RUSSELL FRANK INVESTMENT CO, 497, 1999-12-02

RUSSELL FRANK INVESTMENT CO
497, 1999-12-02

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<PAGE>

FRANK RUSSELL INVESTMENT COMPANY

[GRAPHIC]

TAX-MANAGED FUNDS
PROSPECTUS

TAX-MANAGED LARGE CAP FUND* - CLASS C AND S SHARES
TAX-MANAGED SMALL CAP FUND - CLASS C AND S SHARES
TAX EXEMPT BOND FUND - CLASS C, E AND S SHARES
TAX FREE MONEY MARKET FUND- CLASS S SHARES

NOVEMBER 30, 1999

909 A STREET, TACOMA, WA 98402 - 800-787-7354 - 253-627-7001

As with all mutual funds, the Securities and Exchange Commission has neither
determined that the information in this prospectus is accurate or complete,
nor approved or disapproved of these securities. It is a criminal offense to
state otherwise.

* Prior to November 30, 1999, this Fund was known as the Equity T Fund.

[LOGO]

<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary......................................... 3
Investment Objective, Principal Investment Strategies
and Principal Risks.................................... 3
Performance............................................. 6
Fees and Expenses....................................... 9
Summary Comparison of the Funds............................. 11
The Purpose of the Funds--Multi-Style, Multi-Manager
Diversification........................................... 11
Investment Objective and Principal Investment Strategies.... 13
Risks....................................................... 19
Management of the Funds..................................... 22
The Money Managers.......................................... 24
Dividends and Distributions................................. 25
Taxes....................................................... 26
How Net Asset Value Is Determined........................... 27
Distribution and Shareholder Servicing Arrangements......... 28
How to Purchase Shares...................................... 29
Exchange Privilege.......................................... 31
How to Redeem Shares........................................ 32
Payment of Redemption Proceeds.............................. 33
Written Instructions........................................ 33
Account Policies............................................ 34
Financial Highlights........................................ 35
Money Manager Information................................... 38
</TABLE>

<PAGE>
(This page has been left blank intentionally.)
<PAGE>
RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE, PRINCIPAL INVESTMENT STRATEGIES AND PRINCIPAL RISKS

TAX-MANAGED LARGE CAP FUND
- ---------------------------------
(FORMERLY EQUITY T FUND)

<TABLE>
<S> <C>
INVESTMENT To provide capital growth on an after-tax basis by investing
OBJECTIVE principally in equity securities.

PRINCIPAL The Tax-Managed Large Cap Fund invests primarily in equity
INVESTMENT securities of large capitalization US companies, although
STRATEGIES the Fund may invest a limited amount in non-US firms from
time to time. The Fund generally pursues a market-oriented
style of security selection which incorporates both a growth
style and a value style. The Fund seeks to realize capital
growth while minimizing shareholder tax consequences arising
from the Fund's portfolio management activities. The Fund
attempts to do this through the realization of returns as
capital gains and the minimization of the realization of
capital gains. The Fund also attempts to offset any such
realization of capital gains with capital losses. The Fund
intends to be fully invested at all times.

PRINCIPAL RISKS An investment in the Tax-Managed Large Cap Fund, like any
investment, has risks. The value of the Fund fluctuates and
you could lose money. The principal risks of investing in
the Fund are those associated with tax-sensitive management,
investing in equity securities and exposing liquidity
reserves to equity markets. Additionally, the Fund is
subject to the general risk that its service providers'
computer systems may not function accurately on or after
January 1, 2000. Please refer to the "Risks" section later
in this Prospectus for further details.
</TABLE>

TAX-MANAGED SMALL CAP FUND
- ---------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide capital growth on an after-tax basis by investing
OBJECTIVE principally in equity securities of small capitalization
companies.

PRINCIPAL The Tax-Managed Small Cap Fund invests primarily in equity
INVESTMENT securities of US companies, although the Fund may invest a
STRATEGIES limited amount in non-US firms from time to time. The Fund
generally pursues a market-oriented style of security
selection which incorporates both a growth style and a value
style. The Fund seeks to realize capital growth while
minimizing shareholder tax consequences arising from the
Fund's portfolio management activities. The Fund attempts to
do this through the realization of returns as capital gains
and the minimization of the realization of capital gains.
The Fund also attempts to offset any such
</TABLE>

3
<PAGE>
<TABLE>
<S> <C>
realization of capital gains with capital losses. The Fund
intends to be fully invested at all times.

PRINCIPAL RISKS An investment in the Tax-Managed Small Cap Fund, like any
investment, has risks. The value of the Fund fluctuates and
you could lose money. The principal risks of investing in
the Fund are those associated with tax-sensitive management,
investing in equity securities, investing in securities of
small capitalization companies and exposing liquidity
reserves to equity markets. Additionally, the Fund is
subject to the general risk that its service providers'
computer systems may not function accurately on or after
January 1, 2000. Please refer to the "Risks" section later
in this Prospectus for further details.
</TABLE>

TAX EXEMPT BOND FUND
- -------------------------

<TABLE>
<S> <C>
INVESTMENT To provide a high level of federal tax-exempt current income
OBJECTIVE by investing primarily in a diversified portfolio of
investment grade municipal securities.

PRINCIPAL The Tax Exempt Bond Fund concentrates its investments in
INVESTMENT investment- grade municipal debt obligations providing
STRATEGIES federal tax-exempt interest income. The average weighted
duration of the Fund's portfolio typically ranges within ten
percent of the average weighted duration of the Lehman
Brothers 1-10 Year Municipal Bond Index, but may vary up to
25% from the Index's duration. The Fund has no restrictions
on individual security duration. The Fund employs multiple
money managers, each with its own expertise in the municipal
bond market.

PRINCIPAL RISKS An investment in the Tax Exempt Bond Fund, like any
investment, has risks. The value of the Fund fluctuates with
interest rates and you could lose money. The principal risks
of investing in the Fund are those associated with investing
in fixed-income securities, investing in municipal
securities and using a multi-manager approach. Additionally,
the Fund is subject to the general risk that its service
providers' computer systems may not function accurately on
or after January 1, 2000. Please refer to the "Risks"
section later in this Prospectus for further details.
</TABLE>

TAX FREE MONEY MARKET FUND
- ---------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide the maximum current income exempt from federal
OBJECTIVE income tax that is consistent with the preservation of
capital and liquidity, and the maintenance of a $1.00 per
share net asset value by investing in short-term municipal
obligations.
</TABLE>

4
<PAGE>
<TABLE>
<S> <C>
PRINCIPAL The Tax Free Money Market Fund invests in a portfolio of
INVESTMENT high quality short-term debt securities maturing in 397 days
STRATEGIES or less. The dollar-weighted average maturity of the Fund's
portfolio will be 90 days or less. The Fund invests almost
exclusively in investment-grade municipal debt obligations
providing tax-exempt interest income.

PRINCIPAL RISKS An investment in the Tax Free Money Market Fund, like any
investment, has risks. The principal risks of investing in
the Fund are those associated with investing in fixed-income
securities, investing in municipal securities and credit and
liquidity enhancements. Additionally, the Fund is subject to
the general risk that its service providers' computer
systems may not function accurately on or after January 1,
2000. Please refer to the "Risks" section later in this
Prospectus for further details.

An investment in the Fund is not insured or guaranteed by
the Federal Deposit Insurance Corporation 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.
</TABLE>

5
<PAGE>
PERFORMANCE

The following bar charts illustrate the risks of investing in the Funds by
showing how the performance of each Fund's Class S Shares varies from year to
year over a 10 year period (or, if a Fund has not been in operation for 10
years, since the beginning of operations of such Fund). The highest and lowest
quarterly returns during the periods shown are set forth below each chart. The
return for the other classes of Shares offered by this Prospectus may be lower
than the Class S returns shown in the bar chart, depending upon the fees and
expenses of that class. The chart does not reflect any account maintenance fee
or any fee that you may be required to pay upon redemption of the Fund's shares.
Any such charge will reduce your return.

The tables accompanying the bar charts further illustrate the risks of
investing in the Funds by showing how each Fund's average annual returns for 1,
5 and 10 years (or, if a Fund has not been in operation for 10 years, since the
beginning of operations of such Fund) compare with the returns of certain
indexes that measure broad market performance.

Past performance is no indication of future results.
- --------------------------------------------------------------------------------

TAX-MANAGED LARGE CAP FUND CLASS S
(FORMERLY EQUITY T FUND)
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS
<S> <C>

1997 31.73%

1998 32.08%
</TABLE>

<TABLE>
<CAPTION>
----------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS** 1 YEAR INCEPTION*
------------------------------ ------ ----------
<S> <C> <C>

Tax-Managed Large Cap Fund Class S....... 32.08% 31.66%

S&P 500 Composite Stock Price Index...... 28.76 30.76
----------------------------------------------------------------
</TABLE>

BEST QUARTER: 4TH-1998 23.71%
WORST QUARTER: 3RD-1998 (10.12%)
------------------------------

* The Tax-Managed Large Cap Fund commenced operations on October 7,
1996.

** No returns are shown for Class C Shares of the Tax-Managed Large Cap
Fund because those Shares were not issued during the periods shown. Had
the rule 12b-1 distribution fees and shareholder servicing fees for
Class C Shares have been reflected in the returns shown for Class S
Shares, the returns shown would have been lower.
-----------------------------------------------------------------------
--------------------------------------------------------------------------

TAX-MANAGED SMALL CAP FUND

Because the Tax-Managed Small Cap Fund was new when this Prospectus was
printed, its performance history and average annual returns are not
included. Performance history and average annual returns will be available
for the Tax-Managed Small Cap Fund after the Fund has been in operation for
one year.
- --------------------------------------------------------------------------------

6
<PAGE>
- --------------------------------------------------------------------------------

TAX EXEMPT BOND FUND CLASS S

(FOR THE PERIODS ENDED DECEMBER 31)

ANNUAL TOTAL RETURNS

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
1989 6.95%

1990 6.12%

1991 7.64%

1992 5.85%

1993 6.58%

1994 -0.54%

1995 7.81%

1996 3.07%

1997 4.92%

1998 4.82%
</TABLE>

BEST QUARTER: 2ND-1989 3.27% WORST QUARTER: 1ST-1994 (1.59%)

<TABLE>
<CAPTION>
--------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS* 1 YEAR 5 YEARS 10 YEARS
----------------------------- ------ ------- --------
<S> <C> <C> <C>
Tax Exempt Bond Fund Class S**.............................. 4.82% 3.98% 5.30%

Lehman Brothers Municipal 1-10 Year Index#.................. 5.95 5.58 NA

Salomon Smith Barney 3-Month Treasury Bill Index............ 5.05 5.10 5.44

YIELDS CURRENT
------------------------------------------------------------ -------

30-Day Yields*.............................................. 2.97%

30-Day Tax Equivalent Yield*................................ 4.92
--------------------------------------------------------------------------------------------
</TABLE>

----------------------------

* No returns or yields are shown for Class C or Class E Shares of the
Tax Exempt Bond Fund because those Shares were not issued during the
periods shown. Had the Rule 12b-1 distribution fees and shareholder
servicing fees for Class C Shares and the shareholder servicing fees
for Class E Shares been reflected in the returns shown for Class S
Shares, the returns shown would have been lower.

** The performance of the Tax Exempt Bond Fund prior to January 1, 1999
reflects a higher advisory fee than is currently borne by the Fund.

# Prior to November 1, 1999, the comparative index for the Tax Exempt
Bond Fund was the Salomon Smith Barney 3-Month Treasury Bill Index. The
Fund believes that the Lehman Brothers Municipal 1-10 Year Index is
more broadly representative of the securities and strategies likely to
be employed by the Tax Exempt Bond Fund and provides more useful
information as a comparative basis for evaluation of the Fund's
performance. The Lehman Brothers Municipal 1-10 Year Index is an index,
with income reinvested, representative of municipal bonds with
maturities ranging from 1-10 years.

- --------------------------------------------------------------------------------

To obtain current yield information, please call 1-800-787-7354.

7
<PAGE>
- --------------------------------------------------------------------------------

TAX FREE MONEY MARKET FUND CLASS S

(FOR THE PERIODS ENDED DECEMBER 31)

ANNUAL TOTAL RETURNS

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
1989 6.42%

1990 5.99%

1991 4.84%

1992 3.09%

1993 2.55%

1994 2.83%

1995 3.76%

1996 3.35%

1997 3.61%

1998 3.36%
</TABLE>

BEST QUARTER: 2ND-1998 1.62% WORST QUARTER: 1ST-1994 (0.58%)

<TABLE>
<CAPTION>
---------------------------------------------------------------------------------------------
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR 5 YEARS 10 YEARS
---------------------------- -------- --------- --------
<S> <C> <C> <C>
Tax Free Money Market Fund Class S.......................... 3.36% 3.38% 3.97%

YIELDS CURRENT EFFECTIVE
------------------------------------------------------------ ------- ---------

30-Day Yields............................................... 2.99% -

7-Day Yields................................................ 3.29 3.34%

7-Day Tax Equivalent Yield.................................. 5.44 5.53
---------------------------------------------------------------------------------------------
</TABLE>

- --------------------------------------------------------------------------------

To obtain current yield information, please call 1-800-787-7354.

8
<PAGE>
FEES AND EXPENSES

These tables describe the fees and expenses that you may pay if you buy and
hold shares of the Funds.

SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
MAXIMUM SALES
MAXIMUM SALES CHARGE (LOAD) MAXIMUM
CHARGE (LOAD) IMPOSED ON MAXIMUM ACCOUNT
IMPOSED ON REINVESTED DEFERRED SALES REDEMPTION EXCHANGE MAINTENANCE
PURCHASES DIVIDENDS CHARGE (LOAD) FEES FEES FEES
--------- --------- ------------- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C>

Each Fund (All Classes) None None None None None None
</TABLE>

ANNUAL OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM THE FUND ASSETS)
(% OF NET ASSETS)

<TABLE>
<CAPTION>
OTHER
EXPENSES TOTAL GROSS TOTAL NET
(INCLUDING ANNUAL FUND ANNUAL FUND
ADVISORY DISTRIBUTION ADMINISTRATIVE OPERATING FEE WAIVERS AND OPERATING
FEE (12B-1) FEES* FEES)** EXPENSE# REIMBURSEMENTS+ EXPENSES
--- ------------- ------- -------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>

Tax-Managed Large Cap Fund--
Class C....................... 0.70% 0.75% 0.53% 1.98% -- 1.98%

Tax-Managed Large Cap Fund--
Class S....................... 0.70% 0.00% 0.24% 0.94% -- 0.94%

Tax-Managed Small Cap Fund--
Class C....................... 0.98% 0.75% 0.58% 2.31% (0.03)% 2.28%

Tax-Managed Small Cap Fund--
Class S....................... 0.98% 0.00% 0.33% 1.31% (0.03)% 1.28%

Tax Exempt Bond Fund--Class C... 0.30% 0.75% 0.51% l.56% -- 1.56%

Tax Exempt Bond Fund--Class E... 0.30% 0.00% 0.51% 0.81% -- 0.81%

Tax Exempt Bond Fund--Class S... 0.30% 0.00% 0.26% 0.56% -- 0.56%

Tax Free Money Market Fund--
Class S....................... 0.20% 0.00% 0.18% 0.38% (.10)% 0.28%
</TABLE>

- ------------------------

* Pursuant to the rules of the National Association of Securities Dealers,
Inc. (NASD), the aggregate initial sales charges, deferred sales charges and
asset-based sales charges on shares of the Funds may not exceed 6.25% of
total gross sales, subject to certain exclusions. This 6.25% limitation is
imposed on the Class C Shares of the Funds rather than on a per shareholder
basis. Therefore, long-term shareholders of the Class C Shares may pay more
than the economic equivalent of the maximum front-end sales charges
permitted by the NASD.

9
<PAGE>
** Annual Class C and Class E Shares' operating expenses for the Tax Exempt
Bond Fund are based on average net assets expected to be invested during the
year ending December 31, 1999. Annual Class C and Class S Shares' operating
expenses for the Tax-Managed Small Cap Fund and Class C Shares operating
expenses of the Tax-Managed Large Cap Fund are based on average net assets
expected to be invested during those Classes' first twelve month period of
operations. During the course of this period, expenses may be more or less
than the amount shown. "Other Expenses" for Class C and Class E Shares of
the Tax Exempt Bond Fund and Class C Shares of the Tax-Managed Small Cap
Fund and Tax-Managed Large Cap Fund include a shareholder servicing fee of
0.25% of the average daily net assets of those Funds' Class C Shares and
Class E Shares, respectively. Other Expenses have been restated to reflect
changes to the Funds' Transfer and Dividend Disbursing Agency Agreement,
which became effective June 8, 1998. Prior to December 1, 1998, FRIMCo
provided advisory and administrative services to the Funds pursuant to a
single management agreement under which each Fund paid a single fee. Since
then, FRIMCo's advisory and administrative services have been provided under
a separate advisory agreement and administrative agreement which provide for
the fees reflected in the table.

# If you purchase any class of Shares of the Funds through a financial
intermediary, such as a bank or an investment adviser, you may also pay
additional fees to the intermediary for services provided by the
intermediary. You should contact your financial intermediary for information
concerning what additional fees, if any, will be charged. Each Fund may also
pay, in addition to the fee set forth above, a fee which compensates FRIMCo
for managing collateral which the Funds have received in securities lending
and certain other portfolio transactions which are not treated as net assets
of that Fund ("additional assets") in determining the Fund's net asset value
per share. The additional fee payable to FRIMCo will equal an amount of up
to 0.07% of each Fund's additional assets on an annualized basis.

+ FRIMCo has contractually agreed to waive, at least until November 30, 2000
up to the full amount of its 1.03% combined advisory and administrative fees
for the Tax-Managed Small Cap Fund, and to reimburse the Fund to the extent
that Fund-level expenses exceed 1.25% of the average daily net assets of
that Fund on an annual basis. FRIMCo has contractually agreed to waive, at
least until November 30, 2000, 0.10% of its 0.25% combined advisory and
administrative fees for the Tax Free Money Market Fund. The Funds' Custodian
has agreed to waive a portion of its fees for the first three months of
operation for the Tax-Managed Small Cap Fund.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

The example assumes that you invest $10,000 in a Fund for the time periods
indicated and then redeemed all of your Shares at the end of those periods. The
example also assumes your investment has a 5% return each year and that
operating expenses remain the same.

Although your actual costs may be higher or lower, under these assumptions
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
-------- -------- -------- --------
<S> <C> <C> <C> <C>
Tax-Managed Large Cap Fund--Class C......................... $198 $624 $1,094 $2,490
Tax-Managed Large Cap Fund--Class S......................... 94 296 519 1,182
Tax-Managed Small Cap Fund--Class C......................... 228 719 1,260 2,868
Tax-Managed Small Cap Fund--Class S......................... 128 403 707 1,610
Tax Exempt Bond Fund--Class C............................... 156 492 862 1,962
Tax Exempt Bond Fund--Class E............................... 81 255 448 1,019
Tax Exempt Bond Fund--Class S............................... 56 177 309 704
Tax Free Money Market Fund--Class S......................... 28 88 155 352
</TABLE>

10
<PAGE>
SUMMARY COMPARISON OF THE FUNDS

<TABLE>
<CAPTION>
ANTICIPATED MAXIMUM
EQUITY DEBT
FUND INVESTMENTS INVESTMENTS FOCUS
- --------------------------------------------- ----------- ----------- ------------------------
<S> <C> <C> <C>
Tax-Managed Large Cap Fund................... 65-100% 35% Capital growth
Tax-Managed Small Cap Fund................... 65-100% 35% Capital growth
Tax Exempt Bond Fund......................... 0% 100% Maximum current income
Tax Free Money Market Fund................... 0% 100% Maximum current income
</TABLE>

THE PURPOSE OF THE FUNDS--MULTI-STYLE, MULTI-MANAGER DIVERSIFICATION

The Funds are offered through certain bank trust departments, registered
investment advisers, broker-dealers or other financial services organizations
that have been selected by the Funds' adviser or distributor (Financial
Intermediaries). The Funds are designed to provide a means for investors to use
Frank Russell Investment Management Company's (FRIMCo) and Frank Russell
Company's (Russell) "multi-style, multi-manager diversification" investment
method and to obtain FRIMCo's and Russell's money manager evaluation services.
Unlike most investment companies that have a single organization that acts as
both administrator and investment adviser, the Funds divide responsibility for
corporate management and investment advice between FRIMCo and a number of
different money managers.

Three functions form the core of Russell's consulting services:

- OBJECTIVE SETTING: Defining appropriate investment objectives and desired
investment returns, based on a client's unique situation and risk
tolerance.

- ASSET ALLOCATION: Allocating a client's assets among different asset
classes--such as common stocks, fixed-income securities, international
securities, temporary cash investments and real estate--in a way most
likely to achieve the client's objectives and desired returns.

- MONEY MANAGER RESEARCH: Evaluating and recommending professional
investment advisory and management organizations ("money managers") to
make specific portfolio investments for each asset class, according to
designated investment objectives, styles and strategies.

When this process is completed, a client's assets are invested using a
"multi-style, multi-manager diversification" technique. The goals of this
process are to reduce risk and to increase returns.

The Funds believe investors should seek to hold fully diversified portfolios
that reflect both their own individual investment time horizons and their
ability to accept risk. The Funds believe that for many, this can be
accomplished through strategically purchasing shares in one or more of the Funds
which have been structured to provide access to specific asset classes employing
a multi-style, multi-manager approach.

11
<PAGE>
classes with greater risk may also underperform lower risk asset classes, on
either a risk adjusted or absolute basis. Investors should select a mix of asset
classes that reflects their overall ability to withstand market fluctuations
over their investment horizons.

Studies have shown that no one investment style within an asset class will
consistently outperform competing styles. For instance, investment styles
favoring securities with growth characteristics may outperform styles favoring
income producing securities, and vice versa. For this reason, no single manager
has consistently outperformed the market over extended periods. Although
performance cycles tend to repeat themselves, they do not do so predictably.

The Funds believe, however, that it is possible to select managers who have
shown a consistent ability to achieve superior results within subsets or styles
of specific asset classes and investment styles by employing a unique
combination of qualitative and quantitative measurements. The Funds combine
these select managers with other managers within the same asset class who employ
complementary styles. By combining complementary investment styles within an
asset class, investors are better able to reduce their exposure to the risk of
any one investment style going out of favor.

By strategically selecting from among a variety of investments by asset
class, each of which has been constructed using these multi-style, multi-manager
principles, investors are able to design portfolios that meet their specific
investment needs.

The Funds conduct their business through a number of service providers, who
act on behalf of the Funds. FRIMCo, the Funds' administrator and investment
adviser, performs the Funds' day to day corporate management and oversees the
Funds' money managers. Each of the Funds' money managers makes all investment
decisions for the portion of the Fund assigned to it by FRIMCo. The Funds'
custodian, State Street Bank, maintains custody of all of the Funds' assets.
FRIMCo, in its capacity as the Funds' transfer agent, is responsible for
maintaining the Funds' shareholder records and carrying out shareholder
transactions. When a Fund acts in one of these areas, it does so through the
service provider responsible for that area.

12
<PAGE>
INVESTMENT OBJECTIVE AND PRINCIPAL INVESTMENT STRATEGIES

TAX-MANAGED LARGE CAP FUND (FORMERLY EQUITY T FUND)
- ---------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide capital growth on an after-tax basis by investing
OBJECTIVE principally in equity securities.

PRINCIPAL The Tax-Managed Large Cap Fund invests primarily in equity
INVESTMENT securities of large capitalization US companies, as
STRATEGIES represented by the S&P 500-Registered Trademark- market
index although the Fund may invest a limited amount in
non-US firms from time to time.

The Fund generally pursues a market-oriented style of
security selection, which incorporates both a growth style
and a value style, based on quantitative investment models
which are mathematical formulas based on statistical
analyses. This style emphasizes investments in large
capitalization companies that, on a long-term basis, appear
to be undervalued relative to their growth prospects, and
may include both growth and value securities. Although it is
not an index fund, under normal market conditions, the Tax-
Managed Large Cap Fund will invest at least 65 percent of
the value of its total assets in securities that are
included in the S&P 500-Registered Trademark- market index.

The Fund seeks to realize capital growth while minimizing
shareholder tax consequences arising from the Fund's
portfolio management activities. In its attention to tax
consequences of its investment decisions, the Fund differs
from most equity mutual funds, which are managed to maximize
pre-tax total return without regard to whether their
portfolio management activities result in taxable
distributions to shareholders.

The Fund is designed for long-term investors who seek to
minimize the impact of taxes on their investment returns.
The Fund is not designed for short-term investors or for
tax-deferred investment vehicles such as IRAs and 401(k)
plans.

The Fund intends to minimize its taxable distributions to
shareholders in two ways:

- First, the Fund strives to realize its returns as
capital gains, and not as investment income, under US
tax laws. To do so, the Fund typically buys stocks
with the intention of holding them long enough to
qualify for capital gain tax treatment.
</TABLE>

13
<PAGE>
<TABLE>
<S> <C>
- Second, the Fund attempts to minimize its realization
of capital gains and to offset any such realization with
capital losses. To do so, when the Fund sells shares
of an appreciated portfolio security, it seeks to
minimize the resulting capital gains by first selling
the shares for which the Fund paid the highest price.
Further the Fund attempts to offset those capital
gains with matching capital losses by simultaneously
selling shares of depreciated portfolio securities.

If large shareholder redemptions occur unexpectedly, the
Fund could be required to sell portfolio securities
resulting in its realization of net capital gains. This
could temporarily reduce the Fund's tax efficiency. Also, as
the Fund matures, it may hold individual securities that
have appreciated so significantly that it would be difficult
for the Fund to sell them without realizing net capital
gains.

The Fund selects and holds portfolio securities based on its
assessment of their potential for long term total returns.
The Fund uses a dividend discount model to gauge securities'
anticipated returns relative to their industry peers. This
model forecasts the expected future dividends of individual
securities, and calculates the expected return at the
current share price. The Fund identifies securities that
exhibit superior total return prospects. From among those
securities, using a quantitative after-tax model, the Fund
chooses stocks from a variety of economic sectors and
industries, generally in the proportions that those sectors
and industries are represented in the S&P 500 Index.

When the Fund's shares are redeemed, the Fund may realize
capital gains or income, impacting all shareholders. The
Fund believes that multiple purchases and redemptions of
Fund shares by individual shareholders could adversely
affect the Fund's strategy of tax-efficiency and could
reduce its ability to contain costs. The Fund further
believes that short-term investments in the Fund are
inconsistent with its long-term strategy. For this reason,
the Fund will apply its general right to refuse any
purchases by rejecting purchase orders from investors whose
patterns of purchases and redemptions in the Fund is
inconsistent with the Fund's strategy.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform generally as though its cash reserves were actually
invested in those markets. The Fund may also invest its
liquidity reserves in one or more Frank Russell Investment
Company (FRIC) money market funds.
</TABLE>

14
<PAGE>
<TABLE>
<S> <C>
Additionally, the Fund may lend up to one-third of its
portfolio securities to earn additional income. These loans
may be terminated at any time. The Fund will receive either
cash or US government debt obligations as collateral.

From time to time, the Fund may take temporary defensive
positions that may be inconsistent with its principal
investment policies in an attempt to respond to adverse
market, economic, political or other conditions.
</TABLE>

TAX-MANAGED SMALL CAP FUND
- ---------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide capital growth on an after-tax basis by investing
OBJECTIVE principally in equity securities of small capitalization
companies.

PRINCIPAL The Tax-Managed Small Cap Fund invests primarily in equity
INVESTMENT securities of US companies, although the Fund may invest a
STRATEGIES limited amount in non-US firms from time to time.

The Fund generally pursues a market-oriented style of
security selection, which incorporates both a growth style
and a value style, based on quantitative investment models
which are mathematical formulas based on statistical
analyses. This style emphasizes investments in small
capitalization companies that, on a long-term basis, appear
to be undervalued relative to their growth prospects, and
may include both growth and value securities. Under normal
market conditions, the Tax-Managed Small Cap Fund will
invest at least 65 percent of its total assets in securities
that are not included in the S&P 500 market index.

The Fund seeks to realize capital growth while minimizing
shareholder tax consequences arising from the Fund's
portfolio management activities. In its attention to tax
consequences of its investment decisions, the Fund differs
from most equity mutual funds, which are managed to maximize
pre-tax total return without regard whether their portfolio
management activities result in taxable distributions to
shareholders.

15
<PAGE>
<TABLE>
<S> <C>
The Fund intends to minimize its taxable distributions to
shareholders in two ways:

- Second, the Fund attempts to minimize its realization
of capital gains and to offset any such realization with
capital losses. To do so, when the Fund sells shares
of an appreciated portfolio security, it seeks to
minimize the resulting capital gains by first selling
the shares for which the Fund paid the highest price.
Further the Fund attempts to offset those capital
gains with matching capital losses by simultaneously
selling shares of depreciated portfolio securities.

The Fund selects and holds portfolio securities based on its
assessment of their potential for long term total returns.

16
<PAGE>
<TABLE>
<S> <C>
Additionally, the Fund may lend up to one-third of its
portfolio securities to earn additional income. These loans
may be terminated at any time. The Fund will receive either
cash or US government debt obligations as collateral.

TAX EXEMPT BOND FUND
- -------------------------

<TABLE>
<S> <C>
INVESTMENT To provide a high level of federal tax-exempt current income
OBJECTIVE by investing primarily in a diversified portfolio of
investment grade municipal securities.

PRINCIPAL The Tax Exempt Bond Fund concentrates its investments in
INVESTMENT investment- grade municipal debt obligations providing
STRATEGIES federal tax-exempt interest income. Specifically, these
obligations are debt obligations issued by states,
territories and possessions of the United States and the
District of Columbia and their political subdivisions,
agencies, and instrumentalities, or multi-state agencies or
authorities to obtain funds to support special government
needs or special projects. Under normal market conditions,
at least 80% of the Fund's assets will be invested in
tax-exempt securities.

The average weighted duration of the Fund's portfolio
typically ranges within ten percent of the average weighted
duration of the Lehman Brothers 1-10 Year Municipal Bond
Index, but may vary up to 25% from the Index's duration. The
Fund has no restrictions on individual security duration.

The Fund employs multiple money managers, each with its own
expertise in the municipal bond market. When determining how
to allocate its assets among money managers, the Fund
considers a variety of factors. These factors include a
money manager's investment style and performance record as
well as the characteristics of the money manager's typical
portfolio investments. These characteristics include
portfolio biases, magnitude of sector shifts, and duration
movements. The Fund also considers the manner in which money
managers' historical and expected investment returns
correlate with one another.

The Fund may lend up to one-third of its portfolio
securities to earn additional income. These loans may be
terminated at any time. The Fund will receive either cash or
US government debt obligations as collateral.

17
<PAGE>
TAX FREE MONEY MARKET FUND
- ---------------------------------

PRINCIPAL The Tax Free Money Market Fund invests in a portfolio of
INVESTMENT high quality short-term debt securities maturing in 397 days
STRATEGIES or less. The dollar-weighted average maturity of the Fund's
portfolio will be 90 days or less.

The Fund invests almost exclusively in investment-grade
municipal debt obligations providing tax-exempt interest
income. Specifically, these obligations are debt
obligations, rated BBB- or higher by Moody's Investors
Service, Inc. or its equivalent by a nationally recognized
statistical rating organization (NRSRO), issued by states,
territories and possessions of the United States and the
District of Columbia and their political subdivisions,
agencies, and instrumentalities, or multi-state agencies or
authorities to obtain funds to support special government
needs or special projects.

Some of the securities in which the Fund invests are
supported by credit and liquidity enhancements from third
parties. These enhancements are generally letters of credit
from foreign or domestic banks.

18
<PAGE>
RISKS

An investment in the Funds, like any investment, has risks. The value of
each Fund fluctuates, and you could lose money. The following table describes
principal types of risks that the Funds are subject to and lists next to each
description the Funds most likely to be affected by the risk. A Fund that is not
listed may hold portfolio investments that are subject to one or more of the
risks, but will not do so in a way that is expected to principally affect the
performance of the Fund as a whole. Please refer to the Funds' Statement of
Additional Information for a discussion of risks associated with types of
securities held by the Funds and investment practices employed.

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>

MULTI-MANAGER The investment styles employed by a Fund's money Tax Exempt
APPROACH managers may not be complementary. The interplay of the Bond
various strategies employed by a Fund's multiple money
managers may result in the Fund's holding a
concentration of certain types of securities. This
concentration may be beneficial or detrimental to the
Fund's performance depending upon the performance of
those securities and the overall economic environment.
The multiple manager approach could result in a high
level of portfolio turnover, resulting in higher Fund
brokerage expenses and increased tax liability from the
Fund's realization of capital gains.

TAX-SENSITIVE A Fund's tax-managed equity investment strategy may not Tax-Managed
MANAGEMENT provide as high a return before consideration of Large Cap
federal income tax consequences as other funds. A Tax-Managed
tax-sensitive investment strategy involves active Small Cap
management and a Fund may realize capital gains. In
response to market, economic, political or other
conditions, a Fund may temporarily use a different
investment strategy for defensive purposes. If a Fund
does so, different factors could affect the Fund's
performance and the Fund may not achieve its investment
objective.

EQUITY SECURITIES The value of equity securities will rise and fall in Tax-Managed
response to the activities of the company that issued Large Cap
the stock, general market conditions, and/or economic Tax-Managed
conditions. Small Cap

- -Value Stocks Investments in value stocks are subject to risks that Tax-Managed
(i) their intrinsic values may never be realized by the Large Cap
market or (ii) such stock may turn out not to have been Tax-Managed
undervalued. Small Cap
</TABLE>

19
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
- -Growth Stocks Growth company stocks may provide minimal dividends Tax-Managed
that can cushion stock prices in a market decline. The Large Cap
value of growth company stocks may rise and fall Tax-Managed
dramatically based, in part, on investors' perceptions Small Cap
of the company rather than on fundamental analysis of
the stocks.

- -Market- Market-oriented investments are generally subject to Tax-Managed
Oriented the risks associated with growth and value stocks. Large Cap
Investments Tax-Managed
Small Cap

- -Securities of Investments in small capitalization companies may Tax-Managed
Small involve greater risks because these companies generally Small Cap
Capitalization have a limited track record. Smaller capitalization
Companies companies often have narrower markets and more limited
managerial and financial resources than larger, more
established companies. As a result, the performance of
small capitalization companies may be more volatile
which could increase the volatility of a Fund's
portfolio.

FIXED-INCOME Prices of fixed-income securities rise and fall in Tax Exempt
SECURITIES response to interest rate changes. Generally, when Bond
interest rates rise, prices of fixed-income securities Tax Free
fall. The longer the duration of the security, the more Money Market
sensitive the security is to this risk. A 1% increase
in interest rates would reduce the value of a $100 note
by approximately one dollar if it had a one year
duration, but would reduce its value by approximately
fifteen dollars if it had a 15 year duration. There is
also a risk that one or more of the securities will be
downgraded in credit rating or go into default.
Lower-rated bonds generally have higher credit risks.

MUNICIPAL Municipal obligations are affected by economic, Tax Exempt
OBLIGATIONS business or political developments. These securities Bond
may be subject to provisions of litigation, bankruptcy Tax Free
and other laws affecting the rights and remedies of Money Market
creditors, or may become subject to future laws
extending the time for payment of principal and/or
interest, or limiting the rights of municipalities to
levy taxes.

