ANNUAL REPORT
LOGO
Retirement System
Fund Inc.
Core Equity Fund
Emerging Growth Equity Fund
Intermediate-Term Fixed-Income Fund
Money Market Fund
Value Equity Fund*
International Equity Fund*
Actively Managed Fixed-Income Fund*
1995
Broker/Dealer
LOGO
Retirement System
Distributors Inc.
P.O. Box 2064
Grand Central Station
New York, NY 10163-2064
*Not yet available for sale to investors
<PAGE>
Table of Contents
- --------------------------------------------------------------------------------
President's Message .................................................... 1
Investment Review ...................................................... 3
Financial Statements of Investment Funds ............................... 9
Core Equity Fund ................................................... 9
Emerging Growth Equity Fund ........................................ 13
Intermediate-Term Fixed-Income Fund ................................ 18
Money Market Fund .................................................. 21
Notes to Financial Statements .......................................... 24
Independent Auditor's Report ........................................... 34
Officers, Consultants, Investment Managers and Custodians .............. 35
Board of Directors ..................................................... 36
-------------------
Note: Investors currently may purchase shares of the Core Equity Fund, the
Emerging Growth Equity Fund, the Intermediate-Term Fixed-Income Fund and the
Money Market Fund. Shares of the Value Equity Fund, the International Equity
Fund and the Actively Managed Fixed-Income Fund, as described in Retirement
System Fund Inc.'s Prospectus, are not yet available for sale to investors.
<PAGE>
PRESIDENT'S MESSAGE
To Our Shareholders:
Setting savings goals, whether long-term or short-term, is the first step an
individual should take in deciding the appropriate investment mix for his or her
portfolio. It is then that the value of asset allocation, an important component
in investment education programs, comes into play. Different models exist to
assist in determining a suitable investment mix to achieve savings goals. It is
key, however, that an individual periodically review the status of his or her
portfolio to ensure that accumulated balances are in keeping with the desired
asset allocation.
The past two-year period is a prime example of another topic of investment
education--the volatility of returns that can arise within a market cycle. In
1994, investors experienced a situation in which the domestic equity markets
were slightly positive; however, the bond markets finished the year showing
negative results (the worst in many years). Thus far in 1995, both stocks and
bonds are showing double digit results for the nine months ended September 30,
1995.
It is important to remember that individuals should review their savings
goals and reassess their investment strategies periodically. By examining their
accumulated account balances, individuals may determine that a reallocation of
funds among the different investment vehicles is necessary to stay on track.
On behalf of the Board of Directors, I would like to thank you for choosing
Retirement System Fund Inc. to help meet your investment needs.
Sincerely,
[INSERT SIGNATURE]
William Dannecker
President and Director
November 27, 1995
1
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Equity Funds
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Core Equity Fund
The Core Equity Fund is a stock fund that invests in a broadly diversified group
of high-quality, medium to large companies that exhibit sustainable growth in
earnings, and that appear attractively valued. It offers investors the potential
for long-term capital appreciation, with income as a secondary goal.
Managed by Retirement System Investors Inc.
Emerging Growth Equity Fund
The Emerging Growth Equity Fund is a growth stock fund that seeks capital
appreciation by investing primarily in smaller, relatively new companies that,
in the view of the investment manager, have higher than average potential for
earnings growth and attractive stock market valuations.
Managed by The Putnam Advisory Company, Inc.
Fixed-Income Funds
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Intermediate-Term Fixed-Income Fund
The Intermediate-Term Fixed-Income Fund invests in high-quality, fixed-income
securities that mature within ten years, or have expected average lives of ten
years or less. At least 65% of the investments in this Fund are in U.S.
Government or U.S. Government Agency issues which have the highest credit
rating. At the time of purchase at least 75% of the holdings must have a quality
rating of "AA" or better, with a minimum quality rating of "A" for other
holdings. This investment Fund's goal is to achieve income and price
appreciation.
Managed by Retirement System Investors Inc.
Money Market Fund
The Money Market Fund seeks to achieve as high a level of current interest
income as possible while maintaining liquidity, stability of principal and
high-quality holdings. This investment Fund invests in money market instruments
of U.S. dollar denominations with maturities of one year or less. Holdings focus
on a broad range of U.S. Government, bank and commercial obligations available
in money markets. The average maturity of the Fund will not exceed 90 days.
Managed by Retirement System Investors Inc.
2
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INVESTMENT REVIEW
Core Equity Fund
The Core Equity Fund seeks capital appreciation over the long term. The Fund
invests in a broadly diversified group of high-quality, medium to large
companies which the manager, Retirement System Investors Inc., believes are
valued at a reasonable price and offer attractive earnings potential.
The Core Fund's results (see below) over the past fiscal year benefited
from meaningful positions in large multi-national growth companies, led by
technology (33% of total fund assets), capital goods producers (16% of total)
and consumer staple companies (14% of total). An under-exposure to the financial
sector (7% of total), which also had good returns, was a missed opportunity.
Market Environment
Expanding world markets, the continued miniaturization of electronics, and the
drive to enhance productivity continue to sustain robust demand for technology
and communications products holdings. Consumer staples--particularly health
care--benefited from cost reductions, dollar weakness, resumption of unit growth
and a modest return of pricing power. The portfolio's fiscal 1995 results were
also helped by below-average positions in the relatively weak consumer cyclicals
and raw material areas, which suffered from weak unit growth and limited pricing
flexibility.
Performance Results
The Core Equity Fund continued its strong performance in fiscal year 1995. For
the one-year period ended September 30, 1995, the fund posted a return of
35.24%, outpacing by a wide margin the 29.72% return of the S&P 500 (an
unmanaged representative index of the broad equity market; all market index
results that appear in this report represent gross returns, since expenses are
not applicable) and the 23.08% return of the Lipper Growth & Income Funds
Average for the same period. This result placed the Core Equity Fund in the top
1% of Lipper's Growth and Income Funds grouping of mutual funds. The Fund ranked
third out of 395 funds.
The Core Equity Fund also outperformed its Lipper benchmark and the S&P 500
for all periods shown in this report. For the three-year period ended September
30, 1995, the Core Fund achieved an annual return of 20.17%, placing it among
the top 4% of the Lipper Universe of Growth & Income Mutual Funds (8th out of
241 funds), which reflected an
Core Equity Fund vs S&P 500
CHART
Growth of $10,000
Core Equity S&P 500
----------- --------
1 year $13,524 $12,972
4 1/3 year $19,276 $16,976
Cumulative Returns
1 year 35.24% 29.72%
4 1/3 year 92.76% 69.76%
Average Annual Returns
1 year 35.24% 29.72%
4 1/3 year 16.35% 12.99%
3
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average return of 13.73% per year for the same period. For this same period, the
Core Fund outperformed the S&P 500 by 519 basis points, with a return of 20.17%
versus 14.98% for the S&P 500. For the period since inception (June 1, 1991
through September 30, 1995), the Core Fund provided a return of 16.35% per year,
versus 12.99% for the S&P 500 and 12.15% for its Lipper benchmark for the same
period--a top 7% ranking in the Lipper Growth and Income Funds grouping (13th
out of 207 funds; this ranking is based on total return). Past performance is
not a guarantee of future results.
Core Equity Fund vs Lipper Growth and Income Funds Average
For periods ended September 30, 1995
- --------------------------------------------------------------------------------
Annualized
------------------------
Since
1 Year 3 Years Inception
------ ------- ---------
CORE EQUITY FUND(1) 35.24% 20.17% 16.35%(2)
Lipper Growth & Income Funds Avg.(3) 23.08 13.73 12.15
(1) All performance results shown are net of management fees and all related
expenses.
(2) Covers the period from 6/1/91 through 9/30/95.
(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.
