Table of Contents
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED MANAGEMENT
INVESTMENT COMPANIES
Investment Company Act file number: | 811-05371 |
Russell Investment Funds
(Exact name of registrant as specified in charter) |
909 A Street, Tacoma Washington | 98402 | |
(Address of principal executive offices) | (Zip code) |
Gregory J. Lyons, Assistant Secretary
Russell Investment Funds
909 A Street
Tacoma, Washington 98402
253-439-2406
(Name and address of agent for service) |
Registrant’s telephone number, including area code: 253-572-9500
Date of fiscal year end: December 31
Date of reporting period: January 1, 2009 – June 30, 2009
Table of Contents
Item 1. | Reports to Stockholders |
Table of Contents
2009 SEMIANNUAL REPORT
Russell Investment Funds
JUNE 30, 2009
FUND
Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
Real Estate Securities Fund
Table of Contents
Russell Investment Funds
Russell Investment Funds is a series investment company with nine different investment portfolios referred to as Funds. These financial statements report on five of these Funds.
Table of Contents
Russell Investment Funds
Semiannual Report
June 30, 2009 (Unaudited)
Table of Contents
Russell Investment Funds
Copyright © Russell Investments 2009. All rights reserved.
Russell Investments is a Washington, USA corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.
Fund objectives, risks, charges and expenses should be carefully considered before investing. A prospectus containing this and other important information must precede or accompany this material. Please read the prospectus carefully before investing.
Securities products and services offered through Russell Financial Services, Inc., member FINRA, part of Russell Investments.
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate
of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,062.30 | $ | 1,020.53 | ||
Expenses Paid During Period* | $ | 4.40 | $ | 4.31 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.86% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
Multi-Style Equity Fund | 3 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 92.9% | ||||
Consumer Discretionary - 11.5% | ||||
Amazon.com, Inc. (Æ) | 23,190 | 1,940 | ||
American Eagle Outfitters, Inc. | 42,100 | 597 | ||
Apollo Group, Inc. Class A (Æ) | 6,558 | 466 | ||
AutoZone, Inc. (Æ)(Ñ) | 4,926 | 744 | ||
Avon Products, Inc. | 39,760 | 1,025 | ||
Bed Bath & Beyond, Inc. (Æ) | 15,760 | 485 | ||
Best Buy Co., Inc. (Ñ) | 29,109 | 975 | ||
BJ’s Wholesale Club, Inc. (Æ)(Ñ) | 4,300 | 139 | ||
CBS Corp. Class B | 82,400 | 570 | ||
Clear Channel Outdoor Holdings, Inc. Class A (Æ) | 5,724 | 30 | ||
Coach, Inc. | 8,400 | 226 | ||
Costco Wholesale Corp. | 22,000 | 1,005 | ||
DISH Network Corp. Class A (Æ) | 16,300 | 264 | ||
Dollar Tree, Inc. (Æ) | 8,466 | 356 | ||
DR Horton, Inc. | 12,800 | 120 | ||
eBay, Inc. (Æ) | 61,100 | 1,047 | ||
Estee Lauder Cos., Inc. (The) Class A | 10,479 | 342 | ||
Foot Locker, Inc. | 13,700 | 143 | ||
Ford Motor Co. (Æ)(Ñ) | 75,882 | 461 | ||
Fortune Brands, Inc. | 9,200 | 320 | ||
Garmin, Ltd. (Ñ) | 30,300 | 722 | ||
Goodyear Tire & Rubber Co. (The) (Æ) | 22,980 | 259 | ||
Guess?, Inc. | 9,040 | 233 | ||
Home Depot, Inc. | 23,341 | 552 | ||
JC Penney Co., Inc. | 24,300 | 698 | ||
Johnson Controls, Inc. (Ñ) | 42,000 | 912 | ||
Jones Apparel Group, Inc. | 11,400 | 122 | ||
Kohl’s Corp. (Æ) | 26,104 | 1,116 | ||
Limited Brands, Inc. | 50,800 | 608 | ||
Lowe’s Cos., Inc. (Ñ) | 124,659 | 2,420 | ||
Macy’s, Inc. | 48,400 | 569 | ||
McDonald’s Corp. | 57,529 | 3,307 | ||
McGraw-Hill Cos., Inc. (The) | 21,300 | 641 | ||
Meritage Homes Corp. (Æ)(Ñ) | 1,300 | 25 | ||
Newell Rubbermaid, Inc. | 34,600 | 360 | ||
Nike, Inc. Class B (Ñ) | 34,409 | 1,782 | ||
NVR, Inc. (Æ)(Ñ) | 1,020 | 512 | ||
priceline.com, Inc. (Æ)(Ñ) | 4,866 | 543 | ||
Pulte Homes, Inc. (Ñ) | 39,390 | 348 | ||
Rent-A-Center, Inc. Class A (Æ) | 8,100 | 144 | ||
Starbucks Corp. (Æ) | 26,925 | 374 | ||
Starwood Hotels & Resorts Worldwide, Inc. (Ñ)(ö) | 32,370 | 719 | ||
Target Corp. | 15,900 | 628 | ||
Tiffany & Co. (Ñ) | 12,500 | 317 | ||
Timberland Co. Class A (Æ) | 3,100 | 41 | ||
Time Warner Cable, Inc. | 7,100 | 225 | ||
TRW Automotive Holdings Corp. (Æ)(Ñ) | 10,300 | 116 | ||
Viacom, Inc. Class B (Æ) | 66,800 | 1,516 | ||
Wal-Mart Stores, Inc. | 54,450 | 2,638 | ||
Walt Disney Co. (The) | 32,800 | 765 | ||
WESCO International, Inc. (Æ) | 7,700 | 193 | ||
Williams-Sonoma, Inc. | 45,100 | 535 | ||
Wynn Resorts, Ltd. (Æ)(Ñ) | 7,280 | 257 | ||
35,452 | ||||
Principal Amount ($) or Shares | Market Value $ | |||
Consumer Staples - 7.4% | ||||
Casey’s General Stores, Inc. | 2,500 | 64 | ||
Coca-Cola Co. (The) | 83,244 | 3,995 | ||
Colgate-Palmolive Co. | 20,060 | 1,419 | ||
CVS Caremark Corp. | 113,335 | 3,612 | ||
Hansen Natural Corp. (Æ)(Ñ) | 23,185 | 715 | ||
Hershey Co. (The) (Ñ) | 9,600 | 346 | ||
Hormel Foods Corp. | 4,600 | 159 | ||
JM Smucker Co. (The) | 424 | 21 | ||
Kimberly-Clark Corp. | 15,500 | 813 | ||
Kroger Co. (The) | 12,700 | 280 | ||
Lorillard, Inc. | 6,600 | 447 | ||
Molson Coors Brewing Co. Class B | 13,100 | 554 | ||
Pepsi Bottling Group, Inc. | 6,700 | 227 | ||
PepsiCo, Inc. | 104,949 | 5,768 | ||
Procter & Gamble Co. (The) | 36,540 | 1,867 | ||
Ralcorp Holdings, Inc. (Æ) | 2,300 | 140 | ||
Safeway, Inc. | 15,100 | 308 | ||
SUPERVALU, Inc. | 18,800 | 243 | ||
Sysco Corp. | 10,340 | 232 | ||
Tyson Foods, Inc. Class A | 16,800 | 212 | ||
Walgreen Co. | 25,800 | 758 | ||
Whole Foods Market, Inc. (Ñ) | 27,151 | 515 | ||
22,695 | ||||
Energy - 9.6% | ||||
Anadarko Petroleum Corp. | 17,200 | 781 | ||
Apache Corp. | 2,500 | 180 | ||
Arch Coal, Inc. (Ñ) | 44,500 | 684 | ||
Baker Hughes, Inc. | 46,950 | 1,711 | ||
Berry Petroleum Co. Class A (Ñ) | 3,600 | 67 | ||
Cameron International Corp. (Æ) | 45,990 | 1,302 | ||
Chesapeake Energy Corp. | 38,156 | 757 | ||
Chevron Corp. | 29,500 | 1,954 | ||
ConocoPhillips | 32,200 | 1,354 | ||
Devon Energy Corp. | 22,300 | 1,215 | ||
ENSCO International, Inc. | 7,100 | 248 | ||
Exxon Mobil Corp. | 43,240 | 3,023 | ||
First Solar, Inc. (Æ)(Ñ) | 4,751 | 770 | ||
Halliburton Co. | 17,900 | 371 | ||
Hess Corp. | 2,979 | 160 | ||
Key Energy Services, Inc. (Æ) | 15,500 | 89 | ||
Marathon Oil Corp. | 97,245 | 2,930 | ||
Occidental Petroleum Corp. | 56,165 | 3,696 | ||
Oil States International, Inc. (Æ) | 6,000 | 145 | ||
Patterson-UTI Energy, Inc. (Ñ) | 10,300 | 133 | ||
Rowan Cos., Inc. | 9,400 | 182 | ||
Schlumberger, Ltd. | 26,100 | 1,412 | ||
Southwestern Energy Co. (Æ) | 7,290 | 283 | ||
Sunoco, Inc. (Ñ) | 22,300 | 517 | ||
Tesoro Corp. (Ñ) | 10,600 | 135 | ||
Total SA - ADR | 21,300 | 1,155 | ||
Transocean, Ltd. (Æ) | 20,972 | 1,558 | ||
Valero Energy Corp. | 16,900 | 286 | ||
Weatherford International, Ltd. (Æ) | 18,730 | 366 | ||
Western Refining, Inc. (Æ) | 8,900 | 63 | ||
Williams Cos., Inc. (The) | 49,100 | 767 | ||
XTO Energy, Inc. | 29,583 | 1,128 | ||
29,422 | ||||
4 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Financial Services - 16.0% | ||||
ACE, Ltd. | 28,800 | 1,274 | ||
Allied World Assurance Co. Holdings, Ltd. | 2,400 | 98 | ||
Allstate Corp. (The) | 11,700 | 285 | ||
American Express Co. | 34,337 | 798 | ||
American Financial Group, Inc. | 11,400 | 246 | ||
Annaly Capital Management, Inc. (ö) | 48,600 | 736 | ||
Anworth Mortgage Asset Corp. (ö) | 10,100 | 73 | ||
Apollo Investment Corp. | 1,000 | 6 | ||
Arch Capital Group, Ltd. (Æ) | 2,200 | 129 | ||
Arthur J Gallagher & Co. | 7,100 | 152 | ||
Bank of America Corp. | 90,000 | 1,188 | ||
Bank of New York Mellon Corp. (The) | 99,841 | 2,926 | ||
BB&T Corp. | 30,550 | 671 | ||
BioMed Realty Trust, Inc. (ö) | 7,200 | 74 | ||
Brandywine Realty Trust (ö) | 14,400 | 107 | ||
Brown & Brown, Inc. | 1,000 | 20 | ||
Camden Property Trust (ö) | 5,900 | 163 | ||
Capital One Financial Corp. (Ñ) | 46,950 | 1,027 | ||
Capstead Mortgage Corp. (ö) | 8,000 | 102 | ||
Cash America International, Inc. | 4,800 | 112 | ||
CBL & Associates Properties, Inc. (ö)(Ñ) | 12,900 | 70 | ||
Charles Schwab Corp. (The) | 106,000 | 1,859 | ||
Chubb Corp. | 19,800 | 790 | ||
Commerce Bancshares, Inc. | 3,360 | 107 | ||
DCT Industrial Trust, Inc. (ö)(Ñ) | 22,900 | 93 | ||
Discover Financial Services | 28,900 | 297 | ||
Extra Space Storage, Inc. (ö)(Ñ) | 9,900 | 83 | ||
Fidelity National Financial, Inc. Class A | 7,700 | 104 | ||
Fifth Third Bancorp | 22,700 | 161 | ||
Fulton Financial Corp. (Ñ) | 12,700 | 66 | ||
Goldman Sachs Group, Inc. (The) | 28,173 | 4,154 | ||
Hartford Financial Services Group, Inc. | 2,500 | 30 | ||
Hospitality Properties Trust (ö)(Ñ) | 14,400 | 171 | ||
Hudson City Bancorp, Inc. | 17,700 | 235 | ||
JPMorgan Chase & Co. | 199,179 | 6,794 | ||
Keycorp | 85,400 | 447 | ||
Liberty Property Trust (ö) | 7,000 | 161 | ||
Lincoln National Corp. | 15,100 | 260 | ||
Mack-Cali Realty Corp. (ö) | 7,600 | 173 | ||
Marsh & McLennan Cos., Inc. | 36,900 | 743 | ||
Mastercard, Inc. Class A | 5,685 | 951 | ||
Mercury General Corp. (Ñ) | 18,700 | 625 | ||
MetLife, Inc. | 29,333 | 880 | ||
MFA Financial, Inc. (ö) | 7,600 | 53 | ||
Morgan Stanley | 125,519 | 3,579 | ||
MSCI, Inc. Class A (Æ) | 9,100 | 222 | ||
Nasdaq OMX Group, Inc. (The) (Æ) | 11,300 | 241 | ||
Navigators Group, Inc. (Æ) | 1,000 | 44 | ||
New York Community Bancorp, Inc. (Ñ) | 52,700 | 563 | ||
PartnerRe, Ltd. - ADR (Ñ) | 4,100 | 266 | ||
PNC Financial Services Group, Inc. | 54,885 | 2,130 | ||
Prologis (ö)(Ñ) | 33,000 | 266 | ||
Prudential Financial, Inc. | 21,200 | 789 | ||
Regions Financial Corp. (Ñ) | 54,361 | 220 | ||
StanCorp Financial Group, Inc. | 3,100 | 89 | ||
State Street Corp. | 2,000 | 94 |
Principal Amount ($) or Shares | Market Value $ | |||
SunTrust Banks, Inc. | 62,900 | 1,035 | ||
Susquehanna Bancshares, Inc. (Ñ) | 12,100 | 59 | ||
Synovus Financial Corp. (Ñ) | 58,500 | 175 | ||
T Rowe Price Group, Inc. (Ñ) | 17,230 | 718 | ||
Travelers Cos., Inc. (The) | 28,500 | 1,170 | ||
UDR, Inc. (ö)(Ñ) | 23,772 | 246 | ||
Universal American Corp. (Æ) | 4,400 | 38 | ||
Visa, Inc. | 53,314 | 3,319 | ||
Wells Fargo & Co. | 163,678 | 3,971 | ||
Wilmington Trust Corp. (Ñ) | 24,500 | 335 | ||
WR Berkley Corp. | 10,200 | 219 | ||
XL Capital, Ltd. Class A | 9,300 | 107 | ||
49,389 | ||||
Health Care - 12.1% | ||||
Abbott Laboratories | 77,350 | 3,639 | ||
Alexion Pharmaceuticals, Inc. (Æ) | 12,720 | 523 | ||
Allergan, Inc. | 18,800 | 895 | ||
Amgen, Inc. (Æ) | 31,075 | 1,645 | ||
Boston Scientific Corp. (Æ) | 77,082 | 782 | ||
Bristol-Myers Squibb Co. | 17,400 | 353 | ||
Cardinal Health, Inc. | 3,800 | 116 | ||
Centene Corp. (Æ) | 4,500 | 90 | ||
Coventry Health Care, Inc. (Æ) | 12,100 | 226 | ||
Covidien PLC | 29,500 | 1,105 | ||
Eli Lilly & Co. | 7,800 | 270 | ||
Express Scripts, Inc. Class A (Æ) | 11,330 | 779 | ||
Forest Laboratories, Inc. (Æ) | 13,400 | 337 | ||
Gilead Sciences, Inc. (Æ) | 65,000 | 3,045 | ||
Health Net, Inc. (Æ) | 4,200 | 65 | ||
Healthspring, Inc. (Æ) | 5,200 | 56 | ||
Henry Schein, Inc. (Æ) | 6,260 | 300 | ||
Humana, Inc. (Æ) | 8,600 | 277 | ||
Illumina, Inc. (Æ)(Ñ) | 3,880 | 151 | ||
Intuitive Surgical, Inc. (Æ)(Ñ) | 4,027 | 659 | ||
Johnson & Johnson | 22,400 | 1,272 | ||
King Pharmaceuticals, Inc. (Æ) | 27,200 | 262 | ||
Laboratory Corp. of America Holdings (Æ) | 12,000 | 814 | ||
Magellan Health Services, Inc. (Æ) | 3,900 | 128 | ||
Merck & Co., Inc. | 9,300 | 260 | ||
Mylan, Inc. (Æ)(Ñ) | 43,304 | 565 | ||
Myriad Genetics, Inc. (Æ) | 16,391 | 584 | ||
Myriad Pharmaceuticals, Inc. (Æ) | 4,097 | 19 | ||
Novartis AG - ADR | 48,700 | 1,986 | ||
Pfizer, Inc. | 183,935 | 2,759 | ||
Schering-Plough Corp. | 173,922 | 4,369 | ||
St. Jude Medical, Inc. (Æ) | 49,602 | 2,039 | ||
Stryker Corp. | 14,300 | 568 | ||
Teva Pharmaceutical Industries, | 6,440 | 318 | ||
Thermo Fisher Scientific, Inc. (Æ) | 42,333 | 1,726 | ||
WellPoint, Inc. (Æ) | 12,406 | 631 | ||
Wyeth | 81,924 | 3,719 | ||
37,332 | ||||
Materials and Processing - 5.5% | ||||
Air Products & Chemicals, Inc. | 11,200 | 723 | ||
Alcoa, Inc. (Ñ) | 40,710 | 420 | ||
Archer-Daniels-Midland Co. | 18,220 | 488 |
Multi-Style Equity Fund | 5 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Ball Corp. | 16,000 | 723 | ||
Barrick Gold Corp. | 31,725 | 1,064 | ||
Bunge, Ltd. | 4,200 | 253 | ||
Cabot Corp. | 29,300 | 369 | ||
Celanese Corp. Class A | 35,500 | 843 | ||
Cliffs Natural Resources, Inc. | 7,700 | 188 | ||
Cytec Industries, Inc. | 5,300 | 99 | ||
Domtar Corp. (Æ)(Ñ) | 3,250 | 54 | ||
Dow Chemical Co. (The) | 40,300 | 650 | ||
EI Du Pont de Nemours & Co. | 48,950 | 1,254 | ||
Freeport-McMoRan Copper & Gold, Inc. Class B | 16,220 | �� | 813 | |
Masco Corp. (Ñ) | 36,000 | 345 | ||
Monsanto Co. | 30,478 | 2,266 | ||
Newmont Mining Corp. | 68,414 | 2,796 | ||
OM Group, Inc. (Æ)(Ñ) | 4,000 | 116 | ||
Packaging Corp. of America | 13,574 | 220 | ||
Pactiv Corp. (Æ) | 3,900 | 85 | ||
Potash Corp. of Saskatchewan, Inc. | 2,680 | 249 | ||
PPG Industries, Inc. | 13,600 | 597 | ||
RPM International, Inc. | 27,150 | 381 | ||
Silgan Holdings, Inc. | 4,600 | 226 | ||
Timken Co. | 32,500 | 555 | ||
United States Steel Corp. (Ñ) | 13,840 | 495 | ||
Vulcan Materials Co. | 16,900 | 728 | ||
17,000 | ||||
Producer Durables - 9.8% | ||||
3M Co. | 25,100 | 1,509 | ||
Accenture, Ltd. Class A | 19,900 | 666 | ||
AGCO Corp. (Æ) | 600 | 17 | ||
Alaska Air Group, Inc. (Æ) | 5,900 | 108 | ||
Alcatel-Lucent - ADR (Æ) | 98,380 | 244 | ||
AO Smith Corp. | 2,500 | 81 | ||
ASML Holding NV (Ñ) | 12,700 | 275 | ||
Avery Dennison Corp. | 21,100 | 542 | ||
Bucyrus International, Inc. Class A | 7,200 | 206 | ||
Burlington Northern Santa Fe Corp. | 4,700 | 346 | ||
Caterpillar, Inc. (Ñ) | 19,650 | 649 | ||
CH Robinson Worldwide, Inc. (Ñ) | 5,340 | 279 | ||
Continental Airlines, Inc. Class B (Æ) | 40,902 | 362 | ||
Convergys Corp. (Æ) | 3,900 | 36 | ||
CSX Corp. | 108,180 | 3,746 | ||
Cummins, Inc. | 30,780 | 1,084 | ||
Deere & Co. | 8,900 | 356 | ||
Deluxe Corp. | 5,300 | 68 | ||
Emerson Electric Co. | 16,000 | 518 | ||
Fluor Corp. (Ñ) | 18,000 | 923 | ||
Gardner Denver, Inc. (Æ) | 1,000 | 25 | ||
General Dynamics Corp. | 14,617 | 810 | ||
General Electric Co. | 86,200 | 1,010 | ||
Honeywell International, Inc. | 82,798 | 2,600 | ||
JetBlue Airways Corp. (Æ)(Ñ) | 11,800 | 50 | ||
Joy Global, Inc. | 4,540 | 162 | ||
KBR, Inc. | 6,400 | 118 | ||
L-3 Communications Holdings, Inc. | 3,300 | 229 | ||
Lexmark International, Inc. Class A (Æ) | 14,500 | 230 | ||
Lockheed Martin Corp. | 34,734 | 2,801 |
Principal Amount ($) or Shares | Market Value $ | |||
Manitowoc Co., Inc. (The) (Ñ) | 20,200 | 106 | ||
Manpower, Inc. | 6,600 | 279 | ||
Nokia OYJ - ADR (Ñ) | 60,900 | 888 | ||
Northrop Grumman Corp. | 14,700 | 672 | ||
Pall Corp. | 16,400 | 436 | ||
Pitney Bowes, Inc. | 30,500 | 669 | ||
Republic Services, Inc. Class A | 24,000 | 586 | ||
Robert Half International, Inc. (Ñ) | 11,720 | 277 | ||
Rockwell Automation, Inc. | 12,300 | 395 | ||
RR Donnelley & Sons Co. | 37,600 | 437 | ||
Ryder System, Inc. | 8,600 | 240 | ||
SPX Corp. | 8,000 | 392 | ||
Steelcase, Inc. Class A (Ñ) | 1,600 | 9 | ||
Sunpower Corp. (Æ)(Ñ) | 24,061 | 576 | ||
Teleflex, Inc. | 13,200 | 592 | ||
Tutor Perini Corp. (Æ)(Ñ) | 6,800 | 118 | ||
Tyco International, Ltd. | 21,500 | 559 | ||
Union Pacific Corp. | 8,574 | 446 | ||
United Parcel Service, Inc. Class B | 15,300 | 765 | ||
United Technologies Corp. | 19,600 | 1,018 | ||
Watson Wyatt Worldwide, Inc. Class A | 1,600 | 60 | ||
Xerox Corp. | 99,300 | 643 | ||
30,213 | ||||
Technology - 18.4% | ||||
Activision Blizzard, Inc. (Æ) | 76,920 | 971 | ||
Adobe Systems, Inc. (Æ) | 9,840 | 278 | ||
Amphenol Corp. Class A | 47,776 | 1,512 | ||
Apple, Inc. (Æ) | 44,231 | 6,300 | ||
Applied Materials, Inc. | 120,880 | 1,326 | ||
Arris Group, Inc. (Æ) | 15,200 | 185 | ||
Avnet, Inc. (Æ) | 11,300 | 238 | ||
Broadcom Corp. Class A (Æ)(Ñ) | 64,069 | 1,588 | ||
Cisco Systems, Inc. (Æ) | 178,616 | 3,329 | ||
Computer Sciences Corp. (Æ) | 3,000 | 133 | ||
Corning, Inc. | 38,480 | 618 | ||
Data Domain, Inc. (Æ) | 4,189 | 140 | ||
Dell, Inc. (Æ) | 63,400 | 870 | ||
F5 Networks, Inc. (Æ)(Ñ) | 10,510 | 364 | ||
Google, Inc. Class A (Æ)(Ñ) | 13,242 | 5,583 | ||
Hewlett-Packard Co. | 138,247 | 5,343 | ||
Ingram Micro, Inc. Class A (Æ) | 8,900 | 156 | ||
Intel Corp. | 198,420 | 3,284 | ||
International Business Machines Corp. | 25,231 | 2,635 | ||
International Game Technology (Ñ) | 10,810 | 172 | ||
Jabil Circuit, Inc. | 80,700 | 599 | ||
Juniper Networks, Inc. (Æ)(Ñ) | 99,336 | 2,344 | ||
Lam Research Corp. (Æ)(Ñ) | 18,650 | 485 | ||
Marvell Technology Group, Ltd. (Æ) | 55,232 | 643 | ||
Maxim Integrated Products, Inc. | 59,400 | 932 | ||
McAfee, Inc. (Æ) | 6,080 | 256 | ||
Microsoft Corp. | 113,250 | 2,692 | ||
Motorola, Inc. | 48,700 | 323 | ||
Oracle Corp. | 27,900 | 598 | ||
QUALCOMM, Inc. | 151,126 | 6,831 | ||
Research In Motion, Ltd. (Æ) | 37,641 | 2,674 | ||
SAIC, Inc. (Æ) | 12,700 | 236 |
6 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Salesforce.com, Inc. (Æ)(Ñ) | 5,820 | 222 | ||
Seagate Technology, Inc. (Æ)(ß) | 2,300 | — | ||
Taiwan Semiconductor Manufacturing Co., Ltd. - ADR | 55,300 | 520 | ||
Tellabs, Inc. (Æ) | 41,100 | 235 | ||
Texas Instruments, Inc. | 65,300 | 1,391 | ||
Xilinx, Inc. (Ñ) | 24,820 | 508 | ||
56,514 | ||||
Utilities - 2.6% | ||||
Ameren Corp. (Ñ) | 10,400 | 259 | ||
American Electric Power Co., Inc. | 12,300 | 355 | ||
American Water Works Co., Inc. | 21,500 | 411 | ||
AT&T, Inc. | 31,900 | 792 | ||
Atmos Energy Corp. | 5,700 | 143 | ||
Avista Corp. | 2,500 | 45 | ||
BCE, Inc. | 32,050 | 662 | ||
China Mobile, Ltd. - ADR | 5,700 | 286 | ||
Clearwire Corp. (Æ)(Ñ) | 2,400 | 13 | ||
DTE Energy Co. | 9,600 | 307 | ||
Duke Energy Corp. | 21,700 | 317 | ||
Embarq Corp. | 6,600 | 278 | ||
Frontier Communications Corp. | 65,500 | 468 | ||
Millicom International Cellular SA (Æ)(Ñ) | 2,930 | 165 | ||
Mirant Corp. (Æ) | 11,400 | 179 | ||
NiSource, Inc. | 23,500 | 274 | ||
NRG Energy, Inc. (Æ) | 22,731 | 590 | ||
Pepco Holdings, Inc. | 14,000 | 188 | ||
Pinnacle West Capital Corp. | 9,600 | 289 | ||
Progress Energy, Inc. - CVO (ß)(Æ) | 1,300 | — | ||
Qwest Communications International, Inc. (Ñ) | 20,000 | 83 | ||
Southwest Gas Corp. | 2,900 | 64 |
Principal Amount ($) or Shares | Market Value $ | ||||
Sprint Nextel Corp. (Æ) | 96,863 | 466 | |||
US Cellular Corp. (Æ) | 900 | 35 | |||
Veolia Environnement - ADR | 14,400 | 425 | |||
Verizon Communications, Inc. | 2,700 | 83 | |||
Vodafone Group PLC - ADR (Ñ) | 46,850 | 913 | |||
8,090 | |||||
Total Common Stocks (cost $294,240) | 286,107 | ||||
Short-Term Investments - 6.5% | |||||
Russell Investment Company | 15,775,000 | 15,775 | |||
State Street Euro Commercial Paper (ç)(ž) | 4,400 | 4,400 | |||
Total Short-Term Investments (cost $20,175) | 20,175 | ||||
Other Securities - 8.0% | |||||
State Street Securities Lending Quality Trust (×) | 25,154,968 | 24,603 | |||
Total Other Securities (cost $25,155) | 24,603 | ||||
Total Investments - 107.4% (identified cost $339,570) | 330,885 | ||||
Other Assets and Liabilities, Net - (7.4%) | (22,927 | ) | |||
Net Assets - 100.0% | 307,958 | ||||
A portion of the portfolio has been fair valued as period end.
See accompanying notes which are an integral part of the financial statements.
Multi-Style Equity Fund | 7 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except contracts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||
Long Positions | ||||||||||
Russell 1000 Mini Index | 34 | USD | 1,701 | 09/09 | (39) | |||||
S&P 500 E-Mini Index (CME) | 300 | USD | 13,733 | 09/09 | (317) | |||||
S&P 500 Index (CME) | 20 | USD | 4,578 | 09/09 | (106) | |||||
S&P Midcap 400 E-Mini Index (CME) | 30 | USD | 1,730 | 09/09 | (56) | |||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | (518) | |||||||||
See accompanying notes which are an integral part of the financial statements.
8 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Presentation of Portfolio Holdings — June 30, 2009 (Unaudited)
Portfolio Summary | Market Value $ Level 1 | Market Value $ Level 2 | Market Value $ Level 3 | Total | % of Net Assets | ||||||||||||
Consumer Discretionary | $ | 35,451,863 | $ | — | $ | — | $ | 35,451,863 | 11.5 | ||||||||
Consumer Staples | 22,695,537 | — | — | 22,695,537 | 7.4 | ||||||||||||
Energy | 29,421,498 | — | — | 29,421,498 | 9.6 | ||||||||||||
Financial Services | 49,389,309 | — | — | 49,389,309 | 16.0 | ||||||||||||
Health Care | 37,331,966 | — | — | 37,331,966 | 12.1 | ||||||||||||
Materials and Processing | 17,000,283 | — | — | 17,000,283 | 5.5 | ||||||||||||
Producer Durables | 30,213,174 | — | — | 30,213,174 | 9.8 | ||||||||||||
Technology | 56,513,763 | — | — | 56,513,763 | 18.4 | ||||||||||||
Utilities | 8,090,030 | — | — | 8,090,030 | 2.6 | ||||||||||||
Short Term Investments | 15,775,000 | 4,400,000 | — | 20,175,000 | 6.5 | ||||||||||||
Other Securities | — | 24,602,903 | — | 24,602,903 | 8.0 | ||||||||||||
Total Investments | 301,882,423 | 29,002,903 | — | 330,885,326 | 107.4 | ||||||||||||
Other Assets and Liabilities, Net | (7.4 | ) | |||||||||||||||
100.0 | |||||||||||||||||
Futures Contracts | (518,246 | ) | — | — | (518,246 | ) | (0.2 | ) | |||||||||
Total Other Financial Instruments** | (518,246 | ) | — | — | (518,246 | ) | |||||||||||
Total | $ | 301,364,177 | $ | 29,002,903 | $ | — | $ | 330,367,080 | |||||||||
** | Other financial instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instruments. |
See accompanying notes which are an integral part of the financial statements.