CREDIT AND Adverse changes in a guarantor's credit quality if Tax Exempt
LIQUIDITY contemporaneous with adverse changes in the guaranteed Fund
ENHANCEMENTS security could cause losses to a Fund and may affect Tax Free
its net asset value. Money Market
</TABLE>

20
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
EXPOSING LIQUIDITY By exposing its liquidity reserves to the equity market Tax-Managed
RESERVES TO EQUITY principally by use of equity futures, a Fund's Large Cap
MARKETS performance tends to correlate more closely to the Tax-Managed
performance of the market as a whole. Although this Small Cap
increases a Fund's performance if equity markets rise,
it reduces a Fund's performance if equity markets
decline.

SECURITIES If a borrower of a Fund's securities fails financially, Tax-Managed
LENDING the Fund's recovery of the loaned securities may be Large Cap
delayed or the Fund may lose its rights to the Tax-Managed
collateral which could result in a loss to a Fund. Small Cap
Tax Exempt
Bond

YEAR 2000
- -Year 2000 and Fund The Funds' operations depend on the smooth functioning All Funds
operations of their service providers' computer systems. The Funds
and their shareholders could be adversely affected if
those computer systems do not properly process and
calculate date-related information on or after January
1, 2000. Many computer software systems in use today
cannot distinguish between the year 2000 and the year
1900. Although year 2000-related computer problems
could have a negative effect on the Funds and their
shareholders, the Funds' service providers have advised
the Funds that they are working to avoid such problems.
Because it is the obligation of those service providers
to ensure the proper functioning of their computer
systems, the Funds do not expect to incur any material
expense in connection with year 2000 preparations.

- -Year 2000 and The Funds and their shareholders could be adversely All Funds
Fund portfolio affected if the computer systems of the issuers in
investments which the Funds invest or those of the service
providers they depend upon, do not properly process and
calculate date-related information on or after January
1, 2000. If such an event occurred, the value of those
issuer's securities could be reduced.
</TABLE>

AN INVESTMENT IN ANY OF THE FUNDS IS NOT A BANK DEPOSIT AND IS NOT INSURED
OR GUARANTEED BY THE FEDERAL DEPOSIT INSURANCE CORPORATION OR ANY OTHER
GOVERNMENT AGENCY. THE TAX FREE MONEY MARKET FUND SEEKS TO PRESERVE THE VALUE OF
AN INVESTMENT IN THAT FUND AT $1.00 PER SHARE, HOWEVER, IT IS POSSIBLE TO LOSE
MONEY BY INVESTING IN THAT FUND.

21
<PAGE>
MANAGEMENT OF THE FUNDS

The Funds' investment adviser is FRIMCo, 909 A Street, Tacoma, Washington
98402. FRIMCo pioneered the "multi-style, multi-manager" investment method in
mutual funds and manages over $14 billion in more than 30 mutual fund
portfolios. FRIMCo was established in 1982 to serve as the investment management
arm of Russell.

Russell, which acts as consultant to the Funds, was founded in 1936 and has
been providing comprehensive asset management consulting services for over 30
years to institutional investors, principally large corporate employee benefit
plans. Russell provides the Funds and FRIMCo with the asset management
consulting services that it provides to its other consulting clients. The Funds
do not compensate Russell for these services. Russell and its affiliates have
offices around the world--in Tacoma, New York, Toronto, London, Paris, Sydney,
Auckland, Singapore and Tokyo.

Russell is a subsidiary of The Northwestern Mutual Life Insurance Company.
Founded in 1857, Northwestern Mutual is a mutual life insurance corporation
headquartered in Milwaukee, Wisconsin. It leads the US in both individual life
insurance sold annually and individual life insurance in force.

FRIMCo recommends money managers to the Funds, allocates Fund assets among
them, oversees them, and evaluates their results. FRIMCo also oversees the
management of the Funds' liquidity reserves. The Funds' money managers select
the individual portfolio securities for the assets assigned to them.

FRIMCo's officers and employees who oversee the money managers are:

- Randall P. Lert, who has been Chief Investment Officer of FRIMCo since
June 1989.

- Mark D. Amberson, who has been a Portfolio Manager of FRIMCo since January
1998. From 1991 to 1997, Mr. Amberson was a Portfolio Manager in Russell's
Money Market Trading Group. Mr. Amberson, jointly with another portfolio
manager listed in this section, has primary responsibility for management
of the Fixed Income I, Diversified Bond, Short Term Bond, Fixed Income
III, Tax Exempt Bond and Multistrategy Bond Funds.

- Randal C. Burge, who has been a Portfolio Manager of FRIMCo since June
1995. From 1990 to 1995, Mr. Burge was a Client Executive for Frank
Russell Australia. Mr. Burge, jointly with another portfolio manager
listed in this section, has primary responsibility for management of the
Fixed Income I, Fixed Income III, Diversified Bond, Short Term Bond, Tax
Exempt Bond, Multistrategy Bond and Emerging Markets Funds.

- Jean E. Carter, who has been a Portfolio Manager of FRIMCo since April
1994. Ms. Carter, jointly with another portfolio manager listed in this
section, has primary responsibility for management of the International
and International Securities Funds.

- Ann Duncan, who has been a Portfolio Manager of FRIMCo since January 1998.
From 1996 to 1997, Ms. Duncan was a Senior Equity Research Analyst with
Russell. From 1992 to 1995, Ms. Duncan was an equity analyst and portfolio
manager with Avatar Associates. Ms. Duncan, jointly with another portfolio
manager listed in this section, has primary responsibility for management
of the International and International Securities Funds.

22
<PAGE>
- James M. Imhof, Manager of FRIMCo's Portfolio Trading, manages the Funds'
liquidity portfolios on a day to day basis and has been responsible for
ongoing analysis and monitoring of the money managers since 1989.

- James A. Jornlin, who has been a Senior Investment Officer of FRIMCo since
April 1995. From 1991 to March 1995, Mr. Jornlin was employed as a Senior
Research Analyst with Russell. Mr. Jornlin has primary responsibility for
management of the Tax-Managed Global Equity, Equity Aggressive Strategy,
Aggressive Strategy, Balanced Strategy, Moderate Strategy and Conservative
Strategy Funds and, jointly with another portfolio manager listed in this
section, has primary responsibility for the Emerging Markets and Real
Estate Securities Funds.

- C. Nola Kulig, who has been a Portfolio Manager of FRIMCo since January
1996. From 1994 to 1995, Ms. Kulig was a member of the Alpha Strategy
Group. From 1988 to 1994, Ms. Kulig was Senior Research Analyst with
Russell. Ms. Kulig, jointly with another portfolio manager listed in this
section, has primary responsibility for management of the Equity I, Equity
II, Equity III, Equity Q, Tax-Managed Small Cap, Diversified Equity,
Quantitative Equity, Special Growth and Equity Income Funds.

- Dennis J. Trittin, who has been a Portfolio Manager of FRIMCo since
January 1996. From 1988 to 1996, Mr. Trittin was director of US Equity
Manager Research Department with Russell. Mr. Trittin, jointly with
another portfolio manager listed in this section, has primary
responsibility for management of the Equity I, Equity II, Equity III,
Equity Q, Tax-Managed Large Cap, Tax-Managed Small Cap, Diversified
Equity, Quantitative Equity, Special Growth, and Equity Income Funds.

- Brian C. Tipple, who has been a Portfolio Manager of FRIMCo since July
1999. From 1991 to 1999, Mr. Tipple was a Client Executive with Frank
Russell Trust Company. From 1986 to 1989, he was an Investment Officer
with Frank Russell Trust Company. Mr. Tipple, jointly with another
portfolio manager listed in this section, has primary responsibility for
the Tax-Managed Large Cap Fund.

The aggregate annual rate of advisory and administrative fees payable to
FRIMCo monthly on a pro rata basis are the following percentages of each Fund's
average daily net assets: Tax-Managed Large Cap Fund, 0.75%; Tax-Managed Small
Cap, 1.03%; Tax Exempt Bond Fund, 0.35%; and Tax Free Money Market Fund, 0.25%.
Of these aggregate amounts 0.05% is attributable to administrative services.
FRIMCo has contractually agreed to waive, at least until October 31, 2000, a
portion of its 1.03% combined advisory and administrative fees for the
Tax-Managed Small Cap Fund, up to the full amount of those fees for Fund-level
expenses that exceed 1.25% of the average daily net assets of that Fund on an
annual basis. Additionally, FRIMCo has agreed to reimburse the Tax-Managed Small
Cap Fund, at least until October 31, 2000, for all remaining Fund-level expenses
that exceed 1.25% of the average daily net assets of the Tax-Managed Small Cap
Fund on an annual basis. FRIMCo has contractually agreed to waive 0.10% of its
0.25% combined advisory and administrative fees for the Tax Free Money Market
Fund until October 31, 2000. Prior to December 1, 1998, FRIMCo provided advisory
and administrative services to the Funds pursuant to a single Management
Agreement for which each Fund paid a single fee. Since then, FRIMCo's advisory
and administrative services are provided under a

23
<PAGE>
separate advisory agreement and an administrative agreement. Each Fund may also
pay, in addition to the aggregate fees set forth above, a fee which compensates
FRIMCo for managing collateral which the Funds have received in securities
lending and certain other portfolio transactions which are not treated as net
assets of that Fund ("additional assets") in determining the Fund's net asset
value per share. The additional fee payable to FRIMCo will equal an amount of up
to 0.07% of each Fund's additional assets on an annualized basis.

THE MONEY MANAGERS

Each Fund allocates its assets among the money managers listed under "Money
Manager Information" at the end of this Prospectus. FRIMCo, as the Funds'
advisor, may change the allocation of a Fund's assets among money managers at
any time. The Funds received an exemptive order from the Securities and Exchange
Commission (SEC) that permits a Fund to engage or terminate a money manager at
any time, subject to the approval by the Fund's Board of Trustees (Board),
without a shareholder vote. A Fund notifies its shareholders within 60 days of
when a money manager begins providing services. The Funds select money managers
based primarily upon the research and recommendations of FRIMCo and Russell.
FRIMCo and Russell evaluate quantitatively and qualitatively the money manager's
skills and results in managing assets for specific asset classes, investment
styles and strategies. Short-term investment performance, by itself, is not a
controlling factor in any Fund's selection or termination of a money manager.

Each money manager has complete discretion to purchase and sell portfolio
securities for its segment of a Fund. At the same time, however, each money
manager must operate within the Fund's investment objectives, restrictions and
policies. Additionally, each manager must operate within more specific
constraints developed from time to time by FRIMCo. FRIMCo develops such
constraints for each manager based on FRIMCo's assessment of the manager's
expertise and investment style. By assigning more specific constraints to each
money manager, FRIMCo intends to capitalize on the strengths of each money
manager and to combine their investment activities in a complementary fashion.
Although the money managers' activities are subject to general oversight by the
Board and the Funds' officers, neither the Board, the officers, FRIMCo, nor
Russell evaluate the investment merits of the money managers' individual
security selections.

J.P. Morgan Investment Management, Inc. ("Morgan") manages the Tax-Managed
Large Cap Fund. Robin Chance is the individual responsible for the management of
the Fund. Ms. Chance, Vice President and member of the Structured Equity Group,
has responsibility for tax aware structured equity strategies. Ms. Chance joined
Morgan in 1987. Ms. Chance is a CFA and a graduate of the of the University of
Pennsylvania's Management and Technology Program, also earning an MBA from New
York University's Stern School of Business.

Geewax, Terker & Company manages the Tax-Managed Small Cap Fund. John Julius
Geewax is the portfolio manager responsible for the management of the Fund. Mr.
Geewax is a graduate of the University of Pennsylvania and has earned a J.D.
from the University of Pennsylvania as well as an MBA and a PhD from the Wharton
School of the University of Pennsylvania. Mr. Geewax co-founded the firm in
1982. He is currently a general partner and portfolio manager responsible for
research and development and trading oversight for all of the firm's investment
services.

24
<PAGE>
DIVIDENDS AND DISTRIBUTIONS

INCOME DIVIDENDS

Each Fund distributes substantially all of its net investment income and net
capital gains to shareholders each year. The amount and frequency of
distributions are not guaranteed--all distributions are at the Board's
discretion. Currently, the Board intends to declare dividends from net
investment income (if any), according to the following schedule:

<TABLE>
<CAPTION>
DECLARED PAYABLE FUNDS
- -------- ------- -----
<S> <C> <C>
Daily................... 2nd to last business day of the month Tax Free Money Market Fund
Monthly................. Early in the following month Tax Exempt Bond Fund
Annually................ Mid-December Tax-Managed Large Cap Fund
Tax-Managed Small Cap Fund
</TABLE>

The Tax Free Money Market Fund determines net investment income immediately
prior to the determination of its net asset values. This occurs at the close of
the New York Stock Exchange (NYSE) (currently 4:00 p.m. Eastern Time) on each
business day. Net investment income is credited daily to the accounts of
shareholders of record prior to the net asset value calculation. The income is
paid monthly.

CAPITAL GAINS DISTRIBUTIONS

The Board annually intends to declare capital gains distributions through
October 31 (excess of capital gains over capital losses), generally in
mid-December. To meet certain legal requirements, a Fund may declare a special
year-end dividend and capital gains distributions during October, November or
December to shareholders of record in that month. These latter distributions are
deemed to have been paid by a Fund and received by you on December 31 of the
prior year, provided that the Fund pays them by January 31. Capital gains
realized during November and December will be distributed to you generally
during February of the following year.

BUYING A DIVIDEND

If you purchase shares just before a distribution, you will pay the full
price for the shares and receive a portion of the purchase price back as a
taxable distribution. This is called "buying a dividend." Unless your account is
a tax-deferred account, dividends paid to you would be included in your gross
income for tax purposes even though you may not have participated in the
increase of the net asset value of a Fund, regardless of whether you reinvested
the dividends.

AUTOMATIC REINVESTMENT

Your dividends and other distributions are automatically reinvested at the
closing net asset value on the record date, in additional shares of the
appropriate Fund, unless you elect to have the dividends or distributions paid
in cash or invested in another Fund. You may change your election by delivering
written notice no later than ten days prior to the payment date to the Funds'
Transfer Agent, at Operations Department, P.O. Box 1591, Tacoma, WA 98401.

25
<PAGE>
TAXES

In general, distributions from a Fund are taxable to you as either ordinary
income or capital gains. This is true whether you reinvest your distributions in
additional shares of the Fund or receive them in cash. Any long-term capital
gains distributed by a Fund are taxable to you as long-term capital gains no
matter how long you have owned your shares. Every January, you will receive a
statement that shows the tax status of distributions you received for the
previous year. Distributions declared in December but paid in January are
taxable as if they were paid in December. Distributions taxed as capital gains
may be taxable at different rates depending on how long a Fund holds its assets.

When you sell or exchange your shares of a Fund, you may have a capital gain
or loss. The tax rate on any gain from the sale or exchange of your shares
depends on how long you have held your shares.

The Fund managers make no representation as to the amount or variability of
each Funds capital gain distributions which may vary as a function of several
variables including, but not limited to, prevailing dividend yield levels,
general market conditions, shareholders redemption patterns and Fund cash
equitization activity.

Fund distributions and gains from the sale or exchange of your shares will
generally be subject to state and local income tax. Non-US investors may be
subject to US withholding and estate tax. You should consult your tax
professional about federal, state, local or foreign tax consequences in holding
shares of a Fund.

Any foreign taxes paid by a Fund on its investments may be passed through to
its shareholders as foreign tax credits.

If you are a corporate investor, a portion of the dividends from net
investment income paid by the Tax-Managed Large Cap Fund and the Tax-Managed
Small Cap Fund will generally qualify, in part, for the corporate
dividends-received deduction. However, the portion of the dividends so qualified
depends on the aggregate qualifying dividend income received by each Fund from
domestic (US) sources. Certain holding period and debt financing restrictions
may apply to corporate investors seeking to claim the deduction. You should
consult your tax professional with respect to the applicability of these rules.

Although the Tax-Managed Large Cap and the Tax-Managed Small Cap Funds are
managed to minimize the amount of capital gains realized during a particular
year, the realization of capital gains is not entirely within either Fund's or
its money manager's control. Shareholder purchase and redemption activity, as
well as the Fund's performance, will impact the amount of capital gains
realized. Capital gains distributions by the Tax-Managed Large Cap Fund and
Tax-Managed Small Cap Fund may vary considerably from year to year.

The Tax Exempt Bond and Tax Free Money Market Funds intend to continue to
qualify to pay "exempt-interest dividends" to their shareholders by maintaining,
as of the close of each quarter of their taxable years, at least 50% of the
value of their total assets in municipal obligations. If the Funds satisfy this
requirement, distributions from net investment income to shareholders will be
exempt from federal income taxation, including the alternative minimum tax, to
the extent that net investment income is represented by interest on municipal
obligations. However, to the extent dividends are

26
<PAGE>
derived from taxable income from temporary investments, short-term capital
gains, or income derived from the sale of bonds purchased with market discount,
the dividends are treated as ordinary income, whether paid in cash or reinvested
in additional shares. The Funds may invest a portion of their assets in private
activity bonds, the income from which is a preference item in determining your
alternative minimum tax.

By law, a Fund must withhold 31% of your distributions and proceeds if you
do not provide your correct taxpayer identification number, or certify that such
number is correct, or if the IRS instructs the Fund to do so.

THE TAX DISCUSSION SET FORTH ABOVE IS INCLUDED FOR GENERAL INFORMATION ONLY.
PROSPECTIVE INVESTORS SHOULD CONSULT THEIR OWN TAX ADVISERS CONCERNING THE
FEDERAL, STATE, LOCAL OR FOREIGN TAX CONSEQUENCES OF AN INVESTMENT IN A FUND.

Additional information on these and other tax matters relating to the Funds
and their shareholders is included in the section entitled "Taxes" in the SAI.

HOW NET ASSET VALUE IS DETERMINED

NET ASSET VALUE PER SHARE

The net asset value per share is calculated for shares of each class of each
Fund on each business day on which shares are offered or redemption orders are
tendered. For the Tax-Managed Large Cap, Tax-Managed Small Cap and Tax Exempt
Bond Funds, a business day is one on which the New York Stock Exchange (NYSE) is
open for trading. A business day for the Tax Free Money Market Fund includes any
day on which the NYSE is open for trading and the Boston Federal Reserve Bank is
open. Neither the NYSE nor the Boston Federal Reserve Bank is open on national
holidays. Each Fund determines net asset value as of the close of the NYSE
(currently 4:00 p.m. Eastern Time).

VALUATION OF PORTFOLIO SECURITIES

Securities held by the Funds are typically priced using market quotations or
pricing services when the prices are believed to be reliable--that is, when the
prices reflect the fair market value of the securities. The Funds value
securities for which market quotations are not readily available at "fair
value," as determined in good faith and in accordance with procedures
established by the Board.

The Tax Free Money Market Fund's portfolio investments are valued using the
amortized cost method. Under this method, a portfolio instrument is initially
valued at cost, and thereafter a constant accretion/amortization to maturity of
any discount or premium is assumed. Money market instruments maturing within 60
days of the valuation date held by the Tax-Managed Large Cap, Tax-Managed Small
Cap and Tax Exempt Bond Funds are also valued at "amortized cost" unless the
Board determines that amortized cost does not represent fair value. While
amortized cost provides certainty in valuation, it may result in periods when
the value of an instrument is higher or lower than the price a Fund would
receive if it sold the instrument.

27
<PAGE>
DISTRIBUTION AND SHAREHOLDER
SERVICING ARRANGEMENTS

Certain Funds offer multiple classes of shares. The Tax Exempt Bond Fund
offers Class C Shares, Class E Shares and Class S Shares. The Tax-Managed Small
Cap Fund and Tax-Managed Large Cap Fund offer Class C Shares and Class S Shares.
The Tax Free Money Market Fund offers Class S Shares only.

CLASS C SHARES participate in the Funds' Rule 12b-1 distribution plan
and in the Funds' shareholder servicing plan. Under the distribution plan,
the Funds' Class C shares pay distribution fees of 0.75% annually for the
sale and distribution of Class C shares. Under the shareholder servicing
plan, the Funds' Class C shares pay shareholder servicing fees of 0.25%
annually for services provided to Class C shareholders. Because both of
these fees are paid out of the Funds' Class C share assets on an ongoing
basis, over time these fees will increase the cost of a Class C share
investment in the Funds, and the distribution fee may cost an investor more
than paying other types of sales charges.

CLASS E SHARES participate in the Funds' shareholder servicing plan.
Under the shareholder servicing plan, the Funds' Class E shares pay daily
fees equal to 0.25% on an annualized basis for services provided to Class E
shareholders. The shareholder servicing fees are paid out of the Funds'
Class E share assets on an ongoing basis, and over time will increase the
cost of your investment in the Tax Exempt Bond Fund.

CLASS S SHARES do not participate in the Funds' distribution plan or the
Funds' shareholders services plan.

28
<PAGE>
HOW TO PURCHASE SHARES

Funds are generally available only through a select network of qualified
Financial Intermediaries. If you are not currently working with one of these
Financial Intermediaries, please call Russell Investor Services at (800)
RUSSEL4, (800-787-7354) for assistance in contacting an investment professional
near you.

There is a $5,000 required minimum investment in each of the Funds described
in this Prospectus except the Tax Free Money Market Fund. The Funds are designed
to be used as part of an allocated investment portfolio in combination with
Funds described in FRIC's Russell Funds Prospectus or Institutional Funds
Prospectus. Investment in the Funds described in this Prospectus will be applied
toward any applicable required minimum initial investment with respect to other
Funds.

Financial Intermediaries may charge their customers a fee for providing
investment-related services. Financial Intermediaries that maintains omnibus
accounts with the Funds may receive administrative fees from the Funds or their
transfer agent. Financial Intermediaries may receive shareholder servicing
compensation with respect to Class C and Class E shares of the Funds, and may
receive distribution compensation with respect to Class C shares.

PAYING FOR SHARES

You may purchase shares of the Funds through a Financial Intermediary on any
business day the Funds are open. Purchase orders are processed at the next net
asset value per share calculated after the Funds receive your order in proper
form (defined in the "Written Instructions" section), and accept the order.

All purchases must be made in US dollars. Checks and other negotiable bank
drafts must be drawn on US banks and made payable to "Frank Russell Investment
Company." The Funds reserve the right to reject any purchase order for any
reason including, but not limited to, receiving a check which does not clear the
bank or a payment which does not arrive in proper form by settlement date. You
will be responsible for any resulting loss to the Funds. An overdraft charge may
also be applied. Cash, third party checks and checks drawn on credit card
accounts generally will not be accepted. However, exceptions may be made by
prior special arrangement with certain Financial Intermediaries.

OFFERING DATES AND TIMES

Orders must be received by the Funds prior to the following designated
times:

<TABLE>
<S> <C>
Close of the NYSE (currently 4:00 pm Eastern Time) Tax-Managed Large Cap, Tax-Managed Small
Cap and Tax Exempt Bond Funds
11:45 a.m. Eastern Time Tax Free Money Market Fund
</TABLE>

Purchases can be made on any day when Fund shares are offered. Because
Financial Intermediaries' processing time may vary, please ask your Financial
Intermediary representative when your account will be credited.

29
<PAGE>
ORDER AND PAYMENT PROCEDURES

Generally, you must place purchase orders for Fund shares through a
Financial Intermediary. You may pay for your purchase by mail or electronic
funds transfer. Initial purchases require a completed and signed Application for
each new account regardless of the investment method. Specific payment
arrangements should be made with your Financial Intermediary.

BY MAIL

For new accounts, please mail the completed Application to your Financial
Intermediary. Payment for orders may be made by check or other negotiable bank
draft and sent to the Funds' Transfer Agent. Certified checks are not necessary,
but checks are accepted subject to collection at full face value in US funds.
Third party checks will not be accepted. Checks should be made payable to "Frank
Russell Investment Company."

BY FEDERAL FUNDS WIRE

You can pay for orders by wiring federal funds to the Funds' Custodian,
State Street Bank and Trust Company. All wires must include your account
registration and account number for identification. Inability to properly
identify a wire transfer may prevent or delay timely settlement of your
purchase.

BY AUTOMATED CLEARING HOUSE ("ACH")

You can make initial or subsequent investments through ACH to the Funds'
Custodian, State Street Bank and Trust Company.

AUTOMATED INVESTMENT PROGRAM

You can make regular investments (minimum $50) in the Funds in an
established account on a monthly, quarterly, semiannual or annual basis by
automatic electronic funds transfer from a bank account. You must make a
separate transfer for each Fund in which you purchase shares. You may change the
amount or stop the automatic purchase at any time. Contact your Financial
Intermediary for further information on this program and an enrollment form.

THREE DAY SETTLEMENT PROGRAM

The Funds will accept orders at the next computed net asset value from
Financial Intermediaries to purchase shares of the Funds for settlement on the
third business day following the receipt of the order. These orders are paid for
by a federal funds wire if the Financial Intermediary has enrolled in the
program and agreed in writing to indemnify the Funds against any losses
resulting from non-receipt of payment.

30
<PAGE>
EXCHANGE PRIVILEGE

BY MAIL OR TELEPHONE

Through your Financial Intermediary, you may exchange shares of any Fund you
own for shares of any other Fund on the basis of the current net asset value per
share at the time of the exchange. Shares of a Fund offered by this Prospectus
may only be exchanged for shares of a Fund offered by FRIC through another
Prospectus under certain conditions and only in states where the exchange may be
legally made. For additional information, including Prospectuses for other
Funds, contact your Financial Intermediary.

Exchanges may be made by mail or by telephone if the registration of the two
accounts is identical. Contact your Financial Intermediary for assistance in
exchanging shares and, because Financial Intermediaries' processing time may
vary, to find out when your account will be credited or debited. To request an
exchange in writing, please follow the procedures in the "Written Instructions"
section before mailing to your Financial Intermediary.

An exchange involves the redemption of shares, which is treated as a sale
for income tax purposes. Thus, capital gain or loss may be realized. Please
consult your tax adviser for more information. The Fund shares to be acquired
will be purchased when the proceeds from the redemption become available (up to
seven days from the receipt of the request) at the next net asset value per
share calculated after the Funds received the exchange request in good order.

IN-KIND EXCHANGE OF SECURITIES

FRIMCo, in its capacity as the Funds' investment advisor, may, at its
discretion, permit you to acquire Fund shares in exchange for securities you
currently own. Any securities exchanged must: meet the investment objective,
policies and limitations of the applicable Fund, have a readily ascertainable
market value, be liquid and not be subject to restrictions on resale, and have a
market value, plus any cash, equal to at least $100,000.

Shares purchased in exchange for securities generally may not be redeemed or
exchanged for 15 days following the purchase by exchange or until the transfer
has settled, whichever comes first. If you are a taxable investor, you will
generally realize a gain or loss for federal income tax purposes on the
exchange. If you are contemplating an in-kind exchange you should consult your
tax adviser.

The price at which the exchange will take place will depend upon the
relative net asset value of the Fund shares purchased and securities exchanged.
Securities accepted by a Fund will be valued in the same way the Fund values its
assets. Any interest earned on the securities following their delivery to the
Funds and prior to the exchange will be considered in valuing the securities.
All interest, dividends, subscription or other rights attached to the securities
becomes the property of the Fund, along with the securities. Please contact your
Financial Intermediary for further information.

31
<PAGE>
HOW TO REDEEM SHARES

Shares of the Funds may be redeemed through your Financial Intermediary on
any business day the Funds are open at the next net asset value per share
calculated after the Funds' Transfer Agent receives an order in proper form
(defined in the "Written Instructions" section). Payment will ordinarily be made
within seven days after receipt of your request in proper form. Shares recently
purchased by check may not be available for redemption for 15 days following the
purchase or until the check clears, whichever occurs first, to assure payment
has been collected.

REDEMPTION DATES AND TIMES

Redemption requests must be placed through a Financial Intermediary and
received by the Funds prior to the following designated times. Because Financial
Intermediaries' processing times may vary, please ask your Financial
Intermediary representative when your account will be debited. Requests can be
made by mail or telephone on any day when Fund shares are offered, or through
the Systematic Withdrawal Program.

<TABLE>
<S> <C>
Close of the NYSE (currently 4:00 pm Eastern Time) Tax-Managed Large Cap, Tax-Managed Small
Cap and Tax Exempt Bond Funds

11:45 a.m. Eastern Time Tax Free Money Market Fund
</TABLE>

BY MAIL OR TELEPHONE

You may redeem your shares by calling or writing to your Financial
Intermediary. Written requests to sell shares are in proper form when the
instructions are signed by all registered owners, with a signature guarantee if
necessary.

SYSTEMATIC WITHDRAWAL PROGRAM

The Tax Exempt Bond and Tax Free Money Market Funds offer a systematic
withdrawal program which allows you to redeem your shares and receive regular
payments from your account on a monthly, quarterly, semiannual or annual basis.
If you would like to establish a systematic withdrawal program, please complete
the proper section of the account application and indicate how you would like to
receive your payments. You will generally receive your payment by the end of the
month in which a payment is scheduled. When you redeem your shares under a
systematic withdrawal program, it is a taxable transaction.

This program is not offered in connection with the Tax-Managed Large Cap
Fund or the Tax-Managed Small Cap Fund in view of their portfolio management
strategies.

You may choose to have the payments mailed to you or directed to your bank
account by ACH transfer. You may discontinue the systematic withdrawal program,
or change the amount and timing of withdrawal payments by contacting your
Financial Intermediary.

32
<PAGE>
ACCOUNTS IN STREET NAME

Many brokers, employee benefit plans and bank trusts combine their client's
Fund holdings in a single omnibus account with the Funds held in the brokers',
plans', or bank trusts' own name or "street name." Therefore, if you hold Fund
shares through a brokerage account, employee benefit plan or bank trust fund,
the Funds may have records only of the omnibus account. In this case, your
broker, employee benefit plan or bank is responsible for keeping track of your
account information. This means that you may not be able to request transactions
in your Fund shares directly through the Funds, but can do so only through your
broker, plan administrator or bank. Ask your Financial Intermediary for
information on whether your Fund shares are held in an omnibus account.

PAYMENT OF REDEMPTION PROCEEDS

BY CHECK

When you redeem your shares, a check for the redemption proceeds will be
sent to the shareholder(s) of record at the address of record within seven days
after the Funds receive a redemption request in proper form.

BY WIRE

If you have established the electronic redemption option, your redemption
proceeds can be wired to your predesignated bank account on the next bank
business day after the Funds receive your redemption request. The Funds may
charge a fee to cover the cost of sending a wire transfer for redemptions less
than $1,000, and your bank may charge an additional fee to receive the wire.
Wire transfers can be sent to US commercial banks that are members of the
Federal Reserve System.

WRITTEN INSTRUCTIONS

PROPER FORM: Written instructions must be in proper form. They must include:

A description of the request

The name of the Fund(s)

The class of shares, if applicable

The account number(s)

The amount of money or number of shares being purchased, exchanged,
transferred or redeemed

The name(s) on the account(s)

The signature(s) of all registered account owners

For exchanges, the name of the Fund you are exchanging into

Your daytime telephone number

33
<PAGE>
SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE

<TABLE>
<CAPTION>
ACCOUNT TYPE REQUIREMENTS FOR WRITTEN REQUESTS
<S> <C>
Individual, Joint Tenants, Tenants in Written instructions must be signed by each
Common shareholder, exactly as the names appear in the
account registration.

UGMA or UTMA (custodial accounts for Written instructions must be signed by the
minors) custodian in his/her capacity as it appears in
the account registration.

Corporation, Association Written instructions must be signed by authorized
person(s), stating his/her capacity as indicated
by the corporate resolution to act on the
account. A copy of the corporate resolution,
certified within the past 90 days, authorizing
the signer to act.

Estate, Trust, Pension, Profit Sharing Written instructions must be signed by all
Plan trustees. If the name of the trustee(s) does not
appear in the account registration, please
provide a copy of the trust document certified
within the last 60 days.

Joint tenancy shareholders whose Written instructions must by signed by the
co-tenants are deceased surviving tenant(s). A certified copy of the
death certificate must accompany the request.
</TABLE>

SIGNATURE GUARANTEE

The Funds reserve the right to require a signature guarantee under certain
circumstances. A signature guarantee verifies the authenticity of your
signature. You should be able to obtain a signature guarantee from a bank,
broker, credit union, savings association, clearing agency, or securities
exchange or association, but not a notary public. Call your financial
institution to see if it has the ability to guarantee a signature.

ACCOUNT POLICIES

THIRD PARTY TRANSACTIONS

If you purchase Fund shares as part of a program of services offered by a
Financial Intermediary, you may be required to pay additional fees. You should
contact your Financial Intermediary for information concerning what additional
fees, if any, may be charged.

REDEMPTION IN-KIND

A Fund may pay for any portion of the redemption amount in excess of
$250,000 by a distribution in-kind of securities from the Fund's portfolio,
instead of in cash. If you receive an in-kind distribution of portfolio
securities, and choose to sell them, you will incur brokerage charges and
continue to be subject to tax consequences and market risk pending any sale.

34
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand a Fund's
financial performance for the past 5 years (or, if a Fund or Class has not been
in operation for 5 years, since the beginning of operations for that Fund or
Class). Certain information reflects financial results for a single Fund share
throughout each year or period ended December 31 and for the six months ended
June 30, 1999. The total returns in the table represent how much your investment
in the Fund would have increased (or decreased) during each period, assuming
reinvestment of all dividends and distributions. This information, except the
six months ended June 30, 1999 data, has been audited by PricewaterhouseCoopers
LLP, whose report, along with the Funds' financial statements, are included in
the Funds' annual report, which is available upon request. The Fund's
Semi-Annual Report for the period ended June 30, 1999 is also available upon
request. The information in the tables represents the Financial Highlights for
each Fund's Class S Shares for the periods shown. No Class C or Class E Shares
of the Tax Exempt Bond Fund, Class C or Class S Shares of the Tax-Managed Small
Cap Fund or Class C Shares of the Tax-Managed Large Cap Fund were issued during
the periods shown.

<TABLE>
<CAPTION>
TAX-MANAGED LARGE CAP FUND--CLASS S SHARES
SIX MONTHS YEARS ENDED DECEMBER 31
ENDED ------------------------------
JUNE 30, 1999* 1998 1997 1996+
-------------- -------- -------- --------
<S> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR........................ $ 18.26 $ 13.90 $ 10.61 $ 10.00
-------- -------- -------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (d)............................... .09 .10 .08 .03
Net realized and unrealized gain (loss) on
investments........................................... 2.28 4.35 3.28 .61
-------- -------- -------- -------
Total Income From Investment Operations............... 2.37 4.45 3.36 .64
-------- -------- -------- -------
LESS DISTRIBUTIONS:
Net investment income................................... -- (.08) (.07) (.03)
Net realized gain on investments........................ -- (.01) -- --
-------- -------- -------- -------
Total Distributions................................... -- (.09) (.07) (.03)
-------- -------- -------- -------
NET ASSET VALUE, END OF YEAR.............................. $ 20.63 $ 18.26 $ 13.90 $ 10.61
======== ======== ======== =======
TOTAL RETURN (%)(A)(C).................................... 12.98 32.08 31.73 6.10
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average net assets (b)(c)... .77 .99 1.00 1.00
Operating expenses, gross, to average net assets
(b)(c)................................................ .77 .99 1.08 2.83
Net investment income to average net assets (b)(c)...... .90 .61 .92 1.62
Portfolio turnover (b).................................. 44.53 50.59 39.23 8.86
Net assets, end of year ($000 omitted).................. 455,090 305,452 109,735 19,931
</TABLE>

- --------------------------

+ For the period October 7, 1996 (commencement of operations) to December 31,
1996.