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Emerging Growth Equity Fund
The Emerging Growth Equity Fund seeks capital appreciation through investment in
quality emerging growth companies with superior growth and financial
characteristics and attractive stock market valuations. Managed by The Putnam
Advisory Company, Inc., the Fund acquires growth stocks of smaller
companies--those with market capitalizations generally between $50 million and
$500 million (at time of purchase). Companies are evaluated according to a
number of fundamental criteria such as above-average earnings growth,
above-average return on equity, and low debt total capitalization, in order to
identify super-achieving companies. These companies are then screened using
valuation measures such as price/earnings, price/book and market
capitalization/revenues, to determine those stocks that are attractively priced.
A rigorous buy, hold and sell discipline is then applied.
Emerging Growth Equity Fund vs Russell 2000
CHART
Growth of $10,000
Emerging Growth Russell
Equity 2000
------- -------
1 year $13,920 $12,336
4 1/3 year $25,741 $18,723
Cumulative Returns
1 year 39.20% 23.36%
4 1/3 year 157.41% 87.23%
Average Annual Returns
1 year 39.20% 23.36%
4 1/3 year 24.38% 15.57%
4
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Market Environment
For the one-year period ended September 30, 1995, the equity markets were
influenced by improving economic growth, strong corporate earnings, declining
interest rates and stable inflation. Early in the year, a weaker dollar and
healthy economy favored larger capitalization multi-national and
cyclically-oriented issues. As investor confidence grew on the strength of the
economy (in early 1995), and the dollar rebounded, small to medium
capitalization stocks, which continued to record very strong earnings gains,
performed particularly well. For fiscal 1995, the Russell 2000, a representative
index for this sector, produced a return of 23.36% (with over 85% of this result
arising in the last two quarters of fiscal year 1995). Although strong in
nominal terms, this index result was 636 basis points under the 29.72% return of
the S&P 500, the broad U.S. equity market index. (For fiscal 1994, the Russell
2000 return of 2.67% was more in line with the S&P 500, which returned 3.68%.)
The manager's diversified approach and large number of holdings (152 at
September 30, 1995) aided the portfolio, as many of the stocks held, met or
exceeded earnings and growth expectations. While technology was the best
performing sector throughout the year, specialty apparel companies, consumer
services issues and radio, television and cable-related beneficiaries of pending
telecommunications legislation were also meaningful contributors to Putnam's
performance, as noted below. At September 30, 1995, the top three sector
weightings were in consumer staples, consumer cyclicals and technology, with an
aggregate portfolio weighting of 82%.
Performance Results
For the one-year period ended September 30, 1995, the Emerging Growth Equity
Fund posted a return of 39.20%, exceeding the 23.36% return of the Russell 2000
by more than 15 percentage points, and exceeding the 28.93% return of the Lipper
Small Company Growth Funds Average (a representative benchmark) by more than ten
percentage points. This one-year return placed the Emerging Growth Fund among
the top 24% of mutual funds in the Lipper Small Company Growth Funds grouping
(68th out of 288 funds; this ranking is based on total return).
Emerging Growth Equity Fund vs Lipper Small Company Growth Funds Average
For periods ended September 30, 1995
- --------------------------------------------------------------------------------
Annualized
---------------------
Since
1 Year 3 Years Inception
------ ------- ---------
EMERGING GROWTH EQUITY FUND(1) 39.20% 29.07% 24.38%(2)
Lipper Small Company Growth Funds Avg.(3) 28.93 20.38% 16.97
(1) All performance results shown are net of management fees and all related
expenses.
(2) Covers the period from 6/1/91 through 9/30/95.
(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.
- --------------------------------------------------------------------------------
5
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For the three-year period ended September 30, 1995, the Fund's average return
per year was 29.07%, well above the 20.38% return of its Lipper benchmark. This
performance placed the Fund in the top 11% (14th out of 134 funds) of the Lipper
Universe of Small Company Growth Mutual Funds. For the period since inception
(June 1, 1991 through September 30, 1995) the Emerging Growth Fund achieved an
annualized return of 24.38%, versus the 16.97% return by the Lipper Small
Company Growth Funds Average, and the 15.57% return of the Russell 2000. For
this period, the Fund ranked in the top 6% of its Lipper grouping (5th out of 87
funds). Past performance is not a guarantee of future results.
Intermediate-Term Fixed-Income Fund
The Intermediate-Term Fixed-Income Fund invests in high-quality, fixed-income
securities that mature within ten years or have expected average lives of ten
years or less. At least 65% of the holdings in the Fund are in U.S. Government
or agency issues.
Market Environment
The environment for fixed-income investors turned positive during the fiscal
year ended September 30, 1995, as interest rates declined in the intermediate
and longer sectors of the yield curve. The bond market rally started in November
1994, as investors perceived that the economy was slowing and inflation would be
contained. The rally further strengthened during fiscal 1995 as a more
conservative Congress promised to cut government spending and reduce or
eliminate the budget deficit, money growth remained low, and foreign economies
slowed. Consequently, the 30-year Treasury declined from 7.8% to 6.5% during the
fiscal year, the ten-year Treasury from 7.6% to 6.2%, the five year from 7.3% to
6.0%, and the two year from 6.6% to 5.8%.
The performance of fixed-income investments varied substantially with
duration in fiscal 1995. Longer durations and a flattening yield curve raised
prices and total return as investors extended out the curve. The yield spread
between the three-month Treasury bill and the 30-year bond narrowed to 109 basis
points at the end of fiscal 1995, from 305 basis points the year before. Short
interest rates moved higher late in 1994 and early 1995 before drifting lower,
while the rest of the yield curve declined more sharply this year. Within
fixed-income sectors, long duration Governments and non-callable corporates
outperformed mortgages and other callable issues in fiscal 1995.
The Intermediate-Term Fixed-Income Fund received meaningful inflows of cash
during the early months of fiscal 1995 and this was principally invested in cash
equivalent-type securities as the manager waited to see a sustained trend in the
movement of interest rates. The Fund's performance (as noted below) was
adversely influenced by a less than average market duration for part of the
year--the Fund's average duration began the year at 2.9 years and dropped to 2.0
years (when cash investments reached 43% of the portfolio), and then was
gradually raised to 3.5 years by May, before drifting back to 2.8 years at
September 30, 1995. The Lehman Brothers Government-Intermediate Bond Index, a
representative market benchmark, had a modified duration of 3.0 years at the end
of fiscal 1995, which was the case for most of the year. Investment changes
during the year primarily consisted of buying discount callable Federal agency
issues maturing in five to ten years, at yields of 55 to 70 basis points over
the comparable Treasury.
6
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The Fund maintained its emphasis on high-quality fixed-income investments
in fiscal year 1995. At the end of the year, 100% of holdings were in "AAA"
securities consisting of U.S. Treasury and Federal agency notes and agency
mortgage issues. All holdings must have a quality rating of "A" or better.
Performance Results
The Fund's return of 9.64% for the one-year period ended September 30, 1995
trailed the return of the Lehman Brothers Government-Intermediate Bond Index of
10.61% and the Lipper Intermediate (5 to 10 years maturity) U.S. Government
Funds Average of 11.34% for the same period. Over the longer period of three
years ended September 30, 1995, the Fund posted an annualized return of 4.88%,
versus the market benchmark's return of 5.46% per year. For this period the
Lipper benchmark achieved an annualized return of 5.12%.
Intermediate-Term Fixed-Income Fund vs Lehman
Brothers Government-Intermediate Bond Index
CHART
Growth of $10,000
Intermediate-Term LB Gov't-Inter.
