<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities Exchange Act of 1934
(Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
RSI Retirement Trust
---------------------------------------------------
(Name of Registrant as Specified In Its Charter)
Board of Trustees of RSI Retirement Trust
---------------------------------------------------
(Name of Person(s) Filing Proxy Statement)
Payment of Filing Fee (Check the appropriate box): None
/ / $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6 (i)(2) or
Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
1) title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11. (Set forth the amount on which
the filing fee is caluculated and state how it was determined.)
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total Fee Paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
----------------------------------------------------------------------
2) Form, Schedule or Registration Statement No.:
----------------------------------------------------------------------
3) Filing Party:
----------------------------------------------------------------------
4) Date Filed:
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<PAGE>
DRAFT: 6/19/97
RSI RETIREMENT TRUST
317 MADISON AVENUE
NEW YORK, NEW YORK 10017
-----------------------
NOTICE OF ANNUAL MEETING OF TRUST PARTICIPANTS
JULY 29, 1997
----------------------------
NOTICE IS HEREBY GIVEN that the Annual Meeting of Trust Participants of RSI
Retirement Trust ("Trust") will be held at the offices of the Trust, 317 Madison
Avenue, New York, New York 10017, on July 29, 1997 at 10:30 A.M. (E.D.T.), for
the following purposes:
1. To elect five (5) trustees for terms of three (3) years and until
their respective successors are elected and qualified.
2. To consider ratification or rejection of the selection of McGladrey &
Pullen as independent accountants of the Trust for the fiscal year
ending September 30, 1997.
3. (EMERGING GROWTH EQUITY FUND UNITHOLDERS ONLY) To approve or
disapprove (a) a new investment sub-advisory agreement between
Retirement System Investors Inc. (the Emerging Growth Equity Fund's
investment manager) and HLM Management Company, Inc. (the Emerging
Growth Equity Fund's sub-adviser for a portion of the Emerging Growth
Equity Fund); and (b) a new investment management agreement between
the Trust and Retirement System Investors Inc.
4. To transact such other business as may properly come before the
meeting or any adjournment or adjournments thereof.
The matters referred to above are discussed in detail in the Proxy Statement
accompanying this Notice. Only those persons having the right to vote Units
of the Trust ("Trust Participants") of record as of the close of business on
May , 1997 are entitled to notice of and to vote at the Annual Meeting of
Trust Participants or at any adjournment or adjournments thereof.
By Order of the Trustees,
-------------------------------
STEPHEN P. POLLAK
Executive Vice President
Counsel and Secretary
DATED: New York, New York
June , 1997
<PAGE>
DRAFT: 6/19/97
RSI RETIREMENT TRUST
317 MADISON AVENUE
NEW YORK, NEW YORK 10017
------------
PROXY STATEMENT
GENERAL INFORMATION
This Proxy Statement is furnished in connection with the solicitation of
proxies by the trustees of RSI Retirement Trust ("Trust") for use at the annual
meeting ("Meeting") of those persons having the right to vote shares ("Units")
of each investment fund ("Investment Fund") of the Trust ("Trust Participants")
to be held at the offices of the Trust at 317 Madison Avenue, New York, New
York, 10017 on July 29, 1997, at 10:30 A.M. (E.D.T.), and at any adjournment
thereof. The approximate date on which this Proxy Statement and form of proxy
are first being sent to Trust Participants is June , 1997.
Execution of a proxy will not in any way affect a Trust Participant's right
to attend the Meeting and vote in person, and any Trust Participant giving a
proxy has the right to revoke it at any time by written notice addressed to and
received by the Secretary of the Trust prior to the exercise of the proxy or by
attending the Meeting or revoking the proxy in person.
The Trustees have fixed the close of business on May 30, 1997 as the record
date for the determination of Trust Participants entitled to notice of and to
vote at the Meeting.
The Trust had outstanding as of the record date 13,906,890.306 Units of
beneficial interest, which are divided into separate Investment Funds as
follows:
Core Equity Fund 3,231,898.816
Emerging Growth Equity Fund 1,219,483.705
Value Equity Fund 1,142,111.183
International Equity Fund 751,223.377
Activity Managed Bond Fund 4,143,888.571
Intermediate-Term Bond Fund 2,198,201.369
Short-Term Investment Fund 1,220,083.285
Dedicated Bond Fund 0.000
<PAGE>
Each Trust Participant shall be entitled to exercise the voting rights of
Units owned by the participating trust or custodial account of which he is the
Trust Participant. All outstanding full Units of the Trust, irrespective of
class, are entitled to one vote and each fractional Unit is entitled to the
corresponding fractional vote. Units of all Investment Funds will be voted in
the aggregate with respect to the election of Trustees, the ratification or
rejection of the selection of the independent accountants, and any other matter
that may come before the Meeting or any adjournment thereof. Units of the
Emerging Growth Equity Fund will be voted separately with respect to approval or
rejection of the new Investment Sub-Advisory Agreement between Retirement System
Investors Inc. ("Investors"); the Emerging Growth Equity Fund Investment
Manager, and HLM Management Company, Inc. ("HLM"), and the new Investment
Management Agreement between the Trust and Investors, resulting in a
modification of the investment management fee rate payable by the Emerging
Growth Equity Fund. The following table summarizes the foregoing information:
PROPOSAL INVESTMENT FUNDS VOTING
1. Election of Trustees All
2. Ratification of Accountants All
3. Approval or disapproval of (a) Emerging Growth Equity Fund only
Investment Sub-Advisory
Agreement Between HLM and
Investors; and (b) Investment
Management Agreement Between
Emerging Growth Equity Fund
and Investors
In the event that a quorum of Trust Participants (holders of one-third of
the shares issued and outstanding and entitled to vote at the Meeting) is not
represented at the Meeting or at any adjournment thereof, or, even though a
quorum is so represented, in the event that sufficient votes in favor of the
items set forth in the Notice of the Meeting are not received, the persons named
as proxies may propose and vote for one or more adjournments of the Meeting for
a period or periods of not more than 60 days in the aggregate and further
solicitation of proxies may be made. Trust Participants who have voted against
the proposals or who have abstained from voting will be included in the quorum
for the Meeting. Proxies sent in by brokers and other nominees, if any, which
cannot be voted on a proposal because instructions have not been received from
the beneficial owners ("non-votes") and proxies abstaining on a particular
proposal, will be considered to be shares present at the Meeting, but not voting
with respect to the proposal. Thus, non-vote proxies, and abstentions will have
no effect on Proposals 1 and 2, but will have the effect of a vote against
Proposal 3.
The Trust is registered as an open-end investment company under the
Investment Company Act of 1940, as amended ("Act"). A registration statement
relating to the offer and sale of Units in the Trust has been filed and is
effective under the Securities Act of 1933, as amended.
The costs of the Meeting, including the solicitation of proxies, will be
paid by the Trust. In addition to the solicitation of proxies by mail, Trustees
and agents of the Trust may solicit proxies in person or by telephone. Proxies
may be recorded pursuant to telephone or
2
<PAGE>
electronically transmitted instructions obtained pursuant to procedures
reasonably designed to verify that such instructions have been authorized.
PROPOSAL 1
ELECTION OF TRUSTEES
The Agreement and Declaration of Trust pursuant to which the Trust was
established, as amended, provides that the Trustees of the Trust shall be
divided into three classes of approximately equal size. The Board of Trustees
of the Trust is currently comprised of 11 members. The class of Trustees to be
elected at the Meeting will consist of five Trustees, each of whom will be
elected and will hold office for a term of three years and until a successor is
elected and qualified.
The nominees for Trustee are set forth below under "Information Regarding
Trustees."
Four of the five nominees for Trustee are currently members of the Board of
Trustees. All nominees have agreed to stand for election and to serve if
elected. All proxies will be voted in favor of the five nominees listed under
"Information Regarding Trustees," unless a contrary indication is made. If,
prior to the Meeting, any nominee becomes unable to serve by reason of death,
incapacity or other unexpected occurrence, the proxies which would have
otherwise been voted for such nominee will be voted for such substitute nominee
as may be selected by the Board of Trustees.
THE BOARD OF TRUSTEES RECOMMENDS A VOTE FOR THE ELECTION OF THE FIVE
NOMINEES FOR TRUSTEE LISTED BELOW UNDER "INFORMATION REGARDING TRUSTEES."
INFORMATION REGARDING TRUSTEES
Set forth below is certain information regarding the nominees for election
as Trustees of the Trust, as well as those persons currently serving as Trustees
with remaining terms of one and two years, including their ages, principal
occupations and business experience during the last five years, present
directorships or trusteeships and the year they first became a Trustee. Any
nominee or Trustee who is an "interested person" of the Trust, as defined in
the Act, is indicated by an asterisk (*). The nominees and Trustees so
designated are "interested persons" by virtue of their executive positions with
plan sponsors of plans of participation in the Trust (Trust Participants), with
the Trust, or with Investors. Any nominee or Trustee who is an officer or
director of Investors is indicated by a dagger (+).
3
<PAGE>
NOMINEES FOR ELECTION AS TRUSTEES:
Principal Occupation,
Business Experience First
During Last 5 Years, Became
Name Age Present Directorships Trustee
- ------ --- --------------------------------- --------
Herbert G. Chorbajian* 58 Chairman and Chief Executive Officer 1994
since October 1990 and President and
Director since June 1985 of ALBANK,
FSB; Chairman, President and Chief
Executive Officer of ALBANK Financial
Corporation since April 1992;
Director or Trustee of the Federal
Home Loan Bank of New York; the
Community Bankers Association of New
York State; the New York Business
Development Corporation; the Albany
Memorial Hospital Foundation, Inc.;
the Albany Cemetery Association; the
Federal Reserve Bank of New York Thrift
Advisory Panel; the City Arts
Commission; and the Capitalize Albany
Advisory Committee.
James P. Cronin* 51 ----
Ralph L. Hodgkins, Jr. 63 Retired since August 1995; Vice 1983
President, Peoples Heritage Bank,
Portland, Maine from September, 1994
to August 1995; President and Chief
Executive Officer, Mid Maine Savings
Bank, FSB, Auburn, Maine from August,
1970 to August, 1994; Trustee of
University of Maine System.
