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As filed with the Securities and Exchange Commission on February 18, 2000
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.37 /x/
and
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF 1940 /x/
AMENDMENT NO. 39 /x/
RS INVESTMENT TRUST
(formerly, Robertson Stephens Investment Trust)
(Exact Name of Registrant as Specified in Charter)
388 Market Street, Suite 200
San Francisco, California 94111
(Address of Principal Executive Offices)
Registrant's Telephone Number, including Area Code: (800) 766-3863
G. RANDALL HECHT
c/o RS Investment Management
388 Market Street, Suite 200
San Francisco, California 94111
(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)
/ / 60 days after filing pursuant to paragraph (a)(1);
/ / On (date) pursuant to paragraph (a)(1);
/X/ 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:
/X/ This post-effective amendment designates a new effective date for a
previously filed post-effective amendment.
PARTS A AND B OF THIS AMENDMENT RELATE ONLY TO RS AGGRESSIVE GROWTH FUND, A
NEW SERIES OF THE REGISTRANT. NO INFORMATION RELATING TO ANY OTHER SERIES OF
THE REGISTRANT IS AMENDED, DELETED, OR SUPERSEDED BY PARTS A AND B OF THIS
AMENDMENT.
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SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS
DATED FEBRUARY 18, 2000
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
POST-EFFECTIVE AMENDMENT TO THE TRUST'S REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS
NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY
BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER
TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY STATE WHICH SUCH
OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR TO REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
RS INVESTMENT TRUST
388 Market Street, Suite 200
San Francisco, CA 94111 PROSPECTUS
800-766-FUND March ___, 2000
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RS AGGRESSIVE GROWTH FUND
The RS Aggressive Growth Fund seeks capital appreciation. The Fund invests
in equity securities of companies of any size offering the potential for
significant increases in value. RS Investment Management, L.P. is the Fund's
investment adviser.
The RS Aggressive Growth Fund is a series of shares of RS Investment Trust.
You can call RS Investment Management at (800) 766-FUND to find out more
about the Fund. This Prospectus explains what you should know about the Fund
before you invest. Please read it carefully.
THE SECURITIES AND EXCHANGE COMMISSION HAS NOT APPROVED OR DISAPPROVED
THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS ACCURATE OR COMPLETE. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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TABLE OF CONTENTS
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PAGE
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Summary Information.....................................................................................................4
Objective, Principal Investment Strategies, and Principal Risks.........................................................4
Fees and Expenses.......................................................................................................6
Other Investment Strategies and Risks...................................................................................8
Risks of Investing in the Fund..........................................................................................8
Management of the Fund.................................................................................................11
How the Fund's Shares Are Priced.......................................................................................12
How to Purchase Shares.................................................................................................13
Initial Investments....................................................................................................13
Subsequent Investments.................................................................................................15
Other Information About Purchasing Shares..............................................................................15
How to Sell Shares.....................................................................................................16
Redemptions by Mail....................................................................................................16
Redemptions by Telephone...............................................................................................16
Wire Transfer of Redemptions...........................................................................................17
General Redemption Policies............................................................................................17
Exchanges..............................................................................................................18
Dividends and Distributions............................................................................................18
Taxes ..............................................................................................................18
Distribution Arrangements and Rule 12b-1 Fees..........................................................................19
Additional Information.................................................................................................20
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SUMMARY INFORMATION
OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES, AND PRINCIPAL RISKS.
- -- INVESTMENT OBJECTIVE. Capital appreciation.
- -- PRINCIPAL INVESTMENT STRATEGIES. The Fund invests in companies of any size
that RS Investment Management believes offer the potential for significant
increases in value. The Fund generally invests in industry segments that
are experiencing rapid growth and in companies with proprietary advantages.
RS Investment Management typically considers a number of factors in
evaluating a potential investment, including, for example, whether the
company has a distinct proprietary element; whether it is gaining market
share; whether it is earning superior margins or experiencing superior
profitability or whose incremental margins have potential to show improving
returns; whether it participates in an emerging space with a large market
opportunity; and whether it has a strong management team. RS Investment
Management may consider selling a security for the Fund if the issuer's
growth rate deteriorates or its performance otherwise disappoints, if the
price of the security attains RS Investment Management's price target or
otherwise appears relatively high to RS Investment Management, or if there
is an unfavorable change in the issuer's management or corporate plans or
if institutional ownership of the security increases substantially.
The Fund may sell securities short if RS Investment Management expects the
values of those securities decline.
- -- 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 will likely invest a portion of its assets in technology
companies.
- -- PRINCIPAL RISKS.
-- It is possible to lose money on an investment in the Fund.
-- EQUITY SECURITIES. One risk of investing in the Fund is the risk that
the value of the equity securities in the portfolio will fall, or will
not appreciate as anticipated by RS Investment Management, 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 the risk that the Fund
will suffer a loss because of general advances or declines in the
prices of stocks in those sectors or industries.
-- TECHNOLOGY INVESTMENTS. The Fund's investments in technology companies
may be highly volatile. Changes in their prices may reflect changes in
investor evaluation of a particular product or group of products, or
the prospects of a company to develop and market a particular
technology successfully, or of technology-related investments
generally.
-- SMALL COMPANIES. Although the Fund may invest its assets in companies
of any size, it is likely that some portion of the Fund's assets will
be invested in smaller companies. These companies
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may have limited product lines, markets, or financial resources, or
may depend on a limited management group. Their securities may trade
infrequently and in limited volumes. As a result, the prices of these
securities may fluctuate more than prices of securities of larger,
more widely traded companies and the Fund may experience difficulty in
establishing or closing out positions in these securities at
prevailing market prices. Also, there may be less publicly available
information about small companies or less market interest in their
securities as compared to larger companies, and it may take longer for
the prices of the securities to reflect the full value of their
issuers' earnings potential or assets.
-- PORTFOLIO TURNOVER. Frequent purchases and sales of the Fund's
portfolio securities involve expenses to the Fund, including brokerage
commissions or dealer mark-ups and other transaction costs. They may
also result in realization of taxable capital gains, which may be
taxed to shareholders at ordinary income tax rates.
FEES AND EXPENSES
THIS TABLE DESCRIBES THE FEES AND EXPENSES THAT YOU MAY PAY IF YOU BUY AND HOLD
SHARES OF THE FUND.
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
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* A $9.00 fee is charged for redemption by bank wire.
ANNUAL FUND OPERATING EXPENSES
(expenses that are deducted from Fund assets)
Management Fees 1.00%
Distribution (12b-1) Fees 0.25%
Other Expenses 0.38%(1)
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Total Annual Fund
Operating Expenses 1.63%
(1)"Other Expenses" are based on estimated amounts for the current fiscal year.
Because of Rule 12b-1 fees paid by the Fund, long-term shareholders may pay more
than the economic equivalent of the maximum front-end sales load permitted under
applicable broker-dealer sales rules.
EXAMPLE
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This Example is intended to help you compare the cost of investing in the Fund
with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the 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:
1 YEAR 3 YEARS
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RS Aggressive Growth Fund $ 197 $653
OTHER INVESTMENT STRATEGIES AND RISKS
In addition to the principal investment strategies described in the Summary
Information section above, the Fund 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 RS Investment Management might use in managing the Fund. As
in any mutual fund, investors must rely on the professional investment judgment
and skill of RS Investment Management.
The Fund may not achieve its objective in all circumstances and you could
lose money by investing. The following provides more detail about the Fund's
principal risks and the circumstances that could adversely affect the value of
the Fund's shares or its total return.
The Fund's investment strategies and portfolio investments may differ from
those of most other mutual funds. RS Investment Management seeks aggressively to
identify favorable securities, economic and market sectors, and investment
opportunities that other investors and investment advisers may not have
identified. RS Investment Management may devote more of the 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. The Fund may hold a portion of
its assets in cash or money market investments.
All percentage limitations on investments will apply at the time of
investment and will not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of the investment.