Fixed-Income Bond Index
------------ ----------
1 year $10,964 $11,061
4 1/3 year $13,876 $13,827
Cumulative Returns
1 year 9.64% 10.61%
4 1/3 year 38.76% 38.27%
Average Annual Returns
1 year 9.64% 10.61%
4 1/3 year 7.85% 7.77%
Intermediate-Term Fixed-Income Fund vs Lipper Intermediate (5 to 10 years
maturity) U.S. Government Funds Average
For periods ended September 30, 1995
- --------------------------------------------------------------------------------
Annualized
---------------------
Since
1 Year 3 Years Inception
------ ------- ---------
INTERMEDIATE-TERM FIXED-
INCOME FUND(1) 9.64% 4.88% 7.85%(2)
Lipper Intermediate (5 to 10 yrs.
maturity) U.S. Government Funds Avg.(3) 11.34 5.12 7.50
(1) All performance results shown are net of management fees and all related
expenses.
(2) Covers the period from 6/1/91 through 9/30/95.
(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.
- --------------------------------------------------------------------------------
7
<PAGE>
For the period since inception (June 1, 1991 through September 30, 1995),
the Fund outpaced its Lipper benchmark--the Lipper Intermediate (5 to 10 years
maturity) U.S. Government Funds Average--by 35 basis points per year with an
annualized return of 7.85%, compared to a return of 7.50%, respectively. Past
performance is not a guarantee of future results.
Money Market Fund
The objective of the Money Market Fund is to achieve high current interest
income while maintaining liquidity, stability of principal and high-quality
holdings. Average maturity of portfolio holdings may not exceed 90 days. As a
money market fund, it strives to maintain a stable unit value of $1.00, while
the yield fluctuates with the market.
The Fund continued to maintain a conservative posture in fiscal 1995 and
was primarily invested in discount Federal agency notes of short maturities.
Average maturity began the fiscal year at 35 days, extended to 48 days in July,
1995, then declined to 26 days at the end of September, 1995. The Fund's
maturity benchmark, the Donoghue All-Taxable Money Funds Average, began the
fiscal year at 41 days and ended at 54 days.
Performance Results
For the one-year period ended September 30, 1995, the Money Market Fund posted a
return of 5.20%, compared to the Lipper Retail Money Market Funds Average of
5.25% and the Donoghue All-Taxable Money Funds Average of 5.35% for the same
period. The 90-Day U.S. Treasury Bills Index (an unmanaged index which provides
a representative proxy for short-term money market instruments) returned 5.60%
for this period.
The Fund achieved respectable three-year average returns of 3.74%, which
compared favorably to the Lipper Average of 3.69% per annum and is in line with
the Donoghue Average annual return of 3.76%. (The 90-Day U.S. Treasury Bills
returned 4.16% per year for the period.)
Since inception (April 1, 1991 through September 30, 1995), the Fund has
achieved a return of 3.91% per year versus 3.92% per year for the Lipper Average
and a 4.00% annualized return for the Donoghue Average. For this same period,
the market result, as measured by the 90-Day U.S. Treasury Bills, was 4.27%.
Past performance is not a guarantee of future results.
Money Market Fund vs Donoghue All Taxable Money Funds Average
For periods ended September 30, 1995
- --------------------------------------------------------------------------------
Annualized
---------------------
Since
1 Year 3 Years Inception
------ ------- ---------
MONEY MARKET FUND(1) 5.20% 3.74 3.91%(2)
Donoghue All Taxable Money Fund Avg.(3) 5.35 3.76 4.00
Lipper Retail Money Market Funds Average(4) 5.25 3.69 3.92
(1) All performance results shown are net of management fees and all related
expenses. 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.
(2) Covers the period from 4/1/91 through 9/30/95.
(3) Reported by the Donoghue Money Fund Reporting Service. The performance
results reflect an unmanaged index and are net, since expenses are
applicable.
(4) Lipper Analytical Services is an independent reporting service that measures
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.
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8
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FINANCIAL STATEMENTS OF INVESTMENT FUNDS
Core Equity Fund
Statement of Investments September 30, 1995
- --------------------------------------------------------------------------------
Shares Value
- ------ ------
COMMON STOCKS 89.7%
AEROSPACE 1.2%
1,000 Lockheed Martin Corp. $ 67,125
--------
AUTOMOTIVE & PARTS 1.9%
2,600 Arvin Industries Inc. 55,575
1,020 Chrysler Corp. 54,060
--------
109,635
--------
BANKS 2.4%
1,600 Chase Manhattan Corp. 97,800
500 Citicorp 35,375
--------
133,175
--------
BASIC MATERIALS 3.2%
1,900 E.I. Du Pont de Nemours & Company 130,625
900 Phelps Dodge Corp. 56,363
--------
186,988
--------
BROADCASTING AND PUBLISHING 0.7%
1,850 Comcast Corp Special-CL A 37,000
--------
BUILDING PRODUCTS 3.3%
2,500 Armstrong World Industries Inc. 138,750
2,500 Martin Marrietta Materials 49,063
--------
187,813
--------
DATA PROCESSING SERVICES 4.4%
1,200 Cisco Systems Inc.* 82,800
200 FORE Systems Inc.* 7,350
4,200 Oracle Systems Corp.* 161,175
--------
251,325
--------
DRUG AND HEALTH CARE 7.0%
2,900 Johnson & Johnson 214,963
3,400 Pfizer Inc. 181,475
--------
396,438
--------
ELECTRONICS AND ELECTRICAL
EQUIPMENT 14.2%
2,900 Emerson Electric Company 207,350
4,600 General Electric Company 293,250
2,600 Hewlett Packard Company 216,775
1,400 Intel Corp. 84,175
--------
801,550
--------
ENERGY 4.1%
2,500 Dresser Industries Inc. 59,688
1,300 Exxon Corp. 93,925
200 Royal Dutch Petroleum Company 24,550
800 Texaco Inc. 51,700
--------
229,863
--------
See Notes to Financial Statements
9
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Core Equity Fund (Continued)
Statement of Investments September 30, 1995
- --------------------------------------------------------------------------------
Shares Value
- ------ ------
ENGINEERING AND CONSTRUCTION 3.6%
3,600 Fluor Corp. $ 201,600
----------
FINANCE 5.7%
2,300 Federal National Mortgage Association 238,050
1,100 Morgan (J.P.) & Company Inc. 85,112
----------
323,162
----------
HOUSEHOLD PRODUCTS 1.0%
700 Procter & Gamble Company 53,900
----------
MACHINERY 1.2%
400 Ingersoll-Rand Company 15,000
1,600 Cincinnati Milacron Inc. 50,400
----------
65,400
----------
OFFICE AND BUSINESS EQUIPMENT 3.3%
1,400 Xerox Corp. 188,125
----------
OTHER 7.4%
2,500 Allied Signal Inc. 110,312
3,700 Philip Morris Companies Inc. 308,950
----------
419,262
----------
PAPER PRODUCTS 0.1%
200 International Paper Company 8,400
----------
SOFTWARE PRODUCTS 8.4%
200 Broderbund Software Inc.* 15,225
9,900 Informix Corp.* 321,750
1,500 Microsoft Corp.* 135,750
----------
472,725
----------
TELECOMMUNICATIONS 16.6%
5,300 American Telephone & Telegraph Corp. 348,475
4,400 DSC Communications Corp.* 260,700
1,000 Motorola Inc. 76,374
6,000 Tellabs Inc.* 252,750
----------
938,299
----------
Total Common Stocks (Cost $3,244,843) $5,071,785
----------
* Denotes non-income producing security
Principal
Amount Value
