<PAGE>
As Filed with the Securities and Exchange Commission on January 28, 1997
File No. 2-95074
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
-----------------------
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933 /xx/
Pre-Effective Amendment No.____ / /
Post-Effective Amendment No. 15 /xx/
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940 /xx/
Amendment No. 17 /xx/
(Check appropriate box or boxes)
-------------------------
RSI RETIREMENT TRUST
(Exact Name of Registrant as Specified in Charter)
317 Madison Avenue, New York, New York 10017
(Address of Principal Executive Office) (Zip Code)
Registrant's Telephone Number, including Area Code: (2l2) 503-0100
-------------------------
Stephen P. Pollak, Esq.
317 Madison Avenue
New York, New York 10017
(Name and address of agent for service)
Copy to:
Judith L. Shandling, Esq.
Shereff, Friedman, Hoffman & Goodman, LLP
919 Third Avenue
New York, New York 10022
-------------------------
It is proposed that this filing will become effective (check appropriate box):
xx immediately upon filing pursuant to paragraph (b)
- ---
on (date) pursuant to paragraph (b)
- ---
60 days after filing pursuant to paragraph (a)(1)
- ---
on (date) pursuant to paragraph (a)(1)
- ---
75 days after filing pursuant to paragraph (a)(2)
- ---
on (date) pursuant to paragraph (a)(2) of Rule 485.
- ---
If appropriate, check the following box:
___ This post-effective amendment designates a new effective date for a
previously filed post effective amendment.
<PAGE>
Registrant has elected to maintain registration of an indefinite number
of units of Beneficial Interest pursuant to Rule 24f-2 under the Investment
Company Act of 1940, as amended. Registrant's Rule 24f-2 Notice for its fiscal
year ended September 30, 1996 was filed with the Securities and Exchange
Commission on November 27, 1996. Registrant has also elected to maintain
registration of a definite number of units of Beneficial Interest pursuant to
Rule 24e-2 under the Investment Company Act of 1940, as amended.
CALCULATION OF REGISTRATION FEE
- --------------------------------------------------------------------------------
Title of Proposed Proposed
Securities Amount of Maximum Maximum Amount of
Being Units Being Offering Price Aggregate Registration
Registered Registered Per Unit Offering Price* Fee
- --------------------------------------------------------------------------------
Units of
beneficial
interest 877,619 N/A $ 0 None
(no par value)
- --------------------------------------------------------------------------------
* The above calculation has been made pursuant to Rule 24e-2 under the
Investment Company Act of 1940. Registrant, during its fiscal year ended
September 30, 1996, redeemed or repurchased 3,620,600 units. None of such
units have been used for reduction of filing fees pursuant to Rule 24e-2(a)
under the Investment Company Act of 1940 in previous filings during
Registrant's current fiscal year. 2,742,981 of such units have been used for
reduction of filing fees pursuant to Rule 24f-2(c) under the Investment
Company Act of 1940 in previous filings during Registrant's current fiscal
year. The remaining 877,619 redeemed or repurchased units are being used for
reduction of the filing fee hereunder pursuant to Rule 24e-2(a).
2
<PAGE>
CROSS REFERENCE SHEET
N-1A Item No. Location (Caption)
- ------------- ------------------
Part A
- ------
Item 1. Cover Page . . . . . . . . . . . . . Cover Page
Item 2. Synopsis . . . . . . . . . . . . . . Prospectus Summary
Item 3. Condensed Financial
Information. . . . . . . . . . . . Financial Highlights
Item 4. General Description of
Registrant . . . . . . . . . . . . The Fund; Investment
Objectives and Policies;
Investment Restrictions;
Distributions and Taxes
Item 5. Management of the Fund . . . . . . . Administration of the
Fund;Investment Managers;
General Information
Item 5A. Management's' Discussion
of Fund Performance. . . . . . . . Not Applicable
Item 6. Capital Stock and
Other Securities . . . . . . . . . Investments in the Fund;
General Information
Item 7. Purchase of Securities
Being Offered. . . . . . . . . . . Participants in the Fund;
Investments in the Fund;
Valuation of Units
Item 8. Redemption or Repurchase . . . . . . Withdrawals and Exchanges;
Valuation of Units
3
<PAGE>
Item 9. Pending Legal Proceedings. . . . . . Not Applicable
Part B
- ------
Item 10. Cover Page. . . . . . . . . . . . . . Cover Page
Item 11. Table of Contents . . . . . . . . . . Table of Contents
Item 12. General Information
History . . . . . . . . . . . . . . The Fund
Item 13. Investment Objectives &
Policies. . . . . . . . . . . . . . Investment Objectives and
Policies (Part A, Item 4);
Investment Restrictions
(Part A, Item 4);
Brokerage Allocation and
Portfolio Turnover
Item 14. Management of the Fund. . . . . . . . Administration of the
Fund (Part A, Item 5)
Item 15. Control Persons & Principal
Holders of Securities . . . . . . . Control Persons and
Principal Unitholders
Item 16. Investment Advisory &
Other Services. . . . . . . . . . . Investments in the Fund
(Part A, Item 6);
Administration of the Fund
(Part A,Item 5);
Investment Managers (Part
A, Item 5); General
Information (Part A, Item
6)
Item 17. Brokerage Allocation. . . . . . . . . Brokerage Allocation
4
<PAGE>
Item 18. Capital Stock &
Other Securities. . . . . . . . . . Investments in the Fund
(Part A, Item 6); General
Information (Part A, Item
6)
Item 19. Purchase, Redemption &
Pricing of Securities
Being Offered . . . . . . . . . . . Investments in the Fund
(Part A, Item 6);
Withdrawals and Exchanges
(Part A, Item 8);
Valuation of Units (Part
A, Item 8)
Item 20. Tax Status. . . . . . . . . . . . . . Distributions and Taxes
(Part A, Item 4)
Item 21. Underwriters. . . . . . . . . . . . . Not Applicable
Item 22. Calculation of Yield
Quotation on Money
Market Funds. . . . . . . . . . . . Not Applicable
Item 23. Financial Statements. . . . . . . . . Financial Statements
5
<PAGE>
PROSPECTUS
CORE EQUITY FUND
VALUE EQUITY FUND
EMERGING GROWTH EQUITY FUND
INTERNATIONAL EQUITY FUND
ACTIVELY MANAGED BOND FUND
INTERMEDIATE-TERM BOND FUND
SHORT-TERM INVESTMENT FUND
DEDICATED BOND FUND
JANUARY 28, 1997
1997
BROKER/DEALER:
[Logo]
RETIREMENT SYSTEM
Distributors Inc.
317 Madison Ave.
New York, NY 10017-5397
<PAGE>
TABLE OF CONTENTS
Introduction....................................................1
Fee Table.......................................................2
Financial Highlights............................................3
Prospectus Summary.............................................11
The Fund.......................................................12
Participants in the Fund.......................................12
Investment Objectives and Policies.............................13
Core Equity Fund.............................................14
Value Equity Fund............................................15
Emerging Growth Equity Fund..................................15
International Equity Fund....................................16
Actively Managed Bond Fund...................................18
Intermediate-Term Bond Fund..................................21
Short-Term Investment Fund...................................23
Dedicated Bond Fund..........................................26
Other Investment Policies and Risk Considerations............27
Investment Restrictions........................................34
Investments in the Fund........................................34
Full Participating Trusts....................................34
Participating Trusts of Eligible Employers other than Full
Participating Trusts........................................37
Individual Retirement Accounts (IRAs)........................37
General......................................................38
Withdrawals and Exchanges......................................38
Withdrawals from Investment Funds (Redemptions)..............38
Exchanges....................................................40
Valuation of Units.............................................40
Distributions and Taxes........................................42
Administration of the Fund.....................................43
General......................................................43
Information Regarding Trustees...............................43
The Service Agreement........................................45
Distribution Agreement.......................................47
Investment Managers............................................47
General Information............................................50
Units of Beneficial Interest and Voting Rights...............50
Termination of the Fund......................................52
Custodian....................................................52
Litigation...................................................52
Expenses.....................................................52
Performance Information......................................53
Counsel and Auditors...........................................53
Appendix.......................................................54
THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL, OR A
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE
SECURITIES TO WHICH IT RELATES, OR AN OFFER TO OR A
SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH SUCH
OFFER OR SOLICITATION WOULD BE UNLAWFUL.
<PAGE>
PROSPECTUS
JANUARY 28, 1997
RSI RETIREMENT TRUST
INTRODUCTION
The units offered hereby are being sold by RSI Retirement
Trust ("Fund"), an open-end diversified management investment
company.
The Fund is a no load series mutual fund that currently
offers eight investment funds ("Investment Funds") with each
having its own investment objectives and investment
strategies.
The Fund is designed for the investment of funds held
in trusts which are exempt from taxation under Section 501(a)
of the Internal Revenue Code of 1986, as amended ("Code") and
which have been established by eligible employers to
effectuate pension or profit sharing plans which are qualified
under Section 401(a) of said Code. Eligible employers are
corporations or associations organized under the laws of any
state or of the United States, organizations which are
controlling, controlled by, or under common control with such
eligible employers or the members of which consist solely of
some or all of such organizations, organizations which are
determined by the Trustees of the Fund to have business
interests in common with other organizations participating in
the Fund or self-employed individuals; provided, however, that
the participation in the Fund of any self-employed individual
or of any corporation or association which is not a bank,
savings bank, credit union or savings and loan association, or
controlling, controlled by, or under common control with a
bank, savings bank, credit union or savings and loan
association, shall be subject to the approval of the Trustees
of the Fund ("Eligible Employers").
The Fund is also designed for the investment of funds
held in individual retirement trusts or custodial accounts
which are exempt from taxation under Section 408(e) of the
Code and which have been established by individual
accountholders ("Individual Retirement Accountholders") to
effectuate an individual retirement trust or custodial
agreement which is maintained in conformity with Section
408(a) of the Code ("Individual Retirement Accounts").
Individual Retirement Accountholders are individuals for whom
an Individual Retirement Account (IRA) has been established;
provided, however, that participation in the Fund of such
arrangement shall be subject to the approval of the Trustees
of the Fund.
This Prospectus sets forth concisely information about
the Fund that an investor ought to know before investing.
Please read and retain this Prospectus for future reference.
The Fund has filed with the Securities and Exchange Commission
a Statement of Additional Information, dated January 28, 1997,
("Statement of Additional Information"), which sets forth
additional and more detailed information with respect to the
Fund. The information in the Statement of Additional
Information is incorporated by reference into this Prospectus.
A copy of the Statement of Additional Information may be
obtained without charge by writing to RSI Retirement Trust,
317 Madison Avenue, New York, New York 10017, Attention:
Stephen P. Pollak, Esq.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
<PAGE>
FEE TABLE
Shown below are all expenses incurred by the Investment Funds,
during the 1996 fiscal year, restated where appropriate, to
reflect current fees.
<TABLE>
<CAPTION>
INTER- SHORT-
CORE VALUE EMERGING INTER- ACTIVELY MEDIATE- TERM
EQUITY EQUITY GROWTH NATIONAL MANAGED TERM BOND INVESTMENT DEDICATED
FUND FUND EQUITY FUND EQUITY FUND BOND FUND FUND FUND BOND FUND
------- ------- ----------- ----------- --------- --------- ----------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
I. SHAREHOLDER TRANSACTION
EXPENSES
Sales Load on Purchases... None None None None None None None None
Sales Load on Reinvested
Dividends................. None None None None None None None None
Deferred Sales Load....... None None None None None None None None
Redemption Fees........... None None None None None None None None
Exchange Fees............. None None None None None None None None
II. ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees............. .56% .49% 1.20% .84% .34% .37% .25% .25%
Other Expenses(after fee
waivers)+................... .36% .71% .71% 1.09% .46% .61% .55%+ .50%
Total Annual Fund Operating
Expenses.................... .92% 1.20% 1.91% 1.93% .80% .98% .80%+ .75%*
III. EXAMPLE: You would pay the following expenses in each of the funds on a $1,000 investment assuming (1) a 5% annual return and
(2) redemption at the end of each time period.
1 year...................... $9.39 $12.23 $19.40 $19.60 $8.17 $10.00 $8.17+ $7.66
3 years..................... $29.34 $38.12 $60.04 $60.64 $5.55 $31.22 $25.55+ $23.98
5 years..................... $50.99 $66.06 $103.34 $104.36 $4.45 $54.23 $44.45+ $41.74
10 years.................... $113.71 $146.38 $225.15 $227.27 $9.43 $120.78 $99.43+ $93.44
</TABLE>
The purpose of this table is to assist investors in
understanding the costs and expenses an investor in the Fund
will bear. SEE, "Administration of the Fund -- Distribution
Agreement" and "General Information -- Expenses" for a more
complete description of these costs and expenses.
A. Annual Fund Operating Expenses are based on each
Investment Fund's historical expenses adjusted in the case
of each Investment Fund to reflect current fees. The
Investment Funds incur Other Expenses for maintaining
shareholder records, furnishing shareholder statements and
reports and other services. SEE, "Administration of the
Fund -- The Service Agreement" for further information.
Management Fees and Other Expenses have already been
reflected in each Investment Fund's unit price and are not
charged directly to individual unit holder accounts. SEE,
"Investment Managers" and "General Information --
Expenses" for further information.
B. Example of Expenses. The hypothetical example illustrates
the expenses associated with a $1,000 investment over
periods of 1, 3, 5 and 10 years, based on the expenses in
the table and an assumed annual rate of return of 5%. The
return of 5% and expenses should not be considered
indications of actual or expected performance or expenses,
both of which will vary. Please refer to "Condensed
Financial Information" for each Investment Fund's past
performance.
* Annualized based on 1992 fiscal year. No funds have been
invested in the Dedicated Bond Fund since April 24, 1992.
+ "Other Expenses" for the Short-Term Investment Fund
reflects a voluntary fee waiver by Retirement System
Consultants Inc. (which will continue for at least the
current fiscal year of the Fund). Absent the voluntary fee
waiver, other expenses for this Investment Fund would be
.94% of average net assets and total annual fund operating
expenses for this Investment Fund would be 1.19%.
2
<PAGE>
FINANCIAL HIGHLIGHTS
The following information for the years ended September 30,
1992, 1993, 1994, 1995 and 1996, has been audited by McGladrey
& Pullen, LLP, independent auditors, whose report thereon,
which is incorporated by reference, appears in the Fund's 1996
Annual Report to Unitholders. The financial information
included in this table should be read in conjunction with the
financial statements incorporated by reference in the
Statement of Additional Information. Further performance
information is contained in the 1996 Annual Report which may
be obtained without charge. See, Statement of Additional
Information -- Financial Statements.
Financial highlights for each Investment Fund are as follows:
<TABLE>
<CAPTION>
CORE EQUITY FUND
-------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of
Year........................... $ 46.71 $ 35.57 $ 34.49 $ 30.09 $ 27.68 $ 23.15 $ 24.41 $ 18.34 $ 21.40 $ 15.46
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income-- net....... 0.72 0.74 0.54 0.56 0.65 0.75 0.85 0.69 0.54 0.53
Net realized and unrealized
gain (loss) on investments... 9.14 10.40 0.54 3.84 1.76 3.78 (1.90) 5.38 (3.60) 5.41
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 9.86 11.14 1.08 4.40 2.41 4.53 (1.05) 6.07 (3.06) 5.94
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- (0.07) -- -- --
Paid-in capital............... -- -- -- -- -- -- (0.14) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- (0.21) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)....... 9.86 11.14 1.08 4.40 2.41 4.53 (1.26) 6.07 (3.06) 5.94
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 56.57 $ 46.71 $ 35.57 $ 34.49 $ 30.09 $ 27.68 $ 23.15 $ 24.41 $ 18.34 $ 21.40
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN................ 21.11% 31.32% 3.13% 14.62% 8.71% 19.57% (4.41)% 33.10% (14.29)% 38.42%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (0.92)% (0.98)% (1.01)% (0.99)% (0.95)% (0.94)% (0.64)% (0.49)% (0.51)% (0.44)%
Investment income-- net....... 1.40% 1.86% 1.56% 1.74% 2.25% 2.88% 3.41% 3.29% 3.07% 2.84%
Portfolio Turnover Rate......... 9.95% 7.91% 6.47% 13.41% 18.94% 18.88% 10.71% 21.51% 12.80% 13.98%
Average Commission
Rate paid (per share)+......... $.05 -- -- -- -- -- -- -- -- --
Net Assets at End of Year
($1,000's)..................... $217,356 $189,942 $141,544 $146,137 $134,269 $158,578 $136,539 $134,572 $105,571 $126,701
</TABLE>
-------------------------------------
* Using average units basis.
** The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities.
+ Required by regulations issued in 1995.
3
<PAGE>
<TABLE>
<CAPTION>
VALUE EQUITY FUND
-------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of
Year........................... $ 32.63 $ 27.05 $ 26.48 $ 22.94 $ 21.48 $ 15.89 $ 21.11 $ 16.94 $ 18.35 $ 13.97
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income-- net....... 0.72 0.93 0.79 0.70 0.52 0.45 0.38 0.46 0.43 0.42
Net realized and unrealized
gain (loss) on investments... 6.32 4.65 (0.22) 2.84 0.94 5.14 (5.44) 3.71 (1.84) 3.96
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 7.04 5.58 0.57 3.54 1.46 5.59 (5.06) 4.17 (1.41) 4.38
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- (0.05) -- -- --
Paid-in capital............... -- -- -- -- -- -- (0.11) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- (0.16) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)....... 7.04 5.58 0.57 3.54 1.46 5.59 (5.22) 4.17 (1.41) 4.38
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 39.67 $ 32.63 $ 27.05 $ 26.48 $ 22.94 $ 21.48 $ 15.89 $ 21.11 $ 16.94 $ 18.35
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN+............... 21.58% 20.63% 2.15% 15.43% 6.80% 35.18% (24.13)% 24.62% (7.68)% 31.35%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (1.20)% (1.32)% (1.41)% (1.70)% (1.55)% (1.56)% (1.74)% (1.37)% (1.19)% (1.12)%
Investment income-- net....... 1.98% 3.24% 3.02% 2.83% 2.32% 2.30% 1.98% 2.44% 2.72% 2.57%
Portfolio Turnover Rate......... 61.53% 67.06% 40.41% 54.46% 14.26% 23.55% 45.04% 46.51% 65.40% 57.81%
Average Commission
Rate Paid (per share)++........ $.01 -- -- -- -- -- -- -- -- --
Net Assets at End of Year
($1,000's)..................... $52,231 $43,824 $35,603 $38,104 $33,417 $37,955 $30,636 $84,313 $71,365 $79,765
</TABLE>
-------------------------------------
* Using average units basis.
** The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities. Ratio reflects fees paid with
brokerage commissions only for the years ended September
30, 1995 and September 30, 1996.
+ On April 1, 1995, Retirement System Investors Inc. became
the sole advisor to Value Equity Fund.
++ Required by regulations issued in 1995.
4
<PAGE>
<TABLE>
<CAPTION>
EMERGING GROWTH EQUITY FUND
-------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of
Year........................... $ 52.58 $ 35.96 $ 35.52 $ 24.26 $ 23.34 $ 14.97 $ 19.36 $ 16.78 $ 18.35 $ 15.28
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income
(loss)--net.................. (0.90) (0.67) (0.57) (0.53) (0.35) (0.23) 0.01 0.22 0.13 0.09
Net realized and unrealized
gain (loss) on investments... 15.39 17.29 1.01 11.79 1.27 8.60 (4.24) 2.36 (1.70) 2.98
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 14.49 16.62 0.44 11.26 0.92 8.37 (4.23) 2.58 (1.57) 3.07
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- (0.05) -- -- --
Paid-in capital............... -- -- -- -- -- -- (0.11) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- (0.16) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)....... 14.49 16.62 0.44 11.26 0.92 8.37 (4.39) 2.58 (1.57) 3.07
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 67.07 $ 52.58 $ 35.96 $ 35.52 $ 24.26 $ 23.34 $ 14.97 $ 19.36 $ 16.78 $ 18.35
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN................ 27.56% 46.22% 1.24% 46.41% 3.94% 55.91% (22.06)% 15.38% (8.56)% 20.09%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (1.91)% (2.12)% (2.08)% (2.27)% (2.18)% (2.27)% (2.46)% (1.76)% (1.72)% (1.59)%
Investment income
(loss)--net.................. (1.54)% (1.61)% (1.64)% (1.78)% (1.43)% (1.19)% 0.07% 1.23% 0.84% 0.52%
Portfolio Turnover Rate......... 150.40% 170.54% 114.15% 145.59% 135.45% 101.10% 167.90% 39.40% 36.88% 34.28%
Average Commission
Rate Paid (per share)+......... $.02 -- -- -- -- -- -- -- -- --
Net Assets at End of Year
($1,000's)..................... $92,136 $74,625 $48,293 $56,645 $40,844 $46,283 $32,560 $50,026 $46,604 $52,088
</TABLE>
-------------------------------------
* Using average units basis.
** The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities. Ratio reflects fees paid with
brokerage commissions only for the years ended September
30, 1995 and September 30, 1996.
+ Required by regulations issued in 1995.
5
<PAGE>
<TABLE>
<CAPTION>
INTERNATIONAL EQUITY FUND
--------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING
PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of
Year......................... $ 40.25 $ 38.08 $ 34.36 $ 28.27 $ 29.26 $ 25.31 $ 30.03 $ 25.10 $ 29.38 $ 20.91
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income
(loss)--net................ (0.08) (0.02) (0.09) (0.21) (0.16) 0.15 (0.31) (0.15) (0.27) (0.22)
Net realized and unrealized
gain (loss) on
investments................ 5.08 2.19 3.81 6.30 (0.83) 3.80 (4.16) 5.08 (4.01) 8.69
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................. 5.00 2.17 3.72 6.09 (0.99) 3.95 (4.47) 4.93 (4.28) 8.47
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments................ -- -- -- -- -- -- (0.08) -- -- --
Paid-in capital............. -- -- -- -- -- -- (0.17) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions......... -- -- -- -- -- -- (0.25) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)..... 5.00 2.17 3.72 6.09 (0.99) 3.95 (4.72) 4.93 (4.28) 8.47
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year................ $ 45.25 $ 40.25 $ 38.08 $ 34.36 $ 28.27 $ 29.26 $ 25.31 $ 30.03 $ 5.10 $ 9.38
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN.............. 12.42% 5.70% 10.83% 21.54% (3.38)% 15.61% (15.05)% 19.64% (14.57)% 40.51%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................. (1.93)% (1.90)% (1.96)% (2.83)% (2.69)% (2.58)% (2.64)% (2.65)% (2.97)% (2.57)%
Investment income
(loss)--net................ (0.20)% (0.07)% (0.25)% (0.68)% (0.50)% 0.54% (1.06)% (0.54)% (1.07)% (0.90)%
Portfolio Turnover Rate....... 51.29% 51.40% 44.25% 55.02% 52.58% 65.55% 84.61% 103.55% 55.45% 56.71%
Average Commisson
Rate Paid (per share)+....... $.02 -- -- -- -- -- -- -- -- --
Net Assets at End of Year
($1,000's)................... $39,602 $31,143 $28,672 $21,769 $18,997 $22,677 $21,691 $29,249 $24,388 $31,420
</TABLE>
-------------------------------------
* Using average units basis.
** The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities. Ratio reflects fees paid with
brokerage commissions only for years ended September 30,
1995 and September 30, 1996.
+ Required by regulations issued in 1995.
6
<PAGE>
<TABLE>
<CAPTION>
ACTIVELY MANAGED BOND FUND
-------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING
PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of
Year......................... $ 29.58 $ 26.06 $ 27.43 $ 24.57 $ 21.74 $ 18.44 $ 17.72 $ 16.34 $ 14.83 $ 14.92
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment Operations:
Investment income--net...... 1.80 1.64 1.47 1.23 1.54 1.51 1.44 1.34 1.16 1.12
Net realized and unrealized
gain (loss) on
investments................ (0.59) 1.88 (2.84) 1.63 1.29 1.79 (0.57) 0.04 0.35 (1.21)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................. 1.21 3.52 (1.37) 2.86 2.83 3.30 0.87 1.38 1.51 (0.09)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments................ -- -- -- -- -- -- (0.05) -- -- --
Paid-in capital............. -- -- -- -- -- -- (0.10) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions......... -- -- -- -- -- -- (0.15) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)..... 1.21 3.52 (1.37) 2.86 2.83 3.30 0.72 1.38 1.51 (0.09)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year................ $ 30.79 $ 29.58 $ 26.06 $ 27.43 $ 24.57 $ 21.74 $ 18.44 $ 17.72 $ 16.34 $ 14.83
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN.............. 4.09% 13.51% (4.99)% 11.64% 13.02% 17.90% 4.88% 8.45% 10.18% (0.60)%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................. (0.80)% (0.84)% (0.82)% (0.87)% (0.84)% (0.84)% (0.83)% (0.85)% (0.67)% (0.81)%
Investment income--net...... 5.94% 5.94% 5.51% 5.22% 6.87% 7.56% 7.64% 7.80% 7.36% 7.38%
Portfolio Turnover Rate....... 17.14% 18.21% 8.54% 170.16% 132.97% 125.32% 162.70% 1,078.25% 986.87% 809.66%
Net Assets at End of Year
($1,000's)................... $150,304 $140,127 $136,210 $146,918 $189,827 $197,573 $180,269 $136,674 $138,063 $134,326
</TABLE>
-------------------------------------
* Using average units basis.
** The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities.
7
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM BOND FUND
-------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of
Year........................... $ 28.01 $ 25.40 $ 25.95 $ 24.20 $ 21.72 $ 19.10 $ 17.73 $ 16.30 $ 14.77 $ 14.41
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income-- net....... 1.74 1.66 1.46 1.48 1.55 1.46 1.44 1.47 1.33 1.27
Net realized and unrealized
gain (loss) on investments... (0.45) 0.95 (2.01) 0.27 0.93 1.16 0.08 (0.04) 0.20 (0.91)
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 1.29 2.61 (0.55) 1.75 2.48 2.62 1.52 1.43 1.53 0.36
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- (0.05) -- -- --
Paid-in capital............... -- -- -- -- -- -- (0.10) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- (0.15) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)....... 1.29 2.61 (0.55) 1.75 2.48 2.62 (1.37) 1.43 1.53 0.36
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 29.30 $ 28.01 $ 25.40 $ 25.95 $ 24.20 $ 21.72 $ 19.10 $ 17.73 $ 16.30 $ 14.77
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN................ 4.61% 10.28% (2.12)% 7.23% 11.42% 13.72% 8.58% 8.77% 10.36% 2.50%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (0.98)% (0.98)% (0.95)% (1.07)% (0.98)% (0.98)% (0.64)% (0.48)% (0.44)% (0.43)%
Investment income-- net....... 6.06% 6.27% 5.68% 5.95% 6.78% 7.21% 7.81% 8.65% 8.47% 8.58%
Portfolio Turnover Rate......... 13.20% 15.95% 17.92% 12.39% 24.86% 43.70% 20.56% 38.44% 9.66% 28.85%
Net Assets at End of Year
($1,000's)..................... $74,754 $90,482 $89,780 $97,796 $117,107 $108,144 $111,544 $126,007 $118,283 $104,971
</TABLE>
-------------------------------------
* Using average units basis.
** The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities.
8
<PAGE>
<TABLE>
<CAPTION>
SHORT-TERM INVESTMENT FUND
-------------------------------------------------------------------------------------------------
YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR YEAR
ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED ENDED
9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of
Year........................... $ 19.31 $ 18.36 $ 17.83 $ 17.43 $ 16.80 $ 15.79 $ 14.69 $ 13.49 $ 12.60 $ 11.90
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income-- net....... 0.94 0.93 0.53 0.43 0.64 0.99 1.14 1.19 0.84 0.70
Net realized and unrealized
gain (loss) on investments... (0.01) 0.02 0.00 (0.03) (0.01) 0.02 0.09 0.01 0.05 0.00
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 0.93 0.95 0.53 0.40 0.63 1.01 1.23 1.20 0.89 0.70
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- (0.04) -- -- --
Paid-in capital............... -- -- -- -- -- -- (0.09) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- (0.13) -- -- --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase.................. 0.93 0.95 0.53 0.40 0.63 1.01 1.10 1.20 0.89 0.70
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 20.24 $ 19.31 $ 18.36 $ 17.83 $ 17.43 $ 16.80 $ 15.79 $ 14.69 $ 13.49 $ 12.60
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN................ 4.82% 5.17% 2.97% 2.29% 3.75% 6.40% 8.34% 8.90% 7.06% 5.88%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (0.80)% (0.80)% (0.80)% (0.89)% (0.79)% (0.79)% (0.59)% (0.45)% (0.91)% (0.80)%
Investment income-- net....... 4.76% 4.94% 2.92% 2.43% 3.72% 6.06% 7.49% 8.41% 6.51% 5.76%
Decrease in above expense ratio
due to Fee waiver.............. 0.39% 0.34% 0.32%
Net Assets at End of Year
($1,000's)..................... $25,668 $27,360 $29,975 $35,117 $34,911 $61,505 $62,481 $54,265 $30,076 $67,917
</TABLE>
-------------------------------------
* Using average units basis.