The Trustees of the Trust may change the investment objective and policies
of the Fund without a vote of the shareholders unless otherwise specifically
stated.
RISKS OF INVESTING IN THE FUND
SECTOR CONCENTRATION. At times the 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. The Fund would only concentrate its investment in
a particular market sector if RS Investment Management were to believe the
investment return available from concentration in that sector justifies any
additional risk associated with concentration in that sector. When the Fund
concentrates its investments in a market sector, financial, economic, business,
and other developments affecting
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issuers in that sector will have a greater effect on the Fund than if it had not
concentrated its assets in that sector.
HIGH-TECHNOLOGY AND THE INTERNET. The Fund may invest a substantial portion
of its assets in companies in high-technology or Internet-related sectors.
Companies in those sectors operate in markets that are characterized by rapid
change, evolving industry standards, frequent new service and product
announcements, introductions, and enhancements, and changing customer demands.
The failure of a company to adapt to such changes could have a material adverse
effect on the company's business, results of operations, and financial
conditions. In addition, the widespread adoption of new technologies or other
technological changes could require substantial expenditures by a company to
modify or adapt its services or infrastructure, which could have a material
adverse effect on its business, results of operations, and financial condition.
Investments in these sectors may be highly volatile.
INVESTMENTS IN SMALLER COMPANIES. The Fund 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
the 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.
FOREIGN SECURITIES. The Fund may invest in securities principally traded in
foreign markets. Because foreign securities are normally denominated and traded
in foreign currencies, the value of the 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 the Fund's assets held abroad) and
expenses not present in the settlement of domestic investments.
In addition, there may be a possibility of nationalization or expropriation
of assets, imposition of currency exchange controls, confiscatory taxation,
political or financial instability, and diplomatic developments that could
affect the value of the 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 the Fund may have limited recourse available to it in the event of
default. The laws of some foreign
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countries may limit the Fund's ability to invest in securities of certain
issuers located in those foreign countries. Special tax considerations apply to
foreign securities. The 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 the Fund's assets that may be invested in foreign
securities.
OPTIONS AND FUTURES. The 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, the Fund may at times seek to hedge against fluctuations in
net asset value and to attempt to increase its investment return.
The 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 the 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 the Fund to segregate assets to cover its outstanding positions. For
more information, see the Statement of Additional Information.
INDEX FUTURES AND OPTIONS. The 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. The Fund may also buy and
sell index futures and options to increase its investment return.
RISKS RELATED TO OPTIONS AND FUTURES STRATEGIES. Options and futures
transactions involve costs and may result in losses. Certain risks arise because
of the possibility of imperfect correlations between movements in the prices of
futures and options and movements in the prices of the underlying security or
index or of the securities held by the Fund that are the subject of a hedge. The
successful use by the Fund of the strategies described above further depends on
the ability of RS Investment Management to forecast market movements correctly.
Other risks arise from the Fund's potential inability to close out futures or
options positions. Although the Fund will enter into an options or futures
transactions only if RS Investment Management believes that a liquid secondary
market exists for such option or futures contract, there can be no assurance
that the Fund will be able to effect closing transactions at any particular time
or at an acceptable price.
The Fund expects that its options and futures transactions generally will
be conducted on recognized exchanges. The Fund may in certain instances purchase
and sell options in the over-the-counter markets. The 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. The Fund will, however, engage in
over-the-counter transactions only when appropriate exchange-traded transactions
are unavailable and when, in
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the opinion of RS Investment Management, the pricing mechanism and liquidity of
the over-the-counter markets are satisfactory and the participants are
responsible parties likely to meet their obligations.
SHORT SALES. When RS Investment Management anticipates that the price of a
security will decline, it may sell the security short and borrow the same
security from a broker or other institution to complete the sale. The 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 the 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 the Fund
will be able to close out the position at any particular time or at an
acceptable price.
The Fund may enter into short sales on securities with a value of up to 25%
of the Fund's total assets. Use of short sales by the Fund may have the effect
of providing the Fund with investment leverage, which increases the Fund's
market exposure and its risk. The use of short sales by the Fund may provide the
economic equivalent of the Fund's borrowing money. If the Fund is leveraged, the
Fund's net asset value will normally increase or decrease more than if it were
not leveraged. Successful use of short sales depends on RS Investment
Management's ability to predict market movements correctly.
DEFENSIVE STRATEGIES. At times, RS Investment Management may judge that
market conditions make pursuing the Fund's basic investment strategy
inconsistent with the best interests of its shareholders. At such times, RS
Investment Management may temporarily use alternative strategies, primarily
designed to reduce fluctuations in the values of the Fund's assets. In
implementing these "defensive" strategies, the Fund may invest in U.S.
Government securities, other high-quality debt instruments, and other securities
RS Investment Management believes to be consistent with the Fund's best
interests. If such a temporary "defensive" strategy is implemented, the Fund may
not achieve its investment objective.
PORTFOLIO TURNOVER. The length of time the Fund has held a particular
security is not generally a consideration in investment decisions. The
investment policies of the 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 the Fund is known as "portfolio turnover." Portfolio
turnover generally involves some expense to the 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. RS Investment
Management anticipates that the portfolio turnover rate for the Fund's first
full year of operation will not exceed 200%.
MANAGEMENT OF THE FUND
INVESTMENT ADVISER. RS Investment Management, L.P., 388 Market Street,
Suite 200, San Francisco, CA 94111, is the investment adviser for the Fund. RS
Investment Management, L.P. is a California partnership that was formed in 1993.
Subject to such policies as the Trustees may determine, RS Investment
Management furnishes a continuing investment program for the Fund and makes
investment decisions on its 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 Fund's Distribution Plan.
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RS Investment Management places all orders for purchases and sales of the
Fund's investments. In selecting broker-dealers, RS Investment Management may
consider research and brokerage services furnished to it and its affiliates.
Subject to seeking the most favorable price and execution available, RS
Investment Management may consider sales of shares of the Fund as a factor in
the selection of broker-dealers.
RS Investment Management may at times bear certain expenses of the Fund.
The Investment Advisory Agreement between the Fund and RS Investment Management
permits RS Investment Management to seek reimbursement for those expenses within
the succeeding two-year period, subject to any expense limitations then
applicable to the Fund in question.
ADMINISTRATIVE SERVICES. The Fund has entered into an agreement with RS
Investment Management pursuant to which RS Investment Management provides
administrative services to the Fund. No fees are payable by the Fund under the
agreement.
PORTFOLIO MANAGERS. The Fund is managed by a team of investment
professionals at RS Investment Management. Mr. James L. Callinan currently
serves as senior member of the team. Mr. Callinan is also the portfolio manager
for RS Emerging Growth Fund and a co-manager of RS Internet Age Fund. From 1986
until June 1996, Mr. Callinan was employed by Putnam Investments, where,
beginning in June 1994, he served as portfolio manager of the Putnam OTC
Emerging Growth Fund. Mr. Callinan received an A.B. in economics from Harvard
College, an M.S. in accounting from New York University, and an M.B.A. from
Harvard Business School, and is a Chartered Financial Analyst.
HOW THE FUND'S SHARES ARE PRICED
CALCULATION OF NET ASSET VALUE. The 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 Fund values its 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 Fund values all other
securities and assets at their fair values as determined in accordance with the
guidelines and procedures adopted by the Trust's Board of Trustees.
The Fund will not price its shares on days when the New York Stock Exchange
is closed. The Fund expects that the days, other than weekend days, that the New
York Stock Exchange will be closed are New Year's Day, Martin Luther King, Jr.
Day, Presidents' Day, Good Friday, Memorial Day, Independence Day (observed),
Labor Day, Thanksgiving Day, and Christmas Day.
Securities quoted in foreign currencies are translated into U.S. dollars at
the current exchange rates or at such other rates as may be used in accordance
with procedures approved by the Trustees. As a result, fluctuations in the
values of such currencies in relation to the U.S. dollar will affect the net
asset value of the 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 the 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 the Fund's shares is calculated. Because certain of
the securities in which the Fund may invest may trade on days when such Fund
does not price its shares, the net asset value of the Fund's shares may change
on days when shareholders will not be able to purchase or redeem their shares.
