SCHEDULE 14A
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
(Amendment No._____)
XNo. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [_]
Check the appropriate box:
X[X] Preliminary Proxy Statement[_] Confidential, for
Statement Use of the
Commission Only (as
[_] Definitive Proxy permitted by Rule
Statement 14a-6(e)(2))
Definitive Proxy Statement[_] Definitive
Additional Materials
[_] Soliciting Material
Pursuant to Sec.Section
240.14a-11(c) or
Sec.Section 240.14a-12
RUSSELL INSURANCE FUNDSRussell Investment Funds
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X[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 proxy 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:_________________________________________________
2.
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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, WashingtonSTREET
TACOMA, WASHINGTON 98402
1-800-972-0700[Phone Number]
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 11:00 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 ELECTRONIC 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,
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, WashingtonSTREET
TACOMA, WASHINGTON 98402
- -------------------------------------------------------------------------------------------------
NOTICE OF SPECIAL 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:TO BE HELD ON OCTOBER 3, 2003
-----------------
NOTICE IS HEREBY GIVEN that a Special Meeting of the Shareholders (the
"Shareholders")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 11:00
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,
KARLKarl J. EGE, ESQ.Ege
Secretary
Tacoma, Washington
October ___, 1998
- --------------------------------------------------------------------------------July 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.... 13
Other Business........................................................... 15
Information about RIF.................................................... 15
Further Information...................................................... 17
List of Names and Addresses of Money Managers............................ Appendix A
Beneficial Owners of the Funds........................................... Appendix B
RUSSELL INSURANCEINVESTMENT FUNDS
909 A Street
Tacoma, Washington 98402
1-800-972-0700[Phone Number]
-----------------
PROXY STATEMENT
Dated October ____, 1998-----------------
DATED July 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("RIF")
QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING
AND THE PROXY STATEMENT
GENERAL INFORMATION ABOUT THE PROPOSALS
Q. What is the Purposepurpose of this proxy statement?
A. You are receiving these proxy materials--a booklet that includes the Proxy
Statement?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 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 , 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.
2
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
[DATE] 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 [date] and proper voting instructions
received via facsimile, telephone or the Internet prior to 4:00 p.m. Eastern
time on [DATE], 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 [DATE] 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 how the Funds
operate.agent, toll-free at
1-800- - .
GENERAL INFORMATION ABOUT THE FUNDS
Q. 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 disclose the aggregate fees paid to the manager and the
money managers of each sub-trust.
The money managers for the Funds are listed in Exhibitvote. Appendix A
to this Proxy Statement.Statement lists the current Money Managers for the 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 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.THE 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 1940 Act as they apply to the election of
Trustees. One factor considered by the Board is the
requirement imposed by the 1940 Act that the selectionTrustees generally and nomination of
trustees who are not "interested persons" (as that term is defined in Section
2(a)(19) of the 1940 Act) 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 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 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 Amended
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 Amended 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 Companyparticular.
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.Shareholders.
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 RIF.
Ms. Weston and Mr. Connealy are not "interested persons" of RIF as defined in
Section 2(a)(19) of the 1940 Act. Mr. Phillips is an interested person of RIF
by virtue of his employment by Frank Russell Company, the parent of FRIMCo.
Each nominee currently oversees 37 funds in the Russell Fund complex. The
Russell Fund complex consists of RIF and Frank Russell Investment Company
and, except as
otherwise indicated, has served("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
------- ----------- ------------ --------------------------------- ----------- -------------
NOMINEES
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
Michael J. A. Phillips, Trustee Since 2002 Chairman of the Board, President, 37 None
Born January 20, 1948 CEO and Director, Frank Russell
Company ("FRC")
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
- --------
** Each Trustee serves as a Trustee since 1996.
Mr. Lynnduring the lifetime of RIF and until 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 meetings 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.