** The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities.
9
<PAGE>
<TABLE>
<CAPTION>
DEDICATED BOND FUND
-------------------------------------------------------------------------
PERIOD YEAR YEAR
10/1/91 ENDED ENDED YEAR ENDED YEAR ENDED YEAR ENDED
4/24/92*** 9/30/91 9/30/90 9/30/89 9/30/88 9/30/87
------------- ---------- ---------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding throughout
the year)
Net Asset Value, Beginning of
Year............................. $ 18.97 $ 16.36 $ 15.54 $ 14.02 $ 12.25 $ 12.20
----- ----- ----- ----- ----- -----
Income from Investment Operations:
Investment income--net.......... 0.79 1.91 1.39 1.31 1.20 1.12
Net realized and unrealized gain
(loss) on investments.......... 0.07 0.70 (0.44) 0.21 0.57 (1.07)
----- ----- ----- ----- ----- -----
Total from Investment
Operations..................... 0.86 2.61 0.95 1.52 1.77 0.05
----- ----- ----- ----- ----- -----
Less Distributions:
Net realized gain on
investments.................... -- -- (0.04) -- -- --
Paid-in capital................. -- -- (0.09) -- -- --
----- ----- ----- ----- ----- -----
Total distributions............. -- -- (0.13) -- -- --
----- ----- ----- ----- ----- -----
Net increase (decrease)......... 0.86 2.61 0.82 1.52 1.77 0.05
----- ----- ----- ----- ----- -----
Net Asset Value,
End of Year.................... $ 19.83 $ 18.97 $ 16.36 $ 15.54 $ 14.02 $ 12.25
----- ----- ----- ----- ----- -----
----- ----- ----- ----- ----- -----
TOTAL RETURN.................. 4.53%+ 15.95% 6.11% 10.84% 14.49% 0.41%
RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**...................... (0.75)++ (0.68) (0.79) (0.56) (0.47) (0.31)
Investment income-net........... 7.45%++ 10.83% 8.66% 8.95% 9.01% 8.86%
Portfolio Turnover Rate........... 0.00% 0.00% 0.55% 22.16% 0.36% 0.00%
Net Assets at End of Year
($1,000's)....................... $0 $14,133 $13,988 $18,664 $24,310 $24,414
</TABLE>
-------------------------------------
*Using average units basis.
**The August 1, 1990 reorganization of RSI externalized all
employees and the investment advisory, administrative and
distribution services they had performed into separate
entities. Certain investment expenses previously allocated
among the series portfolios are now set by contract between
RSI and the new entities.
***No sales after April 24, 1992.
+ Not annualized for periods less than a year -- commenced
operation July 3, 1985.
++ Annualized
10
<PAGE>
PROSPECTUS SUMMARY
THE FOLLOWING SUMMARY IS QUALIFIED IN ITS ENTIRETY BY THE MORE
DETAILED INFORMATION APPEARING ELSEWHERE IN THIS PROSPECTUS
AND IN THE STATEMENT OF ADDITIONAL INFORMATION.
The Fund is a New York common law trust currently
offering eight no load Investment Funds, each having its own
investment objectives and policies: Core Equity Fund, Emerging
Growth Equity Fund, Value Equity Fund, International Equity
Fund, Actively Managed Bond Fund, Intermediate-Term Bond Fund,
Short-Term Investment Fund and Dedicated Bond Fund. SEE,
"Investment Objectives and Policies".
Trusts which are exempt from taxation under Section
501(a) of the Code and have been established to effectuate
pension or profit sharing plans qualified under Section 401(a)
of said Code by Eligible Employers are eligible for
participation in the Fund. Eligible Employers are corporations
or associations organized under the laws of any state or of
the United States, organizations which are controlling,
controlled by, or under common control with such eligible
employers or the members of which consist solely of some or
all of such organizations, organizations which are determined
by the Trustees of the Fund to have business interests in
common with other organizations participating in the Fund or
self-employed individuals; provided, however, that the
participation in the Fund of any self-employed individual or
any corporation or association which is not a bank, savings
bank, credit union or savings and loan association, or
controlling, controlled by, or under common control with a
bank, savings bank, credit union or savings and loan
association, shall be subject to the approval of the Trustees
of the Fund. SEE, "Participants in the Fund".
The Fund is also designed for the investment of funds
held in individual retirement trusts or custodial accounts
which are exempt from taxation under Section 408(e) of the
Code and which have been established by individual
accountholders ("Individual Retirement Accountholders") to
effectuate an individual retirement trust or custodial
agreement which is maintained in conformity with Section
408(a) of the Code ("Individual Retirement Accounts").
Individual Retirement Accountholders are individuals for whom
an Individual Retirement Account (IRA) has been established;
provided, however, that participation in the Fund of such
arrangement shall be subject to the approval of the Trustees
of the Fund. SEE, "Participants in the Fund".
A Participating Trust established by an Eligible
Employer through the adoption of the Fund's Agreement and
Declaration of Trust is herein referred to as a "Full
Participating Trust". Subject to guidelines established by the
Trustees, authority is permitted to be reserved to Investment
Fiduciaries of Full Participating Trusts to direct the
proportions in which units held in such Trusts shall be
divided between certain investment classifications established
by the Trustees of the Fund or, in the case of Full
Participating Trusts established to effectuate defined benefit
Plans, to direct the Trustees of the Fund to invest assets of
such Trust in units of specified Investment Funds. SEE,
"Investments in the Fund -- Full Participating Trusts".
Participating Trusts other than Full Participating Trusts and
Individual Retirement Accounts can effect purchases from
specific Investment Funds. SEE, "Investments in the Fund --
Participating Trusts of Eligible Employers other than Full
Participating Trusts" and "Investments in the Fund --
Individual Retirement Accounts (IRAs)".
Except with respect to Individual Retirement Accounts,
there is no minimum initial investment for admission for a
Participating Trust and subsequent investments may be made in
any amount. The purchase price for units in each Investment
Fund will be the net asset value per unit next
11
<PAGE>
determined following receipt of proper investment
instructions. SEE,"Investments in the Fund -- General" and
"Valuation of Units". Certificates representing units of the
Fund will not be issued. SEE, "Investments in the Fund --
General".
Withdrawals (I.E., redemptions) and exchanges may be
made at any time. SEE, "Withdrawals and Exchanges". The
withdrawal and exchange price is the net asset value per unit
next determined following receipt of proper instructions. SEE,
"Withdrawals and Exchanges".
Net asset value per unit of each Investment Fund is
determined by dividing the total value of the Investment
Fund's assets, less any liabilities, by the number of units of
such Investment Fund outstanding. The Fund determines the
value of the assets held in each Investment Fund as of the
close of trading (normally 4:00 p.m. Eastern time). SEE,
"Valuation of Units".
The Fund has entered into a Distribution Agreement with
Retirement System Distributors Inc. ("Broker-Dealer"), whereby
the Broker-Dealer will distribute and promote the sale of
units in the Fund's Investment Funds. SEE, "Administration of
the Fund -- Distribution Agreement".
THE FUND
The Fund is an open-end diversified management investment
company. The Fund is a trust which was established by
individual trustees under the laws of the State of New York
pursuant to an Agreement and Declaration of Trust made as of
October 22, 1940. The Agreement and Declaration of Trust, as
amended from time to time, is referred to as the "Agreement
and Declaration of Trust". The term "Trustees", as used
herein, refers to the trustees acting from time to time under
the Agreement and Declaration of Trust in their capacity as
such. Except as otherwise specifically provided herein, the
term "Trustees", as used herein, is not meant to refer to the
trustees of Participating Trusts (as hereinafter defined) in
their capacity as such, although the trustees of Full
Participating Trusts (as hereinafter defined) are one and the
same as the trustees under the Agreement and Declaration of
Trust. The Fund has entered into a service agreement ("Service
Agreement") with Retirement System Consultants Inc. ("Service
Company"), pursuant to which, among other things, the Service
Company has agreed to provide the Fund with certain
administrative services in order to enable the Trustees to
fulfill their administrative duties to the Participating
Trusts established under the Agreement and Declaration of
Trust. SEE, "Administration of the Fund -- Administrative
Services". Certain references herein to "Trustees" refer to
the trustees acting from time to time pursuant to authority
delegated to the Service Company. SEE, "Administration of the
Fund -- The Service Agreement" and "Reorganization".
PARTICIPANTS IN THE FUND
Participation in the Fund is limited to Qualified Trusts (as
hereinafter defined) established by either Eligible Employers
or Individual Retirement Accountholders. Eligible Employers
are corporations or associations organized under the laws of
any state or of the United States, organizations which are
controlling, controlled by, or under common control with such
eligible employers or the members of which consist solely of
some or all of such organizations, organizations which are
determined by the Trustees of the Fund to have business
interests in common with other organizations participating in
the Fund or self-employed individuals; provided, however, that
the participation in the Fund of any self-employed individual
or any corporation or association which is not a bank, savings
bank, credit union
12
<PAGE>
or savings and loan association, or controlling, controlled
by, or under common control with a bank, savings bank, credit
union or savings and loan association, shall be subject to the
approval of the Trustees of the Fund. Individual Retirement
Accountholders are individuals for whom an Individual
Retirement Account has been established; provided, however,
that participation in the Fund of such arrangement, shall be
subject to the approval of the Trustees of the Fund. Qualified
Trusts include trusts which are exempt from taxation under
Section 501(a) of the Code and have been established to
effectuate pension or profit sharing plans which are qualified
under Section 401(a) of said Code ("Plans") either by (a) the
adoption of a Plan of Participation and the Agreement and
Declaration of Trust or (b) the execution of a trust
instrument with a trustee or trustees, other than the
Trustees. Qualified Trusts also include Individual Retirement
Accounts which are exempt from taxation under Section 408(a)
of said Code. SEE,"Investments in the Fund -- Individual
Retirement Accounts (IRAs)". Qualified Trusts which have been
admitted to the Fund are referred to as "Participating
Trusts".
Participation in the Fund requires the execution of an
agreement by the Eligible Employer or the adoption of
resolutions or other documentation satisfactory to the
Trustees ("Participation Agreement"). With respect to the
Participation Agreement of an Eligible Employer, such
agreement, among other things, adopts the Agreement and
Declaration of Trust as a part of the Plan of the Eligible
Employer and provides that the provisions of the Agreement and
Declaration of Trust shall be controlling with respect to the
assets of the Plan transferred to the Trustees. Participation
Agreements entered into with respect to Full Participating
Trusts provide, in addition, for the designation of the
Trustees as the trustees of the Eligible Employer's Plan and
for the allocation of certain administrative plan
responsibilities between the Trustees and fiduciaries
designated by the Eligible Employer. SEE, "Investments in the
Fund".
INVESTMENT OBJECTIVES AND POLICIES
The Fund consists of eight Investment Funds each with a
different set of investment objectives and policies. There can
be no assurance that the investment objective of any
Investment Fund can be attained. The term "investment manager"
as used herein in reference to any Investment Fund means the
investment manager acting for such fund or any segment
thereof.
Although all of the Investment Funds stress current
income to some degree, it is the policy of each Investment
Fund to earn current income for the reinvestment and further
accumulation of assets. Accordingly, no current income will be
distributed. This policy is unlike that of most investment
companies which do not reinvest earnings as the Fund does.
This policy arises from the fact that the Fund, unlike most
investment companies, exclusively invests retirement funds.
Participating Trusts do, however, receive a benefit from any
current income of the Fund comparable to the benefit received
from the distributions made by most other investment
companies. In the Fund, this benefit is received in the form
of an increase in net asset value per unit rather than in the
form of cash or reinvestment through the purchase of
additional units.
Six of the Investment Funds, the Core Equity Fund,
Emerging Growth Equity Fund, Value Equity Fund, Actively
Managed Bond Fund, Intermediate-Term Bond Fund and Short-Term
Investment Fund, commenced investment operation as separate
funds on January 1, 1983. The net assets of these
13
<PAGE>
funds were transferred from two predecessor investment funds
and were allocated to these Investment Funds pursuant to
instructions of the Participating Trusts. The International
Equity Fund and Dedicated Bond Fund commenced operations on
May 1, 1984 and July 3, 1985, respectively.
The following sets forth the investment objectives and
policies particular to each of the Investment Funds. SEE,
"Investment Objectives and Policies -- Other Investment
Policies" for a discussion of investment policies relating to
the Investment Funds generally.
CORE EQUITY FUND
The Core Equity Fund is a diversified fund which seeks to
achieve a total return in excess of the total return of the
Lipper Growth and Income Mutual Funds Average measured over a
period of three to five years. Total return includes both
capital return (appreciation or depreciation in net asset
value) and income return (dividends and any interest income,
net of operating expenses). Investments are made primarily in
common stocks, although investments may be made in other
equity-based securities, such as securities convertible into
common stocks and warrants to purchase common stocks and
American Depository Receipts -- ADRs (U.S. traded
dollar-denominated securities that represent an interest in
the share of foreign company). A portion of the Core Equity
Fund may be temporarily held in cash equivalents not exceeding
25% of the total assets of such Fund. SEE,"Investment
Objectives and Policies -- Other Investment Policies -- Cash
Equivalents" for the definition of "cash equivalents".
Although there is no assurance that the Core Equity Fund will
meet its total return objective, the securities held in the
Core Equity Fund will generally reflect the price volatility
of the broad equity market (I.E., the Standard & Poor's 500
Composite Stock Price Index).
In general, the Core Equity Fund will invest in stocks
of companies with market capitalizations in excess of $750
million. Equity securities of a company will be selected
considering such factors as the sales, growth, and
profitability prospects for the economic sector and markets in
which the company operates and for the products or services it
provides; the financial condition of the company; its ability
to meet its liabilities and to provide income in the form of
dividends; the prevailing price of the security; how that
price compares to historical price levels of the security, to
current price levels in the general market, and to the prices
of competing companies; projected earnings estimates and
earnings growth rate of the company, and the relation of those
figures to the current price.
Under normal circumstances, the Core Equity Fund
expects to be as fully invested as practicable in equity-based
securities, primarily common stocks, and will be at least 65%
so invested.
Mr. James P. Coughlin, President and Chief Investment
Officer of Retirement System Investors Inc. ("Investors
Inc."), has been the portfolio manager for the Core Equity
Fund since August, 1984. Mr. Coughlin also serves as Executive
Vice President -- Investments of the Fund. His prior
experience in the investment management business, as a
research analyst and portfolio manager was with the economic
and investment counsel firm of Lionel Edie & Co., which for a
time was a subsidiary of Merrill Lynch and eventually part of
Manufacturers Hanover. An honors graduate of Iona College, Mr.
Coughlin holds a Bachelor of Arts degree in Economics. He
received a Master of Business Administration degree in Finance
from New York University Graduate School of Business and is a
Chartered Financial Analyst (CFA).
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VALUE EQUITY FUND
The Value Equity Fund, a diversified fund, seeks to achieve a
total return which exceeds the Lipper Growth and Income Mutual
Funds Average measured over a period of three to five years,
primarily through capital appreciation. Total return includes
changes in security values plus dividends and interest income,
net of operating expenses. Investments are made in securities
of companies which are perceived by the investment manager to
be "undervalued" due to the perceptions of other investors and
which, in the investment manager's view, may be selling at
unjustifiably low price/earnings ratios, price-to-book ratios,
price/dividend ratios, or offer exceptional dividend yield.
Typical investment holdings are believed by the investment
manager to be financially sound companies which offer
prospects for significant earnings or dividend growth relative
to their market prices. Such undervalued companies generally
will have price/earnings ratios that are lower than average
relative to broad stock market indices (E.G., the Standard &
Poor's 500 Composite Stock Price Index) or generally accepted
value indices such as the Russell Value 1000 Index.
Investments are made primarily in common stocks, although
investments may be made in other equity-based securities, such
as securities convertible into common stocks and warrants to
purchase common stocks and American Depository Receipts --
ADRs (U.S. traded dollar-denominated securities that represent
an interest in the share of a foreign company). In general,
the Value Equity Fund will invest in stocks of companies with
a market capitalization in excess of $750 million. A portion
of the Value Equity Fund may be temporarily held in cash
equivalents not exceeding 25% of the total assets of such
Fund. Under normal market conditions however, the Fund will be
fully invested (E.G., at least 90% of total portfolio assets
will be invested in equity-based securities). SEE "Investment
Objectives and Policies -- Other Investment Policies -- Cash
Equivalents" for the definition of "cash equivalents". The
portfolio of the Value Equity Fund generally will have a lower
degree of risk than the portfolio of the Emerging Growth
Equity Fund and a slightly higher degree of risk than the Core
Equity Fund.
As an "equity" fund, at least 65% of the total assets
of the Value Equity Fund will, under normal market conditions,
be invested in equity-based securities.
The Value Equity Fund has been managed by Chris R.
Kaufman, Portfolio Manager, since July 1, 1995. In addition to
his portfolio management responsibilities, Mr. Kaufman assists
in providing research and equity analysis for the Core Equity
Fund. Mr. Kaufman joined Investors Inc. in May 1995, with over
10 years of investment experience. Prior to joining Investors
Inc., he was an Investment Vice President at The Mutual Life
Insurance Company of New York, where he spent 8 years in
investment/ security analysis and in a portfolio advisory
capacity. Prior to that, he worked for 2 years in the
Investment Management Group of Bankers Trust. Mr. Kaufman
graduated with honors and received a Phi Beta Kappa
designation from Hunter College, with a Bachelor of Arts
degree in Economics and Art History, and received a Masters in
Business Administration in Finance from the Columbia School of
Business. He is currently pursuing a Chartered Financial
Analyst (CFA) designation.
EMERGING GROWTH EQUITY FUND
The Emerging Growth Equity Fund is a diversified fund which
seeks to maximize total return, primarily through capital
appreciation, through investment in securities of rapidly
growing, emerging companies. The Emerging Growth Equity Fund
seeks to achieve a total return which exceeds the Lipper Small
Company Growth Mutual Funds Average measured over a period of
three to five years. Total return
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includes both capital return (appreciation or depreciation in
net asset value) and income return (dividends and any interest
income, net of operating expenses). Emerging growth companies
are those that are expected by the Fund's manager to
experience rapid earnings growth in the next few years. The
following types of companies frequently offer rapid earnings
growth: newer companies that are able to identify and service
a market niche; more mature companies that restructure their
operations or develop a new product or service that enhances
the company's sales and profit growth potential; small to
medium-sized companies (I.E., market capitalizations from $50
million to $750 million at time of purchase) that, because of
successful market penetration, expect to experience
accelerating revenue and earnings growth. Investment holdings
in companies with market capitalizations greater than $1
billion (occurring as a result of price appreciation) should
not exceed 10% of the Fund's total assets. Emerging growth
companies generally exhibit the following characteristics
relative to the average company in a similar industry included
in the broad stock market indices (E.G., the Standard & Poor's
500 Composite Stock Price Index): higher than average return
on equity, higher than average earnings and dividend growth
potential as perceived by the investment manager and smaller
than average market capitalization. Investments are made
primarily in common stocks, although investments may be made
in other equity-based securities, such as securities
convertible into common stocks and warrants to purchase common
stocks and American Depository Receipts -- ADRs (U.S. traded
dollar-denominated securities that represent an interest in
the share of a foreign company). A portion of the Emerging
Growth Equity Fund may be temporarily held in cash equivalents
not exceeding 25% of the total assets of such Fund. Under
normal market conditions however, the Fund will be fully
invested (E.G., at least 90% of total portfolio assets will be
invested in equity-based securities). SEE, "Investment
Objectives and Policies -- Other Investment Policies -- Cash
Equivalents" for the definition of "cash equivalents". The
portfolio of the Emerging Growth Equity Fund generally will
have a higher degree of risk and price volatility than the
portfolio of the Core Equity Fund and may have a lower income
return than such fund.
As an "equity" fund, at least 65% of the total assets
of the Emerging Growth Equity Fund, will, under normal market
conditions, be invested in equity-based securities.
Friess Associates Inc. has been a manager of a portion
of the Emerging Growth Equity Fund since January 1, 1990.
Friess Associates Inc. was organized in 1974 and is wholly
owned by Foster Friess and Lynnette E. Friess, who are
directors and the sole officers of the firm. Friess directs
the purchase and sale of investment securities in the day to
day management of its portion of the Investment Fund. All
investment decisions for the Investment Fund are made by
investment teams comprising three or more analysts, and no
single person is primarily responsible for making investment
recommendations to such teams. Richard M. Frucci, Senior Vice
President of The Putnam Advisory Company, Inc. has, since
February 28, 1994, primary responsibility for the day-to-day
management of the portion of the Emerging Growth Equity Fund
managed by The Putnam Advisory Company, Inc. Mr. Frucci has
been employed by The Putnam Advisory Company, Inc. since 1984.
INTERNATIONAL EQUITY FUND
The International Equity Fund, a diversified fund, seeks to
achieve a total return (currency adjusted) in excess of the
total return of the Lipper International Mutual Funds Average
measured over a period of three to five years. Total return
includes both capital return (appreciation or depreciation in
net asset
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<PAGE>
value) and income return (dividends and any interest income,
net of operating expenses). Investments are made primarily in
common stocks, and other equity-based securities such as
securities convertible into common stocks and warrants to
purchase common stocks and American Depository Receipts --
ADRs (U.S. traded dollar-denominated securities that represent
an interest in the share of a foreign company). Investments
may also be made in fixed-income securities not in excess of
10% of the value of the total assets of the International
Equity Fund. Such investments will be made primarily in
securities of companies domiciled outside of the United States
and at least 65% of such Fund's total assets will be invested
in securities of companies domiciled in at least three
countries. The International Equity Fund may also invest in
securities of non-United States governments and their agencies
and may also invest in securities of United States companies
which derive, or are expected to derive, a substantial portion
of their revenues from operations outside the United States.
Investments in such U.S. companies will normally be less than
10% of such Investment Fund's total assets. The International
Equity Fund may enter into forward foreign currency exchange
contracts to protect against uncertainty in the level of
future foreign exchange rates. SEE, "Investment Objectives and
Policies -- Other Investment Policies -- Foreign Currency
Transactions". A portion of the International Equity Fund may
be temporarily held in cash equivalents not exceeding 25% of
the total assets of such Fund. Under normal market conditions
however, the Fund will be fully invested (E.G., at least 90%
of total portfolio assets will be invested in equity-based
securities). SEE, "Investment Objectives and Policies -- Other
Investment Policies -- Cash Equivalents" for the definition of
"cash equivalents".
In general, the International Equity Fund will invest
in stocks of companies whose market capitalizations are
greater than the break point (as hereafter defined) for small
capitalization stocks. The definition for the size of small
capitalization stocks is the lowest quartile ("break point"),
of the market index in each country the Investment Fund
invests in. However, it is permissible for the portfolio to
invest in small capitalization stocks, but such investments
should normally not exceed 25% of the portfolio's total
assets. Equity securities of a company will be selected
considering such factors as the sales, growth, and
profitability prospects for the economic sector and markets in
which the company operates and for the products or services it
provides; the financial condition of the company, its ability
to meet its liabilities and to provide income in the form of
dividends; the prevailing price of the security; how that
price compares to historical price levels of the security, to
current price levels in the general market, and to the prices
of competing companies; projected earnings estimates and
earnings growth rate for the company, and the relation of
those figures to the current price.
Investments in fixed-income securities will be based on
judgments by the investment manager of the quality of the
securities. This judgment may be based upon such
considerations as the issuer's financial strength, including
its historic and current financial condition, its historic and
projected earnings and its present and anticipated cash flow;
the issuer's debt maturity schedules and current and future
borrowing requirements; and the issuer's continuing ability to
meet its future obligations. In addition, emphasis will be
placed on comparative geographical and economic valuation,
which will require fundamental analysis of the economies,
currencies, financial markets and other variables of the
various countries in which investments may be made.
Investments currently may be made in the following
countries: Australia; New Zealand; Hong Kong; Indonesia;
Japan; Malaysia; Philippines; Singapore; South Korea;
Thailand; Sri Lanka; Taiwan; Canada; South Africa; Austria;
Belgium; Denmark; Finland; France; Germany; Greece; Ireland;
Italy;
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<PAGE>
Luxembourg; Netherlands; Norway; Portugal; Spain; Sweden;
Switzerland; India; Pakistan; Turkey; United Kingdom; Jordan;
Mexico; Argentina; Peru; Brazil; Chile and Venezuela. The
Investment Fund sub-investment adviser will not consider
investments in any of these markets until the adviser, the
Fund custodian and Fund management are completely satisfied
with local administrative and regulatory controls within each
such market. Investments in securities of non-United States
issuers and in securities involving foreign currencies involve
investment risks that are different from investments in
securities of United States issuers involving no foreign
currency, including the effect of different economies, changes
in currency rates, future political and economic developments
and possible imposition of exchange controls or other
governmental restrictions. There may also be less publicly
available information about a non-United States issuer than
about a domestic issuer, and non-United States issuers are not
generally subject to uniform accounting, auditing and
financial reporting standards, practices and requirements
comparable to those applicable to domestic issuers. Most stock
exchanges outside the United States have substantially less
volume than the New York Stock Exchange and securities of some
non-United States companies are less liquid and more volatile
than securities of comparable domestic issuers. There is
generally less government regulation of stock exchanges,
brokers and listed companies outside than in the United
States. In addition, with respect to certain countries there
is a possibility of expropriation or confiscatory taxation,
political or social instability or diplomatic developments
which could adversely affect investments in securities of
issuers located in those countries.
As an "equity" fund, at least 65% of the total assets
of the International Equity Fund will, under normal market
conditions, be invested in equity-based securities.
William G.M. Thomas, investment manager for the
International Equity Fund, has an honors degree from Queen's
University, Belfast, and joined Morgan Grenfell in 1979 as a
technology analyst. Prior to Morgan Grenfell, he spent 10
years with the Extel Group developing sophisticated investment
computer software for international portfolio management firms
including Morgan Grenfell. At Morgan Grenfell, his work in
global technology introduced him to Japan and Japanese
companies and in 1984 he became part of the Morgan Grenfell
Investment Services (MGIS) Japanese research team, traveling
to Japan, visiting companies and analyzing investment
opportunities. Mr. Thomas, who became a director of MGIS in
1988, now heads the Japanese Research Team and works with a
team of 15 analysts in London and Tokyo, researching Japanese
companies.
ACTIVELY MANAGED BOND FUND
The Actively Managed Bond Fund is a diversified fund which
seeks through selective investment in bonds and other debt
securities, to achieve a total return (I.E., income, including
reinvested income, and capital appreciation or depreciation in
the net asset value, net of operating expenses) in excess of
the Lipper U.S. Government Bond Funds Average measured over a
period of three to five years. The returns are sought through
substantial periodic altering of the structure (particularly
the maturity structure) of the portfolio. Such strategy
requires that the investment manager or managers have the
flexibility to lengthen and shorten maturities of the
portfolio, as well as to make shifts in quality and sector
distribution, as market conditions dictate. Obtaining
successful results in the Actively Managed Bond Fund will
principally, but not exclusively, depend upon the manager's
ability to forecast interest rate and bond market movements.
An important technique will be the manager's use of cash
reserves
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<PAGE>
(I.E., when interest rates are expected to rise, the manager
will sell portfolio securities and thereby raise its cash
reserves, whereas when interest rates are expected to drop,
the Fund's cash reserves would be expected to be fully
invested). Securities issued or guaranteed by the United
States government or its agencies or instrumentalities in
which the Actively Managed Bond Fund might invest would
generally be of the same nature as those in which the
Short-Term Investment Fund might invest. SEE, "Short-Term
Investment Fund" below. The debt securities in which the
Actively Managed Bond Fund may invest are limited by the
following policies: (a) at least 75% of the portfolio, taken
at market value, must be in debt securities having a rating at
the time of purchase of "Aa" or better from Moody's Investors
Service, Inc., "AA" or better from Standard & Poor's
Corporation or Fitch Investors Service, Inc. or an equivalent
rating from another nationally known rating service or must
consist of securities issued or guaranteed by the United
States government or its agencies or instrumentalities, (b) at
least 65% of such portfolio must be invested in securities
issued or guaranteed by the United States government or its
agencies or instrumentalities and (c) the balance of such
portfolio must be invested in debt securities of United States
corporations rated at the time of purchase of "A" or better
from Moody's Investors Service, Inc., Standard & Poor's
Corporation, Fitch Investors Service, Inc. or another
nationally known rating service (SEE, "Appendix" for an
explanation of the ratings); and other debt securities (E.G.,
securities of foreign issuers) which, in the judgment of the
investment manager, would be of comparable quality to United
States securities having a rating of "A" or better by one of
the above rating agencies. These judgments may be based upon
such considerations as the issuer's financial strength,
including its historic and current financial condition, its
historic and projected earnings and its present and
anticipated cash flow; the issuer's debt maturity schedules
and current and future borrowing requirements; and the
issuer's continuing ability to meet its future obligations.
The portfolio structure of the Actively Managed Bond
Fund is distributed among sectors or industries with no more
than 25% of such portfolio invested in securities of any one
sector of the corporate bond market. The Fund attempts to
purchase only securities which were part of an original issue
of $100 million or more.
Non-income producing securities to be held in the
Actively Managed Bond Fund may include zero-coupon obligations
of corporations, instruments evidencing ownership of future
interest or principal payments on United States Treasury Bonds
and collateralized mortgage obligations. (See the next
paragraph for a discussion of collateralized mortgage
obligations.) Zero-coupon obligations pay no current interest.
Zero-coupon obligations are sold at prices discounted from par
value, with that par value to be paid to the holder at
maturity. The return on a zero-coupon obligation, when held to
maturity, equals the difference between the par value and the
original purchase price. Zero-coupon obligations may be
purchased if the yield spread between these obligations and
coupon issues is considered advantageous, giving consideration
to the duration of the two alternative investments. The market
value of a zero-coupon obligation is generally more volatile
than that of an interest-bearing obligation and, as a result,
if a zero-coupon obligation is sold prior to maturity under
unfavorable market conditions, the loss that may be sustained
on such sale may be greater than on the sale of an
interest-bearing obligation of similar yield and maturity.