------ -----
SHORT TERM INVESTMENTS
REPURCHASE AGREEMENT 3.7%
210,000 Bear, Stearns & Co. Inc. Dated
9/29/1995, 6.20% Due 10/2/1995 col-
lateralized by 1,050,000 United States
Treasury Strips Due 2/15/2019 (Value
$214,599) $ 210,000
----------
Total Investments (Cost $3,454,843) 93.4% $5,281,785
Other Assets, Less Liabilities 6.6% 375,653
----- ----------
Net Assets 100.0% $5,657,438
===== ==========
See Notes to Financial Statements
10
<PAGE>
Core Equity Fund (Continued)
Statement of Assets and Liabilities September 30, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $3,454,843) - Note 2 $5,281,785
Cash 306,594
Receivable for investments sold 56,310
Receivable for shares sold 3,758
Dividends and interest receivable 14,320
Deferred organizational costs 9,760
Other assets 7,392
----------
$5,679,919
LIABILITIES:
Accrued expenses and other 22,481
----------
NET ASSETS at value, applicable to
338,972 outstanding shares - Note 5 $5,657,438
==========
NET ASSET VALUE, offering and redemption
price per share ($5,657,438 divided by
338,972 shares) $ 16.69
==========
Statement of Operations Year Ended September 30, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Interest $ 23,542
Dividends 84,854
---------
Total income $ 108,396
Expenses:
Investment manager's fees - Note 3 26,842
Shareholder servicing fees and expenses - Note 3 21,663
Distribution fee - Note 3 8,947
Custodian fees and expenses 5,981
Legal and auditing fees 6,885
Directors' fees and expenses 11,533
Other 16,587
---------
Total expenses 98,438
Less expense reimbursement - Note 3 (58,183)
---------
Net expenses 40,255
----------
INVESTMENT INCOME--NET 68,141
REALIZED AND UNREALIZED GAIN ON INVESTMENTS - Note 4:
Net realized gain (loss) on investments (18,467)
Unrealized appreciation on investments 1,388,101
---------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 1,369,634
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $1,437,775
==========
See Notes to Financial Statements
11
<PAGE>
Core Equity Fund (Continued)
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Year Ended Year Ended
9/30/95 9/30/94
---------- ----------
OPERATIONS:
Investment income -- net $ 68,141 $ 39,121
Net realized gain (loss) on investments (18,467) 57,531
Unrealized appreciation on investments 1,388,101 141,680
---------- ----------
Increase in net assets resulting from operations 1,437,775 238,332
---------- ----------
DIVIDEND DISTRIBUTION -- Note 2:
Investment income -- net (77,331) (36,190)
Realized gain on investments (37,144) (28,435)
---------- ----------
(114,475) (64,625)
---------- ----------
CAPITAL TRANSACTIONS -- Note 5:
Value of shares sold 912,546 792,456
Value of shares redeemed (332,203) (485,591)
Value of shares issued in reinvestment of dividend
distribution 114,475 64,624
---------- ----------
Net increase in net assets resulting from capital
transactions 694,818 371,489
---------- ----------
Net increase 2,018,118 545,196
NET ASSETS at beginning of year 3,639,320 3,094,124
---------- ----------
NET ASSETS at end of year $5,657,438 $3,639,320
========== ==========
See Notes to Financial Statements
12
<PAGE>
Emerging Growth Equity Fund
Statement of Investments September 30, 1995
- --------------------------------------------------------------------------------
Shares Value
- ------ -----
COMMON STOCKS 93.1%
APPAREL AND TEXTILE 7.1%
1,125 Authentic Fitness Corp. $ 25,313
900 Kenneth Cole Productions - CL A* 31,613
989 Nautica Enterprises Inc.* 33,873
945 St. John Knits Inc. 46,068
1,000 Tommy Hilfiger Corp.* 32,500
1,507 Wolverine World Wide 41,254
--------
210,621
--------
AUTOMOTIVE PRODUCTS 1.3%
1 Corporate Express Inc.* 12
650 Custom Chrome, Inc.* 14,463
650 Edelbrock Corp.* 9,425
630 On Assignment Inc.* 15,908
--------
39,808
--------
BROADCASTING AND PUBLISHING 3.3%
425 Lin Television Corp.* 12,963
300 Mecklermedia Corp.* 5,474
240 Renaissance Communications Corp.* 8,400
1,125 Saga Communications Inc. - CL A* 17,858
600 SFX Broadcasting Inc. - CL A* 16,799
400 Sinclair Broadcast Group Inc.* 11,100
800 Young Broadcasting Corp. - CL A* 24,400
--------
96,994
--------
BUILDING & CONSTRUCTION 1.7%
275 Brady, W.H. Compay - CL A 19,800
810 Fastenal Company 29,565
--------
49,365
--------
BUSINESS AND PUBLIC SERVICES 0.7%
575 Accustaff Inc.* 21,130
--------
BUSINESS AND EQUIPMENT SERVICES 10.5%
600 Alternative Resources Corp.* 19,200
615 America Online Inc.* 42,280
500 Analysts International Corp. 16,000
580 Cambridge Technology Partners Inc.* 29,290
1,655 Computer Horizons Corp.* 33,099
720 Concord EFS, Inc.* 21,420
775 Fiserv Inc.* 22,378
510 Keane Inc.* 14,726
550 National Data Corp. 14,780
660 Peak Technologies Group Inc.* 16,995
100 PMT Services Inc.* 2,388
500 Renaissance Solutions Inc.* 12,125
820 Robert Half International Inc.* 27,983
200 Romac International Inc.* 3,250
700 SOS Staffing Services* 5,774
1,025 Transaction Network Services* 26,778
--------
308,466
--------
Shares Value
- ------ -----
CONSUMER GOODS AND SERVICES 8.4%
1,825 Benson Eyecare Corp.* $ 18,022
525 Blyth Industries Inc.* 24,544
610 Cannondale Corp.* 9,608
250 Catalina Marketing Corp.* 15,500
685 Department 56* 32,024
1,025 Loewen Group Inc. 42,281
600 Rexall Sundown Inc.* 9,975
710 Scientific Games Holdings Corp.* 26,270
1,160 Sola International Inc.* 25,665
600 Speedway Motorsports Inc.* 15,600
755 Stewart Enterprises Inc. - CL A 26,991
--------
246,480
--------
DRUGS & MEDICAL SUPPLIES 2.7%
500 Daig Corp.* 11,750
800 Idexx Laboratories Inc.* 29,200
950 Igen Inc.* 6,056
540 I-Stat Corp.* 20,115
485 Medisense Inc.* 11,640
--------
78,761
--------
ELECTRONICS & ELECTRICAL 12.0%
625 Cognex Corp.* 29,688
1,003 Credence Systems Corp.* 36,108
100 Cyberoptics Corp.* 3,350
800 C.P. Clare Corp.* 20,400
400 Eltron International Inc.* 11,100
1,102 Exar Corp.* 38,570
700 Flextronics International Ltd.* 18,025
509 Harman International Industries Inc. 24,941
1,025 ITI Technologies Inc.* 27,675
515 Maxim Integrated Products Inc.* 38,110
755 Oak Industries Inc.* 22,744
200 Plasma & Materials Technologies Inc.* 3,399
700 Sanmina Corp.* 33,425
500 Smart Flex Systems Inc.* 8,375
1,100 Telecom Semiconductor Inc.* 12,100
155 Ultratech Stepper Inc.* 6,510
495 Zilog Inc.* 20,604
--------
355,124
--------
FOOD AND BEVERAGES 0.2%
300 Ben & Jerry's Home-made Inc. - CL A* 5,550
--------
FOOD AND SERVICES 1.0%
1,025 Apple South Inc. 23,191
450 O'Charleys Inc.* 6,413
--------
29,604
--------
INSURANCE 2.8%
942 HCC Insurance Holdings Inc.* 31,204
720 Reinsurance Group of America Inc. 25,380
480 Trenwick Group Inc. 25,440
--------
82,024
--------
See Notes to Financial Statements
13
<PAGE>
Emerging Growth Equity Fund
(Continued)
Statement of Investments September 30, 1995
- --------------------------------------------------------------------------------
Shares Value
- ------ -----
LODGING - MOTELS 1.4%
825 Doubletree Corp.* $18,150
1,040 Studio Plus Hotels Inc.* 23,920
-------
42,070
-------
MACHINERY - GENERAL 2.0%
1,035 American Business Information* 20,959
1,279 Baldor Electric Company 32,135
300 Computational Systems Inc.* 4,800
-------