W. L. Schrauth* 62 President and Chief Executive Officer, 1981
The Savings Bank of Utica, Utica, New
York; Director of Retirement System
Group Inc.; Director and President of
Oneida County Industrial Development;
Director and Vice President of Utica
Foundation, Inc.
4
<PAGE>
Principal Occupation,
Business Experience First
During Last 5 Years, Became
Name Age Present Directorships Trustee
- ------ --- --------------------------------- --------
William E. Swan* 49 President and Chief Executive Officer, 1994
Lockport Savings Bank, Lockport, New
York since July 1989; Vice Chairman
and Director of Empire State Thrift
Service Corp.; Director or Trustee of
Christ the King Seminary; Greater
Buffalo Partnership; St. Bonaventure
University; Federal Reserve Bank of
New York, Buffalo Branch; New York
Business Development Corp.; and
Community Bankers Association of New
York State.
TRUSTEES SERVING WITH A TERM EXPIRING IN ONE YEAR:
Candace Cox 45 President and Chief Investment Officer, 1992
NYNEX Asset Management Company since
November 1995, Vice President and
Managing Director, between September
1992 and October 1995; Chief, Division
of Investment Strategy, New York City
Controller's Office, New York, New
York from July 1989 to August 1992;
Director of Retirement System Fund
Inc.; and Financial Women's Association.
Eugene C. Ecker 73 Consultant, Pension and Group Insurance 1986
since January 1988; Director of
Retirement System Fund Inc.; formerly
Pension Investment Officer, Primerica
Corporation (formerly American Can Co.),
Greenwich, Connecticut.
Raymond L. Willis 61 Private Investments since March 1989; 1985
formerly Corporate Director, Risk and
Benefits Management, United Technologies
Corporation, Hartford, Connecticut;
Chairman, U.T.C. Pension Trust, Ltd.;
President, U.T. Insurance, Ltd.;
Director of Retirement System Fund Inc.;
Director of Association of Private
Pension and Welfare Plans; Trustee of
Employee Benefits Research Institute.
5
<PAGE>
Principal Occupation,
Business Experience First
During Last 5 Years, Became
Name Age Present Directorships Trustee
- ------ --- --------------------------------- --------
TRUSTEES SERVING WITH A TERM EXPIRING IN TWO YEARS:
William Dannecker+ 57 President of the Trust since May 1987
1986; 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; President of
Retirement System Fund Inc. since
February 1991 and Director since
November 1990; Director, Association
of Private Pension and Welfare Plans;
formerly Chief Executive Officer of
the Trust from January 1988 to August
1990.
Covington Hardee 78 Retired since 1984; Director of 1977
Retirement System Fund Inc.;
formerly Chairman of the Board of The
Lincoln Savings Bank, FSB, New York.
Maurice E. Kinkade 55 Director of Development, Maplebrook 1987
School, since September, 1994;
President since June 1992, KINCO
Management; formerly Chairman and Chief
Executive Officer, from 1984 and 1980,
respectively, to February 1990, and
President from August 1986 to February
1990 and between 1980 and 1984,
Poughkeepsie Savings Bank, FSB,
Poughkeepsie, New York.
William G. Lillis 66 Real Estate Consultant; formerly 1986
President and Chief Executive Officer
from April 1981 and December 1989,
respectively, to November 1991;
American Savings Bank, FSB.
6
<PAGE>
The Trust has an Audit Committee, Board Affairs Committee, Nominating
Committee, Proxy Committee and an Investment Committee. At least a majority of
the members of each committee are not "interested persons" of the Trust as
defined in the Act. (SEE further information on "interested persons" under
"Information Regarding Trustees," above.)
The Audit Committee, which met two times during the Trust's fiscal year
ended September 30, 1996, presently consists of Messrs. Chorbajian, Kinkade and
Willis. The Audit Committee reviews the professional services to be rendered by
the Trust's independent public accountant and the costs thereof. It also
reviews with such firm the results of its audit and such firm's findings and
recommendations, including those furnished on the adequacy of accounting
controls.
The Board Affairs Committee, which met three times during the Trust's
fiscal year ended September 30, 1996, presently consists of Messrs. Hardee,
Schrauth and Willis. The Board Affairs Committee addresses issues involving
conflicts of interest between the Trust and Retirement System Group Inc. and its
subsidiaries. The Committee also addresses procedural issues of the Board of
Trustees.
The Investment Committee, which met three times during the Trust's fiscal
year ended September 30, 1996, presently consists of Ms. Cox and Messrs.
Schrauth and Willis. The Investment Committee reviews the practices and
procedures of the Trust's various investment managers, including practices
relating to brokerage allocation, and makes recommendations to the Board of
Trustees on the policies of such investment managers and any changes in
brokerage allocation which should be made by such investment managers.
The Nominating Committee, which met one time during the Trust's fiscal year
ended September 30, 1996, presently consists of Ms. Cox and Messrs. Lillis and
Swan. The Nominating Committee recommends Trustees to the Board for nomination
by the Board for election by the Trust Participants. The Nominating Committee
does not consider nominees recommended by Trust Participants.
The Proxy Committee, which met two times during the Trust's fiscal year
ending September 30, 1996, presently consists of Messrs. Hodgkins, Lillis and
Schrauth. The Proxy Committee oversees the preparation of all proxy materials
to be distributed to Trust Participants and also oversees the collection and
tabulation of proxies.
The Trust's Board of Trustees held six regular meetings during the Trust's
fiscal year ended September 30, 1996. There were no special meetings. During
the Trust's fiscal year ended September 30, 1996, each Trustee currently serving
attended at least 75% of the aggregate of (a) the total number of meetings of
the Board (held during the period for which he or she has been a Trustee), and
(b) the total number of meetings held by all committees of the Board on which he
or she served (during the period that he or she served).
INFORMATION REGARDING THE TRUST CHAIRMAN AND EXECUTIVE OFFICERS
The officers of the Trust are the President, one or more Vice Presidents, a
Secretary and a Treasurer. There is also a Trust Chairman who presides at Board
of Trustees meetings in the absence of the President, William Dannecker. The
Trust Chairman position is presently vacant.
7
<PAGE>
The following are the names of the executive officers of the Trust, as of
September 30, 1996, other than Mr. Dannecker, who is described above under
"Information Regarding Trustees," together with their ages and positions with
the Trust and the period during which each of such officers has served as such.
Each of the executive officers of the Trust serves as an officer or director of
Investors.
Principal Occupation,
Business Experience
Name Age During the Last 5 Years,
- ------ --- ---------------------------------
James P. Coughlin 60 Executive Vice President-Investments of the Trust
since July 1995, Senior Vice President-Investments
from December 1986 to July 1995; Executive Vice
President-Investments of Retirement System Group
Inc. since January 1993, Chief Investment Officer
since January 1991, Director since May 1990 and
Senior Vice President-Investments from January
1990 to December 1992; President of Retirement
System Investors Inc. since February 1990; Senior
Vice President of Retirement System Fund Inc.
since January 1991.
Stephen P. Pollak 51 Executive Vice President, Counsel and Secretary of
the Trust since July 1995; Senior Vice President,
Counsel and Secretary from December 1986 to July
1995; Executive Vice President, Counsel and
Secretary of Retirement System Group Inc. since
January 1993, Senior Vice President, Counsel and
Secretary from January 1990 to December 1992 and
Director since March 1989; Vice President and
Secretary of Retirement System Consultants Inc.
since January 1990 and Director since March 1989;
Vice President, Secretary and Compliance Officer
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; President of RSG Insurance
Agency Inc. since March 1996 and Director since
March 1996.
John F. Meuser 61 Senior Vice President and Treasurer of the Trust
since July 1996; Vice President and Treasure from
October 1992 to July 1996; First Vice President
from June 1987 to September 1992; Vice President
of Retirement System Group Inc. since January
1993, First Vice President from August 1990 to
December 1992; Registered Representative of
Retirement System Distributors Inc. since February
1990 and Vice President since June 1994, Vice
President of Retirement System Investors Inc.
since February 1990; Vice President of Retirement
System Consultants Inc. since June 1994; Senior
Vice President and Treasurer of
8
<PAGE>
Principal Occupation,
Business Experience
Name Age During the Last 5 Years,
- ------ --- ---------------------------------
John F. Meuser 61 Retirement System Fund Inc. since October 1996;
Vice President and Treasurer from October 1992 to
October 1996.
COMPENSATION OF TRUSTEES AND OFFICERS
TRUSTEES' COMPENSATION
The Trustees received the aggregate compensation shown below for services
to the Trust during the fiscal year ended September 30, 1996. Trust officers
received no compensation from the Fund during the fiscal year ended September
30, 1996:
TOTAL COMPENSATION
FROM FUND AND
AGGREGATE COMPENSATION FUND COMPLEX
NAME OF TRUSTEE FROM THE FUND PAID TO TRUSTEES **
- --------------- ---------------------- -------------------
Herbert G. Chorbajian $ $- 0 -
Candace Cox * - 0 -
William Dannecker - 0 - - 0 -
Eugene C. Ecker - 0 -
Covington Hardee * - 0 -
Ralph L. Hodgkins, Jr. - 0 -
Maurice E. Kinkade * - 0 -
William G. Lillis * - 0 -
William L. Schrauth - 0 -
William E. Swan - 0 -
Raymond L. Willis - 0 -
OFFICERS' CASH COMPENSATION
Officers of the Trust do not receive any direct compensation from the
Trust; however, they do receive compensation indirectly because of their
employment by Retirement System Group Inc. and its subsidiaries.
- --------------------
* Aggregate compensation includes amounts deferred under the Trust's Section
457 Deferred Compensation Plan ("Plan"). The total amount of deferred
compensation payable under the Plan as of September 30, 1996 is as follows: Ms.
Cox ($________); Mr. Hardee ($______); Mr. Kinkade ($_______) and Mr. Lillis
($_______). There are no pension or retirement benefits.
** The Fund Complex consists of the Trust and one other investment fund,
Retirement System Fund Inc., which shares a common investment manager with the
Trust.
