497 1 d497.txt SUPPLEMENT DATED JANUARY 31, 2003 RUSSELL INSURANCE FUNDS Supplement dated January 31, 2003 to PROSPECTUS DATED APRIL 30, 2002 I. The following information restates the sections entitled "Annual Fund Operating Expenses" and "Example" for the Multi-Style Equity Fund, Aggressive Equity Fund, Non-U.S. Fund, Real Estate Securities Fund and Core Bond Fund in its entirety in the Russell Insurance Funds Prospectus: Annual Fund Operating Expenses (expenses that are deducted from Fund assets) (% of net assets)
Total Gross Annual Fund Fee Waivers Management Other Operating and Expense Total Net Fund Fee Expenses Expenses Reimbursements Operating Expenses ---------- -------- ----------- -------------- ------------------ Multi-Style Equity Fund* .............. 0.78% 0.21% 0.99% (0.12)% 0.87% Aggressive Equity Fund* ............... 0.95% 0.41% 1.36% (0.31)% 1.05% Non-U.S. Fund* ........................ 0.95% 0.53% 1.48% (0.33)% 1.15% Real Estate Securities Fund* .......... 0.85% 0.13% 0.98% 0.00% 0.98% Core Bond Fund* ....................... 0.60% 0.20% 0.80% (0.10)% 0.70%
* Multi-Style Equity Fund - The Fund's Manager, Frank Russell Investment Management Company (FRIMCo) has contractually agreed to waive, at least until April 30, 2004, a portion of its 0.78% management fee, up to the full amount of that fee, equal to the amount by which the Fund's total operating expenses exceed 0.87% of the fund's average daily net assets on an annual basis and to reimburse the Fund for all remaining expenses, after fee waivers, that exceed 0.87% of the average daily net assets on an annual basis. Aggressive Equity Fund - FRIMCo has contractually agreed to waive, at least until April 30, 2004, a portion of its 0.95% management fee, up to the full amount of that fee, equal to the amount by which the Fund's total operating expenses exceed 1.05% of the Fund's average daily net assets on an annual basis and to reimburse the Fund for all remaining expenses, after fee waivers, that exceed 1.05% of the average daily net assets on an annual basis. Non-U.S. Fund - FRIMCo has contractually agreed to waive, at least until April 30, 2004, a portion of its 0.95% management fee, up to the full amount of that fee, equal to the amount by which the Fund's total operating expenses exceed 1.15% of the Fund's average daily net assets on an annual basis and to reimburse the Fund for all remaining expenses, after fee waivers, that exceed 1.15% of the average daily net assets on an annual basis. Real Estate Securities Fund - FRIMCo has contractually agreed to waive, at least until April 30, 2004, a portion of its 0.85% management fee, up to the full amount of that fee, equal to the amount by which the Fund's total operating expenses exceed 1.10% of the Fund's average daily net assets on an annual basis and to reimburse the Fund for all remaining expenses, after fee waivers, that exceed 1.10% of the average daily net assets on an annual basis. Core Bond Fund - FRIMCo has contractually agreed to waive, at least until April 30, 2004, a portion of its 0.60% management fee, up to the full amount of that fee, equal to the amount by which the Fund's total operating expenses exceed 0.70% of the Fund's average daily net assets on an annual basis and to reimburse the Fund for all remaining expenses, after fee waivers, that exceed 0.70% of the average daily net assets on an annual basis. In addition to the management fees payable by the Funds to FRIMCo, each Fund that invests its uninvested cash balances or collateral received in securities lending transactions in one or more of Frank Russell Investment Company's ("FRIC") money market funds pursuant to the terms and conditions of an exemptive order will bear indirectly a proportionate share of that money market fund's operating expenses, which include the advisory and administrative fees that such money market fund pays to FRIMCo. Currently, the uninvested cash balances and collateral for all Funds are invested in FRIC's Money Market Fund. The aggregate annual rate of advisory and administrative fees payable to FRIMCo on the uninvested cash balances and collateral invested in this fund is 0.10% (net of fee waivers and reimbursements). Example This example is intended to help you compare the cost of investing in each Fund with the cost of investing in other mutual funds. The example assumes that you invest $10,000 in a Fund for the time periods indicated and then redeem all of your Shares at the end of those periods. The example also assumes your investment has a 5% return each year and that operating expenses remain the same. This example does not reflect any Insurance Company Separate Account or Policy charges. If it did, the costs shown would be higher. Although your actual costs may be higher or lower, under these assumptions your costs would be:
Fund 1 Year 3 Years 5 Years 10 Years ------ ------- ------- -------- Multi-Style Equity Fund .................. $ 89 $ 303 $ 535 $ 1,201 Aggressive Equity Fund ................... 107 400 715 1,608 Non-U.S. Fund ............................ 117 435 777 1,741 Real Estate Securities Fund .............. 100 312 542 1,203 Core Bond Fund ........................... 72 246 434 980
II. The following paragraph is added to the end of the section entitled "Purchase of Fund Shares": Frequent Trading: The Funds do not permit market-timing. The Funds reserve the right to reject or restrict any purchase order, including exchanges from any investor. The Funds are intended for long-term investors. Frequent trading of Fund shares, often in response to short-term fluctuations in the market, also known as "market timing", is not permitted. The Funds may reject or cancel purchase and exchange orders and may restrict the availability of purchases and exchanges through telephone requests, facsimile transmissions, automated telephone services, internet services or any electronic transfer service, if an investor's trading, in the judgment of the Funds, has been or may be disruptive to a Fund. In making this judgment, the Funds may consider trading done in multiple accounts under common control or ownership. This policy will not affect any redemption rights. III. The following restates the section entitled "Money Manager Information" for the Multi-Style Equity Fund, Aggressive Equity Fund and Non-U.S. Fund in its entirety in the Russell Insurance Funds Prospectus: MONEY MANAGER INFORMATION Multi-Style Equity Fund Alliance Capital Management L.P. through its Bernstein Investment Research and Management Unit, 1345 Avenue of the Americas, New York, NY 10105. Barclays Global Fund Advisors, 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, NE, 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, a business unit of the Investment Management Division of Goldman, Sachs & Co., 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, Glenpoint 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. 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. Russell Insurance Funds Supplement Dated January 31, 2003 To the Statement of Additional Information Dated April 30, 2002 As Supplemented through June 24, 2002 I. The following restates the chart contained on the cover page of this Statement of Additional Information: As of the date of this Statement of Additional Information, RIF is comprised of the following investment portfolios, each of which commenced operations on the date set forth opposite the Fund's name.
Fund Fund Inception Date Prospectus Date ---- ------------------- --------------- Multi-Style Equity Fund January 2, 1997 April 30, 2002* Aggressive Equity Fund January 2, 1997 April 30, 2002* Non-U.S. Fund January 2, 1997 April 30, 2002* Real Estate Securities Fund April 30, 1999 April 30, 2002* Core Bond Fund January 2, 1997 April 30, 2002*
------------------- * As Supplemented through January 31, 2003 II. The following restates the section entitled "Code of Ethics" in its entirety in the Frank Russell Investment Company Statement of Additional Information: Codes Of Ethics. RIF, FRIMCo and the Distributor have each adopted a Code of Ethics as required under SEC Rule 17j-1. These Codes permit personnel subject to the Codes to invest in securities, which may include securities in which the Funds can invest. Personal investments are subject to the regulatory and disclosure provisions of the respective Codes. In addition, each Money Manager has adopted a Code of Ethics under Rule 17j-1. The table below indicates whether each Money Manager's Code of Ethics permits personnel covered by the Code to invest in securities and, where appropriate, to invest in securities in which a Fund advised by that Money Manager may invest.
