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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR/A
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
| Investment Company Act file number | 811-05159 |
RS Investment Trust
(Exact name of registrant as specified in charter)
| 388 Market Street San Francisco, CA |
94111 | |
| (Address of principal executive offices) | (Zip code) |
Matthew H. Scanlan
c/o RS Investments
388 Market Street
San Francisco, CA 94111
(Name and address of agent for service)
Registrant’s telephone number, including area code: 800-766-3863
Date of fiscal year end: December 31
Date of reporting period: December 31, 2010
Form N-CSR is to be used by management investment companies to file reports with the Commission not later than 10 days after the transmission to stockholders of any report that is required to be transmitted to stockholders under Rule 30e-1 under the Investment Company Act of 1940 (17 CFR 270.30e-1). The Commission may use the information provided on Form N-CSR in its regulatory, disclosure review, inspection, and policymaking roles.
A registrant is required to disclose the information specified by Form N-CSR, and the Commission will make this information public. A registrant is not required to respond to the collection of information contained in Form N-CSR unless the Form displays a currently valid Office of Management and Budget (“OMB”) control number. Please direct comments concerning the accuracy of the information collection burden estimate and any suggestions for reducing the burden to Secretary, Securities and Exchange Commission, 450 Fifth Street, NW, Washington, DC 20549-0609. The OMB has reviewed this collection of information under the clearance requirements of 44 U.S.C. § 3507.
This Form N-CSR/A is being filed only in respect of the following series of RS Investment Trust: RS Investment Quality Bond Fund, RS Low Duration Bond Fund, RS High Yield Fund (formerly known as RS High Yield Bond Fund), RS Tax-Exempt Fund, RS High Yield Municipal Bond Fund, RS Floating Rate Fund, RS Strategic Income Fund, and RS Money Market Fund.
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| Item 1. | Reports to Stockholders. |
The Report to Shareholders is attached herewith.
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Notice regarding SEC yield calculations for RS Floating Rate Fund, RS Strategic Income Fund, RS High Yield Municipal Bond Fund, RS High Yield Fund, RS Low Duration Bond Fund, and RS Investment Quality Bond Fund (together, the “Funds”) and taxable equivalent yield calculations for RS High Yield Municipal Bond Fund.
The Funds’ third-party administrator recently notified the Funds of certain corrections to its previous calculations of the Funds’ “SEC yield.” The corrections will result in a reduction in the previously reported SEC yield for all share classes of the Funds and in the previously reported Class A taxable equivalent yield for RS High Yield Municipal Bond Fund. (Please note: The Funds’ net asset values and total returns have been correctly calculated and are not affected by the methodology corrections.) In the 2010 annual report and in the semi-annual report for the six-month period ended June 30, 2011, RS Floating Rate Fund’s Class A SEC yields for the 30-day periods ended December 31, 2010, and June 30, 2011, respectively, should have been reported as 5.01% (with the expense limitation)/3.67% (without the expense limitation) and 5.43% (with the expense limitation)/5.03% (without the expense limitation). Also in the 2010 annual report, RS Strategic Income Fund’s Class A SEC yield for the 30-day period ended December 31, 2010, should have been reported as 4.47% (with the expense limitation)/3.99% (without the expense limitation), and RS High Yield Municipal Bond Fund’s Class A SEC yield for the 30-day period ended December 31, 2010, should have been reported as 5.25% (with the expense limitation)/4.61% (without the expense limitation). Similarly, in the semi-annual report for the six-month period ended June 30, 2011, RS High Yield Municipal Bond Fund’s Class A SEC yield and Class A taxable equivalent yield for a person in the 35% income tax bracket in 2011 for the 30-day period ended June 30, 2011, should have been reported as 4.93% and 7.58%, respectively (with the expense limitation), and 4.62% and 7.11%, respectively (without the expense limitation). The Funds’ SEC yield and RS High Yield Municipal Bond Fund’s taxable equivalent yield also appeared in marketing information about the Funds, and those numbers also would have been reduced under the corrected methodology.
If you want to know current yield information for any of the Funds, please visit RS Investments’ website at www.rsinvestments.com/performance/FixedIncome-AShares.shtml or please call 1-800-766-3863 for a Fund’s historic yield for any other period.
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2010 Annual Report
All data as of December 31, 2010
RS Fixed Income Funds
Class A, B, C, K, and Y Shares
| Ÿ | RS Investment Quality Bond Fund |
| Ÿ | RS Low Duration Bond Fund |
| Ÿ | RS High Yield Bond Fund |
| Ÿ | RS Tax-Exempt Fund |
| Ÿ | RS High Yield Municipal Bond Fund |
| Ÿ | RS Floating Rate Fund |
| Ÿ | RS Strategic Income Fund |
| Ÿ | RS Money Market Fund |
| NOT FDIC INSURED MAY LOSE VALUE NO BANK GUARANTEE |
|
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RS Investments
Value | Core Growth | Growth | International | Natural Resources | Fixed Income
RS Funds provide clients with access to distinct and experienced investment teams – each pursuing investment opportunities consistent with its particular style. The dedicated research team approach assures that our clients benefit from process consistency, investment excellence, and choice across disciplines.
| Value | RS Mid Cap Growth Fund |
Fixed Income | ||
| RS Partners Fund* | RS Growth Fund |
RS Investment Quality Bond Fund | ||
| RS Value Fund | RS Technology Fund |
RS Low Duration Bond Fund | ||
| RS Large Cap Alpha Fund | RS Small Cap Equity Fund** |
RS High Yield Bond Fund | ||
| RS Investors Fund | RS Tax-Exempt Fund | |||
| International |
RS High Yield Municipal Bond Fund | |||
| Core Growth | RS International Growth Fund |
RS Floating Rate Fund | ||
| RS Capital Appreciation Fund |
RS Emerging Markets Fund* |
RS Strategic Income Fund | ||
| RS Money Market Fund | ||||
| Growth |
Natural Resources | |||
| RS Small Cap Growth Fund |
RS Global Natural Resources Fund | Other RS Funds | ||
| RS Select Growth Fund |
RS S&P 500 Index Fund | |||
| * | Currently only offered to certain investors. Please see prospectus for more information. |
| ** | Closed to new investors. |
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| THIS PAGE NOT PART OF YOUR FUND REPORT | www.RSinvestments.com | 1 |
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CEO’S LETTER
| 2 | www.RSinvestments.com | THIS PAGE NOT PART OF YOUR FUND REPORT |
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IMPORTANT INFORMATION CONCERNING FUND COMMENTARY AND PERFORMANCE
Important Information Concerning Fund Commentary and Performance
Except as otherwise specifically stated, all information and investment team commentary, including portfolio security positions, is as of December 31, 2010. The views expressed in the investment team letters are those of the Fund’s portfolio manager(s) and are subject to change without notice. They do not necessarily represent the views of RS Investments. The letters contain some forward-looking statements providing current expectations or forecasts of future events; they do not necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. A Fund may buy, sell, or hold any security discussed herein, on the basis of factors described herein or on the basis of other factors or other considerations. Fund holdings will change.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when redeemed, may be worth more or less than their original cost. Please keep in mind that any double digit returns are highly unusual and cannot be sustained. Class A performance quoted “with maximum sales charge” reflects the current maximum sales charge of 3.75% (2.25% for RS Low Duration Bond Fund). Please read a Fund’s prospectus carefully for more information on sales charges as they do not apply in all cases, and if applied, are reduced for larger purchases. Certain share classes are subject to contingent deferred sales charges which are typically paid at time of sale. Class B performance quoted “with sales charge” reflects contingent deferred sales charges of 3% for the 1 year period, 2% for the 3 year period, 1% for the 5 year period and 0% for periods longer than 6 years. Class B performance quoted also reflects the conversion of Class B shares to Class A shares after the eighth anniversary of purchase. The Class C share performance quoted “with sales charge” takes into account the applicable contingent deferred sales charge of 1% for periods of 1 year or less. There are no sales charges for Class K and Class Y shares. Any sales charges are in addition to the Fund’s fees and expenses as detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of your shares and any performance numbers we release. Total return figures reflect expense limitations in effect during the periods shown; without such limitations, the performance shown would have been lower. Performance results assume the reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or the redemption of Fund shares. Current and month-end performance and other information, which may be lower or higher than that cited, is available by contacting RS Investments at 800-766-3863 and is periodically updated on our Web site: www.RSinvestments.com.
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RS INVESTMENT QUALITY BOND FUND
| 4 | www.RSinvestments.com |
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RS INVESTMENT QUALITY BOND FUND
the year. The Fund underperformed the 7.73% average return for the Lipper Intermediate Investment Grade Debt Funds peer group2. (The peer group consisted of 567 mutual funds that invest primarily in investment grade debt issues with average maturities of five to ten years.)
Portfolio Review
The Fund continued to overweight the non-Treasury segments of the bond market during the year, given our expectation that the economy would continue to grow slowly. This strategy proved beneficial for the Fund.
The Fund’s significant overweight in the corporate bond sector had a positive impact on the Fund’s performance. In particular, the Fund’s holdings in financials outperformed other corporate sectors, and its underweight in sovereigns contributed positively to its performance.
In addition, the Fund’s overweight in the CMBS sector throughout 2010 added to the Fund’s outperformance relative to its benchmark. As noted above, CMBS outperformed Treasuries by over 15%. We continued our strategy of owning shorter-duration, seasoned bonds that we believed would provide ample credit support and were backed by loans that were, in our view, underwritten to higher credit quality standards.
Our decision to have a significant exposure to the non-agency MBS sector in lieu of agency MBS also benefitted the Fund’s performance. Although the Fund was underweight agency MBS, which outperformed Treasuries by 2.25% in 20105, the Fund’s non-agency holdings outperformed agency MBS by over 6% in 2010.
Outlook
We remain optimistic on the prospects for a continued economic recovery, but we also note that there are still major headwinds, including high unemployment, a weak housing market, and relatively limited credit availability. Given the risk/reward profiles we are seeing in the market at this time, we believe that the non-Treasury segments of the fixed income market should still continue to provide value.
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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RS INVESTMENT QUALITY BOND FUND
Characteristics
| Total Net Assets: $156,358,252 |
| Sector Allocation | ||
| ||
| Bond Quality Allocation3 | ||
|
||
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RS INVESTMENT QUALITY BOND FUND
| Top Ten Holdings4 | ||||||||||||
| Holding | Coupon | Maturity Date | % of Total Net Assets |
|||||||||
| FNMA Mortgage Pass-Through | 5.000% | 12/1/2039 | 4.77% | |||||||||
| FNMA Mortgage Pass-Through | 5.500% | 1/1/2038 | 3.66% | |||||||||
| FHLMC Mortgage Pass-Through | 4.000% | 12/1/2040 | 3.50% | |||||||||
| FNMA Mortgage Pass-Through | 4.500% | 12/1/2040 | 2.76% | |||||||||
| FHLMC CMO | 5.500% | 9/15/2035 | 1.61% | |||||||||
| Master Asset Securitization Trust | 5.250% | 9/25/2033 | 1.21% | |||||||||
| FNMA Mortgage Pass-Through | 4.000% | 11/1/2040 | 1.14% | |||||||||
| CNH Equipment Trust | 3.000% | 8/17/2015 | 1.12% | |||||||||
| Daimler Chrysler Auto Trust | 4.480% | 8/8/2014 | 1.08% | |||||||||
| FHLMC Mortgage Pass-Through | 5.500% | 6/1/2038 | 1.06% | |||||||||
| Total |
21.91% | |||||||||||
| 1 | The Barclays Capital U.S. Aggregate Bond Index is generally considered to be representative of U.S. bond market activity. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index that is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund. |
| 3 | Source: Moody’s, Standard and Poor’s, Fitch Investors Service. |
| 4 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. Also certain securities that the Fund’s management consider “short-term” investments have been excluded from this presentation. |
| 5 | Source: Barclays Capital Index Summary, Barclays Capital Inc. |
| 6 | Source: Bloomberg. |
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RS INVESTMENT QUALITY BOND FUND
Performance Update
| Average Annual Total Returns | ||||||||||||||||||||
| 1 Year | 3 Year | 5 Year | 10 Year | Since Inception |
||||||||||||||||
| Class A Shares (2/16/93) without sales charge |
7.55% | 5.80% | 5.44% | 5.55% | 5.56% | |||||||||||||||
| with maximum sales charge | 3.47% | 4.46% | 4.64% | 5.15% | 5.34% | |||||||||||||||
| Class B Shares (8/7/00) without sales charge |
6.65% | 4.97% | 4.63% | 4.92% | 5.20% | |||||||||||||||
| with sales charge | 3.65% | 4.37% | 4.47% | 4.92% | 5.20% | |||||||||||||||
| Class C Shares (8/7/00) without sales charge |
6.64% | 4.97% | 4.63% | 4.77% | 5.01% | |||||||||||||||
| with sales charge | 5.64% | 4.97% | 4.63% | 4.77% | 5.01% | |||||||||||||||
| Class K Shares (5/15/01) | 7.12% | 5.38% | 5.02% | — | 5.04% | |||||||||||||||
| Class Y Shares (5/12/09) | 7.75% | — | — | — | 9.28% | |||||||||||||||
| Barclays Capital U.S. Aggregate Bond Index1 | 6.54% | 5.90% | 5.80% | 5.84% | 6.27% | * | ||||||||||||||
| * | Since Class A shares inception. |
| Results of a Hypothetical $10,000 Investment |
|
The chart above shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of RS Investment Quality Bond Fund and in the Barclays Capital U.S. Aggregate Bond Index. The starting point of $9,625 for Class A shares reflects the current maximum sales charge of 3.75%. Hypothetical $10,000 investments made 10 years ago in Class B shares and Class C shares, and upon the inception of Class K shares (5/15/01) and Class Y shares (5/12/09) would have the following values as of December 31, 2010: $16,168 (Class B), $15,927 (Class C), $16,049 (Class K), and $11,563 (Class Y). While Class B, Class C shares, and Class K shares have a higher starting value than Class A shares because they do not impose a sales charge on purchase, they have higher annual expenses and, therefore, day-to-day performance is lower than that of Class A shares. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Performance quoted represents past performance and does not guarantee or predict future results. The Fund is the successor to The Guardian Investment Quality Bond Fund; performance shown includes performance of the predecessor fund for periods prior to October 9, 2006.
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| www.RSinvestments.com | 9 |
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RS LOW DURATION BOND FUND
Fund Performance Overview
RS Low Duration Bond Fund (Class A Shares) returned 4.15% for the twelve-month period ended December 31, 2010. The Fund’s benchmark, the Barclays Capital U.S. Government 1-3 Year Bond Index, returned 2.40% for the year. The Fund’s performance compared favorably with a 3.90% average return for the Lipper Short Investment Grade Debt Funds peer group2. (The peer group consisted of 250 mutual funds that invest primarily in short-term investment-grade debt with average maturities of one to three years.)
Portfolio Review
The Fund continued to overweight the non-Treasury segments of the bond market during the year, given our expectation that the economy would continue to grow slowly. This strategy proved to be beneficial for the Fund.
The Fund’s significant overweight to the corporate bond sector had a positive impact on the Fund’s performance In particular, the Fund’s holdings in the financial and energy sectors contributed positively to its performance.
In addition, the Fund’s overweight in the CMBS sector throughout 2010 added to the Fund’s outperformance relative to its benchmark. As noted above, CMBS outperformed Treasuries by over 15%. We continued our strategy of owning shorter-duration, seasoned bonds that we believed would provide ample credit support and were backed by loans that were, in our view, underwritten to higher credit quality standards. We focused on issues originated in 2005 and earlier.
Outlook
We remain optimistic on the prospects for a continued economic recovery, but we also note that there are still major headwinds, including high unemployment, a weak housing market, and relatively limited credit availability. Given the risk/reward profiles we are seeing in the market at this time, we believe that the non-Treasury segments of the fixed income market should still continue to provide value.
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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RS LOW DURATION BOND FUND
Characteristics
| Total Net Assets: $663,110,793 |
| Sector Allocation |
|
| Bond Quality Allocation3 |
|
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RS LOW DURATION BOND FUND
| Top Ten Holdings4 | ||||||||||||
| Holding | Coupon | Maturity Date | % of Total Net Assets |
|||||||||
| Harley-Davidson Motorcycle Trust | 3.320% | 2/15/2017 | 1.25% | |||||||||
| U.S. Treasury Notes | 2.125% | 12/31/2015 | 1.24% | |||||||||
| Citibank Credit Card Issuance Trust | 4.900% | 12/12/2016 | 1.01% | |||||||||
| Daimler Chrysler Auto Trust | 4.480% | 8/8/2014 | 1.01% | |||||||||
| PG&E Energy Recovery Funding LLC | 4.370% | 6/25/2014 | 1.00% | |||||||||
| Nissan Auto Lease Trust | 2.070% | 1/15/2015 | 1.00% | |||||||||
| BMW Vehicle Lease Trust | 3.660% | 8/15/2013 | 0.97% | |||||||||
| Morgan Stanley Capital I | 5.400% | 6/15/2038 | 0.97% | |||||||||
| Wachovia Bank Commercial Mortgage Trust | 5.204% | 10/15/2044 | 0.95% | |||||||||
| Honda Auto Receivables Owner Trust | 0.940% | 12/21/2016 | 0.94% | |||||||||
| Total |
10.34% | |||||||||||
| 1 | The Barclays Capital U.S. Government 1-3 Year Bond Index is generally considered to be representative of U.S. Government bonds with maturities between one and three years. The Barclays Capital U.S. Government 1-3 Year Bond Index is an unmanaged Index that is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund. |
| 3 | Source: Moody’s, Standard and Poor’s, Fitch Investors Service. |
| 4 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. |
| 5 | Source: Barclays Capital Index Summary, Barclays Capital Inc. |
| 6 | Source: Bloomberg. |
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RS LOW DURATION BOND FUND
Performance Update
| Average Annual Total Returns | ||||||||||||||||
| 1 Year | 3 Year | 5 Year | Since Inception |
|||||||||||||
| Class A Shares (7/30/03) | ||||||||||||||||
| without sales charge | 4.15% | 4.46% | 4.56% | 3.56% | ||||||||||||
| with maximum sales charge | 1.85% | 3.66% | 4.10% | 3.24% | ||||||||||||
| Class B Shares (7/30/03) | ||||||||||||||||
| without sales charge | 3.38% | 3.64% | 3.76% | 2.77% | ||||||||||||
| with sales charge | 0.38% | 3.02% | 3.59% | 2.77% | ||||||||||||
| Class C Shares (7/30/03) | ||||||||||||||||
| without sales charge | 3.38% | 3.68% | 3.78% | 2.79% | ||||||||||||
| with sales charge | 2.38% | 3.68% | 3.78% | 2.79% | ||||||||||||
| Class K Shares (7/30/03) | 3.75% | 4.05% | 4.15% | 3.15% | ||||||||||||
| Class Y Shares (5/12/09) | 4.36% | — | — | 5.08% | ||||||||||||
| Barclays Capital U.S. Government 1-3 Year Bond Index1 | 2.40% | 3.47% | 4.32% | 3.40% | ||||||||||||
| * | Since Class A shares inception. |
| Results of a Hypothetical $10,000 Investment |
|
The chart above shows the performance of a hypothetical $10,000 investment made on 7/30/03 in Class A shares of RS Low Duration Bond Fund and in the Barclays Capital U.S. Government 1-3 Year Bond Index. The starting point of $9,775 for Class A shares reflects the current maximum sales charge of 2.25%. Hypothetical $10,000 investments made upon the inception of Class B shares (7/30/03), Class C shares (7/30/03), Class K shares (7/30/03), and Class Y shares (5/12/09) would have the following values as of December 31, 2010: $12,251 (Class B), $12,265 (Class C), $12,588 (Class K), and $10,844 (Class Y). While Class B, Class C shares, and Class K shares have a higher starting value than Class A shares because they do not impose a sales charge on purchase, they have higher annual expenses and, therefore, day-to-day performance is lower than that of Class A shares. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Performance quoted represents past performance and does not guarantee or predict future results. The Fund is the successor to The Guardian Low Duration Bond Fund; performance shown includes performance of the predecessor fund for periods prior to October 9, 2006.
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RS HIGH YIELD BOND FUND
Portfolio Review
Improving corporate fundamentals, modest economic growth, a strong new issue market, and a steep drop in defaults all led high yield bonds to strong returns for both the fourth quarter and the full year.
The Fund’s underweight exposure to the financials sector dampened relative
performance for the year, as yield-seeking investors returned to the sector to take advantage of highly distressed prices. Furthermore, government bailouts of companies led to significant rallies in their debt. Nonetheless, we continue to believe that the financial sector remains highly risky, given the operational and asset problems that confront many of these companies. For this reason, we stand by our positioning, despite its impact on relative performance for the year.
While we continued to approach lower-rated credits with caution, we have looked for opportunities to add exposure to a limited number of lower-quality issues that we believe are mispriced relative to underlying fundamentals. The Fund benefited from its overweight in the Retail/Consumer Product sector as we believed the sector was undervalued entering the year and the sector rallied significantly.
We believe security selection will become increasingly important as we head into 2011, and we will continue to seek to take advantage of value opportunities in the sector while preparing for any potential decline in the market.
Outlook
We believe that investors’ thirst for yield, improving corporate earnings, and a strong new issue market should be favorable for the Fund. We believe that positive corporate earnings momentum and meaningful balance sheet improvement for high yield issuers indicate strong fundamentals moving forward.
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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RS HIGH YIELD BOND FUND
Characteristics
| Total Net Assets: $124,302,651 |
| Bond Quality Allocation3 | ||||||||||||
|
||||||||||||
| Top Ten Holdings4 | ||||||||||||
| Holding | Coupon | Maturity Date | % of Total Net Assets |
|||||||||
| CIT Group, Inc. | 7.000% | 5/1/2013 | 1.43% | |||||||||
| Stallion Oilfield Holdings Ltd. | 10.500% | 2/15/2015 | 0.95% | |||||||||
| International Lease Finance Corp. | 5.650% | 6/1/2014 | 0.93% | |||||||||
| Wynn Las Vegas LLC | 7.750% | 8/15/2020 | 0.91% | |||||||||
| Block Communications, Inc. | 8.250% | 12/15/2015 | 0.91% | |||||||||
| Alliance HealthCare Services, Inc. | 8.000% | 12/1/2016 | 0.89% | |||||||||
| Bio-Rad Laboratories, Inc. | 8.000% | 9/15/2016 | 0.87% | |||||||||
| OPTI Canada, Inc. | 8.250% | 12/15/2014 | 0.87% | |||||||||
| CITGO Petroleum Corp. | 11.500% | 7/1/2017 | 0.85% | |||||||||
| International Lease Finance Corp. | 8.625% | 9/15/2015 | 0.85% | |||||||||
| Total | 9.46% | |||||||||||
| 1 | The Barclays Capital U.S. Corporate High-Yield Bond Index is generally considered to be representative of the investable universe of the US-dominated high-yield debt market. The Barclays Capital U.S. Corporate High-Yield Bond Index is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund. |
| 3 | Source: Moody’s, Standard and Poor’s, Fitch Investors Service. |
| 4 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. |
| 5 | Source: J.P. Morgan Default Monitor, Jan. 3, 2011. |
| 6 | Source: Barclays Capital High Yield Corporate Update, Jan. 3, 2011. |
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RS HIGH YIELD BOND FUND
Performance Update
| Average Annual Total Returns | ||||||||||||||||||||
| 1 Year | 3 Year | 5 Year | 10 Year | Since Inception |
||||||||||||||||
| Class A Shares (9/1/98) without sales charge |
13.54% | 8.01% | 6.80% | 6.94% | 5.76% | |||||||||||||||
| with maximum sales charge | 9.23% | 6.66% | 5.98% | 6.53% | 5.43% | |||||||||||||||
| Class B Shares (9/1/98) without sales charge |
12.87% | 7.25% | 6.01% | 6.30% | 5.16% | |||||||||||||||
| with sales charge | 9.87% | 6.68% | 5.86% | 6.30% | 5.16% | |||||||||||||||
| Class C Shares (8/7/00) without sales charge |
12.88% | 7.27% | 6.01% | 6.16% | 5.24% | |||||||||||||||
| with sales charge | 11.88% | 7.27% | 6.01% | 6.16% | 5.24% | |||||||||||||||
| Class K Shares (5/15/01) | 13.09% | 7.58% | 6.38% | — | 6.43% | |||||||||||||||
| Class Y Shares (5/12/09) | 13.77% | — | — | — | 21.41% | |||||||||||||||
| Barclays Capital U.S. Corporate High-Yield Bond Index1 | 15.12% | 10.38% | 8.91% | 8.88% | 7.07% | * | ||||||||||||||
| * | Since Class A shares inception. |
| Results of a Hypothetical $10,000 Investment |
|
The chart above shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of RS High Yield Bond Fund and in the Barclays Capital U.S. Corporate High-Yield Bond Index. The starting point of $9,625 for Class A shares reflects the current maximum sales charge of 3.75%. Hypothetical $10,000 investments made 10 years ago in Class B shares and Class C shares, and upon the inception of Class K shares (5/15/01) and Class Y shares (5/12/09) would have the following values as of December 31, 2010: $18,417 (Class B), $18,175 (Class C), $18,221 (Class K), and $13,739 (Class Y). While Class B, Class C shares and Class K shares have a higher starting value than Class A shares because they do not impose a sales charge on purchase, they have higher annual expenses and, therefore, day-to-day performance is lower than that of Class A shares. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Performance quoted represents past performance and does not guarantee or predict future results. The Fund is the successor to The Guardian High Yield Bond Fund; performance shown includes performance of the predecessor fund for periods prior to October 9, 2006.
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Table of Contents
RS TAX-EXEMPT FUND
The number of issues the Fund typically holds is significantly lower than the number of issues in the benchmark. At any one time, the Barclays Capital Municipal Bond Index has approximately 46,200 issues, whereas the Fund generally has exposure to about 150 names, some of which may not be in the benchmark1.
Portfolio Review
Given the broad opportunity set open to a national fund, we focus on what we believe to be quality issuers that offer value and seek to avoid large concentrations to any one issuer, insurer, industry, sector, or state. However, when we feel we are properly compensated for risk, we may seek to purchase lower-rated credits if our research indicates upside potential for the bond.
During the year, we maintained the Fund’s overall high-grade portfolio profile. As of December 31, the ratings breakdown of the Fund’s holdings were 21.1% AAA-rated3,6, 38.0% AA-rated, 20.4%, A-rated, 18.9% BBB rated, and the remaining 1.6% in cash and other short term assets and liabilities. None of the Fund’s holdings were in unrated or below investment grade bonds. We believe the Fund’s underperformance reflected our focus on higher quality tax-exempt issues, which did not keep pace with more speculative, lower quality investments through much of the period.
Outlook
With the BAB program not extended beyond the end of 2010, we estimate that in 2011 there should be a total issuance of about $347 billion in bonds: $333 billion in tax-exempt, and $14 billion in taxable bonds. In 2010, the tax-exempt supply was approximately $283 billion, with many issuers opting to issue the taxable, federally subsidized, BABs instead9.
With dwindling federal stimulus money available to states, and with some states, such as Illinois, California and New York, still not able to balance their budgets, we expect to see increased credit weakness in this sector. Local governments, experiencing falling property tax revenues, may see significant reductions in state aid. Some may face serious stress; overall, however, we do not expect the level of municipal bond defaults to spiral much higher or even approach those in the private sector.
With tax revenues on the state levels rebounding, the fiscal measures that have already been taken, and the tools available to balance public sector budgets and to address longer-term liabilities, we believe that – despite frequent media speculation to the contrary – states are in a favorable position to weather the storm.
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Investors in the Fund may be subject to alternative minimum tax (AMT) and certain other state and local taxes. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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Table of Contents
RS TAX-EXEMPT FUND
Characteristics
| Total Net Assets: $265,599,369 |
| Sector Allocation | ||||||||
|
||||||||
| Revenue Bonds Allocation | % of Total Net Assets |
% Index | ||||||
| Education | 10.1% | 7.1% | ||||||
| Hospital / Nursing Home / Health Care | 9.8% | 8.1% | ||||||
| Housing | 1.0% | 1.9% | ||||||
| Industrial Revenue | 6.7% | 4.3% | ||||||
| Leasing | 6.6% | 6.1% | ||||||
| Power | 7.0% | 7.1% | ||||||
| Resource Recovery | 0.0% | 0.3% | ||||||
| Special Tax | 6.0% | 10.1% | ||||||
| Transportation | 16.1% | 16.5% | ||||||
| Water and Sewer |
12.1% | 8.6% | ||||||
| Revenue Bonds Total | 75.4% | 70.1% | ||||||
| AA Insured Bonds | 2.5% | 11.4% | ||||||
| Prerefunded | 1.9% | 8.9% | ||||||
| Total Insured Bonds | 9.5% | 38.0% | ||||||
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RS TAX-EXEMPT FUND
| Bond Quality Allocation6 | ||||||||||||
|
||||||||||||
| Top Ten Holdings7 | ||||||||||||
| Holding | Coupon | Maturity Date | % of Total Net Assets |
|||||||||
| California St. Var. Purp. G.O. | 6.000% | 11/1/2035 | 1.94% | |||||||||
| North Tex. Twy. Auth. Dallas North Twy. Sys. Rev. Ser. C | 6.000% | 1/1/2025 | 1.72% | |||||||||
| Illinois St. G.O. | 5.000% | 1/1/2019 | 1.27% | |||||||||
| Atlanta GA Wtr. & Wastewtr. Rev. Ser. A | 6.000% | 11/1/2029 | 1.20% | |||||||||
| Gwinnett Cnty. GA Sch. Dist. G.O. | 5.000% | 2/1/2036 | 1.06% | |||||||||
| Puerto Rico Comwlth. Govt. Dev. Bk. | 5.000% | 12/1/2014 | 0.99% | |||||||||
| Orlando & Orange Cnty. FLA Expressway Auth. Rev. Ser. C | 5.000% | 7/1/2026 | 0.94% | |||||||||
| Wake Cnty. NC G.O. | 5.000% | 4/1/2018 | 0.88% | |||||||||
| Michigan Mun. Bd. Auth. Dept. of Treasury Rev. | 5.000% | 10/1/2019 | 0.83% | |||||||||
| Minnesota St. Var. Purp. Ser. D G.O. | 5.000% | 8/1/2024 | 0.83% | |||||||||
| Total | 11.66% | |||||||||||
| 1 | Source: Barclays Capital. The Barclays Capital Municipal Bond Index is generally considered to be representative of the municipal bond market. The Barclays Capital Municipal Bond Index is an unmanaged index that is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund. |
| 3 | Rating agencies’ independent ratings of individual bonds are aggregated by Barclays and market weights are reported using Standard & Poor’s letter rating conventions. Rating methodology uses the middle rating of Moody’s, Standard & Poor’s and Fitch. When a rating from only two of the rating agencies is available the lower rating is used. Average Rating calculation does not reflect unrated and short-term holdings. |
| 4 | SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission (SEC) that allows for fairer comparisons of bond funds. It is based on the most recent 30-Day period covered by the fund’s filings with the SEC. The yield figure reflects the dividends and interest earned during the period, after the deduction of the fund’s expenses. This is also referred to as the “standardized yield.” |
| 5 | An expense limitation has been imposed pursuant to a written agreement between the Fund’s investment adviser, RS Investments, and the Fund in effect through April 30, 2011 to limit the Fund’s total annual fund operating expenses. |
| 6 | Source: Moody’s, Standard and Poor’s, Fitch Investor Service. |
| 7 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. |
| 8 | Source: The Bond Buyer, Jan. 4, 2011. |
| 9 | Source: Barclays Capital Municipal Market Commentary, Municipal Outlook 2011. |
| 10 | Source: Bloomberg, “Quinn Weighs $15 Billion Bond-Sale ‘option’ to close Illinois Budget Gap,” Dec. 28, 2010. |
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Table of Contents
RS TAX-EXEMPT FUND
Performance Update
| Average Annual Total Returns | ||||||||||||||||||||
| 1 Year | 3 Year | 5 Year | 10 Year | Since Inception |
||||||||||||||||
| Class A Shares (2/16/93) | ||||||||||||||||||||
| without sales charge | 1.21% | 4.04% | 3.72% | 4.71% | 4.79% | |||||||||||||||
| with maximum sales charge | -2.61% | 2.73% | 2.92% | 4.31% | 4.57% | |||||||||||||||
| Class C Shares (8/7/00) | ||||||||||||||||||||
| without sales charge | 0.52% | 3.25% | 2.93% | 3.92% | 4.24% | |||||||||||||||
| with sales charge | -0.46% | 3.25% | 2.93% | 3.92% | 4.24% | |||||||||||||||
| Class Y Shares (5/12/09) | 1.47% | — | — | — | 3.91% | |||||||||||||||
| Barclays Capital Municipal Bond Index1 | 2.38% | 4.08% | 4.09% | 4.83% | 5.50% | * | ||||||||||||||
| * | Since Class A shares inception. |
| Results of a Hypothetical $10,000 Investment |
|
The chart above shows the performance of a hypothetical $10,000 investment made 10 years ago in Class A shares of RS Tax-Exempt Fund and in the Barclays Capital Municipal Bond Index. The starting point of $9,625 for Class A shares reflects the maximum sales charge of 3.75%. A hypothetical $10,000 investment made 10 years ago in Class C shares and upon the inception of Class Y shares (5/12/09) would have the following values as of December 31, 2010: $14,692 (Class C), and $10,649 (Class Y). While Class C shares have a higher starting value than Class A shares because they do not impose a sales charge on purchase, they have higher annual expenses and, therefore, day-to-day performance is lower than that of Class A shares. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Performance quoted represents past performance and does not guarantee or predict future results. The Fund is the successor to The Guardian Tax-Exempt Fund; performance shown includes performance of the predecessor fund for periods prior to October 9, 2006.
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Table of Contents
RS HIGH YIELD MUNICIPAL BOND FUND
| www.RSinvestments.com | 23 |
Table of Contents
RS HIGH YIELD MUNICIPAL BOND FUND
Given the broad opportunity set open to a national fund, we continue to focus on issuers in the low investment grade and high yield sectors that we believe offer potential for value. We will continue to seek to avoid large concentrations in any one issuer, industry, credit sector, or state. If we believe we are properly compensated for risk, we may purchase non-rated or lower-rated credits if we believe there may be value in the bonds.
The Fund’s holdings in the health care sector, as well as in state and local general obligation bonds, contributed positively to the Fund’s performance. The Fund’s holdings in the industrial, water and sewer, and resource recovery/solid waste sectors were the largest detractors from the Fund’s performance. Our security selection in special tax and education revenue bonds and in state general obligation bonds added to performance, while housing and health care revenue bonds were the largest detractors.
Outlook
With dwindling federal stimulus money available to states and with some states, such as Illinois, California, and New York, still not able to balance their budgets, we expect to see increased credit weakness in this sector. Local governments may see significant reductions in state aid and falling property tax collections. Some may face serious stress. Overall on the state level, we have seen a rebound in tax revenues. With fiscal measures already taken, and given the tools available to balance public sector budgets and address longer-term liabilities, we do not expect — despite frequent media speculation to the contrary — the level of municipal bond defaults to spiral higher or even approach those in the private sector.
Through December, the issuers of approximately $26.4 billion of municipal bonds notified investors of some credit impairment. This resulted in $8.2 billion in actual cash payment defaults on 282 bonds8. Many of the defaults continue to be land-secured issues (which are directly related to real estate) and we expect some defaults to continue. We expect an increase in defaults among certain types of issuers, notably smaller, non-essential projects from economically challenged areas with cash flows that are not supported by taxes. By carefully monitoring the Fund’s investments and doing thorough research, we will seek to avoid these situations.
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Investors in the Fund may be subject to alternative minimum tax (AMT) and certain other state and local taxes. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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Table of Contents
RS HIGH YIELD MUNICIPAL BOND FUND
Characteristics
| Total Net Assets: $103,758,504 |
| Sector Allocation | ||
| ||
| Bond Quality Allocation2 | ||
| ||
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Table of Contents
RS HIGH YIELD MUNICIPAL BOND FUND
| Top Ten Holdings3 | ||||||||||||
| Holding | Coupon | Maturity Date | % of Total Net Assets |
|||||||||
| New Jersey Economic Dev. Auth. Rev. | 5.750% | 6/15/2034 | 3.56% | |||||||||
| Kentucky Economic Dev. Fin. Auth. Hosp. Facs. Rev. | 6.375% | 3/1/2040 | 2.37% | |||||||||
| Village Cmnty. Dev. District No. 8 FLA Spl. Assessment Rev. | 6.125% | 5/1/2039 | 2.30% | |||||||||
| Indiana Hlth. & Edl. Fac. Fing. Auth. Hosp. Rev. | 5.500% | 3/1/2037 | 2.14% | |||||||||
| Pima Cnty. AR Ind. Dev. Auth. Ind. Rev. | 5.250% | 10/1/2040 | 2.09% | |||||||||
| California St. Pub. Wrks. Brd. Lease Rev. | 6.625% | 11/1/2034 | 2.02% | |||||||||
| Tex. Private Activity Bd. Surface Transn. Corp. | 7.500% | 6/30/2033 | 2.01% | |||||||||
| California St. Var. Purp. G.O. | 6.000% | 3/1/2033 | 2.00% | |||||||||
| Cook Cnty. IL Rev. | 6.500% | 10/15/2040 | 1.93% | |||||||||
| New Jersey Economic Dev. Auth. Rev. | 5.875% | 6/1/2042 | 1.92% | |||||||||
| Total |
22.34% | |||||||||||
| 1 | Source: Barclays Capital. The Barclays Capital Municipal Bond Index is generally considered to be representative of the municipal bond market. The Barclays Capital Municipal Bond Index is an unmanaged index that is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Source: Moody’s, Standard and Poor’s, Fitch Investor Service. |
| 3 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. |
| 4 | Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund. |
| 5 | SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission (SEC) that allows for fairer comparisons of bond funds. It is based on the most recent 30-Day period covered by the fund’s filings with the SEC. The yield figure reflects the dividends and interest earned during the period, after the deduction of the fund’s expenses. This is also referred to as the “standardized yield.” |
| 6 | An expense limitation has been imposed pursuant to a written agreement between the Fund’s investment adviser, RS Investments, and the Fund in effect through April 30, 2011 to limit the Fund’s total annual fund operating expenses. |
| 7 | Source: The Bond Buyer, Jan. 4, 2011. |
| 8 | Source: Municipal Market Advisors Weekly Outlook, Jan. 3, 2011. |
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Table of Contents
RS HIGH YIELD MUNICIPAL BOND FUND
Performance Update
| Average Annual Total Returns | ||||||||
| 1 Year | Since Inception |
|||||||
| Class A Shares (12/31/09) without sales charge |
4.74% | 4.74% | ||||||
| with maximum sales charge | 0.84% | 0.84% | ||||||
| Class C Shares (12/31/09) without sales charge |
4.55% | 4.55% | ||||||
| with sales charge | 3.57% | 3.57% | ||||||
| Class Y Shares (12/31/09) | 4.76% | 4.76% | ||||||
| Barclays Capital Municipal Bond Index1 | 2.38% | 2.38% | ||||||
| Results of a Hypothetical $10,000 Investment |
|
|
The chart above shows the performance of a hypothetical $10,000 investment made on 12/31/09 in Class A shares of RS High Yield Municipal Bond Fund and in the Barclays Capital Municipal Bond Index. The starting point of $9,625 for Class A shares reflects the current maximum sales charge of 3.75%. Hypothetical $10,000 investments made on 12/31/09 in Class C shares and Class Y shares would have the following values as of December 31, 2010: $10,357 (Class C), and $10,476 (Class Y). While Class C shares have a higher starting value than Class A shares because they do not impose a sales charge on purchase, they have higher annual expenses and, therefore, day-to-day performance is lower than that of Class A shares. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Performance quoted represents past performance and does not guarantee or predict future results.
| www.RSinvestments.com | 27 |
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| 28 | www.RSinvestments.com |
Table of Contents
RS FLOATING RATE FUND
At December 31, 2010, the Fund had $656 million in total net assets invested across 123 holdings. Roughly 76% of the Fund’s assets were allocated to bank loans, 13% allocated to high-yield corporate bonds, and 11% allocated to cash and investment-grade securities. Of the 91 bank loans, 65 had LIBOR floors averaging 1.7%. This resulted in a portfolio construction that was approximately 90/10 floating/fixed rate.
The Fund’s overweight positions in the oil and gas and automotive industries contributed positively to the Fund’s performance. The Fund’s relative lack of exposure to the broadcast radio and television sectors, as well as an underweight in CCC-rated securities2, were the most significant factors contributing to the Fund’s underperformance relative to the benchmark. Significant cash inflows into the Fund following its launch on December 31, 2009, and throughout 2010 also constituted a drag on performance.
Outlook
Housing and commercial real estate remain challenging, and we believe they are a primary reason for the Fed’s quantitative easing (QE2) program. While at present we do not expect core inflation to exceed 2% in 2011, we are wary of the Fed’s ability to respond effectively to rising inflationary pressures. We believe that by the time the data is in, inflationary factors may have already secured a foothold. We do not think the Fed anticipated a 100 basis point rise in the 10-year Treasury note rate during the fourth quarter, which served to increase mortgage rates; rather, we believe that this increase was an unintended consequence of the Fed’s policy.
We are more optimistic regarding the economy and consumer in 2011 than we were in 2010. We expect U.S. gross domestic product (GDP) growth within the 2.5-3% range, to be driven mainly by consumer spending, which in turn should support job growth.
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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Table of Contents
RS FLOATING RATE FUND
Characteristics
| Total Net Assets: $656,139,700 |
| Sector Allocation | ||||||||||||
|
||||||||||||
| Top Ten Holdings3 | ||||||||||||
| Holding | Coupon | Maturity Date | % of Total Net Assets |
|||||||||
| Intelsat Jackson Holdings Ltd. | 5.250% | 4/6/2018 | 1.85% | |||||||||
| Novelis, Inc. | 5.250% | 12/28/2016 | 1.54% | |||||||||
| Dunkin’ Brands, Inc. | 5.750% | 11/23/2017 | 1.54% | |||||||||
| Interactive Data Corp. | 6.750% | 1/29/2017 | 1.54% | |||||||||
| United Components, Inc. | 6.250% | 9/13/2013 | 1.54% | |||||||||
| Getty Images, Inc. | 5.250% | 11/7/2016 | 1.53% | |||||||||
| Armstrong World Industries, Inc. | 5.000% | 5/23/2017 | 1.53% | |||||||||
| GenOn Energy, Inc. | 6.000% | 9/8/2017 | 1.53% | |||||||||
| Gymboree Corp. | 5.500% | 11/23/2017 | 1.53% | |||||||||
| Michael Foods Holdings, Inc. | 6.250% | 6/29/2016 | 1.53% | |||||||||
| Total | 15.66% | |||||||||||
| 1 | The S&P/LSTA U.S Leveraged Loan Index is a market-weighted index that tracks the performance of institutional leveraged loans. The Index is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Rating agencies’ independent ratings of individual bonds are aggregated by Barclays and market weights are reported using Standard & Poor’s letter rating conventions. Rating methodology uses the middle rating of Moody’s, Standard & Poor’s and Fitch. When a rating from only two of the rating agencies is available the lower rating is used. Average Rating calculation does not reflect unrated and short-term holdings. |
| 3 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. |
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RS FLOATING RATE FUND
| 4 | SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission (SEC) that allows for fairer comparisons of bond funds. It is based on the most recent 30-Day period covered by the fund’s filings with the SEC. The yield figure reflects the dividends and interest earned during the period, after the deduction of the fund’s expenses. This is also referred to as the “standardized yield.” |
| 5 | An expense limitation has been imposed pursuant to a written agreement between the Fund’s investment adviser, RS Investments, and the Fund in effect through April 30, 2011 to limit the Fund’s total annual fund operating expenses. |
| 6 | Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund. |
| 7 | Source: Standard & Poor’s LCD Quarterly Review, 4th Quarter 2010. |
| 8 | Source: Barclays Capital Leveraged Capital Markets 2010 Year in Review, 2011 Outlook, January 2011. |
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Table of Contents
RS FLOATING RATE FUND
Performance Update
| Average Annual Total Returns | ||||||||
| 1 Year | Since Inception |
|||||||
| Class A Shares (12/31/09) without sales charge |
8.37% | 8.37% | ||||||
| with maximum sales charge | 4.32% | 4.32% | ||||||
| Class C Shares (12/31/09) without sales charge |
8.25% | 8.25% | ||||||
| with sales charge | 7.25% | 7.25% | ||||||
| Class K Shares (12/31/09) | 8.33% | 8.33% | ||||||
| Class Y Shares (12/31/09) | 8.28% | 8.28% | ||||||
| S&P/LSTA U.S. Leveraged Loan Index1 | 10.13% | 10.13% | ||||||
| Results of a Hypothetical $10,000 Investment |
|
|
The chart above shows the performance of a hypothetical $10,000 investment made on 12/31/09 in Class A shares of RS Floating Rate Fund and in the S&P/LSTA U.S. Leveraged Loan Index. The starting point of $9,625 for Class A shares reflects the current maximum sales charge of 3.75%. Hypothetical $10,000 investments made on 12/31/09 in Class C shares, Class K shares, and Class Y shares would have the following values as of December 31, 2010: $10,725 (Class C), $10,833 (Class K), and $10,828 (Class Y). While Class C shares, and Class K shares have a higher starting value than Class A shares because they do not impose a sales charge on purchase, they have higher annual expenses and, therefore, day-to-day performance is lower than that of Class A shares. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Performance quoted represents past performance and does not guarantee or predict future results.
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RS STRATEGIC INCOME FUND
U.S. Aggregate Bond Index, which returned 6.54% for the period. However, the Fund underperformed the 10.83% average return of its Lipper Multi-Sector Income Funds peer group2. (The peer group consisted of 164 mutual funds that seek current income by allocating assets among several different fixed income securities sectors.)
Portfolio Review
The Fund’s outperformance compared to the index is attributable to our overweighting in spread products such as high yield credit and investment grade corporate bonds, and allocations to CMBS and non-agency residential MBS, all of which outperformed the Treasury market for the year as yield premiums continued to tighten.
The Fund allocates its assets across various asset classes based on our assessment of relative value, changing market conditions and opportunities. As of December 31, 2010 the Fund’s highest allocations were to high yield corporate issues, investment grade credit, and to global bonds. Over half of the Fund’s portfolio (about 56%) was invested in U.S. dollar denominated corporate credit overall, with that allocation weighted more heavily toward high yield rated credits (about 35% of the overall Fund). Over 15% of the portfolio was invested in non-U.S. dollar-denominated debt, from countries that we believed offered better return potential than was available for similar maturity instruments in the United States. Most of this non-US dollar exposure was hedged back to U.S. dollars, but about 2% was left exposed to other currencies. The Fund’s allocation to high yield corporate issues was the largest contributor to the Fund’s performance. Security selection also positively contributed to the Fund’s return.
We gave somewhat lower allocations to residential MBS and CMBS, given the pressures facing both the residential and commercial real estate markets. The Fund’s allocation to MBS was the most significant detractor from the Fund’s performance.
Outlook
We are more optimistic regarding the economy and consumer confidence for 2011 than we were for 2010. Our outlook is for solid but moderate GDP growth (2.5% to 3%), and fairly low inflation. We continue to seek to focus risk-taking in areas where we believe the fundamentals, structure, and risk premiums (yields above Treasuries) may compensate the Fund for risk. We expect most other sectors to outperform Treasuries over the course of 2011.
Given sovereign stresses that still exist, especially in Europe, we expect bouts of volatility in 2011, but believe that the contagion from Europe to the U.S. will likely be limited. We expect the U.S. to work on addressing long-term budget issues starting in the first half of 2011. We believe the Fund’s allocation to non-U.S. dollar bonds should provide additional diversification, given their sensitivity to moves in the local government bond yields rather than to U.S. Treasuries.
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RS STRATEGIC INCOME FUND
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Bond funds are subject to interest rate risk, credit risk, and prepayment risk. When interest rates rise, bond prices generally fall, and when interest rates fall, bond prices generally rise. Currently, interest rates are at relatively low levels. Please keep in mind that in this kind of environment, the risk that bond prices may fall when interest rates rise is potentially greater. Derivative transactions can create leverage and may be highly volatile. It is possible that a derivative transaction will result in a loss greater than the principal amount invested and the Fund may not be able to close out a derivative transaction at a favorable time or price. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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RS STRATEGIC INCOME FUND
Characteristics
| Total Net Assets: $66,504,743 |
| Sector Allocation | ||
| ||
| Bond Quality Allocation3 | ||
| ||
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RS STRATEGIC INCOME FUND
| Top Ten Holdings4 | ||||||||||||
| Holding | Coupon | Maturity Date | % of Total Net Assets |
|||||||||
| Asian Development Bank | 2.350% | 6/21/2027 | 1.60% | |||||||||
| AGFS Funding Co. | 7.250% | 4/21/2015 | 1.52% | |||||||||
| Leslie’s Poolmart, Inc. | 6.000% | 11/21/2016 | 1.51% | |||||||||
| Citgo Petroleum Corp. | 8.000% | 6/24/2015 | 1.51% | |||||||||
| MEG Energy Corp. | 6.000% | 4/3/2016 | 1.49% | |||||||||
| FNMA Mortgage Pass-Through | 4.000% | 11/1/2040 | 1.49% | |||||||||
| Reynolds Group Holdings, Inc. | 6.750% | 5/5/2016 | 1.49% | |||||||||
| Sequa Corp. | 3.540% | 12/3/2014 | 1.45% | |||||||||
| Poland Government Bond | 5.250% | 10/25/2017 | 1.42% | |||||||||
| Dealer Computer Services, Inc. | 5.250% | 4/21/2017 | 1.34% | |||||||||
| Total |
14.82% | |||||||||||
| 1 | Source: Barclays Capital. The Barclays Capital U.S. Aggregate Bond Index is generally considered to be representative of U.S. bond market activity. The Barclays Capital U.S. Aggregate Bond Index is an unmanaged index that is not available for direct investment. There are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Lipper, Inc. is an independent mutual fund monitoring and rating service. Its database of performance information is based on historical returns, which assume the reinvestment of dividends and distributions and the deduction of all Fund expenses. Lipper return figures do not reflect the deduction of any sales charges that an investor may pay when purchasing or redeeming shares of the Fund. |
| 3 | Source: Moody’s, Standard and Poor’s, Fitch Investor Services. |
| 4 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. Also, certain securities that the Fund’s management consider “short-term” have been excluded from this presentation. |
| 5 | SEC Yield is a standard yield calculation developed by the Securities and Exchange Commission (SEC) that allows for fairer comparisons of bond funds. It is based on the most recent 30-Day period covered by the fund’s filings with the SEC. The yield figure reflects the dividends and interest earned during the period, after the deduction of the fund’s expenses. This is also referred to as the “standardized yield.” |
| 6 | An expense limitation has been imposed pursuant to a written agreement between the Fund’s investment adviser, RS Investments, and the Fund in effect through April 30, 2011 to limit the Fund’s total annual fund operating expenses. |
| 7 | Source: Bloomberg. |
| 8 | Source: Barclays Capital. The Barclays Capital U.S. Corporate High-Yield Bond Index is generally considered to be representative of the investable universe of the U.S.-dominated high-yield debt market. The Index is not available for direct investment. There are no expenses associated with the Index while there are expenses associated with the Fund. |
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RS STRATEGIC INCOME FUND
Performance Update
| Average Annual Total Returns | ||||||||
| 1 Year | Since Inception |
|||||||
| Class A Shares (12/31/09) without sales charge |
8.93% | 8.93% | ||||||
| with maximum sales charge | 4.82% | 4.82% | ||||||
| Class C Shares (12/31/09) without sales charge |
8.89% | 8.89% | ||||||
| with sales charge | 7.89% | 7.89% | ||||||
| Class K Shares (12/31/09) | 8.93% | 8.93% | ||||||
| Class Y Shares (12/31/09) | 8.95% | 8.95% | ||||||
| Barclays Capital U.S. Aggregate Bond Index1 | 6.54% | 6.54% | ||||||
| Results of a Hypothetical $10,000 Investment |
|
|
The chart above shows the performance of a hypothetical $10,000 investment made on 12/31/09 in Class A shares of RS Strategic Income Fund and in the Barclays Capital U.S. Aggregate Bond Index. The starting point of $9,625 for Class A shares reflects the current maximum sales charge of 3.75%. Hypothetical $10,000 investments made on 12/31/09 in Class C shares, Class K shares, and Class Y shares would have the following values as of December 31, 2010: $10,789 (Class C), $10,893 (Class K), and $10,895 (Class Y). While Class C shares and Class K shares have a higher starting value than Class A shares because they do not impose a sales charge on purchase, they have higher annual expenses and, therefore, day-to-day performance is lower than that of Class A shares. The chart and table do not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares.
