<PAGE>
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ROBERTSON STEPHENS MUTUAL FUNDS
555 California Street, Suite 2600 PROSPECTUS
San Francisco, CA 94104 CLASS A SHARES
800-766-FUND April 1, 1997
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ROBERTSON STEPHENS INVESTMENT TRUST makes available to investors the
expertise of the investment professionals at Robertson Stephens Investment
Management. The Trust is offering Class A shares of twelve mutual funds by this
Prospectus: The CONTRARIAN FUND-TM-, The Robertson Stephens DEVELOPING COUNTRIES
FUND, The Robertson Stephens DIVERSIFIED GROWTH FUND, The Robertson Stephens
EMERGING GROWTH FUND, The Robertson Stephens GLOBAL LOW-PRICED STOCK FUND, The
Robertson Stephens GLOBAL NATURAL RESOURCES FUND, The Robertson Stephens GLOBAL
VALUE FUND, The Robertson Stephens GROWTH & INCOME FUND, THE INFORMATION AGE
FUND-TM-, The Robertson Stephens MICROCAP GROWTH FUND, The Robertson Stephens
PARTNERS FUND, and The Robertson Stephens VALUE + GROWTH FUND.
THIS PROSPECTUS EXPLAINS CONCISELY THE INFORMATION ABOUT THE TRUST THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN THE FUNDS' CLASS A SHARES.
Please read it carefully and keep it for future reference. Investors can find
more detailed information about the Funds in the April 1, 1997 Statement of
Additional Information, as amended from time to time. For a free copy of the
Statement of Additional Information, please call 1-800-766-FUND. The Statement
of Additional Information has been filed with the Securities and Exchange
Commission and is available along with other related materials on the Securities
and Exchange Commission's Internet Web site (http://www.sec.gov). The Statement
of Additional Information is incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
<PAGE>
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EXPENSE SUMMARY
The following table summarizes an investor's maximum transaction costs from
investing in Class A shares of each of the Funds and expenses incurred by each
of the Funds based on its most recent fiscal year (except in the case of the
Global Value Fund, which only recently commenced operations, where the table
shows the expenses that Fund expects to incur in its first full year of
operations). The Example shows the cumulative expenses attributable to a $1,000
investment in the Funds over specified periods.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fee* None
Exchange Fee None
</TABLE>
- --------------------------
* A $9.00 FEE IS CHARGED FOR REDEMPTIONS MADE BY BANK WIRE.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
GLOBAL
LOW- GLOBAL
CON- DEVELOPING DIVERSIFIED EMERGING PRICED NATURAL GLOBAL
TRARIAN COUNTRIES GROWTH GROWTH STOCK RESOURCES VALUE
-------- ---------- ----------- -------- -------- --------- ------
<S> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.50% 1.25% 1.00% 1.00% 1.00% 1.00% 1.00%
Rule 12b-1 Expenses 0.75% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.21% 0.35%(1) 0.70%(1)* 0.35% 0.70%(1) 0.70%(1) 0.70%(1)*
-------- ---------- ----------- -------- -------- --------- ------
Total Fund Operating Expenses 2.46% 1.85%(1) 1.95%(1)* 1.60% 1.95%(1) 1.95%(1) 1.95%(1)*
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
GROWTH MICRO VALUE
& INFORMATION CAP +
INCOME AGE GROWTH PARTNERS GROWTH
-------- ----------- ------ -------- ------
<S> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.25% 1.25% 1.00%
Rule 12b-1 Expenses 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.05%(1) 0.78% .45%(1)* 0.45%(1) 0.26%
-------- ----------- ------ -------- ------
Total Fund Operating Expenses 1.30%(1) 2.03% 1.95%(1)* 1.95%(1) 1.51%
</TABLE>
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(1) REFLECTING VOLUNTARY EXPENSE LIMITATIONS.
* ESTIMATED BASED ON EXPECTED EXPENSES DURING FIRST FULL YEAR OF OPERATIONS.
2
<PAGE>
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EXAMPLE
An investment of $1,000 in a Fund would incur the following expenses, assuming
5% annual return and redemption at the end of each period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
The Contrarian Fund-TM- $25 $77 $131 $278
The Developing Countries Fund $19 $58 $100 $216
The Diversified Growth Fund $20 $61 N/A N/A
The Emerging Growth Fund $16 $50 $ 87 $189
The Global Low-Priced Stock Fund $20 $61 $105 $227
The Global Natural Resources Fund $20 $61 $105 $227
The Global Value Fund $20 $61 N/A N/A
The Growth & Income Fund $13 $41 $ 71 $156
The Information Age Fund-TM- $21 $64 $109 $235
The MicroCap Growth Fund $20 $61 N/A N/A
The Partners Fund $20 $61 $105 $227
The Value + Growth Fund $15 $48 $ 82 $180
</TABLE>
This information is provided to help investors understand the operating expenses
of the Funds. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
PERFORMANCE. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. Other
Expenses and Total Fund Operating Expenses for some of the Funds reflect
voluntary expense limitations currently in effect. In the absence of those
limitations, Other Expenses and Total Fund Operating Expenses, respectively, of
those Funds would be as follows: Developing Countries Fund, 1.20% and 2.70%;
Diversified Growth Fund, 0.85% and 2.10%; Global Low-Priced Stock Fund, 1.89%
and 3.14%; Global Natural Resources Fund, 0.91% and 2.16%; Global Value Fund,
0.90% and 2.15%; Growth & Income Fund, 0.51% and 1.76%; MicroCap Growth Fund,
0.60% and 2.10%; Partners Fund, 0.65% and 2.15%. In addition, Rule 12b-1
Expenses for the Developing Countries Fund reflect the rate to which the
Trustees have limited payments under the Fund's Distribution Plan; in the
absence of the limitation, that Fund's Rule 12b-1 Expenses would be 0.50%. The
Management Fees paid by the Funds are higher than those paid by most other
mutual funds. Because of Rule 12b-1 fees paid by the Funds, long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales load permitted under applicable broker-dealer sales rules.
3
<PAGE>
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FINANCIAL HIGHLIGHTS
THE CONTRARIAN FUND-TM-, THE DEVELOPING COUNTRIES FUND, AND THE DIVERSIFIED
GROWTH FUND
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The financial highlights presented below, covering the life of each Fund
through December 31, 1996, have been audited by Price Waterhouse LLP,
independent accountants. The audited financial statements for these periods are
contained in the Statement of Additional Information and may be obtained by
shareholders upon request.
<TABLE>
<CAPTION>
THE CONTRARIAN FUND-TM- THE DEVELOPING COUNTRIES FUND
------------------------------------------------------ ---------------------------------------------
NINE FOR THE FOR THE
MONTHS PERIOD NINE MONTHS PERIOD
YEAR ENDED ENDED YEAR ENDED ENDED YEAR ENDED ENDED ENDED
12/31/96 12/31/95 3/31/95 3/31/94(1) 12/31/96 12/31/95 3/31/95(1)
------------ ---------- ------------- ---------- ---------------- ------------ -----------
<S> <C> <C> <C> <C> <C> <C> <C>
Net asset value,
beginning of period $ 13.78 $ 10.70 $ 12.34 $ 10.00 $ 8.02 $ 8.57 $ 10.00
Income From Investment
Operations:
Net investment
income/(loss) 0.00 (0.01) (0.04) (0.02) 0.03 (0.03) 0.06
Net realized
gain/(loss) and
unrealized
appreciation/
(depreciation) on
investments 2.99 3.09 (1.35) 2.36 1.67 (0.52) (1.36)
------------ ---------- ------------- ---------- ------- ------------ -----------
Total from investment
operations 2.99 3.08 (1.39) 2.34 1.70 (0.55) (1.30)
Distributions:
Dividends from net
investment income -- -- -- -- (0.03) -- (0.04)
Distribution from net
realized capital gain (0.20) -- (0.25) -- -- -- (0.09)
------------ ---------- ------------- ---------- ------- ------------ -----------
Net asset value, end of
period $ 16.57 $ 13.78 $ 10.70 $ 12.34 $ 9.69 $ 8.02 $ 8.57
Total Return 21.68% 28.79% (11.23)% 23.40% 21.19% (6.42)% (13.14)%
Ratios/Supplemental Data:
Net assets, end of period
(thousands) $1,063,438 $507,477 $397,646 $484,951 $50,424 $14,343 $8,345
Ratio of net operating
expenses to average net
assets 2.46% 2.54%* 2.46%(2) 2.22%* 1.84%(2) 1.83%(2)* 3.15%(2)*
Ratio of net investment
income/(loss) to average
net assets: (0.02)% (0.20)%* (0.27)%(2) (0.77)%* 0.36%(2) (0.51)%(2)* 0.72%(2)*
Portfolio Turnover rate 44% 29% 79% 14% 165% 103% 124%
Average Commission Rate
Paid (3) $0.0273 -- -- -- $0.0009 -- --
<CAPTION>
THE DIVERSIFIED
GROWTH FUND
----------------
FOR THE PERIOD
ENDED
12/31/96(1)
----------------
<S> <C>
Net asset value,
beginning of period $ 10.00
Income From Investment
Operations:
Net investment
income/(loss) (0.05)
Net realized
gain/(loss) and
unrealized
appreciation/
(depreciation) on
investments 2.47
-------
Total from investment
operations 2.42
Distributions:
Dividends from net
investment income --
Distribution from net
realized capital gain --
-------
Net asset value, end of
period $ 12.42
Total Return 24.20%
Ratios/Supplemental Data:
Net assets, end of period
(thousands) $59,587
Ratio of net operating
expenses to average net
assets 2.28%(2)*
Ratio of net investment
income/(loss) to average
net assets: (1.05)%(2)*
Portfolio Turnover rate 69%
Average Commission Rate
Paid (3) $0.0526
</TABLE>
- ----------------------------------
Per share data has been determined by using the average number of shares
outstanding throughout the period.
* Annualized.
(1) The Contrarian Fund commenced operations on June 30, 1993; the Developing
Countries Fund commenced operations on May 2, 1994; the Diversified Growth
Fund commenced operations on August 1, 1996.
(2) If the Contrarian Fund had paid all of its expenses and there had been no
reimbursement by the Adviser, the ratio of expenses to average net assets
for the year ended March 31, 1995, would have been 2.58%, and the ratio of
net investment loss to average net assets would have been (0.39)%.
If the Developing Countries Fund had paid all of its expenses and there had
been no reimbursement by the Adviser, the ratio of expenses to average net
assets for the year ended December 31, 1996, the nine months ended December
31, 1995, and the period from May 2, 1994 (Commencement of Operations), to
March 31, 1995, would have been 2.70%, 4.24%, and 3.46%, respectively, and
the ratio of net investment income/(loss) to average net assets would have
been (0.50)%, (2.92)%, and 0.41%, respectively.
If the Diversified Growth Fund had paid all of its expenses and had
received no reimbursement from the Adviser, the ratio of expenses to
average net assets for the period ended December 31, 1996, would have been
2.44%, and the ratio of net investment loss to average net assets would
have been (1.21)%.
(3) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
4
<PAGE>
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FINANCIAL HIGHLIGHTS (CONTINUED)
THE EMERGING GROWTH FUND
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The financial highlights presented below, covering the life of the Fund
through December 31, 1996, have been audited by Price Waterhouse LLP,
independent accountants, for the years ended after December 31, 1990. The
audited financial statements of the Fund for these periods are contained in the
Statement of Additional Information and may be obtained by shareholders upon
request.
<TABLE>
<CAPTION>
NINE THREE
MONTHS MONTHS
YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED
12/31/96 12/31/95 3/31/95 3/31/94 3/31/93
---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 19.21 $ 18.36 $ 18.37 $ 14.71 $ 16.77
---------- ---------- ---------- ---------- ----------
Income from Investment
Operations:
Net investment
income/(loss).............. (0.17) (0.15) (0.17) (0.40) (0.02)
Net realized and unrealized
appreciation/
(depreciation) on
investments................ 4.23 2.58 2.26 4.06 (2.04)
---------- ---------- ---------- ---------- ----------
Total from investment
operations................. 4.06 2.43 2.09 3.66 (2.06)
Distributions:
Dividends from net
investment income.......... -- -- -- -- --
Distributions from net
realized capital gain...... (3.20) (1.58) (2.10) -- --
---------- ---------- ---------- ---------- ----------
Total Distributions......... (3.20) (1.58) (2.10) -- --
Net asset value, end of
period....................... $ 20.07 $ 19.21 $ 18.36 $ 18.37 $ 14.71
Total Return.................. 21.53% 13.50% 12.01% 24.88% (12.28)%
Ratios/Supplemental Data:
Net assets, end of period
(thousands).................. $210,404 $167,728 $182,275 $168,192 $228,893
Ratio of net operating
expenses to average net
assets....................... 1.60% 1.64%* 1.56% 1.60% 1.54%*
Ratio of net investment
income/(loss) to average net
assets....................... (0.83)% (0.99)%* (0.96)% (1.27)% (0.61)%*
Portfolio turnover rate....... 270% 147% 280% 274% 43%
Average Commission Rate Paid
(2).......................... $0.0587 -- -- -- --
<CAPTION>
YEAR ENDED DECEMBER 31, ONE MONTH
---------------------------------------------------------- ENDED
1992 1991 1990 1989 1988 12/31/87(1)
---------- ---------- --------- --------- -------- ------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period....................... $ 17.50 $ 11.67 $ 11.46 $ 9.09 $ 7.97 $ 6.32
---------- ---------- --------- --------- -------- ------------
Income from Investment
Operations:
Net investment
income/(loss).............. (0.15) (0.09) 0.00 (0.09) (0.21) (0.02)
Net realized and unrealized
appreciation/
(depreciation) on
investments................ (0.31) 6.82 1.07 4.06 1.33 1.67
---------- ---------- --------- --------- -------- ------------
Total from investment
operations................. (0.46) 6.73 1.07 3.97 1.12 1.65
Distributions:
Dividends from net
investment income.......... -- -- -- -- -- --
Distributions from net
realized capital gain...... (0.27) (0.90) (0.86) (1.60) -- --
---------- ---------- --------- --------- -------- ------------
Total Distributions......... (0.27) (0.90) (0.86) (1.60) -- --
Net asset value, end of
period....................... $ 16.77 $ 17.50 $ 11.67 $ 11.46 $ 9.09 $ 7.97
Total Return.................. (2.55)% 58.70% 9.57% 44.45% 14.05% 26.11%
Ratios/Supplemental Data:
Net assets, end of period
(thousands).................. $277,531 $141,929 $22,931 $12,830 $7,583 $7,396
Ratio of net operating
expenses to average net
assets....................... 1.49% 1.59% 1.88% 2.15% 2.85% 0.25%*
Ratio of net investment
income/(loss) to average net
assets....................... (0.92)% (0.68)% (0.02)% (0.75)% (2.44)% (0.21)%*
Portfolio turnover rate....... 124% 147% 272% 236% 139% 8%
Average Commission Rate Paid
(2).......................... -- -- -- -- -- --
</TABLE>
- ----------------------------------
Per share data is determined by using the average number of shares outstanding
throughout the period.
* Annualized.
(1) Data for 1987 is limited to the one month after the Emerging Growth Fund's
shares were first offered to the public on November 30, 1987. The ratios
and portfolio turnover rate are not annualized for this one month.
(2) A fund is required to disclose its average commission rate for security
trades on which a commission is charged. This amount may vary from fund to
fund and period to period depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ. This rate generally does not reflect markups, markdowns or spreads
on shares traded on a principle basis, if any.
5
<PAGE>
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
THE GLOBAL LOW-PRICED STOCK FUND, THE GLOBAL NATURAL RESOURCES FUND AND THE
GROWTH & INCOME FUND
- --------------------------------------------------------------------------------
The financial highlights presented below, covering the life of each Fund
through December 31, 1996, have been audited by Price Waterhouse LLP,
independent accountants. The audited financial statements for these periods are
contained in the Statement of Additional Information and may be obtained by
shareholders upon request.
<TABLE>
<CAPTION>
THE GLOBAL LOW-PRICED THE GLOBAL NATURAL
STOCK FUND RESOURCES FUND THE GROWTH & INCOME FUND
---------------------------- --------------------------- -----------------------------
PERIOD PERIOD PERIOD
11/15/95 11/15/95 7/12/95
YEAR ENDED THROUGH YEAR ENDED THROUGH YEAR ENDED THROUGH
12/31/96 12/31/95 12/31/96 12/31/95 12/31/96 12/31/95
------------- ------------ ------------- ----------- ------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................ $ 10.45 $ 10.00 $ 10.12 $ 10.00 $ 11.24 $ 10.00
Income From Investment Operations:
Net investment income/(loss)..... (0.09) 0.03 (0.06) 0.02 0.02 0.00
Net realized gain/(loss) and
unrealized
appreciation/(depreciation) on
investments..................... 3.17 0.42 4.24 0.10 2.70 1.24
------------- ------------ ------------- ----------- ------------- -------------
Total from investment
operations...................... 3.08 0.45 4.18 0.12 2.72 1.24
Distributions:
Dividends from net investment
income.......................... (0.01) -- (0.01) -- (0.02) --
Distribution from net realized
capital gain.................... -- -- -- -- (0.32) --
------------- ------------ ------------- ----------- ------------- -------------
Total from investment
operations...................... (0.01) -- (0.01) -- (0.34) --
Net asset value, end of period..... $ 13.52 $ 10.45 $ 14.29 $ 10.12 $ 13.62 $ 11.24
Total Return....................... 29.39% 4.50% 41.21% 1.20% 24.16% 12.40%
Ratios/Supplemental Data:
Net assets, end of period
(thousands)....................... $ 31,441 $ 1,643 $120,521 $ 792 $ 309,775 $ 136,902
Ratio of net operating expenses to
average net assets................ 1.94%(1) 1.91%(1)* 1.94%(1) 2.60%(1)* 1.71%(1) 1.94%*
Ratio of net investment
income/(loss) to average net
assets............................ (0.67)%(1) 2.06%(1)* (0.45)%(1) 1.84%(1)* 0.18%(1) (0.01)%*
Portfolio turnover rate............ 66% 0% 82% 0% 212% 97%
Average Commission Rate Paid (2)... $ 0.0134 -- $ 0.0148 -- $ 0.0567 --
</TABLE>
- ----------------------------------
Per share data is determined by using the average number of shares outstanding
throughout the period.
* Annualized.
(1) If the Global Low-Priced Sock Fund had paid all of its expenses and had
received no reimbursement from the Adviser, the ratio of expenses to
average net assets for the year ended December 31, 1996, and the period
ended December 31, 1995, would have been 3.14% and 9.04%, respectively, and
the ratio of net investment loss to average net assets would have been
(1.87)% and (5.07)%, respectively.
If the Global Natural Resources Fund had paid all of its expenses and had
received no reimbursement from the Adviser, the ratio of expenses to
average net assets for the year ended December 31, 1996, and the period
from November 15, 1995 (Commencement of Operations), through December 31,
1995, would have been 2.16% and 14.25%, respectively, and the ratio of net
investment loss to average net assets would have been (0.67)% and (9.81)%,
respectively.
If the Growth & Income Fund had paid all of its expenses and had received
no waiver from the Adviser, the ratio of expenses to average net assets for
the year ended December 31, 1996, would have been 1.76%, and the ratio of
net investment income to average net assets would have been 0.13%.
(2) A Fund is required to disclose its average commission rate for security
trades on which a commission is charged. This amount may vary from fund to
fund and period to period depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ. This rate generally does not reflect markups, markdowns or spreads
on shares traded on a principle basis, if any.
6
<PAGE>
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (CONTINUED)
THE INFORMATION AGE FUND-TM-, THE MICRO CAP GROWTH FUND, THE PARTNERS FUND, AND
THE VALUE + GROWTH FUND
- --------------------------------------------------------------------------------
The financial highlights presented below, covering the life of each Fund
through December 31, 1996, have been audited by Price Waterhouse LLP,
independent accountants. The audited financial statements for these periods are
contained in the Statement of Additional Information and may be obtained by
shareholders upon request.
<TABLE>
<CAPTION>
THE
INFORMATION THE MICRO
AGE CAP GROWTH
FUND-TM- FUND THE PARTNERS FUND
----------------------- ----------- -------------------------
PERIOD PERIOD PERIOD
11/15/95 8/15/96 7/12/95
YEAR ENDED THROUGH THROUGH YEAR ENDED THROUGH
12/31/96 12/31/95 12/31/96 12/31/96 12/31/95
---------- ---------- ----------- ------------ ----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................... $ 9.30 $ 10.00 $10.00 $ 10.39 $10.00
Income from Investment Operations:
Net investment income (loss)........ (0.20) (0.01) (0.08) 0.13 0.06
Net realized gain (loss) and
unrealized appreciation/
depreciation) on investments....... 2.68 (0.69) 1.08 4.36 0.33
---------- ---------- ----------- ------------ ----------
Total from investment operations.... 2.48 (0.70) 1.00 4.49 0.39
Distributions:
Dividends from net investment
income............................. -- -- -- (0.06) --
Distribution from net realized
capital gain....................... (0.27) -- -- (0.22) --
---------- ---------- ----------- ------------ ----------
Total from investment operations...... (0.27) -- -- (0.28) --
Net asset value, end of period........ $ 11.51 $ 9.30 $11.00 $ 14.60 $10.39
Total Return.......................... 26.72% (7.00)% 10.00% 43.15% 3.90%
Ratios/Supplemental Data:
Net assets, end of period
(thousands).......................... $106,264 $32,826 $9,464 $127,268 $7,480
Ratio of net operating expenses to
average net assets................... 2.03% 2.13%* 3.08%(1)* 1.93%(1) 2.41%(1)*
Ratio of net investment income/ (loss)
to average net assets................ (1.85)% (0.89)%* (2.13)%(1)* 0.95%(1) 1.34%(1)*
Portfolio turnover rate............... 452% 89% 22% 101% 71%
Average Commission Rate Paid (2)...... $ 0.0582 -- $ 0.06 $ 0.0216 --
<CAPTION>
THE VALUE + GROWTH FUND
----------------------------------------------------------------------
PERIOD
NINE MONTHS 4/21/92
YEAR ENDED ENDED YEAR ENDED YEAR ENDED THROUGH
12/31/96 12/31/95 3/31/95 3/31/94 3/31/93
------------ ------------- ---------- ------------ -----------
<S> <C> <C> <C> <C> <C>
Net asset value, beginning of
period............................... $ 22.66 $ 18.25 $ 13.56 $ 11.94 $ 10.00
Income from Investment Operations:
Net investment income (loss)........ (0.24) (0.16) (0.18) (0.04) 0.12
Net realized gain (loss) and
unrealized appreciation/
depreciation) on investments....... 3.47 4.57 5.07 1.99 1.88
------------ ------------- ---------- ------------ -----------
Total from investment operations.... 3.23 4.41 4.89 1.95 2.00
Distributions:
Dividends from net investment
income............................. -- -- -- (0.03) (0.06)
Distribution from net realized
capital gain....................... (1.73) -- (0.20) (0.30) --
------------ ------------- ---------- ------------ -----------
Total from investment operations...... (1.73) -- (0.20) (0.33) (0.06)
Net asset value, end of period........ $ 24.16 $ 22.66 $ 18.25 $ 13.56 $ 11.94
Total Return.......................... 14.12% 24.16% 36.27% 16.32% 20.05%
Ratios/Supplemental Data:
Net assets, end of period
(thousands).......................... $643,157 $1,140,151 $428,903 $44,500 $17,833
Ratio of net operating expenses to
average net assets................... 1.51% 1.45%* 1.68% 1.55%(1) 1.33%(1)*
Ratio of net investment income/ (loss)
to average net assets................ (1.06)% (1.04)%* (1.09)% (0.51)%(1) 1.26%(1)*
Portfolio turnover rate............... 221% 104% 232% 250% 210%
Average Commission Rate Paid (2)...... $ 0.0574 -- -- -- --
</TABLE>
- ----------------------------------
Per share data is determined by using the average number of shares outstanding
throughout the period.
* Annualized.
(1) If the MicroCap Growth Fund had paid all of its expenses and had received
no reimbursement from the Advisers, the ratio of expenses to average net
assets for the period ended December 31, 1996, would have been 6.40%, and
the ratio of net investment loss to average net assets would have been
(5.45)%.
If the Partners Fund had paid all of its expenses and there had been no
reimbursement by the Adviser, the ratio of expenses to average net assets
for the year ended December 31, 1996, and for the period ended December 31,
1995, would have been 2.15% and 5.12%, respectively, and the ratio of net
investment income/(loss) to average net assets would have been 0.73% and
(1.37)%, respectively.
If the Value + Growth Fund had paid all of its expenses and had received no
reimbursement from the Adviser, the ratio of expenses to average net assets
for the period ended March 31, 1994, and March 31, 1993, would have been
2.35% and 2.71%, respectively, and the ratio of net investment loss to
average net assets would have been (1.31)% and (0.12)%, respectively.
(2) A Fund is required to disclose its average commission rate for security
trades on which a commission is charged. This amount may vary from fund to
fund and period to period depending on the mix of trades executed in
various markets where trading practices and commission rate structures may
differ. This rate generally does not reflect markups, markdowns or spreads
on shares traded on a principle basis, if any.
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INVESTMENT OBJECTIVES AND POLICIES
The Robertson Stephens Mutual Funds are designed to make available to mutual
fund investors the expertise of the investment professionals at Robertson,
Stephens & Company Investment Management, L.P. and Robertson Stephens Investment
Management, Inc. (Robertson, Stephens & Company Investment Management, L.P. and
Robertson Stephens Investment Management, Inc. are referred to collectively in
this Prospectus as "Robertson Stephens Investment Management").
THE FUNDS' INVESTMENT STRATEGIES AND PORTFOLIO INVESTMENTS WILL DIFFER FROM
THOSE OF MOST OTHER MUTUAL FUNDS. ROBERTSON STEPHENS INVESTMENT MANAGEMENT SEEKS
AGGRESSIVELY TO IDENTIFY FAVORABLE SECURITIES, ECONOMIC AND MARKET SECTORS, AND
INVESTMENT OPPORTUNITIES THAT OTHER INVESTORS AND INVESTMENT ADVISERS MAY NOT
HAVE IDENTIFIED. ROBERTSON STEPHENS INVESTMENT MANAGEMENT MAY DEVOTE MORE OF A
FUND'S ASSETS TO PURSUING AN INVESTMENT OPPORTUNITY THAN MANY OTHER MUTUAL FUNDS
MIGHT; IT MAY BUY OR SELL AN INVESTMENT AT TIMES DIFFERENT FROM WHEN MOST OTHER
MUTUAL FUNDS MIGHT DO SO; AND IT MAY SELECT INVESTMENTS FOR THE FUND THAT WOULD
BE INAPPROPRIATE FOR LESS AGGRESSIVE MUTUAL FUNDS. IN ADDITION, UNLIKE MOST
OTHER MUTUAL FUNDS, MANY OF THE FUNDS MAY ENGAGE IN SHORT SALES OF SECURITIES
WHICH INVOLVE SPECIAL RISKS. SEE "OTHER INVESTMENT PRACTICES AND RISK
CONSIDERATIONS," BELOW.
None of the Funds, other than the Growth & Income Fund, invests for current
income. Each of the Funds may hold a portion of its assets in cash or money
market investments.
The investment policies of each Fund may, unless otherwise specifically
stated, be changed by the Trustees of the Trust without shareholder approval, as
may each Fund's investment objective. All percentage limitations on investments
will apply at the time of investment and will not be considered violated unless
an excess or deficiency occurs or exists immediately after and as a result of
the investment. There can, of course, be no assurance that a Fund will achieve
its investment objective.
For a description of certain risks associated with the Funds' investment
practices, see "Other Investment Practices and Risk Considerations," below.
THE CONTRARIAN FUND-TM-
- -------------------------------------
The Contrarian Fund's-TM- investment objective is maximum long-term growth.
Normally, The Contrarian Fund-TM- seeks this growth by aggressive yet flexible
investing worldwide in growing companies that are attractively priced. The
Contrarian Fund-TM- focuses its investments primarily on equity securities of
domestic, multinational, and foreign companies whose potential values generally
have been overlooked by other investors. Such companies include attractively
priced businesses that have not yet been discovered or become popular,
previously unpopular companies with growth potential due to changed
circumstances, companies that have declined in value and no longer command an
investor following, and previously popular companies temporarily out of favor
due to short-term factors.
In implementing its "contrarian" investment strategy, the Fund may take
positions that are different from those taken by other mutual funds. For
example, the Fund may sell the stocks of some issuers short, and may take
positions in options and futures contracts in anticipation of a market decline.
The Fund may also borrow money to purchase additional portfolio securities. The
Fund is a non-diversified mutual fund.
THE DEVELOPING COUNTRIES FUND
- -------------------------------------
The Developing Countries Fund's investment objective is long-term capital
appreciation. The Fund invests primarily in a non-diversified portfolio of
publicly traded developing country equity securities. The Fund may also, to a
lesser degree, invest in private placements of developing country equity
securities.
Developing country equity securities are securities which are principally
traded in the capital markets of a developing country; securities of
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companies that derive at least 50% of their total revenues from either goods
produced or services performed in developing countries or from sales made in
developing countries, regardless of where the securities of such companies are
principally traded; securities of companies organized under the laws of, and
with a principal office in, a developing country; securities of investment
companies (such as country funds) that principally invest in developing country
securities; and American Depository Receipts (ADRs) and Global Depository
Receipts (GDRs) with respect to the securities of such companies. Developing
countries are countries that in the opinion of Robertson Stephens Investment
Management are generally considered to be developing countries by the
international financial community. The Fund will normally invest at least 65% of
its assets in developing country equity securities. The Fund may also borrow
money to purchase additional portfolio securities. The Fund is a non-diversified
mutual fund.
The Developing Countries Fund may invest up to 10% of its total assets in
shares of other investment companies. Such other investment companies would
likely pay expenses similar to those paid by the Fund, including, for example,
advisory and administrative fees. Robertson Stephens Investment Management will
waive its investment advisory fees on the Fund's assets invested in other
open-end investment companies, to the extent of the advisory fees of those
investment companies attributable to the Fund's investment.
In selecting investments for the Fund, Robertson Stephens Investment
Management may consider a number of factors in evaluating potential investments,
including political risks, classic macroeconomic variables, and equity market
valuations. Robertson Stephens Investment Management may also focus on the
quality of a company's management, the company's growth prospects, and the
financial well being of the company. The Developing Countries Fund's investments
generally will reflect a broad cross-section of countries, industries, and
companies in order to limit risk. In situations where the market for a
particular security is determined by
Robertson Stephens Investment Management to be sufficiently liquid, the Fund may
engage in short sales.
THE DIVERSIFIED GROWTH FUND
- -------------------------------------
The Diversified Growth Fund's investment objective is to seek long-term
capital growth. In selecting investments for the Fund, Robertson Stephens
Investment Management focuses on small- and mid-cap companies, to create a
portfolio of investments broadly diversified over industry sectors and
companies.
The Fund will invest principally in common and preferred stocks and
warrants. Although the Fund intends to focus on companies with market
capitalizations of up to $3 billion, the Fund will remain flexible and may
invest in securities of larger companies. The Fund may also purchase debt
securities Robertson Stephens Investment Management believes are consistent with
the Fund's investment objective, and may engage in short sales of securities it
expects to decline in price.
Small- and mid-cap companies may present greater opportunities for
investment return than do larger companies, but also involve greater risks. They
may have limited product lines, markets, or financial resources, or may depend
on a limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
than prices of securities of larger, widely traded companies. See "Investments
in smaller companies," below.
THE EMERGING GROWTH FUND
- -------------------------------------
The Emerging Growth Fund's investment objective is capital appreciation. The
Fund invests in an actively managed diversified portfolio of equity securities
(principally common stocks) of emerging growth companies. Emerging growth
companies are companies that, in the opinion of Robertson Stephens Investment
Management, have the potential, based on superior
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products or services, operating characteristics, and financing capabilities, for
more rapid growth than the overall economy.
The Emerging Growth Fund's investments generally are held in a portfolio of
securities of companies in industry segments that are experiencing rapid growth
and in companies with proprietary advantages. Robertson Stephens Investment
Management may consider a number of factors in evaluating potential investments,
including, for example, the rate of earnings growth, the quality of management,
the extent of proprietary operating advantage, the return on equity and/or the
financial condition of the company.
Smaller companies may present greater opportunities for investment return
than do larger companies, but may also involve greater risks. They may have
limited product lines, markets, or financial resources, or may depend on a
limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
than prices of securities of larger, widely traded companies. See "Investments
in smaller companies," below.
THE GLOBAL LOW-PRICED STOCK FUND
- -------------------------------------
The Global Low-Priced Stock Fund's investment objective is long-term growth.
The Fund intends to invest in "low-priced" stocks (prices no greater than $10
per share) of companies worldwide that have future growth potential, but are
overlooked or underappreciated by other investors.
Robertson Stephens Investment Management believes there are substantial
opportunities to discover and invest in undervalued companies that have
long-term growth prospects. Such companies include attractively priced
businesses that have not yet been discovered by other investors, previously
out-of-favor companies with growth potential due to changing circumstances,
companies that have declined in value and no longer command an investor
following, and companies temporarily out of favor due to short-term factors. In
most cases there will be little coverage by Wall Street analysts of the
companies in which the Fund invests. Institutional ownership will also usually
be limited.
It has been the experience of Robertson Stephens Investment Management that
attractive investment opportunities often exist in companies whose stock price
is $10 or less per share. For many reasons, including limits on purchasing the
stocks "on margin" (with borrowed money), many investors do not buy low-priced
stocks. The result is less competition from other investors, and the potential
that a company's value may not be reflected fully in its stock price.
In selecting securities for the Fund's portfolio, Robertson Stephens
Investment Management uses a "bottom-up" analysis, looking at companies of all
sizes, and in all industries and geographical markets. Robertson Stephens
Investment Management focuses on a company's financial condition, profitability
prospects, and capital needs going forward.
Robertson Stephens Investment Management will likely invest in certain
stocks before other investors recognize their value. The result could be a lack
of stock price movement in the near term. Investors should therefore have a
long-term investment horizon when investing in the Fund.
Although the Fund will seek to invest principally in common stocks, it may
also invest any portion of its assets in preferred stocks, warrants, and debt
securities if Robertson Stephens Investment Management believes they would help
achieve the Fund's objective. The Fund will normally invest substantially all of
its assets in low-priced stocks, and will normally invest in securities of
issuers located in at least three countries, one of which may be the United
States.
Smaller companies may present greater opportunities for investment return
than do larger companies, but may also involve greater risks. They may have
limited product lines, markets, or financial resources, or may depend on a
limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
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than prices of securities of larger, more widely traded companies. See
"Investments in smaller companies," below.
THE GLOBAL NATURAL
RESOURCES FUND
- -------------------------------------
The Global Natural Resources Fund's investment objective is long-term
capital appreciation. The Fund will invest primarily in securities of issuers in
the natural resources industries. The Fund is designed for investors who believe
that investment in securities of such companies provides the opportunity for
capital appreciation, while offering the potential over the long term to limit
the adverse effects of inflation. The Fund may invest in securities of issuers
located anywhere in the world if Robertson Stephens Investment Management
believes they offer the potential for capital appreciation.
Although the Fund will seek to invest principally in common stocks, it may
also invest in preferred stocks, securities convertible into common stocks or
preferred stocks, and warrants to purchase common stocks or preferred stocks.
The Fund will seek to invest in companies with strong potential for earnings
growth, and whose earnings and tangible assets could benefit from accelerating
inflation. Robertson Stephens Investment Management believes that companies in
the natural resources industries with the flexibility to adjust prices or
control operating costs offer attractive opportunities for capital growth when
inflation is rising.
Companies in the natural resources industries include companies that
Robertson Stephens Investment Management considers to be principally engaged in
the discovery, development, production, or distribution of natural resources,
the development of technologies for the production or efficient use of natural
resources, or the furnishing of related supplies or services. Natural resources
include, for example, energy sources, precious metals, forest products, real
estate, nonferrous metals, and other basic commodities.
Companies in the natural resources industries may include, for example:
- Companies that participate in the discovery and development of natural
resources from new or conventional sources.
- Companies that own or produce natural resources such as oil, natural gas,
precious metals, and other commodities.
- Companies that engage in the transportation, distribution, or processing
of natural resources.
- Companies that contribute new technologies for the production or efficient
use of natural resources, such as systems for energy conversion,
conservation, and pollution control.
- Companies that provide related services such as mining, drilling,
chemicals, and related parts and equipment.
A particular company will be considered to be principally engaged in the
natural resources industries if at the time of investment Robertson Stephens
Investment Management determines that at least 50% of the company's assets,
gross income, or net profits are committed to, or derived from, those
industries. A company will also be considered to be principally engaged in the
natural resources industries if Robertson Stephens Investment Management
considers that the company has the potential for capital appreciation primarily
as a result of particular products, technology, patents, or other market
advantages in those industries.
The Fund will normally invest at least 65% of its assets in securities of
companies in the natural resources industries. The Fund may invest the remainder
of its assets in securities of companies in any industry if Robertson Stephens
Investment Management believes they would help achieve the Fund's objective of
long-term capital appreciation. The portion of the Fund's assets invested in
such securities will vary depending on Robertson Stephens Investment
Management's evaluation of economic conditions, inflationary expectations, and
other factors affecting companies in the natural resources industries and other
sectors. The Fund may also sell securities short if it expects their market
price to decline. The Fund
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will normally invest in securities of issuers located in at least three
countries, one of which may be the United States.
Because the Fund's investments are concentrated in the natural resources
industries, the value of its shares will be especially affected by factors
peculiar to those industries and may fluctuate more widely than the value of
shares of a portfolio which invests in a broader range of industries. For
example, changes in commodity prices may affect both the industries which
produce, refine, and distribute them and industries which supply alternate
sources of commodities. In addition, certain of these industries are generally
subject to greater government regulation than many other industries; therefore,
changes in regulatory policies may have a material effect on the business of
companies in these industries.
THE GLOBAL VALUE FUND
- -------------------------------------
The Global Value Fund's investment objective is long-term growth. The Fund
will employ a value methodology to invest in equity securities primarily of
companies with market capitalizations of $1 billion or more. This traditional
value methodology combines Graham & Dodd balance sheet analysis with cash flow
analysis.
In selecting investments for the Fund, Robertson Stephens investment
Management will:
- Perform fundamental research focusing on business analysis;
- Observe how management allocates capital;
- Strive to understand the unit economics of the business of the company;
- Key on the cash flow rate of return on capital employed;
- Discern the sources and uses of cash;
- Consider how management is compensated; and
- Ask how the stock market is pricing the entire company.
Although the Fund will seek to invest principally in common stocks, it may
also invest in preferred stocks, warrants, and debt securities if Robertson
Stephens Investment Management believes they would help achieve the Fund's
objective. Under normal circumstances, the Fund will invest at least 65% of its
assets in equity securities selected using the value methodology described
above.
The Fund may invest in securities of companies located anywhere in the
world, if Robertson Stephens Investment Management believes they are consistent
with the Fund's investment objective. Under normal circumstances, the Fund's
assets will be invested in securities of issuers located in at least three
countries, one of which may be the United States. The Fund will consider an
issuer of securities to be located in a country if it is organized under the
laws of that country and has a principal office in that country, if it derives
50% or more of its total revenues from business in that country, or if its
equity securities are traded principally on a securities exchange in that
country. The Fund is a non-diversified mutual fund.
THE GROWTH & INCOME FUND
- -------------------------------------
The Growth & Income Fund's investment objective is long-term total return.
The Fund will pursue this objective primarily by investing in equity and debt
securities, focusing on small- and mid-cap companies that offer the potential
for capital appreciation, current income, or both.
The Fund will normally invest the majority of its assets in common and
preferred stocks, convertible securities, bonds, and notes. Although the Fund
intends to focus on companies with market capitalizations of up to $3 billion,
the Fund will remain flexible and may invest in securities of larger companies.
The Fund may also engage in short sales of securities it expects to decline in
price.
Small- and mid-cap companies may present greater opportunities for
investment return than do larger companies, but may also involve greater risks.
They may have limited product lines, markets, or financial resources, or may
depend on a limited management group. Their securities may trade less frequently
and in limited volume. As a result, the prices of these securities
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may fluctuate more than prices of securities of larger, widely traded companies.
See "Investments in smaller companies," below.
THE INFORMATION AGE FUND-TM-
- -------------------------------------
The Information Age Fund's-TM- investment objective is long-term capital
appreciation. The Fund is designed for investors who believe that aggressive
investment in common stocks of companies in the information technology
industries provides significant opportunities for capital appreciation. While
ordinary mutual funds may place some of their investments in securities of
companies in the information technology sector, The Information Age Fund-TM-
focuses its investments in that sector.
Although the Fund will seek to invest principally in common stocks, it may
also invest any portion of its assets in preferred stocks and warrants if
Robertson Stephens Investment Management believes they would help achieve the
Fund's objective. The Fund may also engage in short sales of securities it
expects to decline in price.
Companies in the information technology industries include companies that
Robertson Stephens Investment Management considers to be principally engaged in
the development, production, or distribution of products or services related to
the processing, storage, transmission, or presentation of information or data.
The following examples illustrate the wide range of products and services
provided by these industries:
- Computer hardware and software of any kind, including, for example,
semiconductors, minicomputers, and peripheral equipment.
- Telecommunications products and services.
- Multimedia products and services, including, for example, goods and
services used in the broadcast and media industries.
- Data processing products and services.
- Financial services companies that collect or disseminate market, economic,
and financial information.
A particular company will be considered to be principally engaged in the
information technology industries if at the time of investment Robertson
Stephens Investment Management determines that at least 50% of the company's
assets, gross income, or net profits are committed to, or derived from, those
industries. A company will also be considered to be principally engaged in the
information technology industries if Robertson Stephens Investment Management
considers that the company has the potential for capital appreciation primarily
as a result of particular products, technology, patents, or other market
advantages in those industries. The Fund will normally invest at least 65% of
its assets in securities of companies in the information technology industries.
Because the Fund's investments are concentrated in the information
technology industries, the value of its shares will be especially affected by
factors peculiar to those industries and may fluctuate more widely than the
value of shares of a portfolio which invests in a broader range of industries.
For example, many products and services are subject to risks of rapid
obsolescence caused by technological advances. Competitive pressures may have a
significant effect on the financial condition of companies in the information
technology industries. For example, if information technology continues to
advance at an accelerated rate, and the number of companies and product
offerings continues to expand, these companies could become increasingly
sensitive to short product cycles and aggressive pricing. In addition, many of
the activities of companies in the information technology industries are highly
capital intensive, and it is possible that a company which invests substantial
amounts of capital in the development of new products or services will be unable
to recover its investment or otherwise to meet its obligations.
THE MICROCAP GROWTH FUND
- -------------------------------------
The MicroCap Growth Fund's investment objective is long-term capital
appreciation. The Fund will invest in a diversified portfolio of equity
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securities of "micro-cap" companies that Robertson Stephens Investment
Management believes offer the potential for long-term capital appreciation.
"Micro-cap" companies are companies with market capitalizations of $250
million or less. Robertson Stephens Investment Management seeks to identify
micro-cap companies that have the potential, based on superior or niche products
or services, operating characteristics, management, or other factors, for
long-term capital appreciation. Equity securities in which the Fund may invest
include common stocks, preferred stocks, and warrants and securities convertible
into common or preferred stocks. Under normal circumstances, the Fund will
invest at least 65% of its assets in securities of companies which Robertson
Stephens Investment Management determines at the time of investment to be micro-
cap companies. The Fund may invest the remainder of its assets in securities of
companies of any size if Robertson Stephens Investment Management believes such
investments are consistent with the Fund's investment objective. The Fund may
also engage in short sales of securities it expects to decline in price.
Micro-cap and other small companies may offer greater opportunities for
capital appreciation than other companies but may also involve greater risks.
They may have limited product lines, markets, or financial resources, or may
depend on a limited management group. Their securities may trade less frequently
and in limited volume. As a result, the prices of these securities may fluctuate
more sharply than those of other securities, and the Fund may experience
difficulty in establishing or closing out positions in these securities at
prevailing market prices. See "Investments in smaller companies," below.
THE PARTNERS FUND
- -------------------------------------
The Partners Fund's investment objective is long-term growth. The Fund will
employ a value methodology to invest in equity securities primarily of companies
with market capitalizations of up to $1 billion. This traditional value
methodology combines Graham & Dodd balance sheet analysis with cash flow
analysis.
In selecting investments for the Fund, Robertson Stephens Investment
Management will:
- Perform fundamental research focusing on business analysis;
- Observe how management allocates capital;
- Strive to understand the unit economics of the business of the company;
- Key on the cash flow rate of return on capital employed;
- Discern the sources and uses of cash;
- Consider how management is compensated; and
- Ask how the stock market is pricing the entire company.
At times, the Fund may invest all or most of its assets in securities of
U.S. issuers. At other times, the Fund may invest any portion of its assets in
foreign securities, if Robertson Stephens Investment Management believes they
offer attractive investment values.
Small companies may present greater opportunities for investment return than
do larger companies, but may also involve greater risks. They may have limited
product lines, markets, or financial resources, or may depend on a limited
management group. Their securities may trade less frequently and in limited
volume. As a result, the prices of these securities may fluctuate more than
prices of securities of larger, widely traded companies. See "Investments in
smaller companies," below.
Although the Fund will seek to invest principally in common stocks, it may
also invest in preferred stocks, warrants, and debt securities if Robertson
Stephens Investment Management believes they would help achieve the Fund's
objective. The Fund is a non-diversified mutual fund.
THE VALUE + GROWTH FUND
- -------------------------------------
The Value + Growth Fund's investment objective is capital appreciation. The
Fund invests primarily in growth companies with favorable relationships between
price/earnings ratios and growth rates, in sectors offering the potential for
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above-average returns. The Fund may invest in securities of larger or smaller
companies, if Robertson Stephens Investment Management believes they offer the
potential for capital appreciation.
In selecting investments for the Fund, Robertson Stephens Investment
Management's primary emphasis is typically on evaluating a company's management,
growth prospects, business operations, revenues, earnings, cash flows, and
balance sheet in relationship to its share price. Robertson Stephens Investment
Management may select stocks which it believes are undervalued relative to the
current stock price. Undervaluation of a stock can result from a variety of
factors, such as a lack of investor recognition of (1) the value of a business
franchise and continuing growth potential, (2) a new, improved, or upgraded
product, service, or business operation, (3) a positive change in either the
economic or business condition for a company, (4) expanding or changing markets
that provide a company with either new earnings direction or acceleration, or
(5) a catalyst, such as an impending or potential asset sale or change in
management, that could draw increased investor attention to a company. Robertson
Stephens Investment Management also may use similar factors to identify stocks
which it believes to be overvalued, and may engage in short sales of such
securities.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
- -------------------------------------
The Funds may also engage in the following investment practices, each of
which involves certain special risks. The Statement of Additional Information
contains more detailed information about these practices (some of which,
including, for example, options and futures contracts, and certain debt
securities, may be considered "derivative" investments), including limitations
designed to reduce these risks.
INVESTMENTS IN SMALLER COMPANIES. Each of the Funds may invest a
substantial portion of its assets in securities issued by small companies. Such
companies may offer greater opportunities for capital appreciation than larger
companies, but investments in such companies may involve certain special risks.
Such companies may have limited product lines, markets, or financial resources
and may be dependent on a limited management group. While the markets in
securities of such companies have grown rapidly in recent years, such securities
may trade less frequently and in smaller volume than more widely held
securities. The values of these securities may fluctuate more sharply than those
of other securities, and a Fund may experience some difficulty in establishing
or closing out positions in these securities at prevailing market prices. There
may be less publicly available information about the issuers of these securities
or less market interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets.
Some securities of smaller issuers may be restricted as to resale or may
otherwise be highly illiquid. The ability of a Fund to dispose of such
securities may be greatly limited, and a Fund may have to continue to hold such
securities during periods when Robertson Stephens Investment Management would
otherwise have sold the security. It is possible that Robertson Stephens
Investment Management or its affiliates or clients may hold securities issued by
the same issuers, and may in some cases have acquired the securities at
different times, on more favorable terms, or at more favorable prices, than a
Fund.
SHORT SALES (ALL FUNDS EXCEPT THE EMERGING GROWTH, GLOBAL LOW-PRICED STOCK,
GLOBAL VALUE, AND PARTNERS FUNDS). When Robertson Stephens Investment
Management anticipates that the price of a security will decline, it may sell
the security short and borrow the same security from a broker or other
institution to complete the sale. A Fund may make a profit or incur a loss
depending upon whether the market price of the security decreases or increases
between the date of the short sale and the date on which the Fund must replace
the borrowed security. An increase in the value of a security sold short by a
Fund over the price at which it was sold short will result in a loss to the
Fund, and there can be no
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assurance that a Fund will be able to close out the position at any particular
time or at an acceptable price.
FOREIGN SECURITIES. The Funds may invest in securities principally traded
in foreign markets. Because foreign securities are normally denominated and
traded in foreign currencies, the value of a Fund's assets may be affected
favorably or unfavorably by currency exchange rates and exchange control
regulations. There may be less information publicly available about a foreign
company than about a U.S. company, and foreign companies are not generally
subject to accounting, auditing, and financial reporting standards and practices
comparable to those in the United States. The securities of some foreign
companies are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement procedures and
trade regulations may involve certain risks (such as delay in payment or
delivery of securities or in the recovery of a Fund's assets held abroad) and
expenses not present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or expropriation
of assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability, and diplomatic developments that could
affect the value of a Fund's investments in certain foreign countries. Legal
remedies available to investors in certain foreign countries may be more limited
than those available with respect to investments in the United States or in
other foreign countries. In the case of securities issued by a foreign
governmental entity, the issuer may in certain circumstances be unable or
unwilling to meet its obligations on the securities in accordance with their
terms, and a Fund may have limited recourse available to it in the event of
default. The laws of some foreign countries may limit a Fund's ability to invest
in securities of certain issuers located in those foreign countries. Special tax
considerations apply to foreign securities. A Fund may buy or sell foreign
currencies and options and futures contracts on foreign currencies for hedging
purposes in connection with its foreign investments. Except as otherwise
provided in this Prospectus, there is no limit on the amount of a Fund's assets
that may be invested in foreign securities.
Each of the Funds may invest in securities of issuers in developing
countries. Certain Funds may at times invest a substantial portion of their
assets in such securities. Investments in developing countries are subject to
the same risks applicable to foreign investments generally, although those risks
may be increased due to conditions in such countries. For example, the
securities markets and legal systems in developing countries may only be in a
developmental stage and may provide few, or none, of the advantages or
protections of markets or legal systems available in more developed countries.
Although many of the securities in which the Funds may invest are traded on
securities exchanges, they may trade in limited volume, and the exchanges may
not provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Funds may also invest a substantial
portion of their assets in securities traded in the over-the-counter markets in
such countries and not on any exchange, which may affect the liquidity of the
investment and expose the Funds to the credit risk of their counterparties in
trading those investments. The prices of securities of issuers in developing
countries are subject to greater volatility than those of issuers in many more
developed countries.
DEBT SECURITIES. Each of the Funds may invest in debt securities from time
to time, if Robertson Stephens Investment Management believes investing in such
securities might help achieve the Fund's objective. The Growth & Income, Global
Value, and Partners Funds may invest without limit in debt securities and other
fixed-income securities. Each of the other Funds may invest in debt securities
to the extent consistent with its investment policies, although Robertson
Stephens Investment Management expects that under normal circumstances those
Funds would not likely invest a substantial portion of their assets in debt
securities.
THE CONTRARIAN FUND-TM-, the DIVERSIFIED GROWTH FUND, and the GROWTH &
INCOME FUND
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may invest in lower-quality, high-yielding debt securities. Lower-rated debt
securities (commonly called "junk bonds") are considered to be of poor standing
and predominantly speculative. Securities in the lowest rating categories may
have extremely poor prospects of attaining any real investment standing, and
some of those securities in which a Fund may invest may be in default. The
rating services' descriptions of securities in the lower rating categories,
including their speculative characteristics, are set forth in the Statement of
Additional Information.
Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. In addition, the
lower ratings of such securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the ability or perceived inability of an issuer to make payments of interest and
principal may also affect the value of these investments. See the Statement of
Additional Information.
Each of the other Funds will invest only in securities rated "investment
grade" or considered by Robertson Stephens Investment Management to be of
comparable quality. Investment grade securities are rated Baa or higher by
Moody's Investors Service, Inc. or BBB or higher by Standard & Poor's.
Securities rated Baa or BBB lack outstanding investment characteristics, have
speculative characteristics, and are subject to greater credit and market risks
than higher-rated securities. Descriptions of the securities ratings assigned by
Moody's and Standard & Poor's are described in the Statement of Additional
Information.
Any of the Funds may at times invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity rather than at intervals
during the life of the security. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash or in
additional bonds. The values of zero-coupon bonds and payment-in-kind bonds are
subject to greater fluctuation in response to changes in market interest rates
than bonds which pay interest currently, and may involve greater credit risk
than such bonds.
A Fund will not necessarily dispose of a security when its debt rating is
reduced below its rating at the time of purchase, although Robertson Stephens
Investment Management will monitor the investment to determine whether continued
investment in the security will assist in meeting the Fund's investment
objective. If a security's rating is reduced below investment grade, an
investment in that security may entail the risks of lower-rated securities
described below.
BORROWING AND LEVERAGE. THE CONTRARIAN FUND-TM- and the DEVELOPING
COUNTRIES FUND may borrow money to invest in additional portfolio securities.
This practice, known as "leverage," increases a Fund's market exposure and its
risk. When a Fund has borrowed money for leverage and its investments increase
or decrease in value, the Fund's net asset value will normally increase or
decrease more than if it had not borrowed money. The interest the Fund must pay
on borrowed money will reduce the amount of any potential gains or increase any
losses. The extent to which a Fund will borrow money, and the amount it may
borrow, depend on market conditions and interest rates. Successful use of
leverage depends on Robertson Stephens Investment Management's ability to
predict market movements correctly. A Fund may at times borrow money by means of
reverse repurchase agreements. Reverse repurchase agreements generally involve
the sale by a Fund of securities held by it and an agreement to repurchase the
securities at an agreed-upon price, date, and interest payment. Reverse
repurchase agreements will increase a Fund's overall investment exposure and may
result in losses. The amount of money borrowed by a Fund for leverage may
generally not exceed one-third of the Fund's assets (including the amount
borrowed).
OPTIONS AND FUTURES. A Fund may buy and sell call and put options to hedge
against
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changes in net asset value or to attempt to realize a greater current return. In
addition, through the purchase and sale of futures contracts and related
options, a Fund may at times seek to hedge against fluctuations in net asset
value and to attempt to increase its investment return.
A Fund's ability to engage in options and futures strategies will depend on
the availability of liquid markets in such instruments. It is impossible to
predict the amount of trading interest that may exist in various types of
options or futures contracts. Therefore, there is no assurance that a Fund will
be able to utilize these instruments effectively for the purposes stated above.
Options and futures transactions involve certain risks which are described below
and in the Statement of Additional Information.
Transactions in options and futures contracts involve brokerage costs and
may require a Fund to segregate assets to cover its outstanding positions. For
more information, see the Statement of Additional Information.
INDEX FUTURES AND OPTIONS. A Fund may buy and sell index futures contracts
("index futures") and options on index futures and on indices (or may purchase
investments whose values are based on the value from time to time of one or more
securities indices) for hedging purposes. An index future is a contract to buy
or sell units of a particular bond or stock index at an agreed price on a
specified future date. Depending on the change in value of the index between the
time when the Fund enters into and terminates an index futures or option
transaction, the Fund realizes a gain or loss. A Fund may also buy and sell
index futures and options to increase its investment return.
LEAPS AND BOUNDS. The VALUE + GROWTH FUND may purchase long-term
exchange-traded equity options called Long-Term Equity Anticipation Securities
("LEAPs") and Buy-Write Options Unitary Derivatives ("BOUNDs"). LEAPs provide a
holder the opportunity to participate in the underlying securities' appreciation
in excess of a fixed dollar amount, and BOUNDs provide a holder the opportunity
to retain dividends on the underlying securities while potentially participating
in the underlying securities' capital appreciation up to a fixed dollar amount.
The VALUE + GROWTH FUND will not purchase these options with respect to more
than 25% of the value of its net assets.
RISKS RELATED TO OPTIONS AND FUTURES STRATEGIES. Options and futures
transactions involve costs and may result in losses. Certain risks arise because
of the possibility of imperfect correlations between movements in the prices of
futures and options and movements in the prices of the underlying security or
index or of the securities held by a Fund that are the subject of a hedge. The
successful use by a Fund of the strategies described above further depends on
the ability of Robertson Stephens Investment Management to forecast market
movements correctly. Other risks arise from a Fund's potential inability to
close out futures or options positions. Although a Fund will enter into an
option or futures transaction only if Robertson Stephens Investment Management
believes that a liquid secondary market exists for such option or futures
contract, there can be no assurance that a Fund will be able to effect closing
transactions at any particular time or at an acceptable price. Certain
provisions of the Internal Revenue Code may limit a Fund's ability to engage in
options and futures transactions.
Each Fund expects that its options and futures transactions generally will
be conducted on recognized exchanges. A Fund may in certain instances purchase
and sell options in the over-the-counter markets. A Fund's ability to terminate
options in the over-the-counter markets may be more limited than for
exchange-traded options, and such transactions also involve the risk that
securities dealers participating in such transactions would be unable to meet
their obligations to the Fund. A Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of Robertson Stephens Investment Management, the
pricing mechanism and liquidity of the over-the-counter markets are satisfactory
and the participants are responsible parties likely to meet their obligations.
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A Fund will not purchase futures or options on futures or sell futures if,
as a result, the sum of the initial margin deposits on the Fund's existing
futures positions and premiums paid for outstanding options on futures contracts
would exceed 5% of the Fund's assets. (For options that are "in-the-money" at
the time of purchase, the amount by which the option is "in-the-money" is
excluded from this calculation.)
NON-DIVERSIFICATION AND SECTOR CONCENTRATION. THE CONTRARIAN FUND-TM-, the
DEVELOPING COUNTRIES FUND, the GLOBAL VALUE FUND, and the PARTNERS FUND are
"non-diversified" investment companies, and may invest their assets in a more
limited number of issuers than may other investment companies. Under the
Internal Revenue Code, an investment company, including a non-diversified
investment company, generally may not invest more than 25% of its assets in
obligations of any one issuer other than U.S. Government obligations and, with
respect to 50% of its total assets, a Fund may not invest more than 5% of its
total assets in the securities of any one issuer (except U.S. Government
securities). Thus, each of those Funds may invest up to 25% of its total assets
in the securities of each of any two issuers. This practice involves an
increased risk of loss to a Fund if the market value of a security should
decline or its issuer were otherwise not to meet its obligations.
At times a Fund may invest more than 25% of its assets in securities of
issuers in one or more market sectors such as, for example, the technology
sector. A market sector may be made up of companies in a number of related
industries. A Fund would only concentrate its investments in a particular market
sector if Robertson Stephens Investment Management were to believe the
investment return available from concentration in that sector justifies any
additional risk associated with concentration in that sector. When a Fund
concentrates its investments in a market sector, financial, economic, business,
and other developments affecting issuers in that sector will have a greater
effect on the Fund than if it had not concentrated its assets in that sector.
Currently, THE CONTRARIAN FUND-TM- has invested a significant portion of its
assets in companies within a number of industries involving base metals,
precious metals, and oil/energy. In addition, a number of the Funds have
invested, and may continue to invest, a significant portion of their assets in
companies in the technology and telecommunications sectors. Accordingly, the
performance of these Funds may be subject to a greater risk of market
fluctuation than that of a fund invested in a wider spectrum of market or
industrial sectors.
SECURITIES LOANS AND REPURCHASE AGREEMENTS. Each of the Funds may lend
portfolio securities to broker-dealers and may enter into repurchase agreements.
These transactions must be fully collateralized at all times, but involve some
risk to a Fund if the other party should default on its obligations and the Fund
is delayed or prevented from recovering the collateral.
DEFENSIVE STRATEGIES. At times, Robertson Stephens Investment Management
may judge that market conditions make pursuing a Fund's basic investment
strategy inconsistent with the best interests of its shareholders. At such
times, Robertson Stephens Investment Management may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the values of the
Fund's assets. In implementing these "defensive" strategies, a Fund may invest
in U.S. Government securities, other high-quality debt instruments, and other
securities Robertson Stephens Investment Management believes to be consistent
with the Fund's best interests.
PORTFOLIO TURNOVER. The length of time a Fund has held a particular
security is not generally a consideration in investment decisions. The
investment policies of a Fund may lead to frequent changes in the Fund's
investments, particularly in periods of volatile market movements. A change in
the securities held by a Fund is known as "portfolio turnover." Portfolio
turnover generally involves some expense to a Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestment in other securities. Such sales may result in
realization of taxable capital gains. The Portfolio turnover rates for the Funds
are set forth under "Financial Highlights," beginning on page of this
Prospectus.
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MANAGEMENT OF THE FUNDS
The Trustees of the Trust are responsible for generally overseeing the
conduct of the Trust's business. Robertson, Stephens & Company Investment
Management, L.P., 555 California Street, San Francisco, CA 94104, is the
investment adviser for each of the Funds other than the Emerging Growth Fund.
Robertson, Stephens & Company Investment Management, L.P., a California limited
partnership, was formed in 1993. The general partner of Robertson, Stephens &
Company Investment Management, L.P. is Robertson, Stephens & Company, Inc.
Robertson, Stephens & Company LLC is the Funds' distributor and a major
investment banking firm specializing in emerging growth companies that has
developed substantial investment research, underwriting, and venture capital
expertise. Since 1978, Robertson, Stephens & Company LLC has managed
underwritten public offerings for over $15.23 billion of securities of emerging
growth companies. Robertson, Stephens & Company Investment Management, L.P. and
its affiliates have in excess of $3.4 billion under management in public and
private investment funds. Robertson, Stephens & Company LLC, its managing
member, Robertson, Stephens & Company, Inc., Sanford R. Robertson, and Paul H.