Multi-Style Equity Fund | 9 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate
of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,044.00 | $ | 1,019.64 | ||
Expenses Paid During Period* | $ | 5.27 | $ | 5.21 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.04% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
10 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 92.4% | ||||
Consumer Discretionary - 14.4% | ||||
99 Cents Only Stores (Æ)(Ñ) | 27,738 | 377 | ||
Aaron’s, Inc. (Ñ) | 9,700 | 289 | ||
Advance Auto Parts, Inc. (Ñ) | 13,727 | 570 | ||
Aeropostale, Inc. (Æ)(Ñ) | 4,800 | 165 | ||
American Eagle Outfitters, Inc. (Ñ) | 21,282 | 302 | ||
American Woodmark Corp. (Ñ) | 800 | 19 | ||
Arctic Cat, Inc. (Ñ) | 1,800 | 7 | ||
Asbury Automotive Group, Inc. (Ñ) | 7,300 | 75 | ||
ATC Technology Corp. (Æ)(Ñ) | 1,400 | 20 | ||
Bally Technologies, Inc. (Æ)(Ñ) | 5,984 | 179 | ||
Bebe Stores, Inc. (Ñ) | 35,800 | 246 | ||
Bed Bath & Beyond, Inc. (Æ)(Ñ) | 8,360 | 257 | ||
BJ’s Restaurants, Inc. (Æ)(Ñ) | 7,400 | 125 | ||
BJ’s Wholesale Club, Inc. (Æ)(Ñ) | 6,700 | 216 | ||
Black & Decker Corp. (Ñ) | 4,200 | 120 | ||
Blyth, Inc. | 1,500 | 49 | ||
Borders Group, Inc. (Æ)(Ñ) | 7,300 | 27 | ||
Brightpoint, Inc. (Æ) | 5,200 | 33 | ||
Brinker International, Inc. (Ñ) | 18,100 | 308 | ||
Brunswick Corp. (Ñ) | 23,000 | 99 | ||
Build-A-Bear Workshop, Inc. Class A (Æ)(Ñ) | 3,900 | 17 | ||
Cabela’s, Inc. (Æ)(Ñ) | 23,300 | 287 | ||
Callaway Golf Co. (Ñ) | 300 | 2 | ||
Carter’s, Inc. (Æ) | 17,100 | 421 | ||
Charlotte Russe Holding, Inc. (Æ) | 14,000 | 180 | ||
Chico’s FAS, Inc. (Æ)(Ñ) | 27,900 | 271 | ||
Childrens Place Retail Stores, Inc. (The) (Æ)(Ñ) | 2,900 | 77 | ||
Chipotle Mexican Grill, Inc. | 1,184 | 95 | ||
Chipotle Mexican Grill, Inc. | 1,314 | 92 | ||
Christopher & Banks Corp. (Ñ) | 34,572 | 232 | ||
Churchill Downs, Inc. (Ñ) | 3,595 | 121 | ||
CKE Restaurants, Inc. (Ñ) | 24,000 | 204 | ||
Columbia Sportswear Co. (Ñ) | 9,818 | 304 | ||
Core-Mark Holding Co., Inc. (Æ) | 900 | 23 | ||
Corinthian Colleges, Inc. (Æ)(Ñ) | 7,600 | 129 | ||
CSS Industries, Inc. | 300 | 6 | ||
DeVry, Inc. (Ñ) | 8,643 | 433 | ||
DG FastChannel, Inc. (Æ)(Ñ) | 12,910 | 236 | ||
Dick’s Sporting Goods, Inc. (Æ)(Ñ) | 12,289 | 211 | ||
Dillard’s, Inc. Class A (Ñ) | 27,700 | 255 | ||
Dollar Tree, Inc. (Æ)(Ñ) | 20,000 | 842 | ||
DR Horton, Inc. (Ñ) | 37,700 | 353 | ||
Dress Barn, Inc. (Æ)(Ñ) | 11,500 | 164 | ||
DSW, Inc. Class A (Æ)(Ñ) | 4,600 | 45 | ||
Elizabeth Arden, Inc. (Æ)(Ñ) | 2,000 | 17 | ||
Ethan Allen Interiors, Inc. (Ñ) | 14,500 | 150 | ||
Family Dollar Stores, Inc. (Ñ) | 9,700 | 275 | ||
Fastenal Co. (Ñ) | 6,871 | 228 | ||
Finish Line, Inc. (The) Class A (Ñ) | 7,400 | 55 | ||
Foot Locker, Inc. | 8,900 | 93 | ||
Fred’s, Inc. Class A (Ñ) | 6,900 | 87 | ||
Furniture Brands International, Inc. (Ñ) | 7,300 | 22 | ||
Gannett Co., Inc. (Ñ) | 50,100 | 179 |
Principal Amount ($) or Shares | Market Value $ | |||
Gap, Inc. (The) (Ñ) | 11,250 | 185 | ||
Group 1 Automotive, Inc. (Ñ) | 19,197 | 500 | ||
Gymboree Corp. (Æ)(Ñ) | 7,550 | 268 | ||
Haverty Furniture Cos., Inc. (Æ)(Ñ) | 1,700 | 16 | ||
hhgregg, Inc. (Æ)(Ñ) | 11,700 | 177 | ||
Hooker Furniture Corp. (Ñ) | 900 | 10 | ||
HOT Topic, Inc. (Æ)(Ñ) | 6,000 | 44 | ||
Insight Enterprises, Inc. (Æ) | 4,600 | 44 | ||
Intersections, Inc. (Æ)(Å) | 26,666 | 124 | ||
Isle of Capri Casinos, Inc. (Æ)(Ñ) | 17,134 | 228 | ||
ITT Educational Services, Inc. (Æ)(Ñ) | 3,599 | 362 | ||
Jarden Corp. (Æ)(Ñ) | 10,400 | 195 | ||
Jones Apparel Group, Inc. (Ñ) | 22,900 | 246 | ||
Journal Communications, Inc. | 8,000 | 8 | ||
Kenneth Cole Productions, Inc. | 22,286 | 157 | ||
Leapfrog Enterprises, Inc. Class A (Æ) | 2,500 | 6 | ||
Lennar Corp. Class A (Ñ) | 41,100 | 398 | ||
Liz Claiborne, Inc. (Ñ) | 9,800 | 28 | ||
LKQ Corp. (Æ)(Ñ) | 14,283 | 235 | ||
Maidenform Brands, Inc. (Æ) | 1,700 | 20 | ||
Meritage Homes Corp. (Æ)(Ñ) | 7,400 | 140 | ||
New York & Co., Inc. (Æ)(Ñ) | 4,000 | 12 | ||
O’Reilly Automotive, Inc. (Æ)(Ñ) | 5,674 | 216 | ||
Pacific Sunwear of California, Inc. (Æ) | 16,900 | 57 | ||
Papa John’s International, Inc. (Æ)(Ñ) | 12,200 | 302 | ||
PC Connection, Inc. (Æ)(Ñ) | 2,000 | 11 | ||
Penn National Gaming, Inc. (Æ) | 8,134 | 237 | ||
Perceptron, Inc. (Æ)(Å) | 45,969 | 158 | ||
Perry Ellis International, Inc. (Æ)(Ñ) | 1,900 | 14 | ||
Polaris Industries, Inc. (Ñ) | 7,700 | 247 | ||
Pool Corp. (Ñ) | 150 | 3 | ||
Pulte Homes, Inc. (Ñ) | 8,200 | 72 | ||
Quiksilver, Inc. (Æ) | 18,300 | 34 | ||
RadioShack Corp. (Ñ) | 22,800 | 318 | ||
Red Lion Hotels Corp. (Æ) | 24,355 | 117 | ||
Rent-A-Center, Inc. Class A (Æ)(Ñ) | 28,900 | 515 | ||
Ruby Tuesday, Inc. (Æ)(Ñ) | 29,700 | 198 | ||
Scholastic Corp. | 3,300 | 65 | ||
Shoe Carnival, Inc. (Æ) | 1,400 | 17 | ||
Sina Corp. (Æ) | 1,395 | 41 | ||
Skechers U.S.A., Inc. Class A (Æ)(Ñ) | 2,100 | 21 | ||
Snap-On, Inc. (Ñ) | 7,600 | 218 | ||
Stage Stores, Inc. (Ñ) | 13,100 | 145 | ||
Starbucks Corp. (Æ)(Ñ) | 12,750 | 177 | ||
Steven Madden, Ltd. (Æ) | 6,640 | 169 | ||
Stewart Enterprises, Inc. Class A (Ñ) | 60,100 | 290 | ||
Superior Industries International, | 17,640 | 249 | ||
Tenneco, Inc. (Æ)(Ñ) | 6,800 | 72 | ||
Texas Roadhouse, Inc. Class A (Æ)(Ñ) | 25,250 | 275 | ||
Timberland Co. Class A (Æ) | 3,800 | 50 | ||
TRW Automotive Holdings | 10,200 | 115 | ||
Tuesday Morning Corp. (Æ)(Ñ) | 19,200 | 65 | ||
Tween Brands, Inc. (Æ)(Ñ) | 1,400 | 9 | ||
United Stationers, Inc. (Æ)(Ñ) | 4,500 | 157 | ||
Valassis Communications, Inc. (Æ) | 6,200 | 38 | ||
Wabash National Corp. (Ñ) | 2,800 | 2 | ||
Wendy’s/Arby’s Group, Inc. (Ñ) | 50,000 | 200 |
Aggressive Equity Fund | 11 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
WESCO International, Inc. (Æ) | 4,400 | 110 | ||
Williams-Sonoma, Inc. (Ñ) | 25,887 | 307 | ||
18,283 | ||||
Consumer Staples - 3.5% | ||||
Alberto-Culver Co. Class B (Ñ) | 8,541 | 217 | ||
Alliance One International, Inc. (Æ)(Ñ) | 91,200 | 347 | ||
Andersons, Inc. (The) (Ñ) | 7,600 | 228 | ||
Casey’s General Stores, Inc. (Ñ) | 4,400 | 113 | ||
Chiquita Brands International, | 11,300 | 116 | ||
Church & Dwight Co., Inc. (Ñ) | 9,138 | 496 | ||
Constellation Brands, Inc. Class A (Æ) | 3,700 | 47 | ||
Corn Products International, Inc. (Ñ) | 10,900 | 292 | ||
Dean Foods Co. (Æ)(Ñ) | 16,300 | 313 | ||
Del Monte Foods Co. | 83,900 | 787 | ||
Energizer Holdings, Inc. (Æ)(Ñ) | 4,801 | 251 | ||
Fresh Del Monte Produce, Inc. (Æ) | 15,000 | 244 | ||
Great Atlantic & Pacific Tea Co. (Æ)(Ñ) | 7,200 | 31 | ||
Imperial Sugar Co. (Ñ) | 2,400 | 29 | ||
J&J Snack Foods Corp. (Ñ) | 1,900 | 68 | ||
Lancaster Colony Corp. (Ñ) | 7,600 | 335 | ||
Nash Finch Co. (Ñ) | 3,300 | 89 | ||
Omega Protein Corp. (Æ) | 500 | 2 | ||
Pantry, Inc. (The) (Æ) | 4,400 | 73 | ||
Sanderson Farms, Inc. | 1,500 | 67 | ||
Spartan Stores, Inc. (Ñ) | 3,500 | 43 | ||
TreeHouse Foods, Inc. (Æ)(Ñ) | 6,325 | 182 | ||
Weis Markets, Inc. (Ñ) | 3,300 | 111 | ||
Winn-Dixie Stores, Inc. (Æ)(Ñ) | 1,000 | 12 | ||
4,493 | ||||
Energy - 5.4% | ||||
Alon USA Energy, Inc. (Ñ) | 2,800 | 29 | ||
Alpha Natural Resources, Inc. (Æ)(Ñ) | 9,053 | 238 | ||
Arena Resources, Inc. (Æ)(Ñ) | 12,900 | 411 | ||
ATP Oil & Gas Corp. (Æ)(Ñ) | 3,200 | 22 | ||
Atwood Oceanics, Inc. (Æ)(Ñ) | 6,123 | 152 | ||
Basic Energy Services, Inc. (Æ)(Ñ) | 4,500 | 31 | ||
Berry Petroleum Co. Class A (Ñ) | 9,700 | 180 | ||
BJ Services Co. (Ñ) | 8,807 | 120 | ||
CARBO Ceramics, Inc. (Ñ) | 8,300 | 284 | ||
Cimarex Energy Co. (Ñ) | 4,790 | 136 | ||
Clayton Williams Energy, Inc. (Æ) | 1,400 | 26 | ||
Complete Production Services, Inc. (Æ) | 2,600 | 17 | ||
Continental Resources, Inc. (Æ)(Ñ) | 6,380 | 177 | ||
Core Laboratories NV (Ñ) | 4,597 | 401 | ||
Dawson Geophysical Co. (Æ)(Ñ) | 5,426 | 162 | ||
Delek US Holdings, Inc. (Ñ) | 4,400 | 37 | ||
EXCO Resources, Inc. (Æ)(Ñ) | 30,513 | 394 | ||
Exterran Holdings, Inc. (Æ) | 8,400 | 135 | ||
FMC Technologies, Inc. (Æ)(Ñ) | 4,573 | 172 | ||
Geokinetics, Inc. (Æ)(Ñ) | 12,496 | 171 | ||
GMX Resources, Inc. (Æ)(Ñ) | 1,700 | 18 | ||
Goodrich Petroleum Corp. (Æ)(Ñ) | 13,130 | 323 | ||
Gulf Island Fabrication, Inc. | 2,200 | 35 | ||
Key Energy Services, Inc. (Æ) | 5,000 | 29 | ||
Noble Corp. | 6,060 | 183 |
Principal Amount ($) or Shares | Market Value $ | |||
Oceaneering International, Inc. (Æ) | 9,535 | 431 | ||
Oil States International, Inc. (Æ)(Ñ) | 7,100 | 172 | ||
Parker Drilling Co. (Æ)(Ñ) | 2,300 | 10 | ||
Patterson-UTI Energy, Inc. (Ñ) | 38,155 | 491 | ||
Penn Virginia Corp. | 21,200 | 347 | ||
Petroleum Development Corp. (Æ) | 4,000 | 63 | ||
Petroquest Energy, Inc. (Æ)(Ñ) | 6,300 | 23 | ||
Rosetta Resources, Inc. (Æ) | 4,500 | 39 | ||
Rowan Cos., Inc. (Ñ) | 7,550 | 146 | ||
RPC, Inc. (Ñ) | 13,700 | 114 | ||
SandRidge Energy, Inc. (Æ)(Ñ) | 5,700 | 49 | ||
Superior Energy Services, Inc. (Æ) | 22,120 | 382 | ||
T-3 Energy Services, Inc. (Æ) | 3,300 | 39 | ||
Tesoro Corp. (Ñ) | 14,500 | 185 | ||
Union Drilling, Inc. (Æ)(Ñ) | 1,300 | 9 | ||
Unit Corp. (Æ)(Ñ) | 1,400 | 39 | ||
W&T Offshore, Inc. (Ñ) | 17,200 | 167 | ||
Western Refining, Inc. (Æ)(Ñ) | 9,700 | 68 | ||
Whiting Petroleum Corp. (Æ)(Ñ) | 5,300 | 186 | ||
6,843 | ||||
Financial Services - 15.6% | ||||
Advance America Cash Advance Centers, Inc. | 36,200 | 160 | ||
Affiliated Managers Group, Inc. (Æ)(Ñ) | 15,293 | 890 | ||
Allied Capital Corp. (Ñ) | 31,900 | 111 | ||
Allied World Assurance Co. Holdings, Ltd. | 5,400 | 220 | ||
American Capital Agency Corp. (ö)(Ñ) | 2,100 | 48 | ||
American Equity Investment Life Holding Co. (Ñ) | 32,900 | 184 | ||
American Financial Group, Inc. | 9,800 | 211 | ||
Ameriprise Financial, Inc. | 8,064 | 196 | ||
Annaly Capital Management, Inc. (ö)(Ñ) | 14,267 | 216 | ||
Anworth Mortgage Asset Corp. (ö) | 57,800 | 417 | ||
Apartment Investment & Management Co. Class A (ö)(Ñ) | 1 | — | ||
Apollo Investment Corp. (Ñ) | 26,100 | 157 | ||
Arch Capital Group, Ltd. (Æ)(Ñ) | 3,900 | 228 | ||
Ares Capital Corp. (Ñ) | 50,179 | 404 | ||
Argo Group International Holdings, Ltd. (Æ) | 3,800 | 107 | ||
Arthur J Gallagher & Co. (Ñ) | 9,300 | 198 | ||
Aspen Insurance Holdings, Ltd. | 6,200 | 138 | ||
Asset Acceptance Capital Corp. (Æ)(Ñ) | 200 | 2 | ||
Bancfirst Corp. (Ñ) | 1,000 | 35 | ||
Banco Latinoamericano de Exportaciones SA Class E | 4,800 | 60 | ||
Bancorpsouth, Inc. (Ñ) | 4,200 | 86 | ||
Bank of Hawaii Corp. (Ñ) | 700 | 25 | ||
BioMed Realty Trust, Inc. (ö) | 5,000 | 51 | ||
BOK Financial Corp. (Ñ) | 13,625 | 513 | ||
Brandywine Realty Trust (ö)(Ñ) | 28,200 | 210 | ||
Brookline Bancorp, Inc. (Ñ) | 14,800 | 138 | ||
Calamos Asset Management, Inc. Class A (Ñ) | 20,800 | 293 | ||
CapLease, Inc. (ö)(Ñ) | 4,100 | 11 | ||
Capstead Mortgage Corp. (ö)(Ñ) | 26,700 | 339 |
12 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Cash America International, Inc. (Ñ) | 7,100 | 166 | ||
CBL & Associates Properties, Inc. (ö)(Ñ) | 19,500 | 105 | ||
Cedar Shopping Centers, Inc. (ö) | 2,600 | 12 | ||
Central Pacific Financial Corp. (Ñ) | 6,500 | 24 | ||
Cigna Corp. (Ñ) | 11,101 | 267 | ||
Citizens Republic Bancorp, Inc. (Æ)(Ñ) | 20,200 | 14 | ||
City Holding Co. (Ñ) | 900 | 27 | ||
Cogdell Spencer, Inc. (ö) | 400 | 2 | ||
Cohen & Steers, Inc. | 18,700 | 280 | ||
Colonial Properties Trust (ö)(Ñ) | 13,900 | 103 | ||
Community Trust Bancorp, Inc. (Ñ) | 1,000 | 27 | ||
Crawford & Co. Class B (Æ)(Ñ) | 1,600 | 8 | ||
Cullen/Frost Bankers, Inc. (Ñ) | 6,860 | 316 | ||
Cybersource Corp. (Æ)(Ñ) | 13,893 | 213 | ||
Delphi Financial Group, Inc. Class A | 17,035 | 331 | ||
Developers Diversified Realty | 8,000 | 39 | ||
DiamondRock Hospitality Co. (ö)(Ñ) | 18,154 | 114 | ||
Dime Community Bancshares (Ñ) | 2,700 | 25 | ||
Duff & Phelps Corp. Class A | 3,300 | 59 | ||
Duke Realty Corp. (ö)(Ñ) | 23,000 | 202 | ||
DuPont Fabros Technology, Inc. (ö)(Ñ) | 32,533 | 306 | ||
EMC Insurance Group, Inc. (Ñ) | 900 | 19 | ||
Employers Holdings, Inc. (Ñ) | 10,400 | 141 | ||
Endurance Specialty Holdings, Ltd. | 5,900 | 173 | ||
Evercore Partners, Inc. Class A (Ñ) | 6,200 | 122 | ||
FBL Financial Group, Inc. Class A (Ñ) | 1,800 | 15 | ||
FelCor Lodging Trust, Inc. (ö)(Ñ) | 11,200 | 28 | ||
Fidelity National Financial, Inc. Class A | 14,100 | 191 | ||
First American Corp. | 6,100 | 158 | ||
First Community Bancshares, Inc. (Ñ) | 400 | 5 | ||
First Financial Bancorp | 3,100 | 23 | ||
First Industrial Realty Trust, Inc. (ö)(Ñ) | 6,300 | 27 | ||
First Niagara Financial Group, Inc. | 29,000 | 331 | ||
First Potomac Realty Trust (ö) | 4,400 | 43 | ||
Flushing Financial Corp. (Ñ) | 8,200 | 77 | ||
Franklin Street Properties Corp. (ö)(Ñ) | 20,208 | 268 | ||
Fulton Financial Corp. (Ñ) | 14,500 | 76 | ||
Genworth Financial, Inc. Class A | 15,400 | 108 | ||
Global Payments, Inc. | 7,874 | 295 | ||
Green Bankshares, Inc. (Ñ) | 2,018 | 9 | ||
Hanover Insurance Group, Inc. | 3,200 | 122 | ||
Harleysville National Corp. | 3,300 | 15 | ||
Hatteras Financial Corp. (ö)(Ñ) | 3,600 | 103 | ||
Hercules Technology Growth Capital, Inc. | 3,900 | 33 | ||
Hersha Hospitality Trust (ö)(Ñ) | 4,400 | 11 | ||
Horace Mann Educators Corp. | 20,900 | 208 | ||
Hospitality Properties Trust (ö) | 17,700 | 210 | ||
HRPT Properties Trust (ö)(Ñ) | 39,400 | 160 | ||
IBERIABANK Corp. (Ñ) | 5,100 | 201 | ||
Independent Bank Corp. (Ñ) | 3,500 | 69 | ||
Inland Real Estate Corp. (ö)(Ñ) | 3,500 | 24 | ||
Invesco, Ltd. | 17,718 | 316 | ||
IPC Holdings, Ltd. | 4,100 | 112 | ||
iStar Financial, Inc. (ö)(Ñ) | 25,000 | 71 | ||
JER Investors Trust, Inc. (Æ)(þ) | 1,771 | 1 | ||
Kite Realty Group Trust (ö)(Ñ) | 6,700 | 20 | ||
Knight Capital Group, Inc. | 17,008 | 290 |
Principal Amount ($) or Shares | Market Value $ | |||
LaSalle Hotel Properties (ö)(Ñ) | 11,900 | 147 | ||
Lazard, Ltd. Class A (Ñ) | 9,410 | 253 | ||
Lexington Realty Trust (ö)(Ñ) | 21,817 | 74 | ||
Life Partners Holdings, Inc. (Ñ) | 300 | 4 | ||
LTC Properties, Inc. (ö)(Ñ) | 900 | 18 | ||
Maguire Properties, Inc. (Æ)(ö)(Ñ) | 10,500 | 9 | ||
MainSource Financial Group, Inc. (Ñ) | 1,100 | 8 | ||
MarketAxess Holdings, Inc. (Æ) | 23,417 | 223 | ||
Marshall & Ilsley Corp. (Ñ) | 14,000 | 67 | ||
Meadowbrook Insurance Group, Inc. | 5,485 | 36 | ||
Medical Properties Trust, Inc. (ö)(Ñ) | 9,800 | 59 | ||
Montpelier Re Holdings, Ltd. (Ñ) | 3,200 | 42 | ||
Moody’s Corp. (Ñ) | 8,516 | 224 | ||
National Financial Partners Corp. (Ñ) | 7,400 | 54 | ||
National Penn Bancshares, Inc. | 1,800 | 8 | ||
National Retail Properties, Inc. (ö)(Ñ) | 100 | 2 | ||
Nelnet, Inc. Class A (Æ)(Ñ) | 9,700 | 132 | ||
NewAlliance Bancshares, Inc. (Ñ) | 13,100 | 151 | ||
Old National Bancorp (Ñ) | 21,400 | 210 | ||
Old Republic International Corp. (Ñ) | 15,700 | 155 | ||
OneBeacon Insurance Group, Ltd. Class A | 2,800 | 33 | ||
Oriental Financial Group, Inc. (Ñ) | 27,607 | 268 | ||
PacWest Bancorp (Ñ) | 4,300 | 57 | ||
Parkway Properties, Inc. (ö)(Ñ) | 3,400 | 44 | ||
PartnerRe, Ltd. - ADR | 3,500 | 227 | ||
PennantPark Investment Corp. | 52,680 | 374 | ||
Piper Jaffray Cos. (Æ)(Ñ) | 8,987 | 392 | ||
Platinum Underwriters Holdings, Ltd. | 6,300 | 180 | ||
PMA Capital Corp. Class A (Æ) | 1,700 | 8 | ||
Prosperity Bancshares, Inc. (Ñ) | 4,400 | 131 | ||
Provident Financial Services, Inc. (Ñ) | 22,300 | 203 | ||
PS Business Parks, Inc. (ö)(Ñ) | 2,724 | 132 | ||
RAIT Financial Trust (ö) | 8,900 | 12 | ||
Raymond James Financial, Inc. (Ñ) | 12,997 | 224 | ||
RenaissanceRe Holdings, Ltd. | 500 | 23 | ||
S1 Corp. (Æ) | 18,500 | 128 | ||
Sandy Spring Bancorp, Inc. (Ñ) | 1,700 | 25 | ||
Santander BanCorp (Æ)(Ñ) | 1,900 | 13 | ||
Senior Housing Properties Trust (ö)(Ñ) | 6,536 | 107 | ||
StanCorp Financial Group, Inc. | 4,800 | 138 | ||
StellarOne Corp. (Ñ) | 12,642 | 164 | ||
Sterling Bancorp Ñ) | 3,100 | 26 | ||
Sterling Bancshares, Inc. (Ñ) | 14,400 | 91 | ||
Sun Bancorp, Inc. (Æ)(Ñ) | 1,653 | 9 | ||
Sunstone Hotel Investors, Inc. (ö) | 11,499 | 61 | ||
SVB Financial Group (Æ)(Ñ) | 12,505 | 340 | ||
SWS Group, Inc. | 4,700 | 66 | ||
SY Bancorp, Inc. (Ñ) | 900 | 22 | ||
Synovus Financial Corp. (Ñ) | 53,200 | 159 | ||
TCF Financial Corp. (Ñ) | 11,500 | 154 | ||
Texas Capital Bancshares, Inc. (Æ)(Ñ) | 19,042 | 295 | ||
Tower Group, Inc. | 14,523 | 360 | ||
U-Store-It Trust (ö)(Ñ) | 8,600 | 42 | ||
United America Indemnity, Ltd. Class A (Æ) | 3,802 | 18 | ||
United Western Bancorp, Inc. | 5,300 | 50 | ||
Universal American Corp. (Æ)(Ñ) | 7,500 | 65 |
Aggressive Equity Fund | 13 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
ViewPoint Financial Group (Ñ) | 8,400 | 128 | ||
Waddell & Reed Financial, Inc. Class A (Ñ) | 6,800 | 179 | ||
Washington Federal, Inc. (Ñ) | 12,700 | 165 | ||
WesBanco, Inc. (Ñ) | 2,200 | 32 | ||
Western Alliance Bancorp (Æ) | 1,000 | 7 | ||
Whitney Holding Corp. (Ñ) | 16,670 | 153 | ||
Wintrust Financial Corp. (Ñ) | 1,000 | 16 | ||
WSFS Financial Corp. (Ñ) | 500 | 14 | ||
Zenith National Insurance Corp. (Ñ) | 10,850 | 236 | ||
19,810 | ||||
Health Care - 10.0% | ||||
Allscripts-Misys Healthcare Solutions, Inc. (Ñ) | 10,049 | 159 | ||
Analogic Corp. (Ñ) | 4,726 | 175 | ||
Angiodynamics, Inc. (Æ) | 1,800 | 24 | ||
athenahealth, Inc. (Æ)(Ñ) | 10,940 | 405 | ||
Centene Corp. (Æ) | 9,900 | 198 | ||
Cephalon, Inc. (Æ)(Ñ) | 3,400 | 193 | ||
Coventry Health Care, Inc. (Æ) | 3,400 | 64 | ||
Cynosure, Inc. Class A (Æ)(Ñ) | 24,981 | 191 | ||
DaVita, Inc. (Æ)(Ñ) | 3,466 | 171 | ||
Dentsply International, Inc. (Ñ) | 7,712 | 235 | ||
Edwards Lifesciences Corp. (Æ)(Ñ) | 3,157 | 215 | ||
Endo Pharmaceuticals Holdings, | 7,000 | 126 | ||
eResearchTechnology, Inc. (Æ) | 30,641 | 190 | ||
Gen-Probe, Inc. (Æ)(Ñ) | 9,282 | 399 | ||
Gentiva Health Services, Inc. (Æ)(Ñ) | 20,717 | 341 | ||
Harvard Bioscience, Inc. (Æ)(Ñ) | 49,156 | 194 | ||
Health Net, Inc. (Æ) | 7,300 | 114 | ||
Healthspring, Inc. (Æ)(Ñ) | 27,100 | 294 | ||
Henry Schein, Inc. (Æ) | 1,641 | 79 | ||
HMS Holdings Corp. (Æ)(Ñ) | 10,550 | 430 | ||
Humana, Inc. (Æ) | 3,500 | 113 | ||
Icon PLC - ADR (Æ) | 7,931 | 171 | ||
Idexx Laboratories, Inc. (Æ)(Ñ) | 6,567 | 303 | ||
Illumina, Inc. (Æ)(Ñ) | 21,435 | 835 | ||
Invacare Corp. | 3,800 | 67 | ||
Kindred Healthcare, Inc. (Æ)(Ñ) | 17,234 | 213 | ||
King Pharmaceuticals, Inc. (Æ)(Ñ) | 73,525 | 708 | ||
Laboratory Corp. of America Holdings (Æ)(Ñ) | 4,018 | 272 | ||
Life Technologies Corp. (Æ)(Ñ) | 5,998 | 250 | ||
Lincare Holdings, Inc. (Æ)(Ñ) | 14,900 | 351 | ||
Magellan Health Services, Inc. (Æ) | 5,200 | 171 | ||
MDS, Inc. (Æ) | 8,552 | 46 | ||
Medcath Corp. (Æ) | 600 | 7 | ||
Mednax, Inc. (Æ)(Ñ) | 6,364 | 268 | ||
Molina Healthcare, Inc. (Æ)(Ñ) | 5,200 | 124 | ||
Myriad Pharmaceuticals, Inc. (Æ) | 376 | 2 | ||
NuVasive, Inc. (Æ)(Ñ) | 5,278 | 235 | ||
Odyssey HealthCare, Inc. (Æ) | 14,500 | 149 | ||
Omnicare, Inc. (Ñ) | 22,700 | 585 | ||
OSI Systems, Inc. (Æ)(Ñ) | 16,887 | 352 | ||
Owens & Minor, Inc. (Ñ) | 700 | 31 | ||
Par Pharmaceutical Cos., Inc. (Æ)(Ñ) | 15,934 | 241 |
Principal Amount ($) or Shares | Market Value $ | |||
Parexel International Corp. (Æ) | 8,589 | 124 | ||
Patterson Cos., Inc. (Æ)(Ñ) | 7,986 | 173 | ||
PerkinElmer, Inc. (Ñ) | 16,626 | 289 | ||
PharMerica Corp. (Æ)(Ñ) | 5,000 | 98 | ||
Prestige Brands Holdings, Inc. (Æ)(Ñ) | 2,800 | 17 | ||
ResMed, Inc. (Æ)(Ñ) | 10,568 | 431 | ||
STERIS Corp. (Ñ) | 16,181 | 422 | ||
Sun Healthcare Group, Inc. (Æ) | 7,600 | 64 | ||
SXC Health Solutions Corp. (Æ) | 14,250 | 362 | ||
Universal Health Services, Inc. Class B (Ñ) | 3,100 | 152 | ||
Valeant Pharmaceuticals | 11,400 | 293 | ||
VCA Antech, Inc. (Æ)(Ñ) | 9,168 | 245 | ||
Watson Pharmaceuticals, Inc. | 11,700 | 394 | ||
12,755 | ||||
Materials and Processing - 6.4% | ||||
Airgas, Inc. (Ñ) | 9,363 | 380 | ||
Albemarle Corp. (Ñ) | 10,533 | 269 | ||
Allegheny Technologies, Inc. (Ñ) | 3,395 | 119 | ||
Ashland, Inc. | 6,000 | 168 | ||
Buckeye Technologies, Inc. (Æ) | 8,200 | 37 | ||
Bway Holding Co. (Æ) | 8,999 | 158 | ||
Carpenter Technology Corp. | 5,500 | 114 | ||
Clearwater Paper Corp. (Æ)(Ñ) | 2,900 | 73 | ||
Comfort Systems USA, Inc. | 9,800 | 100 | ||
Commercial Metals Co. (Ñ) | 15,550 | 249 | ||
Crown Holdings, Inc. (Æ)(Ñ) | 2,900 | 70 | ||
Cytec Industries, Inc. | 4,800 | 89 | ||
Domtar Corp. (Æ)(Ñ) | 4,191 | 70 | ||
Ecolab, Inc. (Ñ) | 8,103 | 316 | ||
Encore Wire Corp. (Ñ) | 4,600 | 98 | ||
Foster Wheeler AG (Æ) | 15,237 | 362 | ||
General Cable Corp. (Æ) | 843 | 32 | ||
Gibraltar Industries, Inc. (Ñ) | 6,000 | 41 | ||
Glatfelter | 4,000 | 36 | ||
Greif, Inc. Class A | 3,300 | 146 | ||
Griffon Corp. (Æ) | 5,000 | 42 | ||
HB Fuller Co. (Ñ) | 3,300 | 62 | ||
IAMGOLD Corp. | 13,155 | 133 | ||
Innophos Holdings, Inc. | 2,700 | 46 | ||
Intrepid Potash, Inc. (Æ)(Ñ) | 6,840 | 192 | ||
Kaydon Corp. (Ñ) | 2,500 | 81 | ||
LB Foster Co. Class A (Æ)(Ñ) | 1,100 | 33 | ||
Lubrizol Corp. | 5,399 | 255 | ||
Mueller Water Products, Inc. Class A (Ñ) | 36,000 | 135 | ||
Olin Corp. (Ñ) | 11,600 | 138 | ||
OM Group, Inc. (Æ)(Ñ) | 12,281 | 356 | ||
Owens-Illinois, Inc. (Æ) | 7,900 | 221 | ||
Pactiv Corp. (Æ)(Ñ) | 17,400 | 378 | ||
Pan American Silver Corp. (Æ) | 3,051 | 56 | ||
PolyOne Corp. (Æ)(Ñ) | 3,100 | 8 | ||
Quaker Chemical Corp. | 1,000 | 13 | ||
Quanex Building Products Corp. | 13,600 | 153 | ||
Rock-Tenn Co. Class A | 9,600 | 366 | ||
RPM International, Inc. | 16,500 | 232 |
14 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Schnitzer Steel Industries, Inc. Class A (Ñ) | 5,830 | 308 | ||
Schulman A, Inc. | 12,900 | 195 | ||
Schweitzer-Mauduit International, Inc. (Ñ) | 2,700 | 74 | ||
Silgan Holdings, Inc. | 4,100 | 201 | ||
Sims Metal Management, Ltd. - ADR | 12,815 | 264 | ||
Sonoco Products Co. | 7,700 | 184 | ||
Spartech Corp. | 2,400 | 22 | ||
Steel Dynamics, Inc. (Ñ) | 32,796 | 483 | ||
Symyx Technologies (Æ) | 2,500 | 15 | ||
Thompson Creek Metals Co., | 15,952 | 163 | ||
Timken Co. | 12,400 | 212 | ||
Titanium Metals Corp. (Ñ) | 16,464 | 151 | ||
Universal Forest Products, Inc. (Ñ) | 3,100 | 103 | ||
US Concrete, Inc. (Æ)(Ñ) | 4,200 | 8 | ||
Wausau Paper Corp. | 1,600 | 11 | ||
8,221 | ||||
Producer Durables - 14.6% | ||||
Administaff, Inc. (Ñ) | 4,700 | 109 | ||
AGCO Corp. (Æ)(Ñ) | 8,800 | 256 | ||
Alaska Air Group, Inc. (Æ)(Ñ) | 2,800 | 51 | ||
Albany International Corp. Class A (Ñ) | 4,200 | 48 | ||
Alexander & Baldwin, Inc. (Ñ) | 16,115 | 378 | ||
AM Castle & Co. (Ñ) | 1,308 | 16 | ||
American Commercial Lines, | 1,300 | 20 | ||
American Railcar Industries, Inc. (Ñ) | 1,900 | 16 | ||
AO Smith Corp. (Ñ) | 4,400 | 143 | ||
APAC Customer Services, Inc. (Æ)(Ñ) | 18,431 | 95 | ||
Argon ST, Inc. (Æ) | 4,300 | 88 | ||
Arkansas Best Corp. (Ñ) | 15,113 | 398 | ||
Astec Industries, Inc. (Æ)(Ñ) | 4,011 | 119 | ||
Atlas Air Worldwide Holdings, Inc. (Æ) | 2,500 | 58 | ||
Baldor Electric Co. (Ñ) | 12,500 | 297 | ||
BE Aerospace, Inc. (Æ)(Ñ) | 26,834 | 385 | ||
Bucyrus International, Inc. Class A | 19,760 | 564 | ||
Celadon Group, Inc. (Æ) | 1,000 | 8 | ||
Columbus McKinnon Corp. (Æ) | 2,600 | 33 | ||
Copart, Inc. (Æ)(Ñ) | 15,616 | 541 | ||
Corporate Executive Board Co. (The) (Ñ) | 9,700 | 201 | ||
Crane Co. | 2,800 | 63 | ||
Cubic Corp. | 7,800 | 279 | ||
Curtiss-Wright Corp. (Ñ) | 8,800 | 262 | ||
Deluxe Corp. | 15,900 | 204 | ||
Ducommun, Inc. (Ñ) | 1,900 | 36 | ||
DXP Enterprises, Inc. (Æ)(Ñ) | 1,000 | 12 | ||
Eagle Bulk Shipping, Inc. (Ñ) | 13,700 | 64 | ||
Electro Rent Corp. | 30,427 | 289 | ||
EMCOR Group, Inc. (Æ) | 5,300 | 107 | ||
EnerSys (Æ)(Ñ) | 14,940 | 272 | ||
Ennis, Inc. (Ñ) | 600 | 8 | ||
EnPro Industries, Inc. (Æ)(Ñ) | 3,000 | 54 | ||
Flowserve Corp. | 3,700 | 258 | ||
Forward Air Corp. (Ñ) | 12,600 | 269 | ||
Franklin Electric Co., Inc. (Ñ) | 7,200 | 187 | ||
FreightCar America, Inc. (Ñ) | 2,000 | 34 | ||
FTI Consulting, Inc. (Æ)(Ñ) | 7,637 | 387 | ||
Gardner Denver, Inc. (Æ) | 8,200 | 206 |
Principal Amount ($) or Shares | Market Value $ | |||
Genesee & Wyoming, Inc. Class A | 6,307 | 167 | ||
Geo Group, Inc. (The) (Æ) | 12,718 | 236 | ||
Global Sources, Ltd. (Æ)(Ñ) | 1,300 | 9 | ||
Goodrich Corp. | 3,267 | 163 | ||
Gulfmark Offshore, Inc. (Æ) | 900 | 25 | ||
H&E Equipment Services, Inc. (Æ)(Ñ) | 3,200 | 30 | ||
Heidrick & Struggles International, Inc. (Ñ) | 2,300 | 42 | ||
Herman Miller, Inc. | 1,100 | 17 | ||
Hewitt Associates, Inc. Class A (Æ)(Ñ) | 14,200 | 423 | ||
IDEX Corp. | 7,200 | 177 | ||
Insituform Technologies, Inc. Class A (Æ)(Ñ) | 12,712 | 216 | ||
Jacobs Engineering Group, Inc. (Æ) | 8,184 | 344 | ||
Joy Global, Inc. (Ñ) | 3,339 | 119 | ||
Kaman Corp. Class A (Ñ) | 13,200 | 220 | ||
KBR, Inc. (Ñ) | 20,874 | 385 | ||
Kennametal, Inc. (Ñ) | 7,200 | 138 | ||
Kforce, Inc. (Æ) | 3,300 | 27 | ||
Kimball International, Inc. Class B (Ñ) | 16,492 | 103 | ||
Kirby Corp. (Æ)(Ñ) | 5,548 | 176 | ||
Knight Transportation, Inc. (Ñ) | 13,570 | 225 | ||
Layne Christensen Co. (Æ)(Ñ) | 8,139 | 166 | ||
Lexmark International, Inc. Class A | 13,400 | 212 | ||
LTX-Credence Corp. (Æ)(Ñ) | 1,732 | 1 | ||
Manitowoc Co., Inc. (The) (Ñ) | 16,800 | 88 | ||
McDermott International, Inc. (Æ) | 27,270 | 554 | ||
MPS Group, Inc. (Æ) | 2,800 | 21 | ||
MTS Systems Corp. | 100 | 2 | ||
NACCO Industries, Inc. Class A (Ñ) | 3,329 | 96 | ||
Nalco Holding Co. | 10,447 | 176 | ||
National Instruments Corp. (Ñ) | 8,100 | 183 | ||
Navios Maritime Holdings, Inc. (Ñ) | 43,000 | 182 | ||
Navistar International Corp. (Æ) | 9,000 | 392 | ||
Nice Systems, Ltd. - ADR (Æ) | 19,922 | 460 | ||
Old Dominion Freight Line, Inc. (Æ) | 4,557 | 153 | ||
Pacer International, Inc. | 5,400 | 12 | ||
PHH Corp. (Æ)(Ñ) | 19,462 | 354 | ||
PHI, Inc. (Æ)(Ñ) | 14,921 | 256 | ||
Quanta Services, Inc. (Æ)(Ñ) | 7,790 | 180 | ||
Republic Airways Holdings, Inc. (Æ) | 2,000 | 13 | ||
Republic Services, Inc. Class A | 10,054 | 245 | ||
Robbins & Myers, Inc. (Ñ) | 14,567 | 280 | ||
RR Donnelley & Sons Co. | 6,500 | 76 | ||
Ryder System, Inc. (Ñ) | 10,600 | 296 | ||
Sauer-Danfoss, Inc. | 4,700 | 29 | ||
Shaw Group, Inc. (The) (Æ) | 6,600 | 181 | ||
Skywest, Inc. | 8,200 | 84 | ||
Southwest Airlines Co. (Ñ) | 15,738 | 106 | ||
Spherion Corp. (Æ) | 3,900 | 16 | ||
Standard Register Co. (The) (Ñ) | 2,100 | 7 | ||
Steelcase, Inc. Class A (Ñ) | 9,100 | 53 | ||
Stericycle, Inc. (Æ)(Ñ) | 9,589 | 494 | ||
Teekay Corp. (Ñ) | 11,600 | 244 | ||
Teleflex, Inc. | 6,740 | 302 | ||
Trinity Industries, Inc. (Ñ) | 14,600 | 199 | ||
Triumph Group, Inc. (Ñ) | 8,370 | 335 | ||
Tutor Perini Corp. (Æ)(Ñ) | 8,600 | 149 |
Aggressive Equity Fund | 15 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
URS Corp. (Æ) | 22,241 | 1,101 | ||
Viad Corp. | 1,900 | 33 | ||
Wabtec Corp. (Ñ) | 9,611 | 309 | ||
Waste Connections, Inc. (Æ)(Ñ) | 13,344 | 346 | ||
Werner Enterprises, Inc. (Ñ) | 4,500 | 82 | ||
YRC Worldwide, Inc. (Æ)(Ñ) | 11,800 | 20 | ||
18,545 | ||||
Technology - 18.0% | ||||
3Com Corp. (Æ) | 125,500 | 591 | ||
ACI Worldwide, Inc. (Æ)(Ñ) | 12,500 | 174 | ||
Acxiom Corp. | 16,522 | 146 | ||
Adaptec, Inc. (Æ) | 117,064 | 310 | ||
Advanced Analogic Technologies, Inc. (Æ) | 31,900 | 146 | ||
Affiliated Computer Services, Inc. Class A (Æ) | 14,646 | 651 | ||
Akamai Technologies, Inc. (Æ)(Ñ) | 8,200 | 157 | ||
Amkor Technology, Inc. (Æ)(Ñ) | 21,300 | 101 | ||
Amphenol Corp. Class A | 17,513 | 554 | ||
Ansys, Inc. (Æ)(Ñ) | 14,088 | 439 | ||
Ariba, Inc. (Æ)(Ñ) | 26,580 | 262 | ||
Arris Group, Inc. (Æ) | 7,000 | 85 | ||
Art Technology Group, Inc. (Æ) | 53,408 | 203 | ||
Atmel Corp. (Æ)(Ñ) | 28,500 | 106 | ||
Avnet, Inc. (Æ) | 6,500 | 137 | ||
AVX Corp. (Ñ) | 22,800 | 226 | ||
Benchmark Electronics, Inc. (Æ) | 14,151 | 204 | ||
Broadcom Corp. Class A (Æ)(Ñ) | 17,617 | 437 | ||
Brocade Communications Systems, Inc. (Æ) | 23,785 | 186 | ||
Brooks Automation, Inc. (Æ) | 3,000 | 13 | ||
Celestica, Inc. (Æ)(Ñ) | 21,150 | 144 | ||
Ciber, Inc. (Æ)(Ñ) | 43,800 | 136 | ||
Cognex Corp. | 21,600 | 305 | ||
Cogo Group, Inc. (Æ)(Ñ) | 14,600 | 87 | ||
Cohu, Inc. (Ñ) | 17,050 | 153 | ||
CommScope, Inc. (Æ)(Ñ) | 6,877 | 181 | ||
Compuware Corp. (Æ) | 34,700 | 238 | ||
COMSYS IT Partners, Inc. (Æ) | 100 | 1 | ||
Concur Technologies, Inc. (Æ)(Ñ) | 14,840 | 461 | ||
Cray, Inc. (Æ) | 1,400 | 11 | ||
CTS Corp. | 4,700 | 31 | ||
Digital River, Inc. (Æ)(Ñ) | 8,897 | 323 | ||
DSP Group, Inc. (Æ)(Ñ) | 1,700 | 11 | ||
Earthlink, Inc. (Æ)(Ñ) | 53,600 | 397 | ||
Electro Scientific Industries, Inc. (Æ)(Ñ) | 39,170 | 438 | ||
Electronic Arts, Inc. (Æ) | 14,595 | 317 | ||
Equinix, Inc. (Æ)(Ñ) | 11,424 | 831 | ||
Exar Corp. (Æ)(Ñ) | 1,800 | 13 | ||
Fairchild Semiconductor International, Inc. Class A (Æ) | 3,200 | 22 | ||
Flextronics International, Ltd. (Æ)(Ñ) | 81,875 | 336 | ||
Harris Stratex Networks, Inc. Class A (Æ) | 6,000 | 39 | ||
Hittite Microwave Corp. (Æ)(Ñ) | 8,326 | 289 | ||
Imation Corp. | 4,000 | 30 | ||
Informatica Corp. (Æ)(Ñ) | 10,820 | 186 | ||
Infospace, Inc. (Æ) | 3,700 | 25 | ||
Ingram Micro, Inc. Class A (Æ) | 21,200 | 371 | ||
Integrated Device Technology, Inc. (Æ) | 14,647 | 88 |
Principal Amount ($) or Shares | Market Value $ | |||
Internap Network Services Corp. (Æ)(Ñ) | 3,600 | 13 | ||
International Rectifier Corp. (Æ)(Ñ) | 22,333 | 331 | ||
Intersil Corp. Class A (Ñ) | 20,273 | 255 | ||
Jabil Circuit, Inc. | 48,200 | 358 | ||
Lam Research Corp. (Æ)(Ñ) | 11,329 | 295 | ||
Macrovision Solutions Corp. (Æ)(Ñ) | 24,780 | 540 | ||
MasTec, Inc. (Æ)(Ñ) | 8,600 | 101 | ||
Micrel, Inc. (Ñ) | 21,190 | 155 | ||
Microchip Technology, Inc. (Ñ) | 12,947 | 292 | ||
Micros Systems, Inc. (Æ)(Ñ) | 15,398 | 390 | ||
Monolithic Power Systems, Inc. (Æ)(Ñ) | 20,729 | 465 | ||
Ness Technologies, Inc. (Æ) | 2,700 | 11 | ||
Netlogic Microsystems, Inc. (Æ) | 7,467 | 272 | ||
Netscout Systems, Inc. (Æ) | 15,647 | 147 | ||
Newport Corp. (Æ)(Ñ) | 2,300 | 13 | ||
Novatel Wireless, Inc. (Æ)(Ñ) | 4,500 | 41 | ||
Novell, Inc. (Æ) | 35,900 | 163 | ||
Nuance Communications, Inc. (Æ)(Ñ) | 13,588 | 164 | ||
Nvidia Corp. (Æ)(Ñ) | 57,925 | 654 | ||
Omnivision Technologies, Inc. (Æ)(Ñ) | 5,400 | 56 | ||
Oplink Communications, Inc. (Æ) | 12,297 | 140 | ||
Pegasystems, Inc. (Ñ) | 17,751 | 468 | ||
Perot Systems Corp. Class A (Æ)(Ñ) | 3,700 | 53 | ||
Photronics, Inc. (Æ) | 33,400 | 135 | ||
QLogic Corp. (Æ) | 10,413 | 132 | ||
Red Hat, Inc. (Æ) | 6,800 | 137 | ||
SAIC, Inc. (Æ) | 16,717 | 310 | ||
Salesforce.com, Inc. (Æ)(Ñ) | 4,510 | 172 | ||
Sanmina-SCI Corp. (Æ) | 90,700 | 40 | ||
SBA Communications Corp. | 9,009 | 221 | ||
Seagate Technology | 22,337 | 234 | ||
Silicon Image, Inc. (Æ) | 8,300 | 19 | ||
Siliconware Precision Industries Co. - ADR (Ñ) | 26,265 | 163 | ||
Skyworks Solutions, Inc. (Æ)(Ñ) | 40,800 | 399 | ||
Solera Holdings, Inc. (Æ) | 10,920 | 277 | ||
Starent Networks Corp. (Æ)(Ñ) | 12,520 | 306 | ||
Sybase, Inc. (Æ)(Ñ) | 10,600 | 332 | ||
Syniverse Holdings, Inc. (Æ)(Ñ) | 13,530 | 217 | ||
SYNNEX Corp. (Æ)(Ñ) | 13,600 | 340 | ||
Synopsys, Inc. (Æ) | 8,000 | 156 | ||
Technitrol, Inc. | 6,400 | 41 | ||
Tellabs, Inc. (Æ) | 42,800 | 245 | ||
TIBCO Software, Inc. (Æ) | 39,700 | 285 | ||
Tier Technologies, Inc. Class B (Æ)(Å) | 50,456 | 387 | ||
Trimble Navigation, Ltd. (Æ)(Ñ) | 5,649 | 111 | ||
TTM Technologies, Inc. (Æ)(Ñ) | 5,100 | 41 | ||
United Online, Inc. | 24,200 | 158 | ||
Varian Semiconductor Equipment Associates, Inc. (Æ)(Ñ) | 13,222 | 317 | ||
Verint Systems, Inc. (Æ) | 5,209 | 54 | ||
Vishay Intertechnology, Inc. (Æ)(Ñ) | 91,237 | 619 | ||
Western Digital Corp. (Æ) | 9,200 | 244 | ||
White Electronic Designs Corp. (Æ)(Å) | 91,502 | 424 | ||
Zoran Corp. (Æ) | 35,200 | 384 | ||
22,869 | ||||
16 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Utilities - 4.5% | ||||
AGL Resources, Inc. | 5,800 | 184 | ||
Alliant Energy Corp. | 5,700 | 149 | ||
Atmos Energy Corp. | 23,800 | 596 | ||
Avista Corp. (Ñ) | 12,236 | 218 | ||
Black Hills Corp. (Ñ) | 9,600 | 221 | ||
California Water Service Group (Ñ) | 3,900 | 144 | ||
CenturyTel, Inc. (Ñ) | 8,700 | 267 | ||
El Paso Electric Co. (Æ) | 3,800 | 53 | ||
Hawaiian Electric Industries, Inc. (Ñ) | 2,400 | 46 | ||
Idacorp, Inc. (Ñ) | 7,902 | 207 | ||
Integrys Energy Group, Inc. (Ñ) | 3,700 | 111 | ||
j2 Global Communications, Inc. (Æ)(Ñ) | 8,261 | 186 | ||
Laclede Group, Inc. (The) | 6,000 | 199 | ||
Leap Wireless International, Inc. (Æ)(Ñ) | 4,842 | 159 | ||
Millicom International Cellular SA (Æ)(Ñ) | 3,721 | 209 | ||
Mirant Corp. (Æ)(Ñ) | 16,100 | 253 | ||
New Jersey Resources Corp. (Ñ) | 11,950 | 443 | ||
Nicor, Inc. (Ñ) | 4,400 | 152 | ||
Northwest Natural Gas Co. (Ñ) | 800 | 36 | ||
NorthWestern Corp. | 5,400 | 123 | ||
Pepco Holdings, Inc. | 2,500 | 34 | ||
Pinnacle West Capital Corp. | 3,100 | 94 | ||
Portland General Electric Co. (Ñ) | 8,800 | 171 | ||
RRI Energy, Inc. (Æ)(Ñ) | 4,000 | 20 | ||
Southwest Gas Corp. | 15,627 | 347 | ||
Southwest Water Co. | 1,300 | 7 | ||
TECO Energy, Inc. (Ñ) | 7,600 | 91 | ||
UGI Corp. | 32,700 | 834 | ||
UIL Holdings Corp. | 1,700 | 38 | ||
US Cellular Corp. (Æ) | 2,300 | 88 | ||
USA Mobility, Inc. (Ñ) | 3,400 | 43 | ||
5,723 | ||||
Total Common Stocks (cost $117,947) | 117,542 | |||
Principal Amount ($) or Shares | Market Value $ | ||||
Short-Term Investments - 8.0% | |||||
Russell Investment Company Russell | 8,357,000 | 8,357 | |||
State Street Euro Commercial Paper (ç)(ž) | 1,800 | 1,800 | |||
Total Short-Term Investments (cost $10,157) | 10,157 | ||||
Other Securities - 42.3% | |||||
State Street Securities Lending Quality Trust (×) | 54,937,562 | 53,732 | |||
Total Other Securities (cost $54,938) | 53,732 | ||||
Total Investments - 142.7% (identified cost $183,042) | 181,431 | ||||
Other Assets and Liabilities, Net - (42.7%) | (54,303 | ) | |||
Net Assets - 100.0% | 127,128 | ||||
A portion of the portfolio has been fair valued as of period end.
