RS INVESTMENT TRUST, 497, 1999-12-15

RS INVESTMENT TRUST
497, 1999-12-15

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RS INVESTMENT TRUST
388 Market Street, Suite 200
San Francisco, CA 94111 PROSPECTUS
800-766-3863 www.rsim.com May 3, 1999, as revised December 13, 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-REGISTERED TRADEMARK-
RS GLOBAL NATURAL RESOURCES FUND
RS INTERNET AGE FUND-TM-
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) 766-3863 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.
<PAGE>
TABLE OF CONTENTS

<TABLE>
<CAPTION>
PAGE
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<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-Registered Trademark-.......... 13
RS GLOBAL NATURAL RESOURCES FUND........................ 16
RS INTERNET AGE FUND-TM-................................ 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...................................... 37

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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- - 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.

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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE PAST FIVE PAST TEN
PERIODS ENDING DECEMBER 31, 1998) YEAR YEARS 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.

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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) 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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) 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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C> <C>
SINCE
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE PAST FIVE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) YEAR 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>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) 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-REGISTERED TRADEMARK-
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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.

13
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- - 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 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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) YEAR (11/15/95)
The Information Age
Fund-Registered Trademark- 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.

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

- - 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 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
available 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 (%)
CALENDAR YEAR END
<S> <C>
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

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

* The S&P 500 Index is an unmanaged market capitalization-weighted index of 500
stocks designed to measure performance 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 INTERNET AGE FUND-TM-
- --------------------------------------------------------------------------------

- - INVESTMENT OBJECTIVE. Long-term capital appreciation.

- - PRINCIPAL INVESTMENT STRATEGIES. The Fund invests primarily in companies
that RSIM, L.P. believes are likely to benefit substantially from the
development of the Internet. Such companies may include (i) companies that
provide access, infrastructure, content, products, or services to Internet
companies or Internet users; (ii) companies engaged in e-commerce; and
(iii) other companies in any industry that RSIM, L.P. believes are likely to
benefit substantially as a direct or indirect result of the growth of the
Internet.

The following examples illustrate the wide range of products and services
provided by companies in which the Fund may invest:

- - Computer hardware and software of any kind, including, for example,
semiconductors, semiconductor equipment, Internet access devices and
technologies, optical components, and any technology used in the
distribution of data, voice, or interactive content.

- - Telecommunications products and services including landline, satellite, and
wireless technologies and any other related technology that may emerge in
the future.

- - E-commerce, including the distribution or sale of goods and services to
individuals and businesses over the Internet or other means of electronic
commerce.

- - Medical products and services developed or provided through or using the
Internet.

- - Multimedia products and services.

- - Data processing and interpretation products and services.

- - Dissemination of market, economic, and financial information.

The Fund may invest in companies that RSIM, L.P. believes are likely to
benefit indirectly from the development of the Internet. For example, the
Fund might invest in media companies RSIM, L.P. believes will benefit
substantially from advertising by companies providing products or services
to Internet users. As a result, the Fund's investments will not necessarily
be limited to high-technology or similar companies but may include issuers
in a wide range of industries.

The Fund may invest in companies of any size. It is likely, however, that
the Fund will at times invest a substantial portion of its assets in small-
and mid-cap companies, if RSIM, L.P. believes that they offer the best
opportunities for long-term capital appreciation. RSIM, L.P. typically
considers a number of factors in evaluating a potential investment,
including, for example, whether a company participates in an emerging space
with a large market opportunity; whether the company has a distinct
proprietary element; whether it is gaining market share; whether it is
earning superior margins or experiencing superior profitability or whether
its incremental margins have potential to show improving returns; and
whether it has a strong management team. RSIM, L.P. 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, L.P.'s price target or otherwise appears relatively high to RSIM,
L.P., or if there is an unfavorable change in the issuer's management or
corporate plans or if institutional ownership of the security increases
substantially. Because many of the markets in which the Fund invests are
characterized by rapid change, frequent new entrants, and price volatility,
RSIM, L.P. will trade the Fund's portfolio actively, potentially resulting
in a high portfolio turnover rate.

