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TABLE OF CONTENTS
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President's Message....................................................... i
Investment Review......................................................... ii
Financial Statements of Investment Funds.................................. 1
Core Equity Fund........................................................ 1
Emerging Growth Equity Fund............................................. 7
Intermediate-Term Fixed-Income Fund..................................... 15
Money Market Fund....................................................... 21
Notes to Financial Statements............................................. 24
Officers, Consultants, Investment Managers, Custodians, Distributor,
Transfer Agent.......................................................... 35
Board of Directors........................................................ 36
<PAGE>
President's Message
To Our Shareholders:
The six-month period ending March 31, 1995 was rather volatile for
investors. After a lackluster fourth quarter 1994, the equity and bond markets
rebounded nicely in the first quarter 1995 -- the S&P 500 Index (a measure of
the broad equity market) was up 9.74% and the Lehman Brothers Aggregate Bond
Index (a proxy for the fixed-income markets) rose 5.04%. The first quarter's
excellent results were fueled by continued solid economic growth and the view
that inflation remains reasonably under control. In this environment, interest
rates contracted at the intermediate to long end of the yield curve, and
investor sentiment was strong for both medium to large capitalization value and
growth stocks.
We are proud to report that the Core Equity Fund and the Emerging Growth
Equity Fund produced excellent returns for all the periods reported -- the
fiscal year-to-date, the one and three-years and the since inception periods
ended March 31, 1995. For example, the Core Equity Fund outpaced the returns of
its benchmark, the Lipper Growth and Income Funds Average, by more than three
percentage points for the three-year period, while the Emerging Growth Equity
Fund returned 19.29% for this same period, nearly double the 10.73% return of
its benchmark, the Lipper Small Company Growth Funds Average.
I am also pleased to report that during the fiscal year-to-date, assets
under management have grown significantly, increasing by almost 25%, to $12.4
million at March 31, 1995.
On behalf of the Board of Directors, I'd like to thank our shareholders for
choosing Retirement System Fund Inc. to help meet their investment goals. I'd
also like to thank members of the Board for their valuable counsel and
assistance.
Sincerely,
William Dannecker
President and Director
May 26, 1995
<PAGE>
Investment Performance Review
Equity Funds
For the first quarter of fiscal year 1995, most equity market indices were
down -- the Russell 2000, a small capitalization index, was down by -1.87%,
followed by the Russell 1000 Value Index, by -1.58%, and the S&P 500, a
representative index of the U.S. broad equity market, which was off marginally
by -0.03%.
The second quarter of the fiscal year (the first quarter of calendar year
1995) began with some degree of uncertainty. There were concerns over the
outcome of the mid-term elections (which resulted in a Republican majority in
Congress) and an overheated economy. There were also questions about whether the
Federal Reserve would take further action to slow the economy in an attempt to
control inflation.
By the end of the quarter, it was clear that a turning point had occurred
-- economic growth was definitely contracting, which became more evident after
the Federal Reserve increased the Federal Funds Rate another 50 basis points, to
6%, in February. With inflationary fears dampened, investor sentiment in the
U.S. became very bullish, and all the domestic equity markets rose accordingly,
with the S&P 500 leading the way, up 9.74% for the quarter and 9.71% for the six
months ended March 31, 1995.
In this environment, the Fund's equity funds turned in solid performance
results for the six-month period (October, 1994 through March, 1995).
Core Equity Fund
The Core Equity Fund posted a 7.45% return for the six months ended March
31, 1995, compared to a return of 6.20% for the Lipper Growth and Income Funds
Average, its performance comparison benchmark. For the one-year period ended
March 31, 1995, this Fund returned 13.33% versus the 10.35% return of the Lipper
benchmark, a difference of nearly three percentage points. Over the three-year
period, the Core Equity Fund provided an annual return of 12.29% -- 3.15% higher
than the 9.14% return of the Lipper Growth and Income Funds Average. Since
inception (June 1, 1991 to March 31, 1995), this Fund, with an annualized return
of 11.76%, ranked in the top 15% of the Lipper Growth and Income Funds' grouping
(31st out of 211 funds).
Emerging Growth Equity Fund
The Emerging Growth Equity Fund returned 12.02% for the fiscal year-to-date
ended March 31, 1995, outperforming its benchmark, the Lipper Small Company
Growth Funds Average return of 5.28% by nearly seven percentage points. For the
one-year period ended March 31, 1995, the Emerging Growth Fund returned 21.0%,
nearly triple the 7.69% return of its Lipper benchmark. And, for the three-year
period ended March
ii
<PAGE>
31, 1995, the Fund continued to outperform the Lipper benchmark by a wide
margin, producing a return of 19.29% per year versus the benchmark's return of
10.73% per year. With an annualized return of 20.92%, Emerging Growth ranked in
the top 6% of the Lipper Small Company Growth Funds grouping (5th out of 85
funds) for the period since inception (June 1, 1991 to March 31, 1995).
Fixed-Income Funds
The fourth quarter of 1994 was a lackluster period for the fixed-income
market, with bonds generally performing at close to a breakeven result. The
first quarter of 1995, however, marked a change in direction. Influenced in part
by the Federal Reserve's action in February to increase the Federal Funds Rate
-- a move designed to control the threat of inflation -- intermediate to
long-term bond interest rates declined more rapidly, and the bond market's
performance improved significantly. For example, the Lehman Brothers Aggregate
Index (a representative proxy for the fixed-income markets) rose 5.04% for the
quarter and 5.44% for the six-month period.
Intermediate-Term Fixed-Income Fund
For the six-month period ended March 31, 1995, the Intermediate-Term
Fixed-Income Fund recorded a return of 3.55%, compared to the 4.25% return for
the Lipper Intermediate (5- to 10-year maturities) U.S. Government Funds
Average, the Fund's performance benchmark. Over the three-year period covered by
this report, the Intermediate-Term Fixed-Income Fund outperformed the Lipper
benchmark by 0.71% per year, posting a return of 6.36%. Since inception (June 1,
1991 - March 31, 1995), the Intermediate-Term Fixed-Income Fund, with an
annualized return of 7.31%, ranked in the top 19% of the Lipper Intermediate (5-
to 10-year maturities) U.S. Government Funds grouping, placing fifth out of 27
funds.
The Intermediate-Term Fixed-Income Fund emphasizes quality of holdings,
with 100% in U.S. Government and Agency issues. At March 31, 1995, the Fund
reflected an average maturity of 4.1 years and an average duration of 3.2 years,
versus 3.7 years and 2.9 years, respectively, at September 30, 1994.
Money Market Fund
The performance of the Money Market Fund continues to keep a close pace
with its performance benchmark, the Donoghue All Taxable Money Funds Average.
For the six months ended March 31, 1995, the Money Market Fund posted a return
of 2.34%, down 20 basis points from the benchmark's return of 2.54%. For the
three-year period ended March 31, 1995, the Fund produced a return of 3.39%, and
was in line with the Donoghue return of 3.40% for this period.
iii
<PAGE>
The Money Market Fund also emphasizes quality holding, with 100% in U.S.
Treasury Bills and other U.S. Government Agency issues. On March 31, 1995, the
average maturity of all portfolio holdings was 8 days versus 35 days, six months
ago (September 30, 1994).
iv
<PAGE>
Equity Funds
Net Investment Performance(1)
For Periods Ended March 31, 1995
<TABLE>
<CAPTION>
Annualized
----------------------------------
6 Months 1 Year 3 Years Since Inception(2)
-------- ------ ------- ------------------
<S> <C> <C> <C> <C>
CORE EQUITY FUND ................................ 7.45% 13.33% 12.29% 11.76%
Lipper Growth & Income Funds Average(3) ......... 6.20 10.35 9.14 9.39
EMERGING GROWTH EQUITY FUND ..................... 12.02 21.00 19.29 20.92
Lipper Small Company Growth Funds Average(3) .... 5.28 7.69 10.73 13.32
---------------
<FN>
(1) All performance results shown are net of management fees and all related
expenses, unless otherwise footnoted.