5
The Board of Trustees has established a standing Audit Committee and a
standing Nominating and Governance Committee. The Audit 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 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 31, 2002, the Audit
Committee held five meetings. RIF's Board of Trustees has adopted and approved
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 the Board as to the selection of
independent auditors, and 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, William E. Baxter and Lee C. Gingrich and Ms. Julie W. Weston, each
of whom is an independent Trustee. For the only nominee for electionfiscal 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 anominees and its
principal executive officers, including their names, ages, position(s) with
RIF, and principal occupation or employment during the past five years. An
asterisk (*) indicates that the Trustee whoor officer is an "interested person" of
the Investment CompanyRIF as defined in section 2(a)(19) of the 1940 Act. This
designation results from his ownership interestMr. George F. Russell, Mr.
Lynn L. Anderson and positionMr. Michael J.A. Phillips are the only Trustees who are
"interested persons" of RIF as an officerdefined in section 2(a)(19) of certain FRC affiliates. As usedthe 1940 Act.
They are interested persons of RIF because of their relationships with FRIMCo
or its affiliates as set forth in the listtable below. The address for each Trustee
and officer listed 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, Chairman of the Board and President,
The SSgA Funds (investment company); Director, Chief Executive Officer and
Chairman of the Board, Frank Russell Investment Management Company; Director,
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. and Frank Russell Investments (UK) Ltd.,
Russell Insurance Agency, Inc., Frank Russell Investment Company, PLC; June
1993 to November 1995, Director, Frank Russell Company. Until September 1994,
Director and President, The Laurel Funds, Inc. (investment company); November
1995 to December 1996, Director and Chairman, Russell MLC Management Company;
December 1996 to March 1997, Director and Chairman, Frank Russell Company
(Delaware) Inc.
Paul E. Anderson--66 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--72 years old--Trustee. 800 North Cis 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 TRUSTEE EMERITUS
*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
*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
INDEPENDENT TRUSTEES AND 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, Born.... Director of Since 1991 Director of Investments,
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--67 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--71 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
Trustee Fund Trustees in Russell Fund Complex
------- ---------------------- --------------------------------------------------
George F. Russell, Jr... None None
Michael J. A. Phillips.. None None
Lynn L. Anderson........ None None
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 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
PENSION OR
AGGREGATE RETIREMENT ESTIMATED TOTAL COMPENSATION
COMPENSATION BENEFITS ACCRUED AS ANNUAL FROM
TRUSTEE FROM THE INVESTMENT PART OF THE BENEFITS UPON THE INVESTMENT
COMPANY INVESTMENT RETIREMENT COMPANY
COMPANY EXPENSES PAID TO TRUSTEESPension or
Retirement Estimated Total
Benefits Annual Compensation
Aggregate Accrued as Benefits From Russell
Compensation Part of Upon Fund Complex
Trustee from RIF RIF Expenses Retirement Paid to Trustees
------- ------------ ------------ ---------- ----------------
Lynn L. AndersonAnderson......... $ 0 $0 $0 $0$ 0
Paul E. Anderson $11,263*Anderson......... $12,530 $0 $0 $31,263**$ 85,250
Paul Anton, PhD. $11,263**........ $11,760 $0 $0 $31,263**$ 78,250
William E.Baxter $11,263*E. Baxter........ $11,760 $0 $0 $31,263**
Lee C. Gingrich $11,263*$ 81,750
Kristianne Blake......... $12,677 $0 $0 $31,263*$ 86,800
Daniel P. Connealy**
Eleanor W. Palmer $11,263* $0 $0 $31,263**
George F.Russell..... $ 0 $0 $0 $ 0
Lee C. Gingrich.......... $12,390 $0 $0 $ 86,250
Eleanor W. Palmer........ $11,974 $0 $0 $ 83,280
Michael J. A. Phillips... $ 0 $0 $0 $ $0
Raymond P. Tennison, Jr.. $12,040 $0 $0 $81,750.09
George F. Russell, Jr.*** $ 0 $0 $0 $ $0
Julie W. Weston****...... $ 4,327 $0 $0 $ $31,333
- --------
* Of this amount, $4,000Dr. Anton was for services during 1996.elected Trustee Emeritus effective December 31, 2002.