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 17 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except contracts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||
Long Positions | ||||||||||
Russell 2000 Mini Index (CME) | 190 | USD | 9,637 | 09/09 | (274) | |||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | (274) | |||||||||
18 | Aggressive Equity Fund |
See accompanying notes which are an integral part of the financial statements.
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Presentation of Portfolio Holdings — June 30, 2009 (Unaudited)
Portfolio Summary | Market Value $ Level 1 | Market Value $ Level 2 | Market Value $ Level 3 | Total | % of Net Assets | ||||||||||||
Consumer Discretionary | $ | 18,282,709 | $ | — | $ | — | $ | 18,282,709 | 14.4 | ||||||||
Consumer Staples | 4,493,206 | — | — | 4,493,206 | 3.5 | ||||||||||||
Energy | 6,842,600 | — | — | 6,842,600 | 5.4 | ||||||||||||
Financial Services | 19,810,361 | — | 620 | 19,810,981 | 15.6 | ||||||||||||
Health Care | 12,753,809 | — | — | 12,753,809 | 10.0 | ||||||||||||
Materials and Processing | 8,221,148 | — | — | 8,221,148 | 6.4 | ||||||||||||
Producer Durables | 18,545,608 | — | — | 18,545,608 | 14.6 | ||||||||||||
Technology | 22,869,093 | — | — | 22,869,093 | 18.0 | ||||||||||||
Utilities | 5,722,664 | — | — | 5,722,664 | 4.5 | ||||||||||||
Short Term Investments | 8,357,000 | 1,800,000 | — | 10,157,000 | 8.0 | ||||||||||||
Other Securities | — | 53,731,872 | — | 53,731,872 | 42.3 | ||||||||||||
Total Investments | 125,898,198 | 55,531,872 | 620 | 181,430,690 | 142.7 | ||||||||||||
Other Assets and Liabilities, Net | (42.7 | ) | |||||||||||||||
100.0 | |||||||||||||||||
Futures Contracts | (274,374 | ) | — | — | (274,374 | ) | (0.2 | ) | |||||||||
Total Other Financial Instruments** | (274,374 | ) | — | — | (274,374 | ) | |||||||||||
Total | $ | 125,623,824 | $ | 55,531,872 | $ | 620 | $ | 181,156,316 | |||||||||
** | Other financial instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instruments. |
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 19 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate
of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,048.80 | $ | 1,019.44 | ||
Expenses Paid During Period* | $ | 5.49 | $ | 5.41 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.08% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
20 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 88.8% | ||||
Australia - 1.1% | ||||
ABC Learning Centres, Ltd. (Æ) | 5,058 | 2 | ||
Allco Finance Group, Ltd. (Æ) | 99,445 | 12 | ||
CSL, Ltd. | 59,552 | 1,539 | ||
National Australia Bank, Ltd. | 21,089 | 380 | ||
Newcrest Mining, Ltd. | 34,490 | 845 | ||
QBE Insurance Group, Ltd. (Ñ) | 14,489 | 231 | ||
Transpacific Industries Group, Ltd. | 10,659 | 15 | ||
3,024 | ||||
Austria - 0.1% | ||||
Erste Group Bank AG | 12,382 | 336 | ||
Belgium - 0.8% | ||||
Anheuser-Busch InBev NV | 57,663 | 2,088 | ||
Bermuda - 1.1% | ||||
Esprit Holdings, Ltd. | 122,800 | 684 | ||
Jardine Matheson Holdings, Ltd. | 62,100 | 1,699 | ||
Li & Fung, Ltd. | 240,000 | 641 | ||
3,024 | ||||
Brazil - 1.6% | ||||
Gafisa SA | 64,900 | 543 | ||
Itau Unibanco Holding SA - ADR | 75,900 | 1,202 | ||
Petroleo Brasileiro SA - ADR | 41,000 | 1,680 | ||
Vale SA Class B | 51,000 | 899 | ||
4,324 | ||||
Canada - 2.0% | ||||
Canadian National Railway Co. | 31,190 | 1,340 | ||
EnCana Corp. | 13,017 | 645 | ||
Inmet Mining Corp. | 18,800 | 690 | ||
Potash Corp. of Saskatchewan, Inc. | 14,519 | 1,351 | ||
Suncor Energy, Inc. | 23,629 | 719 | ||
Yamana Gold, Inc. (Ñ) | 58,080 | 513 | ||
5,258 | ||||
China - 0.4% | ||||
Industrial & Commercial Bank of China | 1,545,000 | 1,073 | ||
Czech Republic - 0.1% | ||||
Komercni Banka AS | 2,564 | 354 | ||
Denmark - 1.0% | ||||
Vestas Wind Systems A/S (Æ) | 37,510 | 2,697 | ||
Finland - 0.8% | ||||
Nokia OYJ | 73,053 | 1,066 | ||
Pohjola Bank PLC Class A | 124,000 | 992 | ||
2,058 | ||||
France - 10.9% | ||||
Accor SA | 13,809 | 549 | ||
Air France-KLM | 46,400 | 595 |
Principal Amount ($) or Shares | Market Value $ | |||
Air Liquide SA (Ñ) | 12,167 | 1,114 | ||
Alstom SA | 13,459 | 797 | ||
AXA SA (Ñ) | 72,918 | 1,379 | ||
BNP Paribas | 21,515 | 1,396 | ||
Carrefour SA | 35,470 | 1,517 | ||
Danone | 12,868 | 636 | ||
GDF Suez | 38,599 | 1,442 | ||
L’Oreal SA | 9,657 | 723 | ||
Legrand SA | 39,689 | 867 | ||
LVMH Moet Hennessy Louis Vuitton SA | 28,372 | 2,172 | ||
Pernod-Ricard SA (Ñ) | 15,494 | 978 | ||
Rallye SA | 37,900 | 1,005 | ||
Sanofi-Aventis SA | 48,424 | 2,848 | ||
Schneider Electric SA | 24,532 | 1,876 | ||
SCOR SE | 34,200 | 702 | ||
Thales SA | 23,551 | 1,054 | ||
Total SA | 48,923 | 2,650 | ||
UBISOFT Entertainment (Æ) | 80,100 | 1,958 | ||
Vivendi (Ñ) | 118,305 | 2,834 | ||
29,092 | ||||
Germany - 6.9% | ||||
Adidas AG | 21,780 | 830 | ||
Allianz SE | 7,361 | 681 | ||
BASF SE (Ñ) | 6,674 | 266 | ||
Bayer AG | 26,004 | 1,396 | ||
Bayerische Motoren Werke AG | 15,198 | 574 | ||
Beiersdorf AG (Ñ) | 6,960 | 328 | ||
Daimler AG | 19,905 | 720 | ||
Deutsche Boerse AG (Ñ) | 8,130 | 632 | ||
Deutsche Telekom AG | 80,100 | 947 | ||
E.ON AG | 49,324 | 1,751 | ||
Hochtief AG | 6,192 | 313 | ||
Linde AG | 23,730 | 1,951 | ||
MAN SE | 14,100 | 867 | ||
Merck KGaA | 12,630 | 1,288 | ||
Metro AG | 11,087 | 530 | ||
MTU Aero Engines Holding AG | 32,100 | 1,172 | ||
Muenchener Rueckversicherungs AG | 4,100 | 555 | ||
SAP AG | 38,600 | 1,556 | ||
Siemens AG | 12,499 | 865 | ||
Symrise AG (Ñ) | 78,667 | 1,164 | ||
18,386 | ||||
Hong Kong - 2.0% | ||||
Cheung Kong Holdings, Ltd. | 159,310 | 1,826 | ||
CNOOC, Ltd. | 900,000 | 1,108 | ||
Denway Motors, Ltd. | 2,190,000 | 872 | ||
Hang Lung Properties, Ltd. - ADR | 86,000 | 284 | ||
Industrial & Commercial Bank of China Asia, Ltd. | 710,000 | 1,281 | ||
5,371 | ||||
India - 0.7% | ||||
ICICI Bank, Ltd. - ADR | 29,915 | 882 | ||
Infosys Technologies, Ltd. - ADR (Ñ) | 25,740 | 947 | ||
1,829 | ||||
Non-U.S. Fund | 21 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Indonesia - 0.0% | ||||
Telekomunikasi Indonesia Tbk PT - ADR | 1,750 | 52 | ||
Ireland - 0.4% | ||||
Covidien PLC | 17,060 | 639 | ||
CRH PLC | 14,865 | 341 | ||
980 | ||||
Israel - 0.6% | ||||
Teva Pharmaceutical Industries, | 30,666 | 1,513 | ||
Italy - 4.0% | ||||
Ansaldo STS SpA (Ñ) | 18,758 | 346 | ||
ENI SpA | 90,139 | 2,138 | ||
Finmeccanica SpA (Ñ) | 84,200 | 1,188 | ||
Intesa Sanpaolo SpA (Æ) | 136,285 | 442 | ||
Lottomatica SpA | 55,500 | 1,072 | ||
Parmalat SpA | 633,400 | 1,531 | ||
Snam Rete Gas SpA | 259,700 | 1,142 | ||
Telecom Italia SpA | 410,900 | 569 | ||
UniCredit SpA (Æ) | 546,400 | 1,400 | ||
Unione di Banche Italiane SCPA | 69,800 | 911 | ||
10,739 | ||||
Japan - 13.9% | ||||
Aeon Credit Service Co., Ltd. | 35,900 | 467 | ||
Amada Co., Ltd. | 123,000 | 760 | ||
Bank of Yokohama, Ltd. (The) | 149,776 | 798 | ||
Canon, Inc. | 101,830 | 3,314 | ||
Daikin Industries, Ltd. | 19,400 | 620 | ||
Daiwa Securities Group, Inc. | 226,750 | 1,340 | ||
Fanuc, Ltd. | 17,780 | 1,419 | ||
Hirose Electric Co., Ltd. (Ñ) | 3,900 | 415 | ||
Honda Motor Co., Ltd. | 19,500 | 534 | ||
Hoya Corp. | 60,300 | 1,207 | ||
Inpex Holdings, Inc. | 156 | 1,243 | ||
Joyo Bank, Ltd. (The) | 167,980 | 854 | ||
Kao Corp. | 45,000 | 981 | ||
Keyence Corp. | 3,516 | 716 | ||
Konica Minolta Holdings, Inc. | 20,500 | 213 | ||
Kose Corp. (Ñ) | 52,750 | 1,112 | ||
Lawson, Inc. | 7,200 | 316 | ||
Marubeni Corp. | 280,000 | 1,237 | ||
MID Reit, Inc. Class A (ö)(Ñ) | 160 | 357 | ||
Mitsubishi Chemical Holdings Corp. | 201,500 | 850 | ||
Mitsubishi Corp. | 19,639 | 361 | ||
Mitsubishi UFJ Financial Group, Inc. | 48,152 | 296 | ||
Mitsui Sumitomo Insurance Group Holdings, Inc. | 24,730 | 645 | ||
Mizuho Financial Group, Inc. | 592,800 | 1,379 | ||
Mori Seiki Co., Ltd. | 62,400 | 646 | ||
Nintendo Co., Ltd. | 2,600 | 715 | ||
Nippon Telegraph & Telephone Corp. | 23,200 | 944 | ||
Nipponkoa Insurance Co., Ltd. | 202,260 | 1,173 | ||
Nomura Holdings, Inc. (Ñ) | 115,728 | 970 | ||
Nomura Research Institute, Ltd. | 62,645 | 1,390 | ||
Secom Co., Ltd. | 9,800 | 397 |
Principal Amount ($) or Shares | Market Value $ | |||
Seven & I Holdings Co., Ltd. | 40,100 | 941 | ||
Shin-Etsu Chemical Co., Ltd. | 11,700 | 540 | ||
SMC Corp. | 6,758 | 724 | ||
Sugi Holdings Co., Ltd. - GDR (Ñ) | 39,759 | 818 | ||
Sumitomo Metal Mining Co., Ltd. | 49,950 | 702 | ||
Sumitomo Realty & Development Co., Ltd. | 33,000 | 600 | ||
Sumitomo Trust & Banking Co., Ltd. (The) | 105,093 | 566 | ||
Suzuki Motor Corp. | 51,749 | 1,157 | ||
Takeda Pharmaceutical Co., Ltd. | 37,600 | 1,461 | ||
THK Co., Ltd. | 26,010 | 388 | ||
Tokyo Electron, Ltd. | 6,000 | 288 | ||
Toshiba TEC Corp. (Ñ) | 273,779 | 1,109 | ||
United Urban Investment Corp. (ö) | 70 | 300 | ||
37,263 | ||||
Luxembourg - 0.4% | ||||
ArcelorMittal | 29,200 | 959 | ||
Malaysia - 0.2% | ||||
Sime Darby Berhad | 266,956 | 526 | ||
Mexico - 0.9% | ||||
America Movil SAB de CV Series L (Ñ) | 12,860 | 498 | ||
Cemex SAB de CV - ADR (Æ) | 193,908 | 1,811 | ||
Grupo Modelo SAB de CV (Æ)(Ñ) | 65,000 | 231 | ||
2,540 | ||||
Netherlands - 3.0% | ||||
ASML Holding NV | 57,188 | 1,240 | ||
Heineken NV (Ñ) | 103,848 | 3,858 | ||
Nutreco Holding NV | 23,500 | 917 | ||
TNT NV | 51,210 | 998 | ||
Wolters Kluwer NV (Ñ) | 59,540 | 1,042 | ||
8,055 | ||||
Norway - 1.7% | ||||
Cermaq ASA (Æ) | 101,000 | 809 | ||
DNB NOR ASA (Æ) | 105,500 | 808 | ||
StatoilHydro ASA | 150,062 | 2,964 | ||
4,581 | ||||
Portugal - 0.2% | ||||
Energias de Portugal SA | 134,542 | 528 | ||
Singapore - 2.4% | ||||
CapitaLand, Ltd. | 464,000 | 1,179 | ||
DBS Group Holdings, Ltd. | 175,980 | 1,428 | ||
Jardine Cycle & Carriage, Ltd. | 119,000 | 1,575 | ||
Singapore Airlines, Ltd. | 36,000 | 330 | ||
Singapore Telecommunications, Ltd. (Ñ) | 427,000 | 881 | ||
United Overseas Bank, Ltd. (Ñ) | 99,000 | 1,000 | ||
6,393 | ||||
South Africa - 0.3% | ||||
Gold Fields, Ltd. - ADR (Ñ) | 35,020 | 422 | ||
MTN Group, Ltd. | 31,370 | 482 | ||
904 | ||||
22 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
South Korea - 0.7% | ||||
Hyundai Motor Co. | 5,365 | 311 | ||
KB Financial Group, Inc. - ADR | 7,428 | 248 | ||
Samsung Electronics Co., Ltd. | 3,028 | 1,402 | ||
1,961 | ||||
Spain - 2.3% | ||||
Banco Bilbao Vizcaya Argentaria SA | 76,334 | 962 | ||
Banco Santander SA | 156,900 | 1,893 | ||
Gamesa Corp. Tecnologica SA | 68,463 | 1,300 | ||
Telefonica SA | 86,764 | 1,967 | ||
6,122 | ||||
Sweden - 1.1% | ||||
Hennes & Mauritz AB Series B Class B | 6,052 | 302 | ||
Telefonaktiebolaget LM Ericsson Class B | 281,516 | 2,754 | ||
3,056 | ||||
Switzerland - 8.9% | ||||
ABB, Ltd. (Æ) | 38,200 | 601 | ||
Actelion, Ltd. (Æ) | 20,229 | 1,061 | ||
Compagnie Financiere Richemont SA Class A (Ñ) | 44,653 | 930 | ||
Credit Suisse Group AG | 54,615 | 2,493 | ||
Georg Fischer AG (Æ) | 3,000 | 514 | ||
Givaudan SA | 1,926 | 1,180 | ||
Helvetia Holding AG | 4,100 | 1,088 | ||
Julius Baer Holding AG | 43,526 | 1,697 | ||
Lonza Group AG | 15,210 | 1,511 | ||
Nestle SA | 148,691 | 5,612 | ||
Novartis AG | 11,575 | 470 | ||
Roche Holding AG | 20,192 | 2,747 | ||
Sonova Holding AG | 6,138 | 500 | ||
Swiss Reinsurance | 10,869 | 360 | ||
Transocean, Ltd. (Æ) | 27,530 | 2,045 | ||
UBS AG (Æ) | 25,567 | 313 | ||
Zurich Financial Services AG | 4,600 | 814 | ||
23,936 | ||||
Taiwan - 1.5% | ||||
Taiwan Semiconductor Manufacturing Co., Ltd. | 434,870 | 722 | ||
Taiwan Semiconductor Manufacturing Co., Ltd. - ADR (Ñ) | 348,357 | 3,278 | ||
4,000 | ||||
Thailand - 0.2% | ||||
Bangkok Bank PCL | 153,979 | 502 | ||
United Kingdom - 15.1% | ||||
Anglo American PLC | 64,140 | 1,872 | ||
Antofagasta PLC (Ñ) | 89,520 | 869 | ||
BAE Systems PLC | 66,579 | 372 | ||
BG Group PLC | 30,818 | 518 | ||
BHP Billiton PLC | 16,093 | 363 | ||
BP PLC | 226,937 | 1,796 |
Principal Amount ($) or Shares | Market Value $ | |||
BP PLC - ADR (Ñ) | 29,270 | 1,395 | ||
Brit Insurance Holdings PLC | 216,400 | 675 | ||
Burberry Group PLC | 74,740 | 522 | ||
Cadbury PLC | 128,981 | 1,102 | ||
Dairy Crest Group PLC | 138,600 | 733 | ||
Diageo PLC | 194,060 | 2,787 | ||
Experian PLC | 182,535 | 1,368 | ||
GlaxoSmithKline PLC | 111,566 | 1,965 | ||
HSBC Holdings PLC | 340,195 | 2,824 | ||
Imperial Tobacco Group PLC | 63,300 | 1,646 | ||
Ladbrokes PLC | 122,525 | 373 | ||
Lloyds Banking Group PLC | 512 | 1 | ||
Reckitt Benckiser Group PLC | 67,257 | 3,065 | ||
Royal Dutch Shell PLC Class A | 101,585 | 2,539 | ||
Sage Group PLC (The) | 406,600 | 1,194 | ||
Scottish & Southern Energy PLC | 43,229 | 812 | ||
Smiths Group PLC | 54,675 | 633 | ||
Spectris PLC | 85,400 | 776 | ||
Standard Chartered PLC (Ñ) | 71,389 | 1,344 | ||
Tesco PLC | 195,389 | 1,139 | ||
Vodafone Group PLC | 1,782,696 | 3,446 | ||
Vodafone Group PLC - ADR (Ñ) | 76,350 | 1,488 | ||
William Hill PLC (Ñ) | 195,297 | 636 | ||
WPP PLC (Ñ) | 319,600 | 2,126 | ||
40,379 | ||||
United States - 1.5% | ||||
NII Holdings, Inc. (Æ)(Ñ) | 14,600 | 279 | ||
Philip Morris International, Inc. | 61,490 | 2,682 | ||
Synthes, Inc. (Æ) | 11,466 | 1,110 | ||
4,071 | ||||
Total Common Stocks (cost $269,349) | 237,974 | |||
Preferred Stocks - 0.4% | ||||
Germany - 0.4% | ||||
Henkel AG & Co. KGaA | 37,917 | 1,185 | ||
Total Preferred Stocks (cost $1,902) | 1,185 | |||
Warrants & Rights - 0.0% | ||||
Australia - 0.0% | ||||
Mirvac Group (Æ) | 6 | — | ||
Belgium - 0.0% | ||||
Fortis (Æ) | 10 | — | ||
Italy - 0.0% | ||||
Unione di Banche Italiane SCPA (Æ) | 70 | 5 | ||
Total Warrants & Rights (cost $—) | 5 | |||
Non-U.S. Fund | 23 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | ||||
Short-Term Investments - 9.3% | |||||
United States - 9.3% | |||||
Russell Investment Company | 20,801,000 | 20,801 | |||
State Street Euro Commercial Paper (ç)(ž) | |||||
0.010% due 07/01/09 | 4,200 | 4,200 | |||
Total Short-Term Investments (cost $25,001) | 25,001 | ||||
Other Securities - 6.6% | |||||
State Street Securities Lending Quality Trust (×) | 18,013,672 | 17,618 | |||
Total Other Securities (cost $18,014) | 17,618 | ||||
Total Investments - 105.1% (identified cost $314,266) | 281,783 | ||||
Other Assets and Liabilities, Net - (5.1%) | (13,823 | ) | |||
Net Assets - 100.0% | 267,960 | ||||
A portion of the portfolio has been fair valued as of period end.
See accompanying notes which are an integral part of the financial statements.
24 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except contracts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) | ||||||
Long Positions | ||||||||||
CAC-40 Index (France) | 80 | EUR | 2,585 | 07/09 | (106) | |||||
DAX Index (Germany) | 14 | EUR | 1,718 | 09/09 | (43) | |||||
EUR STOXX 50 Index (EMU) | 186 | EUR | 4,545 | 09/09 | (117) | |||||
FTSE-100 Index (UK) | 82 | GBP | 3,546 | 09/09 | (140) | |||||
TOPIX Index (Japan) | 102 | JPY | 937,308 | 09/09 | 54 | |||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | (352) | |||||||||
Non-U.S. Fund | 25 |
See accompanying notes which are an integral part of the financial statements.
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||
Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||
USD | 21 | CHF | 23 | 07/01/09 | — | ||||||
USD | 24 | CHF | 26 | 07/02/09 | — | ||||||
USD | 55 | EUR | 39 | 07/01/09 | — | ||||||
USD | 143 | EUR | 101 | 07/01/09 | (1 | ) | |||||
USD | 35 | EUR | 25 | 07/02/09 | — | ||||||
USD | 131 | EUR | 93 | 07/02/09 | — | ||||||
USD | 134 | EUR | 96 | 07/03/09 | — | ||||||
USD | 2,025 | EUR | 1,445 | 09/16/09 | 2 | ||||||
USD | 2,025 | EUR | 1,445 | 09/16/09 | 2 | ||||||
USD | 2,025 | EUR | 1,445 | 09/16/09 | 2 | ||||||
USD | 2,025 | EUR | 1,445 | 09/16/09 | 1 | ||||||
USD | 2,025 | EUR | 1,445 | 09/16/09 | 2 | ||||||
USD | 2,025 | EUR | 1,445 | 09/16/09 | 2 | ||||||
USD | 3,196 | EUR | 2,300 | 09/16/09 | 31 | ||||||
USD | 321 | GBP | 200 | 09/16/09 | 8 | ||||||
USD | 1,041 | GBP | 633 | 09/16/09 | (1 | ) | |||||
USD | 1,041 | GBP | 633 | 09/16/09 | — | ||||||
USD | 1,041 | GBP | 633 | 09/16/09 | (1 | ) | |||||
USD | 1,041 | GBP | 633 | 09/16/09 | — | ||||||
USD | 1,041 | GBP | 633 | 09/16/09 | — | ||||||
USD | 1,041 | GBP | 633 | 09/16/09 | — | ||||||
USD | 1,205 | GBP | 750 | 09/16/09 | 29 | ||||||
USD | 36 | HKD | 278 | 07/02/09 | — | ||||||
USD | 48 | HKD | 371 | 07/02/09 | — | ||||||
USD | 18 | JPY | 1,703 | 07/01/09 | — |
Foreign Currency Exchange Contracts | |||||||||||
Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||
USD | 18 | JPY | 1,732 | 07/02/09 | — | ||||||
USD | 1,571 | JPY | 154,167 | 09/16/09 | 30 | ||||||
USD | 1,571 | JPY | 154,167 | 09/16/09 | 30 | ||||||
USD | 1,571 | JPY | 154,167 | 09/16/09 | 30 | ||||||
USD | 1,572 | JPY | 154,167 | 09/16/09 | 30 | ||||||
USD | 1,572 | JPY | 154,167 | 09/16/09 | 30 | ||||||
USD | 1,572 | JPY | 154,167 | 09/16/09 | 30 | ||||||
USD | 2,236 | JPY | 220,000 | 09/16/09 | 49 | ||||||
USD | 58 | SGD | 84 | 07/02/09 | — | ||||||
USD | 72 | SGD | 104 | 07/02/09 | — | ||||||
CHF | 50 | USD | 46 | 07/01/09 | — | ||||||
EUR | 100 | USD | 141 | 09/16/09 | — | ||||||
EUR | 300 | USD | 425 | 09/16/09 | 4 | ||||||
EUR | 700 | USD | 979 | 09/16/09 | (3 | ) | |||||
EUR | 1,700 | USD | 2,377 | 09/16/09 | (8 | ) | |||||
GBP | 100 | USD | 164 | 09/16/09 | — | ||||||
GBP | 150 | USD | 243 | 09/16/09 | (4 | ) | |||||
GBP | 200 | USD | 328 | 09/16/09 | (1 | ) | |||||
GBP | 700 | USD | 1,150 | 09/16/09 | (1 | ) | |||||
JPY | 15,000 | USD | 156 | 09/16/09 | — | ||||||
JPY | 30,000 | USD | 313 | 09/16/09 | 1 | ||||||
JPY | 40,000 | USD | 420 | 09/16/09 | 4 | ||||||
JPY | 200,000 | USD | 2,035 | 09/16/09 | (43 | ) | |||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | 254 | ||||||||||
Amounts unrounded | |||||||||||||||||
Industry Diversification | Market Value $ Level 1 | Market Value $ Level 2 | Market Value $ Level 3 | Total | % of Net Assets | ||||||||||||
Consumer Discretionary | $ | — | $ | 29,085,242 | $ | 2,201 | $ | 29,087,443 | 10.9 | ||||||||
Consumer Staples | 2,912,809 | 30,950,987 | — | 33,863,796 | 12.6 | ||||||||||||
Energy | 7,929,307 | 13,512,266 | — | 21,441,573 | 8.0 | ||||||||||||
Financial Services | 23,132,416 | 45,857,086 | 11,219 | 69,000,721 | 18.0 | ||||||||||||
Health Care | 2,151,787 | 13,448,751 | 14,977 | 15,615,515 | 5.8 | ||||||||||||
Materials and Processing | 5,686,317 | 22,886,910 | — | 28,573,227 | 10.6 | ||||||||||||
Producer Durables | 1,882,771 | 29,663,981 | — | 31,546,752 | 11.8 | ||||||||||||
Technology | 4,224,757 | 9,378,586 | — | 13,603,343 | 5.1 | ||||||||||||
Utilities | 2,316,888 | 14,910,743 | — | 17,227,631 | 6.4 | ||||||||||||
Warrents & Rights | 4,769 | — | — | 4,769 | — | * | |||||||||||
Short Term Investments | — | 4,200,000 | — | 4,200,000 | 9.3 | ||||||||||||
Other Securities | — | 17,618,334 | — | 17,618,334 | 6.6 | ||||||||||||
Total Investments | 50,241,821 | 231,512,886 | 28,397 | 281,783,104 | 105.1 | ||||||||||||
Other Assets and Liabilities, Net | (5.1 | ) | |||||||||||||||
100.0 | |||||||||||||||||
Foreign Currency | (1,547 | ) | 255,661 | — | 254,114 | 0.1 | |||||||||||
Futures Contracts | (352,121 | ) | — | — | (352,121 | ) | (0.1 | ) | |||||||||
Total Other Financial Instruments** | (353,668 | ) | 255,661 | — | (98,007 | ) | |||||||||||
Total | $ | 49,888,153 | $ | 231,768,547 | $ | 28,397 | $ | 281,685,097 | |||||||||
* | Less than .05% of net assets. |
** | Other financial instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instruments. |
See accompanying notes which are an integral part of the financial statements.
26 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands
Geographic Diversification | % of Net Assets | Market Value $ | ||||
Africa | 0.3 | 904 | ||||
Asia | 9.2 | 24,731 | ||||
Europe | 43.0 | 115,157 | ||||
Japan | 13.9 | 37,263 | ||||
Latin America | 3.6 | 9,888 | ||||
Middle East | 0.6 | 1,513 | ||||
Other Regions | 12.8 | 34,330 | ||||
United Kingdom | 15.1 | 40,379 | ||||
Other Securities | 6.6 | 17,618 | ||||
Total Investments | 105.1 | 281,783 | ||||
Other Assets and Liabilities, Net | (5.1 | ) | (13,823 | ) | ||
Net Assets | 100.0 | 267,960 | ||||
Presentation of Portfolio Holdings — June 30, 2009 (Unaudited)
Categories | % of Net Assets | ||
Australia | 1.1 | ||
Austria | 0.1 | ||
Belgium | 0.8 | ||
Bermuda | 1.1 | ||
Brazil | 1.6 | ||
Canada | 2.0 | ||
China | 0.4 | ||
Czech Republic | 0.1 | ||
Denmark | 1.0 | ||
Finland | 0.8 | ||
France | 10.9 | ||
Germany | 6.9 | ||
Hong Kong | 2.0 | ||
India | 0.7 | ||
Indonesia | — | * | |
Ireland | 0.4 | ||
Israel | 0.6 | ||
Italy | 4.0 | ||
Japan | 13.9 | ||
Luxembourg | 0.4 | ||
Malaysia | 0.2 | ||
Mexico | 0.9 | ||
Netherlands | 3.0 | ||
Norway | 1.7 |
Categories | % of Net Assets | ||
Portugal | 0.2 | ||
Singapore | 2.4 | ||
South Africa | 0.3 | ||
South Korea | 0.7 | ||
Spain | 2.3 | ||
Sweden | 1.1 | ||
Switzerland | 8.9 | ||
Taiwan | 1.5 | ||
Thailand | 0.2 | ||
United Kingdom | 15.1 | ||
United States | 1.5 | ||
Preferred Stocks | 0.4 | ||
Warrants & Rights | — | * | |
Short-Term Investments | 9.3 | ||
Other Securities | 6.6 | ||
Total Investments | 105.1 | ||
Other Assets and Liabilities, Net | (5.1 | ) | |
100.0 | |||
Futures Contracts | (0.1 | ) | |
Foreign Currency Exchange Contracts | 0.1 |
* | Less than .05% of net assets. |
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 27 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate
of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,059.60 | $ | 1,021.42 | ||
Expenses Paid During Period* | $ | 3.47 | $ | 3.41 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.68% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
28 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Long-Term Investments - 112.6% | ||||
Asset-Backed Securities - 4.5% | ||||
Access Group, Inc. (Ê) | 871 | 867 | ||
Accredited Mortgage Loan Trust (Ê) | 34 | 15 | ||
ACE Securities Corp. (Ê) | 29 | 18 | ||
Series 2005-SD3 Class A | 153 | 124 | ||
Aegis Asset Backed Securities Trust (Ê) | 110 | 55 | ||
American Express Credit Account Master Trust (Ê)(Þ) | 32 | 32 | ||
Ameriquest Mortgage Securities, Inc. (Ê) Series 2002-D Class M1 | 90 | 30 | ||
ARES CLO Funds (Ê)(Å) | 730 | 603 | ||
Armstrong Loan Funding, Ltd. (Ê)(Å) | 840 | 736 | ||
Bank of America Credit Card Trust (Ê) | 200 | 198 | ||
Bayview Financial Acquisition Trust | 190 | 80 | ||
Centex Home Equity (Ê) | 700 | 263 | ||
CIT Mortgage Loan Trust (Ê) | 261 | 195 | ||
Series 2007-1 Class 2A2 | 130 | 37 | ||
Series 2007-1 Class 2A3 (Å) | 180 | 49 | ||
Citigroup Mortgage Loan Trust, Inc. (Ê) Series 2006-WFH Class A2 | 563 | 528 | ||
Series 2007-AMC Class A2A | 376 | 302 | ||
Countrywide Asset-Backed Certificates Series 2004-AB2 Class M3 (Ê) | 95 | 4 | ||
Series 2004-BC1 Class M1 (Ê) | 95 | 52 | ||
Series 2006-11 Class 1AF4 | 170 | 58 |
Principal Amount ($) or Shares | Market Value $ | |||
Countrywide Home Equity Loan Trust (Ê) | 467 | 168 | ||
First Franklin Mortgage Loan Asset Backed Certificates (Ê) | 76 | 72 | ||
Series 2007-FF1 Class A2B | 1,000 | 341 | ||
GMAC Mortgage Corp. Loan Trust | 65 | 29 | ||
Series 2007-HE3 Class 2A1 | 72 | 24 | ||
GSAA Trust (Ê) | 320 | 273 | ||
Series 2006-4 Class 1A2 | 207 | 28 | ||
Series 2006-4 Class 3A1 | 1,431 | 757 | ||
GSAMP Trust (Ê) | 61 | 39 | ||
Series 2004-SEA Class A2A | 14 | 14 | ||
HFC Home Equity Loan Asset Backed Certificates (Ê) | 191 | 132 | ||
Series 2006-4 Class A3V | 800 | 474 | ||
Series 2007-1 Class AS | 753 | 404 | ||
Series 2007-3 Class APT | 333 | 218 | ||
HSI Asset Securitization Corp. Trust (Ê) | 27 | 16 | ||
Indymac Residential Asset Backed Trust (Ê) | 292 | 123 | ||
JP Morgan Mortgage Acquisition Corp. (Ê) | 1,000 | 308 | ||
Lehman XS Trust (Ê) | 70 | 39 | ||
Series 2005-5N Class 3A1A | 410 | 175 | ||
Series 2005-7N Class 1A1A | 448 | 210 | ||
Series 2006-16N Class A1A | 86 | 72 | ||
Series 2006-16N Class A4A | 710 | 286 |
Core Bond Fund | 29 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Series 2006-2N Class 1A2 | 197 | 42 | ||
Long Beach Mortgage Loan Trust (Ê) | 5 | 3 | ||
Series 2006-9 Class 2A1 | 97 | 91 | ||
Master Asset Backed Securities Trust (Ê) | 57 | 17 | ||
Morgan Stanley ABS Capital I (Ê) | 29 | 3 | ||
Series 2006-HE7 Class A2A | 123 | 117 | ||
Series 2007-HE2 Class A2B | 1,043 | 298 | ||
New Century Home Equity Loan Trust (Ê) | 215 | 129 | ||
Novastar Home Equity Loan (Ê) | 334 | 273 | ||
Option One Mortgage Loan Trust (Ê) | 38 | 3 | ||
Series 2003-3 Class M3 | 27 | 4 | ||
Series 2003-4 Class M2 | 25 | 7 | ||
Park Place Securities, Inc. (Ê) | 210 | 89 | ||
Popular ABS Mortgage Pass-Through Trust | 191 | 163 | ||
Renaissance Home Equity Loan Trust | 61 | 18 | ||
Series 2005-2 Class AF4 | 85 | 48 | ||
Series 2006-1 Class AF6 | 173 | 104 | ||
Residential Asset Mortgage Products, Inc. | 146 | 84 | ||
Series 2003-RS9 Class AI6A | 459 | 263 | ||
Series 2006-RZ4 Class A1A (Ê) | 98 | 97 | ||
Residential Asset Securities Corp. | 155 | 65 | ||
Series 2003-KS2 Class MI3 | 59 | 7 | ||
Series 2003-KS4 Class AIIB (Ê) | 40 | 17 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2006-KS9 Class AI1 (Ê) | 21 | 21 | ||
Series 2007-KS2 Class AI1 (Ê) | 158 | 145 | ||
SBI Heloc Trust (Ê)(Þ) | 40 | 36 | ||
SLM Student Loan Trust (Ê) | 238 | 237 | ||
Series 2008-2 Class A1 | 73 | 73 | ||
Series 2008-7 Class A2 1.592% due 10/25/17 | 2,800 | 2,732 | ||
Small Business Administration Participation Certificates | 758 | 788 | ||
Soundview Home Equity Loan Trust | 256 | 193 | ||
Structured Asset Investment Loan Trust (Ê) | 120 | 23 | ||
Structured Asset Securities Corp. (Ê) | 61 | 56 | ||
Series 2007-BC3 Class 2A2 | 920 | 210 | ||
14,904 | ||||
Corporate Bonds and Notes - 20.5% | ||||
Ace Capital Trust II | 175 | 159 | ||
Allied Waste NA, Inc. | 90 | 90 | ||
Allstate Life Global Funding Trusts | 200 | 207 | ||
Altria Group, Inc. | 150 | 172 | ||
American Airlines Pass Through Trust 2009-1A | 500 | 505 | ||
American Express Bank FSB | 300 | 294 | ||
6.000% due 09/13/17 | 400 | 365 | ||
American Express Centurion Bank | 400 | 365 | ||
American Express Co. | 200 | 194 | ||
American Express Travel Related Services Co., Inc. (Ê) | 100 | 88 |
30 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
American General Finance Corp. | 400 | 217 | ||
American International Group, Inc. | 20 | 16 | ||
5.850% due 01/16/18 | 900 | 476 | ||
Americo Life, Inc. (Þ) | 75 | 49 | ||
Amgen, Inc. | 1,000 | 1,133 | ||
Anheuser-Busch InBev Worldwide, Inc. (Þ) | 350 | 383 | ||
ANZ Capital Trust (ƒ)(Þ) | 225 | 221 | ||
Appalachian Power Co. | 65 | 69 | ||
Arizona Public Service Co. | 100 | 101 | ||
6.250% due 08/01/16 | 150 | 148 | ||
AT&T, Inc. | 200 | 208 | ||
5.500% due 02/01/18 | 200 | 200 | ||
6.300% due 01/15/38 | 975 | 942 | ||
6.400% due 05/15/38 | 250 | 245 | ||
BAC Capital Trust XV(Ê) | 375 | 185 | ||
Bank of America Corp. | 115 | 104 | ||
6.000% due 09/01/17 | 335 | 305 | ||
5.750% due 12/01/17 | 290 | 258 | ||
5.650% due 05/01/18 | 175 | 155 | ||
7.625% due 06/01/19 | 375 | 377 | ||
Bank of America NA (Ê) | 200 | 149 | ||
BankAmerica Capital III (Ê) | 350 | 179 | ||
Bear Stearns Cos. LLC (The) | 600 | 600 | ||
6.950% due 08/10/12 | 600 | 652 | ||
7.250% due 02/01/18 | 645 | 680 | ||
BellSouth Telecommunications, Inc. | 245 | 214 | ||
BNP Paribas Capital Trust (ƒ)(Å) | 450 | 381 | ||
Boardwalk Pipelines, LP | 225 | 214 | ||
Burlington Northern Santa Fe Corp. | 25 | 25 | ||
6.750% due 03/15/29 | 10 | 10 | ||
Capital One Bank USA NA | 300 | 306 | ||
Capital One Financial Corp. | 448 | 462 | ||
Caterpillar Financial Services Corp. | 100 | 104 |
Principal Amount ($) or Shares | Market Value $ | |||
Catlin Insurance Co., Ltd. (ƒ)(Å) | 100 | 56 | ||
CenterPoint Energy Houston Electric LLC (Ñ) | 110 | 112 | ||
CenterPoint Energy Resources Corp. | 50 | 46 | ||
Series B | 295 | 315 | ||
Chubb Corp. | 175 | 140 | ||
Series 1 | 50 | 54 | ||
Citigroup Capital XXI | 650 | 507 | ||
Citigroup, Inc. | 700 | 703 | ||
5.500% due 08/27/12 | 200 | 194 | ||
5.625% due 08/27/12 | 200 | 187 | ||
5.500% due 04/11/13 | 700 | 656 | ||
5.850% due 07/02/13 | 100 | 95 | ||
6.500% due 08/19/13 | 565 | 549 | ||
4.700% due 05/29/15 | 50 | 41 | ||
5.850% due 08/02/16 | 55 | 49 | ||
6.000% due 08/15/17 | 400 | 349 | ||
6.125% due 11/21/17 | 405 | 355 | ||
8.500% due 05/22/19 | 450 | 458 | ||
6.125% due 08/25/36 | 300 | 223 | ||
5.875% due 05/29/37 | 150 | 117 | ||
6.875% due 03/05/38 | 75 | 66 | ||
CNA Financial Corp. | 125 | 101 | ||
Columbus Southern Power Co. | 10 | 10 | ||
Comcast Cable Communications Holdings, Inc. | 100 | 117 | ||
Comcast Cable Holdings LLC | 180 | 203 | ||
7.875% due 08/01/13 | 245 | 279 | ||
Comcast Corp. | 100 | 104 | ||
Comcast Holdings Corp. | 125 | 146 | ||
Commonwealth Edison Co. | 50 | 51 | ||
5.900% due 03/15/36 | 75 | 72 | ||
Series 105 | 125 | 131 | ||
Community Health Systems, Inc. | 235 | 230 | ||
Continental Airlines, Inc. | 250 | 250 | ||
Series 071A | 150 | 124 |
Core Bond Fund | 31 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Series 991A | 290 | 268 | ||
Countrywide Financial Corp. | 100 | 101 | ||
Countrywide Home Loans, Inc. | 290 | 286 | ||
COX Communications, Inc. (Þ) | 75 | 74 | ||
8.375% due 03/01/39 | 125 | 139 | ||
Credit Suisse USA, Inc. | 45 | 47 | ||
4.875% due 01/15/15 | 55 | 55 | ||
CSC Holdings, Inc. | 90 | 87 | ||
CSX Corp. | 75 | 76 | ||
DCP Midstream LLC | 20 | 21 | ||
Dell, Inc. | 400 | 412 | ||
Delta Air Lines, Inc. | 205 | 196 | ||
Series 01A2 | 400 | 372 | ||
DISH DBS Corp. (Ñ) | 125 | 117 | ||
Dow Chemical Co. (The) | 250 | 257 | ||
DPL, Inc. | 193 | 203 | ||
El Paso Corp. | 200 | 166 | ||
El Paso Natural Gas Co. | 100 | 99 | ||
Energy Transfer Partners, LP | 300 | 302 | ||
6.700% due 07/01/18 | 175 | 179 | ||
Enterprise Products Operating LLC | 100 | 102 | ||
8.375% due 08/01/66 | 100 | 80 | ||
Equities Corp. | 40 | 43 | ||
Express Scripts, Inc. | 100 | 103 | ||
6.250% due 06/15/14 | 100 | 106 | ||
Federal Express Corp. | 75 | 69 | ||
Fifth Third Bancorp | 1,100 | 842 | ||
FirstEnergy Corp. | 280 | 292 | ||
Series C | 125 | 118 |
Principal Amount ($) or Shares | Market Value $ | |||
Florida Gas Transmission Co. LLC(Þ) | 225 | 247 | ||
Frontier Communications Corp. | 125 | 130 | ||
General Electric Capital Corp. | 1,000 | 1,003 | ||
5.900% due 05/13/14 | 350 | 357 | ||
5.625% due 05/01/18 | 230 | 218 | ||
5.875% due 01/14/38 | 300 | 237 | ||
6.375% due 11/15/67 | 1,900 | 1,268 | ||
Series EMTN (Ê) | 400 | 343 | ||
Series GMTN (Ñ) | 220 | 228 | ||
Series MTNA (Ê) | 300 | 255 | ||
General Electric Co. | 150 | 147 | ||
GMAC LLC | 525 | 451 | ||
7.500% due 12/31/13 (Þ) | 200 | 155 | ||
Goldman Sachs Group, Inc. (The) | 350 | 350 | ||
6.000% due 05/01/14 | 150 | 157 | ||
6.250% due 09/01/17 | 600 | 594 | ||
6.150% due 04/01/18 | 150 | 146 | ||
7.500% due 02/15/19 | 550 | 589 | ||
6.750% due 10/01/37 | 800 | 711 | ||
Series MTNB (Ê) | 100 | 86 | ||
GrafTech Finance, Inc. | 12 | 11 | ||
HBOS PLC (Þ) | 825 | 623 | ||
HCA, Inc. | 300 | 294 | ||
9.125% due 11/15/14 | 125 | 124 | ||
Historic TW, Inc. | 195 | 196 | ||
Inmarsat Finance II PLC | 125 | 129 | ||
Inter-American Development Bank | 900 | 897 | ||
International Finance Corp. | 900 | 880 | ||
International Game Technology (Ñ) | 100 | 101 | ||
International Lease Finance Corp. | 100 | 85 | ||
Jackson National Life Fund LLC (Ê) | 2,800 | 2,516 | ||
Jersey Central Power & Light Co. | 90 | 88 | ||
JP Morgan Chase Capital XIII (Ê) | 480 | 270 |
32 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
JPMorgan Chase & Co. | 200 | 201 | ||
5.375% due 01/15/14 | 170 | 171 | ||
6.000% due 01/15/18 | 200 | 199 | ||
6.300% due 04/23/19 | 250 | 251 | ||
6.400% due 05/15/38 | 323 | 324 | ||
Series 1 (ƒ) | 840 | 735 | ||
JPMorgan Chase Bank NA | 70 | 67 | ||
6.000% due 10/01/17 | 400 | 389 | ||
KCP&L Greater Missouri Operations Co. | 425 | 470 | ||
Kinder Morgan Energy Partners, LP | 700 | 685 | ||
Kraft Foods, Inc. | 200 | 207 | ||
L-3 Communications Corp. | 125 | 113 | ||
Lehman Brothers Holdings, Inc. | 200 | 30 | ||
6.200% due 09/26/14 | 200 | 29 | ||
1.000% due 04/03/49 | 400 | 59 | ||
1.000% due 12/31/49 (Ø) | 600 | 88 | ||
