<PAGE>
Specialty Funds
Frank Russell Investment Company
Supplement Dated January 21, 1998
To the Prospectus Dated May 1, 1997
As Amended through December 15, 1997
Effective January 21, 1998, Frank Russell Investment Company makes the following
change to its Specialty Funds Prospectus. Under the section "Investment
Policies, Objectives, Restrictions, Policies and Risks," subsection "Investment
Policies." The first and second paragraphs of "Lending Portfolio Securities"
thereunder are restated to read in their entirety as follows:
Lending Portfolio Securities. The Real Estate Securities, the Emerging
Markets, the Equity T, the Money Market and the U.S. Government Money
Market Funds may lend portfolio securities with a value of up to 33.33% of
each Fund's total assets. Such loans may be terminated at any time. A
Fund will receive cash (and agree to pay a "rebate" interest rate), US
government or US government agency securities as collateral in an amount
equal to at least 102% for loans of US securities, and 105%, for non-US
securities, of the current market value of loaned securities. The
collateral will be "marked-to-market" on a daily basis, and the borrower
will furnish additional collateral in the event that the value of the
collateral drops below the respective percentages set forth above of the
market value of the loaned securities.
Cash collateral will be invested in high-quality, short-term debt
instruments, short-term bank collective investment and money market mutual
funds (including funds advised by State Street Bank and Trust Company, the
Funds' Custodian, for which it may receive an asset-based fee), and other
investments meeting certain quality and maturity requirements established
by the Funds. Income generated from the investment of the cash collateral
is used first to pay the rebate interest cost to the borrower of the
securities, then to pay for lending transaction costs, and then the
remainder is divided between the Fund and the lending agent.
<PAGE>
Class C Funds
Frank Russell Investment Company
Supplement Dated January 21, 1998
To the Prospectus Dated May 1, 1997
As Amended through December 15, 1997
Effective January 21, 1998, Frank Russell Investment Company makes the following
change to its Class C Funds Prospectus. Under the section "Investment Policies,
Objectives, Restrictions, Policies and Risks," subsection, "Investment
Policies." The first and second paragraphs of "Lending Portfolio Securities"
thereunder are restated to read in their entirety as follows:
Lending Portfolio Securities. Each Fund may lend portfolio securities with
a value of up to 33.33% of its total assets. Such loans may be terminated
at any time. A Fund will receive cash (and agree to pay a "rebate" interest
rate), US government or US government agency securities as collateral in an
amount equal to at least 102%, for loans US securities, and 105%, for non-
US securities, of the current market value of the loaned securities. The
collateral will be "marked-to-market" on a daily basis, and the borrower
will furnish additional collateral in the event that the value of the
collateral drops below the respective percentages set forth above of the
market value of the loaned securities.
Cash collateral will be invested in high-quality short-term debt
instruments, short-term bank collective investment and money market mutual
funds (including funds advised by State Street Bank and Trust Company, the
Funds' Custodian, for which it may receive an asset based fee) and other
investments meeting certain quality and maturity requirements established
by the Funds. Income generated from the investment of the cash collateral
is used first to pay the rebate interest cost to the borrower of the
securities, then to pay for lending transaction costs, and then the
remainder is divided between the Fund and the lending agent.
Effective January 21, 1998, the Equity Income Fund will be managed by the
following money managers:
Brandywine Asset Management, Inc., Three Christina Centre, Suite 1200, 201
N. Walnut Street, Wilmington, DE 19801, is a wholly owned subsidiary of
Legg Mason, Inc.
Equinox Capital Management, Inc., 590 Madison Avenue, 41st Floor, New York,
NY 10022. Equinox is a registered investment adviser with majority
ownership held by Ron Ulrich.
Trinity Investment Management Corporation, 75 Park Plaza, Boston, MA
02116, is a corporation with seven shareholders, with Stanford M.
Calderwood holding majority ownership.
