As Filed with the Securities and Exchange Commission on November 23, 1999
Securities Act File No. 2-95074
Investment Company Act File No. 811-04193
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-1A
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF l933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. 18 [X]
and/or
REGISTRATION STATEMENT UNDER THE INVESTMENT COMPANY ACT OF l940 [X]
Amendment No. 20 [X]
(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
405 Lexington Avenue
New York, New York 10174
It is proposed that this filing will become effective (check appropriate
box):
[ ] immediately upon filing pursuant to paragraph (b)
[ ] on (date) pursuant to paragraph (b)
[x] 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.
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<PAGE>
P R O S P E C T U S
RSI RETIREMENT TRUST
A no-load series mutual fund currently offering seven investment funds.
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
The Funds are offered only to:
- Employer-sponsored tax-exempt retirement trusts
implementing tax-qualified pension or profit sharing plans; and
- Tax-exempt individual retirement trusts or custodial accounts,
including Individual Retirement Accounts.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED
UPON THE ADEQUACY OR ACCURACY OF THE PROSPECTUS. ANY REPRESENTATION TO
THE CONTRARY IS A CRIMINAL OFFENSE.
January 28, 2000
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TABLE OF CONTENTS
Page
----
OVERVIEW............................................................1
The Equity Funds....................................................2
Core Equity Fund...............................................2
Value Equity Fund..............................................2
Emerging Growth Equity Fund....................................2
International Equity Fund......................................2
FEE TABLE......................................................6
The Bond Funds......................................................7
Actively Managed Bond Fund.....................................7
Intermediate-Term Bond Fund....................................7
Short-Term Investment Fund.....................................7
FEE TABLE.....................................................10
OTHER INFORMATION ABOUT THE FUNDS' INVESTMENTS.....................11
Special Policy Relating to Distributions......................11
Additional Information About the Funds' Investment
Policies and Risks..........................................11
HOW THE FUNDS ARE MANAGED..........................................17
The Investment Advisers.......................................18
The Portfolio Managers........................................18
Amounts Paid for Portfolio Management.........................19
INVESTING IN THE TRUST.............................................20
Who may Invest.....................................................20
Employer Sponsored Plans......................................20
Individual Retirement Accounts (IRAs).........................23
PURCHASES..........................................................23
WITHDRAWALS AND EXCHANGES..........................................24
Withdrawals from Investment Funds (Redemptions)...............24
Withdrawal Due to Disqualification............................25
Exchanges.....................................................25
VALUATION OF UNITS.................................................26
DISTRIBUTIONS AND TAXES............................................27
<PAGE>
<PAGE>
ADMINISTRATION OF THE TRUST........................................27
The Distribution Agreement....................................27
The Service Agreement.........................................28
Custodian.....................................................28
Expenses......................................................28
GENERAL INFORMATION................................................29
Units of Beneficial Interest and Voting Rights................29
FINANCIAL HIGHLIGHTS...............................................30
COUNSEL AND AUDITORS...............................................37
<PAGE>
<PAGE>
RSI RETIREMENT TRUST
OVERVIEW
RSI Retirement Trust (the "Trust") is a no load series mutual fund that
currently offers seven investment funds ("Investment Funds" or "Funds"), each
with its own investment objectives and investment strategies. The Investment
Funds include four equity funds (the "Equity Funds") and three fixed income
funds (the "Bond Funds").
Each of the Investment Funds has a TOTAL RETURN* objective, and the
PRIMARY INVESTMENTS of each Investment Fund are:
CORE EQUITY FUND: Equity securities of companies considered
for growth only and for growth and income.
VALUE EQUITY FUND: Equity securities of companies considered
to be undervalued.
EMERGING GROWTH EQUITY FUND: Equity securities of rapidly growing,
emerging companies.
INTERNATIONAL EQUITY FUND: Equity securities of companies domiciled
outside of the United States.
ACTIVELY MANAGED BOND FUND: U.S. Government securities and high grade
corporate bonds, without limit as to
maturity.
INTERMEDIATE-TERM BOND FUND: U.S. Government securities and high grade
corporate bonds, with an average weighted
portfolio maturity of 2 1/2 to 5 years and
average modified duration of 2 1/2 to 4
years.
SHORT-TERM INVESTMENT FUND: U.S. Government and high quality corporate,
short-term fixed income securities.
* 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).
The Funds are offered only to:
- Employer-sponsored tax-exempt retirement trusts
implementing tax-qualified pension or profit sharing plans; and
- Tax-exempt individual retirement trusts or custodial accounts,
funding Individual Retirement Accounts.
This Prospectus sets forth information about the Funds that an investor
ought to know before investing. Please read and retain this Prospectus for
future reference. For information about how to obtain additional information
about the Trust and the Investment funds, see the back cover of this
Prospectus.
<PAGE>
<PAGE>
THE EQUITY FUNDS
CORE EQUITY FUND:
- - OBJECTIVE: A TOTAL RETURN that exceeds the total return of the Lipper
Large-Cap Core Mutual Funds Average measured over a period of three to
five years
- - PRIMARY INVESTMENTS: Equity securities (common stocks and other equity-
based securities).
VALUE EQUITY FUND:
- - OBJECTIVE: A TOTAL RETURN that exceeds the total return of the Lipper
Multi-Cap Value Mutual Funds Average measured over a period of three to
five years.
- - PRIMARY INVESTMENTS: Equity securities of companies considered to be
undervalued.
EMERGING GROWTH EQUITY FUND:
- - OBJECTIVE: A TOTAL RETURN that exceeds the total return of the Lipper
Small Company Growth Mutual Funds Average measured over a period of
three to five years.
- - PRIMARY INVESTMENTS: Equity securities of rapidly growing, emerging
companies.
INTERNATIONAL EQUITY FUND:
- - OBJECTIVE: A TOTAL RETURN (currency adjusted) that exceeds the total
return of the Lipper International Mutual Funds Average measured over a
period of three to five years.
- - PRIMARY INVESTMENTS: Equity securities of companies domiciled outside of
the United States.
The investment objectives of all the Funds are not fundamental and may be
changed by the Trustees without unitholder approval. There is no assurance
that any Fund will meet its objective, and investors in any of the Funds could
lose money.
PRINCIPAL STRATEGIES
All of the Equity Funds invest 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")
for common stock of foreign companies.
In general, the Equity Funds will invest in companies with market
capitalizations in excess of $1 billion, except for the EMERGING GROWTH EQUITY
FUND, which may invest in companies with market capitalizations ranging between
$50 million and $1 billion at the time of purchase. Except for the
INTERNATIONAL EQUITY FUND, each of the Equity Funds may invest no more than 20%
of its total assets in securities of foreign issuers.
Each of the Equity Funds may temporarily hold a portion (not exceeding
25%) of its assets in cash equivalents. Under normal market conditions,
however, the Funds will be fully invested (i.e., at least 90%) in equity-based
securities.
The CORE EQUITY FUND will select securities of a company considering such
factors as the sales, growth, and profitability prospects for the company's
economic sector and markets and 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.
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<PAGE>
The VALUE EQUITY FUND will select securities of companies that its
investment manager considers to be "undervalued" due to the perceptions of
other investors and selling at unjustifiably low price/earnings ratios or
price-to-book ratios, or offer exceptional dividend yield. The investment
manager looks for financially sound companies that offer prospects for
significant earnings or dividend growth relative to their market prices. At
the time of purchase by the Fund, such companies generally will have
price/earnings or other valuation ratios that are lower than average for
companies included in the broad stock market indices.
The EMERGING GROWTH EQUITY FUND will select securities of companies that
its investment manager expects to experience rapid earnings growth in the next
few years. Such companies may include: 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 $1
billion 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. Compared to companies in the same or a similar industry
and included in the broad stock market indices, emerging growth companies
generally exhibit higher than average sales, earnings and growth, and smaller
than average market capitalization.
The INTERNATIONAL EQUITY FUND invests primarily in securities of
companies domiciled outside of the United States, 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. However, investments in such United States companies will normally be
less than 10% of the Fund's total assets. The Fund will not invest in
developing countries, and it will not invest in any foreign market unless the
investment adviser, the Fund custodian and Fund management are satisfied with
local administrative and regulatory controls within the market.
The INTERNATIONAL EQUITY FUND will select securities of companies
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.
All of the Funds will sell securities when the investment manager deems
them to have fulfilled the potential for which they were chosen, when they are
deemed to no longer fit the strategy of a Fund, or to obtain cash for other,
more promising investments. None of the Funds will purchase securities solely
for the purpose of short-term trading, but the turnover rate for a Fund will
not be a factor preventing sale or purchase when the investment manager
believes investment considerations warrant such sale or purchase.
MAIN RISKS
Market risk: Market risk is the risk that the stock market will go down
in value, including the possibility that the market will go down sharply and
unpredictably. Such downturns can cause the securities held by the Funds to
lose value, even if those securities are performing as well as or better than
the market generally. Investments in foreign markets are subject to similar
market risk, and there is a risk that a foreign market may decline during a
period when the United States stock market is stable or rising.
<PAGE>
<PAGE>
Stock selection risk: Stock selection risk is the risk that the Funds'
investment managers will make the wrong choices when selecting investments
(e.g., a Fund's investments may underperform the market or securities of
similar companies, securities of a company selected as a Fund as being
undervalued may fail to appreciate as expected).
Liquidity risk: Liquidity risk is the risk of possible limited volume
of frequency of trades for certain issues.
Inflation risk: Inflation risk is the risk that a portion of an
investment's return may be eliminated by inflation.
Foreign investment risk: The INTERNATIONAL EQUITY FUND invests primarily
in foreign securities. Investments in securities of foreign issuers and in
securities involving foreign currencies have additional risks, including the
effect of different economies, changes in currency rates, possible adverse
political and economic developments, and possible government-imposed
investment restrictions. Also, foreign securities trading on foreign
exchanges may be less liquid and more volatile than securities of comparable
domestic issuers trading in United States markets. Therefore, foreign
securities may be harder to value and harder to buy or sell than U.S.
securities.
RISK COMPARISON AMONG THE FUNDS
Over time, the VALUE EQUITY FUND has exhibited a slightly higher degree
of risk and price volatility than the Core Equity Fund.
The EMERGING GROWTH EQUITY FUND generally will have a higher degree of
risk and price volatility than the Core Equity Fund and the Value Equity Fund,
and it will have higher return expectations.
FUND PERFORMANCE
The following bar graphs and tables give some indication of the risks of
investing in the Funds by showing changes in a Fund's performance from year to
year over a 10-year period and by showing how a Fund's average annual returns
for one, five, and ten years compare to that of a broad-based securities
market index. How a Fund has performed in the past is not necessarily an
indication of how a Fund will perform in the future.
The figures for best and worst quarter returns during the same 10-year
period show the Funds' potential for short-term performance swings.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURNS
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Core Equity Fund 33.51% -3.23% 21.46% 6.30% 10.34% 1.31% 40.17% 21.53% 25.32% 25.85%
Value Equity Fund 14.42 -8.98 24.2 8.42 8.10 -1.14 33.96 25.90 31.70 17.90
Emerging Growth
Equity Fund 12.58 -9.88 53.53 15.82 20.99 3.53 42.83 27.09 8.25 -7.08
International
Equity Fund 13.63 -13.91 9.35 -5.41 30.37 0.77 12.46 10.86 0.92 14.79
</TABLE>
<PAGE>
<PAGE>
BEST AND WORST QUARTERS
Quarter Ended Total Return
Core Equity Fund
Best quarter 12/31/98 19.93%
Worst quarter 9/30/90 -11.08%
Value Equity Fund
Best quarter 12/31/98 21.01%
Worst quarter 9/30/90 -20.47%
Emerging Growth Equity Fund
Best quarter 3/31/91 30.50%
Worst quarter 9/30/98 -28.19%
International Equity Fund
Best quarter 12/31/98 21.01%
Worst quarter 9/30/90 -20.47%
AVERAGE ANNUAL TOTAL RETURNS AT 12/31/98
1 Year 5 Years 10 Years
Core Equity Fund 25.85% 22.17% 17.49%
S&P 500 28.70% 24.09% 19.22%
Lipper Growth & Income Funds 15.61% 18.35% 15.53%
Value Equity Fund 17.90% 20.95% 14.66%
Russell 1000 Value 15.63% 20.85% 17.39%
Lipper Growth & Income Funds 15.61% 18.35% 15.53%
Emerging Growth Equity Fund -7.08% 13.58% 15.23%
Russell 2000 Growth 1.23% 10.22% 11.54%
Lipper Small Company Growth Funds -0.32% 12.87% 15.07%
International Equity Fund 14.79% 7.79% 6.74%
EAFE 19.97% 9.19% 5.54%
Lipper International Equity Funds 13.05% 7.69% 8.95%
<PAGE>
<PAGE>
FEE TABLE
Shown below are all expenses incurred by the Investment Funds, during the
1999 fiscal year, restated where appropriate, to reflect current fees. This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
<TABLE>
<CAPTION>
Emerging
Core Value Growth
Equity Equity Equity International
Fund Fund Fund Equity Fund
------ ------ ------- --------------
<S> <C> <C> <C> <C>
I. Shareholder Fees
(fees paid directly from your investment)
Maximum Sales Change (Load) Imposed on Purchases None None None None
Maximum Deferred Sales Charge (Load) None None None None
Maximum Sales Charge (Load)Imposed
on Reinvested Dividends None None None None
Redemption Fee None None None None
Exchange Fee None None None None
II. Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
(as a percentage of average net assets)
Management Fees .52% .38% 1.13% .90%
Distribution (12b-1) Fees None None None None
Other Expenses .45% .64% .86% 1.07%
Total Annual Fund Operating Expenses .97% 1.02% 1.99% 1.97%
</TABLE>
III. Example: This Example is intended to help you compare the cost of
investing in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in a Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
Emerging
Core Value Growth
Equity Equity Equity International
Fund Fund Fund Equity Fund
------ ------ ------- --------------
1 year $99 $104 $202 $200
3 years $309 $325 $625 $619
5 years $537 $564 $1,075 $1,064
10 years $1,196 $1,255 $2,336 $2,315
The purpose of this table is to assist investors in understanding the
costs and expenses an investor in the Trust will bear. See, "Administration
of the Trust -- The Distribution Agreement" and "Administration of the Trust --
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, "Adminstration of the Trust -- The Service Agreement" for further
- ---
information, including information regarding certain changes to the fees paid
in connection with the Service Agreement, which changes went 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, "How the Funds are Managed" and
"Administraiton of the Trust -- 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.
<PAGE>
<PAGE>
THE BOND FUNDS
ACTIVELY MANAGED BOND FUND:
- - OBJECTIVE: A TOTAL RETURN that exceeds that of the Lipper U.S.
Government Bond Funds Average measured over a period of three to five
years.
- - PRIMARY INVESTMENTS: U.S. Government securities and high grade corporate
bonds, without limit as to maturity.
- - PRIMARY EMPHASIS: Seeking its objective through periodic altering of the
structure and average weighted maturity of the portfolio.
INTERMEDIATE-TERM BOND FUND:
- - OBJECTIVE: A TOTAL RETURN that exceeds that 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.
- - PRIMARY INVESTMENTS: U.S. Government securities and high grade corporate
bonds, with an average weighted portfolio maturity of 2 1/2 to 5 years.
- - PRIMARY EMPHASIS: A high level of current income, with consideration
also given to safety of principal.
SHORT-TERM INVESTMENT FUND:
- - OBJECTIVE: A 12 month total return that exceeds the average return of a
broad-based universe of money market funds.
- - PRIMARY INVESTMENTS: U.S. Government and high quality corporate, short-
term fixed income securities.
- - PRIMARY EMPHASIS: Current income and safety of principal.
- - THIS FUND IS NOT A MONEY MARKET FUND AND ITS NET ASSET VALUE WILL
FLUCTUATE.
The investment objectives of all the Funds are not fundamental and may be
changed by the Trustees without unitholder approval. There is no assurance
that any Fund will meet its objective, and investors in any of the Funds could
lose money.
PRINCIPAL STRATEGIES
The ACTIVELY MANAGED BOND FUND and the INTERMEDIATE-TERM BOND FUND must
invest at least 65% of their portfolios in U.S. Government securities. At
least 75% of their portfolios must be invested in U.S. Government securities
or in debt securities having a rating in one of the top two categories of a
nationally known rating service. Any other investments for the portfolios
must be U.S. corporate debt securities having a rating in one of the top three
categories at the time of investment. Each Fund may invest in zero-coupon
obligations of corporations, instruments evidencing ownership of future
interest only (IO) or principal only (PO) payments on United States Treasury
Bonds, and collateralized mortgage obligations. Each Fund may invest up to
10% of its total assets in securities of foreign issuers. A portion of the
portfolio of each Fund may be temporarily held, without limitation on amount,
in cash equivalents.