From time to time the Fund may invest in collateralized
mortgage obligations ("CMOs"), real estate mortgage investment
conduits ("REMICs") and certain stripped mortgage-backed
securities. CMOs generally represent a participation in, or
are secured by, a pool of mortgage loans. The CMOs in
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<PAGE>
which the Fund may invest are limited to United States
government and related securities (including those of agencies
or instrumentalities) such as CMOs issued by GNMA, FNMA and
FHLMC. Stripped mortgage securities are usually structured
with two classes that receive different portions of the
interest and principal distributions on a pool of mortgage
assets. The Fund may invest in both the interest-only or "IO"
class and the principal-only or "PO" class. The yield to
maturity on an IO class is extremely sensitive not only to
changes in prevailing interest rates but also to the rate of
principal payments (including prepayments) on the related
underlying mortgage assets, and a rapid rate of principal
payments may have a material adverse effect on the Fund's
yield to maturity. If the underlying mortgage assets
experience greater than anticipated prepayments of principal,
the Fund may fail to fully recoup its initial investment in
these securities. Conversely, POs tend to increase in value if
prepayments are greater than anticipated and decline if
prepayments are slower than anticipated.
REMICs are offerings of multiple class real estate
mortgage-backed securities which qualify and elect treatment
as such under provisions of the Code. Issuers of REMICs may
take several forms, such as trusts, partnerships,
corporations, associations or a segregated pool of mortgages.
Once REMIC status is elected and obtained, the entity is not
subject to federal income taxation. Instead, income is passed
through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of
one or more classes of "regular interests," some of which may
offer adjustable rates, and a single class of "residual
interests." To qualify as a REMIC, substantially all of the
assets of the entity must be in assets directly or indirectly
secured principally by real property.
The Actively Managed Bond Fund invests in fixed-income
securities without any restriction on maturity. Fixed-income
securities can have maturities as long as 30 years or more.
The average maturity of securities in the Actively Managed
Bond Fund will be based primarily upon the investment
manager's expectations for the future course of interest rates
and then prevailing price and yield levels in the fixed-income
market.
Changes in interest rates will cause the value of
securities held in the Actively Managed Bond Fund to vary
inversely to changes in prevailing interest rates. If,
however, a security is held to maturity, no gain or loss will
be realized as a result of changes in prevailing rates. The
value of these securities will also be affected by general
market and economic conditions and by the creditworthiness of
the issuer. Fluctuations in value of the Actively Managed Bond
Fund securities will cause net asset value per unit to
fluctuate.
A portion of the Actively Managed Bond Fund may be
temporarily held, without limitation on amount, in cash
equivalents. SEE, "Investment Objectives and Policies -- Other
Investment Policies -- Cash Equivalents" for the definition of
"cash equivalents".
As a "bond" fund, at least 65% of the total assets of
the Actively Managed Bond Fund will, under normal market
conditions, be invested in debt securities.
The Actively Managed Bond Fund is co-managed by Herbert
Kuhl, Jr., Vice President, and Deborah A. Modzelewski, Vice
President, of Investors Inc., who each play an important role
in the Investment Fund's management process. They work closely
together to develop investment strategies and select
securities for the Investment Fund's portfolio. Mr. Kuhl, Jr.
has been co-manager of the Investment Fund since August 1993,
except during a period of retirement between November 1995 and
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<PAGE>
March 1996. Ms. Modzelewski has been a co-manager since
November 1995. Mr. Kuhl, Jr. joined Retirement System for
Savings Institutions (predecessor to Investors Inc.) in April,
1986, with over 20 years of experience in managing credit
research and fixed-income investments. Prior thereto, he was
an investment officer at Savings Bank Trust Company, with
responsibility for managing various banks' fixed-income
investments. He is a graduate of Rhode Island University with
a Bachelor of Science degree in Industrial Engineering and
received a Master of Science degree in Finance from Columbia
University. Mr. Kuhl, Jr. is a Chartered Financial Analyst.
Ms. Modzelewski joined Retirement System in September 1984 and
she has been responsible for money market investments and cash
management for all investment funds managed by Investors Inc.
A graduate of New York University, Ms. Modzelewski holds a
Bachelor of Science degree in Finance and International
Business. She also received a Master of Business
Administration degree in Finance from St. John's University.
INTERMEDIATE-TERM BOND FUND
The Intermediate-Term Bond Fund is a diversified fund which
seeks to achieve a total return (I.E., income, including
reinvested income, and capital appreciation or depreciation in
the net asset value, net of operating expenses) in excess of
the Lipper Short-Intermediate (five to ten year maturity) U.
S. Government Mutual Funds Average measured over a period of
three to five years. The returns are sought through a high
level of current income with consideration also given to
safety of principal through investment in fixed-income
securities either maturing within ten years or having an
expected average life of under ten years. The Fund is managed
within an average portfolio maturity range of 2 1/2 years to a
maximum of 5 years and an average duration range from 2 1/2
years to 4 years. Investment emphasis is placed upon securing
a stable rate of return through investment in a diversified
portfolio of debt securities. The Intermediate-Term Bond Fund
will attempt to purchase only securities which were part of an
original issue of $100 million or more. The average maturity
of securities in the Intermediate-Term Bond Fund will be based
primarily upon the investment manager's expectations for the
future course of interest rates and the then prevailing price
and yield levels in the fixed-income markets. The debt
securities in which the Intermediate Bond Fund may invest are
limited by the following policies: (a) at least 75% of the
portfolio of the Intermediate-Term Bond Fund, taken at market
value, must be in debt securities having a rating at the time
of purchase of "Aa" or better from Moody's Investors Service,
Inc., "AA" or better from Standard & Poor's Corporation or
Fitch Investors Service, Inc. or an equivalent rating from
another nationally known rating service or must consist of
securities issued or guaranteed by the United States
government or its agencies or instrumentalities, (b) at least
65% of such portfolio must be invested in securities issued or
guaranteed by the United States government or its agencies or
instrumentalities and (c) the balance of such portfolio must
be invested in debt securities of United States corporations
rated at the time of purchase "A" or better by one of the
above rating agencies and other debt securities (E.G.,
securities of foreign investors) which, in the judgment of the
investment manager, would be of comparable quality to U. S.
securities having a rating of "A" or better by one of the
above rating agencies. SEE, "Appendix" for an explanation of
the ratings. A reduction below such rating for any debt
security owned will not require disposition of the security.
The portfolio structure of the Intermediate-Term Bond
Fund is distributed among sectors or industries with no more
than 25% of such portfolio invested in securities of any one
sector of the corporate bond market. The Fund attempts to
purchase only securities which were part of an original issue
of $100 million or more.
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<PAGE>
Non-income producing securities to be held in the
Intermediate-Term Bond Fund may include zero-coupon
obligations of corporations, instruments evidencing ownership
of future interest or principal payments on United States
Treasury Bonds and collateralized mortgage obligations. (See
the next paragraph for a discussion of collateralized mortgage
obligations.) Zero-coupon obligations pay no current interest.
Zero-coupon obligations are sold at prices discounted from par
value, with that par value to be paid to the holder at
maturity. The return on a zero-coupon obligation, when held to
maturity, equals the difference between the par value and the
original purchase price. Zero-coupon obligations may be
purchased if the yield spread between these obligations and
coupon issues is considered advantageous, giving consideration
to the duration of the two alternative investments. The market
value of a zero-coupon obligation is generally more volatile
than that of an interest-bearing obligation and, as a result,
if a zero-coupon obligation is sold prior to maturity under
unfavorable market conditions, the loss that may be sustained
on such sale may be greater than on the sale of an
interest-bearing obligation of similar yield and maturity.
From time to time the Fund may invest in collateralized
mortgage obligations ("CMOs"), real estate mortgage investment
conduits ("REMICs") and certain stripped mortgage-backed
securities. CMOs generally represent a participation in, or
are secured by, a pool of mortgage loans. The CMOs in which
the Fund may invest are limited to United States government
and related securities (including those of agencies or
instrumentalities) such as CMOs issued by GNMA, FNMA and
FHLMC. Stripped mortgage securities are usually structured
with two classes that receive different portions of the
interest and principal distributions on a pool of mortgage
assets. The Fund may invest in both the interest-only or "IO"
class and the principal-only or "PO" class. The yield to
maturity on an IO class is extremely sensitive not only to
changes in prevailing interest rates but also to the rate of
principal payments (including prepayments) on the related
underlying mortgage assets, and a rapid rate of principal
payments may have a material adverse effect on the Fund's
yield to maturity. If the underlying mortgage assets
experience greater than anticipated prepayments of principal,
the Fund may fail to fully recoup its initial investment in
these securities, even if the securities are United States
government and related securities. Conversely, POs tend to
increase in value if prepayments are greater than anticipated
and decline if prepayments are slower than anticipated.
REMICs are offerings of multiple class real estate
mortgage-backed securities which qualify and elect treatment
as such under provisions of the Code. Issuers of REMICs may
take several forms, such as trusts, partnerships,
corporations, associations or a segregated pool of mortgages.
Once REMIC status is elected and obtained, the entity is not
subject to federal income taxation. Instead, income is passed
through the entity and is taxed to the person or persons who
hold interests in the REMIC. A REMIC interest must consist of
one or more classes of "regular interests," some of which may
offer adjustable rates, and a single class of "residual
interests." To qualify as a REMIC, substantially all of the
assets of the entity must be in assets directly or indirectly
secured principally by real property.
A portion of the Intermediate-Term Bond Fund may be
temporarily held, without limitation on amount, in cash
equivalents. SEE, "Investment Objectives and Policies -- Other
Investment Policies -- Cash Equivalents" for the definition of
"cash equivalents".
As a "bond" fund, at least 65% of the total assets of
the Intermediate-Term Bond Fund will, under normal market
conditions, be invested in debt securities.
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<PAGE>
The Intermediate-Term Bond Fund is co-managed by
Herbert Kuhl, Jr., Vice President, and Deborah A. Modzelewski,
Vice President, of Investors Inc., who each play an important
role in the Investment Fund's management process. They work
closely together to develop investment strategies and select
securities for the Investment Fund's portfolio. Mr. Kuhl, Jr.
has been co-manager of the Investment Fund since April 1986,
except during a period of retirement between November 1995 and
March 1996. Ms. Modzelewski has been a co-manager since
November 1995. Mr. Kuhl, Jr. joined Retirement System for
Savings Institutions (predecessor to Investors Inc.) in April,
1986, with over 20 years of experience in managing credit
research and fixed-income investments. Prior thereto, he was
an investment officer at Savings Bank Trust Company, with
responsibility for managing various banks' fixed-income
investments. He is a graduate of Rhode Island University with
a Bachelor of Science degree in Industrial Engineering and
received a Master of Science degree in Finance from Columbia
University. Mr. Kuhl, Jr. is a Chartered Financial Analyst.
Ms. Modzelewski joined Retirement System in September 1984 and
she has been responsible for money market investments and cash
management for all investment funds managed by Investors Inc.
A graduate of New York University, Ms. Modzelewski holds a
Bachelor of Science degree in Finance and International
Business. She also received a Master of Business
Administration degree in Finance from St. John's University.
SHORT-TERM INVESTMENT FUND
The Short-Term Investment Fund, a diversified fund, seeks
current income and stability of principal through investment
in short term, fixed-income securities, and seeks to achieve a
12 month total return (I.E., income, including reinvested
income, and capital appreciation or depreciation in the net
asset value, net of operating expenses) in excess of the
average return of a broad-based universe of institutional
money market funds. However, the fund is not a money market
fund and its net asset value will fluctuate. The Short-Term
Investment Fund purchases only instruments which are callable
on demand or with a remaining maturity of one year or less,
except debt obligations issued or guaranteed by the United
States government or its agencies or instrumentalities, which
may have a remaining maturity of up to two years, and will
maintain a dollar weighted average portfolio maturity of 12
months or less. Although the type of money market securities
in which the Short-Term Investment Fund invests are not
completely risk free, such securities are generally considered
by the investment manager to have a low risk of default in
payment of principal and interest obligations. With respect to
repurchase agreements and the lending of portfolio securities
by the Short-Term Investment Fund, there is the risk of the
failure of the parties involved to repurchase at the agreed
upon price or to return the securities loaned. SEE,
"Investment Objectives and Policies -- Other Investment
Policies -- Repurchase Agreements" and "Investment Objectives
and Policies -- Other Investment Policies -- Lending Portfolio
Securities" for a description of these and other related
risks. In addition to effecting repurchase agreements and the
lending of securities, the Short-Term Investment Fund limits
its investments to the instruments described below. The
Short-Term Investment Fund attempts to maintain a relatively
stable per share value with less fluctuation than a
longer-term bond fund.
OBLIGATIONS ISSUED BY OR GUARANTEED BY THE UNITED
STATES GOVERNMENT, ITS AGENCIES OR
INSTRUMENTALITIES. United States government obligations
are bills, notes, bonds and other debt securities issued
by the Treasury which are direct obligations of the
United States government and differ primarily in length
of their maturity. These obligations are backed by the
"full faith and credit" of the United States.
Obligations issued by an agency or
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instrumentality of the United States government are not
direct obligations of the Treasury. They include notes,
bonds and discount notes which may or may not be backed
by the full faith and credit of the United States. In
the case of securities not backed by the full faith and
credit of the United States, the Short-Term Investment
Fund must look principally to the agency issuing or
guaranteeing the obligations for ultimate repayment and
may not be able to assert a claim against the United
States itself in the event the agency or instrumentality
does not meet its commitments. Securities in which the
Short-Term Investment Fund may invest that are not
backed by the full faith and credit of the United States
include, but are not limited to, obligations of Federal
National Mortgage Association and the United States
Postal Service, each of which has the right to borrow
from the United States Treasury to meet its obligations,
and obligations of the Federal Farm Credit System and
the Federal Home Loan Banks, both of whose obligations
may be satisfied only by the individual credits of each
issuing agency. Securities which are backed by the full
faith and credit of the United States include
obligations of the Government National Mortgage
Association and the Farmers Home Administration.
BANK OBLIGATIONS. These obligations include, but
are not limited to, negotiable certificates of deposit,
bankers' acceptances and fixed time deposits issued by
United States banks and foreign banks. Investments in
United States bank obligations are limited to
obligations of United States banks (including foreign
branches), which are members of the Federal Reserve
System or are examined by the Comptroller of the
Currency or whose deposits are insured by the Federal
Deposit Insurance Corporation or the Federal Savings and
Loan Insurance Corporation. In addition, any United
States bank whose obligations are held must have a class
of unsecured debt obligations rated "A" or better by
Moody's Investors Service, Inc., Standard & Poor's
Corporation, Fitch Investors Service, Inc. or another
nationally known rating service or, if not rated, have
comparable quality in the opinion of the investment
manager.
Investments in foreign bank obligations are
limited to United States dollar denominated obligations
of foreign banks which at the time of investment (a)
have more than $10 billion, or the equivalent in other
currencies, in total assets; (b) in terms of assets are
among the 75 largest foreign banks in the world; (c)
have branches or agencies in the United States; and (d)
in the opinion of the investment manager, are of an
investment quality comparable with obligations of United
States banks which may be purchased.
Fixed time deposits are obligations of foreign
branches of United States banks or foreign banks which
are payable at a stated maturity date and bear a fixed
rate of interest. Generally, fixed time deposits may be
withdrawn on demand by the investor, but they may be
subject to early withdrawal penalties which vary
depending upon market conditions and the remaining
maturity of the obligation. Although fixed time deposits
do not have a market, there are no contractual
restrictions on the Fund's right to transfer a
beneficial interest in the deposit to a third party. It
is the present policy of the Fund not to invest in fixed
time deposits subject to withdrawal penalties, other
than overnight deposits, if more than 10% of the value
of its total assets would be invested in such deposits
or other illiquid securities.
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Obligations of foreign banks involve somewhat
different investment risks from those affecting
obligations of United States banks, including the
possibilities that liquidity could be impaired because
of future political and economic developments, that the
obligations may be less marketable than comparable
obligations of United States banks, that a foreign
jurisdiction might impose withholding taxes on interest
income payable on those obligations, that foreign
deposits may be seized or nationalized, that foreign
governmental restrictions like exchange control may be
adopted which might adversely affect the payment of
principal and interest on those obligations and that the
selection of those obligations may be more difficult
because there may be less publicly available information
concerning foreign banks or the accounting, auditing and
financial reporting standards, practices and
requirements applicable to foreign banks may differ from
those applicable to United States banks.
COMMERCIAL PAPER AND MASTER DEMAND NOTES ISSUED
BY UNITED STATES CORPORATIONS. Commercial paper is
unsecured promissory notes issued to finance short-term
credit requirements. The Fund's investments in
commercial paper will be limited to commercial paper
rated "Prime-1" by Moody's Investors Service, Inc., and
rated "A-1" or better by Standard & Poor's Corporation.
Master notes are demand obligations that permit the
investment of fluctuating amounts at varying market
rates of interest pursuant to arrangements between the
issuer and a United States commercial bank acting as
agent for the payees of such notes. Master notes are
callable on demand by the Fund, but are not marketable
to third parties. Consequently, the right to redeem such
notes depends on the borrower's ability to pay on
demand. The investment manager will take into account
the creditworthiness of the issuer of master notes in
making investment decisions with respect to such notes.
BONDS, DEBENTURES OR NOTES ISSUED BY UNITED
STATES CORPORATIONS. Bonds, debentures or notes are
obligations of the issuing company to repay a set amount
of money on a specific date and to pay interest (usually
semi-annually) at a fixed or floating rate to maturity.
The corporate bonds, debentures and notes purchased by
the Fund consist of bonds, debentures and notes which
are callable on demand or have a remaining maturity of
less than one year which are rated "A" or better by
Moody's Investors Service, Inc., Standard & Poor's
Corporation, Fitch Investors Service, Inc. or another
nationally known rating service including all sub
classifications indicated by modifiers of such "A"
ratings, or, if not rated, have comparable quality in
the opinion of the investment manager.
SEE, "Appendix" for an explanation of the
ratings described above.
The Short-Term Investment Fund is co-managed by Herbert
Kuhl, Jr., Vice President, and Deborah A. Modzelewski, Vice
President, of Investors Inc., who each play an important role
in the Investment Fund's management process. They work closely
together to develop investment strategies and select
securities for the Investment Fund's portfolio. Mr. Kuhl, Jr.
has been co-manager of the Investment Fund since October 1988,
except during a period of retirement between November 1995 and
March 1996. Ms. Modzelewski has been a co-manager since
November 1995. Mr. Kuhl, Jr. joined Retirement System for
Savings Institutions (predecessor to Investors Inc.) in April,
1986, with over 20 years of experience in managing credit
research and fixed-income investments. Prior thereto, he was
an investment officer at Savings Bank Trust Company, with
responsibility for managing various banks'
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fixed-income investments. He is a graduate of Rhode Island
University with a Bachelor of Science degree in Industrial
Engineering and received a Master of Science degree in Finance
from Columbia University. Mr. Kuhl, Jr. is a Chartered
Financial Analyst. Ms. Modzelewski joined Retirement System in
September 1984 and she has been responsible for money market
investments and cash management for all investment funds
managed by Investors Inc. A graduate of New York University,
Ms. Modzelewski holds a Bachelor of Science degree in Finance
and International Business. She also received a Master of
Business Administration degree in Finance from St. John's
University.
DEDICATED BOND FUND
The Dedicated Bond Fund, a diversified fund, seeks to produce
annual cash flows sufficient to fund all future benefit
payments for defined groups of employees under defined benefit
Plans (SEE, "Investments in the Fund -- Full Participating
Trusts -- A. Defined Benefit Plans"). The necessary cash flows
will be determined based on an actuarial determination of the
stream of future payments for the current group of employees
participating in a Plan. Investment emphasis is placed on
producing such cash flows through investment in a diversified
portfolio of fixed-income securities. More emphasis is
generally placed on predictability of cash flow than on
maximizing yield in the selection of fixed income securities
due to the Dedicated Bond Fund's objective of cash matching --
I.E., establishing a portfolio where the flow of coupon
payments and principal repayments matches the liability
stream. This investment emphasis could result in having
maturities which, at a given point in time, would not produce
the maximum yield available in the market generally through a
choice of different maturities. At least 75% of the portfolio
of the Dedicated Bond Fund, taken at market value, must have a
rating at the time of purchase of at least "Aa" from Moody's
Investors Service, Inc., or "AA" from Standard & Poor's
Corporation or Fitch Investors Service, Inc. or an equivalent
rating from another nationally known rating service, or must
consist of, and at least 50% of such portfolio must be
invested in, securities issued or guaranteed by the United
States government or its agencies or instrumentalities. In
addition, the Dedicated Bond Fund invests in corporate debt
securities only if at the time of purchase they carry a rating
of at least "A" from Moody's Investors Service, Inc., Standard
& Poor's Corporation, Fitch Investors Service, Inc. or an
equivalent rating from another nationally known rating
service. Securities issued or guaranteed by the United States
government or its agencies or instrumentalities in which the
Dedicated Bond Fund might invest would be of the same nature
as those in which the Short-Term Investment Fund might invest
except that they may have longer maturities. SEE, "Short-Term
Investment Fund" above. SEE, "Appendix" for an explanation of
the ratings.
The Dedicated Bond Fund attempts to purchase only
securities which were part of an original issue of $100
million or more. The Fund seeks to minimize its investment in
issues which are subject to call or refunding. In general, the
Dedicated Bond Fund does not invest in callable or refundable
issues unless they have a coupon that is at least 1.5% below
the issue's current yield to maturity at the time of purchase.
While there is no minimum investment in the Dedicated
Bond Fund, Participating Trusts participating in the Dedicated
Bond Fund should have a retired lives liability of
approximately $1 million at current interest rates.
As a "bond" fund, at least 65% of the total assets of
the Dedicated Bond Fund will, under normal market conditions,
be invested in debt securities.
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The Dedicated Bond Fund is co-managed by Herbert Kuhl,
Jr., Vice President, and Deborah A. Modzelewski, Vice
President, of Investors Inc., who each play an important role
in the Investment Fund's management process. They work closely
together to develop investment strategies and select
securities for the Investment Fund's portfolio. Mr. Kuhl, Jr.
has been co-manager of the Investment Fund since 1986, except
during a period of retirement between November 1995 and March
1996. Ms. Modzelewski has been a co-manager since November
1995. Mr. Kuhl, Jr. joined Retirement System for Savings
Institutions (predecessor to Investors Inc.) in April, 1986,
with over 20 years of experience in managing credit research
and fixed-income investments. Prior thereto, he was an
investment officer at Savings Bank Trust Company, with
responsibility for managing various banks' fixed-income
investments. He is a graduate of Rhode Island University with
a Bachelor of Science degree in Industrial Engineering and
received a Master of Science degree in Finance from Columbia
University. Mr. Kuhl, Jr. is a Chartered Financial Analyst.
Ms. Modzelewski joined Retirement System in September 1984 and
she has been responsible for money market investments and cash
management for all investment funds managed by Investors Inc.
A graduate of New York University, Ms. Modzelewski holds a
Bachelor of Science degree in Finance and International
Business. She also received a Master of Business
Administration degree in Finance from St. John's University.
OTHER INVESTMENT POLICIES AND RISK CONSIDERATIONS
The following investment policies apply to all Investment
Funds unless otherwise noted.
SECURITIES SUBJECT TO RESALE RESTRICTIONS
The Investment Funds will not invest in securities
which are subject to restrictions on resale because they have
not been registered under the Securities Act of 1933, as
amended, or which are not readily marketable, except for
master demand notes, other securities payable upon demand,
fixed-time deposits, notes secured by mortgages, repurchase
agreements and instruments evidencing loans of securities.
FOREIGN SECURITIES
The Equity Investment Funds, other than the
International Equity Fund, may invest up to 20% of the value
of their total assets in securities of foreign issuers. The
Bond Investment Funds are limited to 10% of their total assets
in securities of foreign issuers. The Investment Funds
purchasing these securities may be subject to additional risks
associated with the holding of property abroad. Such risks
include future political and economic developments, currency
fluctuations, the possible withholding of tax payments, the
possible seizure or nationalization of foreign assets, the
possible establishment of exchange controls or the adoption of
other foreign government restrictions which might adversely
affect the payment of principal or interest on foreign
securities in the Investment Funds. Risks that may be involved
with the Investment Funds' investment in foreign securities
are, therefore, different in some respects from those incurred
by investment companies which invest solely in the securities
of domestic issuers.
FOREIGN CURRENCY TRANSACTIONS
The value of the assets of the International Equity
Fund and the value of the foreign securities held by the other
Investment Funds as measured in United States dollars may be
affected favorably or
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unfavorably by changes in foreign currency exchange rates and
exchange control regulations, and the International Equity
Fund may incur costs in connection with conversions between
various currencies. The International Equity Fund will conduct
its foreign currency exchange transactions either on a spot
(I.E., cash) basis at the spot rate prevailing in the foreign
currency exchange market, or through forward contracts to
purchase or sell foreign currencies. A forward foreign
currency exchange contract involves an obligation to purchase
or sell a specific currency at a future date, which may be any
fixed number of days from the date of the contract agreed upon
by the parties, at a price set at the time of the contract.
These contracts are traded directly between currency traders
(usually large commercial banks) and their customers.
The Investment Funds will enter into forward foreign
currency exchange contracts as described hereafter. When an
Investment Fund enters into a contract for the purchase or
sale of a security denominated in a foreign currency, it may
desire to establish the United States dollar cost or proceeds.
By entering into a forward contract United States dollars for
the purchase or sale of the amount of foreign currency
involved in an underlying security transaction, such Fund will
be able to protect itself against a possible loss between
trade and settlement dates resulting from an adverse change in
the relationship between the United States dollar and such
foreign currency. However, this tends to limit potential gains
which might result from a positive change in such currency
relationships.
When an investment manager believes that the currency
of a particular foreign country may suffer a substantial
decline against the United States dollar, it may enter into a
forward contract to sell an amount of foreign currency
approximating the value of some or all of the Investment
Fund's portfolio securities denominated in such foreign
currency. A forward contract may also be used to protect a
portion of the portfolio denominated in a foreign currency
against an adverse movement in the value of that currency
relative to other currencies. The forecasting of short-term
currency market movement is extremely difficult and the
successful execution of a short-term hedging strategy is
highly uncertain. No Investment Fund intends to enter into
such forward contracts on a regular or continuous basis, and
will not do so if, as a result, such Fund would have more than
25% of the value of its total assets committed to such
contracts. No Investment Fund will enter into such forward
contracts or maintain a net exposure in such contracts where
such Fund would be obligated to deliver an amount of foreign
currency in excess of the value of such Fund's portfolio
securities or other assets denominated in that currency. Under
normal circumstances, consideration of the prospect for
currency parities will be incorporated into the longer term
investment decisions made with regard to overall
diversification strategies (I.E., anticipated currency
fluctuations will necessarily be considered as part of the
investment decision process). However, the Trustees believe
that it is important to have the flexibility to enter into
such forward contracts when it is determined that the best
interests of an Investment Fund will be served.
It is impossible to forecast with absolute precision
the market value of portfolio securities at the expiration of
the contract. Accordingly, it may be necessary for an
Investment Fund to purchase additional foreign currency on the
spot market (and bear the expense of such purchase) if the
market value of the security is less than the amount of
foreign currency such Fund is obligated to deliver and if a
decision is made to sell the security and make delivery of the
foreign currency. Conversely, it may be necessary to sell on
the spot market some of the foreign currency received upon the
sale of the portfolio security if its market value exceeds the
amount of foreign currency such Fund is obligated to deliver.
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An Investment Fund's dealing in forward foreign
currency exchange contracts will be limited to the
transactions described above. Of course, no Investment Fund is
required to enter into such transactions with regard to its
foreign currency denominated securities and will not do so
unless deemed appropriate by the investment manager. It also
should be realized that this method of protecting the value of
an Investment Fund's portfolio securities against a decline in
the value of a currency does not eliminate fluctuations in the
underlying prices of the securities. It simply establishes a
rate of exchange which one can achieve at some future point in
time. Additionally, although such contracts tend to minimize
the risk of loss due to a decline in the value of the hedged
currency, at the same time, they tend to limit any potential
gain which might result should the value of such currency
increase.
CASH EQUIVALENTS
A portion of any Investment Fund may be held in cash
equivalents. Cash equivalents are interest-bearing instruments
or deposits maturing within one year in which funds are
invested temporarily pending long-term investment or in which
funds are invested when warranted for liquidity reasons or
when market conditions warrant a temporary "defensive"
investment strategy. The purpose of cash equivalents is to
provide income at money market rates while minimizing the risk
of decline in value to the maximum extent possible. The
instruments may include, but are not limited to, repurchase
agreements, obligations issued by or guaranteed by the United
States government, its agencies or instrumentalities,
obligations of banks, and commercial paper. For a description
of repurchase agreements, SEE BELOW, and for a further
description of the other instruments, SEE, "Investment
Objectives and Policies -- Short-Term Investment Fund".
REPURCHASE AGREEMENTS
The Investment Funds may each enter into repurchase
agreements. Under repurchase agreements, an Investment Fund
purchases securities, bankers' acceptances and certificates of
deposit, from a bank, broker-dealer, savings and loan
association or other recognized financial institution with a
concurrent obligation of the seller to repurchase them within
a specified time or on notice at a fixed price (equal to the
purchase price plus interest). Repurchase agreements are
considered loans under the Investment Company Act. Repurchase
agreements maturing in more than seven days and other illiquid
securities will not exceed 10% of the value of the total
assets of any Investment Fund. Repurchase agreements will be
entered into only for debt obligations issued or guaranteed by
the United States government, its agencies or
instrumentalities. SEE, "Investment Objectives and Policies --
Short-Term Investment Fund".
