ROBERTSON STEPHENS INVESTMENT TRUST, 497, 1999-05-07

ROBERTSON STEPHENS INVESTMENT TRUST
497, 1999-05-07

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RS INVESTMENT TRUST
388 Market Street, Suite 200
San Francisco, CA 94111 PROSPECTUS
800-766-FUND May 3, 1999

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This Prospectus describes ten mutual funds offered by RS Investment Trust.

RS EMERGING GROWTH FUND
RS MIDCAP OPPORTUNITIES FUND
RS MICROCAP GROWTH FUND
RS VALUE + GROWTH FUND
RS DIVERSIFIED GROWTH FUND
THE INFORMATION AGE FUND-TM-
RS GLOBAL NATURAL RESOURCES FUND
RS GLOBAL VALUE FUND
RS PARTNERS FUND
THE CONTRARIAN FUND-TM-

THE TRUST WAS FORMERLY KNOWN AS "ROBERTSON STEPHENS INVESTMENT TRUST." You
can call RS Investment Management at (800) 766-FUND to find out more about the
Funds. This Prospectus explains what you should know about the Funds before you
invest. Please read it carefully.

THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED THESE
SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

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TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
-----
<S> <C>
Summary information..................................................................................... 3

RS EMERGING GROWTH FUND............................................................................. 3
RS MIDCAP OPPORTUNITIES FUND........................................................................ 5
RS MICROCAP GROWTH FUND............................................................................. 7
RS VALUE + GROWTH FUND.............................................................................. 9
RS DIVERSIFIED GROWTH FUND.......................................................................... 11
THE INFORMATION AGE FUND-TM-........................................................................ 13
RS GLOBAL NATURAL RESOURCES FUND.................................................................... 16
RS GLOBAL VALUE FUND................................................................................ 19
RS PARTNERS FUND.................................................................................... 21
THE CONTRARIAN FUND-TM-............................................................................. 23

Fees and expenses....................................................................................... 26

Other investment strategies and risks................................................................... 28

Management of the Funds................................................................................. 33

Portfolio managers...................................................................................... 34

How the Funds' shares are priced........................................................................ 36

How to purchase shares.................................................................................. 36

How to sell shares...................................................................................... 38

Exchanges............................................................................................... 40

Dividends and distributions............................................................................. 40

Taxes................................................................................................... 40

Distribution arrangements and Rule 12b-1 fees........................................................... 41

Year 2000 disclosure.................................................................................... 42

Financial highlights.................................................................................... 43
</TABLE>

2
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SUMMARY INFORMATION

Objective, Principal Investment Strategies, and Principal Risks.

RS EMERGING GROWTH FUND
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- - INVESTMENT OBJECTIVE. Capital appreciation.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in smaller,
rapidly growing emerging companies. The Fund generally invests in industry
segments that are experiencing rapid growth and in companies with proprietary
advantages. RSIM, Inc. typically considers a number of factors in evaluating
potential investments, including, for example, whether the company has a
distinct proprietary element; whether it is gaining market share; whether it
is earning superior margins or experiencing superior profitability; and
whether it has a strong management team. RSIM, Inc. may consider selling a
security for the Fund if the issuer's growth rate deteriorates or its
performance otherwise disappoints, if the price of the security attains RSIM,
Inc.'s price target or otherwise appears relatively high to RSIM, Inc., or if
there is an unfavorable change in the issuer's management or corporate plans
or if institutional ownership of the security increases substantially.

- - PRINCIPAL INVESTMENTS. The Fund invests in a diversified portfolio of equity
securities (principally common stocks) in companies that RSIM, Inc. believes
have the potential for more rapid growth than the overall economy. The Fund
normally invests at least 65% of its assets in such emerging growth
companies. Although the Fund may invest in companies of any size, it is
likely under current market conditions that a substantial amount of its
investments will be in companies with market capitalizations of $1.5 billion
or less. The Fund will likely invest a portion of its assets in technology
companies.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by RSIM, Inc., due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.

- - OVERWEIGHTING. Overweighting investments in certain sectors or industries
of the U.S. stock market increases risk that the Fund will suffer a loss
because of general advances or declines in the prices of stocks in those
sectors or industries.

- - SMALL COMPANIES. The Fund invests in smaller companies, which tend to be
more vulnerable to adverse developments than larger companies. These
companies may have limited product lines, markets, or financial resources,
or may depend on a limited management group. Their securities may trade
infrequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than prices of securities of larger, more
widely traded companies and the Fund may experience difficulty in
establishing or closing out positions in these securities at prevailing
market prices. Also, there may be less publicly available information about
small companies or less market interest in their securities as compared to
larger companies, and it may take longer for the prices of the securities
to reflect the full value of their issuers' earnings potential or assets.

- - TECHNOLOGY INVESTMENTS. The Fund's investments in technology companies may
be highly volatile. Changes in their prices may reflect changes in investor
evaluation of a particular product or group of products, of the prospects
of a company to develop and market a particular technology successfully, or
of technology-related investments generally.

3
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may also result in realization of taxable capital gains, which may be taxed
to shareholders at ordinary income tax rates.

PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
ten calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1989 44.45%
1990 9.57%
1991 58.69%
1992 -2.55%
1993 7.22%
1994 7.96%
1995 20.31%
1996 21.53%
1997 18.54%
1998 28.02%
</TABLE>

During the periods shown above, the highest quarterly return was 38.37% for the
quarter ended December 1998, and the lowest was -23.37% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR PAST FIVE YEARS PAST TEN YEARS
RS Emerging Growth Fund 28.02% 19.09% 20.18%
Russell 2000 Growth Index* 1.23% 10.22% 11.54%
</TABLE>

* The Russell 2000 Growth Index is an unmanaged market capitalization-weighted
index containing those securities in the Russell 2000 Index with higher
price-to-book ratios and higher forecasted growth values. Investment results
assume the reinvestment of dividends paid on the stocks constituting the
index.

4
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RS MIDCAP OPPORTUNITIES FUND

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- - INVESTMENT OBJECTIVE. Long-term total return.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests in equity and debt
securities of mid-cap companies-- with market capitalizations from $1.5
billion up to $10 billion-- that offer the potential for capital appreciation
and/or current income.

In selecting investments for the Fund, RSIM, L.P. may look to see whether the
company has a superior management team; whether the company has experienced
or has the potential for superior earnings per share momentum; and whether
there is a possible catalyst that has the potential to drive earnings and
valuations higher (for example, new management, a new product launch). RSIM,
L.P. may consider selling a security for the Fund if the stock price declines
substantially below the purchase price, if the price of the security attains
RSIM, L.P.'s price target or otherwise appears relatively high to RSIM, L.P.,
if the company's business fundamentals turn negative in RSIM, L.P.'s view, or
if RSIM, L.P. believes that another investment offers a better opportunity.

- - PRINCIPAL INVESTMENTS. The Fund normally invests a majority of its assets in
common and preferred stocks, convertible securities, bonds, and notes. The
Fund will normally invest in equity securities that typically pay relatively
low dividends, and in convertible securities and preferred stocks, which
offer current income and the potential for capital appreciation upon
conversion. The Fund under normal circumstances invests at least 65% of its
assets in mid-cap companies.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by RSIM, L.P., due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.

- - DEBT SECURITIES. The Fund's investments in debt securities are obligations
of the issuer to make payments of principal and/or interest on future
dates. As interest rates rise, the value of the Fund's debt securities is
likely to fall. This risk is generally greater for debt securities with
longer maturities. Debt securities also carry the risk that the issuer or
the guarantor of a security will be unable or unwilling to make timely
principal and/or interest payments, or otherwise to honor its obligations.

- - MID-CAP COMPANIES. The Fund invests in mid-cap companies, which tend to be
more vulnerable to adverse developments than larger companies. Mid-cap
companies may have limited product lines, markets, or financial resources,
or may depend on a limited management group. Their securities may trade
infrequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than the prices of securities of larger, more
widely traded companies. Also, there may be less publicly available
information about mid-cap companies or less market interest in their
securities as compared to larger companies, and it may take longer for the
prices of the securities to reflect the full value of their issuers'
earnings potential or assets.

- - CONVERTIBLE SECURITIES. "Convertible" securities include corporate bonds,
debentures, notes, or preferred stocks that can be converted into (that is,
exchanged for) common stock or other equity securities of the same or a
different issuer, and other securities, such as warrants, that also provide
an opportunity for equity participation. As a result, convertible
securities are subject to the risks of investment generally in debt
securities and to the risks of investment in equity securities, as well.

- - PORTFOLIO TURNOVER Frequent purchases and sales of the Fund's portfolio
securities involve expense to the Fund, including brokerage commissions or
dealer mark-ups and other transaction costs. They may also result in
realization of taxable capital gains, which may be taxed to shareholders at
ordinary income tax rates.

5
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PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
three calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 24.16%
1997 22.40%
1998 11.65%
</TABLE>

During the periods shown above, the highest quarterly return was 19.89% for the
quarter ended December 1998, and the lowest was -13.53% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (7/12/95)
RS MidCap Opportunities Fund 11.65% 20.42%
Russell Midcap Growth Index* 17.86% 18.78%
</TABLE>

* The Russell Midcap Growth Index is an unmanaged market capitalization-weighted
index which measures the performance of those Russell Midcap companies
(defined as the 800 smallest companies in the Russell 1000 Index) with a
higher than average growth orientation as determined by price-to-book ratios
and forecasted growth values. Investment results assume the reinvestment of
dividends paid on the stocks constituting the index.

6
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RS MICROCAP GROWTH FUND
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- - INVESTMENT OBJECTIVE. Long-term capital appreciation.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in "micro-cap"
companies with market capitalizations of $500 million or less at the time of
investment that, in RSIM, L.P.'s opinion, have potential for long-term
capital appreciation. The Fund may invest the remainder of its assets in
securities of companies of any size. The Fund may also engage in short sales
of securities it expects to decline in price. The Fund will likely invest a
portion of its assets in technology companies.

In selecting investments for the Fund, RSIM, L.P. looks for companies with
sustainable revenue and earnings growth; companies that have a sustainable
competitive advantage, superior financial characteristics, and strong
management; and companies that are underfollowed by Wall Street analysts.
The Fund may sell a stock when RSIM, L.P. no longer believes that a company
provides these advantages or that the stock's price fully reflects what
RSIM, L.P. believes to be the company's value.

- - PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities,
including common and preferred stocks, and warrants and securities
convertible into common or preferred stocks. The Fund under normal
circumstances invests at least 65% of its assets in "micro-cap" companies.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by RSIM, L.P., due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.

- - MICRO-CAP AND SMALL COMPANIES. The Fund invests primarily in micro-cap and
small companies, which tend to be more vulnerable to adverse developments
than larger companies. These companies may have limited product lines,
markets, or financial resources, or may depend on a limited management
group. Their securities may trade infrequently and in limited volumes. As a
result, the prices of these securities may fluctuate more than the prices
of securities of larger, more widely traded companies and the Fund may
experience difficulty in establishing or closing out positions in these
securities at prevailing market prices. Also, there may be less publicly
available information about small companies or less market interest in
their securities as compared to larger companies, and it may take longer
for the prices of the securities to reflect the full value of their
issuers' earnings potential or assets.

- - SHORT SALES. Short sales may result in a loss if the value of the security
sold short increases between the date when the Fund enters into the short
sale and the date on which the Fund closes the short sale.

7
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PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
two calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1997 30.45%
1998 -0.63%
</TABLE>

During the periods shown above, the highest quarterly return was 27.11% for the
quarter ended September 1997, and the lowest was -24.58% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (8/15/96)
RS MicroCap Growth Fund (0.63)% 16.09%
Russell 2000 Growth Index* 1.23% 9.37%
</TABLE>

8
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RS VALUE + GROWTH FUND
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- - INVESTMENT OBJECTIVE. Capital appreciation.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in equity
securities of mid- and large-capitalization companies (with market
capitalizations greater than $1.5 billion). In selecting investments for the
Fund, the primary emphasis of Elijah Asset Management, LLC, sub-advisor to
the Fund, 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.

Elijah Asset Management seeks to identify stocks that are undervalued
relative to their growth prospects. For example, Elijah Asset Management may
look to see whether a company offers a new or improved product, service, or
business operation; whether it has experienced a positive change in its
financial or business condition; whether the market for its goods or services
has expanded or experienced a positive change; and whether there is a
potential catalyst for positive change in the company's business or stock
price. The Fund may sell a security if Elijah Asset Management determines
that the company has become overvalued due to price appreciation or has
experienced a change in its business fundamentals, if the company's growth
rate slows substantially, or if Elijah Asset Management believes that another
investment offers a better opportunity. The Fund may invest in securities of
larger and smaller companies. The Fund may also sell stocks short that Elijah
Asset Management believes are relatively overvalued. The Fund will likely
invest a portion of its assets in technology companies.

- - PRINCIPAL INVESTMENTS. The Fund invests primarily in growth companies with
favorable relationships between price/earnings ratios and growth rates in
sectors offering the potential for above-average returns.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by Elijah Asset Management, due to factors that
adversely affect particular companies in the portfolio and/or the U.S.
equities market in general.

- - PORTFOLIO TURNOVER. Frequent purchases and sales of the Fund's portfolio
securities involve expense to the Fund, including brokerage commissions or
dealer mark-ups and other transaction costs. They may also result in
realization of taxable capital gains, which may be taxed to shareholders at
ordinary income tax rates.

9
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PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
six calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1993 21.57%
1994 23.11%
1995 42.70%
1996 14.12%
1997 13.81%
1998 27.44%
</TABLE>

During the periods shown above, the highest quarterly return was 24.07% for the
quarter ended December 1998, and the lowest was -14.65% for the quarter ended
December 1995.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR PAST FIVE YEARS (5/12/92)
RS Value + Growth Fund 27.44% 23.80% 22.70%
Russell 1000 Growth Index* 38.71% 25.69% 20.86%
</TABLE>

* The Russell 1000 Growth Index is an unmanaged market capitalization-weighted
index containing those securities in the Russell 1000 Index with higher
price-to-book ratios and higher forecasted growth values. Investment results
assume the reinvestment of dividends paid on the stocks constituting the
index.

10
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RS DIVERSIFIED GROWTH FUND
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- - INVESTMENT OBJECTIVE. To seek long-term capital growth.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests in small-capitalization
value and growth companies across a broadly diversified mix of industry
sectors and companies. The Fund invests primarily in stocks of companies with
market capitalizations of up to $1.5 billion, but may invest in securities of
larger companies.

In selecting investments for the Fund, RSIM, L.P. may look to see whether
the company has a superior management team; whether the company has
experienced or has the potential for superior earnings per share momentum;
and whether there is a possible catalyst that has the potential to drive
earnings and valuations higher (for example, new management, a new product
launch). RSIM, L.P. may consider selling a security for the Fund if the
stock price declines substantially below the purchase price, if the price of
the security attains RSIM, L.P.'s price target or otherwise appears
relatively high to RSIM, L.P., if the company's business fundamentals turn
negative in RSIM, L.P.'s view, or if RSIM, L.P. believes that another
investment offers a better opportunity.

- - PRINCIPAL INVESTMENTS. The Fund invests principally in common and preferred
stocks and warrants. The Fund will likely invest a portion of its assets in
technology companies.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by RSIM, L.P., due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.

- - SMALL COMPANIES. The Fund invests primarily in small companies, which tend
to be more vulnerable to adverse developments than larger companies. These
companies may have limited product lines, markets, or financial resources,
or may depend on a limited management group. Their securities may trade
infrequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than the prices of securities of larger, more
widely traded companies and the Fund may experience difficulty in
establishing or closing out positions in these securities at prevailing
market prices. Also, there may be less publicly available information about
small companies or less market interest in their securities as compared to
larger companies, and it may take longer for the prices of the securities
to reflect the full value of their issuers' earnings potential or assets.

11
<PAGE>
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PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
two calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1997 29.45%
1998 16.28%
</TABLE>

During the periods shown above, the highest quarterly return was 29.77% for the
quarter ended December 1998, and the lowest was -16.25% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (8/1/96)
RS Diversified Growth Fund 16.28% 29.55%
Russell 2000 Index* (2.55)% 13.71%
</TABLE>

* The Russell 2000 Index is an unmanaged market capitalization-weighted index
composed of 2,000 U.S. companies with an average market capitalization of $467
million. Investment results assume the reinvestment of dividends paid on the
stocks constituting the index.

12
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THE INFORMATION AGE FUND-TM-
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- - INVESTMENT OBJECTIVE. Long-term capital appreciation.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund primarily invests in the
information technology industry sector.

