The RS Emerging Growth Fund seeks capital appreciation by investing principally in smaller, rapidly growing emerging companies. The Fund is actively managed, using hands-on, fundamental research that includes extensive travel and visits with company management. The Fund seeks to invest in companies that are growing at least 20% annually, are market-share leaders, and are managed by executives who can leverage a competitive advantage and consistently execute in today’s business environment. The Fund is intended for investors with long-term investment goals.
Investment Objective
Capital appreciation.
Investment Strategy
The Fund normally invests at least 80% of its net assets in equity securities of companies that RS Investments believes have the potential for more-rapid growth than the overall economy. Although the Fund may invest without limit in companies of any size, it is likely, under current market conditions, that a substantial amount of the Fund’s investments will be in companies with market capitalizations (at the time of purchase) of up to 120% of the market capitalization of the largest company included in the Russell 2000® Index on the last day of the most recent quarter (currently, approximately $8.5 billion, based on the size of the largest company on March 31, 2008).
The Fund may hold a substantial portion of its assets in cash and cash equivalents, although it will not necessarily do so.
Investment Process
We typically consider a number of factors in evaluating a potential investment, including, for example:
• whether the company has experienced strong revenue growth;
• whether the company appears to have a strong competitive position;
• whether the company participates in what RS Investments considers an emerging growth industry or a niche in an established industry.
Sell Discipline
We consider selling or initiating the process when:
• the price of the security appears high relative to the company’s prospects;
• the company’s financial results are disappointing.
Risk Factors
As with all mutual funds, the value of an investment in the Fund could decline, so you could lose money. Investing in smaller companies can involve risks such as having less publicly available information, higher volatility, and less liquidity than in the case of larger companies. Overweighting investments in certain sectors or industries increases the risk of loss due to general declines in the prices of stocks in those sectors or industries. Investments in technology companies may be highly volatile.