Stephens may be deemed to be control persons of Robertson, Stephens & Company
Investment Management, L.P.
Robertson Stephens Investment Management, Inc., 555 California Street, San
Francisco, CA 94104 is the investment adviser for the Emerging Growth Fund.
Robertson Stephens Investment Management, Inc., an indirect wholly-owned
subsidiary of Robertson, Stephens & Company LLC, commenced operations in March
1986.
Subject to such policies as the Trustees may determine, Robertson Stephens
Investment Management furnishes a continuing investment program for the Funds
and makes investment decisions on their behalf pursuant to Investment Advisory
Agreements with each Fund. Robertson Stephens Investment Management is also
responsible for overall management of the Funds' business affairs, subject to
the authority of the Board of Trustees, and for providing office space and
officers for the Trust. The Trust pays all expenses not assumed by Robertson
Stephens Investment Management including, among other things, Trustees' fees,
auditing, accounting, legal, custodial, investor servicing, and shareholder
reporting expenses, and payments under the Funds' Distribution Plans.
Robertson Stephens Investment Management places all orders for purchases and
sales of the Funds' investments. In selecting broker-dealers, Robertson Stephens
Investment Management may consider research and brokerage services furnished to
it and its affiliates. Robertson, Stephens & Company LLC may receive brokerage
commissions from the Funds in accordance with procedures adopted by the Trustees
under the Investment Company Act of 1940 which require periodic review of these
transactions. Subject to seeking the most favorable price and execution
available, Robertson Stephens Investment Management may consider sales of shares
of the Funds as a factor in the selection of broker-dealers.
Robertson Stephens Investment Management may at times bear certain expenses
of the Funds. The Investment Advisory Agreements between each of the Diversified
Growth Fund, the Global Low-Priced Stock Fund, the Global Natural Resources
Fund, the Global Value Fund, the Growth & Income Fund, The Information Age
Fund-TM-, the MicroCap Growth Fund, the Partners Fund, and the Value + Growth
Fund, and Robertson Stephens Investment Management permit Robertson Stephens
Investment Management to seek reimbursement for those expenses within the
succeeding two-year period, subject to any expense limitations then applicable
to the Fund in question.
ADMINISTRATIVE SERVICES. Each of the Diversified Growth, Growth & Income,
Global Low-Priced Stock, Global Natural Resources, Global Value, Information
Age-TM- and MicroCap Growth Funds has entered into an agreement with Robertson
Stephens Investment Management pursuant to which Robertson Stephens Investment
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Management provides administrative services to the Fund. Each Fund pays
Robertson Stephens Investment Management a fee for such services
at the annual rate of 0.25% of its average daily net assets.
PORTFOLIO MANAGERS
Paul H. Stephens has served as The Contrarian Fund's-TM- portfolio manager
since its inception in June 1993. He is a founder of Robertson, Stephens &
Company LLC. In addition to managing public investment portfolios for
individuals since 1975, Mr. Stephens has acted as the firm's Chief Investment
Officer since 1978. He holds a B.S. and an M.B.A. from the University of
California at Berkeley.
James Callinan is responsible for managing the Emerging Growth Fund's
portfolio. Mr. Callinan has more than nine years of investment research and
management experience. From 1986 until June 1996, Mr. Callinan was employed by
Putnam Investments, where, beginning in June 1994, he served as portfolio
manager of the Putnam OTC Emerging Growth Fund. Mr. Callinan received an A.B. in
economics from Harvard College, an M.S. in accounting from New York University,
and an M.B.A. from Harvard Business School, and is a Chartered Financial
Analyst.
Ronald E. Elijah has managed the Value + Growth Fund's portfolio since that
Fund's inception in April 1992. Mr. Elijah is also the portfolio manager for The
Information Age Fund-TM-. From August 1985 to January 1990, Mr. Elijah was a
securities analyst for Robertson, Stephens & Company LLC. From January 1990 to
January 1992, Mr. Elijah was an analyst and portfolio manager for Water Street
Capital, which managed short selling investment funds. He holds a master's
degree in economics from Humboldt State University and an M.B.A. with an
emphasis in finance from Golden Gate University.
David Evans is responsible for managing the portfolio of the MicroCap Growth
Fund. Mr. Evans has more than fifteen years of investment research and
management experience, and has been a part of the management team at Robertson
Stephens Investment Management since 1989. Mr. Evans was an analyst and
portfolio manager at CIGNA before joining Robertson Stephens Investment
Management. He holds a B.A. from Muskingum College and an M.B.A. from the
Wharton School of the University of Pennsylvania.
Michael Hoffman has been responsible for managing the Developing Countries
Fund's portfolio since that Fund's inception in April 1994. From August 1990 to
April 1994, Mr. Hoffman was a portfolio manager with CIGNA International
Investment Advisors, where he managed four portfolios with net assets ranging
from $25 million to $100 million. He holds a B.S. from Pennsylvania State
University and a master's degree in international business from the University
of South Carolina.
Andrew P. Pilara, Jr. has been responsible for managing the Partners Fund
since the Fund's inception in July 1995 and is responsible for managing the
Global Natural Resources and Global Value Funds. Since August 1993 he has been a
member of The Contrarian Fund-TM- management team. Mr. Pilara has been involved
in the securities business for over 25 years, with experience in portfolio
management, research, trading, and sales. Prior to joining Robertson, Stephens &
Company Investment Management, L.P., he was president of Pilara Associates, an
investment management firm he established in 1974. He holds a B.A. in economics
from St. Mary's College.
M. Hannah Sullivan is responsible for managing the Global Low-Priced Stock
Fund. Since April 1992, she has been a member of the management team for The
Contrarian Fund-TM-. She holds a B.A. in Spanish literature from Cornell
University and an M.B.A. from the University of California at Berkeley.
John L. Wallace has been responsible for managing the Growth & Income Fund
since its
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inception in July 1995 and is responsible for managing the Diversified Growth
Fund. Prior to joining Robertson, Stephens & Company Investment Management,
L.P., Mr. Wallace was Vice President of Oppenheimer Management Corp., where he
was portfolio manager of the Oppenheimer Main Street Income & Growth Fund. He
holds a B.A. from the University of Idaho and an M.B.A. from Pace University.
Prior to joining Robertson Stephens Investment Management, Mr. Wallace was
Vice President of OppenheimerFunds, Inc., where he was portfolio manager of the
Oppenheimer Main Street Income & Growth Fund (the "Main Street Fund") from 1991
through June 1995 and of the Oppenheimer Total Return Fund (the "Total Return
Fund") from 1990 through June 1995. The table on the following page shows the
average annual total return of the Class A shares of each of the Main Street
Fund and the Total Return Fund during those periods as reported by Lipper
Analytical Services, Inc. It also reflects the return on the Standard & Poor's
500 Composite Stock Price Index over the same periods. The Main Street Fund and
the Total Return Fund are managed by OppenheimerFunds, Inc.
Robertson Stephens & Company believes that the investment objectives and
policies of the Main Street Fund and the Total Return Fund during the periods
when Mr. Wallace served as portfolio manager to those funds were substantially
similar to those of the Growth & Income Fund, although they differ in certain
respects. For example, neither the Main Street Fund nor the Total Return Fund
states as one of its investment policies that it will focus on securities of
small- and mid-cap companies, nor may either of those Funds sell securities
short.
The expenses of each of the Main Street Fund and the Total Return Fund
differ from those of the Growth & Income Fund, which affects their performance.
For example, the Main Street Fund currently pays investment advisory fees at the
following annual rate: 0.65% of the first $200 million of the Fund's net assets,
0.60% of the next $150 million, 0.55% of the next $150 million, and 0.45% of its
average net assets in excess of $500 million; the Total Return Fund currently
pays investment advisory fees at the following annual rate: 0.75% of the first
$100 million of the Fund's net assets, 0.70% of the next $100 million, 0.65% of
the next $100 million, 0.60% of the next $100 million, 0.55% of the next $100
million, and 0.50% of its average net assets in excess of $500 million. The
Growth & Income Fund pays investment advisory fees at an annual rate of 1% of
the Fund's average daily net assets, and administrative fees at an annual rate
of 0.25% of the Fund's average daily net assets. Other expenses incurred by the
Funds also differ. See "Expense Summary" above for information regarding an
expense limitation currently in effect for the Growth & income Fund. The
performance information shown below does not reflect the deduction of any
initial sales charge imposed on sales of Class A shares of the Main Street Fund
or of the Total Return Fund.
<TABLE>
<CAPTION>
STANDARD &
MAIN TOTAL POOR'S 500
STREET RETURN (DIVIDENDS
FUND FUND REINVESTED)
<S> <C> <C> <C>
- ----------------------------------------------------
One year ending
June 30, 1995 20.52% 15.82% 25.95%
- ----------------------------------------------------
Three years
ending
June 30, 1995 26.67% 14.53% 13.21%
- ----------------------------------------------------
Five years ending
June 30, 1995 -- 16.73% 12.05%
- ----------------------------------------------------
Period from
1/1/90
to 6/30/95 -- 12.33% 11.51%
- ----------------------------------------------------
Period from
1/1/91
to 6/30/95 31.16% -- 15.06%
- ----------------------------------------------------
</TABLE>
The average annual total return of the Growth & Income Fund for the period
from commencement of its operations on July 12, 1995 through December 31, 1996
was 25.38%, and for the one-year period ending on December 31, 1996 was 24.16%.
The return on the Standard &
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Poor's 500 Composite Stock Price Index (dividends reinvested) for those periods
was 23.64% and 22.99%, respectively.
Class A shares of the Main Street Fund and of the Total Return Fund are
currently sold subject to a 5.75% initial sales charge. The table below shows
the performance information for each of those Funds adjusted to reflect the
deduction of that sales charge at the commencement of the periods shown.
<TABLE>
<CAPTION>
MAIN TOTAL
STREET RETURN
FUND FUND
<S> <C> <C>
- ----------------------------------------------------
One year ending
June 30, 1995 13.59% 9.16%
- ----------------------------------------------------
Three years ending
June 30, 1995 24.19% 12.29%
- ----------------------------------------------------
Five years ending
June 30, 1995 -- 15.35%
- ----------------------------------------------------
Period from 1/1/90
to 6/30/95 -- 11.12%
- ----------------------------------------------------
Period from 1/1/91
to 6/30/95 29.45% --
- ----------------------------------------------------
</TABLE>
THE PERFORMANCE INFORMATION FOR THE MAIN STREET FUND AND THE TOTAL RETURN
FUND DOES NOT REPRESENT THE INVESTMENT PERFORMANCE OF THE GROWTH & INCOME FUND,
NOR SHOULD IT BE CONSIDERED A PREDICTION OF THE GROWTH & INCOME FUND'S FUTURE
PERFORMANCE. THE GROWTH & INCOME FUND'S PERFORMANCE MAY BE HIGHER OR LOWER THAN
THE PERFORMANCE OF THE MAIN STREET FUND OR THE TOTAL RETURN FUND FOR THE PERIODS
SHOWN. FOR INFORMATION CONCERNING THE INVESTMENT PERFORMANCE OF THE GROWTH &
INCOME FUND THROUGH DECEMBER 31, 1996, SEE "FINANCIAL HIGHLIGHTS," ABOVE.
NEITHER ROBERTSON STEPHENS INVESTMENT MANAGEMENT NOR ROBERTSON STEPHENS &
COMPANY HAS INDEPENDENTLY VERIFIED THE ACCURACY OF THE PERFORMANCE INFORMATION
PRESENTED FOR THE MAIN STREET FUND OR THE TOTAL RETURN FUND.
HOW TO PURCHASE SHARES (CLASS A SHARES ONLY)
Currently, your minimum initial investment is $5,000 ($1,000 for IRA and for
gift/transfer-to-minor accounts), and your subsequent investments must be at
least $100 ($1 for IRA). You may obtain an Application by calling the Funds at
1-800-766-FUND, or by writing to Robertson, Stephens & Company LLC at 555
California Street, San Francisco, CA 94104.
INITIAL INVESTMENTS
- -------------------------------------
You may make your initial investment by mail or by wire transfer as
described below.
BY MAIL: Send a completed Application, together with a check made payable
to the Fund in which you intend to invest (or, if you are investing in more than
one Fund, make your check payable to Robertson, Stephens & Company), to the
Funds' Transfer Agent: State Street Bank and Trust Company c/o National
Financial Data Services, P.O. Box 419717, Kansas City, MO 64141.
BY OVERNIGHT MAIL: Send the information described above to: 1004 Baltimore
Avenue., Dwight Building, Second Floor, Kansas City, MO 64105.
BY WIRE:
(1) Telephone National Financial Data Services at 1-800-272-6944. Indicate the
name(s) to be used on the account registration, the mailing address, your
social security or tax ID number, the amount being wired, the name of your
wiring bank, and the name and telephone number of a contact person at the
wiring bank.
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(2) Then instruct your bank to wire the specified amount, along with your
account name and number to:
State Street Bank and Trust Company
ABA# 011 000028
Attn.: Custody
DDA# 99047177
225 Franklin Street
Boston, MA 02110
Credit: [Name of Fund]
For further credit:
---------------------------------------------
(Shareholder's name)
---------------------------------------------
(Shareholder's account #)
(3) At the same time, you MUST mail a completed and signed Application to: State
Street Bank and Trust Company, c/o National Financial Data Services, P.O.
Box 419717, Kansas City, MO 64141. Please include your account number on the
Application.
You also may purchase and sell shares through certain securities brokers.
Such brokers may charge you a transaction fee for this service; account options
available to clients of securities brokers, including arrangements regarding the
purchase and sale of Fund shares, may differ from those available to persons
investing directly in the Funds. The Funds, Robertson Stephens Investment
Management, or Robertson, Stephens & Company LLC, the Funds' distributor, may,
in their discretion, pay such brokers for shareholder, subaccounting, and other
services.
SUBSEQUENT INVESTMENTS
- -------------------------------------
After your account is open, you may invest by mail, telephone, or wire at
any time. Please include your name and account number on all checks and wires.
Please use separate checks or wires for investments to separate accounts.
AUTOBUY: The Autobuy option allows shareholders to purchase shares by
moving money directly from their checking account to a Robertson Stephens fund.
If you have established the Autobuy option, you may purchase additional shares
in an existing account by calling the Transfer Agent at 1-800-272-6944 and
instructing the Transfer Agent as to the dollar amount you wish to invest. The
investment will automatically be processed through the Automatic Clearing House
(ACH) system. There is no fee for this option. If you did not establish this
option at the time you opened your account, send a letter of instruction, along
with a voided check, to the Transfer Agent.
OTHER INFORMATION
ABOUT PURCHASING SHARES
- -------------------------------------
All purchases of the Funds' shares are subject to acceptance by a Fund and
are not binding until accepted and shares are issued. Your signed and completed
Application (for initial investments) or account statement stub (for subsequent
investments) and full payment, in the form of either a wire transfer or a check,
must be received and accepted by a Fund before any purchase becomes effective.
Purchases of Fund shares are made at the net asset value next determined after
the purchase is accepted. See "How Net Asset Value Is Determined." Please
initiate any wire transfer early in the morning to ensure that the wire is
received by a Fund before 4:00 p.m. eastern time.
All purchases must be made in U.S. dollars, and checks should be drawn on
banks located in the U.S. If your purchase of shares is canceled due to
non-payment or because a check does not clear, you will be held responsible for
any loss incurred by the Funds or the Transfer Agent. Each Fund can redeem
shares to reimburse it or the Transfer Agent for any such loss.
Each Fund reserves the right to reject any purchase, in whole or in part,
and to suspend the offering of its shares for any period of time and to change
or waive the minimum investment amounts specified in this Prospectus.
No share certificates will be issued, except that certificates for shares of
the Emerging Growth Fund will be issued upon written request to the Transfer
Agent.
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EXCHANGE PRIVILEGE
- -------------------------------------
Shares of one Fund may be exchanged for Class A shares of another Fund.
Exchanges of shares will be made at their relative net asset values. Shares may
be exchanged only if the amount being exchanged satisfies the minimum investment
required and the shareholder is a resident of a state where shares of the
appropriate Fund are qualified for sale. However, you may not exchange your
investment in shares of any Fund more than four times in any twelve-month period
(including the initial exchange of your investment from that Fund during the
period, and subsequent exchanges of that investment from other Funds during the
same twelve-month period).
Investors should note that an exchange will result in a taxable event.
Exchange privileges may be terminated, modified, or suspended by a Fund upon 60
days prior notice to shareholders.
Unless you have indicated that you do not wish to establish telephone
exchange privileges (see the Account Application or call the Funds for details),
you may make exchanges by telephone.
HOW TO REDEEM SHARES (CLASS A SHARES ONLY)
REDEMPTIONS BY MAIL
- -------------------------------------
You may redeem your shares of a Fund by mailing a written request for
redemption to the Transfer Agent that:
(1) states the number of shares or dollar amount to be redeemed;
(2) identifies your account number; and
(3) is signed by you and all other owners of the account exactly as their names
appear on the account.
If you request that the proceeds from your redemption be sent to you at an
address other than your address of record, or to another party, you must include
a signature guarantee for each such signature by an eligible signature
guarantor, such as a member firm of a national securities exchange or a
commercial bank or trust company located in the United States. If you are a
resident of a foreign country, another type of certification may be required.
Please contact the Transfer Agent for more details. Corporations, fiduciaries,
and other types of shareholders may be required to supply additional documents
which support their authority to effect a redemption.
REDEMPTIONS BY TELEPHONE
- -------------------------------------
Unless you have indicated you do not wish to establish telephone redemption
privileges (see the Account Application or call the Transfer Agent for details),
you may redeem shares by calling the Transfer Agent at 1-800-272-6944 by 4:00
p.m. New York time on any day the New York Stock Exchange is open for business.
If an account has more than one owner, the Transfer Agent may rely on the
instructions of any one owner. Each Fund employs reasonable procedures in an
effort to confirm the authenticity of telephone instructions. If procedures
established by the Trust are not followed, the Funds and the Transfer Agent may
be responsible for any losses because of unauthorized or fraudulent
instructions. By not declining telephone redemption privileges, you authorize
the Transfer Agent to act upon any telephone instructions it believes to be
genuine (1) to redeem shares from your account and (2) to mail or wire the
redemption proceeds. If you recently opened an account by wire, you cannot
redeem shares by telephone until the Transfer Agent has received your completed
Application.
Telephone redemption is not available for shares held in IRAs. Each Fund may
modify or terminate its telephone redemption services at any time upon 30 days
notice.
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WIRE TRANSFER OF REDEMPTIONS
- -------------------------------------
If your financial institution receives Federal Reserve wires, you may
instruct that your redemption proceeds be forwarded to you by a wire transfer.
Please indicate your financial institution's complete wiring instructions. The
Funds will forward proceeds from telephone redemptions only to the bank account
or Robertson, Stephens & Company LLC brokerage account that you have authorized
in writing. A $9.00 wire fee will be paid either by redeeming shares from your
account or, upon a full redemption, deducting the fee from the proceeds.
AUTOSELL: The Autosell option allows shareholders to redeem shares from
their Robertson Stephens fund accounts and to have the proceeds sent directly to
their checking account. If you have established the Autosell option, you may
redeem shares by calling the Transfer Agent at 1-800-272-6944 and instructing it
as to the dollar amount or number of shares you wish to redeem. The proceeds
will automatically be sent to your bank through the Automatic Clearing House
(ACH) system. There is no fee for this option. If you did not establish this
option at the time you opened your account, send a letter of instruction along
with a voided check to the Transfer Agent.
GENERAL REDEMPTION POLICIES
- -------------------------------------
The redemption price per share is the net asset value per share next
determined after the Transfer Agent receives the request for redemption in
proper form, and each Fund will make payment for redeemed shares within seven
days thereafter. Under unusual circumstances, a Fund may suspend repurchases, or
postpone payment of redemption proceeds for more than seven days, as permitted
by federal securities law. If you purchase shares of a Fund by check (including
certified check) and redeem them shortly thereafter, the Fund will delay payment
of the redemption proceeds for up to fifteen days after the Fund's receipt of
the check or until the check has cleared, whichever occurs first.
You may experience delays in exercising telephone redemptions during periods
of abnormal market activity. Accordingly, during periods of volatile economic
and market conditions, you may wish to consider transmitting redemption orders
to the Transfer Agent by an overnight courier service.
THE FUNDS' DISTRIBUTOR
Shares of the Funds are distributed by Robertson, Stephens & Company LLC.
Robertson, Stephens & Company LLC bears certain expenses related to the
distribution of shares of the Funds, including commissions payable to persons
engaging in the distribution of the shares, advertising expenses, and the costs
of preparing and distributing sales literature incurred in connection with the
offering of the shares.
To compensate Robertson, Stephens & Company LLC for the services it provides
and for the expenses it bears, each Fund has adopted a Distribution Plan
pursuant to Rule 12b-1 under the Investment Company Act of 1940 under which the
Fund pays Robertson, Stephens & Company LLC compensation, accrued daily and paid
monthly, at the annual rate of 0.75% of the Fund's average daily net assets, in
the case of the Contrarian Fund-TM-, and 0.25% of the Fund's average daily net
assets, in the case of each of the other Funds. (The Distribution Plan for the
Developing Countries Fund contemplates that the Fund may make payments at the
annual rate of up to 0.50% of the Fund's average daily net assets, although the
Trustees have currently limited such payments to the annual rate of 0.25% of the
Fund's average daily net assets.) Robertson, Stephens & Company LLC may pay
brokers a commission expressed as a percentage of the purchase price of shares
of the Funds.
Each Fund has agreed to indemnify Robertson, Stephens & Company LLC against
certain liabilities, including liabilities under the Securities Act of 1933, as
amended.
26
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DIVIDENDS, DISTRIBUTIONS, AND TAXES
Each Fund distributes substantially all of its net investment income and net
capital gains to shareholders at least once a year (more often if necessary to
avoid certain excise or income taxes on the Fund). All distributions will be
automatically reinvested in Fund shares unless the shareholder requests cash
payment on at least 10 days prior written notice to the Transfer Agent.
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gains it distributes to
shareholders. A Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxed as such,
regardless of how long you have held your shares. Distributions will be taxable
as described above, whether received in cash or in shares through the
reinvestment of distributions. Early in each year, the Trust will notify you of
the amount and tax status of distributions paid to you by each of the Funds for
the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax adviser to determine the
precise effect of an investment in a Fund on your particular tax situation.
HOW NET ASSET VALUE IS DETERMINED
Each Fund calculates the net asset value of its Class A shares by dividing
the total value of its assets attributable to its Class A shares, less its
liabilities attributable to its Class A shares, by the number of its Class A
shares outstanding. Shares are valued as of the close of regular trading on the
New York Stock Exchange each day the Exchange is open. Portfolio securities for
which market quotations are readily available are stated at market value.
Short-term investments that will mature in 60 days or less are stated at
amortized cost, which approximates market value. All other securities and assets
are valued at their fair values determined in accordance with the guidelines and
procedures adopted by the Trust's Board of Trustees. The net asset value of a
Fund's Class A shares will generally differ from that of its other classes of
shares due to the variance in net income realized by and dividends paid on each
class of shares, and any difference in the expenses of the different classes.
HOW PERFORMANCE IS DETERMINED
Yield and total return data for a Fund's Class A shares may from time to
time be included in advertisements about the Funds. A Fund's "yield" is
calculated by dividing the annualized net investment income per Class A share
during a recent 30-day period by the net asset value per Class A share on the
last day of that period. "Total return" for one-, five-, and ten-year periods,
or for the life of a Fund, through the most recent calendar quarter represents
the average annual compounded rate of return (or, in the case of a period of one
year or less, the actual rate of return) on an investment of $1,000 in the
Fund's Class A shares. Total return may also be presented for other periods.
Quotations of yield or total return for a period when an expense limitation was
in effect will be greater than if the limitation had not been in effect. A
Fund's performance may be compared to various indices. See the Statement of
Additional Information. Information may be presented in advertisements about a
Fund describing the background and professional experience of the Fund's
investment advisor or any portfolio manager.
All data are based on a Fund's past investment results and do not predict
future performance. Investment performance, which will vary, is
27
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based on many factors, including market conditions, the composition of the
Fund's portfolio, and the Fund's investments expenses. Investment performance
also often reflects the risks associated with a Fund's investment objective and
policies. These factors should be considered when comparing a Fund's investment
results to those of other mutual funds and other investment vehicles.
ADDITIONAL INFORMATION
Each Fund is a series of the Trust, which was organized on May 11, 1987
under the laws of The Commonwealth of Massachusetts and is a business entity
commonly known as a "Massachusetts business trust." A copy of the Agreement and
Declaration of Trust, which is governed by Massachusetts law, is on file with
the Secretary of State of The Commonwealth of Massachusetts.
When matters are submitted for shareholder vote, shareholders of each series
will have one vote for each full share owned and proportionate, fractional votes
for fractional shares held. Generally, shares of each series vote separately as
a single series except when required by law or determined by the Board of
Trustees. Each series offered by this Prospectus issues shares of two classes,
Class A shares and Class C shares. The sales charges and other expenses of a
Fund's Class C shares differ from those of its Class A shares, which will affect
performance. Contact RS&Co. for information concerning the Class C shares of any
Fund, at 1-800-766-FUND. Although the Trust is not required to hold annual
shareholder meetings, shareholders have the right to call a meeting to elect or
remove Trustees, or to take other actions as provided in the Agreement and
Declaration of Trust.
State Street Bank and Trust Company, c/o National Financial Data Services,
P.O. Box 419717, Kansas City, Missouri 64141, acts as each Fund's transfer agent
and dividend paying agent. State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, also acts as the custodian of each Fund's
portfolio.
28
<PAGE>
- ----------------------------------------------------
- ----------------------------------------------------
ROBERTSON STEPHENS & COMPANY
BRINGING THE FUND MANAGER TO YOU
ADDRESS
555 California Street
San Francisco, CA 94104
1-800-766-FUND
INVESTMENT ADVISERS
Robertson, Stephens & Company
Investment Management, L.P.
Robertson Stephens Investment
Management, Inc.
555 California Street
San Francisco, CA 94104
1-800-766-3863
DISTRIBUTOR
Robertson, Stephens & Company LLC
555 California Street
San Francisco, CA 94104
1-415-781-9700
TRANSFER AGENT
State Street Bank and Trust Company
c/o National Financial Data Services
P. O. Box 419717
Kansas City, MO 64141
1-800-272-6944
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
San Francisco, CA 94104
LEGAL COUNSEL
Ropes & Gray
Boston, MA 02110
CUSTODIAN
State Street Bank and Trust Company
Boston, MA 02110
No dealer, salesperson, or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund. This Prospectus does not constitute an
offering in any state or jurisdiction in which such offering may not lawfully be
made.
- ---------------------------------------------------
- ---------------------------------------------------
---------------------------------------------------
ROBERTSON
STEPHENS &
COMPANY
--------------------
CLASS A SHARES
PROSPECTUS
April 1, 1997
<PAGE>
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ROBERTSON STEPHENS MUTUAL FUNDS
555 California Street, Suite 2600 PROSPECTUS
San Francisco, CA 94104 CLASS C SHARES
800-270-5829 April 1, 1997
- --------------------------------------------------------------------------------
ROBERTSON STEPHENS INVESTMENT TRUST makes available to investors the
expertise of the investment professionals at Robertson Stephens Investment
Management. The Trust is offering Class C shares of twelve mutual funds by this
Prospectus: The CONTRARIAN FUND-TM-, The Robertson Stephens DEVELOPING COUNTRIES
FUND, The Robertson Stephens DIVERSIFIED GROWTH FUND, The Robertson Stephens
EMERGING GROWTH FUND, The Robertson Stephens GLOBAL LOW-PRICED STOCK FUND, The
Robertson Stephens GLOBAL NATURAL RESOURCES FUND, The Robertson Stephens GLOBAL
VALUE FUND, The Robertson Stephens GROWTH & INCOME FUND, THE INFORMATION AGE
FUND-TM-, The Robertson Stephens MICROCAP GROWTH FUND, The Robertson Stephens
PARTNERS FUND, and The Robertson Stephens VALUE + GROWTH FUND.
THIS PROSPECTUS EXPLAINS CONCISELY THE INFORMATION ABOUT THE TRUST THAT A
PROSPECTIVE INVESTOR SHOULD KNOW BEFORE INVESTING IN THE FUNDS' CLASS C SHARES.
Please read it carefully and keep it for future reference. Investors can find
more detailed information about the Funds in the April 1, 1997 Statement of
Additional Information, as amended from time to time. For a free copy of the
Statement of Additional Information, please call 1-800-270-5829. The Statement
of Additional Information has been filed with the Securities and Exchange
Commission and is available along with other related materials on the Securities
and Exchange Commission's Internet Web site (http://www.sec.gov). The Statement
of Additional Information is incorporated into this Prospectus by reference.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE COMMISSION OR
ANY STATE SECURITIES COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
SHARES OF THE FUND ARE NOT DEPOSITS OR OBLIGATIONS OF, OR GUARANTEED OR ENDORSED
BY, ANY FINANCIAL INSTITUTION, ARE NOT INSURED BY THE FEDERAL DEPOSIT INSURANCE
CORPORATION, THE FEDERAL RESERVE BOARD, OR ANY OTHER AGENCY, AND INVOLVE RISK,
INCLUDING THE POSSIBLE LOSS OF PRINCIPAL.
<PAGE>
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EXPENSE SUMMARY
The following table summarizes an investor's maximum transaction costs from
investing in Class C shares of each of the Funds and expenses each of the Funds
expects to incur in respect of its Class C shares. The Example shows the
cumulative expenses attributable to a $1,000 investment in Class C shares of the
Funds over specified periods.
<TABLE>
<S> <C>
SHAREHOLDER TRANSACTION EXPENSES:
Maximum Sales Load Imposed on Purchases None
Maximum Sales Load Imposed on Reinvested Dividends None
Deferred Sales Load None
Redemption Fee* None
Exchange Fee None
Contingent Deferred Sales Charge 1.0% in the
(as a percentage of the original purchase price) first year,
and
eliminated
thereafter.
</TABLE>
- --------------------------
* A $9.00 FEE IS CHARGED FOR REDEMPTIONS MADE BY BANK WIRE.
<TABLE>
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
GLOBAL
LOW- GLOBAL
CON- DEVELOPING DIVERSIFIED EMERGING PRICED NATURAL GLOBAL GROWTH &
TRARIAN COUNTRIES GROWTH GROWTH STOCK RESOURCES VALUE INCOME
------- --------- ---------- -------- -------- --------- ------ --------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Management Fees 1.50% 1.25% 1.00% 1.00% 1.00% 1.00% 1.00% 1.00%
Rule 12b-1 Expenses 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75% 0.75%
Shareholder Service Fee 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses* 0.21% 0.35%(1) 0.70%(1) 0.35% 0.70%(1) 0.70%(1) 0.70%(1) 0.05%(1)
------- --------- ---------- -------- -------- --------- ------ --------
Total Fund Operating Expenses* 2.71% 2.60%(1) 2.70%(1) 2.35% 2.70%(1) 2.70%(1) 2.70%(1) 2.05%(1)
<CAPTION>
ANNUAL FUND OPERATING EXPENSES
(as a percentage of average net assets)
MICRO VALUE
INFORMATION CAP +
AGE GROWTH PARTNERS GROWTH
----------- -------- -------- ------
<S> <C> <C> <C> <C>
Management Fees 1.00% 1.25% 1.25% 1.00%
Rule 12b-1 Expenses 0.75% 0.75% 0.75% 0.75%
Shareholder Service Fee 0.25% 0.25% 0.25% 0.25%
Other Expenses* 0.78% 0.45%(1) 0.45%(1) 0.26%
----------- -------- -------- ------
Total Fund Operating Expenses* 2.78% 2.70%(1) 2.70%(1) 2.26%
</TABLE>
- ----------------------------------------
(1) REFLECTING VOLUNTARY EXPENSE LIMITATIONS.
* ESTIMATED BASED ON EXPECTED EXPENSES OF CLASS C SHARES.
2
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EXAMPLE
An investment of $1,000 in Class C shares of the Funds would incur the following
expenses, assuming 5% annual return and redemption at the end of each period:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS
----------- -----------
<S> <C> <C>
The Contrarian Fund-TM- $ 37 $ 84
The Developing Countries Fund $ 36 $ 81
The Diversified Growth Fund $ 37 $ 84
The Emerging Growth Fund $ 34 $ 73
The Global Low-Priced Stock Fund $ 37 $ 84
The Global Natural Resources Fund $ 37 $ 84
The Global Value Fund $ 37 $ 84
The Growth & Income Fund $ 31 $ 64
The Information Age Fund-TM- $ 38 $ 86
The MicroCap Growth Fund $ 37 $ 84
The Partners Fund $ 37 $ 84
The Value + Growth Fund $ 33 $ 71
</TABLE>
This information is provided to help investors understand the operating expenses
of the Funds. THE EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
PERFORMANCE. ACTUAL EXPENSES MAY BE MORE OR LESS THAN THOSE SHOWN. Other
Expenses and Total Fund Operating Expenses for the Funds are estimated based on
the expenses the Funds expect to incur with respect to their Class C shares;
they also reflect voluntary expense limitations currently in effect for some of
the Funds. In the absence of those expense limitations, Other Expenses and Total
Fund Operating Expenses, respectively, of those Funds would be as follows:
Developing Countries Fund, 1.20% and 3.45%; Diversified Growth Fund, 0.85% and
2.85%; Global Low-Priced Stock Fund, 1.89% and 3.89%; Global Natural Resources
Fund, 0.91% and 2.91%; Global Value Fund, 0.90% and 2.90%; Growth & Income Fund,
0.51% and 2.51%; MicroCap Growth Fund, 0.60% and 2.85%; and Partners Fund, 0.65%
and 2.90%. The Management Fees paid by the Funds are higher than those paid by
most other mutual funds. Because of Rule 12b-1 fees paid by the Funds, long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales load permitted under applicable broker-dealer sales rules.
3
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INVESTMENT OBJECTIVES AND POLICIES
The Robertson Stephens Mutual Funds are designed to make available to mutual
fund investors the expertise of the investment professionals at Robertson,
Stephens & Company Investment Management, L.P. and Robertson Stephens Investment
Management, Inc. (Robertson, Stephens & Company Investment Management, L.P. and
Robertson Stephens Investment Management, Inc. are referred to collectively in
this Prospectus as "Robertson Stephens Investment Management").
THE FUNDS' INVESTMENT STRATEGIES AND PORTFOLIO INVESTMENTS WILL DIFFER FROM
THOSE OF MOST OTHER MUTUAL FUNDS. ROBERTSON STEPHENS INVESTMENT MANAGEMENT SEEKS
AGGRESSIVELY TO IDENTIFY FAVORABLE SECURITIES, ECONOMIC AND MARKET SECTORS, AND
INVESTMENT OPPORTUNITIES THAT OTHER INVESTORS AND INVESTMENT ADVISERS MAY NOT
HAVE IDENTIFIED. ROBERTSON STEPHENS INVESTMENT MANAGEMENT MAY DEVOTE MORE OF A
FUND'S ASSETS TO PURSUING AN INVESTMENT OPPORTUNITY THAN MANY OTHER MUTUAL FUNDS
MIGHT; IT MAY BUY OR SELL AN INVESTMENT AT TIMES DIFFERENT FROM WHEN MOST OTHER
MUTUAL FUNDS MIGHT DO SO; AND IT MAY SELECT INVESTMENTS FOR THE FUND THAT WOULD
BE INAPPROPRIATE FOR LESS AGGRESSIVE MUTUAL FUNDS. IN ADDITION, UNLIKE MOST
OTHER MUTUAL FUNDS, MANY OF THE FUNDS MAY ENGAGE IN SHORT SALES OF SECURITIES
WHICH INVOLVE SPECIAL RISKS. SEE "OTHER INVESTMENT PRACTICES AND RISK
CONSIDERATIONS," BELOW.
None of the Funds, other than the Growth & Income Fund, invests for current
income. Each of the Funds may hold a portion of its assets in cash or money
market investments.
The investment policies of each Fund may, unless otherwise specifically
stated, be changed by the Trustees of the Trust without shareholder approval, as
may each Fund's investment objective. All percentage limitations on investments
will apply at the time of investment and will not be considered violated unless
an excess or deficiency occurs or exists immediately after and as a result of
the investment. There can, of course, be no assurance that a Fund will achieve
its investment objective.
For a description of certain risks associated with the Funds' investment
practices, see "Other Investment Practices and Risk Considerations," below.
THE CONTRARIAN FUND-TM-
- -------------------------------------
The Contrarian Fund's-TM- investment objective is maximum long-term growth.
Normally, The Contrarian Fund-TM- seeks this growth by aggressive yet flexible
investing worldwide in growing companies that are attractively priced. The
Contrarian Fund-TM- focuses its investments primarily on equity securities of
domestic, multinational, and foreign companies whose potential values generally
have been overlooked by other investors. Such companies include attractively
priced businesses that have not yet been discovered or become popular,
previously unpopular companies with growth potential due to changed
circumstances, companies that have declined in value and no longer command an
investor following, and previously popular companies temporarily out of favor
due to short-term factors.
In implementing its "contrarian" investment strategy, the Fund may take
positions that are different from those taken by other mutual funds. For
example, the Fund may sell the stocks of some issuers short, and may take
positions in options and futures contracts in anticipation of a market decline.
The Fund may also borrow money to purchase additional portfolio securities. The
Fund is a non-diversified mutual fund.
THE DEVELOPING COUNTRIES FUND
- -------------------------------------
The Developing Countries Fund's investment objective is long-term capital
appreciation. The Fund invests primarily in a non-diversified portfolio of
publicly traded developing country equity securities. The Fund may also, to a
lesser degree, invest in private placements of developing country equity
securities.
Developing country equity securities are securities which are principally
traded in the capital markets of a developing country; securities of
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companies that derive at least 50% of their total revenues from either goods
produced or services performed in developing countries or from sales made in
developing countries, regardless of where the securities of such companies are
principally traded; securities of companies organized under the laws of, and
with a principal office in, a developing country; securities of investment
companies (such as country funds) that principally invest in developing country
securities; and American Depository Receipts (ADRs) and Global Depository
Receipts (GDRs) with respect to the securities of such companies. Developing
countries are countries that in the opinion of Robertson Stephens Investment
Management are generally considered to be developing countries by the
international financial community. The Fund will normally invest at least 65% of
its assets in developing country equity securities. The Fund may also borrow
money to purchase additional portfolio securities. The Fund is a non-diversified
mutual fund.
The Developing Countries Fund may invest up to 10% of its total assets in
shares of other investment companies. Such other investment companies would
likely pay expenses similar to those paid by the Fund, including, for example,
advisory and administrative fees. Robertson Stephens Investment Management will
waive its investment advisory fees on the Fund's assets invested in other
open-end investment companies, to the extent of the advisory fees of those
investment companies attributable to the Fund's investment.
In selecting investments for the Fund, Robertson Stephens Investment
Management may consider a number of factors in evaluating potential investments,
including political risks, classic macroeconomic variables, and equity market
valuations. Robertson Stephens Investment Management may also focus on the
quality of a company's management, the company's growth prospects, and the
financial well being of the company. The Developing Countries Fund's investments
generally will reflect a broad cross-section of countries, industries, and
companies in order to limit risk. In situations where the market for a
particular security is determined by Robertson Stephens Investment Management to
be sufficiently liquid, the Fund may engage in short sales.
THE DIVERSIFIED GROWTH FUND
- -------------------------------------
The Diversified Growth Fund's investment objective is to seek long-term
capital growth. In selecting investments for the Fund, Robertson Stephens
Investment Management focuses on small- and mid-cap companies, to create a
portfolio of investments broadly diversified over industry sectors and
companies.
The Fund will invest principally in common and preferred stocks and
warrants. Although the Fund intends to focus on companies with market
capitalizations of up to $3 billion, the Fund will remain flexible and may
invest in securities of larger companies. The Fund may also purchase debt
securities Robertson Stephens Investment Management believes are consistent with
the Fund's investment objective, and may engage in short sales of securities it
expects to decline in price.
Small- and mid-cap companies may present greater opportunities for
investment return than do larger companies, but also involve greater risks. They
may have limited product lines, markets, or financial resources, or may depend
on a limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
than prices of securities of larger, widely traded companies. See "Investments
in smaller companies," below.
THE EMERGING GROWTH FUND
- -------------------------------------
The Emerging Growth Fund's investment objective is capital appreciation. The
Fund invests in an actively managed diversified portfolio of equity securities
(principally common stocks) of emerging growth companies. Emerging growth
companies are companies that, in the opinion of Robertson Stephens Investment
Management, have the potential, based on superior
5
<PAGE>
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products or services, operating characteristics, and financing capabilities, for
more rapid growth than the overall economy.
The Emerging Growth Fund's investments generally are held in a portfolio of
securities of companies in industry segments that are experiencing rapid growth
and in companies with proprietary advantages. Robertson Stephens Investment
Management may consider a number of factors in evaluating potential investments,
including, for example, the rate of earnings growth, the quality of management,
the extent of proprietary operating advantage, the return on equity, and/or the
financial condition of the company.
Smaller companies may present greater opportunities for investment return
than do larger companies, but may also involve greater risks. They may have
limited product lines, markets, or financial resources, or may depend on a
limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
than prices of securities of larger, widely traded companies. See "Investments
in smaller companies," below.
THE GLOBAL LOW-PRICED STOCK FUND
- -------------------------------------
The Global Low-Priced Stock Fund's investment objective is long-term growth.
The Fund intends to invest in "low-priced" stocks (prices no greater than $10
per share) of companies worldwide that have future growth potential, but are
overlooked or underappreciated by other investors.
Robertson Stephens Investment Management believes there are substantial
opportunities to discover and invest in undervalued companies that have
long-term growth prospects. Such companies include attractively priced
businesses that have not yet been discovered by other investors, previously
out-of-favor companies with growth potential due to changing circumstances,
companies that have declined in value and no longer command an investor
following, and companies temporarily out of favor due to short-term factors. In
most cases there will be little coverage by Wall Street analysts of the
companies in which the Fund invests. Institutional ownership will also usually
be limited.
It has been the experience of Robertson Stephens Investment Management that
attractive investment opportunities often exist in companies whose stock price
is $10 or less per share. For many reasons, including limits on purchasing the
stocks "on margin" (with borrowed money), many investors do not buy low-priced
stocks. The result is less competition from other investors, and the potential
that a company's value may not be reflected fully in its stock price.
In selecting securities for the Fund's portfolio, Robertson Stephens
Investment Management uses a "bottom-up" analysis, looking at companies of all
sizes, and in all industries and geographical markets. Robertson Stephens
Investment Management focuses on a company's financial condition, profitability
prospects, and capital needs going forward.
Robertson Stephens Investment Management will likely invest in certain
stocks before other investors recognize their value. The result could be a lack
of stock price movement in the near term. Investors should therefore have a
long-term investment horizon when investing in the Fund.
Although the Fund will seek to invest principally in common stocks, it may
also invest any portion of its assets in preferred stocks, warrants, and debt
securities if Robertson Stephens Investment Management believes they would help
achieve the Fund's objective. The Fund will normally invest substantially all of
its assets in low-priced stocks, and will normally invest in securities of
issuers located in at least three countries, one of which may be the United
States.
Smaller companies may present greater opportunities for investment return
than do larger companies, but may also involve greater risks. They may have
limited product lines, markets, or financial resources, or may depend on a
limited management group. Their securities may trade less frequently and in
limited volume. As a result, the prices of these securities may fluctuate more
6
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than prices of securities of larger, more widely traded companies. See
"Investments in smaller companies," below.
THE GLOBAL NATURAL
RESOURCES FUND
- -------------------------------------
The Global Natural Resources Fund's investment objective is long-term
capital appreciation. The Fund will invest primarily in securities of issuers in
the natural resources industries. The Fund is designed for investors who believe
that investment in securities of such companies provides the opportunity for
capital appreciation, while offering the potential over the long term to limit
the adverse effects of inflation. The Fund may invest in securities of issuers
located anywhere in the world if Robertson Stephens Investment Management
believes they offer the potential for capital appreciation.
Although the Fund will seek to invest principally in common stocks, it may
also invest in preferred stocks, securities convertible into common stocks or
preferred stocks, and warrants to purchase common stocks or preferred stocks.
The Fund will seek to invest in companies with strong potential for earnings
growth, and whose earnings and tangible assets could benefit from accelerating
inflation. Robertson Stephens Investment Management believes that companies in
the natural resources industries with the flexibility to adjust prices or
control operating costs offer attractive opportunities for capital growth when
inflation is rising.
Companies in the natural resources industries include companies that
Robertson Stephens Investment Management considers to be principally engaged in
the discovery, development, production, or distribution of natural resources,
the development of technologies for the production or efficient use of natural
resources, or the furnishing of related supplies or services. Natural resources
include, for example, energy sources, precious metals, forest products, real
estate, nonferrous metals, and other basic commodities.
Companies in the natural resources industries may include, for example:
- Companies that participate in the discovery and development of natural
resources from new or conventional sources.
- Companies that own or produce natural resources such as oil, natural gas,
precious metals, and other commodities.
- Companies that engage in the transportation, distribution, or processing
of natural resources.
- Companies that contribute new technologies for the production or efficient
use of natural resources, such as systems for energy conversion,
conservation, and pollution control.
- Companies that provide related services such as mining, drilling,
chemicals, and related parts and equipment.
A particular company will be considered to be principally engaged in the
natural resources industries if at the time of investment Robertson Stephens
Investment Management determines that at least 50% of the company's assets,
gross income, or net profits are committed to, or derived from, those
industries. A company will also be considered to be principally engaged in the
natural resources industries if Robertson Stephens Investment Management
considers that the company has the potential for capital appreciation primarily
as a result of particular products, technology, patents, or other market
advantages in those industries.
The Fund will normally invest at least 65% of its assets in securities of
companies in the natural resources industries. The Fund may invest the remainder
of its assets in securities of companies in any industry if Robertson Stephens
Investment Management believes they would help achieve the Fund's objective of
long-term capital appreciation. The portion of the Fund's assets invested in
such securities will vary depending on Robertson Stephens Investment
Management's evaluation of economic conditions, inflationary expectations, and
other factors affecting companies in the natural resources industries and other
sectors. The Fund may also sell securities short if it expects their market
price to decline. The Fund
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will normally invest in securities of issuers located in at least three
countries, one of which may be the United States.
Because the Fund's investments are concentrated in the natural resources
industries, the value of its shares will be especially affected by factors
peculiar to those industries and may fluctuate more widely than the value of
shares of a portfolio which invests in a broader range of industries. For
example, changes in commodity prices may affect both the industries which
produce, refine, and distribute them and industries which supply alternate
sources of commodities. In addition, certain of these industries are generally
subject to greater government regulation than many other industries; therefore,
changes in regulatory policies may have a material effect on the business of
companies in these industries.
THE GLOBAL VALUE FUND
- -------------------------------------
The Global Value Fund's investment objective is long-term growth. The Fund
will employ a value methodology to invest in equity securities primarily of
companies with market capitalizations of $1 billion or more. This traditional
value methodology combines Graham & Dodd balance sheet analysis with cash flow
analysis.
In selecting investments for the Fund, Robertson Stephens Investment
Management will:
- Perform fundamental research focusing on business analysis;
- Observe how management allocates capital;
- Strive to understand the unit economics of the business of the company;
- Key on the cash flow rate of return on capital employed;
- Discern the sources and uses of cash;
- Consider how management is compensated; and
- Ask how the stock market is pricing the entire company.
Although the Fund will seek to invest principally in common stocks, it may
also invest in preferred stocks, warrants, and debt securities if Robertson
Stephens Investment Management believes they would help achieve the Fund's
objective. Under normal circumstances, the Fund will invest at least 65% of its
assets in equity securities selected using the value methodology described
above.
The Fund may invest in securities of companies located anywhere in the
world, if Robertson Stephens Investment Management believes they are consistent
with the Fund's investment objective. Under normal circumstances, the Fund's
assets will be invested in securities of issuers located in at least three
countries, one of which may be the United States. The Fund will consider an
issuer of securities to be located in a country if it is organized under the
laws of that country and has a principal office in that country, if it derives
50% or more of its total revenues from business in that country, or if its
equity securities are traded principally on a securities exchange in that
country. The Fund is a non-diversified mutual fund.
THE GROWTH & INCOME FUND
- -------------------------------------
The Growth & Income Fund's investment objective is long-term total return.
The Fund will pursue this objective primarily by investing in equity and debt
securities, focusing on small- and mid-cap companies that offer the potential
for capital appreciation, current income, or both.
The Fund will normally invest the majority of its assets in common and
preferred stocks, convertible securities, bonds, and notes. Although the Fund
intends to focus on companies with market capitalizations of up to $3 billion,
the Fund will remain flexible and may invest in securities of larger companies.
The Fund may also engage in short sales of securities it expects to decline in
price.
Small- and mid-cap companies may present greater opportunities for
investment return than do larger companies, but may also involve greater risks.
They may have limited product lines, markets, or financial resources, or may
depend on a limited management group. Their securities may trade less frequently
and in limited volume. As a result, the prices of these securities
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may fluctuate more than prices of securities of larger, widely traded companies.
See "Investments in smaller companies," below.
THE INFORMATION AGE FUND-TM-
- -------------------------------------
The Information Age Fund's-TM- investment objective is long-term capital
appreciation. The Fund is designed for investors who believe that aggressive
investment in common stocks of companies in the information technology
industries provides significant opportunities for capital appreciation. While
ordinary mutual funds may place some of their investments in securities of
companies in the information technology sector, The Information Age Fund-TM-
focuses its investments in that sector.
Although the Fund will seek to invest principally in common stocks, it may
also invest any portion of its assets in preferred stocks and warrants if
Robertson Stephens Investment Management believes they would help achieve the
Fund's objective. The Fund may also engage in short sales of securities it
expects to decline in price.
Companies in the information technology industries include companies that
Robertson Stephens Investment Management considers to be principally engaged in
the development, production, or distribution of products or services related to
the processing, storage, transmission, or presentation of information or data.
The following examples illustrate the wide range of products and services
provided by these industries:
- Computer hardware and software of any kind, including, for example,
semiconductors, minicomputers, and peripheral equipment.
- Telecommunications products and services.
- Multimedia products and services, including, for example, goods and
services used in the broadcast and media industries.
- Data processing products and services.
- Financial services companies that collect or disseminate market, economic,
and financial information.
A particular company will be considered to be principally engaged in the
information technology industries if at the time of investment Robertson
Stephens Investment Management determines that at least 50% of the company's
assets, gross income, or net profits are committed to, or derived from, those
industries. A company will also be considered to be principally engaged in the
information technology industries if Robertson Stephens Investment Management
considers that the company has the potential for capital appreciation primarily
as a result of particular products, technology, patents, or other market
advantages in those industries. The Fund will normally invest at least 65% of
its assets in securities of companies in the information technology industries.
Because the Fund's investments are concentrated in the information
technology industries, the value of its shares will be especially affected by
factors peculiar to those industries and may fluctuate more widely than the
value of shares of a portfolio which invests in a broader range of industries.
For example, many products and services are subject to risks of rapid
obsolescence caused by technological advances. Competitive pressures may have a
significant effect on the financial condition of companies in the information
technology industries. For example, if information technology continues to
advance at an accelerated rate, and the number of companies and product
offerings continues to expand, these companies could become increasingly
sensitive to short product cycles and aggressive pricing. In addition, many of
the activities of companies in the information technology industries are highly
capital intensive, and it is possible that a company which invests substantial
amounts of capital in the development of new products or services will be unable
to recover its investment or otherwise to meet its obligations.
THE MICROCAP GROWTH FUND
- -------------------------------------
The MicroCap Growth Fund's investment objective is long-term capital
appreciation. The Fund will invest in a diversified portfolio of equity
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securities of "micro-cap" companies that Robertson Stephens Investment
Management believes offer the potential for long-term capital appreciation.
"Micro-cap" companies are companies with market capitalizations of $250
million or less. Robertson Stephens Investment Management seeks to identify
micro-cap companies that have the potential, based on superior or niche products
or services, operating characteristics, management, or other factors, for
long-term capital appreciation. Equity securities in which the Fund may invest
include common stocks, preferred stocks, and warrants, and securities
convertible into common or preferred stocks. Under normal circumstances, the
Fund will invest at least 65% of its assets in securities of companies which
Robertson Stephens Investment Management determines at the time of investment to
be micro-cap companies. The Fund may invest the remainder of its assets in
securities of companies of any size if Robertson Stephens Investment Management
believes such investments are consistent with the Fund's investment objective.
The Fund may also engage in short sales of securities it expects to decline in
price.
Micro-cap and other small companies may offer greater opportunities for
capital appreciation than other companies but may also involve greater risks.
They may have limited product lines, markets, or financial resources, or may
depend on a limited management group. Their securities may trade less frequently
and in limited volume. As a result, the prices of these securities may fluctuate
more sharply than those of other securities, and the Fund may experience
difficulty in establishing or closing out positions in these securities at
prevailing market prices. See "Investments in smaller companies," below.
THE PARTNERS FUND
- -------------------------------------
The Partners Fund's investment objective is long-term growth. The Fund will
employ a value methodology to invest in equity securities primarily of companies
with market capitalizations of up to $1 billion. This traditional value
methodology combines Graham & Dodd balance sheet analysis with cash flow
analysis.
In selecting investments for the Fund, Robertson Stephens Investment
Management will:
- Perform fundamental research focusing on business analysis;
- Observe how management allocates capital;
- Strive to understand the unit economics of the business of the company;
- Key on the cash flow rate of return on capital employed;
- Discern the sources and uses of cash;
- Consider how management is compensated; and
- Ask how the stock market is pricing the entire company.
At times, the Fund may invest all or most of its assets in securities of
U.S. issuers. At other times, the Fund may invest any portion of its assets in
foreign securities, if Robertson Stephens Investment Management believes they
offer attractive investment values.
Small companies may present greater opportunities for investment return than
do larger companies, but may also involve greater risks. They may have limited
product lines, markets, or financial resources, or may depend on a limited
management group. Their securities may trade less frequently and in limited
volume. As a result, the prices of these securities may fluctuate more than
prices of securities of larger, widely traded companies. See "Investments in
smaller companies," below.
Although the Fund will seek to invest principally in common stocks, it may
also invest in preferred stocks, warrants, and debt securities if Robertson
Stephens Investment Management believes they would help achieve the Fund's
objective. The Fund is a non-diversified mutual fund.
THE VALUE + GROWTH FUND
- -------------------------------------
The Value + Growth Fund's investment objective is capital appreciation. The
Fund invests primarily in growth companies with favorable relationships between
price/earnings ratios and growth rates, in sectors offering the potential for
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above-average returns. The Fund may invest in securities of larger or smaller
companies, if Robertson Stephens Investment Management believes they offer the
potential for capital appreciation.
In selecting investments for the Fund, Robertson Stephens Investment
Management's primary emphasis is typically on evaluating a company's management,
growth prospects, business operations, revenues, earnings, cash flows, and
balance sheet in relationship to its share price. Robertson Stephens Investment
Management may select stocks which it believes are undervalued relative to the
current stock price. Undervaluation of a stock can result from a variety of
factors, such as a lack of investor recognition of (1) the value of a business
franchise and continuing growth potential, (2) a new, improved, or upgraded
product, service, or business operation, (3) a positive change in either the
economic or business condition for a company, (4) expanding or changing markets
that provide a company with either new earnings direction or acceleration, or
(5) a catalyst, such as an impending or potential asset sale or change in
management, that could draw increased investor attention to a company. Robertson
Stephens Investment Management also may use similar factors to identify stocks
which it believes to be overvalued, and may engage in short sales of such
securities.
OTHER INVESTMENT PRACTICES AND RISK CONSIDERATIONS
- -------------------------------------
The Funds may also engage in the following investment practices, each of
which involves certain special risks. The Statement of Additional Information
contains more detailed information about these practices (some of which,
including, for example, options and futures contracts, and certain debt
securities, may be considered "derivative" investments), including limitations
designed to reduce these risks.
INVESTMENTS IN SMALLER COMPANIES. Each of the Funds may invest a
substantial portion of its assets in securities issued by small companies. Such
companies may offer greater opportunities for capital appreciation than larger
companies, but investments in such companies may involve certain special risks.
Such companies may have limited product lines, markets, or financial resources
and may be dependent on a limited management group. While the markets in
securities of such companies have grown rapidly in recent years, such securities
may trade less frequently and in smaller volume than more widely held
securities. The values of these securities may fluctuate more sharply than those
of other securities, and a Fund may experience some difficulty in establishing
or closing out positions in these securities at prevailing market prices. There
may be less publicly available information about the issuers of these securities
or less market interest in such securities than in the case of larger companies,
and it may take a longer period of time for the prices of such securities to
reflect the full value of their issuers' underlying earnings potential or
assets.
Some securities of smaller issuers may be restricted as to resale or may
otherwise be highly illiquid. The ability of a Fund to dispose of such
securities may be greatly limited, and a Fund may have to continue to hold such
securities during periods when Robertson Stephens Investment Management would
otherwise have sold the security. It is possible that Robertson Stephens
Investment Management or its affiliates or clients may hold securities issued by
the same issuers, and may in some cases have acquired the securities at
different times, on more favorable terms, or at more favorable prices, than a
Fund.
SHORT SALES (ALL FUNDS EXCEPT THE EMERGING GROWTH, GLOBAL LOW-PRICED STOCK,
PARTNERS, AND GLOBAL VALUE FUNDS). When Robertson Stephens Investment
Management anticipates that the price of a security will decline, it may sell
the security short and borrow the same security from a broker or other
institution to complete the sale. A Fund may make a profit or incur a loss
depending upon whether the market price of the security decreases or increases
between the date of the short sale and the date on which the Fund must replace
the borrowed security. An increase in the value of a security sold short by a
Fund over the price at which it was sold short will result in a loss to the
Fund, and
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there can be no assurance that a Fund will be able to close out the position at
any particular time or at an acceptable price.
FOREIGN SECURITIES. The Funds may invest in securities principally traded
in foreign markets. Because foreign securities are normally denominated and
traded in foreign currencies, the value of a Fund's assets may be affected
favorably or unfavorably by currency exchange rates and exchange control
regulations. There may be less information publicly available about a foreign
company than about a U.S. company, and foreign companies are not generally
subject to accounting, auditing, and financial reporting standards and practices
comparable to those in the United States. The securities of some foreign
companies are less liquid and at times more volatile than securities of
comparable U.S. companies. Foreign brokerage commissions and other fees are also
generally higher than in the United States. Foreign settlement procedures and
trade regulations may involve certain risks (such as delay in payment or
delivery of securities or in the recovery of a Fund's assets held abroad) and
expenses not present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or expropriation
of assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability, and diplomatic developments that could
affect the value of a Fund's investments in certain foreign countries. Legal
remedies available to investors in certain foreign countries may be more limited
than those available with respect to investments in the United States or in
other foreign countries. In the case of securities issued by a foreign
governmental entity, the issuer may in certain circumstances be unable or
unwilling to meet its obligations on the securities in accordance with their
terms, and a Fund may have limited recourse available to it in the event of
default. The laws of some foreign countries may limit a Fund's ability to invest
in securities of certain issuers located in those foreign countries. Special tax
considerations apply to foreign securities. A Fund may buy or sell foreign
currencies and options and futures contracts on foreign currencies for hedging
purposes in connection with its foreign investments. Except as otherwise
provided in this Prospectus, there is no limit on the amount of a Fund's assets
that may be invested in foreign securities.
Each of the Funds may invest in securities of issuers in developing
countries. Certain Funds may at times invest a substantial portion of their
assets in such securities. Investments in developing countries are subject to
the same risks applicable to foreign investments generally, although those risks
may be increased due to conditions in such countries. For example, the
securities markets and legal systems in developing countries may only be in a
developmental stage and may provide few, or none, of the advantages or
protections of markets or legal systems available in more developed countries.
Although many of the securities in which the Funds may invest are traded on
securities exchanges, they may trade in limited volume, and the exchanges may
not provide all of the conveniences or protections provided by securities
exchanges in more developed markets. The Funds may also invest a substantial
portion of their assets in securities traded in the over-the-counter markets in
such countries and not on any exchange, which may affect the liquidity of the
investment and expose the Funds to the credit risk of their counterparties in
trading those investments. The prices of securities of issuers in developing
countries are subject to greater volatility than those of issuers in many more
developed countries.
DEBT SECURITIES. Each of the Funds may invest in debt securities from time
to time, if Robertson Stephens Investment Management believes investing in such
securities might help achieve the Fund's objective. The Growth & Income,
Partners, and Global Value Funds may invest without limit in debt securities and
other fixed-income securities. Each of the other Funds may invest in debt
securities to the extent consistent with its investment policies, although
Robertson Stephens Investment Management expects that under normal circumstances
those Funds would not likely invest a substantial portion of their assets in
debt securities.
THE CONTRARIAN FUND,-TM- the DIVERSIFIED GROWTH FUND, and the GROWTH &
INCOME FUND
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may invest in lower-quality, high-yielding debt securities. Lower-rated debt
securities (commonly called "junk bonds") are considered to be of poor standing
and predominantly speculative. Securities in the lowest rating categories may
have extremely poor prospects of attaining any real investment standing, and
some of those securities in which a Fund may invest may be in default. The
rating services' descriptions of securities in the lower rating categories,
including their speculative characteristics, are set forth in the Statement of
Additional Information.
Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. In addition, the
lower ratings of such securities reflect a greater possibility that adverse
changes in the financial condition of the issuer, or in general economic
conditions, or both, or an unanticipated rise in interest rates, may impair the
ability of the issuer to make payments of interest and principal. Changes by
recognized rating services in their ratings of any fixed-income security and in
the ability or perceived inability of an issuer to make payments of interest and
principal may also affect the value of these investments. See the Statement of
Additional Information.
