RSI RETIREMENT TRUST, 485BPOS, 1998-11-30

RSI RETIREMENT TRUST
485BPOS, 1998-11-30

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<PAGE>

As Filed with the Securities and Exchange Commission on November 30, 1998
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. 17 /xx/
--

and/or

REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940 /xx/
--

Amendment No. 19 /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: (212) 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.
Swidler Berlin Shereff Friedman, LLP
919 Third Avenue
New York, New York 10022
--------------------------------

It is proposed that this filing will become effective (check appropriate box):

immediately upon filing pursuant to paragraph (b)
- ---

xx on December 30, 1998 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>

CROSS REFERENCE SHEET
<TABLE>
<CAPTION>

N-1A Item No. Location (Caption)
- ------------- ------------------
<S> <C> <C>
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 . . . . . . . . Not Applicable
of Fund Performance

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

2
<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

3
<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

</TABLE>

Part C
- ------

Information required to be included in Part C is set forth under the
appropriate Item, so numbered, in Part C to this Post-Effective Amendment to
this Registration Statement.

<PAGE>

PROSPECTUS

[LOGO]

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

January 1, 1999

1999

BROKER/DEALER

RETIREMENT SYSTEM
Distributors Inc.

317 Madison Ave.
New York, N.Y. 10017-5397

<PAGE>
TABLE OF CONTENTS

Introduction....................................................1
Fee Table.......................................................2
Financial Highlights............................................3
Prospectus Summary.............................................10
The Fund.......................................................11
Participants in the Fund.......................................11
Investment Objectives and Policies.............................12
Core Equity Fund.............................................13
Value Equity Fund............................................14
Emerging Growth Equity Fund..................................14
International Equity Fund....................................16
Actively Managed Bond Fund...................................17
Intermediate-Term Bond Fund..................................20
Short-Term Investment Fund...................................22
Other Investment Policies and Risk Considerations............25
Investment Restrictions........................................32
Investments in the Fund........................................33
Full Participating Trusts....................................33
Participating Trusts of Eligible Employers other than Full
Participating Trusts........................................35
Individual Retirement Accounts (IRAs)........................36
General......................................................36
Withdrawals and Exchanges......................................37
Withdrawals from Investment Funds (Redemptions)..............37
Exchanges....................................................38
Valuation of Units.............................................39
Distributions and Taxes........................................41
Administration of the Fund.....................................41
General......................................................41
Information Regarding Trustees...............................42
The Service Agreement........................................44
Distribution Agreement.......................................46
Investment Managers............................................46
General Information............................................50
Year 2000....................................................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

[LOGO]
IS A REGISTERED TRADEMARK OF RETIREMENT SYSTEM GROUP INC.
<PAGE>

PROSPECTUS
DATED JANUARY 1, 1999
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 seven 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 including Roth IRAs as defined in Code
Section 408A ("Individual Retirement Accounts"). Individual
Retirement Accountholders are individuals for whom a
Traditional or Roth Individual Retirement Account ("IRA") has
been established.

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 November 30,
1998, ("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. The Commission maintains a web site
(http://www.sec.gov) that contains the Statement of Additional
Information, material incorporated by reference and other
information regarding the Fund.

THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION NOR HAS THE 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 1998 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
FUND FUND EQUITY FUND EQUITY FUND BOND FUND FUND FUND
------- ------- ----------- ----------- --------- --------- -----------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
I. SHAREHOLDER TRANSACTION
EXPENSES
Sales Load on Purchases... None None None None None None None
Sales Load on Reinvested
Dividends................. None None None None None None None
Deferred Sales Load....... None None None None None None None
Redemption Fees........... None None None None None None None
Exchange Fees............. None None None None None None None
II. ANNUAL FUND OPERATING
EXPENSES
(as a percentage of
average net assets)
Management Fees........... .52% .40% 1.19% .80% .33% .38% .25%
Other Expenses (after fee
waivers).................. .47% .71% .75% (1.15)% .52% .72% .55%+
Total Annual Fund
Operating Expenses........ .99% 1.11% 1.94% 1.94% .85% 1.10% .80%+
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...................... $10.10 $11.32 $19.70 $19.70 $8.68 $11.21 $8.17
3 years..................... $31.54 $35.30 $60.95 $60.95 $27.14 $34.98 $25.55
5 years..................... $54.77 $61.23 $104.89 $104.89 $47.19 $60.69 $44.45
10 years.................... $121.97 $135.98 $228.36 $228.36 $105.41 $134.80 $99.43
</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 unit
records, furnishing unitholder statements and reports and
other services. SEE, "Administration of the Fund -- The
Service Agreement" for further information, including
information regarding certain changes to the fees paid in
connection with the Service Agreement, which changes go
into effect January 1, 1999. 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 "Financial
Highlights" for each Investment Fund's past performance.

* Current fees have been restated to reflect the level of
operating expenses in effect during the 1999 fiscal year.

+ "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
1.05% of average net assets and total annual fund operating
expenses for this Investment Fund would be 1.30%.

2
<PAGE>
FINANCIAL HIGHLIGHTS:

The following information for the years ended September 30,
1992, 1993, 1994, 1995, 1996, 1997 and 1998 has been audited
by McGladrey & Pullen, LLP, independent auditors, whose report
thereon, which is incorporated by reference, appears in the
Fund's 1998 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 1998 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
9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<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............... $ 76.11 $ 56.57 $ 46.71 $ 35.57 $ 34.49 $ 30.09 $ 27.68 $ 23.15 $ 24.41 $ 18.34
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Income from
Investment
Operations:

Investment
income-- net..... 0.58 0.60 0.72 0.74 0.54 0.56 0.65 0.75 0.85 0.69

Net realized and
unrealized gain
(loss) on
investments...... 2.72 18.94 9.14 10.40 0.54 3.84 1.76 3.78 (1.90) 5.38
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Total from
Investment
Operations....... 3.30 19.54 9.86 11.14 1.08 4.40 2.41 4.53 (1.05) 6.07
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Less Distributions:

Net realized gain
on investments... -- -- -- -- -- -- -- -- (0.07) --

Paid-in capital... -- -- -- -- -- -- -- -- (0.14) --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Total
distributions.... -- -- -- -- -- -- -- -- (0.21) --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Net increase
(decrease)....... 3.30 19.54 9.86 11.14 1.08 4.40 2.41 4.53 (1.26) 6.07
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

Net Asset Value,
End of Year...... $ 79.41 $ 76.11 $ 56.57 $ 46.71 $ 35.57 $ 34.49 $ 30.09 $ 27.68 $ 23.15 $ 24.41
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

TOTAL RETURN.... 4.34% 34.54% 21.11% 31.32% 3.13% 14.62% 8.71% 19.57% (4.41)% 33.10%

RATIOS/SUPPLEMENTAL DATA

Ratios to Average
Net Assets:

Expenses**........ (0.94)% (0.90)% (0.92)% (0.98)% (1.01)% (0.99)% (0.95)% (0.94)% (0.64)% (0.49)%

Investment
income-- net..... 0.72% 0.92% 1.40% 1.86% 1.56% 1.74% 2.25% 2.88% 3.41% 3.29%

Portfolio Turnover
Rate............... 5.62% 5.68% 9.95% 7.91% 6.47% 13.41% 18.94% 18.88% 10.71% 21.51%

Net Assets at End of
Year ($1,000's).... $176,367 $212,273 $217,356 $189,942 $141,544 $146,137 $134,269 $158,578 $136,539 $134,572
</TABLE>

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

* Using average units basis.

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
9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<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........................... $ 57.36 $ 39.67 $ 32.63 $ 27.05 $ 26.48 $ 22.94 $ 21.48 $ 15.89 $ 21.11 $ 16.94
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income-- net....... 0.57 0.60 0.72 0.93 0.79 0.70 0.52 0.45 0.38 0.46
Net realized and unrealized
gain (loss) on investments... (1.66) 17.09 6.32 4.65 (0.22) 2.84 0.94 5.14 (5.44) 3.71
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... (1.09) 17.69 7.04 5.58 0.57 3.54 1.46 5.59 (5.06) 4.17
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- -- -- (0.05) --
Paid-in capital............... -- -- -- -- -- -- -- -- (0.11) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- -- -- (0.16) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)....... (1.09) 17.69 7.04 5.58 0.57 3.54 1.46 5.59 (5.22) 4.17
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 56.27 $ 57.36 $ 39.67 $ 32.63 $ 27.05 $ 26.48 $ 22.94 $ 21.48 $ 15.89 $ 21.11
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------

TOTAL RETURN.................. (1.90)% 44.59% 21.58% 20.63% 2.15% 15.43% 6.80% 35.18% (24.13)% 24.62%

RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (1.11)% (1.20)% (1.20)% (1.32)% (1.41)% (1.70)% (1.55)% (1.56)% (1.74)% (1.37)%
Investment income-- net....... 0.93% 1.26% 1.98% 3.24% 3.02% 2.83% 2.32% 2.30% 1.98% 2.44%
Portfolio Turnover Rate......... 95.66% 99.25% 61.53% 67.06% 40.41% 54.46% 14.26% 23.55% 45.04% 46.51%
Net Assets at End of Year
($1,000's)..................... $63,931 $60,389 $52,231 $43,824 $35,603 $38,104 $33,417 $37,955 $30,636 $84,313
</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 Investment Funds 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, September 30, 1996, September 30, 1997 and
September 30, 1998.

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
9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<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........................... $ 84.47 $ 67.07 $ 52.58 $ 35.96 $ 35.52 $ 24.26 $ 23.34 $ 14.97 $ 19.36 $ 16.78
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income
(loss)--net.................. (0.90) (0.95) (0.90) (0.67) (0.57) (0.53) (0.35) (0.23) 0.01 0.22
Net realized and unrealized
gain (loss) on investments... (28.67) 18.35 15.39 17.29 1.01 11.79 1.27 8.60 (4.24) 2.36
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... (29.57) 17.40 14.49 16.62 0.44 11.26 0.92 8.37 (4.23) 2.58
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- -- -- (0.05) --
Paid-in capital............... -- -- -- -- -- -- -- -- (0.11) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- -- -- (0.16) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)....... (29.57) 17.40 14.49 16.62 0.44 11.26 0.92 8.37 (4.39) 2.58
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 54.90 $ 84.47 $ 67.07 $ 52.58 $ 35.96 $ 35.52 $ 24.26 $ 23.34 $ 14.97 $ 19.36
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
TOTAL RETURN................ (35.01)% 25.94% 27.56% 46.22% 1.24% 46.41% 3.94% 55.91% (22.06)% 15.38%

RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (1.94)% (1.98)% (1.91)% (2.12)% (2.08)% (2.27)% (2.18)% (2.27)% (2.46)% (1.76)%
Investment income
(loss)--net.................. (1.22)% (1.39)% (1.54)% (1.61)% (1.64)% (1.78)% (1.43)% (1.19)% 0.07% 1.23%
Portfolio Turnover Rate......... 204.41% 177.68% 150.40% 170.54% 114.15% 145.59% 135.45% 101.10% 167.90% 39.40%
Net Assets at End of Year
($1,000's)..................... $55,287 $91,589 $92,136 $74,625 $48,293 $56,645 $40,844 $46,283 $32,560 $50,026
</TABLE>

-------------------------------------
* Using average units basis.

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
9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<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......................... $ 51.09 $ 45.25 $ 40.25 $ 38.08 $ 34.36 $ 28.27 $ 29.26 $ 25.31 $ 30.03 $ 25.10
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income
(loss)--net................ (0.14) (0.14) (0.08) (0.02) (0.09) (0.21) (0.16) 0.15 (0.31) (0.15)
Net realized and unrealized
gain (loss) on
investments................ (5.51) 5.98 5.08 2.19 3.81 6.30 (0.83) 3.80 (4.16) 5.08
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................. (5.65) 5.84 5.00 2.17 3.72 6.09 (0.99) 3.95 (4.47) 4.93
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments................ -- -- -- -- -- -- -- -- (0.08) --
Paid-in capital............. -- -- -- -- -- -- -- -- (0.17) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions......... -- -- -- -- -- -- -- -- (0.25) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase (decrease)..... (5.65) 5.84 5.00 2.17 3.72 6.09 (0.99) 3.95 (4.72) 4.93
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year................ $ 45.44 $ 51.09 $ 45.25 $ 40.25 $ 38.08 $ 34.36 $ 28.27 $ 29.26 $ 25.31 $ 30.03
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------

TOTAL RETURN.............. (11.06)% 12.91% 12.42% 5.70% 10.83% 21.54% (3.38)% 15.61% (15.05)% 19.64%

RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................. (1.94)% (1.96)% (1.93)% (1.90)% (1.96)% (2.83)% (2.69)% (2.58)% (2.64)% (2.65)%
Investment income
(loss)--net................ (0.27)% (0.29)% (0.20)% (0.07)% (0.25)% (0.68)% (0.50)% 0.54% (1.06)% (0.54)%
Portfolio Turnover Rate....... 92.82% 61.87% 51.29% 51.40% 44.25% 55.02% 52.58% 65.55% 84.61% 103.55%
Net Assets at End of Year
($1,000's)................... $34,083 $35,276 $39,602 $31,143 $28,672 $21,769 $18,997 $22,677 $21,691 $29,249
</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 Investment Funds 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, September 30, 1996 September 30, 1997 and September
30, 1998.

