<PAGE>
ROBERTSON STEPHENS MUTUAL FUNDS
The Value + Growth Fund
Annual Report
December 31, 1997
[GRAPHIC]
VALUE + GROWTH
4
<PAGE>
January 30, 1998
FELLOW SHAREHOLDER:
First I want to thank you for being a shareholder in the Robertson Stephens
Funds. All of us here appreciate your support.
As you probably already know, 1997 was an outstanding year for most categories
of equity investing with the notable exception of stocks of Asian companies.
The year also brought very high market volatility especially in shares of
smaller companies, but investors who stayed the course were well rewarded.
Yet as I review the timing and level of redemptions out of our fund complex
and other fund complexes, I am acutely aware that many investors do not stay
the course, and instead sell during market declines worrying that the market
will go even lower. An important study done in 1997 by an independent
consulting group (DALBAR, Inc.) studying mutual fund investors from 1984-1996
concluded that the average investor in equity mutual funds had given up
between 1/3 to 2/3 of available returns by selling at the wrong times and
reinvesting after the market had significantly recovered. This slippage in
performance is very significant and obviously needs to be avoided.
Developing a financial plan and sticking to it are the centerpieces for
achieving expected returns.
We have put some free tools in place for your convenience to help an investor
stay the course or just stay up to date with fund activity. First, the
portfolio managers of each fund regularly update a recorded message. These
"hotline" messages are accessible for current investors through our toll free
number (1-800-766-3863) and our Web site (www.rsim.com) and are updated
especially during times of significant market volatility. Additionally, we also
conduct monthly conference calls with our portfolio managers and provide
detailed quarterly summaries on each of our equity mutual funds, all of which
can also be accessed on our Web site.
Over the past few years we have introduced several funds that have the objective
of global investing. In 1998 we plan to introduce a new fund - a broadly
diversified large-cap international fund that is designed to be a core holding.
This fund will seek to outperform the benchmark indexes through the application
of an investment discipline based on Economic Value Added (EVA). This
methodology focuses on studying the level of incremental returns on capital that
companies can earn with their free cash flow. Though we have successfully used
EVA analysis for years in some of our funds, this is a little used methodology
in the mutual fund industry. We believe this methodology sets us apart and that
our technological advances help to give our portfolio managers an edge in
picking winning stocks. We are quite enthusiastic about this future fund
offering.
At Robertson Stephens Funds we continually work on making our investment process
better to pursue the goal of outstanding risk adjusted rates of return. One of
the areas we focused on in 1997 and will continue to focus on in the future is
the use of technologies that help us become better investors. In that regard we
added several new exciting technology tools in 1997. As very significant
shareholders of our own funds we look forward to seeking excellent returns with
you in 1998 and beyond. We believe in the old adage of "Eating your own
cooking."
If you have any questions or suggestions please drop me a note or send me an
E-mail message.
Again, thank you for your support.
/s/ G. RANDY HECHT
G. RANDY HECHT
President
Robertson Stephens Funds
[email protected]
Information contained herein relating to the new international fund is subject
to completion or amendment. A registration statement relating to the fund's
securities has been filed with the Securities and Exchange Commission. The
fund's securities may not be sold nor may offers to buy be accepted prior to the
time the registration statement becomes effective. This letter shall not
constitute an offer to sell or the solicitation of an offer to buy nor shall
there be any sale of the fund's securities in any state in which such offer,
solicitation, or sale would be unlawful prior to registration or qualification
under the securities laws of any such state. A prospectus regarding the new
fund is available from BancAmerica Robertson Stephens; an investor should read
that prospectus carefully before investing.
<PAGE>
VALUE + GROWTH FUND
FUND HIGHLIGHTS
ACQUISITION
BankAmerica Corporation's acquisition of Robertson, Stephens & Company became
effective October 1, 1997. The investment management activity for both
organizations has been placed under the leadership of Randy Hecht, President of
Robertson Stephens Investment Management (RSIM) since 1989. We believe this is a
strong commitment to honor the unique culture which remains at the heart of
RSIM's success, and we look forward to the ability to expand our global
capabilities and resources as a result of this partnership.
FUND PHILOSOPHY
The Robertson Stephens Value + Growth Fund seeks capital appreciation by
investing primarily in companies with favorable relationships between
price/earnings ratios and growth rates, in sectors offering above-average growth
potential. We seek to identify specific business sectors poised to benefit from
major changes in the marketplace and societal trends. Within these sectors, we
conduct bottom-up research, looking for well-managed companies that have
low-multiple valuations relative to their peers and are poised to leverage
growth opportunities.
CONTENTS
Fund Highlights 1
Report to Shareholders 2
Fund Performance - Class A Shares 8
Portfolio Summary 9
Fund Performance - Class C Shares 10
Schedule of Investments 11
Statement of Assets and Liabilities 14
Statement of Operations 15
Statement of Changes in Net Assets 16
Financial Highlights - Class A Shares 17
Financial Highlights - Class C Shares 18
Notes to Financial Statements 19
Report of Independent Accountants 24
Administration 24
1
<PAGE>
[PHOTO]
FUND MANAGER
RONALD E. ELIJAH
Portfolio Manager
The Robertson Stephens
Value + Growth Fund
DEAR SHAREHOLDER:
The Robertson Stephens Value + Growth Fund (Class A) returned -14.05% for the
fourth quarter and 13.81% for the one-year period ended December 31, 1997,
compared to the S&P 500 Index returns of 2.90% and 33.34% for the same periods.
The Fund's Class C shares had a return of -15.28% in the fourth quarter and
- -2.50% since their inception on May 28, 1997.
As we entered the fourth quarter of 1997, we believed the market was positioned
to appreciate due to expected earnings gains, low interest rates, and modest
inflation. We also felt that the Fund's portfolio was well positioned with
companies whose earnings outlook seemed bright. While the overall market did
produce gains for investors, our Fund's various growth stocks corrected during
this quarter. We believe most of the correction was caused by fears of earnings
damage due to recent Southeast Asian currency disruptions, specifically in the
technology sector with its large international business exposure. As the fourth
quarter progressed, what initially seemed to be a single sector battering aimed
solely at the semiconductor industry began to move through other technology
areas and ultimately to the financial services, health care, and retailing
industries.
"WE BELIEVE OUR PRESENT ECONOMIC ENVIRONMENT OF MODEST GROWTH AND
RESTRAINED INFLATIONARY PRESSURES IS VERY FAVORABLE FOR EQUITY INVESTMENTS."
2
<PAGE>
THEMES
Searching for reasons to account for many of the stock price declines in the
quarter was frustrating since it became apparent that deteriorating fundamentals
were not the justification for a number of the stock price declines. However, a
great percentage of the Fund's investments were substantially up in the first
nine months of the year. We believe that as the fourth quarter progressed and
the growth stock correction gained momentum, many institutional investors sold
stocks to lock in profits for the year.