9
<PAGE>
SECTION 457 DEFERRED COMPENSATION PLAN
The Trust maintains a Deferred Compensation Plan ("Plan") which meets the
requirements of Section 457 of the Internal Revenue Code, as amended. Under the
Plan, Trustees may defer up to the lesser of $7,500 or 33-1/3% of their
compensation from the Trust during each calendar year.
Compensation deferred is distributable in full upon attainment of age
70 1/2 or upon retirement or earlier termination from service as a Trustee,
unless deferred to a later date in accordance with the provisions of the Plan.
(Minimum distributions are required beginning as of the April 1st following
attainment of age 70 1/2.) Earlier distributions are permitted only for an
"unforeseeable emergency" as defined in the Plan.
The Trust has established a bookkeeping account for each participant's
deferral and is only under a contractual obligation to make Plan payments. The
Plan is deemed to be an unfunded plan.
Deferred compensation attributable to the Plan may be invested in one or
more investment funds as shall be made available by the Trust from time to time,
in its sole discretion, as authorized by the Trustees.
PROPOSAL 2
SELECTION OF ACCOUNTANTS
Subject to ratification or rejection by the Trust Participants, the Board
of Trustees of the Trust, including a majority of those members of the Board who
are not interested persons of the Trust, selected, on September 26, 1996,
McGladrey & Pullen to continue in the capacity of independent public
accountants, to examine the accounts and to certify from time to time the
financial statements of the Trust for the fiscal year ending September 30, 1997.
Representatives of McGladrey & Pullen are expected to be present at the
Meeting and will have the opportunity to make a statement and respond to
appropriate questions from the Trust Participants.
The Trust has an Audit Committee of the Board of Trustees, whose
composition and responsibilities are discussed above under "Information
Regarding Trustees."
THE BOARD OF TRUSTEES RECOMMENDS APPROVAL OF THE SELECTION OF MCGLADREY &
PULLEN AS THE TRUST'S INDEPENDENT PUBLIC ACCOUNTANTS.
10
<PAGE>
PROPOSAL 3(a)
NEW INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN RETIREMENT SYSTEM INVESTORS INC. AND HLM
(PROPOSAL TO BE VOTED ON BY TRUST PARTICIPANTS OF THE EMERGING GROWTH EQUITY
FUND ONLY)
Investors currently serves as investment manager for the Emerging Growth
Equity Fund pursuant to an Investment Management Agreement (the "Current
Management Agreement") dated August 1, 1993 between the Trust, on behalf of the
Emerging Growth Equity Fund, and Investors. The Current Management Agreement
was approved by Trust Participants of the Emerging Growth Equity Fund at a
meeting held on July 31, 1993, and was most recently approved by the Board of
Trustees at its meeting on July 25, 1996. The Current Management Agreement
provides that Investors shall supply portfolio management services to the
Emerging Growth Equity Fund, and that Investors may, with the approval of the
Trustees and the Trust Participants, retain one or more sub-advisers to provide
such portfolio management services, subject to oversight by Investors. From
September 4, 1990 through March 31, 1997, The Putnam Advisory Company, Inc.
("Putnam"), provided portfolio management services to a portion of the Emerging
Growth Equity Fund. Putnam provided these services pursuant to an investment
sub-advisory agreement (the "Putnam Sub-Advisory Agreement") between Investors
and Putnam which was most recently approved by the Board of Trustees at its July
25, 1996 meeting and by Trust Participants of the Emerging Growth Equity Fund on
August 30, 1997. Investors has retained Friess Associates Inc. pursuant to a
separate investment sub-advisory agreement to provide portfolio management
services with respect to the remaining portion of the Emerging Growth Equity
Fund. That Agreement is not the subject of this proxy statement and Friess
Associates Inc. will continue to provide such services following the Meeting.
Following discussions between Investors and Putnam concerning Putnam's
competitive distribution relationships, at meetings held on March 20, 1997 and
March 27, 1997, the Investment Committee of the Board of Trustees of the Trust,
and on March 27, 1997, the full Board of Trustees, considered a proposal by
Investors to terminate the Putnam Sub-Advisory Agreement, effective as of the
close of business on March 31, 1997 and to appoint HLM as the new sub-adviser to
the Emerging Growth Equity Fund, effective April 1, 1997.
The Investment Committee requested and evaluated a broad range of
information described below relating to the choice of a successor sub-adviser to
the Emerging Growth Equity Fund, and recommended to the full Board the approval
of HLM as successor sub-adviser. At the March 27, 1997 meeting, the Board of
Trustees, including a majority of the Trustees who are not "interested persons"
(as defined in the Act) of the Trust (the "Independent Trustees"), unanimously
approved a new investment sub-advisory agreement between Investors and HLM (the
"HLM Sub-Advisory Agreement"), and directed that it be submitted to the Emerging
Growth Equity Fund's Trust Participants for approval.
Since April 1, 1997, HLM has been managing that portion of the Emerging
Growth Equity Fund previously managed by Putnam. Under rules prescribed under
the Act, HLM may continue to act as sub-adviser with respect to the Emerging
Growth Equity Fund for a period of 120 days after termination of the Putnam
Sub-Advisory Agreement, provided that the compensation to be received by HLM
during this period does not exceed the compensation
11
<PAGE>
which would have been paid if the Putnam Sub-Advisory Agreement were still
effect. Accordingly, pending shareholder approval of the new HLM Sub-Advisory
Agreement, HLM has agreed to provide portfolio management services to the
Emerging Growth Equity Fund at the rate of compensation and upon the other terms
and conditions of the Putnam Sub-Advisory Agreement.
In evaluating the proposal to appoint HLM as sub-adviser to the Emerging
Growth Equity Fund, the Investment Committee, and the full Board of Trustees,
considered various factors. The Trustees considered the qualifications of HLM
to provide sub-advisory services, including the credentials and investment
experience of HLM's officers and employees who will be responsible for the
day-to-day management of the Emerging Growth Equity Fund's portfolio. The
Trustees also considered the investment capabilities of HLM in managing a
portfolio concentrating in growth stocks. The Trustees also evaluated the
historical record of HLM in managing other portfolios, particularly where such
performance is relevant to managing growth stocks.
In considering the proposal to appoint HLM, the Trustees also considered
the sub-advisory fee payable under the Putnam Sub-Advisory Agreement as compared
with the sub-advisory fee payable under the HLM Sub-Advisory Agreement. The
Trustees considered the fact that, although the sub-advisory fee rate payable
under the HLM Sub-Advisory Agreement is higher than the rate payable under the
Putnam Sub-Advisory Agreement for asset levels between $25 million and $50
million, the rate payable under the HLM Sub-Advisory Agreement is less than the
rate payable under the Putnam Sub-Advisory Agreement for asset levels above $50
million. The following chart describes the investment management fee rate
payable under the Current Management Agreement and sub-advisory fee rate payable
under the Putnam Sub-Advisory Agreement.
CURRENT INVESTMENT MANAGEMENT AND SUB-ADVISORY FEE SCHEDULES
------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF PERCENTAGE OF ASSETS
EMERGING GROWTH AVERAGE DAILY AVERAGE DAILY NET PAYABLE BY
EQUITY FUND NET ASSETS PAYABLE ASSETS RETAINED BY INVESTORS TO
ASSETS MANAGED TO INVESTORS INVESTORS SUB-ADVISER
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
First $25 Million 1.20% .20% 1.00%
Over $25 Million .95% .20% .75%
</TABLE>
The following chart describes the investment management fee rate proposed
to be payable by the Trust to Investors with respect to the portfolio of the
Emerging Growth Equity Fund advised by HLM and by Investors to HLM under the HLM
Sub-Advisory Agreement. (As described below, if the HLM Sub-Advisory Agreement
is approved, the fee paid by the Emerging Growth Equity Fund to Investors will
be adjusted to reflect the different fees payable by Investors to HLM).
12
<PAGE>
PROPOSED INVESTMENT MANAGEMENT AND SUB-ADVISORY FEE SCHEDULES
-------------------------------------------------------------
<TABLE>
<CAPTION>
PERCENTAGE OF PERCENTAGE OF
EMERGING GROWTH PERCENTAGE OF AVERAGE AVERAGE DAILY AVERAGE DAILY NET
EQUITY FUND DAILY NET ASSETS NET ASSETS RETAINED ASSETS PAYABLE BY
ASSETS MANAGED PAYABLE TO INVESTORS BY INVESTORS INVESTORS TO HLM
- --------------------- --------------------- --------------------- ---------------------
<S> <C> <C> <C>
First $25 Million 1.20% .20% 1.00%
Next $25 Million 1.00% .20% .80%
Over $50 Million .80% .20% .60%
</TABLE>
Attached as Exhibit A, is a comparison of the actual advisory fee payable
under the Current Management Agreement and Putnam Sub-Advisory Agreement with
the pro-forma advisory fees payable assuming the modification of the Current
Management Agreement (the "Proposed Management Agreement") and HLM Sub-Advisory
Agreement were in effect for the fiscal year ended September 30, 1996.
In considering the proposed changes in sub-advisory arrangements, the
Trustees also considered the fact that the method of calculating the
sub-advisory fee payable by Investors under the Putnam Sub-Advisory Agreement is
different from the method under the HLM Sub-Advisory Agreement. The fee under
the Putnam Sub-Advisory Agreement is calculated at the end of each month, and is
based on the Investment Fund's assets on that day. The fee under the HLM
Sub-Advisory Agreement is calculated based on the average daily net assets over
a calendar quarter. Under the new arrangement, the sub-advisory fee will more
closely reflect asset fluctuations during the course of a month. The Trustees
also considered the fact that the terms and conditions of the Putnam
Sub-Advisory Agreement are identical in all material respects to the terms and
conditions of the HLM Sub-Advisory Agreement, with the exceptions of the
compensation payable thereunder and the identity of the sub-adviser.