** The Trustees received $20,000 for service as trustees onMr. Connealy was elected to the Board of Trustees for the Frankon April 24, 2003.
*** Mr. 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.--65 years old--Trustee and Chairman of the Board
since 1996.was elected Trustee and Chairman ofEmeritus effective January 1, 1999.
**** Ms. Weston was elected to the Board of FrankTrustees on August 19, 2002.
The Russell Investment
Company since 1984; 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;
Senior Vice President and Assistant Fund Treasurer, 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
Seven Seas Series Fund; February 1997 to July 1998, Manager, Funds Accounting
and Taxes, Frank Russell Investment Management Company.
*Randall P. Lert--44 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--56 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.;
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--52 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 vote on any or all of the nominees. If an executed
proxy card or voting instruction card is returnedreceived without voting instructions,
the shares will be voted for alleach of the nominees named herein for Trustees. All of theherein. The 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.elected, provided that
there is a sufficient number of shares represented in person or by proxy to
meet the quorum requirements set forth in RIF's Master Trust Agreement.
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 VOTE TO ELECT AS TRUSTEES THE
NOMINEES FOR ELECTIONARE RETURNED ON A TIMELY BASIS WILL BE SO VOTED.
PROPOSALS 2(a)-2(e):
APPROVAL OF A CHANGE TO THE BOARD OF TRUSTEESINVESTMENT OBJECTIVES 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, pursuantFUNDS
Pursuant to the 1940 Act, each of the Funds has adopted and operates
according to a requeststated investment objective. The investment policies,
restrictions, strategies and activities of each Fund are guided by, and
designed to achieve, the managementFund's stated investment objective. Each Fund is
subject to an investment objective that currently is a fundamental investment
restriction, meaning that it may not be changed without Shareholder approval.
These investment objectives were established at the inception of the Investment Company,Funds and
reflected market conditions and circumstances at that time and the Board, including a majoritymanner 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 Independent TrusteesFunds and reduce
administrative burdens associated with clarifying the meaning of and monitoring
compliance with the current investment objectives. In addition, clarification
of the Investment Company, selectedinvestment objectives of the firmFunds may facilitate the marketing of PricewaterhouseCoopers LLP to be
independent accountantsthe
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
Investment Companyaffected Funds are not expected to affect materially the manner in which such
Funds are managed.
The current and proposed objectives for the fiscal year ending
December 31, 1998.Funds
The current and proposed investment objectives for the Funds are set forth
in the chart below:
Proposal Fund Current Investment Objective Proposed Investment Objective
- -------- ---- ---------------------------- -----------------------------
2(a) Multi-Style To provide income and capital growth Seeks to provide long term capital
Equity by investing principally in equity growth.
securities.
2(b) Aggressive To provide capital appreciation by Seeks to provide long term capital
Equity assuming a higher level of volatility growth.
than is ordinarily expected from the
Multi-Style Equity Fund by investing
in equity securities.
12
Proposal Fund Current Investment Objective Proposed Investment Objective
- -------- ---- ---------------------------- -----------------------------
2(c) Non-US To provide favorable total return and Seeks to provide long term capital
additional diversification for US growth.
investors by investing primarily in
equity and fixed-income securities of
non-US companies and securities
issued by non-US governments.
2(d) Real Estate To generate a high level of total return Seeks to provide current income and
Securities through above average current income long term capital growth.
while maintaining the potential for
capital appreciation.
2(e) Core Bond To maximize total return through Seeks to provide current income and
capital appreciation and income by the preservation of capital.
assuming a level of volatility
consistent with the broad fixed-
income market by investing in fixed-
income securities.