In the event of a bankruptcy or a default of a seller
of repurchase agreements, the Fund could experience costs and
delays in liquidating the securities held as collateral and
the Fund might incur a loss if the value of the collateral
held declined during this period. Certificated securities
purchased subject to resale must be placed in the physical
possession of the Fund's custodian. Uncertificated securities,
such as Treasury Bills and most agency issues, which are
recorded by book-entry on the records of the Federal Reserve
Banks, must be transferred to the Fund's custodian by
appropriate entry in the Federal Reserve Banks' records. If
the value of the securities purchased should decline below the
sales price, additional securities sufficient to make the
value of the securities equal to the sales price must be
deposited with the Fund's custodian. If the seller defaults,
the Investment Fund might incur a
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loss if the value of the securities securing the repurchase
agreement declines and might incur disposition costs in
connection with liquidating the securities. In addition, if
bankruptcy proceedings are commenced with respect to the
seller, realization upon the securities by the Investment Fund
may be delayed or denied.
REVERSE REPURCHASE AGREEMENTS
Each Investment Fund may enter into reverse repurchase
agreements with broker-dealers or financial institutions
deemed creditworthy under guidelines approved by the board of
the Investment Fund. Such agreements involve the sale of
securities held by the Investment Fund pursuant to the
Investment Fund's agreement to repurchase the securities at an
agreed-upon date and price reflecting a market rate of
interest. Reverse repurchase agreements are considered to be
borrowings by the Investment Fund and may be entered into only
when the investment manager believes an Investment Fund's
earnings from the transaction will exceed the interest expense
incurred.
LENDING PORTFOLIO SECURITIES
Any Investment Fund may lend its portfolio securities
where such loans are callable at any time and are continuously
secured by collateral (cash, government securities or Letters
of Credit) equal to no less than the market value, determined
daily, of the securities loaned. Securities may be lent to
normal market participants such as broker-dealers. The
Investment Fund which lends its securities will receive
dividends or interest paid on the securities loaned. It may
also earn interest for having made the loan. On termination of
the loan, the borrower is required to return the securities to
the Investment Fund. Any cash collateral deposited pursuant to
loans of securities will be invested in cash equivalents
including securities issued or guaranteed by the United States
government, its agencies or instrumentalities. Income earned
on the instruments, minus any amounts paid to the borrower for
the use of cash, will be added to the asset value of the
Investment Fund, increasing the value of each unit. At the
same time, the value of the money market instrument may
increase or decrease depending on movements in general
interest rates during the period the instrument is held. If a
decrease in value is greater than the net amount of income
earned on the money market instrument, the asset value of the
Investment Fund, and the value of each unit in that Investment
Fund, will decline if the Investment Fund bears the
responsibility for such investment. Letters of Credit will
only be used if the issuing bank has a bond rating of "A" or
better by one or more of the nationally known rating agencies.
Loans of portfolio securities will be limited to 50% of the
value of each Investment Fund's total assets. Borrowers of
portfolio securities may not be affiliated directly or
indirectly with the Fund. As with any extension of credit,
there are risks of delay in recovery and in some cases even
loss of rights in securities loaned should the borrower of the
securities fail financially. However, these loans of portfolio
securities will only be made to firms deemed to be
creditworthy.
FUTURES AND OPTIONS TRANSACTIONS
An Investment Fund may purchase and sell stock index
futures contracts and futures contracts on financial
instruments and related options for the purpose of hedging
against changes in values of such Fund's portfolio securities
or options on stock indices held by such Fund. An Investment
Fund may also purchase and sell forward foreign currency
exchange contracts and related options and forward currency
contracts for the purpose of hedging against changes in
foreign currency exchange
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rates and other hedging strategies relating to portfolio
securities. SEE, "Foreign Currency Transactions", above.
Finally, an Investment Fund may invest in interest rate
futures contracts and related options to hedge against changes
in interest rates in relation to the interest rates that are
reflected in portfolio securities. The ability of an
Investment Fund to hedge successfully will depend on the
investment manager's ability to forecast pertinent market
movements, which cannot be assured.
Options are valued at their last purchase price as of
the close of options trading on the applicable exchange.
Futures contracts are marked to the market daily and options
thereon are valued at their last sale price, as of the close
of the applicable commodities exchange.
An Investment Fund will not enter into futures
contracts or related options if the aggregate initial margin
and premiums exceed 5% of the liquidation value of the Fund's
total assets, taking into account unrealized profits and
losses on such contracts, provided, however, that in the case
of an option that is in-the-money, the in-the-money amount may
be excluded in computing such 5%. The above restriction does
not apply to the purchase or sale of futures contracts and
related options for bona fide hedging purposes, within the
meaning of regulations of the Commodity Futures Trading
Commission. For purposes of the foregoing, a call option is
"in-the-money" when the current market price is above the
strike price and a put option is "in-the-money" when the
current market price is below the strike price.
Any Investment Fund may purchase call and put options
on securities and on stock indices to attempt to increase such
Fund's total return. An Investment Fund may purchase call
options when, in the opinion of the investment manager for
such Fund, the market price of the underlying security or
index will increase above the exercise price. An Investment
Fund will purchase put options when the investment manager for
such Fund expects the market price of the underlying security
or index to decrease below the exercise price. When an
Investment Fund purchases a call option it will pay a premium
to the person writing the option and a commission to the
broker selling the option. If the option is exercised by the
Investment Fund, the amount of the premium and the commission
paid may be greater than the amount of the brokerage
commission that would be charged if the security were to be
purchased directly.
In addition, an Investment Fund may write covered put
or call options on securities or stock indices. By writing
options, the Investment Fund limits its profit to the amount
of the premium received. By writing a call option, the
Investment Fund assumes the risk that it may be required to
deliver the security having a market value greater than at the
time the option was written. By writing a put option, the
Investment Fund assumes the risk that it may be required to
purchase the underlying security at a price in excess of its
current market value. An Investment Fund will not write
options if immediately after such sale the aggregate value of
the obligations under the outstanding options would exceed 25%
of such Fund's net assets.
The staff of the Securities and Exchange Commission has
taken the position that the purchase and sale of futures
contracts and the writing of related options may involve
senior securities for the purposes of the restrictions
contained in the Investment Company Act on investment
companies issuing senior securities. However, the staff has
issued letters declaring that it will not recommend
enforcement action if an investment company:
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(a) sells futures contracts to offset expected
declines in the value of the investment company's
portfolio securities, provided the value of such futures
contracts does not exceed the total market value of those
securities (plus such additional amount as may be
necessary because of differences in the volatility factor
of the portfolio securities vis-a-vis the futures
contracts);
(b) writes call options on futures contracts,
stock indices or other securities, provided that such
options are covered by the investment company's holding of
a corresponding long futures position, by its ownership of
portfolio securities which correlate with the underlying
stock index, or otherwise;
(c) purchases futures contracts, provided the
investment company establishes a segregated account ("cash
segregated account") consisting of cash or cash
equivalents in an amount equal to the total market value
of such futures contracts less the initial margin
deposited therefor; and
(d) writes put options on futures contracts,
stock indices or other securities, provided that such
options are covered by the investment company's holding of
a corresponding short futures position, by establishing a
cash segregated account in an amount equal to the value of
its obligation under the option, or otherwise.
The Fund will conduct its purchases and sales of
futures contracts and writing of related options transactions
in accordance with the foregoing.
There are risks associated with the use of futures
contracts for hedging purposes. In a declining market
environment, the increase in value of the hedging instruments
may not completely offset the decline in value of the
securities owned by an Investment Fund. Conversely, in a
rising market environment the loss in the hedged position may
be greater than the capital appreciation that an Investment
Fund may experience in its securities positions. Further, if
market values do not fluctuate, an Investment Fund will
sustain a loss at least equal to the commissions on the
financial futures transactions and premium paid.
The price of a futures contract will vary from day to
day and should parallel (but not necessarily equal) the
changes in price of the underlying deliverable securities. The
difference between these two price movements is called
"basis". There are occasions when basis becomes distorted. All
investors in the futures market are subject to initial margin
and variation margin requirements. Rather than providing a
variation margin, an investor may close out a futures
position. Changes in the initial and variation margin
requirements may influence an investor's decision to close out
the position. The normal relationship between the securities
and futures markets may become distorted if changing margin
requirements do not reflect changes in value of the
securities. The liquidity of the futures market depends on
participants entering into offsetting transactions rather than
making or taking delivery of the underlying securities. In the
event investors decide to make or take delivery (which is
unlikely), liquidity in the futures market could be reduced,
thus producing temporary basis distortion. Finally, the margin
requirements in the futures market are lower than margin
requirements in the securities market. Therefore, increased
participation by speculators in the futures market may cause
temporary basis distortion.
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Under certain circumstances, successful use of futures
contracts by an Investment Fund is also subject to the
respective investment manager's ability to correctly
anticipate movements in the direction of the prices of the
Investment Fund's underlying securities. For example, if an
Investment Fund has hedged against the possibility of a
decrease in the price of its securities and prices of such
securities increase instead, the Investment Fund will lose
part or all of the benefit of the increased value of the
securities which it has hedged because it will have offsetting
losses in its futures positions. In addition, in such
situations, if the Investment Fund has hedged with futures and
has insufficient cash, it may have to sell securities to meet
daily maintenance margin requirements. Such sales of
securities may be, but will not necessarily be, at increased
prices which reflect the rising market. The Investment Fund
may have to sell securities at a time when it may be
disadvantageous to do so.
In the futures market, it may not always be possible to
execute a buy or sell order at the desired price or to close
out a position due to market conditions, limits on open
positions and/or daily price fluctuation limits. Each market
establishes a limit on the amount by which the daily market
price of a futures contract may fluctuate. Once the market
price of a futures contract reaches its daily price
fluctuation limit, positions in the contract can be neither
taken nor liquidated unless traders are willing to effect
trades at or within the limit. The holder of a futures
contract may therefore be locked into its position by an
adverse price movement for several days or more to its
detriment. Should this occur, it may be possible for an
investor to reduce its exposure to changing securities values
through option transactions.
SHORT-TERM TRADING
None of the Investment Funds plans to purchase
securities solely for the purpose of short-term trading. The
turnover rate for an Investment Fund will not be a factor
preventing sale or purchase when the investment manager
believes investment considerations warrant such sale or
purchase. The annual portfolio turnover rates for each of the
eight Investment Funds for the fiscal year ended September 30,
1996 were as follows: Core Equity Fund (9.95%), Emerging
Growth Equity Fund (150.40%), Value Equity Fund (61.53%),
International Equity Fund (51.29%), Actively Managed Bond Fund
(17.14%), Intermediate-Term Bond Fund (13.20%), Short-Term
Investment Fund (0.00%), and Dedicated Bond Fund (0.00%). High
portfolio turnover involves correspondingly greater brokerage
commissions, other transaction costs and a possible increase
in short-term capital gains and losses.
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The foregoing investment objectives and related
policies are not fundamental and may be changed by the
Trustees without the approval of the holders of a majority of
the outstanding units of the affected Investment Fund or
Funds.
INVESTMENT RESTRICTIONS
The investment policies of the respective Investment Funds are
subject to a number of restrictions which reflect both
self-imposed standards and Federal and state regulatory
limitations. The investment restrictions recited below are
matters of fundamental policy and may not be changed without
the affirmative vote of a majority of the outstanding shares
of the Investment Fund. Accordingly, each Investment Fund will
not:
(a) Concentrate 25% or more of its total assets
in securities of issuers in any one industry (for this
purpose the United States government, its agencies and
instrumentalities are not considered an industry);
(b) With respect to 75% of its total assets,
invest more than 5% of its total assets in the securities
of any single issuer (for this purpose the United States
government, its agencies and instrumentalities are not
considered a single issuer);
(c) Borrow money in any Investment Fund except
for temporary emergency purposes and then only in an
amount not exceeding 5% of the value of the total assets
of that Investment Fund;
(d) Pledge, mortgage or hypothecate the assets of
any Investment Fund to any extent greater than 10% of the
value of the total assets of that Investment Fund; or
(e) Invest more than 10% of its total assets in
illiquid securities, including repurchase agreements with
maturities greater than seven days.
The Investment Funds are subject to further investment
restrictions that are set forth in the Statement of Additional
Information.
INVESTMENTS IN THE FUND
As more fully explained below, investments in the Fund may be
made by Qualified Trusts which are either Full Participating
Trusts, Participating Trusts other than Full Participating
Trusts or Individual Retirement Accounts. Participation in the
Fund requires a Participation Agreement. The Participation
Agreement for Qualified Trusts other than Individual
Retirement Accounts, among other things, adopts the Agreement
and Declaration of Trust as a part of the Plan of the Eligible
Employer and provides that the provisions of the Agreement and
Declaration of Trust shall be controlling with respect to the
assets of the Plan transferred to the Trustees.
FULL PARTICIPATING TRUSTS
A Participating Trust which has adopted the Agreement and
Declaration of Trust and which designated the Trustees as
named fiduciaries and as administrator to act as "Trustee
Administrator" (SEE, "Administration of the Fund --
Administrative Services") is herein referred to as a "Full
Participating
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Trust". A Plan effectuated by a Full Participating Trust is
herein referred to as a "Plan of Participation" and the
Eligible Employer which is the sponsor of such Plan is herein
referred to as a "Full Participating Employer".
The Participation Agreement which adopts the Agreement
and Declaration of Trust is required to provide for the manner
of administration of the Plan of Participation and the
investment of its assets, including, among other things, any
applicable allocation of authority between the Trustees and
the investment fiduciary designated by the Full Participating
Employer with respect to the acquisition, retention and
disposition of units of the Fund on behalf of the Full
Participating Trust. Fiduciaries designated by a Full
Participating Employer with such authority with respect to
units of the Fund or with other authority relating to the
investment of assets of a Full Participating Trust are herein
referred to as "Investment Fiduciaries".
Except upon the withdrawal of a Full Participating
Trust from the participation in the Fund, the assets of such
Trust which are held by the Trustees are comprised solely of
units of the Fund.
A Plan of Participation may be a defined benefit Plan
or a defined contribution Plan.
Admissions to an Investment Fund or Funds by Full
Participating Trusts are effected by the Trustees in their
discretion, which is exercised consistently with the
directions of the Investment Fiduciaries in the case of Full
Participating Trusts subject to Classification Authority
and/or Unit Direction Authority (as defined below), and to
allocation directions relating to DC Investment
Classifications (as defined below), provided with respect to
Full Participating Trusts established under defined
contribution Plans.
Subject to the approval of the Trustees, the benefits
under a Plan of Participation may be funded through one or
more funding agencies in addition to the Trust. Such a plan,
sometimes referred to as a "Plan of Partial Participation",
remains a Plan of Participation subject to the provisions of
the Agreement and Declaration of Trust, and the Eligible
Employer which sponsors it remains a Full Participating
Employer, except that the Trustees have no responsibility with
respect to the assets of a Plan of Partial Participation which
are not held and administered by them under the Agreement and
Declaration of Trust. The Investment Fiduciaries of a Plan of
Partial Participation are solely responsible for the manner in
which the Plan assets of such Plan shall be diversified. A
Full Participating Employer sponsoring a Plan of Partial
Participation is required to elect that the assets of its Full
Participating Trust held by the Trustees shall be subject to
Unit Direction Authority, and/or, with the consent of the
Trustees, to Classification Authority.
A. DEFINED BENEFIT PLANS
A Full Participating Employer sponsoring a defined
benefit Plan of Participation may elect to authorize
Investment Fiduciaries to direct, to the extent provided
below, the manner in which the units held in its Full
Participating Trust shall be allocated among classes of units.
Except to the extent authority is reserved to Investment
Fiduciaries pursuant to an election described below, the
Trustees, acting as the trustees of the Full Participating
Trust established in connection with a defined benefit Plan,
determine in their discretion the classes of units which will
be acquired, retained and disposed of by the Full
Participating Trust. In this connection, the Trustees may
establish guidelines as to
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proportions of the units held in such Full Participating Trust
which shall be allocated among various classes of units and
may take into account characteristics of the Plan of
Participation, Full Participating Employer, Plan participants,
or other factors as they may deem relevant.
Allocation authority is permitted to be reserved to
Investment Fiduciaries on one or both of the following two
bases, as elected by the Full Participating Employer:
(a) CLASSIFICATION AUTHORITY. The Investment
Fiduciaries may be given the authority to direct, subject
to guidelines established by the Trustees, the proportions
in which the units held in the Full Participating Trust
shall be divided between the investment classifications
("Investment Classifications") established by the
Trustees. The Trustees have classified the classes of
units comprising the Investment Funds under two Investment
Classifications comprising investments providing generally
for a return based on fixed income investments and equity
investments. The Trustees may change the Investment
Classifications or add new classifications from time to
time. Trusts with respect to which the Investment
Fiduciaries have been given the authority described in
this paragraph are referred to as trusts subject to
"Classification Authority".
(b) UNIT DIRECTION AUTHORITY. The Investment
Fiduciaries may be given authority to direct the Trustees
to invest, subject to guidelines established by the
Trustees, assets of the Full Participating Trust in units
of specified Investment Funds. Trusts with respect to
which the Investment Fiduciaries have been given the
authority described in this paragraph are referred to as
trusts subject to "Unit Direction Authority".
The allocation of the assets of a Full Participating
Trust among units and/or classes of units are effected in
conformity with the funding policy established with respect to
the Plan of Participation in accordance with the provisions of
the Agreement and Declaration of Trust. The Trustees may
establish guidelines with respect to the allocation of units
where a directory power has been reserved to Investment
Fiduciaries, taking into account such characteristics of the
Plan of Participation, Full Participating Employer, Plan
participants or other factors as they may deem relevant. To
the extent permitted by the Employee Retirement Income
Security Act of 1974, as amended ("ERISA") and, subject to the
requirements of any guidelines so established, the Trustees
will follow the investment directions of the Investment
Fiduciaries and will have no liability or responsibility with
respect to such directions.
B. DEFINED CONTRIBUTION PLANS
The assets of Full Participating Trusts which have been
established under Plans which are defined contribution Plans
are invested in units in the manner set forth below. The
Trustees have established three Investment Classifications
("DC Investment Classifications") under which the classes of
units comprising the Investment Funds have been classified.
The DC Investment Classifications comprise investments
providing generally for (a) a return based on long-term fixed
income investments, (b) a return based on short-term fixed
income investments, and (c) equity investments. The Trustees
may change the DC Investment Classifications or add new
classifications from time to time.
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The Dedicated Bond Fund is not currently available for
defined contribution Plans. Full Participating Employers
sponsoring defined contribution Plans may choose from the
remaining seven funds those that will be offered to employees.
Each Full Participating Employer sponsoring a defined
contribution Plan which is funded under a Full Participating
Trust is required to elect in its Participation Agreement the
DC Investment Classifications among which contributions under
such Plan shall be allocated. The Trustees may, upon the
request of such Full Participating Employer or Investment
Fiduciaries, if any, establish an investment classification or
classifications, other than the DC Investment Classifications,
hereinafter called "Special DC Investment Classifications",
which include classes of units selected by such Full
Participating Employer or its Investment Fiduciaries. The Full
Participating Employer or its Investment Fiduciaries shall
provide the Fund with investment instructions in respect of
contributions made under its defined contribution Plan
specifying the DC Investment Classifications and/or Special DC
Investment Classifications under which such contributions are
to be invested. The Trustees shall invest contributions
directed to be invested in any such DC Investment
Classification and/or Special DC Investment Classification and
shall make withdrawals therefrom in such manner as to preserve
the proportions of the DC Investment Classification and/or
Special DC Investment Classifications which are represented by
the Investment Funds. To the extent permitted by ERISA, the
Trustees shall have no liability or responsibility for the
determination of the Investment Funds included in a Special DC
Investment Classification directed by a Full Participating
Employer or its Investment Fiduciaries. The allocation of the
assets of a Full Participating Trust established in connection
with a defined contribution Plan among the DC Investment
Classifications established by the Trustees and the selection
of the Investment Funds, or combinations thereof, shall be
subject to the funding policy established with respect to the
defined contribution Plan in accordance with the provisions of
the Agreement and Declaration of Trust and such guidelines as
may be established by the Trustees.
PARTICIPATING TRUSTS OF ELIGIBLE EMPLOYERS OTHER THAN FULL
PARTICIPATING TRUSTS
Participating Trusts of Eligible Employers other than Full
Participating Trusts can effect purchases of specific
Investment Funds by entering into a Participation Agreement
and by sending the Fund investment instructions on a
PARTICIPATION AGREEMENT AND PURCHASE ORDER APPLICATION,
available to an Eligible Employer's plan fiduciaries. The
application can be obtained from the office of RSI Retirement
Trust at 317 Madison Avenue, New York, New York 10017.
Completed applications and funds in the form of checks can be
submitted in person to the office of the Fund or by mail.
Investors wishing to purchase units by means of wire transfer
should contact the Distributor.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Individual Retirement Accounts are eligible for participation
in the Fund. The Fund serves solely as the investment vehicle
for the Individual Retirement Accounts. Individual Retirement
Accounts may purchase units of all Investment Funds other than
the Dedicated Bond Fund. In order to participate in the Fund,
a completed IRA APPLICATION AND TRANSFER FORM must be sent to
the Fund instructing the Trustees how to allocate amounts
accompanying the form (and any subsequent contributions made
prior to a change in instructions) among the various
Investment Funds on behalf of the individual submitting the
form. The minimum initial Fund investment is $2,000 (which may
be made in quarterly investments of $500 during the first
year). The minimum initial investment for each Investment Fund
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is $500, and subsequent investments for each Investment Fund
must also be at least $500. IRA APPLICATION AND TRANSFER FORMS
can be obtained by writing to Retirement System Distributors
Inc., Customer Service, at P. O. Box 2064, Grand Central
Station, New York, New York 10163-2064, or by calling the
Distributor's Individual Retirement Account Customer Service
line at 1-800-772-3615. Completed IRA APPLICATION AND TRANSFER
FORMS and contribution checks can be submitted in person to
the office of the Fund or by mail to the above address.
Investors wishing to purchase units by means of wire transfer
should contact the Distributor.
GENERAL
There is no minimum initial investment for admission to each
Investment Fund for a Participating Trust (other than an
Individual Retirement Account as described above) and
subsequent investments may be made in any amount (subject to
the Individual Retirement Account minimum). All funds will be
invested in full and fractional units. The purchase price for
units of each Investment Fund will be its net asset value per
unit next determined following receipt of investment
instructions to the Fund and the purchase price at the office
of the Fund. SEE, "Valuation of Units". Upon request, each
Participating Trust must provide to the Trustees a properly
completed investment instruction form. An investment
instruction form which is not properly completed will be
directed to the Service Company for clarification. The Service
Company will ascertain the information necessary to properly
complete the investment instruction form and forward it to the
Fund. If such investment instruction form is transmitted to
the Fund in proper form by 4:00 p.m., Eastern Time, the
purchase will be effected at the net asset value determined as
of the close of business on that day. Otherwise, such
investment instruction form will be based on the next
determined net asset value. Each Participating Trust must
contain an appropriate provision authorizing the investment of
all or a portion of its assets in the Fund.
Because units are not transferable, certificates
representing units of the Fund will not be issued. All units
purchased shall be confirmed to Trust Participants and
credited to the accounts of the Participating Trusts on the
Fund's books.
The Fund reserves the right in its sole discretion to
(a) suspend the availability of its units, or (b) to reject
requests for admission, when in the judgment of the Trustees
such suspension or rejection is in the best interests of the
Fund. In addition, the availability of units or classes of
units to Full Participating Trusts shall be subject to the
applicable authorizing election of the Full Participating
Employer and the guidelines established by the Trustees.
WITHDRAWALS AND EXCHANGES
WITHDRAWALS FROM INVESTMENT FUNDS (REDEMPTIONS)
All or a portion of the units held in any of the Investment
Funds can be redeemed at any time. Payment for units withdrawn
by a Participating Trust which is not a Full Participating
Trust (including an Individual Retirement Account) will be
made by check drawn in favor of the trustee or trustees of
such Participating Trust. Payment for units withdrawn by a
Full Participating Trust will be made to the Trustees in their
capacities as the trustees of such Full Participating Trust to
be administered in accordance with the Agreement and
Declaration of Trust.
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Participating Trusts (other than Individual Retirement
Accounts) can make withdrawals at any time by filing the
redemption request form provided by the Trustees at the Fund's
office.
Individual Retirement Accountholders can request a
distribution of account shares at any time, by completing a
Redemption Request Form which is available by calling the
Distributor's Individual Retirement Account Customer Service
line at 1-800-772-3615 or by writing to Retirement System
Distributors Inc., Customer Service, at P.O. Box 2064, Grand
Central Station, New York, New York 10163-2064.
A redemption request filed by a Participating Trust
(including an Individual Retirement Account) which is not
properly completed will be directed to the Service Company for
clarification. The Service Company will ascertain the
information necessary to properly complete the redemption
request and forward it to the Fund. If such redemption request
is transmitted to the Fund in proper form by 4:00 p.m.,
Eastern Time, the withdrawal will be effected at the net asset
value determined as of the close of business on that day.
Otherwise, such withdrawal will be based on the next
determined net asset value.
Withdrawal of units by a Full Participating Trust shall
be made only by the Trustees, in their capacities as trustees
of a Full Participating Trust, acting in their discretion
consistently with the directions of the Investment Fiduciaries
in the case of Full Participating Trusts subject to
Classification Authority and/or Unit Direction Authority and
to the allocation directions relating to DC Investment
Classifications provided with respect to Full Participating
Trusts established under defined contribution Plans.
The withdrawal price will be the net asset value per
unit next determined following receipt of instructions for
withdrawal, together with all other required documents, in
proper form at the office of the Fund. SEE, "Valuation of
Units". Generally a request must be accompanied by appropriate
evidence of authority and authorization (E.G., certified
resolutions, incumbency and signature certificates, evidence
of any required governmental approval, and a signature
guarantee for Individual Retirement Accounts). The value of a
unit on withdrawal may be more or less than the value upon
admission to the Investment Fund, depending upon the value at
the time of withdrawal of the assets in the Investment Fund,
from which the units are withdrawn. SEE, "Valuation of Units".
Withdrawals are subject to determination by the Trustees that
the Redemption Request Form has been properly completed.
Payment for units withdrawn will normally be made, in
the case of Full Participating Trusts, to the Trustees in
their capacities as trustees of the Full Participating Trust
or, in the case of Participating Trusts other than Full
Participating Trusts (including Individual Retirement
Accounts), to the trustees of such Participating Trust, within
one business day of the determination of net asset value
following receipt of documents in proper form, but in no event
will payment be made more than seven days after such receipt.
The payment may be delayed or the right of withdrawal from any
Investment Fund suspended at times when (a) trading on the New
York Stock Exchange is restricted or closed for other than
customary weekends and holidays, (b) an emergency, as defined
by rules of the Securities and Exchange Commission, exists
making disposal of portfolio securities or determination of
the value of the net assets of an Investment Fund not
reasonably practicable, or (c) the Securities and Exchange
Commission has by order permitted such suspension.
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Disqualification of a Participating Trust other than an
Individual Retirement Account could result from actions taken
by the trustee thereof or by the administrators or fiduciaries
of the Plan with respect to which it has been established. In
that event, a determination of disqualification may be made by
the Internal Revenue Service or by a court. If at any time a
Participating Trust is disqualified, the Trustees will
withdraw all units of such Participating Trust at the net
asset value next determined after the Trustees are apprised of
such disqualification. Payments for units withdrawn by the
Trustees upon disqualification will be made in the same manner
as described in the preceding paragraph for payment of units
withdrawn upon request.
EXCHANGES
Units in any Investment Fund may be exchanged without cost for
units in any other Investment Fund. Exchanges may be effected
by Participating Trusts other than Full Participating Trusts
(but not including Individual Retirement Accounts), and by
Full Participating Trusts subject to Unit Direction Authority,
by sending a completed investment instruction form to the
Trustees. Exchange of units by a Full Participating Trust
other than a Full Participating Trust subject to Unit
Direction Authority, shall be made only by the Trustees in
their capacities as trustees of such Full Participating Trust,
acting in their discretion consistently with the direction of
the Investment Fiduciaries in the case of Full Participating
Trusts subject to Classification Authority and to the
allocation directions relating to DC Investment
Classifications provided with respect to Full Participating
Trusts established under defined contribution Plans.
Investment instruction forms can be obtained from the Fund at
its office. Completed investment instruction forms can be
returned in person or by mail to the Fund.
Individual Retirement Accountholders may exchange units
in any Investment Fund for units in any other Investment Fund
without cost by completing an Individual Retirement Account
Exchange Request Form. This form is available by calling the
Distributor's Individual Retirement Account Customer Service
line at 1-800-772-3615 or by writing to Retirement System
Distributors Inc., Customer Service, at P.O. Box 2064, Grand
Central Station, New York, New York 10163-2064. Exchanges may
be effected by an Individual Retirement Accountholder by
sending a completed Exchange Request Form to the trustee of
the Individual Retirement Account. (The trustee of all
Individual Retirement Accounts is a Participating Trust of the
Fund, although not a Full Participating Trust.)
Any exchange will be based on the respective net asset
values of the units involved next determined after receipt of
instructions for an exchange at the office of the Fund prior
to its close of business. Exchanges are subject to
determination by the Trustees that the investment instruction
form has been properly completed.
VALUATION OF UNITS
Net asset value per unit of each Investment Fund is determined
by dividing the total value of each Investment Fund's assets,
less any liabilities, by the number of units of the respective
Investment Funds outstanding.