The ACTIVELY MANAGED BOND FUND seeks to achieve its objective through
selective investment in U.S. Government and corporate debt securities and
through periodic altering of the structure (particularly the maturity
structure) of the portfolio. The investment manager will lengthen and shorten
the average weighted maturity of the portfolio, and make shifts in quality and
sector distribution, according to the manager's expectations for the future
course of interest rates and the then prevailing price and yield levels in the
fixed-income market. An important technique will be the manager's use of cash
reserves (i.e., cash reserves would be increased when interest rates are
expected to rise and decreased when interest rates are expected to drop.) The
ACTIVELY MANAGED BOND FUND invests in fixed-income securities without any
restriction on maturity.
<PAGE>
<PAGE>
The INTERMEDIATE-TERM BOND FUND seeks to achieve its objective by
realizing a high level of current income, with consideration also given to
safety of principal through investment in fixed-income securities either
maturing within ten years or having an expected average life of under ten
years. The Fund is managed within an average portfolio maturity between 2 1/2
to 5 years and an average modified duration between 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 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. The Fund will maintain a dollar weighted average portfolio maturity
of twelve months or less. The fund may invest in: obligations issued by or
guaranteed by the United States government, its agencies or instrumentalities,
bank obligations issued by United States banks and foreign banks, commercial
paper and master demand notes issued by U.S. corporations, and bonds, debentures
or notes issued by U.S. corporations. The Fund may invest up to 10% of its
total assets in securities of foreign issuers.
MAIN RISKS
Credit risk: This is the risk that issuer of a debt security will default
on any payment of interest or principal required by the terms of the security.
This risk is greater for corporate securities than for U.S. Government
securities, and greater for lower rated corporate securities than for higher
rated ones.
Inflation risk: Inflation risk is the risk that a portion of an
investment's return may be eliminated by inflation.
Interest rate risk: This is the risk that the value of debt securities
held in the Funds will decline when interest rates rise. The effect on the
price of the security is greater for securities with longer maturities.
Therefore, this risk will increase for the ACTIVELY MANAGED BOND FUND as the
weighted average maturity of its portfolio increases. IOs and POs are
especially sensitive to changes in interest rates; a decline in interest rates
could cause a severe drop in the value of IOs (as mortgages are prepaid at a
faster rate than expected) and a rise in interest rates could cause a drop in
the value of POs (as mortgages are prepaid at a slower rate than expected).
Interest rate prediction risk: This is the risk that the investment
manager of the ACTIVELY MANAGED BOND FUND may incorrectly predict movements in
the interest rate for according to which the Fund's investments are managed.
If adjustments in the Fund's portfolio are made to accommodate interest rate
changes that do not happen as predicted, the Fund will realize a lower return
than it would had it not made the portfolio adjustments.
RISK COMPARISON AMONG THE FUNDS
The INTERMEDIATE-TERM BOND FUND generally will have a higher degree of
risk and price volatility than the Short-term Investment Fund.
The ACTIVELY MANAGED BOND FUND generally will have a higher degree of
risk and price volatility than the Intermediate-Term Bond Fund and the Short-
Term Investment Fund.
FUND PERFORMANCE
The following bar graphs and tables give some indication of the risks of
investing in the Funds by showing changes in a Fund's performance from year to
year over a 10-year period and by showing how a Fund's average annual returns
for one, five, and ten years compare to that of a broad-based securities
market index. How a Fund has performed in the past is not necessarily an
indication of how a Fund will perform in the future.
<PAGE>
<PAGE>
The figures for best and worst quarter returns during the same 10-year
period show the Funds' potential for short-term performance swings.
<TABLE>
<CAPTION>
CALENDAR YEAR TOTAL RETURNS
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C> <C>
Actively Managed
Bond Fund 11.07 7.76 17.27 6.69 11.20 -4.21 17.70 3.15 9.70 8.38
Intermediate-
Term Bond Fund 11.00 9.51 14.72 5.98 7.63 -2.54 13.99 4.02 7.07 6.69
Short-Term
Investment Fund 9.09 8.11 5.66 3.12 2.40 3.40 5.39 4.70 4.93 5.03
</TABLE>
BEST AND WORST QUARTERS
Quarter Ended Total Return
Actively Managed Bond Fund
Best quarter 9/30/91 6.84%
Worst quarter 3/31/94 -3.19%
Intermediate-Term Bond Fund
Best quarter 6/30/89 5.29%
Worst quarter 3/31/94 -1.85%
Short-Term Investment Fund
Best quarter 6/30/89 2.35%
Worst quarter 9/30/93 0.51%
AVERAGE ANNUAL TOTAL RETURNS
1 Year 5 Years 10 Years
Actively Managed Bond Fund 8.38% 6.69% 8.70%
Lehman Brothers Aggregate 8.67% 7.27% 9.26%
Lipper U.S. Government Bond Funds 8.07% 6.15% 8.19%
Intermediate-Term Bond Fund 6.69% 5.71% 7.70%
Lehman Brothers Government 8.47% 6.45% 8.34%
Intermediate
Lipper Short Intermediate 6.58% 5.34% 7.48%
U.S. Government Fund Average
Short-Term Investment Fund 5.03% 4.69% 5.16%
Salomon Brothers Six Month
Treasury Bills 5.27% 5.28% 5.66%
Lipper Money Market Funds Average 4.84% 4.77% 5.20%
<PAGE>
<PAGE>
FEE TABLE
Shown below are all expenses incurred by the Investment Funds, during the
1999 fiscal year, restated where appropriate, to reflect current fees. This
table describes the fees and expenses that you may pay if you buy and hold
shares of the Funds.
<TABLE>
<CAPTION>
Actively Intermediate Short-
Managed Term Term
Bond Bond Investment
Fund Fund Fund
------ ------ ---------
<S> <C> <C> <C>
I. Shareholder Fees (fees paid directly from your investment) None None None
Maximum Sales Change (Load) Imposed on Purchases None None None
Maximum Deferred Sales Charge (Load) None None None
Maximum Sales Charge (Load)Imposed on Reinvested Dividends None None None
Redemption Fee None None None
Exchange Fee None None None
II. Annual Fund Operating Expenses
(expenses that are deducted from fund assets)
(as a percentage of average net assets)
Management Fees .31% .38% .25%
Distribution (12b-1) Fees None None None
Other Expenses+ .47% .74% 1.01%+
Total Annual Fund Operating Expenses .78% 1.12% 1.26%+
</TABLE>
III. Example: This Example is intended to help you compare the cost
of investing in the Fund with the cost of investing in other mutual funds.
The Example assumes that you invest $10,000 in the Fund for the time
periods indicated and then redeem all of your shares at the end of those
periods. The Example also assumes that your investment has a 5% return each
year and that the Fund's operating expenses remain the same. Although your
actual costs may be higher or lower, based on these assumptions your costs
would be:
Actively Intermediate- Short-Term
Managed Term Bond Investment
Bond Fund Fund Fund
--------- ------------- -----------
1 year $80 $114 $128
3 years $249 $356 $400
5 years $434 $618 $693
10 years $970 $1,371 $ 1,533
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 Trust -- 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 Trust -- The Service Agreement" for further
- ---
information, including information regarding certain changes to the fees paid
in connection with the Service Agreement, which changes went 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, "How the Funds are Managed" and "General
---
Information -- Expenses" for further information.
<PAGE>
<PAGE>
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.
+"Other Expenses" for the Short-Term Investment Fund do not reflect a
voluntary fee waiver by Retirement System Consultants Inc. (which will
continue for at least the current fiscal year of the Fund). With the
voluntary fee waiver, other expenses for this Investment Fund are .55% of
average net assets and total annual fund operating expenses for this
Investment Fund are .80%.
OTHER INFORMATION ABOUT THE FUNDS' INVESTMENTS
SPECIAL POLICY RELATING TO DISTRIBUTIONS
Although most 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 Trust does. This policy
arises from the fact that the Trust, unlike most investment companies,
exclusively invests retirement assets. Participating Trusts do, however,
receive a benefit from any current income of the Trust comparable to the
benefit received from the distributions made by most other investment
companies. In the Trust, 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.
ADDITIONAL INFORMATION ABOUT THE FUNDS' INVESTMENT POLICIES AND RISKS
The following investment policies and risks apply to all Investment Funds
unless otherwise noted.
Foreign Securities
------------------
Each of the Equity Funds may invest up to 20% of the value of its total
assets in securities of foreign issuers. Each of the Bond Funds 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 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 was
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) were redenominated in the
euro upon its introduction,
<PAGE>
<PAGE>
and 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. Each Investment fund may enter into forward
foreign currency exchange contracts. A forward foreign currency exchange
contract is an obligation to purchase or sell a specific currency at a future
date at a price set at the time of the contract.
In order to protect itself against a possible loss between trade and
settlement dates resulting from an adverse change in currency exchange rates,
each Fund may enter into forward foreign currency exchange contracts.
However, this practice will 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.
Cash Equivalents
----------------
A portion of any Investment Fund may be held in cash equivalents. Cash
equivalents are interest-bearing instruments or deposits maturing within one
year in which funds are invested temporarily pending long-term investment or
in which funds are invested when warranted for liquidity reasons or when
market conditions warrant a temporary "defensive" investment strategy. The
purpose of cash equivalents is to provide income at money market rates while
minimizing the risk of decline in value to the maximum extent possible. The
instruments may include, but are not limited to, repurchase
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<PAGE>
agreements, obligations issued by or guaranteed by the United States
government, its agencies or instrumentalities, obligations of banks, and
commercial paper.
Repurchase Agreements
---------------------
Each Investment Fund may enter into repurchase agreements. Under
repurchase agreements, an Investment Fund purchases a security 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 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. The Funds will enter into repurchase
agreements only for U.S. Government securities.
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 will be
entered into only when the investment manager believes an Investment Fund's
earnings from the transaction will exceed the interest expense incurred.
Lending Portfolio Securities
----------------------------
Any Investment Fund may lend its portfolio securities where such loans
are callable at any time and are continuously secured by collateral (cash,
government securities or Letters of Credit) equal to no less than the market
value, determined daily, of the securities loaned. Securities may be lent to
normal market participants such as broker-dealers. 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. 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.
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.
<PAGE>
<PAGE>
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. 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.
An Investment Fund will not enter into futures contracts or related
options, except for bona fide hedging purposes, if the aggregate initial
margin and premiums exceed 5% of the liquidation value of such Investment
Fund's total assets.
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.
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.
Short-Term Trading and Portfolio Turnover
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
<PAGE>
<PAGE>
portfolio turnover rates for each of the seven Investment Funds for the fiscal
year ended September 30, 1999 were as follows: Core Equity Fund (8.89%),
Emerging Growth Equity Fund (222.98%), Value Equity Fund (90.14%),
International Equity Fund (120.42%), Actively Managed Bond Fund (42.18%),
Intermediate-Term Bond Fund (50.51%) and Short-Term Investment Fund (0.46%).
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 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.
INTERNATIONAL EQUITY FUND
The INTERNATIONAL EQUITY FUND may invest 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 of 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.
ACTIVELY MANAGED BOND FUND AND INTERMEDIATE-TERM BOND FUND
The ACTIVELY MANAGED BOND FUND AND INTERMEDIATE-TERM BOND FUND may invest
in Zero-coupon 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 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.
<PAGE>
<PAGE>
From time to time the ACTIVELY MANAGED BOND FUND AND 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 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, and AAA rated whole loans. Stripped mortgage securities are usually
structured with two classes that receive different portions of the interest
and principal distributions on a pool of mortgage assets. The Fund may invest
in both the interest-only or "IO" class and the principal-only or "PO" class.
The yield to maturity on an IO class is extremely sensitive not only to
changes in prevailing interest rates but also to the rate of principal
payments (including prepayments) on the related underlying mortgage assets,
and a rapid rate of principal payments may have a material adverse effect on
the Fund's yield to maturity. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities. Conversely, POs tend to
increase in value if prepayments are greater than anticipated and decline if
prepayments are 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 Internal Revenue Code of 1986, as amended (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.
SHORT-TERM INVESTMENT 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.
Bank obligations. These obligations include 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 that 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, are 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
<PAGE>
<PAGE>
equivalent in other currencies, in total assets; (b) in terms of assets, are
among the 75 largest foreign banks in the world; (c) have branches or agencies
in the United States; and (d) in the opinion of the investment manager, are of
an investment quality comparable to obligations of United States banks which
may be purchased.
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.
HOW THE FUNDS ARE MANAGED
Retirement System Investors Inc. ("RSI") is the primary investment
adviser for all seven Investment Funds, pursuant to a Management Agreement
between RSI and the Trust. RSI directly manages the portfolios of five of the
Investment Funds and retains subadvisers to manage the portfolios (or
a portion thereof) of the other two, subject to RSI's overall supervision. RSI
selects subadvisers 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 subadvisers. The appointment
of a new subadviser will not be effective until approved by the unitholders.
RSI directly manages the portfolios of the CORE EQUITY FUND, the VALUE
EQUITY FUND, a portion of the EMERGING GROWTH EQUITY FUND, and all three of
the Bond Funds. RSI has retained subadvisers to manage the portfolios (or a
portion thereof), of the EMERGING GROWTH EQUITY FUND and the INTERNATIONAL
EQUITY FUND. HLM Management Company, Inc. ("HLM"), is a subadviser for the
EMERGING GROWTH EQUITY FUND, and the portfolio management is split 50%-50%
between HLM and RSI. Bank of Ireland Asset Management (U.S.) Limited ("BIAM")
is the subadviser for the INTERNATIONAL EQUITY FUND, and manages 100% of the
portfolio. The percentage of assets under management by any subadviser may be
adjusted from time to time by RSI.
<PAGE>
<PAGE>
RSI is also responsible for overall management of each Investment Fund's
business affairs. However, if authorized by the Fund, an investment manager
or its affiliate may execute portfolio transactions for the Funds and receive
brokerage commissions for those transactions.
THE INVESTMENT ADVISERS
RETIREMENT SYSTEM INVESTORS INC., 317 Madison Avenue, New York, NY 10017,
is a wholly-owned subsidiary of Retirement System Group Inc. (RSGroup). It
was formed in March 1989 to act as investment adviser to certain of the Fund's
Investment Funds and currently manages over $900 million in assets.
HLM MANAGEMENT COMPANY, INC., 222 Berkeley Street, Boston, MA 02116, was
incorporated in November, 1983. Its 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. HLM currently manages over $700
million in assets.
BANK OF IRELAND ASSET MANAGEMENT (U.S.) LIMITED, 20 Horseneck Lane,
Greenwich, CT, is a wholly-owned subsidiary of the Bank of Ireland Group. BIAM
is part of Bank of Ireland Asset Management Group, established in 1966. The
group began managing portfolios for their North American based clients in 1989
and currently manages over $19 billion in global and international equity and
fixed income products.
THE PORTFOLIO MANAGERS
CORE EQUITY FUND: Mr. JAMES P. COUGHLIN, President and Chief Investment
Officer of RSI, has been the portfolio manager for the Core Equity Fund since
August 1984, upon joining Retirement System for Savings Institutions
(predecessor to the Trust). Mr. Coughlin also serves as Executive Vice
President-Investments of the Core Equity Fund. Previously, he worked as a
research analyst and portfolio manager with the economic and investment
counsel firm of Lionel Edie & Co. 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).
VALUE EQUITY FUND: Mr. CHRIS R. KAUFMAN, Vice President of RSI, has been the
portfolio manager of the Value Equity Fund since July 1, 1995. Mr. Kaufman
joined RSI in May 1995, with over 10 years of investment experience. Prior to
joining RSI, he was an Investment Vice President at The Mutual Life Insurance
Company of New York, where he spent eight years in investment/security analysis
and in a portfolio advisory capacity. Prior to that, he worked for two years in
the Investment Management Group of Bankers Trust. Mr. Kaufman graduated Phi
Beta Kappa, with honors, from Hunter College of the City University of New York,
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.
EMERGING GROWTH EQUITY FUND: RSI has been managing a portion of the
Emerging Growth Equity Fund since February 8, 1999. In January 2000 this
portion was increased to 50%. The portfolio manager for this portion of the
fund is Mr. MARK GORODINSKY. Mr. Gorodinsky joined the
organization as a equity analyst in 1996 primarily researching technology
companies. He brings more than five years of investment research and
portfolio management experience. He began his professional investment career
in 1994 with an institutional investment
<PAGE>
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management firm, where he researched a variety of industries. Prior to that,
he was in corporate accounting and finance with Saint-Gobain Corporation from
1991 to 1994. Mark is a graduate of Temple University with a Bachelor of
Business Administration in Accounting.
HLM has been a manager of a portion of the Emerging Growth Equity Fund
since April 1, 1997. At that time, HLM was responsible for managing 50% of
the assets in the portfolio, with the other 50% being managed by Friess
Associates Inc. ("Friess"), which had managed its portion of the Fund since
January 1, 1990. In February 1999, HLM's portion was increased to 84% when RSI
took over management of 16% upon termination of the contract with Friess. In
January 2000, HLM's portion was reduced back to 50% of the assets in the
portfolio, with RSI managing the other 50%. HLM uses a team approach to the
management of its portion of the portfolio and no single person is responsible
for making investment decisions.