These corrections provide investors with an excellent opportunity to invest in
great growth companies at significant discounts to their 52-week stock price
highs and at price earnings multiples below their long-term growth rate
potentials. We believe that with long-term fundamentals remaining bright and
stock prices down significantly from recent highs, many technology stocks and
other growth stocks appear to be excellent investment values for 1998.
As we enter 1998, we are pleased with the Fund's major investment themes, which
are concentrated primarily in banking, financial services, health care,
retailing and technology.
BANKING
We believe the U.S. banking system is positioned to do well in today's business
climate. While there have been some recent concerns over consumer loans and
Southeast Asian exposure, in this period of robust earnings growth, problems can
be solved without damaging the industry's long-term earnings growth prospects.
Operating earnings remain strong, and today's banking sector is generating
significant surplus capital that it is pouring into stock buyback programs,
generating incremental earnings gains for investors. The Fund's banking
investments are generating greater than 10% year-over-year earnings per share
growth, roughly two-thirds from operations and one-third from stock buybacks.
Our banking investments include CITICORP, CHASE MANHATTAN CORPORATION, and H.F.
AHMANSON & COMPANY.
FINANCIAL SERVICES
As the baby boom generation ages, financial services should continue to be a
good investment area for the next decade. This age group represents peak earning
years and peak years of household discretionary income. We believe that much of
this money will be set aside for retirement needs as evidenced by the sig-
3
<PAGE>
nificant capital inflows into the mutual fund industry over the last few years.
It is for this reason that we feel the investment management industry is ideally
positioned for long-term growth. The Fund's investments here include MERRILL
LYNCH AND COMPANY, INC., THE CHARLES SCHWAB CORPORATION, SUNAMERICA, INC.,
FRANKLIN RESOURCES, INC. AND TRAVELERS GROUP, INC.
HEALTH CARE
We believe the U.S. health care sector is a long-term growth opportunity.
Demand for health care services comes from an aging U.S. population and the
modest population growth expected in the United States during the next decade.
We believe that recent price pullback in general health care industry equities
has created excellent investment values relative to their long-term growth
prospects. In particular, the recent decline has created excellent investment
potential in managed care companies which have played a significant role in
bringing down health care inflation from over 10% just a few years ago to under
3%. Controlling and reducing costs in the Medicare system is a $160 billion
opportunity still in front of the industry. We have investments in UNITED
HEALTHCARE CORPORATION, CONCENTRA MANAGED CARE, INC., and HEALTHCARE COMPARE
CORPORATION.
In addition to managed care, the Fund has significant holdings in the
pharmaceutical industry. We believe the two most compelling reasons for having
significant investments in the drug industry are the aging of the U.S.
population, and the accelerated drug approval process by the Federal Drug
Administration (FDA). With the aging of the U.S. population, drug consumption is
growing, and in 1996 the FDA approved 390 drug applications versus 229 in 1990.
High unit demand is expected to continue well into the next decade as the
population ages; therefore, we believe the industry's outlook continues to look
bright. We have investments in drug manufacturers PFIZER INC., ELI LILLY &
COMPANY and BRISTOL MEYERS SQUIBB COMPANY, as well as drug distributors MCKESSON
CORPORATION and CARDINAL HEALTH, INC.
[PICTURE]
INVESTMENT MANAGEMENT
G. RANDY HECHT
President
Robertson Stephens
Funds
[email protected]
INVESTMENT TEAM
RESEARCH
Rod Berry
Susan Richardson
Rob Zidar
TRADING
Bill Reinsberg
SENIOR TRADER
Catherine O'Neill
ADMINISTRATION
Keira Koziol
Annette Tate
4
<PAGE>
"...WE REMAIN BULLISH ABOUT THE LONG-TERM OUTLOOK FOR TECHNOLOGY COMPANIES."
RETAILING
Various retailing stocks have been added to the portfolio over the last year
including apparel retailers, food stores, drug stores and specialty retailing.
Behind these investments is the demographic push from "baby boomers" moving into
their peak earning and spending years of 45 to 55. Right now we own apparel
retailers DAYTON HUDSON CORPORATION, NORDSTROM INC. and GAP, INC. Further, we
believe many large retail sectors now have large chains that control significant
regional sectors, and are no longer looking for increased market share gains.
Instead, they are focused on improving efficiencies and increasing returns on
equity. These retailers continue to add new storefronts, but not at the
sacrifice of profit margins. These chains are positioned to do well as the
overall U.S. economy remains robust and to improve profit margins from better
asset management. This thesis includes several large and different retail
sectors. We have investments with food chains SAFEWAY, INC. and COSTCO
COMPANIES, INC., with drug chains CVS CORPORATION stores and WALGREEN, CO., and
with specialty retailing companies such as STARBUCKS CORPORATION, GENERAL
NUTRITION COMPANIES, INC., and COMPUSA, INC.
TECHNOLOGY
The NASDAQ Composite Index, a growth stock index in which technology stocks are
largely represented, suffered two rare corrections over 15% last year. Since the
1987 stock market crash, we have not endured two NASDAQ corrections over 10%
until this year. Unfortunately, although a number of technology companies
fundamentals remained robust during this period, the fundamentals were ignored
and a forceful correction set in which did not abate until year end. Regardless,
we remain bullish about the long-term outlook for technology companies. Taking
advantage of this recent correction in technology stocks, we have intensified
our efforts to find great values in this sector and adjust the Fund's portfolio
accordingly. Currently the Fund has a significant commitment to technology --
we have approximately 30% of our assets invested in the sector including data
communications, software, computers, and semiconductor stocks.
5
<PAGE>
We believe during the next three to five years, U.S. technology suppliers will
continue to experience demand from domestic companies that push for greater
efficiencies; and strong demand from foreign companies that are retooling and
restructuring to become more productive global competitors. Recently, there
have been some signs that European companies are beginning to purchase U.S.
technology products to improve productivity, something that U.S. companies did
several years ago. Even Southeast Asia, with its currency turmoil, remains a
great prospective customer. In the near term, there will be a disruption in
technology orders by nations hardest hit by currency devaluations; however, we
believe this disruption is temporary. Our technology holdings include global
companies such as COMPAQ COMPUTER CORPORATION, DELL COMPUTER CORPORATION, EMC
CORPORATION, and CADENCE DESIGN SYSTEMS, INC.
NEW AREA
A new addition to the Fund is the transportation sector. Our research has led us
to believe that the U.S. manufacturing sector is improving its productivity not
only by unitizing technology, but also through an increased focus on
transportation logistics. U.S. manufacturers have been steadily improving
inventory management for the last several years, and we believe much of this is
due to the tracking and timely movement of inventory and finished goods.
Transportation companies, specifically the trucking industry, are doing this
with better logistical management. We can also see that as commerce increases
over the Internet, the movement of products from direct manufacturer to
consumers, without involvement of retailers, is going to grow, and the
transportation industry will play a major role. As our research progresses, our
investments within this area should expand. The Fund's initial investments
include FEDERAL EXPRESS CORPORATION, CNF TRANSPORTATION, INC., YELLOW
CORPORATION, USFREIGHTWAYS CORPORATION, SWIFT TRANSPORTATION COMPANY, INC. and
WERNER ENTERPRISES, INC.
