<PAGE>
As filed with the Securities and Exchange Commission on March 4, 1999
Registration No. 33-16439
811-5159
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 /x/
PRE-EFFECTIVE AMENDMENT NO. / /
POST-EFFECTIVE AMENDMENT NO. 34 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
AMENDMENT NO. 36 /x/
RS INVESTMENT TRUST
(formerly, Robertson Stephens Investment Trust)
(Exact Name of Registrant as Specified in Charter)
555 California Street
San Francisco, California 94104
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 766-3863
George R. Hecht
c/o RS Investment Management
555 California Street
San Francisco, California 94104
(Name and Address of Agent for Service)
Copies to:
TIMOTHY W. DIGGINS, ESQUIRE
ROPES & GRAY
One International Place
Boston, MA 02110-2624
Approximate date of proposed public offering : As soon as practicable after
this Amendment becomes effective.
It is proposed that this filing will become effective:
(check appropriate box)
/ / Immediately upon filing pursuant to paragraph (b);
/ / On (date) pursuant to paragraph (b)
/x/ 60 days after filing pursuant to paragraph (a)(1);
/ / On (date) pursuant to paragraph (a)(1);
/ / 75 days after filing pursuant to paragraph (a)(2); or
/ / On (date) pursuant to paragraph (a)(2) of Rule 485.
If appropriate, check the following box:
/ / This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
THIS POST-EFFECTIVE AMENDMENT DOES NOT RELATE TO RS INTERNATIONAL FUND,
RS ASIA FUND, RS INTERNATIONAL INVESTORS FUND, RS LARGE CAPITALIZATION
EQUITY INCOME FUND, RS LARGE CAPITALIZATION VALUE FUND, AND RS 50/500 FUND.
<PAGE>
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RS FUNDS
555 California Street, Suite 2500
San Francisco, CA 94104 PROSPECTUS
800-766-FUND May 3, 1999
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RS INVESTMENT TRUST
This Prospectus describes ten mutual funds offered by RS Investment Trust.
THE CONTRARIAN FUND-TM-
RS DIVERSIFIED GROWTH FUND
RS EMERGING GROWTH FUND
RS GLOBAL NATURAL RESOURCES FUND
RS GLOBAL VALUE FUND
RS GROWTH & INCOME FUND
THE INFORMATION AGE FUND-TM-
RS MICROCAP GROWTH FUND
RS PARTNERS FUND
RS VALUE + GROWTH FUND
You can call RS Funds at (800) 766-FUND to find out more about the Funds.
The Prospectus explains what you should know about the Funds before you invest.
Please read it carefully.
NEITHER THE U.S. SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF 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
-----
<S> <C>
SUMMARY INFORMATION..................................................................................... 3
THE CONTRARIAN FUND-TM-............................................................................. 3
RS DIVERSIFIED GROWTH FUND.......................................................................... 5
RS EMERGING GROWTH FUND............................................................................. 7
RS GLOBAL NATURAL RESOURCES FUND.................................................................... 8
RS GLOBAL VALUE FUND................................................................................ 10
RS GROWTH & INCOME FUND............................................................................. 12
THE INFORMATION AGE FUND-TM-........................................................................ 13
RS MICROCAP GROWTH FUND............................................................................. 15
RS PARTNERS FUND.................................................................................... 16
RS VALUE GROWTH FUND................................................................................ 18
FEES AND EXPENSES....................................................................................... 20
RISKS AND OTHER INVESTMENT STRATEGIES................................................................... 22
MANAGEMENT OF THE FUNDS................................................................................. 27
PORTFOLIO MANAGERS...................................................................................... 28
HOW THE FUNDS' SHARES ARE PRICED........................................................................ 30
HOW TO PURCHASE SHARES.................................................................................. 30
HOW TO SELL SHARES...................................................................................... 32
EXCHANGES............................................................................................... 34
DIVIDENDS AND DISTRIBUTIONS............................................................................. 34
TAXES................................................................................................... 34
DISTRIBUTION ARRANGEMENTS AND 12b-1 FEES................................................................ 35
YEAR 2000 DISCLOSURE.................................................................................... 36
FINANCIAL HIGHLIGHTS.................................................................................... 37
</TABLE>
2
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SUMMARY INFORMATION
The Funds offered by RS Investment Trust provide a broad range of investment
choices. This summary identifies each Fund's investment objective, principal
investment strategies, and principal risks. The Trustees of the Trust may change
the investment objectives and policies of any Fund without a vote of the
shareholders unless otherwise specifically stated. As a matter of policy, the
Trustees would not materially change a Fund's investment objective without
shareholder approval.
RS Investment Management, L.P. ("RSIM, L.P.") manages all of the Funds,
except the Emerging Growth Fund. RS Investment Management, Inc. ("RSIM, Inc.")
manages the Emerging Growth Fund. RSIM, L.P. and RSIM, Inc. are sometimes
referred to in this Prospectus collectively as "RS Investment Management."
Elijah Asset Management, LLC ("Elijah Asset Management") serves as sub-adviser
to The Information Age Fund-TM- and the Value + Growth Fund. Eastbourne
Management, L.L.C. ("Eastbourne") serves as sub-adviser in respect of a portion
of the assets of The Contrarian Fund-TM-. Each of RS Investment Management,
Elijah Asset Management, and Eastbourne is sometimes referred to as an
"Adviser."
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.
After the narrative describing each Fund is a chart showing how the
investment returns of that Fund's shares have varied from year to year. The
chart shows returns for each full calendar year for each of the last 10 calendar
years or since the Fund commenced operations (as applicable). The table
following the chart indicates some of the risks of investing in the Fund by
comparing that Fund's average annual returns for the last year, for the last
five years and for the last ten years or for the life of the Fund (as
applicable) to a broad-based securities market index. PAST PERFORMANCE IS NOT
NECESSARILY AN INDICATION OF FUTURE PERFORMANCE. It is possible to lose money on
investments in the Funds.
For a discussion of recent market and portfolio developments affecting each
Fund's performance, see the Funds' most recent financial reports. You can call
the Trust at (800) 766-FUND to request a free copy of the financial reports.
THE CONTRARIAN FUND-TM-
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- - INVESTMENT OBJECTIVE. Maximum long-term growth.
- - INVESTMENT STRATEGIES. The Fund invests worldwide in growth and value
companies whose stocks are attractively priced. The Fund invests primarily in
attractively priced 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. The Fund is a nondiversified mutual fund.
The Fund may also do the following:
- - Sell stocks short.
- - Take positions in options and futures contracts in anticipation of a market
decline.
- - Borrow money to purchase additional portfolio securities.
3
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- - 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
- - 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 Adviser, 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.
- - NON-DIVERSIFIED FUND. The Fund is a "non-diversified" mutual fund, and may
invest its assets in a more limited number of issuers than may diversified
investment companies. To the extent the Fund focuses on fewer issuers, its
risk of loss increases if the market value of a security declines or if an
issuer is not able to meet its obligations.
- - 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 less
frequently and in limited volume. As a result, the prices of these
securities may fluctuate more than prices of securities of larger, widely
traded companies.
- - SHORT SALES AND OTHER 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 the Adviser anticipates that the price of a security will
decline. The Fund may sell futures contracts and related options on a broad
market index if RS Investment Management expects a broad market decline.
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. The Fund
may enter into short sales on securities with a value of up to 40% of the
Fund's total assets.
- - LEVERAGE. The Fund may borrow money to invest in additional securities.
The use of borrowed money 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.
4
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PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1994 -5.52%
1995 30.86%
1996 21.68%
1997 -29.51%
1998 -32.69%
</TABLE>
During the periods shown above, the highest quarterly return was 20.97 for
the quarter ended March 1996, and the lowest was -30.17 for the quarter ended
September 1998.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR PAST FIVE YEARS (6/30/93)
The Contrarian Fund-TM- (32.69)% (6.52)% (4.01)%
Morgan Stanley Capital International
All Country World Index* 19.69% 12.28% 12.57%
</TABLE>
* The Morgan Stanley Capital International All Country World Index is an
unmanaged, market capitalization-weighted index composed of companies
representative of the market structure of 47 developed and emerging market
countries.
RS DIVERSIFIED GROWTH FUND
- --------------------------------------------------------------------------------
- - INVESTMENT OBJECTIVE. To seek long-term capital growth.
- - 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.
- - PRINCIPAL INVESTMENTS. The Fund invests principally in common and preferred
stocks and warrants, but may invest in debt securities that its Adviser
believes are consistent with the Fund's objective.
- - PRINCIPAL RISKS.
- - 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 the Adviser, due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.
5
<PAGE>
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- - 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. 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.
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1997 29.45%
1998 16.28%
</TABLE>
During the periods shown above, the highest quarterly return was 29.77 for the
quarter ended December 1998, and the lowest was -16.25 for the quarter ended
September 1998.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (8/1/96)
RS Diversified Growth Fund 16.28% 29.55%
Russell 2000 Index* (2.55)% 13.71%
</TABLE>
* The Russell 2000 Index is an unmanaged market capitalization-weighted index
composed of 2,000 U.S. companies with an average market capitalization of $467
million. Investment results assume the reinvestment of dividends paid on the
stocks constituting the index.
6
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RS EMERGING GROWTH FUND
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- - INVESTMENT OBJECTIVE. Capital appreciation.
- - INVESTMENT STRATEGIES. The Fund invests primarily in rapidly growing
emerging companies. The Fund generally invests in industry segments that are
experiencing rapid growth and in companies with proprietary advantages. The
Adviser may consider a number of factors in evaluating potential investments,
including, for example, the rate of earnings growth, the quality of
management, the extent of proprietary operating advantage, the return on
equity and/or the financial condition of the company.
- - PRINCIPAL INVESTMENTS. The Fund invests in a diversified portfolio of equity
securities (principally common stocks) in companies that the Fund's Adviser
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.
- - PRINCIPAL RISKS.
- - 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 the Adviser, 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 on 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 have limited product lines, markets, or financial resources, or
may depend on a limited management group. Their securities may trade less
frequently and in limited volume. As a result, the prices of these
securities may fluctuate more than prices of securities of larger, widely
traded companies.
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1989 44.45%
1990 9.57%
1991 58.69%
1992 -2.55%
1993 7.22%
1994 7.96%
1995 20.31%
1996 21.53%
1997 18.54%
1998 28.02%
</TABLE>
During the periods shown above, the highest quarterly return was 38.37 for the
quarter ended December 1998, and the lowest was -23.37 for the quarter ended
September 1998.
7
<PAGE>
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PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR PAST FIVE YEARS PAST TEN YEARS
RS Emerging Growth Fund 28.02% 19.09% 20.18%
Russell 2000 Growth Index* 1.23% 10.22% 11.54%
</TABLE>
* The Russell 2000 Growth Index is an unmanaged market capitalization-weighted
index containing those securities in the Russell 2000 Index with higher
price-to-book ratios and higher forecasted growth values. Investment results
assume the reinvestment of dividends paid on the stocks constituting the
index.
RS GLOBAL NATURAL RESOURCES FUND
- --------------------------------------------------------------------------------
- - INVESTMENT OBJECTIVE. Long-term capital appreciation.
- - 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 the Adviser expects
its market price to decline.
- - Companies in the natural resources industries include companies that the
Adviser 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 the Adviser
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 the Adviser 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.
- - 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
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.
8
<PAGE>
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- - 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 the Adviser, 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.
- - CONCENTRATION. The Fund's investments are concentrated in the natural
resources industries and those investments 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 these industries.
- - 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.
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 41.21%
1997 -17.14%
1998 -34.45%
</TABLE>
During the periods shown above, the highest quarterly return was 17.19 for the
quarter ended March 1996, and the lowest was -22.47 for the quarter ended
September 1998.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (11/15/95)
RS Global Natural Resources Fund (34.45)% (7.78)%
Lipper Natural Resources Index* (23.12)% 6.85%
<CAPTION>
</TABLE>
* The Lipper Natural Resources Index is an equally weighted index of the largest
mutual funds in the Lipper Natural Resources investment objective, adjusted
for the reinvestment of capital gains distributions and income dividends.
9
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RS GLOBAL VALUE FUND
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- - INVESTMENT OBJECTIVE. Long-term growth.
- - INVESTMENT STRATEGIES The Fund employs a value methodology, combining Graham
& Dodd balance sheet analysis and cash flow analysis (such as the Holt/Value
Search cash-flow model), to invest in equity securities primarily of
companies with market capitalizations of $1 billion or more. The Fund may
invest in securities of issuers located anywhere in the world and normally
will invest in securities of companies located in at least three countries,
which may include the United States. The Fund considers an issuer to be
located in a country if it is organized under the laws of that country and
has a principal office in that country, if it derives 50% or more of its
total revenues from business in that country or if its equity securities
trade principally on a securities exchange in that country. The Fund is a
non-diversified mutual fund.
- - In selecting investments for the Fund, RS Investment Management will:
- - Perform fundamental research focusing on business analysis;
- - Observe how management allocates capital;
- - Strive to understand the unit economics of the business of the company;
- - Key on the cash flow rate of return on capital employed;
- - Discern the sources and uses of cash;
- - Consider how management is compensated; and
- - Ask how the stock market is pricing the entire company.
- - PRINCIPAL INVESTMENTS. Although the Fund invests primarily in common stocks,
it may also invest in preferred stocks, warrants and debt securities. The
Fund under normal circumstances invests at least 65% of its assets in equity
securities selected through its value methodology.
- - PRINCIPAL RISKS.
- - 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 the Adviser, 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.
- - 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.
- - 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 on the prices of stocks in those
sectors or industries.
- - NON-DIVERSIFIED FUND. The Fund is a "non-diversified" mutual fund, and may
invest its assets in a more limited number of issuers than may diversified
investment companies. To the extent the Fund focuses on fewer issuers, its
risk of loss increases if the market value of a security declines or if an
issuer is not able to meet its obligations.
10
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PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1998 10.50%
</TABLE>
During the periods shown above, the highest quarterly return was 12.47 for the
quarter ended March 1998 and the lowest was -5.07 for the quarter ended
September 1998.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (4/1/97)
RS Global Value Fund 10.50% 17.47%
Morgan Stanley Capital
International
World Value Index* 13.66% 16.37%
</TABLE>
* The Morgan Stanley Capital International World Value Index is a market
capitalization-weighted index composed of companies representative of the
market structure of 22 developed market countries in North America, Europe,
and the Pacific Basin.
RS GROWTH & INCOME FUND
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- - INVESTMENT OBJECTIVE. Long-term total return.
- - 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.
- - PRINCIPAL INVESTMENTS. The Fund normally invests a majority of its assets in
common and preferred stocks, convertible securities, bonds and notes.
- - PRINCIPAL RISKS.
- - 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 the Adviser, due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.
- - 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
11
<PAGE>
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- --------------------------------------------------------------------------------
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.
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 24.16%
1997 22.40%
1998 11.65%
</TABLE>
During the periods shown above, the highest quarterly return was 19.89 for the
quarter ended December 1998, and the lowest was -13.53 for the quarter ended
September 1998.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (7/12/95)
RS Growth & Income 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.
THE INFORMATION AGE FUND-TM-
- --------------------------------------------------------------------------------
- - INVESTMENT OBJECTIVE. Long-term capital appreciation.
- - INVESTMENT STRATEGIES. The Fund primarily invests in the information
technology industry sector.
- - Companies in the information technology industries include companies that
an Adviser 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:
12
<PAGE>
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- - 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 an Adviser
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 an Adviser 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.
- - 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.
13
<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 an Adviser, due to factors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.
- - 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.
- - 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. 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.
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 26.72%
1997 6.15%
1998 52.20%
</TABLE>
During the periods shown above, the highest quarterly return was 41.86 for the
quarter ended December 1998, and the lowest was -21.73 for the quarter ended
December 1997.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (11/15/95)
The Information Age Fund-TM- 52.20% 22.85%
Pacific Stock Exchange Technology Index* 54.60% 28.40%
</TABLE>
* The Pacific Stock Exchange Technology Index is an unmanaged, price-weighted
index of the top 100 U.S. technology stocks.
14
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
RS MICROCAP GROWTH FUND
- --------------------------------------------------------------------------------
- - INVESTMENT OBJECTIVE. Long-term capital appreciation.
- - INVESTMENT STRATEGIES. The Fund primarily invests in "micro-cap" companies
with market capitalizations of $500 million or less at the time of investment
that, in the Adviser'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.
- - 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 such "micro-cap"
companies.
- - PRINCIPAL RISKS.
- - 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 the Adviser, 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. The Fund may sell securities short. The Fund may sell a
security short and borrow the same security from a broker or other
institution to complete the sale when the Adviser anticipates that the
price of a security will decline. Short sales may result in a loss if the
value of the security increases between the date when the Fund enters into
the short sale and the date on which the Fund closes the short sale.
- - 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 on the prices of stocks in those
sectors or industries.
15
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1997 30.45%
1998 -0.63%
</TABLE>
During the periods shown above, the highest quarterly return was 27.11 for the
quarter ended September 1997, and the lowest was -24.58 for the quarter ended
September 1998.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (8/15/96)
RS MicroCap Growth Fund (0.63)% 16.09%
Russell 2000 Growth Index* 1.23% 9.37%
</TABLE>
* 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.
RS PARTNERS FUND
- --------------------------------------------------------------------------------
- - INVESTMENT OBJECTIVE. Long-term growth.
- - INVESTMENT STRATEGIES. The Fund employs a value methodology, combining
Graham & Dodd balance sheet analysis and cash flow analysis (such as the
Holt/Value Search cash-flow model) to invest in equity securities primarily
of companies with market capitalizations of up to $1 billion. 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 selecting investments for the Fund, the Adviser 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;
16
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- - 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, warrants and debt securities.
- - PRINCIPAL RISKS.
- - 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 the Adviser, 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.
- - 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.
- - 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. 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.
- - NON-DIVERSIFIED FUND. The Fund is a "non-diversified" mutual fund, and may
invest its assets in a more limited number of issuers than may diversified
investment companies. To the extent the Fund focuses on fewer issuers, 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 CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1996 43.15%
1997 18.08%
1998 -27.23%
</TABLE>
17
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR (7/12/95)
RS Partners Fund (27.23)% 7.31%
Russell 2000 Value Index* (6.45)% 14.93%
</TABLE>
* The Russell 2000 Value Index is an unmanaged market capitalization-weighted
index composed of those securities in the Russell 2000 Index with lower
price-to-book ratios and lower forecasted growth values. Investment results
assume the reinvestment of dividends paid on the stocks constituting the
index.
RS VALUE + GROWTH FUND
- --------------------------------------------------------------------------------
- - INVESTMENT OBJECTIVE. Capital appreciation.
- - 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, its Adviser's
primary emphasis is typically on evaluating a company's management, growth
prospects, business operations, revenues, earnings, cash flows, and balance
sheet in relationship to its share price. The Adviser may select stocks for
purchase which it believes are undervalued relative to the current stock
price. The Fund may invest in securities of larger and smaller companies. The
Fund may also sell short stocks that the Adviser believes are relatively
overvalued.
- - 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.
- - 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 the Adviser, due to sfactors that adversely
affect particular companies in the portfolio and/or the U.S. equities
market in general.
- - SHORT SALES. The Fund may sell securities short. The Fund may sell a
security short and borrow the same security from a broker or other
institution to complete the sale when the Adviser anticipates that the
price of a security will decline. Short sales may result in a loss if the
value of the security increases between the date when the Fund enters into
the short sale and the date on which the Fund closes the short sale.
- - 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 on the prices of stocks in those
sectors or industries.
18
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PERFORMANCE CHART
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
<TABLE>
<CAPTION>
ANNUAL RETURN (%)
<S> <C>
Calendar Year End
1993 21.57%
1994 23.11%
1995 42.70%
1996 14.12%
1997 13.81%
1998 27.44%
</TABLE>
During the periods shown above, the highest quarterly return was 24.07 for the
quarter ended December 1998, and the lowest was -14.65 for the quarter ended
December 1995.
PERFORMANCE TABLE
<TABLE>
<CAPTION>
<S> <C> <C> <C>
AVERAGE ANNUAL TOTAL RETURNS (FOR SINCE INCEPTION
PERIODS ENDING DECEMBER 31, 1998) PAST ONE YEAR PAST FIVE YEARS (5/12/92)
RS Value + Growth Fund 27.44% 23.80% 22.70%
Russell 1000 Growth Index* 38.71% 25.69% 20.86%
</TABLE>
* The Russell 1000 Growth Index is an unmanaged market capitalization-weighted
index containing those securities in the Russell 1000 Index with higher
price-to-book ratios and higher forecasted growth values. Investment results
assume the reinvestment of dividends paid on the stocks constituting the
index.
19
<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):
GLOBAL
DIVERSIFIED EMERGING NATURAL GLOBAL
CONTRARIAN GROWTH GROWTH RESOURCES VALUE
-------- ---------- ----------- -------- ---------
<S> <C> <C> <C> <C> <C>
Management Fees 1.50% 1.00% 1.00% 1.00% 1.00%
Distribution (12b-1)
Fees 0.25%* 0.25% 0.25% 0.25% 0.25%
Other Expenses* 1.08% 0.70% 0.22% 0.96% 1.74%
-------- ---------- ----------- -------- ---------
Total Annual Fund
Operating Expenses* 2.83% 1.95% 1.47% 2.21% 2.99%
Fee Waiver and/or
Expense Limitations(1) -- 0.06% -- 0.26% 1.04%
-------- ---------- ----------- -------- ---------
Net Expenses(1) -- 1.89% -- 1.95% 1.95%
</TABLE>
<TABLE>
<CAPTION>
VALUE
GROWTH & INFORMATION MICROCAP +
INCOME AGE GROWTH PARTNERS GROWTH
--------- -------- ----------- -------- ------
<S> <C> <C> <C> <C> <C>
Management Fees 1.00% 1.00% 1.25% 1.25% 1.00%
Distribution (12b-1)
Fees 0.25% 0.25% 0.25% 0.25% 0.25%
Other Expenses 0.39% 0.49% 0.51% 0.57% 0.21%
--------- -------- ----------- -------- ------
Total Annual Fund
Operating Expenses 1.64% 1.74% 2.01% 2.07% 1.46%
Fee Waiver and/or
Expense Limitations(1) -- -- 0.10% 0.19% --
--------- -------- ----------- -------- ------
Net Expenses(1) -- -- 1.91% 1.88% --
</TABLE>
- --------------------------
(1) THE NET EXPENSES SHOWN ABOVE FOR THE CONTRARIAN FUND-TM-, GLOBAL VALUE FUND,
AND MICROCAP GROWTH FUND SHOW THE EFFECT OF CONTRACTUALLY IMPOSED EXPENSE
LIMITATIONS AND/OR FEE WAIVERS IN EFFECT THROUGH DECEMBER 31, 1999 ON THE TOTAL
ANNUAL OPERATING EXPENSES OF THE FUNDS.
* Rule 12b-1 Expenses for The Contrarian Fund-TM- reflect the rate to which the
Trustees have limited payments under the Fund's Distribution Plan; in the
absence of that limitation, the Fund's Rule 12b-1 Expenses would be 0.75%, and
Total Fund Operating Expenses would be 3.33%. Until May 26, 1998, each of the
Diversified Growth, Growth & Income, Global Natural Resources, Global Value,
Information Age-TM-, and MicroCap Growth Funds paid fees under an administrative
services agreement with Robertson Stephens Investment Management 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.
The Management Fees paid by the Funds are higher than those paid by most
other mutual funds. Because of Rule 12b-1 fees paid by the Funds, long-term
shareholders may pay more than the economic equivalent of the maximum front-end
sales load permitted under applicable broker-dealer sales rules.
20
<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>
The Contrarian Fund-TM- $ 287 $ 876 $ 1,491 $ 3,142
RS Diversified Growth Fund* $ 192 $ 594 $ 1,020 $ 2,203
RS Emerging Growth Fund $ 150 $ 465 $ 802 $ 1,752
RS Global Natural Resources Fund* $ 198 $ 612 $ 1,051 $ 2,266
RS Global Value Fund* $ 198 $ 612 $ 1,051 $ 2,266
RS Growth & Income Fund $ 133 $ 412 $ 712 $ 1,563
The Information Age Fund-TM- $ 177 $ 548 $ 943 $ 2,045
RS MicroCap Growth Fund* $ 194 $ 600 $ 1,030 $ 2,224
RS Partners Fund* $ 191 $ 591 $ 1,015 $ 2,193
RS Value + Growth Fund $ 149 $ 462 $ 797 $ 1,741
</TABLE>
- --------------------------
* ASSUMING THAT EACH OF THESE FUND'S OPERATING EXPENSES REMAIN THE SAME AS THE
NET EXPENSES SHOWN ABOVE, BASED ON THE OTHER ASSUMPTIONS ABOVE, YOUR COSTS OF
INVESTING IN THE FUND WOULD BE AS FOLLOWS FOR 1 YEAR, 3 YEARS, 5 YEARS, AND 10
YEARS, RESPECTIVELY:
RS Diversified Growth Fund -- $198, $612, $1,051, $2,266
RS Global Natural Resources Fund -- $225, $691, $1,183, $2,534
RS Global Value Fund -- $303, $924, $1,569, $3,292
RS MicroCap Growth Fund -- $204, $630, $1,081, $2,329
RS Partners Fund -- $211, $649, $1,112, $2,391
21
<PAGE>
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- --------------------------------------------------------------------------------
RISKS AND OTHER INVESTMENT STRATEGIES
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.
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.
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 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
22
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 counter parties 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 its Adviser believes investing in such securities might help achieve
the Fund's objective. The Growth & Income, Global Value, and Partners Funds may
invest without limit in debt securities and other fixed-income securities. Each
of the other Funds may invest in debt securities to the extent consistent with
its investment policies, although the Fund's Adviser expects that under normal
circumstances those Funds would not likely invest a substantial portion of their
assets in debt securities.
The CONTRARIAN FUND-TM-, the DIVERSIFIED GROWTH FUND, and the GROWTH &
INCOME FUND 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 its 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
23
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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).
OTHER INVESTMENT STRATEGIES
AND TECHNIQUES
- -------------------------------------
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 an 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.
SHORT SALES (THE CONTRARIAN FUND-TM-, GLOBAL NATURAL RESOURCES FUND,
MICROCAP GROWTH FUND, AND VALUE + GROWTH FUND ONLY). When an 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 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 The
Contrarian Fund-TM- 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
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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.
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. For more information, see the Statement
of Additional Information.
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 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 transactions would be unable to meet
their obligations to the Fund. A Fund will, however,
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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 CONTRARIAN FUND-TM-, the
GLOBAL VALUE FUND, and the PARTNERS FUND are "non-diversified" investment
companies, and may invest their assets in a more limited number of issuers than
may other investment companies. Under the Internal Revenue Code, an investment
company, including a non-diversified investment company, generally may not
invest more than 25% of its assets in the securities of any one issuer other
than U.S. Government securities and other securities of certain other investment
companies and, with respect to 50% of its total assets, a Fund may not invest
more than 5% of its total assets in the securities of any one issuer (except
U.S. Government securities and securities of certain other investment
companies). Thus, each of those Funds may invest up to 25% of its total assets
in the securities of each of any two issuers. This practice involves an
increased risk of loss to a Fund if the market value of a security should
decline or its issuer were otherwise not to meet its obligations. At times a
Fund may invest more than 25% of its assets in securities of issuers in one or
more market sectors such as, for example, the technology sector. A market sector
may be made up of companies in a number of related industries. A Fund would only
concentrate its investments in a particular market sector if its Adviser were to
believe the investment return available from concentration in that sector
justifies any additional risk associated with concentration in that sector. When
a Fund concentrates its investments in a market sector, financial, economic,
business, and other developments affecting issuers in that sector will have a
greater effect on the Fund than if it had not concentrated its assets in that
sector.
Currently, The CONTRARIAN FUND-TM- has invested a significant portion of its
assets in companies within a number of industries involving base metals,
precious metals, and oil/energy. In addition, a number of the Funds have
invested, and may continue to invest, a significant portion of their assets in
companies within the technology and telecommunications sectors. Accordingly, the
performance of these Funds may be subject to a greater risk of market
fluctuation than that of a fund invested in a wider spectrum of market or
industrial sectors.
SECURITIES LOANS AND REPURCHASE AGREEMENTS. Each of the Funds may lend
portfolio securities to broker-dealers and may enter into repurchase agreements.
These transactions must be fully collateralized at all times, but involve some
risk to a Fund if the other party should default on its obligations and the Fund
is delayed or prevented from recovering the collateral.
DEFENSIVE STRATEGIES. At times, a Fund's Adviser may judge that market
conditions make pursuing a Fund's basic investment strategy inconsistent with
the best interests of its shareholders. At such times, the Adviser may
temporarily use alternative strategies, primarily designed to reduce
fluctuations in the values of the Fund's assets. In implementing these
"defensive" strategies, a Fund may invest in U.S. Government securities, other
high-quality debt instruments, and other securities its Adviser believes to be
consistent with the Fund's best interests. If such a temporary "defensive"
strategy is implemented, a Fund may not achieve its investment objective.
PORTFOLIO TURNOVER. The length of time a Fund has held a particular
security is not generally a consideration in investment decisions. The
investment policies of a Fund may lead to frequent changes in the Fund's
investments, particularly in periods of volatile market movements. A change in
the securities held by a Fund is known
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as "portfolio turnover." Portfolio turnover generally involves some expense to a
Fund, including brokerage commissions or dealer mark-ups and other transaction
costs on the sale of securities and reinvestment in other securities. Such sales
may result in realization of taxable capital gains including short-term capital
gains which are generally taxed to shareholders at ordinary income tax rates.
The Portfolio turnover rates for the Funds are set forth under "Financial
Highlights."
MANAGEMENT OF THE FUNDS
INVESTMENT ADVISERS
- -------------------------------------
RS Investment Management, L.P., 555 California Street, San Francisco, CA
94104, is the investment adviser for each of the Funds other than the Emerging
Growth Fund. 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 advisor for the Emerging Growth Fund. RS Investment
Management, Inc. commenced operations in March 1986.
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.
ADMINISTRATIVE SERVICES. Each of the DIVERSIFIED GROWTH, GROWTH & INCOME,
GLOBAL NATURAL RESOURCES, GLOBAL VALUE, INFORMATION AGE and MICROCAP GROWTH
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, 555 California St., San Francisco, California
94104, a newly formed Delaware limited liability company, serves as sub-adviser
to The Information Age Fund-TM- and the Value + Growth Fund in respect of all of
the assets of those Funds. Eastbourne Management, L.L.C. 555 California St., San
Francisco, California 94104, 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 and the Value +
Growth Fund equal to 50% of the
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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
Information Age Fund-TM- and the Value + Growth Fund. Previously, Mr. Elijah
managed these Funds as an employee of RSIM, L.P.
EASTBOURNE MANAGEMENT, L.L.C. RSIM, L.P. allocates a portion of The
Contrarian Fund's assets for management by Eastbourne in circumstances where
RSIM, L.P. believes that management of those assets by Eastbourne would be in
the best interests of the Fund, such as where RSIM, L.P. believes that an
increase in, or change to, the Fund's short positions might be desirable, or
where it believes that long investments by the Fund might be desirable in
sectors or companies where Eastbourne might offer a successful investment
program. RSIM, L.P. pays a fee to Eastbourne in an amount equal to 40% of the
fees received by 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>
CONTRACTUAL
FEES PAID* RATE
------------- -------------
<S> <C> <C>
The Contrarian Fund-TM- 1.50% 1.50%
RS Diversified Growth Fund 0.94% 1.00%
RS Emerging Growth Fund 1.00% 1.00%
RS Global Natural Resources
Fund 0.74% 1.00%
RS Global Value Fund 0.00% 1.00%
RS Growth & Income Fund 0.66% 1.00%
The Information Age Fund-TM- 1.00% 1.00%
RS MicroCap Growth Fund 1.15% 1.25%
RS Partners Fund 1.06% 1.25%
RS Value + Growth Fund 1.00% 1.00%
</TABLE>
* The fees paid reflect expense limitations in effect during the period.
PORTFOLIO MANAGERS
Roderick R. Berry, formerly an employee of RSIM, L.P. and now a member of
Elijah Asset Management, serves as a co-portfolio manager of The Information Age
Fund-TM-. Prior to joining Elijah Asset Management, Mr. Berry was a member of
the Robertson Stephens Investment Management research team. He has served on the
management team of that Fund since its inception. Prior to joining RS Investment
Management, Mr. Berry worked for USL Capital for six years as both an investment
officer and a financial manager. Prior to joining USL Capital, he was the
assistant product manager for interest-bearing checking at Wells Fargo Bank.
From 1987-1989, Mr. Berry was president and founder of the Bay Area Optical
Laboratory, Inc., a wholesale optical laboratory. He holds a B.A. in economics
from Stanford University and an M.B.A. from the J.L. Kellogg School at
Northwestern University.
James L. Callinan is responsible for managing the Emerging Growth Fund's
portfolio. From 1986 until June 1996, Mr. Callinan was employed by Putnam
Investments, where, beginning in June 1994, he served as portfolio manager of
the Putnam OTC Emerging Growth Fund. Mr. Callinan received an A.B. in economics
from Harvard College, an M.S. in accounting from New York University, and an
M.B.A. from Harvard Business School, and is a Charter Financial Analyst.
Ronald E. Elijah, formerly an employee of RSIM, L.P. and now a managing
member of Elijah Asset Management, has managed the Value + Growth Fund's
portfolio since that Fund's inception in April 1992. Mr. Elijah is also the
portfolio manager for The Information Age Fund-TM-. From 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
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master's degree in economics from Humboldt State University and an M.B.A. with
an emphasis in finance from Golden Gate University.
David J. Evans is responsible for managing the portfolio of the MicroCap
Growth Fund. Mr. Evans has more than fifteen years of investment research and
management experience, and has been a part of the management team at RS
Investment Management since 1989. Mr. Evans was an analyst and portfolio manager
at CIGNA before joining RS Investment Management. He holds a B.A. from Muskingum
College and an M.B.A. from the Wharton School of the University of Pennsylvania.
Andrew P. Pilara, Jr. has been responsible for managing the Partners Fund
since the Fund's inception in July 1995 and is responsible for managing the
Global Natural Resources and Global Value Funds. Mr. Pilara is the President and
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 Growth & Income Fund. Prior to
joining the Growth & Income 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 Growth & Income Fund
since its inception in July 1995 and is responsible for managing the Diversified
Growth Fund. Prior to joining RS Investment Management, Mr. Wallace was Vice
President of Oppenheimer Management Corp., where he was portfolio manager of the
Oppenheimer Main Street Income and Growth Fund. He holds a B.A. from the
University of Idaho and an M.B.A. from Pace University.
The Contrarian Fund-TM- is managed by a team of investment professionals at
RS Investment Management and Eastbourne Management, L.L.C. Mr. Paul Stephens and
Mr. Andrew P. Pilara, Jr. serve as senior members of the RS Investment
Management team for the Fund and Mr. Rick Barry serves as a senior member of the
Eastbourne team for the Fund.
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HOW THE FUNDS' SHARES ARE PRICED
CALCULATION OF NET ASSET VALUE
- -------------------------------------
Each Fund calculates the net asset value of its shares by dividing the total
value of its assets, less its liabilities, by the number of shares outstanding.
Shares are valued as of 4:30 p.m. eastern time on each day the New York Stock
Exchange is open. The Funds value their portfolio securities for which market
quotations are readily available at market value. Short-term investments that
will mature in 60 days or less are stated at amortized cost, which approximates
market value. The Funds value all other securities and assets at their fair
values as determined in accordance with the guidelines and procedures adopted by
the Trust's Board of Trustees.
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
of a particular class of shares are computed as of such times. Also because of
the amount of time required to collect and process trading information as to
large number of securities issues, the values of certain securities (such as
convertible bonds) are determined based on market quotations collected earlier
in the day at the latest practicable time prior to the close of the Exchange.
Occasionally, events affecting the value of such securities may occur between
such times and the close of the Exchange which will not be reflected in the
computation of net asset value. If events materially affecting the value of such
securities occur during such period, then these securities will be valued at
their fair value following procedures approved by the Trustees.
The Funds expect that the days, other than weekend days, that the New York
Stock Exchange will not be open 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.
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 the Funds at
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1-800-766-FUND, or by writing to the Funds at 555 California Street, Suite 2500,
San Francisco, CA 94104. For more information on RS Funds IRAs, please call to
request an IRA Disclosure Statement.
INITIAL INVESTMENTS
- -------------------------------------
You may make your initial investment by mail or by wire transfer as
described below.
BY MAIL: Send a completed Application, together with a check made payable
to the Fund in which you intend to invest (or, if you are investing in more than
one Fund, make your check payable to RS Investment Trust), to the Funds'
Transfer Agent: State Street Bank and Trust Company, c/o National Financial Data
Services, P.O. Box 419717, Kansas City, MO 64141-6717.
BY OVERNIGHT MAIL: Send the information described above to: 330 West 9th
Street, First Floor, Kansas City, MO 64105.
BY WIRE:
(1) Telephone National Financial Data Services at 1-800-624-8025. Indicate the
name(s) to be used on the account registration, the mailing address, your
social security or tax ID number, the amount being wired, the name of your
wiring bank, and the name and telephone number of a contact person at the
wiring bank.
(2) Then instruct your bank to wire the specified amount, along with your
account name and number to:
State Street Bank and Trust Company
ABA# 011 000028
Attn.: Custody
DDA# 99047177
225 Franklin Street
Boston, MA 02110
Credit: [Name of Fund]
For further credit:
---------------------------------
(Shareholder's name)
---------------------------------
(Shareholder's account #)
(3) At the same time, you MUST mail a completed and signed Application to: State
Street Bank and Trust Company, c/o National Financial Data Services, P.O.
Box 419717, Kansas City, MO 64141-6717. Please include your account number
on the Application. Failure to supply a signed Application may result in
backup withholding.
You also may purchase and sell shares through certain securities brokers.
Such brokers may charge you a transaction fee for this service; account options
available to clients of securities brokers, including arrangements regarding the
purchase and sale of Fund shares, may differ from those available to persons
investing directly in the Funds. The Funds, an Adviser or its affiliates, or
Provident Distributors, Inc. ("Provident"), the Funds' distributor, may in their
discretion pay such brokers for shareholder, subaccounting, and other services.
SUBSEQUENT INVESTMENTS
- -------------------------------------
After your account is open, you may invest by mail, telephone, or wire at
any time. Please include your name and account number on all checks and wires.
Please use separate checks or wires for investments to separate accounts.
AUTOBUY. The Autobuy option allows shareholders to purchase shares by
moving money directly from their checking account to a RS 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
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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 Net Asset Value
Is Determined." Please initiate any wire transfer early in the morning to ensure
that the wire is received by a Fund before the close of the New York Stock
Exchange, normally 4:00 p.m. eastern time.
All purchases must be made in U.S. dollars, and checks should be drawn on
banks located in the U.S. Third-party checks will not be accepted as payment for
purchases. If your purchase of shares is canceled due to non-payment or because
a check does not clear, you will be held responsible for any loss incurred by
the Funds or the Transfer Agent. Each Fund can redeem shares to reimburse it or
the Transfer Agent for any such loss.
Each Fund reserves the right to reject any purchase, in whole or in part,
and to suspend the offering of its shares for any period of time and to change
or waive the minimum investment amounts specified in this prospectus.
No share certificates will be issued, except that certificates for shares of
the Emerging Growth Fund will be issued upon written request to the Transfer
Agent.
HOW TO SELL SHARES
You may redeem your shares, or sell your shares back to the appropriate
Fund, on any business day by following one of the procedures explained below.
REDEMPTIONS BY MAIL
- -------------------------------------
You may redeem your shares of a Fund by mailing a written request for
redemption to the Transfer Agent that:
(1) states the number of shares or dollar amount to be redeemed;
(2) identifies your Fund and account number; and
(3) is signed by you and all other owners of the account exactly as their names
appear on the account.
If you request that the proceeds from your redemption be sent to you at an
address other than your address of record, or to another party, you must include
a signature guarantee for each such signature by an eligible signature
guarantor, such as a member firm of a national securities exchange or a
commercial bank or trust company located in the United States. If you are a
resident of a foreign country, another type of certification may be required.
Please contact the Transfer Agent for more details. Corporations, fiduciaries,
and other types of shareholders may be required to supply additional documents
which support their authority to effect a redemption.
REDEMPTIONS BY TELEPHONE
- -------------------------------------
Unless you have indicated you do not wish to establish telephone redemption
privileges
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(see the Account Application or call the Transfer Agent for details), you may
redeem shares by calling the Transfer Agent at 1-800-624-8025 by the close of
the New York Stock Exchange, normally 4:00 p.m. eastern time on any day the New
York Stock Exchange is open for business.
If an account has more than one owner, the Transfer Agent may rely on the
instructions of any one owner. Each Fund employs reasonable procedures in an
effort to confirm the authenticity of telephone instructions. If procedures
established by the Trust are not followed, the Funds and the Transfer Agent may
be responsible for any losses because of unauthorized or fraudulent
instructions. By not declining telephone redemption privileges, you authorize
the Transfer Agent to act upon any telephone instructions it believes to be
genuine (1) to redeem shares from your account and (2) to mail or wire the
redemption proceeds. If you recently opened an account by wire, you cannot
redeem shares by telephone until the Transfer Agent has received your completed
Application.
Telephone redemption is not available for shares held in IRAs. Each Fund may
change, modify, or terminate its telephone redemption services at any time upon
30 days' notice.
WIRE TRANSFER OF REDEMPTIONS
- -------------------------------------
If your financial institution receives Federal Reserve wires, you may
instruct that your redemption proceeds be forwarded to you by a wire transfer.
Please indicate your financial institution's complete wiring instructions. The
Funds will forward proceeds from telephone redemptions only to the bank account
or brokerage account that you have authorized in writing. A $9.00 wire fee will
be paid either by redeeming shares from your account, or upon a full redemption,
deducting the fee from the proceeds.
AUTOSELL: The Autosell option allows shareholders to redeem shares from
their RS fund accounts and to have the proceeds sent directly to their checking
account. If you have established the Autosell option, you may redeem shares by
calling the Transfer Agent at 1-800-624-8025 and instructing it as to the dollar
amount or number of shares you wish to redeem. The proceeds will automatically
be sent to your bank through the Automatic Clearing House (ACH) system. There is
no fee for this option. If you did not establish this option at the time you
opened your account, send a letter of instruction along with a voided check to
the Transfer Agent.
GENERAL REDEMPTION POLICIES
- -------------------------------------
The redemption price per share is the net asset value per share next
determined after the Transfer Agent receives the request for redemption in
proper form, and each Fund will make payment for redeemed shares within seven
days thereafter. Under unusual circumstances, a Fund may suspend repurchases, or
postpone payment of redemption proceeds for more than seven days, as permitted
by federal securities law. If you purchase shares of a Fund by check (including
certified check) and redeem them shortly thereafter, the Fund will delay payment
of the redemption proceeds for up to fifteen days after the Fund's receipt of
the check or until the check has cleared, whichever occurs first. If you
purchase shares of a Fund through the Autobuy option and redeem them shortly
thereafter, the Fund will delay payment of the redemption proceeds for up to
fifteen days after your purchase of shares through the Autobuy option is
accepted.
You may experience delays in exercising telephone redemptions during periods
of abnormal market activity. Accordingly, during periods of volatile economic
and market conditions, you may wish to consider transmitting redemption orders
to the Transfer Agent by an overnight courier service.
33
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 in shares
of any Fund more than four times in any twelve-month period (including the
initial exchange of your investment from that Fund during the period, and
subsequent exchanges of that investment from other Funds during the same
twelve-month period).
Investors should note that an exchange will result in a taxable event and
will generally result in a taxable gain or loss. Exchange privileges may be
terminated, modified, or suspended by a Fund upon 60 days' prior notice to
shareholders.
Unless you have indicated that you do not wish to establish telephone
exchange privileges (see the Account Application or call the Funds for details),
you may make exchanges by telephone.
DIVIDENDS AND DISTRIBUTIONS
Each Fund distributes substantially all of its net investment income and net
capital gains to shareholders at least annually (more often, if necessary to
avoid certain excise or income taxes on the Fund).
YOU MAY CHOOSE EITHER OF THE FOLLOWING DISTRIBUTION OPTIONS:
- - Reinvest your distributions in additional shares of your Fund; or
- - Receive your distributions in cash.
All distributions will be automatically reinvested in Fund shares unless the
shareholder requests cash payment on at least 10 days' prior written notice to
the Transfer Agent.
TAXES
QUALIFICATION AS A REGULATED INVESTMENT COMPANY. Each Fund intends to
qualify as a "regulated investment company" under Subchapter M of the Internal
Revenue Code and to meet all other requirements that are necessary for it to be
relieved of federal taxes on income and gains it distributes to shareholders. A
Fund will distribute substantially all of its net investment income and net
capital gain income on a current basis.
TAXES ON DIVIDENDS AND DISTRIBUTIONS. For federal income tax purposes,
distributions of investment income are taxable as ordinary income. Taxes on
distributions of capital gains are determined by how long the Fund owned the
investments that generated them, rather than how long shareholders have held
Fund shares. Distributions are taxable to shareholders even if they are paid
from income or gains earned by the Fund before an investment in a Fund (and thus
were included in the price paid for the Fund shares). Distributions of gains
from investments that the Fund owned for more than one year will be taxable as
capital gains. Distributions of gains from investments that the Fund owned for
one year or less will be taxable as ordinary income. Distributions will be
taxable as described above, whether received in cash or in shares through the
reinvestment of distributions. Early in each year,
34
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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 Class A
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 attributable
to its Class A shares. (The Distribution Plan contemplates that The Contrarian
Fund-TM- may make payments at the annual rate of up to 0.75% of the Fund's
average daily net assets attributable to its Class A shares, although the
Trustees have currently limited such payments to the annual rate of 0.25% of the
Fund's average daily net assets attributable to its Class A shares). Provident
may pay brokers a commission expressed as a percentage of the purchase price of
shares of the Funds.
Affiliates of RS Investment Management provide certain services to Provident
in respect of the promotion of the shares of the Funds. In return for these
services, Provident pays to these affiliates substantially all of the payments
received by Provident under the Distribution Plan.
RS Investment Management and its affiliates, at their own expense and out of
their own assets, may also provide other compensation to financial institutions
in connection with sales of the Funds' shares or the servicing of shareholders
or shareholder accounts. Such compensation may include, but is not limited to,
financial assistance to financial institutions in connection with conferences,
sales, or training programs for their employees, seminars for the public,
advertising or sales campaigns, or other financial institution-sponsored special
events. In some instances, this compensation may be made available only to
certain financial institutions whose representatives have sold or are expected
to sell significant amounts of shares. Dealers may not use sales of the Funds'
shares to qualify for this compensation to the extent such may be prohibited by
the laws 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
35
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
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.
36
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS
THE CONTRARIAN FUND-TM-
The financial highlights table is intended to help you understand the financial
performance of the Fund for the past 5 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).
<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)%.
37
<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).
<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.
38
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
EMERGING GROWTH FUND
The financial highlights table is intended to help you understand the financial
performance of the Fund for the past 5 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).
<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.
39
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
GLOBAL NATURAL RESOURCES 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).
<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.
40
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
GLOBAL VALUE FUND AND 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).
<TABLE>
<CAPTION>
Global Value Fund Growth & Income Fund
- --------------------------------------------------------------------------------------------------
PERIOD PERIOD
YEAR 4/1/97 YEAR YEAR YEAR 7/12/95
ENDED THROUGH ENDED ENDED ENDED THROUGH
12/31/98 12/31/97 12/31/98 12/31/97 12/31/96 12/31/95
<S> <C> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Net asset value, beginning of
period $11.15 $10.00 $13.52 $13.62 $11.24 $10.00
Income From Investment
Operations:
Net Investment
income/(loss) 0.16 0.28 0.14 0.07 0.02 --
Net realized gain/(loss)
and unrealized
appreciation/
(depreciation) on
investments 1.03 1.69 1.34 2.90 2.70 1.24
- --------------------------------------------------------------------------------------------------
Total from investment
operations 1.19 1.97 1.48 2.97 2.72 1.24
Distributions:
Dividends from net
investment income (0.08) (0.22) (0.19) (.04) (0.02) --
Distribution from net
realized capital gain (3.23) (0.60) (0.77) (3.03) (0.32) --
- --------------------------------------------------------------------------------------------------
Total Distributions (3.31) (0.82) (0.96) (3.07) (0.34) --
Net asset value, end of
period $9.03 $11.15 $14.04 $13.52 $13.62 $11.24
Total Return 11.11% 19.97% 11.65% 22.40% 24.16% 12.40%
Ratios/Supplemental Data:
Net assets, end of period
(thousands) $8,251 $21,019 $183,910 $298,669 $309,775 $136,902
Ratio of net operating
expenses to average net
assets 1.95%(1) 1.95%(1) 1.30%(1) 1.30%(1) 1.71%(1) 1.94%*
Ratio of net investment
income/ (loss) to average
net assets 1.37%(1) 3.50%(1) 1.00%(1) 0.45%(1) 0.18%(1) (0.01)%*
Portfolio turnover rate 279% 234% 212% 236% 212% 97%
- --------------------------------------------------------------------------------------------------
</TABLE>
Per share data has been determined by using the average number of shares
outstanding throughout the period.
* ANNUALIZED.
(1) IF THE GLOBAL VALUE FUND HAD PAID ALL OF ITS EXPENSES AND HAD RECEIVED NO
REIMBURSEMENT FROM THE ADVISERS, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998, AND FOR THE YEAR ENDED DECEMBER 31,
1997 WOULD HAVE BEEN 2.99% AND 3.21%, RESPECTIVELY, AND THE RATIO OF NET
INVESTMENT INCOME TO AVERAGE NET ASSETS WOULD HAVE BEEN 0.33% AND 2.24%,
RESPECTIVELY. IF THE GROWTH & INCOME FUND HAD PAID ALL OF ITS EXPENSES AND
HAD RECEIVED NO WAIVER FROM THE ADVISER, THE RATIO OF EXPENSES TO AVERAGE
NET ASSETS FOR THE YEAR ENDED DECEMBER 31, 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.
41
<PAGE>
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
THE INFORMATION AGE FUND-TM- AND MICROCAP GROWTH 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).
<TABLE>
<CAPTION>
The Information
Age Fund-TM- MicroCap Growth Fund
- -------------------------------------------------------------------------------------------------------------------------
PERIOD PERIOD
YEAR YEAR YEAR 11/15/95 YEAR YEAR 8/15/96
ENDED ENDED ENDED THROUGH ENDED ENDED THROUGH
12/31/98 12/31/97 12/31/96 12/31/95 12/31/98 12/31/97 12/31/96
<S> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------------------------------
Net asset value, beginning of period $11.80 $11.51 $9.30 $10.00 $14.35 $11.00 $10.00
Income From Investment Operations:
Net investment income/(loss) (0.20) (0.22) (0.20) (0.01) (0.21) (0.19) (0.08)
Net realized gain/(loss) and unrealized
appreciation/ (depreciation) on
investments 6.36 0.95 2.68 (0.69) 0.12 3.54 1.08
- -------------------------------------------------------------------------------------------------------------------------
Total from investment operations 6.16 0.73 2.48 (0.70) (0.09) 3.35 1.00
Distributions:
Dividends from net investment income -- -- -- -- -- -- --
Distribution from net realized capital
gain -- (0.44) (0.27) -- -- -- --
- -------------------------------------------------------------------------------------------------------------------------
Total Distributions -- (0.44) (0.27) -- -- -- --
Net asset value, end of period $17.96 $11.80 $11.51 $9.30 $14.26 $14.35 $11.00
Total Return 52.20% 6.15% 26.72% (7.00)% (0.63)% 30.45% 10.00%
Ratios/Supplemental Data:
Net assets, end of period (thousands) $159,604 $118,832 $106,264 $32,826 $94,723 $104,858 $9,464
Ratio of net operating expenses to average
net assets 1.74% 1.82% 2.03% 2.13%* 1.91%(1) 1.95%(1) 3.08%(1)*
Ratio of net investment income/(loss) to
average net assets (1.55)% (1.71)% (1.85)% (0.89)%* (1.46)%(1) (1.35)%(1) (2.13)%(1)*
Portfolio turnover rate 224% 369% 452% 89% 108% 170% 22%
- -------------------------------------------------------------------------------------------------------------------------
</TABLE>
Per share data has been determined by using the average number of shares
outstanding throughout the period.
* ANNUALIZED.
(1) IF THE MICROCAP GROWTH FUND HAD PAID ALL OF ITS EXPENSES AND HAD RECEIVED NO
REIMBURSEMENT FROM THE ADVISERS, THE RATIO OF EXPENSES TO AVERAGE NET ASSETS
FOR THE YEAR ENDED DECEMBER 31, 1998, AND FOR THE YEAR ENDED DECEMBER 31
1997, AND FOR THE PERIOD ENDED DECEMBER 31, 1996, WOULD HAVE BEEN 2.01%,
2.60% AND 6.40%, RESPECTIVELY, AND THE RATIO OF NET INVESTMENT LOSS TO
AVERAGE NET ASSETS WOULD HAVE BEEN (1.56)%, (2.00)% AND (5.45)%,
RESPECTIVELY.