INTERNATIONAL EQUITY FUND: BIAM has managed the portfolio of the International
Equity Fund since March 1, 1999, when it replaced Morgan Grenfell Investment
Services Limited as the subadviser for this Fund's portfolio. BIAM uses a
team approach to portfolio management, and no single person is responsible for
making investment decisions.
ACTIVELY MANAGED BOND FUND, INTERMEDIATE-TERM BOND FUND, SHORT-TERM INVESTMENT
FUND: All three of the Bond Funds are co-managed by HERBERT KUHL, JR., First
Vice President, and DEBORAH A. MODZELEWSKI, First Vice President, of RSI.
They work closely together to develop investment strategies and select
securities for the portfolios. Except during a period of retirement between
November 1995 and March 1996, Mr. Kuhl has been a co-manager of the Actively
Managed Bond Fund since August 1993, of the Intermediate-Term Bond Fund since
April 1996, and of the Short-Term Investment Fund since October 1988. Ms.
Modzelewski has been a co-manager of all three bond Funds since November 1995.
Mr. Kuhl joined Retirement System for Savings Institutions (predecessor
to the Trust) in April, 1986, with over 20 years of experience in managing
credit research and fixed-income investments. Prior to joining the Trust, 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 for Savings Institutions
(predecessor to the Trust) in September 1984 and she has been responsible for
money market investments and cash management for all investment funds managed
by RSI. 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.
AMOUNTS PAID FOR PORTFOLIO MANAGEMENT
RSI provides investment management services to the each of the Investment
Funds at fees provided in the Management Agreement. Each Fund pays a
graduated incremental fee i.e., the rate of the fee is reduced on assets under
management that exceed certain thresholds, or breakpoints. The subadvisers,
if any, are not paid directly by the Funds, but are paid by RSI from the fees
that it receives from the Funds. The maximum and minimum fees payable by each
Investment Fund are shown below, as a percentage of average net assets, along
with the amount paid by each Fund for the fiscal year ended September 30,
1999.
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Fund Maximum Minimum Paid for FY 1999
Core Equity Fund .60% .40% $1,055,796
Value Equity Fund .60% .30% $ 293,601*
Emerging Growth Equity Fund 1.20% .80% $ 588,014
International Equity Fund .95% .70% $ 229,031**
Actively Managed Bond Fund .40% .20% $ 558,842
Intermediate-Term Bond Fund .40% .20% $ 232,628
Short-Term Investment Fund .25% .20% $ 68,011
* There was a change in the advisory fee rate payable by the Value Equity
Fund because of an increase in the minimum breakpoint from 10% to 30%.
** There was no change in the advisory fee rate payable by the
International Equity Fund because of a change in subadvise during the fiscal
year.
INVESTING IN THE TRUST
WHO MAY INVEST
The Trust offers its Investment Funds only to QUALIFIED TRUSTS.
Qualified Trusts are either:
(1) Trusts which are exempt from taxation under Section 501(a) of the
Code and which have been established by
ELIGIBLE EMPLOYERS to effectuate pension or profit sharing plans which are
qualified under Section 401(a) of the Code, or
(2) 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 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.
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 Trust
to have business interests in common with other organizations participating in
the Trust or self-employed individuals; provided, however, that the
participation in the Trust 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 Trust.
INDIVIDUAL RETIREMENT ACCOUNTHOLDERS are individuals for whom an
individual retirement account has been established.
EMPLOYER SPONSORED PLANS
To participate in the Trust, an Eligible Employer must execute an
agreement with the Trust or adopt resolutions or other documentation
satisfactory to the Trustees (a "PARTICIPATION AGREEMENT"). A Participation
Agreement of an Eligible Employer adopts the Trust's Agreement and Declaration
of Trust
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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. In addition,
an Eligible Employer may elect to establish a FULL PARTICIPATING TRUST, in
which case the Participation Agreement also provides for the designation of
the Trustees of the Trust as trustees of the Eligible Employer's Plan and for
the allocation of certain administrative plan responsibilities between the
Trustees and Investment Fiduciaries designated by the Eligible Employer.
In the case of a Full Participating Trust arrangement, the Trust is
responsible for allocating the Plan assets invested in the Trust among its
various Investment Funds, and the Plan's INVESTMENT FIDUCIARIES (other than
the Trustees) have only limited ability to direct the investment among Funds.
However, subject to guidelines established by the Trustees, a Full
Participating Trust may reserve to its Investment Fiduciaries CLASSIFICATION
AUTHORITY, i.e., the authority to direct the proportions in which its Trust
investments are divided between the investment classifications established by
the Trust (e.g., equity funds, fixed income funds) and, in the case of a Full
Participating Trust implementing a defined benefit plan, UNIT DIRECTION
AUTHORITY, i.e., the authority to direct investment of its assets in specified
Investment Funds. Participating Trusts other than Full Participating Trusts
will have Unit Direction Authority.
Full Participating Trusts
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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 Investment
Fiduciary designated by the Full Participating Employer with respect to the
acquisition, retention and disposition of units of the Trust on behalf of the
Full Participating Trust.
Purchasers of 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 that has been reserved to the Investment Fiduciaries.
Subject to the approval of the Trustees, the benefits under a Plan of
Participation may be funded through one or more funding agencies in addition
to the Trust. Such a plan, sometimes referred to as a "Plan of Partial
Participation", remains a Plan of Participation subject to the provisions of
the Agreement and Declaration of Trust, and the Eligible Employer which
sponsors it remains a Full Participating Employer, except that the Trustees
have no responsibility with respect to the assets of a Plan of Partial
Participation which are not held and administered by them under the Agreement
and Declaration of Trust. The Investment Fiduciaries of a Plan of Partial
Participation are solely responsible for the manner in which the plan assets
of such plan shall be diversified. A Full Participating Employer sponsoring a
Plan of Partial Participation is required to elect that the assets of its Full
Participating Trust held by the Trustees shall be subject to Unit Direction
Authority, and/or, with the consent of the Trustees, to Classification
Authority.
A. Defined Benefit Plans
---------------------
A Full Participating Employer sponsoring a defined benefit plan of
Participation may elect to reserve to the Investment Fiduciaries
Classification Authority or Unit direction Authority, or both. Except to the
extent authority is reserved to Investment Fiduciaries, the Trustees, acting
as the trustees of
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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.
For Full Participating Trusts that are Defined Benefit Plans, the Trustees
have established two classifications for the purposes of reserving
Classification Authority: fixed income investments and equity investments.
The Trustees may change the Investment Classifications or add new
classifications from time to time.
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 discretionary
power has been reserved to Investment Fiduciaries, taking into account such
characteristics of the Plan of Participation, Full Participating Employer,
plan participants or other factors as they may deem relevant. To the extent
permitted by the Employee Retirement Income Security Act of l974, 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
--------------------------
For Full Participating Trusts that are defined benefit plans, the Trustees
have established three classifications for the purposes of reserving
Classification Authority: long-term fixed income investments, short-term fixed
income investments, and equity investments. The Trustees may change these
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 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 other
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 Trust
with investment instructions in respect of contributions made under its
defined contribution plan specifying the classifications under which
contributions are to be invested. The Trustees shall invest contributions and
make withdrawals so as to preserve the classification proportions that have
been specified. 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 among the classifications established by the Trustees and the selection
of the Investment Funds 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.
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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 Trust 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 offices of RSI Retirement Trust at 317 Madison Avenue, New York, NY 10017,
or Retirement Systems Distributors, Inc. ("Distributors"), at the same address.
Completed applications and funds in the form of checks can be submitted in
person to the office of the Trust or by mail. Investors wishing to purchase
units by means of wire transfer should contact the Distributor.
The Distributor may enter into agreements with various outside brokers on
behalf of the Trust 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 Trust. To place a telephone order, such
Participating Trusts or brokers should call the Distributor at 1-800-772-3615.
INDIVIDUAL RETIREMENT ACCOUNTS (IRAS)
Individual Retirement Accounts (both traditional IRAs and Roth IRAs) are
eligible for participation in the Trust. The Trust serves solely as the
investment vehicle for the IRAs. IRA Accountholders may purchase units of
all Investment Funds. In order for an IRA to participate in the Trust, the
Accountholder must send a completed Traditional IRA/Roth IRA Application and
Transfer Form to the Trust (via RSGroup Trust Company as custodian) indicating
the type of IRA involved and instructing the custodian how to allocate the
investment among the various Investment Funds. Subsequent investments will be
made according to the asset allocation accompanying the applicable additional
purchase order form.
Traditional IRA/Roth IRA Application and Transfer Forms can be obtained
by writing to the Distributor, Attn: Investor Services, at P.O.
Box 2064, Grand Central Station, New York, NY 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
custodian or Trust or by mail to the above address. Investors wishing to
purchase units by means of wire transfer should contact the Distributor.
PURCHASES
There is no minimum initial investment for the Trust or for any of its
Investment Funds, and subsequent investments may be made in any amount. There
are no sales loads, and all funds will be invested in full and fractional
units at net asset value.
The purchase price for units of each Investment Fund will be the net
asset value per unit next determined following receipt at the office of the
Trust of the funds to be invested together with a properly
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completed investment application form. If the application form is not
properly completed, the order may be delayed for the time needed to obtain
the required information.
Units are not transferable, and certificates representing units of the
Trust will not be issued.
The Trust 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 Trust. 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.
In order for a Participating Trust to purchase shares, its trust
agreement must contain an appropriate provision authorizing the investment of
all or a portion of its assets in the Trust.
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.
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 Trust. 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.
Withdrawals are subject to determination by the Trustees that the
Redemption Request Form or new custodian's transfer form has been properly
completed.
If the redemption request is not properly completed or does not contain
all required documents, the order may be delayed while the Service Company
ascertains the information necessary to properly complete the redemption
request and forward it to the Trust.
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 Trust. If such redemption request is
transmitted to the Trust 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.
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
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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 Trust'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 the Distributor, Attn:
Investor Services, at P.O. Box 2064, Grand Central Station,
New York, NY 10163-2064. A redemption of account shares can also be
accomplished by filing a completed transfer form of another trustee or
custodian.
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.
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
trustee 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.
WITHDRAWAL DUE TO DISQUALIFICATION
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 as described above.
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
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Full Participating Trust other than a Full Participating Trust subject to Unit
Direction Authority, shall be made only by the Trustees in their capacities as
trustees of such Full Participating Trust, acting in their discretion
consistently with the direction of the Investment Fiduciaries in the case of
Full Participating Trusts subject to Classification Authority and to the
allocation directions relating to DC Investment Classifications provided with
respect to Full Participating Trusts established under defined contribution
plans. Investment exchange forms can be obtained from the Trust at its
office. Completed investment exchange forms can be returned in person or by
mail to the Trust.
Individual Retirement Accountholders may exchange units in any Investment
Fund for units in any other Investment Fund without cost either by completing
a 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
the Distributor, Attn: Investor Services, at P.O. Box 2064,
Grand Central Station, New York, NY 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 Trust prior
to its close of business. These exchanges are subject to determination by the
Trustees that the investment exchange 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 Trust 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 Trust,
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 the Investment Fund's assets, less any
liabilities, by the number of units of such Investment Fund outstanding. The
Trust determines the value of the assets held in each Investment Fund as of
the close of trading (normally 4:00 p.m. Eastern Time).
Current market prices are used to value Fund assets except for debt
securities with remaining maturities of 60 days or less, which are valued on
the basis of amortized cost. In the absence of an ascertainable market value,
assets are valued at their fair market value as determined by the officers of
the Trust using methods and procedures reviewed and approved by the Trustees.
Investments denominated in foreign currencies are valued in United States
dollars at the prevailing rate of exchange. Because foreign markets may trade
when U.S. markets are closed, the value of your securities may change while
purchase or redemption is not available.
The Trust does not ordinarily declare and pay dividends on its investment
income. Income earned on assets in an Investment Fund is included in the
total value of such Investment Fund's assets.
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DISTRIBUTIONS AND TAXES
With respect to the plans of Eligible Employers, the Trust 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 Trust to maintain its tax exempt status, only Qualified
Trusts (including Individual Retirement Accounts) may participate in the
Trust. In addition, all corpus and income belonging to any Qualified
Trust must be used exclusively for the benefit of the participants and their
beneficiaries under that Qualified Trust. No Participating Trust may assign
any part of its interest in the Trust. The Trust 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 Trust.
The Trust 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.
Payments for units withdrawn from the Trust 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 Trust. 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 TRUST
THE DISTRIBUTION AGREEMENT
The Trust has entered into a Distribution Agreement with the
Distributor, whereby the Distributor will distribute and promote the sale of
units in the Trust's Investment Funds.
Pursuant to the Distribution Agreement, the Distributor is responsible
for paying all distribution expenses incurred in connection with the
performance of its services on behalf of the Trust. Distribution expenses are
expenses that represent payment for activities primarily intended to result in
the
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sale of units and include: (a) distribution services, including processing
transactions and answering inquiries from new or prospective investors, (b)
marketing and promotional activities, including advertising and direct mail
promotions, (c) printing and distributing prospectuses, statements of
additional information and reports of the Trust to prospective investors; (d)
preparing, printing and distributing advertising and sales literature, and (e)
market research.
THE SERVICE AGREEMENT
The Trust has entered into a Service Agreement with Retirement System
Consultants Inc. (the "Service Company"), whereby the Service Company provides
the Trust with the general administrative and related services necessary to
carry on the affairs of the Trust.
Pursuant to the Service Agreement, the Service Company has agreed to:
(a) manage, supervise and conduct the affairs and business of the Trust, (b)
provide to the Trust with office space, equipment and personnel, and such
clerical and back office services, (c) provide the Trust with stock transfer
agent and registrar services, (d) provide the Trust with plan administrative
services necessary due to the fact that the Trustees of the Trust are the
Trustee Administrator for each of the affected Participating Trusts under the
Trust's Agreement and Declaration of Trust; and (e) provide the Trust 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 Trust.
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.
EXPENSES
All fees and expenses incurred in the administration of the Trust (other
than expenses relating to the administration of Plans of Participation and any
maintenance fee charged to Individual Retirement Accountholders), are charged
to the Trust. 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
Trust 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.
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GENERAL INFORMATION
UNITS OF BENEFICIAL INTEREST AND VOTING RIGHTS
The units offered by the Trust constitute units of beneficial interest in
the respective Investment Funds as to which they have been issued. The
Agreement and Declaration of Trust permits the Trustees to create an unlimited
number of Investment Funds. Each class of units designated as a separate
InvestmentFund represents a separate pool of assets. Currently, the Trust is
offering units of beneficial interest in the seven Investment Funds described in
this Prospectus. 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 Trust 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 Trust 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 Trust 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. 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.
No certificates will be issued for Trust units. Trust units are not
transferable or assignable.
Participating Trusts may be subject to liability for obligations of the
Trust under the laws of some jurisdictions. Therefore, the Agreement and
Declaration of Trust contains a disclaimer of liability 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 liable
for the obligations of the Trust.
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FINANCIAL HIGHLIGHTS
The following information for the year ended September 30, 1999, has been
audited by PricewaterhouseCoopers LLP whose report thereon, which is
incorporated by reference, appears in the Fund's 1999 Annual Report to
Unitholders. The information for the years prior to 1999 was audited by other
independent auditors. 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 1999 Annual Report which may be obtained without charge.
See, Statement of Additional Information Financial Statements.
Financial highlights for each Investment Fund are as follows:
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<CAPTION>
Core Equity Fund
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Year Year Year Year Year
Ended Ended Ended Ended Ended
09/30/99 09/30/98 09/30/97 09/30/96 09/30/95
------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of Year $79.41 $76.11 $56.57 $46.71 $35.57
----------- ---------- ---------- ----------- ---------
Income from Investment Operations:
Investment income-net 0.37 0.58 0.60 0.72 0.74
----------- ---------- ---------- ---------- ---------
Net realized and unrealized
gain on investments 26.52 2.72 18.94 9.14 10.40
--------- ---------- ---------- ---------- --------
Total from Investment Operations 26.89 3.30 19.54 9.86 11.14
--------- ---------- ---------- ---------- --------
Net Asset Value, End of the Year $106.30 $79.41 $76.11 $56.57 $46.71
--------- ---------- --------- ---------- --------
--------- ---------- --------- ---------- --------
TOTAL RETURN 33.86% 4.34% 34.54% 21.11% 31.32%
RATIOS/SUPPLEMENTAL DATA:
Ratios to Average Net Assets
Expenses (0.97)% (0.94)% (0.90)% (0.92)% (0.98)%
Investment Income-net 0.37% 0.72% 0.92% 1.40% 1.66%
Portfolio Turnover Rate 8.89% 5.62% 5.68% 9.95% 7.91%
Net Assets at End of the Year
($1,000's) $174,373 $176,36 $212,273 $217,356 $189,942
- --------------------
*Using average units basis.