Each of the OTHER FUNDS will invest only in securities rated "investment
grade" or considered by Robertson Stephens Investment Management to be of
comparable quality. Investment grade securities are rated Baa or higher by
Moody's Investors Service, Inc. or BBB or higher by Standard & Poor's.
Securities rated Baa or BBB lack outstanding investment characteristics, have
speculative characteristics, and are subject to greater credit and market risks
than higher-rated securities. Descriptions of the securities ratings assigned by
Moody's and Standard & Poor's are described in the Statement of Additional
Information.
Any of the Funds may at times invest in so-called "zero-coupon" bonds and
"payment-in-kind" bonds. Zero-coupon bonds are issued at a significant discount
from face value and pay interest only at maturity rather than at intervals
during the life of the security. Payment-in-kind bonds allow the issuer, at its
option, to make current interest payments on the bonds either in cash or in
additional bonds. The values of zero-coupon bonds and payment-in-kind bonds are
subject to greater fluctuation in response to changes in market interest rates
than bonds which pay interest currently, and may involve greater credit risk
than such bonds.
A Fund will not necessarily dispose of a security when its debt rating is
reduced below its rating at the time of purchase, although Robertson Stephens
Investment Management will monitor the investment to determine whether continued
investment in the security will assist in meeting the Fund's investment
objective. If a security's rating is reduced below investment grade, an
investment in that security may entail the risks of lower-rated securities
described below.
BORROWING AND LEVERAGE. THE CONTRARIAN FUND-TM- and the DEVELOPING
COUNTRIES FUND may borrow money to invest in additional portfolio securities.
This practice, known as "leverage," increases a Fund's market exposure and its
risk. When a Fund has borrowed money for leverage and its investments increase
or decrease in value, the Fund's net asset value will normally increase or
decrease more than if it had not borrowed money. The interest the Fund must pay
on borrowed money will reduce the amount of any potential gains or increase any
losses. The extent to which a Fund will borrow money, and the amount it may
borrow, depend on market conditions and interest rates. Successful use of
leverage depends on Robertson Stephens Investment Management's ability to
predict market movements correctly. A Fund may at times borrow money by means of
reverse repurchase agreements. Reverse repurchase agreements generally involve
the sale by a Fund of securities held by it and an agreement to repurchase the
securities at an agreed-upon price, date, and interest payment. Reverse
repurchase agreements will increase a Fund's overall investment exposure and may
result in losses. The amount of money borrowed by a Fund for leverage may
generally not exceed one-third of the Fund's assets (including the amount
borrowed).
OPTIONS AND FUTURES. A Fund may buy and sell call and put options to hedge
against
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changes in net asset value or to attempt to realize a greater current return. In
addition, through the purchase and sale of futures contracts and related
options, a Fund may at times seek to hedge against fluctuations in net asset
value and to attempt to increase its investment return.
A Fund's ability to engage in options and futures strategies will depend on
the availability of liquid markets in such instruments. It is impossible to
predict the amount of trading interest that may exist in various types of
options or futures contracts. Therefore, there is no assurance that a Fund will
be able to utilize these instruments effectively for the purposes stated above.
Options and futures transactions involve certain risks which are described below
and in the Statement of Additional Information.
Transactions in options and futures contracts involve brokerage costs and
may require a Fund to segregate assets to cover its outstanding positions. For
more information, see the Statement of Additional Information.
INDEX FUTURES AND OPTIONS. A Fund may buy and sell index futures contracts
("index futures")and options on index futures and on indices (or may purchase
investments whose values are based on the value from time to time of one or more
securities indices) for hedging purposes. An index future is a contract to buy
or sell units of a particular bond or stock index at an agreed price on a
specified future date. Depending on the change in value of the index between the
time when the Fund enters into and terminates an index futures or option
transaction, the Fund realizes a gain or loss. A Fund may also buy and sell
index futures and options to increase its investment return.
LEAPS AND BOUNDS. The VALUE + GROWTH FUND may purchase long-term
exchange-traded equity options called Long-Term Equity Anticipation Securities
("LEAPs") and Buy-Write Options Unitary Derivatives ("BOUNDs"). LEAPs provide a
holder the opportunity to participate in the underlying securities' appreciation
in excess of a fixed dollar amount, and BOUNDs provide a holder the opportunity
to retain dividends on the underlying securities while potentially participating
in the underlying securities' capital appreciation up to a fixed dollar amount.
The VALUE + GROWTH FUND will not purchase these options with respect to more
than 25% of the value of its net assets.
RISKS RELATED TO OPTIONS AND FUTURES STRATEGIES. Options and futures
transactions involve costs and may result in losses. Certain risks arise because
of the possibility of imperfect correlations between movements in the prices of
futures and options and movements in the prices of the underlying security or
index or of the securities held by a Fund that are the subject of a hedge. The
successful use by a Fund of the strategies described above further depends on
the ability of Robertson Stephens Investment Management to forecast market
movements correctly. Other risks arise from a Fund's potential inability to
close out futures or options positions. Although a Fund will enter into an
options or futures transaction only if Robertson Stephens Investment Management
believes that a liquid secondary market exists for such option or futures
contract, there can be no assurance that a Fund will be able to effect closing
transactions at any particular time or at an acceptable price. Certain
provisions of the Internal Revenue Code may limit a Fund's ability to engage in
options and futures transactions.
Each Fund expects that its options and futures transactions generally will
be conducted on recognized exchanges. A Fund may in certain instances purchase
and sell options in the over-the-counter markets. A Fund's ability to terminate
options in the over-the-counter markets may be more limited than for
exchange-traded options, and such transactions also involve the risk that
securities dealers participating in such transactions would be unable to meet
their obligations to the Fund. A Fund will, however, engage in over-the-counter
transactions only when appropriate exchange-traded transactions are unavailable
and when, in the opinion of Robertson Stephens Investment Management, the
pricing mechanism and liquidity of the over-the-counter markets are satisfactory
and the participants are responsible parties likely to meet their obligations.
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A Fund will not purchase futures or options on futures or sell futures if,
as a result, the sum of the initial margin deposits on the Fund's existing
futures positions and premiums paid for outstanding options on futures contracts
would exceed 5% of the Fund's assets. (For options that are "in-the-money" at
the time of purchase, the amount by which the option is "in-the-money" is
excluded from this calculation.)
NON-DIVERSIFICATION AND SECTOR CONCENTRATION. THE CONTRARIAN FUND-TM-, the
DEVELOPING COUNTRIES FUND, the GLOBAL VALUE FUND, and the PARTNERS FUND are
"non-diversified" investment companies, and may invest their assets in a more
limited number of issuers than may other investment companies. Under the
Internal Revenue Code, an investment company, including a non-diversified
investment company, generally may not invest more than 25% of its assets in
obligations of any one issuer other than U.S. Government obligations and, with
respect to 50% of its total assets, a Fund may not invest more than 5% of its
total assets in the securities of any one issuer (except U.S. Government
securities). Thus, each of those Funds may invest up to 25% of its total assets
in the securities of each of any two issuers. This practice involves an
increased risk of loss to a Fund if the market value of a security should
decline or its issuer were otherwise not to meet its obligations.
At times a Fund may invest more than 25% of its assets in securities of
issuers in one or more market sectors such as, for example, the technology
sector. A market sector may be made up of companies in a number of related
industries. A Fund would only concentrate its investments in a particular market
sector if Robertson Stephens Investment Management were to believe the
investment return available from concentration in that sector justifies any
additional risk associated with concentration in that sector. When a Fund
concentrates its investments in a market sector, financial, economic, business,
and other developments affecting issuers in that sector will have a greater
effect on the Fund than if it had not concentrated its assets in that sector.
Currently, THE CONTRARIAN FUND-TM- has invested a significant portion of its
assets in companies within a number of industries involving base metals,
precious metals, and oil/energy. In addition, a number of the Funds have
invested, and may continue to invest, a significant portion of their assets in
companies in the technology and telecommunications sectors. Accordingly, the
performance of these Funds may be subject to a greater risk of market
fluctuation than that of a fund invested in a wider spectrum of market or
industrial sectors.
SECURITIES LOANS AND REPURCHASE AGREEMENTS. Each of the Funds may lend
portfolio securities to broker-dealers and may enter into repurchase agreements.
These transactions must be fully collateralized at all times, but involve some
risk to a Fund if the other party should default on its obligations and the Fund
is delayed or prevented from recovering the collateral.
DEFENSIVE STRATEGIES. At times, Robertson Stephens Investment Management
may judge that market conditions make pursuing a Fund's basic investment
strategy inconsistent with the best interests of its shareholders. At such
times, Robertson Stephens Investment Management may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the values of the
Fund's assets. In implementing these "defensive" strategies, a Fund may invest
in U.S. Government securities, other high-quality debt instruments, and other
securities Robertson Stephens Investment Management believes to be consistent
with the Fund's best interests.
PORTFOLIO TURNOVER. The length of time a Fund has held a particular
security is not generally a consideration in investment decisions. The
investment policies of a Fund may lead to frequent changes in the Fund's
investments, particularly in periods of volatile market movements. A change in
the securities held by a Fund is known as "portfolio turnover." Portfolio
turnover generally involves some expense to a Fund, including brokerage
commissions or dealer mark-ups and other transaction costs on the sale of
securities and reinvestment in other securities. Such sales may result in
realization of taxable capital gains. Portfolio turnover rates for each of the
Funds during their fiscal periods ended December 31, 1996 were as follows:
Contrarian Fund, 44%; Developing Countries Fund, 165%; Diversified Growth
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Fund, 69% (5 months); Emerging Growth Fund, 270%; Global Low-Priced Stock Fund,
66%; Global Natural Resources Fund, 82%; Global Value Fund, 100% (estimated for
first fiscal year); Growth & Income Fund, 212%; MicroCap Growth Fund, 22% (5
months); The Information Age Fund-TM-, 452%; Partners Fund, 101%; and
Value+Growth Fund, 221%.
MANAGEMENT OF THE FUNDS
The Trustees of the Trust are responsible for generally overseeing the
conduct of the Trust's business. Robertson, Stephens & Company Investment
Management, L.P., 555 California Street, San Francisco, CA 94104, is the
investment adviser for each of the Funds other than the Emerging Growth Fund.
Robertson, Stephens & Company Investment Management, L.P., a California limited
partnership, was formed in 1993. The general partner of Robertson, Stephens &
Company Investment Management, L.P. is Robertson, Stephens & Company, Inc.
Robertson, Stephens & Company LLC is the Funds' distributor and a major
investment banking firm specializing in emerging growth companies that has
developed substantial investment research, underwriting, and venture capital
expertise. Since 1978, Robertson, Stephens & Company LLC has managed
underwritten public offerings for over $15.23 billion of securities of emerging
growth companies. Robertson, Stephens & Company Investment Management, L.P. and
its affiliates have in excess of $4.1 billion under management in public and
private investment funds. Robertson, Stephens & Company LLC, its managing
member, Robertson, Stephens & Company, Inc., Sanford R. Robertson, and Paul H.
Stephens may be deemed to be control persons of Robertson, Stephens & Company
Investment Management, L.P.
Robertson Stephens Investment Management, Inc., 555 California Street, San
Francisco, CA 94104 is the investment adviser for the Emerging Growth Fund.
Robertson Stephens Investment Management, Inc., an indirect wholly-owned
subsidiary of Robertson, Stephens & Company LLC, commenced operations in March
1986.
Subject to such policies as the Trustees may determine, Robertson Stephens
Investment Management furnishes a continuing investment program for the Funds
and makes investment decisions on their behalf pursuant to Investment Advisory
Agreements with each Fund. Robertson Stephens Investment Management is also
responsible for overall management of the Funds' business affairs, subject to
the authority of the Board of Trustees, and for providing office space and
officers for the Trust. The Trust pays all expenses not assumed by Robertson
Stephens Investment Management including, among other things, Trustees' fees,
auditing, accounting, legal, custodial, investor servicing, and shareholder
reporting expenses, and payments under the Funds' Distribution Plans.
Robertson Stephens Investment Management places all orders for purchases and
sales of the Funds' investments. In selecting broker-dealers, Robertson Stephens
Investment Management may consider research and brokerage services furnished to
it and its affiliates. Robertson, Stephens & Company LLC may receive brokerage
commissions from the Funds in accordance with procedures adopted by the Trustees
under the Investment Company Act of 1940 which require periodic review of these
transactions. Subject to seeking the most favorable price and execution
available, Robertson Stephens Investment Management may consider sales of shares
of the Funds as a factor in the selection of broker-dealers.
Robertson Stephens Investment Management may at times bear certain expenses
of the Funds. The Investment Advisory Agreements between each of the Diversified
Growth Fund, the Global Low-Priced Stock Fund, the Global Natural Resources
Fund, the Global Value Fund, the Growth & Income Fund, The Information Age
Fund-TM-, the MicroCap Growth Fund, the Partners Fund, and the Value + Growth
Fund and Robertson Stephens Investment Management permit Robertson Stephens
Investment Management to seek reimbursement for those expenses within
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the succeeding two-year period, subject to any expense limitations then
applicable to the Fund in question.
ADMINISTRATIVE SERVICES. Each of the Diversified Growth, Growth & Income,
Global Low-Priced Stock, Global Natural Resources, Global Value, Information
Age-TM-, and MicroCap Growth Funds, has entered into an agreement with Robertson
Stephens Investment Management pursuant to which Robertson Stephens Investment
Management provides administrative services to the Fund. Each Fund pays
Robertson Stephens Investment Management a fee for such services at the annual
rate of 0.25% of its average daily net assets.
PORTFOLIO MANAGERS
Paul H. Stephens has served as The Contrarian Fund's-TM- portfolio manager
since its inception in June 1993. He is a founder of Robertson, Stephens &
Company LLC. In addition to managing public investment portfolios for
individuals since 1975, Mr. Stephens has acted as the firm's Chief Investment
Officer since 1978. He holds a B.S. and an M.B.A. from the University of
California at Berkeley.
James Callinan is responsible for managing the Emerging Growth Fund's
portfolio. Mr. Callinan has more than nine years of investment research and
management experience. From 1986 until June 1996, Mr. Callinan was employed by
Putnam Investments, where, beginning in June 1994, he served as portfolio
manager of the Putnam OTC Emerging Growth Fund. Mr. Callinan received an A.B. in
economics from Harvard College, an M.S. in accounting from New York University,
and an M.B.A. from Harvard Business School, and is a Chartered Financial
Analyst.
Ronald E. Elijah has managed the Value + Growth Fund's portfolio since that
Fund's inception in April 1992. Mr. Elijah is also the portfolio manager for the
Information Age Fund.-TM- From August 1985 to January 1990, Mr. Elijah was a
securities analyst for Robertson, Stephens & Company LLC. From January 1990 to
January 1992, Mr. Elijah was an analyst and portfolio manager for Water Street
Capital, which managed short selling investment funds. He holds a master's
degree in economics from Humboldt State University and an M.B.A. with an
emphasis in finance from Golden Gate University.
David Evans is responsible for managing the portfolio of the MicroCap Growth
Fund. Mr. Evans has more than fifteen years of investment research and
management experience, and has been a part of the management team at Robertson
Stephens Investment Management since 1989. Mr. Evans was an analyst and
portfolio manager at CIGNA before joining Robertson Stephens Investment
Management. He holds a B.A. from Muskingum College and an M.B.A. from the
Wharton School of the University of Pennsylvania.
Michael Hoffman has been responsible for managing the Developing Countries
Fund's portfolio since that Fund's inception in April 1994. From August 1990 to
April 1994, Mr. Hoffman was a portfolio manager with CIGNA International
Investment Advisors, where he managed four portfolios with net assets ranging
from $25 million to $100 million. He holds a B.S. from Pennsylvania State
University and a master's degree in international business from the University
of South Carolina.
Andrew P. Pilara, Jr. has been responsible for managing the Partners Fund
since the Fund's inception in July 1995 and is responsible for managing the
Global Natural Resources and Global Value Funds. Since August 1993 he has been a
member of The Contrarian Fund-TM- management team. Mr. Pilara has been involved
in the securities business for over 25 years, with experience in portfolio
management, research, trading, and sales. Prior to joining Robertson, Stephens &
Company Investment Management, L.P., he was president of Pilara Associates, an
investment management firm he established in 1974. He holds a B.A. in economics
from St. Mary's College.
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M. Hannah Sullivan is responsible for managing the Global Low-Priced Stock
Fund. Since April 1992, she has been a member of the management team for The
Contrarian Fund.-TM- She holds a B.A. in Spanish literature from Cornell
University and an M.B.A. from the University of California at Berkeley.
John L. Wallace has been responsible for managing the Growth & Income Fund
since its inception in July 1995 and is responsible for managing the Diversified
Growth Fund. Prior to joining Robertson, Stephens & Company Investment
Management, L.P., Mr. Wallace was Vice President of Oppenheimer Management
Corp., where he was portfolio manager of the Oppenheimer Main Street Income and
Growth Fund. He holds a B.A. from the University of Idaho and an M.B.A. from
Pace University.
HOW TO PURCHASE SHARES
Class C shares of any Fund may be purchased through your financial
institution, which may be a broker-dealer, a bank, or another institution. You
can open an Class C shares account in any Fund with as little as $5,000 ($1,000
for IRA and for gift/transfer-to-minor accounts) and make additional investments
at any time with as little as $100 ($1 for IRAs).
Your financial institution can assist you in establishing your account and
making your investment. Your financial institution is responsible for forwarding
all of the necessary documentation to the Trust, and may charge for its
services. If you do not have a financial institution, Robertson, Stephens & Co.
LLC, the Funds' principal underwriter ("RS&Co."), can refer you to one.
Once you have made the initial minimum investment in a Fund, you can make
regular investments in that Fund of $100 or more on a monthly or quarterly basis
through automatic deductions from your bank checking account. Application forms
are available from your financial institution or through RS&Co.
OTHER INFORMATION
ABOUT PURCHASING SHARES
- -------------------------------------
Each Fund's Class C shares are sold at the Fund's net asset value per share
next determined after the Fund receives your purchase order. In most cases, in
order to receive that day's public offering price, your financial institution
must ensure that the Trust receives your order before the close of regular
trading on the New York Stock Exchange.
CONTINGENT DEFERRED SALES CHARGE. Class C shares are sold without an
initial sales charge, although a contingent deferred sales charge ("CDSC") of
1.00% is imposed on redemptions of such shares within the first year after
purchase. The CDSC will be charged on the lesser of the shares' cost or current
net asset value. Shares acquired by reinvestment of distributions will be
redeemed without a CDSC. In determining whether a CDSC is payable on any
redemption, a Fund will first redeem shares acquired through the reinvestment of
distributions, and then the remaining shares held longest. RS&Co. receives the
entire amount of any CDSC you pay.
REINVESTMENT PRIVILEGE. If you redeem Class C shares of a Fund, you have a
one-time right, within 90 days, to reinvest the redemption proceeds plus the
amount of CDSC you paid, if any, at the next-determined net asset value. RS&Co.
must be notified in writing by you or by your financial institution of the
reinvestment for you to recover the CDSC. If you redeem shares in a Fund, there
may be tax consequences.
GENERAL
- -------------------------------------
If you purchase shares of a Fund by check (including certified check) and redeem
them shortly thereafter, the Fund will delay payment of the redemption proceeds
for up to fifteen days after the Fund's receipt of the check or until the check
has cleared, whichever occurs first.
A Fund may waive the CDSC on Class C shares redeemed by the Trust's current
and retired Trustees (and their families), current and retired employees (and
their families) of RS&Co.,
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Robertson Stephens Investment Management, and their affiliates, registered
representatives and other employees (and their families) of broker-dealers
having sales agreements with RS&Co., employees (and their families) of financial
institutions having sales agreements with RS&Co. (or otherwise having an
arrangement with a broker-dealer or financial institution with respect to sales
of Fund shares), financial institution trust departments investing an aggregate
of $1 million or more in one or more funds in the Robertson Stephens family,
clients of certain administrators of tax-qualified plans, employer-sponsored
retirement plans, and tax-qualified plans when proceeds from repayments of loans
to participants are invested (or reinvested) in the Robertson Stephens Funds. A
Fund may sell shares not subject to any CDSC in connection with the acquisition
by the Fund of assets of an investment company or personal holding company. In
addition, the CDSC may be waived in the case of (i) redemptions of shares held
at the time a shareholder dies or becomes disabled, including the shares of a
shareholder who owns the shares with his or her spouse as joint tenants with
right of survivorship, provided that the redemption is requested within one year
of the death or initial determination of disability; and (ii) redemptions in
connection with the following retirement plan distributions: (a) lump-sum or
other distributions from a qualified retirement plan following retirement; (b)
distributions from an IRA, Keogh Plan, or Custodial Account under Section
403(b)(7) of the Internal Revenue Code following attainment of age 59 1/2; (c) a
tax-free return on an excess contribution to an IRA; and (d) distributions to
make "substantially equal periodic payments" as described in Section 72(t) of
the Internal Revenue Code. The minimum initial investment may be waived for
current and retired Trustees, and current and retired employees of the Trust,
RS&Co., or their affiliates. Contact your financial institution or RS&Co. for
information. If you invest through a broker-dealer or other financial
institution, your broker-dealer or other financial institution will be
responsible for electing on your behalf to take advantage of any of the waivers
described above. Please instruct your broker-dealer or other financial
institution accordingly.
Because of the relatively high cost of maintaining accounts, the Fund
reserves the right to redeem, upon not less than 60 days notice, any Fund
account whose account balance falls below $500 as a result of redemptions. A
shareholder may, however, avoid such a redemption by a Fund by increasing his
investment in shares of the Fund to a value of $500 or more during such 60-day
period.
Each Fund reserves the right to reject any purchase, in whole or in part,
and to suspend the offering of its shares for any period of time and to change
or waive the minimum investment amounts specified in this prospectus. No share
certificates for Class C shares will be issued.
EXCHANGE PRIVILEGE
- -------------------------------------
Except as otherwise described below, you can exchange your shares in any Fund
worth at least $1,000 for Class C shares of the other Robertson Stephens Funds
offering such shares, at net asset value beginning 15 days after purchase. If
you exchange shares subject to a CDSC, the transaction will not be subject to a
CDSC. However, when you redeem the shares acquired through the exchange, the
redemption may be subject to the CDSC, depending upon when you originally
purchased the shares. For purposes of computing the CDSC, the length of time you
have owned your shares will be measured from the date of original purchase and
will not be affected by any exchange.
Shares may be exchanged only if the amount being exchanged satisfies the
minimum investment required and the shareholder is a resident of a state where
shares of the appropriate Fund are qualified for sale. However, you may not
without the consent of RS&Co. exchange your investment in shares of any Fund
more than four times in any twelve-month period (including the initial exchange
of your investment from that Fund during the period, and subsequent exchanges of
that investment from other Funds during the same twelve-month period).
The exchange privilege is not intended as a vehicle for short-term trading.
Excessive exchange activity may interfere with portfolio management and have an
adverse effect on all
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shareholders. In order to limit excessive exchange activity and in other
circumstances where RS&Co. or the Trustees believe doing so would be in the best
interests of the Fund, the Fund reserves the right to revise or terminate the
exchange privilege, limit the amount or number of exchanges, or reject any
exchange. Shareholders would be notified of any such action to the extent
required by law. Consult your financial institution before requesting an
exchange.
Investors should note that an exchange will result in a taxable event.
Exchange privileges may be terminated, modified, or suspended by a Fund upon 60
days prior notice to shareholders.
Unless you have indicated that you do not wish to establish telephone
exchange privileges (see the Account Application or call the Funds for details),
you may make exchanges by telephone.
HOW TO REDEEM SHARES
You can sell your Class C shares in a Fund to that Fund any day the New York
Stock Exchange is open, either through your financial institution or directly to
the Fund. A Fund will only redeem shares for which it has received payment.
SELLING SHARES THROUGH YOUR
FINANCIAL INSTITUTION
- -------------------------------------
Your financial institution and RS&Co. must receive your request before the
close of regular trading on the New York Stock Exchange to receive that day's
net asset value. Your financial institution will be responsible for furnishing
all necessary documentation to RS&Co., and may charge you for its services.
SELLING SHARES DIRECTLY TO A FUND
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BY MAIL. You may redeem your shares of a Fund by mailing a written request
for redemption to National Financial Data Services (the "Transfer Agent") that:
(1) states the number of shares or dollar amount to be redeemed;
(2) identifies your account number; and
(3) is signed by you and all other owners of the account exactly as their names
appear on the account.
If you request that the proceeds from your redemption be sent to you at an
address other than your address of record, or to another party, you must include
a signature guarantee for each such signature by an eligible signature
guarantor, such as a member firm of a national securities exchange or a
commercial bank or trust company located in the United States. If you are a
resident of a foreign country, another type of certification may be required.
Please contact the Transfer Agent for more details at 1-800-272-6944.
Corporations, fiduciaries, and other types of shareholders may be required to
supply additional documents which support their authority to effect a
redemption.
BY TELEPHONE. Unless you have indicated that you do not wish to establish
telephone redemption privileges (see the Account Application or call the
Transfer Agent for details), you may redeem shares by calling the Transfer Agent
at 1-800-272-6944 by 4:00 p.m. New York time on any day the New York Stock
Exchange is open for business.
If an account has more than one owner, the Transfer Agent may rely on the
instructions of any one owner. Each Fund employs reasonable procedures in an
effort to confirm the authenticity of telephone instructions. If procedures
established by the Trust are not followed, the Funds and the Transfer Agent may
be responsible for any losses because of unauthorized or fraudulent
instructions. By not declining telephone redemption privileges, you authorize
the Transfer Agent to act upon any telephone instructions it believes to be
genuine (1) to redeem shares from your account and (2) to mail or wire the
redemption proceeds. If you recently opened an account by wire, you cannot
redeem shares by telephone until the Transfer Agent has received your completed
Application.
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Telephone redemption is not available for shares held in IRAs. Each Fund may
modify or terminate its telephone redemption services at any time upon 30 days
notice.
BY WIRE TRANSFER. If your financial institution receives Federal Reserve
wires, you may instruct that your redemption proceeds be forwarded to your
account with your financial institution or to you by a wire transfer. Please
indicate your financial institution's or your own complete wiring instructions.
The Funds will forward proceeds from telephone redemptions only to the bank or
brokerage account that you have authorized in writing. A $9.00 wire fee will be
paid either by redeeming shares from your account or, upon a full redemption,
deducting the fee from the proceeds.
GENERAL REDEMPTION POLICIES
- -------------------------------------
The redemption price per share is the net asset value per share next
determined after the Transfer Agent receives the request for redemption in
proper form, and each Fund will make payment for redeemed shares within seven
days thereafter. Under unusual circumstances, a Fund may suspend repurchases, or
postpone payment of redemption proceeds for more than seven days, as permitted
by federal securities law. If you purchase shares of a Fund by check (including
certified check) and redeem them shortly thereafter, the Fund will delay payment
of the redemption proceeds for up to fifteen days after the Fund's receipt of
the check or until the check has cleared, whichever occurs first. If you redeem
shares through your financial institution, your financial institution is
responsible for ensuring that the Transfer Agent receives your redemption
request in proper form and at the appropriate time.
You may experience delays in exercising telephone redemptions during periods
of abnormal market activity. Accordingly, during periods of volatile economic
and market conditions, you may wish to consider transmitting redemption orders
to the Transfer Agent by an overnight courier service.
THE FUNDS' DISTRIBUTOR
Each of the Funds has adopted a Distribution Plan under Rule 12b-1 with
respect to its Class C shares (each, a "Plan") providing for payments by the
Fund to RS&Co. from the assets attributable to the Fund's Class C shares.
Payments under a Plan are intended to compensate RS&Co. for services provided
and expenses incurred by it as principal underwriter of the Fund's Class C
shares, including the payments to financial institutions described below.
In order to compensate broker-dealers and certain other financial
institutions for services provided in connection with sales of Class C shares,
RS&Co. makes quarterly payments to qualifying broker-dealers and other financial
institutions at an annual rate of up to 0.75% of the average daily net asset
value of Class C shares attributable to shareholders for whom the broker-dealers
or financial institutions are intermediaries of record. RS&Co. may suspend or
modify such payments at any time. Such payments are also subject to the
continuation of the relevant Plan, the term of any agreements between financial
institutions and RS&Co., and any applicable limits imposed by the National
Association of Securities Dealers, Inc.
Each of the Funds currently makes payments under its Plan at the annual rate
of 0.75% of the average net assets of the Fund attributable to its Class C
shares (although the Plans contemplate payments at a rate of up to 1.00% of a
Fund's average net assets attributable to Class C shares). The Plans also by
their terms relate to payments under the Funds' Shareholder Servicing Plans, to
the extent such payments may be seen as primarily intended to result in the sale
of a Fund's Class C shares. The Trustees may reduce the amount of payments or
suspend the Plan for such periods as they may determine. RS&Co. also receives
the proceeds of any CDSC imposed on redemptions of shares.
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RS&Co., Robertson Stephens Investment Management, and their affiliates, at
their own expense and out of their own assets, may also provide other
compensation to financial institutions in connection with sales of the Funds'
shares or the servicing of shareholders or shareholder accounts. Such
compensation may include, but is not limited to, financial assistance to
financial institutions in connection with conferences, sales or training
programs for their employees, seminars for the public, advertising or sales
campaigns, or other financial institution-sponsored special events. In some
instances, this compensation may be made available only to certain financial
institutions whose representatives have sold or are expected to sell significant
amounts of shares. Dealers may not use sales of the Funds' shares to qualify for
this compensation to the extent such may be prohibited by the laws of any state
or any self-regulatory agency, such as the National Association of Securities
Dealers, Inc.
Each Fund has agreed to indemnify RS&Co. against certain liabilities,
including liabilities under the Securities Act of 1933, as amended.
SHAREHOLDER SERVICING PLAN
The Trust has adopted a Shareholder Servicing Plan (the "Service Plan") for
the Class C shares of each Fund. Under the Service Plan, each Fund pays fees to
RS&Co. at an annual rate of up to 0.25% of the Fund's average daily net assets.
The Plan contemplates that financial institutions will enter into shareholder
service agreements with RS&Co. to provide administrative support services to
their customers who are Fund shareholders. In return for providing these support
services, a financial institution may receive payments from RS&Co. at a rate not
exceeding 0.25% of the average daily net assets of the Class C shares of each
Fund for which the financial institution is the financial institution of record.
These administrative services may include, but are not limited to, the following
functions: providing office space, equipment, telephone facilities, and various
personnel, including clerical, supervisory, and computer personnel, as necessary
or beneficial to establish and maintain shareholder accounts and records;
processing purchase and redemption transactions and automatic investments of
client account cash balances; answering routine client inquiries regarding the
Funds; assisting clients in changing dividend options, account designations, and
addresses; and providing such other services as RS&Co. reasonably requests.
DIVIDENDS, DISTRIBUTIONS, AND TAXES
Each Fund distributes substantially all of its net investment income and net
capital gains to shareholders at least once a year (or more often if necessary
to avoid certain excise or income taxes on the Fund). All distributions by a
Fund will be automatically reinvested in Class C shares of the Fund unless the
shareholder requests cash payment on at least 10 days prior written notice to
the Transfer Agent.
Each Fund intends to qualify as a "regulated investment company" for federal
income tax purposes and to meet all other requirements that are necessary for it
to be relieved of federal taxes on income and gains it distributes to
shareholders. A Fund will distribute substantially all of its net investment
income and net capital gain income on a current basis.
All Fund distributions will be taxable to you as ordinary income, except
that any distributions of net long-term capital gains will be taxed as such,
regardless of how long you have held your shares. Distributions will be taxable
as described above, whether received in cash or in shares through the
reinvestment of distributions. Early in
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each year, the Trust will notify you of the amount and tax status of
distributions paid to you by each of the Funds for the preceding year.
The foregoing is a summary of certain federal income tax consequences of
investing in a Fund. You should consult your tax adviser to determine the
precise effect of an investment in a Fund on your particular tax situation.
HOW NET ASSET VALUE IS DETERMINED
Each Fund calculates the net asset value of its Class C shares by dividing
the total value of its assets attributable to its Class C shares, less its
liabilities attributable to those shares, by the number of its Class C shares
outstanding. Shares are valued as of the close of regular trading on the New
York Stock Exchange each day the Exchange is open. Portfolio securities for
which market quotations are readily available are stated at market value.
Short-term investments that will mature in 60 days or less are stated at
amortized cost, which approximates market value. All other securities and assets
are valued at their fair values determined in accordance with the guidelines and
procedures adopted by the Trust's Board of Trustees. The net asset value of a
Fund's Class C shares will generally differ from that of its other classes of
shares due to the variance in net income realized by and dividends paid on each
class of shares, and any differences in the expenses of the different classes.
HOW PERFORMANCE IS DETERMINED
Yield and total return data may from time to time be included in
advertisements about the Funds' Class C shares. The "yield" of a Fund's Class C
shares is calculated by dividing the annualized net investment income per Class
C share during a recent 30-day period by the net asset value per Class C share
on the last day of that period. "Total return" for the period during which Class
C shares of a Fund have been offered, through the most recent calendar quarter,
represents the average annual compounded rate of return (or, in the case of a
period of one year or less, the actual rate of return) on an investment of
$1,000 in Class C shares of that Fund. Total return may also be presented for
other periods. Advertisements about a Fund may include total return information
for the Fund's Class A shares for periods prior to the initial offering date of
the Fund's Class C shares; that information may be adjusted to reflect any
higher operating expenses (such as shareholder service fees or distribution
fees) incurred by the Fund's Class C shares. Because a Fund's operating expenses
attributable to its Class C shares are higher than those attributable to its
Class A shares and because a Fund may impose a contingent deferred sales charge
in connection with the redemption of Class C shares, the investment performance
of a Fund's Class C shares would have been lower than that of its Class A shares
for any such periods shown. Quotations of yield or total return for a period
when an expense limitation was in effect will be greater than if the limitation
had not been in effect. A Fund's performance may be compared to various indices.
See the Statement of Additional Information. Information may be presented in
advertisements about a Fund describing the background and professional
experience of the Fund's investment adviser or any portfolio manager.
All data are based on a Fund's past investment results and do not predict
future performance. Investment performance, which will vary, is based on many
factors, including market conditions, the composition of the Fund's portfolio,
and the Fund's expenses. Investment performance also often reflects the risks
associated with a Fund's investment objective and policies. These factors should
be considered when comparing a Fund's investment results to those of other
mutual funds and other investment vehicles.
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ADDITIONAL INFORMATION
Each Fund is a series of the Trust, which was organized on May 11, 1987
under the laws of The Commonwealth of Massachusetts and is a business entity
commonly known as a "Massachusetts business trust." A copy of the Agreement and
Declaration of Trust, which is governed by Massachusetts law, is on file with
the Secretary of State of The Commonwealth of Massachusetts.
When matters are submitted for shareholder vote, shareholders of each series
will have one vote for each full share owned and proportionate, fractional votes
for fractional shares held. Generally, shares of each series vote separately as
a single series except when required by law or determined by the Board of
Trustees. Each series offered by this Prospectus issues shares of two classes,
Class A shares and Class C shares. The sales charges and other expenses of a
Fund's Class A shares differ from (and are currently lower than) those of its
Class C shares, which will affect performance. Contact RS&Co. for information
concerning the Class A shares of any Fund, at 1-800-270-5829. Although the Trust
is not required to hold annual shareholder meetings, shareholders have the right
to call a meeting to elect or remove Trustees, or to take other actions as
provided in the Agreement and Declaration of Trust.
State Street Bank and Trust Company, c/o National Financial Data Services,
P.O. Box 419717, Kansas City, Missouri 64141, acts as each Fund's transfer agent
and dividend paying agent. State Street Bank and Trust Company, 225 Franklin
Street, Boston, Massachusetts 02110, also acts as the custodian of each Fund's
portfolio.
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ROBERTSON STEPHENS & COMPANY
BRINGING THE FUND MANAGER TO YOU
ADDRESS
555 California Street
San Francisco, CA 94104
1-800-270-5829
INVESTMENT ADVISERS
Robertson, Stephens & Company
Investment Management, L.P.
Robertson Stephens Investment
Management, Inc.
555 California Street
San Francisco, CA 94104
1-800-270-5829
DISTRIBUTOR
Robertson, Stephens & Company LLC
555 California Street
San Francisco, CA 94104
1-800-270-5829
TRANSFER AGENT
State Street Bank and Trust Company
c/o National Financial Data Services
P. O. Box 419717
Kansas City, MO 64141
1-800-272-6944
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
San Francisco, CA 94104
LEGAL COUNSEL
Ropes & Gray
Boston, MA 02110
CUSTODIAN
State Street Bank and Trust Company
Boston, MA 02110
No dealer, salesperson, or any other person has been authorized to give any
information or to make any representations other than those contained in this
Prospectus in connection with the offer contained in this Prospectus, and, if
given or made, such other information or representations must not be relied upon
as having been authorized by the Fund. This Prospectus does not constitute an
offering in any state or jurisdiction in which such offering may not lawfully be
made.
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ROBERTSON
STEPHENS
MUTUAL
FUNDS
--------------------
CLASS C SHARES
PROSPECTUS
April 1, 1997
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
ROBERTSON STEPHENS MUTUAL FUNDS
APRIL 1, 1997
Robertson Stephens Investment Trust (the "Trust") is an open-end series
investment company. This Statement of Additional Information is not a
prospectus and should be read in conjunction with a Prospectus of the Trust
dated April 1, 1997, as it may be revised from time to time. This Statement
relates to the Funds' Class A and Class C Shares. A copy of a Prospectus of the
Trust for its Class A or Class C Shares can be obtained upon request made to
Robertson, Stephens & Company LLC ("RS&Co."), the Trust's distributor, 555
California Street, San Francisco, California 94104, telephone 1-800-766-FUND.
TABLE OF CONTENTS
CAPTION PAGE
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INVESTMENT OBJECTIVES AND POLICIES . . . . . . . . . . . . . . . . . . . . . . 2
THE FUNDS' INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . .15
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . .19
THE FUNDS' DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . .31
HOW NET ASSET VALUE IS DETERMINED. . . . . . . . . . . . . . . . . . . . . . .33
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .33
HOW PERFORMANCE IS DETERMINED. . . . . . . . . . . . . . . . . . . . . . . . .35
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .39
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . .42
<PAGE>
INVESTMENT OBJECTIVES AND POLICIES
The investment objectives and policies of the Funds are described in detail
in the Prospectuses. The following discussion provides supplemental information
concerning certain investment techniques in which one or more of the Funds may
engage, and certain of the risks they may entail. Certain of the investment
techniques may not be available to all of the Funds.
All of the Funds, except for the Emerging Growth Fund, are managed by
Robertson, Stephens & Company Investment Management, L.P. ("RSIM, L.P."). The
Emerging Growth Fund is managed by Robertson Stephens Investment Management,
Inc. ("RSIM, Inc."). RSIM, L.P. and RSIM, Inc. are sometimes referred to in
this Statement collectively as "Robertson Stephens Investment Management."
Class A shares and Class C shares are offered through two separate
prospectuses. Any reference to the "Prospectus" in this Statement is a
reference to each such prospectus unless the context requires otherwise or
unless otherwise specified.
LOWER-RATED DEBT SECURITIES
Certain of the Funds may purchase lower-rated debt securities, sometimes
referred to as "junk bonds" (those rated BB or lower by Standard & Poor's
("S&P") or Ba or lower by Moody's Investor Service, Inc. ("Moody's")). See
APPENDIX A for a description of these ratings. None of the Funds intends, under
current circumstances, to purchase such securities if, as a result, more than
35% of the Fund's assets would be invested in securities rated below BB or Ba.
The lower ratings of certain securities held by a Fund reflect a greater
possibility that adverse changes in the financial condition of the issuer, or in
general economic conditions, or both, or an unanticipated rise in interest
rates, may impair the ability of the issuer to make payments of interest and
principal. The inability (or perceived inability) of issuers to make timely
payment of interest and principal would likely make the values of securities
held by the Fund more volatile and could limit the Fund's ability to sell its
securities at prices approximating the values a Fund had placed on such
securities. It is possible that legislation may be adopted in the future
limiting the ability of certain financial institutions to purchase lower rated
securities; such legislation may adversely affect the liquidity of such
securities. In the absence of a liquid trading market for securities held by
it, the Fund may be unable at times to establish the fair market value of such
securities. The rating assigned to a security by Moody's or S&P does not
reflect an assessment of the volatility of the security's market value or of the
liquidity of an investment in the security.
Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. Thus, a decrease
in interest rates generally will result in an increase in the value of a Fund's
fixed-income securities. Conversely, during periods of rising interest rates,
the value of a Fund's fixed-income securities generally will decline. In
addition, the values of such securities are also affected by changes in general
economic conditions and business conditions affecting the specific industries of
their issuers. Changes by recognized rating services in their ratings of any
fixed-income security and in the ability of an issuer to make payments of
interest and principal may also affect the value of these investments. Changes
in the value of portfolio securities generally will not affect cash income
derived from such securities, but will affect the Fund's net asset value. A
Fund will not necessarily dispose of a security when its rating is reduced below
its rating at the time of purchase, although Robertson Stephens Investment
Management will monitor the investment to determine whether continued investment
in the security will assist in meeting the Fund's investment objective.
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Issuers of lower-rated securities are often highly leveraged, so that their
ability to service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. In addition, such
issuers may not have more traditional methods of financing available to them,
and may be unable to repay debt at maturity by refinancing. The risk of loss
due to default in payment of interest or principal by such issuers is
significantly greater because such securities frequently are unsecured and
subordinated to the prior payment of senior indebtedness. Certain of the lower-
rated securities in which the Funds may invest are issued to raise funds in
connection with the acquisition of a company, in so-called "leveraged buy-out"
transactions. The highly leveraged capital structure of such issuers may make
them especially vulnerable to adverse changes in economic conditions.
Under adverse market or economic conditions or in the event of adverse
changes in the financial condition of the issuer, a Fund could find it more
difficult to sell lower-rated securities when Robertson Stephens Investment
Management believes it advisable to do so or may be able to sell such securities
only at prices lower than if such securities were more widely held. In many
cases, such securities may be purchased in private placements and, accordingly,
will be subject to restrictions on resale as a matter of contract or under
securities laws. Under such circumstances, it may also be more difficult to
determine the fair value of such securities for purposes of computing a Fund's
net asset value. In order to enforce its rights in the event of a default under
such securities, a Fund may be required to take possession of and manage assets
securing the issuer's obligations on such securities, which may increase the
Fund's operating expenses and adversely affect the Fund's net asset value. A
Fund may also be limited in its ability to enforce its rights and may incur
greater costs in enforcing its rights in the event an issuer becomes the subject
of bankruptcy proceedings.
Certain securities held by a Fund may permit the issuer at its option to
"call," or redeem, its securities. If an issuer were to redeem securities held
by a Fund during a time of declining interest rates, the Fund may not be able to
reinvest the proceeds in securities providing the same investment return as the
securities redeemed.
OPTIONS
The Funds may purchase and sell put and call options on their portfolio
securities to enhance investment performance and to protect against changes in
market prices. There is no assurance that a Fund's use of put and call options
will achieve its desired objective, and a Fund's use of options may result in
losses to the Fund.
COVERED CALL OPTIONS. A Fund may write covered call options on its
securities to realize a greater current return through the receipt of premiums
than it would realize on its securities alone. Such option transactions may
also be used as a limited form of hedging against a decline in the price of
securities owned by the Fund.
A call option gives the holder the right to purchase, and obligates the
writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times while
obligated as a writer, either owns the underlying securities (or comparable
securities satisfying the cover requirements of the securities exchanges), or
has the right to acquire such securities through immediate conversion of
securities.
In return for the premium received when it writes a covered call option, a
Fund gives up some or all of the opportunity to profit from an increase in the
market price of the securities covering the call option during the life of the
option. The Fund retains the risk of loss should the price of such securities
decline. If the option expires unexercised, the Fund realizes a gain equal to
the premium, which may be offset by a decline in price of the underlying
security. If the option is exercised, the Fund realizes a gain or loss equal to
the difference between the Fund's cost for the underlying security and the
proceeds of sale (exercise price minus commissions) plus the amount of the
premium.
A Fund may terminate a call option that it has written before it expires by
entering into a closing purchase transaction. A Fund may enter into closing
purchase transactions in order to free itself to sell the underlying security or
to write another call on the security, realize a profit on a previously written
call option, or protect a
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security from being called in an unexpected market rise. Any profits from a
closing purchase transaction may be offset by a decline in the value of the
underlying security. Conversely, because increases in the market price of a
call option will generally reflect increases in the market price of the
underlying security, any loss resulting from a closing purchase transaction is
likely to be offset in whole or in part by unrealized appreciation of the
underlying security owned by the Fund.
COVERED PUT OPTIONS. A Fund may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that the
Fund plans to purchase. A put option gives the holder the right to sell, and
obligates the writer to buy, a security at the exercise price at any time before
the expiration date. A put option is "covered" if the writer segregates cash
and high-grade short-term debt obligations or other permissible collateral equal
to the price to be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, a Fund also receives
interest on the cash and debt securities maintained to cover the exercise price
of the option. By writing a put option, the Fund assumes the risk that it may
be required to purchase the underlying security for an exercise price higher
than its then current market value, resulting in a potential capital loss unless
the security later appreciates in value.
A Fund may terminate a put option that it has written before it expires by
a closing purchase transaction. Any loss from this transaction may be partially
or entirely offset by the premium received on the terminated option.
PURCHASING PUT AND CALL OPTIONS. A Fund may also purchase put options to
protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Fund must
pay. These costs will reduce any profit the Fund might have realized had it
sold the underlying security instead of buying the put option.
A Fund may purchase call options to hedge against an increase in the price
of securities that the Fund wants ultimately to buy. Such hedge protection is
provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
A Fund may also purchase put and call options to attempt to enhance its
current return.
OPTIONS ON FOREIGN SECURITIES. A Fund may purchase and sell options on
foreign securities if Robertson Stephens Investment Management believes that the
investment characteristics of such options, including the risks of investing in
such options, are consistent with the Fund's investment objective. It is
expected that risks related to such options will not differ materially from
risks related to options on U.S. securities. However, position limits and other
rules of foreign exchanges may differ from those in the U.S. In addition,
options markets in some countries, many of which are relatively new, may be less
liquid than comparable markets in the U.S.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that Robertson Stephens Investment Management
will not forecast interest rate or market movements correctly, that a Fund may
be unable at times to close out such positions, or that hedging transactions may
not accomplish their purpose because of imperfect market correlations. The
successful use of these strategies depends on the ability of Robertson Stephens
Investment Management to forecast market and interest rate movements correctly.
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An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were to
exist, it would be impossible to enter into a closing transaction to close out
an option position. As a result, a Fund may be forced to continue to hold, or
to purchase at a fixed price, a security on which it has sold an option at a
time when Robertson Stephens Investment Management believes it is inadvisable to
do so.
Higher than anticipated trading activity or order flow or other unforeseen
events might cause The Options Clearing Corporation or an exchange to institute
special trading procedures or restrictions that might restrict a Fund's use of
options. The exchanges have established limitations on the maximum number of
calls and puts of each class that may be held or written by an investor or group
of investors acting in concert. It is possible that the Trust and other clients
of Robertson Stephens Investment Management may be considered such a group.
These position limits may restrict the Funds' ability to purchase or sell
options on particular securities.
Options which are not traded on national securities exchanges may be closed
out only with the other party to the option transaction. For that reason, it
may be more difficult to close out unlisted options than listed options.
Furthermore, unlisted options are not subject to the protection afforded
purchasers of listed options by The Options Clearing Corporation.
Government regulations, particularly the requirements for qualification as
a "regulated investment company" under the Internal Revenue Code, may also
restrict the Funds' use of options.
SPECIAL EXPIRATION PRICE OPTIONS
Certain of the Funds may purchase over-the-counter ("OTC") puts and calls
with respect to specified securities ("special expiration price options")
pursuant to which the Funds in effect may create a custom index relating to a
particular industry or sector that Robertson Stephens Investment Management
believes will increase or decrease in value generally as a group. In exchange
for a premium, the counterparty, whose performance is guaranteed by a broker-
dealer, agrees to purchase (or sell) a specified number of shares of a
particular stock at a specified price and further agrees to cancel the option at
a specified price that decreases straight line over the term of the option.
Thus, the value of the special expiration price option is comprised of the
market value of the applicable underlying security relative to the option
exercise price and the value of the remaining premium. However, if the value of
the underlying security increases (or decreases) by a prenegotiated amount, the
special expiration price option is canceled and becomes worthless. A portion of
the dividends during the term of the option are applied to reduce the exercise
price if the options are exercised. Brokerage commissions and other transaction
costs will reduce these Funds' profits if the special expiration price options
are exercised. A Fund will not purchase special expiration price options with
respect to more than 25% of the value of its net assets, and will limit premiums
paid for such options in accordance with state securities laws.
LEAPs AND BOUNDs
The Value + Growth Fund may purchase certain long-term exchange-traded
equity options called Long-Term Equity Anticipation Securities ("LEAPs") and
Buy-Right Options Unitary Derivatives ("BOUNDs"). LEAPs provide a holder the
opportunity to participate in the underlying securities' appreciation in excess
of a fixed dollar amount. BOUNDs provide a holder the opportunity to retain
dividends on the underlying security while potentially participating in the
underlying securities' capital appreciation up to a fixed dollar amount. The
Value + Growth Fund will not purchase these options with respect to more than
25% of the value of its net assets.
LEAPs are long-term call options that allow holders the opportunity to
participate in the underlying securities' appreciation in excess of a specified
strike price, without receiving payments equivalent to any cash dividends
declared on the underlying securities. A LEAP holder will be entitled to
receive a specified number of shares of the underlying stock upon payment of the
exercise price, and therefore the LEAP will be exercisable at any
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time the price of the underlying stock is above the strike price. However, if
at expiration the price of the underlying stock is at or below the strike price,
the LEAP will expire worthless.
BOUNDs are long-term options which are expected to have the same economic
characteristics as covered call options, with the added benefits that BOUNDs can
be traded in a single transaction and are not subject to early exercise.
Covered call writing is a strategy by which an investor sells a call option
while simultaneously owning the number of shares of the stock underlying the
call. BOUND holders are able to participate in a stock's price appreciation up
to but not exceeding a specified strike price while receiving payments
equivalent to any cash dividends declared on the underlying stock. At
expiration, a BOUND holder will receive a specified number of shares of the
underlying stock for each BOUND held if, on the last day of trading, the
underlying stock closes at or below the strike price. However, if at expiration
the underlying stock closes above the strike price, the BOUND holder will
receive a payment equal to a multiple of the BOUND's strike price for each BOUND
held. The terms of a BOUND are not adjusted because of cash distributions to
the shareholders of the underlying security. BOUNDs are subject to the position
limits for equity options imposed by the exchanges on which they are traded.
The settlement mechanism for BOUNDs operates in conjunction with that of
the corresponding LEAPs. For example, if at expiration the underlying stock
closes at or below the strike price, the LEAP will expire worthless, and the
holder of a corresponding BOUND will receive a specified number of shares of
stock from the writer of the BOUND. If, on the other hand, the LEAP is "in the
money" at expiration, the holder of the LEAP is entitled to receive a specified
number of shares of the underlying stock from the LEAP writer upon payment of
the strike price, and the holder of a BOUND on such stock is entitled to the
cash equivalent of a multiple of the strike price from the writer of the BOUND.
An investor holding both a LEAP and a corresponding BOUND, where the underlying
stock closes above the strike price at expiration, would be entitled to receive
a multiple of the strike price from the writer of the BOUND and, upon exercise
of the LEAP, would be obligated to pay the same amount to receive shares of the
underlying stock. LEAPs are American-style options (exercisable at any time
prior to expiration), whereas BOUNDs are European-style options (exercisable
only on the expiration date).
FUTURES CONTRACTS
INDEX FUTURES CONTRACTS AND OPTIONS. A Fund may buy and sell stock index
futures contracts and related options for hedging purposes or to attempt to
increase investment return. A stock index futures contract is a contract to buy
or sell units of a stock index at a specified future date at a price agreed upon
when the contract is made. A unit is the current value of the stock index.
The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index (the "S&P 100
Index") is composed of 100 selected common stocks, most of which are listed on
the New York Stock Exchange. The S&P 100 Index assigns relative weightings to
the common stocks included in the Index, and the Index fluctuates with changes
in the market values of those common stocks. In the case of the S&P 100 Index,
contracts are to buy or sell 100 units. Thus, if the value of the S&P 100 Index
were $180, one contract would be worth $18,000 (100 units x $180). The stock
index futures contract specifies that no delivery of the actual stocks making up
the index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract. For example, if a Fund enters into a futures contract to buy 100
units of the S&P 100 Index at a specified future date at a contract price of
$180 and the S&P 100 Index is at $184 on that future date, the Fund will gain
$400 (100 units x gain of $4). If the Fund enters into a futures contract to
sell 100 units of the stock index at a specified future date at a contract price
of $180 and the S&P 100 Index is at $182 on that future date, the Fund will lose
$200 (100 units x loss of $2).
Positions in index futures may be closed out only on an exchange or board
of trade which provides a secondary market for such futures.
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In order to hedge its investments successfully using futures contracts and
related options, a Fund must invest in futures contracts with respect to indexes
or sub-indexes the movements of which will, in its judgment, have a significant
correlation with movements in the prices of the Fund's securities.
Options on index futures contracts give the purchaser the right, in return
for the premium paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the holder would assume the underlying futures position
and would receive a variation margin payment of cash or securities approximating
the increase in the value of the holder's option position. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash based on the difference between the
exercise price of the option and the closing level of the index on which the
futures contract is based on the expiration date. Purchasers of options who
fail to exercise their options prior to the exercise date suffer a loss of the
premium paid.
As an alternative to purchasing and selling call and put options on index
futures contracts, each of the Funds which may purchase and sell index futures
contracts may purchase and sell call and put options on the underlying indexes
themselves to the extent that such options are traded on national securities
exchanges. Index options are similar to options on individual securities in
that the purchaser of an index option acquires the right to buy (in the case of
a call) or sell (in the case of a put), and the writer undertakes the obligation
to sell or buy (as the case may be), units of an index at a stated exercise
price during the term of the option. Instead of giving the right to take or
make actual delivery of securities, the holder of an index option has the right
to receive a cash "exercise settlement amount." This amount is equal to the
amount by which the fixed exercise price of the option exceeds (in the case of a
put) or is less than (in the case of a call) the closing value of the underlying
index on the date of the exercise, multiplied by a fixed "index multiplier."
A Fund may purchase or sell options on stock indices in order to close out
its outstanding positions in options on stock indices which it has purchased. A
Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of call
or put options on an index involves less potential risk to a Fund because the
maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar
to those risks relating to the purchase or sale of index futures contracts.
MARGIN PAYMENTS. When a Fund purchases or sells a futures contract, it is
required to deposit with its custodian an amount of cash, U.S. Treasury bills,
or other permissible collateral equal to a small percentage of the amount of the
futures contract. This amount is known as "initial margin." The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to a Fund upon termination of the contract, assuming the Fund satisfies its
contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market." These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying index rises above the delivery price, the Fund's position declines in
value. The Fund then pays the broker a variation margin payment equal to the
difference between the delivery price of the futures contract and the value of
the index underlying the futures contract. Conversely, if the price of the
underlying index falls below the delivery price of the contract, the Fund's
futures position increases in value. The broker then must make a variation
margin payment equal to the difference between the delivery price of the futures
contract and the value of the index underlying the futures contract.
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When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or a gain. Such closing transactions involve
additional commission costs.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out only on
an exchange or board of trade which provides a secondary market for such
futures. Although the Funds intend to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange or
board of trade will exist for any particular contract or at any particular time.
If there is not a liquid secondary market at a particular time, it may not be
possible to close a futures position at such time and, in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. However, in the event financial futures are used
to hedge portfolio securities, such securities will not generally be sold until
the financial futures can be terminated. In such circumstances, an increase in
the price of the portfolio securities, if any, may partially or completely
offset losses on the financial futures.
The ability to establish and close out positions in options on futures
contracts will be subject to the development and maintenance of a liquid
secondary market. It is not certain that such a market will develop. Although
a Fund generally will purchase only those options for which there appears to be
an active secondary market, there is no assurance that a liquid secondary market
on an exchange will exist for any particular option or at any particular time.
In the event no such market exists for particular options, it might not be
possible to effect closing transactions in such options, with the result that a
Fund would have to exercise the options in order to realize any profit.
HEDGING RISKS. There are several risks in connection with the use by a
Fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the prices of
the futures contracts and options and movements in the underlying securities or
index or movements in the prices of a Fund's securities which are the subject of
a hedge. Robertson Stephens Investment Management will, however, attempt to
reduce this risk by purchasing and selling, to the extent possible, futures
contracts and related options on securities and indexes the movements of which
will, in its judgment, correlate closely with movements in the prices of the
underlying securities or index and the Fund's portfolio securities sought to be
hedged.
Successful use of futures contracts and options by a Fund for hedging
purposes is also subject to Robertson Stephens Investment Management's ability
to predict correctly movements in the direction of the market. It is possible
that, where a Fund has purchased puts on futures contracts to hedge its
portfolio against a decline in the market, the securities or index on which the
puts are purchased may increase in value and the value of securities held in the
portfolio may decline. If this occurred, the Fund would lose money on the puts
and also experience a decline in value in its portfolio securities. In
addition, the prices of futures, for a number of reasons, may not correlate
perfectly with movements in the underlying securities or index due to certain
market distortions. First, all participants in the futures market are subject
to margin deposit requirements. Such requirements may cause investors to close
futures contracts through offsetting transactions which could distort the normal
relationship between the underlying security or index and futures markets.
Second, the margin requirements in the futures markets are less onerous than
margin requirements in the securities markets in general, and as a result the
futures markets may attract more speculators than the securities markets do.
Increased participation by speculators in the futures markets may also cause
temporary price distortions. Due to the possibility of price distortion, even a
correct forecast of general market trends by Robertson Stephens Investment
Management still may not result in a successful hedging transaction over a very
short time period.
OTHER RISKS. Funds will incur brokerage fees in connection with their
futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
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transactions themselves entail certain other risks. Thus, while a Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is intended to be
protected, the desired protection may not be obtained and the Fund may be
exposed to risk of loss.
INDEXED SECURITIES
Certain of the Funds may purchase securities whose prices are indexed to
the prices of other securities, securities indices, currencies, precious metals,
or other commodities, or other financial indicators. Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity or coupon rate is determined by reference to a specific instrument or
statistic. Gold-indexed securities, for example, typically provide for a
maturity value that depends on the price of gold, resulting in a security whose
price tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values of
one or more specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting in a
security whose price characteristics are similar to a put option on the
underlying currency. Currency-indexed securities also may have prices that
depend on the values of a number of different foreign currencies relative to
each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, commodity or other instrument to which
they are indexed, and also may be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the credit
risks associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
Government agencies.
REPURCHASE AGREEMENTS
A Fund may enter into repurchase agreements. A repurchase agreement is a
contract under which the Fund acquires a security for a relatively short period
(usually not more than one week) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. Government or its
agencies or instrumentalities or other high-quality, short-term debt
obligations. Repurchase agreements may also be viewed as loans made by a Fund
which are collateralized by the securities subject to repurchase. Robertson
Stephens Investment Management will monitor such transactions to ensure that the
value of the underlying securities will be at least equal at all times to the
total amount of the repurchase obligation, including the interest factor. If
the seller defaults, a Fund could realize a loss on the sale of the underlying
security to the extent that the proceeds of sale including accrued interest are
less than the resale price provided in the agreement including interest. In
addition, if the seller should be involved in bankruptcy or insolvency
proceedings, a Fund may incur delay and costs in selling the underlying security
or may suffer a loss of principal and interest if the Fund is treated as an
unsecured creditor and required to return the underlying collateral to the
seller's estate.
LEVERAGE
Leveraging a Fund creates an opportunity for increased net income but, at
the same time, creates special risk considerations. For example, leveraging may
exaggerate changes in the net asset value of a Fund's shares and in the yield on
a Fund's portfolio. Although the principal of such borrowings will be fixed, a
Fund's assets may change in value during the time the borrowing is outstanding.
Since any decline in value of a Fund's investments will be borne entirely by the
Fund's shareholders (and not by those persons providing the leverage to the
Fund),
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the effect of leverage in a declining market would be a greater decrease in net
asset value than if the Fund were not so leveraged. Leveraging will create
interest expenses for a Fund, which can exceed the investment return from the
borrowed funds. To the extent the investment return derived from securities
purchased with borrowed funds exceeds the interest a Fund will have to pay, the
Fund's investment return will be greater than if leveraging were not used.
Conversely, if the investment return from the assets retained with borrowed
funds is not sufficient to cover the cost of leveraging, the investment return
of the Fund will be less than if leveraging were not used.
REVERSE REPURCHASE AGREEMENTS
In connection with its leveraging activities, a Fund may enter into reverse
repurchase agreements, in which the Fund sells securities and agrees to
repurchase them at a mutually agreed date and price. A reverse repurchase
agreement may be viewed as a borrowing by the Fund, secured by the security
which is the subject of the agreement. In addition to the general risks
involved in leveraging, reverse repurchase agreements involve the risk that, in
the event of the bankruptcy or insolvency of the Fund's counterparty, the Fund
would be unable to recover the security which is the subject of the agreement,
that the amount of cash or other property transferred by the counterparty to the
Fund under the agreement prior to such insolvency or bankruptcy is less than the
value of the security subject to the agreement, or that the Fund may be delayed
or prevented, due to such insolvency or bankruptcy, from using such cash or
property or may be required to return it to the counterparty or its trustee or
receiver.