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
9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
<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............... $ 33.89 $ 30.79 $ 29.58 $ 26.06 $ 27.43 $ 24.57 $ 21.74 $ 18.44 $ 17.72 $ 16.34
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Investment
income-- net..... 2.19 2.04 1.80 1.64 1.47 1.23 1.54 1.51 1.44 1.34
Net realized and
unrealized gain
(loss) on
investments...... 1.65 1.06 (0.59) 1.88 (2.84) 1.63 1.29 1.79 (0.57) 0.04
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total from
Investment
Operations....... 3.84 3.10 1.21 3.52 (1.37) 2.86 2.83 3.30 0.87 1.38
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Less Distributions:
Net realized gain
on investments... -- -- -- -- -- -- -- -- (0.05) --
Paid-in capital... -- -- -- -- -- -- -- -- (0.10) --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Total
distributions.... -- -- -- -- -- -- -- -- (0.15) --
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net increase
(decrease)....... 3.84 3.10 1.21 3.52 (1.37) 2.86 2.83 3.30 0.72 1.38
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
Net Asset Value,
End of Year...... $ 37.73 $ 33.89 $ 30.79 $ 29.58 $ 26.06 $ 27.43 $ 24.57 $ 21.74 $ 18.44 $ 17.72
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- -------- -------- -------- -------- --------

TOTAL RETURN.... 11.33% 10.07% 4.09% 13.51% (4.99)% 11.64% 13.02% 17.90% 4.88% 8.45%

RATIOS/SUPPLEMENTAL DATA
Ratios to Average
Net Assets:
Expenses**........ (0.81)% (0.81)% (0.80)% (0.84)% (0.82)% (0.87)% (0.84)% (0.84)% (0.83)% (0.85)%
Investment
income-- net..... 6.16% 6.32% 5.94% 5.94% 5.51% 5.22% 6.87% 7.56% 7.64% 7.80%
Portfolio Turnover
Rate............... 71.12% 69.29% 17.14% 18.21% 8.54% 170.16% 132.97% 125.32% 162.70% 1,078.25%
Net Assets at End of
Year ($1,000's).... $162,355 $147,139 $150,304 $140,127 $136,210 $146,918 $189,827 $197,573 $180,269 $136,674
</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 Investment Funds 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
9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
<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....... $ 31.55 $ 29.30 $ 28.01 $ 25.40 $ 25.95 $ 24.20 $ 21.72 $ 19.10 $ 17.73 $ 16.30
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Income from Investment
Operations:
Investment income--
net................... 1.93 1.78 1.74 1.66 1.46 1.48 1.55 1.46 1.44 1.47
Net realized and
unrealized gain (loss)
on investments........ 0.62 0.47 (0.45) 0.95 (2.01) 0.27 0.93 1.16 0.08 (0.04)
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Total from Investment
Operations............ 2.55 2.25 1.29 2.61 (0.55) 1.75 2.48 2.62 1.52 1.43
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Less Distributions:
Net realized gain on
investments........... -- -- -- -- -- -- -- -- (0.05) --
Paid-in capital........ -- -- -- -- -- -- -- -- (0.10) --
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Total distributions.... -- -- -- -- -- -- -- -- (0.15) --
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Net increase
(decrease)............ 2.55 2.25 1.29 2.61 (0.55) 1.75 2.48 2.62 (1.37) 1.43
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
Net Asset Value,
End of Year........... $ 34.10 $ 31.55 $ 29.30 $ 28.01 $ 25.40 $ 25.95 $ 24.20 $ 21.72 $ 19.10 $ 17.73
------- ------- ------- ------- ------- -------- -------- -------- -------- --------
------- ------- ------- ------- ------- -------- -------- -------- -------- --------

TOTAL RETURN......... 8.08% 7.68% 4.61% 10.28% (2.12)% 7.23% 11.42% 13.72% 8.58% 8.77%

RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net
Assets:
Expenses**............. (1.10)% (1.04)% (0.98)% (0.98)% (0.95)% (1.07)% (0.98)% (0.98)% (0.64)% (0.48)%
Investment income--
net................... 5.92% 5.86% 6.06% 6.27% 5.68% 5.95% 6.78% 7.21% 7.81% 8.65%
Portfolio Turnover
Rate.................... 107.30% 67.95% 13.20% 15.95% 17.92% 12.39% 24.86% 43.70% 20.56% 38.44%
Net Assets at End of Year
($1,000's).............. $59,718 $68,389 $74,754 $90,482 $89,780 $97,796 $117,107 $108,144 $111,544 $126,007
</TABLE>

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
9/30/98 9/30/97 9/30/96 9/30/95 9/30/94 9/30/93 9/30/92 9/30/91 9/30/90 9/30/89
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
<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........................... $ 21.23 $ 20.24 $ 19.31 $ 18.36 $ 17.83 $ 17.43 $ 16.80 $ 15.79 $ 14.69 $ 13.49
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Income from Investment
Operations:
Investment income-- net....... 1.06 0.97 0.94 0.93 0.53 0.43 0.64 0.99 1.14 1.19
Net realized and unrealized
gain (loss) on investments... 0.02 0.02 (0.01) 0.02 0.00 (0.03) (0.01) 0.02 0.09 0.01
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total from Investment
Operations................... 1.08 0.99 0.93 0.95 0.53 0.40 0.63 1.01 1.23 1.20
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Less Distributions:
Net realized gain on
investments.................. -- -- -- -- -- -- -- -- (0.04) --
Paid-in capital............... -- -- -- -- -- -- -- -- (0.09) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Total distributions........... -- -- -- -- -- -- -- -- (0.13) --
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net increase.................. 1.08 0.99 0.93 0.95 0.53 0.40 0.63 1.01 1.10 1.20
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
Net Asset Value,
End of Year.................. $ 22.31 $ 21.23 $ 20.24 $ 19.31 $ 18.36 $ 17.83 $ 17.43 $ 16.80 $ 15.79 $ 14.69
------- ------- ------- ------- ------- ------- ------- ------- ------- -------
------- ------- ------- ------- ------- ------- ------- ------- ------- -------

TOTAL RETURN................ 5.09% 4.89% 4.82% 5.17% 2.97% 2.29% 3.75% 6.40% 8.34% 8.90%

RATIOS/SUPPLEMENTAL DATA
Ratios to Average Net Assets:
Expenses**.................... (0.80)% (0.80)% (0.80)% (0.80)% (0.80)% (0.89)% (0.79)% (0.79)% (0.59)% (0.45)%
Investment income-- net....... 4.89% 4.67% 4.76% 4.94% 2.92% 2.43% 3.72% 6.06% 7.49% 8.41%
Decrease in above expense ratio
due to Fee waiver.............. 0.50% 0.45% 0.39% 0.34% 0.32% -- -- -- -- --
Net Assets at End of Year
($1,000's)..................... $32,385 $27,021 $25,668 $27,360 $29,975 $35,117 $34,911 $61,505 $62,481 $54,265
</TABLE>

-------------------------------------
* Using average units basis.

9
<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 seven 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
and Short-Term Investment 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 (as defined below under "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 including Roth IRAs as defined in Section
408A of the Code ("Individual Retirement Accounts").
Individual Retirement Accountholders are individuals for whom
an Individual Retirement Account ("IRA") has been established.

A Participating Trust (as defined below under
"Participants in the Fund") established by an Eligible
Employer through the adoption of the Fund's Agreement and
Declaration of Trust (as defined below under "The Fund") 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)".

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

10
<PAGE>
will be the net asset value per unit next 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". 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".

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

11
<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. 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 the 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(e)
of the 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 seven 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

12
<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 commenced operations on May 1, 1984.

The following sets forth the investment objectives and
policies particular to each of the Investment Funds. SEE,
"Investment Objectives and Policies -- Other Investment
Policies and Risk Considerations" for a discussion of
investment policies relating to the Investment Funds
generally.

CORE EQUITY FUND

The Core Equity Fund is a diversified fund that 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 and other equity-based securities, such as
securities convertible into common stocks, 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 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 and Risk Considerations -- Cash Equivalents" for the
definition of "cash equivalents"). Under normal market
conditions however, the Core Equity Fund will be fully
invested (E.G., at least 90% of total portfolio assets will be
invested in equity-based securities). 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 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.

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 Core Equity Fund. His
prior experience in the investment management business, as a
research analyst, portfolio manager and as a manager
responsible for determining investment policy, was with the
economic and investment counsel firm of Lionel Edie & Co.,
which for a time was a subsidiary of Merrill Lynch, Pierce,
Fenner & Smith Incorporated and eventually part of
Manufacturers Hanover Trust. 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).

13
<PAGE>
VALUE EQUITY FUND

The Value Equity Fund is a diversified fund that 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, 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 or price-to-book 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. When
purchased, such undervalued companies generally will have
price/earnings or other valuation ratios that are lower than
average relative to broad stock market indices (E.G., the
Standard & Poor's 500 Index) or generally accepted value
indices such as the Russell Value 1000 Index. In general, the
Value Equity Fund will invest in stocks of companies with a
market capitalization in excess of $750 million. Investments
are made primarily in common stocks and other equity-based
securities, such as securities convertible into common stocks,
warrants to purchase common stocks and American Depository
Receipts -- ADRs (U.S. traded dollar-denominated securities
that represent an interest in the shares of a foreign
company). A portion of the Value Equity Fund may be
temporarily held in cash equivalents not exceeding 25% of the
total assets of such Fund (SEE, "Investment Objectives and
Policies and Risk Considerations -- Other Investment Policies
-- Cash Equivalents" for the definition of "cash equivalents".
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.) Over time, the Value
Equity Fund has exhibited a lower degree of risk and price
volatility than the Emerging Growth Equity Fund and a slightly
higher degree of volatility than the Core Equity Fund.

The Value Equity Fund has been managed by Chris R.
Kaufman, Portfolio Manager, since July 1, 1995. Mr. Kaufman is
Vice President of Investors Inc. 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 Phi Beta Kappa, with honors 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) qualification.

EMERGING GROWTH EQUITY FUND

The Emerging Growth Equity Fund is a diversified fund that
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 total return
of the Lipper Small Company Growth 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

14
<PAGE>

(dividends and any interest income, net of operating
expenses). Emerging growth companies are those that are
expected by the Emerging Growth Equity 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; and small to
medium-sized companies (I.E., companies with 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 $2 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 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 and other equity-based
securities, such as securities convertible into common stocks,
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 (SEE, "Investment Objectives and
Policies -- Other Investment Policies and Risk Considerations
-- Cash Equivalents" for the definition of "cash
equivalents"). Under normal market conditions however, the
Emerging Growth Equity Fund will be fully invested (E.G., at
least 90% of total portfolio assets will be invested in
equity-based securities.) 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 the Value Equity Fund and may have a lower income return
than these funds.

Friess Associates Inc. ("Friess") has been a manager of
a portion of the Emerging Growth Equity Fund since January 1,
1990. Friess was organized in 1974 and is wholly owned by
Foster Friess and Lynnette E. Friess, who are directors and
the sole officers of Friess. Friess directs the purchase and
sale of investment securities in the day to day management of
its portion of the Emerging Growth Equity Fund. All investment
decisions for the Emerging Growth Equity Fund are made by
investment teams consisting of two or more analysts, and no
single person is responsible for making investment decisions.
HLM Management Company Inc. ("HLM") has been a manager of a
portion of the Emerging Growth Equity Fund since April 1,
1997. HLM 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., and by a
fourth principal, Peter J. Grua, who are all active, full-time
members of HLM. HLM 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 Emerging Growth Fund are made by an investment team
comprised of the three founding principals and two other HLM
principals, Peter J. Grua and Ann B. Hutchins. All five
principals must agree to add an investment security to the
Emerging Growth Equity Fund and any three principals must
agree to sell an investment security.