Performance quoted represents past performance and does not guarantee or predict future results.
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RS Money Market Fund Commentary
Highlights
| Ÿ | Economic activity increased in 2010, even as the unemployment rate remained at elevated levels and a sovereign debt crisis in Europe roiled financial markets. |
| Ÿ | While the federal funds rate remained anchored in the range of 0.00% to 0.25% through the entire year, total net assets managed by money market funds decreased in 2010 as investors sought higher returns in other areas of the financial markets. |
| Ÿ | RS Money Market Fund delivered positive returns but underperformed its benchmark, the Barclays Capital U.S. Treasury Bellwethers (3 Month) Index1. Guardian Investor Services LLC (“Guardian”), the Fund’s sub-adviser, reimbursed the Fund’s expenses during 20102 to enable the Fund to maintain a minimum yield of 0.01%. |
Market Overview
By the beginning of 2010, conditions in the money markets had improved and the Federal Reserve (the “Fed”) continued to roll back some of the tools and liquidity programs it had implemented in the wake of the implosion of financial markets in the fall of 2008. However, volatility returned to some areas during the third quarter of 2010 as concerns rose over sovereign debt issues in Europe.
At its September 2010, Federal Open Market Committee (FOMC) meeting, the committee stated that inflation levels were below levels it considered consistent with its mandate of maximum employment and price stability. The Fed stated it would provide additional accommodation to support the economic recovery and to return inflation to levels more consistent with its mandate. In our view, the Fed was essentially announcing that it was ready to fight deflation by engaging in a new round of quantitative easing (which became known as “QE2”).
In the final quarter of 2010, sovereign debt concerns mounted for several of the euro area peripherals (for example, Greece and Ireland) and the European Union/International Monetary Fund announced a € 85 billion financial aid package for Ireland. As banks in the euro area periphery continued to rely heavily on the European Central Bank, pressure grew for a more robust resolution mechanism within the eurozone. The result was the creation of the European Stability Mechanism. This program, based on the European Financial Stability Facility, will be a permanent program capable of providing financial assistance packages to eurozone member states.
The Fed gave details of the net asset purchase program at the November FOMC meeting, stating it would purchase up to $600 billion in longer-term U.S. Treasuries by the end of the second quarter of 2011, a pace of around $75 billion a per month.
In the minutes of the December FOMC meeting, the Fed stated that information it had received since the November meeting had increased its confidence in the economic recovery, but cautioned that progress towards its dual mandate of maximum employment and price stability was disappointingly low. As a result, the committee
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RS MONEY MARKET FUND
decided to continue to expand the Fed’s holdings of longer-term securities by maintaining its existing policy of reinvesting principal payments from its existing securities into longer-term Treasuries and by completing the purchase, announced in November, of $600 billion in longer-term U.S. Treasury securities.
Recognizing the apparent fragility of the economic recovery, the Fed kept the targeted federal funds rate unchanged in the 0.00% to 0.25% range through the end of the year, well below the 5.25% peak level of 2007.
Portfolio Review
RS Money Market Fund (Class A shares) returned 0.02% for the twelve-month period ended December 31, 2010, compared to a 0.15% return for its benchmark, the Barclays Capital U.S. Treasury Bellwethers (3 Month) Index. Due to the current low interest rate environment and the impact it has had on money market funds generally, Guardian reimbursed the Fund’s expenses during 20102 to enable the Fund to maintain a minimum yield of 0.01%.
Several factors combined to impact returns in money market funds in 2010. The federal funds target rate of 0.00% to 0.25% continues to challenge money market funds, which are having to reinvest at historically low levels. In addition, many commercial paper issuers have reduced or halted issuance.
As of year end, the majority of the Fund’s assets were invested in first-tier commercial paper issued by either financial or industrial companies. In 2010, we maintained the Fund’s exposure to floating rate taxable municipal bonds, as well as to high grade taxable municipal paper. The Fund has also increased its exposure to U.S. Treasury bills.
Outlook
We remain relatively optimistic on prospects for a continued economic recovery in 2011. Although the housing market remains weak and the unemployment rate remains stubbornly high, we believe the outlook for the consumer and labor markets should improve in 2011. Meanwhile, the Fed is expected to keep the federal funds rate very low for the near-term and continue with the $600 billion asset purchase program. Maturing funds across the entire money market space continue to be reinvested at interest rates that are among the lowest in history. Given our focus on preserving capital, we will continue to attempt to avoid exposure to credits that we feel could come under stress in the near-term economic environment. We remain selective, working hard to understand any credit we are considering, as we evaluate how it may perform over the next three to nine months. This examination of each credit is the foundation of our overall investment philosophy and remains critical to our investment process.
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RS MONEY MARKET FUND
RS Money Market Fund is neither insured nor guaranteed by the FDIC or any other government agency. Although the Fund seeks to preserve the value of your investment at $1.00 per share, it is possible to lose money by investing in the Fund.
As with all mutual funds, the value of an investment in the Fund could decline, in which case you could lose money. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will vary. Except as otherwise specifically stated, all information and portfolio manager commentary, including portfolio security positions, is as of December 31, 2010.
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RS MONEY MARKET FUND
Characteristics
| Total Net Assets: $461,158,938 |
| Sector Allocation |
|
| Portfolio Statistics | ||||
| Average Maturity (days) | 34 | |||
| Current 7-day Yield | ||||
| With Fee Waiver2 | 0.01% | |||
| Without Fee Waiver | -0.65% | |||
| Effective 7-day Yield | ||||
| With Fee Waiver2 | 0.01% | |||
| Without Fee Waiver | -0.64% | |||
Annualized historical yields for the 7-day period ended December 31, 2010. Effective yield assumes reinvested income. Yields will vary. Figures cited represent yield for Class A shares.
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RS MONEY MARKET FUND
| Top Ten Holdings3 | ||||||||||||
| Holding | Discount/ Coupon |
Maturity Date | % of Total Net Assets |
|||||||||
| Connecticut St. Housing Fin. Auth. | 0.390% | 1/6/2011 | 3.82% | |||||||||
| New York St. Pwr. Auth. | 0.290% | 1/18/2011 | 2.83% | |||||||||
| Los Angeles Department of Airports | 0.250% | 2/1/2011 | 2.17% | |||||||||
| New York St. Urban Dev. Corp. Rev. | 0.400% | 1/6/2011 | 2.17% | |||||||||
| General Electric Capital Corp. | 0.070% | 1/3/2011 | 2.17% | |||||||||
| Northern Illinois Gas Co. | 0.190% | 1/3/2011 | 2.17% | |||||||||
| Hewlett-Packard Co. | 0.160% | 1/7/2011 | 2.17% | |||||||||
| National Rural Utilities Cooperative Finance Corp. | 0.230% | 1/6/2011 | 2.17% | |||||||||
| Proctor & Gamble Co. | 0.220% | 1/10/2011 | 2.17% | |||||||||
| Emerson Electric Co. | 0.170% | 1/13/2011 | 2.17% | |||||||||
| Total |
24.01% | |||||||||||
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RS MONEY MARKET FUND
Performance Update
| Average Annual Total Returns | ||||||||||||||||||||
| 1 Year | 3 Year | 5 Year | 10 Year | Since Inception |
||||||||||||||||
| Class A Shares (9/13/82) | 0.02% | 0.63% | 2.10% | 1.80% | 4.41% | |||||||||||||||
| Class B Shares (5/1/96) | ||||||||||||||||||||
| without sales charge | 0.02% | 0.38% | 1.65% | 1.35% | 2.62% | |||||||||||||||
| with sales charge | -2.98% | -0.28% | 1.46% | 1.35% | 2.62% | |||||||||||||||
| Class C Shares (8/7/00) | ||||||||||||||||||||
| without sales charge | 0.02% | 0.38% | 1.65% | 1.35% | 1.49% | |||||||||||||||
| with sales charge | -0.98% | 0.38% | 1.65% | 1.35% | 1.49% | |||||||||||||||
| Class K Shares (5/15/01) | 0.02% | 0.49% | 1.86% | — | 1.43% | |||||||||||||||
| Barclays Capital U.S. Treasury Bellwethers (3 Month) Index1 | 0.15% | 0.87% | 2.50% | 2.42% | 4.93% | |||||||||||||||
Please refer to page 42 for the 7-day yield quotation which more closely reflects the current earnings of the RS Money Market Fund than the total return quotations.
| * | Since Class A shares inception. Since inception performance for the index is measured from 8/31/1982, the month end prior to the Fund’s commencement of operations. |
| 1 | The Barclays Capital U.S. Treasury Bellwethers (3 Month) Index is generally considered to be representative of the average yield of three-month Treasury Bills. The Barclays Capital U.S. Treasury Bellwethers (3 Month) Index is an unmanaged index that is not available for direct investment, and there are no expenses associated with the index while there are expenses associated with the Fund. |
| 2 | Pursuant to a written agreement in effect through April 30, 2011, expense limitations have been imposed by the Advisor. In addition to fees reimbursed with respect to the expense limitations by Guardian Investor Services LLC (GIS), the Fund’s subadviser, GIS voluntarily reimbursed expenses to maintain a minimum yield threshold for RS Money Market Fund for the twelve-month period ended December 31, 2010. There is no guarantee that the reimbursement will be in effect for subsequent periods. See page 182 for further information. |
| 3 | Portfolio holdings are subject to change and should not be considered a recommendation to buy or sell individual securities. Top ten holdings are determined at the unique security level. For this reason, the securities included above, their order, and the percentages they represent of the Fund’s total net assets may differ from similar data calculated directly from the Schedule of Investments, where certain securities of the same issuer with the same coupon rate may be aggregated. |
The table above does not reflect the deduction of taxes that a shareholder would pay on fund distributions.
Performance quoted represents past performance and does not guarantee or predict future results. The Fund is the successor to The Guardian Cash Management Fund; performance shown includes performance of the predecessor fund for periods prior to October 9, 2006.
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IMPORTANT INFORMATION CONCERNING FUND COMMENTARY AND PERFORMANCE
Important Information Concerning Fund Commentary and Performance
Except as otherwise specifically stated, all information and investment team commentary, including portfolio security positions, is as of December 31, 2010. The views expressed in the investment team letters are those of the Fund’s portfolio manager(s) and are subject to change without notice. They do not necessarily represent the views of RS Investments. The letters contain some forward-looking statements providing current expectations or forecasts of future events; they do not necessarily relate to historical or current facts. There can be no guarantee that any forward-looking statement will be realized. We undertake no obligation to publicly update forward-looking statements, whether as a result of new information, future events, or otherwise. Any discussions of specific securities should not be considered a recommendation to buy or sell those securities. Fund holdings will change.
Performance quoted represents past performance and does not guarantee or predict future results. Investment return and principal value will fluctuate, so shares, when redeemed, may be worth more or less than their original cost. Please keep in mind that any high double digit returns are highly unusual and cannot be sustained. Class A performance quoted “with maximum sales charge” reflects the current maximum sales charge of 3.75% (2.25% for RS Low Duration Bond Fund). Please read a Fund’s prospectus carefully for more information on sales charges as they do not apply in all cases, and if applied, are reduced for larger purchases. Certain share classes are subject to contingent deferred sales charges which are typically paid at time of sale. Class B performance quoted “with sales charge” reflects contingent deferred sales charges of 3% for the 1 year period, 2% for the 3 year period, 1% for the 5 year period and 0% for periods longer than 6 years. Class B performance quoted also reflects the conversion of Class B shares to Class A shares after the eighth anniversary of purchase. The Class C share performance quoted “with sales charge” takes into account the applicable contingent deferred sales charge of 1% for periods of 1 year or less. There are no sales charges for Class K and Class Y shares. Any sales charges are in addition to the Fund’s fees and expenses as detailed in the Financial Highlights section of this report. Fees and expenses are factored into the net asset value of your shares and any performance numbers we release. Total return figures reflect an expense limitation in effect during the periods shown; without such limitation, the performance shown would have been lower. Performance results assume the reinvestment of dividends and capital gains. The return figures shown do not reflect the deduction of taxes that a shareholder may pay on Fund distributions or the redemption of Fund shares. Current and month-end performance and other information, which may be lower or higher than that cited, is available by contacting RS Investments at 800-766-3863 and is periodically updated on our Web site: www.RSinvestments.com.
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UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
As a shareholder of the Funds, you incur two types of costs: (1) transaction costs, including as applicable, sales charges (loads) on purchase payments; redemption fees; and exchange fees; and (2) ongoing costs, including investment advisory fees, distribution (12b-1) fees, and other Fund expenses. The examples below are intended to help you understand your ongoing costs (in dollars) of investing in the Funds and to compare these costs with the ongoing costs of investing in other mutual funds.
The examples are based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated. The table below shows the Funds’ expenses in two ways:
Expenses based on actual return
This section of the table provides information about actual account values and actual expenses. You may use the information in this section, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the section under the heading entitled “Expenses Paid During Period” for your Fund to estimate the expenses you paid on your account during this period. A maintenance fee of $12.00 that is charged once a year may apply for IRAs. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Expenses based on hypothetical 5% return for comparison purposes
This section of the table provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Funds with the costs of investing in other mutual funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of the other funds. A maintenance fee of $12.00 that is charged once a year may apply for IRAs. This fee is not included in the table below. If it was, the estimate of expenses you paid during the period would be higher, and your ending account value lower, by this amount.
Note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs, such as sales charges (loads) or exchange fees. Therefore the second section is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. If these transactional costs were included, your costs would have been higher.
| Based on Actual Return |
Beginning Account Value 7/1/10 |
Ending Account Value 12/31/10 |
Expenses Paid During Period* 7/1/10-12/31/10 |
Expense Ratio During Period 7/1/10-12/31/10 |
||||||||||||||
| RS Investment Quality Bond Fund |
Class A | $1,000.00 | $1,018.70 | $4.32 | 0.85% | |||||||||||||
| Class B | $1,000.00 | $1,013.80 | $8.12 | 1.60% | ||||||||||||||
| Class C | $1,000.00 | $1,013.80 | $8.12 | 1.60% | ||||||||||||||
| Class K | $1,000.00 | $1,015.60 | $6.35 | 1.25% | ||||||||||||||
| Class Y | $1,000.00 | $1,019.60 | $3.37 | 0.66% | ||||||||||||||
| RS Low Duration Bond Fund |
Class A | $1,000.00 | $1,017.20 | $4.07 | 0.80% | |||||||||||||
| Class B | $1,000.00 | $1,013.40 | $7.86 | 1.55% | ||||||||||||||
| Class C | $1,000.00 | $1,013.40 | $7.87 | 1.55% | ||||||||||||||
| Class K | $1,000.00 | $1,015.20 | $6.09 | 1.20% | ||||||||||||||
| Class Y | $1,000.00 | $1,017.20 | $3.18 | 0.63% | ||||||||||||||
| RS High Yield Bond Fund |
Class A | $1,000.00 | $1,099.70 | $4.50 | 0.85% | |||||||||||||
| Class B | $1,000.00 | $1,095.60 | $8.45 | 1.60% | ||||||||||||||
| Class C | $1,000.00 | $1,097.30 | $8.46 | 1.60% | ||||||||||||||
| Class K | $1,000.00 | $1,097.50 | $6.60 | 1.25% | ||||||||||||||
| Class Y | $1,000.00 | $1,100.80 | $3.50 | 0.66% | ||||||||||||||
| RS Tax-Exempt Fund |
Class A | $1,000.00 | $984.30 | $3.97 | 0.79% | |||||||||||||
| Class C | $1,000.00 | $980.40 | $7.95 | 1.59% | ||||||||||||||
| Class Y | $1,000.00 | $985.90 | $3.33 | 0.67% | ||||||||||||||
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UNDERSTANDING YOUR FUND’S EXPENSES (UNAUDITED)
| Based on Actual Return |
Beginning Account Value 7/1/10 |
Ending Account Value 12/31/10 |
Expenses Paid During Period* 7/1/10-12/31/10 |
Expense Ratio During Period 7/1/10-12/31/10 |
||||||||||||||
| RS High Yield Municipal Bond Fund |
Class A | $1,000.00 | $984.40 | $0.69 | 0.14% | |||||||||||||
| Class C | $1,000.00 | $983.30 | $1.85 | 0.37% | ||||||||||||||
| Class Y | $1,000.00 | $984.50 | $0.48 | 0.10% | ||||||||||||||
| RS Floating Rate Fund |
Class A | $1,000.00 | $1,065.50 | $0.32 | 0.06% | |||||||||||||
| Class C | $1,000.00 | $1,065.70 | $1.25 | 0.24% | ||||||||||||||
| Class K | $1,000.00 | $1,066.20 | $0.33 | 0.06% | ||||||||||||||
| Class Y | $1,000.00 | $1,065.50 | $0.39 | 0.08% | ||||||||||||||
| RS Strategic Income Fund |
Class A | $1,000.00 | $1,043.30 | $0.69 | 0.13% | |||||||||||||
| Class C | $1,000.00 | $1,043.50 | $0.40 | 0.08% | ||||||||||||||
| Class K | $1,000.00 | $1,043.30 | $0.68 | 0.13% | ||||||||||||||
| Class Y | $1,000.00 | $1,043.50 | $0.52 | 0.10% | ||||||||||||||
| RS Money Market Fund |
Class A | $1,000.00 | $1,000.10 | $1.11 | 0.22% | |||||||||||||
| Class B | $1,000.00 | $1,000.10 | $1.12 | 0.22% | ||||||||||||||
| Class C | $1,000.00 | $1,000.10 | $1.11 | 0.22% | ||||||||||||||
| Class K | $1,000.00 | $1,000.10 | $1.11 | 0.22% | ||||||||||||||
| Based on Hypothetical Return (5% Return Before Expenses) |
||||||||||||||||||
| RS Investment Quality Bond Fund |
Class A | $1,000.00 | $1,020.92 | $4.33 | 0.85% | |||||||||||||
| Class B | $1,000.00 | $1,017.14 | $8.13 | 1.60% | ||||||||||||||
| Class C | $1,000.00 | $1,017.14 | $8.14 | 1.60% | ||||||||||||||
| Class K | $1,000.00 | $1,018.90 | $6.36 | 1.25% | ||||||||||||||
| Class Y | $1,000.00 | $1,021.87 | $3.37 | 0.66% | ||||||||||||||
| RS Low Duration Bond Fund |
Class A | $1,000.00 | $1,021.17 | $4.07 | 0.80% | |||||||||||||
| Class B | $1,000.00 | $1,017.39 | $7.88 | 1.55% | ||||||||||||||
| Class C | $1,000.00 | $1,017.39 | $7.88 | 1.55% | ||||||||||||||
| Class K | $1,000.00 | $1,019.16 | $6.11 | 1.20% | ||||||||||||||
| Class Y | $1,000.00 | $1,022.05 | $3.19 | 0.63% | ||||||||||||||
| RS High Yield Bond Fund |
Class A | $1,000.00 | $1,020.92 | $4.33 | 0.85% | |||||||||||||
| Class B | $1,000.00 | $1,017.14 | $8.13 | 1.60% | ||||||||||||||
| Class C | $1,000.00 | $1,017.14 | $8.13 | 1.60% | ||||||||||||||
| Class K | $1,000.00 | $1,018.91 | $6.35 | 1.25% | ||||||||||||||
| Class Y | $1,000.00 | $1,021.88 | $3.37 | 0.66% | ||||||||||||||
| RS Tax-Exempt Fund |
Class A | $1,000.00 | $1,021.21 | $4.04 | 0.79% | |||||||||||||
| Class C | $1,000.00 | $1,017.18 | $8.10 | 1.59% | ||||||||||||||
| Class Y | $1,000.00 | $1,021.85 | $3.40 | 0.67% | ||||||||||||||
| RS High Yield Municipal Bond Fund |
Class A | $1,000.00 | $1,024.51 | $0.70 | 0.14% | |||||||||||||
| Class C | $1,000.00 | $1,023.34 | $1.89 | 0.37% | ||||||||||||||
| Class Y | $1,000.00 | $1,024.72 | $0.49 | 0.10% | ||||||||||||||
| RS Floating Rate Fund |
Class A | $1,000.00 | $1,024.89 | $0.32 | 0.06% | |||||||||||||
| Class C | $1,000.00 | $1,023.99 | $1.23 | 0.24% | ||||||||||||||
| Class K | $1,000.00 | $1,024.89 | $0.32 | 0.06% | ||||||||||||||
| Class Y | $1,000.00 | $1,024.82 | $0.39 | 0.08% | ||||||||||||||
| RS Strategic Income Fund |
Class A | $1,000.00 | $1,024.53 | $0.69 | 0.13% | |||||||||||||
| Class C | $1,000.00 | $1,024.81 | $0.40 | 0.08% | ||||||||||||||
| Class K | $1,000.00 | $1,024.54 | $0.68 | 0.13% | ||||||||||||||
| Class Y | $1,000.00 | $1,024.70 | $0.51 | 0.10% | ||||||||||||||
| RS Money Market Fund |
Class A | $1,000.00 | $1,024.10 | $1.12 | 0.22% | |||||||||||||
| Class B | $1,000.00 | $1,024.09 | $1.13 | 0.22% | ||||||||||||||
| Class C | $1,000.00 | $1,024.10 | $1.12 | 0.22% | ||||||||||||||
| Class K | $1,000.00 | $1,024.10 | $1.12 | 0.22% | ||||||||||||||
| * | Expenses are equal to the Fund’s annualized expense ratio as indicated, multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). |
| www.RSinvestments.com | 47 |
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Financial Information
Year Ended December 31, 2010
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Asset Backed Securities – 4.9% | ||||||||
| Ameriquest Mortgage Securities, Inc. |
$ | 829,034 | $ | 744,123 | ||||
| Chase Funding Mortgage Loan Trust |
126,910 | 125,659 | ||||||
| CitiFinancial Mortgage Securities, Inc. |
282,139 | 284,773 | ||||||
| CNH Equipment Trust |
1,700,000 | 1,751,714 | ||||||
| Daimler Chrysler Auto Trust |
1,650,000 | 1,691,826 | ||||||
| Hertz Vehicle Financing LLC |
1,400,000 | 1,464,927 | ||||||
| Nissan Auto Lease Trust |
1,570,000 | 1,580,598 | ||||||
| Total Asset Backed Securities (Cost $7,605,187) |
7,643,620 | |||||||
| Principal Amount |
Value | |||||||
| Collateralized Mortgage Obligations – 16.7% | ||||||||
| Banc of America Alternative Loan Trust |
1,114,052 | 1,118,922 | ||||||
| Banc of America Mortgage Securities, Inc. |
464,109 | 464,473 | ||||||
| Cendant Mortgage Corp. |
383,561 | 392,919 | ||||||
| Citicorp Mortgage Securities, Inc. |
554,308 | 541,555 | ||||||
| Countrywide Alternative Loan Trust |
356,410 | 352,192 | ||||||
| 2006-19CB A15 |
482,904 | 434,727 | ||||||
| Countrywide Home Loans Trust |
1,261,948 | 1,282,977 | ||||||
| 50 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Collateralized Mortgage Obligations (continued) | ||||||||
| 2002-19 1A1 |
$ | 310,775 | $ | 322,766 | ||||
| FHLMC |
400,000 | 427,529 | ||||||
| 1534 Z |
284,507 | 284,378 | ||||||
| 3227 PR |
2,300,000 | 2,517,553 | ||||||
| FNMA |
1,080,000 | 1,214,831 | ||||||
| 2006-45 AC |
172,760 | 180,617 | ||||||
| 2002-52 PB |
484,859 | 498,840 | ||||||
| GNMA |
871,180 | 967,046 | ||||||
| J.P. Morgan Mortgage Trust |
1,016,000 | 989,939 | ||||||
| 2004-S2 1A3 |
612,279 | 619,381 | ||||||
| Master Asset Securitization Trust |
485,458 | 498,128 | ||||||
| 2003-7 4A33 |
1,832,704 | 1,896,014 | ||||||
| 2003-10 3A7 |
724,712 | 753,371 | ||||||
| Prime Mortgage Trust |
417,589 | 429,205 | ||||||
| 2003-3 A9 |
1,326,724 | 1,396,773 | ||||||
| Residential Asset Mortgage Products, Inc. |
337,962 | 341,330 | ||||||
| Residential Funding Mortgage Securities I |
903,630 | 922,565 | ||||||
| 2003-S20 1A4 |
485,404 | 493,016 | ||||||
| Residential Funding Mortgage Securities Trust |
688,232 | 602,403 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 51 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Collateralized Mortgage Obligations (continued) | ||||||||
| Structured Asset Securities Corp. |
$ | 752,442 | $ | 763,149 | ||||
| Wells Fargo Mortgage Backed Securities Trust |
1,007,423 | 1,032,449 | ||||||
| 2004-2 A1 |
572,214 | 586,548 | ||||||
| 2006-1 A3 |
1,235,408 | 1,233,092 | ||||||
| 2003-2 A7 |
1,136,481 | 1,181,305 | ||||||
| 2006-7 1A1 |
362,410 | 366,455 | ||||||
| 2004-6 A4 |
367,633 | 387,930 | ||||||
| 2007-13 A7 |
640,084 | 600,413 | ||||||
| Total Collateralized Mortgage Obligations (Cost $25,702,104) |
26,094,791 | |||||||
| Principal Amount |
Value | |||||||
| Senior Secured Loans – 1.2% | ||||||||
| Finance Companies – 0.2% | ||||||||
| AGFS Funding Co. |
250,000 | 253,535 | ||||||
|
|
|
|||||||
| 253,535 | ||||||||
| Food – 0.1% | ||||||||
| Dole Food Co., Inc. |
70,059 | 70,447 | ||||||
| Term Loan C |
174,008 | 174,972 | ||||||
|
|
|
|||||||
| 245,419 | ||||||||
| Healthcare – 0.5% | ||||||||
| Grifols S.A. |
500,000 | 504,905 | ||||||
| IMS Health, Inc. |
247,560 | 249,771 | ||||||
|
|
|
|||||||
| 754,676 | ||||||||
| Metals And Mining – 0.3% | ||||||||
| Novelis, Inc. |
400,000 | 404,812 | ||||||
|
|
|
|||||||
| 404,812 | ||||||||
| 52 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Technology – 0.1% | ||||||||
| Dealer Computer Services, Inc. |
$ | 221,841 | $ | 223,090 | ||||
|
|
|
|||||||
| 223,090 | ||||||||
| Total Senior Secured Loans (Cost $1,851,877) |
1,881,532 | |||||||
| Principal Amount |
Value | |||||||
| Commercial Mortgage-Backed Securities – 17.1% | ||||||||
| Adams Outdoor Advertising LP |
1,200,000 | 1,179,000 | ||||||
| American Tower Trust |
1,240,000 | 1,340,759 | ||||||
| Banc of America Commercial Mortgage, Inc. |
650,000 | 681,265 | ||||||
| 2005-6 A4 |
1,500,000 | 1,611,088 | ||||||
| 2006-2 A4 |
927,000 | 1,014,845 | ||||||
| Bear Stearns Commercial Mortgage Securities |
1,500,000 | 1,577,033 | ||||||
| 1999-C1 B |
279,784 | 290,050 | ||||||
| Chase Commercial Mortgage Securities Corp. |
1,016,048 | 1,076,032 | ||||||
| Crown Castle Towers LLC |
1,500,000 | 1,564,981 | ||||||
| CS First Boston Mortgage Securities Corp. |
422,207 | 421,849 | ||||||
| 2001-CP4 A4 |
869,243 | 880,118 | ||||||
| GE Capital Commercial Mortgage Corp. |
715,000 | 759,841 | ||||||
| GMAC Commercial Mortgage Securities, Inc. |
572,000 | 569,673 | ||||||
| Greenwich Capital Commercial Funding Corp. |
1,100,000 | 1,170,467 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 53 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Commercial Mortgage-Backed Securities (continued) | ||||||||
| 2004-GG1 A7 |
$ | 1,052,000 | $ | 1,134,682 | ||||
| J.P. Morgan Chase Commercial Mortgage |
1,000,000 | 1,059,738 | ||||||
| 2005-LDP5 A4 |
720,000 | 775,126 | ||||||
| 2001-C1 A3 |
902,370 | 913,602 | ||||||
| LB UBS Commercial Mortgage Trust |
1,500,000 | 1,585,003 | ||||||
| Merrill Lynch Mortgage Trust |
1,110,000 | 1,168,742 | ||||||
| Morgan Stanley Capital I |
105,438 | 107,642 | ||||||
| 2005-HQ7 AAB |
1,500,000 | 1,574,733 | ||||||
| NCUA Guaranteed Notes |
560,000 | 544,475 | ||||||
| Salomon Brothers Mortgage Securities VII, Inc. |
839,000 | 884,438 | ||||||
| SBA Tower Trust |
1,500,000 | 1,552,212 | ||||||
| Wachovia Bank Commercial Mortgage Trust |
561,000 | 590,264 | ||||||
| 2005-C18 A4 |
705,000 | 749,357 | ||||||
| Total Commercial Mortgage-Backed Securities (Cost $25,702,704) |
26,777,015 | |||||||
| Principal Amount |
Value | |||||||
| Corporate Bonds – 33.4% | ||||||||
| Aerospace & Defense – 0.2% | ||||||||
| L-3 Communications Corp. |
125,000 | 127,077 | ||||||
| TRW, Inc. |
150,000 | 193,282 | ||||||
|
|
|
|||||||
| 320,359 | ||||||||
| 54 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Automotive – 0.8% | ||||||||
| BorgWarner, Inc. |
$ | 500,000 | $ | 493,631 | ||||
| DaimlerChrysler NA Holdings |
80,000 | 90,565 | ||||||
| Ford Motor Credit Co. LLC |
650,000 | 716,110 | ||||||
|
|
|
|||||||
| 1,300,306 | ||||||||
| Banking – 6.0% | ||||||||
| American Express Bank FSB |
250,000 | 278,600 | ||||||
| Bank of America Corp. |
400,000 | 444,632 | ||||||
| Barclays Bank PLC |
400,000 | 408,503 | ||||||
| Citigroup, Inc. |
850,000 | 931,323 | ||||||
| City National Corp. |
300,000 | 313,964 | ||||||
| Credit Suisse/New York NY |
250,000 | 256,075 | ||||||
| 5.30% due 8/13/2019 |
150,000 | 158,441 | ||||||
| Deutsche Bank AG London |
300,000 | 336,069 | ||||||
| Discover Bank |
400,000 | 430,017 | ||||||
| HSBC USA, Inc. |
200,000 | 208,530 | ||||||
| Huntington BancShares, Inc. |
400,000 | 421,157 | ||||||
| JPMorgan Chase Bank N.A. |
650,000 | 720,565 | ||||||
| Lloyds TSB Bank PLC |
350,000 | 345,578 | ||||||
| Merrill Lynch & Co., Inc. |
250,000 | 264,725 | ||||||
| Morgan Stanley |
550,000 | 581,922 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 55 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Banking (continued) | ||||||||
| PNC Bank N.A. |
$ | 200,000 | $ | 228,612 | ||||
| Regions Financial Corp. |
500,000 | 487,500 | ||||||
| Santander U.S. Debt S.A. Unipersonal |
400,000 | 378,984 | ||||||
| The Bear Stearns Cos. LLC |
200,000 | 212,568 | ||||||
| The Goldman Sachs Group, Inc. |
400,000 | 429,754 | ||||||
| Sr. Nt. |
500,000 | 516,680 | ||||||
| 5.625% due 1/15/2017 |
80,000 | 84,595 | ||||||
| UBS AG Stamford CT |
400,000 | 406,936 | ||||||
| USB Realty Corp. |
250,000 | 188,437 | ||||||
| Wells Fargo Bank NA |
300,000 | 331,011 | ||||||
|
|
|
|||||||
| 9,365,178 | ||||||||
| Brokerage – 0.7% | ||||||||
| Jefferies Group, Inc. |
300,000 | 294,871 | ||||||
| Lehman Brothers Holdings Capital Trust VII |
200,000 | 20 | ||||||
| Nomura Holdings, Inc. |
400,000 | 417,036 | ||||||
| The Charles Schwab Corp. |
300,000 | 326,230 | ||||||
|
|
|
|||||||
| 1,038,157 | ||||||||
| Building Materials – 0.5% | ||||||||
| CRH America, Inc. |
350,000 | 373,470 | ||||||
| Masco Corp. |
400,000 | 419,322 | ||||||
|
|
|
|||||||
| 792,792 | ||||||||
| 56 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Chemicals – 0.7% | ||||||||
| FMC Corp. |
$ | 250,000 | $ | 258,111 | ||||
| Incitec Pivot Finance LLC |
300,000 | 307,207 | ||||||
| Lubrizol Corp. |
200,000 | 251,691 | ||||||
| The Dow Chemical Co. |
250,000 | 270,432 | ||||||
|
|
|
|||||||
| 1,087,441 | ||||||||
| Construction Machinery – 0.2% | ||||||||
| Joy Global, Inc. |
300,000 | 324,992 | ||||||
|
|
|
|||||||
| 324,992 | ||||||||
| Consumer Products – 0.1% | ||||||||
| Whirlpool Corp. |
200,000 | 215,523 | ||||||
|
|
|
|||||||
| 215,523 | ||||||||
| Diversified Manufacturing – 0.1% | ||||||||
| Siemens Financieringsmat N.V. |
200,000 | 225,783 | ||||||
|
|
|
|||||||
| 225,783 | ||||||||
| Electric – 1.2% | ||||||||
| Alabama Power Co. |
300,000 | 299,932 | ||||||
| Duquesne Light Holdings, Inc. |
300,000 | 308,191 | ||||||
| Florida Power & Light Co. |
200,000 | 191,761 | ||||||
| Nevada Power Co. |
250,000 | 279,708 | ||||||
| PPL Electric Utilities Corp. |
400,000 | 452,140 | ||||||
| Virginia Electric and Power Co. |
200,000 | 289,924 | ||||||
|
|
|
|||||||
| 1,821,656 | ||||||||
| Energy – 2.7% | ||||||||
| BP Capital Markets PLC |
400,000 | 399,036 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 57 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Energy (continued) | ||||||||
| Canadian Natural Resources Ltd. |
$ | 150,000 | $ | 165,740 | ||||
| Dolphin Energy Ltd. |
692,175 | 740,627 | ||||||
| Hess Corp. |
500,000 | 496,366 | ||||||
| Husky Energy, Inc. |
150,000 | 164,849 | ||||||
| Motiva Enterprises LLC |
300,000 | 336,513 | ||||||
| Suncor Energy, Inc. |
300,000 | 333,043 | ||||||
| Tosco Corp. |
125,000 | 161,907 | ||||||
| Transocean, Inc. |
200,000 | 210,058 | ||||||
| Valero Energy Corp. |
150,000 | 186,192 | ||||||
| Weatherford International Ltd. |
200,000 | 212,147 | ||||||
| Western Oil Sands, Inc. |
350,000 | 380,808 | ||||||
| Whiting Petroleum Corp. |
400,000 | 404,000 | ||||||
|
|
|
|||||||
| 4,191,286 | ||||||||
| Entertainment – 0.4% | ||||||||
| Time Warner, Inc. |
350,000 | 424,117 | ||||||
| Viacom, Inc. |
200,000 | 229,470 | ||||||
|
|
|
|||||||
| 653,587 | ||||||||
| Food And Beverage – 0.5% | ||||||||
| Anheuser-Busch InBev Worldwide, Inc. |
250,000 | 263,304 | ||||||
| Diageo Capital PLC |
125,000 | 140,224 | ||||||
| 58 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Food And Beverage (continued) | ||||||||
| Kraft Foods, Inc. |
$ | 125,000 | $ | 140,079 | ||||
| Mead Johnson Nutrition Co. |
300,000 | 316,459 | ||||||
|
|
|
|||||||
| 860,066 | ||||||||
| Government Related – 1.0% | ||||||||
| Korea Electric Power Corp. |
250,000 | 268,502 | ||||||
| Pemex Project Funding Master Trust |
175,000 | 187,108 | ||||||
| Petrobras International Finance Co. |
400,000 | 425,927 | ||||||
| RAS Laffan Liquefied Natural Gas Co. Ltd. |
550,000 | 637,968 | ||||||
|
|
|
|||||||
| 1,519,505 | ||||||||
| Health Insurance – 0.3% | ||||||||
| UnitedHealth Group, Inc. |
125,000 | 138,020 | ||||||
| WellPoint, Inc. |
300,000 | 297,663 | ||||||
|
|
|
|||||||
| 435,683 | ||||||||
| Healthcare – 0.8% | ||||||||
| Beckman Coulter, Inc. |
250,000 | 274,416 | ||||||
| Becton Dickinson and Co. |
250,000 | 271,299 | ||||||
| Bio-Rad Laboratories, Inc. |
400,000 | 388,391 | ||||||
| McKesson Corp. |
200,000 | 242,952 | ||||||
|
|
|
|||||||
| 1,177,058 | ||||||||
| Independent Energy – 0.2% | ||||||||
| Nexen, Inc. |
225,000 | 242,274 | ||||||
|
|
|
|||||||
| 242,274 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 59 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Industrial - Other – 0.2% | ||||||||
| Princeton University |
$ | 300,000 | $ | 322,026 | ||||
|
|
|
|||||||
| 322,026 | ||||||||
| Insurance - Life – 2.4% | ||||||||
| American International Group, Inc. |
200,000 | 206,228 | ||||||
| AXA SA |
200,000 | 178,500 | ||||||
| Genworth Financial, Inc. |
600,000 | 614,171 | ||||||
| MetLife, Inc. |
125,000 | 117,500 | ||||||
| Sr. Nt. Series A |
400,000 | 466,353 | ||||||
| New York Life Insurance Co. |
300,000 | 353,729 | ||||||
| Prudential Financial, Inc. |
400,000 | 471,616 | ||||||
| Symetra Financial Corp. |
300,000 | 302,561 | ||||||
| Teachers Insurance & Annuity Association of America |
300,000 | 351,001 | ||||||
| The Hartford Financial Services Group, Inc. |
300,000 | 304,325 | ||||||
| UnumProvident Finance Co. |
300,000 | 332,786 | ||||||
|
|
|
|||||||
| 3,698,770 | ||||||||
| Insurance P&C – 1.4% | ||||||||
| Ace INA Holdings, Inc. |
200,000 | 221,032 | ||||||
| Allied World Assurance Co. Hldgs. Ltd. |
335,000 | 370,918 | ||||||
| Berkshire Hathaway Finance Corp. |
400,000 | 420,348 | ||||||
| CNA Financial Corp. |
300,000 | 307,931 | ||||||
| 60 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Insurance P&C (continued) | ||||||||
| Liberty Mutual Group, Inc. |
$ | 100,000 | $ | 99,425 | ||||
| The Northwestern Mutual Life Insurance Co. |
400,000 | 441,818 | ||||||
| The Travelers Cos., Inc. |
300,000 | 333,556 | ||||||
|
|
|
|||||||
| 2,195,028 | ||||||||
| Media Cable – 1.1% | ||||||||
| Comcast Corp. |
350,000 | 373,963 | ||||||
| 6.50% due 1/15/2017 |
500,000 | 576,386 | ||||||
| Time Warner Cable, Inc. |
700,000 | 781,058 | ||||||
|
|
|
|||||||
| 1,731,407 | ||||||||
| Media Noncable – 0.5% | ||||||||
| Discovery Communications LLC |
300,000 | 329,238 | ||||||
| News America Holdings, Inc. |
150,000 | 184,503 | ||||||
| Scholastic Corp. |
300,000 | 300,750 | ||||||
|
|
|
|||||||
| 814,491 | ||||||||
| Metals And Mining – 1.8% | ||||||||
| Allegheny Technologies, Inc. |
400,000 | 467,298 | ||||||
| ArcelorMittal |
250,000 | 266,372 | ||||||
| Cliffs Natural Resources, Inc. |
400,000 | 421,414 | ||||||
| FMG Resources |
500,000 | 500,000 | ||||||
| Freeport-McMoRan Copper & Gold, Inc. |
300,000 | 331,875 | ||||||
| Steel Dynamics, Inc. |
500,000 | 506,250 | ||||||
| Teck Resources Ltd. |
250,000 | 274,516 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 61 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Metals And Mining (continued) | ||||||||
| Vale Overseas Ltd. |
$ | 100,000 | $ | 111,511 | ||||
|
|
|
|||||||
| 2,879,236 | ||||||||
| Non Captive Consumer – 0.2% | ||||||||
| Household Finance Corp. |
300,000 | 325,250 | ||||||
|
|
|
|||||||
| 325,250 | ||||||||
| Non Captive Diversified – 0.7% | ||||||||
| General Electric Capital Corp. |
450,000 | 490,731 | ||||||
| 6.75% due 3/15/2032 |
200,000 | 226,424 | ||||||
| KKR Group Finance Co. |
400,000 | 398,291 | ||||||
|
|
|
|||||||
| 1,115,446 | ||||||||
| Paper – 0.5% | ||||||||
| Georgia-Pacific LLC |
500,000 | 494,340 | ||||||
| Rock-Tenn Co. |
350,000 | 359,625 | ||||||
|
|
|
|||||||
| 853,965 | ||||||||
| Pharmaceuticals – 0.6% | ||||||||
| Abbott Laboratories |
300,000 | 330,319 | ||||||
| Astrazeneca PLC |
150,000 | 178,081 | ||||||
| Pfizer, Inc. |
300,000 | 351,408 | ||||||
| Wyeth |
125,000 | 138,329 | ||||||
|
|
|
|||||||
| 998,137 | ||||||||
| Pipelines – 1.5% | ||||||||
| Boardwalk Pipelines LLC |
400,000 | 427,301 | ||||||
| Energy Transfer Partners LP |
225,000 | 255,256 | ||||||
| 8.50% due 4/15/2014 |
250,000 | 290,266 | ||||||
| Enterprise Products Operating LLC |
400,000 | 414,409 | ||||||
| 8.375% due 8/1/2066(1) |
100,000 | 107,375 | ||||||
| Magellan Midstream Partners LP |
400,000 | 456,003 | ||||||
| 62 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Pipelines (continued) | ||||||||
| Williams Partners LP |
$ | 350,000 | $ | 362,810 | ||||
|
|
|
|||||||
| 2,313,420 | ||||||||
| Railroads – 0.1% | ||||||||
| Canadian National Railway Co. |
200,000 | 225,797 | ||||||
|
|
|
|||||||
| 225,797 | ||||||||
| REITs – 1.2% | ||||||||
| CommonWealth REIT |
300,000 | 288,723 | ||||||
| Equity One, Inc. |
300,000 | 316,583 | ||||||
| ERP Operating LP |
200,000 | 218,672 | ||||||
| Liberty Property LP |
200,000 | 202,289 | ||||||
| ProLogis |
400,000 | 424,690 | ||||||
| WEA FIN LLC/WCI FIN LLC |
350,000 | 371,044 | ||||||
|
|
|
|||||||
| 1,822,001 | ||||||||
| Retailers – 0.9% | ||||||||
| Macy’s Retail Holdings, Inc. |
350,000 | 373,625 | ||||||
| 6.625% due 4/1/2011 |
350,000 | 354,375 | ||||||
| Nebraska Book Co. |
150,000 | 149,250 | ||||||
| Nordstrom, Inc. |
250,000 | 281,327 | ||||||
| Target Corp. |
150,000 | 183,890 | ||||||
|
|
|
|||||||
| 1,342,467 | ||||||||
| Technology – 1.2% | ||||||||
| Agilent Technologies, Inc. |
250,000 | 271,548 | ||||||
| Cisco Systems, Inc. |
125,000 | 142,639 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 63 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Technology (continued) | ||||||||