OUTLOOK
Recently, market volatility has increased, and with it has investor temptation
to "time" market swings. In the past, we have encouraged investors to maintain
a long-term focus. The market tends to advance in surges, and too often
investors who attempt to time it are either under-invested when the market
surges or fail to hit the market at the right moment. In these volatile
periods, we seek investment opportunities that meet our criteria for long-term
growth potential. For example, we have used this recent correction to reinvest
some of the Fund's assets in attractive growth companies that our research
indicates are selling at significant discounts and still possess outstanding
long-term growth prospects.
"IN THESE VOLATILE PERIODS, WE SEEK INVESTMENT OPPORTUNITIES
THAT MEET OUR CRITERIA FOR LONG-TERM GROWTH POTENTIAL.."
6
<PAGE>
Trying to determine the stock market's direction is difficult and always open
for further evaluation. However, the market's fundamentals can lead investors
to some conclusions as to what the market's long-term outlook might be. We
believe the market's recent correction in October was simply that -- a
correction. Seldom has a 5% to 10% market correction led to a "bear market" and
we do not believe this one will. However, even though the S&P 500 recovered
from its October low, the NASDAQ Composite Index lagged and finished its year
well below its October high. In our opinion, this most recent correction was
very similar to that experienced in the first half of 1994, which did not lead
into a bear market. We believe the conditions for a bear market are not in
place today. Background conditions remain positive for stocks as inflation
continues to be restrained, interest rates have declined recently, and, based on
our research, we do not feel the market is excessively overvalued when
considering 1997 and 1998 earnings potentials.
In conclusion, we believe the U.S. stock market will be favorable to investors
in 1998. We believe our present economic environment of modest growth and
restrained inflationary pressures is very favorable for equity investments.
This is not to say that the market does not have challenges in 1998,
specifically the Asian currency crisis and its possible negative impact on U.S.
corporate earnings. However, we believe that early in 1998 investors will
recognize that any fallout from Southeast Asia will be minimal, and as
uncertainty dissipates, U.S. equities should move higher. We remain selective
and focused on investments that we believe are poised for growth, and our
current industry selections of banking, financial services, health care,
technology, and now transportation, seem well positioned for 1998.
We are committed to our long-term investment goal of capital appreciation
through investing in reasonably priced growth companies.
As always, thank you for your ongoing support.
Sincerely,
/s/ RONALD E. ELIJAH
RONALD E. ELIJAH
Portfolio Manager
January 16, 1998
TO HEAR MY ONGOING THOUGHTS ON THE FUND, CALL OUR
PORTFOLIO MANAGER HOTLINE AT 1-800-766-3863.
7
<PAGE>
FUND PERFORMANCE - CLASS A SHARES
Results of a hypothetical $10,000 investment in The Robertson Stephens Value +
Growth Fund and the S&P 500 Index(1)
IF INVESTED ON MAY 12, 1992(2)
[GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
VALUE + GROWTH S&P 500
FOR THE PERIODS ENDED 12/31/97 FUND INDEX(1)
- --------------------------------------------------------------------------------
<S> <C> <C>
Since inception (5/12/92)(2) 205.23% 168.31%
- --------------------------------------------------------------------------------
<CAPTION>
AVERAGE ANNUAL TOTAL RETURNS
VALUE + GROWTH S&P 500
FOR THE PERIODS ENDED 12/31/97 FUND INDEX(1)
- --------------------------------------------------------------------------------
One year 13.81% 33.34%
- --------------------------------------------------------------------------------
Three years 22.83% 31.14%
- --------------------------------------------------------------------------------
Five years 22.64% 20.25%
- --------------------------------------------------------------------------------
Since inception (5/12/92)(2) 21.87% 19.12%
- --------------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's Composite Index of 500 Stocks ("S&P 500 Index") is a
widely recognized, unmanaged index of market activity based on the
aggregate performance of a selected portfolio of publicly traded stocks. It
is widely recognized as representative of the stock market in general.
Investment results assume the reinvestment of dividends paid on the stocks
constituting the index. You cannot invest in an index itself.
(2) Date that the Fund's Class A shares were first issued to the public.
Investors should realize that all performance data presented is based upon
past performance during limited periods of time, and past performance is no
guarantee of future performance. Investors should also realize that both
investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. The
correlation of performance between an unmanaged index and this Fund is not
usually exact.
Investing in smaller companies may involve risks such as less publicly
available information than larger companies, volatility, and illiquidity.
Short selling is the sale of a borrowed security and may involve the risk
that the price of the security may increase between the date it is sold and
the date the fund must replace the borrowed security. Options and futures
involve the risk that their value may not be perfectly correlated to that
of the underlying index or security.
8
<PAGE>
PORTFOLIO SUMMARY
AS OF DECEMBER 31, 1997
[CHART]
Cash & Cash Equivalents 0.5%
Network Systems 1.9%
Commercial Services 2.3%
Telecom Equipment/Services 2.6%
Computer Software 4.2%
Transportation 4.3%
Banks 4.7%
Health/Medical 8.2%
Pharmaceuticals 9.7%
Computer Hardware & Components 9.9%
Other & Other Assets, Net 1.2%
Consumer & Specialty Retail 22.0%
Financial Services 17.7%
Semiconductors 10.8%
TOP TEN HOLDINGS
1.
COMPUSA, INC. (3.62%)
Retails and resells personal computers, and related products and services.
2.
COMPAQ COMPUTER CORPORATION (3.37%)
Designs, develops, manufactures, and markets personal computers for professional
users and consumers.
3.
DELL COMPUTER CORPORATION (3.34%)
Produces and sells personal computers. Also sells third-party software and
peripherals.
4.
HBO & COMPANY (3.16%)
Sells information systems and technology to health care institutions.
5.
MERRILL LYNCH AND COMPANY, INC. (3.09%)
Provides a diverse range of financial services including personal financial
planning, trading and brokering, banking and lending, insurance and others.
6.
MCKESSON CORPORATION (3.08%)
Provider of health care products and services.
7.
H.F. AHMANSON & COMPANY (2.85%)
Conducts savings and loan activities and related financial services.
8.
APPLIED MATERIALS, INC. (2.76%)
Develops, manufactures, sells, and services semiconductor wafer fabrication
equipment worldwide.
9.
CITICORP (2.51%)
Provides a broad range of financial services including commercial, mortgage and
investment banking, trust services, consumer finance and credit card services.
10.
TERADYNE, INC. (2.44%)
Manufactures electronic systems, software and electronic connection systems.