- - Companies in the information technology industries include companies that
Elijah Asset 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.

- - Internet companies and other companies engaged in, or providing products or
services for, e-commerce.

- - A particular company will be considered to be principally engaged in the
information technology industries if at the time of investment Elijah Asset
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 Elijah Asset 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.

In selecting stocks for the Fund, Elijah Asset Management looks at a
company's valuation relative to its potential long-term growth rate. Elijah
Asset Management may look to see whether a company offers a new or improved
product, service, or business operation; whether it has experienced a
positive change in its financial or business condition; whether the market
for its goods or services has expanded or experienced a positive change; and
whether there is a potential catalyst for positive change in the company's
business or stock price. The Fund may sell a security if Elijah Asset
Management determines that the company has become overvalued due to price
appreciation or has experienced a change in its business fundamentals, if
the company's growth rate slows substantially, or if Elijah Asset Management
believes that another investment offers a better opportunity.

- - PRINCIPAL INVESTMENTS. The Fund invests principally in common stocks, but
may also invest any portion of its assets in preferred stocks and warrants.
The Fund normally invests at least 65% of its assets in the information
technology sector.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - CONCENTRATION. 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

13
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may fluctuate more widely than the value of shares of a portfolio which
invests in a broader range of industries.

- - INFORMATION TECHNOLOGY INVESTMENTS. The Fund's investments in information
technology companies may be highly volatile. Changes in their prices may
reflect changes in investor evaluation of a particular product or group of
products, of the prospects of a company to develop and market a particular
technology successfully, or of information technology investments
generally.

- - SMALL COMPANIES. The Fund may invest in small companies, which tend to be
more vulnerable to adverse developments than larger companies. Small
companies may have limited product lines, markets, or financial resources,
or may depend on a limited management group. Their securities may trade
infrequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than the prices of securities of larger, more
widely traded companies and the Fund may experience difficulty in
establishing or closing out positions in these securities at prevailing
market prices. Also, there may be less publicly available information about
small companies or less market interest in their securities as compared to
larger companies, and it may take longer for the prices of the securities
to reflect the full value of their issuers' earnings potential or assets.

14
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
three calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 26.72%
1997 6.15%
1998 52.20%
</TABLE>

During the periods shown above, the highest quarterly return was 41.86% for the
quarter ended December 1998, and the lowest was -21.73% for the quarter ended
December 1997.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (11/15/95)
The Information Age Fund-TM- 52.20% 22.85%
Pacific Stock Exchange Technology Index* 54.60% 28.40%
</TABLE>

* The Pacific Stock Exchange Technology Index is an unmanaged, price-weighted
index of the top 100 U.S. technology stocks.

15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

RS GLOBAL NATURAL RESOURCES FUND
- --------------------------------------------------------------------------------

- - INVESTMENT OBJECTIVE. Long-term capital appreciation.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in securities of
issuers in the natural resources industries. The Fund may invest in
securities of issuers located anywhere in the world and normally will invest
in securities of companies located in at least three countries, which may
include the United States. The Fund may also sell a security short if RSIM,
L.P. expects its market price to decline.

- - Companies in the natural resources industries include companies that RSIM,
L.P. 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 RSIM, L.P.
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 RSIM, L.P. 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.

In determining whether to buy or sell a security, RSIM, L.P. typically
performs substantial fundamental analysis of the company and its potential
for capital appreciation. RSIM, L.P. generally seeks to identify companies
that produce a rate of return on capital greater than their cost of capital
over a commodity cycle.

- - PRINCIPAL INVESTMENTS. The Fund invests primarily in common stocks, but may
also invest in preferred stocks, securities convertible into stocks, and
warrants to purchase stocks. The Fund normally invests at least 65% of its
total assets in securities of companies in the natural resources industries.
The Fund may invest the remaining 35% of its assets in securities of
companies in any industry.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by RSIM, L.P., due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.

16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

- - FOREIGN INVESTMENT. Investments in foreign securities entail risks not
present in domestic investments including, among others, risks related to
political or economic instability, currency exchange, and taxation. Many
companies engaged in the natural resources industries have substantial
operations in foreign countries including emerging markets. Commodity
markets and legal protections in those countries may be in the early stages
of development and may provide few of the advantages or protections
avaliable in domestic markets.

- - CONCENTRATION. Because the Fund concentrates in the natural resources
industries, the value of the Fund's 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. Also, changes in regulatory policies may have a material effect
on the business of companies in those industries. Prices of many natural
resources are currently at historically low levels; there can be no
assurance as to when, or whether, prices of those natural resources may
recover.

- - GEOGRAPHIC CONCENTRATION. There is no limit on the amount of the Fund's
assets that may be invested in securities of issuers domiciled in any one
country. To the extent that the Fund invests a substantial amount of its
assets in one country, it will be more susceptible to the political and
economic developments and market fluctuations in that country than if it
invested in a more geographically diversified portfolio.

17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
three calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 41.21%
1997 -17.14%
1998 -34.45%
</TABLE>

During the periods shown above, the highest quarterly return was 17.19% for the
quarter ended March 1996, and the lowest was -22.47% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (11/15/95)
RS Global Natural Resources Fund (34.45)% (7.78)%
S&P 500 Index* 28.57% 28.52 %

* The S&P 500 Index is an unmanaged market capitalization-weighted index of 500
stocks designed to measure peformance of the broad domestic economy through
changes in the aggregate market value of 500 stocks representing all major
industries. 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.

18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

RS GLOBAL VALUE FUND
- --------------------------------------------------------------------------------

- - INVESTMENT OBJECTIVE. Long-term growth.

- - PRINCIPAL INVESTMENT STRATEGIES The Fund invests in equity securities
primarily of companies with market capitalizations of $1 billion or more that
RSIM believes are undervalued. In evaluating potential investments for the
Fund, RSIM employs a value methodology, combining Graham & Dodd balance sheet
analysis and cash flow analysis (such as the Holt/Value Search cash-flow
model).The Fund may invest in securities of issuers located anywhere in the
world and normally will invest in securities of companies located in at least
three countries, which may include the United States. The Fund considers an
issuer 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 trade principally on a securities exchange in that country. The
Fund is a non-diversified mutual fund.

- - In determining whether to buy or sell investments for the Fund, RSIM, L.P.
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.

- - PRINCIPAL INVESTMENTS. Although the Fund invests primarily in common stocks,
it may also invest in preferred stocks and warrants. The Fund under normal
circumstances invests at least 65% of its assets in equity securities
selected through its value methodology.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by RSIM, L.P., due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.

- - FOREIGN SECURITIES. Investments in foreign securities entail risks not
present in domestic investments including, among others, risks related to
political or economic instability, currency exchange, and taxation.

19
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

may also result in realization of taxable capital gains, which may be taxed
to shareholders at ordinary income tax rates.

- - NON-DIVERSIFIED FUND. Because the Fund is "non-diversified," it generally
invests its assets in a more limited number of issuers than a diversified
investment company. As a result, its risk of loss increases if the market
value of a security declines or if an issuer is not able to meet its
obligations.

PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance during the last year,
and by comparing the Fund's returns with those of a broad measure of market
performance. The table following the bar chart compares the Fund's performance
to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN INDICATION
OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT IN THE
FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1998 11.11%
</TABLE>

During the periods shown above, the highest quarterly return was 12.47% for the
quarter ended March 1998 and the lowest was -5.07% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (4/1/97)
RS Global Value Fund 11.11% 17.84%
Morgan Stanley Capital
International
World Value Index* 13.66% 16.37%
</TABLE>

* The Morgan Stanley Capital International World Value Index is a market
capitalization-weighted index composed of companies representative of the
market structure of 22 developed market countries in North America, Europe,
and the Pacific Basin.

20
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

RS PARTNERS FUND
- --------------------------------------------------------------------------------

- - INVESTMENT OBJECTIVE. Long-term growth.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests in equity securities
primarily of companies with market capitalizations of up to $1 billion that
RSIM believes are undervalued. In evaluating potential investments for the
Fund, RSIM employs a value methodology, combining Graham & Dodd balance sheet
analysis and cash flow analysis (such as the Holt/Value Search cash-flow
model). The Fund may invest most or all of its assets in securities of U.S.
companies, but may also invest any portion of its assets in foreign
securities. The Fund is a non-diversified mutual fund.

- - In determining whether to buy or sell investments for the Fund, RSIM, L.P.
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.

- - PRINCIPAL INVESTMENTS. Although the Fund invests principally in common
stocks, it may also invest in preferred stocks and warrants.

- - PRINCIPAL RISKS.

- - It is possible to lose money on an investment in the Fund.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by RSIM, L.P., due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.

21
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
three calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 43.15%
1997 18.08%
1998 -27.23%
</TABLE>

During the periods shown above, the highest quarterly return was 18.38% for the
quarter ended March 1996, and the lowest was -23.21% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (7/12/95)
RS Partners Fund (27.23)% 7.31%
Russell 2000 Value Index* (6.45)% 14.93%
</TABLE>

* The Russell 2000 Value Index is an unmanaged market capitalization-weighted
index composed of those securities in the Russell 2000 Index with lower
price-to-book ratios and lower forecasted growth values. Investment results
assume the reinvestment of dividends paid on the stocks constituting the
index.

22
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

THE CONTRARIAN FUND-TM-
- --------------------------------------------------------------------------------

- - INVESTMENT OBJECTIVE. Maximum long-term growth.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests worldwide in attractively
priced equity securities of growth and value companies. The Fund invests
primarily in businesses that have not yet been discovered or become popular,
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. Although the Fund may invest in companies of any size, it
may at times invest a substantial portion of its assets in smaller companies.
The Fund may at times invest in companies engaged in the production,
development, or sale of natural resources. The Fund is a non-diversified
mutual fund.

In determining whether to buy or sell a security, RSIM, L.P. typically
performs substantial fundamental analysis of the company, to identify
companies offering the potential for long-term growth but which are out of
favor or have been overlooked.

The Fund may also do the following:

- - Sell stocks short.

- - Take positions in options and futures contracts in anticipation of a market
decline or advance.

- - Borrow money to purchase additional portfolio securities.

- - PRINCIPAL INVESTMENTS. The Fund invests primarily in equity securities of
domestic, multinational, and foreign companies whose potential values
generally have been overlooked by other investors.

- - PRINCIPAL RISKS

- - It is possible to lose money on an investment in the Fund.

- - CONTRARIAN INVESTING. Because the Fund takes investment positions contrary
to those of most other investors, the Fund may not be able to realize what
RSIM believes to be the unrecognized value in a security for a substantial
period of time, if ever. It is also possible that RSIM's investment
decisions will turn out to have been premature or incorrect. The Fund will
not necessarily realize gains in a falling market, and it is possible for
the Fund to lose money in either a rising or a falling market.

- - EQUITY SECURITIES. One risk of investing in the Fund is the risk that the
value of the equity securities in the portfolio will fall, or will not
appreciate as anticipated by an investment adviser, due to factors that
adversely affect particular companies in the portfolio and/or the U.S.
equities market in general.

- - EMERGING MARKET SECURITIES. Investments in emerging markets are subject to
the same risks applicable to foreign investments generally but to a greater
extent. For example, the securities markets and legal systems in emerging
markets may provide few, or none, of the advantages or protections of
markets or legal systems available in more developed countries. Emerging
market securities may trade in limited volume and may be illiquid.
Exchanges, if any, on which they trade may not provide all of the
conveniences or protections provided by securities exchanges in more
developed markets.

23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

- - FUTURES AND OPTIONS TRANSACTIONS. The Fund may lose money on futures and
options transactions because, among other things, the futures and options
may be illiquid or their prices may not correlate perfectly with the
securities or indices underlying them or with the prices of any investments
which they are intended to hedge, or because an investment adviser
forecasts market or price movements incorrectly. The Fund also incurs
transaction costs when it opens or closes futures or option positions.

- - SMALL COMPANIES. The Fund may invest in smaller companies, which tend to
be more vulnerable to adverse developments than larger companies. These
companies have limited product lines, markets, or financial resources, or
may depend on a limited management group. Their securities may trade
infrequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than prices of securities of larger, more
widely traded companies and the Fund may experience difficulty in
establishing or closing out positions in these securities at prevailing
market prices. Also, there may be less publicly available information about
small companies or less market interest in their securities as compared to
larger companies, and it may take longer for the prices of the securities
to reflect the full value of their issuers' earnings potential or assets.

- - SHORT SALES AND OTHER SHORT POSITIONS. Short positions may result in a
loss if the value of the security or index in question increases between
the date when the Fund enters into the short position and the date on which
the Fund closes the short position.

- - LEVERAGE. Borrowing money to invest in additional securities increases the
Fund's market exposure and risk and may result in losses. The interest that
the Fund must pay on borrowed money will reduce its net investment income,
and may also either offset any potential capital gains or increase any
losses.

- - NATURAL RESOURCES INVESTMENTS. Prices of many natural resources are
currently at historically low levels; there can be no assurance as to when,
or whether, prices of those natural resources may recover.

24
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

PERFORMANCE INFORMATION; BAR CHART

The following information provides some indication of the risk of investing
in the Fund by showing changes in the Fund's performance from year to year, and
by comparing the Fund's returns with those of a broad measure of market
performance. The bar chart shows changes in the Fund's performance for the last
five calendar years. The table following the bar chart compares the Fund's
performance to a broad-based market index. THE FUND'S PAST PERFORMANCE IS NOT AN
INDICATION OF FUTURE PERFORMANCE. IT IS POSSIBLE TO LOSE MONEY ON AN INVESTMENT
IN THE FUND. The Fund may not achieve its investment objective.

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1994 -5.52%
1995 30.86%
1996 21.68%
1997 -29.51%
1998 -32.69%
</TABLE>

During the periods shown above, the highest quarterly return was 20.97% for
the quarter ended March 1996, and the lowest was -30.17% for the quarter ended
September 1998.

TABLE

<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR PAST FIVE YEARS (6/30/93)
The Contrarian Fund-TM- (32.69)% (6.52)% (4.01)%
Morgan Stanley Capital International
All Country World Index* 19.69% 12.28% 12.57%
</TABLE>

* The Morgan Stanley Capital International All Country World Index is an
unmanaged, market capitalization-weighted index composed of companies
representative of the market structure of 47 developed and emerging market
countries.

25
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FEES AND EXPENSES

THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUNDS.

<TABLE>
<S> <C>
SHAREHOLDER FEES (paid directly from your investment):
Maximum Sales Charge (Load) Imposed on Purchases None
Maximum Deferred Sales Charge (Load) None
Maximum Sales Charge (Load) Imposed on Reinvested Dividends 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
(expenses that are deducted from Fund assets):
VALUE
EMERGING MIDCAP MICROCAP + DIVERSIFIED
GROWTH OPPORTUNITIES GROWTH GROWTH GROWTH
----------- --------- ----------- ------ ----------
<S> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.25% 1.00% 1.00%
Distribution (12b-1)
Fees 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses(1) 0.22% 0.27% 0.41% 0.21% 0.59%
----------- --------- ----------- ------ ----------
Total Annual Fund
Operating Expenses(1) 1.47% 1.52% 1.91% 1.46% 1.84%

Fee Waiver and/or
Expense Limitations(2) -- -- -- -- --
----------- --------- ----------- ------ ----------
Net Expenses(2) 1.47% 1.52% 1.91% 1.46% 1.84%
</TABLE>

<TABLE>
<CAPTION>
GLOBAL
INFORMATION NATURAL GLOBAL
AGE RESOURCES VALUE PARTNERS CONTRARIAN
-------- -------- --------- -------- --------
<S> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.00% 1.25% 1.50%
Distribution (12b-1)
Fees 0.25% 0.25% 0.25% 0.25% 0.25%*
Other Expenses(1) 0.38% 0.82% 1.62% 0.57% 1.08%
-------- -------- --------- -------- --------
Total Annual Fund
Operating Expenses(1) 1.63% 2.07% 2.87% 2.07% 2.83%

Fee Waiver and/or
Expense Limitations(2) -- 0.12% 0.92% 0.19% --
-------- -------- --------- -------- --------
Net Expenses(2) 1.63% 1.95% 1.95% 1.88% 2.83%
</TABLE>

- --------------------------

(1) UNTIL MAY 26, 1998, EACH OF THE MIDCAP OPPORTUNITIES, MICROCAP GROWTH,
DIVERSIFIED GROWTH, THE INFORMATION AGE-TM-, GLOBAL NATURAL RESOURCES, AND
GLOBAL VALUE FUNDS PAID FEES UNDER AN ADMINISTRATIVE SERVICES AGREEMENT WITH RS
INVESTMENT MANAGEMENT AT AN ANNUAL RATE OF 0.25% OF A FUND'S AVERAGE DAILY NET
ASSETS; THE AGREEMENT WAS AMENDED ON THAT DATE TO PROVIDE THAT NO FEE WOULD BE
PAYABLE BY THOSE FUNDS FOR SERVICES UNDER THE AGREEMENT. OTHER EXPENSES AND
TOTAL ANNUAL FUND OPERATING EXPENSES SHOWN ABOVE EXCLUDE THE IMPACT OF AN
ADMINISTRATIVE SERVICES FEE.

