SCHEDULE 14A
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF THE SECURITIES EXCHANGE ACT OFProxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(AMENDMENT NO.(Amendment No. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] CONFIDENTIAL, FOR USE OF THE
[_] Preliminary Proxy [_] Confidential, for
Statement COMMISSION ONLY (AS PERMITTED BY
RULE 14A-6(E)(2))Use of the
Commission Only (as
[X] Definitive Proxy permitted by Rule
Statement 14a-6(e)(2))
[_] Definitive
Additional Materials
[_] Soliciting Material
Pursuant to Sec.Section
240.14a-11(c) or
Sec.Section 240.14a-12
RUSSELL INSURANCE FUNDS
(NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
(NAME OF PERSON(S) FILING PROXY STATEMENT, IF OTHER THAN THE REGISTRANT)Russell Investment Funds
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4)(1) and 0-11.
1.(1) Title of each class of securities to which transaction applies:
2.-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
3.-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
4.-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
5.-------------------------------------------------------------------------
(5) Total feefees paid:
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[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
1.(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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RUSSELL INSURANCEINVESTMENT FUNDS
909 A STREET
TACOMA, WASHINGTON 98402
1-800-787-73541-800-628-8510
Dear Shareholder:
Enclosed is a Notice of Special Meeting in lieu of Annual Meetingshareholders of Shareholders of the Russell
InsuranceInvestment Funds (the "Investment Company"("RIF"). The Special Meeting has been called for Thursday, November 19, 1998October 3,
2003 at 11:009:30 a.m., local time, at the offices of the Investment CompanyRIF at 909 A Street, Tacoma,
Washington.Washington 98402. The accompanying Proxy Statement details the proposals being
presented for your consideration.
The Special Meeting will consider several matters,consideration by shareholders of RIF's series (each a "Fund,"
and, shareholderscollectively, the "Funds").
Shareholders will be asked to: (i)to consider the following proposals at the
Special Meeting:
1. To elect thethree members of the Board of Trustees of the Investment
Company; (ii) ratify the selection of PricewaterhouseCoopers LLP as the
Investment Company's independent accountants; (iii) approve a proposed
management agreement between the Investment Company, on behalf of each sub-
trust of the Investment Company (each a "Fund") and Frank Russell Investment
Management Company ("FRIMCo"), to take effect upon the acquisition of Frank
Russell Company by The Northwestern Mutual Life Insurance Company; and (iv)RIF;
2. To approve a change into each Fund's fundamental investment restriction limiting
borrowingobjective;
3. To approve the reclassification of the investment objective of each
Fund from "fundamental" to authorize a higher borrowing level for"non-fundamental"; and
4. To consider and act on any other business (none being known as of the
purposedate of meeting
redemptions.this notice) as may legally come before the Special Meeting or any
adjournment thereof.
The enclosed materials provide details of the proposals. Accordingly, aA proxy or voting
instruction card for the Special Meeting in lieu of Annual Meeting of Shareholders is enclosed. IT IS IMPORTANT THAT YOU
COMPLETE, SIGN AND RETURN YOUR CARD, OR TAKE ADVANTAGE OF THE FACSIMILE,
TELEPHONIC OR INTERNET VOTING OR VOTING INSTRUCTION PROCEDURES DESCRIBED IN THE
PROXY OR VOTING INSTRUCTION CARD, AS SOON AS POSSIBLE TO ENSURE THAT YOUR VOTE
ISOR INSTRUCTIONS ARE COUNTED AT THE SPECIAL MEETING.
Please return your proxy card as soon as possible.
Sincerely,
/s/ Karl J. Ege
Karl J. Ege
Esq.
Secretary
NOTE: If you own shares ofNote: You may receive more than one Fund, you will receive a separate
proxy card for each Fund.card. PLEASE COMPLETE THEEACH CARD PROVIDED FOR EACH FUND IN
WHICH YOU OWN SHARES so that each Fund will have the quorum needed to conduct
its business.PROVIDED.
RUSSELL INSURANCEINVESTMENT FUNDS
Multi-Style Equity Fund
Aggressive Equity Fund
Non-US Fund
Core Bond Fund
Real Estate Securities Fund
(each a "Fund," and, collectively, the "Funds")
909 A STREET
TACOMA, WASHINGTON 98402
-----------------
NOTICE OF SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF SHAREHOLDERS
OF THE
RUSSELL INSURANCE FUNDS
TO BE HELD ON THURSDAY, NOVEMBER 19, 1998
To the Shareholders of Multi-Style Equity Fund, Aggressive Equity Fund, Non-
U.S. Fund and Core Bond Fund:OCTOBER 3, 2003
-----------------
NOTICE IS HEREBY GIVEN that a Special Meeting in lieu of Annual Meeting of the shareholders (the "Shareholders") of the
four sub-trusts (eachFunds, each a "Fund,"
and collectively the "Funds")series of Russell InsuranceInvestment Funds (the "Investment
Company"("RIF"), will be held at the Investment Company'sRIF's
offices located at 909 A Street, Tacoma, Washington, on Thursday, November 19, 1998October 3, 2003 at 11:009:30
a.m., local time, for the following purposes:
1. To elect thethree members of the Board of Trustees of the Investment
Company.RIF;
2. To ratify the selection of PricewaterhouseCoopers LLP as the
Investment Company's independent accountants.
3. To approve a proposed management agreement with Frank Russell
Investment Management Company ("FRIMCo"), the current investment manager
of the Investment Company, to take effect upon the closing of the
acquisition of Frank Russell Company by The Northwestern Mutual Life
Insurance Company.
4. To approve a change to each Fund'sthe fundamental investment restriction
limiting borrowing activities, authorizing a higher borrowing level forobjective of each
Fund;
3. To approve the purposereclassification of meeting shareholder redemption requests.
The Special Meeting also willthe investment objective of each
Fund from "fundamental" to "non-fundamental"; and
4. To consider and act uponon any other business (none being known as of the
date of this notice) as may legally come before the Special Meeting or any
adjournment thereof.
The attached Proxy Statement provides more information concerning each of
the proposed items upon which Shareholdersshareholders will be asked to vote.
Shareholders of record as of the close of business on September 21, 1998,July 7, 2003 are
entitled to notice of, and to vote at, the Special Meeting or any adjournment
thereof.
By Order of the Board of Trustees,
/s/ Karl J. Ege
KARLKarl J. EGE, ESQ.Ege
Secretary
Tacoma, Washington
October 19, 1998July 8, 2003
IT IS IMPORTANT THAT SHARES REPRESENTED BY YOUR SHARESVOTING INSTRUCTIONS BE
REPRESENTED AT THE SPECIAL MEETING! WHETHER OR NOT YOU EXPECT TO BE PRESENT
AT THE SPECIAL MEETING, PLEASE COMPLETE AND SIGN THE ENCLOSED PROXY CARD(S)CARD OR
VOTING INSTRUCTION CARD AND RETURN IT PROMPTLY IN THE ENCLOSED ENVELOPE,
WHICH NEEDS NO POSTAGE IF MAILED IN THE UNITED STATES. IF YOU DESIRE TO
VOTESTATES, OR TAKE ADVANTAGE OF
THE FACSIMILE, TELEPHONIC OR INTERNET VOTING PROCEDURES DESCRIBED IN PERSON YOU MAY REVOKE YOURTHE
PROXY PRIOR TO THE MEETING. PLEASE
COMPLETE AND RETURN ALL PROXY CARDS ENCLOSED. EACH IS FOR A SEPARATE FUND.CARD OR VOTING INSTRUCTION CARD.
TABLE OF CONTENTS
PAGE
----
Questions and Answers About the Special Meeting and the Proxy Statement.. 2
Proposal 1: Election of Trustees to the Board of Trustees of RIF........ 4
Proposal 2: To change the fundamental investment objectives of the Funds 12
Proposal 3: To make each Fund's investment objective non-fundamental.... 16
Other Business........................................................... 17
Information about RIF.................................................... 18
Further Information...................................................... 20
List of Names and Addresses of Money Managers............................ 22
Beneficial Owners of the Funds........................................... 24
RUSSELL INSURANCEINVESTMENT FUNDS
909 A STREET
TACOMA, WASHINGTONStreet
Tacoma, Washington 98402
1-800-787-73541-800-628-8510
-----------------
PROXY STATEMENT
-----------------
DATED OCTOBER 19, 1998July 8, 2003
FOR A SPECIAL MEETING IN LIEU OF ANNUAL MEETING
OF SHAREHOLDERS OF
Multi-Style Equity Fund
Aggressive Equity Fund
Non-US Fund
Core Bond Fund
Real Estate Securities Fund
(each a "Fund," and, collectively, the "Funds")
EACH A SERIES OF
RUSSELL INSURANCEINVESTMENT FUNDS TO BE HELD NOVEMBER 19, 1998
SUMMARY
WHAT IS("RIF")
QUESTIONS AND ANSWERS ABOUT THE PURPOSE OF THISSPECIAL MEETING
AND THE PROXY STATEMENT?STATEMENT
GENERAL INFORMATION ABOUT THE PROPOSALS
Q. What is the purpose of this proxy statement?
A. You are receiving these proxy materials--a booklet that includes the Proxy
Statement and one or more proxy or voting instruction cards--because you
have the right to vote or give voting instructions on important proposals
concerning your investment in your Fund(s).
The principal purpose of this Proxy Statement is to seek Shareholdershareholder
approval of the matters identified in the accompanyingtable below.
Proposal Shareholders Solicited
-------- ----------------------
1. To elect three members of the Board of Trustees of RIF. Each Fund
2(a) To approve changes to the fundamental investment Each Fund
through objectives of the Funds.
2(e)
3. To approve a change to the fundamental investment Each Fund
objectives of the Funds to make them non-fundamental.
INFORMATION ABOUT VOTING
Q. Who is asking for my vote?
A. The Board of Trustees (the "Board" or the "Trustees") of RIF has requested
your vote on several matters in connection with the Special Meeting (the
"Special Meeting") of shareholders of the series of RIF (the
"Shareholders"). The Special Meeting will be held at 9:30 a.m., local time,
on October 3, 2003, at the offices of RIF located at 909 A Street, Tacoma,
Washington. RIF proposes to mail the Notice of Special Meeting, the proxy
card and the Proxy Statement to Shareholders of record on or about July 15,
2003. As described below, on or about such date, the Notice of Special
Meeting, Proxy Statement and a voting instruction card will be mailed to
holders of certain variable annuity contracts and variable life insurance
policies who have the right to instruct Shareholders of record how to vote
at the Special Meeting.
Q. Who is eligible to vote?
A. RIF has the following five series, or funds, in lieuall (each a "Fund," and,
collectively, the "Funds"): Multi-Style Equity Fund, Aggressive Equity Fund,
Non-US Fund, Core Bond Fund and Real Estate Securities Fund.
Shareholders of Annualrecord of the Funds at the close of business on July 7, 2003
(the "Record Date") are entitled to notice of and to vote at the Special
Meeting or at any adjournment of the Special Meeting on the proposals
applicable to the Fund(s) for which they hold shares. Shareholders of record
will be entitled to one vote for each full share and a fractional vote for
each fractional share that they hold on each matter presented at the Special
Meeting.
ShareholdersThe Funds serve as investment vehicles for variable annuity contracts and
variable life insurance policies (the "Variable Contracts" and "Variable
Policies") issued by various life insurance companies (the "Participating
Insurance Companies"). Participating Insurance Companies may also invest
their own general account assets in RIF. All shares of the Funds are owned
of record by sub-accounts of separate accounts ("Separate Accounts")
established to fund the Variable Contracts and Variable Policies issued by
the Participating Insurance Companies or by the Participating Insurance
Companies in their general accounts.
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Each Participating Insurance Company, to the extent required by the
Investment Company Act of 1940, as amended (the "1940 Act"), will solicit
voting instructions from Variable Contract and Variable Policy owners who
beneficially own shares of a Fund through a Separate Account (a "1940 Act
Separate Account") of such Participating Insurance Company as of the Record
Date (the "Contractowners"). These shares will be voted by the applicable
Participating Insurance Company as timely directed by the Contractowners.
Each Participating Insurance Company will vote the shares of each 1940 Act
Separate Account for which no timely instructions are received from a
Contractowner in the same proportion as dictated by the timely voting
instructions received from other Contractowners for shares of such Fund held
in that 1940 Act Separate Account.
RIF has been advised by certain Participating Insurance Companies that they
are not required by the 1940 Act to solicit voting instructions from the
owners of Variable Contracts or Variable Policies who own shares of a Fund
through certain of their Separate Accounts (the "Non-1940 Act Separate
Accounts") and that such Participating Insurance Companies therefore will
not solicit voting instructions from the Variable Contract or Variable
Policy owners that beneficially own shares of a Fund through a Non-1940 Act
Separate Account (and such Variable Contract or Variable Policy owners are
not included in the term "Contractowners" as used herein). Fund shares held
in a Non-1940 Act Separate Account will be represented at the Special
Meeting by the applicable Participating Insurance Company and voted in the
same proportion as the aggregate of votes cast with respect to shares of
such Fund held in all of that Participating Insurance Company's 1940 Act
Separate Accounts or in such other manner as may be required by law.
Q. How do I deliver voting instructions to my Participating Insurance Company?
A. Contractowners may instruct their Participating Insurance Company how to
vote shares of the Funds attributable to their Variable Contract or Variable
Policy in writing, by executing the enclosed voting instruction card and
returning it in the envelope provided or via facsimile, telephone or the
Internet as described in the proxy or voting instruction card. The
Participating Insurance Companies have fixed 4:00 p.m. Eastern time on
September 30, 2003 as the last day and time on which voting instructions
will be accepted. Voting instructions received after this date and time will
not be considered.
To give voting instructions via the Internet, please access the website
listed on your instruction card(s) or noted in the enclosed voting
instructions. To give voting instructions via the Internet, you will need
the "control number" that appears on your voting instruction card. The
Internet voting procedures are designed to authenticate your identity, to
allow you to give voting instructions and to confirm that your instructions
have been recorded properly. If you vote via the Internet, you may incur
costs associated with electronic access providers and telephone companies.
Voting instruction card(s) that are properly signed, dated and received
prior to 4:00 p.m. Eastern time on September 30, 2003 and proper voting
instructions received via facsimile, telephone or the Internet prior to 4:00
p.m. Eastern time on September 30, 2003, will be voted by your Participating
Insurance Company in accordance with the instructions received. If you sign,
date and return the voting instruction card(s), but do not specify a vote
for one or more of the Proposals, your Participating Insurance Company will
vote the shares of each Fund represented by your voting instructions on the
Proposals for which you have not specified a vote as follows:
. IN FAVOR of electing each of the nominees to serve on the Board of
Trustees of RIF (Proposal 1);
. IN FAVOR of approving a change to the investment objective, currently a
fundamental investment restriction, of each Fund, (Proposals 2(a) through
2(e), voted on a Fund-by-Fund basis); and
. IN FAVOR of approving a change to the fundamental investment objective of
each Fund to make it non-fundamental (Proposal 3, voted on a Fund-by-Fund
basis).
3
Q. If I send my voting instructions in now as requested, can I change my
instructions later?
A. Contractowners may revoke their voting instructions at any time prior to
4:00 p.m. Eastern time on September 30, 2003 by submitting written notice of
revocation, a later-dated instruction card or a later-dated voting
instruction via facsimile, telephone or the Internet. Revocations of voting
instructions received after this date and time will not be asked to
consideraccepted.
Q. How do the Trustees recommend that I vote for these proposals?
A. The Trustees recommend that Shareholders and approve, on behalf of their respective Fund(s), the four
proposals discussed inContractowners vote FOR each
proposal.
Q. Whom should I call for additional information about this Proxy Statement. Before addressing the specific
proposals, this Proxy Statement provides you with importantStatement?
A. Please call D.F. King & Co., Inc., RIF's information regarding howagent, toll-free at
1-800-628-8510.
GENERAL INFORMATION ABOUT THE FUNDS
Q. How are the Funds operate.
HOW ARE THE FUNDS MANAGED?
Each Fundmanaged?
A. RIF is a sub-trust of the Russell Insurance Funds, an open-end, management investment company organized under the laws
of the Commonwealth of Massachusetts, with principal offices located at 909
A Street, Tacoma, Washington 98402.
Under Massachusetts law, each Fund is a "sub-trust" of RIF. The management
of the business and affairs of the Investment
CompanyRIF is the responsibility of the Board of Trustees (the "Board" or
"Trustees").Board. The
Board oversees the Funds' operations, including reviewing and approving the
Funds' contracts with the Funds' investment adviser, Frank Russell
Investment Management Company ("FRIMCo" or the "Manager"), Frank Russell Company ("FRC") and the Funds' money managers. The Investment Company'srespective
sub-advisers ("Money Managers"). RIF's officers all of whom are
employed by and are officers of FRIMCo or its affiliates, are responsible for the
day-to-day management and administration of the Funds' operations. The money managersMoney
Managers are responsible for selection of individual portfolio securities
for the assets assigned to them.
Shareholders will be asked to elect Trustees, ratify the selection of
accountants, and amend a restriction affecting borrowing. Shareholders will
also consider approval of a new management agreement to become effective at
the time of a change of control of FRC, the corporate parent of the investment
manager to the Investment Company.
Each Fund is managed by FRIMCo, whose address is 909 A Street, Tacoma,
Washington 98402. As described in more detail in connection with Proposal #3
below, FRIMCo:
. provides or supervises the general management and administration,
investment advisory and portfolio management, and distribution services
for the Funds;
. furnishes the Funds with office space, equipment and personnel to
operate and administer the Funds' business, and supervises services
provided by third parties, such as the money managers and the custodian;
. develops investment guidelines and restrictions, selects money managers,
allocates assets among money managers and monitors the money managers'
investment programs and results; and
. provides the Funds with transfer agent, dividend disbursing and
shareholder recordkeeping services.
FRIMCo pays the expenses of providing these services (other than transfer
agent, dividend disbursing, and shareholder recordkeeping), as well as a
portion of the costs of preparing and distributing materials that describe the
Funds. FRIMCo is a wholly owned subsidiary of FRC, which provides
comprehensive asset management consulting services to institutional pools of
investment assets. The address of FRC is 909 A Street, Tacoma, Washington
98402. George F. Russell, Jr., Chairman of the Board of the Investment
Company, is the Chairman of the Board and controlling shareholder of FRC.
The Investment CompanyRIF has received an exemptive order from the U.S. Securities and Exchange
Commission (the "SEC"("SEC") which permits the Investment
Company,RIF, with the approval of the Board, to
engage and terminate money
managersMoney Managers without a shareholder vote and to disclosevote. Please see
page 22 of this Proxy Statement for a list of the aggregate fees paid to
the manager and the money managers of each sub-trust.
The money managerscurrent Money Managers for
the Funds are listed in Exhibit A to this Proxy
Statement.Funds. The money managersMoney Managers will not change as a result of the proposalsProposals
that Shareholders are being asked to consider at the Special Meeting.
WHAT ARE THE VARIOUS FEES AND EXPENSES FOR THE FUNDS?
The following summarizes the fees and expenses of the Funds under the
current service agreements.