| Computer Sciences Corp. |
$ | 200,000 | $ | 217,743 | ||||
| Corning, Inc. |
250,000 | 288,534 | ||||||
| International Business Machines Corp. |
100,000 | 114,776 | ||||||
| Kla-Tencor Corp. |
500,000 | 550,003 | ||||||
| National Semiconductor Corp. |
250,000 | 276,189 | ||||||
|
|
|
|||||||
| 1,861,432 | ||||||||
| Wireless – 1.0% | ||||||||
| America Movil S.A.B. de C.V. |
500,000 | 520,402 | ||||||
| American Tower Corp. |
400,000 | 417,875 | ||||||
| Cellco Partnership |
150,000 | 165,406 | ||||||
| Vodafone Group PLC |
||||||||
| Sr. Nt. |
||||||||
| 5.45% due 6/10/2019 |
300,000 | 329,668 | ||||||
| 6.15% due 2/27/2037 |
100,000 | 107,050 | ||||||
|
|
|
|||||||
| 1,540,401 | ||||||||
| Wirelines – 1.7% | ||||||||
| AT&T, Inc. |
400,000 | 421,979 | ||||||
| Deutsche Telekom International Finance BV |
250,000 | 335,987 | ||||||
| France Telecom S.A. |
115,000 | 156,334 | ||||||
| Qwest Communications International, Inc. |
500,000 | 517,500 | ||||||
| Qwest Corp. |
400,000 | 412,000 | ||||||
| Telecom Italia Capital |
150,000 | 153,579 | ||||||
| Verizon Communications, Inc. |
||||||||
| 5.55% due 2/15/2016 |
225,000 | 252,208 | ||||||
| 6.40% due 2/15/2038 |
350,000 | 387,165 | ||||||
|
|
|
|||||||
| 2,636,752 | ||||||||
| Total Corporate Bonds (Cost $48,777,207) |
52,247,672 | |||||||
| 64 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Hybrid ARMS – 0.4% | ||||||||
| FNMA |
||||||||
| 5.748% due 12/1/2036(1)(3) |
$ | 375,472 | $ | 396,531 | ||||
| 6.228% due 8/1/2046(1) |
294,857 | 308,353 | ||||||
| Total Hybrid ARMS (Cost $674,907) |
704,884 | |||||||
| Principal Amount |
Value | |||||||
| Mortgage Pass-Through Securities – 17.8% | ||||||||
| FHLMC |
||||||||
| 4.00% due 12/1/2040 |
5,500,000 | 5,465,708 | ||||||
| 5.50% due 6/1/2038 |
1,555,661 | 1,659,272 | ||||||
| 7.00% due 9/1/2038 |
271,911 | 306,808 | ||||||
| FNMA |
||||||||
| 4.00% due 11/1/2040 |
1,791,225 | 1,783,695 | ||||||
| 4.50% due 12/1/2040(7) |
4,200,000 | 4,310,905 | ||||||
| 5.00% due 12/1/2034 - 12/1/2039 |
7,086,894 | 7,456,420 | ||||||
| 5.50% due 4/1/2022(3) |
186,452 | 200,600 | ||||||
| 5.50% due 1/1/2038 |
5,349,999 | 5,728,301 | ||||||
| 6.00% due 8/1/2021 |
284,517 | 311,858 | ||||||
| 6.50% due 1/1/2013 - 7/1/2014 |
86,604 | 94,384 | ||||||
| 7.00% due 6/1/2012 - 6/1/2032 |
173,151 | 195,401 | ||||||
| 7.50% due 12/1/2029 - 2/1/2031 |
150,419 | 172,400 | ||||||
| 8.00% due 6/1/2030 - 9/1/2030 |
63,241 | 73,139 | ||||||
| GNMA |
122,368 | 136,063 | ||||||
| Total Mortgage Pass-Through Securities (Cost $27,626,027) |
27,894,954 | |||||||
| Principal Amount |
Value | |||||||
| Municipal Bonds – 2.2% | ||||||||
| Arizona Water Infrastructure Finance Authority Revenue Water Quality-Series
A |
300,000 | 309,690 | ||||||
| California State General Obligation |
200,000 | 208,996 | ||||||
| Chicago Illinois Metropolitan Water Reclamation District Greater Chicago General
Obligation Build America Bonds-Taxable Direct Payment |
400,000 | 397,424 | ||||||
| Illinois State Toll Highway Authority Toll Highway Revenue Build America
Bonds-Series A |
400,000 | 391,700 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 65 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Municipal Bonds (continued) | ||||||||
| Massachusetts Bay Transportation Authority Revenue Series A |
$ | 600,000 | $ | 619,098 | ||||
| Massachusetts State Health & Educational Facilities Authority
Revenue |
340,000 | 361,359 | ||||||
| New York City Municipal Water Finance Authority Water & Sewer
Revenue |
400,000 | 399,636 | ||||||
| Oregon School Board Association |
200,000 | 177,890 | ||||||
| San Diego County California Water Authority
Financing Agency Water Revenue |
500,000 | 500,695 | ||||||
| Total Municipal Bonds (Cost $3,363,363) |
3,366,488 | |||||||
| Principal Amount |
Value | |||||||
| U.S. Treasury – 3.7% | ||||||||
| U.S. Treasury Bonds |
||||||||
| 3.875% due 8/15/2040 |
1,190,000 | 1,096,102 | ||||||
| 4.25% due 11/15/2040 |
400,000 | 393,500 | ||||||
| 4.375% due 5/15/2040 |
1,504,000 | 1,511,279 | ||||||
| 6.625% due 2/15/2027 |
650,000 | 854,953 | ||||||
| U.S. Treasury Notes |
||||||||
| 1.875% due 10/31/2017 |
450,000 | 427,781 | ||||||
| 2.625% due 11/15/2020 |
1,530,000 | 1,443,220 | ||||||
| Total U.S. Treasury (Cost $5,953,159) |
5,726,835 | |||||||
| Principal Amount |
Value | |||||||
| Short-Term Investments – 2.9% | ||||||||
| Barclays U.S. Funding Corp. |
3,000,000 | 2,999,770 | ||||||
| Massachusetts Mutual Life Insurance Co. |
1,500,000 | 1,499,885 | ||||||
| Total Short-Term Investments (Cost $4,499,655) |
4,499,655 | |||||||
| 66 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS INVESTMENT QUALITY BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Repurchase Agreements – 4.2% | ||||||||
| State Street Bank and Trust Co. Repurchase Agreement, 0.09%, dated 12/31/2010, maturity value of $6,574,049, due 1/3/2011(8) |
$ | 6,574,000 | $ | 6,574,000 | ||||
| Total Repurchase Agreements (Cost $6,574,000) |
6,574,000 | |||||||
| Total Investments - 104.5% (Cost $158,330,190) |
163,411,446 | |||||||
| Other Liabilities, Net - (4.5)% | (7,053,194 | ) | ||||||
| Total Net Assets - 100.0% | $ | 156,358,252 | ||||||
| (1) | Variable rate securities, which may include step-up bonds or adjustable rate mortgages. The rate shown is the rate in effect at December 31, 2010. |
| (2) | Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, normally to certain qualified buyers. At December 31, 2010, the aggregate market value of these securities amounted to $16,832,943, representing 10.8% of net assets. These securities have been deemed liquid by the investment adviser pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (3) | Securities are segregated to cover to be announced securities, TBA. |
| (4) | Maturity is perpetual. Maturity date presented represents the next call date. |
| (5) | Non-income producing security. In case of a bond, generally denotes that the issuer has defaulted on the payment of principal or interest or has filed for bankruptcy. The following table presents bonds that are in default. |
| Security | Coupon | Maturity Date | Principal Amount |
Acquisition Cost |
Value | |||||||||||||||
| Lehman Brothers Holdings Capital Trust VII |
5.857% | 5/31/2012 | $ | 200,000 | $ | 200,312 | $ | 20 | ||||||||||||
| (6) | The table below presents securities deemed illiquid by the investment adviser. |
| Security | Principal Amount |
Acquisition Cost |
Value | Acquisition Date |
% of Fund’s Net Assets |
|||||||||||||||
| Symetra Financial Corp. |
$ | 300,000 | $ | 298,671 | $ | 302,561 | 3/23/2006 | 0.19% | ||||||||||||
| (7) | TBA — To be announced. |
| (8) | The table below presents collateral for repurchase agreements. |
| Security | Coupon | Maturity Date |
Value | |||||||||
| U.S. Treasury Note |
1.375% | 5/15/2013 | $ | 6,706,057 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 67 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS INVESTMENT QUALITY BOND FUND
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Asset Backed Securities |
$ | — | $ | 7,643,620 | $ | — | $ | 7,643,620 | ||||||||
| Collateralized Mortgage Obligations |
— | 26,094,791 | — | 26,094,791 | ||||||||||||
| Senior Secured Loans |
— | 1,881,532 | — | 1,881,532 | ||||||||||||
| Commercial Mortgage-Backed Securities |
— | 26,777,015 | — | 26,777,015 | ||||||||||||
| Corporate Bonds |
— | 52,247,672 | — | 52,247,672 | ||||||||||||
| Hybrid ARMS |
— | 704,884 | — | 704,884 | ||||||||||||
| Mortgage Pass-Through Securities |
— | 27,894,954 | — | 27,894,954 | ||||||||||||
| Municipal Bonds |
— | 3,366,488 | — | 3,366,488 | ||||||||||||
| U.S. Treasury |
— | 5,726,835 | — | 5,726,835 | ||||||||||||
| Short-Term Investments |
— | 4,499,655 | — | 4,499,655 | ||||||||||||
| Repurchase Agreements |
— | 6,574,000 | — | 6,574,000 | ||||||||||||
| Total | $ | — | $ | 163,411,446 | $ | — | $ | 163,411,446 | ||||||||
| 68 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Asset Backed Securities – 19.2% | ||||||||
| Ally Auto Receivables Trust |
$ | 5,500,000 | $ | 5,490,346 | ||||
| Ally Master Owner Trust |
3,200,000 | 3,277,209 | ||||||
| American Express Credit Account Master Trust |
5,285,000 | 5,463,670 | ||||||
| AmeriCredit Automobile Receivables Trust |
4,100,000 | 4,091,457 | ||||||
| Ameriquest Mortgage Securities, Inc. |
188,543 | 169,232 | ||||||
| Bank of America Auto Trust |
1,550,000 | 1,577,361 | ||||||
| 2009-2A A4 |
2,260,000 | 2,332,109 | ||||||
| BMW Vehicle Lease Trust |
6,320,000 | 6,433,368 | ||||||
| Capital One Multi-Asset Execution Trust |
3,830,000 | 4,055,261 | ||||||
| CenterPoint Energy Transition Bond Co. LLC |
5,264,156 | 5,655,324 | ||||||
| 2001-1 A4 |
413,944 | 445,267 | ||||||
| Chase Funding Mortgage Loan Trust |
319,088 | 315,943 | ||||||
| Citibank Credit Card Issuance Trust |
6,050,000 | 6,681,177 | ||||||
| CitiFinancial Mortgage Securities, Inc. |
211,453 | 213,427 | ||||||
| CNH Equipment Trust |
3,854,000 | 3,971,239 | ||||||
| 2007-C A4A |
915,760 | 935,462 | ||||||
| Daimler Chrysler Auto Trust |
6,500,000 | 6,664,767 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 69 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Asset Backed Securities (continued) | ||||||||
| Ford Credit Floorplan Master Owner Trust |
$ | 4,115,000 | $ | 4,235,951 | ||||
| GE Capital Credit Card Master Note Trust |
2,100,000 | 2,135,314 | ||||||
| 2009-3 A |
2,760,000 | 2,793,160 | ||||||
| GE Equipment Midticket LLC |
3,048,323 | 3,078,309 | ||||||
| Harley-Davidson Motorcycle Trust |
8,000,000 | 8,264,866 | ||||||
| Hertz Vehicle Financing LLC |
5,770,000 | 6,037,591 | ||||||
| Honda Auto Receivables Owner Trust |
6,310,000 | 6,211,397 | ||||||
| Hyundai Auto Receivables Trust |
1,890,000 | 1,968,175 | ||||||
| John Deere Owner Trust |
2,000,000 | 2,041,479 | ||||||
| Mercedes-Benz Auto Receivables Trust |
2,000,000 | 2,019,926 | ||||||
| Navistar Financial Corp. Owner Trust |
5,600,000 | 5,663,700 | ||||||
| Nissan Auto Lease Trust |
6,570,000 | 6,614,351 | ||||||
| PG&E Energy Recovery Funding LLC |
6,453,016 | 6,649,178 | ||||||
| 2005-1 A5 |
580,000 | 614,615 | ||||||
| Residential Asset Mortgage Products, Inc. |
25,408 | 14,294 | ||||||
| Toyota Auto Receivables Owner Trust |
2,000,000 | 1,983,758 | ||||||
| 70 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Asset Backed Securities (continued) | ||||||||
| USAA Auto Owner Trust |
$ | 1,500,000 | $ | 1,530,907 | ||||
| Volkswagen Auto Lease Trust |
3,600,000 | 3,578,610 | ||||||
| World Omni Auto Receivables Trust |
2,200,000 | 2,245,723 | ||||||
| World Omni Automobile Lease Securitization
Trust |
1,900,000 | 1,912,356 | ||||||
| Total Asset Backed Securities (Cost $126,893,728) |
127,366,279 | |||||||
| Principal Amount |
Value | |||||||
| Collateralized Mortgage Obligations – 12.3% | ||||||||
| Banc of America Mortgage Securities, Inc. |
746,754 | 747,340 | ||||||
| Cendant Mortgage Corp. |
1,210,265 | 1,239,793 | ||||||
| Chase Mortgage Finance Corp. |
4,059,970 | 4,167,100 | ||||||
| 2003-S14 3A1 |
2,077,532 | 2,124,478 | ||||||
| Citicorp Mortgage Securities, Inc. |
3,128,822 | 3,182,062 | ||||||
| Countrywide Alternative Loan Trust |
522,750 | 516,563 | ||||||
| Countrywide Home Loans Trust |
5,228,172 | 5,315,294 | ||||||
| CS First Boston Mortgage Securities Corp. |
1,966,734 | 2,023,939 | ||||||
| 2003-27 5A2 |
2,368,211 | 2,398,334 | ||||||
| 2003-27 5A1 |
452,492 | 460,031 | ||||||
| 2003-11 1A31 |
2,181,650 | 2,242,616 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 71 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Collateralized Mortgage Obligations (continued) | ||||||||
| FHLMC 1534 Z |
$ | 118,918 | $ | 118,864 | ||||
| 20 H |
57,871 | 61,652 | ||||||
| FNMA 2003-63 GU |
7,850 | 8,084 | ||||||
| 2005-39 CL |
60,640 | 61,527 | ||||||
| 2006-45 AC |
55,454 | 57,976 | ||||||
| 2002-52 PB |
153,539 | 157,966 | ||||||
| GMAC Mortgage Corp. Loan Trust |
1,456,170 | 1,484,896 | ||||||
| 2004-J6 2A1 |
733,657 | 733,086 | ||||||
| GNMA |
9,886 | 9,927 | ||||||
| J.P. Morgan Mortgage Trust |
2,816,029 | 2,864,926 | ||||||
| 2004-S2 1A3 |
2,103,179 | 2,127,575 | ||||||
| 2004-S1 1A7 |
3,360,779 | 3,451,762 | ||||||
| Master Asset Securitization Trust |
3,500,000 | 3,590,737 | ||||||
| 2003-5 2A1 |
654,550 | 671,633 | ||||||
| Morgan Stanley Mortgage Loan Trust |
2,546,288 | 2,615,782 | ||||||
| Prime Mortgage Trust |
2,651,394 | 2,709,799 | ||||||
| 2004-2 A3 |
1,465,593 | 1,506,359 | ||||||
| 2003-3 A9 |
2,765,509 | 2,911,522 | ||||||
| RAAC Series |
63,102 | 62,918 | ||||||
| Residential Asset Mortgage Products, Inc. |
56,056 | 56,615 | ||||||
| 72 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Collateralized Mortgage Obligations (continued) | ||||||||
| Residential Asset Securitization Trust |
$ | 2,588,079 | $ | 2,604,379 | ||||
| Residential Funding Mortgage Securities I |
3,933,167 | 3,962,568 | ||||||
| 2005-S1 2A1 |
2,891,153 | 2,951,735 | ||||||
| 2003-S20 1A4 |
1,332,186 | 1,353,076 | ||||||
| Structured Asset Securities Corp. |
3,047,075 | 3,090,438 | ||||||
| 2003-30 3A1 |
1,643,287 | 1,679,450 | ||||||
| Wells Fargo Mortgage Backed Securities Trust |
1,246,472 | 1,274,145 | ||||||
| 2003-8 A1 |
1,141,284 | 1,169,365 | ||||||
| 2003-N 2A1 |
5,297,055 | 5,477,780 | ||||||
| 2005-1 1A1 |
2,014,626 | 2,051,582 | ||||||
| 2003-6 1A1 |
1,527,104 | 1,569,229 | ||||||
| 2004-2 A1 |
2,280,843 | 2,337,981 | ||||||
| 2006-7 1A1 |
1,146,781 | 1,159,580 | ||||||
| 2003-17 1A4 |
1,128,417 | 1,126,957 | ||||||
| Total Collateralized Mortgage Obligations (Cost $81,351,041) |
81,489,421 | |||||||
| Principal Amount |
Value | |||||||
| Senior Secured Loans – 1.7% | ||||||||
| Energy – 0.4% | ||||||||
| CITGO Petroleum Corp. |
2,487,500 | 2,590,632 | ||||||
|
|
|
|||||||
| 2,590,632 | ||||||||
| Finance Companies – 0.5% | ||||||||
| AGFS Funding Co. |
800,000 | 811,312 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 73 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Finance Companies (continued) | ||||||||
| Interactive Data Corp. |
$ | 2,686,500 | $ | 2,715,272 | ||||
|
|
|
|||||||
| 3,526,584 | ||||||||
| Food – 0.1% | ||||||||
| Dole Food Co., Inc. |
210,177 | 211,341 | ||||||
| Term Loan C |
522,026 | 524,918 | ||||||
|
|
|
|||||||
| 736,259 | ||||||||
| Healthcare – 0.6% | ||||||||
| Grifols, Inc. |
3,000,000 | 3,029,430 | ||||||
| IMS Health, Inc. |
742,680 | 749,312 | ||||||
|
|
|
|||||||
| 3,778,742 | ||||||||
| Technology – 0.1% | ||||||||
| Dealer Computer Services, Inc. |
709,890 | 713,887 | ||||||
|
|
|
|||||||
| 713,887 | ||||||||
| Total Senior Secured Loans (Cost $11,006,832) |
11,346,104 | |||||||
| Principal Amount |
Value | |||||||
| Commercial Mortgage-Backed Securities – 22.9% | ||||||||
| American Tower Trust |
2,052,000 | 2,218,740 | ||||||
| Asset Securitization Corp. |
2,000,000 | 2,081,616 | ||||||
| Banc of America Commercial Mortgage, Inc. |
2,000,000 | 2,099,637 | ||||||
| 2005-6 A4 |
4,900,000 | 5,262,888 | ||||||
| Bear Stearns Commercial Mortgage Securities |
500,000 | 527,570 | ||||||
| 2003-T10 A2 |
2,014,000 | 2,117,430 | ||||||
| 74 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Commercial Mortgage-Backed Securities (continued) | ||||||||
| 2003-PWR2 A4 |
$ | 3,695,000 | $ | 3,941,913 | ||||
| 1999-C1 B |
884,922 | 917,392 | ||||||
| CDC Commercial Mortgage Trust |
2,000,000 | 2,066,260 | ||||||
| Chase Commercial Mortgage Securities Corp. |
1,312,187 | 1,389,654 | ||||||
| Commercial Mortgage Asset Trust |
45,792 | 45,846 | ||||||
| 1999-C1 B |
3,000,000 | 3,292,340 | ||||||
| Commercial Mortgage Pass-Through Certificates |
516,656 | 526,312 | ||||||
| 2004-LB2A A3 |
459,113 | 461,071 | ||||||
| Crown Castle Towers LLC |
3,650,000 | 3,593,137 | ||||||
| 4.523% due 1/15/2015(1) |
1,950,000 | 2,026,257 | ||||||
| CS First Boston Mortgage Securities Corp. |
2,000,000 | 2,075,078 | ||||||
| 2002-CP5 A1 |
765,215 | 776,651 | ||||||
| 2004-C5 A2 |
133,327 | 133,213 | ||||||
| 2004-C2 A2 |
4,758,000 | 5,072,780 | ||||||
| 2001-CP4 A4 |
796,516 | 806,481 | ||||||
| 1997-C2 F |
2,425,000 | 2,689,003 | ||||||
| First Union-Lehman Brothers-Bank of America |
4,016,000 | 4,316,315 | ||||||
| GE Capital Commercial Mortgage Corp. |
355,000 | 371,142 | ||||||
| 2004-C1 B |
2,315,000 | 2,365,192 | ||||||
| 2003-C2 A4 |
5,300,000 | 5,632,387 | ||||||
| GMAC Commercial Mortgage Securities, Inc. |
2,690,000 | 2,895,823 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 75 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Commercial Mortgage-Backed Securities (continued) | ||||||||
| Greenwich Capital Commercial Funding Corp. |
$ | 190,076 | $ | 191,938 | ||||
| 2005-GG3 A3 |
4,000,000 | 4,091,852 | ||||||
| 2004-GG1 A7 |
4,415,000 | 4,761,999 | ||||||
| GS Mortgage Securities Corp. II |
69,505 | 69,854 | ||||||
| J.P. Morgan Chase Commercial Mortgage |
420,862 | 422,842 | ||||||
| 2005-LDP5 A4 |
3,500,000 | 3,767,973 | ||||||
| 2003-CB6 A2 |
3,450,000 | 3,691,439 | ||||||
| 2001-C1 A3 |
3,222,362 | 3,262,474 | ||||||
| LB Commercial Conduit Mortgage Trust |
2,500,000 | 2,655,790 | ||||||
| LB UBS Commercial Mortgage Trust |
5,025,000 | 5,296,350 | ||||||
| 2002-C7 A4 |
1,500,000 | 1,585,003 | ||||||
| 2003-C8 A4 |
3,515,000 | 3,756,358 | ||||||
| 2002-C1 A4 |
3,717,707 | 3,880,556 | ||||||
| Merrill Lynch Mortgage Investors Trust |
4,500,000 | 4,898,233 | ||||||
| Merrill Lynch Mortgage Trust |
5,135,000 | 5,443,142 | ||||||
| Morgan Stanley Capital I |
461,808 | 474,627 | ||||||
| 2004-HQ3 A4 |
1,810,000 | 1,896,243 | ||||||
| 2003-T11 A3 |
652,018 | 665,642 | ||||||
| 2005-HQ7 AAB |
1,253,000 | 1,315,427 | ||||||
| 76 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Commercial Mortgage-Backed Securities (continued) | ||||||||
| 2005-HQ5 A4 |
$ | 3,500,000 | $ | 3,745,857 | ||||
| 2004-IQ7 A4 |
6,000,000 | 6,408,256 | ||||||
| Morgan Stanley Dean Witter Capital I |
1,388,000 | 1,460,638 | ||||||
| Prudential Securities Secured Financing Corp. |
20,061 | 20,175 | ||||||
| Salomon Brothers Mortgage Securities VII, Inc. |
1,407,120 | 1,441,198 | ||||||
| 2002-KEY2 A3 |
1,725,000 | 1,795,539 | ||||||
| 1999-C1 G |
1,258,000 | 1,326,129 | ||||||
| TIAA Real Estate CDO Ltd. |
4,000,000 | 4,293,524 | ||||||
| Wachovia Bank Commercial Mortgage Trust |
4,900,000 | 5,049,626 | ||||||
| 2004-C10 A4 |
1,889,000 | 1,987,537 | ||||||
| 2003-C8 B |
1,727,000 | 1,786,481 | ||||||
| 2005-C21 A4 |
5,800,000 | 6,268,559 | ||||||
| 2004-C11 A5 |
3,810,000 | 4,053,959 | ||||||
| Total Commercial Mortgage-Backed Securities (Cost $150,309,338) |
151,467,348 | |||||||
| Principal Amount |
Value | |||||||
| Corporate Bonds – 38.9% | ||||||||
| Aerospace/Defense – 0.5% | ||||||||
| L-3 Communications Corp. |
3,000,000 | 3,090,000 | ||||||
|
|
|
|||||||
| 3,090,000 | ||||||||
| Automotive – 0.6% | ||||||||
| Daimler Finance North America LLC |
1,000,000 | 1,010,140 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 77 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Automotive (continued) | ||||||||
| Ford Motor Credit Co. LLC |
$ | 3,000,000 | $ | 3,189,627 | ||||
|
|
|
|||||||
| 4,199,767 | ||||||||
| Banking – 6.0% | ||||||||
| American Express Travel Related Services Co., Inc. |
2,000,000 | 2,064,074 | ||||||
| ANZ National Int’l Ltd. |
3,000,000 | 3,046,287 | ||||||
| Barclays Bank PLC |
1,500,000 | 1,524,353 | ||||||
| Capital One Financial Corp. |
3,000,000 | 3,096,918 | ||||||
| Citigroup, Inc. |
2,750,000 | 2,836,226 | ||||||
| Countrywide Home Loans, Inc. |
850,000 | 856,197 | ||||||
| Credit Suisse/New York NY |
1,250,000 | 1,296,044 | ||||||
| Deutsche Bank AG |
1,500,000 | 1,522,122 | ||||||
| Fifth Third Bancorp |
2,500,000 | 2,709,690 | ||||||
| Merrill Lynch & Co., Inc. |
2,000,000 | 2,117,798 | ||||||
| Morgan Stanley |
1,250,000 | 1,252,320 | ||||||
| 6.60% due 4/1/2012 |
1,250,000 | 1,331,835 | ||||||
| PNC Preferred Funding Trust III |
3,000,000 | 3,185,310 | ||||||
| Rabobank Nederland N.V. |
750,000 | 769,328 | ||||||
| Regions Financial Corp. |
2,000,000 | 1,950,000 | ||||||
| 78 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Banking (continued) | ||||||||
| The Goldman Sachs Group, Inc. |
$ | 2,750,000 | $ | 2,838,014 | ||||
| UBS AG Stamford CT |
2,500,000 | 2,521,335 | ||||||
| Union Bank N.A. |
2,500,000 | 2,495,655 | ||||||
| Westpac Banking Corp. |
2,500,000 | 2,525,392 | ||||||
|
|
|
|||||||
| 39,938,898 | ||||||||
| Building Materials – 0.9% | ||||||||
| CRH America, Inc. |
1,054,000 | 1,087,233 | ||||||
| Lafarge S.A. |
2,750,000 | 2,821,731 | ||||||
| Masco Corp. |
1,850,000 | 1,939,364 | ||||||
|
|
|
|||||||
| 5,848,328 | ||||||||
| Chemicals – 0.9% | ||||||||
| Airgas, Inc. |
2,500,000 | 2,519,587 | ||||||
| The Dow Chemical Co. |
3,000,000 | 3,162,537 | ||||||
|
|
|
|||||||
| 5,682,124 | ||||||||
| Construction Machinery – 0.3% | ||||||||
| Case New Holland, Inc. |
2,000,000 | 2,150,000 | ||||||
|
|
|
|||||||
| 2,150,000 | ||||||||
| Consumer Products – 0.7% | ||||||||
| Newell Rubbermaid, Inc. |
3,000,000 | 3,227,991 | ||||||
| Whirlpool Corp. |
1,525,000 | 1,643,366 | ||||||
|
|
|
|||||||
| 4,871,357 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 79 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Distributors – 0.2% | ||||||||
| ONEOK, Inc. |
$ | 1,040,000 | $ | 1,058,231 | ||||
|
|
|
|||||||
| 1,058,231 | ||||||||
| Electric – 2.8% | ||||||||
| AEP Texas North Co. |
1,350,000 | 1,450,794 | ||||||
| EDP Finance BV |
1,500,000 | 1,519,553 | ||||||
| FirstEnergy Corp. |
2,500,000 | 2,601,723 | ||||||
| FPL Group Capital, Inc. |
1,400,000 | 1,442,952 | ||||||
| Great Plains Energy, Inc. |
800,000 | 808,149 | ||||||
| MidAmerican Energy Holdings Co. |
1,250,000 | 1,287,404 | ||||||
| Mirant Mid Atlantic Pass Through Trust |
1,159,104 | 1,193,877 | ||||||
| National Rural Utilities Cooperative Finance Corp. |
2,000,000 | 1,976,880 | ||||||
| Sr. Sec. Nt. |
1,050,000 | 1,079,210 | ||||||
| New York State Electric & Gas Corp. |
1,732,000 | 1,831,768 | ||||||
| Oncor Electric Delivery Co. |
750,000 | 798,509 | ||||||
| Pacific Gas & Electric Co. |
650,000 | 653,687 | ||||||
| The AES Corp. |
2,000,000 | 2,135,000 | ||||||
|
|
|
|||||||
| 18,779,506 | ||||||||
| Energy – 1.3% | ||||||||
| BP Capital Markets PLC |
3,000,000 | 3,067,623 | ||||||
| 80 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Energy (continued) | ||||||||
| Chevron Corp. |
$ | 500,000 | $ | 515,933 | ||||
| OPTI Canada, Inc. |
2,500,000 | 2,506,250 | ||||||
| Woodside Finance Ltd. |
2,500,000 | 2,686,165 | ||||||
|
|
|
|||||||
| 8,775,971 | ||||||||
| Environmental – 0.2% | ||||||||
| Allied Waste North America, Inc. |
1,000,000 | 1,014,770 | ||||||
|
|
|
|||||||
| 1,014,770 | ||||||||
| Food And Beverage – 2.5% | ||||||||
| Anheuser-Busch InBev Worldwide, Inc. |
1,500,000 | 1,534,959 | ||||||
| 3.00% due 10/15/2012 |
1,000,000 | 1,031,812 | ||||||
| Coca-Cola Enterprises, Inc. |
2,000,000 | 1,980,510 | ||||||
| Diageo Finance BV |
600,000 | 604,711 | ||||||
| Dr. Pepper Snapple Group, Inc. |
1,500,000 | 1,513,391 | ||||||
| Kraft Foods, Inc. |
2,000,000 | 2,056,836 | ||||||
| Mead Johnson Nutrition Co. |
1,750,000 | 1,809,642 | ||||||
| PepsiAmericas, Inc. |
450,000 | 459,113 | ||||||
| SABMiller PLC |
1,795,000 | 1,841,316 | ||||||
| Wm. Wrigley Jr. Co. |
2,000,000 | 2,014,184 | ||||||
| 3.05% due 6/28/2013(1) |
2,000,000 | 2,042,838 | ||||||
|
|
|
|||||||
| 16,889,312 | ||||||||
| Government Related – 0.2% | ||||||||
| Ras Laffan Liquefied Natural Gas Co. Ltd. |
1,250,000 | 1,312,568 | ||||||
|
|
|
|||||||
| 1,312,568 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 81 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Health Insurance – 0.5% | ||||||||
| UnitedHealth Group, Inc. |
$ | 3,000,000 | $ | 3,205,644 | ||||
|
|
|
|||||||
| 3,205,644 | ||||||||
| Healthcare – 1.3% | ||||||||
| AmerisourceBergen Corp. |
1,750,000 | 1,869,280 | ||||||
| CareFusion Corp. |
1,085,000 | 1,130,431 | ||||||
| Express Scripts, Inc. |
1,200,000 | 1,266,546 | ||||||
| Fresenius Medical Care Capital Trust IV |
850,000 | 864,875 | ||||||
| Life Technologies Corp. |
1,740,000 | 1,779,413 | ||||||
| Thermo Fisher Scientific, Inc. |
1,500,000 | 1,525,794 | ||||||
|
|
|
|||||||
| 8,436,339 | ||||||||
| Home Construction – 0.2% | ||||||||
| KB HOME |
1,395,000 | 1,415,925 | ||||||
|
|
|
|||||||
| 1,415,925 | ||||||||
| Independent Energy – 0.4% | ||||||||
| Chesapeake Energy Corp. |
2,750,000 | 2,980,313 | ||||||
|
|
|
|||||||
| 2,980,313 | ||||||||
| Insurance - Life – 2.6% | ||||||||
| American International Group, Inc. |
3,000,000 | 3,051,228 | ||||||
| Genworth Financial, Inc. |
2,500,000 | 2,606,675 | ||||||
| Lincoln National Corp. |
2,895,000 | 3,079,472 | ||||||
| Metropolitan Life Global Funding I |
2,000,000 | 2,049,868 | ||||||
| New York Life Global Funding |
1,200,000 | 1,229,341 | ||||||
| 82 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Insurance - Life (continued) | ||||||||
| Prudential Financial, Inc. |
$ | 2,000,000 | $ | 2,066,794 | ||||
| The Hartford Financial Services Group, Inc. |
3,000,000 | 3,088,470 | ||||||
|
|
|
|||||||
| 17,171,848 | ||||||||
| Insurance P&C – 1.6% | ||||||||
| CNA Financial Corp. |
3,000,000 | 3,079,308 | ||||||
| Marsh & McLennan Cos., Inc. |
2,762,000 | 2,886,409 | ||||||
| Travelers Property Casualty Corp. |
1,500,000 | 1,614,609 | ||||||
| XL Capital Finance Europe PLC |
3,000,000 | 3,098,754 | ||||||
|
|
|
|||||||
| 10,679,080 | ||||||||
| Lodging – 0.3% | ||||||||
| Royal Caribbean Cruises Ltd. |
2,000,000 | 2,115,000 | ||||||
|
|
|
|||||||
| 2,115,000 | ||||||||
| Media Cable – 0.8% | ||||||||
| Cox Communications, Inc. |
2,200,000 | 2,354,326 | ||||||
| Time Warner Cable, Inc. |
3,000,000 | 3,184,893 | ||||||
|
|
|
|||||||
| 5,539,219 | ||||||||
| Media Noncable – 0.9% | ||||||||
| NBC Universal, Inc. |
3,500,000 | 3,489,629 | ||||||
| Rainbow National Services LLC |
800,000 | 802,000 | ||||||
| Scholastic Corp. |
1,500,000 | 1,503,750 | ||||||
|
|
|
|||||||
| 5,795,379 | ||||||||
| Metals And Mining – 2.8% | ||||||||
| Alcoa, Inc. |
2,500,000 | 2,607,712 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 83 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Metals And Mining (continued) | ||||||||
| Anglo American Capital PLC |
$ | 1,700,000 | $ | 1,714,617 | ||||
| ArcelorMittal |
3,000,000 | 3,188,862 | ||||||
| Freeport-McMoRan Copper & Gold, Inc. |
3,100,000 | 3,429,375 | ||||||
| Rio Tinto Alcan, Inc. |
1,000,000 | 1,056,894 | ||||||
| 6.45% due 3/15/2011 |
900,000 | 910,239 | ||||||
| Steel Dynamics, Inc. |
1,950,000 | 2,057,250 | ||||||
| United States Steel Corp. |
2,000,000 | 2,070,000 | ||||||
| Xstrata Finance Canada Ltd. |
1,500,000 | 1,556,915 | ||||||
|
|
|
|||||||
| 18,591,864 | ||||||||
| Natural Gas - Distributors – 0.5% | ||||||||
| Inergy, LP |
3,000,000 | 3,045,000 | ||||||
|
|
|
|||||||
| 3,045,000 | ||||||||
| Non Captive Consumer – 0.3% | ||||||||
| SLM Corp. |
2,250,000 | 2,289,701 | ||||||
|
|
|
|||||||
| 2,289,701 | ||||||||
| Non Captive Diversified – 0.5% | ||||||||
| GATX Corp. |
1,200,000 | 1,257,035 | ||||||
| General Electric Capital Corp. |
2,000,000 | 2,044,604 | ||||||
|
|
|
|||||||
| 3,301,639 | ||||||||
| Oil Field Services – 0.3% | ||||||||
| Transocean Ltd. |
2,000,000 | 2,108,534 | ||||||
|
|
|
|||||||
| 2,108,534 | ||||||||
| 84 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Packaging – 1.0% | ||||||||
| Bemis Co., Inc. |
$ | 790,000 | $ | 822,276 | ||||
| Owens-Brockway Glass Container, Inc. |
2,500,000 | 2,543,750 | ||||||
| Pactiv Corp. |
3,044,000 | 3,162,731 | ||||||
|
|
|
|||||||
| 6,528,757 | ||||||||
| Paper – 0.2% | ||||||||
| Rock-Tenn Co. |
1,200,000 | 1,233,000 | ||||||
|
|
|
|||||||
| 1,233,000 | ||||||||
| Pharmaceuticals – 0.2% | ||||||||
| Eli Lilly & Co. |
650,000 | 670,633 | ||||||
| Pfizer, Inc. |
650,000 | 678,246 | ||||||
|
|
|
|||||||
| 1,348,879 | ||||||||
| Pipelines – 2.3% | ||||||||
| Energy Transfer Partners LP |
2,750,000 | 2,913,636 | ||||||
| Enterprise Products Operating LLC |
3,000,000 | 3,148,611 | ||||||
| Kinder Morgan Energy Partners LP |
550,000 | 586,737 | ||||||
| Kinder Morgan, Inc. |
2,750,000 | 2,894,375 | ||||||
| NGPL Pipeco LLC |
2,500,000 | 2,698,275 | ||||||
| Plains All American Pipeline LP |
3,000,000 | 3,128,388 | ||||||
|
|
|
|||||||
| 15,370,022 | ||||||||
| REITs – 1.3% | ||||||||
| Camden Property Trust |
2,000,000 | 2,132,260 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 85 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| REITs (continued) | ||||||||
| CommonWealth REIT |
$ | 2,550,000 | $ | 2,657,414 | ||||
| Liberty Property LP |
1,000,000 | 1,066,829 | ||||||
| Regency Centers LP |
350,000 | 350,546 | ||||||
| Washington Real Estate Investment Trust |
2,000,000 | 2,118,384 | ||||||
|
|
|
|||||||
| 8,325,433 | ||||||||
| Retailers – 0.9% | ||||||||
| Macy’s Retail Holdings, Inc. |
3,300,000 | 3,407,250 | ||||||
| Nebraska Book Co. |
1,300,000 | 1,293,500 | ||||||
| The Home Depot, Inc. |
1,000,000 | 1,007,270 | ||||||
|
|
|
|||||||
| 5,708,020 | ||||||||
| Supermarkets – 0.1% | ||||||||
| The Kroger Co. |
550,000 | 558,066 | ||||||
|
|
|
|||||||
| 558,066 | ||||||||
| Technology – 2.0% | ||||||||
| Agilent Technologies, Inc. |
1,300,000 | 1,315,241 | ||||||
| 4.45% due 9/14/2012 |
1,500,000 | 1,566,927 | ||||||
| Broadcom Corp. |
2,500,000 | 2,482,970 | ||||||
| Hewlett-Packard Co. |
500,000 | 519,598 | ||||||
| Lexmark International, Inc. |
2,500,000 | 2,668,865 | ||||||
| Maxim Integrated Products, Inc. |
2,000,000 | 2,044,856 | ||||||
| 86 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Technology (continued) | ||||||||
| National Semiconductor Corp. |
$ | 2,250,000 | $ | 2,394,227 | ||||
|
|
|
|||||||
| 12,992,684 | ||||||||
| Wireless – 0.1% | ||||||||
| Cellco Partnership |
930,000 | 973,393 | ||||||
|
|
|
|||||||
| 973,393 | ||||||||
| Wirelines – 0.7% | ||||||||
| Qwest Corp. |
3,000,000 | 3,090,000 | ||||||
| Telefonica Emisiones SAU |
1,500,000 | 1,501,208 | ||||||
|
|
|
|||||||
| 4,591,208 | ||||||||
| Total Corporate Bonds (Cost $254,856,906) |
257,915,779 | |||||||
| Principal Amount |
Value | |||||||
| Government Agencies – 0.3% | ||||||||
| Federal Farm Credit Bank |
1,760,000 | 1,800,512 | ||||||
| PNC Funding Corp. |
450,000 | 461,457 | ||||||
| Total Government Agencies (Cost $2,210,810) |
2,261,969 | |||||||
| Principal Amount |
Value | |||||||
| Hybrid ARMS – 0.0% | ||||||||
| FNMA |
103,255 | 107,981 | ||||||
| Total Hybrid ARMS (Cost $104,175) |
107,981 | |||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 87 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS LOW DURATION BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Mortgage-Backed Securities – 0.0% | ||||||||
| FHLMC |
$ | 130,517 | $ | 147,268 | ||||
| Total Mortgage-Backed Securities (Cost $135,673) |
147,268 | |||||||
| Principal Amount |
Value | |||||||
| U.S. Treasury – 1.3% | ||||||||
| U.S. Treasury Notes |
8,200,000 | 8,238,433 | ||||||
| Total U.S. Treasury (Cost $8,238,438) |
8,238,433 | |||||||
| Principal Amount |
Value | |||||||
| Repurchase Agreements – 6.0% | ||||||||
| State Street Bank and Trust Co. Repurchase Agreement, 0.09%, dated 12/31/2010, maturity value of $39,890,299, due 1/3/2011(6) |
39,890,000 | 39,890,000 | ||||||
| Total Repurchase Agreements (Cost $39,890,000) |
39,890,000 | |||||||
| Total Investments - 102.6% (Cost $674,996,941) |
680,230,582 | |||||||
| Other Liabilities, Net - (2.6)% | (17,119,789 | ) | ||||||
| Total Net Assets - 100.0% | $ | 663,110,793 | ||||||
| (1) | Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, normally to certain qualified buyers. At December 31, 2010, the aggregate market value of these securities amounted to $79,638,640, representing 12.0% of net assets. These securities have been deemed liquid by the investment adviser pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (2) | Variable rate securities, which may include step-up bonds or adjustable rate mortgages. The rate shown is the rate in effect at December 31, 2010. |
| (3) | Securities are segregated for anticipated collateral requirements. |
| (4) | Maturity is perpetual. Maturity date presented represents the next call date. |
| (5) | Classified under Government Agencies as a result of participation in a program issuing debt guaranteed by FDIC. |
| (6) | The table below presents collateral for repurchase agreements. |
| Security | Coupon | Maturity Date | Value | |||||||||
| FHLMC |
6.25% | 7/15/2032 | $ | 40,689,281 | ||||||||
| 88 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS LOW DURATION BOND FUND
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Asset Backed Securities |
$ | — | $ | 127,366,279 | $ | — | $ | 127,366,279 | ||||||||
| Collateralized Mortgage Obligations |
— | 81,489,421 | — | 81,489,421 | ||||||||||||
| Senior Secured Loans |
— | 11,346,104 | — | 11,346,104 | ||||||||||||
| Commercial Mortgage-Backed Securities |
— | 151,467,348 | — | 151,467,348 | ||||||||||||
| Corporate Bonds |
— | 257,915,779 | — | 257,915,779 | ||||||||||||
| Government Agencies |
— | 2,261,969 | — | 2,261,969 | ||||||||||||
| Hybrid ARMS |
— | 107,981 | — | 107,981 | ||||||||||||
| Mortgage-Backed Securities |
— | 147,268 | — | 147,268 | ||||||||||||
| U.S. Treasury |
— | 8,238,433 | — | 8,238,433 | ||||||||||||
| Repurchase Agreements |
— | 39,890,000 | — | 39,890,000 | ||||||||||||
| Total | $ | — | $ | 680,230,582 | $ | — | $ | 680,230,582 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 89 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Corporate Bonds – 94.1% | ||||||||
| Aerospace/Defense – 1.5% | ||||||||
| BE Aerospace, Inc. |
$ | 460,000 | $ | 503,700 | ||||
| Moog, Inc. |
450,000 | 470,250 | ||||||
| Spirit Aerosystems, Inc. |
280,000 | 280,700 | ||||||
| Triumph Group, Inc. |
290,000 | 301,600 | ||||||
| 8.625% due 7/15/2018 |
330,000 | 360,525 | ||||||
|
|
|
|||||||
| 1,916,775 | ||||||||
| Automotive – 4.4% | ||||||||
| Allison Transmission, Inc. |
600,000 | 654,000 | ||||||
| Ford Motor Credit Co. LLC |
280,000 | 300,892 | ||||||
| 8.00% due 12/15/2016 |
700,000 | 782,221 | ||||||
| 8.125% due 1/15/2020 |
560,000 | 651,511 | ||||||
| Goodyear Tire & Rubber Co. |
280,000 | 289,800 | ||||||
| 8.75% due 8/15/2020 |
280,000 | 294,700 | ||||||
| Lear Corp. |
280,000 | 299,600 | ||||||
| 8.125% due 3/15/2020 |
450,000 | 489,375 | ||||||
| Navistar International Corp. |
900,000 | 967,500 | ||||||
| Tenneco, Inc. |
700,000 | 715,750 | ||||||
|
|
|
|||||||
| 5,445,349 | ||||||||
| Banking – 0.9% | ||||||||
| AmSouth Bank |
600,000 | 578,250 | ||||||
| Zions Bancorporation |
550,000 | 573,381 | ||||||
|
|
|
|||||||
| 1,151,631 | ||||||||
| Brokerage – 1.4% | ||||||||
| E*Trade Financial Corp. |
784,000 | 921,200 | ||||||
| 90 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Brokerage (continued) | ||||||||
| Penson Worldwide, Inc. |
$ | 840,000 | $ | 756,000 | ||||
|
|
|
|||||||
| 1,677,200 | ||||||||
| Building Materials – 0.4% | ||||||||
| Roof Supply Group LLC |
450,000 | 463,500 | ||||||
|
|
|
|||||||
| 463,500 | ||||||||
| Chemicals – 1.1% | ||||||||
| Hexion US Finance Corp. |
600,000 | 634,500 | ||||||
| Lyondell Chemical Co. |
377,000 | 417,056 | ||||||
| NOVA Chemicals Corp. |
240,000 | 255,600 | ||||||
|
|
|
|||||||
| 1,307,156 | ||||||||
| Construction Machinery – 0.8% | ||||||||
| The Manitowoc Co., Inc. |
900,000 | 956,250 | ||||||
|
|
|
|||||||
| 956,250 | ||||||||
| Consumer Cyclical Services – 1.9% | ||||||||
| Live Nation Entertainment, Inc. |
220,000 | 222,750 | ||||||
| Mobile Mini, Inc. |
480,000 | 496,800 | ||||||
| Service Corp. International |
280,000 | 280,000 | ||||||
| 7.625% due 10/1/2018 |
490,000 | 514,500 | ||||||
| Travelport LLC |
440,000 | 389,400 | ||||||
| West Corp. |
480,000 | 488,400 | ||||||
|
|
|
|||||||
| 2,391,850 | ||||||||
| Consumer Products – 1.7% | ||||||||
| Armored Autogroup, Inc. |
300,000 | 297,750 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 91 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Consumer Products (continued) | ||||||||
| Easton-Bell Sports, Inc. |
$ | 750,000 | $ | 823,125 | ||||
| NBTY, Inc. |
900,000 | 960,750 | ||||||
|
|
|
|||||||
| 2,081,625 | ||||||||
| Electric – 4.0% | ||||||||
| Calpine Corp. |
300,000 | 295,500 | ||||||
| 7.875% due 7/31/2020(1) |
600,000 | 607,500 | ||||||
| Dynegy Holdings, Inc. |
360,000 | 271,800 | ||||||
| GenOn Energy, Inc. |
450,000 | 436,500 | ||||||
| Mirant Americas Generation LLC |
150,000 | 150,000 | ||||||
| Mirant Mid Atlantic Pass Through Tr. |
116,018 | 119,499 | ||||||
| Ser. B |
429,325 | 461,525 | ||||||
| Mirant North America LLC |
380,000 | 387,159 | ||||||
| North American Energy Alliance LLC |
760,000 | 843,600 | ||||||
| NRG Energy, Inc. |
645,000 | 661,125 | ||||||
| 8.25% due 9/1/2020(1) |
220,000 | 225,500 | ||||||
| The AES Corp. |
540,000 | 571,950 | ||||||
|
|
|
|||||||
| 5,031,658 | ||||||||
| Energy – 9.4% | ||||||||
| Allis-Chalmers Energy, Inc. |
570,000 | 578,550 | ||||||
| Alon Refining Krotz Springs, Inc. |
320,000 | 307,200 | ||||||
| Chesapeake Energy Corp. |
200,000 | 197,000 | ||||||
| 6.875% due 8/15/2018 |
420,000 | 426,300 | ||||||
| 9.50% due 2/15/2015 |
500,000 | 563,750 | ||||||
| 92 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Energy (continued) | ||||||||
| Complete Production Services, Inc. |
$ | 370,000 | $ | 382,950 | ||||
| Connacher Oil and Gas Ltd. |
600,000 | 603,000 | ||||||
| 11.75% due 7/15/2014(1) |
300,000 | 324,750 | ||||||
| Continental Resources, Inc. |
800,000 | 840,000 | ||||||
| 8.25% due 10/1/2019 |
270,000 | 299,700 | ||||||
| Denbury Resources, Inc. |
578,000 | 627,130 | ||||||
| Harvest Operations Corp. |
300,000 | 309,000 | ||||||
| Linn Energy LLC |
520,000 | 533,000 | ||||||
| 9.875% due 7/1/2018 |
290,000 | 317,550 | ||||||
| 11.75% due 5/15/2017 |
280,000 | 320,600 | ||||||
| OPTI Canada, Inc. |
1,515,000 | 1,079,437 | ||||||
| 9.00% due 12/15/2012(1) |
200,000 | 200,500 | ||||||
| Quicksilver Resources, Inc. |
860,000 | 823,450 | ||||||
| Rosetta Resources, Inc. |
280,000 | 302,400 | ||||||
| SandRidge Energy, Inc. |
280,000 | 286,650 | ||||||
| Sr. Nt. |
250,000 | 264,375 | ||||||
| Stallion Oilfield Holdings Ltd. |
1,120,000 | 1,176,000 | ||||||
| Tesoro Corp. |
300,000 | 332,250 | ||||||
| Venoco, Inc. |
560,000 | 597,800 | ||||||
|
|
|
|||||||
| 11,693,342 | ||||||||
| Entertainment – 0.4% | ||||||||
| NAI Entertainment Holdings LLC |
450,000 | 472,500 | ||||||
|
|
|
|||||||
| 472,500 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 93 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Financial - Other – 0.4% | ||||||||
| FTI Consulting, Inc. |