9
<PAGE>
FUND PERFORMANCE - CLASS C SHARES
Results of a hypothetical $10,000 investment in the Robertson Stephens
Value + Growth Fund and the S&P 500 Index(1)
IF INVESTED ON MAY 28, 1997(2)
[GRAPH]
<TABLE>
<CAPTION>
CUMULATIVE TOTAL RETURNS
VALUE + GROWTH VALUE + GROWTH S&P 500
FOR THE PERIOD ENDED 12/31/97 FUND FUND(3) INDEX(1)
- --------------------------------------------------------------------------------
<S> <C> <C> <C>
Since inception (5/28/97)(2) (1.52)% (2.50)% 15.75%
- --------------------------------------------------------------------------------
</TABLE>
(1) The Standard & Poor's Composite Index of 500 Stocks ("S&P 500 Index") is a
widely recognized, unmanaged index of market activity based on the
aggregate performance of a selected portfolio of publicly traded stocks. It
is widely recognized as representative of the stock market in general.
Investment results assume the reinvestment of dividends paid on the stocks
constituting the index. You cannot invest in an index itself.
(2) Date that the Fund's Class C shares were first issued to the public.
(3) Reflects the 1% contingent deferred sales charge imposed on redemptions
within the first year of purchasing shares.
Investors should realize that all performance data presented is based upon
past performance during limited periods of time, and past performance is no
guarantee of future performance. Investors should also realize that both
investment return and principal value will fluctuate so that shares, when
redeemed, may be worth more or less than their original cost. The
correlation of performance between an unmanaged index and this Fund is not
usually exact.
Investing in smaller companies may involve risks such as less publicly
available information than larger companies, volatility, and illiquidity.
Short selling is the sale of a borrowed security and may involve the risk
that the price of the security may increase between the date it is sold and
the date the fund must replace the borrowed security. Options and futures
involve the risk that their value may not be perfectly correlated to that
of the underlying index or security.
10
<PAGE>
SCHEDULE OF INVESTMENTS
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
COMMON STOCKS
- --------------------------------------------------------------------------------
BANKS - 4.7%
Chase Manhattan Corporation 150,000 $ 16,425,000
Citicorp 150,000 18,965,625
- --------------------------------------------------------------------------------
35,390,625
- --------------------------------------------------------------------------------
COMMERCIAL SERVICES - 2.3%
Inacom Corporation(1) 481,600 13,514,900
Robert Half International, Inc.(1) 100,300 4,012,000
- --------------------------------------------------------------------------------
17,526,900
- --------------------------------------------------------------------------------
COMPUTER HARDWARE & COMPONENTS - 9.9%
Adaptec, Inc.(1) 400,000 14,850,000
Compaq Computer Corporation 450,082 25,401,531
Dell Computer Corporation(1) 300,000 25,200,000
EMC Corporation(1) 336,000 9,219,000
- --------------------------------------------------------------------------------
74,670,531
- --------------------------------------------------------------------------------
COMPUTER SOFTWARE - 4.2%
BMC Software, Inc.(1) 245,000 16,078,125
Cadence Design Systems, Inc.(1) 630,000 15,435,000
- --------------------------------------------------------------------------------
31,513,125
- --------------------------------------------------------------------------------
CONSUMER PRODUCTS - 1.6%
Sony Corporation, ADR(2) 136,700 12,405,525
- --------------------------------------------------------------------------------
12,405,525
- --------------------------------------------------------------------------------
CONSUMER & SPECIALTY RETAIL - 20.4%
CompUSA, Inc.(1) 880,000 27,280,000
Costco Companies, Inc.(1) 300,000 13,387,500
CVS Corporation 260,600 16,694,687
Dayton Hudson Corporation 235,000 15,862,500
Gap, Inc. 375,000 13,289,063
General Nutrition Companies, Inc.(1) 201,200 6,840,800
Nordstrom, Inc. 283,000 17,086,125
Safeway, Inc.(1) 201,300 12,732,225
Staples, Inc.(1) 300,000 8,325,000
Starbucks Corporation(1) 300,000 11,512,500
Walgreen Co. 350,000 10,981,250
- --------------------------------------------------------------------------------
153,991,650
- --------------------------------------------------------------------------------
DISTRIBUTION - 1.8%
Tech Data Corporation(1) 347,400 13,505,175
- --------------------------------------------------------------------------------
13,505,175
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - 17.7%
Franklin Resources, Inc. 134,000 11,649,625
H.F. Ahmanson & Company 321,400 21,513,713
Household International, Inc. 130,000 16,583,125
Merrill Lynch and Company, Inc. 319,538 23,306,303
Northern Trust Corporation 172,000 11,997,000
</TABLE>
The acccompanying notes are an integral part of these financial statements.
11
<PAGE>
SCHEDULE OF INVESTMENTS (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
FINANCIAL SERVICES - CONTINUED
SunAmerica, Inc. 300,000 $ 12,825,000
The Charles Schwab Corporation 300,000 12,581,250
The Equitable Companies, Inc. 150,500 7,487,375
Travelers Group, Inc. 288,750 15,556,406
- --------------------------------------------------------------------------------
133,499,797
- --------------------------------------------------------------------------------
HEALTH MAINTENANCE ORGANIZATIONS - 8.2%
Concentra Managed Care, Inc.(1) 276,500 9,331,875
HBO & Company 496,000 23,808,000
HealthCare COMPARE Corporation(1) 290,000 14,826,250
United Healthcare Corporation 285,000 14,160,938
- --------------------------------------------------------------------------------
62,127,063
- --------------------------------------------------------------------------------
NETWORK SYSTEMS - 1.9%
Bay Networks, Inc.(1) 550,000 14,059,375
- --------------------------------------------------------------------------------
14,059,375
- --------------------------------------------------------------------------------
PHARMACEUTICALS - 9.7%
Bristol-Myers Squibb Company 100,000 9,462,500
Cardinal Health, Inc. 200,000 15,025,000
Eli Lilly & Company 157,200 10,945,050
McKesson Corporation 215,000 23,260,312
Pfizer, Inc. 200,000 14,912,500
- --------------------------------------------------------------------------------
73,605,362
- --------------------------------------------------------------------------------
SEMICONDUCTORS/EQUIPMENT - 10.8%
Applied Materials, Inc.(1) 690,000 20,786,250
KLA-Tencor Corporation(1) 400,000 15,450,000
National Semiconductor Corporation(1) 250,000 6,484,375
Novellus Systems, Inc.(1) 400,000 12,925,000
Teradyne, Inc.(1) 575,000 18,400,000
VLSI Technology, Inc.(1) 300,900 7,108,762
- --------------------------------------------------------------------------------
81,154,387
- --------------------------------------------------------------------------------
TELECOMMUNICATIONS EQUIPMENT - 2.6%
Lucent Technologies, Inc. 150,000 11,981,250
Northern Telecom, Ltd. 85,000 7,565,000
- --------------------------------------------------------------------------------
19,546,250
- --------------------------------------------------------------------------------
TRANSPORTATION - 4.3%
CNF Transportation, Inc. 325,000 12,471,875
Federal Express Corporation(1) 120,000 7,327,500
Swift Transportation Company, Inc.(1) 76,400 2,473,450
USFreightways Corporation 165,900 5,391,750
Werner Enterprises, Inc. 100,000 2,050,000
Yellow Corporation(1) 100,000 2,512,500
- --------------------------------------------------------------------------------
32,227,075
- --------------------------------------------------------------------------------
</TABLE>
The acccompanying notes are an integral part of these financial statements.