SECURITIES LENDING
A Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) a Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of any Fund loaned will not at any time exceed one-
third (or such other limit as the Trustees may establish) of the total assets of
the Fund. In addition, it is anticipated that a Fund may share with the
borrower some of the income received on the collateral for the loan or that it
will be paid a premium for the loan.
Before a Fund enters into a loan, Robertson Stephens Investment Management
considers all relevant facts and circumstances, including the creditworthiness
of the borrower. The risks in lending portfolio securities, as with other
extensions of credit, consist of possible delay in recovery of the securities or
possible loss of rights in the collateral should the borrower fail financially.
Although voting rights or rights to consent with respect to the loaned
securities pass to the borrower, a Fund retains the right to call the loans at
any time on reasonable notice, and it will do so in order that the securities
may be voted by a Fund if the holders of such securities are asked to vote upon
or consent to matters materially affecting the investment. A Fund will not lend
portfolio securities to borrowers affiliated with the Fund.
SHORT SALES
Certain of the Funds may seek to hedge investments or realize additional
gains through short sales. Short sales are transactions in which a Fund sells a
security it does not own, in anticipation of a decline in the market value of
that security. To complete such a transaction, a Fund must borrow the security
to make delivery to the buyer. A Fund then is obligated to replace the security
borrowed by purchasing it at the market price at or prior to the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by a Fund. Until the security is replaced, a Fund is
required to repay the lender any dividends or interest that accrue during the
period of the loan. To borrow the security, a Fund also may be required to pay
a premium, which would increase the cost of the security sold. The net proceeds
of the short sale will be retained by the broker (or by the Fund's custodian in
a special custody account), to the extent necessary to meet margin
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requirements, until the short position is closed out. A Fund also will incur
transaction costs in effecting short sales.
A Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which a
Fund replaces the borrowed security. A Fund will realize a gain if the security
declines in price between those dates. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of the premium,
dividends, interest or expenses a Fund may be required to pay in connection with
a short sale. An increase in the value of a security sold short by a Fund over
the price at which it was sold short will result in a loss to the Fund, and
there can be no assurance that a Fund will be able to close out the position at
any particular time or at an acceptable price.
FOREIGN INVESTMENTS
Investments in foreign securities may involve considerations different from
investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment
against a foreign issuer.
In addition, to the extent that a Fund's foreign investments are not U.S.
dollar-denominated, the Fund may be affected favorably or unfavorably by changes
in currency exchange rates or exchange control regulations and may incur costs
in connection with conversion between currencies.
DEVELOPING COUNTRIES. The considerations noted above for foreign
investments generally are intensified for investments in developing countries.
These risks include (i) volatile social, political and economic conditions; (ii)
the small current size of the markets for such securities and the currently low
or nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) the existence of national policies which may
restrict a Fund's investment opportunities, including restrictions on investment
in issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; (v) the absence of developed structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain developing countries, of a capital market
structure or market-oriented economy; (vii) economies based on only a few
industries; and (viii) the possibility that recent favorable economic
developments in certain developing countries may be slowed or reversed by
unanticipated political or social events in such countries.
FOREIGN CURRENCY TRANSACTIONS
A Fund may engage in currency exchange transactions to protect against
uncertainty in the level of future foreign currency exchange rates and to
increase current return. A Fund may engage in both "transaction hedging" and
"position hedging."
When it engages in transaction hedging, a Fund enters into foreign currency
transactions with respect to specific receivables or payables of the Fund
generally arising in connection with the purchase or sale of its portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging, a Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
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A Fund may purchase or sell a foreign currency on a spot (I.E., cash) basis
at the prevailing spot rate in connection with transaction hedging. A Fund may
also enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes, a Fund may also purchase exchange-listed
and over-the-counter call and put options on foreign currency futures contracts
and on foreign currencies. A put option on a futures contract gives a Fund the
right to assume a short position in the futures contract until expiration of the
option. A put option on currency gives a Fund the right to sell a currency at a
specified exercise price until the expiration of the option. A call option on a
futures contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option. A call option on currency gives a
Fund the right to purchase a currency at the exercise price until the expiration
of the option. A Fund will engage in over-the-counter transactions only when
appropriate exchange-traded transactions are unavailable and when, in the
opinion of Robertson Stephens Investment Management, the pricing mechanism and
liquidity are satisfactory and the participants are responsible parties likely
to meet their contractual obligations.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which securities held by the Fund are denominated or are quoted in
their principle trading markets or an increase in the value of currency for
securities which the Fund expects to purchase. In connection with position
hedging, a Fund may purchase put or call options on foreign currency and foreign
currency futures contracts and buy or sell forward contracts and foreign
currency futures contracts. A Fund may also purchase or sell foreign currency
on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of a Fund's
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency a Fund is obligated to deliver and if a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security or
securities of a Fund if the market value of such security or securities exceeds
the amount of foreign currency the Fund is obligated to deliver.
To offset some of the costs to a Fund of hedging against fluctuations in
currency exchange rates, the Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency.
A Fund may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, by purchasing and selling options on
foreign currencies and on foreign currency futures contracts, and by purchasing
and selling foreign currency forward contracts.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the contract.
In the case of a
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cancelable forward contract, the holder has the unilateral right to cancel the
contract at maturity by paying a specified fee. The contracts are traded in the
interbank market conducted directly between currency traders (usually large
commercial banks) and their customers. A forward contract generally has no
deposit requirement, and no commissions are charged at any stage for trades. A
foreign currency futures contract is a standardized contract for the future
delivery of a specified amount of a foreign currency at a future date at a price
set at the time of the contract. Foreign currency futures contracts traded in
the United States are designed by and traded on exchanges regulated by the
Commodity Futures Trading Commission (the "CFTC"), such as the New York
Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in a given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund may either accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected
on a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Positions in foreign currency futures contracts and related options may be
closed out only on an exchange or board of trade which provides a secondary
market in such contracts or options. Although a Fund will normally purchase or
sell foreign currency futures contracts and related options only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or option or at any particular time. In such event,
it may not be possible to close a futures or related option position and, in the
event of adverse price movements, a Fund would continue to be required to make
daily cash payments of variation margin on its futures positions.
FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate similarly
to options on securities, and are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been listed on
several exchanges. Such options will be purchased or written only when
Robertson Stephens Investment Management believes that a liquid secondary market
exists for such options. There can be no assurance that a liquid secondary
market will exist for a particular option at any specific time. Options on
foreign currencies are affected by all of those factors which influence exchange
rates and investments generally.
The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last-sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options markets are closed while the markets for the
underlying currencies remain open, significant price and rate movements may take
place in the underlying markets that cannot be reflected in the U.S. options
markets.
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FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at
one rate, while offering a lesser rate of exchange should a Fund desire to
resell that currency to the dealer.
PRECIOUS METALS
The value of the investments of certain Funds may be affected by changes in
the price of gold and other precious metals. Gold has been subject to
substantial price fluctuations over short periods of time and may be affected by
unpredictable international monetary and other governmental policies, such as
currency devaluations or revaluations; economic and social conditions within a
country; trade imbalances; or trade or currency restrictions between countries.
Because much of the world's known gold reserves are located in South Africa,
political and social conditions there may pose special risks to investments in
gold. For instance, social upheaval and related economic difficulties in South
Africa could cause a decrease in the share values of South African issuers.
Many institutions have rescinded policies that preclude investments in companies
doing business in South Africa. In July 1991, the United States lifted the
prohibition on new U.S. investment in South Africa, including the purchase of
newly-issued securities of South African companies.
In addition to its investments in securities, a Fund may, as described from
time to time in the Prospectus, invest a portion of its assets in precious
metals, such as gold, silver, platinum, and palladium, and precious metal
options and futures. The prices of precious metals are affected by broad
economic and political conditions, but are less subject to local and company-
specific factors than securities of individual companies. As a result, precious
metals and precious metal options and futures may be more or less volatile in
price than securities of companies engaged in precious metals-related
businesses. Precious metals may be purchased in any form, including bullion and
coins, provided that Robertson Stephens Investment Management intends to
purchase only those forms of precious metals that are readily marketable and
that can be stored in accordance with custody regulations applicable to mutual
funds. A Fund may incur higher custody and transaction costs for precious
metals than for securities. Also, precious metals investments do not pay
income.
Under current federal income tax law, gains from selling precious metals
(and certain other assets) may not exceed 10% of a Fund's annual gross income.
This tax requirement could a Fund to hold or sell precious metals, securities,
options, or futures when it would not otherwise do so.
ZERO-COUPON DEBT SECURITIES AND PAY-IN-KIND SECURITIES
Zero-coupon securities in which a Fund may invest are debt obligations
which are generally issued at a discount and payable in full at maturity, and
which do not provide for current payments of interest prior to maturity. Zero-
coupon securities usually trade at a deep discount from their face or par value
and are subject to greater market value fluctuations from changing interest
rates than debt obligations of comparable maturities which make current
distributions of interest. As a result, the net asset value of shares of a Fund
investing in zero-coupon securities may fluctuate over a greater range than
shares of other mutual funds investing in securities making current
distributions of interest and having similar maturities.
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic cash interest payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
such bundled form. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero-coupon
securities issued directly by the obligor.
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Zero-coupon securities allow an issuer to avoid the need to generate cash
to meet current interest payments. Even though zero-coupon securities do not
pay current interest in cash, a Fund is nonetheless required to accrue interest
income on them and to distribute the amount of that interest at least annually
to shareholders. Thus, a Fund could be required at times to liquidate other
investments in order to satisfy its distribution requirement.
A Fund also may purchase pay-in-kind securities. Pay-in-kind securities
pay all or a portion of their interest or dividends in the form of additional
securities.
THE FUNDS' INVESTMENT LIMITATIONS
The Trust has adopted the following fundamental investment restrictions
which (except to the extent they are designated as nonfundamental as to any
Fund) may not be changed without the affirmative vote of a majority of the
outstanding voting securities of the affected Fund.
THE CONTRARIAN FUND-TM-, THE DEVELOPING COUNTRIES FUND, THE EMERGING GROWTH
FUND AND THE VALUE + GROWTH FUND.
A Fund may not:
1. purchase or sell commodities or commodity contracts, or interests in
oil, gas, or other mineral leases, or other mineral exploration or
development programs, although it may invest in companies that engage
in such businesses to the extent otherwise permitted by a Fund's
investment policies and restrictions and by applicable law, except as
required in connection with otherwise permissible options, futures and
commodity activities as described elsewhere in the Prospectus and this
Statement;
2. purchase or sell real estate, although it may invest in securities
secured by real estate or real estate interests, or issued by
companies, including real estate investment trusts, that invest in
real estate or real estate interests;
3. make short sales or purchases on margin, although it may obtain short-
term credit necessary for the clearance of purchases and sales of its
portfolio securities and except as required in connection with
permissible options, futures, short selling and leverage activities as
described elsewhere in the Prospectus and this Statement;
4. (a) for the Contrarian Fund-TM- and the Developing Countries Fund
only: with respect to 50% of its total assets, invest in the
securities of any one issuer (other than the U.S. Government and its
agencies and instrumentalities), if immediately after and as a result
of such investment more than 5% of the total assets of the Fund would
be invested in such issuer (the remaining 50% of its total assets may
be invested without restriction except to the extent other investment
restrictions may be applicable);
(b) for the Emerging Growth Fund and Value + Growth Fund only: with
respect to 75% of its total assets, invest in the securities of any
one issuer (other than the U.S. Government and its agencies and
instrumentalities), if immediately after and as a result of such
investment more than 5% of the total assets of the Fund would be
invested in such issuer (the remaining 25% of its total assets may be
invested without restriction except to the extent other investment
restrictions may be applicable);
5. mortgage, hypothecate, or pledge any of its assets as security for any
of its obligations, except as required for otherwise permissible
borrowings (including reverse repurchase agreements), short sales,
financial options and other hedging activities;
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6. make loans of the Fund's assets, including loans of securities
(although it may, subject to the other restrictions or policies stated
herein, purchase debt securities or enter into repurchase agreements
with banks or other institutions to the extent a repurchase agreement
is deemed to be a loan), except that the Contrarian Fund-TM- and
Developing Countries Fund each may lend up to one-third of its total
assets to other parties;
7. borrow money, except from banks for temporary or emergency purposes or
in connection with otherwise permissible leverage activities, and then
only in an amount not in excess of (a) one-third of the value of the
Contrarian Fund's-TM- or Developing Countries Fund's total assets, or
(b) 5% of the Emerging Growth Fund's or Value + Growth Fund's total
assets (in any case as determined at the lesser of acquisition cost or
current market value and excluding collateralized reverse repurchase
agreements);
8. underwrite securities of any other company, although it may invest in
companies that engage in such businesses if it does so in accordance
with policies established by the Trust's Board of Trustees (the
Board's current policy permits a Fund to invest in companies that
directly or through subsidiaries execute portfolio transactions for a
Fund or have entered into selling agreements with the Distributor to
sell Fund shares, to the extent permitted by applicable law), and
except to the extent that the Fund may be considered an underwriter
within the meaning of the Securities Act of 1933, as amended, in the
disposition of restricted securities;
9. invest more than 25% of the value of the Fund's total assets in the
securities of companies engaged in any one industry (except securities
issued by the U.S. Government, its agencies and instrumentalities);
10. issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from making any
otherwise permissible borrowings, mortgages or pledges, or entering
into permissible reverse repurchase agreements, and options and
futures transactions;
11. purchase the securities of any company for the purpose of exercising
management or control (Emerging Growth Fund only);
12. purchase more than 10% of the outstanding voting securities of any one
issuer (Emerging Growth Fund only);
13. (a) purchase the securities of any registered investment company,
except as part of a merger or similar reorganization transaction
(Emerging Growth Fund only);
(b) purchase the securities of other investment companies, except as
permitted by the 1940 Act or as part of a merger, consolidation,
acquisition of assets or similar reorganization transaction (Value +
Growth Fund only);
14. invest more than 5% of the value of its total assets in securities of
any issuer which has not had a record, together with its predecessors,
of at least three years of continuous operations (Emerging Growth Fund
only);
15. invest more than 10% of the value of its total assets in securities
that are not readily marketable or that would require registration
under the Securities Act of 1933, as amended, upon disposition (as a
matter of operating policy, the Fund interprets this restriction as
including venture capital investments such as venture capital
partnerships whose securities are not registered under the Securities
Act of 1933 and unregistered securities of companies which are not yet
publicly held; furthermore, and as an additional matter of operating
policy, the Board of Trustees has adopted a
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further restriction that no more than 5% of the Fund's total assets
may be held in such restricted securities) (Emerging Growth Fund
only).
ALL OTHER FUNDS.
As fundamental investment restrictions, which may not be changed with
respect to a Fund without approval by the holders of a majority of the
outstanding shares of that Fund, a Fund may not:
1. issue any class of securities which is senior to the Fund's shares of
beneficial interest, except that each of the Funds may borrow money to
the extent contemplated by Restriction 3 below;
2. purchase securities on margin (but a Fund may obtain such short-term
credits as may be necessary for the clearance of transactions) (Margin
payments or other arrangements in connection with transactions in
short sales, futures contracts, options, and other financial
instruments are not considered to constitute the purchase of
securities on margin for this purpose.);
3. borrow more than one-third of the value of its total assets less all
liabilities and indebtedness (other than such borrowings) not
represented by senior securities;
4. act as underwriter of securities of other issuers except to the extent
that, in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under certain federal securities
laws;
5. (i) (as to 75% of the Diversified Growth Fund's, the Global Low-Priced
Stock Fund's, the Global Natural Resources Fund's, the Growth & Income
Fund's, the Information Age Fund's-TM-, and the MicroCap Growth
Fund's total assets and 50% of the Global Value Fund's and the
Partners Fund's total assets) purchase any security (other than
obligations of the U.S. Government, its agencies or instrumentalities)
if as a result more than 5% of the Fund's total assets (taken at
current value) would then be invested in securities of a single
issuer, or (ii) purchase any security if as a result 25% or more of
the Fund's total assets (taken at current value) would be invested in
a single industry, except that the Information Age Fund-TM- will
invest without limit in any one or more information technology
industries and the Global Natural Resources Fund will invest without
limit in any one or more natural resources industries, as described in
the Trust's Prospectus at the time;
6. (all Funds other than the Global Value Fund) invest in securities of
any issuer if any officer or Trustee of the Trust or any officer or
director of RSIM, L.P. or RSIM, Inc., as the case may be, owns more
than 1/2 of 1% of the outstanding securities of such issuer, and such
officers, Trustees and directors who own more than 1/2 of 1% own in
the aggregate more than 5% of the outstanding securities of such
issuer (This policy is non-fundamental as to the MicroCap Growth
Fund);
7. make loans, except by purchase of debt obligations or other financial
instruments in which the Fund may invest consistent with its
investment policies, by entering into repurchase agreements, or
through the lending of its portfolio securities;
8. purchase or sell commodities or commodity contracts, except that a
Fund may purchase or sell financial futures contracts, options on
financial futures contracts, and futures contracts, forward contracts,
and options with respect to foreign currencies, and may enter into
swap transactions or other financial transactions, and except as
required in connection with otherwise permissible options, futures,
and commodity activities as described elsewhere in the Prospectus or
this Statement at the time;
B-17
<PAGE>
9. purchase or sell real estate or interests in real estate, including
real estate mortgage loans, although (i) it may purchase and sell
securities which are secured by real estate and securities of
companies, including limited partnership interests, that invest or
deal in real estate and it may purchase interests in real estate
investment trusts, and (ii) the Global Natural Resources Fund may
invest in any issuers in the natural resources industries, as
described in the Prospectus at the time. (For purposes of this
restriction, investments by a Fund in mortgage-backed securities and
other securities representing interests in mortgage pools shall not
constitute the purchase or sale of real estate or interests in real
estate or real estate mortgage loans.).
In addition, it is contrary to the current policy of each of the
Diversified Growth, Global Low-Priced Stock, Global Natural Resources, Global
Value, Growth & Income, Information Age-TM-, MicroCap Growth, and Partners
Funds, which policy may be changed without shareholder approval, to invest more
than 15% of its net assets in securities which are not readily marketable,
including securities restricted as to resale (other than securities restricted
as to resale but determined by the Trustees, or persons designated by the
Trustees to make such determinations, to be readily marketable).
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as fundamental or to the extent
designated as such in a Prospectus, the other investment policies described in
this Statement or in the Prospectus are not fundamental and may be changed by
approval of the Trustees. As a matter of policy, the Trustees would not
materially change a Fund's investment objective without shareholder approval.
The Investment Company Act of 1940, as amended (the "1940 Act"), provides
that a "vote of a majority of the outstanding voting securities" of the Fund
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of a Fund, or (2) 67% or more of the shares present at a meeting if more
than 50% of the outstanding shares are represented at the meeting in person or
by proxy.
MANAGEMENT OF THE FUNDS
TRUSTEES AND OFFICERS
Set forth below is certain information about the Trust's trustees and
executive officers:
*G. RANDY HECHT, PRESIDENT, CHIEF EXECUTIVE OFFICER AND TRUSTEE
c/o Robertson, Stephens & Company LLC, 555 California Street, San Francisco, CA
94104
Mr. Hecht, 45, has served as the Chief Operating Officer of Robertson,
Stephens & Company, Inc. since January 1993, as Chief Financial Officer of
Robertson, Stephens & Company LLC (and its predecessors) from June 1984 to
January 1993 and as the head of the firm's Investment Management Group
since 1988. He is a limited partner of Robertson, Stephens & Company LLC,
and a member of the Management and Executive Committees of Robertson,
Stephens & Company, Inc. As of October 18, 1988, Mr. Hecht assumed the
responsibilities of President and Chief Executive Officer of the Trust.
From May 1987 through May 1995, he served as Chief Financial Officer of
the Trust. Mr. Hecht has been a Director of RSIM, Inc., and of Robertson,
Stephens & Company, Inc., the sole general partner of RSIM, L.P., one of
the Trust's Advisers, from June 1989 to January 1993, and since January
1993, respectively. Mr. Hecht served as the Trust's Secretary from May
1987 through January 1989, as RSIM, L.P.'s Secretary from 1993 to the
present, and as RSIM, Inc.'s Secretary from May 1987 through June 1989. He
has been a Trustee of the Trust since June 1987.
- ---------------
* Denotes a Trustee who is an "interested person," as defined in the 1940
Act.
B-18
<PAGE>
LEONARD B. AUERBACH, TRUSTEE
c/o Robertson, Stephens & Company LLC, 555 California Street, San Francisco, CA
94104
Mr. Auerbach, 49, is the President and Chairman of the Board of Auerbach
Associates, Inc., a management consulting firm which he founded in 1979.
Mr. Auerbach is also the sole shareholder and director of a company that is
a general partner of Tuttle & Company, which provides mortgage pipeline
interest rate hedging services to a variety of institutional clients. Mr.
Auerbach is the President of Tuttle & Auerbach Securities, Inc., an
introducing broker trading futures on behalf of institutional hedging
clients and individuals. He also is a Director of Roelof Mining, Inc. He
was a professor of Business Administration at St. Mary's College, Moraga,
California until June 1992. He is the co-founder, and served as the
Chairman until March 1986, of Intraview Systems Corporation, a privately-
held company whose assets were acquired by Worlds of Wonder, Inc. He has
been a Trustee of the Trust since June 1987.
DANIEL R. COONEY, TRUSTEE
c/o Robertson, Stephens & Company LLC, 555 California Street, San Francisco, CA
94104
Mr. Cooney, 72, is retired. He had a consulting agreement with Lord Abbett
& Co., a mutual fund adviser, from January 1987 until December 1989. From
September 1985 through December 1986 he was an Executive Vice President and
Senior Adviser of the Lord Abbett Developing Growth Fund, a mutual fund.
Mr. Cooney was the portfolio manager of the Lord Abbett Developing Growth
Fund from its inception (October 1973) through September 1985, at which
time the Lord Abbett Developing Growth Fund had assets of approximately
$250 million. He has been a Trustee of the Trust since April 1989.
TERRY R. OTTON, CHIEF FINANCIAL OFFICER
c/o Robertson, Stephens & Company LLC, 555 California Street, San Francisco, CA
94104
Mr. Otton, 42, has served as Treasurer, Chief Financial Officer, and
Principal Accounting Officer of Robertson, Stephens & Company LLC (and its
predecessors) since January 1993, and has been a Managing Director since
January 1992. Prior to becoming Chief Financial Officer of Robertson,
Stephens & Company LLC, he served as Controller from January 1988 to
December 1992. Mr. Otton is a Certified Public Accountant, and prior to
joining Robertson, Stephens & Company LLC in 1982, was employed by Arthur
Anderson.
JAMES K. PETERSON, TRUSTEE
c/o Robertson, Stephens & Company LLC, 555 California Street, San Francisco, CA
94104
Mr. Peterson, 55, is a private consultant; he served as Director of the IBM
Retirement Funds from April 1988 until October 1996. Mr. Peterson was a
Manager of the IBM Retirement Funds from March 1981 until April 1988. Mr.
Peterson has been a Trustee of the Trust since June 1987.
*JOHN P. ROHAL, TRUSTEE
c/o Robertson, Stephens & Company LLC, 555 California Street, San Francisco, CA
94104
Mr. Rohal, 49, has served as Managing Director and Director of Research for
Robertson, Stephens & Company LLC (and its predecessors) since April 1993.
From November 1987 to April 1993 he was Managing Director and co-head of
the technology research group for Alex. Brown & Sons, an investment banking
firm. He has been a Trustee of the Trust since July 1993.
DANA K. WELCH, SECRETARY
c/o Robertson, Stephens & Company LLC, 555 California Street, San Francisco, CA
94104
Ms. Welch, 45, is a Managing Director of Robertson, Stephens & Company LLC
and has served as General Counsel of Robertson, Stephens & Company LLC (and
its predecessors) since June 1995. Prior to joining Robertson, Stephens &
Company LLC, Ms. Welch was Special Counsel at O'Melveny & Myers, a Los
Angeles based law firm. She has served as Secretary of the Trust since
August 1996.
Pursuant to the terms of the Advisory Agreements with the Funds, Robertson
Stephens Investment Management pays all compensation of officers of the Trust as
well as the fees and expenses of all Trustees of the
B-19
<PAGE>
Trust who are affiliated persons of Robertson Stephens Investment Management.
The Trust pays each unaffiliated Trustee an annual fee of $5,000 per Fund and
reimburses their actual out-of-pocket expenses relating to attendance at
meetings of the Board of Trustees.
CONTROL PERSONS AND SHARE OWNERSHIP
Shareholders of record who owned on March 1, 1997 more than 5% of the
outstanding shares of any Fund were as follows:
Percentage of Fund's
Shareholder Shares Owned Outstanding Shares
----------- ------------ ------------------
CONTRARIAN FUND-TM-
Charles Schwab & Co., Inc. 23,940,364.525 35.51%
Cash Account Special Custody
FBO Customers Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 8,682,525.378 12.88%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
DEVELOPING COUNTRIES FUND
Charles Schwab & Co., Inc. 3,969,645.149 44.00%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 1,412,302.551 15.66%
Attn: Mutual Funds, 5th Floor
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
DIVERSIFIED GROWTH FUND
Charles Schwab & Co., Inc. 2,195,698.601 44.08%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
B-20
<PAGE>
National Financial Services Corp. 710,532.054 14.26%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908 Church Street Station
New York, NY 10008-3908
EMERGING GROWTH FUND
Charles Schwab & Co., Inc. 2,117,513.984 21.20%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
GLOBAL LOW-PRICED STOCK FUND
National Financial Services Corp. 299,839.989 11.65%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
FTC & Co. 185,795.497 7.22%
Attn: Datalynx #003
P.O. Box 173736
Denver, CO 80217-3736
Charles Schwab & Co., Inc. 788,837.743 30.64%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94101-4122
GLOBAL NATURAL RESOURCES FUND
National Financial Services Corp. 1,855,094.905 15.28%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Charles Schwab & Co., Inc. 5,954,297.619 49.04%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94101-4122
B-21
<PAGE>
GROWTH & INCOME FUND
Charles Schwab & Co., Inc. 8,990,670.131 41.91%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 2,883,774.702 13.44%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
INFORMATION AGE FUND-TM-
National Financial Services Corp. 1,334,536.191 16.07%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
Charles Schwab & Co., Inc. 2,951,914.066 35.55%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
MICRO CAP GROWTH FUND
Charles Schwab & Co., Inc. 189,723.669 18.58%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 142,631.668 13.97%
FBO The Exclusive Benefit of
Our Clients
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
PARTNERS FUND
Charles Schwab & Co., Inc. 6,218,348.907 41.14%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
B-22
<PAGE>
National Financial Services Corp. 2,030,490.633 13.43%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
VALUE + GROWTH FUND
Charles Schwab & Co., Inc. 8,524,532.935 33.48%
Reinvest Account
Attn: Mutual Fund Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 3,663,410.439 14.39%
FBO The Exclusive Benefit of
Our Customers
P.O. Box 3908
Church Street Station
New York, NY 10008-3908
To the Funds' knowledge, there were no shareholders who owned beneficially
5% or more of a Fund's shares on March 1, 1997.
On March 1, 1997 the officers and Trustees of the Trust, as a group,
beneficially owned less than 1% of the outstanding shares of each Fund.
The Trust's Declaration of Trust provides that the Trust will indemnify its
Trustees and officers against liabilities and expenses incurred in connection
with litigation in which they may be involved because of their offices with the
Trust, except if it is determined in the manner specified in the Declaration of
Trust that they have not acted in good faith in the reasonable belief that their
actions were in the best interests of the Trust or that such indemnification
would relieve any officer or Trustee of any liability to the Trust or its
shareholders by reason of willful misfeasance, bad faith, gross negligence, or
reckless disregard of his or her duties. The Trust, at its expense, provides
liability insurance for the benefit of its Trustees and officers.
ROBERTSON STEPHENS INVESTMENT MANAGEMENT
Pursuant to Investment Advisory Agreements (the "Advisory Agreements"),
Robertson Stephens Investment Management determines the composition of the
Funds' portfolios, the nature and timing of the changes to the Funds'
portfolios, and the manner of implementing such changes. Robertson Stephens
Investment Management also (a) provides the Funds with investment advice,
research, and related services for the investment of their assets, subject to
such directions as it may receive from the Board of Trustees; (b) pays all of
the Trust's executive officers' salaries and executive expenses (if any); (c)
pays all expenses incurred in performing its investment advisory duties under
the Advisory Agreements; and (d) furnishes the Funds with office space and
certain administrative services (pursuant, in the case of the Diversified Growth
Fund, the Global Low-Price Stock Fund, the Global Natural Resources Fund, the
Global Value Fund, the Growth & Income Fund, the Information Age Fund-TM-, and
the MicroCap Growth Fund, Administrative Services Agreements with the Funds, as
described below). The services of Robertson Stephens Investment Management to
the Funds are not deemed to be exclusive, and Robertson Stephens Investment
Management or any affiliate may provide similar services to other series of the
Trust, other investment companies, and other clients, and may engage in other
activities. The Funds may reimburse Robertson Stephens Investment Management
(on a cost recovery basis only) for any services performed for a Fund by it
outside its duties under the Advisory Agreements.
B-23
<PAGE>
Investment decisions for the Funds and for the other investment advisory
clients of Robertson Stephens Investment Management and its affiliates are made
with a view to achieving their respective investment objectives. Investment
decisions are the product of many factors in addition to basic suitability for
the particular client involved. Thus, a particular security may be bought or
sold for certain clients even though it could have been bought or sold for other
clients at the same time. Likewise, a particular security may be bought for one
or more clients when one or more other clients are selling the security. In
some instances, one client may sell a particular security to another client. It
also sometimes happens that two or more clients simultaneously purchase or sell
the same security, in which event each day's transactions in such security are,
insofar as possible, averaged as to price and allocated between such clients in
a manner which in Robertson Stephens Investment Management's opinion is
equitable to each and in accordance with the amount being purchased or sold by
each. There may be circumstances when purchases or sales of portfolio
securities for one or more clients will have an adverse effect on other clients.
Robertson Stephens Investment Management employs professional staffs of
portfolio managers who draw upon a variety of resources, including RS&Co., for
research information for the Funds.
MANAGEMENT FEES. The Funds pay Robertson Stephens Investment Management
fees as compensation for the services provided by it under the Advisory
Agreements. The amount of these management fees is calculated daily and payable
monthly at the following annual rates based on the average daily net assets of
each Fund:
Contrarian Fund-TM- 1.50%
Developing Countries Fund 1.25%
Diversified Growth Fund 1.00%
Emerging Growth Fund 1.00%
Global Low-Priced Stock Fund 1.00%
Global Natural Resources Fund 1.00%
Global Value Fund 1.00%
Growth & Income Fund 1.00%
Information Age Fund-TM- 1.00%
MicroCap Growth Fund 1.25%
Partners Fund 1.25%
Value + Growth Fund 1.00%
These management fees are higher than those paid by most other investment
companies. Robertson Stephens Investment Management also may at its discretion
from time to time pay Fund expenses from its own assets, or reduce the
management fee of a Fund.
ADMINISTRATIVE FEES. The Diversified Growth Fund, Global Low-Priced Stock
Fund, Global Natural Resources Fund, Global Value Fund, Growth & Income Fund,
Information Age Fund-TM-, and MicroCap Growth Fund have entered into
Administrative Services Agreements with RSIM, L.P., pursuant to which RSIM, L.P.
continuously provides business management services to the Funds and generally
manages all of the business and affairs of the Funds, subject to the general
oversight of the Trustees. The Funds pay RSIM, L.P. a fee, calculated daily and
payable monthly, at the annual rate of 0.25% of their respective average daily
net assets.
The proceeds received by each Fund for each issue or sale of its shares,
and all income, earnings, profits, and proceeds thereof, subject only to the
rights of creditors, will be specifically allocated to such Fund, and constitute
the underlying assets of that Fund. The underlying assets of each Fund will be
segregated on the Trust's books of account, and will be charged with the
liabilities in respect of such Fund and with a share of the general liabilities
of the Trust. Expenses with respect to any two or more Funds may be allocated
in proportion to the net asset values of the respective Funds except where
allocations of direct expenses can otherwise be fairly made.
Each of the Advisory Agreements is subject to annual approval (in the case
of the Diversified Growth Fund and the MicroCap Growth Fund, commencing in 1998
and in the case of the Global Value Fund, in 1999) by (i)
B-24
<PAGE>
the vote of the Trustees or of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the affected Fund, and (ii) the
vote of a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the Trust, RSIM, L.P., or RSIM, Inc. Each is
terminable by Robertson Stephens Investment Management or the Trust, without
penalty, on 60 days written notice to the other and will terminate
automatically in the event of its assignment.
Each of the Administrative Services Agreements is subject to annual
approval (in the case of the Diversified Growth Fund and the MicroCap Growth
Fund, commencing in 1998, and in the case of the Global Value Fund, in 1999) by
(i) the Board ofTrustees, and (ii) the vote of a majority of the Trustees who
are not "interested persons" (as defined in the 1940 Act). The Administrative
Services Agreements may be terminated without penalty, by the Trust or by the
vote of a majority of the outstanding voting securities (as defined in the 1940
Act) of the affected Fund, on 30 days notice to RSIM, L.P.
RECENT MANAGEMENT AND ADMINISTRATIVE FEES PAID BY THE FUNDS.
Reimbursement Administration
Management Fees(1) of Expenses(2) Fees
------------------ -------------- --------------
CONTRARIAN FUND-TM-
Year ended 3/31/95 $8,053,129 $785,897 --
Nine Months Ended 12/31/95 $5,648,970 -- --
Year ended 12/31/96 $13,472,471 -- --
DEVELOPING COUNTRIES FUND
5/2/94 - 3/31/95 $174,084 $ 44,177 --
Nine Months ended 12/31/95 $145,517 $282,462 --
Year ended 12/31/96 $543,832 $373,858 --
DIVERSIFIED GROWTH FUND
8/1/96 - 12/31/96 $135,953 $22,771 $33,988
EMERGING GROWTH FUND
Year ended 3/31/95 $1,736,763 -- --
Nine Months Ended 12/31/95 $1,288,465 -- --
Year ended 12/31/96 $1,805,586 -- --
GLOBAL LOW-PRICED STOCK FUND
11/15/95 - 12/31/95 $854 $6,440 $213
Year ended 12/31/96 $195,547 $234,614 $48,887
GLOBAL NATURAL RESOURCES FUND
11/15/95 - 12/31/95 $470 $5,748 $117
Year ended 12/31/96 $487,594 $107,877 $121,899
GROWTH & INCOME FUND
7/12/95 - 12/31/95 $415,116 --
Year ended 12/31/96 $2,462,636 $140,905 $615,659
INFORMATION AGE FUND-TM-
11/15/95 - 12/31/95 $25,307 --
Year ended 12/31/96 $720,640 -- $6,327
$180,160
MICROCAP GROWTH FUND
8/15/96 - 12/31/96 $25,237 $67,948 $5,047
B-25
<PAGE>
Reimbursement Administration
Management Fees(1) of Expenses(2) Fees
------------------ -------------- --------------
PARTNERS FUND
7/12/95 - 12/31/95 $42,710 $93,846 --
Year ended 12/31/96 $514,459 $91,703 --
VALUE + GROWTH FUND
Year ended 3/31/95 $1,260,821 -- --
Nine Months Ended 12/31/95 $9,702,327 -- --
Year ended 12/31/96 $8,168,685 -- --
(1) Before giving effect to any reimbursement or waiver by RSIM.
(2) Includes amount of management fees waived or reimbursed by RSIM, plus
the amount of any other expenses for which RSIM reimbursed the Fund or which
RSIM bore on behalf of the Fund.
EXPENSES
Each Fund will pay all expenses related to its operation which are not
borne by Robertson Stephens Investment Management or RS&Co., including but not
limited to taxes, interest, brokerage fees and commissions, compensation paid to
RS&Co. under a Fund's 12b-1 Plans and its Shareholder Service Plans, fees paid
to members of the Board of Trustees who are not officers, directors,
stockholders, or employees of Robertson Stephens Investment Management or
RS&Co., SEC fees and related expenses, state Blue Sky qualification fees,
charges of custodians, transfer agents, registrars or other agents, outside
auditing, accounting, and legal services, charges for the printing of
prospectuses and statements of additional information for regulatory purposes or
for distribution to shareholders, certain shareholder report charges, and
charges relating to corporate matters.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Transactions on U.S. stock exchanges, commodities markets, and futures
markets and other agency transactions involve the payment by a Fund of
negotiated brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions according to such
factors as the difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions, which may
be higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by the Trust usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by the Trust includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, Robertson Stephens Investment Management receives brokerage and
research services and other similar services from many broker-dealers with which
Robertson Stephens Investment Management places a Fund's portfolio transactions
and from third parties with which these broker-dealers have arrangements. These
services include such matters as general economic and market reviews, industry
and company reviews, evaluations of investments, recommendations as to the
purchase and sale of investments, newspapers, magazines, pricing services,
quotation services, news services, and personal computers utilized by Robertson
Stephens Investment Management's managers and analysts. Where the services
referred to above are not used exclusively by Robertson Stephens Investment
Management for research purposes, Robertson Stephens Investment Management,
based upon its own allocations of expected use, bears that portion of the cost
of these services which directly relates to its non-research use. Some of these
services are of value to Robertson Stephens Investment Management and its
affiliates in advising various of its clients (including the Funds), although
not all of these services are necessarily useful and
B-26
<PAGE>
of value in managing the Funds. The management fee paid by a Fund is not
reduced because Robertson Stephens Investment Management or its affiliates
receive these services even though Robertson Stephens Investment Management
might otherwise be required to purchase some of these services for cash.
Robertson Stephens Investment Management places all orders for the
purchase and sale of portfolio investments for the Funds and buys and sells
investments for the Funds through a substantial number of brokers and dealers.
RobertsonStephens Investment Management seeks the best overall terms available
for the Funds, except to the extent Robertson Stephens Investment Management
may be permitted to pay higher brokerage commissions as described below. In
doing so, Robertson Stephens Investment Management, having in mind a Fund's
best interests, considers all factors it deems relevant, including, by way of
illustration, price, the size of the transaction, the nature of the market for
the security or other investment, the amount of the commission, the timing of
the transaction taking into account market prices, and trends, the reputation,
experience, and financial stability of the broker-dealer involved and the
quality of service rendered by the broker-dealer in other transactions.
As permitted by Section 28(e) of the 1934 Act, and by the Advisory
Agreements, Robertson Stephens Investment Management may cause a Fund to pay a
broker-dealer which provides "brokerage and research services" (as defined in
the 1934 Act) to Robertson Stephens Investment Management an amount of disclosed
commission for effecting securities transactions on stock exchanges and other
transactions for the Fund on an agency basis in excess of the commission which
another broker-dealer would have charged for effecting that transaction.
Robertson Stephens Investment Management's authority to cause a Fund to pay any
such greater commissions is also subject to such policies as the Trustees may
adopt from time to time. Neither RSIM, L.P. nor RSIM, Inc. currently intends to
cause the Funds to make such payments. It is the position of the staff of the
Securities and Exchange Commission that Section 28(e) does not apply to the
payment of such greater commissions in "principal" transactions. Accordingly,
RSIM, L.P. and RSIM, Inc. will use their best efforts to obtain the best overall
terms available with respect to such transactions.
The following tables provide information regarding brokerage commissions
paid by the Funds for the periods indicated.
<TABLE>
<CAPTION>
CONTRARIAN FUND-TM- FISCAL YEAR PERIOD FISCAL YEAR
ENDED 12/31/96 3/31/95-12/31/95 ENDED 3/31/95
-------------- ---------------- -------------
<S> <C> <C> <C>
Percentage of total transactions 61% 62% 69%
involving brokerage commissions
Dollar amount of commissions $3,072,174 $1,026,683 $1,959,452
Percentage (dollar amount) paid to 1%($27,230) 1% ($6,840) 14.8% ($289,074)
RS&Co.
Percentage of brokerage transactions 1% 1% 14%
effected through RS&Co.
Percentage of transactions effected 39% 38% 31%
without brokerage commissions
B-27
<PAGE>
<CAPTION>
DEVELOPING COUNTRIES FUND FISCAL YEAR PERIOD PERIOD
ENDED 12/31/96 3/31/95-12/31/95 5/2/94 - 3/31/95
-------------- ---------------- ----------------
<S> <C> <C> <C>
Percentage of total transactions 62% 87% 76%
involving brokerage commissions
Dollar amount of commissions $680,315 $228,245 $170,919
Percentage (dollar amount) paid to 0.02% ($150) 0% ($0) .73% ($1,250)
RS&Co.
Percentage of brokerage transactions 0.37% 0% 2%
effected through RS&Co.
Percentage of transactions effected 38% 13% 24%
without brokerage commissions
<CAPTION>
DIVERSIFIED GROWTH FUND PERIOD
8/1/96 - 12/31/96
-----------------
<S> <C>
Percentage of total transactions 57%
involving brokerage commissions
Dollar amount of commissions $125,233
Percentage (dollar amount) paid to 13% ($16,648)
RS&Co.
Percentage of brokerage transactions 20%
effected through RS&Co.
Percentage of transactions effected 43%
without brokerage commissions
<CAPTION>
EMERGING GROWTH FUND FISCAL YEAR PERIOD FISCAL YEAR
ENDED 12/31/96 3/31/95-12/31/95 ENDED 3/31/95
-------------- ---------------- -------------
<S> <C> <C> <C>
Percentage of total transactions involving 27% 21% 21%
brokerage commissions
Dollar amount of commissions $479,020 $300,963 $559,915
Percentage (dollar amount) paid to RS&Co. 5% ($23,895) 24% ($71,498) 29.2% ($163,607)
Percentage of brokerage transactions effected 2% 4% 24%
through RS&Co.
Percentage of transactions effected without 73% 79% 79%
brokerage commissions
B-28
<PAGE>
<CAPTION>
VALUE + GROWTH FUND FISCAL YEAR PERIOD FISCAL YEAR
ENDED 12/31/96 3/31/95-12/31/95 ENDED 3/31/95
-------------- ---------------- -------------
<S> <C> <C> <C>
Percentage of total transactions involving 53% 77% 49%
brokerage commissions
Dollar amount of commissions $3,175,482 $1,707,929 $665,354
Percentage (dollar amount) paid to RS&Co. 12% ($375,005) 21% ($356,240) 12.4% ($82,270)
Percentage of brokerage transactions effected 8% 9% 13%
through RS&Co.
Percentage of transactions effected without 47% 23% 51%
brokerage commissions
<CAPTION>
GLOBAL LOW-PRICED STOCK FUND FISCAL YEAR PERIOD
ENDED 12/31/96 11/15/95-12/31/95
-------------- -----------------
<S> <C> <C>
Percentage of total transactions 50% 51%
involving brokerage commissions
Dollar amount of commissions $127,491 $1,595
Percentage (dollar amount) paid to RS&Co. 2% ($2,087) 0%
Percentage of brokerage transactions effected 1% 0%
through RS&Co.
Percentage of transactions effected without 50% 49%
brokerage commissions
<CAPTION>
GLOBAL NATURAL RESOURCES FUND FISCAL YEAR PERIOD
ENDED 12/31/96 11/15/95-12/31/95
-------------- -----------------
<S> <C> <C>
Percentage of total transactions 69% 84%
involving brokerage commissions
Dollar amount of commissions $362,984 $1,242
Percentage (dollar amount) paid to RS&Co. 1% (2,302) 41% ($515)
Percentage of brokerage transactions 2% 39%
effected through RS&Co.
Percentage of transactions effected 31% 16%
without brokerage commissions
B-29
<PAGE>
<CAPTION>
GROWTH & INCOME FUND FISCAL YEAR PERIOD
ENDED 12/31/96 7/12/95-12/31/95
-------------- ----------------
<S> <C> <C>
Percentage of total transactions involving 44% 45%
brokerage commissions
Dollar amount of commissions $1,257,368 $282,119
Percentage (dollar amount) paid to RS&Co. 14% ($179,275) 18% ($49,415)
Percentage of brokerage transactions effected 6% 7%
through RS&Co.
Percentage of transactions effected without 56% 55%
brokerage commissions
<CAPTION>
INFORMATION AGE FUND-TM- FISCAL YEAR PERIOD
ENDED 12/31/96 11/15/95-12/31/95
-------------- -----------------
<S> <C> <C>
Percentage of total transactions involving 22% 75%
brokerage commissions
Dollar amount of commissions $245,279 $21,166
Percentage (dollar amount) paid to RS&Co. 13% ($31,080) 25% ($5,200)
Percentage of brokerage transactions effected 3% 8%
through RS&Co.
Percentage of transactions effected without 78% 25%
brokerage commissions
<CAPTION>
MICRO CAP FUND PERIOD
8/15/96 - 12/31/96
------------------
<S> <C>
Percentage of total transactions involving 5%
brokerage commissions
Dollar amount of commissions $1,800
Percentage (dollar amount) paid to RS&Co. 0%
Percentage of brokerage transactions effected 0%
through RS&Co.
Percentage of transactions effected without 95%
brokerage commissions
B-30
<PAGE>
<CAPTION>
PARTNERS FUND FISCAL YEAR PERIOD
ENDED 12/31/96 7/12/95-12/31/95
-------------- ----------------
<S> <C> <C>
Percentage of total transactions involving 63% 70%
brokerage commissions
Dollar amount of commissions $143,042 $21,979
Percentage (dollar amount) paid to RS&Co. 0.5% ($680) 0.1% ($25)
Percentage of brokerage transactions effected 1% 1%
through RS&Co.
Percentage of transactions effected without 37% 30%
brokerage commissions
</TABLE>
THE FUNDS' DISTRIBUTOR
Each of the Funds has adopted a Distribution Plan under Rule 12b-l of the
1940 Act (each, a "Plan") in respect of its Class A and Class C Shares.
CLASS A SHARES. Pursuant to the Plans adopted in respect of the Funds'
Class A Shares (the "Class A Plans"), each Fund may pay RS&Co. (also referred to
as the "Distributor"), from the assets attributable to the Fund's Class A
Shares, distribution fees, for services the Distributor renders and costs and
expenses it incurs in connection with the continuous offering of the Fund's
shares, at an annual rate of 0.75% of the Fund's average daily net assets, in
the case of The Contrarian Fund-TM-, 0.50% of the Fund's average daily net
assets, in the case of the Developing Countries Fund, and 0.25% of the Fund's
average daily net assets, in the case of each of the other Funds. (The Trustees
have currently limited payments under the Distribution Plan for the Developing
Countries Fund to a rate of 0.25% of the Fund's average daily net assets.)
These expenses may include, but are not limited to, costs of advertising and
promoting the sale of shares of the Funds and payments to dealers, financial
institutions, advisers, or other firms. The Plans also permit the Distributor
to receive compensation based on a prorated portion of its overhead expenses
attributable to the distribution of each Fund's shares, which include leases,
communications, salaries, training, supplies, photocopying, and any other
category of the Distributor's expenses attributable to the distribution of these
Funds' shares.
CLASS C SHARES. Pursuant to the Plans adopted in respect of the Funds'
Class C Shares (the "Class C Plans"), each Fund may pay the Distributor fees for
services provided and expenses incurred by it as the principal underwriter of
the Class C shares. The Plans by their terms also relate to payments under the
Funds' shareholder service plans, to the extent such payments may be seen as
primarily intended to result in the sale of the Funds' Class C Shares. The
Plans, which are "compensation" plans, provide for payments by each Fund to the
Distributor from the assets attributable to the Funds' Class C Shares at an
annual rate of up to 1.00%.
RECENT PAYMENTS UNDER THE FUNDS' CLASS A DISTRIBUTION PLANS*.
Distribution Fees Waiver
----------------- -----
CONTRARIAN FUND-TM-
Year ended 3/31/95 $4,026,498 --
Nine months ended 12/31/95 $2,824,481 --
Year ended 12/31/96 $6,736,236 --
B-31
<PAGE>
DEVELOPING COUNTRIES FUND
5/2/94 - 3/31/95 $69,633 --
Nine months ended 12/31/95 $37,616 --
Year ended 12/31/96 $108,766 --
DIVERSIFIED GROWTH FUND
8/1/96 - 12/31/96 $33,988 --
EMERGING GROWTH FUND
Year ended 3/31/95 $434,190 --
Nine months ended 12/31/95 $322,116 --
Year ended 12/31/96 $451,396 --
GLOBAL LOW-PRICED STOCK FUND
11/15/95 - 12/31/95 $213 $213
Year ended 12/31/96 $48,887 $48,887
GLOBAL NATURAL RESOURCES FUND
11/15/95 - 12/31/95 $117 --
Year ended 12/31/96 $121,899 --
GROWTH & INCOME FUND
7/25/95 - 12/31/95 $103,780 --
Year ended 12/31/96 $615,659 --
INFORMATION AGE FUND-TM-
11/15/95 - 12/31/95 $6,327 --
Year ended 12/31/96 $180,160 --
MICROCAP GROWTH FUND
8/15/96 - 12/31/96 $5,047 --
PARTNERS FUND
7/12/95 - 12/31/95 $8,542 --
Year ended 12/31/96 $102,892 --
VALUE + GROWTH FUND
Year ended 12/31/96 $2,042,076 --
- ---------------
* No payments were made under the Funds' Class C Plans during fiscal 1995 or
fiscal 1996.
HOW NET ASSET VALUE IS DETERMINED
Each Fund determines the net asset value per share of each class of its
shares once daily, as of 4:30 p.m. eastern time on each day the New York Stock
Exchange (the "Exchange") is open. The Exchange is closed Saturdays, Sundays,
New Year's Day, Presidents' Day, Good Friday, Memorial Day, the Fourth of July,
Labor Day, Thanksgiving, and Christmas.
Securities for which market quotations are readily available are valued
using the last reported sale price or, if no sales are reported (as in the case
of some securities traded over-the-counter), at the mean between the closing bid
and asked prices, except that certain U.S. Government securities are stated at
the mean between the last reported bid and asked prices. Short-term investments
having remaining maturities of 60 days or less are stated at amortized cost,
which approximates market value. All other securities and assets are valued at
their fair value following procedures approved by the Trustees.
B-32
<PAGE>
Reliable market quotations are not considered to be readily available for
long-term corporate bonds and notes, certain preferred stocks, or certain
foreign securities. These investments are stated at fair value on the basis of
valuations furnished by pricing services, which determine valuations for normal,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships between
securities which are generally recognized by institutional traders.
If any securities held by a Fund are restricted as to resale, their fair
value is determined in accordance with the guidelines and procedures adopted by
the Trust's Board of Trustees. The fair value of such securities is generally
determined as the amount which a Fund could reasonably expect to realize from an
orderly disposition of such securities over a reasonable period of time. The
valuation procedures applied in any specific instance are likely to vary from
case to case. However, consideration is generally given to the financial
position of the issuer and other fundamental analytical data relating to the
investment and to the nature of the restrictions on disposition of the
securities (including any registration expenses that might be borne by the Fund
in connection with such disposition). In addition, specific factors are also
generally considered, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities, and any available
analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of a Fund's shares are computed as of such times. Also, because of the
amount of time required to collect and process trading information as to large
numbers of securities issues, the values of certain securities (such as
convertible bonds and U.S. Government securities) are determined based on market
quotations collected earlier in the day at the latest practicable time prior to
the close of the Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the Exchange which will
not be reflected in the computation of a Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value following procedures
approved by the Trustees.
REDEMPTIONS
During any 90-day period, the Trust is committed to pay in cash all
requests to redeem shares by any one shareholder, up to the lesser of $250,000
and 1% of the value of a Fund's net assets at the beginning of the period.
Should redemptions by any shareholder of a Fund exceed this limitation, the
Trust reserves the right to redeem the excess amount in whole or in part in
securities or other assets. If shares are redeemed in this manner, the
redeeming shareholder typically will incur brokerage and other costs in
converting the securities to cash.
TAXES
Each Fund intends to qualify each year and elect to be taxed as a regulated
investment company under Subchapter M of the United States Internal Revenue Code
of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, a Fund would not be subject to federal income tax
on any of its net investment income or net realized capital gains that are
distributed to shareholders. As long as each Fund maintains its status as a
regulated investment company and distributes all of its income, it will not,
under present law, be subject to any excise or income taxes in Massachusetts or
to franchise or income taxes in California.
In order to qualify as a "regulated investment company," a Fund must, among
other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies;
(b) derive less than 30% of its gross income from the sale or other disposition
of certain assets (including stock and securities) held less than three months;
(c) diversify its holdings so that, at the close of each quarter of its taxable
year, (i) at least 50% of the value of its total assets consists of cash, cash
items, U.S. Government securities, and other securities limited generally with
respect to any one issuer to not more than 5% of the total assets of the Fund
and not more than 10% of the outstanding voting
B-33
<PAGE>
securities of such issuer, and (ii) not more than 25% of the value of its assets
is invested in the securities of any issuer (other than U.S. Government
securities). In order to receive the favorable tax treatment accorded regulated
investment companies and their shareholders, moreover, a Fund must in general
distribute at least 90% of its interest, dividends, net short-term capital gain,
and certain other income each year.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. Each Fund
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November, or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.
With respect to investment income and gains received by a Fund from sources
outside the United States, such income and gains may be subject to foreign taxes
which are withheld at the source. The effective rate of foreign taxes to which
a Fund will be subject depends on the specific countries in which its assets
will be invested and the extent of the assets invested in each such country and
therefore cannot be determined in advance.
A Fund's ability to use options, futures, and forward contracts and other
hedging techniques, and to engage in certain other transactions, including short
sales, may be limited by tax considerations, in particular, the requirement that
less than 30% of the Fund's gross income be derived from the sale or disposition
of assets held for less than three months. A Fund's transactions in foreign
currency-denominated debt instruments and its hedging activities will likely
produce a difference between its book income and its taxable income. This
difference may cause a portion of the Fund's distributions of book income to
constitute returns of capital for tax purposes or require the Fund to make
distributions exceeding book income in order to permit the Fund to continue to
qualify, and be taxed under Subchapter M of the Code, as a regulated investment
company.
Under federal income tax law, a portion of the difference between the
purchase price of zero-coupon securities in which a Fund has invested and their
face value ("original issue discount") is considered to be income to the Fund
each year, even though the Fund will not receive cash interest payments from
these securities. This original issue discount (imputed income) will comprise a
part of the net investment income of the Fund which must be distributed to
shareholders in order to maintain the qualification of the Fund as a regulated
investment company and to avoid federal income tax at the level of the Fund.
Each Fund is required to withhold 31% of all income dividends and capital
gain distributions, and 31% of the gross proceeds of all redemptions of Fund
shares, in the case of any shareholder who does not provide a correct taxpayer
identification number, about whom a Fund is notified that the shareholder has
under reported income in the past, or who fails to certify to a Fund that the
shareholder is not subject to such withholding. Tax-exempt shareholders are not
subject to these back-up withholding rules so long as they furnish the Fund with
a proper certification.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative actions. Dividends and distributions also may be subject to
state and federal taxes. Shareholders are urged to consult their tax advisers
regarding specific questions as to federal, state, or local taxes. The
foregoing discussion relates solely to U.S. federal income tax law. Non-U.S.
investors should consult their tax advisers concerning the tax consequences of
ownership of shares of the Fund, including the possibility that distributions
may be subject to a 30% United States withholding tax (or a reduced rate of
withholding provided by treaty). Statements as to the tax status of
distributions will be mailed annually.
B-34
<PAGE>
HOW PERFORMANCE IS DETERMINED
STANDARDIZED PERFORMANCE INFORMATION
Average annual total return of a class of shares of a Fund for one-, five-,
and ten-year periods (or for such shorter periods as shares of that class of
shares of the Fund have been offered) is determined by calculating the actual
dollar amount of investment return on a $1,000 investment in that class of
shares at the beginning of the period, and then calculating the annual
compounded rate of return which would produce that amount. Total return for a
period of one year or less is equal to the actual return of that class of shares
during that period. Total return calculations assume reinvestment of all Fund
distributions at net asset value on their respective reinvestment dates. Total
return may be presented for other periods.
A contingent deferred sales charge may apply to certain redemptions of
Class C shares in the first year after purchase. Accordingly, performance
information for Class C shares relating to periods of up to one year will
reflect deduction of the contingent deferred sales charge. The Funds may at
times also present performance for such periods not reflecting deduction of the
contingent deferred sales charge. The calculation of total return assumes that
all dividends, if any, and distributions paid by a Fund would be reinvested at
the net asset value on the day of payment.
At times, Robertson Stephens Investment Management may reduce its
compensation or assume expenses of the Fund in order to reduce the Fund's
expenses. Any such fee reduction or assumption of expenses would increase the
Fund's total return during the period of the fee reduction or assumption of
expenses.
All data are based on past performance and do not predict future results.
PERFORMANCE INFORMATION
The average annual total returns of the Class A shares of each of the Funds
for the periods indicated through December 31, 1996 are set forth below. (No
Class C shares were outstanding during those periods.)
CONTRARIAN FUND-TM-
Year ended December 31, 1996 21.68%
From inception (6/30/93) through December 31, 1996 16.00%
DEVELOPING COUNTRIES FUND
Year ended December 31, 1996 21.19%
From inception (5/2/94) through December 31, 1996 (.56)%
DIVERSIFIED GROWTH FUND
From inception (8/1/96) through December 31, 1996 24.20%
EMERGING GROWTH FUND
Year ended December 31, 1996 21.53%
Five years ended December 31, 1996 10.53%
From inception (11/30/87) through December 31, 1996 21.69%
GLOBAL LOW-PRICED STOCK FUND
Year ended December 31, 1996 29.39%
From inception (11/15/95) through December 31, 1996 30.64%
GLOBAL NATURAL RESOURCES FUND
Year ended December 31, 1996 41.21%
From inception (11/15/95) through December 31, 1996 37.20%
GROWTH & INCOME FUND
B-35
<PAGE>
Year ended December 31, 1996 24.16%
From inception (7/12/95) through December 31, 1996 25.38%
INFORMATION AGE FUND-TM-
Year ended December 31, 1996 26.72%
From inception (11/15/95) through December 31, 1996 15.66%
MICROCAP GROWTH FUND
From inception (8/15/96) through December 31, 1996 10.00%
PARTNERS FUND
Year ended December 31, 1996 43.15%
From inception (7/12/95) through December 31, 1996 30.91%
VALUE + GROWTH
Year ended December 31, 1996 14.12%
From inception (5/12/92) through December 31, 1996 23.68%
NON-STANDARDIZED TOTAL RETURN INFORMATION
From time to time, a Fund may present non-standardized total return
information, in addition to standardized performance information, which may
include such results as the growth of a hypothetical $10,000 investment in a
class of the Fund's shares, and cumulative total return. Cumulative total
return is calculated in a similar manner to average annual total return, except
that the results are not annualized. Each calculation assumes that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period.
INDICES AND PUBLICATIONS
A Fund may compare its performance with that of appropriate indices such as
the Standard & Poor's Composite Index of 500 stocks ("S&P 500"), Standard &
Poor's MidCap 400 Index ("S&P 400"), the NASDAQ Industrial Index, the NASDAQ
Composite Index, Russell 2000 Index, or other unmanaged indices so that
investors may compare such results with those of a group of unmanaged
securities. The S&P 500, the S&P 400, the NASDAQ Industrial Index, the NASDAQ
Composite Index, and the Russell 2000 Index are unmanaged groups of common
stocks traded principally on national securities exchanges and the over the
counter market, as the case may be. A Fund may also, from time to time, compare
its performance to other mutual funds with similar investment objectives and to
the industry as a whole, as quoted by rating services and publications, such as
Lipper Analytical Services, Inc., Morningstar Mutual Funds, Forbes, Money, and
Business Week.
In addition, one or more portfolio managers or other employees of Robertson
Stephens Investment Management may be interviewed by print media, such as THE
WALL STREET JOURNAL or BUSINESS WEEK, or electronic news media, and such
interviews may be reprinted or excerpted for the purpose of advertising
regarding the Fund.
RELATIVE VOLATILITY - BETA
From time to time a Fund may present a statistical measure of the
volatility of a Fund's performance relative to the volatility of the performance
of the S&P 500. A Fund calls this comparative measure its "beta." Beta is
approximate, because it is statistical, and is not necessarily indicative of
future fund performance volatility. Thus, if a Fund's portfolio volatility
perfectly represents that of the S&P 500, a Fund's beta would be 1.0. If a
Fund's beta is greater than 1.0, a Fund's portfolio would tend to represent a
greater market risk than the S&P 500 because a Fund's portfolio would tend to be
more sensitive to movements in the securities markets. For example, if a Fund's
beta is 1.1, a Fund's performance would tend to vary approximately 10% more than
would the performance of the S&P 500. If a Fund's beta is 0.9, a Fund's
performance would tend to vary 10% less than the performance of the S&P 500.
The correlation is not usually exact because, depending upon the diversification
of a Fund's portfolio, a beta of less than 1.0 may indicate only that the
portfolio
B-36
<PAGE>
is less sensitive to market movements, not that the Fund's portfolio has low
overall risk.
The beta included with any presentation of the Fund's performance data will be
calculated according to the following formula:
n _ _
sigma R R - nR R
FT MT F M
beta = ----------------------------
n 2 _3
sigma R - nR
MT M
Where: n = number of months measured
R = rate of return on the Fund in month T
FT
R = rate of return on the market index, I.E., the S&P 500, in
MT month T
_
R = arithmetic average monthly rate of return of the Fund
F
_
R = arithmetic average monthly rate of return on the market
M index, I.E., the S&P 500
ADDITIONAL INFORMATION
GENERAL
Robertson Stephens Investment Trust (the "Trust") is an open-end series
investment company, which was organized on May 11, 1987 as a Massachusetts
business trust.
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, c/o National Financial Data Services,
at P.O. Box 419717, Kansas City, MO 64141, serves as the Funds' transfer agent.