$ | 480,000 | $ | 476,400 | ||||
|
|
|
|||||||
| 476,400 | ||||||||
| Food And Beverage – 2.0% | ||||||||
| Aramark Corp. |
135,000 | 131,963 | ||||||
| 8.50% due 2/1/2015 |
605,000 | 632,225 | ||||||
| Darling International, Inc. |
100,000 | 104,250 | ||||||
| Michael Foods, Inc. |
750,000 | 819,375 | ||||||
| Reddy Ice Corp. |
760,000 | 777,100 | ||||||
|
|
|
|||||||
| 2,464,913 | ||||||||
| Gaming – 3.6% | ||||||||
| Harrah’s Operating Co., Inc. |
900,000 | 1,012,500 | ||||||
| MGM Resorts International |
340,000 | 317,900 | ||||||
| Sr. Sec. Nt. |
230,000 | 253,000 | ||||||
| 11.125% due 11/15/2017 |
290,000 | 333,500 | ||||||
| Sr. Nt. |
160,000 | 173,600 | ||||||
| Pinnacle Entertainment, Inc. |
450,000 | 465,750 | ||||||
| Pokagon Gaming Authority |
186,000 | 193,905 | ||||||
| Scientific Games International, Inc. |
620,000 | 640,150 | ||||||
| Wynn Las Vegas LLC |
1,050,000 | 1,136,625 | ||||||
|
|
|
|||||||
| 4,526,930 | ||||||||
| Healthcare – 7.5% | ||||||||
| Alliance HealthCare Services, Inc. |
1,200,000 | 1,107,000 | ||||||
| Apria Healthcare Group, Inc. |
920,000 | 1,012,000 | ||||||
| 94 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Healthcare (continued) | ||||||||
| Bio-Rad Laboratories, Inc. |
$ | 1,000,000 | $ | 1,085,000 | ||||
| ConvaTec Healthcare E S.A. |
900,000 | 912,375 | ||||||
| DaVita, Inc. |
600,000 | 594,000 | ||||||
| HCA Holdings, Inc. |
260,000 | 260,000 | ||||||
| HCA, Inc. |
250,000 | 267,500 | ||||||
| 8.50% due 4/15/2019 |
340,000 | 372,300 | ||||||
| Sec. Nt. |
222,000 | 232,823 | ||||||
| Sr. Sec. Nt. |
280,000 | 308,000 | ||||||
| Health Management Associates, Inc. |
550,000 | 555,500 | ||||||
| IMS Health, Inc. |
450,000 | 522,000 | ||||||
| Omega Healthcare Investors, Inc. |
750,000 | 743,437 | ||||||
| US Oncology, Inc. |
300,000 | 369,750 | ||||||
| Vanguard Health Holding Co. II LLC |
900,000 | 918,000 | ||||||
|
|
|
|||||||
| 9,259,685 | ||||||||
| Home Construction – 1.9% | ||||||||
| Beazer Homes USA, Inc. |
900,000 | 873,000 | ||||||
| Sr. Nt. |
375,000 | 356,250 | ||||||
| K Hovnanian Enterprises, Inc. |
320,000 | 328,000 | ||||||
| Meritage Homes Corp. |
850,000 | 845,750 | ||||||
|
|
|
|||||||
| 2,403,000 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 95 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Independent Energy – 2.1% | ||||||||
| Alta Mesa Holdings |
$ | 450,000 | $ | 437,063 | ||||
| Carrizo Oil & Gas, Inc. |
600,000 | 618,000 | ||||||
| Concho Resources, Inc. |
700,000 | 717,500 | ||||||
| Energy XXI Gulf Coast, Inc. |
310,000 | 322,400 | ||||||
| Hilcorp Energy I L.P. |
530,000 | 547,225 | ||||||
|
|
|
|||||||
| 2,642,188 | ||||||||
| Industrial - Other – 0.6% | ||||||||
| Belden, Inc. |
340,000 | 372,725 | ||||||
| Diversey, Inc. |
150,000 | 162,750 | ||||||
| Interline Brands, Inc. |
240,000 | 243,600 | ||||||
|
|
|
|||||||
| 779,075 | ||||||||
| Insurance - Life – 1.5% | ||||||||
| CNO Financial Group, Inc. |
700,000 | 728,000 | ||||||
| Genworth Financial, Inc. |
620,000 | 630,114 | ||||||
| Symetra Financial Corp. |
560,000 | 532,000 | ||||||
|
|
|
|||||||
| 1,890,114 | ||||||||
| Lodging – 0.3% | ||||||||
| Royal Caribbean Cruises Ltd. |
360,000 | 381,600 | ||||||
|
|
|
|||||||
| 381,600 | ||||||||
| Media Cable – 2.1% | ||||||||
| CCO Holdings LLC |
600,000 | 609,000 | ||||||
| 7.875% due 4/30/2018 |
700,000 | 724,500 | ||||||
| 96 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Media Cable (continued) | ||||||||
| DISH DBS Corp. |
$ | 820,000 | $ | 856,900 | ||||
| Virgin Media Finance PLC |
340,000 | 384,200 | ||||||
|
|
|
|||||||
| 2,574,600 | ||||||||
| Media Noncable – 7.8% | ||||||||
| Allbritton Communications Co. |
220,000 | 222,200 | ||||||
| Block Communications, Inc. |
1,120,000 | 1,128,400 | ||||||
| Clear Channel Worldwide Holdings, Inc. |
460,000 | 503,700 | ||||||
| Entravision Communications Corp. |
600,000 | 633,000 | ||||||
| Gannett Co., Inc. |
300,000 | 300,750 | ||||||
| 9.375% due 11/15/2017 |
140,000 | 156,100 | ||||||
| GeoEye, Inc. |
520,000 | 587,600 | ||||||
| Hughes Network Systems LLC |
500,000 | 515,625 | ||||||
| 9.50% due 4/15/2014 |
520,000 | 536,250 | ||||||
| Inmarsat Finance PLC |
150,000 | 157,500 | ||||||
| Intelsat Jackson Holdings Ltd. |
590,000 | 635,725 | ||||||
| Intelsat Subsidiary Holding Co. Ltd. |
140,000 | 143,150 | ||||||
| 8.875% due 1/15/2015 |
160,000 | 164,400 | ||||||
| Lamar Media Corp. |
500,000 | 511,100 | ||||||
| 7.875% due 4/15/2018 |
440,000 | 467,500 | ||||||
| LIN Television Corp. |
220,000 | 233,200 | ||||||
| McClatchy Co. |
580,000 | 651,775 | ||||||
| Nielsen Finance LLC |
560,000 | 646,800 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 97 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Media Noncable (continued) | ||||||||
| Quebecor Media, Inc. |
$ | 821,000 | $ | 847,682 | ||||
| Sinclair Television Group, Inc. |
160,000 | 173,200 | ||||||
| Univision Communications, Inc. |
480,000 | 504,000 | ||||||
|
|
|
|||||||
| 9,719,657 | ||||||||
| Metals And Mining – 1.9% | ||||||||
| Consol Energy, Inc. |
450,000 | 479,250 | ||||||
| New Enterprise Stone & Lime Co. |
830,000 | 788,500 | ||||||
| Novelis, Inc. |
700,000 | 724,500 | ||||||
| Penn Virginia Resource Partners L.P. |
330,000 | 339,900 | ||||||
|
|
|
|||||||
| 2,332,150 | ||||||||
| Natural Gas - Distributors – 0.9% | ||||||||
| Ferrellgas L.P. |
410,000 | 399,750 | ||||||
| Inergy L.P. |
600,000 | 604,500 | ||||||
| 8.75% due 3/1/2015 |
80,000 | 85,200 | ||||||
|
|
|
|||||||
| 1,089,450 | ||||||||
| Non Captive Diversified – 4.3% | ||||||||
| Ally Financial, Inc. |
900,000 | 983,250 | ||||||
| CIT Group, Inc. |
1,740,000 | 1,774,800 | ||||||
| International Lease Finance Corp. |
1,160,000 | 1,151,300 | ||||||
| Sr. Nt. |
980,000 | 1,053,500 | ||||||
| PHH Corp. |
400,000 | 422,000 | ||||||
|
|
|
|||||||
| 5,384,850 | ||||||||
| 98 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Oil Field Services – 0.2% | ||||||||
| Frac Tech Services LLC |
$ | 300,000 | $ | 304,500 | ||||
|
|
|
|||||||
| 304,500 | ||||||||
| Packaging – 2.7% | ||||||||
| Berry Plastics Corp. |
560,000 | 554,400 | ||||||
| Owens-Brockway Glass Container, Inc. |
340,000 | 361,250 | ||||||
| Reynolds Group Issuer, Inc. |
600,000 | 610,500 | ||||||
| 7.75% due 10/15/2016(1) |
300,000 | 317,250 | ||||||
| Sr. Nt. |
560,000 | 562,800 | ||||||
| 9.00% due 4/15/2019(1) |
600,000 | 621,750 | ||||||
| Silgan Holdings, Inc. |
300,000 | 319,500 | ||||||
|
|
|
|||||||
| 3,347,450 | ||||||||
| Paper – 0.6% | ||||||||
| Cascades, Inc. |
300,000 | 312,750 | ||||||
| 7.875% due 1/15/2020 |
440,000 | 459,800 | ||||||
|
|
|
|||||||
| 772,550 | ||||||||
| Pharmaceuticals – 1.1% | ||||||||
| Mylan, Inc. |
420,000 | 412,650 | ||||||
| 7.875% due 7/15/2020(1) |
880,000 | 948,200 | ||||||
|
|
|
|||||||
| 1,360,850 | ||||||||
| Pipelines – 3.4% | ||||||||
| Atlas Pipeline Partners L.P. |
760,000 | 794,200 | ||||||
| Crosstex Energy L.P. |
720,000 | 771,300 | ||||||
| Energy Transfer Equity L.P. |
800,000 | 824,000 | ||||||
| MarkWest Energy Partners L.P. |
480,000 | 480,000 | ||||||
| Sr. Nt. Ser. B 8.50% due 7/15/2016 |
400,000 | 422,000 | ||||||
| Niska Gas Storage US LLC |
560,000 | 599,200 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 99 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Pipelines (continued) | ||||||||
| Regency Energy Partners L.P. |
$ | 340,000 | $ | 373,150 | ||||
|
|
|
|||||||
| 4,263,850 | ||||||||
| Railroads – 0.4% | ||||||||
| RailAmerica, Inc. |
420,000 | 461,475 | ||||||
|
|
|
|||||||
| 461,475 | ||||||||
| Refining – 1.1% | ||||||||
| Citgo Petroleum Corp. |
945,000 | 1,058,400 | ||||||
| Northern Tier Energy LLC |
300,000 | 306,000 | ||||||
|
|
|
|||||||
| 1,364,400 | ||||||||
| REITs – 0.4% | ||||||||
| Sabra Health Care L.P. |
480,000 | 495,600 | ||||||
|
|
|
|||||||
| 495,600 | ||||||||
| Restaurants – 0.5% | ||||||||
| DineEquity, Inc. |
600,000 | 636,000 | ||||||
|
|
|
|||||||
| 636,000 | ||||||||
| Retailers – 1.7% | ||||||||
| Michaels Stores, Inc. |
140,000 | 152,600 | ||||||
| Nebraska Book Co., Inc. |
600,000 | 597,000 | ||||||
| Sonic Automotive, Inc. |
230,000 | 242,075 | ||||||
| Susser Holdings LLC |
550,000 | 589,875 | ||||||
| The Neiman Marcus Group, Inc. |
520,000 | 549,250 | ||||||
|
|
|
|||||||
| 2,130,800 | ||||||||
| Supermarkets – 0.6% | ||||||||
| Tops Holding Corp. |
710,000 | 729,525 | ||||||
|
|
|
|||||||
| 729,525 | ||||||||
| 100 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Technology – 6.6% | ||||||||
| Amkor Technology, Inc. |
$ | 910,000 | $ | 946,400 | ||||
| CDW LLC |
450,000 | 459,000 | ||||||
| Communications & Power Industries, Inc. |
490,000 | 490,000 | ||||||
| Digicel Ltd. |
900,000 | 922,500 | ||||||
| DuPont Fabros Technology L.P. |
530,000 | 567,100 | ||||||
| First Data Corp. |
||||||||
| Sr. Sec. Nt. |
262,000 | 251,520 | ||||||
| 8.75% due 1/15/2022(1)(2) |
263,000 | 254,452 | ||||||
| 9.875% due 9/24/2015 |
59,000 | 56,198 | ||||||
| Sr. Nt. |
525,000 | 501,375 | ||||||
| GXS Worldwide, Inc. |
530,000 | 523,375 | ||||||
| NXP BV |
1,000,000 | 985,000 | ||||||
| Sitel LLC |
450,000 | 371,250 | ||||||
| Stream Global Services, Inc. |
240,000 | 241,800 | ||||||
| Terremark Worldwide, Inc. |
500,000 | 572,500 | ||||||
| Trans Union LLC |
600,000 | 684,000 | ||||||
| Viasystems, Inc. |
360,000 | 402,300 | ||||||
|
|
|
|||||||
| 8,228,770 | ||||||||
| Textile – 0.4% | ||||||||
| Hanesbrands, Inc. |
450,000 | 482,625 | ||||||
|
|
|
|||||||
| 482,625 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 101 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Transportation Services – 3.0% | ||||||||
| Avis Budget Car Rental LLC |
$ | 300,000 | $ | 306,000 | ||||
| 8.25% due 1/15/2019(1) |
600,000 | 606,000 | ||||||
| 9.625% due 3/15/2018 |
450,000 | 484,875 | ||||||
| Hertz Corp. |
700,000 | 726,250 | ||||||
| Navios Maritime Acquisition Corp. |
600,000 | 613,500 | ||||||
| Navios Maritime Holdings, Inc. |
360,000 | 389,700 | ||||||
| Teekay Corp. |
500,000 | 544,375 | ||||||
|
|
|
|||||||
| 3,670,700 | ||||||||
| Wireless – 5.3% | ||||||||
| Cricket Communications, Inc. |
280,000 | 266,700 | ||||||
| MetroPCS Wireless, Inc. |
||||||||
| 6.625% due 11/15/2020 |
900,000 | 857,250 | ||||||
| 7.875% due 9/1/2018 |
1,000,000 | 1,037,500 | ||||||
| Nextel Communications, Inc. |
550,000 | 551,375 | ||||||
| Ser. D |
300,000 | 300,375 | ||||||
| NII Capital Corp. |
910,000 | 980,525 | ||||||
| 10.00% due 8/15/2016 |
410,000 | 454,075 | ||||||
| SBA Telecommunications, Inc. |
430,000 | 465,475 | ||||||
| Sprint Capital Corp. |
885,000 | 873,937 | ||||||
| Trilogy International Partners LLC |
840,000 | 831,600 | ||||||
|
|
|
|||||||
| 6,618,812 | ||||||||
| Wirelines – 1.3% | ||||||||
| Frontier Communications Corp. |
540,000 | 592,650 | ||||||
| 8.25% due 4/15/2017 |
280,000 | 307,300 | ||||||
| 102 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Wirelines (continued) | ||||||||
| Wind Acquisition Finance S.A. |
$ | 300,000 | $ | 305,250 | ||||
| Windstream Corp. |
330,000 | 346,913 | ||||||
|
|
|
|||||||
| 1,552,113 | ||||||||
| Total Corporate Bonds (Cost $110,956,544) |
116,933,468 | |||||||
| Principal Amount |
Value | |||||||
| Senior Secured Loans – 0.6% | ||||||||
| Electric – 0.6% | ||||||||
| Texas Competitive Electric Holdings Co. LLC |
989,770 | 763,251 | ||||||
|
|
|
|||||||
| 763,251 | ||||||||
| Total Senior Secured Loans (Cost $836,036) |
763,251 | |||||||
| Shares | Value | |||||||
| Common Stocks – 0.6% | ||||||||
| Banking – 0.6% | ||||||||
| Citigroup, Inc.(4) |
166,615 | 788,089 | ||||||
|
|
|
|||||||
| 788,089 | ||||||||
| Total Common Stocks (Cost $501,612) |
788,089 | |||||||
| Principal Amount |
Value | |||||||
| Repurchase Agreements – 3.0% | ||||||||
| State Street Bank and Trust Co. Repurchase Agreement, 0.09%, dated 12/31/2010, maturity value of $3,738,028, due 1/3/2011(5) |
$ | 3,738,000 | 3,738,000 | |||||
| Total Repurchase Agreements (Cost $3,738,000) |
3,738,000 | |||||||
| Total Investments - 98.3% (Cost $116,032,192) |
122,222,808 | |||||||
| Other Assets, Net - 1.7% | 2,079,843 | |||||||
| Total Net Assets - 100.0% | $ | 124,302,651 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 103 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD BOND FUND
| (1) | Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, normally to certain qualified buyers. At December 31, 2010, the aggregate market value of these securities amounted to $44,205,408, representing 35.6% of net assets. These securities have been deemed liquid by the investment adviser pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (2) | Payment-in-kind security for which part of the income earned may be paid as additional principal. |
| (3) | Variable rate security. The rate shown is the rate in effect at December 31, 2010. |
| (4) | Non-income producing security. |
| (5) | The table below presents collateral for repurchase agreements. |
| Security | Coupon | Maturity Date | Value | |||||||||
| FHLMC |
0.00% | 6/20/2011 | $ | 3,816,180 | ||||||||
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Corporate Bonds |
$ | — | $ | 116,933,468 | $ | — | $ | 116,933,468 | ||||||||
| Senior Secured Loans |
— | 763,251 | — | 763,251 | ||||||||||||
| Common Stocks |
788,089 | — | — | 788,089 | ||||||||||||
| Repurchase Agreements |
— | 3,738,000 | — | 3,738,000 | ||||||||||||
| Total | $ | 788,089 | $ | 121,434,719 | $ | — | $ | 122,222,808 | ||||||||
| 104 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
SCHEDULE OF INVESTMENTS — RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Municipal Bonds – 98.4% | ||||||||
| Alabama – 0.1% | ||||||||
| Alabama 21st Century Auth. Tobacco Settlement |
$ | 160,000 | $ | 163,170 | ||||
|
|
|
|||||||
| 163,170 | ||||||||
| Arizona – 2.2% | ||||||||
| Arizona St. Transn. Brd. Hwy. Rev. |
1,000,000 | 1,004,950 | ||||||
| AZ Wtr. Infrastructure Fin. Auth. Rev. |
1,500,000 | 1,548,450 | ||||||
| Chandler, AZ G.O. |
1,500,000 | 1,629,600 | ||||||
| Mesa AZ Utility Sys. Rev. |
575,000 | 580,209 | ||||||
| Phoenix, AZ G.O. |
1,000,000 | 1,059,590 | ||||||
|
|
|
|||||||
| 5,822,799 | ||||||||
| California – 8.5% | ||||||||
| California St. Dept. of Wtr. Res. Ctr. Valley Proj. |
1,500,000 | 1,552,245 | ||||||
| California St. Dept. Wtr. Res. Pwr. Supply Rev. |
1,500,000 | 1,596,270 | ||||||
| California St. Pub. Wrks. Brd. Lease Rev. |
1,000,000 | 1,030,180 | ||||||
| Trustees Calif. St. Univ. Ser. D |
1,245,000 | 1,311,881 | ||||||
| Var. Cap. Projs. Ser. I-1 |
1,875,000 | 1,920,338 | ||||||
| Dept. Dev. Svcs. Porterville Ser. C |
1,500,000 | 1,596,105 | ||||||
| California St. Var. Purp. G.O. |
5,000,000 | 5,142,380 | ||||||
| 6.50% due 4/1/2033 |
2,000,000 | 2,137,680 | ||||||
| California Statewide Cmntys. Dev. Auth. Rev. |
2,000,000 | 1,873,440 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 105 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| California (continued) | ||||||||
| Golden St. Tobacco Securitization Corp. CA |
$ | 1,500,000 | $ | 1,500,105 | ||||
| Palomar Pomerado Hlth. CA Election of 2004 |
2,000,000 | 1,781,980 | ||||||
| Univ. of California Revs. Ser. O |
1,000,000 | 1,071,130 | ||||||
|
|
|
|||||||
| 22,513,734 | ||||||||
| Colorado – 2.3% | ||||||||
| Colorado Health Facs. Auth. Rev. |
1,825,000 | 1,785,215 | ||||||
| Colorado Hsg. & Fin. Auth. |
1,270,000 | 1,324,470 | ||||||
| North Metro Fire Rescue Dist. Colorado G.O., |
1,000,000 | 1,031,390 | ||||||
| West Metro Fire Protn. Dist. CO G.O. Ser. A, |
1,895,000 | 1,992,972 | ||||||
|
|
|
|||||||
| 6,134,047 | ||||||||
| Connecticut – 1.8% | ||||||||
| Connecticut St. |
1,500,000 | 1,599,510 | ||||||
| Connecticut St. G.O. Ser. A |
1,500,000 | 1,550,430 | ||||||
| Connecticut St. Spl. Tax Oblig. Rev. |
1,500,000 | 1,560,945 | ||||||
|
|
|
|||||||
| 4,710,885 | ||||||||
| Delaware – 0.5% | ||||||||
| Wilmington Delaware G.O. Ser. A |
1,195,000 | 1,390,382 | ||||||
| 5.00% due 12/1/2028 |
55,000 | 57,070 | ||||||
|
|
|
|||||||
| 1,447,452 | ||||||||
| 106 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| District Of Columbia – 0.8% | ||||||||
| Metropolitan Washington DC Arpt. Auth. Sys. |
$ | 2,000,000 | $ | 2,043,180 | ||||
|
|
|
|||||||
| 2,043,180 | ||||||||
| Florida – 5.8% | ||||||||
| Brevard Cnty. FLA Health Facs. Auth. Health |
1,500,000 | 1,607,265 | ||||||
| Florida St. |
2,000,000 | 2,165,460 | ||||||
| Dept. Trans. - Right of Way 5.375% due 7/1/2027 |
1,500,000 | 1,600,080 | ||||||
| Miami-Dade Cnty. FLA Aviation Rev. |
2,000,000 | 1,914,160 | ||||||
| Miami-Dade Cnty. FLA Aviation Rev. Ser. A |
1,500,000 | 1,585,440 | ||||||
| Orlando & Orange Cnty. FLA Expressway Auth. |
2,480,000 | 2,509,884 | ||||||
| Palm Beach Cnty. FLA Wtr. & Swr. Rev. |
1,500,000 | 1,557,360 | ||||||
| Sarasota Cnty. FLA Pub. Hosp. Dist. Hosp. Rev. |
1,000,000 | 983,170 | ||||||
| 5.625% due 7/1/2039 |
1,500,000 | 1,494,705 | ||||||
|
|
|
|||||||
| 15,417,524 | ||||||||
| Georgia – 3.6% | ||||||||
| Atlanta GA Wtr. & Wastewtr. Rev. Ser. A |
3,000,000 | 3,197,415 | ||||||
| Gwinnett Cnty. GA Sch. Dist. G.O. |
1,760,000 | 2,028,787 | ||||||
| 5.00% due 2/1/2032 - 2/1/2036 |
2,740,000 | 2,807,386 | ||||||
| Metropolitan Atlanta Rapid Tran. Auth. GA Sales |
1,500,000 | 1,541,790 | ||||||
|
|
|
|||||||
| 9,575,378 | ||||||||
| Illinois – 3.1% | ||||||||
| Illinois Fin. Auth. Rev. |
1,500,000 | 1,437,555 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 107 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Illinois (continued) | ||||||||
| Illinois St. G.O. |
$ | 3,350,000 | $ | 3,371,909 | ||||
| Illinois St. Toll Hwy. Auth. Toll Hwy. Rev. Ref. |
2,000,000 | 1,939,240 | ||||||
| Illinois St. Toll Hwy. Auth. Toll Hwy. Rev. Ser. B |
1,500,000 | 1,509,495 | ||||||
|
|
|
|||||||
| 8,258,199 | ||||||||
| Indiana – 0.8% | ||||||||
| Indiana Fin. Auth. Hlth. Sys. Rev. |
2,000,000 | 2,037,000 | ||||||
|
|
|
|||||||
| 2,037,000 | ||||||||
| Iowa – 1.3% | ||||||||
| Iowa Fin. Auth. Rev. Revolving Fd. |
1,750,000 | 1,807,837 | ||||||
| Iowa St. Spl. Oblig. iJobs Prog. Ser. A |
1,500,000 | 1,542,420 | ||||||
|
|
|
|||||||
| 3,350,257 | ||||||||
| Kansas – 1.7% | ||||||||
| Kansas St. Dept. Transn. Hwy. Rev. Ser. B-2 |
1,500,000 | 1,655,190 | ||||||
| Kansas St. Dev. Fin. Auth. Lease Rev. Ser. G-1, |
1,300,000 | 1,372,241 | ||||||
| Kansas St. Dev. Fin. Auth. Hosp. Rev. Adventist Health |
1,500,000 | 1,553,055 | ||||||
|
|
|
|||||||
| 4,580,486 | ||||||||
| Louisiana – 1.3% | ||||||||
| De Soto Parish LA Environmental Impt. Rev. |
1,925,000 | 1,926,848 | ||||||
| Louisiana Loc. Govt. Environmental Facs. & |
1,525,000 | 1,631,064 | ||||||
|
|
|
|||||||
| 3,557,912 | ||||||||
| Maine – 0.6% | ||||||||
| Maine St. Tpk. Auth. Tpk. Rev. |
1,500,000 | 1,603,785 | ||||||
|
|
|
|||||||
| 1,603,785 | ||||||||
| 108 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Maryland – 1.3% | ||||||||
| Baltimore Cnty. MD Met. Dist. 71st Issue |
$ | 1,500,000 | $ | 1,652,685 | ||||
| Maryland St. Dept. Transn. Cons. Transn. |
1,500,000 | 1,759,365 | ||||||
|
|
|
|||||||
| 3,412,050 | ||||||||
| Massachusetts – 6.5% | ||||||||
| Massachusetts Bay Transn. Auth. Rev. Ser. A |
1,500,000 | 1,547,745 | ||||||
| Massachusetts St. College Bldg. Auth. Proj. Rev. |
950,000 | 978,547 | ||||||
| Massachusetts St. College Bldg. Auth. Proj. Rev. |
1,500,000 | 1,516,605 | ||||||
| Massachusetts St. Dept. Transn. Met Hwy. Sys. |
2,000,000 | 1,974,000 | ||||||
| Massachusetts St. Health & Ed. Facs. Auth. Rev. |
1,500,000 | 1,526,490 | ||||||
| Harvard Univ. Ser. A |
1,500,000 | 1,594,230 | ||||||
| Massachusetts St. Health & Ed. Facs. Auth. Rev. |
1,500,000 | 1,521,555 | ||||||
| Massachusetts St. Health & Ed. Facs. Auth. Rev. |
1,500,000 | 1,652,715 | ||||||
| Massachusetts St. Hsg. Fin. Agy. Ser. B |
1,500,000 | 1,425,315 | ||||||
| Massachusetts St. Wtr. Poll. Abatement Tr. Ref. |
1,500,000 | 1,598,940 | ||||||
| Massachusetts St. Wtr. Res. Auth. |
2,000,000 | 2,021,160 | ||||||
|
|
|
|||||||
| 17,357,302 | ||||||||
| Michigan – 0.8% | ||||||||
| Michigan Mun. Bd. Auth. Dept. of Treasury Rev. |
2,000,000 | 2,205,100 | ||||||
|
|
|
|||||||
| 2,205,100 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 109 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Minnesota – 2.0% | ||||||||
| Minnesota St. G.O. |
$ | 1,500,000 | $ | 1,636,560 | ||||
| Minnesota St. Var. Purp. Ser. D G.O. |
2,000,000 | 2,197,760 | ||||||
| Rochester, MN Waste Wtr. Ser. A G.O. |
1,500,000 | 1,558,095 | ||||||
|
|
|
|||||||
| 5,392,415 | ||||||||
| Mississippi – 0.6% | ||||||||
| Warren Cnty. MS Gulf Opportunity Zone Intl. |
1,500,000 | 1,553,715 | ||||||
|
|
|
|||||||
| 1,553,715 | ||||||||
| Missouri – 2.5% | ||||||||
| Metropolitan St. Louis MO Swr. Dist. Wastewtr. |
1,500,000 | 1,604,625 | ||||||
| Missouri St. Environmental Impt. & Energy Res. |
1,500,000 | 1,680,165 | ||||||
| Missouri St. Hwys. & Trans. Commn. St. Rd. |
1,500,000 | 1,591,860 | ||||||
| 5.25% due 5/1/2018 (2st Lein) |
1,500,000 | 1,727,475 | ||||||
|
|
|
|||||||
| 6,604,125 | ||||||||
| Montana – 0.7% | ||||||||
| Forsyth MT Poll. Ctl. Rev. |
2,000,000 | 1,889,360 | ||||||
|
|
|
|||||||
| 1,889,360 | ||||||||
| Nevada – 0.6% | ||||||||
| Clark Cnty. NV Ind. Dev. Rev. Southwest Gas |
1,675,000 | 1,455,324 | ||||||
|
|
|
|||||||
| 1,455,324 | ||||||||
| New Jersey – 6.0% | ||||||||
| Essex Cnty. NJ Impt. Auth. Proj. Rev. |
2,000,000 | 2,100,380 | ||||||
| Middlesex Cnty. NJ Impt. Auth. Lease Rev. |
1,500,000 | 1,556,145 | ||||||
| 110 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| New Jersey (continued) | ||||||||
| New Jersey Economic Dev. Auth. Rev. |
$ | 1,500,000 | $ | 1,548,420 | ||||
| New Jersey Economic Dev. Auth. Wtr. Facs. Rev. |
1,500,000 | 1,448,250 | ||||||
| New Jersey Garden St. Preservation Tr. Ser. A , |
1,500,000 | 1,734,180 | ||||||
| New Jersey St. Ed. Facs. Auth. Rev. |
1,500,000 | 1,558,905 | ||||||
| New Jersey St. Transn. Tr. Fd. Auth. |
2,000,000 | 2,091,420 | ||||||
| Transn. Sys. Ser. C, |
1,500,000 | 1,696,650 | ||||||
| New Jersey St. Var. Purp. G.O. |
2,000,000 | 2,178,740 | ||||||
|
|
|
|||||||
| 15,913,090 | ||||||||
| New York – 5.1% | ||||||||
| New York NY City Mun. Wtr. Fin. Auth. Wtr. & |
1,500,000 | 1,554,240 | ||||||
| New York NY G.O. Ser. H-1 |
1,500,000 | 1,636,935 | ||||||
| New York NY Ser. D1 |
1,500,000 | 1,582,365 | ||||||
| New York St. Dorm. Auth. Lease Rev. |
2,000,000 | 2,159,860 | ||||||
| New York St. Dorm. Auth. Rev. |
1,500,000 | 1,567,530 | ||||||
| New York St. Dorm. Auth. Revs. Non St. Supp. |
2,050,000 | 2,101,434 | ||||||
| New York State Thruway Auth. New York |
1,500,000 | 1,566,945 | ||||||
| Port Auth. of New York & New Jersey Spl. Oblig. Rev. |
1,500,000 | 1,475,895 | ||||||
|
|
|
|||||||
| 13,645,204 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 111 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| North Carolina – 3.4% | ||||||||
| Charlotte NC Wtr. & Swr. Sys. Rev. Ser. B |
$ | 1,750,000 | $ | 1,797,897 | ||||
| Raleigh NC Combined Enterprise Sys. Rev. |
1,600,000 | 1,664,720 | ||||||
| University NC Univ. Revs. |
1,500,000 | 1,563,015 | ||||||
| Wake Cnty. NC G.O. |
1,500,000 | 1,756,530 | ||||||
| Pub. Impt. Ser. A |
2,000,000 | 2,330,580 | ||||||
|
|
|
|||||||
| 9,112,742 | ||||||||
| Ohio – 2.9% | ||||||||
| Buckeye OH Tobacco Settlement Fing. Auth. |
2,000,000 | 2,089,020 | ||||||
| Columbus OH Swr. Rev. Ser. A |
1,500,000 | 1,537,770 | ||||||
| Franklin Cnty. OH Cnvtn. Facs. Ref. |
1,000,000 | 1,071,350 | ||||||
| Ohio St. Air Quality Dev. Auth. Rev. |
1,500,000 | 1,589,715 | ||||||
| Ohio St. Hosp. Fac. Rev. |
1,500,000 | 1,514,460 | ||||||
|
|
|
|||||||
| 7,802,315 | ||||||||
| Oklahoma – 0.6% | ||||||||
| Oklahoma St. Wtr. Res. Brd. Revolving Fd. Rev. |
1,635,000 | 1,712,434 | ||||||
|
|
|
|||||||
| 1,712,434 | ||||||||
| Oregon – 2.6% | ||||||||
| Deschutes & Jefferson Cnty. OR Sch. Dist. G.O. |
1,500,000 | 1,655,700 | ||||||
| Oregon St. Dept. Trans. Hwy. User Tax Rev. |
1,500,000 | 1,553,025 | ||||||
| Sr. Lien-Ser. A |
1,500,000 | 1,518,315 | ||||||
| 112 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Oregon (continued) | ||||||||
| Oregon St. Facs. Auth. Rev. |
$ | 1,000,000 | $ | 957,090 | ||||
| Oregon St. G.O. St. Brd. Ed. Ser. D |
1,000,000 | 1,077,200 | ||||||
|
|
|
|||||||
| 6,761,330 | ||||||||
| Pennsylvania – 1.2% | ||||||||
| Franklin Cnty. PA Ind. Dev. Auth. Rev. |
1,000,000 | 952,160 | ||||||
| St. Mary Hosp. Auth. PA Health Sys. Rev. |
2,000,000 | 2,133,660 | ||||||
|
|
|
|||||||
| 3,085,820 | ||||||||
| Puerto Rico – 10.9% | ||||||||
| Puerto Rico Comwlth. G.O. |
2,000,000 | 2,068,760 | ||||||
| Ref. Pub. Impt. Ser. B |
500,000 | 525,590 | ||||||
| Puerto Rico Comwlth. Govt. Dev. Bk. |
2,460,000 | 2,616,628 | ||||||
| Puerto Rico Comwlth. Hwy. & Transn. Auth. |
1,500,000 | 1,466,895 | ||||||
| Puerto Rico Comwlth. Hwy. & Transn. Auth. |
2,000,000 | 1,999,980 | ||||||
| Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Ser. TT |
1,500,000 | 1,506,585 | ||||||
| Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Ser. UU |
1,500,000 | 1,560,615 | ||||||
| Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Ser. WW |
2,000,000 | 2,062,740 | ||||||
| 5.50% due 7/1/2021 |
1,500,000 | 1,594,470 | ||||||
| Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Ser. XX |
2,000,000 | 2,002,880 | ||||||
| Puerto Rico Elec. Pwr. Auth. Pwr. Rev. Ser. ZZ |
2,000,000 | 2,022,340 | ||||||
| Puerto Rico Pub. Bldgs. Auth. Rev. Gtd. |
||||||||
| Ref-Govt. Facs. Ser. F |
1,470,000 | 1,532,284 | ||||||
| Ref-Govt. Facs. Ser. P |
1,170,000 | 1,249,291 | ||||||
| 7.00% due 7/1/2021 |
1,500,000 | 1,631,940 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 113 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Puerto Rico (continued) | ||||||||
| Puerto Rico Sales Tax Fing. Corp. Sales Tax Rev. Ser. A |
$ | 2,000,000 | $ | 2,004,080 | ||||
| 5.25% due 8/1/2027 |
1,500,000 | 1,503,015 | ||||||
| 6.125% due 8/1/2029 |
1,500,000 | 1,534,170 | ||||||
|
|
|
|||||||
| 28,882,263 | ||||||||
| Rhode Island – 0.9% | ||||||||
| Tobacco Settlement Fing. Corp. RI Asset Bkd. Ser. A |
1,465,000 | 1,491,927 | ||||||
| 6.125% due 6/1/2032 |
1,015,000 | 973,517 | ||||||
|
|
|
|||||||
| 2,465,444 | ||||||||
| South Carolina – 1.2% | ||||||||
| South Carolina St. Pub. Svc. Auth. Rev. Ref. Ser. A |
1,500,000 | 1,723,935 | ||||||
| South Carolina St. Pub. Svc. Auth. Rev. Ser. B |
1,500,000 | 1,538,340 | ||||||
|
|
|
|||||||
| 3,262,275 | ||||||||
| Tennessee – 2.8% | ||||||||
| Johnson City Hlth. & Edl. Facs. Brd. Hosp. Rev. Mountain Sts. Hlth.
Alliance |
1,500,000 | 1,425,945 | ||||||
| Metropolitan Govt. Nashville & Davidson Cnty. |
1,250,000 | 1,252,538 | ||||||
| Vanderbilt Univ. Ser. B |
1,500,000 | 1,567,575 | ||||||
| Tennessee St. G.O. Ser. C |
1,425,000 | 1,529,566 | ||||||
| Tennessee St. Sch. Bd. Auth. Higher Ed. Facs. Ser. B |
1,500,000 | 1,543,695 | ||||||
|
|
|
|||||||
| 7,319,319 | ||||||||
| Texas – 6.3% | ||||||||
| Austin, TX Elec. Utility Sys. Rev. Ser. A |
2,000,000 | 2,051,560 | ||||||
| Fort Bend Tex. Indpt. Sch. Dist. G.O. Sch. Bldg. |
1,500,000 | 1,545,420 | ||||||
| Harris Cnty. TX G.O. Ser. B |
1,500,000 | 1,612,395 | ||||||
| North Tex. Mun. Wtr. Dist. Regl. Wastewtr. Rev. |
1,500,000 | 1,541,025 | ||||||
| North Tex. Twy. Auth. Dallas North Twy. Sys. Rev. Ser. C |
4,250,000 | 4,573,198 | ||||||
| 114 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS TAX-EXEMPT FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Texas (continued) | ||||||||
| Round Rock Tex. Indpt. Sch. Dist. G.O. Sch. Bldg. |
$ | 1,500,000 | $ | 1,550,070 | ||||
| Tex. Private Activity Bd. Surface Transn. Corp. |
2,130,000 | 2,123,333 | ||||||
| Texas St. Univ. Sys. Fing. Rev. |
1,500,000 | 1,593,180 | ||||||
|
|
|
|||||||
| 16,590,181 | ||||||||
| Virginia – 1.8% | ||||||||
| Fairfax Cnty. VA Indl. Dev. Auth. Rev. Health Care Inova Ser. C |
500,000 | 507,825 | ||||||
| Tobacco Settlement Fin. Corp. VA Asset Bkd. |
1,500,000 | 1,654,785 | ||||||
| Virginia St. Pub. Sch. Auth. Ser. B |
1,500,000 | 1,563,270 | ||||||
| 5.25% due 8/1/2033 |
1,000,000 | 1,034,020 | ||||||
|
|
|
|||||||
| 4,759,900 | ||||||||
| Washington – 2.0% | ||||||||
| Clark Cnty. WA Pub. Utility Dist. No. 001, |
2,000,000 | 2,012,940 | ||||||
| King Cnty. WA Swr. Rev. |
1,815,000 | 1,890,758 | ||||||
| Tobacco Settlement Auth. WA Tobacco |
1,445,000 | 1,459,898 | ||||||
|
|
|
|||||||
| 5,363,596 | ||||||||
| Wisconsin – 1.3% | ||||||||
| Wisconsin St. Health & Edl. Facs. Auth. Rev. |
1,500,000 | 1,485,750 | ||||||
| Aurora Health Care |
2,000,000 | 2,027,960 | ||||||
|
|
|
|||||||
| 3,513,710 | ||||||||
| Total Municipal Bonds (Cost $259,964,219) |
261,274,822 | |||||||
| Total Investments - 98.4% (Cost $259,964,219) |
261,274,822 | |||||||
| Other Assets, Net - 1.6% | 4,324,547 | |||||||
| Total Net Assets - 100.0% | $ | 265,599,369 | ||||||
| (1) | Pre-refunded. |
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 115 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS TAX-EXEMPT FUND
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Municipal Bonds |
$ | — | $ | 261,274,822 | $ | — | $ | 261,274,822 | ||||||||
| Total | $ | — | $ | 261,274,822 | $ | — | $ | 261,274,822 | ||||||||
| 116 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD MUNICIPAL BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Municipal Bonds – 89.6% | ||||||||
| Arizona – 2.1% | ||||||||
| Pima Cnty. AR Ind. Dev. Auth. Ind. Rev. |
$ | 2,500,000 | $ | 2,169,925 | ||||
|
|
|
|||||||
| 2,169,925 | ||||||||
| California – 11.4% | ||||||||
| California Health Facs. Fing. Auth. Rev. |
1,500,000 | 1,466,610 | ||||||
| California St. Pub. Wrks. Brd. Lease Rev. |
1,500,000 | 1,536,270 | ||||||
| 6.625% due 11/1/2034 |
2,000,000 | 2,094,200 | ||||||
| California St. Var. Purp. G.O. |
2,000,000 | 2,071,000 | ||||||
| San Diego Calif. Redev. Agy. Tax Allocation Rev. |
1,000,000 | 934,500 | ||||||
| Naval Training Ctr. Ser. A |
1,000,000 | 946,570 | ||||||
| San Ysidro Redev. Ser. A |
1,000,000 | 922,460 | ||||||
| Tulare Calif. Redev. Agy. Tax Allocation |
1,970,000 | 1,872,899 | ||||||
|
|
|
|||||||
| 11,844,509 | ||||||||
| Colorado – 1.4% | ||||||||
| Regl. Transn. Dist. CO Private Activity Rev. |
1,500,000 | 1,467,300 | ||||||
|
|
|
|||||||
| 1,467,300 | ||||||||
| District Of Columbia – 1.4% | ||||||||
| District of Columbia Tobacco Settlement Fing. Corp. |
1,500,000 | 1,477,275 | ||||||
|
|
|
|||||||
| 1,477,275 | ||||||||
| Florida – 5.4% | ||||||||
| Brevard Cnty. FLA Health Facs. Auth. Health |
1,500,000 | 1,607,265 | ||||||
| Highlands Cnty. FLA Health Facs. Auth. Rev. |
1,500,000 | 1,563,675 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 117 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD MUNICIPAL BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Florida (continued) | ||||||||
| Village Cmnty. Dev. Dist. No. 8 FLA Spl. |
$ | 2,500,000 | $ | 2,388,375 | ||||
|
|
|
|||||||
| 5,559,315 | ||||||||
| Illinois – 7.4% | ||||||||
| Cook Cnty. IL Rev. |
2,000,000 | 2,002,600 | ||||||
| Illinois Fin. Auth. Rev. |
1,250,000 | 1,197,963 | ||||||
| Temps-50-Park Place Elmhurst Ser. D-3 |
1,250,000 | 1,254,725 | ||||||
| Ref-Roosevelt Univ. Proj. |
1,500,000 | 1,531,170 | ||||||
| Park Place Elmhurst Ser. A |
1,750,000 | 1,717,695 | ||||||
|
|
|
|||||||
| 7,704,153 | ||||||||
| Indiana – 2.1% | ||||||||
| Indiana Hlth. & Edl. Fac. Fing. Auth. Hosp. Rev. |
2,500,000 | 2,218,750 | ||||||
|
|
|
|||||||
| 2,218,750 | ||||||||
| Kentucky – 2.4% | ||||||||
| Kentucky Economic Dev. Fin. Auth. Hosp. Facs. |
2,500,000 | 2,462,300 | ||||||
|
|
|
|||||||
| 2,462,300 | ||||||||
| Louisiana – 4.2% | ||||||||
| Louisiana Pub. Facs. Auth. Rev. Ochsner Clinic |
1,500,000 | 1,253,205 | ||||||
| Fndtn. Proj. Ser. B 5.25% due 5/15/2038 |
1,500,000 | 1,253,205 | ||||||
| St. John The Baptist Parish LA Rev. |
2,000,000 | 1,798,680 | ||||||
|
|
|
|||||||
| 4,305,090 | ||||||||
| Maryland – 1.4% | ||||||||
| Gaithersburg MD Economic Dev. Rev. |
1,500,000 | 1,489,875 | ||||||
|
|
|
|||||||
| 1,489,875 | ||||||||
| 118 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD MUNICIPAL BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Massachusetts – 1.9% | ||||||||
| Massachusetts Dev. Fin. Agy. Sr. Living Fac. |
$ | 1,000,000 | $ | 1,000,600 | ||||
| Groves-Lincoln Ser. A |
1,000,000 | 1,017,310 | ||||||
|
|
|
|||||||
| 2,017,910 | ||||||||
| Michigan – 2.8% | ||||||||
| Michigan St. Hsg. Dev. Auth. Single Fam. Homeownership |
1,200,000 | 1,170,588 | ||||||
| Michigan Tobacco Settlement Fin. Auth. Tobacco |
2,000,000 | 1,730,820 | ||||||
|
|
|
|||||||
| 2,901,408 | ||||||||
| Nebraska – 1.4% | ||||||||
| Nebraska Inv. Fin. Auth. Single Fam. Hsg. Rev. |
1,500,000 | 1,495,935 | ||||||
|
|
|
|||||||
| 1,495,935 | ||||||||
| Nevada – 1.7% | ||||||||
| Clark Cnty. NV Ind. Dev. Rev. Southwest Gas |
2,000,000 | 1,737,700 | ||||||
|
|
|
|||||||
| 1,737,700 | ||||||||
| New Jersey – 5.5% | ||||||||
| New Jersey Economic Dev. Auth. Rev. |
4,060,000 | 3,697,618 | ||||||
| MSU Student Hsg. Proj.-Provident |
2,000,000 | 1,987,100 | ||||||
|
|
|
|||||||
| 5,684,718 | ||||||||
| New Mexico – 3.3% | ||||||||
| Farmington NM Poll. Ctrl. Rev. |
2,000,000 | 1,942,840 | ||||||
| Ref. Pub. Svc. N Mex Ser. F |
1,600,000 | 1,525,616 | ||||||
|
|
|
|||||||
| 3,468,456 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 119 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD MUNICIPAL BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| New York – 2.9% | ||||||||
| Hempstead Town NY Loc. Dev. Corp. Rev. |
$ | 1,500,000 | $ | 1,550,730 | ||||
| Port Auth. of New York & New Jersey Spl. Oblig. |
1,500,000 | 1,475,895 | ||||||
|
|
|
|||||||
| 3,026,625 | ||||||||
| Ohio – 2.0% | ||||||||
| Bowling Green OH Student Hsg. Rev. |
1,500,000 | 1,403,115 | ||||||
| Ohio St. Environmental Facs. Rev. |
760,000 | 700,484 | ||||||
|
|
|
|||||||
| 2,103,599 | ||||||||
| Oklahoma – 1.4% | ||||||||
| Tulsa Cnty. OKLA Indl. Auth. Sr. Living Cmnty. Rev. |
1,500,000 | 1,472,850 | ||||||
|
|
|
|||||||
| 1,472,850 | ||||||||
| Pennsylvania – 4.1% | ||||||||
| Cumberland Cnty. PA Mun. Auth. Rev. |
1,250,000 | 1,170,750 | ||||||
| Diakon Lutheran |
1,500,000 | 1,523,145 | ||||||
| Dauphin Cnty. PA Gen. Auth. Health Sys. Rev. |
1,500,000 | 1,505,790 | ||||||
|
|
|
|||||||
| 4,199,685 | ||||||||
| Puerto Rico – 2.5% | ||||||||
| Puerto Rico Comwlth. G.O. |
1,000,000 | 1,008,600 | ||||||
| 6.50% due 7/1/2037 |
1,500,000 | 1,576,770 | ||||||
|
|
|
|||||||
| 2,585,370 | ||||||||
| Rhode Island – 0.6% | ||||||||
| Tobacco Settlement Fing. Corp. RI |
600,000 | 575,478 | ||||||
|
|
|
|||||||
| 575,478 | ||||||||
| 120 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS HIGH YIELD MUNICIPAL BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| South Carolina – 2.9% | ||||||||
| Richland Cnty. SC Environmental Impt. Rev. |
$ | 1,500,000 | $ | 1,530,225 | ||||
| South Carolina Jobs-Economic Dev. |
1,500,000 | 1,478,640 | ||||||
|
|
|
|||||||
| 3,008,865 | ||||||||
| Tennessee – 2.8% | ||||||||
| Johnson City Health & Edl. Facs. Brd. Hosp. Rev. |
1,500,000 | 1,425,945 | ||||||
| Maury Cnty. TN Indl. Dev. Brd. Poll. Ctrl. Rev. |
1,500,000 | 1,457,610 | ||||||
|
|
|
|||||||
| 2,883,555 | ||||||||
| Texas – 9.7% | ||||||||
| Brazos River Tex. Harbor Navigation Dist. |
2,000,000 | 1,895,840 | ||||||
| Dallas-Fort Worth Tex. International Arpt. Rev. Jt |
1,500,000 | 1,500,330 | ||||||
| Tarrant Cnty. Tex. Cultural Ed. Facs. Fin. Corp. |
1,500,000 | 1,503,450 | ||||||
| Tex. Private Activity Bd. Surface Transn. Corp. |
1,500,000 | 1,507,185 | ||||||
| Sr. Lien-NTE Mobility |
1,500,000 | 1,571,790 | ||||||
| Sr. Lien-LBJ Infrastructure |
2,000,000 | 2,081,080 | ||||||
|
|
|
|||||||
| 10,059,675 | ||||||||
| Washington – 1.8% | ||||||||
| Tobacco Settlement Auth. WA Tobacco |
1,905,000 | 1,846,688 | ||||||
|
|
|
|||||||
| 1,846,688 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 121 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS HIGH YIELD MUNICIPAL BOND FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Wisconsin – 3.1% | ||||||||
| Wisconsin Hsg. & Econ. Dev. Auth. Hsg. Rev. |
$ | 1,710,000 | $ | 1,681,409 | ||||
| Wisconsin St. Health & Edl. Facs. Auth. Rev. |
1,500,000 | 1,517,820 | ||||||
|
|
|
|||||||
| 3,199,229 | ||||||||
| Total Municipal Bonds (Cost $95,752,577) |
92,966,238 | |||||||
| Total Investments - 89.6% (Cost $95,752,577) |
92,966,238 | |||||||
| Other Assets, Net - 10.4% | 10,792,266 | |||||||
| Total Net Assets - 100.0% | $ | 103,758,504 | ||||||
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Municipal Bonds |
$ | — | $ | 92,966,238 | $ | — | $ | 92,966,238 | ||||||||
| Total | $ | — | $ | 92,966,238 | $ | — | $ | 92,966,238 | ||||||||
| 122 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
SCHEDULE OF INVESTMENTS — RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Senior Secured Loans – 76.2% | ||||||||
| Aerospace/Defense – 2.4% | ||||||||
| Sequa Corp. |
$ | 1,999,413 | $ | 1,926,934 | ||||
| The SI Organization, Inc. |
6,000,000 | 6,037,500 | ||||||
| Transdigm, Inc. |
8,000,000 | 8,071,760 | ||||||
|
|
|
|||||||
| 16,036,194 | ||||||||
| Automotive – 4.1% | ||||||||
| Allison Transmission, Inc. |
9,873,828 | 9,655,814 | ||||||
| Dana Corp. |
6,777,540 | 6,823,289 | ||||||
| United Components, Inc. |
9,982,500 | 10,082,325 | ||||||
|
|
|
|||||||
| 26,561,428 | ||||||||
| Brokerage – 0.4% | ||||||||
| Fortress Investment Group LLC |
2,477,679 | 2,505,552 | ||||||
|
|
|
|||||||
| 2,505,552 | ||||||||
| Building Materials – 1.5% | ||||||||
| Armstrong World Industries, Inc. |
10,000,000 | 10,059,400 | ||||||
|
|
|
|||||||
| 10,059,400 | ||||||||
| Capital Goods – 0.1% | ||||||||
| The Manitowoc Co., Inc. |
689,719 | 697,650 | ||||||
|
|
|
|||||||
| 697,650 | ||||||||
| Chemicals – 1.8% | ||||||||
| Momentive Specialty Chemicals, Inc. |
3,510,242 | 3,472,963 | ||||||
| Extended Term Loan C2 |
1,473,026 | 1,457,382 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 123 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Chemicals (continued) | ||||||||
| Styron S.A.R.L. LLC |
$ | 6,849,683 | $ | 6,943,867 | ||||
|
|
|
|||||||
| 11,874,212 | ||||||||
| Communications – 1.8% | ||||||||
| Presidio, Inc. |
5,000,000 | 4,875,000 | ||||||
| Savvis Communications Corp. |
6,982,500 | 7,084,305 | ||||||
|
|
|
|||||||
| 11,959,305 | ||||||||
| Consumer Cyclical Services – 2.8% | ||||||||
| Affinion Group, Inc. |
1,985,000 | 1,977,556 | ||||||
| Ascend Learning |
10,000,000 | 9,750,000 | ||||||
| Language Line LLC |
6,500,000 | 6,548,750 | ||||||
|
|
|
|||||||
| 18,276,306 | ||||||||
| Consumer Products – 3.3% | ||||||||
| AMSCAN Holdings, Inc. |