57,894
-------
MEDICAL EQUIPMENT & SERVICES 0.2%
300 Bio-Vascular Inc.* 5,400
-------
MEDICAL PRODUCTS 2.6%
1,160 Avecor Cardiovascular Inc.* 15,660
550 ICU Medical Inc.* 7,219
550 Instent Inc.* 8,938
300 Lunar Corp.* 9,675
800 Minntech Corp. 12,800
450 Research Industries Corp.* 13,050
150 Target Therapeutics Inc.* 10,388
-------
77,730
-------
MEDICAL SERVICES 10.6%
100 Access Health Inc.* 2,800
890 Advantage Health Corp.* 30,260
600 American Homepatient Inc.* 15,000
650 Community Health Systems* 26,244
675 Compdent Corp.* 19,744
535 CRA Managed Care Inc.* 11,369
785 Genesis Health Ventures Inc.* 28,064
797 Health Management Associates New - CL A* 25,604
800 Healthcare Services Group Inc.* 8,600
435 Healthwise Of America Inc.* 12,180
300 HPR Inc.* 6,750
550 Imnet Systems Inc.* 14,025
605 Lincare Holdings Inc.* 15,579
725 Living Centers Of America* 24,106
900 Owen Healthcare Inc.* 14,625
100 Pediatrix Medical Group Inc.* 2,038
465 Sierra Health Services* 11,625
400 United Dental Care Inc.* 12,000
527 Vencor Inc.* 16,864
635 Wellcare Management Group Inc.* 14,764
-------
312,241
-------
MERCHANDISING 0.9%
506 Zebra Technologies Corp. - CL A* 26,945
-------
PHARMACEUTICALS 1.6%
1,475 Dura Pharmaceuticals Inc.* 43,513
200 Gilead Sciences Inc.* 4,350
-------
47,863
-------
Shares Value
- ------ -----
POLLUTION CONTROLS 0.7%
485 United Waste Systems, Inc.* $20,249
-------
RESTAURANTS 1.0%
600 Quantum Restaurant Group Inc.* 8,025
1,160 Landry's Seafood Restaurants* 20,880
-------
28,905
-------
RETAIL TRADE 2.7%
1,620 Hollywood Entertainment Corp.* 34,628
850 Moovies Inc.* 16,575
100 Novadigm Inc.* 1,675
400 Sunglass Hut International* 20,000
200 West Marine Inc.* 6,200
-------
79,078
-------
SOFTWARE PRODUCTS 8.3%
550 Bisys Group Inc.* 13,750
325 Business Objects SA ADR* 13,813
575 Datalogix International Inc.* 8,194
370 Inso Corp.* 11,748
510 McAfee Associates Inc.* 26,265
705 Mercury Interactive Corp.* 19,388
900 Network Express Inc.* 14,175
1,250 Platinum Software Corp.* 14,531
425 Project Software and Development Inc.* 10,891
300 Security Dynamics Tech Inc.* 14,250
300 Shiva Corp.* 18,375
950 Sierra On-Line Inc.* 37,050
319 Softkey International Inc.* 14,116
500 Spectrum Holobyte Inc.* 6,249
200 Spyglass Inc.* 9,150
400 Unison Software Inc.* 5,800
500 Vantive Corp.* 7,750
-------
245,495
-------
TELECOMMUNICATIONS 7.1%
900 Cai Wireless Systems Inc.* 9,225
800 Centennial Cellular Corp.* 15,400
1,223 Century Communications Corp.* 12,383
390 Clear Channel Communications* 29,543
750 Colonial Data Technologies Corp.* 13,875
440 Commnet Cellular Inc.* 12,704
900 Evergreen Media Corp. CL A* 25,200
1,175 EZ Communications Inc. CL A* 22,619
575 Heartland Wireless Communications Inc.* 14,519
450 Midcom Communication Inc.* 6,638
800 Pairgain Technologies Inc.* 27,600
450 P-Com Inc.* 19,688
100 Tel-Save Holdings Inc.* 1,525
-------
210,919
-------
See Notes to Financial Statements
14
<PAGE>
Emerging Growth Equity Fund
(Continued)
Statement of Investments September 30, 1995
- --------------------------------------------------------------------------------
Shares Value
- ------ -----
TRANSPORTATION 2.3%
925 Expeditors Int'l Of Washington Inc. $ 24,975
350 Fritz Companies Inc.* 25,724
600 U.S. Delivery Systems Inc.* 17,250
----------
67,949
----------
Total Common Stocks (Cost $1,859,189) $2,746,665
----------
Principal
Amount Value
- --------- -----
SHORT TERM INVESTMENTS
REPURCHASE AGREEMENT 3.7%
108,000 Bear, Stearns & Co. Inc. Dated 9/29/1995
6.20% Due 10/2/1995 collateralized by
540,000 United States Treasury Strips Due
2/15/2019 (Value $110,365) $ 108,000
----------
Total Investments (Cost $1,967,189) 96.8% $2,854,665
Other Assets, Less Liabilities 3.2% 95,801
----- ----------
Net Assets 100.0% $2,950,466
===== ==========
* Denotes Non-Income Producing Security
See Notes to Financial Statements
15
<PAGE>
Emerging Growth Equity Fund (Continued)
Statement of Assets and Liabilities September 30, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $1,967,189) - Note 2 $2,854,665
Cash 101,735
Receivable for investments sold 17,621
Receivable for shares sold 3,475
Dividends and interest receivable 1,220
Deferred organizational costs 9,749
Other assets 5,772
----------
2,994,237
LIABILITIES:
Payable for investments purchased $ 18,986
Accrued expenses and other 24,785 43,771
-------- ----------
NET ASSETS at value, applicable to 154,859
outstanding shares - Note 5 $2,950,466
==========
NET ASSET VALUE, offering and redemption
price per share ($2,950,466
divided by 154,859 shares) $ 19.05
==========
Statement of Operations Year Ended September 30, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Interest $ 9,444
Dividends 2,261
--------
Total income $ 11,705
Expenses:
Investment manager's fees - Note 3 27,019
Shareholder servicing fees and expenses - Note 3 13,386
Distribution fee - Note 3 4,504
Custodian fees and expenses 36,388
Legal and auditing fees 7,305
Directors' fees and expenses 10,980
Other 16,281
--------
Total expenses 115,863
Less expense reimbursement - Note 3 (74,265)
--------
Net expenses 41,598
----------
INVESTMENT (LOSS) - NET (29,893)
REALIZED AND UNREALIZED GAIN ON INVESTMENTS - Note 4:
Net realized gain on investments 272,274
Unrealized appreciation on investments 547,848
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 820,122
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 790,229
==========
See Notes to Financial Statements
16
<PAGE>
Emerging Growth Equity Fund (Continued)
Statements Of Changes In Net Assets
- --------------------------------------------------------------------------------
Year Ended Year Ended
9/30/95 9/30/94
---------- ----------
OPERATIONS:
Investment (loss) - net $ (29,893) $ (20,272)
Net realized gain on investments 272,274 102,116
Unrealized appreciation on investments 547,848 84,947
----------- -----------
Increase in net assets resulting from operations 790,229 166,791
----------- -----------
DIVIDEND DISTRIBUTION - Note 2:
Realized gain on investments (45,582) (186,026)
----------- -----------
(45,582) (186,026)
----------- -----------
CAPITAL TRANSACTIONS - Note 5:
Value of shares sold 527,430 582,005
Value of shares redemmed (191,700) (276,661)
Value of shares issued in reinvestment
of dividend distribution 45,582 186,026
----------- -----------
Net increase in net assets resulting
from capital transactions 381,312 491,370
----------- -----------
Net increase 1,125,959 472,135
NET ASSETS at beginning of year 1,824,507 1,352,372
----------- -----------
NET ASSETS at end of year $ 2,950,466 $ 1,824,507
=========== ===========
See Notes to Financial Statements
17
<PAGE>
Intermediate-Term Fixed Income Fund
Statement of Investments September 30, 1995
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------- -----
UNITED STATES GOVERNMENT
AND AGENCY OBLIGATIONS 92.3%
$245,000 Federal Home Loan Bank Note
7.00% Due 7/5/2000 $ 244,182
300,000 Federal Home Loan Bank Structured Note
5.75% Due 4/25/1997 300,121
300,000 Federal Home Loan Bank Structured Note
7.20% Due 4/28/2004 300,145
250,000 Federal Home Loan Mortgage Corp.