State Street Bank and Trust Company, 225 Franklin Street, Boston, Massachusetts
02110, serves as the Funds' Custodian. As transfer agent, State Street Bank and
Trust Company maintains records of shareholder accounts, processes purchases and
redemptions of shares, acts as dividend and distribution disbursing agent, and
performs other related shareholder functions. As custodian, it and
subcustodians approved by the Board of Trustees hold the securities in the
Funds' portfolios and other assets for safekeeping. The Transfer Agent and
Custodian do not participate in making investment decisions for the Funds.
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP, 555 California Street, San Francisco, California
94104, are the Trust's independent accountants, providing audit services, tax
return review, and other tax consulting services and assistance and consultation
in connection with the review of various Securities and Exchange Commission
filings. The Financial Highlights included in the Trust's combined prospectus
for the Contrarian-TM-, Developing Countries, Diversified Growth, Emerging
Growth, Global Low-Priced Stock, Global Natural Resources, Growth & Income,
Information Age-TM-, MicroCap Growth, Partners, and Value + Growth Funds and the
financial statements incorporated by reference therein and included in this
Statement have been so included and incorporated in reliance upon the report of
Price Waterhouse LLP, the independent accountants, given on the authority of
said firm as experts in auditing and accounting.
B-37
<PAGE>
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Agreement and Declaration of Trust provides for
indemnification out of a Fund's property for all loss and expense of any
shareholder held personally liable for the obligations of that Fund. Thus the
risk of a shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund would be unable to meet
its obligations.
OTHER INFORMATION
The Prospectuses of the Trust and this Statement, together, do not contain
all of the information set forth in the Registration Statement of Robertson
Stephens Investment Trust, as amended, filed with the Securities and Exchange
Commission. Certain information is omitted in accordance with rules and
regulations of the Commission. The Registration Statement may be inspected at
the Public Reference Room of the Commission at Room 1024, 450 Fifth Street,
N.W., Judiciary Plaza, Washington, D.C. 20549, and copies thereof may be
obtained from the Commission at prescribed rates.
B-38
<PAGE>
APPENDIX A
DESCRIPTION OF SECURITIES RATINGS
This Appendix describes ratings applied to corporate bonds by Standard & Poor's
("S&P"), Moody's Investors Service, Inc. ("Moody's") and Fitch Investor
Services, Inc. ("Fitch").
S&P'S RATINGS
AAA: Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.
AA: Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.
A: Debt rated 'A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.
BBB: Debt rated 'BBB' is regarded as having an adequate capacity to pay interest
and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.
Debt rated 'BB,' 'B,' 'CCC,' 'CC,' and 'C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. 'BB' indicates the least degree of speculation and 'C' the highest.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties of major exposures to adverse
markets.
BB: Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.
B: Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating.
CCC: Debt rated 'CCC' has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The 'CCC' rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
'B' or 'B-' rating.
CC: The rating 'CC' typically is applied to debt subordinated to senior debt
that is assigned an actual or implied 'CCC' rating.
C: The rating 'C' typically is applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC-' rating. The 'C' rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI: The rating 'CI' is reserved for income bonds on which no interest is being
paid.
D: Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
B-39
<PAGE>
will be made during such grace period. The 'D' rating will also be used upon
the filing of a bankruptcy petition if debt service payments are jeopardized.
The ratings from 'AA' to 'CCC' may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
MOODY'S RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
B-40
<PAGE>
FITCH RATINGS
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality.
The obligor's ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated 'AAA.' Because bonds rate in the
'AAA' and 'AA' categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated 'F-1+.'
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however,
are more likely to have adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the rating of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB: Bonds are considered to be speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issues.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D: Bonds in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. 'DDD'
represents the highest potential for recovery on these bonds, and 'D' represents
the lowest potential for recovery.
Note: Fitch ratings (other than the 'AAA,' 'DDD,' 'DD,' or 'D' categories) may
be modified by the addition of a plus (+) or minus (-) sign to show relative
position of a credit within the rating category.
B-41
<PAGE>
FINANCIAL STATEMENTS
Attached are financial statements of Robertson Stephens Investment Trust
for the specified periods.
B-42
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(8) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
ALUMINUM - 6.7%
Alumax, Inc. 678,100 $22,631,588
Kaiser Aluminum Corporation 2,047,500 23,802,188
MAXXAM, Inc. 517,800 24,660,225
- -----------------------------------------------------------------------------------------------------------------------------
71,094,001
- -----------------------------------------------------------------------------------------------------------------------------
BASE METALS - 1.1%
Teck Corporation, Class B(1) CAD 500,000 11,593,515
- -----------------------------------------------------------------------------------------------------------------------------
11,593,515
- -----------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION/INFRASTRUCTURE - 6.7%
American Buildings Company 433,000 10,337,875
Martin Marietta Materials, Inc.(1) 50,891 1,183,216
Royal Plastics Group, Ltd. CAD 3,203,200 59,301,190
- -----------------------------------------------------------------------------------------------------------------------------
70,822,281
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER/BUSINESS SERVICES - 0.5%
The Pittston Brinks Group(1) 201,000 5,427,000
- -----------------------------------------------------------------------------------------------------------------------------
5,427,000
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER/SPECIALTY RETAIL - 0.0%
Nu Skin Asia Pacific, Inc. 9,500 293,312
- -----------------------------------------------------------------------------------------------------------------------------
293,312
- -----------------------------------------------------------------------------------------------------------------------------
COPPER/GOLD MINING - 7.0%
Adrian Resources, Ltd. CAD 1,120,003 1,603,159
Armada Gold Corporation CAD 593,400 546,034
Cambior, Inc.(1) CAD 1,043,800 15,398,203
Indochina Goldfields, Ltd. CAD 3,528,240 41,484,455
Indochina Goldfields, Ltd., Restricted(2)(3) CAD 1,700,000 14,991,236
- -----------------------------------------------------------------------------------------------------------------------------
74,023,087
- -----------------------------------------------------------------------------------------------------------------------------
DIAMOND MINING - 1.0%
Diamond Fields International Note(2) CAD 6,687,600 2,686,175
DiamondWorks, Ltd. CAD 1,188,400 1,744,456
DiamondWorks, Ltd., Restricted(2)(3) CAD 4,987,500 5,856,934
- -----------------------------------------------------------------------------------------------------------------------------
10,287,565
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 8.5%
Abacan Resource Corporation CAD 410,000 3,561,875
Alberta Energy Corporation(1) CAD 150,000 3,582,122
Anderson Exploration, Ltd. CAD 382,100 4,939,144
Anzoil N.L. AUD 59,997,000 6,676,401
Basin Exploration, Inc. 75,600 472,500
Beau Canada Exploration, Ltd. CAD 908,900 1,593,048
Burlington Resources, Inc.(1) 125,000 6,296,875
Encal Energy, Ltd. CAD 361,600 1,132,888
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(8) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY - CONTINUED
Eurogas Corporation CAD 265,700 $ 242,551
Eurogas Corporation, 144A(5) CAD 4,947,396 4,516,355
Louisiana Land & Exploration(1) 35,000 1,876,875
McMoRan Oil & Gas Company 1,302,420 2,849,044
Nescor Energy, Restricted(2)(3) 375,000 243,750
Noble Affiliates, Inc.(1) 150,000 7,181,250
Petro-Canada CAD 500,000 5,495,509
Petroleum Securities Australia, Ltd. AUD 226,000 993,387
Petroleum Securities Australia, Ltd., ADR(4) 185,000 4,208,750
Renaissance Energy, Ltd. CAD 100,000 3,406,850
Tarragon Oil & Gas, Ltd. CAD 500,000 5,477,251
Union Pacific Resources Group, Inc.(1) 250,000 7,312,500
United Meridian Corporation 218,000 11,281,500
Vastar Resources, Inc.(1) 175,000 6,650,000
- -----------------------------------------------------------------------------------------------------------------------------
89,990,425
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES - 6.3%
Coastal Corporation(1) 125,000 6,109,375
Enron Corporation(1) 110,000 4,743,750
KN Energy, Inc.(1) 150,000 5,887,500
NGC Corporation(1) 500,000 11,625,000
Roper Industries, Inc.(1) 125,500 4,910,188
Sonat, Inc.(1) 150,000 7,725,000
Tejas Gas Corporation 15,500 738,188
USX-Delhi Group(1) 576,000 9,144,000
Western Gas Resources, Inc.(1) 128,600 2,475,550
Williams Companies, Inc.(1) 375,000 14,062,500
- -----------------------------------------------------------------------------------------------------------------------------
67,421,051
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 3.0%
Dundee Bancorp, Inc., Class A CAD 1,725,500 31,818,356
U.S. Global Investor, Inc., Class A 279,860 664,668
- -----------------------------------------------------------------------------------------------------------------------------
32,483,024
- -----------------------------------------------------------------------------------------------------------------------------
GOLD MINING - 11.6%
Bakyrchik Gold PLC GBP 2,653,232 11,045,663
Central Fund of Canada, Class A(1) 184,600 819,162
Consolidated Mining Corporation, Ltd. SAR 27,000,000 4,039,756
Delta Gold Mining Corporation CAD 807,900 767,012
El Callao Mining Corporation CAD 450,000 430,512
Emperor Mines, Ltd. AUD 3,772,979 7,347,428
Euro-Nevada Mining Corporation(1) CAD 100,000 2,986,928
First Dynasty Mines, Ltd. CAD 2,324,550 5,941,667
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(8) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
GOLD MINING - CONTINUED
First Dynasty Mines, Ltd., Restricted(2)(3) CAD 1,600,000 $ 3,885,197
Franco-Nevada Mining Corporation, Ltd.(1) CAD 80,000 3,666,107
Golden Knight Resources, Inc. CAD 325,000 1,566,494
Golden Star Resources, Ltd.(1) CAD 1,747,500 23,035,401
Guyanor Ressources, S.A., Class B CAD 585,700 3,956,565
Harmony Gold Mining Company, Ltd. SAR 21,000 173,934
Harmony Gold Mining Company, Ltd., ADR(4) 889,000 7,000,875
Lydenburg Exploration, Ltd. SAR 22,000 66,068
MK Gold Company 739,600 1,109,400
New East Daggafontein Mines, Ltd. SAR 224,100 622,700
Newmont Mining Corporation(1) 370,300 16,570,925
Normandy Mining, Ltd.(1) AUD 11,131,180 15,394,844
Queenstake Resources, Ltd. CAD 1,988,900 2,236,841
Randgold and Exploration Company, Ltd. SAR 664,700 4,510,896
Tombstone Explorations Company, Ltd. CAD 230,400 361,761
Vengold, Inc. CAD 4,756,400 5,766,175
- -----------------------------------------------------------------------------------------------------------------------------
123,302,311
- -----------------------------------------------------------------------------------------------------------------------------
INTERNATIONAL CONGLOMERATE - 2.5%
Companhia Vale Do Rio Doce, ADR(1)(4) 1,000,000 19,390,000
Gencor, Ltd.(1) SAR 1,544,100 5,610,709
Government of Poland Privatisation Certificates PLZ 25,000 1,242,415
- -----------------------------------------------------------------------------------------------------------------------------
26,243,124
- -----------------------------------------------------------------------------------------------------------------------------
NICKEL MINING - 9.6%
Inco, Ltd.(1) CAD 1,714,857 54,790,764
Voisey Bay Nickel, Ltd.(1) CAD 1,971,900 47,882,623
- -----------------------------------------------------------------------------------------------------------------------------
102,673,387
- -----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE - 2.1%
Atlantic Gulf Communities 371,700 1,602,956
Avatar Holdings, Inc. 195,100 6,243,200
Catellus Development Corporation 1,271,400 14,462,175
- -----------------------------------------------------------------------------------------------------------------------------
22,308,331
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY CHEMICALS - 2.1%
Cabot Corporation(1) 492,700 12,379,088
W.R. Grace & Company(1) 200,000 10,350,000
- -----------------------------------------------------------------------------------------------------------------------------
22,729,088
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 0.3%
Steel Dynamics, Inc. 190,000 3,633,750
- -----------------------------------------------------------------------------------------------------------------------------
3,633,750
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION/MEDIA - 3.0%
Central European Media Enterprises, Ltd. 350,500 11,128,375
Metromedia International Group, Inc. 2,000,000 19,750,000
Vimpel-Communications, ADR(4) 27,700 654,413
- -----------------------------------------------------------------------------------------------------------------------------
31,532,788
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(8) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
TEXTILES - 0.6%
PT Apac Centertex Corporation, Foreign(1)(7) IDR 17,668,000 $ 5,984,081
- -----------------------------------------------------------------------------------------------------------------------------
5,984,081
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION SERVICES - 3.0%
AMERCO, Inc. 272,200 9,527,000
China Yuchai International, Ltd.(1) 1,141,300 5,421,175
Harper Group(1) 300,000 7,125,000
Pittston Burlington Group(1) 509,200 10,184,000
- -----------------------------------------------------------------------------------------------------------------------------
32,257,175
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.1%
Pacific Gas and Electric Corporation(1) 50,000 1,050,000
- -----------------------------------------------------------------------------------------------------------------------------
1,050,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS - 75.7% (Cost $641,998,122) 805,149,296
- -----------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
Mesa, Inc., 8.00%, 6/30/08, Series A(1) 1,032,406 6,581,589
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS - 0.6% (Cost $3,910,211) 6,581,589
PAR VALUE
- -----------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS
- -----------------------------------------------------------------------------------------------------------------------------
Randgold and Exploration Company, Ltd., 7.00%, Due 10/3/011 $ 3,250,000 3,250,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS - 0.3% (Cost $3,250,000) 3,250,000
- -----------------------------------------------------------------------------------------------------------------------------
VALUE WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
DiamondWorks, Ltd., Warrants, Strike CAD 2.00, Expire 12/5/97(2)(6) CAD 4,987,500 1,729,289
First Dynasty Mines, Ltd., Warrants, Strike CAD 4.50, Expire 9/13/97(2)(6) CAD 1,600,000 143,653
Golden Star Resources, Ltd., Warrants, Strike CAD 11.00, Expire 3/7/97(6) CAD 55,000 319,324
PT Apac Centertex Corporation, Warrants, Strike IDR 1000, Expire 7/14/01(6) IDR 2,700,000 142,887
Queenstake Resources, Ltd., Warrants, Strike CAD 3.70, Expire 3/18/97(2)(6) CAD 500,000 145,911
Vengold, Inc., Warrants, Strike $1.30, Expire 6/30/00(2)(6) CAD 1,286,000 633,977
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 0.3% (Cost $2,640,222) 3,115,041
- -----------------------------------------------------------------------------------------------------------------------------
OPTIONS VALUE
- -----------------------------------------------------------------------------------------------------------------------------
OPTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Normandy Mining, Ltd., Options, Strike AUD 2.50, Expire 4/30/01(6) AUD 1,673,426 558,651
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS - 0.0% (Cost $0) 558,651
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
- -----------------------------------------------------------------------------------------------------------------------------
December 31, 1996 CONTRACTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
S&P 500 INDEX PUT OPTIONS
March 97 575 900 $ 90,000
March 97 600 1,517 218,069
March 97 625 3,307 744,075
March 97 640 590 177,000
March 97 650 2,284 1,113,450
March 97 660 436 228,900
March 97 670 1,415 902,062
March 97 675 824 556,200
March 97 680 445 333,750
March 97 685 405 263,250
March 97 700 330 383,625
March 97 725 710 1,207,000
March 97 730 833 1,457,750
March 97 740 635 1,404,938
March 97 750 79 190,587
June 97 725 435 1,049,438
June 97 730 410 943,000
June 97 735 390 1,145,625
June 97 740 360 1,125,000
June 97 750 320 1,080,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL PUT OPTIONS - 1.4% (Cost $31,773,805) 14,613,719
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 78.3% (Cost $683,572,360) 833,268,296
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -----------------------------------------------------------------------------------------------------------------------------
Cash 600
Australian Dollar 8,057
Canadian Dollar 4
Indonesian Rupiah 248
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96, due 1/2/97,
maturity value $9,420,616 (collateralized by $6,610,000 par value
U.S. Treasury Note, 10.625%, due 8/15/15) 9,418,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 0.9% 9,426,909
12
<PAGE>
<CAPTION>
DECEMBER 31, 1996 VALUE
- -----------------------------------------------------------------------------------------------------------------------------
DEPOSITS WITH BROKERS AND CUSTODIAN BANK FOR SECURITIES SOLD SHORT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Cash $21,611,875
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96, due 1/2/97,
maturity value $28,007,778 (collateralized by $21,890,000 par value
U.S. Treasury Note, 10.625%, due 8/15/15) 28,000,000
U.S. Treasury Bill, 4.85%, due 2/6/97, $140,000,000 par value 139,321,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DEPOSITS WITH BROKERS AND CUSTODIAN BANK FOR SECURITIES SOLD SHORT - 17.8% 188,932,875
- -----------------------------------------------------------------------------------------------------------------------------
RECEIVABLE FROM BROKERS FOR SECURITIES SOLD SHORT - 20.1% 213,455,330
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SECURITIES SOLD SHORT - (17.2)% (Proceeds: $185,809,146) (182,682,504)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, NET - 0.1% 1,036,772
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $1,063,437,678
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income-producing security.
(2) Fair-value security. See 1.a. in Notes to Financial Statements.
(3) Restricted security. See 4.e. in Notes to Financial Statements.
(4) ADR - American Depository Receipt.
(5) These securities may be resold in transactions exempt from registration
under Rule 144A of the Securities Act of 1933, normally to qualified
institutional buyers.
(6) See 4.f. in Notes to Financial Statements.
(7) Shares registered for foreign investors.
(8) Foreign-denominated security: AUD - Australian Dollar; CAD - Canadian
Dollar; GBP - British Pound; IDR - Indonesian Rupiah; PLZ - Polish Zloty;
SAR - South African Rand.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
SCHEDULE OF SECURITIES SOLD SHORT
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
AGRICULTURAL SERVICES - (1.3)%
Delta and Pine Land Company 419,200 $ 13,414,400
- -----------------------------------------------------------------------------------------------------------------------------
13,414,400
- -----------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE PARTS/EQUIPMENT - (0.5)%
Exide Corporation 239,100 5,499,300
- -----------------------------------------------------------------------------------------------------------------------------
5,499,300
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - (1.3)%
Employee Solutions, Inc. 656,200 13,452,100
- -----------------------------------------------------------------------------------------------------------------------------
13,452,100
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS - (0.6)%
Cyrix Corporation 133,600 2,371,400
Encad, Inc. 104,100 4,294,125
- -----------------------------------------------------------------------------------------------------------------------------
6,665,525
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE - (1.8)%
Avant! Corporation 421,200 13,373,100
Imnet Systems, Inc. 196,620 4,768,035
Objective Systems Integrators, Inc. 51,500 1,229,563
- -----------------------------------------------------------------------------------------------------------------------------
19,370,698
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER/SPECIALTY RETAIL - (0.3)%
Gymboree Corporation 129,400 2,960,025
- -----------------------------------------------------------------------------------------------------------------------------
2,960,025
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER TECHNOLOGY - (1.5)%
Electronic Arts, Inc. 170,800 5,113,325
Sensormatic Electronics Corporation 637,000 10,669,750
- -----------------------------------------------------------------------------------------------------------------------------
15,783,075
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS - (0.5)%
Identix, Inc. 325,700 2,666,669
IMP, Inc. 398,000 883,063
X-Rite, Inc. 99,100 1,635,150
- -----------------------------------------------------------------------------------------------------------------------------
5,184,882
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - (0.3)%
Zenith Electronics Corporation 257,700 2,802,488
- -----------------------------------------------------------------------------------------------------------------------------
2,802,488
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - (1.5)%
Capital One Financial Corporation 349,800 12,592,800
Cityscape Financial Corporation 73,400 1,926,750
Delta Financial Corporation 3,000 54,000
Hambrecht and Quist Group, Inc. 43,300 936,363
- -----------------------------------------------------------------------------------------------------------------------------
15,509,913
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
HEALTH CARE/MEDICAL TECHNOLOGY/HMO - (2.4)%
Integrated Health Services, Inc. 187,400 $ 4,567,875
Stryker Corporation 707,500 21,136,562
- -----------------------------------------------------------------------------------------------------------------------------
25,704,437
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/DEVICES - (0.2)%
PerSeptive Biosystems, Inc. 292,400 2,028,525
- -----------------------------------------------------------------------------------------------------------------------------
2,028,525
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SERVICES - (1.8)%
Genesis Health Ventures, Inc. 280,900 8,743,012
Medaphis Corporation 118,700 1,327,956
Medic Computer Systems, Inc. 223,800 9,021,937
- -----------------------------------------------------------------------------------------------------------------------------
19,092,905
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SUPPLIES - (1.2)%
Biomet, Inc. 423,600 6,406,950
Enzo Biochem, Inc. 362,800 6,575,750
- -----------------------------------------------------------------------------------------------------------------------------
12,982,700
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS - (0.7)%
Maxim Integrated Products, Inc. 75,000 3,243,750
Micron Technology, Inc. 150,000 4,368,750
- -----------------------------------------------------------------------------------------------------------------------------
7,612,500
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY WHOLESALE - (0.7)%
Rexall Sundown, Inc. 276,300 7,511,906
- -----------------------------------------------------------------------------------------------------------------------------
7,511,906
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - (0.3)%
EchoStar Communications 92,500 2,035,000
InteliData Technologies Corporation 196,100 1,421,725
- -----------------------------------------------------------------------------------------------------------------------------
3,456,725
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - (0.3)%
- -----------------------------------------------------------------------------------------------------------------------------
Coherent Communications Systems Corporation 187,200 3,650,400
- -----------------------------------------------------------------------------------------------------------------------------
3,650,400
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES SOLD SHORT - (17.2)% (Proceeds: $185,809,146) $182,682,504
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $683,572,360) $833,268,296
Cash and cash equivalents 9,426,909
Deposits with brokers and custodian bank for securities sold short 188,932,875
Receivable from brokers for securities sold short 213,455,330
Receivable for investments sold 822,496
Receivable for fund shares subscribed 4,034,102
Dividends/interest receivable 96,484
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 1,250,036,492
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Securities sold short (Proceeds: $185,809,146) 182,682,504
Payable for investments purchased 89,472
Payable for fund shares redeemed 1,536,289
Payable to adviser 1,266,508
Payable to distributor 635,434
Accrued expenses 388,607
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 186,598,814
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $1,063,437,678
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 893,173,835
Accumulated net realized gain from investments 15,637,708
Accumulated net realized loss from securities sold short (3,467,166)
Net unrealized appreciation on investments 145,786,968
Net unrealized appreciation on securities sold short 12,306,333
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $1,063,437,678
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $16.57
Net Asset Value, offering and redemption price per share
(net assets of $1,063,437,678 applicable to 64,160,166 shares of
beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Interest $ 18,933,540
Dividends (net of foreign tax withheld of $154,439) 3,044,652
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 21,978,192
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 13,472,471
Distribution fees 6,736,236
Custodian and transfer agent fees 1,063,192
Dividend expense for securities sold short 324,352
Shareholder reports 300,900
Professional fees 151,690
Registration and filing fees 71,080
Trustees' fees and expenses 22,326
Interest expense 17,962
Insurance fees 4,366
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 22,164,575
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (186,383)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS AND SECURITIES SOLD SHORT
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments 61,594,231
Net realized gain from securities sold short 9,532,717
Net change in unrealized appreciation on investments 46,658,624
Net change in unrealized appreciation on securities sold short 6,082,273
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS AND SECURITIES SOLD SHORT 123,867,845
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $123,681,462
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE NINE
YEAR ENDED MONTHS ENDED
12/31/96 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (186,383) $ (774,508)
Net realized gain from investments 61,594,231 23,064,485
Net realized gain/(loss) from securities sold short 9,532,717 (12,590,530)
Net change in unrealized appreciation on investments 46,658,624 111,844,929
Net change in unrealized appreciation/(depreciation) on securities sold short 6,082,273 (3,688,560)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 123,681,462 117,855,816
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income - -
Realized gain on investments (12,608,730) -
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (12,608,730) -
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets resulting from capital share transactions 444,888,205 (8,025,100)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 444,888,205 (8,025,100)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 555,960,937 109,830,716
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
Beginning of period 507,476,741 397,646,025
End of period $1,063,437,678 $507,476,741
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE NINE FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED MONTHS ENDED YEAR ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 12/31/96 12/31/95(3) 3/31/95 3/31/94(1)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $13.78 $10.70 $12.34 $10.00
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment loss 0.00 (0.01) (0.04) (0.02)
Net realized gain/(loss) and unrealized
appreciation/(depreciation) on investments
and securities sold short 2.99 3.09 (1.35) 2.36
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS
RESULTING FROM OPERATIONS 2.99 3.08 (1.39) 2.34
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income - - - -
Distributions from realized gain on investments (0.20) - (0.25) -
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $16.57 $13.78 $10.70 $12.34
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 21.68% 28.79% (11.23)% 23.40%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $1,063,437,678 $507,476,741 $397,646,025 $484,950,746
Ratio of Expenses to Average Net Assets 2.46% 2.54% 2.46% 22.22%
Ratio of Net Investment Loss
to Average Net Assets (0.02)% (0.20)% (0.27)%(2) (0.77)%
Portfolio Turnover Rate 44% 29% 79% 14%
Average Commission Rate Paid(4) $0.0273 - - -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on June 30, 1993.
(2) If the Fund had paid all of its expenses and there had been no
reimbursement by the Adviser, the ratio of expenses to average net assets
for the year ended March 31, 1995, would have been 2.58%, and the ratio of
net investment loss to average net assets would have been (0.39)%.
(3) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(4) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data has been determined by using the average number of shares
outstanding throughout the period. Distributions reflect actual per-share
amounts distributed for the year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Contrarian Fund-TM- (the "Fund") is a series of the Robertson Stephens
Investment Trust (the "Trust"), a Massachusetts business trust organized on May
11, 1987. The Fund is registered under the Investment Company Act of 1940, as
amended (the "1940 Act"), as a nondiversified, open-end management investment
company. The Fund became effective to offer shares to the public on June 30,
1993. Prior to the public offering, shares were offered in a private placement
offering on June 3, 1993, at $10 per share, to sophisticated investors under
Section 4(2) of the Securities Act of 1933. The Trust offers eleven series of
shares -- The Robertson Stephens Emerging Growth Fund, The Robertson Stephens
Value + Growth Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing
Countries Fund, The Robertson Stephens Growth & Income Fund, The Robertson
Stephens Partners Fund, The Information Age Fund-TM-, The Robertson Stephens
Global Natural Resources Fund, The Robertson Stephens Global Low-Priced Stock
Fund, The Robertson Stephens Diversified Growth, and The Robertson Stephens
MicroCap Growth. The assets for each series are segregated and accounted for
separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable equity securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Foreign securities
prices are generally denominated in foreign currencies. The currencies are
translated into U.S. dollars by using the exchange rates quoted at the close of
The London Stock Exchange prior to when the Fund's net asset value is next
determined. At December 31, 1996, 96.4% of the Fund's long positions and 100% of
its short positions were valued
in this manner.
20
<PAGE>
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use all
available resources, including quotations from market-makers and fundamental
valuation methods which include, but are not limited to, the analysis of: the
effect of any restrictions on the sale of the security, product development and
trends of the security's issuer; changes in the industry and other competing
companies; significant changes in the issuer's financial position; and any other
event which could have a significant impact on the value of the security. At
December 31, 1996, 3.6% of the Fund's long positions were valued using these
guidelines and procedures.
As its normal course of business, the Fund has invested a significant portion of
its assets in companies concentrated within a number of industries involving
base metals, precious metals, and oil/energy. Accordingly, the performance of
the Fund may be subject to a greater risk of market fluctuation than that of a
fund invested in a wider spectrum of market or industrial sectors.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased, sold, or sold short (trade date). Realized gains and losses on
securities transactions are determined on the basis of specific identification.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
e. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a
foreign currency are translated into U.S. dollars at the exchange rate each day.
Purchases and sales of securities, income receipts, and expense payments are
translated into U.S. dollars at the exchange rate in effect on the dates of the
respective transactions.
The Fund does not isolate the portion of the fluctuations
on investments resulting from changes in foreign currency exchange rates from
the fluctuations in market prices of investments held. Such fluctuations are
included with the net realized gain or loss and unrealized appreciation or
depreciation from investments and securities sold short.
f. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
g. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
h. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended December
31, 1996, and the nine months ended December 31, 1995, were as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 59,842,647 $ 974,268,575
Shares reinvested 718,331 12,010,500
- -------------------------------------------------------------------------------
60,560,978 986,279,075
- -------------------------------------------------------------------------------
Shares redeemed (33,218,658) (541,390,870)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net Increase 27,342,320 $ 444,888,205
- -------------------------------------------------------------------------------
4/1/95 - 12/31/95 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 27,676,642 $349,025,223
Shares reinvested - -
- -------------------------------------------------------------------------------
27,676,642 349,025,223
- -------------------------------------------------------------------------------
Shares redeemed (28,017,625) (357,050,323)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net decrease (340,983) $(8,025,100)
- -------------------------------------------------------------------------------
22
<PAGE>
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Board of Trustees, the Fund pays Robertson Stephens Investment
Management, L.P. ("RSIM") an investment advisory fee calculated at an annual
rate of 1.50% of the average daily net assets of the Fund. For the year ended
December 31, 1996, the Fund incurred investment advisory fees of $13,472,471.
For the year ended December 31, 1996, there was no expected reimbursement of the
advisory fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund during the year ended December 31, 1996.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also Members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor, and
RSIM, the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer,
and a Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and
Chief Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of
the Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John
P. Rohal, a Trustee of the Fund, is a Member of RS Group and Director of
Research for RS & Co. Dana K. Welch, Secretary of the Fund, is a Member of RS
Group and General Counsel of RS & Co. Paul H. Stephens, Portfolio Manager, is a
Member of RS Group and Chief Investment Officer of RS & Co. All affiliated and
access persons, as defined in the 1940 Act, follow strict guidelines and
policies on personal trading as outlined in the Fund's Code
of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is reviewed annually by the Fund's Board of Trustees. Under this
Plan, RS & Co. is compensated for services in such capacity including its
expenses in connection with the promotion and distribution of the Fund's shares.
The distribution fee is calculated at an annual rate of 0.75% of the average
daily net assets of the Fund. For the year ended December 31, 1996, the Fund
incurred distribution fees of $6,736,236.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the year ended December 31, 1996, the Fund paid
brokerage commissions of $27,230 to RS & Co., which represented 1.3% of total
commissions paid during the year.
On March 29, 1996, RSIM assumed an $831,595 liability of the Fund associated
with a short sale obligation for 130,780 shares of Imnet Systems, Inc. The
assumption of the liability resulted from the Fund having entered into short
sale positions for this issuer which exceeded the most stringent state-imposed
limitations. The limitations were repealed in October 1996 under the Securities
Markets Improvement Act of 1996.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments and proceeds of securities sold
short for federal income tax purposes was $903,720,408. Accumulated net
unrealized appreciation on investments and securities sold short was
$173,776,044, consisting of gross unrealized appreciation and depreciation of
$256,321,614, and $(82,545,570), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding options, securities sold short, and
short-term investments) were $590,344,955 and $281,679,916, respectively.
c. PUT OPTIONS:
At December 31, 1996, 3.0% of the Fund's net assets consisted of premiums paid
for the purchase of S&P 500 Index put options to hedge portfolio long
investments against adverse price fluctuations.
The risk associated with the purchase of these put options is limited to the
premium originally paid. The premium paid for the purchase of these options is
included in the Fund's "Schedule of Investments" as an investment and
subsequently mark-to-market daily to reflect the market value of the options.
24
<PAGE>
d. SHORT SALES:
Short sales are transactions in which the Fund sells a security it does not own,
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the buyer
upon the short sale; the Fund then is obligated to replace the security borrowed
by purchasing it in the open market at some later date. The Fund will incur a
loss if the market price of the security increases between the date of the short
sale and the date on which the Fund replaces the borrowed security. The Fund
will realize a gain if the security declines in value between those dates. All
short sales must be fully collateralized. The Fund maintains the collateral in a
segregated account consisting of cash and/or U.S. government securities
sufficient to collateralize its obligation on the short positions.
The Fund may also sell short "against the box" (i.e., the Fund enters into a
short sale as described above while holding an offsetting long position in the
security which is sold short). If the Fund enters into a short sale against the
box, it will hold an equivalent amount of the securities to cover its position
while the short sale is outstanding. The Fund limits the value of short sale
positions (excluding short sales against the box) to 25% of the Fund's total
assets. At December 31, 1996, the Fund had 15% of its total assets in short
positions. For the year ended December 31, 1996, the cost of investments
purchased to cover short sales and the proceeds from investments sold short were
$352,419,086 and $449,790,282, respectively.
Included in the "Other Assets, Net" category in the "Schedule of Investments"
are the following securities sold short where the Fund has purchased the
underlying securities to effectively close out the short positions. Included in
Receivable from Brokers for Securities Sold Short is $27,646,184 for these short
positions. At December 31, 1996, the cost of the associated long positions and
the unrealized appreciation of investments and securities sold short are
$22,374,714 and $5,271,470, respectively. At December 31, 1996, the Fund chose
not to complete the transactions which would have required delivery of the
purchased securities to the lender. The Fund does not consider these boxed
positions as investments.
SECURITIES SHARES VALUE
- -------------------------------------------------------------------------------
Cyrix Corporation 236,000 $ 4,189,000
IMP, Inc. 30,000 66,562
Intelidata Technologies Company 142,000 1,029,500
Iomega Corporation 557,500 9,686,563
Isolyser Company, Inc. 153,200 1,072,400
Micron Technology, Inc. 83,000 2,417,375
Vista 2000, Inc. 81,500 5,094
- -------------------------------------------------------------------------------
$18,466,494
- -------------------------------------------------------------------------------
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
e. RESTRICTED SECURITIES:
A restricted security is a security which cannot be resold
to the general public without prior registration under the Securities Act of
1933. At December 31, 1996, the Fund held restricted securities with an
aggregate value of $26,850,059, which represented 2.5% of the Fund's total net
assets. Restricted securities are valued according to the guidelines and
procedures adopted by the Fund's Board of Trustees as outlined in Note 1.a.,
paragraph 2.
SHARES COST VALUE ACQUISITION
SECURITY (000) (000) (000) DATE
- -------------------------------------------------------------------------------
DiamondWorks, Ltd. 4,987 $5,889 $5,857 12/5/96
DiamondWorks, Ltd.,
Warrants 4,987 1,454 1,729 12/5/96
- -------------------------------------------------------------------------------
First Dynasty Mines, Ltd. 1,600 3,928 3,885 9/13/96
First Dynasty Mines, Ltd.,
Warrants 1,600 1,031 144 9/13/96
- -------------------------------------------------------------------------------
Indochina Goldfields, Ltd. 233 233 2,054 3/24/94
117 117 1,032 3/28/94
750 1,469 6,614 5/26/94
600 3,000 5,291 8/18/95
- -------------------------------------------------------------------------------
Nescor Energy 125 25 81 4/18/94
250 100 163 5/05/94
- -------------------------------------------------------------------------------
$17,246 $ 26,850
- -------------------------------------------------------------------------------
f. OPTIONS AND WARRANTS:
Options and warrants normally entitle the holder to purchase a proportionate
amount of a particular class of the issuer's securities at a predetermined price
during a specific period. Options and warrants for which market quotations were
not readily available were priced using the modified Black-Scholes Valuation
Formula. The Black-Scholes Valuation Formula values an option or warrant by
determining the differential between the exercise price of the option or warrant
and the current price of the underlying stock based on a number of factors.
These factors include, but are not limited to, current price of the underlying
stock, exercise price of the option or warrant, time to expiration, assumed
riskless rate of interest, compounded rate of return on the stock, and standard
deviation of the return on the stock. This valuation method is subject to
frequent review and is in accordance with the guidelines and procedures adopted
by the Fund's Board of Trustees.
g. FOREIGN SECURITIES:
Foreign securities investments involve special risks and considerations not
typically associated with those of U.S. origin. These risks include, but are not
limited to, revalue of currencies, adverse political, social, and economic
developments, and less reliable information about issuers. Moreover, securities
of many foreign companies and markets may be less liquid and their prices more
volatile than those of U.S. companies and markets.
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
The Contrarian Fund-TM-
In our opinion, the accompanying statement of assets and liabilities, including
the schedules of investments and securities sold short, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Contrarian FundTM (the "Fund") at December 31, 1996, and the results of its
operations and the changes in its net assets and the financial highlights for
each of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1996, by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
27
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- ------------------------------------------------------------------------------------------------------------------------------
ARGENTINA - 3.9%
Cresud Sacifya 286,700 $ 507,561
Inversiones y Representaciones, S.A.(1) 444,600 1,427,451
- ------------------------------------------------------------------------------------------------------------------------------
1,935,012
- ------------------------------------------------------------------------------------------------------------------------------
BRAZIL - 4.7%
Companhia Vale Do Rio Doce, ADR(1)(2) 122,000 2,365,580
- ------------------------------------------------------------------------------------------------------------------------------
2,365,580
- ------------------------------------------------------------------------------------------------------------------------------
CANADA - 1.2%
Golden Knight Resources, Inc. 112,000 539,838
NDU Resources, Ltd., Restricted(6)(7) 75,000 72,847
- ------------------------------------------------------------------------------------------------------------------------------
612,685
- ------------------------------------------------------------------------------------------------------------------------------
CHINA - 6.4%
China Resources Beijing Land 129,000 81,725
China Yuchai International, Ltd.(1) 143,100 679,725
Sino Forest Corporation, Class A 871,200 788,935
Sino Forest Corporation, Class A, Restricted(6)(7) 300,000 244,505
Wuxi Little Swan Company, Ltd., Class B 1,437,000 1,449,169
- ------------------------------------------------------------------------------------------------------------------------------
3,244,059
- ------------------------------------------------------------------------------------------------------------------------------
CZECH REPUBLIC - 9.0%
Alpha-Effect 6,000 142,957
Czech Value Fund 125,000 1,062,500
I.F. Yse 2 8,850 44,027
Komercni Banka A.S., GDR(3) 35,000 948,500
Komercni Banka, I.F. 11,000 278,266
PF YSE Akcionaru 9,300 123,102
PPF Cesky Podilovy Fond 1,425 21,063
PPF Investicni Holding, A.S. 2,093 17,700
Restitucni Investicni Fond Ceske 4,684 145,702
Sporitelni Privat Vseobecny 40,000 117,101
Sporitelni Vynosovy Investic 18,429 115,194
SPT Telecom, A.S. 11,100 1,381,939
Zivnobanka-Investicni Fond 7,250 123,690
- ------------------------------------------------------------------------------------------------------------------------------
4,521,741
- ------------------------------------------------------------------------------------------------------------------------------
EGYPT - 1.7%
Commercial International Bank of Egypt, 144A, GDR(3)(4) 62,100 873,437
- ------------------------------------------------------------------------------------------------------------------------------
873,437
- ------------------------------------------------------------------------------------------------------------------------------
GHANA - 1.5%
Leo Shield Exploration NL 1,460,000 777,522
- ------------------------------------------------------------------------------------------------------------------------------
777,522
- ------------------------------------------------------------------------------------------------------------------------------
HONG KONG - 3.1%
Cathay Investment Fund, Ltd.(1) 1,200,000 1,551,490
- ------------------------------------------------------------------------------------------------------------------------------
1,551,490
- ------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
INDONESIA - 7.7%
First Dynasty Mines, Ltd. 331,600 $ 847,586
First Dynasty Mines, Ltd., Restricted(6)(7) 100,000 242,825
PT Apac Centertex Corporation, Foreign(1)(5) 2,977,000 1,008,298
PT Dynaplast, Foreign(1)(5) 828,500 675,217
PT Multibreeder Adirama, Foreign(1)(5) 872,500 332,451
PT Perdanacipta Multi Finance, Foreign(1)(5) 550,000 518,099
PT Sumalindo Lestari Jaya, Foreign(1)(5) 362,500 268,575
- ------------------------------------------------------------------------------------------------------------------------------
3,893,051
- ------------------------------------------------------------------------------------------------------------------------------
ISRAEL - 2.9%
Blue Square Israel, Ltd., ADR(2) 102,400 1,459,200
- ------------------------------------------------------------------------------------------------------------------------------
1,459,200
- ------------------------------------------------------------------------------------------------------------------------------
KOREA - 6.9%
Commercial Bank of Korea 76,500 499,740
Daewoo Securities Company 32,500 419,231
Korea Fund, Inc. 61,900 928,500
Korean Electric Power Corporation, ADR(1)(2) 58,800 1,205,400
LG Electronics, Inc., 144A, GDR(3)(4) 130,000 438,750
- ------------------------------------------------------------------------------------------------------------------------------
3,491,621
- ------------------------------------------------------------------------------------------------------------------------------
MALAYSIA - 5.3%
Land and General Holdings(1) 680,000 1,628,984
Nylex (Malaysia) Berhad(1) 470,000 1,060,780
- ------------------------------------------------------------------------------------------------------------------------------
2,689,764
- ------------------------------------------------------------------------------------------------------------------------------
MEXICO - 8.6%
Acer Comutech Latino America, ADR(2) 62,300 1,062,994
Amarc Resources, Ltd. 128,600 272,358
Amarc Resources, Ltd., Restricted(6)(7) 65,000 96,363
Anooraq Resources Corporation 39,300 86,102
Anooraq Resources Corporation, Restricted(6)(7) 65,000 128,168
Cifra S.A. de C.V., Class B, ADR(2) 600,000 717,000
Corporacion GEO, S.A. de C.V., Series B 79,000 389,380
Empresas ICA Sociedad Controladora, S.A., de C.V., ADR(1)(2) 68,500 1,001,813
Farallon Resources, Ltd. 50,000 584,240
- ------------------------------------------------------------------------------------------------------------------------------
4,338,418
- ------------------------------------------------------------------------------------------------------------------------------
MYANMAR - 3.2%
Indochina Goldfields, Ltd. 137,000 1,610,823
- ------------------------------------------------------------------------------------------------------------------------------
1,610,823
- ------------------------------------------------------------------------------------------------------------------------------
PHILIPPINES - 1.4%
Ionics Circuits, Inc. 978,500 697,600
- ------------------------------------------------------------------------------------------------------------------------------
697,600
- ------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
POLAND - 4.1%
Government of Poland Privatisation Certificates 25,000 $ 1,242,415
Mostostal-Export, S.A.(1) 185,963 441,009
Stalexport, S.A.(1) 37,700 369,453
- ------------------------------------------------------------------------------------------------------------------------------
2,052,877
- ------------------------------------------------------------------------------------------------------------------------------
RUSSIA - 7.2%
Chernogorneft, ADR(2) 95,000 1,128,334
Eurogas Corporation 16,700 15,245
Eurogas Corporation, 144A(4) 234,165 213,763
Lukoil Holding, ADR(2) 25,000 1,175,000
Mosenergo, ADR(2) 35,000 1,076,250
- ------------------------------------------------------------------------------------------------------------------------------
3,608,592
- ------------------------------------------------------------------------------------------------------------------------------
SINGAPORE - 2.1%
ABR Holdings, Ltd.(1) 395,000 454,477
L & M Group Investments, Ltd.(1) 555,500 603,416
- ------------------------------------------------------------------------------------------------------------------------------
1,057,893
- ------------------------------------------------------------------------------------------------------------------------------
SLOVAKIA - 0.2%
Ferro Fond, I.F.(6) 14,545 77,168
- ------------------------------------------------------------------------------------------------------------------------------
77,168
- ------------------------------------------------------------------------------------------------------------------------------
THAILAND - 0.8%
Alphatec Electronics Company, Ltd., Foreign(1)(5) 38,000 291,897
GSS Array Technology Public Company, Ltd., Foreign(5) 99,800 130,363
- ------------------------------------------------------------------------------------------------------------------------------
422,260
- ------------------------------------------------------------------------------------------------------------------------------
TURKEY - 4.9%
Akal Tekstil Sanayii(1) 11,980,000 817,446
Altinyildiz Mensucat ve Konfeksiyon Fabriklari, A.S.(1) 2,868,000 390,069
Bolu Cimento Sanayii, A.S.(1) 9,018,000 253,618
Eczacibasi Ilac Sanayi ve Ticaret, A.S. 12,101,000 602,539
Eczacibasi Yatirim Holding Ortaklig, A.S.(1) 4,828,042 418,475
- ------------------------------------------------------------------------------------------------------------------------------
2,482,147
- ------------------------------------------------------------------------------------------------------------------------------
VIETNAM - 2.0%
Anzoil NL 5,700,000 634,290
Vietnam Industrial Investments, Ltd. 2,016,000 380,574
- ------------------------------------------------------------------------------------------------------------------------------
1,014,864
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK - 88.8% (COST: $46,007,083) 44,777,804
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
RIGHTS
PT Dynaplast, Rights, Strike IDR1000, Expire 2/18/97(6)(8)(9) 828,500 256,789
TOTAL RIGHTS - 0.5% (COST: $0) 256,789
- ------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
14
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS
- ------------------------------------------------------------------------------------------------------------------------------
Amarc Resources, Ltd., Warrants, Strike CAD2.05, Expire 7/16/97(6)(7)(8)(9) 65,000 $ 37,230
Anooraq Resources Corporation, Warrants, Strike CAD2.07, Expire 9/12/97(6)(7)(8)(9) 65,000 53,225
Farallon Resources, Ltd., Warrants, Strike CAD6.25, Expire 5/7/97(6)(8)(9) 85,000 621,318
First Dynasty Mines, Ltd., Warrants, Strike CAD4.50, Expire 3/13/97(6)(7)(8)(9) 100,000 8,978
NDU Resources, Ltd., Warrants, Strike CAD2.31, Expire 5/17/98(6)(7)(8)(9) 75,000 29,860
PT Apac Centertex Corporation, Warrants, Strike IDR1000, Expire 7/14/01(8)(9) 450,000 23,815
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 1.5% (COST: $243,854) 774,426
- ------------------------------------------------------------------------------------------------------------------------------
OPTIONS
KOSPI 200 Index, Strike $0.13742, Expire April 97(8) 100,000,000 10,500
Taiwan Weighted Index 2, Strike $198.17, Expire March 98(8) 10,000 720,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS - 1.5% (COST: $1,006,750) 730,500
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 92.3% (COST: $47,257,687) 46,539,519
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- ------------------------------------------------------------------------------------------------------------------------------
Cash 418,629
French Franc 515
Indonesian Rupiah 1,317
Philippine Peso 60,643
Polish Zloty 3,039
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96, due 1/2/96,
maturity value $2,854,793 (collateralized by $2,235,000 par value
U.S. Treasury Bond, 9.25%, due 2/15/16) 2,854,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 6.6% 3,338,143
- ------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, NET - 1.1% 546,296
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 50,423,958
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Income-producing security.
2 ADR - American Depository Receipt.
3 GDR - Global Depository Receipt.
4 These securities may be resold in transactions exempt from registration
under Rule 144A of the Securities Act of 1933, normally to qualified
institutional buyers.
5 Shares registered for foreign investors.
6 Fair-value security. See 1.a. in Notes to Financial Statements.
7 Restricted security. See 4.e. in Notes to Financial Statements.
8 See 4.d. in Notes to Financial Statements.
9 Foreign-denominated security. CAD - Canadian Dollar; IDR - Indonesian
Rupiah.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $47,257,687) $ 46,539,519
Cash and cash equivalents 3,338,143
Receivable for investments sold 1,910,480
Receivable for fund shares subscribed 244,299
Interest/dividends receivable 22,644
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 52,055,085
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 1,096,588
Payable for fund shares redeemed 343,891
Accrued expenses 110,942
Payable to adviser 53,382
Payable to distributor 10,676
Payables, other 15,648
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,631,127
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 50,423,958
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------
Paid-in capital 51,021,394
Accumulated undistributed net investment income 2,724
Accumulated net realized loss from investments (198,027)
Accumulated net realized gain from securities sold short 317,146
Net unrealized depreciation on investments (719,279)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 50,423,958
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 9.69
Net Asset Value, offering and redemption price per share
(net assets of $50,423,958 applicable to 5,206,392 shares of
beneficial interest outstanding with no par value)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
16
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------
Dividends (Net of foreign tax withheld of $37,041) $ 687,564
Interest 200,947
Other 72,549
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 961,060
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 543,832
Custodian and transfer agent fees 300,305
Distribution fees 108,766
Professional fees 89,504
Shareholder reports 57,580
Registration and filing fees 51,972
Trustees' fees and expenses 22,326
Dividend expense for securities sold short 5,081
Insurance 284
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 1,179,650
LESS: EXPENSE WAIVER BY ADVISER (373,858)
TOTAL EXPENSES, NET 805,792
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 155,268
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS AND SECURITIES SOLD SHORT
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments 2,587,856
Net realized gain from short sales 32,841
Net change in unrealized appreciation on investments 1,487,419
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS AND SECURITIES SOLD SHORT 4,108,116
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 4,263,384
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE NINE
YEAR ENDED MONTHS ENDED
12/31/96 12/31/95
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) $ 155,268 $ (59,234)
Net realized gain/(loss) from investments 2,587,856 (1,766,278)
Net realized gain/(loss) from securities sold short 32,841 (17,500)
Net change in unrealized appreciation on investments 1,487,419 112,264
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 4,263,384 (1,730,748)
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (152,544) -
Realized gain on investments - -
Total Distributions (152,544) -
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 31,969,698 7,729,040
TOTAL CAPITAL SHARE TRANSACTIONS 31,969,698 7,729,040
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 36,080,538 5,998,292
- -----------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
Beginning of period 14,343,420 8,345,128
End of period $ 50,423,958 $ 14,343,420
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THE FINANCIAL STATEMENTS.
18
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE NINE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED MONTHS ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 12/31/96 12/31/95(3) 3/31/95(1)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 8.02 $ 8.57 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) 0.03 (0.03) 0.06
Net realized gain/(loss) and unrealized appreciation/
(depreciation) on investments and securities sold short 1.67 (0.52) (1.36)
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 1.70 (0.55) (1.30)
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income (0.03) - (0.04)
Distributions from realized gain on investments - - (0.09)
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 9.69 $ 8.02 $ 8.57
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 21.19% (6.42)% (13.14)%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 50,423,958 $ 14,343,420 $ 8,345,128
Ratio of Expenses to Average Net Assets 1.84%(2) 1.83%(2) 3.15%(2)
Ratio of Net Investment Income/(Loss) to Average Net Assets 0.36%(2) (0.51)%(2) 0.72%(2)
Portfolio Turnover Rate 165% 103% 124%
Average Commission Rate Paid(4) $ 0.0009 - -
</TABLE>
1 The Fund commenced operations on May 2, 1994.
2 If the Fund had paid all of its expenses and there had been no
reimbursement by the Adviser, the ratio of expenses to average net assets
for the year ended December 31, 1996, the nine months ended December 31,
1995, and the period from May 2, 1994 (Commencement of Operations), to
March 31, 1995, would have been 2.70%, 4.24%, and 3.46%, respectively, and
the ratio of net investment income/(loss) to average net assets would have
been (0.50)%, (2.92)%, and 0.41%, respectively.
3 Ratios, except for total return and portfolio turnover rate, have been
annualized.
4 A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data has been determined by using the average number of shares
outstanding throughout the period. Distributions reflect actual per-share
amounts distributed for the periods.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Developing Countries Fund (the "Fund") is a series of
the Robertson Stephens Investment Trust (the "Trust"), a Massachusetts
business trust organized on May 11, 1987. The Fund is registered under the
Investment Company Act of 1940, as amended (the "1940 Act") as a
nondiversified, open-end management investment company. The Fund became
effective to offer shares to the public on April 29, 1994, and it started to
offer shares to the public on May 2, 1994. The Trust offers eleven series of
shares -- The Robertson Stephens Emerging Growth Fund, The Robertson Stephens
Value + Growth Fund, The Contrarian Fund-TM-, The Robertson Stephens
Developing Countries Fund, The Robertson Stephens Growth & Income Fund, The
Robertson Stephens Partners Fund, The Information Age Fund-TM-, The Robertson
Stephens Global Natural Resources Fund, The Robertson Stephens Global
Low-Priced Stock Fund, The Robertson Stephens Diversified Growth Fund, and
The Robertson Stephens MicroCap Growth Fund. The assets for each series are
segregated and accounted for separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value.
Foreign securities prices are generally denominated in foreign currencies. The
currencies are translated into U.S. dollars by using the exchange rates quoted
at the close of The London Stock Exchange prior to when the Fund's net asset
value is next determined. At December 31, 1996, 96.0% of the Fund's positions
were valued in this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use all
available resources including quotations from market makers and fundamental
valuation methods which include, but are not limited to, the analysis of: the
effect of any restrictions on the sale of the security, product development and
trends of the security's issuer, changes in the industry and other competing
companies, significant changes in the issuer's financial position, and any other
event which would have a significant impact on the value of a security. At
December 31, 1996, 4.0% of the Fund's positions were valued using these
guidelines and procedures.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
20
<PAGE>
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased, sold, or sold short (trade date). Realized gains and losses on
securities transactions are determined on the basis of specific identification.
e. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a
foreign currency are translated into U.S. dollars at the exchange rate each day.
Purchases and sales of securities, income receipts, and expense payments are
translated into U.S. dollars at the exchange rate in effect on the dates of the
respective transactions.
The Fund does not isolate the portion of the fluctuations on investments
resulting from changes in foreign currency exchange rates from the fluctuations
in market prices of investments held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.
f. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
g. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
h. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended December
31, 1996, and for the nine months ended December 31, 1995, were as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- --------------------------------------------------------------------------------
Shares sold 11,798,506 $112,215,356
Shares reinvested 15,445 148,733
- --------------------------------------------------------------------------------
11,813,951 12,364,089
- --------------------------------------------------------------------------------
Shares redeemed (8,395,045) (80,394,391)
- --------------------------------------------------------------------------------
Net increase 3,418,906 $ 31,969,698
- --------------------------------------------------------------------------------
4/1/95 - 12/31/95 SHARES AMOUNT
- --------------------------------------------------------------------------------
Shares sold 2,510,903 $ 23,109,743
Shares reinvested - -
- --------------------------------------------------------------------------------
2,510,903 23,109,743
- --------------------------------------------------------------------------------
Shares redeemed (1,697,748) (15,380,703)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net increase 813,155 $ 7,729,040
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Fund's Board of Trustees, the Fund pays Robertson Stephens
Investment Management, L.P. ("RSIM"), an investment advisory fee calculated at
an annual rate of 1.25% of the average daily net assets of the Fund. For the
year ended December 31, 1996, the Fund incurred investment advisory fees of
$543,832. RSIM has voluntarily agreed to waive any annual operating expenses
exceeding an annual expense ratio of 1.85%. For the year ended December 31,
1996, the Adviser agreed to waive $373,858 of its fees and other expenses.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund during the year ended December 31, 1996.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also Members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member
of Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor,
and RSIM, the Fund's Adviser. G. Randy Hecht, President, Chief Executive
Officer, and a Trustee of the Fund, is also a Director of RSIM, a Member of
RS Group, and Chief Operating Officer of RS & Co. Terry R. Otton, Chief
Financial Officer of the Fund, is a Member of RS Group and Chief Financial
Officer of RS & Co. John P. Rohal, a Trustee of the Fund, is a Member of RS
Group and Director of Research for RS & Co. Dana K. Welch, Secretary of the
Fund, is a member of RS Group and General Counsel of RS & Co. All affiliated
and access persons, as defined in the 1940 Act, follow strict guidelines and
policies on personal trading as outlined in the Fund's Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is approved annually by the Fund's Board of Trustees. Under the Plan,
RS & Co. is compensated for services in such capacity, including its expenses in
connection with the promotion and distribution of the Fund's shares. The
distribution fee is calculated at an annual rate of 0.25% of the average daily
net assets of the Fund. For the year ended December 31, 1996, the Fund incurred
distribution fees of $108,766.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the year ended December 31, 1996, the Fund paid
brokerage commissions of $150 to RS & Co.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $46,987,965. Accumulated net unrealized depreciation on investments was
$449,557, consisting of gross unrealized appreciation and depreciation of
$5,156,146 and $(5,605,703), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding options, securities sold short and
short-term investments) were $92,869,464 and $63,178,582, respectively.
c. SHORT SALES:
Short sales are transactions in which the Fund sells a security it does not own
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the buyer
upon the short sale; the Fund then is obligated to replace the security borrowed
by purchasing it in the open market at some later date. The Fund will incur a
loss if the market price of the security increases between the date of the short
sale and the date on which the Fund replaces the
22
<PAGE>
borrowed security. The Fund will realize a gain if the security declines in
value between those dates. All short sales must be fully collateralized. The
Fund maintains the collateral in a segregated account consisting of cash and/or
U.S. government securities sufficient to collateralize its obligations on the
short positions. The Fund may also sell short "against the box" (i.e., the Fund
enters into a short sale as described above while holding an offsetting long
position in the security which is sold short). If the Fund enters into a short
sale against the box, it will hold an equivalent amount of the securities to
cover its position while the short sale is outstanding. The Fund limits the
value of short sale positions (excluding short sales against the box) to 25% of
the Fund's total assets. At December 31, 1996, there were no securities sold
short. For the year ended December 31, 1996, the cost of investments purchased
to cover short sales and the proceeds from investments sold short were
$1,879,109 and $1,912,668, respectively.
d. OPTIONS, WARRANTS, AND RIGHTS:
Options, warrants, and rights normally entitle the holder to purchase a
proportionate amount of a particular class of the issuer's securities at a
predetermined price during a specific period.
Options, warrants, and rights for which market quotations were not readily
available were priced using the modified Black-Scholes Valuation Formula. The
Black-Scholes Valuation Formula values an option, warrant, or right by
determining the differential between the exercise price of the option, warrant,
or right and the current price of the underlying stock, based on a number of
factors. These factors include, but are not limited to, current price of the
underlying stock, exercise price of the option, warrant, or right, time to
expiration, assumed riskless rate of interest, compounded rate of return, and
standard deviation of the return on the stock. This valuation method is subject
to frequent review and in accordance with the guidelines and procedures adopted
by the Fund's Board of Trustees.
e. RESTRICTED SECURITIES:
A restricted security is a security which cannot be resold to the general public
without prior registration under the Securities Act of 1933. If the security is
subsequently registered and resold, the issuers would typically bear the expense
of all registrations at no cost to the Fund. At December 31, 1996, the Fund
held restricted securities with an aggregate value of $914,001, which
represented 1.8% of the Fund's total assets. Restricted securities are valued
according to the guidelines and procedures adopted by the Fund's Board of
Trustees as outlined in Note 1.a., paragraph 2.
SHARES COST VALUE ACQUISITION
SECURITY (000) (000) (000) DATE
- ---------------------------------------------------------------------------
Amarc Resources, Ltd. 65,000 $ 72 $ 96 7/17/96
Amarc Resources, Ltd.,
Warrants 65,000 25 37 7/17/96
Anooraq Resources
Corporation 65,000 64 128 9/12/96
Anooraq Resources
Corporation, Warrants 65,000 34 53 9/12/96
First Dynasty Mines, Ltd. 100,000 246 243 9/13/96
First Dynasty Mines,
Ltd., Warrants 100,000 64 9 9/13/96
NDU Resources, Ltd. 75,000 87 73 5/17/96
NDU Resources, Ltd.,
Warrants 75,000 23 30 5/17/96
Sino Forest Corporation,
Class A 300,000 275 245 10/2/96
- ---------------------------------------------------------------------------
$890 $914
f. FOREIGN SECURITIES:
Foreign securities investments involve special risks and considerations not
typically associated with those of U.S. origin. These risks include, but are not
limited to, reevaluation of currencies, adverse political, social, and economic
developments, and less reliable information about issuers. Moreover, securities
of many foreign companies and markets may be less liquid and their prices more
volatile than those of U.S. companies and markets.