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Generally, trading in certain securities (such as foreign securities) is
substantially completed each day at various times prior to the close of the
Exchange. The values of these securities used in determining the net asset value
are computed as of such times. Also because of the amount of time required to
collect and process trading information as to large number of securities issues,
the values of certain securities (such as convertible bonds) are determined
based on market quotations collected earlier in the day at the latest
practicable time prior to the close of the Exchange. Occasionally, events
affecting the value of such securities may occur between such times and the
close of the Exchange that will not be reflected in the computation of net asset
value. If events materially affecting the value of such securities occur during
such period, then these securities will be valued at their fair value following
procedures approved by the Trustees.
During any 90-day period, the Trust is committed to pay in cash all
requests to redeem shares by each shareholder, up to the lesser of $250,000 and
1% of the value of the Fund's net assets at the beginning of the period. Should
redemptions by any shareholder of the 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 Fund at
1-800-766-FUND, or by writing to the Fund at 388 Market Street, Suite 200, San
Francisco, CA 94111. For more information on RS Fund 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, to the Fund's 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
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DDA# 99047177
225 Franklin Street
Boston, MA 02110
Credit: RS Aggressive Growth 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 of the Fund 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 Fund. The Fund, RS
Investment Management, or Provident Distributors, Inc. ("Provident"), the Fund's
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 the 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, but wish to do so
now, send a letter of instruction, along with a voided check, to the Transfer
Agent.
OTHER INFORMATION ABOUT PURCHASING SHARES
All purchases of the Fund's shares are subject to acceptance by the 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 the Fund before any purchase
becomes effective. Failure to include your specific Fund and account information
may delay processing of purchases. Purchases of Fund shares are made at the net
asset value next determined after the purchase is accepted. See "How the Fund's
Shares are Priced." Please initiate any wire transfer early in the morning to
ensure that the wire is received by the Fund before the close of the New York
Stock Exchange, normally 4:00 p.m. eastern time.
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<PAGE>
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 Fund or the Transfer Agent. The Fund can redeem shares to reimburse it or
the Transfer Agent for any such loss.
The 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.
HOW TO SELL SHARES
You may redeem your shares, or sell your shares back to the Fund on any
business day by following one of the procedures explained below.
REDEMPTIONS BY MAIL
You may redeem your shares of the 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 that you do not wish to establish telephone
redemption privileges (see the Account Application or call the Transfer Agent
for details), you may redeem shares by calling the Transfer Agent at
1-800-624-8025 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. The Fund employs reasonable procedures in an
effort to confirm the authenticity of telephone instructions. If procedures
established by the Trust are not followed, the Fund and the Transfer Agent may
be responsible for any losses because of unauthorized or fraudulent
instructions. By not declining telephone redemption privileges, you
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<PAGE>
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. The 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
Fund 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 but wish to do so now, 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 the Fund will make payment for redeemed shares within seven
days thereafter. Under unusual circumstances, the 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 the 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 the Fund through the Autobuy option and redeem them
shortly thereafter, the Fund will delay payment of the redemption proceeds for
up to fifteen days after your purchase of shares through the Autobuy option is
accepted.
You may experience delays in exercising telephone redemptions during
periods of abnormal market activity. Accordingly, during periods of volatile
economic and market conditions, you may wish to consider transmitting redemption
orders to the Transfer Agent by an overnight courier service.
EXCHANGES
Shares of the Fund may be exchanged for shares of another series of the
Trust, but only after you obtain and read the prospectus of the series into
which you are exchanging. Please call 1-800-766-FUND for a prospectus or more
information. 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 series of the Trust are qualified for sale. However,
you may not exchange your investment more than four times in any twelve-month
period (including the initial exchange of your investment
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during the period, and subsequent exchanges of that investment from other series
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 the 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 Fund for details),
you may make exchanges by telephone.
DIVIDENDS AND DISTRIBUTIONS
The 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 the 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. The 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.
The 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 the Fund (and
thus were included in the price paid for the Fund shares). Distributions of
gains from investments that the Fund owned for more than one year will be
taxable as capital gains. Distributions of gains from investments that the Fund
owned for one year or less will be taxable as ordinary income. Distributions
will be taxable as described above, whether received in cash or in shares
through the reinvestment of distributions. Early in each year, the Trust will
notify you of the amount and tax status of distributions paid to you by the Fund
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 Fund will also generally be subject to
federal income or capital gains tax, depending on your holding period. The
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, the
Fund could be required at times to liquidate other investments in order to
satisfy its distribution requirements.
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<PAGE>
The 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, the 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
the 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 the 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 Fund's
shares. To compensate Provident for the services it provides and for the
expenses it bears in connection with the distribution of the Fund's shares, the
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
Fund pays Provident compensation, accrued daily and paid monthly, at the annual
rate of 0.25% of the Fund's average daily net assets. Provident may pay brokers
a commission expressed as a percentage of the purchase price of shares of the
Fund.
RS Investment Management or its affiliates provide certain services to
Provident in respect of the promotion of the shares of the Fund. In return for
those services, Provident pays to RS Investment Management or those affiliates a
portion of the payments received by Provident under the Distribution Plan.
RS Investment Management and its affiliates or Provident, at their own
expense and out of their own assets, may also provide other compensation to
financial institutions in connection with sales of the Fund's 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 Fund's 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 Fund pays distribution and other fees for the sale of its shares and
for services provided to shareholders out of the Fund's assets on an on-going
basis. As a result, over time these fees will increase the cost of your
investment and may cost you more than paying other types of sales charges.
ADDITIONAL INFORMATION
The Trust's Statement of Additional Information ("SAI") for the Fund dated
March ___, 2000 contains additional information about the Fund. The SAI is
incorporated by reference into this prospectus, which means that it is part of
this prospectus for legal purposes. You may obtain a free copy of the SAI,
request other information about the Fund, 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
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<PAGE>
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 Fund. You may also obtain copies of these
materials, upon payment of a duplicating fee, by writing the Public Reference
Section of the Commission, Washington, D.C. 20549-6009. You may need to refer to
the Trust's file number under the Investment Company Act, which is 811-05159.
ADDRESS CORRESPONDENCE TO:
RS Investment Management
388 Market Street, Suite 200
San Francisco, CA 94111
World Wide Web Address: http://www.rsim.com
Shareholder Services
1-800-766-FUND
[LOGO]
RS AGGRESSIVE GROWTH FUND
----------------
RS INVESTMENT TRUST
----------------
PROSPECTUS
----------------
MARCH ___, 2000
Investment Company Act File No. 811-05159
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INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
POST-EFFECTIVE AMENDMENT TO THE TRUST'S REGISTRATION STATEMENT RELATING TO THESE
SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE COMMISSION BUT HAS
NOT YET BECOME EFFECTIVE. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS TO BUY
BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES EFFECTIVE. THIS
STATEMENT OF ADDITIONAL INFORMATION SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION
PRELIMINARY STATEMENT OF ADDITIONAL INFORMATION
DATED FEBRUARY 18, 2000
STATEMENT OF ADDITIONAL INFORMATION
RS AGGRESSIVE GROWTH FUND
MARCH __, 2000
RS Aggressive Growth Fund (the "Fund") is a series of shares of RS
Investment Trust (the "Trust"), an open-end series investment company. This
Statement of Additional Information is not a prospectus and should be read in
conjunction with the Prospectus of the Fund dated March __, 2000, as it may be
revised from time to time. A copy of the Fund's Prospectus can be obtained upon
request made to RS Investment Management, 388 Market Street, Suite 200, San
Francisco, CA 94111 telephone 1-800-766-FUND.