</TABLE>
<PAGE>
<PAGE>
<TABLE> Value Equity Fund
---------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
09/30/99 09/30/98 09/30/97 09/30/96 09/30/95
------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of Year $56.27 $57.36 $39.67 $32.63 $27.05
----------- ---------- ---------- ----------- ---------
Income from Investment Operations:
Investment income-net 0.66 0.57 0.60 0.72 0.93
Net realized and unrealized gain
(loss) on investments 15.08 (1.66) 17.09 6.32 4.65
----------- ---------- ---------- --------- ---------
Total from Investment Operations 15.74 (1.09) 17.69 7.04 5.58
----------- ---------- ----------- --------- ---------
Net Asset Value, End of the Year $ 72.01 $56.27 $57.36 $39.67 $32.63
----------- ---------- ----------- --------- -------
---------- ---------- ----------- --------- -------
TOTAL RETURN 27.97% (1.90)% 44.59% 21.58% 20.63%
RATIOS/SUPPLEMENTAL DATA:
Ratios to Average Net Assets
Expenses (1.02)% (1.11)% (1.20)% (1.20)% (1.32)%
Investment Income-net 0.94% 0.93% 1.26% 1.98% 3.24%
Portfolio Turnover Rate 90.14% 95.66% 99.25% 61.53% 67.06%
Net Assets at End of the Year
($1,000's) $ 84,839 $ 63,931 $ 60,389 $ 52,231 $43,824
- --------------------
</TABLE>
* Using average units basis.
<PAGE>
<PAGE>
<TABLE>
<CAPTION> Emerging Growth Equity Fund
---------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
09/30/99 09/30/98 09/30/97 09/30/96 09/30/95
------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of Year $54.90 $84.47 $67.07 $52.58 $35.96
---------- --------- --------- ----------- ---------
Income from Investment Operations:
Investment (loss)-net (1.05) (0.90) (0.95) (0.90) (0.67)
Net realized and unrealized gain
(loss) on investments 27.11 (28.67) 18.35 15.39 17.29
---------- ---------- ---------- ---------- ---------
Total from Investment Operations 26.06 (29.57) 17.40 14.49 16.62
---------- ---------- --------- -------- ---------
Net Asset Value, End of the Year $80.96 $54.90 $84.47 $67.07 $52.58
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
TOTAL RETURN 47.47% (35.01)% 25.84% 27.56% 46.22%
RATIOS/SUPPLEMENTAL DATA:
Ratios to Average Net Assets
Expenses (1.99)% (1.94)% (1.98)% (1.91)% (2.12)%
Investment Income (loss)-net (1.55)% (1.22)% (1.39)% (1.54)% (1.61)%
Portfolio Turnover Rate 222.98% 204.41% 177.68% 150.40% 170.54%
Net Assets at End of the Year
($1,000's) $ 76,191 $ 55,287 $ 91,589 $ 92,136 $74,625
- ------------------
</TABLE>
* Using average units basis.
<PAGE>
<PAGE>
<TABLE>
<CAPTION> International Equity Fund
---------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
09/30/99 09/30/98 09/30/97 09/30/96 09/30/95
------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of Year $45.44 $51.09 $45.25 $40.25 $38.08
---------- ---------- ---------- ---------- ---------
Income from Investment Operations:
Investment (loss)-net (0.21) (0.14) (0.14) (0.08) (0.02)
Net realized and unrealized gain
(loss) on investments 10.64 (5.51) 5.98 5.08 2.19
---------- ---------- ---------- ---------- ---------
Total from Investment Operations 10.43 (5.85) 5.84 5.00 2.17
---------- ---------- ---------- ---------- ---------
Net Asset Value, End of the Year $55.87 $45.44 $51.09 $45.25 $40.25
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
TOTAL RETURN 22.95% (11.06)% 12.91% 12.42% 5.70%
RATIOS/SUPPLEMENTAL DATA:
Ratios to Average Net Assets
Expenses (1.97)% (1.94)% (1.96)% (1.93)% (1.90)%
Investment Income (loss)-net (0.39)% (0.27)% (0.29)% (0.20)% (0.07)%
Portfolio Turnover Rate 120.42% 92.82% 61.87% 51.29% 51.40%
Net Assets at End of the Year
($1,000's) $49,288 $34,083 $35,276 $39,502 $31,143
- -----------------------
</TABLE>
* Using average units basis.
<PAGE>
<PAGE>
<TABLE>
<CAPTION> Actively Managed Bond Fund
---------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
09/30/99 09/30/98 09/30/97 09/30/96 09/30/95
------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of Year $37.73 $33.89 $30.79 $29.58 $25.06
---------- ---------- ---------- ---------- ---------
Income from Investment Operations:
Investment Income-net 2.32 2.19 2.04 1.80 1.64
Net realized and unrealized gain
(loss) on investments (2.84) 1.65 1.06 (0.59) 1.88
---------- ---------- ---------- ---------- ---------
Total from Investment Operations (0.52) 3.84 3.10 1.21 3.52
---------- ---------- ---------- ---------- ---------
Net Asset Value, End of the Year $37.21 $37.73 $33.89 $30.79 $29.58
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
TOTAL RETURN (1.38)% 11.33% 10.07% 4.09% 13.51%
RATIOS/SUPPLEMENTAL DATA:
Ratios to Average Net Assets
Expenses (0.78)% (0.81)% (0.81)% (0.80)% (0.84)%
Investment Income-net 6.17% 8.16% 6.32% 5.94% 5.95%
Portfolio Turnover Rate 42.18% 71.12% 69.29% 17.14% 18.21%
Net Assets at End of the Year
($1,000's) $184,197 $162,355 $147,139 $150,304 $140,127
- ----------------------
* Using average units basis.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION> Intermediate-Term Bond Fund
---------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
09/30/99 09/30/98 09/30/97 09/30/96 09/30/95
------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
PER UNIT OPERATING PERFORMANCE:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of Year $34.10 $31.55 $29.30 $28.01 $25.40
---------- ---------- ---------- ---------- ---------
Income from Investment Operations:
Investment Income-net 1.85 1.93 1.78 1.74 1.65
Net realized and unrealized gain
(loss) on investments (1.41) 0.62 0.47 (0.45) 0.95
---------- ---------- ---------- ---------- ---------
Total from Investment Operations 0.44 2.55 2.25 1.29 2.61
---------- ---------- ---------- ---------- ---------
Net Asset Value, End of the Year $34.54 $34.10 $31.55 $29.30 $28.01
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
TOTAL RETURN 1.29% 8.08% 7.68% 4.61% 10.28%
RATIOS/SUPPLEMENTAL DATA:
Ratios to Average Net Assets
Expenses (1.12)% (1.10)% (1.04)% (0.96)% (0.98)%
Investment Income-net 5.41% 5.92% 5.86% 6.06% 6.27%
Portfolio Turnover Rate 50.51% 107.30% 67.95% 13.20% 15.95%
Net Assets at End of the Year
($1,000's) $62,524 $59,718 $68,389 $74,754 $90,482
* Using average units basis.
</TABLE>
<PAGE>
<PAGE>
<TABLE>
<CAPTION> International Equity Fund
---------------------------------------------------------------
Year Year Year Year Year
Ended Ended Ended Ended Ended
09/30/99 09/30/98 09/30/97 09/30/96 09/30/95
------------- ---------- ---------- ------------ ---------
<S> <C> <C> <C> <C> <C>
Per Unit Operating Performance:*
(for a unit outstanding
throughout the year)
Net Asset Value, Beginning of Year $22.31 $21.23 $20.24 $19.31 $16.36
---------- ---------- ---------- ---------- ---------
Income from Investment Operations:
Investment Income net 1.06 1.06 0.97 0.94 0.93
Net realized and unrealized gain
(loss) on investments (0.09) 0.02 0.02 (0.01) 0.02
---------- ---------- ---------- ---------- ---------
Total from Investment Operations 0.97 1.08 0.99 0.93 0.95
---------- ---------- ---------- ---------- ---------
Net Asset Value, End of the Year $23.28 $22.31 $21.23 $20.24 $19.31
---------- ---------- ---------- ---------- ---------
---------- ---------- ---------- ---------- ---------
TOTAL RETURN 4.35% 5.09% 4.89% 4.82% 5.17%
RATIOS/SUPPLEMENTAL DATA:
Ratios to Average Net Assets
Expenses (0.80)% (0.80)% (0.80)% (0.80)% (0.80)%
Investment Income net 4.63% 4.89% 4.67% 4.76% 4.94%
Decrease in above expense ratio
due to fee waiver 0.46% 0.50% 0.45% 0.39% 0.34%
Net Assets at End of the Year
($1,000's) $27,286 $32,385 $27,021 $25,668 $27,360
* Using average units basis.
</TABLE>
<PAGE>
<PAGE>
COUNSEL AND AUDITORS
Swidler Berlin Shereff Friedman, LLP, 405 Lexington Avenue, New York, NY
10174, serves as counsel for the Trust. PricewaterhouseCoopers LLP, 1177
Avenue of the Americas, New York, NY 10036, have been selected as auditors of
the Trust.
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.
<PAGE>
<PAGE>
RSI
RETIREMENT
TRUST
The Trust has filed with the Securities and
Exchange Commission a Statement of
Additional Information ("SAI") which sets forth
additional and more detailed information about
the Trust. The SAI is incorporated by reference
into this Prospectus.
Additional information about the Trust's
investments is available in the Trust's annual
and semi-annual reports to shareholders. In the
Trust's annual report, you will find a discussion
of the market conditions and investment
strategies that significantly affected the Funds'
performance during the last fiscal year.
Copies of the Statement of Additional
Information or the annual or semi-annual reports
to shareholders may be obtained without
charge by writing to:
RSI Retirement Trust
317 Madison Avenue
New York, NY 10017
Attention: Stephen P. Pollak, Esq.
or by calling 1-800-772-3615.
Information about the Trust (including the SAI)
can be reviewed and copied at the Commission's
Public Reference Room in Washington, D.C.
Information on the operation of the public
reference room may be obtained by calling the
Commission at 1-800-SEC-0330.
Reports and other information about the Trust
are available on the Commission's Internet site
at http://www.sec.gov and copies of this
information may be obtained, upon payment of a
duplicating fee, by writing the Public Reference
Section of the Commission, Washington, D.C.
20549-6009.
SEC File No. 811-1234
<PAGE>
<PAGE>
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
<PAGE>
<PAGE>
PART B: STATEMENT OF ADDITIONAL INFORMATION
RSI RETIREMENT TRUST
A NO-LOAD SERIES MUTUAL FUND CURRENTLY OFFERING SEVEN INVESTMENT FUNDS.
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
TABLE OF CONTENTS PAGE
----
THE TRUST.................................................................. 2
INVESTMENT STRATEGIES AND RISKS............................................ 2
OTHER INFORMATION ABOUT THE FUNDS' INVESTMENTS............................. 7
INVESTMENT RESTRICTIONS................................................... 10
MANAGEMENT OF THE TRUST................................................... 12
CONTROL PERSONS AND PRINCIPAL UNITHOLDERS................................. 18
INVESTMENT ADVISORY AND OTHER SERVICES.................................... 19
BROKERAGE ALLOCATION AND PORTFOLIO TURNOVER............................... 24
DISTRIBUTIONS AND TAXES................................................... 26
CALCULATION OF PERFORMANCE DATA........................................... 27
VALUATION OF UNITS........................................................ 30
GENERAL INFORMATION....................................................... 31
FINANCIAL STATEMENTS...................................................... 33
THIS STATEMENT OF ADDITIONAL INFORMATION IS NOT A PROSPECTUS. IT SHOULD BE
READ IN CONJUNCTION WITH THE TRUST'S PROSPECTUS DATED JANUARY 28, 2000, WHICH
MAY BE OBTAINED BY WRITING TO RSI RETIREMENT TRUST,
317 MADISON AVENUE, NEW YORK, NY 10017, ATTENTION: STEPHEN P. POLLAK, ESQ.
THE FINANCIAL STATEMENTS REQUIRED TO BE INCLUDED IN THIS STATEMENT OF
ADDITIONAL INFORMATION ARE INCORPORATED BY REFERENCE FROM THE
TRUST'S ANNUAL REPORT TO UNITHOLDERS
FOR THE FISCAL YEAR ENDED SEPTEMBER 30, 1999.
JANUARY 28, 2000
<PAGE>
<PAGE>
THE TRUST
HISTORY AND CURRENT STATUS
RSI Retirement Trust (the "Trust") was established as a New York trust
under the name The Savings Banks Retirement System 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
"Declaration of Trust". The Declaration of Trust was amended effective as of
August 31, 1984, to provide for the continued operation of the Trust as an
open-end diversified investment company under the name of Retirement System
for Savings Institutions. Effective August 1, 1990 the Trust completed a
reorganization and changed its name to RSI Retirement Trust.
The Trust currently offers seven investment funds ("Investment Funds" or
"Funds"): Core Equity Fund, Emerging Growth Equity Fund, Value Equity Fund,
International Equity Fund (together, the "Equity Funds"), Actively Managed
Bond Fund, Intermediate-Term Bond Fund and Short-Term Investment Fund
(together, the "Bond Funds"). Each Fund has its investment objective and
investment policies. However, a number of investment policies and
restrictions are common to all the Funds or to the Equity Funds as a group or
to the Bond Funds as a group. There is no assurance that any Investment Fund
will be able to achieve its investment objective.
As explained more fully below, the Trust has entered into an investment
advisory agreement with Retirement System Investors Inc., a distribution
agreement with Retirement System Distributors Inc. (the "Broker-Dealer"), and
a service agreement with Retirement System Consultants Inc. (the "Service
Company"), all of which are subsidiaries of Retirement System Group Inc.
("RSGroup").
CLASSIFICATION
The Trust is registered with the Securities and Exchange Commission
("Commission") as an open-end diversified management investment company.
(Each of the Investment Funds also operates as a diversified company.)
Registration of the Trust with the Commission does not mean that the
Commission has approved the Trust's investment objectives and policies or
passed upon the merits of the offering of beneficial interests in the Trust.
INVESTMENT STRATEGIES AND RISKS
The following information is provided to supplement the information in
the prospectus relating to investment strategies and risks. Unless otherwise
indicated, the strategies and risks discussed apply to all Investment Funds
unless otherwise noted.
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.
<PAGE>
<PAGE>
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 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 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.
<PAGE>
<PAGE>
Cash Equivalents
----------------
A portion of any Investment Fund may be held in cash equivalents. Cash
equivalents are interest-bearing instruments or deposits maturing within one
year in which funds are invested temporarily pending long-term investment or
in which funds are invested when warranted for liquidity reasons or when
market conditions warrant a temporary "defensive" investment strategy. The
purpose of cash equivalents is to provide income at money market rates while
minimizing the risk of decline in value to the maximum extent possible. The
instruments may include, but are not limited to, repurchase agreements,
obligations issued by or guaranteed by the United States government, its
agencies or instrumentalities, obligations of banks, and commercial paper.
For a description of repurchase agreements, see below, and for a further
description of the other instruments, see, "Investment Objectives and Policies
- -- Short-Term Investment Fund".
Repurchase Agreements
---------------------
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.
<PAGE>
<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 Trust. 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%. 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.
<PAGE>
<PAGE>
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
(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.
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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 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.
OTHER INFORMATION ABOUT THE FUNDS' INVESTMENTS
Foreign Investment risk: 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;
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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.
ACTIVELY MANAGED BOND FUND AND INTERMEDIATE-TERM BOND FUND
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 and, as a result, if a zero-coupon obligation is sold prior
to maturity under unfavorable market conditions, the loss that may be
sustained on such sale may be greater than on the sale of an interest-bearing
obligation of similar yield and maturity.
From time to time the Fund may invest in collateralized mortgage
obligations ("CMOs"), real estate mortgage investment conduits ("REMICs") and
certain stripped mortgage-backed securities. CMOs generally represent a
participation in, or are secured by, a pool of mortgage loans. The CMOs in
which the Fund may invest are limited to United States government and related
securities (including those of agencies or instrumentalities) such as CMOs
issued by GNMA, FNMA and FHLMC. Stripped mortgage securities are usually
structured with two classes that receive different portions of the interest
and principal distributions on a pool of mortgage assets. The Fund may invest
in both the interest-only or "IO" class and the principal-only or "PO" class.
The yield to maturity on an IO class is extremely sensitive not only to
changes in prevailing interest rates but also to the rate of principal
payments (including prepayments) on the related underlying mortgage assets,
and a rapid rate of principal payments may have a material adverse effect on
the Fund's yield to maturity. If the underlying mortgage assets experience
greater than anticipated prepayments of principal, the Fund may fail to fully
recoup its initial investment in these securities. 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
Internal Revenue Code of 1986, as amended (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
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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.