12
<PAGE>
<TABLE>
<CAPTION>
DECEMBER 31, 1997 SHARES VALUE
- --------------------------------------------------------------------------------
<S> <C> <C>
- --------------------------------------------------------------------------------
TOTAL INVESTMENTS - 100.1% (Cost $640,705,146) $755,222,840
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
CASH AND CASH EQUIVALENTS
- --------------------------------------------------------------------------------
Cash 6
Repurchase Agreement
State Street Bank and Trust Company, 5.30%,
dated 12/31/97, due 1/2/98, maturity value
$3,591,057 (Collateralized by $3,370,000
par value U.S. Treasury Notes, 7.875%,
due 11/15/07) 3,590,000
- --------------------------------------------------------------------------------
TOTAL CASH AND CASH EQUIVALENTS - 0.5% 3,590,006
- --------------------------------------------------------------------------------
OTHER LIABILITIES, NET - (0.6)% (4,572,764)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL NET ASSETS - 100% $754,240,082
- --------------------------------------------------------------------------------
</TABLE>
(1) Non-income producing security.
(2) ADR - American Depository Receipt.
The acccompanying notes are an integral part of these financial statements.
13
<PAGE>
STATEMENT OF ASSETS AND LIABILITIES
<TABLE>
<CAPTION>
DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<S> <C>
ASSETS
- --------------------------------------------------------------------------------
Investments, at value (Cost: $640,705,146) $ 755,222,840
Cash and cash equivalents 3,590,006
Receivable for investments sold 15,948,314
Receivable for fund shares subscribed 1,404,769
Dividends/interest receivable 283,511
- --------------------------------------------------------------------------------
TOTAL ASSETS 776,449,440
- --------------------------------------------------------------------------------
LIABILITIES
- --------------------------------------------------------------------------------
Payable for investments purchased 16,540,716
Payable for fund shares redeemed 4,726,513
Payable to adviser 654,334
Accrued expenses 287,795
- --------------------------------------------------------------------------------
TOTAL LIABILITIES 22,209,358
- --------------------------------------------------------------------------------
TOTAL NET ASSETS $ 754,240,082
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NET ASSETS CONSIST OF:
- --------------------------------------------------------------------------------
Paid-in capital 610,040,517
Accumulated net realized gain from investments 29,681,871
Net unrealized appreciation on investments 114,517,694
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
TOTAL NET ASSETS $ 754,240,082
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PRICING OF SHARES:
Net Asset Value, offering, and redemption price
per share - Class A Shares $ 23.18
(Net assets of $752,994,431 applicable to
32,482,774 shares of beneficial interest
outstanding with no par value)
- --------------------------------------------------------------------------------
Net Asset Value, offering, and redemption
price per share - Class C Shares $ 22.98
(Net assets of $1,245,651 applicable
to 54,196 shares of beneficial interest
outstanding with no par value)(1)
- --------------------------------------------------------------------------------
</TABLE>
(1) Redemption price per share is equal to the net asset value less any
applicable contingent deferred sales charge.
The acccompanying notes are an integral part of these financial statements.
14
<PAGE>
ROBERTSON STEPHENS MUTUAL FUNDS
STATEMENT OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
- --------------------------------------------------------------------------------
<S> <C>
INVESTMENT INCOME
- --------------------------------------------------------------------------------
Dividends (net of foreign tax withheld of $15,038) $ 3,386,721
Interest 226,918
- --------------------------------------------------------------------------------
TOTAL INVESTMENT INCOME 3,613,639
- --------------------------------------------------------------------------------
EXPENSES
- --------------------------------------------------------------------------------
Investment advisory fees 7,509,306
Distribution fees - Class A Shares 1,876,469
Transfer agent fees 622,904
Shareholder reports 277,223
Custodian fees 158,341
Interest expense 135,151
Professional fees 94,096
Registration and filing fees 93,660
Trustees' fees and expenses 22,265
Insurance 5,241
Distribution fees - Class C Shares 2,570
Shareholder Servicing fees - Class C Shares 857
- --------------------------------------------------------------------------------
TOTAL EXPENSES 10,798,083
- --------------------------------------------------------------------------------
NET INVESTMENT LOSS $ (7,184,444)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
REALIZED GAIN/(LOSS) AND UNREALIZED APPRECIATION/
(DEPRECIATION) ON INVESTMENTS
- --------------------------------------------------------------------------------
Net realized gain from investments 146,756,187
Net change in unrealized appreciation on investments (66,096,145)
- --------------------------------------------------------------------------------
TOTAL NET REALIZED GAIN AND UNREALIZED APPRECIATION ON
INVESTMENTS 80,660,042
- --------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 73,475,598
- --------------------------------------------------------------------------------
</TABLE>
15
The accompanying notes are an integral part of these financial statements.
<PAGE>
STATEMENT OF CHANGES IN NET ASSETS
<TABLE>
<CAPTION>
FOR THE FOR THE
YEAR ENDED YEAR ENDED
DECEMBER 31, 1997 DECEMBER 31, 1996
- -----------------------------------------------------------------------------------------------
OPERATIONS
- -----------------------------------------------------------------------------------------------
<S> <C> <C>
Net investment loss $ (7,184,444) $ (8,983,202)
Net realized gain from investments 146,756,187 79,782,280
Net change in unrealized appreciation on investments (66,096,145) 555,123
- -----------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 73,475,598 71,354,201
- -----------------------------------------------------------------------------------------------
DISTRIBUTIONS TO SHAREHOLDERS
- -----------------------------------------------------------------------------------------------
Net investment income - Class A Shares -- --
Net investment income - Class C Shares(1) -- --
Realized gain on investments - Class A Shares (126,111,661) (43,728,491)
Realized gain on investments - Class C Shares(1) (239,736) --
- -----------------------------------------------------------------------------------------------
TOTAL DISTRIBUTIONS (126,351,397) (43,728,491)
- -----------------------------------------------------------------------------------------------
CAPITAL SHARE TRANSACTIONS
- -----------------------------------------------------------------------------------------------
Net increase/(decrease) in net assets
resulting from capital share transactions 163,958,496 (524,619,492)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
TOTAL INCREASE/(DECREASE) IN NET ASSETS 111,082,697 (496,993,782)
- -----------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------
NET ASSETS
- -----------------------------------------------------------------------------------------------
Beginning of period 643,157,385 1,140,151,167
End of period $ 754,240,082 $ 643,157,385
- -----------------------------------------------------------------------------------------------
</TABLE>
(1) Class C shares were first issued on May 28, 1997.