The Fund may sell securities short if RSIM, L.P. expects the values of those
securities to decline.

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

- - 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 invests primarily (and will normally invest at least 65% of its
assets) in companies that RSIM, L.P. believes are likely to benefit
substantially from the development of the Internet.

- - 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 equities markets in
general.

- - INTERNET-RELATED INVESTMENTS. Because the Fund's investments are
concentrated in the securities of companies whose success may depend on the
development of the Internet, the value of its shares will be especially
affected by factors peculiar to those companies and may fluctuate more
widely than the value of shares of a portfolio which invests in a broader
range of companies. These factors might include, for example, intense
competition, changes in consumer preferences, challenges in achieving
product compatibility, and government regulation. Securities of such
companies may experience significant price movements caused by
disproportionate investor optimism or pessimism with little or no basis in
fundamental economic conditions.

The Fund's investments in such 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 high-
technology investments generally.

- - SMALLER COMPANIES. The Fund may invest in smaller 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.

- - SHORT SALES AND SHORT POSITIONS. The Fund may sell securities short and
may take short positions on broad securities market indexes, such as the
Standard & Poor's 500 Index. The Fund may sell a security short and borrow
the same security from a broker or other institution to complete the sale
when RSIM, L.P. anticipates that the price of the security will decline.
The Fund may sell futures contracts and related options on a broad market
index if RSIM, L.P. expects a broad market decline. Short positions may
result in a loss if the market price 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. The Fund may enter
into short sales on securities with a value of up to 25% of the Fund's
total assets.

- - PORTFOLIO TURNOVER. Frequent purchases and sales of the Fund's portfolio
securities involve expenses 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.

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.

- - 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.

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

take longer for the prices of the securities to reflect the full value of
their issuers' earnings potential or assets.

- - 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 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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) 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 (%)
CALENDAR YEAR END
<S> <C>
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

<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR PAST ONE PAST FIVE SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) YEAR 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):
<S> <C> <C> <C> <C> <C>
EMERGING MIDCAP MICROCAP VALUE + DIVERSIFIED
GROWTH OPPORTUNITIES GROWTH GROWTH GROWTH
----- ----- ----- ----- -----
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>
INFORMATION GLOBAL NATURAL INTERNET
AGE RESOURCES AGE PARTNERS CONTRARIAN
----------- -------------- -------- -------- -----------
<S> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.25% 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% 0.38% 0.57% 1.08%
----- ----- ----- ----- -----
Total Annual Fund Operating Expenses(1) 1.63% 2.07% 1.88% 2.07% 2.83%

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

- --------------------------
(1) UNTIL MAY 26, 1998, EACH OF THE MIDCAP OPPORTUNITIES, MICROCAP GROWTH,
DIVERSIFIED GROWTH, THE INFORMATION AGE-REGISTERED TRADEMARK-, AND GLOBAL
NATURAL RESOURCES 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, 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.

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 $155 $480 $ 828 $1,807
RS MicroCap Growth Fund $194 $600 $1,030 $2,224
RS Value + Growth Fund $149 $462 $ 797 $1,741
RS Diversified Growth Fund $187 $578 $ 994 $2,151
The Information Age $166 $514 $ 885 $1,926
Fund-Registered Trademark-
RS Global Natural Resources Fund $198 $612 $1,051 $2,266
RS Internet Age Fund-TM- $191 $591 $1,015 $2,193
RS Partners Fund $191 $591 $1,015 $2,193
The Contrarian Fund-TM- $287 $876 $1,491 $3,142
</TABLE>

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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.

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 Adviser or its affiliates or clients may hold
securities issued by the same issuers, and may in

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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 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, RS INTERNET AGE FUND-TM-, 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 a Fund

30
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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

31
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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 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 (other than the Global Natural Resources
Fund, The Information Age Fund-Registered Trademark-, and RS Internet Age
Fund-TM-, which typically concentrate in specific market sectors) 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.