Manufacturers & Traders Trust Co. | 84 | 65 | ||
MBNA Corp. | 200 | 203 | ||
Merrill Lynch & Co., Inc. | ||||
6.050% due 08/15/12 | 100 | 100 | ||
5.450% due 02/05/13 | 200 | 195 | ||
6.400% due 08/28/17 | 325 | 288 | ||
6.875% due 04/25/18 | 625 | 578 | ||
MetLife, Inc. | 205 | 215 | ||
6.400% due 12/15/66 | 100 | 71 | ||
Series A | 200 | 201 | ||
Metropolitan Life Global Funding I (Þ) | 200 | 198 | ||
Midamerican Energy Holdings Co. | 125 | 130 | ||
Series WI | 125 | 124 | ||
Mirant Mid Atlantic Pass Through Trust A | 294 | 292 | ||
Morgan Stanley | 200 | 207 | ||
1.600% due 03/01/13 (Ê) | 600 | 742 | ||
6.000% due 05/13/14 | 440 | 445 | ||
1.557% due 10/18/16 (Ê) | 435 | 352 | ||
5.450% due 01/09/17 | 225 | 210 | ||
6.250% due 08/28/17 | 100 | 97 | ||
5.950% due 12/28/17 | 125 | 120 | ||
6.625% due 04/01/18 | 450 | 449 | ||
7.300% due 05/13/19 | 100 | 104 |
Principal Amount ($) or Shares | Market Value $ | |||
Series GMTN | 125 | 129 | ||
1.449% due 01/09/14 (Ê) | 425 | 382 | ||
Nevada Power Co. | 100 | 107 | ||
Series L | 100 | 102 | ||
New Cingular Wireless Services, Inc. | 150 | 162 | ||
News America Holdings, Inc. | 90 | 79 | ||
8.250% due 10/17/96 | 20 | 18 | ||
NGPL Pipeco LLC (Þ) | 200 | 210 | ||
Nisource Finance Corp. | 125 | 129 | ||
10.750% due 03/15/16 | 100 | 111 | ||
6.400% due 03/15/18 | 145 | 133 | ||
Norfolk Southern Corp. | 415 | 434 | ||
Ohio Power Co. (Ñ)(Þ) | 20 | 21 | ||
Oncor Electric Delivery Co. | 550 | 588 | ||
Pacific Gas & Electric Co. | 125 | 134 | ||
Panhandle Eastern Pipeline Co., LP | 450 | 485 | ||
Philip Morris International, Inc. | 225 | 236 | ||
6.375% due 05/16/38 | 100 | 106 | ||
Phoenix Life Insurance Co. (Þ) | 150 | 42 | ||
PNC Bank NA | 250 | 247 | ||
Progress Energy, Inc. | 77 | 82 | ||
5.625% due 01/15/16 | 40 | 41 | ||
7.050% due 03/15/19 (Ñ) | 200 | 222 | ||
Prudential Holdings LLC (Þ) | 350 | 335 | ||
Public Service Co. of New Mexico | 260 | 252 | ||
Puget Sound Energy, Inc. | 100 | 71 | ||
Pulte Homes, Inc. | 1,000 | 870 | ||
Qwest Communications International, Inc. | 234 | 227 | ||
Qwest Corp. | 120 | 120 | ||
7.625% due 06/15/15 | 100 | 94 | ||
Reckson Operating Partnership, LP | 92 | 85 |
Core Bond Fund | 33 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Reinsurance Group of America, Inc. | 75 | 42 | ||
Roche Holdings, Inc. (Þ) | 225 | 240 | ||
Sabine Pass LNG, LP | 500 | 424 | ||
Simon Property Group, LP | 200 | 202 | ||
5.300% due 05/30/13 | 395 | 382 | ||
6.100% due 05/01/16 | 130 | 121 | ||
6.125% due 05/30/18 | 50 | 46 | ||
SLM Corp. | 100 | 90 | ||
5.125% due 08/27/12 | 75 | 64 | ||
8.450% due 06/15/18 | 100 | 86 | ||
Southern Union Co. | 100 | 68 | ||
State Street Capital Trust III | 200 | 169 | ||
Sun Life Financial Global Funding, LP (Ê)(Þ) | 700 | 679 | ||
Swiss Re Capital I, LP (ƒ)(Þ) | 225 | 124 | ||
Symetra Financial Corp. (Å) | 150 | 114 | ||
Target Corp. (Ñ) | 400 | 424 | ||
Tennessee Gas Pipeline Co. | 200 | 209 | ||
7.000% due 10/15/28 (Ñ) | 50 | 48 | ||
TEPPCO Partners, LP | 250 | 254 | ||
Time Warner Cable, Inc. | 300 | 310 | ||
6.550% due 05/01/37 | 75 | 72 | ||
Time Warner, Inc. | 400 | 394 | ||
Union Electric Co. | 205 | 210 | ||
Union Pacific Corp. | 400 | 401 | ||
UnitedHealth Group, Inc. | 95 | 98 | ||
4.875% due 02/15/13 | 200 | 202 | ||
6.000% due 06/15/17 (Ñ) | 35 | 34 | ||
Series WI | 45 | 39 | ||
Valero Energy Corp. | 225 | 192 | ||
Verizon Wireless Capital LLC (Þ) | 400 | 412 | ||
5.250% due 02/01/12 | 700 | 738 | ||
8.500% due 11/15/18 | 175 | 209 | ||
Wachovia Capital Trust III (ƒ) | 50 | 30 | ||
Wachovia Corp. | 450 | 465 |
Principal Amount ($) or Shares | Market Value $ | |||
5.625% due 10/15/16 | 100 | 96 | ||
5.750% due 06/15/17 | 155 | 153 | ||
5.750% due 02/01/18 | 500 | 491 | ||
Series* (Ê) | 200 | 157 | ||
WEA Finance LLC/WT Finance Aust Pty, Ltd. (Þ) | 205 | 203 | ||
Wells Fargo & Co. | 400 | 452 | ||
5.625% due 12/11/17 | 300 | 295 | ||
Series K (ƒ) | 3,585 | 2,976 | ||
Whirlpool Corp. | 25 | 26 | ||
8.600% due 05/01/14 | 75 | 78 | ||
Williams Cos., Inc. | 300 | 296 | ||
8.750% due 01/15/20 (Þ) | 150 | 156 | ||
Williams Cos., Inc. (The) | 150 | 148 | ||
Windstream Corp. | 125 | 120 | ||
XTO Energy, Inc. | 175 | 188 | ||
ZFS Finance USA Trust I (Þ) | 500 | 385 | ||
67,865 | ||||
International Debt - 6.2% | ||||
ANZ National International, Ltd. (Þ) | 600 | 618 | ||
Apidos CDO (Ê)(Å) | 500 | 379 | ||
ArcelorMittal | 300 | 263 | ||
Argentina Bonos | 550 | 274 | ||
AstraZeneca PLC | 100 | 107 | ||
AXA SA (ƒ)(Þ) | 100 | 63 | ||
Ballyrock CDO, Ltd. (Ê)(Þ) | — | — | ||
Barclays Bank PLC | 1,300 | 1,355 | ||
6.050% due 12/04/17 (Þ) | 200 | 173 | ||
Barrick Gold Corp. | 135 | 151 | ||
Barrick Gold Financeco LLC (Ñ) | 270 | 290 | ||
BAT International Finance PLC (Þ) | 150 | 176 |
34 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Black Diamond CLO, Ltd. (Ê)(Å) | 1,000 | 748 | ||
BNP Paribas (ƒ)(Þ) | 300 | 195 | ||
Canadian Natural Resources, Ltd. | 100 | 102 | ||
5.700% due 05/15/17 | 75 | 76 | ||
6.500% due 02/15/37 | 100 | 100 | ||
Corp. Nacional del Cobre de Chile - CODELCO (Þ) | 200 | 231 | ||
Credit Suisse NY | 330 | 337 | ||
6.000% due 02/15/18 | 450 | 449 | ||
Deutsche Bank AG | 600 | 612 | ||
Electricite De France (Þ) | 200 | 215 | ||
6.500% due 01/26/19 | 200 | 219 | ||
6.950% due 01/26/39 | 200 | 225 | ||
Endurance Specialty Holdings, Ltd. | 100 | 83 | ||
Enel Finance International SA (Þ) | 600 | 626 | ||
European Investment Bank | 1,200 | 1,203 | ||
Export Development Canada | 400 | 402 | ||
HSBC Holdings PLC | 100 | 98 | ||
6.500% due 09/15/37 | 100 | 97 | ||
Korea Electric Power Corp. (Þ) | 60 | 55 | ||
Kreditanstalt fuer Wiederaufbau (Ñ) | 1,200 | 1,243 | ||
LeasePlan Corp. NV(Þ) | 400 | 402 | ||
MUFG Capital Finance 1, Ltd. (ƒ)(Ñ) | 200 | 175 | ||
National Australia Bank, Ltd. (Þ) | 800 | 824 | ||
Petroleos Mexicanos (Þ) | 320 | 347 | ||
Province of Ontario Canada | 600 | 612 | ||
Qtel International Finance, Ltd. (Å) | 120 | 122 | ||
Ras Laffan Liquefied Natural Gas Co., Ltd. III (Þ) | 250 | 210 | ||
Republic of Peru | 180 | 192 | ||
Resona Bank, Ltd. (ƒ)(Þ) | 100 | 76 | ||
Resona Preferred Global Securities Cayman, Ltd. (ƒ)(Þ) | 325 | 237 |
Principal Amount ($) or Shares | Market Value $ | |||
Rogers Communications, Inc. | 200 | 214 | ||
Royal Bank of Scotland Group PLC (ƒ) | 300 | 147 | ||
Series 1 | 700 | 571 | ||
Royal Bank of Scotland PLC (The) (Þ) | 800 | 799 | ||
3.000% due 12/09/11 (Ñ) | 200 | 204 | ||
2.625% due 05/11/12 | 900 | 907 | ||
Santander Perpetual SA Unipersonal (ƒ)(Þ) | 300 | 222 | ||
SMFG Preferred Capital USD 1, Ltd. (ƒ)(Þ) | 100 | 80 | ||
Societe Financement de l’Economie Francaise (Þ) | 700 | 702 | ||
StatoilHydro ASA | 175 | 180 | ||
Sumitomo Mitsui Banking Corp. (ƒ)(Þ) | 300 | 276 | ||
Systems 2001 AT LLC (Þ) | 65 | 65 | ||
Telecom Italia Capital SA | 255 | 264 | ||
7.721% due 06/04/38 | 200 | 204 | ||
Thomson Reuters Corp. (Ñ) | 225 | 234 | ||
TransCapitalInvest, Ltd. for OJSC AK Transneft (Þ) | 100 | 96 | ||
Transocean, Inc. | 150 | 160 | ||
UBS AG | 400 | 373 | ||
5.750% due 04/25/18 | 100 | 91 | ||
UBS Luxembourg SA for OJSC Vimpel Communications | 100 | 84 | ||
WEA Finance LLC / WCI Finance LLC (Þ) | 125 | 120 | ||
Westfield Capital Corp., Ltd./WT Finance Aust Pty Ltd/WEA Finance LLC (Þ) | 125 | 113 | ||
Xstrata Canada Corp. | 50 | 48 | ||
6.000% due 10/15/15 | 45 | 40 | ||
20,556 | ||||
Loan Agreements - 0.8% | ||||
Adam Aircraft Term Loan (Ø)(Å) | 56 | 6 | ||
HCA, Inc. Term Loan A (Ê) | 428 | 388 |
Core Bond Fund | 35 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Kelson Holdings, Inc. Term Loan | 1,000 | 871 | ||
NRG Energy, Inc. Term Loan B (Ê) | 1,579 | 1,327 | ||
2,592 | ||||
Mortgage-Backed Securities - 73.2% | ||||
ABN Amro Mortgage Corp. | 1,758 | 1,485 | ||
Adjustable Rate Mortgage Trust (Ê) | 72 | 49 | ||
Series 2005-3 Class 8A2 | 105 | 45 | ||
American Home Mortgage Assets (Ê) | 1,060 | 414 | ||
American Home Mortgage Investment Trust (Ê) | 95 | 75 | ||
Banc of America Alternative Loan Trust | 63 | 54 | ||
Series 2003-10 Class 2A2 (Ê) | 166 | 122 | ||
Series 2006-5 Class CB17 | 187 | 131 | ||
Banc of America Commercial Mortgage, Inc. | 22 | 21 | ||
Series 2005-2 Class A4 | 333 | 314 | ||
Series 2005-3 Class A2 | 150 | 147 | ||
Series 2005-5 Class A4 | 500 | 427 | ||
Series 2006-1 Class A4 (Ê) | 280 | 231 | ||
Series 2006-2 Class A4 | 200 | 167 | ||
Banc of America Funding Corp. | 113 | 96 | ||
Series 2006-3 Class 5A8 | 475 | 328 | ||
Series 2006-A Class 3A2 (Ê) | 155 | 72 | ||
Series 2006-A Class 4A1 (Ê) | 405 | 255 | ||
Banc of America Mortgage Securities, Inc. | 228 | 212 | ||
Series 2004-1 Class 5A1 | 10 | 10 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2004-2 Class 1A9 (Ê) | 137 | 123 | ||
Series 2004-11 Class 2A1 | 336 | 290 | ||
Series 2005-H Class 2A5 (Ê) | 220 | 121 | ||
Series 2005-L Class 3A1 (Ê) | 200 | 170 | ||
Series 2006-2 Class A15 | 182 | 156 | ||
Series 2006-B Class 1A1 (Ê) | 102 | 44 | ||
Bear Stearns Adjustable Rate Mortgage Trust (Ê) | 42 | 38 | ||
Series 2003-8 Class 4A1 | 84 | 64 | ||
Series 2004-1 Class 21A1 | 68 | 58 | ||
Series 2004-9 Class 22A1 | 72 | 60 | ||
Series 2005-2 Class A1 | 1,098 | 949 | ||
Series 2005-3 Class 2A1 | 262 | 166 | ||
Bear Stearns Alt-A Trust (Ê) | 198 | 128 | ||
Series 2005-7 Class 22A1 | 94 | 51 | ||
Series 2006-4 Class 13A1 | 719 | 284 | ||
Bear Stearns Alt-A Trust II (Ê) | 812 | 367 | ||
Bear Stearns Commercial Mortgage Securities | 1,000 | 829 | ||
Bear Stearns Mortgage Funding Trust (Ê) | 780 | 290 | ||
Series 2006-AR2 Class 2A1 | 657 | 245 | ||
Chase Mortgage Finance Corp. | 119 | 116 | ||
Series 2006-S4 Class A3 | 192 | 158 | ||
Series 2006-S4 Class A4 | 107 | 97 | ||
Series 2007-A1 Class 1A3 (Ê) | 489 | 428 | ||
Citigroup Commercial Mortgage Trust (Ê) | 330 | 278 |
36 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Citigroup Mortgage Loan Trust, Inc. | 68 | 54 | ||
Series 2007-AR8 Class 2A1A | 197 | 121 | ||
Citigroup/Deutsche Bank Commercial Mortgage Trust | 1,340 | 1,188 | ||
Series 2006-CD3 Class A5 | 190 | 155 | ||
Citimortgage Alternative Loan Trust | 121 | 88 | ||
Commercial Mortgage Loan Trust Series 2008-LS1 Class A4B | 425 | 315 | ||
Commercial Mortgage Pass Through Certificates | 200 | 146 | ||
Series 2007-C9 Class A4 (Ê) | 360 | 286 | ||
Countrywide Alternative Loan Trust | 553 | 356 | ||
Series 2005-32T Class A7 (Ê) | 103 | 83 | ||
Series 2005-J8 Class 1A3 | 181 | 125 | ||
Series 2005-J13 Class 2A3 | 117 | 89 | ||
Series 2006-9T1 Class A7 | 90 | 55 | ||
Series 2006-43C Class 1A7 | 218 | 168 | ||
Series 2006-J2 Class A3 | 137 | 87 | ||
Series 2006-OA1 Class 2A1 (Ê) | 551 | 226 | ||
Series 2006-OA1 Class 4A1 (Ê) | 603 | 237 | ||
Series 2006-OA1 Class A1 (Ê) | 742 | 288 | ||
Series 2007-15C Class A5 | 799 | 427 | ||
Series 2007-J2 Class 2A1 | 238 | 130 | ||
Series 2007-OA1 Class A1A (Ê) | 950 | 332 | ||
Countrywide Home Loan Mortgage Pass Through Trust | 124 | 103 | ||
Series 2003-52 Class A1 (Ê) | 150 | 127 | ||
Series 2004-16 Class 1A1 (Ê) | 141 | 61 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2004-22 Class A3 | 190 | 144 | ||
Series 2004-HYB Class 1A1 (Ê) | 326 | 259 | ||
Series 2005-1 Class 2A1 (Ê) | 1,722 | 765 | ||
Series 2005-3 Class 1A2 (Ê) | 26 | 12 | ||
Series 2005-HYB Class 3A2A | 62 | 42 | ||
Series 2006-OA5 Class 2A1 (Ê) | 687 | 292 | ||
Series 2007-18 Class 2A1 | 210 | 150 | ||
Series 2007-HY1 Class 1A2 (Ê) | 82 | 20 | ||
Credit Suisse First Boston Mortgage Securities Corp. | 400 | 293 | ||
Credit Suisse Mortgage Capital Certificates | 680 | 414 | ||
Series 2006-C2 Class A3 (Ê) | 100 | 71 | ||
Deutsche ALT-A Securities, Inc. Alternate Loan Trust (Ê) | 465 | 246 | ||
Series 2007-OA1 Class A1 | 2,673 | 1,004 | ||
Series 2007-OA2 Class A1 | 1,488 | 569 | ||
DLJ Commercial Mortgage Corp. | 373 | 7 | ||
Fannie Mae | 204 | 216 | ||
6.000% due 2016 | 9 | 10 | ||
3.296% due 2017 (Ê) | 39 | 39 | ||
5.000% due 2017 | 381 | 399 | ||
6.000% due 2017 | 56 | 60 | ||
4.000% due 2018 | 621 | 635 | ||
4.500% due 2018 | 1,786 | 1,854 | ||
5.000% due 2018 | 168 | 176 | ||
5.000% due 2019 | 856 | 894 | ||
6.000% due 2019 | 342 | 364 | ||
4.500% due 2020 | 132 | 137 | ||
5.000% due 2020 | 551 | 574 | ||
5.500% due 2020 | 177 | 186 | ||
6.000% due 2020 | 428 | 456 | ||
5.000% due 2021 | 953 | 991 | ||
5.500% due 2021 | 286 | 299 | ||
5.500% due 2022 | 337 | 353 | ||
5.000% due 2023 | 5,351 | 5,577 | ||
5.500% due 2023 | 359 | 376 | ||
6.000% due 2026 | 788 | 830 |
Core Bond Fund | 37 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
6.000% due 2027 | 401 | 422 | ||
6.000% due 2028 | 26 | 28 | ||
5.500% due 2029 | 90 | 94 | ||
5.500% due 2032 | 306 | 318 | ||
6.000% due 2032 | 386 | 408 | ||
7.000% due 2032 | 133 | 144 | ||
3.727% due 2033 (Ê) | 152 | 153 | ||
4.390% due 2033 (Ê) | 64 | 65 | ||
5.000% due 2033 | 480 | 491 | ||
5.500% due 2033 | 2,065 | 2,142 | ||
6.000% due 2033 | 155 | 164 | ||
5.000% due 2034 | 2,207 | 2,257 | ||
5.500% due 2034 | 1,418 | 1,471 | ||
5.000% due 2035 | 1,358 | 1,387 | ||
5.500% due 2035 | 1,916 | 1,988 | ||
6.000% due 2035 | 143 | 150 | ||
4.005% due 2036 (Ê) | 348 | 348 | ||
5.000% due 2036 | 2,205 | 2,252 | ||
5.500% due 2036 | 3,617 | 3,745 | ||
6.000% due 2036 | 1,799 | 1,883 | ||
6.500% due 2036 | 96 | 102 | ||
7.000% due 2036 | 20 | 22 | ||
5.000% due 2037 | 4,532 | 4,621 | ||
5.500% due 2037 | 7,542 | 7,813 | ||
5.548% due 2037 (Ê) | 243 | 254 | ||
6.000% due 2037 | 2,901 | 3,040 | ||
6.500% due 2037 | 1,220 | 1,297 | ||
5.500% due 2038 | 14,014 | 14,489 | ||
6.000% due 2038 | 6,990 | 7,314 | ||
5.500% due 2039 | 1,510 | 1,561 | ||
Series 2003-343 Class 6 | 214 | 32 | ||
Series 2003-345 Class 18 | 555 | 52 | ||
Series 2003-345 Class 19 | 616 | 57 | ||
Series 2005-365 Class 12 | 869 | 115 | ||
Series 2006-369 Class 8 | 172 | 26 | ||
30 Year TBA (Ï) | 1,000 | 998 | ||
5.000% | 6,180 | 6,292 | ||
5.500% | 19,500 | 20,128 | ||
6.000% | 25,800 | 26,961 | ||
6.500% | 19,000 | 20,235 | ||
Fannie Mae REMICS | 83 | 90 | ||
Series 2003-32 Class FH (Ê) | 227 | 224 | ||
Series 2003-35 Class FY (Ê) | 299 | 295 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2003-78 Class FI (Ê) | 228 | 225 | ||
Series 2004-21 Class FL (Ê) | 119 | 117 | ||
Series 2005-79 Class FC (Ê) | 92 | 92 | ||
Series 2006-48 Class LG (Ê) | 55 | 47 | ||
Series 2008-22 Class FD (Ê) | 872 | 866 | ||
Series 2008-56 Class FD (Ê) | 907 | 906 | ||
Fannie Mae Whole Loan | 34 | 36 | ||
Federal Home Loan Mortgage Corp. Structured Pass Through Securities (Ê) | 27 | 26 | ||
First Horizon Alternative Mortgage Securities | 40 | 27 | ||
Series 2006-AA5 Class A2 (Ê) | 124 | 17 | ||
Series 2006-FA3 Class A6 | 162 | 123 | ||
First Horizon Asset Securities, Inc. (Ê) | 32 | 29 | ||
Series 2005-AR5 Class 3A1 | 84 | 67 | ||
Freddie Mac | 18 | 19 | ||
5.000% due 2018 | 483 | 505 | ||
5.000% due 2019 | 538 | 563 | ||
5.000% due 2020 | 989 | 1,031 | ||
5.500% due 2020 | 565 | 595 | ||
4.751% due 2030 (Ê) | 1 | 1 | ||
5.000% due 2033 | 155 | 159 | ||
4.884% due 2034 (Ê) | 66 | 67 | ||
5.000% due 2035 | 1,699 | 1,735 | ||
5.863% due 2036 (Ê) | 89 | 92 | ||
5.920% due 2036 (Ê) | 153 | 160 | ||
5.967% due 2036 (Ê) | 130 | 136 | ||
5.464% due 2037 (Ê) | 111 | 116 | ||
5.500% due 2037 | 2,589 | 2,672 | ||
5.525% due 2037 (Ê) | 384 | 402 | ||
5.687% due 2037 (Ê) | 501 | 524 | ||
5.707% due 2037 (Ê) | 76 | 80 | ||
5.712% due 2037 (Ê) | 199 | 208 | ||
5.736% due 2037 (Ê) | 156 | 163 | ||
5.805% due 2037 (Ê) | 52 | 54 | ||
5.806% due 2037 (Ê) | 163 | 171 | ||
5.888% due 2037 (Ê) | 80 | 84 | ||
6.000% due 2037 | 1,377 | 1,435 | ||
5.500% due 2038 | 8,166 | 8,442 |
38 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
6.000% due 2038 | 9,423 | 9,845 | ||
5.000% due 2039 | 1,697 | 1,727 | ||
5.500% due 2039 | 56 | 57 | ||
6.000% due 2039 | 123 | 129 | ||
30 Year TBA (Ï) | ||||
5.500% | 1,000 | 1,032 | ||
6.000% | 1,900 | 1,983 | ||
Freddie Mac REMICS | ||||
Series 2000-226 Class F (Ê) | ||||
0.769% due 11/15/30 | 14 | 14 | ||
Series 2003-256 Class FJ (Ê) | ||||
0.719% due 02/15/33 | 107 | 106 | ||
Series 2003-262 Class AB | ||||
2.900% due 11/15/14 | 76 | 77 | ||
Series 2004-281 Class DF (Ê) | ||||
0.769% due 06/15/23 | 87 | 85 | ||
Series 2005-294 Class FA (Ê) | ||||
0.489% due 03/15/20 | 163 | 159 | ||
Series 2005-299 Class KF (Ê)(Å) | ||||
0.719% due 06/15/35 | 42 | 42 | ||
Series 2005-301 Class IM | ||||
Interest Only STRIP | ||||
5.500% due 01/15/31 | 108 | 7 | ||
Series 2006-313 Class FP (Ê) | ||||
Principal Only STRIP (Å) | ||||
Zero coupon due 04/15/36 | 90 | 82 | ||
Series 2006-317 Class XI (Ê) | ||||
Principal Only STRIP (Å) | ||||
Zero coupon due 10/15/35 | 46 | — | ||
Series 2006-323 Class PA | ||||
6.000% due 03/15/26 | 67 | 68 | ||
Series 2007-330 Class GL (Ê) | ||||
23.314% due 04/15/37 | 40 | 40 | ||
Series 2007-333 Class AF (Ê) | ||||
0.469% due 10/15/20 | 965 | 945 | ||
Series 2007-333 Class BF (Ê) | ||||
0.469% due 07/15/19 | 251 | 246 | ||
Series 2007-333 Class FT (Ê) | ||||
0.469% due 08/15/19 | 500 | 490 | ||
Ginnie Mae I | ||||
6.000% due 2029 | 10 | 11 | ||
6.000% due 2038 | 279 | 290 | ||
5.500% due 2039 | 956 | 990 | ||
30 Year TBA (Ï) | ||||
4.500% | 3,525 | 3,518 | ||
5.500% | 410 | 423 | ||
Ginnie Mae II | ||||
5.375% due 2026 | 144 | 149 | ||
4.625% due 2027 | 10 | 10 | ||
3.750% due 2032 | 58 | 59 | ||
GMAC Mortgage Corp. Loan Trust (Ê) | 64 | 51 | ||
Government National Mortgage Association (Ê) | ||||
Series 1999-40 Class FE | ||||
0.868% due 11/16/29 | 85 | 85 | ||
Series 2000-29 Class F | ||||
0.815% due 09/20/30 | 17 | 17 |
Principal Amount ($) or Shares | Market Value $ | |||
Greenwich Capital Commercial Funding Corp. | ||||
Series 2003-C2 Class A2 | ||||
4.022% due 01/05/36 | 55 | 54 | ||
Series 2004-GG1 Class A7 | ||||
5.317% due 06/10/36 | 465 | 430 | ||
Series 2006-GG7 Class A4 (Ê) | ||||
6.115% due 07/10/38 | 690 | 566 | ||
Series 2007-GG9 Class A4 | ||||
5.444% due 03/10/39 | 315 | 251 | ||
GS Mortgage Securities Corp. II | ||||
Series 2006-GG6 Class A4 | ||||
5.553% due 04/10/38 | 320 | 264 | ||
Series 2006-GG8 Class AAB | ||||
5.535% due 11/10/39 | 200 | 180 | ||
GSR Mortgage Loan Trust | 228 | 177 | ||
Harborview Mortgage Loan Trust | ||||
Series 2005-3 Class 2A1A (Ê) | ||||
0.553% due 06/19/35 | 1,563 | 732 | ||
Series 2005-4 Class 3A1 | ||||
5.143% due 07/19/35 | 147 | 85 | ||
Series 2005-14 Class 3A1A | ||||
5.307% due 12/19/35 | 81 | 51 | ||
Series 2005-16 Class 3A1A (Ê) | ||||
0.563% due 01/19/36 | 380 | 158 | ||
Indymac Index Mortgage Loan Trust | ||||
Series 2005-AR1 Class A1 | ||||
5.302% due 09/25/35 | 604 | 374 | ||
Series 2006-AR2 Class A2 (Ê) | ||||
0.394% due 11/25/36 | 63 | 57 | ||
Series 2006-AR3 Class 2A1A (Ê) | ||||
0.484% due 01/25/37 | 686 | 249 | ||
Series 2006-AR9 Class 1A1 | ||||
5.752% due 06/25/36 | 742 | 387 | ||
Series 2007-AR5 Class 1A1 | ||||
5.996% due 05/25/37 | 784 | 344 | ||
JPMorgan Chase Commercial Mortgage Securities Corp. | ||||
Series 2001-CIB Class A2 | ||||
6.244% due 04/15/35 | 43 | 43 | ||
Series 2004-LN2 Class A1 | ||||
4.475% due 07/15/41 | 299 | 298 | ||
Series 2005-LDP Class A3A1 | ||||
4.871% due 10/15/42 | 210 | 192 | ||
Series 2005-LDP Class A4 | ||||
4.918% due 10/15/42 | 325 | 276 | ||
5.344% due 12/15/44 (Ê) | 390 | 330 | ||
Series 2006-CB1 Class A4 | ||||
5.552% due 05/12/45 | 220 | 177 | ||
Series 2006-LDP Class A3B | ||||
5.447% due 05/15/45 | 250 | 207 | ||
Series 2006-LDP Class A4 | ||||
6.065% due 04/15/45 (Ê) | 650 | 552 | ||
5.399% due 05/15/45 | 290 | 230 | ||
Series 2007-CB1 Class A4 | ||||
5.440% due 06/12/47 | 1,200 | 904 | ||
5.935% due 02/12/49 (Ê) | 340 | 257 |
Core Bond Fund | 39 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Series 2007-LD1 Class A4 | ||||
5.882% due 02/15/51 | 380 | 285 | ||
Series 2007-LDP Class A3 | ||||
5.420% due 01/15/49 | 1,525 | 1,123 | ||
JPMorgan Mortgage Trust | ||||
Series 2005-A1 Class 6T1 (Ê) | ||||
5.012% due 02/25/35 | 106 | 93 | ||
Series 2005-A5 Class TA1 | ||||
5.431% due 08/25/35 | 918 | 763 | ||
Series 2007-A1 Class 2A2 (Ê) | ||||
4.741% due 07/25/35 | 661 | 570 | ||
Series 2007-S3 Class 1A35 | ||||
6.000% due 07/25/37 | 1,104 | 712 | ||
LB-UBS Commercial Mortgage Trust | ||||
Series 2006-C1 Class A4 | ||||
5.156% due 02/15/31 | 1,000 | 833 | ||
Series 2006-C3 Class A4 | ||||
5.661% due 03/15/39 | 210 | 177 | ||
Series 2006-C4 Class A4 (Ê) | ||||
6.080% due 06/15/38 | 105 | 88 | ||
Series 2007-C6 Class A4 | ||||
5.858% due 07/15/40 | 270 | 196 | ||
Lehman Mortgage Trust | ||||
Series 2005-3 Class 1A3 | ||||
5.500% due 01/25/36 | 491 | 352 | ||
Series 2006-8 Class 2A1 (Ê) | ||||
0.734% due 12/25/36 | 783 | 318 | ||
Series 2007-8 Class 3A1 | ||||
7.250% due 09/25/37 | 887 | 475 | ||
Lehman XS Trust (Ê) | 900 | 177 | ||
Mastr Alternative Loans Trust | ||||
Series 2003-4 Class B1 (Ê) | ||||
5.696% due 06/25/33 | 174 | 109 | ||
Series 2004-10 Class 5A6 | ||||
5.750% due 09/25/34 | 170 | 156 | ||
Mastr Asset Securitization Trust (Ê) | ||||
Series 2003-7 Class 4A35 | ||||
0.714% due 09/25/33 | 143 | 131 | ||
Series 2004-4 Class 2A2 | ||||
0.764% due 04/25/34 | 59 | 54 | ||
Mellon Residential Funding Corp. (Ê) | 153 | 127 | ||
Merrill Lynch Floating Trust (Ê)(Þ) | 554 | 388 | ||
Merrill Lynch Mortgage Investors, Inc. (Ê) | 88 | 48 | ||
Merrill Lynch/Countrywide Commercial Mortgage Trust | 100 | 67 | ||
MLCC Mortgage Investors, Inc. (Ê) | ||||
Series 2004-HB1 Class A2 | ||||
1.998% due 04/25/29 | 29 | 15 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2005-3 Class 5A | ||||
0.564% due 11/25/35 | 55 | 36 | ||
Morgan Stanley Capital I | ||||
Series 2005-HQ6 Class A4A | ||||
4.989% due 08/13/42 | 740 | 632 | ||
Series 2005-IQ1 Class AAB | ||||
5.178% due 09/15/42 | 415 | 401 | ||
Series 2006-HQ1 Class A4 | ||||
5.328% due 11/12/41 | 130 | 105 | ||
Series 2006-HQ8 Class A4 (Ê) | ||||
5.558% due 03/12/44 | 310 | 251 | ||
Series 2006-HQ9 Class A4 | ||||
5.731% due 07/12/44 | 295 | 242 | ||
Series 2007-IQ1 Class A4 | ||||
5.809% due 12/12/49 | 320 | 244 | ||
MortgageIT Trust (Ê) | 419 | 181 | ||
Prime Mortgage Trust (Ê) | 29 | 23 | ||
Residential Accredit Loans, Inc. | ||||
Series 2004-QS5 Class A6 (Ê) | ||||
0.914% due 04/25/34 | 48 | 36 | ||
Series 2004-QS8 Class A4 (Ê) | ||||
0.714% due 06/25/34 | 223 | 186 | ||
Series 2005-QA8 Class NB3 (Ê) | 194 | 130 | ||
Series 2005-QO5 Class A1 (Ê) | 2,062 | 933 | ||
Series 2005-QS1 Class 2A3 | 580 | 401 | ||
Series 2006-QS6 Class 1A13 | 248 | 137 | ||
Series 2007-QH9 Class A1 (Ê) | 942 | 295 | ||
Residential Asset Securitization Trust | 244 | 201 | ||
Series 2007-A5 Class 2A3 | 110 | 69 | ||
Residential Funding Mortgage Securities I | 129 | 128 | ||
Series 2003-S14 Class A5 (Ê) | 146 | 104 | ||
Series 2003-S20 Class 1A7 (Ê) | 25 | 25 | ||
Series 2005-SA4 Class 2A1 | 585 | 433 | ||
Series 2006-SA4 Class 2A1 | 377 | 224 | ||
Sequoia Mortgage Trust (Ê) | 54 | 41 | ||
Small Business Administration | 5 | 5 |
40 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Structured Adjustable Rate Mortgage Loan Trust | 121 | 97 | ||
Series 2004-12 Class 3A2 (Ê) | 57 | 43 | ||
Series 2004-16 Class 3A1 (Ê) | 213 | 154 | ||
Series 2005-21 Class 7A1 | 1,137 | 717 | ||
Series 2006-12 Class 2A1 (Ê) | 755 | 380 | ||
Structured Asset Mortgage Investments, Inc. (Ê) | 154 | 97 | ||
Series 2006-AR2 Class A1 | 518 | 205 | ||
Series 2006-AR8 Class A1A | 728 | 300 | ||
Series 2007-AR6 Class A1 | 922 | 362 | ||
Structured Asset Securities Corp. | 171 | 166 | ||
Thornburg Mortgage Securities Trust (Ê) | 64 | 52 | ||
Series 2006-5 Class A1 | 607 | 557 | ||
Series 2006-6 Class A1 | 108 | 97 | ||
Wachovia Bank Commercial Mortgage Trust | 1,000 | 905 | ||
Washington Mutual Alternative Mortgage Pass-Through Certificates | 90 | 53 | ||
Series 2007-OA1 Class 2A (Ê) | 689 | 226 | ||
Washington Mutual Mortgage Pass Through Certificates (Ê) | 237 | 233 | ||
Series 2004-AR3 Class A2 | 125 | 110 | ||
Series 2005-AR1 Class 1A1 | 216 | 168 | ||
Series 2005-AR1 Class A1A1 | 33 | 17 | ||
0.574% due 11/25/45 | 819 | 396 | ||
0.584% due 12/25/45 | 398 | 188 | ||
Series 2005-AR6 Class B3 (Å) | 196 | 8 | ||
Series 2006-AR1 Class 3A1A | 703 | 248 |
Principal Amount ($) or Shares | Market Value $ | ||||
Series 2006-AR2 Class 1A1 | 682 | 420 | |||
Series 2007-HY3 Class 4B1 | 124 | 14 | |||
Series 2007-HY4 Class 1A1 | 138 | 82 | |||
Wells Fargo Mortgage Backed Securities Trust | 354 | 317 | |||
Series 2006-AR2 Class 2A1 | 266 | 188 | |||
Series 2007-8 Class 1A16 | 306 | 213 | |||
Series 2007-10 Class 2A5 | 142 | 108 | |||
242,449 | |||||
Municipal Bonds - 1.0% | |||||
Chicago Transit Authority Revenue Bonds | 400 | 428 | |||
Los Angeles Unified School District General Obligation Unlimited (µ) | 400 | 384 | |||
New York City Municipal Water Finance Authority Revenue Bonds | 1,300 | 1,233 | |||
State of California General Obligation Unlimited | 100 | 91 | |||
5.650% due 04/01/39 (Ê) | 100 | 98 | |||
7.550% due 04/01/39 | 600 | 546 | |||
State of Louisiana Revenue Bonds (Ê) | 400 | 397 | |||
Tennessee Valley Authority Revenue Bonds | 200 | 218 | |||
3,395 | |||||
Non-US Bonds - 0.5% | |||||
Brazilian Government International Bond | BRL | 300 | 169 | ||
Federative Republic of Brazil | BRL | 1,400 | 704 | ||
Fortis Bank Nederland Holding NV | EUR | 200 | 283 | ||
Hellas Telecommunications | EUR | 125 | 117 | ||
Impress Holdings BV (Ê) | EUR | 125 | 153 | ||
Societe Financement de l’Economie Francaise | EUR | 100 | 140 | ||
UBS AG (Å) | EUR | 270 | 56 | ||
1,622 | |||||
Core Bond Fund | 41 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
United States Government Agencies - 2.4% | ||||
Fannie Mae | 900 | 982 | ||
5.000% due 05/11/17 (Ñ) | 600 | 651 | ||
Federal Home Loan Bank (Ñ) | 700 | 772 | ||
Federal Home Loan Mortgage Corp. | ||||
1.625% due 04/26/11 | 800 | 806 | ||
0.926% due 05/04/11 (Ê) | 2,430 | 2,435 | ||
0.937% due 08/05/11 (Ê) | 800 | 800 | ||
3.000% due 07/28/14 (Ñ) | 600 | 601 | ||
5.300% due 12/01/15 | 600 | 665 | ||
5.000% due 12/14/18 | 100 | 95 | ||
Series 1 (Ê) | ||||
0.888% due 02/01/11 | 100 | 100 | ||
Freddie Mac | 100 | 108 | ||
8,015 | ||||
United States Government Treasuries - 3.5% | ||||
United States Treasury Principal | ||||
Principal Only STRIP | ||||
Zero coupon due 05/15/20 | 600 | 380 | ||
Zero coupon due 08/15/20 | 1,400 | 872 | ||
Zero coupon due 05/15/21 | 100 | 60 | ||
Zero coupon due 11/15/21 (Ñ) | 1,938 | 1,124 | ||
Zero coupon due 11/15/26 | 300 | 137 | ||
Zero coupon due 11/15/27 (Ñ) | 1,130 | 495 | ||
United States Treasury Inflation Indexed Bonds | ||||
2.000% due 07/15/14 | 1,135 | 1,161 | ||
1.625% due 01/15/15 | 893 | 889 | ||
2.000% due 01/15/16 (Ñ) | 1,464 | 1,486 | ||
2.500% due 07/15/16 (Ñ) | 422 | 443 | ||
2.625% due 07/15/17 | 309 | 329 | ||
2.000% due 01/15/26 (Ñ) | 430 | 421 | ||
1.750% due 01/15/28 (Ñ) | 3,138 | 2,961 | ||
United States Treasury Notes | ||||
1.750% due 01/31/14 | 425 | 413 | ||
2.750% due 06/30/14 | 190 | 191 | ||
4.250% due 05/15/39 | 200 | 198 | ||
11,560 | ||||
Total Long-Term Investments (cost $398,561) | 372,958 | |||
Preferred Stocks - 0.2% | ||||
Financial Services - 0.2% | ||||
DG Funding Trust (Å)(Æ) | 49 | 422 | ||
General Motors Corp. | 80,000 | 209 | ||
Total Preferred Stocks (cost $766) | 631 | |||
Notional Amount | Market Value $ | ||||
Options Purchased - 0.2% | |||||
(Number of Contracts) | |||||
Mortgage-Backed Securities | |||||
Fannie Mae TBA | USD | 6,000 | — | ||
Swaptions | |||||
(Fund Pays/Fund Receives) | |||||
USD Three Month LIBOR/USD | 2,300 | 93 | |||
USD Three Month LIBOR/USD | 13,900 | 494 | |||
Total Options Purchased (cost $168) | 587 | ||||
Principal | |||||
Short-Term Investments - 11.5% | |||||
American Electric Power Co., Inc. | 35 | 36 | |||
Bank of America Corp. (Ê) | 100 | 100 | |||
Bank of Scotland PLC (Ê)(Ñ)(Þ) | 300 | 300 | |||
Bear Stearns Cos. LLC (The) (Ê) | 1,200 | 1,200 | |||
BNP Paribas Financial, Inc. | |||||
1.000% due 07/07/09 (ç)(ž) | 1,125 | 1,125 | |||
1.000% due 08/05/09 (ç)(ž) | 1,150 | 1,150 | |||
Citigroup Global Markets Deutschland AG for OAO Gazprom | 200 | 205 | |||
Citigroup, Inc. (Ê) | 400 | 396 | |||
Continental Airlines, Inc. | 300 | 297 | |||
Countrywide Home Loans, Inc. | |||||
Series MTNK | |||||
5.625% due 07/15/09 | 175 | 175 | |||
4.125% due 09/15/09 | 335 | 336 | |||
COX Communications, Inc. | 350 | 352 | |||
DnB NOR Bank ASA (Ê)(Þ) | 1,000 | 994 | |||
Enterprise Products Operating LLC | 125 | 127 | |||
Federal Home Loan Bank Discount Notes (ç)(ž) | 1,700 | 1,700 | |||
Federal National Mortgage Association Discount Notes (ç)(ž) | 2,390 | 2,390 |
42 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | ||||
Ford Motor Credit Co. LLC | 200 | 190 | |||
General Electric Capital Corp. (Ê) | |||||
Series MTN | |||||
1.122% due 10/26/09 | 100 | 100 | |||
1.177% due 01/20/10 (Ê)(Ñ) | 200 | 199 | |||
Goldman Sachs Group, Inc. (The) | 125 | 128 | |||
HSBC Finance Corp. (Ê) | |||||
1.162% due 10/21/09 | 100 | 100 | |||
0.719% due 03/12/10 (Ñ) | 300 | 295 | |||
1.206% due 05/10/10 | 100 | 97 | |||
KeyBank NA (Ê) | 300 | 291 | |||
Korea Development Bank/Republic of Korea (Ê) | 900 | 881 | |||
Lehman Brothers Holdings, Inc. (Ø) | 200 | 30 | |||
Merrill Lynch & Co., Inc. (Ê) | 200 | 200 | |||
Metropolitan Life Global Funding I (Ê)(Þ) | 400 | 397 | |||
Morgan Stanley (Ê) | |||||
Series MTN | |||||
1.221% due 01/15/10 | 300 | 298 | |||
3.006% due 05/14/10 (Ê) | 400 | 399 | |||
Nationwide Life Global Funding I (Ê)(Þ) | 1,300 | 1,205 | |||
Russell Investment Company | 20,784,000 | 20,784 | |||
Sprint Nextel Corp. (Ê) | 350 | 330 | |||
UBS AG/Stamford Branch (Ê) | 700 | 702 | |||
United States Treasury Bills (§) | |||||
0.106% due 07/16/09 (ç)(ž) | 10 | 10 | |||
0.010% due 08/20/09 (ç)(ž) | 165 | 165 | |||
Zero coupon due 09/17/09 | 300 | 300 | |||
Total Short-Term Investments (cost $38,245) | 37,984 | ||||
Other Securities - 3.7% | |||||
State Street Securities Lending Quality Trust (×) | 12,536,951 | 12,262 | |||
Total Other Securities (cost $12,537) | 12,262 | ||||
Total Investments - 128.2% (identified cost $450,277) | 424,422 | ||||
Other Assets and Liabilities, Net - (28.2%) | (93,429 | ) | |||
Net Assets - 100.0% | 330,993 | ||||
Core Bond Fund | 43 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except contracts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||
Long Positions | ||||||||||
Euribor Futures (Germany) | 3 | EUR | 739 | 12/09 | 3 | |||||
Euribor Futures (Germany) | 6 | EUR | 1,474 | 03/10 | 8 | |||||
Eurodollar Futures (CME) | 53 | USD | 12,864 | 09/09 | 297 | |||||
Eurodollar Futures (CME) | 73 | USD | 17,872 | 12/09 | 213 | |||||
Eurodollar Futures (CME) | 18 | USD | 4,328 | 03/10 | 119 | |||||
Eurodollar Futures (CME) | 20 | USD | 4,911 | 06/10 | 12 | |||||
Eurodollar Futures (CME) | 2 | USD | 484 | 09/10 | 6 | |||||
Eurodollar Futures (CME) | 25 | USD | 6,123 | 12/10 | (17) | |||||
Three Month Short Sterling Interest Rate Futures (UK) | 1 | GBP | 119 | 12/09 | 6 | |||||
Three Month Short Sterling Interest Rate Futures (UK) | 2 | GBP | 245 | 03/10 | — | |||||
Three Month Short Sterling Interest Rate Futures (UK) | 4 | GBP | 489 | 06/10 | — | |||||
Three Month Short Sterling Interest Rate Futures (UK) | 4 | GBP | 488 | 09/10 | (2) | |||||
Three Month Short Sterling Interest Rate Futures (UK) | 4 | GBP | 486 | 12/10 | (3) | |||||
Three Month Short Sterling Interest Rate Futures (UK) | 2 | GBP | 242 | 03/11 | (3) | |||||
United States Treasury 2 Year Notes | 50 | USD | 10,825 | 09/09 | (14) | |||||
United States Treasury 5 Year Notes | 92 | USD | 10,694 | 09/09 | (140) | |||||
United States Treasury 10 Year Notes | 35 | USD | 4,145 | 09/09 | (76) | |||||
United States Treasury 30 Year Bond | 48 | USD | 5,563 | 09/09 | 118 | |||||
Short Positions | ||||||||||
Australian 3 Year Bond (Australia) | 15 | AUD | 1,556 | 09/09 | 3 | |||||
Euro-Bobl Futures (Germany) | 14 | EUR | 1,616 | 09/09 | — | |||||
Long Gilt Bond (UK) | 3 | GBP | 352 | 09/09 | (3) | |||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | 527 | |||||||||
See accompanying notes which are an integral part of the financial statements.