The Fund determines the value of the assets held in
each Investment Fund as of the close of the New York Stock
Exchange composite transactions on each day on which the
Exchange is open for trading (normally 4:00 p.m. Eastern
time), provided that such determination need be made only on
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each day on which units are to be valued for purposes of
issuance or redemption. The following days are holidays on the
New York Stock Exchange: January 1, New Year's Day; third
Monday in February, Presidents' Day; Friday before Easter,
Good Friday; last Monday in May, Memorial Day; July 4,
Independence Day; first Monday in September, Labor Day; fourth
Thursday in November, Thanksgiving Day; December 25, Christmas
Day. Except for debt securities with remaining maturities of
60 days or less, assets for which markets are available are
valued as follows: (a) each listed equity security is valued
at its closing price obtained from the respective primary
exchange on which the security is listed, or, if there were no
sales on that day, at its last reported current closing price;
(b) each unlisted equity security quoted on the NASDAQ is
valued at the last current bid price obtained from the NASDAQ;
(c) United States government and agency obligations are valued
based upon bid quotations from various market makers for
identical or similar obligations; and (d) short-term money
market instruments (such as certificates of deposit, bankers'
acceptances and commercial paper) are most often valued by bid
quotation or by reference to bid quotations of available
yields for similar instruments of issuers with similar credit
ratings. Certain of these prices may be obtained by the Fund
from a service which collects and disseminates such market
prices. When approved by the Trustees, certain debt
securities, including corporate debt obligations, may be
valued on the basis of prices provided by such service when
such prices are believed to reflect the fair market value of
such debt securities.
Debt securities with remaining maturities of 60 days or
less are valued on the basis of amortized cost. Under this
method of valuation, the security is initially valued at cost
on the date of purchase or, in the case of securities
purchased with more than 60 days remaining to maturity, the
market value on the 61st day prior to maturity. Thereafter,
the Fund assumes a constant proportionate amortization in
value until maturity of any discount or premium, regardless of
the impact of fluctuating interest rates on the market value
of the security, unless the Trustees are apprised that
amortized cost no longer represents fair market value. The
Fund will monitor the market value of these investments for
the purpose of ascertaining whether any such circumstances
exist.
When approved by the Trustees, certain securities may
be valued on the basis of valuations provided by an
independent pricing service when such prices are believed by
the Trustees to reflect the fair market value of such
securities. These securities would normally be those which
have no available recent market value, have few outstanding
shares and therefore infrequent trades, or for which there is
a lack of consensus on the value, with quoted prices covering
a wide range. The lack of consensus would result from
relatively unusual circumstances such as no trading in the
security for long periods of time, or a company's involvement
in merger or acquisition activity, with widely varying
valuations placed on the company's assets or stock. Prices
provided by an independent pricing service may be determined
without exclusive reliance on quoted prices and may take into
account appropriate factors such as institutional-size trading
in similar groups of securities, yield, quality, coupon rate,
maturity, type of issue, trading characteristics and other
market data.
In the absence of an ascertainable market value, assets
are valued at their fair market value as determined by the
officers of the Fund using methods and procedures reviewed and
approved by the Trustees.
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Investments denominated in foreign currencies are
translated to United States dollars at the prevailing rate of
exchange. Each foreign security is valued at its closing price
or the mean between the jobber's bid and asked price,
depending on the security and the exchange on which it is
traded.
The Fund does not ordinarily declare and pay dividends
on its investment income. The Fund did, however, declare a
dividend of shares of common stock of Retirement System Group
Inc. ("System") in connection with the reorganization of the
Fund and the transfer of certain assets of the Fund to the
System in 1990. SEE, "Distributions and Taxes". Income earned
on assets in an Investment Fund is included in the total value
of such Fund's assets. Interest income on debt securities is
accrued and added to asset value daily. Dividend income is
recognized and added to asset value on the ex-dividend date.
In addition, realized and unrealized gains or losses on
investment securities of each Investment Fund will be added to
or subtracted from, respectively, the asset value of that
Investment Fund.
DISTRIBUTIONS AND TAXES
With respect to the Plans of Eligible Employers, the Fund has
received from the Internal Revenue Service a determination
that it is a commingled trust which is exempt from taxation
under Section 501(a) of the Code with respect to funds derived
from Participating Trusts which are pension or profit sharing
trusts maintained in conformity with Section 401(a) of the
Code.
In order for the Fund to maintain its tax exempt
status, only Qualified Trusts (including Individual Retirement
Accounts) may participate in the Fund. In addition, all
investments and income belonging to any Qualified Trust must
be used exclusively for the benefit of the participants and
their beneficiaries under that Qualified Trust prior to the
satisfaction of all liabilities for such participants and
their beneficiaries. Except to the extent provided by
applicable Federal law, no Participating Trust may assign any
part of its interest in the Fund. The Fund must, at all times,
be maintained as a domestic trust in the United States, and
there must be a separate accounting for the interest of each
Participating Trust in the Fund.
The Fund does not intend to declare a dividend from its
net investment income or to make distributions of any gains
realized on sales of portfolio securities. Income on, and
gains realized from the sale of, portfolio securities of each
Investment Fund will be added to the total asset value of the
assets of such Investment Fund and losses realized from the
sale of portfolio securities of each Investment Fund will be
subtracted from the total asset value of the assets of such
Investment Fund. SEE, "Valuation of Units".
Payments for units withdrawn from the Fund are not
taxable upon their distribution to the trustees of a
Participating Trust which is qualified under Section 401(a) of
the Code. Distributions from Individual Retirement Accounts
are ordinarily taxable, unless "rolled over" into another
Individual Retirement Account or a tax-qualified trust.
The foregoing describes only certain Federal tax
considerations relating to the Fund. Among other things, it
does not describe other tax laws such as state or local taxes,
does not describe the deductibility of contributions to
Participating Trusts and does not describe the taxation of
individual
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participants on the receipt of distributions from
Participating Trusts. Trust Participants and Eligible
Employers and Individual Retirement Accountholders should
consult their individual tax advisors with respect to the
taxes applicable to or in respect of their Plans.
ADMINISTRATION OF THE FUND
GENERAL
The business and affairs of the Fund, a New York common law
trust, are managed by the Trustees. The Trustees perform the
duties and undertake the responsibilities, in effect, of a
board of directors of an investment company. As Trustees,
however, they must discharge their duties with the care,
skill, prudence and diligence under the circumstances then
prevailing that a prudent man acting in a like capacity and
familiar with such matters would use in the conduct of an
enterprise of a like character and with like aims. The
Trustees were last elected by vote of the Trust Participants
at a meeting held on July 1, 1996. Pursuant to the Fund's
Agreement and Declaration of Trust, the Trustees of the Fund
have been divided into three classes of Trustees. At each
annual meeting, one class of Trustees is elected. There is no
limitation on the number of terms which may be served by any
Trustee. The Trustees of the Fund and their principal
occupations are set forth below. Each Trustee who is an
"interested person" of the Fund, as defined in the Investment
Company Act, is indicated by an asterisk (*).
INFORMATION REGARDING TRUSTEES
<TABLE>
<CAPTION>
POSITIONS
WITH AGE PRINCIPAL OCCUPATION FOR LAST FIVE YEARS
NAME THE FUND -- AND AFFILIATION WITH THE FUND
- ---------------------- --------- ------------------------------------------
<S> <C> <C> <C>
CURRENT TERM REMAINING --
THREE YEARS:
William Dannecker* President 57 President and Trustee of the Fund since
and May 1986 and May 1987, respectively; Chief
Trustee Executive Officer of the Fund from January
1988 to August 1990; President of
Retirement System Fund Inc. since February
1991 and Director since November 1990;
President and Director of Retirement
System Group Inc. since March 1989 and
Chief Executive Officer since January
1990; President and Director of Retirement
System Consultants Inc. since January 1990
and March 1989, respectively; Director of
Retirement System Investors Inc. since
March 1989; President and Director of
Retirement System Distributors Inc. since
December 1990 and July 1989, respectively;
Director of RSG Insurance Agency Inc.
since March 1996.
Covington Hardee Trustee 77 Chairman of the Board Emeritus from 1984
to April 1990, The Lincoln Savings Bank,
FSB, New York, New York. Also director of
Retirement System Fund Inc.
</TABLE>
43
<PAGE>
<TABLE>
<CAPTION>
POSITIONS
WITH AGE PRINCIPAL OCCUPATION FOR LAST FIVE YEARS
NAME THE FUND -- AND AFFILIATION WITH THE FUND
- ---------------------- --------- ------------------------------------------
Maurice E. Kinkade Trustee 55 Director of Development, Maplebrook
School, Amenia, New York, since September
1994; President, of KINCO Management,
Poughkeepsie, New York from June 1992 to
September 1995; formerly Chairman and
Chief Executive Officer from 1984 and
1980, respectively to February 1990.
President from August 1986 to February
1990 and between 1980 and 1984,
Poughkeepsie Savings Bank, FSB,
Poughkeepsie, New York.
<S> <C> <C> <C>
William G. Lillis Trustee 66 Real Estate Consultant; formerly President
and Chief Executive Officer from April
1981 and December 1989, respectively to
November 1991, American Savings Bank,
White Plains, New York.
CURRENT TERM REMAINING --
TWO YEARS:
Candace Cox Trustee 45 President and Chief Investment Officer,
NYNEX Asset Management Co., since
November, 1995; Vice President, Public
Markets Strategy, NYNEX Asset Management
Co., from September 1992 to October 1995;
Principal Investment Officer, New York
City Controller's Office, New York, New
York from July 1989 to August 1992. Also
Director of Retirement System Fund Inc.
Eugene C. Ecker Trustee 72 Consultant since January 1988, Pension and
Group Insurance. Also Director of
Retirement System Fund Inc.
Raymond L. Willis Trustee 61 Private investments since March 1989. Also
Director of Retirement System Fund Inc.
CURRENT TERM REMAINING --
ONE YEAR:
Herbert G. Chorbajian* Trustee 58 Chairman and Chief Executive Officer since
October 1990 and President and Director
since June 1985 of ALBANK, FSB; Chairman,
President and Chief Executive Officer of
ALBANK Financial Corporation since
December 1991.
Ralph L. Hodgkins, Jr. Trustee 63 Trustee and Investment Committee Chair,
University of Maine System; Vice
President, Peoples Heritage Bank, Portland
Maine from September 1994 to March 1995;
formerly President and Chief Executive
Officer, Mid Maine Savings Bank, FSB,
Auburn, Maine from August 1970 to August
1994.
</TABLE>
44
<PAGE>
<TABLE>
<CAPTION>
POSITIONS
WITH AGE PRINCIPAL OCCUPATION FOR LAST FIVE YEARS
NAME THE FUND -- AND AFFILIATION WITH THE FUND
- ---------------------- --------- ------------------------------------------
William L. Schrauth* Trustee 61 President and Chief Executive Officer, The
Savings Bank of Utica, Utica, New York
since August 1977.
<S> <C> <C> <C>
William E. Swan* Trustee 49 President and Chief Executive Officer,
Lockport Savings Bank, Lockport, New York
since July 1989.
</TABLE>
SEE, "Administration of the Fund" in the Statement of
Additional Information for further information regarding
Trustees' compensation.
An important function of the Trustees is the selection
of investment managers for the Investment Funds and the review
and evaluation of their performance.
The Trustees periodically evaluate the performance of
the investment managers and review the continued
appropriateness of the structure of the Investment Funds. The
Trustees also periodically evaluate the allocation of assets
among Investment Classifications and among Investment Funds
and guidelines of investment for all Plans. The Trustees have
retained Hewitt Associates to assist them in the above
matters, for which service the Fund paid Hewitt Associates
fees and expenses amounting to $47,550 for the Fund's fiscal
year ended September 30, 1996.
THE SERVICE AGREEMENT
Effective August 1, 1990, the Fund entered into a Service
Agreement with the Service Company, whereby the Service
Company provides the Fund with the general administrative and
related services necessary to carry on the affairs of the
Fund.
Pursuant to the Service Agreement, the Service Company
has agreed to: (a) manage, supervise and conduct the affairs
and business of the Fund, and matters incidental thereto, in a
manner consistent with the Fund's Agreement and Declaration of
Trust, Rules and Procedures, Statement of Investment
Objectives and Guidelines and Prospectus, as these may be
amended from time to time; (b) furnish or provide to the Fund
such office space, equipment and personnel, and such clerical
and back office services, as the Fund may reasonably require;
(c) provide the Fund with stock transfer agent and registrar
services and maintain sufficient trained personnel and
equipment and supplies to perform such services; (d) provide
the Fund with Plan administrative services necessary due to
the fact that the Trustees of the Fund are the Trustee
Administrator for each of the affected Participating Trusts
under the Fund's Agreement and Declaration of Trust; and (e)
provide the Fund with certain administrative services in
connection with Individual Retirement Accounts. In addition,
the Service Company provides information relating to the
allocation of assets between equities and fixed income
obligations and within specified Investment Funds of the Fund.
Effective August 1, 1993, the Trustees of the Fund
approved continuance of an amended Service Agreement with the
Service Company. Under the amended Service Agreement, the
Service
45
<PAGE>
Company is paid a fee for its services as of the last day of
each month such Service Agreement is in effect, at the
following annual rates, based on the average daily net assets
of each of the Fund's Investment Funds for such month:
<TABLE>
<CAPTION>
FEE (% OF AVERAGE
NET ASSETS OF INVESTMENT FUND DAILY NET ASSETS)
- --------------------------------------------------------- -------------------
<S> <C>
First $25 million........................................ .60%
Next $25 million......................................... .50%
Next $25 million......................................... .40%
Next $25 million......................................... .30%
Over $100 Million........................................ .20%
</TABLE>
The Service Company will pay all of the fees and
expenses incurred by it in providing the Fund with the
services and facilities described in the Service Agreement.
The Fund will pay, or reimburse the Service Company for the
payment of, the following fees and expenses incurred by or on
behalf of the Fund, including, without limitation: (1) fees
and expenses relating to investment advisory services; (2)
fees and expenses of custodians and depositories; (3) fees and
expenses of outside legal counsel, independent auditors and
consultants; (4) interest charges; (5) all Federal, state and
local taxes (including, without limitation, stamp, excise,
income and franchise taxes); (6) costs of stock certificates
and other expenses of issuing and redeeming units; (7) costs
incidental to unitholder meetings; (8) fees and expenses of
registering or qualifying units for sale under Federal and
state securities laws; (9) costs (including postage) of
printing and mailing prospectuses, proxy statements and other
reports and notices to unitholders and to governmental
agencies (other than in connection with promoting the sale of
units to prospective new investors); (10) premiums on all
insurance and bonds; (11) fees and expenses of the Fund's
Trustees; (12) fees and expenses paid to any securities
pricing organization; and (13) fees and expenses paid to any
third party arising out of any of the services relating to
Participating Trusts and other unitholders, as described in
the Service Agreement.
The amended Service Agreement was initially effective
until July 31, 1995, and will remain in effect from year to
year thereafter if such continuance is approved in the manner
required for investment advisory contracts under the
Investment Company Act, and if, in addition, the following
findings are made by a majority of the Fund's Trustees who are
"not interested" (as defined in the Investment Company Act):
(A) that the Service Agreement is in the best interests of the
Fund and its unitholders; (B) that the services to be
performed pursuant to the Service Agreement are services
required for the operation of the Fund; (C) that the Service
Company can provide services, the nature and quality of which
are at least equal to those provided by others offering the
same or similar services; and (D) that the fees for such
services are fair and reasonable in light of the usual and
customary charges made by others for services of the same
nature and quality.
The Service Agreement may be terminated by the Fund or
the Service Company, without penalty, on not more than 60
days' nor less than 30 days' written notice. The Service
Agreement will also terminate automatically in the event of
its "assignment" (as defined in the Investment Company Act).
46
<PAGE>
DISTRIBUTION AGREEMENT
Pursuant to the Distribution Agreement, approved effective
August 1, 1993, the Broker-Dealer will distribute and promote
the sale of units in the Fund's Investment Funds without
compensation for its services.
Pursuant to the Distribution Agreement, the
Broker-Dealer is responsible for paying all of the
"distribution expenses" incurred in connection with the
performance of its services on behalf of the Fund. For
purposes of the Distribution Agreement, "distribution
expenses" means all expenses which represent payment for
activities primarily intended to result in the sale of units
including, but not limited to, the following: (a) payments
made to, and expenses of, persons or entities which provide
sales services in connection with the distribution of units,
including, but not limited to, office space and equipment,
telephone facilities, answering routine inquiries regarding
the Fund, processing transactions and providing any other
service to new or prospective holders of units; (b) costs
relating to the formulation and implementation of marketing
and promotional activities with respect to units, including,
but not limited to, direct mail promotions and television,
radio, newspaper, magazine and other mass media advertising;
(c) costs of printing and distributing prospectuses,
statements of additional information and reports of the Fund
to prospective holders of units; (d) costs involved in
preparing, printing and distributing advertising and sales
literature pertaining to units; and (e) costs involved in
obtaining whatever information, analyses and reports with
respect to marketing and promotional activities with respect
to units that the Fund or the Broker-Dealer may, from time to
time, deem advisable.
The Distribution Agreement was initially effective
until July 31, 1995, and will remain in effect from year to
year thereafter if such continuance is approved in the manner
required under the Investment Company Act. The Distribution
Agreement may be terminated by the Fund or the Broker-Dealer
without penalty, on not more than 60 days' nor less than 30
days' written notice. The Distribution Agreement will also
terminate automatically in the event of its "assignment" as
defined in the Investment Company Act.
INVESTMENT MANAGERS
Investors Inc. serves as the investment manager for each
Investment Fund pursuant to an Investment Management Agreement
dated August 1, 1993. Investors Inc. retains sub-investment
advisers to manage the portfolios, subject to Investors Inc.'s
overall supervision, of the Emerging Growth Equity Fund, and
International Equity Fund pursuant to Sub-Investment Advisory
Agreements dated August 1, 1993 between Investors Inc. and
each such sub-investment adviser. Investors Inc. is
responsible for overall management of each Investment Fund's
business affairs, as well as managing the portfolios of each
Investment Fund which does not have a sub-investment adviser.
The Investment Management Agreement and each Sub-Investment
Advisory Agreement (each a "Contract") were approved by Trust
Participants at a meeting held on July 30, 1993.
Each Contract has an initial term of two years and
remains in effect from year to year thereafter, if such
continuance is approved in the manner required by the
Investment Company Act.
47
<PAGE>
Each Contract may be terminated by either party, without
penalty, on not more than 60 days' nor less than 30 days'
written notice. The Contracts will also terminate
automatically in the event of "assignment" as defined in the
Investment Company Act.
The sub-investment advisers for the Emerging Growth
Equity Fund are Friess Associates, Inc. ("Friess") and The
Putnam Advisory Company, Inc. ("Putnam"), each of which has
been allocated approximately 50% of that Investment Fund's
assets (initially and in respect of subsequent investments by
Participating Trusts). The sub-investment adviser for the
International Equity Fund is Morgan Grenfell Investment
Services Limited ("Morgan Grenfell"). From June 15, 1992 until
March 31, 1995, NFJ Investment Group was responsible for
managing the Value Equity Fund's portfolio. Beginning April 1,
1995 Investors Inc. assumed the portfolio management function.
The following is a brief description of Investors Inc.
and each sub-investment adviser, including its address, a
brief description of its business history, and the
identification of its controlling persons:
RETIREMENT SYSTEM INVESTORS INC. ("INVESTORS
INC."), 317 Madison Avenue, New York, New York 10017,
is a wholly-owned subsidiary of the System. Investors
Inc. was formed in March 1989 to act as investment
adviser to certain of the Fund's Investment Funds
following the consummation of the Reorganization.
Investors Inc. may also act as investment adviser to
other investment companies.
FRIESS ASSOCIATES, INC. ("FRIESS"), 350
Broadway, P.O. Box 576, Jackson, Wyoming 83001, is an
investment adviser to individual and institutional
clients with substantial investment portfolios. The
company was organized in 1974 and is wholly owned by
Foster S. Friess and Lynnette E. Friess who are
directors and the sole officers of the company.
MORGAN GRENFELL INVESTMENT SERVICES LIMITED
("MGIS"), 20 Finsbury Circus, London EC2M 1NB, England,
was established in 1977 to provide international
investment management services to North American
investment funds. MGIS is a wholly-owned subsidiary of
Morgan Grenfell Asset Management Limited ("MGAM"), the
holding company for a group of United Kingdom operated
funds management companies; each of MGIS (indirectly)
and MGAM (directly) are wholly-owned subsidiaries of
Morgan Grenfell Group PLC, an investment holding company
which is a subsidiary of Deutsche Bank AG.
THE PUTNAM ADVISORY COMPANY, INC.
("PUTNAM"), One Post Office Square, Boston,
Massachusetts 02109, was formed in 1968 to manage
domestic and foreign institutional separately managed
accounts. Its parent company is The Putnam Companies,
Inc. The Putnam Companies, Inc. is a wholly-owned
subsidiary of Marsh & McLennan Companies, Inc., a
publicly owned holding company, whose principal
businesses are international insurance and reinsurance
brokerage, employee benefit consulting and investment
management. The Putnam organization has been managing
money since 1937 with the inception of The George Putnam
Fund of Boston.
The Trustees select the investment manager and the
investment manager selects sub-investment advisers based upon
a quantitative and qualitative evaluation of their skills in
managing assets pursuant to specific investment styles and
strategies. Short-term investment performance, by
48
<PAGE>
itself, is not a significant factor in selecting or
terminating sub-investment advisers. The Fund will mail
written notice of the appointment of a new manager to each
Participating Trust as promptly as is reasonably practicable
under the circumstances when a new manager begins providing
investment management services.
The investment manager and each sub-investment adviser
has complete discretion to purchase and sell portfolio
securities for its segment of an Investment Fund within the
parameters of the Investment Fund's objectives, policies and
restrictions. Although the investment manager's and each
sub-investment adviser's activities are subject to general
oversight by the Trustees, the Trustees do not evaluate the
investment merits of the investment managers' individual
security selections.
The Investment Management and Sub-Investment Advisory
Agreements provide for fees at the annual rates set forth in
the following table. The Sub-Investment Advisory fees are
payable by Investors Inc. and not by the Investment Funds.
<TABLE>
<CAPTION>
TOTAL MANAGEMENT SUB-INVESTMENT
INVESTMENT FUND FEE ADVISORY FEE
- ------------------------------------------- ----------------- -----------------
<S> <C> <C>
Core Equity Fund N/A
First $50 Million...................... .60%
Next $150 Million...................... .50
Over $200 Million...................... .40
Emerging Growth Equity Fund
The Putnam Advisory Company, Inc.
First $25 Million.................... 1.20 1.0
Over $25 Million..................... .95 .75
Friess Associates, Inc................. 1.20 1.0
Value Equity Fund N/A
First $10 Million...................... .60
Next $10 Million....................... .50
Next $20 Million....................... .40
Next $20 Million....................... .30
Next $40 Million....................... .20
Next $50 Million....................... .15
Over $150 Million...................... .10
International Equity Fund
First $50 Million...................... .80 .60
Over $50 Million....................... .70 .50
Actively Managed Bond Fund N/A
First $50 Million...................... .40
Next $100 Million...................... .30
Over $150 Million...................... .20
Intermediate-term Bond Fund N/A
First $50 Million...................... .40
Next $100 Million...................... .30
Over $150 Million...................... .20
</TABLE>
49
<PAGE>
<TABLE>
<CAPTION>
TOTAL MANAGEMENT SUB-INVESTMENT
INVESTMENT FUND FEE ADVISORY FEE
- ------------------------------------------- ----------------- -----------------
Short-term Investment Fund N/A
<S> <C> <C>
First $50 Million...................... .25
Over $50 Million....................... .20
Dedicated Bond Fund N/A
First $5 Million....................... .25
Next $15 Million....................... .20
Over $20 Million....................... .15
</TABLE>
The Investors Inc. fee is payable as of the last day of
each month, based on average daily net assets of each of the
Investment Funds during such month. Each sub-investment
advisory fee is payable at the end of each quarterly period.
The Morgan Grenfell and Putnam fees are calculated on the
basis of assets at the end of each month during the quarter.
The Freiss fees are calculated on the basis of assets at the
end of each quarter.
No investment manager provides any services to an
Investment Fund except portfolio investment. However, if
authorized by the Fund, an investment manager or its affiliate
may execute portfolio transactions for the Funds and receive
brokerage commissions therefor.
An adviser may also serve as a discretionary investment
manager or non discretionary investment adviser to management
or advisory accounts unrelated in any manner to the Fund. Each
Contract requires the adviser to provide fair and equitable
treatment to the Fund in the selection of portfolio
investments and the allocation of investment opportunities,
but does not obligate the adviser to give the Fund exclusive
or preferential treatment.
Although the advisers make investment decisions for an
Investment Fund independently from those for their other
clients, it is likely that similar investment decisions will
be made from time to time. When an Investment Fund and a
client are simultaneously engaged in the purchase or sale of
the same security, the transactions are, to the extent
feasible and practicable, averaged as to price and allocated
as to quantity between the Investment Fund and the clients in
a manner considered by the investment manager to be equitable.
In some cases, this system could have a detrimental effect on
the price or volume of the security to be purchased or sold,
as far as the particular Investment Fund is concerned. In
other cases, however, it is believed that coordination and the
ability to participate in volume transactions should be to the
benefit of the Investment Fund.
GENERAL INFORMATION
UNITS OF BENEFICIAL INTEREST AND VOTING RIGHTS
The units offered hereby constitute units of beneficial
interest in the respective Investment Funds as to which they
have been issued. The Agreement and Declaration of Trust
provides that the Fund may issue an unlimited number of units
of beneficial interest without par value. The classes are
treated as series for the purposes of the Investment Company
Act and are referred to elsewhere in this Prospectus as
Investment Funds. The Agreement and Declaration of Trust
permits the Trustees to create an unlimited number of
Investment Funds and, with respect to each Investment Fund, to
issue an unlimited number of full and fractional units of
beneficial interest of that Fund. Each class of units
designated as a separate
50
<PAGE>
Investment Fund represents a separate pool of assets.
Currently, the Fund is offering units of beneficial interest
in eight Investment Funds: Core Equity Fund, Emerging Growth
Equity Fund, Value Equity Fund, International Equity Fund,
Actively Managed Bond Fund, Intermediate-Term Bond Fund,
Short-Term Investment Fund, and Dedicated Bond Fund. The
Trustees may classify or reclassify units into one or more
Investment Funds so long as such classification or
reclassification does not have a material adverse effect on
Participating Trusts which own the units.
The units of each Investment Fund are fully paid and
non-assessable, except as described in the last paragraph
hereunder, have no preference as to conversion, exchange,
dividends, retirement or other features, and have no
preemptive rights. The voting rights of the units held by a
Participating Trust are exercised by the named fiduciary or
fiduciaries of the related Plan who have been duly vested in
accordance with the provisions of ERISA, with authority to
invest assets of the Plan in units of the Fund or, if
applicable, the Individual Retirement Accountholder ("Trust
Participant"). A Trust Participant is entitled to one vote for
each full unit (and a fractional vote for each fractional
unit) outstanding on the books of the Fund in the name of the
Participating Trust. The units of each Investment Fund have
non-cumulative voting rights, which means that the holders of
more than 50% of the units voting for the election of the
Trustees can elect 100% of the Trustees if they choose to do
so. On any matter submitted to a vote of Trust Participants,
all units of the Fund then issued and outstanding and entitled
to vote, irrespective of the class, will be voted in the
aggregate and not by class, except (a) when required by the
Investment Company Act, units shall be voted by individual
classes; and (b) when the matter affects an interest of less
than all classes, then only Trust Participants of
Participating Trusts which own units of the affected series
shall be entitled to vote thereon. Units vote in the aggregate
on matters such as the election of Trustees; whereas, units
are voted by class on matters such as the approval of an
Investment Management Agreement and changing certain
investment restrictions.
Except as set forth below under "Termination of the
Fund", as used in this Prospectus, when referring to the
approvals to be obtained from Trust Participants in connection
with matters affecting all of the Investment Funds, the term
"majority" means the vote of the lesser of (1) 67% of the
Fund's outstanding units present at a meeting if the holders
of more than 50% of the outstanding units are present in
person or by proxy, or (2) more than 50% of the Fund's
outstanding units. When referring to the approvals to be
obtained from Trust Participants in connection with matters
affecting less than all of the Investment Funds, the term
"majority" means the vote of the lesser of (A) 67% of each
Investment Fund's outstanding units present at a meeting if
the holders of more than 50% of the outstanding units of such
Investment Fund are present in person or by proxy, or (B) more
than 50% of such Investment Fund's outstanding units.
No document shall be issued evidencing any interest in
the Fund. No Participating Trust shall have the power to sell,
assign or transfer any unit or all or any part of its equity
or interest in the Fund or use it as security for a loan. The
Service Company is a Transfer Agent and provides transfer
agency services to the Fund. SEE, "Administration of the Fund
-- The Service Agreement."
Participating Trusts may be subject to liability for
obligations of the Fund under the laws of some jurisdictions.
Therefore, the Agreement and Declaration of Trust contains a
disclaimer of liability
51
<PAGE>
of Participating Trusts and requires notice of such disclaimer
be given in each obligation entered into or executed by the
Trustees. It also provides for an indemnification out of Trust
property for any Participating Trust held personally liable
for the obligations of the Fund.