INFORMATION CONCERNING THE HLM SUB-ADVISORY AGREEMENT
Under the HLM Sub-Advisory Agreement, HLM is required to manage the assets
of the portion of the Emerging Growth Equity Fund allocated to it, subject to
and consistent with the investment objectives and policies of the Fund as set
forth in the current prospectus of the Trust and as specified in writing from
time to time by the Trustees or Investors. HLM is also required to consult with
Investors or the Trustees as Investors or the Trustees shall reasonably request
with respect to the overall investment policy of the Emerging Growth Equity
Fund. A copy of the HLM Sub-Advisory Agreement is annexed as Exhibit B.
After taking all of the above factors into consideration, the Board of
Trustees of the Trust, including the Independent Trustees unanimously approved
the HLM Sub-Advisory Agreement with HLM.
13
<PAGE>
INFORMATION CONCERNING HLM
Set forth below is information concerning HLM, its address and the names of
its principals and their official titles, including a brief description of the
organization.
HLM Management Company, Inc. (HLM), 222 Berkeley Street, Boston, MA 02166,
was incorporated in November, 1983 and is wholly owned by its three founding
principals, A. R. (Buck) Haberkorn, III, Judith P. Lawrie and James J. Mahoney,
Jr. All three partners remain as active, full-time members of the firm. HLM
has no affiliations with other companies. In 1992, two new principals were
hired, Peter J. Grua and Frances M. Hawk. HLM's sole business focus since
inception has been the management of small capitalization emerging growth equity
and later-stage venture capital investments. HLM began managing small
capitalization U.S. public equity investments in June 1984. Assets under
management on May 31, 1997 totaled $597 million ($473 million in separately
managed small cap growth company portfolios, $58 million in a Healthcare only
Partnership and $66 million in Venture Capital Partnerships). HLM has advised
the Trustees that it will stop accepting new clients when the assets under
management reaches $600 million. The names of each of HLM's directors and its
principal executive officers, each of whose address is in care of HLM, is as
follows.
Name Title
James J. Mahoney, Jr. Treasurer, Director and Portfolio Manager
Judith P. Lawrie Chairman Director and Portfolio Manager
A. R. (buck) Haberkorn III Director and Portfolio Manager
Peter John Grua President and Portfolio Manager
Ann B. Hutchins* Portfolio Manager
* Ann Hutchins, the newest principal, will join the Firm on July 7, 1997 and
replaces Frances M. Hawk, who will retire, effective June 30, 1997.
PROPOSAL 3(b)
MODIFICATION OF FEE FOR EMERGING GROWTH EQUITY FUND UNDER INVESTMENT MANAGEMENT
AGREEMENT WITH RETIREMENT SYSTEM INVESTORS INC.
(PROPOSAL TO BE VOTED ON BY TRUST PARTICIPANTS OF THE EMERGING GROWTH EQUITY
FUND ONLY)
As noted above, under Proposal 3(a), Investors currently serves as
investment manager for the Emerging Growth Equity Fund. Investors supplies
portfolio management services to the Emerging Growth Equity Fund, and may, with
the approval of the Trustees and the Trust Participants, retain one or more
sub-advisers to provide such portfolio management services, subject to oversight
by Investors. Under the Current Management Agreement between the
14
<PAGE>
Emerging Growth Equity Fund and Investors, Investors is paid 0.20% of the
average daily net assets under management in excess of the amount payable by
Investors to such sub-advisers. The amount retained was designed to compensate
Investors for its services provided under the investment management agreement,
including oversight services in monitoring and reporting to the Board of
Trustees on the services provided by the sub-advisers.
If the HLM Sub-Advisory Agreement is approved, the sub-advisory fee payable
by Investors to HLM would be modified. As the Current Management Agreement
provides that Investors is paid a fee equal to the sub-advisory fee plus .20% of
average daily net assets, the modification of the sub-advisory fee will result
in a modification of the fees payable by the Emerging Growth Equity Fund to
Investors with respect to the portion of the Investment Fund advised by HLM.
This modification would be deemed an amendment of the Current Management
Agreement. Accordingly, the Board of Trustees, including the Independent
Trustees, have considered and unanimously approved the Proposed Management
Agreement between the Trust and Investors and directed that it be submitted to
the Emerging Growth Equity Fund's Trust Participants for approval.
INFORMATION CONCERNING THE PROPOSED MODIFIED MANAGEMENT AGREEMENT
The terms and conditions of the Current Management Agreement, are identical
in all material respects to the terms and conditions of the Proposed Management
Agreement, with the exception that the fee schedule payable by the Emerging
Growth Equity Fund to Investors has been modified, as described above. However,
under both the Current Management Agreement and the Proposed Management
Agreement, Investors retains 0.20% of the Emerging Growth Equity Fund's average
daily net assets under management. Investors will continue to provide the same
services under the Proposed Management Agreement as those provided under the
Current Management Agreement.
Under the Management Agreement, Investors is required to perform
supervisory services pertaining to the ongoing oversight and management of each
sub-adviser retained by Investors. Such services include, but are not limited
to, supervising the compliance by such sub-adviser with the Act, reviewing such
sub-adviser's performance, analysis of the composition of such sub-adviser's
portfolio, and preparing reports relating to such supervisory activities for the
Trustees. In addition, at the request of the Trustees, Investors is required to
conduct a search to find a recommended replacement for any sub-adviser.
Investors is required to prepare presentations to Trust Participants analyzing
the Trust's overall performance based on analysis of each sub-adviser's
performance. Investors also is required to consult with the Trustees and their
representatives at such times as the Trustees may reasonably request with
respect to the overall investment policy of the Investment Fund, and Investors
is required to cause one or more of its officers to attend such meetings with
the Trustees and their representatives and to furnish such oral or written
reports to the Trustees and their representatives, as the Trustees may
reasonably request, with respect to, among other matters, the decisions it has
made with respect to the Investment Fund and the purchase and sale of its
portfolio securities (including the reasons therefor) and the extent to which
such decisions have been implemented. A copy of the Proposed Management
Agreement is annexed as Exhibit C.
15
<PAGE>
In evaluating the proposal to modify the fee payable to Investors by the
Emerging Growth Equity Fund, the Investment Committee of the Board of Trustees,
and the full Board of Trustees considered various factors. The Trustees took
into consideration the fact that the services provided by Investors are central
to the effective operation of the Trust. The Trustees also considered the fact
that Investors will be compensated at the same management fee rate if the
proposal is approved. The Trustees also considered various other factors,
including the amount of the proposed fee in the context of all the other
payments made to Investors and its affiliates. These other payments include
payments made to Retirement System Consultants Inc. under a Service Agreement.
The Trustees also reviewed the cost and benefits derived by Investors and its
affiliates in providing services to the Trust, including the profitability of
the relationship to Investors and its affiliates (without taking into account
any costs of distribution borne or to be borne by them); the manner in which the
proposed fees allocate economies of scale between Investors and the Trust; and
the resulting expense ratios of the Emerging Growth Equity Fund, both absolutely
and relative to comparable investment companies. In light of all these
considerations, the Trustees concluded that approval of the Proposed Management
Agreement with Investors was in the best interests of the Emerging Growth Equity
Fund and the Participants in the Fund, as it would ensure an uninterrupted high
level of advisory services to the Fund.
After taking all of the above factors into consideration, the Board of
Trustees, including the Independent Trustees, unanimously approved the
modification of the Management Agreement.
THE BOARD OF TRUSTEES RECOMMENDS APPROVAL OF THE HLM SUB-
ADVISORY AGREEMENT AND THE PROPOSED MANAGEMENT AGREEMENT.
INFORMATION CONCERNING INVESTORS
Set forth below is information concerning Investors, including its address,
the name, address and principal occupation of its principal executive officer
and each director and the identification of its controlling persons and
principal owners.
RETIREMENT SYSTEM INVESTORS INC. ("INVESTORS"), 317 Madison Avenue, New York,
New York 10017, is a wholly-owned subsidiary of Retirement System Group Inc.
("Group"), 317 Madison Avenue, New York, New York 10017. Investors was formed
in March 1989 to act as investment adviser to certain of the Trust's Investment
Funds following the consummation of a reorganization of the Trust. Investors
Inc. also provides investment adviser and management services to Retirement
System Fund Inc., and may also act as investment adviser to other investment
companies. The name of each of Investors' directors and its principal executive
officer, each of whose address is in care of Investors, is as follows:
Title and Other
Name Principal Occupation, if any
- ----------------- ----------------------------------
William Dannecker Director
16
<PAGE>
Title and Other
Name Principal Occupation, if any
- ----------------- ----------------------------------
William Dannecker (Con't) President, Chief Executive Officer and Director -
Retirement System Group Inc.
President and Director - Retirement System
Consultants Inc.
President, Director and Registered Principal -
Retirement System Distributors Inc.
President and Director - Retirement
System Fund Inc.
Director - RSG Insurance Agency Inc.
James P. Coughlin President
Executive Vice President, Chief Investment
Officer and Director - Retirement System Group I
Inc.
Registered Principal - Retirement System
Distributors Inc.
Executive Vice President - Retirement
System Fund Inc.
Stephen P. Pollak Director, Vice President and Secretary
Executive Vice President, Counsel, Secretary and
Director - Retirement System Group Inc.
Vice President, Counsel, Secretary and Director -
Retirement System Consultants Inc.
Vice President, Secretary, Registered Principal
and Director- Retirement System Distributors Inc.
Executive Vice President, Counsel and Secretary -
Retirement System Fund Inc.
In addition to acting as Investment Manager for the Trust, Investors acts as
investment adviser and provides management services to Retirement System Fund
Inc., resulting in compensation paid to Investors, for the year ended September
30, 1996, as follows:
17
<PAGE>
INVESTMENT RATE OF
FUND NAME TOTAL ASSETS COMPENSATION
------------ ------------ ------------
Core Equity Fund $8,865,016 .60%
Intermediate-Term Fixed $5,884,590 .40%
Income Fund
Retirement System Distributors Inc. ("Distributors"), another wholly-owned
subsidiary of Group, located at 317 Madison Avenue, New York, New York 10017, is
the principal underwriter to the Trust. For the year ended September 30, 1996,
Distributors received no fees from the Trust. Administrative services to the
Trust are provided by Retirement System Consultants Inc. ("Consultants"), also a
wholly owned subsidiary of Group, located at 317 Madison Avenue, New York, New
York 10017. For the year ended September 30, 1996, Consultants received fees
from the Trust in the aggregate amount of $2,694,465.