Investment Management Fees: Under its Management Agreement with the
Investment Company, FRIMCo receives a management fee from each Fund for
FRIMCo's services. From this fee, FRIMCo, as the Investment Company's agent,
pays the money managers for their investment selection services. The remainder
of the management fee is retained by FRIMCo as compensation for the services
described above and to pay expenses. Quarterly, each money manager is paid the
pro rata portion of an annual fee, based on the average of all assets
allocated to the money manager for the quarter. Additional information
regarding the management fees of the Funds is set
2
forth under "Information Regarding the Current Management Agreement" in this
Proxy Statement.
Administrative Services: FRIMCo provides the Investment Company with
administrative services and facilities necessary to operate the Funds. FRIMCo
also serves as the dividend-paying agent, transfer agent and shareholder
servicing agent for the Funds.PROPOSALS
PROPOSAL #1:1: TO ELECT THETHREE MEMBERS OF THE BOARD OF TRUSTEES
At itstheir meeting held on October 5, 1998,May 20, 2003, the Trustees determined to present
the election of three trustees who have not been previously elected by the
Shareholders to hold office until their respective successors are elected and
qualified. RIF currently has ten trustees, seven of whom have previously been
elected by RIF's Shareholders. This Proposal 1 will not affect the status of
these seven Trustees. Each of these Trustees, and, if elected, each of the
nominees, will continue to hold office during the lifetime of RIF except as
such Trustee sooner dies, resigns or is removed, as provided for in RIF's
Master Trust Agreement. RIF also has two Trustees Emeritus. Trustees Emeritus
do not have the power to vote on matters coming before the Board, or to direct
the vote of Trustees to Shareholders atany Trustee, and generally are not responsible or accountable in
any way for the Special Meeting.
Messrs. Russell, Lynn L. Anderson, Paul E. Anderson, Baxter and Gingrich, Dr.
Anton and Ms. Palmer (the "Current Trustees"), after due consideration,
unanimously approved each nominee identified below to serve as a memberperformance of the Board of Trustees. Mr. Russell will not stand for re-election as a voting
Trustee of the Investment Company, although he has been elected to serve as a
Trustee Emeritus immediately upon the completion of his present service as a
Trustee.Board's responsibilities.
In considering the nominees for election as Trustees of the
Investment Company,RIF, the Trustees
took into account the qualifications of each of the nomineesnominee and the concern for the
continued efficient conduct of the
Investment Company'sRIF's business. In particular, the Trustees
considered the requirements of the Investment
Company1940 Act of 1940, as amended, (the "1940 Act") as they apply to the election of
Trustees. One factor considered byTrustees generally and the nominees in particular. The Board has determined
that Proposal 1 is in the requirement
imposed by the 1940 Act that the selection and nomination of trustees who are
not "interested persons" (as that term is defined in Section 2(a)(19)best interests of the 1940 Act)Shareholders of the Investment Company (the "Independent Trustees") must be
committed, in the first instance, to the Independent Trustees then in office.
The Independent Trustees met separately with Investment Company counsel, and
proposed the nomination of the Independent Trustees whose names are set forth
below.
At a meeting held on October 5, 1998, the Board also noted the proposed
change in control of FRC described in Proposal #3 below. Under Section 15(f)
of the 1940 Act, for a period of three years following a change of control, at
least 75% of the members of the Board of Trustees must be individuals who are
not "interested persons" of FRIMCo or its predecessor entities. Based upon the
current affiliations of the nominees for election, the election of a Board
comprised of the six nominees set forth in this Proposal #1 will satisfy that
requirement.
The Current Trustees will continue to serve as Trustees until the Trustees
elected by the Shareholders take office, although Mr. Russell will resign as a
voting Trustee effective December 30, 1998, or at such date as may be
considered appropriate to assure that the composition of the Board complies
with Section 15(f). Upon the election and
3
qualification of the new Trustees, the six nominees listed below will
constitute the Board of Trustees of the Investment Company. It is anticipated
that the nominees will take office at the first regularly scheduled Board
meeting following their election, which Board meeting is presently anticipated
to be held in January, 1999. Mr. Russell and Mr. Lynn Anderson are and will
continue to be "interested persons" of the Investment Company. Mr. Russell has
been designated by the Board of Trustees as a Trustee Emeritus of the
Investment Company as described above pursuant to the Master Trust Agreement.
As a Trustee Emeritus, he will be expected to attend meetings of the Board,
will participate in discussions of the business of the Investment Company, and
may continue to provide the benefit of his advice and experience to the Board.
Under the Master Trust Agreement, a Trustee Emeritus does not vote on any
matter before the Board, and is not liable for the actions taken or omitted by
the Board.
Because the Investment Companyeach Fund.
RIF does not hold regular annual meetings, each
nominee, if elected, will hold office until his or her successor is elected
and qualified.meetings. The Board may call special
meetings of shareholdersShareholders for action by shareholderShareholder vote as may be required by
the 1940 Act or required or permitted by the Master Trust Agreement
4
and by-laws of the Investment Company.RIF. In compliance with the 1940 Act, shareholderShareholder meetings will
be held to elect Trustees whenever fewer than a majority of the Trustees
holding office have been elected by the shareholdersShareholders or, if necessary in the case of filling
vacancies, to assure that at least two-thirds of the Trustees holding office
after vacancies are filled have been elected by shareholders.
THE NOMINEESShareholders.
The Nominees
The following information is provided for each of the six nominees.nominee. It includes the
nominee's name, principal occupation(s) or employment during the past five
years, date of birth, address and directorships with other companies whichthat file
reports periodically with the SEC. Unless otherwise noted, the mailing address for
eachEach nominee is Frank Russell Investment Company, 909 A Street, Tacoma, WA
98402. Each of the nominees is currently a Trustee of the Investment CompanyRIF.
Ms. Weston and except as otherwise indicated, has served as a Trustee since 1996.
Mr. Lynn Anderson is the only nominee for election as a Trustee who is anConnealy are not "interested person"persons" of the Investment CompanyRIF as defined in
Section 2(a)(19) of the 1940 Act. This
designation results fromMr. Phillips is an interested person of RIF
by virtue of his ownership interest and position as an officeremployment by Frank Russell Company, the parent of certain FRC affiliates. As usedFRIMCo.
Each nominee currently oversees 37 funds in the list below, "Frank Russell Company"
includes its corporate predecessor, Frank Russell Co., Inc.
*Lynn L. Anderson -- 59 years old -- Trustee, President and Chief Executive
Officer since 1996. Trustee, President and Chief Executive Officer, Frank
Russell Investment Company; Director, Chief Executive Officer and Chairman of
the Board, Russell Fund Distributors, Inc.; Trustee, Chairmancomplex. The
Russell Fund complex consists of the Board,
President,RIF and Treasurer, The SSgA Funds (investment company); Director, Chief
Executive Officer and Chairman of the Board, Frank Russell Investment
Management Company; Director,
4
Chief Executive Officer and President, Frank Russell Trust Company; Director
and Chairman of the Board, Frank Russell Investment Company
Public Limited
PLC; Director, Frank Russell Company, Frank Russell Investments (Ireland)
Limited, Frank Russell Investments (Cayman) Ltd.("FRIC"). The address for each nominee listed below is 909 A Street, Tacoma,
Washington 98402-1616.
No. of
Portfolios
In Russell
Term of Principal Fund Other
Position(s) Office** and Occupation(s) Complex Directorships
Name Held With Length of During the Overseen by Held by
and Age Fund Time Served Past 5 Years Trustee Trustee
------- ----------- ------------ --------------------------------- ----------- -------------
Interested Nominee
Michael J. A. Phillips, Trustee Since 2002 Chairman of the Board, CEO and 37 None
Born January 20, 1948 Director, Frank Russell Company
("FRC"); President, FRC until
July 1, 2003
Independent Nominees
Daniel P. Connealy,.... Trustee Since April 2001-2003, Vice President and 37 Director,
Born June 6, 1946 2003 Chief Financial Officer, Janus Gold Banc
Capital Group Inc.; 1979-2001, Corporation,
Audit and Accounting Partner, Inc.
Pricewaterhouse-
Coopers LLP
Julie W. Weston,....... Trustee Since 2002 Retired since 2000. 1997 to 2000, 37 None
Born October 2, 1943 Arbitrator, The American
Arbitration Association
Commercial Panel. From 1995 to
1999, Hearing Officer, University
of Washington
- --------
** Each Trustee serves as a Trustee during the lifetime of RIF and Frank Russell Investments
(UK) Ltd., Russell Insurance Agency, Inc., Frank Russell Investment Company,
PLC; June 1993until its
termination except as such Trustee sooner dies, resigns or is removed.
During the fiscal year ended December 31, 2002, there were four regular
meetings of the Board, two special meetings of the Board and one telephonic
meeting of the Board. All of the Trustees, including the nominees with respect
to November 1995, Director, Frank Russell Company. Until
September 1994, Directormeetings held after their election to the Board by the Trustees, attended at
least 75% of the meetings of the Board of Trustees held during that time.
The Board of Trustees has established a standing Audit Committee and President,a
standing Nominating and Governance Committee. The Laurel Funds, Inc. (investment
company); November 1995Audit Committee's primary
functions are: (1) oversight of the Funds' accounting and financial reporting
policies and practices and their internal controls; (2) oversight of the
quality and objectivity of the Funds' financial statements and the independent
audit thereof; and (3) to act as liaison between the Funds' independent
auditors and the full Board. It is management's responsibility to maintain
appropriate
5
systems for accounting and internal control and the auditor's responsibility to
plan and carry out a proper audit. Currently, the Audit Committee members
consist of Mmes. Kristianne Blake and Eleanor W. Palmer and Messrs. Raymond P.
Tennison, Jr. and Daniel P. Connealy, each of whom is an independent Trustee.
For the fiscal year ended December 1996, Director31, 2002, the Audit Committee held five
meetings. RIF's Board of Trustees has adopted and Chairman, Russell MLC
Management Company; December 1996approved a formal written
charter for the Audit Committee, which sets forth the Audit Committee's current
responsibilities. The Audit Committee reviews the maintenance of the Funds'
records and the safekeeping arrangements of RIF's custodian, reviews both the
audit and non-audit work of RIF's independent auditors, submits a
recommendation to March 1997, Directorthe Board as to the selection of independent auditors, and
Chairman, Frank
Russell Company (Delaware) Inc.pre-approves (i) all audit and non-audit services to be rendered by the
auditors for RIF, (ii) all audit services provided to FRIMCo, or any affiliate
thereof that provides ongoing services to RIF, relating to the operations and
financial reporting of RIF, and (iii) all non-audit services relating to the
operations and financial reporting of RIF, provided to FRIMCo, or any affiliate
thereof that provides ongoing services to RIF, by any auditors with an ongoing
relationship with RIF.
The primary functions of the Nominating and Governance Committee are to: (1)
nominate individuals who are not interested persons of RIF for independent
Trustee membership on the Board; (2) evaluate and review the composition and
performance of the Board; (3) review Board governance procedures; (4) review
Trustee compensation; and (5) make nominations for membership on all Board
committees and review the responsibilities of each committee. The Committee
will not consider nominees recommended by Shareholders of the Funds. Currently,
the Nominating and Governance Committee members consist of Messrs. Paul E.
Anderson, -- 67 years old -- Trustee. 23 Forest Glen Lane, Tacoma,
Washington 98409. Trustee, Frank Russell Investment Company; 1996 to Present,
President, Forest Limited Partnership. 1984 to 1996, President, Vancouver Door
Company, Inc.
Paul Anton, Ph.D. -- 78 years old -- Trustee. PO Box 212, Gig Harbor,
Washington 98335. Trustee, Frank Russell Investment Company. President, Paul
Anton and Associates (Marketing Consultant on emerging international markets
for small corporations). 1991-1994, Adjunct Professor, International
Marketing, University of Washington, Tacoma, Washington.
William E. Baxter -- 73 years old --and Lee C. Gingrich and Ms. Julie W. Weston, each
of whom is an independent Trustee. 800 North CFor the fiscal year ended December 31, 2002,
the Nominating and Governance Committee held one meeting.
6
Information Regarding the Other Trustees and the Officers of RIF
Listed below are the Trustees of RIF not named above as nominees and its
principal executive officers, including their names, ages, position(s) with
RIF, and principal occupation or employment during the past five years. Mr.
George F. Russell, Mr. Lynn L. Anderson and Mr. Michael J.A. Phillips are the
only Trustees who are "interested persons" of RIF as defined in section
2(a)(19) of the 1940 Act. The address for each Trustee and officer listed below
is 909 A Street, Tacoma, Washington 98403.98402-1616.
No. of
Portfolios in
Russell
Term of Principal Fund Other
Position(s) Office** and Occupation(s) Complex Directorships
Name Held With Length of During the Overseen by Held by
and Age Fund Time Served Past 5 Years Trustee Trustee
------- ----------- ------------- ----------------------------------- ------------- -------------
Interested Trustee and Interested Trustee Emeritus*
Lynn L. Anderson,........ Trustee Trustee since Vice Chairman, FRC; Chairman of 37 Trustee,
Born April 22, 1939 and 1987; the Board, Trustee, FRIC and RIF; SSgA Funds
Chairman Chairman of CEO and Chairman of the Board, (investment
of the the Board Russell Fund Distributors, Inc. and company)
Board since 1999 FRIMCo; Trustee, President and
Chairman of the Board, SSgA
Funds (investment company);
Trustee and Chairman of the
Board, Frank Russell Trust
Company; Director, Frank Russell
Investments (Ireland) Limited and
Frank Russell Investments
(Cayman) Ltd.; Until October,
2002, President and CEO, FRIC
and RIF
George F. Russell, Jr.,.. Trustee Since 1999 Chairman Emeritus, FRC; 37 None
Born July 3, 1932 Emeritus Chairman Emeritus, FRIC and RIF
and
Chairman
Emeritus
* Interested persons of RIF because of their relationships with FRIMCo or its affiliates as set forth in the table.
Independent Trustees and Independent Trustee Emeritus
Paul E. Anderson,........ Trustee Since 1984 1996 to present, President, 37 None
Born October 15, 1931 Anderson Management Group
LLC (private investments
consulting)
Paul Anton, Ph.D.,....... Trustee Since 2003 Retired since 1997; Trustee of 37 None
Born December 1, 1919 Emeritus FRIC and RIF until 2002
William E. Baxter,....... Trustee Since 1984 Retired since 1986 37 None
Born June 8, 1925
7
No. of
Portfolios in
Russell
Term of Principal Fund Other
Position(s) Office** and Occupation(s) Complex Directorships
Name Held With Length of During the Overseen by Held by
and Age Fund Time Served Past 5 Years Trustee Trustee
------- ----------- ------------ ---------------------------------- ------------- -------------
Kristianne Blake,........ Trustee Since 2000 President, Kristianne Gates Blake, 37 - Trustee
Born January 22, 1954 P.S. (accounting services) WM Group of
Funds
(investment
company)
- Director,
Avista
Corporation
Lee C. Gingrich,......... Trustee Since 1984 Retired since 1995 37 None
Born October 6, 1930
Eleanor W. Palmer,....... Trustee Since 1984 Retired since 1981 37 None
Born May 5, 1926
Raymond P. Tennison, Jr., Trustee Since 2000 Currently, President, Simpson 37 None
Born December 21, 1955 Investment Company and several
additional subsidiary companies,
including Simpson Timber
Company, Simpson Paper
Company and Simpson Tacoma
Kraft Company
- --------
** Each Trustee Frankserves as a Trustee during the lifetime of RIF and until its
termination except as such Trustee sooner dies, resigns or is removed. Dr.
Anton was appointed Trustee Emeritus by the Board effective December 31,
2002 for a term not to exceed five years. Mr. Russell was appointed Trustee
Emeritus by the Board effective January 1, 1999 to serve until his death,
retirement, resignation or removal.
8
Term of Principal
Position(s) Office** and Occupation(s)
Name Held With Length of During the
and Age Fund Time Served Past 5 Years
- ------------------------ ---------------------- ------------ ------------------------
OFFICERS
Leonard P. Brennan,...... President and Chief Since 2002 Director, President and
Born October 11, 1959 Executive Officer CEO, FRIMCo; From 1995
to present, Managing
Director Individual
Investor Services of
Frank Russell Company
Mark E. Swanson,......... Treasurer and Chief Since 1998 1998 to present,
Born November 26, 1963 Accounting Officer Treasurer and Chief
Accounting Officer, FRIC
and RIF; Director, Funds
Administration, FRIMCo
and Frank Russell Trust
Company; Treasurer, SSgA
Funds (investment
company); Manager, Funds
Accounting and Taxes,
Russell Fund
Distributors, Inc. From
April 1996 to August
1998, Assistant
Treasurer, FRIC. From
August 1996 to August
1998, Assistant
Treasurer, FRIC and RIF.
November 1995 to July
1998, Assistant
Secretary, SSgA Funds.
February 1997 to July
1998, Manager, Funds
Accounting and Taxes,
FRIMCo
Randall P. Lert,......... Director of Since 1991 Director of Investments,
Born October 3, 1953 Investments FRIC and RIF; Chief
Investment Officer, FRC
and Frank Russell Trust
Company; Director,
FRIMCo and Russell Fund
Distributors, Inc.
Karl J. Ege,............. Secretary and General Since 1994 Secretary and General
Born October 8, 1941 Counsel Counsel, FRC, FRIC, RIF,
FRIMCo, Frank Russell
Trust Company, Russell
Fund Distributors, Inc.
and Frank Russell
Capital Inc.
Mark D. Amberson,........ Director of Short-Term Since 2001 Director of Short-Term
Born July 20, 1960 Investment Funds Investment Funds, FRIC,
RIF, FRIMCo and Frank
Russell Trust Company.
From 1991 to 2001,
Portfolio Manager, FRIC,
RIF, FRIMCo and Frank
Russell Trust Company
Retired.
Lee C. Gingrich -- 68 years old -- Trustee. 1730 North Jackson, Tacoma,
Washington 98406.
- --------
** All officers serve for one year and until their successors are duly elected
and qualified; provided, however, that any officer may be removed at any
time either with or without cause, by the Board.
9
Trustee FrankOwnership of Fund Shares
The table below sets forth the dollar range of the value of the shares of
each Fund, and the dollar range of the aggregate value of the shares of all
funds in the Russell Investment Company. President,
Gingrich Enterprises, Inc. (BusinessFund Complex, owned directly or beneficially by the
Trustees, including the nominees, as of December 31, 2002. The Russell Fund
Complex consists of RIF and Property Management).
Eleanor W. Palmer -- 72 years old -- Trustee. 2025 Narrows View Circle #232-
D, P.O. Box 1057, Gig Harbor, Washington 98335. Trustee, Frank Russell
Investment Company; DirectorFRIC.
EQUITY SECURITIES BENEFICIALLY OWNED BY TRUSTEES
FOR THE CALENDAR YEAR ENDED DECEMBER 31, 2002
Dollar Range of Equity Aggregate Dollar Range of Equity Securities in all
Securities in Each Registered Investment Companies Overseen by
Interested Trustees Fund Trustees in Russell Fund Complex
------------------- ---------------------- --------------------------------------------------
Lynn L. Anderson........ None None
Michael J. A. Phillips.. None None
George F. Russell, Jr... None None
Independent Trustees
--------------------
Paul E. Anderson........ None Over $100,000
Paul Anton, Ph.D........ None $50,001-$100,000
William E. Baxter....... None $1-$10,000
Kristianne Blake........ None Over $100,000
Daniel P. Connealy...... None None
Lee C. Gingrich......... None None
Eleanor W. Palmer....... None None
Raymond P. Tennison, Jr. None None
Julie W. Weston......... None $1-$10,000
10
Remuneration of Frank Russell Trust Company.