TERMINATION OF THE FUND
The Fund has been established to continue for such time as may
be necessary to accomplish the purposes as to which it was
created. Subject to approval of Participating Trusts which own
at least a majority of the outstanding units of any Investment
Fund, the Trustees may (a) sell the assets of such Investment
Fund to another trust or corporation in exchange for cash or
securities of such trust or corporation, and distribute such
cash or securities, ratably among the Participating Trusts
which own the units of such Investment Fund; or (b) sell and
convert into money the assets of such Investment Fund and
distribute the proceeds or such assets ratably among the
Participating Trusts which own the units of such Investment
Fund.
Upon completion of the distribution of the remaining
proceeds or the remaining assets of any Investment Fund, the
Fund will terminate as to that Investment Fund and the
Trustees will be discharged of any and all further liabilities
and duties and the right, title and interest of all parties
will be canceled and discharged.
CUSTODIAN
The Chase Manhattan Bank, N.A., Chase Metro Tech Center,
Brooklyn, New York 11245, acts as custodian of the assets of
the Short-Term Investment Fund, the Intermediate-Term Bond
Fund, the Actively Managed Bond Fund, the Dedicated Bond Fund
and the International Equity Fund. Custodial Trust Company,
101 Carnegie Center, Princeton, New Jersey 08540-6231, acts as
custodian of the assets of the Core Equity Fund, the Emerging
Growth Equity Fund and the Value Equity Fund.
LITIGATION
The Fund currently is not involved in any material pending
litigation.
EXPENSES
All fees and expenses incurred in the administration of the
Fund, other than expenses relating to the administration of
Plans of Participation, are charged to the Fund. Expenses
relating to the administration of Plans of Participation are
charged to Full Participating Employers. Expenses relating to
the administration of Individual Retirement Accounts are
charged to Individual Retirement Accountholders. Examples of
expenses relating to the administration of Plans of
Participation and Individual Retirement Accounts are general
overhead expenses (other than for investment), particular
expenses arising from services to particular Plans of
Participation and Individual Retirement Accounts which are
recorded on the basis of time records maintained by the
Service Company and actuarial expense. Expenses chargeable to
the Fund which are directly attributable to a particular
Investment Fund are charged to that Fund's operations.
Expenses which are not attributable to a particular Investment
Fund are allocated among the Investment Funds on bases which
are deemed equitable by the Trustees. The expenses of each of
the eight Investment Funds as a percentage of average net
assets were as follows for the Fund's fiscal year ended
September 30, 1996: Core Equity Fund (0.92%); Emerging Growth
Equity
52
<PAGE>
Fund (1.91%); Value Equity Fund (1.20%); International Equity
Fund (1.93%); Actively Managed Bond Fund (0.80%);
Intermediate-Term Bond Fund (0.98%); Short-Term Investment
Fund (0.80%) and Dedicated Bond Fund (.00%).
PERFORMANCE INFORMATION
Each Investment Fund's performance may be quoted in
advertising in terms of total return. Total returns are based
on historical results and are not intended to indicate future
performance. Total returns are based on the overall dollar or
percentage change in value of a hypothetical investment in an
Investment Fund. Each Investment Fund's total return shows its
overall change in value, including changes in Unit price. A
cumulative total return reflects performance over a stated
period of time. An average annual total return reflects the
hypothetical annually compounded rate that would have produced
the same cumulative total return if performance had been
constant over the entire period. Because average annual
returns for more than one year tend to smooth out variations
in returns, they are not the same as actual year-by-year
results.
The performance of an Investment Fund, as well as the
composite performance of all bond funds and all equity funds,
may be compared to data prepared by Lipper Analytical
Services, Inc., CDA Investment Technologies, Inc., Morning
Star, Inc., the Donoghue Organization, Inc. or other
independent services which monitor the performance of
investment companies, and may be quoted in advertising in
terms of their rankings in each applicable universe.
In addition, the Fund may use performance data reported
in financial and industry publications, including BARRON'S,
BUSINESS WEEK, FORBES, INVESTOR'S DAILY, IBC/DONOGHUE'S MONEY
FUND REPORT, MONEY MAGAZINE, THE WALL STREET JOURNAL and USA
TODAY.
COUNSEL AND AUDITORS
Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third Avenue,
New York, New York, 10022, serves as counsel for the Fund.
McGladrey & Pullen, LLP, 555 Fifth Avenue, New York, New York,
10017, have been selected as auditors of the Fund.
NO PERSON HAS BEEN AUTHORIZED IN CONNECTION WITH THE
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS
AND THE STATEMENT OF ADDITIONAL INFORMATION, AND, IF GIVEN OR
MADE, SUCH REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING
BEEN AUTHORIZED.
53
<PAGE>
APPENDIX
Description of Moody's Investors Service, Inc.'s long-term
debt ratings of A or better:
Aaa -- Bonds which are rated Aaa are judged to be
the best quality. They carry the smallest degree of
investment risk and are generally referred to as "gilt
edged". Interest payments are protected by a large or by
an exceptionally stable margin and principal is secure.
While the various protective elements are likely to
change, such changes as can be visualized are most
unlikely to impair the fundamentally strong position of
such issues.
Aa -- Bonds which are rated Aa are judged to be of
high quality by all standards. Together with the Aaa
group, they comprise what are generally known as
high-grade bonds. They are rated lower than the best bonds
because margins of protection may not be as large as in
Aaa securities or fluctuation of protective elements may
be of greater amplitude or there may be other elements
present which make the long-term risks appear somewhat
larger than the Aaa securities.
A -- Bonds which are rated A possess many favorable
investment attributes and are to be considered as
upper-medium grade obligations. Factors giving security to
principal and interest are considered adequate, but
elements may be present which suggest a susceptibility to
impairment sometime in the future.
Description of Standard & Poor's Corporation's corporate debt
ratings of A or better:
AAA -- Debt rated AAA has the highest rating
assigned by Standard & Poor's. Capacity to pay interest
and repay principal is extremely strong.
AA -- Debt rated AA has a very strong capacity to
pay interest and repay principal and differs from the
highest rated issues only in small degree.
A -- Debt rated A has a strong capacity to pay
interest and repay principal although it is somewhat more
susceptible to the adverse effects of changes in
circumstances and economic conditions than debt in higher
rated categories.
Description of Fitch Investors Service, Inc.'s corporate debt
ratings of A or better:
AAA -- AAA rated bonds are considered to be
investment grade and of the highest quality. The obligor
has an extraordinary ability to pay interest and repay
principal, which is unlikely to be affected by reasonably
foreseeable events.
AA -- AA rated bonds are considered to be
investment grade and of high quality. The obligor's
ability to pay interest and repay principal, while very
strong, is somewhat less than for AAA rated securities or
more subject to possible change over the term of the
issue.
A -- A rated bonds are considered to be investment
grade and of good quality. The obligor's ability to pay
interest and repay principal is considered to be strong,
but may be more vulnerable to adverse changes in economic
conditions and circumstances than bonds with higher
ratings.
54
<PAGE>
Description of Moody's Investors Service, Inc.'s commercial
paper rating of Prime-1:
Prime-1 -- Issuers rated Prime-1 (or related
supporting institutions) have a superior capacity for
repayment of short-term promissory obligations. Prime-1
repayment capacity will normally be evidenced by the
following characteristics:
-- Leading market positions in well-established
industries.
-- High rates of return on funds employed.
-- Conservative capitalization structures with
moderate reliance on debt and ample asset
protection.
-- Broad margins in earnings coverage of fixed
financial charges and high internal cash
generation.
-- Well-established access to a range of financial
markets and assured sources of alternate
liquidity.
Description of Standard & Poor's Corporation commercial paper
ratings of A-1 or better:
A-1 -- This highest rating designation indicates
that the degree of safety regarding timely payment is
either overwhelming or very strong. Those issues
determined to possess overwhelming safety characteristics
are denoted with a plus (+) sign designation.
55
<PAGE>
PROSPECTUS
CORE EQUITY FUND
VALUE EQUITY FUND
EMERGING GROWTH EQUITY FUND
INTERNATIONAL EQUITY FUND
ACTIVELY MANAGED BOND FUND
INTERMEDIATE-TERM BOND FUND
SHORT-TERM INVESTMENT FUND
DEDICATED BOND FUND
JANUARY 28, 1997
1997
BROKER/DEALER:
[Logo]
RETIREMENT SYSTEM
Distributors Inc.
317 Madison Ave.
New York, NY 10017-5397
<PAGE>
File No. 2-95074
STATEMENT OF ADDITIONAL INFORMATION
RSI RETIREMENT TRUST
JANUARY 28, 1997
This Statement of Additional Information sets forth certain information
with respect to units offered by RSI Retirement Trust ("Fund"), an open-end
diversified management investment company.
The Fund is a no load series mutual fund that currently offers eight
investment funds with each having its own investment objectives and investment
strategies. The Fund is designed for the investment of funds held in trusts
which are exempt from taxation under Section 501(a) of the Internal Revenue Code
of 1986, as amended ("Code") and which have been established by Eligible
Employers to effectuate pension or profit sharing plans which are qualified
under Section 401(a) of said Code. Eligible Employers are corporations or
associations organized under the laws of any state or of the United States,
organizations which are controlling, controlled by, or under common control with
such eligible employers or the members of which consist solely of some or all of
such organizations, or organizations which are determined by the Trustees of the
Fund to have business interests in common with other organizations participating
in the Fund or self-employed individuals; provided, however, that the
participation in the Fund of any self-employed individual or of any corporation
or association which is not a bank, savings bank, credit union or savings and
loan association, or controlling, controlled by, or under common control with a
bank, savings bank, credit union or savings and loan association, shall be
subject to the approval of the Trustees of the Fund.
The Fund is also designed for the investment of funds held in Individual
Retirement Accounts (IRAs) which are exempt from taxation under Section 408(e)
of the Code and which have been established by individual retirement
accountholders to effectuate an individual retirement trust or custodial
agreement which is maintained in conformity with Section 408(a) of the Code.
Individual retirement accountholders are individuals for whom an Individual
Retirement Account has been established; provided, however, that participation
in the Fund of such arrangement shall be subject to the approval of the Trustees
of the Fund.
---------------
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. THE
INFORMATION HEREIN SHOULD BE READ IN CONJUNCTION WITH THE FUND'S PROSPECTUS
DATED JANUARY 28, 1997, A COPY OF WHICH MAY BE OBTAINED BY WRITING TO RSI
RETIREMENT TRUST, 317 MADISON AVENUE, NEW YORK, NEW YORK 10017, ATTENTION:
STEPHEN P. POLLAK, ESQ.
1
<PAGE>
TABLE OF CONTENTS
PAGE
----
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . 10
Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . 12
Administration of The Fund . . . . . . . . . . . . . . . . . . . . . . 12
Control Persons and Principal Unitholders. . . . . . . . . . . . . . . 18
Investment Managers. . . . . . . . . . . . . . . . . . . . . . . . . . 19
Brokerage Allocation and Portfolio Turnover. . . . . . . . . . . . . . 21
Counsel and Auditors . . . . . . . . . . . . . . . . . . . . . . . . . 24
Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . 24
2
<PAGE>
THE FUND
The Fund is a trust which was established by individual trustees under the
laws of the State of New York pursuant to an Agreement and Declaration of Trust
made as of October 22, 1940. The Agreement and Declaration of Trust, as amended
from time to time, is referred to as the "Agreement and Declaration of Trust".
The term "Trustees", as used herein, refers to the trustees acting from time to
time under the Agreement and Declaration of Trust in their capacity as such.
Except as otherwise specifically provided herein, the term "Trustees", as used
herein, is not meant to refer to the trustees of Participating Trusts (SEE, "The
Fund" in the Prospectus) in their capacity as such, although the trustees of
Full Participating Trusts (SEE, "Investments in the Fund -- Full Participating
Trusts" in the Prospectus) are one and the same as the trustees under the
Agreement and Declaration of Trust. The Agreement and Declaration of Trust was
amended effective as of August 31, 1984 to provide for the continued operation
of the Fund as an open-end diversified investment company under the name of
Retirement System for Savings Institutions. Prior to such date the Fund had
been known as The Savings Banks Retirement System.
Effective August 1, 1990 the Fund consummated a reorganization
("Reorganization") in order to further enhance the long-term viability of the
Fund and realize value for the Participating Trusts. The Reorganization was
effected through a transfer of the Fund's operating assets and business (E.G.,
office furniture, computers and files) and certain intangible assets (I.E.,
reorganization costs) to subsidiaries of Retirement System Group Inc.
("System"), in exchange for shares of the common stock of the System, and the
spin-off of the System through the allocation of such shares to the
Participating Trusts ("Distributed Shares"), all pursuant to the Agreement and
Plan of Reorganization, dated as of March 22, 1990, as amended ("Reorganization
Agreement"), between the System and the Fund. Thus, immediately following the
consummation of the Reorganization ("Closing"), the Participating Trusts owned
all of the outstanding shares of the System's common stock while at the same
time retaining units in the Fund's Investment Funds (as hereinafter defined).
Pursuant to the Reorganization Agreement, the System and its subsidiaries
assumed certain of the liabilities of the Fund, including liabilities under two
Participating Trusts which were sponsored by the Fund for its own employees. In
connection with the Reorganization, the Fund changed its name to RSI Retirement
Trust effective August 1, 1990.
As a condition to receipt of its Distributed Shares, each Participating
Trust was required to enter into a stockholders' agreement with the System,
the Fund, the Service Company and a trustee/custodian which provides for,
among other things, (a) significant restrictions on transfers of the common
stock, (b) opportunities for Participating Trusts to dispose of their
Distributed Shares in an initial offer period following the Closing and
during three subsequent offer periods and (c) opportunities for members of
the System's Board of Directors and management and certain other persons to
acquire shares of the common stock from Participating Trusts during such
offer periods and/or directly from the System.
3
<PAGE>
The Fund also entered into an investment management agreement with a
subsidiary of the System, Retirement System Investors Inc. ("Investors Inc."),
effective at the Closing. This agreement was superseded by a new Investment
Management Agreement, effective August 1, 1993, pursuant to which Investors
Inc. manages the assets of each of the Investment Funds of the Fund. SEE,
"Investment Managers" in this Statement of Additional Information.
The Fund also entered into a service agreement ("Service Agreement") with a
subsidiary of the System, Retirement System Consultants Inc. ("Service
Company"), effective at the Closing. Pursuant to the Service Agreement, the
Service Company provides the Fund with general administrative and related
services necessary to carry on the affairs of the Fund. SEE, "Administration of
the Fund -- Service Agreement" in the Prospectus.
The Fund also entered into a distribution agreement ("Distribution
Agreement") with a subsidiary of the System, Retirement System Distributors Inc.
("Broker-Dealer"), effective at the Closing. Pursuant to the Distribution
Agreement, the Broker-Dealer distributes and promotes the sale of units in the
Fund's Investment Funds. SEE, "Distribution Plan" in this Statement of
Additional Information.
The Fund is registered with the Securities and Exchange Commission
("Commission") as an open-end diversified management investment company.
Registration of the Fund with the Commission does not mean that the Commission
has approved the Fund's investment objectives and policies or passed upon the
merits of the offering of beneficial interests in the Fund.
The Fund is currently offering eight investment funds ("Investment Funds"),
each with a different set of investment objectives and policies: Core Equity
Fund, Emerging Growth Equity Fund, Value Equity Fund, International Equity Fund,
Actively Managed Bond Fund, Intermediate-Term Bond Fund, Short-Term Investment
Fund and Dedicated Bond Fund. There can be no assurance that the investment
objective of any Investment Fund can be attained. The term "investment manager"
as used herein in reference to any Investment Fund means the investment manager
acting for such fund or any segment thereof.
YIELD
The yield of each Investment Fund is calculated by dividing the net
investment income per unit (as described below) earned by the Investment Fund
during a 30-day (or one month) period by the net asset value per unit on the
last day of the period and analyzing the result on a semi-annual basis by adding
one to the quotient, raising the sum to the power of six, subtracting one from
the result and then doubling the difference. The Investment Fund's net
investment income per unit earned during the period is based on the average
daily number of units outstanding during the period entitled to receive
dividends and includes dividends and interest earned during the period minus
expenses accrued for the period. This calculation can be expressed as follows:
4
<PAGE>
_ _
| / \ 6 |
Yield = 2 | | a-b + 1 | -1 |
| | --- | |
| | cd | |
|_ \ / _|
Where: a = dividends and interest earned during the
period
b = expenses accrued for the period
c = the average daily number of units outstanding
during the period that were entitled to receive
dividends
d = the net asset value per unit on the last day
of the period
Except as noted below, for the purpose of determining net investment income
earned during the period (variable "a" in the formula), interest earned on debt
obligations held by an Investment Fund is calculated by computing the yield to
maturity of each obligation based on the market value of the obligation
(including actual accrued interest) at the close of business on the last
business day of each month, or, with respect to obligations purchased during the
month, based on the purchase price (plus actual accrued interest), dividing the
result by 360 and multiplying the quotient by the market value of the obligation
(including actual accrued interest) in order to determine the interest income on
the obligation for each day of the subsequent month that the obligation is held
by an Investment Fund. For purposes of this calculation, it is assumed that
each month contains 30 days. The maturity of an obligation with a call
provision is the next call date on which the obligation reasonably may be
expected to be called or, if none, the maturity date.
The yields on certain obligations, including instruments such as commercial
paper and bank obligations, are dependent on a variety of factors, including
general market conditions, conditions in the particular market for the
obligation, the financial condition of the issuer, the size of the offering, the
maturity of the obligation and the ratings of the issue. The ratings of Moody's
Investors Service and Standard & Poor's Corporation represent their respective
opinions as to the quality of the obligations they undertake to rate. Ratings,
however, are general and are not absolute standards of quality. Consequently,
obligations with the same rating, maturity and interest rate may have different
market prices. In addition, subsequent to its purchase by an Investment Fund,
an issue may cease to be rated or may have its rating reduced below the minimum
required for purchase. In such event, the investment manager will consider
whether the Investment Fund should continue to hold the obligation.
5
<PAGE>
For the 30-day period ended September 30, 1996, the yield for each
Investment Fund as to which performance may be quoted in advertising was as
follows:
INVESTMENT FUNDS Yield
---------------- -----
Core Equity Fund 1.74%
Emerging Growth Equity Fund -1.11%
Value Equity Fund 1.57%
International Equity Fund 0.07%
Short-Term Investment Fund 4.12%
Intermediate-Term Bond Fund 5.58%
Actively Managed Bond Fund 6.13%
TOTAL RETURN
Average annual total return quotes ("Standardized Return") used in an
Investment Fund's performance are calculated according to the following formula:
n
P(1 + T) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (exponent)
ERV = ending redeemable value of a hypothetical $1,000 payment made
at the beginning of that period.
Under the foregoing formula, the time periods used will be based on rolling
calendar quarters, updated to the last day of the most recent quarter prior to
submission of the advertising for publication and will cover one, three, five
and ten year periods or a shorter period dating from the effectiveness of an
Investment Fund's registration statement. Average annual total return, or "T" in
the formula above, is computed by finding the average annual change in the value
of an initial $1,000 investment over the period.
An Investment Fund also may include in advertising total return performance
data that are not calculated according to the formula set forth above in order
to compare more accurately the Investment Fund's performance with other measures
of investment return. For example, an Investment Fund may calculate total
return for specified periods of time by assuming the investment of $1,000 in
Investment Fund units. The rate of return is determined by subtracting the
initial value of the investment from the ending value and by dividing the
remainder by the initial value.
Set forth below are the average annual total returns for the periods ending
September 30, 1996 and December 31, 1996 for each of the Investment Funds as to
which performance may be quoted in advertising. Total returns are based on
historical results and are not intended to indicate future performance. Total
returns are based on the overall dollar or percentage change in value of a
hypothetical investment in an Investment Fund. Each
6
<PAGE>
Investment Fund's total returns show its overall change in value, including
changes in unit price. A cumulative total return reflects performance over a
stated period of time. An average annual total return reflects the hypothetical
annually compounded rate that would have produced the same cumulative total
return if performance had been constant over the entire period. (Footnotes are
indicated at the end of the tables.)
Net Investment Performance+
For Periods Ending September 30, 1996:
Annualized
--------------------------------------------------
Since Inception
1 Year 3 Years 5 Years 10 Years 13-3/4 Years
------ ------- ------- -------- ---------------
EQUITY FUNDS
RSI Retirement Trust:
Core 21.11% 17.93% 15.37% 13.94% 16.03%
Emerging Growth 27.56% 23.60% 23.51% 16.03% 16.43%
Value 21.58% 14.42% 13.05% 11.09% 12.03%
International 12.42% 9.61% 9.11% 8.11% --
Annualized
--------------------------------------------------
Since Inception
1 Year 3 Years 5 Years 10 Years 13-3/4 Years
------ ------- ------- -------- ---------------
FIXED-INCOME FUNDS
Short-Term 4.82% 4.32% 3.80% 5.54% 6.55%
Intermediate-Term 4.64% 4.13% 6.17% 7.44% 9.11%
Actively Managed 4.09% 3.93% 7.21% 7.60% 9.45%
Annualized
-----------------------------------------------------
Since Inception
1 Year 3 Years 5 Years 10 Years 13-3/4 Years
------ ------- ------- -------- ------------
TOTAL FUNDS
RSI Retirement Trust Plan
Category:**
Conservative Risk 11.74% N/A N/A N/A N/A
Tolerance
Positive Risk Tolerance 14.24% 11.45% 11.80% 10.72% 12.29%
7
<PAGE>
For Periods Ending December 31, 1996:
<TABLE>
<CAPTION>
Annualized
--------------------------------------------------
Since Inception
1 Year 3 Years 5 Years 10 Years 14 Years*
------ ------- ------- -------- --------
<S> <C> <C> <C> <C> <C>
EQUITY FUNDS
RSI Retirement Trust
Core 21.53% 19.95% 15.15% 14.13% 16.27%
Emerging Growth 27.09% 23.41% 21.37% 16.14% 16.18%
Value 25.90% 18.58% 14.34% 12.12% 12.60%
International 10.86% 7.90% 9.15% 7.48% -
FIXED-INCOME FUNDS
RSI Retirement Trust:
Short-Term 4.70% 4.49% 3.79% 5.52% 6.52%
Intermediate-Term 4.02% 4.94% 5.68% 7.36% 9.13%
Actively Managed 3.15% 5.16% 6.65% 7.60% 9.51%
TOTAL FUNDS
RSI Retirement Trust Plan
Category:**
Positive Risk Tolerance 14.21% 12.79% 11.42% 10.86% 12.40%
Conservative Risk Tolerance 11.54% -- -- -- --
</TABLE>
+ All performance results shown are net of management fees and all related
investment expenses, unless otherwise footnoted.
* The International Equity Fund was started on May 1, 1984.
** The performance information of these two categories reflects asset
allocation strategies employed by the Board of Trustees of RSI
Retirement Trust with respect to those employee benefit plans over which
the Board of Trustees has investment discretion. The asset allocation
strategies are designed to take into account the differing levels of
8
<PAGE>
risk tolerance of such plans. Effective November 1, 1994, the Trust
maintains two active Tolerance for Risk Categories --- Conservative
(which replaced the former Low and Average Tolerance for Risk
Categories) and Positive. As a result of this change only the Positive
Tolerance for Risk Category maintained continuity with a previous risk
category regarding asset mix and performance results.
9
<PAGE>
OTHER INFORMATION
The performance of an Investment Fund, as well as the composite performance
of all fixed-income funds and all equity funds, may be compared to data prepared
by Lipper Analytical Services, Inc., CDA Investment Technologies, Inc. or other
independent services which monitor the performance of investment companies, and
may be quoted in advertising in terms of their rankings in the applicable Lipper
Mutual Funds Universes. These Lipper Universes are as follows: The Lipper
General Equity Funds Universe for the Core Equity Fund and the Value Equity
Fund; the Lipper Small Company Growth Funds Universe for the Emerging Growth
Equity Fund; the Lipper International Funds Universe for the International
Equity Fund; the Lipper Fixed Income Funds Universe for the Actively Managed
Fixed-Income Fund; and the Lipper (one to five year maturity) Investment Grade
Funds Universe for the Intermediate-Term Fixed-Income Fund. In addition, an
Investment Fund may use performance data reported in financial and industry
publications, including BARRON'S, BUSINESS WEEK, FORBES, INVESTOR'S DAILY,
IBC/DONOGHUE'S MONEY FUND REPORT, MONEY MAGAZINE, THE WALL STREET JOURNAL AND
THE NEW YORK TIMES.
INVESTMENT RESTRICTIONS
The following restrictions and fundamental policies cannot be changed for
any Investment Fund without the approval of the holders of a majority of the
outstanding units of the affected Investment Fund or Funds. Each Investment
Fund may not:
(a) With respect to at least 75% of the value of any Investment Fund's
total assets, purchase securities of any issuer (except securities
issued or guaranteed as to principal or interest by the United States
government, its agencies or instrumentalities) if as a result more
than 5% of the value of the total assets of such Investment Fund
would be invested in the securities of such issuer or all Investment
Funds together would own more than 10% of the outstanding voting
securities of such issuer; for purposes of this limitation,
identification of the "issuer" will be based on a determination of
the source of assets and revenues committed to meeting interest and
principal payments of each security;
(b) Invest in companies for the purpose of exercising control or
management, except a company all the stock of which is owned by the
Fund and which provides administrative services to the Fund and
others;
(c) Borrow money in any Investment Fund except for temporary emergency
purposes and then only in an amount not exceeding 5% of the value of
the total assets of that Investment Fund;
10
<PAGE>
(d) Pledge, mortgage or hypothecate the assets of any Investment Fund to
any extent greater than 10% of the value of the total assets of that
Investment Fund;
(e) Issue senior securities;
(f) Underwrite any issue of securities;
(g) Purchase or sell real estate, but this shall not prevent investments
in instruments secured by real estate or interest therein or in
marketable securities of issuers which invest in real estate or
engage in real estate operations;
(h) Make loans to other persons, except the Fund may make time or demand
deposits with banks, may purchase bonds, debentures or similar
obligations that are publicly distributed or of a type customarily
purchased by institutional investors, may loan portfolio securities
and may enter into repurchase and reverse repurchase agreements;
(i) Purchase securities (other than stock index futures contracts and
futures contracts on financial instruments and related options) on
margin or make short sales of securities;
(j) Purchase or sell commodities or commodity contracts except futures
contracts on financial instruments, such as bank certificates of
deposit and United States Treasury securities, foreign currencies
and stock indexes;
(k) Invest in securities of other investment companies except as part of
a merger, consolidation, reorganization or purchase of assets
approved by the Trust Participants;
(l) Participate on a joint or joint and several basis in any securities
trading account;
(m) Purchase from or sell portfolio securities to its Trustees, officers
or other "interested persons" (as defined in the Investment Company
Act of 1940, as amended ("Investment Company Act")) of the Fund,
except as permitted by the Investment Company Act or any rules or
orders thereunder;
(n) Purchase any securities in an Investment Fund that would cause 25%
or more of the value of that Investment Fund's total assets at the
time of such purchase to be invested in the securities of one or
more issuers conducting their principal activities in the same
industry (as defined by Standard & Poor's); except that there is no
limitation in any Investment Fund with respect to
11
<PAGE>
investments in obligations issued or guaranteed by the United States
government or its agencies or instrumentalities; or
(o) Invest the assets of any Investment Fund in nonmarketable securities
(including repurchase agreements and time deposits maturing in more
than seven days but excluding master demand notes and other
securities payable on demand) to any extent greater than 10% of the
value of the total assets of that Investment Fund. If through the
appreciation of nonmarketable securities, or the depreciation of
marketable securities, an Investment Fund has more than 10% of its
assets invested in nonmarketable securities, the Investment Fund
will reduce its holdings of nonmarketable securities to 10% or less
of its total assets as soon as practicable consistent with the
objective of limiting any loss that may be sustained upon such
reduction.
Except as stated in (o) above, if a percentage restriction is adhered to at
the time of investment, a later increase or decrease in percentage resulting
from a change in values or assets will not constitute a violation of that
restriction.
DISTRIBUTION AGREEMENT
Pursuant to the Distribution Agreement, the Broker-Dealer will distribute
and promote the sale of units in the Fund's Investment Funds.
The Broker-Dealer is not paid a fee for its services under the Distribution
Agreement, which was approved, effective August 1, 1993, by a vote of Trust
Participants on July 31, 1993.
The Distribution Agreement was initially effective until July 31, 1995, and
will remain in effect from year to year thereafter if such continuance is
approved in the manner required under the Investment Company Act. The
Distribution Agreement may be terminated by the Fund or the Broker-Dealer
without penalty, on not more than 60 days' nor less than 30 days' written
notice. The Distribution Agreement will also terminate automatically in the
event of its "assignment" (as defined in the Investment Company Act).
ADMINISTRATION OF THE FUND
An important function of the Trustees is the selection of investment
managers for the Investment Funds and the review and evaluation of their
performance.
The Trustees periodically evaluate the performance of the investment
managers and review the continued appropriateness of the structure of the
Investment Funds. The Trustees also periodically evaluate the allocation of
assets among Investment Classifications
12
<PAGE>
(SEE, "Investments In the Fund -- Full Participating Trusts" in the Prospectus)
and among Investment Funds and guidelines of investment for all Plans.
INFORMATION REGARDING EXECUTIVE OFFICERS AND TRUSTEES
The Fund has 11 Trustees who are elected for staggered terms of three years
each. The officers of the Fund are the President, one or more Vice Presidents,
a Secretary, a Treasurer and an Auditor. The Fund currently has five standing
committees: an Audit Committee, a Board Affairs Committee, an Investment
Committee, a Nominating Committee, and a Proxy Committee. These committees
meet from time to time between meetings of the Trustees to consider matters
concerning the Fund. A majority of the Trustees are not "interested persons" of
the Fund within the meaning of the Investment Company Act.