(2) THE NET EXPENSES SHOWN ABOVE FOR THE MICROCAP GROWTH FUND, DIVERSIFIED
GROWTH FUND, GLOBAL NATURAL RESOURCES FUND, GLOBAL VALUE FUND, AND PARTNERS FUND
SHOW THE EFFECT OF EXPENSE LIMITATIONS AND/OR FEE WAIVERS IN EFFECT THROUGH
DECEMBER 31, 1999 ON THE TOTAL ANNUAL FUND OPERATING EXPENSES. SUCH EXPENSE
LIMITATIONS AND/OR FEE WAIVERS ARE IMPOSED PURSUANT TO A WRITTEN AGREEMENT
BETWEEN RSIM AND THE TRUST, WHICH MAY NOT BE TERMINATED BEFORE DECEMBER 31,
1999.

* Rule 12b-1 Expenses for The Contrarian Fund-TM- reflect the rate to which the
Trustees have limited payments under the Fund's Distribution Plan; in the
absence of that limitation, the Fund's Rule 12b-1 Expenses would be 0.75%, and
Total Annual Fund Operating Expenses would be 3.33%.

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.

26
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

EXAMPLE

This Example is intended to help you compare the cost of investing in a Fund
with the cost of investing in other mutual funds.

The Example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeem all of your shares at the end of those periods. The
Example also assumes that your investment earns a 5% return each year and that
the Fund's operating expenses remain the same as the Total Annual Fund Operating
Expenses shown above. Your actual costs may be higher or lower. Based on these
assumptions, your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
----------- ----------- --------- -----------
<S> <C> <C> <C> <C>
RS Emerging Growth Fund $ 150 $ 465 $ 802 $ 1,752
RS MidCap Opportunities Fund $ 133 $ 412 $ 712 $ 1,563
RS MicroCap Growth Fund $ 194 $ 600 $ 1,030 $ 2,224
RS Value + Growth Fund $ 149 $ 462 $ 797 $ 1,741
RS Diversified Growth Fund $ 192 $ 594 $ 1,020 $ 2,203
The Information Age Fund-TM- $ 166 $ 514 $ 885 $ 1,926
RS Global Natural Resources Fund $ 198 $ 649 $ 1,112 $ 2,391
RS Global Value Fund $ 198 $ 888 $ 1,510 $ 3,179
RS Partners Fund $ 191 $ 649 $ 1,112 $ 2,391
The Contrarian Fund-TM- $ 287 $ 876 $ 1,491 $ 3,142
</TABLE>

27
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

OTHER INVESTMENT STRATEGIES AND RISKS

In addition to the principal investment strategies described in the Summary
Information section above, the Funds may at times use the strategies and
techniques described below, which involve certain special risks. This Prospectus
does not attempt to disclose all of the various investment techniques and types
of securities that a Fund's Adviser might use in managing the Funds. As in any
mutual fund, investors must rely on the professional investment judgment and
skill of the Adviser.

A Fund may not achieve its objective in all circumstances and you could lose
money by investing. The following provides more detail about the Funds'
principal risks and the circumstances which could adversely affect the value of
a Fund's shares or its total return or yield.

In the remainder of this Prospectus, each of RSIM, L.P., RSIM, Inc., Elijah
Asset Management, LLC, and Eastbourne Management, L.L.C. is referred to
sometimes as an "Adviser" and they are sometimes referred to collectively as the
"Advisers."

The Funds' investment strategies and portfolio investments of many of the
Funds differ from those of most other mutual funds. Each Adviser seeks
aggressively to identify favorable securities, economic and market sectors, and
investment opportunities that other investors and investment advisers may not
have identified. An Adviser 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, some of
the Funds may engage in short sales of securities which involve special risks.
Each of the Funds may hold a portion of its assets in cash or money market
investments.

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.

The Trustees of the Trust may change the investment objective and policies
of any Fund without a vote of the shareholders unless otherwise specifically
stated. As a matter of policy, the Trustees would not materially change a Fund's
investment objective without shareholder approval.

RISKS OF INVESTING IN THE FUNDS
- -------------------------------------

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 an Adviser would otherwise have sold the
security. It is possible that an

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Adviser 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.

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, exchange control
regulations, foreign withholding taxes, and restrictions or prohibitions on the
repatriation of foreign currencies. 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 the Fund's Adviser believes investing in such securities might help
achieve the Fund's objective. The MidCap Opportunities, 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 the Fund's
Adviser expects that under normal circumstances those Funds would not likely
invest a substantial portion of their assets in debt securities.

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The MIDCAP OPPORTUNITIES FUND, the DIVERSIFIED GROWTH FUND, and THE
CONTRARIAN FUND-TM- 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 a Fund's Adviser 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.

A Fund will not necessarily dispose of a security when its debt rating is
reduced below its rating at the time of purchase, although the Fund's Adviser
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- may borrow money to invest
in additional portfolio securities. This practice, known as "leverage,"
increases the Fund's market exposure and its risk. In addition, use of short
sales by the Fund may provide the economic equivalent of the Fund's borrowing
money. When the 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 the Fund will borrow money, and the amount it
may borrow, depend on market conditions and interest rates. Successful use of
leverage depends on the Fund's Advisers' ability to predict market movements
correctly. The Fund may at times borrow money by means of reverse repurchase
agreements. Reverse repurchase agreements generally involve the sale by the 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 the Fund's overall investment exposure and may result in losses.
The amount of money borrowed by the Fund for leverage may generally not exceed
one-third of the Fund's assets (including the amount borrowed).

SHORT SALES (THE MICROCAP GROWTH FUND, VALUE + GROWTH FUND, GLOBAL NATURAL
RESOURCES FUND, AND THE CONTRARIAN FUND-TM- ONLY). When a Fund's Adviser
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 assurance that

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a Fund will be able to close out the position at any particular time or at an
acceptable price.

The Contrarian Fund-TM- may enter into short sales on securities with a
value of up to 40% of the Fund's total assets. Use of short sales by a Fund may
have the effect of providing the Fund with investment leverage. For a
description of the effects and the risks of investment leverage, see "Borrowing
and leverage" in this Prospectus. Each of the Funds other than The Contrarian
Fund-TM- may enter into short sales on securities with a value of up to 25% of
the Fund's total assets.

ZERO COUPON BONDS. 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.

OPTIONS AND FUTURES. A Fund may buy and sell call and put options to hedge
against 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.

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 its Adviser 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 transactions
only if its Adviser 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.

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

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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 its
Adviser, the pricing mechanism and liquidity of the over-the-counter markets are
satisfactory and the participants are responsible parties likely to meet their
obligations.

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 net 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 GLOBAL VALUE FUND, the
PARTNERS FUND, and THE CONTRARIAN FUND-TM-, 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 the securities of any one issuer other
than U.S. Government securities and other securities of certain other investment
companies 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 and securities of certain other investment
companies). 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 its Adviser 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.

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, a Fund's Adviser may judge that market
conditions make pursuing a Fund's basic investment strategy inconsistent with
the best interests of its shareholders. At such times, the Adviser 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 its Adviser believes to be
consistent with the Fund's best interests. If such a temporary "defensive"
strategy is implemented, a Fund may not achieve its investment objective.

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 including short-term capital gains which
are generally taxed to shareholders at ordinary income tax rates. The Portfolio
turnover rates for the Funds are set forth under "Financial Highlights."

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MANAGEMENT OF THE FUNDS

INVESTMENT ADVISERS
- -------------------------------------

RS Investment Management, L.P., 388 Market Street, Suite 200, San Francisco,
CA 94111, is the investment adviser for each of the Funds other than the
Emerging Growth Fund. RSIM, L.P., a California partnership, was formed in 1993.
RS Investment Management, Inc., 40 Tower Lane, Avon Park South, Avon,
Connecticut 06001 is the investment adviser for the Emerging Growth Fund. RSIM,
Inc. commenced operations in March 1986. (RSIM, L.P. and RSIM, Inc. are
sometimes referred to collectively in this Prospectus as "RS Investment
Management.")

Subject to such policies as the Trustees may determine, RS Investment
Management (or a Sub-Adviser to the Fund in question, as the case may be)
furnishes a continuing investment program for the Funds and makes investment
decisions on their behalf. The Trust pays all expenses not assumed by RS
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.

The Advisers place all orders for purchases and sales of the Funds'
investments. In selecting broker-dealers, an Adviser may consider research and
brokerage services furnished to it and its affiliates. Subject to seeking the
most favorable price and execution available, an Adviser may consider sales of
shares of the Funds as a factor in the selection of broker-dealers.

RS Investment Management may at times bear certain expenses of the Funds.
The Investment Advisory Agreements between the Funds and RS Investment
Management permit RS 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 MIDCAP OPPORTUNITIES, MICROCAP GROWTH,
DIVERSIFIED GROWTH, INFORMATION AGE, GLOBAL NATURAL RESOURCES, and GLOBAL VALUE
FUNDS has entered into an agreement with RSIM, L.P. pursuant to which RSIM, L.P.
provides administrative services to the Fund. No fees are payable by the Funds
under the agreement.

SUB-ADVISERS
- -------------------------------------

Elijah Asset Management, LLC, 100 Pine St., Suite 420, San Francisco,
California 94111, a newly formed Delaware limited liability company, serves as
sub-adviser to The Information Age Fund-TM- and the Value + Growth Fund in
respect of all of the assets of those Funds. Eastbourne Management, L.L.C. 1101
Fifth Avenue, Suite 160, San Rafael, California 94901, serves as a
sub-adviser in respect of a portion of the assets of The Contrarian Fund-TM-.
(Each of Elijah Asset Management and Eastbourne is sometimes referred to as a
"Sub-Adviser.") Subject to such policies as the Trustees or RSIM, L.P. may
determine, each Sub-Adviser manages such of the Fund's assets as are allocated
to it in accordance with the Fund's investment objective, policies, and
limitations. Each Sub-Adviser also makes investment decisions for the Fund as to
those assets and places orders to purchase and sell securities and other
investments for such Fund in respect of those assets.

ELIJAH ASSET MANAGEMENT, LLC. RSIM, L.P. pays a fee to Elijah Asset
Management with respect to each of The Information Age Fund-TM- and the Value +
Growth Fund equal to 50% of the fees paid to RSIM, L.P. by such Fund pursuant to
its Investment Advisory Agreement.

Pursuant to an agreement with RSIM, L.P., Elijah Asset Management has agreed
to employ Mr. Ronald Elijah as the full-time principal portfolio manager of the
Value + Growth Fund and The Information Age Fund-TM-. Previously, Mr. Elijah
managed those Funds as an employee of RSIM, L.P.

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EASTBOURNE MANAGEMENT, L.L.C. RSIM, L.P. allocates a portion of The
Contrarian Fund's assets for management by Eastbourne in circumstances where
RSIM, L.P. believes that management of those assets by Eastbourne would be in
the best interests of the Fund, such as where RSIM, L.P. believes that an
increase in, or change to, the Fund's short positions might be desirable, or
where it believes that long investments by the Fund might be desirable in
sectors or companies where Eastbourne might offer a successful investment
program. RSIM, L.P. pays a fee to Eastbourne in an amount equal to 40% of the
fees paid to RSIM, L.P. under its Investment Advisory Agreement with the Fund,
in respect of assets allocated to Eastbourne.

For 1998, the Funds paid, in total, the following advisory fees (as a
percentage of each Fund's average net assets):

<TABLE>
<CAPTION>
ADMINISTRATIVE
ADVISORY CONTRACTUAL SERVICES
FEES PAID* RATE FEES PAID**
------------- ------------- ---------------
<S> <C> <C> <C>
RS Emerging Growth
Fund 1.00% 1.00% --
RS MidCap
Opportunities Fund 0.66% 1.00% 0.12%
RS MicroCap Growth
Fund 1.15% 1.25% 0.10%
RS Value + Growth Fund 1.00% 1.00% --
RS Diversified Growth
Fund 0.94% 1.00% 0.11%
The Information Age
Fund-TM- 1.00% 1.00% 0.11%
RS Global Natural
Resources Fund 0.74% 1.00% 0.14%
RS Global Value Fund 0.00% 1.00% 0.12%
RS Partners Fund 1.06% 1.25% --
The Contrarian
Fund-TM- 1.50% 1.50% --
</TABLE>

* The fees paid reflect expense limitations in effect during the period for
certain Funds.

** Each of these Funds shown paid administrative services fees to RSIM, L.P. at
an annual rate of 0.25% of the Fund's average daily net assets through May 26,
1998.

PORTFOLIO MANAGERS

Roderick R. Berry, formerly an employee of RSIM, L.P. and now a member of
Elijah Asset Management, serves as a co-portfolio manager of The Information Age
Fund-TM-. Prior to joining Elijah Asset Management, Mr. Berry was a member of
the RS Investment Management research team. He has served on the management team
of that Fund since its inception. Prior to joining RS Investment Management, Mr.
Berry worked for USL Capital for six years as both an investment officer and a
financial manager. Prior to joining USL Capital, he was the assistant product
manager for interest-bearing checking at Wells Fargo Bank. From 1987-1989, Mr.
Berry was president and founder of the Bay Area Optical Laboratory, Inc., a
wholesale optical laboratory. He holds a B.A. in economics from Stanford
University and an M.B.A. from the J.L. Kellogg School at Northwestern
University.

James L. Callinan is responsible for managing the Emerging Growth Fund's
portfolio. 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 Charter Financial Analyst.

Ronald E. Elijah, formerly an employee of RSIM, L.P. and now a managing
member of Elijah Asset Management, 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

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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 J. 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 RS
Investment Management since 1989. Mr. Evans was an analyst and portfolio manager
at CIGNA before joining RS Investment Management. He holds a B.A. from Muskingum
College and an M.B.A. from the Wharton School of the University of Pennsylvania.

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. Mr. Pilara is a Trustee of the
Trust. 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 RS Investment Management, 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. Mr. Pilara has been a Trustee of the
Trust since September 1997.

Rainerio Reyes joined RS Investment Management in February 1994 and serves
as a co-portfolio manager of the MicroCap Growth Fund. Prior to joining RS
Investment Management, he was a manager in Ernst & Young's management consulting
division and served clients in the retail, hotel, financial services, real
estate, and business services industries. During the Aquino Administration, Mr.
Reyes served as Executive Assistant to the Secretary of Transportation and
Communications, Republic of the Philippines. While with the Hilton Hotels
Corporation, Mr. Reyes held various management positions with the food and
beverage and rooms divisions. Mr. Reyes holds a B.S. in hotel and restaurant
administration from Cornell University and an M.B.A. with a major in finance
from the Wharton School of the University of Pennsylvania.

John H. Seabern serves as a co-portfolio manager of the Diversified Growth
Fund. He has served on the management team of that Fund since its inception. Mr.
Seabern is also a research analyst for the MidCap Opportunities Fund. Prior to
joining the MidCap Opportunities Fund, Mr. Seabern was a research analyst for
The Contrarian Fund-TM-. He has been with RS Investment Management since
September 1993. Prior to that time, Mr. Seabern worked at Duncan-Hurst Capital
Management as a performance analyst for two years. He holds a B.S. degree in
finance from the University of Colorado.

John L. Wallace has been responsible for managing the MidCap Opportunities
Fund since its inception in July 1995 and is responsible for managing the
Diversified Growth Fund. Prior to joining RS Investment Management, 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.

The Contrarian Fund-TM- is managed by a team of investment professionals at
RS Investment Management and Eastbourne Management, L.L.C. Mr. Paul Stephens and
Mr. Andrew P. Pilara, Jr. serve as senior members of the RS Investment
Management team for the Fund and Mr. Rick Barry serves as a senior member of the
Eastbourne team for the Fund.

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HOW THE FUNDS' SHARES ARE PRICED

CALCULATION OF NET ASSET VALUE
- -------------------------------------

Each Fund calculates the net asset value of its shares by dividing the total
value of its assets, less its liabilities, by the number of shares outstanding.
Shares are valued as of 4:30 p.m. eastern time on each day the New York Stock
Exchange is open. The Funds value their portfolio securities for which market
quotations are readily available at market value. Short-term investments that
will mature in 60 days or less are stated at amortized cost, which approximates
market value. The Funds value all other securities and assets at their fair
values as determined in accordance with the guidelines and procedures adopted by
the Trust's Board of Trustees.