* Unaudited.

(a) Periods less than one year are not annualized.

(b) The ratios for the period October 7, 1996 (commencement of operations) to
December 31, 1996 are annualized.

(c) Fund performance, operating expenses, and net investment income are reported
net of investment management fees paid to the Manager or money managers, but
gross of any investment services fees.

(d) For the period ended December 31, 1998, average month-end shares outstanding
were used for this calculation.

35
<PAGE>

<TABLE>
<CAPTION>
TAX EXEMPT BOND FUND--CLASS S
SIX MONTHS YEARS ENDED DECEMBER 31
ENDED ----------------------------------------------------
JUNE 30, 1999* 1998 1997 1996 1995 1994
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............. $ 21.39 $ 21.19 $ 21.02 $ 21.24 $ 20.48 $ 21.45
-------- -------- ------- ------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (a).................... .41 .81 .84 .85 .81 .86
Net realized and unrealized gain (loss) on
investments................................ (.60) .19 .18 (.21) .77 (.97)
-------- -------- ------- ------- ------- -------
Total From Investment Operations........... (.19) 1.00 1.02 .64 1.58 (.11)
-------- -------- ------- ------- ------- -------
LESS DISTRIBUTIONS:
Net investment income........................ (.34) (.80) (.85) (.86) (.82) (.86)
-------- -------- ------- ------- ------- -------
Total Distributions........................ (.34) (.80) (.85) (.86) (.82) (.86)
-------- -------- ------- ------- ------- -------
NET ASSET VALUE, END OF YEAR................... $ 20.86 $ 21.39 $ 21.19 $ 21.02 $ 21.24 $ 20.48
======== ======== ======= ======= ======= =======
TOTAL RETURN (%)............................. (.93) 4.82 4.92 3.07 7.81 (0.54)
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, to average net assets.... .53 .72 .71 .75 .74 .72
Net investment income to average net
assets..................................... 3.92 3.80 3.99 4.02 3.91 4.14
Portfolio turnover (%)....................... 133.64 74.42 40.79 74.34 73.91 71.71
Net assets, end of year ($000 omitted)....... 146,674 128,959 83,076 66,344 63,838 48,975
</TABLE>

- --------------------------

* Unaudited.

(a) For the period ended December 31, 1998, average month-end shares outstanding
were used for this calculation.

36
<PAGE>

<TABLE>
<CAPTION>
TAX FREE MONEY MARKET FUND--CLASS S SHARES
SIX MONTHS YEARS ENDED DECEMBER 31
ENDED ----------------------------------------------------
JUNE 30, 1999* 1998 1997 1996 1995 1994
-------------- -------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF YEAR............ $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $1.0000 $ 1.0000
-------- -------- -------- -------- ------- --------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income....................... .0152 .0331 .0355 .0329 .0370 .0279
-------- -------- -------- -------- ------- --------
LESS DISTRIBUTIONS:
Net investment income....................... (.0152) (.0331) (.0355) (.0329) (.0370) (.0279)
-------- -------- -------- -------- ------- --------
NET ASSET VALUE, END OF YEAR.................. $ 1.0000 $ 1.0000 $ 1.0000 $ 1.0000 $1.0000 $ 1.0000
======== ======== ======== ======== ======= ========
TOTAL RETURN (%)............................ 1.53 3.36 3.61 3.35 3.76 2.83
RATIOS (%)/SUPPLEMENTAL DATA:
Operating expenses, net, to average daily
net assets................................ .29 .34 .28 .42 .48 .40
Operating expenses, gross, to average daily
net assets................................ .39 .44 .38 .42 .48 .40
Net investment income to average daily net
assets.................................... 3.06 3.29 3.55 3.28 3.69 2.84
Net assets, end of year ($000 omitted)...... 181,637 194,663 130,725 102,207 78,000 100,819
</TABLE>

- --------------------------

* Unaudited.

37
<PAGE>
MONEY MANAGER INFORMATION

The money managers have no affiliations with the Funds or the Funds' service
providers other than their management of Fund assets. Each money manager has
been in business for at least three years, and is principally engaged in
managing institutional investment accounts. These managers may also serve as
managers or advisers to other Funds in FRIC, or to other clients of Frank
Russell Company, including its wholly-owned subsidiary, Frank Russell Trust
Company.

TAX-MANAGED LARGE CAP FUND

J.P. MORGAN INVESTMENT MANAGEMENT INC., 522 Fifth Ave., 6th Floor, New York,
NY 10036.

TAX-MANAGED SMALL CAP FUND

GEEWAX, TERKER & COMPANY, 99 Starr Street, Phoenixville, PA 19460.

TAX EXEMPT BOND FUND

MFS INSTITUTIONAL ADVISORS, INC., 500 Boylston Street, Boston, MA 02116.

STANDISH, AYER & WOOD, INC., One Financial Center, Boston, MA 02111.

TAX FREE MONEY MARKET FUND

WEISS, PECK & GREER, L.L.C., One New York Plaza, 30th Floor, New York, NY
10004.

IN CONSIDERING INVESTMENT IN THE FUNDS, DO NOT RELY ON ANY INFORMATION
UNLESS IT IS CONTAINED IN THIS PROSPECTUS OR IN THE FUNDS' STATEMENT OF
ADDITIONAL INFORMATION. THE FUNDS HAVE NOT AUTHORIZED ANYONE TO ADD ANY
INFORMATION OR TO MAKE ANY ADDITIONAL STATEMENTS ABOUT THE FUNDS. THE FUNDS MAY
NOT BE AVAILABLE IN SOME JURISDICTIONS OR TO SOME PERSONS. THE FACT THAT YOU
HAVE RECEIVED THIS PROSPECTUS SHOULD NOT, IN ITSELF, BE TREATED AS AN OFFER TO
SELL FUND SHARES TO YOU. CHANGES IN THE AFFAIRS OF THE FUNDS OR IN THE FUNDS'
MONEY MANAGERS MAY OCCUR AFTER THE DATE ON THE COVER PAGE OF THIS PROSPECTUS.
THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED TO REFLECT ANY MATERIAL CHANGES
TO THE INFORMATION IT CONTAINS.

38
<PAGE>
(This page has been left blank intentionally.)
<PAGE>
(This page has been left blank intentionally.)
<PAGE>

For more information about the Funds, the following documents are available
without charge:

ANNUAL/SEMIANNUAL REPORTS: Additional information about the Funds' investments
is available in the Funds' annual and semiannual reports to shareholders. In
each Fund's annual report, you will find a discussion of the market conditions
and investment strategies that significantly affected the Fund's performance
during its last fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the Funds.

The annual report for each Fund and the SAI are incorporated into this
Prospectus by reference. You may obtain free copies of the reports and the SAI,
and may request other information, by contacting your Financial Intermediary or
the Funds at:

Frank Russell Investment Company
909 A Street
Tacoma, WA 98402
Telephone: 1-800-787-7354
Fax: 253-591-3495
Website: http://www.russell.com

You can review and copy information about the Funds (including the SAI) at the
Securities and Exchange Commission's Public Reference Room in Washington, D.C.
You can obtain information on the operation of the Public Reference Room by
calling the Commission at 1-800-SEC-0330. You can obtain copies of this
information upon paying a duplicating fee by writing to the Public Reference
Section of the Commission, Washington, D.C. 20549-6009. Reports and other
information about the Funds are also available on the Commission's Internet
website at http://www.sec.gov.

FRANK RUSSELL INVESTMENT COMPANY

Tax-Managed Large Cap Fund* - Classes C and S
Tax-Managed Small Cap Fund - Classes C and S
Tax Exempt Bond Fund - Classes C, E and S
Tax Free Money Market Fund - Class S

* Formerly the Equity T Fund
<TABLE>
<S> <C>
Distributor: Russell Fund Distributors, Inc.
SEC File No. 811-3153
[LOGO] 36-08-060 (11/99)
</TABLE>

<PAGE>

FRANK RUSSELL INVESTMENT COMPANY

[GRAPHIC]

LIFEPOINTS-Registered Trademark-FUNDS
PROSPECTUS

CLASS C, D, E AND S SHARES

EQUITY AGGRESSIVE STRATEGY FUND*
AGGRESSIVE STRATEGY FUND
BALANCED STRATEGY FUND
MODERATE STRATEGY FUND
CONSERVATIVE STRATEGY FUND

NOVEMBER 30, 1999

909 A STREET, TACOMA, WA 98402 - 800-787-7354 - 253-627-7001

As with all mutual funds, the Securities and Exchange Commission has neither
determined that the information in this prospectus is accurate or complete, nor
approved or disapproved of these securities. It is a criminal offense to state
otherwise.

[LOGO]

* Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund

<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary
Investment Objective.................................... 3
Principal Investment Strategies......................... 4
Principal Risks......................................... 5
Performance............................................. 6
Fees and Expenses....................................... 10
Summary Comparison of the Funds............................. 14
The Purpose of the Funds--Multi-Style, Multi-Manager
Diversification........................................... 16
Management of the Underlying Funds and the LifePoints
Funds..................................................... 17
The Money Managers for the Underlying Funds................. 20
Investment Objectives, Investment Strategies and Risks of
the Underlying Funds...................................... 21
Principal Risks............................................. 35
Dividends and Distributions................................. 42
Taxes....................................................... 42
How Net Asset Value Is Determined........................... 43
Distribution and Shareholder Servicing Arrangements......... 44
How to Purchase Shares...................................... 44
Exchange Privilege.......................................... 47
How to Redeem Shares........................................ 48
Payment of Redemption Proceeds.............................. 49
Written Instructions........................................ 49
Account Policies............................................ 50
Financial Highlights........................................ 51
Money Manager Information................................... 66
</TABLE>

<PAGE>
(This page has been left blank intentionally.)
<PAGE>
RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

<TABLE>
<S> <C>
EQUITY AGGRESSIVE seeks to achieve high, long-term capital appreciation, while
STRATEGY FUND* recognizing the possibility of high fluctuations in
year-to-year market values.

AGGRESSIVE STRATEGY seeks to achieve high, long-term capital appreciation with
FUND low current income, while recognizing the possibility of
substantial fluctuations in year-to-year market values.

BALANCED STRATEGY seeks to achieve a moderate level of current income and,
FUND over time, above-average capital appreciation with moderate
risk.

MODERATE STRATEGY seeks to achieve moderate long-term capital appreciation
FUND with high current income, while recognizing the possibility
of moderate fluctuations in year-to-year market values.

CONSERVATIVE seeks to achieve moderate total rate of return through low
STRATEGY FUND capital appreciation and reinvestment of a high level of
current income.
</TABLE>

* Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund.

3
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES

Each of the five Frank Russell Investment Company (FRIC) Funds described in
this Prospectus (LifePoints Fund) is a "fund of funds," and diversifies its
assets by investing, at present, in the Class S Shares of several other FRIC
Funds (Underlying Funds). Each LifePoints Fund seeks to achieve a specific
investment objective by investing in different combinations of the Underlying
Funds.

Each LifePoints Fund allocates its assets by investing in shares of a
diversified group of Underlying Funds. The Underlying Funds in which each
LifePoints Fund invests are shown in the table below and illustrated by pie
charts appearing later in this Prospectus. The LifePoints Funds intend their
strategy of investing in combinations of Underlying Funds to result in
investment diversification that an investor could otherwise achieve only by
holding numerous individual investments.

<TABLE>
<CAPTION>
EQUITY
AGRESSIVE AGRESSIVE BALANCED MODERATE CONSERVATIVE
STRATEGY STRATEGY STRATEGY STRATEGY STRATEGY
UNDERLYING FUND FUND FUND FUND FUND FUND
- --------------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C>
Diversified Equity Fund.................... 30% 21% 16% 11% 5%
Special Growth Fund........................ 10% 11% 5% 2% --
Quantitative Equity Fund................... 30% 21% 16% 11% 6%
International Securities Fund.............. 20% 19% 14% 9% 5%
Diversified Bond Fund...................... -- -- 25% 27% 18%
Multistrategy Bond Fund.................... -- 18% 16% -- --
Real Estate Securities Fund................ 5% 5% 5% 5% 5%
Emerging Markets Fund...................... 5% 5% 3% 2% 1%
Short Term Bond Fund....................... -- -- -- 33% 60%
</TABLE>

Each LifePoints Fund intends to be fully invested at all times. Although the
Funds, like all other mutual funds, maintain liquidity reserves (i.e. cash
awaiting investment or held to meet redemption requests), the Funds expose these
reserves to the performance of appropriate equity markets by investing in stock
futures contracts. This causes the Funds to perform as though their cash
reserves were actually invested in those markets. Additionally, the Funds invest
their liquidity reserves in one or more FRIC money market funds.

A LifePoints Fund can change the allocation of its assets among Underlying
Funds at any time, if the LifePoints Funds' investment adviser, Frank Russell
Investment Management Company (FRIMCo) believes that doing so would better
enable the LifePoints Fund to pursue its investment objective. From time to
time, each LifePoints Fund adjusts its investments within set limits based on
FRIMCo's outlook for the economy, financial markets generally and relative
market valuation of the asset classes represented by each Underlying Fund.
Additionally, each LifePoints Fund may deviate from set limits when, in FRIMCo's
opinion, it is necessary to do so to pursue the LifePoints Fund's investment
objective. However, The LifePoints Funds expect that amounts they allocate to
each Underlying Fund will generally vary only within 10% of the ranges specified
in the table above.

4
<PAGE>
DIVERSIFICATION

Each LifePoints Fund is a "nondiversified" investment company for purposes
of the Investment Company Act of 1940 because it invests in the securities of a
limited number of issuers (i.e., the Underlying Funds). Each of the Underlying
Funds in which the LifePoints Funds invest is a diversified investment company.

PRINCIPAL RISKS

You should consider the following factors before investing in the LifePoints
Funds:

- An investment in the LifePoints Funds, like any investment, has risks. The
value of each LifePoints Fund fluctuates, and you could lose money.

- Since the assets of each LifePoints Fund is invested primarily in shares
of the Underlying Funds, the investment performance of each LifePoints
Fund is directly related to the investment performance of the Underlying
Funds in which it invests.

- The policy of each LifePoints Fund is to allocate its assets among the
Underlying Funds within certain ranges. Therefore, the LifePoints Funds
may have less flexibility to invest than a mutual fund without such
constraints.

- A LifePoints Fund is exposed to the same risks as the Underlying Funds in
direct proportion to the allocation of its assets among the Underlying
Funds. These risks include the risks associated with a multi-manager
approach to investing, as well as those associated with investing in
equity securities, fixed income securities, and international securities.
In addition, each Lifepoints Fund and each Underlying Fund could be
adversely affected if the computer systems of its service providers or of
the issuers in which they invest fail to operate properly on or after
January 1, 2000. For further detail on the risks summarized here, please
refer to the section "Risks of the Underlying Funds".

- An investment in any of the LifePoints Funds is not a bank deposit and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.

- The officers, Trustees, and FRIMCo presently serve as officers, Trustees
and investment manager of the Underlying Funds. Therefore, conflicts may
arise as those persons and FRIMCo fulfill their fiduciary responsibilities
to the LifePoints Funds and to the Underlying Funds.

5
<PAGE>
PERFORMANCE

The following bar charts illustrate the risks of investing in the LifePoints
Funds by showing how the performance of each LifePoints Fund's Class E Shares
varies over the life of each LifePoints Fund. The highest and lowest quarterly
returns during the periods shown in the bar charts are set forth below the bar
charts.

The tables accompanying the bar charts further illustrate the risks of
investing in the LifePoints Funds by showing how each LifePoints Fund's average
annual returns for one year and since the beginning of operations of such
LifePoints Fund compare with the returns of certain indexes that measure broad
market performance. The return for the other classes of shares offered by this
Prospectus may be lower than the Class E returns shown in the bar chart,
depending upon the fees and expenses of that class. The performance information
shown does not reflect any account maintenance fee. Any such charge will reduce
your return.

No returns are shown for the Class C or Class S Shares of any LifePoints
Fund because those Shares were not issued during the periods shown. If the Rule
12b-1 distribution fees for the Class C Shares had been reflected in the returns
shown for Class E Shares, the returns would have been lower. If the shareholder
services fees, which are not imposed for Class S, had not been reflected, the
returns would have been higher. Each LifePoints Fund commenced operations of its
Class D Shares on March 24, 1998. Performance shown for Class D Shares prior to
that date is the performance of the Class E Shares, and does not reflect
deduction of the Rule 12b-1 distribution fees that apply to Class D Shares. Had
it done so, the returns shown would have been lower.

Past performance is no indication of future results.
- --------------------------------------------------------------------------------

EQUITY AGGRESSIVE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 13.75%
</TABLE>

BEST QUARTER: 4TH-1998 17.7%
WORST QUARTER: 3RD-1998 (14.0)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Equity Aggressive Strategy Fund Class
D....................................... - 1.17%
Equity Aggressive Strategy Fund Class
E....................................... 13.75% 8.69
Russell 1000-Registered Trademark-
Index**................................. 27.02 23.99
Salomon Smith Barney BMI Ex-US Index**... 17.24 6.57
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.99
Equity Aggressive Strategy Composite
Index#.................................. 17.71 13.07
----------------------------------------------------------------------
</TABLE>

----------------------------
* Commenced operations by issuing Class E Shares on September 30, 1997.

** Prior to November 1, 1999, the comparative index for the Fund was the
Salomon Smith Barney 3-Month Treasury Bill Index. The Fund believes the
Russell 1000 Index and the Salomon Smith Barney BMI Ex-US Index are
more broadly representative of the securities and strategies likely to
be employed by the Fund and provide more useful information as a
comparative basis for evaluation of the Fund's performance.

# The Equity Aggressive Strategy Composite Index is comprised of the
following indices: 60% Russell 1000 Index, 20% Salomon Smith Barney BMI
Ex-US, 10% Russell 2500-TM- Index, 5% IFC Investable Composite Index
and 5% NAREIT Equity REIT Index.
-----------------------------------------------------------------------

6
<PAGE>
- --------------------------------------------------------------------------------

AGGRESSIVE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 11.69%
</TABLE>

BEST QUARTER: 4TH-1998 14.3%
WORST QUARTER: 3RD-1998 (11.6)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Aggressive Strategy Fund Class D......... - 0.96%
Aggressive Strategy Fund Class E......... 11.69% 8.79
Russell 1000 Index**..................... 27.07 23.99
Salomon Smith Barney BMI Ex-US Index**... 17.24 6.57
Lehman Brothers Aggregate Bond Index**... 8.69 9.40
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.99
Aggressive Strategy Composite Index#..... 14.68 10.80
----------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations by issuing Class E Shares on September 16, 1997.

** Prior to November 1, 1999, the comparative index for the Fund was the
Salomon Smith Barney 3-month Treasury Bill Index. The Fund believes the
Russell 1000 Index, the Salomon Smith Barney BMI Ex-US Index and the
Lehman Brothers Aggregate Bond Index are more broadly representative of
the securities and strategies likely to be employed by the Fund and
provide more useful information as a comparative basis for evaluation
of the Fund's performance.

# The Aggressive Strategy Composite Index is comprised of the following
indices: 42% Russell 1000 Index, 19% Salomon Smith Barney BMI Ex-US,
18% Lehman Brothers Aggregate Bond Index, 11% Russell 2500-TM- Index,
5% IFC Investable Composite Index and 5% NAREIT Equity REIT Index.
-----------------------------------------------------------------------

7
<PAGE>
--------------------------------------------------------------------------

BALANCED STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 11.66%
</TABLE>

BEST QUARTER: 4TH-1998 10.5%
WORST QUARTER: 3RD-1998 (7.2)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Balanced Strategy Fund Class D........... - 3.23%
Balanced Strategy Fund Class E........... 11.66% 9.80
Lehman Brothers Aggregate Bond Index**... 8.69 9.40
Russell 1000 Index**..................... 27.07 23.99
Salomon Smith Barney BMI Ex-US Index**... 17.24 6.57
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.99
Balanced Strategy Composite Index#....... 13.72 11.23
----------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations by issuing Class E Shares on September 16, 1997.

** Prior to November 1, 1999, the comparative index for the Fund was the
Salomon Smith Barney 3-Month Treasury Bill Index. The Fund believes the
Lehman Brothers Aggregate Bond Index, the Russell 1000 Index and the
Salomon Smith Barney BMI Ex-US Index are more broadly representative of
the securities and strategies likely to be employed by the Fund and
provide more useful information as a comparative basis for evaluation
of the Fund's performance.

# The Balanced Strategy Composite Index is comprised of the following
indices: 41% Lehman Brothers Aggregate Bond Index, 32% Russell 1000
Index, 14% Salomon Smith Barney BMI Ex-US, 5% Russell 2500-TM- Index,
5% NAREIT Equity REIT Index and 3% IFC Investable Composite Index.
-----------------------------------------------------------------------

8
<PAGE>
- --------------------------------------------------------------------------------

MODERATE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 10.19%
</TABLE>

BEST QUARTER: 4TH-1998 6.8%
WORST QUARTER: 3RD-1998 (3.8)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Moderate Strategy Fund Class D........... - 3.57%
Moderate Strategy Fund Class E........... 10.19% 8.04
Merrill Lynch 1-2.99 Year Treasury
Index**................................. 7.00 6.97
Lehman Brothers Aggregate Bond Index**... 8.69 9.40
Russell 1000 Index**..................... 27.02 23.99
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.99
Moderate Strategy Composite Index#....... 11.30 9.78
----------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations by issuing Class E Shares on October 2, 1997.

** Prior to November 1, 1999, the comparative index for the Fund was the
Salomon Smith Barney 3-month Treasury Bill Index. The Fund believes the
Merrill Lynch 1-2.99 Year Treasury Index, the Lehman Brothers Aggregate
Bond Index and the Russell 1000 Index are more broadly representative
of the securities and strategies likely to be employed by the Fund and
provide more useful information as a comparative basis for evaluation
of the Fund's performance.

# The Moderate Strategy Composite Index is comprised of the following
indices: 33% Merrill Lynch 1-2.99 Year Treasury Index, 27% Lehman
Brothers Aggregate Bond Index, 22% Russell 1000 Index, 9% Salomon Smith
Barney BMI Ex-US, 5% NAREIT Equity REIT Index, 2% Russell 2500-TM-
Index and 2% IFC Investable Composite Index.
-----------------------------------------------------------------------

9
<PAGE>
- --------------------------------------------------------------------------------

CONSERVATIVE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 7.70%
</TABLE>

BEST QUARTER: 4TH-1998 3.6%
WORST QUARTER: 3RD-1998 (0.8)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Conservative Strategy Fund Class D....... - 3.77%
Conservative Strategy Fund Class E....... 7.70% 7.95
Merrill Lynch 1-2.99 Year Treasury
Index**................................. 7.00 6.81
Lehman Brothers Aggregate Bond Index**... 8.69 8.75
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.97
Revised Conservative Strategy Composite
Index#.................................. 8.72 8.09
----------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations on November 7, 1997.

** Prior to November 1, 1999, the comparative index for the Fund was the
Salomon Smith Barney 3-month Treasury Bill Index. The Fund believes the
Merrill Lynch 1-2.99 Year Treasury Index and the Lehman Brothers
Aggregate Bond Index are more broadly representative of the securities
and strategies likely to be employed by the Fund and provide more
useful information as a comparative basis for evaluation of the Fund's
performance.

# The Revised Conservative Strategy Composite Index is comprised of the
following indices: 60% Merrill Lynch 1-2.99 Year Treasury Index, 18%
Lehman Brothers Aggregate Bond Index, 11% Russell
1000-Registered Trademark- Index, 5% Salomon Smith Barney BMI Ex-US, 5%
NAREIT Equity REIT Index and 1% IFC Investable Composite Index.
-----------------------------------------------------------------------

FEES AND EXPENSES

These tables describe the fees and expenses that you may pay if you buy and
hold shares of the LifePoints Funds.

SHAREHOLDER FEES
(FEE PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
MAXIMUM SALES
MAXIMUM SALES CHARGE (LOAD) MAXIMUM
CHARGE (LOAD) MAXIMUM IMPOSED ON ACCOUNT
IMPOSED ON DEFERRED SALES REINVESTED REDEMPTION EXCHANGE MAINTENANCE
PURCHASES CHARGE (LOAD) DIVIDENDS FEES FEES FEES
--------- ------------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Each Fund (All Classes)....... None None None None None None
</TABLE>

10
<PAGE>
ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT WERE DEDUCTED FROM FUND ASSETS)
(% OF NET ASSETS)

<TABLE>
<CAPTION>
OTHER EXPENSES#
(INCLUDING
ADMINISTRATIVE TOTAL GROSS TOTAL NET
FEES AND ANNUAL FUND EXPENSE WAIVERS ANNUAL FUND
ADVISORY DISTRIBUTION SHAREHOLDER OPERATING AND OPERATING
FEE (12B-1) FEES* SERVICING FEES)** EXPENSES**+ REIMBURSEMENTS# EXPENSES
--- ------------- ----------------- ----------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
CLASS C SHARES
Equity Aggressive Strategy
Fund....................... 0.20% 0.75% 0.42% 1.37% (0.37)% 1.00%
Aggressive Strategy Fund..... 0.20% 0.75% 0.46% 1.41% (0.41)% 1.00%
Balanced Strategy Fund....... 0.20% 0.75% 0.41% 1.36% (0.36)% 1.00%
Moderate Strategy Fund....... 0.20% 0.75% 0.74% 1.69% (0.69)% 1.00%
Conservative Strategy Fund... 0.20% 0.75% 2.30% 3.25% (2.25)% 1.00%

CLASS D SHARES
Equity Aggressive Strategy
Fund....................... 0.20% 0.25% 0.42% 0.87% (0.37)% 0.50%
Aggressive Strategy Fund..... 0.20% 0.25% 0.46% 0.91% (0.41)% 0.50%
Balanced Strategy Fund....... 0.20% 0.25% 0.41% 0.86% (0.36)% 0.50%
Moderate Strategy Fund....... 0.20% 0.25% 0.74% 1.19% (0.69)% 0.50%
Conservative Strategy Fund... 0.20% 0.25% 2.30% 2.75% (2.25)% 0.50%

CLASS E SHARES
Equity Aggressive Strategy
Fund....................... 0.20% 0.00% 0.42% 0.62% (0.37)% 0.25%
Aggressive Strategy Fund..... 0.20% 0.00% 0.46% 0.66% (0.41)% 0.25%
Balanced Strategy Fund....... 0.20% 0.00% 0.41% 0.61% (0.36)% 0.25%
Moderate Strategy Fund....... 0.20% 0.00% 0.74% 0.94% (0.69)% 0.25%
Conservative Strategy Fund... 0.20% 0.00% 2.30% 2.50% (2.25)% 0.25%

CLASS S SHARES
Equity Aggressive Strategy
Fund....................... 0.20% 0.00% 0.17% 0.37% (0.37)% 0.00%
Aggressive Strategy Fund..... 0.20% 0.00% 0.21% 0.41% (0.41)% 0.00%
Balanced Strategy Fund....... 0.20% 0.00% 0.16% 0.36% (0.36)% 0.00%
Moderate Strategy Fund....... 0.20% 0.00% 0.49% 0.69% (0.69)% 0.00%
Conservative Strategy Fund... 0.20% 0.00% 2.05% 2.25% (2.25)% 0.00%
</TABLE>

- ------------------------

* Pursuant to the rules of the National Association of Securities Dealers,
Inc. ("NASD"), the aggregate initial sales charges, deferred sales charges
and asset-based sales charges on shares of the Funds may not exceed 6.25% of
total gross sales, subject to certain exclusions. This 6.25% limitation is
imposed on the Class C and Class D Shares of the Funds rather than on a per
shareholder basis. Therefore, long-term shareholders of the Class C or Class
D Shares may pay more than the economic equivalent of the maximum front-end
sales charges permitted by the NASD.

11
<PAGE>
Dividend Disbursing Agency Agreement, which became effective June 8, 1998.
Prior to December 1, 1998, FRIMCo provided advisory and administrative
services to the Funds pursuant to a single Management Agreement for which
each Fund paid a single fee. Since then, FRIMCo's advisory and
administrative services have been provided under a separate advisory
agreement and administrative agreement which provide for the fees reflected
in the table.

# FRIMCo has contractually agreed to waive, at least through November 30, 2000,
its aggregate 0.25% combined advisory and administrative fees. Certain
LifePoints Funds operating expenses will be paid by the Underlying Funds
and/or FRIMCo, as more fully described below.

+ If you purchase any class of Shares of a LifePoints Fund through a Financial
Intermediary, such as a bank or an investment adviser, may also pay
additional fees to the intermediary for services provided by the
intermediary. You should contact your financial intermediary for information
concerning what additional fees, if any, will be charged.

No Lifepoints Fund will bear any operating expenses. Those operating
expenses include those arising from accounting, custody, auditing, legal and
transfer agent services. They do not include expenses attributable to advisory
and administrative fees (which are currently waived by FRIMCo), any Rule 12b-1
distribution fee, any shareholder service fees, or any nonrecurring
extraordinary expenses, which will be borne by the LifePoints Funds or their
appropriate classes of shares.

A LifePoints Fund's operating expenses are borne either by the Underlying
Funds in which the LifePoints Fund invests or by FRIMCo. This arrangement is
governed by Special Servicing Agreements among each of the affected Funds and
FRIMCo. Those agreements are entered into on a yearly basis and must be
re-approved annually by FRIC's Board of Trustees.

Shareholders in a LifePoints Fund bear indirectly the proportionate expenses
of the Underlying Funds in which the LifePoints Fund invests. The following
table provides the expense ratios for each of the Underlying Funds in which the
LifePoints Funds may invest (based on information as of December 31, 1998). As
explained at the beginning of this Prospectus, each LifePoints Fund intends to
invest in some, but not all, of the Underlying Funds.

<TABLE>
<CAPTION>
TOTAL OPERATING
UNDERLYING FUND CLASS S EXPENSE RATIOS
- ----------------------- --------------
<S> <C>
Diversified Equity Fund..................................... .95%
Special Growth Fund......................................... 1.20%
Quantitative Equity Fund.................................... .94%
International Securities Fund............................... 1.30%
Diversified Bond Fund....................................... .59%
Short Term Bond Fund........................................ .67%
Multistrategy Bond Fund..................................... .80%
Real Estate Securities Fund................................. 1.10%
Emerging Markets Fund....................................... 1.81%
</TABLE>

12
<PAGE>
The total direct and indirect operating expense ratios of each class of
shares of each LifePoints Fund (calculated as a percentage of average net
assets) are as follows:

<TABLE>
<CAPTION>
CLASS C CLASS D CLASS E CLASS S
------- ------- ------- -------
<S> <C> <C> <C> <C>
Equity Aggressive Strategy.......................... 2.10% 1.60% 1.35% 1.10%
Aggressive Strategy................................. 2.07% 1.57% 1.32% 1.07%
Balanced Strategy................................... 1.96% 1.46% 1.21% 0.96%
Moderate Strategy................................... 1.82% 1.32% 1.07% 0.82%
Conservative Strategy............................... 1.75% 1.25% 1.00% 0.75%
</TABLE>

Each LifePoints Fund's total expense ratio is based on its total operating
expense ratio plus a weighted average of the expense ratios of the underlying
FRIC Funds in which it was invested as of December 31, 1998. These total expense
ratios may be higher or lower depending on the allocation of a LifePoints Fund's
assets among the underlying FRIC Funds and the actual expenses of the underlying
LifePoints Funds.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
LIFEPOINTS FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

The example assumes that you invest $10,000 in a LifePoints Fund for the
time periods indicated and then redeemed all of your Shares at the end of those
periods. The example also assumes that your investment has a 5% return each
year, and that operating expenses, which include the indirect expenses of the
Underlying Funds, remain the same.

Although your actual costs may be higher or lower, under these assumptions
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CLASS C: ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Aggressive Strategy Fund...................... $210 $663 $1,161 $2,641
Aggressive Strategy Fund............................. 207 652 1,144 2,603
Balanced Strategy Fund............................... 196 618 1,083 2,466
Moderate Strategy Fund............................... 182 574 1,006 2,289
Conservative Strategy Fund........................... 175 552 968 2,202
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CLASS D: ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Aggressive Strategy Fund...................... $160 $504 $ 883 $2,010
Aggressive Strategy Fund............................. 157 495 868 1,975
Balanced Strategy Fund............................... 146 460 806 1,835
Moderate Strategy Fund............................... 132 417 730 1,661
Conservative Strategy Fund........................... 125 394 691 1,574
</TABLE>

13
<PAGE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CLASS E: ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Aggressive Strategy Fund...................... $135 $426 $ 746 $1,697
Aggressive Strategy Fund............................. 132 417 730 1,661
Balanced Strategy Fund............................... 121 381 668 1,521
Moderate Strategy Fund............................... 107 337 591 1,346
Conservative Strategy Fund........................... 100 315 553 1,259
</TABLE>

<TABLE>
<CAPTION>
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CLASS S: ------ ------- ------- --------
<S> <C> <C> <C> <C>
Equity Aggressive Strategy Fund...................... $110 $348 $ 609 $1,387
Aggressive Strategy Fund............................. 107 336 589 1,340
Balanced Strategy Fund............................... 96 302 530 1,206
Moderate Strategy Fund............................... 82 259 453 1,032
Conservative Strategy Fund........................... 75 237 415 944
</TABLE>

SUMMARY COMPARISON OF THE FUNDS

The investment objectives of the LifePoints Funds are summarized below in a
chart that illustrates the degree to which each LifePoints Fund seeks to obtain
capital appreciation, income, and stability of principal:

<TABLE>
<CAPTION>
CAPITAL POSSIBILITY OF
LIFEPOINTS FUND APPRECIATION INCOME FLUCTUATION
- -------------------------------------------------- ------------ ------ -----------
<S> <C> <C> <C>
Equity Aggressive Strategy Fund................... High Low High
Aggressive Strategy Fund.......................... High Low High
Balanced Strategy Fund............................ Moderate Moderate Moderate
Moderate Strategy Fund............................ Moderate High Moderate
Conservative Strategy Fund........................ Low High Low
</TABLE>

14
<PAGE>
The allocation of each LifePoints Fund's investment in the Underlying Funds
is illustrated in the following charts:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
Diversified Equity 30%
Special Growth 10%
Quantitative Equity 30%
International Securities 20%
Emerging Markets 5%
Real Estate Securities 5%
Equity Aggressive Strategy Fund
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
Diversified Equity 21%
Special Growth 11%
Quantitative Equity 21%
International Securities 19%
Emerging Markets 5%
Real Estate Securities 5%
Multistrategy Bond 18%
Aggressive Strategy Fund
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
Diversified Equity 16%
Special Growth 5%
Quantitative Equity 16%
International
Securities 14%
Emerging Markets 3%
Real Estate Securities 5%
Diversified Bond 25%
Multistrategy Bond 16%
Balanced Strategy Fund
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
Diversified Equity 11%
Special Growth 2%
Quantitative Equity 11%
International
Securities 9%
Emerging Markets 2%
Real Estate Securities 5%
Diversified Bond 27%
Short Term Bond 33%
Moderate Strategy Fund
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
Diversified Equity 5%
Quantitative Equity 6%
International Securities 5%
Emerging Markets 1%
Real Estate Securities 5%
Diversified Bond 18%
Short Term Bond 60%
Convservative Strategy Fund
</TABLE>

15
<PAGE>
THE PURPOSE OF THE FUNDS--MULTI-STYLE, MULTI-MANAGER DIVERSIFICATION

The LifePoints Funds are offered through certain bank trust departments,
registered investment advisers, broker-dealers and other financial services
organizations that have been selected by the LifePoints Funds' adviser or
distributor (Financial Intermediaries). The LifePoints Funds offer investors the
opportunity to invest in a diversified mutual fund investment allocation program
and are designed to provide a means for investors to use FRIMCo's and Frank
Russell Company's (Russell) "multi-style, multi-manager diversification"
investment method and to obtain FRIMCo's and Russell's money manager evaluation
services.