The Investment CompanyTrustees
RIF pays fees only to the Independent Trustees of the
Investment Company.independent Trustees. Compensation of officers and
Trustees who are "interested persons" of the Investment Company (as indicated by an asterisk)RIF is paid by FRIMCo or its
affiliates.
All of the nominees attended each regular Board of Trustees meeting held in
1997, and the special meeting of the Board of Trustees held on June 6, 1997,
except for Paul Anderson, who was absent from two meetings, Lynn L. Anderson,
who was absent from three meetings, and Eleanor W Palmer, who was absent from
one meeting. The Board of Trustees has an Audit Committee, which is composed
of the Independent Trustees of the Investment Company. The function of the
Audit Committee is to advise the Board with regard to the appointment of the
Investment Company's independent accountants, review and approve audit and
non-audit services of the Investment Company's independent
5
accountants, and meet with the Investment Company's financial officers to
review the conduct of accounting and internal controls. The Committee also
serves as a vehicle for these Trustees to consult separately with the
Investment Company's outside counsel. The Audit Committee met once during the
year ended December 31, 1997. All members of the Audit Committee attended the
Audit Committee meeting. The Board does not have standing nominating or
compensation committees. The following represents the compensation paid to each Current Trustee for
the fiscal year ended December 31, 1997:2002. The Russell Fund Complex consists of
FRIC and RIF.
TRUSTEE COMPENSATION TABLE
FOR THE FISCAL YEAR ENDED DECEMBER 31, 2002
AGGREGATE TOTAL COMPENSATION FROM
COMPENSATION THE INVESTMENT COMPANY
FROM THE INVESTMENT AND THE FUND COMPLEX
TRUSTEE COMPANY PAID TO TRUSTEES
- -------Pension or
Retirement Estimated Total
Benefits Annual Compensation
Aggregate Accrued as Benefits From Russell
Compensation Part of Upon Fund Complex
Interested Trustees from RIF RIF Expenses Retirement Paid to Trustees
------------------- ----------------------------------- ------------ ---------- ----------------
Lynn L. Anderson....................Anderson........ $ 0 $0 $0 $ 0
Michael J. A. Phillips.. $ 0 $0 $0 $ 0
George F. Russell, Jr.*. $ 0 $0 $0 $ 0
Independent Trustees
--------------------
Paul E. Anderson.................... $11,263* $31,263**Anderson........ $12,530 $0 $0 $ 85,250
Paul Anton, PhD..................... $11,263* $31,263*PhD.**...... $11,760 $0 $0 $ 78,250
William E. Baxter................... $11,263* $31,263*Baxter....... $11,760 $0 $0 $ 81,750
Kristianne Blake........ $12,677 $0 $0 $ 86,800
Daniel P. Connealy***... $ 0 $0 $0 $ 0
Lee C. Gingrich..................... $11,263* $31,263**Gingrich......... $12,390 $0 $0 $ 86,250
Eleanor W. Palmer................... $11,263* $31,263**
George F. Russell...................Palmer....... $11,974 $0 $0 $ 083,280
Raymond P. Tennison, Jr. $12,040 $0 $0 $81,750.09
Julie W. Weston****..... $ 04,327 $0 $0 $ $31,333
- ------------------
* Of this amount, $4,000Mr. Russell was for services during 1996.elected Trustee Emeritus effective January 1, 1999.
** The Trustees received $20,000 for service as trustees onDr. Anton was elected Trustee Emeritus effective December 31, 2002.
*** Mr. Connealy was elected to the Board of Trustees for the Frank Russell Investment Company.
OFFICERS OF THE INVESTMENT COMPANY
Information about the Investment Company's principal executive officers
(other than Lynn Anderson), including their names, ages, position(s) with the
Investment Company, and principal occupation or employment during the past
five years, is set forth below. An asterisk (*) indicates that the officer is
an "interested person" of the Investment Company as defined in the 1940 Act.
As used in the table, "Frank Russell Company" includes its corporate
predecessor, Frank Russell Co., Inc.
*George F. Russell, Jr. -- 66 years old -- Trustee and Chairman of the Board
since 1996. Trustee and Chairman ofon April 24, 2003.
**** Ms. Weston was elected to the Board of FrankTrustees on August 19, 2002.
The Russell Investment
Company; Director, ChairmanFund Complex currently pays each of the Boardindependent Trustees a
retainer of $52,000 per year, $5,000 for each regular quarterly meeting
attended in person, $2,000 for each special meeting attended in person, and
Chief Executive Officer,$2,000 for each Joint Audit Committee meeting or Nominating and Governance
Committee meeting attended in person. The Trustees receive a $500 fee for
attending an in-person meeting by phone instead of receiving the full fee had
the member attended in person. Out of pocket expenses are also paid by the Fund
Complex. The Lead Trustee is paid a fee of $10,000 per year, and each Committee
Chair is paid a fee of $6,000 per year. The Russell Building Management Company, Inc.; Director and ChairmanFund Complex pays each
independent Trustee Emeritus an annual retainer equal to 80% of the Board, Frank
Russell Company, Frank Russell Securities, Inc., Frank Russell Trust Company,
Frank Russell Investments (Delaware), Inc.; Director, Frank Russell Investment
Management Company; Director, Chairman ofannual
retainer for independent Trustees in effect at the Board, and President, Russell
20/20 Association.
*Mark E. Swanson -- 34 years old -- Treasurer and Chief Accounting Officer
since August 1998. Treasurer and Chief Accounting Officer, Frank Russell
Investment Company; Interim Director, Finance and Operations, Frank Russell
Trust Company;
6
Assistant Secretary and Principal Accounting Officer, SSgA Funds (investment
company); Interim Director of Fund Administration and Accounting, Frank
Russell Investment Management Company; Manager, Funds Accounting and Taxes,
Russell Fund Distributors, Inc. April 1996 to August 1998, Assistant
Treasurer, Frank Russell Investment Company; August 1996 to August 1998,
Assistant Treasurer, Frank Russell Investment Company; November 1995 to July
1998, Assistant Secretary, the SSgA Funds; February 1997 to July 1998,
Manager, Funds Accounting and Taxes, Frank Russell Investment Management
Company.
*Randall P. Lert -- 45 years old -- Director of Investments since 1996.
Director of Investments, Frank Russell Investment Company; Senior Investment
Officer and Director of Investment Services, Frank Russell Trust Company;
Director and Chief Investment Officer, Frank Russell Investment Management
Company; Director and Chief Investment Officer, Russell Fund Distributors,
Inc. Director-Futures Trading, Frank Russell Investments (Ireland) Limited and
Frank Russell Investments (Cayman) Ltd.; Senior Vice President and Director of
Portfolio Trading, Frank Russell Canada Limited/Limitee. April 1990 to
November 1995, Director of Investments of Frank Russell Investment Management
Company.
*Karl J. Ege -- 57 years old -- Secretary and General Counsel since 1996.
Secretary and General Counsel of Frank Russell Investment Company. Director,
Secretary and General Counsel, Russell Fiduciary Services Co., Frank Russell
Capital, Inc.; Director, Secretary, General Counsel and Managing Director --
Law and Government Affairs of Frank Russell Company; Secretary and General
Counsel of Frank Russell Investment Management Company, Frank Russell Trust
Company and Russell Fund Distributors, Inc.; Director and Secretary of Russell
Building Management Company Inc., Russell International Services Co., Inc. and
Russell 20-20 Association; Director and Assistant Secretary of Frank Russell
Company Limited (London) and Russell Systems Ltd.; Director, Frank Russell
Investment Company LLC, Frank Russell Investments (Cayman) Ltd., Frank Russell
Investment Company PLC, Frank Russell Investments (Ireland) Limited, Frank
Russell Company S.A., Frank Russell Japan Co. Ltd., Frank Russell Company (NZ)
Limited, Russell Investment Nominee Co PTY Ltd and Frank Russell Investments
(UK) Ltd.; Secretary, A Street Investments, Inc.; Director and Secretary,
Frank Russell Investments (Delaware), Inc.; July 1992 to June 1994, Director,
President and Secretary of Frank Russell Shelf Corporation; July 1993 to
December 1996, Secretary, Russell MLC Management Co.
*Peter Apanovitch -- 53 years old -- Manager of Short-Term Investment Funds
since 1996. Manager of Short-Term Investment Funds, Frank Russell Investment
Company; Manager of Short-Term Investment Funds, Frank Russell Investment
Management Company and Frank Russell Trust Company.time such person is elected
Trustee Emeritus.
Required Vote
The persons named inon the proxy card intend, in the absence of contrary
instructions, to vote all proxies in favor of the election of each nominee.the nominees. A
Shareholder or Contractowner providing voting instructions may vote for or
withhold authority with respect to any or all of the nominees. If an executed
proxy card or voting instruction card is 7
returnedreceived without voting instructions,
the shares will be voted for alleach of the nominees named herein. All of theThe nominees
have consented to being named in this Proxy Statement and to serve if elected.
The Investment CompanyRIF knows of no reason why any nomineethe nominees would be unable or unwilling to serve
if elected. Should any of the nominees become unable or unwilling to accept
nomination or election prior to the Special Meeting, the persons named inon the
proxy card will exercise their voting power to vote for such substitute person
or persons as the Currentcurrent Trustees of the Investment CompanyRIF may recommend.
If any nominee
is not approved11
RIF's Master Trust Agreement requires that the Trustees be elected by a
"plurality" vote. Therefore, the Shareholders of the Investment Company, the Board will
consider alternative nominations.
Thethree nominees who receive the greatest number
of affirmative votes cast by the shareholdersShareholders of the Investment CompanyRIF who are present at the
Special Meeting in person or by proxy will be declared elected.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE TO ELECT AS TRUSTEES THE
NOMINEES FOR ELECTION TO THE
BOARD OF TRUSTEES OF THE INVESTMENT COMPANY
PROPOSAL #2: RATIFICATION OF THE SELECTION OF
PRICEWATERHOUSECOOPERS LLP AS THE
INVESTMENT COMPANY'S INDEPENDENT ACCOUNTANTS
At its meeting on April 27, 1998, pursuantelected, provided that
there is a sufficient number of shares represented in person or by proxy to
a request bymeet the managementquorum requirements set forth in RIF's Master Trust Agreement. Because
the Participating Insurance Companies are the only Shareholders of RIF, the
presence of the Investment Company, the Board, including a majority of the Independent
Trustees of the Investment Company, selected the firm of
PricewaterhouseCoopers LLP to be independent accountants for the Investment
Company for the fiscal year ending December 31, 1998. Shareholders of all of
the sub-trusts of the Investment Company are being askedParticipating Insurance Companies at the Special
Meeting to ratify the selection of PricewaterhouseCoopers LLP, a firm formed
by the recent merger of the Investment Company's accountant with another
prominent accounting firm.
Services in connection with the audit function to be performed by the
Investment Company's independent accountants include: (i) the examination of
the annual financial statements of the Investment Company; (ii) all services
rendered in order to permit the accountants to render a formal opinion on the
Investment Company's financial statements; and (iii) provision of assistance
and consultations with respect to filings with the SEC. PricewaterhouseCoopers
LLP does not have any direct or indirect financial interest in the Investment
Company. It is not expected that a representative of PricewaterhouseCoopers
LLP will be present at the Special Meeting. If a representative is present, he
or she will have an opportunity to make a statement if he or she so desires to
do so, and would be available to respond to appropriate questions.
8
To be ratified, the appointment of PricewaterhouseCoopers LLP must receive
the affirmative vote of a majority of the securities of the Investment Company
which are present at the Meeting in
person or by proxy and vote on this
proposal.will meet the quorum requirement.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND AND CONTRACTOWNERS PROVIDING VOTING
INSTRUCTIONS VOTE "FOR" THE ELECTION OF EACH OF THE THREE NOMINEES TO
SERVE ON THE BOARD OF TRUSTEES RECOMMENDSAS DESCRIBED IN PROPOSAL 1. ANY
EXECUTED UNMARKED PROXY CARDS AND VOTING INSTRUCTION CARDS THAT SHAREHOLDERS VOTEARE
RETURNED ON A TIMELY BASIS WILL BE SO VOTED.
PROPOSALS 2(a)-2(e):
APPROVAL OF A CHANGE TO RATIFY THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS THE INVESTMENT COMPANY'S INDEPENDENT ACCOUNTANTS
PROPOSAL #3: TO APPROVE A PROPOSED MANAGEMENT
AGREEMENT BETWEENOBJECTIVES OF THE INVESTMENT COMPANY,
ON BEHALF OF EACH FUND, AND FRANK RUSSELL
INVESTMENT MANAGEMENT COMPANY, TO TAKE EFFECT
UPON THE ACQUISITION OF FRANK RUSSELL COMPANY
BY THE NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY
INTRODUCTION
FRIMCo currently serves as the investment managerFUNDS
Pursuant to the 1940 Act, each of the Funds pursuanthas adopted and operates
according to a stated investment objective. The investment policies,
restrictions, strategies and activities of each Fund are guided by, and
designed to achieve, the Fund's stated investment objective. Each Fund is
subject to an investment management agreement (the "Management Agreement") described
below. The current Management Agreement with FRIMCoobjective that currently is dated August 5, 1996.
The Management Agreement was continued until April 30, 1999, by the Board,
including all of the Independent Trustees, at its meeting held on April 27,
1998. The continuance of the current Management Agreement assureda fundamental investment
restriction, meaning that the
Investment Company would continue to receive the services of FRIMCo after
April 30, 1998. On August 10, 1998, FRC entered into an Agreement and Plan of
Merger (the "Transaction Agreement") with The Northwestern Mutual Life
Insurance Company ("Northwestern Mutual") pursuant to which Northwestern
Mutual will acquireit may not be changed without Shareholder approval.
These investment objectives were established at the effective time allinception of the outstanding common stock
of FRC through the merger of Project Rainier Corp., a wholly-owned subsidiary
of Northwestern Mutual, with and into FRC (the "Transaction"). Northwestern
Mutual is a Milwaukee-based mutual insurance company with assets of more than
$76 billion at June 30, 1998, and annual revenues of more than $12.3 billion
for the year ended December 31, 1997. Northwestern Mutual Investment Services,
LLC ("NMIS"), a wholly-owned subsidiary of Northwestern Mutual, serves as
investment adviser to the Mason Street Funds, Inc. (a family of retail mutual
funds sponsored by Northwestern Mutual) and Northwestern Mutual Series Fund,
Inc. (the investment fund for Northwestern Mutual's variable annuity and life
insurance contracts). NMIS had approximately $9 billion under management at
June 30, 1998. The mailing address of Northwestern Mutual is 720 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202-4797.
Pursuant to the Transaction Agreement, FRC will be the surviving corporation
in the merger, and will continue to exist as a Washington corporation, as a
subsidiary of Northwestern Mutual. The corporate headquarters of FRC will
remain in Tacoma,
9
Washington. FRC will retain its name and operating independence and will
continue to operate globally as a separate company. George F. Russell, Jr.
will continue as Chairman of the Board of Directors of FRC. Michael J. A.
Phillips will continue as Chief Executive Officer of FRC and as a member of
FRC's Board of Directors.
Consummation of the Transaction will constitute an "assignment," as that
term is defined in the 1940 Act, of the Management Agreement. As required by
the 1940 Act, that Agreement provides for its automatic termination in the
event of its assignment. In anticipation of the Transaction and the resulting
termination, a new investment agreement (the "New Agreement") between the Funds and
reflected market conditions and circumstances at that time and the manner in
which FRIMCo then wished to conduct the Funds' investment programs. In many
cases, market conditions and circumstances have changed since the Funds'
inceptions and are expected to continue to change.
The proposed changes are designed to clarify the investment objectives and,
by doing so, avoid possible investor confusion, facilitate the efforts of
FRIMCo to conduct the investment programs of the Funds and reduce
administrative burdens associated with clarifying the meaning of and monitoring
compliance with the current investment objectives. In addition, clarification
of the investment objectives of the Funds may facilitate the marketing of the
Funds. In such event, Shareholders could benefit from the economies of scale
resulting from increases in the Funds' total assets and consequent decreases in
their expense ratios. The changes proposed in the investment objectives for the
Funds will not affect materially the manner in which such Funds are managed.
The Funds' principal investment strategies will not change. The current
investment strategies and policies of the Funds can be found in the current RIF
prospectuses. The Board considered the foregoing in making its determination
that Proposals 2(a)-2(e) are in the best interests of the Shareholders of each
Fund.
12
The current and proposed objectives for the Funds
The current and proposed investment objectives for the Funds, a summary of
their principal investment strategies and a discussion of the effect of
changing the investment objective are set forth in the chart below:
Current Investment Proposed Investment
Proposal Fund Objective Objective
- -------- ---- --------- ---------
2(a) Multi- To provide income and capital growth by Seeks to provide long term capital growth.
Style investing principally in equity securities.
Equity
Principal Investment Strategy
-----------------------------
The Multi-Style Equity Fund invests primarily in common stocks of medium and large
capitalization companies, most of which are US based. The Fund employs a "multi-style,
multi-manager" approach whereby portions of the Fund are allocated to different money
managers who employ distinct investment styles. The Fund uses three principal
investment styles intended to complement one another: a Growth Style, a Value Style and
a Market-Oriented Style. The Fund intends to be fully invested at all times.
Effect of changing the investment objective
-------------------------------------------
Pursuant to its principal investment strategy, the Fund invests in securities that its Money
Managers believe will provide income and capital growth. If the proposed investment
objective is approved, the Fund would continue to invest in such securities, but income
would no longer be a stated investment goal.
Current Investment Proposed Investment
Proposal Fund Objective Objective
- -------- ---- --------- ---------
2(b) Aggressive To provide capital appreciation by Seeks to provide long term capital growth.
Equity assuming a higher level of volatility than is
ordinarily expected from the Multi-Style
Equity Fund by investing in equity
securities.
Principal Investment Strategy
-----------------------------
The Aggressive Equity Fund invests primarily in common stocks of small and medium
capitalization companies, most of which are US based. The Fund's investments may
include companies that have been publicly traded for less than five years and smaller
companies, such as companies not listed in the Russell 2000(R) Index. The Fund employs
a "multi-style, multi-manager" approach whereby portions of the Fund are allocated to
different money managers who employ distinct investment styles. The Fund uses three
principal investment styles intended to complement one another: a Growth Style, a Value
Style and a Market-Oriented Style. The Fund intends to be fully invested at all times. A
portion of the Fund's net assets may be "illiquid securities" (i.e., securities that do not
have a readily available market or that are subject to resale restrictions).
Effect of changing the investment objective
-------------------------------------------
Pursuant to its principal investment strategy, the Fund invests in securities that its Money
Managers believe will provide capital appreciation. If the proposed investment objective
is approved, the Fund would continue to invest in such securities, but capital growth
would be the stated investment goal. Also, the investment objective of the Fund would no
longer reference Multi-Style Equity Fund.