PRINCIPAL UNITHOLDERS
The Plan of Participation of each of the institutions listed below owns of
record and beneficially 5% or more of the Trust's and each Investment Fund's
outstanding Units, as of May 30, 1997. Each Plan of Participation listed is a
defined benefit plan, unless otherwise indicated:
Amount of Percent
Name Ownership of Class
- ------------------ --------- --------
TRUST (CONSIDERED AS A WHOLE):
ALBANK, FSB 764,726.265 5.12%
GreenPoint Bank 759,319.826 5.08%
CORE EQUITY FUND:
GreenPoint Bank 231,171.251 7.15%
Ridgewood Savings Bank 182,792.705 5.66%
ALBANK, FSB 182,126.760 5.64%
EMERGING GROWTH EQUITY FUND:
Ridgewood Savings Bank 62,383.181 5.12%
ALBANK, FSB 62,166.381 5.10%
INTERNATIONAL EQUITY FUND:
ALBANK, FSB 65,465.778 8.71%
North Fork Bank 41,820.316 5.57%
Staten Island Savings Bank 38,214.634 5.09%
VALUE EQUITY FUND
GreenPoint Bank 81,521.490 7.14%
Ridgewood Savings Bank 64,779.752 5.67%
ALBANK, FSB 64,543.420 5.65%
18
<PAGE>
Amount of Percent
Name Ownership of Class
- ------------------ --------- --------
ACTIVELY MANAGED BOND FUND:
GreenPoint Bank 366,188.821 8.84%
ALBANK, FSB 261,607.116 6.31%
Ridgewood Savings Bank 221,890.670 5.35%
INTERMEDIATE-TERM BOND FUND:
GreenPoint Bank 180,117.613 8.19%
ALBANK, FSB 128,816.810 5.86%
SHORT-TERM INVESTMENT FUND:
Independence Savings Bank * 231,803.355 19.00%
Roosevelt Savings Bank * 105,464.043 8.64%
Institutional Group Information Corp. * 83,586.313 6.85%
Northfield Savings Bank, FSB * 74,505.384 6.11%
North Fork Bank * 68,520.554 5.62%
DEDICATED BOND FUND:
None -- --
The addresses of these institutions are as follows:
ALBANK, FSB, Corner of State & North Pearl Streets, Albany, New York 12207;
GreenPoint Bank, 41-60 Main Street, Flushing, New York 11355; Independence
Savings Bank, 130 Court Street, Brooklyn, New York 11201; Institutional Group
Information Corp., 1000 Northern Blvd., Great Neck, New York 11021-5305; North
Fork Bank, 275 Broad Hollow Road, Melville, New York 11747: Northfield Savings
Bank, FSB, 1731 Victory Boulevard Staten Island, NY 10314-0025; Ridgewood
Savings Bank, Myrtle & Forest Avenues, Ridgewood, New York 11385; Roosevelt
Savings Bank, 1122 Franklin Avenue, Garden City, New York 11530; and Staten
Island Savings Bank, 15 Beach Street, Stapleton, S.I., NY 10304
VOTE REQUIRED
Election of Trustees and the approval of the selection of McGladrey &
Pullen as independent accountants (Proposals 1 and 2) require a majority of the
votes validly cast, if a quorum is present, with Units of all Investment Funds
voting in the aggregate as a single class.
- ----------------------------
* Defined contribution plan.
19
<PAGE>
Approval of the HLM Sub-Advisory Agreement and the Proposed Management
Agreement with Investors are part of the same Proposal (3) and will not be voted
on separately. Approval of Proposal 3 requires a vote of a majority of the
outstanding Units of the Emerging Growth Equity Fund, voting separately.
The "vote of a majority of the outstanding Units" of any Investment Fund
means the vote (i) of 67% or more of the Units present or represented at any
meeting, if the holders of more than 50% of the outstanding Units of the
Investment Fund are present or represented by proxy, or (ii) of more than 50% of
the outstanding Units of the Investment Fund, whichever is less.
DEADLINE FOR SUBMISSION OF TRUST PARTICIPANTS'
PROPOSALS TO BE PRESENTED TO
1998 ANNUAL MEETING OF TRUST PARTICIPANTS
The 1998 Annual Meeting of Trust Participants is expected to be held on or
about July 23, 1998. Any proposal intended to be presented by any Trust
Participant for action at the 1998 Annual Meeting of Trust Participants must be
received by the Secretary of the Trust at 317 Madison Avenue, New York, New York
10017, not later than March 25, 1998 in order for such proposal to be included
in the Proxy Statement and proxy relating to the 1998 Annual Meeting of Trust
Participants. Nothing in this paragraph shall be deemed to require the Trust to
include in its Proxy Statement and proxy relating to the 1998 Annual Meeting of
Trust Participants, any Trust Participant proposal which does not meet all of
the requirements for such inclusion established by the Securities and Exchange
Commission at that time in effect.
OTHER MATTERS
Management does not know of any matters to be presented at the Meeting
other than those mentioned in this Proxy Statement. If any other matters
properly come before the Meeting, including any vote in respect of adjournment,
arising because of a lack of a quorum or otherwise, the Units represented by
proxies will be voted with respect thereto in accordance with the best judgment
of the person or persons voting the proxies. COPIES OF THE TRUST'S ANNUAL
REPORT FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1996 AND SEMI-ANNUAL REPORT FOR
THE SIX MONTHS ENDED MARCH 31, 1997 ARE AVAILABLE WITHOUT CHARGE TO TRUST
PARTICIPANTS. TO OBTAIN A COPY, CALL THE TRUST AT (800) 446-7774, OR WRITE TO
THE TRUST AT 317 MADISON AVENUE, NEW YORK, NEW YORK 10017.
By Order of the Board of Trustees,
----------------------------
STEPHEN P. POLLAK
New York, New York Executive Vice President, Counsel
June , 1997 and Secretary
-------
20
<PAGE>
EXHIBIT A
EMERGING GROWTH EQUITY FUND
PRO FORMA COMPARISON OF CURRENT MANAGEMENT AND SUB-ADVISORY AGREEMENTS WITH
PROPOSED AGREEMENTS
The following table shows the dollar amount of investment management fees
paid by the Emerging Growth Equity Fund (the "Fund") to Investors and the dollar
amount of sub-advisory fees paid by Investors to Putnam for the component of the
Fund managed by Putnam during the Fund's fiscal year ended September 30, 1996
under the Current Management Agreement and Putnam Sub-Advisory Agreement and the
pro-forma amount of fees that would have been paid for the component of the Fund
managed by HLM assuming the HLM Sub-Advisory Agreement and related fee change
under the Management Agreement were in effect during the same period. Also set
forth below is a comparative fee table showing the actual amount of fees and
expenses paid by the Fund under the Current Management Agreement for the fiscal
year ended September 30, 1996, expressed as a percentage of average net assets
and the pro-forma amount of fees and expenses that would have been paid by the
Fund assuming the revised fee under the Management Agreement was in effect.
<TABLE>
<CAPTION>
FEE PAYABLE BY
FEE PAYABLE BY FUND FEE RETAINED BY INVESTORS TO
TO INVESTORS* INVESTORS SUB-ADVISER
--------------------- --------------------- ---------------------
<S> <C> <C> <C>
ACTUAL INVESTMENT
MANAGEMENT AND SUB-
ADVISOR FEES WITH
PUTNAM $386,280 $61,502 $324,778
PRO-FORMA INVESTMENT
MANAGEMENT AND SUB-
ADVISORY FEES WITH HLM $397,687 $63,060 $334,127
PERCENTAGE DIFFERENCE
BETWEEN ACTUAL AND PRO-
FORMA FEES 2.95% 2.53% 3.03%
</TABLE>
* Amount shown is for the portion of the Fund managed by Putnam/HLM. For the
fiscal year ended September 30, 1996, the Fund paid Investors an additional
$___________with respect to the portion of the Fund managed by Friess Associates
Inc. from which amount Investors paid $________to Friess Associates Inc.
21
<PAGE>
ACTUAL PRO-FORMA
(AS OF SEPT. 30, 1996) (AS OF SEPT. 30, 1996)
Management Fee -- % -- %
Rule 12b-1 Fee -- --
Other Expenses -- % -- %
Total Fund Operating -- % -- %
Expenses
EXAMPLES
The following examples are intended to assist Trust Participants in
understanding the difference in costs that a Trust Participant would bear under
the Current Management Agreement and Putnam Sub-Advisory Agreement as compared
with the HLM Sub-Advisory Agreement and modified fee under the Proposed
Management Agreement.
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and redemption at the end of each time period:
1 YEAR 3 YEARS 5 YEARS 10 YEARS
CURRENT MANAGEMENT
AGREEMENT AND PUTNAM SUB-
ADVISORY AGREEMENT. . . . . . $19.40 $60.04 $103.34 $225.15
PROPOSED MANAGEMENT
AGREEMENT AND HLM SUB-
ADVISORY AGREEMENT. . . . . . $19.60 $60.64 $104.36 $227.27
THE EXAMPLES ARE BASED ON ACTUAL EXPENSES FOR THE FISCAL YEAR ENDED SEPTEMBER
30, 1996 AND ESTIMATED EXPENSES FOR THE SAME PERIOD ASSUMING THE PROPOSED
MANAGEMENT ARRANGEMENTS WERE IN EFFECT. THE EXAMPLES SHOULD NOT BE CONSIDERED A
REPRESENTATION OF PAST OR FUTURE EXPENSES. ACTUAL EXPENSES MAY BE GREATER OR
LESS THAN SHOWN.
22
<PAGE>
EXHIBIT B
RETIREMENT SYSTEM INVESTORS INC.