42
<PAGE>
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- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
PARTNERS 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).
<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.
43
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
FINANCIAL HIGHLIGHTS (continued)
VALUE + GROWTH FUND
The financial highlights table is intended to help you understand the financial
performance of the Fund for the past 5 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).
<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.
44
<PAGE>
The Trust's Statement of Additional Information ("SAI") dated May 3, 1999
and annual and semi-annual reports to shareholders contains 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 it is part of this prospectus
for legal purposes. The Trust's annual report discusses the market conditions
and investment strategies that significantly affected each Fund's performance
during its last fiscal year. You may obtain free copies of these materials,
request other information about the Funds, or make shareholder inquiries by
writing to the Trust at the address below or by telephoning 1-800-766-FUND.
You may review and copy information about the Trust, including the SAI, at
the Securities and Exchange Commissions Public Reference Room in Washington,
D.C. You may call the Commission at 800-SEC-0330 for information about the
operation of the public reference room. The Commission maintains a World Wide
Web site at http://www.sec.gov, which contains reports and other information
about the Funds. You may also obtain copies of these materials, upon payment of
a duplicating fee, by writing the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. You may need to refer to the Trust's file number
under the Investment Company Act, which is 811-05159.
ADDRESS CORRESPONDENCE TO:
RS Funds
555 California Street, Suite 2500
San Francisco, CA 94104
World Wide Web Address: http://www.rsfunds.com
Shareholder Services
1-800-766-FUND
Investment Company Act File No. 811-05159
<PAGE>
STATEMENT OF ADDITIONAL INFORMATION
RS INVESTMENT TRUST
THE CONTRARIAN FUND-TM-
RS DIVERSIFIED GROWTH FUND
RS EMERGING GROWTH FUND
RS GLOBAL NATURAL RESOURCES FUND
RS GLOBAL VALUE FUND
RS GROWTH & INCOME FUND
THE INFORMATION AGE FUND-TM-
RS MICROCAP GROWTH FUND
RS PARTNERS FUND
RS VALUE + GROWTH FUND
MAY 3, 1999
This Statement of Additional Information ("SAI" or "Statement") is not a
prospectus and should be read in conjunction with a Prospectus of RS
Investment Trust (the "Trust") dated May 3, 1999, as it may be revised from
time to time. This Statement relates to the Funds' Class A Shares. A copy of a
Prospectus of the Trust for its Class A Shares can be obtained upon request made
to RS Funds, 555 California Street, Suite 2500, San Francisco, CA 94104,
telephone 1-800-766-FUND.
Certain disclosure has been incorporated by reference into this SAI
from the Funds' annual report. For a free copy of the annual report, please
call 1-800-766-FUND.
<TABLE>
<CAPTION>
TABLE OF CONTENTS
CAPTION PAGE
- ------- ----
<S> <C>
TRUST INFORMATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-2
INVESTMENTS AND RISKS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-3
THE FUNDS' INVESTMENT LIMITATIONS. . . . . . . . . . . . . . . . . . . . . . . . . . B-15
MANAGEMENT OF THE FUNDS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-18
THE FUNDS' DISTRIBUTOR . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-36
HOW NET ASSET VALUE IS DETERMINED. . . . . . . . . . . . . . . . . . . . . . . . . . B-39
TAXES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-40
HOW PERFORMANCE IS DETERMINED. . . . . . . . . . . . . . . . . . . . . . . . . . . . B-42
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-45
APPENDIX A . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-46
FINANCIAL STATEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . B-49
</TABLE>
<PAGE>
TRUST INFORMATION
TRUST HISTORY
RS Investment Trust (formerly, Robertson Stephens Investment Trust until
approximately February 26, 1999), 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, Growth & Income Fund,
The Information Age Fund-TM-, MicroCap Growth Fund, and Value + Growth Fund
is also a"diversified" investment company under the 1940 Act. This means
that with respect to 75% of a Fund's total assets, the Fund may not invest in
securities of any issuer if, immediately after such investment, more than 5%
of the total assets of the Fund (taken at current value) would be invested in
the securities of that issuer (this limitation does not apply to investments
of 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. Each Fund currently offers Class A shares. Class A
shares are offered through a prospectus. Any reference to the "Prospectus" in
this Statement is a reference to such prospectus unless the context requires
otherwise or unless otherwise specified.
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 (currently, a $5,000 minimum initial
investment and $100 subsequent investments). Under unusual circumstances, a
Fund may suspend repurchases, or postpone payment of redemption proceeds for
more than seven days, as permitted by law. If shares of a Fund are purchased by
check (including a certified check) and are redeemed shortly thereafter, the
Fund will delay payment of the redemption proceeds for up to fifteen days after
the Fund's receipt of the check until the check has cleared, whichever occurs
first.
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.
Class A shares of one Fund may be exchanged for Class A shares of another
Fund. Exchanges of shares will be made at their relative net asset values.
Shares may be exchanged only if the amount being exchanged satisfies the minimum
investment required (as indicated above) and the shareholder is a resident of a
state where shares of the appropriate Fund are qualified for sale. However,
shareholders may not exchange their investment in shares of any Fund more than
four times in any twelve-month period (including the initial exchange of your
investment from the Fund during the period, and subsequent exchanges of that
investment from other Funds during the same twelve-month period).
Shareholder of each series will have one vote for each full share owned and
proportionate, fractional votes for fractional shares held. Generally, shares
of each series vote separately as a single series except when required by law or
determined by the Board of Trustees. Although the Trust is not required to hold
annual meetings of
B-2
<PAGE>
its shareholders, shareholders have the right to call a meeting to elect or
remove Trustees or to take other actions as provided in the Declaration of
Trust.
INVESTMENTS AND RISKS
In addition to the principal investment strategies and the principal risks
of the Funds described in the Prospectus, each Fund may employ other investment
practices and may be subject to additional risks which are described below.
Because the following is a combined description of investment strategies and
risks for all the Funds, certain strategies and/or risks described below may not
apply to your Fund. Unless a strategy or policy described below is specifically
prohibited by the investment restrictions listed in the Prospectus, under "The
Funds' Investment Limitations" in this SAI, or by applicable law, a Fund may
engage in each of the practices described below.
All of the Funds, except for the Emerging Growth Fund, are managed by RS
Investment Management, L.P. ("RSIM, L.P."). The Emerging Growth Fund is managed
by RS Investment Management, Inc. ("RSIM, Inc."). RSIM, L.P. and RSIM, Inc. are
sometimes referred to in this Statement collectively as "RS Investment
Management." Elijah Asset Management, LLC ("Elijah Asset Management") serves as
sub-adviser to The Information Age Fund-TM- and the Value + Growth Fund.
Eastbourne Management, L.L.C. ("Eastbourne") serves as sub-adviser in respect of
a portion of the assets of The Contrarian Fund.-TM- (Each of Elijah Asset
Management and Eastbourne is sometimes referred to in this Statement as a
"Sub-Adviser".) Each of RS Investment Management, Elijah Asset Management, and
Eastbourne is sometimes referred to in this Statement as an "Adviser".
LOWER-RATED DEBT SECURITIES
Certain of the Funds may purchase lower-rated debt securities, sometimes
referred to as "junk bonds" (those rated BB or lower by Standard & Poor's
("S&P") or Ba or lower by Moody's Investor Service, Inc. ("Moody's")). See
APPENDIX A for a description of these ratings. None of the Funds intends, under
current circumstances, to purchase such securities if, as a result, more than
35% of the Fund's assets would be invested in securities rated below BB or Ba.
The lower ratings of certain securities held by a Fund reflect a greater
possibility that adverse changes in the financial condition of the issuer, or in
general economic conditions, or both, or an unanticipated rise in interest
rates, may impair the ability of the issuer to make payments of interest and
principal. The inability (or perceived inability) of issuers to make timely
payment of interest and principal would likely make the values of securities
held by the Fund more volatile and could limit the Fund's ability to sell its
securities at prices approximating the values a Fund had placed on such
securities. It is possible that legislation may be adopted in the future
limiting the ability of certain financial institutions to purchase lower rated
securities; such legislation may adversely affect the liquidity of such
securities. In the absence of a liquid trading market for securities held by
it, the Fund may be unable at times to establish the fair market value of such
securities. The rating assigned to a security by Moody's or S&P does not
reflect an assessment of the volatility of the security's market value or of the
liquidity of an investment in the security.
Like those of other fixed-income securities, the values of lower-rated
securities fluctuate in response to changes in interest rates. Thus, a decrease
in interest rates generally will result in an increase in the value of a Fund's
fixed-income securities. Conversely, during periods of rising interest rates,
the value of a Fund's fixed-income securities generally will decline. In
addition, the values of such securities are also affected by changes in general
economic conditions and business conditions affecting the specific industries of
their issuers. Changes by recognized rating services in their ratings of any
fixed-income security and in the ability of an issuer to make payments of
interest and principal may also affect the value of these investments. Changes
in the value of portfolio securities generally will not affect cash income
derived from such securities, but will affect the Fund's net asset value. A
Fund will not necessarily dispose of a security when its rating is reduced below
its rating at the time of purchase, although the Fund's Adviser will monitor the
investment to determine whether continued investment in the security will assist
in meeting the Fund's investment objective.
B-3
<PAGE>
Issuers of lower-rated securities are often highly leveraged, so that their
ability to service their debt obligations during an economic downturn or during
sustained periods of rising interest rates may be impaired. In addition, such
issuers may not have more traditional methods of financing available to them,
and may be unable to repay debt at maturity by refinancing. The risk of loss
due to default in payment of interest or principal by such issuers is
significantly greater because such securities frequently are unsecured and
subordinated to the prior payment of senior indebtedness. Certain of the
lower-rated securities in which the Funds may invest are issued to raise funds
in connection with the acquisition of a company, in so-called "leveraged
buy-out" transactions. The highly leveraged capital structure of such issuers
may make them especially vulnerable to adverse changes in economic conditions.
Under adverse market or economic conditions or in the event of adverse
changes in the financial condition of the issuer, a Fund could find it more
difficult to sell lower-rated securities when an Adviser believes it advisable
to do so or may be able to sell such securities only at prices lower than if
such securities were more widely held. In many cases, such securities may be
purchased in private placements and, accordingly, will be subject to
restrictions on resale as a matter of contract or under securities laws. Under
such circumstances, it may also be more difficult to determine the fair value of
such securities for purposes of computing a Fund's net asset value. In order to
enforce its rights in the event of a default under such securities, a Fund may
be required to take possession of and manage assets securing the issuer's
obligations on such securities, which may increase the Fund's operating expenses
and adversely affect the Fund's net asset value. A Fund may also be limited in
its ability to enforce its rights and may incur greater costs in enforcing its
rights in the event an issuer becomes the subject of bankruptcy proceedings.
Certain securities held by a Fund may permit the issuer at its option to
"call," or redeem, its securities. If an issuer were to redeem securities held
by a Fund during a time of declining interest rates, the Fund may not be able to
reinvest the proceeds in securities providing the same investment return as the
securities redeemed.
OPTIONS
The Funds may purchase and sell put and call options on their portfolio
securities to enhance investment performance and to protect against changes in
market prices. There is no assurance that a Fund's use of put and call options
will achieve its desired objective, and a Fund's use of options may result in
losses to the Fund.
COVERED CALL OPTIONS. A Fund may write covered call options on its
securities to realize a greater current return through the receipt of premiums
than it would realize on its securities alone. Such option transactions may
also be used as a limited form of hedging against a decline in the price of
securities owned by the Fund.
A call option gives the holder the right to purchase, and obligates the
writer to sell, a security at the exercise price at any time before the
expiration date. A call option is "covered" if the writer, at all times while
obligated as a writer, either owns the underlying securities (or comparable
securities satisfying the cover requirements of the securities exchanges), or
has the right to acquire such securities through immediate conversion of
securities.
In return for the premium received when it writes a covered call option, a
Fund gives up some or all of the opportunity to profit from an increase in the
market price of the securities covering the call option during the life of the
option. The Fund retains the risk of loss should the price of such securities
decline. If the option expires unexercised, the Fund realizes a gain equal to
the premium, which may be offset by a decline in price of the underlying
security. If the option is exercised, the Fund realizes a gain or loss equal to
the difference between the Fund's cost for the underlying security and the
proceeds of sale (exercise price minus commissions) plus the amount of the
premium.
A Fund may terminate a call option that it has written before it expires by
entering into a closing purchase transaction. A Fund may enter into closing
purchase transactions in order to free itself to sell the underlying security or
to write another call on the security, realize a profit on a previously written
call option, or protect a security from being called in an unexpected market
rise. Any profits from a closing purchase transaction may be offset by a
decline in the value of the underlying security. Conversely, because increases
in the market price of a call option will generally reflect increases in the
market price of the underlying security, any loss resulting from a closing
purchase transaction is likely to be offset in whole or in part by unrealized
appreciation of the underlying security owned by the Fund.
B-4
<PAGE>
COVERED PUT OPTIONS. A Fund may write covered put options in order to
enhance its current return. Such options transactions may also be used as a
limited form of hedging against an increase in the price of securities that the
Fund plans to purchase. A put option gives the holder the right to sell, and
obligates the writer to buy, a security at the exercise price at any time before
the expiration date. A put option is "covered" if the writer segregates cash
and high-grade short-term debt obligations or other permissible collateral equal
to the price to be paid if the option is exercised.
In addition to the receipt of premiums and the potential gains from
terminating such options in closing purchase transactions, a Fund also receives
interest on the cash and debt securities maintained to cover the exercise price
of the option. By writing a put option, the Fund assumes the risk that it may
be required to purchase the underlying security for an exercise price higher
than its then current market value, resulting in a potential capital loss unless
the security later appreciates in value.
A Fund may terminate a put option that it has written before it expires by
a closing purchase transaction. Any loss from this transaction may be partially
or entirely offset by the premium received on the terminated option.
PURCHASING PUT AND CALL OPTIONS. A Fund may also purchase put options to
protect portfolio holdings against a decline in market value. This protection
lasts for the life of the put option because the Fund, as a holder of the
option, may sell the underlying security at the exercise price regardless of any
decline in its market price. In order for a put option to be profitable, the
market price of the underlying security must decline sufficiently below the
exercise price to cover the premium and transaction costs that the Fund must
pay. These costs will reduce any profit the Fund might have realized had it
sold the underlying security instead of buying the put option.
A Fund may purchase call options to hedge against an increase in the price
of securities that the Fund wants ultimately to buy. Such hedge protection is
provided during the life of the call option since the Fund, as holder of the
call option, is able to buy the underlying security at the exercise price
regardless of any increase in the underlying security's market price. In order
for a call option to be profitable, the market price of the underlying security
must rise sufficiently above the exercise price to cover the premium and
transaction costs. These costs will reduce any profit the Fund might have
realized had it bought the underlying security at the time it purchased the call
option.
A Fund may also purchase put and call options to attempt to enhance its
current return.
OPTIONS ON FOREIGN SECURITIES. A Fund may purchase and sell options on
foreign securities if its Adviser believes that the investment characteristics
of such options, including the risks of investing in such options, are
consistent with the Fund's investment objective. It is expected that risks
related to such options will not differ materially from risks related to options
on U.S. securities. However, position limits and other rules of foreign
exchanges may differ from those in the U.S. In addition, options markets in
some countries, many of which are relatively new, may be less liquid than
comparable markets in the U.S.
RISKS INVOLVED IN THE SALE OF OPTIONS. Options transactions involve
certain risks, including the risks that an Adviser will not forecast interest
rate or market movements correctly, that a Fund may be unable at times to close
out such positions, or that hedging transactions may not accomplish their
purpose because of imperfect market correlations. The successful use of these
strategies depends on the ability of an Adviser to forecast market and interest
rate movements correctly.
An exchange-listed option may be closed out only on an exchange which
provides a secondary market for an option of the same series. There is no
assurance that a liquid secondary market on an exchange will exist for any
particular option or at any particular time. If no secondary market were to
exist, it would be impossible to enter into a closing transaction to close out
an option position. As a result, a Fund may be forced to continue to hold, or
to purchase at a fixed price, a security on which it has sold an option at a
time when an Adviser believes it is inadvisable to do so.
Higher than anticipated trading activity or order flow or other unforeseen
events might cause The Options Clearing Corporation or an exchange to institute
special trading procedures or restrictions that might restrict a Fund's use of
options. The exchanges have established limitations on the maximum number of
calls and puts of
B-5
<PAGE>
each class that may be held or written by an investor or group of investors
acting in concert. It is possible that the Trust and other clients of an
Adviser may be considered such a group. These position limits may restrict the
Funds' ability to purchase or sell options on particular securities.
Options which are not traded on national securities exchanges may be closed
out only with the other party to the option transaction. For that reason, it
may be more difficult to close out unlisted options than listed options.
Furthermore, unlisted options are not subject to the protection afforded
purchasers of listed options by The Options Clearing Corporation.
Government regulations may also restrict the Funds' use of options.
SPECIAL EXPIRATION PRICE OPTIONS
Certain of the Funds may purchase over-the-counter ("OTC") puts and calls
with respect to specified securities ("special expiration price options")
pursuant to which the Funds in effect may create a custom index relating to a
particular industry or sector that an Adviser believes will increase or decrease
in value generally as a group. In exchange for a premium, the counterparty,
whose performance is guaranteed by a broker-dealer, agrees to purchase (or sell)
a specified number of shares of a particular stock at a specified price and
further agrees to cancel the option at a specified price that decreases straight
line over the term of the option. Thus, the value of the special expiration
price option is comprised of the market value of the applicable underlying
security relative to the option exercise price and the value of the remaining
premium. However, if the value of the underlying security increases (or
decreases) by a prenegotiated amount, the special expiration price option is
canceled and becomes worthless. A portion of the dividends during the term of
the option are applied to reduce the exercise price if the options are
exercised. Brokerage commissions and other transaction costs will reduce these
Funds' profits if the special expiration price options are exercised. A Fund
will not purchase special expiration price options with respect to more than 25%
of the value of its net assets, and will limit premiums paid for such options in
accordance with state securities laws.
LEAPS AND BOUNDS
The Value + Growth Fund may purchase certain long-term exchange-traded
equity options called Long-Term Equity Anticipation Securities ("LEAPs") and
Buy-Right Options Unitary Derivatives ("BOUNDs"). LEAPs provide a holder the
opportunity to participate in the underlying securities' appreciation in excess
of a fixed dollar amount. BOUNDs provide a holder the opportunity to retain
dividends on the underlying security while potentially participating in the
underlying securities' capital appreciation up to a fixed dollar amount. The
Value + Growth Fund will not purchase these options with respect to more than
25% of the value of its net assets.
LEAPs are long-term call options that allow holders the opportunity to
participate in the underlying securities' appreciation in excess of a specified
strike price, without receiving payments equivalent to any cash dividends
declared on the underlying securities. A LEAP holder will be entitled to
receive a specified number of shares of the underlying stock upon payment of the
exercise price, and therefore the LEAP will be exercisable at any time the price
of the underlying stock is above the strike price. However, if at expiration
the price of the underlying stock is at or below the strike price, the LEAP will
expire worthless.
BOUNDs are long-term options which are expected to have the same economic
characteristics as covered call options, with the added benefits that BOUNDs can
be traded in a single transaction and are not subject to early exercise.
Covered call writing is a strategy by which an investor sells a call option
while simultaneously owning the number of shares of the stock underlying the
call. BOUND holders are able to participate in a stock's price appreciation up
to but not exceeding a specified strike price while receiving payments
equivalent to any cash dividends declared on the underlying stock. At
expiration, a BOUND holder will receive a specified number of shares of the
underlying stock for each BOUND held if, on the last day of trading, the
underlying stock closes at or below the strike price. However, if at expiration
the underlying stock closes above the strike price, the BOUND holder will
receive a payment equal to a multiple of the BOUND's strike price for each BOUND
held. The terms of a BOUND are not adjusted because of cash distributions to
the shareholders of the underlying security. BOUNDs are subject to the position
limits for equity options imposed by the exchanges on which they are traded.
B-6
<PAGE>
The settlement mechanism for BOUNDs operates in conjunction with that of
the corresponding LEAPs. For example, if at expiration the underlying stock
closes at or below the strike price, the LEAP will expire worthless, and the
holder of a corresponding BOUND will receive a specified number of shares of
stock from the writer of the BOUND. If, on the other hand, the LEAP is "in the
money" at expiration, the holder of the LEAP is entitled to receive a specified
number of shares of the underlying stock from the LEAP writer upon payment of
the strike price, and the holder of a BOUND on such stock is entitled to the
cash equivalent of a multiple of the strike price from the writer of the BOUND.
An investor holding both a LEAP and a corresponding BOUND, where the underlying
stock closes above the strike price at expiration, would be entitled to receive
a multiple of the strike price from the writer of the BOUND and, upon exercise
of the LEAP, would be obligated to pay the same amount to receive shares of the
underlying stock. LEAPs are American-style options (exercisable at any time
prior to expiration), whereas BOUNDs are European-style options (exercisable
only on the expiration date).
FUTURES CONTRACTS
INDEX FUTURES CONTRACTS AND OPTIONS. A Fund may buy and sell stock index
futures contracts and related options for hedging purposes or to attempt to
increase investment return. A stock index futures contract is a contract to buy
or sell units of a stock index at a specified future date at a price agreed upon
when the contract is made. A unit is the current value of the stock index.
The following example illustrates generally the manner in which index
futures contracts operate. The Standard & Poor's 100 Stock Index (the "S&P 100
Index") is composed of 100 selected common stocks, most of which are listed on
the New York Stock Exchange. The S&P 100 Index assigns relative weightings to
the common stocks included in the Index, and the Index fluctuates with changes
in the market values of those common stocks. In the case of the S&P 100 Index,
contracts are to buy or sell 100 units. Thus, if the value of the S&P 100 Index
were $180, one contract would be worth $18,000 (100 units x $180). The stock
index futures contract specifies that no delivery of the actual stocks making up
the index will take place. Instead, settlement in cash must occur upon the
termination of the contract, with the settlement being the difference between
the contract price and the actual level of the stock index at the expiration of
the contract. For example, if a Fund enters into a futures contract to buy 100
units of the S&P 100 Index at a specified future date at a contract price of
$180 and the S&P 100 Index is at $184 on that future date, the Fund will gain
$400 (100 units x gain of $4). If the Fund enters into a futures contract to
sell 100 units of the stock index at a specified future date at a contract price
of $180 and the S&P 100 Index is at $182 on that future date, the Fund will lose
$200 (100 units x loss of $2).
Positions in index futures may be closed out only on an exchange or board
of trade which provides a secondary market for such futures.
In order to hedge its investments successfully using futures contracts and
related options, a Fund must invest in futures contracts with respect to indexes
or sub-indexes the movements of which will, in its judgment, have a significant
correlation with movements in the prices of the Fund's securities.
Options on index futures contracts give the purchaser the right, in return
for the premium paid, to assume a position in an index futures contract (a long
position if the option is a call and a short position if the option is a put) at
a specified exercise price at any time during the period of the option. Upon
exercise of the option, the holder would assume the underlying futures position
and would receive a variation margin payment of cash or securities approximating
the increase in the value of the holder's option position. If an option is
exercised on the last trading day prior to the expiration date of the option,
the settlement will be made entirely in cash based on the difference between the
exercise price of the option and the closing level of the index on which the
futures contract is based on the expiration date. Purchasers of options who
fail to exercise their options prior to the exercise date suffer a loss of the
premium paid.
As an alternative to purchasing and selling call and put options on index
futures contracts, each of the Funds which may purchase and sell index futures
contracts may purchase and sell call and put options on the underlying indexes
themselves to the extent that such options are traded on national securities
exchanges. Index options are similar to options on individual securities in
that the purchaser of an index option acquires the right to buy (in the case of
a call) or sell (in the case of a put), and the writer undertakes the obligation
to sell or buy (as the case may be), units of an index at a stated exercise
price during the term of the option. Instead of giving the right to take
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or make actual delivery of securities, the holder of an index option has the
right to receive a cash "exercise settlement amount." This amount is equal to
the amount by which the fixed exercise price of the option exceeds (in the case
of a put) or is less than (in the case of a call) the closing value of the
underlying index on the date of the exercise, multiplied by a fixed "index
multiplier."
A Fund may purchase or sell options on stock indices in order to close out
its outstanding positions in options on stock indices which it has purchased. A
Fund may also allow such options to expire unexercised.
Compared to the purchase or sale of futures contracts, the purchase of call
or put options on an index involves less potential risk to a Fund because the
maximum amount at risk is the premium paid for the options plus transactions
costs. The writing of a put or call option on an index involves risks similar
to those risks relating to the purchase or sale of index futures contracts.
MARGIN PAYMENTS. When a Fund purchases or sells a futures contract, it is
required to deposit with its custodian an amount of cash, U.S. Treasury bills,
or other permissible collateral equal to a small percentage of the amount of the
futures contract. This amount is known as "initial margin." The nature of
initial margin is different from that of margin in security transactions in that
it does not involve borrowing money to finance transactions. Rather, initial
margin is similar to a performance bond or good faith deposit that is returned
to a Fund upon termination of the contract, assuming the Fund satisfies its
contractual obligations.
Subsequent payments to and from the broker occur on a daily basis in a
process known as "marking to market." These payments are called "variation
margin" and are made as the value of the underlying futures contract fluctuates.
For example, when a Fund sells a futures contract and the price of the
underlying index rises above the delivery price, the Fund's position declines in
value. The Fund then pays the broker a variation margin payment equal to the
difference between the delivery price of the futures contract and the value of
the index underlying the futures contract. Conversely, if the price of the
underlying index falls below the delivery price of the contract, the Fund's
futures position increases in value. The broker then must make a variation
margin payment equal to the difference between the delivery price of the futures
contract and the value of the index underlying the futures contract.
When a Fund terminates a position in a futures contract, a final
determination of variation margin is made, additional cash is paid by or to the
Fund, and the Fund realizes a loss or a gain. Such closing transactions involve
additional commission costs.
SPECIAL RISKS OF TRANSACTIONS IN FUTURES CONTRACTS AND RELATED OPTIONS
LIQUIDITY RISKS. Positions in futures contracts may be closed out only on
an exchange or board of trade which provides a secondary market for such
futures. Although the Funds intend to purchase or sell futures only on
exchanges or boards of trade where there appears to be an active secondary
market, there is no assurance that a liquid secondary market on an exchange or
board of trade will exist for any particular contract or at any particular time.
If there is not a liquid secondary market at a particular time, it may not be
possible to close a futures position at such time and, in the event of adverse
price movements, a Fund would continue to be required to make daily cash
payments of variation margin. However, in the event financial futures are used
to hedge portfolio securities, such securities will not generally be sold until
the financial futures can be terminated. In such circumstances, an increase in
the price of the portfolio securities, if any, may partially or completely
offset losses on the financial futures.
The ability to establish and close out positions in options on futures
contracts will be subject to the development and maintenance of a liquid
secondary market. It is not certain that such a market will develop. Although
a Fund generally will purchase only those options for which there appears to be
an active secondary market, there is no assurance that a liquid secondary market
on an exchange will exist for any particular option or at any particular time.
In the event no such market exists for particular options, it might not be
possible to effect closing transactions in such options, with the result that a
Fund would have to exercise the options in order to realize any profit.
HEDGING RISKS. There are several risks in connection with the use by a
Fund of futures contracts and related options as a hedging device. One risk
arises because of the imperfect correlation between movements in the
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prices of the futures contracts and options and movements in the underlying
securities or index or movements in the prices of a Fund's securities which are
the subject of a hedge. An Adviser will, however, attempt to reduce this risk
by purchasing and selling, to the extent possible, futures contracts and related
options on securities and indexes the movements of which will, in its judgment,
correlate closely with movements in the prices of the underlying securities or
index and the Fund's portfolio securities sought to be hedged.
Successful use of futures contracts and options by a Fund for hedging
purposes is also subject to an Adviser's ability to predict correctly movements
in the direction of the market. It is possible that, where a Fund has purchased
puts on futures contracts to hedge its portfolio against a decline in the
market, the securities or index on which the puts are purchased may increase in
value and the value of securities held in the portfolio may decline. If this
occurred, the Fund would lose money on the puts and also experience a decline in
value in its portfolio securities. In addition, the prices of futures, for a
number of reasons, may not correlate perfectly with movements in the underlying
securities or index due to certain market distortions. First, all participants
in the futures market are subject to margin deposit requirements. Such
requirements may cause investors to close futures contracts through offsetting
transactions which could distort the normal relationship between the underlying
security or index and futures markets. Second, the margin requirements in the
futures markets are less onerous than margin requirements in the securities
markets in general, and as a result the futures markets may attract more
speculators than the securities markets do. Increased participation by
speculators in the futures markets may also cause temporary price distortions.
Due to the possibility of price distortion, even a correct forecast of general
market trends by an Adviser still may not result in a successful hedging
transaction over a very short time period.
OTHER RISKS. Funds will incur brokerage fees in connection with their
futures and options transactions. In addition, while futures contracts and
options on futures will be purchased and sold to reduce certain risks, those
transactions themselves entail certain other risks. Thus, while a Fund may
benefit from the use of futures and related options, unanticipated changes in
interest rates or stock price movements may result in a poorer overall
performance for the Fund than if it had not entered into any futures contracts
or options transactions. Moreover, in the event of an imperfect correlation
between the futures position and the portfolio position which is intended to be
protected, the desired protection may not be obtained and the Fund may be
exposed to risk of loss.
INDEXED SECURITIES
Certain of the Funds may purchase securities whose prices are indexed to
the prices of other securities, securities indices, currencies, precious metals,
or other commodities, or other financial indicators. Indexed securities
typically, but not always, are debt securities or deposits whose value at
maturity or coupon rate is determined by reference to a specific instrument or
statistic. Gold-indexed securities, for example, typically provide for a
maturity value that depends on the price of gold, resulting in a security whose
price tends to rise and fall together with gold prices. Currency-indexed
securities typically are short-term to intermediate-term debt securities whose
maturity values or interest rates are determined by reference to the values of
one or more specified foreign currencies, and may offer higher yields than U.S.
dollar-denominated securities of equivalent issuers. Currency-indexed
securities may be positively or negatively indexed; that is, their maturity
value may increase when the specified currency value increases, resulting in a
security whose price characteristics are similar to a put option on the
underlying currency. Currency-indexed securities also may have prices that
depend on the values of a number of different foreign currencies relative to
each other.
The performance of indexed securities depends to a great extent on the
performance of the security, currency, commodity or other instrument to which
they are indexed, and also may be influenced by interest rate changes in the
U.S. and abroad. At the same time, indexed securities are subject to the credit
risks associated with the issuer of the security, and their values may decline
substantially if the issuer's creditworthiness deteriorates. Recent issuers of
indexed securities have included banks, corporations, and certain U.S.
Government agencies.
REPURCHASE AGREEMENTS
A Fund may enter into repurchase agreements. A repurchase agreement is a
contract under which the Fund acquires a security for a relatively short period
(usually not more than one week) subject to the obligation of the seller to
repurchase and the Fund to resell such security at a fixed time and price
(representing the Fund's cost plus interest). It is the Trust's present
intention to enter into repurchase agreements only with member banks of
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the Federal Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. Government or its
agencies or instrumentalities or other high-quality, short-term debt
obligations. Repurchase agreements may also be viewed as loans made by a Fund
which are collateralized by the securities subject to repurchase. An Adviser
will monitor such transactions to ensure that the value of the underlying
securities will be at least equal at all times to the total amount of the
repurchase obligation, including the interest factor. If the seller defaults, a
Fund could realize a loss on the sale of the underlying security to the extent
that the proceeds of sale including accrued interest are less than the resale
price provided in the agreement including interest. In addition, if the seller
should be involved in bankruptcy or insolvency proceedings, a Fund may incur
delay and costs in selling the underlying security or may suffer a loss of
principal and interest if the Fund is treated as an unsecured creditor and
required to return the underlying collateral to the seller's estate.
LEVERAGE
Leveraging a Fund creates an opportunity for increased net income but, at
the same time, creates special risk considerations. For example, leveraging may
exaggerate changes in the net asset value of a Fund's shares and in the yield on
a Fund's portfolio. Although the principal of such borrowings will be fixed, a
Fund's assets may change in value during the time the borrowing is outstanding.
Since any decline in value of a Fund's investments will be borne entirely by the
Fund's shareholders (and not by those persons providing the leverage to the
Fund), the effect of leverage in a declining market would be a greater decrease
in net asset value than if the Fund were not so leveraged. Leveraging will
create interest expenses for a Fund, which can exceed the investment return from
the borrowed funds. To the extent the investment return derived from securities
purchased with borrowed funds exceeds the interest a Fund will have to pay, the
Fund's investment return will be greater than if leveraging were not used.
Conversely, if the investment return from the assets retained with borrowed
funds is not sufficient to cover the cost of leveraging, the investment return
of the Fund will be less than if leveraging were not used.
REVERSE REPURCHASE AGREEMENTS
In connection with its leveraging activities, a Fund may enter into reverse
repurchase agreements, in which the Fund sells securities and agrees to
repurchase them at a mutually agreed date and price. A reverse repurchase
agreement may be viewed as a borrowing by the Fund, secured by the security
which is the subject of the agreement. In addition to the general risks
involved in leveraging, reverse repurchase agreements involve the risk that, in
the event of the bankruptcy or insolvency of the Fund's counterparty, the Fund
would be unable to recover the security which is the subject of the agreement,
that the amount of cash or other property transferred by the counterparty to the
Fund under the agreement prior to such insolvency or bankruptcy is less than the
value of the security subject to the agreement, or that the Fund may be delayed
or prevented, due to such insolvency or bankruptcy, from using such cash or
property or may be required to return it to the counterparty or its trustee or
receiver.
SECURITIES LENDING
A Fund may lend its portfolio securities, provided: (1) the loan is
secured continuously by collateral consisting of U.S. Government securities,
cash, or cash equivalents adjusted daily to have market value at least equal to
the current market value of the securities loaned; (2) the Fund may at any time
call the loan and regain the securities loaned; (3) a Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of any Fund loaned will not at any time exceed
one-third (or such other limit as the Trustees may establish) of the total
assets of the Fund. In addition, it is anticipated that a Fund may share with
the borrower some of the income received on the collateral for the loan or that
it will be paid a premium for the loan.
Before a Fund enters into a loan, an Adviser considers all relevant facts
and circumstances, including the creditworthiness of the borrower. The risks in
lending portfolio securities, as with other extensions of credit, consist of
possible delay in recovery of the securities or possible loss of rights in the
collateral should the borrower fail financially. Although voting rights or
rights to consent with respect to the loaned securities pass to the borrower, a
Fund retains the right to call the loans at any time on reasonable notice, and
it will do so in order that the securities may be voted by a Fund if the holders
of such securities are asked to vote upon or consent
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to matters materially affecting the investment. A Fund will not lend portfolio
securities to borrowers affiliated with the Fund.
SHORT SALES
Certain of the Funds may seek to hedge investments or realize additional
gains through short sales. Short sales are transactions in which a Fund sells a
security it does not own, in anticipation of a decline in the market value of
that security. To complete such a transaction, a Fund must borrow the security
to make delivery to the buyer. A Fund then is obligated to replace the security
borrowed by purchasing it at the market price at or prior to the time of
replacement. The price at such time may be more or less than the price at which
the security was sold by a Fund. Until the security is replaced, a Fund is
required to repay the lender any dividends or interest that accrue during the
period of the loan. To borrow the security, a Fund also may be required to pay
a premium, which would increase the cost of the security sold. The net proceeds
of the short sale will be retained by the broker (or by the Fund's custodian in
a special custody account), to the extent necessary to meet margin requirements,
until the short position is closed out. A Fund also will incur transaction
costs in effecting short sales.
A Fund will incur a loss as a result of the short sale if the price of the
security increases between the date of the short sale and the date on which a
Fund replaces the borrowed security. A Fund will realize a gain if the security
declines in price between those dates. The amount of any gain will be
decreased, and the amount of any loss increased, by the amount of the premium,
dividends, interest or expenses a Fund may be required to pay in connection with
a short sale. An increase in the value of a security sold short by a Fund over
the price at which it was sold short will result in a loss to the Fund, and
there can be no assurance that a Fund will be able to close out the position at
any particular time or at an acceptable price.
FOREIGN INVESTMENTS
Investments in foreign securities may involve considerations different from
investments in domestic securities due to limited publicly available
information, non-uniform accounting standards, lower trading volume and possible
consequent illiquidity, greater volatility in price, the possible imposition of
withholding or confiscatory taxes, the possible adoption of foreign governmental
restrictions affecting the payment of principal and interest, expropriation of
assets, nationalization, or other adverse political or economic developments.
Foreign companies may not be subject to auditing and financial reporting
standards and requirements comparable to those which apply to U.S. companies.
Foreign brokerage commissions and other fees are generally higher than in the
United States. It may be more difficult to obtain and enforce a judgment
against a foreign issuer.
In addition, to the extent that a Fund's foreign investments are not U.S.
dollar-denominated, the Fund may be affected favorably or unfavorably by changes
in currency exchange rates or exchange control regulations and may incur costs
in connection with conversion between currencies.
DEVELOPING COUNTRIES. The considerations noted above for foreign
investments generally are intensified for investments in developing countries.
These risks include (i) volatile social, political and economic conditions; (ii)
the small current size of the markets for such securities and the currently low
or nonexistent volume of trading, which result in a lack of liquidity and in
greater price volatility; (iii) the existence of national policies which may
restrict a Fund's investment opportunities, including restrictions on investment
in issuers or industries deemed sensitive to national interests; (iv) foreign
taxation; (v) the absence of developed structures governing private or foreign
investment or allowing for judicial redress for injury to private property; (vi)
the absence, until recently in certain developing countries, of a capital market
structure or market-oriented economy; (vii) economies based on only a few
industries; and (viii) the possibility that recent favorable economic
developments in certain developing countries may be slowed or reversed by
unanticipated political or social events in such countries.
FOREIGN CURRENCY TRANSACTIONS
A Fund may engage in currency exchange transactions to protect against
uncertainty in the level of future foreign currency exchange rates and to
increase current return. A Fund may engage in both "transaction hedging" and
"position hedging."
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There can be no assurance that appropriate foreign currency transactions
will be available for a Fund at any time; or that a Fund will enter into such
transactions at any time or under any circumstances even if appropriate
transactions are available to it.
When it engages in transaction hedging, a Fund enters into foreign currency
transactions with respect to specific receivables or payables of the Fund
generally arising in connection with the purchase or sale of its portfolio
securities. A Fund will engage in transaction hedging when it desires to "lock
in" the U.S. dollar price of a security it has agreed to purchase or sell, or
the U.S. dollar equivalent of a dividend or interest payment in a foreign
currency. By transaction hedging, a Fund will attempt to protect against a
possible loss resulting from an adverse change in the relationship between the
U.S. dollar and the applicable foreign currency during the period between the
date on which the security is purchased or sold or on which the dividend or
interest payment is declared, and the date on which such payments are made or
received.
A Fund may purchase or sell a foreign currency on a spot (I.E., cash) basis
at the prevailing spot rate in connection with transaction hedging. A Fund may
also enter into contracts to purchase or sell foreign currencies at a future
date ("forward contracts") and purchase and sell foreign currency futures
contracts.
For transaction hedging purposes, a Fund may also purchase exchange-listed
and over-the-counter call and put options on foreign currency futures contracts
and on foreign currencies. A put option on a futures contract gives a Fund the
right to assume a short position in the futures contract until expiration of the
option. A put option on currency gives a Fund the right to sell a currency at a
specified exercise price until the expiration of the option. A call option on a
futures contract gives a Fund the right to assume a long position in the futures
contract until the expiration of the option. A call option on currency gives a
Fund the right to purchase a currency at the exercise price until the expiration
of the option. A Fund will engage in over-the-counter transactions only when
appropriate exchange-traded transactions are unavailable and when, in the
opinion of an Adviser, the pricing mechanism and liquidity are satisfactory and
the participants are responsible parties likely to meet their contractual
obligations.
When it engages in position hedging, a Fund enters into foreign currency
exchange transactions to protect against a decline in the values of the foreign
currencies in which securities held by the Fund are denominated or are quoted in
their principle trading markets or an increase in the value of currency for
securities which the Fund expects to purchase. In connection with position
hedging, a Fund may purchase put or call options on foreign currency and foreign
currency futures contracts and buy or sell forward contracts and foreign
currency futures contracts. A Fund may also purchase or sell foreign currency
on a spot basis.
The precise matching of the amounts of foreign currency exchange
transactions and the value of the portfolio securities involved will not
generally be possible since the future value of such securities in foreign
currencies will change as a consequence of market movements in the values of
those securities between the dates the currency exchange transactions are
entered into and the dates they mature.
It is impossible to forecast with precision the market value of a Fund's
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for a Fund to purchase additional
foreign currency on the spot market (and bear the expense of such purchase) if
the market value of the security or securities being hedged is less than the
amount of foreign currency a Fund is obligated to deliver and if a decision is
made to sell the security or securities and make delivery of the foreign
currency. Conversely, it may be necessary to sell on the spot market some of
the foreign currency received upon the sale of the portfolio security or
securities of a Fund if the market value of such security or securities exceeds
the amount of foreign currency the Fund is obligated to deliver.
To offset some of the costs to a Fund of hedging against fluctuations in
currency exchange rates, the Fund may write covered call options on those
currencies.
Transaction and position hedging do not eliminate fluctuations in the
underlying prices of the securities which a Fund owns or intends to purchase or
sell. They simply establish a rate of exchange which one can achieve at some
future point in time. Additionally, although these techniques tend to minimize
the risk of loss due to a decline in the value of the hedged currency, they tend
to limit any potential gain which might result from the increase in the value of
such currency.
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A Fund may also seek to increase its current return by purchasing and
selling foreign currency on a spot basis, by purchasing and selling options on
foreign currencies and on foreign currency futures contracts, and by purchasing
and selling foreign currency forward contracts.
CURRENCY FORWARD AND FUTURES CONTRACTS. A forward foreign currency
exchange contract involves an obligation to purchase or sell a specific currency
at a future date, which may be any fixed number of days from the date of the
contract as agreed by the parties, at a price set at the time of the contract.
In the case of a cancelable forward contract, the holder has the unilateral
right to cancel the contract at maturity by paying a specified fee. The
contracts are traded in the interbank market conducted directly between currency
traders (usually large commercial banks) and their customers. A forward
contract generally has no deposit requirement, and no commissions are charged at
any stage for trades. A foreign currency futures contract is a standardized
contract for the future delivery of a specified amount of a foreign currency at
a future date at a price set at the time of the contract. Foreign currency
futures contracts traded in the United States are designed by and traded on
exchanges regulated by the Commodity Futures Trading Commission (the "CFTC"),
such as the New York Mercantile Exchange.
Forward foreign currency exchange contracts differ from foreign currency
futures contracts in certain respects. For example, the maturity date of a
forward contract may be any fixed number of days from the date of the contract
agreed upon by the parties, rather than a predetermined date in a given month.
Forward contracts may be in any amounts agreed upon by the parties rather than
predetermined amounts. Also, forward foreign exchange contracts are traded
directly between currency traders so that no intermediary is required. A
forward contract generally requires no margin or other deposit.
At the maturity of a forward or futures contract, a Fund may either accept
or make delivery of the currency specified in the contract, or at or prior to
maturity enter into a closing transaction involving the purchase or sale of an
offsetting contract. Closing transactions with respect to forward contracts are
usually effected with the currency trader who is a party to the original forward
contract. Closing transactions with respect to futures contracts are effected
on a commodities exchange; a clearing corporation associated with the exchange
assumes responsibility for closing out such contracts.
Positions in foreign currency futures contracts and related options may be
closed out only on an exchange or board of trade which provides a secondary
market in such contracts or options. Although a Fund will normally purchase or
sell foreign currency futures contracts and related options only on exchanges or
boards of trade where there appears to be an active secondary market, there is
no assurance that a secondary market on an exchange or board of trade will exist
for any particular contract or option or at any particular time. In such event,
it may not be possible to close a futures or related option position and, in the
event of adverse price movements, a Fund would continue to be required to make
daily cash payments of variation margin on its futures positions.
FOREIGN CURRENCY OPTIONS. Options on foreign currencies operate similarly
to options on securities, and are traded primarily in the over-the-counter
market, although options on foreign currencies have recently been listed on
several exchanges. Such options will be purchased or written only when an
Adviser believes that a liquid secondary market exists for such options. There
can be no assurance that a liquid secondary market will exist for a particular
option at any specific time. Options on foreign currencies are affected by all
of those factors which influence exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last-sale information for foreign
currencies and there is no regulatory requirement that quotations available
through dealers or other market sources be firm or revised on a timely basis.
Available quotation information is generally representative of very large
transactions in the interbank market and thus may not reflect relatively smaller
transactions (less than $1 million) where rates may be less favorable. The
interbank market in foreign currencies is a global, around-the-clock market. To
the extent that the U.S. options
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markets are closed while the markets for the underlying currencies remain open,
significant price and rate movements may take place in the underlying markets
that cannot be reflected in the U.S. options markets.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not
charge a fee for currency conversion, they do realize a profit based on the
difference (the "spread") between prices at which they buy and sell various
currencies. Thus, a dealer may offer to sell a foreign currency to a Fund at
one rate, while offering a lesser rate of exchange should a Fund desire to
resell that currency to the dealer.
PRECIOUS METALS
The value of the investments of certain Funds may be affected by changes in
the price of gold and other precious metals. Gold has been subject to
substantial price fluctuations over short periods of time and may be affected by
unpredictable international monetary and other governmental policies, such as
currency devaluations or revaluations; economic and social conditions within a
country; trade imbalances; or trade or currency restrictions between countries.
Because much of the world's known gold reserves are located in South Africa,
political and social conditions there may pose special risks to investments in
gold. For instance, social upheaval and related economic difficulties in South
Africa could cause a decrease in the share values of South African issuers.
Many institutions have rescinded policies that preclude investments in companies
doing business in South Africa. In July 1991, the United States lifted the
prohibition on new U.S. investment in South Africa, including the purchase of
newly-issued securities of South African companies.
In addition to its investments in securities, a Fund may, as described from
time to time in the Prospectus, invest a portion of its assets in precious
metals, such as gold, silver, platinum, and palladium, and precious metal
options and futures. The prices of precious metals are affected by broad
economic and political conditions, but are less subject to local and
company-specific factors than securities of individual companies. As a result,
precious metals and precious metal options and futures may be more or less
volatile in price than securities of companies engaged in precious
metals-related businesses. Precious metals may be purchased in any form,
including bullion and coins, provided that an Adviser intends to purchase only
those forms of precious metals that are readily marketable and that can be
stored in accordance with custody regulations applicable to mutual funds. A
Fund may incur higher custody and transaction costs for precious metals than for
securities. Also, precious metals investments do not pay income.
Under current federal income tax law, gains from selling precious metals
(and certain other assets) may not exceed 10% of a Fund's annual gross income.
This tax requirement could cause a Fund to hold or sell precious metals,
securities, options, or futures when it would not otherwise do so.
ZERO-COUPON DEBT SECURITIES AND PAY-IN-KIND SECURITIES
Zero-coupon securities in which a Fund may invest are debt obligations
which are generally issued at a discount and payable in full at maturity, and
which do not provide for current payments of interest prior to maturity.
Zero-coupon securities usually trade at a deep discount from their face or par
value and are subject to greater market value fluctuations from changing
interest rates than debt obligations of comparable maturities which make current
distributions of interest. As a result, the net asset value of shares of a Fund
investing in zero-coupon securities may fluctuate over a greater range than
shares of other mutual funds investing in securities making current
distributions of interest and having similar maturities.
When debt obligations have been stripped of their unmatured interest
coupons by the holder, the stripped coupons are sold separately. The principal
or corpus is sold at a deep discount because the buyer receives only the right
to receive a future fixed payment on the security and does not receive any
rights to periodic cash interest payments. Once stripped or separated, the
corpus and coupons may be sold separately. Typically, the coupons are sold
separately or grouped with other coupons with like maturity dates and sold in
such bundled form. Purchasers of stripped obligations acquire, in effect,
discount obligations that are economically identical to the zero-coupon
securities issued directly by the obligor.
Zero-coupon securities allow an issuer to avoid the need to generate cash
to meet current interest payments. Even though zero-coupon securities do not
pay current interest in cash, a Fund is nonetheless required to accrue
B-14
<PAGE>
interest income on them and to distribute the amount of that interest at least
annually to shareholders. Thus, a Fund could be required at times to liquidate
other investments in order to satisfy its distribution requirement.
A Fund also may purchase pay-in-kind securities. Pay-in-kind securities
pay all or a portion of their interest or dividends in the form of additional
securities.
TEMPORARY DEFENSIVE STRATEGIES
At times, a Fund's Adviser may judge that market conditions make pursuing
the Fund's basic investment strategy inconsistent with the best interests of its
shareholders. At such times, the Adviser may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the values of the
Fund's assets. In implementing these "defensive strategies", a Fund may invest
in U.S. Government securities, other high-quality debt instruments, and other
securities its Adviser believes to be consistent with the Fund's best interests.
THE FUNDS' INVESTMENT LIMITATIONS
The Trust has adopted the following fundamental investment restrictions
which (except to the extent they are designated as nonfundamental as to any
Fund) may not be changed without the affirmative vote of a majority of the
outstanding voting securities of the affected Fund.
THE CONTRARIAN FUND-TM-, THE EMERGING GROWTH FUND AND THE VALUE + GROWTH
FUND.
A Fund may not:
1. purchase or sell commodities or commodity contracts, or interests in
oil, gas, or other mineral leases, or other mineral exploration or
development programs, although it may invest in companies that engage
in such businesses to the extent otherwise permitted by a Fund's
investment policies and restrictions and by applicable law, except as
required in connection with otherwise permissible options, futures and
commodity activities as described elsewhere in the Prospectus and this
Statement;
2. purchase or sell real estate, although it may invest in securities
secured by real estate or real estate interests, or issued by
companies, including real estate investment trusts, that invest in
real estate or real estate interests;
3. make short sales or purchases on margin, although it may obtain
short-term credit necessary for the clearance of purchases and sales
of its portfolio securities and except as required in connection with
permissible options, futures, short selling and leverage activities as
described elsewhere in the Prospectus and this Statement;
4. (a) for The Contrarian Fund-TM- only: with respect to 50% of its
total assets, invest in the securities of any one issuer (other than
the U.S. Government and its agencies and instrumentalities), if
immediately after and as a result of such investment more than 5% of
the total assets of the Fund would be invested in such issuer (the
remaining 50% of its total assets may be invested without restriction
except to the extent other investment restrictions may be applicable);
(b) for the Emerging Growth Fund and Value + Growth Fund only: with
respect to 75% of its total assets, invest in the securities of any
one issuer (other than the U.S. Government and its agencies and
instrumentalities), if immediately after and as a result of such
investment more than 5% of the total assets of the Fund would be
invested in such issuer (the remaining 25% of its total assets may be
invested without restriction except to the extent other investment
restrictions may be applicable);
5. mortgage, hypothecate, or pledge any of its assets as security for any
of its obligations, except as required for otherwise permissible
borrowings (including reverse repurchase agreements), short sales,
financial options and other hedging activities;
B-15
<PAGE>
6. make loans of the Fund's assets, including loans of securities
(although it may, subject to the other restrictions or policies stated
herein, purchase debt securities or enter into repurchase agreements
with banks or other institutions to the extent a repurchase agreement
is deemed to be a loan), except that The Contrarian Fund-TM- may lend
up to one-third of its total assets to other parties;
7. borrow money, except from banks for temporary or emergency purposes or
in connection with otherwise permissible leverage activities, and then
only in an amount not in excess of (a) one-third of the value of The
Contrarian Fund's-TM- total assets, or (b) 5% of the Emerging Growth
Fund's or Value + Growth Fund's total assets (in any case as
determined at the lesser of acquisition cost or current market value
and excluding collateralized reverse repurchase agreements);
8. underwrite securities of any other company, although it may invest in
companies that engage in such businesses if it does so in accordance
with policies established by the Trust's Board of Trustees (the
Board's current policy permits a Fund to invest in companies that
directly or through subsidiaries execute portfolio transactions for a
Fund or have entered into selling agreements with the Distributor to
sell Fund shares, to the extent permitted by applicable law), and
except to the extent that the Fund may be considered an underwriter
within the meaning of the Securities Act of 1933, as amended, in the
disposition of restricted securities;
9. invest more than 25% of the value of the Fund's total assets in the
securities of companies engaged in any one industry (except securities
issued by the U.S. Government, its agencies and instrumentalities);
10. issue senior securities, as defined in the 1940 Act, except that this
restriction shall not be deemed to prohibit the Fund from making any
otherwise permissible borrowings, mortgages or pledges, or entering
into permissible reverse repurchase agreements, and options and
futures transactions;
11. purchase the securities of any company for the purpose of exercising
management or control (Emerging Growth Fund only);
12. purchase more than 10% of the outstanding voting securities of any one
issuer (Emerging Growth Fund only);
13. (a) purchase the securities of any registered investment company,
except as part of a merger or similar reorganization transaction
(Emerging Growth Fund only);
(b) purchase the securities of other investment companies, except as
permitted by the 1940 Act or as part of a merger, consolidation,
acquisition of assets or similar reorganization transaction (Value +
Growth Fund only);
14. invest more than 5% of the value of its total assets in securities of
any issuer which has not had a record, together with its predecessors,
of at least three years of continuous operations (Emerging Growth Fund
only);
15. invest more than 10% of the value of its total assets in securities
that are not readily marketable or that would require registration
under the Securities Act of 1933, as amended, upon disposition (as a
matter of operating policy, the Fund interprets this restriction as
including venture capital investments such as venture capital
partnerships whose securities are not registered under the Securities
Act of 1933 and unregistered securities of companies which are not yet
publicly held; furthermore, and as an additional matter of operating
policy, the Board of Trustees has adopted a further restriction that
no more than 5% of the Fund's total assets may be held in such
restricted securities) (Emerging Growth Fund only).