(2) Covers the period from 6/1/91 through 3/31/95 (46 months).
(3) Lipper Analytical Services is an independent reporting service that
measures the performance of most U.S. mutual funds. The performance results
reflect an unmanaged index and are net of all expenses other than sales
charges and redemption fees.
</FN>
</TABLE>
<PAGE>
Fixed-Income Funds
Net Investment Performance(1)
For Periods Ended March 31, 1995
<TABLE>
<CAPTION>
Annualized
-----------------------------------
6 Months 1 Year 3 Years Since Inception
-------- ------ ------- ---------------
<S> <C> <C> <C> <C>
INTERMEDIATE-TERM FIXED-INCOME FUND ..................... 3.55% 2.59% 6.36% 7.31%(2)
Lipper Intermediate (5 to 10 year maturities)
U.S. Gov't Funds Average ................................ 4.25 3.24 5.65 6.66
MONEY MARKET FUND(4) .................................... 2.34 4.22 3.39 3.69(3)
Donoghue All Taxable Money Fund Average(5) .............. 2.54 4.43 3.40 3.81
--------------
<FN>
(1) All performance results shown are net of management fees and all related
expenses, unless otherwise footnoted.
(2) Covers the period from 6/1/91 through 3/31/95 (46 months).
(3) Covers the period from 4/1/91 through 3/31/95 (48 months).
(4) Investment in the Money Market Fund is neither insured nor guaranteed by
the U.S. government and there is no assurance that the fund will maintain a
steady net asset value of $1.00 per share.
(5) Reported by the Donoghue Money Fund Reporting Service. The performance
results reflect an unmanaged index and are net, since expenses are
applicable.
</FN>
</TABLE>
<PAGE>
Core Equity Fund
Statement of Investments
March 31, 1995 (Unaudited)
----------------------------------------------------------------------------
Shares Value
------ -----
COMMON STOCKS 87.2%
AEROSPACE 1.2%
1,000 Lockheed Martin Corp. $ 52,875
----------
AUTOMOTIVE & PARTS 6.4%
3,600 Arvin Industries Inc. 76,500
3,800 Chrysler Corp. 159,125
2,100 Hayes Wheels International Inc. 42,525
----------
278,150
----------
BASIC MATERIALS 3.7%
1,000 E.I. Dupont De Nemours & Company 60,500
100 International Paper Company 7,513
900 Phelps Dodge Corp. 51,188
800 Union Camp Corp. 41,500
----------
160,701
----------
BROADCASTING & PUBLISHING 0.7%
1,850 Comcast Corp. Special-Cl A 28,675
----------
BUILDING PRODUCTS 3.2%
2,000 Armstrong World Industries Inc. 91,250
2,500 Martin Marietta Materials Inc. 48,125
----------
139,375
----------
DATA PROCESSING SERVICES 12.2%
1,200 Cisco Systems Inc.* 45,600
200 Fore Systems Inc.* 7,900
5,200 Informix Corp.* 178,750
700 Intel Corp. 59,412
1,500 Microsoft Corp.* 106,688
4,200 Oracle Systems Corp.* 131,250
----------
529,600
----------
DRUG AND HEALTH CARE 7.4%
2,900 Johnson & Johnson 172,550
1,700 Pfizer Inc. 145,775
----------
318,325
----------
ELECTRONICS & ELECTRICAL EQUIPMENT 15.2%
2,900 Emerson Electric Company 192,850
4,200 General Electric Company 227,325
1,300 Hewlett Packard Company 156,487
2,400 Vodaphone Group Plc-Adr 79,500
----------
656,162
----------
See Notes to Financial Statements
-1-
<PAGE>
Shares Value
------ -----
ENERGY 5.0%
2,500 Dresser Industries Inc. $ 53,125
1,300 Exxon Corp. 86,775
200 Royal Dutch Petroleum Company 24,000
800 Texaco Inc. 53,200
----------
217,100
----------
ENGINEERING AND CONSTRUCTION 4.0%
3,600 Fluor Corp. 173,700
----------
FINANCE 5.9%
2,300 Federal National Mortgage Association 187,162
1,100 Morgan (J.P.) & Company Inc. 67,100
----------
254,262
----------
HOUSEHOLD PRODUCTS 1.1%
700 Procter & Gamble Company 46,375
----------
MACHINERY 1.1%
400 Ingersol Rand Company 13,150
1,600 Cincinnati Milacron Inc. 36,600
----------
49,750
----------
OTHER 3.3%
2,200 Philip Morris Companies Inc. 143,550
----------
SOFTWARE PRODUCTS 0.9%
200 Broderbund Software Inc.* 10,350
720 Sybase Inc. 28,800
----------
39,150
----------
TELECOMMUNICATIONS 15.8%
4,900 American Telephone & Telegraph Corp. 253,575
4,400 DSC Communications Corp. 143,275
1,000 Motorola Inc. 54,625
1,200 Newbridge Networks, Corp.* 39,300
3,000 Tellabs Inc.* 174,750
500 Time Warner Inc. 18,875
----------
684,400
----------
Total Common Stocks (Cost $3,043,598) $3,772,150
==========
See Notes to Financial Statements
-2-
<PAGE>
Principal
Amount Value
--------- -----
SHORT-TERM INVESTMENTS
REPURCHASE AGREEMENT 3.5%
$150,000 Bear, Stearns & Co. Inc. Dated
3/31/1995 6.10% Due 4/3/1995
Collateralized by 195,000 Federal National
Mortgage Association 6.45% Due 6/25/2000
(Value $155,977) $ 150,000
----------
Total Investments (Cost $3,193,598) 90.7% 3,922,150
Other Assets, less Liabilities 9.3% 404,221
------ ----------
Net Assets 100.0% $4,326,371
====== ==========
*Denotes non-income producing security
See Notes to Financial Statements
-3-
<PAGE>
RETIREMENT SYSTEM FUND INC.
CORE EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $3,193,598) - Note 2 $3,922,150
Cash 402,908
Receivable for shares sold 1,370
Dividends and interest receivable 11,832
Deferred organizational costs 14,290
Other assets 4,125
----------
4,356,675
LIABILITIES:
Payable for investments purchased $14,462
Accrued expenses and other 15,842 30,304
------- ----------
NET ASSETS
at value, applicable
to 326,257 outstanding shares - Note 5 $4,326,371
==========
NET ASSET VALUE,
offering and redemption price per share
($4,326,371 divided by 326,257 shares) $ 13.26
==========
See Notes to Financial Statements
-4-
<PAGE>
RETIREMENT SYSTEM FUND INC.
CORE EQUITY FUND
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Interest $ 9,033
Dividends 39,243
-------
Total Income $ 48,276
Expenses:
Investment manager's fees - Note 3 11,702
Shareholder servicing fees and expenses - Note 3 6,524
Distribution fee - Note 3 3,901
Custodian fees and expenses 2,998
Legal and auditing fees 3,491
Directors' fees and expenses 5,698
Other 6,516
-------
Total expenses 40,830
Less expense reimbursement - Note 3 (23,298)
-------
Net Expenses 17,532
--------
INVESTMENT INCOME - NET 30,744
REALIZED AND UNREALIZED GAIN ON INVESTMENTS - Note 4:
Net realized (loss) on investments (26,900)
Unrealized appreciation on investments 289,711
-------
NET REALIZED (LOSS) AND UNREALIZED GAIN ON INVESTMENTS 262,811
--------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $293,555
========
See Notes to Financial Statements
-5-
<PAGE>
RETIREMENT SYSTEM FUND INC.