INVESTMENT SUB-ADVISORY AGREEMENT
THIS AGREEMENT effective as of April 1, 1997 and modified effective as of
July 29, 1997, between Retirement System Investors Inc., a Delaware corporation
(the "Manager"), and HLM Management Company, Inc., Boston, Massachusetts (the
"Sub-Adviser").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, RSI Retirement Trust ("Trust"), a trust organized and
existing pursuant to an Agreement and Declaration of Trust, made as of October
22, 1940, as amended from time to time ("Agreement and Declaration of Trust")
provides benefits for the employees (and their beneficiaries) of savings
institutions, related organizations and other corporate entities which have
established plans of participation and individual retirement accounts
("Unitholders") in the Trust;
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trustees of the Trust ("Trustees") are vested with
authority for the management and control of the assets of the Trust in
accordance with the provisions of the Agreement and Declaration of Trust and in
furtherance of such authority are vested with the power to designate an
investment manager or managers (as defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) to manage (including the power to
acquire and dispose of) the assets of any of the Investment Funds (as defined in
the Agreement and Declaration of Trust) of the Trust; and
WHEREAS, the Trust and the Manager have entered into an Investment
Management Agreement dated August 1, 1993 and amended and restated July 29,
1997, pursuant to which the Manager may designate Sub-Advisers to perform
certain investment advisory functions under the supervision of the Manager and
the Trustees; and
WHEREAS, the Manager wishes to appoint the Sub-Adviser to manage a
portion of the assets of certain Investment Funds of the Trust, to act in such
capacity in the manner set forth in this Agreement, and the Sub-Adviser is
willing to act in such capacity in accordance with the provisions of this
Agreement;
NOW, THEREFORE, the Manager hereby agrees with the Sub-Adviser as
follows:
<PAGE>
1. APPOINTMENT OF THE SUB-ADVISER
A. The Manager hereby designates, appoints, engages and retains the
Sub-Adviser as investment manager of the assets comprising the Investment Fund
of the Trust referred to on Schedule A hereto ("Investment Fund"), or such
portion thereof as shall be designated by the Manager ("Account").
B. The Sub-Adviser hereby accepts appointment to manage the assets
of the Account. The Sub-Adviser hereby represents and warrants that it is a
qualified investment manager, as defined in Section 3(38) of ERISA, without
regard to subpart (c) of said Section. The Sub-Adviser agrees that although it
may not be subject to the provisions of Title I of ERISA in carrying out its
duties and responsibilities under this Agreement, it shall act in accordance
with the requirements of Part 4 of ERISA as applicable to fiduciaries as defined
under ERISA. Notwithstanding anything contained herein to the contrary,
references to ERISA in this Agreement shall be deemed to contemplate all
judicial or administrative interpretations and all statutory and administrative
exemptions which would be applicable in the circumstances and to the parties in
question were this Agreement subject to ERISA.
C. The term of this Agreement shall commence on the date hereof and
shall remain in full force and effect until July 29, 1999 and thereafter from
year to year provided that such continuance is specifically approved in the
manner required by the Act.
2. ASSETS OF THE ACCOUNT
The Manager shall certify or cause to be certified to the Sub-Adviser
the assets comprising the Account as of the commencement of the term of this
Agreement. The Manager may add to the Account assets acceptable to the
Sub-Adviser or withdraw assets from the Account at any time or from time to time
by notification to the Sub-Adviser. The Account shall consist of the assets
certified to the Sub-Adviser as aforesaid, or any assets into which the same may
be converted from time to time, together with any income therefrom or any other
increment thereon and assets as aforesaid, less assets withdrawn as aforesaid.
3. INVESTMENT POWERS
A. Subject to the provisions of paragraph B of this Section 3, the
Sub-Adviser shall have exclusive authority and discretion, subject to and
consistent with the investment objectives and policies of the Investment Fund as
set forth in the current Prospectus of the Trust delivered to the Sub-Adviser
("Prospectus") and as specified in writing from time to time by the Trustees or
the Manager and accepted by the Sub-Adviser, to manage (including the power to
acquire and dispose of) the assets of the Account, and, without limiting the
generality of the foregoing, to direct the Trustees in the exercise of the
powers relating to the Account which are specified in the Agreement and
Declaration of Trust as subject to such direction.
B. Notwithstanding the provisions of paragraph A of this Section 3,
it is understood and agreed that an investment manager other than the
Sub-Adviser may lend securities from the Account and may invest assets of the
Account on a temporary basis pending permanent investment or distribution, and,
to the extent not inconsistent with ERISA, the Sub-
-2-
<PAGE>
Adviser shall have no liability or responsibility with respect to the exercise
of such authority by such other investment manager; provided, however, that the
Sub-Adviser shall coordinate the exercise of its authority hereunder which may
be affected by the exercise of such authority by the other investment manager in
such manner appropriate to the exercise of its authority as shall be agreed upon
by the Sub-Adviser and such other investment manager. The Trustees will advise
the Manager, and the Manager will advise the Sub-Adviser, of any arrangement
with respect to any proposed lending of securities from the Account.
C. The Sub-Adviser shall consult with the Manager or the Trustees at
such times as the Manager or the Trustees shall reasonably request with respect
to the overall investment policy of the Account.
4. STANDARD OF CARE
A. The Sub-Adviser shall invest the assets of the Account in the
manner provided herein and shall have no duty or responsibility with respect to
the diversification of the assets of the Trust, except with respect to the
diversification of the assets of the Account as contemplated by the Prospectus.
B. Except as provided in ERISA, the Sub-Adviser will be under no
liability or obligation to anyone with respect to any failure on the part of the
Manager or any other investment manager to perform any of their obligations
under any agreement affecting the Account or under the terms of this Agreement
or for any error or omission whatsoever on the part of the Manager or any other
investment manager.
C. The Sub-Adviser shall not be liable for the making, retention or
sale of any investment or reinvestment made by it as herein provided, nor for
any loss to or diminution of the value of the property of the Account; provided,
however, that the Sub-Adviser has acted in the premises with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in like capacity and familiar with such matters would use in the
conduct of any enterprise of a like character and with like aims and in
accordance with such other requirements of ERISA as applicable generally to
fiduciaries under ERISA; provided, further, however, that nothing in this
Agreement shall protect the Sub-Adviser against any liability to the Manager,
the Trust or Unitholders to which the Sub-Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or gross negligence in the performance
of its duties hereunder or by reason of its reckless disregard of its
obligations and duties hereunder.
5. GENERAL PROVISIONS
A. Compensation for the services of the Sub-Adviser will be as set
forth in Schedule A hereto.
B. With respect to securities in the Account, the Sub-Adviser shall
purchase such securities from or through and sell such securities to or through
such persons, brokers or dealers as the Sub-Adviser shall deem appropriate to
carry out the policy with respect to brokerage as set forth in the Prospectus or
as the Manager or the Trustees of the Trust may direct from time to time. It is
understood that it is desirable for the Trust that the Sub-Adviser have
-3-
<PAGE>
access to supplemental research and security and economic analysis and
statistical services and information with respect to the availability of
securities or purchasers or sellers of securities provided by brokers and of use
to the Trust although such access may require the allocation of brokerage
business to brokers who execute transactions at a higher cost to the Trust than
other brokers who provide only execution of portfolio transactions. Therefore,
the Sub-Adviser is authorized to place orders for the purchase and sale of
securities with such brokers, subject to review by the Manager from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to the Sub-Adviser in
connection with its services to other clients.
C. This Agreement shall automatically terminate in the event of its
"assignment" (as that term is defined in the Act).
D. This Agreement may be terminated, without the payment of any
penalty, by either party hereto or by the Trust on not more than sixty (60)
days' nor less than thirty (30) days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party; any such termination on
behalf of the Trust to be pursuant to a vote of the Trustees or by a vote of a
majority of the outstanding voting securities of the Trust.
E. The Sub-Adviser may rely on the authenticity, truth and accuracy
of, and will be fully protected in acting upon:
(a) Any notice, direction, certification, approval or other writing
of the Manager, if evidenced by an instrument signed by the
President, a Vice President, the Treasurer or the Assistant
Treasurer of the Manager;
(b) Any copy of a resolution of the Trustees, if certified by the
Secretary of the Trust;
(c) Any notification or information provided by the custodian of the
assets in the Account, if evidenced by an instrument signed by an
officer of the custodian;
(d) Any oral notice or instruction reasonably believed to be genuine
and to be given by the Manager or the Trustees or its or their
authorized delegate or by the custodian or any other investment
manager.
F. The Sub-Adviser may rely on, and will be fully protected with
respect to any action taken or omitted in reliance on, any information,
statement or certificate delivered to the Sub-Adviser by the Manager or the
Trustees with respect to any matter concerning the Trust and the operation and
administration of the Account. The Sub-Adviser is expressly authorized to
consult with the Manager with respect to any matters arising in the
administration of the Account and to act on the advice of the Manager, provided
nothing herein shall limit the full responsibility of the Sub-Adviser for the
management of the assets of the Account as provided herein.
G. Communications from the Sub-Adviser to the Manager shall be
addressed to:
-4-
<PAGE>
Retirement System Investors Inc.
317 Madison Avenue
New York, New York 10017-5397
Attn.: President
Communications to the Sub-Adviser from the Manager or the Trustees shall be
addressed to the address set forth in Schedule A hereto. In the event of a
change of address, communications shall be addressed to such new address as
designated in a written notice from the Manager, the Trustees or the
Sub-Adviser, as the case may be. All communications addressed in the above
manner and by ordinary mail, registered mail or delivered by hand shall be
sufficient under this Agreement.
H. All agreements hereunder will be governed by the laws of the
State of New York, without reference to such State's conflict of law rules.
I. No term or provision of this Agreement may be amended, modified
or waived without the affirmative vote or action by written consent of the
Trustees and the written agreement of the Manager and the Sub-Adviser and in
accordance with the Act.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have executed this
Agreement, effective as of the date of this Agreement first set forth above.
RETIREMENT SYSTEM INVESTORS INC.
By
-----------------------------
President
HLM MANAGEMENT COMPANY INC.
By
-----------------------------
Title
-----------------------------
-5-
<PAGE>
SCHEDULE A
RSI RETIREMENT TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
Name of Sub-Adviser: HLM Management Company, Inc.
Address: 222 Berkeley Street
Boston, Massachusetts 02166
Attention: Mr. James J. Mahoney, Jr.