6,982,500 | 6,979,567 | ||||||
| Reynolds Group Holdings, Inc. |
4,000,000 | 4,043,000 | ||||||
| Dollar Term Loan |
2,956,328 | 2,979,890 | ||||||
| Viking Acquisition |
7,500,000 | 7,495,350 | ||||||
|
|
|
|||||||
| 21,497,807 | ||||||||
| Diversified Manufacturing Operations – 1.5% | ||||||||
| Goodman Global Holdings, Inc. |
9,981,250 | 10,020,277 | ||||||
|
|
|
|||||||
| 10,020,277 | ||||||||
| 124 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Electric – 1.6% | ||||||||
| Calpine Corp. |
$ | 255,153 | $ | 254,612 | ||||
| Dynegy Holdings, Inc. |
1,851,348 | 1,832,834 | ||||||
| Term Loan B |
147,509 | 146,034 | ||||||
| New Development Holdings, Inc. |
4,480,934 | 4,551,330 | ||||||
| Race Point Power |
4,000,000 | 3,980,000 | ||||||
|
|
|
|||||||
| 10,764,810 | ||||||||
| Energy – 4.8% | ||||||||
| Citgo Petroleum Corp. |
4,875,000 | 5,034,461 | ||||||
| Term Loan C |
1,994,988 | 2,077,700 | ||||||
| GenOn Energy, Inc. |
9,982,500 | 10,053,775 | ||||||
| MEG Energy Corp. |
6,957,311 | 6,974,705 | ||||||
| Venoco, Inc. |
7,721,503 | 7,399,748 | ||||||
|
|
|
|||||||
| 31,540,389 | ||||||||
| Entertainment – 2.2% | ||||||||
| Leslie’s Poolmart, Inc. |
8,000,000 | 8,060,000 | ||||||
| Live Nation Entertainment, Inc. |
6,476,187 | 6,462,717 | ||||||
|
|
|
|||||||
| 14,522,717 | ||||||||
| Environmental – 0.6% | ||||||||
| Wm. Bolthouse Farms, Inc. |
3,875,760 | 3,907,270 | ||||||
|
|
|
|||||||
| 3,907,270 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 125 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Finance Companies – 3.2% | ||||||||
| AGFS Funding Co. |
$ | 7,000,000 | $ | 7,098,980 | ||||
| Delos Aircraft, Inc. |
1,423,077 | 1,446,558 | ||||||
| Interactive Data Corp. |
9,977,481 | 10,084,340 | ||||||
| International Lease Finance Corp. |
2,576,923 | 2,611,273 | ||||||
|
|
|
|||||||
| 21,241,151 | ||||||||
| Financial Other – 1.1% | ||||||||
| Trans Union LLC |
6,972,481 | 7,065,424 | ||||||
|
|
|
|||||||
| 7,065,424 | ||||||||
| Food – 2.9% | ||||||||
| Dole Food Co., Inc. |
850,738 | 855,451 | ||||||
| Term Loan C |
2,113,019 | 2,124,726 | ||||||
| Michael Foods Group, Inc. |
9,916,563 | 10,032,289 | ||||||
| NBTY, Inc. |
6,000,000 | 6,078,000 | ||||||
|
|
|
|||||||
| 19,090,466 | ||||||||
| Food And Beverage – 2.0% | ||||||||
| Darling International, Inc. |
7,500,000 | 7,556,250 | ||||||
| Pinnacle Foods Holdings Corp. |
5,417,208 | 5,475,876 | ||||||
|
|
|
|||||||
| 13,032,126 | ||||||||
| Gaming – 1.1% | ||||||||
| Caesars Entertainment Operating Co. |
8,000,000 | 7,218,000 | ||||||
|
|
|
|||||||
| 7,218,000 | ||||||||
| 126 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
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RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Healthcare – 9.1% | ||||||||
| Alliance Healthcare Services, Inc. |
$ | 6,962,368 | $ | 6,953,665 | ||||
| DJO Finance LLC New |
2,727,242 | 2,679,515 | ||||||
| Grifols, Inc. |
7,000,000 | 7,068,670 | ||||||
| Healthspring, Inc. |
6,475,000 | 6,377,875 | ||||||
| IMS Health, Inc. |
1,980,480 | 1,998,166 | ||||||
| Multiplan, Inc. |
9,799,279 | 9,885,023 | ||||||
| Sheridan Healthcare, Inc. |
1,984,536 | 1,908,468 | ||||||
| Skilled Healthcare Group, Inc. |
4,974,987 | 4,891,059 | ||||||
| United Surgical Partners International, Inc. |
4,529,389 | 4,365,199 | ||||||
| Delayed Draw |
568,766 | 548,148 | ||||||
| Universal Health Services, Inc. |
5,000,000 | 5,067,200 | ||||||
| Vanguard Health Holding Co. II LLC |
7,962,556 | 7,994,088 | ||||||
|
|
|
|||||||
| 59,737,076 | ||||||||
| Industrial – 1.5% | ||||||||
| Pinafore LLC |
9,906,350 | 10,031,468 | ||||||
|
|
|
|||||||
| 10,031,468 | ||||||||
| Insurance P&C – 1.1% | ||||||||
| Asurion Corp. |
7,000,000 | 7,015,750 | ||||||
|
|
|
|||||||
| 7,015,750 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 127 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Insurance: Life – 0.2% | ||||||||
| CNO Financial Group, Inc. |
$ | 1,000,000 | $ | 1,006,500 | ||||
|
|
|
|||||||
| 1,006,500 | ||||||||
| Media Cable – 1.0% | ||||||||
| Charter Communications Operating LLC |
1,665,750 | 1,642,146 | ||||||
| New Term Loan |
1,665,782 | 1,726,950 | ||||||
| Weather Channel |
2,943,378 | 2,958,566 | ||||||
|
|
|
|||||||
| 6,327,662 | ||||||||
| Media Noncable – 3.7% | ||||||||
| Getty Images, Inc. |
9,985,000 | 10,059,887 | ||||||
| Intelsat Jackson Holdings Ltd. |
1,000,000 | 947,500 | ||||||
| New Term Loan |
12,000,000 | 12,120,000 | ||||||
| Nielsen Finance LLC |
987,500 | 985,851 | ||||||
|
|
|
|||||||
| 24,113,238 | ||||||||
| Metals And Mining – 2.6% | ||||||||
| Fairmount Minerals Ltd. |
6,957,500 | 7,073,482 | ||||||
| Novelis, Inc. |
10,000,000 | 10,120,300 | ||||||
|
|
|
|||||||
| 17,193,782 | ||||||||
| Packaging – 1.1% | ||||||||
| Graham Packaging Co., L.P. |
6,982,500 | 7,065,452 | ||||||
|
|
|
|||||||
| 7,065,452 | ||||||||
| Paper – 1.1% | ||||||||
| Smurfit-Stone Container Enterprises, Inc. |
6,969,987 | 7,072,028 | ||||||
|
|
|
|||||||
| 7,072,028 | ||||||||
| 128 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
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RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Pharmaceuticals – 0.3% | ||||||||
| Convatec, Inc. |
$ | 2,000,000 | $ | 2,017,500 | ||||
|
|
|
|||||||
| 2,017,500 | ||||||||
| Restaurants – 4.2% | ||||||||
| Burger King Corp. |
5,500,000 | 5,578,760 | ||||||
| Dunkin’ Brands, Inc. |
10,000,000 | 10,113,900 | ||||||
| Focus Brands, Inc. |
4,590,909 | 4,636,818 | ||||||
| Wendy’s/Arby’s Restaurants LLC |
6,974,975 | 7,021,498 | ||||||
|
|
|
|||||||
| 27,350,976 | ||||||||
| Retailers – 5.1% | ||||||||
| Gymboree Corp. |
10,000,000 | 10,045,300 | ||||||
| Michaels Stores, Inc. |
4,860,811 | 4,725,292 | ||||||
| Term Loan B2 |
1,944,325 | 1,943,119 | ||||||
| Petco Animal Supplies, Inc. |
10,000,000 | 9,991,700 | ||||||
| The Neiman Marcus Group, Inc. |
4,816,002 | 4,709,665 | ||||||
| Extended Term Loan B2 |
2,000,000 | 1,978,440 | ||||||
|
|
|
|||||||
| 33,393,516 | ||||||||
| Technology – 5.7% | ||||||||
| Data Device Corp. |
10,000,000 | 9,868,800 | ||||||
| Dealer Computer Services, Inc. |
7,667,263 | 7,710,429 | ||||||
| Evertec, Inc. |
4,987,500 | 5,004,108 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 129 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Technology (continued) | ||||||||
| InfoGroup, Inc. |
$ | 4,982,481 | $ | 5,019,850 | ||||
| MDA Information Products Ltd. |
10,000,000 | 9,875,000 | ||||||
|
|
|
|||||||
| 37,478,187 | ||||||||
| Transportation – 0.0% | ||||||||
| Avis Budget Car Rental LLC |
261,786 | 261,917 | ||||||
|
|
|
|||||||
| 261,917 | ||||||||
| Wireless – 0.3% | ||||||||
| MetroPCS Wireless, Inc. |
1,981,892 | 1,976,937 | ||||||
|
|
|
|||||||
| 1,976,937 | ||||||||
| Total Senior Secured Loans (Cost $496,238,497) |
499,912,473 | |||||||
| Principal Amount |
Value | |||||||
| Corporate Bonds – 13.2% | ||||||||
| Airlines – 0.4% | ||||||||
| Air Canada |
2,500,000 | 2,625,000 | ||||||
|
|
|
|||||||
| 2,625,000 | ||||||||
| Banking – 0.2% | ||||||||
| BankAmerica Capital III |
1,500,000 | 1,066,360 | ||||||
|
|
|
|||||||
| 1,066,360 | ||||||||
| Brokerage – 0.1% | ||||||||
| Penson Worldwide, Inc. |
500,000 | 450,000 | ||||||
|
|
|
|||||||
| 450,000 | ||||||||
| Building Materials – 1.3% | ||||||||
| Associated Materials LLC |
2,000,000 | 2,090,000 | ||||||
| 130 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
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RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Building Materials (continued) | ||||||||
| Roofing Supply Group LLC |
$ | 4,000,000 | $ | 4,120,000 | ||||
| Texas Industries, Inc. |
2,000,000 | 2,125,000 | ||||||
|
|
|
|||||||
| 8,335,000 | ||||||||
| Construction Machinery – 0.8% | ||||||||
| The Manitowoc Co., Inc. |
5,000,000 | 5,312,500 | ||||||
|
|
|
|||||||
| 5,312,500 | ||||||||
| Consumer Cyclical Services – 0.5% | ||||||||
| West Corp. |
3,000,000 | 3,052,500 | ||||||
|
|
|
|||||||
| 3,052,500 | ||||||||
| Consumer Products – 0.2% | ||||||||
| NBTY, Inc. |
1,500,000 | 1,601,250 | ||||||
|
|
|
|||||||
| 1,601,250 | ||||||||
| Electric – 0.1% | ||||||||
| Dynegy Roseton Pass-Through Trust |
1,000,000 | 940,000 | ||||||
|
|
|
|||||||
| 940,000 | ||||||||
| Energy – 1.0% | ||||||||
| OPTI Canada, Inc. |
5,000,000 | 5,012,500 | ||||||
| SandRidge Energy, Inc. |
2,000,000 | 1,861,810 | ||||||
|
|
|
|||||||
| 6,874,310 | ||||||||
| Energy - Independent – 0.2% | ||||||||
| Energy XXI Gulf Coast, Inc. |
1,500,000 | 1,560,000 | ||||||
|
|
|
|||||||
| 1,560,000 | ||||||||
| Food And Beverage – 1.7% | ||||||||
| Aramark Corp. |
6,000,000 | 5,865,000 | ||||||
| Reddy Ice Corp. |
5,000,000 | 5,112,500 | ||||||
|
|
|
|||||||
| 10,977,500 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 131 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Gaming – 0.5% | ||||||||
| Pinnacle Entertainment, Inc. |
$ | 1,000,000 | $ | 1,002,500 | ||||
| Scientific Games Corp. |
2,250,000 | 2,266,875 | ||||||
|
|
|
|||||||
| 3,269,375 | ||||||||
| Healthcare – 0.8% | ||||||||
| ConvaTec Healthcare E S.A. |
5,000,000 | 5,068,750 | ||||||
|
|
|
|||||||
| 5,068,750 | ||||||||
| Metals And Mining – 0.6% | ||||||||
| FMG Resources August 2006 Pty Ltd |
2,500,000 | 2,500,000 | ||||||
| New Enterprise Stone & Lime Co. |
1,500,000 | 1,425,000 | ||||||
|
|
|
|||||||
| 3,925,000 | ||||||||
| Oil Field Services – 0.1% | ||||||||
| Frac Tech Services LLC |
500,000 | 507,500 | ||||||
|
|
|
|||||||
| 507,500 | ||||||||
| Packaging – 0.5% | ||||||||
| Reynolds Group Issuer, Inc. |
2,000,000 | 2,010,000 | ||||||
| 9.00% due 4/15/2019(2) |
1,500,000 | 1,554,375 | ||||||
|
|
|
|||||||
| 3,564,375 | ||||||||
| Refining – 0.5% | ||||||||
| Northern Tier Energy LLC |
3,000,000 | 3,060,000 | ||||||
|
|
|
|||||||
| 3,060,000 | ||||||||
| Restaurants – 0.9% | ||||||||
| Blue Acquisition Sub, Inc. |
2,000,000 | 2,130,000 | ||||||
| Seminole Hard Rock Entertainment, Inc. |
4,000,000 | 3,660,000 | ||||||
|
|
|
|||||||
| 5,790,000 | ||||||||
| 132 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
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RS FLOATING RATE FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Retailers – 0.1% | ||||||||
| Nebraska Book Co. |
$ | 1,000,000 | $ | 995,000 | ||||
|
|
|
|||||||
| 995,000 | ||||||||
| Technology – 0.9% | ||||||||
| Sanmina-SCI Corp. |
6,000,000 | 5,670,000 | ||||||
|
|
|
|||||||
| 5,670,000 | ||||||||
| Transportation Services – 0.9% | ||||||||
| Avis Budget Car Rental LLC |
2,000,000 | 1,920,000 | ||||||
| 8.25% due 1/15/2019(2) |
4,000,000 | 4,040,000 | ||||||
|
|
|
|||||||
| 5,960,000 | ||||||||
| Wireless – 0.9% | ||||||||
| iPCS, Inc. |
1,500,000 | 1,443,750 | ||||||
| MetroPCS Wireless, Inc. |
4,500,000 | 4,286,250 | ||||||
|
|
|
|||||||
| 5,730,000 | ||||||||
| Total Corporate Bonds (Cost $85,529,942) |
86,334,420 | |||||||
| Principal Amount |
Value | |||||||
| Repurchase Agreements – 0.6% | ||||||||
| State Street Bank and Trust Co. Repurchase Agreement, 0.09%, dated 12/31/2010, maturity value of $4,000,030, due 1/3/2011(3) |
4,000,000 | 4,000,000 | ||||||
| Total Repurchase Agreements (Cost $4,000,000) |
4,000,000 | |||||||
| Total Investments - 90.0% (Cost $585,768,439) |
590,246,893 | |||||||
| Other Assets, Net - 10.0% | 65,892,807 | |||||||
| Total Net Assets - 100.0% | $ | 656,139,700 | ||||||
| (1) | Variable rate security. The rate shown is the rate in effect at December 31, 2010. |
| (2) | Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, normally to certain qualified buyers. At December 31, 2010, the aggregate market value of these securities amounted to $56,528,750, representing 8.6% of net assets. These securities have been deemed liquid by the investment adviser pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 133 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS FLOATING RATE FUND
| (3) | The table below presents collateral for repurchase agreements. |
| Security | Coupon | Maturity Date | Value | |||||||||
| FHLMC |
0.00% | 6/20/2011 | $ | 4,080,915 | ||||||||
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Senior Secured Loans |
$ | — | $ | 499,912,473 | $ | — | 499,912,473 | |||||||||
| Corporate Bonds |
— | 86,334,420 | — | 86,334,420 | ||||||||||||
| Repurchase Agreements |
— | 4,000,000 | — | 4,000,000 | ||||||||||||
| Total | $ | — | $ | 590,246,893 | $ | — | 590,246,893 | |||||||||
| 134 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Collateralized Mortgage Obligations – 11.0% | ||||||||
| Chase Mortgage Finance Corp. |
$ | 318,100 | $ | 326,494 | ||||
| 2003-S14 2A2 |
159,285 | 161,894 | ||||||
| 2003-S14 3A1 |
289,600 | 296,144 | ||||||
| Citigroup Mortgage Loan Trust, Inc. |
155,616 | 162,603 | ||||||
| Countrywide Home Loan Mortgage Pass Through Trust |
310,026 | 315,193 | ||||||
| CS First Boston Mortgage Securities Corp. |
324,949 | 334,401 | ||||||
| 2003-27 5A2 |
435,159 | 440,694 | ||||||
| GMAC Mortgage Corp. Loan Trust |
166,623 | 166,493 | ||||||
| GSR Mortgage Loan Trust |
349,218 | 348,228 | ||||||
| J.P. Morgan Mortgage Trust |
191,337 | 193,557 | ||||||
| Master Asset Securitization Trust |
305,457 | 313,429 | ||||||
| Morgan Stanley Mortgage Loan Trust |
211,955 | 217,740 | ||||||
| Prime Mortgage Trust |
476,521 | 487,017 | ||||||
| Residential Funding Mortgage Securities I |
391,219 | 394,143 | ||||||
| 2005-S1 2A1 |
327,541 | 334,404 | ||||||
| Structured Asset Securities Corp. |
386,648 | 392,490 | ||||||
| 2003-30 3A1 |
148,738 | 152,011 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 135 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Collateralized Mortgage Obligations (continued) | ||||||||
| 2005-6 5A6 |
$ | 465,004 | $ | 465,469 | ||||
| 2005-6 2A19 |
179,860 | 177,491 | ||||||
| Wells Fargo Mortgage Backed Securities Trust |
351,007 | 359,643 | ||||||
| 2005-2 2A1 |
426,902 | 437,507 | ||||||
| 2006-1 A3 |
444,865 | 444,031 | ||||||
| 2006-7 1A1 |
213,249 | 215,629 | ||||||
| 2003-17 1A4 |
202,410 | 202,148 | ||||||
| Total Collateralized Mortgage Obligations (Cost $7,288,071) |
7,338,853 | |||||||
| Principal Amount |
Value | |||||||
| Commercial Mortgage-Backed Securities – 9.4% | ||||||||
| Bear Stearns Commercial Mortgage Securities |
500,000 | 533,412 | ||||||
| Citigroup Commercial Mortgage Trust |
605,000 | 646,176 | ||||||
| Commercial Mortgage Pass-Through Certificates |
150,053 | 150,692 | ||||||
| CS First Boston Mortgage Securities Corp. |
500,000 | 518,770 | ||||||
| First Union-Lehman Brothers-Bank of America |
500,000 | 537,390 | ||||||
| GE Capital Commercial Mortgage Corp. |
300,000 | 306,504 | ||||||
| Greenwich Capital Commercial Funding Corp. |
350,000 | 377,508 | ||||||
| JP Morgan Chase Commercial Mortgage Securities Corp. |
400,000 | 426,218 | ||||||
| 136 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS STRATEGIC INCOME FUND
| December 31, 2010 | Foreign Currency(6) |
Principal Amount |
Value | |||||||||
| Commercial Mortgage-Backed Securities (continued) | ||||||||||||
| LB UBS Commercial Mortgage Trust |
$ | 599,000 | $ | 640,130 | ||||||||
| Morgan Stanley Dean Witter Capital I |
500,000 | 526,166 | ||||||||||
| SBA Tower Trust Sec. Nt. |
500,000 | 517,404 | ||||||||||
| Wachovia Bank Commercial Mortgage Trust |
500,000 | 526,082 | ||||||||||
| 2006-C29 A4 |
500,000 | 532,070 | ||||||||||
| Total Commercial Mortgage-Backed Securities (Cost $6,132,879) |
6,238,522 | |||||||||||
| Principal Amount |
Value | |||||||||||
| Corporate Bonds – 58.2% | ||||||||||||
| Aerospace/Defense – 1.0% | ||||||||||||
| BE Aerospace, Inc. |
250,000 | 273,750 | ||||||||||
| Spirit Aerosystems, Inc. |
150,000 | 150,375 | ||||||||||
| Triumph Group, Inc. |
250,000 | 273,125 | ||||||||||
|
|
|
|||||||||||
| 697,250 | ||||||||||||
| Automotive – 0.4% | ||||||||||||
| Navistar International Corp. |
250,000 | 268,750 | ||||||||||
|
|
|
|||||||||||
| 268,750 | ||||||||||||
| Banking – 6.3% | ||||||||||||
| American Express Travel Related Services Co., Inc. |
500,000 | 516,019 | ||||||||||
| Australia & New Zealand Banking |
AUD | 500,000 | 513,087 | |||||||||
| Citigroup, Inc. |
$ | 500,000 | 538,723 | |||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 137 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| December 31, 2010 | Foreign Currency(6) |
Principal Amount |
Value | |||||||||
| Banking (continued) | ||||||||||||
| First Horizon National Corp. |
$ | 500,000 | $ | 504,710 | ||||||||
| JPMorgan Chase & Co. |
500,000 | 558,373 | ||||||||||
| Morgan Stanley |
500,000 | 510,818 | ||||||||||
| The Goldman Sachs Group, Inc. |
500,000 | 542,441 | ||||||||||
| Westpac Banking Corp. |
AUD | 500,000 | 514,436 | |||||||||
|
|
|
|||||||||||
| 4,198,607 | ||||||||||||
| Brokerage – 1.1% | ||||||||||||
| BlackRock, Inc. |
$ | 400,000 | 414,807 | |||||||||
| E*Trade Financial Corp. |
250,000 | 293,750 | ||||||||||
|
|
|
|||||||||||
| 708,557 | ||||||||||||
| Building Materials – 0.4% | ||||||||||||
| Roofing Supply Group LLC |
250,000 | 257,500 | ||||||||||
|
|
|
|||||||||||
| 257,500 | ||||||||||||
| Chemicals – 0.7% | ||||||||||||
| FMC Corp. |
250,000 | 258,111 | ||||||||||
| Lyondell Chemical Co. |
179,000 | 198,019 | ||||||||||
|
|
|
|||||||||||
| 456,130 | ||||||||||||
| Consumer Cyclical Services – 1.4% | ||||||||||||
| Live Nation Entertainment, Inc. |
250,000 | 253,125 | ||||||||||
| Mobile Mini, Inc. |
200,000 | 207,000 | ||||||||||
| 138 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Consumer Cyclical Services (continued) | ||||||||
| Service Corp. International |
$ | 150,000 | $ | 150,000 | ||||
| West Corp. |
300,000 | 305,250 | ||||||
|
|
|
|||||||
| 915,375 | ||||||||
| Consumer Products – 0.4% | ||||||||
| Easton-Bell Sports, Inc. |
250,000 | 274,375 | ||||||
|
|
|
|||||||
| 274,375 | ||||||||
| Electric – 0.6% | ||||||||
| Calpine Corp. |
250,000 | 246,250 | ||||||
| Mirant Mid Atlantic Pass Through Tr. |
150,393 | 154,905 | ||||||
|
|
|
|||||||
| 401,155 | ||||||||
| Energy – 1.8% | ||||||||
| Allis-Chalmers Energy, Inc. |
250,000 | 253,750 | ||||||
| Denbury Resources, Inc. |
249,000 | 270,165 | ||||||
| Linn Energy LLC |
150,000 | 153,750 | ||||||
| SandRidge Energy, Inc. |
250,000 | 232,726 | ||||||
| Suncor Energy, Inc. Sr. Nt. |
250,000 | 287,446 | ||||||
|
|
|
|||||||
| 1,197,837 | ||||||||
| Food And Beverage – 0.8% | ||||||||
| Aramark Corp. |
250,000 | 244,375 | ||||||
| Michael Foods, Inc. |
250,000 | 273,125 | ||||||
|
|
|
|||||||
| 517,500 | ||||||||
| Gaming – 0.9% | ||||||||
| MGM Resorts International |
100,000 | 110,000 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 139 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| December 31, 2010 | Foreign Currency(6) |
Principal Amount |
Value | |||||||||
| Gaming (continued) | ||||||||||||
| Pinnacle Entertainment, Inc. |
$ | 200,000 | $ | 207,000 | ||||||||
| Wynn Las Vegas LLC |
250,000 | 270,625 | ||||||||||
|
|
|
|||||||||||
| 587,625 | ||||||||||||
| Government Related – 14.5% | ||||||||||||
| Asian Development Bank |
JPY | 80,000,000 | 1,063,999 | |||||||||
| Bank Nederlandse Gemeenten NV |
CHF | 500,000 | 517,380 | |||||||||
| 3.00% due 1/28/2014 |
NOK | 4,000,000 | 680,847 | |||||||||
| Development Bank of Japan |
JPY | 40,000,000 | 534,654 | |||||||||
| European Bank for Reconstruction |
NOK | 3,000,000 | 516,020 | |||||||||
| European Investment Bank |
NOK | 3,000,000 | 524,380 | |||||||||
| Hungary Government Bond |
HUF | 90,000,000 | 406,362 | |||||||||
| Ser. 17/A |
HUF | 90,000,000 | 402,911 | |||||||||
| Italy Buoni Poliennali Del Tesoro |
EUR | 400,000 | 506,190 | |||||||||
| Kreditanstalt fuer Wiederaufbau |
AUD | 500,000 | 499,259 | |||||||||
| Petrobras International Finance Co. |
$ | 500,000 | 532,409 | |||||||||
| Poland Government Bond |
PLN | 2,800,000 | 941,071 | |||||||||
| 5.50% due 10/25/2019(2) |
PLN | 1,400,000 | 458,648 | |||||||||
| 6.25% due 10/24/2015(2) |
PLN | 1,400,000 | 489,950 | |||||||||
| Rabobank Nederland |
NOK | 3,000,000 | 520,714 | |||||||||
| 6.50% due 1/15/2015(2) |
AUD | 500,000 | 517,320 | |||||||||
| Societe Nationale des Chemins de Fer Francais |
CHF | 500,000 | 556,235 | |||||||||
|
|
|
|||||||||||
| 9,668,349 | ||||||||||||
| 140 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Healthcare – 1.2% | ||||||||
| Bio-Rad Laboratories, Inc. |
$ | 250,000 | $ | 271,250 | ||||
| HCA Holdings, Inc. |
250,000 | 250,000 | ||||||
| Vanguard Health Holding Co. II LLC |
250,000 | 255,000 | ||||||
|
|
|
|||||||
| 776,250 | ||||||||
| Independent Energy – 0.7% | ||||||||
| Anadarko Petroleum Corp. |
250,000 | 280,484 | ||||||
| Hilcorp Energy I L.P. |
200,000 | 206,500 | ||||||
|
|
|
|||||||
| 486,984 | ||||||||
| Industrial - Other – 0.2% | ||||||||
| Interline Brands, Inc. |
100,000 | 101,500 | ||||||
|
|
|
|||||||
| 101,500 | ||||||||
| Insurance - Life – 1.5% | ||||||||
| MetLife, Inc. |
500,000 | 510,512 | ||||||
| Prudential Financial, Inc. |
500,000 | 495,964 | ||||||
|
|
|
|||||||
| 1,006,476 | ||||||||
| Insurance P&C – 1.3% | ||||||||
| ACE INA Holdings, Inc. |
300,000 | 328,943 | ||||||
| CNA Financial Corp. |
500,000 | 548,377 | ||||||
|
|
|
|||||||
| 877,320 | ||||||||
| Lodging – 0.3% | ||||||||
| Host Hotels & Resorts, Inc. |
200,000 | 197,000 | ||||||
|
|
|
|||||||
| 197,000 | ||||||||
| Media Cable – 2.4% | ||||||||
| CCO Holdings LLC |
250,000 | 258,750 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 141 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Media Cable (continued) | ||||||||
| Comcast Corp. |
$ | 500,000 | $ | 537,385 | ||||
| Time Warner Cable, Inc. |
500,000 | 535,347 | ||||||
| Virgin Media Finance PLC |
250,000 | 282,500 | ||||||
|
|
|
|||||||
| 1,613,982 | ||||||||
| Media Noncable – 2.8% | ||||||||
| Allbritton Communications Co. |
250,000 | 252,500 | ||||||
| Discovery Communications LLC |
500,000 | 548,730 | ||||||
| Lamar Media Corp. |
200,000 | 212,500 | ||||||
| LIN Television Corp. |
100,000 | 106,000 | ||||||
| News America, Inc. |
250,000 | 280,378 | ||||||
| Quebecor Media, Inc. |
250,000 | 258,125 | ||||||
| Univision Communications, Inc. |
200,000 | 210,000 | ||||||
|
|
|
|||||||
| 1,868,233 | ||||||||
| Metals And Mining – 1.9% | ||||||||
| ArcelorMittal |
500,000 | 532,743 | ||||||
| Freeport-McMoRan Copper & Gold, Inc. |
500,000 | 553,125 | ||||||
| Penn Virginia Resource Partners L.P. |
150,000 | 154,500 | ||||||
|
|
|
|||||||
| 1,240,368 | ||||||||
| Natural Gas: Distributors – 0.4% | ||||||||
| Ferrellgas L.P. |
250,000 | 243,750 | ||||||
|
|
|
|||||||
| 243,750 | ||||||||
| Non Captive Consumer – 0.4% | ||||||||
| SLM Corp. |
250,000 | 254,411 | ||||||
|
|
|
|||||||
| 254,411 | ||||||||
| 142 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Non Captive Diversified – 0.4% | ||||||||
| International Lease Finance Corp. |
$ | 250,000 | $ | 268,750 | ||||
|
|
|
|||||||
| 268,750 | ||||||||
| Packaging – 0.7% | ||||||||
| Berry Plastics Corp. |
250,000 | 247,500 | ||||||
| Reynolds Group Issuer, Inc. |
250,000 | 251,250 | ||||||
|
|
|
|||||||
| 498,750 | ||||||||
| Pharmaceuticals – 0.7% | ||||||||
| Mylan, Inc. |
200,000 | 196,500 | ||||||
| 7.625% due 7/15/2017(3) |
250,000 | 265,938 | ||||||
|
|
|
|||||||
| 462,438 | ||||||||
| Pipelines – 0.7% | ||||||||
| Crosstex Energy L.P./Crosstex |
250,000 | 267,813 | ||||||
| MarkWest Energy Partners L.P. |
200,000 | 200,000 | ||||||
|
|
|
|||||||
| 467,813 | ||||||||
| REITs – 3.1% | ||||||||
| Equity One, Inc. |
500,000 | 527,638 | ||||||
| OMEGA Healthcare Investors, Inc. |
250,000 | 247,813 | ||||||
| Sabra Health Care L.P. |
200,000 | 206,500 | ||||||
| Simon Property Group L.P. |
500,000 | 535,947 | ||||||
| WCI Finance LLC |
500,000 | 539,684 | ||||||
|
|
|
|||||||
| 2,057,582 | ||||||||
| Retailers – 1.2% | ||||||||
| Nordstrom, Inc. |
250,000 | 281,327 | ||||||
| Sonic Automotive, Inc. |
250,000 | 263,125 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 143 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Retailers (continued) | ||||||||
| Susser Holdings LLC |
$ | 250,000 | $ | 268,125 | ||||
|
|
|
|||||||
| 812,577 | ||||||||
| Technology – 2.3% | ||||||||
| Agilent Technologies, Inc. |
500,000 | 543,096 | ||||||
| Amkor Technology, Inc. |
220,000 | 228,800 | ||||||
| DuPont Fabros Technology L.P. |
250,000 | 267,500 | ||||||
| GXS Worldwide, Inc. |
250,000 | 246,875 | ||||||
| Sanmina-SCI Corp. |
250,000 | 236,250 | ||||||
|
|
|
|||||||
| 1,522,521 | ||||||||
| Textile – 0.4% | ||||||||
| Phillips-Van Heusen Corp. |
250,000 | 265,625 | ||||||
|
|
|
|||||||
| 265,625 | ||||||||
| Transportation Services – 0.7% | ||||||||
| Avis Budget Car Rental LLC |
200,000 | 215,500 | ||||||
| Teekay Corp. |
250,000 | 272,188 | ||||||
|
|
|
|||||||
| 487,688 | ||||||||
| Wireless – 2.6% | ||||||||
| America Movil SAB de C.V. |
500,000 | 545,079 | ||||||
| Cricket Communications, Inc. |
100,000 | 95,250 | ||||||
| Nextel Communications, Inc. |
250,000 | 250,313 | ||||||
| NII Capital Corp. |
250,000 | 269,375 | ||||||
| 10.00% due 8/15/2016 |
250,000 | 276,875 | ||||||
| SBA Telecommunications, Inc. |
250,000 | 270,625 | ||||||
|
|
|
|||||||
| 1,707,517 | ||||||||
| 144 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Wirelines – 2.0% | ||||||||
| AT&T, Inc. |
$ | 500,000 | $ | 527,474 | ||||
| Frontier Communications Corp. |
250,000 | 274,375 | ||||||
| Telecom Italia Capital S.A. |
500,000 | 512,271 | ||||||
|
|
|
|||||||
| 1,314,120 | ||||||||
| Total Corporate Bonds (Cost $37,364,802) |
38,680,665 | |||||||
| Principal Amount |
Value | |||||||
| Mortgage Pass-Through Securities – 1.5% | ||||||||
| FNMA |
995,125 | 990,942 | ||||||
| Total Mortgage Pass-Through Securities (Cost $981,131) |
990,942 | |||||||
| Principal Amount |
Value | |||||||
| Municipal Bonds – 2.3% | ||||||||
| California St. Pub. Wrks. Brd. Lease Rev. |
500,000 | 512,090 | ||||||
| California St. Var. Purp. G.O. |
500,000 | 509,700 | ||||||
| Puerto Rico Comwlth. G.O. |
500,000 | 508,635 | ||||||
| Total Municipal Bonds (Cost $1,504,583) |
1,530,425 | |||||||
| Principal Amount |
Value | |||||||
| Senior Secured Loans – 13.2% | ||||||||
| Aerospace/Defense – 1.4% | ||||||||
| Sequa Corp. Term Loan |
999,706 | 963,467 | ||||||
|
|
|
|||||||
| 963,467 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 145 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Consumer Products – 1.5% | ||||||||
| Reynolds Group Holdings, Inc. |
$ | 981,328 | $ | 989,149 | ||||
|
|
|
|||||||
| 989,149 | ||||||||
| Energy – 3.0% | ||||||||
| CITGO Petroleum Corp. |
975,000 | 1,006,892 | ||||||
| MEG Energy Corp. |
989,975 | 992,450 | ||||||
|
|
|
|||||||
| 1,999,342 | ||||||||
| Entertainment – 1.5% | ||||||||
| Leslie’s Poolmart, Inc. |
1,000,000 | 1,007,500 | ||||||
|
|
|
|||||||
| 1,007,500 | ||||||||
| Finance Companies – 1.5% | ||||||||
| AGFS Funding Co. |
1,000,000 | 1,014,140 | ||||||
|
|
|
|||||||
| 1,014,140 | ||||||||
| Food And Beverage – 1.0% | ||||||||
| Pinnacle Foods Holdings Corp. |
624,340 | 631,102 | ||||||
|
|
|
|||||||
| 631,102 | ||||||||
| Healthcare – 0.4% | ||||||||
| Grifols S.A. |
250,000 | 252,453 | ||||||
|
|
|
|||||||
| 252,453 | ||||||||
| Media Noncable – 0.8% | ||||||||
| Getty Images, Inc. |
500,000 | 503,750 | ||||||
|
|
|
|||||||
| 503,750 | ||||||||
| Restaurants – 0.8% | ||||||||
| Dunkin’ Brands, Inc. |
500,000 | 505,695 | ||||||
|
|
|
|||||||
| 505,695 | ||||||||
| 146 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS STRATEGIC INCOME FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Technology – 1.3% | ||||||||
| Dealer Computer Services, Inc. |
$ | 887,363 | $ | 892,358 | ||||
|
|
|
|||||||
| 892,358 | ||||||||
| Total Senior Secured Loans (Cost $8,631,206) |
8,758,956 | |||||||
| Principal Amount |
Value | |||||||
| Repurchase Agreements – 7.5% | ||||||||
| State Street Bank and Trust Co. Repurchase Agreement, 0.09%, dated 12/31/2010, maturity value of $5,005,038, due 1/3/2011(5) |
5,005,000 | 5,005,000 | ||||||
| Total Repurchase Agreements (Cost $5,005,000) |
5,005,000 | |||||||
| Total Investments - 103.1% (Cost $66,907,672) |
68,543,363 | |||||||
| Other Liabilities, Net - (3.1)% | (2,038,620 | ) | ||||||
| Total Net Assets - 100.0% | $ | 66,504,743 | ||||||
| (1) | Variable rate security. The rate shown is the rate in effect at December 31, 2010. |
| (2) | Security is segregated as collateral to cover margin requirements on open forwards contracts. |
At December 31, 2010, the Fund had entered into the following forward currency exchange contracts:
| Forward Currency Contracts to Buy |
Counterparty | Value | Aggregate Face Value |
Settlement Date |
Unrealized |
|||||||||||||
| JPY |
JP Morgan Chase |
$ | 616,284 | $ | 598,357 | 3/15/2011 | $ | 17,927 | ||||||||||
| NZD |
JP Morgan Chase |
1,007,464 | 952,105 | 3/15/2011 | 55,359 | |||||||||||||
| SEK |
JP Morgan Chase |
956,586 | 941,458 | 3/15/2011 | 15,128 | |||||||||||||
| Total | $ | 88,414 | ||||||||||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 147 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS STRATEGIC INCOME FUND
| Forward Currency Contracts to Sell |
Counterparty | Value | Aggregate Face Value |
Settlement Date |
Unrealized Depreciation |
|||||||||||||
| AUD |
JP Morgan Chase |
$ | 2,028,009 | $ | 1,936,170 | 3/15/2011 | $ | (91,839 | ) | |||||||||
| CHF |
JP Morgan Chase |
1,064,005 | 1,028,718 | 3/15/2011 | (35,287 | ) | ||||||||||||
| EUR |
JP Morgan Chase |
521,034 | 516,459 | 3/15/2011 | (4,575 | ) | ||||||||||||
| HUF |
JP Morgan Chase |
877,511 | 870,594 | 3/16/2011 | (6,917 | ) | ||||||||||||
| JPY |
JP Morgan Chase |
1,608,501 | 1,553,242 | 3/15/2011 | (55,259 | ) | ||||||||||||
| NOK |
JP Morgan Chase |
1,656,526 | 1,614,195 | 3/15/2011 | (42,331 | ) | ||||||||||||
| NZD |
JP Morgan Chase |
1,007,464 | 967,200 | 3/15/2011 | (40,264 | ) | ||||||||||||
| PLN |
JP Morgan Chase |
1,883,139 | 1,831,320 | 3/15/2011 | (51,819 | ) | ||||||||||||
| SEK |
JP Morgan Chase |
956,586 | 934,042 | 3/15/2011 | (22,544 | ) | ||||||||||||
| Total | $ | (350,835 | ) | |||||||||||||||
Legend:
AUD — Australian Dollar
CHF — Swiss Franc
EUR — Euro
HUF — Hungarian Forint
JPY — Japanese Yen
NOK — Norwegian Krone
NZD — New Zealand Dollar
PLN — Polish Zloty
SEK — Swedish Krona
| (3) | Securities that may be resold in transactions, exempt from registration under Rule 144A of the Securities Act of 1933, normally to certain qualified buyers. At December 31, 2010, the aggregate market value of these securities amounted to $7,207,002, representing 10.8% of net assets. These securities have been deemed liquid by the investment adviser pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| 148 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS STRATEGIC INCOME FUND
| (4) | Payment-in-kind security for which part of the income earned may be paid as additional principal. |
| (5) | The table below presents collateral for repurchase agreements. |
| Security | Coupon | Maturity Date | Value | |||||||||
| U.S. Treasury Note |
1.375% | 5/15/2013 | $ | 5,106,959 | ||||||||
| (6) | See currency legend above. |
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Collateralized Mortgage Obligations |
$ | — | $ | 7,338,853 | $ | — | $ | 7,338,853 | ||||||||
| Commercial Mortgage-Backed Securities |
— | 6,238,522 | — | 6,238,522 | ||||||||||||
| Corporate Bonds |
— | 38,680,665 | — | 38,680,665 | ||||||||||||
| Mortgage Pass-Through Securities |
— | 990,942 | — | 990,942 | ||||||||||||
| Municipal Bonds |
— | 1,530,425 | — | 1,530,425 | ||||||||||||
| Senior Secured Loans |
— | 8,758,956 | — | 8,758,956 | ||||||||||||
| Repurchase Agreements |
— | 5,005,000 | — | 5,005,000 | ||||||||||||
| Other Financial Instruments |
||||||||||||||||
| Forward Currency Contracts |
— | (262,421 | ) | — | (262,421 | ) | ||||||||||
| Total | $ | — | $ | 68,280,942 | $ | — | $ | 68,280,942 | ||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 149 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS MONEY MARKET FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Commercial Paper – 68.8% | ||||||||
| Agricultural – 5.4% | ||||||||
| Archer Daniels Midland Co. |
$ | 5,000,000 | $ | 4,998,467 | ||||
| 0.24% due 2/2/2011(1) |
5,000,000 | 4,998,933 | ||||||
| 0.25% due 2/23/2011(1) |
5,000,000 | 4,998,160 | ||||||
| Cargill, Inc. |
5,000,000 | 4,999,361 | ||||||
| 0.25% due 1/19/2011(1) |
5,000,000 | 4,999,375 | ||||||
|
|
|
|||||||
| 24,994,296 | ||||||||
| Airport Development & Maintenance – 2.2% | ||||||||
| Los Angeles Department of Airports |
10,017,000 | 10,014,844 | ||||||
|
|
|
|||||||
| 10,014,844 | ||||||||
| Chemicals – 1.1% | ||||||||
| BASF SE |
5,000,000 | 4,998,000 | ||||||
|
|
|
|||||||
| 4,998,000 | ||||||||
| Computers – 4.3% | ||||||||
| Hewlett-Packard Co. |
10,000,000 | 9,999,734 | ||||||
| International Business Machines Corp. |
9,885,000 | 9,884,835 | ||||||
|
|
|
|||||||
| 19,884,569 | ||||||||
| Conglomerates – 2.2% | ||||||||
| General Electric Capital Corp. |
10,000,000 | 9,999,961 | ||||||
|
|
|
|||||||
| 9,999,961 | ||||||||
| Diversified Manufacturing – 2.2% | ||||||||
| Danaher Corp. |
5,000,000 | 4,999,762 | ||||||
| 0.20% due 1/10/2011(1) |
5,000,000 | 4,999,750 | ||||||
|
|
|
|||||||
| 9,999,512 | ||||||||
| Education Revenue – 1.7% | ||||||||
| Yale University |
8,000,000 | 7,997,125 | ||||||
|
|
|
|||||||
| 7,997,125 | ||||||||
| Electric – 4.3% | ||||||||
| Electricite de France |
5,000,000 | 4,997,906 | ||||||
| 0.27% due 3/7/2011(1) |
5,000,000 | 4,997,562 | ||||||
| Emerson Electric Co. |
10,000,000 | 9,999,433 | ||||||
|
|
|
|||||||
| 19,994,901 | ||||||||
| 150 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS MONEY MARKET FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Entertainment – 2.7% | ||||||||
| The Walt Disney Co. |
$ | 2,500,000 | $ | 2,499,386 | ||||
| 0.18% due 1/31/2011(1) |
10,000,000 | 9,998,500 | ||||||
|
|
|
|||||||
| 12,497,886 | ||||||||
| Finance Companies – 2.2% | ||||||||
| Private Export Funding Corp. |
5,000,000 | 4,999,292 | ||||||
| 0.19% due 3/17/2011(1) |
5,000,000 | 4,998,021 | ||||||
|
|
|
|||||||
| 9,997,313 | ||||||||
| Food And Beverage – 4.3% | ||||||||
| Pepsico, Inc. |
10,000,000 | 9,997,544 | ||||||
| The Coca-Cola Co. |
5,000,000 | 4,999,657 | ||||||
| 0.21% due 3/8/2011(1) |
5,000,000 | 4,998,075 | ||||||
|
|
|
|||||||
| 19,995,276 | ||||||||
| Household Products - Wares – 3.2% | ||||||||
| Proctor & Gamble Co. |
5,000,000 | 4,998,389 | ||||||
| 0.22% due 1/10/2011(1) |
10,000,000 | 9,999,450 | ||||||
|
|
|
|||||||
| 14,997,839 | ||||||||
| Internet – 6.5% | ||||||||
| eBay, Inc. |
14,850,000 | 14,848,832 | ||||||
| Google, Inc. |
5,000,000 | 4,999,175 | ||||||
| 0.19% due 2/2/2011(1) |
5,000,000 | 4,999,155 | ||||||
| 0.20% due 1/24/2011(1) |
5,000,000 | 4,999,361 | ||||||
|
|
|
|||||||
| 29,846,523 | ||||||||
| Life Insurance – 1.1% | ||||||||
| Massachusetts Mutual Life Insurance Co. |
5,000,000 | 4,999,617 | ||||||
|
|
|
|||||||
| 4,999,617 | ||||||||
| Machinery – 4.3% | ||||||||
| Caterpillar Financial Services Corp. |
5,000,000 | 4,999,400 | ||||||
| 0.20% due 2/25/2011 |
5,000,000 | 4,998,472 | ||||||
| John Deere Bank S.A. |
10,000,000 | 9,999,361 | ||||||
|
|
|
|||||||
| 19,997,233 | ||||||||
| Oil & Gas Services – 4.3% | ||||||||
| Northern Illinois Gas Co. |
10,000,000 | 9,999,894 | ||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 151 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS MONEY MARKET FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Oil & Gas Services (continued) | ||||||||
| Schlumberger Ltd. |
$ | 10,000,000 | $ | 9,998,075 | ||||
|
|
|
|||||||
| 19,997,969 | ||||||||
| Pharmaceuticals – 9.1% | ||||||||
| Abbot Laboratories |
5,000,000 | 4,999,929 | ||||||
| 0.20% due 2/9/2011(1) |
10,000,000 | 9,997,833 | ||||||
| Johnson & Johnson |
5,000,000 | 4,998,778 | ||||||
| 0.17% due 2/14/2011(1) |
5,000,000 | 4,998,961 | ||||||
| 0.22% due 3/16/2011(1) |
5,000,000 | 4,997,739 | ||||||
| Medtronic, Inc. |
11,850,000 | 11,846,607 | ||||||
|
|
|
|||||||
| 41,839,847 | ||||||||
| Tobacco – 2.2% | ||||||||
| Philip Morris International, Inc. |
10,000,000 | 9,998,961 | ||||||
|
|
|
|||||||
| 9,998,961 | ||||||||
| Transportation – 2.2% | ||||||||
| NetJets, Inc. |
5,000,000 | 4,999,225 | ||||||
| 0.20% due 1/4/2011(1) |
5,000,000 | 4,999,917 | ||||||
|
|
|
|||||||
| 9,999,142 | ||||||||
| Utilities - Electric & Water – 3.3% | ||||||||
| National Rural Utilities Cooperative Finance Corp. |
10,000,000 | 9,999,681 | ||||||
| 0.27% due 2/8/2011 |
5,000,000 | 4,998,575 | ||||||
|
|
|
|||||||
| 14,998,256 | ||||||||
| Total Commercial Paper (Cost $317,049,070) |
317,049,070 | |||||||
| Principal Amount |
Value | |||||||
| Municipal Securities – 13.6% | ||||||||
| Connecticut – 3.8% | ||||||||
| Connecticut St. Housing Fin. Auth. |
17,600,000 | 17,600,000 | ||||||
|
|
|
|||||||
| 17,600,000 | ||||||||
| District Of Columbia – 0.5% | ||||||||
| District of Columbia Univ. Rev. |
2,000,000 | 2,000,000 | ||||||
|
|
|
|||||||
| 2,000,000 | ||||||||
| 152 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
RS MONEY MARKET FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Iowa – 0.9% | ||||||||
| Iowa Fin. Auth. Single Family Mtg. Rev. |
$ | 4,180,000 | $ | 4,180,000 | ||||
|
|
|
|||||||
| 4,180,000 | ||||||||
| Massachusetts – 1.4% | ||||||||
| Massachusetts St. Wtr. Res. Auth. |
6,600,000 | 6,600,000 | ||||||
|
|
|
|||||||
| 6,600,000 | ||||||||
| Nebraska – 0.5% | ||||||||
| Nebraska Pub. Pwr. Dist. |
2,329,000 | 2,328,565 | ||||||
|
|
|
|||||||
| 2,328,565 | ||||||||
| New York – 6.5% | ||||||||
| New York St. Pwr. Auth. |
2,000,000 | 1,999,745 | ||||||
| 0.29% due 1/18/2011 |
13,057,000 | 13,055,212 | ||||||
| New York St. Urban Dev. Corp. Rev. |
5,000,000 | 5,000,000 | ||||||
| St. Facs. Ser. A3C |
10,000,000 | 10,000,000 | ||||||
|
|
|
|||||||
| 30,054,957 | ||||||||
| Total Municipal Securities (Cost $62,763,522) |
62,763,522 | |||||||
| Principal Amount |
Value | |||||||
| U.S. Government Securities – 12.1% | ||||||||
| U.S. Treasury Bills – 12.1% | ||||||||
| United States Treasury Bill |
10,000,000 | 9,997,033 | ||||||
| 0.14% due 3/17/2011 |
10,000,000 | 9,997,083 | ||||||
| 0.165% due 3/3/2011 |
10,000,000 | 9,997,204 | ||||||
| 0.18% due 2/10/2011 |
10,000,000 | 9,998,000 | ||||||
| 0.185% due 1/13/2011 |
6,000,000 | 5,999,630 | ||||||
| 0.245% due 9/22/2011 |
10,000,000 | 9,982,034 | ||||||
|
|
|
|||||||
| 55,970,984 | ||||||||
| Total U.S. Government Securities (Cost $55,970,984) |
55,970,984 | |||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 153 |
Table of Contents
SCHEDULE OF INVESTMENTS — RS MONEY MARKET FUND
| December 31, 2010 | Principal Amount |
Value | ||||||
| Repurchase Agreements – 5.4% | ||||||||
| State Street Bank and Trust Co.