---------------------------------------------------------------------------------------------------------------------------- Does the code contain Personal investing Are investments in securities owned by all of the required MONEY MANAGER allowed? the advised sub-trust allowed? Rule 17j-1 provisions? ---------------------------------------------------------------------------------------------------------------------------- AEW Management and Advisors, Yes No Yes L.P. ---------------------------------------------------------------------------------------------------------------------------- Alliance Capital Management, Yes Yes, but not in securities with Yes L.P. through its Bernstein pending or possible client buy or sell Investment Research and orders Management Unit ---------------------------------------------------------------------------------------------------------------------------- AQR Capital Management, LLC Yes Yes, unless the securities are on a Yes restricted list ---------------------------------------------------------------------------------------------------------------------------- Barclays Global Fund Advisors Yes Yes, but not in securities with Yes pending or possible client buy or sell orders and certain blackouts apply to securities of Barclays PLC and securities underwritten by Barclays affiliates ---------------------------------------------------------------------------------------------------------------------------- The Boston Company Asset Yes Yes, but not in securities with Yes Management, LLC pending or possible client buy or sell orders, also, certain persons may not purchase securities issued by financial services organizations ----------------------------------------------------------------------------------------------------------------------------
---------------------------------------------------------------------------------------------------------------------------- Brandywine Asset Management, Yes Yes, but not in securities with Yes LLC pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- CapitalWorks Investment Yes Yes, but not in securities with Yes Partners, LLC pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- David J. Greene and Company, Yes Yes Yes LLC ---------------------------------------------------------------------------------------------------------------------------- Fidelity Management and Yes Yes, but cannot purchase closed-end Yes Research Company funds for which Fidelity performs pricing and bookkeeping, securities of certain broker-dealers or interests in hedge funds and investment clubs ---------------------------------------------------------------------------------------------------------------------------- Geewax, Terker & Company Yes Yes, but not in securities with Yes pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- Goldman Sachs Asset Yes Yes, but not in securities with Yes Management, a business unit pending or possible client buy or sell of the Investment Management orders Division of Goldman, Sachs & Co. ---------------------------------------------------------------------------------------------------------------------------- Jacobs Levy Equity Yes Yes, but not in securities with Yes Management, Inc. pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- Montag & Caldwell, Inc. Yes Yes, but not in securities on a Yes Restricted Stock List ---------------------------------------------------------------------------------------------------------------------------- Oechsle International Yes Yes, but not in securities with Yes Advisors, LLC pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- Pacific Investment Yes, but must use a Yes, but not in securities with Yes Management Company, LLC registered broker for pending or possible client buy or sell transactions in orders publicly traded securities ---------------------------------------------------------------------------------------------------------------------------- RREEF America L.L.C. Yes Yes, but transactions in securities Yes with pending or possible client buy or sell orders require prior approval ---------------------------------------------------------------------------------------------------------------------------- Security Capital Research & Yes Yes, but not in securities with Yes Management Incorporated pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- Strong Capital Management, Yes Yes, but not in securities with Yes Inc. pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- Suffolk Capital Management, Yes Yes, but not in securities with Yes LLC pending or possible client buy or sell orders or in securities of which 10% or more are held in portfolios managed by Suffolk ---------------------------------------------------------------------------------------------------------------------------- Systematic Financial Yes Yes, but not in securities with Yes Management, L.P. pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- TimesSquare Capital Yes Yes, but not in securities with Yes Management, Inc. pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- Turner Investment Partners, Yes Yes, but not in securities in which Yes Inc. the adviser has a long or short position or with pending or possible client buy or sell orders ---------------------------------------------------------------------------------------------------------------------------- Westpeak Global Advisors, Yes Yes, but not in securities with Yes L.P. pending or possible client buy or sell orders ----------------------------------------------------------------------------------------------------------------------------