13
Current Investment Proposed Investment
Proposal Fund Objective Objective
- -------- ---- --------- ---------
2(c) Non-US To provide favorable total return and Seeks to provide long term capital growth.
additional diversification for US investors
by investing primarily in equity and fixed-
income securities of non-US companies and
securities issued by non-US governments.
Principal Investment Strategy
-----------------------------
The Non-U.S. Fund invests primarily in equity securities issued by companies domiciled
outside the US and in depositary receipts, which represent ownership of securities of non-
US companies. The Fund's investments span most of the developed nations of the world
(particularly Europe and the Far East) to maintain a high degree of diversification among
countries and currencies. The Fund employs a "multi-style, multi-manager" approach
whereby portions of the Fund are allocated to different money managers who employ
distinct investment styles. The Fund uses three principal investment styles intended to
complement one another: a Growth Style, a Value Style and a Market-Oriented Style. The
Fund intends to be fully invested at all times. A portion of the Fund's net assets may be
"illiquid" securities (i.e., securities that do not have a readily available market or that are
subject to resale restrictions).
Effect of changing the investment objective
-------------------------------------------
Pursuant to its principal investment strategy, the Fund invests in securities that its Money
Managers believe will provide favorable total return and diversification. If the proposed
investment objective is approved, the Fund would continue to invest in such securities, but
capital growth would be the stated investment goal. Also, the investment objective of the
Fund would no longer reference equity and fixed-income securities of non-US companies
and securities issued by non-US governments.
Current Investment Proposed Investment
Proposal Fund Objective Objective
- -------- ---- --------- ---------
2(d) Real To generate a high level of total return Seeks to provide current income and long
Estate through above average current income term capital growth.
Securities while maintaining the potential for capital
appreciation.
Principal Investment Strategy
-----------------------------
The Real Estate Securities Fund seeks to achieve its objective by concentrating its
investments primarily in equity securities of issuers whose value is derived from
ownership, development and management of underlying real estate properties. The Fund
invests primarily in securities of companies known as real estate investment trusts (REITs)
that own and/or manage properties. The Fund may also invest in equity securities of other
types of real estate-related companies. The Fund invests in companies which are
predominantly US based. The Fund employs a multi-manager approach whereby portions
of the Fund are allocated to different money managers whose approaches are intended to
complement one another. The Fund intends to be fully invested at all times. A portion of
the Fund's net assets may be "illiquid" securities (i.e., securities that do not have a readily
available market or that are subject to resale restrictions).
Effect of changing the investment objective
-------------------------------------------
Pursuant to its principal investment strategy, the Fund invests in securities that its Money
Managers believe will provide favorable total return through above average current
income. If the proposed investment objective is approved, the Fund would continue to
invest in such securities, but current income and capital growth would be the stated
investment goals.
14
Current Investment Proposed Investment
Proposal Fund Objective Objective
- -------- ---- --------- ---------
2(e) Core To maximize total return through capital Seeks to provide current income and the
Bond appreciation and income by assuming a level preservation of capital.
of volatility consistent with the broad fixed-
income market by investing in fixed-income
securities.
Principal Investment Strategy
-----------------------------
The Core Bond Fund invests primarily in fixed-income securities. In particular, the Fund holds
fixed income securities issued or guaranteed by the US government and, to a lesser extent by
non-US governments, or by their respective agencies and instrumentalities. It also holds
mortgage-backed securities, including collateralized mortgage obligations. The Fund also
invests in corporate debt securities and dollar-denominated obligations issued in the US by
non-US banks and corporations (Yankee Bonds). The Fund may invest up to 25% of its assets
in debt securities that are rated below investment grade. These securities are commonly
referred to as "junk bonds." The duration of the Fund's portfolio typically ranges within 10%
of the duration of the Lehman Brothers Aggregate Bond Index, which was 3.73 years as of
December 31, 2002, but may vary up to 25% from the Index's duration. The Fund has no
restrictions on individual security duration. The Fund invests in securities of issuers in a variety
of sectors of the fixed-income market. The Fund employs multiple money managers, each with
its own expertise in the fixed-income markets.
Effect of changing the investment objective
-------------------------------------------
Pursuant to its principal investment strategy, the Fund invests in securities that its Money
Managers believe will provide favorable total return and income. If the proposed investment
objective is approved, the Fund would continue to invest in such securities, but current income
and the preservation of capital would be the stated investment goals. Also, the investment
objective would no longer reference volatility or fixed-income securities.
Shareholders of each Fund are being asked to approve a reclassification of
the Fund's investment objectives from "fundamental" to "non-fundamental" in
Proposal 3, described below. If Shareholders approve Proposal 3, each of the
amended investment objectives that are approved pursuant to Proposals 2(a)
through 2(e) will be non-fundamental investment objectives. None of Proposals
2(a) through 2(e) is being submitted forcontingent upon approval of Proposal 3 by Shareholders of
the Funds.
A copysubject Fund or upon approval of the Management Agreement is attached hereto as Exhibit B. THE NEW
AGREEMENT FOR THE FUNDS WILL CONTAIN IN ALL MATERIAL RESPECTS THE SAME TERMS
AS THE TERMS IN THE MANAGEMENT AGREEMENT THAT ARE IN EFFECT AT THE TIME OF THE
CONSUMMATION OF THE TRANSACTION, other than the effective date of the
agreement.
BOARD OF TRUSTEES EVALUATION AND CONCLUSIONS
At a Board of Trustees meeting on August 10, 1998, the Board was advised
that FRC and Northwestern Mutual had entered into the Transaction Agreement.
The Board directed the officers of the Investment Company to obtain additional
information concerning Northwestern Mutual, the terms of the Transaction, and
the impact of the Transaction on the Investment Company. Extensive information
was provided to the Board by FRC and Northwestern Mutual, and this information
was reviewedProposal 2 by the Board. In addition,other Funds.
Approval of Proposal 3 by the Independent Trustees also
consulted with the Investment Company's outside counsel concerning these
matters. After a careful review and evaluationShareholders of this information, a special
meetingany Fund is likewise not
contingent upon approval of the Board was held on October 5, 1998 to consider the information
provided by FRC and Northwestern Mutual.
At its October meeting, the Board of the Investment Company focused upon the
effect of the proposed Transaction on the Investment Company. Representatives
of FRC and Northwestern Mutual attended the meeting and described the terms of
the proposed Transaction and the perceived benefits to the FRC organization,
FRIMCo and FRIMCo's investment advisory clients. In the course of these
discussions, FRIMCo and FRC advised the Independent Trustees that they did not
expect that the proposed Transaction would have a material effect on the
operations of the Investment Company or its shareholders. FRC has advised the
Independent Trustees that the Transaction Agreement, by its terms, does not
contemplate any changes in the structure or operations of FRIMCo, or in the
way that FRIMCo provides services to the Investment Company. Representatives
of Northwestern Mutual have informed the Trustees that Northwestern Mutual
currently intends to maintain the separate existence of the investment
companies that FRIMCo advises, and the funds that NMIS manages.
10
Though no specific plans have been developed at this time, the Trustees have
been advised by FRC that there may be some changes in personnel currently
involved in providing services to the Investment Company in order to combine
the strengths and efficiencies of FRC and Northwestern Mutual. With respect to
non-investment advisory services, Northwestern Mutual and FRC will seek to
identify ways in which FRIMCo and other subsidiaries of Northwestern Mutual
(including Robert W. Baird & Co. Incorporated) can more effectively meet the
administrative needs of the Investment Company and its affiliates. Any changes
in investment advisory services would requirecorresponding Proposal 2.
Required Vote
The approval of the Board and
Shareholders in accordance with the 1940 Act. Any restructuring of non-
advisory services provided by FRIMCo will be subject to the review and
approval of the Board of Trustees, including the Trustees who are not
"interested persons" of FRC or Northwestern. In their discussions with the
Trustees, Northwestern Mutual representatives also emphasized the strengths of
the Northwestern Mutual organization and its commitment to provide the FRC
organization, including FRIMCo, with the resources necessary to continue to
provide high quality services to the Investment Company and the otheramended investment advisory clients of the FRC organization.
The Board of the Investment Company was advised that the Transaction
Agreement provides for FRC to rely, and that FRC intends to rely, on Section
15(f) of the 1940 Act, which provides a safe harbor for an investment adviser
to an investment company (and the adviser's affiliated persons) to retain any
amount or benefit received in connection with a change in control of the
investment adviser so long as the two conditions described below are met.
First, for a period of three years after the Transaction, at least 75% of
the members of the Board of Trustees of the Investment Company must not be
"interested persons" of the Investment Company's investment adviser or its
predecessor adviser. Assuming the election of the nominees listed in Proposal
#1, the Board of the Investment Company would be in compliance with this
provision of Section 15(f) at the time of, or prior to, the consummation of
the Transaction. (See Proposal #1 concerning the election of the Board of
Trustees.)
Second, an "unfair burden" must not be imposed upon the Investment Company
as a result of such Transaction or any express or implied terms, conditions or
understandings applicable thereto. The term "unfair burden" is defined in
Section 15(f) to include any arrangement during the two-year period after the
Transaction whereby the investment adviser, or any interested person of any
such adviser, receives or is entitled to receive any compensation, directly or
indirectly, from the Investment Company or its shareholders (other than fees
for bona fide investment advisory or other services) or from any person in
connection with the purchase or sale of securities or other property to, from
or on behalf of the Investment Company (other than ordinary fees for bona fide
services as principal underwriter for the Investment Company). No compensation
agreements which would violate Section 15(f) are contemplated in connection
with the Transaction.
11
FRIMCo has undertaken to pay the costs associated with the preparation,
filing, printing, and distribution of these proxy materials, and of holding
the Special Meeting in lieu of Annual Meeting, as well as any other fees and
expenses incurred by the Investment Company in connection with the
Transaction, including the fees and expenses of legal counsel to the
Investment Company.
During the course of their deliberations, the Independent Trustees
considered a variety of factors. These factors included the nature, quality
and extent of the services furnished by FRIMCo to the Investment Company; the
investment record of FRIMCo in managing the Funds in the Investment Company,
including the special role of FRIMCo as a "manager of managers"; the increased
complexity of the domestic and international securities markets; and
comparative data as to investment performance, advisory fees and other fees,
including administrative fees, and expense ratios. The Board also considered
the risks assumed by FRIMCo by serving as adviser to the Investment Company;
the necessity for FRIMCo to maintain and enhance its ability to retain and
attract capable personnel to serve the Investment Company; FRIMCo's
profitability from advising the Investment Company; and other benefits
received by FRIMCo from serving the Investment Company. In connection with the
acquisition of FRC by Northwestern Mutual, the Board noted that there could be
possible economies of scale or other advantages to the Investment Company of
having an adviser with a parent which also serves other investment companies.
The Board also considered current and developing conditions in the financial
services industry, including the entry into the industry of large and well
capitalized companies which are spending and appear to be prepared to continue
to spend substantial sums to engage experienced personnel and to provide
services to competing investment companies; and the financial resources of
FRIMCo and the continuance of appropriate incentive compensation arrangements
to assure that FRIMCo will continue to furnish high quality services to the
Investment Company.
In addition to the foregoing factors, the Independent Trustees gave careful
consideration to the likely impact of the Transaction on the FRC organization.
In this regard, the Independent Trustees considered, among other things, the
following factors: the structure of the Transaction, which is expected to
afford FRIMCo executives significant autonomy over FRIMCo's operations and
could potentially provide meaningful FRC equity participation and incentives
for certain FRIMCo employees; FRIMCo's, FRC's and Northwestern Mutual's
commitment to enable FRIMCo to pay compensation adequate to attract and retain
top quality personnel; information regarding the financial resources and
business reputation of Northwestern Mutual; the complementary nature of
various aspects of the business of FRIMCo and the Northwestern Mutual
organization; and the current intention of Northwestern Mutual to maintain
separate Frank Russell and Northwestern Mutual brands in the mutual fund
business. Based on the foregoing, the Independent Trustees concluded that the
Transaction should cause no reduction in the quality of services provided to
the Investment Company and concluded that the Transaction should enhance
FRIMCo's ability to provide such services. The Independent Trustees considered
the foregoing
12
factors with respect to each of the sub-trusts of the Investment Company, and
the Investment Company collectively. The Trustees, including the Independent
Trustees, concluded that the on-going reorganization of the organizational and
operational structure of the sub-trusts of the Investment Company permitted
the Trustees to conclude that no sub-trust would be affected differently from
the Investment Company as a whole in these respects, and therefore determined
that the conclusions of the Board with respect to these matters would have
equal impact with respect to every sub-trust in the Investment Company.
As a result of these deliberations, at the Board of Trustees meeting on
October 5, 1998, the Trustees of the Investment Company, including the
Independent Trustees, approved the New Agreement for the Investment Company,
and recommended that shareholdersobjective of each of the sub-trusts in the Investment
Company approve the New Agreement, to become effective upon the completion of
the change of control of FRC and the termination of the Management Agreement
then in effect. In reaching this decision, the Board did not determine the
relative importance of the factors which were discussed. The discussion by the
Trustees with Fund counsel reflected consideration by the Board of all of the
issues considered.
The Board has not determined what action would be taken in the event that
any sub-trust does not approve the New Agreement for that sub-trust, and the
Transaction closes. In such a circumstance, the Board would seek to obtain for
the sub-trust suitable advisory services from FRIMCo or another investment
advisor on both an interim and/or a continuing basis. The approval of
continuing arrangements would be subject torequires the
approval of the shareholders
of the affected sub-trust. The Trustees have determined that, in the event the
Transaction is not completed, FRIMCo will continue to serve the Investment
Company under the terms of the agreement then in effect.
INFORMATION CONCERNING THE TRANSACTION AND NORTHWESTERN MUTUAL
Under the Transaction Agreement, at the effective time of the Transaction,
each share of FRC common stock then outstanding (other than shares for which
dissenters' rights have been exercised) will be converted into the right to
receive $905,000,000 divided by the number of fully diluted units of equity of
FRC (taking into account all outstanding shares of FRC capital stock, options
to acquire shares of FRC capital stock, equity appreciation units and other
equity related rights), adjusted as described below. Such share price will be
increased or reduced based on the change (taking into account certain pro
forma adjustments) in FRC's net worth per share between March 31, 1998 and
closing. In addition, $90,000,000 of the $905,000,000 will be held back by
Northwestern Mutual at the closing to cover any adjustments occasioned by
changes in the net worth of FRC and for any losses incurred by Northwestern
Mutual or FRC as a result of the breach by FRC of certain specified
representations made by FRC in the Transaction Agreement, and will be
distributed to the former FRC shareholders and other former holders of FRC
equity related rights no earlier than October 1, 1999 to the extent
13
that there are no such adjustments or claims in respect of the breach of the
specified representations. FRC currently has approximately 200 shareholders.
Certain shareholders of FRC who have held their shares of common stock for
less than twelve months will have the option to convert such shares of common
stock into FRC preferred stock prior to the closing. Such preferred stock will
be subject to certain put and call rights during certain periods (at a price
per share equal to the amount that would have been paid if the preferred stock
had been common stock at the effective time of the Transaction, plus a
percentage of cumulative earnings per share of FRC on a fully diluted basis
from such effective time to the quarter preceding the put or call) but will
convert to FRC common stock if not redeemed or repurchased after four years.
George Russell, his family members and their related trusts are expected to
own approximately 59% in the aggregate of the fully diluted equity units of
FRC at the effective time of the Transaction. Lynn Anderson is also a
shareholder of FRC and is expected to own approximately 1% of the fully
diluted equity units of FRC at the effective time of the Transaction.
At and after the effective time of the Transaction, FRC will be a subsidiary
of Northwestern Mutual. FRIMCo will remain a wholly-owned subsidiary of FRC.
In connection with the Transaction, 50,000,000 shares of new FRC common stock
will be reserved for future issuance under a FRC Incentive Payments Plan. The
Incentive Payments Plan will be established to enhance the value of FRC and
its subsidiaries, including FRIMCo, by motivating superior performance of
management and key employees of the FRC organization after the closing of the
Transaction through the award of shares of FRC common stock and cash (to cover
certain income tax consequences of any stock award) to certain employees of
FRC and its subsidiaries. Over the course of a five-year period from the
effective time of the Transaction, participants in the Incentive Payments Plan
could collectively earn awards constituting up to 20% of the outstanding
common stock of FRC, depending upon FRC's cumulative earnings over the five
year period. George Russell and his wife, Jane Russell, will be awarded 20% in
the aggregate of the total number of incentive shares that may be issued under
the Incentive Payments Plan. Lynn Anderson is expected to participate in the
Incentive Payments Plan. The number of incentive shares to be granted to Mr.
Anderson will be determined after the closing of the Transaction.
At the closing, FRC and Northwestern Mutual will enter into a Governance
Agreement (the "Governance Agreement"). Under the Governance Agreement, the
Board of Directors of FRC will be comprised of five persons. Initially,
Northwestern Mutual will elect to the FRC Board George F. Russell, Jr.,
Michael J.A. Phillips (both of whom are currently members of FRC's Board) and
three other Northwestern Mutual-designated persons. Thereafter, Northwestern
Mutual has agreed to take all actions within its power to cause the FRC Board
at all times to be comprised of (i) FRC's Chief Executive Officer and one
other senior officer or employee of FRC designated by the Chief Executive
Officer and approved by a majority of the other FRC directors then in
14
office (with Messrs. Russell and Phillips, each a "Russell-designated
director"); and (ii) three other persons designated by Northwestern Mutual.
The names, addresses and principal occupations of the initial Russell-
designated directors are as follows:
George F. Russell, Jr., 909 A Street, Tacoma, Washington, 98402; Trustee
and Chairman of the Board, Frank Russell Investment Company; Trustee and
Chairman of the Board, Russell Insurance Funds; Director, Chairman of the
Board, and Chief Executive Officer, Russell Building Management Company,
Inc.; Director and Chairman of the Board, Frank Russell Company, Frank
Russell Securities, Inc., Frank Russell Trust Company, Frank Russell
Investments (Delaware), Inc.; Director, Frank Russell Investment
Management Company; Director, Chairman of the Board and President, Russell
20/20 Association.
Michael J.A. Phillips, 909 A Street, Tacoma, Washington, 98402;
Director, President and Chief Executive Officer, Frank Russell Company;
Director and President, Frank Russell Investments (Delaware), Inc.;
Director, Frank Russell Capital Inc., Frank Russell Japan Co., Ltd., Frank
Russell Trust Company, Russell Systems Limited, Frank Russell Company
Limited and Frank Russell Company Pty Limited.
The three initial directors to be designated by Northwestern Mutual have not
yet been determined, but will be selected prior to the closing of the
Transaction. It is currently anticipated that such directors will be selected
from among the executive officers of Northwestern Mutual.