TABLE OF CONTENTS
CAPTION PAGE
INVESTMENTS AND RISKS.....................................................B-2
THE FUND'S INVESTMENT LIMITATIONS........................................B-11
DISTRIBUTION PLAN........................................................B-17
HOW NET ASSET VALUE IS DETERMINED........................................B-17
TAXES....................................................................B-18
HOW PERFORMANCE IS DETERMINED............................................B-20
ADDITIONAL INFORMATION...................................................B-22
APPENDIX A...............................................................B-23
<PAGE>
TRUST INFORMATION
TRUST HISTORY AND FUND CLASSIFICATION
RS Investment Trust (formerly, Robertson Stephens Investment Trust) was
organized on May 11, 1987 under the laws of The Commonwealth of Massachusetts
and is a business entity commonly known as a "Massachusetts business trust." A
copy of the Agreement and Declaration of Trust, which is governed by
Massachusetts law, is on file with the Secretary of State of The Commonwealth of
Massachusetts.
The Trust currently offers shares of beneficial interest of various series with
separate investment objectives and policies, of which the Fund is one. The Fund
is a diversified, open-end, management investment company under the Investment
Company Act of 1940, as amended (the "1940 Act"). This means that with respect
to 75% of the Fund's total assets, the Fund may not invest in securities of any
issuer if, immediately after such investment, more than 5% of the total assets
of the Fund (taken at current value) would be invested in the securities of that
issuer (this limitation does not apply to investments in U.S. Government
securities). The Fund is not subject to this limitation with respect to the
remaining 25% of its total assets.
CAPITALIZATION
The Trust has an unlimited number of shares of beneficial interest that may,
without shareholder approval, be divided into an unlimited number of series of
such shares, which, in turn, may be divided into an unlimited number of classes
of such shares.
The proceeds received by the 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 the Fund, and constitute the
underlying assets of the Fund. The underlying assets of the Fund will be
segregated on the Trust's books of account, and will be charged with the
liabilities in respect of the Fund and with a share of the general liabilities
of the Trust. Expenses with respect to the Fund and one or more other series of
the Trust may be allocated in proportion to the net asset values of the
respective series except where allocations of direct expenses can otherwise be
fairly made.
Shareholders of the Fund will have one vote for each full share owned and
proportionate, fractional votes for fractional shares held. Generally, shares of
the Fund vote separately as a single series of the Trust except when required by
law or determined by the Board of Trustees. Although the Trust is not required
to hold annual meetings of its shareholders, shareholders have the right to call
a meeting to elect or remove Trustees or to take other actions as provided in
the Declaration of Trust.
INVESTMENTS AND RISKS
In addition to the principal investment strategies and the principal risks of
the Fund described in the Prospectus, the Fund may employ other investment
practices and may be subject to additional risks which are described below.
RS Investment Management, L.P. ("RSIM, L.P.") serves as investment adviser to
the Fund.
OPTIONS
The Fund may purchase and sell put and call options on its portfolio securities
to enhance investment performance and to protect against changes in market
prices. There is no assurance that the Fund's use of put and call options will
achieve its desired objective, and the Fund's use of options may result in
losses to the Fund.
COVERED CALL OPTIONS. The 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.
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<PAGE>
In return for the premium received when it writes a covered call option, the
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.
The Fund may terminate a call option that it has written before it expires by
entering into a closing purchase transaction. The Fund may enter into closing
purchase transactions in order to free itself to sell the underlying security or
to write another call on the security, realize a profit on a previously written
call option, or protect a security from being called in an unexpected market
rise. Any profits from a closing purchase transaction may be offset by a decline
in the value of the underlying security. Conversely, because increases in the
market price of a call option will generally reflect increases in the market
price of the underlying security, any loss resulting from a closing purchase
transaction is likely to be offset in whole or in part by unrealized
appreciation of the underlying security owned by the Fund.
COVERED PUT OPTIONS. The 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, the 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.
The 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. The 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.
The 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.
The Fund may also purchase put and call options to attempt to enhance its
current return.
OPTIONS ON FOREIGN SECURITIES. The Fund may purchase and sell options on foreign
securities if RSIM, L.P. 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 RSIM, L.P. will not forecast interest rate or
market movements correctly, that the 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 RSIM, L.P. to forecast market and interest rate
movements correctly.
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<PAGE>
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, the 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 RSIM, L.P.
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 the Fund's use of
options. The exchanges have established limitations on the maximum number of
calls and puts of each class that may be held or written by an investor or group
of investors acting in concert. It is possible that the Fund, the Trust and
other clients of RSIM, L.P. may be considered such a group. These position
limits may restrict the Fund's 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 Fund's use of options.
SPECIAL EXPIRATION PRICE OPTIONS
The Fund may purchase over-the-counter ("OTC") puts and calls with respect to
specified securities ("special expiration price options") pursuant to which the
Fund in effect may create a custom index relating to a particular industry or
sector that RSIM, L.P. 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 the Fund's profits if the special expiration price
options are exercised. The 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.
FUTURES CONTRACTS
INDEX FUTURES CONTRACTS AND OPTIONS. The 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 the 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&P100 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.
B-4
<PAGE>
In order to hedge its investments successfully using futures contracts and
related options, the 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, the Fund may purchase and sell index futures contracts may
purchase and sell call and put options on the underlying indexes themselves to
the extent that such options are traded on national securities exchanges. Index
options are similar to options on individual securities in that the purchaser of
an index option acquires the right to buy (in the case of a call) or sell (in
the case of a put), and the writer undertakes the obligation to sell or buy (as
the case may be), units of an index at a stated exercise price during the term
of the option. Instead of giving the right to take or make actual delivery of
securities, the holder of an index option has the right to receive a cash
"exercise settlement amount." This amount is equal to the amount by which the
fixed exercise price of the option exceeds (in the case of a put) or is less
than (in the case of a call) the closing value of the underlying index on the
date of the exercise, multiplied by a fixed "index multiplier."
The 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. The
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 the 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 the 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 the 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 the 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 the 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 Fund intends 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
B-5
<PAGE>
and, in the event of adverse price movements, the 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 the 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 the 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 the Fund of
futures contracts and related options as a hedging device. One risk arises
because of the imperfect correlation between movements in the prices of the
futures contracts and options and movements in the underlying securities or
index or movements in the prices of the Fund's securities which are the subject
of a hedge. RSIM, L.P. 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 the Fund for hedging purposes
is also subject to RSIM, L.P.'s ability to predict correctly movements in the
direction of the market. It is possible that, where the 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 RSIM, L.P. still
may not result in a successful hedging transaction over a very short time
period.
OTHER RISKS. The Fund will incur brokerage fees in connection with its 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 the 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.
REPURCHASE AGREEMENTS
The 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 Fund's present intention
to enter into repurchase agreements only with member banks of the Federal
Reserve System and securities dealers meeting certain criteria as to
creditworthiness and financial condition established by the Trustees of the
Trust and only with respect to obligations of the U.S. Government or its
agencies or instrumentalities or other high-quality, short-term debt
obligations. Repurchase agreements may also be viewed as loans made by the Fund
which are collateralized by the securities subject to repurchase. RSIM, L.P.
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,
the 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, the 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.
B-6
<PAGE>
SECURITIES LENDING
The 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) the Fund will receive any
interest or dividends paid on the loaned securities; and (4) the aggregate
market value of securities of the 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 the 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 the Fund enters into a loan, RSIM, L.P. 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,
the 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 the Fund if the
holders of such securities are asked to vote upon or consent to matters
materially affecting the investment. The Fund will not lend portfolio securities
to borrowers affiliated with the Fund.
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 the 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 the 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
The 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. The Fund may engage in both "transaction hedging" and
"position hedging."
There can be no assurance that appropriate foreign currency transactions will be
available for the Fund at any time; or that the 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, the 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. The 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, the 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.
B-7
<PAGE>
The 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. The 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, the 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 the Fund the
right to assume a short position in the futures contract until expiration of the
option. A put option on currency gives the 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 the Fund the right to assume a long position in the
futures contract until the expiration of the option. A call option on currency
gives the Fund the right to purchase a currency at the exercise price until the
expiration of the option. The Fund will engage in over-the-counter transactions
only when appropriate exchange-traded transactions are unavailable and when, in
the opinion of RSIM, L.P., 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, the 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, the 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. The 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 the Fund's
portfolio securities at the expiration or maturity of a forward or futures
contract. Accordingly, it may be necessary for the 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 the 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 the 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 the 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 the 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.