THE INTERNET AND HIGH-TECHNOLOGY. Many of the Funds may invest all or a
substantial portion of their assets in companies in high-technology or
Internet-related sectors. Companies in those sectors operate in markets that are
characterized by rapid change, evolving industry standards, frequent new service
and product announcements, introductions, and enhancements, and changing
customer demands. The failure of a company to adapt to such changes could have a
material adverse effect on the company's business, results of operations, and
financial condition. In addition, the widespread adoption of new technologies or
other technological changes could require substantial expenditures by a company
to modify or adapt its services or infrastructure, which could have a material
adverse effect on its business, results of operations, and financial condition.
Investments in these sectors may be highly volatile.

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

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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. RSIM, L.P.
anticipates that the portfolio turnover rate for RS Internet Age Fund's-TM-
first full year of operation will not exceed 200%. The Portfolio turnover rates
for each of the other Funds are set forth under "Financial Highlights."

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, RS INTERNET AGE-TM- AND GLOBAL NATURAL
RESOURCES 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

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Fund-Registered Trademark- 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-Registered Trademark- 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-Registered Trademark-.
Previously, Mr. Elijah managed those Funds as an employee of RSIM, L.P.

EASTBOURNE MANAGEMENT, L.L.C. RSIM, L.P. allocates a portion of The
Contrarian Fund's-TM- 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-Registered Trademark- 1.00% 1.00% 0.11%
RS Global Natural
Resources Fund 0.74% 1.00% 0.14%
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-Registered Trademark-. 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.

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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. Mr. Callinan is also a co-manager of RS Internet Age Fund-TM-. 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-Registered Trademark-. From
August 1985 to January 1990, Mr. Elijah was a securities analyst for Robertson,
Stephens & Company LLC. From January 1990 to January 1992, Mr. Elijah was an
analyst and portfolio manager for Water Street Capital, which managed short
selling investment funds. He holds a master's degree in economics from Humboldt
State University and an M.B.A. with an emphasis in finance from Golden Gate
University.

David 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 Fund. 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

35
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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.

Catherine Baker is co-manager of RS Internet Age Fund-TM-. Ms. Baker joined
the RS Investment Management research team in March 1997 and is a member of RS
Growth Equities Group. Previously, she was a Principal and Senior Analyst
covering information technology and services companies at Robertson, Stephens &
Co. beginning in the spring of 1995. Prior to joining Robertson, Stephens & Co.,
she served as an analyst at Cowen & Company. She also has previous brokerage
analyst experience at J.P. Morgan Securities and industry experience at IBM as
an analyst in software acquisitions. Cathy has a BSE in Electrical Engineering
from the University of Michigan and an MBA from Carnegie-Mellon University. She
is also a CFA.

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.

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

36
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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 may obtain an Application by calling RS Funds at
1-800-766-3863, or by writing to RS 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 219717, Kansas City, MO 64121-9717.

BY OVERNIGHT MAIL: Send the information described above to: 330 West 9th
Street, First Floor, Kansas City, MO 64105-1514.

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 219717, Kansas City, MO 64121-9717. 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

37
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- --------------------------------------------------------------------------------
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 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:

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

(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 (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

39
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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.

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.

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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, 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. 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

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Investment Management or those affiliates a portion of the payments received by
Provident under the Distribution Plan. The Plan is a compensation 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.

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.

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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.

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FINANCIAL HIGHLIGHTS (continued)

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>
MidCap Opportunities 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 $13.52 $13.62 $11.24 $10.00
Income From Investment Operations:
Net Investment income/(loss) 0.14 0.07 0.02 --
Net realized gain/(loss) and unrealized appreciation/
(depreciation) on investments 1.34 2.90 2.70 1.24
- ---------------------------------------------------------------------------------------------------------------------------------
Total from investment operations 1.48 2.97 2.72 1.24
Distributions:
Dividends from net investment income (0.19) (0.04) (0.02) --
Distribution from net realized capital gain (0.77) (3.03) (0.32) --
- ---------------------------------------------------------------------------------------------------------------------------------
Total Distributions (0.96) (3.07) (0.34) --
Net asset value, end of period $14.04 $13.52 $13.62 $11.24
Total Return 11.65% 22.40% 24.16% 12.40%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $183,910 $298,669 $309,775 $136,902
Ratio of net operating expenses to average net assets 1.30%(1) 1.30%(1) 1.71%(1) 1.94%*
Ratio of net investment income/(loss) to average net
assets 1.00%(1) 0.45%(1) 0.18%(1) (0.01)%*
Portfolio turnover rate 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 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-REGISTERED TRADEMARK- AND MICROCAP GROWTH FUND