The Governance Agreement, which will terminate no later than December 31,
2008, vests the officers of FRC with the responsibility for day-to-day
management and implementation of FRC's annual operating budget and strategic
plan. However, FRC Board approval is required before certain specified actions
may be taken by FRC or its subsidiaries including, (i) the registration,
issuance and/or sales ofoutstanding voting securities of FRC and its subsidiaries; (ii) the
merger, consolidation or sale of a substantial portion of assets with or to
another entity (other than another FRC company); (iii) entering into certain
joint ventures, partnerships or other business combinations or acquisitions;
(iv) entering into any material business or line of business other than
investment management, investment consulting, securities trading, analytical
services, and other similar financial services, or discontinuing any material
line of business; (v) entering into material exclusivity contracts, or other
agreements, which materially restrict the manner in which FRC or its
subsidiaries conduct their investment management business in any jurisdiction,
or any U.S. distribution agreements with any life insurance company or life
insurance marketing company other than Northwestern Mutual and its affiliates;
(vi) selling, leasing or otherwise disposing of certain assets or property;
(vii) assuming, incurring, or becoming liable for certain material
indebtedness for borrowed money; (viii) pledging, mortgaging or encumbering
certain assets; (ix) amending its articles of
15
incorporation or bylaws or undertaking any recapitalization or similar plan;
(x) changing FRC's heads of internal audit or compliance; (xi) approving any
transaction with key employees or certain related parties; (xii) taking any
action with respect to a FRC stockholder meeting; (xiii) declaring dividends
or distributions on FRC's shares; or (xiv) taking any action required to be
taken or approved by the FRC Board under Washington State corporate law. With
respect to (iv) and (v) above, FRC Board approval must include the approval of
the Chief Executive Officer of FRC. In addition, for a period of ten years
from the date of the Governance Agreement, FRC may not change its name or move
its principal place of business to a location other than Tacoma, Washington,
without the unanimous vote or consent of the FRC Board.that Fund. The closing of the Transaction is subject to a number of conditions,
including, among others, approval by FRC shareholders; a determination that at
the closing date FRC's annualized revenues from investment advisory, retainer
consulting and analytical services (neutralized for market effect and currency
fluctuations) have not fallen below 90% of the level of such revenues as of
July 31, 1998; the absence of any restraining order or injunction preventing
the Transaction, or any litigation seeking such an injunction; the continued
accuracy of the representations and warranties contained in the Transaction
Agreement; delivery and/or filing of certain documents contemplated by the
Transaction Agreement; all material governmental approvals having been
obtained; holders of not more than 2% of the outstanding FRC common stock
having exercised their statutory appraisal rights; and compliance in all
material respects with all agreements and obligations contained in the
Transaction Agreement. Holders entitled to vote a percentage of shares of FRC
sufficient to approve the Transaction have entered into an agreement with
Northwestern Mutual in which they have agreed to vote such shares in favor of
the approval of the Transaction. The Transaction is expected to close on or
about December 30, 1998, with the merger becoming effective on January 1,
1999.
The information set forth under this Proposal #3 concerning FRC and the
Transaction has been provided to the Investment Company by FRC, and the
information set forth under this Proposal #3 concerning Northwestern Mutual
has been provided to the Investment Company by Northwestern Mutual.
Founded in 1857, Northwestern Mutual is a mutual insurance corporation
organized under the laws of Wisconsin. Its home office is located at 720 East
Wisconsin Avenue, Milwaukee, Wisconsin 53202-4797. Northwestern Mutual's
products consist of a full range of permanent and term life insurance,
disability income insurance, long term care insurance, mutual funds and
annuities for personal, estate, retirement, business and benefits planning.
Northwestern Mutual provides its insurance products and services through an
exclusive network of approximately 7,200 agents associated with over 100
general agencies nationwide. Northwestern Mutual leads the U.S. in both
individual life insurance sold annually (approximately $78 billion in 1997)
and total individual life insurance in force (more than $500 billion at June
30, 1998). Northwestern Mutual employs over 3,600 people, mostly in Milwaukee,
Wisconsin.
16
FRC, one of the world's leading investment management and consulting firms,
provides investment advice, analytical tools and funds to institutional and
individual investors in more than 30 countries. FRC, through its subsidiaries,
currently manages approximately $40 billion in assets and provides investment
strategy consulting, including manager selection, for more than $1 trillion in
retainer client assets. It is also well known for its family of market
indexes, including the Russell 2000(R). Russell indexes provide complete sets
of performance benchmarks for investors in Australia, Canada, Japan and the
United States. FRC is a three-time winner of Washington CEO magazine's "Best
Large Company to Work For" award in Washington State, and in 1997 was chosen
from among some 12 million family companies to receive the "National Family
Business of the Year" Award. Founded in 1936, the FRC organization is an
established presence in the asset management and mutual fund industry.
REQUIRED VOTE
To be approved, the Management Agreement must receive the affirmative vote
of a "majority of the outstanding voting securities" of each Fund, as defined
in the 1940 Act. Under the 1940 Act, a
vote of a majority of the outstanding voting securities of eacha Fund means the
vote of the lesser of (i)(a) 67% or more of the sharesvoting securities of eachthe Fund
representedpresent at the Special Meeting,meeting, if the holders of more than 50% of the outstanding
sharesvoting securities of the Fund are present at the Special Meeting or represented by proxy,proxy; or (ii)(b) more
than 50% of the outstanding sharesvoting securities of the Fund. Shareholders of each
Fund will vote separately on their respective Proposal, as applicable. The
investment objective applicable to each Fund will be changed only if approved
by the Shareholders of that Fund.
15
THE BOARDTRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS OF TRUSTEES RECOMMENDSEACH FUND AND CONTRACTOWNERS PROVIDING VOTING
INSTRUCTIONS VOTE "FOR" PROPOSALS 2(a) - 2(e) AS APPLICABLE. ANY
EXECUTED UNMARKED PROXY CARDS AND VOTING INSTRUCTION CARDS THAT SHAREHOLDERS
VOTE TO APPROVE THE PROPOSED MANAGEMENT AGREEMENT WITH
FRIMCOARE
RETURNED ON BEHALFA TIMELY BASIS WILL BE SO VOTED.
PROPOSAL 3:
APPROVAL OF A RECLASSIFICATION OF THE FUNDS,INVESTMENT
OBJECTIVES OF EACH FUND FROM FUNDAMENTAL TO TAKE EFFECT
UPON THE ACQUISITION OF FRC BY NORTHWESTERN MUTUAL
PROPOSAL #4: TO APPROVE AN AMENDMENT TO
EACH FUND'S FUNDAMENTAL INVESTMENT
RESTRICTIONS TO INCREASE THE AMOUNT WHICH THE
FUND MAY BORROW TO MEET REDEMPTIONS
WHAT IS THE CURRENT LIMITATION ON BORROWING BY THE FUNDS?
Section 18(f)(1) of the 1940 Act providesNON-FUNDAMENTAL
The investment objective for each Fund is a "fundamental" investment policy,
meaning that it shallmay not be unlawful for any
registered open-endchanged without Shareholder approval. The Funds'
investment companyobjectives are not required to issue any class of senior security
orbe fundamental, and FRIMCo has
proposed to sell any senior security of which it is the issuer, exceptBoard that any such
registered company shall be permitted to borrow from any bank; provided, that
immediately after any such borrowing, there is an asset coverage of at least
300 per cent for all borrowings of the investment company; and provided
further, thatobjective for each Fund be
reclassified from fundamental to non-fundamental. As a non-fundamental
investment policy, each investment objective could be changed by the Trustees
without Shareholder approval if the Trustees deem the change to be in the event that such asset coverage shall at any time fall
below 300 per centbest
interests of Shareholders. FRIMCo has proposed these changes in order to
provide additional flexibility to conduct the registered company shall, within three days thereafter
(not including Sundays and holidays) or such longer period as the SEC may
allow, reduce
17
the amount of its borrowings to an extent that the asset coverage of such
borrowings shall be at least 300 per cent.
The Investment Company, on behalf of the Funds, has previously adopted a
fundamental investment restriction that limits the borrowing authorityprogram of each sub-trustFund
in response to less thanchanging market conditions and circumstances consistent with
applicable laws in effect from time to time, without the amount that is permitted by the 1940 Act as
describedexpense and delay
associated with arranging for a Shareholder meeting to approve changes in the
prior paragraph. Specifically, each Fund's investment restriction on borrowing currently provides:
"[objective.
The Board does not expect to use this flexibility frequently. However, the
Trustees would be in a position to change the investment objective of any Fund
will not:] Borrow amounts more than 5%in circumstances when a change, in the Board's judgment, would be in the best
interests of the Fund's total
assets taken at costShareholders. Such circumstances would include changes
in the securities markets generally that would render achievement of the Fund's
then current investment objective more difficult on an ongoing basis or at market value, whichever is lower, and only from
banks as a temporary measure for extraordinary or emergency purposes,
except that [the] Fund may engage in reverse repurchase agreements to meet
redemption requests without immediately selling any portfolio instruments.
The Fund will not mortgage, pledge or in any other manner transfer as
security for any indebtedness, any of its assets. Collateral arrangementschanges
with respect to margin for futures contracts are not deemed a pledge of
assets."
WHY IS AN INCREASE IN THE BORROWING LIMITATION PROPOSED?
At a Board meeting held on October 5, 1998, management reported tothe Fund specifically. If the Board did decide to make such a
change to any non-fundamental investment objective, the Fund would provide
Shareholders with 60 days' notice before the effective date of such change. If
Proposal 3 is approved, Shareholders will no longer have the ability to vote on
proposed investment objective changes.
The current fundamental investment objectives for each Fund, to which
Shareholders are being asked to approve changes, are set forth above in
Proposals 2(a) through 2(e).
If the prospects for entering intoShareholders of a line of credit forFund approve the Investment Company
with a commercial bank, wherebyproposal to reclassify its
investment objective from fundamental to non-fundamental, the Investment Company's sub-trustsBoard thereafter
would be permitted to borrow money underchange the line of creditinvestment objective for such Fund, if
appropriate to do so in order to meet redemption
requests. This practice would permit the Funds to pay redemption proceeds to
shareholdersits judgment, without the need to make untimelydelay and disadvantageous
dispositions of securities. Given the current investment restrictionexpense of the Investment Company, borrowings byFund
arranging for Shareholder approval. If these Funds' investment objectives
remain fundamental and the Funds for this purposeBoard determined that it was in the best interests
of Shareholders to change an investment objective, each such Fund would be
limitedrequired to five percenthold a Shareholder meeting at which such change would be voted
upon, and to prepare and send a proxy statement to Shareholders seeking their
instructions as to how to vote shares at such meeting. Obtaining Shareholder
approval to change the Funds' investment objectives is likely to involve
significant delays and costs. The Board has determined that Proposal 3 is in
the best interests of the Shareholders of each Fund.
16
The table below summarizes the effects of reclassifying each investment
objective from fundamental to non-fundamental.
Fundamental Investment Non-Fundamental Investment
Objective Objective
---------------------------------- ------------------------------------
Who must approve changes in a Board and Shareholders Board
fundamental investment objective?
How quickly can a change to the Relatively slowly, since a vote of Relatively quickly, because the
investment objective be made? Shareholders is required change can be accomplished by
action of the Board alone, provided
that Shareholders are provided 60
days' prior notice that their Fund's
objective is being changed
What is the relative cost to change an Costly to change because a Less costly to change because a
investment objective? Shareholder vote requires holding change can be accomplished by
a meeting of Shareholders with action of the Board of Trustees
additional SEC filing requirements without Shareholder approval
and proxy solicitation efforts
Shareholders of each Fund are being asked to approve a change of each Fund's
assets.
At the Board meeting, management recommended that the Trustees consider
approving a revision to the fundamental restriction that would authorize a
higher borrowing level for the purpose of efficiently meeting shareholder
redemption requests. FRIMCo,investment objectives in advocating an increase in the borrowing limits
for the Investment Company's sub-trusts, noted that raising the maximum level
of borrowing to conform to the 1940 Act's limitation would give the Investment
Company's money managers greater flexibility in meeting shareholder redemption
requests.
The officersProposal 2, described above. If Shareholders approve
Proposals 2 and 3, each of the Investment Company notedamended investment objectives that an increase in the maximum
levelare approved
pursuant to Proposals 2(a) through 2(e) will be non-fundamental investment
objectives. Proposal 3 is not contingent upon approval of borrowing permitted to the Investment Company's sub-trusts would
permit the Investment Company to negotiate a larger line of credit with a
bank, although the officers advised the Board that there is no current
intention to do so at this time.
At that meeting, the Board approved a proposal to increase the borrowing
limit under each Fund's fundamental investment restriction, and directed that
the officersProposal 2 by
Shareholders of the Investment Company submit to Shareholders a proposal to
approve such amendment
18
to permit borrowing at a higher levelsubject Fund or upon approval of this Proposal 3 by the
other Funds. If approved, each Fund's
investment restriction would be revised to state:
"[TheApproval of Proposal 2 by the Shareholders of any Fund will not:] Borrow money, except that the Fund may borrow as a
temporary measure for extraordinary or emergency purposes, andis likewise
not in
excess of five percentcontingent upon approval of its net assets; provided, that the Fund may
borrow to facilitate redemptions (not for leveraging or investment),
provided that borrowings do not exceed an amount equal to 33 1/3%corresponding Proposal 3.
Required Vote
The approval of the current valuereclassification of the Fund's assets taken at market value, less liabilities
other than borrowings. If at any timeinvestment objective of each
Fund from fundamental to non-fundamental requires the Fund's borrowings exceed this
limitation due toapproval of a decline in net assets, such borrowings will be reduced
to the extent necessary to comply with this limitation within three days.
Reverse repurchase agreements will not be considered borrowings for
purposes of the foregoing restriction, provided that the Fund will not
purchase investments when borrowed funds (including reverse repurchase
agreements) exceed 5% of its total assets."
The revised fundamental investment restriction will take effect after
receipt of approval by Shareholders.
To be approved, the proposal must receive the affirmative vote of "a majority of
the outstanding voting securities"securities of that Fund. The vote of a majority of the
outstanding voting securities of a Fund means the vote of the lesser of (a) 67%
or more of the voting securities of the Fund present at the meeting, if the
holders of more than 50% of the outstanding voting securities of the Fund are
present or represented by proxy; or (b) more than 50% of the outstanding voting
securities of the Fund. Shareholders of each Fund as definedwill vote separately on
Proposal 3. The investment objective applicable to each Fund will be
reclassified only if approved by the Shareholders of that Fund.
THE TRUSTEES, INCLUDING THE INDEPENDENT TRUSTEES, RECOMMEND THAT THE
SHAREHOLDERS OF EACH FUND AND CONTRACTOWNERS PROVIDING VOTING
INSTRUCTIONS VOTE "FOR" PROPOSAL 3. ANY EXECUTED UNMARKED PROXY CARDS
AND VOTING INSTRUCTION CARDS THAT ARE RETURNED ON A TIMELY BASIS WILL
BE SO VOTED.
OTHER BUSINESS
The Trustees know of no other business to be presented at the Special
Meeting other than Proposals 1 through 3, and do not intend to bring any other
matters before the Special Meeting. However, if any additional matters should
be properly presented, proxies will be voted in the 1940 Act anddiscretion of the persons
named as described in more detail in the last paragraph under Proposal
#3.
THE BOARD OF TRUSTEES RECOMMENDS THAT
SHAREHOLDERS VOTE TO APPROVE A CHANGE IN
EACH FUND'S FUNDAMENTAL RESTRICTIONS TO INCREASE THE
LIMITS ON BORROWING MONEY FOR THE PURPOSE
OF MEETING REDEMPTIONS
19proxies.
17
INFORMATION REGARDING THE CURRENT
MANAGEMENT AGREEMENT
The table below sets forth (i)ABOUT RIF
Investment Advisor, Administrator and Transfer Agent
FRIMCo provides or oversees the net assetsprovision of each Fund as of the
Investment Company's year ended December 31, 1997; (ii) the rate ofall general management fees, computed daily and
payable monthly, to which FRIMCo is entitled for the
services providedadministration, investment advisory and expenses assumed pursuant to the Management Agreement;
(iii) the actualportfolio management fees (net of waivers) paid by the Funds for the
year ended December 31, 1997; and (iv) the management fees paid by FRIMCo to
money managers for their services for the
year ended December 31, 1997.
ANNUAL
MANAGEMENT MANAGEMENT FEES FEES PAID TO
NET ASSETS FEE (BASED (NET OF WAIVERS) MONEY MANAGERS
AS ON AVERAGE FOR YEAR ENDED FOR YEAR ENDED
FUNDS OF 12/31/97 NET ASSETS) 12/31/97 12/31/97
- ----- ----------- ----------- ---------------- --------------
Multi-Style Equity
Fund................... $23,639,008 0.78% $88,827 $53,897
Aggressive Equity Fund.. $15,371,664 0.95% $82,318 $75,321
Non-U.S. Fund........... $ 6,876,259 0.95% $25,460 $23,654
Core Bond Fund.......... $ 8,522,683 0.60% $ 0 $14,574
Until further notice,Funds and acts as transfer agent for the Funds. FRIMCo intends to voluntarily waive all or a portion
of its management fees, and, if necessary, reimburse total fund operating
expenses, todevelops the extent necessaryinvestment
program for each of the Funds, to maintain annual
expense ratios of not more than 0.92%selects Money Managers for the Multi-Style Equity Fund; 1.25%Funds (subject to
approval by the Board), allocates assets among Money Managers, monitors the
Money Managers' investment programs and results, and may exercise investment
discretion over certain assets. FRIMCo's mailing address is 909 A Street,
Tacoma, Washington 98402. Unlike most investment companies that have a single
organization that acts as both administrator and investment advisor, the Funds
divide responsibility for corporate management and investment advice between
FRIMCo and a number of different Money Managers. A list of the Money Managers
and their addresses is provided on page 22 of this proxy statement.
Distributor
Russell Fund Distributors, Inc. (the "Distributor") serves as the
distributor of RIF's shares. The Distributor receives no compensation from RIF
for its services. The Distributor is a wholly owned subsidiary of FRIMCo and
its mailing address is 909 A Street, Tacoma, WA 98402.
Custodian
RIF's custodian is State Street Bank and Trust Company and its mailing
address is 1776 Heritage Drive, North Quincy, MA 02171.
Independent Auditors
Upon the recommendation of the Audit Committee, the Board selected the firm
of PricewaterhouseCoopers LLP ("PwC") as independent auditors of RIF for the
Aggressive Equity Fund; 1.30%fiscal year ending December 31, 2003.
Audit Fees. The aggregate fees billed by PwC for professional services
rendered for the Non-U.S. Fund and 0.80%audit of RIF's annual financial statements for the Core Bond Fund. Any such waiver mayfiscal
years ended December 31, 2001 and 2002 were $77,812 and $74,168, respectively.
Audit-Related Fees. PwC billed no aggregate fees for assurance and related
services rendered that are reasonably related to the audit of RIF's annual
financial statements but not reported under "Audit-Fees" above for the fiscal
years ended December 31, 2001 and 2002.
Tax Fees. The aggregate fees billed by PwC for professional services
rendered for tax compliance, tax advice and tax planning for the fiscal years
ended December 31, 2001 and 2002 were $82,886 and $27,033, respectively.
All Other Fees. The aggregate fees billed by PwC for professional services
rendered for products and services other than those described above for the
fiscal years ended December 31, 2001 and 2002 were $5,300 and $0, respectively.