The Funds will not price their shares on days when the New York Stock
Exchange is closed. The Funds expect that the days, other than weekend days,
that the New York Stock Exchange will be closed are New Year's Day, Martin
Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day, Independence
Day (observed), Labor Day, Thanksgiving Day, and Christmas Day.

Securities quoted in foreign currencies are translated into U.S. dollars at
the current exchange rates or at such other rates as may be used in accordance
with procedures approved by the Trustees. As a result, fluctuations in the
values of such currencies in relation to the U.S. dollar will affect the net
asset value of a Fund's shares even though there has not been any change in the
values of such securities as quoted in such foreign currencies. All assets and
liabilities of a Fund denominated in foreign currencies are valued in U.S.
dollars based on the exchange rate last quoted by a major bank prior to the time
when the net asset value of a Fund's shares is calculated. Because certain of
the securities in which a Fund may invest may trade on days when such Fund does
not price its shares, the net asset value of a Fund's shares may change on days
when shareholders will not be able to purchase or redeem their shares.

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
are computed as of such times. Also because of the amount of time required to
collect and process trading information as to large number of securities issues,
the values of certain securities (such as convertible bonds) 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 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.

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.

HOW TO PURCHASE SHARES

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

36
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

may obtain an Application by calling the Funds at 1-800-766-FUND, or by writing
to the Funds at 388 Market Street, Suite 200, San Francisco, CA 94111. For more
information on RS Funds IRAs, please call to request an IRA Disclosure
Statement.

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 RS Investment Trust), to the Funds'
Transfer Agent: State Street Bank and Trust Company, c/o National Financial Data
Services, P.O. Box 419717, Kansas City, MO 64141-6717.

BY OVERNIGHT MAIL: Send the information described above to: 330 West 9th
Street, First Floor, Kansas City, MO 64105.

BY WIRE:

(1) Telephone National Financial Data Services at 1-800-624-8025. 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.

(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 64141-6717. Please include your account number
on the Application. Failure to supply a signed Application may result in
backup withholding.

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, an Adviser, or Provident
Distributors, Inc. ("Provident"), 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 Fund. If you have
established the Autobuy option, you may purchase additional shares in an
existing account in any amount that does not exceed the cumulative dollar value
held in the account, by calling the Transfer Agent at 1-800-624-8025 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. Shares will be issued at the net asset value per share after the
Fund accepts your order, which will typically be on the date when you provide
proper instructions to the Transfer Agent (assuming you do so prior to the close
of the New York Stock Exchange). There is no fee for this option. If you did not
establish this option at the time you opened your account, send a

37
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
Failure to include your specific Fund and account information may delay
processing of purchases. Purchases of Fund shares are made at the net asset
value next determined after the purchase is accepted. See "How the Funds' Shares
are Priced." Please initiate any wire transfer early in the morning to ensure
that the wire is received by a Fund before the close of the New York Stock
Exchange, normally 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. Third-party checks will not be accepted as payment for
purchases. 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.

HOW TO SELL SHARES

You may redeem your shares, or sell your shares back to the appropriate
Fund, on any business day by following one of the procedures explained below.

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 Fund and 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

38
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- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

(see the Account Application or call the Transfer Agent for details), you may
redeem shares by calling the Transfer Agent at 1-800-624-8025 by the close of
the New York Stock Exchange, normally 4:00 p.m. eastern 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
change, modify, or terminate its telephone redemption services at any time upon
30 days' notice.

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 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 RS 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 1-800-624-8025 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. If you
purchase shares of a Fund through the Autobuy option and redeem them shortly
thereafter, the Fund will delay payment of the redemption proceeds for up to
fifteen days after your purchase of shares through the Autobuy option is
accepted.

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.

39
<PAGE>
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- --------------------------------------------------------------------------------

EXCHANGES

Shares of one Fund may be exchanged for 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 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 or RS money market funds during the same
twelve-month period).

Investors should note that an exchange will result in a taxable event and
will generally result in a taxable gain or loss. 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.

DIVIDENDS AND DISTRIBUTIONS

Each Fund distributes substantially all of its net investment income and net
capital gains to shareholders at least annually (more often, if necessary to
avoid certain excise or income taxes on the Fund).

YOU MAY CHOOSE EITHER OF THE FOLLOWING DISTRIBUTION OPTIONS:

- - Reinvest your distributions in additional shares of your Fund; or

- - Receive your distributions in cash.

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.

TAXES

QUALIFICATION AS A REGULATED INVESTMENT COMPANY. Each Fund intends to
qualify as a "regulated investment company" under Subchapter M of the Internal
Revenue Code 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.

TAXES ON DIVIDENDS AND DISTRIBUTIONS. For federal income tax purposes,
distributions of investment income are taxable as ordinary income. Taxes on
distributions of capital gains are determined by how long the Fund owned the
investments that generated them, rather than how long shareholders have held
Fund shares. Distributions are taxable to shareholders even if they are paid
from income or gains earned by the Fund before an investment in a Fund (and thus
were included in the price paid for the Fund shares). Distributions of gains
from investments that the Fund owned for more than one year will be taxable as
capital gains. Distributions of gains from investments that the Fund owned for
one year or less will be taxable as ordinary income. Distributions will be
taxable as described above,

40
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- --------------------------------------------------------------------------------
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.

TAXES WHEN YOU SELL OR EXCHANGE YOUR SHARES. Any gain resulting from the
sale or exchange of your shares in the Funds will also generally be subject to
federal income or capital gains tax, depending on your holding period. A Fund's
investments in certain debt obligations may cause the Fund to recognize taxable
income in excess of the cash generated by such obligations. Thus, a Fund could
be required at times to liquidate other investments in order to satisfy its
distribution requirements.

A Fund's investments in foreign securities may be subject to foreign
withholding taxes. In that case, the Fund's yield on those securities would be
decreased. In addition, a Fund's investments in foreign securities or foreign
currencies may increase or accelerate the Fund's recognition of ordinary income
and may affect the timing or amount of the Fund's distributions. Shareholders in
a Fund that invests more than 50% of its assets in foreign securities may be
entitled to claim a credit or deduction with respect to foreign taxes.

CONSULT YOUR TAX ADVISOR ABOUT OTHER POSSIBLE TAX CONSEQUENCES. This is a
summary of certain federal tax consequences of investing in a Fund. You should
consult your tax advisor for more information on your own tax situation,
including possible foreign, state, and local taxes.

DISTRIBUTION ARRANGEMENTS AND RULE 12B-1 FEES

Provident Distributors, Inc. is the principal underwriter of the Funds'
shares. To compensate Provident for the services it provides and for the
expenses it bears in connection with the distribution of a Fund's shares, each
Fund makes payments to Provident under a Distribution Plan adopted pursuant to
Rule 12b-1 under the Investment Company Act of 1940. Under the Plan, each of the
Funds pays Provident compensation, accrued daily and paid monthly, at the annual
rate of 0.25% of the Fund's average daily net assets. (The Distribution Plan
contemplates that The Contrarian Fund-TM- may make payments at the annual rate
of up to 0.75% 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.) Provident may pay brokers a commission expressed as a
percentage of the purchase price of shares of the Funds.

RS Investment Management or its affiliates provide certain services to
Provident in respect of the promotion of the shares of the Funds. In return for
those services, Provident pays to RS Investment Management or those affiliates
substantially all of the payments received by Provident under the Distribution
Plan.

RS Investment Management and its affiliates or Provident, 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 or rules of any state or any self-regulatory
agency, such as the National Association of Securities Dealers, Inc.

41
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- --------------------------------------------------------------------------------

The Funds pay distribution and other fees for the sale of their shares and
for services provided to shareholders out of the Funds' assets on an on-going
basis. As a result, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.

YEAR 2000 DISCLOSURE

Each of the Funds receives services from its Adviser, administrator,
sub-administrator, distributor, transfer agent, custodian, and other providers
which rely on the smooth functioning of their respective systems and the systems
of others to perform those services. It is generally recognized that certain
systems in use today may not perform their intended functions adequately after
the Year 1999 because of the inability of the software to distinguish the Year
2000 from the Year 1900. Each Adviser is taking steps that it believes is
reasonably designed to address this potential "Year 2000" problem and to obtain
satisfactory assurances that comparable steps are being taken by each of the
Funds' other major service providers. There can be no assurance, however, that
these steps will be sufficient to avoid any adverse impact on the Funds from
this problem. In considering whether to purchase or to continue to hold a
security, RSIM considers, where appropriate, the likely effects of any potential
Year 2000 issues on the security's issuer.

42
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- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS

EMERGING GROWTH FUND

The financial highlights table is intended to help you understand the financial
performance of the Fund for the past five fiscal years. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with each Fund's financial statements, are included in the
annual report, which is available upon request.

<TABLE>
<CAPTION>
Emerging Growth Fund
- ---------------------------------------------------------------------------------------------------
NINE
YEAR YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/96 12/31/95 3/31/95
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $18.71 $20.07 $19.21 $18.36 $18.37
Income From Investment Operations:
Net investment income/(loss) (0.20) (0.14) (0.17) (0.15) (0.17)
Net realized and unrealized
appreciation/ (depreciation) on
investments 5.32 3.80 4.23 2.58 2.26
- ---------------------------------------------------------------------------------------------------
Total from investment operations 5.12 3.66 4.06 2.43 2.09
Distributions:
Dividends from net investment income -- -- -- -- --
Distribution from net realized
capital gain (0.88) (5.02) (3.20) (1.58) (2.10)
- ---------------------------------------------------------------------------------------------------
Total Distributions (0.88) (5.02) (3.20) (1.58) (2.10)
Net asset value, end of period $22.95 $18.71 $20.07 $19.21 $18.36
Total Return 28.02% 18.54% 21.53% 13.50% 12.01%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $403,330 $248,730 $210,404 $167,728 $182,275
Ratio of net operating expenses to
average net assets 1.47% 1.50% 1.60% 1.64%* 1.56%
Ratio of net investment income/(loss)
to average net assets (1.03)% (0.68)% (0.83)% (0.99)%* (0.96)%
Portfolio turnover rate 291% 462% 270% 147% 280%
- ---------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been determined by using the average number of shares
outstanding throughout the period.

* ANNUALIZED.

43
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FINANCIAL HIGHLIGHTS (continued)

GLOBAL VALUE FUND AND MIDCAP OPPORTUNITIES FUND (FORMERLY, THE "GROWTH & INCOME
FUND")

The financial highlights table is intended to help you understand the financial
performance of these Funds since the Funds commenced operations. Certain
information reflects financial results for a single Fund share. The total
returns in the table represent the rate that an investor would have earned or
lost on an investment in such Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with each Fund's financial statements, are included in the
annual report, which is available upon request.

<TABLE>
<CAPTION>
Global Value Fund MidCap Opportunities Fund
- --------------------------------------------------------------------------------------------------
PERIOD PERIOD
YEAR 4/1/97 YEAR YEAR YEAR 7/12/95
ENDED THROUGH ENDED ENDED ENDED THROUGH
12/31/98 12/31/97 12/31/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $11.15 $10.00 $13.52 $13.62 $11.24 $10.00
Income From Investment
Operations:
Net Investment
income/(loss) 0.16 0.28 0.14 0.07 0.02 --
Net realized gain/(loss)
and unrealized
appreciation/
(depreciation) on
investments 1.03 1.69 1.34 2.90 2.70 1.24
- --------------------------------------------------------------------------------------------------
Total from investment
operations 1.19 1.97 1.48 2.97 2.72 1.24
Distributions:
Dividends from net
investment income (0.08) (0.22) (0.19) (0.04) (0.02) --
Distribution from net
realized capital gain (3.23) (0.60) (0.77) (3.03) (0.32) --
- --------------------------------------------------------------------------------------------------
Total Distributions (3.31) (0.82) (0.96) (3.07) (0.34) --
Net asset value, end of
period $9.03 $11.15 $14.04 $13.52 $13.62 $11.24
Total Return 11.11% 19.97% 11.65% 22.40% 24.16% 12.40%
Ratios/Supplemental Data:
Net assets, end of period
(thousands) $8,269 $21,019 $183,910 $298,669 $309,775 $136,902
Ratio of net operating
expenses to average net
assets 1.95%(1) 1.95%(1)* 1.30%(1) 1.30%(1) 1.71%(1) 1.94%*
Ratio of net investment
income/ (loss) to average
net assets 1.37%(1) 3.50%(1)* 1.00%(1) 0.45%(1) 0.18%(1) (0.01)%*
Portfolio turnover rate 279% 234% 212% 236% 212% 97%
- --------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been determined by using the average number of shares
outstanding throughout the period.

* ANNUALIZED.

(1) IF THE GLOBAL VALUE 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 YEAR ENDED DECEMBER 31, 1998, AND FOR THE YEAR ENDED DECEMBER 31,
1997 WOULD HAVE BEEN 2.99% AND 3.21%, RESPECTIVELY, AND THE RATIO OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 0.33% AND 2.24%,
RESPECTIVELY. IF THE MIDCAP OPPORTUNITIES 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, 1998, FOR THE YEAR ENDED
DECEMBER 31, 1997, AND FOR THE YEAR ENDED DECEMBER 31, 1996, WOULD HAVE BEEN
1.64%, 1.72% AND 1.76%, RESPECTIVELY, AND THE RATIO OF NET INVESTMENT INCOME
TO AVERAGE NET ASSETS WOULD HAVE BEEN 0.65%, 0.03% AND 0.13%, RESPECTIVELY.

44
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FINANCIAL HIGHLIGHTS (continued)

THE INFORMATION AGE FUND-TM- AND MICROCAP GROWTH FUND

<TABLE>
<CAPTION>
The Information
Age Fund-TM- MicroCap Growth Fund
- -------------------------------------------------------------------------------------------------------------------------
PERIOD PERIOD
YEAR YEAR YEAR 11/15/95 YEAR YEAR 8/15/96
ENDED ENDED ENDED THROUGH ENDED ENDED THROUGH
12/31/98 12/31/97 12/31/96 12/31/95 12/31/98 12/31/97 12/31/96
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.80 $11.51 $9.30 $10.00 $14.35 $11.00 $10.00
Income From Investment Operations:
Net investment income/(loss) (0.20) (0.22) (0.20) (0.01) (0.21) (0.19) (0.08)
Net realized gain/(loss) and unrealized
appreciation/ (depreciation) on
investments 6.36 0.95 2.68 (0.69) 0.12 3.54 1.08
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.16 0.73 2.48 (0.70) (0.09) 3.35 1.00
Distributions:
Dividends from net investment income -- -- -- -- -- -- --
Distribution from net realized capital
gain -- (0.44) (0.27) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.44) (0.27) -- -- -- --
Net asset value, end of period $17.96 $11.80 $11.51 $9.30 $14.26 $14.35 $11.00
Total Return 52.20% 6.15% 26.72% (7.00)% (0.63)% 30.45% 10.00%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $159,604 $118,832 $106,264 $32,826 $94,723 $104,858 $9,464
Ratio of net operating expenses to average
net assets 1.74% 1.82% 2.03% 2.13%* 1.91%(1) 1.95%(1) 3.08%(1)*
Ratio of net investment income/(loss) to
average net assets (1.55)% (1.71)% (1.85)% (0.89)%* (1.46)%(1) (1.35)%(1) (2.13)%(1)*
Portfolio turnover rate 224% 369% 452% 89% 108% 170% 22%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been 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 YEAR ENDED DECEMBER 31, 1998, AND FOR THE YEAR ENDED DECEMBER 31
1997, AND FOR THE PERIOD ENDED DECEMBER 31, 1996, WOULD HAVE BEEN 2.01%,
2.60% AND 6.40%, RESPECTIVELY, AND THE RATIO OF NET INVESTMENT LOSS TO
AVERAGE NET ASSETS WOULD HAVE BEEN (1.56)%, (2.00)% AND (5.45)%,
RESPECTIVELY.