Shareholders of all of the sub-trusts of the Investment
Companyeach Fund are being asked atto approve a reclassification of
the Special MeetingFund's investment objectives from "fundamental" to ratify"non-fundamental" in
Proposal 3, described below. If Shareholders approve Proposal 3, each of the
selectionamended investment objectives that are approved pursuant to Proposals 2(a)
through 2(e) will be non-fundamental investment objectives. None of PricewaterhouseCoopers LLP, a firm formedProposals
2(a) through 2(e) is contingent upon approval of Proposal 3 by Shareholders of
the subject Fund or upon approval of this Proposal 2 by the recent mergerother Funds.
Approval of Proposal 3 by the Shareholders of any Fund is likewise not
contingent upon approval of its corresponding Proposal 2.
Required vote
The approval of the Investment
Company's accountant with another prominent accounting firm.
Services in connection withamended investment objective of each Fund requires 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.
To be ratified, the appointment of PricewaterhouseCoopers LLP must receive the
affirmative voteapproval of a majority of the outstanding voting securities of the Investment Company which
are present at the Meeting in person or by proxy, and vote on this proposal.
THE BOARD OF TRUSTEES RECOMMENDS
THAT SHAREHOLDERS VOTE TO RATIFY THE
SELECTION OF PRICEWATERHOUSECOOPERS LLP AS
THE INVESTMENT COMPANY'S INDEPENDENT ACCOUNTANTS
PROPOSAL #3: TO APPROVE A PROPOSED MANAGEMENT
AGREEMENT BETWEEN 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 manager to the Funds pursuant to an
investment management agreement (the "Management Agreement") described below.that Fund. The current Management Agreement with FRIMCo 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 assured 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 acquire at
the effective time all 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, 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 FRIMCo is
being submitted for approval by shareholders of the Funds. A copy 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 reviewed by the Board. In addition, the Independent Trustees also consulted
with the Investment Company's outside counsel concerning these matters. After a
careful review and evaluation of this information, a special meeting 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.
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
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 other 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.
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 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 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 shareholders 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.
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 to 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 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 an 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 FRC directors then in 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 of
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 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 an 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.
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.
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.
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
WhatNON-FUNDAMENTAL
The investment objective for each Fund is a "fundamental" investment policy,
meaning that it may not be changed without Shareholder approval. The Funds'
investment objectives are not required to be fundamental, and FRIMCo has
proposed to the current limitation on borrowingBoard that the investment objective for each Fund be
reclassified from fundamental
13
to non-fundamental. As a non-fundamental investment policy, each investment
objective could be changed by the Funds?
Section 18(f)(1)Trustees without Shareholder approval if the
Trustees deem the change to be in the best interests of the 1940 Act provides that it shall be unlawful for any
registered open-end investment companyShareholders. FRIMCo
has proposed these changes in order to issue any class of senior security orprovide additional flexibility to
sell any senior security of which it is the issuer, except 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 ofconduct the investment company;program of each Fund in response to changing market
conditions and provided further,
thatcircumstances consistent with applicable laws in effect from
time to time, without the expense and delay associated with arranging for a
Shareholder meeting to approve changes in the event that such asset coverage shall atFund's investment 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 time fall below 300 per
cent the registered company shall, within three days thereafter (not including
Sundays and holidays) or such longer period as the SEC may allow, reduce 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 adoptedFund
in circumstances when a fundamental investment restriction that limits the borrowing authority of each
sub-trust to less than the amount that is permitted by the 1940 Act as describedchange, in the prior paragraph. Specifically, each Fund's investment restriction on
borrowing currently provides:
"[The Fund will not:] Borrow amounts more than 5%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 toFund specifically. If the Board ondid decide to make such a
change to any non-fundamental investment objective, the prospectsFund would provide
Shareholders with 60 days' notice before the effective date of such change.
The current fundamental investment objectives for entering intoeach Fund, to which
Shareholders are being asked to approve changes, are set forth above in
Proposals 2(a) through 2(e).