The accompanying notes are an integral part of these financial statements.
16
<PAGE>
FINANCIAL HIGHLIGHTS - CLASS A SHARES
<TABLE>
<CAPTION>
FOR THE FOR THE FOR THE FOR THE FOR THE FOR THE
FOR A SHARE OUTSTANDING YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED YEAR ENDED PERIOD ENDED
THROUGHOUT EACH PERIOD: 12/31/97 12/31/96 12/31/95(3) 3/31/95 3/31/94 3/31/93(1)(3)
- -----------------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 24.16 $ 22.66 $ 18.25 $ 13.56 $ 11.94 $ 10.00
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
Net investment (loss)/income (0.26) (0.24) (0.16) (0.18) (0.04) 0.12
Net realized gain and net change in unrealized
appreciation on investments 3.71 3.47 4.57 5.07 1.99 1.88
- -----------------------------------------------------------------------------------------------------------------------------------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS 3.45 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 (4.43) (1.73) - (0.20) (0.30) -
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 23.18 $ 24.16 $ 22.66 $ 18.25 $ 13.56 $ 11.94
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
TOTAL RETURN 13.81% 14.12% 24.16% 36.27% 16.32% 20.05%
- -----------------------------------------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- -----------------------------------------------------------------------------------------------------------------------------------
Net Assets, end of period (000s) $ 752,994 $643,157 $1,140,151 $428,903 $ 44,500 $17,833
Ratio of Expenses to Average Net Assets 1.44% 1.51% 1.45% 1.68% 1.55%(2) 1.33%(2)
Ratio of Net Investment (Loss)/Income to
Average Net Assets (0.96)% (1.06)% (1.04)% (1.09)% (0.51)%(2) 1.26%(2)
Portfolio Turnover Rate 228% 221% 104% 232% 250% 210%
Average Commission Rate Paid(4) $ 0.0573 $ 0.0574 - - - -
- -----------------------------------------------------------------------------------------------------------------------------------
</TABLE>
(1) Class A Shares were first issued on April 12, 1992.
(2) If the fund had paid all of its expenses and had received no reimbursement
from the adviser for the year ended March 31, 1994, and for the period
ended March 31, 1993, total return would have been 15.88% and 18.64%,
respectively, the ratio of expenses to average net assets 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 principal basis, if any.
Per-share data with respect to Class A shares for each of the periods has
been determined by using the average number of class a shares outstanding
throughout each period. Distributions reflect actual per-share amounts
distributed for the period.
The accompanying notes are an integral part of these financial statements.
17
<PAGE>
FINANCIAL HIGHLIGHTS - CLASS C SHARES
<TABLE>
<CAPTION>
FOR THE
FOR A SHARE OUTSTANDING PERIOD ENDED
THROUGHOUT THE PERIOD: 12/31/97(1)
- --------------------------------------------------------------------------------------------------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD $ 27.71
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
Net investment loss (0.24)
Net realized gain and net change in unrealized appreciation on investments(2) (0.06)
- --------------------------------------------------------------------------------------------------
NET DECREASE IN NET ASSETS RESULTING FROM OPERATIONS (0.30)
- --------------------------------------------------------------------------------------------------
Distributions from net investment income --
Distributions from realized gain on investments (4.43)
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
NET ASSET VALUE, END OF PERIOD $ 22.98
- --------------------------------------------------------------------------------------------------
TOTAL RETURN (1.52)%
- --------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------
RATIOS/SUPPLEMENTAL DATA
- --------------------------------------------------------------------------------------------------
Net Assets, end of period (000s) $ 1,246
Ratio of Expenses to Average Net Assets 2.19%
Ratio of Net Investment Loss to Average Net Assets (1.69)%
Portfolio Turnover Rate 228%
Average Commission Rate Paid(3) $ 0.0573
- --------------------------------------------------------------------------------------------------
</TABLE>
(1) Class C shares were first issued on May 28, 1997.
(2) Amounts shown may not correspond to amounts shown on the Statement of
Operations due to the timing of realized and unrealized gain/(loss).
(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 principal basis, if any.
Ratios, except for total return and portfolio turnover rate, have been
annualized. Total return do not include the 1% contingent deferred sales
charge.
Per-share data with respect to Class C shares has been determined by using
the average number of Class C 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.
18
<PAGE>
ROBERTSON STEPHENS MUTUAL FUNDS
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 twelve 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, The Robertson Stephens MicroCap Growth Fund
and The Robertson Stephens Global Value Fund. The assets for each series are
segregated and accounted for separately.
The Trustees have authorized the issuance of two classes of shares of beneficial
interest of the Fund, designated as Class A and C, respectively. The shares of
each class represent an interest in the same portfolio of investments of the
Fund. Expenses of the Fund are borne pro-rata by the holders of each class of
shares, except that each class may bear expenses unique to that class
(including, but not limited to, distribution expenses applicable to such class).
Shares of each class would receive their pro-rata share of the net assets of the
Fund, if the Fund was liquidated. In addition, the Board of Trustees declares
separate distributions on each class of shares. Each class votes as a class only
with respect to its own distribution plan or other matters for which a class
vote is required by law or determined by the Board of Trustees. Class C shares
were first issued by the Fund on May 28, 1997. Class C shares are subject to a
1% contingent deferred sales charge if those shares are redeemed within one year
of purchase.
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, 1997, 100% 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
fundamental valuation methods which include, but are not limited to, the
analysis of: the effect of any restrictions on the sale of
19
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
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 that could have a significant
impact on the value of the security. At December 31, 1997, 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, health
care consumer, 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, 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 intends to comply with requirements of the Internal Revenue Code,
qualifying as a regulated investment company. Therefore, the Fund does not
expect to be subject to income tax, and no provision for such tax will be made.
d. SECURITIES TRANSACTIONS:
Securities transactions are accounted for on the date securities are purchased
or sold (trade date). Realized gains or losses on securities transactions are
determined on the basis of specific identification.
e. INVESTMENT INCOME:
Dividend income is recorded on the ex-dividend date, except certain cash
dividends from foreign securities which are recorded as soon as the Fund is
informed of the ex-dividend date. Interest income, which includes accretion of
original issue discount, is accrued and recorded daily.
f. EXPENSES:
Most expenses of the Trust can be directly attributed to a specific fund.
Expenses which cannot de directly attributed to a specific fund are apportioned
between the funds in the Trust.
g. DISTRIBUTIONS TO SHAREHOLDERS:
Dividends to shareholders are recorded on the ex-dividend date. Income and
capital gain distributions are determined in accordance with income tax
regulations which may differ from generally accepted accounting principles.