Repurchase |
$ | 24,748,000 | $ | 24,748,000 | ||||
| Total Repurchase Agreements (Cost $24,748,000) | 24,748,000 | |||||||
| Total Investments – 99.9% (Cost $460,531,576) |
460,531,576 | |||||||
| Other Assets, Net - 0.1% | 627,362 | |||||||
| Total Net Assets - 100.0% $ | $ | 461,158,938 | ||||||
| (1) | Security issued in an exempt transaction without registration under the Securities Act of 1933. At December 31, 2010, the aggregate market value of these securities amounted to $249,041,501, representing 54.0% of the net assets. These securities have been deemed liquid by the investment adviser pursuant to the Fund’s liquidity procedures approved by the Board of Trustees. |
| (2) | Variable rate demand note. The rate shown is the rate in effect at December 31, 2010. |
| (3) | The table below presents collateral for repurchase agreements. |
| Security | Coupon | Maturity Date | Value | |||||||||
| U.S. Treasury Note |
3.125% | 4/30/2017 | $ | 25,247,030 | ||||||||
The following is a summary of the inputs used as of December 31, 2010 in valuing the Fund’s investments. For more information on valuation inputs, please refer to Note 1a of the accompanying Notes to Financial Statements.
| Valuation Inputs | ||||||||||||||||
| Investments in Securities | Level 1 | Level 2 | Level 3 | Total | ||||||||||||
| Commercial Paper |
$ | — | $ | 317,049,070 | $ | — | $ | 317,049,070 | ||||||||
| Municipal Securities |
— | 62,763,522 | — | 62,763,522 | ||||||||||||
| U.S. Government Securities |
— | 55,970,984 | — | 55,970,984 | ||||||||||||
| Repurchase Agreements |
— | 24,748,000 | — | 24,748,000 | ||||||||||||
| Total | $ | — | $ | 460,531,576 | $ | — | $ | 460,531,576 | ||||||||
The Fund’s end of the month schedule of investments is available at www.RSInvestments.com on the fifth business day following the end of each month. Also available on the website is a link to the Securities Exchange Commission’s website to view the Fund’s monthly Form N-MFP filings which are posted by the sixtieth day after the end of each month.
| 154 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
This Page Intentionally Left Blank
| www.RSinvestments.com | 155 |
Table of Contents
| Statements of Assets and Liabilities As of December 31, 2010 |
RS Investment Quality Bond |
RS Low Duration Bond |
RS High Yield Bond |
|||||||||
| Assets |
||||||||||||
| Investments, at value |
$ | 163,411,446 | $ | 680,230,582 | $ | 122,222,808 | ||||||
| Cash and cash equivalents |
958 | 166 | 552 | |||||||||
| Dividends/interest receivable |
1,152,036 | 4,365,891 | 2,067,664 | |||||||||
| Receivable for fund shares subscribed |
101,461 | 4,689,736 | 296,318 | |||||||||
| Due from distributor |
15,545 | — | 8,851 | |||||||||
| Receivable for investments sold |
— | — | 2,558 | |||||||||
| Unrealized appreciation for open forward currency contracts |
— | — | — | |||||||||
| Due from broker |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Assets |
164,681,446 | 689,286,375 | 124,598,751 | |||||||||
|
|
|
|
|
|
|
|||||||
| Liabilities |
||||||||||||
| Payable for investments purchased |
7,712,018 | 22,507,141 | — | |||||||||
| Payable for fund shares redeemed |
399,643 | 2,850,090 | 93,286 | |||||||||
| Payable to adviser |
81,783 | 249,604 | 84,722 | |||||||||
| Distributions payable |
30,801 | 291,078 | 53,761 | |||||||||
| Accrued trustees’ fees |
2,585 | 9,730 | 1,899 | |||||||||
| Unrealized depreciation for open forward currency contracts |
— | — | — | |||||||||
| Payable to distributor |
— | 15,771 | — | |||||||||
| Accrued expenses/other liabilities |
96,364 | 252,168 | 62,432 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Liabilities |
8,323,194 | 26,175,582 | 296,100 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Net Assets |
$ | 156,358,252 | $ | 663,110,793 | $ | 124,302,651 | ||||||
|
|
|
|
|
|
|
|||||||
| Net Assets Consist of: |
||||||||||||
| Paid-in capital |
$ | 151,298,705 | $ | 657,834,434 | $ | 129,058,111 | ||||||
| Distributions in excess of net investment income |
— | (2,160 | ) | — | ||||||||
| Accumulated undistributed net investment income |
26,077 | — | 166,808 | |||||||||
| Accumulated net realized gain/(loss) from investments and foreign currency transactions |
(47,786 | ) | 44,878 | (11,112,884 | ) | |||||||
| Net unrealized appreciation/(depreciation) on investments and translation of assets and liabilities in foreign currencies |
5,081,256 | 5,233,641 | 6,190,616 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Net Assets |
$ | 156,358,252 | $ | 663,110,793 | $ | 124,302,651 | ||||||
|
|
|
|
|
|
|
|||||||
| Investments, at Cost |
$ | 158,330,190 | $ | 674,996,941 | $ | 116,032,192 | ||||||
|
|
|
|
|
|
|
|||||||
| Pricing of Shares |
||||||||||||
| Net Assets: |
||||||||||||
| Class A |
$ | 135,370,520 | $ | 408,167,165 | $ | 72,025,180 | ||||||
| Class B |
1,765,478 | 1,627,949 | 3,787,709 | |||||||||
| Class C |
7,269,639 | 144,392,877 | 25,102,308 | |||||||||
| Class K |
10,104,086 | 4,138,976 | 18,709,543 | |||||||||
| Class Y |
1,848,529 | 104,783,826 | 4,677,911 | |||||||||
| Shares of Beneficial Interest Outstanding with no Par Value: |
||||||||||||
| Class A |
13,378,937 | 39,696,006 | 10,390,878 | |||||||||
| Class B |
174,597 | 158,497 | 546,552 | |||||||||
| Class C |
718,748 | 14,042,794 | 3,623,530 | |||||||||
| Class K |
997,585 | 402,528 | 2,697,927 | |||||||||
| Class Y |
182,705 | 10,189,405 | 675,700 | |||||||||
| Net Asset Value Per Share: |
||||||||||||
| Class A |
$ | 10.12 | $ | 10.28 | $ | 6.93 | ||||||
| Class B |
10.11 | 10.27 | 6.93 | |||||||||
| Class C |
10.11 | 10.28 | 6.93 | |||||||||
| Class K |
10.13 | 10.28 | 6.93 | |||||||||
| Class Y |
10.12 | 10.28 | 6.92 | |||||||||
| Sales Charge Class A (Load) |
3.75 | % | 2.25 | % | 3.75 | % | ||||||
| Maximum Offering Price Per Class A Share |
$ | 10.51 | $ | 10.52 | $ | 7.20 | ||||||
| 156 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| RS Tax-Exempt |
RS High Yield Municipal Bond |
RS Floating Rate |
RS Strategic Income |
RS Money Market |
||||||||||||||
| $ | 261,274,822 | $ | 92,966,238 | $ | 590,246,893 | $ | 68,543,363 | $ | 460,531,576 | |||||||||
| 4,255,627 | 5,072,369 | 171,621,176 | 651 | 658 | ||||||||||||||
| 4,048,031 | 1,372,530 | 2,254,783 | 721,251 | 16,786 | ||||||||||||||
| 603,279 | 4,804,733 | 23,732,228 | 36,085 | 1,547,243 | ||||||||||||||
| — | — | 116,651 | — | 42,542 | ||||||||||||||
| — | — | 11,287,163 | 744,418 | — | ||||||||||||||
| |
— |
|
— | — | 88,414 | — | ||||||||||||
| — | — | — | 145,066 | — | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 270,181,759 | 104,215,870 | 799,258,894 | 70,279,248 | 462,138,805 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| — | — | 141,682,186 | 3,362,851 | — | ||||||||||||||
| 3,969,501 | 291,020 | 480,333 | 1,813 | 663,782 | ||||||||||||||
| 118,695 | — | — | — | 179,654 | ||||||||||||||
| 367,589 | 103,516 | 831,948 | 5,886 | 113 | ||||||||||||||
| 4,744 | 1,486 | 3,882 | 967 | 7,622 | ||||||||||||||
| |
— |
|
— | — | 350,835 | — | ||||||||||||
| 1,435 | 17,234 | — | 11,789 | — | ||||||||||||||
| 120,426 | 44,110 | 120,845 | 40,364 | 128,696 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 4,582,390 | 457,366 | 143,119,194 | 3,774,505 | 979,867 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 265,599,369 | $ | 103,758,504 | $ | 656,139,700 | $ | 66,504,743 | $ | 461,158,938 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 266,611,792 | $ | 107,172,793 | $ | 649,842,592 | $ | 64,897,851 | $ | 461,169,852 | |||||||||
| |
— |
|
|
— |
|
— | — | — | ||||||||||
| 16,978 | 14,261 | 20,814 | 206,581 | 42,359 | ||||||||||||||
| (2,340,004 | ) | (642,211 | ) | 1,797,840 | 21,325 | (53,273 | ) | |||||||||||
| 1,310,603 | (2,786,339 | ) | 4,478,454 | 1,378,986 | |
— |
| |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 265,599,369 | $ | 103,758,504 | $ | 656,139,700 | $ | 66,504,743 | $ | 461,158,938 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 259,964,219 | $ | 95,752,577 | $ | 585,768,439 | $ | 66,907,672 | $ | 460,531,576 | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| $ | 161,531,467 | $ | 72,924,214 | $ | 373,238,308 | $ | 52,361,999 | $ | 432,944,908 | |||||||||
| — | — | — | — | 699,220 | ||||||||||||||
| 62,691,565 | 20,103,524 | 159,694,733 | 4,872,616 | 2,164,799 | ||||||||||||||
| — | — | 2,917,894 | 2,297,676 | 25,350,011 | ||||||||||||||
| 41,376,337 | 10,730,766 | 120,288,765 | 6,972,452 | — | ||||||||||||||
| 16,226,777 | 7,327,840 | 36,221,650 | 5,084,365 | 432,955,400 | ||||||||||||||
| — | — | — | — | 699,262 | ||||||||||||||
| 6,299,159 | 2,020,101 | 15,493,864 | 473,056 | 2,164,959 | ||||||||||||||
| — | — | 283,145 | 223,100 | 25,351,457 | ||||||||||||||
| 4,158,676 | 1,078,248 | 11,674,766 | 676,891 | — | ||||||||||||||
| $ | 9.95 | $ | 9.95 | $ | 10.30 | $ | 10.30 | $ | 1.00 | |||||||||
| — | — | — | — | 1.00 | ||||||||||||||
| 9.95 | 9.95 | 10.31 | 10.30 | 1.00 | ||||||||||||||
| — | — | 10.31 | 10.30 | 1.00 | ||||||||||||||
| 9.95 | 9.95 | 10.30 | 10.30 | — | ||||||||||||||
| 3.75 | % | 3.75 | % | 3.75 | % | 3.75 | % | NA | ||||||||||
| $ | 10.34 | $ | 10.34 | $ | 10.70 | $ | 10.70 | $ | NA | |||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 157 |
Table of Contents
| Statements of Operations For the Year Ended December 31, 2010 |
RS Investment Quality Bond |
RS Low Duration Bond |
RS High Yield Bond |
|||||||||
| Investment Income |
||||||||||||
| Interest |
$ | 7,226,841 | $ | 16,007,842 | $ | 9,747,176 | ||||||
| Withholding taxes on foreign interest |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Investment Income |
7,226,841 | 16,007,842 | 9,747,176 | |||||||||
|
|
|
|
|
|
|
|||||||
| Expenses |
||||||||||||
| Investment advisory fees |
795,027 | 2,073,073 | 685,978 | |||||||||
| Distribution fees |
541,149 | 1,718,584 | 523,636 | |||||||||
| Transfer agent fees |
191,909 | 424,303 | 107,510 | |||||||||
| Custodian fees |
78,750 | 99,554 | 67,831 | |||||||||
| Registration fees |
67,892 | 180,578 | 74,423 | |||||||||
| Professional fees |
46,533 | 86,215 | 40,717 | |||||||||
| Shareholder reports |
43,728 | 108,516 | 30,427 | |||||||||
| Administrative service fees |
21,534 | 62,088 | 15,667 | |||||||||
| Trustees’ fees |
8,864 | 26,071 | 6,405 | |||||||||
| Insurance expense |
6,563 | 12,686 | 4,285 | |||||||||
| Offering costs |
— | — | — | |||||||||
| Other expenses |
3,912 | 8,657 | 2,761 | |||||||||
|
|
|
|
|
|
|
|||||||
| Total Expenses |
1,805,861 | 4,800,325 | 1,559,640 | |||||||||
| Less: Fee/Expense waiver/reimbursement by distributor |
(309,754 | ) | (503,536 | ) | (348,500 | ) | ||||||
| Less: Custody credits |
(50 | ) | (203 | ) | (19 | ) | ||||||
|
|
|
|
|
|
|
|||||||
| Total Expenses, Net |
1,496,057 | 4,296,586 | 1,211,121 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Investment Income |
5,730,784 | 11,711,256 | 8,536,055 | |||||||||
|
|
|
|
|
|
|
|||||||
| Realized Gain/(Loss) and Change in Unrealized Appreciation/Depreciation on Investments and Foreign Currency Transactions |
||||||||||||
| Net realized gain/(loss) from investments |
3,140,081 | 1,493,653 | 3,581,512 | |||||||||
| Net realized loss from foreign currency transactions |
— | — | — | |||||||||
| Net change in unrealized appreciation/depreciation on investments |
2,433,585 | 2,852,659 | 2,251,037 | |||||||||
| Net change in unrealized appreciation/depreciation on translation of assets and liabilities in foreign currencies |
— | — | — | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Gain/(Loss) on Investments and Foreign Currency Transactions |
5,573,666 | 4,346,312 | 5,832,549 | |||||||||
|
|
|
|
|
|
|
|||||||
| Net Increase in Net Assets Resulting from Operations |
$ | 11,304,450 | $ | 16,057,568 | $ | 14,368,604 | ||||||
|
|
|
|
|
|
|
|||||||
| 158 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| RS Tax-Exempt |
RS High Yield Municipal Bond |
RS Floating Rate |
RS Strategic Income |
RS Money Market |
||||||||||||||
| $ | 11,720,077 | $ | 3,755,399 | $ | 10,775,691 | $ | 3,002,305 | $ | 1,036,868 | |||||||||
| — | — | — | (2,734 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 11,720,077 | 3,755,399 | 10,775,691 | 2,999,571 | 1,036,868 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 1,335,741 | 326,258 | 1,316,974 | 341,932 | 2,176,141 | ||||||||||||||
| 1,032,389 | 225,638 | 779,411 | 169,964 | 1,342,743 | ||||||||||||||
| 196,929 | 51,856 | 130,665 | 39,583 | 234,099 | ||||||||||||||
| 79,862 | 21,072 | 147,790 | 57,582 | 69,477 | ||||||||||||||
| 73,898 | 49,847 | 126,277 | 47,112 | 51,165 | ||||||||||||||
| 58,854 | 39,355 | 117,832 | 38,919 | 82,006 | ||||||||||||||
| 70,397 | 12,630 | 31,400 | 10,749 | 142,954 | ||||||||||||||
| 36,625 | 2,236 | 16,864 | 1,516 | 64,601 | ||||||||||||||
| 15,112 | 3,554 | 8,781 | 3,168 | 26,366 | ||||||||||||||
| 9,586 | 1,426 | 3,892 | 1,455 | 24,305 | ||||||||||||||
| — | 108,271 | 116,796 | 116,796 | — | ||||||||||||||
| 5,900 | 1,289 | 3,002 | 1,383 | 10,706 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 2,915,293 | 843,432 | 2,799,684 | 830,159 | 4,224,563 | ||||||||||||||
| |
(320,337 |
) |
(739,448 | ) | (2,544,409 | ) | (762,806 | ) | (3,293,116 | ) | ||||||||
| (10,223 | ) | (2,342 | ) | (33,350 | ) | (31 | ) | (3 | ) | |||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 2,584,733 | 101,642 | 221,925 | 67,322 | 931,444 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 9,135,344 | 3,653,757 | 10,553,766 | 2,932,249 | 105,424 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| 1,041,987 | (505,768 | ) | 3,220,340 | 524,183 | (1,000 | ) | ||||||||||||
| — | — | — | (270,500 | ) | — | |||||||||||||
| (8,829,288 | ) | (3,035,839 | ) | 4,295,961 | 1,894,973 | — | ||||||||||||
| — | — | — | (328,153 | ) | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| |
(7,787,301 |
) |
(3,541,607 | ) | 7,516,301 | 1,820,503 | (1,000 | ) | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| $ |
1,348,043 |
|
$ | 112,150 | $ | 18,070,067 | $ | 4,752,752 | $ | 104,424 | ||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 159 |
Table of Contents
| Statements of Changes in Net Assets |
RS Investment Quality Bond | |||||||
| For the Year Ended 12/31/10 |
For the Year Ended 12/31/09 |
|||||||
|
|
||||||||
| Operations |
||||||||
| Net investment income |
$ | 5,730,784 | $ | 5,765,954 | ||||
| Net realized gain/(loss) from investments |
3,140,081 | (656,334 | ) | |||||
| Net change in unrealized appreciation/depreciation on investments |
2,433,585 | 8,849,058 | ||||||
|
|
|
|
|
|||||
| Net Increase in Net Assets Resulting from Operations |
11,304,450 | 13,958,678 | ||||||
|
|
|
|
|
|||||
| Distributions to Shareholders |
||||||||
| Net investment income |
||||||||
| Class A |
(4,868,769 | ) | (4,645,547 | ) | ||||
| Class B |
(96,153 | ) | (293,494 | ) | ||||
| Class C |
(292,270 | ) | (341,003 | ) | ||||
| Class K |
(414,665 | ) | (469,088 | ) | ||||
| Class Y |
(59,398 | ) | (28,682 | ) | ||||
| Net realized gain on investments |
||||||||
| Class A |
(1,753,441 | ) | — | |||||
| Class B |
(22,605 | ) | — | |||||
| Class C |
(93,555 | ) | — | |||||
| Class K |
(129,119 | ) | — | |||||
| Class Y |
(29,172 | ) | — | |||||
|
|
|
|
|
|||||
| Total Distributions |
(7,759,147 | ) | (5,777,814 | ) | ||||
|
|
|
|
|
|||||
| Capital Share Transactions |
||||||||
| Proceeds from sales of shares |
57,368,157 | 63,997,831 | ||||||
| Reinvestment of distributions |
7,220,943 | 5,540,804 | ||||||
| Cost of shares redeemed |
(68,712,576 | ) | (35,679,116 | ) | ||||
|
|
|
|
|
|||||
| Net Increase/(Decrease) in Net Assets Resulting from Capital Share Transactions |
(4,123,476 | ) | 33,859,519 | |||||
|
|
|
|
|
|||||
| Increase from Regulatory Settlements |
— | 33,319 | ||||||
|
|
|
|
|
|||||
| Net Increase/(Decrease) in Net Assets |
(578,173 | ) | 42,073,702 | |||||
|
|
|
|
|
|||||
| Net Assets |
||||||||
| Beginning of year |
156,936,425 | 114,862,723 | ||||||
|
|
|
|
|
|||||
| End of year |
$ | 156,358,252 | $ | 156,936,425 | ||||
|
|
|
|
|
|||||
| Distributions in Excess of Net Investment Income Included in Net Assets |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Accumulated Undistributed Net Investment Income Included in Net Assets |
$ | 26,077 | $ | 16,549 | ||||
|
|
|
|
|
|||||
| Other Information: |
||||||||
| Shares |
||||||||
| Sold |
5,614,187 | 6,666,792 | ||||||
| Reinvested |
710,516 | 574,033 | ||||||
| Redeemed |
(6,737,463 | ) | (3,675,624 | ) | ||||
|
|
|
|
|
|||||
| Net Increase/(Decrease) |
(412,760 | ) | 3,565,201 | |||||
|
|
|
|
|
|||||
| 160 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| RS Low Duration Bond |
RS High Yield Bond | RS Tax-Exempt | ||||||||||||||||||||
| For the Year Ended 12/31/10 |
For the Year Ended 12/31/09 |
For the Year Ended 12/31/10 |
For the Year Ended 12/31/09 |
For the Year Ended 12/31/10 |
For the Year Ended 12/31/09 |
|||||||||||||||||
|
|
|
|
||||||||||||||||||||
| $ | 11,711,256 | $ | 3,117,919 | $ | 8,536,055 | $ | 7,227,137 | $ | 9,135,344 | $ | 5,941,886 | |||||||||||
| 1,493,653 | 346,718 | 3,581,512 | (1,818,638 | ) | 1,041,987 | 1,059,661 | ||||||||||||||||
| |
2,852,659 |
|
2,632,148 | 2,251,037 | 22,814,583 | (8,829,288 | ) | 9,652,186 | ||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 16,057,568 | 6,096,785 | 14,368,604 | 28,223,082 | 1,348,043 | 16,653,733 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (7,976,424 | ) | (2,152,555 | ) | (5,430,784 | ) | (4,849,756 | ) | (6,472,783 | ) | (5,205,746 | ) | |||||||||||
| (22,159 | ) | (171,619 | ) | (233,303 | ) | (286,837 | ) | — | — | |||||||||||||
| (1,801,820 | ) | (484,073 | ) | (1,375,732 | ) | (890,773 | ) | (1,616,367 | ) | (719,920 | ) | |||||||||||
| (94,250 | ) | (273,523 | ) | (1,281,185 | ) | (1,144,108 | ) | — | — | |||||||||||||
| (1,816,603 | ) | (36,117 | ) | (216,492 | ) | (58,145 | ) | (1,046,522 | ) | (33,436 | ) | |||||||||||
| (971,551 | ) | (27,751 | ) | — | — | — | — | |||||||||||||||
| (3,939 | ) | (450 | ) | — | — | — | — | |||||||||||||||
| (341,308 | ) | (8,247 | ) | — | — | — | — | |||||||||||||||
| (10,569 | ) | (2,205 | ) | — | — | — | — | |||||||||||||||
| (269,211 | ) | (1,046 | ) | — | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (13,307,834 | ) | (3,157,586 | ) | (8,537,496 | ) | (7,229,619 | ) | (9,135,672 | ) | (5,959,102 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 813,823,325 | 244,656,404 | 38,874,285 | 36,548,171 | 216,718,643 | 163,777,714 | |||||||||||||||||
| 9,851,987 | 2,547,713 | 7,873,883 | 6,810,752 | 5,573,428 | 4,727,672 | |||||||||||||||||
| (382,298,936 | ) | (77,238,711 | ) | (40,442,419 | ) | (17,182,792 | ) | (176,620,664 | ) | (60,104,026 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| |
441,376,376 |
|
169,965,406 | 6,305,749 | 26,176,131 | 45,671,407 | 108,401,360 | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| — | — | 1,320 | 9,396 | — | 17,306 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 444,126,110 | 172,904,605 | 12,138,177 | 47,178,990 | 37,883,778 | 119,113,297 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 218,984,683 | 46,080,078 | 112,164,474 | 64,985,484 | 227,715,591 | 108,602,294 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | 663,110,793 | $ | 218,984,683 | $ | 124,302,651 | $ | 112,164,474 | $ | 265,599,369 | $ | 227,715,591 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ |
(2,160 |
) |
$ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ |
— |
|
$ | — | $ | 166,808 | $ | 48,875 | $ | 16,978 | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 79,075,487 | 24,212,936 | 5,771,037 | 6,128,169 | 20,950,727 | 16,357,769 | |||||||||||||||||
| 956,165 | 252,132 | 1,170,456 | 1,145,639 | 540,273 | 473,663 | |||||||||||||||||
| (37,077,796 | ) | (7,593,918 | ) | (6,037,106 | ) | (2,840,206 | ) | (17,164,148 | ) | (5,934,930 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 42,953,856 | 16,871,150 | 904,387 | 4,433,602 | 4,326,852 | 10,896,502 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 161 |
Table of Contents
FINANCIAL INFORMATION
| Statements of Changes in Net Assets (continued) |
RS High Yield Municipal Bond | |||||||
| For the Year Ended 12/31/10 |
For the Period Ended 12/31/09(1) |
|||||||
|
|
||||||||
| Operations |
||||||||
| Net investment income |
$ | 3,653,757 | $ | 140,930 | ||||
| Net realized gain/(loss) from investments and foreign currency transactions |
(505,768 | ) | — | |||||
| Net change in unrealized appreciation/depreciation on investments and translation of assets and liabilities in foreign currencies |
(3,035,839 | ) | 249,500 | |||||
|
|
|
|
|
|||||
| Net Increase/(Decrease) in Net Assets Resulting from Operations |
112,150 | 390,430 | ||||||
|
|
|
|
|
|||||
| Distributions to Shareholders |
||||||||
| Net investment income |
||||||||
| Class A |
(2,811,163 | ) | (124,824 | ) | ||||
| Class B |
— | — | ||||||
| Class C |
(541,694 | ) | (8,053 | ) | ||||
| Class K |
— | — | ||||||
| Class Y |
(300,900 | ) | (8,053 | ) | ||||
| Net realized gain on investments |
||||||||
| Class A |
(93,217 | ) | — | |||||
| Class C |
(28,885 | ) | — | |||||
| Class K |
— | — | ||||||
| Class Y |
(14,799 | ) | — | |||||
|
|
|
|
|
|||||
| Total Distributions |
(3,790,658 | ) | (140,930 | ) | ||||
|
|
|
|
|
|||||
| Capital Share Transactions |
||||||||
| Proceeds from sales of shares |
92,342,316 | 35,000,000 | ||||||
| Reinvestment of distributions |
3,206,844 | 140,930 | ||||||
| Cost of shares redeemed |
(23,502,578 | ) | — | |||||
|
|
|
|
|
|||||
| Net Increase/(Decrease) in Net Assets Resulting from Capital Share Transactions |
72,046,582 | 35,140,930 | ||||||
|
|
|
|
|
|||||
| Increase from Regulatory Settlements |
— | — | ||||||
|
|
|
|
|
|||||
| Net Increase/(Decrease) in Net Assets |
68,368,074 | 35,390,430 | ||||||
|
|
|
|
|
|||||
| Net Assets |
||||||||
| Beginning of year |
35,390,430 | — | ||||||
|
|
|
|
|
|||||
| End of year |
$ | 103,758,504 | $ | 35,390,430 | ||||
|
|
|
|
|
|||||
| Distributions in Excess of Net Investment Income Included in Net Assets |
$ | — | $ | — | ||||
|
|
|
|
|
|||||
| Accumulated Undistributed Net Investment Income Included in Net Assets |
$ | 108,226 | $ | — | ||||
|
|
|
|
|
|||||
| Other Information: |
||||||||
| Shares |
||||||||
| Sold |
8,854,499 | 3,500,000 | ||||||
| Reinvested |
308,872 | 13,996 | ||||||
| Redeemed |
(2,251,178 | ) | — | |||||
|
|
|
|
|
|||||
| Net Increase/(Decrease) |
6,912,193 | 3,513,996 | ||||||
|
|
|
|
|
|||||
| (1) | Commenced operations on November 24, 2009. |
| (2) | Commenced operations on December 8, 2009. |
| 162 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| RS Floating Rate |
RS Strategic Income | RS Money Market | ||||||||||||||||||||
| |
For the Year Ended 12/31/10 |
|
|
For the Period Ended 12/31/09 |
(2) |
|
For the Year Ended 12/31/10 |
|
|
For the Period Ended 12/31/09 |
(1) |
|
For the Year Ended 12/31/10 |
|
|
For the Year Ended 12/31/09 |
| |||||
|
|
|
|
||||||||||||||||||||
| $ | 10,553,766 | $ | 38,525 | $ | 2,932,249 | $ | 128,240 | $ | 105,424 | $ | 278,118 | |||||||||||
| 3,220,340 | 26 | 253,683 | (7,006 | ) | (1,000 | ) | — | |||||||||||||||
| 4,295,961 | 182,493 | 1,566,820 | (187,834 | ) | — | — | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 18,070,067 | 221,044 | 4,752,752 | (66,600 | ) | 104,424 | 278,118 | ||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (6,688,786 | ) | (33,794 | ) | (2,503,931 | ) | (112,851 | ) | (97,655 | ) | (259,858 | ) | |||||||||||
| — | — | — | — | (235 | ) | (829 | ) | |||||||||||||||
| (2,277,706 | ) | (1,577 | ) | (177,475 | ) | (5,130 | ) | (543 | ) | (3,892 | ) | |||||||||||
| (115,943 | ) | (1,577 | ) | (109,898 | ) | (5,130 | ) | (5,850 | ) | (13,134 | ) | |||||||||||
| (1,477,971 | ) | (1,577 | ) | (142,875 | ) | (5,129 | ) | — | — | |||||||||||||
| (809,466 | ) | — | (32,620 | ) | — | — | — | |||||||||||||||
| (351,718 | ) | — | (2,288 | ) | — | — | — | |||||||||||||||
| (7,233 | ) | — | (1,413 | ) | — | — | — | |||||||||||||||
| (254,109 | ) | — | (1,511 | ) | — | — | — | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| (11,982,932 | ) | (38,525 | ) | (2,972,011 | ) | (128,240 | ) | (104,283 | ) | (277,713 | ) | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 666,013,270 | 50,007,000 | 14,281,999 | 50,000,000 | 239,089,550 | 184,632,006 | |||||||||||||||||
| 8,824,735 | 38,525 | 2,938,516 | 128,240 | 102,904 | 275,798 | |||||||||||||||||
| (75,013,484 | ) | — | (2,429,913 | ) | — | (268,906,771 | ) | (237,806,192 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 599,824,521 | 50,045,525 | 14,790,602 | 50,128,240 | (29,714,317 | ) | (52,898,388 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| — | — | — | — | 2,152 | — | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 605,911,656 | 50,228,044 | 16,571,343 | 49,933,400 | (29,712,024 | ) | (52,897,983 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 50,228,044 | — | 49,933,400 | — | 490,870,962 | 543,768,945 | |||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | 656,139,700 | $ | 50,228,044 | $ | 66,504,743 | $ | 49,933,400 | $ | 461,158,938 | $ | 490,870,962 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | — | $ | — | $ | — | $ | (44,575 | ) | $ | — | $ | — | ||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| $ | 20,814 | $ | — | $ | 206,581 | $ | — | $ | 42,359 | $ | 39,838 | |||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 65,148,649 | 5,001,698 | 1,393,147 | 5,000,000 | 239,089,550 | 184,632,006 | |||||||||||||||||
| 865,384 | 3,841 | 287,282 | 12,875 | 102,904 | 275,798 | |||||||||||||||||
| (7,346,147 | ) | — | (235,892 | ) | — | (268,906,771 | ) | (237,806,192 | ) | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| 58,667,886 | 5,005,539 | 1,444,537 | 5,012,875 | (29,714,317 | ) | (52,898,388 | ) | |||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 163 |
Table of Contents
The financial highlights table is intended to help you understand each Fund’s financial performance for the past five years (or, if shorter, the period since inception of each Fund’s share classes). Certain information reflects financial results for a single Fund share. The total returns in the table represent the rate that an investor would have earned (or lost) on an investment in each Fund (assuming reinvestment of all distributions).
|
Financial Highlights |
||||||||||||||||||||||||
| Net Asset Value, Beginning of Period |
Net Investment |
Net Realized and Unrealized Gain/(Loss) |
Total Operations |
Distributions From Net Investment Income |
Realized Capital Gains |
|||||||||||||||||||
| RS Investment Quality Bond Fund | ||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.89 | $ | 0.38 | $ | 0.36 | $ | 0.74 | $ | (0.38 | ) | $ | (0.13 | ) | ||||||||||
| Year Ended 12/31/09 |
9.34 | 0.41 | 0.55 | 0.96 | (0.41 | ) | — | |||||||||||||||||
| Year Ended 12/31/08 |
9.79 | 0.42 | (0.45 | ) | (0.03 | ) | (0.42 | ) | — | |||||||||||||||
| Year Ended 12/31/07 |
9.69 | 0.44 | 0.10 | 0.54 | (0.44 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.76 | 0.42 | (0.04 | ) | 0.38 | (0.42 | ) | (0.03 | ) | |||||||||||||||
| Class B |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.89 | $ | 0.30 | $ | 0.35 | $ | 0.65 | $ | (0.30 | ) | $ | (0.13 | ) | ||||||||||
| Year Ended 12/31/09 |
9.33 | 0.34 | 0.56 | 0.90 | (0.34 | ) | — | |||||||||||||||||
| Year Ended 12/31/08 |
9.79 | 0.35 | (0.46 | ) | (0.11 | ) | (0.35 | ) | — | |||||||||||||||
| Year Ended 12/31/07 |
9.68 | 0.37 | 0.11 | 0.48 | (0.37 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.76 | 0.35 | (0.05 | ) | 0.30 | (0.35 | ) | (0.03 | ) | |||||||||||||||
| Class C |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.89 | $ | 0.30 | $ | 0.35 | $ | 0.65 | $ | (0.30 | ) | $ | (0.13 | ) | ||||||||||
| Year Ended 12/31/09 |
9.34 | 0.34 | 0.55 | 0.89 | (0.34 | ) | — | |||||||||||||||||
| Year Ended 12/31/08 |
9.79 | 0.35 | (0.45 | ) | (0.10 | ) | (0.35 | ) | — | |||||||||||||||
| Year Ended 12/31/07 |
9.68 | 0.37 | 0.11 | 0.48 | (0.37 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.76 | 0.35 | (0.05 | ) | 0.30 | (0.35 | ) | (0.03 | ) | |||||||||||||||
| Class K |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.90 | $ | 0.34 | $ | 0.36 | $ | 0.70 | $ | (0.34 | ) | $ | (0.13 | ) | ||||||||||
| Year Ended 12/31/09 |
9.35 | 0.37 | 0.55 | 0.92 | (0.37 | ) | — | |||||||||||||||||
| Year Ended 12/31/08 |
9.80 | 0.38 | (0.45 | ) | (0.07 | ) | (0.38 | ) | — | |||||||||||||||
| Year Ended 12/31/07 |
9.70 | 0.40 | 0.10 | 0.50 | (0.40 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.77 | 0.39 | (0.04 | ) | 0.35 | (0.39 | ) | (0.03 | ) | |||||||||||||||
| Class Y |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.89 | $ | 0.40 | $ | 0.36 | $ | 0.76 | $ | (0.40 | ) | $ | (0.13 | ) | ||||||||||
| Period From 5/13/093 to 12/31/094 |
9.47 | 0.27 | 0.42 | 0.69 | (0.27 | ) | — | |||||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| 164 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| Total Distributions |
Net Asset Value, End of Period |
Total Return1 | Net Assets, End of Period (000s) |
Net Ratio of Expenses to Average Net Assets2 |
Gross Ratio of Expenses to Average Net Assets |
Net Ratio of Net Investment Income to Average Net Assets2 |
Gross Ratio of Net Investment Income to Average Net Assets |
Portfolio Turnover Rate |
||||||||||||||||||||||||||
| $ | (0.51) | $ | 10.12 | 7.55% | $ | 135,370 | 0.85% | 1.04% | 3.69% | 3.50% | 129% | |||||||||||||||||||||||
| (0.41) | 9.89 | 10.50% | 127,155 | 0.85% | 1.05% | 4.24% | 4.04% | 169% | ||||||||||||||||||||||||||
| (0.42) | 9.34 | (0.35)% | 88,118 | 0.85% | 1.01% | 4.34% | 4.18% | 172% | ||||||||||||||||||||||||||
| (0.44) | 9.79 | 5.73% | 94,057 | 0.85% | 1.04% | 4.56% | 4.37% | 154% | ||||||||||||||||||||||||||
| (0.45) | 9.69 | 4.08% | 89,505 | 0.86% | 1.04% | 4.40% | 4.22% | 147% | ||||||||||||||||||||||||||
| $ | (0.43) | $ | 10.11 | 6.65% | $ | 1,765 | 1.60% | 1.82% | 3.00% | 2.78% | 129% | |||||||||||||||||||||||
| (0.34) | 9.89 | 9.79% | 3,891 | 1.60% | 1.84% | 3.51% | 3.27% | 169% | ||||||||||||||||||||||||||
| (0.35) | 9.33 | (1.20)% | 8,148 | 1.60% | 1.82% | 3.59% | 3.37% | 172% | ||||||||||||||||||||||||||
| (0.37) | 9.79 | 5.05% | 8,800 | 1.61% | 1.84% | 3.81% | 3.58% | 154% | ||||||||||||||||||||||||||
| (0.38) | 9.68 | 3.20% | 9,182 | 1.61% | 2.00% | 3.65% | 3.26% | 147% | ||||||||||||||||||||||||||
| $ | (0.43) | $ | 10.11 | 6.64% | $ | 7,270 | 1.60% | 1.80% | 2.97% | 2.77% | 129% | |||||||||||||||||||||||
| (0.34) | 9.89 | 9.68% | 11,701 | 1.60% | 1.81% | 3.49% | 3.28% | 169% | ||||||||||||||||||||||||||
| (0.35) | 9.34 | (1.10)% | 7,794 | 1.60% | 1.80% | 3.60% | 3.40% | 172% | ||||||||||||||||||||||||||
| (0.37) | 9.79 | 5.05% | 7,293 | 1.61% | 1.82% | 3.81% | 3.60% | 154% | ||||||||||||||||||||||||||
| (0.38) | 9.68 | 3.20% | 6,863 | 1.61% | 2.04% | 3.65% | 3.22% | 147% | ||||||||||||||||||||||||||
| $ | (0.47) | $ | 10.13 | 7.12% | $ | 10,104 | 1.25% | 1.50% | 3.34% | 3.09% | 129% | |||||||||||||||||||||||
| (0.37) | 9.90 | 10.05% | 13,096 | 1.25% | 1.55% | 3.86% | 3.56% | 169% | ||||||||||||||||||||||||||
| (0.38) | 9.35 | (0.74)% | 10,804 | 1.25% | 1.39% | 3.95% | 3.81% | 172% | ||||||||||||||||||||||||||
| (0.40) | 9.80 | 5.31% | 9,695 | 1.25% | 1.63% | 4.17% | 3.79% | 154% | ||||||||||||||||||||||||||
| (0.42) | 9.70 | 3.67% | 8,530 | 1.26% | 1.42% | 4.01% | 3.85% | 147% | ||||||||||||||||||||||||||
| $ | (0.53) | $ | 10.12 | 7.75% | $ | 1,849 | 0.66% | 0.76% | 3.85% | 3.75% | 129% | |||||||||||||||||||||||
| (0.27) | 9.89 | 7.32% | 1,093 | 0.66% | 0.84% | 4.28% | 4.10% | 169% | ||||||||||||||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 165 |
Table of Contents
FINANCIAL INFORMATION
|
Financial Highlights (continued) |
||||||||||||||||||||||||
| Net Asset Value, Beginning of Period |
Net Investment |
Net Realized and Unrealized Gain/(Loss) |
Total Operations |
Distributions From Net Investment Income |
Realized Capital Gains |
|||||||||||||||||||
| RS Low Duration Bond Fund | ||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.17 | $ | 0.28 | $ | 0.14 | $ | 0.42 | $ | (0.28 | ) | $ | (0.03 | ) | ||||||||||
| Year Ended 12/31/09 |
9.88 | 0.28 | 0.29 | 0.57 | (0.28 | ) | — | 5 | ||||||||||||||||
| Year Ended 12/31/08 |
9.89 | 0.34 | (0.01 | ) | 0.33 | (0.34 | ) | — | ||||||||||||||||
| Year Ended 12/31/07 |
9.80 | 0.42 | 0.09 | 0.51 | (0.42 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.77 | 0.37 | 0.03 | 0.40 | (0.37 | ) | — | |||||||||||||||||
| Class B |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.16 | $ | 0.20 | $ | 0.14 | $ | 0.34 | $ | (0.20 | ) | $ | (0.03 | ) | ||||||||||
| Year Ended 12/31/09 |
9.88 | 0.21 | 0.28 | 0.49 | (0.21 | ) | — | 5 | ||||||||||||||||
| Year Ended 12/31/08 |
9.89 | 0.26 | (0.01 | ) | 0.25 | (0.26 | ) | — | ||||||||||||||||
| Year Ended 12/31/07 |
9.80 | 0.34 | 0.09 | 0.43 | (0.34 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.77 | 0.29 | 0.03 | 0.32 | (0.29 | ) | — | |||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.17 | $ | 0.21 | $ | 0.14 | $ | 0.35 | $ | (0.21 | ) | $ | (0.03 | ) | ||||||||||
| Year Ended 12/31/09 |
9.88 | 0.21 | 0.29 | 0.50 | (0.21 | ) | — | 5 | ||||||||||||||||
| Year Ended 12/31/08 |
9.89 | 0.26 | (0.01 | ) | 0.25 | (0.26 | ) | — | ||||||||||||||||
| Year Ended 12/31/07 |
9.80 | 0.34 | 0.09 | 0.43 | (0.34 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.77 | 0.29 | 0.03 | 0.32 | (0.29 | ) | — | |||||||||||||||||
| Class K |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.17 | $ | 0.24 | $ | 0.14 | $ | 0.38 | $ | (0.24 | ) | $ | (0.03 | ) | ||||||||||
| Year Ended 12/31/09 |
9.88 | 0.24 | 0.29 | 0.53 | (0.24 | ) | — | 5 | ||||||||||||||||
| Year Ended 12/31/08 |
9.89 | 0.30 | (0.01 | ) | 0.29 | (0.30 | ) | — | ||||||||||||||||
| Year Ended 12/31/07 |
9.80 | 0.38 | 0.09 | 0.47 | (0.38 | ) | — | |||||||||||||||||
| Year Ended 12/31/06 |
9.77 | 0.33 | 0.03 | 0.36 | (0.33 | ) | — | |||||||||||||||||
| Class Y |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.17 | $ | 0.30 | $ | 0.14 | $ | 0.44 | $ | (0.30 | ) | $ | (0.03 | ) | ||||||||||
| Period From 5/13/093 |
9.98 | 0.20 | 0.19 | 0.39 | (0.20 | ) | — | 5 | ||||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| 166 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| Total Distributions |
Net Asset Value, End of Period |
Total Return1 | Net Assets, End of Period |
Net Ratio of Expenses to Average Net Assets2 |
Gross Ratio of Expenses to Average Net Assets |
Net Ratio of Net Investment Income to Average Net Assets2 |
Gross Ratio of Net Investment Income to Average Net Assets |
Portfolio Turnover Rate |
||||||||||||||||||||||||||
| $ | (0.31) | $ | 10.28 | 4.15% | $ | 408,167 | 0.80% | 0.93% | 2.68% | 2.55% | 121% | |||||||||||||||||||||||
| (0.28) | 10.17 | 5.89% | 162,209 | 0.80% | 0.97% | 2.84% | 2.67% | 393% | ||||||||||||||||||||||||||
| (0.34) | 9.88 | 3.35% | 17,326 | 0.80% | 1.23% | 3.37% | 2.94% | 127% | ||||||||||||||||||||||||||
| (0.42) | 9.89 | 5.29% | 10,320 | 0.80% | 1.29% | 4.25% | 3.76% | 53% | ||||||||||||||||||||||||||
| (0.37) | 9.80 | 4.16% | 9,759 | 0.80% | 1.50% | 3.77% | 3.07% | 67% | ||||||||||||||||||||||||||
| $ | (0.23) | $ | 10.27 | 3.38% | $ | 1,628 | 1.55% | 1.80% | 1.94% | 1.69% | 121% | |||||||||||||||||||||||
| (0.21) | 10.16 | 4.99% | 1,002 | 1.55% | 1.77% | 2.05% | 1.83% | 393% | ||||||||||||||||||||||||||
| (0.26) | 9.88 | 2.58% | 8,744 | 1.55% | 1.94% | 2.65% | 2.26% | 127% | ||||||||||||||||||||||||||
| (0.34) | 9.89 | 4.51% | 8,585 | 1.55% | 1.97% | 3.50% | 3.08% | 53% | ||||||||||||||||||||||||||
| (0.29) | 9.80 | 3.38% | 8,329 | 1.55% | 2.27% | 3.01% | 2.29% | 67% | ||||||||||||||||||||||||||
| $ | (0.24) | $ | 10.28 | 3.38% | $ | 144,393 | 1.55% | 1.67% | 1.92% | 1.80% | 121% | |||||||||||||||||||||||
| (0.21) | 10.17 | 5.10% | 44,681 | 1.55% | 1.71% | 2.09% | 1.93% | 393% | ||||||||||||||||||||||||||
| (0.26) | 9.88 | 2.58% | 9,156 | 1.55% | 1.93% | 2.65% | 2.27% | 127% | ||||||||||||||||||||||||||
| (0.34) | 9.89 | 4.51% | 8,290 | 1.55% | 1.98% | 3.50% | 3.07% | 53% | ||||||||||||||||||||||||||
| (0.29) | 9.80 | 3.38% | 7,949 | 1.55% | 2.29% | 3.01% | 2.27% | 67% | ||||||||||||||||||||||||||
| $ | (0.27) | $ | 10.28 | 3.75% | $ | 4,139 | 1.20% | 1.41% | 2.32% | 2.11% | 121% | |||||||||||||||||||||||
| (0.24) | 10.17 | 5.47% | 3,746 | 1.20% | 1.42% | 2.42% | 2.20% | 393% | ||||||||||||||||||||||||||
| (0.30) | 9.88 | 2.94% | 10,854 | 1.20% | 1.56% | 3.00% | 2.64% | 127% | ||||||||||||||||||||||||||
| (0.38) | 9.89 | 4.87% | 10,171 | 1.20% | 1.67% | 3.85% | 3.38% | 53% | ||||||||||||||||||||||||||
| (0.33) | 9.80 | 3.74% | 9,512 | 1.20% | 1.58% | 3.37% | 2.99% | 67% | ||||||||||||||||||||||||||
| $ | (0.33) | $ | 10.28 | 4.36% | $ | 104,784 | 0.62% | 0.62% | 2.83% | 2.83% | 121% | |||||||||||||||||||||||
| (0.20) | 10.17 | 3.91% | |
7,347 |
|
0.63% | 0.73% | 3.07% | 2.97% | 393% | ||||||||||||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 167 |
Table of Contents
FINANCIAL INFORMATION
|
Financial Highlights (continued) |
||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period |
Net Investment |
Net Realized and Unrealized Gain/(Loss) |
Total Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Capital Gains |
Total Distributions |
||||||||||||||||||||||
| RS High Yield Bond Fund | ||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 6.59 | $ | 0.52 | $ | 0.34 | $ | 0.86 | $ | (0.52 | ) | $ | — | $ | (0.52 | ) | ||||||||||||
| Year Ended 12/31/09 |
5.16 | 0.50 | 1.43 | 1.93 | (0.50 | ) | — | (0.50 | ) | |||||||||||||||||||
| Year Ended 12/31/08 |
7.03 | 0.52 | (1.87 | ) | (1.35 | ) | (0.52 | ) | — | (0.52 | ) | |||||||||||||||||
| Year Ended 12/31/07 |
7.49 | 0.54 | (0.46 | ) | 0.08 | (0.54 | ) | — | (0.54 | ) | ||||||||||||||||||
| Year Ended 12/31/06 |
7.35 | 0.51 | 0.14 | 0.65 | (0.51 | ) | — | (0.51 | ) | |||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 6.58 | $ | 0.47 | $ | 0.35 | $ | 0.82 | $ | (0.47 | ) | $ | — | $ | (0.47 | ) | ||||||||||||
| Year Ended 12/31/09 |
5.16 | 0.45 | 1.42 | 1.87 | (0.45 | ) | — | (0.45 | ) | |||||||||||||||||||
| Year Ended 12/31/08 |
7.02 | 0.47 | (1.86 | ) | (1.39 | ) | (0.47 | ) | — | (0.47 | ) | |||||||||||||||||
| Year Ended 12/31/07 |
7.48 | 0.49 | (0.46 | ) | 0.03 | (0.49 | ) | — | (0.49 | ) | ||||||||||||||||||
| Year Ended 12/31/06 |
7.35 | 0.45 | 0.13 | 0.58 | (0.45 | ) | — | (0.45 | ) | |||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 6.58 | $ | 0.47 | $ | 0.35 | $ | 0.82 | $ | (0.47 | ) | $ | — | $ | (0.47 | ) | ||||||||||||
| Year Ended 12/31/09 |
5.16 | 0.45 | 1.42 | 1.87 | (0.45 | ) | — | (0.45 | ) | |||||||||||||||||||
| Year Ended 12/31/08 |
7.02 | 0.47 | (1.86 | ) | (1.39 | ) | (0.47 | ) | — | (0.47 | ) | |||||||||||||||||
| Year Ended 12/31/07 |
7.48 | 0.49 | (0.46 | ) | 0.03 | (0.49 | ) | — | (0.49 | ) | ||||||||||||||||||
| Year Ended 12/31/06 |
7.34 | 0.45 | 0.14 | 0.59 | (0.45 | ) | — | (0.45 | ) | |||||||||||||||||||
| Class K |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 6.59 | $ | 0.49 | $ | 0.34 | $ | 0.83 | $ | (0.49 | ) | $ | — | $ | (0.49 | ) | ||||||||||||
| Year Ended 12/31/09 |
5.16 | 0.48 | 1.43 | 1.91 | (0.48 | ) | — | (0.48 | ) | |||||||||||||||||||
| Year Ended 12/31/08 |
7.03 | 0.50 | (1.87 | ) | (1.37 | ) | (0.50 | ) | — | (0.50 | ) | |||||||||||||||||
| Year Ended 12/31/07 |
7.49 | 0.51 | (0.46 | ) | 0.05 | (0.51 | ) | — | (0.51 | ) | ||||||||||||||||||
| Year Ended 12/31/06 |
7.35 | 0.48 | 0.14 | 0.62 | (0.48 | ) | — | (0.48 | ) | |||||||||||||||||||
| Class Y |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 6.58 | $ | 0.53 | $ | 0.34 | $ | 0.87 | $ | (0.53 | ) | $ | — | $ | (0.53 | ) | ||||||||||||
| Period From 5/13/093 |
5.74 | 0.33 | 0.84 | 1.17 | (0.33 | ) | — | (0.33 | ) | |||||||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| 168 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| Redemption Fees |
Net Asset Value, End of Period |
Total Return1 | Net Assets, End of Period (000s) |
Net Ratio of Expenses to Average Net Assets2 |
Gross Ratio of Expenses to Average Net Assets |
Net Ratio of Net Investment Income to Average Net Assets2 |
Gross Ratio of Net Investment Income to Average Net Assets |
Portfolio Rate |
||||||||||||||||||||||||||
| $ | — | $ | 6.93 | 13.54% | $ | 72,025 | 0.85% | 1.14% | 7.67% | 7.38% | 108% | |||||||||||||||||||||||
| — | 6.59 | 38.92% | 76,328 | 0.85% | 1.14% | 8.39% | 8.10% | 66% | ||||||||||||||||||||||||||
| — | 5.16 | (20.10)% | 41,222 | 0.85% | 1.18% | 8.38% | 8.05% | 72% | ||||||||||||||||||||||||||
| — | 7.03 | 1.04% | 48,425 | 0.85% | 1.17% | 7.37% | 7.05% | 95% | ||||||||||||||||||||||||||
| 0.00 | 5 | 7.49 | 9.14% | 49,616 | 0.85% | 1.19% | 6.90% | 6.56% | 82% | |||||||||||||||||||||||||
| $ | — | $ | 6.93 | 12.87% | $ | 3,788 | 1.60% | 1.97% | 6.93% | 6.56% | 108% | |||||||||||||||||||||||
| — | 6.58 | 37.67% | 3,019 | 1.60% | 1.98% | 7.72% | 7.34% | 66% | ||||||||||||||||||||||||||
| — | 5.16 | (20.60)% | 3,203 | 1.60% | 1.97% | 7.28% | 6.91% | 72% | ||||||||||||||||||||||||||
| — | 7.02 | 0.28% | 9,257 | 1.60% | 1.95% | 6.62% | 6.27% | 95% | ||||||||||||||||||||||||||
| 0.00 | 5 | 7.48 | 8.19% | 9,434 | 1.60% | 2.23% | 6.14% | 5.51% | 82% | |||||||||||||||||||||||||
| $ | — | $ | 6.93 | 12.88% | $ | 25,102 | 1.60% | 1.92% | 6.92% | 6.60% | 108% | |||||||||||||||||||||||
| — | 6.58 | 37.69% | 15,088 | 1.60% | 1.93% | 7.67% | 7.34% | 66% | ||||||||||||||||||||||||||
| — | 5.16 | (20.58)% | 8,897 | 1.60% | 1.93% | 7.59% | 7.26% | 72% | ||||||||||||||||||||||||||
| — | 7.02 | 0.28% | 11,277 | 1.60% | 1.93% | 6.62% | 6.29% | 95% | ||||||||||||||||||||||||||
| 0.00 | 5 | 7.48 | 8.33% | 11,258 | 1.60% | 2.16% | 6.14% | 5.58% | 82% | |||||||||||||||||||||||||
| $ | — | $ | 6.93 | 13.09% | $ | 18,710 | 1.25% | 1.58% | 7.29% | 6.96% | 108% | |||||||||||||||||||||||
| — | 6.59 | 38.36% | 16,522 | 1.25% | 1.60% | 8.04% | 7.69% | 66% | ||||||||||||||||||||||||||
| — | 5.16 | (20.42)% | 11,663 | 1.25% | 1.57% | 7.94% | 7.62% | 72% | ||||||||||||||||||||||||||
| — | 7.03 | 0.64% | 14,330 | 1.25% | 1.65% | 6.97% | 6.57% | 95% | ||||||||||||||||||||||||||
| 0.00 | 5 | 7.49 | 8.71% | 13,774 | 1.25% | 1.54% | 6.50% | 6.21% | 82% | |||||||||||||||||||||||||
| $ | — | $ | 6.92 | 13.77% | $ | 4,678 | 0.66% | 0.88% | 7.89% | 7.67% | 108% | |||||||||||||||||||||||
| |
— |
|
6.58 | 20.76% | 1,207 | 0.66% | 0.97% | 8.25% | 7.94% | 66% | ||||||||||||||||||||||||
See notes to Financial Highlights on pages 174-175.