CORE EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
Six Months Ended
3/31/95 Year Ended
OPERATIONS: (Unaudited) 9/30/94
----------- ----------
Investment income - net $ 30,744 $ 39,121
Net realized gain (loss) on investments (26,900) 57,531
Unrealized appreciation on investments 289,711 141,680
---------- ----------
Increase in net assets
resulting from operations 293,555 238,332
---------- ----------
DIVIDEND DISTRIBUTION - Note 2:
Investment income - net (48,200) (36,190)
Realized gain on investments (66,275) (28,435)
---------- ----------
(114,475) (64,625)
---------- ----------
CAPITAL TRANSACTIONS - Note 5:
Value of shares sold 623,557 792,456
Value of shares redeemed (230,061) (485,591)
Value of shares issued in reinvestment
of dividend distribution 114,475 64,624
---------- ----------
Net increase in net assets
resulting from capital transactions 507,971 371,489
---------- ----------
Net increase 687,051 545,196
NET ASSETS at beginning of period 3,639,320 3,094,124
---------- ----------
NET ASSETS at end of period $4,326,371 $3,639,320
========== ==========
See Notes to Financial Statements
-6-
<PAGE>
Emerging Growth Equity Fund
Statement of Investments
March 31, 1995 (Unaudited)
----------------------------------------------------------------------------
Shares Value
------ -----
COMMON STOCKS 94.6%
APPAREL AND TEXTILE 2.4%
945 St. John Knits Inc. $ 34,492
870 Tommy Hilfiger Corp.* 19,140
----------
53,632
----------
AUTOMOTIVE PRODUCTS 0.4%
650 Edelbrock Corp.* 8,125
----------
BROADCASTING AND PUBLISHING 2.3%
425 Lin Television Corp.* 13,812
240 Renaissance Communications Corp.* 7,680
600 SFX Broadcasting Inc.* 13,200
750 Young Broadcasting Corp. Cl. A* 16,500
----------
51,192
----------
BUILDING & CONSTRUCTION 1.3%
810 Fastenal Company 19,945
800 Schuler Homes Inc.* 8,700
----------
28,645
----------
BUSINESS AND PUBLIC SERVICES 14.2%
700 Accustaff Inc.* 13,388
525 America Online Inc.* 38,980
680 Cambridge Technology Partners Inc.* 20,400
480 Concord EFS, Inc.* 13,200
600 Encad Inc.* 10,650
800 Fiserv Inc.* 21,200
800 FTP Software Inc.* 25,200
450 Interim Services Inc* 13,388
810 Keane Inc.* 19,643
249 Medaphis Corp.* 15,686
720 Mercury Interactive Corp.* 11,880
210 Netmanage Inc.* 8,715
450 Platinum Technology Corp.* 9,394
1,520 Robert Half International Inc.* 38,760
300 Security Dynamics Tech Inc.* 9,900
700 U.S. Delivery Systems Inc.* 13,825
285 Wall Data Inc.* 13,039
456 Zebra Technologies Corp.* 18,696
----------
315,944
----------
See Notes to Financial Statements
-7-
<PAGE>
Shares Value
------ -----
CONSUMER GOODS AND SERVICES 10.5%
100 Alternative Resource Corp.* $ 3,900
400 Blyth Industries Inc.* 11,000
535 Cannondale Corp.* 6,554
780 Cyrk Inc.* 12,870
685 Department 56 Inc.* 27,314
625 Doubletree Corp.* 12,344
910 Hollywood Entertainment Corp.* 31,623
1,025 Loewen Group Inc. 27,931
450 O'Charleys Inc.* 4,950
630 On Assignment Inc.* 11,970
585 Scientific Games Holdings Corp.* 11,700
575 Speedway Motorsports Inc.* 10,350
755 Stewart Enterprises Inc. 20,196
400 Sunglass Hut International Inc. 11,700
905 Wolverine World Wide Inc. 27,716
----------
232,118
----------
DRUGS & HEALTHCARE 16.9%
1,800 Authentic Fitness Corp.* 28,800
650 Community Health Systems Inc.* 20,475
400 Coventry Corp.* 11,600
620 Grancare Inc.* 10,540
947 Health Management Associates* 27,345
1,025 Health Management Inc.* 19,090
800 Healthcare Services Group Inc. 9,600
650 Healthsource Inc.* 30,794
260 Healthsouth Corp.* 10,563
950 Horizon Healthcare Corp.* 25,413
540 I-Stat Corp. 13,500
400 Idexx Laboratories Inc.* 16,500
935 Lincare Holdings Inc.* 27,699
575 Living Centers Of America* 21,634
225 Mariner Health Group Inc.* 4,359
560 Medisense Inc.* 11,060
400 Quantum Health Resources* 8,300
1,040 Ren Corp-USA* 16,120
745 Renal Treatment Centers Inc.* 18,998
900 Sola International Inc.* 19,350
637 Vencor Inc.* 22,693
----------
374,433
----------
ELECTRONICS & ELECTRICAL 11.5%
985 Actel Corp.* 12,313
928 Baldor Electric Company 25,752
1,475 Cherry Corp Class A* 23,600
See Notes to Financial Statements
-8-
<PAGE>
Shares Value
------ -----
ELECTRONICS & ELECTRICAL - continued
350 Chipcom Corp.* $ 13,213
1,102 Exar Corporation* 23,142
400 Franklin Electronic Publishers Inc.* 11,250
950 Maxim Integrated Products Inc.* 34,675
755 Oak Industries Inc.* 19,440
725 Sanmina Corp.* 23,563
560 Silicon Valley Group Inc.* 15,750
385 Teradyne Inc.* 15,978
265 Ultratech Stepper Inc.* 12,853
645 Zilog Inc.* 23,059
----------
254,588
----------
FOOD AND SERVICES 2.7%
990 Advantage Health Corp.* 23,018
1,025 Apple South Inc. 16,016
200 Davco Restaurants Inc.* 2,650
580 Landry's Seafood Restaurants Inc.* 17,763
----------
59,447
----------
INSURANCE 9.2%
1,500 Crop Growers Corp.* 39,750
942 HCC Insurance Holdings Inc.* 21,666
525 Healthwise Of America Inc.* 18,506
795 Life Partners Group Inc. 15,602
680 Mid Atlantic Medical Services* 15,045
720 Reinsurance Group America Inc. 19,530
590 Sierra Health Services Inc.* 19,396
480 Trenwick Group Inc.* 20,100
490 United American Healthcare Corp.* 10,350
685 Wellcare Management Group Inc.* 23,119
----------
203,064
----------
MACHINERY - GENERAL 3.2%
1,205 Cognex Corp.* 34,040
722 Credence Systems Corp.* 22,563
1,000 Dura Pharmaceuticals Inc.* 14,500
----------
71,103
----------
OTHER 0.5%
400 International Imaging Materials Inc.* 10,600
----------
See Notes to Financial Statements
-9-
<PAGE>
Shares Value
------ -----
RETAIL TRADE 2.6%
375 Corporate Express Inc.* $ 9,844
764 Gymboree Corp.* 19,387
1,125 Revco D.S. Inc New* 25,875
350 Welcome Home Inc.* 1,530
----------
56,636
----------
SOFTWARE PRODUCTS 6.9%
500 Analysts Intl Corp. 11,250
350 Applied Voice Technology Inc.* 7,044
550 Caere Corp.* 5,363
970 Computer Horizons Corp.* 17,217
500 Comverse Technology Inc.* 6,875
100 Datastream Systems Inc.* 2,025
100 Dialogic Corp.* 2,800
180 Infosoft International Inc.* 8,550
600 Mcafee Associates Inc.* 17,100
300 Medar Inc.* 2,963
1,175 Microcom Inc.* 13,072
525 Network Peripherals Inc.* 11,288
235 Oak Technology Inc.* 6,990
1,250 Platinum Software Corp.* 12,188
610 Sierra On-Line Inc.* 13,115
469 Softkey International Inc.* 12,663
100 TGV Software Inc.* 2,175
----------
152,678
----------
TELECOMMUNICATIONS 7.3%
500 ALC Communications* 17,063
275 Cellular Communications of PR Inc.* 8,181
1,325 Centennial Cellular Corp.* 19,213
1,798 Century Communications Corp.* 17,755
525 Clear Channel Communications Inc.* 31,238
440 Commnet Cellular Inc.* 10,725
560 EIS International Inc.* 9,310
1,175 EZ Communications Inc.-Cl A* 19,681
675 Transaction Network Services Inc.* 11,728
200 U.S. Robotics Corp.* 12,500
900 Valuevision Intl Inc.* 4,556
----------
161,950
----------
TRANSPORTATION 2.9%
1,025 Expeditors Int'l Of Wash. Inc. 21,525
425 Fritz Companies, Inc.* 27,094
500 Landstar System Inc.* 15,500
----------
64,119
----------
Total Common Stocks (Cost $1,591,819) $2,098,274
==========
See Notes to Financial Statements
-10-
<PAGE>
Principal
Amount Value
--------- -----
SHORT-TERM INVESTMENTS
$84,000 REPURCHASE AGREEMENT 3.8%
Bear, Stearns & Co. Inc. Dated
3/31/1995 6.10% Due 4/3/1995
Collateralized by 5,000 Federal Home
Loan Mortgage Due 4/15/2013
(Value $227,548) $ 84,000
----------
Total Investments (Cost $1,675,819) 98.4% 2,182,274
Other Assets, less Liabilities 1.6% 35,128
------ ----------
Net Assets 100.0% $2,217,402
====== ==========
------------
* Denotes non-income producing security.