Investment Fund: Emerging Growth Equity Fund
Compensation Terms:
Terms used herein shall have the meaning used in the Investment Sub-Advisory
Agreement between the Manager and the Sub-Adviser ("Agreement"). The Manager
agrees to pay to the Sub-Adviser, as full compensation and reimbursement for the
services to be rendered pursuant to the Agreement and any expenses incurred in
connection therewith, a fee at the end of each fiscal quarter of the Trust,
computed by applying the following rate to that portion of the assets of the RSI
Retirement Trust's Emerging Growth Equity Fund portfolio managed by the
Sub-Adviser:
Effective April 1, 1997, 1% of the first $25 million of
assets and .75% of assets in excess of $25 million,
modified, effective July 29, 1997, to 1% of the first $25
million of assets, .80% of the next $25 million of assets,
and .60% of assets in excess of $50 million.
Billing is done for each quarter on the basis of services performed during that
particular quarter. The quarterly fee is calculated on the basis of the average
of the asset value as of the last day of each month of each calendar quarter,
equal to one-fourth of the annual rate.
If the Agreement commences on a date other than on the beginning of any such
quarterly period or terminates on a date other than the end of any such
quarterly period, the fee payable hereunder shall be proportionately reduced
according to the number of days during such period services were rendered by the
Sub-Adviser.
<PAGE>
IN WITNESS WHEREOF, the parties to the Agreement, effective as of April 1, 1997
and modified effective as of July 29, 1997, have executed this Schedule A,
effective as of the same dates.
RETIREMENT SYSTEM INVESTORS INC.
BY:
-------------------------------
President
HLM MANAGEMENT COMPANY, INC.
BY:
-------------------------------
TITLE:
-----------------------------
<PAGE>
EXHIBIT C
RSI RETIREMENT TRUST
RETIREMENT SYSTEM INVESTORS INC.
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT made as of July 29, 1997, between RSI Retirement Trust (the
"Trust"), a retirement fund organized and existing as a trust pursuant to a
certain Agreement and Declaration of Trust, as amended and restated August 1,
1990 and as further amended from time to time (the "Agreement and Declaration of
Trust"), and Retirement System Investors Inc., a Delaware corporation (the
"Manager").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is an investment trust exempt from taxation under
Section 501(a) of the Internal Revenue Code of 1986, as amended (the "Code"),
which has been designed to effectuate pension or profit-sharing plans which are
qualified under Section 401(a) of the Code and individual retirement accounts
under Section 408(a) of the Code; and
WHEREAS, such pension and profit-sharing plans are eligible to invest
their assets in the Trust, and to become unitholders of the Trust (the
"Unitholders"); and
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, pursuant to an Investment Management Agreement dated August
1, 1993, the Manager has served as the investment manager for all of the
investment funds of the Trust (the "Investment Funds"); and
WHEREAS, the Trust wishes to continue the Manager to continue as the
investment manager of the assets of each of the Investment Funds (the
"Account"), with a modification to the terms and conditions under which the
Manager serves as investment manager of the assets comprising the Emerging
Growth Equity Fund, to act in such capacity in the manner set forth in this
Agreement, and the Manager is willing to act in such capacity in accordance with
the provisions of this Agreement;
NOW, THEREFORE, the Trust hereby agrees with the Manager as follows:
1. APPOINTMENT OF THE MANGER
A. The Trust hereby designates, appoints, engages and retains the
Manager as investment manager of the Account.
B. The Manager hereby accepts appointment as investment manager to
manage the Account. The Manager hereby represents and warrants that it is a
qualified investment adviser under the Investment Advisers Act of 1940, as
amended. The Manager agrees that, although it may not be subject to the
provisions of Title 1 of the Employee
<PAGE>
Retirement Income Security Act of 1974, and amended ("ERISA"), in carrying out
its duties and responsibilities under this Agreement , it will conduct itself as
an investment manager (as defined in Section 3(38) of ERISA), and it will act in
accordance with the requirements of Part 4 of ERISA as applicable to fiduciaries
(as defined in Section 3(21) of ERISA). Notwithstanding anything contained
herein to the contrary, references to ERISA in this Agreement will be deemed to
contemplate all judicial or administrative interpretations and all statutory and
administrative exemptions which would be applicable in the circumstances and to
the parties in question were this Agreement and the Manager subject to ERISA.
C. The Manager will also perform such services as may be requested
from time to time by the Trust relating to the allocation of a Plan's assets
between equities and fixed income obligations and within specified investment
funds of the Trust, at no additional charge to the Trust.
D. Notwithstanding the foregoing, the Manager may, from time to time
subject to the approval of the Trust's Board of Trustees (the "Trustees") and
the Unitholders, retain a person or persons (a "Sub-Adviser") to provide
investment management services to one or more of the Investment Funds. The
Sub-Adviser shall agree to comply with all provisions applicable to the Manager
hereunder. If the Manager retains a Sub-Adviser, the Trust will have no
responsibility to compensate the Sub-Adviser, any such compensation to be paid
by the Manager from the amount paid to it pursuant to Section 5 of the
Agreement.
E. This Agreement is effective on the date hereof. This Agreement
will remain in full force and effect until July 29, 1999, unless terminated
earlier in accordance with its terms, and thereafter from year to year provided
that such continuance is specifically approved in the manner required by the
Act.
2. ASSETS OF THE ACCOUNT
The Trust will certify or cause to be certified to the Manager the
assets comprising the Account as of the commencement of the term of this
Agreement. The Trust may add to the Account assets acceptable to the Manager or
withdraw assets from the Account at any time or from time to time by written
notification to the Manager. The Account will consist of the assets certified
to the Manager as aforesaid, or any assets into which the same may be converted
form time to time, together with any income therefrom or any other increment
thereon, and assets added as aforesaid, less assets withdrawn as aforesaid.
3. INVESTMENT POWERS
A. Subject to the provisions of paragraphs B and C of this Section
3, the Manager will have sole and complete authority and discretion, subject to
and consistent with the investment objectives and policies of the Investment
Funds as set forth in the prospectus of the Trust (the "Prospectus"), the
Agreement and Declaration of Trust, the Rules and Procedures of the Trust and
the Trust's Statement of Investment Objectives and Guidelines, as the same may
be amended from time to time, all as delivered to the Manager (collectively, the
"Controlling Documents"), or as specified in writing form time to time by the
Trust or otherwise accepted by the Manager, to manage (including the power to
acquire and dispose of ) the assets of the
2
<PAGE>
Account and, without limiting the generality of the foregoing, to direct the
Trustees in the exercise of the powers relating to the Account which are
specified in the Controlling Documents, and, subject to such direction.
B. The manager will also perform supervisory services pertaining to
the ongoing oversight and management of each Sub-Advisor retained by the
Manager. Such services include, but shall not be limited to, supervising the
compliance by such Sub-Adviser with the Act, reviewing such Sub-Adviser's
performance, analysis of the composition of such Sub-Adviser's portfolio, and
preparing reports relating to such supervisory activities for the Trustees. In
addition, the Manager will, at the request of the Trustees, conduct a search to
find a recommended replacement for any Sub-Adviser. The Manager will prepare
presentations to Unitholders analyzing the Trust's overall performance based on
analysis of each Sub-Adviser's performance.
C. The Manager will consult with the Trustees and their
representatives at such times as the Trustees may reasonably request with
respect to the overall investment policy of the Account, and the Manager will
cause one or more of its officers to attend such meetings with the Trustees and
their representatives and to furnish such oral or written reports to the
Trustees and their representatives, as the Trustees may reasonably request, with
respect to , among other matters, the decisions it has made with respect to the
Account and the purchase and sale of its portfolio securities (including the
reasons therefor) and the extent to which such decisions have been implemented.
In addition, the Manager also specifically agrees to (i) give advance notice in
writing to the Trustees of the taking on by the Manager of new clients or
ventures of material significance, including any related information required in
order to enable the Trustees to determine whether the taking on of new business
by the Manager will impair the Manager's ability to carry out its obligations
under this Agreement and (ii) provide to the Trustees such reports and other
information as the Trustees may reasonably request in order to enable the
Trustees to perform a review of the Manager's performance under this Agreement
no less frequently than quarterly.
4. STANDARD OF CARE
A. The Manager will invest the Account in the manner provided herein
and will have no duty or responsibility with respect to the diversification of
the assets of the Trust, except with respect to the diversification of the
Account as contemplated by the Prospectus.
B. Except as provided in ERISA, the Manager will be under no
liability or obligation to anyone with respect to any failure on the part of the
Trustees or any other investment manager to perform any of their obligations
under the Controlling Documents or any agreement affecting the Account, or under
the terms of this Agreement, or for any error or omission whatsoever on the part
of the Trustees or any other investment manager.
C. The Manager will not be liable for the making, retention or sale
of any investment or reinvestment by it as herein provided, nor for any loss to
or diminution of the value of the Account; PROVIDED, however, that the Manager
has acted in the premises with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent man acting in like capacity and
familiar with such matters would use in the conduct of any enterprise
3
<PAGE>
of a like character and with like aims, and in accordance with such other
requirements of ERISA as are applicable generally to fiduciaries under ERISA;
PROVIDED further, however that nothing in this Agreement will protect the
Manager against any liability to the Trust or the Unitholders to which the
Manager would otherwise be subject by reason of willful misfeasance, bad faith
or gross negligence in the performance of its duties hereunder or by reason of
its reckless disregard of its obligations and duties hereunder.
5. COMPENSATION
A. The Trust agrees to pay to the Manager, as full compensation and
reimbursement for the services to be rendered by the Manager pursuant to this
Agreement and any expenses incurred by the Manager in connection therewith
(including the fees of a Sub-Adviser, if any), a fee on the last day of each
month in which this Agreement is in effect, at the rates set forth on Schedule I
attached hereto.
B. In the event that this Agreement commences on a date other than
on the beginning of any calendar month, or if this Agreement terminates on a
date other than the end of any calendar month, the fee payable hereunder by the
Trust shall be proportionately reduced according to the number of days during
such month that services were not rendered hereunder by the Manager.