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INTERNATIONAL EQUITY FUND

The International Equity Fund is a diversified fund that 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 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, 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. 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
other than the United States. 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 United States companies
will normally be less than 10% of the International Equity
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 and Risk Considerations -- 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 (SEE, "Investment
Objectives and Policies -- Other Investment Policies -- Cash
Equivalents" for the definition of "cash equivalents"). Under
normal market conditions however, the International Equity
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 in
excess of $750 million. While investments in companies with a
market capitalization of less than $750 million is
permissible, such investments should normally not exceed 25%
of the International Equity Fund'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

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<PAGE>
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; Luxembourg; Netherlands; Norway; Portugal; Spain;
Sweden; Switzerland; India; Pakistan; Turkey; United Kingdom;
Jordan; Mexico; Argentina; Peru; Brazil; Chile and Venezuela.
The International Equity Fund sub-investment adviser will not
consider investments in any of these markets until the
adviser, the International Equity Fund custodian and fund
management are 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 "international 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.

Morgan Grenfell Investment Services Limited ("MGIS")
has been managing the International Equity Fund since May
1984. William G.M. Thomas, investment manager for the
International Equity Fund, has an honors degree from Queen's
University, Belfast, and joined MGIS in 1979 as a technology
analyst. Prior to MGIS, he spent 10 years with the Extel Group
developing sophisticated investment computer software for
international portfolio management firms including MGIS. At
MGIS, his work in global technology introduced him to Japan
and Japanese companies and in 1984 he joined the 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 that
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

17
<PAGE>

are sought through substantial periodic altering of the
structure (particularly the maturity structure) of the
portfolio. Such strategy requires that the investment manager
has 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 (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 Actively Managed Bond 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 "A" or better from
Moody's Investors Service, Inc., Standard & Poor's
Corporation, Fitch Investors Service, Inc. or another
nationally known rating service and other debt securities
(E.G., those 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. SEE, "Appendix" for an explanation
of the ratings. 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 such that investments are distributed among different
sectors or industries, with no more than 25% of the portfolio
invested in securities of any one sector of the corporate bond
market. The Actively Managed Bond 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 alternative investments. The market value
of a zero-coupon obligation is generally more volatile than
that of an interest-bearing obligation

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<PAGE>
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 Actively Managed Bond 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 Actively Managed Bond 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 Actively
Managed Bond 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 Actively
Managed Bond Fund's yield to maturity. If the underlying
mortgage assets experience greater than anticipated
prepayments of principal, the Actively Managed Bond 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 lower 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 generally must be 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 the 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 interest
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 and Risk Considerations -- Cash
Equivalents" for the definition of "cash equivalents".

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<PAGE>
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., First Vice President, and Deborah A. Modzelewski,
First Vice President, of Investors Inc., each of whom plays an
important role in the Actively Managed Bond Fund's management
process. They work closely together to develop investment
strategies and select securities for the Actively Managed Bond
Fund's portfolio. Mr. Kuhl has been co-manager of the Actively
Managed Bond Fund since August 1993, except during a period of
retirement between November 1995 and March 1996. Ms.
Modzelewski has been a co-manager since November 1995. Mr.
Kuhl 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 graduated
from 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 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 that
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 (one to five 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
Intermediate-Term Bond 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 attempts
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 managers' 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-Term 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

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<PAGE>

better by one of the above rating agencies and other debt
securities (E.G., those 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. 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 such that investments are distributed among different
sectors or industries, with no more than 25% of the portfolio
invested in securities of any one sector of the corporate bond
market.

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 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 Intermediate-Term Bond 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 Intermediate-Term Bond 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
Intermediate-Term Bond 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
Intermediate-Term Bond Fund's yield to maturity. If the
underlying mortgage assets experience greater than anticipated
prepayments of principal, the Intermediate-Term Bond 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 lower than anticipated.

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<PAGE>
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 and Risk Considerations -- 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.

The Intermediate-Term Bond Fund is co-managed by
Herbert Kuhl, Jr., First Vice President, and Deborah A.
Modzelewski, First Vice President, of Investors Inc., each of
whom plays an important role in the Intermediate-Term Bond
Fund's management process. They work closely together to
develop investment strategies and select securities for the
Intermediate-Term Bond Fund's portfolio. Mr. Kuhl has been
co-manager of the Intermediate-Term Bond 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 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 graduated from 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 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 is a diversified fund that
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 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,

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<PAGE>

"Investment Objectives and Policies -- Other Investment
Policies and Risk Considerations -- Repurchase Agreements" and
"Investment Objectives and Policies -- Other Investment
Policies and Risk Considerations -- 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 instrumentality of
the United States government are not direct obligations
of the United States Treasury. Such obligations 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, be of
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

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<PAGE>

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 to 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 Short-Term Investment 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.

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 (such as exchange controls)
may be adopted which might adversely affect the payment
of principal and interest on those obligations, 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 Short-Term Investment 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
payees, 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 until
maturity thereof. The corporate bonds, debentures and
notes purchased by the Short-Term

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<PAGE>

Investment Fund consist of bonds, debentures and notes
which are callable on demand or have a remaining
maturity of less than one year and 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., First Vice President, and Deborah A. Modzelewski,
First Vice President, of Investors Inc., each of whom plays an
important role in the Short-Term Investment Fund's management
process. They work closely together to develop investment
strategies and select securities for the Short-Term Investment
Fund's portfolio. Mr. Kuhl has been co-manager of the
Short-Term 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 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 graduated
from 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
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 and risks apply to all
Investment Funds unless otherwise noted.

SECURITIES SUBJECT TO RESALE RESTRICTIONS

No Investment Fund will 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

Each of the Core Equity Fund, Value Equity Fund and the
Emerging Growth Equity Fund, may invest up to 20% of the value
of its total assets in securities of foreign issuers. Each of
the Actively Managed Bond Fund, Intermediate-Term Bond Fund
and the Short-Term Investment Fund is limited to 10% of its
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

25
<PAGE>

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 foreign securities in the Investment
Funds. Such risks may also include risks associated with the
European Economic and Monetary Union ("EMU") as described
below. 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.

In an effort to, among other things, reduce barriers
between participating countries, increase competition among
companies and reduce or eliminate currency fluctuations among
such countries, certain European countries have agreed to
enter the EMU. the EMU, among other things, establishes the
"euro" as a single common European currency. The euro will be
introduced on January 1, 1999 and is expected to replace the
national currencies of all EMU participants by July 1, 2002.
Certain securities (beginning with government and corporate
bonds) will be redenominated in the euro upon its
introduction, and thereafter will trade and make payments
(including dividend payments) only in euros. Although the EMU
is generally expected to have a beneficial effect, it may
adversely affect the Investment Funds in a number of
situations. Such situations may, without limitation, include:
(i) market disruptions (including sharp fluctuations in
currency exchange rates) that may occur if the EMU (or any
part thereof, including the euro) does not take effect as
planned; (ii) securities that are redenominated in euros are
transferred back into a country's national currency as a
result of such country's withdrawal from the EMU; and (iii)
certain computer, accounting, trading and other systems that
may not be able to recognize the euro as a distinct currency,
thereby adversely affecting a wide variety of companies,
business organizations and other entities, including the
Investment Funds and the companies that the Investment Funds
invest in.

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 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.

Each Investment Fund may enter into forward foreign
currency exchange contracts as described herein. 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 United States dollar forward contract for
the purchase or sale of the amount of foreign currency
involved in an underlying security transaction, such
Investment Fund will be able to protect

26
<PAGE>
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, the investment
manager 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 Investment 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 Investment Fund would be obligated to deliver an
amount of foreign currency in excess of the value of such
Investment 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
a forward 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 Investment 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
Investment Fund is obligated to deliver.

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. The above
described 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. The method simply 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

27
<PAGE>
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

Each Investment Fund may 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 such
security 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 of 1940, as amended ("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 a repurchase agreement, an Investment Fund could experience
costs and delays in liquidating the securities held as
collateral and the Investment 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 Investment 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 declines below the sales price, additional
securities sufficient to make the value of the securities
equal to the sales price thereof must be deposited with the
Investment Fund's custodian. If the seller defaults, the
Investment Fund might incur a 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.

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<PAGE>
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. An
Investment Fund which lends its securities will receive
dividends or interest paid on the securities loaned. It may
also earn interest on the loan itself. 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

Any 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 rates and executing other hedging
strategies relating to portfolio securities. SEE, "Foreign
Currency Transactions", above. Finally, any 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, the success or
accuracy of 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 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 such
Investment 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%.

29
<PAGE>
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
Investment Fund's total return. An Investment Fund may
purchase call options when, in the opinion of the investment
manager for such Investment 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 Investment 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 Investment 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:

(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

30
<PAGE>
(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 premiums 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.

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

31
<PAGE>

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
seven Investment Funds for the fiscal year ended September 30,
1998 were as follows: Core Equity Fund (5.62%), Emerging
Growth Equity Fund (204.41%), Value Equity Fund (96.66%),
International Equity Fund (92.82%), Actively Managed Bond Fund
(71.12%), Intermediate-Term Bond Fund (107.30%) and Short-Term
Investment 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.

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
Investment 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 an 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.

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<PAGE>
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") is herein
referred to as a "Full Participating 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

33
<PAGE>
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 the Investment
Funds. 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 Investment
Funds which will be acquired, retained and disposed of by the
Full Participating Trust. In this connection, the Trustees may
establish guidelines as to proportions of the units held in
such Full Participating Trust which shall be allocated among
various Investment Funds 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 Investment Funds 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

34
<PAGE>
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 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.

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 other 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.

35
<PAGE>
The Distributor may enter into agreements with various
outside brokers on behalf of the Fund through which
Participating Trusts of Eligible Employers other than Full
Participating Trusts may purchase units of Investment Funds.
Such units may be held by such outside brokers in an omnibus
account rather than in the name of the Participating Trusts.

Participating Trusts of Eligible Employers other than
Full Participating Trusts, including those which hold
Investment Funds through outside brokers, may purchase
additional units of Investment Funds by telephone if they have
made arrangements in advance with the Fund. To place a
telephone order, such Participating Trusts or brokers should
call the Fund at 1-800-772-3615.

INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)

Individual Retirement Accounts (both traditional IRAs and Roth
IRAs) 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. In order to
participate in the Fund, a completed TRADITIONAL IRA/ROTH IRA
APPLICATION AND TRANSFER FORM must be sent to the Fund
instructing the Trustees about the type of IRA and 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. There is no maximum initial investment
and there is no minimum for subsequent investments. The
Individual Retirement Account custodian may establish a
maintenance fee on all or some accounts from time to time.
TRADITIONAL IRA/ ROTH IRA APPLICATION AND TRANSFER FORMS can
be obtained by writing to Retirement System Distributors Inc.,
Investor Services, at P. O. Box 2064, Grand Central Station,
New York, New York 10163-2064, or by calling the Distributor's
Individual Retirement Account Investor Services line at
1-800-772-3615. Completed TRADITIONAL IRA/ ROTH 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 and subsequent
investments may be made in any amount. 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.

36
<PAGE>
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 Investment Funds 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 custodian 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.

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 Investor Services
line at 1-800-772-3615 or by writing to Retirement System
Distributors Inc., Investor Services, at P.O. Box 2064, Grand
Central Station, New York, New York 10163-2064. A redemption
of account shares can also be accomplished by filing a
completed transfer form to another trustee or custodian.

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.

37
<PAGE>

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 certain Individual Retirement Accounts). A
signature guarantee will be required if the distribution is:
payable to someone other than the Accountholder; to be
invested in a joint tenancy account; mailed to an address
other than that listed on the account registration; or greater
than $25,000. 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 or new custodian's transfer 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 or custodian 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.

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

38
<PAGE>
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 either by completing traditional IRA AND ROTH IRA
EXCHANGE REQUEST FORM or by telephone, if available. The form
is available by calling the Distributor's Individual
Retirement Account Investor Services line at 1-800-772-3615 or
by writing to Retirement System Distributors Inc., Investor
Services, 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 custodian of the Individual
Retirement Account. Any exchange transacted through the use of
the EXCHANGE REQUEST FORM 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. These exchanges are
subject to determination by the Trustees that the investment
instruction form has been properly completed.

If the exchange is to be completed by telephone, if
available, the IRA custodian will be entitled to rely and act
upon any telephonic instructions, deemed by it to be in proper
form, received from any person directing the exchange of
investments in the account(s) for other investments allowed to
be exchanged; provided that the Fund is then available for
sale in the Individual Retirement Accountholder's state of
residence. The IRA custodian will not incur liability, cost or
expense arising out of any telephonic exchange request
effected pursuant to telephonic instructions. (The custodian
of all Individual Retirement Accounts is a Participating Trust
of the Fund, although not a Full Participating Trust.)

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 outstanding units of
the respective Investment Fund.

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
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 January, Martin Luther King, Jr. 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 and instrumentality obligations
are valued based upon bid quotations from various market
makers for identical or similar

39
<PAGE>
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.