Three functions form the core of Russell's consulting services:

- OBJECTIVE SETTING: Defining appropriate investment objectives and desired
investment returns, based on a client's unique situation and risk
tolerance.

- ASSET ALLOCATION: Allocating a client's assets among different asset
classes-- such as common stocks, fixed-income securities, international
securities, temporary cash investments and real estate--in a way most
likely to achieve the client's objectives and desired returns.

When this process is completed, a client's assets are invested using a
"multi-style, multi-manager diversification" technique. The goals of this
process are to reduce risk and to increase returns.

The LifePoints Funds believe investors should seek to hold fully diversified
portfolios that reflect both their own individual investment time horizons and
their ability to accept risk. The LifePoints Funds believe that for many, this
can be accomplished through strategically purchasing shares in one or more of
the Underlying Funds which have been structured to provide access to specific
asset classes employing a multi-style, multi-manager approach.

Capital market history shows that asset classes with greater risk will
generally outperform lower risk asset classes over time. For instance, corporate
equities, over the past 50 years, have outperformed corporate debt in absolute
terms. However, what is generally true of performance over extended periods will
not necessarily be true at any given time during a market cycle, and from time
to time asset classes with greater risk may also underperform lower risk asset
classes, on either a risk adjusted or absolute basis. Investors should select a
mix of asset classes that reflects their overall ability to withstand market
fluctuations over their investment horizons.

16
<PAGE>
The LifePoints Funds believe, however, that it is possible to select
managers who have shown a consistent ability to achieve superior results within
subsets or styles of specific asset classes and investment styles by employing a
unique combination of qualitative and quantitative measurements. The Underlying
Funds in which the LifePoints Funds invest combine these select managers with
other managers within the same asset class who employ complementary styles. By
combining complementary investment styles within an asset class, investors are
better able to reduce their exposure to the risk of any one investment style
going out of favor.

The LifePoints Funds have a greater potential than most mutual funds for
diversification among investment styles and money managers since the LifePoints
Funds invest in shares of several Underlying Funds. The LifePoints Funds were
created to provide a mutual fund investor with a simple but effective means of
structuring a diversified mutual fund investment program suited to meet the
investor's individual needs. FRIMCo has long stressed the value of
diversification in an investment program, and has offered its advisory expertise
in assisting investors on how to design their individual investment program.

MANAGEMENT OF THE UNDERLYING FUNDS
AND THE LIFEPOINTS FUNDS

The LifePoints Funds' investment adviser is FRIMCo, 909 A Street, Tacoma,
Washington 98402. FRIMCo pioneered the "multi-style, multi-manager" investment
method in mutual funds and manages over $14 billion in more than 30 mutual fund
portfolios. FRIMCo was established in 1982 to serve as the investment management
arm of Russell.

Russell, which acts as consultant to the LifePoints Funds, was founded in
1936 and has been providing comprehensive asset management consulting services
for over 30 years to institutional investors, principally large corporate
employee benefit plans. Russell provides the LifePoints Funds and FRIMCo with
the asset management consulting services that it provides to its other
consulting clients. The LifePoints Funds do not compensate Russell for these
services. Russell and its affiliates have offices around the world--in Tacoma,
New York, Toronto, London, Paris, Sydney, Auckland and Tokyo.

17
<PAGE>
Russell is a subsidiary of The Northwestern Mutual Life Insurance Company.
Founded in 1857, Northwestern Mutual is a mutual life insurance corporation
headquartered in Milwaukee, Wisconsin. It leads the US in both individual life
insurance sold annually and individual life insurance in force.

FRIMCo recommends money managers to the Underlying Funds, allocates
Underlying Fund assets among them, oversees them, and evaluates their results.
FRIMCo also oversees the management of the Underlying Funds' liquidity reserves.
The Underlying Funds' money managers select the individual portfolio securities
for the assets in the Underlying Funds assigned to them.

James A. Jornlin is responsible for the day to day decisions regarding the
investment and reinvestment of the LifePoints Funds within their target
allocation strategy percentages. Mr. Jornlin also oversees certain other funds
as described below. Mr. Jornlin has been a Senior Investment Officer of FRIMCo
since April 1995. From 1991 to March 1995, Mr. Jornlin was a Senior Research
Analyst with Russell.

FRIMCo's officers and employees who oversee the money managers of the
Underlying Funds are:

- Randall P. Lert, who has been Chief Investment Officer of FRIMCo since
June 1989.

- James M. Imhof, Manager of FRIMCo's Portfolio Trading, manages the Funds'
liquidity portfolios on a day to day basis and has been responsible for
ongoing analysis and monitoring of the money managers since 1989.

18
<PAGE>
Aggressive Strategy, Aggressive Strategy, Balanced Strategy, Moderate
Strategy and Conservative Strategy Funds and, jointly with another
portfolio manager listed in this section, has primary responsibility for
the Emerging Markets and Real Estate Securities Funds.

For its investment advisory and administrative services, FRIMCo receives an
aggregate fee from each LifePoints Fund at the annual rate of 0.25% of the
average daily net assets of each LifePoints Fund, payable to FRIMCo monthly on a
pro rata basis. FRIMCo has voluntarily agreed to waive the fee to which it is
entitled from each LifePoints Fund. Of this aggregate amount 0.05% is
attributable to administrative services. Prior to December 1, 1998, FRIMCo
provided advisory and administrative services to the LifePoints Funds pursuant
to a single Management Agreement for which each LifePoints Fund paid a single
fee. Since then, FRIMCo's advisory and administrative services are provided
under a separate advisory agreement and an administrative agreement.

In addition to the advisory fee payable by the LifePoints Funds, the
LifePoints Funds will bear indirectly a proportionate share of operating
expenses that include the advisory fees paid by the Underlying Funds in which
they invest. While a shareholder of a LifePoints Fund will also bear a
proportionate part of advisory fees paid by an Underlying Fund, each of the
advisory fees paid is based upon the services received by the respective
LifePoints Fund. From the advisory fee that it receives from each Underlying
Fund, FRIMCo pays the Underlying Fund's money managers for their investment
selection services. FRIMCo retains any remainder as compensation for the
services described above and to pay expenses. The annual rate of the advisory
fees, payable to FRIMCo monthly on a pro rata basis, are the following
percentages of the average daily net assets of each Underlying Fund: Diversified
Equity Fund 0.73%, Special Growth Fund 0.90%, Quantitative Equity Fund 0.73%,
International Securities Fund 0.90%, Diversified Bond Fund 0.40%, Short Term
Bond Fund 0.45%, Multistrategy Bond Fund 0.60%, Real Estate Securities Fund
0.80%, and Emerging Markets Fund 1.15%. The fees of the Underlying Funds, other
than the Diversified Bond, Short Term Bond, and Multistrategy Bond Funds, may be
higher than the fees charged by some mutual funds with similar objectives which
use only a single money manager.

19
<PAGE>
THE MONEY MANAGERS FOR THE UNDERLYING FUNDS

Each Underlying Fund allocates its assets among the money managers listed
under "Money Manager Information" at the end of this Prospectus. FRIMCo, as the
Underlying Funds' advisor, may change the allocation of an Underlying Fund's
assets among money managers at any time. The Underlying Funds received an
exemptive order from the Securities and Exchange Commission (SEC) that permits
an Underlying Fund to engage or terminate a money manager at any time, subject
to the approval by the Underlying Fund's Board of Trustees (Board), without a
shareholder vote. An Underlying Fund notifies its shareholders within 60 days of
when a money manager begins providing services. The Underlying Funds select
money managers based primarily upon the research and recommendations of FRIMCo
and Russell. FRIMCo and Russell evaluate quantitatively and qualitatively the
money manager's skills and results in managing assets for specific asset
classes, investment styles and strategies. Short-term investment performance, by
itself, is not a controlling factor in any Underlying Fund's selection or
termination of a money manager.

Each money manager has complete discretion to purchase and sell portfolio
securities for its segment of an Underlying Fund. At the same time, however,
each money manager must operate within the Underlying Fund's investment
objectives, restrictions and policies. Additionally, each manager must operate
within more specific constraints developed from time to time by FRIMCo. FRIMCo
develops such constraints for each manager based on FRIMCo's assessment of the
manager's expertise and investment style. By assigning more specific constraints
to each money manager, FRIMCo intends to capitalize on the strengths of each
money manager and to combine their investment activities in a complementary
fashion. Although the money managers' activities are subject to general
oversight by the Board and the Underlying Funds' officers, neither the Board,
the officers, FRIMCo, nor Russell evaluate the investment merits of the money
managers' individual security selections.

20
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT STRATEGIES
AND RISKS OF THE UNDERLYING FUNDS

The objective and principal strategies and risks of each Underlying Fund are
described in this section. Further information about the Underlying Funds is
contained in the Statement of Additional Information as well as in the
Prospectuses of the Underlying Funds. Because the LifePoints Funds invest in the
Underlying Funds, investors of the LifePoints Funds will be affected by the
Underlying Funds' investment strategies in direct proportion to the amount of
assets each LifePoints Fund allocates to the Underlying Fund pursuing such
policies. To request a copy of a Prospectus for an Underlying Fund, contact FRIC
at 800/787-7354 (in Washington, 253/627-7001).

DIVERSIFIED EQUITY FUND
- ---------------------------

<TABLE>
<S> <C>
INVESTMENT To provide income and capital growth by investing
OBJECTIVE principally in equity securities.

PRINCIPAL The Diversified Equity Fund invests primarily in common
INVESTMENT stocks of medium and large capitalization companies. These
STRATEGIES companies are predominately US-based, although the Fund may
invest a limited portion of its assets in non-US firms from
time to time.

The Fund employs a "multi-style, multi manager" approach
whereby portions of the Fund are allocated to different
money managers who employ distinct investment styles. The
Fund uses three principal investment styles, intended to
complement one another.

- GROWTH STYLE emphasizes investments in equity
securities of companies with above-average earnings
growth prospects. These companies are generally found
in the technology, health care, consumer, and service
sectors.

- VALUE STYLE emphasizes investments in equity
securities of companies that appear to be undervalued
relative to their corporate worth, based on earnings,
book or asset value, revenues, or cash flow. These
companies are generally found among industrial,
financial, and utilities sectors.

21
<PAGE>
<TABLE>
<S> <C>
Additionally, the Fund is diversified by equity substyle.
For example, within the Growth Style, the Fund expects to
employ both an Earnings Momentum substyle (concentrating on
companies with more volatile and accelerating growth rates)
and Consistent Growth substyle (concentrating on companies
with stable earnings growth over an economic cycle).

When determining how to allocate its assets among money
managers, the Fund considers a variety of factors. These
factors include a money manager's investment style and
substyle and its performance record as well as the
characteristics of the money manager's typical portfolio
investments. These characteristics include capitalization
size, growth and profitability measures, valuation ratios,
economic sector weightings, and earnings and price
volatility statistics. The Fund also considers the manner in
which money managers' historical and expected investment
returns correlate with one another.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally the Fund invests its
liquidity reserves in one or more Frank Russell Investment
Company (FRIC) money market Funds.

The Fund may lend up to one-third of its portfolio
securities to earn income. These loans may be terminated at
any time. The Fund will receive either cash or US government
debt obligations as collateral.

SPECIAL GROWTH FUND
- ------------------------

<TABLE>
<S> <C>
INVESTMENT To maximize total return primarily through capital
OBJECTIVE appreciation and assuming a higher level of volatility than
Diversified Equity Fund.

PRINCIPAL The Special Growth Fund invests primarily in common stocks
INVESTMENT of small
STRATEGIES and medium capitalization companies. These companies are
predominately
US-based, although the Fund may invest in non-US firms from
time to time.

The Fund's investments may include companies that have been
publicly traded for less than five years and smaller
companies, such as companies not listed in the Russell
2000-Registered Trademark- Index.
</TABLE>

22
<PAGE>
<TABLE>
<S> <C>
The Fund employs a "multi-style, multi manager" approach
whereby portions of the Fund are allocated to different
money managers who employ distinct investment styles. The
Fund uses three principal investment styles, intended to
complement one another:

When determining how to allocate its assets among money
managers, the Fund considers a variety of factors. These
factors include a money manager's investment style and
performance record as well as the characteristics of the
money manager's typical portfolio investments. These
characteristics include capitalization size, growth and
profitability measures, valuation ratios, economic sector
weightings, and earnings and price volatility statistics.
The Fund also considers the manner in which money managers'
historical and expected investment returns correlate with
one another.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally the Fund invests its
liquidity reserves in one or more FRIC money market Funds.
</TABLE>

23
<PAGE>
<TABLE>
<S> <C>
Up to 15% of a Fund's net assets may be "illiquid"
securities (i.e., securities that do not have a readily
available market or that are subject to resale
restrictions). Additionally, the Fund may lend up to
one-third of its portfolio securities to earn income. These
loans may be terminated at any time. The Fund will receive
either cash or US government debt obligations as collateral.

QUANTITATIVE EQUITY FUND
- -----------------------------

<TABLE>
<S> <C>
INVESTMENT To provide a total return greater than the total return of
OBJECTIVE the US stock market (as measured by the Russell
1000-Registered Trademark- Index over a market cycle of four
to six years), while maintaining volatility and
diversification similar to the Index.

PRINCIPAL The Quantitative Equity Fund invests primarily in common
INVESTMENT stocks of medium and large capitalization companies, which
STRATEGIES are predominately
US-based.

The Fund employs a multi-manager approach whereby portions
of the Fund are allocated to different money managers who
employ distinct investment styles. The Fund intends these
styles to complement one another. When determining how to
allocate its assets among money managers, the Fund considers
a variety of factors. These factors include a money
manager's investment style and performance record as well as
the characteristics of the money manager's typical portfolio
investments. These characteristics include capitalization
size, growth and profitability measures, valuation ratios,
economic sector weightings, and earnings and price
volatility statistics. The Fund also considers the manner in
which money managers' historical and expected investment
returns correlate with one another.
</TABLE>

24
<PAGE>
<TABLE>
<S> <C>
Each of the Fund's money managers use quantitative models to
rank securities based upon their expected ability to
outperform the total return of the Russell 1000 Index. Once
a money manager has ranked the securities, it then selects
the securities most likely to outperform and constructs, for
its segment of the Fund, a portfolio that has risks similar
to the Russell 1000 Index. Each money manager performs this
process independently from each other money manager.

The Russell 1000 Index consists of the 1,000 largest US
companies by capitalization (i.e., market price per share
times the number of shares outstanding). The smallest
company in the Index at the time of selection has a
capitalization of approximately $1 billion.

The Fund's money managers typically use a variety of
quantitative models, ranking securities within each model
and on a composite basis using proprietary weighting
formulas. Examples of those quantitative models are dividend
discount models, price/cash flow models, price/earnings
models, earnings surprise and earnings estimate revisions
models, and price momentum models.

Although the Fund, like any mutual fund, maintains liquidity
reserves (i.e., cash awaiting investment or held to meet
redemption requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally the Fund invests its
liquidity reserves in one or more FRIC money market Funds.

INTERNATIONAL SECURITIES FUND
- -----------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide favorable total return and additional
OBJECTIVE diversification for US investors.

PRINCIPAL The International Securities Fund invests primarily in
INVESTMENT equity securities issued by companies domiciled outside the
STRATEGIES United States and in depository receipts, which represent
ownership of securities of non-US companies.
</TABLE>

25
<PAGE>
<TABLE>
<S> <C>
The Fund's investments span most of the developed nations of
the world (particularly Europe and the Far East) to maintain
a high degree of diversification among countries and
currencies. Because international equity investment
performance has a reasonably low correlation to US equity
performance, this Fund may be appropriate for investors who
want to reduce their investment portfolio's overall
volatility by combining an investment in this Fund with
investments in US equities.

The Fund may seek to protect its investments against adverse
currency exchange rate changes by purchasing forward
currency contracts. These contracts enable the Fund to "lock
in" the US dollar price of a security that it plans to buy
or sell. The Fund may not accurately predict currency
movements.

- MARKET-ORIENTED STYLE emphasizes investments in
companies that appear to be undervalued relative to
their growth prospects. This style may encompass
elements of both the growth and value styles. These
companies may be found in any industry sector. A
variation of this style maintains investments that
replicate country and sector weightings of a broad
international market index.
</TABLE>

26
<PAGE>
<TABLE>
<S> <C>
When determining how to allocate its assets among money
managers, the Fund considers a variety of factors. These
factors include a money manager's investment style and
performance record as well as the characteristics of the
money manager's typical portfolio investments. These
characteristics include capitalization size, growth and
profitability measures, valuation ratios, economic sector
weightings, and earnings and price volatility statistics.
The Fund also considers the manner in which money managers'
historical and expected investment returns correlate with
one another.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally the Fund invests its
liquidity reserves in one or more FRIC money market Funds.

Up to 15% of the Fund's net assets may be "illiquid"
securities (i.e., securities that do not have a readily
available market or that are subject to resale
restrictions). Additionally, the Fund may lend up to
one-third of its portfolio securities to earn income. These
loans may be terminated at any time. The Fund will receive
either cash or US government debt obligations as collateral.

DIVERSIFIED BOND FUND
- -------------------------

<TABLE>
<S> <C>
INVESTMENT To provide effective diversification against equities and a
OBJECTIVE stable level of cash flow by investing in fixed-income
securities.

PRINCIPAL The Diversified Bond Fund invests primarily in investment
INVESTMENT grade fixed- income securities. In particular, the Fund
STRATEGIES holds debt securities issued or guaranteed by the US
government or, to a lesser extent by non-US governments, or
by their respective agencies and instrumentalities. It also
holds mortgage-backed securities, including collateralized
mortgage obligations. The Fund also invests in corporate
debt securities and dollar-denominated obligations issued in
the US by non-US banks and corporations (Yankee Bonds). A
majority of the Fund's holdings are US dollar denominated.
From time to time the Fund may invest in municipal debt
obligations.
</TABLE>

27
<PAGE>
<TABLE>
<S> <C>
The average weighted duration of the Fund's portfolio
typically ranges within 10% of the average weighted duration
of the Lehman Brothers Aggregate Bond Index, which was 4.5
years as of December 31, 1998, but may vary up to 25% from
the Index's duration. The Fund has no restrictions on
individual security duration.

The Fund invests in securities of issuers in a variety of
sectors of the fixed-income market. In seeking investments
that will produce cash flow, the Fund's money managers also
identify sectors of the fixed-income market that they
believe are undervalued and concentrate the Fund's
investments in those sectors. These sectors will differ over
time. To a lesser extent, the Fund may attempt to anticipate
shifts in interest rates and hold securities that the Fund
expects to perform well in relation to market indexes, as a
result of such shifts. Additionally, the Fund typically
holds proportionately fewer US Treasury obligations than are
represented in the Lehman Brothers Aggregate Bond Index.

The Fund employs multiple money managers, each with its own
expertise in the fixed-income markets. When determining how
to allocate its assets among money managers, the Fund
considers a variety of factors. These factors include a
money manager's investment style and performance record as
well as the characteristics of the money manager's typical
portfolio investments. These characteristics include
portfolio biases, magnitude of sector shifts, and duration
movements. The Fund also considers the manner in which money
managers' historical and expected investment returns
correlate with one another.

The Fund may enter into interest rate futures contracts,
options on such futures contracts, and interest rate swaps
(i.e., agreements to exchange the Fund's rights to receive
certain interest payments) as a substitute for holding
physical securities or to facilitate the implementation of
its investment strategy, but not for leverage purposes.

28
<PAGE>
SHORT TERM BOND FUND
- --------------------------

<TABLE>
<S> <C>
INVESTMENT The preservation of capital and the generation of current
OBJECTIVE income consistent with preservation of capital by investing
primarily in fixed-income securities with low-volatility
characteristics.

PRINCIPAL The Short Term Bond Fund invests primarily in fixed-income
INVESTMENT securities. In particular, the Fund holds debt securities
STRATEGIES issued or guaranteed by the US government or, to a lesser
extent by non-US governments, or by their respective
agencies and instrumentalities. It also holds
mortgage-backed securities, including collateralized
mortgage obligations. The Fund also invests in corporate
debt securities and dollar-denominated obligations issued in
the US by non-US banks and corporations (Yankee Bonds). A
majority of the Fund's holdings are US dollar denominated.
From time to time the Fund may invest in municipal debt
obligations.

The Fund may invest up to 10% of its assets in debt
securities that are rated below investment grade as
determined by one or more nationally recognized securities
rating organizations or in unrated securities judged by the
Fund to be of comparable quality.

The average weighted duration of the Fund's portfolio
typically ranges within 15% of the average weighted duration
of the Merrill Lynch 1-2.99 Years Treasury Index, but may
vary up to 50% from the Index's duration. The Fund has no
restrictions on individual security duration.

The Fund invests in securities of issuers in a variety of
sectors of the fixed-income market. The Fund's money
managers identify sectors of the fixed-income market that
they believe are undervalued and concentrate the Fund's
investments in those sectors. These sectors will differ over
time. To a lesser extent, the Fund may attempt to anticipate
shifts in interest rates and hold securities that the Fund
expects to perform well in relation to market indexes, as a
result of such shifts. Additionally, the Fund typically
holds proportionately fewer US Treasury obligations than are
represented in the Merrill Lynch 1-2.99 Years Treasury
Index.

29
<PAGE>
<TABLE>
<S> <C>
The Fund may enter into interest rate futures contracts,
options on such futures contracts, and interest rate swaps
(i.e., agreements to exchange the Fund's rights to receive
certain interest payments) as a substitute for holding
physical securities or to facilitate the implementation of
its investment strategy, but not for leverage purposes.

MULTISTRATEGY BOND FUND
- -----------------------------

<TABLE>
<S> <C>
INVESTMENT To provide maximum total return, primarily through capital
OBJECTIVE appreciation and by assuming a higher level of volatility
than is ordinarily expected from broad fixed-income market
portfolios.

PRINCIPAL The Multistrategy Bond Fund invests primarily in
INVESTMENT fixed-income securities. In particular, the Fund holds debt
STRATEGIES securities issued or guaranteed by the US government or, to
a lesser extent by non-US governments, or by their
respective agencies and instrumentalities. It also holds
mortgage-backed securities, including collateralized
mortgage obligations. The Fund also invests in corporate
debt securities and dollar-denominated obligations issued in
the US by non-US banks and corporations (Yankee Bonds). A
majority of the Fund's holdings are US dollar denominated.
From time to time the Fund may invest in municipal debt
obligations.

The Fund may invest up to 25% of its assets in debt
securities that are rated below investment grade as
determined by one or more nationally recognized securities
rating organizations or in unrated securities judged by a
Fund money manager to be of comparable quality. These
securities are commonly referred to as "junk bonds."

The average weighted duration of the Fund's portfolio
typically ranges within 10% of the average weighted duration
of the Lehman Brothers Aggregate Bond Index, which was 4.5
years as of December 31, 1998, but may vary up to 25% from
the Index's duration. The Fund has no restrictions on
individual security duration.
</TABLE>

30
<PAGE>
<TABLE>
<S> <C>
The Fund invests in securities of issuers in a variety of
sectors of the fixed-income market. The Fund's money
managers identify sectors of the fixed-income market that
they believe are undervalued and concentrate the Fund's
investments in those sectors. These sectors will differ over
time. To a lesser extent, the Fund may attempt to anticipate
shifts in interest rates and hold securities that the Fund
expects to perform well in relation to market indexes, as a
result of such shifts. Additionally, the Fund typically
holds proportionately fewer US Treasury obligations than are
represented in the Lehman Brothers Aggregate Bond Index.

REAL ESTATE SECURITIES FUND
- --------------------------------

<TABLE>
<S> <C>
INVESTMENT To generate a high level of total return through above
OBJECTIVE average current income, while maintaining the potential for
capital appreciation.

PRINCIPAL The Fund seeks to achieve its objective by concentrating its
INVESTMENT investments in equity securities of issuers whose value is
STRATEGIES derived primarily from development, management and market
pricing of underlying real estate properties.
</TABLE>

31
<PAGE>
<TABLE>
<S> <C>
The Fund invests primarily in securities of companies that
own and/or manage properties, known as real estate
investment trusts (REITs). REITs may be composed of anywhere
from two to over 1,000 properties. The Fund may also invest
in equity and debt securities of other types of real
estate-related companies. These companies are predominately
US-based, although the Fund may invest a limited portion of
its assets in non-US firms from time to time.

The Fund employs a "multi-style, multi manager" approach
whereby portions of the Fund are allocated to different
money managers who employ distinct investment styles. The
Fund intends these investment styles to complement one
another.

When determining how to allocate its assets among money
managers, the Fund considers a variety of factors. These
factors include a money manager's investment style and
performance record as well as the characteristics of the
money manager's typical portfolio investments. These
characteristics include capitalization size, growth and
profitability measures, valuation ratios, property type and
geographic weightings, and earnings and price volatility
statistics. The Fund also considers the manner in which
money managers' historical and expected investment returns
correlate with one another.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund may expose these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally, the Fund invests its
liquidity reserves in one or more FRIC money market Funds.

32
<PAGE>
EMERGING MARKETS FUND
- ----------------------------

PRINCIPAL The Emerging Markets Fund will primarily invest in equity
INVESTMENT securities of companies that are located in countries with
STRATEGIES emerging markets or that derive a majority of their revenues
from operations in such countries. These companies are
referred to as "Emerging Market Companies." For purposes of
the Fund's operations, an "emerging market" country is a
country having an economy and market that the World Bank or
the United Nations consider to be emerging or developing.
These countries generally include every country in the world
except the United States, Canada, Japan, Australia, and most
countries located in Western Europe.

The Fund seeks to maintain a broadly diversified exposure to
emerging market countries and ordinarily will invest in the
securities of issuers in at least three different emerging
market countries.

The Fund invests in common stocks of Emerging Market
Companies and in depository receipts, which represent
ownership of securities of non-US companies. The Fund may
also invest in rights, warrants and convertible fixed-income
securities. The Fund's securities are denominated primarily
in foreign currencies and may be held outside the United
States.

Some emerging markets countries do not permit foreigners to
participate directly in their securities markets or
otherwise present difficulties for efficient foreign
investment. Therefore, when it believes it is appropriate to
do so, the Fund may invest in pooled investment vehicles,
such as other investment companies, which enjoy broader or
more efficient access to shares of Emerging Market Companies
in certain countries but may include a further layering of
expenses.
</TABLE>

33
<PAGE>
<TABLE>
<S> <C>
The Fund employs a multi-manager approach whereby portions
of the Fund are allocated to different money managers who
employ distinct investment styles. The Fund intends these
styles to complement one another. When determining how to
allocate its assets among money managers, the Fund considers
a variety of factors. These factors include a money
manager's investment style and performance record as well as
the characteristics of the money manager's typical portfolio
investments (e.g., capitalization size, growth and
profitability measures, valuation ratios, economic sector
weightings, and earnings and price volatility statistics).
The Fund also considers the manner in which money managers'
historical and expected investment returns correlate with
one another.

The Fund may enter into repurchase agreements. Under those
agreements a bank or broker dealer sells securities to the
Fund, and agrees to repurchase the securities at the Fund's
cost plus interest, ordinarily on the next business day.

The Fund may agree to purchase securities for a fixed price
at a future date beyond customary settlement time. This kind
of agreement is known as a "forward commitment" or as a
"when-issued" transaction.

Up to 15% of the Fund's net assets may be "illiquid"
securities (i.e., securities that do not have a readily
available market or that are subject to resale
restrictions). Additionally, the Fund may lend up to
one-third of its portfolio securities to earn income. These
loans may be terminated at any time. A Fund will receive
either cash or US government debt obligations as collateral.

Because international equity investment performance has a
reasonably low correlation to US equity performance, this
Fund may be appropriate for investors who want to reduce
their investment portfolio's overall volatility by combining
an investment in this Fund with investments in US equities.
</TABLE>

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<PAGE>
PRINCIPAL RISKS

The following table describes principal types of risks the LifePoints Funds
are subject to, based on the investments made by the Underlying Funds, and lists
next to each description the Underlying and LifePoints Funds most likely to be
affected by the risk. Other Underlying and LifePoints Funds that are not listed
may be subject to one or more of the risks, based on the allocation of assets
among the Underlying Funds, but will not do so in a way that is expected to
principally affect the performance of the LifePoints or Underlying Fund as a
whole. Please refer to the LifePoints Funds' Statement of Additional Information
for a discussion of risks associated with types of securities held by the Funds
and investment practices employed.

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
MULTI-MANAGER The investment styles employed by a Fund's money All Funds
APPROACH managers may not be complementary. The interplay
of the various strategies employed by a Fund's (UNDERLYING FUNDS:
multiple money managers may result in the Fund's ALL FUNDS)
holding a concentration of certain types of
securities. This concentration may be beneficial
or detrimental to the Fund's performance
depending upon the performance of those
securities and the overall economic environment.
The multiple manager approach could result in a
high level of portfolio turnover, resulting in
higher Fund brokerage expenses and increased tax
liability from the Fund's realization of capital
gains.

EQUITY SECURITIES The value of equity securities will rise and fall Equity Aggressive
in response to the activities of the company that Strategy
issued the stock, general market conditions, Aggressive Strategy
and/or economic conditions. Balanced Strategy
Moderate Strategy
(UNDERLYING FUNDS:
DIVERSIFIED EQUITY
SPECIAL GROWTH
QUANTITATIVE EQUITY
INTERNATIONAL SECURITIES
REAL ESTATE SECURITIES
EMERGING MARKETS)
</TABLE>

35
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
- -Value Stocks Investments in value stocks are subject to risks Equity Aggressive
that (i) their intrinsic values may never be Strategy
realized by the market or (ii) such stock may Aggressive Strategy
turn out not to have been undervalued. Balanced Strategy
Moderate Strategy
(UNDERLYING FUNDS:
DIVERSIFIED EQUITY
SPECIAL GROWTH
QUANTITATIVE EQUITY
INTERNATIONAL SECURITIES)

- -Growth Stocks Growth company stocks may provide minimal Equity Aggressive
dividends that can cushion stock prices in a Strategy
market decline. The value of growth company Aggressive Strategy
stocks may rise and fall dramatically based, in Balanced Strategy
part, on investors' perceptions of the company Moderate Strategy
rather than on fundamental analysis of the
stocks. (UNDERLYING FUNDS:
DIVERSIFIED EQUITY
SPECIAL GROWTH
INTERNATIONAL SECURITIES)

- -Market-Oriented Market-oriented investments are generally subject Equity Aggressive
Investments to the risks associated with growth and value Strategy
stocks. Aggressive Strategy
Balanced Strategy
Moderate Strategy
(UNDERLYING FUNDS:
DIVERSIFIED EQUITY
SPECIAL GROWTH
QUANTITATIVE EQUITY
INTERNATIONAL SECURITIES)
</TABLE>

36
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
- -Securities of small Investments in smaller companies may involve Equity Aggressive
capitalization greater risks because these companies generally Strategy
companies have a limited track record. Smaller companies Aggressive Strategy
often have narrower markets and more limited Balanced Strategy
managerial and financial resources than larger, Moderate Strategy
more established companies. As a result, their
performance can be more volatile, which could (UNDERLYING FUND:
increase the volatility of a Fund's portfolio. SPECIAL GROWTH)

FIXED-INCOME Prices of fixed-income securities rise and fall Balanced Strategy
SECURITIES in response to interest rate changes. Generally, Moderate Strategy
when interest rates rise, prices of fixed-income Conservative Strategy
securities fall. The longer the duration of the
security, the more sensitive the security is to (UNDERLYING FUNDS:
this risk. A 1% increase in interest rates would DIVERSIFIED BOND
reduce the value of a $100 note by approximately MULTISTRATEGY BOND
one dollar if it had a one year duration, but SHORT TERM BOND)
would reduce its value by approximately fifteen
dollars if it had a 15 year duration. There is
also a risk that one or more of the securities
will be downgraded in credit rating or go into
default. Lower-rated bonds generally have higher
credit risks.

- -Non-investment grade Although lower rated debt securities generally Aggressive Strategy
fixed-income offer a higher yield than higher rated debt Balanced Strategy
securities securities, they involve higher risks. They are
especially subject to: (UNDERLYING FUNDS:
-adverse changes in general economic conditions MULTISTRATEGY BOND
and in the industries in which their issuers are SHORT TERM BOND)
engaged,
-changes in the financial condition of their
issuers, and
-price fluctuations in response to changes in
interest rates.
As a result, issuers of lower rated debt
securities are more likely than other issuers to
miss principal and interest payments or to
default which could result in a loss to a Fund.
</TABLE>

37
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
INTERNATIONAL A Fund's return and net asset value may be Equity Aggressive
SECURITIES significantly affected by political or economic Strategy
conditions and regulatory requirements in a Aggressive Strategy
particular country. Foreign markets, economies Balanced Strategy
and political systems may be less stable than US
markets, and changes in exchange rates of foreign (UNDERLYING FUNDS:
currencies can affect the value of a Fund's INTERNATIONAL SECURITIES
foreign assets. Foreign laws and accounting MULTISTRATEGY BOND
standards typically are not as strict as they are EMERGING MARKETS
in the US and there may be less public SHORT TERM BOND)
information available about foreign companies. A
Fund's foreign debt securities are typically
obligations of sovereign governments. These
securities are particularly subject to a risk of
default from political instability. Foreign
securities markets may be less liquid and have
fewer transactions than US securities markets.
Additionally, international markets may
experience delays and disruptions in securities
settlement procedures for a Fund's portfolio
securities.

- -Non-U.S. debt A Fund's foreign debt securities are typically Aggressive Strategy
securities obligations of sovereign governments. These Balanced Strategy
securities are particularly subject to a risk of
default from political instability. (UNDERLYING FUNDS:
MULTISTRATEGY BOND
SHORT TERM BOND)

- -Emerging market Investments in emerging or developing markets (UNDERLYING FUND:
countries involve exposure to economic structures that are EMERGING MARKETS)
generally less diverse and mature, and to
political systems which have less stability than
those of more developed countries. Emerging
market securities are subject to currency
transfer restrictions and may experience delays
and disruptions in securities settlement
procedures for the Fund's portfolio securities.
</TABLE>

38
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
- -Instruments of US Non-US corporations and banks issuing dollar Balanced Strategy
and foreign banks denominated instruments in the US are not Moderate Strategy
and branches and necessarily subject to the same regulatory Conservative Strategy
foreign requirements that apply to US corporations and
corporations, banks, such as accounting, auditing and (UNDERLYING FUNDS:
including Yankee recordkeeping standards, the public availability DIVERSIFIED BOND
Bonds of information and, for banks, reserve MULTISTRATEGY BOND
requirements, loan limitations, and examinations. SHORT TERM BOND)
This increases the possibility that a non-US
corporation or bank may become insolvent or
otherwise unable to fulfill its obligations on
these instruments.