<TABLE>
<CAPTION>
The Information
Age Fund-Registered Trademark- 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
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------

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>
This Page Intentionally Left Blank

51
<PAGE>
The Trust's Statement of Additional Information ("SAI") dated May 3, 1999
(as revised December 13, 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 1-800-766-3863.

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
1-800-766-3863

[LOGO]
(FORMERLY ROBERTSON STEPHENS INVESTMENT MANAGEMENT)

RS INVESTMENT TRUST

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

PROSPECTUS
----------------

MAY 3, 1999
(AS REVISED DECEMBER 13, 1999)

1-800-766-3863
WWW.RSIM.COM

Investment Company Act File No. 811-05159
<PAGE>

STATEMENT OF ADDITIONAL INFORMATION
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-Registered Trademark-
RS GLOBAL NATURAL RESOURCES FUND
RS INTERNET AGE FUND-TM-
RS PARTNERS FUND
THE CONTRARIAN FUND-TM-

MAY 3, 1999,
AS REVISED
DECEMBER 13, 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 revised on December 13,
1999, as it may be further 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
1-800-766-3863.

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
1-800-766-3863.

TABLE OF CONTENTS

CAPTION PAGE
- ------- ----

TRUST INFORMATION..............................................B-2
INVESTMENTS AND RISKS..........................................B-2
THE FUNDS' INVESTMENT LIMITATIONS.............................B-14
MANAGEMENT OF THE FUNDS.......................................B-18
THE FUNDS' DISTRIBUTION PLAN .................................B-35
HOW NET ASSET VALUE IS DETERMINED.............................B-38
TAXES.........................................................B-38
HOW PERFORMANCE IS DETERMINED.................................B-40
ADDITIONAL INFORMATION........................................B-43
APPENDIX A....................................................B-44
FINANCIAL STATEMENTS..........................................B-47

MHODMA.Active;8143096;1
<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-Registered Trademark-, MicroCap Growth Fund,
RS Internet Age Fund-TM-, 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 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-Registered Trademark- 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

MHODMA.Active;8143096;1 B-2
<PAGE>

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.

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.

MHODMA.Active;8143096;1 B-3
<PAGE>

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.

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

MHODMA.Active;8143096;1 B-4
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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 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

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<PAGE>

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.

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

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<PAGE>

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 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

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<PAGE>

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 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

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<PAGE>

related options, unanticipated changes in interest rates or stock price
movements may result in a poorer overall performance for the Fund than if it
had not entered into any futures contracts or options transactions. Moreover,
in the event of an imperfect correlation between the futures position and the
portfolio position which is intended to be protected, the desired protection
may not be obtained and the Fund may be exposed to risk of loss.

INDEXED SECURITIES

Certain of the Funds may purchase securities whose prices are indexed to
the prices of other securities, securities indices, currencies, precious
metals, or other commodities, or other financial indicators. Indexed
securities typically, but not always, are debt securities or deposits whose
value at maturity or coupon rate is determined by reference to a specific
instrument or statistic. Gold-indexed securities, for example, typically
provide for a maturity value that depends on the price of gold, resulting in a
security whose price tends to rise and fall together with gold prices.
Currency-indexed securities typically are short-term to intermediate-term debt
securities whose maturity values or interest rates are determined by reference
to the values of one or more specified foreign currencies, and may offer
higher yields than U.S. dollar-denominated securities of equivalent issuers.
Currency-indexed securities may be positively or negatively indexed; that is,
their maturity value may increase when the specified currency value increases,
resulting in a security whose price characteristics are similar to a put
option on the underlying currency. Currency-indexed securities also may have
prices that depend on the values of a number of different foreign currencies
relative to each other.