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. ("RSGroup-Registered Trademark-") in connection with the
reorganization of the Fund and the transfer of certain assets
of the Fund to the RSGroup-Registered Trademark- in 1990. SEE,
"Distributions and Taxes". Income earned on assets in an
Investment Fund is included in the total value of such
Investment 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.

40
<PAGE>
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 expenses 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 Qualified
Trust which is qualified under Section 401(a) or 408(e) of the
Code. Distributions from such a trust to the beneficiaries
thereof may be subject to Federal income taxation, unless
"rolled over" into another tax-qualified trust or Individual
Retirement Account. Qualifying distributions from a Roth IRA
are not includable in gross income for Federal income tax
purposes.

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 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 May 28, 1998. 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

41
<PAGE>
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 PRINCIPAL OCCUPATION FOR LAST FIVE YEARS AND
NAME THE FUND AGE AFFILIATION WITH THE FUND
- -------------------- ------------ --- --------------------------------------------------
<S> <C> <C> <C>
CURRENT TERM REMAINING --
THREE YEARS
Candace Cox Trustee 47 Investor; former President and Chief Investment
Officer, Bell Atlantic (formerly NYNEX) Asset
Management Co., from November, 1995 to May, 1998;
Vice President, Public Markets Strategy, Bell
Atlantic (formerly NYNEX) Asset Management Co.,
from September 1992 to October 1995; Director of
Retirement System Fund Inc. from February 1991 to
July 1997.
William A. McKenna, 61 Chairman, President and Chief Executive Officer,
Jr. Ridgewood Savings Bank, Ridgewood, New York since
January 1992; Trustee of Ridgewood Savings Bank;
Trustee of St. Joseph's College; Director of St.
Vincent's Services; Director of Boy's Hope;
Director of M.S.B. Fund, Inc.; Director of
Institutional Investors Mutual Fund, Inc.; Member
of the Cardinal's Committee of the Laity; Member
of University Council, St. John's University;
Member of the Dean's Executive Council, Hofstra
University School of Business.
Raymond L. Willis Trustee 62 Private investments since March 1989. Director of
Retirement System Fund Inc. from February 1991 to
July 1997.
CURRENT TERM REMAINING --
TWO YEARS:
Herbert G. Trustee 60 Vice Chairman of Charter One Financial, Inc. since
Chorbajian* November 30, 1998; Chairman and Chief Executive
Officer from October 1990 and President and
Director from June 1985 of ALBANK, FSB, Albany,
New York to November 1998; Chairman, President and
Chief Executive Officer of ALBANK Financial
Corporation, Albany, New York from December 1991
to November 1998.
</TABLE>

42
<PAGE>

<TABLE>
<CAPTION>
POSITIONS
WITH PRINCIPAL OCCUPATION FOR LAST FIVE YEARS AND
NAME THE FUND AGE AFFILIATION WITH THE FUND
- -------------------- ------------ --- --------------------------------------------------
<S> <C> <C> <C>
James P. Cronin* Trustee 53 President, Treasurer and Chief Executive Officer
since June 1987 of The Dime Savings Bank of
Norwich, Norwich, Connecticut; Director or Trustee
of Mutual Investment Fund of Connecticut; Hartford
Mutual Investment Fund; Connecticut Association of
Securities Inc.; Norwich Free Academy; St. Jude
Common; John S. Blackmar Fund; Eastern Connecticut
Foundation for Public Giving; St. Patrick
Cathedral School Board of Education; and RSGroup
Trust Company.
Ralph L. Hodgkins, Trustee 65 Trustee and Investment Committee Chair, University
Jr. 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.
William L. Schrauth* Trustee 63 President and Chief Executive Officer, The Savings
Bank of Utica, Utica, New York since August 1977;
and Director of Retirement System Group Inc. and
RSGroup Trust Company.
William E. Swan* Trustee 51 President and Chief Executive Officer, Lockport
Savings Bank, Lockport, New York since July 1989.
CURRENT TERM REMAINING --
ONE YEAR:
William Dannecker* President 59 President and Trustee of the Fund since May 1986
and Trustee and May 1987, respectively; Chief Executive
Officer of the Fund from January 1988 to August
1990; President of Retirement System Fund Inc.
from February 1991 to July 1997 and Director from
November 1990 to July 1997; 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 and Director of RSGroup Trust
Company since June 1998.
</TABLE>

43
<PAGE>

<TABLE>
<CAPTION>
POSITIONS
WITH PRINCIPAL OCCUPATION FOR LAST FIVE YEARS AND
NAME THE FUND AGE AFFILIATION WITH THE FUND
- -------------------- ------------ --- --------------------------------------------------
<S> <C> <C> <C>
Covington Hardee Trustee 79 Chairman of the Board Emeritus from 1984 to April
1990, The Lincoln Savings Bank, FSB, New York, New
York. Director of Retirement System Fund Inc. from
February 1991 to July 1997.
Maurice E. Kinkade Trustee 56 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.
William G. Lillis Trustee 68 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.
</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 $55,200 for the Fund's fiscal
year ended September 30, 1998.

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

44
<PAGE>
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 January 1, 1999, the Trustees of the Fund
approved continuance of a further amended Service Agreement
with the Service Company. Under the current Service Agreement,
the Service 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 separately managed Investment
Fund portfolio for such month:

<TABLE>
<CAPTION>
FEE (% OF AVERAGE
NET ASSETS OF EACH SEPARATELY MANAGED INVESTMENT FUND DAILY NET ASSETS)
- --------------------------------------------------------- -------------------

<S> <C>
First $25 million........................................ .60%
Next $25 million......................................... .50%
Next $25 million......................................... .40%
Over $75 million......................................... .30%
</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 is effective until
December 31, 2000, 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

45
<PAGE>
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).

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 July 29, 1997. 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, other than HLM Management
Company, Inc., which Sub-Investment Advisory Agreement was
dated April 1, 1997. Investors Inc. is

46
<PAGE>
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, except the
Contract with HLM Management Company, Inc., which was approved
by Trust Participants at a meeting held on July 29, 1997.

Each Contract had or 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. 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 and HLM, each of which is allocated 50%
of that Investment Fund's assets investments by Participating
Trusts. From September 4, 1990 until March 31, 1997, The
Putnam Advisory Company, Inc. was responsible for managing the
portion of the Emerging Growth Equity Fund currently managed
by HLM Management Company, Inc. The sub-investment adviser for
the International Equity Fund is Morgan Grenfell Investment
Services Limited. 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:

FRIESS, 115 East Snow King Avenue, 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.

HLM, 222 Berkeley Street, Boston, MA 02116, 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. and a
fourth principal, Peter J. Grua. All three founding
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. In July, 1997, Ann B. Hutchins (a
former research analyst with the firm from 1985 through
1988) was rehired and appointed a principal, replacing
Frances M. Hawk, who retired. 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.

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;

47
<PAGE>
each of MGIS (indirectly) and MGAM (directly) are
wholly-owned subsidiaries of the Deutsche Morgan
Grenfell Group PLC (previously known as Morgan Grenfell
Group PLC), an investment holding company which is a
subsidiary of Deutsche Bank AG.

INVESTORS INC., 317 Madison Avenue, New York, New
York 10017, is a wholly-owned subsidiary of Retirement
System Group Inc. 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 or sub-adviser to other investment
companies.

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 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.

48
<PAGE>
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 SUB-INVESTMENT
INVESTMENT FUND MANAGEMENT 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
HLM......................................
First $25 Million...................... 1.20 1.00
Next $25 Million....................... 1.00 .80
Over $50 Million....................... .80 .60
Friess................................... 1.20 1.00
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
Short-Term Investment Fund N/A
First $50 Million........................ .25
Over $50 Million......................... .20
</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 MGIS and HLM fees are calculated on the basis of assets at
the end of each month during the quarter. The Friess fees are
calculated on the basis of assets at the end of each quarter.

49
<PAGE>
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 investment manager and the sub-investment
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 an Investment
Fund.

GENERAL INFORMATION

YEAR 2000

Many computer systems were designed using only two digits to
designate years. These systems may not be able to distinguish
the "year 2000" from the "year 1900" (commonly known as the
"Year 2000 Problem"). The Fund could be adversely affected if
the investment manager, Service Company or other service
providers to the Fund are not able to effectively resolve the
Year 2000 Problem before January 1, 2000. The Service Company
expects to have this problem addressed before such time and
has dedicated one full time employee to coordinate and monitor
the resolution of the Year 2000 Problem, both with respect to
the Fund and with respect to the Fund's service providers. The
Service Company has been informed by its service providers
that they expect successful resolution of the Year 2000
Problem. If the Year 2000 Problem is not fully addressed by
all of the relevant parties, the Fund may be adversely
affected.

The Year 2000 Problem may also adversely affect the
companies, business organizations and other entities that the
Fund invests in, and this may, in turn, adversely affect the
Fund.

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

50
<PAGE>

of full and fractional units of beneficial interest of that
Fund. Each class of units designated as a separate Investment
Fund represents a separate pool of assets. Currently, the Fund
is offering units of beneficial interest in seven Investment
Funds: Core Equity Fund, Emerging Growth Equity Fund, Value
Equity Fund, International Equity Fund, Actively Managed Bond
Fund, Intermediate-Term Bond Fund and Short-Term Investment
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 distribute 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, 4 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 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 and any maintenance fee charged to
Individual Retirement Accountholders), 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 Investment 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 seven Investment
Funds as a percentage of average net assets were as follows
for the Fund's fiscal year ended September 30, 1998: Core
Equity Fund (0.94%); Emerging Growth Equity Fund

52
<PAGE>

(1.94%); Value Equity Fund (1.11%); International Equity Fund
(1.94%); Actively Managed Bond Fund (0.81%); Intermediate-Term
Bond Fund (1.10%); and Short-Term Investment Fund (0.80%). It
should be noted that the fees paid in connection with the
Service Agreement will be revised effective January 1, 1999.
SEE, "Administration of the Fund -- The Service Agreement."

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.,
Morningstar, 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, MONEY MAGAZINE, THE
WALL STREET JOURNAL and USA TODAY.

COUNSEL AND AUDITORS

Swidler Berlin Shereff Friedman, 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

[LOGO]

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

January 1, 1999

BROKER/DEALER

1999

RETIREMENT SYSTEM
Distributors Inc.

317 Madison Ave.
New York, N.Y. 10017-5397

<PAGE>

File No. 2-95074
STATEMENT OF ADDITIONAL INFORMATION

RSI RETIREMENT TRUST

JANUARY 1, 1999

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 seven
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) (both traditional IRAs and Roth 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) or 408A 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 NOVEMBER 30, 1998, 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.

<PAGE>

TABLE OF CONTENTS

<TABLE>
<CAPTION>
Page
----
<S> <C>
The Fund . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3

Investment Restrictions. . . . . . . . . . . . . . . . . . . . . . . . . 9

Distribution Agreement . . . . . . . . . . . . . . . . . . . . . . . . . 11

Administration of The Fund . . . . . . . . . . . . . . . . . . . . . . . 11

Control Persons and Principal Unitholders. . . . . . . . . . . . . . . . 16

Investment Managers. . . . . . . . . . . . . . . . . . . . . . . . . . . 18

Brokerage Allocation and Portfolio Turnover. . . . . . . . . . . . . . . 20

Counsel and Auditors . . . . . . . . . . . . . . . . . . . . . . . . . . 22

Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . 22
</TABLE>

<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.
("RSGroup-Registered Trademark-"), in exchange for shares of the common stock
of RSGroup-Registered Trademark-, and the spin-off of RSGroup-Registered
Trademark- 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 RSGroup-Registered Trademark- and the Fund. Thus,
immediately following the consummation of the Reorganization ("Closing"), the
Participating Trusts owned all of the outstanding shares of the
RSGroup-Registered Trademark-'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 RSGroup-Registered Trademark- 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
RSGroup-Registered Trademark-, 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 RSGroup's-Registered Trademark- 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
RSGroup's-Registered Trademark-.

<PAGE>

The Fund also entered into an investment management agreement with a
subsidiary of RSGroup-Registered Trademark-, 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 RSGroup-Registered Trademark-, Retirement System Consultants Inc.
("Service Company"), effective at the Closing. This Service Agreement was
superseded by amended Service Agreements, effective July 1, 1993 and January 1,
1999. 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 RSGroup-Registered Trademark-, 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 seven 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 and Short-Term
Investment 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

4
<PAGE>

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:

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

<PAGE>

investment manager will consider whether the Investment Fund should continue to
hold the obligation.