6. GENERAL PROVISIONS
A. With respect to securities in the Account, the Manager will
purchase such securities from or through and sell such securities to or through
such persons, brokers or dealers as the Manager shall deem appropriate to carry
out the policy with respect to brokerage as set forth in the Prospectus, or as
the Trust may direct in writing from time to time. It is understood that it is
desirable for the Trust that the Manager have access to supplemental research
and securities and economic analysis and statistical services and information
with respect to the availability of securities or purchasers or sellers of
securities provided by brokers and of use to the Trust although such access may
require the allocation of brokerage business to brokers who execute transactions
at a higher cost to the Trust that other brokers which provide only execution of
portfolio transactions. Therefore, the Manager is authorized to place orders
for the purchase and sale of securities with such brokers, subject to review by
the Trustees from time to time with respect to the extent and continuation of
this practice. It is understood that the services provided by such brokers may
be useful to the Manager in connection with its services to clients other than
the Trust and the Unitholders.
B. The Manager will pay all of its expenses incurred in the
performance of this Agreement, including but not limited to fees, if any, of
Sub-Advisers retained by the Manager, salaries and other compensation of its
officers and employees and all other costs of providing such advice, portfolio
management and information and reports to the Trustees as are required
hereunder.
C. Subject to the provision of paragraph B of Section 6 of this
Agreement with respect to advance notice of the Manager's taking on of new
clients or ventures of material significance, nothing herein contained shall
limit or restrict the right of the Manager to engage in
4
<PAGE>
any other business or to render services of any kind to any other corporation,
firm, individual or association.
D. This Agreement may be terminated, without the payment of any
penalty, by either party hereto on not more than sixty (60) days' nor less than
thirty (30) days' written notice to the other party. Any termination by the
Trust shall be pursuant to a vote of a majority of the Trustees or by vote of a
majority of outstanding voting securities (as defined in the Act) of the Trust.
E. This Agreement will automatically terminate in the event of its
"assignment" (as such term is defined in the Act).
F. The Manager may rely on the authenticity, truth and accuracy of,
and will be fully protected in acting upon:
(i) any notice, direction, certification, approval or other
writing of the Trust, if evidenced by an instrument signed
by the Chairman of the Board or any other Trustee of the
Trust or the President, any Executive Vice President,
Senior Vice President, any Vice President or the Treasurer
of the Trust;
(ii) any copy of a resolution of the Trustees, if certified by
the Chairman of the Board or any other Trustee of the
Trust, or the Secretary or any Assistant Secretary of the
Trust; and
(iii) any notification or information provided by the custodian
of the assets in the Account, if evidenced by an
instrument signed by an officer of the custodian.
G. The Manager may rely on, and will be fully protected with respect
to any action taken or omitted in reliance on, any information, statement or
certificate provided or delivered to the Manager by or on behalf of the Trust
with respect to any matter concerning the Trust and the operation and
administration of the Account. The Manager is expressly authorized to consult
with the Trust with respect to any matters arising in the administration of the
Account and to act on the advice of the Trust; PROVIDED, however, that nothing
herein shall limit the full responsibility of the Manager for the management of
the Account as provided herein.
H. Communications from the Manager to the Trust or Trustees will be
addressed to:
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
ATTENTION: William Dannecker, President and Trustee
5
<PAGE>
Communications to the Manager from the Trust or the Trustees will
be addressed to :
Retirement System Investors Inc.
317 Madison Avenue
New York, New York 10017
ATTENTION: James P. Coughlin, President
In the event of a change of address, communications will be addressed to
such new address as designated in a written notice from the Trust, the Trustees
or the Manager, as the case may be. All communications addressed in the above
manner and by registered mail or delivered by hand shall be sufficient under
this Agreement.
I. This Agreement is governed by the laws of the State of New York
(without reference to such State's conflict of law rules).
J. No term or provision of this Agreement may be amended, modified
or waived without the affirmative vote or action by written consent of the
Manager and the Trust and in accordance with the Act.
IN WITNESS WHEREOF, the Manager and the Trust have executed this Agreement
as of the date first written above.
RSI RETIREMENT TRUST
By:
---------------------------------
Name: William Dannecker
Title: President and Trustee
RETIREMENT SYSTEM INVESTORS INC.
By:
---------------------------------
Name: James P. Coughlin
Title: President
NOTE: ANY AGREEMENT, OBLIGATION OR LIABILITY MADE, ENTERED
INTO OR INCURRED BY OR ON BEHALF OF RSI RETIREMENT
TRUST BINDS ONLY THE TRUST ESTATE, AND NO TRUST
PARTICIPANT, TRUSTEE, OFFICER OR AGENT THEREOF
ASSUMES OR SHALL BE HELD TO ANY LIABILITY THEREFOR.
6
<PAGE>
SCHEDULE I
Retirement System Investors Inc. shall act as the Manager for each of
the Investment Funds of the Trust. For its services, the Manager is entitled to
receive a fee, calculated daily and paid monthly, based on a percentage of the
average net assets of the respective Investment Funds, The specific percentage
for each Investment Fund is set forth in the following table:
Fee (% of Average Daily Net Assets)
Actively Managed Bond Fund
First $50 Million .40%
Next $100 Million .30
Over $150 Million .20
Intermediate-Term Bond Fund
First $50 Million .40%
Next $150 Million .30
Over $200 Million .20
Short-Term Investment Fund
First $50 Million .25%
Over $50 Million .20
Dedicated Bond Fund
First $5 Million .25%
Next $15 Million .20
Over $20 Million .15
Core Equity Fund
First $50 Million .60%
Next $150 Million .50
Over $200 Million .40
7
<PAGE>
Value Equity Fund
First $10 Million .80%
Next $10 Million .70
Next $20 Million .60
Next $20 Million .50
Next $40 Million .40
Next $50 Million .35
Over $150 Million .30
International Equity Fund
First $50 Million .80%
Over $50 Million .70
For the portion of the Emerging Growth Equity Fund, for which Friess
Associates, Inc. currently serves as Sub-Adviser, the fee is 1.20% of average
daily net assets. For the portion of the Emerging Growth Equity Fund for which
HLM Management Company Inc. serves as sub-Adviser, the fee will be 1.20% of the
average daily net assets under their management up to and including $25 million
and .95% of average daily net assets under their management for amounts in
excess of $25 million, modified, effective July 29, 1997, 10 1.20% of the
average daily net assets under their management up to and including $25 million,
1.00% of average daily net assets for the next $25 million of net assets, and
.80% of average daily net assets under their management for amounts in excess of
$50 million.
8
<PAGE>
Draft: 6/19/97
RSI RETIREMENT TRUST
-------------------
PROXY
THIS PROXY IS BEING SOLICITED ON BEHALF OF THE BOARD OF TRUSTEES OF RSI
RETIREMENT TRUST ("TRUST").
The undersigned Trust Participant of the Trust hereby acknowledges
receipt of the Notice of Annual Meeting of Trust Participants to be held on
July 29, 1997 and the Proxy Statement attached thereto, and does hereby
appoint John F. Meuser and Stephen P. Pollak and each of them, the true and
lawful attorney or attorneys, proxy or proxies, of the undersigned, with
power of substitution, for and in the name of the undersigned to attend and
vote as proxy or proxies of the undersigned the number of Units and
fractional Units of beneficial interest the undersigned would be entitled to
vote if then personally present at the Annual Meeting of Trust Participants
of the Trust, to be held at the Trust's offices, 317 Madison Avenue, New
York, New York, on July 29, 1997, at 10:30 A.M. (E.D.T.), or any adjournment
or adjournments thereof, as follows:
(1) Election of five (5) Trustees for a term of three (3) years and until
their respective successors are duly elected and qualified:
Nominees: Herbert G. Chorbajian
James P. Cronin
Ralph L. Hodgkins, Jr.
William L. Schrauth
William E. Swan
/ / FOR all nominees listed above (except as marked to the contrary
below).
/ / WITHHOLD AUTHORITY to vote for all nominees listed above.
Instruction: To withhold authority to vote for any individual nominee,
write the nominee's name in the space provided below.
--------------------------------------------------------------
--------------------------------------------------------------
(2) Selection of McGladrey & Pullen as the Trust's independent
accountants.
/ / FOR / / AGAINST / / ABSTAIN
<PAGE>
(continued on other side)
(3) EMERGING GROWTH EQUITY FUND UNITHOLDERS ONLY
With respect to the approval of (a) the new investment sub-advisory
agreement, between Retirement System Investors Inc. and HLM Management
Company, Inc. with respect to a portion of the Emerging Growth Equity
Fund; and (b) the new management agreement, effective ______, between
Trust and Retirement System Investors Inc.
/ / FOR / / AGAINST / / ABSTAIN
(4) Upon all other matters which shall properly come before the meeting.
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE
PROXY WILL BE VOTED FOR THE ELECTION OF THE NOMINEES AS TRUSTEES, FOR THE
SELECTION OF MCGLADREY & PULLEN, FOR THE APPROVAL OF THE INVESTMENT
SUB-ADVISORY AGREEMENT WITH HLM MANAGEMENT COMPANY, INC., AND THE INVESTMENT
AGREEMENT WITH RETIREMENT SYSTEM INVESTORS INC., AND, AS TO ANY OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING, THE PROXY WILL BE VOTED IN THE
DISCRETION AND ACCORDING TO THE BEST JUDGEMENT OF THE PROXIES.
Either of such proxies or attorneys, or substitutes, as shall be present
and act at said meeting, or at any and all adjournment or adjournments thereof,
may exercise all the powers of both said proxies or attorneys.
The undersigned is entitled to vote the number of Units of the Trust and
the number of Units of each Investment Fund, as indicated on the attached
Statement of Units. *
------------------------------------------- -----------
(Print Name of Trust Participant) Account no.
-------------------------------------------
(Designated Plan Unitholder, if applicable)
By: Dated: , 1997
-------------------------------------------- ----------
(Signature of individual unitholder, or person,
officer or committee duly designated by Trust
Participant)
* Please sign and date the Proxy. Return one copy of the attached
Statement of Units with the Proxy in the stamped, self-addressed
envelope provided, and keep the other copy for your records.
(2)