CMO 1489 G
5.85% Due 10/15/2006 242,010
620,000 Federal Home Loan Mortgage Corp. Note
7.05% Due 1/29/2003 620,000
250,000 Federal National Mortgage Association
CMO G93-8PG
6.50% Due 7/25/2018 243,265
390,000 Federal National Mortgage Association
Medium Term Note
7.46% Due 9/30/1999 400,818
250,000 Federal National Mortgage Association
Medium Term Note
6.25% Due 1/14/2004 239,077
250,000 Federal National Mortgage Association
CMO 1992-9G
7.00% Due 7/25/2005 251,492
250,000 Federal National Mortgage Association
CMO G93-3G
6.00% Due 6/25/2018 237,722
250,000 Federal National Mortgage Association
CMO 1993-54E
6.25% Due 6/25/2019 240,040
221,307 Federal National Mortgage Association
Pool#050987
6.50% Due 2/1/2009 218,250
380,000 United States Treasury Note
8.875% Due 5/15/2000 423,581
250,000 United States Treasury Note
6.00% Due 6/30/1996 250,547
200,000 United States Treasury Note
3.875% Due 10/31/1995 199,750
Principal
Amount Value
- --------- -----
$175,000 United States Treasury Note
8.875% Due 11/15/1997 $ 185,336
65,000 United States Treasury Note
0.0% Due 2/15/1998 Stripped Principal 56,634
100,000 United States Treasury Note
0.0% Due 2/15/1998 Stripped Coupon 87,168
----------
Total United States Government and Agency
Obligations (Cost $4,701,465) $4,740,138
----------
SHORT TERM INVESTMENTS 6.2%
UNITED STATES GOVERNMENT
AND AGENCY OBLIGATIONS
$310,000 Federal Home Loan Bank
Discount Note
5.70% Due 10/2/1995 $ 309,935
REPURCHASE AGREEMENT
$7,150 Bear Stearns & Co., Inc. Dated 9/29/1995
6.20% Due 10/2/1995 collateralized by
40,000 United States Treasury Strips Due
2/15/2019 (Value $8,115) 7,150
----------
Total Short Term Obligations (Cost $317,085) $ 317,085
----------
Total Investments (Cost $5,018,550) 98.5% $5,057,223
Other Assets, Less Liabilities 1.5% 78,512
----- -----------
Net Assets 100.0% $5,135,735
===== ==========
See Notes to Financial Statements
18
<PAGE>
Intermediate-Term Fixed-Income Fund (Continued)
Statement of Assets and Liabilities September 30, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $5,018,550) - Note 2 $5,057,223
Receivable for shares sold 2,406
Interest receivable 79,681
Deferred organizational costs 9,767
Other assets 7,350
----------
5,156,427
LIABILITIES:
Accrued expenses and other 20,692
----------
NET ASSETS at value, applicable to 475,143 outstanding
shares - Note 5 $5,135,735
==========
NET ASSET VALUE, offering and redemption price per share
($5,135,735 divided by 475,143 shares) $ 10.81
==========
Statement of Operations Year Ended September 30, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Interest $301,566
--------
Total income $ 301,566
Expenses:
Investment manager's fees - Note 3 18,262
Shareholder servicing fees and expenses
- Note 3 24,312
Distribution fee - Note 3 9,131
Custodian fees and expenses 4,274
Legal and auditing fees 7,305
Directors' fees and expenses 10,980
Other 16,542
--------
Total expenses 90,806
Less expense reimbursement--Note 3 (49,727)
--------
Net expenses 41,079
----------
INVESTMENT INCOME - NET 260,487
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENT - Note 4:
Net realized gain (loss) on investments (273)
Unrealized appreciation on investments 185,270
--------
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS 184,997
----------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 445,484
==========
See Notes to Financial Statements
19
<PAGE>
Intermediate-Term Fixed-Income Fund (Continued)
Statement of Changes in Net Assets
- --------------------------------------------------------------------------------
Year Ended Year Ended
9/30/95 9/30/94
----------- -----------
OPERATIONS:
Investment income - net $ 260,487 $ 135,028
Net realized gain (loss) on investments (273) 21,282
Unrealized appreciation (depreciation)
on investments 185,270 (245,223)
----------- -----------
Increase (decrease) in net assets resulting
from operations 445,484 (88,913)
----------- -----------
DIVIDEND DISTRIBUTION - Note 2:
Investment income - net (246,044) (136,838)
Realized gain on investments (19,238) (17,663)
----------- -----------
(265,282) (154,501)
----------- -----------
CAPITAL TRANSACTIONS - Note 5:
Value of shares sold 1,578,988 1,478,522
Value of shares redeemed (258,804) (174,870)
Value of shares issued in reinvestment of
dividend distribution 263,537 152,700
----------- -----------
Net increase in net assets resulting from
capital transactions 1,583,721 1,456,352
----------- -----------
Net increase 1,763,923 1,212,938
NET ASSETS at beginning of year 3,371,812 2,158,874
----------- -----------
NET ASSETS at end of year $ 5,135,735 $ 3,371,812
=========== ===========
See Notes to Financial Statements
20
<PAGE>
Money Market Fund
Statement of Investments September 30, 1995
- --------------------------------------------------------------------------------
Principal
Amount Value
- --------- -----
UNITED STATES GOVERNMENT
AND AGENCY OBLIGATIONS 94.9%
$280,000 F.H.L.B. Discount Note
5.57% Due 11/13/95 $ 278,137
200,000 Fed Home Loan Mortgage
Discount Note
5.62% Due 10/27/95 199,188
300,000 Federal National Mortgage Association
Discount Note
5.58% Due 10/11/95 299,535
200,000 Federal National Mortgage Association
Discount Note
5.61% Due 11/06/95 198,878
170,000 Federal National Mortgage Association
Discount Note
5.57% Due 10/10/95 169,763
----------
Total United States Government and Agency
Obligations (Cost $1,145,501) $1,145,501
----------
REPURCHASE AGREEMENT 1.3%
$16,443 Bear Stearns & Co., Inc. Dated 9/29/1995
6.20% Due 10/2/1995 Collateralized by
85,000 United States Treasury Strips Due
2/15/2019 (Value $17,372) 16,443
----------
Total Investments (Cost $1,161,944) 96.2% $1,161,944
Other Assets, Less Liabilities 3.8% 45,426
----- ----------
Net Assets 100.0% $1,207,370
===== ==========
See Notes to Financial Statements
21
<PAGE>
Money Market Fund (Continued)
Statement of Assets and Liabilities September 30, 1995
- --------------------------------------------------------------------------------
ASSETS:
Investments in securities at value
(Cost $1,161,944) - Note 2 $1,161,944
Receivable for investments sold 50,573
Receivable for shares sold 2,641
Interest receivable 75
Deferred organizational costs 8,211
Other assets 5,914
----------
$1,229,358
LIABILITIES:
Dividends payable $ 5,233
Accrued expenses and other 16,755 21,988
-------- ----------
NET ASSETS at value, applicable to 1,207,382
outstanding shares - Note 5 $1,207,370
==========
NET ASSET VALUE, offering and redemption price
per share ($1,207,370 divided by 1,207,382 shares) $ 1.00
==========
Statement of Operations Year Ended September 30, 1995
- --------------------------------------------------------------------------------
INVESTMENT INCOME:
Income:
Interest $ 65,165
--------
Total Income $ 65,165
Expenses:
Investment manager's fees - Note 3 2,885
Shareholder servicing fees and expenses - Note 3 5,574
Distribution fee - Note 3 2,308
Custodian fees and expenses 1,988
Legal and auditing fees 8,305
Directors' fees and expenses 10,947
Other 16,718
--------
Total expenses 48,725
Less expense reimbursement - Note 3 (42,954)
--------
Net expenses 5,771
---------
INVESTMENT INCOME - NET 59,394
NET REALIZED AND UNREALIZED GAIN ON INVESTMENTS --
---------