SHORT-TERM INVESTMENT FUND
Obligations issued by or guaranteed by the United States government, its
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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 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
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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 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.
INVESTMENT RESTRICTIONS
The following restrictions and fundamental policies ((a) through (o))
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) Issue senior securities;
(b) 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;
(c) Underwrite any issue of securities;
(d) 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
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an industry) 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;
(e) 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;
(f) 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;
(g) 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;
(h) 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;
(i) 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;
(j) 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;
(k) 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;
(l) Invest in securities of other investment companies except as part
of a merger, consolidation, reorganization or purchase of assets
approved by the Trust Participants;
(m) Participate on a joint or joint and several basis in any
securities trading account;
(n) 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;
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(o) Invest the assets of any Investment Fund in nonmarketable
securities (including repurchase agreements and time deposits
maturing in more than seven days but excluding master demand
notes and other securities payable on demand) to any extent
greater than 10% of the value of the total assets of that
Investment Fund. If through the appreciation of nonmarketable
securities, or the depreciation of marketable securities, an
Investment Fund has more than 10% of its assets invested in
nonmarketable securities, the Investment Fund will reduce its
holdings of nonmarketable securities to 10% or less of its total
assets as soon as practicable consistent with the objective of
limiting any loss that may be sustained upon such reduction.
Except as stated in (o) above, if an Investment Fund complies with a
percentage restriction 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.
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.
TEMPORARY DEFENSIVE POSITIONS
A portion of any Investment Fund may be held in cash equivalents. Cash
equivalents are interest-bearing instruments or deposits maturing within one
year in which funds are invested temporarily pending long-term investment or
in which funds are invested when warranted for liquidity reasons or when
market conditions warrant a temporary "defensive" investment strategy. The
purpose of cash equivalents is to provide income at money market rates while
minimizing the risk of decline in value to the maximum extent possible. The
instruments may include, but are not limited to, repurchase agreements,
obligations issued by or guaranteed by the United States government, its
agencies or instrumentalities, obligations of banks, and commercial paper.
For a description of repurchase agreements, see below, and for a further
description of the other instruments, see, "Investment Objectives and Policies
- -- Short-Term Investment Fund".
MANAGEMENT OF THE TRUST
The business and affairs of the Trust, 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 April
26, 1999. Pursuant to the Trust's Agreement and Declaration of Trust, the
Trustees of the Trust have been divided into three classes of Trustees. At
each annual meeting, one class of Trustees is elected. There is no limitation
on the number of terms which may be served by any Trustee. The Trustees of
the Trust and their principal occupations are set forth below. Each Trustee
who is an "interested person" of the Trust, as defined in the Investment
Company Act, is indicated by an asterisk (*).
The Trust has 10 Trustees who are elected for staggered terms of three
years each. The Trustees are responsible for the overall supervision of the
operations of the Trust and perform the various duties
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imposed on the directors or trustees of investment companies by the Investment
Company Act. The officers of the Trust are the President, one or more Vice
Presidents, a Secretary and a Treasurer. The Trustees hold six regular
meetings a year. The Trust 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 Trust.
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 $62,198 for the
Fund's fiscal year ended September 30, 1999.
TRUSTEES AND OFFICERS
Positions
with the Principal occupation for the
Name the Trust Age last affiliation with the Trust
- ---- --------- --- -------------------------------
Current term remaining - three years:
- ------------------------------------
William Dannecker* President
and Trustee 60 President and Trustee of the Fund
since May 1986 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; Director
since June 1998, RSGroup Trust
Company. President between June
1998 and January 1999, and
Chairman and Chief Operating
Officer since January 1999.
Maurice E. Kinkade Trustee 57 Director of Development,
Maplebrook School, Amenia, New
York, since September
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<PAGE>
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 69 Real Estate Consultant; formerly
President and Chief Executive
Officer from April 1981 and
December 1989, respectively to
November 1991, American Savings
Bank, White Plains, New York.
Current term remaining - two years:
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William A.
McKenna, Jr.* Trustee 63 Chairman, President and Chief
Executive Officer, 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 63 Private investments since March
1989. Director of Retirement
System Fund Inc. from February
1991 to July 1997.
Current term remaining - one year:
- ---------------------------------
Herbert G.
Chorbajian Trustee 61 Vice Chairman of Charter One
Financial, Inc. since 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.
James P. Cronin Trustee 54 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, Jr. Trustee 66 Retired Vice President, Peoples
Heritage Bank, Portland, Maine
from September 1994
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<PAGE>
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 64 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 52 President and Chief Executive
Officer, Lockport Savings Bank,
Lockport, New York since July
1989; and President and Chief
Executive Officer of Niagara
Bancorp Inc., Lockport, New York
since April 1998.
James P. Coughlin Executive 63 Executive Vice President and Chief
Vice Investment Officer of Retirement
President 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.
Stephen P. Pollak Executive 54 Executive Vice President, Counsel
Vice and Secretary of Retirement System
President Group Inc. since January 1993,
Counsel and Director since March 1989;
Secretary 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.
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Heidi Viceconte First Vice 33 First Vice President of Retirement
President and System Group Inc. since January
Treasurer 1998, Manager of Trust Accounting
since November 1994 and Second
Vice President from January 1995
to December 1997; First Vice
President and Trust Officer of
RSGroup Trust Company since August
1999.
John F. Meuser Senior Vice 64 Senior Vice President of Retire-
President ment 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
from August 1998 to January 1999
and Senior Vice President 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.
*An asterisk indicates a Trustee who is an "interested person" of the
Trust within the meaning of the Investment Company Act.
The address of each Trustee and executive officer of the Trust is: c/o
RSI Retirement Trust, 317 Madison Avenue, New York, New York 10017.
COMPENSATION
The Trust pays to each Trustee who is not an officer of the Trust 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 Trust pays to each non-officer Trustee
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 Trust
under Section 457 of the Code.
The Trustees hold six regular meetings a year. During the Trust's fiscal
year ended September 30, 1999, total Trustee compensation amounted to
$201,692. 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 Trust. During the Trust's fiscal year ended
September 30, 1999, the total of such reimbursed expenses was $14,522.
The Trust does not provide Trustees or officers, directly or indirectly,
with any pension or retirement benefits for their services to the Trust.
William Dannecker, the President of the Trust, is an officer of RSGroup, the
Service Company and the Broker-Dealer, and receives compensation in such
capacities. James P. Coughlin, Executive Vice President of the Trust, is an
officer of RSGroup and
<PAGE>
<PAGE>
Investors Inc. and receives compensation in such capacities. Stephen P.
Pollak, Executive Vice President, Counsel and Secretary of the Trust, is an
officer of RSGroup, Investors Inc., the Broker-Dealer and the Service Company,
and receives compensation in such capacities. Heidi Viceconte, First Vice
President and Treasurer of the Trust is an officer of RSGroup and receives
compensation in such capacity. John F. Meuser, Senior Vice President of the
Trust, is an officer of RSGroup, the Service Company, the Broker-Dealer and
Investors Inc., and receives compensation in such capacities.
The Trustees received the compensation shown below for services to the
Trust during the fiscal year ended September 30, 1999. No officer of the
Trust receives any remuneration directly from the Trust for service to the
Trust.
<TABLE>
<CAPTION>
Pension or Total
Retirement Estimated Compensation
Aggregate Benefits Annual from Trust**
Compensation Accrued As Benefits Paid
from the Part of Trust Upon to
Name of Trustee Trust Expenses Retirement Trustees
<S> <C> <C> <C> <C>
Herbert G. Chorbajian $21,100.00 $- 0 - $- 0 - $21,100.00
James P. Cronin 20,900.00 - 0 - - 0 - 20,900.00
William Dannecker -0- - 0 - - 0 - -0-
Ralph L. Hodgkins, Jr. 17,700.00 - 0 - - 0 - 17,700.00
Maurice E. Kinkade 19,500.00* - 0 - - 0 - 19,500.00*
William G. Lillis 16,550.00* - 0 - - 0 - 16,550.00*
William A. McKenna 15,200.00 - 0 - - 0 - 15,200.00
William L. Schrauth 21,850.00* - 0 - - 0 - 21,850.00*
William E. Swan 14,650.00* - 0 - - 0 - 14,650.00*
Raymond L. Willis 23,400.00 - 0 - - 0 - 23,400.00
</TABLE>
*Aggregate compensation includes amounts deferred under the Trust's
Section 457 Deferred Compensation Plan. The total amount of deferred
compensation payable under the Plan as of September 30, 1999 is as follows:
Mr. Kinkade ($226,176), Mr. Lillis ($48,411) and Mr. Swan ($15,305).
**The Trust is not a part of any larger fund complex.
<PAGE>
<PAGE>
CONTROL PERSONS AND PRINCIPAL UNITHOLDERS
No person controls the Trust.
A Plan of Participation of each of the Trust Participants listed below
owned of record and beneficially five percent or more of the Trust's
outstanding units and each of the Investment Fund's outstanding units, as of
October 31, 1999. Defined Contribution Plans of Participation are indicated
by an asterisk (*).
Name Percentage
- ---- ----------
Trust (considered as a whole):
- -----------------------------
Ridgewood Savings Bank 5.60%
ALBANK, FSB 5.20
Core Equity Fund:
- -----------------
Ridgewood Savings Bank 6.34
Emerging Growth Equity Fund:
- ---------------------------
Ridgewood Savings Bank 7.49
The Roslyn Savings Bank 5.29
Value Equity Fund:
- -----------------
Ridgewood Savings Bank 8.44
The Roslyn Savings Bank 5.96
International Equity Fund:
- -------------------------
The Roslyn Savings Bank 8.84
Staten Island Savings Bank 7.04
BSB Bank & Trust Company 5.64
Actively Managed Bond Fund:
- --------------------------
ALBANK, FSBT 14.21
The Roslyn Savings Bank 6.94
Ridgewood Savings Bank 5.28
Intermediate-Term Bond Fund:
- ---------------------------
ALBANK, FSB 13.13
The Roslyn Savings Bank 6.41
Short-Term Investment Fund:
- --------------------------
Independence Savings Bank* 21.93
Northfield Savings Bank* 10.93
The Roslyn Savings Bank* 7.23
The Dime Savings Bank of Williamsburgh* 6.32
The addresses of these Trust Participants are as follows: ALBANK, FSB,
10 North Pearl Street, Albany, NY 12207; BSB Bank & Trust Company, 58-68
Exchange Street, Binghamton, NY 13902, Independence Savings Bank, 195 Montague
Street, Brooklyn, NY 11201; Northfield Savings Bank, 1731 Victory Boulevard,
Staten Island, NY 10314; Ridgewood Savings Bank, Myrtle & Forest Avenues,
Ridgewood, NY 11385; The Roslyn Savings Bank, 1122 Franklin Avenue, Garden
City, NY 11530; Staten Island Savings Bank, 15 Beach Street, Staten Island, NY
10304; The Dime Savings Bank of Williamsburgh, 209 Havemeyer Street
Williamsburgh Bridge Plaza, Brooklyn, NY 11211.
The Trustees and officers of the Trust own, as a group, less than 1% of
the outstanding units of the Trust.
ALBANK, FSB is a wholly-owned subsidiary of Charter One Bank, 1215
Superior Avenue, Cleveland, Ohio 44114.
<PAGE>
<PAGE>
INVESTMENT ADVISORY AND OTHER SERVICES
INVESTMENT MANAGERS
RETIREMENT SYSTEM INVESTORS INC. ("RSI") serves as the investment manager
for each Investment Fund pursuant to an Investment Management Agreement dated
February 8, 1999. RSI retains sub-investment advisers, subject to RSI's
overall supervision, to manage the portfolios of the Emerging Growth Equity
Fund and International Equity Fund pursuant to Sub-Investment Advisory
Agreements between RSI and each such sub-investment adviser. RSI is
responsible for overall management of each Investment Fund's business affairs,
as well as managing the portfolios of each Investment Fund which does not have
a sub-investment adviser.
The sub-investment adviser for the Emerging Growth Equity Fund is HLM
MANAGEMENT COMPANY, INC. ("HLM"), which is allocated 50% of that Investment
Fund's assets for investment. The sub-investment adviser for the
International Equity Fund is BANK OF IRELAND ASSET MANAGEMENT (U.S.) LIMITED
("BIAM").
RETIREMENT SYSTEM INVESTORS INC., 317 Madison Avenue, New York, NY 10017,
is a wholly-owned subsidiary of RSGroup. It was formed in March 1989 to act
as investment adviser to certain of the Fund's Investment Funds and currently
manages over $900 million in assets.
HLM MANAGEMENT COMPANY, INC., 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. Its 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.
BANK OF IRELAND ASSET MANAGEMENT (U.S.) LIMITED, 20 Horseneck Lane,
Greenwich, CT, is a wholly-owned subsidiary of the Bank of Ireland Group. BIAM
is part of Bank of Ireland Asset Management Group, established in 1966. The
group began managing portfolios for their North American based clients in
1989.
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 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
<PAGE>
<PAGE>
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.
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, or by vote of a majority of the unit
holders. The Contracts will also terminate automatically in the event of
"assignment" as defined in the Investment Company Act.
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 RSI and not by the Investment Funds.
Total Sub-Investment
Investment Fund Management Fee Advisory Fee
- ---------------- -------------- --------------
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
RSI 1.00 N/A
VALUE EQUITY FUND N/A
- -----------------
First $10 Million .60
Next $10 Million .50
Next $20 Million .40
Over $40 Million .30
INTERNATIONAL EQUITY FUND
- -------------------------
First $20 Million .95 .75
Next $30 Million .70 .50
Over $50 Million .55 .35
<PAGE>
<PAGE>
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
- --------------------------
First $50 Million .25
Over $50 Million .20
COMPENSATION PAID TO INVESTMENT MANAGERS FOR THE PAST THREE YEARS.
Investment managers were paid the following amounts for the fiscal years
ended September 30, 1999, September 30, 1998 and September 30, 1997:
1999 1998 1997
CORE EQUITY FUND
RSI $1,055,792 $1,040,755 $1,131,713
VALUE EQUITY FUND
RSI $ 293,614 $ 261,587 $ 239,747
EMERGING GROWTH EQUITY FUND*
RSI $ 69,196 $ -0- $ -0-
HLM $ 399,373 $ 266,525 $ 148,585
INTERNATIONAL EQUITY FUND**
BIAM $ 137,002 $ -0- $ -0-
ACTIVELY MANAGED BOND FUND
RSI $ 558,829 $ 500,102 $ 485,096
INTERMEDIATE-TERM BOND FUND
RSI $ 232,622 $ 243,403 $ 265,854
SHORT-TERM INVESTMENT FUND
RSI $ 68,063 $ 61,881 $ 64,074
* RSI managed 15.85% of this portfolio, beginning February 8, 1999. HLM
managed 50% of the portfolio from April 1, 1997 to February 8, 1999, and
84.15% of the portfolio from February 8, 1999 to September 30, 1999.
** BIAM managed this portfolio beginning March 1, 1999.
<PAGE>
<PAGE>
OTHER INVESTMENT MANAGER INFORMATION
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.
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
Trust'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 Trust. 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
Trust, 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 Trust 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
<PAGE>
<PAGE>
whatever information, analyses and reports with respect to marketing and
promotional activities with respect to units that the Trust or the Broker-
Dealer may, from time to time, deem advisable.
The Distribution Agreement was initially effective until July 31, 1995,
and remains 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 Trust 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.
The procedures for sales and redemption of Fund units are described in
the Prospectus.
THE SERVICE AGREEMENT
Effective August 1, 1990, the Trust entered into a Service Agreement with
the Service Company, whereby the Service Company provides the Trust with the
general administrative and related services necessary to carry on the affairs
of the Trust.
Pursuant to the Service Agreement, the Service Company has agreed to:
(a) manage, supervise and conduct the affairs and business of the Trust, and
matters incidental thereto, in a manner consistent with the Trust'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 Trust such office space, equipment and
personnel, and such clerical and back office services, as the Trust may
reasonably require; (c) provide the Trust with stock transfer agent and
registrar services and maintain sufficient trained personnel and equipment and
supplies to perform such services; (d) provide the Trust with Plan
administrative services necessary due to the fact that the Trustees of the
Trust are the Trustee Administrator for each of the affected Participating
Trusts under the Trust's Agreement and Declaration of Trust; and (e) provide
the Trust 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 Trust.
Effective January 1, 1999, the Trustees of the Trust approved continuance
of an 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
Trust's separately managed Investment Fund portfolios for such month:
Net Assets of each Separately Managed Fee (% of average daily net assets)
Investment Fund
First $25 million .60%
Next $25 million .50%
Next $25 million .40%
Over $75 million .30%
The Service Company will pay all of the fees and expenses incurred by it
in providing the Trust with the services and facilities described in the
Service Agreement. The Trust will pay, or reimburse the Service Company for
the payment of, the following fees and expenses incurred by or on behalf of
the Trust, 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,Fee (% of average
daily net assets)
<PAGE>
<PAGE>
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 Trust'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 Trust'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 Trust and its unitholders; (B) that the services to be
performed pursuant to the Service Agreement are services required for the
operation of the Trust; (C) that the Service Company can provide services, the
nature and quality of which are at least equal to those provided by others
offering the same or similar services; and (D) that the fees for such services
are fair and reasonable in light of the usual and customary charges made by
others for services of the same nature and quality.