See Notes to Financial Statements
-11-
<PAGE>
RETIREMENT SYSTEM FUND INC.
EMERGING GROWTH EQUITY FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $1,675,819) - Note 2 $2,182,274
Cash 22,627
Receivable for investments sold 41,987
Receivable for shares sold 950
Dividends and interest receivable 1,020
Deferred organizational costs 14,278
Other assets 5,279
----------
2,268,415
LIABILITIES:
Payable for investments purchased $ 33,637
Accrued expenses and other 17,376 51,013
---------- ----------
NET ASSETS
at value, applicable
to 144,689 outstanding shares - Note 5 $2,217,402
==========
NET ASSET VALUE,
offering and redemption price per share
($2,217,402 divided by 144,689 shares) $ 15.33
==========
See Notes to Financial Statements
-12-
<PAGE>
RETIREMENT SYSTEM FUND INC.
EMERGING GROWTH EQUITY FUND
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1995 (Unaudited)
------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 4,239
Dividends 1,021
----------
Total Income $ 5,260
Expenses:
Investment manager's fees - Note 3 9,971
Shareholder servicing fees and
expenses - Note 3 5,775
Distribution fee - Note 3 1,967
Custodian fees and expenses 16,038
Legal and auditing fees 3,361
Directors' fees and expenses 5,698
Other 6,351
----------
Total expenses 49,161
Less expense reimbursement - Note 3 (30,968)
----------
Net Expenses 18,193
----------
INVESTMENT (LOSS) - NET (12,933)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS - Note 4:
Net realized gain on investments 77,628
Unrealized appreciation on investments 166,827
----------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 244,455
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 231,522
==========
See Notes to Financial Statements
-13-
<PAGE>
RETIREMENT SYSTEM FUND INC.
EMERGING GROWTH EQUITY FUND
STATEMENT OF CHANGES IN NET ASSETS
-----------------------------------------------------------------------------
Six Months Ended
3/31/95 Year Ended
OPERATIONS: (Unaudited) 9/30/94
---------------- ----------
Investment (loss) - net $ (12,933) $ (20,272)
Net realized gain on investments 77,628 102,116
Unrealized appreciation
on investments 166,827 84,947
---------- ----------
Increase in net assets
resulting from operations 231,522 166,791
---------- ----------
DIVIDEND DISTRIBUTION - Note 2:
Investment income - net - -
Realized gain on investments (45,582) (186,026)
---------- ----------
(45,582) (186,026)
---------- ----------
CAPITAL TRANSACTIONS - Note 5:
Value of shares sold 303,610 582,005
Value of shares redeemed (142,237) (276,661)
Value of shares issued in reinvestment
of dividend distribution 45,582 186,026
---------- ----------
Net increase in net assets
resulting from capital transactions 206,955 491,370
---------- ----------
Net increase 392,895 472,135
NET ASSETS at beginning of period 1,824,507 1,352,372
---------- ----------
NET ASSETS at end of period $2,217,402 $1,824,507
========== ==========
See Notes to Financial Statements
-14-
<PAGE>
Intermediate-Term Fixed-Income Fund
Statement of Investments
March 31, 1995 (Unaudited)
---------------------------------------------------------------------------
Principal
Amount Value
--------- -----
UNITED STATES GOVERNMENT 86.7%
AND AGENCY OBLIGATIONS
$300,000 Fed Home Loan Bank Notes
6.72% Due 6/9/1997 $ 298,046
300,000 FHLB Note(Cpn Steps Up Every 6Mn)
5.50% Due 4/25/1997 295,394
620,000 FHLMC Note
7.05% Due 1/29/2003 593,752
390,000 FNMA, Mtn
7.46% Due 9/30/1999 390,582
250,000 Federal Home Loan Mortgage Corp. CMO 1489 G
5.85% Due 10/15/2006 227,567
250,000 Federal National Mortgage Assoc.
6.00% Due 06/25/2018 225,147
250,000 Federal National Mortgage Assoc. CMO-1993-54E
6.25% Due 6/25/2019 228,390
250,000 Federal National Mortgage Association
6.50% Due 07/25/2018 230,087
250,000 Federal National Mortgage Association Remic
7.00% Due 7/25/2005 245,007
231,938 Federal National Mortgage Assoc. P#050987
6.5% Due 2/1/2009 220,081
380,000 U. S. Treasury Note
8.875% Due 5/15/2000 409,450
175,000 U.S. Treasury Note
8.875% Due 11/15/1997 183,148
200,000 U.S. Treasury Note
3.875% Due 10/31/1995 197,313
250,000 U.S. Treasury Note
6.00% Due 6/30/1996 248,047
65,000 U.S. Treasury Note
0.00% Due 2/15/1998 Stripped Coupon 53,456
100,000 U.S. Treasury Note
0.00% Due 2/15/1998 Stripped Coupon 82,217
----------
Total United States Government and Agency
Obligations (Cost $4,222,655) $4,127,684
==========
See Notes to Financial Statements
-15-
<PAGE>
Principal
Amount Value
--------- ----------
SHORT-TERM INVESTMENTS 11.9%
UNITED STATES GOVERNMENT
AND AGENCY OBLIGATIONS
$500,000 FNMA Discount Note 6.05% Due 4/3/1995
Mat. 04/03/95 6.050%
(Cost $499,832) $ 499,832
----------
$68,565 REPURCHASE AGREEMENT
Bear, Stearns & Co. Inc. Dated
3/31/1995 6.10% Due 4/3/1995
Collateralized by 5,000 Federal Home
Loan Mortgage Due 4/15/2013
(Value $227,548) $ 68,565
----------
Total Investments (Cost $4,791,052) 98.6% $4,696,081
Other Assets, less Liabilities 1.4% 64,650
------ ----------
Net Assets 100.0% $4,760,731
====== ==========
See Notes to Financial Statements
-16-
<PAGE>
RETIREMENT SYSTEM FUND INC.