Substantially all of these services were rendered in connection with the
issuance of consent letters related to filings by RIF with the Securities and
Exchange Commission.
The Audit Committee has considered whether the services described above are
compatible with PwC's independence. The Audit Committee has also considered
whether the provision of all other non-audit services rendered to FRIMCo, or an
affiliate thereof that provides ongoing services to RIF, is compatible with
maintaining PwC's independence. The Audit Committee has adopted a policy
requiring pre-approval by the committee of all services (audit and non-audit)
to be revised or eliminated at any time.
Forprovided to RIF by its independent auditor. In accordance
18
with that policy, the Audit Committee has given its approval for the provision
of audit services by PricewaterhouseCoopers LLP for the fiscal year ended
December 31, 1997,2003 and has also given its general pre-approval ("general
pre-approval") for up to a year in advance for the brokerage commissions paidprovision by
PricewaterhouseCoopers LLP of particular categories or types of audit-related,
tax and permitted non-audit services (including permitted non-audit services to
RIF, FRIMCo and any entity controlling, controlled by, or under common control
with FRIMCo that provides ongoing services to RIF), subject to specific
budgets. Services which have not received general pre-approval or which exceed
their budgets must receive specific approval of the Audit Committee ("specific
approval"). In cases where the Audit Committee's pre-approval is not covered by
one of those approvals, the policy provides that the Audit Committee may
delegate general or specific pre-approval authority to one or more of its
members, and that any such pre-approvals will then be communicated for
informational purposes only to the full Audit Committee at its next scheduled
meeting. To date, no such delegation of authority has been made by the Funds were:
Multi-Style Equity Fund............. $36,614
Aggressive Equity Fund.............. $39,991
Non-US Fund......................... $22,186
Audit
Committee.
Pre-approval has not been waived in respect of services described under
"Audit-Related Fees," "Tax Fees" or "All Other Fees" since the date on which
the aforementioned pre-approval procedures were adopted by the Audit Committee.
The Core Bond Fund normally doesaggregate non-audit fees billed by PwC for services rendered to RIF and
to FRIMCo, or an affiliate thereof that provides ongoing services to RIF, for
the fiscal years ended December 31, 2001 and 2002 were $330,697 and $210,258,
respectively.
Representatives of PwC are not payexpected to be present at the Special
Meeting, but will be given the opportunity to make a stated brokerage commission onstatement if they so
desire and will be available should any matter arise requiring their presence.
Massachusetts State Law Considerations
RIF is an entity of the type commonly known as a transaction. The Core Bond Fund does, however, engage in transactions with
dealers acting as principal and the costs"Massachusetts business
trust." Under Massachusetts law, shareholders of such transactions involve dealer
spreads rather than brokerage commissions.
20
DIRECTORS AND OFFICERS OF FRIMCO
Set forth below area trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the namesMaster Trust Agreement of RIF contains an express
disclaimer of Shareholder liability for acts or obligations of RIF and current positionsprovides
for indemnification and reimbursement of expenses out of RIF's property for any
Shareholder held personally liable for the obligations of RIF. The Master Trust
Agreement also provides that RIF may maintain appropriate insurance (for
example, fidelity bonding and errors and omissions insurance) for the
protection of RIF, the Shareholders of the sub-trusts, Trustees, officers,
employees and directorsagents covering possible tort and other liabilities. Thus, the
risk that a Shareholder would incur financial loss on account of FRIMCo, alongShareholder
liability also is limited to circumstances in which both inadequate insurance
exists and RIF itself is unable to meet its obligations.
Under Massachusetts law, RIF is not required to hold annual meetings. In the
past, the Funds have availed themselves of these provisions of state law to
achieve cost savings by eliminating printing costs, mailing charges and other
expenses involved to hold routine annual meetings. The Funds may, however, hold
a meeting for such purposes as changing fundamental investment restrictions,
approving a new investment management agreement or any other matters which are
required to be acted on by Shareholders under the 1940 Act. In addition, a
meeting also may be called by Shareholders holding at least 10% of the shares
entitled to vote at the meeting for the purpose of voting upon the removal of
Trustees, in which case Shareholders may receive assistance in communicating
with their positions with FRC and/orother Shareholders as provided in Section 16(c) of the Investment
Company, as applicable:
NAME INVESTMENT COMPANY FRIMCO FRC
---- ------------------ ------ ---
George F. Russell, Trustee, Chairman Director Director, Chairman
Jr. ................... of the Board of the Board
Lynn L. Anderson........ Trustee, President, and Director, Chairman Director
Chief Executive of the Board and
Officer Chief Executive Officer
Randall P. Lert......... Director of Investments Director --
Eric A. Russell......... -- Director, President Director
Karl J. Ege............. Secretary and Secretary and Director,
General Counsel General Counsel Secretary and
General Counsel
Peter F. Apanovitch..... Manager of Short Term Manager of Short Term --
Investment Funds Investment Funds
Mark E. Swanson......... Treasurer and Chief Interim Director of Fund --
Accounting Officer Administration and
Accounting
1940 Act. RIF is
holding the Special Meeting because of the items that must be presented for
Shareholders' consideration and approval.
19
FURTHER INFORMATION REGARDINGABOUT VOTING AND THE SOLICITATION AND REVOCATION
OF PROXIES AND VOTING INFORMATIONSPECIAL MEETING
This Proxy Statement is provided on behalf of the Board of Trustees of the
Investment Company in connection with
athe Special Meeting in lieu of Annual
Meeting of Shareholders of the Investment CompanyRIF to be held at the offices of the Investment CompanyRIF at 909 A Street,
Tacoma, Washington 98402, on Thursday,
November 19, 1998October 3, 2003, at 11:009:30 a.m., local time, and at any
or all adjournments thereof. This Proxy Statement is first being mailed to
Shareholders on or about October 19, 1998. YouJuly 15, 2003. Contractowners may revoke your proxytheir voting
instructions at any time before it is exercisedprior to 4:00 p.m. Eastern time on September 30, 2003
by delivering asubmitting written notice to the Investment Company expressly revoking
your proxy, by signing and forwarding to the Investment Companyof revocation, a later-dated proxy,instruction card or by attendinga
later-dated instruction via facsimile, telephone or the Special Meeting and casting your votes in person.
The Investment CompanyInternet.
RIF requests that broker-dealer firms, custodians,
nominees and fiduciariesParticipating Insurance Companies forward proxy material
to Contractowners. RIF may reimburse such Participating Insurance Companies for
their reasonable expenses incurred in connection with the beneficial ownerssolicitation of
the shares held of record by such persons. Under the terms of certain
exemptive orders which the SEC has issued to the Investment Company, insurance
companies which have placed assets in the Funds are required to forward
proxies to policy holders to request
voting instructions. The cost of soliciting these proxies will be borne by each
Fund, to the extent of its direct operational expenses, and by FRIMCo.
In addition to solicitations by
mail, someEmployees of the
21
officers and employeesRIF or FRIMCo may solicit voting instructions from Contractowners
for no additional remuneration.
Record Date
Shareholders of the Investment Company, FRIMCo and Russell Fund
Distributors, Inc. ("Distributors"), without extra remuneration, may conduct
additional solicitations by telephone, or facsimile or computer transmission
or in person.
WHO MAY VOTE AT THE SPECIAL MEETING?
The Board of the Investment Company has fixed the close of business on
September 21, 1998, as the record date (the "Record Date") for the
determination of Shareholders entitled to notice of and to vote at the Special
Meeting and any adjournments thereof. Only holders of record of shares at the close of business on the Record Date, July 7,
2003, are entitled to notice of,be present and to vote at the Special Meeting andor any
adjournments thereof. The holders of 5% or
more of each Fund's shares are listed in the section "Principal Shareholders"
below. At the close of business on the Record Date, the total number of voting
shares of each Fund issued and outstanding was the following:
Multi-Style Equity Fund................................... 3,984,687 Shares
Aggressive Equity Fund.................................... 1,737,951 Shares
Non-U.S. Bond Fund........................................ 1,608,032 Shares
Core Bond Fund............................................ 2,377,688 Shares
The total number of voting sharesadjournment of the Investment Company issued and
outstanding was 9,708,359.
The holderSpecial Meeting. Each share of record of each full share of beneficial interest of each Fund
outstanding as of the close of business on the Record Date is entitled to one
vote for each share held of record uponon each matter properly submitted topresented at the Special Meeting, orwith proportionate votes
for fractional shares.
Shares Outstanding
As of June 30, 2003, there were the following number of shares of beneficial
interest outstanding of each Fund:
Number of Shares
Name of Fund Outstanding
------------ -----------
Multi-Style Equity Fund 23,884,177.022
Aggressive Equity Fund 10,928,160.262
Non-US Fund 19,600,962.718
Real Estate Securities
Fund 16,175,657.167
Core Bond Fund 13,781,646.216
Quorum
The Master Trust Agreement provides that a quorum shall be present at a
meeting when a majority of the shares entitled to vote is present at the
meeting, but any adjournments thereof, with a proportionate votelesser number shall be sufficient for each fractional share.
WHAT OTHER BUSINESS WILL BE DISCUSSED AT THE SPECIAL MEETING IN LIEU OF ANNUAL
MEETING?
The Board of Trustees does not intend to present any matters before the
Special Meeting in lieu of Annual Meeting other than as described in this
Proxy Statement, and is not aware of any other matters to be brought before
the Meeting or any adjournments thereof by others. IF ANY OTHER MATTER LEGALLY
COMES BEFORE THE MEETING, YOUR SHARES WILL BE VOTED IN ACCORDANCE WITH THE
INSTRUCTIONS OF THE BOARD OF TRUSTEES OF THE INVESTMENT COMPANY, AND IN THE
JUDGMENT OF THE NAMED PROXIES.
WHAT IF A QUORUM IS NOT PRESENT AT THE SPECIAL MEETING IN LIEU OF ANNUAL
MEETING?adjournments. In the
event that a quorum is not present at the Special Meeting in lieu of
Annual Meeting or sufficient votes
to approve a proposalProposal are not received, the persons named as proxies may
propose one or more adjournments of the Special Meeting to permit further
solicitation of proxies. A shareholderShareholder vote may be taken on any other matter to
properly come before the Special Meeting prior to such adjournment if
sufficient votes to approve such matters have been received and such vote is
otherwise appropriate. Any adjournment of the Special Meeting will require the
affirmative vote of a majority of those shares present at the Special Meeting
or represented by proxy and voting. The persons named as proxies on the proxy
22
card will vote against any such adjournment those proxies required to be voted
against such proposal.Proposal. They will vote in favor of an adjournment all other
proxies whichthat they are entitled to vote.
The costs of any such additional solicitation and of any adjourned session
will be borne by the Investment
Company.RIF. Abstentions and broker "non-votes" (i.e., proxies from
brokers or nominees indicating that such persons have not received instructions
from the beneficial owner or other person entitled to vote shares on a
particular matter with respect to which the brokers or nominees do not have
discretionary power) will be counted as shares that are present for purposes of
determining the presence of a quorum.quorum, but which have not been voted, and will
not be voted for or against any adjournment. Abstentions (butand broker non-votes
will not broker non-votes)be counted in
20
favor of, but will have no other effect on, Proposal 1, and will have the
effect of a "no" vote when determining whether a proposal has received
sufficient voteson all other Proposals and adjournments. Accordingly,
Shareholders are urged to be approved.
PRINCIPAL SHAREHOLDERSforward their voting instructions promptly.
Beneficial Owners
As of September 21, 1998, the only persons known by the Investment Company
to be beneficial owners of more than 5% of the Investment Company's voting
securities were:
RUSSELL
MULTI-STYLE AGGRESSIVE CORE BOND INSURANCE
EQUITY FUND EQUITY FUND NON-U.S. FUND FUND FUND
INSURANCE ---------------- -------------- -------------- ---------------- ----------------
COMPANY SHARES % SHARES % SHARES % SHARES % SHARES %
--------- --------- ------ ------- ------ ------- ------ --------- ------ --------- ------
Security Equity Life
Insurance Co. ......... 1,527,688 38.34% 965,270 55.54% 413,936 25.74% 440,121 32.41% 3,347,015 34.48%
84 Business Park, Ste.
303
Armont, NY 10504-1738
COVA Financial Services
Life Insurance Co. .... 1,410,874 35.40% 305,284 17.57% 680,741 42.33% 1,166,817 49.07% 3,563,717 36.71%
One Tower Lane, Ste.
3000
Oakbrook Terace, IL
60181-4644
General American Life
Insurance Co........... 1,046,124 26.25% 467,397 26.89% 513,356 31.92% 770,751 18.51% 2,797,628 28.82%
700 Market Street
St. Louis, MO
63101-1887
ADDITIONAL INFORMATION
HOW ARE THE FUNDS DISTRIBUTED?
Distributors, located at 909 A Street, Tacoma, WA 98402, a wholly-owned
subsidiary of FRIMCo, serves as the principal underwriter of the Investment
Company's shares. Distributors receives no compensation from the Investment
Company for its services.
MASSACHUSETTS STATE LAW CONSIDERATIONS
The Investment Company is an entity of the type commonly known as a
"Massachusetts business trust." Under Massachusetts law, shareholders of such
a trust may, under certain circumstances, be held personally liable as
partners for its obligations.
23
However, the Master Trust Agreement of the Investment Company contains an
express disclaimer of shareholder liability for acts or obligations of the
Investment Company and provides for indemnification and reimbursement of
expenses out of the Investment Company's property for any shareholder held
personally liable for the obligations of the Investment Company. The Master
Trust Agreement also provides that the Investment Company may maintain
appropriate insurance (for example, fidelity bonding and errors and omissions
insurance) for the protection of the Investment Company, the shareholders of
the sub-trusts, Trustees, officers, employees and agents covering possible
tort and other liabilities. Thus, the risk of a shareholder incurring
financial loss on account of shareholder liability also is limited to
circumstances in which both inadequate insurance exists and the Investment
Company itself is unable to meet its obligations.
Under Massachusetts law, the Investment Company is not required to hold
annual meetings. In the past, the Funds have availed themselves of these
provisions of state law to achieve cost savings by eliminating printing costs,
mailing charges and other expenses involved to hold routine annual meetings.
Each Fund may, however, hold a meeting for such purposes as changing
fundamental investment restrictions, approving a new investment management
agreement or any other matters which are required to be acted on by
shareholders under the 1940 Act. In addition, a meeting also may be called by
shareholders holding at least 10% of the shares entitled to vote at the
meeting for the purpose of voting upon the removal of Trustees, in which case
shareholders may receive assistance in communicating with other shareholders
such as that provided in Section 16(c) of the 1940 Act. The Investment Company
is holding the Special Meeting because of the items that must be presented for
Shareholders' consideration and approval.
As of September 21, 1998,December 31, 2002, the officers and Trustees, including the nominees,
of the Investment
CompanyRIF as a group beneficially owned less than 1% of the shares of each Fund
outstanding on such date. ANNUAL AND SEMI-ANNUAL REPORTS
AAs of June 30, 2003, to the best of RIF's knowledge,
no person owned beneficially more than 5% of any Fund, will furnish, without charge, a copyexcept as set forth on
page 24 of this Proxy Statement.
As of the Fund's Annual ReportRecord Date, the Participating Insurance Companies are The
Northwestern Mutual Life Insurance Company ("Northwestern Mutual"), First
MetLife Investors Insurance Company, MetLife Investors Insurance Company of
California, MetLife Investors Insurance Company, Hartford Life Insurance
Company, General American Life Insurance Company and Security Equity Life
Insurance Company. Northwestern Mutual is an affiliate of FRIMCo and the
most recent Semi-Annual Report succeedingDistributor.
RIF has been advised by Northwestern Mutual that all shares of a Fund held
in its general account will be represented at the Annual Report,Special Meeting by
Northwestern Mutual and voted in the same proportion as the aggregate of the
votes cast with respect to shares of such Fund held in all of Northwestern
Mutual's 1940 Act Separate Accounts.
Shareholder Proposals
RIF is not required, and does not intend, to hold regular annual meetings of
Shareholders. Shareholders wishing to submit proposals for consideration for
inclusion in a Shareholder upon request. A Shareholder may receiveproxy statement for the report by writingnext meeting of Shareholders should send
their written proposals to the Secretary, Russell Insurance Funds,RIF's offices, 909 A Street, Tacoma, Washington
98402, Attn: Secretary, so they are received within a reasonable time before
any such meeting. The Trustees know of no business, other than the matters
mentioned in the Notice and described above, that is expected to come before
the Special Meeting. An opportunity will be provided at the Special Meeting for
Shareholders present in person to present a motion to the Special Meeting.
Should any properly presented motion or by telephoning 1-800-787-7354.
By Orderany other matter requiring a vote of
Shareholders arise, including any question as to an adjournment or postponement
of the Trustees,
/s/ Karl J. Ege
Karl J. Ege
Secretary
October 19, 1998
24Special Meeting, the persons named as proxies will vote on such matters
according to their best judgment in the interests of RIF.
Annual and Semi-Annual Reports
The Funds' most recent audited financial statements and Annual Report, for
the fiscal year ended December 31, 2002, has been previously mailed to
Shareholders, and is available free of charge. If you have not received an
Annual Report for the Fund(s) in which you are an investor, or would like to
receive additional copies, free of charge, please contact your Participating
Insurance Company or contact RIF by mailing a request to Russell Investment
Funds, 909 A Street, Tacoma, WA 98402, calling 1-800-787-7354, faxing
253-591-3495, or logging onto www.russell.com.
21
EXHIBITS TO PROXY STATEMENT
EXHIBIT
A. ListLIST OF NAMES AND ADDRESSES OF MONEY MANAGERS
The following is a list of names and addresses of the Money Managers for the
Underlying Funds. B. Present Management Agreement (the "Management Agreement") between the
Investment Company and FRIMCo.
25
EXHIBIT A
As of the date of this Proxy Statement, the money managers forThe Money Managers have no affiliations with the Funds alongor the Funds'
service providers other than their management of Fund assets. These managers
may also serve as Money Managers or advisers to other investment companies
unaffiliated with their addresses, are as follows:
MULTI-STYLE EQUITY FUNDRIF, other Funds in RIF, or to other clients of FRIMCo or of
Frank Russell Company, including Frank Russell Company's wholly-owned
subsidiary, Frank Russell Trust Company.
Multi-Style Equity Fund
Alliance Capital Management L.P., 601 2nd Ave. South,through its Bernstein Investment Research
and Management Unit, 1345 Avenue of the Americas, New York, NY 10105.
Barclays Global Investors, N.A., 45 Fremont Street, San Francisco, CA 94105.
Brandywine Asset Management, LLC, 201 North Walnut Street, Suite 5000,
Minneapolis, MN 55402-4322
Equinox1200,
Wilmington, DE 19801.
Jacobs Levy Equity Management, Inc., 100 Campus Drive, P.O. Box 650, Florham
Park, NJ 07932-0650.
Montag & Caldwell, Inc., 3455 Peachtree Road, N.E., Suite 1200, Atlanta, GA
30326-3248.
Strong Capital Management, Inc., 590 Madison100 Heritage Reserve, P.O. Box 2936,
Menomonee Falls, WI 53201.
Turner Investment Partners, Inc., 1205 Westlakes Drive, Suite 100, Berwyn,
PA 19312-2414.