45
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FINANCIAL HIGHLIGHTS (continued)

VALUE + GROWTH FUND

<TABLE>
<CAPTION>
Value + Growth Fund
- ---------------------------------------------------------------------------------------------------------
NINE
YEAR YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/96 12/31/95 12/31/95
<S> <C> <C> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $23.18 $24.16 $22.66 $18.25 $13.56
Income From Investment Operations:
Net investment income/(loss) (0.25) (0.26) (0.24) (0.16) (0.18)
Net realized gain/(loss) and unrealized
appreciation/(depreciation) on
investments 6.33 3.71 3.47 4.57 5.07
- ---------------------------------------------------------------------------------------------------------
Total from investment operations 6.08 3.45 3.23 4.41 4.89
Distributions:
Dividends from net investment income -- -- -- -- --
Distribution from net realized capital
gain (3.34) (4.43) (1.73) -- (0.20)
- ---------------------------------------------------------------------------------------------------------
Total Distributions (3.34) (4.43) (1.73) -- (0.20)
Net asset value, end of period $25.92 $23.18 $24.16 $22.66 $18.25
Total Return 27.44% 13.81% 14.12% 24.16% 36.27%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $677,505 $752,994 $643,157 $1,140,151 $428,903
Ratio of net operating expenses to average
net assets 1.46% 1.44% 1.51% 1.45%* 1.68%
Ratio of net investment income/(loss) to
average net assets (0.96)% (0.96)% (1.06)% (1.04)%* (1.09)%
Portfolio turnover rate 190% 228% 221% 104% 232%
- ---------------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been determined by using the average number of shares
outstanding throughout the period.

* ANNUALIZED.

46
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS (continued)

DIVERSIFIED GROWTH FUND

The financial highlights table is intended to help you understand the financial
performance of the Fund since the Fund commenced operations. Certain information
reflects financial results for a single Fund share. The total returns in the
table represent the rate that an investor would have earned or lost on an
investment in the Fund (assuming reinvestment of all dividends and
distributions). This information has been audited by PricewaterhouseCoopers LLP,
whose report, along with each Fund's financial statements, are included in the
annual report, which is available upon request.

<TABLE>
<CAPTION>
Diversified Growth Fund
- ---------------------------------------------------------------------------------------------------
FOR THE
YEAR YEAR PERIOD
ENDED ENDED ENDED
12/31/98 12/31/97 12/31/96(1)
<S> <C> <C> <C>
- ---------------------------------------------------------------------------------------------------
Net asset value, beginning of period $14.04 $12.42 $10.00
Income From Investment Operations:
Net investment income/(loss) (0.19) (0.17) (0.05)
Net realized gain/(loss) and unrealized
appreciation/(depreciation) on investments 2.43 3.72 2.47
- ---------------------------------------------------------------------------------------------------
Total from investment operations 2.24 3.55 2.42
Distributions:
Dividends from net investment income -- -- --
Distribution from net realized capital gain (0.39) (1.93) --
- ---------------------------------------------------------------------------------------------------
Total Distributions (0.39) (1.93) --
Net asset value, end of period $15.89 $14.04 $12.42
Total Return 16.28% 29.45% 24.20%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $69,031 $80,278 $59,588
Ratio of net operating expenses to average net assets 1.89%(2) 1.94%(2) 2.28%(2)*
Ratio of net investment income/(loss) to average net assets (1.29)%(2) (1.20)%(2) (1.05)%(2)*
Portfolio turnover rate 403% 370% 69%
- ---------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been determined by using the average number of shares
outstanding throughout the period.

* ANNUALIZED.

(1) THE DIVERSIFIED GROWTH FUND COMMENCED OPERATIONS ON AUGUST 1, 1996.

(2) 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 YEAR ENDED DECEMBER 31, 1998, FOR THE YEAR ENDED DECEMBER 31,
1997 AND FOR THE PERIOD ENDED DECEMBER 31, 1996, WOULD HAVE BEEN 1.95, 2.14%
AND 2.44%, RESPECTIVELY, AND THE RATIO OF NET INVESTMENT LOSS TO AVERAGE NET
ASSETS WOULD HAVE BEEN (1.35%), (1.40)% AND (1.21)%, RESPECTIVELY.

47
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS (continued)

GLOBAL NATURAL RESOURCES FUND

<TABLE>
<CAPTION>
Global Natural Resources Fund
- -----------------------------------------------------------------------------------------------------
PERIOD
YEAR YEAR YEAR 11/15/95
ENDED ENDED ENDED THROUGH
12/31/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.67 $14.29 $10.12 $10.00
Income From Investment Operations:
Net investment income/(loss) (0.07) (0.05) (0.06) 0.02
Net realized gain/(loss) and unrealized
appreciation/ (depreciation) on investments (3.95) (2.39) 4.24 0.10
- -----------------------------------------------------------------------------------------------------
Total from investment operations (4.02) (2.44) 4.18 0.12
Distributions:
Dividends from net investment income -- -- (0.01) --
Distribution from net realized capital gain (0.19) (0.18) -- --
- -----------------------------------------------------------------------------------------------------
Total Distributions (0.19) (0.18) (0.01) --
Net asset value, end of period $7.46 $11.67 $14.29 $10.12
Total Return (34.45)% (17.14)% 41.21% 1.20%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $23,476 $78,371 $120,521 $792
Ratio of net operating expenses to average net assets 1.95%(1) 1.81%(1) 1.94%(1) 2.60%(1)*
Ratio of net investment income/(loss) to average net
assets (0.69)%(1) (0.38)%(1) (0.45)%(1) 1.84%(1)*
Portfolio turnover rate 63% 97% 82% 0%
- -----------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been determined by using the average number of shares
outstanding throughout the period.

* ANNUALIZED.

(1) 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, 1998, FOR THE YEAR ENDED DECEMBER
31, 1997, FOR THE YEAR ENDED DECEMBER 31, 1996, AND THE PERIOD FROM NOVEMBER
15, 1995 (COMMENCEMENT OF OPERATIONS), THROUGH DECEMBER 31, 1995, WOULD HAVE
BEEN 2.21%, 1.82%, 2.16% AND 14.25%, RESPECTIVELY, AND THE RATIO OF NET
INVESTMENT LOSS TO AVERAGE NET ASSETS WOULD HAVE BEEN (0.96)%, (0.38)%,
(0.67)% AND (9.81)%, RESPECTIVELY.

48
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS (continued)

PARTNERS FUND

<TABLE>
<CAPTION>
Partners Fund
- --------------------------------------------------------------------------------------------------------
PERIOD
YEAR YEAR YEAR 7/12/95
ENDED ENDED ENDED THROUGH
12/31/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $16.49 $14.60 $10.39 $10.00
Income From Investment Operations:
Net investment income/(loss) (0.04) 0.13 0.13 0.06
Net realized gain/(loss) and unrealized
appreciation/(depreciation) on investments (4.31) 2.52 4.36 0.33
- --------------------------------------------------------------------------------------------------------
Total from investment operations (4.35) 2.65 4.49 0.39
Distributions:
Dividends from net investment income (0.38) (0.12) (0.06) --
Distribution from net realized capital gain (0.23) (0.64) (0.22) --
- --------------------------------------------------------------------------------------------------------
Total Distributions (0.61) (0.76) (0.28) --
Net asset value, end of period $11.53 $16.49 $14.60 $10.39
Total Return (27.38)% 18.08% 43.15% 3.90%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $47,936 $194,133 $127,268 $7,480
Ratio of net operating expenses to average net assets 1.88%(1) 1.78% 1.93%(1) 2.41%(1)*
Ratio of net investment income/(loss) to average net assets (0.26)%(1) 0.82% 0.95%(1) 1.34%(1)*
Portfolio turnover rate 73% 78% 101% 71%
- --------------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been determined by using the average number of shares
outstanding throughout the period.

* ANNUALIZED.

(1) 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, 1998, AND FOR THE YEAR ENDED DECEMBER 31,
1996, AND FOR THE PERIOD ENDED DECEMBER 31, 1995, WOULD HAVE BEEN 2.07%,
2.15% AND 5.12%, RESPECTIVELY, AND THE RATIO OF NET INVESTMENT INCOME/(LOSS)
TO AVERAGE NET ASSETS WOULD HAVE BEEN (0.46)%, 0.73% AND (1.37)%,
RESPECTIVELY.

49
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

FINANCIAL HIGHLIGHTS (continued)

THE CONTRARIAN FUND-TM-

<TABLE>
<CAPTION>
The Contrarian Fund-TM-
- --------------------------------------------------------------------------------------------------
NINE
YEAR YEAR YEAR MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED
12/31/98 12/31/97 12/31/96 12/31/95 3/31/95
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.61 $16.57 $13.78 $10.70 $12.34
Income From Investment Operations:
Net investment income/(loss) (0.08) 0.00 0.00 (0.01) (0.04)
Net realized gain/(loss) and
unrealized
appreciation/(depreciation) on
investments (3.72) (4.88) 2.99 3.09 (1.35)
- --------------------------------------------------------------------------------------------------
Total from investment operations (3.80) (4.88) 2.99 3.08 (1.39)
Distributions:
Dividends from net investment
income -- -- -- -- --
Distribution from net realized
capital gain (0.58) (0.08) (0.20) -- (0.25)
- --------------------------------------------------------------------------------------------------
Total Distributions (0.58) (0.08) (0.20) -- (0.25)
Net asset value, end of period $7.23 $11.61 $16.57 $13.78 $10.70
Total Return (32.69)% (29.51)% 21.68% 28.79% (11.23)%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $124,666 $398,242 $1,063,438 $507,477 $397,646
Ratio of net operating expenses to
average net assets 2.83% 2.48% 2.46% 2.54%* 2.46%(1)
Ratio of net investment income/(loss)
to average net assets (0.80)% 0.01% (0.02)% (0.20)%* (0.27)%(1)
Portfolio turnover rate 39% 36% 44% 29% 79%
- --------------------------------------------------------------------------------------------------
</TABLE>

Per share data has been determined by using the average number of shares
outstanding throughout the period.

* ANNUALIZED.

(1) IF THE CONTRARIAN FUND-TM- 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)%.

50
<PAGE>

The Trust's Statement of Additional Information ("SAI") dated May 3, 1999
and annual and semi-annual reports to shareholders contain additional
information about the Funds. The SAI and the financial statements included in
the Trust's most recent annual report to shareholders are incorporated by
reference into this prospectus, which means that they are part of this
prospectus for legal purposes. The Trust's annual report discusses the market
conditions and investment strategies that significantly affected each Fund's
performance during its last fiscal year. You may obtain free copies of these
materials, request other information about the Funds, or make shareholder
inquiries by writing to the Trust at the address below or by telephoning
1-800-766-FUND.

You may review and copy information about the Trust, including the SAI, at
the Securities and Exchange Commissions Public Reference Room in Washington,
D.C. You may call the Commission at 800-SEC-0330 for information about the
operation of the public reference room. The Commission maintains a World Wide
Web site at http://www.sec.gov, which contains reports and other information
about the Funds. You may also obtain copies of these materials, upon payment of
a duplicating fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-05159.

ADDRESS CORRESPONDENCE TO:
RS Investment Management
388 Market Street, Suite 200
San Francisco, CA 94111
World Wide Web Address: http://www.rsim.com
Shareholder Services
1-800-766-FUND

[LOGO]
(FORMERLY ROBERTSON STEPHENS INVESTMENT MANAGEMENT)

RS INVESTMENT TRUST

----------------

PROSPECTUS

----------------

MAY 3, 1999

Investment Company Act File No. 811-05159

<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
RS INVESTMENT TRUST

THE CONTRARIAN FUND-TM-
RS DIVERSIFIED GROWTH FUND
RS EMERGING GROWTH FUND
RS GLOBAL NATURAL RESOURCES FUND
RS GLOBAL VALUE FUND
RS MIDCAP OPPORTUNITIES FUND
THE INFORMATION AGE FUND-TM-
RS MICROCAP GROWTH FUND
RS PARTNERS FUND
RS VALUE + GROWTH FUND

MAY 3, 1999

This Statement of Additional Information ("SAI" or "Statement") is not a
prospectus and should be read in conjunction with the Prospectus of RS
Investment Trust (the "Trust") dated May 3, 1999, as it may be revised from
time to time. A copy of a Prospectus of the Trust can be obtained upon
request made to RS Investment Management, 388 Market Street, Suite 200, San
Francisco, California 94111 telephone 1-800-766-FUND.

Certain disclosure has been incorporated by reference into this SAI
from the Funds' annual report. For a free copy of the annual report, please
call 1-800-766-FUND.

TABLE OF CONTENTS

CAPTION PAGE
- ------- ----
<S> <C>
TRUST INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
INVESTMENTS AND RISKS. . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
THE FUNDS' INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . B-14
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . B-17
THE FUNDS' DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . B-35
HOW NET ASSET VALUE IS DETERMINED. . . . . . . . . . . . . . . . . . . . . B-39
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
HOW PERFORMANCE IS DETERMINED. . . . . . . . . . . . . . . . . . . . . . . B-41
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . B-44
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-45
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . B-48
</TABLE>

<PAGE>

TRUST INFORMATION

TRUST HISTORY

RS Investment Trust (formerly, Robertson Stephens Investment Trust) 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.

FUND CLASSIFICATION

The Trust currently offers shares of beneficial interest of ten series
(the "Funds") with separate investment objectives and policies. Each Fund is
an open-end, management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"). Each of the Diversified Growth Fund,
Emerging Growth Fund, Global Natural Resources Fund, MidCap Opportunities
Fund, The Information Age Fund-TM-, MicroCap Growth Fund, and Value + Growth
Fund is also a"diversified" investment company under the 1940 Act. This
means that with respect to 75% of a Fund's total assets, the Fund may not
invest in securities of any issuer if, immediately after such investment,
more than 5% of the total assets of the Fund (taken at current value) would
be invested in the securities of that issuer (this limitation does not apply
to investments in U.S. Government securities). A Fund is not subject to this
limitation with respect to the remaining 25% of its total assets.

CAPITALIZATION

The Trust has an unlimited number of shares of beneficial interest that
may, without shareholder approval, be divided into an unlimited number of series
of such shares, which, in turn, may be divided into an unlimited number of
classes of such shares.

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.

Shareholder 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. Although the Trust is not
required to hold annual meetings of

B-2
<PAGE>

its shareholders, shareholders have the right to call a meeting to elect or
remove Trustees or to take other actions as provided in the Declaration of
Trust.

INVESTMENTS AND RISKS

In addition to the principal investment strategies and the principal risks
of the Funds described in the Prospectus, each Fund may employ other investment
practices and may be subject to additional risks which are described below.
Because the following is a combined description of investment strategies and
risks for all the Funds, certain strategies and/or risks described below may not
apply to your Fund. Unless a strategy or policy described below is specifically
prohibited by the investment restrictions listed in the Prospectus, under "The
Funds' Investment Limitations" in this SAI, or by applicable law, a Fund may
engage in each of the practices described below.

RS Investment Management, L.P. ("RSIM, L.P.") serves as investment
adviser to all of the Funds, except for the Emerging Growth Fund. The
Emerging Growth Fund is managed by RS Investment Management, Inc. ("RSIM,
Inc."). RSIM, L.P. and RSIM, Inc. are sometimes referred to in this
Statement collectively as "RS Investment Management." Elijah Asset
Management, LLC ("Elijah Asset Management") serves as sub-adviser to The
Information Age Fund-TM- and the Value + Growth Fund. Eastbourne Management,
L.L.C. ("Eastbourne") serves as sub-adviser in respect of a portion of the
assets of The Contrarian Fund.-TM- (Each of Elijah Asset Management and
Eastbourne is sometimes referred to in this Statement as a "Sub-Adviser".)
Each of RS Investment Management, Elijah Asset Management, and Eastbourne is
sometimes referred to in this Statement as an "Adviser".

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 the Fund's Adviser will monitor the
investment to determine whether continued investment in the security will assist
in meeting the Fund's investment objective.

B-3
<PAGE>

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 an Adviser 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 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.

B-4
<PAGE>

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 its Adviser 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 an Adviser 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 an Adviser to forecast market and interest
rate movements correctly.

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 an Adviser 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

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<PAGE>

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 an
Adviser 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 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 an Adviser 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 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.

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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.

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

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<PAGE>

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.

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

B-8
<PAGE>

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. An Adviser 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 an Adviser'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 an Adviser 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
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

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<PAGE>

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. An Adviser
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), 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, an Adviser 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

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<PAGE>

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 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."

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There can be no assurance that appropriate foreign currency transactions
will be available for a Fund at any time; or that a Fund will enter into such
transactions at any time or under any circumstances even if appropriate
transactions are available to it.

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.

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 an Adviser, 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.

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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 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 an
Adviser 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

B-13
<PAGE>

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.

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 an Adviser 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 cause 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.

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

B-14
<PAGE>

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.

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.

TEMPORARY DEFENSIVE STRATEGIES

At times, a Fund's Adviser may judge that market conditions make pursuing
the Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times, the Adviser 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 its Adviser believes to be consistent with the Fund's best interests.