NET INCREASE IN NET ASSETS RESULTING FROM OPERATIONS $ 59,394
=========
See Notes to Financial Statements
22
<PAGE>
Money Market Fund (Continued)
Statement of Changes in Net Assets September 30, 1995
- --------------------------------------------------------------------------------
Year Ended Year Ended
9/30/95 9/30/94
---------- ----------
OPERATIONS:
Investment income - net $ 59,394 $ 43,748
Net realized (loss) on investments -- (681)
---------- ----------
Increase in net assets resulting
from operations 59,394 43,067
---------- ----------
DIVIDEND DISTRIBUTION - Note 2:
Investment income - net (59,394) (43,748)
---------- ----------
CAPITAL TRANSACTIONS - Note 5:
Value of shares sold 160,847 343,769
Value of shares redeemed (119,753) (734,260)
Value of shares issued in reinvestment
of dividend distribution 53,877 36,477
---------- ----------
Net increase (decrease) in net assets
resulting from capital transactions 94,971 (354,014)
---------- ----------
Contribution of capital from investment
manager (Note 3) -- 681
---------- ----------
Net increase (decrease) 94,971 (354,014)
---------- ----------
NET ASSETS at beginning of year 1,112,399 1,466,413
---------- ----------
NET ASSETS at end of year $1,207,370 $1,112,399
========== ==========
See Notes to Financial Statements
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 are valued at their fair value as determined by the officers of the
Investors 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.
24
<PAGE>
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, which are determined in accordance with income tax
regulations, 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.
Certain reclassifications are made each year amongst the components of each
Investment Fund's net assets which relate to different classifications of
income and distributions for financial reporting and tax purposes.
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.
25
<PAGE>
NOTE 3--INVESTMENT MANAGERS' FEES AND OTHER
TRANSACTIONS WITH AFFILIATES
Retirement System Investors Inc. ("Investors") 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. Investors 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.
Investment Fund Annual 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, Investors 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. Investors, in turn, remits such portion of its fee to the investment
manager of such Investment Fund. With respect to the Investment Funds for which
Investors does not act as investment manager, Investors 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 Investors, 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
26
<PAGE>
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
Investors, 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 ended 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%
For the period ended September 30, 1995 Investors 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
$58,183, $74,265, $49,727 and $42,954, respectively.
Each Director who is not an officer of the Investment Funds or a Trustee of
Investors 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. (Committee chairs receive an additional $100 per meeting.) A
Director and several officers of the Fund are also officers of Investors 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,
maturity on 1/12/1995 with a maturity value of $100,000, from the Money Market
Fund for $98,450 which was equal to the Money Market Fund's amortized cost or
carrying value on that date. The security had a fair value of $97,768 on this
date. The excess over fair value ($681) 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.
27
<PAGE>
NOTE 4--SECURITIES TRANSACTIONS
The following summarizes the securities transactions, other than short term
securities, by the various Investment Funds for the period ended September 30,
1995:
Investment Fund Purchases Sales
--------------- --------- -----
Core Equity Fund $1,266,309 $1,037,956
Emerging Growth Equity Fund 1,994,434 1,800,471
Intermediate-Term Fixed-Income Fund 2,583,356 319,559
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 September
30, 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 $1,826,942 $1,853,416 $(26,474)
Emerging Growth Equity Fund 887,476 916,696 (29,220)
Intermediate-Term Fixed-Income Fund 38,673 73,952 (35,279)
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
September 30, 1995:
Value of
Securities Vaue of
Investment Fund Loaned Collateral
--------------- ---------- ----------
Core Equity Fund $ 64,736 $ 69,489
Emerging Growth Equity Fund 357,616 377,081
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.
28
<PAGE>
Transactions in the shares of capital stock of each Investment Fund for the
years ended September 30, 1995 and September 30, 1994 were as follows:
Core Equity Emerging Growth
Fund Equity Fund
------------------ ------------------
1995 1994 1995 1994
---- ---- ---- ----
Fund shares sold 67,933 63,904 34,324 43,337
Dividends reinvested 9,247 5,323 3,282 14,522
Fund shares redeemed (24,411) (39,055) (12,944) (19,407)
------ ------ ------ ------
Net increase 52,769 30,172 24,662 38,452
====== ====== ====== ======
Intermediate-Term
Fixed-Income Fund
-------------------
1995 1994
---- ----
Fund shares sold 152,183 135,467
Dividends reinvested 25,145 14,169
Fund shares redeemed (24,467) (16,157)
------- -------
Net increase 152,861 133,479
======= =======
Net Assets at September 30, 1995 are as follows:
Core Equity Emerging Growth
Fund Equity Fund
---------- ----------------
Paid-in capital $3,812,577 $1,839,118
Accumulated undistributed
investment income (loss)--net 45,040 (24,013)
Undistributed realized gain (loss) (27,121) 247,885
Unrealized appreciation 1,826,942 887,476
---------- ----------
$5,657,438 $2,950,466
========== ==========
Intermediate-Term Money Market
Fixed-Income Fund Fund
----------------- ------------
Paid-in capital $5,045,228 $1,182,439
Accumulated undistributed
investment income--net 52,107 24,931
Undistributed realized gain (loss) (273) --
Unrealized appreciation 38,673 --
---------- ----------
$5,135,735 $1,207,370
========== ==========
29
<PAGE>
NOTE 6--FINANCIAL HIGHLIGHTS
<TABLE>
<CAPTION>
CORE EQUITY FUND
----------------
From 5/10/91
(Commencement
Year Year Year Year of Operations)
Ended Ended Ended Ended Through
9/30/95 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 year)
Net Asset Value, beginning of year $12.72 $12.08 $10.98 $10.45 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Investment income--net 0.13 0.15 0.18 0.23 0.14
Net realized and unrealized gain on investments 4.22 0.74 1.84 0.60 0.31
------ ------ ------ ------ ------
Total from Investment Operations 4.35 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 3.97 0.64 1.10 0.53 0.45
------ ------ ------ ------ ------
Net Asset Value, end of year $16.69 $12.72 $12.08 $10.98 $10.45
====== ====== ====== ====== ======
Total Return*** 35.24% 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 1.52% 1.17% 1.31% 1.86% 3.31%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 1.30% 1.33% 2.43% 2.46% 1.80%**
Portfolio turnover rate 25.49% 9.64% 21.79% 61.27% 12.49%
Net Assets at end of year ($1,000's) $5,657 $3,639 $3,094 $1,049 $1,560
<FN>
*Using average share basis.