44 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands
Options Written (Number of Contracts) | Notional Amount $ | Market Value | |||
Swaptions | |||||
(Fund Receives/Fund Pays) | 2,000 | (2 | ) | ||
USD 4.400%/USD Three Month LIBOR | 1,600 | (3 | ) | ||
USD 4.550%/USD Three Month LIBOR | 1,500 | (2 | ) | ||
Total Liability for Options Written | (7 | ) | |||
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 45 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||
Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||
USD | 203 | AUD | 258 | 07/23/09 | 5 | ||||||
USD | 240 | AUD | 297 | 09/16/09 | (2 | ) | |||||
USD | 995 | AUD | 1,244 | 09/16/09 | 1 | ||||||
USD | 201 | BRL | 412 | 08/04/09 | 8 | ||||||
USD | 248 | BRL | 530 | 08/04/09 | 25 | ||||||
USD | 147 | CAD | 161 | 08/04/09 | (9 | ) | |||||
USD | 145 | CAD | 161 | 09/16/09 | (6 | ) | |||||
USD | 193 | CAD | 212 | 09/16/09 | (10 | ) | |||||
USD | 263 | CAD | 301 | 09/16/09 | (4 | ) | |||||
USD | 242 | CHF | 259 | 09/16/09 | (3 | ) | |||||
USD | 24 | GBP | 15 | 07/02/09 | 1 | ||||||
USD | 202 | GBP | 122 | 07/02/09 | (1 | ) | |||||
USD | 283 | GBP | 170 | 07/02/09 | (3 | ) | |||||
USD | 121 | GBP | 74 | 09/16/09 | 1 | ||||||
USD | 126 | GBP | 78 | 09/16/09 | 2 | ||||||
USD | 129 | GBP | 77 | 09/16/09 | (2 | ) | |||||
USD | 188 | GBP | 116 | 09/16/09 | 3 | ||||||
USD | 405 | GBP | 255 | 09/16/09 | 14 | ||||||
USD | 51 | JPY | 4,960 | 07/02/09 | — | ||||||
USD | 107 | JPY | 10,523 | 07/16/09 | 2 | ||||||
USD | 52 | JPY | 4,960 | 08/04/09 | — | ||||||
USD | 244 | JPY | 23,375 | 09/16/09 | (1 | ) | |||||
USD | 461 | JPY | 44,404 | 09/16/09 | — | ||||||
USD | 97 | NOK | 617 | 09/16/09 | (1 | ) | |||||
USD | 412 | NOK | 2,672 | 09/16/09 | 3 | ||||||
USD | 72 | NZD | 116 | 09/16/09 | 3 | ||||||
USD | 181 | NZD | 282 | 09/16/09 | — | ||||||
USD | 208 | NZD | 330 | 09/16/09 | 4 | ||||||
AUD | 370 | CHF | 316 | 09/16/09 | (6 | ) | |||||
AUD | 370 | CHF | 316 | 09/16/09 | 1 | ||||||
AUD | 157 | EUR | 88 | 09/16/09 | (4 | ) | |||||
AUD | 157 | EUR | 88 | 09/16/09 | 1 | ||||||
AUD | 237 | EUR | 137 | 09/16/09 | 2 | ||||||
AUD | 237 | EUR | 137 | 09/16/09 | — | ||||||
AUD | 309 | EUR | 176 | 09/16/09 | (2 | ) | |||||
AUD | 309 | EUR | 176 | 09/16/09 | 1 | ||||||
AUD | 92 | JPY | 7,097 | 09/16/09 | (2 | ) | |||||
AUD | 92 | JPY | 7,097 | 09/16/09 | 2 | ||||||
AUD | 154 | JPY | 11,636 | 09/16/09 | (3 | ) | |||||
AUD | 154 | JPY | 11,636 | 09/16/09 | — | ||||||
AUD | 302 | JPY | 23,312 | 09/16/09 | (5 | ) | |||||
AUD | 302 | JPY | 23,312 | 09/16/09 | 5 | ||||||
AUD | 1 | USD | 1 | 07/01/09 | — | ||||||
AUD | 92 | USD | 72 | 09/16/09 | (1 | ) | |||||
AUD | 96 | USD | 77 | 09/16/09 | — | ||||||
AUD | 209 | USD | 168 | 09/16/09 | — | ||||||
BRL | 82 | USD | 37 | 08/03/09 | (5 | ) | |||||
BRL | 1,181 | USD | 550 | 08/04/09 | (51 | ) | |||||
CAD | 211 | CHF | 201 | 09/16/09 | 3 | ||||||
CAD | 211 | CHF | 201 | 09/16/09 | 1 | ||||||
CAD | 117 | EUR | 74 | 09/16/09 | 2 | ||||||
CAD | 117 | EUR | 74 | 09/16/09 | 1 | ||||||
CAD | 54 | USD | 48 | 09/16/09 | 1 |
Foreign Currency Exchange Contracts | |||||||||||
Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||
CAD | 130 | USD | 116 | 09/16/09 | 4 | ||||||
CHF | 80 | USD | 73 | 09/16/09 | — | ||||||
CHF | 181 | USD | 169 | 09/16/09 | 3 | ||||||
CHF | 260 | USD | 243 | 09/16/09 | 3 | ||||||
CHF | 264 | USD | 242 | 09/16/09 | (2 | ) | |||||
CHF | 265 | USD | 242 | 09/16/09 | (2 | ) | |||||
EUR | 90 | JPY | 12,131 | 09/16/09 | (1 | ) | |||||
EUR | 90 | JPY | 12,131 | 09/16/09 | — | ||||||
EUR | 42 | USD | 59 | 07/01/09 | — | ||||||
EUR | 18 | USD | 25 | 07/27/09 | — | ||||||
EUR | 841 | USD | 1,173 | 07/27/09 | (6 | ) | |||||
EUR | 80 | USD | 113 | 07/31/09 | — | ||||||
EUR | 126 | USD | 178 | 07/31/09 | — | ||||||
EUR | 510 | USD | 706 | 09/16/09 | (9 | ) | |||||
GBP | 117 | EUR | 138 | 09/16/09 | — | ||||||
GBP | 117 | EUR | 138 | 09/16/09 | — | ||||||
GBP | 77 | JPY | 12,170 | 09/16/09 | — | ||||||
GBP | 77 | JPY | 12,170 | 09/16/09 | (1 | ) | |||||
GBP | 91 | NZD | 232 | 09/16/09 | 2 | ||||||
GBP | 91 | NZD | 232 | 09/16/09 | (3 | ) | |||||
GBP | 2 | USD | 3 | 07/01/09 | — | ||||||
GBP | 10 | USD | 16 | 07/02/09 | — | ||||||
GBP | 127 | USD | 196 | 07/02/09 | (12 | ) | |||||
GBP | 172 | USD | 276 | 07/02/09 | (7 | ) | |||||
GBP | 122 | USD | 202 | 08/06/09 | 1 | ||||||
GBP | 170 | USD | 283 | 08/07/09 | 3 | ||||||
GBP | 35 | USD | 58 | 09/16/09 | — | ||||||
GBP | 75 | USD | 122 | 09/16/09 | (1 | ) | |||||
GBP | 134 | USD | 219 | 09/16/09 | (1 | ) | |||||
JPY | 11,261 | AUD | 147 | 09/16/09 | — | ||||||
JPY | 11,261 | AUD | 147 | 09/16/09 | 1 | ||||||
JPY | 35,432 | CHF | 389 | 09/16/09 | (7 | ) | |||||
JPY | 35,432 | CHF | 389 | 09/16/09 | (3 | ) | |||||
JPY | 12,662 | GBP | 80 | 09/16/09 | — | ||||||
JPY | 12,662 | GBP | 80 | 09/16/09 | — | ||||||
JPY | 4,960 | USD | 51 | 07/02/09 | — | ||||||
JPY | 9,411 | USD | 96 | 07/16/09 | (2 | ) | |||||
JPY | 14,221 | USD | 146 | 09/16/09 | (2 | ) | |||||
JPY | 87,935 | USD | 898 | 09/16/09 | (16 | ) | |||||
NOK | 628 | SEK | 771 | 09/16/09 | — | ||||||
NOK | 628 | SEK | 771 | 09/16/09 | 2 | ||||||
NOK | 1,241 | SEK | 1,530 | 09/16/09 | 3 | ||||||
NOK | 1,241 | SEK | 1,530 | 09/16/09 | 3 | ||||||
NZD | 155 | EUR | 70 | 09/16/09 | (3 | ) | |||||
NZD | 155 | EUR | 70 | 09/16/09 | 1 | ||||||
NZD | 228 | EUR | 103 | 09/16/09 | (1 | ) | |||||
NZD | 228 | EUR | 103 | 09/16/09 | (1 | ) | |||||
NZD | 150 | USD | 96 | 09/16/09 | — | ||||||
SEK | 902 | USD | 115 | 09/16/09 | (2 | ) | |||||
SEK | 927 | USD | 121 | 09/16/09 | 1 | ||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | (84 | ) | |||||||||
See accompanying notes which are an integral part of the financial statements.
46 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands
Interest Rate Swaps Contracts | |||||||||||||
Counter Party | Notional Amount | Fund Receives | Fund Pays | Termination Date | Market Value $ | ||||||||
Bank of America | USD | 700 | Three Month LIBOR | 3.750% | 12/16/24 | 34 | |||||||
Bank of America | USD | 100 | Three Month LIBOR | 4.000% | 12/17/29 | 3 | |||||||
Bank of America | USD | 800 | Three Month LIBOR | 4.000% | 12/17/29 | 24 | |||||||
Bank of America | USD | 400 | 4.000% | Three Month LIBOR | 12/16/19 | 2 | |||||||
Bank of America | USD | 1,500 | 5.628% | Three Month LIBOR | 06/16/36 | 369 | |||||||
Barclays Bank PLC | BRL | 100 | 11.360% | Brazil Interbank Deposit Rate | 01/04/10 | — | |||||||
Barclays Bank PLC | USD | 146 | Three Month LIBOR | 4.420% | 11/15/21 | (5 | ) | ||||||
Barclays Bank PLC | USD | 144 | Three Month LIBOR | 4.524% | 11/15/21 | (9 | ) | ||||||
Barclays Bank PLC | USD | 530 | Three Month LIBOR | 4.633% | 11/15/21 | (40 | ) | ||||||
Barclays Bank PLC | USD | 266 | Three Month LIBOR | 4.540% | 11/15/21 | (14 | ) | ||||||
BNP Paribas | EUR | 500 | 2.090% | Consumer Price Index (France) | 10/15/10 | 24 | |||||||
BNP Paribas | EUR | 300 | 4.500% | Six Month EURIBOR | 03/18/14 | 34 | |||||||
Deutsche Bank | EUR | 1,350 | Six Month EURIBOR | 3.000% | 12/16/14 | 11 | |||||||
Deutsche Bank | KRW | 416,000 | 2.820% | Korean Interbank Offer Rate | 01/28/11 | (6 | ) | ||||||
Deutsche Bank | KRW | 200,000 | 3.870% | Korean Interbank Offer Rate | 06/12/11 | 1 | |||||||
Deutsche Bank | KRW | 1,120,000 | 3.693% | Korean Interbank Offer Rate | 06/26/11 | 3 | |||||||
Deutsche Bank | USD | 5,700 | 2.250% | Three Month LIBOR | 12/17/12 | (69 | ) | ||||||
Deutsche Bank | USD | 400 | Three Month LIBOR | 3.000% | 12/16/14 | 6 | |||||||
Deutsche Bank | USD | 300 | Three Month LIBOR | 3.750% | 12/16/24 | 14 | |||||||
Deutsche Bank | USD | 200 | Three Month LIBOR | 4.000% | 12/17/29 | 6 | |||||||
Deutsche Bank | USD | 200 | 4.000% | Three Month LIBOR | 12/17/29 | (6 | ) | ||||||
Deutsche Bank | AUD | 200 | 4.500% | Three Month BBSW | 06/15/11 | — | |||||||
Deutsche Bank | GBP | 100 | 5.000% | Six Month LIBOR | 03/18/14 | 11 | |||||||
Goldman Sachs | GBP | 100 | 5.250% | Six Month LIBOR | 03/18/14 | 13 | |||||||
HSBC | GBP | 300 | 5.000% | Six Month LIBOR | 09/17/13 | 33 | |||||||
JP Morgan | EUR | 1,350 | 3.000% | Six Month LIBOR | 12/16/14 | (11 | ) | ||||||
JP Morgan | KRW | 405,000 | 2.830% | Korean Interbank Offer Rate | 01/28/11 | (6 | ) | ||||||
JP Morgan | KRW | 350,000 | 3.900% | Korean Interbank Offer Rate | 06/15/11 | 2 | |||||||
JP Morgan | KRW | 1,100,000 | 3.720% | Korean Interbank Offer Rate | 06/22/11 | 3 | |||||||
JP Morgan | USD | 600 | Three Month LIBOR | 3.500% | 12/16/19 | 23 | |||||||
JP Morgan | USD | 600 | Three Month LIBOR | 3.750% | 12/16/24 | 29 | |||||||
JP Morgan | USD | 400 | Three Month LIBOR | 3.750% | 12/16/24 | 19 | |||||||
JP Morgan | USD | 300 | Three Month LIBOR | 4.000% | 12/17/29 | 9 | |||||||
JP Morgan | USD | 200 | 4.000% | Three Month LIBOR | 12/17/29 | (6 | ) | ||||||
JP Morgan | USD | 500 | 4.000% | Three Month LIBOR | 12/17/29 | (15 | ) | ||||||
Merrill Lynch | BRL | 100 | 14.765% | Brazil Interbank Deposit Rate | 01/02/12 | 4 | |||||||
Merrill Lynch | USD | 1,500 | 4.000% | Three Month LIBOR | 06/17/11 | 74 | |||||||
Merrill Lynch | BRL | 200 | 12.948% | Brazil Interbank Deposit Rate | 01/04/10 | 4 | |||||||
Merrill Lynch | BRL | 700 | 11.980% | Brazil Interbank Deposit Rate | 01/02/12 | 6 | |||||||
Merrill Lynch | BRL | 800 | 12.540% | Brazil Interbank Deposit Rate | 01/02/12 | 12 | |||||||
Morgan Stanley | USD | 1,500 | 4.000% | Three Month LIBOR | 12/16/19 | 6 | |||||||
Morgan Stanley | BRL | 400 | 12.670% | Brazil Interbank Deposit Rate | 01/04/10 | 4 | |||||||
Royal Bank of Scotland | EUR | 100 | 1.955% | Consumer Price Index (France) | 03/28/12 | 7 | |||||||
Royal Bank of Scotland | GBP | 200 | 5.250% | Six Month LIBOR | 03/18/14 | 26 | |||||||
Royal Bank of Scotland | USD | 1,100 | 4.000% | Three Month LIBOR | 06/17/11 | 55 | |||||||
UBS | AUD | 2,900 | 4.500% | Three Month LIBOR | 06/15/11 | (6 | ) | ||||||
UBS | AUD | 1,600 | 4.250% | Six Month BBSW | 09/15/11 | (4 | ) | ||||||
UBS | BRL | 400 | 12.410% | Brazil Interbank Deposit Rate | 01/04/10 | 5 | |||||||
UBS | BRL | 800 | 10.575% | Brazil Interbank Deposit Rate | 01/02/12 | (4 | ) | ||||||
Total Market Value of Open Interest Rate Swap Contracts Premiums Paid (Received) - $172 | 675 | ||||||||||||
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 47 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Credit Default Swap Contracts | ||||||||||||||||
Corporate Issues | ||||||||||||||||
Reference | Counter | Implied Credit Spread | Notional | Fund (Pays)/ Receives Fixed Rate | Termination Date | Market Value $ | ||||||||||
Arrow Electronics, Inc. | Citigroupglobal Markets, Inc. | 0.087% | USD | 135 | (0.820% | ) | 03/20/14 | — | ||||||||
Centex Corporation | JP Morgan | 0.163% | USD | 325 | (4.400% | ) | 12/20/13 | (37 | ) | |||||||
Citigroup, Inc. | Barclays Bank PLC | 1.763% | USD | 600 | 5.650% | 03/20/13 | (158 | ) | ||||||||
Citigroup, Inc. | JP Morgan | 1.763% | USD | 200 | 5.170% | 03/20/13 | (55 | ) | ||||||||
Darden Restaurants, Inc. | Deutsche Bank | 0.129% | USD | 400 | (2.250% | ) | 03/20/14 | (17 | ) | |||||||
Ford Motor Credit Co. | Barclays Bank PLC | 0.929% | USD | 1,000 | 6.150% | 09/20/12 | (81 | ) | ||||||||
Ford Motor Credit Co. | Goldman Sachs | 0.929% | USD | 600 | 5.850% | 09/20/12 | (53 | ) | ||||||||
Ford Motor Credit Co. | Merrill Lynch | 2.128% | USD | 200 | 5.000% | 12/20/09 | (15 | ) | ||||||||
Gaz Capital for Gazprom | Barclays Bank PLC | 0.495% | USD | 300 | 1.600% | 12/20/12 | (30 | ) | ||||||||
Gaz Capital for Gazprom | Morgan Stanely | 0.493% | USD | 100 | 2.180% | 02/20/13 | (8 | ) | ||||||||
Gaz Capital for Gazprom | Morgan Stanely | 0.493% | USD | 1,000 | 2.480% | 02/20/13 | (69 | ) | ||||||||
GE Capital Corp. | Banque National De Paris | 0.372% | USD | 400 | 1.100% | 12/20/09 | (5 | ) | ||||||||
GE Capital Corp. | Citibank | 0.417% | USD | 200 | 4.000% | 12/20/13 | (1 | ) | ||||||||
GE Capital Corp. | Deutsche Bank | 0.417% | USD | 100 | (4.900% | ) | 12/20/13 | 3 | ||||||||
General Motors Acceptance Corp. | Merrill Lynch | 1.191% | USD | 1,000 | 1.850% | 09/20/09 | (22 | ) | ||||||||
Hewelett-Packard Co. | Citigroupglobal Markets, Inc. | 0.051% | USD | 135 | (0.720% | ) | 03/20/14 | (1 | ) | |||||||
Lowe’s Companies, Inc. | Citigroupglobal Markets, Inc. | 0.074% | USD | 340 | (1.450% | ) | 03/20/14 | (11 | ) | |||||||
Mexico Government International Bond | Morgan Stanely | 0.161% | USD | 100 | 0.750% | 01/20/12 | (2 | ) | ||||||||
Nordstrom, Inc. | Deutsche Bank | 0.221% | USD | 425 | (2.100% | ) | 03/20/14 | 2 | ||||||||
Pulte Homes, Inc. | JP Morgan | 0.241% | USD | 725 | (2.550% | ) | 12/20/13 | (5 | ) | |||||||
Pulte Homes, Inc. | JP Morgan | 0.238% | USD | 1,000 | (3.870% | ) | 03/20/14 | (63 | ) | |||||||
SLM Corp. | Citibank | 0.787% | USD | 200 | 4.850% | 03/20/13 | (17 | ) | ||||||||
The Home Depot, Inc. | Citigroupglobal Markets, Inc. | 0.094% | USD | 340 | (3.250% | ) | 03/20/14 | (34 | ) | |||||||
Total Market Value of Open Corporate Issue Credit Default Swap Contracts Premiums Paid (Received) - ($70) |
| (679 | ) | |||||||||||||
Credit Indices | |||||||||||||
Reference | Counter | Notional | Fund (Pays)/ | Termination Date | Market Value $ | ||||||||
ABX - HE Index for Sub-Prime Home Equity Sector | Barclays Bank PLC | USD | 1,300 | 0.760% | 01/25/38 | (945 | ) | ||||||
ABX - HE Index for Sub-Prime Home Equity Sector | Citibank | USD | 650 | 0.170% | 05/25/46 | (601 | ) | ||||||
ABX - HE Index for Sub-Prime Home Equity Sector | Credit Suisse First Boston | USD | 2,050 | 0.840% | 10/12/52 | 951 | |||||||
ABX - HE Index for Sub-Prime Home Equity Sector | JP Morgan | USD | 1,300 | 0.090% | 08/25/37 | (965 | ) | ||||||
CMBX AJ Index | Bank of America | USD | 100 | 0.840% | 10/12/52 | 46 | |||||||
CMBX AJ Index | Barclays Bank PLC | USD | 340 | (0.840%) | 10/12/52 | 157 | |||||||
CMBX AJ Index | Barclays Bank PLC | USD | 360 | (0.840%) | 10/12/52 | 167 | |||||||
CMBX AJ Index | Deutsche Bank | USD | 2,000 | (1.500%) | 12/20/13 | 21 | |||||||
CMBX AJ Index | Deutsche Bank | USD | 3,000 | (1.500%) | 12/20/13 | 16 | |||||||
CMBX AJ Index | Deutsche Bank | USD | 3,000 | (1.500%) | 12/20/13 | 21 | |||||||
Dow Jones CDX Index | Deutsche Bank | USD | 778 | 0.708% | 12/20/12 | 9 | |||||||
Dow Jones CDX Index | JP Morgan | USD | 389 | 0.553% | 12/20/17 | (21 | ) | ||||||
Dow Jones CDX Index | Pershing LLC 1st Republic P.B. CNS | USD | 194 | 0.548% | 12/20/17 | (11 | ) | ||||||
Total Market Value of Open Credit Index Credit Default Swap Contracts Premiums Paid (Received) - ($649) | (1,155 | ) | |||||||||||
Total Market Value of Open Credit Default Swap Contracts Premiums Paid (Received) - ($719) | (1,834 | ) | |||||||||||
See accompanying notes which are an integral part of the financial statements.
48 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Presentation of Portfolio Holdings — June 30, 2009 (Unaudited)
Portfolio Summary | Market Value $ Level 1 | Market Value $ Level 2 | Market Value $ Level 3 | Total | % of Net Assets | |||||||||||||
Asset-Backed Securities | $ | — | $ | 14,623,624 | $ | 280,704 | $ | 14,904,328 | 4.5 | |||||||||
Corporate Bonds and Notes | — | 67,864,847 | — | 67,864,847 | 20.5 | |||||||||||||
International Debt | — | 20,556,678 | — | 20,556,678 | 6.2 | |||||||||||||
Loan Agreements | — | 2,586,299 | 6,144 | 2,592,443 | 0.8 | |||||||||||||
Mortgage-Backed Securities | — | 242,448,682 | — | 242,448,682 | 73.2 | |||||||||||||
Municipal Bonds | — | 3,394,883 | — | 3,394,883 | 1.0 | |||||||||||||
Non-US Bonds | — | 1,565,895 | 55,902 | 1,621,797 | 0.5 | |||||||||||||
United States Government Agencies | — | 8,015,331 | — | 8,015,331 | 2.4 | |||||||||||||
United States Government Treasuries | — | 11,559,838 | — | 11,559,838 | 3.5 | |||||||||||||
Preferred Stocks | 632,625 | — | — | 632,625 | 0.2 | |||||||||||||
Options Purchased | — | 587,315 | — | 587,315 | 0.2 | |||||||||||||
Short-Term Investments | 20,784,000 | 17,197,372 | — | 37,981,372 | 11.5 | |||||||||||||
Other Securities | — | 12,261,809 | — | 12,261,809 | 3.7 | |||||||||||||
Total Investments | 21,416,625 | 402,662,573 | 342,750 | 424,421,948 | 128.2 | |||||||||||||
Other Assets and Liabilities, Net | (28.2 | ) | ||||||||||||||||
100.0 | ||||||||||||||||||
Futures Contracts | 527,472 | — | — | 527,472 | 0.2 | |||||||||||||
Options Written | — | (6,854 | ) | — | (6,854 | ) | (— | )* | ||||||||||
Foreign Currency Exchange Contracts | (3,089 | ) | (80,600 | ) | — | (83,689 | ) | (— | )* | |||||||||
Interest Rate Swap Contracts | — | 447,762 | 55,686 | 503,448 | 0.2 | |||||||||||||
Credit Default Swap Contracts | — | (1,115,420 | ) | — | (1,115,420 | ) | (0.3 | ) | ||||||||||
Total Other Financial Instruments** | 524,383 | (755,112 | ) | 55,686 | (175,043 | ) | ||||||||||||
Total | $ | 21,941,008 | $ | 401,907,461 | $ | 398,436 | $ | 424,246,905 | ||||||||||
* | Less than .05% of net assets. |
** | Other financial instruments not reflected in the Schedule of Investments, such as futures, forwards, and swap contracts which are valued at the unrealized appreciation/depreciation on the instruments. |
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 49 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses
based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 911.10 | $ | 1,019.84 | ||
Expenses Paid During Period* | $ | 4.74 | $ | 5.01 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). |
50 | Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 96.1% | ||||
Diversified - 8.9% | ||||
Agile Property Holdings, Ltd. | 78,400 | 111 | ||
Allgreen Properties, Ltd. | 228,000 | 157 | ||
British Land Co. PLC (ö) | 107,703 | 679 | ||
Canadian Real Estate Investment Trust (ö) | 20,506 | 434 | ||
CapitaLand, Ltd. | 186,500 | 474 | ||
Castellum AB | 11,825 | 75 | ||
Dexus Property Group (ö) | 640,841 | 384 | ||
Gecina SA (ö) | 1,885 | 117 | ||
GPT Group (ö) | 729,027 | 284 | ||
Hang Lung Properties, Ltd. - ADR | 117,000 | 386 | ||
Henderson Land Development Co., Ltd. | 80,336 | 460 | ||
Hysan Development Co., Ltd. | 163,470 | 419 | ||
ICADE (ö) | 2,708 | 223 | ||
Keppel Land, Ltd. | 181,500 | 275 | ||
Kerry Properties, Ltd. | 61,500 | 273 | ||
Mirvac Group (ö) | 211,339 | 182 | ||
Mitsubishi Estate Co., Ltd. | 66,000 | 1,093 | ||
Mitsui Fudosan Co., Ltd. | 54,100 | 937 | ||
New World Development, Ltd. | 387,000 | 699 | ||
Shui On Land, Ltd. | 225,200 | 153 | ||
Sino Land Co. | 82,000 | 135 | ||
Sponda OYJ (Æ) | 27,500 | 78 | ||
Stockland (ö) | 154,524 | 396 | ||
Sun Hung Kai Properties, Ltd. | 144,606 | 1,800 | ||
Suntec Real Estate Investment Trust (Æ)(ö) | 115,000 | 68 | ||
Tokyo Tatemono Co., Ltd. | 41,000 | 227 | ||
Tokyu Land Corp. | 34,000 | 154 | ||
Unibail-Rodamco SE (ö) | 6,341 | 947 | ||
Vornado Realty Trust (ö)(Ñ) | 266,858 | 12,017 | ||
Washington Real Estate Investment Trust (ö)(Ñ) | 96,198 | 2,152 | ||
Wharf Holdings, Ltd. | 38,000 | 161 | ||
25,950 | ||||
Free Standing Retail - 1.0% | ||||
National Retail Properties, Inc. (ö)(Ñ) | 136,100 | 2,361 | ||
Realty Income Corp. (ö)(Ñ) | 25,900 | 568 | ||
2,929 | ||||
Health Care - 13.8% | ||||
Brookdale Senior Living, Inc. | 20,372 | 198 | ||
Cogdell Spencer, Inc. (ö) | 90,100 | 387 | ||
HCP, Inc. (ö)(Ñ) | 425,368 | 9,014 | ||
Health Care REIT, Inc. (ö) | 158,977 | 5,421 | ||
LTC Properties, Inc. (ö) | 14,050 | 287 | ||
Medical Properties Trust, Inc. (ö)(Ñ) | 117,904 | 716 | ||
Nationwide Health Properties, Inc. (ö) | 323,362 | 8,323 | ||
Omega Healthcare Investors, Inc. (ö) | 232,826 | 3,613 | ||
Senior Housing Properties Trust (ö) | 289,080 | 4,718 | ||
Ventas, Inc. (ö) | 254,437 | 7,598 | ||
40,275 | ||||
Principal Amount ($) or Shares | Market Value $ | |||
Industrial - 5.5% | ||||
AMB Property Corp. (ö)(Ñ) | 266,337 | 5,010 | ||
DCT Industrial Trust, Inc. (ö) | 738,799 | 3,014 | ||
EastGroup Properties, Inc. (ö) | 60,200 | 1,988 | ||
First Potomac Realty Trust (ö) | 76,200 | 743 | ||
Goodman Group (ö) | 257,232 | 75 | ||
ProLogis (ö)(Ñ) | 605,255 | 4,878 | ||
ProLogis European Properties | 55,519 | 212 | ||
Segro PLC (ö) | 301,316 | 121 | ||
16,041 | ||||
Lodging/Resorts - 3.5% | ||||
DiamondRock Hospitality Co. (ö) | 72,100 | 451 | ||
Host Hotels & Resorts, Inc. (ö)(Ñ) | 725,900 | 6,090 | ||
LaSalle Hotel Properties (ö)(Ñ) | 141,450 | 1,746 | ||
Orient-Express Hotels, Ltd. Class A | 12,563 | 107 | ||
Shangri-La Asia, Ltd. | 124,000 | 185 | ||
Starwood Hotels & Resorts Worldwide, Inc. (Ñ)(ö) | 60,646 | 1,346 | ||
Sunstone Hotel Investors, Inc. (ö) | 76,400 | 409 | ||
10,334 | ||||
Mixed Industrial/Office - 3.0% | ||||
Duke Realty Corp. (ö) | 144,650 | 1,269 | ||
Liberty Property Trust (ö) | 220,701 | 5,085 | ||
PS Business Parks, Inc. (ö) | 47,672 | 2,309 | ||
8,663 | ||||
Office - 11.7% | ||||
Alexandria Real Estate Equities, Inc. (ö)(Ñ) | 40,600 | 1,453 | ||
Beni Stabili SpA | 93,795 | 73 | ||
BioMed Realty Trust, Inc. (ö) | 231,076 | 2,364 | ||
Boston Properties, Inc. (ö)(Ñ) | 290,092 | 13,837 | ||
Brandywine Realty Trust (ö) | 87,518 | 652 | ||
Brookfield Properties Corp. | 45,829 | 365 | ||
CapitaCommercial Trust (Æ)(ö) | 234,000 | 131 | ||
Commonwealth Property Office Fund (ö) | 222,611 | 148 | ||
Corporate Office Properties Trust SBI MD (ö)(Ñ) | 86,800 | 2,546 | ||
Derwent London PLC (ö) | 14,730 | 227 | ||
Government Properties Income Trust (Æ)(ö) | 15,650 | 321 | ||
Great Portland Estates PLC (ö) | 110,520 | 401 | ||
Highwoods Properties, Inc. (ö) | 73,600 | 1,646 | ||
Hongkong Land Holdings, Ltd. | 139,300 | 492 | ||
HRPT Properties Trust (ö) | 154,800 | 628 | ||
ING Office Fund (ö) | 134,865 | 50 | ||
ING Office Fund | 55,464 | 21 | ||
Japan Prime Realty Investment Corp. | 41 | 89 | ||
Kenedix Realty Investment Corp. Class A (ö) | 19 | 66 | ||
Kilroy Realty Corp. (ö)(Ñ) | 199,298 | 4,094 | ||
Mack-Cali Realty Corp. (ö) | 84,281 | 1,922 |
Real Estate Securities Fund | 51 |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Macquarie Office Trust (ö) | 485,346 | 81 | ||
Nippon Building Fund, Inc. Class A (ö) | 8 | 68 | ||
Nomura Real Estate Office Fund, Inc. | 13 | 83 | ||
NTT Urban Development Corp. | 165 | 159 | ||
SL Green Realty Corp. (ö)(Ñ) | 95,798 | 2,198 | ||
34,115 | ||||
Regional Malls - 11.9% | ||||
Aeon Mall Co., Ltd. | 12,100 | 229 | ||
CBL & Associates Properties, Inc. (ö) | 51,186 | 276 | ||
Macerich Co. (The) (ö)(Ñ) | 193,501 | 3,408 | ||
Simon Property Group, Inc. (ö) | 554,605 | 28,523 | ||
Taubman Centers, Inc. (ö)(Ñ) | 33,800 | 908 | ||
Westfield Group (ö) | 149,336 | 1,360 | ||
34,704 | ||||
Residential - 15.0% | ||||
American Campus Communities, Inc. (ö)(Ñ) | 220,723 | 4,896 | ||
Apartment Investment & Management Co. Class A (ö)(Ñ) | 81,471 | 721 | ||
AvalonBay Communities, Inc. (ö)(Ñ) | 179,318 | 10,031 | ||
Boardwalk Real Estate Investment Trust (ö) | 5,543 | 156 | ||
Camden Property Trust (ö) | 175,926 | 4,856 | ||
China Overseas Land & Investment, Ltd. | 342,200 | 792 | ||
China Resources Land, Ltd. | 144,000 | 317 | ||
Country Garden Holdings Co. | 345,000 | 160 | ||
Equity Lifestyle Properties, Inc. (ö)(Ñ) | 61,281 | 2,279 | ||
Equity Residential (ö) | 521,378 | 11,590 | ||
Essex Property Trust, Inc. (ö)(Ñ) | 91,000 | 5,663 | ||
Mid-America Apartment Communities, Inc. (ö) | 24,719 | 907 | ||
MRV Engenharia e Participacoes SA | 6,192 | 86 | ||
PDG Realty SA Empreendimentos e Participacoes | 7,500 | 81 | ||
Post Properties, Inc. (ö) | 57,700 | 775 | ||
Shimao Property Holdings, Ltd. | 227,500 | 440 | ||
43,750 | ||||
Self Storage - 6.3% | ||||
Extra Space Storage, Inc. (ö)(Ñ) | 204,200 | 1,705 | ||
Public Storage (ö) | 256,166 | 16,774 | ||
18,479 | ||||
Shopping Centers - 8.6% | ||||
Acadia Realty Trust (ö) | 58,424 | 762 | ||
Corio NV (ö) | 9,044 | 441 | ||
Federal Realty Investment Trust (ö)(Ñ) | 149,330 | 7,694 |
A portion of the portfolio has been fair valued as of period end.
Principal Amount ($) or Shares | Market Value $ | ||||
Hammerson PLC (ö) | 61,178 | 310 | |||
Kimco Realty Corp. (ö) | 482,451 | 4,849 | |||
Kite Realty Group Trust (ö) | 239,800 | 700 | |||
Link REIT (The) (ö) | 28,128 | 60 | |||
Mercialys SA (ö) | 4,766 | 147 |
| ||
Primaris Retail Real Estate Investment Trust (ö) | 20,344 | 207 | |||
Regency Centers Corp. (ö)(Ñ) | 241,999 | 8,448 | |||
Tanger Factory Outlet Centers (ö) | 36,800 | 1,193 | |||
Weingarten Realty Investors (ö) | 22,726 | 330 | |||
25,141 | |||||
Specialty - 6.9% | |||||
Digital Realty Trust, Inc. (ö)(Ñ) | 270,716 | 9,705 | |||
DuPont Fabros Technology, Inc. (ö) | 115,586 | 1,089 | |||
Entertainment Properties Trust (ö)(Ñ) | 29,200 | 602 | |||
Plum Creek Timber Co., Inc. (ö)(Ñ) | 195,804 | 5,831 | |||
Rayonier, Inc. (ö) | 75,550 | 2,746 | |||
19,973 | |||||
Total Common Stocks (cost $298,766) | 280,354 | ||||
Short-Term Investments - 4.4% | |||||
Russell Investment Company | 12,923,000 | 12,923 | |||
Total Short-Term Investments (cost $12,923) | 12,923 | ||||
Other Securities - 23.1% | |||||
State Street Securities Lending Quality Trust (×) | 68,752,224 | 67,243 | |||
Total Other Securities (cost $68,752) | 67,243 | ||||
Total Investments - 123.6% (identified cost $380,441) | 360,520 | ||||
Other Assets and Liabilities, Net - (23.6%) | (68,792 | ) | |||
Net Assets - 100.0% | 291,728 | ||||
See accompanying notes which are an integral part of the financial statements.