DERIVATIVES (E.G. If a Fund incorrectly forecasts interest rates in Balanced Strategy
FUTURES CONTRACTS, using derivatives, the Fund could lose money. Moderate Strategy
OPTIONS ON FUTURES, Price movements of a futures contract, option or Conservative Strategy
INTEREST RATE SWAPS) structured note may not be identical to price
movements of portfolio securities or a securities (UNDERLYING FUNDS:
index resulting in the risk that, when a Fund DIVERSIFIED BOND
buys a futures contract or option as a hedge, the MULTISTRATEGY BOND
hedge may not be completely effective. SHORT TERM BOND)

REAL ESTATE Just as real estate values go up and down, (UNDERLYING FUND:
SECURITIES companies involved in the industry, and in which REAL ESTATE SECURITIES)
a Fund invests, also fluctuate. Such a Fund is
subject to the risks associated with direct
ownership of real estate. Additional risks
include declines in the value of real estate,
changes in general and local economic conditions,
increases in property taxes and changes in tax
laws and interest rates. The value of securities
of companies that service the real estate
industry may also be affected by such risks.

- -REITs REITs may be affected by changes in the value of (UNDERLYING FUND:
the underlying properties owned by the REITs and REAL ESTATE SECURITIES)
by the quality of any credit extended. Moreover,
the underlying portfolios of REITs may not be
diversified, and therefore are subject to the
risk of financing a single or a limited number of
projects. REITs are also dependent upon
management skills and are subject to heavy cash
flow dependency, defaults by borrowers,
self-liquidation and the possibility of failing
either to qualify for tax-free pass through of
income under federal tax laws or to maintain
their exemption from certain Federal securities
laws.
</TABLE>

39
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
MUNICIPAL OBLIGATIONS Municipal obligations are affected by economic, Balanced Strategy
business or political developments. These Moderate Strategy
securities may be subject to provisions of Conservative Strategy
litigation, bankruptcy and other laws affecting
the rights and remedies of creditors, or may (UNDERLYING FUNDS:
become subject to future laws extending the time DIVERSIFIED BOND
for payment of principal and/or interest, or MULTISTRATEGY BOND
limiting the rights of municipalities to levy SHORT TERM BOND)
taxes.

EXPOSING LIQUIDITY By exposing its liquidity reserves to the equity All Funds
RESERVES TO EQUITY market principally by use of equity futures, a
MARKETS Fund's performance tends to correlate more (UNDERLYING FUNDS:
closely to the performance of the market as a DIVERSIFIED EQUITY
whole. Although this increases a Fund's SPECIAL GROWTH
performance if equity markets rise, it reduces a QUANTITATIVE EQUITY
Fund's performance if equity markets decline. INTERNATIONAL SECURITIES
REAL ESTATE SECURITIES)

SECURITIES LENDING If a borrower of a Fund's securities fails (UNDERLYING FUNDS:
financially, the Fund's recovery of the loaned ALL FUNDS)
securities may be delayed or the Fund may lose
its rights to the collateral which could result
in a loss to a Fund.

YEAR 2000

- -Year 2000 and Fund The Funds' operations depend on the smooth All LifePoints Funds
operations functioning of their service providers' computer
systems. The Funds and their shareholders could (UNDERLYING FUNDS:
be adversely affected if those computer systems ALL FUNDS)
do not properly process and calculate
date-related information on or after January 1,
2000. Many computer software systems in use today
cannot distinguish between the year 2000 and the
year 1900. Although year 2000-related computer
problems could have a negative effect on the
Funds and their shareholders, the Funds' service
providers have advised the Funds that they are
working to avoid such problems. Because it is the
obligation of those service providers to ensure
the proper functioning of their computer systems,
the Funds do not expect to incur any material
expense in connection with year 2000
preparations.
</TABLE>

40
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
- -Year 2000 and Fund The Funds and their shareholders could be All Funds
portfolio adversely affected if the computer systems of the
investments issuers in which the Funds invest or those of the (UNDERLYING FUNDS:
service providers they depend upon, do not ALL FUNDS)
properly process and calculate date-related
information on or after January 1, 2000. If such
an event occurred, the value of those issuer's
securities could be reduced.

- -Year 2000 and Fund A Fund that invests significantly in non-US All Funds
portfolio issuers may be exposed to a higher degree of risk
investments in from Year 2000 issues than other Funds. It is (UNDERLYING FUNDS:
non-U.S. issuers generally believed that non-US governments and INTERNATIONAL SECURITIES,
issuers are less prepared for Year 2000 related EMERGING MARKETS)
contingencies than the US government and US-based
issuers, which could result in a more significant
diminution in value of non-US issuer's securities
on or after January 1, 2000.
</TABLE>

41
<PAGE>
DIVIDENDS AND DISTRIBUTIONS

INCOME DIVIDENDS

Each LifePoints Fund distributes substantially all of its net investment
income and net capital gains to shareholders each year. The amount and frequency
of distributions are not guaranteed--all distributions are at the Board's
discretion. Currently, the Board intends to declare dividends from net
investment income and net short-term capital gains, if any, for each LifePoints
Fund on a quarterly basis, with payment being made in April, July, October and
December.

CAPITAL GAINS DISTRIBUTIONS

The Board annually intends to declare capital gains distributions through
October 31 (excess of capital gains over capital losses), generally in
mid-December. To meet certain legal requirements, a LifePoints Fund may declare
a special year-end dividend and capital gains distributions during October,
November or December to shareholders of record in that month. These latter
distributions are deemed to have been paid by a LifePoints Fund and received by
you on December 31 of the prior year, provided that the LifePoints Fund pays
them by January 31. Capital gains realized during November and December will be
distributed to you generally during February of the following year.

In addition, the LifePoints Funds receive capital gains distributions from
the Underlying Funds. Consequently, capital gains distributions may be expected
to vary considerably from year to year. Also, the LifePoints Funds may generate
capital gains through rebalancing the portfolios to meet the LifePoints Funds'
allocation percentages.

BUYING A DIVIDEND

If you purchase shares just before a distribution, you will pay the full
price for the shares and receive a portion of the purchase price back as a
taxable distribution. This is called "buying a dividend." Unless your account is
a tax-deferred account, dividends paid to you would be included in your gross
income for tax purposes even though you may not have participated in the
increase of the net asset value of a LifePoints Fund, regardless of whether you
reinvested the dividends.

AUTOMATIC REINVESTMENT

Your dividends and other distributions are automatically reinvested at the
closing net asset value on the record date, in additional shares of the
appropriate LifePoints Fund, unless you elect to have the dividends or
distributions paid in cash or invested in another Fund. You may change your
election by delivering written notice no later than ten days prior to the
payment date to the LifePoints Funds' Transfer Agent, at Operations Department,
P.O. Box 1591, Tacoma, WA 98401.

TAXES

In general, distributions from a LifePoints Fund are taxable to you as
either ordinary income or capital gains. This is true whether you reinvest your
distributions in additional shares of the LifePoints Fund or receive them in
cash. Any long-term capital gains distributed by a LifePoints Fund are taxable

42
<PAGE>
to you as long-term capital gains no matter how long you have owned your shares.
Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
Distributions taxed as capital gains may be taxable at different rates depending
on how long a LifePoints Fund holds its assets.

When you sell or exchange your shares of a LifePoints Fund, you may have a
capital gain or loss. The tax rate on any gain from the sale or exchange of your
shares depends on how long you have held your shares.

LifePoints Fund distributions and gains from the sale or exchange of your
shares will generally be subject to state and local income tax. Non-US investors
may be subject to US withholding and estate tax. You should consult your tax
professional about federal, state, local or foreign tax consequences in holding
shares of a LifePoints Fund.

Any foreign taxes paid by an Underlying Fund on its investments may be
passed through to its shareholders as foreign tax credits.

By law, a LifePoints Fund must withhold 31% of your distributions and
proceeds if you do not provide your correct taxpayer identification number, or
certify that such number is correct, or if the IRS instructs the LifePoints Fund
to do so.

Additional information on these and other tax matters relating to the
LifePoints Funds and their shareholders is included in the section entitled
"Taxes" in the SAI.

HOW NET ASSET VALUE IS DETERMINED

NET ASSET VALUE PER SHARE

The net asset value per share is calculated for shares of each Class of each
LifePoints Fund on each business day on which shares are offered or redemption
orders are tendered. For all LifePoints Funds, a business day is one on which
the New York Stock Exchange (NYSE) is open for trading. The NYSE is not open on
national holidays. All Underlying Funds and LifePoints Funds determine net asset
value as of the close of the NYSE (currently 4:00 p.m. Eastern Time). The
determination is made by appraising each LifePoints Fund's underlying
investments on each business day (i.e., the Underlying Funds at the current net
asset value per share of such Underlying Fund).

VALUATION OF PORTFOLIO SECURITIES

43
<PAGE>
readily available at "fair value," as determined in good faith and in accordance
with procedures established by the Board. If you hold shares in a LifePoints
Fund that invests in an Underlying Fund, such as the International Securities
Fund, that holds portfolio securities listed primarily on foreign exchanges, the
net asset value of both that Underlying Fund's and that LifePoints Fund's shares
may change on a day when you will not be able to purchase or redeem LifePoints
Fund shares. This is because the value of those portfolio securities may change
on weekends or other days when the LifePoints Fund does not price its shares.

DISTRIBUTION AND SHAREHOLDER
SERVICING ARRANGEMENTS

The LifePoints Funds offer multiple classes of shares: Class C Shares, Class
D Shares, Class E Shares and Class S Shares.

CLASS C SHARES participate in the Funds' Rule 12b-1 distribution plan
and in the LifePoints Funds' shareholder servicing plan. Under distribution
plan, Class C Shares pay distribution fees of 0.75% annually for the sale
and distribution of Class C Shares. Under the shareholder servicing plan,
the Class C Shares pay shareholder servicing fees of 0.25% annually for
services provided to Class C shareholders. Because both of these fees are
paid out of the Class C Share assets on an ongoing basis, over time these
fees will increase the cost of a Class C Share investment in the LifePoints
Funds, and the distribution fee may cost an investor more than paying other
types of sales charges.

CLASS D SHARES participate in the Funds' Rule 12b-1 distribution plan
and in the LifePoints Funds' shareholder servicing plan. Under distribution
plan, the Class D shares pay distribution fees of 0.25% annually for the
sale and distribution of Class D Shares. Under the shareholder servicing
plan, the Class D Shares pay shareholder servicing fees of 0.25% annually
for services provided to Class D shareholders. Because both of these fees
are paid out of the Class D Share assets on an ongoing basis, over time
these fees will increase the cost of a Class D share investment in the
LifePoints Funds, and the distribution fee may cost an investor more than
paying other types of sales charges.

CLASS E SHARES participate in the Funds' shareholder servicing plan.
Under the shareholder servicing plan, the Class E Shares pay daily fees
equal to 0.25% on an annualized basis for services provided to Class E
shareholders. The shareholder servicing fees are paid out of the Class E
Share assets on an ongoing basis, and over time will increase the cost of
your investment in the LifePoints Funds.

CLASS S SHARES do not participate in either the Funds' distribution plan
or the Funds' shareholder services plan.

HOW TO PURCHASE SHARES

LifePoints Funds are generally available only through a select network of
qualified Financial Intermediaries. If you are not currently working with one of
these Financial Intermediaries, please call

44
<PAGE>
Russell Investor Services at (800) RUSSEL4, (800-787-7354) for assistance in
contacting an investment professional near you.

There is no minimum investment in Class C, Class E or Class S Shares of the
LifePoints Funds. The initial minimum aggregate investment in the Class D Shares
of any combination of the LifePoints Funds is $5 million. FRIMCo, on behalf of
each LifePoints Fund, reserves the right to change, as to any LifePoints Fund or
any class thereof, the categories of investors eligible to purchase shares of
that LifePoints Fund or class. You may be eligible to purchase shares of the
Class D Shares of the LifePoints Funds if you do not meet the required initial
minimum investment. FRIMCo at its discretion may waive the initial minimum
investment for some employee benefit plans and other plans or if the
requirements are met for a combined purchase privilege, cumulative quantity
discount or statement of intention. You should consult your Financial
Intermediary for details. Trustees, officers, employees, and certain third-party
contractors of FRIC and its affiliates and their spouses and children are not
subject to any initial minimum investment requirement.

Financial Intermediaries may charge their customers a fee for providing
investment-related services. Financial Intermediaries that maintain omnibus
accounts with the Funds may receive administrative fees from the Funds or their
transfer agent. Financial Intermediaries may receive shareholder servicing
compensation with respect to Class C, Class D and Class E Shares of the Funds,
and may receive distribution compensation with respect to Class C and Class D
shares.

PAYING FOR SHARES

You may purchase shares of the LifePoints Funds through a Financial
Intermediary on any business day the Funds are open. Purchase orders are
processed at the next net asset value per share calculated after the LifePoints
Funds' receive your order in proper form (defined in the "Written Instructions"
section), and accept the order.

All purchases must be made in US dollars. Checks and other negotiable bank
drafts must be drawn on US banks and made payable to "Frank Russell Investment
Company." The LifePoints Funds reserve the right to reject any purchase order
for any reason including, but not limited to, receiving a check which does not
clear the bank or a payment which does not arrive in proper form by settlement
date. You will be responsible for any resulting loss to the Funds. An overdraft
charge may also be applied. Cash, third party checks and checks drawn on credit
card accounts generally will not be accepted. However, exceptions may be made by
prior special arrangement with certain Financial Intermediaries.

OFFERING DATES AND TIMES

Orders must be received by the LifePoints Funds prior to the close of the
NYSE (currently 4:00 p.m. Eastern Time). Purchases can be made on any day when
LifePoints Fund shares are offered. Because Financial Intermediaries' processing
time may vary, please ask your Financial Intermediary representative when your
account will be credited.

45
<PAGE>
ORDER AND PAYMENT PROCEDURES

Generally, you must place purchase orders for LifePoints Fund shares through
a Financial Intermediary. You may pay for your purchase by mail or electronic
funds transfer. Initial purchases require a completed and signed Application for
each new account regardless of the investment method. Specific payment
arrangements should be made with your Financial Intermediary.

BY MAIL

For new accounts, please mail the completed Application to your Financial
Intermediary. Payment for orders may be made by check or other negotiable bank
draft and sent to the LifePoints Funds' Transfer Agent. Certified checks are not
necessary, but checks are accepted subject to collection at full face value in
US funds. Third party checks will not be accepted. Checks should be made payable
to "Frank Russell Investment Company."

BY FEDERAL FUNDS WIRE

You can pay for orders by wiring federal funds to the LifePoints Funds'
Custodian, State Street Bank and Trust Company. All wires must include your
account registration and account number for identification. Inability to
properly identify a wire transfer may prevent or delay timely settlement of your
purchase.

BY AUTOMATED CLEARING HOUSE ("ACH")

You can make initial or subsequent investments through ACH to the Funds'
Custodian, State Street Bank and Trust Company.

AUTOMATED INVESTMENT PROGRAM

You can make regular investments (minimum $50) in LifePoints Funds in an
established account on a monthly, quarterly, semiannual or annual basis by
automatic electronic funds transfer from a bank account. You must make a
separate transfer for each LifePoints Fund in which you purchase shares. You may
change the amount or stop the automatic purchase at any time. Contact your
Financial Intermediary for further information on this program and an enrollment
form.

THREE DAY SETTLEMENT PROGRAM

The LifePoints Funds will accept orders at the next computed net asset value
through Financial Intermediaries to purchase shares of the LifePoints Funds for
settlement on the third business day following the receipt of the order. These
orders are paid for by a federal funds wire if the Financial Intermediary has
enrolled in the program and agreed in writing to indemnify the LifePoints Funds
against any losses resulting from non-receipt of payment.

46
<PAGE>
EXCHANGE PRIVILEGE

BY MAIL OR TELEPHONE

Through your Financial Intermediary, you may exchange Class C, Class D,
Class E or Class S Shares of any LifePoints Fund you own for shares of any other
LifePoints Fund offered by this Prospectus on the basis of the current net asset
value per share at the time of the exchange. Shares of a LifePoints Fund offered
by this Prospectus may only be exchanged for shares of a Fund offered by FRIC
through another Prospectus under certain conditions and only in states where the
exchange may be legally made. For additional information, including Prospectuses
for other Funds, contact your Financial Intermediary.

An exchange involves the redemption of shares, which is treated as a sale
for income tax purposes. Thus, capital gain or loss may be realized. Please
consult your tax adviser for more information. The LifePoints Fund shares to be
acquired will be purchased when the proceeds from the redemption become
available (up to seven days from the receipt of the request) at the next net
asset value per share calculated after the Funds received the exchange request
in good order.

IN-KIND EXCHANGE OF SECURITIES

FRIMCo, in its capacity as the LifePoints Funds' investment advisor, may, at
its discretion, permit you to acquire LifePoints Fund shares in exchange for
securities you currently own. Any securities exchanged must: meet the investment
objective, policies and limitations of the applicable LifePoints Fund, have a
readily ascertainable market value, be liquid and not be subject to restrictions
on resale, and have a market value, plus any cash, equal to at least $100,000.

The price at which the exchange will take place will depend upon the
relative net asset value of the LifePoints Fund shares purchased and securities
exchanged. Securities accepted by a LifePoints Fund will be valued in the same
way the LifePoints Fund values its assets. Any interest earned on the securities
following their delivery to the LifePoints Funds and prior to the exchange will
be considered in valuing the securities. All interest, dividends, subscription
or other rights attached to the securities becomes the property of the
LifePoints Fund, along with the securities. Please contact your Financial
Intermediary for further information.

47
<PAGE>
HOW TO REDEEM SHARES

Shares of the LifePoints Funds may be redeemed through your Financial
Intermediary on any business day the LifePoints Funds are open at the next net
asset value per share calculated after the Funds' Transfer Agent receives an
order in proper form (defined in the "Written Instructions" section). Payment
will ordinarily be made within seven days after receipt of your request in
proper form. Shares recently purchased by check may not be available for
redemption for 15 days following the purchase or until the check clears,
whichever occurs first, to assure payment has been collected.

REDEMPTION DATES AND TIMES

Redemption requests must be placed through a Financial Intermediary and
received by the LifePoints Funds prior to the close of the NYSE (currently 4:00
p.m. Eastern Time). Because Financial Intermediaries' processing times may vary,
please ask your Financial Intermediary representative when your account will be
debited. Requests can be made by mail or telephone on any day when LifePoints
Fund shares are offered, or through the Systematic Withdrawal Program.

BY MAIL OR TELEPHONE

SYSTEMATIC WITHDRAWAL PROGRAM

The LifePoints Funds offer a systematic withdrawal program which allows you
to redeem your shares and receive regular payments from your account on a
monthly, quarterly, semiannual or annual basis. If you would like to establish a
systematic withdrawal program, please complete the proper section of the account
application and indicate how you would like to receive your payments. You will
generally receive your payment by the end of the month in which a payment is
scheduled. When you redeem your shares under a systematic withdrawal program, it
is a taxable transaction.

ACCOUNTS IN STREET NAME

Many brokers, employee benefit plans and bank trusts combine their client's
holdings in a single omnibus account held in the brokers', plans', or bank
trusts' own name or "street name." Therefore, if you hold LifePoints Fund shares
through a brokerage account, employee benefit plan or bank trust fund, the
LifePoints Funds may have records only of the omnibus account. In this case,
your broker, employee benefit plan or bank is responsible for keeping track of
your account information. This means that you may not be able to request
transactions in your LifePoints Fund shares directly through the Funds, but can
do so only through your broker, plan administrator or bank. Ask your Financial
Intermediary for information on whether your LifePoints Fund shares are held in
an omnibus account.

48
<PAGE>
PAYMENT OF REDEMPTION PROCEEDS

BY CHECK

When you redeem your shares, a check for the redemption proceeds will be
sent to the shareholder(s) of record at the address of record within seven days
after the LifePoints Funds receive a redemption request in proper form.

BY WIRE

If you have established the electronic redemption option, your redemption
proceeds can be wired to your predesignated bank account on the next bank
business day after the LifePoints Funds receive your redemption request. The
LifePoints Funds may charge a fee to cover the cost of sending a wire transfer
for redemptions less than $1,000, and your bank may charge an additional fee to
receive the wire. Wire transfers can be sent to US commercial banks that are
members of the Federal Reserve System.

WRITTEN INSTRUCTIONS

PROPER FORM: Written instructions must be in proper form. They must include:

A description of the request

The name of the Fund(s)

The class of shares, if applicable

The account number(s)

The amount of money or number of shares being purchased, exchanged,
transferred or redeemed

The name(s) on the account(s)

The signature(s) of all registered account owners

For exchanges, the name of the Fund you are exchanging into

Your daytime telephone number

49
<PAGE>
SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE

UGMA or UTMA (custodial accounts for Written instructions must be signed by the
minors) custodian in his/her capacity as it appears in
the account registration.

Joint tenancy shareholders whose Written instructions must by signed by the
co-tenants are deceased surviving tenant(s). A certified copy of the
death certificate must accompany the request.
</TABLE>

SIGNATURE GUARANTEE

The LifePoints Funds reserve the right to require a signature guarantee
under certain circumstances. A signature guarantee verifies the authenticity of
your signature. You should be able to obtain a signature guarantee from a bank,
broker, credit union, savings association, clearing agency, or securities
exchange or association, but not a notary public. Call your financial
institution to see if it has the ability to guarantee a signature.

ACCOUNT POLICIES

THIRD PARTY TRANSACTIONS

If you purchase LifePoints Fund shares as part of a program of services
offered by a Financial Intermediary, you may be required to pay additional fees.
You should contact your Financial Intermediary for information concerning what
additional fees, if any, may be charged.

REDEMPTION IN-KIND

50
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
LifePoints Fund's financial performance for the past 5 years (or, if a
LifePoints Fund or Class has not been in operation for 5 years, since the
beginning of operations for that LifePoints Fund or Class). Certain information
reflects financial results for a single LifePoints Fund share throughout each
year or period ended December 31 and for the six months ended June 30, 1999. The
total returns in the table represent how much your investment in the LifePoints
Fund would have increased (or decreased) during each period, assuming
reinvestment of all dividends and distributions. This information, except the
six months ended June 30, 1999 data, has been audited by PricewaterhouseCoopers
LLP, whose report, along with the LifePoints Fund's financial statements, are
included in the Funds' annual report, which is available upon request. The
Funds' semi-annual report for the period ended June 30, 1999 is also available
upon request. The information in the tables below represents the financial
highlights for each of the LifePoints Fund's Class D and Class E Shares,
respectively, for the periods shown. No Class S Shares were issued during the
periods shown and no Class C Shares were issued during the period ended
December 31, 1998.

<TABLE>
<CAPTION>
EQUITY AGGRESSIVE STRATEGY FUND+--CLASS C
1999*
--------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.80
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .02
Net realized and unrealized gain (loss) on investments.... .95
------
Total Income From Investment Operations................. .97
------
LESS DISTRIBUTIONS:
Net investment income..................................... (.06)
Net realized gain on investments.......................... (.13)
------
Total Distributions..................................... (.19)
------
NET ASSET VALUE, END OF PERIOD.............................. $10.58
======
TOTAL RETURN (%)(A)......................................... 10.07
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 2,069
Ratios to average net assets (%):
Operating expenses, net (b)(c).......................... 1.00
Operating expenses, gross (c)(d)........................ --
Net investment income (b)............................... .59
Portfolio turnover rate (%)(b).......................... 108.61
</TABLE>

- ------------------------

+ Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund.

* For the period February 11, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

51
<PAGE>
(b) The ratios for the period ended June 30, 1999 are annualized.

(d) The ratio for the period ended June 30, 1999 is not meaningful due to the
Class' short period of operation.

<TABLE>
<CAPTION>
EQUITY AGGRESSIVE STRATEGY FUND+--CLASS D
1999* 1998**
-------- --------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.81 $ 9.92
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .09 .01
Net realized and unrealized gain (loss) on investments.... .88 .10
------ ------
Total Income From Investment Operations................. .97 .11
------ ------
LESS DISTRIBUTIONS:
Net investment income..................................... (.06) (.17)
Net realized gain on investments.......................... (.13) (.05)
------ ------
Total Distributions..................................... (.19) (.22)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $10.59 $ 9.81
====== ======
TOTAL RETURN (%)(A)......................................... 10.07 1.17
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 5,350 4,923
Ratios to average net assets (%)(b):
Operating expenses, net................................. .50 .50
Operating expenses, gross............................... .87 .89
Net investment income................................... 1.74 .01
Portfolio turnover rate (%)(b).......................... 108.61 73.95
</TABLE>

- ------------------------

+ Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund.

* For the six months ended June 30, 1999 (unaudited).

** For the period March 24, 1998 (commencement of operations) to December 31,
1998.

(a) Periods less than one year are not annualized.

(b) Annualized.

52
<PAGE>

<TABLE>
<CAPTION>
EQUITY AGGRESSIVE STRATEGY FUND+--CLASS E
1999* 1998 1997**
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.80 $ 8.83 $10.00
-------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (d)................................. .10 .03 .09
Net realized and unrealized gain (loss) on investments.... .89 1.18 (.33)
-------- ------- ------
Total Income From Investment Operations................. .99 1.21 (.24)
-------- ------- ------
LESS DISTRIBUTIONS:
Net investment income..................................... (.06) (.19) (.33)
Net realized gain on investments.......................... (.13) (.05) (.60)
-------- ------- ------
Total Distributions..................................... (.19) (.24) (.93)
-------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.60 $ 9.80 $ 8.83
======== ======= ======
TOTAL RETURN (%)(A)......................................... 10.35 13.75 (2.42)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 165,271 91,459 2,985
Ratios of average net assets (%):
Operating expenses, net (b)............................. .25 .25 .25
Operating expenses, gross............................... .63 .62 3.58
Net investment income (c)............................... 1.95 .28 .45
Portfolio turnover rate (%)(b).......................... 108.61 73.95 48.30
</TABLE>

- ------------------------

+ Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund.

* For the six months ended June 30, 1999 (unaudited).

** For the period September 30, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(c) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(d) For the periods subsequent to December 31, 1998, average month-end shares
outstanding were used for this calculation.

53
<PAGE>

<TABLE>
<CAPTION>
AGGRESSIVE STRATEGY FUND--CLASS C
1999*
--------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.11
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .01
Net realized and unrealized gain (loss) on investments.... .56
-------
Total Income From Investment Operations................. .57
-------
LESS DISTRIBUTIONS:
Net investment income..................................... (.05)
Net realized gain on investments.......................... (.15)
-------
Total Distributions..................................... (.20)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.48
=======
TOTAL RETURN (%)(A)......................................... 5.81
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 2,896
Ratios to average net assets (%):
Operating expenses, net (b)............................. 1.00
Operating expenses, gross (d)........................... --
Net investment income................................... .50
Portfolio turnover rate (%)(b).......................... 116.46
</TABLE>

- ------------------------

* For the period January 29, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operations.

54
<PAGE>

<TABLE>
<CAPTION>
AGGRESSIVE STRATEGY FUND--CLASS D
1999* 1998**
-------- --------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.95 $ 10.09
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .09 .13
Net realized and unrealized gain (loss) on investments.... (.67) (.05)
------- -------
Total Income From Investment Operations................. .76 .08
------- -------
LESS DISTRIBUTIONS:
Net investment income..................................... (.05) (.21)
Net realized gain on investments.......................... (.15) (.01)
------- -------
Total Distributions..................................... (.20) (.22)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.51 $ 9.95
======= =======
TOTAL RETURN (%)(A)......................................... 7.81 .96
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 3,589 3,649
Ratios to average net assets (%)(b):
Operating expenses, net................................. .50 .50
Operating expenses, gross............................... .91 .93
Net investment income................................... 1.77 1.74
Portfolio turnover rate (%)(b).......................... 116.46 93.08
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period March 24, 1998 (commencement of operations) to December 31,
1998.

(a) Periods less than one year are not annualized.

(b) Annualized.

55
<PAGE>

<TABLE>
<CAPTION>
AGGRESSIVE STRATEGY FUND--CLASS E
1999* 1998 1997**
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 9.94 $ 9.14 $ 10.00
-------- ------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (d)................................. .09 .19 .10
Net realized and unrealized gain (loss) on investments.... .69 .87 (.11)
-------- ------- -------
Total Income From Investment Operations................. .78 1.06 (.01)
-------- ------- -------
LESS DISTRIBUTIONS:
Net investment income..................................... (.06) (.25) (.31)
Net realized gain on investments.......................... (.15) (.01) (.54)
-------- ------- -------
Total Distributions..................................... (.21) (.26) (.85)
-------- ------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.51 $ 9.94 $ 9.14
======== ======= =======
TOTAL RETURN (%)(A)......................................... 7.99 11.69 (.19)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 120,641 62,188 5,307
Ratios of average net assets (%)(b):
Operating expenses, net................................. .25 .25 .25
Operating expenses, gross............................... .67 .66 2.88
Net investment income (c)............................... 1.79 1.88 .97
Portfolio turnover rate (%)(b).......................... 116.46 93.08 56.88
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period September 16, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(c) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(d) For the period ended December 31, 1998, average month-end shares outstanding
were used for this calculation.

56
<PAGE>

<TABLE>
<CAPTION>
BALANCED STRATEGY FUND--CLASS C
1999*
--------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.26
------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .03
Net realized and unrealized gain (loss) on investments.... .31
------
Total Income From Investment Operations................. .34
------
LESS DISTRIBUTIONS:
Net investment income..................................... (.08)
Net realized gain on investments.......................... (.12)
------
Total Distributions..................................... (.20)
NET ASSET VALUE, END OF PERIOD.............................. $10.40
======
TOTAL RETURN (%)(A)......................................... 3.41
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 6,393
Ratios to average net assets (%):
Operating expenses, net (b)............................. 1.00
Operating expenses, gross (d)........................... --
Net investment income................................... 1.17
Portfolio turnover rate (%)(b).......................... 97.31
</TABLE>

- ------------------------

* For the period January 29, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operation.

57
<PAGE>

<TABLE>
<CAPTION>
BALANCED STRATEGY FUND--CLASS D
1999* 1998**
-------- --------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $10.13 $10.22
------ ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .15 .24
Net realized and unrealized gain (loss) on investments.... .36 .07
------ ------
Total Income From Investment Operations................. .51 .31
------ ------
LESS DISTRIBUTIONS:
Net investment income..................................... (.08) (.37)
Net realized gain on investments.......................... (.12) (.03)
------ ------
Total Distributions..................................... (.20) (.40)
------ ------
NET ASSET VALUE, END OF PERIOD.............................. $10.44 $10.13
====== ======
TOTAL RETURN (%)(A)......................................... 5.11 3.23
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 2,930 4,953
Ratios to average net assets (%)(b):
Operating expenses, net................................. .50 .50
Operating expenses, gross............................... .86 .86
Net investment income................................... 2.92 3.18
Portfolio turnover rate (%)(b).......................... 97.31 78.85
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period March 24, 1998 (commencement of operations) to December 31,
1998.

(a) Periods less than one year are not annualized.

(b) Annualized.

58
<PAGE>

<TABLE>
<CAPTION>
BALANCED STRATEGY FUND--CLASS E
1999* 1998 1997**
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.12 $ 9.46 $10.00
-------- -------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (d)................................. .15 .31 .09
Net realized and unrealized gain (loss) on investments.... .37 .78 .02
-------- -------- ------
Total Income From Investment Operations................. .52 1.09 .11
-------- -------- ------
LESS DISTRIBUTIONS:
Net investment income..................................... (.09) (.40) (.24)
Net realized gain on investments.......................... (.12) (.03) (.41)
-------- -------- ------
Total Distributions..................................... (.21) (.43) (.65)
-------- -------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.43 $ 10.12 $ 9.46
======== ======== ======
TOTAL RETURN (%)(A)......................................... 5.17 11.66 1.04
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 255,405 161,108 3,554
Ratios of average net assets (%)(b):
Operating expenses, net................................. .25 .25 .25
Operating expenses, gross............................... .61 .61 4.03
Net investment income (c)............................... 2.91 3.05 1.30
Portfolio turnover rate (%)(b).......................... 97.31 78.85 29.58
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period September 16, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(c) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(d) For the period ended December 31, 1998, average month-end shares outstanding
were used for this calculation.

59
<PAGE>

<TABLE>
<CAPTION>
MODERATE STRATEGY FUND--CLASS C
1999*
--------
<S> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.15
-------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .09
Net realized and unrealized gain (loss) on investments.... .27
-------
Total Income From Investment Operations................. .36
-------
LESS DISTRIBUTIONS:
Net investment income..................................... (.11)
Net realized gain on investments.......................... (.06)
-------
Total Distributions..................................... (.17)
-------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.34
=======
TOTAL RETURN (%)(A)......................................... 3.58
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 848
Ratios to average net assets (%):
Operating expenses, net (b)............................. 1.00
Operating expenses, gross (d)........................... --
Net investment income................................... 2.95
Portfolio turnover rate (%)(b).......................... 183.18
</TABLE>

- ------------------------

* For the period February 11, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operation.

60
<PAGE>

<TABLE>
<CAPTION>
MODERATE STRATEGY FUND--CLASS D
1999* 1998**
-------- --------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.15 $ 10.18
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .15 .26
Net realized and unrealized gain (loss) on investments.... .22 .09
------- -------
Total Income From Investment Operations................. .37 .35
------- -------
LESS DISTRIBUTIONS:
Net investment income..................................... (.11) (.37)
Net realized gain on investments.......................... (.06) (.01)
------- -------
Total Distributions..................................... (.17) (.38)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.35 $ 10.15
======= =======
TOTAL RETURN (%)(A)......................................... 3.68 3.57
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 1,886 1,780
Ratios to average net assets (%)(b):
Operating expenses, net................................. .50 .50
Operating expenses, gross............................... 1.19 1.01
Net investment income................................... 2.95 3.41
Portfolio turnover rate (%)(b).......................... 183.18 175.58
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited)

** For the period March 24, 1998 (commencement of operations) to December 31,
1998.

(a) Periods less than one year are not annualized.

(b) Annualized.

61
<PAGE>

<TABLE>
<CAPTION>
MODERATE STRATEGY FUND--CLASS E
1999* 1998 1997**
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.15 $ 9.61 $10.00
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e)................................. .17 .39 .07
Net realized and unrealized gain (loss) on investments.... .20 .57 (.08)
------- ------- ------
Total Income From Investment Operations................. .37 .96 (.01)
------- ------- ------
LESS DISTRIBUTIONS:
Net investment income..................................... (.11) (.41) (.14)
Net realized gain on investments.......................... (.06) (.01) (.24)
------- ------- ------
Total Distributions..................................... (.17) (.42) (.38)
------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.35 $ 10.15 $ 9.61
======= ======= ======
TOTAL RETURN (%)(A)......................................... 3.75 10.19 (.06)
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 36,653 18,573 385
Ratios of average net assets (%):
Operating expenses, net (b)............................. .25 .25 .25
Operating expenses, gross (c)........................... .96 .94 --
Net investment income (d)............................... 3.25 3.71 1.01
Portfolio turnover rate (%)(b).......................... 183.18 175.58 9.66
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period October 2, 1997 (commencement of operations) to December 31,
1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(d) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(e) For the periods subsequent to December 31, 1997, average month-end shares
outstanding were used for this calculation.