<PAGE>
Institutional Funds
Frank Russell Investment Company
Supplement Dated January 21, 1998
To the Prospectus Dated May 1, 1997
As Amended through December 15, 1997
Effective January 21, 1998, Frank Russell Investment Company makes the following
change to its Institutional Fund Prospectus. Under the section "Investment
Policies, Objectives, Restrictions, Policies and Risks," subsection "Investment
Policies." The first and second paragraphs of "Lending Portfolio Securities,"
thereunder are restated to read in their entirety as follows:
Lending Portfolio Securities. Each Fund may lend portfolio securities with
a value of up to 33.33% of its total assets. Such loans may be terminated
at any time. A Fund will receive cash (and agree to pay a "rebate" interest
rate), US government or US government agency securities as collateral in an
amount equal to at least 102%, for loans of US securities, and 105%, for
non-US securities, of the current market value of loaned securities. The
collateral will be "marked-to-market" on a daily basis, and the borrower
will furnish additional collateral in the event that the value of the
collateral drops below the respective percentages set forth above of the
market value of the loaned securities.
Cash collateral will be invested in high-quality, short-term debt
instruments, short-term bank collective investment and money market mutual
funds (including funds advised by State Street Bank and Trust Company, the
Funds' Custodian, for which it may receive an asset based fee) and other
investments meeting certain quality and maturity requirements established
by the Funds. Income generated from the investment of the cash collateral
is used first to pay the rebate interest cost to the borrower of the
securities, then to pay for lending transaction costs, and then the
remainder is divided between the Fund and the lending agent.
Effective January 21, 1998, the Equity III Fund will be managed by the following
money managers:
Brandywine Asset Management, Inc., Three Christina Centre, Suite 1200, 201
N. Walnut Street, Wilmington, DE 19801, is a wholly owned subsidiary of
Legg Mason, Inc.
Equinox Capital Management, Inc., 590 Madison Avenue, 41st Floor, New York,
NY 10022. Equinox is a registered investment adviser with majority
ownership held by Ron Ulrich.
Trinity Investment Management Corporation, 75 Park Plaza, Boston, MA
02116, is a corporation with seven shareholders, with Stanford M.
Calderwood holding majority ownership.
<PAGE>
Class S Funds
Frank Russell Investment Company
Supplement Dated January 21, 1998
To the Prospectus Dated May 1, 1997
As Amended through December 15, 1997
Effective January 21, 1998, Frank Russell Investment Company makes the following
change to its Class S Funds Prospectus. Under the section "Investment Policies,
Objectives, Restrictions, Policies and Risks," subsection " Investment
Policies." The first and second paragraphs of "Lending Portfolio Securities"
thereunder are restated to read in their entirety as follows:
Lending Portfolio Securities. Each Fund may lend portfolio securities with
a value of up to 33.33% of its total assets. Such loans may be terminated
at any time. A Fund will receive cash (and agree to pay a "rebate"
interest rate), US government or US government agency securities as
collateral in an amount equal to at least 102%, for loans of US securities,
and 105%, for non-US securities, of the current market value of loaned
securities. The collateral will be "marked-to-market" on a daily basis,
and the borrower will furnish additional collateral in the event that the
value of the collateral drops below the respective percentages set forth
above of the market value of the loaned securities.
Cash collateral will be invested in high-quality, short-term debt
instruments, short-term bank collective investment and money market mutual
funds (including funds advised by State Street Bank and Trust Company, the
Funds' Custodian, for which it may receive an asset based fee) and other
investments meeting certain quality and maturity requirements established
by the Funds. Income generated from the investment of the cash collateral
is used first to pay the rebate interest cost to the borrower of the
securities, then to pay for lending transaction costs, and then the
remainder is divided between the Fund and the lending agent.
Effective January 21, 1998, the Equity Income Fund will be managed by the
following money managers:
Brandywine Asset Management, Inc., Three Christina Centre, Suite 1200, 201
N. Walnut Street, Wilmington, DE 19801, is a wholly owned subsidiary of
Legg Mason, Inc.
Equinox Capital Management, Inc., 590 Madison Avenue, 41st Floor, New York,
NY 10022. Equinox is a registered investment adviser with majority
ownership held by Ron Ulrich.
Trinity Investment Management Corporation, 75 Park Plaza, Boston, MA
02116, is a corporation with seven shareholders, with Stanford M.
Calderwood holding majority ownership.