The Service Agreement may be terminated by the Trust 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).
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 Trust 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 Trust 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 Trust. 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 Trust'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
<PAGE>
<PAGE>
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 Trust's fiscal years ended September 30, 1999, September 30,
1998 and, September 30, 1997, the Core Equity Fund paid aggregate brokerage
commissions of $46,801, $44,765 and $71,007, respectively; the Emerging Growth
Equity Fund paid aggregate brokerage commissions of $114,296, $162,353 and
$258,921, respectively; the Value Equity Fund paid aggregate brokerage
commissions of $137,600, $150,227 and $132,126, respectively; and the
International Equity Fund paid aggregate brokerage commissions of $118,695,
$128,369 and $132,475, 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, 1999, September 30, 1998
and September 30, 1997.
During the Trust's fiscal years ended September 30, 1999, September 30,
1998 and September 30, 1997, the investment managers allocated to persons or
firms supplying investment information to them the following amounts of
transactions in portfolio securities of the respective Investment Funds listed
below and associated brokerage commissions:
Name of Amount of Amount of
Investment Fund Portfolio Transactions Brokerage Commissions
--------------- ---------------------- ---------------------
Core Equity Fund $ 23,490,279 (1999) $ 21,200 (1999)
$ 6,888,089 (1998) $ 7,148 (1998)
$ 7,544,273 (1997) $ 7,200 (1997)
Emerging Growth
Equity Fund $ 10,379,447 (1999) $ 25,530 (1999)
$ 14,546,241 (1998) $ 47,322 (1998)
$ 33,292,524 (1997) $ 82,495 (1997)
Value Equity Fund $ 17,234,825 (1999) $ 29,919 (1999)
$ 4,270,717 (1998) $ 6,654 (1998)
$ 17,647,219 (1997) $ 24,103 (1997)
International Equity
Fund $ 6,093,049 (1999) $ 11,535 (1999)
$ 15,358,294 (1998) $ 38,993 (1998)
$ 6,029,457 (1997) $ 29,103 (1997)
The Trust is required to identify any securities of its "regular brokers
or dealers" (as such term is defined in the Investment Company Act) which the
Trust has acquired during its most recent fiscal year. As of September 30,
1999, the Trust held repurchase agreements issued by Bear, Stearns & Co., Inc.
valued at $9,314,436. Bear Stearns & Co., Inc. is a "regular broker or
dealer" of the Trust.
<PAGE>
<PAGE>
PORTFOLIO TURNOVER
The only Investment Funds having a significant variation in portfolio
turnover rates over the last two fiscal years were:
9/30/1999 9/30/1998
International Equity Fund 120.42% 92.82%
Intermediate-Term Bond Fund 50.51% 107.30%
Actively Managed Bond Fund 42.18% 71.12%
The reason for the variation from year-to-year in the turnover rate for these
Funds was optimization of return potential.
DISTRIBUTIONS AND TAXES
With respect to the plans of Eligible Employers, the Trust 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 Trust to maintain its tax exempt status, only Qualified
Trusts (including Individual Retirement Accounts) may participate in the
Trust. In addition, all corpus and income belonging to any Qualified
Trust must be used exclusively for the benefit of the participants and their
beneficiaries under that Qualified Trust. No Participating Trust may assign
any part of its interest in the Trust. The Trust 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 Trust.
The Trust 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 Trust 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 Trust. 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.
<PAGE>
<PAGE>
CALCULATION OF PERFORMANCE DATA
YIELD
The yield of each Investment Fund is calculated by dividing the net
investment income per unit (as described below) earned by the Investment Fund
during a 30-day (or one month) period by the net asset value per unit on the
last day of the period and analyzing the result on a semi-annual basis by
adding one to the quotient, raising the sum to the power of six, subtracting
one from the result and then doubling the difference. The Investment Fund's
net investment income per unit earned during the period is based on the
average daily number of units outstanding during the period entitled to
receive dividends and includes dividends and interest earned during the period
minus expenses accrued for the period. This calculation can be expressed as
follows:
6
Yield = [ (a-b+1) -1]
---
cd
Where: a = dividends and interest earned during the period
b = expenses accrued for the period
c = the average daily number of units outstanding
during the period that were entitled to receive dividends
d = the net asset value per unit on the last day of the period
Except as noted below, for the purpose of determining net investment
income earned during the period (variable "a" in the formula), interest earned
on debt obligations held by an Investment Fund is calculated by computing the
yield to maturity of each obligation based on the market value of the
obligation (including actual accrued interest) at the close of business on the
last business day of each month, or, with respect to obligations purchased
during the month, based on the purchase price (plus actual accrued interest),
dividing the result by 360 and multiplying the quotient by the market value of
the obligation (including actual accrued interest) in order to determine the
interest income on the obligation for each day of the subsequent month that
the obligation is held by an Investment Fund. For purposes of this
calculation, it is assumed that each month contains 30 days. The maturity of
an obligation with a call provision is the next call date on which the
obligation reasonably may be expected to be called or, if none, the maturity
date.
The yields on certain obligations, including instruments such as
commercial paper and bank obligations, are dependent on a variety of factors,
including general market conditions, conditions in the particular market for
the obligation, the financial condition of the issuer, the size of the
offering, the maturity of the obligation and the ratings of the issue. The
ratings of Moody's Investors Service and Standard & Poor's Corporation
represent their respective opinions as to the quality of the obligations they
undertake to rate. Ratings, however, are general and are not absolute
standards of quality. Consequently, obligations with the same rating,
maturity and interest rate may have different market prices. In addition,
subsequent to its purchase by an Investment Fund, an issue may cease to be
rated or may have its rating reduced below the minimum required for purchase.
In such event, the investment manager will consider whether the Investment
Fund should continue to hold the obligation.
For the 30-day period ended September 30, 1999, the yield for each
Investment Fund as to which performance may be quoted in advertising was as
follows:
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<PAGE>
INVESTMENT FUNDS Yield
---------------- -----
Core Equity Fund -0.42
Emerging Growth Equity Fund -1.39
Value Equity Fund 0.52
International Equity Fund -0.29
Short-Term Investment Fund 5.09
Intermediate-Term Bond Fund 5.74
Actively Managed Bond Fund 6.86
TOTAL RETURN
Average annual total return quotes ("Standardized Return") used in an
Investment Fund's performance are calculated according to the following
formula:
n
P(1 + T) = ERV
where: P = a hypothetical initial payment of $1,000
T = average annual total return
n = number of years (exponent)
ERV = ending redeemable value of a hypothetical $1,000
payment made at the beginning of that period.
Under the foregoing formula, the time periods used will be based on
rolling calendar quarters, updated to the last day of the most recent quarter
prior to submission of the advertising for publication and will cover one,
three, five and ten year periods or a shorter period dating from the
effectiveness of an Investment Fund's registration statement. Average annual
total return, or "T" in the formula above, is computed by finding the average
annual change in the value of an initial $1,000 investment over the period.
An Investment Fund also may include in advertising total return
performance data that are not calculated according to the formula set forth
above in order to compare more accurately the Investment Fund's performance
with other measures of investment return. For example, an Investment Fund may
calculate total return for specified periods of time by assuming the
investment of $1,000 in Investment Fund units. The rate of return is
determined by subtracting the initial value of the investment from the ending
value and by dividing the remainder by the initial value.
Set forth below are the average annual total returns for the 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 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.)
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
Net Investment Performance+
For Periods Ending September 30, 1999:
Annualized
Since Inception
---------------
1 Year 3 Years 5 Years 10 Years 15 Years 16-3/4 Years*
<S> <C> <C> <C> <C> <C> <C>
EQUITY FUNDS
- ------------
RSI Retirement Trust:
Core Equity Fund 33.86% 23.40% 24.48% 15.94% 17.12% 17.32%
Emerging Growth Equity Fund 47.47 6.47 17.62 15.47 14.99 14.58
Value Equity Fund 27.97 21.99 21.63 13.14 14.17 13.75
International Equity Fund 22.95 7.28 7.97 6.49 12.24 11.86*
Annualized
Since Inception
---------------
1 Year 3 Years 5 Years 10 Years 15 Years 16-3/4 Years
FIXED-INCOME FUNDS
- ------------------
Short-Term Investment Fund 4.35 4.77 4.86 4.79 5.78 6.23
Intermediate-Term Bond Fund 1.29 5.64 6.34 6.98 8.53 8.48
Actively Managed Bond Fund -1.38 6.52 7.38 7.79 9.05 .92
Annualized
Since Inception
---------------
1 Year 3 Years 5 Years 10 Years 15 Years 16-3/4 Years
TOTAL FUNDS
- -----------
RSI Retirement Trust
Plan Category:**
Conservative Risk Tolerance 13.32% 11.47%
Positive Risk Tolerance 18.44 13.14 14.95% 11.34% 12.62% 12.44%
</TABLE>
+ 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 Trust--The Service Agreement" in the Prospectus
for certain fee changes that took 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.
QUOTATIONS OF 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.
<PAGE>
<PAGE>
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, 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 Trust 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.
- ----- -------------- ----------------------- ---------
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 Trust 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; and 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 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 Trust
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 Trust 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 Trust 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
<PAGE>
<PAGE>
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 Trust 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 Trust does not ordinarily declare and pay dividends on its investment
income. The Trust did, however, declare a dividend of shares of common stock
of RSGroup in connection with the reorganization of the Trust and the transfer
of certain assets of the Trust to RSGroup 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.
GENERAL INFORMATION
UNITS OF BENEFICIAL INTEREST AND VOTING RIGHTS
The units offered hereby constitute units of beneficial interest in the
respective Investment Funds as to which they have been issued. The Agreement
and Declaration of Trust provides that the Trust may issue an unlimited number
of units of beneficial interest without par value. The classes are treated as
series for the purposes of the Investment Company Act and are referred to
elsewhere in this Prospectus as Investment Funds. The Agreement and
Declaration of Trust permits the Trustees to create an unlimited number of
Investment Funds and, with respect to each Investment Fund, to issue an
unlimited number of full and fractional units of beneficial interest of that
Trust. Each class of units designated as a separate Investment Fund
represents a separate pool of assets. Currently, the Trust 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 Trust or, if
applicable, the Individual Retirement Accountholder ("Trust Participant"). A
Trust Participant is
<PAGE>
<PAGE>
entitled to one vote for each full unit (and a fractional vote for each
fractional unit) outstanding on the books of the Trust 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 Trust 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 Trust", 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 Trust'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 Trust'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 Trust. 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 Trust or use it as
security for a loan. The Service Company is a Transfer Agent and provides
transfer agency services to the Trust. See, "Administration of the Trust --
The Service Agreement."
Participating Trusts may be subject to liability for obligations of the
Trust under the laws of some jurisdictions. Therefore, the Agreement and
Declaration of Trust contains a disclaimer of liability 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 Trust.
Because units are not transferable, certificates representing units of
the Trust will not be issued. All units purchased shall be confirmed to Trust
Participants and credited to the accounts of the Participating Trusts on the
Trust's books.
The Trust 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 Trust. 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.
TERMINATION OF THE TRUST
The Trust 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
<PAGE>
<PAGE>
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 Trust 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.
EXPENSES
All fees and expenses incurred in the administration of the Trust (other
than expenses relating to the administration of Plans of Participation and any
maintenance fee charged to Individual Retirement Accountholders), are charged
to the Trust. 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
Trust 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.
FINANCIAL STATEMENTS
The financial statements required to be included in this Statement of
Additional Information are incorporated by reference from the Trust's Annual
Report to unitholders for the fiscal year ended September 30, 1999. Other
portions of the Trust's Annual Report, including Highlights of the Year,
President'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 Trust's Annual Report may be obtained
without charge by writing to RSI Retirement Trust, 317 Madison Avenue, NY, NY
10017, Attention: Stephen P. Pollak, Esq.
<PAGE>
<PAGE>
<PAGE>
<PAGE> PART C. OTHER INFORMATION
ITEM 23. 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 Instrument Defining Rights of Shareholders.
Incorporated by reference to Exhibits 1(a), 1(b), 1(c)
and 2 above.
4(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.):
4(b) Investment Management Agreement between the Fund and
Retirement System Investors Inc., as amended and
restated July 29, 1997. (Filed herewith).
4(c) Investment Management Agreement between the Fund and
Retirement System Investors Inc., as amended and
restated effective February 8, 1999 (Filed herewith).
4(d) Investment Sub-Advisory Agreements between Retirement
System Investors Inc. and each of the investment sub-
advisers listed below, and Schedule A thereto for each
such Agreement, setting forth the terms of its
respective compensation:
(1) 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.)
<PAGE>
<PAGE>
(2) Bank of Ireland Asset Management (U.S.)
Limited. (Filed as Exhibit A to the
Registrant's Definitive Proxy Statement on
Schedule 14A filed on March 29, 1999.)
5 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.)
6 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.)
7(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.)
7(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.)
7(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
Registrant's Registration Statement on Form N-1A filed
on January 24, 1990.)
7(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.)
8(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.)
8(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.)
8(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.)
8(d) Service Agreement. (Filed as Exhibit 9.d to Post-
Effective Amendment No. 17 to the Registrant's
Registration Statement on Form N-1A filed on November
30, 1998.)
<PAGE>
<PAGE>
9(a) Opinion of Milbank, Tweed, Hadley & McCloy. (Filed
as Exhibit 10 to Pre-Effective Amendment No. 1 to the
Registrant's Registration Statement on Form N-1A
filed on June 28, 1985.)
10(a) Consent of PricewaterhouseCoopers, LLP. (Filed
herewith.)
10(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.)
10(c) Consent of McGladrey & Pullen, LLP. (Filed
herewith.)
10(d) Independent Auditor's Report of McGladrey & Pullen,
LLP (filed herewith.)
11 None.
12 None.
13 Not applicable.
14 None.
ITEM 24. PERSONS CONTROLLED BY OR UNDER COMMON CONTROL WITH REGISTRANT.
Not applicable.
<PAGE>
<PAGE>
ITEM 25. 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, 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 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.
<PAGE>
<PAGE>
(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 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 26. 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:
<PAGE>
<PAGE>
HLM MANAGEMENT COMPANY, INC.
- ---------------------------
Positions Other Business, Profession,
Name With Manager Vocation, Employment
- ---- ------------- ---------------------------
Judith P. Lawrie Chairman, Board of -Director
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
RETIREMENT SYSTEM INVESTORS INC.:
- --------------------------------
Positions Other Business, Profession,
Name With Manager Vocation, Employment
- ---- ------------- ---------------------------
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
-Chairman and Director
RSGroup Trust Company
295 Forest Avenue, No. 610
Portland, Maine 04104
-President and Trustee
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
-Director
RSG Insurance Agency Inc.
317 Madison Avenue
New York, New York 10017
<PAGE>
<PAGE>
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 President, -Executive Vice President,
Secretary and Director Counsel, Secretary and
Director
Retirement System Group
Inc.
317 Madison Avenue
New York, New York 10017
-President and Director
RSG Insurance Agency Inc.
317 Madison Avenue
New York, New York 10017
-Vice President, Counsel,
Secretary and Director
Retirement System
Consultants Inc.
317 Madison Avenue
New York, New York 10017
-Vice President, Secretary
and Director
Retirement System
Distributors Inc.
317 Madison Avenue
New York, New York 10017
-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
<PAGE>
<PAGE>
John F. Meuser Senior Vice President -Senior Vice 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
-Senior Vice President
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
Chris R. Kaufman Vice President and -Vice President
Portfolio Manager Retirement System Group
Inc.
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
<PAGE>
<PAGE>
-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
-Vice President and
Assistant Treasurer
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
BANK OF IRELAND ASSET MANAGEMENT (U.S.) LIMITED:
- -----------------------------------------------
Positions Other Business, Profession,
Name With Manager Vocation, Employment
- ---- ------------- ---------------------------
Gerald Colleary Senior Vice President -
Director Client Services
Michele Lynch Vice President - Client Services
ITEM 27. 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:
Position and Offices With Position and Offices With
Name Principal Underwriter Registrant
- ---- ------------------------- -------------------------
William Dannecker Director President and Trustee
C. Paul Tyborowski President none
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
(c) None.
<PAGE>
<PAGE>
ITEM 28. LOCATION OF ACCOUNTS AND RECORDS.
The physical possession of each account, book or other document of
the Registrant, will be maintained by the Registrant, 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 29. MANAGEMENT SERVICES.
Retirement System Consultants Inc.
317 Madison Avenue
New York, New York 10017.
ITEM 30. UNDERTAKINGS.
Not applicable.