62
<PAGE>

<TABLE>
<CAPTION>
CONSERVATIVE STRATEGY FUND--CLASS C
1999*
--------
<S> <C>
NET ASSET VALUE BEGINNING OF PERIOD......................... $ 10.26
--------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .05
Net realized and unrealized gain (loss) on investments.... .16
--------
Total Income From Investment Operations................. .21
--------
LESS DISTRIBUTIONS:
Net investment income..................................... (.14)
Net realized gain on investments.......................... (.02)
--------
Total Distributions..................................... (.16)
--------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.31
TOTAL RETURN (%)(A)......................................... 2.09
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 89
Ratios to average net assets (%):
Operating expenses, net (b)............................... 1.00
Operating expenses, gross (d)........................... --
Net investment income................................... 1.73
Portfolio turnover rate (%)(b).......................... 249.12
</TABLE>

- ------------------------

* For the period February 11, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operation.

63
<PAGE>

<TABLE>
<CAPTION>
CONSERVATIVE STRATEGY FUND--CLASS D
1999* 1998**
-------- --------
<S> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.25 $ 10.20
------- -------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (c)................................. .14 .32
Net realized and unrealized gain (loss) on investments.... .09 .06
------- -------
Total Income From Investment Operations................. .23 .38
------- -------
LESS DISTRIBUTIONS:
Net investment income..................................... (.14) (.33)
Net realized gain on investments.......................... (.02) --
------- -------
Total Distributions..................................... (.16) (.33)
------- -------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.32 $ 10.25
------- -------
TOTAL RETURN (%)(A)......................................... 2.27 3.77
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 1,292 618
Ratios to average net assets (%)(b):
Operating expenses, net................................. .50 .50
Operating expenses, gross............................... 2.75 1.73
Net investment income................................... 2.79 3.99
Portfolio turnover rate (%)(b).......................... 249.12 169.79
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period March 24, 1998 (commencement of operations) to December 31,
1998.

(a) Periods less than one year are not annualized.

(b) Annualized.

64
<PAGE>

<TABLE>
<CAPTION>
CONSERVATIVE STRATEGY FUND--CLASS E
1999* 1998 1997**
-------- -------- --------
<S> <C> <C> <C>
NET ASSET VALUE, BEGINNING OF PERIOD........................ $ 10.24 $ 9.88 $10.00
------- ------- ------
INCOME FROM INVESTMENT OPERATIONS:
Net investment income (e)................................. .18 .46 .07
Net realized and unrealized gain (loss) on investments.... .07 .29 .07
------- ------- ------
Total Income From Investment Operations................. .25 .75 .14
------- ------- ------
LESS DISTRIBUTIONS:
Net investment income..................................... (.15) (.39) (.10)
Net realized gain on investments.......................... (.02) -- (.16)
------- ------- ------
Total Distributions..................................... (.17) (.39) (.26)
------- ------- ------
NET ASSET VALUE, END OF PERIOD.............................. $ 10.32 $ 10.24 $ 9.88
======= ======= ======
TOTAL RETURN (%)(A)......................................... 2.43 7.70 1.36
RATIOS/SUPPLEMENTAL DATA:
Net Assets, end of period ($000 omitted).................. 14,088 4,411 23
Ratios of average net assets (%)(b):
Operating expenses, net................................. .25 .25 .25
Operating expenses, gross (c)........................... 2.50 2.50 --
Net investment income (d)............................... 3.41 4.41 .67
Portfolio turnover rate (%)(b).......................... 249.12 169.79 .00
</TABLE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period November 7, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(d) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(e) For the periods subsequent to December 31, 1997, average month-end shares
outstanding were used for the calculation.

65
<PAGE>
MONEY MANAGER INFORMATION

The money managers have no affiliations with the LifePoints Funds or the
LifePoints Funds' service providers other than their management of Underlying
Fund assets. Each money manager has been in business for at least three years,
and is principally engaged in managing institutional investment accounts. These
managers may also serve as managers or advisers to other Funds in FRIC, or to
other clients of Russell, including its wholly owned subsidiary, Frank Russell
Trust Company.

This section identifies the money managers for the Underlying Funds in which
the LifePoints Funds invest.

DIVERSIFIED EQUITY FUND

ALLIANCE CAPITAL MANAGEMENT L.P., US Bank Place, 601 2nd Ave. South, Suite
5000, Minneapolis, MN 55402-4322.

BARCLAYS GLOBAL FUND ADVISORS N.A., 45 Fremont Street, San Francisco, CA
94105.

EQUINOX CAPITAL MANAGEMENT, INC., 590 Madison Avenue, 41st Floor, New York,
NY 10022.

JACOBS LEVY EQUITY MANAGEMENT, INC., 280 Corporate Center, 3 ADP Boulevard,
Roseland, NJ 07068.

LINCOLN CAPITAL MANAGEMENT COMPANY, 200 South Wacker Drive, Suite 2100,
Chicago, IL 60606.

MARSICO CAPITAL MANAGEMENT COMPANY, LLC, 1200 17th Street, Suite 1200,
Denver, CO 80202.

PEACHTREE ASSET MANAGEMENT, One Peachtree Center, Suite 4500, 303 Peachtree
Street N.E., Atlanta, GA 30308.

SANFORD C. BERNSTEIN & CO., INC., 767 Fifth Avenue, 21st Floor, New York, NY
10153.

SUFFOLK CAPITAL MANAGEMENT, INC., 1633 Broadway, 40th Floor, New York, NY
10107.

TRINITY INVESTMENT MANAGEMENT CORPORATION, 75 Park Plaza, Boston, MA 02116.

WESTPEAK INVESTMENT ADVISORS, L.P., 1011 Walnut Street, Suite 400, Boulder,
CO 80302.

SPECIAL GROWTH FUND

DELPHI MANAGEMENT, INC., 50 Rowes Wharf, Suite 440, Boston, MA 02110.

FIDUCIARY INTERNATIONAL, INC., 2 World Trade Center, New York, NY 10048.

GLOBEFLEX CAPITAL, L.P., 4365 Executive Drive, Suite 720, San Diego, CA
92121.

JACOBS LEVY EQUITY MANAGEMENT, INC., 280 Corporate Center, 3 ADP Boulevard,
Roseland, NJ 07068.

SIRACH CAPITAL MANAGEMENT, INC., One Union Square, Suite 3323, 600 Union
Street, Seattle, WA 98101.

66
<PAGE>
WELLINGTON MANAGEMENT COMPANY LLP, 75 State Street, Boston, MA 02109.

WESTPEAK INVESTMENT ADVISORS, L.P. See: Diversified Equity Fund.

QUANTITATIVE EQUITY FUND

BARCLAYS GLOBAL FUND ADVISORS, See: Diversified Equity Fund.

FRANKLIN PORTFOLIO ASSOCIATES LLC, Two International Place, 22nd Floor,
Boston, MA 02110-4104.

J.P. MORGAN INVESTMENT MANAGEMENT, INC., 522 Fifth Ave., 6th Floor, New
York, NY 10036.

JACOBS LEVY EQUITY MANAGEMENT, INC., See: Diversified Equity Fund.

INTERNATIONAL SECURITIES FUND

DELAWARE INTERNATIONAL ADVISERS LIMITED, 80 Cheapside, 3rd Floor, London
EC2V6EE England.

FIDELITY MANAGEMENT TRUST COMPANY, 82 Devonshire Street, Boston, MA, 02109.

J.P. MORGAN INVESTMENT MANAGEMENT, INC., See: Quantitative Equity Fund.

MASTHOLM ASSET MANAGEMENT, LLC, 10500 N.E. 8th Street, Suite 660, Bellevue,
WA 98004.

MONTGOMERY ASSET MANAGEMENT, LLC, 101 California Street, San Francisco, CA
94111

OESCHLE INTERNATIONAL ADVISORS, LLC, One International Place, 23rd Floor,
Boston, MA 02110.

SANFORD C. BERNSTEIN & CO., INC., See: Diversified Equity Fund.

THE BOSTON COMPANY ASSET MANAGEMENT, INC., One Boston Place, 14th Floor,
Boston, MA 02108-4402.

EMERGING MARKETS FUND

FOREIGN & COLONIAL EMERGING MARKETS LIMITED, Exchange House, Primrose
Street, London, England EC2A 2NY.

GENESIS ASSET MANAGERS, LTD., 21 Knights Bridge, London, SW1X 7LY England.

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, 600 W. Broadway 32nd Fl. San Diego,
CA 92101.

SANFORD C. BERNSTEIN & CO. INC., See: Diversified Equity Fund.

SCHRODERS CAPITAL MANAGEMENT INTERNATIONAL LIMITED, 31 Greshman Street,
London, UK EC2V 7QA.

REAL ESTATE SECURITIES FUND

COHEN & STEERS CAPITAL MANAGEMENT, 757 Third Avenue, New York, NY 10017.

AEW CAPITAL MANAGEMENT, L.P., 225 Franklin Street, Boston, MA 02110-2803.

67
<PAGE>
DIVERSIFIED BOND FUND

LINCOLN CAPITAL MANAGEMENT COMPANY, See: Diversified Equity Fund.

PACIFIC INVESTMENT MANAGEMENT COMPANY, 840 Newport Center Drive, Suite 360,
Newport Beach, CA 92660.

STANDISH, AYER & WOOD, INC., One Financial Center, Boston, MA 02111.

MULTISTRATEGY BOND FUND

LAZARD ASSET MANAGEMENT, 30 Rockefeller Plaza, New York, NY 10112-6300.

MILLER, ANDERSON & SHERRERD, LLP, One Tower Bridge, W. Conshohocken, PA
19428.

PACIFIC INVESTMENT MANAGEMENT COMPANY, See: Diversified Bond Fund.

STANDISH, AYER & WOOD, INC., See: Diversified Bond Fund.

WESTPEAK INVESTMENT ADVISORS, L.P. See: Diversified Equity Fund.

SHORT TERM BOND FUND

BLACKROCK FINANCIAL MANAGEMENT, 345 Park Ave., 29th Floor, New York, NY
10154.

STANDISH, AYER & WOOD, INC., See: Diversified Bond Fund.

STW FIXED INCOME MANAGEMENT LTD., 26 Victoria Street, 3rd Floor, P.O. Box
2910 Hamilton HM KX, Bermuda.

IN CONSIDERING INVESTMENT IN THE LIFEPOINTS FUNDS, DO NOT RELY ON ANY
INFORMATION UNLESS IT IS CONTAINED IN THIS PROSPECTUS OR IN THE LIFEPOINTS
FUNDS' STATEMENT OF ADDITIONAL INFORMATION. THE LIFEPOINTS FUNDS HAVE NOT
AUTHORIZED ANYONE TO ADD ANY INFORMATION OR TO MAKE ANY ADDITIONAL STATEMENTS
ABOUT THE LIFEPOINTS FUNDS. THE LIFEPOINTS FUNDS MAY NOT BE AVAILABLE IN SOME
JURISDICTIONS OR TO SOME PERSONS. THE FACT THAT YOU HAVE RECEIVED THIS
PROSPECTUS SHOULD NOT, IN ITSELF, BE TREATED AS AN OFFER TO SELL LIFEPOINTS FUND
SHARES TO YOU. CHANGES IN THE AFFAIRS OF THE LIFEPOINTS FUNDS OR IN THE
UNDERLYING FUNDS' MONEY MANAGERS MAY OCCUR AFTER THE DATE ON THE COVER PAGE OF
THIS PROSPECTUS. THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED TO REFLECT ANY
MATERIAL CHANGES TO THE INFORMATION IT CONTAINS.

68
<PAGE>

For more information about the LifePoints Funds, the following
documents are available without charge:

ANNUAL/SEMIANNUAL REPORTS: Additional information about the LifePoints Funds'
investments is available in the LifePoints Funds' annual and semiannual
reports to shareholders. In each LifePoints Fund's annual report, you will
find a discussion of the market conditions and investment strategies that
significantly affected the LifePoints Fund's performance during its last
fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the LifePoints Funds.

Frank Russell Investment Company
909 A Street
Tacoma, WA 98402
Telephone: 1-800-787-7354
Fax: 253-591-3495
Website: http://www.russell.com

You can review and copy information about the LifePoints Funds (including the
SAI) at the Securities and Exchange Commission's Public Reference Room in
Washington, D.C. You can obtain information on the operation of the Public
Reference Room by calling the Commission at 1-800-SEC-0330. You can obtain
copies of this information upon paying a duplicating fee by writing to the
Public Reference Section of the Commission, Washington, D.C. 20549-6009.
Reports and other information about the LifePoints Funds are also available
on the Commission's Internet website at http://www.sec.gov.

FRANK RUSSELL INVESTMENT COMPANY

Class C, D, E and S Shares:

Equity Aggressive Strategy Fund

Aggressive Strategy Fund

Balanced Strategy Fund

Moderate Strategy Fund

Conservative Strategy Fund

<TABLE>
<S> <C>
Distributor: Russell Fund Distributors, Inc.
SEC File No. 811-3153
[LOGO] 36-08-058 (11/99)
</TABLE>

<PAGE>

FRANK RUSSELL INVESTMENT COMPANY

[GRAPHIC]

LIFEPOINTS-Registered Trademark-TAX-MANAGED
GLOBAL EQUITY FUND

PROSPECTUS
CLASS C AND S SHARES

NOVEMBER 30, 1999

909 A STREET, TACOMA, WA 98402 - 800-787-7354 - 253-627-7001

As with all mutual funds, the Securities and Exchange Commission has neither
determined that the information in this prospectus is accurate or complete, nor
approved or disapproved of these securities. It is a criminal offense to state
otherwise.

[LOGO]
<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary
Investment Objective...................................... 3
Principal Investment Strategies........................... 3
Principal Risks........................................... 4
Performance............................................... 5
Fees and Expenses......................................... 6
The Purpose of the Fund--Multi-Style, Multi-Manager
Diversification........................................... 8
Management of the Underlying Funds and the Global Equity
Fund...................................................... 11
The Money Managers for the Underlying Funds................. 13
Investment Objectives, Investment Strategies and Risks of
the Underlying Funds...................................... 14
Principal Risks............................................. 24
Dividends and Distributions................................. 28
Taxes....................................................... 29
How Net Asset Value Is Determined........................... 30
Distribution and Shareholder Servicing Arrangements......... 30
How to Purchase Shares...................................... 31
Exchange Privilege.......................................... 32
How to Redeem Shares........................................ 33
Payment of Redemption Proceeds.............................. 34
Written Instructions........................................ 35
Account Policies............................................ 36
Money Manager Information................................... 37
</TABLE>
<PAGE>
RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

The Tax-Managed Global Equity Fund seeks to achieve high, long-term capital
appreciation on an after-tax basis, while recognizing the possibility of high
fluctuations in year-to-year market values.

PRINCIPAL INVESTMENT STRATEGIES

The Frank Russell Investment Company ("FRIC") Tax-Managed Global Equity Fund
(the "Global Equity Fund" or the "Fund") is a "fund of funds," and diversifies
its assets by investing, at present, in the Class S Shares of several other FRIC
Funds ("Underlying Funds"). The Global Equity Fund seeks to achieve its
investment objective by investing in different combinations of the Underlying
Funds using a tax-efficient strategy.

The Global Equity Fund seeks to achieve its investment objectives while
minimizing shareholder tax consequences arising from its portfolio management
activities. In its attention to tax consequences of portfolio management, the
Global Equity Fund differs from most other fund-of-funds, which are managed to
maximize pre-tax return without regard to whether their portfolio management
activities result in taxable distributions to shareholders.

The Global Equity Fund intends to minimize its taxable distributions to
shareholders in three ways:

First, the Global Equity Fund strives to realize its returns as capital
gains, and not as investment income, under US tax laws. To do so, the Fund
typically buys shares of Underlying Funds with the intention of holding them
long enough to qualify for capital gain tax treatment.

Second, the Global Equity Fund attempts to minimize its realization of
capital gains and to offset any such realization with capital losses. To do
so, when the Fund sells shares of an appreciated Underlying Fund, it seeks
to minimize the resulting capital gains by first selling the shares for
which it paid the highest price. Further, the Fund attempts to offset those
capital gains with matching capital losses by simultaneously selling shares
of depreciated Underlying Funds.

Third, the Global Equity Fund allocates a portion of its assets to
Underlying Funds that employ tax-efficient strategies.

When the Global Equity Fund's shares are redeemed, the Fund may realize
capital gains or income, impacting all shareholders. The Global Equity Fund
believes that multiple purchases and redemptions of Fund shares by individual
shareholders could adversely affect its strategy of tax-efficiency and could
reduce its ability to contain costs. The Global Equity Fund further believes
that short-term investments in the Fund are inconsistent with its long-term
strategy. For this reason, the Global Equity Fund will apply its general right
to refuse any purchases by rejecting purchase orders from investors whose
patterns of purchases and redemptions in the Fund is inconsistent with the
Fund's strategy.

The Global Equity Fund allocates its assets by investing in shares of a
diversified group of Underlying Funds. The Underlying Funds in which the Fund
invests are shown in the table below. The Global

3
<PAGE>
Equity Fund intends its strategy of investing in combinations of Underlying
Funds to result in investment diversification that an investor could otherwise
achieve only by holding numerous individual investments.

<TABLE>
<CAPTION>
TAX-MANAGED
UNDERLYING FUND GLOBAL EQUITY FUND
--------------- ------------------
<S> <C>
Tax-Managed Large Cap Fund (formerly Equity T Fund) 50%
Tax-Managed Small Cap Fund 15%
International Securities Fund 20%
Quantitative Equity Fund 10%
Emerging Markets Fund 5%
</TABLE>

The Global Equity Fund intends to be fully invested at all times. Although
the Fund, like all other mutual funds, maintain liquidity reserves (i.e. cash
awaiting investment or held to meet redemption requests), the Fund exposes these
reserves to the performance of appropriate equity markets by investing in stock
futures contracts. This causes the Fund to perform as though its cash reserves
were actually invested in those markets. Additionally, the Fund invests its
liquidity reserves in one or more FRIC money market funds.

The Global Equity Fund can change the allocation of its assets among
Underlying Funds at any time, if its investment adviser, Frank Russell
Investment Management Company (FRIMCo) believes that doing so would better
enable the Global Equity Fund to pursue its investment objective. From time to
time, the Global Equity Fund adjusts its investments within set limits based on
FRIMCo's outlook for the economy, financial markets generally and relative
market valuation of the asset classes represented by each Underlying Fund.
Additionally, the Global Equity Fund may deviate from set limits when, in
FRIMCo's opinion, it is necessary to do so to pursue the Global Equity Fund's
investment objective. However, the Global Equity Fund expects that amounts it
allocates to each Underlying Fund will generally vary only within 10% of the
ranges specified in the table above.

DIVERSIFICATION

The Global Equity Fund is a "nondiversified" investment company for purposes
of the Investment Company Act of 1940 because it invests in the securities of a
limited number of issuers (i.e., the Underlying Funds). Each of the Underlying
Funds in which the Global Equity Fund invests is a diversified investment
company.

PRINCIPAL RISKS

You should consider the following factors before investing in the Global
Equity Fund:

- An investment in the Global Equity Fund, like any investment, has risks.
The value of the Fund fluctuates, and you could lose money.

- Since the assets of the Global Equity Fund are invested primarily in
shares of the Underlying Funds, the investment performance of the Global
Equity Fund is directly related to the investment performance of the
Underlying Funds in which it invests.

4
<PAGE>
- The policy of the Global Equity Fund is to allocate its assets among the
Underlying Funds within certain ranges. Therefore, the Fund may have less
flexibility to invest than a mutual fund without such constraints.

- The Global Equity Fund is exposed to the same risks as the Underlying
Funds in direct proportion to the allocation of its assets among the
Underlying Funds. These risks include the risks associated with a
multi-manager approach to investing, as well as those associated with
investing in equity securities and international securities. In addition,
the Fund and each Underlying Fund could be adversely affected if the
computer systems of its service providers or of the issuers in which they
invest fail to operate properly on or after January 1, 2000. For further
detail on the risks summarized here, please refer to the section "Risks of
the Underlying Funds."

- An investment in the Global Equity Fund is not a bank deposit and is not
insured or guaranteed by the Federal Deposit Insurance Corporation or any
other government agency.

- The officers, Trustees and FRIMCo presently serve as officers, Trustees
and investment manager of the Underlying Funds. Therefore, conflicts may
arise as those persons and FRIMCo fulfill their fiduciary responsibilities
to the Global Equity Fund and to the Underlying Funds.

- The Global Equity Fund is designed for long-term investors who seek to
minimize the impact of taxes on their investment returns. The Fund is not
designed for short-term investors or for tax-deferred investment vehicles
such as IRAs and 40l(k) plans.

- If large shareholder redemptions occur unexpectedly, the Global Equity
Fund could be required to sell shares of appreciated Underlying Funds
resulting in realization of net capital gains. This could temporarily
reduce the Global Equity Fund's tax efficiency. Also, as the Global Equity
Fund matures, it may hold shares of Underlying Funds that have appreciated
so significantly that it would be difficult for the Fund to sell them
without realizing net capital gains.

PERFORMANCE

Because the Global Equity Fund was new when this prospectus was printed, no
performance history is included. Performance history will be available for the
Global Equity Fund after it has been in operation for one calendar year.

5
<PAGE>
FEES AND EXPENSES

These tables describe the fees and expenses that you may pay if you buy and
hold shares of the Global Equity Fund.

SHAREHOLDER FEES
(FEES PAID DIRECTLY FROM YOUR INVESTMENT)

ANNUAL OPERATING EXPENSES
(EXPENSES THAT ARE DEDUCTED FROM FUND ASSETS)
(% OF NET ASSETS)

<TABLE>
<CAPTION>
OTHER EXPENSES
(INCLUDING
ADMINISTRATIVE
FEES AND TOTAL GROSS TOTAL NET
SHAREHOLDER ANNUAL FUND EXPENSE WAIVERS ANNUAL FUND
ADVISORY DISTRIBUTION SERVICING OPERATING AND OPERATING
FEE (12B-1) FEES* FEES)** EXPENSES+ REIMBURSEMENTS# EXPENSES
--- ------------- ------- --------- --------------- --------
<S> <C> <C> <C> <C> <C> <C>
Class C Shares................ 0.20% 0.75% 0.67% 1.62% (0.62)% 1.00%
Class S Shares................ 0.20% 0.00% 0.42% 0.62% (0.62)% 0.00%
</TABLE>

- ------------------------

* Pursuant to the rules of the National Association of Securities Dealers,
Inc. ("NASD"), the aggregate initial sales charges, deferred sales charges
and asset-based sales charges on shares of the Global Equity Fund may not
exceed 6.25% of total gross sales, subject to certain exclusions. This 6.25%
limitation is imposed on the Class C Shares of the Global Equity Fund rather
than on a per shareholder basis. Therefore, long-term shareholders of the
Class C Shares may pay more than the economic equivalent of the maximum
front-end sales charges permitted by the NASD.

** The Fund expenses shown in this table do not include the pro-rata expenses
of the Underlying Funds, which are shown in the next two tables. For
purposes of this table, "Other Expenses" for Class C include a shareholder
services fee of up to 0.25% of average daily net assets. Annual operating
expenses for each Class of Shares are estimated, based on average net assets
expected to be invested for the Fund's first twelve months of operations.
During the course of this period, expenses may be more or less than the
amount shown. FRIMCo's advisory and administrative services are provided
separately under an advisory agreement and administrative agreement which
provide for the fees reflected in the table.

+ If you purchase any class of Shares of the Global Equity Fund through a
Financial Intermediary, such as a bank or an investment adviser, you may
also pay additional fees to the intermediary for services provided by the
intermediary. You should contact your financial intermediary for information
concerning what additional fees, if any, will be charged.

# FRIMCo has contractually agreed to waive, at least through November 30, 2000,
its 0.20% advisory fee. The Global Equity Fund's custodian has agreed to
waive a portion of its fees for the first three months of the Fund's
operations. Certain operating expenses of the Global Equity Fund will be
paid by the Underlying Funds and/or FRIMCo, as more fully described below.

6
<PAGE>
The Global Equity Fund will not bear any operating expenses. Those operating
expenses include those arising from accounting, administrative, custody,
auditing, legal and transfer agent services. They do not include expenses
attributable to advisory fees (which are currently waived by FRIMCo), any
Rule 12b-1 distribution fee, any shareholder service fees, or any nonrecurring
extraordinary expenses, which will be borne by the Global Equity Fund or its
appropriate classes of shares.

The Global Equity Fund's operating expenses are borne either by the
Underlying Funds in which the Global Equity Fund invests or by FRIMCo. This
arrangement is governed by Special Servicing Agreements among each of the
affected Funds and FRIMCo. Those agreements are entered into on a yearly basis
and must be re-approved annually by FRIC's Board of Trustees.

Shareholders in the Global Equity Fund bear indirectly the proportionate
expenses of the Underlying Funds in which the Global Equity Fund invests. The
following table provides the expense ratios for each of the Underlying Funds in
which the Global Equity Fund may invest (based on information as of
December 31, 1998).

<TABLE>
<CAPTION>
TOTAL OPERATING
UNDERLYING FUND (CLASS S SHARES) EXPENSE RATIOS
- -------------------------------- --------------
<S> <C>
Quantitative Equity Fund.................................... .94%
International Securities Fund............................... 1.30%
Emerging Markets Fund....................................... 1.81%
Tax-Managed Large Cap Fund (formerly Equity T Fund)......... .94%
Tax-Managed Small Cap Fund*................................. 1.28%
</TABLE>

- ------------------------

* Estimated based on average net assets expected to be invested during the
first twelve months of operations.

Based on these expense ratios, the Global Equity Fund expects its total
direct and indirect operating expense ratios of each class of its shares
(calculated as a percentage of average net assets) to be as follows:

<TABLE>
<CAPTION>
CLASS C CLASS S
------- -------
<S> <C> <C>
Global Equity Fund.......................................... 2.11% 1.11%
</TABLE>

The Global Equity Fund's total expense ratio is based on its estimated total
operating expense ratio plus a weighted average of the expense ratios of the
Underlying Funds in which it plans to invest. These total expense ratios may be
higher or lower depending on the allocation of the Global Equity Fund's assets
among the Underlying Funds, the actual expenses of the Underlying Funds and the
actual expenses of the Global Equity Fund.

7
<PAGE>
EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN THE
GLOBAL EQUITY FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

The example assumes that you invest $10,000 in the Global Equity Fund for
the time periods indicated and then redeemed all of your shares at the end of
those periods. The example also assumes your investment has a 5% return each
year, and that operating expenses, which include the indirect expenses of the
Underlying Funds, remain the same.

Although your actual costs may be higher or lower, under these assumptions
your costs would be:

<TABLE>
<CAPTION>
1 YEAR 3 YEARS
-------- --------
<S> <C> <C>
Class C..................................................... $211 $664
Class S..................................................... $111 $349
</TABLE>

THE PURPOSE OF THE FUND--MULTI-STYLE, MULTI-MANAGER DIVERSIFICATION

The Global Equity Fund is offered through certain bank trust departments,
registered investment advisers, broker-dealers and other financial services
organizations that have been selected by the Global Equity Fund's adviser or
distributor (Financial Intermediaries). The Global Equity Fund offers investors
the opportunity to invest in a diversified mutual fund investment allocation
program and is designed to provide a means for investors to use FRIMCo's and
Frank Russell Company's (Russell) "multi-style, multi-manager diversification"
investment method and to obtain FRIMCo's and Russell's money manager evaluation
services.

Three functions form the core of Russell's consulting services:

- OBJECTIVE SETTING: Defining appropriate investment objectives and desired
investment returns, based on a client's unique situation and risk
tolerance.

When this process is completed, a client's assets are invested using a
"multi-style, multi-manager diversification" technique. The goals of this
process are to reduce risk and to increase returns.

The Global Equity Fund believes investors should seek to hold fully
diversified portfolios that reflect both their own individual investment time
horizons and their ability to accept risk. The Global Equity Fund believes that
for many, this can be accomplished through strategically purchasing shares in
one or more of the Underlying Funds which have been structured to provide access
to specific asset classes employing a multi-style, multi-manager approach.

8
<PAGE>
Capital market history shows that asset classes with greater risk will
generally outperform lower risk asset classes over time. For instance, corporate
equities, over the past 50 years, have outperformed corporate debt in absolute
terms. However, what is generally true of performance over extended periods will
not necessarily be true at any given time during a market cycle, and from time
to time asset classes with greater risk may also underperform lower risk asset
classes, on either a risk adjusted or absolute basis. Investors should select a
mix of asset classes that reflects their overall ability to withstand market
fluctuations over their investment horizons.

The Global Equity Fund believes, however, that it is possible to select
managers who have shown a consistent ability to achieve superior results within
subsets or styles of specific asset classes and investment styles by employing a
unique combination of qualitative and quantitative measurements. A number of the
Underlying Funds in which the Global Equity Fund invests combine these select
managers with other managers within the same asset class who employ
complementary styles. By combining complementary investment styles within an
asset class, investors are better able to reduce their exposure to the risk of
any one investment style going out of favor.

The Global Equity Fund has a greater potential than most mutual funds for
diversification among investment styles and money managers since the Global
Equity Fund invests in shares of several Underlying Funds. The Global Equity
Fund was created to provide a mutual fund investor with a simple but effective
means of structuring a diversified mutual fund investment program suited to meet
the investor's individual needs. FRIMCo has long stressed the value of
diversification in an investment program, and has offered its advisory expertise
in assisting investors on how to design their individual investment program.

9
<PAGE>
The diversification afforded by the allocation of the Global Equity Fund's
investment in the Underlying Funds is illustrated in the following chart:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
INTERNATIONAL SECURITIES 20%
<S> <C>
Emerging Markets 5%
Quantitative Equity 10%
Tax-Managed Small Cap Fund 15%
Tax-Managed Large Cap Fund 50%
Tax-Managed Global Equity Fund
</TABLE>

The Global Equity Fund conducts its business through a number of service
providers, who act on behalf of the Fund. FRIMCo, the Fund's administrator and
investment adviser, performs the Fund's day to day corporate management and
oversees the Fund's money managers. The Fund's money managers makes all
investment decisions for the portion of the Fund assigned to it by FRIMCo. The
Underlying Funds' custodian, State Street Bank, maintains custody of all of the
Underlying Funds' assets. FRIMCo, in its capacity as the Fund's transfer agent,
is responsible for maintaining the Fund's shareholder records and carrying out
shareholder transactions. When the Fund acts in one of these areas, it does so
through the service provider responsible for that area.

10
<PAGE>
MANAGEMENT OF THE UNDERLYING FUNDS
AND THE GLOBAL EQUITY FUND

The investment adviser of the Global Equity Fund and each of the Underlying
Funds is FRIMCo, 909 A Street, Tacoma, Washington 98402. FRIMCo pioneered the
"multi-style, multi-manager" investment method in mutual funds and manages over
$14 billion in more than 30 mutual fund portfolios. FRIMCo was established in
1982 to serve as the investment management arm of Russell.

Russell, which acts as consultant to the Global Equity Fund and each of the
Underlying Funds, was founded in 1936 and has been providing comprehensive asset
management consulting services for over 30 years to institutional investors,
principally large corporate employee benefit plans. Russell provides the Global
Equity Fund, the Underlying Funds, and FRIMCo with the asset management
consulting services that it provides to its other consulting clients. Neither
the Global Equity Fund nor the Underlying Funds compensate Russell for these
services. Russell and its affiliates have offices around the world--in Tacoma,
New York, Toronto, London, Paris, Sydney, Auckland, Singapore and Tokyo.

James A. Jornlin is responsible for the day to day decisions regarding the
investment and reinvestment of the Global Equity Fund within their target asset
allocation strategy percentages. Mr. Jornlin has managed the Global Equity Fund
since its inception. He also oversees certain Underlying Funds as described
below. Mr. Jornlin has been a Senior Investment Officer of FRIMCo since
April 1995. From 1991 to March 1995, Mr. Jornlin was a Senior Research Analyst
with Russell.

FRIMCo's officers and employees who oversee the money managers of the
Underlying Funds are:

- Randall P. Lert, who has been Chief Investment Officer of FRIMCo since
June 1989.

11
<PAGE>
- Jean E. Carter, who has been a Portfolio Manager of FRIMCo since April
1994. Ms. Carter, jointly with another portfolio manager listed in this
section, has primary responsibility for management of the International
and International Securities Funds.

- James A. Jornlin, who has been a Senior Investment Officer of FRIMCo since
April 1995. From 1991 to March 1995, Mr. Jornlin was a Senior Research
Analyst with Russell. Mr. Jornlin has primary responsibility for
management of the Tax-Managed Global Equity, Equity Aggressive Strategy,
Aggressive Strategy, Balanced Strategy, Moderate Strategy and Conservative
Strategy and, jointly with another portfolio manager listed in this
section, has primary responsibility for the Emerging Markets and Real
Estate Securities Funds.

- C. Nola Kulig, who has been a Portfolio Manager of FRIMCo since January
1996. From 1994 to 1995, Ms. Kulig was a member of the Alpha Strategy
Group. From 1988 to 1994, Ms. Kulig was Senior Research Analyst with
Russell. Ms. Kulig, jointly with another portfolio manager listed in this
section, has primary responsibility for management of the Equity I,
Equity II, Equity III, Equity Q, Tax-Managed Small Cap, Diversified
Equity, Quantitative Equity, Special Growth and Equity Income Funds.

- Brian C. Tipple, who has been a Portfolio Manager of FRIMCo since July
1999. From 1991 to 1999, Mr. Tipple was a Client Executive with Frank
Russell Trust Company. From 1986 to 1989, he was an Investment Officer
with Frank Russell Trust Company. Mr. Tipple has primary responsibility
for the Tax-Managed Large Cap Fund.

For its investment advisory and administrative services, FRIMCo receives an
aggregate fee from the Global Equity Fund at the annual rate of 0.25% of the
average daily net assets of the Fund, payable to FRIMCo monthly on a pro rata
basis. Of this aggregate amount, 20% is attributable to advisory services and
0.05% is attributable to administrative services. FRIMCo has contractually
agreed to waive its .20% advisory fee to which it is entitled from the Global
Equity Fund.

12
<PAGE>
In addition to the advisory fee payable by the Global Equity Fund, the Fund
will bear indirectly a proportionate share of operating expenses that include
the advisory fees paid by the Underlying Funds in which it invests. While a
shareholder of the Global Equity Fund will also bear a proportionate part of
advisory fees paid by an Underlying Fund, each of the advisory fees paid is
based upon the services received by the Global Equity Fund. From the advisory
fee that it receives from each Underlying Fund, FRIMCo pays the Underlying
Fund's money managers for their investment selection services. FRIMCo retains
any remainder as compensation for the services described above and to pay
expenses. The annual rate of the advisory fees, payable to FRIMCo monthly on a
pro rata basis, are the following percentages of the average daily net assets of
each Underlying Fund: Quantitative Equity Fund 0.73%, International Securities
Fund 0.90%, Emerging Markets Fund 1.15%, Tax-Managed Large Cap Fund .70% and
Tax-Managed Small Cap Fund .98%. The fees of the Underlying Funds may be higher
than the fees charged by some mutual funds with similar objectives which use
only a single money manager.

THE MONEY MANAGERS FOR THE UNDERLYING FUNDS

Each Underlying Fund allocates its assets among the money managers listed
under "Money Manager Information" at the end of this Prospectus. FRIMCo, as the
Underlying Funds' advisor, may change the allocation of an Underlying Fund's
assets among money managers at any time. The Underlying Funds received an
exemptive order from the Securities and Exchange Commission (SEC) that permits
an Underlying Fund to engage or terminate a money manager at any time, subject
to approval by the Underlying Fund's Board of Trustees (Board), without a
shareholder vote. An Underlying Fund notifies its shareholders within 60 days of
when a money manager begins providing services. The Underlying Funds select
money managers based primarily upon the research and recommendations of FRIMCo
and Russell. FRIMCo and Russell evaluate quantitatively and qualitatively the
money manager's skills and results in managing assets for specific asset
classes, investment styles and strategies. Short-term investment performance, by
itself, is not a controlling factor in any Underlying Fund's selection or
termination of a money manager.