The performance of indexed securities depends to a great extent on the
performance of the security, currency, commodity or other instrument to which
they are indexed, and also may be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the
credit risks associated with the issuer of the security, and their values may
decline substantially if the issuer's creditworthiness deteriorates. Recent
issuers of indexed securities have included banks, corporations, and certain
U.S. Government agencies.

REPURCHASE AGREEMENTS

A Fund may enter into repurchase agreements. A repurchase agreement is a
contract under which the Fund acquires a security for a relatively short
period (usually not more than one week) subject to the obligation of the
seller to repurchase and the Fund to resell such security at a fixed time and
price (representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of the
Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. Government or its
agencies or instrumentalities or other high-quality, short-term debt
obligations. Repurchase agreements may also be viewed as loans made by a Fund
which are collateralized by the securities subject to repurchase. 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.

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<PAGE>

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 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

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<PAGE>

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."

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

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<PAGE>

are quoted in their principle trading markets or an increase in the value of
currency for securities which the Fund expects to purchase. In connection with
position hedging, a Fund may purchase put or call options on foreign currency
and foreign currency futures contracts and buy or sell forward contracts and
foreign currency futures contracts. A Fund may also purchase or sell foreign
currency on a spot basis.

The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.

It is impossible to forecast with precision the market value of a Fund's
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency a Fund is obligated to deliver and if a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security or
securities of a Fund if the market value of such security or securities
exceeds the amount of foreign currency the Fund is obligated to deliver.

To offset some of the costs to a Fund of hedging against fluctuations in
currency exchange rates, the Fund may write covered call options on those
currencies.

Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase
or sell. They simply establish a rate of exchange which one can achieve at
some future point in time. Additionally, although these techniques tend to
minimize the risk of loss due to a decline in the value of the hedged
currency, they tend to limit any potential gain which might result from the
increase in the value of such currency.

A Fund may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, by purchasing and selling options on
foreign currencies and on foreign currency futures contracts, and by
purchasing and selling foreign currency forward contracts.

CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific
currency at a future date, which may be any fixed number of days from the date
of the contract as agreed by the parties, at a price set at the time of the
contract. In the case of a 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.

MHODMA.Active;8143096;1 B-12
<PAGE>

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 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

MHODMA.Active;8143096;1 B-13
<PAGE>

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
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.

MHODMA.Active;8143096;1 B-14
<PAGE>

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;

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);

MHODMA.Active;8143096;1 B-15
<PAGE>

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:

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. (all Funds other than RS Internet Age Fund-TM-) 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. (all Funds other than RS Internet Age Fund-TM-) 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. RS Inernet Age Fund may not borrow money,
except to the extent permitted by applicable law, regulation or
order;

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-Registered Trademark-, the Internet Age
Fund's-TM- and the MicroCap Growth Fund's total assets and 50%
of 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

MHODMA.Active;8143096;1 B-16
<PAGE>

(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-Registered Trademark- will invest without
limit in any one or more information technology industries, 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, and RS Internet Age Fund-TM- will
invest in companies RSIM believes are likely to benefit
substantially from the development of the Internet without
limitation as to industry concentration;

6. (all Funds other than RS Internet Age Fund-TM-) 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, RS Internet Age, MidCap
Opportunities, Information Age-Registered Trademark-, MicroCap Growth, and
Partners Funds, which policy may be changed without shareholder approval, to
invest more than 15% of its net assets in securities which are not readily
marketable, including securities restricted as to resale (other than
securities restricted as to resale but determined by the Trustees, or persons
designated by the Trustees to make such determinations, to be readily
marketable).

All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as fundamental or to the extent
designated as such in 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.

MHODMA.Active;8143096;1 B-17
<PAGE>

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 Chief Executive Officer of
Centre Capital Group, Inc., a member company of American International
Group, Inc. 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 APMT LLC, a manager of mortgage assets. Mr.
Auerbach is a limited partner in RS Residential Fund, L.P. and RS
Commercial Property Fund, L.P., of which RSRF Company, L.L.C. and RS
Investment Co., L.L.C., 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, TRUSTEE, 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 and was most recently elected a
Trustee in May, 1999.