ALL OTHER FUNDS.
As fundamental investment restrictions, which may not be changed with
respect to a Fund without approval by the holders of a majority of the
outstanding shares of that Fund, a Fund may not:
B-16
<PAGE>
1. issue any class of securities which is senior to the Fund's shares of
beneficial interest, except that each of the Funds may borrow money to
the extent contemplated by Restriction 3 below;
2. purchase securities on margin (but a Fund may obtain such short-term
credits as may be necessary for the clearance of transactions) (Margin
payments or other arrangements in connection with transactions in
short sales, futures contracts, options, and other financial
instruments are not considered to constitute the purchase of
securities on margin for this purpose.);
3. borrow more than one-third of the value of its total assets less all
liabilities and indebtedness (other than such borrowings) not
represented by senior securities;
4. act as underwriter of securities of other issuers except to the extent
that, in connection with the disposition of portfolio securities, it
may be deemed to be an underwriter under certain federal securities
laws;
5. (i) (as to 75% of the Diversified Growth Fund's, the Global Natural
Resources Fund's, the Growth & Income Fund's, the Information Age
Fund's-TM-, and the MicroCap Growth Fund's total assets and 50% of
the Global Value Fund's and the Partners Fund's total assets) purchase
any security (other than obligations of the U.S. Government, its
agencies or instrumentalities) if as a result more than 5% of the
Fund's total assets (taken at current value) would then be invested in
securities of a single issuer, or (ii) purchase any security if as a
result 25% or more of the Fund's total assets (taken at current value)
would be invested in a single industry, except that the Information
Age Fund-TM- will invest without limit in any one or more information
technology industries and the Global Natural Resources Fund will
invest without limit in any one or more natural resources industries,
as described in the Trust's Prospectus at the time;
6. (all Funds other than the Global Value Fund) invest in securities of
any issuer if any officer or Trustee of the Trust or any officer or
director of RSIM, L.P. or RSIM, Inc., as the case may be, owns more
than 1/2 of 1% of the outstanding securities of such issuer, and such
officers, Trustees and directors who own more than 1/2 of 1% own in
the aggregate more than 5% of the outstanding securities of such
issuer (This policy is non-fundamental as to the MicroCap Growth
Fund);
7. make loans, except by purchase of debt obligations or other financial
instruments in which the Fund may invest consistent with its
investment policies, by entering into repurchase agreements, or
through the lending of its portfolio securities;
8. purchase or sell commodities or commodity contracts, except that a
Fund may purchase or sell financial futures contracts, options on
financial futures contracts, and futures contracts, forward contracts,
and options with respect to foreign currencies, and may enter into
swap transactions or other financial transactions, and except as
required in connection with otherwise permissible options, futures,
and commodity activities as described elsewhere in the Prospectus or
this Statement at the time;
9. purchase or sell real estate or interests in real estate, including
real estate mortgage loans, although (i) it may purchase and sell
securities which are secured by real estate and securities of
companies, including limited partnership interests, that invest or
deal in real estate and it may purchase interests in real estate
investment trusts, and (ii) the Global Natural Resources Fund may
invest in any issuers in the natural resources industries, as
described in the Prospectus at the time. (For purposes of this
restriction, investments by a Fund in mortgage-backed securities and
other securities representing interests in mortgage pools shall not
constitute the purchase or sale of real estate or interests in real
estate or real estate mortgage loans.)
In addition, it is contrary to the current policy of each of the
Diversified Growth, Global Natural Resources, Global Value, Growth & Income,
Information Age-TM-, MicroCap Growth, and Partners Funds, which policy may be
changed without shareholder approval, to invest more than 15% of its net
assets in securities which are not readily marketable, including securities
restricted as to resale (other than securities restricted as to resale but
B-17
<PAGE>
determined by the Trustees, or persons designated by the Trustees to make such
determinations, to be readily marketable).
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as fundamental or to the extent
designated as such in the Prospectus, the other investment policies described in
this Statement or in the Prospectus are not fundamental and may be changed by
approval of the Trustees. As a matter of policy, the Trustees would not
materially change a Fund's investment objective without shareholder approval.
The Investment Company Act of 1940, as amended (the "1940 Act"), provides
that a "vote of a majority of the outstanding voting securities" of the Fund
means the affirmative vote of the lesser of (1) more than 50% of the outstanding
shares of a Fund, or (2) 67% or more of the shares present at a meeting if more
than 50% of the outstanding shares are represented at the meeting in person or
by proxy.
MANAGEMENT OF THE FUNDS
TRUSTEES AND OFFICERS
The Trustees of the Trust are responsible for generally overseeing the
conduct of the Trust's business. Set forth below is certain information
about the Trust's trustees and executive officers:
LEONARD B. AUERBACH, TRUSTEE
c/o RS Investment Management, 555 California Street, San Francisco, CA 94104
Mr. Auerbach, 51, is the President and Chairman of the Board of Auerbach
Associates, Inc., a management consulting firm which he founded in 1979.
Mr. Auerbach is also President of LBA&C, Inc., which served until July 1997
as general partner of Tuttle & Company, which provides mortgage pipeline
interest rate hedging services and related software to a variety of
institutional clients. He also served until July 1997 as President of
Tuttle & Auerbach Securities, Inc., an introducing broker trading futures
on behalf of institutional hedging clients and individuals. He is also a
Director of Roelof Mining, Inc. He was a professor of Business
Administration at St. Mary's College, Moraga, California until June 1992.
He is the co-founder, and served as the Chairman until March 1986, of
Intraview Systems Corporation, a privately-held company whose assets were
acquired by Worlds of Wonder, Inc. Mr. Auerbach is a limited partner in
Robertson Stephens Residential Fund, L.P., RS Property Fund I, L.P., and
Robertson Stephens Commercial Property Fund, L.P., of which RSRF Company,
L.L.C., RSRE II., L.L.C., and Robertson, Stephens & Company, Inc.,
respectively, affiliates of RSIM, L.P., and RSIM, Inc., are the general
partners. Mr. Auerbach has been a Trustee of the Trust since June 1987.
JOHN W. GLYNN, JR., TRUSTEE
c/o RS Investment Management, 555 California Street, San Francisco, CA 94104
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 Neurex Corporation, and of Sterling Payot Company, a
private investment banking firm that advises executives and companies on
financial and strategic matters. He is also a lecturer at the Darden
School of Business at the University of Virginia and at the Stanford
Business School. Mr. Glynn was until June 1997 a limited partner in The
Orphan Fund, of which RSIM, L.P. is a general partner. He has been a
Trustee of the Trust since July, 1997.
*G. RANDALL HECHT, PRESIDENT AND PRINCIPAL EXECUTIVE OFFICER
c/o RS Investment Management, 555 California Street, San Francisco, CA 94104
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. Previously, Mr. Hecht
served as President and Chief Executive Officer of the Trust from October
1988 until December 1997. From May 1987 through May 1995, he served as
Chief Financial Officer of the Trust. Mr. Hecht was a Director of RSIM,
Inc. and of Robertson, Stephens & Company, Inc., from June 1989 to
January 1993, and from January 1993 to October 1998, respectively.
Mr. Hecht served as the Trust's Secretary from May 1987 through
January 1989, as RSIM, L.P.'s Secretary from 1993 to the present, and
as RSIM, Inc.'s Secretary from May 1987 through June 1989. He was a
Trustee of the Trust from June 1987 until December 1997.
JAMES K. PETERSON, TRUSTEE
c/o RS Investment Management, 555 California Street, San Francisco, CA 94104
Mr. Peterson, 56, is an employee of Mitchum, Jones & Templeton, Inc.; 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 has
been a Trustee of the Trust since June 1987.
B-18
<PAGE>
*ANDREW P. PILARA, JR., TRUSTEE
c/o RS Investment Management, 555 California Street, San Francisco, CA 94104
Mr. Pilara, 56, is a managing director of RSIM, L. P. and RSIM, Inc. He
is also a managing member of RS Investment Management Co., LLC the
parent company of RSIM L.P. and RSIM, Inc. He served as the Principal
Executive Officer and the President of the Trust from October 1997 and
December 1997, respectively, until February 1999. Mr. Pilara
has been responsible for managing the Partners Fund since the Fund's
inception in July 1995 and is responsible for managing the Global Natural
Resources and Global Value Funds. Since August 1993 he has been a member
of The Contrarian Fund-TM- management team. Mr. Pilara has been involved
in the securities business for over 25 years, with experience in portfolio
management, research, trading, and sales. Prior to joining RS Investment
Management, L.P., he was president of Pilara Associates, an investment
management firm he established in 1974. He holds a B.A. in economics from
St. Mary's College. Mr. Pilara has been a Trustee of the Trust since
September 1997.
ANDREW C. MORRISON, TREASURER AND SECRETARY
c/o RS Investment Management, 555 California Street, San Francisco, CA 94104
Mr. Morrison, 30, is a Vice President at RS Investment Management where he
started as a performance analyst in 1994. He has over 7 years experience
in the investment management industry, starting his career at Wm Mason &
Company in Los Angeles in 1991. He has a B.A. in Economics from the
University of California at Los Angeles. He has been an officer of the
Trust since September 1998.
Pursuant to the terms of the Advisory Agreements with the Funds, RS
Investment Management pays all compensation of officers of the Trust as well as
the fees and expenses of all Trustees of the Trust who are affiliated persons of
RS Investment Management. The Trust pays each unaffiliated Trustee an annual
fee of $5,000 per Fund and reimburses their actual out-of-pocket expenses
relating to attendance at meetings of the Board of Trustees.
<TABLE>
<CAPTION>
COMPENSATION TABLE
Pension or
Retirement
Benefits Estimated Total
Name of Aggregate Accrued As Annual Compensation
Person, Compensation Part of Trust Benefits Upon From Fund Paid
Position From Trust Expenses Retirement to Trustees
- ---------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leonard Auerbach, Trustee $90,000 -- -- $90,000
John W. Glynn, Jr., Trustee $90,000 -- -- $90,000
James K. Peterson, Trustee $95,488 -- -- $95,488
Andrew P. Pilara, Jr., Trustee -- -- -- --
</TABLE>
- ----------------------
* DENOTES A TRUSTEE WHO IS AN "INTERESTED PERSON," AS DEFINED IN THE 1940
ACT.
B-19
<PAGE>
CONTROL PERSONS AND SHARE OWNERSHIP
As of February 10, 1999, to the Funds' knowledge, the shareholders who
owned of record or beneficially more than 5% of the outstanding shares of any
Fund were as follows:
<TABLE>
<CAPTION>
Percentage of Percentage of
Outstanding Outstanding
Shares of the Shares of
Shareholder Shares Owned Class Owned Fund Owned
----------- ------------ ----------- ----------
<S> <C> <C> <C>
THE CONTRARIAN FUND-TM-
CLASS A SHARES
Charles Schwab & Co. Inc. 3,906,812.193 24.08% 23.96%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 1,413,385.225 8.71% 8.67%
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 12.68% 0.06%
FBO 126-01287-13
1 Metrotech Center North
Brooklyn NY 11201-3870
Dain Raucher Inc. FBO 5,493.689 7.26% 0.03%
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 5.89% 0.03%
George Meyerratken IRA
870 Sharon Drive, Suite 3
Florence, KY 41042-1272
DIVERSIFIED GROWTH FUND
CLASS A SHARES
Charles Schwab & Co. Inc 1,455,794.600 36.98% 36.37%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Fracisco, CA 94104-4122
National Financial Services Corp. 629,106.840 15.98% 15.72%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
CLASS C SHARES
Dominic N. Ferrara & Rita A. 7,560.091 11.58% 0.19%
Ferrara TTEE
U/A 9/1/79 Dominic N. Ferrara
PSP
Ross Park Professional Center
1 Ross Park Blvd.
Steubenville, OH 43952-2673
B-20
<PAGE>
NFSC FEBO # OLF-204382 4,733.813 7.25% 0.12%
William S. Collum
125 Sterling Way
Hatsfield, PA 19440-3716
Katie H. Gordon** 3,322.335 5.09% 0.08%
5311 Beacon Ct.
Bakersfield, CA 93312-4980
Scott A. Gordon** 3,322.335 5.09% 0.08%
5311 Beacon Ct.
Bakersfield, CA 93312-4980
EMERGING GROWTH FUND
CLASS A SHARES
Charles Schwab & Co. Inc. 3,848,236.444 21.18% 21.12%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 2,498,774.768 13.75% 13.71%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
CLASS C SHARES
NSFC FBO # U18-007897 7,652.510 13.98% 0.04%
Nationsbank of Texas N.A.
FBO IRA of Frank Dunham Jr.
30022000183285
PO Box 831575
Dallas, TX 75283-1571
CoreLink Financial 6,216.182 11.36% 0.03%
PO Box 4054
Concord, CA 94524-4054
BHC Securities Inc. 2,821.610 5.15% 0.02%
Attn: Mutual Funds Dept.
FAO 40078978
One Commerce Square
2005 Market Street, Suite 1200
Philadelphia, PA 19103-7084
- -------------------
** Owned of Record and Beneficially
B-21
<PAGE>
GLOBAL NATURAL RESOURCES FUND
CLASS A SHARES
Charles Schwab & Co. Inc. 1,510,186.094 49.70% 49.63%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 315,451.528 10.38% 10.37%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
CLASS C SHARES
NFSC FEBO # X77-005371 2,020.719 46.32% 0.07%
Diagnostic Imaging Assoc. Ltd.
Amended & Restated Pension Plan
FBO M. Reza Faji Et Al.
2041 Blvd. of the Allies
Pittsburgh, PA 15219-5801
NFSC FEBO # A1K-609455 1,725.311 39.55% 0.06%
Linda Peterson & Mark Peterson JT
TEN
272 Route 526
Imlaystown, NJ 08526-1307
NFSC FEBO # A1K-609269 609.373 13.97% 0.02%
Qamar Ahmad GDN & Sadaf
Ahmad JT TEN
26 Joseph Court
Monmouth Junction, NJ 08852-2506
GLOBAL VALUE FUND
CLASS A SHARES
Charles Schwab & Co. Inc. 162,602.202 18.75% 17.90%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, Ca 94104-4122
G. Randy Hecht** 125,741.936 14.50% 13.85%
22 Turtle Rock Court
Tiburon, CA 94920-1300
Andrew P. Pilara, Jr.** 63,896.438 7.37% 7.04%
c/o BancAmerica Robertson Stephens
555 California, Suite 2600
San Franscico, CA 94104-1502
B-22
<PAGE>
National Financial Services Corp. 51,393.034 5.93% 5.66%
FBO The Exclusive Benefit of Our Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
CLASS C SHARES
CoreLine Financial 19,183.802 46.75% 2.11%
PO Box 4054
Concord, CA 94524-4054
Roney & Co. CUST FBO 5,831.456 14.21% 0.64%
Edward I. Brown IRA R/O
126 Ponce De Leon
Islamorada, FL 33036-4116
Roney & Co. CUST FBO 2,511.047 6.12% 0.28%
Judity C. Bankey IRA R/O
437 Broadleaf
Rochester, MI 48306-2818
Judy S. Craddick** 2,363.919 5.76% 0.26%
2 Reliez Manor Court
Lafayette, CA 94549-2652
Wanda J. Zimmerman TTEE 2,190.417 5.34% 0.24%
U/A DTD 7/24/95 Wanda J.
Zimmerman Trust
156 Maywood
Rochester, MI 48307-1537
Roney & Co. as CUST 2,094.751 5.10% 0.23%
FBO Duane Joseph Peltier IRA
382 Beachview Drive
Rochester, MI 48306-2807
GROWTH & INCOME FUND
CLASS A SHARES
Charles Schwab & Co. Inc. 4,313,329.780 35.60% 35.17%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 1,275,458.975 10.53% 10.40%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
B-23
<PAGE>
CLASS C SHARES
CoreLink Financial 11,667.591 7.92% 0.10%
PO Box 4054
Concord, CA 94524-4054
INFORMATION AGE FUND-TM-
CLASS A SHARES
Charles Schwab & Co. Inc. 3,104,968.708 36.12% 36.07%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 1,521,619.995 17.70% 17.68%
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 20.15% 0.03%
CUST FBO John L. White Jr.
IRA R/O
4 Wilcote Way
Medford, NJ 08055-3333
NFSC FEBO # X01-271039 901.744 8.42% 0.01%
John M. Miller
108 Main Street
Norwell, MA 02061-2413
Donaldson Lufkin Jenrette 762.248 7.12% 0.01%
Securites Corp.
P.O. Box 2052
Jersey City, NJ 07303-2052
Judy S. Craddick** 759.878 7.09% 0.01%
2 Reliez Manor Court
Lafayette, CA 94549-2652
Resources Trust Company TTEE 748.234 6.98% 0.01%
IRA U/A 05/26/98 FBO Ernest
Deustachio
R-213-36-6304
PO Box 5900
Denver, CO 80217-5900
NFSC FEBO # 04J-675318 674.536 6.30% 0.01%
NFSC/FMTC IRA FBO Steven
Somers Smith
2728 Vincente St.
San Francisco, CA 94116-2862
B-24
<PAGE>
MICROCAP GROWTH FUND
CLASS A SHARES
Goodness Ltd.** 1,456,664.239 25.23% 25.05%
PO Box N-7776
Nassau, Bahamas
Charles Schwab & Co. Inc. 934,429.046 16.18% 16.07%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 844,758.884 14.63% 14.53%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
CLASS C SHARES
Trust Company of America Cust FBO 2,222.003 5.47% 0.04%
Gale L. Fry Acct # 14534
7103 S. Revere Parkway
Englewood, CO 80112-3936
Resources Trust Company N.A. 2,178.649 5.36% 0.04%
FBO George Whittaker IRA
I235700644
DTD 08/23/1997
PO Box 5900
Denver, CO 80217-5900
PARTNERS FUND
CLASS A SHARES
Charles Schwab & Co. Inc. 1,107,058.056 31.52% 31.42%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 356,259.989 10.14% 10.11%
FBO The Exclusive Benefit of Our
Customers
PO Box 3908
Church Street Station
New York, NY 10008-3908
CLASS C SHARES
Robert G. Moulton TTEE 3,729.985 36.07% 0.11%
Robert G. Moulton DDS SC PSP
U/A 6-1-88
504 South Main Street
Jefferson, WI 53549-1736
B-25
<PAGE>
Resources Trust Company TTEE 1,369.128 13.24% 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 13.24% 0.04%
Securities Corp.
PO Box 2052
Jersey City, NJ 07303-2052
State Street Bank & Trust Company 867.961 8.39% 0.02%
IRA R/O Jyoti S. Shah**
266 Slater Blvd.
Staten Island, NY 10305-3241
NFSC FEBO # 179-838152 716.073 6.93% 0.02%
FMT Co. CUST IRA
FBO Alan A. Schetelich
2294 Edgewood Terrace
Scotch Plains, NJ 07076-2107
NFSC FEBO # X59-050318 655.628 6.34% 0.02%
Paula R. Weissman
12 D Dorado Drive
Convent Station, NJ 07961
Donaldson Lufkin Jenrette 591.672 5.72% 0.02%
Securities Corp.
PO Box 2052
Jersey City, NJ 07303-2052
VALUE + GROWTH FUND
CLASS A SHARES
Charles Schwab & Co. Inc. 7,700,674.601 30.64% 30.56%
Reinvest Account
Attn: Mutual Funds Department
101 Montgomery Street
San Francisco, CA 94104-4122
National Financial Services Corp. 3,576,481.357 14.23% 14.19%
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 8.88% 0.02%
FBO George Whittaker IRA
I235700644
DTD 08/23/1997
PO Box 5900
Denver, CO 80217-5900
</TABLE>
B-26
<PAGE>
On February 10, 1999 the officers and Trustees of the Trust, as a group,
beneficially owned less than 1% of the outstanding shares of each Fund,
except for the Global Value Fund where the officers and Trustees of the
Trust, as a group, beneficially owned 190,154.531 shares, approximately
20.94% of the outstanding shares of that Fund.
The Trust's Declaration of Trust and By-Laws provide that the Trust will
indemnify its Trustees and officers against liabilities and expenses incurred in
connection with litigation in which they may be involved because of their
offices with the Trust, except if it is determined in the manner specified in
the Declaration of Trust and By-Laws that they have not acted in good faith in
the reasonable belief that their actions were in the best interests of the Trust
or that such indemnification would relieve any officer or Trustee of any
liability to the Trust or its shareholders by reason of willful misfeasance, bad
faith, gross negligence, or reckless disregard of his or her duties. The Trust,
at its expense, provides liability insurance for the benefit of its Trustees and
officers.
RS INVESTMENT MANAGEMENT
RS Investment Management Co. LLC ("RSIM Co."), a Delaware limited
liability company, is the owner of all of the outstanding beneficial interest
in RSIM, L.P. and RSIM, Inc. G. Randall Hecht, Chairman and Chief Executive
Officer of RSIM Co., owns 29% of the membership interest in RSIM Co.; Mr.
Paul Stephens, Mr. Andrew P. Pilara, and Mr. James Callinan, portfolio
managers of certain of the Funds, own 22%, 15%, and 20%, respectively. The
remainder of the membership interests is owned by other employees of RSIM Co.
or its affiliates and by other persons otherwise unaffiliated with RSIM Co.
Each of Messrs. Callinan, Hecht, Pilara, and Stephens and Messrs. David Evans
and James Foster, employees of RSIM Co. or its affiliates, is a member of the
Board of Managers of RSIM Co. Mr. Hecht serves as the President and Principal
Executive Officer of the Trust. Mr. Pilara serves as a Trustee of the Trust.
Pursuant to Investment Advisory Agreements (the "Advisory Agreements"),
RS Investment Management, at its expense, furnishes investment management
services with respect to the assets of each Fund, consistent with the
investment objective and policies of such Fund and subject to the supervision
and direction of the Trust's Board of Trustees, and (i) furnishes the Trust
with investment advice, research, and recommendations with respect to the
investment of each Fund's assets and the purchase and sale of its portfolio
securities, (ii) furnishes the Trust and each Fund with reports, statements,
and other data on securities, economic conditions, and other pertinent
subjects, and (iii) in general superintends and manages the investments of
each Fund, subject to the ultimate supervision and direction of the Board of
Trustees. In addition, the Advisory Agreements provide that RS Investment
Management provides all administrative services needed for the management and
operation of each Fund and furnishes such office space and personnel as are
needed by the Fund (except in the case of the Diversified Growth, Global
Natural Resources, Global Value, Growth & Income, The Information Age,
and MicroCap Growth Funds, where such administrative services are furnished
by RS Investment Management pursuant to an Administrative Services Agreement
with those Funds, as described in "Administrative Fees" below). The services
of RS Investment Management to the Funds are not deemed to be exclusive, and
RS Investment Management or any affiliate may provide similar services to
other series of the Trust, other investment companies, and other clients, and
may engage in other activities. The Funds may reimburse RS Investment
Management (on a cost recovery basis only) for any services performed for a
Fund by it outside its duties under the Advisory Agreements.
Each Advisory Agreement provides that RS Investment Management shall not,
in the absence of willful misfeasance, bad faith, gross negligence, or reckless
disregard by it of its obligations or duties, be subject to liability to the
Trust, the Fund in question, or the shareholders of the Fund for any act or
omission in the course of, or connected with, its rendering services thereunder,
or for any losses that may be sustained in the purchase, holding, or sale of any
security by the Fund.
Each of the Advisory Agreements is subject to annual approval, commencing
in 2001, by (i) the vote of the Trustees or of a majority of the outstanding
voting securities (as defined in the 1940 Act) of the affected Fund, and (ii)
the vote of a majority of the Trustees who are not "interested persons" (as
defined in the 1940 Act) of the
B-27
<PAGE>
Trust, RSIM, L.P., or RSIM, Inc. Each is terminable by RS Investment
Management, the Trust, or a vote of a majority of the outstanding voting
securities of the affected Fund, without penalty, on 60 days written notice and
will terminate automatically in the event of its assignment.
Each Advisory Agreement also provides that RS Investment Management may, at
its own expense, delegate certain of its responsibilities under the Agreement to
sub-advisers for the Funds, who would be required to furnish an investment
program and make investment decisions for the Funds. RSIM, L.P. has entered
into sub-advisory agreements with Elijah Asset Management, in respect of the
Information and Value + Growth Funds, and with Eastbourne in respect of a
portion of the assets of The Contrarian Fund-TM-. See "The Sub-Advisors,"
below.
THE SUB-ADVISORS
Elijah Asset Management serves as sub-advisor to The Information Age
Fund-TM- and the Value + Growth Fund. Eastbourne serves as sub-adviser in
respect of a portion of the assets of The Contrarian Fund-TM- . Pursuant to
each sub-advisory agreement ("Sub-Advisory Agreements"), each Sub-Adviser (i)
manages such of the Fund's assets as are allocated to it in accordance with the
Fund's investment objective, policies, and limitations and with any additional
policies or guidelines established from time to time by RSIM, L.P. or the Board
of Trustees, (ii) makes investment decisions for the Fund as to those assets,
and (iii) places orders to purchase and sell securities and other investments
for the Fund in respect of those assets. Each Sub-Advisory Agreement requires
the Sub-Adviser to keep the Trust and RSIM, L.P informed of developments
materially affecting the Fund in question. RSIM, L.P. currently allocates all
of the assets of The Information Age Fund-TM- and the Value + Growth Fund to
Elijah Asset Management for management by that firm. RSIM, L.P. currently
allocates only a portion of the assets of The Contrarian Fund-TM- to Eastbourne
for management, as described below.
ELIJAH ASSET MANAGEMENT, LLC.
Elijah Asset Management is a newly formed Delaware limited liability
company; its sole managing member is Ronald E. Elijah, who currently serves
as portfolio manager to the Information Age Fund-TM- and the Value + Growth
Fund. Mr. Elijah owns 80% of the outstanding voting interest in Elijah Asset
Management and is the sole managing member of the company; each of Mr. John
P. McNiff and Radnor Holdings Corp. owns an additional 10% of the
outstanding voting interest in Elijah Asset Management.
Under the Sub-Advisory Agreement with Elijah Asset Management, RSIM, L.P
will pay a fee to Elijah Asset Management with respect to each of The
Information Age Fund-TM- and the Value + Growth Fund equal to 50% of the fees
paid to RSIM, L.P. by such Fund pursuant to the Advisory Agreement.
The Sub-Advisory Agreement with Elijah Asset Management may be terminated
as to either Fund (i) by the Trust at any time without penalty, upon the vote of
a majority of the Trust's Trustees or by vote of a majority of the outstanding
voting securities of the Fund in question, upon 60 days written notice to Elijah
Asset Management and RSIM, L.P., (ii) by RSIM, L.P. at any time without penalty,
upon 60 days written notice to Elijah Asset Management and the Trust (which
right RSIM, L.P. has agreed with Elijah Asset Management not to exercise except
under certain circumstances, as described below), or (iii) by Elijah Asset
Management at any time without penalty, upon 60 days written notice to RSIM,
L.P. and the Trust. The Sub-Advisory Agreement will continue in effect for a
period of more than two years in respect of a Fund only if its continuance is
approved annually by the Board of Trustees of the Trust or the shareholders of
the Fund in question and by the disinterested Trustees of the Trust.
RSIM, L.P. has entered into a separate agreement with Elijah Asset
Management relating generally to Elijah Asset Management's management of assets
of a number of clients of RSIM, L.P., including the Funds. That agreement
includes provisions, by way of example, requiring Elijah Asset Management to
provide certain types of information to RSIM, L.P., to continue to employ
Mr. Ronald Elijah as the full-time principal portfolio manager of the accounts
of those clients, to comply with all applicable laws, rules, and regulations,
and to comply with such investment guidelines and protocols as RSIM, L.P. may
establish from time to time. It also includes provisions requiring RSIM, L.P. to
make payments to Elijah Asset Management at an annual rate of up to 0.025% of
the average daily net assets of each of the Funds in consideration of Elijah
Asset Management's
B-28
<PAGE>
cooperation with RSIM, L.P. in respect of the promotion of the shares of the
Funds. In that agreement, RSIM, L.P. has also agreed not to exercise its right
to terminate the Sub-Advisory Agreement in respect of either Fund for a period
of three years except for cause, which is defined in the agreement to include,
among other things, Elijah Asset Management's becoming subject to a statutory
disqualification preventing it from serving as sub-adviser; Elijah Asset
Management's (or any affiliate's) becoming subject to any claim, investigation,
action, or suit that could reasonably be expected to injure or call into
question the goodwill, reputation, or business of any Fund, of RSIM, L.P., or of
any of their affiliates; any breach by Elijah Asset Management of any material
provision of the agreement or of the Sub-Advisory Agreement; or Elijah Asset
Management's (or any affiliate's) committing any act of fraud or dishonesty that
could injure the goodwill, reputation, or business of any Fund or of RSIM, L.P.
or of any of their affiliates. RSIM, L.P. has also agreed not to exercise its
right to terminate the Sub-Advisory Agreement in respect of the Fund after that
three-year period except for cause so long as the investment performance of the
Fund meets certain criteria agreed upon by RSIM, L.P. and Elijah Asset
Management. Nothing in that agreement limits in any way the right of any Fund to
terminate a Sub-Advisory Agreement in accordance with its terms or the right or
ability of RSIM, L.P. to provide evaluations and recommendations to the Board of
Trustees as to Elijah Asset Management, its services, or its status as
sub-adviser to a Fund.
In its agreement with RSIM, L.P., Elijah Asset Management has agreed to
limit its management of other mutual funds comparable to the Information Age and
Value + Growth Funds.
EASTBOURNE MANAGEMENT, L.L.C.
Eastbourne is a newly formed Delaware limited liability company; its sole
managing member and owner of a majority of the outstanding membership interest
is Rick Barry, who currently serves as a member of the portfolio management team
for The Contrarian Fund-TM-. Mr. Barry owns the majority of the outstanding
membership interest in Eastbourne; certain employees of Eastbourne own the
remaining membership interests.
Currently, RSIM, L.P. allocates a portion of The Contrarian Fund's
assets for management by Eastbourne in circumstances where RSIM, L.P.
believes that management of those assets by Eastbourne would be in the best
interest of the Fund. RSIM, L.P. allocates a portion of the Fund's assets to
Eastbourne in circumstances where, for example, RSIM, L.P. believes that an
increase in, or change to, the Fund's short positions might be desirable, or
where it believes that long investments by the Fund might be desirable in
sectors or companies where Eastbourne might offer a successful investment
program. Under the Sub-Advisory Agreement, RSIM, L.P. pays a fee to
Eastbourne in an amount equal to 40% of the fees received by RSIM, L.P. under
its Investment Advisory Agreement with the Fund in respect of assets
allocated to Eastbourne.
The Sub-Advisory Agreement with Eastbourne may be terminated (i) at any
time without penalty by the Trust, upon the vote of a majority of the Trust's
Trustees or by vote of the majority of the outstanding voting securities of The
Contrarian Fund-TM-, upon 60 days written notice to Eastbourne and RSIM, L.P.,
(ii) by RSIM, L.P. at any time without penalty, upon 60 days written notice to
Eastbourne and the Trust, or (iii) by Eastbourne at any time without penalty,
upon 60 days written notice to RSIM, L.P. and the Trust. The Sub-Advisory
Agreement will continue in effect for a period of more than two years in respect
of the Fund only if its continuance is approved annually by the Board of
Trustees of the Trust or the shareholders of the Fund and by the disinterested
Trustees of the Trust.
Eastbourne may from time to time place limits on the amount of assets it
will manage for The Contrarian Fund-TM- and other clients of RSIM, L.P. for the
purpose of making "short" investments; currently, Eastbourne has fixed that
limit at $50 million.
MANAGEMENT AND ADMINISTRATIVE FEES
MANAGEMENT FEES. The Funds pay RS Investment Management fees as
compensation for the services provided by it under the Advisory Agreements. The
amount of these management fees is calculated daily and payable monthly at the
following annual rates based on the average daily net assets of each Fund:
The Contrarian Fund-TM- 1.50%
Diversified Growth Fund 1.00%
B-29
<PAGE>
Emerging Growth Fund 1.00%
Global Natural Resources Fund 1.00%
Global Value Fund 1.00%
Growth & Income Fund 1.00%
Information Age Fund-TM- 1.00%
MicroCap Growth Fund 1.25%
Partners Fund 1.25%
Value + Growth Fund 1.00%
These management fees are higher than those paid by most other investment
companies. RS Investment Management also may at its discretion from time to
time pay Fund expenses from its own assets, or reduce the management fee of a
Fund.
ADMINISTRATIVE SERVICES. The Diversified Growth Fund, Global Natural
Resources Fund, Global Value Fund, Growth & Income Fund, The Information
Age Fund-TM-, and MicroCap Growth Fund have entered into an Administrative
Services Agreement with RSIM, L.P., pursuant to which RSIM, L.P. continuously
provides business management services to the Funds and generally manages all
of the business and affairs of the Funds, subject to the general oversight of
the Trustees. No fees are payable by these Funds under the Administrative
Services Agreement.
The Administrative Services Agreement is subject to annual approval,
commencing in 2001, by (i) the Board of Trustees, and (ii) the vote of a
majority of the Trustees who are not "interested persons" (as defined in the
1940 Act). The Administrative Services Agreement may be terminated without
penalty, by the Trust or by the vote of a majority of the outstanding voting
securities (as defined in the 1940 Act) of the affected Fund, on 30 days notice
to RSIM, L.P.
RECENT MANAGEMENT AND ADMINISTRATIVE FEES PAID BY THE FUNDS.
<TABLE>
<CAPTION>
Reimbursement Administration
Management Fees(1) of Expenses(2) Fees(3)
------------------ -------------- --------------
<S> <C> <C> <C>
THE CONTRARIAN FUND-TM-
Year ended 12/31/96 $13,472,471 -- --
Year ended 12/31/97 $13,674,978 -- --
Year ended 12/31/98 $3,977,993 -- --
DIVERSIFIED GROWTH FUND
8/1/96 - 12/31/96 $135,953 $22,771 $33,988
Year ended 12/31/97 $646,730 $126,477 $161,683
Year ended 12/31/98 $734,620 $151,559 $82,199
EMERGING GROWTH FUND
Year ended 12/31/96 $1,805,586 -- --
Year ended 12/31/97 $2,277,624 -- --
Year ended 12/31/98 $2,833,019 -- --
GLOBAL NATURAL RESOURCES FUND
Year ended 12/31/96 $487,594 $107,877 $121,899
Year ended 12/31/97 $1,438,918 $9,044 $359,729
Year ended 12/31/98 $507,251 $132,665 $69,681
GLOBAL VALUE FUND
4/1/97 - 12/31/97 $130,016 $163,698 $32,504
Year ended 12/31/98 $169,479 $175,876 $21,758
</TABLE>
B-30
<PAGE>
<TABLE>
<CAPTION>
Reimbursement Administration
Management Fees(1) of Expenses(2) Fees(3)
------------------ -------------- --------------
<S> <C> <C> <C>
GROWTH & INCOME FUND
Year ended 12/31/96 $2,462,636 $140,905 $615,659
Year ended 12/31/97 $2,972,467 $1,235,367 $743,117
Year ended 12/31/98 $2,451,091 $853,895 $288,447
THE INFORMATION AGE FUND-TM-
Year ended 12/31/96 $720,640 -- $180,160
Year ended 12/31/97 $1,234,823 -- $308,706
Year ended 12/31/98 $1,177,214 -- $126,941
MICROCAP GROWTH FUND
8/15/96 - 12/31/96 $25,237 $67,948 $5,047
Year ended 12/31/97 $530,205 $274,052 $106,041
Year ended 12/31/98 $1,386,701 $104,172 $126,373
PARTNERS FUND
Year ended 12/31/96 $514,459 $91,703 --
Year ended 12/31/97 $2,580,567 $1,746 --
Year ended 12/31/98 $1,496,310 $236,741 --
VALUE + GROWTH FUND
Year ended 12/31/96 $8,168,685 -- --
Year ended 12/31/97 $7,509,306 -- --
Year ended 12/31/98 $7,015,541 -- --
</TABLE>
(1) Before giving effect to any reimbursement or waiver by RSIM, L.P. or
RSIM, Inc.
(2) Includes amount of management fees waived or reimbursed by RSIM, L.P.
or RSIM, Inc. plus the amount of any other expenses for which RSIM, L.P. or
RSIM, Inc. reimbursed the Fund or which RSIM, L.P. or RSIM, Inc. bore on
behalf of the Fund.
(3) On May 26, 1998, the Administrative Services Agreement between the
Trust on behalf of certain of the Funds and RSIM, L.P. was amended to
provide that no fee is payable by the Funds under that Agreement. Prior to
such date, certain of the Funds paid fees under the Administrative Services
Agreement at an annual rate of 0.25% of a Fund's average daily net assets.
EXPENSES
Each Fund will pay all expenses related to its operation which are not
borne by an Adviser, including but not limited to taxes, interest, brokerage
fees and commissions, compensation paid to Provident Distributors, Inc., Four
Falls Corporate Center, 6th Floor, West Conshohocken, Pennsylvania 19428
("Provident" or the "Distributor"), the Trust's distributor, under the Funds'
12b-1 Plan, fees paid to members of the Board of Trustees who are not officers,
directors, stockholders, or employees of an Adviser or Provident, SEC fees and
related expenses, state Blue Sky qualification fees, charges of custodians,
transfer agents, registrars or other agents, outside auditing, accounting, and
legal services, charges for the printing of prospectuses and statements of
additional information for regulatory purposes or for distribution to
shareholders, certain shareholder report charges, and charges relating to
corporate matters.
PORTFOLIO TRANSACTIONS AND BROKERAGE
Investment decisions for the Funds and for the other investment advisory
clients of an Adviser and its affiliates are made with a view to achieving their
respective investment objectives. Investment decisions are the product of many
factors in addition to basic suitability for the particular client involved.
Thus, a particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In some instances, one client
may sell a particular security to another client. It also sometimes
B-31
<PAGE>
happens that two or more clients simultaneously purchase or sell the same
security, in which event each day's transactions in such security are, insofar
as possible, averaged as to price and allocated between such clients in a manner
which in the Adviser's opinion is equitable to each and in accordance with the
amount being purchased or sold by each. There may be circumstances when
purchases or sales of portfolio securities for one or more clients will have an
adverse effect on other clients. Each Adviser employs professional staffs of
portfolio managers who draw upon a variety of resources for research information
for the Funds.
Transactions on U.S. stock exchanges, commodities markets, and futures
markets and other agency transactions involve the payment by a Fund of
negotiated brokerage commissions. Such commissions vary among different
brokers. A particular broker may charge different commissions according to such
factors as the difficulty and size of the transaction. Transactions in foreign
investments often involve the payment of fixed brokerage commissions, which may
be higher than those in the United States. There is generally no stated
commission in the case of securities traded in the over-the-counter markets, but
the price paid by the Trust usually includes an undisclosed dealer commission or
mark-up. In underwritten offerings, the price paid by the Trust includes a
disclosed, fixed commission or discount retained by the underwriter or dealer.
It has for many years been a common practice in the investment advisory
business for advisers of investment companies and other institutional investors
to receive brokerage and research services (as defined in the Securities
Exchange Act of 1934, as amended (the "1934 Act")) from broker-dealers that
execute portfolio transactions for the clients of such advisers and from third
parties with which such broker-dealers have arrangements. Consistent with this
practice, the Advisers receive brokerage and research services and other similar
services from many broker-dealers with which they place a Fund's portfolio
transactions and from third parties with which these broker-dealers have
arrangements. These services include such matters as general economic and
market reviews, industry and company reviews, evaluations of investments,
recommendations as to the purchase and sale of investments, newspapers,
magazines, pricing services, quotation services, news services, and personal
computers utilized by an Adviser's managers and analysts. Where the services
referred to above are not used exclusively by an Adviser for research purposes,
the Adviser, based upon its own allocations of expected use, bears that portion
of the cost of these services which directly relates to its non-research use.
Some of these services are of value to an Adviser and its affiliates in advising
various of its clients (including the Funds), although not all of these services
are necessarily useful and of value in managing the Funds. The management fee
paid by a Fund is not reduced because an Adviser or its affiliates receive these
services even though the Adviser might otherwise be required to purchase some of
these services for cash.
The Advisers place all orders for the purchase and sale of portfolio
investments for the Funds and buy and sell investments for the Funds through a
substantial number of brokers and dealers. Each Adviser seeks the best overall
terms available for the Funds, except to the extent an Adviser may be permitted
to pay higher brokerage commissions as described below. In doing so, an
Adviser, having in mind a Fund's best interests, considers all factors it deems
relevant, including, by way of illustration, price, the size of the transaction,
the nature of the market for the security or other investment, the amount of the
commission, the timing of the transaction taking into account market prices, and
trends, the reputation, experience, and financial stability of the broker-dealer
involved and the quality of service rendered by the broker-dealer in other
transactions.
As permitted by Section 28(e) of the 1934 Act, an Adviser may cause a Fund
to pay a broker-dealer which provides "brokerage and research services" (as
defined in the 1934 Act) to the Adviser an amount of disclosed commission for
effecting securities transactions on stock exchanges and other transactions for
the Fund on an agency basis in excess of the commission which another
broker-dealer would have charged for effecting that transaction. An Adviser's
authority to cause a Fund to pay any such greater commissions is also subject to
such policies as the Trustees may adopt from time to time. None of the Advisers
currently intends to cause the Funds to make such payments. It is the position
of the staff of the Securities and Exchange Commission that Section 28(e) does
not apply to the payment of such greater commissions in "principal"
transactions. Accordingly, the Advisers will use their best efforts to obtain
the best overall terms available with respect to such transactions.
The following tables provide information regarding brokerage commissions
paid by the Funds for the periods indicated.
B-32
<PAGE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
THE CONTRARIAN FUND-TM- ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ----------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 77% 61%
involving brokerage commissions
Dollar amount of commissions $2,654,377 $3,072,174
Percentage (dollar amount) paid 0.3%($2,370) 0.6%($16,986) 1%($27,230)
to Robertson, Stephens & Company
LLC ("RS&Co.")/BancAmerica
Robertson Stephens
("BARS")/NationsBanc Montgomery
Securities/("NMS")
Percentage of brokerage transactions 3% 1%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 23% 39%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR PERIOD
RS DIVERSIFIED GROWTH FUND ENDED 12/31/98 ENDED 12/31/97 8/1/96 - 12/31/96
- -------------------------- -------------- -------------- -----------------
<S> <C> <C> <C>
Percentage of total transactions 46% 57%
involving brokerage commissions
Dollar amount of commissions $611,542 $125,233
Percentage (dollar amount) paid 4.3%($40,890) 9.6%($58,721) 13% ($16,648)
to RS&Co./BARS/NMS
Percentage of brokerage transactions 8% 20%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 54% 43%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
EMERGING GROWTH FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- -------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 40% 27%
involving brokerage commissions
Dollar amount of commissions $892,322 $479,020
Percentage (dollar amount) paid to 12.3%($74,833) 10.0%($89,505) 5% ($23,895)
RS&Co./BARS/NMS
B-33
<PAGE>
Percentage of total transactions 77% 61%
Percentage of brokerage transactions 6% 2%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 60% 73%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
VALUE + GROWTH FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 58% 53%
involving brokerage commissions
Dollar amount of commissions $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 3% 8%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 42% 47%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
GLOBAL NATURAL FISCAL YEAR FISCAL YEAR FISCAL YEAR
RESOURCES FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- -------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 82% 69%
involving brokerage commissions
Dollar amount of commissions $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 0.4% 2%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 18% 31%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR PERIOD
GLOBAL VALUE FUND ENDED 12/31/98 2/20/97-12/31/97
- ----------------- -------------- ----------------
<S> <C> <C>
Percentage of total transactions 73%
involving brokerage commissions
Dollar amount of commissions $99,195
Percentage (dollar amount) paid to 0.9%($1,555) 1.0%($980)
RS&Co./BARS/NMS
B-34
<PAGE>
Percentage of brokerage transactions 3%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 27%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
GROWTH & INCOME FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- -------------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 55% 44%
involving brokerage commissions
Dollar amount of commissions $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 9% 6%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 45% 56%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
INFORMATION AGE FUND-TM- ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------------------ -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 24% 22%
involving brokerage commissions
Dollar amount of commissions $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 3% 3%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 76% 78%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
MICROCAP FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 6% 5%
involving brokerage commissions
Dollar amount of commissions $62,898 $1,800
B-35
<PAGE>
Percentage (dollar amount) paid to 2.39%($1,332) 0% 0%
RS&Co./BARS/NMS
Percentage of brokerage transactions 0% 0%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 94% 95%
without brokerage commissions
</TABLE>
<TABLE>
<CAPTION>
FISCAL YEAR FISCAL YEAR FISCAL YEAR
PARTNERS FUND ENDED 12/31/98 ENDED 12/31/97 ENDED 12/31/96
- ------------- -------------- -------------- --------------
<S> <C> <C> <C>
Percentage of total transactions 81% 63%
involving brokerage commissions
Dollar amount of commissions $599,656 $143,042
Percentage (dollar amount) paid to 0%($0) 0.5%($2,965) 0.5% ($680)
RS&Co./BARS/NMS
Percentage of brokerage transactions 0.4% 1%
effected through RS&Co./BARS/NMS
Percentage of transactions effected 19% 37%
without brokerage commissions
</TABLE>
THE FUNDS' DISTRIBUTOR
Each of the Funds has adopted a Distribution Plan under Rule 12b-l of the
1940 Act (the "Plan") in respect of its Class A Shares. Pursuant to the Plan,
each Fund may pay Provident, from the assets attributable to the Fund's Class A
shares, distribution fees, for services Provident renders and costs and expenses
it incurs in connection with the promotion and distribution of the Fund's
shares, at an annual rate of 0.25% of the Fund's average daily net assets. (The
Contrarian Fund-TM- may pay fees under the Plan at a rate of up to 0.75% of the
Fund's average daily net assets; the Board of Trustees has currently limited
payments under the Plan by that Fund to a rate of 0.25% of the Fund's average
daily net assets.) Such expenses may include, but are not limited to, costs of
advertising and promoting the sale of shares of the Funds and payments to
dealers, financial institutions, advisers, or other firms. They also include
Provident's overhead expenses attributable to the distribution of each Fund's
shares, which may include, for example, expenses for office space,
communications, and salaries of Provident personnel, and any other of
Provident's expenses attributable to the distribution of the Funds' shares.
Affiliates of RSIM, L.P. provide certain services to Provident in respect of the
promotion of the shares of the Funds. In return for those services, Provident
pays to these affiliates substantially all of the payments received by Provident
under the Plan. The Plan is a "compensation" plan.
RECENT PAYMENTS UNDER THE FUNDS' CLASS A DISTRIBUTION PLAN **
<TABLE>
<CAPTION>
The Contrarian Fund-TM- Distribution Fees Waiver
- ----------------------- ----------------- ------
<S> <C> <C>
Year ended 12/31/96 $6,736,236 --
Year ended 12/31/97 $6,816,512 --
Year ended 12/31/98 $1,050,953 --
</TABLE>
- ------------------
** Distribution fees were paid to Edgewood Services, Inc., the Funds'
distributor until December 31, 1998 ("Edgewood"). No payments were made under
the Funds' Class C Plan during fiscal 1996.
B-36
<PAGE>
<TABLE>
<CAPTION>
DIVERSIFIED GROWTH FUND
<S> <C> <C>
8/1/96 - 12/31/96 $33,988 --
Year ended 12/31/97 $161,523 --
Year ended 12/31/98 $181,969 --
EMERGING GROWTH FUND
Year ended 12/31/96 $451,396 --
Year ended 12/31/97 $569,136 --
Year ended 12/31/98 $706,777 --
GLOBAL NATURAL RESOURCES FUND
Year ended 12/31/96 $121,899 --
Year ended 12/31/97 $359,714 --
Year ended 12/31/98 $126,725 --
GLOBAL VALUE FUND
2/20/97 - 12/31/97 $31,862 --
Year ended 12/31/98 $41,710 --
GROWTH & INCOME FUND
Year ended 12/31/96 $615,659 --
Year ended 12/31/97 $742,070 --
Year ended 12/31/98 $608,595 --
THE INFORMATION AGE FUND-TM-
Year ended 12/31/96 $180,160 --
Year ended 12/31/97 $308,650 --
Year ended 12/31/98 $293,961 --
MICROCAP GROWTH FUND
8/15/96 - 12/31/96 $5,047 --
Year ended 12/31/97 $105,123 --
Year ended 12/31/98 $274,092 --
PARTNERS FUND
Year ended 12/31/96 $102,892 --
Year ended 12/31/97 $514,757 --
Year ended 12/31/98 $297,791 --
VALUE + GROWTH FUND
Year ended 12/31/96 $2,042,076 --
Year ended 12/31/97 $1,876,469 --
Year ended 12/31/98 $1,750,301 --
<CAPTION>
RECENT PAYMENTS UNDER THE FUNDS' CLASS C DISTRIBUTION PLAN**(1):
<S> <C> <C>
THE CONTRARIAN FUND-TM- Distribution Fees Waiver
4/14/97 - 12/31/97 $20,977 --
Year ended 12/31/98 $18,507 --
B-37
<PAGE>
DIVERSIFIED GROWTH FUND
9/10/97 - 12/31/97 $478 --
Year ended 12/31/98 $5,057 --
EMERGING GROWTH FUND
5/8/97 - 12/31/97 $811 --
Year ended 12/31/98 $4,433 --
GLOBAL NATURAL RESOURCES FUND
7/30/97 - 12/31/97 $48 --
Year ended 12/31/98 $263 --
GLOBAL VALUE FUND
6/30/97 - 12/31/97 $1,926 --
Year ended 12/31/98 $1,893 --
GROWTH & INCOME FUND
5/9/97 - 12/31/97 $3,140 --
Year ended 12/31/98 $12,533 --
THE INFORMATION AGE FUND-TM-
7/11/97 - 12/31/97 $167 --
Year ended 12/31/98 $1,029 --
MICROCAP GROWTH FUND
6/18/97 - 12/31/97 $2,755 --
Year ended 12/31/98 $9,744 --
PARTNERS FUND
4/14/97 - 12/31/97 $4,068 --
Year ended 12/31/98 $4,414 --
VALUE + GROWTH FUND
5/28/97 - 12/31/97 $2,570 --
Year ended 12/31/98 $10,753 --
</TABLE>
(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.
** 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 CONTINGENT DEFERRED SALES CHARGES ("CDSC") RECEIVED FOR
CLASS C SHARES(1):
The Funds paid CDSCs during fiscal 1997 and 1998 in the following amounts:
<TABLE>
<CAPTION>
THE CONTRARIAN FUND-TM- CDSC PAID
<S> <C>
4/14/97 - 12/31/97 $5,351.73
Year ended 12/31/98 $18,057.11
B-38
<PAGE>
DIVERSIFIED GROWTH FUND
9/10/97 - 12/31/97 $45.32
Year Ended 12/31/98 $344.44
EMERGING GROWTH FUND
5/8/97 - 12/31/97 $108.62
Year ended 12/31/98 $2,563.77
GLOBAL NATURAL RESOURCES FUND
7/30/97 - 12/31/97 $32.13
Year ended 12/31/98 $0
GLOBAL VALUE FUND
6/30/97 - 12/31/97 $522.73
Year ended 12/31/98 $662.95
GROWTH & INCOME FUND
5/9/97 - 12/31/97 $105.01
Year ended 12/31/98 $2,154.00
THE INFORMATION AGE FUND-TM-
7/11/97 - 12/31/97 $34
Year ended 12/31/98 $2,105.76
MICROCAP GROWTH FUND
6/18/97 - 12/31/97 $438.82
Year ended 12/31/98 $2,579.04
PARTNERS FUND
4/14/97 - 12/31/97 $958.57
Year ended 12/31/98 $1,543.46
VALUE + GROWTH FUND
5/28/97 - 12/31/97 $4,958.15
Year ended 12/31/98 $3,006.03
</TABLE>
(1)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 of each class of its
shares once daily, as of 4:30 p.m. eastern time, on each day the New York Stock
Exchange (the "Exchange") is open. The Exchange is closed Saturdays, Sundays,
New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good Friday,
Memorial Day, the Independence Day (observed), Labor Day, Thanksgiving, and
Christmas.