52 | Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2009 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||
Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||
USD | 7 | AUD | 9 | 7/1/2009 | — | ||||||
USD | 7 | AUD | 9 | 7/1/2009 | — | ||||||
USD | 35 | AUD | 43 | 7/1/2009 | — | ||||||
USD | 1 | AUD | 1 | 7/2/2009 | — | ||||||
USD | 1 | AUD | 1 | 7/2/2009 | — | ||||||
USD | 7 | AUD | 9 | 7/2/2009 | — | ||||||
USD | 7 | AUD | 9 | 7/2/2009 | — | ||||||
USD | 15 | AUD | 18 | 7/2/2009 | — | ||||||
USD | 20 | AUD | 25 | 7/6/2009 | — | ||||||
USD | 9 | BRL | 18 | 7/1/2009 | — | ||||||
USD | 9 | EUR | 7 | 7/1/2009 | — | ||||||
USD | 9 | EUR | 6 | 7/1/2009 | — | ||||||
USD | 35 | EUR | 25 | 7/1/2009 | — | ||||||
USD | 13 | EUR | 9 | 7/2/2009 | — | ||||||
USD | 244 | EUR | 5 | 7/2/2009 | — | ||||||
USD | 12 | GBP | 7 | 7/1/2009 | — | ||||||
USD | 13 | GBP | 8 | 7/2/2009 | — | ||||||
USD | 3 | JPY | 333 | 7/1/2009 | — | ||||||
USD | 164 | JPY | 15,647 | 7/1/2009 | (2 | ) | |||||
USD | 10 | JPY | 1,005 | 7/2/2009 | — | ||||||
USD | 17 | SGD | 25 | 7/1/2009 | — | ||||||
EUR | 1 | USD | 1 | 7/1/2009 | — | ||||||
EUR | 3 | USD | 4 | 7/2/2009 | — | ||||||
EUR | 6 | USD | 9 | 7/2/2009 | — | ||||||
HKD | 70 | USD | 9 | 7/2/2009 | — | ||||||
HKD | 244 | USD | 31 | 7/2/2009 | — | ||||||
JPY | 3,141 | USD | 33 | 7/1/2009 | — | ||||||
JPY | 7,618 | USD | 80 | 7/1/2009 | 1 | ||||||
SGD | 41 | USD | 28 | 7/1/2009 | — | ||||||
SGD | 89 | USD | 61 | 7/2/2009 | — | ||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | (1 | ) | |||||||||
See accompanying notes which are an integral part of the financial statements.
Real Estate Securities Fund | 53 |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Presentation of Portfolio Holdings — June 30, 2009 (Unaudited)
Portfolio Summary | Market Value Level 1 | Market Value Level 2 | Market Value Level 3 | Total | % of Net Assets | ||||||||||||
Diversified | $ | 14,602,256 | $ | 11,348,139 | $ | — | $ | 25,950,395 | 8.9 | ||||||||
Free Standing Retail | 2,929,063 | — | — | 2,929,063 | 1.0 | ||||||||||||
Health Care | 40,274,688 | — | — | 40,274,688 | 13.8 | ||||||||||||
Industrial | 15,633,208 | 408,122 | — | 16,041,330 | 5.5 | ||||||||||||
Lodging/Resorts | 10,148,881 | 185,431 | — | 10,334,312 | 3.5 | ||||||||||||
Mixed Industrial/Office | 8,662,763 | — | — | 8,662,763 | 3.0 | ||||||||||||
Office | 32,047,047 | 2,068,208 | — | 34,115,255 | 11.7 | ||||||||||||
Regional Malls | 33,114,648 | 1,589,176 | — | 34,703,824 | 11.9 | ||||||||||||
Residential | 42,040,887 | 1,708,599 | — | 43,749,486 | 15.0 | ||||||||||||
Self Storage | 18,478,820 | — | — | 18,478,820 | 6.3 | ||||||||||||
Shopping Centers | 24,183,213 | 958,031 | — | 25,141,244 | 8.6 | ||||||||||||
Specialty | 19,972,794 | — | — | 19,972,794 | 6.9 | ||||||||||||
Short-Term Investments | 12,923,000 | — | — | 12,923,000 | 4.4 | ||||||||||||
Other Securities | — | 67,243,350 | — | 67,243,350 | 23.1 | ||||||||||||
Total Investments | 275,011,268 | 85,509,056 | — | 360,520,324 | 123.6 | ||||||||||||
Other Assets and Liabilities, Net | (23.6 | ) | |||||||||||||||
100.0 | |||||||||||||||||
Foreign Currency | (558 | ) | — | — | (558 | ) | (— | )* | |||||||||
Total Other Financial Instruments** | (558 | ) | — | — | (558 | ) | |||||||||||
Total | $ | 275,010,711 | $ | 85,509,056 | $ | — | $ | 360,519,767 | |||||||||
* | Less than .05% of net assets. |
** | Other financial instruments not reflected in the Schedule of Investments, such as futures, forwards and swap contracts, which are valued at the unrealized appreciation/depreciation on the instruments. |
See accompanying notes which are an integral part of the financial statements.
54 | Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Notes to Schedules of Investments — June 30, 2009 (Unaudited)
Footnotes:
(Æ) | Nonincome-producing security. |
(ö) | Real Estate Investment Trust (REIT). |
(§) | All or a portion of the shares of this security are held as collateral in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund. |
(ž) | Rate noted is yield-to-maturity from date of acquisition. |
(ç) | At amortized cost, which approximates market. |
(Ê) | Adjustable or floating rate security. Rate shown reflects rate in effect at period end. |
(Ï) | Forward commitment. |
(ƒ) | Perpetual floating rate security. Rate shown reflects rate in effect at period end. |
(µ) | Bond is insured by a guarantor. |
(æ) | Pre-refunded: These bonds are collateralized by US Treasury securities, which are held in escrow by a trustee and used to pay principal and interest in the tax-exempt issue and to retire the bonds in full at the earliest refunding date. The rate noted is for descriptive purposes; effective yield may vary. |
(Ø) | In default. |
(ß) | Illiquid security. |
(×) | The security is purchased with the cash collateral from the securities loaned. |
(Ñ) | All or a portion of the shares of this security are on loan. |
(Þ) | Restricted security. Security may have contractual restrictions on resale, may have been offered in a private placement transaction, and may not be registered under the Securities Act of 1933. |
(Å) | Illiquid and restricted security. |
(å) | Currency balances were held in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund. See Note 2. |
(£) | A portion of this asset has been segregated to cover the liability caused by the valuation of the State Street Securities Lending Quality Trust Fund. |
Abbreviations:
144A - Represents private placement security for qualified buyers according to rule 144A of the Securities Act of 1933.
ADR - American Depositary Receipt
ADS - American Depositary Share
BBSW - Australian Bank Bill Short Term Rate
CIBOR - Copenhagen Interbank Offered Rate
CME - Chicago Mercantile Exchange
CMO - Collateralized Mortgage Obligation
CVO - Contingent Value Obligation
EMU - European Economic and Monetary Union
EURIBOR - Euro Interbank Offered Rate
FDIC - Federal Deposit Insurance Company
GDR - Global Depositary Receipt
GDS - Global Depositary Share
LIBOR - London Interbank Offered Rate
NIBOR - Norwegian Interbank Offered Rate
PIK - Payment in Kind
REMIC - Real Estate Mortgage Investment Conduit
STRIP - Separate Trading of Registered Interest and Principal of Securities
TBA - To Be Announced Security
Foreign Currency Abbreviations:
ARS - Argentine peso | HKD - Hong Kong dollar | PLN - Polish zloty | ||
AUD - Australian dollar | HUF - Hungarian forint | RUB - Russian ruble | ||
BRL - Brazilian real | IDR - Indonesian rupiah | SEK - Swedish krona | ||
CAD - Canadian dollar | ILS - Israeli shekel | SGD - Singapore dollar | ||
CHF - Swiss franc | INR - Indian rupee | SKK - Slovakian koruna | ||
CLP - Chilean peso | JPY - Japanese yen | THB - Thai baht | ||
CNY - Chinese renminbi yuan | KES - Kenyan schilling | TRY - Turkish lira | ||
COP - Colombian peso | KRW - South Korean won | TWD - Taiwanese dollar | ||
CRC - Costa Rica colon | MXN - Mexican peso | USD - United States dollar | ||
CZK - Czech koruna | MYR - Malaysian ringgit | VEB - Venezuelan bolivar | ||
DKK - Danish krone | NOK - Norweigian Krone | VND - Vietnamese dong | ||
EGP - Egyptian pound | NZD - New Zealand dollar | ZAR - South African rand | ||
EUR - Euro | PEN - Peruvian nouveau sol | |||
GBP - British pound sterling | PHP - Philippine peso |
Notes to Schedules of Investments | 55 |
Table of Contents
Russell Investment Funds
Statements of Assets and Liabilities — June 30, 2009 (Unaudited)
Amounts in thousands | Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | ||||||||||
Assets | |||||||||||||||
Investments, at identified cost | $ | 339,570 | $ | 183,042 | $ | 314,266 | $ | 450,277 | $ | 380,441 | |||||
Investments, at market*** | 330,885 | 181,431 | 281,783 | 424,422 | 360,520 | ||||||||||
Cash | — | — | — | 117 | — | ||||||||||
Cash (restricted) | 2,500 | 1,200 | 2,800 | 1,651 | — | ||||||||||
Foreign currency holdings* | — | — | 1,551 | 287 | 150 | ||||||||||
Unrealized appreciation on foreign currency exchange contracts | — | — | 317 | 119 | 1 | ||||||||||
Receivables: | |||||||||||||||
Dividends and interest | 320 | 137 | 658 | 2,421 | 1,269 | ||||||||||
Dividends from affiliated RIC Russell Money Market Fund | 3 | 2 | 4 | 3 | 2 | ||||||||||
Investments sold | 2,869 | 1,405 | 77 | 54,126 | 687 | ||||||||||
Fund shares sold | 30 | 152 | 92 | 63 | 67 | ||||||||||
Foreign taxes recoverable | — | — | 170 | — | — | ||||||||||
Daily variation margin on futures contracts | — | — | 69 | 472 | — | ||||||||||
Prepaid expenses | 1 | — | 1 | 7 | 1 | ||||||||||
Interest rate swap contracts, at market value**** | — | — | — | 876 | — | ||||||||||
Credit default swap contracts, at market value***** | — | — | — | 1,393 | — | ||||||||||
Total assets | 336,608 | 184,327 | 287,522 | 485,957 | 362,697 | ||||||||||
Liabilities | |||||||||||||||
Payables: | |||||||||||||||
Due to Custodian or Broker | — | — | 6 | 1,112 | — | ||||||||||
Investments purchased | 3,001 | 2,064 | 880 | 135,467 | 1,907 | ||||||||||
Fund shares redeemed | 108 | 37 | 45 | 131 | 13 | ||||||||||
Accrued fees to affiliates | 202 | 89 | 194 | 140 | 211 | ||||||||||
Other accrued expenses | 51 | 57 | 120 | 69 | 84 | ||||||||||
Daily variation margin on futures contracts | 133 | 14 | 236 | 156 | — | ||||||||||
Deferred tax liability | — | — | 4 | — | — | ||||||||||
Other payable | — | — | — | 1,714 | — | ||||||||||
Unrealized depreciation on foreign currency exchange contracts | — | — | 63 | 203 | | 2 | |||||||||
Options written, at market value** | — | — | — | 7 | — | ||||||||||
Payable upon return of securities loaned | 25,155 | 54,938 | 18,014 | 12,537 | 68,752 | ||||||||||
Interest rate swap contracts, at market value**** | — | — | — | 201 | — | ||||||||||
Credit default swap contracts, at market value***** | — | — | — | 3,227 | — | ||||||||||
Total liabilities | 28,650 | 57,199 | 19,562 | 154,964 | 70,969 | ||||||||||
Net Assets | $ | 307,958 | $ | 127,128 | $ | 267,960 | $ | 330,993 | $ | 291,728 | |||||
See accompanying notes which are an integral part of the financial statements.
56 | Statement of Assets and Liabilities |
Table of Contents
Russell Investment Funds
Statements of Assets and Liabilities, continued — June 30, 2009 (Unaudited)
Amounts in thousands | Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | |||||||||||||||
Net Assets Consist of: | ||||||||||||||||||||
Undistributed (overdistributed) net investment income | $ | 831 | $ | 144 | $ | 1,920 | $ | 5,684 | $ | 2,376 | ||||||||||
Accumulated net realized gain (loss) | (136,464 | ) | (83,602 | ) | (101,446 | ) | (1,362 | ) | (133,326 | ) | ||||||||||
Unrealized appreciation (depreciation) on: | ||||||||||||||||||||
Investments | (8,685 | ) | (1,611 | ) | (32,487 | ) | (25,855 | ) | (19,921 | ) | ||||||||||
Futures contracts | (518 | ) | (274 | ) | (352 | ) | 527 | — | ||||||||||||
Options written | — | — | — | 14 | — | |||||||||||||||
Credit default swap contracts | — | — | — | (1,115 | ) | — | ||||||||||||||
Interest rate swap contracts | — | — | — | 503 | — | |||||||||||||||
Foreign currency-related transactions | — | — | 268 | (78 | ) | (1 | ) | |||||||||||||
Shares of beneficial interest | 322 | 166 | 344 | 342 | 349 | |||||||||||||||
Additional paid-in capital | 452,472 | 212,305 | 399,713 | 352,333 | 442,251 | |||||||||||||||
Net Assets | $ | 307,958 | $ | 127,128 | $ | 267,960 | $ | 330,993 | $ | 291,728 | ||||||||||
Net Asset Value, offering and redemption price per share: | ||||||||||||||||||||
Net asset value per share****** | $ | 9.56 | $ | 7.64 | $ | 7.78 | $ | 9.68 | $ | 8.37 | ||||||||||
Net assets | $ | 307,958,330 | $ | 127,128,121 | $ | 267,959,540 | $ | 330,993,177 | $ | 291,728,211 | ||||||||||
Shares outstanding ($.01 par value) | 32,215,588 | 16,640,498 | 34,445,864 | 34,202,408 | 34,851,934 | |||||||||||||||
Amounts in thousands | ||||||||||||||||||||
* Foreign currency holdings - cost | $ | — | $ | — | $ | 1,551 | $ | 287 | $ | 150 | ||||||||||
** Premiums received on options written | $ | — | $ | — | $ | — | $ | 21 | $ | — | ||||||||||
*** Securities on loan included in investments | $ | 24,507 | $ | 53,143 | $ | 17,804 | $ | 12,306 | $ | 67,383 | ||||||||||
**** Interest rate swap contracts - premiums paid (received) | $ | — | $ | — | $ | — | $ | 172 | $ | — | ||||||||||
***** Credit default swap contracts - premiums paid (received) | $ | — | $ | — | $ | — | $ | (719 | ) | $ | — | |||||||||
****** Net asset value per share equals net assets divided by shares of beneficial interest outstanding. |
See accompanying notes which are an integral part of the financial statements.
Statement of Assets and Liabilities | 57 |
Table of Contents
Russell Investment Funds
Statements of Operations — For the Period Ended June 30, 2009 (Unaudited)
Amounts in thousands | Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | |||||||||||||||
Investment Income | ||||||||||||||||||||
Dividends | $ | 2,917 | $ | 854 | $ | 5,202 | $ | — | $ | 6,152 | ||||||||||
Dividends from affiliated money market funds | 46 | 2 | 49 | 61 | 28 | |||||||||||||||
Interest | — | — | — | 8,652 | — | |||||||||||||||
Securities lending income | 204 | 227 | 195 | 69 | 397 | |||||||||||||||
Less foreign taxes withheld | — | — | (529 | ) | — | — | ||||||||||||||
Total investment income | 3,167 | 1,083 | 4,917 | 8,782 | 6,577 | |||||||||||||||
Expenses | ||||||||||||||||||||
Advisory fees | 1,037 | 520 | 1,077 | 858 | 1,053 | |||||||||||||||
Administrative fees | 71 | 29 | 60 | 78 | 66 | |||||||||||||||
Custodian fees | 87 | 121 | 260 | 174 | 150 | |||||||||||||||
Transfer agent fees | 6 | 3 | 5 | 7 | 6 | |||||||||||||||
Professional fees | 36 | 22 | 34 | 39 | 35 | |||||||||||||||
Trustees’ fees | 4 | 2 | 4 | 5 | 4 | |||||||||||||||
Printing fees | 3 | 1 | 2 | 4 | 3 | |||||||||||||||
Miscellaneous | 8 | 4 | 2 | 7 | 5 | |||||||||||||||
Expenses before reductions | 1,252 | 702 | 1,444 | 1,172 | 1,322 | |||||||||||||||
Expense reductions | (34 | ) | (102 | ) | (153 | ) | (107 | ) | — | |||||||||||
Net expenses | 1,218 | 600 | 1,291 | 1,065 | 1,322 | |||||||||||||||
Net investment income (loss) | 1,949 | 483 | 3,626 | 7,717 | 5,255 | |||||||||||||||
Net Realized and Unrealized Gain (Loss) | ||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||
Investments | (52,053 | ) | (27,228 | ) | (20,990 | ) | (116 | ) | (51,866 | ) | ||||||||||
Futures contracts | 770 | 840 | 2,070 | 1,635 | — | |||||||||||||||
Options written | — | — | — | (1,005 | ) | — | ||||||||||||||
Credit default swap contracts | — | — | — | (2,018 | ) | — | ||||||||||||||
Interest rate swap contracts | — | — | — | 2,384 | — | |||||||||||||||
Foreign currency-related transactions | — | — | 2,312 | (153 | ) | 8 | ||||||||||||||
Net realized gain (loss) | (51,283 | ) | (26,388 | ) | (16,608 | ) | 727 | (51,858 | ) | |||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||||||
Investments | 70,017 | 34,373 | 28,778 | 9,739 | 27,259 | |||||||||||||||
Futures contracts | (972 | ) | (917 | ) | (865 | ) | (1,821 | ) | — | |||||||||||
Options written | — | — | — | 1,456 | — | |||||||||||||||
Credit default swap contracts | — | — | — | 606 | — | |||||||||||||||
Interest rate swap contracts | — | — | — | 450 | — | |||||||||||||||
Foreign currency-related transactions | — | — | (1,243 | ) | 108 | 3 | ||||||||||||||
Net change in unrealized appreciation (depreciation) | 69,045 | 33,456 | 26,670 | 10,538 | 27,262 | |||||||||||||||
Net realized and unrealized gain (loss) | 17,762 | 7,068 | 10,062 | 11,265 | (24,596 | ) | ||||||||||||||
Net Increase (Decrease) in Net Assets from Operations | $ | 19,711 | $ | 7,551 | $ | 13,688 | $ | 18,982 | $ | (19,341 | ) | |||||||||
See accompanying notes which are an integral part of the financial statements.
58 | Statements of Operations |
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Table of Contents
Russell Investment Funds
Statements of Changes in Net Assets
Multi-Style Equity Fund | Aggressive Equity Fund | |||||||||||||||
Amounts in thousands | Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | ||||||||||||
Increase (Decrease) in Net Assets | ||||||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | 1,949 | $ | 6,074 | $ | 483 | $ | 1,551 | ||||||||
Net realized gain (loss) | (51,283 | ) | (81,223 | ) | (26,388 | ) | (55,173 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | 69,045 | (125,100 | ) | 33,456 | (45,658 | ) | ||||||||||
Net increase (decrease) in net assets from operations | 19,711 | (200,249 | ) | 7,551 | (99,280 | ) | ||||||||||
Distributions | ||||||||||||||||
From net investment income | (2,808 | ) | (5,806 | ) | (339 | ) | (1,578 | ) | ||||||||
From net realized gain | — | (3,972 | ) | — | (44 | ) | ||||||||||
Net decrease in net assets from distributions | (2,808 | ) | (9,778 | ) | (339 | ) | (1,622 | ) | ||||||||
Share Transactions | ||||||||||||||||
Net increase (decrease) in net assets from share transactions | (7,156 | ) | 28,316 | (3,172 | ) | (4,937 | ) | |||||||||
Total Net Increase (Decrease) in Net Assets | 9,747 | (181,711 | ) | 4,040 | (105,839 | ) | ||||||||||
Net Assets | ||||||||||||||||
Beginning of period | 298,211 | 479,922 | 123,088 | 228,927 | ||||||||||||
End of period | $ | 307,958 | $ | 298,211 | $ | 127,128 | $ | 123,088 | ||||||||
Undistributed (overdistributed) net investment income included in net assets | $ | 831 | $ | 1,690 | $ | 144 | $ | — |
See accompanying notes which are an integral part of the financial statements.
60 | Statements of Changes in Net Assets |
Table of Contents
Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | ||||||||||||||||||||
Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | |||||||||||||||||
$ | 3,626 | $ | 7,095 | $ | 7,717 | $ | 16,634 | $ | 5,255 | $ | 11,970 | |||||||||||
(16,608 | ) | (87,637 | ) | 727 | 8,473 | (51,858 | ) | (72,571 | ) | |||||||||||||
26,670 | (106,389 | ) | 10,538 | (40,513 | ) | 27,262 | (115,578 | ) | ||||||||||||||
13,688 | (186,931 | ) | 18,982 | (15,406 | ) | (19,341 | ) | (176,179 | ) | |||||||||||||
(3,432 | ) | — | (4,871 | ) | (14,176 | ) | (6,892 | ) | (8,443 | ) | ||||||||||||
— | (3,345 | ) | (2,610 | ) | (6,979 | ) | — | — | ||||||||||||||
(3,432 | ) | (3,345 | ) | (7,481 | ) | (21,155 | ) | (6,892 | ) | (8,443 | ) | |||||||||||
1,954 | 14,340 | 383 | 9,603 | 14,545 | (771 | ) | ||||||||||||||||
12,210 | (175,936 | ) | 11,884 | (26,958 | ) | (11,688 | ) | (185,393 | ) | |||||||||||||
255,750 | 431,686 | 319,109 | 346,067 | 303,416 | 488,809 | |||||||||||||||||
$ | 267,960 | $ | 255,750 | $ | 330,993 | $ | 319,109 | $ | 291,728 | $ | 303,416 | |||||||||||
$ | 1,920 | $ | 1,726 | $ | 5,684 | $ | 2,838 | $ | 2,376 | $ | 4,013 |
See accompanying notes which are an integral part of the financial statements.
Statements of Changes in Net Assets | 61 |
Table of Contents
Russell Investment Funds
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, Beginning of Period | $ Net Investment Income (Loss)(a) | $ Net Realized and Unrealized Gain (Loss) | $ Total Income (Loss) from Operations | $ Distributions from Net Investment Income | $ Distributions from Net Realized Gain | $ Total Distributions | |||||||||||||
Multi-Style Equity Fund | |||||||||||||||||||
June 30, 2009* | 9.00 | .06 | .59 | .65 | (.09 | ) | — | (.09 | ) | ||||||||||
December 31, 2008 | 15.65 | .19 | (6.52 | ) | (6.33 | ) | (.19 | ) | (.13 | ) | (.32 | ) | |||||||
December 31, 2007 | 14.93 | .16 | 1.37 | 1.53 | (.16 | ) | (.65 | ) | (.81 | ) | |||||||||
December 31, 2006 | 13.37 | .14 | 1.55 | 1.69 | (.13 | ) | — | (.13 | ) | ||||||||||
December 31, 2005 | 12.60 | .12 | .79 | .91 | (.14 | ) | — | (.14 | ) | ||||||||||
December 31, 2004 | 11.56 | .11 | 1.02 | 1.13 | (.09 | ) | — | (.09 | ) | ||||||||||
Aggressive Equity Fund | |||||||||||||||||||
June 30, 2009* | 7.18 | .05 | .43 | .48 | (.02 | ) | — | (.02 | ) | ||||||||||
December 31, 2008 | 12.99 | .09 | (5.81 | ) | (5.72 | ) | (.09 | ) | — | (d) | (.09 | ) | |||||||
December 31, 2007 | 14.45 | .06 | .40 | .46 | (.05 | ) | (1.87 | ) | (1.92 | ) | |||||||||
December 31, 2006 | 14.40 | .03 | 2.10 | 2.13 | (.03 | ) | (2.05 | ) | (2.08 | ) | |||||||||
December 31, 2005 | 14.90 | .03 | .90 | .93 | (.03 | ) | (1.40 | ) | (1.43 | ) | |||||||||
December 31, 2004 | 13.47 | .02 | 1.95 | 1.97 | (.02 | ) | (.52 | ) | (.54 | ) | |||||||||
Non-U.S. Fund | |||||||||||||||||||
June 30, 2009* | 7.48 | .11 | .29 | .40 | (.10 | ) | — | (.10 | ) | ||||||||||
December 31, 2008 | 13.20 | .21 | (5.83 | ) | (5.62 | ) | — | (.10 | ) | (.10 | ) | ||||||||
December 31, 2007 | 15.01 | .25 | 1.14 | 1.39 | (.38 | ) | (2.82 | ) | (3.20 | ) | |||||||||
December 31, 2006 | 12.68 | .23 | 2.75 | 2.98 | (.35 | ) | (.30 | ) | (.65 | ) | |||||||||
December 31, 2005 | 11.33 | .16 | 1.38 | 1.54 | (.19 | ) | — | (.19 | ) | ||||||||||
December 31, 2004 | 9.76 | .11 | 1.66 | 1.77 | (.20 | ) | — | (.20 | ) | ||||||||||
Core Bond Fund | |||||||||||||||||||
June 30, 2009* | 9.33 | .23 | .34 | .57 | (.15 | ) | (.07 | ) | (.22 | ) | |||||||||
December 31, 2008 | 10.32 | .47 | (.86 | ) | (.39 | ) | (.39 | ) | (.21 | ) | (.60 | ) | |||||||
December 31, 2007 | 10.14 | .51 | .20 | .71 | (.53 | ) | — | (.53 | ) | ||||||||||
December 31, 2006 | 10.23 | .45 | (.08 | ) | .37 | (.46 | ) | — | (.46 | ) | |||||||||
December 31, 2005 | 10.50 | .38 | (.17 | ) | .21 | (.37 | ) | (.11 | ) | (.48 | ) | ||||||||
December 31, 2004 | 10.47 | .24 | .24 | .48 | (.26 | ) | (.19 | ) | (.45 | ) | |||||||||
Real Estate Securities Fund | |||||||||||||||||||
June 30, 2009* | 9.30 | .15 | (.88 | ) | (.73 | ) | (.20 | ) | — | (.20 | ) | ||||||||
December 31, 2008 | 15.22 | .38 | (6.03 | ) | (5.65 | ) | (.27 | ) | — | (.27 | ) | ||||||||
December 31, 2007 | 21.34 | .35 | (3.68 | ) | (3.33 | ) | (.47 | ) | (2.32 | ) | (2.79 | ) | |||||||
December 31, 2006 | 17.28 | .37 | 5.72 | 6.09 | (.39 | ) | (1.64 | ) | (2.03 | ) | |||||||||
December 31, 2005 | 17.09 | .32 | 1.82 | 2.14 | (.37 | ) | (1.58 | ) | (1.95 | ) | |||||||||
December 31, 2004 | 13.71 | .36 | 4.33 | 4.69 | (.36 | ) | (.95 | ) | (1.31 | ) |
See accompanying notes which are an integral part of the financial statements.
62 | Financial Highlights |
Table of Contents
$ Net Asset Value, End of Period | % Total Return(b) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Net(c)(e) | % Ratio of Expenses to Average Net Assets, Gross(c) | % Ratio of Net Investment Income to Average Net Assets(c)(e) | % Portfolio Turnover Rate(b) | |||||||
9.56 | 6.23 | 307,958 | .86 | .88 | 1.37 | 69 | |||||||
9.00 | (41.15 | ) | 298,211 | .87 | .89 | 1.50 | 135 | ||||||
15.65 | 10.36 | 479,922 | .87 | .87 | 1.04 | 136 | |||||||
14.93 | 12.75 | 417,507 | .87 | .87 | 1.03 | 128 | |||||||
13.37 | 7.27 | 349,659 | .83 | .87 | .94 | 130 | |||||||
12.60 | 9.81 | 332,759 | .87 | .88 | .96 | 123 | |||||||
7.64 | 4.40 | 127,128 | 1.04 | 1.21 | 1.47 | 106 | |||||||
7.18 | (44.16 | ) | 123,088 | 1.05 | 1.18 | .84 | 161 | ||||||
12.99 | 3.42 | 228,927 | 1.05 | 1.13 | .39 | 180 | |||||||
14.45 | 14.79 | 223,646 | 1.05 | 1.12 | .16 | 184 | |||||||
14.40 | 6.36 | 204,292 | .99 | 1.13 | .21 | 130 | |||||||
14.90 | 14.73 | 195,583 | 1.05 | 1.17 | .17 | 150 | |||||||
7.78 | 4.88 | 267,960 | 1.08 | 1.21 | 3.03 | 91 | |||||||
7.48 | (42.79 | ) | 255,750 | 1.15 | 1.21 | 2.01 | 123 | ||||||
13.20 | 10.12 | 431,686 | 1.15 | 1.18 | 1.70 | 106 | |||||||
15.01 | 23.64 | 369,884 | 1.15 | 1.21 | 1.64 | 111 | |||||||
12.68 | 13.69 | 302,261 | 1.12 | 1.26 | 1.41 | 88 | |||||||
11.33 | 18.30 | 258,766 | 1.15 | 1.28 | 1.11 | 73 | |||||||
9.68 | 5.96 | 330,993 | .68 | .75 | 4.94 | 60 | |||||||
9.33 | (3.87 | ) | 319,109 | .70 | .77 | 4.70 | 164 | ||||||
10.32 | 7.24 | 346,067 | .70 | .78 | 5.04 | 965 | |||||||
10.14 | 3.72 | 265,783 | .70 | .73 | 4.40 | 453 | |||||||
10.23 | 2.01 | 216,774 | .70 | .72 | 3.70 | 193 | |||||||
10.50 | 4.66 | 175,851 | .70 | .73 | 2.41 | 216 | |||||||
8.37 | (8.89 | ) | 291,728 | 1.00 | 1.00 | 3.99 | 56 | ||||||
9.30 | (37.76 | ) | 303,416 | .96 | .96 | 2.72 | 71 | ||||||
15.22 | (15.86 | ) | 488,809 | .92 | .92 | 1.75 | 77 | ||||||
21.34 | 35.84 | 625,477 | .90 | .91 | 1.86 | 53 | |||||||
17.28 | 12.96 | 443,092 | .91 | .91 | 1.86 | 64 | |||||||
17.09 | 34.88 | 379,733 | .92 | .92 | 2.43 | 47 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights | 63 |
Table of Contents
Russell Investment Funds
Notes to Financial Highlights — June 30, 2009 (Unaudited)
* | For the period ended June 30, 2009 (Unaudited) |
(a) | Average month-end shares outstanding were used for this calculation. |
(b) | Periods less than one year are not annualized. |
(c) | The ratios for periods less than one year are annualized. |
(d) | Less than $.01 per share. |
(e) | May reflect amounts waived and/or reimbursed by RIMCo and/or RFSC custody credit arrangements. |
See accompanying notes which are an integral part of the financial statements.
64 | Notes to Financial Highlights |
Table of Contents
Russell Investment Funds
Notes to Financial Statements — June 30, 2009 (Unaudited)
1. | Organization |
Russell Investment Funds (the “Investment Company” or “RIF”) is a series investment company with nine different investment portfolios referred to as Funds. These financial statements report on five of these Funds (each a “Fund” and collectively the “Funds”). The Investment Company provides the investment base for one or more variable insurance products issued by one or more insurance companies. These Funds are offered at net asset value to qualified insurance company separate accounts offering variable insurance products. The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated October 1, 2008. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.
Russell Investment Management Company (“RIMCo”) is the Funds’ adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Funds’ administrator and transfer agent.
2. | Significant Accounting Policies |
The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by each Fund in the preparation of its financial statements.
Security Valuation
The Funds value portfolio securities according to Board-approved securities valuation procedures and pricing services which include market value procedures, fair value procedures and a description of the pricing services used by the Funds. Debt obligation securities maturing within 60 days of the time of purchase are priced using the amortized cost method of valuation, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.
Ordinarily, the Funds value each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Generally, Fund securities are valued at the close of the market on which they are traded as follows:
• | U.S. listed equities, equity and fixed income options and rights/warrants: Last sale price; last bid price if no last sale price. |
• | U.S. over-the-counter equities: Official closing price; last bid price if no closing price. |
• | Listed ADRs/GDRs: Last sale price; last bid price if no last sale price. |
• | Municipal bonds, U.S. bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price. |
• | Futures: Settlement price. |
• | Bank loans and forwards: Mean between bid and asking price. |
• | Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier; |
• | The value of swap agreements is equal to the Funds’ obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts. |
• | Equity securities traded on a national foreign securities exchange or a foreign over the counter market are valued on the basis of the official closing price, or lacking the official closing price, at the last sale price of the primary exchange on which the security is traded. |
If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Funds will use the security’s fair value, as determined in accordance with the fair value procedures. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded, but rather may be priced by another method that the Board believes reflects fair value. The fair value procedures may involve subjective judgments as to the fair value of securities. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Fund shares and the daily movement of the benchmark index if the index is valued using another pricing method.
Notes to Financial Statements | 65 |
Table of Contents
Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
This policy is intended to assure that the Funds’ net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Fund shares is determined may be reflected in the calculation of net asset values for each applicable Fund when the Funds deem that the particular event or circumstance would materially affect such Fund’s net asset value. Funds that invest primarily in frequently traded exchange-listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. Funds that invest in foreign securities are likely to use fair value pricing more often since significant events may occur between the close of foreign markets and the time of pricing which would trigger fair value pricing of the foreign securities. Funds that invest in low-rated debt securities are also likely to use fair value pricing more often since the markets in which such securities are traded are generally thinner, more limited and less active than those for higher rated securities. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the U.S. securities market (defined in the fair value procedures as the movement by a single major U.S. Index greater than a certain percentage) or other significant event; foreign market holidays if on a daily basis, Fund exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.
Because foreign securities can trade on non-business days, the net asset value of a Fund’s portfolio that includes foreign securities may change on days when shareholders will not be able to purchase or redeem fund shares.
The Funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), effective January 1, 2008. In accordance with SFAS 157, fair value is defined as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. SFAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including a pricing model and/or risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• | Level 1 — quoted prices in active markets for identical investments |
• | Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.) |
• | Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments) |
Inputs used in valuing the Funds’ investments for the period ended June 30, 2009 are disclosed in the Presentation of Portfolio Holdings.
A reconciliation of investments in which significant unobservable inputs (Level 3) were used in determining a value for the period ending June 30, 2009 were as follows:
Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | ||||||||||
Balance as of 01/01/09 | $ | 1,070,925 | $ | 11,611 | $ | 3,687,314 | ||||||
Accrued discounts/(premiums) | — | — | 48,523 | |||||||||
Realized gain/(loss) | (2,581,364 | ) | (182,660 | ) | 31,224 | |||||||
Net changes in unrealized appreciation/(depreciation) from investments still held as of 06/30/09 | (768,573 | ) | (204,949 | ) | 287,136 | |||||||
Net purchases (sales) | 2,279,632 | 1,465,397 | (2,596,695 | ) | ||||||||
Net transfers in and/or out of Level 3 | — | (1,061,002 | ) | (1,059,066 | ) | |||||||
Balance as of 06/30/09 | $ | 620 | $ | 28,397 | $ | 398,436 | ||||||
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost incurred by each money manager within a particular Fund.
66 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
Investment Income
Dividend income is recorded net of applicable withholding taxes on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon thereafter as the Funds are informed of the ex-dividend date. Interest income is recorded daily on the accrual basis. The Core Bond Fund classifies gains and losses realized on prepayments received on mortgage-backed securities as part of interest income. All premiums and discounts, including original issue discounts, are amortized/accreted using the interest method.
Federal Income Taxes
Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.
It is each Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income tax provision is required for the Funds.
In accordance with the provisions set forth in the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), management has reviewed the Funds’ tax positions for all open tax years, and concluded that adoption had no effect on the Funds’ financial position or results of operations. At June 30, 2009, the Funds have recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.
Each Fund files a U. S. tax return. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years ending December 31, 2005 through December 31, 2007, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Dividends and Distributions to Shareholders
For all Funds, income and capital gain distributions, if any, are recorded on the ex-dividend date. Income distributions are generally declared and paid quarterly, except for the Non-U.S. Fund, which generally declares and pays income distributions annually. Capital gain distributions are generally declared and paid annually. An additional distribution may be paid by the Funds to avoid imposition of federal income and excise tax on any remaining undistributed capital gains and net investment income.
The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) from investment and foreign currency-related transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP relate primarily to investments in options, futures, forward contracts, swap contracts, passive foreign investment companies, foreign-denominated investments, mortgage-backed securities, certain securities sold at a loss and capital loss carryforwards.
Expenses
The Funds will pay their own expenses other than those expressly assumed by RIMCo or RFSC. Most expenses can be directly attributed to the individual Funds. Expenses which cannot be directly attributed to a specific Fund are allocated among all Funds principally based on their relative net assets.
Foreign Currency Translations
The books and records of the Funds are maintained in U.S. dollars. Foreign currency amounts and transactions of the Funds are translated into U.S. dollars on the following basis:
(a) | Market value of investment securities, other assets and liabilities at the closing rate of exchange on the valuation date. |
(b) | Purchases and sales of investment securities and income at the closing rate of exchange prevailing on the respective trade dates of such transactions. |
Net realized gains or losses from foreign currency-related transactions arise from: sales and maturities of short-term securities; sales of foreign currencies; currency gains or losses realized between the trade and settlement dates on securities transactions; the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Non-U.S. Fund’s books and
Notes to Financial Statements | 67 |
Table of Contents
Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
the U.S. dollar equivalent of the amounts actually received or paid. Net unrealized gains or losses from foreign currency-related transactions arise from changes in the value of assets and liabilities, other than investments in securities, at year-end, as a result of changes in the exchange rates.
The Funds do not isolate that portion of the results of operations of the Funds that arises as a result of changes in exchange rates from that portion that arises from changes in market prices of investments during the year. Such fluctuations are included with the net realized and unrealized gain or loss from investments. However, for federal income tax purposes the Funds do isolate the effects of changes in foreign exchange rates from the fluctuations arising from changes in market prices for realized gain (or loss) on debt obligations.
Capital Gains Taxes
The Non-U.S. Fund may be subject to capital gains taxes and repatriation taxes imposed by certain countries in which it invests. The Non-U.S. Fund may record a deferred tax liability in respect of unrealized appreciation on foreign securities for potential capital gains and repatriation taxes at June 30, 2009. The accrual for capital gains and repatriation taxes is included in net unrealized appreciation (depreciation) on investments in the Statements of Assets and Liabilities for the Fund. The amounts related to capital gains taxes are included in net realized gain (loss) on investments in the Statements of Operations for the Fund. The Non-U.S. Fund incurred a deferred tax liability of $3,570 but had no capital gains taxes for the period ended June 30, 2009.
Derivatives
To the extent permitted by the investment objectives, restrictions and policies set forth in the Funds’ Prospectus and Statement of Additional Information, the Funds may participate in various derivative-based transactions. Derivative securities are instruments or agreements whose value is derived from an underlying security or index. They include options, futures, swaps, forwards, structured notes and stripped securities. These instruments offer unique characteristics and risks that assist the Funds in meeting its investment strategies.
The Funds typically use derivatives in three ways: exposing cash reserves to markets, hedging and return enhancement. The Funds, other than the Real Estate Securities Fund, may pursue their strategy to be fully invested by exposing cash reserves to the performance of appropriate markets by purchasing securities and/or derivatives. This is intended to cause the Funds to perform as though their cash reserves were actually invested in those markets. Hedging is also used by some Funds to limit or control risks, such as adverse movements in exchange rates and interest rates. Return enhancement can be accomplished through the use of derivatives in a Fund. By purchasing certain instruments, Funds may more effectively achieve the desired portfolio characteristics that assist them in meeting their investment objectives. Depending on how the derivatives are structured and utilized, the risks associated with them may vary widely. These risks are generally categorized as market risk, liquidity risk and counterparty or credit risk.
The Funds adopted FASB issued Statement of Financial Accounting Standards No. 161, “Disclosures about Derivative Instruments and Hedging Activities” (“SFAS 161”). SFAS 161 requires enhanced disclosures about the Funds’ derivative and hedging activities.