23
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens Developing
Countries Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Robertson Stephens Developing
Countries Fund (the "Fund") at December 31, 1996, and the results of its
operations and the changes in its net assets and the financial highlights for
each of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1996, by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
24
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY (2) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
BANKS - 2.4%
First Hawaiian, Inc.(1) 25,000 $ 875,000
Washington Mutual, Inc.(1) 12,500 541,406
- -----------------------------------------------------------------------------------------------------------------------------
1,416,406
- -----------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY - 2.8%
Autoimmune, Inc. 35,000 538,125
CardioThoracic Systems, Inc. 25,000 462,500
Intercardia, Inc. 30,000 645,000
- -----------------------------------------------------------------------------------------------------------------------------
1,645,625
- -----------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES - 1.6%
International Imaging Materials, Inc. 20,000 455,000
Wallace Computer Services, Inc.(1) 15,000 517,500
- -----------------------------------------------------------------------------------------------------------------------------
972,500
- -----------------------------------------------------------------------------------------------------------------------------
CLOTHING/RETAIL - 3.8%
SkyMall, Inc. 75,000 665,625
Sport-Haley, Inc. 60,000 753,750
Vans, Inc. 70,000 875,000
- -----------------------------------------------------------------------------------------------------------------------------
2,294,375
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 3.2%
ADT Ltd. 20,000 457,500
General Binding Corporation(1) 20,000 595,000
ICTS International NV 42,000 425,250
Mail Boxes Etc. 18,000 405,000
- -----------------------------------------------------------------------------------------------------------------------------
1,882,750
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS - 6.1%
Creative Technology, Ltd. 125,000 1,468,750
Read-Rite Corporation 32,000 808,000
Sequent Computer Systems, Inc. 30,000 532,500
Southern Electronics Corporation 65,000 812,500
- -----------------------------------------------------------------------------------------------------------------------------
3,621,750
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE - 3.9%
Adobe Systems, Inc.(1) 14,000 523,250
BMC Software, Inc. 10,000 413,750
Ciber, Inc. 7,000 210,000
Dynamic Healthcare Technologies, Inc. 103,800 493,050
Microsoft Corporation 4,000 330,500
Platinum Software Corporation 30,000 356,250
- -----------------------------------------------------------------------------------------------------------------------------
2,326,800
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES - 3.8%
Computer Data Systems, Inc.(1) 20,000 $ 605,000
Compuware Corporation 12,000 601,500
Data Dimensions, Inc. 17,500 621,250
InfoNow Corporation, Restricted(3),(4) 285,715 455,358
- -----------------------------------------------------------------------------------------------------------------------------
2,283,108
- -----------------------------------------------------------------------------------------------------------------------------
DATA COMMUNICATIONS - 3.8%
Aware, Inc. 70,000 708,750
Cabletron Systems, Inc. 17,000 565,250
Digi International, Inc. 27,000 256,500
FORE Systems, Inc. 22,500 739,688
- -----------------------------------------------------------------------------------------------------------------------------
2,270,188
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 1.8%
American Power Conversion Corporation 40,000 1,090,000
- -----------------------------------------------------------------------------------------------------------------------------
1,090,000
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 3.3%
Gulf Canada Resources, Ltd. 75,000 553,125
Nuevo Energy Company 17,200 894,400
Questar Corporation(1) 14,000 514,500
- -----------------------------------------------------------------------------------------------------------------------------
1,962,025
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES - 5.6%
BJ Services Company 15,000 765,000
Camco International, Inc.(1) 14,000 645,750
National-Oilwell, Inc. 500 15,375
Pride Petroleum Services, Inc. 22,500 523,125
Tejas Gas Corporation 10,000 476,250
Veritas DGC, Inc. 15,000 277,500
Western Gas Resources, Inc.(1) 33,000 635,250
- -----------------------------------------------------------------------------------------------------------------------------
3,338,250
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 4.6%
Ascent Entertainment Group, Inc. 30,000 483,750
Hollywood Entertainment Corporation 20,000 370,000
Signature Resorts, Inc. 15,000 528,750
Sodak Gaming, Inc. 47,500 730,312
Vacation Break USA, Inc. 30,000 607,500
- ------------------------------------------------------------------------------------------------------------------------------
2,720,312
- -----------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES - 1.2%
Philip Environmental, Inc. 50,000 725,000
- -----------------------------------------------------------------------------------------------------------------------------
725,000
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S>
<C> <C>
FINANCIAL SERVICES - 2.5%
Conseco, Inc.(1) 6,500 $ 414,375
Federal National Mortgage Association(1) 15,000 558,750
H.F. Ahmanson & Company(1) 15,000 487,500
- -----------------------------------------------------------------------------------------------------------------------------
1,460,625
- -----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE/HMO - 0.8%
Diagnostic Health Services, Inc. 62,500 500,000
- -----------------------------------------------------------------------------------------------------------------------------
500,000
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 1.2%
Compdent Corporation 20,000 705,000
- -----------------------------------------------------------------------------------------------------------------------------
705,000
- -----------------------------------------------------------------------------------------------------------------------------
IRON/STEEL - 0.8%
WHX Corporation 55,000 488,125
- -----------------------------------------------------------------------------------------------------------------------------
488,125
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 9.9%
Applied Power Inc., Class A(1) 22,500 891,563
Coachmen Industries, Inc.(1) 20,000 567,500
Farr Company 32,000 532,000
Furniture Brands International, Inc. 60,000 840,000
Graham Corporation 35,000 328,125
Herman Miller, Inc.(1) 30,000 1,698,750
Kimball International, Inc., Class B(1) 25,000 1,034,375
- -----------------------------------------------------------------------------------------------------------------------------
5,892,313
- -----------------------------------------------------------------------------------------------------------------------------
MEDIA - 0.7%
Lin Television Corporation 9,000 380,250
Univision Communications, Inc., Class A 1,000 37,000
- -----------------------------------------------------------------------------------------------------------------------------
417,250
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/DEVICES - 3.5%
Cytyc Corporation 17,500 472,500
Imagyn Medical, Inc. 50,000 406,250
Novoste Corporation 20,000 265,000
Ventritex, Inc. 37,500 923,437
- -----------------------------------------------------------------------------------------------------------------------------
2,067,187
- -----------------------------------------------------------------------------------------------------------------------------
NETWORK SYSTEMS - 1.1%
Network Computing Devices, Inc. 65,000 658,125
- -----------------------------------------------------------------------------------------------------------------------------
658,125
- -----------------------------------------------------------------------------------------------------------------------------
OIL/GAS DRILLING - 8.4%
Diamond Offshore Drilling, Inc. 7,000 399,000
ENSCO International, Inc. 18,000 873,000
Ensign Resource Service Group, Inc.(1),(2) CAD 25,000 461,002
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OIL/GAS DRILLING - CONTINUED
Forasol-Foramer NV 30,000 $ 588,750
Noble Drilling Corporation 44,000 874,500
Patterson Energy, Inc. 20,000 515,000
Precision Drilling Corporation 15,000 521,250
Transocean Offshore, Inc.(1) 12,500 782,812
- -----------------------------------------------------------------------------------------------------------------------------
5,015,314
- -----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS - 1.0%
Guilford Pharmaceuticals, Inc. 25,000 581,250
- -----------------------------------------------------------------------------------------------------------------------------
581,250
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT - 0.2%
PRI Automation, Inc. 2,500 113,750
- -----------------------------------------------------------------------------------------------------------------------------
113,750
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS - 2.7%
LSI Logic Corporation 20,000 535,000
National Semiconductor Corporation 20,000 487,500
Texas Instruments, Inc.(1) 9,500 605,625
- -----------------------------------------------------------------------------------------------------------------------------
1,628,125
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL - 2.7%
Amrion, Inc. 27,500 622,188
Arbor Drugs, Inc.(1) 30,000 521,250
Video Update, Inc., Class A 125,000 492,187
- -----------------------------------------------------------------------------------------------------------------------------
1,635,625
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY WHOLESALE - 1.4%
Fisher Scientific International(1) 17,500 824,688
- -----------------------------------------------------------------------------------------------------------------------------
824,688
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.4%
Premisys Communications, Inc. 7,500 253,125
- -----------------------------------------------------------------------------------------------------------------------------
253,125
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - 1.2%
Boston Technology, Inc. 25,000 718,750
- -----------------------------------------------------------------------------------------------------------------------------
718,750
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS SERVICES - 1.4%
Loral Space & Communications 22,500 413,437
Metromedia International Group, Inc. 40,000 395,000
- -----------------------------------------------------------------------------------------------------------------------------
808,437
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.1%
Airborne Freight Corporation(1) 35,000 818,125
Fritz Companies, Inc. 35,000 446,250
- -----------------------------------------------------------------------------------------------------------------------------
1,264,375
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TOTAL COMMON STOCK - 89.9% (Cost $47,127,046) $ 53,581,153
- -----------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 0.9%
Mesa, Inc., 8.00%, Expires 6/30/08, Series A(1) 82,071 523,206
- -----------------------------------------------------------------------------------------------------------------------------
Total Convertible Preferred Stocks - 0.9% (Cost $388,001) 523,206
PAR VALUE
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT BONDS
U.S. Treasury Note, 6.625%, Due 7/31/01(1) $ 818,000 831,039
U.S. Treasury STRIP, Due 11/15/24(1) 1,850,000 283,531
- -----------------------------------------------------------------------------------------------------------------------------
Total Government Bonds - 1.9% (Cost $1,081,126) 1,114,570
WARRANTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
Glendale Federal Savings Bank, Warrants, Strike $12.00, Expire 8/21/00(5) 46,500 592,875
InfoNow Corporation, 1/2 Warrants, Strike $1.40, Expire 5/20/98(3),(4),(5) 285,715 168,583
- -----------------------------------------------------------------------------------------------------------------------------
Total Warrants - 1.3% (Cost $637,031) 761,458
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 94.0% (Cost $49,233,204) 55,980,387
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -----------------------------------------------------------------------------------------------------------------------------
Cash 22,890
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96, due 1/02/97,
maturity value $1,901,528 (collateralized by $1,489,000 par value
U.S. Treasury Bond, 9.25%, due 2/15/16) 1,901,000
- -----------------------------------------------------------------------------------------------------------------------------
Total Cash and Cash Equivalents 3.2% 1,923,890
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
<CAPTION>
DECEMBER 31, 1996 VALUE
- -----------------------------------------------------------------------------------------------------------------------------
DEPOSITS WITH BROKERS AND CUSTODIAN BANK FOR SECURITIES SOLD SHORT
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96, due 1/02/97,
maturity value $850,236 (collateralized by $666,000 par value
U.S. Treasury Bond, 9.25%, due 2/15/16) $ 850,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DEPOSITS WITH BROKERS AND CUSTODIAN BANK FOR SECURITIES SOLD SHORT - 1.4% 850,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RECEIVABLE FROM BROKERS FOR SECURITIES SOLD SHORT - 2.7% 1,600,310
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SECURITIES SOLD SHORT - (1.0)% (Proceeds: $589,960) (595,812)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES, NET (0.3)% (171,117)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS 100.0% $ 59,587,658
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income-producing security.
(2) Foreign-denominated security; CAD - Canadian Dollar.
(3) Fair-value security. See 1.a. in Notes to Financial Statements.
(4) Restricted security. See 4.d. in Notes to Financial Statements
(5) See 4.e. in Notes to Financial Statements.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
SCHEDULE OF SECURITIES SOLD SHORT
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BIOTECHNOLOGY - 0.3%
Liposome Company, Inc. 8,000 $ 153,000
- -----------------------------------------------------------------------------------------------------------------------------
153,000
- -----------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES - 0.4%
Accustaff, Inc. 12,500 264,062
- -----------------------------------------------------------------------------------------------------------------------------
264,062
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.3%
Quality Dining, Inc. 10,000 178,750
- -----------------------------------------------------------------------------------------------------------------------------
178,750
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES SOLD SHORT - 1.0% (PROCEEDS: $589,960) $ 595,812
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Investments, at value (Cost: $49,233,204) $ 55,980,387
Cash and cash equivalents 1,923,890
Deposits with brokers and custodian bank for securities sold short 850,000
Receivable from brokers for securities sold short 1,600,310
Receivable for investments sold 116,103
Receivable for fund shares subscribed 1,494,207
Organization cost 46,897
Dividend/interest receivable 45,830
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 62,057,624
- -----------------------------------------------------------------------------------------------------------------------------
LIABILTIES
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 1,476,223
Securities sold short (Proceeds $589,960) 595,812
Payable to custodian bank 125,385
Payable for fund shares redeemed 111,242
Accrued expenses 92,542
Payable to adviser 57,302
Payable to distributor 11,460
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,469,966
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 59,587,658
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 53,025,975
Accumulated net realized loss from investments (316,244)
Accumulated net realized loss from securities sold short (142,191)
Net unrealized appreciation on investments 6,847,495
Net unrealized appreciation on short sales 172,623
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $59,587,658
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $12.42
Net Asset Value, offering and redemption price per share
(Net assets of $59,587,658 applicable to 4,799,410 shares
of beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD FROM AUGUST 1, 1996 (COMMENCEMENT OF OPERATIONS), THROUGH DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
Interest $ 105,486
Dividends (net of foreign tax withheld of $161) 64,646
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 170,132
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 135,953
Custodian and transfer agent fees 46,271
Professional fees 34,928
Administrative services fee 33,988
Distribution fees 33,988
Shareholder reports 20,655
Registration and filing fees 13,180
Organization expense 9,853
Trustees' fees and expenses 9,333
Insurance fees 153
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 338,302
Less: Expense waiver by adviser (22,771)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES, NET 315,531
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (145,399)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS AND SECURITIES SOLD SHORT
- -----------------------------------------------------------------------------------------------------------------------------
Net realized loss from investments (316,244)
Net realized loss from securities sold short (142,191)
Net change in unrealized appreciation on investments 6,847,495
Net change in unrealized appreciation on securities sold short 172,623
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED LOSS AND UNREALIZED APPRECIATION ON INVESTMENTS AND SECURITIES SOLD SHORT 6,561,683
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 6,416,284
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
PERIOD ENDED
12/31/96(1)
- --------------------------------------------------------------------------------------------------------------------------------
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
Net investment loss $ (145,399)
Net realized loss from investments (316,244)
Net realized loss from securities sold short (142,191)
Net change in unrealized appreciation on investments 6,847,495
Net change in unrealized appreciation on securities sold short 172,623
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 6,416,284
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income -
Realized gain on investments -
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS -
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 53,171,374
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 53,171,374
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 59,587,658
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
Beginning of period 0
End of period $ 59,587,658
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on August 1, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
FOR A SHARE OUTSTANDING PERIOD ENDED
THROUGHOUT THE PERIOD: 12/31/96(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.05)
Net realized loss and net change in unrealized appreciation on investments and securities sold short 2.47
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2.42
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income -
Distributions from realized gain on investments -
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 12.42
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 24.20%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 59,587,658
Ratio of Expenses to Average Net Assets 2.28%(2)
Ratio of Net Investment Loss to Average Net Assets (1.05)%(2)
Portfolio Turnover Rate 69%
Average Commission Rate Paid(3) $ 0.0526
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on August 1, 1996.
(2) If the Fund had paid all of its expenses and had received no reimbursement
from the Adviser, the ratio of expenses to average net assets for the
period ended December 31, 1996, would have been 2.44%, and the ratio of net
investment loss to average net assets would have been (1.21%).
(3) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each of the periods has been determined by using the
average number of shares outstanding throughout each period. Distributions
reflect actual per-share amounts distributed for the year.
Ratios, except for total return and portfolio turnover rate, have been
annualized.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
THE DIVERSIFIED GROWTH FUND ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Diversified Growth Fund (the "Fund") is a series of the
Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund became effective to offer shares to the
public on August 1, 1996. The Trust offers eleven series of shares -- The
Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value + Growth
Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing Countries Fund,
The Robertson Stephens Growth & Income Fund, The Robertson Stephens Partners
Fund, The Information Age Fund-TM-, The Robertson Stephens Global Natural
Resources Fund, The Robertson Stephens Global Low-Priced Stock Fund, The
Robertson Stephens Diversified Growth Fund, and The Robertson Stephens MicroCap
Growth Fund. The assets for each series are segregated and accounted for
separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. At December 31, 1996, 98.9% of the Fund's long
portfolio was valued in this manner.
As its normal course of business, the Fund has invested a significant portion of
its assets in companies within a number of industries in the technology and
energy sectors. Accordingly, the performance of the Fund may be subject to a
greater risk of market fluctuation than that of a fund invested in a wider
spectrum of market or industrial sectors.
20
<PAGE>
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use
fundamental valuation methods which include, but are not limited to, the
analysis of: the effect of any restrictions on the sale of the security, product
development and trends of the security's issuer, changes in the industry and
other competing companies, significant changes in the issuer's financial
position, and any other event which could have a significant impact on the value
of the security. At December 31, 1996, approximately 1.1% of the Fund's long
portfolio was valued using these guidelines and procedures.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy, realization
and/or retention of the collateral may be subject to legal proceedings. The
Fund's policy is to limit repurchase agreement transactions to those parties
deemed by the Fund's Investment Adviser to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
As of December 31, 1996, the Fund has a capital loss carryforward of $421,424,
which will expire by December 31, 2004. No capital gain distribution shall be
made until the capital loss carryforward has been fully utilized or expires.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased and sold (trade date). Realized gains and losses on securities
transactions are determined on the basis of specific identification.
e. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
f. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
21
<PAGE>
THE DIVERSIFIED GROWTH FUND ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
g. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
A. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the period ending from
August 1, 1996 (Commencement of Operations), through December 31, 1996, was as
follows:
8/1/96 - 12/31/96 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 6,310,303 $ 70,534,742
Shares reinvested - -
- -------------------------------------------------------------------------------
6,310,303 70,534,742
- -------------------------------------------------------------------------------
Shares redeemed (1,510,893) (17,363,368)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net increase 4,799,410 $53,171,374
- -------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Board of Trustees, the Fund pays Robertson Stephens Investment
Management, L.P. ("RSIM") an investment advisory fee and an administrative
services fee calculated respectively at an annual rate of 1.00% and 0.25% of the
average daily net assets of the Fund. For the period from August 1, 1996
(Commencement of Operations), through December 31, 1996, the Fund incurred
investment advisory fees and administrative fees of $135,953 and $33,988,
respectively. At December 31, 1996, the Adviser voluntarily agreed to waive
$22,771 of its fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund during the period ended December 31, 1996.
22
<PAGE>
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC (RS & Co.), the Fund's Distributor and RSIM,
the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer and a
Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and Chief
Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of the
Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John P.
Rohal, a Trustee of the Fund, is a Member of RS Group and Director of Research
for RS & Co. Dana K. Welch, Secretary of the Fund, is a Member of RS Group and
General Counsel of RS & Co. John L. Wallace, Portfolio Manager, is a Member of
RS Group. All affiliated and access persons, as defined in the 1940 Act, follow
strict guidelines and policies on personal trading as outlined in the Fund's
Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $9,333 for the period from August 1, 1996
(Commencement of Operations), through December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is reviewed and approved annually by the Fund's Board of Trustees.
Under this Plan, RS & Co. is compensated for services in such capacity including
its expenses in connection with the promotion and distribution of the Fund's
shares. The distribution fee is calculated at an annual rate of 0.25% of the
average daily net assets of the Fund. For the period from August 1, 1996
(Commencement of Operations), through December 31, 1996, the Fund incurred
distribution fees of $33,988.
23
<PAGE>
THE DIVERSIFIED GROWTH FUND ANNUAL REPORT
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the period from August 1, 1996 (Commencement of
Operations), through December 31, 1996, the Fund paid brokerage commissions of
$16,648 to RS & Co., which represented 13.3% of total commissions paid during
the period.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments and proceeds of securities sold
short for federal income tax purposes was $51,602,102. Accumulated net
unrealized appreciation on investments and securities sold short was $6,983,093,
consisting of gross unrealized appreciation and depreciation of $8,042,220 and
$(1,059,127), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the period from August 1, 1996 (Commencement of Operations), through
December 31, 1996, the cost of investments purchased and the proceeds from
investments sold (excluding securities sold short and short-term investments)
were $71,393,463 and $21,117,523, respectively.
c. SHORT SALES:
Short sales are transactions in which the Fund sells a security it does not own,
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the buyer
upon the short sale; the Fund then is obligated to replace the security borrowed
by purchasing it in the open market at some later date. The Fund will incur a
loss if the market price of the security increases between
24
<PAGE>
the date of the short sale and the date on which the Fund replaces the borrowed
security. The Fund will typically realize a gain if the security declines in
value between those dates. All short sales must be fully collateralized. The
Fund maintains the collateral in a segregated account consisting of cash and/or
U.S. government securities sufficient to collateralize its obligation on the
short positions. The Fund may also sell short "against the box" (i.e., the Fund
enters into a short sale as described above while holding an offsetting long
position in the security which is sold short). If the Fund enters into a short
sale against the box, it will hold an equivalent amount of the securities to
cover its position while the short sale is outstanding. The Fund limits the
value of short sale positions (excluding short sales against the box) to 25% of
the Fund's total assets. At December 31, 1996, the Fund had 1.0% of its total
assets in short positions. For the period from August 1, 1996 (Commencement of
Operations), through December 31, 1996, the cost of investments purchased to
cover short sales and proceeds from investments sold short were $3,859,347 and
$5,317,465, respectively.
Included in the "Other Liabilities, Net" category in the Schedule of Investments
are the following securities sold short where the Fund has purchased the
underlying securities to effectively close out the short positions. Included in
Receivable from Brokers for Securities Sold Short is $1,010,350 for these
covered short positions. At December 31, 1996, the cost of the associated long
positions and the unrealized appreciation on investments and securities sold
short are $731,563 and $278,787. At December 31, 1996, the Fund chose not to
complete the transactions which would have required delivery of the purchased
securities to the lender. The Fund does not consider these boxed positions as
investments.
SECURITY SHARES VALUE
- -------------------------------------------------------------------------------
DSC Communications Corporation 10,000 $ 178,750
Premisys Communications, Inc, 2,500 84,375
PRI Automation, Inc. 12,500 568,750
- --------------------------------------------------------------------------------
$ 831,875
- -------------------------------------------------------------------------------
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
d. RESTRICTED SECURITIES:
A restricted security cannot be resold to the general public without prior
registration under the Securities Act of 1933. If the security is subsequently
registered and resold, the issuers would bear the expense of all registrations
at no cost to the Fund. At December 31, 1996, the Fund held restricted
securities with an aggregate value of $623,941, which represented 1.0% of the
Fund's total assets. Restricted securities are valued according to the
guidelines and procedures adopted by the Fund's Board of Trustees as outlined in
Note 1.a., paragraph 2.
SHARES COST VALUE ACQUISITION
SECURITY (000) (000) (000) DATE
- -------------------------------------------------------------------------------
InfoNow Corporation 286 270 455 12/02/96
InfoNow Corporation,
1/2 Warrants 286 130 169 12/02/96
- -------------------------------------------------------------------------------
$400 $624
- -------------------------------------------------------------------------------
E. OPTIONS AND WARRANTS:
Options and warrants normally entitle the holder to purchase a proportionate
number of a particular class of the issuer's securities at a predetermined price
during a specific period. The Glendale Federal Savings Bank Warrants are valued
daily at the last sale price on the principal exchange or market on which they
were traded, or, if there were no sales that day, at the mean between the
closing bid and asked prices.
Options and warrants for which market quotations were not readily available were
priced using the modified Black-Scholes Valuation Formula. The Black-Scholes
Valuation Formula values an option or warrant by determining the differential
between the exercise price of the option or warrant and the current price of the
underlying stock based on a number of factors. These factors include, but are
not limited to, current price of the underlying stock, exercise price of the
option or warrant, time to expiration, assumed riskless rate of interest,
compounded rate of return on the stock, and standard deviation of the return on
the stock. This valuation method is subject to frequent review and is in
accordance with the guidelines and procedures adopted by the Fund's Board of
Trustees.
26
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens Diversified
Growth Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedules of investments and securities sold short, and the
related statements of operations and of changes in net assets and the
financial highlights present fairly, in all material respects, the financial
position of The Robertson Stephens Diversified Growth Fund (the "Fund") at
December 31, 1996, the results of its operations and changes in its net
assets and the financial highlights for the period from August 1, 1996
(Commencement of Operations), through December 31, 1996, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audit. We conducted our
audit of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audit, which included confirmation of securities at December
31, 1996, by correspondence with the custodian and brokers, provides a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
27
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- ------------------------------------------------------------------------------------------------------------------------------
ADVERTISING - 1.9%
HA-LO Industries, Inc. 18,750 $ 515,625
Lamar Advertising Company, Class A 131,100 3,179,175
TMP Worldwide, Inc. 25,000 318,750
- ------------------------------------------------------------------------------------------------------------------------------
4,013,550
- ------------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY - 3.3%
BioChem Pharma, Inc. 10,000 502,500
Dura Pharmaceuticals, Inc. 89,800 4,287,950
Gensia, Inc.(1) 1,175 5,434
Vertex Pharmaceuticals, Inc. 55,600 2,237,900
- ------------------------------------------------------------------------------------------------------------------------------
7,033,784
- ------------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 5.6%
Abacus Direct Corporation 10,000 187,500
American Residential Services, Inc. 80,400 2,180,850
Applied Graphics Technologies, Inc. 14,500 422,312
Caribiner International, Inc. 12,100 608,025
E*Trade Group, Inc. 15,000 172,500
Service Experts, Inc. 27,500 715,000
Staffmark, Inc. 60,000 750,000
Sykes Enterprises, Inc. 13,000 487,500
Teletech Holdings, Inc. 50,000 1,300,000
Vanstar Corporation 111,000 2,719,500
West TeleServices Corporation 31,000 705,250
Whittman-Hart, Inc. 60,000 1,537,500
- ------------------------------------------------------------------------------------------------------------------------------
11,785,937
- ------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 16.1%
America Online, Inc. 20,000 665,000
Arbor Software Corporation 10,000 242,500
CBT Group PLC, ADR(5) 47,000 2,549,750
Clarify, Inc. 31,800 1,526,400
CyberMedia, Inc. 4,500 70,875
ECsoft Group PLC, ADR(5) 30,000 288,750
Excite, Inc. 195,000 1,998,750
HNC Software, Inc. 15,000 468,750
Hyperion Software Corporation 50,000 1,062,500
Infoseek Corporation 50,000 387,500
i2 Technologies, Inc. 40,000 1,530,000
Indus Group, Inc. 50,000 1,287,500
Legato Systems, Inc. 68,000 2,218,500
Midway Games, Inc. 25,000 506,250
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE/SERVICES - CONTINUED
Open Text Corporation 25,000 $ 171,875
Pegasystems Inc. 20,000 602,500
Rational Software Corporation 70,000 2,769,375
Remedy Corporation 53,400 2,870,250
Rogue Wave Software, Inc. 20,300 319,725
Security Dynamics Technologies, Inc. 34,000 1,071,000
Siebel Systems, Inc. 88,000 2,376,000
Smallworldwide PLC, ADR(5) 130,000 1,543,750
Summit Design, Inc. 50,000 512,500
Vantive Corporation 145,000 4,531,250
Versatility, Inc. 10,000 150,000
Visigenic Software, Inc. 20,000 305,000
Wind River Systems, Inc. 30,000 1,421,250
Yahoo! Inc. 30,000 510,000
- ------------------------------------------------------------------------------------------------------------------------------
33,957,500
- ------------------------------------------------------------------------------------------------------------------------------
CONSULTING SERVICES - 8.1%
BTG, Inc. 20,000 530,000
Claremont Technology Group, Inc. 127,000 3,333,750
Computer Management Sciences, Inc. 237,375 5,518,969
Donnelley Enterprise Solutions, Inc. 69,000 1,690,500
Information Management Resources, Inc. 45,000 950,625
Keane, Inc. 5,000 158,750
Mastech Corporation 40,000 760,000
Renaissance Solutions, Inc. 20,000 895,000
Superior Consultant Holdings Corporation 66,200 1,638,450
The Vincam Group, Inc. 37,500 1,645,312
- ------------------------------------------------------------------------------------------------------------------------------
17,121,356
- ------------------------------------------------------------------------------------------------------------------------------
CONSUMER/SPECIALTY RETAIL - 7.0%
Amscan Holdings, Inc. 50,000 600,000
Bed Bath & Beyond, Inc. 60,000 1,455,000
Delia's, Inc. 10,000 198,750
Factory Card Outlet Corporation 50,000 450,000
Forrester Research, Inc. 70,000 1,802,500
Inacom Corporation 15,000 600,000
Intelligent Electronics, Inc.(1) 50,000 400,000
Just For Feet, Inc. 70,000 1,837,500
Mazel Stores, Inc. 77,500 1,743,750
The North Face, Inc. 70,000 1,347,500
PETsMART, Inc. 84,300 1,844,062
Renter's Choice, Inc. 67,100 972,950
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE>
<CAPTION>
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER/SPECIALTY RETAIL - CONTINUED
Sport-Haley, Inc. 60,000 $ 753,750
Starsight Telecast, Inc. 70,000 656,250
- ------------------------------------------------------------------------------------------------------------------------------
14,662,012
- ------------------------------------------------------------------------------------------------------------------------------
DATA COMMUNICATIONS/TELECOMMUNICATIONS - 9.2%
Aspect Telecommunications Corporation 47,500 3,016,250
COLT Telecom Group PLC, ADR5 10,000 192,500
GeoTel Communications Corporation 116,800 1,518,400
Harmonic Lightwaves, Inc. 15,000 230,625
Lightbridge, Inc. 35,000 299,687
Midcom Communications, Inc. 146,000 1,241,000
Natural Microsystems Corporation 85,000 2,677,500
NetVantage, Inc., Class A 60,000 540,000
Pacific Gateway Exchange, Inc. 62,500 2,281,250
PairGain Technologies, Inc. 89,000 2,708,940
Sawtek, Inc. 40,000 1,585,000
Tellabs, Inc. 80,000 3,010,000
- ------------------------------------------------------------------------------------------------------------------------------
19,301,152
- ------------------------------------------------------------------------------------------------------------------------------
DATA PROCESSING SERVICES - 8.1%
Affiliated Computer Services, Inc., Class A 316,500 9,415,875
First USA Paymentech, Inc. 46,000 1,558,250
National Data Corporation(1) 20,000 870,000
NOVA Corporation 43,000 951,375
Peerless Group, Inc. 200,000 1,350,000
Transaction Systems Architects, Inc., Class A 84,000 2,793,000
- ------------------------------------------------------------------------------------------------------------------------------
16,938,500
- ------------------------------------------------------------------------------------------------------------------------------
EDUCATION/TRAINING - 1.1%
Education Management Corporation 30,000 630,000
Computer Learning Centers, Inc. 60,000 1,710,000
- ------------------------------------------------------------------------------------------------------------------------------
2,340,000
- ------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES - 2.3%
Metzler Group, Inc. 68,500 2,174,875
Nabors Industries, Inc. 45,000 866,250
NGC Corporation, Class B(1) 60,000 1,395,000
Smedvig ASA, Class B, ADR(5) 15,000 301,875
- ------------------------------------------------------------------------------------------------------------------------------
4,738,000
- ------------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 6.1%
American Express Company(1) 30,000 1,695,000
Cohr, Inc. 30,000 810,000
Emergent Group, Inc. 40,000 420,000
Financial Federal Corporation 70,000 1,172,500
First USA, Inc.(1) 50,000 1,731,250
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
FINANCIAL SERVICES - CONTINUED
Glendale Federal Bank FSB 25,000 $ 581,250
MBNA Corporation(1) 40,000 1,660,000
Marsh & McLennan Companies, Inc.(1) 12,000 1,248,000
Matrix Capital Corporation 50,000 793,750
Southern Pacific Funding Corporation 63,900 1,988,887
The Money Store, Inc.(1) 15,000 414,375
Willis Lease Finance Corporation 20,000 257,500
- ------------------------------------------------------------------------------------------------------------------------------
12,772,512
- ------------------------------------------------------------------------------------------------------------------------------
HARDWARE/COMPONENTS - 0.6%
Seagate Technology, Inc. 15,000 592,500
U.S. Robotics Corporation 10,000 720,000
- ------------------------------------------------------------------------------------------------------------------------------
1,312,500
- ------------------------------------------------------------------------------------------------------------------------------
HEALTH CARE SERVICES - 13.3%
CareMatrix Corporation 50,800 666,750
Diagnostic Health Services, Inc. 25,000 200,000
Enterprise Systems, Inc. 118,800 2,791,800
Foundation Health Corporation(2)(3) 74 0
HBO & Company(1) 130,000 7,718,750
IDX Systems Corporation 35,000 1,001,875
Lincare Holdings, Inc. 45,000 1,845,000
Medic Computer Systems, Inc. 30,000 1,209,375
National Surgery Centers, Inc. 35,000 1,330,000
NCS HealthCare, Inc., Class A 43,500 1,266,937
Pediatrix Medical Group, Inc. 70,000 2,581,250
PhyMatrix Corporation 25,000 356,250
Renal Care Group, Inc. 97,800 3,092,925
Renal Treatment Centers, Inc. 30,000 765,000
Romac International, Inc. 111,200 2,446,400
Transition Systems, Inc. 50,000 706,250
- ------------------------------------------------------------------------------------------------------------------------------
27,978,562
- ------------------------------------------------------------------------------------------------------------------------------
LODGING - 4.9%
Doubletree Corporation 50,000 2,250,000
Fairfield Communities, Inc. 118,726 2,938,469
HFS, Inc. 10,000 597,500
Leisure Canada, Inc.(6) 5,000 11,137
Signature Resorts, Inc. 96,000 3,384,000
Wyndham Hotel Corporation 45,000 1,108,125
- ------------------------------------------------------------------------------------------------------------------------------
10,289,231
- ------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL DEVICES - 1.7%
Endosonics Corporation 110,000 $ 1,677,500
Hologic, Inc. 15,000 371,250
ResMed, Inc. 24,000 528,000
SeaMED Corporation 97,600 1,061,400
- ------------------------------------------------------------------------------------------------------------------------------
3,638,150
- ------------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 0.8%
Landry's Seafood Restaurants, Inc. 81,600 1,744,200
- ------------------------------------------------------------------------------------------------------------------------------
1,744,200
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS - 90.1% (COST: $161,714,550) 189,626,946
- ------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS
Applied Micro Circuits Corporation, Series 3, Restricted(2)(3) 2,381 43,953
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS - 0.0% (COST: $50,001) 43,953
<CAPTION>
DECEMBER 31, 1996 PAR VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS
Midcom Communications, 8.25%, Due 8/15/03, 144A(1)(3)(4) 1,000,000 920,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS - 0.4% (COST: $1,000,000) 920,000
<CAPTION>
WARRANTS WARRANTS
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
Glendale Federal Savings Bank, Warrants, Strike $12.00, Expire 8/21/00 25,000 318,750
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 0.2% (COST: $281,875) 318,750
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 90.7% (COST: $163,046,426) 190,909,649
- ------------------------------------------------------------------------------------------------------------------------------
12
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
<CAPTION>
DECEMBER 31, 1996 VALUE
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
Cash $ 102
Repurchase Agreement
State Street Bank & Trust Company, 5.00%, dated 12/31/96,
due 1/2/97, maturity value $16,076,464 (collateralized by
$11,280,000 par value U.S. Treasury Note, 10.625%, due 8/15/15) 16,072,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 7.7% 16,072,102
- ------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, NET - 1.6% 3,422,631
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 210,404,382
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income-producing security.
(2) Restricted security. See 4.c. in Notes to Financial Statements.
(3) Fair-value security. See 1.a. in Notes to Financial Statements.
(4) These securities may be resold in transactions exempt from registration
under Rule 144A of the Securities Act of 1933, normally to qualified
institutional buyers.
(5) ADR - American Depository Receipt.
(6) Foreign security denominated in Canadian Dollars.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- ------------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $163,046,426) $ 190,909,649
Cash and cash equivalents 16,072,102
Receivable for investments sold 4,927,250
Receivable for fund shares subscribed 1,202,414
Receivable for class action settlement revenue from investments 187,538
Dividends/interest receivable 50,503
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 213,349,456
- ------------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- ------------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 1,127,476
Payable for fund shares redeemed 1,329,348
Accrued expenses 269,179
Payable to adviser 175,257
Payable to distributor 43,814
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 2,945,074
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 210,404,382
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- ------------------------------------------------------------------------------------------------------------------------------
Paid-in capital 178,964,300
Accumulated net realized gain from investments 3,576,859
Net unrealized appreciation on investments 27,863,223
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 210,404,382
- ------------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 20.07
Net Asset Value, offering and redemption price per share
(net assets of $210,404,382 applicable to 10,484,214 shares
of beneficial interest outstanding with no par value)
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- ------------------------------------------------------------------------------------------------------------------------------
Interest $ 942,545
Dividends 141,522
Class action settlement revenue from investments 313,189
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,397,256
- ------------------------------------------------------------------------------------------------------------------------------
EXPENSES
- ------------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 1,805,586
Distribution fees 451,396
Custodian and transfer agent fees 322,210
Professional fees 130,160
Shareholder reports 115,630
Registration and filing fees 52,745
Trustees' fees and expenses 22,326
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 2,900,053
- ------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,502,797)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS
- ------------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments 22,243,747
Net change in unrealized appreciation on investments 9,164,670
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS 31,408,417
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 29,905,620
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE NINE
YEAR ENDED MONTHS ENDED
12/31/96 12/31/95
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (1,502,797) $ (1,275,816)
Net realized gain from investments 22,243,747 22,504,993
Net change in unrealized appreciation/(depreciation) on investments 9,164,670 (731,214)
- ------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 29,905,620 20,497,963
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- ------------------------------------------------------------------------------------------------------------------------------
Net investment income - -
Realized gain on investments (28,398,700) (13,460,981)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (28,398,700) (13,460,981)
- ------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- ------------------------------------------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets resulting from capital share transactions 41,168,975 (21,583,831)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 41,168,975 (21,583,831)
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS 42,675,895 (14,546,849)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 167,728,487 182,275,336
End of period $ 210,404,382 $ 167,728,487
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR THE NINE MONTHS FOR THE FOR THE THREE MONTHS FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED ENDED YEAR ENDED YEAR ENDED ENDED YEAR ENDED YEAR ENDED
THROUGHOUT EACH PERIOD: 12/31/96 12/31/95(1) 3/31/95(3) 3/31/94 3/31/93(1) 12/31/92 12/31/91
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF
PERIOD $ 19.21 $ 18.36 $ 18.37 $ 14.71 $ 16.77 $ 17.50 $ 11.67
- --------------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (0.17) (0.15) (0.17) (0.40) (0.02) (0.15) (0.09)
Net realized gain/(loss) and
unrealized appreciation/
(depreciation) on investments 4.23 2.58 2.26 4.06 (2.04) (0.31) 6.82
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE/(DECREASE) IN NET
ASSETS RESULTING FROM
OPERATIONS 4.06 2.43 2.09 3.66 (2.06) (0.46) 6.73
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment
income - - - - - - -
Distributions from realized gain on
investments (3.20) (1.58) (2.10) - - (0.27) (0.90)
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 20.07 $ 19.21 $ 18.36 $ 18.37 $ 14.71 $ 16.77 $ 17.50
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 21.53% 13.50% 12.01% 24.88% (12.28)% (2.55)% 58.70%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
Net Assets, end of period (000s) $ 210,404 $ 167,728 $ 182,275 $ 168,192 $ 228,893 $ 277,531 $ 141,929
Ratio of Expenses to Average
Net Assets 1.60% 1.64% 1.56% 1.60% 1.54% 1.49% 1.59%
Ratio of Net Investment Loss to
Average Net Assets (0.83)% (0.99)% (0.96)% (1.27)% (0.61)% (0.92)% (0.68)%
Portfolio Turnover Rate 270% 147% 280% 274% 43% 124% 147%
Average Commission Rate Paid(2) $ 0.0587 - - - - - -
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
1 Ratios, except for total return and portfolio turnover rate, have been
annualized.
2 A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each of the periods has been determined by using the
average number of shares outstanding throughout each period. Distributions
reflect actual per-share amounts distributed for the periods.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Emerging Growth Fund (the "Fund") is a series of the
Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund became effective to offer shares to
the public on November 30, 1987. The Trust offers eleven series of shares --
The Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value +
Growth Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing
Countries Fund, The Robertson Stephens Growth & Income Fund, The Robertson
Stephens Partners Fund, The Information Age Fund-TM-, The Robertson Stephens
Global Natural Resources Fund, The Robertson Stephens Global Low-Priced
Stock Fund, The Robertson Stephens Diversified Growth Fund and The Robertson
Stephens MicroCap Growth Fund. The assets for each series are segregated and
accounted for separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. At December 31, 1996, 99.5% of the Fund's
portfolio was valued in this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use
fundamental valuation methods which include, but are not limited to, the
analysis of: the effect of any restrictions on the sale of the security, product
development
18
<PAGE>
and trends of the security's issuer, changes in the industry and other
competing companies, significant changes in the issuer's financial position,
and any other event which could have a significant impact on the value of the
security. At December 31, 1996, approximately 0.5% of the Fund's portfolio
was valued using these guidelines and procedures.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy, realization
and/or retention of the collateral may be subject to legal proceedings. The
Fund's policy is to limit repurchase agreement transactions to those parties
deemed by the Fund's Investment Adviser to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on securities
transactions are determined on the basis of specific identification.
e. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
f. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
g. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended December
31, 1996, and for the nine months ended December 31, 1995, were as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 10,385,165 $ 223,710,716
Shares reinvested 1,385,610 27,461,885
- -------------------------------------------------------------------------------
11,770,775 251,172,601
- -------------------------------------------------------------------------------
Shares redeemed (10,019,081) (210,003,626)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net increase 1,751,694 $ 41,168,975
- -------------------------------------------------------------------------------
4/1/95 - 12/31/95 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 2,181,298 $ 41,669,243
Shares reinvested 686,387 13,000,659
- -------------------------------------------------------------------------------
2,867,685 54,669,902
- -------------------------------------------------------------------------------
Shares redeemed (4,060,471) (76,253,733)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
Net decrease (1,192,786) $ (21,583,831)
- -------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Board of Trustees, the Fund pays Robertson Stephens Investment
Management, Inc. ("RSIM") an investment advisory fee calculated at an annual
rate of 1.00% of the average daily net assets of the Fund. For the year ended
December 31, 1996, the Fund incurred investment advisory fees of $1,805,586. For
the year ended December 31, 1996, there was no expected reimbursement of the
advisory fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. For
the previous two years ended December 31, 1996, the Fund had not received any
waivers or reimbursements of operating expenses from RSIM.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC (RS & Co.), the
20
<PAGE>
Fund's Distributor and RSIM Inc., the Fund's Adviser. G. Randy Hecht,
President, Chief Executive Officer, and a Trustee of the Fund, is also a
Director of RSIM Inc., a Member of RS Group, and Chief Operating Officer of RS &
Co. Terry R. Otton, Chief Financial Officer of the Fund, is a Member of RS Group
and Chief Financial Officer of RS & Co. John P. Rohal, a Trustee of the Fund, is
a Member of RS Group and Director of Research for RS & Co. Dana K. Welch,
Secretary of the Fund, is a Member of RS Group and General Counsel of RS & Co.
James Callinan, Portfolio Manager, is a member of RS Group. All affiliated and
access persons, as defined in the 1940 Act, follow strict guidelines and
policies on personal trading as outlined in the Fund's Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is reviewed and approved annually by the Fund's Board of Trustees.
Under this Plan, RS & Co. is compensated for services in such capacity including
its expenses in connection with the promotion and distribution of the Fund's
shares. The distribution fee is calculated at an annual rate of 0.25% of the
average daily net assets of the Fund. For the year ended December 31, 1996, the
Fund incurred distribution fees of $451,396.
e. BROKERAGE COMMISSIONS:
RSIM Inc. may direct orders for investment transactions to RS & Co. as broker-
dealer, subject to Fund policies as stated in the prospectus, regulatory
constraints, and the ability of RS & Co. to provide competitive prices and
commission rates. All investment transactions in which RS & Co. acts as a broker
may only be executed on an agency basis. Subject to certain constraints, the
Fund may make purchases of securities from offerings or underwritings in which
RS & Co. has been retained by the issuer. For the year ended December 31, 1996,
the Fund paid brokerage commissions of $23,895 to RS & Co., which represented
5.0% of the total commissions paid for the period.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $164,109,004. Accumulated net unrealized appreciation on investments was
$26,800,645, consisting of gross unrealized appreciation and depreciation of
$32,761,269 and ($5,960,624), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding short-term investments) were
$466,039,595 and $440,314,574, respectively.
c. RESTRICTED SECURITIES:
A restricted security is a security which cannot be resold to the general
public without prior registration under the Securities Act of 1933. If the
security is subsequently registered and resold, the issuers would bear the
expense of all registrations at no cost to the Fund. At December 31, 1996,
the Fund held restricted securities with an aggregate value of $43,953.
Restricted securities are valued according to the guidelines and procedures
adopted by the Fund's Board of Trustees as outlined in Note 1.a., paragraph 2.
COST VALUE ACQUISITION
SECURITY SHARES (000) (000) DATE
- -------------------------------------------------------------------------------
Applied Micro Circuits
Corporation, Convertible
Preferred Stock, Series 3 2,381 $50 $44 9/14/87
Foundation Health
Corporation 74 $2 $0 3/6/96
- -------------------------------------------------------------------------------
d. WARRANTS:
A warrant is an option which normally entitles the holder to purchase a
proportionate number of a particular class of the issuer's securities at a
predetermined price during a specific period. The Glendale Federal Savings Bank
Warrants held by the Fund were valued daily at the last sale price on the
principal exchange or market on which they were traded, or, if there were no
sales that day, at the mean between the closing bid and asked prices.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens Emerging
Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Robertson Stephens Emerging
Growth Fund (the "Fund") at December 31, 1996, the results of its operations and
the changes in its net assets and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1996, by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
23
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
- -------------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES - 1.7%
Enterprise Solutions Asia Pacific, Ltd. AUD 40,000 $ 44,512
Insignia Systems, Inc. 81,500 157,906
U-Ship, Inc. 110,000 343,750
- -------------------------------------------------------------------------------------------------------------------------------
546,168
- -------------------------------------------------------------------------------------------------------------------------------
CLOSED-END FUNDS - 5.5%
Cathay Investment Fund, Ltd.(1) HKD 1,283,000 1,658,802
Greenchip Development Capital, Ltd.(1) AUD 33,640 20,856
Greenchip Emerging Growth, Ltd. AUD 40,610 34,538
Greenchip Investments, Ltd.(1) AUD 31,746 16,149
- -------------------------------------------------------------------------------------------------------------------------------
1,730,345
- -------------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS SERVICES - 1.1%
CD Radio, Inc. 61,000 251,625
Telecard, Ltd. PKR 95,500 99,479
- -------------------------------------------------------------------------------------------------------------------------------
351,104
- -------------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 2.6%
InfoNow Corporation, Restricted(3)(7) 214,286 341,518
Techniche, Ltd. AUD 226,700 466,698
- -------------------------------------------------------------------------------------------------------------------------------
808,216
- -------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION/INFRASTRUCTURE - 3.5%
L&M Group Investments, Ltd.(1) SGD 150,000 162,939
Overseas & General, Ltd. AUD 678,751 109,250
PT Super Indah Makmur, Foreign(1)(6) IDR 125,000 127,011
Van Der Horst, Ltd.(1) SGD 100,000 418,066
Vietnam Industrial Investments, Ltd. AUD 1,521,301 287,186
- -------------------------------------------------------------------------------------------------------------------------------
1,104,452
- -------------------------------------------------------------------------------------------------------------------------------
CONSUMER GOODS - 2.1%
Wuxi Little Swan Company, Ltd., Class B HKD 649,300 654,799
- -------------------------------------------------------------------------------------------------------------------------------
654,799
- -------------------------------------------------------------------------------------------------------------------------------
DIAMOND MINING - 0.6%
DiamondWorks, Ltd. CAD 130,000 190,827
- -------------------------------------------------------------------------------------------------------------------------------
190,827
- -------------------------------------------------------------------------------------------------------------------------------
ELECTRONIC COMPONENTS - 1.3%
AER Energy Resources, Inc. 109,900 240,406
Spectrum Control, Inc. 45,000 151,875
- -------------------------------------------------------------------------------------------------------------------------------
392,281
- -------------------------------------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------------------------------------
ENERGY - 10.3%
Aztec Resources, Ltd. CAD 79,700 162,974
Basin Exploration, Inc. 36,500 228,125
BlackRock Ventures, Inc. 116,500 60,407
Calahoo Petroleum, Ltd. CAD 494,000 306,653
Canadian Conquest Exploration, Inc. CAD 295,100 528,003
- -------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
8
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY - CONTINUED
Clayton Williams Energy, Inc. 15,000 $ 260,625
Discovery West Corporation CAD 116,500 204,192
Eurogas Corporation CAD 4,500 4,108
Eurogas Corporation, 144A(5) CAD 154,775 141,290
Highridge Exploration, Ltd. CAD 156,800 383,612
Nugas, Ltd. CAD 30,000 52,582
Olympia Energy, Inc., Class A CAD 537,000 247,068
Paragon Petroleum Corporation CAD 95,600 223,413
Place Resources Corporation CAD 294,200 431,857
- -------------------------------------------------------------------------------------------------------------------------------
3,234,909
- -------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES - 3.6%
3-D Geophysical, Inc. 14,000 126,000
Computalog, Ltd. CAD 68,400 749,288
DI Industries, Inc. 60,400 169,875
DSI Industries, Inc. 102,500 54,453
Grant Geophysical, Inc. 205,000 19,219
- -------------------------------------------------------------------------------------------------------------------------------
1,118,835
- -------------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES - 0.9%
Stake Technology, Ltd. 225,000 267,188
- -------------------------------------------------------------------------------------------------------------------------------
267,188
- -------------------------------------------------------------------------------------------------------------------------------
FOOD SERVICE - 5.5%
ABR Holdings, Ltd.(1) SGD 250,000 287,644
New World Coffee, Inc. 297,500 706,563
New York Bagel Enterprises 38,000 232,750
Taco Cabana, Inc., Class A 68,700 506,663
- -------------------------------------------------------------------------------------------------------------------------------
1,733,620
- -------------------------------------------------------------------------------------------------------------------------------
FOREST PRODUCTS - 2.8%
Sino-Forest Corporation, Class A CAD 689,500 624,392
Sino-Forest Corporation, Class A, Restricted(3),(7) CAD 300,000 244,505
- -------------------------------------------------------------------------------------------------------------------------------
868,897
- -------------------------------------------------------------------------------------------------------------------------------
GOLD MINING - 4.5%
Bakyrchik Gold PLC GBP 50,000 208,155
Brazilian Resources, Inc. CAD 91,828 26,825
Emperor Mines, Ltd. AUD 151,000 294,055
First Dynasty Mines, Ltd., Restricted(3)(7) CAD 100,000 242,825
General Gold Resources NL(1) AUD 490,220 175,343
Ghana Gold Mines, Ltd. AUD 337,500 53,652
Guyanor Ressources, S.A., Class B CAD 49,900 337,088
Solomon Resources, Ltd. CAD 75,000 76,134
- -------------------------------------------------------------------------------------------------------------------------------
1,414,077
- -------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 0.4%
Mobile Mini, Inc. 36,100 112,813
- -------------------------------------------------------------------------------------------------------------------------------
112,813
- -------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
9
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MEDIA - 2.2%
Valuevision International, Inc. 131,000 $ 704,125
- -------------------------------------------------------------------------------------------------------------------------------
704,125
- -------------------------------------------------------------------------------------------------------------------------------
MEDICAL SERVICES - 1.5%
In Home Health, Inc. 250,000 484,375
- -------------------------------------------------------------------------------------------------------------------------------
484,375
- -------------------------------------------------------------------------------------------------------------------------------
OTHER BASE METALS - 1.1%
Farallon Resources, Ltd. CAD 20,000 233,696
NDU Resources, Ltd. CAD 30,000 30,673
NDU Resources, Ltd., Restricted(3)(7) CAD 75,000 72,847
- -------------------------------------------------------------------------------------------------------------------------------
337,216
- -------------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS - 0.1%
PT Bayer Indonesia, Foreign(1)(6) IDR 40,000 36,410
- -------------------------------------------------------------------------------------------------------------------------------
36,410
- -------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE - 2.8%
Catellus Development Corporation 76,700 872,463
- -------------------------------------------------------------------------------------------------------------------------------
872,463
- -------------------------------------------------------------------------------------------------------------------------------
SPECIALTY PAPER - 3.8%
Climax International Company(1) HKD 3,770,400 487,478
Geographics, Inc. 140,000 717,500
- -------------------------------------------------------------------------------------------------------------------------------
1,204,978
- -------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL - 6.7%
Paul Harris Stores, Inc. 87,500 1,553,125
Service Merchandise Company 40,000 170,000
Video Update, Inc., Class A 100,000 393,750
- -------------------------------------------------------------------------------------------------------------------------------
2,116,875
- -------------------------------------------------------------------------------------------------------------------------------
TEXTILES - 1.0%
PT Apac Centertex Corporation, Foreign(1)(6) IDR 962,000 325,826
- -------------------------------------------------------------------------------------------------------------------------------
325,826
- -------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION EQUIPMENT /SERVICES - 5.4%
China Yuchai International, Ltd.(1) 129,600 615,600
PT Steady Safe Transportation Services, Foreign(1)(6) IDR 854,833 1,094,779
- -------------------------------------------------------------------------------------------------------------------------------
1,710,379
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK - 71.0% (Cost $21,885,949) 22,321,178
- -------------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCK
Energy - 2.2%
Mesa, Inc., 8.00%, Expires 6/30/08, Series A(1) 108,338 690,650
- -------------------------------------------------------------------------------------------------------------------------------
690,650
- -------------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL - 1.4%
Tyco Toys Inc., 8.25%, Expires 7/1/00, Series C(1) 43,800 443,475
- --------------------------------------------------------------------------------------------------------------------------------
443,475
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCK - 3.6% (COST $701,924) 1,134,125
- -------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- -------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WARRANTS
- -------------------------------------------------------------------------------------------------------------------------------
Brazilian Resources, Inc., 1/2 Warrants, Strike CAD 0.50,
Expire 3/4/99(3)(4)(7) CAD 45,914 $ 9,818
Calahoo Petroleum, Ltd., 3/4 Warrants, Strike CAD 0.65,
Expire 6/28/97(3)(4) CAD 292,500 68,496
Farallon Resources, Ltd., Warrants, Strike CAD 6.25,
Expire 8/30/97(3)(4) CAD 20,000 146,192
First Dynasty Mines, Ltd., Warrants, Strike CAD 4.50,
Expire 3/13/97(3)(4)(7) CAD 100,000 8,978
Help At Home, Inc., Warrants, Strike $6.00, Expire 12/5/00(4) 267,000 392,156
InfoNow Corporation, 1/2 Warrants, Strike $1.40,
Expire 5/20/98(3)(4)(7) 214,286 126,437
NDU Resources, Ltd., 1/2 Warrants, Strike CAD 2.31,
Expire 5/17/98(3)(4)(7) CAD 75,000 29,860
PT Apac Centertex Corporation Warrants, Strike IDR 1000,
Expire 1/16/97(4) IDR 150,000 7,938
Solomon Resources Ltd., 1/2 Warrants, Strike CAD 1.05,
Expire 1/3/98(3)(4) CAD 75,000 19,381
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 2.6% (Cost $784,352) 809,256
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 77.2% (Cost $23,372,225) 24,264,559
- -------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -------------------------------------------------------------------------------------------------------------------------------
Cash 185,971
Czech Koruna 148,903
Hong Kong Dollars 3
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96,
due 1/2/97, maturity value $1,999,555(collateralized by
$1,565,000 par value U.S. Treasury Bond, 9.25%, due 2/15/16) 1,999,000
Federal National Mortgage Association, 5.50%, due 1/8/97,
$4,700,000 par value 4,694,974
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 22.3% 7,028,851
- -------------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, NET - 0.5% 147,271
- -------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 31,440,681
</TABLE>
(1) Income-producing security.
(2) Foreign-denominated security; AUD - Australian Dollar, CAD - Canadian
Dollar, GBP - British Pound, HKD - Hong Kong Dollar, IDR - Indonesian
Rupiah, PKR - Pakistani Rupee, SGD - Singapore Dollar.
(3) Fair-value security. See 1.a. in Notes to Financial Statements.
(4) See 4.d. in Notes to Financial Statements.
(5) These securities may be resold in transactions exempt from registration
under Rule 144A of the Securities Act of 1933, normally to qualified
institutional buyers.
(6) Shares registered for foreign investors.
(7) Restricted security. See 4.c. in Notes to Financial Statements.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S>
ASSETS <C>
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $23,372,225) $ 24,264,559
Cash and cash equivalents 7,028,851
Receivable for investments sold 52,500
Receivable for fund shares subscribed 283,511
Dividend/interest receivable 28,057
Organization cost 15,713
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 31,673,191
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Accrued expenses 128,186
Payable for fund shares redeemed 77,524
Payable to adviser 26,800
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 232,510
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS 31,440,681
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 30,330,116
Accumulated net realized gain from investments 217,687
Net unrealized appreciation on investments 892,878
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 31,440,681
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 13.52
Net Asset Value, offering and redemption price per share
(Net assets of $31,440,681 applicable to 2,325,797 shares
of beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Interest $ 166,259
Dividends (net of foreign tax withheld of $5,162) 83,431
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 249,690
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 195,547
Custodian and transfer agent fees 138,322
Professional fees 84,273
Shareholder reports 40,875
Administrative services fee 48,887
Distribution fees 48,887
Registration and filing fees 32,568
Trustees' fees and expenses 22,326
Organization expense 3,850
Insurance fees 374
TOTAL EXPENSES 615,909
- -----------------------------------------------------------------------------------------------------------------------------
LESS: EXPENSE WAIVER BY ADVISER (234,614)
TOTAL EXPENSES, NET 381,295
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (131,605)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 349,292
Net change in unrealized appreciation on investments 872,069
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS 1,221,361
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 1,089,756
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
12/31/96 12/31/95(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment (loss)/income $ (131,605) $ 1,858
Net realized gain on investments 349,292 -
Net change in unrealized appreciation on investments 872,069 20,809
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1,089,756 22,667
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION TO SHAREHOLDERS
Net investment income (2,077) -
Realized gain on investments - -
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2,077) -
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 28,709,614 1,620,721
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 28,709,614 1,620,721
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 29,797,293 1,643,388
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 1,643,388 0
End of period $ 31,440,681 $ 1,643,388
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on November 15, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED PERIOD ENDED
THROUGHOUT THE PERIOD: 12/31/96 12/31/95(1)(3)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.45 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Net investment (loss)/income (0.09) 0.03
Net realized gain and net change in unrealized
appreciation on investments 3.17 0.42
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3.08 0.45
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income (0.01) -
Distributions from realized gain on investments - -
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.52 $ 10.45
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 29.39% 4.50%
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 31,440,681 $ 1,643,388
Ratio of Expenses to Average Net Assets 1.94%(2) 1.91%(2)
Ratio of Net Investment (Loss)/Income to Average Net Assets (0.67)%(2) 2.06%(2)
Portfolio Turnover Rate 66% 0%
Average Commission Rate Paid(4) $ 0.0134 -
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on November 15, 1995.
(2) If the Fund had paid all of its expenses and had received no reimbursement
from the Adviser, the ratio of expenses to average net assets for the year
ended December 31, 1996, and the period ended December 31, 1995, would have
been 3.14% and 9.04%, respectively, and the ratio of net investment loss to
average net assets would have been (1.87)% and (5.07)%, respectively.
(3) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(4) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each period has been determined by using the average
number of shares outstanding throughout each period. Distributions reflect
actual per-share amounts distributed for the year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Global Low-Priced Stock Fund (the "Fund") is a series of
the Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as a diversified, open-end
management investment company. The Fund became effective to offer shares to the
public on November 15, 1995. The Trust offers eleven series of shares -- The
Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value + Growth
Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing Countries Fund,
The Robertson Stephens Growth & Income Fund, The Robertson Stephens Partners
Fund, The Information Age Fund-TM-, The Robertson Stephens Global Natural
Resources Fund, The Robertson Stephens Global Low-Priced Stock Fund, The
Robertson Stephens Diversified Growth Fund, and The Robertson Stephens MicroCap
Growth Fund. The assets for each series are segregated and accounted for
separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. Foreign securities prices are generally
denominated in foreign currencies. The currencies are translated into U.S.
dollars by using the exchange rates quoted at the close of The London Stock
Exchange prior to when the Fund's net asset value is next determined. At
December 31, 1996, 94.6% of the Fund's positions were valued in this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use all
available resources, including quotations from market-makers and fundamental
valuation methods which include, but are not limited to, the analysis of: the
effect of any restrictions on the sale of the security, product development and
trends of the security's issuer, changes in the industry and other competing
companies, significant changes in the issuer's financial position, and any other
event which would have a significant impact on the value of a security. At
December 31, 1996, 5.4% of the Fund's positions were valued using these
guidelines and procedures.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterpart to the agreement, realization and/or retention of the collateral may
be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
16
<PAGE>
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on securities
transactions are determined on the basis of specific identification.
e. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a
foreign currency are translated into U.S. dollars at the exchange rate each day.
Purchases and sales of securities, income receipts, and expense payments are
translated into U.S. dollars at the exchange rate in effect on the dates of the
respective transactions.
The Fund does not isolate the portion of the fluctuations on investments
resulting from changes in foreign currency exchange rates from the fluctuations
in market prices of investments held. Such fluctuations are included with the
net realized and unrealized gain or loss from investments.
f. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
g. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
h. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended December
31, 1996 and for the period from November 15, 1995 (Commencement of Operations),
through December 31, 1995, were as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 4,496,553 $ 59,273,573
Shares reinvested 150 2,030
- -------------------------------------------------------------------------------
4,496,703 59,275,603
- -------------------------------------------------------------------------------
Shares redeemed (2,328,173) (30,565,989)
- -------------------------------------------------------------------------------
Net increase 2,168,530 $ 28,709,614
- -------------------------------------------------------------------------------
11/15/95 - 12/31/95 SHARES AMOUNT
- -------------------------------------------------------------------------------
Shares sold 164,230 $ 1,691,739
Shares reinvested - -
- -------------------------------------------------------------------------------
164,230 1,691,739
- -------------------------------------------------------------------------------
Shares redeemed (6,963) (71,018)
- -------------------------------------------------------------------------------
Net increase 157,267 $ 1,620,721
- -------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Fund's Board of Trustees, the Fund pays Robertson Stephens
Investment Management, LP ("RSIM") an investment advisory fee and an
administrative services fee
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
calculated respectively at an annual rate of 1.00% and 0.25% of the average
daily net assets of the Fund. For the year ended December 31, 1996, the Fund
incurred investment advisory fees and administrative fees of $195,547 and
$48,887, respectively. RSIM has voluntarily agreed to waive any annual operating
expenses exceeding an annual expense ratio of 1.95%. For the year ended December
31, 1996, the Adviser agreed to waive $234,614 of its fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund for the year ended December 31, 1996.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor, and
RSIM, the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer,
and a Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and
Chief Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of
the Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John
P. Rohal, a Trustee of the Fund, is a Member of RS Group and Director of
Research for RS & Co. Dana K. Welch, Secretary of the Fund, is a member of RS
Group and General Counsel of RS & Co. All affiliated and access persons, as
defined in the 1940 Act, follow strict guidelines and policies on personal
trading as outlined in the Fund's Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is approved annually by the Fund's Board of Trustees. Under the Plan,
RS & Co. is compensated for services in such capacity, including its expenses in
connection with the promotion and distribution of the Fund's shares. The
distribution fee is calculated at an annual rate of 0.25% of the average daily
net assets of the Fund. For the year ended December 31, 1996, RS & Co. agreed to
waive distribution fees worth $48,887.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as
broker-dealer, subject to Fund policies as stated in the prospectus,
regulatory constraints, and the ability of RS & Co. to provide competitive
prices and commission rates. All investment transactions in which RS & Co.
acts as a broker may only be executed on an agency basis. Subject to certain
constraints, the Fund may make purchases of securities from offerings or
underwriting in which RS & Co. has been retained by the issuer. For the year
ended December 31, 1996, the Fund paid brokerage commissions $2,087 to RS &
Co., which represented 1.6% of total commissions paid during the year.