Securities for which market quotations are readily available are valued
using the last reported sale price or, if no sales are reported (as in the case
of some securities traded over-the-counter), at the mean between the closing bid
and asked prices, except that certain U.S. Government securities are stated at
the mean between the last reported bid and asked prices. Short-term investments
having remaining maturities of 60 days or less are stated at amortized cost,
which approximates market value. All other securities and assets are valued at
their fair value following procedures approved by the Trustees.
B-39
<PAGE>
Reliable market quotations are not considered to be readily available for
long-term corporate bonds and notes, certain preferred stocks, or certain
foreign securities. These investments are stated at fair value on the basis of
valuations furnished by pricing services, which determine valuations for normal,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships between
securities which are generally recognized by institutional traders.
If any securities held by a Fund are restricted as to resale, their fair
value is determined in accordance with the guidelines and procedures adopted by
the Trust's Board of Trustees. The fair value of such securities is generally
determined as the amount which a Fund could reasonably expect to realize from an
orderly disposition of such securities over a reasonable period of time. The
valuation procedures applied in any specific instance are likely to vary from
case to case. However, consideration is generally given to the financial
position of the issuer and other fundamental analytical data relating to the
investment and to the nature of the restrictions on disposition of the
securities (including any registration expenses that might be borne by the Fund
in connection with such disposition). In addition, specific factors are also
generally considered, such as the cost of the investment, the market value of
any unrestricted securities of the same class (both at the time of purchase and
at the time of valuation), the size of the holding, the prices of any recent
transactions or offers with respect to such securities, and any available
analysts' reports regarding the issuer.
Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset
value of a Fund's shares are computed as of such times. Also, because of the
amount of time required to collect and process trading information as to large
numbers of securities issues, the values of certain securities (such as
convertible bonds and U.S. Government securities) are determined based on market
quotations collected earlier in the day at the latest practicable time prior to
the close of the Exchange. Occasionally, events affecting the value of such
securities may occur between such times and the close of the Exchange which will
not be reflected in the computation of a Fund's net asset value. If events
materially affecting the value of such securities occur during such period, then
these securities will be valued at their fair value following procedures
approved by the Trustees.
TAXES
Each Fund intends to qualify each year and elect to be taxed as a regulated
investment company under Subchapter M of the United States Internal Revenue Code
of 1986, as amended (the "Code").
As a regulated investment company qualifying to have its tax liability
determined under Subchapter M, a Fund would not be subject to federal income tax
on any of its net investment income or net realized capital gains that are
distributed to shareholders.
In order to qualify as a "regulated investment company," a Fund must, among
other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies
and (b) diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the total assets
of the Fund and not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
B-40
<PAGE>
securities of any issuer (other than U.S. Government securities). In order to
receive the favorable tax treatment accorded regulated investment companies and
their shareholders, moreover, a Fund must in general distribute with respect to
each taxable year at least 90% of the sum of its taxable net investment income,
its net tax-exempt income, and the excess, if any, of net short-term capital
gains over net long-term capital gains.
An excise tax at the rate of 4% will be imposed on the excess, if any, of
each Fund's "required distribution" over its actual distributions in any
calendar year. Generally, the "required distribution" is 98% of the Fund's
ordinary income for the calendar year plus 98% of its capital gain net income
recognized during the one-year period ending on October 31 (or December 31, if
the Fund so elects) plus undistributed amounts from prior years. Each Fund
intends to make distributions sufficient to avoid imposition of the excise tax.
Distributions declared by a Fund during October, November, or December to
shareholders of record on a date in any such month and paid by the Fund during
the following January will be treated for federal tax purposes as paid by the
Fund and received by shareholders on December 31 of the year in which declared.
With respect to investment income and gains received by a Fund from sources
outside the United States, such income and gains may be subject to foreign taxes
which are withheld at the source. Thus, a Fund's yield on foreign investments
would be decreased by such taxes. The effective rate of foreign taxes to which
a Fund will be subject depends on the specific countries in which its assets
will be invested and the extent of the assets invested in each such country and
therefore cannot be determined in advance.
If a Fund engages in hedging transactions, including hedging transactions
in options, futures contracts, and straddles, or other similar transactions, it
will be subject to special tax rules (including constructive sale, mark-to-
market, straddle, wash sale, and short sale rules), the effect of which may be
to accelerate income to the Fund, defer losses to the Fund, cause adjustments in
the holding periods of the Fund's securities, convert long-term capital gains
into short-term capital gains, or convert short-term capital losses into long-
term capital losses. These rules could therefore affect the amount, timing and
character of distributions to shareholders. Each Fund will endeavor to make any
available elections pertaining to such transactions in a manner believed to be
in the best interests of the Fund.
A Fund's transactions in foreign currencies, foreign currency-denominated
debt securities and certain foreign currency options, futures contracts and
forward contracts (and similar instruments) may give rise to ordinary income or
loss to the extent such income or loss results from fluctuations in the value of
the foreign currency concerned.
A Fund's transactions in foreign currency-denominated debt instruments and
its hedging activities will likely produce a difference between its book income
and its taxable income. This difference may cause a portion of the Fund's
distributions of book income to constitute returns of capital for tax purposes
or require the Fund to make distributions exceeding book income in order to
permit the Fund to continue to qualify, and be taxed under Subchapter M of the
Code, as a regulated investment company.
Under federal income tax law, a portion of the difference between the
purchase price of zero-coupon securities in which a Fund has invested and their
face value ("original issue discount") is considered to be income to the Fund
each year, even though the Fund will not receive cash interest payments from
these securities. This original issue discount (imputed income) will comprise a
part of the net investment income of the Fund which must be distributed to
shareholders in order to maintain the qualification of the Fund as a regulated
investment company and to avoid federal income tax at the level of the Fund.
Thus, a Fund could be required at times to liquidate other investments in order
to satisfy its distribution requirements.
A Fund generally is required to withhold and remit to the U.S. Treasury
31% of the taxable dividends and other distributions paid to non-corporate
shareholders who fail to furnish the Fund with a correct taxpayer identification
number, who have underreported dividends or interest income, or who fail to
certify to the Fund that they are not subject to such withholding. An
individual's taxpayer identification number is his or her social security
number. Tax-exempt shareholders are not subject to these back-up withholding
rules so long as they furnish the Fund with a proper certification.
Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be
B-41
<PAGE>
subject to a U.S. withholding tax at a rate of 30% on a Fund's distributions
from its ordinary income and the excess of its net short-term capital gain over
its net long-term capital loss, unless the tax is reduced or eliminated by an
applicable tax treaty. Distributions from the excess of the Fund's net capital
gain received by such shareholders and any gain from the sale or other
disposition of shares of the Fund generally will not be subject to U.S. Federal
income taxation, provided that non-resident alien status has been certified by
the shareholder. Different U.S. tax consequences may result if the shareholder
is engaged in a trade or business in the United States, is present in the United
States for a sufficient period of time during a taxable year to be treated as a
U.S. resident, or fails to provide any required certifications regarding status
as a non-resident alien investor. Foreign shareholders should consult their tax
advisors regarding the U.S. and foreign tax consequences of an investment in the
Fund.
The IRS recently revised its regulations affecting the application to
foreign investors of the back-up withholding and withholding tax rules described
above. The new regulations will generally be effective for payments made on or
after January 1, 2000 (although transition rules will apply). In some
circumstances, the new rules will increase the certification and filing
requirements imposed on foreign investors in order to qualify for exemption from
31% back-up withholding tax and for reduced withholding tax rates under income
tax treaties. Foreign investors in each Fund should consult their tax advisors
with respect to the potential application of these new regulations.
The foregoing is a general and abbreviated summary of the applicable
provisions of the Code and related regulations currently in effect. For the
complete provisions, reference should be made to the pertinent Code sections and
regulations. The Code and regulations are subject to change by legislative or
administrative actions. Dividends and distributions also may be subject to
local, state and foreign taxes. Shareholders are urged to consult their tax
advisers regarding specific questions as to federal, state, local, and foreign
taxes. The foregoing discussion relates solely to U.S. federal income tax law.
Non-U.S. investors should consult their tax advisers concerning the tax
consequences of ownership of shares of the Fund. Statements as to the tax
status of distributions will be mailed annually.
HOW PERFORMANCE IS DETERMINED
STANDARDIZED PERFORMANCE INFORMATION
Average annual total return of a class of shares of a Fund for one-, five-,
and ten-year periods (or for such shorter periods as shares of that class of
shares of the Fund have been offered) is determined by calculating the actual
dollar amount of investment return on a $1,000 investment in that class of
shares at the beginning of the period, and then calculating the annual
compounded rate of return which would produce that amount. Total return for a
period of one year or less is equal to the actual return of that class of shares
during that period. Total return calculations assume reinvestment of all Fund
distributions at net asset value on their respective reinvestment dates. Total
return may be presented for other periods.
At times, RS Investment Management may reduce its compensation or assume
expenses of the Fund in order to reduce the Fund's expenses. Any such fee
reduction or assumption of expenses would increase the Fund's total return
during the period of the fee reduction or assumption of expenses.
All data are based on past performance and do not predict future results.
PERFORMANCE INFORMATION
Yield and total return data for a Fund's Class A shares may from time to
time be included in advertisements about the Funds. A Fund's "yield" is
calculated by dividing the annualized net investment income per Class A share
during a recent 30-day period by the net asset value per Class A share on the
last day of that period. "Total return" for one-, five-, and ten-year periods,
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 Class A shares. Total return may also be presented for other
B-42
<PAGE>
periods. Quotations of yield or total return for a period when an expense
limitation was in effect will be greater than if the limitation had not been in
effect. A Fund's performance may be compared to various indices. Information may
be presented in advertisements about a Fund describing the background and
professional experience of the Fund's investment advisor or any portfolio
manager.
All data are based on a Fund's past investment results and do not predict
future performance. Investment performance, which will vary, is based on many
factors, including market conditions, the composition of the Fund's portfolio,
and the Fund's investments expenses. Investment performance also often reflects
the risks associated with a Fund's investment objective and policies. These
factors should be considered when comparing a Fund's investment results to those
of other mutual funds and other investment vehicles.
The average annual total returns of the Class A shares of each of the Funds
for the periods indicated through December 31, 1998 are set forth below.
<TABLE>
<CAPTION>
THE CONTRARIAN FUND-TM-
<S> <C>
Year ended December 31, 1998 (32.51)%
Five years ended December 31, 1998 (6.47)%
From inception (6/30/93) through December 31, 1998 (3.96)%
DIVERSIFIED GROWTH FUND
Year ended December 31, 1998 16.28%
From inception (8/1/96) through December 31, 1998 29.55%
EMERGING GROWTH FUND
Year ended December 31, 1998 28.02%
Five years ended December 31, 1998 19.09%
Ten years ended December 31, 1998 20.18%
GLOBAL NATURAL RESOURCES FUND
Year ended December 31, 1998 (34.45)%
From inception (11/15/95) through December 31, 1998 (7.78)%
GLOBAL VALUE FUND
Year ended December 31, 1998 11.11%
From inception (4/1/97) through December 31, 1998 17.84%
GROWTH & INCOME FUND
Year ended December 31, 1998 11.65%
From inception (7/12/95) through December 31, 1998 20.42%
INFORMATION AGE FUND-TM-
Year ended December 31, 1998 52.20%
From inception (11/15/95) through December 31, 1998 22.85%
MICROCAP GROWTH FUND
Year ended December 31, 1998 (0.63)%
From inception (8/15/96) through December 31, 1998 16.09%
PARTNERS FUND
Year ended December 31, 1998 (27.23)%
From inception (7/12/95) through December 31, 1998 7.31%
VALUE + GROWTH
B-43
<PAGE>
Year ended December 31, 1998 27.44%
Five years ended December 31, 1998 23.80%
From inception (5/12/92) through December 31, 1998 22.70%
</TABLE>
NON-STANDARDIZED TOTAL RETURN INFORMATION
From time to time, a Fund may present non-standardized total return
information, in addition to standardized performance information, which may
include such results as the growth of a hypothetical $10,000 investment in a
class of the Fund's shares, and cumulative total return. Cumulative total
return is calculated in a similar manner to average annual total return, except
that the results are not annualized. Each calculation assumes that all
dividends and distributions are reinvested at net asset value on the
reinvestment dates during the period.
INDICES AND PUBLICATIONS
A Fund may compare its performance with that of appropriate indices such as
the Standard & Poor's Composite Index of 500 stocks ("S&P 500"), Standard &
Poor's MidCap 400 Index ("S&P 400"), the NASDAQ Industrial Index, the NASDAQ
Composite Index, Russell 2000 Index, or other unmanaged indices so that
investors may compare such results with those of a group of unmanaged
securities. The S&P 500, the S&P 400, the NASDAQ Industrial Index, the NASDAQ
Composite Index, and the Russell 2000 Index are unmanaged groups of common
stocks traded principally on national securities exchanges and the over the
counter market, as the case may be. A Fund may also, from time to time, compare
its performance to other mutual funds with similar investment objectives and to
the industry as a whole, as quoted by rating services and publications, such as
Lipper Analytical Services, Inc., Morningstar Mutual Funds, Forbes, Money, and
Business Week.
In addition, one or more portfolio managers or other employees of an
Adviser may be interviewed by print media, such as THE WALL STREET JOURNAL or
BUSINESS WEEK, or electronic news media, and such interviews may be reprinted or
excerpted for the purpose of advertising regarding the Fund.
RELATIVE VOLATILITY - BETA
From time to time a Fund may present a statistical measure of the
volatility of a Fund's performance relative to the volatility of the performance
of the S&P 500. A Fund calls this comparative measure its "beta." Beta is
approximate, because it is statistical, and is not necessarily indicative of
future fund performance volatility. Thus, if a Fund's portfolio volatility
perfectly represents that of the S&P 500, a Fund's beta would be 1.0. If a
Fund's beta is greater than 1.0, a Fund's portfolio would tend to represent a
greater market risk than the S&P 500 because a Fund's portfolio would tend to be
more sensitive to movements in the securities markets. For example, if a Fund's
beta is 1.1, a Fund's performance would tend to vary approximately 10% more than
would the performance of the S&P 500. If a Fund's beta is 0.9, a Fund's
performance would tend to vary 10% less than the performance of the S&P 500.
The correlation is not usually exact because, depending upon the diversification
of a Fund's portfolio, a beta of less than 1.0 may indicate only that the
portfolio is less sensitive to market movements, not that the Fund's portfolio
has low overall risk.
The beta included with any presentation of the Fund's performance data will be
calculated according to the following formula:
[EQUATION]
Where: n = number of months measured
B-44
<PAGE>
FT = rate of return on the Fund in month T
MT = rate of return on the market index, I.E., the S&P 500, in
month T
F = arithmetic average monthly rate of return of the Fund
M = arithmetic average monthly rate of return on the market
index, I.E., the S&P 500
ADDITIONAL INFORMATION
TRANSFER AGENT AND CUSTODIAN
State Street Bank and Trust Company, c/o National Financial Data Services,
at P.O. Box 419717, Kansas City, MO 64141, serves as the Funds' transfer agent
and dividend-paying agent ("Transfer Agent"). PFPC Trust Company ("PFPC
Trust"), 400 Bellevue Parkway, Wilmington, DE 19809, serves as the Funds'
custodian ("Custodian"). As Custodian, PFPC Trust and subcustodians approved by
the Board of Trustees hold the securities in the Funds' portfolios and other
assets for safekeeping. The Transfer Agent and Custodian do not participate in
making investment decisions for the Funds.
INDEPENDENT ACCOUNTANTS
PricewaterhouseCoopers LLP, 555 California Street, San Francisco,
California 94104, are the Trust's independent accountants, providing audit
services, tax return review, and other tax consulting services and assistance
and consultation in connection with the review of various Securities and
Exchange Commission filings.
SHAREHOLDER LIABILITY
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Trust. However, the
Agreement and Declaration of Trust disclaims shareholder liability for acts or
obligations of the Trust and requires that notice of such disclaimer be given in
each agreement, obligation, or instrument entered into or executed by the Trust
or the Trustees. The Agreement and Declaration of Trust provides for
indemnification out of a Fund's property for all loss and expense of any
shareholder held personally liable for the obligations of that Fund. Thus the
risk of a shareholder's incurring financial loss on account of shareholder
liability is limited to circumstances in which the Fund would be unable to meet
its obligations.
B-45
<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
B-46
<PAGE>
payments are not made on the date due even if the applicable grace period has
not expired, unless S&P believes that such payments will be made during such
grace period. The "D" rating will also be used upon the filing of a bankruptcy
petition if debt service payments are jeopardized.
The ratings from "AA" to "CCC" may be modified by the addition of a plus or
minus to show relative standing within the major rating categories.
MOODY'S RATINGS
Aaa: Bonds which are rated Aaa are judged to be of the best quality. They carry
the smallest degree of investment risk and are generally referred to as "gilt
edge." Interest payments are protected by a large or by an exceptionally stable
margin and principal is secure. While the various protective elements are
likely to change, such changes as can be visualized are most unlikely to impair
the fundamentally strong position of such issues.
Aa: Bonds which are rated Aa are judged to be of high quality by all standards.
Together with the Aaa group they comprise what are generally known as high grade
bonds. They are rated lower than the best bonds because margins of protection
may not be as large as in Aaa securities or fluctuation of protective elements
may be of greater amplitude or there may be other elements present which make
the long-term risks appear somewhat larger than in Aaa securities.
A: Bonds which are rated A possess many favorable investment attributes and are
to be considered as upper medium grade obligations. Factors giving security to
principal and interest are considered adequate but elements may be present which
suggest a susceptibility to impairment sometime in the future.
Baa: Bonds which are rated Baa are considered as medium grade obligations, i.e.,
they are neither highly protected nor poorly secured. Interest payments and
principal security appear adequate for the present but certain protective
elements may be lacking or may be characteristically unreliable over any great
length of time. Such bonds lack outstanding investment characteristics and in
fact have speculative characteristics as well.
Ba: Bonds which are Ba are judged to have speculative elements; their future
cannot be considered as well assured. Often the protection of interest and
principal payments may be very moderate and thereby not well safeguarded during
both good and bad times over the future. Uncertainty of position characterizes
bonds in this class.
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked
shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
B-47
<PAGE>
FITCH RATINGS
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality.
The obligor"s ability to pay interest and repay principal is very strong,
although not quite as strong as bonds rated "AAA." Because bonds rate in the
"AAA" and "AA" categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated "F-1+."
A: Bonds considered to be investment grade and of high credit quality. The
obligor's ability to pay interest and repay principal is considered to be
strong, but may be more vulnerable to adverse changes in economic conditions and
circumstances than bonds with higher ratings.
BBB: Bonds considered to be investment grade and of satisfactory credit quality.
The obligor's ability to pay interest and repay principal is considered to be
adequate. Adverse changes in economic conditions and circumstances, however,
are more likely to have adverse impact on these bonds, and therefore impair
timely payment. The likelihood that the rating of these bonds will fall below
investment grade is higher than for bonds with higher ratings.
BB: Bonds are considered to be speculative. The obligor's ability to pay
interest and repay principal may be affected over time by adverse economic
changes. However, business and financial alternatives can be identified which
could assist the obligor in satisfying its debt service requirements.
B: Bonds are considered highly speculative. While bonds in this class are
currently meeting debt service requirements, the probability of continued timely
payment of principal and interest reflects the obligor's limited margin of
safety and the need for reasonable business and economic activity throughout the
life of the issues.
CCC: Bonds have certain identifiable characteristics that, if not remedied, may
lead to default. The ability to meet obligations requires an advantageous
business and economic environment.
CC: Bonds are minimally protected. Default in payment of interest and/or
principal seems probable.
C: Bonds are in imminent default in payment of interest or principal.
DDD, DD, and D: Bonds in default on interest and/or principal payments. Such
bonds are extremely speculative and should be valued on the basis of their
ultimate recovery value in liquidation or reorganization of the obligor. "DDD"
represents the highest potential for recovery on these bonds, and "D" represents
the lowest potential for recovery.
Note: Fitch ratings (other than the "AAA," "DDD," "DD," or "D" categories) may
be modified by the addition of a plus (+) or minus (-) sign to show relative
position of a credit within the rating category.
B-48
<PAGE>
FINANCIAL STATEMENTS
[To be filed by Amendment]
B-49
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS.
a(i). Amended and Restated Agreement and Declaration of Trust of
Registrant.*
a(ii). Amendment to Amended and Restated Agreement and Declaration of
Trust of Registrant.*
b. Copy of By-Laws of Registrant as amended through July 22, 1997.(G)
c(i). Specimen Share Certificate(A)
c(ii). Portions of Amended and Restated Agreement and Declaration of Trust
Relating to Shareholders' Rights.*
c(iii). Portions of By-laws Relating to Shareholders' Rights.*
d(i). Investment Advisory Agreement between RS Investment Management,
L.P. and Registrant (on behalf of each of The Contrarian Fund-TM-,
RS Diversified Growth Fund, RS Global Value Fund, RS Global Natural
Resources Fund, RS Growth & Income Fund, The Information Age
Fund-TM-, RS MicroCap Growth Fund, RS Partners Fund and RS
Value + Growth Fund. *
d(ii). Investment Advisory Agreement between RS Investment Management,
Inc. and Registrant (on behalf of RS Emerging Growth Fund).*
d(iii). Form of Investment Advisory Agreement between Robertson, Stephens &
Company Investment Management, L.P. and Registrant (on behalf of
RS International Fund).(H)
d(iv). Form of Investment Advisory Agreement between Robertson, Stephens &
Company Investment Management, L.P. and Registrant (on behalf of
RS Asia Fund).(I)
d(v). Form of Investment Advisory Agreement between Robertson, Stephens &
Company Investment Management, L.P. and Registrant (on behalf of
RS International Investors Fund).(I)
d(vi). Form of Investment Advisory Agreement between Robertson, Stephens &
Company Investment Management, L.P. and Registrant (on behalf of
RS Large Capitalization Equity Income Fund).(I)
d(vii). Form of Investment Advisory Agreement between Robertson, Stephens &
Company Investment Management, L.P. and Registrant (on behalf of
RS Large Capitalization Value Fund).(I)
d(viii). Form of Investment Advisory Agreement between Robertson, Stephens &
Company Investment Management, L.P. and Registrant (on behalf of
RS 50/500 Fund).(I)
d(ix). Sub-Advisory Agreement among RS Investment Management, L.P., Elijah
Asset Management, LLC and Registrant (on behalf of each of The
Information Age Fund-TM- and RS Value + Growth Fund).*
d(x). Sub-Advisory Agreement among RS Investment Management, L.P.,
Eastbourne Management, L.L.C. and the Registrant (on behalf of The
Contrarian Fund-TM-).*
e. Distribution Agreement with Provident Distributors, Inc.*
f. Inapplicable.
g. Form of Custodian Agreement between Registrant and PFPC Trust
Company.*
h(i). Administrative Services Agreement.*
h(ii). Form of Sub-Administration and Accounting Services Agreement
between Registrant and PFPC, Inc.*
i. Inapplicable.
<PAGE>
j. Consent of Independent Accountants.+
k. Inapplicable.
l. Letter of Understanding Relating to Initial Capital.(A,D)
m. Distribution Plan Pursuant to Rule 12b-1 dated September 30, 1997
(for Class A shares).(G)
n. Finanical Data Schedules for Period ending December 31, 1998.+
o. 18f-3 Plan.(F)
p. Power of Attorney.*
Incorporated by a reference to like-numbered exhibits:
(A) Previously filed as part of the Registration Statement filed
August 12, 1987.
(B) Previously filed as part of the Post-Effective Amendment No.
4 to the Registration Statement on May 1, 1991.
(C) Previously filed as part of the Post-Effective Amendment No.
6 to the Registration Statement on March 12, 1992.
(D) Previously filed as part of the Post-Effective Amendment No.
19 to the Registration Statement on July 5, 1994.
(E) Previously filed as part of the Post-Effective Amendment No.
21 to the Registration Statement on April 28, 1995.
(F) Previously filed as part of the Post-Effective Amendment No.
28 to the Registration Statement on March 24, 1997.
(G) Previously filed as part of the Post-Effective Amendment No.
30 to the Registration Statement on December 29, 1997.
(H) Previously filed as part of the Post-Effective Amendment No.
32 to the Registration Statement on March 12, 1998.
(I) Previously filed as part of the Post-Effective Amendment No.
33 to the Registration Statement on March 27, 1998.
* Filed herewith.
+ To be filed by Amendment.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not Applicable.
ITEM 25. INDEMNIFICATION
Under the terms of Registrant's By-laws, Article VI, Registrant is required,
subject to certain exceptions and limitations, to indemnify and insure its
trustees, officers, employees, agents and other persons who may be indemnified
by Registrant under the Investment Company Act of 1940 (the "1940 Act").
Insofar as indemnification for liabilities arising under the Securities Act is
permitted to trustees and officers and controlling persons of Registrant
pursuant to the foregoing provisions, or otherwise, Registrant has been advised
that in the opinion of the Securities and Exchange Commission, such
indemnification by Registrant is against public policy as expressed in the
Securities Act, and therefore may be unenforceable. In the event that a claim
for such indemnification (except insofar as it provides for the payment by
Registrant of expenses incurred or paid by a trustee, officer or controlling
person in the successful defense of any action, suit or proceeding) is asserted
against Registrant by any trustee, officer or controlling person and the
Securities and Exchange Commission is still of the same opinion, Registrant
will, unless in the opinion of its counsel the matter has been settled by a
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act, and will be governed by the final adjudication
of such issue.
The Trust, at its expense, provides liability insurance for the benefit of its
Trustees and officers.
ITEM 26. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
<PAGE>
Each of RS Investment Management, L.P. (formerly, Robertson, Stephens &
Company Investment Management, L.P.) ("RSIM, L.P."), RS Investment
Management, Inc. ("RSIM, Inc."), Elijah Asset Management, LLC and Eastbourne
Management, L.L.C. is engaged in the provision of investment advisory and
management services to mutual funds, private investment pools (including
hedge funds), and private accounts.
Information about G. Randall Hecht, the chief executive officer of RSIM, L.P.
and RSIM, Inc., is set forth in Part B herein. Information about James
Callinan, a managing director of RSIM, L.P. and RSIM, Inc. is set forth in
Part A herein. Information about Andrew P. Pilara, Jr., also a managing
director of RSIM, L.P. and RSIM, Inc. is set forth in Part B herein.
Paul H. Stephens, a managing director of RSIM, L.P. and RSIM, Inc., was
previously a founding partner, managing director, and chief investment
officer of Robertson, Stephens & Company LLC (now BancBoston Robertson
Stephens).
Information about Ronald E. Elijah, the sole managing member of Elijah Asset
Management, LLC, is set forth in Part A herein.
John McNiff, a member of Elijah Asset Management, has been a member of Golden
Gate Fund Management, an investment adviser, since December 1998. Mr. McNiff
has also been the managing director of Longwood Investment Advisors, Inc.
(Three Radnor Corp. Center, Radnor, PA), an investment adviser, since
December 1993. In addition Mr. McNiff is an indirect limited partner of
Chartwell Investment Partners (1235 Westlakes Drive, Suite 330, Berwyn, PA),
an investment adviser. Mr. McNiff serves as Director of both Longwood
Offshore Management, Ltd and Wineup Corp. (both at 1235 Westlakes Drive,
Suite 330, Berwyn, PA), both investment advisers. Mr. McNiff has served as an
officer of Trinity Capital Partners (Three Radnor Corp. Center, Radnor, PA),
an investment adviser, since July 1990. Mr. McNiff served as chairman of the
board of CAM Investment Advisors, Inc. (Three Radnor Corp. Center, Radnor,
PA), an investment adviser, until May 1998.
Mr. Rick Barry is a manager and member of Eastbourne Management,
L.L.C. ("Eastbourne"). Mr. Barry was previously a managing director of RS
Investment Management. Each of Mr. Chris Bonomo, Mr. Jim Carruthers, Jr., Ms.
Cathy O'Neill and Mr. Jeff Heely is a manager and member of Eastbourne.
ITEM 27. PRINCIPAL UNDERWRITERS.
(a) Provident Distributors, Inc., the Distributor for shares of the
Registrant, acts as principal underwriter for the following open-end
investment companies, including the Registrant: Pacific Horizon Funds,
Inc., Time Horizon Funds, World Horizon Funds, Inc., Pacific Innovations
Trust, International Dollar Reserve Fund I, Ltd., Municipal Fund for
Temporary Investment, Municipal Fund for New York Investors, Inc.,
Municipal Fund for California Investors, Inc., Temporary Investment Fund,
Inc., Trust for Federal Securities, Columbia Common Stock Fund, Inc.,
Columbia Growth Fund, Inc., Columbia International Stock Fund, Inc.,
Columbia Special Fund, Inc., Columbia Small Cap Fund, Inc., Columbia Real
Estate Equity Fund, Inc., Columbia Balanced Fund, Inc., Columbia Daily
Income Company, Columbia U.S. Government Securities Fund, Inc., Columbia
Fixed Income Securities Fund, Inc., Columbia Municipal Bond Fund, Inc.,
Columbia High Yield Fund, Inc., WT Mutual Fund, Kalmar Pooled Investment
Trust, The RBB Fund, Inc., RS Investment Trust, Hilliard-Lyons Government
Fund, Inc., Hilliard-Lyons Growth Fund, Inc., The Rodney Square Fund,
Inc., The Rodney Square Tax-Exempt Fund, Inc., The Rodney Square
Strategic Equity Fund, Inc., The Rodney Square Stategic Fixed-Income
Fund, Inc., The BlackRock Funds, Inc. (distributed by BlackRock
Distributors, Inc., a wholly owned subsidiary of Provident Distributors,
Inc.), The OffitBank Investment Fund, Inc. (distributed by Offit Funds
Distributor, Inc., a wholly owned subsidiary of Provident Distributors,
Inc.), The OffitBank Variable Insurance Fund, Inc. (distributed by Offit
Funds Distributor, Inc., a wholly owned subsidiary of Provident
Distributors, Inc.) and CVO Greater China Fund, Inc. (distributed by
Offit Funds Distributor, Inc., a wholly owned subsidiary of Provident
Distributors, Inc.).
(b) For information as to the business, profession, vocation or employment of
a substantial nature of each of the Distributor, its officers and
partners, reference is made to the Form BD filed by the Distributor (File
No. 8-46564), which is incorporated by reference herein.
(c) Inapplicable.
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS
The records required by Section 31(a) and Rule 31a-1 through 3 under the 1940
Act will be maintained by Registrant at its offices, 555 California Street, San
Francisco, CA 94104 except that pursuant to Rule 31a-3 under the 1940 Act, the
Transfer Agent (located at 1004 Baltimore, Kansas City, MO 64105) and Custodian
(located at Airport Business Center, International Court 2, 200 Stevens Drive,
Lester, Pennsylvania 19113) for Registrant, will maintain the records required
by subparagraphs (b)(1) and (b)(2)(D) of Rule 31a-1.
ITEM 29. MANAGEMENT SERVICES.
Not applicable.
ITEM 30. UNDERTAKINGS.
The Registrant has made the following undertakings which are still applicable:
(a) Registrant has undertaken to comply with Section 16(a) of the Investment
Company Act of 1940, as amended, which requires the prompt convening of a
meeting of shareholders to elect trustees to fill existing vacancies in
the Registrant's Board of Trustees in the event that less than a majority
of the trustees have been elected to such position by shareholders.
Registrant has also undertaken to promptly call a meeting of shareholders
for the purpose of voting upon the question of removal of any Trustee or
Trustees when requested in writing to do so by the record holders of not
less than 10 percent of the Registrant's outstanding shares and to assist
its shareholders in communicating with other shareholders in accordance
with the requirements of Section 16(c) of the Investment Company Act of
1940, as amended.
(b) Registrant has undertaken to furnish each person to whom a prospectus is
delivered with a copy of the Registrant's latest annual report to
shareholders when available, upon request and without charge.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, and the Investment
Company of 1940, the Registrant, RS Investment Trust, has duly caused this
Amendment to be signed on behalf of the undersigned, thereunto duly authorized,
in the City and County of San Francisco and State of California, on the 4th day
of March, 1999.
RS INVESTMENT TRUST
By: George R. Hecht*
-----------------------------------------------
President and Principal Executive Officer
Pursuant to the requirements of the Securities Act of 1933, this Amendment to
the Registration Statement has been signed below, on March 4, 1999, by the
following persons in the capacities indicated.
SIGNATURE CAPACITY
GEORGE R. HECHT* President and Principal Executive
- ------------------------- Officer
George R. Hecht
Trustee
- -------------------------
Andrew P. Pilara, Jr.
/s/ANDREW C. MORRISON Treasurer
- -------------------------
Andrew C. Morrison
LEONARD B. AUERBACH* Trustee
- -------------------------
Leonard B. Auerbach
JOHN W. GLYNN, Jr.* Trustee
- -------------------------
John W. Glynn, Jr.
JAMES K. PETERSON* Trustee
- -------------------------
James K. Peterson
*BY /S/ ANDREW C. MORRISON
----------------------
ANDREW C. MORRISON, ATTORNEY-IN-FACT PURSUANT
TO THE POWERS OF ATTORNEY FILED HEREWITH.
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Title
- ----------- -----
<S> <C>
a(i). Amended and Restated Agreement and Declaration of Trust of
Registrant.
a(ii). Amendment to Amended and Restated Agreement and Declaration of
Trust of Registrant.
c(ii). Portions of Amended and Restated Agreement and Declaration of
Trust Relating to Shareholders' Rights.
c(iii). Portions of By-laws Relating to Shareholders' Rights.
d(i). Investment Advisory Agreement between RS Investment Management,
L.P. and Registrant (on behalf of each of The Contrarian
Fund-TM-, RS Diversified Growth Fund, RS Global Value Fund, RS
Global Natural Resources Fund, RS Growth & Income Fund, The
Information Age Fund-TM-, RS MicroCap Growth Fund, RS Partners
Fund and RS Value + Growth Fund.
d(ii). Investment Advisory Agreement between RS Investment Management,
Inc. and Registrant (on behalf of RS Emerging Growth Fund).
d(ix). Sub-Advisory Agreement among RS Investment Management, L.P.,
Elijah Asset Management, LLC and Registrant (on behalf of each of
The Information Age Fund-TM- and RS Value + Growth Fund).
d(x). Sub-Advisory Agreement among RS Investment Management, L.P.,
Eastbourne Management, L.L.C. and the Registrant (on behalf of
The Contrarian Fund-TM-).
e. Distribution Agreement with Provident Distributors, Inc.
g. Form of Custodian Servies Agreement between Registrant and PFPC
Trust Company.
h(i). Administrative Services Agreement.
h(ii). Form of Sub-Administration and Accounting Services Agreement between
Registrant and PFPC, Inc.
p. Power of Attorney.
</TABLE>
<PAGE>
EXHIBIT a(i)
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
ROBERTSON STEPHENS INVESTMENT TRUST
a Massachusetts Business Trust
Dated: March 13, 1997
<PAGE>
TABLE OF CONTENTS
Page
ARTICLE I Name and Definitions . . . . . . . . . . . . . . . . . . . . . . . .4
Section 1. NAME. . . . . . . . . . . . . . . . . . . . . . . . . . . . .4
Section 2. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . .4
ARTICLE II Purpose of Trust. . . . . . . . . . . . . . . . . . . . . . . . . .5
ARTICLE III Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6
Section 1. DIVISION OF BENEFICIAL INTEREST . . . . . . . . . . . . . . .6
Section 2. OWNERSHIP OF SHARES . . . . . . . . . . . . . . . . . . . . .6
Section 3. INVESTMENTS IN THE TRUST. . . . . . . . . . . . . . . . . . .6
Section 4. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY . . . .6
Section 5. POWER OF BOARD OF TRUSTEES TO CHANGE PROVISIONS
RELATING TO SHARES . . . . . . . . . . . . . . . . . . . .7
Section 6. ESTABLISHMENT AND DESIGNATION OF SERIES OR CLASSES. . . . . .8
Section 7. INDEMNIFICATION OF SHAREHOLDERS . . . . . . . . . . . . . . .10
ARTICLE IV The Board of Trustees . . . . . . . . . . . . . . . . . . . . . . .10
Section 1. NUMBER, ELECTION AND TENURE . . . . . . . . . . . . . . . . .10
Section 2. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE . . . . . . .11
Section 3. POWERS. . . . . . . . . . . . . . . . . . . . . . . . . . . .11
Section 4. PAYMENT OF EXPENSES BY THE TRUST. . . . . . . . . . . . . . .14
Section 5. PAYMENT OF EXPENSES BY SHAREHOLDERS . . . . . . . . . . . . .14
Section 6. OWNERSHIP OF ASSETS OF THE TRUST. . . . . . . . . . . . . . .15
Section 7. SERVICE CONTRACTS . . . . . . . . . . . . . . . . . . . . . .15
ARTICLE V Shareholder Voting Powers and Meetings . . . . . . . . . . . . . . .16
Section 1. VOTING POWERS . . . . . . . . . . . . . . . . . . . . . . . .16
Section 2. VOTING POWER AND MEETINGS . . . . . . . . . . . . . . . . . .16
Section 3. QUORUM AND REQUIRED VOTE. . . . . . . . . . . . . . . . . . .17
Section 4. ACTION BY WRITTEN CONSENT . . . . . . . . . . . . . . . . . .17
Section 5. RECORD DATES. . . . . . . . . . . . . . . . . . . . . . . . .17
Section 6. ADDITIONAL PROVISIONS . . . . . . . . . . . . . . . . . . . .18
ARTICLE VI Net Asset Value, Distributions, and Redemptions . . . . . . . . . .18
Section 1. DETERMINATION OF NET ASSET VALUE, NET INCOME,
AND DISTRIBUTIONS. . . . . . . . . . . . . . . . . . . . .18
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Section 2. REDEMPTIONS AND REPURCHASES . . . . . . . . . . . . . . . . .18
Section 3. REDEMPTIONS AT THE OPTION OF THE TRUST. . . . . . . . . . . .19
ARTICLE VII Compensation and Limitation of Liability of Trustees. . . . . . .19
Section 1. COMPENSATION. . . . . . . . . . . . . . . . . . . . . . . . .19
Section 2. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . .19
Section 3. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . .20
ARTICLE VIII Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . .20
Section 1. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE. .20
Section 2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND
OR SURETY. . . . . . . . . . . . . . . . . . . . . . . . .21
Section 3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. . . . . . .21
Section 4. TERMINATION OF TRUST OR SERIES. . . . . . . . . . . . . . . .21
Section 5. MERGER AND CONSOLIDATION. . . . . . . . . . . . . . . . . . .22
Section 6. FILING OF COPIES, REFERENCES, HEADINGS. . . . . . . . . . . .22
Section 7. APPLICABLE LAW. . . . . . . . . . . . . . . . . . . . . . . .22
Section 8. AMENDMENTS. . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 9. TRUST ONLY. . . . . . . . . . . . . . . . . . . . . . . . . .22
Section 10. USE OF THE NAME "RCS EMERGING GROWTH FUND". . . . . . . . . .23
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AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
OF
ROBERTSON STEPHENS INVESTMENT TRUST
THIS AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST is made and
entered into this 13th day of March, 1997 by the Trustees named hereunder.
WITNESSETH that
WHEREAS, the Trustees desire and have agreed to manage all property coming
into their hands as trustees of a Massachusetts business trust in accordance
with the provisions hereinafter set forth;
NOW, THEREFORE, the Trustees hereby direct that this Agreement and
Declaration of Trust be filed with the Secretary of The Commonwealth of
Massachusetts and do hereby declare that they will hold all cash, securities and
other assets, which they may from time to time acquire in any manner as Trustees
hereunder, IN TRUST, and manage and dispose of the same upon the following terms
and conditions for the pro rata benefit of the holders of Shares in this Trust.
ARTICLE I
Name and Definitions
SECTION 1. NAME. This Trust shall be known as ROBERTSON STEPHENS
INVESTMENT TRUST and the Trustees shall conduct the business of the Trust under
that name or any other name as they, in their sole discretion, from time to time
determine.
SECTION 2. DEFINITIONS. Whenever used herein, unless otherwise
required by the context or specifically provided:
(a) The "Trust" refers to the Massachusetts business trust
established by this Agreement and Declaration of Trust, as amended from time to
time;
(b) "Trustees" refers to the persons named at the end of this
Declaration of Trust and constituting the Board of Trustees of the Trust, so
long as they continue in office in accordance with the terms hereof, and all
other persons who may from time to time be duly elected or appointed to serve on
the Board of Trustees in accordance with Article IV hereof;
(c) "Shares" means the equal proportionate transferable units of
interest into which the beneficial interest in the Trust shall be divided from
time to time or, if more than one Series of Shares is authorized by the
Trustees, the equal proportionate units into which each
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Series of Shares shall be divided from time to time or, if more than one class
of Shares of any Series is authorized by the Trustees, the equal proportionate
units into which each class of such Series of Shares shall be divided from time
to time;
(d) "Shareholder" means a record owner of Shares;
(e) The "1940 Act" refers to the Investment Company Act of 1940
and the Rules and Regulations thereunder, all as amended from time to time;
(f) The terms "Commission" and "Principal Underwriter" shall
have meanings given them in the 1940 Act;
(g) "Declaration of Trust" shall mean this Agreement and
Declaration of Trust, as amended or restated from time to time;
(h) "By-Laws" shall mean the By-Laws of the Trust as amended
from time to time;
(i) "Series Company" refers to the form of registered open-end
investment company described in Section 18(f)(2) of the 1940 Act or in any
successor statutory provision; and
(j) "Series" refers to each Series of Shares established and
designated under or in accordance with the provisions of Article III.
(k) The term "class" or "class of Shares" refers to the division
of Shares representing any series into two or more classes as provided in
Article III.
ARTICLE II
Purpose of Trust
The purpose of the Trust is to conduct, operate and carry on the business
of a managed investment company registered under the 1940 Act through one or
more portfolios invested primarily in securities.
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ARTICLE III
Shares
SECTION 1. DIVISION OF BENEFICIAL INTEREST. The Shares of the Trust
shall be issued in one or more Series as the Trustees may, without Shareholder
approval, authorize. The Trustees may, without Shareholder approval, divide the
Shares of any Series into two or more classes, Shares of each such class having
such preferences or special or relative rights or privileges (including
conversion rights, if any) as the Trustees may determine and as are not
inconsistent with any provision of this Agreement and Declaration of Trust.
Each Series shall be preferred over all other Series in respect of the assets
allocated to that Series. The beneficial interest in each Series shall at all
times be divided into Shares, without par value, each of which shall, except as
the Trustees may otherwise authorize in the case of any Series that is divided
into two or more classes, represent an equal proportionate interest in the
Series with each other Share of the same Series, none having priority or
preference over another. The number of Shares authorized shall be unlimited,
and the Shares so authorized may be represented in part by fractional shares.
The Trustees may from time to time divide or combine the Shares of any Series or
class into a greater or lesser number without thereby changing the proportionate
beneficial interests in the Series or class. Shareholders shall have no
preemptive or other right to subscribe to any additional Shares or other
securities issued by the Trust or any Series.
SECTION 2. OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the Trust,
which books shall be maintained separately for the Shares of each Series. No
certificates certifying the ownership of Shares shall be issued except as the
Board of Trustees may otherwise determine from time to time. The Trustees may
make such rules as they consider appropriate for the transfer of Shares and
similar matters. The record books of the Trust as kept by the Trust or any
transfer or similar agent, as the case may be, shall be conclusive as to who are
the Shareholders of each Series and class and as to the number of Shares of each
Series and class held from time to time by each.
SECTION 3. INVESTMENTS IN THE TRUST. The Trustees may accept
investments in the Trust from such persons, at such times, on such terms, and
for such consideration as they from time to time authorize.
SECTION 4. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights provided
in this instrument. Every Shareholder, by virtue of having become a Shareholder
shall be held to have expressly assented and agreed to the terms hereof and to
have become a party hereto. The death of a Shareholder during the existence of
the Trust shall not operate to terminate the Trust, nor entitle the
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but entitles
such representative only to the rights of said deceased Shareholder under this
Trust. Ownership of Shares shall not entitle the
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Shareholder to any title in or to the whole or any part of the Trust property or
right to call for a partition or division of the same or for an accounting, nor
shall the ownership of Shares constitute the Shareholders as partners. Neither
the Trust nor the Trustees, nor any officer, employee or agent of the Trust
shall have any power to bind personally any Shareholders, nor, except as
specifically provided herein, to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder may
at any time personally agree to pay.
SECTION 5. POWER OF BOARD OF TRUSTEES TO CHANGE PROVISIONS RELATING TO
SHARES. Notwithstanding any other provision of this Declaration of Trust and
without limiting the power of the Board of Trustees to amend the Declaration of
Trust as provided elsewhere herein, the Board of Trustees shall have the power
to amend this Declaration of Trust, at any time and from time to time, in such
manner as the Board of Trustees may determine in their sole discretion, without
the need for Shareholder action, so as to add to, delete, replace or otherwise
modify any provisions relating to the Shares contained in this Declaration of
Trust, provided that before adopting any such amendment without Shareholder
approval, the Board of Trustees shall determine that it is consistent with the
fair and equitable treatment of all Shareholders or that Shareholder approval is
not otherwise required by the 1940 Act or other applicable law.
Without limiting the generality of the foregoing, the Board of Trustees
may, for the above-stated purposes, amend the Declaration of Trust to:
(a) create one or more Series or classes of Shares (in addition
to any Series or classes already existing or otherwise) with such rights and
preferences and such eligibility requirements for investment therein as the
Trustees shall determine and reclassify any or all outstanding Shares as shares
of a particular Series or class in accordance with such eligibility
requirements;
(b) amend any of the provisions set forth in paragraphs (a)
through (h) of Section 5 of this Article III;
(c) combine one or more Series or classes of Shares into a
single Series or class on such terms and conditions as the Trustees shall
determine.
(d) change or eliminate any eligibility requirements for
investment in Shares of any Series or class, including, without limitation, to
provide for the issue of Shares of any Series or class in connection with any
merger or consolidation of the Trust with the other trust or company or any
acquisition by the Trust of part or all of the assets of another trust or
investment company;
(e) change the designation of any Series or class of Shares;
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(f) change the method of allocating dividends among the various
Series or classes of Shares;
(g) allocate assets, liabilities and expenses of the Trust to a
particular Series of Shares or apportion the same among two or more Series,
provided that any liabilities or expenses incurred by a particular Series of
Shares shall be payable solely out of the assets of that Series; and to the
extent necessary or appropriate to give effect to the preferences and special or
relative rights and privileges of any classes of Shares, allocate assets,
liabilities, income and expenses of a Series to a particular class of Shares of
that Series or apportion the same among two or more classes of Shares of that
Series;
(h) specifically allocate assets to any or all Series of Shares
or create one or more additional Series of Shares which are preferred over all
other Series of Shares in respect of assets specifically allocated thereto or
any dividends paid by the Trust with respect to any net income, however
determined, earned from the investment and reinvestment of any assets so
allocated or otherwise and provide for any special voting or other rights with
respect to such Series.
SECTION 6. ESTABLISHMENT AND DESIGNATION OF SERIES OR CLASSES. The
establishment and designation of any Series or class of Shares shall be
effective upon the resolution by a majority of the then Trustees, setting forth
such establishment and designation and the relative rights an preferences of
such Series or class, or as otherwise provided in such resolution. Shares of
each Series or class established pursuant to this Section 6, unless otherwise
provided in the resolution establishing such Series or class, shall have the
following relative rights and preferences:
(a) ASSETS BELONGING TO SERIES. All consideration received
by the Trust for the issue or sale of Shares of a particular Series, together
with all assets in which such consideration is invested or reinvested, all
income, earnings, profits, and proceeds thereof from whatever source derived,
including, without limitation, any proceeds derived from the sale, exchange
or liquidation of such assets, and any funds or payments derived from any
reinvestment of such proceeds in whatever form the same may be, shall
irrevocably belong to that Series for all purposes, subject only to the
rights of creditors, and shall be so recorded upon the books of account of
the Trust. Such considerations, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
belonging to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to,
between or among any one or more of the Series in such manner and on such
basis as they, in their sole discretion, deem fair and equitable, and any
General Asset so allocated to a particular Series shall belong to that
Series; and, in the event that there are any assets, income, earnings,
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profits and proceeds thereof, funds or payments belonging to any Series which
are not readily identifiable as belonging to any particular class
(collectively "Series General Assets"), the Trustees shall allocate such
Series General Assets to, between or among any one or more of the classes of
such Series in such manner and on such basis as they, in their sole
discretion, deem fair and equitable, and any Series General Asset so
allocated to a particular class shall belong to that class. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and classes for all purposes.
(b) LIABILITIES BELONGING TO SERIES. The assets belonging to
each particular Series shall be charged with the liabilities of the Trust in
respect to that Series and all expenses, costs, charges and reserves
attributable to that Series and any general liabilities of the Trust, or of any
Series, which are not readily identifiable as belonging to any particular
Series, or any particular class of any Series, shall be allocated and charged by
the Trustees to and among any one or more of the Series, or to and among any one
or more of the classes of such Series, as the case may be, in such manner and on
such basis as the Trustees in their sole discretion deem fair and equitable.
The liabilities, expenses, costs, charges, and reserves so charged to a Series
or class are herein referred to as "liabilities belonging to" that Series or
class. Each allocation of liabilities, expenses, costs, charges and reserves by
the Trustees shall be conclusive and binding upon the holders of all Series and
classes for all purposes. Under no circumstances shall the assets allocated or
belonging to any particular Series be charged with liabilities attributable to
any other Series. All persons who have extended credit which has been allocated
to a particular Series, or who have a claim or contract which has been allocated
to any particular Series, shall look only to the assets of that particular
Series for payment of such credit, claim or contract.
(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, AND REPURCHASES.
Notwithstanding any other provisions of this Declaration of Trust, including,
without limitation, Article VI, no dividend or distribution (including, without
limitation, any distribution paid upon termination of the Trust or of any
Series) with respect to, nor any redemption or repurchase of, the Shares of any
Series shall be effected by the Trust other than from the assets belonging to
such Series, nor, except as specifically provided in Section 7 of this Article
III, shall any Shareholder of any particular Series otherwise have any right or
claim against the assets belonging to any other Series except to the extent that
such Shareholder has such a right or claim hereunder as a Shareholder of such
other Series. The Trustees shall have full discretion, to the extent not
inconsistent with the 1940 Act, to determine which items shall be treated as
income and which items as capital; and each such determination and allocation
shall be conclusive and binding upon the Shareholders.
(d) VOTING. Notwithstanding any other provision of this
Declaration of Trust, on any matter submitted to a vote of Shareholders, all
Shares of the Trust then entitled to vote shall be voted in the aggregate as a
single class without regard to Series or class; except (1) when required by the
1940 Act or when the Trustees shall have determined that the matter affects one
or more Series or classes materially differently, Shares shall be voted by
individual Series or class; and (2) when the Trustees have determined that the
matter affects only the interests of one
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or more Series or classes, then only Shareholders of such Series or classes
shall be entitled to vote thereon.
(e) FRACTIONS. Any fractional Share of a Series or class of any
Series shall carry proportionately all the rights and obligations of a whole
share of that Series or class, as the case may be, including rights with respect
to voting, receipt of dividends and distributions, redemptions of Shares and
termination of the Trust.
(f) EXCHANGE PRIVILEGE. The Trustees shall have the authority
to provide that the holders of Shares of any Series shall have the right to
exchange said Shares for Shares of one or more other Series of Shares in
accordance with such requirements and procedures as may be established by the
Trustees.
(g) COMBINATION OF SERIES. The Trustees shall have the
authority, without the approval of the Shareholders of any Series or class of
any Series unless otherwise required by applicable law, to combine the assets
and liabilities belonging to any two or more Series or classes into assets and
liabilities belonging to a single Series or class.
(h) ELIMINATION OF SERIES OR CLASSES. At any time that there
are no Shares outstanding of any particular Series or class of any Series
previously established and designated, the Trustees may amend this Declaration
of Trust to abolish that Series or class and to rescind the establishment and
designation thereof.