The 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.
B-8
<PAGE>
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, the 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 the 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, the 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 RSIM, L.P.
believes that a liquid secondary market exists for such options. There can be no
assurance that a liquid secondary market will exist for a particular option at
any specific time. Options on foreign currencies are affected by all of those
factors which influence exchange rates and investments generally.
The value of a foreign currency option is dependent upon the value of the
foreign currency and the U.S. dollar, and may have no relationship to the
investment merits of a foreign security. Because foreign currency transactions
occurring in the interbank market involve substantially larger amounts than
those that may be involved in the use of foreign currency options, investors may
be disadvantaged by having to deal in an odd lot market (generally consisting of
transactions of less than $1 million) for the underlying foreign currencies at
prices that are less favorable than for round lots.
There is no systematic reporting of last-sale information for foreign currencies
and there is no regulatory requirement that quotations available through dealers
or other market sources be firm or revised on a timely basis. Available
quotation information is generally representative of very large transactions in
the interbank market and thus may not reflect relatively smaller transactions
(less than $1 million) where rates may be less favorable. The interbank market
in foreign currencies is a global, around-the-clock market. To the extent that
the U.S. options markets are closed while the markets for the underlying
currencies remain open, significant price and rate movements may take place in
the underlying markets that cannot be reflected in the U.S. options markets.
FOREIGN CURRENCY CONVERSION. Although foreign exchange dealers do not charge a
fee for currency conversion, they do realize a profit based on the difference
(the "spread") between prices at which they buy and sell various currencies.
Thus, a dealer may offer to sell a foreign currency to the Fund at one rate,
while offering a lesser rate of exchange should the Fund desire to resell that
currency to the dealer.
The Fund 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, RSIM, L.P. may judge that market conditions make pursuing the Fund's
basic investment strategy inconsistent with the best interests of its
shareholders. At such times, RSIM, L.P. may temporarily use alternative
strategies, primarily designed to reduce fluctuations in the values of the
Fund's assets. In implementing these "defensive strategies", the Fund may invest
in U.S. Government securities, other high-quality debt instruments, and other
securities RSIM, L.P. believes to be consistent with the Fund's best interests.
B-9
<PAGE>
THE FUND'S INVESTMENT LIMITATIONS
The Trust has adopted the following fundamental investment restrictions which
may not be changed without the affirmative vote of a majority of the outstanding
voting securities of the Fund. The Fund may not:
1. issue any class of securities which is senior to the Fund's shares of
beneficial interest, except that the Fund may borrow money to the extent
contemplated by Restriction 3 below;
2. purchase securities on margin (but the 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 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 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;
6. 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;
7. purchase or sell commodities or commodity contracts, except that the
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;
8. 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. (For purposes of
this restriction, investments by the 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 the Fund, which policy may
be changed without shareholder approval, to invest more than 15% of its net
assets in securities which are not readily marketable, including securities
restricted as to resale (other than securities restricted as to resale but
determined by the Trustees, or persons designated by the Trustees to make such
determinations, to be readily marketable).
All percentage limitations on investments will apply at the time of
investment and shall not be considered violated unless an excess or deficiency
occurs or exists immediately after and as a result of such investment. Except
for the investment restrictions listed above as fundamental or to the extent
designated as such in the Prospectus, the other investment policies described in
this Statement or in the Prospectus are not fundamental and may be changed by
approval of the Trustees. As a matter of policy, the Trustees would not
materially change the Fund's investment objective without shareholder approval.
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 the Fund, or (2) 67% or more of the shares
of the Fund present at a meeting if more than 50% of the outstanding shares of
the Fund are represented at the meeting in person or by proxy.
B-10
<PAGE>
MANAGEMENT OF THE FUND
TRUSTEES AND OFFICERS
The Trustees of the Trust are responsible for generally overseeing the conduct
of the Trust's (and the Fund's) business. Set forth below is certain information
about the Trust's trustees and executive officers:
LEONARD B. AUERBACH, TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111
Mr. Auerbach, 52, is the President and Chairman of the
Board of Auerbach Associates, Inc., a management consulting firm which he
founded in 1979. Mr. Auerbach is also President of LBA&C, Inc., which served
until July 1997 as general partner of Tuttle & Company, which provides
mortgage pipeline interest rate hedging services and related software to a
variety of institutional clients. He also served until July 1997 as President
of Tuttle & Auerbach Securities, Inc., an introducing broker trading futures
on behalf of institutional hedging clients and individuals. He is also a
Director of Roelof Mining, Inc. and Headlands Mortgage Corp. Mr. Auerbach is
President of All Performance Mortgage Trust LLC, a manager of mortgage assets.
Mr. Auerbach is a limited partner in Robertson Stephens Residential Fund,
L.P., RS Property Fund I, L.P., and Robertson Stephens Commercial Property
Fund, L.P., of which RSRF Company, L.L.C., RSRE II., L.L.C., and Robertson,
Stephens & Company, Inc., respectively, affiliates of RSIM, L.P., and RS
Investment Management, Inc. ("RSIM, Inc."), another adviser to several series
of the Trust, are the general partners. Mr. Auerbach has been a Trustee of the
Trust since June 1987.
JOHN W. GLYNN, JR., TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco, CA
94111
Mr. Glynn, 57, is the Principal and Chairman of the Board of Glynn
Capital Management, an investment management firm which he founded in 1983.
Mr. Glynn is a Director of Sterling Payot Company, a private investment
banking firm that advises executives and companies on inancial and strategic
matters. He is also a director of several private companies. He is also a
lecturer at the Darden School of Business at the University of Virginia and
at the Stanford Business School. Mr. Glynn was until June 1997 a limited
partner in The Orphan Fund, of which RSIM, L.P. is a general partner. He
has been a Trustee of the Trust since July , 1997.
*G. RANDALL HECHT, TRUSTEE, PRESIDENT, AND PRINCIPAL EXECUTIVE OFFICER
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco,
CA 94111
Mr. Hecht, 47, was elected President and Principal Executive Officer of the
Trust in February 1999. Mr. Hecht is the chief executive officer of RSIM, L.P.
and RSIM, Inc. He is also the chief executive officer and a member of RS
Investment Management Co., LLC, the parent company to RSIM, L.P. and RSIM, Inc.
Mr. Hecht served as Chief Operating Officer of Robertson, Stephens & Company,
Inc. from January 1993 to 1997 as Chief Financial Officer of Robertson, Stephens
& Company LLC (and its predecessors) from June 1984 to January 1993 and as the
head of that firm's Investment Management Group. He was also a limited partner
of Robertson, Stephens & Company LLC, and a member of the Management and
Executive Committees of Robertson, Stephens & Company, Inc. He was a Trustee of
the Trust from June 1987 until December 1997.
JAMES K. PETERSON, TRUSTEE
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco, CA
94111
Mr. Peterson, 56, is a Managing Director of Oak Glen Consultancy,
L.L.C., a firm which advises pension funds and other institutions on
investment issues. From October 1998 until April 1999, Mr. Peterson was an
employee of Mitchum, Jones & Templeton, Inc. a registered broker-dealer. He
served as Director of Investment Management for the IBM Retirement Funds
from April 1988 until October 1996. Mr. Peterson was a Manager of the IBM
Retirement Funds from March 1981 until April 1988. Mr. Peterson is a limited
partner of Robertson Stephens Residential Fund, L.P., a limited partnership
of which RSRF Company, L.L.C., an affiliate of RSIM, L.P. and RSIM, Inc., is
the general partner. He has been a Trustee of the Trust since June 1987.