If the Shareholders 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 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 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.
14
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 and
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
INFORMATION REGARDING THE CURRENT
MANAGEMENT AGREEMENT
The table below sets forth (i) the net assets of each Fund asdiscretion of the persons
named as proxies.
INFORMATION ABOUT RIF
Investment Company's year ended December 31, 1997; (ii)Advisor, Administrator and Transfer Agent
FRIMCo provides or oversees the rateprovision of all 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.
Funds Net Assets Annual Management Management Fees Fees Paid to
as of Fee (Based On (net of waivers) Money Managers
12/31/97 Average Net Assets) for Year for Year
Ended 12/31/97 Ended 12/31/97
Multi-Style Equity Fund $23,639,008 0.78% $88,827 $53,897
Aggressive Equity Fund $15,371,664 0.95% $82,018 $75,321
Non-U.S. Fund $ 6,876,259 0.95% $25,461 $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 in Appendix A to 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.
15
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 may be revised or eliminated at any time.
For the yearfiscal
years ended December 31, 1997,2001 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 pre-approval
policies and procedures pursuant to which the engagement of any accountant is
approved. Such procedures provide that [to be completed when procedures are
completed]. The Audit Committee is informed of each such engagement in a timely
manner, and such procedures do not include delegation of the Audit Committee's
responsibilities to management.
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 aggregate 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 expected to be present at the Special
Meeting, but will be given the opportunity to make a statement 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 "Massachusetts business
trust." Under Massachusetts law, shareholders of such a trust may, under
certain circumstances, be held personally liable as partners for its
obligations. However, the Master Trust Agreement of RIF contains an express
disclaimer of Shareholder liability for acts or obligations of RIF and provides
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 agents covering possible tort and other liabilities. Thus, the
risk that a Shareholder would incur financial loss on account of Shareholder
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 did not payhave availed themselves of these provisions of state law to
achieve cost savings by eliminating printing costs, mailing charges
16
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 brokerage
commissions and did not enter into any brokerage transaction.
Directors and Officers of FRIMCo
Set forth belowother
matters which are required to be acted on by Shareholders under the names and current positions1940 Act.
In addition, a meeting also may be called by Shareholders holding at least 10%
of the officersshares 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 as provided in Section 16(c) of the 1940
Act. RIF is holding the Special Meeting because of the items that must be
presented for Shareholders' consideration and directors of FRIMCo, along with their positions with FRC and/or the Investment
Company, as applicable:
Name Investment Company FRIMCo FRC
George F. Russell, Trustee, Director Director,
Jr. Chairman of the Board Chairman of
the Board
Lynn L. Anderson Trustee, President, Director, Director
and Chief Executive Chairman of the Board
Officer and Chief Executive
Officer
Randall P. Lert Director of Director -------
Investments
Eric A. Russell ------- Director, President Director
Karl J. Ege Secretary and Secretary and Secretary and
General Counsel General Counsel 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 -------
Accounting Officer Fund Administration
and Accounting
approval.
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 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 11:00 a.m., local time, and at
any or all adjournments thereof. This Proxy Statement is first being mailed to
Shareholders on or about October 14, 1998. YouJuly , 2003. Contractowners may revoke your
proxytheir
voting instructions at any time before it is exercisedprior to 4:00 p.m. Eastern time on [DATE] 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 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 3,980,134 Shares
Aggressive Equity Fund 1,737,033 Shares
Non-U.S. Bond Fund 1,603,391 Shares
Core Bond Fund 2,373,899 Shares
The total number of voting sharesadjournment of the Investment Company issued and
outstanding was 9,694,457.
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 to the
Special Meeting or any adjournments thereof, with a proportionate vote for each
fractional share.
What other business will be discussedpresented at the Special Meeting, in Lieuwith proportionate votes
for fractional shares.