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 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- 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;

B-15
<PAGE>

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- 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- 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 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:

B-16
<PAGE>

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 Natural
Resources Fund's, the MidCap Opportunities 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;

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 Natural Resources, Global Value, MidCap
Opportunities, 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

B-17
<PAGE>

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 the 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

The Trustees of the Trust are responsible for generally overseeing the
conduct of the Trust's business. Set forth below is certain information
about the Trust's trustees and executive officers:

LEONARD B. AUERBACH, TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111 Mr. Auerbach, 52, 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 President of LBA&C, Inc., which served
until July 1997 as general partner of Tuttle & Company, which provides
mortgage pipeline interest rate hedging services and related software to
a variety of institutional clients. He also served until July 1997 as
President of Tuttle & Auerbach Securities, Inc., an introducing broker
trading futures on behalf of institutional hedging clients and
individuals. He is also a Director of Roelof Mining, Inc. and Headlands
Mortgage Corp. Mr. Auerbach is President of All Performance Mortgage
Trust LLC, a manager of mortgage assets. Mr. Auerbach is a limited
partner in Robertson Stephens Residential Fund, L.P., RS Property Fund I,
L.P., and Robertson Stephens Commercial Property Fund, L.P., of which
RSRF Company, L.L.C., RSRE II., L.L.C., and Robertson, Stephens &
Company, Inc., respectively, affiliates of RSIM, L.P., and RSIM, Inc., are
the general partners. Mr. Auerbach has been a Trustee of the Trust since
June 1987.

JOHN W. GLYNN, JR., TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111 Mr. Glynn, 57, is the Principal and Chairman of the Board of
Glynn Capital Management, an investment management firm which he founded
in 1983. Mr. Glynn is a Director of Sterling Payot Company, a private
investment banking firm that advises executives and companies on
financial and strategic matters. He is also a director of several
private companies. He is also a lecturer at the Darden School of
Business at the University of Virginia and at the Stanford Business
School. Mr. Glynn was until June 1997 a limited partner in The Orphan
Fund, of which RSIM, L.P. is a general partner. He has been a Trustee
of the Trust since July, 1997.

*G. RANDALL HECHT, PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111 Mr. Hecht, 47, was elected President and Principal Executive
Officer of the Trust in February 1999. Mr. Hecht is the chief executive
officer of RSIM, L.P. and RSIM, Inc. He is also the chief executive
officer and a member of RS Investment Management Co., LLC, the parent
company to RSIM, L.P. and RSIM, Inc. Mr. Hecht served as Chief Operating
Officer of Robertson, Stephens & Company, Inc. from January 1993 to 1997,
as Chief Financial Officer of Robertson, Stephens & Company LLC (and its
predecessors) from June 1984 to January 1993 and as the head of that firm's
Investment Management Group. He was also a limited partner of Robertson,
Stephens & Company LLC, and a member of the Management and Executive
Committees of Robertson, Stephens & Company, Inc. He was a Trustee of
the Trust from June 1987 until December 1997.

JAMES K. PETERSON, TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111 Mr. Peterson, 56, is Managing Director of Oak Glen Consultancy,
L.L.C, a firm which advises pension funds and other institutions on
investment issues. From October 1998 until April 1999, Mr. Peterson was
an employee of Mitchum, Jones & Templeton, Inc., a registered
broker-dealer. He served as Director of Investment Management for 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 is a limited partner of Robertson Stephens Residential
Fund, L.P., a limited partnership of which RSRF Company, L.L.C., an
affiliate of RSIM, L.P. and RSIM, Inc., is the general partner. He has
been a Trustee of the Trust since June 1987.

B-18
<PAGE>

*ANDREW P. PILARA, JR., TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111 Mr. Pilara, 56, is a managing director of RSIM, L. P. and RSIM,
Inc. He is also a managing member of RS Investment Management Co., LLC the
parent company of RSIM L.P. and RSIM, Inc. He served as the Principal
Executive Officer and the President of the Trust from October 1997 and
December 1997, respectively, until February 1999. Mr. Pilara
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 RS 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. Mr. Pilara has been a Trustee of the Trust since
September 1997.

STEVEN COHEN, TREASURER
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111 Mr. Cohen, 32, is the Chief Financial Officer of RSIM, L.P. and
RSIM, Inc. Prior to joining RS Investment Management in April 1999,
Mr. Cohen was Trading Operations Manager of Ziff Brothers Investments
from 1997 until 1998. From 1994 until 1997, he served as an Audit Manager
at Ernst & Young. Mr. Cohen has been Treasurer of the Trust since April
1999.

ANDREW C. MORRISON, SECRETARY
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111 Mr. Morrison, 30, is an employee of Elijah Asset Management, LLC.
Prior to joining Elijah Asset Management, Mr. Morrison was a Vice President
at RS Investment Management where he started as a performance analyst in
1994. He has over 7 years experience in the investment management industry,
starting his career at Wm Mason & Company in Los Angeles in 1991. He has a
B.A. in Economics from the University of California at Los Angeles. He has
been an officer of the Trust since September 1998.

Pursuant to the terms of the Advisory Agreements with the Funds, RS
Investment Management pays all compensation of officers of the Trust as well as
the fees and expenses of all Trustees of the Trust who are affiliated persons of
RS 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.

<TABLE>
<CAPTION>
COMPENSATION TABLE

Pension or
Retirement
Benefits Estimated Total
Name of Aggregate Accrued As Annual Compensation
Person, Compensation Part of Trust Benefits Upon From Fund Paid
Position From Trust Expenses Retirement to Trustees
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leonard Auerbach, Trustee $90,000 -- -- $90,000

John W. Glynn, Jr., Trustee $90,000 -- -- $90,000

James K. Peterson, Trustee $95,488 -- -- $95,488

Andrew P. Pilara, Jr., Trustee -- -- -- --

</TABLE>
- ----------------------
* DENOTES A TRUSTEE WHO IS AN "INTERESTED PERSON," AS DEFINED IN THE 1940
ACT.

B-19
<PAGE>

CONTROL PERSONS AND SHARE OWNERSHIP

As of April 11, 1999, to the Funds' knowledge, the shareholders who
owned of record or beneficially more than 5% of the outstanding shares of
any Fund were as follows:

<TABLE>

<CAPTION>
Percentage of Percentage of
Outstanding Outstanding
Shares of the Shares of
Shareholder Shares Owned Class Owned Fund Owned
----------- ------------ ----------- ----------
<S> <C> <C> <C>
THE CONTRARIAN FUND-TM-

CLASS A SHARES

Charles Schwab & Co. Inc. 3,631,442.954 24.05% 23.94%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 1,283,647.124 8.50% 8.46%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

Bear Stearns Securities Corp. 9,586.820 13.42% 0.06%
FBO 126-01287-13
1 Metrotech Center North
Brooklyn NY 11201-3870

Dain Rauscher Inc. FBO 5,493.689 7.69% 0.04%
Sharon K. Lundgren & Kent Thor
Lundgren JT TEN
9911 N Corey Lane
Mequon, WI 53092-6207

McDonald Co. Secs. Inc. C/FBO 4,454.179 6.23% 0.03%
George Meyerratken IRA
870 Sharon Drive, Suite 3
Florence, KY 41042-1272

DIVERSIFIED GROWTH FUND

CLASS A SHARES

Charles Schwab & Co. Inc 1,308,299.682 34.57% 34.11%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 615,830.430 16.27% 16.06%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

B-20

<PAGE>

CLASS C SHARES
NFSC FEBO # OLF-204382 4,733.813 9.37% 0.12%
William S. Collum
125 Sterling Way
Hatsfield, PA 19440-3716

Katie H. Gordon** 3,322.335 6.57% 0.09%
5311 Beacon Ct.
Bakersfield, CA 93312-4980

Scott A. Gordon** 3,322.335 6.57% 0.09%
5311 Beacon Ct.
Bakersfield, CA 93312-4980

EMERGING GROWTH FUND

CLASS A SHARES

Charles Schwab & Co. Inc. 4,367,442.809 19.82% 19.77%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 3,818,635.789 17.33% 17.29%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

NFSC FBO # U18-007897 7,652.510 14.97% 0.03%
Nationsbank of Texas N.A.
FBO IRA of Frank Dunham Jr.
30022000183285
PO Box 831575
Dallas, TX 75283-1575

CoreLink Financial 8,266.814 16.18% 0.04%
PO Box 4054
Concord, CA 94524-4054

BHC Securities Inc. 2,821.610 5.52% 0.01%
Attn: Mutual Funds Dept.
FAO 40078978
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7084

- -------------------

** Owned of Record and Beneficially

B-21

<PAGE>

GLOBAL NATURAL RESOURCES FUND

CLASS A SHARES

Charles Schwab & Co. Inc. 1,443,106.468 48.77% 48.70%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 309,656.738 10.47% 10.45%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

NFSC FEBO # X77-005371 2,020.719 46.32% 0.07%
Diagnostic Imaging Assoc. Ltd.
Amended & Restated Pension Plan
FBO M. Reza Raji Et Al.
2041 Blvd. of the Allies
Pittsburgh, PA 15219-5801

NFSC FEBO # A1K-609455 1,725.311 39.55% 0.06%
Linda Peterson & Mark Peterson JT
TEN
272 Route 526
Imlaystown, NJ 08526-1307

NFSC FEBO # A1K-609269 609.373 13.97% 0.02%
Qamar Ahmad GDN & Sadaf
Ahmad JT TEN
26 Joseph Court
Monmouth Junction, NJ 08852-2506

GLOBAL VALUE FUND

CLASS A SHARES

Charles Schwab & Co. Inc. 125,492.942 17.40% 16.92%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

G. Randy Hecht** 125,741.936 17.44% 16.95%
22 Turtle Rock Court
Tiburon, CA 94920-1300

Andrew P. Pilara, Jr.** 63,896.438 8.86% 8.61%
c/o BancAmerica Robertson Stephens
555 California, Suite 2600
San Francisco, CA 94104-1502

B-22

<PAGE>

National Financial Services Corp. 43,638.053 6.05% 5.88%
FBO The Exclusive Benefit of Our Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

CoreLine Financial 19,034.343 91.93% 2.57%
PO Box 4054
Concord, CA 94524-4054

BA Investment Services Inc 1,175.060 5.67% 0.16%
FBO 21152 3271
185 Berry St., 33rd Floor #12640
San Francisco, CA 94107

MIDCAP OPPORTUNITIES FUND

CLASS A SHARES

Charles Schwab & Co. Inc. 4,131,088.967 36.21% 35.78%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 1,164,493.304 10.21% 10.08%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

B-23

<PAGE>

CLASS C SHARES

CoreLink Financial 13,185.553 9.46% 0.11%
PO Box 4054
Concord, CA 94524-4054

Resources Trust Company N.A. 7,093.850 5.09% 0.06%
FBO George Whittaker IRA R235700644
DTD 08/23/1997
PO Box 5900
Denver, CO 80217-5900

INFORMATION AGE FUND-TM-

CLASS A SHARES

Charles Schwab & Co. Inc. 3,237,345.575 36.07% 36.03%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 1,151,783.830 12.83% 12.82%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

Raymond James & Assoc. Inc. 2,158.662 23.87% 0.02%
CUST FBO John L. White Jr.
IRA R/O
4 Wilcote Way
Medford, NJ 08055-3333

Donaldson Lufkin Jenrette 762.248 8.43% 0.01%
Securites Corp.
P.O. Box 2052
Jersey City, NJ 07303-2052

Resources Trust Company TTEE 748.234 8.27% 0.01%
IRA U/A 05/26/98 FBO Ernest
Deustachio
R-213-36-6304
PO Box 5900
Denver, CO 80217-5900

NFSC FEBO # 04J-675318 674.536 7.46% 0.01%
NFSC/FMTC IRA FBO Steven Somers Smith
2728 Vincente St.
San Francisco, CA 94116-2862

Raymond James & Associates Inc. CUST 508.169 5.62% 0.01%
FBO W. Gene Hoss IRA
547 Cumberland Drive
Allen TX 75002

B-24

<PAGE>

MICROCAP GROWTH FUND

CLASS A SHARES

Goodness Ltd.** 1,456,664.239 29.25% 29.06%
PO Box N-7776
Nassau, Bahamas

Charles Schwab & Co. Inc. 748,202.846 15.02% 14.93%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 699,376.907 14.04% 13.95%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

Trust Company of America Cust FBO 2,222.003 6.93% 0.04%
Gale L. Fry Acct # 14534
7103 S. Revere Parkway
Englewood, CO 80112-3936

Resources Trust Company N.A. 2,178.649 6.79% 0.04%
FBO George Whittaker IRA
I235700644
DTD 08/23/1997
PO Box 5900
Denver, CO 80217-5900

Dain Rauscher Inc. FBO 1,866.833 5.82% 0.04%
Ronald G. Scott
7900 236th ST SW
Edmonds, WA 98026

PARTNERS FUND

CLASS A SHARES

Charles Schwab & Co. Inc. 994,389.271 32.32% 32.22%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 284,044.425 9.23% 9.20%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

Robert G. Moulton TTEE 3,729.985 38.49% 0.12%
Robert G. Moulton DDS SC PSP
U/A 6-1-88
504 South Main Street
Jefferson, WI 53549-1736

B-25

<PAGE>

Resources Trust Company TTEE 1,369.128 14.13% 0.04%
IRA U/A 05/19/97 FBO Gerald A.
Root I-371-40-7703
PO Box 5900
Denver, CO 80217-5900

Donaldson Lufkin Jenrette 1,369.128 14.13% 0.04%
Securities Corp.
PO Box 2052
Jersey City, NJ 07303-2052

State Street Bank & Trust Company 867.961 8.96% 0.03%
IRA R/O Jyoti S. Shah**
266 Slater Blvd.
Staten Island, NY 10305-3241

NFSC FEBO # X59-050318 655.628 6.77% 0.02%
Paula R. Weissman
12 D Dorado Drive
Convent Station, NJ 07961

Donaldson Lufkin Jenrette 591.672 6.11% 0.02%
Securities Corp.
PO Box 2052
Jersey City, NJ 07303-2052

VALUE + GROWTH FUND

CLASS A SHARES

Charles Schwab & Co. Inc. 7,616,585.026 31.46% 31.38%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122

National Financial Services Corp. 3,505,176.147 14.48% 14.44%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908

CLASS C SHARES

Resources Trust Company, N.A. 5,613.967 9.35% 0.02%
FBO George Whittaker IRA
I235700644
DTD 08/23/1997
PO Box 5900
Denver, CO 80217-5900

</TABLE>

B-26

<PAGE>

On April 11, 1999 the officers and Trustees of the Trust, as a group,
beneficially owned less than 1% of the outstanding shares of each Fund,
except for the Global Value Fund where the officers and Trustees of the
Trust, as a group, beneficially owned 189,638.374 shares, approximately
25.57% of the outstanding shares of that Fund.

The Trust's Declaration of Trust and By-Laws provide 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 and By-Laws 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.

RS INVESTMENT MANAGEMENT

RS Investment Management Co. LLC ("RSIM Co."), a Delaware limited
liability company, is the owner of all of the outstanding beneficial interest
in RSIM, L.P. and RSIM, Inc. G. Randall Hecht, Chairman and Chief Executive
Officer of RSIM Co., owns 29% of the membership interest in RSIM Co.; Mr.
Paul Stephens, Mr. Andrew P. Pilara, and Mr. James Callinan, portfolio
managers of certain of the Funds, own 22%, 15%, and 20%, respectively. The
remainder of the membership interests is owned by other employees of RSIM Co.
or its affiliates and by other persons otherwise unaffiliated with RSIM Co.
Each of Messrs. Callinan, Hecht, Pilara, and Stephens and Messrs. David Evans
and James Foster, employees of RSIM Co. or its affiliates, is a member of the
Board of Managers of RSIM Co. Mr. Hecht serves as the President and Principal
Executive Officer of the Trust. Mr. Pilara serves as a Trustee of the Trust.

Pursuant to Investment Advisory Agreements (the "Advisory Agreements"),
RS Investment Management, at its expense, furnishes investment management
services with respect to the assets of each Fund, consistent with the
investment objective and policies of such Fund and subject to the supervision
and direction of the Trust's Board of Trustees, and (i) furnishes the Trust
with investment advice, research, and recommendations with respect to the
investment of each Fund's assets and the purchase and sale of its portfolio
securities, (ii) furnishes the Trust and each Fund with reports, statements,
and other data on securities, economic conditions, and other pertinent
subjects, and (iii) in general superintends and manages the investments of
each Fund, subject to the ultimate supervision and direction of the Board of
Trustees. In addition, the Advisory Agreements provide that RS Investment
Management provides all administrative services needed for the management and
operation of each Fund and furnishes such office space and personnel as are
needed by the Fund (except in the case of the Diversified Growth, Global
Natural Resources, Global Value, MidCap Opportunities, The Information Age,
and MicroCap Growth Funds, where such administrative services are furnished
by RS Investment Management pursuant to an Administrative Services Agreement
with those Funds, as described in "Administrative Services" below). The
services of RS Investment Management to the Funds are not deemed to be
exclusive, and RS 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 RS
Investment Management (on a cost recovery basis only) for any services
performed for a Fund by it outside its duties under the Advisory Agreements.