SECTION 7. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder or
former Shareholder shall be held to be personally liable solely by reason of his
or her being or having been a Shareholder and not because of his or her acts or
omissions or for some other reason, the Shareholder or former Shareholder (or
his or her heirs, executors, administrators, or other legal representatives or
in the case of a corporation or other entity, its corporate or other general
successor) shall be entitled out of the assets of the Trust to be held harmless
from and indemnified against all loss and expense arising from such liability.
ARTICLE IV
The Board of Trustees
SECTION 1. NUMBER, ELECTION AND TENURE. The number of Trustees
constituting the Board of Trustees shall be five (5), unless such number shall
be changed from time to time by written instrument signed by a majority of the
Board of Trustees, provided, however, that the number of Trustees shall in no
event be less than one nor more than 15. The Board of Trustees, by action of a
majority of the then Trustees at a duly constituted meeting, may fill vacancies
in the Board of Trustees or remove Trustees with or without cause. Each Trustee
shall serve during the continued lifetime of the Trust until he or she dies,
resigns, is declared bankrupt or incompetent by a court of appropriate
jurisdiction, or is removed, or, if sooner, until the next
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meeting of Shareholders called for the purpose of electing Trustees and until
the election and qualification of his or her successor. Any Trustee may resign
at any time by written instrument signed by him or her and delivered to any
officer of the Trust or to a meeting of the Trustees. Such resignation shall be
effective upon receipt unless specified to be effective at some other time.
Except to the extent expressly provided in a written agreement with the Trust,
no Trustee resigning and no Trustee removed shall have any right to any
compensation for any period following his or her resignation or removal, or any
right to damages on account of such removal. The Shareholders may fix the
number of Trustees and elect Trustees at any meeting of Shareholders called by
the Trustees for that purpose.
SECTION 2. EFFECT OF DEATH, RESIGNATION, ETC. OF A TRUSTEE. The death,
declination, resignation, retirement, removal, or incapacity of one or more
Trustees, or all of them, shall not operate to annul the Trust or to revoke any
existing agency created pursuant to the terms of this Declaration of Trust.
Whenever a vacancy in the Board of Trustees shall occur, until such vacancy is
filled as provided in Article IV, Section 1, the Trustees in office, regardless
of their number, shall have all the powers granted to the Trustees and shall
discharge all the duties imposed upon the Trustees by this Declaration of Trust.
As conclusive evidence of such vacancy, a written instrument certifying the
existence of such vacancy may be executed by an officer of the Trust or by a
majority of the Board of Trustees. In the event of the death, declination,
resignation, retirement, removal, or incapacity of all the then Trustees within
a short period of time and without the opportunity for at least one Trustee
being able to appoint additional Trustees to fill vacancies, the Trust's
investment adviser or investment advisers jointly, if there is more than one,
are empowered to appoint new Trustees subject to the provisions of Section 16(a)
of the 1940 Act.
SECTION 3. POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Board of Trustees,
and such Board shall have all powers necessary or convenient to carry out
that responsibility including the power to engage in securities transactions
of all kinds on behalf of the Trust. Without limiting the foregoing, the
Trustees may: adopt By-Laws not inconsistent with this Declaration of Trust
providing for the regulation and management of the affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; fill vacancies in or remove from their number, and
may elect and remove such officers and appoint and terminate such agents as
they consider appropriate; appoint from their own number and establish and
terminate one or more committees consisting of two or more Trustees which may
exercise the powers and authority of the Board of Trustees to the extent that
the Trustees determine; employ one or more custodians to employ subcustodians
and to deposit all or any part of such assets in a system or systems for the
central handling of securities or with a Federal Reserve Bank, retain a
transfer agent or a shareholder servicing agent or both; provide for the
issuance and distribution of Shares by the Trust directly or through one or
more Principal Underwriters or otherwise; redeem, repurchase and transfer
Shares pursuant to applicable law; set record dates for the determination of
Shareholders with respect to various matters; declare and pay dividends and
distributions to Shareholders of each Series from the assets of such Series;
and in general
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delegate such authority as they consider desirable to any officer of the Trust,
to any committee of the Trustees and to any agent or employee of the Trust or to
any such custodian, transfer or shareholder servicing agent, or Principal
Underwriter. Any determination as to what is in the interests of the Trust made
by the Trustees in good faith shall be conclusive. In construing the provisions
of this Declaration of Trust, the presumption shall be in favor of a grant of
power to the Trustees.
Without limiting the foregoing, the Board of Trustees shall have power and
authority:
(a) To invest and reinvest cash, to hold cash uninvested, and to
subscribe for, invest in, reinvest in, purchase or otherwise acquire, own, hold,
pledge, sell, assign, transfer, exchange, distribute, write options on, lend or
otherwise deal in or dispose of contracts for the future acquisition or delivery
of fixed income or other securities, and securities of every nature and kind,
including, without limitation, all types of bonds, debentures, stocks,
negotiable or non-negotiable instruments, obligations, evidences of
indebtedness, certificates of deposit or indebtedness, commercial paper,
repurchase agreements, bankers' acceptances, and other securities of any kind,
issued, created, guaranteed, or sponsored by any and all persons, including,
without limitation, states, territories, and possessions of the United States
and the District of Columbia and any political subdivision, agency, or
instrumentality thereof, any foreign government or any political subdivision of
the U.S. Government or any foreign government, or any international
instrumentality, or by any bank or savings institution, or by any corporation or
organization organized under the laws of the United States or of any state,
territory, or possession thereof, or by any corporation or organization
organized under any foreign law, or in "when issued" contracts for any such
securities, to change the investments of the assets of the privileges of
ownership or interest in respect of any and all such investments of every kind
and description, including, without limitation, the right to consent and
otherwise act with respect thereto, with power to designate one or more persons,
firms, associations, or corporations to exercise any of said rights, powers, and
privileges in respect of any of said instruments;
(b) To sell, exchange, lend, pledge, mortgage, hypothecate,
lease, or write, options with respect to or otherwise deal in any property
rights relating to any or all of the assets of the Trust;
(c) To vote or give assent, or exercise any rights of ownership,
with respect to stock or other securities or property; and to execute and
delivery proxies or powers of attorney to such person or persons as the Trustees
shall deem proper, granting to such person or persons such power and discretion
with relation to securities or property as the Trustees shall deem proper;
(d) To exercise powers and right of subscription or otherwise
which in any manner arise out of ownership of securities;
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(e) To hold any security or property in a form not indicating
any trust, whether in bearer, unregistered or other negotiable form, or in its
own name or in the name of a custodian or subcustodian or a nominee or nominees
or otherwise.
(f) Subject to the provisions of Article III, Section 3, to
allocate assets, liabilities, income and expenses of the Trust to a particular
Series of Shares or to apportion the same among two or more Series, provided
that any liabilities or expenses incurred by or arising in connection with a
particular Series of Shares shall be payable solely out of the assets of that
Series; and to the extent necessary or appropriate to give effect to the
preferences and special or relative rights and privileges of any classes of
Shares, to allocate assets, liabilities, income and expenses of a Series to a
particular class of Shares of the Series or to apportion the same among two or
more classes of Shares of that Series;
(g) To consent to or participate in any plan for the
reorganization, consolidation or merger of any corporation or issuer of any
security which is held in the Trust; to consent to any contract, lease,
mortgage, purchase or sale of property by such corporation or issuer; and to pay
calls or subscriptions with respect to any security held in the Trust;
(h) To join with other security holders in acting through a
committee, depositary, voting trustee or otherwise, and in that connection to
deposit any security with or transfer any security to, any such committee,
depositary or trustee, and to delegate to them such power and authority with
relation to any security (whether or not so deposited or transferred) as the
Trustees shall deem proper, and to agree to pay, and to pay, such portion of the
expenses and compensation of such committee, depositary or trustee as the
Trustees shall deem proper;
(i) To compromise, attribute or otherwise adjust claims in favor
of or against the Trust or any matter in controversy, including but not limited
to claims for taxes;
(j) To enter into joint ventures, general or limited
partnerships and any other combinations or associations;
(k) To borrow funds or other property in the name of the Trust
exclusively for Trust purposes;
(l) To endorse or guarantee the payment of any notes or other
obligations of any person; to make contracts of guaranty or suretyship; or
otherwise assume liability for payment thereof;
(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the assets
of the Trust or payment of distributions and principal on its portfolio
investments, and insurance policies insuring the Shareholders, Trustees,
officers, employees, agents, investment advisers, principal underwriters, or
independent
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contractors of the Trust, individually against all claims and liabilities of
every nature arising by reason of holding, being or having held any such
office or position, or by reason of any action alleged to have been taken or
omitted by any such person as Trustee, officer, employee, agent, investment
adviser, principal underwriter, or independent contractor, including any
action taken or omitted that may be determined to constitute negligence;
whether or not the Trust would have the power to indemnify such person
against liability; and
(n) To adopt, establish and carry out pension, profit-sharing,
share bonus, share purchase, savings, thrift and other retirement, incentive and
benefit plans, trusts and provisions, including the purchasing of life insurance
annuity contracts as a means of providing such retirement and other benefits,
for any or all of the Trustees, officers, employees and agents of the Trust.
The Trustees shall not be limited to investing in obligations maturing
before the possible termination of the Trust or one or more of its Series. The
Trustees shall not in any way be bound or limited by any present or future law
or custom in regard to investment by fiduciaries. The Trustees shall not be
required to obtain any court order to deal with any assets of the Trust or take
any other action hereunder.
SECTION 4. PAYMENT OF EXPENSES BY THE TRUST. The Trustees are
authorized to pay or cause to be paid out of the principal or income of the
Trust, or partly out of the principal and partly out of income, as they deem
fair, all expenses, fees, charges, taxes and liabilities incurred or arising in
connection with the Trust, or in connection with the management thereof,
including, but not limited to; the Trustees' compensation and such expenses and
charges for the services of the Trust's officers, employees, investment adviser
or manager, principal underwriter, auditors, counsel, custodian, transfer agent,
Shareholder servicing agent, and such other agents or independent contractors
and such other expenses and charges as the Trustees may deem necessary or proper
to incur.
SECTION 5. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Trustees shall
have the power, as frequently as they may determine, to cause each Shareholder,
or each Shareholder of any particular Series or class, to pay directly, in
advance or arrears, for charges of the Trust's custodian or transfer,
Shareholder servicing or similar agent, an amount fixed from time to time by the
Trustees, by setting off such charges due from such Shareholder from declared
but unpaid dividends owed such Shareholder and/or by reducing the number of
shares in the account of such Shareholder by that number of full and/or
fractional Shares which represents the outstanding amount of such charges due
from such Shareholder.
SECTION 6. OWNERSHIP OF ASSETS OF THE TRUST. Title to all of the
assets of the Trust shall at all times be considered as vested in the Board of
Trustees.
SECTION 7. SERVICE CONTRACTS.
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(a) Subject to such requirements and restrictions as may be set
forth in the By-Laws, the Trustees may, at any time and from time to time,
contract for exclusive or nonexclusive advisory and/or management services for
the Trust or for any Series with any corporation, trust, association or other
organization (the "Manager"); and any such contract may contain such other terms
as the Trustees may determine, including, without limitation, authority for the
Manager to determine from time to time without prior consultation with the
Trustees what investments shall be purchased, held, sold or exchanged and what
portion, if any, of the assets of the Trust shall be held uninvested and to make
changes in the Trust's investments.
(b) The Trustees may also, at any time and from time to time,
contract with any corporation, trust, association or other organization,
appointing it exclusive or nonexclusive distributor or Principal Underwriter for
the Shares of one or more of the Series or classes. Every such contract shall
comply with such requirements and restrictions as may be set forth in the
By-Laws; and any such contract may contain such other terms as the Trustees may
determine.
(c) The Trustees are also empowered, at any time and from time
to time, to contract with any corporations, trusts, associations or other
organizations, appointing it or them the custodian, transfer agent and/or
shareholder servicing agent for the Trust or one or more of its Series or
classes. Every such contract shall comply with such requirements and
restrictions as may be set forth in the By-Laws or stipulated by resolution of
the Trustees.
(d) The Trustees are further empowered, at any time and from
time to time, to contract with any entity to provide such other services to the
Trust or one or more of the Series or classes, as the Trustees determine to be
in the best interests of the Trust and the applicable Series or class.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers of the Trust
is a shareholder, director, officer, partner, trustee, employee, manager,
adviser, principal underwriter, distributor, or affiliate or agent of or
for any corporation, trust, association, or other organizational or for any
parent or affiliate of any organization with which an advisory or
management contract, or principal underwriter's or distributor's contract,
or transfer, shareholder servicing or other type of service contract may
have been or may hereafter be made, or that any such organization, or any
parent or affiliate thereof, is a Shareholder or has an interest in the
Trust, or that
(ii) any corporation, trust, association or other organization
with which an advisory or management contract or principal underwriter's or
distributor's contract, or transfer, shareholder servicing or other type of
service contract may have been or may hereafter be made also has an
advisory or management contract, or principal underwriter's or
distributor's contract, or transfer, shareholder servicing or other service
contract with one or more other corporations, trust, associations, or other
organizations, or has other business or interests
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shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing the
same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the 1940 Act.
ARTICLE V
Shareholder Voting Powers and Meetings
SECTION 1. VOTING POWERS. Subject to the voting powers of one or more
classes of Shares as set forth elsewhere in this Declaration of Trust or in the
Bylaws, the Shareholders shall have power to vote only (i) for the election of
Trustees as provided in Article IV, Section 1, (ii) to the same extent as the
stockholders of a Massachusetts business corporation as to whether or not a
court action, proceeding or claim should, or should not be brought or maintained
derivatively or as a class action on behalf of the Trust or the Shareholders,
(iii) with respect to the termination of the Trust or any Series or class to the
extent and as provided in Article VIII, Section 4, and (iv) with respect to such
additional matters relating to the Trust as may be required by any registration
of the Trust with the Commission (or any successor agency) or any state, or as
the Trustees may consider necessary or desirable. Each whole Share shall be
entitled to one vote as to any matter on which it is entitled to vote and each
fractional Share shall be entitled to a proportionate fractional vote. There
shall be no cumulative voting in the election of Trustees. Shares may be voted
in person or by proxy. A proxy with respect to Shares held in the name of two
or more persons shall be valid if executed by any one of them unless at or prior
to exercise of the proxy the Trust receives a specific written notice to the
contrary from any one of them. A proxy purporting to be executed by or on
behalf of a Shareholder shall be deemed valid unless challenged at or prior to
its exercise and the burden of proving invalidity shall rest on the challenger.
At any time when no Shares of a Series or class are outstanding, the Trustees
may exercise all rights of Shareholders of that Series or class with respect to
matters affecting that Series or class, take any action required by law, this
Declaration of Trust or the By-Laws, to be taken by Shareholders.
SECTION 2. VOTING POWER AND MEETINGS. Meetings of the Shareholders of
the Trust or of any Series or class may be called by the Trustees for the
purpose of electing Trustees as provided in Article IV, Section 1 and for such
other purposes as may be prescribed by law, by this Declaration of Trust or by
the By-Laws. Meetings of the Shareholders may also be called by the Trustees
from time to time for the purpose of taking action upon any other matter deemed
by the Trustees to be necessary or desirable. A meeting of Shareholders may be
held at any place designated by the Trustees. Written notice of any meeting of
Shareholders shall be give or caused to be given by the Trustees by mailing such
notice at least seven (7) days before such meeting, postage prepaid, stating the
time and place of the meeting, to each Shareholder entitled to vote at such
meeting, at the Shareholder's address as it appears on the records of the Trust.
Whenever notice of a meeting is required to be given to a Shareholder under this
Declaration of
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Trust or the By-Laws, a written waiver thereof, executed before or after the
meeting by such Shareholder or his or her attorney thereunto authorized and
filed with the records of the meeting, shall be deemed equivalent to such
notice.
SECTION 3. QUORUM AND REQUIRED VOTE. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
forty percent (40%) of the Shares entitled to vote on a particular matter shall
constitute a quorum for the transaction of business on that matter at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust or the By-Laws requires that holders of any Series or class
shall vote as a Series or class, then forty percent (40%) of the aggregate
number of Shares of that Series or class entitled to vote shall be necessary to
constitute a quorum for the transaction of business by that Series or class.
Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held within a reasonable time
after the date set for the original meeting without further notice. Except when
a larger vote is required by any provision of this Declaration of Trust or the
By-Laws or by applicable law, when a quorum is present, a majority of the Shares
voted shall decide any questions and a plurality shall elect a Trustee, provided
that where any provision of law or of this Declaration of Trust or of the
By-Laws permits or requires that the holders of any Series or class shall vote
as a Series or class, then a majority of the Shares of that Series or class
voted on the matter (or a plurality with respect to the election of a Trustee)
shall decide that matter insofar as that Series or class is concerned.
SECTION 4. ACTION BY WRITTEN CONSENT. Any action taken by Shareholders
may be taken without a meeting if Shareholders holding a majority of the Shares
entitled to vote on the matter (or such larger proportion thereof as shall be
required by any express provision of this Declaration of Trust or by the
By-Laws) consent to the action in writing and such written consents are filed
with the records of the meetings of Shareholders. Such consent shall be treated
for all purposes as a vote taken at a meeting of Shareholders.
SECTION 5. RECORD DATES. For the purpose of determining the
Shareholders of any Series or class who are entitled to vote or act at any
meeting or any adjournment thereof, the Trustees may from time to time fix a
time, which shall be not more than ninety (90) days before the date of any
meeting of Shareholders, as the record date for determining the Shareholders of
such Series or class having the right to notice of and to vote at such meeting
and any adjournment thereof, and in such case only Shareholders of record on
such record date shall have such right, notwithstanding any transfer of shares
on the books of the Trust after the record date. For the purpose of determining
the Shareholders of any Series or class who are entitled to receive payment or
any dividend or of any other distribution, the Trustees may from time to time
fix a date, which shall be before the date for the payment of such dividend or
such other payment, as the record date for determining the Shareholders of such
Series or class having the right to receive such dividend or distribution.
Without fixing a record date the Trustees may for voting and/or distribution
purposes close the register or transfer books for one or more Series or classes
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for all or any part of the period between a record date and a meeting of
Shareholders or the payment of a distribution. Nothing in this Section shall be
construed as precluding the Trustees from setting different record dates for
different Series or classes.
SECTION 6. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions, and Redemptions
SECTION 1. DETERMINATION OF NET ASSET VALUE, NET INCOME, AND
DISTRIBUTIONS. The term "net asset value" of the Shares of each Series or class
shall mean: (i) the value of all the assets of such Series or class; (ii) less
the total liabilities of such Series or class; (iii) divided by the number of
Shares of such Series or class outstanding, in each case at the time of each
determination. The "number of Shares of such Series or class outstanding" for
the purposes of such computation shall be exclusive of any Shares of such Series
or class to be redeemed and not then redeemed as to which the redemption price
has been determined, but shall include Shares of such Series or class presented
for repurchase and not then repurchased and Shares of such Series or class to be
redeemed and not then redeemed as to which the redemption price has not been
determined and Shares of such Series or class the sale of which has been
confirmed. Any fractions involved in the computation of net asset value per
share shall be adjusted to the nearest cent unless the Trustees shall determine
to adjust such fractions to a fraction of a cent.
Determinations under this Section made in good faith shall be binding on
all parties concerned. The manner of determining the net assets of any Series or
class or of determining the net asset value of the Shares of any Series or class
may from time to time be altered as necessary or desirable in the judgment of
the Trustees to conform to any other method prescribed or permitted by any
applicable law or regulation.
SECTION 2. REDEMPTIONS AND REPURCHASES. The Trust shall purchase such
Shares as are offered by any Shareholder for redemption, upon the presentation
of a proper instrument of transfer together with a request directed to the Trust
or a person designated by the Trust that the Trust purchase such Shares or in
accordance with such other procedures for redemption as the Trustees may from
time to time authorize; and the Trust will pay therefor the net asset value
thereof, as determined in accordance with the By-Laws and applicable law, next
determined. Payment for said Shares shall be made by the Trust to the
Shareholder within seven days after the date on which the request is made in
proper form. The obligation set forth in this Section 2 is subject to the
provision that in the event that any time the New York Stock Exchange is closed
for other than weekends or holidays, or if permitted by the Rules of the
Commission during periods when trading on the Exchange is restricted or during
any emergency which makes it impracticable for the Trust to dispose of the
investments of the applicable Series or to determine fairly the value of the net
assets belonging to such Series or during any other period permitted by
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order of the Commission for the protection of investors, such obligations may be
suspended or postponed by the Trustees.
The redemption price may in any case or cases be paid wholly or partly in
kind if the Trustees determine that such payment is advisable in the interest of
the remaining Shareholders of the Series for which the Shares are being
redeemed. Subject to the foregoing, the fair value, selection and quantity of
securities or other property so paid or delivered as all or part of the
redemption price may be determined by or under authority of the Trustees. In no
case shall the Trust be liable for any delay of any corporation or other person
in transferring securities selected for delivery as all or part of any payment
in kind.
SECTION 3. REDEMPTIONS AT THE OPTION OF THE TRUST. The Trust shall
have the right at its option and at any time to redeem Shares of any Shareholder
at the net asset value thereof as described in Section 1 of this Article VI:
(i) if at such time such Shareholder owns Shares of any Series having an
aggregate net asset value of less than an amount determined from time to time by
the Trustees, but not to exceed $40,000; or (ii) to the extent that such
Shareholder owns Shares equal to or in excess of a percentage, determined from
time to time by the Trustees, of the outstanding Shares of the Trust or of any
Series or class of any Series.
ARTICLE VII
Compensation and Limitation of Liability of Trustees
SECTION 1. COMPENSATION. The Trustees as such shall be entitled to
reasonable compensation from the Trust, and they may fix the amount of such
compensation. Nothing herein shall in any way prevent the employment of any
Trustee for advisory, management, legal, accounting, investment banking or other
services and payment for the same by the Trust.
SECTION 2. LIMITATION OF LIABILITY. The Trustees shall not be
responsible or liable in any event for any neglect or wrong-doing of any
officer, agent, employee, manager or Principal Underwriter of the Trust, nor
shall any Trustee be responsible for the act or omission of any other Trustee,
but nothing herein contained shall protect any Trustee against any liability to
which he or she would otherwise be subject by reason of wilful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved in the
conduct of his or her office.
Every note, bond, contract, instrument, certificates or undertaking and
every other act or thing whatsoever issued, executed or done by or on behalf of
the Trust or the Trustees or any of them in connection with the Trust shall be
conclusively deemed to have been issued, executed or done only in or with
respect to their or his or her capacity as Trustees or Trustee, and such
Trustees or Trustee shall not be personally liable thereon.
SECTION 3. INDEMNIFICATION. The Trustees shall be entitled and
empowered to the fullest extent permitted by law to purchase with Trust assets
insurance for and to provide by
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resolution or in the By-Laws for indemnification out of Trust assets for
liability and for all expenses reasonably incurred or paid or expected to be
paid by a Trustee or officer in connection with any claim, action, suit or
proceeding in which he or she becomes involved by virtue of his or her capacity
or former capacity with the Trust. The provisions, including any exceptions and
limitations concerning indemnification, may be set forth in detail in the
By-Laws or in a resolution of the Board of Trustees.
ARTICLE VIII
Miscellaneous
SECTION 1. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE; NOTICE.
All persons extending credit to, contracting with or having any claim against
the Trust or any Series shall look only to the assets of the Trust, or, to the
extent that the liability of the Trust may have been expressly limited by
contract to the assets of a particular Series, only to the assets belonging to
the relevant Series, for payment under such credit, contract or claim; and
neither the Shareholders nor the Trustees, nor any of the Trust's officers,
employees or agents, whether past, present or future, shall be personally liable
therefor. Nothing in this Declaration of Trust shall protect any Trustee
against any liability to which such Trustee would otherwise be subject by reason
of wilful misfeasance, bad faith, gross negligence or reckless disregard of the
duties involved in the conduct of the office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made or
issued on behalf of the Trust by the Board of Trustees, by any officers or
officer or otherwise may include a notice that this Declaration of Trust is on
file with the Secretary of The Commonwealth of Massachusetts and may recite that
the note, bond, contract, instrument, certificate or undertaking was executed or
made by or on behalf of the Trust or by them as Trustee or Trustees or as
officers or officer or otherwise and not individually and that the obligations
of such instrument are not binding upon any of them or the Shareholders
individually but are binding only upon the assets and property of the Trust or
upon the assets belonging to the Series or class for the benefit of which the
Trustees have caused the note, bond, contract, instrument, certificate or
undertaking to be made or issued, and may contain such further recital as he or
she or they may deem appropriate, but the omission of any such recital shall not
operate to bind any Trustee or Trustees or officer or officers or Shareholders
of any other person individually.
SECTION 2. TRUSTEE'S GOOD FAITH ACTION, EXPERT ADVICE, NO BOND OR
SURETY. The exercise by the Trustees of their powers and discretions hereunder
shall be binding upon everyone interested. A Trustee shall be liable solely for
his or her own wilful misfeasance, bad faith, gross negligence or reckless
disregard of the duties involved in the conduct of the office of Trustee, and
shall not be liable for errors of judgment or mistakes of fact or law. The
Trustees may take advice of counsel or other experts with respect to the meaning
and operation of this Declaration of Trust, and shall be under no liability for
any act or omission in accordance with
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such advice nor for failing to follow such advice. The Trustees shall not be
required to give any bond as such, nor any surety if a bond is required.
SECTION 3. LIABILITY OF THIRD PERSONS DEALING WITH TRUSTEES. No person
dealing with the Trustees shall be bound to make any inquiry concerning the
validity of any transaction made or to be made by the Trustees or to see to the
application of any payments made or property transferred to the Trust or upon
its order.
SECTION 4. TERMINATION OF TRUST OR SERIES. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The Trust
may be terminated at any time by the affirmative vote of a "majority of the
outstanding voting securities" of each Series (as the quoted phrase is defined
in the 1940 Act), voting separately by Series, or by the Trustees by written
notice to the Shareholders. Any Series may be terminated at any time by vote of
the affirmative vote of "majority of the outstanding voting securities" of that
Series (as the quoted phrase is defined in the 1940 Act) or by the Trustees by
written notice to the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may be), after
paying or otherwise providing for all charges, taxes, expenses and liabilities
belonging, severally, to each Series (or the applicable Series, as the case may
be), whether due or accrued or anticipated as may be determined by the Trustees,
the Trust shall, in accordance with such procedures as the Trustees consider
appropriate, reduce the remaining assets belonging, severally, to each Series
(or the applicable Series, as the case may be), to distributable form in cash or
shares or other securities, or any combination thereof, and distribute the
proceeds belonging to each Series (or the applicable Series, as the case may
be), to the Shareholders of that Series, as a Series, ratably according to the
number of Shares of that Series held by the several Shareholders on the date of
termination, except to the extent otherwise required or permitted by the
preferences and special or relative rights and privileges of any classes of
Shares of that Series, provided that any distribution to the Shareholders of a
particular class of Shares shall be made to such Shareholders pro rata in
proportion to the number of Shares of such class held by each of them.
SECTION 5. MERGER AND CONSOLIDATION. The Trustees may cause the Trust
or one or more of its Series to be merged into or consolidated with another
Trust or company or the Shares exchanged under or pursuant to any state or
Federal statute, if any, or otherwise to the extent permitted by law. Such
merger or consolidation of Share exchange must be authorized by vote of a
majority of the outstanding Shares of the Trust, as whole, or any affected
Series, as may be applicable; provided that in all respects not governed by
statute or applicable law, the Trustees shall have power to prescribe the
procedure necessary or appropriate to accomplish a sale of assets, merger or
consolidation.
SECTION 6. FILING OF COPIES, REFERENCES, HEADINGS. The original or a
copy of this instrument and of each amendment hereto shall be kept at the office
of the Trust where it may be inspected by any Shareholder. A copy of this
instrument and of each amendment hereto shall be filed by the Trust with the
Secretary of The Commonwealth of Massachusetts and with any other governmental
office where such filing may from time to time be required. Anyone dealing with
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the Trust may rely on a certificate by an officer of the Trust as to whether or
not any such amendments have been made and as to any matters in connection with
the Trust hereunder; and, with the same effect as if it were the original, may
rely on a copy certified by an officer of the Trust to be a copy of this
instrument or of any such amendments. In this instrument and in any such
amendment, references to this instrument, and all expressions like "herein,"
"hereof," and "hereunder," shall be deemed to refer to this instrument as
amended or affected by any such amendments. Headings are placed herein for
convenience of reference only and shall not be taken as a part hereof or control
or affect the meaning, construction or affect of this instrument. This
instrument may be executed in any number of counterparts each of which shall be
deemed an original.
SECTION 7. APPLICABLE LAW. This Agreement and Declaration of Trust is
created under and is to be governed by and construed and administered according
to the laws of The Commonwealth of Massachusetts. The Trust shall be of the
type commonly called a Massachusetts business trust, and without limiting the
provisions hereof, the Trust may exercise all powers which are ordinarily
exercised by such a trust.
SECTION 8. AMENDMENTS. This Declaration of Trust may be amended at any
time by an instrument in writing signed by a majority of the then Trustees.
SECTION 9. TRUST ONLY. It is the intention of the Trustees to create
only the relationship of Trustee and beneficiary between the Trustees and each
Shareholder from time to time. It is not the intention of the Trustees to
create a general partnership, limited partnership, joint stock association,
corporation, bailment, or any form of legal relationship other than a trust.
Nothing in this Agreement and Declaration of Trust shall be construed to make
the Shareholders, either by themselves, or with the Trustees, partners or
members of a joint stock association.
SECTION 10. USE OF THE NAME "RCS EMERGING GROWTH FUND". The Trust
recognizes that Robertson Stephens & Company LLC ("RS&Co.") and its affiliates
have exclusive use, control and rights to the name and identifying words "RCS
Emerging Growth Fund." The Trust also recognizes that in consideration of the
sponsorship and creation of the Trust and such Series as may be created from
time to time, RS&Co. has exclusive use, control and rights to the names they
have designated and may designate for the Trust and its Series. The Trust
understands that RS&Co. has consented (a) to the use by the Trust of the
identifying words or name "RCS Emerging Growth Fund" as the name of the Trust
and (b) to the use by the Trust of the names or identifying words which may be
used for each of the Trust's Series from RS&Co., as Manager of the Trust and
said Series. Such names or identifying words or any variations thereof may be
used from time to time in other connections and for other purposes by RS&Co. or
affiliated entities. RS&Co. has the right to require the Trust to cease using
the names designated for each Series of the Trust during the time RS&Co. or an
affiliate was employed as the investment manager or adviser of the Trust or such
Series if the Trust and said Series cease to employ RS&Co. or such affiliate in
such capacity. Future names adopted by the Trust for itself and its
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Series shall be the property of RS&Co. and its affiliates, and the use of each
names shall be subject to the same conditions set forth in this Section insofar
as such names or identifying words require the consent of RS&Co.
IN WITNESS WHEREOF, the Trustees named below do hereby set their hands as
of the 13th day of March, 1997.
/S/ LEONARD S. AUERBACH
----------------------------------------------
Leonard S. Auerbach
/S/ DANIEL R. COONEY
----------------------------------------------
Daniel R. Cooney
/S/ G. RANDY HECHT
----------------------------------------------
G. Randy Hecht
/S/ JAMES K. PETERSON
----------------------------------------------
James K. Peterson
----------------------------------------------
John P. Rohal
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<PAGE>
EXHIBIT (a)(ii)
AMENDMENT
to
AMENDED AND RESTATED AGREEMENT AND DECLARATION OF TRUST
of
ROBERTSON STEPHENS INVESTMENT TRUST
February 26, 1999
The undersigned, being at least a majority of the Trustees of Robertson
Stephens Investment Trust (the "Trust"), hereby amend the Amended and
Restated Agreement and Declaration of Trust of the Trust by deleting therefrom
Article I, Section 1 in its entirety and replacing it with the following:
Section 1. Name. This Trust shall be known as RS INVESTMENT TRUST, and
the Trustees shall conduct the business of the Trust under that name or
any other name as they, in their sole discretion, from time to time
determine.
IN WITNESS WHEREOF, the Trustees named below do hereby set their hands as
of the 26th day of February 1999.
/s/ Leonard B. Auerbach
------------------------------------------
Leonard B. Auerbach
/s/ John W. Glynn, Jr.
------------------------------------------
John W. Glynn, Jr.
/s/ James K. Peterson
------------------------------------------
James K. Peterson
------------------------------------------
Andrew P. Pilara, Jr.
<PAGE>
EXHIBIT c(ii)
PORTIONS OF
AMENDED AND RESTATED
AGREEMENT AND DECLARATION OF TRUST
PERTAINING TO SHAREHOLDERS' RIGHTS
RS INVESTMENT TRUST
ARTICLE III
Shares
Section 1. DIVISION OF BENEFICIAL INTEREST. The Shares of the Trust
shall be issued in one or more Series as the Trustees may, without
Shareholder approval, authorize. The Trustees may, without Shareholder
approval, divide the Shares of any Series into two or more classes, Shares of
each such class having such preferences or special or relative rights or
privileges (including conversion rights, if any) as the Trustees may
determine and as are not inconsistent with any provision of this Agreement
and Declaration of Trust. Each Series shall be preferred over all other
Series in respect of the assets allocated to that Series. The beneficial
interest in each Series shall at all times be divided into Shares, without
par value, each of which shall, except as the Trustees may otherwise
authorize in the case of any Series that is divided into two or more classes,
represent an equal proportionate interest in the Series with each other Share
of the same Series, none having priority or preference over another. The
number of Shares authorized shall be unlimited, and the Shares so authorized
may be represented in part by fractional shares. The Trustees may from time
to time divide or combine the Shares of any Series or class into a greater or
lesser number without thereby changing the proportionate beneficial interests
in the Series or class. Shareholders shall have no preemptive or other right
to subscribe to any additional Shares or other securities issued by the Trust
or any Series.
Section 2. OWNERSHIP OF SHARES. The ownership of Shares shall be
recorded on the books of the Trust or a transfer or similar agent for the
Trust, which books shall be maintained separately for the Shares of each
Series. No certificates certifying the ownership of Shares shall be issued
except as the Board of Trustees may otherwise determine from time to time.
The Trustees may make such rules as they consider appropriate for the
transfer of Shares and similar matters. The record books of the Trust as
kept by the Trust or any transfer or similar agent, as the case may be, shall
be conclusive as to who are the Shareholders of each Series and class and as
to the number of Shares of each Series and class held from time to time by
each.
Section 4. STATUS OF SHARES AND LIMITATION OF PERSONAL LIABILITY.
Shares shall be deemed to be personal property giving only the rights
provided in this instrument. Every Shareholder, by virtue of having become a
Shareholder shall be held to have expressly assented and agreed to the terms
hereof and to have become a party hereto. The death of a Shareholder during
the existence of the Trust shall not operate to terminate the Trust, nor
entitle the
<PAGE>
representative of any deceased Shareholder to an accounting or to take any
action in court or elsewhere against the Trust or the Trustees, but entitles
such representative only to the rights of said deceased Shareholder under
this Trust. Ownership of Shares shall not entitle the Shareholder to any
title in or to the whole or any part of the Trust property or right to call
for a partition or division of the same or for an accounting, nor shall the
ownership of Shares constitute the Shareholders as partners. Neither the
Trust nor the Trustees, nor any officer, employee or agent of the Trust shall
have any power to bind personally any Shareholders, nor, except as
specifically provided herein, to call upon any Shareholder for the payment of
any sum of money or assessment whatsoever other than such as the Shareholder
may at any time personally agree to pay.
Section 5. POWER OF BOARD OF TRUSTEES TO CHANGE PROVISIONS RELATING
TO SHARES. Notwithstanding any other provision of this Declaration of Trust
and without limiting the power of the Board of Trustees to amend the
Declaration of Trust as provided elsewhere herein, the Board of Trustees
shall have the power to amend this Declaration of Trust, at any time and from
time to time, in such manner as the Board of Trustees may determine in their
sole discretion, without the need for Shareholder action, so as to add to,
delete, replace or otherwise modify any provisions relating to the Shares
contained in this Declaration of Trust, provided that before adopting any
such amendment without Shareholder approval, the Board of Trustees shall
determine that it is consistent with the fair and equitable treatment of all
Shareholders or that Shareholder approval is not otherwise required by the
1940 Act or other applicable law.
Without limiting the generality of the foregoing, the Board of Trustees
may, for the above-stated purposes, amend the Declaration of Trust to:
(a) create one or more Series or classes of Shares (in
addition to any Series or classes already existing or otherwise) with such
rights and preferences and such eligibility requirements for investment
therein as the Trustees shall determine and reclassify any or all outstanding
Shares as shares of a particular Series or class in accordance with such
eligibility requirements;
(b) amend any of the provisions set forth in paragraphs (a)
through (h) of Section 5 of this Article III;
(c) combine one or more Series or classes of Shares into a
single Series or class on such terms and conditions as the Trustees shall
determine.
(d) change or eliminate any eligibility requirements for
investment in Shares of any Series or class, including, without limitation,
to provide for the issue of Shares of any Series or class in connection with
any merger or consolidation of the Trust with the other trust or company or
any acquisition by the Trust of part or all of the assets of another trust or
investment company;
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(e) change the designation of any Series or class of Shares;
(f) change the method of allocating dividends among the
various Series or classes of Shares;
(g) allocate assets, liabilities and expenses of the Trust
to a particular Series of Shares or apportion the same among two or more
Series, provided that any liabilities or expenses incurred by a particular
Series of Shares shall be payable solely out of the assets of that Series;
and to the extent necessary or appropriate to give effect to the preferences
and special or relative rights and privileges of any classes of Shares,
allocate assets, liabilities, income and expenses of a Series to a particular
class of Shares of that Series or apportion the same among two or more
classes of Shares of that Series;
(h) specifically allocate assets to any or all Series of
Shares or create one or more additional Series of Shares which are preferred
over all other Series of Shares in respect of assets specifically allocated
thereto or any dividends paid by the Trust with respect to any net income,
however determined, earned from the investment and reinvestment of any assets
so allocated or otherwise and provide for any special voting or other rights
with respect to such Series.
Section 6. ESTABLISHMENT AND DESIGNATION OF SERIES OR CLASSES. The
establishment and designation of any Series or class of Shares shall be
effective upon the resolution by a majority of the then Trustees, setting
forth such establishment and designation and the relative rights an
preferences of such Series or class, or as otherwise provided in such
resolution. Shares of each Series or class established pursuant to this
Section 6, unless otherwise provided in the resolution establishing such
Series or class, shall have the following relative rights and preferences:
(a) ASSETS BELONGING TO SERIES. All consideration
received by the Trust for the issue or sale of Shares of a particular Series,
together with all assets in which such consideration is invested or
reinvested, all income, earnings, profits, and proceeds thereof from whatever
source derived, including, without limitation, any proceeds derived from the
sale, exchange or liquidation of such assets, and any funds or payments
derived from any reinvestment of such proceeds in whatever form the same may
be, shall irrevocably belong to that Series for all purposes, subject only to
the rights of creditors, and shall be so recorded upon the books of account
of the Trust. Such considerations, assets, income, earnings, profits and
proceeds thereof, from whatever source derived, including, without
limitation, any proceeds derived from the sale, exchange or liquidation of
such assets, and any funds or payments derived from any reinvestment of such
proceeds, in whatever form the same may be, are herein referred to as "assets
belonging to" that Series. In the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments which are not
readily identifiable as belonging to any particular Series (collectively
"General Assets"), the Trustees shall allocate such General Assets to,
between or among any one or more of the Series in such manner and on such
basis as they, in their sole discretion, deem fair and equitable, and any
General Asset so allocated to a particular Series shall
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belong to that Series; and, in the event that there are any assets, income,
earnings, profits and proceeds thereof, funds or payments belonging to any
Series which are not readily identifiable as belonging to any particular
class (collectively "Series General Assets"), the Trustees shall allocate
such Series General Assets to, between or among any one or more of the
classes of such Series in such manner and on such basis as they, in their
sole discretion, deem fair and equitable, and any Series General Asset so
allocated to a particular class shall belong to that class. Each such
allocation by the Trustees shall be conclusive and binding upon the
Shareholders of all Series and classes for all purposes.
(b) LIABILITIES BELONGING TO SERIES. The assets
belonging to each particular Series shall be charged with the liabilities of
the Trust in respect to that Series and all expenses, costs, charges and
reserves attributable to that Series and any general liabilities of the
Trust, or of any Series, which are not readily identifiable as belonging to
any particular Series, or any particular class of any Series, shall be
allocated and charged by the Trustees to and among any one or more of the
Series, or to and among any one or more of the classes of such Series, as the
case may be, in such manner and on such basis as the Trustees in their sole
discretion deem fair and equitable. The liabilities, expenses, costs,
charges, and reserves so charged to a Series or class are herein referred to
as "liabilities belonging to" that Series or class. Each allocation of
liabilities, expenses, costs, charges and reserves by the Trustees shall be
conclusive and binding upon the holders of all Series and classes for all
purposes. Under no circumstances shall the assets allocated or belonging to
any particular Series be charged with liabilities attributable to any other
Series. All persons who have extended credit which has been allocated to a
particular Series, or who have a claim or contract which has been allocated
to any particular Series, shall look only to the assets of that particular
Series for payment of such credit, claim or contract.
(c) DIVIDENDS, DISTRIBUTIONS, REDEMPTIONS, AND
REPURCHASES. Notwithstanding any other provisions of this Declaration of
Trust, including, without limitation, Article VI, no dividend or distribution
(including, without limitation, any distribution paid upon termination of the
Trust or of any Series) with respect to, nor any redemption or repurchase of,
the Shares of any Series shall be effected by the Trust other than from the
assets belonging to such Series, nor, except as specifically provided in
Section 7 of this Article III, shall any Shareholder of any particular Series
otherwise have any right or claim against the assets belonging to any other
Series except to the extent that such Shareholder has such a right or claim
hereunder as a Shareholder of such other Series. The Trustees shall have
full discretion, to the extent not inconsistent with the 1940 Act, to
determine which items shall be treated as income and which items as capital;
and each such determination and allocation shall be conclusive and binding
upon the Shareholders.
(d) VOTING. Notwithstanding any other provision of this
Declaration of Trust, on any matter submitted to a vote of Shareholders, all
Shares of the Trust then entitled to vote shall be voted in the aggregate as
a single class without regard to Series or class; except (1) when required by
the 1940 Act or when the Trustees shall have determined that the matter
affects one or more Series or classes materially differently, Shares shall be
voted by individual Series or
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class; and (2) when the Trustees have determined that the matter affects only
the interests of one or more Series or classes, then only Shareholders of
such Series or classes shall be entitled to vote thereon.
(e) FRACTIONS. Any fractional Share of a Series or class
of any Series shall carry proportionately all the rights and obligations of a
whole share of that Series or class, as the case may be, including rights
with respect to voting, receipt of dividends and distributions, redemptions
of Shares and termination of the Trust.
(f) EXCHANGE PRIVILEGE. The Trustees shall have the
authority to provide that the holders of Shares of any Series shall have the
right to exchange said Shares for Shares of one or more other Series of
Shares in accordance with such requirements and procedures as may be
established by the Trustees.
(g) COMBINATION OF SERIES. The Trustees shall have the
authority, without the approval of the Shareholders of any Series or class of
any Series unless otherwise required by applicable law, to combine the assets
and liabilities belonging to any two or more Series or classes into assets
and liabilities belonging to a single Series or class.
(h) ELIMINATION OF SERIES OR CLASSES. At any time that
there are no Shares outstanding of any particular Series or class of any
Series previously established and designated, the Trustees may amend this
Declaration of Trust to abolish that Series or class and to rescind the
establishment and designation thereof.
Section 7. INDEMNIFICATION OF SHAREHOLDERS. In case any Shareholder
or former Shareholder shall be held to be personally liable solely by reason
of his or her being or having been a Shareholder and not because of his or
her acts or omissions or for some other reason, the Shareholder or former
Shareholder (or his or her heirs, executors, administrators, or other legal
representatives or in the case of a corporation or other entity, its
corporate or other general successor) shall be entitled out of the assets of
the Trust to be held harmless from and indemnified against all loss and
expense arising from such liability.
ARTICLE IV
The Board of Trustees
Section 1. NUMBER, ELECTION AND TENURE. The number of Trustees
constituting the Board of Trustees shall be five (5), unless such number
shall be changed from time to time by written instrument signed by a majority
of the Board of Trustees, provided, however, that the number of Trustees
shall in no event be less than one nor more than 15. The Board of Trustees,
by action of a majority of the then Trustees at a duly constituted meeting,
may fill vacancies in the Board of Trustees or remove Trustees with or
without cause. Each Trustee shall serve during the continued lifetime of the
Trust until he or she dies, resigns, is declared bankrupt or
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incompetent by a court of appropriate jurisdiction, or is removed, or, if
sooner, until the next meeting of Shareholders called for the purpose of
electing Trustees and until the election and qualification of his or her
successor. Any Trustee may resign at any time by written instrument signed
by him or her and delivered to any officer of the Trust or to a meeting of
the Trustees. Such resignation shall be effective upon receipt unless
specified to be effective at some other time. Except to the extent expressly
provided in a written agreement with the Trust, no Trustee resigning and no
Trustee removed shall have any right to any compensation for any period
following his or her resignation or removal, or any right to damages on
account of such removal. The Shareholders may fix the number of Trustees and
elect Trustees at any meeting of Shareholders called by the Trustees for that
purpose.
Section 3. POWERS. Subject to the provisions of this Declaration of
Trust, the business of the Trust shall be managed by the Board of Trustees,
and such Board shall have all powers necessary or convenient to carry out
that responsibility including the power to engage in securities transactions
of all kinds on behalf of the Trust. Without limiting the foregoing, the
Trustees may: adopt By-Laws not inconsistent with this Declaration of Trust
providing for the regulation and management of the affairs of the Trust and
may amend and repeal them to the extent that such By-Laws do not reserve that
right to the Shareholders; fill vacancies in or remove from their number, and
may elect and remove such officers and appoint and terminate such agents as
they consider appropriate; appoint from their own number and establish and
terminate one or more committees consisting of two or more Trustees which may
exercise the powers and authority of the Board of Trustees to the extent that
the Trustees determine; employ one or more custodians to employ subcustodians
and to deposit all or any part of such assets in a system or systems for the
central handling of securities or with a Federal Reserve Bank, retain a
transfer agent or a shareholder servicing agent or both; provide for the
issuance and distribution of Shares by the Trust directly or through one or
more Principal Underwriters or otherwise; redeem, repurchase and transfer
Shares pursuant to applicable law; set record dates for the determination of
Shareholders with respect to various matters; declare and pay dividends and
distributions to Shareholders of each Series from the assets of such Series;
and in general delegate such authority as they consider desirable to any
officer of the Trust, to any committee of the Trustees and to any agent or
employee of the Trust or to any such custodian, transfer or shareholder
servicing agent, or Principal Underwriter. Any determination as to what is
in the interests of the Trust made by the Trustees in good faith shall be
conclusive. In construing the provisions of this Declaration of Trust, the
presumption shall be in favor of a grant of power to the Trustees.
Without limiting the foregoing, the Board of Trustees shall have power
and authority:
(f) Subject to the provisions of Article III, Section 3, to
allocate assets, liabilities, income and expenses of the Trust to a
particular Series of Shares or to apportion the same among two or more
Series, provided that any liabilities or expenses incurred by or arising in
connection with a particular Series of Shares shall be payable solely out of
the assets of that Series; and to the extent necessary or appropriate to give
effect to the preferences and special or relative rights
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and privileges of any classes of Shares, to allocate assets, liabilities,
income and expenses of a Series to a particular class of Shares of the Series
or to apportion the same among two or more classes of Shares of that Series;
(m) To purchase and pay for entirely out of Trust property such
insurance as they may deem necessary or appropriate for the conduct of the
business, including, without limitation, insurance policies insuring the
assets of the Trust or payment of distributions and principal on its
portfolio investments, and insurance policies insuring the Shareholders,
Trustees, officers, employees, agents, investment advisers, principal
underwriters, or independent contractors of the Trust, individually against
all claims and liabilities of every nature arising by reason of holding,
being or having held any such office or position, or by reason of any action
alleged to have been taken or omitted by any such person as Trustee, officer,
employee, agent, investment adviser, principal underwriter, or independent
contractor, including any action taken or omitted that may be determined to
constitute negligence; whether or not the Trust would have the power to
indemnify such person against liability;
Section 5. PAYMENT OF EXPENSES BY SHAREHOLDERS. The Trustees shall
have the power, as frequently as they may determine, to cause each
Shareholder, or each Shareholder of any particular Series or class, to pay
directly, in advance or arrears, for charges of the Trust's custodian or
transfer, Shareholder servicing or similar agent, an amount fixed from time
to time by the Trustees, by setting off such charges due from such
Shareholder from declared but unpaid dividends owed such Shareholder and/or
by reducing the number of shares in the account of such Shareholder by that
number of full and/or fractional Shares which represents the outstanding
amount of such charges due from such Shareholder.
Section 7. SERVICE CONTRACTS.
(e) The fact that:
(i) any of the Shareholders, Trustees, or officers
of the Trust is a shareholder, director, officer, partner, trustee,
employee, manager, adviser, principal underwriter, distributor, or
affiliate or agent of or for any corporation, trust, association, or
other organizational or for any parent or affiliate of any organization
with which an advisory or management contract, or principal
underwriter's or distributor's contract, or transfer, shareholder
servicing or other type of service contract may have been or may
hereafter be made, or that any such organization, or any parent or
affiliate thereof, is a Shareholder or has an interest in the Trust, or
that
(ii) any corporation, trust, association or other
organization with which an advisory or management contract or principal
underwriter's or distributor's contract, or transfer, shareholder
servicing or other type of service contract may have been or may
hereafter be made also has an advisory or management contract, or
principal underwriter's or distributor's contract, or transfer,
shareholder servicing or other service
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contract with one or more other corporations, trust, associations, or
other organizations, or has other business or interests
shall not affect the validity of any such contract or disqualify any
Shareholder, Trustee or officer of the Trust from voting upon or executing
the same, or create any liability or accountability to the Trust or its
Shareholders, provided approval of each such contract is made pursuant to the
requirements of the 1940 Act.
ARTICLE V
Shareholder Voting Powers and Meetings
Section 1. VOTING POWERS. Subject to the voting powers of one or
more classes of Shares as set forth elsewhere in this Declaration of Trust or
in the Bylaws, the Shareholders shall have power to vote only (i) for the
election of Trustees as provided in Article IV, Section 1, (ii) to the same
extent as the stockholders of a Massachusetts business corporation as to
whether or not a court action, proceeding or claim should, or should not be
brought or maintained derivatively or as a class action on behalf of the
Trust or the Shareholders, (iii) with respect to the termination of the Trust
or any Series or class to the extent and as provided in Article VIII, Section
4, and (iv) with respect to such additional matters relating to the Trust as
may be required by any registration of the Trust with the Commission (or any
successor agency) or any state, or as the Trustees may consider necessary or
desirable. Each whole Share shall be entitled to one vote as to any matter
on which it is entitled to vote and each fractional Share shall be entitled
to a proportionate fractional vote. There shall be no cumulative voting in
the election of Trustees. Shares may be voted in person or by proxy. A
proxy with respect to Shares held in the name of two or more persons shall be
valid if executed by any one of them unless at or prior to exercise of the
proxy the Trust receives a specific written notice to the contrary from any
one of them. A proxy purporting to be executed by or on behalf of a
Shareholder shall be deemed valid unless challenged at or prior to its
exercise and the burden of proving invalidity shall rest on the challenger.
At any time when no Shares of a Series or class are outstanding, the Trustees
may exercise all rights of Shareholders of that Series or class with respect
to matters affecting that Series or class, take any action required by law,
this Declaration of Trust or the By-Laws, to be taken by Shareholders.
Section 2. VOTING POWER AND MEETINGS. Meetings of the Shareholders
of the Trust or of any Series or class may be called by the Trustees for the
purpose of electing Trustees as provided in Article IV, Section 1 and for
such other purposes as may be prescribed by law, by this Declaration of Trust
or by the By-Laws. Meetings of the Shareholders may also be called by the
Trustees from time to time for the purpose of taking action upon any other
matter deemed by the Trustees to be necessary or desirable. A meeting of
Shareholders may be held at any place designated by the Trustees. Written
notice of any meeting of Shareholders shall be give or
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caused to be given by the Trustees by mailing such notice at least seven (7)
days before such meeting, postage prepaid, stating the time and place of the
meeting, to each Shareholder entitled to vote at such meeting, at the
Shareholder's address as it appears on the records of the Trust. Whenever
notice of a meeting is required to be given to a Shareholder under this
Declaration of Trust or the By-Laws, a written waiver thereof, executed
before or after the meeting by such Shareholder or his or her attorney
thereunto authorized and filed with the records of the meeting, shall be
deemed equivalent to such notice.
