<PAGE> 1
CLASS C FUNDS
FRANK RUSSELL INVESTMENT COMPANY
SUPPLEMENT DATED DECEMBER 10, 1996
TO THE PROSPECTUS DATED JULY 8, 1996,
AS SUPPLEMENTED ON SEPTEMBER 17, 1996
Effective December 10, 1996 the Real Estate Securities Fund will be managed by
the following money managers:
Cohen & Steers Capital Management, 757 Third Avenue, New York, NY 10017,
is a corporation whose two principals, Robert H. Steers and Martin
Cohen, control the corporation within the meaning of the 1940 Act.
AEW Capital Management, L.P., 225 Franklin Street, Boston, MA
02110-2803, is a wholly owned affiliate of New England Investment
Companies, L.P. ("NEIC"). NEIC is a publicly-held limited partnership.
Metropolitan Life Insurance Company, a publicly held Corporation, owns
approximately 53% of NEIC. AEW Capital Management, Inc., a wholly-
owned subsidiary of NEIC, is the general partner, and NEIC is the sole
limited partner of AEW Capital Management, L.P.
<PAGE> 2
SPECIALTY FUNDS
FRANK RUSSELL INVESTMENT COMPANY
SUPPLEMENT DATED DECEMBER 10, 1996
TO THE PROSPECTUS DATED JULY 8, 1996
AS SUPPLEMENTED SEPTEMBER 17, 1996
Effective December 10, 1996, the Real Estate Securities Fund will be managed by
the following money managers:
Cohen & Steers Capital Management, 757 Third Avenue, New York, NY 10017,
is a corporation whose two principals, Robert H. Steers and Martin
Cohen, control the corporation within the meaning of the 1940 Act.
AEW Capital Management, L.P., 225 Franklin Street, Boston, MA
02110-2803, is a wholly owned affiliate of New England Investment
Companies, L.P. ("NEIC"). NEIC is a publicly-held limited partnership.
Metropolitian Life Insurance Company, a publicly held Corporation, owns
approximately 53% of NEIC. AEW Capital Management, Inc., a wholly-owned
subsidiary of NEIC, is the general partner, and NEIC is the sole
limited partner, of AEW Capital Management, L.P.
Effective January 1, 1997, the Tax Free Money Market Fund annual fund operating
expenses will change to reflect the partial waiver of the management fee and
page 11 of the Prospectus will be restated in its entirety as follows:
ANNUAL FUND OPERATING EXPENSES OF THE CLASS S SHARES
OF THE TAX FREE MONEY MARKET FUND
The purpose of the following table is to assist the investor in
understanding the various costs and expenses that an investor in the Class S
Shares of the Fund will bear directly or indirectly. The example provided in
the table should not be considered a representation of past or future expenses.
Actual expenses may be greater or less than those shown.
<TABLE>
CLASS S SHARES SHAREHOLDER TRANSACTION EXPENSES:
<S> <C> <C> <C>
Sales Load Imposed on Purchases ............... None
Sales Load Imposed on Reinvested Dividends .... None
Deferred Sales Load ........................... None
Redemption Fees ............................... None
Exchange Fees ................................. None
ANNUAL CLASS S SHARES OPERATING EXPENSES:
(as a percentage of average net assets)
Management Fee (After Fee Waiver)(1) .......... .15%
12b-1 Fees .................................... None
Other Expenses:
Custodian Fees ........................ .05%
Transfer Agent Fees ................... .07
Other Fees ............................ .11
---
Total Other Expenses .................. .23
----
Total Class S Shares Operating Expenses
(After Fee Waiver)(1)+ ...................... .38%
----
</TABLE>
EXAMPLE:
<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
------ ------- ------- --------
<S> <C> <C> <C> <C>
You would pay the following expenses on a $1,000
investment assuming (1) 5% annual return and
(2) redemption at the end of each time period ...... $4 $12 $21 $48
-- --- --- ---
</TABLE>
- ---------------
(1) Effective January 1, 1997 the Management Company has voluntarily agreed to
waive 10% of its .25% management fee. The total operating expenses absent
the fee waiver would be .48% of average daily net assets on an annual basis.
This waiver may be revised or eliminated at any time without notice to
shareholders.
+ Investors purchasing Class S of the Fund through a financial intermediary,
such as a bank or an investment adviser, may also be required to pay
additional fees to the intermediary for services provided by the
intermediary. Such investors should contact the intermediary for information
concerning what additional fees, if any, will be charged.