For the 30-day period ended September 30, 1998, the yield for each
Investment Fund as to which performance may be quoted in advertising was as
follows:

INVESTMENT FUNDS Yield
---------------- -----
<S> <C>
Core Equity Fund 0.55%
Emerging Growth Equity Fund -1.33%
Value Equity Fund 1.29%
International Equity Fund 1.53%
Short-Term Investment Fund 4.60%
Intermediate-Term Bond Fund 5.41%
Actively Managed Bond Fund 5.97%
</TABLE>

TOTAL RETURN

Average annual total return quotes ("Standardized Return") used in an
Investment Fund's performance are calculated according to the following formula:

P(1 + T)n = 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 period ending
September 30, 1998 for each of the Investment Funds as to which performance may
be quoted in advertising. Total returns are based on historical results and

<PAGE>

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 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, 1998:

<TABLE>
<CAPTION>
Annualized
-------------------------------------------------------------------------
Since Inception
1 Year 3 Years 5 Years 10 Years 15 Years 15-3/4 Years*
------ ------- ------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS
RSI Retirement
Trust:
Core 4.34% 19.35% 18.15% 15.87% 15.55% 16.34%

Emerging Growth -35.01% 1.45% 9.10% 12.67% 11.88% 12.76%

Value -1.90% 19.92% 16.27% 12.84% 11.89% 12.90%

International -11.06% 4.13% 5.75% 6.20% - 11.13%

<CAPTION>
Annualized
-------------------------------------------------------------------------
Since Inception
1 Year 3 Years 5 Years 10 Years 15 Years 15-3/4 Years
------ ------- ------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
FIXED-INCOME FUNDS
Short-Term 5.09% 4.93% 4.59% 5.24% 6.21% 6.35%
Intermediate-Term 8.08% 6.79% 5.61% 7.75% 9.00% 8.96%
Actively Managed 11.33% 8.45% 6.58% 8.81% 9.71%% 9.60%

<CAPTION>
Annualized
-------------------------------------------------------------------------
Since Inception
1 Year 3 Years 5 Years 10 Years 15 Years 15-3/4 Years
------ ------- ------- -------- -------- ----------------
<S> <C> <C> <C> <C> <C> <C>
TOTAL FUNDS
RSI Retirement Trust Plan
Category:**
Conservative Risk
Tolerance 2.52% 10.95% - - - -
Positive Risk Tolerance 0.07% 11.79% 11.10% 11.27% 11.69% 12.07%

</TABLE>

<PAGE>

+ All performance results shown are net of management fees and all
related investment expenses, unless otherwise footnoted. Reference
should be made to "Administration of the Fund -- The Service
Agreement" in the Prospectus for certain fee changes that will take
effect as of January 1, 1999.

* 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 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.

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

<PAGE>

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, 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;

(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;

<PAGE>

(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 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

<PAGE>
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 (SEE, "Investments In the Fund -- Full
Participating Trusts" in the Prospectus) and among Investment Funds and
guidelines of investment for all Plans.

<PAGE>

INFORMATION REGARDING EXECUTIVE OFFICERS AND TRUSTEES

The Fund has 12 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 and a Treasurer. 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, 1998, total Trustee compensation amounted to $181,550.
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, 1998,
the total of such reimbursed expenses was $16,820.

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 RSGroup-Registered
Trademark-, 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 RSGroup-Registered Trademark- 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 RSGroup-Registered
Trademark-, Investors Inc., the Broker-Dealer and the Service Company, and
receives compensation in such capacities. Heidi Viceconte, First Vice President
and Treasurer of the Fund is an officer of RSGroup-Registered Trademark- and
receives compensation in such capacity. John F. Meuser, Senior Vice President
of the Fund, is an officer of RSGroup-Registered Trademark-, the Service
Company, the Broker-Dealer 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, 1998. Fund officers
received no compensation from the Fund during the fiscal year ended September
30, 1998:

<PAGE>

<TABLE>
<CAPTION>
PENSION OR
RETIREMENT
BENEFITS ACCRUED
AGGREGATE COMPENSATION AS PART OF FUND
NAME OF TRUSTEE FROM THE FUND EXPENSES
- ---------- ------------- --------
<S> <C> <C>
Herbert G. Chorbajian $15,200.00 $- 0 -

Candace Cox 19,500.00* - 0 -

James P. Cronin 17,100.00 - 0 -

William Dannecker - 0 - - 0 -

Covington Hardee 14,250.00* - 0 -

Ralph L. Hodgkins, Jr. 16,250.00 - 0 -

William A. McKenna 6,016.67 - 0 -

Maurice E. Kinkade 16,350.00* - 0 -

William G. Lillis 15,600.00* - 0 -

William L. Schrauth 17,100.00 - 0 -

William E. Swan 15,600.00* - 0 -

Raymond L. Willis 19,400.00 - 0 -
</TABLE>

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, 1998 is as follows: Ms. Cox
($96,486.74); Mr. Hardee ($39,370.53); Mr. Kinkade ($163,555.54), Mr. Lillis
($29,108.62) and Mr. Swan ($10,870.60).

<PAGE>

PRINCIPAL OCCUPATION
POSITIONS FOR LAST FIVE YEARS AND
NAME WITH FUND AFFILIATION WITH FUND
- ---- --------- ---------------------
<S> <C> <C>
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 and Director of
RSGroup Trust Company since
June 1998; President of
Retirement System Fund Inc.
from February 1991 to July
1997 and Director from
November 1990 to July 1997.

James P. Coughlin Executive Vice Executive Vice President and
President Chief Investment Officer of
Retirement System Group Inc.
since January 1993, 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.
from February 1991 to July
1997.

</TABLE>

<PAGE>

POSITIONS FOR LAST FIVE YEARS AND
NAME WITH FUND AFFILIATION WITH FUND
- ---- --------- ---------------------
<S> <C> <C>
Stephen P. Pollak Executive Vice Executive Vice President,
President, Counsel Counsel and Secretary of
and Secretary Retirement System Group Inc.
since January 1993, 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;
Executive Vice President,
Counsel and Secretary and
Director of RSGroup Trust
Company since June 1998;
Executive Vice President,
Counsel and Secretary of
Retirement System Fund Inc.
from October 1995 to July 1997
and Senior Vice President,
Counsel and Secretary from
February 1991 to October 1995.

Heidi Viceconte First Vice President
and Treasurer First Vice President of
Retirement System Group Inc.
since January 1998, Manager
of Trust Accounting since
November 1994 and Second
Vice President from January
1995 to December 1997.

</TABLE>

<PAGE>

NAME POSITIONS WITH FUND PRINCIPAL OCCUPATION FOR LAST
- ---- FIVE YEARS AND
AFFILIATION WITH FUND
<S> <C> <C>

John F. Meuser Senior Vice Senior Vice President of
President Retirement System Group Inc.
since January 1996, Vice
President from January 1993 to
December 1995; Financial and
Operations Principal since
October 1993 and Registered
Representative since February
1990 of Retirement System
Distributors Inc.; Vice
President of Retirement System
Investors Inc. since February
1990; Chief Operations Officer
of RSGroup Trust Company since
August 1998; Senior Vice
President and Treasurer of
Retirement System Fund Inc.
from October 1996 to July 1997
and Vice President and
Treasurer from October 1992 to
July 1997.

</TABLE>

No officer of the Fund receives any remuneration directly from the Fund for
service to the Fund.

CONTROL PERSONS AND PRINCIPAL UNITHOLDERS

No person controls the Fund.

A 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 October 31,
1998:

<PAGE>

Name Percentage
---- ----------
<S> <C>
Fund (considered as a whole):
----------------------------
ALBANK, FSB 6.17%
Ridgewood Savings Bank 5.23

Core Equity Fund:
----------------
Ridgewood Savings Bank 5.90
ALBANK, FSB 5.74

Emerging Growth Equity Fund:
---------------------------
Ridgewood Savings Bank 5.63
ALBANK, FSB 5.48

Value Equity Fund:
-----------------
Ridgewood Savings Bank 6.61
ALBANK, FSB 6.43

International Equity Fund:
-------------------------
ALBANK, FSB 9.05
Staten Island Savings Bank 5.52
Roosevelt Savings Bank 5.19

Short-Term Investment Fund:
--------------------------
Independence Savings Bank 12.97
Roosevelt Savings Bank 12.83
Northfield Savings Bank 10.59
Institutional Group Information Corp. 7.59
The Dime Savings Bank of Williamsburgh 6.82

Intermediate-Term Bond Fund:
---------------------------
ALBANK, FSB 6.51
Ridgewood Savings Bank 5.68

Actively Managed Bond Fund:
--------------------------
ALBANK, FSB 7.32
Ridgewood Savings Bank 6.39

</TABLE>

The addresses of these Trust Participants are as follows: ALBANK, FSB, 10
North Pearl Street, Albany, New York 12207; Independence Savings Bank, 195
Montague Street, Brooklyn, New York 11201; Institutional Group Information
Corp., 1000 Northern Blvd., Great Neck, New York 11021-5305; Northfield Savings
Bank, 1731 Victory Boulevard, Staten Island, New York 10314; Ridgewood Savings
Bank, Myrtle & Forest Avenues, Ridgewood, New York 11385; Roosevelt Savings
Bank, 1122 Franklin Avenue, Garden

<PAGE>

City, New York 11530; Staten Island Savings Bank, 15 Beach Street, Staten
Island, New York 10304; The Dime Savings Bank of Williamsburgh, 209 Havemeyer
Street Williamsburgh Bridge Plaza, Brooklyn, NY 11211.

The Trustees and officers of the Fund own, as a group, less than 1% 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 July 29, 1997. Investors
Inc. has retained sub-investment adviser for the Emerging Growth Equity Fund
(Friess Associates, Inc. ("Friess") and HLM Management Company, Inc. ("HLM")),
and the International Equity Fund (Morgan Grenfell Investment Services Limited
("Morgan Grenfell")), pursuant to Sub-Investment Advisory Agreements dated
August 1, 1993, except with respect to HLM, with a Sub-Investment Advisory
Agreement dated April 1, 1997. 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:

Freiss was paid $487,453 for the fiscal year ended September 30, 1998,
$523,455 for the fiscal year ended September 30, 1997 and $463,736 for
the fiscal year ended September 30, 1996. The Fund paid $98,295 to
Investors Inc. for the fiscal year ended September 30, 1998, $100,977
for the fiscal year ended September 30, 1997 and $92,764 for the
fiscal year ended September 30, 1996 with respect to the Emerging
Growth Equity Fund.

HLM was paid $266,525 for the fiscal year ended September 30, 1998 and
$148,585 for the period beginning April 1, 1997 and ending September
30, 1997. The Fund paid $54,476 to Investors Inc. for the fiscal year
ended September 30, 1998 and $31,003 for the period beginning April 1,
1997 and ending September 30, 1997.

Morgan Grenfell was paid $221,799 for the fiscal year ended September
30, 1998, $223,080 for the fiscal year ended September 30, 1997 and
$219,603 for the fiscal year ended September 30, 1996. The Fund paid
$73,933 to Investors Inc. for the fiscal year ended September 30,
1998, $73,908 for the fiscal year ended September 30, 1997 and $73,447
for the fiscal year ended September 30, 1996 with respect to the
International Equity Fund.

<PAGE>

The Putnam Advisory Company Inc. ("Putnam") was an adviser to the
Emerging Growth Equity Fund between September 4, 1990 and March 31,
1997. Putnam was paid $161,262 for the period October 1, 1996 through
March 31, 1997 and $314,530 for the fiscal year ended September 30,
1996. The Fund paid $37,277 to Investors Inc. for the period October
1, 1996 through March 31, 1997 and $69,582 for the fiscal year ended
September 30, 1996 with respect to the Emerging Growth Equity Fund.

The Fund incurred charges from Investors Inc. as investment manager of
the Core Equity Fund of $1,040,755 for the fiscal year ended September
30, 1998, $1,131,713 for the fiscal year ended September 30, 1997 and
$1,064,643 for the fiscal year ended September 30, 1996.

The Fund incurred charges from Investors Inc. as investment manager of
the Actively Managed Bond Fund of $500,102 for the fiscal year ended
September 30, 1998, $485,096 for the fiscal year ended September 30,
1997 and $489,590 for the fiscal year ended September 30, 1996.

The Fund incurred charges from Investors Inc. as investment manager of
the Intermediate-Term Bond Fund of $243,403 for the fiscal year ended
September 30, 1998, $265,854 for the fiscal year ended September 30,
1997 and $303,786 for the fiscal year ended September 30, 1996.

The Fund incurred charges from Investors Inc. as investment manager of
the Value Equity Fund of $261,587 for the fiscal year ended September
30, 1998, $239,747 for the fiscal year ended September 30, 1997 and
$215,788 for the fiscal year ended September 30, 1996.