Section 3. QUORUM AND REQUIRED VOTE. Except when a larger quorum is
required by applicable law, by the By-Laws or by this Declaration of Trust,
forty percent (40%) of the Shares entitled to vote on a particular matter
shall constitute a quorum for the transaction of business on that matter at a
Shareholders' meeting, except that where any provision of law or of this
Declaration of Trust or the By-Laws requires that holders of any Series or
class shall vote as a Series or class, then forty percent (40%) of the
aggregate number of Shares of that Series or class entitled to vote shall be
necessary to constitute a quorum for the transaction of business by that
Series or class. Any lesser number shall be sufficient for adjournments.
Any adjourned session or sessions may be held within a reasonable time
after the date set for the original meeting without further notice. Except
when a larger vote is required by any provision of this Declaration of Trust
or the By-Laws or by applicable law, when a quorum is present, a majority of
the Shares voted shall decide any questions and a plurality shall elect a
Trustee, provided that where any provision of law or of this Declaration of
Trust or of the By-Laws permits or requires that the holders of any Series or
class shall vote as a Series or class, then a majority of the Shares of that
Series or class voted on the matter (or a plurality with respect to the
election of a Trustee) shall decide that matter insofar as that Series or
class is concerned.
Section 4. ACTION BY WRITTEN CONSENTS. Any action taken by
Shareholders may be taken without a meeting if Shareholders holding a
majority of the Shares entitled to vote on the matter (or such larger
proportion thereof as shall be required by any express provision of this
Declaration of Trust or by the By-Laws) consent to the action in writing and
such written consents are filed with the records of the meetings of
Shareholders. Such consent shall be treated for all purposes as a vote taken
at a meeting of Shareholders.
Section 5. RECORD DATES. For the purpose of determining the
Shareholders of any Series or class who are entitled to vote or act at any
meeting or any adjournment thereof, the Trustees may from time to time fix a
time, which shall be not more than ninety (90) days before the date of any
meeting of Shareholders, as the record date for determining the Shareholders
of such Series or class having the right to notice of and to vote at such
meeting and any adjournment thereof, and in such case only Shareholders of
record on such record date shall have such right, notwithstanding any
transfer of shares on the books of the Trust after the record date. For the
purpose of determining the Shareholders of any Series or class who are
entitled to receive payment or any dividend or of any other distribution, the
Trustees may from time to time fix a
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date, which shall be before the date for the payment of such dividend or such
other payment, as the record date for determining the Shareholders of such
Series or class having the right to receive such dividend or distribution.
Without fixing a record date the Trustees may for voting and/or distribution
purposes close the register or transfer books for one or more Series or
classes for all or any part of the period between a record date and a meeting
of Shareholders or the payment of a distribution. Nothing in this Section
shall be construed as precluding the Trustees from setting different record
dates for different Series or classes.
Section 6. ADDITIONAL PROVISIONS. The By-Laws may include further
provisions for Shareholders' votes and meetings and related matters.
ARTICLE VI
Net Asset Value, Distributions, and Redemptions
Section 1. DETERMINATION OF NET ASSET VALUE, NET INCOME, AND
DISTRIBUTIONS. The term "net asset value" of the Shares of each Series or
class shall mean: (i) the value of all the assets of such Series or class;
(ii) less the total liabilities of such Series or class; (iii) divided by the
number of Shares of such Series or class outstanding, in each case at the
time of each determination. The "number of Shares of such Series or class
outstanding" for the purposes of such computation shall be exclusive of any
Shares of such Series or class to be redeemed and not then redeemed as to
which the redemption price has been determined, but shall include Shares of
such Series or class presented for repurchase and not then repurchased and
Shares of such Series or class to be redeemed and not then redeemed as to
which the redemption price has not been determined and Shares of such Series
or class the sale of which has been confirmed. Any fractions involved in the
computation of net asset value per share shall be adjusted to the nearest
cent unless the Trustees shall determine to adjust such fractions to a
fraction of a cent.
Determinations under this Section made in good faith shall be binding on
all parties concerned. The manner of determining the net assets of any Series
or class or of determining the net asset value of the Shares of any Series or
class may from time to time be altered as necessary or desirable in the
judgment of the Trustees to conform to any other method prescribed or
permitted by any applicable law or regulation.
Section 2. REDEMPTIONS AND REPURCHASES. The Trust shall purchase
such Shares as are offered by any Shareholder for redemption, upon the
presentation of a proper instrument of transfer together with a request
directed to the Trust or a person designated by the Trust that the Trust
purchase such Shares or in accordance with such other procedures for
redemption as the Trustees may from time to time authorize; and the Trust
will pay therefor the net asset value thereof, as determined in accordance
with the By-Laws and applicable law, next determined. Payment for said
Shares shall be made by the Trust to the Shareholder within seven days after
the date on which the request is made in proper form. The obligation set
forth in this Section 2 is subject to the provision that in the event that
any time the New York Stock Exchange is closed
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for other than weekends or holidays, or if permitted by the Rules of the
Commission during periods when trading on the Exchange is restricted or
during any emergency which makes it impracticable for the Trust to dispose of
the investments of the applicable Series or to determine fairly the value of
the net assets belonging to such Series or during any other period permitted
by order of the Commission for the protection of investors, such obligations
may be suspended or postponed by the Trustees.
The redemption price may in any case or cases be paid wholly or partly
in kind if the Trustees determine that such payment is advisable in the
interest of the remaining Shareholders of the Series for which the Shares are
being redeemed. Subject to the foregoing, the fair value, selection and
quantity of securities or other property so paid or delivered as all or part
of the redemption price may be determined by or under authority of the
Trustees. In no case shall the Trust be liable for any delay of any
corporation or other person in transferring securities selected for delivery
as all or part of any payment in kind.
Section 3. REDEMPTIONS AT THE OPTION OF THE TRUST. The Trust shall
have the right at its option and at any time to redeem Shares of any
Shareholder at the net asset value thereof as described in Section 1 of this
Article VI: (i) if at such time such Shareholder owns Shares of any Series
having an aggregate net asset value of less than an amount determined from
time to time by the Trustees, but not to exceed $40,000; or (ii) to the
extent that such Shareholder owns Shares equal to or in excess of a
percentage, determined from time to time by the Trustees, of the outstanding
Shares of the Trust or of any Series or class of any Series.
ARTICLE VIII
Miscellaneous
Section 1. TRUSTEES, SHAREHOLDERS, ETC. NOT PERSONALLY LIABLE;
NOTICE. All persons extending credit to, contracting with or having any claim
against the Trust or any Series shall look only to the assets of the Trust,
or, to the extent that the liability of the Trust may have been expressly
limited by contract to the assets of a particular Series, only to the assets
belonging to the relevant Series, for payment under such credit, contract or
claim; and neither the Shareholders nor the Trustees, nor any of the Trust's
officers, employees or agents, whether past, present or future, shall be
personally liable therefor. Nothing in this Declaration of Trust shall
protect any Trustee against any liability to which such Trustee would
otherwise be subject by reason of wilful misfeasance, bad faith, gross
negligence or reckless disregard of the duties involved in the conduct of the
office of Trustee.
Every note, bond, contract, instrument, certificate or undertaking made
or issued on behalf of the Trust by the Board of Trustees, by any officers or
officer or otherwise may include a notice that this Declaration of Trust is
on file with the Secretary of The Commonwealth of Massachusetts and may
recite that the note, bond, contract, instrument, certificate or undertaking
was executed or made by or on behalf of the Trust or by them as Trustee or
Trustees or as
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officers or officer or otherwise and not individually and that the
obligations of such instrument are not binding upon any of them or the
Shareholders individually but are binding only upon the assets and property
of the Trust or upon the assets belonging to the Series or class for the
benefit of which the Trustees have caused the note, bond, contract,
instrument, certificate or undertaking to be made or issued, and may contain
such further recital as he or she or they may deem appropriate, but the
omission of any such recital shall not operate to bind any Trustee or
Trustees or officer or officers or Shareholders of any other person
individually.
Section 4. TERMINATION OF TRUST OR SERIES. Unless terminated as
provided herein, the Trust shall continue without limitation of time. The
Trust may be terminated at any time by the affirmative vote of a "majority of
the outstanding voting securities" of each Series (as the quoted phrase is
defined in the 1940 Act), voting separately by Series, or by the Trustees by
written notice to the Shareholders. Any Series may be terminated at any time
by vote of the affirmative vote of "majority of the outstanding voting
securities" of that Series (as the quoted phrase is defined in the 1940 Act)
or by the Trustees by written notice to the Shareholders of that Series.
Upon termination of the Trust (or any Series, as the case may be), after
paying or otherwise providing for all charges, taxes, expenses and
liabilities belonging, severally, to each Series (or the applicable Series,
as the case may be), whether due or accrued or anticipated as may be
determined by the Trustees, the Trust shall, in accordance with such
procedures as the Trustees consider appropriate, reduce the remaining assets
belonging, severally, to each Series (or the applicable Series, as the case
may be), to distributable form in cash or shares or other securities, or any
combination thereof, and distribute the proceeds belonging to each Series (or
the applicable Series, as the case may be), to the Shareholders of that
Series, as a Series, ratably according to the number of Shares of that Series
held by the several Shareholders on the date of termination, except to the
extent otherwise required or permitted by the preferences and special or
relative rights and privileges of any classes of Shares of that Series,
provided that any distribution to the Shareholders of a particular class of
Shares shall be made to such Shareholders pro rata in proportion to the
number of Shares of such class held by each of them.
Section 5. MERGER AND CONSOLIDATION. The Trustees may cause the
Trust or one or more of its Series to be merged into or consolidated with
another Trust or company or the Shares exchanged under or pursuant to any
state or Federal statute, if any, or otherwise to the extent permitted by
law. Such merger or consolidation of Share exchange must be authorized by
vote of a majority of the outstanding Shares of the Trust, as whole, or any
affected Series, as may be applicable; provided that in all respects not
governed by statute or applicable law, the Trustees shall have power to
prescribe the procedure necessary or appropriate to accomplish a sale of
assets, merger or consolidation.
Section 6. FILING OF COPIES, REFERENCES, HEADINGS. The original or
a copy of this instrument and of each amendment hereto shall be kept at the
office of the Trust where it may be inspected by any Shareholder. A copy of
this instrument and of each amendment hereto shall be filed by the Trust with
the Secretary of The Commonwealth of Massachusetts and with any other
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governmental office where such filing may from time to time be required.
Anyone dealing with the Trust may rely on a certificate by an officer of the
Trust as to whether or not any such amendments have been made and as to any
matters in connection with the Trust hereunder; and, with the same effect as
if it were the original, may rely on a copy certified by an officer of the
Trust to be a copy of this instrument or of any such amendments. In this
instrument and in any such amendment, references to this instrument, and all
expressions like "herein," "hereof," and "hereunder," shall be deemed to
refer to this instrument as amended or affected by any such amendments.
Headings are placed herein for convenience of reference only and shall not be
taken as a part hereof or control or affect the meaning, construction or
affect of this instrument. This instrument may be executed in any number of
counterparts each of which shall be deemed an original.
Section 9. TRUST ONLY. It is the intention of the Trustees to
create only the relationship of Trustee and beneficiary between the Trustees
and each Shareholder from time to time. It is not the intention of the
Trustees to create a general partnership, limited partnership, joint stock
association, corporation, bailment, or any form of legal relationship other
than a trust. Nothing in this Agreement and Declaration of Trust shall be
construed to make the Shareholders, either by themselves, or with the
Trustees, partners or members of a joint stock association.
<PAGE>
EXHIBIT c(iii)
PORTIONS OF BY-LAWS
OF
RS INVESTMENT TRUST
AS AMENDED THROUGH JULY 22, 1997
PERTAINING TO SHAREHOLDERS' RIGHTS
ARTICLE II
Meetings of Shareholders
SECTION 3. NOTICE OF SHAREHOLDERS' MEETING. All notices of meetings
of shareholders shall be sent or otherwise given in accordance with Section 4
of this Article II not less than seven (7) nor more than seventy-five (75)
days before the date of the meeting. The notice shall specify (i) the place,
date, and hour of the meeting, and (ii) the general nature of the business to
be transacted. The notice of any meeting at which Trustees are to be elected
also shall include the name of any nominee or nominees whom at the time of
the notice are intended to be presented for election.
SECTION 4. MANNER OF GIVING NOTICE; AFFIDAVIT OF NOTICE. Notice of
any meeting of shareholders shall be given either personally or by
first-class mail or telegraphic or other written communication, charges
prepaid, addressed to the shareholder at the address of that shareholder
appearing on the books of the Trust or its transfer agent or given by the
shareholder to the Trust for the purpose of notice. If no such address
appears on the Trust's books or is given, notice shall be deemed to have been
given if sent to that shareholder by first-class mail or telegraphic or other
written communication to the Trust's principal executive office, or if
published at least once in a newspaper of general circulation in the county
where that office is located. Notice shall be deemed to have been given at
the time when delivered personally or deposited in the mail or sent by
telegram or other means of written communication.
If any notice addressed to a shareholder at the address of that
shareholder appearing on the books of the Trust is returned to the Trust by
the United States Postal Service marked to indicate that the Postal Service
is unable to deliver the notice to the shareholder at that address, all
future notices or reports shall be deemed to have been duly given without
further mailing if these shall be available to the shareholder on written
demand of the shareholder at the principal executive office of the Trust for
a period of one year from the date of the giving of the notice.
An affidavit of the mailing or other means of given any notice of any
shareholder's meeting shall be executed by the secretary, assistance
secretary or any transfer agent of the Trust giving the notice and shall be
filed and maintained in the minute book of the Trust.
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SECTION 5. ADJOURNED MEETING; NOTICE. Any shareholder's meeting,
whether or not a quorum is present, may by adjourned from time to time by the
vote of the majority of the shares represented at that meeting, either in
person or by proxy.
When any meeting of shareholders is adjourned to another time or place,
notice need not be given of the adjourned meeting at which the adjournment is
taken, unless a new record date of the adjourned meeting is fixed or unless
the adjournment is for more than sixty (60) days from the date set for the
original meeting, in which case the Board of Trustees shall set a new record
date. Notice of any such adjourned meeting shall be given to each shareholder
of record entitled to vote at the adjourned meeting in accordance with the
provisions of Sections 3 and 4 of this Article II. At any adjourned meeting
the Trust may transact any business which might have been transacted at the
original meeting.
SECTION 6. VOTING. The shareholders entitled to vote at any meeting
of shareholders shall be determined in accordance with the provisions of the
Declaration of Trust, as in effect at such time. The shareholders' vote may
be by voice vote or by ballot, provided, however, that any election for
Trustees must be by ballot if demanded by any shareholder before the voting
has begun. On any matter other than elections of Trustees, any shareholder
may vote part of the shares in favor of the proposal and refrain from voting
the remaining shares or vote them against the proposal, but if the
shareholder fails to specify the number of shares which the shareholder is
voting affirmatively, it will be conclusively presumed that the shareholder's
approving vote is with respect to the total shares that the shareholder is
entitled to vote on such proposal.
SECTION 7. WAIVER OF NOTICE BY CONSENT OF ABSENT SHAREHOLDERS. The
transactions of the meeting of shareholders, however called and noticed and
wherever held, shall be as valid as though had at a meeting duly held after
regular call and notice if a quorum be present either in person or by proxy
and if either before or after the meeting, each person entitled to vote who
was not present in person or by proxy signs a written waiver of notice or a
consent to a holding of the meeting or an approval of the minutes. The
waiver of notice or consent need not specify either the business to be
transacted or the purpose of any meeting of shareholders.
Attendance by a person at a meeting shall also constitute a waiver of
notice of that meeting, except when the person objects at the beginning of
the meeting to the transaction of any business because the meeting is not
lawfully called or convened and except that attendance at a meeting is not a
waiver of any right to object to the consideration of matters not included in
the notice of the meeting if that objection is expressly made at the
beginning of the meeting.
SECTION 8. SHAREHOLDER ACTION BY WRITTEN CONSENT WITHOUT A MEETING.
Any action which may be taken at any meeting of shareholders may be taken
without a meeting and without prior notice if a consent in writing setting
forth the action so taken is signed by the holders of outstanding shares
having not less than the minimum number of votes that would be necessary to
authorize or take that action at a meeting at which all shares entitled to
vote on that action were present and voted. All such consents shall be filed
with the Secretary of the Trust and shall be
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maintained in the Trust's records. Any shareholder giving a written consent
or the shareholder's proxy holders or a transferee of the shares or a
personal representative of the shareholder or their respective proxy holders
may revoke the consent by a writing received by the Secretary of the Trust
before written consents of the number of shares required to authorize the
proposed action have been filed with the Secretary.
If the consents of all shareholders entitled to vote have not been
solicited in writing and if the unanimous written consent of all such
shareholders shall not have been received, the Secretary shall give prompt
notice of the action approved by the shareholders without a meeting. This
notice shall be given in the manner specified in Section 4 of this Article
II. In the case of approval of (i) contracts or transactions in which a
Trustee has a direct or indirect financial interest, (ii) indemnification of
agents of the Trust, and (iii) a reorganization of the Trust, the notice
shall be given at least ten (10) days before the consummation of any action
authorized by that approval.
SECTION 9. RECORD DATE FOR SHAREHOLDER NOTICE, VOTING AND GIVING
CONSENTS. For purposes of determining the shareholders entitled to notice of
any meeting or to vote or entitled to give consent to action without a
meeting, the Board of Trustees may fix in advance a record date which shall
not be more than ninety (90) days nor less than seven (7) days before the
date of any such meeting as provided in the Declaration of Trust.
If the Board of Trustees does not so fixed a record date:
(a) The record date for determining shareholders entitled to notice
of or to vote at a meeting of shareholders shall be at the close of
business on the business day next preceding the day on which notice is
given or if notice is waived, at the close of business on the business day
next preceding the day on which the meeting is held.
(b) The record date for determining shareholders entitled to give
consent to action in writing without a meeting, (i) when no prior action
by the Board of Trustees has been taken, shall be the day on which the
first written consent is given, or (ii) when prior action of the Board of
Trustees has been taken, shall be at the close of business on the day on
which the Board of Trustees adopt the resolution relating to that action
or the seventy-fifth day before the date of such other action, whichever
is later.
SECTION 10. PROXIES. Every person entitled to vote for Trustees or
on any other matter shall have the right to do so either in person or by one
or more agents authorized by a written proxy signed by the person and filed
with the Secretary of the Trust. A proxy shall be deemed signed if the
shareholder's name is placed on the proxy (whether by manual signature,
typewriting, telegraphic transmission or otherwise) by the shareholder or the
shareholder's attorney-in-fact. A validly executed proxy which does not
state that it is irrevocable shall continue in full force and effect unless
(i) revoked by the person executing it before the vote pursuant to that proxy
by a writing delivered to the Trust stating that the proxy is revoked or by a
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subsequent proxy executed by or attendance at the meeting and voting in
person by the person executing that proxy; or (ii) written notice of the
death or incapacity of the maker of that proxy is received by the Trust
before the vote pursuant to that proxy is counted; provided however, that no
proxy shall be valid after the expiration of eleven (11) months from the date
of the proxy unless otherwise provided in the proxy. The revocability of a
proxy that states on its face that it is irrevocable shall be governed by the
provisions of the Massachusetts Business Corporation Law.
SECTION 11. INSPECTORS OF ELECTION. Before any meeting of
shareholders, the Board of Trustees may appoint any persons other than
nominees for office to act as inspectors of election at the meeting or its
adjournment. If no inspectors of election are so appointed, the chairman of
the meeting may and on the request of any shareholder or a shareholder's
proxy shall, appoint inspectors of election at the meeting. The number of
inspectors shall be either one (1) or three (3). If inspectors are appointed
at a meeting on the request of one or more shareholders or proxies, the
holders of a majority of shares or their proxies present at the meeting shall
determine whether one (1) or three (3) inspectors are to be appointed, as
inspector fails to appear or fails or refuses to act, the chairman of the
meeting may and on the request of any shareholder or a shareholder's proxy,
shall appoint a person to fill the vacancy.
These inspectors shall:
(c) Determine the number of shares outstanding and the voting power
of each, the shares represented at the meeting, the existence of a quorum
and the authenticity, validity and effect of proxies;
(d) Receive votes, ballots or consents;
(e) Hear and determine all challenges and questions in any way
arising in connection with the right to vote;
(f) Count and tabulate all votes or consents;
(g) Determine when the polls shall close;
(h) Determine the result; and
(i) Do any other acts that may be proper to conduct the election or
vote with fairness to all shareholders.
SECTION 12. ELECTRONIC PROXY, ETC. The placing of a shareholder's name on a
proxy pursuant to telephone or electronically transmitted instructions
obtained pursuant to procedures reasonably designed to verify that such
instructions have been authorized by such shareholder shall constitute
execution of such proxy by or on behalf of such shareholder.
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ARTICLE III
Trustees
SECTION 2. VACANCIES. Vacancies in the Board of Trustees may be filled
by a majority of the remaining Trustees, though less than a quorum, or by a
sole remaining Trustee, unless the Board of Trustees calls a meeting of
shareholders for the purposes of electing Trustees. In the event that at any
time less than a majority of the Trustees holding office at that time were so
elected by the holders of the outstanding voting securities of the Trust, the
Board of Trustees shall forthwith cause to be held as promptly as possible,
and in any event within sixty (60) days, a meeting of such holders for the
purpose of electing Trustees to fill any existing vacancies in the Board of
Trustees, unless such period is extended by order of the United States
Securities and Exchange Commission.
ARTICLE VI
Indemnification of Trustees, Officers, Employees
and Other Agents
SECTION 1. MANDATORY INDEMNIFICATION. (a) Subject to the
exceptions and limitations contained in paragraph (b) below:
(i) every person who is or has been a Trustee, officer, employee or
agent of the Trust (including persons who serve at its request as
directors, officers, employees or trustees of another organization in
which it has any interest, as a shareholder, creditor or otherwise) shall
be indemnified by the Trust against all liability and against all expenses
reasonably incurred or paid by him in connection with any claim, action,
suit or proceeding in which he becomes involved as a party or otherwise by
virtue of his being or having been a Trustee, officer, employee or agent
and against amounts paid or incurred by him in the settlement thereof;
(ii) the word "claim," "action," "suit," or "proceeding" shall apply
to all claims, actions, suits or proceedings (civil, criminal, or other,
including appeals), actual or threatened; and the words "liability" and
"expense" shall include, without limitation, attorneys' fees, costs,
judgments, amounts paid in settlement, fines, penalties and other
liabilities.
(b) No indemnification shall be provided hereunder to a Trustee,
officer, employee or agent:
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(i) against any liability to the Trust or the shareholders by reason
of a final adjudication by the court or other body before which the
proceeding was brought that he engaged in willful misfeasance, bad
faith, gross negligence or reckless disregard of the duties involved
in the conduct of his office;
(ii) with respect to any matter as to which he shall have been
finally adjudicated not to have acted in good faith in the reasonable
belief that his action was in the best interest of the Trust;
(iii) in the event of a settlement involving a payment by a
Trustee, officer, employee or agent or other disposition not
involving a final adjudication as provided in paragraph (b)(i) or
(b)(ii) resulting in a payment by a Trustee, officer, employee or
agent, unless there has been either a determination that such
Trustee, officer, employee or agent did not engage in willful
misfeasance, bad faith, gross negligence or reckless disregard of
the duties involved in the conduct of his office by the court or
other body approving the settlement or other disposition or a
reasonable determination, based upon a review of readily available
facts (as opposed to a full trial-type inquire) that he did not
engage in such conduct:
(A) by vote of a majority of the Disinterested Trustees acting
on the matter (provided that a majority of the Disinterested
Trustees then in office act on the matter); or
(B) by written opinion of independent legal counsel.
(c) The rights of indemnification herein provided may be insured
against by policies maintained by the Trust, shall be severable, shall not
affect any other rights to which any Trustee, officer, employee or agent may
now or hereafter be entitled, shall continue as to a person who has ceased to
be such Trustee, officer, employee or agent and shall inure to the benefit of
the heirs, executors and administrators of such person. Nothing contained
herein shall affect any rights to indemnification to which personnel other
than Trustees, officers, employee and agents may be entitled by contract or
otherwise under law.
(d) Expenses of investigation, preparation and presentation of a
defense to any claim, action, suit, or proceeding of the character described
in paragraph (a) of this Section 1 shall be advance by the Trust prior to
final disposition thereof upon receipt of an undertaking by or on behalf of
the recipient to repay such amount if it is ultimately determined that he is
not entitled to indemnification under this Section 1, provided that either
(i) such undertaking is secured by a surety bond or some other
appropriate security of the Trust shall be insured against losses
arising out of any such advances; or
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(ii) a majority of the Disinterested Trustees acting on the matter
(provided that a majority of the Disinterested Trustees then in office act
on the matter) or an independent legal counsel in a written opinion, shall
determine, based upon a review of readily available facts (as opposed to a
full trial-type inquiry), that there is reason to believe that the
recipient ultimately will be found entitled to indemnification.
As used in this Section 1, a "Disinterested Trustee" is one (i) who is
not an "Interested Person" of the Trust as defined in the Investment Company
Act of 1940, as amended (including anyone who has been exempted from being an
"Interested Person" by any rule, regulation or order of the United States
Securities and Exchange Commission) and (ii) against whom none of such
actions, suits or other proceedings or another action, suit or other
proceeding on the same or similar grounds is then or had been pending.
ARTICLE VII
Records and Reports
SECTION 2. MAINTENANCE AND INSPECTION OF BY-LAWS. The Trust shall
keep at its principal executive office the original or a copy of these
By-Laws as amended to date, which shall be open to inspection by the
shareholders at all reasonable times during office hours.
SECTION 3. MAINTENANCE AND INSPECTION OF OTHER RECORDS. The
accounting books and records and minutes of proceedings of the shareholders
and the Board of Trustees and any committee or committees of the Board of
Trustees shall be kept at such place or places designated by the Board of
Trustees or in the absence of such designation of the principal executive
office of the Trust. The minutes shall be kept in written form and the
accounting books and records shall be kept either in written form or in any
other form capable of being converted into written form. The minutes and
accounting books and records shall be open to inspection upon the written
demand of any shareholders or holder of a voting trust certificate at any
reasonable time during usual business hours for a purpose reasonably related
to the holder's interests as a shareholder or as the holder of a voting trust
certificate. The inspection may be made in person or by an agent or attorney
and shall include the right to copy and make extracts.
SECTION 5. FINANCIAL STATEMENTS. A copy of any financial statements
and any income statement of the Trust for each quarterly period of each
fiscal year and accompanying balance sheet of the Trust as of the end of each
such period that has been prepared by the Trust shall be kept on file in the
principal executive office of the Trust for at least twelve (12) months and
each such statement shall be exhibited at all reasonable times to any
shareholder demanding an examination of any such statement or a copy shall be
mailed to any such shareholder.
The quarterly income statements and balance sheets referred to in this
section shall be accompanied by the report, if any, of any independent
accounting engaged by the Trust or the
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certificate of an authorized officer of the Trust that the financial
statements were prepared without audit from the books and records of the
Trust.
ARTICLE VIII
General Matters
SECTION 3. CERTIFICATES FOR SHARES. A certificate or certificates
for shares of beneficial interest in any series of the Trust may be issued to
a shareholder upon his request when such shares are fully paid. All
certificates shall be signed in the name of the Trust by the chairman of the
board or the president or vice president and by the treasurer or an assistant
treasurer or the secretary or any assistant secretary, certifying the number
of shares and the series of shares owned by the shareholders. Any or all of
the signatures on the certificate may be facsimile. In case any officer,
transfer agent, or registrar who has signed or whose facsimile signature has
been placed on a certificate shall have ceased to be that officer, transfer
agent, or registrar before that certificate is issued, it may be issued by
the Trust with the same effect as if that person were an officer, transfer
agent or registrar at the date of issue. Notwithstanding the foregoing, the
Trust may adopt and use a system of issuance, recordation and transfer of its
shares by electronic or other means.
SECTION 4. LOST CERTIFICATES. Except as provided in this Section 4,
no new certificates for shares shall be issued to replace an old certificate
unless the latter is surrendered to the Trust and canceled at the same time.
The Board of Trustees may in case any share certificate or certificate for
any other security is lost, stolen, or destroyed, authorize the issuance of a
replacement certificate on such terms and conditions as the board of Trustees
may require, including a provision for indemnification of the Trust secured
by a bond or other adequate security sufficient to protect the Trust against
any claim that may be made against it, including any expense or liability on
account of the alleged loss, theft, or destruction of the certificate or the
issuance of the replacement certificate.
ARTICLE IX
Amendments
SECTION 1. AMENDMENT BY SHAREHOLDERS. These By-Laws may be amended
or repealed by the affirmative vote or written consent of a majority of the
outstanding shares entitled to vote, except as otherwise provided by
applicable law or by the Declaration of Trust or these By-Laws.
<PAGE>
EXHIBIT d(i)
RS INVESTMENT TRUST
INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT ("Agreement") made as of the 26th day of
February, 1999, by and between RS INVESTMENT TRUST, a business trust organized
and existing under the laws of The Commonwealth of Massachusetts (the "Trust"),
on behalf of each of its series of shares of beneficial interest named on
Schedule 1 to this Agreement, as it may be amended by the parties from
time to time (each, a "Fund"), and RS INVESTMENT MANAGEMENT, L.P. (the
"Adviser")
W I T N E S S E T H :
WHEREAS, the Trust is an open-end, management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Trust and each Fund pursuant to the terms and provisions of this
Agreement, and the Adviser is interested in furnishing said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto mutually agree as follows:
1. EMPLOYMENT OF ADVISER. (a) The Trust hereby employs the Adviser, and
the Adviser hereby accepts such employment, to render investment advice and
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. The Adviser
shall, except as otherwise provided for herein, as part of its duties hereunder,
(i) furnish 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, including the taking of such other steps as may be
necessary to implement such advice and recommendations, (ii) furnish the Trust
and each Fund with reports, statements, and other data on securities, economic
conditions, and other pertinent subjects in respect of the investment management
of each Fund which the Trust's Board of Trustees may request, and (iii) in
general superintend and manage the investments of each Fund, subject to the
ultimate supervision and direction of the Trust's Board of Trustees. In
addition, in respect of each Fund designated as an "Administrative Fund" on
Schedule 1 to this Agreement, the Adviser shall, except as otherwise provided
for herein, render or make available all administrative services needed for the
management and operation of the Fund, and shall furnish such office space and
personnel as are needed by the Fund.
(b) The Adviser shall determine the securities to be purchased or sold by
each Fund and will place orders pursuant to its determinations with or through
such persons, brokers, or dealers in conformity with the policy with respect to
brokerage as set forth in the Trust's Registration Statement and each Fund's
Prospectus and Statement of Additional Information or as the Trustees may direct
from time to time.
2. SUB-ADVISERS AND CONSULTANTS. The Adviser may from time to time, in its
discretion, delegate certain of its responsibilities under this Agreement in
respect of any Fund to one or more qualified companies, each of which is
registered under the Investment Advisers Act of 1940, as amended, provided that
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<PAGE>
separate costs of employing such companies and of the companies themselves are
borne by the Adviser and not by the Fund in question.
3. ADVISER IS INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Trust or any Fund in any way, or in any way be deemed an agent for the Trust or
any Fund. It is expressly understood and agreed that the services to be rendered
by the Adviser to the Trust and each Fund under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. RESPONSIBILITIES AND PERSONNEL OF ADVISER. The Adviser agrees to use
its best efforts in the furnishing of investment advice, research, and
recommendations to each Fund, in the preparation of reports and information, and
in the management of each Fund's assets, all pursuant to this Agreement, and for
this purpose the Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed to include
persons employed or retained by the Adviser to furnish statistical, research,
and other factual information, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice, and assistance as the Adviser may desire and request.
5. FURNISHING OF STATEMENTS AND REPORTS. The Trust shall from time to time
furnish to the Adviser detailed statements of the portfolio investments and
assets of each Fund and information as to each Fund's investment objectives and
needs, and shall make available to the Adviser such financial reports, business
descriptions and plans, proxy statements, legal information, and other
information relating to its investments as may be in the possession of the Trust
or available to it and such other information as the Adviser may reasonably
request.
6. EXPENSES OF EACH PARTY. (a) The Adviser shall bear all expenses in
connection with the performance of its services under this Agreement. The
Adviser shall also pay (i) all compensation, if any, to the executive officers
of the Trust and their related expenses and (ii) all compensation, if any, and
out-of-pocket expenses of the Trust's Trustees, who are "interested persons" of
the Trust (as defined in the Act).
(b) The Trust shall bear all expenses of each Fund's organization,
operations, and business not specifically assumed or agreed to be paid by the
Adviser as provided in this Agreement. In particular, but without limiting the
generality of the foregoing, the Trust on behalf of each Fund and out of such
Fund's assets shall pay:
(A) CUSTODY AND ACCOUNTING SERVICES. All expenses of the transfer,
receipt, safekeeping, servicing, and accounting for the cash, securities,
and other property of the Fund, including all charges of depositories,
custodians, and other agents, if any;
(B) SHAREHOLDER SERVICING. All expenses of maintaining and servicing
shareholder accounts, including all charges for transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents for the
benefit of the Fund;
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(C) BOOKS AND RECORDS. All costs and expenses associated with the
maintenance of the Fund's books of account and records as required by the
Act;
(D) SHAREHOLDER MEETINGS. All fees and expenses incidental to holding
meetings of shareholders, including the printing of notices and proxy
material, and proxy solicitation therefor, provided that the Adviser shall
be responsible for and assume all expenses and fees with respect to
meetings of the Fund's shareholders held solely for the benefit of the
Adviser;
(E) PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION. All
expenses of preparing and printing of annual or more frequent revisions of
the Prospectus and Statement of Additional Information relating to the
offering of the Fund's shares and of mailing them to shareholders;
(F) PRICING. All expenses of computing the Fund's net asset values per
share, including the cost of any equipment or services used for obtaining
price quotations;
(G) COMMUNICATION EQUIPMENT. All charges for equipment or services
used for communication between the Adviser or the Trust and the custodian,
transfer agent, or any other agent selected by the Trust;
(H) LEGAL AND ACCOUNTING FEES AND EXPENSES. All charges for services
and expenses of the Trust's legal counsel and independent auditors for the
benefit of the Trust;
(I) TRUSTEES' FEES AND EXPENSES. All compensation of Trustees, other
than those who are interested persons of or affiliated with the Adviser,
and all expenses incurred in connection with their service and meetings;
(J) FEDERAL REGISTRATION FEES. All fees and expenses of registering
and maintaining the registration of the Trust under the Act and the
registration of Fund shares under the Securities Act of 1933, as amended
(the "1933 Act"), including all fees and expenses incurred in connection
with the preparation, printing, and filing of any registration statement,
Prospectus, and Statement of Additional Information under the 1933 Act or
the Act, and any amendments or supplements thereto that may be made from
time to time;
(K) STATE REGISTRATION FEES. All fees and expenses (including the
compensation of personnel who may be employed by the Adviser or an
affiliate) of qualifying and maintaining qualification of the Trust and of
the Fund shares for sale under securities laws of various states or
jurisdictions, and of registration and qualification of the Trust under all
other laws applicable to the Trust or its business activities (including
registering the Trust as a broker-dealer, or any officer of the Trust or
any person as agent or salesman of the Trust in any state);
(L) ISSUE AND REDEMPTION OF TRUST SHARES. All expenses incurred in
connection with the issue, redemption, and transfer of Fund shares,
including the expense of confirming all Fund share transactions, and of
preparing and transmitting the Fund's share certificates;
(M) BONDING AND INSURANCE. All expenses of bond, liability, and other
insurance coverage required by law or deemed advisable by the Board of
Trustees;
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(N) BROKERAGE COMMISSIONS. All brokerage commissions and other charges
incident to the purchase, sale, or lending of the Fund's portfolio
securities;
(O) TAXES. All taxes or governmental fees payable by or in respect of
the Trust or Fund to federal, state, or other governmental agencies,
domestic or foreign, including stamp or other transfer taxes;
(P) TRADE ASSOCIATION FEES. All fees, dues, and other expenses
incurred in connection with the Trust's membership in any trade association
or other investment organization;
(Q) INTEREST. All interest which may accrue and be payable as a result
of the Fund's activities;
(R) STATIONERY AND POSTAGE. The cost of all stationery and postage
required by the Fund, unless otherwise payable by another party with
respect to an activity or expense referred to above; and
(S) NONRECURRING AND EXTRAORDINARY EXPENSES. Such nonrecurring
expenses as may arise, including the costs of actions, suits, or
proceedings to which the Trust on behalf of a Fund is a party and the
expenses the Trust on behalf of a Fund may incur as a result of its legal
obligation to provide indemnification to its officers, Trustees, and
agents.
7. REIMBURSEMENT FOR ADVANCED COSTS AND EXPENSES. To the extent the
Adviser incurs any costs or performs any services which are an obligation of the
Trust or the Fund, as set forth herein, the Trust on behalf of such Fund and out
of such Fund's assets shall promptly reimburse the Adviser for such costs and
expenses. To the extent the services for which the Fund is obligated to pay are
performed by the Adviser, the Adviser shall be entitled to recover from such
Fund only to the extent of its actual costs for such services.
8. FEES. (a) The Trust on behalf of each Fund and out of each Fund's
assets agrees to pay to the Adviser, and the Adviser agrees to accept, as full
compensation for all services furnished or provided to such Fund hereunder, and
as full reimbursement for all expenses assumed by the Adviser, a management fee
computed at the rate per annum set out on Schedule 1 hereto of the average daily
net assets of such Fund.
(b) The management fee shall be accrued daily during each month by the
Trust on behalf of each Fund and paid to the Adviser on the first business day
of the succeeding month. The initial monthly fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement. The fee to the Adviser shall be prorated for the portion
of any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the month
during which the Agreement is in effect bears to the calendar days in the month.
If this Agreement is terminated prior to the end of any month, the fee to the
Adviser shall be payable within ten (10) days after the date of termination.
(c) The Adviser may reduce or waive any portion of the compensation due to
it hereunder, or for reimbursement of expenses by the Trust pursuant to
Paragraph 7 of this Agreement, and any such reduction or waiver shall be
applicable only with respect to the specific items waived and shall not
constitute a waiver of any future compensation or reimbursement due to the
Adviser hereunder.
(d) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement prior to the time such
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<PAGE>
compensation or reimbursement has accrued as a liability of the Fund in
question. Any such agreement shall be applicable only with respect to the
specific items covered thereby and shall not constitute an agreement not to
require payment of any future compensation or reimbursement due to the Adviser
hereunder.
9. SHORT POSITIONS IN FUNDS' SHARES. The Adviser agrees that neither it
nor any of its officers or employees shall take any short position in the shares
of any Fund. This prohibition shall not prevent the purchase of such shares by
any of the officers and Trustees or employees of the Adviser or any trust,
pension, profit-sharing, or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the Act.
10. RELATIONSHIP TO PROVISIONS OF AGREEMENT AND DECLARATION OF TRUST.
Nothing herein contained shall be deemed to require the Trust to take any action
contrary to its Agreement and Declaration of Trust or any applicable statute or
regulation, or to relieve or deprive the Board of Trustees of the Trust of its
responsibility for and control of the conduct of the affairs of the Trust and
any Fund.
11. DUTIES AND STANDARDS OF CARE. (a) In the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Trust or any Fund or to any shareholder of any Fund for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding, or
sale of any security by the Fund.
(b) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust or director or officer of the Adviser from
liability in violation of Sections 17(h) and (i) of the Act.
12. TERM AND RENEWAL. This Agreement shall remain in effect for a period
of two (2) years, unless sooner terminated in accordance with Paragraph 13
hereof, and shall continue in effect from year to year thereafter in respect of
each Fund so long as such continuation is approved at least annually by (i) the
Board of Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of such Fund, and (ii) the vote of a majority of the Trustees
of the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting for the purpose of voting on such
approval.
13. TERMINATION. This Agreement may be terminated in respect of a Fund at
any time, without payment of any penalty, by the Board of Trustees of the Trust
or by a vote of a majority of the Fund's outstanding voting securities, upon
sixty (60) days written notice to the Adviser, and by the Adviser upon sixty
(60) days written notice to the Trust. This Agreement shall also terminate in
the event of any assignment thereof, as defined in the Act.
14. CERTAIN DEFINITIONS. The terms "majority of the outstanding voting
securities" of the Trust or the Fund and "interested persons" shall have the
meanings as set forth in the Act. The term "net assets" shall have the meaning
and shall be calculated as set forth in the Trust's Registration Statement from
time to time.
15. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby.
16. HEADINGS. The headings used herein are for convenience and ease of
reference only. No legal effect is intended, nor is to be derived from such
headings.
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<PAGE>
17. NOTICE. A copy of the Agreement and Declaration of Trust of the Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this Agreement is executed on behalf of the Trustees
of the Trust as Trustees, and not individually, and that the obligations arising
out of this Agreement are not binding upon the Trustees or holders of the
Trust's shares individually but are binding only upon the assets and property of
the Fund in question. The Adviser acknowledges that it has received notice of
and accepts the limitations of liability as set forth in the Agreement and
Declaration of Trust of the Trust. The Adviser agrees that the Trust's
obligations hereunder shall be limited to the Fund in question and to its
assets, and that the Adviser or any affiliated or related party shall not seek
satisfaction of any such obligation from any shareholder of any Fund nor from
any Trustee, officer, employee, or agent of the Trust.
18. NAME. The Adviser owns or has the right to use the words "Robertson
Stephens," "Robertson, Stephens & Company Investment Management," "RS," and
"RSIM" which may be used by the Trust only with the consent of the Adviser. The
Adviser consents to the use by the Trust of such words in such forms as the
Adviser shall in writing approve, but only on condition and so long as (i) this
Agreement shall remain in full force and (ii) the Trust shall fully perform,
fulfill, and comply with all provisions of this Agreement expressed herein to be
performed, fulfilled, or complied with by it. No such name shall be used by the
Trust at any time or in any place or for any purposes or under any conditions
except as in this section provided. The foregoing authorization by the Adviser
to the Trust to use said name as part of a business or name is not exclusive of
the right of the Adviser itself to use, or to authorize others to use, the same;
the Trust acknowledges and agrees that as between the Adviser and the Trust, the
Adviser has the exclusive right to so authorize others to use the same; the
Trust acknowledges and agrees that as between the Adviser and the Trust, the
Adviser has the exclusive right so to use, or authorize others to use, said
words and the Trust agrees to take such action as may reasonably be requested by
the Adviser to give full effect to the provisions of this section (including,
without limitation, consenting to such use of said words). Without limiting the
generality of the foregoing, the Trust agrees that, upon any termination of this
Agreement by either party or upon the violation of any of its provisions by the
Trust, the Trust will, at the request of the Adviser, use its best efforts to
change the name of the Trust so as to eliminate all reference, if any, to the
words "Robertson Stephens," "Robertson, Stephens & Company Investment
Management," "RS," or "RSIM" and will not thereafter transact any business in a
name containing the words "Robertson Stephens," "Robertson, Stephens & Company
Investment Management," "RS," and "RSIM" in any form or combination whatsoever,
or designate itself as the same entity as or successor to an entity of such
name, or otherwise use the words "Robertson Stephens," "Robertson, Stephens &
Company Investment Management," "RS," or "RSIM" or any other reference to the
Adviser. Such covenants on the part of the Trust shall be binding upon it, its
trustees, officers, stockholders, creditors, and all other persons claiming
under or through it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all as of the day
and year first above written.
RS INVESTMENT TRUST
/s/ George R. Hecht
President
RS INVESTMENT MANAGEMENT, L.P.
By RS Investment Management Co. LLC
/s/ George R. Hecht
<PAGE>
SCHEDULE I
RS Diversified Growth Fund 1.00%
RS Global Value Fund 1.00%
RS Global Natural Resources Fund 1.00%
RS Growth + Income Fund 1.00%
The Information Age Fund-TM- 1.00%
RS MicroCap Growth Fund 1.25%
ADMINISTRATIVE FUNDS
The Contrarian Fund-TM- 1.50%
RS Partners Fund 1.25%
RS Value + Growth Fund 1.00%
<PAGE>
<PAGE>
EXHIBIT d(ii)
RS INVESTMENT TRUST
INVESTMENT ADVISORY AGREEMENT
This INVESTMENT ADVISORY AGREEMENT ("Agreement") made as of the 26th day of
February, 1999, by and between RS INVESTMENT TRUST, a business trust organized
and existing under the laws of The Commonwealth of Massachusetts (the "Trust"),
on behalf of each of its series of shares of beneficial interest named on
Schedule 1 to this Agreement, as it may be amended by the parties from time to
time (each, a "Fund"), and RS INVESTMENT MANAGEMENT, INC. (the "Adviser")
WITNESSETH:
WHEREAS, the Trust is an open-end, management investment company,
registered as such under the Investment Company Act of 1940, as amended (the
"Act"); and
WHEREAS, the Trust desires to retain the Adviser to render advice and
services to the Trust and each Fund pursuant to the terms and provisions of this
Agreement, and the Adviser is interested in furnishing said advice and services;
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto mutually agree as follows:
1. EMPLOYMENT OF ADVISER. (a) The Trust hereby employs the Adviser, and
the Adviser hereby accepts such employment, to render investment advice and
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. The Adviser
shall, except as otherwise provided for herein, as part of its duties hereunder,
(i) furnish 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, including the taking of such other steps as may be
necessary to implement such advice and recommendations, (ii) furnish the Trust
and each Fund with reports, statements, and other data on securities, economic
conditions, and other pertinent subjects in respect of the investment management
of each Fund which the Trust's Board of Trustees may request, and (iii) in
general superintend and manage the investments of each Fund, subject to the
ultimate supervision and direction of the Trust's Board of Trustees. In
addition, in respect of each Fund designated as an "Administrative Fund" on
Schedule 1 to this Agreement, the Adviser shall, except as otherwise provided
for herein, render or make available all administrative services needed for the
management and operation of the Fund, and shall furnish such office space and
personnel as are needed by the Fund.
(b) The Adviser shall determine the securities to be purchased or sold by
each Fund and will place orders pursuant to its determinations with or through
such persons, brokers, or dealers in conformity with the policy with respect to
brokerage as set forth in the Trust's Registration Statement and each Fund's
Prospectus and Statement of Additional Information or as the Trustees may direct
from time to time.
<PAGE>
2. SUB-ADVISERS AND CONSULTANTS. The Adviser may from time to time, in its
discretion, delegate certain of its responsibilities under this Agreement in
respect of any Fund to one or more qualified companies, each of which is
registered under the Investment Advisers Act of 1940, as amended, provided that
the separate costs of employing such companies and of the companies themselves
are borne by the Adviser and not by the Fund in question.
3. ADVISER IS INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes
herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized, have no authority to act for or represent the
Trust or any Fund in any way, or in any way be deemed an agent for the Trust or
any Fund. It is expressly understood and agreed that the services to be rendered
by the Adviser to the Trust and each Fund under the provisions of this Agreement
are not to be deemed exclusive, and the Adviser shall be free to render similar
or different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
4. RESPONSIBILITIES AND PERSONNEL OF ADVISER. The Adviser agrees to use
its best efforts in the furnishing of investment advice, research, and
recommendations to each Fund, in the preparation of reports and information, and
in the management of each Fund's assets, all pursuant to this Agreement, and for
this purpose the Adviser shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary to the performance of its
obligations under this Agreement. Without limiting the generality of the
foregoing, the staff and personnel of the Adviser shall be deemed to include
persons employed or retained by the Adviser to furnish statistical, research,
and other factual information, advice regarding economic factors and trends,
information with respect to technical and scientific developments, and such
other information, advice, and assistance as the Adviser may desire and request.
5. FURNISHING OF STATEMENTS AND REPORTS. The Trust shall from time to time
furnish to the Adviser detailed statements of the portfolio investments and
assets of each Fund and information as to each Fund's investment objectives and
needs, and shall make available to the Adviser such financial reports, business
descriptions and plans, proxy statements, legal information, and other
information relating to its investments as may be in the possession of the Trust
or available to it and such other information as the Adviser may reasonably
request.
6. EXPENSES OF EACH PARTY. (a) The Adviser shall bear all expenses in
connection with the performance of its services under this Agreement. The
Adviser shall also pay (i) all compensation, if any, to the executive officers
of the Trust and their related expenses and (ii) all compensation, if any, and
out-of-pocket expenses of the Trust's Trustees, who are "interested persons" of
the Trust (as defined in the Act).
(b) The Trust shall bear all expenses of each Fund's organization,
operations, and business not specifically assumed or agreed to be paid by the
Adviser as provided in this Agreement. In particular, but without limiting the
generality of the foregoing, the Trust on behalf of each Fund and out of such
Fund's assets shall pay:
(A) CUSTODY AND ACCOUNTING SERVICES. All expenses of the transfer,
receipt, safekeeping, servicing, and accounting for the cash, securities,
and other property of the Fund, including all charges of depositories,
custodians, and other agents, if any;
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<PAGE>
(B) SHAREHOLDER SERVICING. All expenses of maintaining and servicing
shareholder accounts, including all charges for transfer, shareholder
recordkeeping, dividend disbursing, redemption, and other agents for the
benefit of the Fund;
(C) BOOKS AND RECORDS. All costs and expenses associated with the
maintenance of the Fund's books of account and records as required by the
Act;
(D) SHAREHOLDER MEETINGS. All fees and expenses incidental to holding
meetings of shareholders, including the printing of notices and proxy
material, and proxy solicitation therefor, provided that the Adviser shall
be responsible for and assume all expenses and fees with respect to
meetings of the Fund's shareholders held solely for the benefit of the
Adviser;
(E) PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION. All
expenses of preparing and printing of annual or more frequent revisions of
the Prospectus and Statement of Additional Information relating to the
offering of the Fund's shares and of mailing them to shareholders;
(F) PRICING. All expenses of computing the Fund's net asset values per
share, including the cost of any equipment or services used for obtaining
price quotations;
(G) COMMUNICATION EQUIPMENT. All charges for equipment or services
used for communication between the Adviser or the Trust and the custodian,
transfer agent, or any other agent selected by the Trust;
(H) LEGAL AND ACCOUNTING FEES AND EXPENSES. All charges for services
and expenses of the Trust's legal counsel and independent auditors for the
benefit of the Trust;
(I) TRUSTEES' FEES AND EXPENSES. All compensation of Trustees, other
than those who are interested persons of or affiliated with the Adviser,
and all expenses incurred in connection with their service and meetings;
(J) FEDERAL REGISTRATION FEES. All fees and expenses of registering
and maintaining the registration of the Trust under the Act and the
registration of Fund shares under the Securities Act of 1933, as amended
(the "1933 Act"), including all fees and expenses incurred in connection
with the preparation, printing, and filing of any registration statement,
Prospectus, and Statement of Additional Information under the 1933 Act or
the Act, and any amendments or supplements thereto that may be made from
time to time;
(K) STATE REGISTRATION FEES. All fees and expenses (including the
compensation of personnel who may be employed by the Adviser or an
affiliate) of qualifying and maintaining qualification of the Trust and of
the Fund shares for sale under securities laws of various states or
jurisdictions, and of registration and qualification of the Trust under all
other laws applicable to the Trust or its business activities (including
registering the Trust as a broker-dealer, or any officer of the Trust or
any person as agent or salesman of the Trust in any state);
(L) ISSUE AND REDEMPTION OF TRUST SHARES. All expenses incurred in
connection with the issue, redemption, and transfer of Fund shares,
including the expense of confirming all Fund share transactions, and of
preparing and transmitting the Fund's share certificates;
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<PAGE>
(M) BONDING AND INSURANCE. All expenses of bond, liability, and other
insurance coverage required by law or deemed advisable by the Board of
Trustees;
(N) BROKERAGE COMMISSIONS. All brokerage commissions and other charges
incident to the purchase, sale, or lending of the Fund's portfolio
securities;
(O) TAXES. All taxes or governmental fees payable by or in respect of
the Trust or Fund to federal, state, or other governmental agencies,
domestic or foreign, including stamp or other transfer taxes;
(P) TRADE ASSOCIATION FEES. All fees, dues, and other expenses
incurred in connection with the Trust's membership in any trade association
or other investment organization;
(Q) INTEREST. All interest which may accrue and be payable as a result
of the Fund's activities;
(R) STATIONERY AND POSTAGE. The cost of all stationery and postage
required by the Fund, unless otherwise payable by another party with
respect to an activity or expense referred to above; and
(S) NONRECURRING AND EXTRAORDINARY EXPENSES. Such nonrecurring
expenses as may arise, including the costs of actions, suits, or
proceedings to which the Trust on behalf of a Fund is a party and the
expenses the Trust on behalf of a Fund may incur as a result of its legal
obligation to provide indemnification to its officers, Trustees, and
agents.