The Fund pays to each of the Trustees who is not an officer of the Fund a
fee of $950 for each board meeting and each committee meeting which they attend.
A fee of $400 is paid to each non officer Trustee who participates in a
telephonic meeting. In addition, the Fund pays to each Trustee who is not an
officer of the Fund an annual fee of $9,500. Trustees may elect to defer to a
future date a portion of such fees under a deferred compensation plan provided
by the Fund under Section 457 of the Code.
The Trustees hold six regular meetings a year. During the Fund's fiscal
year ended September 30, 1996, total Trustee compensation amounted to $152,750.
The Trustees and officers are reimbursed for their reasonable expenses incurred
in attending meetings or otherwise in connection with their attention to the
affairs of the Fund. During the Fund's fiscal year ended September 30, 1996,
the total of such reimbursed expenses was $16,384.
The Fund does not provide Trustees and officers, directly or indirectly,
with any pension or retirement benefits for their services to the Fund. William
Dannecker, the President of the Fund, is an officer of the System, the Service
Company and the Broker-Dealer and receives compensation in such capacities.
James P. Coughlin, Executive Vice President of the Fund, is an officer of the
System and Investors Inc. and receives compensation in such capacities. Stephen
P. Pollak, Executive Vice President, Counsel and Secretary of the Fund, is an
officer of the System, Investors Inc., the Broker-Dealer and the Service
Company, and receives compensation in such capacities. John F. Meuser, Senior
Vice President and Treasurer of the Fund, is an officer of the System and
Investors Inc., and receives compensation in such capacities.
The Trustees of the Fund received the compensation shown below for services
to the Fund during the fiscal year ended September 30, 1996. Fund officers
received no compensation from the Fund during the fiscal year ended September
30, 1996:
13
<PAGE>
PENSION OR
RETIREMENT
BENEFITS ACCRUED
AGGREGATE COMPENSATION AS PART OF FUND
NAME OF TRUSTEE FROM THE FUND EXPENSES
--------------- ------------------ --------------
Herbert G. Chorbajian $14,475.00 $- 0 -
Candace Cox 15,675.00* - 0 -
William Dannecker -0- - 0 -
Eugene C. Ecker 12,725.00 - 0 -
Covington Hardee 15,075.00* - 0 -
Ralph L. Hodgkins, Jr. 14,675.00 - 0 -
Maurice E. Kinkade 14,675.00* - 0 -
William G. Lillis 14,775.00* - 0 -
William L. Schrauth 18,275.00 - 0 -
William E. Swan 13,025.00* - 0 -
Raymond L. Willis 19,375.00 - 0 -
The executive officers of the Fund, each of whose address is c/o RSI
Retirement Trust, 317 Madison Avenue, New York, New York 10017, their principal
occupations for the last five years and their affiliations, if any, with the
Fund are set forth below.
* Aggregate compensation includes amounts deferred under the Fund's Section
457 Deferred Compensation Plan. The total amount of deferred compensation
payable under the Plan as of September 30, 1996 is as follows: Ms. Cox
($81,963); Mr. Hardee ($41,886); Mr. Kinkade ($117,698); Mr. Lillis
($25,638); and Mr. Swan ($5,017).
14
<PAGE>
PRINCIPAL OCCUPATION
POSITIONS FOR LAST FIVE YEARS AND
NAME WITH FUND AFFILIATION WITH FUND
William Dannecker President and President and Chief Executive
Trustee Officer of Retirement System Group
Inc. since January 1990 and Director
since March 1989; President of
Retirement System Consultants Inc.
since January 1990 and Director
since March 1989; Director of
Retirement System Investors Inc.
since March 1989; President of
Retirement System Distributors Inc.
since December 1990 and Director
since July 1989; Director of RSG
Insurance Agency Inc. since March
1996; President of Retirement System
Fund Inc. since February 1991 and
Director since November 1990.
James P. Coughlin Executive Vice Executive Vice President and Chief
President Investment Officer of Retirement
System Group Inc. since January
1993, Senior Vice President -
Investments from January 1990 to
December 1992, Chief Investment
Officer since January 1991 and
Director since May 1990; President
of Retirement System Investors Inc.
since February 1990; Senior Vice
President of Retirement System Fund
Inc. since February 1991; President
of Retirement System Distributors
Inc. from February 1990 to December
1990.
15
<PAGE>
PRINCIPAL OCCUPATION
POSITIONS FOR LAST FIVE YEARS AND
NAME WITH FUND AFFILIATION WITH FUND
Stephen P. Pollak Executive Vice Executive Vice President, Counsel
President, Counsel and Secretary of Retirement System
and Secretary Group Inc. since January 1993,
Senior Vice President, Counsel and
Secretary from January 1990 to
December 1992, Director since March
1989; President and Director of RSG
Insurance Agency Inc. since March
1996; Vice President and Secretary
of Retirement System Consultants
Inc. since January 1990 and Director
since March 1989; Vice President and
Secretary of Retirement System
Distributors Inc. since February
1990 and Director since July 1989;
Vice President and Secretary of
Retirement System Investors Inc.
since February 1990 and Director
since March 1989; Senior Vice
President, Counsel and Secretary of
Retirement System Fund Inc. since
February 1991 and Director since
November 1990.
John F. Meuser Senior Vice Senior Vice President of Retirement
President and System Group Inc. since January
Treasurer 1996, Vice President from January
1993 to December 1995, First Vice
President from August 1990 to
December 1992; Financial and
Operations Principal since October
1993 and Registered Representative
since February 1990 of Retirement
System Distributors Inc.; Vice
President of Retirement System
16
<PAGE>
PRINCIPAL OCCUPATION
POSITIONS FOR LAST FIVE YEARS AND
NAME WITH FUND AFFILIATION WITH FUND
John F. Meuser (Cont'd) Investors Inc. since February 1990;
Senior Vice President and Treasurer
of Retirement System Fund Inc. since
October 1996 and Vice President and
Treasurer since October 1992.
No officer of the Fund receives any remuneration directly from the Fund
for service to the Fund.
17
<PAGE>
CONTROL PERSONS AND PRINCIPAL UNITHOLDERS
No person controls the Fund.
The Plan of Participation of each of the Trust Participants listed below
owned of record and beneficially five percent or more of the Fund's outstanding
units and each of the Investment Fund's outstanding units, as of December 31,
1996:
Name Percentage
---- ----------
FUND (CONSIDERED AS A WHOLE):
The Long Island Savings Bank, FSB 8.64%
GreenPoint Bank 5.91
CORE EQUITY FUND:
The Long Island Savings Bank, FSB 8.91
GreenPoint Bank 6.48
ALBANK, FSB 5.08
EMERGING GROWTH EQUITY FUND:
The Long Island Savings Bank, FSB 8.39
VALUE EQUITY FUND:
The Long Island Savings Bank, FSB 9.15
GreenPoint Bank 6.59
ALBANK, FSB 5.18
Ridgewood Savings Bank 5.09
INTERNATIONAL EQUITY FUND:
The Long Island Savings Bank, FSB 13.01
ALBANK, FSB 7.37
Republic National Bank 6.17
SHORT-TERM INVESTMENT FUND:
Independence Savings Bank 18.38
North Fork Bank 12.71
Roosevelt Savings Bank 8.54
Institutional Group Information Corp. 6.58
INTERMEDIATE-TERM BOND FUND:
The Long Island Savings Bank, FSB 9.17
GreenPoint Bank 7.30
ALBANK, FSB 5.19
18
<PAGE>
Name Percentage
---- ----------
ACTIVELY MANAGED BOND FUND:
The Long Island Savings Bank, FSB 9.73
GreenPoint Bank 7.76
ALBANK, FSB 5.51
The addresses of these Trust Participants are as follows: ALBANK, FSB,
10 North Pearl Street, Albany, New York 12207; GreenPoint Bank, 41-60 Main
Street, Flushing, New York 11355; Independence Savings Bank, 195 Montague
Street, Brooklyn, New York 11201; Institutional Group Information Corp., 1000
Northern Blvd., Great Neck, New York 11021-5305; The Long Island Savings
Bank, FSB, 201 Old Country Road, Melville, New York 11747-2724; North Fork
Bank, 275 Broad Hollow Road, Melville, New York 11747-2724; Republic National
Bank, 452 5th Avenue, New York, New York 10018; Ridgewood Savings Bank,
Myrtle & Forest Aveneus, Ridgewood, New York 11385; Roosevelt Savings Bank,
1122 Franklin Avenue, Garden City, New York 11530.
No Trustee or officer of the Fund in his individual capacity owns any of
the outstanding units of the Fund.
INVESTMENT MANAGERS
Investors Inc. serves as investment manager for each Investment Fund
pursuant to an Investment Management Agreement dated August 1, 1993. Investors
Inc. has retained sub-investment adviser for the Emerging Growth Equity Fund,
(Friess Associates, Inc. ("Friess") and The Putnam Advisory Company, Inc.
("Putnam")), and the International Equity Fund (Morgan Grenfell Investment
Services Limited ("Morgan Grenfell")), pursuant to Sub-Investment Advisory
Agreements dated August 1, 1993. Prior to August 1, 1993, each such sub-
investment adviser served directly as investment adviser to the respective
Investment Funds.
With respect to investment managers who received fees from the Fund for
services provided during the last three fiscal years, the Fund incurred charges
of the following total dollar amounts for the periods indicated:
Friess was paid $463,736 for the fiscal year ended September 30, 1996,
$348,890, for the fiscal year ended September 30, 1995
19
<PAGE>
and $276,376 for the fiscal year ended September 30, 1994. The Fund paid
$92,764 to Investors Inc. for the fiscal year ended September 30, 1996,
$65,616 for the fiscal year ended September 30, 1995 and $223,561 for the
fiscal year ended September 30, 1994 with respect to the Emerging Growth
Equity Fund.
Morgan Grenfell was paid $219,603 for the fiscal year ended September
30, 1996, $172,841 for the fiscal year ended September 30, 1995 and
$155,490 for the fiscal year ended September 30, 1994. The Fund paid
$73,447 to Investors Inc. for the fiscal year ended September 30, 1996,
$57,212 for the fiscal year ended September 30, 1995 and $205,790 for
the fiscal year ended September 30, 1994 with respect to the
International Equity Fund.
Putnam was paid $314,530 for the fiscal year ended September 30, 1996,
$245,401 for the fiscal year ended September 30, 1995 and $217,230 for the
fiscal year ended September 30, 1994. The Fund paid $69,582 to Investors
Inc. for the fiscal year ended September 30, 1996, $49,308 for the fiscal
year ended September 30, 1995 and $172,291 for the fiscal year ended
September 30, 1994 with respect to the Emerging Growth Equity Fund.
NFJ Investment Group ("NFJ") was an adviser to the Value Equity Fund
between June 15, 1992 and March 31, 1995. NFJ was paid $80,207 for the
period October 1, 1994 through March 31, 1995 and $171,038 for the fiscal
year ended September 30, 1994. The Fund paid $115,806 to Investors Inc.
for the period October 1, 1994 through March 31, 1995 and $276,053 for the
fiscal year ended September 30, 1994 with respect to this Fund.
The Fund incurred charges from Investors Inc. as investment manager of the
Core Equity Fund of $1,064,643 for the fiscal year ended September 30,
1996, $847,061 for the fiscal year ended September 30, 1995 and $757,174
for the fiscal year ended September 30, 1994.
The Fund incurred charges from Investors Inc. as investment manager of the
Actively Managed Bond Fund of $489,590 for the fiscal year ended
20
<PAGE>
September 30, 1996, $455,073 for the fiscal year ended September 30, 1995
and $466,183 for the fiscal year ended September 30, 1994.
The Fund incurred charges from Investors Inc. as investment manager of the
Intermediate-Term Bond Fund of $303,786 for the fiscal year ended
September 30, 1996, $313,881 for the fiscal year ended September 30, 1995
and $335,469 for the fiscal year ended September 30, 1994.
The Fund incurred charges from Investors Inc. as investment manager of the
Value Equity Fund of $215,788 for the fiscal year ended September 30, 1996
and $95,995 for the period April 1, 1995 through September 30, 1995.
The Fund incurred charges from Investors Inc. as investment manager of the
Short-Term Investment Fund of $66,957 for the fiscal year ended
September 30, 1996, $72,748 for the fiscal year ended September 30, 1995
and $78,858 for the fiscal year ended September 30, 1994.
The Fund incurred no charges from Retirement System Investors Inc. as
investment manager of the Dedicated Bond Fund for the fiscal year ended
September 30, 1996. There have been no sales since April 24, 1992.
The sub-investment advisory relationship with NFJ was terminated on
March 31, 1995, and Investors Inc. assumed the portfolio management
responsibilities for the Value Equity Fund on April 1, 1995.
BROKERAGE ALLOCATION AND PORTFOLIO TURNOVER
Each investment manager determines the broker to be used, if any, in each
specific securities transaction executed on behalf of the Fund with the
objective of negotiating a combination of the most favorable commission and the
best price obtainable on each transaction, taking into consideration the quality
of execution (generally defined as best execution). When consistent with the
objective of obtaining best execution, brokerage may be directed to persons or
firms supplying information to an investment manager. The investment
information provided to an investment manager is of the type described in
Section 28(e) of the Securities Exchange Act of 1934 and is designed to augment
the manager's own internal research and investment strategy capabilities.
Research services furnished by brokers through which the Fund effects securities
transactions are used by those investment managers to whom such services are
furnished in carrying out their investment management responsibilities with
respect to all their client accounts and not all such services may be used by
such investment managers in connection with the Fund. There may be occasions
where the transaction costs charged by a broker may be greater than those which
21
<PAGE>
another broker may charge if the investment manager determines in good faith
that the amount of such transaction cost is reasonable in relationship to the
value of the brokerage and research services provided by the executing broker.
No investment manager has entered into agreements with any brokers regarding the
placement of securities transactions because of research services they provide.
The Fund's investment managers deal in some instances in securities which
are not listed on a national securities exchange but are traded in the over-the-
counter market or the third market. Investment managers may also purchase
listed securities through the third market (I.E., transactions effected off the
exchange with brokers). Where securities transactions are executed in the over-
the-counter market or third market, each investment manager seeks to deal with
primary market makers except in those circumstances where, in their opinion,
better prices and executions may be available elsewhere.
During the Fund's fiscal years ended September 30, 1996, September 30,
1995 and September 30, 1994, the Core Equity Fund paid aggregate brokerage
commissions of $34,560, $29,445 and $19,334, respectively; the Emerging
Growth Equity Fund paid aggregate brokerage commissions of $175,817,
$129,735 and $83,981, respectively; the Value Equity Fund paid aggregate
brokerage commissions of $69,947, $73,760 and $70,169, respectively; and the
International Equity Fund paid aggregate brokerage commissions of $101,228,
$88,119 and $97,095, respectively. The Actively Managed Bond Fund,
Intermediate-Term Bond Fund, Short-Term Investment Fund and Dedicated Bond
Fund paid no brokerage commissions for the fiscal years ended September 30,
1996, September 30, 1995 and September 30, 1994.
During the Fund's fiscal years ended September 30, 1996, September 30,
1995 and September 30, 1994, the investment managers allocated to persons or
firms supplying investment information to them the following amounts of
transactions in portfolio securities of the respective Investment Funds listed
below and associated brokerage commissions:
Name of Amount of Amount of
Investment Fund Portfolio Transactions Brokerage Commissions
--------------- ---------------------- ---------------------
Core Equity Fund $9,409,838 (1996) $10,086 (1996)
$1,752,700 (1995) $ 2,100 (1995)
$ 508,050 (1994) $ 510 (1994)
Emerging Growth $27,883,705 (1996) $75,930 (1996)
Equity Fund $24,637,308 (1995) $78,829 (1995)
$ 9,649,387 (1994) $36,675 (1994)
22
<PAGE>
Value Equity $ 5,922,802 (1996) $ 8,856 (1996)
Fund $ 6,964,537 (1995) $25,475 (1995)
$12,072,635 (1994) $24,708 (1994)
International $ 8,807,267 (1996) $26,918 (1996)
Equity Fund $ 7,553,606 (1995) $28,719 (1995)
$ 7,279,121 (1994) $33,604 (1994)
The Fund is required to identify any securities of its "regular brokers or
dealers" (as such term is defined in the Investment Company Act) which the Fund
has acquired during its most recent fiscal year. As of September 30, 1996, the
Fund held repurchase agreements issued by Bear, Stearns & Co., Inc. valued at
$15,411,673. Bear Stearns & Co., Inc. is a "regular broker or dealer" of the
Fund.
The annual portfolio turnover rates for each of the eight Investment
Funds for the fiscal years ended September 30, 1996 and September 30, 1995,
respectively, were as follows: Core Equity Fund (9.95%) and (7.91%),
Emerging Growth Equity Fund (150.40%) and (170.54%), Value Equity Fund
(61.53%) and (67.06%), International Equity Fund (51.29%) and (51.40%),
Actively Managed Bond Fund (17.14%) and (18.21%), Intermediate-Term Bond Fund
(13.20%) and (15.95%), Short-Term Investment Fund (0.00%) and (0.00%) and
Dedicated Bond Fund (0.00%) and (0.00%). High portfolio turnover involves
correspondingly greater brokerage commissions, other transactions costs and a
possible increase in short-term capital gains and losses.
23
<PAGE>
COUNSEL AND AUDITORS
Shereff, Friedman, Hoffman & Goodman, LLP, 919 Third Avenue, New York, New
York 10022 serves as counsel for the Fund. McGladrey & Pullen, LLP, 555 Fifth
Avenue, New York, New York 10017, have been selected as auditors of the Fund.
FINANCIAL STATEMENTS
The financial statements required to be included in this Statement of
Additional Information are incorporated herein by reference from the Fund's
Annual Report to unitholders for the fiscal year ended September 30, 1996.
Other portions of the Fund's Annual Report, including Highlights of the Year,
Chairman's Message and Investment Performance and Asset Values, are not
incorporated by reference and therefore do not constitute a part of this
Registration Statement. A copy of the Fund's Annual Report may be obtained
without charge by writing to RSI Retirement Trust, 317 Madison Avenue, New York,
New York 10017, Attention: Stephen P. Pollak, Esq.
24
<PAGE>
File No. 2-95074
PART C
OTHER INFORMATION
RSI RETIREMENT TRUST
JANUARY 28, 1997
ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS:
Included in Prospectus:
- Condensed Financial Information
Included in Statement of Additional Information by incorporation by
reference from 1996 Annual Report:
- Report dated November 15, 1996 of McGladrey & Pullen on the
combined and individual financial statements of the Core Equity
Fund, Emerging Growth Equity Fund, Value Equity Fund, International
Equity Fund, Actively Managed Bond Fund, Intermediate-Term Bond
Fund, Short-Term Investment Fund and Dedicated Bond Fund.
- Statement of assets and liabilities as of September 30, 1996 for
each of the investment funds listed above.
- Statement of investments as of September 30, 1996 for each of the
investment funds listed above.
- Statement of operations for the year ended September 30, 1996 for
each of the investment funds listed above.
- Statement of changes in net assets for the years ended September 30,
1996 and September 30, 1995 for each of the investment funds listed
above.
The information required under Schedule I is included in the statement of
investments.
Schedule Nos. II-VII and other financial statements for which provision is
made in the applicable accounting regulations of the Securities and
<PAGE>
Exchange Commission are omitted because they are not required under the
related instructions, they are inapplicable, or the required information
is presented in the financial statements or notes thereto.
(b) EXHIBITS:
EXHIBIT NUMBER DOCUMENT
-------------- --------
1.a. Agreement and Declaration of Trust made as of
October 22, l940, as amended and restated
effective August 1, 1990. (Filed as Exhibit 1 to
Post-Effective Amendment No. 8 to the Registrant's
Registration Statement on Form N-1A filed on July
27, 1990.)
1.b. Amendment No. 1 to the Agreement and Declaration
of Trust as amended and restated effective August
1, 1990. (Filed as Exhibit 1.b to Post-Effective
Amendment No. 11 to the Registrant's Registration
Statement on Form N-1A filed on January 28, 1993.)
1.c. Amendment No. 2 to the Agreement and Declaration
of Trust as amended and restated effective
August 1, 1990. (Filed as Exhibit 1.c, to Post-
Effective Amendment No. 13 to the Registrant's
Registration Statement on Form N-1A filed on
January 30, 1995.)
2. Rules and Procedures of the Fund, as amended.
(Filed as Exhibit 2 to Post-Effective Amendment
No. 8 to the Registrant's Registration Statement
on Form N-1A filed on July 27, 1990.)
3. None.
4. See Exhibits 1.a., 1.b., 1.c. and 2.
5.a. Investment Management Agreement between the Fund
and Retirement System Investors Inc. (Filed as
Exhibit 5.a. to Post-Effective Amendment No. 12 to
the Registrant's Registration Statement on Form
N-1A filed on January 28, 1994.):
5.b. Investment Sub-Advisory Agreements between
Retirement System Investors Inc. and each of the
investment sub-advisers listed below, and
Schedule A
2
<PAGE>
thereto for each such Agreement, setting forth the
terms of its respective compensation:
1. Morgan Grenfell Investment Services
Limited. (Filed as Exhibit 5.b.1. to
Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on
Form N-1A filed on January 28, 1994.)
2. Friess Associates, Inc. (Filed as
Exhibit 5.b.2. to Post-Effective
Amendment No. 12 to the Registrant's
Registration Statement on Form N-1A
filed on January 28, 1994.)
3. The Putnam Advisory Company, Inc. (Filed
as Exhibit 5.b.3. to Post-Effective
Amendment No. 12 to the Registrant's
Registration Statement on Form N-1A
filed on January 28, 1994.)
6. Distribution Agreement (Filed as Exhibit 6. to
Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A
filed on January 28, 1994.)
7. Retirement System for Savings Institutions
Deferred Compensation Plan. (Filed as Exhibit
7.d. to Post-Effective Amendment No. 3 to the
Registrant's Statement on Form N-1A filed on
January 28, 1988.)
8.a. Custody Agreement dated as of January 11, 1990
between the Fund and The Chase Manhattan Bank,
N.A. (Filed as Exhibit 8.a. to Post-Effective
Amendment No. 6 to the Registrant's Registration
Statement on Form N-1A filed on January 24, 1990.)
8.b. Schedule of Custodial Remuneration for The Chase
Manhattan Bank, N.A. (Filed as Exhibit 8.b. to
Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A filed on
January 24, 1990.)
8.c. Custody Agreement dated December 21, 1989 between
the Fund and Custodial Trust Company. (Filed as
Exhibit 8.c. to Post-Effective Amendment No. 6 to
3
<PAGE>
the Registrant's Registration Statement on Form
N-1A filed on January 24, 1990.)
8.d. Schedule of Custodial Remuneration for Custodial
Trust Company. (Filed as Exhibit 8.d. to
Post-Effective Amendment No. 6 to the Registrant's
Registration Statement on Form N-1A filed on
January 24, 1990.)
9.a. Undertaking Letter. (Filed as Exhibit 9.a. to
Post-Effective Amendment No. 9 to the Registrant's
Registration Statement on Form N-1A filed on
January 28, 1991.)
9.b. Service Agreement. (Filed as Exhibit 9.b. to
Post-Effective Amendment No. 12 to the
Registrant's Registration Statement on Form N-1A
filed on January 28, 1994.)
9.c. Reorganization Agreement. (Filed as Exhibit 9.c.
to Post-Effective Amendment No. 8 to the
Registrant's Registration Statement on Form N-1A
filed on July 27, 1990.)
10.a. Opinion of Milbank, Tweed, Hadley & McCloy.
(Filed as Exhibit 10 to Pre-Effective Amendment
No. 1 to the Registrant's Registration Statement
on Form N-1A filed on June 28, 1985.)
10.b. Opinion of Shereff, Friedman, Hoffman & Goodman.
(Filed herewith.)
11.a. Consent of McGladrey & Pullen, LLP. (Filed
herewith.)
11.b. Consent of Milbank, Tweed, Hadley & McCloy.
(Filed as Exhibit 11.c. to Pre-Effective Amendment
No. 1 to the Registrant's Registration Statement
on Form N-1A filed on June 28, 1985.)
12. 1996 Annual Report to Unitholders, including
report of Independent Auditors. (Filed on Form
N-30D via EDGAR (accession No.
0000912057-96-027650) on November 26, 1996.)
13. None.
14. Not applicable.
4
<PAGE>
15. None.
16. Schedule of Computation of Performance Quotations
(unaudited). (Filed as Exhibit 16 to
Post-Effective Amendment No. 10 to the
Registrant's Registration Statement on Form N-1A
filed on January 28, 1992.)
17. Financial Data Schedule. (Filed as Exhibit 27 on
EDGAR.)
18. Not applicable.
ITEM 25. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
ITEM 26. NUMBER OF HOLDERS OF SECURITIES.
As of December 31, 1996 the Fund had 593 record holders of units.
The following table sets forth the number of record holders of units for each
Investment Fund as of such date.
Number of
Investment Fund Record Holders
--------------- --------------
Core Equity Fund 367
Emerging Growth Equity Fund 397
Value Equity Fund 274
International Equity Fund 206
Actively Managed Bond Fund 273
Intermediate-Term Bond Fund 358
Short-Term Investment Fund 245
Dedicated Bond Fund 0
ITEM 27. INDEMNIFICATION.
The Agreement and Declaration of Trust provides with regard to
indemnification that:
5
<PAGE>
(a) The Fund shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the Fund) by
reason of the fact that he is or was a Trustee, employee of the Trustees
performing the duties of the Trustees, or officer of the Fund or is or was
serving at the request of the Trustees as a director or officer of another
corporation, or as an official of a partnership, joint venture, trust or
other enterprise, against expenses (including attorneys' fees), judgments,
fines and amounts paid in settlement actually and reasonably incurred by
him in connection with such action, suit or proceeding if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed to,
the best interest of the Fund, and, with respect to any criminal action or
proceeding, and had no reasonable cause to believe his conduct was
unlawful. The termination of any action, suit or proceeding by judgment,
order, settlement, conviction, or upon a plea of nolo contendere or its
equivalent, shall not, of itself, create a presumption that the person did
not act in good faith and in a manner which he reasonably believed to be
in, or not opposed to, the best interests of the Fund, and, with respect to
any criminal action or proceedings that he had reasonable cause to believe
that his conduct was unlawful.
(b) The Fund shall indemnify any person who was or is a party or is
threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Fund to procure a judgment in its
favor by reason of the fact that he is or was a Trustee or officer of the
Fund or is or was serving at the request of the Trustees as a director or
officer of another corporation, or as an official of a partnership, joint
venture, trust or other enterprise against expenses (including attorneys'
fees) actually and reasonably incurred by him in connection with the
defense or settlement of such action or suit if he acted in good faith and
in a manner he reasonably believed to be in, or not opposed to, the best
interests of the Fund; except, however, that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall
have been adjudged to be liable for negligence or misconduct in the
performance of his duty to the Fund, unless and only to the extent that an
appropriate court shall determine upon application that, despite the
adjudication of liability but in view of all the circumstances of the case,
such person is fairly and reasonably entitled to indemnity for such
expenses which the court shall deem proper.
(c) To the extent that a Trustee or officer of the Fund has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in subsection (a) or (b) or in defense of any claim,
issue or matter therein, he shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection therewith.
(d) Except as provided in subsection (c), any indemnification under
subsection (a) or (b) (unless ordered by a court) shall be made by the Fund
only as permitted under any applicable provisions of Title I of ERISA, and
as authorized in the specific case upon a determination that
indemnification of a Trustee or officer is proper in the circumstances
because he has met the applicable standard of conduct set forth in
6
<PAGE>
subsection (a) or (b). Such determination shall be made (1) by the
Trustees by a majority vote of a quorum consisting of members who were not
parties to such action, suit or proceeding, or (2) if such a quorum is not
obtainable, or, even if such a quorum is obtainable and such quorum so
directs, by independent legal counsel in a written opinion, or (3) by the
Trust Participants.
(e) Expenses (including attorneys' fees) incurred in defending a
civil or criminal action, suit or proceeding may be paid by the Fund in
advance of the final disposition of such action, suit or proceeding as
authorized by the Trustees upon receipt of an undertaking by or on behalf
of the Trustees or officer to repay such amount unless it shall ultimately
be determined that he is entitled to be indemnified by the Fund as
authorized in this Article; provided that such an undertaking must be
secured by a surety bond or other suitable insurance.
(f) The indemnification shall not be deemed exclusive of any other
rights to which those seeking indemnification may be entitled under any
rule, agreement, vote of Trust Participants or disinterested members of the
Trustees or otherwise, both as to action in his official capacity and as to
action in any capacity while holding such office, and shall continue as to
a person who has ceased to be a Trustee, employee or the Trustee performing
the duties of the Trustees, or officer and shall inure to the benefit of
the heirs, executors and administrators of such a person.
(g) The Fund may purchase and maintain insurance on behalf of any
person who is or was a Trustee or officer of the Fund, or is or was serving
at the request of the Trustees as a director or officer of another
corporation, or as an official of a partnership, joint venture, Fund or
other enterprise against any liability asserted against him and incurred by
him in any such capacity, or arising out of his status as such, whether or
not the Fund would have the power to indemnify him against such liability;
provided, however, that the Fund shall not purchase or maintain any such
insurance in contravention of any applicable provision of Title I of ERISA.
(h) Anything to the contrary in the foregoing subsections (a)
through (g) notwithstanding, no Trustee or officer shall be indemnified
against any liability to the Fund or its Participating Trusts to which he
would otherwise be subject by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard of the duties involved in the
conduct of his office, and no Trustee, or officer shall be indemnified in
any other case in which the Investment Company Act would restrict or
prohibit such indemnification.