INTERMEDIATE-TERM FIXED-INCOME FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $4,791,052) - Note 2 $4,696,081
Receivable for shares sold 420
Dividends and interest receivable 54,545
Deferred organizational costs 14,303
Other assets 6,362
----------
4,771,711
LIABILITIES:
Accrued expenses and other $ 10,980 10,980
---------- ----------
NET ASSETS
at value, applicable
to 452,939 outstanding shares - Note 5 $4,760,731
==========
NET ASSET VALUE,
offering and redemption price per share
($4,760,731 divided by 452,939 shares) $ 10.51
==========
See Notes to Financial Statements
-17-
<PAGE>
RETIREMENT SYSTEM FUND INC.
INTERMEDIATE-TERM FIXED-INCOME FUND
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Interest $ 129,694
----------
Total Income $ 129,694
Expenses:
Investment manager's fees - Note 3 8,202
Shareholder servicing fees and
expenses - Note 3 9,222
Distribution fee - Note 3 4,101
Custodian fees and expenses 2,888
Legal and auditing fees 3,491
Directors' fees and expenses 5,698
Other 6,460
----------
Total expenses 40,062
Less expense reimbursement - Note 3 (21,617)
----------
Net Expenses 18,445
----------
INVESTMENT INCOME - NET 111,249
REALIZED AND UNREALIZED GAIN ON INVESTMENTS - Note 4:
Net realized (loss) on investments (126)
Unrealized appreciation on investments 51,626
----------
NET REALIZED (LOSS) AND UNREALIZED GAIN ON INVESTMENTS 51,500
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 162,749
==========
See Notes to Financial Statements
-18-
<PAGE>
RETIREMENT SYSTEM FUND INC.
INTERMEDIATE-TERM FIXED-INCOME FUND
STATEMENT OF CHANGES IN NET ASSETS
Six Months Ended
3/31/95 Year Ended
OPERATIONS: (Unaudited) 9/30/94
---------------- -----------
Investment income - net $ 111,249 $ 135,028
Net realized gain (loss) on investments (126) 21,282
Unrealized appreciation (depreciation)
on investments 51,626 (245,223)
---------- ----------
Increase (decrease) in net assets
resulting from operations 162,749 (88,913)
---------- ----------
DIVIDEND DISTRIBUTION - Note 2:
Investment income - net (101,220) (136,838)
Realized gain on investments (20,148) (17,663)
---------- ----------
(121,368) (154,501)
---------- ----------
CAPITAL TRANSACTIONS - Note 5:
Value of shares sold 1,339,922 1,478,522
Value of shares redeemed (112,852) (174,870)
Value of shares issued in reinvestment
of dividend distribution 120,468 152,700
---------- ----------
Net increase in net assets
resulting from capital transactions 1,347,538 1,456,352
---------- ----------
Net increase 1,388,919 1,212,938
NET ASSETS at beginning of period 3,371,812 2,158,874
---------- ----------
NET ASSETS at end of period $4,760,731 $3,371,812
========== ==========
See Notes to Financial Statements
-19-
<PAGE>
Money Market Fund
Statement of Investments
March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------
Principal
Amount Value
--------- ----------
UNITED STATES GOVERNMENT 100.9%
AND AGENCY OBLIGATIONS
$500,000 FHLB Discount Note
5.90% Due 4/3/1995 $ 499,836
500,000 FHLB Discount Note
5.90% Due 4/6/1995 499,590
120,000 FHLMC Discount Note
5.95% Due 5/5/1995 119,326
----------
Total United States Government and Agency
Obligations (Cost $1,118,752) $1,118,752
----------
$26,762 REPURCHASE AGREEMENT 2.4%
Bear, Stearns & Co. Inc. Dated
3/31/1995 6.10% Due 4/3/1995
Collateralized by 5,000 Federal Home
Loan Mortgage Due 4/15/2013
(Value $227,548) $ 26,762
----------
Total Investments (Cost $1,145,514) $1,145,514
Liabilities, net of assets -3.3% (36,981)
------ ----------
Net Assets 100.0% $1,108,533
====== ==========
See Notes to Financial Statements
-20-
<PAGE>
RETIREMENT SYSTEM FUND INC.
MONEY MARKET FUND
STATEMENT OF ASSETS AND LIABILITIES
March 31, 1995 (Unaudited)
-----------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $1,145,514) - Note 2 $1,145,514
Receivable for shares sold 560
Dividends and interest receivable 186
Deferred organizational costs 13,089
Other assets 2,735
----------
1,162,084
LIABILITIES:
Dividends payable $ 5,392
Accrued expenses and other 48,159 53,551
---------- ----------
NET ASSETS
at value, applicable
to 1,108,545 outstanding shares - Note 5 $1,108,533
==========
NET ASSET VALUE,
offering and redemption price per share
($1,108,533 divided by 1,108,545 shares) $ 1.00
==========
See Notes to Financial Statements
-21-
<PAGE>
RETIREMENT SYSTEM FUND INC.
MONEY MARKET FUND
STATEMENT OF OPERATIONS
Six Months Ended March 31, 1995 (Unaudited)
----------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Interest $ 30,523
----------
$ 30,523
Total Income
Expenses:
Investment manager's fees - Note 3 1,418
Shareholder servicing fees and
expenses - Note 3 2,055
Distribution fee - Note 3 1,135
Custodian fees and expenses 1,115
Legal and auditing fees 3,491
Directors' fees and expenses 5,665
Other 6,612
----------
Total expenses 21,491
Less expense reimbursement - Note 3 (18,653)
----------
Net Expenses 2,838
----------
INVESTMENT INCOME - NET 27,685
REALIZED AND UNREALIZED GAIN ON INVESTMENTS - Note 4:
Net realized gain on investments 0
Unrealized appreciation on investments 0
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 0
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 27,685
==========
See Notes to Financial Statements
-22-
<PAGE>
RETIREMENT SYSTEM FUND INC.
MONEY MARKET FUND
STATEMENT OF CHANGES IN NET ASSETS
------------------------------------------------------------------------------
Six Months Ended
3/31/95 Year Ended
OPERATIONS: (Unaudited) 9/30/94
---------- ----------
Investment income - net $ 27,685 $ 43,748
Net realized (loss) on investments 0 (681)
Unrealized appreciation on investments 0 0
---------- ----------
Increase in net assets
resulting from operations 27,685 43,067
---------- ----------
DIVIDEND DISTRIBUTION - Note 2:
Investment income - net (27,685) (43,748)
---------- ----------
CAPITAL TRANSACTIONS - Note 5:
Value of shares sold 68,648 343,769
Value of shares redeemed (100,199)
Value of shares issued in reinvestment (734,260)
of dividend distribution 27,685 36,477
---------- ----------
Net (decrease) in net assets
resulting from capital transactions (3,866) (354,014)
Contribution of capital from investment
manager (Note 3) -- 681
---------- ----------
Net (decrease) (3,866) (354,014)
---------- ----------
NET ASSETS at beginning of period 1,112,399 1,466,413
---------- ----------
NET ASSETS at end of period $1,108,533 $1,112,399
========== ==========
-23-
<PAGE>
NOTES TO FINANCIAL STATEMENTS
NOTE 1 - GENERAL
Retirement System Fund Inc. ("Fund") is a no-load, open-end diversified
management investment company, registered under the Investment Company Act of
1940, as amended, designed to provide professional investment management and
diversification of risk to investors by offering shares in separate investment
funds ("Investment Funds"), each with a different investment objective.