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of l933 and the
Investment Company Act of l940, the Registrant certifies that it 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 4th day of November, 1999.
RSI RETIREMENT TRUST
By /s/ William Dannecker
------------------------------
William Dannecker,
President and Trustee
Pursuant to the requirements of the Securities Act of 1933, this
Post-Effective Amendment to the 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 4, 1999
- --------------------- (Principal Executive Officer),
William Dannecker Trustee
/s/ Heidi Viceconte Treasurer November 4, 1999
- --------------------- (Principal Financial and
Heidi Viceconte Accounting Officer)
/s/ Herbert G. Chorbajian Trustee November 5, 1999
- --------------------------
Herbert G. Chorbajian
/s/ James P. Cronin Trustee November 4, 1999
- --------------------------
James P. Cronin
/s/ Ralph L. Hodgkins, Jr. Trustee November 5,1999
- ----------------------------
Ralph L. Hodgkins, Jr.
/s/ Maurice E. Kinkade Trustee November 3,1999
- ----------------------------
Maurice E. Kinkade
/s/ William G. Lillis Trustee November 3, 1999
- -----------------------------
William G. Lillis
/s/ William A. McKenna Trustee November 5, 1999
- -----------------------------
William A. McKenna
<PAGE>
<PAGE>
/s/ William L. Schrauth Trustee November 4, 1999
- -----------------------------
William L. Schrauth
/s/ William E. Swan Trustee November 5, 1999
- -----------------------------
William E. Swan
/s/ Raymond L. Willis Trustee November 4, 1999
- -----------------------------
Raymond L. Willis
<PAGE>
<PAGE>
INDEX TO EXHIBITS
Exhibit Number Description
- -------------- -----------
EX - 99.4.b. Investment Management Agreement with Retirement System
Investors Inc., as amended and restated July 29, 1997
EX - 99.4.c. Investment Management Agreement with Retirement System
Investors Inc., as amended and restated February 8, 1999
EX - 99.10.a. Consent of PricewaterhouseCoopers LLP
EX - 99.10.b. Consent of McGladrey & Pullen, LLP
EX - 99.10.c. Independent Auditor's Report of McGladrey & Pullen, LLP
RSI RETIREMENT TRUST
RETIREMENT SYSTEM INVESTORS INC.
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT made as of July 29, 1997, between RSI Retirement
Trust (the "Trust"), a retirement fund organized and existing as a trust
pursuant to a certain Agreement and Declaration of Trust, as amended and
restated August 1, 1990 and as further amended from time to time (the
"Agreement and Declaration of Trust"), and Retirement System Investors Inc., a
Delaware corporation (the "Manager").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is an investment trust exempt from taxation
under Section 501(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), which has been designed to effectuate pension or profit-sharing plans
which are qualified under Section 401(a) of the Code and individual retirement
accounts under Section 408(a) of the Code; and
WHEREAS, such pension and profit-sharing plans are eligible to
invest their assets in the Trust, and to become unitholders of the Trust (the
"Unitholders"); and
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, pursuant to an Investment Management Agreement dated
August 1, 1993, the Manager has served as the investment manager for all of
the investment funds of the Trust (the "Investment Funds"); and
WHEREAS, the Trust wishes to continue the Manager as the
investment manager of the assets of each of the Investment Funds (the
"Account"), with a modification to the terms and conditions under which the
Manager serves as investment manager of the assets comprising the Emerging
Growth Equity Fund, to act in such capacity in the manner set forth in this
Agreement, and the Manager is willing to act in such capacity in accordance
with the provisions of this Agreement;
NOW, THEREFORE, the Trust hereby agrees with the Manager as
follows:
1. Appointment of the Manager
--------------------------
A. The Trust hereby designates, appoints, engages and retains
the Manager as investment manager of the Account.
B. The Manager hereby accepts appointment as investment manager
to manage the Account. The Manager hereby represents and warrants that it is
a qualified investment adviser under the Investment Advisers Act of 1940, as
amended. The Manager agrees that, although it may not be subject to the
provisions of Title 1 of the Employee
<PAGE>
<PAGE>
Retirement Income Security Act of 1974, and amended ("ERISA"), in carrying out
its duties and responsibilities under this Agreement , it will conduct itself
as an investment manager (as defined in Section 3(38) of ERISA), and it will
act in accordance with the requirements of Part 4 of ERISA as applicable to
fiduciaries (as defined in Section 3(21) of ERISA). Notwithstanding anything
contained herein to the contrary, references to ERISA in this Agreement will
be deemed to contemplate all judicial or administrative interpretations and
all statutory and administrative exemptions which would be applicable in the
circumstances and to the parties in question were this Agreement and the
Manager subject to ERISA.
C. The Manager will also perform such services as may be
requested from time to time by the Trust relating to the allocation of a
Plan's assets between equities and fixed income obligations and within
specified investment funds of the Trust, at no additional charge to the Trust.
D. Notwithstanding the foregoing, the Manager may, from time
to time subject to the approval of the Trust's Board of Trustees (the
"Trustees") and the Unitholders, retain a person or persons (a "Sub-Adviser")
to provide investment management services to one or more of the Investment
Funds. The Sub-Adviser shall agree to comply with all provisions applicable
to the Manager hereunder. If the Manager retains a Sub-Adviser, the Trust
will have no responsibility to compensate the Sub-Adviser, any such
compensation to be paid by the Manager from the amount paid to it pursuant to
Section 5 of the Agreement.
E. This Agreement is effective on the date hereof. This
Agreement will remain in full force and effect until July 29, 1999, unless
terminated earlier in accordance with its terms, and thereafter from year to
year provided that such continuance is specifically approved in the manner
required by the Act.
2. Assets of the Account
---------------------
The Trust will certify or cause to be certified to the Manager
the assets comprising the Account as of the commencement of the term of this
Agreement. The Trust may add to the Account assets acceptable to the Manager
or withdraw assets from the Account at any time or from time to time by
written notification to the Manager. The Account will consist of the assets
certified to the Manager as aforesaid, or any assets into which the same may
be converted from time to time, together with any income therefrom or any
other increment thereon, and assets added as aforesaid, less assets withdrawn
as aforesaid.
3. Investment Powers
-----------------
A. Subject to the provisions of paragraphs B and C of this
Section 3, the Manager will have sole and complete authority and discretion,
subject to and consistent with the investment objectives and policies of the
Investment Funds as set forth in the prospectus of the Trust (the
"Prospectus"), the Agreement and Declaration of Trust, the Rules and
Procedures of the Trust and the Trust's Statement of Investment Objectives and
Guidelines, as the same may be amended from time to time, all as delivered to
the Manager (collectively, the "Controlling Documents"), or as specified in
writing form time to time by the Trust or otherwise accepted by the Manager,
to manage (including the power to acquire and dispose of ) the assets of the
Account and, without limiting the generality of the foregoing, to direct the
Trustees in the
<PAGE>
<PAGE>
exercise of the powers relating to the Account which are specified in the
Controlling Documents, and, subject to such direction.
B. The manager will also perform supervisory services
pertaining to the ongoing oversight and management of each Sub-Advisor
retained by the Manager. Such services include, but shall not be limited to,
supervising the compliance by such Sub-Adviser with the Act, reviewing such
Sub-Adviser's performance, analysis of the composition of such Sub-Adviser's
portfolio, and preparing reports relating to such supervisory activities for
the Trustees. In addition, the Manager will, at the request of the Trustees,
conduct a search to find a recommended replacement for any Sub-Adviser. The
Manager will prepare presentations to Unitholders analyzing the Trust's
overall performance based on analysis of each Sub-Adviser's performance.
C. The Manager will consult with the Trustees and their
representatives at such times as the Trustees may reasonably request with
respect to the overall investment policy of the Account, and the Manager will
cause one or more of its officers to attend such meetings with the Trustees
and their representatives and to furnish such oral or written reports to the
Trustees and their representatives, as the Trustees may reasonably request,
with respect to, among other matters, the decisions it has made with respect
to the Account and the purchase and sale of its portfolio securities
(including the reasons therefor) and the extent to which such decisions have
been implemented. In addition, the Manager also specifically agrees to (i)
give advance notice in writing to the Trustees of the taking on by the Manager
of new clients or ventures of material significance, including any related
information required in order to enable the Trustees to determine whether the
taking on of new business by the Manager will impair the Manager's ability to
carry out its obligations under this Agreement, and (ii) provide to the
Trustees such reports and other information as the Trustees may reasonably
request in order to enable the Trustees to perform a review of the Manager's
performance under this Agreement no less frequently than quarterly.
4. Standard of Care
----------------
A. The Manager will invest the Account in the manner provided
herein and will have no duty or responsibility with respect to the
diversification of the assets of the Trust, except with respect to the
diversification of the Account as contemplated by the Prospectus.
B. Except as provided in ERISA, the Manager will be under no
liability or obligation to anyone with respect to any failure on the part of
the Trustees or any other investment manager to perform any of their
obligations under the Controlling Documents or any agreement affecting the
Account, or under the terms of this Agreement, or for any error or omission
whatsoever on the part of the Trustees or any other investment manager.
C. The Manager will not be liable for the making, retention or
sale of any investment or reinvestment by it as herein provided, nor for any
loss to or diminution of the value of the Account; provided, however, that the
--------
Manager has acted in the premises with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in like
capacity and familiar with such matters would use in the conduct of any
enterprise 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
--------
<PAGE>
<PAGE>
this Agreement will protect the Manager against any liability to the Trust or
the Unitholders to which the Manager would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or by reason of its reckless disregard of its obligations and
duties hereunder.
5. Compensation
------------
A. The Trust agrees to pay to the Manager, as full compensation
and reimbursement for the services to be rendered by the Manager pursuant to
this Agreement and any expenses incurred by the Manager in connection
therewith (including the fees of a Sub-Adviser, if any), a fee on the last day
of each month in which this Agreement is in effect, at the rates set forth on
Schedule I attached hereto.
B. In the event that this Agreement commences on a date other
than on the beginning of any calendar month, or if this Agreement terminates
on a date other than the end of any calendar month,
the fee payable hereunder by the Trust shall be proportionately reduced
according to the number of days during such month that services were not
rendered hereunder by the Manager.
6. General Provisions
------------------
A. With respect to securities in the Account, the Manager will
purchase such securities from or through and sell such securities to or
through such persons, brokers or dealers as the Manager shall deem appropriate
to carry out the policy with respect to brokerage as set forth in the
Prospectus, or as the Trust may direct in writing from time to time. It is
understood that it is desirable for the Trust that the Manager have access to
supplemental research and securities and economic analysis and statistical
services and information with respect to the availability of securities or
purchasers or sellers of securities provided by brokers and of use to the
Trust although such access may require the allocation of brokerage business to
brokers who execute transactions at a higher cost to the Trust that other
brokers which provide only execution of portfolio transactions. Therefore,
the Manager is authorized to place orders for the purchase and sale of
securities with such brokers, subject to review by the Trustees from time to
time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Manager in connection with its services to clients other than the Trust and
the Unitholders.
B. The Manager will pay all of its expenses incurred in the
performance of this Agreement, including but not limited to fees, if any, of
Sub-Advisers retained by the Manager, salaries and other compensation of its
officers and employees and all other costs of providing such advice, portfolio
management and information and reports to the Trustees as are required
hereunder.
C. Subject to the provision of paragraph B of Section 6 of
this Agreement with respect to advance notice of the Manager's taking on of
new clients or ventures of material significance, nothing herein contained
shall limit or restrict the right of the Manager to engage in any other
business or to render services of any kind to any other corporation, firm,
individual or association.
<PAGE>
<PAGE>
D. This Agreement may be terminated, without the payment of any
penalty, by either party hereto on not more than sixty (60) days' nor less
than thirty (30) days' written notice to the other party. Any termination by
the Trust shall be pursuant to a vote of a majority of the Trustees or by vote
of a majority of outstanding voting securities (as defined in the Act) of the
Trust.
E. This Agreement will automatically terminate in the event of
its "assignment" (as such term is defined in the Act).
F. The Manager may rely on the authenticity, truth and accuracy
of, and will be fully protected in acting upon:
(i) any notice, direction, certification, approval or
other writing of the Trust, if evidenced by an
instrument signed by the Chairman of the Board or any
other Trustee of the Trust or the President, any
Executive Vice President, Senior Vice President, any
Vice President or the Treasurer of the Trust;
(ii) any copy of a resolution of the Trustees, if
certified by the Chairman of the Board or any other
Trustee of the Trust, or the Secretary or any
Assistant Secretary of the Trust; and
(iii) any notification or information provided by the
custodian of the assets in the Account, if evidenced
by an instrument signed by an officer of the
custodian.
G. The Manager may rely on, and will be fully protected with
respect to any action taken or omitted in reliance on, any information,
statement or certificate provided or delivered to the Manager by or on behalf
of the Trust with respect to any matter concerning the Trust and the operation
and administration of the Account. The Manager is expressly authorized to
consult with the Trust with respect to any matters arising in the
administration of the Account and to act on the advice of the Trust; provided,
--------
however, that nothing herein shall limit the full responsibility of the
Manager for the management of the Account as provided herein.
H. Communications from the Manager to the Trust or Trustees
will be addressed to:
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
Attention: William Dannecker, President and Trustee
----------
Communications to the Manager from the Trust or the
Trustees will be addressed to:
Retirement System Investors Inc.
317 Madison Avenue
<PAGE>
<PAGE>
New York, New York 10017
Attention: James P. Coughlin, President
---------
In the event of a change of address, communications will be
addressed to such new address as designated in a written notice from the
Trust, the Trustees or the Manager, as the case may be. All communications
addressed in the above manner and by registered mail or delivered by hand
shall be sufficient under this Agreement.
I. This Agreement is governed by the laws of the State of New
York (without reference to such State's conflict of law rules).
J. No term or provision of this Agreement may be amended,
modified or waived without the affirmative vote or action by written consent
of the Manager and the Trust and in accordance with the Act.
IN WITNESS WHEREOF, the Manager and the Trust have executed this
Agreement as of the date first written above.
RSI RETIREMENT TRUST
By:
----------------------------
Name: William Dannecker
Title: President and Trustee
RETIREMENT SYSTEM INVESTORS INC.
By:
----------------------------
Name: James P. Coughlin
Title: President
NOTE: ANY AGREEMENT, OBLIGATION OR LIABILITY MADE,
ENTERED INTO OR INCURRED BY OR ON BEHALF OF RSI
RETIREMENT TRUST BINDS ONLY THE TRUST ESTATE,
AND NO TRUST PARTICIPANT, TRUSTEE, OFFICER OR
AGENT THEREOF ASSUMES OR SHALL BE HELD TO ANY
LIABILITY THEREFOR.
SCHEDULE I
Retirement System Investors Inc. shall act as the Manager for each of
the Investment Funds of the Trust. For its services, the Manager is entitled
to receive a fee, calculated daily and paid monthly, based on a percentage of
the average net assets of the
<PAGE>
<PAGE>
respective Investment Funds, The specific percentage for each Investment Fund
is set forth in the following table:
Fee (% of Average Daily Net Assets)
-----------------------------------
Actively Managed Bond Fund
--------------------------
First $50 Million .40%
Next $100 Million .30
Over $150 Million .20
Intermediate-Term Bond Fund
---------------------------
First $50 Million .40%
Next $150 Million .30
Over $200 Million .20
Short-Term Investment Fund
--------------------------
First $50 Million .25%
Over $50 Million .20
Dedicated Bond Fund
-------------------
First $5 Million .25%
Next $15 Million .20
Over $20 Million .15
Core Equity Fund
----------------
First $50 Million .60%
Next $150 Million .50
Over $200 Million .40
<PAGE>
<PAGE>
Value Equity Fund
-----------------
First $10 Million .80%
Next $10 Million .70
Next $20 Million .60
Next $20 Million .50
Next $40 Million .40
Next $50 Million .35
Over $150 Million .30
International Equity Fund
First $50 Million .80%
Over $50 Million .70
For the portion of the Emerging Growth Equity Fund, for
which Friess Associates, Inc. serves as Sub-Adviser, the fee is 1.20% of
average daily net assets. For the portion of the Emerging Growth Equity Fund
for which HLM Management Company Inc. serves as Sub-Adviser, the fee is 1.20%
of the average daily net assets under their management up to and including $25
million, 1.00% of average daily net assets for the next $25 million of average
daily net assets, and .80% of average daily net assets under their management
for amounts in excess of $50 million.
For any Investment Fund which currently employs a
Sub-Adviser (the International Equity Fund, Value Equity Fund and Emerging
Growth Equity Fund) the fee set forth above shall be reduced by 0.20% of
average daily net assets if and when such sub-advisory relationship is
terminated without the retention of a successor Sub-Adviser.
RSI RETIREMENT TRUST
RETIREMENT SYSTEM INVESTORS INC.