18
<PAGE>
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $23,438,888. Accumulated net unrealized appreciation on investments was
$825,671, consisting of gross unrealized appreciation and depreciation of
$4,485,761 and $(3,629,617), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding short-term investments) were
$32,899,602 and $10,338,754, respectively.
c. RESTRICTED SECURITIES:
A restricted security is a security which cannot be resold to the general public
without prior registration under the Securities Act of 1933. If the security is
subsequently registered and resold, the issuers would typically bear the expense
of all registrations at no cost to the Fund. At December 31, 1996, the Fund held
restricted securities with an aggregate value of $1,076,788, which represented
3.4% of the Fund's total assets. Restricted securities are valued according to
the guidelines and procedures adopted by the Fund's Board of Trustees as
outlined in Note 1.a., paragraph 2.
SHARES COST VALUE ACQUISITION
SECURITY (000) (000) (000) DATE
- --------------------------------------------------------------------------------
Brazilian Resources,
Inc., 1/2 Warrants 46 $ 14 $ 9 3/01/96
First Dynasty Mines, Ltd. 100 246 243 9/13/96
First Dynasty Mines,
Ltd., Warrants 100 64 9 9/13/96
InfoNow Corporation 214 203 342 11/20/96
InfoNow Corporation,
1/2 Warrants 214 97 126 11/20/96
NDU Resources, Ltd. 75 87 73 5/16/96
NDU Resources, Ltd.,
Warrants 75 23 30 5/16/96
Sino-Forest Corp., Class A 300 275 245 10/02/96
- --------------------------------------------------------------------------------
$ 1,009 $ 1,077
- --------------------------------------------------------------------------------
d. OPTIONS AND WARRANTS:
Options and warrants normally entitle the holder to purchase a proportionate
number of a particular class of the issuer's securities at a predetermined
price during a specific period. Options and warrants for which market
quotations were not readily available were priced using the modified
Black-Scholes Valuation Formula. The Black-Scholes Valuation Formula values
an option or warrant by determining the differential between the exercise
price of the option or warrant and the current price of the underlying stock
based on a number of factors. These factors include, but are not limited to,
current price of the underlying stock, exercise price of the option or
warrant, time to expiration, assumed riskless rate of interest, compounded
rate of return on the stock, and standard deviation of the return on the
stock. This valuation method is subject to frequent review and is in
accordance with the guidelines and procedures adopted by the Fund's Board of
Trustees.
e. FOREIGN SECURITIES:
Foreign securities investments involve special risks and considerations not
typically associated with those of U.S. origin. These risks include, but are not
limited to, reevaluation of currencies, adverse political, social, and economic
developments, and less reliable information about issuers. Moreover, securities
of many foreign companies and markets may be less liquid and their prices more
volatile than those of U.S. companies and markets.
The Fund intends to invest no more than 40% of its total assets exclusively in
one foreign country. At December 31, 1996, the Fund had its largest concentrated
foreign investments, worth 18.3% of the Fund's total assets, in Canada.
19
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens Global Low-
Priced Stock Fund
In our opinion, the accompanying statement of assets and liabilities,
including the schedule of investments, and the related statements of
operations and of changes in net assets and the financial highlights present
fairly, in all material respects, the financial position of The Robertson
Stephens Global Low-Priced Stock Fund (the "Fund") at December 31, 1996, and
the results of its operations and the changes in its net assets and the
financial highlights for each of the periods presented, in conformity with
generally accepted accounting principles. These financial statements and
financial highlights (hereafter referred to as "financial statements") are
the responsibility of the Fund's management; our responsibility is to express
an opinion on these financial statements based on our audits. We conducted
our audits of these financial statements in accordance with generally
accepted auditing standards, which require that we plan and perform the audit
to obtain reasonable assurance about whether the financial statements are
free of material misstatement. An audit includes examining, on a test basis,
evidence supporting the amounts and disclosures in the financial statements,
assessing the accounting principles used and significant estimates made by
management, and evaluating the overall financial statement presentation. We
believe that our audits, which included confirmation of securities at
December 31, 1996, by correspondence with the custodian and brokers, provide
a reasonable basis for the opinion expressed above.
/s/ Price Waterhouse
Price Waterhouse LLP
San Francisco, California
February 7, 1997
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(4) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
Aluminum - 4.2%
Alumax, Inc. 32,100 $ 1,071,338
Kaiser Aluminum Corporation 107,300 1,247,363
MAXXAM, Inc. 58,600 2,790,825
- -----------------------------------------------------------------------------------------------------------------------------
5,109,526
- -----------------------------------------------------------------------------------------------------------------------------
COPPER/MINING - 0.9%
Indochina Goldfields, Ltd. CAD 93,000 1,093,478
- -----------------------------------------------------------------------------------------------------------------------------
1,093,478
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 38.2%
Abacan Corporation CAD 200,000 1,723,508
Abacan Corporation 70,000 608,125
Alberta Energy Company, Ltd.(1) CAD 23,400 558,811
Alberta Energy Company, Ltd.(1) 13,000 312,000
Anderson Exploration, Ltd. CAD 357,000 4,614,694
Aztec Resources, Ltd. CAD 411,500 841,452
Basin Exploration, Inc. 82,500 515,625
Beau Canada Exploration, Ltd. CAD 509,600 893,186
BlackRock Ventures, Inc. CAD 163,000 84,518
Burner Exploration, Ltd. CAD 473,038 570,009
Calahoo Petroleum, Ltd. CAD 1,893,800 1,175,586
Canadian Conquest Exploration, Inc. CAD 721,600 1,291,112
Discovery West Corporation CAD 147,000 257,650
Encal Energy, Ltd. CAD 619,100 1,939,633
Eurogas Corporation CAD 550,514 502,551
HCO Energy, Ltd. CAD 119,200 134,930
Murphy Oil Corporation(1) 51,529 2,774,563
Noble Affiliates, Inc.(1) 4,000 191,500
Oiltec Resources, Ltd., Restricted(1)(3)(6) CAD 865,000 994,943
Olympia Energy, Inc., Class A CAD 465,000 213,941
Pan East Petroleum Corporation CAD 540,700 1,934,879
Paragon Petroleum, Ltd. CAD 294,300 687,768
Petro-Canada Installment Receipts CAD 177,800 1,954,203
Petroleum Securities Australia, Ltd. AUD 143,952 632,743
Petroleum Securities Australia, Ltd., ADR(2) 64,000 1,456,000
Place Resources Corporation, Class A CAD 606,200 889,843
Remington Energy, Ltd. CAD 44,800 458,044
Tarragon Oil & Gas, Ltd. CAD 100,000 1,095,450
Titan Exploration, Inc. 84,000 1,008,000
Ulster Petroleums, Ltd. CAD 338,900 2,375,988
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(4) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY - CONTINUED
Union Pacific Resources Group, Inc.(1) 130,000 $ 3,802,500
United Meridian Corporation 87,000 4,502,250
Vastar Resources, Inc.(1) 131,000 4,978,000
- -----------------------------------------------------------------------------------------------------------------------------
45,974,005
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES - 10.4%
3DX Technologies, Inc. 100,000 1,100,000
Computalog, Ltd. CAD 197,000 2,158,037
Dailey Petroleum Services Corporation 250,000 2,625,000
Dreco Energy Services, Ltd., Class A, Restricted(3)(6) CAD 28,000 991,697
Enerflex Systems, Ltd.(1) CAD 33,700 824,472
NGC Corporation(1) 55,000 1,278,750
Tejas Gas Corporation 4,400 209,550
USX Delhi Group(1) 130,900 2,078,038
Western Gas Resources, Inc.(1) 68,000 1,309,000
- -----------------------------------------------------------------------------------------------------------------------------
12,574,544
- -----------------------------------------------------------------------------------------------------------------------------
GOLD MINING - 11.8%
Barrick Gold Corporation(1) 17,000 488,750
Cambiex Exploration, Inc. CAD 781,500 656,339
Consolidated Mining Corporation, Ltd.(1) ZAR 7,917,700 1,184,646
Corona Goldfields, Inc., Restricted(3)(6) CAD 412,500 301,249
Eagle Mining Corporation NL AUD 195,000 424,688
Emperor Mines, Ltd., ADR(2) 128,500 250,238
Emperor Mines, Ltd. AUD 100,000 194,738
Euro-Nevada Mining Corporation, Ltd.(1) CAD 26,000 776,601
Franco-Nevada Mining Corporation, Ltd.(1) CAD 42,040 1,926,539
General Gold Resources NL AUD 1,268,199 453,612
Golden Star Resources, Ltd. CAD 78,000 1,028,190
Goldstream Mining NL AUD 1,000,000 580,240
Grenfell Resources NL AUD 1,492,000 877,577
Guyanor Resources, S.A., Class B CAD 114,400 772,804
Leo Shield Exploration NL AUD 1,679,671 894,507
Menzies Gold NL AUD 492,311 223,049
Minera Andes, Inc., Restricted(3)(6) CAD 317,460 452,090
Minotaur Gold NL AUD 132,950 88,767
Normandy Mining, Ltd.(1) AUD 742,969 1,027,554
Randgold and Exploration Company, Ltd.(1) ZAR 120,000 814,364
Resolute Samantha Limited Mines(1) AUD 240,000 499,801
Solomon Resources, Ltd. CAD 75,000 76,134
Specialty Retail Concepts, Inc., Restricted(3)(6) CAD 25,000 13,757
Tan Range Exploration Corporation CAD 490,000 286,278
- -----------------------------------------------------------------------------------------------------------------------------
14,292,512
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(4) SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
MINING/CONSTRUCTION EQUIPMENT - 0.5%
KCI Konecranes International Corporation FIM 18,000 $ 567,391
- -----------------------------------------------------------------------------------------------------------------------------
567,391
- -----------------------------------------------------------------------------------------------------------------------------
OTHER BASE METALS - 3.7%
Amarc Resources, Ltd. CAD 112,000 237,202
Amarc Resources, Ltd., Restricted(3)(6) CAD 65,000 96,363
Anooraq Resources Corporation CAD 120,000 262,908
Anooraq Resources Corporation, Restricted(3)(6) CAD 65,000 128,168
Farallon Resources, Ltd. CAD 270,800 3,164,245
NDU Resources, Ltd., Restricted(3)(6) CAD 75,000 72,848
Valerie Gold Resources, Ltd. CAD 82,000 476,083
- -----------------------------------------------------------------------------------------------------------------------------
4,437,817
- -----------------------------------------------------------------------------------------------------------------------------
REAL ESTATE - 1.4%
Catellus Development Corporation 148,000 1,683,500
- -----------------------------------------------------------------------------------------------------------------------------
1,683,500
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY CHEMICALS - 6.3%
Cabot Corporation(1) 70,000 1,758,750
NL Industries, Inc.(1) 103,300 1,123,388
W. R. Grace & Company(1) 90,000 4,657,500
- -----------------------------------------------------------------------------------------------------------------------------
7,539,638
- -----------------------------------------------------------------------------------------------------------------------------
STEEL - 1.3%
Steel Dynamics, Inc. 80,000 1,530,000
- -----------------------------------------------------------------------------------------------------------------------------
1,530,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK - 78.7% (COST: $83,127,957) 94,802,411
- -----------------------------------------------------------------------------------------------------------------------------
<CAPTION>
PAR VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONVERTIBLE BONDS
- -----------------------------------------------------------------------------------------------------------------------------
Randgold and Exploration Company, Ltd., 7.00%, Due 10/3/01(1) $ 750,000 750,000
- -----------------------------------------------------------------------------------------------------------------------------
Total Convertible Bonds - 0.6% (Cost: $750,000) 750,000
<CAPTION>
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Amarc Resources, Ltd., Warrants, Strike CAD 2.05,
Expire 7/16/97(3)(5)(6) CAD 65,000 37,230
Anooraq Resources Corporation, Ltd., Warrants, Strike CAD 2.07,
Expire 9/12/97(3)(5)(6) CAD 65,000 53,225
Brazilian Resources, Inc., 1/2 Warrants, Strike CAD 0.50,
Expire 3/4/99(3)(5) CAD 61,218 13,091
Calahoo Petroleum, Ltd., 3/4 Warrants, Strike CAD 0.65,
Expire 6/28/97(3)(5) CAD 1,327,500 310,866
Farallon Resources, Ltd., Warrants, Strike CAD 6.25,
Expire 5/7/97(3)(5) CAD 45,000 328,933
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(4) WARRANTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WARRANTS - CONTINUED
Minera Andes, Inc., 1/2 Warrants, Strike CAD 2.50,
Expire 12/12/97(3)(5)(6) CAD 317,460 $ 80,240
NDU Resources, Ltd., Warrants, Strike CAD 2.31,
Expire 5/17/98(3)(5)(6) CAD 75,000 29,860
Oiltec Resources, Ltd., Warrants, Strike CAD 1.75,
Expire 2/18/97(3)(5)(6) CAD 865,000 193,513
Solomon Resources, Ltd., 1/2 Warrants, Strike CAD 1.05,
Expire 1/3/98(3)(5) CAD 75,000 19,381
Specialty Retail Concepts, Inc., Warrants, Strike CAD 2.00,
Expire 12/15/97(3)(5)(6) CAD 116,667 170,404
Valerie Gold Resources, Ltd., 1/2 Warrants, Strike CAD 20.00,
Expire 12/27/97(3)(5) CAD 3,500 1,981
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 1.0% (COST: $737,093) 1,238,724
<CAPTION>
OPTIONS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Menzies Gold NL, Strike AUD 1.00, Expires 4/30/98(3) 57,437 2,376
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL OPTIONS - 0.0% (Cost: $14,178) 2,376
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 80.3% (COST: $84,629,228) 96,793,511
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -----------------------------------------------------------------------------------------------------------------------------
Cash 107,919
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96, due 1/2/97,
maturity value $19,735,481 (collateralized by $15,425,000 par value
U.S. Treasury Notes, 9.25%, due 2/15/16) 19,730,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 16.5% 19,837,919
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, NET - 3.2% 3,889,535
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 120,520,965
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income-producing security.
(2) ADR - American Depository Receipt.
(3) Fair-value security. See 1.a. in Notes to Financial Statements.
(4) Foreign-denominated security; AUD - Australian Dollar, CAD - Canadian
Dollar, FIM - Finnish Markka, ZAR - South African Rand.
(5) See 4.e. in Notes to Financial Statements.
(6) Restricted Security. See 4.d. in Notes to Financial Statements.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $84,629,228) $ 96,793,511
Cash and cash equivalents 19,837,919
Receivable for investments sold 413,118
Receivable for fund shares subscribed 6,935,191
Dividend/interest receivable 33,399
Organization cost 26,368
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 124,039,506
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 458,597
Payable for fund shares redeemed 2,806,476
Payable to adviser 117,134
Accrued expenses 112,420
Payable to distributor 23,914
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 3,518,541
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 120,520,965
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 108,238,480
Accumulated net realized gain on investments 118,292
Net unrealized appreciation on investments 12,164,193
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 120,520,965
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 14.29
Net Asset Value, offering and redemption price per share
(Net assets of $120,520,965 applicable to 8,435,747 shares
of beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Interest $ 559,075
Dividends (net of foreign tax withheld of $5,285) 174,755
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 733,830
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 487,594
Custodian and transfer agent fees 140,542
Administrative services fee 121,899
Distribution fees 121,899
Professional fees 76,148
Shareholder reports 59,000
Registration and filing fees 24,768
Trustees' fees and expenses 22,326
Organization expense 6,533
Insurance fees 259
Interest expense 22
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 1,060,990
Less: Expense waiver by adviser (107,877)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES, NET 953,113
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (219,283)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain on investments 337,575
Net change in unrealized appreciation on investments 12,158,103
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS 12,495,678
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 12,276,395
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
12/31/96 12/31/95(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment (loss)/income $ (219,283) $ 906
Net realized gain on investments 337,575 -
Net change in unrealized appreciation on investments 12,158,103 6,090
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 12,276,395 6,996
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (823) -
Realized gain on investments - -
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (823) -
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 107,453,649 784,748
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 107,453,649 784,748
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 119,729,221 791,744
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period 791,744 0
End of period $ 120,520,965 $ 791,744
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on November 15, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 12/31/96 12/31/95(1)(3)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.12 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Net investment (loss)/income (0.06) 0.02
Net realized gain and change in unrealized appreciation on investments 4.24 0.10
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4.18 0.12
- -----------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income (0.01) -
Distributions from realized gain on investments - -
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.29 $ 10.12
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 41.21% 1.20%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 120,520,965 $ 791,744
Ratio of Expenses to Average Net Assets 1.94%(2) 2.60%(2)
Ratio of Net Investment (Loss)/Income to Average Net Assets (0.45)%(2) 1.84%(2)
Portfolio Turnover Rate 82% 0%
Average Commission Rate Paid(4) 0.0148 -
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on November 15, 1995.
(2) If the Fund had paid all of its expenses and had received no reimbursement
from the Adviser, the ratio of expenses to average net assets for the year
ended December 31, 1996, and the period from November 15, 1995
(Commencement of Operations), through December 31, 1995, would have been
2.16% and 14.25%, respectively, and the ratio of net investment loss to
average net assets would have been (0.67)% and (9.81)%, respectively.
(3) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(4) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each period has been determined by using the average
number of shares outstanding throughout each period. Distributions reflect
actual per-share amounts distributed for the year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Global Natural Resources Fund (the "Fund") is a series of
the Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act") as a diversified, open-end
management investment company. The Fund became effective to offer shares to the
public on November 15, 1995. The Trust offers eleven series of shares -- The
Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value + Growth
Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing Countries Fund,
The Robertson Stephens Growth & Income Fund, The Robertson Stephens Partners
Fund, The Information Age Fund-TM-, The Robertson Stephens Global Natural
Resources Fund, The Robertson Stephens Global Low-Priced Stock Fund, The
Robertson Stephens Diversified Growth Fund, and The Robertson Stephens MicroCap
Growth Fund. The assets for each series are segregated and accounted for
separately.
NOTE 1
SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Foreign securities
prices are generally denominated in foreign currencies. The currencies are
translated into U.S. dollars by using the exchange rates quoted at the close of
The London Stock Exchange prior to when the Fund's net asset value is next
determined. At December 31, 1996, 95.6% of the Fund's positions were valued in
this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use all
available resources, including quotations from market-makers and fundamental
valuation methods which include, but are not limited to, the analysis of: the
effect of any restrictions on the sale of the security, product development and
trends of the security's issuer, changes in the industry and other competing
companies, significant changes in the issuer's financial position, and any other
event which would have a significant impact on the value of a security. At
December 31, 1996, 4.4% of the Fund's positions were valued using these
guidelines and procedures.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the col
18
<PAGE>
lateral's market value equals at least 100% of the repurchase price under the
agreement. However, in the event of default or bankruptcy by the counterparty to
the agreement, realization and/or retention of the collateral may be subject to
legal proceedings. The Fund's policy is to limit repurchase agreement
transactions to those parties deemed by the Fund's Investment Adviser to have
satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on securities
transactions are determined on the basis of specific identification.
e. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a
foreign currency are translated into U.S. dollars at the exchange rate each day.
Purchases and sales of securities, income receipts, and expense payments are
translated into U.S. dollars at the exchange rate in effect on the dates of the
respective transactions. The Fund does not isolate the portion of the
fluctuations on investments resulting from changes in foreign currency exchange
rates from the fluctuations in market prices of investments held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
f. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
g. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
h. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2
CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
capital shares for the year ended December 31, 1996, and for the period from
November 15, 1995 (Commencement of Operations), through December 31, 1995, were
as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 14,550,350 $ 190,686,335
Shares reinvested 54 762
- ------------------------------------------------------------------------------
14,550,404 190,687,097
- ------------------------------------------------------------------------------
Shares redeemed (6,192,868) (83,233,448)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 8,357,536 $ 107,453,649
- ------------------------------------------------------------------------------
11/15/95 - 12/31/95 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 79,226 $ 794,930
Shares reinvested - -
- ------------------------------------------------------------------------------
79,226 794,930
- ------------------------------------------------------------------------------
Shares redeemed (1,015) (10,182)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 78,211 $ 784,748
- ------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Fund's Board of Trustees, the Fund pays Robertson Stephens
Investment Management, L.P. ("RSIM"), an investment advisory fee and an
administrative services fee calculated respectively at an annual rate of 1.00%
and 0.25% of the average daily net assets of the Fund. For the year ended
December 31, 1996, the Fund incurred investment advisory fees and administrative
fees of $487,594 and $121,899, respectively. RSIM has voluntarily agreed to
waive annual operating expenses exceeding an annual expense ratio of 1.95%. For
the year ended December 31, 1996, the Adviser agreed to waive $107,877 of its
fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund during the period ended December 31, 1996.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor, and
RSIM, the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer,
and a Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and
Chief Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of
the Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John
P. Rohal, a Trustee of the Fund, is a Member of RS Group and Director of
Research for RS & Co. Dana K. Welch, Secretary of the Fund, is a member of RS
Group and General Counsel of RS & Co. Andrew P. Pilara, Jr., Portfolio Manager,
is a member of RS Group. All affiliated and access persons, as defined in the
1940 Act, follow strict guidelines and policies on personal trading as outlined
in the Fund's Code of Ethics.
20
<PAGE>
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is approved annually by the Fund's Board of Trustees. Under the Plan,
RS & Co. is compensated for services in such capacity, including its expenses in
connection with the promotion and distribution of the Fund's shares. The
distribution fee is calculated at an annual rate of 0.25% of the average daily
net assets of the Fund. For the year ended December 31, 1996, the Fund incurred
distribution fees of $121,899.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the year ended December 31, 1996, the Fund paid
brokerage commissions of $2,302 to RS & Co., which represented 0.6% of total
commissions paid for the period.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $84,629,228. Accumulated net unrealized appreciation on investments was
$12,164,283, consisting of gross unrealized appreciation and depreciation of
$13,808,957 and $(1,644,674), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding options and short-term investments)
were $115,735,192 and $31,857,121, respectively.
c. FOREIGN SECURITIES:
Foreign securities investments involve special risks and considerations not
typically associated with those of U.S. origin. These risks include, but are not
limited to, reevaluation of currencies, adverse political, social, and economic
developments, and less reliable information about issuers. Moreover, securities
of many foreign companies and markets may be less liquid and their prices more
volatile than those of U.S. companies and markets.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
d. RESTRICTED SECURITIES:
A restricted security is a security which cannot be resold to the general public
without prior registration under the Securities Act of 1933. If the security is
subsequently registered and resold, the issuers would typically bear the expense
of all registrations at no cost to the Fund. At December 31, 1996, the Fund held
restricted securities with an aggregate value of $3,615,587, which represented
2.9% of the Fund's total assets. Restricted securities are valued according to
the guidelines and procedures adopted by the Fund's Board of Trustees as
outlined in Note 1.a., paragraph 2.
SHARES COST VALUE ACQUISITION
SECURITY (000) (000) (000) DATE
- ------------------------------------------------------------------------------
Amarc Resources, Ltd. 65 $72 $96 7/17/96
Amarc Resources, Ltd. Warrants 65 25 37 7/17/96
Anooraq Resources Corporation 65 64 128 9/11/96
Anooraq Resources Corporation
Warrants 65 34 53 9/11/96
Corona Goldfields, Inc. 413 300 301 6/18/96
Dreco Energy Services, Ltd. 28 961 992 12/12/96
Minera Andes, Inc. 317 423 452 12/12/96
Minera Andes, Inc. Warrants 317 67 80 12/12/96
NDU Resources, Ltd. 75 87 73 5/16/96
NDU Resources, Ltd. Warrants 75 23 30 5/16/96
Oiltec Resources, Ltd. 865 711 995 11/13/96
Oiltec Resources, Ltd.
Warrants 865 194 194 11/13/96
Specialty Retail Concepts, Inc. 25 14 14 11/25/96
Specialty Retail Concepts, Inc.
Warrants 117 172 171 12/13/96
- ------------------------------------------------------------------------------
$3,147 $3,616
- ------------------------------------------------------------------------------
e. OPTIONS AND WARRANTS:
Options and warrants normally entitle the holder to purchase a proportionate
number of a particular class of the issuer's securities at a predetermined price
during a specific period.
Options and warrants for which market quotations were not readily available were
priced using the modified Black-Scholes Valuation Formula. The Black-Scholes
Valuation Formula values an option or warrant by determining the differential
between the exercise price of the option or warrant and the current price of the
underlying stock based on a number of factors. These factors include, but are
not limited to, current price of the underlying stock, exercise price of the
option or warrant, time to expiration, assumed riskless rate of interest,
compounded rate of return on the stock, and standard deviation of the return on
the stock. This valuation method is subject to frequent review and is in
accordance with the guidelines and procedures adopted by the Fund's Board of
Trustees.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens Global
Natural Resources Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Robertson Stephens Global
Natural Resources Fund (the "Fund") at December 31, 1996, and the results of its
operations and the changes in its net assets and the financial highlights for
each of the periods presented, in conformity with generally accepted accounting
principles. These financial statements and financial highlights (hereafter
referred to as "financial statements") are the responsibility of the Fund's
management; our responsibility is to express an opinion on these financial
statements based on our audits. We conducted our audits of these financial
statements in accordance with generally accepted auditing standards, which
require that we plan and perform the audit to obtain reasonable assurance about
whether the financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts and
disclosures in the financial statements, assessing the accounting principles
used and significant estimates made by management, and evaluating the overall
financial statement presentation. We believe that our audits, which included
confirmation of securities at December 31, 1996, by correspondence with the
custodian and brokers, provide a reasonable basis for the opinion expressed
above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
23
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
BANKS - 5.8%
Bank United Corporation, Class A(1) 40,000 $ 1,070,000
Collective Bancorp, Inc. 80,000 2,810,000
Commercial Federal Corporation 65,000 3,120,000
Corestates Financial Corporation 60,000 3,112,500
Firstar Corporation 65,000 3,412,500
Glendale Federal Bank, FSB(1) 80,000 1,860,000
Great Western Financial Corporation 85,000 2,465,000
- -----------------------------------------------------------------------------------------------------------------------------
17,850,000
- -----------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY - 0.3%
FemRx, Inc.(1) 174,000 783,000
- -----------------------------------------------------------------------------------------------------------------------------
783,000
- -----------------------------------------------------------------------------------------------------------------------------
BUILDING PRODUCTS - 1.7%
Royal Plastics Group, Ltd.(1),(2) 125,000 2,314,138
Texas Industries, Inc. 60,000 3,037,500
- -----------------------------------------------------------------------------------------------------------------------------
5,351,638
- -----------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES - 2.6%
National Education Corporation(1) 230,000 3,507,500
U-Ship, Inc.(1) 250,000 781,250
Wallace Computer Services, Inc. 105,000 3,622,500
- -----------------------------------------------------------------------------------------------------------------------------
7,911,250
- -----------------------------------------------------------------------------------------------------------------------------
CLOTHING/RETAIL - 3.9%
Brown Group, Inc. 110,000 2,021,250
Regis Corporation 130,000 2,112,500
Saks Holdings, Inc.(1) 35,000 945,000
SkyMall, Inc.(1) 49,000 434,875
Sport-Haley, Inc.(1) 250,000 3,140,625
Vans, Inc.(1) 280,000 3,500,000
- -----------------------------------------------------------------------------------------------------------------------------
12,154,250
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 1.7%
ADT, Ltd.(1) 155,000 3,545,625
Western Staff Services, Inc.(1) 180,000 1,642,500
- -----------------------------------------------------------------------------------------------------------------------------
5,188,125
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS - 4.5%
Compaq Computer Corporation(1) 47,000 3,489,750
Dell Computer Corporation(1) 45,000 2,390,625
Read-Rite Corporation(1) 90,000 2,272,500
Scientific Games Holdings Corporation(1) 150,000 4,012,500
Sequent Computer Systems, Inc.(1) 100,000 1,775,000
- -----------------------------------------------------------------------------------------------------------------------------
13,940,375
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE - 2.7%
BMC Software, Inc.(1) 100,000 $ 4,137,500
Dynamic Healthcare Technologies, Inc.(1) 257,500 1,223,125
Intergraph Corporation(1) 125,000 1,281,250
Midway Games, Inc.(1) 85,000 1,721,250
- -----------------------------------------------------------------------------------------------------------------------------
8,363,125
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 2.1%
Autodesk, Inc. 100,000 2,800,000
Compuware Corporation(1) 75,000 3,759,375
- -----------------------------------------------------------------------------------------------------------------------------
6,559,375
- -----------------------------------------------------------------------------------------------------------------------------
DATA COMMUNICATIONS - 2.7%
Cabletron Systems, Inc.(1) 110,000 3,657,500
Digi International, Inc.(1) 156,000 1,482,000
FORE Systems, Inc.(1) 57,500 1,890,312
Sync Research, Inc.(1) 95,000 1,306,250
- -----------------------------------------------------------------------------------------------------------------------------
8,336,062
- -----------------------------------------------------------------------------------------------------------------------------
DATA PROCESSING SERVICES - 1.6%
Affiliated Computer Services, Inc., Class A(1) 107,000 3,183,250
Equifax, Inc. 60,000 1,837,500
- -----------------------------------------------------------------------------------------------------------------------------
5,020,750
- -----------------------------------------------------------------------------------------------------------------------------
ELECTRONICS - 2.5%
American Power Conversion Corporation(1) 185,000 5,041,250
Harman International Industries, Inc. 47,500 2,642,187
- -----------------------------------------------------------------------------------------------------------------------------
7,683,437
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 4.3%
Consolidated Natural Gas Company 60,000 3,315,000
Costilla Energy, Inc.(1) 134,000 1,825,750
El Paso Natural Gas Company 70,000 3,535,000
Gulf Canada Resources, Ltd.(1) 165,000 1,216,875
Questar Corporation 90,000 3,307,500
- -----------------------------------------------------------------------------------------------------------------------------
13,200,125
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES - 4.2%
BJ Services Company(1) 43,600 2,223,600
Drilex International, Inc.(1) 138,000 1,656,000
National-Oilwell, Inc.(1) 9,000 276,750
Smith International, Inc.(1) 100,000 4,487,500
Tuboscope Vetco International Corporation(1) 20,000 310,000
Varco International, Inc.(1) 105,000 2,428,125
Veritas DGC, Inc.(1) 90,000 1,665,000
- -----------------------------------------------------------------------------------------------------------------------------
13,046,975
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 1.8%
Hollywood Entertainment Corporation(1) 130,000 2,405,000
International Game Technology, Inc.(1) 100,000 1,825,000
Sodak Gaming, Inc.(1) 92,500 1,422,187
- -----------------------------------------------------------------------------------------------------------------------------
5,652,187
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENVIRONMENTAL SERVICES - 2.1%
Philip Environmental, Inc.(1) 250,000 $ 3,625,000
Tetra Technologies, Inc.(1) 120,000 3,030,000
- -----------------------------------------------------------------------------------------------------------------------------
6,655,000
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 3.7%
American Express Company 55,000 3,107,500
Conseco, Inc. 55,000 3,506,250
Federal National Mortgage Association 75,000 2,793,750
Matrix Capital Corporation(1) 120,000 1,905,000
- -----------------------------------------------------------------------------------------------------------------------------
11,312,500
- -----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE/HMO - 0.6%
Diagnostic Health Services, Inc.(1) 220,000 1,760,000
- -----------------------------------------------------------------------------------------------------------------------------
1,760,000
- -----------------------------------------------------------------------------------------------------------------------------
INSURANCE - 0.8%
Everest Reinsurance Holdings, Inc. 85,000 2,443,750
- -----------------------------------------------------------------------------------------------------------------------------
2,443,750
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 4.7%
Breed Technologies, Inc. 100,000 2,600,000
Cavalier Homes, Inc. 95,000 1,092,500
Coachmen Industries, Inc. 139,200 3,949,800
Furniture Brands International, Inc.(1) 250,000 3,500,000
Skyline Corporation 140,000 3,465,000
- -----------------------------------------------------------------------------------------------------------------------------
14,607,300
- -----------------------------------------------------------------------------------------------------------------------------
MEDIA - 1.7%
Liberty Media Corporation, Grade A(1) 105,000 2,999,062
Lin Television Corporation(1) 42,000 1,774,500
Univision Communications, Inc., Class A(1) 17,000 629,000
- -----------------------------------------------------------------------------------------------------------------------------
5,402,562
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/DEVICES - 2.5%
Meridian Diagnostics, Inc. 155,000 2,015,000
Novoste Corporation(1) 185,000 2,451,250
Ventritex, Inc.(1) 130,000 3,201,250
- -----------------------------------------------------------------------------------------------------------------------------
7,667,500
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SUPPLIES - 1.1%
Biosource International, Inc.(1) 195,000 1,340,625
PLC Systems, Inc.(1) 60,000 1,350,000
SeaMED Corporation(1) 75,000 815,625
- -----------------------------------------------------------------------------------------------------------------------------
3,506,250
- -----------------------------------------------------------------------------------------------------------------------------
MOTOR VEHICLES/PARTS SUPPLIERS - 0.8%
Boyds Wheels, Inc.(1) 170,000 2,380,000
- -----------------------------------------------------------------------------------------------------------------------------
2,380,000
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NETWORK SYSTEMS - 2.5%
3Com Corporation(1) 40,000 $ 2,935,000
Newbridge Networks Corporation(1) 85,000 2,401,250
Storage Technology Corporation(1) 50,000 2,381,250
- -----------------------------------------------------------------------------------------------------------------------------
7,717,500
- -----------------------------------------------------------------------------------------------------------------------------
OIL/GAS DRILLING - 4.9%
Diamond Offshore Drilling, Inc.(1) 50,000 2,850,000
ENSCO International, Inc.(1) 5,000 242,500
Marine Drilling Companies, Inc.(1) 150,000 2,953,125
Noble Drilling Corporation(1) 230,000 4,571,250
Precision Drilling Corporation(1) 43,500 1,511,625
Transocean Offshore, Inc. 50,000 3,131,250
- -----------------------------------------------------------------------------------------------------------------------------
15,259,750
- -----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS - 1.3%
Cardinal Health, Inc. 67,500 3,931,875
- -----------------------------------------------------------------------------------------------------------------------------
3,931,875
- -----------------------------------------------------------------------------------------------------------------------------
R.E.I.T. - 4.7%
Ambassador Apartments, Inc.(1) 77,500 1,830,937
Bedford Property Investors, Inc. 90,000 1,575,000
Crescent Real Estate Equities Trust 50,000 2,637,500
Health and Retirement Property Trust 105,000 2,034,375
JP Realty, Inc. 110,000 2,846,250
Simon DeBartolo Group, Inc. 60,000 1,860,000
Walden Residential Properties, Inc. 70,000 1,741,250
- -----------------------------------------------------------------------------------------------------------------------------
14,525,312
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS - 3.2%
Cypress Semiconductor Corporation(1) 130,000 1,836,250
Motorola, Inc. 54,500 3,344,937
Texas Instruments, Inc. 72,500 4,621,875
- -----------------------------------------------------------------------------------------------------------------------------
9,803,062
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY CHEMICALS - 1.1%
Monsanto Company 90,000 3,498,750
- -----------------------------------------------------------------------------------------------------------------------------
3,498,750
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY WHOLESALE - 1.5%
Fisher Scientific International, Inc. 100,000 4,712,500
- -----------------------------------------------------------------------------------------------------------------------------
4,712,500
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 1.1%
Comsat Corporation 145,000 3,570,625
- -----------------------------------------------------------------------------------------------------------------------------
3,570,625
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 2.3%
Airborne Freight Corporation 3,700 86,487
Genesee & Wyoming, Inc., Class A(1) 100,000 3,475,000
Hvide Marine, Inc., Class A(1) 170,000 3,697,500
- -----------------------------------------------------------------------------------------------------------------------------
7,258,987
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
UTILITIES - 1.5%
Houston Industries, Inc. 100,000 $ 2,262,500
US West Communications Group 75,000 2,418,750
- -----------------------------------------------------------------------------------------------------------------------------
4,681,250
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCKS - 84.5% (Cost: $224,972,769) 261,735,147
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE PREFERRED STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
BANKS - 0.3%
The Sakura Bank, Ltd., 7.50%, Expires 10/1/01, 144A(3),(4) 18 954,795
- -----------------------------------------------------------------------------------------------------------------------------
954,795
- -----------------------------------------------------------------------------------------------------------------------------
ENERGY - 1.0%
Mesa, Inc., 8.00%, Expires 6/30/08, Series A 489,981 3,123,629
- -----------------------------------------------------------------------------------------------------------------------------
3,123,629
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS - 0.7%
Westinghouse Electric Corporation, $1.30, Expires 6/1/97, Series C(3) 125,000 2,218,750
- -----------------------------------------------------------------------------------------------------------------------------
2,218,750
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 2.0%
Crown Cork & Seal Company, Inc., 4.50%, Expires 2/26/00 70,000 3,640,000
Timet Capital Trust, 6.625%, Expires 11/1/26, 144A(3),(4) 45,000 2,446,875
- -----------------------------------------------------------------------------------------------------------------------------
6,086,875
- -----------------------------------------------------------------------------------------------------------------------------
SPECIALTY RETAIL - 1.0%
Tyco Toys Inc., 8.25%, Expires 7/1/00, Series C 300,000 3,037,500
- -----------------------------------------------------------------------------------------------------------------------------
3,037,500
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATION SERVICES - 0.4%
Loral Space & Communications, 6.00%, Expires 11/1/06, 144A(3),(4) 23,600 1,333,400
- -----------------------------------------------------------------------------------------------------------------------------
1,333,400
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION - 0.7%
Trans World Airlines, Inc., 8.00%, Expires 12/31/49, 144A(3),(4) 85,000 2,125,000
- -----------------------------------------------------------------------------------------------------------------------------
2,125,000
- -----------------------------------------------------------------------------------------------------------------------------
UTILITIES - 0.6%
CalEnergy Capital Trust, 6.25%, Expires 3/10/16, 144A(3),(4) 30,000 1,893,750
- -----------------------------------------------------------------------------------------------------------------------------
1,893,750
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE PREFERRED STOCKS - 6.7% (Cost: $18,632,844) 20,773,699
- -----------------------------------------------------------------------------------------------------------------------------
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
Glendale Federal Bank, FSB, Warrants, Strike $12.00, Expires 8/21/00(5) 80,000 1,020,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 0.3% (Cost $859,953) 1,020,000
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
<CAPTION>
DECEMBER 31, 1996 CONTRACTS VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
PUT OPTIONS
- -----------------------------------------------------------------------------------------------------------------------------
S&P INDEX PUT OPTIONS
March 97 730 100 $ 175,000
March 97 750 100 241,250
- -----------------------------------------------------------------------------------------------------------------------------
416,250
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL PUT OPTIONS - 0.1% (Cost: 413,100) 416,250
<CAPTION>
PAR VALUE
- -----------------------------------------------------------------------------------------------------------------------------
CONVERTIBLE BONDS
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CLOTHING/RETAIL - 0.2%
Charming Shoppes, Inc., 7.5%, Due 7/15/06(3) 500,000 497,500
- -----------------------------------------------------------------------------------------------------------------------------
497,500
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS - 0.3%
AST Research, Inc., Due 12/14/13(3) 3,000,000 960,000
- -----------------------------------------------------------------------------------------------------------------------------
960,000
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE - 0.7%
Platinum Technology, Inc., 6.75%, Due 11/15/01(3) 700,000 852,250
Softkey International, Inc., 5.50%, Due 11/1/00, 144A(3),(4) 1,750,000 1,454,687
- -----------------------------------------------------------------------------------------------------------------------------
2,306,937
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER/SPECIALTY RETAIL - 0.2%
Sports and Recreation, Inc., 4.25%, Due 11/1/00(3) 1,000,000 745,000
- -----------------------------------------------------------------------------------------------------------------------------
745,000
- -----------------------------------------------------------------------------------------------------------------------------
ENVIRONMENTAL SERVICES - 0.7%
Molten Metal Technology, Inc., 5.50%, Due 5/1/06, 144A(3),(4) 3,000,000 2,055,000
- -----------------------------------------------------------------------------------------------------------------------------
2,055,000
- -----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE/MEDICAL TECHNOLOGY/HMO - 0.4%
Healthsource, Inc., 5.00%, Due 3/1/03, 144A(3),(4) 1,750,000 1,395,625
- -----------------------------------------------------------------------------------------------------------------------------
1,395,625
- -----------------------------------------------------------------------------------------------------------------------------
INDUSTRIAL COMPONENTS - 0.6%
Empresas ICA Sociedad, 5.00%, Due 3/15/04(3) 2,500,000 1,737,500
- -----------------------------------------------------------------------------------------------------------------------------
1,737,500
- -----------------------------------------------------------------------------------------------------------------------------
MACHINERY/GENERAL INDUSTRIAL - 0.2%
Robbins & Myers, Inc., 6.50%, Due 9/1/03(3) 500,000 565,000
- -----------------------------------------------------------------------------------------------------------------------------
565,000
- -----------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 0.5%
Mascotech, Inc., 4.50%, Due 12/15/03 2,000,000 1,640,000
- -----------------------------------------------------------------------------------------------------------------------------
1,640,000
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SERVICES - 0.4%
Renal Treatment Centers, Inc., 5.625%, Due 7/15/06, 144A(3),(4) 1,250,000 1,206,250
- -----------------------------------------------------------------------------------------------------------------------------
1,206,250
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 PAR VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MEDICAL SUPPLIES - 0.4%
Rotech Medical Corporation, 5.25%, Due 6/1/03, 144A(3),(4) 1,250,000 $ 1,240,625
- -----------------------------------------------------------------------------------------------------------------------------
1,240,625
- -----------------------------------------------------------------------------------------------------------------------------
OIL/GAS SERVICES - 0.3%
Pride Petroleum Services, Inc., 6.25%, Due 2/15/06 500,000 905,000
- -----------------------------------------------------------------------------------------------------------------------------
905,000
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS - 0.6%
Midcom Communications, 8.25%, Due 9/15/03, 144A(3),(4) 2,000,000 1,840,000
- -----------------------------------------------------------------------------------------------------------------------------
1,840,000
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - 0.5%
Broadband Technologies, Inc., 5.00%, Due 5/15/01, 144A(3),(4) 2,000,000 1,540,000
- -----------------------------------------------------------------------------------------------------------------------------
1,540,000
- -----------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION SERVICES - 0.6%
Offshore Logistics, Inc., 6.00%, Due 12/15/03(3) 1,800,000 1,890,000
- -----------------------------------------------------------------------------------------------------------------------------
1,890,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CONVERTIBLE BONDS - 6.6% (Cost: $21,357,527) 20,524,437
- -----------------------------------------------------------------------------------------------------------------------------
GOVERNMENT BONDS
- -----------------------------------------------------------------------------------------------------------------------------
U.S. Treasury STRIP, Due 11/15/24 9,140,000 1,400,796
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL GOVERNMENT BONDS - 0.5% (Cost: $1,287,020) 1,400,796
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.7% (Cost: $267,523,213) 305,870,329
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
CASH - 0.1% 140,905
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
DEPOSITS WITH BROKERS AND CUSTODIAN BANK FOR SECURITIES SOLD SHORT
- -----------------------------------------------------------------------------------------------------------------------------
Cash 383,739
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96,
due 1/2/97, maturity value, $2,400,667 (collateralized by
$1,880,000 par value U.S. Treasury Notes, 9.25%, due 2/15/16) 2,400,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DEPOSITS WITH BROKERS AND CUSTODIAN BANK FOR SECURITIES SOLD SHORT - 0.9% 2,783,739
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
18
<PAGE>
<CAPTION>
DECEMBER 31, 1996 VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
RECEIVABLE FROM BROKERS FOR SECURITIES SOLD SHORT - 1.0% $ 3,143,633
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
SECURITIES SOLD SHORT - (0.8)% (Proceeds: $2,497,383) (2,535,312)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
OTHER ASSETS, NET - 0.1% 371,664
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 309,774,958
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Non-income-producing security.
(2) Foreign security denominated in Canadian Dollars.
(3) Fair-value security. See 1.a. in Notes to Financial Statements.
(4) These securities may be resold in transactions exempt from registration
under Rule 144A of the Securities Act of 1933, normally to qualified
institutional buyers.
(5) See 4.d. in Notes to Financial Statements.
SCHEDULE OF SECURITIES SOLD SHORT
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
BUSINESS SERVICES
AccuStaff, Inc. 22,500 $ 475,312
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS
Mylex Corporation 40,000 500,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES
Sykes Enterprises, Inc. 27,500 1,031,250
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SUPPLIES
Ultrafem, Inc. 20,000 350,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS
Quality Dining, Inc. 10,000 178,750
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL SECURITIES SOLD SHORT - (0.8)% (Proceeds: $2,497,383) $ 2,535,312
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
19
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $267,523,213) $ 305,870,329
Cash 140,905
Deposits with brokers and custodian bank for securities sold short 2,783,739
Receivable from brokers for securities sold short 3,143,633
Receivable for investments sold 3,484,842
Receivable for fund shares subscribed 1,088,524
Dividends/interest receivable 551,312
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 317,063,284
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Securities sold short (Proceeds: $2,497,383) 2,535,312
Payable for investments purchased 2,276,139
Payable for fund shares redeemed 1,084,333
Payable to custodian bank 778,828
Payable to adviser 333,571
Accrued expenses 213,433
Payable to distributor 66,710
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 7,288,326
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 309,774,958
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 267,448,798
Accumulated net realized gain from investments 3,567,044
Accumulated net realized gain from securities sold short 193,991
Net unrealized appreciation on investments 38,394,304
Net unrealized appreciation on securities sold short 170,821
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 309,774,958
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 13.62
Net Asset Value, offering and redemption price per share
(net assets of $309,774,958 applicable to 22,744,504 shares of
beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
20
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Dividends (Net of foreign tax withheld of $3,737) $ 3,086,084
Interest 1,572,541
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 4,658,625
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 2,462,636
Distribution fees 615,659
Administrative services fee 615,659
Custodian and transfer agent fees 345,928
Shareholder reports 104,438
Professional fees 92,946
Registration and filing fees 87,220
Trustees' fees and expenses 22,326
Interest expense 3,883
Insurance fees 1,355
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 4,352,050
Less: Expense waiver by adviser (140,905)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES, NET 4,211,145
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 447,480
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS AND SECURITIES SOLD SHORT
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments 14,368,389
Net realized gain from securities sold short 129,616
Net change in unrealized appreciation on investments 25,033,904
Net change in unrealized appreciation on securities sold short 125,009
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS AND SECURITIES SOLD SHORT 39,656,918
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 40,104,398
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
21
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
12/31/96 12/31/95(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income/(loss) $ 447,480 $ (5,124)
Net realized gain/(loss) from investments 14,368,389 (3,511,975)
Net realized gain from securities sold short 129,616 64,375
Net change in unrealized appreciation on investments 25,033,904 13,360,400
Net change in unrealized appreciation on securities sold short 125,009 45,812
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 40,104,398 9,953,488
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income (457,356) -
Realized gain on investments (7,274,370) -
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (7,731,726) -
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 140,500,320 126,948,478
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 140,500,320 126,948,478
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 172,872,992 136,901,966
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period 136,901,966 0
End of period $ 309,774,958 $ 136,901,966
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on July 12, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
22
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 12/31/96 12/31/95(1)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 11.24 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.02 0
Net realized gain and net change in unrealized appreciation from investments
and securities sold short 2.70 1.24
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 2.72 1.24
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income (0.02) -
Distributions from realized gain on investments (0.32) -
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 13.62 $ 11.24
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 24.16% 12.40%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 309,774,958 $ 136,901,966
Ratio of Expenses to Average Net Assets 1.71%(2) 1.94%
Ratio of Net Investment Income/(Loss) to Average Net Assets 0.18%(2) (0.01)%
Portfolio Turnover Rate 212% 97%
Average Commission Rate Paid(4) $ 0.0567 -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on July 12, 1995.
(2) If the Fund had paid all of its expenses and had received no waiver from
the Adviser, the ratio of expenses to average net assets for the year ended
December 31, 1996, would have been 1.76%, and the ratio of net investment
income to average net assets would have been 0.13%.
(3) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(4) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each period has been determined by using the average
number of shares outstanding throughout each period. Distributions
reflect actual per-share amounts distributed for the year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
23
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Growth & Income Fund (the "Fund") is a series of the
Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund became effective to offer shares to the
public on July 12, 1995. The Trust offers eleven series of shares -- The
Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value + Growth
Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing Countries Fund,
The Robertson Stephens Growth & Income Fund, The Robertson Stephens Partners
Fund, The Information Age Fund-TM-, The Robertson Stephens Global Natural
Resources Fund, and The Robertson Stephens Global Low-Priced Stock Fund, The
Robertson Stephens Diversified Growth Fund, and The Robertson Stephens MicroCap
Growth Fund. The assets for each series are segregated and accounted for
separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. At December 31, 1996, 91% of the Fund's long
positions and 100% of its short positions were valued in this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use
fundamental valuation methods which include, but are not limited to, the
analysis of: the effect of any restrictions on the sale of the security, product
development and trends of the security's issuer, changes in the industry and
other competing companies, significant changes in the issuer's financial
position, and any other event which could have a significant impact on the value
of the security. At December 31, 1996, approximately 9% of the Fund's long
positions were valued using these guidelines and procedures.
As its normal course of business, the Fund has invested a significant portion of
its assets in companies within a number of industries in the technology sector.
Accordingly, the performance of the Fund may be subject to a greater risk of
market fluctuation than that of a fund invested in a wider spectrum of market or
industrial sectors.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy, realization
and/or retention of the collateral may be subject to legal proceedings. The
Fund's policy is to limit repurchase agreement transactions to those parties
deemed by the Fund's Investment Adviser to have satisfactory creditworthiness.
24
<PAGE>
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased, sold, or sold short (trade date). Realized gains and losses on
securities transactions are determined on the basis of specific identification.
e. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
f. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
g. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended December
31, 1996, and for the period from July 12, 1995 (Commencement of Operations),
through December 31, 1995, were as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 24,212,751 $314,442,257
Share reinvested 543,194 7,520,835
- ------------------------------------------------------------------------------
24,755,945 321,963,092
- ------------------------------------------------------------------------------
Shares redeemed (14,194,773) (181,462,772)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 10,561,172 $140,500,320
- ------------------------------------------------------------------------------
7/12/95 - 12/31/95 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 14,440,164 $150,810,508
Share reinvested 0 0
- ------------------------------------------------------------------------------
14,440,164 150,810,508
- ------------------------------------------------------------------------------
Shares redeemed (2,256,832) (23,862,030)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 12,183,332 $126,948,478
- ------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Board of Trustees, the Fund pays Robertson Stephens Investment
25
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Management, L.P. ("RSIM") an investment advisory fee and an administrative
services fee calculated respectively at an annual rate of 1.00% and 0.25% of the
average daily net assets of the Fund. For the year ended December 31, 1996, the
Fund incurred investment advisory fees and administrative fees of $2,462,636 and
$615,659, respectively. Effective November 25, 1996, RSIM voluntarily agreed to
waive expenses of the Fund exceeding an annual expense ratio of 1.30%. For the
year ended December 31, 1996, the Adviser agreed to waive $140,905 of its fees.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund during the year ended December 31, 1996.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC (RS & Co.), the Fund's distributor and RSIM,
the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer and a
Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and Chief
Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of the
Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John P.
Rohal, a Trustee of the Fund, is a Member of RS Group and Director of Research
for RS & Co. Dana K. Welch, Secretary of the Fund, is a member of RS Group and
General Counsel of RS & Co. John L. Wallace, Portfolio Manager, is a Member of
RS Group. All affiliated and access persons, as defined in the 1940 Act, follow
strict guidelines and policies on personal trading as outlined in the Fund's
Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is reviewed and approved annually by the Fund's Board of Trustees.
Under this Plan, RS & Co. is compensated for services in such capacity including
its expenses in connection with the promotion and distribution of the Fund's
shares. The distribution fee is calculated at an annual rate of 0.25% of the
average daily net assets of the Fund. For the year ended December 31, 1996, the
Fund incurred distribution fees of $615,659.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the year ended December 31, 1996, the Fund paid
brokerage commissions of $179,275 to RS & Co., which represented 14% of total
commissions paid during the year.
26
<PAGE>
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments and securities sold short for
federal income tax purposes was $272,293,459. Accumulated net unrealized
appreciation on investments and securities sold short was $37,328,824,
consisting of gross unrealized appreciation and depreciation of $49,930,256 and
$(12,601,432), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding options, securities sold short and
short-term investments) were $640,091,257 and $508,695,178, respectively.
c. SHORT SALES:
Short sales are transactions in which the Fund sells a security it does not own,
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the buyer
upon the short sale; the Fund then is obligated to replace the security borrowed
by purchasing it in the open market at some later date. The Fund will incur a
loss if the market price of the security increases between the date of the short
sale and the date on which the Fund replaces the borrowed security. The Fund
will realize a gain if the security declines in value between those dates. All
short sales must be fully collateralized. The Fund maintains the collateral in a
segregated account consisting of cash and/or U.S. government securities
sufficient to collateralize its obligation on the short positions. The Fund may
also sell short "against the box" (i.e., the Fund enters into a short sale as
described above while holding an offsetting long position in the security which
is sold short). If the Fund enters into a short sale against the box, it will
hold an equivalent amount of the securities to cover its position while the
short sale is outstanding. The Fund limits the value of short sale positions
(excluding short sales against the box) to 25% of the Fund's total assets. At
December 31, 1996, the Fund had 1% of its total assets in short positions. For
the year ended December 31, 1996, the cost of investments purchased to cover
short sales and proceeds from investments sold short were $34,694,753 and
$36,655,065, respectively.
Included in the "Other Assets, Net" category in the Schedule of Investments is
the following security sold short where the Fund has purchased the underlying
security to effectively close out the short position. Included in Receivable
from Brokers for Securities Sold Short is $646,250 for this short position. At
December 31, 1996, the cost of the associated long position and the unrealized
appreciation on investments and securities sold short are $390,312 and $255,938,
respectively. At December 31, 1996, the Fund chose not to complete the
transactions which would have required delivery of the purchased security to the
lender. The Fund does not consider this boxed position as an investment.
SECURITIES SHARES VALUE
- ------------------------------------------------------------------------------
Octel Communications Corporation 25,000 $437,500
- ------------------------------------------------------------------------------
d. WARRANTS:
A warrant is an option which normally entitles the holder to purchase a
proportionate number of a particular class of the issuer's securities at a
predetermined price during a specific period. The Glendale Federal Bank, FSB,
Warrants were valued daily at the last sale price on the principal exchange or
market on which they were traded, or, if there were no sales that day, at the
mean between the closing bid and asked prices.
27
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
The Robertson Stephens Growth & Income Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedules of investments and securities sold short, and the related
statements of operations and of changes in net assets and the financial
highlights present fairly, in all material respects, the financial position of
The Robertson Stephens Growth & Income Fund (the "Fund") at December 31, 1996,
the results of its operations and changes in its net assets and the financial
highlights for each of the periods presented, in conformity with generally
accepted accounting principles. These financial statements and financial
highlights (hereafter referred to as "financial statements") are the
responsibility of the Fund's management; our responsibility is to express an
opinion on these financial statements based on our audits. We conducted our
audits of these financial statements in accordance with generally accepted
auditing standards, which require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements, assessing the
accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1996, by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
28
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
BUSINESS SERVICES - 3.2%
Claremont Technology Group, Inc. 50,000 $ 1,312,500
Technology Solutions Company 35,000 1,452,500
Vanstar Corporation 25,000 612,500
- -----------------------------------------------------------------------------------------------------------------------------
3,377,500
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS - 15.1%
Adaptec, Inc. 80,000 3,200,000
Compaq Computer Corporation 50,000 3,712,500
Dell Computer Corporation 102,000 5,418,750
Gateway 2000, Inc. 40,000 2,142,500
Seagate Technology, Inc. 40,000 1,580,000
- -----------------------------------------------------------------------------------------------------------------------------
16,053,750
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE - 13.4%
Arbor Software Corporation 20,000 485,000
Aurum Software, Inc. 1,400 32,375
Clarify, Inc. 20,000 960,000
CyberMedia, Inc. 2,600 40,950
Infinity Financial Technology, Inc. 1,600 27,600
i2 Technologies, Inc. 50,000 1,912,500
McAfee Associates, Inc. 60,000 2,640,000
Metris Companies, Inc. 2,700 64,800
PeopleSoft, Inc. 40,000 1,917,500
Rational Software Corporation 20,000 791,250
Remedy Corporation 54,000 2,902,500
Siebel Systems, Inc. 92,000 2,484,000
- -----------------------------------------------------------------------------------------------------------------------------
14,258,475
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER/RETAIL DISTRIBUTION - 3.7%
CDW Computer Centers, Inc. 26,000 1,542,125
CompUSA, Inc. 108,000 2,227,500
Ingram Micro, Inc., Class A 6,400 147,200
- -----------------------------------------------------------------------------------------------------------------------------
3,916,825
- -----------------------------------------------------------------------------------------------------------------------------
DATA COMMUNICATIONS - 4.7%
3Com Corporation 43,500 3,191,813
Cabletron Systems, Inc. 53,000 1,762,250
- -----------------------------------------------------------------------------------------------------------------------------
4,954,063
- -----------------------------------------------------------------------------------------------------------------------------
DESIGN/ENGINEERING - 4.8%
Cadence Design Systems, Inc. 45,000 1,788,750
Parametric Technology Corporation 47,000 2,414,625
Synopsys, Inc. 20,000 925,000
- -----------------------------------------------------------------------------------------------------------------------------
5,128,375
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
ENTERTAINMENT PRODUCTS - 2.6%
C-Cube Microsystems, Inc. 75,000 $ 2,770,313
- -----------------------------------------------------------------------------------------------------------------------------
2,770,313
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SERVICES/SYSTEMS - 5.2%
Access Health, Inc. 20,000 895,000
HBO & Company(1) 20,000 1,187,500
Oxford Health Plans, Inc. 25,000 1,464,062
United Healthcare Corporation(1) 45,000 2,025,000
- -----------------------------------------------------------------------------------------------------------------------------
5,571,562
- -----------------------------------------------------------------------------------------------------------------------------
ONLINE ACCESS EQUIPMENT - 10.4%
Adtran, Inc. 30,000 1,245,000
Ascend Communications, Inc. 50,000 3,106,250
PairGain Technologies, Inc. 100,000 3,043,750
U.S. Robotics Corporation 50,000 3,600,000
- -----------------------------------------------------------------------------------------------------------------------------
10,995,000
- -----------------------------------------------------------------------------------------------------------------------------
ONLINE SOFTWARE/SERVICES - 6.5%
America Online, Inc. 40,000 1,330,000
Netscape Communications Corporation 70,000 3,981,250
Security Dynamics Technologies, Inc. 50,000 1,575,000
- -----------------------------------------------------------------------------------------------------------------------------
6,886,250
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS - 18.7%
Altera Corporation 47,500 3,452,656
Atmel Corporation 50,000 1,656,250
Cypress Semiconductor Corporation 50,000 706,250
Intel Corporation(1) 20,000 2,618,750
Linear Technology Corporation(1) 50,000 2,193,750
Microchip Technology, Inc. 55,000 2,798,125
VLSI Technology, Inc. 50,000 1,193,750
Vitesse Semiconductor Corporation 50,000 2,275,000
Xilinx, Inc. 80,000 2,945,000
- -----------------------------------------------------------------------------------------------------------------------------
19,839,531
- -----------------------------------------------------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - 8.0%
ADC Telecommunications, Inc. 130,000 4,046,250
Cascade Communications Corporation 60,000 3,307,500
GeoTel Communications Corporation 3,200 41,600
Tellabs, Inc. 30,000 1,128,750
- -----------------------------------------------------------------------------------------------------------------------------
8,524,100
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK - 96.3% (COST: $97,243,067) 102,275,744
- -----------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
WARRANTS
- -----------------------------------------------------------------------------------------------------------------------------
Intel Corporation, Warrants, Strike $40.25, Expire 3/14/97(2) 24,500 $ 2,260,125
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 2.1% (COST $2,006,824) 2,260,125
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 98.4% (COST $99,249,891) 104,535,869
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -----------------------------------------------------------------------------------------------------------------------------
Cash 1,303
Repurchase Agreement
State Street Bank & Trust Company, 5.0%, dated 12/31/96, due 01/02/97,
maturity value $2,502,695 (collateralized by $1,960,000 par value
U.S. Treasury Note, 9.25%, due 2/15/16) 2,502,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS -2.3% 2,503,303
- -----------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES, NET - (0.7)% (775,300)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $106,263,872
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income-producing security.