Currently investors may purchase shares of Money Market Fund, Emerging Growth
Equity Fund, Intermediate-Term Fixed-Income Fund and Core Equity Fund. In the
future, the Fund expects to offer shares of Value Equity Fund, International
Equity Fund and Actively Managed Fixed-Income Fund.
NOTE 2 - SIGNIFICANT ACCOUNTING POLICIES
The following is a summary of significant accounting policies followed by the
Investment Funds in the preparation of the financial statements.
(A) Securities Valuation: Except for debt securities with remaining maturities
of 60 days or less, investments for which market prices are available are
valued as follows:
(1) each listed security is valued at its closing price obtained from the
respective exchange on which the security is listed, or, if there were
no sales on that day, at its last reported closing or bid price.
(2) each unlisted security quoted on the NASDAQ is valued at the last
current bid price obtained from the NASDAQ;
(3) United States Government and agency obligations and certain other debt
obligations are valued based upon bid quotations from various market
makers for identical or similar obligations.
(4) Mortgage-backed securities and asset-backed securities are valued with
a cash flow model based on both the pre-payment assumptions (Public
Securities Association median) and the price-yield spreads over
comparable United States Treasury Securities.
(5) short-term money market instruments (such as certificates of deposit,
bankers' acceptances and commercial paper) are valued by bid
quotations or by reference to bid quotations of available yields for
similar instruments of issuers with similar credit rating.
Debt securities with remaining maturities of 60 days or less are
valued on the basis of amortized cost. In the absence of an ascertainable
market value, investments
-24-
<PAGE>
are valued at their fair value as determined by the officers of RSI using
methods and procedures reviewed and approved by the Fund's Directors.
(B) Securities Transactions and Investment Income: Securities transactions are
recorded on a trade date basis. Realized gain and loss from securities
transactions are recorded on a specific cost basis. Dividend income is
recognized on the ex-dividend date or when the dividend information is
known; interest income, including, where applicable, amortization of
discount and premium on investments and zero coupon bonds, is recognized on
an accrual basis.
The Investment Funds may enter into repurchase agreements with
financial institutions, deemed to be creditworthy by the Investment Funds'
Manager, subject to the sellers' agreement to repurchase and the Funds'
agreement to resell such securities at a mutually agreed upon price.
Securities purchased subject to repurchase agreements are deposited with
the Investment Funds' custodian and, pursuant to the terms of the
repurchase agreement, must have an aggregate market value greater than or
equal to the repurchase price plus accrued interest at all times. If the
value of the underlying securities falls below the value of the repurchase
price plus accrued interest, the Investment Funds will require the seller
to deposit additional collateral by the next business day. If the request
for additional collateral is not met, or the seller defaults on its
repurchase obligation, the Investment Funds maintain the right to sell the
underlying securities at market value and may claim any resulting loss
against the seller.
(C) Dividends to Shareholders: Dividends and capital gain distributions to
shareholders are recorded on the ex-dividend date. However, the Money
Market Fund declares dividends daily and automatically reinvests such
dividends in additional Fund shares at net asset value, unless the
shareholder elects otherwise. Dividends are declared from the total of net
investment income and net realized gain on investments.
(D) Federal Income Taxes: Each Investment Fund is treated as a separate entity
for Federal Income tax purposes and is not combined with other Investment
Funds. Each of the Investment Funds intends to comply with the provisions
of the Internal Revenue Code applicable to "regulated investment companies"
and to distribute all of its taxable income to its shareholders. Therefore,
no provision has been made for Federal income taxes for these Investment
Funds.
(E) Other: Costs incurred in connection with the organization of the Investment
Funds have been deferred and are being amortized on a straight-line basis
over five years from the date of commencement of operations of each
portfolio.
Expenses directly attributed to each Investment Fund are charged to that
Investment Fund's operations; expenses which are applicable to all
Investment Funds are allocated among them.
-25-
<PAGE>
The Investment Funds may enter into financial futures contracts which
require initial margin deposits of cash or U.S. Government securities equal
to approximately 10% of the value of the contract. During the period the
financial futures are open, changes in the value of the contracts are
recognized by "marking to market" on a daily basis to reflect the market
value of the contracts at the close of each day's trading. Accordingly,
variation margin payments are made or received to reflect daily unrealized
gains or losses. The Investment Fund is exposed to market risk as a result
of movements in securities, values and interest rates.
NOTE 3 - INVESTMENT MANAGERS' FEES AND OTHER TRANSACTIONS WITH AFFILIATES
Retirement System Investors Inc. ("RSI") is the investment advisor for each
Investment Fund. The Emerging Growth Equity Fund has engaged Putnam Advisory
Company, Inc. ("Putnam"), an independent investment manager to make and effect
decisions on buying and selling portfolio securities. RSI acts as investment
manager to the remaining investment funds and, in the case of all Investment
Funds, exercises general oversight with respect to portfolio management and
reports to the Board of Directors with respect thereto. For their services, the
investment managers are entitled to receive an annual fee, calculated daily and
paid monthly, (calculated and paid quarterly in the case of Putnam), based upon
a percentage of the average net assets of the respective Investment Funds. The
specific percentages for the Investment Funds are set forth in the following
table.
Annual
Investment Fund Fee
--------------- ------
Core Equity Fund First $50 million 0.60
Next $150 million 0.50
Over $200 million 0.40
Emerging Growth Equity Fund First $25 million 1.00
Over $25 million 0.75
Intermediate-Term Fixed-Income Fund First $50 million 0.40
Next $100 million 0.30
Over $150 million 0.20
Money Market Fund First $50 million 0.25
Over $50 million 0.20
In addition, RSI is entitled to receive an annual fee based upon a
percentage of average net assets of the respective Investment Funds (or portion
thereof) for which it does not act as investment manager, which fee shall be an
amount equal to the sum of (i) .20% of total net assets of the applicable
Investment Funds, and (ii) the fee to which the investment manager of the
applicable Investment Funds is entitled, calculated in the manner described
above with respect to the investment manager's fees for each such Investment
Fund. RSI, in turn, remits such portion of its fee to the investment manager of
such Investment Fund. With
-26-
<PAGE>
respect to the Investment Funds for which RSI does not act as investment
manager, RSI has agreed to waive payment of the portion of the investment
advisory fees in an amount equal to .20% of the total assets of the Investment
Fund's operations, and intends to waive payment of such amount going forward if
necessary to maintain a competitive expense ratio or to assure that the
Investment Fund's expense ratios comply with regulations in various states where
Fund shares are qualified for sale.
Pursuant to a Distribution Agreement ("Plan") each Investment Fund pays
Retirement System Distributors Inc. ("Distributor") an affiliate of RSI, a
monthly fee determined as follows. The maximum amount payable under the Plan is
equal to .25% of the average daily net assets of an Investment Fund but the
Board of Directors currently limits such expenditures to .20% of average daily
net assets. The Plan does not provide for any charges to an Investment Fund for
excess amounts expended by the Distributor and, if the Plan is terminated, the
obligation of the Investment Fund to make payments to the Distributor will cease
and the Investment Fund will not be required to make any payments thereafter. If
the Distributor's costs in connection with its distribution services to an
Investment Fund are less than .20% of net assets, the Distributor may
nevertheless retain the difference. If the Distributor's costs exceed .20% of
net assets, the Distributor will assume the difference and will not be
reimbursed therefore.