Shares Outstanding
As of Annual
Meeting?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
Aggressive Equity Fund
Non-US Fund
Real Estate Securities
Fund
Core Bond Fund
Quorum
The BoardMaster Trust Agreement provides that a quorum shall be present at a
meeting when a majority of Trustees does not intendthe shares entitled to vote is 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
beforeat the
meeting, your shares willbut any lesser number shall be voted in accordance withsufficient for adjournments. In the
instructions of the Board of Trustees of the Investment Company, and in the
judgment of the named proxies.
What ifevent that a quorum is not present at the Special Meeting in Lieu of Annual
Meeting?
In the event 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
17
as proxies on the proxy 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.
PRINCIPAL SHAREHOLDERS
Asquorum, but which have not been voted.
Abstentions and broker non-votes will not be counted in favor of, September 21, 1998,but will have
no other effect on, Proposal 1, and will have the only persons known by the Investment Company
to be beneficial owners of more than 5% of the Investment Company's voting
securities were: [Insurance Companies].
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. 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 amended 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 riskeffect of a shareholder
incurring financial loss"no" vote on accountall
other Proposals. Accordingly, Shareholders are urged to forward their voting
instructions promptly.
Beneficial Owners
[As 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,May 31, 2003, 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
A] As 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 in
Appendix B.
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. Should any other matter requiring a vote of Shareholders
arise, including any question as to an adjournment or postponement of the
Special 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 telephoning 1-800-832-6688.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.
By Order of the Trustees,
Karl J. Ege
Secretary
October ___, 199818
EXHIBITS TO PROXY STATEMENT
Exhibit
A. ListAPPENDIX A
The following is a list of names and addresses of the Money Managers for the
Underlying Funds. B. PresentThe Money Managers have no affiliations with the Funds or 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 RIF, 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 Agreement (the "Management Agreement") betweenL.P., 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 1200,
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., 100 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, New 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
10005.
Jacobs Levy Equity Management, Inc., 100 Campus Drive, P.O. Box 650, Florham
Park, NJ 07932-0650.
Suffolk Capital Management, LLC, 1633 Broadway, 40th Floor, New York, NY
10019.
Systematic Financial Management, L.P., 300 Frank Burr Boulevard, Glenpointe
East, 7th Floor, Teaneck, NJ 07666-6703.
TimesSquare Capital Management, Inc., Four Times Square, 25th Floor, New
York, NY 10036-9998.
Non-U.S. Fund
AQR Capital Management, LLC, 900 Third Avenue, 17th Floor, New York, NY
10022.
A-1
Fidelity Management & Research Company, 82 Devonshire Street, Boston, MA
02109-3614.
Oechsle International Advisors, LLC, One International Place, 23rd Floor,
Boston, MA 02110.
The Boston Company Asset Management, LLC, One Boston Place, 14th Floor,
Boston, MA 02108-4402.
Real Estate Securities Fund
AEW Management and FRIMCo.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
300, P.O. Box 6430, Newport Beach, CA 92658-6430.
TimesSquare Capital Management, Inc., Four Times Square, 25th Floor, New
York, NY 10036-9998.
A-2
APPENDIX B
Name and Address of Amount and Nature of
Fund Beneficial Owner Beneficial Ownership Percentage Owned
- ------------------------ ------------------------ ------------------------ ------------------------
B-1
PROXY CARD PROXY CARD
RUSSELL INSURANCEINVESTMENT FUNDS PROXY
SPECIAL MEETING OF SHAREHOLDERS
NOVEMBER 19, 1998TO BE HELD ON OCTOBER 3, 2003
The undersigned having received Notice of the Special Meeting of Shareholders of
Russell Investment Funds ("RIF") to be held on October 3, 2003, at __:__,
Pacific Time, at the offices of RIF located at 909 A Street, Tacoma, Washington
and the related proxy statement, and hereby revokesrevoking all previous proxies for the undersigned'sProxies heretofore
given with respect to shares andto be voted at this Special Meeting, hereby
appoints Gregory J. Lyons and Rick Chase, and each of David Craig, Greg Lyons, Mary Beth Rhoden and Mark Swanson, or
any of them, proxiesas Proxies of the undersigned with power to act without the others
and with full power of substitution, to vote all shareson behalf of the Russell
Insurance Funds (the "Investment Company")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 Special Meeting and at any adjournment or
postponement thereof, as fully as the undersigned would be entitled to vote if
personally present.