Permanent book and tax basis differences relating to shareholder distributions
will result in reclassifications to paid in capital. Undistributed net
investment income and accumulated undistributed net realized gain/(loss) on
investments and foreign currency transactions may include temporary book and tax
differences which will reverse in a subsequent period. During any particular
year net realized gains from investment transactions, in excess of available
capital loss carryforwards, would be taxable to the Fund if not distributed and,
therefore, will be distributed to shareholders annually. Any taxable income or
gain remaining at fiscal year end is distributed in the following year.
20
<PAGE>
h. CLASS ALLOCATIONS:
Income, common expenses, and realized and unrealized gains/(losses) are
determined at the Fund level and allocated daily to each class of shares based
on the appropriate net assets of the respective classes. Transfer agent
expenses, distribution/shareholder service fees, and any other class specific
expenses, if any, are calculated daily at the class level based on the
appropriate net assets of each class and the specific expense rate applicable to
each class.
i. 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.
j. TEMPORARY BORROWINGS:
The Fund and several affiliated funds share in a $15 million, uncommitted
revolving credit and/or overdraft protection facility from the Fund's custodian
bank for temporary borrowing purposes, including the meeting of redemption
requests that otherwise might require the untimely disposition of securities.
Interest is calculated based on the market rates at the time of borrowing. The
Fund may borrow up to a maximum of 33 percent of its total assets under the
agreement.
NOTE 2 CAPITAL SHARES:
a. TRANSACTIONS:
The Fund has authorized an unlimited number of shares of beneficial interest
with no par value divided into two classes designated Class A and Class C.
Transactions in capital shares for Class A for both the year ended December 31,
1997 and the year ended December 31, 1996, and for Class C shares for the period
from May 28, 1997 (Commencement of Operations), to December 31, 1997, were as
follows:
Class A
<TABLE>
<CAPTION>
1/1/97 - 12/31/97 SHARES AMOUNT
- --------------------------------------------------------------------------------
<S> <C> <C>
Shares sold 20,071,542 $ 566,127,818
Shares reinvested 5,103,602 121,414,686
- --------------------------------------------------------------------------------
25,175,144 687,542,504
- --------------------------------------------------------------------------------
Shares redeemed (19,315,084) (525,190,656)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net increase 5,860,060 $ 162,351,848
- --------------------------------------------------------------------------------
<CAPTION>
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)
- --------------------------------------------------------------------------------
<CAPTION>
Class C
5/28/97* - 12/31/97 SHARES AMOUNT
- --------------------------------------------------------------------------------
Shares sold 69,112 $ 1,989,590
Shares reinvested 9,649 227,911
- --------------------------------------------------------------------------------
78,761 2,217,501
- --------------------------------------------------------------------------------
Shares redeemed (24,565) (610,853)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Net increase 54,196 $ 1,606,648
- --------------------------------------------------------------------------------
</TABLE>
*Class C shares were first issued on May 28, 1997.
21
<PAGE>
NOTES TO FINANCIAL STATEMENTS (CONTINUED)
NOTE 3 TRANSACTIONS WITH AFFILIATES:
a. ADVISORY FEES AND EXPENSE LIMITATION:
Under the terms of an advisory agreement, which is reviewed and approved
annually (beginning in 2000) by the Board of Trustees, the Fund pays Robertson,
Stephens & Company Investment Management, L.P. ("RSIM, L.P.") an investment
advisory calculated at an annual rate of 1.00% of the average daily net assets
of the Fund. For the year ended December 31, 1997, the Fund incurred investment
advisory fees of $7,509,306. For the year ended December 31, 1997, there was no
expected reimbursement of the advisory fees and other expenses.
RSIM L.P. 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, L.P. from the Fund during the year ended December 31, 1997.
b. COMPENSATION OF TRUSTEES AND OFFICERS:
Trustees and officers of the Trust who are interested persons of the Trust
receive no compensation from the Trust. Trustees of the Trust who are not
interested persons of the Trust, as defined in the 1940 Act, collectively
received compensation and reimbursement of expenses of $22,265 for the year
ended December 31, 1997.
c. DISTRIBUTION FEES:
For the period from January 1, 1997, through September 30, 1997, the Fund
entered into agreements with Robertson, Stephens & Company LLC ("RS&Co.") for
distribution services with respect to its Class A and Class C shares and adopted
Plans of Distribution pursuant to Rule 12b-1 under the 1940 Act, where
continuance is reviewed annually by the Fund's Board of Trustees. Under these
Plans, RS&Co. was compensated for services in such capacity including its
expenses in connection with the promotion and distribution of the Fund's Class A
and Class C shares. The distribution fees for Class A and Class C shares are
calculated at an annual rate of 0.25% and 0.75%, respectively, based on the
average daily net assets attributed to each class of shares, although the Class
C Plan contemplates payments at a rate of up to 1% of the Fund's average net
assets attributable to Class C shares. For the period from January 1, 1997,
through September 30, 1997, for Class A, and for the period from May 28, 1997
(Commencement of Operations) through September 30, 1997, for Class C, the Fund
paid distribution fees of $1,356,003 and $625, respectively, to RS&Co. On
October 1, 1997, BankAmerica Corporation ("BAC") became the owner of the entire
beneficial interest in RSIM, L.P. (See note 5.a. in Notes to the Financial
Statements). As part of that acquisition, BAC also became the owner of the
entire beneficial interest in RSIM's affiliate, BancAmerica Robertson Stephens
(formerly Robertson Stephens & Company LLC). Pursuant to certain laws and
regulations that apply to bank holding companies and their affiliates, a bank
holding company-affiliated broker- dealer may not serve as the distributor or
principal underwriter of mutual funds. Commencing October 1, 1997, Edgewood
Services, Inc., a non-affiliate, has been designated the Fund's new distributor.
22
<PAGE>
d. SHAREHOLDER SERVICING FEE:
The Trust has adopted a Shareholder Servicing Plan for the Class C shares of
each fund. Under the Plan, each fund pays fees to BancAmerica Robertson Stephens
("BARS") 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 BARS 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 BARS
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. For the period from May 28, 1997 (Commencement of
Offering) through December 31, 1997, for Class C, the Fund incurred shareholder
services fees of $857.
e. BROKERAGE COMMISSIONS:
RSIM may direct orders for investment transactions to BARS as broker-dealer,
subject to Fund policies as stated in the prospectus, regulatory constraints,
and the ability of BARS to provide competitive prices and commission rates. All
investment transactions in which BARS 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 BARS has been retained by
the issuer. For the year ended December 31, 1997, the Fund paid brokerage
commissions of $118,446 to BARS, which represented 5.2 % of total commissions
paid during the year.
NOTE 4 INVESTMENTS:
a. TAX BASIS OF INVESTMENTS:
At December 31, 1997, the cost of investments purchased for federal income tax
purposes was $642,905,980. Accumulated net unrealized appreciation on
investments was $112,316,860, consisting of gross unrealized appreciation and
depreciation of $144,268,680 and $31,951,820, respectively.
b. INVESTMENT PURCHASES AND SALES:
For the year ended December 31, 1997, the cost of investments purchased and the
proceeds from investments sold (excluding options, securities sold short and
short-term investments) were $1,719,717,602 and $1,689,599,768, respectively.