7. REIMBURSEMENT FOR ADVANCED COSTS AND EXPENSES. To the extent the
Adviser incurs any costs or performs any services which are an obligation of the
Trust or the Fund, as set forth herein, the Trust on behalf of such Fund and out
of such Fund's assets shall promptly reimburse the Adviser for such costs and
expenses. To the extent the services for which the Fund is obligated to pay are
performed by the Adviser, the Adviser shall be entitled to recover from such
Fund only to the extent of its actual costs for such services.
8. FEES. (a) The Trust on behalf of each Fund and out of each Fund's
assets agrees to pay to the Adviser, and the Adviser agrees to accept, as full
compensation for all services furnished or provided to such Fund hereunder, and
as full reimbursement for all expenses assumed by the Adviser, a management fee
computed at the rate per annum set out on Schedule 1 hereto of the average daily
net assets of such Fund.
(b) The management fee shall be accrued daily during each month by the
Trust on behalf of each Fund and paid to the Adviser on the first business day
of the succeeding month. The initial monthly fee under this Agreement shall be
payable on the first business day of the first month following the effective
date of this Agreement. The fee to the Adviser shall be prorated for the portion
of any month in which this Agreement is in effect which is not a complete month
according to the proportion which the number of calendar days in the month
during which the Agreement is in effect bears to the calendar days in the month.
If this Agreement is terminated prior to the end of any month, the fee to the
Adviser shall be payable within ten (10) days after the date of termination.
(c) The Adviser may reduce or waive any portion of the compensation due to
it hereunder, or for reimbursement of expenses by the Trust pursuant to
Paragraph 7 of this Agreement, and any such reduction or waiver shall be
applicable only with respect to the specific items waived and shall not
constitute a waiver of any future compensation or reimbursement due to the
Adviser hereunder.
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<PAGE>
(d) The Adviser may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement prior to the time such compensation or reimbursement has accrued as a
liability of the Fund in question. Any such agreement shall be applicable only
with respect to the specific items covered thereby and shall not constitute an
agreement not to require payment of any future compensation or reimbursement due
to the Adviser hereunder.
9. SHORT POSITIONS IN FUNDS' SHARES. The Adviser agrees that neither it
nor any of its officers or employees shall take any short position in the shares
of any Fund. This prohibition shall not prevent the purchase of such shares by
any of the officers and Trustees or employees of the Adviser or any trust,
pension, profit-sharing, or other benefit plan for such persons or affiliates
thereof, at a price not less than the net asset value thereof at the time of
purchase, as allowed pursuant to rules promulgated under the Act.
10. RELATIONSHIP TO PROVISIONS OF AGREEMENT AND DECLARATION OF TRUST.
Nothing herein contained shall be deemed to require the Trust to take any action
contrary to its Agreement and Declaration of Trust or any applicable statute or
regulation, or to relieve or deprive the Board of Trustees of the Trust of its
responsibility for and control of the conduct of the affairs of the Trust and
any Fund.
11. DUTIES AND STANDARDS OF CARE. (a) In the absence of willful
misfeasance, bad faith, gross negligence, or reckless disregard of obligations
or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Trust or any Fund or to any shareholder of any Fund for any
act or omission in the course of, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase, holding, or
sale of any security by the Fund.
(b) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust or director or officer of the Adviser from
liability in violation of Sections 17(h) and (i) of the Act.
12. TERM AND RENEWAL. This Agreement shall remain in effect for a period
of two (2) years, unless sooner terminated in accordance with Paragraph 13
hereof, and shall continue in effect from year to year thereafter in respect of
each Fund so long as such continuation is approved at least annually by (i) the
Board of Trustees of the Trust or by the vote of a majority of the outstanding
voting securities of such Fund, and (ii) the vote of a majority of the Trustees
of the Trust who are not parties to this Agreement or interested persons of any
such party, cast in person at a meeting for the purpose of voting on such
approval.
13. TERMINATION. This Agreement may be terminated in respect of a Fund at
any time, without payment of any penalty, by the Board of Trustees of the Trust
or by a vote of a majority of the Fund's outstanding voting securities, upon
sixty (60) days written notice to the Adviser, and by the Adviser upon sixty
(60) days written notice to the Trust. This Agreement shall also terminate in
the event of any assignment thereof, as defined in the Act.
14. CERTAIN DEFINITIONS. The terms "majority of the outstanding voting
securities" of the Trust or the Fund and "interested persons" shall have the
meanings as set forth in the Act. The term "net assets" shall have the meaning
and shall be calculated as set forth in the Trust's Registration Statement from
time to time.
15. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby.
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<PAGE>
16. HEADINGS. The headings used herein are for convenience and ease of
reference only. No legal effect is intended, nor is to be derived from such
headings.
17. NOTICE. A copy of the Agreement and Declaration of Trust of the Trust
is on file with the Secretary of State of The Commonwealth of Massachusetts and
notice is hereby given that this Agreement is executed on behalf of the Trustees
of the Trust as Trustees, and not individually, and that the obligations arising
out of this Agreement are not binding upon the Trustees or holders of the
Trust's shares individually but are binding only upon the assets and property of
the Fund in question. The Adviser acknowledges that it has received notice of
and accepts the limitations of liability as set forth in the Agreement and
Declaration of Trust of the Trust. The Adviser agrees that the Trust's
obligations hereunder shall be limited to the Fund in question and to its
assets, and that the Adviser or any affiliated or related party shall not seek
satisfaction of any such obligation from any shareholder of any Fund nor from
any Trustee, officer, employee, or agent of the Trust.
18. NAME. The Adviser owns or has the right to use the words "Robertson
Stephens," "Robertson, Stephens & Company Investment Management," "RS," and
"RSIM" which may be used by the Trust only with the consent of the Adviser. The
Adviser consents to the use by the Trust of such words in such forms as the
Adviser shall in writing approve, but only on condition and so long as (i) this
Agreement shall remain in full force and (ii) the Trust shall fully perform,
fulfill, and comply with all provisions of this Agreement expressed herein to be
performed, fulfilled, or complied with by it. No such name shall be used by the
Trust at any time or in any place or for any purposes or under any conditions
except as in this section provided. The foregoing authorization by the Adviser
to the Trust to use said name as part of a business or name is not exclusive of
the right of the Adviser itself to use, or to authorize others to use, the same;
the Trust acknowledges and agrees that as between the Adviser and the Trust, the
Adviser has the exclusive right to so authorize others to use the same; the
Trust acknowledges and agrees that as between the Adviser and the Trust, the
Adviser has the exclusive right so to use, or authorize others to use, said
words and the Trust agrees to take such action as may reasonably be requested by
the Adviser to give full effect to the provisions of this section (including,
without limitation, consenting to such use of said words). Without limiting the
generality of the foregoing, the Trust agrees that, upon any termination of this
Agreement by either party or upon the violation of any of its provisions by the
Trust, the Trust will, at the request of the Adviser, use its best efforts to
change the name of the Trust so as to eliminate all reference, if any, to the
words "Robertson Stephens," "Robertson, Stephens & Company Investment
Management," "RS," or "RSIM" and will not thereafter transact any business in a
name containing the words "Robertson Stephens," "Robertson, Stephens & Company
Investment Management," "RS," and "RSIM" in any form or combination whatsoever,
or designate itself as the same entity as or successor to an entity of such
name, or otherwise use the words "Robertson Stephens," "Robertson, Stephens &
Company Investment Management," "RS," or "RSIM" or any other reference to the
Adviser. Such covenants on the part of the Trust shall be binding upon it, its
trustees, officers, stockholders, creditors, and all other persons claiming
under or through it.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all as of the day
and year first above written.
RS INVESTMENT TRUST
/s/ George R. Hecht
President
-6-
<PAGE>
RS INVESTMENT MANAGEMENT, INC.
By RS Investment Management Co. LLC
/s/ George R. Hecht
-7-
<PAGE>
SCHEDULE 1
ADMINISTRATIVE FUNDS
RS Emerging Growth Fund 1.00%
<PAGE>
EXHIBIT d(ix)
RS INVESTMENT TRUST
SUB-ADVISORY AGREEMENT
February 26, 1999
Elijah Asset Management, LLC
555 California Street
San Francisco CA 94104
Dear Sirs:
Under an Investment Advisory Agreement (the "Investment Advisory
Agreement") between RS Investment Trust, a Massachusetts business trust (the
"Trust"), and RS Investment Management, L.P., a California limited
partnership (the "Adviser"), the Adviser serves as investment adviser to each
of The Information Age Fund-TM- and RS Value + Growth Fund, each of which is a
series of shares of the Trust (each, a "Fund").
The Adviser hereby confirms its agreement with Elijah Asset Management, LLC
(the "Sub-Adviser") and the Trust with respect to the Sub-Adviser's serving as
the sub-adviser of each Fund as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Adviser, with the approval of the Trust, hereby appoints the
Sub-Adviser to act as investment adviser to each Fund for the periods
and on the terms set forth in this Agreement, and with respect to the
assets of each Fund designated by the Adviser to the Sub-Adviser from
time to time (the "Designated Assets"). The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth for
the compensation herein provided.
2. PORTFOLIO MANAGEMENT DUTIES
a. Subject to the supervision of the Adviser and the Trust's Board
of Trustees, the Sub-Adviser will (i) manage the Designated
Assets in accordance with each Fund's investment objective,
policies, and limitations as stated in the Trust's Prospectus and
Statement of Additional Information, as in effect from time to
time, and with any additional policies or guidelines established
from time to time by the Adviser or by the Board of Trustees of
the Trust; (ii) make investment decisions for each Fund in
respect of the Designated Assets; and (iii) place orders to
purchase and sell securities and other investments for each Fund
in respect of the Designated Assets.
b. The Sub-Adviser will keep the Trust and the Adviser informed of
developments materially affecting each Fund and shall, on the
Sub-Adviser's own initiative and as reasonably requested by the
Adviser or the Trust, furnish to the Trust and the Adviser from
time to time whatever information the Adviser or the Board of
Trustees reasonably believes appropriate for this purpose.
<PAGE>
c. The Sub-Adviser agrees that, in the performance of the duties
required of it by this Agreement, it will comply with the
Investment Company Act of 1940, as amended (the "Act"), and all
rules and regulations thereunder, all applicable federal and
state laws and regulations, and any applicable procedures adopted
by the Trust's Board of Trustees or the Adviser and identified in
writing to the Sub-Adviser.
3. BROKERAGE
The Sub-Adviser shall determine the securities to be purchased or sold
by each Fund in respect of the Designated Assets and will place orders
pursuant to its determinations with or through such persons, brokers,
or dealers in conformity with such policies with respect to brokerage
as are set forth in the Trust's Prospectus and Statement of Additional
Information as in effect from time to time or as the Board of Trustees
may direct from time to time.
4. INFORMATION PROVIDED TO THE ADVISER AND THE TRUST
a. The Sub-Adviser shall furnish to the Adviser and to the Board of
Trustees of the Trust monthly, quarterly, and annual reports
concerning the portfolio transactions and performance of each
Fund in such form as may reasonably be requested by the Adviser
or the Board of Trustees. The Sub-Adviser shall permit all books
and records with respect to the Funds to be inspected and audited
by the Adviser and the Trust at all reasonable times during
normal business hours, upon reasonable notice.
b. The Sub-Adviser agrees that it will make available to the Adviser
and the Trust promptly upon their request copies of all of its
records with respect to each Fund to assist the Adviser and the
Trust in monitoring compliance with the Act and the Investment
Advisers Act of 1940, as amended (the "Advisers Act"), as well as
other applicable laws. The Sub-Adviser will furnish the Trust's
Board of Trustees with respect to each Fund such periodic and
special reports as the Adviser or the Board of Trustees may
reasonably request.
c. The Sub-Adviser agrees that it will immediately notify the
Adviser and the Trust in the event that the Sub-Adviser or any of
its affiliates: (i) becomes subject to a statutory
disqualification that prevents the Sub-Adviser from serving as
investment advisor pursuant to this Agreement; or (ii) is or
expects to become the subject of an administrative proceeding or
enforcement action by the SEC or other regulatory authority. The
Sub-Adviser agrees to notify the Adviser immediately of (x) any
material fact known to the Sub-Adviser respecting or relating to
the Sub-Adviser that is not contained in the Prospectus or
Statement of Additional Information of the Trust, or any
amendment or supplement thereto, if the omission of such might
make such document misleading, or (y) any statement contained
therein relating to the Sub-Adviser that becomes untrue in any
material respect.
d. The Sub-Adviser represents that it is an investment adviser
registered under the Advisers Act and other applicable laws and
that the statements contained in the Sub-Adviser's registration
under the Advisers Act on Form ADV, as of the date hereof, are
true and correct and do not omit to state any material fact
required to be stated therein or necessary in order to make the
statements therein not misleading. The Sub-Adviser agrees to
maintain the completeness and accuracy of its registration on
Form ADV in accordance with all legal requirements relating
-3-
<PAGE>
to that Form. The Sub-Adviser acknowledges that it is an
"investment adviser" to each Fund within the meaning of the Act
and the Advisers Act.
5. BOOKS AND RECORDS
The Sub-Adviser agrees that all records that it maintains in respect
of the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust copies of any such records upon the
Trust's request. The Sub-Adviser agrees to maintain and preserve for
such periods as are required by applicable law, including without
limitation Sections 31 and 32 of the Act and any rule adopted
thereunder and Rule 204-2 under the Advisers Act, any and all records
relating to the Sub-Adviser's duties hereunder.
6. COMPENSATION
The Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to
accept, as full compensation for all services furnished or provided
to each Fund hereunder and as full reimbursement for all expenses
incurred or borne by the Sub-Adviser, a fee for any period equal to
0.50 (50%) of any fees paid by the Fund in question to the Adviser
under the Investment Advisory Agreement in respect of the Designated
Assets of that Fund during that period (the "Sub-Advisory Fee"). From
time to time the Sub-Adviser may agree to reimburse the Fund
additional expenses or waive a portion or all of its fee, in the sole
discretion of the Sub-Adviser.
7. COSTS AND EXPENSES
During the term of this Agreement, the Sub-Adviser will pay all
expenses incurred by it and its staff in connection with the
performance of its services under this Agreement, including the
payment of salaries of all officers and employees who are employed by
it, but not including expenses to be paid by the Fund or the Adviser
such as brokerage fees and commissions and custodian charges. The
Trust, on behalf of each Fund, shall assume and pay any expenses for
services rendered by a custodian for the safekeeping of such Fund's
securities or other property on behalf of such Fund, for keeping its
books of account, for any other charges of the custodian, and for
calculating the net asset values of such Fund as provided in the
Prospectus and Statement of Additional Information as in effect from
time to time. The Sub-Adviser shall not be required to pay and the
Trust (or the Adviser), on behalf of each Fund, shall assume and pay
the charges and expenses of the Fund's operations, including
compensation of the Trustees, charges and expenses of independent
auditors, of legal counsel, of any transfer or dividend disbursing
agent, and of any registrar of the Trust, costs of acquiring and
disposing of portfolio securities, interest, if any, on obligations
incurred by a Fund, costs of share certificates, membership dues in
the Investment Company Institute or any similar organization, costs of
reports and notices to shareholders, other like miscellaneous
expenses, and all taxes and fees payable to federal, state, or other
governmental agencies on account of the registration of securities
issued by the Fund, filing of trust documents, or otherwise.
8. STANDARD OF CARE
Except as may otherwise be provided by the Act or other applicable
law, neither the Sub-Adviser nor any of its officers, directors,
employees, or agents shall be subject to any liability to the Trust,
either Fund, or the Adviser for any error of judgment, any mistake of
law, or any loss arising out of any investment or other act or
omission in the course of, connected with, or arising out of any
service to
-4-
<PAGE>
be rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or gross negligence in the performance of the
Sub-Adviser's duties or by reason of reckless disregard by the
Sub-Adviser of its obligations or duties hereunder.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
a. Except as may otherwise be agreed between the Adviser and the
Sub-Adviser, it is understood that the services of the
Sub-Adviser are not exclusive, and nothing in this Agreement
shall prevent the Sub-Adviser from providing similar services to
other investment companies (whether or not their investment
objectives and policies are similar to those of either Fund) or
from engaging in other activities.
b. When the Sub-Adviser recommends the purchase or sale of a
security for other investment companies and other clients, and at
the same time the Sub-Adviser recommends the purchase or sale of
the same security for a Fund, it is understood that in light of
its fiduciary duty to the Fund, such transactions will be
executed on a basis that it is fair and equitable to such Fund.
10. DURATION AND TERMINATION
a. This Agreement shall become effective on the date hereof and
shall continue for two years from that date, and thereafter
shall continue in respect of a Fund automatically for successive
annual periods, provided such continuance is specifically
approved at least annually by (i) the Trust's Board of Trustees
or (ii) a vote of a majority of that Fund's outstanding voting
securities (as defined in the Act), provided that the continuance
is also approved by a majority of the Trustees who are not
"interested persons" (as defined in the Act) of the Trust, by
vote cast in person at a meeting called for the purpose of voting
on such approval.
b. Notwithstanding the foregoing, this Agreement may be terminated
as to either Fund (i) by the Adviser, at any time without
penalty, upon 60 days written notice to the Sub-Adviser and the
Trust, (ii) 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 Fund in
question, upon 60 days written notice to the Sub-Adviser and the
Adviser, or (iii) by the Sub-Adviser at any time without penalty,
upon 60 days written notice to the Adviser and the Trust.
c. This Agreement will terminate automatically in the event of its
assignment (as defined in the Act and in rules adopted under the
Act).
11. AMENDMENTS
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the
party against whom enforcement of the change, waiver, discharge, or
termination is sought, and no amendment of this Agreement shall be
effective until approved in accordance with applicable law.
12. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS, AND
SHAREHOLDERS OF THE TRUST
-5-
<PAGE>
A copy of the Agreement and Declaration of Trust of the Trust is on
file with the Secretary of State of The Commonwealth of Massachusetts,
and notice is hereby given that this Agreement is executed on behalf
of the Trustees of the Trust as Trustees, and not individually, and
that the obligations arising out of this Agreement are not binding
upon the Trustees or holders of the Trust's shares individually but
are binding only upon the assets and property of the Fund in question.
The Sub-Adviser acknowledges that it has received notice of and
accepts the limitations of liability as set forth in the Agreement and
Declaration of Trust of the Trust. The Sub-Adviser agrees that the
Trust's obligations hereunder shall be limited to the Fund in question
and to its assets, and that the Sub-Adviser or any affiliated or
related party shall not seek satisfaction of any such obligation from
any shareholder of either Fund nor from any Trustee, officer,
employee, or agent of the Trust.
13. MISCELLANEOUS
a. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a
manner inconsistent with the Act, the Advisers Act, or rules or
orders of the SEC thereunder.
b. The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
c. If any provision of this Agreement shall be held or made invalid
by a court decision, statute, rule, or otherwise, the remainder
of this Agreement shall not be affected thereby and, to this
extent, the provisions of this Agreement shall be deemed to be
severable.
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by signing and
returning to us the enclosed copy of this Agreement.
RS INVESTMENT MANAGEMENT, L.P.
By RS Investment Management Co. LLC
By /s/ George R. Hecht
Name: George R. Hecht
Title:
RS INVESTMENT TRUST
By /s/ George R. Hecht
Name: George R. Hecht
Title: President
Accepted:
ELIJAH ASSET MANAGEMENT, LLC
By /s/ Ronald E. Elijah
Name: Ronald E. Elijah
Title:
-6-
<PAGE>
EXHIBIT d(x)
RS INVESTMENT TRUST
SUB-ADVISORY AGREEMENT
February 26, 1999
Eastbourne Management, L.L.C.
555 California Street
San Francisco CA 94104
Dear Sirs:
Under an Investment Advisory Agreement (the "Investment Advisory
Agreement") between RS Investment Trust, a Massachusetts business trust (the
"Trust"), and RS Investment Management, L.P., a California limited
partnership (the "Adviser"), the Adviser serves as investment adviser to
The Contrarian Fund-TM- ,a series of shares of the Trust (the "Fund").
The Adviser hereby confirms its agreement with Eastbourne Management,
L.L.C. (the "Sub-Adviser") and the Trust with respect to the Sub-Adviser's
serving as the sub-adviser of the Fund as follows:
1. INVESTMENT DESCRIPTION; APPOINTMENT
The Adviser, with the approval of the Trust, hereby appoints the
Sub-Adviser to act as investment adviser to the Fund for the periods and on
the terms set forth in this Agreement, and with respect to the assets of
the Fund designated by the Adviser to the Sub-Adviser from time to time
(the "Designated Assets"). The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. PORTFOLIO MANAGEMENT DUTIES
a. Subject to the supervision of the Adviser and the Trust's Board of
Trustees, the Sub-Adviser will (i) manage the Designated Assets in
accordance with the Fund's investment objective, policies, and
limitations as stated in the Trust's Prospectus and Statement of
Additional Information, as in effect from time to time, and with any
additional policies or guidelines established from time to time by the
Adviser or by the Board of Trustees of the Trust; (ii) make investment
decisions for the Fund in respect of the Designated Assets; and (iii)
place orders to purchase and sell securities and other investments for
the Fund in respect of the Designated Assets.
<PAGE>
b. The Sub-Adviser will keep the Trust and the Adviser informed of
developments materially affecting the Fund and shall, on the
Sub-Adviser's own initiative and as reasonably requested by the
Adviser or the Trust, furnish to the Trust and the Adviser from time
to time whatever information the Adviser or the Board of Trustees
reasonably believes appropriate for this purpose.
c. The Sub-Adviser agrees that, in the performance of the duties required
of it by this Agreement, it will comply with the Investment Company
Act of 1940, as amended (the "Act"), and all rules and regulations
thereunder, all applicable federal and state laws and regulations, and
any applicable procedures adopted by the Trust's Board of Trustees or
the Adviser and identified in writing to the Sub-Adviser.
3. BROKERAGE
The Sub-Adviser shall determine the securities to be purchased or sold by
the Fund in respect of the Designated Assets and will place orders pursuant
to its determinations with or through such persons, brokers, or dealers in
conformity with such policies with respect to brokerage as are set forth in
the Trust's Prospectus and Statement of Additional Information as in effect
from time to time or as the Board of Trustees may direct from time to time.
4. INFORMATION PROVIDED TO THE ADVISER AND THE TRUST
a. The Sub-Adviser shall furnish to the Adviser and to the Board of
Trustees of the Trust monthly, quarterly, and annual reports
concerning the portfolio transactions and performance of the Fund in
such form as may reasonably be requested by the Adviser or the Board
of Trustees. The Sub-Adviser shall permit all books and records with
respect to the Fund to be inspected and audited by the Adviser and the
Trust at all reasonable times during normal business hours, upon
reasonable notice.
b. The Sub-Adviser agrees that it will make available to the Adviser and
the Trust promptly upon their request copies of all of its records
with respect to the Fund to assist the Adviser and the Trust in
monitoring compliance with the Act and the Investment Advisers Act of
1940, as amended (the "Advisers Act"), as well as other applicable
laws. The Sub-Adviser will furnish the Trust's Board of Trustees with
respect to the Fund such periodic and special reports as the Adviser
or the Board of Trustees may reasonably request.
c. The Sub-Adviser agrees that it will immediately notify the Adviser and
the Trust in the event that the Sub-Adviser or any of its affiliates:
(i) becomes subject to a statutory disqualification that prevents the
Sub-Adviser from serving as investment advisor pursuant to this
Agreement; or (ii) is or expects to become the subject of an
administrative proceeding or enforcement action by the SEC or other
regulatory authority. The Sub-Adviser agrees to notify the Adviser
immediately of (x) any material fact known to the Sub-Adviser
respecting or relating to the Sub-Adviser that is not contained in the
Prospectus or Statement of Additional Information of the Trust, or any
amendment or supplement thereto, if the omission of such might make
such document misleading, or (y) any statement contained therein
relating to the Sub-Adviser that becomes untrue in any material
respect.
-3-
<PAGE>
d. The Sub-Adviser represents that it is an investment adviser registered
under the Advisers Act and other applicable laws and that the
statements contained in the Sub-Adviser's registration under the
Advisers Act on Form ADV, as of the date hereof, are true and correct
and do not omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. The Sub-Adviser agrees to maintain the completeness and
accuracy of its registration on Form ADV in accordance with all legal
requirements relating to that Form. The Sub-Adviser acknowledges that
it is an "investment adviser" to the Fund within the meaning of the
Act and the Advisers Act.
5. BOOKS AND RECORDS
The Sub-Adviser agrees that all records that it maintains in respect of the
Trust are the property of the Trust and further agrees to surrender
promptly to the Trust copies of any such records upon the Trust's request.
The Sub-Adviser agrees to maintain and preserve for such periods as are
required by applicable law, including without limitation Sections 31 and 32
of the Act and any rule adopted thereunder and Rule 204-2 under the
Advisers Act, any and all records relating to the Sub-Adviser's duties
hereunder.
6. COMPENSATION
The Adviser will pay the Sub-Adviser, and the Sub-Adviser agrees to accept,
as full compensation for all services furnished or provided to the
Fund hereunder and as full reimbursement for all expenses incurred or borne
by the Sub-Adviser, a fee for any period equal to 0.40 (40%) of any fees
paid by the Fund to the Adviser under the Investment Advisory Agreement in
respect of the Designated Assets of the Fund during that period (the
"Sub-Advisory Fee"). From time to time the Sub-Adviser may agree to
reimburse the Fund additional expenses or waive a portion or all of its
fee, in the sole discretion of the Sub-Adviser.
7. COSTS AND EXPENSES
During the term of this Agreement, the Sub-Adviser will pay all expenses
incurred by it and its staff in connection with the performance of its
services under this Agreement, including the payment of salaries of all
officers and employees who are employed by it, but not including expenses
to be paid by the Fund or the Adviser such as brokerage fees and
commissions and custodian charges. The Trust, on behalf of the Fund, shall
assume and pay any expenses for services rendered by a custodian for the
safekeeping of the Fund's securities or other property on behalf of the
Fund, for keeping its books of account, for any other charges of the
custodian, and for calculating the net asset values of the Fund as provided
in the Prospectus and Statement of Additional Information as in effect from
time to time. The Sub-Adviser shall not be required to pay and the Trust
(or the Adviser), on behalf of the Fund, shall assume and pay the charges
and expenses of the Fund's operations, including compensation of the
Trustees, charges and expenses of independent auditors, of legal counsel,
of any transfer or dividend disbursing agent, and of any registrar of the
Trust, costs of acquiring and disposing of portfolio securities, interest,
if any, on obligations incurred by the Fund, costs of share certificates,
membership dues in the Investment Company Institute or any similar
organization, costs of reports and notices to shareholders, other like
miscellaneous expenses, and all taxes and fees payable to federal, state,
or other governmental agencies on account of the registration of securities
issued by the Fund, filing of trust documents, or otherwise.
-4-
<PAGE>
8. STANDARD OF CARE
Except as may otherwise be provided by the Act or other applicable law,
neither the Sub-Adviser nor any of its officers, directors, employees, or
agents shall be subject to any liability to the Trust, the Fund, or the
Adviser for any error of judgment, any mistake of law, or any loss arising
out of any investment or other act or omission in the course of, connected
with, or arising out of any service to be rendered under this Agreement,
except by reason of willful misfeasance, bad faith, or gross negligence in
the performance of the Sub-Adviser's duties or by reason of reckless
disregard by the Sub-Adviser of its obligations or duties hereunder.
9. SERVICES TO OTHER COMPANIES OR ACCOUNTS
a. Except as may otherwise be agreed between the Adviser and the
Sub-Adviser, it is understood that the services of the
Sub-Adviser are not exclusive, and nothing in this Agreement shall
prevent the Sub-Adviser from providing similar services to other
investment companies (whether or not their investment objectives and
policies are similar to those of the Fund) or from engaging in other
activities.
b. When the Sub-Adviser recommends the purchase or sale of a security for
other investment companies and other clients, and at the same time the
Sub-Adviser recommends the purchase or sale of the same security for
the Fund, it is understood that in light of its fiduciary duty to the
Fund, such transactions will be executed on a basis that it is fair
and equitable to the Fund.
10. DURATION AND TERMINATION
a. This Agreement shall become effective on the date hereof and shall
continue for two years from that date, and thereafter shall continue
automatically for successive annual periods, provided such continuance
is specifically approved at least annually by (i) the Trust's Board of
Trustees or (ii) a vote of a majority of the Fund's outstanding voting
securities (as defined in the Act), provided that the continuance is
also approved by a majority of the Trustees who are not "interested
persons" (as defined in the Act) of the Trust, by vote cast in person
at a meeting called for the purpose of voting on such approval.
b. Notwithstanding the foregoing, this Agreement may be terminated as to
the Fund (i) by the Adviser, at any time without penalty, upon 60 days
written notice to the Sub-Adviser and the Trust, (ii) 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 Fund, upon 60 days written notice to the Sub-Adviser
and the Adviser, or (iii) by the Sub-Adviser at any time without
penalty, upon 60 days written notice to the Adviser and the Trust.
c. This Agreement will terminate automatically in the event of its
assignment (as defined in the Act and in rules adopted under the Act).
11. AMENDMENTS
No provision of this Agreement may be changed, waived, discharged, or
terminated orally, but only by an instrument in writing signed by the party
against whom enforcement of the change, waiver,
-5-
<PAGE>
discharge, or termination is sought, and no amendment of this Agreement
shall be effective until approved in accordance with applicable law.
12. LIMITATIONS OF LIABILITY OF TRUSTEES, OFFICERS, EMPLOYEES, AGENTS, AND
SHAREHOLDERS OF THE TRUST
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this Agreement is executed on behalf of the
Trustees of the Trust as Trustees, and not individually, and that the
obligations arising out of this Agreement are not binding upon the Trustees
or holders of the Trust's shares individually but are binding only upon the
assets and property of the Fund. The Sub-Adviser acknowledges that it has
received notice of and accepts the limitations of liability as set forth in
the Agreement and Declaration of Trust of the Trust. The Sub-Adviser agrees
that the Trust's obligations hereunder shall be limited to the Fund and to
its assets, and that the Sub-Adviser or any affiliated or related party
shall not seek satisfaction of any such obligation from any shareholder of
the Fund nor from any Trustee, officer, employee, or agent of the Trust.
13. MISCELLANEOUS
a. This Agreement shall be governed by the laws of the State of
California, provided that nothing herein shall be construed in a
manner inconsistent with the Act, the Advisers Act, or rules or orders
of the SEC thereunder.
b. The captions of this Agreement are included for convenience only and
in no way define or limit any of the provisions hereof or otherwise
affect their construction or effect.
c. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this
Agreement shall not be affected thereby and, to this extent, the
provisions of this Agreement shall be deemed to be severable.
If the terms and conditions described above are in accordance with your
understanding, kindly indicate your acceptance of this Agreement by signing and
returning to us the enclosed copy of this Agreement.
RS INVESTMENT MANAGEMENT, L.P.
By RS Investment Management Co. LLC
By /s/ George R. Hecht
Name: George R. Hecht
Title:
RS INVESTMENT TRUST
By /s/ George R. Hecht
Name: George R. Hecht
Title: President
-6-
<PAGE>
Accepted:
EASTBOURNE MANAGEMENT, L.L.C.
By: /s/ Rick Barry
Name: Rick Barry
Title:
-7-
<PAGE>
EXHIBIT e
ROBERTSON STEPHENS INVESTMENT TRUST
DISTRIBUTION AGREEMENT
This Distribution Agreement is entered into as of December 31, 1998 by and
between ROBERTSON STEPHENS INVESTMENT TRUST, a Massachusetts business trust (the
"Trust"), and PROVIDENT DISTRIBUTORS, INC., a Delaware corporation ("PDI").
WHEREAS, the Trust and PDI are desirous of entering into an agreement
providing for the distribution by PDI of shares of beneficial interest
("shares") of each of the series (each, a "Fund") of the Trust;
NOW, THEREFORE, in consideration of the mutual agreements contained herein,
the Trust hereby appoints PDI as a distributor of shares of each of the Funds,
and PDI hereby accepts such appointment, all as set forth below:
1. RESERVATION OF RIGHT NOT TO SELL. The Trust reserves the right to
refuse at any time or times to sell any of its shares hereunder for any reason.
2. PAYMENTS TO PDI. In connection with the distribution of shares of a
Fund, PDI will be entitled to receive: (a) payments pursuant to any Distribution
Plan from time to time in effect in respect of such Fund or any particular class
of shares of such Fund, as determined by the Board of Trustees of the Trust, (b)
any contingent deferred sales charges applicable to the redemption of shares of
such Fund or of any particular class of shares of such Fund, determined in the
manner set forth in the then current Prospectus and Statement of Additional
Information of such Fund, and (c) subject to the provisions of Section 3 below,
any front-end sales charges applicable to the sale of shares of such Fund or of
any particular class of shares of such Fund, less any applicable dealer
discount.
3. SERVICES TO BE PROVIDED BY PDI; SALES OF SHARES TO PDI AND SALES BY
PDI. PDI will provide general sales and distribution services in respect of the
shares of the Funds, including without limitation reviewing advertising and
sales literature and filing such advertising and sales literature with
appropriate regulatory authorities, preparing reports to the officers and
Trustees of the Trust in respect of the distribution of the Funds' shares,
performing internal audit examinations related to the distribution functions
performed by PDI (the scope and timing of such examinations to be as determined
from time to time by the officers of the Trust and PDI), and providing such
other services as are customarily provided by the principal underwriter and
distributor for an open-end investment company, subject in each case to such
instructions or guidelines as may be specified by the Trustees or officers of
the Trust from time to time.
<PAGE>
PDI will have the right, as principal, to purchase shares from a Fund at
their net asset value and to sell such shares to investment dealers or the
public against orders therefor (a) at the public offering price (calculated as
described below) less a discount determined by PDI, which discount shall not
exceed the amount of the maximum sales charge permitted under applicable law, or
(b) at net asset value, in each case as provided in the current Prospectus and
Statement of Additional Information relating to such shares. Upon receipt of an
order to purchase shares from an investment dealer with whom PDI has a sales
contract, PDI will promptly fill such order. The public offering price of a
class of shares of a Fund shall be the net asset value of such shares then in
effect, plus any applicable front-end sales charge determined in the manner set
forth in the then current Prospectus and Statement of Additional Information
relating to such shares or as permitted by the Investment Company Act of 1940,
as amended, and the rules and regulations of the Securities and Exchange
Commission promulgated thereunder. The net asset value of the shares shall be
determined in the manner provided in the Agreement and Declaration of Trust of
the Trust as then amended and when determined shall be applicable to
transactions as provided for in the then current Prospectus and Statement of
Additional Information relating to such shares.
PDI will also have the right, as principal, to sell shares otherwise
subject to a front-end sales charge or a contingent deferred sales charge not
subject to such a sales charge to such persons as may be approved by the Board
of Trustees of the Trust, all such sales to comply with the provisions of the
Investment Company Act of 1940, as amended, and the rules and regulations of the
Securities and Exchange Commission promulgated thereunder.
Upon receipt of registration instructions in proper form and payment for
shares, PDI will transmit such instructions to the Trust or its agent for
registration of the shares purchased.
On every sale the Trust shall receive the applicable net asset value of the
shares. The net asset value of the shares of any class shall be determined in
the manner provided in the Agreement and Declaration of Trust of the Trust as
then amended and when determined shall be applicable to transactions as provided
for in the then current Prospectus and Statement of Additional Information
relating to such shares.
4. SALES OF SHARES BY THE TRUST. The Trust reserves the right to issue
shares at any time directly to its shareholders as a stock dividend or stock
split and to sell shares to its shareholders or to other persons at not less
than net asset value.
5. REPURCHASE OF SHARES. PDI will act as agent for the Trust in
connection with the repurchase of shares of the various Funds by the Trust upon
the terms and conditions set forth in a then current Prospectus and Statement of
Additional Information relating to such shares.
6. BASIS OF PURCHASES AND SALES OF SHARES. PDI will use its best efforts
to place
<PAGE>
shares sold by it on an investment basis. PDI does not agree to sell any
specific number of shares. Shares will be sold by PDI only against orders
therefor. PDI will not purchase shares from anyone other than the Trust except
in accordance with Section 5, and will not take "long" or "short" positions in
shares contrary to the Agreement and Declaration of Trust of the Trust.
7. RULES OF NASD, ETC. PDI will conform to the Rules of the National
Association of Securities Dealers, Inc. and the sale of securities laws of any
jurisdiction in which it sells, directly or indirectly, any shares. PDI also
agrees to furnish to the Trust sufficient copies of any agreements or plans it
intends to use in connection with any sales of shares in adequate time for the
Trust to file and clear them with the proper authorities before they are put in
use, and not to use them until so filed and cleared.
8. PDI INDEPENDENT CONTRACTOR. PDI shall be an independent contractor,
and neither PDI nor any of its officers or employees, as such, is or shall be an
employee of the Trust. PDI is responsible for its own conduct and the
employment, control, and conduct of its agents and employees and for injury to
such agents or employees or to others through its agents or employees. PDI
assumes full responsibility for its agents and employees under applicable
statutes and agrees to pay all employer taxes thereunder.
PDI will maintain at its own expense insurance against public liability in
such an amount as required by the conduct rules or other rules or requirements
of the National Association of Securities Dealers, Inc. or other applicable law,
rule or regulation.
9. EXPENSES. PDI will pay all of its own expenses in performing its
obligations hereunder.
10. INDEMNIFICATION OF TRUST. PDI agrees to indemnify and hold harmless
the Trust and each person who has been, is, or may hereafter be a Trustee,
officer, or employee of the Trust against expenses reasonably incurred by any of
them in connection with any claim or in connection with any action, suit, or
proceeding to which any of them may be a party, which arises out of or is
alleged to arise out of any misrepresentation or omission to state a material
fact, or out of any alleged misrepresentation or omission to state a material
fact, on the part of PDI or any agent or employee of PDI or any other person for
whose acts PDI is responsible or is alleged to be responsible unless such
misrepresentation or omission was made in reliance upon written information
furnished to PDI by the Trust. PDI agrees likewise to indemnify and hold
harmless the Trust and each such person in connection with any claim or in
connection with any action, suit, or proceeding which arises out of or is
alleged to arise out of PDI's breach of this Agreement, gross negligence, or
reckless disregard of its duties. The term "expenses" includes amounts paid in
satisfaction of judgments or in settlements which are made with PDI's consent.
The foregoing rights of indemnification shall be in addition to any other rights
to which the Trust or any such person may be entitled as a matter of law.
11. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This
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Agreement shall automatically terminate, without the payment of any penalty, in
the event of its assignment. This Agreement may be amended only if such
amendment be approved either by action of the Board of Trustees of the Trust or
at a meeting of the shareholders of the affected Fund or Funds by the
affirmative vote of a majority of the outstanding shares of such Fund or Funds,
and by a majority of the Trustees of the Trust who are not interested persons of
the Trust or of PDI by vote cast in person at a meeting called for the purpose
of voting on such approval.
12. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT. This Agreement
shall take effect upon the date first above written and shall remain in full
force and effect continuously (unless terminated automatically as set forth in
Section 11) until terminated in respect of any Fund or Funds:
(a) Either by the Trust or PDI by not more than sixty (60) days nor
less than ten (10) days written notice delivered or mailed by registered
mail, postage prepaid, to the other party; or
(b) If the continuance of the Agreement after December 31, 2001 is not
specifically approved at least annually by the Board of Trustees of the
Trust or the shareholders of the affected Fund or Funds by the affirmative
vote of a majority of the outstanding shares of the affected Fund or Funds,
and by a majority of the Trustees of the Trust who are not interested
persons of the Trust or of PDI by vote cast in person at a meeting called
for the purpose of voting on such approval.
Action by the Trust or any Fund under (a) above may be taken either (i) by
vote of the Board of Trustees or (ii) by the affirmative vote of a majority of
the outstanding shares of the Trust or the affected Fund or Funds. The
requirement under (b) above that continuance of this Agreement be "specifically
approved at least annually" shall be construed in a manner consistent with the
Investment Company Act of 1940, as amended, and the rules and regulations
thereunder.
Termination of this Agreement pursuant to this Section 12 shall be without
the payment of any penalty.
13. CERTAIN DEFINITIONS. For purposes of this Agreement, the "affirmative
vote of a majority of the outstanding shares" of the Trust or a Fund means the
affirmative vote, at a duly called and held meeting of shareholders of the Trust
or the Fund, as the case may be, (a) of the holders of 67% or more of the shares
of the Trust or the Fund present (in person or by proxy) and entitled to vote at
such meeting, if the holders of more than 50% of the outstanding shares of the
Trust or the Fund entitled to vote at such meeting are present in person or by
proxy, or (b) of the holders of more than 50% of the outstanding shares of the
Trust or the Fund entitled to vote at such meeting, whichever is less.
For the purposes of the Agreement, the terms "interested person" and
"assignment" shall
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have the meanings defined in the Investment Company Act of 1940, subject,
however, to such exemptions as may be granted by the Securities and Exchange
Commission under said Act.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations of or arising
out of this instrument are not binding upon any of the Trustees, officers, or
shareholders individually but are binding only upon the assets and property of
the Trust.
IN WITNESS WHEREOF, each of ROBERTSON STEPHENS INVESTMENT TRUST and
PROVIDENT DISTRIBUTORS, INC. has caused this Distribution Agreement to be signed
in duplicate in its behalf, as of the day and year first above written.
ROBERTSON STEPHENS INVESTMENT TRUST
By /s/ Andrew C. Morrison
---------------------------------
PROVIDENT DISTRIBUTORS, INC.
By /s/ Monroe Haegele
---------------------------------
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<PAGE>
EXHIBIT g
CUSTODIAN SERVICES AGREEMENT
THIS AGREEMENT is made as of _______________, 1999 by and between PFPC
TRUST COMPANY, a limited purpose trust company organized under the laws of
Delaware ("PFPC Trust") and RS INVESTMENT TRUST, a Massachusetts business
trust (the "Fund").
W I T N E S S E T H:
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC Trust to provide custodian
services, and PFPC Trust wishes to furnish custodian services, either directly
or through an affiliate or affiliates, as more fully described herein.
NOW, THEREFORE, In consideration of the premises and mutual covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 ACT" means the Securities Act of 1933, as amended.
(b) "1934 ACT" means the Securities Exchange Act of 1934, as amended.
(c) "AUTHORIZED PERSON" means any officer of the Fund and any other person
duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed
on the Authorized Persons Appendix attached hereto and made a part
hereof or any amendment thereto as may be received by PFPC Trust. An
Authorized Person's scope of authority may be
<PAGE>
limited by the Fund by setting forth such limitation in the Authorized
Persons Appendix.
(d) "BOOK-ENTRY SYSTEM" means Federal Reserve Treasury book-entry system
for United States and federal agency securities, its successor or
successors, and its nominee or nominees and any book-entry system
maintained by an exchange registered with the SEC under the 1934 Act.
(e) "CEA" means the Commodities Exchange Act, as amended.
(f) "CHANGE OF CONTROL" means a change in ownership or control (not
including transactions between wholly-owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(g) "ORAL INSTRUCTIONS" mean oral instructions received by PFPC Trust from
an Authorized Person or from a person reasonably believed by PFPC
Trust to be an Authorized Person.
(h) "PFPC TRUST" means PFPC Trust or a subsidiary or affiliate of PFPC
Trust.
(i) "SEC" means the Securities and Exchange Commission.
(j) "SECURITIES LAWS" mean the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(k) "SHARES" mean the shares of beneficial interest of any series or class
of the Fund.
(l) "PROPERTY" means:
(i) any and all securities and other investment items which the
Fund may from time to time deposit, or cause to be deposited,
with PFPC Trust or which PFPC Trust may from time to time hold
for the Fund;
(ii) all income in respect of any of such securities or other
investment items;
(iii) all proceeds of the sale of any of such securities or
investment items; and
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(iv) all proceeds of the sale of securities issued by the Fund,
which are received by PFPC Trust from time to time, from or on
behalf of the Fund.
(m) "WRITTEN INSTRUCTIONS" mean written instructions signed by two
Authorized Persons and received by PFPC Trust. The instructions may
be delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC Trust to provide custodian
services to the Fund, on behalf of each of its investment portfolios (each,
a "Portfolio"), and PFPC Trust accepts such appointment and agrees to
furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC Trust with the following:
(a) certified or authenticated copies of the resolutions of the Fund's
Board of Trustees, approving the appointment of PFPC Trust or its
affiliates to provide services;
(b) a copy of the Fund's most recent effective registration statement;
(c) a copy of each Portfolio's advisory agreements;
(d) a copy of the distribution agreement with respect to each class of
Shares;
(e) a copy of each Portfolio's administration agreement if PFPC Trust is
not providing the Portfolio with such services;
(f) copies of any shareholder servicing agreements made in respect of the
Fund or a Portfolio; and
(g) certified or authenticated copies of any and all amendments or
supplements to the foregoing.
4. COMPLIANCE WITH LAWS.
PFPC Trust undertakes to comply with all applicable requirements of the
Securities Laws and any laws, rules and regulations of governmental
authorities having jurisdiction with
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respect to the duties to be performed by PFPC Trust hereunder. Except as
specifically set forth herein, PFPC Trust assumes no responsibility for
such compliance by the Fund or any Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC Trust shall act only
upon Oral Instructions and Written Instructions.
(b) PFPC Trust shall be entitled to rely upon any Oral Instructions and
Written Instructions it receives from an Authorized Person (or from a
person reasonably believed by PFPC Trust to be an Authorized Person)
pursuant to this Agreement. PFPC Trust may assume that any Oral
Instructions or Written Instructions received hereunder are not in any
way inconsistent with the provisions of organizational documents of
the Fund or of any vote, resolution or proceeding of the Fund's Board
of Trustees or of the Fund's shareholders, unless and until PFPC Trust
receives Written Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Trust Written Instructions
confirming Oral Instructions (except where such Oral Instructions are
given by PFPC Trust or its affiliates) so that PFPC Trust receives the
Written Instructions by the close of business on the same day that
such Oral Instructions are received. The fact that such confirming
Written Instructions are not received by PFPC Trust shall in no way
invalidate the transactions or enforceability of the transactions
authorized by the Oral Instructions. Where Oral Instructions or
Written Instructions reasonably appear to have been received from an
Authorized Person, PFPC Trust shall incur no liability to the Fund in
acting upon such Oral Instructions or Written
4
<PAGE>
Instructions provided that PFPC Trust's actions comply with the other
provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC Trust is in doubt as to any action it
should or should not take, PFPC Trust may request directions or
advice, including Oral Instructions or Written Instructions, from the
Fund.
(b) ADVICE OF COUNSEL. If PFPC Trust shall be in doubt as to any question
of law pertaining to any action it should or should not take, PFPC
Trust may request advice at its own cost from such counsel of its own
choosing (who may be counsel for the Fund, the Fund's investment
adviser or PFPC Trust, at the option of PFPC Trust).
(c) CONFLICTING ADVICE. In the event of a conflict between directions,
advice or Oral Instructions or Written Instructions PFPC Trust
receives from the Fund, and the advice it receives from counsel, PFPC
Trust shall be entitled to rely upon and follow the advice of counsel,
provided that it takes reasonable steps to notify the Fund of its
intention to follow such advice. In the event PFPC Trust so relies on
the advice of counsel, PFPC Trust remains liable for any action or
omission on the part of PFPC Trust which constitutes willful
misfeasance, bad faith, gross negligence or reckless disregard by PFPC
Trust of any duties, obligations or responsibilities set forth in this
Agreement.
(d) PROTECTION OF PFPC TRUST. PFPC Trust shall be protected in any action
it takes or does not take in reliance upon directions, advice or Oral
Instructions or Written Instructions it receives from the Fund or from
counsel and which PFPC Trust
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<PAGE>
believes, in good faith, to be consistent with those directions,
advice or Oral Instructions or Written Instructions. Nothing in this
section shall be construed so as to impose an obligation upon PFPC
Trust to seek such directions, advice or Oral Instructions or Written
Instructions. Nothing in this subsection shall excuse PFPC Trust
when an action or omission on the part of PFPC Trust constitutes
willful misfeasance, bad faith, gross negligence or reckless disregard
by PFPC Trust of any duties, obligations or responsibilities set forth
in this Agreement.
7. RECORDS; VISITS. The books and records pertaining to the Fund and any
Portfolio, which are in the possession or under the control of PFPC Trust,
shall be the property of the Fund. Such books and records shall be
prepared and maintained as required by the 1940 Act and other applicable
securities laws, rules and regulations. The Fund and Authorized Persons
shall have access to such books and records at all times during PFPC
Trust's normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by PFPC Trust to the
Fund or to an authorized representative of the Fund, at the Fund's expense.
8. CONFIDENTIALITY. PFPC Trust agrees to keep confidential all records of the
Fund and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in
writing, by the Fund. The Fund agrees that such consent shall not be
unreasonably withheld and may not be withheld where PFPC Trust may be
exposed to civil or criminal contempt proceedings or when required to
divulge such information or records to duly constituted authorities.
9. COOPERATION WITH ACCOUNTANTS. PFPC Trust shall cooperate with the Fund's
independent public accountants and shall take all reasonable action in the
performance of
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<PAGE>
its obligations under this Agreement to ensure that the necessary
information is made available to such accountants for the expression of
their opinion, as required by the Fund.
10. DISASTER RECOVERY. PFPC Trust shall enter into and shall maintain in
effect with appropriate parties one or more agreements making reasonable
provisions for emergency use of electronic data processing equipment to the
extent appropriate equipment is available. In the event of equipment
failures, PFPC Trust shall, at no additional expense to the Fund, take
reasonable steps to minimize service interruptions. PFPC Trust shall have
no liability with respect to the loss of data or service interruptions
caused by equipment failure provided such loss or interruption is not
covered by PFPC Trust's own willful misfeasance, bad faith, gross
negligence or reckless disregard of its duties or obligations under this
Agreement.
11. YEAR 2000 READINESS DISCLOSURE. PFPC Trust (a) has reviewed its business
and operations as they relate to the services provided hereunder, (b) has
developed or is developing a program to remediate or replace computer
applications and systems, and (c) has developed a testing plan to test the
remediation or replacement of computer applications/systems, in each case,
to address on a timely basis the risk that certain computer
applications/systems used by PFPC Trust may be unable to recognize and
perform properly date sensitive functions involving dates prior to,
including and after December 31, 1999, including dates such as February 29,
2000 (the "Year 2000 Challenge"). To the best of PFPC Trust's knowledge
and belief, the reasonably foreseeable consequences of the Year 2000
Challenge will not adversely effect PFPC Trust's ability to perform its
duties and obligations under this Agreement.
12. COMPENSATION. As compensation for custody services rendered by PFPC Trust
during
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<PAGE>
the term of this Agreement, the Fund, on behalf of each of the Portfolios,
will pay to PFPC Trust a fee or fees as may be agreed to in writing from
time to time by the Fund and PFPC Trust.
13. INDEMNIFICATION. The Fund, on behalf of each Portfolio, agrees to
indemnify and hold harmless PFPC Trust and its affiliates from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Laws and any state and
foreign securities and blue sky laws, and amendments thereto, and
reasonable expenses, including (without limitation) reasonable attorneys'
fees and disbursements, arising directly or indirectly from any action or
omission to act which PFPC Trust takes (i) at the request or on the
direction of or in reliance on the advice of the Fund or (ii) upon Oral
Instructions or Written Instructions. Neither PFPC Trust, nor any of its
affiliates, shall be indemnified against any liability (or any expenses
incident to such liability) arising out of PFPC Trust's or its affiliates'
own willful misfeasance, bad faith, negligence or reckless disregard of its
duties under this Agreement.
14. RESPONSIBILITY OF PFPC TRUST.
(a) PFPC Trust shall be under no duty to take any action on behalf of the
Fund or any Portfolio except as specifically set forth herein or as
may be specifically agreed to by PFPC Trust in writing. PFPC Trust
shall be obligated to exercise care and diligence in the performance
of its duties hereunder, to act in good faith and to use its best
efforts, within reasonable limits, in performing services provided for
under this Agreement. PFPC Trust shall be liable for any damages
arising out of PFPC Trust's failure to perform its duties under this
agreement to the extent such damages arise out of PFPC Trust's willful
misfeasance, bad faith, gross negligence
8
<PAGE>
or reckless disregard of its duties under this Agreement.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC Trust shall not be under any
duty or obligation to inquire into and shall not be liable for (A) the
validity or invalidity or authority or lack thereof of any Oral
Instruction or Written Instruction, notice or other instrument which
conforms to the applicable requirements of this Agreement, and which
PFPC Trust reasonably believes to be genuine; or (B) subject to
section 10, delays or errors or loss of data occurring by reason of
circumstances beyond PFPC Trust's control, including acts of civil or
military authority, national emergencies, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC Trust nor its affiliates shall be liable to the Fund or to any
Portfolio for any consequential, special or indirect losses or damages
which the Fund may incur or suffer by or as a consequence of PFPC
Trust's or its affiliates' performance of the services provided
hereunder, whether or not the likelihood of such losses or damages was
known by PFPC Trust or its affiliates.