Westpeak Global Advisors, L.P., 1470 Walnut Street, Boulder, CO 80302.
Aggressive Equity Fund
CapitalWorks Investment Partners, LLC, 402 West Broadway, 25th Floor, San
Diego, CA 92101.
David J. Greene and Company, LLC, 599 Lexington Avenue, 41stNew York, NY 10022.
Geewax, Terker & Company, 414 Old Baltimore Pike, Chadds Ford, PA 19317.
Goldman Sachs Asset Management, L.P., 32 Old Slip, 17th Floor, New York, NY
10022
Westpeak Investment Advisors, LP, 1011 Walnut Street, Suite 400, Boulder, CO
80302
AGGRESSIVE EQUITY FUND
Rothschild Asset10005.
Jacobs Levy Equity Management, Inc., 1251 Avenue of the Americas, 51st100 Campus Drive, P.O. Box 650, Florham
Park, NJ 07932-0650.
Suffolk Capital Management, LLC, 1633 Broadway, 40th Floor, New York, NY
10020
Westpeak Investment Advisors, LP, 1011 Walnut Street, Suite 400, Boulder, CO
80302
NON-U.S. FUND
J.P. Morgan Investment10019.
Systematic Financial Management, L.P., 300 Frank Burr Boulevard, Glenpointe
East, 7th Floor, Teaneck, NJ 07666-6703.
TimesSquare Capital Management, Inc., 522 Fifth Avenue, 14thFour Times Square, 25th Floor, New
York, NY 1003610036-9998.
Non-U.S. Fund
AQR Capital Management, LLC, 900 Third Avenue, 17th Floor, New York, NY
10022.
22
Fidelity Management & Research Company, 82 Devonshire Street, Boston, MA
02109-3614.
Oechsle International Advisors, LLC, One International Place, 23rd Floor,
Boston, MA 0211002110.
The Boston Company Asset Management, Inc.,LLC, One Boston Place, 14th Floor,
Boston, MA 02108
CORE BOND FUND02108-4402.
Real Estate Securities Fund
AEW Management and Advisors, L.P., World Trade Center East, Two Seaport
Lane, Boston, MA 02110-2021.
INVESCO Realty Advisors, a division of INVESCO Institutional (N.A.), Inc.,
One Lincoln Center, Suite 700, 540 LBJ Freeway - LB2, Dallas, TX 75240.
RREEF America L.L.C., 875 North Michigan Avenue, 41st Floor, Chicago, IL
60611-1901.
Core Bond Fund
Pacific Investment Management Company LLC, 840 Newport Center Drive, Suite
360,300, P.O. Box 6430, Newport Beach, CA 92660
Standish, Ayer & Wood,92658-6430.
TimesSquare Capital Management, Inc., One Financial Center, Boston, MA 02110
A-1Four Times Square, 25th Floor, New
York, NY 10036-9998.
23
EXHIBIT B
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made this 5th day of August, 1996 between RUSSELL
INSURANCEBENEFICIAL OWNERS OF THE FUNDS
a Massachusetts business trust hereinafter called the "Trust"
and FRANK
Fund Name Beneficial Owner Shares Percent
--------- ---------------- ------ -------
Aggressive Equity Fund. NORTHWESTERN MUTUAL LIFE INSURANCE 3,547,964.146 32.47%
COMPANY VARIABLE LIFE ACCOUNT
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Aggressive Equity Fund. NORTHWESTERN MUTUAL LIFE INSURANCE 3,149,877.814 28.82%
COMPANY ACCOUNT B
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Aggressive Equity Fund. NORTHWESTERN MUTUAL LIFE INSURANCE 2,113,066.894 19.34%
COMPANY NML ACCOUNT
ATTN INVESTMENT ACCOUNTING W6NE
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Aggressive Equity Fund. METLIFE INVESTORS INSURANCE CO 769,857.015 7.04%
D/B/A COVA VARIABLE ANNUITY
ACCOUNT ONE
4700 WESTOWN PKWY BLDG 4 STE 200
W DES MOINES IA 50266-6718
Core Bond Fund......... NORTHWESTERN MUTUAL LIFE INSURANCE 5,875,027.139 42.63%
COMPANY ACCOUNT B
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Core Bond Fund......... NORTHWESTERN MUTUAL LIFE INSURANCE 3,562,880.737 25.85%
COMPANY VARIABLE LIFE ACCOUNT
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Core Bond Fund......... METLIFE INVESTORS INSURANCE CO D/B/A 2,931,355.113 21.27%
COVA VARIABLE ANNUITY ACCOUNT ONE
4700 WESTOWN PKWY BLDG 4 STE 200
W DES MOINES IA 50266-6718
Multi-Style Equity Fund NORTHWESTERN MUTUAL LIFE INSURANCE 7,629,642.658 31.94%
COMPANY VARIABLE LIFE ACCOUNT
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Multi-Style Equity Fund NORTHWESTERN MUTUAL LIFE INSURANCE 6,852,407.910 28.69%
COMPANY ACCOUNT B
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Multi-Style Equity Fund METLIFE INVESTORS INSURANCE CO D/B/A 3,961,061.583 16.58%
COVA VARIABLE ANNUITY ACCOUNT ONE
4700 WESTOWN PKWY BLDG 4 STE 200
W DES MOINES IA 50266-6718
Multi-Style Equity Fund NORTHWESTERN MUTUAL LIFE INSURANCE 2,909,427.235 12.18%
COMPANY NML ACCOUNT
ATTN INVESTMENT ACCOUNTING W6NE
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
24
Fund Name Beneficial Owner Shares Percent
--------- ---------------- ------ -------
Non-U.S. Fund.............. NORTHWESTERN MUTUAL LIFE INSURANCE 6,051,959.653 30.88%
COMPANY NML ACCOUNT
ATTN INVESTMENT ACCOUNTING W6NE
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Non-U.S. Fund.............. NORTHWESTERN MUTUAL LIFE INSURANCE 5,409,132.985 27.60%
COMPANY VARIABLE LIFE ACCOUNT
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Non-U.S. Fund.............. NORTHWESTERN MUTUAL LIFE INSURANCE 4,994,865.060 25.48%
COMPANY ACCOUNT B
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Non-U.S. Fund.............. METLIFE INVESTORS INSURANCE CO D/B/A 1,923,278.596 9.81%
COVA VARIABLE ANNUITY ACCOUNT ONE
4700 WESTOWN PKWY BLDG 4 STE 200
W DES MOINES IA 50266-6718
Real Estate Securities Fund NORTHWESTERN MUTUAL LIFE INSURANCE 7,021,781.858 43.41%
COMPANY ACCOUNT B
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Real Estate Securities Fund NORTHWESTERN MUTUAL LIFE INSURANCE 4,454,811.254 27.54%
COMPANY NML ACCOUNT
ATTN INVESTMENT ACCOUNTING W6NE
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Real Estate Securities Fund NORTHWESTERN MUTUAL LIFE INSURANCE 3,194,786.492 19.75%
COMPANY VARIABLE LIFE ACCOUNT
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
Real Estate Securities Fund NORTHWESTERN MUTUAL LIFE INSURANCE 876,730.131 5.42%
COMPANY ACCOUNT C
ATTN MUTUAL FUND ACCOUNTING N13NW
720 E WISCONSIN AVE
MILWAUKEE WI 53202-4797
25
PROXY CARD PROXY CARD
RUSSELL INVESTMENT MANAGEMENT COMPANY, a Washington corporation,
hereinafter called "FRIMCo."
WHEREAS, the Trust has been organized by and at the expense of a company
affiliated with FRIMCo and operates as an investment companyFUNDS
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 3, 2003
The undersigned, having received Notice of the "series"
type registered under theSpecial Meeting of Shareholders
of Russell Investment Company Act of 1940Funds ("1940 Act"RIF") for the
purpose of investing and reinvesting its assets in portfolios of securities,
each of which has distinct investment objectives and policies (each distinct
portfolio being referred to herein as a "Sub-Trust"), as set forth more fully
in its Master Trust Agreement, its Bylaws and its Registration Statements
under the 1940 Act and the Securities Act of 1933, all as heretofore amended
and supplemented; and the Trust desires to avail itself of the services,
information, advice, assistance, and facilities of a manager and to have a
manager perform for it various management, administrative, statistical,
research, money manager selection, investment management, and other services;
and
WHEREAS, FRIMCo is registered as an investment adviser under the Investment
Advisers Act of 1940 and will engage in the business of rendering investment
advice, counseling, money manager recommendation, and supervisory services to
investment consulting clients; and FRIMCo and its affiliated corporations have
undertaken the initiative and expense of organizing the Trust in order to have
a means to commingle assets for certain investors to have access to and
utilize the "Multi-Style, Multi-Manager" method of investment and to provide
services to the Trust in consideration of and on the terms and conditions
hereinafter set forth;
NOW, THEREFORE, the Trust and FRIMCo agree as follows:
1. Employment of FRIMCo. The Trust hereby employs FRIMCo to manage the
investment and reinvestment of the Trust's assets and to act as a
discretionary Money Manager to certain of the Sub-Trusts in the manner set
forth in Section 2(B) of this Agreement, and to administer its business and
administrative operations, subject to the direction of the Board of Trustees
and the officers of the Trust, for the period, in the manner, and on the terms
hereinafter set forth. FRIMCo hereby accepts such employment and agrees during
such period to render the services and to assume the obligations herein set
forth. FRIMCo shall for all purposes herein be deemed to be an independent
contractor and shall, except as expressly provided or authorized (whether
herein or otherwise)held on October 3, 2003, at 9:30 a.m.,
have no authority to act for or represent the Trust in
any way.
2. Obligations of and Services to be provided by FRIMCo. FRIMCo undertakes
to provide the services hereinafter set forth and to assume the following
obligations:
B-1
A. Management and Administrative Services.
(1) FRIMCo shall furnish to the Trust adequate (a) office space,
which may be space withinPacific Time, at the offices of FRIMCo or in such other place
as may be agreed upon from time to time, (b) office furnishing,
facilities, and equipment as may be reasonably required for managing
and administering the business and operations of the Trust, including
(i) complying with the business trust, securities, and tax reporting
requirements of the United StatesRIF located at 909 A Street, Tacoma, Washington
and the various states in which the
Trust does business, (ii) conducting correspondencerelated proxy statement, and other
communications with the shareholders of the Trust ("Shareholders"),
and (iii) maintaining or supervising the maintenance ofhereby revoking all internal
bookkeeping, accounting, and auditing services and records in
connection with the Trust's investment and business activities. The
Trust agrees that its shareholder recordkeeping services, the
computing of net asset value and the preparation of certain of its
records required by Rule 31 under the 1940 Act are maintained by the
Trust's Transfer Agent, Custodian, and Money Managers, and thatProxies heretofore
given with respect to these records FRIMCo's obligations under this Section 2(A)
are supervisory in nature.
(2) FRIMCo shall employ or provide and compensateshares to be voted at the executive,
administrative, secretarial, and clerical personnel necessary to
supervise the provision of the services set forth in sub-paragraph
2(A)(1), and shall bear the expense of providing such services except
as provided in Section 4 of this Agreement. FRIMCo shall also
compensate all officers and employees of the Trust who are officers or
employees of FRIMCo, or its affiliated companies.
B. Investment Management Services.
(1) The Trust intends to appoint one or more persons or companies
("Money Manager[s]") forSpecial Meeting, hereby appoints
each of the Sub-Trusts or segments thereof,David Craig, Greg Lyons, Mary Beth Rhoden and each Money Manager shall have full investment discretion and shall
make all determinations with respect to the investment of a Sub-
Trust's assets assigned to the Money Manager and the purchase and sale
of portfolio securities with those assets, and such steps as may be
necessary to implement its decision. FRIMCo shall not be responsible
or liable for the investment merits of any decision by a Money Manager
to purchase, hold, or sell a security for a Sub-Trust portfolio.
(2) FRIMCo shall, subject to and in accordance with the investment
objectives and policies of the Trust and each Sub-Trust and any
directions which the Trust's Board of Trustees may issue to FRIMCo,
have: (i) overall supervisory responsibility for the general
management and investment of the Trust's assets and securities
portfolios; and (ii) full investment discretion to make all
determinations with respect to the investment of Sub-Trust assets not
assigned to a Money Manager.
B-2
(3) FRIMCo shall develop overall investment programs and strategies
for each Sub-Trust, or segments thereof, shall revise such programs as
necessary, and shall monitor and report periodically to the Board of
Trustees concerning the implementation of the Programs.
(4) FRIMCo shall research and evaluate Money Managers and shall
advise the Board of Trustees of the Trust of the Money Managers which
FRIMCo believes are best suited to invest the assets of each Sub-
Trust; shall monitor and evaluate the investment performance of each
Money Manager employed by the Trust; shall determine the portion of
each Sub-Trust's assets to be managed by each Money Manager; shall
recommend changes or additions of Money Managers when appropriate;
shall coordinate the investment activities of the Money Managers; and
acting as a fiduciary for the Trust shall compensate the Money
Managers.
(5) FRIMCo shall render to the Trust's Board of Trustees such
periodic reports concerning the Trust's and Sub-Trust's business and
investments as the Board of Trustees shall reasonably request.
C. Use of Frank Russell Company Research.
FRIMCo is hereby authorized and expected to utilize the research and
other resources of Frank Russell Company, its corporate parent, or any
predecessor organization, in providing the Investment Management Services
specified in Subsection "B," above. Neither FRIMCo nor the Trust shall be
obligated to pay any fee to Frank Russell Company for these services.
D. Provision of Information Necessary for Preparation of Securities
Registration Statements, Amendments and Other Materials.
FRIMCo will make available and provide financial, accounting, and
statistical information required by the Trust for the preparation of
registration statements, reports, and other documents required by federal
and state securities laws, and with such information as the Trust may
reasonably request for use in the preparation of such documents or of
other materials necessary or helpful for the underwriting and distribution
of the Trust's shares.
E. Other Obligations and Services.
FRIMCo shall make available its officers and employees to the Board of
Trustees and officers of the Trust for consultation and discussions
regarding the administration and management of the Trust and its
investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions. FRIMCo or
the Money Managers, subject to and in accordance with any directions which the
Trust's
B-3
Board of Trustees may issue from time to time, shall place, in the name of the
Trust, orders for the execution of the Sub-Trust's portfolio transactions.
When placing such orders, the primary objective of FRIMCo and Money Managers
shall be to obtain the best net price and execution for the Trust, but this
requirement shall not be deemed to obligate FRIMCo or a Money Manager to place
any order solely on the basis of obtaining the lowest commission rate if the
other standards set forth in this section have been satisfied. The Trust
recognizes that there are likely to be many cases in which different brokers
are equally able to provide such best price and execution and that, in
selecting among such brokers with respect to particular trades, it is
desirable to choose those brokers who furnish "brokerage and research
services" (as defined in Section 28(e)(3) of the Securities and Exchange Act
of 1934) or statistical quotations and other information to the Trust, FRIMCo
and/or the Money Managers in accord with the standards set forth below.
Moreover, to the extent that it continues to be lawful to do so and so long as
the Board determines as a matter of general policy that the Trust will
benefit, directly or indirectly, by doing so, FRIMCo or a Money Manager may
place orders with a broker who charges a commission for that transaction which
is in excess of the amount of commission that another broker would have
charged for effecting that transaction, provided that the excess commission is
reasonable in relation to the value of brokerage and research services
provided by that broker. Accordingly, the Trust and FRIMCo agree that FRIMCo
and the Money Managers shall select brokers for the execution of the Sub-
Trust's portfolio transactions from among:
A. Those brokers and dealers who provide brokerage and research
services, or statistical quotations and other information to the Trust,
specifically including the quotations necessary to determine the Trust's
net assets, in such amount of total brokerage as may reasonably be
required in light of such services;
B. Those brokers and dealers supply brokerage and research services to
FRIMCo and/or its affiliated corporations, or the Money Managers, which
relate directly to portfolio securities, actual or potential, of the
Trust, or which place FRIMCo or Money Managers in a better position to
make decisions in connection with the management of the Trust's assets and
portfolios, whether or not such data may also be useful to FRIMCo and its
affiliates, or the Money Managers and their affiliates, in managing other
portfolios or advising other clients, in such amount of total brokerage as
may reasonably be required; and
C. Frank Russell Securities, Inc., an affiliate of FRIMCo, when FRIMCo
or Money Manager has determined that the Trust will receive competitive
execution, price, and commission. FRIMCo shall render regular reports to
the Trust, not more frequently than quarterly, of how much total brokerage
business has been placed with Frank Russell Securities, Inc., and the
manner in which the allocation has been accomplished.
FRIMCo agrees and each Money Manager will be required to agree, that no
investment decision will be made or influenced by a desire to provide
brokerage for
B-4
allocation in accordance with the foregoing, and that the right to make such
allocation of brokerage shall not interfere with FRIMCo's or Money Manager's
primary duty to obtain the best net price and execution for the Trust.
4. Expenses of the Trust. It is understood that the Trust will pay all its
expenses other than those expressly assumed by FRIMCo herein, which expressly
assumed by FRIMCo herein, which expenses payable by the Trust shall include:
A. Fees for the services of the Money Manager;
B. Expenses of all audits by independent public accountants;
C. Expenses of transfer agent, registrar, dividend disbursing agent, and
shareholder recordkeeping services;
D. Expenses of custodial services including recordkeeping services
provided by the Custodian;
E. Expenses of obtaining quotations for calculating the value of the
Trust's net assets;
F. Expenses of obtaining Portfolio Activity Reports and Analyses of
International Management reports for each portfolio of each Sub-Trust;
G. Expenses of maintaining each Sub-Trust's tax records;
H. Salaries and other compensation of any of the Trust's executive
officers and employees, if any, who are not officers, directors,
stockholders, or employees of FRIMCo;
I. Taxes levied against the Trust;
J. Brokerage fees and commissions in connection with the purchase and
sale of portfolio securities for the Trust;
K. Costs, including the interest expense, of borrowing money;
L. Costs and/or fees incident to meetings of the Trust, the preparation
and mailings of prospectuses and reports of the Trust to its Shareholders,
the filing of reports with regulatory bodies, the maintenance of the
Trust's existence, and the registration of shares with federal and state
securities authorities;
M. Legal fees, including the legal fees related to the registration and
continued qualification of the Trust shares for sale;
N. Costs of printing stock certificates representing shares of the
Trust;
B-5
O. Trustees' fees and expenses to Trustees who are not officers,
employees, or stockholders of FRIMCoMark Swanson, or any of
its affiliates;
P. The Trust's pro rata portionthem, as Proxies of the fidelity bond required by Section
17(g) of the 1940 Act, or other insurance premiums;
Q. Association membership dues; and
R. Extraordinary expenses as may arise including expenses incurred in
connectionundersigned with litigation, proceedings, other claims, and the legal
obligations of the Trustpower to indemnify its Trustees, officers, employees,
Shareholders, distributors, and agents with respect thereto.
5. Activities and Affiliates of FRIMCo.
A. The services of FRIMCo and its affiliated corporations to the Trust
hereunder are not to be deemed exclusive, and FRIMCo and any of its
affiliates shall be free to render similar services to others.