JAMES K. PETERSON, TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco, CA
94111

Mr. Peterson, 56, is a 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 RS 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.

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.

MHODMA.Active;8143096;1 B-18
<PAGE>

SUZANNE DUFRANE, SECRETARY
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco, CA
94111

Prior to joining RS Investment Management, Ms. DuFrane was a Vice
President at Credit Suisse First Boston in New York. From 1996-1997, Ms.
DuFrane worked at Robertson Stephens Investment Management as a controller
in the hedge fund group. Before joining Robertson Stephens Investment
Management in 1996, Ms. DuFrane was a senior tax consultant at Price
Waterhouse in San Francisco for three years. She has a B.A. in Social
Science from U.C. Berkeley. Ms. DuFrane has been Secretary of the Trust
since July, 1999.

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.

COMPENSATION TABLE
<TABLE>
<CAPTION>
Name of Aggregate Pension or Estimated Annual Total Compensation
Person, Position Compensation Retirement Benefits Benefits Upon From Fund Paid to
From Trust Accrued As Part of Retirement Trustees
Trust Expenses
- -----------------------------------------------------------------------------------------------------------------
<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

G. Randall Hecht,* Trustee -- -- -- --
</TABLE>
- -------------------------------------------------------
*Denotes a Trustee who is an "interested person" as defined in the 1940 Act.

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>
Shareholder Shares Owned Percentage of Percentage of
----------- ------------ Outstanding Shares of Outstanding Shares
the Class Owned of 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
</TABLE>

MHODMA.Active;8143096;1 B-19
<PAGE>

<TABLE>
<S> <C> <C> <C>
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

CLASS C SHARES

NFSC FEBO # 0LF-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
</TABLE>
- ------------------------------
* Owned of Record and Beneficially

MHODMA.Active;8143096;1 B-20
<PAGE>

<TABLE>
<S> <C> <C> <C>
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

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
</TABLE>

MHODMA.Active;8143096;1 B-21
<PAGE>

<TABLE>
<S> <C> <C> <C>
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

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

CLASS C SHARES
--------------

CoreLink Financial 13,185.553 9.46% 0.11%
PO Box 4054
Concord, CA 94524-4054
</TABLE>

MHODMA.Active;8143096;1 B-22
<PAGE>

<TABLE>
<S> <C> <C> <C>
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%
Securities Corp.
P. O. Box 2052
Jersey City, NJ 07303-2052

Resources Trust Company TTEE IRA 748.234 8.27% 0.01%
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. 508.169 5.62% 0.01%
CUST FBO W. Gene Hoss IRA
547 Cumberland Drive
Allen, TX 75002
</TABLE>

MHODMA.Active;8143096;1 B-23
<PAGE>

<TABLE>
<S> <C> <C> <C>
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 2,222.003 6.93% 0.04%
FBO 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
</TABLE>

MHODMA.Active;8143096;1 B-24
<PAGE>

<TABLE>
<S> <C> <C> <C>
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

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>

MHODMA.Active;8143096;1 B-25
<PAGE>

As of November 20, 1999, all outstanding shares of RS Internet Age
Fund-TM- were owned by RS Investment Management Co., LLC ("RSIM Co."), and
the officers and Trustees of the Trust owned no shares of RS Internet Age
Fund-TM-. 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.

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

RSIM Co., a Delaware limited liability company, is the owner of all of
the outstanding beneficial interest in RSIM, L.P. 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, and 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, MidCap Opportunities, The Information
Age-Registered Trademark-, RS Internet 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 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 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

MHODMA.Active;8143096;1 B-26
<PAGE>

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 Age-Registered Trademark- 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-Registered Trademark- 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-Registered Trademark- 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-Registered Trademark- 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-Registered Trademark- 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 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)