The Fund incurred charges from Investors Inc. as investment manager of
the Short-Term Investment Fund of $61,881 for the fiscal year ended
September 30, 1998, $64,078 for the fiscal year ended September 30,
1997 and $66,957 for the fiscal year ended September 30, 1996.

<PAGE>

The sub-investment advisory relationship with Putnam was terminated on
March 31, 1997, and HLM assumed the portfolio management responsibilities for
its portion of the Emerging Growth Equity Fund on April 1, 1997.

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, as amended, 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 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, 1998, September 30, 1997
and, September 30, 1996, the Core Equity Fund paid aggregate brokerage
commissions of $44,765, $71,007 and $34,560, respectively; the

<PAGE>

Emerging Growth Equity Fund paid aggregate brokerage commissions of $162,353,
$258,921, and $175,817, respectively; the Value Equity Fund paid aggregate
brokerage commissions of $150,227, $132,126 and $69,947, respectively; and
the International Equity Fund paid aggregate brokerage commissions of
$128,369, $132,475 and $101,228, respectively. The Actively Managed Bond
Fund, Intermediate-Term Bond Fund and Short-Term Investment Fund paid no
brokerage commissions for the fiscal years ended September 30, 1998,
September 30, 1997 and September 30, 1996.

During the Fund's fiscal years ended September 30, 1998, September 30, 1997
and September 30, 1996, 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
- --------------- ---------------------- ---------------------
<S> <C> <C>
Core Equity Fund $ 6,888,089 (1998) $ 7,148 (1998)
$ 7,544,273 (1997) $ 7,200 (1997)
$ 9,409,838 (1996) $10,086 (1996)

Emerging Growth $14,546,241 (1998) $47,322 (1998)
Equity Fund $33,292,524 (1997) $82,495 (1997)
$27,883,705 (1996) $75,930 (1996)

Value Equity $ 4,270,717 (1998) $ 6,654 (1998)
Fund $17,647,219 (1997) $24,103 (1997)
$ 5,922,802 (1996) $ 8,856 (1996)

International $15,358,294 (1998) $38,993 (1998)
Equity Fund $ 6,029,457 (1997) $29,103 (1997)
$ 8,807,267 (1996) $26,918 (1996)

</TABLE>

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, 1998, the
Fund held repurchase agreements issued by Bear, Stearns & Co., Inc. valued at
$8,607,839. Bear Stearns & Co., Inc. is a "regular broker or dealer" of the
Fund. As of September 30, 1998, the Fund held repurchase agreements issued by
Cantor Fitzgerald Inc. valued at $13,650,000. Cantor Fitzgerald Inc. is a
"regular broker or dealer" of the Fund.

<PAGE>

The annual portfolio turnover rates for each of the seven Investment Funds
for the fiscal years ended September 30, 1998 and September 30, 1997,
respectively, were as follows: Core Equity Fund (5.62%) and (5.68%), Emerging
Growth Equity Fund (204.41%) and (177.68%), Value Equity Fund (95.66%) and
(99.25%), International Equity Fund (92.82%) and (61.87%), Actively Managed Bond
Fund (71.12%) and (69.29%), Intermediate-Term Bond Fund (107.30%) and (67.95%)
and Short-Term Investment 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.

COUNSEL AND AUDITORS

Swidler Berlin Shereff Friedman, 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, 1998.
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.

<PAGE>

File No. 2-95074

PART C

OTHER INFORMATION

RSI RETIREMENT TRUST

JANUARY 1, 1999

ITEM 24. FINANCIAL STATEMENTS AND EXHIBITS.

(a) FINANCIAL STATEMENTS:

Included in Prospectus:

- Financial Highlights

Included in Statement of Additional Information by incorporation by
reference from 1998 Annual Report:

- Report dated October 31, 1998 of McGladrey & Pullen, LLP 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 and
Short-Term Investment Fund.

- Statement of assets and liabilities as of September 30, 1998 for each
of the investment funds listed above.

- Statement of investments as of September 30, 1998 for each of the
investment funds listed above.

- Statement of operations for the year ended September 30, 1998 for each
of the investment funds listed above.

- Statement of changes in net assets for the years ended September 30,
1998 and September 30, 1997 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
Exchange Commission are

<PAGE>

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

<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. HLM Management Company, Inc. (Filed as Exhibit
5.b.3. to Post-Effective Amendment No. 16 to the
Registrant's Registration Statement on Form N-1A
filed on January 28, 1998.)

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 the

<PAGE>

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.)

9.d. Service Agreement. (Filed herewith.)

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.)

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. 1998 Annual Report to Unitholders, including report of
Independent Auditors. (Filed on Form N-30D via EDGAR
(accession No. 0001047469-98-042414) on November 27,
1998.)

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 September 30, 1998 the Fund had 630 record holders of units.
The following table sets forth the number of record holders of units for each
Investment Fund as of such date.

<TABLE>
<CAPTION>
Number of
Investment Fund Record Holders
--------------- --------------
<S> <C>
Core Equity Fund 398
Emerging Growth Equity Fund 489
Value Equity Fund 279
International Equity Fund 184
Actively Managed Bond Fund 214
Intermediate-Term Bond Fund 218
Short-Term Investment Fund 122
</TABLE>

ITEM 27. INDEMNIFICATION.

The Agreement and Declaration of Trust provides with regard to
indemnification that:

(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,

<PAGE>

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
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

<PAGE>

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 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

<PAGE>

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:

MORGAN GRENFELL INVESTMENT SERVICES LIMITED:

<TABLE>
<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
Gregory Charles Fisher Director -Chief Investment Officer
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England

<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
P.N.C. Walker Director -Director
Morgan Grenfell
Asset Management Limited
20 Finsbury Circus
London EC2M 1NB
England

<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
P.N.C. Walker (cont'd) -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
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

-Director
Morgan Grenfell Hedged Funds
Limited
20 Finsbury Circus
London EC2M 1NB
England

10
<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
P.N.C. Walker (cont'd) -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

-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

<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
P.N.C. Walker (cont'd) -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

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

-Director
Deutsche Morgan Grenfell Asset
Management (Japan) Limited
19th Floor, Akasaka Park Building
5-2-20 Akasaka
Minato-ku, Tokyo 107
Japan

12
<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
P.W.W. Disney Managing -Director
Director Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England

-Director
Crown and Manor
Club Limited
England

-Director
Morgan Grenfell Investment Trust
885 Third Avenue
New York, New York 10022-4802

-Director
Woodberry Down
Club Limited
England

I.D. Kelson Director -Director
Morgan Grenfell Asset
Management Limited
20 Finsbury Circus
London EC2M 1NB
England

<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
Annabel Withington Company -Deputy Company Secretary
Secretary Morgan Grenfell Asset Management
Limited
20 Finsbury Circus
London EC2M 1NB
England

-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
Morgan Grenfell Hedged Funds
Limited
20 Finsbury Circus
London EC2M 1NB
England

-Company Secretary
Morgan Grenfell
Quantitative Investment Limited
20 Finsbury Circus
London EC2M 1NB
England

14
<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
Annabel Withington -Company Secretary
(cont'd) Priorbasic Limited
20 Finsbury Circus
London EC2M 1NB
England

-Company Secretary
Shop Moor Limited
20 Finsbury Circus
London EC2M 1NB
England

-Company Secretary
Tokai Morgan Grenfell International
Funds Management Limited
20 Finsbury Circus
London EC2M 1NB
England

N.P. Jenkins Director -Vice President, Portfolio Manager
Morgan Grenfell International Funds
Management Limited
20 Finsbury Circus
London EC2M 1NB
England

-Director
Morgan Grenfell Investment Trust
885 Third Avenue
New York, New York 10022
</TABLE>

15
<PAGE>

FRIESS ASSOCIATES, INC.:

<TABLE>
<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
Foster Stephen Friess President and -Director
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
</TABLE>

HLM MANAGEMENT COMPANY, INC.

<TABLE>
<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
Judith P. Lawrie Chairman, Board -Director
of Directors Wolfgang Puck Food Company
1333 Second Street
Santa Monica, CA 90401

James J. Mahoney, Jr. Treasurer and -Director
Director Teltech, Inc.
2850 Metro Drive, Suite 600
Bloomington, MN 55425

-Director
Aperture Credentialing, Inc.
301 N. Hurstbourne Parkway
Louisville, KY 40222

Peter J. Grua President and -Director
Director HealthVISION, Inc.
141 Stony Circle, Suite 150
Santa Rosa, CA 95401
</TABLE>

16
<PAGE>

RETIREMENT SYSTEM INVESTORS INC.:

<TABLE>
<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
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 Director
RSGroup Trust Company
295 Forest Avenue, No. 610
Portland, Maine 04104

17
<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
William Dannecker -President and Trustee
(cont'd) RSI Retirement Trust
317 Madison Avenue
New York, New York 10017

-Director
RSG Insurance Agency 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

Stephen P. Pollak Executive Vice -Executive Vice President,
President, Counsel, Secretary and Director
Secretary and Retirement System Group Inc.
Director 317 Madison Avenue
New York, New York 10017

-President and Director
RSG Insurance Agency Inc.
317 Madison Avenue
New York, New York 10017

18
<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
Stephen P. Pollak -Vice President, Counsel,
(cont'd) 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

-Executive Vice President, Counsel
and Secretary
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017

-Executive Vice President, Counsel
and Secretary and Director
RSGroup Trust Company
295 Forest Avenue, No. 610
Portland, Maine 04104

John F. Meuser Senior Vice -Senior Vice President
President Retirement System Group Inc.
317 Madison Avenue
New York, New York 10017

-Vice President
Retirement System Consultants Inc.
317 Madison Avenue
New York, New York 10017

-Vice President and Financial and
Operations Principal
Retirement System Distributors
Inc.
317 Madison Avenue
New York, New York 10017

19
<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
John Meuser (cont'd) -Senior Vice President
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017

Chris R. Kaufman Vice President -Vice President
and Portfolio Retirement System Group Inc.
Manager 317 Madison Avenue
New York, New York 10017

-Vice President
Retirement System Distributors
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

-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

-Treasurer
RSGroup Trust Company
295 Forest Avenue, No. 610
Portland, Maine 04104

20
<PAGE>

<CAPTION>
Positions Other Business,
Name with Manager Profession, Vocation, Employment
- ---- ------------ --------------------------------
<S> <C> <C>
Veronica A. Fisher -Vice President and
Assistant Treasurer
RSI Retirement Trust
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:

<TABLE>
<CAPTION>
POSITION AND OFFICES
WITH PRINCIPAL POSITION AND OFFICES
NAME UNDERWRITER WITH REGISTRANT
<S> <C> <C>
William Dannecker President and Director President and Trustee

Stephen P. Pollak Vice President, Executive Vice President,
Secretary and Director Counsel and Secretary

John F. Meuser Vice President and Senior Vice President
Financial and Operations
Principal

Veronica A. Fisher Treasurer Vice President and
Assistant Treasurer
</TABLE>

21
<PAGE>

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, 4
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.

22
<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 30th day of November, 1998.

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 November 30, 1998
- ------------------------- (Principal
William Dannecker Executive
Officer), Trustee

/s/Heidi Viceconte Treasurer November 30, 1998
- -------------------------
Heidi Viceconte

/s/Herbert G. Chorbajian Trustee November 30, 1998
- -------------------------
Herbert G. Chorbajian

/s/Candace Cox Trustee November 24, 1998
- -------------------------
Candace Cox

/s/James P. Cronin Trustee November 23, 1998
- -------------------------
James P. Cronin

23
<PAGE>

Signature Title Date
- --------- ----- ----

/s/Covington Hardee Trustee November 30, 1998
- ------------------------
Covington Hardee

/s/Ralph L. Hodgkins, Jr. Trustee November 30, 1998
- -------------------------
Ralph L. Hodgkins, Jr.

/s/Maurice E. Kinkade Trustee November 30, 1998
- -------------------------
Maurice E. Kinkade

/s/William G. Lillis Trustee November 30, 1998
- -------------------------
William G. Lillis

/s/William A. McKenna Trustee November 23, 1998
- -------------------------
William A. McKenna

/s/William L. Schrauth Trustee November 30, 1998
- -------------------------
William L. Schrauth

/s/William Swan Trustee November 30, 1998
- -------------------------
William Swan

/s/Raymond L. Willis Trustee November 30, 1998
- -------------------------
Raymond L. Willis

24
<PAGE>

EXHIBIT INDEX

Exhibit Document
- ------- --------
<S> <C>
EX - 99.9.d. Service Agreement with Retirement System
Consultants Inc. (Filed herewith)

EX - 99.11.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

</TABLE>

<PAGE>

EXHIBIT 9.d.