15. DESCRIPTION OF SERVICES.
(a) DELIVERY OF THE PROPERTY. The Fund will deliver or arrange for
delivery to PFPC Trust, all the Property owned by the Portfolios,
including cash received as a result of the distribution of Shares,
during the period that is set forth in this Agreement. PFPC Trust
will not be responsible for such property until actual receipt.
(b) RECEIPT AND DISBURSEMENT OF MONEY. PFPC Trust, acting upon Written
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<PAGE>
Instructions, shall open and maintain on its books separate accounts
in the Fund's name using all cash received from or for the account of
the Fund, subject to the terms of this Agreement. In addition, upon
Written Instructions, PFPC Trust shall open and maintain on its books
separate custodial accounts for each separate series or Portfolio of
the Fund (collectively, the "Accounts") and shall hold in the Accounts
all cash received from or for the Accounts of the Fund specifically
designated to each separate series or Portfolio.
PFPC Trust shall make cash payments from or for the Accounts of a
Portfolio only for:
(i) purchases of securities in the name of a Portfolio or in the
nominee name of PFPC Trust or any sub-custodian as provided in
sub-section (j) and for which PFPC Trust has received a copy of
the broker's or dealer's confirmation or payee's invoice, as
appropriate;
(ii) purchase or redemption of Shares of the Fund delivered to PFPC
Trust;
(iii) payment of, subject to Written Instructions, interest, taxes,
administration, accounting, distribution, advisory, management
fees or similar expenses which are to be borne by a Portfolio;
(iv) payment to, subject to receipt of Written Instructions, the
Fund's transfer agent, as agent for the shareholders, an amount
equal to the amount of dividends and distributions stated in
the Written Instructions to be distributed in cash by the
transfer agent to shareholders, or, in lieu of paying the
Fund's transfer agent, PFPC Trust may arrange for the direct
payment of cash dividends and distributions to shareholders in
accordance with procedures mutually agreed upon from time to
time by and among the Fund, PFPC Trust and the Fund's transfer
agent.
(v) payments, upon receipt of Written Instructions, in connection
with the conversion, exchange or surrender of securities owned
or subscribed to by the Fund and held by or delivered to PFPC
Trust;
(vi) payments of the amounts of dividends received with respect to
securities sold short;
(vii) payments made to a sub-custodian pursuant to provisions in
sub-section
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<PAGE>
(c) of this Section; and
(viii) payments, upon Written Instructions, made for other proper Fund
purposes.
PFPC Trust is hereby authorized to endorse and collect all checks, drafts
or other orders for the payment of money received as custodian for the
Accounts.
(c) RECEIPT OF SECURITIES; SUBCUSTODIANS.
(i) PFPC Trust shall hold all securities received by it for the
Accounts in a separate account that physically segregates such
securities from those of any other persons, firms or
corporations, except for securities held in a Book-Entry
System. The ownership of Property in the Account, whether
securities or otherwise, and whether any Property is held
directly by PFPC Trust or through a sub-custodian or Book-Entry
System, shall be clearly recorded on PFPC Trust's books as
belonging to the Fund. All such securities shall be held or
disposed of only upon Written Instructions of the Fund pursuant
to the terms of this Agreement. Except as otherwise provided
herein, no Property is, nor shall any Property be, subject to
any right, charge, security interest, lien or claim of any kind
in favor of PFPC Trust, any sub-custodian, any Book-Entry
System or any creditors of them. PFPC Trust shall have no power
or authority to loan, encumber, assign, hypothecate, pledge or
otherwise dispose of any such securities or investment, except
upon the express terms of this Agreement and upon Written
Instructions, accompanied by a certified resolution of the
Fund's Board of Trustees, authorizing the transaction. In no
case may any member of the Fund's Board of Trustees, or any
officer, employee or agent of the Fund withdraw any securities.
Beneficial ownership of the Property shall be freely
transferable without the payment of money or value other than
for safe custody or administration.
(ii) At PFPC Trust's own expense and for its own convenience, PFPC
Trust may enter into sub-custodian agreements with other United
States banks or trust companies to perform duties described in
this sub-section (c). Such bank or trust company shall have an
aggregate capital, surplus and undivided profits, according to
its last published report, of at least one million dollars
($1,000,000), if it is a subsidiary or affiliate of PFPC Trust,
or at least twenty million dollars ($20,000,000) if such bank
or trust company is not a subsidiary or affiliate of PFPC
Trust. In addition, such bank or trust company must be
qualified to act as custodian under and agree to comply with
the relevant provisions of the 1940 Act and other applicable
rules and regulations. Any such arrangement will not be
entered into without prior written notice to the Fund.
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PFPC Trust shall remain responsible for the performance of all of its
duties as described in this Agreement and shall hold the Fund and each
Portfolio harmless from its own acts or omissions, under the standards of
care provided for herein, or the acts and omissions of any sub-custodian
chosen by PFPC Trust under the terms of this sub-section (c).
(d) TRANSACTIONS REQUIRING INSTRUCTIONS. Upon receipt of Oral
Instructions or Written Instructions and not otherwise, PFPC Trust,
directly or through the use of the Book-Entry System, shall:
(i) deliver any securities held for a Portfolio against the receipt
of payment for the sale of such securities;
(ii) execute and deliver to such persons as may be designated in
such Oral Instructions or Written Instructions, proxies,
consents, authorizations, and any other instruments whereby the
authority of a Portfolio as owner of any securities may be
exercised;
(iii) deliver any securities to the issuer thereof, or its agent,
when such securities are called, redeemed, retired or otherwise
become payable; provided that, in any such case, the cash or
other consideration is to be delivered to PFPC Trust;
(iv) deliver any securities held for a Portfolio against receipt of
other securities or cash issued or paid in connection with the
liquidation, reorganization, refinancing, tender offer,
merger, consolidation or recapitalization of any corporation,
or the exercise of any conversion privilege;
(v) deliver any securities held for a Portfolio to any protective
committee, reorganization committee or other person in
connection with the reorganization, refinancing, merger,
consolidation, recapitalization or sale of assets of any
corporation, and receive and hold under the terms of this
Agreement such certificates of deposit, interim receipts or
other instruments or documents as may be issued to it to
evidence such delivery;
(vi) make such transfer or exchanges of the assets of the Portfolios
and take such other steps as shall be stated in said Oral
Instructions or Written Instructions to be for the purpose of
effectuating a duly authorized plan of liquidation,
reorganization, merger, consolidation or recapitalization of
the Fund;
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(vii) release securities belonging to a Portfolio to any bank or
trust company for the purpose of a pledge or hypothecation to
secure any loan incurred by the Fund on behalf of that
Portfolio; provided, however, that securities shall be released
only upon payment to PFPC Trust of the monies borrowed, except
that in cases where additional collateral is required to secure
a borrowing already made subject to proper prior authorization,
further securities may be released for that purpose; and repay
such loan upon redelivery to it of the securities pledged or
hypothecated therefor and upon surrender of the note or notes
evidencing the loan;
(viii) release and deliver securities owned by a Portfolio in
connection with any repurchase agreement entered into on
behalf of the Fund, but only on receipt of payment therefor;
and pay out moneys of the Fund in connection with such
repurchase agreements, but only upon the delivery of the
securities;
(ix) release and deliver or exchange securities owned by the Fund in
connection with any conversion of such securities, pursuant to
their terms, into other securities;
(x) release and deliver securities owned by the Fund for the
purpose of redeeming in kind shares of the Fund upon delivery
thereof to PFPC Trust; and
(xi) release and deliver or exchange securities owned by the Fund
for other corporate purposes.
PFPC Trust must also receive a certified resolution describing
the nature of the corporate purpose and the name and address of
the person(s) to whom delivery shall be made when such action
is pursuant to sub-paragraph (d)(xi).
(e) USE OF BOOK-ENTRY SYSTEM. The Fund shall deliver to PFPC Trust
certified resolutions of the Fund's Board of Trustees approving,
authorizing and instructing PFPC Trust on a continuous basis, to
deposit in the Book-Entry System all securities belonging to the
Portfolios eligible for deposit therein and to utilize the Book-Entry
System to the extent possible in connection with settlements of
purchases and sales of securities by the Portfolios, and deliveries
and returns of
13
<PAGE>
securities loaned, subject to repurchase agreements or used as
collateral in connection with borrowings. PFPC Trust shall continue
to perform such duties until it receives Written Instructions or Oral
Instructions authorizing contrary actions.
PFPC Trust shall administer the Book-Entry System as follows:
(i) With respect to securities of each Portfolio which are
maintained in the Book-Entry System, the records of PFPC Trust
shall identify by Book-Entry or otherwise those securities
belonging to each Portfolio. PFPC Trust shall furnish to the
Fund a detailed statement of the Property held for each
Portfolio under this Agreement at least monthly and from time
to time and upon written request.
(ii) Securities and any cash of each Portfolio deposited in the
Book-Entry System will at all times be segregated from any
assets and cash controlled by PFPC Trust in other than a
fiduciary or custodian capacity but may be commingled with
other assets held in such capacities. PFPC Trust and its
sub-custodian, if any, will pay out money only upon receipt of
securities and will deliver securities only upon the receipt of
money.
(iii) All books and records maintained by PFPC Trust which relate to
the Fund's participation in the Book-Entry System will at all
times during PFPC Trust's regular business hours be open to the
inspection of Authorized Persons, and PFPC Trust will furnish
to the Fund all information in respect of the services rendered
as it may require.
PFPC Trust will also provide the Fund with such reports on its own
system of internal control as the Fund may reasonably request from
time to time.
(f) REGISTRATION OF SECURITIES. All Securities held for a Portfolio which
are issued or issuable only in bearer form, except such securities
held in the Book-Entry System, shall be held by PFPC Trust in bearer
form; all other securities held for a Portfolio may be registered in
the name of the Fund on behalf of that Portfolio, PFPC Trust, the
Book-Entry System, a sub-custodian, or any duly appointed nominees of
the Fund, PFPC Trust, Book-Entry System or sub-custodian. With
14
<PAGE>
respect to securities held in the nominee name of PFPC Trust or any
sub-custodian, such name shall be assigned exclusively to be used for
the Property of the Fund or to be used in common for the Property of
the Fund together with the property of other clients of PFPC Trust or
sub-custodian (which nominee name shall not in any event be used for
assets of PFPC Trust or sub-custodian other than as a fiduciary,
custodian, or otherwise for customers and in which assets neither PFPC
Trust nor the sub-custodian has any beneficial interest). PFPC Trust
shall inform the appropriate Portfolio of the name in which any
Property held hereunder are initially registered and of any changes in
registration (other than those changes instructed by the Fund). The
specific Property held by PFPC Trust or on its behalf hereunder shall
be at all times identifiable in its records. The Fund reserves the
right to instruct PFPC Trust as to the method of registration and
safekeeping of the securities of the Fund. The Fund agrees to furnish
to PFPC Trust appropriate instruments to enable PFPC Trust to hold or
deliver in proper form for transfer, or to register in the name of its
nominee or in the name of the Book-Entry System, any securities which
it may hold for the Accounts and which may from time to time be
registered in the name of the Fund on behalf of a Portfolio.
(g) VOTING AND OTHER ACTION. Neither PFPC Trust nor its nominee shall
vote any of the securities held pursuant to this Agreement by or for
the account of a Portfolio, except in accordance with Written
Instructions. PFPC Trust, directly or through the use of the
Book-Entry System, shall execute in blank and promptly deliver all
notices, proxies and proxy soliciting materials to the registered
holder of such
15
<PAGE>
securities. If the registered holder is not the Fund on behalf of a
Portfolio, then Written Instructions or Oral Instructions must
designate the person who owns such securities.
(h) TRANSACTIONS NOT REQUIRING INSTRUCTIONS. In the absence of contrary
Written Instructions, PFPC Trust is authorized to take the following
actions:
(i) COLLECTION OF INCOME AND OTHER PAYMENTS.
(A) collect and receive for the account of each Portfolio,
all income, dividends, distributions, coupons, option
premiums, other payments and similar items, included or
to be included in the Property, and, in addition,
promptly advise each Portfolio of such receipt and
credit such income, as collected, to each Portfolio's
custodian account;
(B) endorse and deposit for collection, in the name of the
Fund, checks, drafts, or other orders for the payment
of money;
(C) receive and hold for the account of each Portfolio all
securities received as a distribution on the
Portfolio's securities as a result of a stock dividend,
share split-up or reorganization, recapitalization,
readjustment or other rearrangement or distribution of
rights or similar securities issued with respect to any
securities belonging to a Portfolio and held by PFPC
Trust hereunder;
(D) present for payment and collect the amount payable
upon all securities which may mature or be called,
redeemed, or retired, or otherwise become payable on
the date such securities become payable; and
(E) take any action which may be necessary and proper in
connection with the collection and receipt of such
income and other payments and the endorsement for
collection of checks, drafts, and other negotiable
instruments.
(ii) MISCELLANEOUS TRANSACTIONS.
(A) deliver or cause to be delivered Property against
payment or other consideration or written receipt
therefor in the following cases:
(1) for examination by a broker or dealer selling for
the
16
<PAGE>
account of a Portfolio in accordance with street
delivery custom;
(2) for the exchange of interim receipts or temporary
securities for definitive securities; and
(3) for transfer of securities into the name of the
Fund on behalf of a Portfolio or PFPC Trust or
nominee of either, or for exchange of securities
for a different number of bonds, certificates,
or other evidence, representing the same aggregate
face amount or number of units bearing the same
interest rate, maturity date and call provisions,
if any; provided that, in any such case, the new
securities are to be delivered to PFPC Trust.
(B) Unless and until PFPC Trust receives Oral Instructions
or Written Instructions to the contrary, PFPC Trust
shall:
(1) pay all income items held by it which call for
payment upon presentation and hold the cash
received by it upon such payment for the account
of each Portfolio;
(2) collect interest and cash dividends received, with
notice to the Fund, to the account of each
Portfolio;
(3) hold for the account of each Portfolio all stock
dividends, rights and similar securities issued
with respect to any securities held by PFPC Trust;
and
(4) execute as agent on behalf of the Fund all
necessary ownership certificates required by the
Internal Revenue Code or the Income Tax
Regulations of the United States Treasury
Department or under the laws of any state now or
hereafter in effect, inserting the Fund's name, on
behalf of a Portfolio, on such certificate as the
owner of the securities covered thereby, to the
extent it may lawfully do so.
(i) SEGREGATED ACCOUNTS.
(i) PFPC Trust shall upon receipt of Written Instructions or Oral
Instructions establish and maintain a segregated accounts on
its records for and on behalf of each Portfolio. Such accounts
may be used to transfer cash and securities, including
securities in the Book-Entry System:
(A) for the purposes of compliance by the Fund with the
procedures
17
<PAGE>
required by a securities or option exchange, providing
such procedures comply with the 1940 Act and any
releases of the SEC relating to the maintenance of
segregated accounts by registered investment companies;
and
(B) Upon receipt of Written Instructions, for other proper
corporate purposes.
(ii) PFPC Trust shall arrange for the establishment of IRA custodian
accounts for such shareholders holding Shares through IRA
accounts, in accordance with the Fund's prospectuses, the
Internal Revenue Code of 1986, as amended (including
regulations promulgated thereunder), and with such other
procedures as are mutually agreed upon from time to time by and
among the Fund, PFPC Trust and the Fund's transfer agent.
(j) PURCHASES OF SECURITIES. PFPC Trust shall settle purchased securities
upon receipt of Oral Instructions or Written Instructions from the
Fund or its investment advisers that specify:
(i) the name of the issuer and the title of the securities,
including CUSIP number if applicable;
(ii) the number of shares or the principal amount purchased and
accrued interest, if any;
(iii) the date of purchase and settlement;
(iv) the purchase price per unit;
(v) the total amount payable upon such purchase;
(vi) the Portfolio involved; and
(vii) the name of the person from whom or the broker through whom the
purchase was made. PFPC Trust shall upon receipt of securities
purchased by or for a Portfolio pay out of the moneys held for
the account of the Portfolio the total amount payable to the
person from whom or the broker through whom the purchase was
made, provided that the same conforms to the total amount
payable as set forth in such Oral Instructions or Written
Instructions.
(k) SALES OF SECURITIES. PFPC Trust shall settle sold securities upon
receipt of Oral Instructions or Written Instructions from the Fund
that specify:
18
<PAGE>
(i) the name of the issuer and the title of the security, including
CUSIP number if applicable;
(ii) the number of shares or principal amount sold, and accrued
interest, if any;
(iii) the date of trade and settlement;
(iv) the sale price per unit;
(v) the total amount payable to the Fund upon such sale;
(vi) the name of the broker through whom or the person to whom the
sale was made;
(vii) the location to which the security must be delivered and
delivery deadline, if any; and
(viii) the Portfolio involved.
PFPC Trust shall deliver the securities upon receipt of the total amount
payable to the Portfolio upon such sale, provided that the total amount
payable is the same as was set forth in the Oral Instructions or Written
Instructions. In addition to the other provisions hereof, provided PFPC
Trust has previously informed the Fund in writing of its intention to do so
(which notification may be by means of a standing notification and need not
be repeated with respect to each particular transaction), PFPC Trust may
also accept payment in such form as shall be satisfactory to it and deliver
securities and arrange for payment in accordance with the customs
prevailing among dealers in securities.
(l) REPORTS; PROXY MATERIALS.
(i) PFPC Trust shall furnish to the Fund the following reports:
(A) such periodic and special reports as the Fund may
reasonably request;
(B) a monthly statement summarizing all transactions and
entries for the account of each Portfolio, listing each
portfolio securities
19
<PAGE>
belonging to each Portfolio with the adjusted average
cost of each issue and the market value at the end of
such month and stating the cash account of each
Portfolio including disbursements;
(C) the reports required to be furnished to the Fund
pursuant to Rule 17f-4; and
(D) such other information as may be agreed upon from time
to time between the Fund and PFPC Trust.
(ii) PFPC Trust shall transmit promptly to the Fund any proxy
statement, proxy material, notice of a call or conversion or
similar communication received by it as custodian of the
Property. PFPC Trust shall be under no other obligation to
inform the Fund as to such actions or events.
(m) COLLECTIONS. All collections of monies or other property in respect,
or which are to become part, of the Property (but not the safekeeping
thereof upon receipt by PFPC Trust) shall be at the sole risk of the
Fund. If payment is not received by PFPC Trust within a reasonable
time after proper demands have been made, PFPC Trust shall notify the
Fund in writing, including copies of all demand letters, any written
responses, memoranda of all oral responses and shall await
instructions from the Fund. PFPC Trust shall not be obliged to take
legal action for collection unless and until reasonably indemnified to
its satisfaction. PFPC Trust shall also notify the Fund as soon as
reasonably practicable whenever income due on securities is not
collected in due course and shall provide the Fund with periodic
status reports of such income collected after a reasonable time.
16. DURATION AND TERMINATION. This Agreement shall continue until terminated
by the Fund or PFPC Trust on sixty (60) days' prior written notice to the
other party. In the event this Agreement is terminated (pending appointment
of a successor to PFPC Trust or
20
<PAGE>
vote of the shareholders of the Fund to dissolve or to function without a
custodian of its cash, securities or other property), PFPC Trust shall not
deliver cash, securities or other property of the Portfolios to the Fund.
It may deliver them to a bank or trust company of PFPC Trust's choice,
having an aggregate capital, surplus and undivided profits, as shown by its
last published report, of not less than twenty million dollars
($20,000,000), as a custodian for the Fund to be held under terms similar
to those of this Agreement. PFPC Trust shall not be required to make any
such delivery or payment until full payment shall have been made to PFPC
Trust of all of its fees, compensation, and reasonable costs and expenses.
PFPC Trust shall have a security interest in and shall have a right of
setoff against the Property as security for the payment of such fees,
compensation, and reasonable costs and expenses.
17. CHANGE OF CONTROL. Notwithstanding any other provision of this Agreement,
in the event of an agreement to enter into a transaction that would result
in a Change of Control of the Fund's adviser or sponsor, the Fund's ability
to terminate the Agreement will be suspended from the time of such
agreement until the later of (i) two years from the date of this Agreement
or (ii) six months after the Change of Control.
18. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex
or facsimile sending device. Notice shall be effective upon receipt.
Notice shall be addressed (a) if to PFPC Trust at Airport Business Center,
International Court 2, 200 Stevens Drive, Lester, Pennsylvania 19113,
marked for the attention of the Custodian Services Department (or its
successor) (b) if to the Fund, at RS Investment Trust, 555 California
Street, Suite 2500, San Francisco, CA 94104, Attn: Andrew C. Morrison,
Secretary or (c) if to neither of the foregoing, at such other
21
<PAGE>
address as shall have been given by like notice to the sender of any such
notice or other communication by the other party.
19. AMENDMENTS. This Agreement, or any term hereof, may be changed or waived
only by a written amendment, signed by the party against whom enforcement
of such change or waiver is sought.
20. DELEGATION; ASSIGNMENT. PFPC Trust may assign its rights and delegate its
duties hereunder to any majority-owned direct or indirect subsidiary of
PFPC Trust or PFPC Trust Corp., provided that (i) PFPC Trust gives the Fund
30 days' prior written notice of such assignment or delegation; (ii) the
assignee or delegate agrees to comply with the relevant provision of the
1940 Act; and (iii) PFPC Trust and such assignee or delegate promptly
provide such information as the Fund may reasonably request, and respond to
such questions as the Fund may reasonably ask, relative to the assignment
or delegation, (including, without limitation, the capabilities of the
assignee or delegate).
21. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
22. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
23. MISCELLANEOUS.
(a) ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties and supersedes all prior agreements
and understandings relating to the subject matter hereof, provided
that the parties may embody in one or more separate documents their
agreement, if any, with respect
22
<PAGE>
to delegated duties and Oral Instructions.
(b) The parties agree that the Fund is executing this Agreement on behalf
of each of the Portfolios separately; that each of the Portfolios is
acting solely on its own behalf separately from each of the other
Portfolios and not jointly or jointly and severally with any of the
other Portfolios; that this Agreement shall constitute, and shall for
all purposes be construed to give effect to the intention of the
parties that it constitute, a separate Agreement between PFPC Trust
and the Fund on behalf of each such Portfolio separately, as if the
Fund had executed this Agreement separately on behalf of such
Portfolio; and that no Portfolio shall be liable for the obligations
of any other Portfolio arising hereunder.
(c) A copy of the Agreement and Declaration of Trust of the Fund is on
file with the Secretary of State of The Commonwealth of Massachusetts,
and notice is hereby given that this instrument is executed on behalf
of the trustees of the Fund as trustees and not individually and that
the obligations of this instrument are not binding upon any of the
trustees, officers, or shareholders of the Fund individually but are
binding only upon the assets and property of the Fund.
(d) CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect.
(e) GOVERNING LAW. This Agreement shall be deemed to be a contract made
in Delaware and governed by Delaware law, without regard to principles
of conflicts of law.
(f) PARTIAL INVALIDITY. If any provision of this Agreement shall be held
or made
23
<PAGE>
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected thereby.
(g) SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
(h) FACSIMILE SIGNATURES. The facsimile signature of any party to this
Agreement shall constitute the valid and binding execution hereof by
such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC TRUST COMPANY
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
RS INVESTMENT TRUST,
on behalf of its several constituent Portfolios
By:
-----------------------------------------------
Name:
---------------------------------------------
Title:
--------------------------------------------
24
<PAGE>
AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
25
<PAGE>
EXHIBIT h(i)
RS INVESTMENT TRUST
555 California Street
San Francisco, California 94104
February 26, 1999
RS Investment Management, L.P.
555 California Street
San Francisco, California 94104
Re: ADMINISTRATIVE SERVICES AGREEMENT
Dear Sirs:
RS Investment Trust, a Massachusetts business trust (the "Trust"), is
engaged in the business of an investment company. The Trust desires that you
act as administrator of the various series of shares of the Trust (each, a
"Fund") set out on Schedule A hereto, and you are willing to act as such
administrator and to perform such services under the terms and conditions
hereinafter set forth. Accordingly, the Trust, on behalf of each Fund,
agrees with you as follows:
1. DELIVERY OF FUND DOCUMENTS. The Trust has furnished you with copies
properly certified or authenticated of each of the following:
(a) the Agreement and Declaration of Trust of the Trust (the "Declaration
of Trust").
(b) the By-Laws of the Trust as in effect on the date hereof.
(c) Resolutions of the Board of Trustees of the Trust selecting you as
administrator and approving the form of this Agreement.
The Trust will furnish you from time to time with copies, properly
certified or authenticated, of all amendments of or supplements to the
foregoing, if any.
2. ADMINISTRATIVE SERVICES. You will continuously provide business
management services to each Fund and will generally, subject to the general
oversight of the Trustees and except as provided in the next following
paragraph, manage all of the business and affairs of each Fund, subject always
to the provisions of the Trust's Declaration of Trust and By-Laws and of the
Investment Company Act of 1940, as amended (the "1940 Act"), and subject,
<PAGE>
further, to such policies and instructions as the Board of Trustees may from
time to time establish. You shall, except as provided in the next following
paragraph, advise and assist the officers of the Trust in taking such steps as
are necessary or appropriate to carry out the decisions of the Board of Trustees
regarding the conduct of the business of each Fund.
No provision of this Agreement shall be deemed to require you at any time
to provide to any Fund or to any person with respect to any Fund investment
research, advice, or supervision, or in any way to advise any Fund or any person
acting on behalf of any Fund as to the value of securities or other investments
or as to the advisability of investing in, purchasing, or selling securities or
other investments.
3. ALLOCATION OF CHARGES AND EXPENSES. You will make available, without
expense to the Funds, the services of such of your directors, officers, and
employees as may duly be elected Trustees or officers of the Trust, subject to
their individual consent to serve and to any limitations imposed by law. You
will pay the compensation of such of your directors, officers, and employees as
may duly be elected Trustees or officers of the Trust. You will not be required
to pay any expenses of the Trust other than those specifically allocated to you
in this paragraph 3. In particular, but without limiting the generality of the
foregoing, you will not be required to pay: clerical salaries not relating to
the services described in paragraph 2 above; fees and expenses incurred by the
Trust in connection with membership in investment company organizations;
brokers' commissions; payment for portfolio pricing services to a pricing agent,
if any; legal, auditing, or accounting expenses; taxes or governmental fees; the
fees and expenses of the transfer agent of the Funds; the cost of preparing
share certificates or any other expenses, including clerical expenses, incurred
in connection with the issue, sale, underwriting, redemption, or repurchase of
shares of the Funds; the expenses of and fees for registering or qualifying
securities for sale; the fees and expenses of Trustees of the Trust who are not
affiliated with you; the cost of preparing and distributing reports and notices
to shareholders; public and investor relations expenses; or the fees or
disbursements of custodians of the Funds' assets, including expenses incurred in
the performance of any obligations enumerated by the Declaration of Trust or
By-Laws of the Trust insofar as they govern agreements with any such custodian.
4. COMPENSATION. No fee or compensation is payable to you by the Funds
under this Agreement for the services performed or the facilities furnished or
expenses assumed by you.
5. LIMITATION OF LIABILITY. You shall not be liable for any error of
judgement or mistake of law or for any loss suffered by a Fund in connection
with the matters to which this Agreement relates except a loss resulting from
willful misfeasance, bad faith, or gross negligence on your part in the
performance of your duties, or from reckless disregard by you of your
obligations and duties under this Agreement. Any person, even though also
employed by you, who may be or become an employee of and paid by the Trust shall
be deemed, when
-2-
<PAGE>
acting within the scope of his or her employment by the Trust, to be acting in
such employment solely for the Trust and not as your employee or agent.
6. DURATION AND TERMINATION OF THIS AGREEMENT. This Agreement shall
remain in force until February 26, 2001 and continue from year to year
thereafter in respect of each Fund, but only so long as such continuance is
specifically approved in respect of such Fund at least annually by the vote
of a majority of the Trustees who are not interested persons of you or of the
Trust, cast in person at a meeting called for the purpose of voting on such
approval and by a vote of the Board of Trustees. This Agreement may, on 30
days notice, be terminated as to any Fund at any time without the payment of
any penalty by you, and, as to any Fund, immediately upon notice, by the
Board of Trustees or by vote of a majority of the outstanding voting
securities of that Fund. In interpreting the provisions of this Agreement,
the definitions contained in Section 2(a) of the 1940 Act, as modified by
rule 18f-2 under the Act (particularly the definitions of "interested person"
and "majority of the outstanding voting securities"), as from time to time
amended, shall be applied, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission by any rule, regulation, or
order.
7. AMENDMENT OF THIS AGREEMENT. No provisions of this Agreement may be
changed, waived, discharged, or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge, or termination is sought, and no amendment of this Agreement shall be
effective as to any Fund until approved by the Board of Trustees, including a
majority of the Trustees who are not interested persons of you or of the Trust,
cast in person at a meeting called for the purpose of voting on such approval.
8. MISCELLANEOUS. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed simultaneously in two or more counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
A copy of the Agreement and Declaration of Trust of the Trust is on file
with the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Trust as Trustees and not individually, and that the obligations of or arising
out of this instrument are not binding upon any of the Trustees, officers, or
shareholders individually but are binding only upon the assets and property of
the Trust.
If you are in agreement with the foregoing, please sign the form of
acceptance on the accompanying counterpart of this letter and return such
counterpart to the Trust, whereupon this letter shall become a binding contract.
-3-
<PAGE>
Yours very truly,
RS INVESTMENT TRUST
By: /s/ George R. Hecht
---------------------------
The foregoing Agreement is hereby
accepted as of the date thereof.
RS INVESTMENT MANAGEMENT, L.P.
By RS Investment Management Co. LLC
By: /s/ George R. Hecht
-----------------------------
-4-
<PAGE>
SCHEDULE A
February 26, 1999
RS Diversified Growth
RS Growth & Income Fund
The Information Age Fund-TM-
RS MicroCap Growth Fund
RS Global Natural Resources Fund
-5-
<PAGE>
EXHIBIT h(ii)
SUB-ADMINISTRATION AND ACCOUNTING SERVICES AGREEMENT
THIS AGREEMENT is made as of _________________, 1999 by and between
RS INVESTMENT TRUST, a Massachusetts business trust (the "Fund"), and
PFPC INC., a Delaware corporation ("PFPC"), which is an indirect wholly
owned subsidiary of PNC Bank Corp.
W I T N E S S E T H :
WHEREAS, the Fund is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Fund wishes to retain PFPC to provide sub-administration and
accounting services to its investment portfolios listed on Exhibit A attached
hereto and made a part hereof, as such Exhibit A may be amended from time to
time (each a "Portfolio"), and PFPC wishes to furnish such services.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, and intending to be legally bound hereby the parties hereto
agree as follows:
1. DEFINITIONS. AS USED IN THIS AGREEMENT:
(a) "1933 Act" means the Securities Act of 1933, as amended.
(b) "1934 Act" means the Securities Exchange Act of 1934, as amended.
(c) "Authorized Person" means any officer of the Fund and any other person
duly authorized by the Fund's Board of Trustees to give Oral
Instructions and Written Instructions on behalf of the Fund and listed
on the Authorized Persons Appendix attached hereto and made a part
hereof or any amendment thereto as may be received by PFPC. An
Authorized Person's scope of authority may be limited by
<PAGE>
the Fund by setting forth such limitation in the Authorized Persons
Appendix.
(d) "CEA" means the Commodities Exchange Act, as amended.
(e) "Change of Control" means a change in ownership or control (not
including transactions between wholly-owned direct or indirect
subsidiaries of a common parent) of 25% or more of the beneficial
ownership of the shares of common stock or shares of beneficial
interest of an entity or its parent(s).
(f) "Oral Instructions" mean oral instructions received by PFPC from an
Authorized Person or from a person reasonably believed by PFPC to be
an Authorized Person.
(g) "SEC" means the Securities and Exchange Commission.
(h) "Securities Laws" means the 1933 Act, the 1934 Act, the 1940 Act and
the CEA.
(i) "Shares" means the shares of beneficial interest of any series or
class of the Fund.
(j) "Written Instructions" mean written instructions signed by an
Authorized Person and received by PFPC. The instructions may be
delivered by hand, mail, tested telegram, cable, telex or facsimile
sending device.
2. APPOINTMENT. The Fund hereby appoints PFPC to provide sub-administration
and accounting services to each of the Portfolios, in accordance with the
terms set forth in this Agreement. PFPC accepts such appointment and
agrees to furnish such services.
3. DELIVERY OF DOCUMENTS. The Fund has provided or, where applicable, will
provide PFPC with the following:
(a) certified or authenticated copies of the resolutions of the Fund's
Board of Trustees, approving the appointment of PFPC or its affiliates
to provide services to each Portfolio and approving this Agreement;
(b) a copy of Fund's most recent effective registration statement;
2
<PAGE>
(c) a copy of each Portfolio's advisory agreement or agreements;
(d) a copy of the distribution agreement with respect to each class of
Shares representing an interest in a Portfolio;
(e) a copy of any additional administration agreement with respect to a
Portfolio;
(f) a copy of any shareholder servicing agreement made in respect of the
Fund or a Portfolio; and
(g) copies (certified or authenticated, where applicable) of any and all
amendments or supplements to the foregoing.
4. COMPLIANCE WITH RULES AND REGULATIONS.
PFPC undertakes to comply with all applicable requirements of the
Securities Laws, and any laws, rules and regulations of governmental
authorities having jurisdiction with respect to the duties to be performed
by PFPC hereunder. Except as specifically set forth herein, PFPC assumes
no responsibility for such compliance by the Fund or any Portfolio.
5. INSTRUCTIONS.
(a) Unless otherwise provided in this Agreement, PFPC shall act only upon
Oral Instructions and Written Instructions.
(b) PFPC shall be entitled to rely upon any Oral Instructions and Written
Instructions it receives from an Authorized Person (or from a person
reasonably believed by PFPC to be an Authorized Person) pursuant to
this Agreement. PFPC may assume that any Oral Instruction or Written
Instruction received hereunder is not in any way inconsistent with the
provisions of organizational documents or this Agreement or of any
vote, resolution or proceeding of the Fund's Board of Trustees or of
the Fund's shareholders, unless and until PFPC receives Written
3
<PAGE>
Instructions to the contrary.
(c) The Fund agrees to forward to PFPC Written Instructions confirming
Oral Instructions (except where such Oral Instructions are given by
PFPC or its affiliates) so that PFPC receives the Written Instructions
by the close of business on the same day that such Oral Instructions
are received. The fact that such confirming Written Instructions are
not received by PFPC shall in no way invalidate the transactions or
enforceability of the transactions authorized by the Oral
Instructions. Where Oral Instructions or Written Instructions
reasonably appear to have been received from an Authorized Person,
PFPC shall incur no liability to the Fund in acting upon such Oral
Instructions or Written Instructions provided that PFPC's actions
comply with the other provisions of this Agreement.
6. RIGHT TO RECEIVE ADVICE.
(a) ADVICE OF THE FUND. If PFPC is in doubt as to any action it should or
should not take, PFPC may request directions or advice, including Oral
Instructions or Written Instructions, from the Fund.
(b) ADVICE OF COUNSEL. If PFPC shall be in doubt as to any question of
law pertaining to any action it should or should not take, PFPC may
request advice at its own cost from such counsel of its own choosing
(who may be counsel for the Fund, the Fund's investment adviser or
PFPC, at the option of PFPC).
(c) CONFLICTING ADVICE. In the event of a conflict between directions,
advice or Oral Instructions or Written Instructions PFPC receives from
the Fund and the advice PFPC receives from counsel, PFPC may rely upon
and follow the advice of counsel, provided that it takes reasonable
steps to notify the Fund of its intention
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<PAGE>
to follow such advice. In the event PFPC so relies on the advice of
counsel, PFPC remains liable for any action or omission on the part of
PFPC which constitutes willful misfeasance, bad faith, gross
negligence or reckless disregard by PFPC of any duties, obligations or
responsibilities set forth in this Agreement.
(d) PROTECTION OF PFPC. PFPC shall be protected in any action it takes or
does not take in reliance upon directions, advice or Oral Instructions
or Written Instructions it receives from the Fund or from counsel and
which PFPC believes, in good faith, to be consistent with those
directions, advice and Oral Instructions or Written Instructions.
Nothing in this section shall be construed so as to impose an
obligation upon PFPC to seek such directions, advice or Oral
Instructions or Written Instructions. Nothing in this subsection
shall excuse PFPC when an action or omission on the part of PFPC
constitutes willful misfeasance, bad faith, gross negligence or
reckless disregard by PFPC of any duties, obligations or
responsibilities set forth in this Agreement.
7. RECORDS; VISITS.
(a) The books and records pertaining to the Fund and the Portfolios which
are in the possession or under the control of PFPC shall be the
property of the Fund. Such books and records shall be prepared and
maintained as required by the 1940 Act and other applicable securities
laws, rules and regulations. The Fund and Authorized Persons shall
have access to such books and records at all times during PFPC's
normal business hours. Upon the reasonable request of the Fund,
copies of any such books and records shall be provided by PFPC to the
Fund or to an Authorized Person, at the Fund's expense.
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<PAGE>
(b) PFPC shall keep the following records:
(i) all books and records with respect to each Portfolio's books of
account;
(ii) records of each Portfolio's securities transactions; and
(iii) all other books and records as PFPC is required to maintain
pursuant to Rule 31a-1 of the 1940 Act in connection with the
services provided hereunder.
8. CONFIDENTIALITY. PFPC agrees to keep confidential all records of the Fund
and information relating to the Fund and its shareholders, unless the
release of such records or information is otherwise consented to, in
writing, by the Fund. The Fund agrees that such consent shall not be
unreasonably withheld and may not be withheld where PFPC may be exposed to
civil or criminal contempt proceedings or when required to divulge such
information or records to duly constituted authorities.
9. LIAISON WITH ACCOUNTANTS. PFPC shall act as liaison with the Fund's
independent public accountants and shall provide account analyses, fiscal
year summaries, and other audit-related schedules with respect to each
Portfolio. PFPC shall take all reasonable action in the performance of its
duties under this Agreement to assure that the necessary information is
made available to such accountants for the expression of their opinion, as
required by the Fund.
10. DISASTER RECOVERY. PFPC shall enter into and shall maintain in effect with
appropriate parties one or more agreements making reasonable provisions for
emergency use of electronic data processing equipment to the extent
appropriate equipment is available. In the event of equipment failures,
PFPC shall, at no additional expense to the Fund, take reasonable steps to
minimize service interruptions. PFPC shall have no liability with respect
to the loss of data or service interruptions caused by equipment failure,
provided
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<PAGE>
such loss or interruption is not caused by PFPC's own willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties or
obligations under this Agreement.
11. YEAR 2000 READINESS DISCLOSURE. PFPC (a) has reviewed its business and
operations as they relate to the services provided hereunder, (b) has
developed or is developing a program to remediate or replace computer
applications and systems, and (c) has developed a testing plan to test the
remediation or replacement of computer applications/systems, in each case,
to address on a timely basis the risk that certain computer
applications/systems used by PFPC may be unable to recognize and perform
properly date sensitive functions involving dates prior to, including and
after December 31, 1999, including dates such as February 29, 2000 (the
"Year 2000 Challenge"). To the best of PFPC's knowledge and belief, the
reasonably foreseeable consequences of the Year 2000 Challenge will not
adversely effect PFPC's ability to perform its duties and obligations under
this Agreement.
12. COMPENSATION. As compensation for services rendered by PFPC during the
term of this Agreement, the Fund, on behalf of each Portfolio, will pay to
PFPC a fee or fees as may be agreed to in writing by the Fund and PFPC.
13. INDEMNIFICATION. The Fund, on behalf of each Portfolio, agrees to
indemnify and hold harmless PFPC and its affiliates from all taxes,
charges, expenses, assessments, claims and liabilities (including, without
limitation, liabilities arising under the Securities Laws and any state or
foreign securities and blue sky laws, and amendments thereto), and
reasonable expenses, including (without limitation) reasonable attorneys'
fees and disbursements arising directly or indirectly from any action or
omission to act which PFPC takes (i) at the request or on the direction of
or in reliance on the advice of the
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<PAGE>
Fund or (ii) upon Oral Instructions or Written Instructions. Neither PFPC,
nor any of its affiliates, shall be indemnified against any liability (or
any expenses incident to such liability) arising out of PFPC's or its
affiliates' own willful misfeasance, bad faith, negligence or reckless
disregard of its duties and obligations under this Agreement. Any amounts
payable by the Fund hereunder shall be satisfied only against the relevant
Portfolio's assets and not against the assets of any other investment
portfolio of the Fund.
14. RESPONSIBILITY OF PFPC.
(a) PFPC shall be under no duty to take any action on behalf of the Fund
or any Portfolio except as specifically set forth herein or as may be
specifically agreed to by PFPC in writing. PFPC shall be obligated to
exercise care and diligence in the performance of its duties
hereunder, to act in good faith and to use its best efforts, within
reasonable limits, in performing services provided for under this
Agreement. PFPC shall be liable for any damages arising out of PFPC's
failure to perform its duties under this Agreement to the extent such
damages arise out of PFPC's willful misfeasance, bad faith, gross
negligence or reckless disregard of such duties.
(b) Without limiting the generality of the foregoing or of any other
provision of this Agreement, (i) PFPC shall not be liable for losses
beyond its control, provided that PFPC has acted in accordance with
the standard of care set forth above; and (ii) PFPC shall not be
liable for (A) the validity or invalidity or authority or lack thereof
of any Oral Instruction or Written Instruction, notice or other
instrument which conforms to the applicable requirements of this
Agreement, and which PFPC reasonably believes to be genuine; or (B)
subject to Section 10, delays or
8
<PAGE>
errors or loss of data occurring by reason of circumstances beyond
PFPC's control, including acts of civil or military authority,
national emergencies, labor difficulties, fire, flood, catastrophe,
acts of God, insurrection, war, riots or failure of the mails,
transportation, communication or power supply.
(c) Notwithstanding anything in this Agreement to the contrary, neither
PFPC nor its affiliates shall be liable to the Fund or to any
Portfolio for any consequential, special or indirect losses or damages
which the Fund or any Portfolio may incur or suffer by or as a
consequence of PFPC's or any affiliates' performance of the services
provided hereunder, whether or not the likelihood of such losses or
damages was known by PFPC or its affiliates.
15. DESCRIPTION OF ACCOUNTING SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following accounting services with respect to each
Portfolio:
(i) Journalize investment, capital share and income and expense
activities;
(ii) Verify investment buy/sell trade tickets when received from the
investment adviser for a Portfolio (the "Adviser") and transmit
trades to the Fund's custodian (the "Custodian") for proper
settlement;
(iii) Maintain individual ledgers for investment securities;
(iv) Maintain historical tax lots for each security;
(v) Reconcile cash and investment balances of the Fund with the
Custodian, and provide the Adviser with the beginning cash balance
available for investment purposes;
(vi) Update the cash availability throughout the day as required by the
Adviser;
(vii) Post to and prepare the Statement of Assets and Liabilities and the
Statement of Operations;
(viii) Calculate various contractual expenses (E.G., advisory and custody
fees);
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<PAGE>
(ix) Monitor the expense accruals and notify an officer of the Fund of
any proposed adjustments;
(x) Control all disbursements and authorize such disbursements upon
Written Instructions;
(xi) Calculate capital gains and losses;
(xii) Determine net income;
(xiii) Obtain security market quotes from independent pricing sources
approved by the Adviser, or if such quotes are unavailable, then
obtain such prices from the Adviser, and in either case calculate
the market value of each Portfolio's Investments;
(xiv) Transmit or mail a copy of the daily portfolio valuation to the
Adviser;
(xv) Compute net asset value;
(xvi) As appropriate, compute yields, total return, expense ratios,
portfolio turnover rate, and, if required, portfolio average
dollar-weighted maturity; and
(xvii) Prepare a monthly financial statement, which will include the
following items:
Schedule of Investments
Statement of Assets and Liabilities
Statement of Operations
Statement of Changes in Net Assets
Cash Statement
Schedule of Capital Gains and Losses.
16. DESCRIPTION OF SUB-ADMINISTRATION SERVICES ON A CONTINUOUS BASIS.
PFPC will perform the following sub-administration services with respect to
each Portfolio:
(i) Prepare quarterly broker security transactions summaries;
(ii) Prepare monthly security transaction listings;
(iii) Supply various normal and customary Portfolio and Fund statistical
data as requested on an ongoing basis;
(iv) Prepare for execution and file the Fund's Federal and state tax
returns;
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<PAGE>
(v) Prepare and file with the SEC the Fund's annual, semi-annual, and
quarterly shareholder reports;
(vi) Monitor each Portfolio's status as a regulated investment company
under Sub-chapter M of the Internal Revenue Code of 1986, as
amended;
(vii) Coordinate contractual relationships and communications between the
Fund and its contractual service providers;
(viii) Monitor the Fund's compliance with the amounts and conditions of
each state qualification.
(ix) Prepare, coordinate with Fund Counsel and file with the SEC
Post-Effective Amendments to the Fund's Registration Statement,
prepare reports to the Fund's shareholders of records and the SEC
including the preparation and filing of (i) semi-annual reports on
Form N-SAR and (ii) Notices pursuant to Rule 24f-2 and assist in
preparation of notices of Annual or Special Meetings of Shareholders
and Proxy materials relating to such meetings;
(x) Provide individuals reasonably acceptable to the Fund's Board of
Trustees to serve as "non-policy making" officers of the Fund, who
will be responsible for the administration of certain of the Fund's
affairs as determined by the Fund's Board of Trustees; and
(xi) Obtain and maintain fidelity bonds and directors and officers/errors
and omissions insurance policies for the Fund in accordance with the
requirements of Rules 17g-1 and 17d-1(d)(7) under the 1940 Act as
such bonds and policies are approved by the Fund's Board of
Trustees.
17. DURATION AND TERMINATION. This Agreement shall continue initially for two
years unless terminated for cause by the Fund. The Fund may terminate this
Agreement for cause only if the following have occurred: (i) the Fund gives
PFPC notice that for the preceding thirty (30) days PFPC has been in
material breach of the Agreement (and PFPC has in fact been in such
material breach) and that PFPC has thirty (30) days from receipt of such
notice to cure such material breach; (ii) PFPC fails to cure such material
breach within such thirty (30) day period; and (iii) at the conclusion of
such thirty (30) day period the Fund gives PFPC notice that it is
terminating the Agreement. In addition, the
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Fund may terminate the Agreement immediately for cause upon the insolvency
or bankruptcy of PFPC, the commencement by PFPC of a voluntary proceeding
in respect thereof, the commencement of an involuntary proceeding in
respect thereof if not discharged within 30 days, or the appointment of any
receiver or trustee in respect of PFPC or any of its assets. After the
initial two year term, either party may terminate this Agreement on 60 days
prior written notice to the other party.
18. CHANGE OF CONTROL. Notwithstanding any other provision of this Agreement,
in the event of an agreement to enter into a transaction that would result
in a Change of Control of the Fund's adviser or sponsor, the Fund's ability
to terminate the Agreement will be suspended from the time of such
agreement until six months after the Change of Control; provided that this
provision will not limit the initial 2 year term set forth in Section 17
hereof (i.e., the Fund will not be permitted to terminate the Agreement
until the later of the conclusion of the initial 2 year term or the
conclusion of the 6 month period referenced above).
19. NOTICES. All notices and other communications, including Written
Instructions, shall be in writing or by confirming telegram, cable, telex
or facsimile sending device. Notice shall be effective upon receipt.
Notices shall be addressed (a) if to PFPC, at 400 Bellevue Parkway,
Wilmington, Delaware 19809; (b) if to the Fund, at RS Investment
Trust, 555 California Street, Suite 2500, San Francisco, CA 94104,
Attn: Andrew C. Morrison, Secretary; or (c) if to neither of the
foregoing, at such other address as shall have been provided by like
notice to the sender of any such notice or other communication by the
other party.
20. AMENDMENTS. This Agreement, or any term thereof, may be changed or waived
only by written amendment, signed by the party against whom enforcement of
such change or
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<PAGE>
waiver is sought.
21. DELEGATION; ASSIGNMENT. PFPC may assign its rights and delegate its duties
hereunder to any majority-owned direct or indirect subsidiary of PFPC or
PNC Bank Corp., provided that (i) PFPC gives the Fund 30 days prior written
notice of such assignment or delegation, (ii) the assignee or delegate
agrees to comply with the relevant provision of the 1940 Act, and (iii)
PFPC and such assignee or delegate promptly provide such information as the
Fund may reasonably request, and respond to such questions as the Fund may
reasonably ask, relative to the assignment or delegation (including,
without limitation, the capabilities of the assignee or delegate).
22. COUNTERPARTS. This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
23. FURTHER ACTIONS. Each party agrees to perform such further acts and
execute such further documents as are necessary to effectuate the purposes
hereof.
24. MISCELLANEOUS.
(a) This Agreement embodies the entire agreement and understanding
between the parties and supersedes all prior agreements and
understandings relating to the subject matter hereof, provided that
the parties may embody in one or more separate documents their
agreement, if any, with respect to delegated duties and Oral
Instructions. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of
the provisions hereof or otherwise affect their construction or
effect. Notwithstanding any provision hereof, the services of PFPC
are not, nor shall they be, construed as constituting
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<PAGE>
legal advice or the provision of legal services for or on behalf of
the Fund or any other person.
(b) The parties agree that the Fund is executing this Agreement on
behalf of each of the Portfolios separately; that each of the
Portfolios is acting solely on its own behalf separately from each
of the other Portfolios and not jointly or jointly and severally
with any of the other Portfolios; that this Agreement shall
constitute, and shall for all purposes be construed to give effect
to the intention of the parties that it constitute, a separate
Agreement between PFPC and the Fund on behalf of each such Portfolio
separately, as if the Fund had executed this Agreement separately on
behalf of such Portfolio; and that no Portfolio shall be liable for
the obligations of any other Portfolio arising hereunder.
(c) A copy of the Agreement and Declaration of Trust of the Fund is on
file with the Secretary of State of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the trustees of the Fund as trustees and not
individually and that the obligations of this instrument are not
binding upon any of the trustees, officers, or shareholders of the
Fund individually but are binding only upon the assets and property
of the Fund.
(d) This Agreement shall be deemed to be a contract made in Delaware and
governed by Delaware law, without regard to principles of conflicts
of law.
(e) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this
Agreement shall not be affected thereby. This Agreement shall be
binding upon and shall inure to the benefit of the parties hereto
and their respective successors and permitted assigns.
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(f) The facsimile signature of any party to this Agreement shall
constitute the valid and binding execution hereof by such party.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
PFPC INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
RS INVESTMENT TRUST, on behalf
of its several constituent Portfolios
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT A
THIS EXHIBIT A, dated as of __________, 1999, is Exhibit A to that certain
Sub-Administration and Accounting Services Agreement dated as of _________, 1999
between PFPC Inc. and RS Investment Trust.
PORTFOLIOS
The Contrarian Fund-TM-
RS Diversified Growth Fund
RS Emerging Growth Fund
RS Global Natural Resources Fund
RS Global Value Fund
RS Growth & Income Fund
The Information Age Fund-TM-
RS MicroCap Growth Fund
RS Partners Fund
RS Value + Growth Fund
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AUTHORIZED PERSONS APPENDIX
NAME (TYPE) SIGNATURE
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
- ------------------------------------- --------------------------------------
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EXHIBIT p
POWER OF ATTORNEY
We, the undersigned Trustees and/or Officers of RS INVESTMENT TRUST (the
"Trust"), hereby severally constitute and appoint Andrew C. Morrison, G.
Randall Hecht, and Andrew P. Pilara, Jr., and each of them singly, our true
and lawful attorneys, with full power to them and each of them, to sign for
us, and in our name and in the capacities indicated below, the Registration
Statement on Form N-1A of the Trust and any and all amendments (including
post-effective amendments) to said Registration Statement and to file the
same with all exhibits thereto, and other documents in connection therewith,
with the Securities and Exchange Commission, with the securities commissioner
of any state, or with other regulatory authorities, granting unto them, and
each of them acting alone, full power and authority to do and perform each
and every act and thing requisite or necessary to be done in the premises, as
fully to all intents and purposes as he or she might or could do in person,
and hereby ratify and confirm all that said attorneys or any of them may
lawfully do or cause to be done by virtue thereof.
WITNESS my hand on the date set forth below.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
<S> <C> <C>
/S/ GEORGE R. HECHT President, Principal Executive Officer February 26, 1999
- -----------------------------------
George R. Hecht
/S/ ANDREW C. MORRISON Treasurer and Secretary February 26, 1999
- -----------------------------------
Andrew C. Morrison
/S/ LEONARD B. AUERBACH Trustee February 26, 1999
- -----------------------------------
Leonard B. Auerbach
/S/ JOHN W. GLYNN, JR. Trustee February 26, 1999
- -----------------------------------
John W. Glynn, Jr.
/S/ JAMES K. PETERSON Trustee February 26, 1999
- -----------------------------------
James K. Peterson
</TABLE>