J.P. Morgan Investment Management, Inc. ("Morgan") manages the Tax-Managed
Large Cap Fund. Robin Chance is the individual responsible for the management of
the Fund. Ms. Chance, Vice President and member of the Structured Equity Group,
has responsibility for tax aware structured equity strategies. Ms. Chance joined
Morgan in 1987. Ms. Chance is a CFA and a graduate of the University of
Pennsylvania's Management and Technology Program, also earning an MBA from New
York University's Stern School of Business.

13
<PAGE>
Geewax, Terker & Company manages the Tax-Managed Small Cap Fund. John Julius
Geewax is the portfolio manager responsible for the management of the Fund. Mr.
Geewax is a graduate of the University of Pennsylvania and has earned a J.D.
from the University of Pennsylvania as well as an MBA and a PhD from the Wharton
School of the University of Pennsylvania. Mr. Geewax co-founded the firm in
1982. He is currently a general partner and portfolio manager responsible for
research and development and trading oversight for all of the firm's investment
services.

INVESTMENT OBJECTIVES, INVESTMENT STRATEGIES
AND RISKS OF THE UNDERLYING FUNDS

The objective and principal strategies and risks of each Underlying Fund are
described in this section. Further information about the Underlying Funds is
contained in the Statement of Additional Information as well as in the
Prospectuses of the Underlying Funds. Because the Global Equity Fund invests in
the Underlying Funds, investors of the Global Equity Fund will be affected by
the Underlying Funds' investment strategies in direct proportion to the amount
of assets the Global Equity Fund allocates to the Underlying Fund pursuing such
policies. To request a copy of a Prospectus for an Underlying Fund, contact FRIC
at 800/787-7354 (in Washington, 253/627-7001).

QUANTITATIVE EQUITY FUND
- -----------------------------

PRINCIPAL The Quantitative Equity Fund invests primarily in common
INVESTMENT stocks of medium and large capitalization companies, which
STRATEGIES are predominately US- based.

14
<PAGE>
<TABLE>
<S> <C>
The Fund employs a multi-manager approach whereby portions
of the Fund are allocated to different money managers who
employ distinct investment styles. The Fund intends these
styles to complement one another. When determining how to
allocate its assets among money managers, the Fund considers
a variety of factors. These factors include a money
manager's investment style and performance record as well as
the characteristics of the money manager's typical portfolio
investments. These characteristics include capitalization
size, growth and profitability measures, valuation ratios,
economic sector weightings, and earnings and price
volatility statistics. The Fund also considers the manner in
which money managers' historical and expected investment
returns correlate with one another.

Each of the Fund's money managers use quantitative models to
rank securities based upon their expected ability to
outperform the total return of the Russell 1000 Index. Once
a money manager has ranked the securities, it then selects
the securities most likely to outperform and constructs, for
its segment of the Fund, a portfolio that has risks similar
to the Russell 1000 Index. Each money manager performs this
process independently from each other money manager.

Although the Fund, like any mutual fund, maintains liquidity
reserves (i.e., cash awaiting investment or held to meet
redemption requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally, the Fund invests its
liquidity reserves in one or more FRIC money market funds.

15
<PAGE>
<TABLE>
<S> <C>
From time to time, the Fund may take temporary defensive
positions that may be inconsistent with its principal
investment policies in an attempt to respond to adverse
market, economic, political or other conditions.
</TABLE>

INTERNATIONAL SECURITIES FUND
- -----------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide favorable total return and additional
OBJECTIVE diversification for US investors.

The Fund's investments span most of the developed nations of
the world (particularly Europe and the Far East) to maintain
a high degree of diversification among countries and
currencies. Because international equity investment
performance has a reasonably low correlation to US equity
performance, this Fund may be appropriate for investors who
want to reduce their investment portfolio's overall
volatility by combining an investment in this Fund with
investments in US equities.

16
<PAGE>
<TABLE>
<S> <C>
- MARKET-ORIENTED STYLE emphasizes investments in
companies that appear to be undervalued relative to
their growth prospects. This style may encompass
elements of both the growth and value styles. These
companies may be found in any industry sector. A
variation of this style maintains investments that
replicate country and sector weightings of a broad
international market index.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally, the Fund invests its
liquidity reserves in one or more FRIC money market funds.

EMERGING MARKETS FUND
- ----------------------------

17
<PAGE>
<TABLE>
<S> <C>
PRINCIPAL The Emerging Markets Fund will primarily invest in equity
INVESTMENT securities of companies that are located in countries with
STRATEGIES emerging markets or that derive a majority of their revenues
from operations in such countries. These companies are
referred to as "Emerging Market Companies." For purposes of
the Fund's operations, an "emerging market" country is a
country having an economy and market that the World Bank or
the United Nations consider to be emerging or developing.
These countries generally include every country in the world
except the United States, Canada, Japan, Australia, and most
countries located in Western Europe.

The Fund seeks to maintain a broadly diversified exposure to
emerging market countries and ordinarily will invest in the
securities of issuers in at least three different emerging
market countries.

The Fund employs a multi-manager approach whereby portions
of the Fund are allocated to different money managers who
employ distinct investment styles. The Fund intends these
styles to complement one another. When determining how to
allocate its assets among money managers, the Fund considers
a variety of factors. These factors include a money
manager's investment style and performance record as well as
the characteristics of the money manager's typical portfolio
investments (e.g., capitalization size, growth and
profitability measures, valuation ratios, economic sector
weightings, and earnings and price volatility statistics).
The Fund also considers the manner in which money managers'
historical and expected investment returns correlate with
one another.

18
<PAGE>
<TABLE>
<S> <C>
The Fund may agree to purchase securities for a fixed price
at a future date beyond customary settlement time. This kind
of agreement is known as a "forward commitment" or as a
"when-issued" transaction.

Up to 15% of the Fund's net assets may be "illiquid"
securities (i.e., securities that do not have a readily
available market or that are subject to resale
restrictions). Additionally, the Fund may lend up to
one-third of its portfolio securities to earn income. These
loans may be terminated at any time. A Fund will receive
either cash or US government debt obligations as collateral.

TAX-MANAGED LARGE CAP FUND (FORMERLY EQUITY T FUND)
- ---------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide capital growth on an after-tax basis by investing
OBJECTIVE principally in equity securities.

PRINCIPAL The Tax-Managed Large Cap Fund invests primarily in equity
INVESTMENT securities of large capitalization US companies, as
STRATEGIES represented by the S&P 500-Registered Trademark- market
index, although the Fund may invest a limited amount in
non-US firms from time to time.

19
<PAGE>
<TABLE>
<S> <C>
The Fund is designed for long-term investors who seek to
minimize the impact of taxes on their investment returns.
The Fund is not designed for short-term investors or for
tax-deferred investment vehicles such as IRAs and 401(k)
plans.

The Fund intends to minimize its taxable distributions to
shareholders in two ways:

20
<PAGE>
<TABLE>
<S> <C>
When Shares are redeemed, the Fund may realize capital gains
or income, impacting all shareholders. The Fund believes
that multiple purchases and redemptions of Fund shares by
individual shareholders could adversely affect the Fund's
strategy of tax-efficiency and could reduce its ability to
contain costs. The Fund further believes that short-term
investments in the Fund are inconsistent with its long-term
strategy. For this reason, the Fund will apply its general
right to refuse any purchases by rejecting purchase orders
from investors whose patterns of purchases and redemptions
in the Fund is inconsistent with the Fund's strategy.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. The Fund may also invest its liquidity
reserves in one or more Frank Russell Investment Company
(FRIC) money market funds.

Additionally, the Fund may lend up to one-third of its
portfolio securities to earn additional income. These loans
may be terminated at any time. The Fund will receive either
cash or US government debt obligations as collateral.

TAX-MANAGED SMALL CAP FUND
- ---------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide capital growth on an after-tax basis by investing
OBJECTIVE principally in equity securities of small capitalization
companies.

PRINCIPAL The Tax-Managed Small Cap Fund invests primarily in equity
INVESTMENT securities of US companies, although the Fund may invest a
STRATEGIES limited amount in non-US firms from time to time.

The Fund generally pursues a market-oriented style of
security selection, which incorporates both a growth style
and a value style, based on quantitative investment models
which are mathematical formulas based on statistical
analyses. This style emphasizes investments in small
capitalization companies that, on a long-term basis, appear
to be undervalued relative to their growth prospects, and
may include both growth and value securities. Under normal
market conditions, the Tax-Managed Small Cap Fund will
invest at least 65 percent of the value of its total assets
in securities that are not included in the S&P 500 market
index.
</TABLE>

21
<PAGE>
<TABLE>
<S> <C>
The Fund seeks to realize capital growth while minimizing
shareholder tax consequences arising from the Fund's
portfolio management activities. In its attention to tax
consequences of its investment decisions, the Fund differs
from most equity mutual funds, which are managed to maximize
pre-tax total return without regard whether their portfolio
management activities result in taxable distributions to
shareholders.

The Fund intends to minimize its taxable distributions to
shareholders in two ways:

The Fund selects and holds portfolio securities based on its
assessment of their potential for long term total returns.
</TABLE>

22
<PAGE>
<TABLE>
<S> <C>
When the Fund's shares are redeemed, the Fund may realize
capital gains or income, impacting all shareholders. The
Fund believes that multiple purchases and redemptions of
Fund shares by individual shareholders could adversely
affect the Fund's strategy of tax-efficiency and could
reduce its ability to contain costs. The Fund further
believes that short-term investments in the Fund are
inconsistent with its long-term strategy. For this reason,
the Fund will apply its general right to refuse any
purchases by rejecting purchase orders from investors whose
patterns of purchases and redemptions in the Fund is
inconsistent with the Fund's strategy.

23
<PAGE>
PRINCIPAL RISKS

The following table describes principal types of risks the Global Equity
Fund is subject to, based on the investments made by the Underlying Funds, and
lists next to each description the Underlying Funds most likely to be affected
by the risk. Other Underlying Funds that are not listed may be subject to one or
more of the risks, based on the allocation of assets among the Underlying Funds,
but will not do so in a way that is expected to principally affect the
performance of the Global Equity Fund or Underlying Fund as a whole. Please
refer to the Global Equity Fund's Statement of Additional Information for a
discussion of risks associated with types of securities held by the Funds and
investment practices employed.

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>

MULTI-MANAGER The investment styles employed by a Fund's Global Equity Fund
APPROACH money managers may not be complementary. The
interplay of the various strategies employed by (UNDERLYING FUNDS:
a Fund's multiple money managers may result in QUANTITATIVE EQUITY
the Fund's holding a concentration of certain INTERNATIONAL SECURITIES
types of securities. This concentration may be EMERGING MARKETS)
beneficial or detrimental to the Fund's
performance depending upon the performance of
those securities and the overall economic
environment. The multiple manager approach
could result in a high level of portfolio
turnover, resulting in higher Fund brokerage
expenses and increased tax liability from the
Fund's realization of capital gains.

TAX-SENSITIVE A Fund's tax-managed equity investment strategy Global Equity Fund
MANAGEMENT may not provide as high a return before
consideration of federal income tax (UNDERLYING FUNDS:
consequences as other funds. A tax-sensitive TAX-MANAGED LARGE CAP
investment strategy involves active management TAX-MANAGED SMALL CAP)
and a Fund can realize capital gains.
In response to market, economic, political or
other conditions, a Fund may temporarily use a
different investment strategy for defensive
purposes. If it does so, different factors
could affect the Fund's performance, and the
Fund may not achieve its investment objective.
</TABLE>

24
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
EQUITY SECURITIES The value of equity securities will rise and Global Equity Fund
fall in response to the activities of the
company that issued the stock, general market (UNDERLYING FUNDS:
conditions, and/or economic conditions. QUANTITATIVE EQUITY
INTERNATIONAL SECURITIES
EMERGING MARKETS
TAX-MANAGED LARGE CAP
TAX-MANAGED SMALL CAP)

- -Value Stocks Investments in value stocks are subject to Global Equity Fund
risks that (i) their intrinsic values may never
be realized by the market or (ii) such stock (UNDERLYING FUNDS:
may turn out not to have been undervalued. QUANTITATIVE EQUITY
INTERNATIONAL SECURITIES
TAX-MANAGED LARGE CAP
TAX-MANAGED SMALL CAP)

- -Growth Stocks Growth company stocks may provide minimal Global Equity Fund
dividends that can cushion stock prices in a
market decline. The value of growth company (UNDERLYING FUNDS:
stocks may rise and fall dramatically based, in INTERNATIONAL SECURITIES
part, on investors' perceptions of the company TAX-MANAGED LARGE CAP
rather than on fundamental analysis of the TAX-MANAGED SMALL CAP)
stocks.

- -Market-Oriented Market-oriented investments are generally Global Equity Fund
Investments subject to the risks associated with growth and
value stocks. (UNDERLYING FUNDS:
QUANTITATIVE EQUITY
INTERNATIONAL SECURITIES
TAX-MANAGED LARGE CAP
TAX-MANAGED SMALL CAP)

- -Securities of Small Investments in smaller companies may involve Global Equity Fund
Capitalization greater risks because these companies generally
Companies have a limited track record. Smaller companies (UNDERLYING FUND:
often have narrower markets and more limited TAX-MANAGED SMALL CAP)
managerial and financial resources than larger,
more established companies. As a result, their
performance can be more volatile, which could
increase the volatility of a Fund's portfolio.
</TABLE>

25
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
INTERNATIONAL A Fund's return and net asset value may be Global Equity Fund
SECURITIES significantly affected by political or economic
conditions and regulatory requirements in a (UNDERLYING FUNDS:
particular country. Foreign markets, economies INTERNATIONAL SECURITIES
and political systems may be less stable than EMERGING MARKETS)
US markets, and changes in exchange rates of
foreign currencies can affect the value of a
Fund's foreign assets. Foreign laws and
accounting standards typically are not as
strict as they are in the US and there may be
less public information available about foreign
companies. A Fund's foreign debt securities are
typically obligations of sovereign governments.
These securities are particularly subject to a
risk of default from political instability.
Foreign securities markets may be less liquid
and have fewer transactions than US securities
markets. Additionally, international markets
may experience delays and disruptions in
securities settlement procedures for a Fund's
portfolio securities.

- -Emerging Market Investments in emerging or developing markets (UNDERLYING FUND:
Countries involve exposure to economic structures that EMERGING MARKETS)
are generally less diverse and mature, and to
political systems which have less stability
than those of more developed countries.
Emerging market securities are subject to
currency transfer restrictions and may
experience delays and disruptions in securities
settlement procedures for the Fund's portfolio
securities.

EXPOSING LIQUIDITY By exposing its liquidity reserves to the Global Equity Fund
RESERVES TO EQUITY equity market principally by use of equity
MARKETS futures, a Fund's performance tends to (UNDERLYING FUNDS:
correlate more closely to the performance of QUANTITATIVE EQUITY
the market as a whole. Although this increases INTERNATIONAL SECURITIES
a Fund's performance if equity markets rise, it EMERGING MARKETS
reduces a Fund's performance if equity markets TAX-MANAGED LARGE CAP
decline. TAX-MANAGED SMALL CAP)
</TABLE>

26
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
SECURITIES LENDING If a borrower of a Fund's securities fails Global Equity Fund
financially, the Fund's recovery of the loaned
securities may be delayed or the Fund may lose (UNDERLYING FUNDS:
its rights to the collateral which could result QUANTITATIVE EQUITY
in a loss to a Fund. INTERNATIONAL SECURITIES
EMERGING MARKETS
TAX-MANAGED LARGE CAP
TAX-MANAGED SMALL CAP)

YEAR 2000

- -Year 2000 and Fund The Funds' operations depend on the smooth Global Equity Fund
operations functioning of their service providers'
computer systems. The Funds and their (UNDERLYING FUNDS:
shareholders could be adversely affected if ALL FUNDS)
those computer systems do not properly process
and calculate date-related information on or
after January 1, 2000. Many computer software
systems in use today cannot distinguish between
the year 2000 and the year 1900. Although year
2000-related computer problems could have a
negative effect on the Funds and their
shareholders, the Funds' service providers have
advised the Funds that they are working to
avoid such problems. Because it is the
obligation of those service providers to ensure
the proper functioning of their computer
systems, the Funds do not expect to incur any
material expense in connection with year 2000
preparations.

- -Year 2000 and Fund The Funds and their shareholders could be Global Equity Fund
portfolio adversely affected if the computer systems of
investments the issuers in which the Funds invest or those (UNDERLYING FUNDS:
of the service providers they depend upon, do ALL FUNDS)
not properly process and calculate date-related
information on or after January 1, 2000. If
such an event occurred, the value of those
issuer's securities could be reduced.
</TABLE>

27
<PAGE>

<TABLE>
<CAPTION>
RISK ASSOCIATED WITH DESCRIPTION RELEVANT FUND
- -------------------- ----------- -------------
<S> <C> <C>
- -Year 2000 and Fund A Fund that invests significantly in non-US Global Equity Fund
portfolio issuers may be exposed to a higher degree of
investments in risk from Year 2000 issues than other Funds. It (UNDERLYING FUNDS:
non-U.S. issuers is generally believed that non-US governments INTERNATIONAL SECURITIES
and issuers are less prepared for Year 2000 EMERGING MARKETS)
related contingencies than the US government
and US-based issuers, which could result in a
more significant diminution in value of non-US
issuer's securities on or after January 1,
2000.
</TABLE>

DIVIDENDS AND DISTRIBUTIONS

INCOME DIVIDENDS

The Global Equity Fund distributes substantially all of its net investment
income and net capital gains to shareholders each year. The amount and frequency
of distributions are not guaranteed--all distributions are at the Board's
discretion. Currently, the Board intends to declare dividends from net
investment income, if any, for the Global Equity Fund on a quarterly basis, with
payment being made in April, July, October and December.

CAPITAL GAINS DISTRIBUTIONS

The Board annually intends to declare capital gains distributions through
October 31 (excess of capital gains over capital losses), generally in
mid-December. To meet certain legal requirements, the Global Equity Fund may
declare a special year-end dividend and capital gains distributions during
October, November or December to shareholders of record in that month. These
latter distributions are deemed to have been paid by the Global Equity Fund and
received by you on December 31 of the prior year, provided that the Global
Equity Fund pays them by January 31. Capital gains realized during November and
December will be distributed to you generally during February of the following
year.

In addition, the Global Equity Fund receives capital gains distributions
from the Underlying Funds. Consequently, capital gains distributions may be
expected to vary considerably from year to year. Also, the Global Equity Fund
may generate capital gains through rebalancing the portfolio to meet the Fund's
allocation percentages.

BUYING A DIVIDEND

If you purchase shares just before a distribution, you will pay the full
price for the shares and receive a portion of the purchase price back as a
taxable distribution. This is called "buying a dividend." Unless your account is
a tax-deferred account, dividends paid to you would be included in your gross
income for tax purposes even though you may not have participated in the
increase of the net asset value of the Global Equity Fund, regardless of whether
you reinvested the dividends.

28
<PAGE>
AUTOMATIC REINVESTMENT

Your dividends and other distributions are automatically reinvested at the
closing net asset value on the record date, in additional shares of the Global
Equity Fund, unless you elect to have the dividends or distributions paid in
cash or invested in another Fund. You may change your election by delivering
written notice no later than ten days prior to the payment date to the Global
Equity Fund's Transfer Agent, at Operations Department, P.O. Box 1591, Tacoma,
WA 98401.

TAXES

In general, distributions from the Global Equity Fund are taxable to you as
either ordinary income or capital gains. This is true whether you reinvest your
distributions in additional shares of the Global Equity Fund or receive them in
cash. Any long-term capital gains distributed by the Global Equity Fund are
taxable to you as long-term capital gains no matter how long you have owned your
shares. Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
Distributions taxed as capital gains may be taxable at different rates depending
on how long the Global Equity Fund holds its assets.

When you sell or exchange your shares of the Global Equity Fund, you may
have a capital gain or loss. The tax rate on any gain from the sale or exchange
of your shares depends on how long you have held your shares.

The Global Equity Fund distributions and gains from the sale or exchange of
your shares will generally be subject to state and local income tax. Non-US
investors may be subject to US withholding and estate tax. You should consult
your tax professional about federal, state, local or foreign tax consequences in
holding shares of the Global Equity Fund.

Any foreign taxes paid by an Underlying Fund on its investments may be
passed through to its shareholders as foreign tax credits.

By law, the Global Equity Fund must withhold 31% of your distributions and
proceeds if you do not provide your correct taxpayer identification number, or
certify that such number is correct, or if the IRS instructs the Global Equity
Fund to do so.

Additional information on these and other tax matters relating to the Global
Equity Fund and its shareholders is included in the section entitled "Taxes" in
the SAI.

29
<PAGE>
HOW NET ASSET VALUE IS DETERMINED

NET ASSET VALUE PER SHARE

The net asset value per share is calculated for shares of each Class of the
Global Equity Fund on each business day on which shares are offered or
redemption orders are tendered. For the Global Equity Fund, a business day is
one on which the New York Stock Exchange (NYSE) is open for trading. The NYSE is
not open on national holidays. The Global Equity Fund and all Underlying Funds
determine net asset value as of the close of the NYSE (currently 4:00 p.m.
Eastern Time). The determination is made by appraising the Global Equity Fund's
underlying investments on each business day (i.e., the Underlying Funds at the
current net asset value per share of such Underlying Fund).

VALUATION OF PORTFOLIO SECURITIES

Securities held by the Underlying Funds are typically priced using market
quotations or pricing services when the prices are believed to be reliable--that
is, when the prices reflect the fair market value of the securities. The
Underlying Funds value securities for which market quotations are not readily
available at "fair value," as determined in good faith and in accordance with
procedures established by the Board. The Global Equity Fund invests in
Underlying Funds, such as the International Securities Fund, that holds
portfolio securities listed primarily on foreign exchanges. The net asset value
of those Underlying Funds' shares and therefore, the Global Equity Fund's
shares, may change on a day when you will not be able to purchase or redeem
Global Equity Fund shares. This is because the value of those portfolio
securities may change on weekends or other days when the Global Equity Fund does
not price its shares.

DISTRIBUTION AND SHAREHOLDER
SERVICING ARRANGEMENTS

The Global Equity Fund offers multiple classes of shares: Class C Shares and
Class S Shares.

CLASS C SHARES participate in the Global Equity Fund's Rule 12b-1
distribution plan and in its shareholder servicing plan. Under distribution
plan, Class C Shares pay distribution fees of 0.75% annually for the sale and
distribution of Class C Shares. Under the shareholder servicing plan, the Class
C Shares pay shareholder servicing fees of 0.25% annually for services provided
to Class C shareholders. Because both of these fees are paid out of the Class C
Share assets on an ongoing basis, over time these fees will increase the cost of
a Class C Share investment in the Global Equity Fund, and the distribution fee
may cost an investor more than paying other types of sales charges.

CLASS S SHARES participate in neither the Fund's distribution plan nor the
Fund's shareholder servicing plan.

30
<PAGE>
HOW TO PURCHASE SHARES

The Global Equity Fund is generally available only through a select network
of qualified Financial Intermediaries. If you are not currently working with one
of these Financial Intermediaries, please call Russell Investor Services at
(800) RUSSEL4 (800-787-7354) for assistance in contacting an investment
professional near you.

An initial minimum investment in Class C or Class S Shares of the Global
Equity Fund must be at least $10,000, and any subsequent investments must be at
least $50. FRIMCo, on behalf of the Global Equity Fund, reserves the right to
change, as to the Fund or any class thereof, the categories of investors
eligible to purchase shares of the Fund or class or the required minimum
investment amounts.

Financial Intermediaries may charge their customers a fee for providing
investment-related services. Financial Intermediaries that maintain omnibus
accounts with the Funds may receive administrative fees from the Fund or its
transfer agent. Financial Intermediaries may receive distribution and
shareholder servicing compensation with respect to Class C and Class S shares.

PAYING FOR SHARES

You may purchase shares of the Global Equity Fund through a Financial
Intermediary on any business day the Fund is open. Purchase orders are processed
at the next net asset value per share calculated after the Global Equity Fund
receives your order in proper form (defined in the "Written Instructions"
section), and accepts the order.

All purchases must be made in US dollars. Checks and other negotiable bank
drafts must be drawn on US banks and made payable to "Frank Russell Investment
Company." The Global Equity Fund reserves the right to reject any purchase order
for any reason including, but not limited to, receiving a check which does not
clear the bank or a payment which does not arrive in proper form by settlement
date. You will be responsible for any resulting loss to the Fund. An overdraft
charge may also be applied. Cash, third party checks and checks drawn on credit
card accounts generally will not be accepted. However, exceptions may be made by
prior special arrangement with certain Financial Intermediaries.

OFFERING DATES AND TIMES

Orders must be received by the Global Equity Fund prior to the close of the
NYSE (currently 4:00 p.m. Eastern Time). Purchases can be made on any day when
Global Equity Fund shares are offered. Because Financial Intermediaries'
processing time may vary, please ask your Financial Intermediary representative
when your account will be credited.

ORDER AND PAYMENT PROCEDURES

Generally, you must place purchase orders for Global Equity Fund shares
through a Financial Intermediary. You may pay for your purchase by mail or
electronic funds transfer. Initial purchases require a completed and signed
Application for each new account regardless of the investment method. Specific
payment arrangements should be made with your Financial Intermediary.

31
<PAGE>
BY MAIL

For new accounts, please mail the completed Application to your Financial
Intermediary. Payment for orders may be made by check or other negotiable bank
draft and sent to the Global Equity Fund's Transfer Agent. Certified checks are
not necessary, but checks are accepted subject to collection at full face value
in US funds. Third party checks will not be accepted. Checks should be made
payable to "Frank Russell Investment Company."

BY FEDERAL FUNDS WIRE

You can pay for orders by wiring federal funds to the Global Equity Fund's
Custodian, State Street Bank and Trust Company. All wires must include your
account registration and account number for identification. Inability to
properly identify a wire transfer may prevent or delay timely settlement of your
purchase.

BY AUTOMATED CLEARING HOUSE ("ACH")

You can make initial or subsequent investments through ACH to the Fund's
Custodian, State Street Bank and Trust Company.

AUTOMATED INVESTMENT PROGRAM

You can make regular investments (minimum $50) in the Global Equity Fund in
an established account on a monthly, quarterly, semiannual or annual basis by
automatic electronic funds transfer from a bank account. You may change the
amount or stop the automatic purchase at any time. Contact your Financial
Intermediary for further information on this program and an enrollment form.

THREE DAY SETTLEMENT PROGRAM

The Global Equity Fund will accept orders at the next computed net asset
value through Financial Intermediaries to purchase shares of the Fund for
settlement on the third business day following the receipt of the order. These
orders are paid for by a federal funds wire if the Financial Intermediary has
enrolled in the program and agreed in writing to indemnify the Global Equity
Fund against any losses resulting from non-receipt of payment.

EXCHANGE PRIVILEGE

BY MAIL OR TELEPHONE

Through your Financial Intermediary, you may be able to exchange shares of
the Global Equity Fund for shares of another FRIC Fund. Shares of the Global
Equity Fund offered by this Prospectus may only be exchanged for shares of a
Fund offered by FRIC through another Prospectus under certain conditions and
only in states where the exchange may be legally made. For additional
information, including Prospectuses for other Funds, contact your Financial
Intermediary.

Exchanges may be made by mail or by telephone if the registration of the two
accounts is identical. Contact your Financial Intermediary for assistance in
exchanging shares and, because Financial

32
<PAGE>
Intermediaries' processing time may vary, to find out when your account will be
credited or debited. To request an exchange in writing, please follow the
procedures in the "Written Instructions" section before mailing to your
Financial Intermediary.

IN-KIND EXCHANGE OF SECURITIES

FRIMCo, in its capacity as the Global Equity Fund's investment advisor, may,
at its discretion, permit you to acquire Global Equity Fund shares in exchange
for securities you currently own. Any securities exchanged must: meet the
investment objective, policies and limitations of the Global Equity Fund, have a
readily ascertainable market value, be liquid and not be subject to restrictions
on resale, and have a market value, plus any cash, equal to at least $100,000.

The price at which the exchange will take place will depend upon the
relative net asset value of the shares purchased and securities exchanged.
Securities accepted by the Fund will be valued in the same way the Fund values
its assets. Any interest earned on the securities following their delivery to
the Global Equity Fund and prior to the exchange will be considered in valuing
the securities. All interest, dividends, subscription or other rights attached
to the securities becomes the property of the Fund, along with the securities.
Please contact your Financial Intermediary for further information.

HOW TO REDEEM SHARES

Shares of the Global Equity Fund may be redeemed through your Financial
Intermediary on any business day the Fund is open at the next net asset value
per share calculated after the Fund's Transfer Agent receives an order in proper
form (defined in the "Written Instructions" section). Payment will ordinarily be
made within seven days after receipt of your request in proper form. Shares
recently purchased by check may not be available for redemption for 15 days
following the purchase or until the check clears, whichever occurs first, to
assure payment has been collected.

REDEMPTION DATES AND TIMES

Redemption requests must be placed through a Financial Intermediary and
received by the Global Equity Fund prior to the close of the NYSE (currently
4:00 p.m. Eastern Time). Because Financial Intermediaries' processing times may
vary, please ask your Financial Intermediary representative when your account
will be debited. Requests can be made by mail or telephone on any day when
Global Equity Fund shares are offered, or through the Systematic Withdrawal
Program.

33
<PAGE>
BY MAIL OR TELEPHONE

SYSTEMATIC WITHDRAWAL PROGRAM

The Global Equity Fund offers a systematic withdrawal program which allows
you to redeem your shares and receive regular payments from your account on an
annual basis on December 10th of each year or, if December 10th is not a
business day, on the prior business day. If you would like to establish a
systematic withdrawal program, please complete the proper section of the account
application and indicate how you would like to receive your payments. When you
redeem your shares under a systematic withdrawal program, it is a taxable
transaction.

ACCOUNTS IN STREET NAME

Many brokers, employee benefit plans and bank trusts combine their client's
holdings in a single omnibus account held in the brokers', plans', or bank
trusts' own name or "street name." Therefore, if you hold Global Equity Fund
shares through a brokerage account, employee benefit plan or bank trust fund,
the Global Equity Fund may have records only of the omnibus account. In this
case, your broker, employee benefit plan or bank is responsible for keeping
track of your account information. This means that you may not be able to
request transactions in your Global Equity Fund shares directly through the
Fund, but can do so only through your broker, plan administrator or bank. Ask
your Financial Intermediary for information on whether your Global Equity Fund
shares are held in an omnibus account.

PAYMENT OF REDEMPTION PROCEEDS

BY CHECK

When you redeem your shares, a check for the redemption proceeds will be
sent to the shareholder(s) of record at the address of record within seven days
after the Global Equity Fund receives a redemption request in proper form.

BY WIRE

If you have established the electronic redemption option, your redemption
proceeds can be wired to your predesignated bank account on the next bank
business day after the Global Equity Fund receives your redemption request. The
Fund may charge a fee to cover the cost of sending a wire transfer for
redemptions less than $1,000, and your bank may charge an additional fee to
receive the wire. Wire transfers can be sent to US commercial banks that are
members of the Federal Reserve System.

34
<PAGE>
WRITTEN INSTRUCTIONS

PROPER FORM: Written instructions must be in proper form. They must include:

A description of the request

The name of the Fund(s)

The class of shares, if applicable

The account number(s)

The amount of money or number of shares being purchased, exchanged,
transferred or redeemed

The name(s) on the account(s)

The signature(s) of all registered account owners

For exchanges, the name of the Fund you are exchanging into

Your daytime telephone number

SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE

UGMA or UTMA (custodial accounts for Written instructions must be signed by the
minors) custodian in his/her capacity as it appears in
the account registration.

Joint tenancy shareholders whose Written instructions must by signed by the
co-tenants are deceased surviving tenant(s). A certified copy of the
death certificate must accompany the request.
</TABLE>

35
<PAGE>
SIGNATURE GUARANTEE

The Global Equity Fund reserves the right to require a signature guarantee
under certain circumstances. A signature guarantee verifies the authenticity of
your signature. You should be able to obtain a signature guarantee from a bank,
broker, credit union, savings association, clearing agency, or securities
exchange or association, but not a notary public. Call your financial
institution to see if it has the ability to guarantee a signature.

ACCOUNT POLICIES

THIRD PARTY TRANSACTIONS

If you purchase Global Equity Fund shares as part of a program of services
offered by a Financial Intermediary, you may be required to pay additional fees.
You should contact your Financial Intermediary for information concerning what
additional fees, if any, may be charged.

REDEMPTION IN-KIND

The Fund may pay for any portion of the redemption amount in excess of
$250,000 by a distribution in-kind of securities from the Fund's portfolio,
instead of in cash. If you receive an in-kind distribution of portfolio
securities, and choose to sell them, you will incur brokerage charges and
continue to be subject to tax consequences and market risk pending any sale.

36
<PAGE>
MONEY MANAGER INFORMATION

The money managers have no affiliations with the Global Equity Fund or the
Fund's service providers other than their management of Underlying Fund assets.
Each money manager has been in business for at least three years, and is
principally engaged in managing institutional investment accounts. These
managers may also serve as managers or advisers to other Funds in FRIC, or to
other clients of FRIMCo or of Russell, including its wholly owned subsidiary,
Frank Russell Trust Company.

This section identifies the money managers for the Underlying Funds in which
the Global Equity Fund invests.

QUANTITATIVE EQUITY FUND

BARCLAYS GLOBAL FUND ADVISORS, N.A., 45 Fremont Street, San Francisco, CA
94105.

FRANKLIN PORTFOLIO ASSOCIATES LLC, Two International Place, 22nd Floor,
Boston, MA 02110-4104.

J.P. MORGAN INVESTMENT MANAGEMENT, INC., 522 Fifth Ave., 6th Floor, New
York, NY 10036.

JACOBS LEVY EQUITY MANAGEMENT, INC., 280 Corporate Center, 3 ADP Boulevard,
Roseland, NJ 07068.

INTERNATIONAL SECURITIES FUND

DELAWARE INTERNATIONAL ADVISERS LIMITED, 80 Cheapside, 3rd Floor, London
EC2V6EE England.

FIDELITY MANAGEMENT TRUST COMPANY, 82 Devonshire Street, Boston, MA, 02109.

J.P. MORGAN INVESTMENT MANAGEMENT, INC., See: Quantitative Equity Fund.

MASTHOLM ASSET MANAGEMENT, LLC, 10500 N.E. 8th Street, Suite 660, Bellevue,
WA 98004.

MONTGOMERY ASSET MANAGEMENT, LLC, 101 California Street, San Francisco, CA
94111.

OECHSLE INTERNATIONAL ADVISORS, LLC, One International Place, 23rd Floor,
Boston, MA 02110.

SANFORD C. BERNSTEIN & CO., INC., 767 Fifth Avenue, 21st Floor, New York, NY
10153.

THE BOSTON COMPANY ASSET MANAGEMENT, INC., One Boston Place, 14th Floor,
Boston, MA 02108-4402.

EMERGING MARKETS FUND

FOREIGN & COLONIAL EMERGING MARKETS LIMITED, Exchange House, Primrose
Street, London, England EC2A 2NY.