STEVEN COHEN, TREASURER
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco, CA
94111
B-11
<PAGE>
Mr. Cohen, 32, is the Chief Financial Officer of RSIM, L.P. and RSIM, Inc. Prior
to joining RS Investment Management in April 1999, Mr. Cohen was Trading
Operations Manager of Ziff Brothers Investments from 1997 until 1998. From 1994
until 1997, he served as an Audit Manager at Ernst & Young. Mr. Cohen has been
Treasurer of the Trust since April 1999.
SUZANNE DUFRANE, SECRETARY
c/o RS Investment Management, 388 Market Street, Suite 200, San Francisco, CA
94111
Prior to joining RS Investment Management, Ms. DuFrane was a Vice
President at Credit Suisse First Boston in New York. From 1996-1997, Ms.
DuFrane worked at Robertson Stephens Investment Management as a controller in
the hedge fund group. Before joining Robertson Stephens Investment
Management in 1996, Ms. DuFrane was a senior tax consultant at Price
Waterhouse in San Francisco for three years. She has a B.A. in Social
Science from U.C. Berkeley. Ms. DuFrane has been Secretary of the Trust
since July, 1999.
Pursuant to the terms of the Advisory Agreement with the Fund, 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 RSIM,
L.P. or RSIM, Inc. The Trust pays each unaffiliated Trustee an annual fee of
$5,000 for each series of the Trust, including the Fund and reimburses their
actual out-of-pocket expenses relating to attendance at meetings of the Board of
Trustees.
COMPENSATION TABLE
<TABLE>
<CAPTION>
Name of Aggregate Pension or Estimated Annual Total
Person, Position Compensation Retirement Benefits Upon Compensation
From Trust Benefits Accrued Retirement From Fund Paid to
in 1999 As Part of Trust Trustees in 1999
Expenses
- ------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Leonard Auerbach, Trustee $90,000 -- -- $0
John W. Glynn, Jr., Trustee $90,000 -- -- $0
James K. Peterson, Trustee $95,488 -- -- $0
G. Randall Hecht*, Trustee -- -- -- --
- --------------------
</TABLE>
* Denotes a Trustee who is an "interested person," as defined in the 1940 Act.
CONTROL PERSONS AND SHARE OWNERSHIP
As of March ___, 2000, all outstanding shares of the Fund were owned by______.
On March ___, 2000 the officers and Trustees of the Trust, as a group,
beneficially owned less than 1% of the outstanding shares of the 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 isdetermined 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.
RSIM, L.P.
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. 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 series of
the Trust, own 22%,
B-12
<PAGE>
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 an Investment Advisory Agreement (the "Advisory Agreement"), RSIM,
L.P., at its expense, furnishes investment management services with respect to
the assets of the Fund, consistent with the investment objective and policies of
the Fund and subject to the supervision and direction of the Trust's Board of
Trustees, and (i) furnishes the Fund with investment advice, research, and
recommendations with respect to the investment of the Fund's assets and the
purchase and sale of its portfolio securities, (ii) furnishes the Trust and the
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 the Fund, subject to the ultimate supervision and
direction of the Board of Trustees. In addition, RSIM, L.P. provides all
administrative services needed for the management and operation of the Fund and
furnishes such office space and personnel as are needed by the Fund pursuant to
an Administrative Services Agreement with the Fund, as described in
"Administrative Services" below. The services of RSIM, L.P. to the Fund are not
deemed to be exclusive, and RSIM, L.P. 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 Fund may reimburse RSIM, L.P.
(on a cost recovery basis only) for any services performed for the Fund by it
outside its duties under the Advisory Agreement.
The Advisory Agreement provides that RSIM, L.P. 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 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.
The Advisory Agreement is subject to annual approval, commencing in 2002, by (i)
the vote of the Trustees or of a majority of the outstanding voting securities
(as defined in the 1940 Act) of the Fund, and (ii) the vote of a majority of the
Trustees who are not "interested persons" (as defined in the 1940 Act) of the
Trust or RSIM, L.P. It is terminable by RSIM, L.P., the Trust, or a vote of a
majority of the outstanding voting securities of the Fund, without penalty, on
60 days' written notice and will terminate automatically in the event of its
assignment.
The Advisory Agreement also provides that RSIM, L.P. may, at its own expense,
delegate certain of its responsibilities under the Agreement to sub-advisers for
the Fund, who would be required to furnish an investment program and make
investment decisions for the Funds. RSIM, L.P. has not entered into sub-advisory
agreements in respect of the Fund.
MANAGEMENT AND ADMINISTRATIVE FEES
MANAGEMENT FEES. The Fund pays RSIM, L.P. fees as compensation for the services
provided by it under the Advisory Agreement. The amount of these management fees
is calculated daily and payable monthly at the annual rate of 1.00% of the
average daily net assets of the Fund.
These management fees are higher than those paid by most other investment
companies. RSIM, L.P. also may at its discretion from time to time pay Fund
expenses from its own assets, or reduce the management fee of the Fund.
ADMINISTRATIVE SERVICES. The Fund has entered into an Administrative Services
Agreement with RSIM, L.P., pursuant to which RSIM, L.P. continuously provides
business management services to the Fund and generally manages all of the
business and affairs of the Fund, subject to the general oversight of the
Trustees. No fees are payable by the Fund 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 Fund, on 30 days' notice to RSIM, L.P.
EXPENSES
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<PAGE>
The Fund will pay all expenses related to its operation which are not borne by
an RSIM, L.P., 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 Fund's 12b-1 Plan,
fees paid to members of the Board of Trustees who are not officers, directors,
stockholders, or employees of RSIM, L.P. 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 Fund and for the other investment advisory clients
of RSIM, L.P. and its affiliates are made with a view to achieving their
respective investment objectives. Investment decisions are the product of many
factors in addition to basic suitability for the particular client involved.
Thus, a particular security may be bought or sold for certain clients even
though it could have been bought or sold for other clients at the same time.
Likewise, a particular security may be bought for one or more clients when one
or more other clients are selling the security. In some instances, one client
may sell a particular security to another client. It also sometimes happens that
two or more clients simultaneously purchase or sell the same security, in which
event each day's transactions in such security are, insofar as possible,
averaged as to price and allocated between such clients in a manner which in
opinion of RSIM, L.P. 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. RSIM, L.P. employs professional staffs of portfolio
managers who draw upon a variety of resources for research information for the
Fund.
Transactions on U.S. stock exchanges, commodities markets, and futures markets
and other agency transactions involve the payment by the 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 Fund usually includes an undisclosed dealer commission or mark-up. In
underwritten offerings, the price paid by the Fund 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
receives 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,
RSIM, L.P. receives brokerage and research services and other similar services
from many broker-dealers with which they place the 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 managers
and analysts of RSIM, L.P. Where the services referred to above are not used
exclusively by RSIM, L.P. for research purposes, RSIM, L.P., 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 RSIM, L.P. and its affiliates in advising various of its clients
(including the Fund), although not all of these services are necessarily useful
and of value in managing the Fund. The management fee paid by the Fund is not
reduced because RSIM, L.P. or its affiliates receive these services, even though
RSIM, L.P. might otherwise be required to purchase some of these services for
cash.
RSIM, L.P. places all orders for the purchase and sale of portfolio investments
for the Fund and buys and sells investments for the Fund through a substantial
number of brokers and dealers. RSIM, L.P. seeks the best overall terms available
for the Fund, except to the extent RSIM, L.P. may be permitted to pay higher
brokerage commissions as described below. In doing so, RSIM, L.P., having in
mind the 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.
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<PAGE>
As permitted by Section 28(e) of the 1934 Act, RSIM, L.P. may cause the Fund to
pay a broker-dealer which provides "brokerage and research services" (as defined
in the 1934 Act) to RSIM, L.P. 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. The authority of RSIM, L.P. to
cause the Fund to pay any such greater commissions is also subject to such
policies as the Trustees may adopt from time to time. RSIM, L.P. does not
currently intend to cause the Fund to make such payments. It is the position of
the staff of the Securities and Exchange Commission that Section 28(e) does not
apply to the payment of such greater commissions in "principal" transactions.
Accordingly, RSIM, L.P. will use its best efforts to obtain the best overall
terms available with respect to such transactions.