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 169 |
Table of Contents
FINANCIAL INFORMATION
|
Financial Highlights (continued) |
||||||||||||||||||||||||
| Net Asset Value, Beginning of Period |
Net Investment |
Net Realized and Unrealized Gain/(Loss) |
Total Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Capital Gains |
|||||||||||||||||||
| RS Tax-Exempt Fund | ||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.19 | $ | 0.37 | $ | (0.24 | ) | $ | 0.13 | $ | (0.37 | ) | $ | — | ||||||||||
| Year Ended 12/31/09 |
9.48 | 0.37 | 0.71 | 1.08 | (0.37 | ) | — | |||||||||||||||||
| Year Ended 12/31/08 |
9.83 | 0.33 | (0.35 | ) | (0.02 | ) | (0.33 | ) | — | |||||||||||||||
| Year Ended 12/31/07 |
10.08 | 0.36 | (0.22 | ) | 0.14 | (0.36 | ) | (0.03 | ) | |||||||||||||||
| Year Ended 12/31/06 |
9.98 | 0.36 | 0.13 | 0.49 | (0.36 | ) | (0.03 | ) | ||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.18 | $ | 0.29 | $ | (0.23 | ) | $ | 0.06 | $ | (0.29 | ) | $ | — | ||||||||||
| Year Ended 12/31/09 |
9.47 | 0.29 | 0.71 | 1.00 | (0.29 | ) | — | |||||||||||||||||
| Year Ended 12/31/08 |
9.83 | 0.25 | (0.36 | ) | (0.11 | ) | (0.25 | ) | — | |||||||||||||||
| Year Ended 12/31/07 |
10.08 | 0.29 | (0.22 | ) | 0.07 | (0.29 | ) | (0.03 | ) | |||||||||||||||
| Year Ended 12/31/06 |
9.98 | 0.28 | 0.13 | 0.41 | (0.28 | ) | (0.03 | ) | ||||||||||||||||
| Class Y |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.18 | $ | 0.39 | $ | (0.23 | ) | $ | 0.16 | $ | (0.39 | ) | $ | — | ||||||||||
| Period From 5/13/093 |
9.94 | 0.25 | 0.24 | 0.49 | (0.25 | ) | — | |||||||||||||||||
| RS High Yield Municipal Bond Fund | ||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.07 | $ | 0.59 | $ | (0.11 | ) | $ | 0.48 | $ | (0.59 | ) | $ | (0.01 | ) | |||||||||
| Period From 11/23/096 |
10.00 | 0.04 | 0.07 | 0.11 | (0.04 | ) | — | |||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.07 | $ | 0.57 | $ | (0.11 | ) | $ | 0.46 | $ | (0.57 | ) | $ | (0.01 | ) | |||||||||
| Period From 11/23/096 |
10.00 | 0.04 | 0.07 | 0.11 | (0.04 | ) | — | |||||||||||||||||
| Class Y |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.07 | $ | 0.59 | $ | (0.11 | ) | $ | 0.48 | $ | (0.59 | ) | $ | (0.01 | ) | |||||||||
| Period From 11/23/096 |
10.00 | 0.04 | 0.07 | 0.11 | (0.04 | ) | — | |||||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| 170 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| Total Distributions |
Net Asset Value, End of Period |
Total Return1 | Net Assets, End of Period (000s) |
Net Ratio of Expenses to Average Net Assets2 |
Gross Ratio of Expenses to Average Net Assets |
Net Ratio of Net Investment Income to Average Net Assets2 |
Gross Ratio of Net Investment Income to Average Net Assets |
Portfolio Rate |
||||||||||||||||||||||||||
| $ | (0.37) | $ | 9.95 | 1.21% | $ | 161,531 | 0.82% | 0.96% | 3.58% | 3.44% | 22% | |||||||||||||||||||||||
| (0.37) | 10.19 | 11.52% | 181,692 | 0.85% | 0.94% | 3.66% | 3.57% | 44% | ||||||||||||||||||||||||||
| (0.33) | 9.48 | (0.23)% | 96,557 | 0.85% | 0.96% | 3.38% | 3.27% | 113% | ||||||||||||||||||||||||||
| (0.39) | 9.83 | 1.47% | 95,533 | 0.85% | 0.97% | 3.68% | 3.56% | 158% | ||||||||||||||||||||||||||
| (0.39) | 10.08 | 5.03% | 93,205 | 0.87% | 0.95% | 3.60% | 3.52% | 141% | ||||||||||||||||||||||||||
| $ | (0.29) | $ | 9.95 | 0.52% | $ | 62,692 | 1.60% | 1.72% | 2.78% | 2.66% | 22% | |||||||||||||||||||||||
| (0.29) | 10.18 | 10.69% | 43,668 | 1.60% | 1.71% | 2.90% | 2.79% | 44% | ||||||||||||||||||||||||||
| (0.25) | 9.47 | (1.08)% | 12,045 | 1.60% | 1.73% | 2.64% | 2.51% | 113% | ||||||||||||||||||||||||||
| (0.32) | 9.83 | 0.71% | 11,577 | 1.60% | 1.75% | 2.93% | 2.78% | 158% | ||||||||||||||||||||||||||
| (0.31) | 10.08 | 4.25% | 11,434 | 1.62% | 1.95% | 2.85% | 2.52% | 141% | ||||||||||||||||||||||||||
| $ | (0.39) | $ | 9.95 | 1.47% | $ | 41,376 | 0.67% | 0.67% | 3.71% | 3.71% | 22% | |||||||||||||||||||||||
| (0.25) | 10.18 | 4.95% | |
2,356 |
|
0.69% | 0.77% | 3.80% | 3.72% | 44% | ||||||||||||||||||||||||
| $ | (0.60) | $ | 9.95 | 4.74% | $ | 72,924 | 0.12% | 1.20% | 5.64% | 4.56% | 41% | |||||||||||||||||||||||
| (0.04) | 10.07 | 1.10% | |
31,346 |
|
—% | 7 | 1.25% | 3.85% | 2.60% | —% | 8 | ||||||||||||||||||||||
| $ | (0.58) | $ | 9.95 | 4.55% | $ | 20,104 | 0.34% | 1.94% | 5.36% | 3.76% | 41% | |||||||||||||||||||||||
| (0.04) | 10.07 | 1.10% | |
2,022 |
|
—% | 7 | 2.14% | 3.85% | 1.71% | —% | 8 | ||||||||||||||||||||||
| $ | (0.60) | $ | 9.95 | 4.76% | $ | 10,731 | 0.10% | 0.87% | 5.66% | 4.89% | 41% | |||||||||||||||||||||||
| (0.04) | 10.07 | 1.10% | |
2,022 |
|
—% | 7 | 2.14% | 3.85% | 1.71% | —% | 8 | ||||||||||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 171 |
Table of Contents
FINANCIAL INFORMATION
|
Financial Highlights (continued) |
||||||||||||||||||||||||
| Net Asset Value, Beginning of Period |
Net Investment |
Net Realized and Unrealized Gain/(Loss) |
Total Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Capital Gains |
|||||||||||||||||||
| RS Floating Rate Fund | ||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.03 | $ | 0.52 | $ | 0.30 | $ | 0.82 | $ | (0.52 | ) | $ | (0.03 | ) | ||||||||||
| Period From 12/7/096 |
10.00 | 0.01 | 0.03 | 0.04 | (0.01 | ) | — | |||||||||||||||||
| Class C |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.04 | $ | 0.51 | $ | 0.30 | $ | 0.81 | $ | (0.51 | ) | $ | (0.03 | ) | ||||||||||
| Period From 12/7/096 |
10.00 | 0.01 | 0.04 | 0.05 | (0.01 | ) | — | |||||||||||||||||
| Class K |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.04 | $ | 0.52 | $ | 0.30 | $ | 0.82 | $ | (0.52 | ) | $ | (0.03 | ) | ||||||||||
| Period From 12/7/096 |
10.00 | 0.01 | 0.04 | 0.05 | (0.01 | ) | — | |||||||||||||||||
| Class Y |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 10.04 | $ | 0.52 | $ | 0.29 | $ | 0.81 | $ | (0.52 | ) | $ | (0.03 | ) | ||||||||||
| Period From 12/7/096 |
10.00 | 0.01 | 0.04 | 0.05 | (0.01 | ) | — | |||||||||||||||||
| RS Strategic Income Fund | ||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.96 | $ | 0.53 | $ | 0.35 | $ | 0.88 | $ | (0.53 | ) | $ | (0.01 | ) | ||||||||||
| Period From 11/23/096 |
10.00 | 0.03 | (0.04 | ) | (0.01 | ) | (0.03 | ) | — | |||||||||||||||
| Class C |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.96 | $ | 0.53 | $ | 0.34 | $ | 0.87 | $ | (0.52 | ) | $ | (0.01 | ) | ||||||||||
| Period From 11/23/096 |
10.00 | 0.03 | (0.04 | ) | (0.01 | ) | (0.03 | ) | — | |||||||||||||||
| Class K |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.96 | $ | 0.53 | $ | 0.35 | $ | 0.88 | $ | (0.53 | ) | $ | (0.01 | ) | ||||||||||
| Period From 11/23/096 |
10.00 | 0.03 | (0.04 | ) | (0.01 | ) | (0.03 | ) | — | |||||||||||||||
| Class Y |
||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 9.96 | $ | 0.54 | $ | 0.34 | $ | 0.88 | $ | (0.53 | ) | $ | (0.01 | ) | ||||||||||
| Period From 11/23/096 |
10.00 | 0.03 | (0.04 | ) | (0.01 | ) | (0.03 | ) | — | |||||||||||||||
See notes to Financial Highlights on pages 174 - 175.
| 172 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| Total Distributions |
Net Asset Value, End of Period |
Total Return1 | Net Assets, End of Period (000s) |
Net Ratio of Expenses to Average Net Assets2 |
Gross Ratio of Expenses to Average Net Assets |
Net Ratio of Net Investment Income to Average Net Assets2 |
Gross Ratio of Net Investment Income/(Loss) to Average Net Assets |
Portfolio Rate |
||||||||||||||||||||||||||
| $ | (0.55) | $ | 10.30 | 8.37% | $ | 373,238 | 0.07% | 1.24% | 5.22% | 4.05% | 64% | |||||||||||||||||||||||
| (0.01) | 10.03 | 0.38% | 44,195 | —% | 7 | 1.65% | 1.26% | (0.39)% | —% | 8 | ||||||||||||||||||||||||
| $ | (0.54) | $ | 10.31 | 8.25% | $ | 159,695 | 0.24% | 2.02% | 5.12% | 3.34% | 64% | |||||||||||||||||||||||
| (0.01) | 10.04 | 0.48% | |
2,009 |
|
—% | 7 | 3.09% | 1.20% | (1.89)% | —% | 8 | ||||||||||||||||||||||
| $ | (0.55) | $ | 10.31 | 8.33% | $ | 2,918 | 0.08% | 1.62% | 5.13% | 3.59% | 64% | |||||||||||||||||||||||
| (0.01) | 10.04 | 0.48% | |
2,009 |
|
—% | 7 | 3.09% | 1.20% | (1.89)% | —% | 8 | ||||||||||||||||||||||
| $ | (0.55) | $ | 10.30 | 8.28% | $ | 120,289 | 0.08% | 1.00% | 5.30% | 4.38% | 64% | |||||||||||||||||||||||
| (0.01) | 10.04 | 0.48% | |
2,015 |
|
—% | 7 | 3.09% | 1.20% | (1.89)% | —% | 8 | ||||||||||||||||||||||
| $ | (0.54) | $ | 10.30 | 8.93% | $ | 52,362 | 0.12% | 1.41% | 5.14% | 3.85% | 51% | |||||||||||||||||||||||
| (0.03) | 9.96 | (0.14)% | |
43,942 |
|
—% | 7 | 1.14% | 2.47% | 1.33% | 2% | |||||||||||||||||||||||
| $ | (0.53) | $ | 10.30 | 8.89% | $ | 4,873 | 0.12% | 2.19% | 5.14% | 3.07% | 51% | |||||||||||||||||||||||
| (0.03) | 9.96 | (0.14)% | |
1,997 |
|
—% | 7 | 2.06% | 2.47% | 0.41% | 2% | |||||||||||||||||||||||
| $ | (0.54) | $ | 10.30 | 8.93% | $ | 2,298 | 0.12% | 1.78% | 5.15% | 3.49% | 51% | |||||||||||||||||||||||
| (0.03) | 9.96 | (0.14)% | |
1,997 |
|
—% | 7 | 2.06% | 2.47% | 0.41% | 2% | |||||||||||||||||||||||
| $ | (0.54) | $ | 10.30 | 8.95% | $ | 6,972 | 0.10% | 1.07% | 5.14% | 4.17% | 51% | |||||||||||||||||||||||
| (0.03) | 9.96 | (0.14)% | |
1,997 |
|
—% | 7 | 2.06% | 2.47% | 0.41% | 2% | |||||||||||||||||||||||
See notes to Financial Highlights on pages 174-175.
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 173 |
Table of Contents
FINANCIAL INFORMATION
|
Financial Highlights (continued) |
||||||||||||||||||||||||||||
| Net Asset Value, Beginning of Period |
Net Investment |
Net Realized and Unrealized Gain/(Loss) |
Total Operations |
Distributions From Net Investment Income |
Distributions From Net Realized Capital Gains |
Total Distributions |
||||||||||||||||||||||
| RS Money Market Fund | ||||||||||||||||||||||||||||
| Class A |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 1.00 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | $ | — | 9 | |||||||||
| Year Ended 12/31/09 |
1.00 | — | 9 | — | — | 9 | — | 9 | — | — | 9 | |||||||||||||||||
| Year Ended 12/31/08 |
1.00 | 0.018 | — | 0.018 | (0.018 | ) | — | (0.018 | ) | |||||||||||||||||||
| Year Ended 12/31/07 |
1.00 | 0.044 | — | 0.044 | (0.044 | ) | — | (0.044 | ) | |||||||||||||||||||
| Year Ended 12/31/06 |
1.00 | 0.042 | — | 0.042 | (0.042 | ) | — | (0.042 | ) | |||||||||||||||||||
| Class B |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 1.00 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | $ | — | 9 | |||||||||
| Year Ended 12/31/09 |
1.00 | — | 9 | — | — | 9 | — | 9 | — | — | 9 | |||||||||||||||||
| Year Ended 12/31/08 |
1.00 | 0.011 | — | 0.011 | (0.011 | ) | — | (0.011 | ) | |||||||||||||||||||
| Year Ended 12/31/07 |
1.00 | 0.036 | — | 0.036 | (0.036 | ) | — | (0.036 | ) | |||||||||||||||||||
| Year Ended 12/31/06 |
1.00 | 0.034 | — | 0.034 | (0.034 | ) | — | (0.034 | ) | |||||||||||||||||||
| Class C |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 1.00 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | $ | — | 9 | |||||||||
| Year Ended 12/31/09 |
1.00 | — | 9 | — | — | 9 | — | 9 | — | — | 9 | |||||||||||||||||
| Year Ended 12/31/08 |
1.00 | 0.011 | — | 0.011 | (0.011 | ) | — | (0.011 | ) | |||||||||||||||||||
| Year Ended 12/31/07 |
1.00 | 0.036 | — | 0.036 | (0.036 | ) | — | (0.036 | ) | |||||||||||||||||||
| Year Ended 12/31/06 |
1.00 | 0.034 | — | 0.034 | (0.034 | ) | — | (0.034 | ) | |||||||||||||||||||
| Class K |
||||||||||||||||||||||||||||
| Year Ended 12/31/10 |
$ | 1.00 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | 9 | $ | — | $ | — | 9 | |||||||||
| Year Ended 12/31/09 |
1.00 | — | 9 | — | — | 9 | — | 9 | — | — | 9 | |||||||||||||||||
| Year Ended 12/31/08 |
1.00 | 0.014 | — | 0.014 | (0.014 | ) | — | (0.014 | ) | |||||||||||||||||||
| Year Ended 12/31/07 |
1.00 | 0.040 | — | 0.040 | (0.040 | ) | — | (0.040 | ) | |||||||||||||||||||
| Year Ended 12/31/06 |
1.00 | 0.038 | — | 0.038 | (0.038 | ) | — | (0.038 | ) | |||||||||||||||||||
Distributions reflect actual per-share amounts distributed for the period.
| 1 | Initial sales charges or contingent deferred sales charges are not reflected in the calculation of total return. |
| 2 | Net Ratio of Expenses to Average Net Assets and Net Ratio of Net Investment Income to Average Net Assets include the effect of fee waivers and expense limitation, interest expense associated with reverse repurchase agreements and custody credits, if applicable. |
| 3 | Inception date. |
| 4 | Ratios for periods of less than one year have been annualized, except for total return and portfolio turnover rate. |
| 174 | www.RSinvestments.com | The accompanying notes are an integral part of these financial statements. |
Table of Contents
FINANCIAL INFORMATION
| Increase From Regulatory Settlements |
Net Asset Value, End of Period |
Total Return1 | Net Assets, End of Period (000s) |
Net Ratio of Expenses to Average Net Assets2 |
Gross Ratio of Expenses to Average Net Assets |
Net Ratio of Net Investment Income to Average Net Assets2 |
Gross Ratio of Net Investment Income/(Loss) to Average Net Assets |
|||||||||||||||||||||||
| $ | — | 9 | $ | 1.00 | 0.02% | $ | 432,945 | 0.19% | 11 | 0.84% | 0.02% | 11 | (0.63)% | |||||||||||||||||
| — | 1.00 | 0.05% | 461,792 | 0.33% | 11 | 0.84% | 0.05% | 11 | (0.46)% | |||||||||||||||||||||
| — | 1.00 | 1.82% | 10 | 510,931 | 0.75% | 0.86% | 1.79% | 1.68% | ||||||||||||||||||||||
| — | 1.00 | 4.45% | 458,233 | 0.84% | 0.90% | 4.36% | 4.30% | |||||||||||||||||||||||
| — | 1.00 | 4.26% | 409,170 | 0.85% | 0.92% | 4.18% | 4.11% | |||||||||||||||||||||||
| $ | — | 9 | $ | 1.00 | 0.02% | $ | 699 | 0.19% | 11 | 1.80% | 0.02% | 11 | (1.59)% | |||||||||||||||||
| — | 1.00 | 0.05% | 1,375 | 0.34% | 11 | 1.95% | 0.05% | 11 | (1.56)% | |||||||||||||||||||||
| — | 1.00 | 1.08% | 10 | 1,918 | 1.48% | 11 | 1.85% | 1.12% | 11 | 0.75% | ||||||||||||||||||||
| — | 1.00 | 3.67% | 2,542 | 1.59% | 1.84% | 3.62% | 3.37% | |||||||||||||||||||||||
| — | 1.00 | 3.48% | 2,763 | 1.60% | 1.87% | 3.38% | 3.11% | |||||||||||||||||||||||
| $ | — | 9 | $ | 1.00 | 0.02% | $ | 2,165 | 0.19% | 11 | 1.71% | 0.02% | 11 | (1.50)% | |||||||||||||||||
| — | 1.00 | 0.05% | 2,194 | 0.34% | 11 | 1.69% | 0.05% | 11 | (1.30)% | |||||||||||||||||||||
| — | 1.00 | 1.08% | 10 | 7,950 | 1.48% | 11 | 1.69% | 1.09% | 11 | 0.88% | ||||||||||||||||||||
| — | 1.00 | 3.67% | 8,456 | 1.59% | 1.74% | 3.60% | 3.45% | |||||||||||||||||||||||
| — | 1.00 | 3.48% | 6,378 | 1.60% | 1.71% | 3.43% | 3.32% | |||||||||||||||||||||||
| $ | — | 9 | $ | 1.00 | 0.02% | $ | 25,350 | 0.19% | 11 | 1.40% | 0.02% | 11 | (1.19)% | |||||||||||||||||
| — | 1.00 | 0.05% | 25,510 | 0.32% | 11 | 1.45% | 0.05% | 11 | (1.08)% | |||||||||||||||||||||
| — | 1.00 | 1.42% | 10 | 22,970 | 1.14% | 11 | 1.26% | 1.32% | 11 | 1.20% | ||||||||||||||||||||
| — | 1.00 | 4.03% | 13,294 | 1.23% | 1.61% | 3.94% | 3.56% | |||||||||||||||||||||||
| — | 1.00 | 3.84% | 9,686 | 1.25% | 1.35% | 3.76% | 3.66% | |||||||||||||||||||||||
| 5 | Rounds to $0.00 per share. |
| 6 | Inception date. Shares were not offered to public prior to December 31, 2009. |
| 7 | Expenses for the period ended December 31, 2009 were reimbursed by Guardian Investor Services LLC (See Note 2a). |
| 8 | For the period ended December 31, 2009 no long-term securities were sold. |
| 9 | Rounds to $0.000 per share. |
| 10 | Without the effect of the voluntary contribution by the distributor, the total return would have been 1.78%, 1.04%, 1.04% and 1.38% for Class A, Class B, Class C and Class K, respectively. |
| 11 | Includes additional waivers to maintain a minimum yield threshold (See Note 2a). |
| The accompanying notes are an integral part of these financial statements. | www.RSinvestments.com | 175 |
Table of Contents
Notes to Financial Statements
December 31, 2010
RS Investment Trust (the “Trust”), a Massachusetts business trust organized on May 11, 1987, is registered under the Investment Company Act of 1940, as amended (the “1940 Act”), as an open-end management investment company. These financial statements relate to eight series offered by the Trust: RS Investment Quality Bond Fund, RS Low Duration Bond Fund, RS High Yield Bond Fund, RS Tax-Exempt Fund, RS High Yield Municipal Bond Fund, RS Floating Rate Fund, RS Strategic Income Fund and RS Money Market Fund (each a “Fund,” collectively the “Funds”). All of the Funds are diversified funds. The financial statements for the other remaining series of the Trust are presented in separate reports.
RS Investment Quality Bond Fund, RS Low Duration Bond Fund and RS High Yield Bond Fund offer Class A, B, C, K and Y shares. RS Tax-Exempt Fund and RS High Yield Municipal Bond Fund offer Class A, C and Y shares. RS Floating Rate Fund and RS Strategic Income Fund offer Class A, C, K and Y shares. RS Money Market Fund offers Class A, B, C and K shares. The classes differ principally in their respective sales charges, transfer agent expenses, and other expenses. In general, all classes of shares have identical rights to earnings, assets and voting privileges, except for certain differences, including class-specific expenses and voting rights with respect to matters affecting fewer than all classes or in which the interests of one class differ from the interests of any other class.
The Trust has an unlimited number of authorized shares of beneficial interest with no par value. Shares are bought and sold at closing net asset value (“NAV”), which is the price for all outstanding shares of a Fund, as applicable.
Note 1 Significant Accounting Policies
The following policies are in conformity with accounting principles generally accepted in the United States of America (“GAAP”). The preparation of financial statements in accordance with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts and disclosures in the financial statements. Actual results could differ from those estimates.
a. Investment Valuations The Funds are responsible for the valuation of portfolio securities and use independent pricing services (each, a “Service”). The valuations of debt securities, including bank loans, with more than 60 days to maturity for which quoted bid prices are readily available and representative of the bid side of the market are valued by a relevant Service at the bid price. Debt securities with more than 60 days to maturity for which quoted bid prices are not readily available and representative of the market value are valued by the Service at estimated market value based on methods which may include consideration of yields or prices of government securities of comparable coupon, maturity and type; indications as to values from dealers; and general market conditions.
Other marketable securities are valued at the last reported sale price on the principal exchange or market on which they are traded; or, if there were no sales that day, at the
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mean between the closing bid and asked prices. Securities traded on the NASDAQ Stock Market, LLC (“NASDAQ”) are generally valued at the NASDAQ official closing price, which may not be the last sale price. If the NASDAQ official closing price is not available for a security, that security is generally valued using the last reported sale price, or, if no sales are reported, at the mean between the closing bid and asked prices. Short-term investments that will mature in 60 days or less are valued at amortized cost, which approximates market value. Repurchase agreements are carried at cost, which approximates market value. RS Money Market Fund values its investments based on amortized cost in accordance with Rule 2a-7 of the 1940 Act. Foreign securities are valued in the currencies of the markets in which they trade and then converted to U.S. dollars using the prevailing exchange rates at the close of the New York Stock Exchange (“NYSE”).
Securities for which market quotations are not readily available or for which market quotations may be considered unreliable are valued at their fair values as determined in accordance with guidelines and procedures adopted by the Trust’s Board of Trustees.
Securities whose values have been materially affected by events occurring before the Funds’ valuation time but after the close of the securities’ principal exchange or market may be fair valued using methods approved by the Board of Trustees.
The Funds have adopted the authoritative guidance under GAAP on determining fair value when the volume and level of activity for an asset or liability have significantly decreased and for identifying transactions that are not orderly. Accordingly, if the Funds determine that either the volume and/or level of activity for an asset or liability has significantly decreased (from normal conditions for that asset or liability) or price quotations or observable inputs are not associated with orderly transactions, increased analysis and management judgment will be required to estimate fair value.
In accordance with Financial Accounting Standards Board Codification Topic 820 (“ASC Topic 820”), fair value is defined as the price that the Funds would receive upon selling an investment in an “arm’s length” transaction to a willing buyer in the principal or most advantageous market for the investment. ASC Topic 820 established a hierarchy for classification of fair value measurements for disclosure purposes. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The hierarchy of inputs is summarized in the three broad levels listed below.
| Ÿ | Level 1 — unadjusted quoted prices in active markets for identical investments |
| Ÿ | Level 2 — inputs other than unadjusted quoted prices that are observable either directly or indirectly (including adjusted quoted prices for similar investments, interest rates, prepayment speeds, credit risks, etc.) |
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| Ÿ | Level 3 — significant unobservable inputs (including the Funds’ own assumptions in determining the fair value of investments) |
Inputs may include price information, volatility statistics, specific and broad credit data, liquidity statistics, and other factors. A security’s level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. However, the determination of what constitutes “observable” requires significant judgment by the Trust. The Trust considers observable data to be that market data which is readily available, regularly distributed or updated, reliable and verifiable, and provided by independent sources that are actively involved in the relevant market. The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Changes in valuation techniques may result in transfers into or out of an investment’s assigned level within the hierarchy.
In January 2010, the Financial Accounting Standards Board issued new guidance requiring reporting entities to make new disclosures about amounts and reasons for significant transfers in and out of Level 1 and Level 2 fair value measurements as well as inputs and valuation techniques used to measure fair value for both recurring and nonrecurring fair value measurements that fall in either Level 2 or Level 3, and information on purchases, sales, issuances and settlements of Level 3 securities on a gross basis. The new and revised disclosures are required to be implemented for annual and interim periods beginning after December 15, 2009, except for the disclosures surrounding purchases, sales, issuances and settlements of Level 3 fair value measurements on a gross basis, which are effective for fiscal years beginning after December 15, 2010 and for interim periods within those fiscal years.
The Funds have adopted the new guidance for the year ended December 31, 2010. There were no significant transfers between Level 1 and Level 2 for the year ended December 31, 2010. The Trust is currently evaluating the impact of the adoption of the other provisions of the new guidance on the Funds’ financial statements.
In determining a security’s placement within the hierarchy, the Trust separates the Funds’ investment portfolios into two categories: investments and derivatives (e.g. futures).
Investments Investments whose values are based on quoted market prices in active markets, and are therefore classified within Level 1, include active listed equities. The Trust does not adjust the quoted price for such instruments, even in situations where the Funds hold a large position and a sale could reasonably impact the quoted price.
Investments that trade in markets that are not considered to be active, but are valued based on quoted market prices, dealer quotations or alternative pricing sources supported by observable inputs are classified within Level 2. These include certain U.S. government and sovereign obligations, most government agency securities, investment-grade corporate bonds, certain mortgage products, state, municipal and provincial obligations, and certain foreign equity securities.
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Investments classified within Level 3 have significant unobservable inputs, as they trade infrequently or not at all. Level 3 investments include, among other things, private placement securities. When observable prices are not available for these securities, the Trust uses one or more valuation techniques for which sufficient and reliable data is available. The inputs used by the Trust in estimating the value of Level 3 investments include the original transaction price, recent transactions in the same or similar instruments, completed or pending third-party transactions in the underlying investment or comparable issuers, subsequent rounds of financing, recapitalizations, and other transactions across the capital structure. Level 3 investments may also be adjusted to reflect illiquidity and/or non-transferability, with the amount of such discount estimated by the Trust in the absence of market information. Assumptions used by the Trust due to the lack of observable inputs may significantly impact the resulting fair value and therefore the Funds’ results of operations.
Derivatives Exchange-traded derivatives, such as futures contracts and exchange traded option contracts, are typically classified within Level 1 or Level 2 of the fair value hierarchy depending on whether or not they are deemed to be actively traded. Certain derivatives, such as generic forwards, swaps and options, have inputs which can generally be corroborated by market data and are therefore classified within Level 2.
b. Federal Income Taxes The Funds intend to continue complying with the requirements of the Internal Revenue Code to qualify as regulated investment companies and to distribute substantially all net investment income and realized net capital gains, if any, to shareholders. Therefore, the Funds do not expect to be subject to income tax, and no provision for such tax has been made.
From time to time, however, a Fund may choose to pay an excise tax if the cost of making the required distribution exceeds the amount of the excise tax.
As of December 31, 2010, the Trust has reviewed the tax positions for open periods, as applicable to the Funds, and has determined that no provision for income tax is required in the Funds’ financial statements. The Funds recognize interest and penalties, if any, related to unrecognized tax positions as income tax expense in the Statement of Operations. For the year ended December 31, 2010, the Funds did not incur any interest or penalties. The Funds are not subject to examination by U.S. federal tax authorities for tax years before 2007 and by state authorities for tax years before 2006, except for RS High Yield Municipal Bond Fund, RS Floating Rate Fund and RS Strategic Income Fund which incepted during the fiscal year 2009 and are therefore not subject to U.S. federal and state authority examination for tax years prior to 2009.
c. Securities Transactions Securities transactions are accounted for on the date securities are purchased or sold (trade date). Realized gains or losses on securities transactions are determined on the basis of specific identification.
d. Foreign Currency Translation The accounting records of the Funds are maintained in U.S. dollars. Investment securities and all other assets and liabilities of the Funds denominated in a foreign currency are generally translated into U.S. dollars at the exchange rates quoted at the close of the NYSE on each business day. Purchases and
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sales of securities, income receipts, and expense payments are translated into U.S. dollars at the exchange rates in effect on the dates of the respective transactions. The Funds do not isolate the portion of the fluctuations on investments resulting from changes in foreign currency exchange rates from the fluctuations in market prices of investments held. Such fluctuations are included with the net realized and unrealized gain or loss from investments.
e. Forward Foreign Currency Contracts The Funds may enter into forward foreign currency contracts. A forward foreign currency contract is a commitment to purchase or sell a foreign currency at a future date at a negotiated forward exchange rate. Risks may arise from the potential inability of a Fund’s counterparty to meet the terms of a contract and from unanticipated movements in the value of a currency relative to another currency. Fluctuations in the values of forward foreign currency contracts are recorded for book purposes as unrealized gains or losses from translation of other assets and liabilities denominated in foreign currencies by the Funds. When a forward contract is closed, a Fund will record a realized gain or loss equal to the increase or decrease in the value of such forward contract between the time it was opened and the time it was closed. Such amounts are recorded as net realized gains or losses on foreign currency related transactions.
f. Credit Derivatives The Funds may enter into credit derivatives, including credit default swaps and credit default index investments. The Funds may use these investments (i) as alternatives to direct long or short investment in a particular security, (ii) to adjust a Funds’ asset allocation or risk exposure, or (iii) for hedging purposes. The use by a Fund of credit derivatives may have the effect of creating a short position in a security or a group of securities. These investments can create investment leverage and may create additional investment risks that may subject a Fund to greater volatility than investments in more traditional securities, as described in the Statement of Additional Information. There were no credit derivatives held by any of the Funds as of December 31, 2010.
g. Derivative Instruments and Hedging Activities The following is a summary of the fair valuation of RS Strategic Income Fund’s derivative instruments categorized by risk exposure at December 31, 2010.
| Derivative Instrument Type | Statement of Assets and Liabilities Location |
Value | ||||
| Forward Foreign Currency Contracts to Buy |
Unrealized appreciation for open forward currency contracts |
$ | 88,414 | |||
| Forward Foreign Currency Contracts to Sell |
Unrealized depreciation for open forward currency contracts |
350,835 | ||||
| * | The cumulative appreciation/depreciation of financial forward foreign currency contracts is reported in the notes to the Schedule of Investments. See Note 1e for additional information on forward foreign currency contracts. |
The following is a summary of the effect of RS Strategic Income Fund’s foreign currency hedging activity on the Statement of Operations for the year ended December 31, 2010.
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| Derivative Instrument Type | Location of Gain/(Loss) on Derivatives Recognized in Income |
Amount | ||||
| Forward Foreign Currency Contracts |
Net realized gain/(loss) from foreign currency transactions |
$ | (4,124 | ) | ||
| Net change in unrealized appreciation/(depreciation) on forward currency contracts |
(333,700 | ) | ||||
Open forward currency contracts as of December 31, 2010, approximates the average outstanding contracts during the year then ended. For open forward foreign currency contracts see pages 147 and 148.
RS Strategic Income Fund invests in forward foreign currency contracts to hedge against movements in foreign currency exchange rates affecting the Fund’s foreign holdings, and may invest in forward foreign currency contracts for other reasons as well.
The Funds may, but will not necessarily enter into derivative transactions, such as forward foreign currency contracts, to hedge foreign currency exposure or for other purposes.
h. Investment Income Dividend income is generally recorded on the ex-dividend date. Interest income, which includes amortization/accretion of premium/discount, is accrued and recorded daily.
In calculating net asset value per share for each class, investment income, realized and unrealized gains and losses and expenses other than class specific expenses, are allocated daily to each class of shares based upon the proportion of net assets of each class at the beginning of the day.
i. Expenses Many expenses of the Trust can be directly attributed to a specific Fund. Expenses that cannot be directly attributed to a specific Fund are generally apportioned among all the series in the Trust, based on relative net assets.
j. Custody Credits The Funds have entered into an arrangement with their custodian, State Street Bank and Trust Company, whereby credits realized as a result of uninvested cash balances are used to reduce the Funds’ custodian expenses. Each Fund’s custody credits, if any, are shown in the accompanying Statement of Operations.
k. Distributions to Shareholders Distributions of net investment income are declared and accrued daily and each Fund intends to distribute substantially all net investment income, as determined on a federal tax basis if any, monthly. Distributions of net realized capital gains, if any, are declared and paid at least once a year, except from RS Money Market Fund, which distributes its short-term gains monthly and is not expected to realize long-term capital gains. Distributions to shareholders are recorded on the ex-dividend date.
l. Capital Accounts Due to the timing of dividend distributions and the differences in accounting for income and realized gains/(losses) for financial statement purposes versus federal income tax purposes, the fiscal year in which amounts are distributed
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may differ from the year in which the income and realized gains/(losses) were recorded by the Funds.
m. Offering Costs Offering costs are accounted for on an accrual basis. Offering costs are expensed over a 12-month period. The costs include legal, printing, administration and other expenses associated with the initial registration of a Fund. For the twelve month period ended December 31, 2010, RS High Yield Municipal Bond Fund, RS Floating Rate Fund and RS Strategic Income Fund incurred offering costs.
Note 2 Transactions with Affiliates
a. Advisory Fee and Expense Limitation Under the terms of the advisory agreement, which is reviewed and approved annually by the Board of Trustees, each Fund pays an investment advisory fee to RS Investment Management Co. LLC (“RS Investments”). Guardian Investor Services LLC (“GIS”), a subsidiary of The Guardian Life Insurance Company of America, holds a majority interest in RS Investments. RS Investments receives an investment advisory fee based on the average daily net assets of the Funds, at the following annual rates:
| Fund | Investment Advisory Fee Percentage |
|||
| RS Investment Quality Bond Fund | 0.50% | |||
| RS Low Duration Bond Fund | 0.45% | |||
| RS High Yield Bond Fund | 0.60% | |||
| RS Tax-Exempt Fund | 0.50% | |||
| RS High Yield Municipal Bond Fund | 0.50% | |||
| RS Floating Rate Fund | 0.65% | |||
| RS Strategic Income Fund | 0.60% | |||
| RS Money Market Fund | 0.45% | |||
RS Investments has entered into a Sub-Advisory Services Agreement with GIS. GIS is responsible for providing day-to-day investment advisory services to the Funds, subject to the oversight of the Board of Trustees of the Trust and review by RS Investments. As compensation for GIS’s services, RS Investments pays fees to GIS at annual rates of 0.475%, 0.4275%, 0.57%, 0.475%, 0.475%, 0.6175%, 0.57% and 0.4275% of the average daily net assets of RS Investment Quality Bond Fund, RS Low Duration Bond Fund, RS High Yield Bond Fund, RS Tax-Exempt Fund, RS High Yield Municipal Bond Fund, RS Floating Rate Fund, RS Strategic Income Fund and RS Money Market Fund, respectively. Payment of the sub-investment advisory fees does not represent a separate or additional expense to the Funds.
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Pursuant to a written agreement in effect through April 30, 2011, expense limitations have been imposed whereby RS Investments agreed to limit the Funds’ total annual fund operating expenses to the following rates:
| Expense Limitation | ||||||||||||||||||||
| Fund | Class A | Class B | Class C | Class K | Class Y | |||||||||||||||
| RS Investment Quality Bond Fund | 0.85% | 1.60% | 1.60% | 1.25% | 0.66% | |||||||||||||||
| RS Low Duration Bond Fund | 0.80% | 1.55% | 1.55% | 1.20% | 0.63% | |||||||||||||||
| RS High Yield Bond Fund | 0.85% | 1.60% | 1.60% | 1.25% | 0.66% | |||||||||||||||
| RS Tax-Exempt Fund | 0.80% | * | NA | 1.60% | NA | 0.69% | ||||||||||||||
| RS High Yield Municipal Bond Fund | 0.35% | NA | 1.10% | NA | 0.10% | |||||||||||||||
| RS Floating Rate Fund | 0.35% | NA | 1.10% | 0.75% | 0.10% | |||||||||||||||
| RS Strategic Income Fund | 0.35% | NA | 1.10% | 0.75% | 0.10% | |||||||||||||||
| RS Money Market Fund | 0.65% | 1.40% | 1.40% | 1.05% | NA | |||||||||||||||
| * | The expense limitation in effect from January 1, 2010 through April 30, 2010 for class A was 0.85%. |
To satisfy the expense limitations, certain affiliates of RS Investments, including GIS, may waive expenses that would otherwise be charged to the Funds or may reimburse expenses incurred by the Funds.
In addition to fees waived by GIS with respect to the expense limitations then in effect for RS Money Market Fund, GIS voluntarily reimbursed expenses to maintain a minimum yield threshold for RS Money Market Fund during the year ended December 31, 2010. There is no guarantee that the reimbursement will be in effect for subsequent periods.
RS Investments and GIS do not intend to recoup any reimbursed expenses or waived advisory fees from a prior year under expense limitations then in effect for a Fund or under the previous two paragraphs.
b. Compensation of Trustees and Officers Trustees and officers of the Trust who are interested persons, as defined in the 1940 Act, of RS Investments receive no compensation from the Funds for acting as such. Trustees of the Trust who are not interested persons of RS Investments receive compensation and reimbursement of expenses.
c. Distribution Fees GIS serves as the principal underwriter for shares of the Funds. The Funds have entered into an agreement with GIS for distribution services with respect to their shares and have adopted a distribution plan pursuant to Rule 12b-1 under the 1940 Act, whose continuance is reviewed annually by the Trust’s Board of Trustees. Under the plan, GIS is compensated for services in such capacity, including
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its expenses in connection with the promotion and distribution of shares of each Fund. For the year ended December 31, 2010, GIS received distribution fees as follows:
| Fund | Annual Rate | Distribution Fees | ||||||||
| RS Investment Quality Bond Fund |
Class A | 0.25% | $329,980 | |||||||
| Class B | 1.00% | 32,019 | ||||||||
| Class C | 1.00% | 98,283 | ||||||||
| Class K | 0.65% | 80,867 | ||||||||
| Class Y | 0.00% | — | ||||||||
| RS Low Duration Bond Fund |
Class A | 0.25% | $743,724 | |||||||
| Class B | 1.00% | 11,432 | ||||||||
| Class C | 1.00% | 937,012 | ||||||||
| Class K | 0.65% | 26,416 | ||||||||
| Class Y | 0.00% | — | ||||||||
| RS High Yield Bond Fund |
Class A | 0.25% | $176,913 | |||||||
| Class B | 1.00% | 33,664 | ||||||||
| Class C | 1.00% | 198,851 | ||||||||
| Class K | 0.65% | 114,208 | ||||||||
| Class Y | 0.00% | — | ||||||||
| RS Tax-Exempt Fund |
Class A | 0.25% | $452,372 | |||||||
| Class C | 1.00% | 580,017 | ||||||||
| Class Y | 0.00% | — | ||||||||
| RS High Yield Municipal Bond Fund |
Class A | 0.25% | $124,566 | |||||||
| Class C | 1.00% | 101,072 | ||||||||
| Class Y | 0.00% | — | ||||||||
| RS Floating Rate Fund |
Class A | 0.25% | $320,047 | |||||||
| Class C | 1.00% | 444,678 | ||||||||
| Class K | 0.65% | 14,686 | ||||||||
| Class Y | 0.00% | — | ||||||||
| RS Strategic Income Fund |
Class A | 0.25% | $121,551 | |||||||
| Class C | 1.00% | 34,550 | ||||||||
| Class K | 0.65% | 13,863 | ||||||||
| Class Y | 0.00% | — | ||||||||
| RS Money Market Fund |
Class A | 0.25% | $1,132,875 | |||||||
| Class B | 1.00% | 10,187 | ||||||||
| Class C | 1.00% | 24,182 | ||||||||
| Class K | 0.65% | 175,499 | ||||||||
RS Investments may perform certain services and incur certain expenses with respect to the promotion of the Funds’ shares and the servicing of shareholder accounts. GIS makes payments from the amounts it receives from the Funds pursuant to the distribution plan for any amounts payable with respect to expenses incurred by RS Investments, GIS, or third parties, with respect to the marketing, distribution, or promotion of the Funds or the servicing of shareholder accounts. In addition to payments under the distribution plan, the Funds reimburse GIS for payments GIS makes to financial intermediaries that provide certain administrative, recordkeeping, and
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account maintenance services. The amount of the reimbursement is calculated in a manner approved by the Board of Trustees and is reviewed by the Board of Trustees periodically. Such amounts are included in the Statement of Operations under the caption “Transfer agent fees”.
Park Avenue Securities LLC (“PAS”), a wholly-owned subsidiary of The Guardian Insurance & Annuity Company, Inc. (“GIAC”) and an affiliate of GIS, distributes the Funds’ shares as a retail broker-dealer. For the year ended December 31, 2010, PAS informed the Trust it received $2,153,984 directly or indirectly from GIS as continuing compensation for its services on behalf of all series in the Trust.
For the year ended December 31, 2010, aggregate front-end sales charges for the sale of Class A shares paid to GIS were as follows:
| Fund | Sales Charges |
|||
| RS Investment Quality Bond Fund | $ | 32,443 | ||
| RS Low Duration Bond Fund | 94,598 | |||
| RS High Yield Bond Fund | 8,581 | |||
| RS Tax-Exempt Fund | 96,836 | |||
| RS High Yield Municipal Bond Fund | 37,996 | |||
| RS Floating Rate Fund | 210,498 | |||
| RS Strategic Income Fund | 10,764 | |||
| RS Money Market Fund | — | |||
GIS is entitled to retain any contingent deferred sales load (“CDSL”) imposed on certain share redemptions. For the year ended December 31, 2010, GIS received CDSL charges as follows:
| Fund | CDSL |
|||
| RS Investment Quality Bond Fund | $ | 8,966 | ||
| RS Low Duration Bond Fund | 112,637 | |||
| RS High Yield Bond Fund | 4,933 | |||
| RS Tax-Exempt Fund | 62,901 | |||
| RS High Yield Municipal Bond Fund | 5,674 | |||
| RS Floating Rate Fund | 24,919 | |||
| RS Strategic Income Fund | 238 | |||
| RS Money Market Fund | 6,251 | |||
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Note 3 Federal Income Taxes
a. Distributions to Shareholders The tax character of distributions paid during the years ended December 31, 2010 and December 31, 2009, was as follows:
| Tax-Exempt | Ordinary Income | Long-Term Capital Gains |
||||||||||||||||||||||
| Fund | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | ||||||||||||||||||
| RS Investment Quality Bond Fund |
$ | — | $ | — | $ | 5,864,228 | $ | 5,777,814 | $ | 1,894,919 | $ | — | ||||||||||||
| RS Low Duration Bond Fund |
— | — | 12,868,993 | 3,117,887 | 438,841 | 39,699 | ||||||||||||||||||
| RS High Yield Bond Fund |
— | — | 8,537,496 | 7,229,619 | — | — | ||||||||||||||||||
| RS Tax-Exempt Fund |
9,078,013 | 5,914,993 | 57,659 | 44,109 | — | — | ||||||||||||||||||
| RS High Yield Municipal Bond Fund |
3,647,892 | 140,733 | 142,766 | 197 | — | — | ||||||||||||||||||
| RS Floating Rate Fund |
— | — | 11,982,932 | 38,525 | — | — | ||||||||||||||||||
| RS Strategic Income Fund |
— | — | 2,972,011 | 128,240 | — | — | ||||||||||||||||||
| RS Money Market Fund |
— | — | 104,283 | 277,713 | — | — | ||||||||||||||||||
Income and capital gain distributions are determined in accordance with income tax regulations, which may differ from generally accepted accounting principles. These differences are primarily due to differing treatments of income and gains on various investment securities held by the Funds, timing differences, and differing characterizations of distributions made by the Funds. Permanent book and tax basis differences will result in reclassifications to paid-in capital, undistributed net investment income and accumulated undistributed net realized gain/(loss) on investments and foreign currency transactions. Undistributed net investment income and accumulated undistributed net realized gain/(loss) on investments and foreign currency transactions may include temporary book and tax differences, which will reverse in a subsequent period.
As of December 31, 2010, the Funds made the following reclassifications of permanent book and tax basis differences:
| Fund | Paid-in Capital |
Accumulated Net Investment Income/(Loss) |
Accumulated Net Realized Gain |
|||||||||
| RS Investment Quality Bond Fund | $ | (11,962 | ) | $ | 9,999 | $ | 1,963 | |||||
| RS Low Duration Bond Fund | — | (2,160 | ) | 2,160 | ||||||||
| RS High Yield Bond Fund | (498,137 | ) | 119,374 | 378,763 | ||||||||
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| Fund | Paid-in Capital |
Accumulated Net Investment Income |
Accumulated Net Realized Gain/(Loss) |
|||||||||
| RS Tax-Exempt Fund | $ | (17,306 | ) | $ | 17,306 | $ | — | |||||
| RS High Yield Municipal Bond Fund | (14,719 | ) | 14,261 | 458 | ||||||||
| RS Floating Rate Fund | (27,454 | ) | 27,454 | — | ||||||||
| RS Strategic Income Fund | (20,991 | ) | 253,086 | (232,095 | ) | |||||||
| RS Money Market Fund | (1,380 | ) | 1,380 | — | ||||||||
See the chart below for the tax basis of distributable earnings as of December 31, 2010.
| Fund | Tax-Exempt | Undistributed Ordinary Income |
Undistributed Long-Term Capital Gains |
|||||||||
| RS Investment Quality Bond Fund | $ | — | $ | 34,042 | $ | — | ||||||
| RS Low Duration Bond Fund | — | 288,919 | 44,877 | |||||||||
| RS High Yield Bond Fund | — | 166,809 | — | |||||||||
| RS Tax-Exempt Fund | 16,978 | — | — | |||||||||
| RS High Yield Municipal Bond Fund | 70,101 | — | — | |||||||||
| RS Floating Rate Fund | — | 1,878,192 | 10,018 | |||||||||
| RS Strategic Income Fund | — | 55,331 | — | |||||||||
| RS Money Market Fund | — | 42,359 | — | |||||||||
During any particular year, net realized gains from investment transactions, in excess of available capital loss carryforwards, would be taxable to the Funds if not distributed and, therefore, are normally distributed to shareholders annually.
During the year ended December 31, 2010, the Funds utilized capital loss carryovers as follows:
| Fund | Amount | |||
| RS Investment Quality Bond Fund | $ | 1,056,549 | ||
| RS High Yield Bond Fund | 4,811,628 | |||
| RS Tax-Exempt Fund | 1,358,993 | |||
For RS High Yield Bond Fund, $495,589 of capital loss carryovers expired in the year ended December 31, 2010.