Retirement System Consultants Inc. ("Service Company") an affiliate of RSI,
has entered into a Service Agreement with the Fund to provide each Investment
Fund with the general administrative and related services necessary to carry on
the affairs of the Investment Funds, including transfer agent and registrar
services.
For its services, the Service Company is entitled to receive a fee,
calculated daily and paid monthly, based upon the percentage of the average
daily net assets of the respective Investment Funds. The specific percentages,
applicable for the period ending January 27, 1995, are set forth in the
following table.
Investment Fund Fee
--------------- ---
Core Equity Fund 0.181%
Emerging Growth Equity Fund 0.580
Intermediate-Term Fixed-Income Fund 0.354
Money Market Fund 0.234
The Board of Directors approved a revised Service Agreement which took
effect on January 28, 1995 which provides for a sliding scale fee based on
average daily net assets. The fee arrangement applicable for each of the
investment funds is as follows:
Average Net Assets Fee
------------------ ---
First $25 million .60%
Next $25 million .50%
Next $25 million .40%
Next $25 million .30%
Over $100 million .20%
-27-
<PAGE>
The Service Company has agreed to waive payment of this fee during the
period ended March 31, 1995 and intends thereafter to waive payment of this fee
if necessary to maintain a competitive expense ratio or to assure that the
Investment Funds' expense ratios comply with regulations in various states where
Investment Funds shares are qualified for sale.
For the period ended March 31, 1995 RSI and its affiliates waived fees and
reimbursed expenses of the Core Equity Fund, Emerging Growth Equity Fund,
Intermediate-Term Fixed-Income Fund, and Money Market Fund amounting to $23,298,
$30,968, $21,617 and $18,653, respectively.
Each Director who is not an officer of the Investment Funds or a Trustee of
RSI Retirement Trust receives an annual fee of $7,000. Each Director receives a
fee of $800 per meeting attended, except that such fee is $400 for a telephonic
meeting. A Director and several officers of the Fund are also officers of RSI
and its affiliates.
On July 28, 1994, in order to maintain the net asset value of the Money
Market Fund at $1.00, Service Company purchased a United States Treasury Bill,
3.34% coupon, maturity on 1/12/1995 and a par value of $100,000, from the Money
Market Fund for $98,450.52 which was equal to the Money Market Fund's amortized
cost or carrying value. The securitiy had a fair value of $97,768.69 on this
date. The excess over fair value that was paid by Service Company has been
classified by the Money Market Fund as a realized loss in the Statement of
Operations and a capital contribution in the Statement of Changes in Net Assets.
NOTE 4 - SECURITIES TRANSACTIONS
The following summarizes the securities transactions, other than short term
securities, by the various Investment Funds for the period ended March 31, 1995:
Investment Fund Purchases Sales
--------------- --------- -----
Core Equity Fund 520,261 484,721
Emerging Growth Equity Fund 798,277 677,484
Intermediate-Term Fixed-Income Fund 1,804,637 8,928
The cost basis of investments for tax purposes is substantially the same as
the cost basis for book purposes. Net unrealized appreciation consisting of
gross unrealized appreciation and gross unrealized (depreciation) at March 31,
1995 for each of the Investment Funds was as follows:
Net Unrealized Gross Gross
Appreciation Unrealized Unrealized
Investment Fund (Depreciation) Appreciation Depreciation
--------------- -------------- ------------ ------------
Core Equity Fund 728,552 823,444 94,892
Emerging Growth Equity Fund 506,455 553,298 46,843
Intermediate-Term Fixed-Income Fund (94,971) 23,095 118,066
-28-
<PAGE>
The following summarizes the value of securities that were on loan to brokers
and the value of securities held as collateral for these loans at March 31,
1995:
Value of
Securities Value of
Investment Fund Loaned Collateral
--------------- ---------- ----------
Core Equity Fund 85,398 255,596
Emerging Growth Equity Fund 444,548 682,643
NOTE 5 - CAPITAL TRANSACTIONS
The Investment Funds were organized under the laws of the state of Maryland
in November 1990. The Investment Fund is authorized to issue two billion shares
of capital stock, par value $.001 per share. The Board of Directors of the
Investment Funds is authorized to establish multiple series of shares of capital
stock, each evidencing interest in a separate Investment Fund.
-29-
<PAGE>
Transactions in the shares of capital stock of each Investment Fund for the
period ended March 31, 1995 and for the year ended September 30, 1994 were as
follows:
Core Equity Emerging Growth
Fund Equity Fund
--------------------- -------------------
1995 1994 1995 1994
------ ------- ------ ------
Fund Shares Sold 48,774 63,904 21,172 43,337
Dividends Reinvested 9,247 5,323 3,282 14,522
Fund Shares Redeemed (17,966) (39,055) (9,962) (19,407)
------ ------ ------ ------
Net Increase 40,055 30,172 14,492 38,452
====== ====== ====== ======
Intermediate-Term
Fixed-Income Fund
---------------------
1995 1994
------- -------
Fund Shares Sold 129,812 135,467
Dividends Reinvested 12,676 14,169
Fund Shares Redeemed (10,904) (16,157)
------- -------
Net Increase 131,584 133,479
======= =======
Net Assets at March 31, 1995 are as follows:
Core Equity Emerging Growth
Fund Equity Fund
------------ ---------------
Paid-in Capital $3,650,009 $1,688,947
Accumulated undistributed investment
income (loss) - net (2,956) (70,364)
Undistributed realized gain (49,234) 92,364
Unrealized appreciation 728,552 506,455
---------- ----------
$4,326,371 $2,217,402
========== ==========
Intermediate-Term Money Market
Fixed-Income Fund Fund
----------------- ------------
Paid-in Capital $4,833,317 $1,108,574
Accumulated undistributed investment
income - net 23,421 (29)
Undistributed realized gain (1,036) (12)
Unrealized appreciation (94,971) 0
---------- ----------
$4,760,731 $1,108,533
========== ==========
-30-
<PAGE>
NOTE 6 - FINANCIAL HIGHLIGHTS (Unaudited)
<TABLE>
<CAPTION>
CORE EQUITY FUND
----------------------------------------------------------
From 5/10/91
(Commencement)
Period Year Year Year of Operations)
Ended Ended Ended Ended Through
3/31/95 9/30/94 9/30/93 9/30/92 9/30/91*
------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout
the Period)
Net Asset Value, Beginning of Period $12.72 $12.08 $10.98 $10.45 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Investment income - net 0.08 0.15 0.18 0.23 0.14
Net realized and unrealized gain
on investments 0.84 0.74 1.84 0.60 0.31
------ ------ ------ ------ ------
Total from Investment Operations 0.92 0.89 2.02 0.83 0.45
------ ------ ------ ------ ------
Distributions:
Distributions from capital gains (0.22) (0.11) (0.64) (0.08) --
Distributions from investment income (0.16) (0.14) (0.28) (0.22) --
------ ------ ------ ------ ------
Total Distributions (0.38) (0.25) (0.92) (0.30) --
------ ------ ------ ------ ------
Net increase 0.54 0.64 1.10 0.53 0.45
------ ------ ------ ------ ------
Net Asset Value, End of Period $13.26 $12.72 $12.08 $10.98 $10.45
====== ====== ====== ====== ======
Total Return*** 7.45% 7.47% 19.39% 8.11% 4.50%**
Ratios/Supplemental Data:
Ratios to average net assets:
Expenses 0.90%** 0.90% 0.90% 0.90% 0.90%**
Investment income - net 1.58%** 1.17% 1.31% 1.86% 3.31%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 1.20%** 1.33% 2.43% 2.46% 1.80%**
Portfolio turnover rate 13.21% 9.64% 21.79% 61.27% 12.49%
Net Assets at End of Period ($1,000's) $4,326 $3,639 $3,094 $1,049 $1,560
-----------------
<FN>
* Using average share basis.