Each Advisory Agreement provides that RS Investment Management shall not,
in the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard by it of its obligations or duties, be subject to liability to the
Trust, the Fund in question, or the shareholders of the Fund for any act or
omission in the course of, or connected with, its rendering services thereunder,
or for any losses that may be sustained in the purchase, holding, or sale of any
security by the Fund.

Each of the Advisory Agreements is subject to annual approval, commencing
in 2001, by (i) 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

B-27
<PAGE>

Trust, RSIM, L.P., or RSIM, Inc. Each is terminable by RS Investment
Management, the Trust, or a vote of a majority of the outstanding voting
securities of the affected Fund, without penalty, on 60 days written notice and
will terminate automatically in the event of its assignment.

Each Advisory Agreement also provides that RS Investment Management may, at
its own expense, delegate certain of its responsibilities under the Agreement to
sub-advisers for the Funds, who would be required to furnish an investment
program and make investment decisions for the Funds. RSIM, L.P. has entered
into sub-advisory agreements with Elijah Asset Management, in respect of the
Information and Value + Growth Funds, and with Eastbourne in respect of a
portion of the assets of The Contrarian Fund-TM-. See "The Sub-Advisors,"
below.

THE SUB-ADVISORS

Elijah Asset Management serves as sub-advisor to The Information Age
Fund-TM- and the Value + Growth Fund. Eastbourne serves as sub-adviser in
respect of a portion of the assets of The Contrarian Fund-TM- . Pursuant to
each sub-advisory agreement ("Sub-Advisory Agreements"), each Sub-Adviser (i)
manages such of the Fund's assets as are allocated to it in accordance with the
Fund's investment objective, policies, and limitations and with any additional
policies or guidelines established from time to time by RSIM, L.P. or the Board
of Trustees, (ii) makes investment decisions for the Fund as to those assets,
and (iii) places orders to purchase and sell securities and other investments
for the Fund in respect of those assets. Each Sub-Advisory Agreement requires
the Sub-Adviser to keep the Trust and RSIM, L.P informed of developments
materially affecting the Fund in question. RSIM, L.P. currently allocates all
of the assets of The Information Age Fund-TM- and the Value + Growth Fund to
Elijah Asset Management for management by that firm. RSIM, L.P. currently
allocates only a portion of the assets of The Contrarian Fund-TM- to Eastbourne
for management, as described below.

ELIJAH ASSET MANAGEMENT, LLC.

Elijah Asset Management is a newly formed Delaware limited liability
company; its sole managing member is Ronald E. Elijah, who currently serves
as portfolio manager to the Information Age Fund-TM- and the Value + Growth
Fund. Mr. Elijah owns 80% of the outstanding voting interest in Elijah Asset
Management and is the sole managing member of the company; each of Mr. John
P. McNiff and Radnor Holdings Corp. owns an additional 10% of the
outstanding voting interest in Elijah Asset Management.

Under the Sub-Advisory Agreement with Elijah Asset Management, RSIM, L.P
will pay a fee to Elijah Asset Management with respect to each of The
Information Age Fund-TM- and the Value + Growth Fund equal to 50% of the fees
paid to RSIM, L.P. by such Fund pursuant to the Advisory Agreement.

The Sub-Advisory Agreement with Elijah Asset Management may be terminated
as to either Fund (i) by the Trust at any time without penalty, upon the vote of
a majority of the Trust's Trustees or by vote of a majority of the outstanding
voting securities of the Fund in question, upon 60 days written notice to Elijah
Asset Management and RSIM, L.P., (ii) by RSIM, L.P. at any time without penalty,
upon 60 days written notice to Elijah Asset Management and the Trust (which
right RSIM, L.P. has agreed with Elijah Asset Management not to exercise except
under certain circumstances, as described below), or (iii) by Elijah Asset
Management at any time without penalty, upon 60 days written notice to RSIM,
L.P. and the Trust. The Sub-Advisory Agreement will continue in effect for a
period of more than two years in respect of a Fund only if its continuance is
approved annually by the Board of Trustees of the Trust or the shareholders of
the Fund in question and by the disinterested Trustees of the Trust.

RSIM, L.P. has entered into a separate agreement with Elijah Asset
Management relating generally to Elijah Asset Management's management of assets
of a number of clients of RSIM, L.P., including the Funds. That agreement
includes provisions, by way of example, requiring Elijah Asset Management to
provide certain types of information to RSIM, L.P., to continue to employ
Mr. Ronald Elijah as the full-time principal portfolio manager of the accounts
of those clients, to comply with all applicable laws, rules, and regulations,
and to comply with such investment guidelines and protocols as RSIM, L.P. may
establish from time to time. It also includes provisions requiring RSIM, L.P. to
make payments to Elijah Asset Management at an annual rate of up to 0.025% of
the average daily net assets of each of the Funds in consideration of Elijah
Asset Management's

B-28
<PAGE>

cooperation with RSIM, L.P. in respect of the promotion of the shares of the
Funds. In that agreement, RSIM, L.P. has also agreed not to exercise its right
to terminate the Sub-Advisory Agreement in respect of either Fund for a period
of three years except for cause, which is defined in the agreement to include,
among other things, Elijah Asset Management's becoming subject to a statutory
disqualification preventing it from serving as sub-adviser; Elijah Asset
Management's (or any affiliate's) becoming subject to any claim, investigation,
action, or suit that could reasonably be expected to injure or call into
question the goodwill, reputation, or business of any Fund, of RSIM, L.P., or of
any of their affiliates; any breach by Elijah Asset Management of any material
provision of the agreement or of the Sub-Advisory Agreement; or Elijah Asset
Management's (or any affiliate's) committing any act of fraud or dishonesty that
could injure the goodwill, reputation, or business of any Fund or of RSIM, L.P.
or of any of their affiliates. RSIM, L.P. has also agreed not to exercise its
right to terminate the Sub-Advisory Agreement in respect of the Fund after that
three-year period except for cause so long as the investment performance of the
Fund meets certain criteria agreed upon by RSIM, L.P. and Elijah Asset
Management. Nothing in that agreement limits in any way the right of any Fund to
terminate a Sub-Advisory Agreement in accordance with its terms or the right or
ability of RSIM, L.P. to provide evaluations and recommendations to the Board of
Trustees as to Elijah Asset Management, its services, or its status as
sub-adviser to a Fund.

In its agreement with RSIM, L.P., Elijah Asset Management has agreed to
limit its management of other mutual funds comparable to the Information Age and
Value + Growth Funds.

EASTBOURNE MANAGEMENT, L.L.C.

Eastbourne is a newly formed Delaware limited liability company; its
sole managing member is Rick Barry, who currently serves as a member of the
portfolio management team for The Contrarian Fund-TM-. Mr. Barry owns the
majority of the outstanding membership interest in Eastbourne; certain
employees of Eastbourne own the remaining membership interests.

Currently, RSIM, L.P. allocates a portion of The Contrarian Fund's
assets for management by Eastbourne in circumstances where RSIM, L.P.
believes that management of those assets by Eastbourne would be in the best
interest of the Fund. RSIM, L.P. allocates a portion of the Fund's assets to
Eastbourne in circumstances where, for example, RSIM, L.P. believes that an
increase in, or change to, the Fund's short positions might be desirable, or
where it believes that long investments by the Fund might be desirable in
sectors or companies where Eastbourne might offer a successful investment
program. Under the Sub-Advisory Agreement, RSIM, L.P. pays a fee to
Eastbourne in an amount equal to 40% of the fees received by RSIM, L.P. under
its Investment Advisory Agreement with the Fund in respect of assets
allocated to Eastbourne.

The Sub-Advisory Agreement with Eastbourne may be terminated (i) at any
time without penalty by the Trust, upon the vote of a majority of the Trust's
Trustees or by vote of the majority of the outstanding voting securities of The
Contrarian Fund-TM-, upon 60 days written notice to Eastbourne and RSIM, L.P.,
(ii) by RSIM, L.P. at any time without penalty, upon 60 days written notice to
Eastbourne and the Trust, or (iii) by Eastbourne at any time without penalty,
upon 60 days written notice to RSIM, L.P. and the Trust. The Sub-Advisory
Agreement will continue in effect for a period of more than two years in respect
of the Fund only if its continuance is approved annually by the Board of
Trustees of the Trust or the shareholders of the Fund and by the disinterested
Trustees of the Trust.

Eastbourne may from time to time place limits on the amount of assets it
will manage for The Contrarian Fund-TM- and other clients of RSIM, L.P. for the
purpose of making "short" investments; currently, Eastbourne has fixed that
limit at $50 million.

MANAGEMENT AND ADMINISTRATIVE FEES

MANAGEMENT FEES. The Funds pay RS 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:

The Contrarian Fund-TM- 1.50%
Diversified Growth Fund 1.00%

B-29
<PAGE>

Emerging Growth Fund 1.00%
Global Natural Resources Fund 1.00%
Global Value Fund 1.00%
MidCap Opportunities 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. RS 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 SERVICES. The Diversified Growth Fund, Global Natural
Resources Fund, Global Value Fund, MidCap Opportunities Fund, The
Information Age Fund-TM-, and MicroCap Growth Fund have entered into an
Administrative Services Agreement 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. No fees are payable by these Funds
under the Administrative Services Agreement.

The Administrative Services Agreement is subject to annual approval,
commencing in 2001, by (i) the Board of Trustees, and (ii) the vote of a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act). The Administrative Services Agreement 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.

<TABLE>
<CAPTION>
Reimbursement Administration
Management Fees(1) of Expenses(2) Fees(3)
------------------ -------------- --------------
<S> <C> <C> <C>
THE CONTRARIAN FUND-TM-
Year ended 12/31/96 $13,472,471 -- --
Year ended 12/31/97 $13,674,978 -- --
Year ended 12/31/98 $3,977,993 -- --

DIVERSIFIED GROWTH FUND
8/1/96 - 12/31/96 $135,953 $22,771 $33,988
Year ended 12/31/97 $646,730 $126,477 $161,683
Year ended 12/31/98 $734,620 $151,559 $82,199

EMERGING GROWTH FUND
Year ended 12/31/96 $1,805,586 -- --
Year ended 12/31/97 $2,277,624 -- --
Year ended 12/31/98 $2,833,019 -- --

GLOBAL NATURAL RESOURCES FUND
Year ended 12/31/96 $487,594 $107,877 $121,899
Year ended 12/31/97 $1,438,918 $9,044 $359,729
Year ended 12/31/98 $507,251 $132,665 $69,681

GLOBAL VALUE FUND
4/1/97 - 12/31/97 $130,016 $163,698 $32,504
Year ended 12/31/98 $169,479 $175,876 $21,758
</TABLE>

B-30
<PAGE>

<TABLE>
<CAPTION>
Reimbursement Administration
Management Fees(1) of Expenses(2) Fees(3)
------------------ -------------- --------------
<S> <C> <C> <C>
MIDCAP OPPORTUNITIES FUND
Year ended 12/31/96 $2,462,636 $140,905 $615,659
Year ended 12/31/97 $2,972,467 $1,235,367 $743,117
Year ended 12/31/98 $2,451,091 $853,895 $288,447

THE INFORMATION AGE FUND-TM-
Year ended 12/31/96 $720,640 -- $180,160
Year ended 12/31/97 $1,234,823 -- $308,706
Year ended 12/31/98 $1,177,214 -- $126,941

MICROCAP GROWTH FUND
8/15/96 - 12/31/96 $25,237 $67,948 $5,047
Year ended 12/31/97 $530,205 $274,052 $106,041
Year ended 12/31/98 $1,386,701 $104,172 $126,373

PARTNERS FUND
Year ended 12/31/96 $514,459 $91,703 --
Year ended 12/31/97 $2,580,567 $1,746 --
Year ended 12/31/98 $1,496,310 $236,741 --

VALUE + GROWTH FUND
Year ended 12/31/96 $8,168,685 -- --
Year ended 12/31/97 $7,509,306 -- --
Year ended 12/31/98 $7,015,541 -- --
</TABLE>

(1) Before giving effect to any reimbursement or waiver by RSIM, L.P. or
RSIM, Inc.
(2) Includes amount of management fees waived or reimbursed by RSIM, L.P.
or RSIM, Inc. plus the amount of any other expenses for which RSIM, L.P. or
RSIM, Inc. reimbursed the Fund or which RSIM, L.P. or RSIM, Inc. bore on
behalf of the Fund.
(3) On May 26, 1998, the Administrative Services Agreement between the
Trust on behalf of certain of the Funds and RSIM, L.P. was amended to
provide that no fee is payable by the Funds under that Agreement. Prior to
such date, certain of the Funds paid fees under the Administrative Services
Agreement at an annual rate of 0.25% of a Fund's average daily net assets.

EXPENSES

Each Fund will pay all expenses related to its operation which are not
borne by an Adviser, including but not limited to taxes, interest, brokerage
fees and commissions, compensation paid to Provident Distributors, Inc., Four
Falls Corporate Center, 6th Floor, West Conshohocken, Pennsylvania 19428
("Provident" or the "Distributor"), the Trust's distributor, under the Funds'
12b-1 Plan, fees paid to members of the Board of Trustees who are not officers,
directors, stockholders, or employees of an Adviser or Provident, 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

Investment decisions for the Funds and for the other investment advisory
clients of an Adviser 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

B-31
<PAGE>

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 the Adviser'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. Each Adviser employs professional staffs of
portfolio managers who draw upon a variety of resources for research information
for the Funds.

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, the Advisers receive brokerage and research services and other similar
services from many broker-dealers with which they place 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 an Adviser's managers and analysts. Where the services
referred to above are not used exclusively by an Adviser for research purposes,
the Adviser, 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 an Adviser and its affiliates in advising
various of its clients (including the Funds), although not all of these services
are necessarily useful and of value in managing the Funds. The management fee
paid by a Fund is not reduced because an Adviser or its affiliates receive these
services even though the Adviser might otherwise be required to purchase some of
these services for cash.

The Advisers place all orders for the purchase and sale of portfolio
investments for the Funds and buy and sell investments for the Funds through a
substantial number of brokers and dealers. Each Adviser seeks the best overall
terms available for the Funds, except to the extent an Adviser may be permitted
to pay higher brokerage commissions as described below. In doing so, an
Adviser, 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, an Adviser may cause a Fund
to pay a broker-dealer which provides "brokerage and research services" (as
defined in the 1934 Act) to the Adviser 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. An Adviser'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. None of the Advisers
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, the Advisers 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.