<PAGE>

RETIREMENT SYSTEM CONSULTANTS INC.
RSI RETIREMENT TRUST

AMENDED AND RESTATED
SERVICE AGREEMENT

JANUARY 1, 1999

SERVICE AGREEMENT, dated as of the 1st day of January, 1999, between
RETIREMENT SYSTEM CONSULTANTS INC., a Delaware corporation (the "Servicer"), and
RSI RETIREMENT TRUST, a New York common law trust (the "Trust").

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 of profit-sharing plans which are
qualified under Section 401(a) of the Code and Individual Retirement Accounts
("IRA's") and

WHEREAS, such pension and profit-sharing plans and IRA's are eligible
to invest their assets in the Trust, and to become unitholders of the Trust (the
"Plans"); and

WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and

WHEREAS, the Board of Trustees of the Trust (the "Trustees") have, on
December 3, 1998, approved the execution and adoption of this Agreement by the
Trust, as an amendment and restatement of a service agreement entered into as of
August 1, 1993; and

WHEREAS, as part of a 1990 reorganization of the Trust, certain
general administrative services, transfer agent and registrar services and
services relating to the Plans, including various services with respect to the
Employee Retirement Income Security Act of

<PAGE>

1974, as amended ("ERISA"), were "externalized" and performed by the Servicer on
behalf of the Trust; and

WHEREAS, the Trust, in order to ensure the continuity of
administration of the Trust, and for certain other reasons, wishes to have the
Servicer continue to perform such general administrative, transfer agent and
registrar and Plan-related services for the Trust and to act in such capacity in
the manner set forth in this Agreement, and the Servicer is willing to act in
such capacity in accordance with the provisions of this Agreement;

NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt, sufficiency and adequacy of which are hereby acknowledged, the parties
hereto, intending to be legally bound, agree and promise as follows:

1. SERVICES TO BE PROVIDED.

In consideration of the compensation to be paid by the Trust to the
Servicer pursuant to Section 4 of this Agreement, the Servicer will:

a. Manage, supervise and conduct the affairs and business of the
Trust and matters incidental thereto. In the performance of its
duties, the Servicer will comply with the Trust's Agreement and
Declaration of Trust, dated as of October 22, 1940, as amended
(the "Trust Agreement"), its Rules and Procedures, its Statement
of Investment Objectives and Guidelines and its Prospectus, as
the same may be amended from time to time, all as delivered to
the Servicer (collectively, the "Controlling Documents"). The
Servicer will also use its best efforts to safeguard and promote
the welfare of the Trust and to comply with other policies which
the Trustees may from time to time specify. The Servicer will
furnish or provide to the Trust such office space equipment and
personnel, and such clerical and back office services, as the
Trust may reasonably require in the conduct of its affairs

- 2 -

<PAGE>

and business, including, without limitation, the general
administrative services described on Schedule I attached hereto.

b. Provide the Trust with all required stock transfer agent and
registrar services, including, without limitation, those services
described on Schedule II attached hereto. The Servicer will
maintain sufficient trained personnel and equipment and supplies
to perform such services in conformity with the Controlling
Documents and such other reasonable standards of performance as
the Trust may from time to time specify, and otherwise in an
accurate, timely and efficient manner.

c. Provide the Trust with Plan-related services, including, without
limitation, those services described on Schedule III attached
hereto, in order to enable the Trustees to fulfill their duties
as trustee/administrator of each of the Plans established under
the Trust Agreement.

2. OBLIGATIONS OF THE TRUST.

The Trust will have the following obligations under this Agreement:

a. To keep the Servicer continuously and fully informed as to the
composition of the Trust's investment portfolio and the nature of
all of the Trust's assets and liabilities, and to cause the
investment managers of the Trust's funds to cooperate with the
Servicer in all matters so as to enable the Servicer to perform
its functions under this Agreement.

b. To furnish the Servicer with any materials of information which
the Servicer may reasonably request to enable it to perform its
functions under this Agreement.

- 3 -

<PAGE>

3. PAYMENT OF FEES AND EXPENSES.

a. The Servicer will pay all of the fees and expenses incurred by it
in providing the Trust with the services and facilities described
in this Agreement, except as otherwise provided herein.

b. Notwithstanding any other provision of this Agreement, the Trust
will pay, or reimburse the Servicer for the payment of, the
following described fees and expenses incurred by or on behalf of
the Trust, including, without limitation, such fees and expenses
paid to Retirement System Investors Inc., whether or not billed
to the Trust, the Servicer or any related entity (hereinafter
called "Direct Expenses"):

(i) fees and expenses relating to investment advisory
services;

(ii) fees and expenses of custodians and depositories;

(iii) fees and expenses of outside legal counsel;

(iv) fees and expenses of independent auditors;

(v) fees and expenses of consultants;

(vi) interest charges;

(vii) all federal, state and local taxes (including, without
limitation, stamp, excise, income and franchise taxes);

(viii) costs of stock certificates and other expenses of issuing
and redeeming units;

(ix) costs incidental to unitholder meetings;

(x) fees and expenses of registering or qualifying units for
sale under federal and state securities laws;

(xi) costs (including postage) of printing and mailing
prospectuses, proxy statements and other reports and
notices to the Plans and to governmental agencies;

(xii) premiums on all insurance and bonds;

- 4 -

<PAGE>

(xiii) fees and expenses of the Trustees and expenses incidental
to the meetings of the Trustees;

(xiv) fees and expenses relating to the distribution of units
in the Trust under the Act, whether such fees and
expenses are paid to Retirement System Distributors Inc.
pursuant to the Distribution Agreement, dated August 1,
1993, between Retirement System Distributors Inc. and the
Trust, or to any other party pursuant to any other
related agreement;

(xv) fees and expenses paid to any securities pricing
organization; and

(xvi) fees and expenses paid to any third party arising out of
any of the Plan-related services described on Schedule
III attached hereto.

4. COMPENSATION.

As consideration for the services provided hereunder, the Trust will pay
the Servicer a fee on the last day of each month in which this Agreement is
in effect, at the following annual rates based on the average daily net
assets (the "Assets") of each of the Trust's separately managed investment
portfolios for such month:

Net Assets of Each Separately Fee (% of Average
Managed Investment Fund Daily Net Assets)
----------------------- -----------------
<S> <C>
First $25 Million .60%
Next $25 Million .50%
Next $25 Million .40%
Over $75 Million .30%

</TABLE>

In the event that this Agreement terminates on a date other than the end of
any calendar month, the fees 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 Servicer.

- 5 -

<PAGE>

5. REPORTS TO THE TRUSTEES.

The Servicer will consult with the Trustees at such times as the Trustees
reasonably request with respect to the services provided hereunder, and the
Servicer will cause its officers to attend such meetings with the Trustees,
and to furnish such oral or written reports to the Trustees, as the
Trustees may reasonably request.

6. TERM OF AGREEMENT.

This Agreement is effective on the date hereof. This Agreement will remain
in full force and effect through December 31, 2000, unless terminated
earlier in accordance with its terms, and thereafter from year to year,
provided: (a) that such continuance is approved by (i) either a vote of
the majority of the Trustees, or a vote of a "majority of the outstanding
voting securities" (as defined in the Act) of the Trust and (ii) a majority
of the Trustees who are not "interested persons" (as defined in the Act);
and (b) the following findings are made by a majority of the Trustees who
are not "interested persons" (as defined in the Act): (i) that this
Agreement is in the best interests of the Trust and the Plans; (ii) that
the services to be performed pursuant to this Agreement are services
required for the operation of the Trust; (iii) that the Servicer 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 (iv)
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.

7. TERMINATION.

a. 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 will be

- 6 -

<PAGE>

pursuant to a vote of a majority of the Trustees, or by a vote of a
"majority of the outstanding voting securities" (as defined in the
Act) of the Trust.

b. This Agreement will automatically terminate in the event of its
"assignment" (as defined in the Act).

8. STANDARD OF CARE.

a. Except as provided in ERISA, the Servicer will be under no
liability or obligation to anyone with respect to any failure on
the part of the Trustees or any investment manager to perform any
of their obligations under the Controlling Documents, or for any
error or omission whatsoever on the part of the Trustees or any
investment manager.

b. The Servicer will not be liable for any error of judgment or
mistake of law or for any loss caused by the Trust in connection
with the matters to which this Agreement relates; PROVIDED,
however, that the Servicer 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 are
applicable generally to fiduciaries under ERISA; PROVIDED
further, however, that nothing in this Agreement will protect the
Servicer against any liability to the Trust to which the Servicer
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.

- 7 -

<PAGE>

9. OTHER ACTIVITIES OF THE SERVICER.

Nothing herein contained will limit or restrict the right of the
Servicer to engage in any other business or to render services of any
kind to any other corporation, firm, individual or association.

10. NOTICES.

a. Communications to the Servicer from the Trust or the Trustees
shall be addressed to:

Retirement System Consultants Inc.
317 Madison Avenue
New York, NY 10017
Attention: President

b. Communications from the Servicer to the Trust or the Trustees
shall be addressed to:

RSI Retirement Trust
317 Madison Avenue
New York, NY 10017
Attention: President

c. 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 or the Trustees or the Servicer, as the case may
be. All communications addressed in the above manner and by
certified mail or delivered by hand will be sufficient under this
Agreement.

11. LAW GOVERNING.

This Agreement is governed by the laws of the State of New York
(without reference to such State's conflict of law rules).

- 8 -

<PAGE>

12. COUNTERPARTS.

This Agreement may be executed in counterparts, both of which shall be
deemed an original, but which together shall constitute one and the
same instrument.

13. AMENDMENT, WAIVER, ETC.

No term or provision of this Agreement may be amended, modified or
waived without the affirmative vote or action by written consent of
the Servicer and the Trust effected in accordance with the Act and
Section 6. of this Agreement.

IN WITNESS WHEREOF, the Servicer and the Trust have executed this
Agreement, effective as of the date first written above.

RETIREMENT SYSTEM CONSULTANTS INC.

By /s/Stephen P. Pollak
-----------------------------------
Name: Stephen P. Pollak
Title: Vice President and Secretary

RSI RETIREMENT TRUST

By /s/William Dannecker
-----------------------------------
Name: William Dannecker
Title: President and Trustee

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.

- 9 -

<PAGE>

SCHEDULE I

GENERAL ADMINISTRATIVE SERVICES

The Servicer agrees to provide the Trust with all required general
administrative services, including, without limitation, the following:

1. Office space, equipment and personnel.

2. Clerical and back office services.

3. Bookkeeping, internal accounting, secretarial and other general
administrative services.

4. Preparation of all reports, prospectuses, statements of
additional information, proxy statements and all other materials
required to be filed or furnished by the Trust under federal and
state securities laws.

5. Maintaining fund ledgers and determining net asset values.

<PAGE>

SCHEDULE II

TRANSFER AGENT AND REGISTRAR SERVICES

The Servicer agrees to provide the Trust with all required transfer agent
and registrar services, including, without limitation, the following:

1. Maintaining all unitholder accounts, including processing of new
accounts.

2. Posting address changes and other file maintenance for unitholder
accounts.

3. Posting all transactions to the unitholder file, including:

- Direct purchases
- Wire order purchases
- Direct redemptions
- Telephone redemptions
- Wire order redemptions
- Draft redemptions
- Direct exchanges
- Telephone exchanges
- Transfers

4. Quality control reviewing of every transaction before the mailing
of confirmations, checks and/or certificates to unitholders.

5. Issuing all checks and shipping and replacing lost checks.

6. Mailing confirmations, checks and/or certificates resulting from
transaction requests of unitholders.

7. Performing other mailings, including:

- Quarterly, semi-annual and annual reports
- 1099/year-end unitholder reporting
- Systematic withdrawal plan payments
- Daily confirmations

8. Answering all service-related telephone inquiries from
unitholders, including:

- 2 -

<PAGE>

- General and policy inquiries (research and resolve problems)
- Fund yield inquiries
- Taking unitholder processing requests and account
maintenance changes by telephone
- Submitting pending requests to correspondence
- Monitoring online statistical performance of units
- Developing reports on telephone activity

- 3 -

<PAGE>

SCHEDULE III

PLAN-RELATED SERVICES

The Servicer agrees to provide the Trust with certain Plan-related
services, including, without limitation, the following:

1. Maintaining tax-exempt status of the Trust.

2. Preparation of amendments to the Trust's Agreement and
Declaration of Trust and Rules and Procedures.

3. Consultation with the Trustees and Hewitt Associates, or such
other consultants as may be retained by the Trustees, in
assisting the Trustees in setting risk categories for defined
benefit plans in the Trust.

4. Consultation with the Trustees and Hewitt Associates, or such
other consultants as may be retained by the Trustees, in
assisting the Trustees in determining the asset allocation
guidelines between equities and fixed income obligations for
defined benefit plans in the Trust.