MHODMA.Active;8143096;1 B-27
<PAGE>

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%
Emerging Growth Fund 1.00%
Global Natural Resources Fund 1.00%
RS Internet Age Fund-TM- 1.25%
MidCap Opportunities Fund 1.00%
Information Age Fund-Registered Trademark- 1.00%
MicroCap Growth Fund 1.25%
Partners Fund 1.25%
Value + Growth Fund 1.00%

MHODMA.Active;8143096;1 B-28
<PAGE>

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, RS Internet Age Fund-TM-, MidCap Opportunities Fund, The
Information Age Fund-Registered Trademark-, 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

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-REGISTERED TRADEMARK-
- ----------------------------------------------
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
</TABLE>

MHODMA.Active;8143096;1 B-29
<PAGE>

<TABLE>
Reimbursement Administration
Management Fees(1) of Expenses(2) Fees(3)
------------------ -------------- --------------
<S> <C> <C> <C>
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 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.

MHODMA.Active;8143096;1 B-30
<PAGE>

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.

MHODMA.Active;8143096;1 B-31
<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 involving 80% 77% 61%
brokerage commissions

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

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

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

Percentage of transactions effected without 20% 23% 39%
brokerage commissions
</TABLE>

<TABLE>
<CAPTION>
RS DIVERSIFIED GROWTH FISCAL YEAR FISCAL YEAR PERIOD
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 to 4.3%($40,890) 9.6%($58,721) 13%($16,648)
RS&Co./BARS/NMS

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

Percentage of transactions effected without 59% 54% 43%
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 involving 19% 40% 27%
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

Percentage of brokerage transactions effected 5% 6% 2%
through RS&Co./BARS/NMS

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

MHODMA.Active;8143096;1 B-32
<PAGE>

<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 involving 63% 58% 53%
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 effected 4% 3% 8%
through RS&Co./BARS/NMS

Percentage of transactions effected without 37% 42% 47%
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 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 65% 55% 44%
total transactions 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 effected 7% 9% 6%
through RS&Co./BARS/NMS

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

MHODMA.Active;8143096;1 B-33
<PAGE>

<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 involving 28% 24% 22%
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 effected 4% 3% 3%
through RS&Co./BARS/NMS

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

<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR PERIOD
MICROCAP FUND ENDED 12/31/98 ENDED 12/31/97 8/15/96 - 12/31/96
- ------------- -------------- -------------- ------------------
<S> <C> <C> <C>
Percentage of total transactions involving 6% 6% 5%
brokerage commissions

Dollar amount of commissions $56,235 $62,898 $1,800

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

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

Percentage of transactions effected without 94% 94% 95%
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 involving 80% 81% 63%
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 effected 0% 0.4% 1%
through RS&Co./BARS/NMS

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

MHODMA.Active;8143096;1 B-34
<PAGE>

THE FUNDS' DISTRIBUTION PLAN

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. 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 a
portion of the payments received by Provident under the Plan. The Plan is a
"compensation" plan.

RECENT PAYMENTS UNDER THE FUNDS' DISTRIBUTION PLAN*.
- ----------------------------------------------------

THE CONTRARIAN FUND-TM- DISTRIBUTION FEES WAIVER
Year ended 12/31/96 $6,736,236 --
Year ended 12/31/97 $6,816,512 --
Year ended 12/31/98 $1,050,953 --

DIVERSIFIED GROWTH FUND
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 --

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-REGISTERED TRADEMARK-
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 --

MHODMA.Active;8143096;1 B-35
<PAGE>

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 --

*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.

RECENT PAYMENTS UNDER THE FUNDS' CLASS C DISTRIBUTION PLAN*(1):
- ---------------------------------------------------------------

THE CONTRARIAN FUND-TM- DISTRIBUTION FEES WAIVER
4/14/97 - 12/31/97 $20,977 --
Year ended 12/31/98 $18,507 --

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 --

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

THE INFORMATION AGE FUND-REGISTERED TRADEMARK-
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 --

MHODMA.Active;8143096;1 B-36
<PAGE>

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

*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:

THE CONTRARIAN FUND-TM- CDSC PAID
4/14/97 - 12/31/97 $5,351.73
Year ended 12/31/98 $18,057.11

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

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

THE INFORMATION AGE FUND-REGISTERED TRADEMARK-
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

MHODMA.Active;8143096;1 B-37
<PAGE>

(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.