The fair values of the Fund’s derivative instruments categorized by risk exposure for the period ended June 30, 2009 were as follows:
(Amounts in thousands) | ||||||||||||||||||
Derivatives not accounted for as hedging instruments under Statement 133 | Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | |||||||||||||||
Assets | Liabilities | Assets | Liabilities | Assets | Liabilities | |||||||||||||
Credit Contracts | $ | �� | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||
Equity Contracts* | — | 518 | — | 274 | 54 | 406 | ||||||||||||
Foreign Currency Contracts | — | — | — | — | 317 | 63 | ||||||||||||
Interest Rate Contracts* | — | — | — | — | — | — | ||||||||||||
Total | $ | — | $ | 518 | $ | — | $ | 274 | $ | 377 | $ | 475 | ||||||
* | Includes cumulative appreciation/depreciation of futures contracts as reported in Schedule of Investments. Only current day’s variation margin is reported within the statement of assets & liabilities |
68 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
Derivatives not accounted for as hedging instruments under Statement 133 | Core Bond Fund | Real Estate Securities Fund | ||||||||||||||
Assets | Liabilities | Assets | Liabilities | |||||||||||||
Credit Contracts | $ | 1,393 | $ | 3,227 | $ | — | $ | — | ||||||||
Equity Contracts* | — | — | — | — | ||||||||||||
Foreign Currency Contracts | 119 | 203 | 1 | 2 | ||||||||||||
Interest Rate Contracts* | 2,248 | 466 | — | — | ||||||||||||
Total | $ | 3,760 | $ | 3,896 | $ | 1 | $ | 2 | ||||||||
* | Includes cumulative appreciation/depreciation of futures contracts as reported in Schedule of Investments. Only current day’s variation margin is reported within the statement of assets & liabilities |
The effects of derivative instruments on the Statement of Operations for the period ended June 30, 2009 were as follows:
(Amounts in thousands) | ||||||||||||||||||||||
Amount of Realized Gain or (Loss) on Derivatives Recognized in Income | ||||||||||||||||||||||
Derivatives not accounted for as hedging instruments under Statement 133 | Futures | Forward Currency Contracts | Options | Swaps | Other | Total | ||||||||||||||||
Multi-Style Equity Fund | ||||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Equity Contracts | 770 | — | — | — | — | 770 | ||||||||||||||||
Foreign Currency Contracts | — | — | — | — | — | — | ||||||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | ||||||||||||||||
Total | $ | 770 | $ | — | $ | — | $ | — | $ | — | $ | 770 | ||||||||||
Aggressive Equity Fund | ||||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Equity Contracts | 840 | — | — | — | — | 840 | ||||||||||||||||
Foreign Currency Contracts | — | — | — | — | — | — | ||||||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | ||||||||||||||||
Total | $ | 840 | $ | — | $ | — | $ | — | $ | — | $ | 840 | ||||||||||
Non-U.S. Fund | ||||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Equity Contracts | 2,070 | — | — | — | — | 2,070 | ||||||||||||||||
Foreign Currency Contracts | — | 2,188 | — | — | — | 2,188 | ||||||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | ||||||||||||||||
Total | $ | 2,070 | $ | 2,188 | $ | — | $ | — | $ | — | $ | 4,258 | ||||||||||
Core Bond Fund | ||||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | (2,018 | ) | $ | — | $ | (2,018 | ) | ||||||||
Equity Contracts | — | — | — | — | — | — | ||||||||||||||||
Foreign Currency Contracts | — | (151 | ) | — | — | — | (151 | ) | ||||||||||||||
Interest Rate Contracts | 1,635 | — | (1,418 | ) | 2,384 | — | 2,601 | |||||||||||||||
Total | $ | 1,635 | $ | (151 | ) | $ | (1,418 | ) | $ | 366 | $ | — | $ | 432 | ||||||||
Real Estate Securities Fund | ||||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Equity Contracts | — | — | — | — | — | — | ||||||||||||||||
Foreign Currency Contracts | — | 25 | — | — | — | 25 | ||||||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | ||||||||||||||||
Total | $ | — | $ | 25 | $ | — | $ | — | $ | — | $ | 25 | ||||||||||
Notes to Financial Statements | 69 |
Table of Contents
Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
Change in Unrealized Appreciation or (Depreciation) on Derivatives Recognized in Income | |||||||||||||||||||||
Derivatives not accounted for as hedging instruments under Statement 133 | Futures | Forward Currency Contracts | Options | Swaps | Other | Total | |||||||||||||||
Multi-Style Equity Fund | �� | ||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Equity Contracts | (972 | ) | — | — | — | — | (972 | ) | |||||||||||||
Foreign Currency Contracts | — | — | — | — | — | — | |||||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | |||||||||||||||
Total | $ | (972 | ) | $ | — | $ | — | $ | — | $ | — | $ | (972 | ) | |||||||
Aggressive Equity Fund | |||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Equity Contracts | (917 | ) | — | — | — | — | (917 | ) | |||||||||||||
Foreign Currency Contracts | — | — | — | — | — | — | |||||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | |||||||||||||||
Total | $ | (917 | ) | $ | — | $ | — | $ | — | $ | — | $ | (917 | ) | |||||||
Non-U.S. Fund | |||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Equity Contracts | (865 | ) | — | — | — | — | (865 | ) | |||||||||||||
Foreign Currency Contracts | — | (1,346 | ) | — | — | — | (1,346 | ) | |||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | |||||||||||||||
Total | $ | (865 | ) | $ | (1,346 | ) | $ | — | $ | — | $ | — | $ | (2,211 | ) | ||||||
Core Bond Fund | |||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | 606 | $ | — | $ | 606 | |||||||||
Equity Contracts | — | — | — | — | — | — | |||||||||||||||
Foreign Currency Contracts | — | 86 | — | — | — | 86 | |||||||||||||||
Interest Rate Contracts | (1,821 | ) | — | 296 | 450 | — | (1,075 | ) | |||||||||||||
Total | $ | (1,821 | ) | $ | 86 | $ | 296 | $ | 1,056 | $ | — | $ | (383 | ) | |||||||
Real Estate Securities Fund | |||||||||||||||||||||
Credit Contracts | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||
Equity Contracts | — | — | — | — | — | — | |||||||||||||||
Foreign Currency Contracts | — | 1 | — | — | — | 1 | |||||||||||||||
Interest Rate Contracts | — | — | — | — | — | — | |||||||||||||||
Total | $ | — | $ | 1 | $ | — | $ | — | $ | — | $ | 1 | |||||||||
Foreign Currency Exchange Contracts
In connection with investment transactions consistent with the Funds’ investment objective and strategies, certain Funds may enter into foreign currency exchange spot contracts and forward foreign currency exchange contracts (“contracts”). In addition, the Real Estate Securities Fund may enter into foreign exchange contracts for trade settlement purposes. From time to time the Funds may enter into contracts to hedge certain foreign currency-denominated assets. Contracts are recorded at market value. Certain risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and are generally limited to the amount of unrealized gain on the contracts, if any, that are recognized in the Statements of Assets and Liabilities. Realized gains or losses arising from such transactions are included in net realized gain (or loss) from foreign currency-related transactions.
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For the period ended June 30, 2009, the following funds entered into foreign currency exchange contracts primarily for the strategies listed below:
• | Non-U.S. Fund — hedging |
• | Core Bond Fund — hedging and return enhancement |
• | Real Estate Securities Fund — trade settlement |
Forward Commitments
Certain Funds may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with a Fund’s ability to manage its investment portfolio and meet redemption requests. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Funds may dispose of a forward commitment transaction prior to settlement if it is appropriate to do so and realize short-term gains (or losses) upon such sale. When effecting such transactions, cash or liquid high-grade debt obligations of the Fund in a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated on the Fund’s records at the trade date and maintained until the transaction is settled. A forward commitment transaction involves a risk of loss if the value of the security to be purchased declines prior to the settlement date or the other party to the transaction fails to complete the transaction.
Loan Agreements
The Core Bond Fund may invest in direct debt instruments which are interests in amounts owed by corporate, governmental, or other borrowers to lenders or lending syndicates. A Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. A loan is often administered by a bank or other financial institution (the “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. When investing in a loan participation, a Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt by the lender of payments from the borrower. A Fund generally has no right to enforce compliance with the terms of the loan agreement with the borrower. As a result, a Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When a Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan. For the period ended June 30, 2009, there were no unfunded loan commitments in the Core Bond Fund.
Options
The Funds may purchase and sell (write) call and put options on securities and securities indices, provided such options are traded on a national securities exchange or in an over-the-counter market. The Funds may also purchase and sell call and put options on foreign currencies. The domestic equity Funds may utilize options to equitize liquidity reserve balances.
When a Fund writes a covered call or a put option, an amount equal to the premium received by the Fund is included in the Fund’s Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. The Fund receives a premium on the sale of a call option but gives up the opportunity to profit from any increase in stock value above the exercise price of the option, and when the Fund writes a put option it is exposed to a decline in the price of the underlying security.
Whether an option which the Fund has written expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss, if the cost of a closing purchase transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. When a put option which a Fund has written is exercised, the amount of the premium originally received will reduce the cost of the security which a Fund purchases upon exercise of the option. Realized gains (losses) on purchased options are included in net realized gain (loss) from investments on the Statements of Operations.
The Funds’ use of written options involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to market risk. The risks may be caused by an imperfect correlation between movements in the price of the instrument and the price of the underlying securities and interest rates.
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A Fund may enter into a swaption (swap option). In a swaption, in exchange for an option, the buyer gains the right but not the obligation to enter into a specified swap agreement with the issuer on a specified future date. The writer of the contract receives the premium and bears the risk of unfavorable changes in the preset rate on the underlying interest rate swap. Unrealized gains/losses on swaptions are reflected in investment assets and investment liabilities in the Fund’s Statement of Assets and Liabilities.
For the period ended June 30, 2009, the Core Bond Fund purchased/sold options primarily for exposing cash reserves and return enhancement.
Futures Contracts
The Funds may invest in futures contracts (i.e., interest rate, foreign currency and index futures contracts) to a limited extent. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to off balance sheet risk. The primary risks associated with the use of futures contracts are an imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Funds are required to deposit with a broker an amount, termed the initial margin, which typically represents 5% of the purchase price indicated in the futures contract. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement value are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized.
For the period ended June 30, 2009, the following funds entered into future contracts primarily for the strategies listed below:
• | Multi-Style Equity Fund — exposing cash reserves |
• | Aggressive Equity Fund — exposing cash reserves |
• | Non U.S. Fund — exposing cash reserves |
• | Core Bond Fund — exposing cash reserves, hedging and return enhancement |
As June 30, 2009, the Funds had cash collateral balances in connection with futures contracts purchased (sold) as follows:
Cash Collateral | |||
Multi-Style Equity Fund | $ | 2,500,000 | |
Aggressive Equity Fund | 1,200,000 | ||
Non-U.S. Fund | 2,800,000 | ||
Core Bond Fund | 630,200 |
Swap Agreements
The Funds may enter into swap agreements, on either an asset-based or liability-based basis, depending on whether they are hedging their assets or their liabilities, and will usually enter into swaps on a net basis, i.e., the two payment streams are netted out, with the Funds receiving or paying, as the case may be, only the net amount of the two payments. When a Fund engages in a swap, it exchanges its obligations to pay or rights to receive payments for the obligations or rights to receive payments of another party (i.e., an exchange of floating rate payments for fixed rate payments).
Certain Funds may enter into several different types of agreements including interest rate, credit default and currency swaps. The Funds may enter into index swap agreements as an additional hedging strategy for cash reserves held by those Funds or to effect investment transactions consistent with those Funds’ investment objectives and strategies. Interest rate swaps are a counterparty agreement, can be customized to meet each party’s needs, and involve the exchange of a fixed payment per period for a payment that is not fixed. Currency swaps are an agreement where two parties exchange specified amounts of different currencies which are followed by a series of interest payments that are exchanged based on the principal cash flow. At maturity the principal amounts are exchanged back. Credit default swaps are a counterparty agreement which allows the transfer of third party credit risk (the possibility that an issuer will default on their obligation by failing to pay principal or interest in a timely manner) from one party to another. The lender faces the credit risk from a third party and the counterparty in the swap agrees to insure this risk in exchange for regular periodic payments.
The Funds expect to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of their portfolios or to protect against any increase in the price of securities they anticipate purchasing at a later date. The net amount of the excess, if any, of the Funds’ obligations over their entitlements with respect to each swap will be accrued on a daily basis and an amount of cash or liquid high-grade debt securities having an aggregate net asset value at least equal to the accrued excess will be segregated. To the extent that the Funds enter into swaps on other than a net basis, the amount maintained in a segregated account will be the full amount of the Funds’ obligations, if any, with respect to such interest rate swaps, accrued on a
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daily basis. The Funds will not enter into any swaps unless the unsecured senior debt or the claims-paying ability of the other party thereto is rated in the highest rating category of at least one nationally recognized rating organization at the time of entering into such transaction. If there is a default by the other party to such a transaction, the Funds will have contractual remedies pursuant to the agreement related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become more liquid.
A Fund may not receive the expected amount under a swap agreement if the other party to the agreement defaults or becomes bankrupt. The market for swap agreements is largely unregulated. The Funds will only enter into swap agreements with counterparties that would be eligible for consideration as repurchase agreement counterparties under the Funds’ repurchase agreement guidelines.
As of June 30, 2009, included in the Statement of Assets and Liabilities, the Core Bond Fund had cash collateral balances in connection with swaps contracts purchased (sold) as follows:
Cash Collateral for Swaps | Due to Broker | |||||
Core Bond Fund | $ | 1,021,231 | $ | 980,000 |
Credit Default Swaps
FASB issued FASB Staff Position (“FSP”) No. 133-1 and 45-4 “Disclosures about Credit Derivatives and Certain Guarantees” which requires enhanced disclosure about the Funds’ credit derivatives. Management adopted FSP No. 133-1 and 45-4 on December 31, 2008.
The Core Bond Fund may enter into credit default swaps. A credit default swap can refer to corporate issues, asset-backed securities or an index of assets, each known as the reference entity or underlying asset. The Fund may act as either the buyer or the seller of a credit default swap. Depending on the terms of the contract, the credit default swap may be closed via physical settlement. However, if there is instability in the market, there is a risk that the Fund may be unable to deliver the underlying debt security to the other party to the agreement. Additionally, the Fund may not receive the expected amount under the swap agreement if the other party to the agreement defaults or becomes bankrupt. In an unhedged credit default swap, the Fund enters into a credit default swap without owning the underlying asset or debt issued by the reference entity. Credit default swaps allow the Fund to acquire or reduce credit exposure to a particular issuer, asset or basket of assets.
As the seller in a credit default swap, the Fund would be required to pay the par or other agreed-upon value (or otherwise perform according to the swap contract) of a reference debt obligation to the counterparty in the event of a default (or other specified credit event); the counterparty would be required to surrender the reference debt obligation. In return, the Fund would receive from the counterparty a periodic stream of payments over the term of the contract provided that no credit event has occurred. If no credit event occurs, the Fund would keep the stream of payments and would have no payment obligations. As a seller, the Fund would effectively add leverage to its portfolio because, in addition to its total net assets, that Fund would be subject to investment exposure on the notional amount of the swap.
The Fund may also purchase credit default swap contracts in order to offset the risk of default of debt securities held in its portfolio, in which case the Fund would function as the counterparty referenced in the preceding paragraph.
For the period ended June 30, 2009, the Core Bond Fund entered into credit default swaps primarily for hedging and return enhancement.
Credit default swap agreements on corporate issues involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default or other credit event. If a credit event occurs and cash settlement is not elected, a variety of other deliverable obligations may be delivered in lieu of the specific referenced obligation. The ability to deliver other obligations may result in a cheapest-to-deliver option (the buyer of protection’s right to choose the deliverable obligation with the lowest value following a credit event). A Fund may use credit default swaps on corporate issues to provide a measure of protection against defaults of the issuers (i.e., to reduce risk where a Fund owns or has exposure to the referenced obligation) or to take an active long or short position with respect to the likelihood (as measured by the credit default swap’s spread) of a particular issuer’s default.
Credit default swap agreements on asset-backed securities involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a default or other credit event. Unlike credit default swaps on corporate issues, deliverable obligations in most instances would be limited to the specific referenced obligation as performance for asset-backed securities can vary across deals. Prepayments, principal paydowns, and other write-down or loss events on the
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underlying mortgage loans will reduce the outstanding principal balance of the referenced obligation. These reductions may be temporary or permanent as defined under the terms of the swap agreement and the notional amount for the swap agreement generally will be adjusted by corresponding amounts. A Fund may use credit default swaps on asset-backed securities to provide a measure of protection against defaults (or other defined credit events) of the referenced obligation or to take an active long or short position with respect to the likelihood of a particular referenced obligation’s default (or other defined credit events).
Credit default swap agreements on credit indices involve one party making a stream of payments to another party in exchange for the right to receive a specified return in the event of a write-down, principal shortfall, interest shortfall or default of all or part of the referenced entities comprising the credit index. A credit index is of a basket of credit instruments or exposures designed to be representative of some part of the credit market as a whole. These indices are made up of reference credits that are judged by a poll of dealers to be the most liquid entities in the credit default swap market based on the sector of the index. Components of the indices may include, but are not limited to, investment grade securities, high yield securities, asset backed securities, emerging markets, and/or various credit ratings within each sector. Credit indices are traded using credit default swaps with standardized terms including a fixed spread and standard maturity dates. An index credit default swap references all the names in the index, and if there is a default, the credit event is settled based on that name’s weight in the index. The composition of the indices changes periodically, usually every six months, and for most indices, each name has an equal weight in the index. Traders may use credit-default swaps on indices to speculate on changes in credit quality.
Implied credit spreads, represented in absolute terms, utilized in determining the market value of credit default swap agreements on corporate issues as of period end are disclosed in the Schedules of Investments and generally serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default (or other defined credit event) for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of entering into a credit default swap and may include upfront payments required to be made to enter into the agreement. For credit default swap agreements on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Wider credit spreads and increasing market values, in absolute terms when compared to the notional amount of the swap, generally represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. The maximum potential amount of future payments (undiscounted) that a Fund as a seller of protection could be required to make under a credit default swap agreement would be an amount equal to the notional amount of the agreement. Notional amounts of all credit default swap agreements outstanding as of June 30, 2009 for which a Fund is the seller of protection are disclosed in the Schedules of Investments. These potential amounts would be partially offset by any recovery values of the respective referenced obligations, upfront payments received upon entering into the agreement, or net amounts received from the settlement of buy protection credit default swap agreements entered into by a Fund for the same referenced entity or entities.
Credit default swaps could result in losses if the Fund does not correctly evaluate the creditworthiness of the company or companies on which the credit default swap is based. The Fund will generally incur a greater degree of risk when it sells a credit default swap than when its purchases a credit default swap. As a buyer of credit default swap, the Fund may lose its investment and recover nothing should a credit event fail to occur and the swap is held to its termination date. As seller of a credit default swap, if a credit event were to occur, the value of any deliverable obligation received by the Fund, coupled with the upfront or periodic payments previously received, may be less than what it pays to the buyer, resulting in a loss of value to the Fund.
If the creditworthiness of the Fund’s swap counterparty declines, the risk that the counterparty may not perform could increase, potentially resulting in a loss to the Fund. To limit the counterparty risk involved in swap agreements, the Funds will only enter into swap agreements with counterparties that meet certain standards of creditworthiness. Although there can be no assurance that the Fund will be able to do so, the Fund may be able to reduce or eliminate its exposure under a swap agreement either by assignment or other disposition, or by entering into an offsetting swap agreement with the same party or another creditworthy party. The Fund may have limited ability to eliminate its exposure under a credit default swap if the credit of the reference entity or underlying asset has declined.
Swap agreements generally are entered into by “eligible participants” and in compliance with certain other criteria necessary to render them excluded from regulation under the Commodity Exchange Act (“CEA”) and, therefore not subject to regulation as futures or commodity option transactions under the CEA.
Interest Rate Swaps
The use of interest rate swaps is a highly specialized activity which involves investment techniques and risks different from those associated with ordinary portfolio securities transactions. If a money manager using this technique is incorrect in its forecast of market values, interest rates and other applicable factors, the investment performance of a Fund would diminish compared to what it would have been if this investment technique were not used.
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Interest rate swaps do not involve the delivery of securities or other underlying assets or principal. Accordingly, the risk of loss with respect to interest rate swaps is limited to the net amount of interest payments that the Funds are contractually obligated to make. If the other party to an interest rate swap defaults, the Funds’ risk of loss consists of the net amount of interest payments that the Funds are contractually entitled to receive. Since interest rate swaps are individually negotiated, the Funds expect to achieve an acceptable degree of correlation between their rights to receive interest on their portfolio securities and their rights and obligations to receive and pay interest pursuant to interest rate swaps.
For the period ended June 30, 2009, the Core Bond Fund entered into interest rate swaps primarily for hedging and return enhancement.
Index Swaps
Certain Funds may enter into index swap agreements as an additional hedging strategy for cash reserves held by those Funds or to effect investment transactions consistent with these 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).
For the period ended June 30, 2009, the Core Bond Fund entered into index rate swaps primarily for hedging and return enhancement.
Investments in Emerging Markets
Investing in emerging markets may involve special risks and considerations not typically associated with investing in the United States markets. These risks include revaluation of currencies, high rates of inflation, repatriation, restrictions on income and capital, and future adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls, delayed settlements, and their prices may be more volatile than those of comparable securities in the United States.
Repurchase Agreements
The Core Bond Fund may enter into repurchase agreements. A repurchase agreement is an agreement under which the Fund acquires a fixed income security from a commercial bank, broker or dealer and simultaneously agrees to resell such security to the seller at an agreed upon price and date (normally the next business day). The resale price reflects an agreed upon interest rate effective for the period the security is held by the Fund and is unrelated to the interest rate on the security. The securities acquired by the Fund constitute collateral for the repurchase obligation. In these transactions, the securities acquired by the Fund (including accrued interest earned thereon) must have a total value in excess of the value of the repurchase agreement and must be held by the custodian bank until repurchased. In addition, RIMCo will monitor the Fund’s repurchase agreement transactions generally and will evaluate the credit worthiness of any bank, broker or dealer party to a repurchase agreement with the Fund. The Fund will not invest more than 15% of its net assets (taken at current market value) in repurchase agreements maturing in more than seven days.
Mortgage-Related and Other Asset-Backed Securities
The Core Bond Fund may invest in mortgage or other asset-backed securities. These securities may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. The value of a Fund’s mortgage-backed securities (“MBS”) may be affected by, among other things, changes or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the mortgage, or the quality of the underlying assets. The quality and value of the underlying assets may decline, or default. This has become an increasing risk for collateral related to sub-prime, Alt-A and non-conforming mortgage loans, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.
MBS often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of a Fund’s portfolio at the time the Fund receives the payments for reinvestment.
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Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.
MBS may have less potential for capital appreciation than comparable fixed income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.
Through its investments in MBS, including those that are issued by private issuers, the Fund has exposure to subprime loans, Alt-A loans and non-conforming loans as well as to the mortgage and credit markets generally. Private issuers include commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called special purpose vehicles or SPVs) and other entities that acquire and package mortgage loans for resale as MBS. These privately issued non-governmental MBS may offer higher yields than those issued by government entities, but also may be subject to greater price changes than governmental issues. Subprime loans refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. Alt-A loans refers to loans extended to borrowers who have incomplete documentation of income, assets, or other variables that are important to the credit underwriting processes. Non-conforming mortgages are loans that do not meet the standards that allow purchase by government-sponsored enterprises. MBS with exposure to subprime loans, Alt-A loans or non-conforming loans have had in many cases higher default rates than those loans that meet government underwriting requirements. The risk of non-payment is greater for MBS that are backed by mortgage pools that contain subprime, Alt-A and non-conforming loans, but a level of risk exists for all loans.
Unlike MBS issued or guaranteed by the U.S. government or a government sponsored entity (e.g., Fannie Mae (the Federal National Mortgage Association) and Freddie Mac (the Federal Home Loan Mortgage Corporation)), MBS issued by private issuers do not have a government or government-sponsored entity guarantee, but may have credit enhancements provided by external entities such as banks or financial institutions or achieved through the structuring of the transaction itself. Examples of such credit support arising out of the structure of the transaction include the issue of senior and subordinated securities (e.g., the issuance of securities by an SPV in multiple classes or “tranches,” with one or more classes being senior to other subordinated classes as to the payment of principal and interest, with the result that defaults on the underlying mortgage loans are borne first by the holders of the subordinated class); creation of “reserve funds” (in which case cash or investments, sometimes funded from a portion of the payments on the underlying mortgage loans, are held in reserve against future losses); and “overcollateralization” (in which case the scheduled payments on, or the principal amount of, the underlying mortgage loans exceeds that required to make payment on the securities and pay any servicing or other fees). However, there can be no guarantee that credit enhancements, if any, will be sufficient to prevent losses in the event of defaults on the underlying mortgages loans. In addition, MBS that are issued by private issuers are not subject to the underwriting requirements for the underlying mortgage that are applicable to those MBS that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying private MBS may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored MBS and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Privately issued pools more frequently include second mortgages, high loan-to-value mortgages and manufactured housing loans. The coupon rates and maturities of the underlying mortgage loans in a private-label MBS pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans.
Privately issued MBS are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, MBS held in a Fund’s portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.
Asset-backed securities may include MBS, loans, receivables or other assets. The value of the Fund’s asset-backed securities may be affected by, among other things, actual or perceived changes in interest rates, factors concerning the interests in and structure of the issuer or the originator of the receivables, the market’s assessment of the quality of underlying assets or actual or perceived changes in the credit worthiness of the individual borrowers, the originator, the servicing agent or the financial institution providing the credit support.
Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities. Rising or high interest rates tend to extend the duration of asset-backed securities, making them more volatile and more sensitive to changes in interest rates. The underlying assets are sometimes subject to prepayments which can shorten the security’s weighted average life and may lower its return. Defaults on loans underlying asset-backed securities have become an increasing risk for asset-backed securities that are secured by home-equity loans related to sub-prime, Alt-A or non-conforming mortgage loans, especially in a declining residential real estate market.
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Asset-backed securities (other than MBS) present certain risks that are not presented by MBS. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of asset-backed securities may be affected by legislative or regulatory developments. It is possible that such developments may require the Fund to dispose of any then existing holdings of such securities.
To be announced (“TBA”) is a forward mortgage-backed securities trade. The securities are purchased and sold on a forward commitment basis with an approximate principal amount and maturity date. The actual principal amount and maturity date will be determined upon settlement when the specific mortgage pools are assigned. As of June 30, 2009, the Core Bond Fund had cash collateral balances in connection with TBAs totaling $132,000.
Inflation-Indexed Bonds
The Core Bond Fund may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity.
Guarantees
In the normal course of business the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote.
Market and Credit Risk
In the normal course of business the Funds trade financial instruments and enter into financial transactions where risk of potential loss exists due to changes in the market (market risk) or failure of the other party to a transaction to perform (credit risk). Similar to credit risk, the Funds may be exposed to counterparty risk or risk that an institution or other entity with which the Funds have unsettled or open transactions will default. The potential loss could exceed the value of the assets recorded in the financial statements (the “Assets”). Assets which potentially expose the Funds to credit risk consist principally of cash due from counterparties and investments. The extent of the Funds’ exposure to credit and counterparty risks in respect to the Assets approximates their carrying value as recorded in the Funds’ Statements of Assets and Liabilities.
On September 15, 2008, Lehman Brothers Holdings Inc. filed for protection under Chapter 11 of the United States Bankruptcy Code. On September 19, 2008, a proceeding under the Securities Investor Protection Act (SIPA) was commenced with respect to Lehman Brothers Inc., a broker-dealer. A trustee appointed under SIPA is administering the bankruptcy estate of Lehman Brothers Inc. Lehman Brothers International (Europe) was placed in administration under the UK Insolvency Act on September 15, 2008. Lehman Brothers Special Financing Inc., among other Lehman subsidiaries, filed for protection under Chapter 11 of the United States Bankruptcy Code on October 3, 2008. In connection with these filings, the Lehman Brothers group of companies (collectively “Lehman Brothers”) will be reorganized and/or liquidated in an orderly fashion, subject to court approval. Each Lehman Brothers entity is a separate legal entity that is subject to its own bankruptcy proceeding.
The court overseeing the Lehman Brothers Inc. case has set a claims filing deadline of January 30, 2009 for all customer claims and June 1, 2009 for all general creditor claims related to Lehman Brothers Inc. To the extent that the Funds held accounts with
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Lehman Brothers Inc., the Funds filed the appropriate customer claims on January 29, 2009. The court overseeing the bankruptcy proceedings for the remaining U.S. Lehman entities has set a claims filing deadline of September 22, 2009 for all claims affecting the Funds.
The Core Bond Fund and Non-U.S. Fund had direct holdings swap agreements, and securities and derivatives transactions outstanding with Lehman Brothers entities as issuers or counterparties at the time the relevant Lehman Brothers entities filed for protection or were placed in administration. The direct holdings associated with Lehman Brothers have been written down to their estimated recoverable values. Unrealized gain on foreign exchange swaps or other derivatives transactions have been written down to zero, while anticipated losses for such transactions associated with Lehman Brothers have been incorporated as components of other liabilities on the Statement of Assets and Liabilities and net changes in realized gain (loss) or unrealized appreciation (depreciation) on the Statements of Operations.
RIMCo or the Funds’ Money Managers have delivered notices of default and early termination to the relevant Lehman Brothers entities where required. For transactions with Lehman Brothers counterparties, RIMCo or the Funds’ Money Managers have terminated trades, obtained quotations from brokers for replacement trades and, where deemed appropriate, re-opened positions with new counterparties.
3. | Investment Transactions |
Securities
During the period ended June 30, 2009, purchases and sales of investment securities (excluding U.S. Government and Agency obligations, short-term investments, options, futures and repurchase agreements) were as follows:
Funds | Purchases | Sales | ||||
Multi-Style Equity | $ | 183,414,394 | $ | 181,227,928 | ||
Aggressive Equity | 112,779,521 | 112,975,931 | ||||
Non-U.S. | 206,577,661 | 192,134,885 | ||||
Core Bond | 65,511,562 | 61,084,295 | ||||
Real Estate Securities | 160,407,418 | 146,158,650 |
Purchases and sales of U.S. Government and Agency obligations (excluding short-term investments, options, futures and repurchase agreements) were as follows:
Funds | Purchases | Sales | ||||
Core Bond | $ | 168,390,981 | $ | 170,480,412 |
Written Options Contracts
Transactions in written options contracts for the period ended June 30, 2009 were as follows:
Core Bond | |||||||
Number of Contracts | Premiums Received | ||||||
Outstanding December 31, 2008 | 59 | $ | 579,985 | ||||
Opened | 47 | 54,881 | |||||
Closed | (11 | ) | (542,983 | ) | |||
Expired | (88 | ) | (70,668 | ) | |||
Outstanding June 30, 2009 | 7 | $ | 21,215 | ||||
Securities Lending
The Investment Company has a securities lending program whereby each Fund can loan securities with a value up to 33 1/3% of each Fund’s total assets. The Fund receives cash (U.S. currency), U.S. Government or U.S. Government agency obligations as collateral against the loaned securities. To the extent that a loan is collateralized by cash, such collateral is invested by the securities lending agent, State Street Corporation (“State Street”), in short-term instruments, money market mutual funds and other short-term investments that meet certain quality and diversification requirements. Cash collateral invested in money market funds is included in the Schedule of Investments. The collateral received is recorded on a lending Fund’s statement of assets and liabilities along with the related obligation to return the collateral.
Income generated from the investment of cash collateral, less negotiated rebate fees paid to participating brokers and transaction costs, is divided between the Fund and State Street and is recorded as income for the Fund. To the extent that a loan is secured by
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non-cash collateral, brokers pay the Fund negotiated lenders’ fees, which are divided between the Fund and State Street and are recorded as securities lending income for the Fund. All collateral received will be in an amount at least equal to 102% (for loans of U.S. securities) or 105% (for Non-U.S. securities) of the market value of the loaned securities at the inception of each loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Fund the next day. Should the borrower of the securities fail financially, there is a risk of delay in recovery of the securities or loss of rights in the collateral. Consequently, loans are made only to borrowers which are deemed to be of good financial standing.
The Funds that participate in securities lending have cash collateral invested in the State Street Securities Lending Quality Trust Fund (“SLQT”). The short-term portfolio instruments held by SLQT are valued on the basis of amortized cost. Issuances and redemptions of interests in SLQT are made on each business day (“valuation date”). Currently, interests in SLQT are purchased and redeemed at a constant net asset value of $1.00 per unit for daily operational liquidity purposes, although redemptions for certain other purposes may be in-kind. In the event that a significant disparity develops between the net asset value based on amortized cost and the market based net asset value of SLQT, the Trustee of SLQT may determine that continued redemption at a constant $1.00 net asset value would create inequitable results for the SLQT’s interest holders. In these circumstances, the Trustee of SLQT, in its sole discretion and acting on behalf of the SLQT interest holders, may direct that interests be redeemed at the market-based net asset value until such time as the disparity between the market-based and the constant net asset value per unit is deemed to be insignificant.
At June 30, 2009, the SLQT Fund was transacting at its amortized cost value of $1.00 per unit for daily operational liquidity purposes. The SLQT’s market value per unit is lower than its amortized cost value per unit. Effective February 10, 2009, the Funds began valuing the units of SLQT for purposes of the Funds’ daily valuation calculation at the unit’s market value rather than the unit’s amortized cost value.
As of June 30, 2009, the non-cash collateral received for the securities on loan in the following funds was:
Funds | Non-Cash Collateral Value | Non-Cash Collateral Holding | |||
Multi-Style Equity | $ | 121,018 | Pool of US Government Securities and Corporate Bonds | ||
Aggressive Equity | $ | 6,993 | Pool of US Government Securities and Corporate Bonds |
Custodian
The Funds have entered into arrangements with their Custodian whereby custody credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ expenses. During the period ended June 30, 2009, the Funds’ custodian fees were reduced by the following amounts under these arrangements which are included in expense reductions on the Statements of Operations:
Funds | Custody Credit Amount | ||
Multi-Style Equity | $ | 51 | |
Aggressive Equity | 21 | ||
Non-U.S. | 44 | ||
Core Bond | 15 | ||
Real Estate Securities | 1 |
Brokerage Commissions
The Funds effect certain transactions through LJR Recapture Services, division of BNY ConvergeEX Execution Solution LLC (“LJR”) and its global network of correspondent brokers. LJR is a registered broker and is not an affiliate of the Funds or RIMCo. Trades placed through LJR and its correspondents are used to generate commission rebates to the Funds on whose behalf the trades were made. For purposes of trading to generate commission rebates to the Funds, the Funds’ money managers are requested to and RIMCo may, with respect to transactions it places, effect transactions with or through LJR and its correspondents or other brokers only to the extent that the Funds will receive competitive execution, price and commissions. In addition, RIMCo recommends targets for the amount of trading that money managers allocate through LJR based upon asset class, investment style and other factors.
LJR may also rebate to the Funds a portion of commissions earned on certain trading by the Funds through LJR and their correspondents in the form of commission recapture. Commission recapture is paid solely to those Funds generating the applicable trades. Commission recapture is generated on the instructions of the Soft Dollar Committee once RIMCo’s research budget has been met, as determined annually in the Soft Dollar Committee budgeting process.
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Additionally, the Fund paid brokerage commissions to non-affiliated brokers who provided brokerage and research services to the Adviser.
4. | Related Party Transactions, Fees and Expenses |
Adviser and Administrator
RIMCo is the Funds’ adviser and RFSC, a wholly-owned subsidiary of RIMCo, is the Funds’ administrator. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides ongoing money manager research and trade placement services to RIF and RIMCo.
The Investment Company Funds are permitted to invest their cash reserves (i.e., cash awaiting investment or cash held to meet redemption requests or to pay expenses) in the Russell Investment Company (“RIC”) Russell Money Market Fund. As of June 30, 2009, $78,640,000 represents Investment Company Funds in the RIC Russell Money Market Fund. RIC is a registered investment company that employs the same investment adviser as the Investment Company.
The advisory and administrative fees are based upon the average daily net assets of each Fund at the rates specified in the table below, are payable monthly and total $4,544,581 and $303,551 respectively, for the period ended June 30, 2009.
Annual Rate | ||||||
Funds | Adviser | Administrator | ||||
Multi-Style Equity | 0.73 | % | 0.05 | % | ||
Aggressive Equity | 0.90 | 0.05 | ||||
Non-U.S. Equity | 0.90 | 0.05 | ||||
Core Bond | 0.55 | 0.05 | ||||
Real Estate Securities | 0.80 | 0.05 |
RIMCo agreed to certain waivers of its advisory fees as follows:
For the Multi-Style Equity Fund, RIMCo had contractually agreed to waive, until April 29, 2009, a portion of its 0.73% advisory fee, up to the full amount of that fee, equal to the amount by which the Fund’s total direct Fund-level operating expenses exceeded 0.87% of the Fund’s average daily net assets on an annual basis and then to reimburse the Fund for all remaining expenses, after fee waivers, that exceeded 0.87% of the average daily net assets on an annual basis. Direct Fund-level expenses did not include expenses of other investment companies in which the Fund invested which were borne indirectly by the Fund. The total amount of the waiver for the period ended June 30, 2009 was $33,626. There were no reimbursements during the period.
For the Aggressive Equity Fund, RIMCo had contractually agreed to waive, until April 29, 2009, a portion of its 0.90% advisory fee, up to the full amount of that fee, equal to the amount by which the Fund’s total direct Fund-level operating expenses exceeded 1.05% of the Fund’s average daily net assets on an annual basis and to then reimburse the Fund for all remaining expenses, after fee waivers, that exceeded 1.05% of the average daily net assets on an annual basis. Direct Fund-level expenses did not include expenses of other investment companies in which the Fund invested which were borne indirectly by the Fund.
For the Aggressive Equity Fund, effective May 1, 2009, RIMCo has contractually agreed, until April 30, 2010, to waive 0.06% of its 0.90% advisory fee. The waiver may not be terminated during the relevant period except at the Board’s discretion. The total amount of the waiver for the period ended June 30, 2009 was $101,928. There were no reimbursements during the period.
For the Non-U.S. Fund, RIMCo had contractually agreed to waive, until April 29, 2009, a portion of its 0.90% advisory fee, up to the full amount of that fee, equal to amount by which the Fund’s total direct Fund-level operating expenses exceeded 1.15% of the Fund’s average daily net assets on an annual basis and to then reimburse the Fund for all remaining expenses, after fee waivers, that exceeded 1.15% of the average daily net assets on an annual basis. Direct Fund-level expenses did not include expenses of other investment companies in which the Fund invested which were borne indirectly by the Fund.
For the Non-U.S. Fund, effective May 1, 2009, RIMCo has contractually agreed, until April 30, 2010, to waive 0.06% of its 0.90% advisory fee. The waiver may not be terminated during the relevant period except at the Board’s discretion. The total amount of the waiver for the period ended June 30, 2009 was $153,173. There were no reimbursements during the period.
For the Core Bond Fund RIMCo had contractually agreed to waive, until April 29, 2009, a portion of its 0.55% advisory fee, up to the full amount of that fee, equal to the amount by which the Fund’s total direct Fund-level operating expenses exceeded 0.70% of the Fund’s average daily net assets on an annual basis and to then reimburse the Fund for all remaining expenses, after fee waivers, that exceeded 0.70% of the average daily net assets on an annual basis Direct Fund-level expenses did not include expenses of other investment companies in which the Fund invested which were borne indirectly by the Fund.
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For the Core Equity Fund, effective May 1, 2009, RIMCo has contractually agreed, until April 30, 2010, to waive 0.07% of its 0.55% advisory fee. The waiver may not be terminated during the relevant period except at the Board’s discretion. The total amount of the waiver for the period ended June 30, 2009 was $107,384. There were no reimbursements during the period.
For the Real Estate Securities Fund, RIMCo had contractually agreed to waive, until April 29, 2009, a portion of its 0.80% advisory fee, up to the full amount of that fee, equal to the amount by which the Fund’s total direct Fund-level operating expenses exceeded 1.10% of the Fund’s average daily net assets on an annual basis and then to reimburse the Fund for all remaining expenses, after fee waivers, that exceeded 1.10% of the average daily net assets on an annual basis. Direct Fund-level expenses did not include expenses of other investment companies in which the Fund invested which were borne indirectly by the Fund. There were no amounts waived or reimbursed during the period.
Transfer and Dividend Disbursing Agent
RFSC serves as Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RFSC is paid a fee for transfer agency and dividend disbursing services provided to the Funds. RFSC retains a portion of this fee for services provided to the Funds and pays the balance to unaffiliated agents who assist in providing these services. Total transfer agency fees paid by the Funds presented herein for the period ended June 30, 2009 were $26,712.
Accrued Fees Payable to Affiliates
Accrued fees payable to affiliates as of June 30, 2009 were as follows:
Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | |||||||||||
Administrative fees | $ | 12,861 | $ | 5,283 | $ | 11,139 | $ | 13,376 | $ | 12,256 | |||||
Advisory fees | 185,909 | 82,302 | 180,128 | 124,122 | 196,100 | ||||||||||
Transfer agent fees | 1,120 | 467 | 967 | 1,133 | 1,073 | ||||||||||
Trustees’ fees | 1,627 | 777 | 1,360 | 1,437 | 1,968 | ||||||||||
$ | 201,517 | $ | 88,829 | $ | 193,594 | $ | 140,068 | $ | 211,397 | ||||||
Distributor
Russell Financial Services, Inc. (the “Distributor’), a wholly-owned subsidiary of RIMCo, serves as distributor for RIF, pursuant to the Distribution Agreement with the Investment Company. The Distributor receives no compensation from the Investment Company for its services.
Affiliated Brokerage Commissions
The Funds will effect certain transactions through Russell Implementation Services Inc. (“RIS”) and its global network of unaffiliated correspondent brokers. RIS is a registered broker and investment adviser and an affiliate of RIMCo. Trades placed through RIS and its correspondents are made (i) to manage trading associated with changes in managers, rebalancing across existing managers, cash flows and other portfolio transitions or (ii) to execute portfolio securities transactions for each Fund’s assets that RIMCo determines not to allocate to money managers and for each Fund’s cash reserves.
Board of Trustees
The Russell Fund Complex consists of RIC, which has 38 Funds, and RIF, which has nine Funds. Each of the Trustees is a Trustee of both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 per year, $6,500 for each regular quarterly meeting attended in person, $2,500 for each special meeting attended in person, and $2,500 for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 fee for attending the quarterly and special meetings and a $500 fee for attending the committee meeting by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee Chair is paid a fee of $6,000 per year. The chairman of the Board receives additional annual compensation of $52,000.