This Proxy is solicited on behalf of Shareholders (the "Special Meeting")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 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 held
at the offices of 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 thereof, uponvoted, such shares shall be voted FOR each such
proposal. The Proxies are authorized in their discretion to transact such other
business as may properly be broughtcome before the Special Meeting.
FOR AGAINST ABSTAIN
No. 1 To elect the Board of Trustees of the
Investment Company: (To withhold yourMeeting or any adjournment or
postponement thereof. If you vote for a nominee,
strike out the name of the nominee below.)
a. Lynn L. Anderson
b. Paul E. Anderson
c. Paul Anton, Ph.D.
d. William E. Baxter
e. Lee C. Gingrich
f. Eleanor W. Palmer
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
Frank Russell Investment Management Company
("FRIMCo"), the current investment manager
to the Investment Company, to take effect
upon the acquisition of Frank Russell
Company by The Northwestern Mutual Life
Insurance Company.
No. 4 To approve a change to each 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. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF
TRUSTEES. IT WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THIS PROXY
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 CERTAIN FUNDAMENTAL RESTRICTIONS. IF ANY OTHER
MATTERS PROPERLY COME BEFORE THE MEETING ABOUT WHICH THE PROXY HOLDERS ARE NOT
AWARE AT THIS TIME, THE PROXY HOLDERS MAYvia facsimile, do not return this proxy card.
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 mustshould sign.
EXHIBIT A
As of the date of this Proxy Statement, the money mangers for the Funds, along
with their addresses, are as follow:_______________________________________
Signature
_______________________________________
Signature (if held jointly)
_______________________________________
Date RIF_13381
FUND FUND FUND
- ---- ---- ----
Aggressive Equity Fund Core Bond Fund Multi-Style Equity Fund
Chancellor LGT Asset Management, Inc., 1166 AvenueNon-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. Julie W. Weston [_] [_] [_]
02. Michael J.A. Phillips
03. Daniel P. Connealy
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 Americas, New York, NY
10036 Equinox Capital Management Inc., 590 Madison Avenue, 41st Floor, New York,
NY 10022 Westpeak Investment Advisors, LP, 1011 Walnut Street, Suite 400,
Boulder, CO 80302
Aggressive Equity Fund
Rothschild Asset Management, Inc., 1251 Avenue of the Americas, 51st Floor, New
York, NY 10020 Westpeak Investment Advisors, LP, 1011 Walnut Street, Suite 400,
Boulder, CO 80302
Non-U.S. Fund
J.P. Morgan Investment Management, Inc., 522 Fifth Avenue, 14th Floor, New
York, NY 10036 Oechsle International Advisors, One International Place, 44th
Floor, Boston, MA 02110 The Boston Company Asset Management, One Boston Place,
14th Floor, Boston, MA 02108
Core Bond Fund
Pacific Investment Management Company, 840 Newport Center Drive, Suite 360,
Newport Beach, CA 92660 Standish, Ayer & Wood, Inc., One Financial Center,
Boston, MA 02110investment 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!
EXHIBIT B
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made this 5th day of August , 1996 between RUSSELL
INSURANCE FUNDS, a Massachusetts business trust hereinafter called the "Trust")
and FRANKVOTING INSTRUCTION CARD RUSSELL INVESTMENT MANAGEMENT COMPANY, a Washington corporation
hereinafter called "FRIMCo."