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").

MHODMA.Active;8143096;1 B-38
<PAGE>

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 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

MHODMA.Active;8143096;1 B-39
<PAGE>

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 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.

MHODMA.Active;8143096;1 B-40
<PAGE>

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 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.

THE CONTRARIAN FUND-TM-
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 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-Registered Trademark-
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%

MHODMA.Active;8143096;1 B-41
<PAGE>

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

VALUE + GROWTH
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%

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.

MHODMA.Active;8143096;1 B-42
<PAGE>

The beta included with any presentation of the Fund's performance data will be
calculated according to the following formula:

n
SIGMA R R - R
FT MT nRF M
BETA = ----------------------
n 2 --
SIGMA R - 2
MT NR M

Where: n = number of months measured

R = rate of return on the Fund in month T
FT

R = rate of return on the market index, I.E., the S&P 500, in month T
MT

_
R = arithmetic average monthly rate of return of the Fund
F

_
R = arithmetic average monthly rate of return on the market index,
M 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.

MHODMA.Active;8143096;1 B-43
<PAGE>

APPENDIX A

DESCRIPTION OF SECURITIES RATINGS

This Appendix describes ratings applied to corporate bonds by Standard &
Poor's ("S&P"), Moody's Investors Service, Inc. ("Moody's") and Fitch Investor
Services, Inc. ("Fitch").

S&P'S RATINGS

AAA: Debt rated 'AAA' has the highest rating assigned by Standard & Poor's.
Capacity to pay interest and repay principal is extremely strong.

AA: Debt rated 'AA' has a very strong capacity to pay interest and repay
principal and differs from the highest rated issues only in small degree.

A: Debt rated 'A' has a strong capacity to pay interest and repay principal,
although it is somewhat more susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher-rated categories.

BBB: Debt rated 'BBB' is regarded as having an adequate capacity to pay
interest and repay principal. Whereas it normally exhibits adequate protection
parameters, adverse economic conditions or changing circumstances are more
likely to lead to a weakened capacity to pay interest and repay principal for
debt in this category than in higher-rated categories.

Debt rated 'BB,' 'B,' 'CCC,' 'CC,' and 'C' is regarded as having predominantly
speculative characteristics with respect to capacity to pay interest and repay
principal. 'BB' indicates the least degree of speculation and 'C' the highest.
While such debt will likely have some quality and protective characteristics,
these are outweighed by large uncertainties of major exposures to adverse
markets.

BB: Debt rated 'BB' has less near-term vulnerability to default than other
speculative issues. However, it faces major ongoing uncertainties or exposure
to adverse business, financial, or economic conditions which could lead to
inadequate capacity to meet timely interest and principal payments. The 'BB'
rating category is also used for debt subordinated to senior debt that is
assigned an actual or implied 'BBB-' rating.

B: Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness
to pay interest and repay principal. The 'B' rating category is also used for
debt subordinated to senior debt that is assigned an actual or implied 'BB' or
'BB-' rating.

CCC: Debt rated 'CCC' has a currently identifiable vulnerability to default,
and is dependent upon favorable business, financial, and economic conditions
to meet timely payment of interest and repayment of principal. In the event of
adverse business, financial, or economic conditions, it is not likely to have
the capacity to pay interest and repay principal. The 'CCC' rating category is
also used for debt subordinated to senior debt that is assigned an actual or
implied 'B' or 'B-' rating.

CC: The rating 'CC' typically is applied to debt subordinated to senior debt
that is assigned an actual or implied 'CCC' rating.

C: The rating 'C' typically is applied to debt subordinated to senior debt
that is assigned an actual or implied 'CCC-' rating. The 'C' rating may be
used to cover a situation where a bankruptcy petition has been filed, but debt
service payments are continued.

CI: The rating 'CI' is reserved for income bonds on which no interest is being
paid.

D: Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if
the applicable grace period has not expired, unless S&P believes that such
payments 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.

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<PAGE>

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.

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+.'

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<PAGE>

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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