DISTRIBUTION PLAN
The Fund has adopted a Distribution Plan under Rule 12b-l of the 1940 Act (the
"Plan"). Pursuant to the Plan, the Fund may pay distribution fees to Provident
Distributors, Inc. (the "Distributor") for services the Distributor renders and
costs and expenses it incurs in connection with the promotion and distribution
of the Fund's shares, at an annual rate of 0.25% of the Fund's average daily net
assets. Such expenses may include, but are not limited to, costs of advertising
and promoting the sale of shares of the Fund and payments to dealers, financial
institutions, advisers, or other firms. They may also include the Distributor's
overhead expenses attributable to the distribution of the Fund's shares, which
may include, for example, expenses for office space, communications, and
salaries of the Distributor's personnel, and any other of the Distributor's
expenses attributable to the distribution of the Fund's shares. RSIM, L.P. and
its affiliates provide certain services to the Distributor in respect of the
promotion of the shares of the Funds. In return for those services, the
Distributor pays to RSIM, L.P. a portion of the payments received by the
Distributor under the Plan. The Plan is a "compensation" plan.
HOW NET ASSET VALUE IS DETERMINED
The Fund determines the net asset value per share once daily, as of 4:30 p.m.
eastern time, on each day the New York Stock Exchange (the "Exchange") is open.
The Exchange is closed Saturdays, Sundays, New Year's Day, Martin Luther King,
Jr. Day, Presidents' Day, Good Friday, Memorial Day, the Independence Day
(observed), Labor Day, Thanksgiving, and Christmas.
Securities for which market quotations are readily available are valued using
the last reported sale price or, if no sales are reported (as in the case of
some securities traded over-the-counter), at the mean between the closing bid
and asked prices, except that certain U.S. Government securities are stated at
the mean between the last reported bid and asked prices. Short-term investments
having remaining maturities of 60 days or less are stated at amortized cost,
which approximates market value. All other securities and assets are valued at
their fair value following procedures approved by the Trustees.
Reliable market quotations are not considered to be readily available for
long-term corporate bonds and notes, certain preferred stocks, or certain
foreign securities. These investments are stated at fair value on the basis of
valuations furnished by pricing services, which determine valuations for normal,
institutional-size trading units of such securities using methods based on
market transactions for comparable securities and various relationships between
securities which are generally recognized by institutional traders.
If any securities held by the 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 the 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.
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<PAGE>
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 the 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 the 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
The 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, the 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," the Fund must, among
other things, (a) derive at least 90% of its gross income from dividends,
interest, payments with respect to securities loans, gains from the sale or
other dispositions of stock, securities, or foreign currencies, and other income
(including gains from options, futures, or forward contracts) derived with
respect to its business of investing in such stock, securities, or currencies
and (b) diversify its holdings so that, at the close of each quarter of its
taxable year, (i) at least 50% of the value of its total assets consists of
cash, cash items, U.S. Government securities, and other securities limited
generally with respect to any one issuer to not more than 5% of the total assets
of the Fund and not more than 10% of the outstanding voting securities of such
issuer, and (ii) not more than 25% of the value of its assets is invested in the
securities of any issuer (other than U.S. Government securities). In order to
receive the favorable tax treatment accorded regulated investment companies and
their shareholders, moreover, the 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 the
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. The Fund intends to make
distributions sufficient to avoid imposition of the excise tax. Distributions
declared by the 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 the Fund from sources
outside the United States, such income and gains may be subject to foreign taxes
which are withheld at the source. Thus, the Fund's yield on foreign investments
would be decreased by such taxes. The effective rate of foreign taxes to which
the 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 the 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. The 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.
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<PAGE>
The 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.
The 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 the 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, the Fund could be required at times to liquidate
other investments in order to satisfy its distribution requirements.
The Fund generally is required to withhold and remit to the U.S.
Treasury 31% of the taxable dividends and other distributions paid to
non-corporate shareholders who fail to furnish the Fund with a correct
taxpayer identification number, who have underreported dividends or interest
income, or who fail to certify to the Fund that they are not subject to such
withholding. An individual's taxpayer identification number is his or her
social security number. Tax-exempt shareholders are not subject to these
back-up withholding rules so long as they furnish the Fund with a proper
certification.
Non-resident alien individuals, foreign corporations and certain other
foreign entities generally will be subject to a U.S. withholding tax at a
rate of 30% on the 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 the 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.
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<PAGE>
HOW PERFORMANCE IS DETERMINED
STANDARDIZED PERFORMANCE INFORMATION
Average annual total return of a class of shares of the 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, RSIM, L.P. 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 the Fund's shares may from time to time be
included in advertisements about the Fund. The Fund's "yield" is calculated by
dividing the annualized net investment income per share during a recent 30-day
period by the net asset value per share on the last day of that period. "Total
return" for one-, five-, and ten-year periods, and for the life of the Fund,
through the most recent calendar quarter represents the average annual
compounded rate of return (or, in the case of a period of one year or less, the
actual rate of return) on an investment of $1,000 in the Fund's shares. Total
return may also be presented for other periods. Quotations of yield or total
return for a period when an expense limitation was in effect will be greater
than if the limitation had not been in effect. The Fund's performance may be
compared to various indices. Information may be presented in advertisements
about the Fund describing the background and professional experience of RSIM,
L.P. or any portfolio manager.
All data are based on the 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 the Fund's investment objective and policies. These
factors should be considered when comparing the Fund's investment results to
those of other mutual funds and other investment vehicles.
NON-STANDARDIZED TOTAL RETURN INFORMATION
From time to time, the Fund may present non-standardized total return
information, in addition to standardized performance information, which may
include such results as the growth of a hypothetical $10,000 investment in the
Fund's shares, and cumulative total return. Cumulative total return is
calculated in a similar manner to average annual total return, except that the
results are not annualized. Each calculation assumes that all dividends and
distributions are reinvested at net asset value on the reinvestment dates during
the period.
INDICES AND PUBLICATIONS
The 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. The Fund may also,
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<PAGE>
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 RSIM,
L.P. 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 the Fund may present a statistical measure of the
volatility of the Fund's performance relative to the volatility of the
performance of the S&P 500. The 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 the Fund's portfolio
volatility perfectly represents that of the S&P 500, the Fund's beta would be
1.0. If the Fund's beta is greater than 1.0, the Fund's portfolio would tend to
represent a greater market risk than the S&P 500 because the Fund's portfolio
would tend to be more sensitive to movements in the securities markets. For
example, if the Fund's beta is 1.1, the Fund's performance would tend to vary
approximately 10% more than would the performance of the S&P 500. If the Fund's
beta is 0.9, the 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 the 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:
n _ _
ERFTRMT - nRFRM
(beta) = --------------
n _
ER2MT - NR2M
Where: n = number of months measured
RFT = rate of return on the Fund in month T
RMT = rate of return on the market index, i.e., the S&P 500, in
month T
-
RF = arithmetic average monthly rate of return of the Fund
-
RM = 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 Fund's transfer agent and
dividend-paying agent ("Transfer Agent"). PFPC Trust Company ("PFPC Trust"), 400
Bellevue Parkway, Wilmington, DE 19809, serves as the Fund's custodian
("Custodian"). As Custodian, PFPC Trust and subcustodians approved by the Board
of Trustees hold the securities in the Fund's portfolio and other assets for
safekeeping. The Transfer Agent and Custodian do not participate in making
investment decisions for the Fund.
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<PAGE>
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 the 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.
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-20
<PAGE>
B: Debt rated 'B' has a greater vulnerability to default but currently has the
capacity to meet interest payments and principal repayments. Adverse business,
financial, or economic conditions will likely impair capacity or willingness to
pay interest and repay principal. The 'B' rating category is also used for debt
subordinated to senior debt that is assigned an actual or implied 'BB' or 'BB-'
rating.