5. Consultation with the Trustees and Hewitt Associates, or such
other consultants as may be retained by the Trustees, in
assisting the Trustees with respect to determining the guidelines
for allocation among the Trust's various equity funds and fixed
income funds in the Trust.

6. Consultation with the Trustees and Hewitt Associates, or such
other consultants as may be retained by the Trustees, in
assisting the Trustees in determining which investment funds of
the Trust are suitable for investments made by defined
contribution plans.

- 4 -

<PAGE>

EXHIBIT 11.a.

<PAGE>

CONSENT OF INDEPENDENT AUDITORS

We hereby consent to the incorporation by reference of our report dated
October 30, 1998 on the financial statements of RSI Retirement Trust, referred
to therein in the Post-Effective Amendment No. 17 to the Registration Statement
on Form N-1A (File No. 2-95074) 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."

/s/ McGladrey & Pullen, LLP

New York, New York
November 25, 1998

<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> 01
<NAME> CORE EQUITY FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 71313099
<INVESTMENTS-AT-VALUE> 175933146
<RECEIVABLES> 2343241
<ASSETS-OTHER> 25203
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 178301590
<PAYABLE-FOR-SECURITIES> 272816
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1661815
<TOTAL-LIABILITIES> 1934631
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (147455283)
<SHARES-COMMON-STOCK> 2221060
<SHARES-COMMON-PRIOR> 2788994
<ACCUMULATED-NII-CURRENT> 48669083
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 170531315
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 104621844
<NET-ASSETS> 176366959
<DIVIDEND-INCOME> 3051088
<INTEREST-INCOME> 235593
<OTHER-INCOME> 0
<EXPENSES-NET> 1862865
<NET-INVESTMENT-INCOME> 1423816
<REALIZED-GAINS-CURRENT> 39334232
<APPREC-INCREASE-CURRENT> (31400154)
<NET-CHANGE-FROM-OPS> 9357894
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 276487
<NUMBER-OF-SHARES-REDEEMED> 844421
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (35906463)
<ACCUMULATED-NII-PRIOR> 47245267
<ACCUMULATED-GAINS-PRIOR> 131197083
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 1040755
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1862865
<AVERAGE-NET-ASSETS> 198720863
<PER-SHARE-NAV-BEGIN> 76.11
<PER-SHARE-NII> 0.58
<PER-SHARE-GAIN-APPREC> 2.72
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 79.41
<EXPENSE-RATIO> 0.009
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 64931005
<INVESTMENTS-AT-VALUE> 64514556
<RECEIVABLES> 259674
<ASSETS-OTHER> 14303
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64788533
<PAYABLE-FOR-SECURITIES> 316701
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 541168
<TOTAL-LIABILITIES> 857869
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (27931128)
<SHARES-COMMON-STOCK> 1136058
<SHARES-COMMON-PRIOR> 1052751
<ACCUMULATED-NII-CURRENT> 19333579
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 72936374
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (408161)
<NET-ASSETS> 63930664
<DIVIDEND-INCOME> 1236120
<INTEREST-INCOME> 139290
<OTHER-INCOME> 0
<EXPENSES-NET> 749027
<NET-INVESTMENT-INCOME> 626383
<REALIZED-GAINS-CURRENT> 11453123
<APPREC-INCREASE-CURRENT> (14028220)
<NET-CHANGE-FROM-OPS> (1948714)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 334572
<NUMBER-OF-SHARES-REDEEMED> 251265
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 3541592
<ACCUMULATED-NII-PRIOR> 18707196
<ACCUMULATED-GAINS-PRIOR> 61483251
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 261587
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 753437
<AVERAGE-NET-ASSETS> 67197427
<PER-SHARE-NAV-BEGIN> 57.36
<PER-SHARE-NII> 0.57
<PER-SHARE-GAIN-APPREC> (1.66)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 56.27
<EXPENSE-RATIO> 0.011
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<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> 02
<NAME> EMERGING GROWTH EQUITY FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 57404346
<INVESTMENTS-AT-VALUE> 57009435
<RECEIVABLES> 2556246
<ASSETS-OTHER> 12579
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 59578260
<PAYABLE-FOR-SECURITIES> 3038003
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 1253748
<TOTAL-LIABILITIES> 4291751
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (40744296)
<SHARES-COMMON-STOCK> 1007017
<SHARES-COMMON-PRIOR> 1084298
<ACCUMULATED-NII-CURRENT> (3897760)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 100323476
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> (394911)
<NET-ASSETS> 55286509
<DIVIDEND-INCOME> 102506
<INTEREST-INCOME> 451640
<OTHER-INCOME> 0
<EXPENSES-NET> 1490601
<NET-INVESTMENT-INCOME> (936455)
<REALIZED-GAINS-CURRENT> (4262193)
<APPREC-INCREASE-CURRENT> (25625265)
<NET-CHANGE-FROM-OPS> (30824213)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 153746
<NUMBER-OF-SHARES-REDEEMED> 231027
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (36302149)
<ACCUMULATED-NII-PRIOR> (2961305)
<ACCUMULATED-GAINS-PRIOR> 104585969
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 906749
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1546777
<AVERAGE-NET-ASSETS> 76761426
<PER-SHARE-NAV-BEGIN> 84.47
<PER-SHARE-NII> (0.90)
<PER-SHARE-GAIN-APPREC> (28.67)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 54.90
<EXPENSE-RATIO> 0.019
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<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> 05
<NAME> INTERNATIONAL EQUITY FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 33202721
<INVESTMENTS-AT-VALUE> 33808255
<RECEIVABLES> 832104
<ASSETS-OTHER> 451991
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 35092350
<PAYABLE-FOR-SECURITIES> 34184
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 975550
<TOTAL-LIABILITIES> 1009734
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (2206300)
<SHARES-COMMON-STOCK> 750128
<SHARES-COMMON-PRIOR> 690533
<ACCUMULATED-NII-CURRENT> (1761617)
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37586795
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 463738
<NET-ASSETS> 34082616
<DIVIDEND-INCOME> 491417
<INTEREST-INCOME> 124604
<OTHER-INCOME> 0
<EXPENSES-NET> 716717
<NET-INVESTMENT-INCOME> (100696)
<REALIZED-GAINS-CURRENT> 1791647
<APPREC-INCREASE-CURRENT> (5778005)
<NET-CHANGE-FROM-OPS> (4087054)
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 195365
<NUMBER-OF-SHARES-REDEEMED> 135770
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (1193679)
<ACCUMULATED-NII-PRIOR> (1660921)
<ACCUMULATED-GAINS-PRIOR> 35795148
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 295732
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 736717
<AVERAGE-NET-ASSETS> 36974272
<PER-SHARE-NAV-BEGIN> 51.09
<PER-SHARE-NII> (0.14)
<PER-SHARE-GAIN-APPREC> (5.51)
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 45.44
<EXPENSE-RATIO> 0.019
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<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> 08
<NAME> ACTIVELY MANAGED BOND FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 156375535
<INVESTMENTS-AT-VALUE> 164837305
<RECEIVABLES> 6486963
<ASSETS-OTHER> 288804
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 171613072
<PAYABLE-FOR-SECURITIES> 3972931
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5285092
<TOTAL-LIABILITIES> 9258023
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (49203909)
<SHARES-COMMON-STOCK> 4303204
<SHARES-COMMON-PRIOR> 4341073
<ACCUMULATED-NII-CURRENT> 165876513
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 37220675
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 8461770
<NET-ASSETS> 162355049
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 10517554
<OTHER-INCOME> 0
<EXPENSES-NET> 1218565
<NET-INVESTMENT-INCOME> 9298989
<REALIZED-GAINS-CURRENT> 3247694
<APPREC-INCREASE-CURRENT> 3846747
<NET-CHANGE-FROM-OPS> 16393430
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 744236
<NUMBER-OF-SHARES-REDEEMED> 782105
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 15216243
<ACCUMULATED-NII-PRIOR> 156577524
<ACCUMULATED-GAINS-PRIOR> 33972981
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 500102
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 1218565
<AVERAGE-NET-ASSETS> 150993469
<PER-SHARE-NAV-BEGIN> 33.89
<PER-SHARE-NII> 2.19
<PER-SHARE-GAIN-APPREC> 1.65
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 37.73
<EXPENSE-RATIO> 0.008
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<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-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 59784684
<INVESTMENTS-AT-VALUE> 61118908
<RECEIVABLES> 3757313
<ASSETS-OTHER> 60958
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 64937179
<PAYABLE-FOR-SECURITIES> 0
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 5218763
<TOTAL-LIABILITIES> 5218763
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (84337106)
<SHARES-COMMON-STOCK> 1751290
<SHARES-COMMON-PRIOR> 2167435
<ACCUMULATED-NII-CURRENT> 126622050
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 16099248
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 1334224
<NET-ASSETS> 59718416
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 4527149
<OTHER-INCOME> 0
<EXPENSES-NET> 711751
<NET-INVESTMENT-INCOME> 3815398
<REALIZED-GAINS-CURRENT> 864694
<APPREC-INCREASE-CURRENT> 282393
<NET-CHANGE-FROM-OPS> 4962485
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 227648
<NUMBER-OF-SHARES-REDEEMED> 643793
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> (8670352)
<ACCUMULATED-NII-PRIOR> 122806652
<ACCUMULATED-GAINS-PRIOR> 15234554
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 243403
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 711751
<AVERAGE-NET-ASSETS> 64481367
<PER-SHARE-NAV-BEGIN> 31.55
<PER-SHARE-NII> 1.93
<PER-SHARE-GAIN-APPREC> 0.62
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 34.10
<EXPENSE-RATIO> 0.011
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>

<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> 06
<NAME> SHORT TERM INVESTMENT FUND

<S> <C>
<PERIOD-TYPE> 12-MOS
<FISCAL-YEAR-END> SEP-30-1998
<PERIOD-START> OCT-01-1997
<PERIOD-END> SEP-30-1998
<INVESTMENTS-AT-COST> 30076621
<INVESTMENTS-AT-VALUE> 30115097
<RECEIVABLES> 2634751
<ASSETS-OTHER> 484335
<OTHER-ITEMS-ASSETS> 0
<TOTAL-ASSETS> 33234183
<PAYABLE-FOR-SECURITIES> 578808
<SENIOR-LONG-TERM-DEBT> 0
<OTHER-ITEMS-LIABILITIES> 270855
<TOTAL-LIABILITIES> 849663
<SENIOR-EQUITY> 0
<PAID-IN-CAPITAL-COMMON> (11061810)
<SHARES-COMMON-STOCK> 1451475
<SHARES-COMMON-PRIOR> 1272760
<ACCUMULATED-NII-CURRENT> 42078568
<OVERDISTRIBUTION-NII> 0
<ACCUMULATED-NET-GAINS> 1329286
<OVERDISTRIBUTION-GAINS> 0
<ACCUM-APPREC-OR-DEPREC> 38476
<NET-ASSETS> 32384520
<DIVIDEND-INCOME> 0
<INTEREST-INCOME> 1406761
<OTHER-INCOME> 0
<EXPENSES-NET> 198044
<NET-INVESTMENT-INCOME> 1208717
<REALIZED-GAINS-CURRENT> (625)
<APPREC-INCREASE-CURRENT> 21885
<NET-CHANGE-FROM-OPS> 1229977
<EQUALIZATION> 0
<DISTRIBUTIONS-OF-INCOME> 0
<DISTRIBUTIONS-OF-GAINS> 0
<DISTRIBUTIONS-OTHER> 0
<NUMBER-OF-SHARES-SOLD> 2372449
<NUMBER-OF-SHARES-REDEEMED> 2193734
<SHARES-REINVESTED> 0
<NET-CHANGE-IN-ASSETS> 5363485
<ACCUMULATED-NII-PRIOR> 40869851
<ACCUMULATED-GAINS-PRIOR> 1329911
<OVERDISTRIB-NII-PRIOR> 0
<OVERDIST-NET-GAINS-PRIOR> 0
<GROSS-ADVISORY-FEES> 61881
<INTEREST-EXPENSE> 0
<GROSS-EXPENSE> 321891
<AVERAGE-NET-ASSETS> 24715601
<PER-SHARE-NAV-BEGIN> 21.23
<PER-SHARE-NII> 1.06
<PER-SHARE-GAIN-APPREC> 0.02
<PER-SHARE-DIVIDEND> 0
<PER-SHARE-DISTRIBUTIONS> 0
<RETURNS-OF-CAPITAL> 0
<PER-SHARE-NAV-END> 23.31
<EXPENSE-RATIO> 0.008
<AVG-DEBT-OUTSTANDING> 0
<AVG-DEBT-PER-SHARE> 0

</TABLE>