In addition, the Fund provides for indemnification of Participating
Trusts and Trust Participants under the following conditions:
In case any Participating Trust or Trust Participant or former
Participating Trust or Trust Participant shall be held to be personally
liable solely by reason of his being or having been a Participating Trust
or Trust Participant and not because of his acts or
7
<PAGE>
omissions or for some other reason, the Participating Trust or Trust
Participant or former Participating Trust or Trust Participant (or its
successor, in the case of the Participating Trust, or his heirs, executors,
administrators or other legal representatives in the case of the Trust
Participant) shall be entitled out of the Fund to be held harmless from and
indemnified against all loss and expense arising from such liability. The
Fund shall, upon request by the Participating Trust or Trust Participant,
assume the defense of any claim made against any Participating Trust or
Trust Participant for any act or obligation of the Fund and satisfy any
judgment thereon.
Insofar as indemnification for liability arising under the
Securities Act of l933 may be permitted to Trustees, officers and controlling
persons of the registrant pursuant to the foregoing provisions, or otherwise,
the registrant has been advised that in the opinion of the Securities and
Exchange Commission such indemnification is against public policy as expressed
in the Act and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a Trustee, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such Trustee, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Act and will
be governed by the final adjudication of such issue.
ITEM 28. BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER.
SEE, "Investment Managers" in the Prospectus and "Investment
Managers" in the Statement of Additional Information for a description of the
investment managers.
The following are, for each investment manager, the directors and
officers who are or have been, at any time during the past two fiscal years,
engaged in any other business, profession, vocation or employment of a
substantial nature for their own account or in the capacity of director,
officer, employee, partner or trustee and a description of such business,
profession, vocation or employment of a substantial nature and, if engaged in
the capacity of director, officer, employee, partner or trustee, the name and
principal business address of the company with which the person specified is so
connected and the nature of such connection:
8
<PAGE>
MORGAN GRENFELL INVESTMENT SERVICES LIMITED:
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
Michael Bullock Director - Managing Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB England
- Director
Phoenix Travel (London
Wall) Limited
23 Great Winchester Street
London EC2P 2AX
England
- Director
MGDC Fund
(Syndications) Limited
c/o 20 Finsbury Circus
London EC2M 1NB
England
9
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
Michael Bullock (cont'd) - Director
Morgan Grenfell Capital (G.P.)
Limited
23 Great Winchester Street
London EC2P 2AX
England
- Director
Morgan Grenfell Small Cap Fund Inc.
885 Third Avenue
New York, New York
10022-4802
- Director
Morgan Grenfell
Property Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
- Director
Morgan Grenfell Capital Partners
(Syndications) Limited
c/o 20 Finsbury Circus
London EC2M 1NB
England
P.N.C. Walker Director - Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
</TABLE>
10
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
P.N.C. Walker (contd.) - Director
Morgan Grenfell
Quantitative Investment
Limited
20 Finsbury Circus
London EC2M 1NB
England
- Chairman & Managing Director
Morgan Grenfell
International Funds
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
- Director
Asia Pacific Management SA
2 bd Royal
2953 Luxembourg
- Director
DB Morgan Grenfell
Asset Mgt. Co. Limited
2 bd Royal
2953 Luxembourg
</TABLE>
11
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
P.N.C. Walker (contd.) - Director
M G Management SA
2 bd Royal
2953 Luxembourg
- Director
Euro-Pacific Rim
Management SA
2 bd Royal
2953 Luxembourg
- Chairman
Nomura World Fund
Management SA
2 bd Royal
2953 Luxembourg
- Director
Target International
Growth Fund
2 bd Royal
2953 Luxembourg
</TABLE>
12
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
P.N.C. Walker (contd.)
- Director
Morgan Grenfell Hedged
Funds Limited
20 Finsbury Circus
London EC2M 1NB
England
- Managing Director
(Geschaftsfuhrung)
Deutsche Asset
Management GmbH
Bochenheimer
Landstrabe 42
60323 Frankfurt 1
Germany
- Director
Geschaftsfuhrung
Member
Deutsche Gesellschaft Fur
Fonds Verwaltung MbH
Bochenheimer Landstrabe 42
60323 Frankfurt 1
Germany
- Director
Deutsche Morgan
Grenfell
Asset Management
(Japan) Limited
19th Floor, Akasaka Park Building
5-2-20 Akasaka
Minato-ku, Tokyo 107
Japan
</TABLE>
13
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
P.N.C Walker (Cont'd) - Director
Elizabethan Holdings Limited
P.O. Box 1984
Elizabethan Square
George Town
Grand Cayman
Cayman Islands
- Director
Elizabethan Management Limited
P.O. Box 1984
Elizabethan Square
Grand Cayman
British West Indies
- Director
Morgan Grenfell Green
Energy Fund
c/o P.O. Box 727
St. Paul's Gate
New Street
St. Helier
Jersey JE4 8ZB
Channel Islands
</TABLE>
14
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
W.G.M. Thomas Director - Director
MTI Managers Limited
70 St. Albans Road
Watford, Herts WD1 1RP
England
- Director
MTI Nominees Limited
70 St. Albans Road
Watford, Herts WD1 1RP
England
- Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
P.W.W. Disney Director - Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
- Director
Crown and Manor
Club Limited
England
</TABLE>
15
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
P.W.W. Disney (Cont'd) - Director
Woodberry Down
Club Limited
England
J.R. Johnston Director - Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
I.D. Kelson Director - Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
G. D. Bamping Director - Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
H.F.P. Holding Company - Deputy Company Secretary
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
</TABLE>
16
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
H.F.P. Holding (cont'd) - Company Secretary
Morgan Grenfell
International Funds
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
- Company Secretary
Morgan Grenfell
Investment Management
Limited
20 Finsbury Circus
London EC2M 1NB
England
- Company Secretary
Tokai Morgan Grenfell
International Funds
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
R.L. Lamb Director - Director
Morgan Grenfell Latin
American Companies Trust Plc
20 Finsbury Circus
London EC2M 1NB
England
- Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
</TABLE>
17
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
N.P. Jenkins Director - Director
Morgan Grenfell
International Funds
Management Limited
20 Finsbury Circus
London EC2M 1NB
England
FRIESS ASSOCIATES, INC.:
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
Foster Stephen President and - Director
Friess Director Brandywine Fund, Inc.
3908 Kennett Pike
P.O. Box 4166
Greenville, DE 19807
- Director
Brandywine
Blue Fund, Inc.
3908 Kennett Pike
P.O. Box 4166
Greenville, DE 19807
Herman A. Friess Director - Attorney at Law
Rice Lake, Wisconsin
</TABLE>
18
<PAGE>
<TABLE>
<CAPTION>
THE PUTNAM ADVISORY COMPANY, INC.:
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
Lawrence J. Lasser Director and - President, Chief
President Executive Officer and
Director
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109
- Director
Marsh & McLennan
Companies, Inc.
1166 Avenue of the Americas
New York, New York 10036
- Vice President and
Trustee
The Putnam Funds
One Post Office Square
Boston, MA 02109
- Board Member
Artery Business Committee
One Beacon Street
Boston, MA 02108
- Board of Managers
Investment and Finance Committees
Beth Israel Hospital
330 Brookline Avenue
Boston, MA 02215
</TABLE>
19
<PAGE>
<TABLE>
<CAPTION>
<S> <C> <C>
Lawrence J. Lasser (cont'd) - Board of Governors
Executive Committee
Investment Company Institute
1401 H St., N.W.,
Suite 1200
Washington, D.C. 20005
- Board of Overseers
Museum of Fine Arts
465 Huntington Avenue
Boston, MA 02115
- Board Member
Trust For City Hall Plaza
Three Center Plaza
Boston MA 02108
- Board Member
The Vault Coordinating Committee
c/o John Hancock Mutual
Life Insurance Company
Law Sector, T-55
P.O. Box 111
Boston, MA 02117
Thomas J. Lucey Director and - Senior Managing Senior
Managing and Chief of Institutional
Director Business Development
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109
Steven Spiegel Director and - Director and Senior
Managing Senior Managing Director
Director Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109
Managing Director
Lehman Brothers, Inc.
200 Vesey Street
World Financial Center
New York, NY 10285
from 1977 to December 1994
</TABLE>
20
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
John C. Talanian Director - Managing Director and
Director
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109
Takehiko Watanabe Director - Managing Director and
General Manager
Business Development
Putnam Investments, Inc.
One Post Office Square
Boston, MA 02109
RETIREMENT SYSTEM INVESTORS INC.:
William Dannecker Director - President and Chief
Executive Officer
Retirement System
Group Inc.
317 Madison Avenue
New York, New York 10017
- President and Director
Retirement System
Consultants Inc.
317 Madison Avenue
New York, New York 10017
- President and Director
Retirement System
Distributors Inc.
317 Madison Avenue
New York, New York 10017
- President and Trustee
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
</TABLE>
21
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
William Dannecker (cont'd) - Director
RSG Insurance Agency Inc.
317 Madison Avenue
New York, New York 10017
- President and Director
Retirement System Fund Inc.
317 Madison Avenue
New York, New York 10017
James P. Coughlin President - Executive Vice
President, Chief
Investment Officer
and Director
Retirement System
Group Inc.
317 Madison Avenue
New York, New York 10017
- Registered Principal
Retirement System
Distributors Inc.
317 Madison Avenue
New York, New York 10017
- Executive Vice
President
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
- Executive Vice
President
Retirement System Fund Inc.
317 Madison Avenue
New York, New York 10017
Stephen P. Pollak Vice - Executive Vice
President, President,
Secretary Counsel, Secretary
and Director and Director
Retirement System Group
Inc.
317 Madison Avenue
New York, New York 10017
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
Stephen P. Pollak (cont'd) - President and
Director
RSG Insurance Agency Inc.
317 Madison Avenue
New York, New York 10017
- Vice President,
Counsel, Secretary and
Director
Retirement System
Consultants Inc.
317 Madison Avenue
New York, New York 10017
- Vice President,
Secretary and Director
Retirement System
Distributors Inc.
317 Madison Avenue
New York, New York 10017
- Vice President,
Counsel and Secretary
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
- Vice President,
Counsel and Secretary
Retirement System Fund Inc.
317 Madison Avenue
New York, New York 10017
Veronica A. Fisher Treasurer - Vice President
and Treasurer
Retirement System Group Inc.
317 Madison Avenue
New York, New York 10017
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
Other Business,
Positions Profession, Vocation,
Name with Manager Employment
---- ------------ ----------
<S> <C> <C>
Veronica A. Fisher (cont'd) - Treasurer
Retirement System
Consultants Inc.
317 Madison Avenue
New York, New York 10017
- Treasurer
Retirement System
Distributors Inc.
317 Madison Avenue
New York, New York 10017
- Treasurer
RSG Insurance Agency Inc.
317 Madison Avenue
New York, New York 10017
- First Vice President
and Assistant Treasurer
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
- First Vice President
and Assistant Treasurer
Retirement System Fund Inc.
317 Madison Avenue
New York, New York 10017
</TABLE>
ITEM 29. PRINCIPAL UNDERWRITERS.
(a) Retirement System Distributors Inc. acts as a principal
underwriter for Retirement System Fund Inc.
(b) The following information is furnished with respect to the
officers and directors of Retirement System Distributors Inc., 317 Madison
Avenue, New York, New York 10017, Registrant's principal underwriter:
24
<PAGE>
POSITION AND
OFFICES WITH POSITION AND
PRINCIPAL OFFICES WITH
NAME UNDERWRITER REGISTRANT
William Dannecker President and President and
Director Trustee
Stephen P. Pollak Vice President, Executive Vice
Secretary and President, Counsel
Director and Secretary
Veronica A. Fisher Treasurer First Vice President
and Assistant
Treasurer
(c) None.
ITEM 30. LOCATION OF ACCOUNTS AND RECORDS.
The physical possession of each account, book or other document of the
Fund, will be maintained by the Fund, or The Chase Manhattan Bank, N.A.,
Chase Metro Tech Center, Brooklyn, New York 11245, or Custodial Trust
Company, 101 Carnegie Center, Princeton, New Jersey 08540-6231.
ITEM 31. MANAGEMENT SERVICES.
Retirement System Consultants Inc.
317 Madison Avenue
New York, New York 10017.
ITEM 32. UNDERTAKINGS.
(a) Not applicable.
(b) Not applicable.
25
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of l933 and the
Investment Company Act of l940 the Registrant certifies that it meets all of the
requirements for effectiveness of the Registration Statement pursuant to Rule
485(b) under the Securities Act of 1933 and has duly caused this Amendment to
its Registration Statement to be signed on its behalf by the undersigned,
thereto duly authorized, in the City of New York, and the State of New York, on
the 23rd day of January 1997.
RSI RETIREMENT TRUST
By /s/William Dannecker
------------------------------
William Dannecker, President
and Trustee
Pursuant to the requirements of the Securities Act of l933, this
Registration Statement has been signed below by the following persons, in the
capacities and on the dates indicated.
Signature Title Date
- --------- ----- ----
/s/William Dannecker President January 23, 1997
- ---------------------- (Principal
William Dannecker Executive
Officer), Trustee
/s/John F. Meuser Treasurer January 23, 1997
- ---------------------- (Principal
John F. Meuser Financial
and Accounting
Officer)
/s/Herbert G. Chorbajian Trustee January 23, 1997
- ------------------------
Herbert G. Chorbajian
/s/Candace Cox Trustee January 23, 1997
- ------------------------
Candace Cox
/s/Eugene C. Ecker Trustee January 23, 1997
- ------------------------
Eugene C. Ecker
/s/Covington Hardee Trustee January 23, 1997
- ------------------------
Covington Hardee
26
<PAGE>
Signature Title Date
- --------- ----- ----
/s/Ralph L. Hodgkins, Jr. Trustee January 23, 1997
- ------------------------
Ralph L. Hodgkins, Jr.
/s/Maurice E. Kinkade Trustee January 23, 1997
- ------------------------
Maurice E. Kinkade
/s/William G. Lillis Trustee January 23, 1997
- ------------------------
William G. Lillis
/s/William L. Schrauth Trustee January 23, 1997
- ------------------------
William L. Schrauth
/s/William Swan Trustee January 23, 1997
- ------------------------
William Swan
/s/Raymond L. Willis Trustee January 23, 1997
- ------------------------
Raymond L. Willis
27
<PAGE>
EXHIBIT INDEX
Exhibit Document
- ------- --------
EX - 99. (B)10.b. Opinion of Shereff, Friedman, Hoffman &
Goodman, LLP (Filed herewith)
EX - 99. (B)11.a. Consent of McGladrey & Pullen, LLP (Filed herewith)
EX - 27.1 Financial Data Schedule
EX - 27.2 Financial Data Schedule
EX - 27.3 Financial Data Schedule
EX - 27.5 Financial Data Schedule
EX - 27.6 Financial Data Schedule
EX - 27.7 Financial Data Schedule
EX - 27.8 Financial Data Schedule
<PAGE>
Shereff, Friedman, Hoffman
& Goodman, LLP
919 Third Avenue,
New York New York 10022
January 27, 1997
RSI Retirement Trust
41 East 42nd Street
New York, New York 10017
Dear Sirs:
RSI Retirement Trust, a New York common law trust (the "Trust"), is
filing with the Securities and Exchange Commission Post-Effective Amendment No.
15 ("PEA 15") to its Registration Statement under the Securities Act of 1933, as
amended (the "1933 Act") on Form N-1A (File No. 2-95074), relating to the
registration under the 1933 Act of 877,619 additional shares of beneficial
interest (the "Additional Shares"), which are to be offered and sold by the
Trust in the manner and on the terms set forth in the prospectus of the Trust
current and effective under the 1933 Act at the time of sale. All of the
Additional Shares are previously outstanding shares of the Trust which were
redeemed by the Trust during its fiscal year ended September 30, 1996. As
indicated in PEA 15, none of the Additional Shares have been used by the Trust
for reduction pursuant to paragraph (a) of Rule 24e-2 under the Investment
Company Act of 1940 (the "1940 Act") in previous filings of post-effective
amendments to the Trust's Registration Statement during the current year, or for
reduction pursuant to paragraph (c) of Rule 24f-2 under the 1940 Act during the
Trust's current fiscal year, of the registration fee payable by the Trust for
the registration of shares for sale under the 1933 Act.
We have provided legal services to the Trust when requested to do so
by the Trust with respect to specific matters since April, 1993. In connection
with the preparation of this opinion, we have examined copies of the Trust's
Declaration of Trust and By-Laws, as currently in effect, and PEA 15.
Based on the foregoing, it is our opinion that:
1. The Trust has been duly organized and is legally existing under
the laws of
<PAGE>
RSI Retirement Trust
January 27, 1997
Page 2
the State of New York.
2. The Trust is authorized to issue an unlimited number of its
shares of beneficial interest.
3. Subject to the effectiveness of PEA 15 and compliance with
applicable state securities laws, upon the issuance of the Additional Shares for
a consideration not less than the net asset value thereof as required by the
1940 Act and in accordance with the terms of the Trust's Registration Statement,
such Additional Shares will be legally issued and outstanding and fully paid and
non-assessable. However, we note that as set forth in the Registration
Statement, the Trust's shareholders might, under certain circumstances, be
liable for transactions effected by the Trust.
We hereby consent to the filing of this opinion with the Securities
and Exchange Commission as a part of PEA 15 and with any state securities
commission where such filing is required. In giving this consent we do not
admit that we come within the category of persons whose consent is required
under Section 7 of the 1933 Act.
Very truly yours,
Shereff, Friedman, Hoffman & Goodman, LLP
SFH&G:MKN:JLS:KLJ:jmr
<PAGE>
SHEREFF, FRIEDMAN, HOFFMAN & GOODMAN, LLP
919 Third Avenue
New York, New York 10022-9998
January 27, 1997
VIA EDGAR
Securities and Exchange Commission
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: RSI Retirement Trust
File No. 2-95074
--------------------
Commissioners:
We are counsel to the above-referenced registrant which proposes to file,
pursuant to paragraph (b) of Rule 485 (the "Rule"), Post-Effective Amendment
No. 15 (the "Amendment") to its registration statement under the Securities Act
of 1933, as amended.
Pursuant to paragraph (b)(4) of the Rule, we represent that the Amendment
does not contain disclosures which would render it ineligible to become
effective pursuant to paragraph (b) of the Rule.
Sincerely,
Shereff, Friedman, Hoffman & Goodman, LLP
SFH&G:JLS:KLJ:jmr
<PAGE>
McGladrey & Pullen, LLP
555 Fifth Avenue
New York New York 10017
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the use of our report dated November 15, 1996, on
the financial statements referred to therein, in Post-Effective Amendment No. 15
to the Registration Statement on Form N-1A File No. 2-95074 of RSI Retirement
Trust as filed with the Securities and Exchange Commission.
We also consent to the reference to our Firm in the Statement of
Additional Information under the caption "Counsel and Auditors" and in the
Prospectus under the captions "Financial Highlights" and "Counsel and Auditors."
McGladrey & Pullen, LLP
New York, New York
January 22, 1997
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S ANNUAL REPORT, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 1
<NAME> CORE EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 99934660
<INVESTMENTS-AT-VALUE> 216580931
<RECEIVABLES> 1017867
<ASSETS-OTHER> 33768
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 217632566
<PAYABLE-FOR-SECURITIES> 9600
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 266634
<TOTAL-LIABILITIES> 276234
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (30556772)
<SHARES-COMMON-STOCK> 3842487
<SHARES-COMMON-PRIOR> 4066258
<ACCUMULATED-NII-CURRENT> 45215255
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 86003636
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 116694213
<NET-ASSETS> 217356332
<DIVIDEND-INCOME> 3963983
<INTEREST-INCOME> 768229
<OTHER-INCOME> 0
<EXPENSES-NET> 1877810
<NET-INVESTMENT-INCOME> 2854402
<REALIZED-GAINS-CURRENT> 9678626
<APPREC-INCREASE-CURRENT> 26737020
<NET-CHANGE-FROM-OPS> 39270048
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 338372
<NUMBER-OF-SHARES-REDEEMED> 562143
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 27414733
<ACCUMULATED-NII-PRIOR> 42360853
<ACCUMULATED-GAINS-PRIOR> 166282203
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1075032
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1877810
<AVERAGE-NET-ASSETS> 203818610
<PER-SHARE-NAV-BEGIN> 46.71
<PER-SHARE-NII> 0.72
<PER-SHARE-GAIN-APPREC> 9.14
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 56.57
<EXPENSE-RATIO> 0.009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S ANNUAL REPORT, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 3
<NAME> VALUE EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 42941072
<INVESTMENTS-AT-VALUE> 52377343
<RECEIVABLES> 796802
<ASSETS-OTHER> 15800
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 53189945
<PAYABLE-FOR-SECURITIES> 855612
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 103385
<TOTAL-LIABILITIES> 958997
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (20671712)
<SHARES-COMMON-STOCK> 1316681
<SHARES-COMMON-PRIOR> 1343011
<ACCUMULATED-NII-CURRENT> 17992762
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 45473627
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 9436271
<NET-ASSETS> 52230948
<DIVIDEND-INCOME> 1325666
<INTEREST-INCOME> 220223
<OTHER-INCOME> 0
<EXPENSES-NET> 582864
<NET-INVESTMENT-INCOME> 963025
<REALIZED-GAINS-CURRENT> 4551286
<APPREC-INCREASE-CURRENT> 3977314
<NET-CHANGE-FROM-OPS> 9491625
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 171011
<NUMBER-OF-SHARES-REDEEMED> 197341
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8407119
<ACCUMULATED-NII-PRIOR> 17029737
<ACCUMULATED-GAINS-PRIOR> 46381298
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 226177
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 594484
<AVERAGE-NET-ASSETS> 48536870
<PER-SHARE-NAV-BEGIN> 32.63
<PER-SHARE-NII> 0.72
<PER-SHARE-GAIN-APPREC> 6.32
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 39.67
<EXPENSE-RATIO> 0.012
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S ANNUAL REPORT, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 2
<NAME> EMERGING GROWTH EQUITY FUND
<MULTIPLIER> 1
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 68279391
<INVESTMENTS-AT-VALUE> 92433656
<RECEIVABLES> 1624459
<ASSETS-OTHER> 18394
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 94076509
<PAYABLE-FOR-SECURITIES> 1741750
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 198845
<TOTAL-LIABILITIES> 1940595
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (14483218)
<SHARES-COMMON-STOCK> 1373656
<SHARES-COMMON-PRIOR> 1419334
<ACCUMULATED-NII-CURRENT> (1781337)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 84246203
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 24154266
<NET-ASSETS> 92135914
<DIVIDEND-INCOME> 79542
<INTEREST-INCOME> 228561
<OTHER-INCOME> 0
<EXPENSES-NET> 1558522
<NET-INVESTMENT-INCOME> (1250419)
<REALIZED-GAINS-CURRENT> 15317099
<APPREC-INCREASE-CURRENT> 6281307
<NET-CHANGE-FROM-OPS> 20347987
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 182662
<NUMBER-OF-SHARES-REDEEMED> 228340
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 17510856
<ACCUMULATED-NII-PRIOR> (530918)
<ACCUMULATED-GAINS-PRIOR> 86802063
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 951000
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1595195
<AVERAGE-NET-ASSETS> 81152380
<PER-SHARE-NAV-BEGIN> 52.58
<PER-SHARE-NII> (0.90)
<PER-SHARE-GAIN-APPREC> 15.39
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 67.07
<EXPENSE-RATIO> 0.019
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S ANNUAL REPORT, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 5
<NAME> INTERNATIONAL EQUITY FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 33433435
<INVESTMENTS-AT-VALUE> 39130907
<RECEIVABLES> 266468
<ASSETS-OTHER> 566413
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 39963788
<PAYABLE-FOR-SECURITIES> 229581
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 132254
<TOTAL-LIABILITIES> 361835
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> 3683466
<SHARES-COMMON-STOCK> 875253
<SHARES-COMMON-PRIOR> 773740
<ACCUMULATED-NII-CURRENT> (1553854)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 31775452
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 5696889
<NET-ASSETS> 39601953
<DIVIDEND-INCOME> 533128
<INTEREST-INCOME> 57740
<OTHER-INCOME> 0
<EXPENSES-NET> 662495
<NET-INVESTMENT-INCOME> (71627)
<REALIZED-GAINS-CURRENT> 3827368
<APPREC-INCREASE-CURRENT> 599795
<NET-CHANGE-FROM-OPS> 4355536
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 209851
<NUMBER-OF-SHARES-REDEEMED> 108338
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 8458372
<ACCUMULATED-NII-PRIOR> (1482227)
<ACCUMULATED-GAINS-PRIOR> 33045178
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 303439
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 682578
<AVERAGE-NET-ASSETS> 36741185
<PER-SHARE-NAV-BEGIN> 40.25
<PER-SHARE-NII> (0.08)
<PER-SHARE-GAIN-APPREC> 5.08
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 45.25
<EXPENSE-RATIO> 0.019
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S ANNUAL REPORT, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 8
<NAME> ACTIVELY MANAGED BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 147463093
<INVESTMENTS-AT-VALUE> 148337131
<RECEIVABLES> 1826969
<ASSETS-OTHER> 297653
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 150461753
<PAYABLE-FOR-SECURITIES> 17801
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 139674
<TOTAL-LIABILITIES> 157475
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (30673613)
<SHARES-COMMON-STOCK> 4882232
<SHARES-COMMON-PRIOR> 4736926
<ACCUMULATED-NII-CURRENT> 147350512
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 32753341
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 874038
<NET-ASSETS> 150304278
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 9865990
<OTHER-INCOME> 0
<EXPENSES-NET> 1173614
<NET-INVESTMENT-INCOME> 8692376
<REALIZED-GAINS-CURRENT> (15324)
<APPREC-INCREASE-CURRENT> (2664736)
<NET-CHANGE-FROM-OPS> 6032316
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 942767
<NUMBER-OF-SHARES-REDEEMED> 797462
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 10177284
<ACCUMULATED-NII-PRIOR> 13865136
<ACCUMULATED-GAINS-PRIOR> 36287439
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 499979
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1173614
<AVERAGE-NET-ASSETS> 146463937
<PER-SHARE-NAV-BEGIN> 29.58
<PER-SHARE-NII> 1.80
<PER-SHARE-GAIN-APPREC> (0.59)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 30.79
<EXPENSE-RATIO> 0.008
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S ANNUAL REPORT, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 7
<NAME> INTERMEDIATE TERM BOND FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 73194059
<INVESTMENTS-AT-VALUE> 73924740
<RECEIVABLES> 876765
<ASSETS-OTHER> 78066
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 74879571
<PAYABLE-FOR-SECURITIES> 25593
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 100018
<TOTAL-LIABILITIES> 125611
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (59007893)
<SHARES-COMMON-STOCK> 2550981
<SHARES-COMMON-PRIOR> 3230899
<ACCUMULATED-NII-CURRENT> 118583484
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 14447688
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 730681
<NET-ASSETS> 74753960
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 5947702
<OTHER-INCOME> 0
<EXPENSES-NET> 828084
<NET-INVESTMENT-INCOME> 5119618
<REALIZED-GAINS-CURRENT> 672005
<APPREC-INCREASE-CURRENT> (2099642)
<NET-CHANGE-FROM-OPS> 3691981
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 289856
<NUMBER-OF-SHARES-REDEEMED> 969774
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (15728029)
<ACCUMULATED-NII-PRIOR> 113463866
<ACCUMULATED-GAINS-PRIOR> 16606006
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 314175
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 828084
<AVERAGE-NET-ASSETS> 84499608
<PER-SHARE-NAV-BEGIN> 28.01
<PER-SHARE-NII> 1.74
<PER-SHARE-GAIN-APPREC> (0.45)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 29.30
<EXPENSE-RATIO> 0.01
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 6
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEETS AND CONSOLIDATED STATEMENTS OF OPERATIONS
FOUND IN THE COMPANY'S ANNUAL REPORT, AND IS QUALIFIED IN ITS ENTIRETY
BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<SERIES>
<NUMBER> 6
<NAME> SHORT TERM INVESTMENT FUND
<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1996
<PERIOD-START> OCT-01-1995
<PERIOD-END> SEP-30-1996
<INVESTMENTS-AT-COST> 26022805
<INVESTMENTS-AT-VALUE> 26017259
<RECEIVABLES> 246203
<ASSETS-OTHER> 187310
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 26450772
<PAYABLE-FOR-SECURITIES> 720477
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 62208
<TOTAL-LIABILITIES> 782685
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (15329202)
<SHARES-COMMON-STOCK> 1267898
<SHARES-COMMON-PRIOR> 1416638
<ACCUMULATED-NII-CURRENT> 39672924
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1329911
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (5546)
<NET-ASSETS> 25668087
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1487757
<OTHER-INCOME> 0
<EXPENSES-NET> 214241
<NET-INVESTMENT-INCOME> 1273516
<REALIZED-GAINS-CURRENT> 0
<APPREC-INCREASE-CURRENT> (12603)
<NET-CHANGE-FROM-OPS> 1260913
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 608462
<NUMBER-OF-SHARES-REDEEMED> 757202
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1691824)
<ACCUMULATED-NII-PRIOR> 38399408
<ACCUMULATED-GAINS-PRIOR> 1336968
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 73889
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 319691
<AVERAGE-NET-ASSETS> 26764877
<PER-SHARE-NAV-BEGIN> 19.31
<PER-SHARE-NII> 0.94
<PER-SHARE-GAIN-APPREC> (0.01)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 20.24
<EXPENSE-RATIO> 0.008
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0
</TABLE>