**Annualized.
***The total return calculation reflects dividend reinvestment.
</FN>
</TABLE>
30
<PAGE>
<TABLE>
<CAPTION>
EMERGING GROWTH
EQUITY FUND
---------------
From 5/10/91
(Commencement
Year Year Year Year of Operations)
Ended Ended Ended Ended Through
9/30/95 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 year)
Net Asset Value, beginning of year $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 5.49 1.58 4.36 1.49 0.56
------ ------ ------ ------ ------
Total from Investment Operations 5.37 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) 5.04 (0.73) 2.91 1.29 0.54
------ ------ ------ ------ ------
Net Asset Value, end of year $19.05 $14.01 $14.74 $11.83 $10.54
====== ====== ====== ====== ======
Total Return *** 39.20% 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 (1.33)% (1.37)% (1.34)% (1.10)% (0.46)%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 3.30% 4.11% 6.41% 7.90% 0.85%**
Portfolio turnover rate 84.05% 72.59% 144.49% 138.46% 25.38%
Net Assets at end of year ($1,000's) $2,950 $1,825 $1,352 $684 $602
<FN>
*Using average share basis.
**Annualized.
***The total return calculation reflects dividend reinvestment.
</FN>
</TABLE>
31
<PAGE>
<TABLE>
<CAPTION>
INTERMEDIATE-TERM FIXED-INCOME FUND
-------------------------------------------------
From 5/10/91
(Commencement
Year Year Year Year of Operations)
Ended Ended Ended Ended Through
9/30/95 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 year)
Net Asset Value, beginning of year $10.46 $11.43 $11.00 $10.46 $10.00
------ ------ ------ ------ ------
Income from investment operations:
Investment income--net 0.59 0.52 0.54 0.80 0.25
Net realized and unrealized gain (loss) on
investments 0.38 (0.85) 0.36 0.73 0.40
------ ------ ------ ------ ------
Total from Investment Operations 0.97 (0.33) 0.90 1.53 0.65
------ ------ ------ ------ ------
Distributions:
Distributions from capital gains (0.05) (0.08) -- (0.15) --
Distributions from investment income (0.57) (0.56) (0.47) (0.84) (0.19)
------ ------ ------ ------ ------
Total Distributions (0.62) (0.64) (0.47) (0.99) (0.19)
------ ------ ------ ------ ------
Net increase (decrease) 0.35 (0.97) 0.43 0.54 0.46
------ ------ ------ ------ ------
Net Asset Value, end of year $10.81 $10.46 $11.43 $11.00 $10.46
====== ====== ====== ====== ======
Total Return *** 9.64% (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 5.71% 5.76% 4.90% 5.59% 6.27%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 1.09% 1.66% 3.33% 5.56% 1.80%**
Portfolio turnover rate 8.50% 8.68% 27.62% 8.66% 85.85%
Net Assets at end of year ($1,000's) $5,136 $3,372 $2,159 $881 $423
<FN>
- ----------
* Using average share basis.
** Annualized.
*** The total return calculation reflects dividend reinvestment.
</FN>
</TABLE>
32
<PAGE>
<TABLE>
<CAPTION>
MONEY MARKET FUND
------------------------------------------------
From 2/7/91
(Commencement
Year Year Year Year of Operations)
Ended Ended Ended Ended Through
9/30/95 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 year)
Net Asset Value, beginning of year $1.00 $1.00 $1.00 $1.00 $1.00
----- ----- ----- ----- -----
Income from investment operations:
Investment income--net 0.05 0.03 0.03 0.04 0.03
----- ----- ----- ----- -----
Total from Investment Operations 0.05 0.03 0.03 0.04 0.03
----- ----- ----- ----- -----
Distributions:
Distributions from investment income (0.05) (0.03) (0.03) (0.04) (0.03)
----- ----- ----- ----- -----
Total Distributions (0.05) (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 year $1.00 $1.00 $1.00 $1.00 $1.00
===== ===== ===== ===== =====
Total Return *** 5.20% 3.27%+ 2.77% 3.73% 3.30%
Ratios/Supplemental Data:
Ratios to average net assets
Expenses 0.50% 0.42% 0.25% 0.44% 0.75%**
Investment income--net 5.15% 3.18% 2.94% 3.68% 4.60%**
Decrease reflected in above expense ratio
due to expense waivers and reimbursement 3.72% 3.47% 4.39% 5.19% 1.95%**
Net Assets at end of year ($1,000's) $1,207 $1,112 $1,466 $664 $857
<FN>
- ----------
+ 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%.
* Using average share basis.
** Annualized.
*** The total return calculation reflects dividend reinvestment.
</FN>
</TABLE>
33
<PAGE>
INDEPENDENT AUDITOR'S REPORT
- --------------------------------------------------------------------------------
To the Shareholders and Board of Directors
Retirement System Fund Inc.
We have audited the statements of assets and liabilities, including the
statements of investments, of the Core Equity Fund, Emerging Growth Equity Fund,
Intermediate-Term Fixed-Income Fund and Money Market Fund (the "Investment
Funds") of the Retirement System Fund Inc. as of September 30, 1995, and the
related statements of operations for the year then ended, statements of changes
in net assets for each of the two years in the period then ended and the
financial highlights for each of the four years in the period then ended. These
financial statements and financial highlights are the responsibility of the
Fund'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. Our procedures included confirmation of securities owned as of
September 30, 1995, by correspondence with the custodians and brokers. 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 financial position of the
Investment Funds of Retirement System Fund Inc. at September 30, 1995, the
results of their operations, the changes in their net assets and the financial
highlights for the periods indicated, in conformity with generally accepted
accounting principles.
[INSERT SIGNATURE]
New York, New York
November 15, 1995
34
<PAGE>
OFFICERS
- --------------------------------------------------------------------------------
William Dannecker, President
James P. Coughlin, C.F.A., Executive Vice President and Chief Investment Officer
Stephen P. Pollak, Esq., Executive Vice President, Counsel and Secretary
John F. Meuser, Vice President and Treasurer
Veronica A. Fisher, First Vice President and Assistant Treasurer
Herbert Kuhl, Jr., C.F.A., First Vice President
Deborah A. Modzelewski, Second Vice President
Heidi Viceconte, Second Vice President
INVESTMENT MANAGERS
- --------------------------------------------------------------------------------
The Putnam Advisory Company, Inc.
Retirement System Investors Inc.
CUSTODIAN
- --------------------------------------------------------------------------------
Custodial Trust Company
DISTRIBUTOR
- --------------------------------------------------------------------------------
Retirement System Distributors Inc.
CONSULTANT
- --------------------------------------------------------------------------------
Retirement System Consultants Inc.
TRANSFER AGENT
- --------------------------------------------------------------------------------
Retirement System Consultants Inc.
INDEPENDENT AUDITORS
- --------------------------------------------------------------------------------
McGladrey & Pullen, LLP
COUNSEL
- --------------------------------------------------------------------------------
Morgan, Lewis & Bockius LLP
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
President
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. Gemmell
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
<PAGE>
For more complete information about Retirement System Fund Inc., including
charges and expenses, call 1-800-772-3615 for a prospectus or write to
Retirement System Distributors Inc., Customer Service, P.O. Box 2064, Grand
Central Station, New York, NY 10163-2064. Read the prospectus carefully before
you invest or send money. Retirement System Fund is distributed exclusively by
Retirement System Distributors Inc. Total returns are based on historical
results and are not intended to indicate future performance. Future performance
and unit asset value will fluctuate so that units, if redeemed, may be worth
more or less than their original cost. This material must be preceded or
accompanied by a prospectus.
<PAGE>
ANNUAL REPORT
LOGO
Retirement System
Fund Inc.
Core Equity Fund
Emerging Growth Equity Fund
Intermediate-Term Fixed-Income Fund
Money Market Fund
Value Equity Fund*
International Equity Fund*
Actively Managed Fixed-Income Fund*
1995
Broker/Dealer
LOGO
Retirement System
Distributors Inc.
P.O. Box 2064
Grand Central Station
New York, NY 10163-2064
*Not yet available for sale to investors