CCC: Debt rated 'CCC' has a currently identifiable vulnerability to default, and
is dependent upon favorable business, financial, and economic conditions to meet
timely payment of interest and repayment of principal. In the event of adverse
business, financial, or economic conditions, it is not likely to have the
capacity to pay interest and repay principal. The 'CCC' rating category is also
used for debt subordinated to senior debt that is assigned an actual or implied
'B' or 'B-' rating.
CC: The rating 'CC' typically is applied to debt subordinated to senior debt
that is assigned an actual or implied 'CCC' rating.
C: The rating 'C' typically is applied to debt subordinated to senior debt that
is assigned an actual or implied 'CCC-' rating. The 'C' rating may be used to
cover a situation where a bankruptcy petition has been filed, but debt service
payments are continued.
CI: The rating 'CI' is reserved for income bonds on which no interest is being
paid.
D: Debt rated 'D' is in payment default. The 'D' rating category is used when
interest payments or principal payments are not made on the date due even if the
applicable grace period has not expired, unless S&P believes that such payments
will be made during such grace period. The 'D' rating will also be used upon the
filing of a bankruptcy petition if debt service payments are jeopardized.
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-21
<PAGE>
B: Bonds which are rated B generally lack characteristics of the desirable
investment. Assurance of interest and principal payments or of maintenance of
other terms of the contract over any long period of time may be small.
Caa: Bonds which are rated Caa are of poor standing. Such issues may be in
default or there may be present elements of danger with respect to principal or
interest.
Ca: Bonds which are rated Ca represent obligations which are speculative in a
high degree. Such issues are often in default or have other marked shortcomings.
C: Bonds which are rated C are the lowest rated class of bonds and issues so
rated can be regarded as having extremely poor prospects of ever attaining any
real investment standing.
Moody's applies numerical modifiers, 1, 2, and 3, in each generic rating
classification from Aa through B in its corporate bond rating system. The
modifier 1 indicates that the security ranks in the higher end of its generic
rating category; the modifier 2 indicates a mid-range ranking; and the modifier
3 indicates that the issue ranks in the lower end of its generic rating
category.
FITCH RATINGS
AAA: Bonds considered to be investment grade and of the highest credit quality.
The obligor has an exceptionally strong ability to pay interest and repay
principal, which is unlikely to be affected by reasonably foreseeable events.
AA: Bonds considered to be investment grade and of very high credit quality. The
obligor's ability to pay interest and repay principal is very strong, although
not quite as strong as bonds rated 'AAA.' Because bonds rate in the 'AAA' and
'AA' categories are not significantly vulnerable to foreseeable future
developments, short-term debt of these issuers is generally rated 'F-1+.'
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.
B-22
<PAGE>
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-23
<PAGE>
PART C. OTHER INFORMATION
ITEM 23. EXHIBITS.
a(i). Amended and Restated Agreement and Declaration of Trust of
Registrant.(J)
a(ii). Amendment to Amended and Restated Agreement and Declaration of
Trust of Registrant.(J)
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.(J)
c(iii). Portions of By-laws Relating to Shareholders' Rights.(J)
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 Mid Cap Opportunities Fund (formerly,
RS Growth & Income Fund), The Information Age Fund-TM-, RS
MicroCap Growth Fund, RS Partners Fund and RS Value + Growth
Fund.(J)
d(ii). Investment Advisory Agreement between RS Investment Management, Inc.
and Registrant (on behalf of RS Emerging Growth Fund).(J)
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).(J)
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-).(J)
d(xi). Form of Investment Advisory Agreement between RS Investment
Management, L.P. and Registrant (on behalf of RS Internet
Age Fund).(L)
d(xii). Form of Investment Advisory Agreement between RS Investment
Management, L.P. and Registrant (on behalf of RS Aggressive
Growth Fund).*
e. Distribution Agreement with Provident Distributors, Inc.(J)
f. Inapplicable.
g. Form of Custodian Agreement between Registrant and PFPC Trust
Company.(J)
h(i). Administrative Services Agreement.(J)
h(ii). Form of Sub-Administration and Accounting Services Agreement between
Registrant and PFPC, Inc.(J)
h(iii). Form of Revised Schedule A to Administratve Services Agreement.(L)
h(iv) Form of Further Revised Schedule A to Adminstrative Services
Agreement.*
i(i). Opinion and Consent of Ropes & Gray.(K)
i(ii) Opinion and Consent of Ropes & Gray (with respect to RS Internet
Age Fund).(L)
i(iii). Opinion and Consent of Ropes & Gray (with respect to RS Aggressive
Growth Fund).**
j. Inapplicable.
k. Inapplicable.
l. Letter of Understanding Relating to Initial Capital.(A,D)
m(i). Distribution Plan Pursuant to Rule 12b-1 dated September 30, 1997
(for Class A shares).(G)
m(ii) Form of Revised Schedule A to Distribution Plan.(L)
m(iii). Form of Revised Schedule A to Distribution Plan.*
n(i)-(xx).Financial Data Schedules for Period ending December 31, 1998.(K)
o. 18f-3 Plan.(F)
p. Power of Attorney.(J)
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.
(J) Previously filed as part of the Post-Effective Amendment No. 34 to the
Registration Statement on March 4, 1999.
(K) Previously filed as part of the Post-Effective Amendment No. 35 to the
Registration Statement on May 3, 1999.
(L) Previously filed as part of the Post-Effective Amendment No. 36 to the
Registration Statement on May 3, 1999.
* Filed herewith.
** To be filed by amendment.
<PAGE>
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.
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 Strategic 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.).
<PAGE>
(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, 388 Market Street, Suite
200, San Francisco, CA 94111 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 18th of
February, 2000.
RS INVESTMENT TRUST
By: /s/ G. RANDALL 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 February 18, 2000, by the
following persons in the capacities indicated.
SIGNATURE CAPACITY
/S/ G. RANDALL HECHT Principal Executive Officer
- -------------------------
G. Randall Hecht and Trustee
/S/STEVEN COHEN Treasurer
- -------------------------
Steven Cohen
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/ G. RANDALL HECHT
G. RANDALL HECHT, ATTORNEY-IN-FACT PURSUANT
TO THE POWERS OF ATTORNEY PREVIOUSLY FILED.
<PAGE>
EXHIBIT INDEX
EXHIBIT NO. TITLE
d(xii). Form of Investment Advisory Agreement between RS Investment
Management, L.P. and Registrant (on behalf of RS Aggressive
Growth Fund).
h(iv). Form of Revised Schedule A to Administrative Services Agreement.
m(iii). Form of Revised Schedule A to Distribution Plan.
<PAGE>
EXHIBIT d(xii)
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")
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.
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
<PAGE>
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;
(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
<PAGE>
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;
(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 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.
<PAGE>
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.
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
<PAGE>
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
-----------------------------------------
President
RS INVESTMENT MANAGEMENT, L.P.
------------------------------------------
<PAGE>
SCHEDULE 1
RS Aggressive Growth Fund 1.00%
As amended February 23, 2000
<PAGE>
EXHIBIT h(iv)
SCHEDULE A
February 23, 2000
RS Diversified Growth
RS Growth & Income Fund
The Information Age Fund-R-
RS MicroCap Growth Fund
RS Global Natural Resources Fund
RS Internet Age Fund-TM-
RS Aggressive Growth Fund
<PAGE>
EXHIBIT m(iii)
EXHIBIT A
to the
Shareholder Service Plan
RS INVESTMENT TRUST
Shares of the following Funds:
<TABLE>
<S> <C> <C>
RS Value + Growth Fund The Contrarian Fund(TM) RS MicroCap Growth Fund
RS Diversified Growth Fund RS Emerging Growth Fund RS Partners Fund
RS Global Natural Resources RS MidCap Opportunities Fund RS RS Internet Age Fund(TM)
Fund Aggressive Growth Fund
</TABLE>
The Information Age Fund(R)
This Plan is adopted by Robertson Stephens Investment Trust with respect to the
Classes of shares of the Funds set forth above.
Witness the due execution hereof this 23rd day of February, 2000.
RS INVESTMENT TRUST
By:______________________________