** Annualized.
*** The total return calculation reflects dividend reinvestment.
</FN>
</TABLE>
-31-
<PAGE>
<TABLE>
<CAPTION>
EMERGING GROWTH EQUITY FUND
---------------------------------------------------------
From 5/10/91
(Commencement
Period Year Year Year of Operations)
Ended Ended Ended Ended Through
3/31/95 9/30/94 9/30/93 9/30/92 9/30/91*
------- ------- ------- ------- -------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout
the Period)
Net Asset Value, Beginning of Period $14.01 $14.74 $11.83 $10.54 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Investment income (loss) - net (0.12) (0.04) (0.13) (0.17) (0.02)
Net realized and unrealized gain
on investments 1.77 1.58 4.36 1.49 0.56
------ ------ ------ ------ ------
Total from Investment Operations 1.65 1.54 4.23 1.32 0.54
------ ------ ------ ------ ------
Distributions:
Distributions from capital gains (0.33) (2.27) (1.21) (0.01) --
Distributions from investment income -- -- (0.11) -- --
Return of capital -- -- -- (0.02) --
------ ------ ------ ------ ------
Total Distributions (0.33) (2.27) (1.32) (0.03) --
------ ------ ------ ------ ------
Net Increase (Decrease) 1.32 (0.73) 2.91 1.29 0.54
------ ------ ------ ------ ------
Net Asset Value, End of Period $15.33 $14.01 $14.74 $11.83 $10.54
====== ====== ====== ====== ======
Total Return*** 12.02 % 11.89 % 38.05 % 13.80 % 5.40 %**
Ratios/Supplemental Data:
Ratios to average net assets
Expenses 1.85 %** 1.85 % 1.85 % 1.86 % 1.85 %**
Investment income (loss) - net (1.36)%** (1.37)% (1.34)% (1.10)% (0.46)%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 3.14 %** 4.11 % 6.41 % 7.90 % 0.85 %**
Portfolio turnover rate 35.74 % 72.59 % 144.49 % 138.46 % 25.38 %
Net Assets at End of Period ($1,000's) $2,217 $1,825 $1,352 $684 $602
-----------------
<FN>
* using average share basis.
** Annualized.
*** The total return calculation reflects dividend reinvestment.
</FN>
</TABLE>
-32-
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM FIXED-INCOME FUND
---------------------------------------------------------
From 5/10/91
(Commencement
Period Year Year Year of Operations)
Ended Ended Ended Ended Through
3/31/95 9/30/94 9/30/93 9/30/92 9/30/91*
------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout
the Period)
Net Asset Value, Beginning of Period $10.46 $11.43 $11.00 $10.46 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Investment income - net 0.25 0.52 0.54 0.80 0.25
Net realized and unrealized gain (loss)
on investments 0.11 (0.85) 0.36 0.73 0.40
------ ------ ------ ------ ------
Total from Investment Operations 0.36 (0.33) 0.90 1.53 0.65
------ ------ ------ ------ ------
Distributions:
Distributions from capital gains (0.05) (0.08) 0.00 (0.15) --
Distributions from investment income (0.26) (0.56) (0.47) (0.84) (0.19)
------ ------ ------ ------ ------
Total Distributions (0.31) (0.64) (0.47) (0.99) (0.19)
------ ------ ------ ------ ------
Net Increase (decrease) 0.05 (0.97) 0.43 0.54 0.46
------ ------ ------ ------ ------
Net Asset Value, End of Period $10.51 $10.46 $11.43 $11.00 $10.46
====== ====== ====== ====== ======
Total Return*** 3.55% (2.99)% 8.47% 13.86% 6.58%**
Ratios/Supplemental Data:
Ratios to average net assets
Expenses 0.90%** 0.90 % 0.90% 0.90% 0.90%**
Investment income - net 5.42%** 5.76 % 4.90% 5.59% 6.27%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 1.06%** 1.66 % 3.33% 5.56% 1.80%**
Portfolio turnover rate 0.42% 8.68 % 27.62% 8.66% 85.85%
Net Assets at End of Period ($1,000's) $4,761 $3,372 $2,159 $881 $423
-----------------
<FN>
* Using average share basis.
** Annualized.
*** The total return calculation reflects dividend reinvestment.
</FN>
</TABLE>
-33-
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
----------------------------------------------------------
From 2/7/91
(Commencement
Period Year Year Year of Operations)
Ended Ended Ended Ended Through
3/31/95 9/30/94 9/30/93 9/30/92 9/30/91*
------- ------- ------- ------- --------------
<S> <C> <C> <C> <C> <C>
Per Share Operating Performance
(for a share outstanding throughout
the Period)
Net Asset Value, Beginning of Period $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Income from investment operations:
Investment income - net 0.02 0.03 0.03 0.04 0.03
Total from Investment Operations 0.02 0.03 0.03 0.04 0.03
----- ----- ----- ----- -----
Distributions:
Distributions from investment income (0.02) (0.03) (0.03) (0.04) (0.03)
----- ----- ----- ----- -----
Total Distributions (0.02) (0.03) (0.03) (0.04) (0.03)
----- ----- ----- ----- -----
Net Increase (decrease) 0.00 0.00 0.00 0.00 (0.00)
----- ----- ----- ----- -----
Net Asset Value, End of Period $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return*** 2.34% 3.27%+ 2.77% 3.73% 2.12%**
Ratios/Supplemental Data:
Ratios to average net assets
Expenses 0.50%** 0.42% 0.25% 0.44% 0.75%**
Investment income - net 4.86%** 3.18% 2.94% 3.68% 4.60%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 3.28%** 3.47% 4.39% 5.19% 1.95%**
Net Assets at End of Period ($1,000's) $1,109 $1,112 $1,466 $664 $857
----------------
<FN>
* Using average share basis.
** Annualized.
*** The total return calculation reflects dividend reinvestment.
+ Had an affiliate of the advisor not contributed capital to the fund to
reimburse a realized loss, the total return would have been 3.22%.
</FN>
</TABLE>
-34-
<PAGE>
OFFICERS
William Dannecker, President
James P. Coughlin, C.F.A., Senior Vice President
Stephen P. Pollak, Esq., Senior Vice President, Counsel and Secretary
John F. Meuser, Vice President and Treasurer
Herbert Kuhl, Jr., C.F.A., First Vice President
Deborah A. DaGiau, Second Vice President
Veronica A. Fisher, Second Vice President and Assistant Treasurer
Heidi Viceconte, Second Vice President
INVESTMENT MANAGERS
The Putnam Advisory Company, Inc.
Retirement System Investors Inc.
CUSTODIANS
Custodial Trust Company
DISTRIBUTOR
Retirement System Distributors Inc.
CONSULTANT
Retirement System Consultants Inc.
TRANSFER AGENT
Retirement System Consultants Inc.
INDEPENDENT AUDITORS
McGladrey & Pullen
35
<PAGE>
BOARD OF DIRECTORS
Edward J. Brown
Retired President and
Chief Operating Officer
Apple Bank for Savings
and Apple Bancorp, Inc., NY
Candace Cox
Vice President and Managing Director
NYNEX Asset Management Co., NY
William Dannecker
President and Chief Executive Officer
Retirement System Group Inc. NY
Eugene C. Ecker
Pension and Group Insurance Consultant
Joseph P. Gemmel
Chairman of the Board
President and Chief Executive Officer
Bankers Savings, NJ
Covington Hardee
Retired Chairman
The Lincoln Savings Bank, FSB, NY
Raymond L. Willis
Private Investments
36