WHEREAS, the Trust has been organized by andFUNDS 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 expenseSpecial Meeting of a company
affiliated with FRIMCo and operates as an investment companyShareholders of the "series"
type registered under theRussell
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 its 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
Adviser's Act of 1940 and will engage in the business of rendering investment
advisor, 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), 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:
A. Management and Administrative Services.
(1) FRIMCo shall furnish to the Trust adequate (a) office
space, which may be space withinheld on October 3, 2003 at __:__, Pacific Time,
at the offices of FRIMCoRIF 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
placebusiness as may be agreed upon from time to
time, (b) office furnishing, facilities, and equipment as
may be reasonably required for managing and administeringproperly come before the business and operations of the Trust, including (i)
complying with the business trust, securities, and tax
reporting requirements of the United States and the
various states in which the Trust does business, (ii)
conducting correspondence and other communications with
the shareholders of the Trust ("Shareholders"), and (iii)
maintainingSpecial Meeting or supervising the maintenance of 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 Actany adjournment or
postponement thereof.
Voting Instructions are maintainedsolicited by the Trust's
Transfer Agent, Custodian, and Money Managers, and that
with respect to these records FRIMCo's obligations under
this Section 2(A) are supervisory in nature.
(2) FRIMCo shall employ or provide and compensate the
executive, administrative, secretarial, and clerical
personnel necessary to supervise the provisionissuing insurance company named above
on behalf 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]") for each of the Sub-Trusts
or segments thereof, 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 o 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'sRIF'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.
(3) FRIMCo shall develop overall investment programs and
strategies for each Sub-Trust, or segments thereof, shall
revise such programsTrustees. Shares will be voted 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 theyou specify. The
Board of Trustees of the Trust of the
Money ManagersRIF 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 FRIMCo believes are best suited to
invest the assets of each Sub-Trust; shall monitor and
evaluate the investment performance of each Money Manager
employedshares represented by the Trust; shall determine the portion of each
Sub-Trust's assetsundersigned's
contract or policy are entitled 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 Trusteesvoted, 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 Trustshares shall be obligated to pay any
fee to Frank Russell Companyvoted FOR each
such proposal. If you vote via telephone, facsimile or the Internet, do not
return this Voting Instruction Card.
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 these services.
D. Provision of Information Necessary for Preparation ofestates, 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 Registration Statements, Amendments and Other Materials.
FRIMCo will make available andFund
Please provide financial, accounting, and
statistical information requiredvoting instructions 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 usefilling in the preparation of
such documentsappropriate box below. If
you do not mark one or of other materials necessarymore proposals, the shares attributable to your contract
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 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 requiredvoted FOR each such proposal.
PLEASE MARK YOUR VOTES AS IN THIS SAMPLE. 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 Julie W. Weston
02 Michael J.A. Phillips [_] [_] [_]
03 Daniel P. Connealy
Instruction: To withhold authority to agree, that no
investment decision will be made or influenced by a desire to provide
brokeragevote for allocation in accordance withany
individual nominee, mark "For All Except" and write
the foregoing,number 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. Cots, 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;
O. Trustees' fees and expenses to Trustees who are not officers,
employees, or stockholders of FRIMCo or any of its affiliates;
P. The Trust's pro rata portion 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 connection with litigation, proceedings, other claims, and the
legal obligations of the Trust 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 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 effectname of any such interests shall be governed
by said Master Trust Agreement, Bylaws, andnominee on the 1940 Act.
6. Compensation of FRIMCo.
FRIMCo shall receive from eachline
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 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 payableinvestment objective from "fundamental"
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
interested person 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, 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;
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 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
By:
Gregory J. Lyons, Assistant Secretary Lynn L. Anderson, President
FRANK RUSSELL INVESTMENT
MANAGEMENT COMPANY
By:
Gregory J. Lyons, Assistant Secretary Eric A. Russell, 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
By:
J. David Griswold, Assistant Secretary Michael J. A. Phillips, President"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.