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REPORT OF INDEPENDENT ACCOUNTANTS
To the Shareholders and Board of Trustees
of Russell Insurance Funds:
We have audited the accompanying statements of assets and liabilities of each of
the series of Russell Insurance Funds (comprised of Multi-Style Equity Fund,
Aggressive Equity Fund, Non-U.S. Fund, and Core Bond Fund (the "Funds")), as of
December 31, 1996. These financial statements are the responsibility of the
Funds' management. Our responsibility is to express an opinion on these
financial statements based on our audit.
We conducted our audit 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 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 audit of the financial statements provides a reasonable
basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of the Funds enumerated above as
of December 31, 1996, in conformity with generally accepted accounting
principles.
Boston, Massachusetts
February 25, 1997 /s/ Coopers & Lybrand L.L.P.
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RUSSELL INSURANCE FUNDS
STATEMENTS OF ASSETS AND LIABILITIES
December 31, 1996
<TABLE>
<CAPTION>
MULTI-STYLE AGGRESSIVE NON-U.S. CORE
EQUITY FUND EQUITY FUND FUND BOND FUND
----------- ----------- -------- ---------
<S> <C> <C> <C> <C>
ASSETS:
Cash . . . . . . . . . . . . . . . . . . . . . $25,000 $25,000 $25,000 $25,000
Deferred organization costs (Note) . . . . . . 11,000 11,000 11,000 11,000
------- ------- ------- -------
TOTAL ASSETS . . . . . . . . . . . . . . . . . 36,000 36,000 36,000 36,000
LIABILITIES:
Payable to Manager (Note). . . . . . . . . . . 11,000 11,000 11,000 11,000
------- ------- ------- -------
NET ASSETS. . . . . . . . . . . . . . . . . . . $25,000 $25,000 $25,000 $25,000
------- ------- ------- -------
------- ------- ------- -------
NET ASSETS CONSIST OF:
Shares of beneficial interest. . . . . . . . . $25 $25 $25 $25
Additional paid-in capital . . . . . . . . . . 24,975 24,975 24,975 24,975
------- ------- ------- -------
NET ASSETS . . . . . . . . . . . . . . . . . . $25,000 $25,000 $25,000 $25,000
------- ------- ------- -------
------- ------- ------- -------
Net asset value, offering and redemption price
per share ($25,000 divided by 2,500 shares of
$.01 par value shares of beneficial interest
outstanding, respectively) . . . . . . . . . . $10.00 $10.00 $10.00 $10.00
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
NOTES:
The Russell Insurance Funds (the "Investment Company") is an open-end
Investment Company established as a "Massachusetts Business Trust" under a
Declaration of Trust dated July 11, 1996 and is registered under the
Investment Company Act of 1940, as amended. The Multi-Style Equity Fund,
Aggressive Equity Fund, Non-U.S. Fund, and Core Bond Fund (the "Funds") are
new series of the Russell Insurance Funds. The Funds' authorized capital
consists of an unlimited number of shares of beneficial interest at a $.01 par
value.
The deferred organization costs are estimated by the Funds in connection
with their organization. The Funds are expected to reimburse Frank Russell
Investment Management Company (the "Manager"), for the payment of these costs
made in advance by the Manager. The costs have been deferred and will be
amortized on a straight-line basis over a five-year period beginning January
2, 1997, the commencement of operations of the Funds. In the event that any
of the initial shares of the Funds are redeemed during the amortization period,
the redemption proceeds will be reduced by any unamortized organizational
expenses in the same proportion as the number of initial shares being redeemed
bears to the number of initial shares outstanding at the time of such
redemption. Offering costs, including all initial registration costs, will be
charged to expense during 1997 for each Fund.
The cash is in a non-interest bearing account at the Funds' custodian bank and
will be held until the Funds become operational.
SUBSEQUENT EVENT:
The Funds commenced operations on January 2, 1997, with an initial investment
of $30 million from the separate account of General American. This amount was
allocated to each Fund as follows:
Multi-Style Equity Fund $13 million
Aggressive Equity Fund 9 million
Non-U.S. Fund 4 million
Core Bond Fund 4 million