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See the chart for capital loss carryovers available to the Funds at December 31, 2010.
| Expiring | ||||||||||||||||||||||||||||
| Fund | 2011 | 2012 | 2015 | 2016 | 2017 | 2018 | Total | |||||||||||||||||||||
| RS High Yield Bond Fund |
$ | — | $ | — | $ | — | $ | 6,462,203 | $ | 3,303,739 | $ | — | $ | 9,765,942 | ||||||||||||||
| RS Tax-Exempt Fund |
— | — | — | 1,525,812 | 488,356 | — | 2,014,168 | |||||||||||||||||||||
| RS Money Market Fund |
5,073 | 432 | 7,575 | 35,926 | 3,268 | 1,000 | 53,274 | |||||||||||||||||||||
In determining its taxable income, current tax law permits the Funds to elect to treat all or a portion of any net capital or currency loss realized after October 31 as occurring on the first day of the following fiscal year. For the year ended December 31, 2010, the Funds elected to defer net capital and currency losses as follows:
| Fund | Deferred Net Capital Losses |
|||
| RS Investment Quality Bond Fund | $ | 12,394 | ||
| RS High Yield Bond Fund | 1,346,942 | |||
| RS Tax-Exempt Fund | 325,836 | |||
| RS High Yield Municipal Bond Fund | 610,555 | |||
| RS Strategic Income Fund | 34,006 | |||
b. Tax Basis of Investments The cost of investments for federal income tax purposes at December 31, 2010, for each Fund is listed in the chart below. The net unrealized appreciation/(depreciation) on investments, which consists of gross unrealized appreciation and depreciation, is also disclosed in the chart below:
| Fund | Cost of Investments |
Net Unrealized Appreciation on Investments |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
||||||||||||
| RS Investment Quality Bond Fund |
$ | 158,365,585 | $ | 5,045,861 | $ | 6,162,102 | $ | (1,116,241 | ) | |||||||
| RS Low Duration Bond Fund |
674,996,941 | 5,233,641 | 6,739,032 | (1,505,391 | ) | |||||||||||
| 188 | www.RSinvestments.com |
Table of Contents
NOTES TO FINANCIAL STATEMENTS
| Fund | Cost of Investments |
Net Unrealized Appreciation/ (Depreciation) on Investments |
Gross Unrealized Appreciation |
Gross Unrealized Depreciation |
||||||||||||
| RS High Yield |
$ | 116,032,192 | $ | 6,190,616 | $ | 7,058,780 | $ | (868,164 | ) | |||||||
| RS Tax-Exempt Fund |
259,964,219 | 1,310,603 | 5,588,182 | (4,277,579 | ) | |||||||||||
| RS High Yield Municipal Bond Fund |
95,784,234 | (2,817,996 | ) | 582,102 | (3,400,098 | ) | ||||||||||
| RS Floating |
585,781,818 | 4,465,075 | 5,414,889 | (949,814 | ) | |||||||||||
| RS Strategic |
66,907,672 | 1,635,691 | 1,805,664 | (169,973 | ) | |||||||||||
| RS Money Market Fund |
460,531,576 | — | — | — | ||||||||||||
Note 4 Capital Shares
a. Transactions The Funds have authorized an unlimited number of shares of beneficial interest with no par value. Transactions in capital shares for the Funds were as follows:
Transactions in Capital Shares
| RS Investment Quality Bond Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A |
||||||||||||||||
| Shares sold |
4,599,257 | $ | 46,996,157 | 5,780,156 | $ | 55,509,078 | ||||||||||
| Shares reinvested |
611,995 | 6,220,594 | 461,349 | 4,454,423 | ||||||||||||
| Shares redeemed |
(4,687,617 | ) | (47,735,237 | ) | (2,822,776 | ) | (27,293,480 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
523,635 | $ | 5,481,514 | 3,418,729 | $ | 32,670,021 | ||||||||||
| Class B |
||||||||||||||||
| Shares sold |
56,792 | $ | 585,262 | 54,229 | $ | 517,815 | ||||||||||
| Shares reinvested |
10,932 | 110,931 | 29,753 | 286,026 | ||||||||||||
| Shares redeemed |
(286,750 | ) | (2,951,483 | ) | (563,275 | ) | (5,592,354 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease |
(219,026 | ) | $ | (2,255,290 | ) | (479,293 | ) | $ | (4,788,513 | ) | ||||||
| Class C |
||||||||||||||||
| Shares sold |
405,023 | $ | 4,137,297 | 376,231 | $ | 3,617,830 | ||||||||||
| Shares reinvested |
29,124 | 295,320 | 31,541 | 304,022 | ||||||||||||
| Shares redeemed |
(898,653 | ) | (9,161,436 | ) | (59,401 | ) | (577,722 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/(decrease) |
(464,506 | ) | $ | (4,728,819 | ) | 348,371 | $ | 3,344,130 | ||||||||
| www.RSinvestments.com | 189 |
Table of Contents
NOTES TO FINANCIAL STATEMENTS
Transactions in Capital Shares (continued)
| RS Investment Quality Bond Fund — continued | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class K |
||||||||||||||||
| Shares sold |
318,081 | $ | 3,237,908 | 348,581 | $ | 3,333,107 | ||||||||||
| Shares reinvested |
53,244 | 541,227 | 48,466 | 467,651 | ||||||||||||
| Shares redeemed |
(696,374 | ) | (7,160,850 | ) | (230,172 | ) | (2,215,560 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/ (decrease) |
(325,049 | ) | $ | (3,381,715 | ) | 166,875 | $ | 1,585,198 | ||||||||
| Class Y* |
||||||||||||||||
| Shares sold |
235,034 | $ | 2,411,533 | 107,595 | $ | 1,020,001 | ||||||||||
| Shares reinvested |
5,221 | 52,871 | 2,924 | 28,682 | ||||||||||||
| Shares redeemed |
(168,069 | ) | (1,703,570 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
72,186 | $ | 760,834 | 110,519 | $ | 1,048,683 | ||||||||||
| * | Inception date was May 12, 2009. |
| RS Low Duration Bond Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A |
||||||||||||||||
| Shares sold |
46,826,029 | $ | 481,654,987 | 18,879,142 | $ | 190,683,894 | ||||||||||
| Shares reinvested |
702,697 | 7,239,667 | 166,901 | 1,688,426 | ||||||||||||
| Shares redeemed |
(23,784,381 | ) | (244,971,535 | ) | (4,848,140 | ) | (49,260,464 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
23,744,345 | $ | 243,923,119 | 14,197,903 | $ | 143,111,856 | ||||||||||
| Class B |
||||||||||||||||
| Shares sold |
122,392 | $ | 1,257,471 | 35,818 | $ | 360,950 | ||||||||||
| Shares reinvested |
2,146 | 22,084 | 17,073 | 171,547 | ||||||||||||
| Shares redeemed |
(64,647 | ) | (662,329 | ) | (839,369 | ) | (8,574,003 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/(decrease) |
59,891 | $ | 617,226 | (786,478 | ) | $ | (8,041,506 | ) | ||||||||
| Class C |
||||||||||||||||
| Shares sold |
11,406,539 | $ | 117,454,138 | 4,453,889 | $ | 45,038,117 | ||||||||||
| Shares reinvested |
144,671 | 1,490,239 | 37,261 | 376,581 | ||||||||||||
| Shares redeemed |
(1,902,678 | ) | (19,619,186 | ) | (1,023,626 | ) | (10,432,078 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
9,648,532 | $ | 99,325,191 | 3,467,524 | $ | 34,982,620 | ||||||||||
| 190 | www.RSinvestments.com |
Table of Contents
NOTES TO FINANCIAL STATEMENTS
| RS Low Duration Bond Fund — continued | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class K |
||||||||||||||||
| Shares sold |
347,107 | $ | 3,563,831 | 114,015 | $ | 1,145,440 | ||||||||||
| Shares reinvested |
9,830 | 101,254 | 27,367 | 275,326 | ||||||||||||
| Shares redeemed |
(322,737 | ) | (3,325,709 | ) | (871,698 | ) | (8,858,947 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/(decrease) |
34,200 | $ | 339,376 | (730,316 | ) | $ | (7,438,181 | ) | ||||||||
| Class Y* |
||||||||||||||||
| Shares sold |
20,373,420 | $ | 209,892,898 | 730,072 | $ | 7,428,003 | ||||||||||
| Shares reinvested |
96,821 | 998,743 | 3,530 | 35,833 | ||||||||||||
| Shares redeemed |
(11,003,353 | ) | (113,720,177 | ) | (11,085 | ) | (113,219 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
9,466,888 | $ | 97,171,464 | 722,517 | $ | 7,350,617 | ||||||||||
| * | Inception date was May 12, 2009. |
| RS High Yield Bond Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A |
||||||||||||||||
| Shares sold |
2,733,172 | $ | 18,386,351 | 5,141,106 | $ | 30,720,388 | ||||||||||
| Shares reinvested |
752,108 | 5,058,077 | 753,853 | 4,485,101 | ||||||||||||
| Shares redeemed |
(4,682,889 | ) | (31,307,051 | ) | (2,296,553 | ) | (13,815,290 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/(decrease) |
(1,197,609 | ) | $ | (7,862,623 | ) | 3,598,406 | $ | 21,390,199 | ||||||||
| Class B |
||||||||||||||||
| Shares sold |
95,285 | $ | 628,672 | 57,260 | $ | 331,516 | ||||||||||
| Shares reinvested |
33,017 | 222,068 | 45,679 | 269,007 | ||||||||||||
| Shares redeemed |
(40,290 | ) | (269,386 | ) | (265,393 | ) | (1,695,178 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/(decrease) |
88,012 | $ | 581,354 | (162,454 | ) | $ | (1,094,655 | ) | ||||||||
| Class C |
||||||||||||||||
| Shares sold |
1,855,777 | $ | 12,496,149 | 497,834 | $ | 3,001,476 | ||||||||||
| Shares reinvested |
183,616 | 1,236,764 | 144,621 | 858,248 | ||||||||||||
| Shares redeemed |
(707,935 | ) | (4,783,905 | ) | (76,080 | ) | (465,414 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
1,331,458 | $ | 8,949,008 | 566,375 | $ | 3,394,310 | ||||||||||
| Class K |
||||||||||||||||
| Shares sold |
227,886 | $ | 1,524,790 | 257,753 | $ | 1,494,790 | ||||||||||
| Shares reinvested |
189,775 | 1,276,879 | 192,174 | 1,140,251 | ||||||||||||
| Shares redeemed |
(227,307 | ) | (1,525,455 | ) | (202,180 | ) | (1,206,910 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
190,354 | $ | 1,276,214 | 247,747 | $ | 1,428,131 | ||||||||||
| www.RSinvestments.com | 191 |
Table of Contents
NOTES TO FINANCIAL STATEMENTS
Transactions in Capital Shares (continued)
| RS High Yield Bond Fund — continued | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class Y* |
||||||||||||||||
| Shares sold |
858,917 | $ | 5,838,323 | 174,216 | $ | 1,000,001 | ||||||||||
| Shares reinvested |
11,940 | 80,095 | 9,312 | 58,145 | ||||||||||||
| Shares redeemed |
(378,685 | ) | (2,556,622 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
492,172 | $ | 3,361,796 | 183,528 | $ | 1,058,146 | ||||||||||
| * | Inception date was May 12, 2009. |
| RS Tax-Exempt Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A |
||||||||||||||||
| Shares sold |
11,767,099 | $ | 121,786,361 | 13,010,231 | $ | 130,200,709 | ||||||||||
| Shares reinvested |
419,068 | 4,322,252 | 418,555 | 4,175,817 | ||||||||||||
| Shares redeemed |
(13,797,930 | ) | (141,789,595 | ) | (5,780,212 | ) | (58,536,219 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/(decrease) |
(1,611,763 | ) | $ | (15,680,982 | ) | 7,648,574 | $ | 75,840,307 | ||||||||
| Class C |
||||||||||||||||
| Shares sold |
3,776,449 | $ | 39,080,635 | 3,116,946 | $ | 31,247,851 | ||||||||||
| Shares reinvested |
92,718 | 956,999 | 51,827 | 518,714 | ||||||||||||
| Shares redeemed |
(1,857,874 | ) | (19,378,018 | ) | (152,199 | ) | (1,542,241 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
2,011,293 | $ | 20,659,616 | 3,016,574 | $ | 30,224,324 | ||||||||||
| Class Y* |
||||||||||||||||
| Shares sold |
5,407,179 | $ | 55,851,647 | 230,592 | $ | 2,329,154 | ||||||||||
| Shares reinvested |
28,487 | 294,177 | 3,281 | 33,141 | ||||||||||||
| Shares redeemed |
(1,508,344 | ) | (15,453,051 | ) | (2,519 | ) | (25,566 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
3,927,322 | $ | 40,692,773 | 231,354 | $ | 2,336,729 | ||||||||||
| * | Inception date was May 12, 2009. |
| 192 | www.RSinvestments.com |
Table of Contents
NOTES TO FINANCIAL STATEMENTS
| RS High Yield Municipal Bond Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Period Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A* |
||||||||||||||||
| Shares sold |
5,714,449 | $ | 59,435,619 | 3,100,000 | $ | 31,000,000 | ||||||||||
| Shares reinvested |
248,445 | 2,580,545 | 12,396 | 124,824 | ||||||||||||
| Shares redeemed |
(1,747,450 | ) | (18,334,936 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
4,215,444 | $ | 43,681,228 | 3,112,396 | $ | 31,124,824 | ||||||||||
| Class C* |
||||||||||||||||
| Shares sold |
1,913,805 | $ | 20,053,097 | 200,000 | $ | 2,000,000 | ||||||||||
| Shares reinvested |
36,882 | 382,631 | 800 | 8,053 | ||||||||||||
| Shares redeemed |
(131,386 | ) | (1,372,912 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
1,819,301 | $ | 19,062,816 | 200,800 | $ | 2,008,053 | ||||||||||
| Class Y* |
||||||||||||||||
| Shares sold |
1,226,245 | $ | 12,853,600 | 200,000 | $ | 2,000,000 | ||||||||||
| Shares reinvested |
23,545 | 243,668 | 800 | 8,053 | ||||||||||||
| Shares redeemed |
(372,342 | ) | (3,794,730 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
877,448 | $ | 9,302,538 | 200,800 | $ | 2,008,053 | ||||||||||
| * | Inception date was November 23, 2009. |
| RS Floating Rate Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Period Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A* |
||||||||||||||||
| Shares sold |
37,181,866 | $ | 380,367,764 | 4,401,001 | $ | 44,000,000 | ||||||||||
| Shares reinvested |
594,057 | 6,052,845 | 3,370 | 33,794 | ||||||||||||
| Shares redeemed |
(5,958,644 | ) | (60,839,027 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
31,817,279 | $ | 325,581,582 | 4,404,371 | $ | 44,033,794 | ||||||||||
| Class C* |
||||||||||||||||
| Shares sold |
15,467,801 | $ | 157,936,245 | 200,000 | $ | 2,000,000 | ||||||||||
| Shares reinvested |
159,424 | 1,628,584 | 157 | 1,577 | ||||||||||||
| Shares redeemed |
(333,518 | ) | (3,405,475 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
15,293,707 | $ | 156,159,354 | 200,157 | $ | 2,001,577 | ||||||||||
| Class K* |
||||||||||||||||
| Shares sold |
73,729 | $ | 752,865 | 200,000 | $ | 2,000,000 | ||||||||||
| Shares reinvested |
12,071 | 122,636 | 157 | 1,577 | ||||||||||||
| Shares redeemed |
(2,812 | ) | (28,720 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
82,988 | $ | 846,781 | 200,157 | $ | 2,001,577 | ||||||||||
| www.RSinvestments.com | 193 |
Table of Contents
NOTES TO FINANCIAL STATEMENTS
Transactions in Capital Shares (continued)
| RS Floating Rate Fund — continued | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Period Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class Y* |
||||||||||||||||
| Shares sold |
12,425,253 | $ | 126,956,396 | 200,697 | $ | 2,007,000 | ||||||||||
| Shares reinvested |
99,832 | 1,020,670 | 157 | 1,577 | ||||||||||||
| Shares redeemed |
(1,051,173 | ) | (10,740,262 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
11,473,912 | $ | 117,236,804 | 200,854 | $ | 2,008,577 | ||||||||||
| * | Inception date was December 7, 2009. |
| RS Strategic Income Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Period Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A* |
||||||||||||||||
| Shares sold |
593,295 | $ | 6,073,090 | 4,400,000 | $ | 44,000,000 | ||||||||||
| Shares reinvested |
246,193 | 2,517,543 | 11,330 | 112,851 | ||||||||||||
| Shares redeemed |
(166,453 | ) | (1,707,014 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
673,035 | $ | 6,883,619 | 4,411,330 | $ | 44,112,851 | ||||||||||
| Class C* |
||||||||||||||||
| Shares sold |
271,193 | $ | 2,770,653 | 200,000 | $ | 2,000,000 | ||||||||||
| Shares reinvested |
16,163 | 165,741 | 515 | 5,130 | ||||||||||||
| Shares redeemed |
(14,815 | ) | (152,624 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
272,541 | $ | 2,783,770 | 200,515 | $ | 2,005,130 | ||||||||||
| Class K* |
||||||||||||||||
| Shares sold |
12,998 | $ | 134,676 | 200,000 | $ | 2,000,000 | ||||||||||
| Shares reinvested |
10,866 | 111,107 | 515 | 5,130 | ||||||||||||
| Shares redeemed |
(1,279 | ) | (13,148 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
22,585 | $ | 232,635 | 200,515 | $ | 2,005,130 | ||||||||||
| Class Y* |
||||||||||||||||
| Shares sold |
515,661 | $ | 5,303,580 | 200,000 | $ | 2,000,000 | ||||||||||
| Shares reinvested |
14,060 | 144,125 | 515 | 5,129 | ||||||||||||
| Shares redeemed |
(53,345 | ) | (557,127 | ) | — | — | ||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase |
476,376 | $ | 4,890,578 | 200,515 | $ | 2,005,129 | ||||||||||
| * | Inception date was November 23, 2009. |
| 194 | www.RSinvestments.com |
Table of Contents
NOTES TO FINANCIAL STATEMENTS
| RS Money Market Fund | ||||||||||||||||
| For the Year Ended 12/31/10 | For the Year Ended 12/31/09 | |||||||||||||||
| Shares | Amount | Shares | Amount | |||||||||||||
| Class A |
||||||||||||||||
| Shares sold |
214,581,858 | $ | 214,581,858 | 158,208,530 | $ | 158,208,530 | ||||||||||
| Shares reinvested |
96,494 | 96,494 | 258,449 | 258,449 | ||||||||||||
| Shares redeemed |
(243,527,065 | ) | (243,527,065 | ) | (207,606,785 | ) | (207,606,785 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease |
(28,848,713 | ) | $ | (28,848,713 | ) | (49,139,806 | ) | $ | (49,139,806 | ) | ||||||
| Class B |
||||||||||||||||
| Shares sold |
521,474 | $ | 521,474 | 730,601 | $ | 730,601 | ||||||||||
| Shares reinvested |
215 | 215 | 794 | 794 | ||||||||||||
| Shares redeemed |
(1,197,918 | ) | (1,197,918 | ) | (1,274,264 | ) | (1,274,264 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease |
(676,229 | ) | $ | (676,229 | ) | (542,869 | ) | $ | (542,869 | ) | ||||||
| Class C |
||||||||||||||||
| Shares sold |
6,016,740 | $ | 6,016,740 | 2,213,745 | $ | 2,213,745 | ||||||||||
| Shares reinvested |
502 | 502 | 3,639 | 3,639 | ||||||||||||
| Shares redeemed |
(6,046,831 | ) | (6,046,831 | ) | (7,972,481 | ) | (7,972,481 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net decrease |
(29,589 | ) | $ | (29,589 | ) | (5,755,097 | ) | $ | (5,755,097 | ) | ||||||
| Class K |
||||||||||||||||
| Shares sold |
17,969,478 | $ | 17,969,478 | 23,479,130 | $ | 23,479,130 | ||||||||||
| Shares reinvested |
5,693 | 5,693 | 12,916 | 12,916 | ||||||||||||
| Shares redeemed |
(18,134,957 | ) | (18,134,957 | ) | (20,952,662 | ) | (20,952,662 | ) | ||||||||
|
|
|
|
|
|
|
|
|
|||||||||
| Net increase/(decrease) |
(159,786 | ) | $ | (159,786 | ) | 2,539,384 | $ | 2,539,384 | ||||||||
b. Shareholder Concentration As of December 31, 2010, the number of shareholders and/or omnibus shareholder accounts (which are comprised of a group of individual shareholders) who owned of record 5% or more of the net assets of a Fund is summarized in the following table:
| Fund | Number of Shareholders |
Percentage of Net Assets |
||||||
| RS Investment Quality Bond Fund | 3 | 48.56% | ||||||
| RS Low Duration Bond Fund | 3 | 32.92% | ||||||
| RS High Yield Bond Fund | 1 | 65.76% | ||||||
| RS Tax-Exempt Fund | 2 | 30.36% | ||||||
| RS High Yield Municipal Bond Fund | 1 | 35.55% | ||||||
| RS Floating Rate Fund | 2 | 22.77% | ||||||
| RS Strategic Income Fund | 2 | 86.68% | ||||||
| RS Money Market Fund | 2 | 79.49% | ||||||
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NOTES TO FINANCIAL STATEMENTS
Note 5 Investments
a. Investment Purchases and Sales The cost of U.S. government agency obligations and other investments purchased and the proceeds from U.S. government agency obligations and other investments sold (excluding short-term investments) for the year ended December 31, 2010, were as follows:
| Cost of Investments Purchased |
Proceeds from Investments Sold |
|||||||||||||||
| Fund | Other Investments |
U.S. Government Agency Obligations |
Other Investments |
U.S. Government Agency Obligations |
||||||||||||
| RS Investment |
$ | 57,557,178 | $ | 154,950,153 | $ | 44,584,845 | $ | 154,989,561 | ||||||||
| RS Low Duration |
597,837,927 | 422,127,587 | 96,113,104 | 439,771,422 | ||||||||||||
| RS High Yield |
126,328,427 | — | 119,380,822 | — | ||||||||||||
| RS Tax-Exempt |
115,297,204 | — | 55,970,561 | — | ||||||||||||
| RS High Yield |
87,806,070 | — | 25,747,447 | — | ||||||||||||
| RS Floating Rate |
692,541,590 | — | 133,455,749 | — | ||||||||||||
| RS Strategic |
52,586,622 | 981,131 | 28,073,439 | — | ||||||||||||
b. Foreign Securities Foreign securities investments involve special risks and considerations not typically associated with those of U.S. origin. These risks include, but are not limited to, currency risk; adverse political, social, and economic developments; and less reliable information about issuers. Moreover, securities of some foreign companies may be less liquid and their prices more volatile than those of comparable U.S. companies.
c. Industry or Sector Concentration In their normal course of business, some of the Funds may invest a significant portion of their assets in companies within a limited number of industries or sectors. As a result, these Funds may be subject to a greater risk of loss than that of a fund invested in a wider spectrum of industries or sectors because the stocks of many or all of the companies in the industry, group of industries, sector, or sectors may decline in value due to developments adversely affecting the industry, group of industries, sector, or sectors.
d. Repurchase Agreements The collateral for repurchase agreements is either cash or fully negotiable U.S. government securities (including U.S. government agency securities). Repurchase agreements are fully collateralized (including the interest accrued thereon) and such collateral is marked-to-market daily while the agreements remain in force. If the value of the collateral falls below the repurchase price plus accrued interest, the Fund will typically require the seller to deposit additional collateral
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NOTES TO FINANCIAL STATEMENTS
by the next business day. If the request for additional collateral is not met, or the seller defaults, the Fund maintains the right to sell the collateral and may claim any resulting loss against the seller.
e. Loans Floating rate loans in which the Funds invest are primarily “senior” loans. Senior floating rate loans typically hold a senior position in the capital structure of the borrower, are typically secured by specific collateral, and have a claim on the assets and/or stock of the borrower that is senior to that held by subordinated debtholders and stockholders of the borrower. While these protections may reduce risk, these investments still present significant credit risk. A significant portion of the Funds’ floating rate investments may be issued in connection with highly leveraged transactions such as leveraged buyouts, leveraged recapitalization loans, and other types of acquisition financing. Obligations in these types of transactions are subject to greater credit risk (including default and bankruptcy) than many other investments and may be, or could become, illiquid. See note 5(j) regarding below investment grade securities.
The Funds may purchase second lien loans (secured loans with a claim on collateral subordinate to a senior lender’s claim on such collateral), fixed rate loans, unsecured loans, and other debt obligations.
f. Municipal Obligations The values of municipal obligations can fluctuate and may be affected by adverse tax, legislative, or political changes, and by financial developments affecting municipal issuers. Payment of municipal obligations may depend on a relatively limited source of revenue, resulting in greater credit risk. Future changes in federal tax laws or the activity of an issuer may adversely affect the tax-exempt status of municipal obligations.
g. Securities Purchased on a When-Issued, Delayed Delivery, and TBA Basis The Funds may purchase securities on a when-issued, delayed delivery, or to be announced (TBA) basis, with payment and delivery scheduled for a future date. These transactions are subject to market fluctuations and are subject to the risk that the value at delivery may be more or less than the trade date purchase price. Although the Funds will generally purchase these securities with the intention of holding the securities, they may sell the securities before the settlement date. Assets have been segregated for these securities.
h. Payment In-Kind Securities Certain Funds may invest in payment in-kind securities. Payment in-kind securities give the issuer the option at each interest payment date of making interest payments in either cash or additional debt securities. Those additional debt securities usually have the same terms, including maturity dates and interest rates, and associated risks as the original bonds.
i. Restricted and Illiquid Securities A restricted security cannot be resold to the general public without prior registration under the Securities Act of 1933. If the security is subsequently registered and resold, the issuer would typically bear the expense of all registrations at no cost to a Fund. Restricted and illiquid securities are valued according to the guidelines and procedures adopted by the Trust’s Board of Trustees and are noted on each Fund’s schedule of investments.
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j. Below Investment Grade Securities RS High Yield Bond Fund, RS High Yield Municipal Bond Fund and RS Floating Rate Fund invest primarily in below investment grade securities (i.e. lower-quality debt), which are subject to certain risks. Lower-quality debt is considered to be speculative because it is less certain that the issuer will be able to pay interest or repay the principal than in the case of investment-grade debt. These securities can involve a substantially greater risk of default than higher-rated securities, and their values can decline significantly over short periods of time. Lower-quality debt securities tend to be more sensitive to adverse news about the issuer, or the market economy in general, than higher quality debt securities. The market for these securities can be less liquid, especially during periods of recession or general market decline.
Note 6 Temporary Borrowings
The Funds, excluding RS Money Market Fund but including other funds managed by the same adviser, share in a $75 million committed revolving credit/overdraft protection facility from State Street Bank and Trust Company for temporary purposes, including the meeting of redemption requests that otherwise might require the untimely disposition of securities. Interest is calculated based on market rates at the time of borrowing; all the funds that are parties to the facility share in a commitment fee that is allocated among the funds on the basis of their respective net assets. Each Fund may borrow up to the lesser of one-third of its total assets (including amounts borrowed) or any lower limit specified in the Fund’s Statement of Additional Information or Prospectus.
For the year ended December 31, 2010, the Funds borrowed from the facility as follows:
| Fund | Amount Outstanding at 12/31/10 |
Average Borrowing* |
Average Interest Rate* |
|||||||||
| RS High Yield Municipal Bond Fund | $ | — | $ | 8,612,271 | 1.50% | |||||||
| * | For the year ended December 31, 2010, based on the number of days borrowings were outstanding. |
Note 7 Regulatory Settlements
During the year ended December 31, 2010, the Funds received payments relating to certain regulatory settlements which were distributed under the direction of the Securities and Exchange Commission. These payments for the year ended December 31, 2010 were as follows:
| Fund | Amount | |||
| RS High Yield Bond Fund | $ | 1,320 | ||
| RS Money Market Fund | 2,152 | |||
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NOTES TO FINANCIAL STATEMENTS
These payments are included in “Increase from Regulatory Settlements” on the Statement of Changes in Net Assets and resulted in a less than $0.01 per share net asset value impact as well as a less than 0.01% performance impact to the total return for the year ended December 31, 2010.
Note 8 Review for Subsequent Events
The Trust has evaluated subsequent events through the issuance of the Funds’ financial statements and determined that no events have occurred that require disclosure.
Note 9 Indemnifications
Under the Trust’s organizational documents, its officers and trustees are indemnified against certain liabilities arising out of the performance of their duties to the Funds. In addition, in the normal course of business, the Funds enter into contracts with their vendors and others that provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds. However, based on experience, the Funds expect the risk of loss to be remote.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Report of Independent Registered Public Accounting Firm
To the Board of Trustees and Shareholders of:
RS Investment Quality Bond Fund
RS Low Duration Bond Fund
RS High Yield Bond Fund
RS Tax-Exempt Fund
RS High Yield Municipal Bond Fund
RS Floating Rate Fund
RS Strategic Income Fund
RS Money Market Fund
In our opinion, the accompanying statements of assets and liabilities, including the schedules of investments, and the related statements of operations and of changes in net assets and the financial highlights present fairly, in all material respects, the financial position of RS Investment Quality Bond Fund, RS Low Duration Bond Fund, RS High Yield Bond Fund, RS Tax-Exempt Fund, RS High Yield Municipal Bond Fund, RS Floating Rate Fund, RS Strategic Income Fund and RS Money Market Fund (eight of the portfolios constituting the RS Investment Trust, and hereafter referred to as the “Funds”) at December 31, 2010, the results of each of their operations for the year then ended, the changes in each of their net assets and the financial highlights for each of the periods presented, in conformity with accounting principles generally accepted in the United States of America. These financial statements and financial highlights (hereafter referred to as “financial statements”) are the responsibility of the Funds’ management; our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits of these financial statements in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation. We believe that our audits, which included confirmation of securities at December 31, 2010 by correspondence with the custodian and brokers, provide a reasonable basis for our opinion.
PricewaterhouseCoopers LLP
San Francisco, California
February 18, 2011
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Tax Designation (unaudited)
RS Tax-Exempt Fund
Of the distributions paid from net investment income for the year ended December 31, 2010, 99.37% are designated as exempt interest dividends for federal tax purposes.
RS High Yield Municipal Bond Fund
Of the distributions paid from net investment income for the year ended December 31, 2010, 99.83% are designated as exempt interest dividends for federal tax purposes.
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SUPPLEMENTAL INFORMATION (UNAUDITED)
Supplemental Information (unaudited)
Approval of the Investment Advisory Agreements for RS Investment Trust
The Board of Trustees of RS Investment Trust and RS Variable Products Trust, including all the independent Trustees, met in person on August 11-12, 2010, to consider the continuation of the Advisory Agreements for all of the Funds, for the one-year period commencing August 31, 2010. Prior to the meeting of the Board on August 11-12, the independent Trustees met among themselves and with the independent Trustees’ counsel several times to prepare for the meeting. The Trustees considered and reviewed the information they requested from RS Investments and confirmed their view that no further requests for information from RS Investments were necessary at that time and that RS Investments appeared to have provided complete responses to all of the Trustees’ information requests and questions in connection with their consideration of the annual continuation of the Advisory Agreements.
The Trustees were assisted in their review by the Chief Compliance Officer of the Trusts, who reviewed all of the information presented to the Trustees and, with the independent Trustees’ counsel’s assistance, prepared a written report on the key factors for the Trustees to consider in determining whether to continue the Advisory Agreements. The Chief Compliance Officer concluded in the written report that the information that RS Investments had provided to the Trustees provided a reasonable basis for the Trustees to conclude that the advisory fees proposed in connection with the continuation of the Advisory Agreements were reasonable with respect to each Fund.
The Trustees considered the nature, extent, and quality of the services provided and expected to be provided by RS Investments. In this regard, the Trustees took into account the experience of the Funds’ portfolio management teams and of RS Investments’ senior management, and the time and attention devoted by each to the Funds. The Trustees considered RS Investments’ significant responsibilities in monitoring the services provided by the Funds’ sub-advisers and by other service providers such as the custodian, transfer agent, fund accountant and others.
The Trustees also considered that RS Investments had reported that the fees charged by RS Investments to the Funds reflect a number of factors, such as, for example, the generally high quality of the investment management teams at RS Investments, the high levels of compensation that are required to retain the firm’s investment professionals, and the alternative employment opportunities available to many of those professionals. The Trustees also noted that RS Investments had reported that, in the case of sub-advised Funds, RS Investments pays the majority, in most cases the large majority, of the fees it receives to the Funds’ sub-advisers.
The Trustees reviewed information compiled by the independent Lipper organization showing a comparison of RS Investments’ fee rate for each Fund compared to peer mutual funds having similar objectives and strategies, and within the same broad range of asset sizes. The Trustees were assisted in identifying and selecting those comparable mutual funds by an analysis prepared by an independent consultant
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retained by the Trustees. In his report, the Chief Compliance Officer had stated that the data showed RS Investments’ fees to be within the range of comparable mutual funds, even though the fees with respect to some of the Funds tended to be at the higher end of the range. The Chief Compliance Officer further noted that in the case of one relatively small variable insurance Fund with advisory fees at the highest end of the relevant range, the fee rate is the same as the retail version of that Fund using the same strategy, which has a more competitive posture against its peer funds.
The Trustees reviewed information from the Lipper report showing total expenses for the Funds in comparison to peer funds. The Trustees considered the total expense ratios of the Funds and the various components of those expenses. For a number of the Funds that had been identified as having higher expenses because of limited assets, the Trustees noted they had seen efforts by RS Investments in the past to address those issues through expense limitations, growth in assets or reorganizing the Fund into another Fund. The Trustees agreed to continue to monitor the limited number of Funds with this concern and to engage in further discussions with RS Investments to the extent needed.
The Trustees considered information provided by RS Investments as to the fees charged by RS Investments to clients other than the Funds, including institutional separate accounts and mutual funds for which RS Investments serves as sub-adviser. The Chief Compliance Officer had noted that RS Investments generally charges lower fees to those accounts. The Chief Compliance Officer had also noted that, in a number of cases, such an account pays fees at the same rate as the comparable Fund on assets up to a specified level, and then at lower rates on additional assets; in some cases, an account’s fee rate will be lower at all levels than that of the comparable Fund. The Trustees considered that RS Investments had reported that administrative, compliance, reporting, and other legal burdens of providing investment advice to mutual funds exceed those required to provide advisory services to non-mutual fund clients such as institutional accounts for retirement or pension plans. The Trustees also considered that RS Investments had explained that there are substantially greater legal and other responsibilities and risks to RS Investments in managing public mutual funds than in managing private accounts or in sub-advising mutual funds sponsored by others, and that the services and resources required of RS Investments when it sub-advises mutual funds sponsored by others are substantially less than in the case of the Funds because many of the administrative and compliance responsibilities related to the management function are retained by the primary adviser.
The Trustees reviewed performance information for each Fund for various periods. Their review included an examination of comparisons of the performance of the Funds to relevant securities indexes and various peer groups of mutual funds prepared by the Lipper and Morningstar organizations with respect to various periods, and relative rankings of the Funds compared to peer funds during various periods. The Trustees noted that, in his report, the Chief Compliance Officer had found that no Fund appeared to have substantially lagged all peer mutual funds and indexes for all relevant periods. The Trustees had also noted the following observations made by the Chief Compliance Officer in his report regarding certain Funds that lagged their peers: (1) RS Money Market VIP Series and RS Money Market Fund experienced extremely low (but
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SUPPLEMENTAL INFORMATION (UNAUDITED)
still positive) yields reflecting a very conservative investment posture, (2) RS High Yield Bond VIP Series, which has the same general portfolio as the slightly better performing (compared to its peer group) RS High Yield Bond Fund, focused on better quality segments of the high yield market compared to its peers, (3) RS Value VIP Series had lower performance than the retail version of the Fund, largely related to its very small size ($4 million of total assets as of May 2010), (4) RS Growth Fund, which has faced redemptions attributed in part to past underperformance, has been managed for the past few years by a new portfolio management team, and (5) RS Mid Cap Growth Fund, while continuing to suffer from underperformance over the longer term, has slightly improved performance in the most recent annual period. Finally, the Trustees noted that many Funds enjoyed favorable absolute and comparative performance, and RS Investments has been very responsive to the concerns of the Boards in this regard.
The Trustees reviewed financial information provided to them by RS Investments, showing the substantial costs to RS Investments of providing services to the Funds. The Trustees considered the Chief Compliance Officer’s statement, in his report, that he had discussed with RS Investments the basis for the allocation of RS Investments’ general or common expenses to the cost analysis for the Funds and that he believed the allocation methodology and resulting allocations were reasonable. The Trustees also considered RS Investments’ detailed profitability analysis with respect to each Fund for the year ended December 31, 2009, and for the three months ended March 31, 2010. RS Investments stated that it continued to invest in the business to maintain high quality services for the Funds despite past lower profitability and losses with respect to many Funds. The Trustees also noted that RS Investments’ sub-advisory business had a lower profit margin due to the reduced fees it receives in respect of that business. The Trustees also took into account that the Chief Compliance Officer noted in his report that a comparable or higher profit margin relating to RS Investments’ services to the Funds appeared justifiable by the higher risk and responsibilities associated with the mutual fund business. The Trustees also considered the information that had been provided to them regarding the profitability of the Funds’ sub-advisers.
The Trustees discussed with RS Investments whether economies of scale would likely be realized as the Funds grow and whether a reduction in the advisory fees paid by the Funds by means of breakpoints would be appropriate. The Trustees reviewed a variety of information provided by RS Investments and considered the conclusions of the Chief Compliance Officer in this regard, noting that they took into account the following factors raised by RS Investments and the Chief Compliance Officer: (1) that RS Investments is committed to achieving consistently superior investment performance as shown by RS Investments’ reinvestment of its resources in an effort to improve its investment processes and in an effort to recruit and retain the best professionals available to it; (2) that the profits from the Funds enable RS Investments to devote greater resources to the management of the Funds, including organizational enhancements and financial incentives for the portfolio managers, analysts, and other personnel who in many cases have lucrative alternative employment and business opportunities available to them; (3) that RS Investments maintains that one of its strengths generally is the tenure of its investment management teams; (4) that certain investment styles, such as small-cap and some mid-cap strategies, do not as readily
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benefit from economies of scale because of the limited ability to increase the size of a Fund’s investment in certain portfolio holdings; and (5) that shareholders of the Funds may benefit to some degree to the extent that the expenses of the Funds are reduced simply because of the economies provided by their increased sizes, even in the absence of management fee reductions. The Trustees noted the relatively brief recovery period since the most recent market disruption, which added financial pressure for many asset managers such as RS Investments, and current volatile market conditions result in fluctuating and uncertain revenues that increase the risks to RS Investments of committing increased resources to the Funds. The Trustees said that they would continue to monitor the potential economies of scale for the Funds, and the circumstances under which breakpoints might be appropriate in the future for certain Funds.
The Trustees considered the research and other similar services RS Investments receives from many of the broker-dealers with which it places the Funds’ (as well as other RS Investments clients’) portfolio transactions and from third parties with which these broker-dealers have arrangements. The Trustees considered the benefit to RS Investments and its affiliates from such services including that (1) the services are of value to RS Investments and its affiliates in advising RS Investments clients (including the Funds) and (2) RS Investments might otherwise be required to purchase some of these services for cash. On the basis of the information provided to the Trustees at the meeting and throughout the year, the Trustees concluded that the benefit to RS Investments of these “soft dollar” relationships did not appear unreasonable and that the Funds appeared to benefit from them.
The Trustees reviewed the detailed information provided to them regarding the various sub-advisers to the Funds, including information as to compliance with federal securities laws, capabilities and experience of portfolio management personnel and any changes in such personnel in the past year, certain financial information as to the sub-advisers, information as to their trading practices, and general information as to the pricing of the sub-advisers’ services. On the basis of that information, information provided to them throughout the year, and their periodic meetings with representatives of the sub-advisers, the Trustees determined that the services provided by the sub-advisers to the Funds were generally acceptable.
The Trustees considered generally the nature and quality of the administrative services provided to the Funds by RS Investments including, among other things, the firm’s performance during the course of the preceding year and the responsiveness of senior management to the Trustees’ requests. The Trustees were generally satisfied with the administrative services currently being provided by the firm.
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The Trustees considered specifically a number of additional factors cited by the Chief Compliance Officer in his report:
| Ÿ | RS Investments has continued to integrate the respective RS and Guardian organizations, with even greater integration than last year when substantial progress had been reported. RS Investments has worked to be responsive to concerns raised by the Trustees with respect to the performance of various Funds and the interaction of members across portfolio management teams in order to reduce the compartmentalization of RS Investments as well as concerns about the expenses of smaller and less successful Funds. Based on the information provided to the Trustees, more Funds enjoyed year-over-year net expense reductions than those experiencing increases. |
| Ÿ | RS Investments has recommended, discussed and sought approval from the Trustees as needed to implement various significant changes affecting the Funds including liquidations, reorganizations and expense limitations, both in response to an internal review of various Funds or concerns expressed by the Trustees. In most cases, RS Investments has anticipated issues and addressed them actively with the Trustees, including the implementation of voluntary expense reductions in certain funds. RS Investments provided the Trustees with a table of changes to the Funds for the period from May 1, 2009 to May 1, 2010. Many Funds were changed to reduce expenses or were merged away. |
| Ÿ | The Chief Compliance Officer confirmed that RS Investments provided all necessary staffing, training and other compliance resources necessary for him to perform his responsibilities as the Chief Compliance Officer. |
| Ÿ | The Chief Compliance Officer reported that RS Investments provided (and is committed to providing) very high quality advisory and related services to the Funds. |
After considering all of the information described above, including the Chief Compliance Officer’s written report, the Trustees voted unanimously to approve the continuation of the various Advisory Agreements, including the advisory fees proposed in connection with that continuation, for the one-year period commencing August 31, 2010.
Portfolio Holdings and Proxy Voting Procedures
The Funds file their complete schedule of portfolio holdings with the Securities and Exchange Commission for the first and third quarters of each fiscal year on Form N-Q. The Funds’ Form N-Q is available on the Securities and Exchange Commission’s Web site at http://www.sec.gov. The Funds’ Form N-Q may be reviewed and copied at the Commission’s Public Reference Room in Washington, DC, and information on the operation of the Public Reference Room may be obtained by calling 800-SEC-0330. This information is also available, without charge, upon request, by calling toll-free 800-766-3863.
A description of the policies and procedures that the Funds use to determine how to vote proxies relating to portfolio securities, and information regarding how the Funds
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voted proxies relating to portfolio securities during the most recent 12-month period ended June 30 will be available (i) without charge, upon request, by calling toll-free 800-766-3863; (ii) on RS Investments’ Web site at http://www.RSinvestments.com; and (iii) on the Securities and Exchange Commission’s Web site at http://www.sec.gov.
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Trustees and Officers Information Table
| Name, Address,* and Month and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served+ |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen by Trustee |
Other Directorships Held by Trustee++ | |||||
| Disinterested Trustees | ||||||||||
| Judson Bergman, February 1957 |
Trustee |
Since May 2006 |
Founder and CEO, Envestnet, Inc., a provider of back-office solutions for financial advisors and the wealth management industry. | 35 |
Envestnet, Inc. (1999–present) | |||||
| Kenneth R. Fitzsimmons, Jr., October 1945 | Trustee |
Since May 2007 |
Retired since September 2002; formerly, Managing Director, Robertson Stephens, an investment banking firm. | 35 |
None | |||||
| Anne M. Goggin, November 1948 |
Trustee, Chairman of the Board | Since August 2006 |
Attorney; Retired, Chief Counsel, Metropolitan Life Insurance Company, an insurance company (1979–2004). | 35 |
None | |||||
| Christopher C. Melvin, Jr., September 1954 |
Trustee |
Since November 2007 |
Chairman & CEO, Melvin & Company, LLC, a brokerage firm. | 35 |
None | |||||
| Gloria S. Nelund, May 1961 |
Trustee |
Since November 2007 |
CEO and Co-Founder, TriLinc Global, an investment firm; formerly, President, Titus Development Group, LLC, a consulting firm; formerly, Head of U.S. Private Wealth Management, Deutsche Bank (1999–2005). | 35 |
None | |||||
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| Name, Address,* and Month and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served+ |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen by Trustee |
Other Directorships Held by Trustee++ | |||||
| Disinterested Trustees (continued) | ||||||||||
| John P. Rohal, April 1947 |
Trustee | Since February 2008; Also from December 2006 to March 2007 | Member, Makena Capital Management LLC, an investment management firm. | 35 | None | |||||
| Interested Trustees and Principal Officers | ||||||||||
| Dennis J. Manning,** January 1947 |
Trustee | Since August 2006 | Chairman, RS Investments; Chairman and CEO, The Guardian Life Insurance Company of America, an insurance company (“Guardian Life”). | 35 | None | |||||
| Terry R. Otton,*** March 1954 |
Trustee; President and Principal Executive Officer | Trustee since December 2006; President and Principal Executive Officer since September 2005; Co-President and Co-Principal Executive Officer November 2004 through September 2005; Treasurer and Principal Financial and Accounting Officer May 2004 through September 2006 | CEO (prior to August 2006, CEO and CFO), RS Investments. | 35 | None | |||||
| James E. Klescewski, November 1955 |
Treasurer and Principal Financial and Accounting Officer | Since September 2006 | CFO, RS Investments; formerly, CFO, JCM Partners, LLC, an investment management firm. | N/A | N/A | |||||
| www.RSinvestments.com | 209 |
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SUPPLEMENTAL INFORMATION (UNAUDITED)
| Name, Address,* and Month and Year of Birth |
Position(s) Held with Trust |
Term of Office and Length of Time Served+ |
Principal Occupation(s) During Past 5 Years |
Number of Portfolios in Fund Complex Overseen by Trustee |
Other Directorships Held by Trustee++ | |||||
| Interested Trustees and Principal Officers (continued) | ||||||||||
| Benjamin L. Douglas, January 1967 |
Vice President, Secretary, and Chief Legal Officer | Vice President and Secretary since February 2004; Chief Legal Officer since August 2004 | General Counsel, RS Investments. | N/A | N/A | |||||
| John J. Sanders, Jr., August 1945 |
Senior Vice President, Chief Compliance Officer, and Anti-Money Laundering Compliance Officer | Senior Vice President since November 2004; Chief Compliance Officer since August 2004; Anti-Money Laundering Compliance Officer since May 2004 | Chief Compliance Officer, RS Investments. | N/A |
N/A | |||||
| + | Under the Trust’s Agreement and Declaration of Trust, a Trustee serves until his or her successor is elected or qualified, or until he or she sooner dies, resigns, is removed or becomes disqualified. Under the Trust’s By-Laws, officers hold office at the pleasure of the Trustees. In addition, the Trustees have designated a mandatory retirement age of 72, which can be deferred annually by unanimous vote of all members of the Board, excluding the member who has reached the retirement age. |
| ++ | Directorships or trusteeships of companies required to report to the SEC (i.e., “public companies”). |
| * | c/o RS Investments, 388 Market Street, 17th Floor, San Francisco, CA 94111. |
| ** | Mr. Manning is an “interested person” under the 1940 Act by virtue of his position with Guardian Life, the parent of Guardian Investor Services LLC, which owns a majority of the ownership interest in RS Investments, the Trust’s investment adviser, and by virtue of his position as Chairman of RS Investments. |
| *** | Mr. Otton is an “interested person” under the 1940 Act by virtue of his position with RS Investments. |
The Statement of Additional Information includes information about the Trust’s Trustees and Officers and is available, without charge, upon request by calling toll-free 800-766-3863.
This report is transmitted to shareholders only. It is not authorized for use as an offer of sale or a solicitation of an offer to buy shares of a Fund unless accompanied or preceded by that Fund’s current prospectus. Past performance results shown in this report should not be considered a representation of future performance. Investment returns and principal value of shares will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Statements and other information herein are as dated and are subject to change.
| 210 | www.RSinvestments.com |
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388 Market Street San Francisco CA 94111
www.RSinvestments.com | 800-766-3863
| Six-time winner of Dalbar Service Award
EB 015098 (12/10) |
|
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| Item 2. | Code of Ethics. |
The registrant, as of the end of the period covered by this report, has adopted a code of ethics, as defined in this Item 2, that applies to the registrant’s principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. There were no amendments or waivers granted with respect to the Code of Ethics during the year ended December 31, 2010.
| Item 3. | Audit Committee Financial Expert. |
The registrant’s board of trustees has determined that Judson Bergman is an audit committee financial expert serving on its audit committee. This individual is “independent,” as defined by this Item 3.
| Item 4. | Principal Accountant Fees and Services. |
(a)-(d)
Fees for services rendered to the registrant by its principal accountant.
| Fiscal Year Ended |
Audit Fees * | Audit-Related Fees | Tax Fees * | All Other Fees | ||||||||||||||
| December 31, 2009 |
$ | 650,081 | $ | — | $ | 202,308 | $ | — | ||||||||||
| December 31, 2010 |
$ | 747,685 | $ | — | $ | 192,830 | $ | — | ||||||||||
| * | Fees are exclusive of out-of-pocket expenses. |
Fees for services rendered by the registrant’s principal accountant to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is sub-contracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant if the engagement related directly to the operations and financial reporting of the registrant.
| Fiscal Year Ended |
Audit-Related Fees | Tax Fees * | All Other Fees * | |||||||||||
| December 31, 2009 |
$ | — | $ | 11,700 | $ | 200,000 | ||||||||
| December 31, 2010 |
$ | — | $ | 11,700 | $ | 220,000 | ||||||||
| * | Fees are exclusive of out-of-pocket expenses. |
Audit-Related Fees represent fees billed in the registrant’s last two fiscal years for services traditionally performed by the registrant’s auditor, including accounting consultation concerning financial accounting and reporting standards and other audit or attest services not required by statute or regulation.
Tax Fees represent fees billed in the registrant’s last two fiscal years for tax compliance, tax planning and tax advice services. Tax planning and tax advice services include assistance with tax audits, employee benefit plans and requests for rulings or technical advice from taxing authorities.
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All Other Fees represent fees billed in the registrant’s last two fiscal years for services relating to examination of investment management controls.
| (e)(1) | The registrant’s Audit Committee pre-approves at least annually audit and non-audit services that are required to be pre-approved under paragraph (c)(7) of Rule 2-01 of Regulation S-X. In addition, the chairman of the Audit Committee is authorized to pre-approve a proposed engagement that arises between meetings of the Audit Committee and that needs to commence prior to the next meeting of the Audit Committee. That approval is reported to the Audit Committee at its next meeting. |
| (e)(2) | None, or 0%, of services relating to the Audit-Related Fees, Tax Fees and All Other Fees disclosed above were approved by the audit committee pursuant to paragraph (c)(7)(i)(C) of Rule 2-01 of Regulation S-X. |
| (f) | Not applicable. |
| (g) | The aggregate non-audit fees billed by the registrant’s accountant for services rendered to the registrant, and rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the adviser that provides ongoing services to the registrant for each of the last two fiscal years of the registrant are $479,401 for 2009 and $275,780 for 2010. |
| (h) | The registrant’s audit committee of the board of trustees has considered whether the provision of non-audit services that were rendered to the registrant’s investment adviser (not including any sub-adviser whose role is primarily portfolio management and is subcontracted with or overseen by another investment adviser), and any entity controlling, controlled by, or under common control with the investment adviser that provides ongoing services to the registrant that were not pre-approved pursuant to paragraph (c)(7)(ii) of Rule 2-01 of Regulation S-X is compatible with maintaining the principal accountant’s independence. |
| Item 5. | Audit Committee of Listed registrants. |
Not applicable to the registrant.
| Item 6. | Investments. |
| (a) | Schedule of Investments in securities of unaffiliated issuers as of the close of the reporting period is included as part of the report to shareholders filed under Item 1 of this form. |
| (b) | None. |
| Item 7. | Disclosure of Proxy Voting Policies and Procedures for Closed-End Management Investment Companies. |
Not applicable to the registrant.
| Item 8. | Portfolio Managers of Closed-End Management Investment Companies. |
Not applicable to the registrant.
| Item 9. | Purchases of Equity Securities by Closed-End Management Investment Company and Affiliated Purchasers. |
Not applicable to the registrant.
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| Item 10. | Submission of Matters to a Vote of Security Holders. |
There have been no material changes to the procedures by which shareholders may recommend nominees to the registrant’s board of trustees, where those changes were implemented after the registrant last provided disclosure in response to the requirements of Item 407(c) (2)(iv) of Regulation S-K (as required by Item 22(b)(15) of Schedule 14A) or this Item.
| Item 11. | Controls and Procedures. |
| (a) | The registrant’s principal executive and principal financial officers have concluded that the registrant’s disclosure controls and procedures (as defined in Rule 30a-3(c) under the Investment Company Act of 1940, as amended (the “1940 Act”) (17 CFR 270.30a-3(c)) are effective, as of a date within 90 days of the filing date of this Form N-CSR/A, to provide reasonable assurance that the information required to be disclosed by the registrant on Form N-CSR is recorded, processed, summarized, and reported within the time periods specified in the Commission’s rules and forms, based on their evaluation of these disclosure controls and procedures required by Rule 30a-3(b) under the 1940 Act (17 CFR 270.30a-3(b)) and Rule 13a-15(b) or 15d-15(b) under the Securities Exchange Act of 1934 (17 CFR 240.13a-15(b) or 240.15d-15(b)). |
Since the end of the period covered by this report and prior to the date of the filing of this Form N-CSR/A, the Registrant was informed by its third-party administrator that the administrator had made certain corrections to its previous calculations of “SEC yield,” as reflected in the supplement to the Fixed Income Funds’ shareholder report filed as part of this Form N-CSR/A. In response to this information, additional disclosure controls and procedures with respect to the calculation of SEC yield and taxable equivalent yield (which is based on SEC yield) are being implemented by the administrator and the Registrant.
| (b) | There were no changes in the registrant’s internal control over financial reporting (as defined in Rule 30a-3(d) under the 1940 Act (17 CFR 270.30a-3(d)) that occurred during the registrant’s second fiscal quarter of the period covered by this report that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. |
| Item 12. | Exhibits. |
| (a)(1) | Code of ethics that is the subject of disclosure required by Item 2 is attached hereto. |
| (a)(2) | Certifications pursuant to Rule 30a-2(a) under the 1940 Act and Section 302 of the Sarbanes-Oxley Act of 2002 are attached hereto. |
| (a)(3) | Not applicable. |
| (b) | Certification pursuant to Rule 30a-2(b) under the 1940 Act and Section 906 of the Sarbanes-Oxley Act of 2002 is attached hereto. |
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| (Registrant) | RS Investment Trust | |
| By (Signature and Title)* | /s/ Matthew H. Scanlan | |
| Matthew H. Scanlan, President | ||
| (Principal Executive Officer) | ||
Date: March 5, 2012
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Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.
| By (Signature and Title)* | /s/ Matthew H. Scanlan | |
| Matthew H. Scanlan, President | ||
| (Principal Executive Officer) |
Date: March 5, 2012
| By (Signature and Title)* | /s/ James E. Klescewski | |
| James E. Klescewski, Treasurer | ||
| (Principal Financial Officer) |
Date: March 5, 2012