NOTE 5 MERGER:
On October 1, 1997, BankAmerica Corporation completed its acquisition of
Robertson, Stephens & Company Group, L.L.C. and Robertson, Stephens & Company,
Inc. Pursuant to that acquisition, BankAmerica Corporation became the owner of
the entire beneficial interest in RSIM, L.P.
23
<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, 1997, 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, 1997, by correspondence with the custodian and brokers, and the
application of alternative auditing procedures where confirmations from brokers
were not received, provide a reasonable basis for the opinion expressed above.
/s/PRICE WATERHOUSE LLP
Price Waterhouse LLP
San Francisco, California
February 7, 1998
ADMINISTRATION
OFFICERS AND TRUSTEES
Andrew P. Pilara, Jr., Trustee
President
Leonard B. Auerbach, Trustee
President and Chairman of Auerbach Associates, Inc.
John W. Glynn, Jr., Trustee
Principal and Chairman of Glynn Capital Management
James K. Peterson, Trustee
Former Director of the IBM Retirement Funds
Terry R. Otton
Chief Financial Officer
Dana K. Welch
Secretary
INVESTMENT ADVISER
Robertson, Stephens & Company
Investment Management, L.P.
555 California Street, Suite 2600
San Francisco, CA 94104
DISTRIBUTOR
Edgewood Services, Inc.
Clearing Operations
P.O. Box 897
Pittsburgh, PA 15230-0897
TRANSFER AGENT AND DISBURSING AGENT
State Street Bank & Trust Company
c/o National Financial Data Services
Kansas City, MO
1-800-272-6944
CUSTODIAN
State Street Bank & Trust Company
Boston, MA
INDEPENDENT ACCOUNTANTS
Price Waterhouse LLP
San Francisco, CA
LEGAL COUNSEL
Ropes & Gray
Boston, MA
This report is submitted for the information of shareholders of The Robertson
Stephens Value + Growth Fund. It is not authorized for distribution to
prospective investors unless preceded or accompanied by an effective prospectus.
Published February 13, 1998
24
<PAGE>
Design: Broom & Broom, Inc. San Francisco Photography: Jerry Orabona, Bill
Zemanek
VALUE
THE PARTNERS FUND
A SMALL-CAP FUND USING A CASH FLOW VALUE METHODOLOGY
Managed by Andrew Pilara.
GROWTH & INCOME
THE GROWTH & INCOME FUND
SEEKING GROWTH WHILE ATTEMPTING TO MODERATE RISK
Managed by John Wallace.
GROWTH
THE DIVERSIFIED GROWTH FUND
FOCUSING ON SMALL- AND MID-CAP COMPANIES
Managed by John Wallace
and John Seabern.
THE EMERGING GROWTH FUND
SEEKING TO INVEST IN AMERICA'S MOST DYNAMIC, GROWTH-
ORIENTED COMPANIES
Managed by Jim Callinan.
THE INFORMATION AGE FUND-TM-
TARGETING INVESTMENTS IN THE INFORMATION TECHNOLOGY SECTOR
Managed by Ron Elijah and Rod Berry.
THE MICROCAP GROWTH FUND
FOCUSING ON COMPANIES WITH MARKET CAPS OF LESS THAN $250 MILLION
Managed by Dave Evans and Rainerio Reyes.
THE VALUE + GROWTH FUND
A GROWTH FUND FOR THE LONG-TERM INVESTOR
Managed by Ron Elijah.
GLOBAL
THE CONTRARIAN FUND-TM-
A GLOBAL HEDGE FUND
Managed by Paul Stephens.
THE GLOBAL LOW-PRICED STOCK FUND
SEEKING OVERLOOKED AND UNDERVALUED COMPANIES
Managed by Hannah Sullivan.
THE GLOBAL NATURAL RESOURCES FUND
PRIMARILY FOCUSING ON HARD ASSET COMPANIES
Managed by Andrew Pilara.
THE GLOBAL VALUE FUND
SEEKING UNDERVALUED INVESTMENTS WORLDWIDE
Managed by Andrew Pilara.
INTERNATIONAL
THE DEVELOPING COUNTRIES FUND
LOOKING FOR GROWING COMPANIES IN EMERGING MARKETS
Managed by Michael Hoffman.
Please read the prospectus to learn about the Funds' objectives, investment
policies, and the special risks associated with The Robertson Stephens Mutual
Funds, including international investing, investing in smaller companies,
investing in a more limited number of issuers and sectors or a particular
sector, short selling, using options and futures, and investing in high-
yielding, lower-quality debt securities.
MUTUAL FUND SHARES ARE NOT INSURED BY THE FDIC OR ANY OTHER GOVERNMENTAL ENTITY;
ARE NOT DEPOSITS OR OTHER OBLIGATIONS OF, OR GUARANTEED BY BANK OF AMERICA OR
ANY OF ITS AFFILIATES; AND ARE SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE
LOSS OF THE PRINCIPAL AMOUNT INVESTED.
<PAGE>
ROBERTSON STEPHENS FUNDS
BRINGING THE FUND MANAGER TO YOU
555 California Street, Suite 2600
San Francisco, California 94104
FUND NEWS & INFORMATION
ROBERTSON STEPHENS INVESTOR SERVICES
- - Knowledgeable mutual fund representatives.
- - Automated access to daily net asset values.
- - Portfolio Manager Hotline, 24 hours a day.
1-800-766-3863
ROBERTSON STEPHENS
MUTUAL FUND E-MAIL
[email protected]
[logo]
ROBERTSON STEPHENS
ON THE WEB
HTTP://WWW.RSIM.COM
ROBERTSON STEPHENS
ACCOUNTLINK
- - Automated account information, 24 hours a day.
1-800-624-8025
FUND LISTINGS
The Fund is listed in THE WALL STREET JOURNAL, USA TODAY, INVESTOR'S BUSINESS
DAILY, and most local newspapers as Partners under the heading Robertson
Stephens. Its computer quotation symbol is RSPFX.
The views expressed in this report were those of the Fund's portfolio manager as
of the date specified, and may not reflect the views of the portfolio manager on
the date they are first published or at any other time thereafter. RSIM and its
affiliates may buy or sell investments at any time for the Fund, their other
clients or for their own accounts, and may not necessarily do so in a manner
consistent with the views expressed in this report. The prices at which they buy
or sell investments may be affected favorably by the contents of this report or
the timing of its publication. THE VIEWS EXPRESSED IN THIS REPORT ARE INTENDED
TO ASSIST SHAREHOLDERS OF THE FUND IN UNDERSTANDING THEIR INVESTMENT IN THE FUND
AND DO NOT CONSTITUTE INVESTMENT ADVICE; INVESTORS SHOULD CONSULT THEIR OWN
INVESTMENT PROFESSIONALS AS TO THEIR INDIVIDUAL INVESTMENT PROGRAMS.