(2) See 4.c. in Notes to Financial Statements.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $99,249,891) $104,535,869
Cash and cash equivalents 2,503,303
Receivable for investments sold 261,250
Receivable for fund shares subscribed 900,500
Organization cost 26,368
Dividends, interest receivable 748
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 108,228,038
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 738,750
Payable for fund shares redeemed 968,936
Accrued expenses 120,615
Payable to adviser 113,221
Payable to distributor 22,644
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 1,964,166
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS 106,263,872
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 98,887,017
Accumulated net realized gain from investments and securities sold short 2,090,877
Net unrealized appreciation on investments 5,285,978
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $106,263,872
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 11.51
Net Asset Value, offering, and redemption price per share
(Net assets of $106,263,872 applicable to 9,230,500 shares
of beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Interest $ 125,489
Dividends 7,465
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 132,954
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 720,640
Distribution fees 180,160
Administrative services fee 180,160
Custodian and transfer agent fees 150,248
Professional fees 91,011
Shareholder reports 65,043
Registration and filing fees 41,060
Trustees' fees and expenses 22,326
Organization expense 6,533
Interest expense 1,451
Insurance fee 550
TOTAL EXPENSES 1,459,182
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (1,326,228)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments and securities sold short 8,016,897
Net change in unrealized appreciation on investments 5,030,392
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS 13,047,289
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 11,721,061
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
12/31/96 12/31/95(1)
- --------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (1,326,228) $ (23,511)
Net realized gain/(loss) from investments and securities sold short 8,016,897 (2,116,521)
Net change in unrealized appreciation on investments 5,030,392 255,586
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 11,721,061 (1,884,446)
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
Net investment income - -
Realized gain on investments (2,483,271) -
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2,483,271) -
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
Net increase in net assets resulting from capital share transactions 64,200,446 34,710,082
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 64,200,446 34,710,082
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 73,438,236 32,825,636
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
Beginning of period 32,825,636 0
End of period $106,263,872 $32,825,636
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on November 15, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED PERIOD ENDED
THROUGHOUT THE PERIOD: 12/31/96 12/31/95(1)(2)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 9.30 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment loss (0.20) (0.01)
Net realized gain/(loss) and net change in unrealized
appreciation/(depreciation) on investments and securities sold short 2.68 (0.69)
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE/(DECREASE) IN NET ASSETS RESULTING FROM OPERATIONS 2.48 (0.70)
- -----------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income - -
Distributions from realized gain on investments (0.27) -
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.51 $ 9.30
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 26.72% (7.00)%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $106,263,872 $ 32,825,636
Ratio of Expenses to Average Net Assets 2.03% 2.13%
Ratio of Net Investment Loss to Average Net Assets (1.85)% (0.89)%
Portfolio Turnover Rate 452% 89%
Average Commission Rate Paid(3) $ 0.0582 -
</TABLE>
(1) The Fund commenced operations on November 15, 1995.
(2) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(3) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each of the periods has been determined by using the
average number of shares outstanding throughout each period. Distributions
reflect actual per-share amounts distributed for the year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Information Age Fund-TM- (the "Fund") is a series of the Robertson
Stephens Investment Trust (the "Trust"), a Massachusetts business trust
organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund became effective to offer shares to
the public on November 15, 1995. The Trust offers eleven series of shares --
The Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value +
Growth Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing
Countries Fund, The Robertson Stephens Growth & Income Fund, The Robertson
Stephens Partners Fund, The Information Age Fund-TM-, The Robertson Stephens
Global Natural Resources Fund, The Robertson Stephens Global Low-Priced Stock
Fund, The Robertson Stephens Diversified Growth Fund, and The Robertson
Stephens MicroCap Growth Fund. The assets for each series are segregated and
accounted for separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. At December 31, 1996, 100% of the Fund's
portfolio was valued in this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use
fundamental valuation methods which include,
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
but are not limited to, the analysis of: the effect of any restrictions on the
sale of the security, product development and trends of the security's issuer,
changes in the industry and other competing companies, significant changes in
the issuer's financial position, and any other event which could have a
significant impact on the value of the security. At December 31, 1996, no
security of the Fund was valued using these guidelines and procedures. As its
normal course of business, the Fund has invested a significant portion of its
assets in companies within a number of industries in the technology and
telecommunications sectors. Accordingly, the performance of the Fund may be
subject to a greater risk of market fluctuation than that of a fund invested in
a wider spectrum of market or industrial sectors.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased, sold, or sold short (trade date). Realized gains and losses on
securities transactions are determined on the basis of specific identification.
e. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
f. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
g. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
18
<PAGE>
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended December
31, 1996, and for the period from November 15, 1995 (Commencement of
Operations), to December 31, 1995, were as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 19,929,762 $ 218,745,343
Shares reinvested 211,321 2,430,192
- ------------------------------------------------------------------------------
20,141,083 221,175,535
- ------------------------------------------------------------------------------
Shares redeemed (14,441,218) (156,975,089)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 5,699,865 $ 64,200,446
- ------------------------------------------------------------------------------
11/15/95 - 12/31/95 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 3,937,648 $ 38,546,017
Shares reinvested - -
- ------------------------------------------------------------------------------
3,937,648 38,546,017
- ------------------------------------------------------------------------------
Shares redeemed (407,013) (3,835,935)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 3,530,635 $ 34,710,082
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Board of Trustees, the Fund pays Robertson Stephens Investment
Management, L.P. ("RSIM") an investment advisory fee and an administrative
services fee calculated respectively at an annual rate of 1.00% and 0.25% of the
average daily net assets of the Fund. For the year ended December 31, 1996, the
Fund incurred investment advisory fees and administrative fees of $720,640 and
$180,160, respectively. For the year ended December 31, 1996, there was no
expected reimbursement of advisory fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. For the
period ended December 31, 1996, the Fund had not previously received any waivers
or reimbursements of operating expenses from RSIM.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor and RSIM,
the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer, and a
Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and Chief
Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of the
Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John P.
Rohal, a Trustee of the Fund, is a Member of RS Group and Director of Research
for RS & Co. Ronald E. Elijah, Portfolio Manager, is a Member of RS Group. Dana
K. Welch, Secretary of the Fund, is a Member of RS Group and General Counsel of
RS & Co. All affiliated and access persons, as defined in the 1940 Act, follow
strict guidelines and policies on personal trading as outlined in the Fund's
Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is approved annually by the Fund's Board of Trustees. Under the Plan,
RS & Co. is compensated for services in such capacity, including its expenses in
connection with the promotion and distribution of the Fund's shares. The
distribution fee is calculated at an annual rate of 0.25% of the average daily
net assets of the Fund. For the year ended December 31, 1996, the Fund incurred
distribution fees of $180,160.
20
<PAGE>
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the year ended December 31, 1996, the Fund paid
brokerage commissions of $31,080 to RS & Co., which represented 13% of total
commissions paid during the year.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $101,578,241. Accumulated net unrealized appreciation on investments was
$2,957,628, consisting of gross unrealized appreciation and depreciation of
$7,539,775 and $(4,582,147), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding securities sold short and short-term
investments) were $378,105,958 and $316,847,600, respectively.
c. WARRANTS:
A warrant is an option which normally entitles the holder to purchase a
proportionate number of a particular class of the issuer's securities at a
predetermined price during a specific period. The Intel Corporation Warrants
were valued daily at the last sale price on the principal exchange or market on
which they were traded, or, if there were no sales that day, at the mean between
the closing bid and asked prices.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
c. SHORT SALES:
Short sales are transactions in which the Fund sells a security it does not own
in anticipation of a decline in the market value of that security. To complete
such a transaction, the Fund must borrow the security to deliver to the buyer
upon the short sale; the Fund then is obligated to replace the security borrowed
by purchasing it in the open market at some later date. The Fund will incur a
loss if the market price of the security increases between the date of the short
sale and the date on which the Fund replaces the borrowed security. The Fund
will realize a gain if the security declines in value between those dates. All
short sales must be fully collateralized. The Fund maintains the collateral in a
segregated account consisting of cash and/or U.S. government securities
sufficient to collateralize its obligations on the short positions.
The Fund may also sell short "against the box" (i.e., the Fund enters into a
short sale as described above while holding an offsetting long position in the
security which is sold short). If the Fund enters into a short sale against the
box, it will hold an equivalent amount of the securities to cover its position
while the short sale is outstanding. The Fund limits the value of short sale
positions (excluding short sales against the box) to 25% of the Fund's total
assets. At December 31, 1996, the Fund held no short positions. For the year
ended December 31, 1996, the cost of investments purchased to cover short sales
and the proceeds from investments sold short were $602,886 and $628,851,
respectively.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of
The Information Age Fund-TM-
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Information Age Fund-TM- (the
"Fund") at December 31, 1996, and the results of its operations and the changes
in its net assets and the financial highlights for each of the periods
presented, in conformity with generally accepted accounting principles. These
financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1996, by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
23
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 1.3%
Kellstrom Industries, Inc. 15,000 $ 125,625
- -----------------------------------------------------------------------------------------------------------------------------
125,625
- -----------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE PARTS AND EQUIPMENT - 2.4%
Bonded Motors, Inc. 20,000 222,500
- -----------------------------------------------------------------------------------------------------------------------------
222,500
- -----------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY - 0.7%
Biotransplant, Inc. 10,100 65,650
- -----------------------------------------------------------------------------------------------------------------------------
65,650
- -----------------------------------------------------------------------------------------------------------------------------
BROADCAST/RADIO/TV-1.5%
Pegasus Communications Corporation 10,500 144,375
- -----------------------------------------------------------------------------------------------------------------------------
144,375
- -----------------------------------------------------------------------------------------------------------------------------
CLOTHING-RETAIL - 1.9%
Sport-Haley, Inc. 6,000 75,375
Vans, Inc. 8,000 100,000
- -----------------------------------------------------------------------------------------------------------------------------
175,375
- -----------------------------------------------------------------------------------------------------------------------------
COMMERCIAL SERVICES - 15.1%
Abacus Direct Corporation 5,500 103,125
Cornell Corrections, Inc. 15,500 137,563
Data Processing Resources Corporation 5,500 101,750
E*Trade Group, Inc. 11,500 132,250
Guest Supply, Inc. 8,500 149,812
Lason Holdings, Inc. 7,500 153,750
Rent-Way, Inc. 16,000 154,000
Staffmark, Inc. 12,000 150,000
Superior Consultant Holdings Corporation 3,800 94,050
Youth Services International, Inc. 16,700 254,675
- -----------------------------------------------------------------------------------------------------------------------------
1,430,975
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS - 1.5%
Transact Technologies, Inc. 13,500 140,062
- -----------------------------------------------------------------------------------------------------------------------------
140,062
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE - 15.7%
Aurum Software, Inc. 3,500 80,938
CyberMedia, Inc. 9,000 141,750
Desktop Data, Inc. 7,000 134,750
Hyperion Software Corporation 6,500 138,125
IA Corporation 16,500 96,937
Imnet Systems, Inc. 8,000 194,000
OrCAD, Inc. 12,500 137,500
Peerless Systems Corporation 10,000 170,000
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMPUTER SOFTWARE - CONTINUED
QuadraMed Corporation 13,000 $ 149,500
Select Software Tools, ADR(2) 6,000 109,500
Technology Modeling Associates, Inc. 10,000 132,500
- -----------------------------------------------------------------------------------------------------------------------------
1,485,500
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER SOFTWARE/SERVICES - 7.2%
Excite, Inc. 12,000 123,000
Silicon Valley Research, Inc. 20,000 40,000
SQA, Inc. 3,000 99,750
SS&C Technologies, Inc. 9,500 60,563
STB Systems, Inc. 7,000 141,750
Visigenic Software, Inc. 7,500 114,375
XcelleNet, Inc. 6,000 96,750
- -----------------------------------------------------------------------------------------------------------------------------
676,188
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER/SPECIALTY RETAIL - 5.2%
Cannondale Corporation 6,500 146,250
Filene's Basement Corporation 10,000 41,250
Hot Topic, Inc. 7,500 148,125
Norwood Promotional Products, Inc. 6,000 109,500
Party City Corporation 2,900 49,300
- -----------------------------------------------------------------------------------------------------------------------------
494,425
- -----------------------------------------------------------------------------------------------------------------------------
DATA PROCESSING SERVICES - 1.0%
Transaction Network Services, Inc. 8,000 92,000
- -----------------------------------------------------------------------------------------------------------------------------
92,000
- -----------------------------------------------------------------------------------------------------------------------------
ENTERTAINMENT - 1.5%
Lodgenet Entertainment Corporation 8,000 142,000
- -----------------------------------------------------------------------------------------------------------------------------
142,000
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 1.6%
Willis Lease Finance Corporation 12,000 154,500
- -----------------------------------------------------------------------------------------------------------------------------
154,500
- -----------------------------------------------------------------------------------------------------------------------------
FOOD RETAIL/WHOLESALE - 0.6%
Opta Food Ingredients, Inc. 10,000 57,500
- -----------------------------------------------------------------------------------------------------------------------------
57,500
- -----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE/MEDICAL TECHNOLOGY/HMO - 1.3%
American Oncology Resources, Inc. 6,000 61,500
Vitalcom, Inc. 12,000 61,500
- -----------------------------------------------------------------------------------------------------------------------------
123,000
- -----------------------------------------------------------------------------------------------------------------------------
HEALTH CARE SERVICES - 2.5%
Horizon Mental Health Management, Inc. 5,000 138,750
MedQuist, Inc. 4,000 99,000
- -----------------------------------------------------------------------------------------------------------------------------
237,750
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
MANUFACTURING - 3.3%
CN Biosciences, Inc. 11,000 $ 202,125
RockShox, Inc. 7,500 108,750
- -----------------------------------------------------------------------------------------------------------------------------
310,875
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL INSTRUMENTS/DEVICES - 1.6%
Lifeline Systems, Inc. 8,500 148,750
- -----------------------------------------------------------------------------------------------------------------------------
148,750
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SERVICES - 2.7%
Enterprise Systems, Inc. 11,000 258,500
- -----------------------------------------------------------------------------------------------------------------------------
258,500
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL SUPPLIES - 3.5%
Molecular Devices Corporation 11,500 178,969
Suburban Ostomy Supply Company, Inc. 11,000 151,250
- -----------------------------------------------------------------------------------------------------------------------------
330,219
- -----------------------------------------------------------------------------------------------------------------------------
NETWORK SYSTEMS - 1.1%
Tekelec Corporation 6,500 102,375
- -----------------------------------------------------------------------------------------------------------------------------
102,375
- -----------------------------------------------------------------------------------------------------------------------------
PHARMACEUTICALS - 2.2%
Microcide Pharmaceuticals, Inc. 11,000 110,000
Neurocrine Biosciences, Inc. 10,000 100,000
- -----------------------------------------------------------------------------------------------------------------------------
210,000
- -----------------------------------------------------------------------------------------------------------------------------
REITs - 1.2%
Redwood Trust, Inc.(1) 3,000 111,750
- -----------------------------------------------------------------------------------------------------------------------------
111,750
- -----------------------------------------------------------------------------------------------------------------------------
RESTAURANTS - 2.4%
PJ America, Inc. 5,000 90,000
Taco Cabana, Inc., Class A 19,000 140,125
- -----------------------------------------------------------------------------------------------------------------------------
230,125
- -----------------------------------------------------------------------------------------------------------------------------
RETAIL - 3.7%
Cost Plus, Inc. 8,000 153,000
The Maxim Group, Inc. 11,000 192,500
- -----------------------------------------------------------------------------------------------------------------------------
345,500
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTOR EQUIPMENT - 1.5%
PRI Automation, Inc. 3,200 145,600
- -----------------------------------------------------------------------------------------------------------------------------
145,600
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS - 3.1%
Act Manufacturing, Inc. 5,400 142,425
Microsemi Corporation 3,500 49,875
QLogic Corporation 4,000 103,000
- -----------------------------------------------------------------------------------------------------------------------------
295,300
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
TELECOMMUNICATIONS - 3.2%
Metro One Telecommunications, Inc. 15,000 $ 118,125
REMEC, Inc. 9,500 186,437
- -----------------------------------------------------------------------------------------------------------------------------
304,562
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 90.5% (COST $7,943,804) 8,560,981
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- -----------------------------------------------------------------------------------------------------------------------------
Cash 68,423
Repurchase Agreement
State Street Bank & Trust Company, 5.00%, dated 12/31/96, due 1/02/97,
maturity value $851,236 (collateralized by $670,000 par value
U.S. Treasury Note, 9.25%, due 2/15/16) 851,000
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 9.7% 919,423
- -----------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES, NET - (0.2%) (16,090)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 9,464,314
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income-producing security.
(2) ADR - American Depository Receipt.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $7,943,804) $ 8,560,981
Cash and cash equivalents 919,423
Receivable for investments sold 49,000
Receivable for fund shares subscribed 95,605
Organization cost 27,000
Dividends/interest receivable 1,348
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 9,653,357
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 76,425
Payable for fund shares redeemed 33,430
Accrued expenses 66,321
Payable to adviser 11,029
Payable to distributor 1,838
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 189,043
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS 9,464,314
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 8,974,094
Accumulated net realized loss from investments (126,957)
Net unrealized appreciation on investments 617,177
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 9,464,314
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 11.00
Net Asset Value, offering, and redemption price per share
(Net assets of $9,464,314 applicable to 860,362 shares
of beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE PERIOD FROM AUGUST 15, 1996 (COMMENCEMENT OF OPERATIONS), THROUGH DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Interest $ 18,134
Dividends 1,230
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 19,364
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Custodian and transfer agent fees 36,140
Professional fees 30,545
Investment advisory fees 25,237
Organization expense 8,803
Trustees' fees and expenses 8,479
Registration and filing fees 7,228
Administrative services fee 5,047
Distribution fees 5,047
Shareholder reports 4,309
Insurance fee 42
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 130,877
LESS: EXPENSE WAIVER AND REIMBURSEMENT BY ADVISER (67,948)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES, NET 62,929
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (43,565)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
Net realized loss from investments (126,957)
Net change in unrealized appreciation on investments 617,177
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED LOSS AND UNREALIZED APPRECIATION ON INVESTMENTS 490,220
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 446,655
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE
PERIOD ENDED
12/31/96(1)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (43,565)
Net realized loss from investments (126,957)
Net change in unrealized appreciation on investments 617,177
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 446,655
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income -
Realized gains on investments -
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS -
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 9,017,659
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 9,017,659
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 9,464,314
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period -
End of period $ 9,464,314
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on August 15, 1996.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE
FOR A SHARE OUTSTANDING PERIOD ENDED
THROUGHOUT THE PERIOD: 12/31/96(1)(3)
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (0.08)
Net realized loss and net change in unrealized appreciation on investments 1.08
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 1.00
- -----------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income -
Distributions from realized gains on investments -
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 11.00
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 10.00%
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 9,464,314
Ratio of Expenses to Average Net Assets 3.08%(2)
Ratio of Net Investment Loss to Average Net Assets (2.13)%(2)
Portfolio Turnover Rate 22%
Average Commission Rate Paid(4) $ 0.06
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on August 15, 1996.
(2) If the Fund had paid all of its expenses and had received no reimbursement
from the Adviser, the ratio of expenses to average net assets for the
period ended December 31, 1996, would have been 6.40%, and the ratio of net
investment loss to average net assets would have been (5.45)%.
(3) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(4) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each of the periods has been determined by using the
average number of shares outstanding throughout each period.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens MicroCap Growth Fund (the "Fund") is a series of the
Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund became effective to offer shares to
the public on August 15, 1996. The Trust offers eleven series of shares --
The Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value +
Growth Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing
Countries Fund, The Robertson Stephens Growth & Income Fund, The Robertson
Stephens Partners Fund, The Information Age Fund-TM-, The Robertson Stephens
Global Natural Resources Fund, The Robertson Stephens Global Low-Priced Stock
Fund, The Robertson Stephens Diversified Growth Fund, and The Robertson
Stephens MicroCap Growth Fund. The assets for each series are segregated and
accounted for separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. At December 31, 1996, 100% of the Fund's
portfolio was valued in this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use
fundamental valuation methods which include,
18
<PAGE>
but are not limited to, the analysis of: the effect of any restrictions on the
sale of the security, product development and trends of the security's issuer,
changes in the industry and other competing companies, significant changes in
the issuer's financial position, and any other event which could have a
significant impact on the value of the security. At December 31, 1996, no
security of the Fund was valued using these guidelines and procedures. As its
normal course of business, the Fund has invested a significant portion of its
assets in companies within a number of industries in the technology sector.
Accordingly, the performance of the Fund may be subject to a greater risk of
market fluctuation than that of a fund invested in a wider spectrum of market or
industrial sectors.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
As of December 31, 1996, the Fund has a capital loss carryforward of $126,957,
which will expire by December 31, 2004. No capital gain distribution shall be
made until the capital loss carryforward has been fully utilized or expires.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on securities
transactions are determined on the basis of specific identification.
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
e. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
f. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
g. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the period from August 15,
1996 (Commencement of Operations), to December 31, 1996, were as follows:
8/15/96 - 12/31/96 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 1,308,605 $ 13,800,689
Shares reinvested - -
- ------------------------------------------------------------------------------
1,308,605 $ 13,800,689
- ------------------------------------------------------------------------------
Shares redeemed (448,243) (4,783,030)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 860,362 $ 9,017,659
- ------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Board of Trustees, the Fund pays Robertson Stephens Investment
Management, L.P. ("RSIM"), an investment advisory fee and an administrative
services fee calculated respectively at an annual rate of 1.25% and 0.25% of the
average daily net assets of the Fund. For the period from August 15, 1996
(Commencement of Operations), through December 31, 1996, the Fund incurred
investment advisory fees and administrative fees of $25,237 and $5,047,
respectively. For the period from August 15, 1996 (Commencement of
20
<PAGE>
Operations), through December 31, 1996, the Adviser voluntarily agreed to waive
and reimburse $67,948 of its fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund during the period ended December 31, 1996.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor and RSIM,
the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer,
and a Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and
Chief Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of
the Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John
P. Rohal, a Trustee of the Fund, is a Member of RS Group and Director of
Research for RS & Co. Dana K. Welch, Secretary of the Fund, is a member of RS
Group and General Counsel of RS & Co. All affiliated and access persons, as
defined in the 1940 Act, follow strict guidelines and policies on personal
trading as outlined in the Fund's Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $8,479 for the period from August 15, 1996
(Commencement of Operations), through December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services,
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is approved annually by the Fund's Board of Trustees. Under the Plan,
RS & Co. is compensated for
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
services in such capacity, including its expenses in connection with the
promotion and distribution of the Fund's shares. The distribution fee is
calculated at an annual rate of 0.25% of the average daily net assets of the
Fund. For the period from August 15, 1996 (Commencement of Operations), through
December 31, 1996, the Fund incurred distribution fees of $5,047.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the period from August 15, 1996 (Commencement
of Operations), through December 31, 1996, the Fund paid no brokerage
commissions to RS & Co.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $7,943,804. Accumulated net unrealized appreciation on investments was
$617,177, consisting of gross unrealized appreciation and depreciation of
$1,005,166 and ($387,989), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the period from August 15, 1996 (Commencement of Operations), through
December 31, 1996, the cost of investments purchased and the proceeds from
investments sold (excluding short-term investments) were $8,959,586 and
$888,825, respectively.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens MicroCap
Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Robertson Stephens MicroCap
Growth Fund (the "Fund") at December 31, 1996, and the results of its operations
and the changes in its net assets and the financial highlights for the period
from August 15, 1996 (Commencement of Operations), through December 31, 1996, in
conformity with generally accepted accounting principles. These financial
statements and financial highlights (hereafter referred to as "financial
statements") are the responsibility of the Fund's management; our responsibility
is to express an opinion on these financial statements based on our audits. We
conducted our audits of these financial statements in accordance with generally
accepted auditing standards, which require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements are free of
material misstatement. An audit includes examining, on a test basis, evidence
supporting the amounts and disclosures in the financial statements, assessing
the accounting principles used and significant estimates made by management, and
evaluating the overall financial statement presentation. We believe that our
audits, which included confirmation of securities at December 31, 1996, by
correspondence with the custodian and brokers, provide a reasonable basis for
the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
23
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
COMMON STOCKS
- ------------------------------------------------------------------------------------------------------------------------------
Aluminum - 2.5%
Kaiser Aluminum Corporation 62,500 $ 726,563
MAXXAM, Inc. 52,100 2,481,262
- ------------------------------------------------------------------------------------------------------------------------------
3,207,825
- ------------------------------------------------------------------------------------------------------------------------------
AUTOMOBILE PARTS/EQUIPMENT - 0.4%
Wescast Industries, Inc., Class A(1) 20,000 470,312
- ------------------------------------------------------------------------------------------------------------------------------
470,312
- ------------------------------------------------------------------------------------------------------------------------------
CLOSED-END FUNDS - 0.8%
Cathay Investment Fund, Ltd.(1) HKD 755,000 976,146
- ------------------------------------------------------------------------------------------------------------------------------
976,146
- ------------------------------------------------------------------------------------------------------------------------------
CONSTRUCTION/INFRASTRUCTURE - 5.7%
American Buildings Company 35,000 835,625
Giant Cement Holding, Inc. 82,200 1,325,475
KCI Konecranes International Corporation FIM 35,000 1,103,261
Martin Marietta Materials, Inc.(1) 43,516 1,011,747
Texas Industries, Inc.(1) 60,000 3,037,500
- ------------------------------------------------------------------------------------------------------------------------------
7,313,608
- ------------------------------------------------------------------------------------------------------------------------------
CONSUMER/BUSINESS SERVICES - 1.7%
Dun & Bradstreet Corporation(1) 50,000 1,187,500
GC Companies, Inc. 30,000 1,038,750
- ------------------------------------------------------------------------------------------------------------------------------
2,226,250
- ------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTION - 3.5%
Kevco, Inc. 192,000 2,688,000
SunSource LP, Class B(1) 435,500 1,796,437
- ------------------------------------------------------------------------------------------------------------------------------
4,484,437
- ------------------------------------------------------------------------------------------------------------------------------
ENERGY - 7.3%
Alliance Energy, Inc., Restricted(3)(4) CAD 1,000,000 319,689
Aztec Resources, Ltd. CAD 329,800 674,388
Basin Exploration, Inc. CAD 62,500 390,625
Best Pacific Resources, Ltd., Restricted(3)(4) CAD 1,400,000 1,191,630
Calahoo Petroleum, Ltd. CAD 1,271,000 788,979
Canadian Conquest Exploration, Inc. CAD 646,300 1,156,383
Discovery West Corporation CAD 353,800 620,112
New Cache Petroleums, Ltd. CAD 46,200 263,171
Nugas, Ltd. CAD 189,500 332,140
Ocelot Energy, Inc., Class B CAD 136,200 870,335
Oiltec Resources, Ltd., Restricted(3)(4) CAD 770,000 885,671
Olympia Energy, Inc., Class A CAD 125,000 57,511
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
DECEMBER 31, 1996 FOREIGN CURRENCY(2) SHARES VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
ENERGY - CONTINUED
Paragon Petroleum, Ltd. CAD 99,600 $ 232,761
Place Resources Corporation, Class A CAD 380,000 557,803
Titan Exploration, Inc. 84,000 1,008,000
- ------------------------------------------------------------------------------------------------------------------------------
9,349,198
- ------------------------------------------------------------------------------------------------------------------------------
ENERGY SERVICES - 7.1%
Bowridge Corporation CAD 700,000 444,753
Computalog, Ltd. CAD 111,400 1,220,332
Dailey Petroleum Services Corporation 150,000 1,575,000
Enerflex Systems, Ltd.(1) CAD 31,600 773,096
MarkWest Hydrocarbon, Inc. 70,000 1,085,000
NQL Drilling Tools, Inc., Class A CAD 134,600 469,375
USX-Delhi Group(1) 220,900 3,506,787
- ------------------------------------------------------------------------------------------------------------------------------
9,074,343
- ------------------------------------------------------------------------------------------------------------------------------
HOLDING COMPANIES, DIVERSIFIED - 0.5%
Valhi, Inc.(1) 102,700 654,712
- ------------------------------------------------------------------------------------------------------------------------------
654,712
- ------------------------------------------------------------------------------------------------------------------------------
INSURANCE - 2.7%
Foremost Corporation of America(1) 10,000 600,000
Markel Corporation 31,800 2,862,000
- ------------------------------------------------------------------------------------------------------------------------------
3,462,000
- ------------------------------------------------------------------------------------------------------------------------------
MANUFACTURING - 1.2%
Gardner Denver Machinery, Inc. 10,000 342,500
TB Wood's Corporation(1) 110,900 1,192,175
- ------------------------------------------------------------------------------------------------------------------------------
1,534,675
- ------------------------------------------------------------------------------------------------------------------------------
REAL ESTATE - 0.9%
Catellus Development Corporation 100,000 1,137,500
- ------------------------------------------------------------------------------------------------------------------------------
1,137,500
- ------------------------------------------------------------------------------------------------------------------------------
TRANSPORTATION EQUIPMENT/SERVICES - 6.5%
AMERCO, Inc. 192,800 6,748,000
Harper Group, Inc.(1) 20,000 475,000
Pittston Burlington Group(1) 50,000 1,000,000
- ------------------------------------------------------------------------------------------------------------------------------
8,223,000
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
OTHER COMMON STOCK - 1.1% 1,361,254
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL COMMON STOCK - 41.9% (COST: $46,398,287) 53,475,260
- ------------------------------------------------------------------------------------------------------------------------------
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
DECEMBER 31, 1996 FOREIGN WARRANTS VALUE
- ------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
WARRANTS
- ------------------------------------------------------------------------------------------------------------------------------
Alliance Energy, Inc., 1/2 Warrants, Strike CAD 0.45,
Expire 12/19/97(3)(4)(5) CAD 1,000,000 $ 134,591
Calahoo Petroleum, Ltd., 3/4 Warrants, Strike CAD 0.65,
Expire 6/28/97(3)(5) CAD 630,000 147,530
Oiltec Resources Ltd., Warrants, Strike CAD 1.75,
Expire 11/18/97(3)(4)(5) CAD 770,000 172,260
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL WARRANTS - 0.4% (Cost: $330,266) 454,381
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 42.3% (Cost: $46,728,553) 53,929,641
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- ------------------------------------------------------------------------------------------------------------------------------
Cash 92,012
FNMA Discount Note, 5.50%, due 1/8/97, $55,100,000 par value 55,041,074
Repurchase Agreement
State Street Bank and Trust Company, 5.00%, dated 12/31/96,
due 1/2/97, maturity value $20,563,711 (collateralized by
$14,430,000 par value U.S. Treasury Note, 10.625%, due 8/15/15) 20,558,000
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 59.5% 75,691,086
- ------------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES, NET - (1.8)% (2,353,188)
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100.0% $ 127,267,539
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Income-producing security.
(2) Foreign-denominated security; CAD - Canadian Dollar, FIM - Finnish Markka,
HKD - Hong Kong Dollar.
(3) Fair-value security. See 1.a. in Notes to Financial Statements.
(4) Restricted security. See 4.d. in Notes to Financial Statements.
(5) See 4.e. in Notes to Financial Statements.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $46,728,553) $ 53,929,641
Cash and cash equivalents 75,691,086
Receivable for investments sold 20,695
Receivable for fund shares subscribed 2,180,227
Dividends/interest receivable 5,313
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 131,826,962
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 3,474,508
Payable for fund shares redeemed 839,032
Payable to adviser 127,868
Accrued expenses 92,441
Payable to distributor 25,574
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 4,559,423
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 127,267,539
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 118,919,073
Accumulated net realized gain from investments 1,147,378
Net unrealized appreciation on investments 7,201,088
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $ 127,267,539
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 14.60
Net Asset Value, offering and redemption price per share
(net assets of $127,267,539 applicable to 8,719,430 shares of
beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
13
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Interest $ 1,098,909
Dividends (net of foreign withholding tax of $1,796) 97,778
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 1,196,687
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 514,459
Custodian and transfer agent fees 114,216
Distribution fees 102,892
Professional fees 73,353
Registration and filing fees 35,666
Shareholder reports 31,008
Trustees' fees and expenses 22,326
Insurance 57
- -----------------------------------------------------------------------------------------------------------------------------
Total Expenses 893,977
Less: Expense waiver by adviser (91,703)
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES, NET 802,274
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT INCOME 394,413
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS AND OPTIONS
Net realized gain from investments 2,839,236
Net change in unrealized appreciation on investments 7,025,108
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS 9,864,344
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 10,258,757
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED PERIOD ENDED
12/31/96 12/31/95(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income $ 394,413 $ 46,395
Net realized gain from investments 2,839,236 9,082
Net change in unrealized appreciation on investments 7,025,108 175,980
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 10,258,757 231,457
- --------------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income (480,663) -
Realized gains on investments (1,700,940) -
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (2,181,603) -
- --------------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- --------------------------------------------------------------------------------------------------------------------------------
Net increase in net assets resulting from capital share transactions 111,710,041 7,248,887
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS 111,710,041 7,248,887
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL INCREASE IN NET ASSETS 119,787,195 7,480,344
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- --------------------------------------------------------------------------------------------------------------------------------
Beginning of period 7,480,344 -
End of period $ 127,267,539 $ 7,480,344
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on July 12, 1995.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 12/31/96 12/31/95(1)
- ---------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 10.39 $ 10.00
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
Net investment income 0.13 0.06
Net realized gain and net change in unrealized appreciation on investments 4.36 0.33
- --------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 4.49 0.39
- --------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income (0.06) -
Distributions from realized gains on investments (0.22) -
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 14.60 $ 10.39
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 43.15% 3.90%
- --------------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $ 127,267,539 $ 7,480,344
Ratio of Expenses to Average Net Assets 1.93%(2) 2.41%(2)
Ratio of Net Investment Income to Average Net Assets 0.95%(2) 1.34%(2)
Portfolio Turnover Rate 101% 71%
Average Commission Rate Paid(4) $ 0.0216 -
- --------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) The Fund commenced operations on July 12, 1995.
(2) If the Fund had paid all of its expenses and there had been no
reimbursement by the Adviser, the ratio of expenses to average net assets
for the year ended December 31, 1996, and for the period ended December 31,
1995, would have been 2.15% and 5.12%, respectively, and the ratio of net
investment income/(loss) to average net assets would have been 0.73% and
(1.37)%, respectively.
(3) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(4) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data has been determined by using the average number of
shares outstanding throughout the period. Distributions reflect actual
per-share amounts distributed for the year.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
16
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Partners Fund (the "Fund") is a series of the Robertson
Stephens Investment Trust (the "Trust"), a Massachusetts business trust
organized on May 11, 1987. The Fund is registered under the Investment Company
Act of 1940, as amended (the "1940 Act"), as a non-diversified, open-end
management investment company. The Fund became effective to offer shares to the
public on July 12, 1995. The Trust offers eleven series of shares -- The
Robertson Stephens Emerging Growth Fund, The Robertson Stephens Value + Growth
Fund, The Contrarian Fund-TM-, The Robertson Stephens Developing Countries Fund,
The Robertson Stephens Growth & Income Fund, The Robertson Stephens Partners
Fund, The Information Age Fund-TM-, The Robertson Stephens Global Natural
Resources Fund, and The Robertson Stephens Global Low-Priced Stock Fund, The
Robertson Stephens Diversified Growth Fund, and The Robertson Stephens MicroCap
Growth Fund. The assets for each series are segregated and accounted for
separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. Foreign securities prices are generally
denominated in foreign currencies. The currencies are translated into U.S.
dollars by using the exchange rates quoted at the close of The London Stock
Exchange prior to when the Fund's net asset value is next determined. At
December 31, 1996, 94.7% of the Fund's portfolio was valued in this manner.
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use all
available resources, including quotations from market-makers and fundamental
valuation methods which include, but are not limited to, the analysis of: the
effect of any restrictions on the sale of the security, product development and
trends of the security's issuer, changes in the industry and other competing
companies, significant changes in the issuer's financial position, and any other
event which would have a significant impact on the value of a security. At
December 31, 1996, 5.3% of the Fund's portfolio was valued using these
guidelines and procedures.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on securities
transactions are determined on the basis of specific identification.
e. FOREIGN CURRENCY TRANSLATION:
The accounting records of the Fund are maintained in U.S. dollars. Investment
securities and all other assets and liabilities of the Fund denominated in a
foreign currency are translated into U.S. dollars at the exchange rate each day.
Purchases and sales of securities, income receipts and expense payments are
translated into U.S. dollars at the exchange rate in effect on the dates of the
respective transactions. The Fund does not isolate the portion of the
fluctuations on investments resulting from changes in foreign currency exchange
rates from the fluctuations in market prices of investments held. Such
fluctuations are included with the net realized and unrealized gain or loss from
investments.
18
<PAGE>
f. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
g. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
h. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended December
31, 1996, and for the period from July 12, 1995 (Commencement of Operations),
through December 31, 1995, were as follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 10,949,497 $ 153,105,777
Shares reinvested 142,016 2,066,658
- ------------------------------------------------------------------------------
11,091,513 155,172,435
Shares redeemed (3,092,301) (43,462,394)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 7,999,212 $ 111,710,041
- ------------------------------------------------------------------------------
7/12/95 - 12/31/95 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 993,987 $ 10,001,278
Shares reinvested - -
- ------------------------------------------------------------------------------
993,987 10,001,278
- ------------------------------------------------------------------------------
Shares redeemed (273,769) (2,752,391)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 720,218 $ 7,248,887
- ------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Fund's Board of Trustees, the Fund pays Robertson Stephens
Investment Management, L.P. ("RSIM") an investment advisory fee calculated at an
annual rate of 1.25% of the average daily net assets of the Fund. For the year
ended December 31, 1996, the Fund incurred investment advisory fees of
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
$514,459. RSIM has voluntarily agreed to waive any annual operating expenses
exceeding an annual expense ratio of 1.95%. For the year ended December 31,
1996, the Adviser agreed to waive $91,703 of its fees and other expenses.
RSIM may recoup waived or reimbursed operating expenses over the succeeding two
years, subject to expense limitations then applicable to the Fund. No previous
expense waivers or reimbursements of operating expenses were recouped by RSIM
from the Fund during the year ended December 31, 1996.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also Members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member
of Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor,
and RSIM, the Fund's Adviser. G. Randy Hecht, President, Chief Executive
Officer and a Trustee of the Fund, is also a Director of RSIM, a Member of RS
Group, and Chief Operating Officer of RS & Co. Terry R. Otton, Chief
Financial Officer of the Fund, is a Member of RS Group and Chief Financial
Officer of RS & Co. John P. Rohal, a Trustee of the Fund, is a Member of RS
Group and Director of Research for RS & Co. Dana K. Welch, Secretary of the
Fund, is a member of RS Group and General Counsel of RS & Co. Andrew P.
Pilara, Jr., Portfolio Manager, is a Member of RS Group. All affiliated and
access persons, as defined in the 1940 Act, follow strict guidelines and
policies on personal trading as outlined in the Fund's Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
and has adopted a Plan of Distribution pursuant to Rule 12b-1 under the 1940
Act, which is approved annually by the Fund's Board of
20
<PAGE>
Trustees. Under the Plan, RS & Co. is compensated for services in such capacity,
including its expenses in connection with the promotion and distribution of the
Fund's shares. The distribution fee is calculated at an annual rate of 0.25% of
the average daily net assets of the Fund. For the year ended December 31, 1996,
the Fund incurred distribution fees of $102,892.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the year ended December 31, 1996, the Fund paid
brokerage commissions of $680 to RS & Co., which represented 0.5% of the total
commissions paid during the year.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $46,728,553. Accumulated net unrealized appreciation on investments was
$7,201,088, consisting of gross unrealized appreciation and depreciation of
$7,654,613 and $(453,525), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding options and short-term investments)
were $58,860,897 and $19,623,640, respectively.
c. FOREIGN SECURITIES:
Foreign securities investments involve special risks and considerations not
typically associated with those of U.S. origin. These risks include, but are not
limited to, reevaluation of currencies, adverse political, social, and economic
developments, and less reliable information about issuers. Moreover, securities
of many foreign companies and markets may be less liquid and their prices more
volatile than those of U.S. companies and markets.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
d. RESTRICTED SECURITIES:
A restricted security is a security which cannot be resold to the general public
without prior registration under the Securities Act of 1933. If the security is
subsequently registered and resold, the issuers would typically bear the expense
of all registrations at no cost to the Fund. At December 31, 1996, the Fund held
restricted securities with an aggregate value of $2,703,841 which represented
2.1% of the Fund's total assets. Restricted securities are valued according to
the guidelines and procedures adopted by the Fund's Board of Trustees as
outlined in Note 1.a., paragraph 2.
SHARES COST VALUE ACQUISITION
SECURITY (000) (000) (000) DATE
- --------------------------------------------------------------------------------
Alliance Energy, Inc. 1,000 $ 294 $ 320 12/19/96
Alliance Energy, Inc.,
1/2 Warrants 1,000 87 135 12/19/96
Best Pacific
Resources, Ltd. 1,400 854 1,191 10/28/96
Oiltec Resources, Ltd. 770 805 886 11/13/96
Oiltec Resources, Ltd.,
Warrants 770 172 172 11/13/96
- --------------------------------------------------------------------------------
$ 2,212 $ 2,704
- --------------------------------------------------------------------------------
e. OPTIONS AND WARRANTS:
Options and warrants normally entitle the holder to
purchase a proportionate amount of a particular class of
the issuer's securities at a predetermined price during a specific period.
Options and warrants for which market quotations were not readily available
were priced using the modified Black-Scholes Valuation Formula. The
Black-Scholes Valuation Formula values an option or warrant by determining
the differential between the exercise price of the option or warrant and the
current price of the underlying stock, based on a number of factors. These
factors include, but are not limited to, current price of the underlying
stock, exercise price of the option or warrant, time to expiration, assumed
riskless rate of interest, compounded rate of return on the stock, and the
compounded rate of return on the stock, option or warrant. This valuation
method is subject to frequent review and is in accordance with the guidelines
and procedures adopted by the Fund's Board of Trustees.
22
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens Partners
Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Robertson Stephens Partners
Fund (the "Fund") at December 31, 1996, and the results of its operations and
the changes in its net assets and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1996, by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
23
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- -----------------------------------------------------------------------------------------------------------------------------
AEROSPACE - 4.3%
BE Aerospace, Inc.(1) 210,000 $ 5,696,250
Boeing Company 95,000 10,105,625
United Technologies Corporation 175,400 11,576,400
- -----------------------------------------------------------------------------------------------------------------------------
27,378,275
- -----------------------------------------------------------------------------------------------------------------------------
AIRLINES - 3.2%
AMR Corporation(1) 71,000 6,256,875
Delta Airlines, Inc. 95,000 6,733,125
UAL Corporation(1) 120,000 7,500,000
- -----------------------------------------------------------------------------------------------------------------------------
20,490,000
- -----------------------------------------------------------------------------------------------------------------------------
BANKS - 6.7%
Chase Manhattan Corporation 120,000 10,710,000
Citicorp 119,400 12,298,200
Mellon Bank Corporation 142,000 10,082,000
NationsBank Corporation 100,000 9,775,000
- -----------------------------------------------------------------------------------------------------------------------------
42,865,200
- -----------------------------------------------------------------------------------------------------------------------------
BIOTECHNOLOGY - 3.5%
BioChem Pharma, Inc.(1) 210,000 10,552,500
Biogen, Inc.(1) 310,000 12,012,500
- -----------------------------------------------------------------------------------------------------------------------------
22,565,000
- -----------------------------------------------------------------------------------------------------------------------------
COMMUNICATIONS EQUIPMENT - 6.2%
3Com Corporation(1) 305,000 22,379,375
Cabletron Systems, Inc.(1) 516,400 17,170,300
- -----------------------------------------------------------------------------------------------------------------------------
39,549,675
- -----------------------------------------------------------------------------------------------------------------------------
COMPUTER HARDWARE/COMPONENTS - 13.0%
Compaq Computer Corporation(1) 418,000 31,036,500
Dell Computer Corporation(1) 542,000 28,793,750
Seagate Technology, Inc.(1) 600,000 23,700,000
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83,530,250
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COMPUTER SOFTWARE - 10.8%
Cadence Design Systems, Inc.(1) 665,000 26,433,750
Microsoft Corporation(1) 220,000 18,177,500
Parametric Technology Corporation(1) 482,750 24,801,281
- -----------------------------------------------------------------------------------------------------------------------------
69,412,531
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER/SPECIALTY RETAIL - 11.5%
CompUSA, Inc.(1) 1,259,800 25,983,375
Ross Stores, Inc. 200,000 10,000,000
Starbucks Corporation(1) 270,000 7,728,750
TJX Companies, Inc. 200,000 9,475,000
Walgreen Co. 259,700 10,388,000
Williams-Sonoma, Inc.(1) 290,000 10,548,750
- -----------------------------------------------------------------------------------------------------------------------------
74,123,875
- -----------------------------------------------------------------------------------------------------------------------------
CONSUMER PRODUCTS - 5.0%
Electronic Arts, Inc.(1) 435,000 13,022,813
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
10
<PAGE>
<CAPTION>
DECEMBER 31, 1996 SHARES VALUE
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
CONSUMER PRODUCTS - CONTINUED
Nike, Inc. 318,200 $ 19,012,450
- -----------------------------------------------------------------------------------------------------------------------------
32,035,263
- -----------------------------------------------------------------------------------------------------------------------------
DATA PROCESSING SERVICES - 3.1%
Computer Sciences Corporation(1) 200,000 16,425,000
First Data Corporation 100,000 3,650,000
- -----------------------------------------------------------------------------------------------------------------------------
20,075,000
- -----------------------------------------------------------------------------------------------------------------------------
FINANCIAL SERVICES - 9.2%
Conseco, Inc. 140,000 8,925,000
First USA, Inc. 400,000 13,850,000
Green Tree Financial Corporation 150,000 5,793,750
Household International, Inc. 130,000 11,992,500
MBNA Corporation 252,700 10,487,050
The Money Store, Inc. 300,000 8,287,500
- -----------------------------------------------------------------------------------------------------------------------------
59,335,800
- -----------------------------------------------------------------------------------------------------------------------------
HEALTH MAINTENANCE ORGANIZATIONS - 5.7%
Oxford Health Plans, Inc.(1) 399,400 23,389,863
United Healthcare Corporation 300,000 13,500,000
- -----------------------------------------------------------------------------------------------------------------------------
36,889,863
- -----------------------------------------------------------------------------------------------------------------------------
INVESTMENT MANAGEMENT - 5.6%
Charles Schwab Corporation 305,500 9,776,000
Merrill Lynch and Company, Inc. 325,000 26,487,500
- -----------------------------------------------------------------------------------------------------------------------------
36,263,500
- -----------------------------------------------------------------------------------------------------------------------------
MEDICAL PRODUCTS/SERVICES - 7.1%
Columbia/HCA Healthcare Corporation 307,200 12,518,400
Cardinal Health, Inc. 120,000 6,990,000
HBO & Company 210,000 12,468,750
Medtronic, Inc. 200,000 13,600,000
- -----------------------------------------------------------------------------------------------------------------------------
45,577,150
- -----------------------------------------------------------------------------------------------------------------------------
SEMICONDUCTORS - 4.4%
Intel Corporation 149,400 19,562,062
Micron Technology, Inc. 300,000 8,737,500
- -----------------------------------------------------------------------------------------------------------------------------
28,299,562
- -----------------------------------------------------------------------------------------------------------------------------
VIDEO COMPONENTS - 0.9%
C-Cube Microsystems, Inc.(1) 163,900 6,054,056
- -----------------------------------------------------------------------------------------------------------------------------
6,054,056
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.20% (COST: $463,831,161) 644,445,000
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
OTHER LIABILITIES, NET - (0.20)% (1,287,615)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS - 100% $643,157,385
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Non-income-producing security.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
11
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Investments, at value (Cost: $463,831,161) $644,445,000
Receivable for investments sold 9,304,150
Receivable for fund shares subscribed 1,416,540
Dividends receivable 154,902
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL ASSETS 655,320,592
- -----------------------------------------------------------------------------------------------------------------------------
LIABILITIES
- -----------------------------------------------------------------------------------------------------------------------------
Payable for investments purchased 5,992,507
Payable for fund shares redeemed 4,510,811
Payable to adviser 521,444
Payable to distributor 138,848
Payable to custodian bank 688,311
Accrued expenses 311,286
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL LIABILITIES 12,163,207
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $643,157,385
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- -----------------------------------------------------------------------------------------------------------------------------
Paid-in capital 453,266,465
Accumulated net realized gain from investments 9,277,081
Net unrealized appreciation on investments 180,613,839
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET ASSETS $643,157,385
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
PRICING OF SHARES: $ 24.16
Net Asset Value, offering and redemption price per share
(Net assets of $643,157,385 applicable to 26,622,714 shares
of beneficial interest outstanding with no par value)
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
12
<PAGE>
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- -----------------------------------------------------------------------------------------------------------------------------
Dividends $ 3,514,461
Interest 345,822
Other 17,431
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 3,877,714
- -----------------------------------------------------------------------------------------------------------------------------
EXPENSES
- -----------------------------------------------------------------------------------------------------------------------------
Investment advisory fees 8,168,685
Distribution fees 2,042,076
Custodian and transfer agent fees 1,321,600
Shareholder reports 470,740
Registration and filing fees 355,087
Interest expense 273,752
Professional fees 197,500
Trustees' fees and expenses 22,326
Other 9,150
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL EXPENSES 12,860,916
- -----------------------------------------------------------------------------------------------------------------------------
NET INVESTMENT LOSS (8,983,202)
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/(DEPRECIATION) ON INVESTMENTS
- -----------------------------------------------------------------------------------------------------------------------------
Net realized gain from investments 79,782,280
Net change in unrealized appreciation on investments 555,123
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON INVESTMENTS 80,337,403
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 71,354,201
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
13
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED NINE MONTHS ENDED
12/31/96 12/31/95
- -----------------------------------------------------------------------------------------------------------------------------
<S> <C> <C>
OPERATIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment loss $ (8,983,202) $ (8,122,358)
Net realized gain/(loss) from investments 79,782,280 (25,249,381)
Net change in unrealized appreciation on investments 555,123 139,393,491
- -----------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 71,354,201 106,021,752
- -----------------------------------------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------------------------------------
Net investment income - -
Realized gain on investments (43,728,491) -
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (43,728,491) -
- -----------------------------------------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------------------------------------
Net (decrease)/increase in net assets resulting from capital share transactions (524,619,492) 605,226,408
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL CAPITAL SHARE TRANSACTIONS (524,619,492) 605,226,408
- -----------------------------------------------------------------------------------------------------------------------------
TOTAL (DECREASE)/INCREASE IN NET ASSETS (496,993,782) 711,248,160
- -----------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------------------------------------
Beginning of period 1,140,151,167 428,903,007
End of period $ 643,157,385 $1,140,151,167
- -----------------------------------------------------------------------------------------------------------------------------
</TABLE>
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
14
<PAGE>
FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED NINE MONTHS YEAR ENDED YEAR ENDED PERIOD ENDED
THROUGHOUT THE PERIOD: 12/31/96 ENDED 12/31/95(3) 3/31/95 3/31/94 3/31/93(1)(3)
- ------------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 22.66 $ 18.25 $ 13.56 $ 11.94 $ 10.00
- ------------------------------------------------------------------------------------------------------------------------------------
Net investment (loss)/income (0.24) (0.16) (0.18) (0.04) 0.12
Net realized gain and net change in
unrealized appreciation on investments 3.47 4.57 5.07 1.99 1.88
- ------------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS
RESULTING FROM OPERATIONS 3.23 4.41 4.89 1.95 2.00
- ------------------------------------------------------------------------------------------------------------------------------------
Distributions from net investment income - - - (0.03) (0.06)
Distributions from realized gain on investments (1.73) - (0.20) (0.30) -
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 24.16 $ 22.66 $ 18.25 $ 13.56 $ 11.94
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 14.12% 24.16% 36.27% 16.32% 20.05%
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- ------------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period $643,157,385 $1,140,151,167 $428,903,007 $44,500,363 $17,833,350
Ratio of Expenses to Average Net Assets 1.51% 1.45% 1.68% 1.55%(2) 1.33%(2)
Ratio of Net Investment (Loss)/Income to
Average Net Assets (1.06)% (1.04)% (1.09)% (0.51)%(2) 1.26%(2)
Portfolio Turnover Rate 221% 104% 232% 250% 210%
Average Commission Rate Paid(4) $ 0.0574 - - - -
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) From April 21, 1992 (Commencement of Operations), to March 31, 1993.
(2) If the Fund had paid all of its expenses and had received no reimbursement
from the Adviser, the ratio of expenses to average net assets for the
period ended March 31, 1994, and March 31, 1993, would have been 2.35% and
2.71%, respectively, and the ratio of net investment loss to average net
assets would have been (1.31)% and (0.12)%, respectively.
(3) Ratios, except for total return and portfolio turnover rate, have been
annualized.
(4) A fund is required to disclose its average commission rate per share for
security trades on which a commission is charged. This amount may vary from
fund to fund and period to period depending on the mix of trades executed
in various markets where trading practices and commission rate structures
may differ. This rate generally does not reflect markups, markdowns or
spreads on shares traded on a principle basis, if any.
Per-share data for each of the periods has been determined by using the
average number of shares outstanding throughout each period. Distributions
reflect actual per-share amounts distributed for the periods.
THE ACCOMPANYING NOTES ARE AN INTEGRAL PART OF THESE FINANCIAL STATEMENTS.
15
<PAGE>
NOTES TO FINANCIAL STATEMENTS
The Robertson Stephens Value + Growth Fund (the "Fund") is a series of the
Robertson Stephens Investment Trust (the "Trust"), a Massachusetts business
trust organized on May 11, 1987. The Fund is registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), as a diversified, open-end
management investment company. The Fund became effective to offer shares to the
public on May 12, 1992. Prior to the public offering, shares were offered in a
private placement offering on April 21, 1992, at $10 per share, to sophisticated
investors under Section 4(2) of the Securities Act of 1933. The Trust offers
eleven series of shares -- The Robertson Stephens Emerging Growth Fund, The
Robertson Stephens Value + Growth Fund, The Contrarian Fund-TM-, The Robertson
Stephens Developing Countries Fund, The Robertson Stephens Growth & Income Fund,
The Robertson Stephens Partners Fund, The Information Age Fund-TM-, The
Robertson Stephens Global Natural Resources Fund, The Robertson Stephens Global
Low-Priced Stock Fund, The Robertson Stephens Diversified Growth Fund, and The
Robertson Stephens MicroCap Growth Fund. The assets for each series are
segregated and accounted for separately.
NOTE 1 SIGNIFICANT ACCOUNTING POLICIES:
The following policies are in conformity with generally accepted accounting
principles.
The preparation of financial statements in accordance with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the reported amounts and disclosures in the financial statements. Actual
results could differ from those estimates.
a. INVESTMENT VALUATIONS:
Marketable securities are valued at the last sale price on the principal
exchange or market on which they are traded; or, if there were no sales that
day, at the mean between the closing bid and asked prices. Short-term
investments that will mature in 60 days or less are stated at amortized cost,
which approximates market value. At December 31, 1996, 100% of the Fund's
portfolio was valued in this manner.
Securities for which market quotations are not readily available are valued at
their fair value as determined in accordance with the guidelines and procedures
adopted by the Fund's Board of Trustees. The guidelines and procedures use
fundamental valuation methods which include, but are not limited to, the
analysis of: the effect of any restrictions on the sale of the security, product
development and trends of the security's issuer, changes in the industry and
other competing companies, significant changes in the issuer's financial
position, and any other event which could have a significant impact on the value
of the security. At December 31, 1996, no security of the Fund was valued using
these guidelines and procedures. As its normal course of business, the Fund has
invested a significant portion of its assets in companies within a number of
industries in the financial and technology sectors. Accordingly, the performance
of the Fund may be subject to a greater risk of market fluctuation than that of
a fund invested in a wider spectrum of market or industrial sectors.
b. REPURCHASE AGREEMENTS:
Repurchase agreements are fully collateralized by U.S. government securities.
All collateral is held by the Fund's custodian and is monitored daily to ensure
that the collateral's market value equals at least 100% of the repurchase price
under the agreement. However, in the event of default or bankruptcy by the
counterparty to the agreement, realization and/or retention of the collateral
may be subject to legal proceedings. The Fund's policy is to limit repurchase
agreement transactions to those parties deemed by the Fund's Investment Adviser
to have satisfactory creditworthiness.
16
<PAGE>
c. FEDERAL INCOME TAXES:
The Fund complied with requirements of the Internal Revenue Code, qualifying as
a regulated investment company. Therefore, the Fund is not subject to income
tax, and no provision for such tax was made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date the securities are
purchased or sold (trade date). Realized gains and losses on securities
transactions are determined on the basis of specific identification.
e. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date. Interest income is accrued
and recorded daily.
f. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date.
g. CAPITAL ACCOUNTS:
Due to the timing of dividend distributions and the differences in accounting
for income and realized gains/(losses) for financial statement and federal
income tax purposes, the fiscal year in which amounts are distributed may differ
from the year in which the income and realized gains/(losses) were recorded by
the portfolio.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value. Transactions in capital shares for the year ended
December 31, 1996, and for the nine months ended December 31, 1995, were as
follows:
1/1/96 - 12/31/96 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 19,608,006 $ 449,519,909
Shares reinvested 1,720,903 42,523,699
- ------------------------------------------------------------------------------
21,328,909 492,043,608
- ------------------------------------------------------------------------------
Shares redeemed (45,024,783) (1,016,663,100)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net decrease (23,695,874) (524,619,492)
- ------------------------------------------------------------------------------
4/1/95 - 12/31/95 SHARES AMOUNT
- ------------------------------------------------------------------------------
Shares sold 71,113,394 $ 1,642,232,001
Shares reinvested - -
- ------------------------------------------------------------------------------
71,113,394 1,642,232,001
- ------------------------------------------------------------------------------
Shares redeemed (44,296,835) (1,037,005,593)
- ------------------------------------------------------------------------------
- ------------------------------------------------------------------------------
Net increase 26,816,559 $ 605,226,408
- ------------------------------------------------------------------------------
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually by the Board of Trustees, the Fund pays Robertson Stephens Investment
Management, L.P. ("RSIM"), an investment advisory fee calculated at an annual
rate of 1.00% of the average daily net assets of the Fund. (As of January 1,
1996, the rate was reduced to 1% of the average daily net assets of the Fund
from an annual rate of 1.25%.) For the year ended December 31, 1996, the Fund
incurred investment advisory fees of $8,168,685. For the year ended December 31,
1996, there was no expected reimbursement of advisory
17
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
fees and other expenses. RSIM may recoup waived or reimbursed operating expenses
over the succeeding two years, subject to expense limitations then applicable to
the Fund. For the previous two years ended December 31, 1996, the Fund had not
received any waivers or reimbursements of operating expenses from RSIM.
b. AFFILIATED PERSONS:
Certain officers and Trustees of the Fund are also members and/or officers of
Robertson, Stephens & Company Group, L.L.C. ("RS Group"), the managing member of
Robertson, Stephens & Company LLC ("RS & Co."), the Fund's Distributor and RSIM,
the Fund's Adviser. G. Randy Hecht, President, Chief Executive Officer, and a
Trustee of the Fund, is also a Director of RSIM, a Member of RS Group, and Chief
Operating Officer of RS & Co. Terry R. Otton, Chief Financial Officer of the
Fund, is a Member of RS Group and Chief Financial Officer of RS & Co. John P.
Rohal, a Trustee of the Fund, is a Member of RS Group and Director of Research
for RS & Co. Ronald E. Elijah, Portfolio Manager, is a Member of RS Group. Dana
K. Welch, Secretary of the Fund, is a Member of RS Group and General Counsel of
RS & Co. All affiliated and access persons, as defined in the 1940 Act, follow
strict guidelines and policies on personal trading as outlined in the Fund's
Code of Ethics.
c. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Fund who are affiliated persons receive no
compensation from the Fund. Trustees of the Fund who are not interested persons
of the Trust, as defined in the 1940 Act, collectively received compensation and
reimbursement of expenses of $22,326 for the year ended December 31, 1996.
d. DISTRIBUTION FEES:
The Fund has entered into an agreement with RS & Co. for distribution services
effective on January 1, 1996, and has adopted a Plan of Distribution pursuant to
Rule 12b-1 under the 1940 Act, which is approved annually by the Fund's Board of
Trustees. Under the Plan, RS & Co. is compensated for services in such capacity,
including its expenses in connection with the promotion and distribution of the
Fund's shares. The distribution fee is calculated at an annual rate of 0.25% of
the average daily net assets of the Fund. For the year ended December 31, 1996,
the Fund incurred distribution fees of $2,042,076.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to RS & Co. as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of RS & Co. to provide competitive prices and commission rates.
All investment transactions in which RS & Co. acts as a broker may only be
executed on an agency basis. Subject to certain constraints, the Fund may make
purchases of securities from offerings or underwritings in which RS & Co. has
been retained by the issuer. For the year ended December 31, 1996, the Fund paid
brokerage commissions of $371,005 to RS & Co., which represented 12% of total
commissions paid during the year.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1996, the cost of investments for federal income tax purposes
was $465,630,440. Accumulated net unrealized appreciation on investments was
$178,814,560, consisting of gross unrealized appreciation and depreciation of
$184,192,855 and ($5,378,295), respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1996, the cost of investments purchased and the
proceeds from investments sold (excluding options, securities sold short, and
short-term investments) were $1,815,217,080 and $2,379,931,308, respectively.
18
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
To the Board of Trustees and Shareholders of The Robertson Stephens Value +
Growth Fund
In our opinion, the accompanying statement of assets and liabilities, including
the schedule of investments, and the related statements of operations and of
changes in net assets and the financial highlights present fairly, in all
material respects, the financial position of The Robertson Stephens Value +
Growth Fund (the "Fund") at December 31, 1996, and the results of its operations
and changes in its net assets and the financial highlights for each of the
periods presented, in conformity with generally accepted accounting principles.
These financial statements and financial highlights (hereafter referred to as
"financial statements") are the responsibility of the Fund's management; our
responsibility is to express an opinion on these financial statements based on
our audits. We conducted our audits of these financial statements in accordance
with generally accepted auditing standards, which require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements, assessing the accounting principles used and significant estimates
made by management, and evaluating the overall financial statement presentation.
We believe that our audits, which included confirmation of securities at
December 31, 1996, by correspondence with the custodian and brokers, provide a
reasonable basis for the opinion expressed above.
/s/ Price Waterhouse LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1997
19