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT made as of February 8, 1999, between RSI Retirement
Trust (the "Trust"), a retirement fund organized and existing as a trust
pursuant to a certain Agreement and Declaration of Trust, as amended and
restated August 1, 1990 and as further amended from time to time (the
"Agreement and Declaration of Trust"), and Retirement System Investors Inc., a
Delaware corporation (the "Manager").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is an investment trust exempt from taxation
under Section 501(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), which has been designed to effectuate pension or profit-sharing plans
which are qualified under Section 401(a) of the Code and individual retirement
accounts under Section 408(a) of the Code; and
WHEREAS, such pension and profit-sharing plans are eligible to
invest their assets in the Trust, and to become unitholders of the Trust (the
"Unitholders"); and
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, pursuant to an Investment Management Agreement dated
July 29, 1997, the Manager has served as the investment manager for all of the
investment funds of the Trust (the "Investment Funds"); and
WHEREAS, the Trust wishes to continue the Manager as the
investment manager of the assets of each of the Investment Funds (the
"Account"), with modifications to the terms and conditions under which the
Manager serves as investment manager of the assets comprising the Emerging
Growth Equity Fund, the International Equity Fund, and the Value Equity Fund,
to act in such capacity in the manner set forth in this Agreement, and the
Manager is willing to act in such capacity in accordance with the provisions
of this Agreement;
NOW, THEREFORE, the Trust hereby agrees with the Manager as
follows:
1. Appointment of the Manager
--------------------------
A. The Trust hereby designates, appoints, engages and retains
the Manager as investment manager of the Account.
B. The Manager hereby accepts appointment as investment manager
to manage the Account. The Manager hereby represents and warrants that it is
a qualified investment advisor under the Investment Advisors Act of 1940, as
amended. The Manager agrees that, although it may not be subject to the
provisions of Title 1 of the Employee Retirement Income Security Act of 1974,
and amended ("ERISA"), in carrying out its duties and
<PAGE>
<PAGE>
responsibilities under this Agreement, it will conduct itself as an investment
manager (as defined in Section 3(38) of ERISA), and it will act in accordance
with the requirements of Part 4 of ERISA as applicable to fiduciaries (as
defined in Section 3(21) of ERISA). Notwithstanding anything contained herein
to the contrary, references to ERISA in this Agreement will be deemed to
contemplate all judicial or administrative interpretations and all statutory
and administrative exemptions which would be applicable in the circumstances
and to the parties in question were this Agreement and the Manager subject to
ERISA.
C. The Manager will also perform such services as may be
requested from time to time by the Trust relating to the allocation of a
Plan's assets between equities and fixed incomeobligations and within
specified investment funds of the Trust, at no additional charge to the Trust.
D. Notwithstanding the foregoing, the Manager may, from time to
time subject to the approval of the Trust's Board of Trustees (the "Trustees")
and the Unitholders, retain a person or persons (a "Sub-Advisor") to provide
investment management services to one or more of the Investment Funds. The
Sub-Advisor shall agree to comply with all provisions applicable to the
Manager hereunder. If the Manager retains a Sub-Advisor, the Trust will have
no responsibility to compensate the Sub-Advisor, any such compensation to be
paid by the Manager from the amount paid to it pursuant to Section 5 of the
Agreement.
E. This Agreement is effective on the date hereof. This
Agreement will remain in full force and effect until February 8, 2001, unless
terminated earlier in accordance with its terms, and thereafter from year to
year provided that such continuance is specifically approved in the manner
required by the Act.
2. Assets of the Account
---------------------
The Trust will certify or cause to be certified to the Manager
the assets comprising the Account as of the commencement of the term of this
Agreement. The Trust may add to the Account assets acceptable to the Manager
or withdraw assets from the Account at any time or from time to time by
written notification to the Manager. The Account will consist of the assets
certified to the Manager as aforesaid, or any assets into which the same may
be converted from time to time, together with any income therefrom or any
other increment thereon, and assets added as aforesaid, less assets withdrawn
as aforesaid.
3. Investment Powers
-----------------
A. Subject to the provisions of paragraphs B and C of this
Section 3, the Manager will have sole and complete authority and discretion,
subject to and consistent with the investment objectives and policies of the
Investment Funds as set forth in the prospectus of the Trust (the
"Prospectus"), the Agreement and Declaration of Trust, the Rules and
Procedures of the Trust and the Trust's Statement of Investment Objectives and
Guidelines, as the same may be amended from time to time, all as delivered to
the Manager (collectively, the "Controlling Documents"), or as specified in
writing form time to time by the Trust or otherwise accepted by the Manager,
to manage (including the power to acquire and dispose of ) the assets of the
Account and, without limiting the generality of the foregoing, to direct the
Trustees in the exercise of the powers relating to the Account which are
specified in the Controlling Documents, and, subject to such direction.
<PAGE>
<PAGE>
B. The manager will also perform supervisory services
pertaining to the ongoing oversight and management of each Sub-Advisor
retained by the Manager. Such services include, but shall not be limited to,
supervising the compliance by such Sub-Advisor with the Act, reviewing such
Sub-Advisor's performance, analysis of the composition of such Sub-Advisor's
portfolio, and preparing reports relating to such supervisory activities for
the Trustees. In addition, the Manager will, at the request of the Trustees,
conduct a search to find a recommended replacement for any Sub-Advisor. The
Manager will prepare presentations to Unitholders analyzing the Trust's
overall performance based on analysis of each Sub-Advisor's performance.
C. The Manager will consult with the Trustees and their
representatives at such times as the Trustees may reasonably request with
respect to the overall investment policy of the Account, and the Manager will
cause one or more of its officers to attend such meetings with the Trustees
and their representatives and to furnish such oral or written reports to the
Trustees and their representatives, as the Trustees may reasonably request,
with respect to, among other matters, the decisions it has made with respect
to the Account and the purchase and sale of its portfolio securities
(including the reasons therefor) and the extent to which such decisions have
been implemented. In addition, the Manager also specifically agrees to (i)
give advance notice in writing to the Trustees of the taking on by the Manager
of new clients or ventures of material significance, including any related
information required in order to enable the Trustees to determine whether the
taking on of new business by the Manager will impair the Manager's ability to
carry out its obligations under this Agreement, and (ii) provide to the
Trustees such reports and other information as the Trustees may reasonably
request in order to enable the Trustees to perform a review of the Manager's
performance under this Agreement no less frequently than quarterly.
4. Standard of Care
----------------
A. The Manager will invest the Account in the manner provided
herein and will have no duty or responsibility with respect to the
diversification of the assets of the Trust, except with respect to the
diversification of the Account as contemplated by the Prospectus.
B. Except as provided in ERISA, the Manager will be under no
liability or obligation to anyone with respect to any failure on the part of
the Trustees or any other investment manager to perform any of their
obligations under the Controlling Documents or any agreement affecting the
Account, or under the terms of this Agreement, or for any error or omission
whatsoever on the part of the Trustees or any other investment manager.
C. The Manager will not be liable for the making, retention or
sale of any investment or reinvestment by it as herein provided, nor for any
loss to or diminution of the value of the Account; provided, however, that the
--------
Manager has acted in the premises with the care, skill, prudence and diligence
under the circumstances then prevailing that a prudent man acting in like
capacity and familiar with such matters would use in the conduct of any
enterprise of a like character and with like aims, and in accordance with such
other requirements of ERISA as are applicable generally to fiduciaries under
ERISA; provided further, however that nothing in this Agreement will protect
--------
the Manager against any liability to the Trust or the Unitholders to which the
Manager would otherwise be subject by reason of willful misfeasance, bad faith
or
<PAGE>
<PAGE>
gross negligence in the performance of its duties hereunder or by reason of
its reckless disregard of its obligations and duties hereunder.
5. Compensation
------------
A. The Trust agrees to pay to the Manager, as full compensation
and reimbursement for the services to be rendered by the Manager pursuant to
this Agreement and any expenses incurred by the Manager in connection
therewith (including the fees of a Sub-Advisor, if any), a fee on the last day
of each month in which this Agreement is in effect, at the rates set forth on
Schedule I attached hereto.
B. In the event that this Agreement commences on a date other
than on the beginning of any calendar month, or if this Agreement terminates
on a date other than the end of any calendar month, the fee payable hereunder
by the Trust shall be proportionately reduced according to the number of days
during such month that services were not rendered hereunder by the Manager.
6. General Provisions
------------------
A. With respect to securities in the Account, the Manager will
purchase such securities from or through and sell such securities to or
through such persons, brokers or dealers as the Manager shall deem appropriate
to carry out the policy with respect to brokerage as set forth in the
Prospectus, or as the Trust may direct in writing from time to time. It is
understood that it is desirable for the Trust that the Manager have access to
supplemental research and securities and economic analysis and statistical
services and information with respect to the availability of securities or
purchasers or sellers of securities provided by brokers and of use to the
Trust although such access may require the allocation of brokerage business to
brokers who execute transactions at a higher cost to the Trust that other
brokers which provide only execution of portfolio transactions. Therefore,
the Manager is authorized to place orders for the purchase and sale of
securities with such brokers, subject to review by the Trustees from time to
time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Manager in connection with its services to clients other than the Trust and
the Unitholders.
B. The Manager will pay all of its expenses incurred in the
performance of this Agreement, including but not limited to fees, if any, of
Sub-Advisors retained by the Manager, salaries and other compensation of its
officers and employees and all other costs of providing such advice, portfolio
management and information and reports to the Trustees as are required
hereunder.
C. Subject to the provision of paragraph B of Section 6 of this
Agreement with respect to advance notice of the Manager's taking on of new
clients or ventures of material significance, nothing herein contained shall
limit or restrict the right of the Manager to engage in any other business or
to render services of any kind to any other corporation, firm, individual or
association.
D. This Agreement may be terminated, without the payment of any
penalty, by either party hereto on not more than sixty (60) days' nor less
than thirty (30) days' written notice to the other party. Any termination by
the Trust shall be pursuant to a vote of a majority
<PAGE>
<PAGE>
of the Trustees or by vote of a majority of outstanding voting securities (as
defined in the Act) of the Trust.
E. This Agreement will automatically terminate in the event of
its "assignment" (as such term is defined in the Act).
F. The Manager may rely on the authenticity, truth and accuracy
of, and will be fully protected in acting upon:
(i) any notice, direction, certification, approval or
other writing of the Trust, if evidenced by an
instrument signed by the Chairman of the
Board or any other Trustee of the Trust or the
President, any Executive Vice President, Senior
Vice President, any Vice President or the Treasurer
of the Trust;
(ii) any copy of a resolution of the Trustees, if
certified by the Chairman of the Board or any other
Trustee of the Trust, or the Secretary or any
Assistant Secretary of the Trust; and
(iii) any notification or information provided by the
custodian of the assets in the Account, if
evidenced by an instrument signed by an officer of
the custodian.
G. The Manager may rely on, and will be fully protected with
respect to any action taken or omitted in reliance on, any information,
statement or certificate provided or delivered to the Manager by or on behalf
of the Trust with respect to any matter concerning the Trust and the operation
and administration of the Account. The Manager is expressly authorized to
consult with the Trust with respect to any matters arising in the
administration of the Account and to act on the advice of the Trust; provided,
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however, that nothing herein shall limit the full responsibility of the
Manager for the management of the Account as provided herein.
H. Communications from the Manager to the Trust or Trustees
will be addressed to:
RSI Retirement Trust
317 Madison Avenue
New York, New York 10017
Attention: William Dannecker, President and Trustee
---------
Communications to the Manager from the Trust or the Trustees
will be addressed to:
Retirement System Investors Inc.
317 Madison Avenue
New York, New York 10017
Attention: James P. Coughlin, President
---------
In the event of a change of address, communications will be
addressed to such new address as designated in a written notice from the
Trust, the Trustees or the Manager, as the
<PAGE>
<PAGE>
case may be. All communications addressed in the above manner and by
registered mail or delivered by hand shall be sufficient under this Agreement.
I. This Agreement is governed by the laws of the State of New
York (without reference to such State's conflict of law rules).
J. No term or provision of this Agreement may be amended,
modified or waived without the affirmative vote or action by written consent
of the Manager and the Trust and in accordance with the Act.
IN WITNESS WHEREOF, the Manager and the Trust have executed this
Agreement as of the date first written above.
RSI RETIREMENT TRUST
By:
----------------------------
Name: William Dannecker
Title: President and Trustee
RETIREMENT SYSTEM INVESTORS INC.
By:
-----------------------------
Name: James P. Coughlin
Title: President
NOTE: ANY AGREEMENT, OBLIGATION OR LIABILITY MADE,
ENTERED INTO OR INCURRED BY OR ON BEHALF OF RSI
RETIREMENT TRUST BINDS ONLY THE TRUST ESTATE,
AND NO TRUST PARTICIPANT, TRUSTEE, OFFICER OR
AGENT THEREOF ASSUMES OR SHALL BE HELD TO ANY
LIABILITY THEREOF.
<PAGE>
<PAGE>
SCHEDULE I
Retirement System Investors Inc. shall act as the Manager for each of the
Investment Funds of the Trust. For its services, the Manager is entitled to
receive a fee, calculated daily and paid monthly, based on a percentage of the
average net assets of the respective Investment Funds. The specific
percentage for each Investment Fund is set forth in the following table:
Fee (% of Average Daily Net Assets)
----------------------------------
Actively Managed Bond Fund
--------------------------
First $50 Million .40%
Next $100 Million .30
Over $150 Million .20
Intermediate-Term Bond Fund
---------------------------
First $50 Million .40%
Next $150 Million .30
Over $200 Million .20
Short-Term Investment Fund
--------------------------
First $50 Million .25%
Over $50 Million .20
Core Equity Fund
----------------
First $50 Million .60%
Next $150 Million .50
Over $200 Million .40
Value Equity Fund
-----------------
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
<PAGE>
<PAGE>
Effective May 1, 1999:
First $10 Million .60%
Next $10 Million .50
Next $20 Million .40
Over $40 Million .30
Emerging Growth Equity Fund
---------------------------
Assets Where No Sub-Advisor
is Employed 1.0%
International Equity Fund
-------------------------
First $50 Million .80%
Over $50 Million .70
Effective April 26, 1999:
First $20 Million .95%
Next $30 Million .70
Over $50 Million .55
For the portion of the Emerging Growth Equity Fund for which HLM
Management Company Inc. serves as Sub-Advisor, the fee is 1.20% of the average
daily net assets under their management up to and including $25 million, 1.00%
of average daily net assets for the next $25 million of average daily net
assets, and .80% of average daily net assets under their management for
amounts in excess of $50 million.
For any Investment Fund which currently employs a Sub-Advisor (the
International Equity Fund and Emerging Growth Equity Fund) the fee set forth
above shall be reduced by 0.20% of average daily net assets if and when such
sub-advisory relationship is terminated without the retention of a successor
Sub-Advisor.
[LETTERHEAD OF PRICEWATERHOUSECOOPERS LLP]
CONSENT OF INDEPENDENT ACCOUNTANTS
----------------------------------
We hereby consent to the incorporation by reference in this Registration
Statement on Form N-1A of our report dated October 29, 1999, relating to the
financial statement and financial highlights which appears in the September
30, 1999 Annual Report to Unitholders of RSI Retirement Trust, which is also
incorporated by reference into the Registration Statement. We also consent to
the references to us under the headings "Financial Highlights" and "Counsel
and Auditors" in such Registration Statement.
/s/ PricewaterhouseCoopers LLP
PricewaterhouseCoopers LLP
New York, New York
November, 19, 1999
[LETTERHEAD OF MCGLADREY & PULLEN, LLP]
CONSENT OF INDEPENDENT AUDITORS
We hereby consent to the inclusion of our report dated October 30, 1998 on the
financial statements for the year ended September 30, 1998 and financial
highlights for the four years in the period then ended of RSI Retirement Trust,
attached as an exhibit to the Post-Effective Amendment to the Registration
Statement on Form N-1A (File No. 2-95074) as filed with the Securities and
Exchange Commission.
/s/ McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
New York, New York
November 22, 1999
The Board of Trustees and Unitholders
RSI Retirement Trust
We have audited the combined and individual statements of changes in net assets
for the year ended September 30, 1998 and the financial highlights for each of
the four years in the period then ended 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
(the "Investment Funds") of the RSI Retirement Trust. These financial
statements and financial highlights are the responsibility of the Trust's
management. Our responsibility is to express an opinion on these financial
statements and financial highlights based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to
obtain reasonable assurance about whether the financial statements and
financial highlights are free of material misstatement. An audit includes
examining, on a test basis, evidence supporting the amounts and disclosures in
the financial statements. An audit also includes assessing the accounting
principles used and significant estimates made by management, as well as
evaluating the overall financial statement presentation. We believe that
our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements and financial highlights referred
to above present fairly, in all material respects, the changes in net assets
and the financial highlights of the Investment Funds of RSI Retirement Trust
for the periods indicated, in conformity with generally accepted accounting
principles.
/s/ McGladrey & Pullen, LLP
McGladrey & Pullen, LLP
New York, New York
October 30, 1998