B-32
<PAGE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
THE CONTRARIAN FUND-TM- ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ----------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 80% 77% 61%
involving brokerage commissions

Dollar amount of commissions $908,205 $2,654,377 $3,072,174

Percentage (dollar amount) paid 0.3%($2,370) 0.6%($16,986) 1%($27,230)
to Robertson, Stephens & Company
LLC ("RS&Co.")/BancAmerica
Robertson Stephens
("BARS")/NationsBanc Montgomery
Securities/("NMS")

Percentage of brokerage transactions 0% 3% 1%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 20% 23% 39%
without brokerage commissions

</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR PERIOD
RS DIVERSIFIED GROWTH FUND ENDED 12/31/98 ENDED 12/31/97 8/1/96 - 12/31/96
- -------------------------- -------------- -------------- -----------------
<S> <C> <C> <C>
Percentage of total transactions 41% 46% 57%
involving brokerage commissions

Dollar amount of commissions $947,156 $611,542 $125,233

Percentage (dollar amount) paid 4.3%($40,890) 9.6%($58,721) 13% ($16,648)
to RS&Co./BARS/NMS

Percentage of brokerage transactions 3% 8% 20%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 59% 54% 43%
without brokerage commissions

</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
EMERGING GROWTH FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- -------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 19% 40% 27%
involving brokerage commissions

Dollar amount of commissions $611,965 $892,322 $479,020

Percentage (dollar amount) paid to 12.3%($74,833) 10.0%($89,505) 5% ($23,895)
RS&Co./BARS/NMS
</TABLE>

B-33
<PAGE>

<TABLE>
<S> <C> <C> <C>
Percentage of brokerage transactions 5% 6% 2%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 81% 60% 73%
without brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
VALUE + GROWTH FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 63% 58% 53%
involving brokerage commissions

Dollar amount of commissions $2,283,182 $2,286,747 $3,175,482

Percentage (dollar amount) paid to 6.19%($139,451) 5.2%($118,446) 12% ($375,005)
RS&Co./BARS/NMS

Percentage of brokerage transactions 4% 3% 8%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 37% 42% 47%
without brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
GLOBAL NATURAL FISCAL YEAR FISCAL YEAR FISCAL YEAR
RESOURCES FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- -------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 91% 82% 69%
involving brokerage commissions

Dollar amount of commissions $271,072 $416,574 $362,984

Percentage (dollar amount) paid to 0.4%($1,000) 0.3%($1,120) 1%($2,302)
RS&Co./BARS/NMS

Percentage of brokerage transactions 1% 0.4% 2%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 9% 18% 31%
without brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR PERIOD
GLOBAL VALUE FUND ENDED 12/31/98 2/20/97-12/31/97
- ----------------- -------------- ----------------
<S> <C> <C>
Percentage of total transactions 99% 73%
involving brokerage commissions

Dollar amount of commissions $168,225 $99,195

Percentage (dollar amount) paid to 0.9%($1,555) 1.0%($980)
RS&Co./BARS/NMS
</TABLE>

B-34
<PAGE>

<TABLE>
<S> <C> <C> <C>
Percentage of brokerage transactions 0% 3%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 1% 27%
without brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
MIDCAP OPPORTUNITIES FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- -------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 65% 55% 44%
involving brokerage commissions

Dollar amount of commissions $1,758,597 $1,869,262 $1,257,368

Percentage (dollar amount) paid to 8.0%($139,293) 10%($186,869) 14% ($179,275)
RS&Co./BARS/NMS

Percentage of brokerage transactions 7% 9% 6%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 35% 45% 56%
without brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
INFORMATION AGE FUND-TM- ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------------------ -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 28% 24% 22%
involving brokerage commissions

Dollar amount of commissions $260,603 $339,164 $245,279

Percentage (dollar amount) paid to 6.4%($16,610) 5.9%($19,850) 13% ($31,080)
RS&Co./BARS/NMS

Percentage of brokerage transactions 4% 3% 3%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 72% 76% 78%
without brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
MICROCAP FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 6% 6% 5%
involving brokerage commissions

Dollar amount of commissions $56,235 $62,898 $1,800
</TABLE>

B-35
<PAGE>

<TABLE>
<S> <C> <C> <C>
Percentage (dollar amount) paid to 2.39%($1,332) 0% 0%
RS&Co./BARS/NMS

Percentage of brokerage transactions 0% 0% 0%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 94% 94% 95%
without brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
PARTNERS FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 80% 81% 63%
involving brokerage commissions

Dollar amount of commissions $594,245 $599,656 $143,042

Percentage (dollar amount) paid to 0%($0) 0.5%($2,965) 0.5% ($680)
RS&Co./BARS/NMS

Percentage of brokerage transactions 0% 0.4% 1%
effected through RS&Co./BARS/NMS

Percentage of transactions effected 20% 19% 37%
without brokerage commissions
</TABLE>

THE FUNDS' DISTRIBUTOR

Each of the Funds has adopted a Distribution Plan under Rule 12b-l of
the 1940 Act (the "Plan"). Pursuant to the Plan, each Fund may pay Provident
distribution fees for services Provident renders and costs and expenses it
incurs in connection with the promotion and distribution of the Fund's
shares, at an annual rate of 0.25% of the Fund's average daily net assets.
(The Contrarian Fund-TM- may pay fees under the Plan at a rate of up to 0.75%
of the Fund's average daily net assets; the Board of Trustees has currently
limited payments under the Plan by that Fund to a rate of 0.25% of the Fund's
average daily net assets.) Such 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. They
also include Provident's overhead expenses attributable to the distribution
of each Fund's shares, which may include, for example, expenses for office
space, communications, and salaries of Provident personnel, and any other of
Provident's expenses attributable to the distribution of the Funds' shares.
Affiliates of RSIM, L.P. provide certain services to Provident in respect of
the promotion of the shares of the Funds. In return for those services,
Provident pays to these affiliates substantially all of the payments received
by Provident under the Plan. The Plan is a "compensation" plan.

RECENT PAYMENTS UNDER THE FUNDS' DISTRIBUTION PLAN *

<TABLE>
<CAPTION>
The Contrarian Fund-TM- Distribution Fees Waiver
- ----------------------- ----------------- ------
<S> <C> <C>
Year ended 12/31/96 $6,736,236 --
Year ended 12/31/97 $6,816,512 --
Year ended 12/31/98 $1,050,953 --
</TABLE>

- ------------------
* Distribution fees were paid to Edgewood Services, Inc., the Funds'
distributor until December 31, 1998 ("Edgewood"). No payments were made under
the Funds' Class C Plan during fiscal 1996.

B-36
<PAGE>

<TABLE>
<CAPTION>
DIVERSIFIED GROWTH FUND
<S> <C> <C>
8/1/96 - 12/31/96 $33,988 --
Year ended 12/31/97 $161,523 --
Year ended 12/31/98 $181,969 --

EMERGING GROWTH FUND
Year ended 12/31/96 $451,396 --
Year ended 12/31/97 $569,136 --
Year ended 12/31/98 $706,777 --

GLOBAL NATURAL RESOURCES FUND
Year ended 12/31/96 $121,899 --
Year ended 12/31/97 $359,714 --
Year ended 12/31/98 $126,725 --

GLOBAL VALUE FUND
2/20/97 - 12/31/97 $31,862 --
Year ended 12/31/98 $41,710 --

MIDCAP OPPORTUNITIES FUND
Year ended 12/31/96 $615,659 --
Year ended 12/31/97 $742,070 --
Year ended 12/31/98 $608,595 --

THE INFORMATION AGE FUND-TM-
Year ended 12/31/96 $180,160 --
Year ended 12/31/97 $308,650 --
Year ended 12/31/98 $293,961 --

MICROCAP GROWTH FUND
8/15/96 - 12/31/96 $5,047 --
Year ended 12/31/97 $105,123 --
Year ended 12/31/98 $274,092 --

PARTNERS FUND
Year ended 12/31/96 $102,892 --
Year ended 12/31/97 $514,757 --
Year ended 12/31/98 $297,791 --

VALUE + GROWTH FUND
Year ended 12/31/96 $2,042,076 --
Year ended 12/31/97 $1,876,469 --
Year ended 12/31/98 $1,750,301 --

RECENT PAYMENTS UNDER THE FUNDS' CLASS C DISTRIBUTION PLAN*(1):
<S> <C> <C>

THE CONTRARIAN FUND-TM- Distribution Fees Waiver
4/14/97 - 12/31/97 $20,977 --
Year ended 12/31/98 $18,507 --
</TABLE>

B-37
<PAGE>
<TABLE>
<S> <C> <C>
DIVERSIFIED GROWTH FUND
9/10/97 - 12/31/97 $478 --
Year ended 12/31/98 $5,057 --

EMERGING GROWTH FUND
5/8/97 - 12/31/97 $811 --
Year ended 12/31/98 $4,433 --

GLOBAL NATURAL RESOURCES FUND
7/30/97 - 12/31/97 $48 --
Year ended 12/31/98 $263 --

GLOBAL VALUE FUND
6/30/97 - 12/31/97 $1,926 --
Year ended 12/31/98 $1,893 --

MIDCAP OPPORTUNITIES FUND
5/9/97 - 12/31/97 $3,140 --
Year ended 12/31/98 $12,533 --

THE INFORMATION AGE FUND-TM-
7/11/97 - 12/31/97 $167 --
Year ended 12/31/98 $1,029 --

MICROCAP GROWTH FUND
6/18/97 - 12/31/97 $2,755 --
Year ended 12/31/98 $9,744 --

PARTNERS FUND
4/14/97 - 12/31/97 $4,068 --
Year ended 12/31/98 $4,414 --

VALUE + GROWTH FUND
5/28/97 - 12/31/97 $2,570 --
Year ended 12/31/98 $10,753 --
</TABLE>

* Distribution fees were paid to Edgewood Services, Inc., the Funds'
distributor until December 31, 1998 ("Edgewood"). No payments were made under
the Funds' Class C Plan during fiscal 1996.

(1) The Distribution Plan adopted in respect of the Funds' Class C shares
(the "Class C Plan") was in effect through April 1999. The Class C Plan
provided for payments by each Fund from the assets attributable to the Funds'
Class C shares at an annual rate of up to 1.00% (although each of the Funds'
had limited payments under the Class C Plan to an annual rate of 0.75% of a
Fund's average daily net assets attributable to its Class C shares).
Affiliates of RSIM, L.P. received substantially all of the payments paid
under the Class C Plan.

RECENT CONTINGENT DEFERRED SALES CHARGES ("CDSC") RECEIVED FOR
CLASS C SHARES(2):

CDSCs were received during fiscal 1997 and 1998 in the following amounts:

<TABLE>
<CAPTION>
THE CONTRARIAN FUND-TM- CDSC RECEIVED
<S> <C>
4/14/97 - 12/31/97 $5,351.73
Year ended 12/31/98 $18,057.11

B-38
<PAGE>

DIVERSIFIED GROWTH FUND
9/10/97 - 12/31/97 $45.32
Year Ended 12/31/98 $344.44

EMERGING GROWTH FUND
5/8/97 - 12/31/97 $108.62
Year ended 12/31/98 $2,563.77

GLOBAL NATURAL RESOURCES FUND
7/30/97 - 12/31/97 $32.13
Year ended 12/31/98 $0

GLOBAL VALUE FUND
6/30/97 - 12/31/97 $522.73
Year ended 12/31/98 $662.95

MIDCAP OPPORTUNITIES FUND
5/9/97 - 12/31/97 $105.01
Year ended 12/31/98 $2,154.00

THE INFORMATION AGE FUND-TM-
7/11/97 - 12/31/97 $34
Year ended 12/31/98 $2,105.76

MICROCAP GROWTH FUND
6/18/97 - 12/31/97 $438.82
Year ended 12/31/98 $2,579.04

PARTNERS FUND
4/14/97 - 12/31/97 $958.57
Year ended 12/31/98 $1,543.46

VALUE + GROWTH FUND
5/28/97 - 12/31/97 $4,958.15
Year ended 12/31/98 $3,006.03
</TABLE>

(2)Class C shares were subject to a 1.00% contingent deferred sales charge
("CDSC") if redeemed within one year after purchase. Affiliates of RSIM, L.P.
received substantially all of the proceeds of any CDSC imposed on redemption of
shares.

HOW NET ASSET VALUE IS DETERMINED

Each Fund determines the net asset value per share 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, Martin Luther King, Jr. Day, Presidents' Day, Good Friday, Memorial Day,
the Independence Day (observed), 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-39
<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.

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.

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
and (b) 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 securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the

B-40
<PAGE>

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 with respect to
each taxable year at least 90% of the sum of its taxable net investment income,
its net tax-exempt income, and the excess, if any, of net short-term capital
gains over net long-term capital gains.

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. Thus, a Fund's yield on foreign investments
would be decreased by such taxes. 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.

If a Fund engages in hedging transactions, including hedging transactions
in options, futures contracts, and straddles, or other similar transactions, it
will be subject to special tax rules (including constructive sale, mark-to-
market, straddle, wash sale, and short sale rules), the effect of which may be
to accelerate income to the Fund, defer losses to the Fund, cause adjustments in
the holding periods of the Fund's securities, convert long-term capital gains
into short-term capital gains, or convert short-term capital losses into long-
term capital losses. These rules could therefore affect the amount, timing and
character of distributions to shareholders. Each Fund will endeavor to make any
available elections pertaining to such transactions in a manner believed to be
in the best interests of the Fund.

A Fund's transactions in foreign currencies, foreign currency-denominated
debt securities and certain foreign currency options, futures contracts and
forward contracts (and similar instruments) may give rise to ordinary income or
loss to the extent such income or loss results from fluctuations in the value of
the foreign currency concerned.

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.
Thus, a Fund could be required at times to liquidate other investments in order
to satisfy its distribution requirements.

A Fund generally is required to withhold and remit to the U.S. Treasury
31% of the taxable dividends and other distributions paid to non-corporate
shareholders who fail to furnish the Fund with a correct taxpayer identification
number, who have underreported dividends or interest income, or who fail to
certify to the Fund that they are not subject to such withholding. An
individual's taxpayer identification number is his or her social security
number. Tax-exempt shareholders are not subject to these back-up withholding
rules so long as they furnish the Fund with a proper certification.

Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be

B-41
<PAGE>

subject to a U.S. withholding tax at a rate of 30% on a Fund's distributions
from its ordinary income and the excess of its net short-term capital gain over
its net long-term capital loss, unless the tax is reduced or eliminated by an
applicable tax treaty. Distributions from the excess of the Fund's net capital
gain received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. Federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisors regarding the U.S. and foreign tax consequences of an investment in the
Fund.

The IRS recently revised its regulations affecting the application to
foreign investors of the back-up withholding and withholding tax rules described
above. The new regulations will generally be effective for payments made on or
after January 1, 2000 (although transition rules will apply). In some
circumstances, the new rules will increase the certification and filing
requirements imposed on foreign investors in order to qualify for exemption from
31% back-up withholding tax and for reduced withholding tax rates under income
tax treaties. Foreign investors in each Fund should consult their tax advisors
with respect to the potential application of these new regulations.

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
local, state and foreign taxes. Shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state, local, and foreign
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. Statements as to the tax
status of distributions will be mailed annually.

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.

At times, RS 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

Yield and total return data for a Fund's 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 share during a recent
30-day period by the net asset value per share on the last day of that
period. "Total return" for one-, five-, and ten-year periods, and 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 shares. Total return may also be presented for other

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<PAGE>

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. 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 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.

The average annual total returns of the shares of each of the Funds
for the periods indicated through December 31, 1998 are set forth below.

<TABLE>
<CAPTION>
THE CONTRARIAN FUND-TM-
<S> <C>
Year ended December 31, 1998 (32.69)%
Five years ended December 31, 1998 (6.52)%
From inception (6/30/93) through December 31, 1998 (4.01)%

DIVERSIFIED GROWTH FUND
Year ended December 31, 1998 16.28%
From inception (8/1/96) through December 31, 1998 29.55%

EMERGING GROWTH FUND
Year ended December 31, 1998 28.02%
Five years ended December 31, 1998 19.09%
Ten years ended December 31, 1998 20.18%

GLOBAL NATURAL RESOURCES FUND
Year ended December 31, 1998 (34.45)%
From inception (11/15/95) through December 31, 1998 (7.78)%

GLOBAL VALUE FUND
Year ended December 31, 1998 11.11%
From inception (4/1/97) through December 31, 1998 17.84%

MIDCAP OPPORTUNITIES FUND
Year ended December 31, 1998 11.65%
From inception (7/12/95) through December 31, 1998 20.42%

INFORMATION AGE FUND-TM-
Year ended December 31, 1998 52.20%
From inception (11/15/95) through December 31, 1998 22.85%

MICROCAP GROWTH FUND
Year ended December 31, 1998 (0.63)%
From inception (8/15/96) through December 31, 1998 16.09%

PARTNERS FUND
Year ended December 31, 1998 (27.23)%
From inception (7/12/95) through December 31, 1998 7.31%

VALUE + GROWTH

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<PAGE>

Year ended December 31, 1998 27.44%
Five years ended December 31, 1998 23.80%
From inception (5/12/92) through December 31, 1998 22.70%
</TABLE>

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
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 an
Adviser 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 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:

[EQUATION]

Where: n = number of months measured

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<PAGE>

FT = rate of return on the Fund in month T

MT = rate of return on the market index, I.E., the S&P 500, in
month T
F = arithmetic average monthly rate of return of the Fund

M = arithmetic average monthly rate of return on the market
index, I.E., the S&P 500

ADDITIONAL INFORMATION

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
and dividend-paying agent ("Transfer Agent"). PFPC Trust Company ("PFPC
Trust"), 400 Bellevue Parkway, Wilmington, DE 19809, serves as the Funds'
custodian ("Custodian"). As Custodian, PFPC Trust 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

PricewaterhouseCoopers 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.

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.

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<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

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<PAGE>

payments are not made on the date due even if the applicable grace period has
not expired, unless S&P believes that such payments 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.

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<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.

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<PAGE>

FINANCIAL STATEMENTS

The financial statements, financial highlights, and Independent Auditors'
reports included in the Annual Reports for the Funds' fiscal year ended
December 31, 1998 and filed electronically on March 11, 1999 (File No.
811-5159; Accession No. 0001047469-99-009292), are incorporated by reference
into this Statement of Additional Information.

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