GENESIS ASSET MANAGERS, LTD., 21 Knights Bridge, London, SW1X 7LY England.

NICHOLAS-APPLEGATE CAPITAL MANAGEMENT, 600 W. Broadway 32nd Fl. San Diego,
CA 92101.

SANFORD C. BERNSTEIN & CO. INC., See: International Securities Fund.

37
<PAGE>
SCHRODERS CAPITAL MANAGEMENT INTERNATIONAL LIMITED, 31 Greshman Street,
London, UK EC2V 7QA.

TAX-MANAGED LARGE CAP FUND
(FORMERLY EQUITY T FUND)

J.P. MORGAN INVESTMENT MANAGEMENT, INC., See: Emerging Markets Fund.

TAX-MANAGED SMALL CAP FUND

GEEWAX, TERKER & COMPANY, 99 Starr Street, Phoenixville, PA 19460.

IN CONSIDERING INVESTMENT IN THE GLOBAL EQUITY FUND, DO NOT RELY ON ANY
INFORMATION UNLESS IT IS CONTAINED IN THIS PROSPECTUS OR IN THE GLOBAL EQUITY
FUND STATEMENT OF ADDITIONAL INFORMATION. THE GLOBAL EQUITY FUND HAS NOT
AUTHORIZED ANYONE TO ADD ANY INFORMATION OR TO MAKE ANY ADDITIONAL STATEMENTS
ABOUT THE FUND. THE FUND MAY NOT BE AVAILABLE IN SOME JURISDICTIONS OR TO SOME
PERSONS. THE FACT THAT YOU HAVE RECEIVED THIS PROSPECTUS SHOULD NOT, IN ITSELF,
BE TREATED AS AN OFFER TO SELL GLOBAL EQUITY FUND SHARES TO YOU. CHANGES IN THE
AFFAIRS OF THE FUND OR IN THE UNDERLYING FUNDS' MONEY MANAGERS MAY OCCUR AFTER
THE DATE ON THE COVER PAGE OF THIS PROSPECTUS. THIS PROSPECTUS WILL BE AMENDED
OR SUPPLEMENTED TO REFLECT ANY MATERIAL CHANGES TO THE INFORMATION IT CONTAINS.

38
<PAGE>

For more information about the LifePoints Tax-Managed Global Equity Fund, the
following documents are available without charge:

ANNUAL/SEMIANNUAL REPORTS: Additional information about the LifePoints
Tax-Managed Global Equity Fund's investments will be available in the Funds'
annual and semiannual reports to shareholders once the Fund has completed its
first annual or semi-annual period. In the annual report, you will find a
discussion of the Fund's holdings and of market conditions and investment
strategies that significantly affected the Fund's performance during its last
fiscal year.

STATEMENT OF ADDITIONAL INFORMATION (SAI): The SAI provides more detailed
information about the LifePoints Tax-Managed Global Equity Fund.

You may obtain free copies of the annual report for the Fund and the SAI once
the Fund has completed its first annual or semi-annual period or may request
other information, by contacting your Financial Intermediary or the Fund at:
Frank Russell Investment Company
909 A Street
Tacoma, WA 98402
Telephone: 1-800-787-7354
Fax: 253-591-3495
Website: http://www.russell.com

You can review and copy information about the LifePoints Tax-Managed Global
Equity Fund (including the SAI) at the Securities and Exchange Commission's
Public Reference Room in Washington, D.C. You can obtain information on the
operation of the Public Reference Room by calling the Commission at
1-800-SEC-0330. You can obtain copies of this information upon paying a
duplicating fee by writing to the Public Reference Section of the Commission,
Washington, D.C. 20549-6009. Reports and other information about the
LifePoints Tax-Managed Global Equity Fund are also available on the
Commission's Internet website at http://www.sec.gov.

FRANK RUSSELL INVESTMENT COMPANY
Class C and S Shares:

Tax-Managed Global Equity Fund

<TABLE>
<S> <C>
Distributor: Russell Fund Distributors, Inc.
SEC File No. 811-3153
[LOGO] 36-08-084 (11/99)
</TABLE>

<PAGE>

FRANK RUSSELL INVESTMENT COMPANY

[GRAPHIC]

LIFEPOINTS-Registered Trademark-FUNDS

PROSPECTUS

CLASS C SHARES:

EQUITY AGGRESSIVE STRATEGY FUND*
AGGRESSIVE STRATEGY FUND
BALANCED STRATEGY FUND
MODERATE STRATEGY FUND
CONSERVATIVE STRATEGY FUND

NOVEMBER 30, 1999

909 A STREET, TACOMA, WA 98402 - 800-787-7354 - 253-627-7001

As with all mutual funds, the Securities and Exchange Commission has neither
determined that the information in this prospectus is accurate or complete, nor
approved or disapproved of these securities. It is a criminal offense to state
otherwise.

[LOGO]

<PAGE>
TABLE OF CONTENTS

<TABLE>
<S> <C>
Risk/Return Summary
Investment Objective.................................... 3
Principal Investment Strategies......................... 4
Principal Risks......................................... 5
Performance............................................. 6
Fees and Expenses....................................... 11
Summary Comparison of the Funds............................. 13
The Purpose of the Funds--Multi-Style, Multi-Manager
Diversification........................................... 15
Management of the Underlying Funds and the LifePoints
Funds..................................................... 16
The Money Managers for the Underlying Funds................. 19
Investment Objectives, Investment Strategies and Risks of
the Underlying Funds...................................... 20
Principal Risks............................................. 34
Dividends and Distributions................................. 41
Taxes....................................................... 41
How Net Asset Value Is Determined........................... 42
Distribution and Shareholder Servicing Arrangements......... 43
How to Purchase Shares...................................... 43
Exchange Privilege.......................................... 46
How to Redeem Shares........................................ 47
Payment of Redemption Proceeds.............................. 48
Written Instructions........................................ 48
Account Policies............................................ 49
Financial Highlights........................................ 50
Money Manager Information................................... 60
</TABLE>
<PAGE>
RISK/RETURN SUMMARY

INVESTMENT OBJECTIVE

<TABLE>
<S> <C>
EQUITY AGGRESSIVE seeks to achieve high, long-term capital appreciation, while
STRATEGY FUND* recognizing the possibility of high fluctuations in
year-to-year market values.

AGGRESSIVE STRATEGY seeks to achieve high, long-term capital appreciation with
FUND low current income, while recognizing the possibility of
substantial fluctuations in year-to-year market values.

BALANCED STRATEGY seeks to achieve a moderate level of current income and,
FUND over time, above-average capital appreciation with moderate
risk.

MODERATE STRATEGY seeks to achieve moderate long-term capital appreciation
FUND with high current income, while recognizing the possibility
of moderate fluctuations in year-to-year market values.

CONSERVATIVE seeks to achieve moderate total rate of return through low
STRATEGY FUND capital appreciation and reinvestment of a high level of
current income.
</TABLE>

* Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund.

3
<PAGE>
PRINCIPAL INVESTMENT STRATEGIES

4
<PAGE>
DIVERSIFICATION

PRINCIPAL RISKS

You should consider the following factors before investing in the LifePoints
Funds:

- An investment in the LifePoints Funds, like any investment, has risks. The
value of each LifePoints Fund fluctuates, and you could lose money.

- An investment in any of the LifePoints Funds is not a bank deposit and is
not insured or guaranteed by the Federal Deposit Insurance Corporation or
any other government agency.

5
<PAGE>
PERFORMANCE

The tables accompanying the bar charts further illustrate the risks of
investing in the LifePoints Funds by showing how each LifePoints Fund's average
annual returns for one year and since the beginning of operations of such
LifePoints Fund compare with the returns of certain indexes that measure broad
market performance. The performance information shown does not reflect any
account maintenance fee. Any such charge will reduce your return.

No returns are shown for the Class C Shares of any LifePoints Fund because
those Shares were not issued during the periods shown. If the Rule 12b-1
distribution fees for the Class C Shares had been reflected in the returns shown
for Class E Shares, the returns would have been lower.

Past performance is no indication of future results.

- --------------------------------------------------------------------------------

EQUITY AGGRESSIVE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 13.75%
</TABLE>

BEST QUARTER: 4TH-1998 17.7%
WORST QUARTER: 3RD-1998 (14.0)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Equity Aggressive Strategy Fund Class
E....................................... 13.75% 8.69%
Russell 1000-Registered Trademark-
Index**................................. 27.02 23.99
Salomon Smith Barney BMI Ex-US Index**... 17.24 6.57
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.99
Equity Aggressive Strategy Composite
Index#.................................. 17.71 13.07
----------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations by issuing Class E Shares on September 30, 1997.

6
<PAGE>
- --------------------------------------------------------------------------------

AGGRESSIVE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 11.69%
</TABLE>

BEST QUARTER: 4TH-1998 14.3%
WORST QUARTER: 3RD-1998 (11.6)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Aggressive Strategy Fund Class E......... 11.69% 8.79%
Russell 1000 Index**..................... 27.07 23.99
Salomon Smith Barney BMI Ex-US Index**... 17.24 6.57
Lehman Brothers Aggregate Bond Index**... 8.69 9.40
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.99
Aggressive Strategy Composite Index#..... 14.68 10.80
----------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations by issuing Class E Shares on September 16, 1997.

7
<PAGE>
--------------------------------------------------------------------------

BALANCED STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 11.66%
</TABLE>

BEST QUARTER: 4TH-1998 10.5%
WORST QUARTER: 3RD-1998 (7.2)%

<TABLE>
<CAPTION>
----------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Balanced Strategy Fund Class E........... 11.66% 9.80%
Lehman Brothers Aggregate Bond Index**... 8.69 9.40
Russell 1000 Index**..................... 27.07 23.99
Salomon Smith Barney BMI Ex-US Index**... 17.24 6.57
Salomon Smith Barney 3-Month Treasury
Bill Index.............................. 5.05 4.99
Balanced Strategy Composite Index#....... 13.72 11.23
----------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations by issuing Class E Shares on September 16, 1997.

8
<PAGE>
- --------------------------------------------------------------------------------

MODERATE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 10.19%
</TABLE>

BEST QUARTER: 4TH-1998 6.8%
WORST QUARTER: 3RD-1998 (3.8)%

<TABLE>
<CAPTION>
---------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Moderate Strategy Fund Class E.......... 10.19% 8.04%
Merrill Lynch 1-2.99 Year Treasury
Index**................................ 7.00 6.97
Lehman Brothers Aggregate Bond Index**.. 8.69 9.40
Russell 1000 Index**.................... 27.02 23.99
Salomon Smith Barney 3-Month Treasury
Bill Index............................. 5.05 4.99
Moderate Strategy Composite Index#...... 11.30 9.78
---------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations by issuing Class E Shares on October 2, 1997.

9
<PAGE>
- --------------------------------------------------------------------------------

CONSERVATIVE STRATEGY FUND
(FOR THE PERIODS ENDED DECEMBER 31)

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<CAPTION>
ANNUAL TOTAL RETURNS CLASS E
<S> <C>
1998 7.70%
</TABLE>

BEST QUARTER: 4TH-1998 3.6%
WORST QUARTER: 3RD-1998 (0.8)%

<TABLE>
<CAPTION>
---------------------------------------------------------------------
SINCE
AVERAGE ANNUAL TOTAL RETURNS 1 YEAR INCEPTION*
---------------------------- ------ ----------
<S> <C> <C>
Conservative Strategy Fund Class E...... 7.70% 7.95%
Merrill Lynch 1-2.99 Year Treasury
Index**................................ 7.00 6.81
Lehman Brothers Aggregate Bond Index**.. 8.69 8.75
Salomon Smith Barney 3-Month Treasury
Bill Index............................. 5.05 4.97
Revised Conservative Strategy Composite
Index#................................. 8.72 8.09
---------------------------------------------------------------------
</TABLE>

----------------------------

* Commenced operations on November 7, 1997.

** Prior to November 1, 1999, the comparative index for the Fund was the
Salomon Smith Barney 3-month Treasury Bill Index. The Fund believes the
Merrill Lynch 1-2.99 Year Treasury Index and the Lehman Brothers
Aggregate Bond Index are more broadly representative of the securities
and strategies likely to be employed by the Fund and provide more
useful information as a comparative basis for evaluation of the Fund's
performance.

# The Revised Conservative Strategy Composite Index is comprised of the
following indices: 60% Merrill Lynch 1-2.99 Year Treasury Index, 18%
Lehman Brothers Aggregate Bond Index, 11% Russell 1000 Index, 5%
Salomon Smith Barney BMI Ex-US, 5% NAREIT Equity REIT Index and 1% IFC
Investable Composite Index.
-----------------------------------------------------------------------

10
<PAGE>
FEES AND EXPENSES

These tables describe the fees and expenses that you may pay if you buy and
hold shares of the LifePoints Funds.

SHAREHOLDER FEES
(FEE PAID DIRECTLY FROM YOUR INVESTMENT)

<TABLE>
<CAPTION>
MAXIMUM SALES
MAXIMUM SALES CHARGE (LOAD) MAXIMUM
CHARGE (LOAD) MAXIMUM IMPOSED ON ACCOUNT
IMPOSED ON DEFERRED SALES REINVESTED REDEMPTION EXCHANGE MAINTENANCE
PURCHASES CHARGE (LOAD) DIVIDENDS FEES FEES FEES
--------- ------------- --------- ---------- -------- -----------
<S> <C> <C> <C> <C> <C> <C>
Each Fund (Class C)........... None None None None None None
</TABLE>

ANNUAL FUND OPERATING EXPENSES
(EXPENSES THAT WERE DEDUCTED FROM FUND ASSETS)
(% OF NET ASSETS)

- ------------------------

* Pursuant to the rules of the National Association of Securities Dealers,
Inc. ("NASD"), the aggregate initial sales charges, deferred sales charges
and asset-based sales charges on shares of the Funds may not exceed 6.25% of
total gross sales, subject to certain exclusions. This 6.25% limitation is
imposed on the Class C Shares of the Funds rather than on a per shareholder
basis. Therefore, long-term shareholders of the Class C Shares may pay more
than the economic equivalent of the maximum front-end sales charges
permitted by the NASD.

** The Fund expenses shown in this table do not include the pro-rata expenses
of the Underlying Funds, which are shown in the next two tables. For
purposes of this table, Other Expenses for Class C includes a shareholder
services fee of up to 0.25% of average daily net assets. Annual operating
expenses for Class C Shares are based on average net assets expected to be
invested during the year ending December 31, 1999. During the course of this
period, expenses may be more or less than the amount shown. Other Expenses
have been restated to reflect changes to the Funds' Transfer and Dividend
Disbursing Agency Agreement, which became effective June 8, 1998. Prior to
December 1, 1998, FRIMCo provided advisory and administrative services to
the Funds pursuant to a single Management Agreement for which each Fund paid
a single fee. Since then, FRIMCo's advisory and administrative services have
been provided under a separate advisory agreement and administrative
agreement which provide for the fees reflected in the table.

# FRIMCo has contractually agreed to waive, at least through November 30, 2000,
its aggregate 0.25% combined advisory and administrative fees. Certain
LifePoints Funds' operating expenses will be paid by the Underlying Funds
and/or FRIMCo, as more fully described below.

11
<PAGE>
+ If you purchase Shares of a LifePoints Fund through a Financial
Intermediary, such as a bank or an investment adviser, may also pay
additional fees to the intermediary for services provided by the
intermediary. You should contact your financial intermediary for information
concerning what additional fees, if any, will be charged.

The total direct and indirect operating expense ratios of each class of
shares of each LifePoints Fund (calculated as a percentage of average net
assets) are as follows:

<TABLE>
<CAPTION>
CLASS C
-------
<S> <C>
Equity Aggressive Strategy.................................. 2.10%
Aggressive Strategy......................................... 2.07%
Balanced Strategy........................................... 1.96%
Moderate Strategy........................................... 1.82%
Conservative Strategy....................................... 1.75%
</TABLE>

12
<PAGE>
LifePoints Fund's assets among the underlying FRIC Funds and the actual expenses
of the underlying LifePoints Funds.

EXAMPLE

THIS EXAMPLE IS INTENDED TO HELP YOU COMPARE THE COST OF INVESTING IN EACH
LIFEPOINTS FUND WITH THE COST OF INVESTING IN OTHER MUTUAL FUNDS.

Although your actual costs may be higher or lower, under these assumptions
your costs would be:

SUMMARY COMPARISON OF THE FUNDS

13
<PAGE>
The allocation of each LifePoints Fund's investment in the Underlying Funds
is illustrated in the following charts:

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

<TABLE>
<S> <C>
Diversified Equity 30%
Special Growth 10%
Quantitative Equity 30%
International Securities 20%
Emerging Markets 5%
Real Estate Securities 5%
Equity Aggressive Strategy Fund
</TABLE>

EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC

14
<PAGE>
THE PURPOSE OF THE FUNDS--MULTI-STYLE, MULTI-MANAGER DIVERSIFICATION

Three functions form the core of Russell's consulting services:

- OBJECTIVE SETTING: Defining appropriate investment objectives and desired
investment returns, based on a client's unique situation and risk
tolerance.

- ASSET ALLOCATION: Allocating a client's assets among different asset
classes-- such as common stocks, fixed-income securities, international
securities, temporary cash investments and real estate--in a way most
likely to achieve the client's objectives and desired returns.

When this process is completed, a client's assets are invested using a
"multi-style, multi-manager diversification" technique. The goals of this
process are to reduce risk and to increase returns.

15
<PAGE>
The LifePoints Funds believe, however, that it is possible to select
managers who have shown a consistent ability to achieve superior results within
subsets or styles of specific asset classes and investment styles by employing a
unique combination of qualitative and quantitative measurements. The Underlying
Funds in which the LifePoints Funds invest combine these select managers with
other managers within the same asset class who employ complementary styles. By
combining complementary investment styles within an asset class, investors are
better able to reduce their exposure to the risk of any one investment style
going out of favor.

MANAGEMENT OF THE UNDERLYING FUNDS
AND THE LIFEPOINTS FUNDS

16
<PAGE>
Russell is a subsidiary of The Northwestern Mutual Life Insurance Company.
Founded in 1857, Northwestern Mutual is a mutual life insurance corporation
headquartered in Milwaukee, Wisconsin. It leads the US in both individual life
insurance sold annually and individual life insurance in force.

FRIMCo's officers and employees who oversee the money managers of the
Underlying Funds are:

- Randall P. Lert, who has been Chief Investment Officer of FRIMCo since
June 1989.

17
<PAGE>
Aggressive Strategy, Aggressive Strategy, Balanced Strategy, Moderate
Strategy and Conservative Strategy Funds and, jointly with another
portfolio manager listed in this section, has primary responsibility for
the Emerging Markets and Real Estate Securities Funds.

18
<PAGE>
THE MONEY MANAGERS FOR THE UNDERLYING FUNDS

19
<PAGE>
INVESTMENT OBJECTIVES, INVESTMENT STRATEGIES
AND RISKS OF THE UNDERLYING FUNDS

DIVERSIFIED EQUITY FUND
- ---------------------------

<TABLE>
<S> <C>
INVESTMENT To provide income and capital growth by investing
OBJECTIVE principally in equity securities.

20
<PAGE>
<TABLE>
<S> <C>
Additionally, the Fund is diversified by equity substyle.
For example, within the Growth Style, the Fund expects to
employ both an Earnings Momentum substyle (concentrating on
companies with more volatile and accelerating growth rates)
and Consistent Growth substyle (concentrating on companies
with stable earnings growth over an economic cycle).

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally the Fund invests its
liquidity reserves in one or more Frank Russell Investment
Company (FRIC) money market Funds.

SPECIAL GROWTH FUND
- ------------------------

<TABLE>
<S> <C>
INVESTMENT To maximize total return primarily through capital
OBJECTIVE appreciation and assuming a higher level of volatility than
Diversified Equity Fund.

21
<PAGE>
<TABLE>
<S> <C>
The Fund employs a "multi-style, multi manager" approach
whereby portions of the Fund are allocated to different
money managers who employ distinct investment styles. The
Fund uses three principal investment styles, intended to
complement one another:

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally the Fund invests its
liquidity reserves in one or more FRIC money market Funds.
</TABLE>

22
<PAGE>
<TABLE>
<S> <C>
Up to 15% of a Fund's net assets may be "illiquid"
securities (i.e., securities that do not have a readily
available market or that are subject to resale
restrictions). Additionally, the Fund may lend up to
one-third of its portfolio securities to earn income. These
loans may be terminated at any time. The Fund will receive
either cash or US government debt obligations as collateral.

QUANTITATIVE EQUITY FUND
- -----------------------------

PRINCIPAL The Quantitative Equity Fund invests primarily in common
INVESTMENT stocks of medium and large capitalization companies, which
STRATEGIES are predominately
US-based.

23
<PAGE>
<TABLE>
<S> <C>
Each of the Fund's money managers use quantitative models to
rank securities based upon their expected ability to
outperform the total return of the Russell 1000 Index. Once
a money manager has ranked the securities, it then selects
the securities most likely to outperform and constructs, for
its segment of the Fund, a portfolio that has risks similar
to the Russell 1000 Index. Each money manager performs this
process independently from each other money manager.

INTERNATIONAL SECURITIES FUND
- -----------------------------------

<TABLE>
<S> <C>
INVESTMENT To provide favorable total return and additional
OBJECTIVE diversification for US investors.

24
<PAGE>
<TABLE>
<S> <C>
The Fund's investments span most of the developed nations of
the world (particularly Europe and the Far East) to maintain
a high degree of diversification among countries and
currencies. Because international equity investment
performance has a reasonably low correlation to US equity
performance, this Fund may be appropriate for investors who
want to reduce their investment portfolio's overall
volatility by combining an investment in this Fund with
investments in US equities.

25
<PAGE>
<TABLE>
<S> <C>
When determining how to allocate its assets among money
managers, the Fund considers a variety of factors. These
factors include a money manager's investment style and
performance record as well as the characteristics of the
money manager's typical portfolio investments. These
characteristics include capitalization size, growth and
profitability measures, valuation ratios, economic sector
weightings, and earnings and price volatility statistics.
The Fund also considers the manner in which money managers'
historical and expected investment returns correlate with
one another.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund exposes these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally the Fund invests its
liquidity reserves in one or more FRIC money market Funds.

DIVERSIFIED BOND FUND
- -------------------------

<TABLE>
<S> <C>
INVESTMENT To provide effective diversification against equities and a
OBJECTIVE stable level of cash flow by investing in fixed-income
securities.

26
<PAGE>
<TABLE>
<S> <C>
The average weighted duration of the Fund's portfolio
typically ranges within 10% of the average weighted duration
of the Lehman Brothers Aggregate Bond Index, which was 4.5
years as of December 31, 1998, but may vary up to 25% from
the Index's duration. The Fund has no restrictions on
individual security duration.

27
<PAGE>
SHORT TERM BOND FUND
- --------------------------

28
<PAGE>
<TABLE>
<S> <C>
The Fund may enter into interest rate futures contracts,
options on such futures contracts, and interest rate swaps
(i.e., agreements to exchange the Fund's rights to receive
certain interest payments) as a substitute for holding
physical securities or to facilitate the implementation of
its investment strategy, but not for leverage purposes.

MULTISTRATEGY BOND FUND
- -----------------------------

29
<PAGE>
<TABLE>
<S> <C>
The Fund invests in securities of issuers in a variety of
sectors of the fixed-income market. The Fund's money
managers identify sectors of the fixed-income market that
they believe are undervalued and concentrate the Fund's
investments in those sectors. These sectors will differ over
time. To a lesser extent, the Fund may attempt to anticipate
shifts in interest rates and hold securities that the Fund
expects to perform well in relation to market indexes, as a
result of such shifts. Additionally, the Fund typically
holds proportionately fewer US Treasury obligations than are
represented in the Lehman Brothers Aggregate Bond Index.

REAL ESTATE SECURITIES FUND
- --------------------------------

<TABLE>
<S> <C>
INVESTMENT To generate a high level of total return through above
OBJECTIVE average current income, while maintaining the potential for
capital appreciation.

30
<PAGE>
<TABLE>
<S> <C>
The Fund invests primarily in securities of companies that
own and/or manage properties, known as real estate
investment trusts (REITs). REITs may be composed of anywhere
from two to over 1,000 properties. The Fund may also invest
in equity and debt securities of other types of real
estate-related companies. These companies are predominately
US-based, although the Fund may invest a limited portion of
its assets in non-US firms from time to time.

The Fund employs a "multi-style, multi manager" approach
whereby portions of the Fund are allocated to different
money managers who employ distinct investment styles. The
Fund intends these investment styles to complement one
another.

When determining how to allocate its assets among money
managers, the Fund considers a variety of factors. These
factors include a money manager's investment style and
performance record as well as the characteristics of the
money manager's typical portfolio investments. These
characteristics include capitalization size, growth and
profitability measures, valuation ratios, property type and
geographic weightings, and earnings and price volatility
statistics. The Fund also considers the manner in which
money managers' historical and expected investment returns
correlate with one another.

The Fund intends to be fully invested at all times. Although
the Fund, like any mutual fund, maintains liquidity reserves
(i.e., cash awaiting investment or held to meet redemption
requests), the Fund may expose these reserves to the
performance of appropriate equity markets by investing in
stock index futures contracts. This causes the Fund to
perform as though its cash reserves were actually invested
in those markets. Additionally, the Fund invests its
liquidity reserves in one or more FRIC money market Funds.

31
<PAGE>
EMERGING MARKETS FUND
- ----------------------------

The Fund seeks to maintain a broadly diversified exposure to
emerging market countries and ordinarily will invest in the
securities of issuers in at least three different emerging
market countries.

32
<PAGE>
<TABLE>
<S> <C>
The Fund employs a multi-manager approach whereby portions
of the Fund are allocated to different money managers who
employ distinct investment styles. The Fund intends these
styles to complement one another. When determining how to
allocate its assets among money managers, the Fund considers
a variety of factors. These factors include a money
manager's investment style and performance record as well as
the characteristics of the money manager's typical portfolio
investments (e.g., capitalization size, growth and
profitability measures, valuation ratios, economic sector
weightings, and earnings and price volatility statistics).
The Fund also considers the manner in which money managers'
historical and expected investment returns correlate with
one another.

Up to 15% of the Fund's net assets may be "illiquid"
securities (i.e., securities that do not have a readily
available market or that are subject to resale
restrictions). Additionally, the Fund may lend up to
one-third of its portfolio securities to earn income. These
loans may be terminated at any time. A Fund will receive
either cash or US government debt obligations as collateral.

33
<PAGE>
PRINCIPAL RISKS

34
<PAGE>

35
<PAGE>

36
<PAGE>

37
<PAGE>

38
<PAGE>

YEAR 2000

39
<PAGE>

40
<PAGE>
DIVIDENDS AND DISTRIBUTIONS

INCOME DIVIDENDS

CAPITAL GAINS DISTRIBUTIONS

The Board annually intends to declare capital gains distributions through
October 31 (excess of capital gains over capital losses), generally in
mid-December. To meet certain legal requirements, a LifePoints Fund may declare
a special year-end dividend and capital gains distributions during October,
November or December to shareholders of record in that month. These latter
distributions are deemed to have been paid by a LifePoints Fund and received by
you on December 31 of the prior year, provided that the LifePoints Fund pays
them by January 31. Capital gains realized during November and December will be
distributed to you generally during February of the following year.

BUYING A DIVIDEND

If you purchase shares just before a distribution, you will pay the full
price for the shares and receive a portion of the purchase price back as a
taxable distribution. This is called "buying a dividend." Unless your account is
a tax-deferred account, dividends paid to you would be included in your gross
income for tax purposes even though you may not have participated in the
increase of the net asset value of a LifePoints Fund, regardless of whether you
reinvested the dividends.

AUTOMATIC REINVESTMENT

TAXES

41
<PAGE>
to you as long-term capital gains no matter how long you have owned your shares.
Every January, you will receive a statement that shows the tax status of
distributions you received for the previous year. Distributions declared in
December but paid in January are taxable as if they were paid in December.
Distributions taxed as capital gains may be taxable at different rates depending
on how long a LifePoints Fund holds its assets.

Any foreign taxes paid by an Underlying Fund on its investments may be
passed through to its shareholders as foreign tax credits.

Additional information on these and other tax matters relating to the
LifePoints Funds and their shareholders is included in the section entitled
"Taxes" in the SAI.

HOW NET ASSET VALUE IS DETERMINED

NET ASSET VALUE PER SHARE

VALUATION OF PORTFOLIO SECURITIES

42
<PAGE>
readily available at "fair value," as determined in good faith and in accordance
with procedures established by the Board. If you hold shares in a LifePoints
Fund that invests in an Underlying Fund, such as the International Securities
Fund, that holds portfolio securities listed primarily on foreign exchanges, the
net asset value of both that Underlying Fund's and that LifePoints Fund's shares
may change on a day when you will not be able to purchase or redeem LifePoints
Fund shares. This is because the value of those portfolio securities may change
on weekends or other days when the LifePoints Fund does not price its shares.

DISTRIBUTION AND SHAREHOLDER
SERVICING ARRANGEMENTS

The LifePoints Funds offer multiple classes of shares: Class C Shares, Class
D Shares, Class E Shares and Class S Shares. Class D, E and S Shares are offered
in another LifePoints Fund Prospectus.

CLASS S SHARES do not participate in either the Funds' distribution plan
or the Funds' shareholder services plan.

HOW TO PURCHASE SHARES

LifePoints Funds are generally available only through a select network of
qualified Financial Intermediaries. If you are not currently working with one of
these Financial Intermediaries, please call

43
<PAGE>
Russell Investor Services at (800) RUSSEL4, (800-787-7354) for assistance in
contacting an investment professional near you.

There is no minimum investment in Class C Shares of the LifePoints Funds.
FRIMCo, on behalf of each LifePoints Fund, reserves the right to change, as to
any LifePoints Fund or any class thereof, the categories of investors eligible
to purchase shares of that LifePoints Fund or class.

Financial Intermediaries may charge their customers a fee for providing
investment-related services. Financial Intermediaries that maintain omnibus
accounts with the Funds may receive administrative fees from the Funds or their
transfer agent. Financial Intermediaries may receive shareholder servicing
compensation with respect to Class C Shares of the Funds, and may receive
distribution compensation with respect to Class C Shares.

PAYING FOR SHARES

OFFERING DATES AND TIMES

ORDER AND PAYMENT PROCEDURES

44
<PAGE>
BY MAIL

BY FEDERAL FUNDS WIRE

BY AUTOMATED CLEARING HOUSE ("ACH")

You can make initial or subsequent investments through ACH to the Funds'
Custodian, State Street Bank and Trust Company.

AUTOMATED INVESTMENT PROGRAM

THREE DAY SETTLEMENT PROGRAM

45
<PAGE>
EXCHANGE PRIVILEGE

BY MAIL OR TELEPHONE

An exchange involves the redemption of shares, which is treated as a sale
for income tax purposes. Thus, capital gain or loss may be realized. Please
consult your tax adviser for more information. The LifePoints Fund shares to be
acquired will be purchased when the proceeds from the redemption become
available (up to seven days from the receipt of the request) at the next net
asset value per share calculated after the Funds received the exchange request
in good order.

IN-KIND EXCHANGE OF SECURITIES

46
<PAGE>
HOW TO REDEEM SHARES

REDEMPTION DATES AND TIMES

BY MAIL OR TELEPHONE

SYSTEMATIC WITHDRAWAL PROGRAM

ACCOUNTS IN STREET NAME

47
<PAGE>
PAYMENT OF REDEMPTION PROCEEDS

BY CHECK

BY WIRE

WRITTEN INSTRUCTIONS

PROPER FORM: Written instructions must be in proper form. They must include:

A description of the request

The name of the Fund(s)

The class of shares, if applicable

The account number(s)

The amount of money or number of shares being purchased, exchanged,
transferred or redeemed

The name(s) on the account(s)

The signature(s) of all registered account owners

For exchanges, the name of the Fund you are exchanging into

Your daytime telephone number

48
<PAGE>
SIGNATURE REQUIREMENTS BASED ON ACCOUNT TYPE

UGMA or UTMA (custodial accounts for Written instructions must be signed by the
minors) custodian in his/her capacity as it appears in
the account registration.

Joint tenancy shareholders whose Written instructions must by signed by the
co-tenants are deceased surviving tenant(s). A certified copy of the
death certificate must accompany the request.
</TABLE>

SIGNATURE GUARANTEE

ACCOUNT POLICIES

THIRD PARTY TRANSACTIONS

REDEMPTION IN-KIND

49
<PAGE>
FINANCIAL HIGHLIGHTS

The financial highlights table is intended to help you understand the
LifePoints Fund's financial performance for the past 5 years (or, if a
LifePoints Fund or Class has not been in operation for 5 years, since the
beginning of operations for that LifePoints Fund or Class). Certain information
reflects financial results for a single LifePoints Fund share throughout each
year or period ended December 31 and for the six months ended June 30, 1999. The
total returns in the table represent how much your investment in the LifePoints
Fund would have increased (or decreased) during each period, assuming
reinvestment of all dividends and distributions. This information, except for
the six months ended June 30, 1999 data, has been audited by
PricewaterhouseCoopers LLP, whose report, along with the LifePoints Funds'
financial statements, are included in the Funds' annual report, which is
available upon request. The Funds' semi-annual report for the period ended
June 30, 1999 is also available upon request. The information in the tables
below represents the financial highlights for the LifePoints Fund's Class C and
Class E Shares, respectively, for the periods shown. No Class C Shares were
issued during the period ended December 31, 1998.

- ------------------------

+ Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund.

* For the period February 11, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) The ratios for the period ended June 30, 1999 are annualized.

(d) The ratio for the period ended June 30, 1999 is not meaningful due to the
Class' short period of operation.

50
<PAGE>

- ------------------------

+ Prior to May 1, 1999, this Fund was known as the Equity Balanced Strategy
Fund.

* For the six months ended June 30, 1999 (unaudited).

** For the period September 30, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(c) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(d) For the periods subsequent to December 31, 1998, average month-end shares
outstanding were used for this calculation.

51
<PAGE>

- ------------------------

* For the period January 29, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operations.

52
<PAGE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period September 16, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(c) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(d) For the period ended December 31, 1998, average month-end shares outstanding
were used for this calculation.

53
<PAGE>

- ------------------------

* For the period January 29, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operation.

54
<PAGE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period September 16, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(c) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(d) For the period ended December 31, 1998, average month-end shares outstanding
were used for this calculation.

55
<PAGE>

- ------------------------

* For the period February 11, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operation.

56
<PAGE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period October 2, 1997 (commencement of operations) to December 31,
1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(d) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(e) For the periods subsequent to December 31, 1997, average month-end shares
outstanding were used for this calculation.

57
<PAGE>

- ------------------------

* For the period February 11, 1999 (commencement of sale) to June 30, 1999
(unaudited).

(a) Periods less than one year are not annualized.

(b) Annualized.

(d) The ratio for the period ending June 30, 1999 is not meaningful due to the
Class' short period of operation.

58
<PAGE>

- ------------------------

* For the six months ended June 30, 1999 (unaudited).

** For the period November 7, 1997 (commencement of operations) to
December 31, 1997.

(a) Periods less than one year are not annualized.

(b) The ratios for the periods ended June 30, 1999 and December 31, 1997 are
annualized.

(d) The ratio for the period ended December 31, 1997 has not been annualized due
to the Class' short period of operation.

(e) For the periods subsequent to December 31, 1997, average month-end shares
outstanding were used for the calculation.

59
<PAGE>
MONEY MANAGER INFORMATION