(1) FRIMCo and its affiliated corporations shall use the same skill
and care in the management of the Sub-Trust's portfolios as they use
in the administration of other accounts to which they provide asset
management consulting and manager selection services, but they shall
not be obligated to give the Trust more favorable or preferential
treatment vis-a-vis their other clients.
(2) The Trust expressly recognizes that Frank Russell Investment
Company ("FRIC") is a client of FRIMCo and that Frank Russell Trust
Company ("Trust Company"), a corporation affiliated with FRIMCo, is
also a client of a corporation affiliated with FRIMCo and each of FRIC
and Trust Company receives substantially the same portfolio
structuring and money manager selection services from the affiliate as
does the Trust; that each of FRIC and Trust Company has, or may have,
commingled investment funds with substantially the same investment
objectives, strategies, and programs as the Trust; that each of FRIC
and the Trust was organized by and at the expense of FRIMCo or of a
corporation affiliated with FRIMCo for the express purpose of offering
the same type of investment management services to the Trust's
Shareholders, at least some of whom could not obtain these services
through FRIC or Trust Company, as FRIC provides to its Shareholders
and as Trust Company provides to its trust customers; and that over
time FRIC, Trust Company and the Trust may utilize some of the same
money managers and have similar portfolio securities holders.
B. Subject to and in accordance with the Master Trust Agreement (as
defined below) and Bylaws of the Trust and to Section 10(a) of the 1940
Act, it is understood that Trustees, officers, agents, and Shareholders of
the Trust are or may be interested
B-6
in FRIMCo or its affiliates as directors, agents, or stockholders of
FRIMCo or its affiliates are or may be interested in the Trust as
Trustees, officers, agents, Shareholders, or otherwise; that FRIMCo or its
affiliates may be interested in the Trust as Shareholders or otherwise;
and that the effect of any such interests shall be governed by said Master
Trust Agreement, Bylaws, and the 1940 Act.
6. Compensation of FRIMCo.
FRIMCo shall receive from each of the following Sub-Trusts an annual
management fee, accrued daily at the rate of 1/365th of the applicable
management fee and payable following the last day of each month. The annual
management fee, including the fee payable to the Money Managers (for each
respective Sub-Trust), shall be computed based on the following annual
percentage of each Sub-Trust's average daily net assets during the month:
Multi-Style Equity.................................................. 0.78%
Aggressive Equity................................................... 0.95
Non-U.S............................................................. 0.95
Core Bond........................................................... 0.60
Money Market Liquidity.............................................. 0.25
From this management fee, FRIMCo, acting as a fiduciary of the Trust, shall
compensate the Money Managers.
7. Liabilities of FRIMCo.
A. In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder or on the part of
FRIMCo or its corporate affiliates, FRIMCo and its corporate affiliates
shall not be subject to liability to the Trust or to any Shareholder of
the Trust for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in
the purchase, holding, or sale of any security.
B. No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or FRIMCo and its corporate affiliates,
from liability in violation of Section 17(h) and (i) of the 1940 Act.
8. Renewal and Termination.
A. This Agreement shall become effective on and as of August 5, 1996 and
shall continue in effect as to each Sub-Trust until May 31, 1998. The
Agreement is renewable annually thereafter for successive one-year periods
(a) by a vote of a majority of the Trustees of the Trust, or (b) as to any
Sub-Trust, by a vote of a majority of the outstanding voting securities of
that Sub-Trust, and in either case by a majority of the Trustees who are
not parties to the Agreement or interestedperson of any parties to the
Agreement (other than as Trustees of the Trust), cast in person at a
meeting called for purposes of voting on the Agreement; provided,
B-7
however, that if the Shareholders of any one or more Sub-Trusts fail to
approve the Agreement as provided herein, FRIMCo may continue to serve in
such capacity in the manner and to the extent permitted by the 1940 Act
and Rules and Regulations thereunder.
B. This Agreement:
(a) May at any time be terminated without the payment of any penalty
either by vote of the Board of Trustees of the Trust or, as to any
Sub-Trust, by vote of a majority of the outstanding voting securities
of the Sub-Trust, on 60 days' written notice to FRIMCo;
(b) Shall immediately terminate in the event of its assignment;others and
(c) May be terminated by FRIMCo on 60 days' written notice to the
Trust.
C. As used in this Section 8, the Terms "assignment," "interested
person" and "vote of a majority of the outstanding voting securities"
shall have the meanings set forth for any such terms in the 1940 Act.
D. Any notice under this Agreement shall be given in writing addressed
and delivered, or mailed postpaid, to the other party at any office of
such party.
9. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the remainder of
this Agreement shall not be affected thereby.
10. Reservation of Name. The parties hereto acknowledge that Frank Russell
Company has reserved the right to grant the non-exclusive use of the name
"Russell," or any derivative thereof, to any other investment company,
investment advisor, distributor or other business enterprise, and to withdraw
from the Trust the use of the name "Russell." In the event that Frank Russell
Company should elect to withdraw the use of the name "Russell" from the Trust,
the Trust will submit the question of continuing this Agreement to a vote of
its Shareholders.
11. Limitation of Liability. The Master Trust Agreement, dated July 11,
1996, as amended from time to time, establishing the Trust, which is hereby
referred to and a copy of which is on file with the Secretary of The
Commonwealth of Massachusetts, provides that the name Russell Insurance Funds
means the Trustees from time to time serving (as Trustees but not personally)
under said Master Trust Agreement. It is expressly acknowledged and agreed
that the obligations of the Trust hereunder shall not be binding upon any of
the Shareholders, Trustees, officers, employees, or agents of the Trust,
personally, but shall bind only the trust property of the Trust, as provided
in its Master Trust Agreement. The execution and delivery of this Agreement
have been authorized by the Trustees of the Trust and signed by the President
of the Trust, acting as such, and
B-8
neither such authorization by such Trustees nor such execution and delivery by
such officers shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
trust property of the Trust as provided in its Master Trust Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
RUSSELL INSURANCE FUNDS
/s/ Gregory J. Lyons By: /s/ Lynn L. Anderson
_________________________________ _________________________
Gregory J. Lyons, Assistant Lynn L. Anderson,
Secretary President
FRANK RUSSELL INVESTMENT
MANAGEMENT COMPANY
/s/ Gregory J. Lyons By: /s/ Eric A. Russell
_________________________________ _________________________
Gregory J. Lyons, Assistant Eric A. Russell,
Secretary President
FRANK RUSSELL COMPANY agrees to provide consulting services without charge
to the Trust upon the request of the Board of Trustees or officers of the
Trust, or upon the request of Manager pursuant to Section 2(C).
FRANK RUSSELL COMPANY
/s/ J. David Griswold By: /s/ Michael J. A. Phillips
_________________________________ _________________________
J. David Griswold, Assistant Michael J. A. Phillips,
Secretary President
B-9
RUSSELL INSURANCE FUNDS PROXY
SPECIAL MEETING IN LIEU OF ANNUAL MEETING OF SHAREHOLDERS NOVEMBER 19, 1998
FUND NAME PRINTS HERE
The undersigned hereby revokes all previous proxies for the undersigned's shares
and appoints Gregory J. Lyons and Rick Chase, and each of them, proxies of the
undersigned
with full power of substitution, to vote all shareson behalf of the above-
referenced fund (the "Fund")undersigned as
indicated on this proxy card all of the shares in the funds of RIF which the
undersigned is entitled to vote at the Fund's Special Meeting in Lieu of Annual Meeting of Shareholders ("Special
Meeting") to be heldand at the offices of Russell Insurance Funds (the "Investment
Company"), at 909 A Street, Tacoma, WA 98402 at 11:00 a.m., local time, on
Thursday, the 19th day of November 1998, including any adjournment or
postponement thereof, upon
such business as may properlyfully as the undersigned would be brought before the Special Meeting.
TO AVOID THE EXPENSE OF MULTIPLE MAILINGS TO THE SAME SHAREHOLDER, WE HAVE,
WHEVEVER POSSIBLE, INCLUDED PROXY CARDS FOR ALL YOUR ACCOUNTS
IN THE FUNDS INVOLVED IN THIS PROXY IN ONE ENVELOPE.
Pleaseentitled to vote by filling in the boxes below.
WITHHOLD
FOR all authority
Nominees to vote
except as for all
marked nominees
--------- -------
NO. 1 To elect the following six nominees as
Trustees: Lynn L. Anderson, Paul E. Anderson,
Paul Anton, PhD, William E. Baxter, Lee C.
Gingrich, and Eleanor W. Palmer.
(Instructions: To withhold authority to vote
for any individual nominee(s), write the name
of the nominee(s) below.)
_____________________________________________
FOR AGAINST ABSTAIN
--- ------- -------
No. 2 To ratify the selection of
PricewaterhouseCoopers LLP as the independent
accountants for the Investment Company.
No. 3 To approve a new management agreement with
FRIMCo to take effect upon the acquisition of
Frank Russell Company by The Northwestern
Mutual Life Insurance Company.
NO. 4 To approve a change to the Fund's fundamental
investment restrictions, authorizing a higher
borrowing level for the purpose of meeting
redemptions.
GRANT WITHHOLD
----- --------
To consider and act upon any other business
which may legally come before the meeting
PLEASE SIGN AND PROMPTLY RETURN IN THE ACCOMPANYING ENVELOPE. NO POSTAGE
REQUIRED IF MAILED IN THE U.S.if
personally present.
THIS PROXY IS SOLICITED ON BEHALF OF THERIF'S BOARD OF TRUSTEES. IT WILLShares will be
voted as you specify. The Board of Trustees of RIF recommends that you vote FOR
---
each proposal. IF THIS PROXY CARD IS SIGNED, DATED AND RETURNED WITH NO CHOICE
INDICATED AS TO ONE OR MORE PROPOSALS ON WHICH SHARES REPRESENTED BY THIS PROXY
CARD ARE ENTITLED TO BE VOTED, AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXYSUCH SHARES SHALL BE VOTED IN FAVOR OF THE ELECTION OF THE NOMINEES TO THE BOARD, TO RATIFY
THE SELECTION OF ACCOUNTANTS, AND IN FAVOR OF THE PROPOSALS TO APPROVE A
MANAGEMENT AGREEMENT AND TO AMEND A FUNDAMENTAL RESTRICTION. IF ANY OTHER
MATTERS PROPERLY COME BEFORE THE MEETING ABOUT WHICH THE PROXY HOLDERS ARE NOT
AWARE AT THIS TIME, THE PROXY HOLDERS MAYFOR EACH SUCH
---
PROPOSAL. The Proxies are authorized in their discretion to transact such other
business as may properly come before the Special Meeting or any adjournment or
postponement thereof. If you vote via facsimile, do not return this proxy card
by mail.
VOTE IN ACCORDANCE WITH THE VIEWS OF
THE TRUSTEES THEREON. MANAGEMENT IS NOT AWARE OF ANY SUCH MATTERS.
Dated:___________________________
_________________________________________
Signature
_________________________________________
SignatureVIA FACSIMILE: 1-888-796-9932
Note: Please sign exactly as your name
appears on the proxy.this Proxy card and date. If
signing for estates, trusts or
corporations, title or capacity should
be stated. If shares are held jointly,
each holder should sign.
_______________________________________
Signature
_______________________________________
Signature (if held jointly)
_______________________________________
Date RIF_13381
FUND FUND FUND
- ---- ---- ----
Aggressive Equity Fund Core Bond Fund Multi-Style Equity Fund
Non-U.S. Fund Real Estate Securities Fund
Please vote by filling in the appropriate box below. If you do not mark one or
more proposals your Proxy will be voted FOR each such proposal.
---
PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [X]
- ---------------------------------------------------------------------------
[_] To vote FOR ALL Funds on ALL Proposals mark this box. (No other vote is
---
necessary.)
- ---------------------------------------------------------------------------
1. Elect three members of the Board of Trustees of RIF: FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
Nominee: 01. Michael J.A. Phillips [_] [_] [_]
02. Daniel P. Connealy
03. Julie W. Weston
Instruction: To withhold authority to vote for any individual nominee, mark
the "For All Except" box and write the number and name of any such nominee
on the line immediately below.
______________________________________
2. Approve a change to the fundamental investment objective:
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Aggressive Equity Fund [_] [_] [_] Core Bond Fund [_] [_] [_] Multi-Style Fund [_] [_] [_]
Non-U.S. Fund [_] [_] [_] Real Estate Securities Fund [_] [_] [_]
3. Approve the reclassification of the investment objective from "fundamental"
to "non-fundamental":
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Aggressive Equity Fund [_] [_] [_] Core Bond Fund [_] [_] [_] Multi-Style Fund [_] [_] [_]
Non-U.S. Fund [_] [_] [_] Real Estate Securities Fund [_] [_] [_]
EVERY SHAREHOLDER'S VOTE IS IMPORTANT! PLEASE SIGN, DATE AND
RETURN YOUR PROXY CARD TODAY!
VOTING INSTRUCTION CARD RUSSELL INVESTMENT FUNDS VOTING INSTRUCTION CARD
SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 3, 2003
[NAME OF INSURANCE COMPANY]
The undersigned, revoking all voting instructions heretofore given with respect
to shares to be voted at the Special Meeting of Shareholders of Russell
Investment Funds ("RIF") to be held on October 3, 2003 at 9:30 a.m., Pacific
Time, at the offices of RIF located at 909 A Street, Tacoma, Washington, hereby
instructs all shares of RIF deemed attributable to the undersigned's contract or
policy with the issuing insurance company named above be voted as indicated on
the Voting Instruction Card at the Special Meeting and at any adjournment or
postponement thereof. The issuing insurance company named above and any proxies
appointed by it are authorized in their discretion to transact such other
business as may properly come before the Special Meeting or any adjournment or
postponement thereof.
VOTING INSTRUCTIONS ARE SOLICITED BY THE ISSUING INSURANCE COMPANY NAMED ABOVE
ON BEHALF OF RIF'S BOARD OF TRUSTEES. Shares will be voted as you specify. The
Board of Trustees of RIF recommends that you vote FOR each proposal. IF THIS
---
VOTING INSTRUCTION CARD IS SIGNED, DATED AND RETURNED WITH NO CHOICE INDICATED
AS TO ONE OR MORE PROPOSALS ON WHICH SHARES REPRESENTED BY THE UNDERSIGNED'S
CONTRACT OR POLICY ARE ENTITLED TO BE VOTED, SUCH SHARES SHALL BE VOTED FOR EACH
---
SUCH PROPOSAL. If you vote via telephone, facsimile or the Internet, do not
return this Voting Instruction Card by mail.
VOTE VIA FACSIMILE: 1-888-796-9932
VOTE VIA TELEPHONE: 1-866-235-4258
VOTE VIA THE INTERNET: https://vote.proxy-direct.com
----------------------------------------------------
CONTROL NUMBER: 999 9999 9999 999
----------------------------------------------------
Note: Please sign exactly as your name appears on
this Voting Instruction Card and date. If signing
for estates, trusts or corporations, title or
capacity should be stated. If shares are held
jointly, each holder should sign.
____________________________________________________
Signature
____________________________________________________
Signature (if held jointly)
____________________________________________________
Date RIF_13381
FUND FUND FUND
- ---- ---- ----
Aggressive Equity Fund Core Bond Fund Multi-Style Equity Fund
Non-U.S. Fund Real Estate Securities Fund
Please provide voting instructions by filling in the appropriate box below. If
you do not mark one or more proposals, the shares attributable to your contract
or policy will be voted FOR each such proposal.
---
PLEASE MARK BOXES BELOW IN BLUE OR BLACK INK AS FOLLOWS. EXAMPLE: [X]
- ---------------------------------------------------------------------------
[_] To vote FOR ALL Funds on ALL Proposals mark this box. (No other vote is
---
necessary.)
- ---------------------------------------------------------------------------
1. Elect three members of the Board of Trustees of RIF: FOR WITHHOLD FOR ALL
ALL ALL EXCEPT
Nominee: 01 Michael J.A. Phillips
02 Daniel P. Connealy [_] [_] [_]
03 Julie W. Weston
Instruction: To withhold authority to vote for any
individual nominee, mark "For All Except" and write
the number and name of any such nominee on the line
immediately below.
_______________________________________
2. Approve a change to the fundamental investment objective:
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Aggressive Equity Fund [_] [_] [_] Core Bond Fund [_] [_] [_] Multi-Style Fund [_] [_] [_]
Non-U.S. Fund [_] [_] [_] Real Estate Securities Fund [_] [_] [_]
3. Approve the reclassification of the investment objective from "fundamental"
to "non-fundamental":
FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN FOR AGAINST ABSTAIN
Aggressive Equity Fund [_] [_] [_] Core Bond Fund [_] [_] [_] Multi-Style Fund [_] [_] [_]
Non-U.S. Fund [_] [_] [_] Real Estate Securities Fund [_] [_] [_]
YOUR VOTING INSTRUCTIONS ARE IMPORTANT! PLEASE SIGN, DATE AND RETURN YOUR
VOTING INSTRUCTION CARD TODAY.
July 2003
TO: CONTRACT OWNERS, POLICY OWNERS AND PAYEES
INVESTED IN RUSSELL INVESTMENT FUNDS
A Special Meeting of the Shareholders of Russell Investment Funds ("RIF")
will be held on Friday, October 3, 2003, at 9:30 a.m., Pacific Time, at the
offices of RIF, 909 A Street, Tacoma, Washington 98402. Although you are not a
shareholder of RIF, all or part of the value of your Northwestern Mutual
variable annuity contract or variable life insurance policy is invested in
shares of RIF through NML Variable Annuity Account B or Northwestern Mutual
Variable Life Account, respectively. Your variable annuity contract or variable
life policy provides that you have the right to instruct Northwestern Mutual how
the shares attributable to your contract or policy should be voted at the
Special Meeting.
We have enclosed a booklet from RIF containing a Letter to Shareholders,
Notice of Special Meeting and a Proxy Statement. Also enclosed is a Voting
Instruction Card for each such contract or policy you have invested in RIF. This
material describes in detail the matters to be considered at the Special
Meeting, which include the election of three trustees, changes to RIF's
fundamental investment objectives, and reclassification of RIF's investment
objectives from fundamental to non-fundamental, and contains a phone number you
can call if you have questions regarding the Special Meeting. After reviewing
the material, please complete and sign each Voting Instruction Card and return
it in the self-addressed, postage-paid envelope provided or transmit your voting
instructions via facsimile, telephone or the Internet as described in the Voting
Instruction Card. Shares of RIF attributable to your variable annuity contract
or variable life policy will be voted by Northwestern Mutual in accordance with
your instructions.
Your voting instructions must sign.be received by 4:00 p.m., Eastern Time, on
September 30, 2003. Shares of each fund of RIF held through NML Variable Annuity
Account B or Northwestern Mutual Variable Life Account as to which no timely
voting instructions are received will be voted by Northwestern Mutual in
proportion to the instructions received from those contract owners, policy
owners and payees who furnish timely instructions with respect to shares of that
fund held in the respective Account.
We recommend that you instruct Northwestern Mutual to vote FOR the election
of the three trustees and FOR each of the other proposals presented in the Proxy
Statement.
The Northwestern Mutual Life
Insurance Company
Mason G. Ross,
Executive Vice President
and Chief Investment Officer