III. The following restates the section entitled "Money Manager Information" for the Multi-Style Equity Fund in its entirety in the Russell Insurance Funds Statement of Additional Information: MONEY MANAGER INFORMATION MULTI-STYLE EQUITY FUND Alliance Capital Management L.P., through its Bernstein Investment Research and Management Unit, is a limited partnership the majority ownership interests in which are held by its affiliates. Alliance Capital Management Holding L.P., a publicly traded partnership, owns approximately 30% of the units representing limited partnership interests in Alliance Capital Management L.P. AXA Financial, Inc. owns approximately 2% of the outstanding units of Alliance Capital Management Holding L.P. and approximately 52% of the outstanding units of Alliance Capital Management L.P., representing an approximate 53% economic interest in Alliance Capital Management L.P. AXA Financial, Inc. is a wholly-owned subsidiary of AXA, a publicly traded financial services organization. AXA Financial, Inc.'s indirect wholly-owned subsidiary, Alliance Capital Management Corporation, is the general partner of Alliance Capital Management L.P. and Alliance Capital Management Holding L.P. Barclays Global Fund Advisors, is a wholly-owned subsidiary of Barclays Global Investors, N.A. Brandywine Asset Management, LLC is wholly-owned by Legg Mason, Inc., a publicly traded company. Jacobs Levy Equity Management, Inc. is owned by Bruce Jacobs and Kenneth Levy. Montag & Caldwell, Inc. is a wholly-owned subsidiary of ABN AMRO Holdings N.V., a publicly traded company. Other entities in the corporate chain of control include ABN AMRO Bank N.V., ABN AMRO North America Holding Company, and Montag & Caldwell's parent company, ABN AMRO Asset Management Holdings, Inc. Strong Capital Management, Inc. is a corporation controlled by Richard S. Strong. Turner Investment Partners, Inc. is a corporation controlled by Robert E. Turner. Westpeak Global Advisors, L.P. ("Westpeak") is a limited partnership that is a subsidiary of CDC IXIS Asset Management North America, L.P., Boston, Massachusetts, which itself is a subsidiary of CDC IXIS Asset Management, Paris, France ("CDC IXIS AM"). CDC IXIS AM is part of the Caisse des Depots et Consignations Group, Paris, France. IV. The following is added as the second to last paragraph in the section entitled "Limitations On Use Of Futures And Options On Futures Contracts" of the "Investment Restrictions, Policies And Certain Investments" section in the Statement of Additional Information of Russell Insurance Funds: In order to comply with applicable regulations of the CFTC pursuant to which the Funds avoid being deemed to be "commodity pools," the Funds are limited in entering into futures contracts and options on futures contracts to positions which constitute "bona fide hedging" positions within the meaning and intent of applicable CFTC rules, and with respect to positions for non-hedging purposes, to positions for which the aggregate initial margins and premiums will not exceed 5% of the net assets of a Fund as determined under the CFTC Rules. V. The following restates in its entirety the first paragraph of the section entitled "Swap Agreements" of the "Investment Restrictions, Policies And Certain Investments" section in the Statement of Additional Information of Russell Insurance Funds: Swap Agreements. The Funds may enter into index swap agreements as an additional equitization vehicle for uninvested cash balances held by the Funds or to effect investment transactions consistent with the Funds' investment objectives and strategies. Swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard swap transaction, the two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular investments or instruments. The returns to be exchanged between the parties are calculated with respect to a "notional amount" (i.e. a specified dollar amount that is hypothetically invested in a "basket" of securities representing a particular index). VI. The following restates in its entirety the section entitled "Uninvested Cash Balances" of the "Investment Restrictions, Policies And Certain Investments" section in the Statement of Additional Information of Russell Insurance Funds: Uninvested Cash Balances. Each Fund, and its money managers, may elect to invest the Fund's uninvested cash balances in one or more affiliated or unaffiliated money market funds. Pursuant to exemptive relief from the SEC, any investment of uninvested cash balances in affiliated money market funds will not exceed 25% of the investing Fund's total assets. The Funds will invest uninvested cash balances in affiliated money market funds only so long as it does not adversely affect the portfolio management and operations of the money market funds. The affiliated money market funds, and the Funds investing in them, treat such investments as the purchase and redemption of a money market fund's shares. Any Fund investing in an affiliated money market fund pursuant to this procedure participates equally on a pro rata basis in all income, capital gains, and net assets of the money market fund, and will have all rights and obligations of a shareholder, including voting rights. However, shares of an affiliated money market fund issued to the Funds will be voted by RIF's Trustees in the same proportion as the shares of the money market fund that are held by shareholders that are not Funds. In addition to the management fees payable by the Funds to FRIMCo, each Fund that invests its uninvested cash balances or collateral received in securities lending transactions in one or more of Frank Russell Investment Company's ("FRIC") money market funds pursuant to the terms and conditions of an exemptive order will bear indirectly a proportionate share of that money market fund's operating expenses, which include the advisory and administrative fees that such money market fund pays to FRIMCo. Currently, the uninvested cash balances and collateral for all Funds are invested in FRIC's Money Market Fund. The aggregate annual rate of advisory and administrative fees payable to FRIMCo on the uninvested cash balances and collateral invested in this fund is 0.10% (net of fee waivers and reimbursements). The SEC exemptive order requires that the Funds' Board determine that the advisory fees incurred in connection with the investment of uninvested cash balances in affiliated money market funds are not for duplicative services.