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5. | Federal Income Taxes |
At December 31, 2008, the following Funds had net tax basis capital loss carryforwards which may be applied against any realized net taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Available capital loss carryforwards and expiration dates are as follows:
Funds | 12/31/16 | Totals | ||||
Multi-Style Equity | $ | 47,156,528 | $ | 47,156,528 | ||
Aggressive Equity | 35,188,160 | 35,188,160 | ||||
Non-U.S. | 51,015,389 | 51,015,389 | ||||
Real Estate Securities | 26,296,790 | 26,296,790 |
At June 30, 2009, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | ||||||||||||||||
Cost of Investments for Tax Purposes | $ | 355,246,355 | $ | 187,505,243 | $ | 319,693,114 | $ | 450,361,792 | $ | 432,360,206 | ||||||||||
Unrealized Appreciation | $ | 76,186,625 | $ | 96,891,292 | $ | 9,645,413 | $ | 8,299,544 | $ | 77,699,875 | ||||||||||
Unrealized Depreciation | (100,547,655 | ) | (102,965,845 | ) | (47,555,424 | ) | (34,239,389 | ) | (149,539,755 | ) | ||||||||||
Net Tax Unrealized Appreciation (Depreciation) | $ | (24,361,030 | ) | $ | (6,074,553 | ) | $ | (37,910,011 | ) | $ | (25,939,845 | ) | $ | (71,839,880 | ) | |||||
6. | Fund Share Transactions (amounts in thousands) |
Share transactions for the periods ended June 30, 2009 and December 31, 2008 were as follows:
Shares | Dollars | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||
Multi-Style Equity Fund | ||||||||||||||
Proceeds from shares sold | 1,304 | 4,217 | $ | 11,443 | $ | 50,056 | ||||||||
Proceeds from reinvestment of distributions | 332 | 720 | 2,808 | 9,779 | ||||||||||
Payments for shares redeemed | (2,553 | ) | (2,477 | ) | (21,407 | ) | (31,519 | ) | ||||||
Total net increase (decrease) | (917 | ) | 2,460 | $ | (7,156 | ) | $ | 28,316 | ||||||
Aggressive Equity Fund | ||||||||||||||
Proceeds from shares sold | 807 | 1,687 | $ | 5,456 | $ | 16,796 | ||||||||
Proceeds from reinvestment of distributions | 51 | 176 | 339 | 1,622 | ||||||||||
Payments for shares redeemed | (1,353 | ) | (2,345 | ) | (8,967 | ) | (23,355 | ) | ||||||
Total net increase (decrease) | (495 | ) | (482 | ) | $ | (3,172 | ) | $ | (4,937 | ) | ||||
Non-U.S. Fund | ||||||||||||||
Proceeds from shares sold | 1,497 | 4,132 | $ | 10,292 | $ | 41,756 | ||||||||
Proceeds from reinvestment of distributions | 519 | 286 | 3,432 | 3,345 | ||||||||||
Payments for shares redeemed | (1,741 | ) | (2,955 | ) | (11,770 | ) | (30,761 | ) | ||||||
Total net increase (decrease) | 275 | 1,463 | $ | 1,954 | $ | 14,340 | ||||||||
Core Bond Fund | ||||||||||||||
Proceeds from shares sold | 2,720 | 6,353 | $ | 25,436 | $ | 64,412 | ||||||||
Proceeds from reinvestment of distributions | 814 | 2,179 | 7,480 | 21,155 | ||||||||||
Payments for shares redeemed | (3,519 | ) | (7,885 | ) | (32,533 | ) | (75,964 | ) | ||||||
Total net increase (decrease) | 15 | 647 | $ | 383 | $ | 9,603 | ||||||||
Real Estate Securities Fund | ||||||||||||||
Proceeds from shares sold | 3,122 | 3,828 | $ | 23,145 | $ | 46,717 | ||||||||
Proceeds from reinvestment of distributions | 996 | 585 | 6,892 | 8,443 | ||||||||||
Payments for shares redeemed | (1,908 | ) | (3,880 | ) | (15,492 | ) | (55,931 | ) | ||||||
Total net increase (decrease) | 2,210 | 533 | $ | 14,545 | $ | (771 | ) | |||||||
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7. | Interfund Lending Program |
The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Funds may borrow money from each other for temporary purposes. All such borrowing and lending will be subject to a participating Fund’s fundamental investment limitations. Typically, Funds will borrow from the RIC Russell Money Market Fund. The RIC Russell Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves and the portfolio manager determines it is in the best interest of the RIC Russell Money Market Fund. The Investment Company Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Russell Money Market Fund could result in a lost investment opportunity or additional borrowing costs. For the period ended June 30, 2009, the Funds presented did not borrow through the interfund lending program.
8. | Record Ownership |
As of June 30, 2009, the following table includes shareholders of record with greater than 10% of the total outstanding shares of each respective Fund. The Northwestern Mutual Life Insurance Company separate accounts were the largest shareholder in each Fund.
# of Shareholders | % | |||
Multi-Style Equity Fund | 2 | 83.1 | ||
Aggressive Equity Fund | 2 | 84.8 | ||
Non-U.S. Fund | 2 | 85.5 | ||
Core Bond Fund | 2 | 77.1 | ||
Real Estate Securities Fund | 2 | 92.3 |
9. | Restricted Securities |
Restricted securities are subject to contractual limitations on resale, are often issued in private placement transactions, and are not registered under the Securities Act of 1933 (the “Act”). The most common types of restricted securities are those sold under Rule 144A of the Act and commercial paper sold under Section 4(2) of the Act.
A Fund may invest a portion of its net assets not to exceed 15% in securities that are illiquid. This limitation is applied at the time of purchase. Illiquid securities are securities that may not be readily marketable, and that cannot be sold within seven days in the ordinary course of business at the approximate amount at which the Fund has valued the securities. Restricted securities are generally considered to be illiquid.
The following table lists restricted securities held by a Fund that are illiquid. The following table does not include (1) securities deemed liquid by RIMCo or a money manager pursuant to Board approved policies and procedures or (2) illiquid securities that are not restricted securities as designated on the Fund’s Schedule of Investments.
Fund - % of Net Assets Securities | Acquisition Date | Principal Amount ($) or Shares | Cost per Unit $ | Cost (000) $ | Market Value (000) $ | |||||
Aggressive Equity Fund - 0.9% | ||||||||||
Intersections Inc. | 03/10/08 | 26,666 | 8.24 | 220 | 124 | |||||
Perceptron Inc. | 03/10/08 | 45,969 | 9.73 | 447 | 158 | |||||
Tier Technologies Inc. | 03/10/08 | 50,456 | 7.70 | 389 | 387 | |||||
White Electronic Designs Corp. | 03/10/08 | 91,502 | 4.34 | 397 | 424 | |||||
1,093 | ||||||||||
Core Bond Fund - 1.2% | ||||||||||
Adam Aircraft Term Loan | 02/13/08 | 55,855 | 99.05 | 55 | 6 | |||||
Apidos CDO | 01/29/09 | 500,000 | 70.89 | 354 | 379 | |||||
ARES CLO Funds | 01/15/09 | 730,000 | 72.86 | 532 | 603 | |||||
Armstrong Loan Funding, Ltd. | 05/21/09 | 839,935 | 86.20 | 724 | 736 | |||||
BNP Paribas Capital Trust | 06/01/06 | 450,000 | 112.14 | 505 | 381 | |||||
Black Diamond CLO, Ltd. | 09/11/08 | 1,000,000 | 83.02 | 830 | 748 | |||||
CIT Mortgage Loan Trust | 10/05/07 | 180,000 | 100.00 | 180 | 49 | |||||
CIT Mortgage Loan Trust | 10/05/07 | 260,505 | 100.00 | 261 | 195 | |||||
Catlin Insurance Co., Ltd. | 01/11/07 | 100,000 | 100.00 | 100 | 56 |
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Fund - % of Net Assets Securities | Acquisition Date | Principal Amount ($) or Shares | Cost per Unit $ | Cost (000) $ | Market Value (000) $ | |||||
DG Funding Trust | 11/04/03 | 49 | 10,537.12 | 516 | 422 | |||||
Freddie Mac REMICS | 07/07/06 | 90,096 | 102.10 | 92 | 82 | |||||
Freddie Mac REMICS | 06/28/07 | 45,538 | 0.10 | — | — | |||||
Freddie Mac REMICS | 07/17/07 | 42,477 | 100.00 | 42 | 42 | |||||
Qtel International Finance, Ltd. | 06/02/09 | 120,000 | 99.27 | 119 | 122 | |||||
Symetra Financial Corp. | 06/26/06 | 150,000 | 98.47 | 148 | 114 | |||||
UBS AG | 01/11/08 | 270,000 | 43.40 | 117 | 56 | |||||
Washington Mutual Mortgage Pass Through Certificates | 04/01/05 | 195,769 | 100.00 | 196 | 8 | |||||
3,999 | ||||||||||
Illiquid securities and restricted securities may be priced by the Funds using fair value procedures approved by the Board of Trustees.
10. | Dividends |
On July 1, 2009, the Board declared the following dividends payable from net investment income. Dividends were paid on July 6, 2009, to shareholders of record July 2, 2009.
Funds | Net Investment Income | ||
Multi-Style Equity | $ | 0.0253 | |
Aggressive Equity | 0.0109 | ||
Core Bond | 0.1148 | ||
Real Estate Securities | 0.0678 |
11. | Subsequent Events |
Management has evaluated events or transactions that may have occurred since June 30, 2009, that would merit recognition or disclosure in the financial statements. This evaluation was completed through August 14, 2009, the date the financial statements were issued.
84 | Notes to Financial Statements |
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Russell Investment Funds
Basis for Approval of Investment Advisory Contracts (Unaudited)
Approval of Investment Advisory Agreement
The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the “RIMCo Agreement”) and the portfolio management contract with each Money Manager of the Funds (collectively, the “portfolio management contracts”) at a meeting held on April 21, 2009. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Funds, sales and redemptions of the Funds’ shares, management of the Funds by RIMCo and compliance with applicable regulatory requirements. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds; and (2) information (the “Third-Party Information”) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and their respective operating expenses over various periods of time with other peer funds (“Comparable Funds”) not managed by RIMCo, believed by the provider to be generally comparable in investment objectives to the Funds. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Funds discussing the legal standards for their consideration of the continuations of the RIMCo Agreement and the portfolio management contracts and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.
On April 20, 2009, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or the Funds’ management were present. At the April 21 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contracts with management, counsel to the Funds and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Funds and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.
In evaluating the portfolio management contracts, the Board considered that the Funds, in employing a manager-of-managers method of investment, operate in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which, in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. RIMCo has engaged multiple unaffiliated Money Managers for all Funds.
The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for determining, implementing and maintaining the investment program for each Fund. Assets of each Fund generally have been allocated among the multiple Money Managers selected by RIMCo, subject to Board approval, for that Fund. RIMCo manages directly a portion of certain Funds’ assets employing a “select holdings strategy,” as described below, and directly manages the investment of each Fund’s cash reserves. RIMCo also may manage directly any portion of each Fund’s assets that RIMCo determines not to allocate to the Money Managers and portions of a Fund during transitions between Money Managers. In all cases, assets are managed directly by RIMCo pursuant to authority provided by the RIMCo Agreement.
RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Fund and for actively managing allocations and reallocations of assets among the Money Managers. The Board has been advised that RIMCo’s goal is to construct and manage diversified portfolios in a risk-aware manner. Each Money Manager for a Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Fund assigned to it by RIMCo (each, a “segment”) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in a Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for a Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager or to coordinate the investment activities of Money Managers for the Fund in a complementary manner. Therefore, RIMCo’s selection of Money Managers is made not only on the basis of performance considerations but anticipated compatibility with other Money Managers in the same Fund. In light of the foregoing, the overall performance of each Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Fund’s investment program, structuring the Fund, selecting an effective Money
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Basis for Approval of Investment Advisory Contracts, continued (Unaudited)
Manager with a particular investment style or sub-style for a segment that is complementary to the styles of the Money Managers of other Fund segments, and allocating assets among the Money Managers in a manner designed to achieve the objectives of the Fund.
The Board considered that the prospectuses for the Funds and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for each Fund, rather than the investment selection role of the Funds’ Money Managers, and describe the manner in which the Funds operate so that investors may take that information into account when deciding to purchase shares of any such Fund.
The Board also considered the demands and complexity of managing the Funds pursuant to the manager-of-managers structure, the special expertise of RIMCo with respect to the manager-of-managers structure of the Funds and the likelihood that, at the current expense ratio of each Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of such Fund selected by shareholders in purchasing their shares.
In addition to these general factors relating to the manager-of-managers structure of the Funds, the Trustees considered, with respect to each Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:
1. | The nature, scope and quality of the services provided, and expected to be provided, to the Fund by RIMCo; |
2. | The advisory fee paid by the Fund to RIMCo (the “Advisory Fee”) and the fact that it encompasses all investment advisory fees paid by the Fund, including the fees for any Money Managers of such Fund; |
3. | Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund, including any administrative, transfer agent or cash management fees and fees received for management of securities lending cash collateral, soft dollar arrangements and commissions in connection with portfolio securities transactions; |
4. | Information provided by RIMCo as to expenses incurred by the Fund; and |
5. | Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund. |
In evaluating the nature, quality and scope of services provided and which are expected to be provided to the Funds, including Fund portfolio management services, the Board considered the possible impact of changes in RIMCo’s senior management during the course of 2008 and 2009 and a restructuring of the Russell organization, which was announced to the Board in January 2009 and detailed to the Board on April 15, 2009 and included a significant reduction in Russell’s workforce. Prior to the Independent Trustees’ private meeting on April 20 and at the April 21 meeting of the Board of Trustees, senior representatives of Russell and RIMCo discussed this organizational restructuring with the Board and assured the Board that the restructuring would not result in a diminution of the nature, quality or scope of the services provided to the Funds. The Board also discussed with these representatives the impact of developments over the past year in the financial services industry upon the financial resources available to the Russell organization.
As noted above, RIMCo, pursuant to the terms of the RIMCo Agreement, directly managed during the past year, and continues to manage, a portion—up to 10%—of the assets of the RIF Multi-Style Equity Fund (the “Participating Fund”) during the past year, utilizing a select holdings strategy, the actual allocation being determined by the Participating Fund’s RIMCo portfolio manager. The select holdings strategy utilized by RIMCo in managing such assets for the Participating Fund is designed to increase the Participating Fund’s exposure to stocks that are viewed as attractive by multiple Money Managers of the Participating Fund. The Board reviewed the results of the select holdings strategy in respect of the Participating Fund during the past year. The Trustees considered that RIMCo is not required to pay investment advisory fees to a Money Manager with respect to assets for which the select holdings strategy is utilized and that the profits derived by RIMCo generally and from the Participating Fund consequently may increase incrementally. The Board, however, also considered RIMCo’s advice that it pays certain Money Managers additional fees for providing information and other services in connection with the select holdings strategy and incurs additional costs in carrying out the select holdings strategy, the limited amount of assets that are managed directly by RIMCo pursuant to the select holdings strategy, and the fact that the aggregate investment advisory fees paid by the Participating Fund are not increased as a result of the select holdings strategy.
In evaluating the reasonableness of the Funds’ Advisory Fees in light of Fund performance, the Board considered that, in the Agreement Renewal Information and at past meetings, RIMCo noted differences between the investment strategies of certain Funds and their respective Comparable Funds in pursuing their investment objectives, including fund strategies which seek to achieve a lower tracking error (i.e., the difference, whether positive or negative, between the return of a fund and its benchmark) and resulting lower return volatility than their Comparable Funds. According to RIMCo, these strategies may be expected to result, and for certain Funds during the periods covered by the Third-Party Information did result, in lower performance than that of some of their Comparable Funds. According to RIMCo, the strategies pursued by the Funds, among other things, are intended to result in less volatile, more moderate returns relative to each Fund’s performance benchmark rather than more volatile, more extreme returns that its Comparable Funds may experience over time.
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Basis for Approval of Investment Advisory Contracts, continued (Unaudited)
With respect to the Funds’ Advisory Fees, the Third-Party Information showed that the RIF Multi-Style Equity Fund and RIF Core Bond Fund each had an Advisory Fee which on a contractual basis, an actual basis (i.e., giving effect to any voluntary fee waivers implemented by RIMCo and the advisers to such Fund’s Comparable Funds) or on both a contractual and actual basis was ranked more than 5 basis points below the third quintile, in either the fourth or fifth quintile, for the 1-year period ended December 31, 2008. The Board considered RIMCo’s advice as to the reasons for these Funds’ Advisory Fee rankings and its undertaking to continue to monitor those fees against the Funds’ Comparable Funds’ fees. The Board also noted RIMCo’s advice that the total expenses for each of these Funds ranked in the third quintile for the 1-year period ended December 31, 2008.
In discussing the Funds’ Advisory Fees generally, RIMCo noted, among other things, that its Advisory Fees for the Funds encompass services that may not be provided by investment advisers to the Funds’ Comparable Funds, such as cash equitization and management of portfolio transition costs when Money Managers are added, terminated or replaced. RIMCo also explained that its “margins” in providing investment advisory services to the Funds tend to be lower than competitors’ margins because of the demands and complexities of managing the Funds’ manager-of-managers structure, including RIMCo’s payment of a significant portion of the Funds’ Advisory Fees to their Money Managers.
The Board considered for each Fund whether economies of scale have been realized and whether the Advisory Fee for such Fund appropriately reflects or should be revised to reflect any such economies. During 2008, the Board noted that, generally, there was a reduction in the Funds’ assets as a result of market declines and related investor redemptions. The Board determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the Advisory Fee for each Fund appropriately reflect any economies of scale realized by that Fund, based upon any decline in assets during 2008 and such factors as the variability of Money Manager investment advisory fees and other factors associated with the manager-of-managers structure employed by the Funds.
The Board considered, as a general matter, that fees payable to RIMCo by institutional clients with investment objectives similar to those of the Funds and other RIC funds under the Board’s supervision are lower, and may, in some cases, be substantially lower, than the rates paid by RIC funds supervised by the Board, including the Funds. The Trustees considered the differences in the scope of services RIMCo provides to institutional clients and the Funds. In response to the Trustees’ inquiries, RIMCo, as it has in the past, noted, among other things, that institutional clients have fewer administrative needs than the Funds. RIMCo also noted that since the Funds must constantly issue and redeem their shares, they are more difficult to manage than institutional accounts, where assets are relatively stable. In addition, RIMCo noted that the Funds are subject to heightened regulatory requirements relative to institutional clients. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.
With respect to the Funds’ total expenses, the Board noted that none of the Funds was ranked more than 5 basis points below the third quintile of its Comparable Funds for the period ended December 31, 2008.
On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years, or presented at or in connection with the April 21 Board meeting by RIMCo, the Board, in respect of each Fund, found, after giving effect to any applicable waivers and/or reimbursements (1) the Advisory Fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided, and expected to be provided, to the Funds; (2) the relative expense ratio of the Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.
The Board further concluded that, under the circumstances, the performance of each of the Funds supported continuation of the RIMCo Agreement, except the Board concluded, as discussed herein, that a determination against continuation of the RIMCo Agreement with respect to the RIF Aggressive Equity Fund would not be in the interests of that Fund’s shareholders even though that fund has underperformed based upon the Third-Party Information. The Board, in assessing the Funds’ performance, focused upon each Fund’s performance for the 1-, 3- and 5-year periods as most relevant.
In evaluating the performance of the Funds generally relative to their Comparable Funds, the Board noted RIMCo’s advice that many of the Funds’ Comparable Funds do not “equitize” their cash (i.e., cash awaiting investment or disbursement to satisfy redemptions or other fund obligations) and may hold large positions uninvested in their investment portfolios. By contrast, the Funds generally follow a strategy of equitizing their cash and fully investing their assets in pursuit of their investment objectives (the Funds’ strategy of equitizing cash and fully investing their assets is hereinafter referred to as their “full investment strategy”). In support of the Funds’ full investment strategy, RIMCo advised the Board of its belief that investors manage their own cash positions based upon their personal investment goals, strategies and risk tolerances and generally expect Fund assets to be fully invested. RIMCo noted that the Funds’ full investment strategy generally will detract from relative performance in a declining market, such as 2008, but may enhance the Funds’ relative performance in a rising market.
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Basis for Approval of Investment Advisory Contracts, continued (Unaudited)
With respect to the RIF Aggressive Equity Fund, the Third-Party Information showed that the Fund’s performance was ranked in the fifth quintile for the 1-year period ended December 31, 2008 and in the fourth quintile for the 3- and 5-year periods ended December 31, 2008. The Trustees considered management’s explanation of the Fund’s underperformance. According to RIMCo, the financial crisis that unfolded throughout the year, along with certain portfolio positioning decisions by the Money Managers for the RIF Aggressive Equity Fund, detracted from performance. Notwithstanding the Fund’s underperformance relative to its Comparable Funds, RIMCo advised the Board that, although it remains confident in the team of Money Managers for the Fund, RIMCo will continue to research and analyze the team to look for ways to structure, risk profile and/or return potential. RIMCo also expressed its belief that the RIF Aggressive Equity Fund’s full investment strategy was a significant contributor to the Fund’s underperformance relative to its Comparable Funds.
The Board considered that the performance of certain Funds that have loaned portfolio securities has been subject to a negative impact associated with declining values of investments of cash collateral held in respect of such loans. In considering the performance of the affected Funds, the Board, among other things, considered RIMCo’s assessment of the benefits and risks of continuation of the Funds’ securities lending program notwithstanding this negative impact and steps which have been taken by RIMCo to enhance the process for selection and monitoring of investments of cash collateral held in respect of portfolio securities loans.
In evaluating performance, the Board considered each Fund’s absolute performance and performance relative to appropriate benchmarks and indices in addition to such Fund’s performance relative to its Comparable Funds. In assessing the Funds’ performance relative to their Comparable Funds or benchmarks or in absolute terms, the Board also considered RIMCo’s stated investment strategy of managing the Funds in a risk-aware manner and the extraordinary capital market conditions during 2008.
After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of each Fund and its respective shareholders and voted to approve the continuation of the RIMCo Agreement.
At the April 21 Board meeting, with respect to the evaluation of the terms of portfolio management contracts with Money Managers, the Board received and considered information from RIMCo reporting, among other things, for each Money Manager, the Money Manager’s performance over various periods; RIMCo’s assessment of the performance of each Money Manager; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Funds’ underwriter; and RIMCo’s recommendation to retain the Money Manager at the current fee rate, to retain the Money Manager at a reduced fee rate or to terminate the Money Manager. The Board received reports during the course of the year from the Funds’ Chief Compliance Officer regarding each Money Manager’s compliance program. RIMCo recommended that each Money Manager be retained at its current fee rate. RIMCo has advised the Board that it does not regard Money Manager profitability as relevant to its evaluation of the portfolio management contracts with Money Managers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by Money Managers to other clients; and RIMCo believes that the fees agreed upon with Money Managers are reasonable in light of the anticipated quality of investment advisory services to be rendered. The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the Advisory Fee paid by each Fund and the fact that each Money Manager’s fee is paid by RIMCo.
Based substantially upon RIMCo’s recommendations, together with the information received from RIMCo in support of its recommendations at the April 21 Board meeting, the Board concluded that the fees paid to the Money Managers of each Fund are reasonable in light of the quality of the investment advisory services provided and that continuation of the portfolio management contract with each Money Manager of each Fund would be in the best interests of the Fund and its shareholders.
In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management contract with any Money Manager that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of each Fund.
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Shareholder Requests for Additional Information — June 30, 2009 (Unaudited)
A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iii) at the Securities and Exchange Commission’s public reference room.
The Board has delegated to RIMCo, as RIF’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Funds may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Funds maintain a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Fund. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Funds’ Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Funds at (800) 787-7354, and (ii) on the Securities and Exchange Commission’s website at www.sec.gov.
If possible, depending on contract owner registration and address information, and unless you have otherwise opted out, only one copy of the RIF prospectus and each annual and semi-annual report will be sent to contract owners at the same address. If you would like to receive a separate copy of these documents, please contact your Insurance Company. If you currently receive multiple copies of the prospectus, annual report and semi-annual report and would like to request to receive a single copy of these documents in the future, please call your Insurance Company.
Some Insurance Companies may offer electronic delivery of the Funds’ prospectus and annual and semiannual reports. Please contact your Insurance Company for further details.
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Disclosure of Information about Fund Trustees and Officers — June 30, 2009 (Unaudited)
The following tables provide information for each officer and Trustee of the Russell Fund Complex. The Russell Fund Complex consists of RIC, which has 38 funds, and RIF, which has nine funds. Each of the Trustees is a Trustee of both RIC and RIF. The first table provides information for the interested Trustee. The second table provides information for the independent Trustees. The third table provides information for the Trustees emeritus. The fourth table provides information for the officers.
Name, Age, Address | Position(s) Held with Fund and Length of Time Served | Term of Office* | Principal Occupation(s) During the Past 5 Years | No. of Portfolios in Russell Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |||||
INTERESTED TRUSTEE | ||||||||||
# Greg J. Stark
909 A Street | President and Chief Executive Officer since 2004
Trustee since 2007 | Appointed until successor is duly elected and qualified
Until successor is chosen and qualified by Trustees | • President and CEO RIC and RIF • Chairman of the Board, President and CEO, RIMCo • Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”) • Chairman of the Board, President and CEO, Russell Financial Services, Inc. • Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”)) • Until 2004, Managing Director, of Individual Investor Services, FRC • 2000 to 2004 Managing Director, Sales and Client Service, RIMCo | 47 | None | |||||
INDEPENDENT TRUSTEES | ||||||||||
Thaddas L. Alston Born April 7, 1945
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2006 | Appointed until successor is duly elected and qualified | • Senior Vice President, Larco Investments, Ltd. (real estate firm) | 47 | None | |||||
Kristianne Blake, Born January 22, 1954
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2000
Chairman since 2005 | Appointed until successor is duly elected and qualified
Annual | • Director and Chairman of the Audit Committee, Avista Corp. • Trustee and Chairman of the Operations Committee, Principal Investor Funds and Principal Variable Contracts Funds • Regent, University of Washington • President, Kristianne Gates Blake, P.S. (accounting services) • February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF • Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999-2006 | 47 | • Director, Avista Corp (electric utilities) • Trustee, Principal Investor Funds (investment company); • Trustee, Principal Variable Contracts Funds (investment company) |
# | Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee. |
90 | Disclosure of Information about Fund Trustees and Officers |
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Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2009
(Unaudited)
Name, Age, Address | Position(s) Held with Fund and Length of Time Served | Term of Office* | Principal Occupation(s) During the Past 5 Years | No. of Portfolios in Russell Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |||||
INDEPENDENT TRUSTEES (continued) | ||||||||||
Daniel P. Connealy Born June 6, 1946
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2003
Chairman of the Audit Committee since 2005 | Appointed until successor is duly elected and qualified
Appointed until successor is duly elected and qualified | • June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc. | 47 | None | |||||
Jonathan Fine, Born July 8, 1954
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2004 | Appointed until successor is duly elected and qualified | • President and Chief Executive Officer, United Way of King County, WA | 47 | None | |||||
Raymond P. Tennison, Jr. Born December 21, 1955
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2000
Chairman of the Nominating and Governance Committee since 2007 | Appointed until successor is duly elected and qualified
Appointed until successor is duly elected and qualified | • President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company | 47 | None | |||||
Jack R. Thompson, Born March 21, 1949
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2005 | Appointed until successor is duly elected and qualified | • September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds • September 2007 to present, Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation (health products company) | 47 | • Director, Sparx Asia Funds (investment company) • Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation (health products company) | |||||
Julie W. Weston,
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2002
Chairperson of the Investment Committee since 2006 | Appointed until successor is duly elected and qualified
Appointed until successor is duly elected and qualified | • Retired | 47 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
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Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2009
(Unaudited)
Name, Age, Address | Position(s) Held with Fund and Length of Time Served | Term of Office | Principal Occupation(s) During the Past 5 Years | No. of Portfolios in Russell Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |||||
TRUSTEES EMERITUS | ||||||||||
* George F. Russell, Jr., Born July 3, 1932
909 A Street | Trustee Emeritus and Chairman Emeritus since 1999 | Until resignation or removal | • Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)) and RIMCo • Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”)) • Chairman, Sunshine Management Services, LLC (investment adviser) | 47 | None | |||||
Paul E. Anderson, Born October 15, 1931
909 A Street Tacoma, Washington 98402-1616 | Trustee Emeritus since 2007 | Five year term | • President, Anderson Management Group LLC (private investments consulting) • Trustee, RIC and RIF until 2006 • February 2002 to June 2005, Lead Trustee, RIC and RIF • Chairman of the Nominating and Governance Committee, 2006 | 47 | None | |||||
Lee C. Gingrich, Born October 6, 1930
909 A Street Tacoma, Washington 98402-1616 | Trustee Emeritus since 2006 | Five year term | • Retired since 1995 • Trustee of RIC and RIF until 2005 • Chairman of the Nominating and Governance Committee 2001-2005 | 47 | None |
* | Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF. |
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Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2009
(Unaudited)
Name, Age, Address | Position(s) Held with Fund and Length of Time Served | Term of Office | Principal Occupation(s) During the Past 5 Years | |||
OFFICERS | ||||||
Cheryl Wichers
909 A Street | Chief Compliance Officer since 2005 | Until removed by Independent Trustees | • Chief Compliance Officer, RIC • Chief Compliance Officer, RIF • Chief Compliance Officer, RIMCo • Chief Compliance Officer, RFSC • April 2002–May 2005, Manager, Global Regulatory Policy | |||
Greg J. Stark,
909 A Street | President and Chief Executive Officer since 2004 | Until successor is chosen and qualified by Trustees | • President and CEO, RIC and RIF • Chairman of the Board, President and CEO, RIMCo • Chairman of the Board, President and CEO, Russell Financial Services, Inc. • Chairman of the Board, President and CEO, RFSC • Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”)) • Until 2004, Managing Director of Individual Investor Services, FRC • 2000 to 2004, Managing Director, Sales and Client Service, RIMCo | |||
Mark E. Swanson,
909 A Street | Treasurer and Chief Accounting Officer since 1998 | Until successor is chosen and qualified by Trustees | • Treasurer, Chief Accounting Officer and CFO, RIC and RIF • Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc. • Treasurer and Principal Accounting Officer, SSgA Funds | |||
Peter Gunning,
909 A Street | Chief Investment Officer since 2008 | Until removed by Trustees | • Chief Investment Officer, RIC and RIF • Director, RIMCo and FRC • 1996 to 2008 Chief Investment Officer, Russell, Asia Pacific | |||
Gregory J. Lyons,
909 A Street | Secretary since 2007 | Until successor is chosen and qualified by Trustees | • U.S. General Counsel and Assistant Secretary, FRC • Director and Assistant Secretary, RIA • Secretary, RIMCo, RFSC and Russell Financial Services, Inc. • Secretary and Chief Legal Counsel, RIC and RIF |
Disclosure of Information about Fund Trustees and Officers | 93 |
Table of Contents
909 A Street, Tacoma, Washington 98402
(800) 787-7354
Interested Trustee
Greg J. Stark
Independent Trustees
Thaddas L. Alston
Kristianne Blake
Daniel P. Connealy
Jonathan Fine
Raymond P. Tennison, Jr.
Jack R. Thompson
Julie W. Weston
Trustees Emeritus
George F. Russell, Jr.
Paul E. Anderson
Lee C. Gingrich
Officers
Greg J. Stark, President and Chief Executive Officer
Cheryl Wichers, Chief Compliance Officer
Peter Gunning, Chief Investment Officer
Mark E. Swanson, Treasurer and Chief Accounting Officer
Gregory J. Lyons, Secretary
Adviser
Russell Investment Management Company
909 A Street
Tacoma, WA 98402
Administrator and Transfer and Dividend Disbursing Agent
Russell Fund Services Company
909 A Street
Tacoma, WA 98402
Custodian
State Street Bank and Trust Company
Josiah Quincy Building
200 Newport Avenue
North Quincy, MA 02171
Office of Shareholder Inquiries
909 A Street
Tacoma, WA 98402
(800) 787-7354
Legal Counsel
Dechert LLP
200 Clarendon Street, 27th Floor
Boston, MA 02116-5021
Distributor
Russell Financial Services, Inc.
909 A Street
Tacoma, WA 98402
Money Managers as of June 30, 2009
Multi-Style Equity Fund
Arnhold and S. Bleichroeder Advisers, LLC, New York, NY
Columbus Circle Investors, Stamford, CT
DePrince, Race & Zollo, Inc., Winter Park, FL
Institutional Capital LLC, Chicago, IL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Montag & Caldwell, Inc., Atlanta, GA
Suffolk Capital Management, LLC, New York, NY
Turner Investment Partners, Inc., Berwyn, PA
Aggressive Equity Fund
ClariVest Asset Management LLC, San Diego, CA
DePrince, Race & Zollo, Inc., Winter Park, FL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Ranger Investment Management, L.P., Dallas, TX
Signia Capital Management, LLC, Spokane, WA
Tygh Capital Management, Inc., Portland, OR
Non-U.S. Fund
Altrinsic Global Advisors, LLC, Stamford, CT
Barrow, Hanley, Mewhinney & Strauss, Inc., Dallas, TX
Marsico Capital Management, LLC, Denver, CO
MFS Institutional Advisors, Inc., Boston, MA
Core Bond Fund
Goldman Sachs Asset Management, L.P., New York, NY
Metropolitan West Asset Management, LLC, Los Angeles, CA
Pacific Investment Management Company LLC, Newport Beach, CA
Real Estate Securities Fund
AEW Capital Management, L.P., Boston, MA
Cohen & Steers Capital Management, Inc., New York, NY
Heitman Real Estate Securities LLC, Chicago, IL
INVESCO Institutional (N.A.), Inc. which acts as a money manager to the Fund through its INVESCO Real Estate Division, Dallas, TX
RREEF America L.L.C., Chicago, IL
This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Funds. Such offering is made only by Prospectus, which includes details as to offering price and other material information.
94 | Adviser, Money Managers and Service Providers |
Table of Contents
Russell Investment Funds | 909 A Street | 800-787-7354 | ||
Tacoma, Washington 98402 | Fax: 253-591-3495 | |||
www.russell.com |
36-08-072
Table of Contents
2009 SEMIANNUAL REPORT
Russell Investment Funds
LifePoints® Variable Target Portfolio Series
JUNE 30, 2009
FUND
Moderate Strategy Fund
Balanced Strategy Fund
Growth Strategy Fund
Equity Growth Strategy Fund
Table of Contents
Russell Investment Funds
Russell Investment Funds is a
series investment company with
nine different investment portfolios
referred to as Funds. These
financial statements report on four
of these Funds.
Table of Contents
Russell Investment Funds
LifePoints® Funds
Variable Target Portfolio Series
Semiannual Report
June 30, 2009 (Unaudited)
Table of Contents
Russell Investment Funds - - LifePoints® Funds Variable Target Portfolio Series
Copyright© Russell Investments 2009. All rights reserved.
Russell Investments is a Washington, USA corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.
Fund objectives, risks, charges and expenses should be carefully considered before investing. A prospectus containing this and other important information must precede or accompany this material. Please read the prospectus carefully before investing.
Securities distributed through Russell Financial Services, Inc., member FINRA, part of Russell Investments.
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
Table of Contents
Moderate Strategy Fund
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses
based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,061.70 | $ | 1,024.30 | ||
Expenses Paid During Period* | $ | 0.51 | $ | 0.50 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.10% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
Moderate Strategy Fund | 3 |
Table of Contents
Russell Investment Funds
Moderate Strategy Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Market Value $ | ||||
Investments - 100.0% | |||||
Other Russell Investment Funds (“RIF”) and Russell Investment Company (“RIC”) Series Mutual Funds | |||||
Bonds - 60.1% | |||||
RIF Core Bond Fund | 1,336,005 | 12,932 | |||
Domestic Equities - 25.9% | |||||
RIF Aggressive Equity Fund | 84,621 | 646 | |||
RIF Multi-Style Equity Fund | 224,367 | 2,145 | |||
RIF Real Estate Securities Fund | 77,663 | 650 | |||
RIC Russell U.S. Quantitative Equity Fund | 99,978 | 2,145 | |||
5,586 | |||||
International Equities - 14.0% | |||||
RIF Non-U.S. Fund | 247,682 | 1,927 | |||
RIC Russell Emerging Markets Fund | 31,939 | 436 | |||
RIC Russell Global Equity Fund | 101,628 | 643 | |||
3,006 | |||||
Total Investments - 100.0% | |||||
(identified cost $23,462) | 21,524 | ||||
Other Assets and Liabilities, Net - (0.0%) | (6 | ) | |||
Net Assets - 100.0% | 21,518 | ||||
See accompanying notes which are an integral part of the financial statements.
4 | Moderate Strategy Fund |
Table of Contents
Balanced Strategy Fund
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses
based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,059.10 | $ | 1,024.40 | ||
Expenses Paid During Period* | $ | 0.41 | $ | 0.40 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.08% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
Balanced Strategy Fund | 5 |
Table of Contents
Russell Investment Funds
Balanced Strategy Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Market Value $ | ||||
Investments - 100.0% | |||||
Other Russell Investment Funds (“RIF”) and Russell Investment Company (“RIC”) Series Mutual Funds | |||||
Bonds - 40.0% | |||||
RIF Core Bond Fund | 3,035,478 | 29,383 | |||
Domestic Equities - 38.9% | |||||
RIF Aggressive Equity Fund | 383,576 | 2,930 | |||
RIF Multi-Style Equity Fund | 1,146,710 | 10,963 | |||
RIF Real Estate Securities Fund | 441,204 | 3,693 | |||
RIC Russell U.S. Quantitative Equity Fund | 511,458 | 10,971 | |||
28,557 | |||||
International Equities - 21.1% | |||||
RIF Non-U.S. Fund | 1,313,338 | 10,218 | |||
RIC Russell Emerging Markets Fund | 171,167 | 2,333 | |||
RIC Russell Global Equity Fund | 461,535 | 2,921 | |||
15,472 | |||||
Total Investments - 100.0% | |||||
(identified cost $88,252) | 73,412 | ||||
Other Assets and Liabilities, Net - (0.0%) | (6 | ) | |||
Net Assets - 100.0% | 73,406 | ||||
See accompanying notes which are an integral part of the financial statements.
6 | Balanced Strategy Fund |
Table of Contents
Growth Strategy Fund
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses
based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,059.60 | $ | 1,024.50 | ||
Expenses Paid During Period* | $ | 0.31 | $ | 0.30 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.06% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
Growth Strategy Fund | 7 |
Table of Contents
Russell Investment Funds
Growth Strategy Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Market Value $ | ||||
Investments - 100.0% | |||||
Other Russell Investment Funds (“RIF”) and Russell Investment Company (“RIC”) Series Mutual Funds | |||||
Bonds - 20.2% | |||||
RIF Core Bond Fund | 880,636 | 8,525 | |||
Domestic Equities - 52.8% | |||||
RIF Aggressive Equity Fund | 330,280 | 2,523 | |||
RIF Multi-Style Equity Fund | 918,193 | 8,778 | |||
RIF Real Estate Securities Fund | 302,925 | 2,535 | |||
RIC Russell U.S. Quantitative Equity Fund | 390,234 | 8,371 | |||
22,207 | |||||
International Equities - 27.0% | |||||
RIF Non-U.S. Fund | 915,190 | 7,120 | |||
RIC Russell Emerging Markets Fund | 126,900 | 1,730 | |||
RIC Russell Global Equity Fund | 397,188 | 2,514 | |||
11,364 | |||||
Total Investments - 100.0% | |||||
(identified cost $56,297) | 42,096 | ||||
Other Assets and Liabilities, Net - (0.0%) | (8 | ) | |||
Net Assets - 100.0% | 42,088 | ||||
See accompanying notes which are an integral part of the financial statements.
8 | Growth Strategy Fund |
Table of Contents
Equity Growth Strategy Fund
Shareholder Expense Example — June 30, 2009 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Semiannual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including management fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from January 1, 2009 to June 30, 2009.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses
based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||
Beginning Account Value | ||||||
January 1, 2009 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2009 | $ | 1,052.50 | $ | 1,024.50 | ||
Expenses Paid During Period* | $ | 0.31 | $ | 0.30 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.06% (representing the one-half year period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher. |
Equity Growth Strategy Fund | 9 |
Table of Contents
Russell Investment Funds
Equity Growth Strategy Fund
Schedule of Investments — June 30, 2009 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Market Value $ | ||||
Investments - 100.1% | |||||
Other Russell Investment Funds (“RIF”) and Russell Investment Company (“RIC”) Series Mutual Funds | |||||
Domestic Equities - 65.0% | |||||
RIF Aggressive Equity Fund | 136,666 | 1,044 | |||
RIF Multi-Style Equity Fund | 403,560 | 3,858 | |||
RIF Real Estate Securities Fund | 125,685 | 1,052 | |||
RIC Russell U.S. Quantitative Equity Fund | 173,166 | 3,715 | |||
9,669 | |||||
International Equities - 35.1% | |||||
RIF Non-U.S. Fund | 440,304 | 3,426 | |||
RIC Russell Emerging Markets Fund | 55,703 | 759 | |||
RIC Russell Global Equity Fund | 164,520 | 1,041 | |||
5,226 | |||||
Total Investments - 100.1% | |||||
(identified cost $20,344) | 14,895 | ||||
Other Assets and Liabilities, Net - (0.1%) | (8 | ) | |||
Net Assets - 100.0% | 14,887 | ||||
See accompanying notes which are an integral part of the financial statements.
10 | Equity Growth Strategy Fund |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Statements of Assets and Liabilities — For the Period Ended June 30, 2009 (Unaudited)
Amounts in thousands | Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | ||||||||||||
Assets | ||||||||||||||||
Investments, at identified cost | $ | 23,462 | $ | 88,252 | $ | 56,297 | $ | 20,344 | ||||||||
Investments, at market | 21,524 | 73,412 | 42,096 | 14,895 | ||||||||||||
Receivables: | ||||||||||||||||
Fund shares sold | 5 | 68 | 14 | 4 | ||||||||||||
From Adviser | 2 | 3 | 4 | 2 | ||||||||||||
Prepaid expenses | 2 | 9 | 5 | — | ||||||||||||
Total assets | 21,533 | 73,492 | 42,119 | 14,901 | ||||||||||||
Liabilities | ||||||||||||||||
Payables: | ||||||||||||||||
Investments purchased | 5 | 68 | 14 | 5 | ||||||||||||
Accrued fees to affiliates | 1 | 8 | 2 | 1 | ||||||||||||
Other accrued expenses | 9 | 10 | 15 | 8 | ||||||||||||
Total liabilities | 15 | 86 | 31 | 14 | ||||||||||||
Net Assets | $ | 21,518 | $ | 73,406 | $ | 42,088 | $ | 14,887 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Undistributed (overdistributed) net investment income | $ | (8 | ) | $ | (16 | ) | $ | (7 | ) | $ | (2 | ) | ||||
Accumulated net realized gain (loss) | (2,375 | ) | (4,322 | ) | (1,628 | ) | (2,400 | ) | ||||||||
Unrealized appreciation (depreciation) on investments | (1,938 | ) | (14,840 | ) | (14,201 | ) | (5,449 | ) | ||||||||
Shares of beneficial interest | 27 | 103 | 66 | 26 | ||||||||||||
Additional paid-in capital | 25,812 | 92,481 | 57,858 | 22,712 | ||||||||||||
Net Assets | $ | 21,518 | $ | 73,406 | $ | 42,088 | $ | 14,887 | ||||||||
Net Asset Value, offering and redemption price per share: | ||||||||||||||||
Net asset value per share* | $ | 7.92 | $ | 7.09 | $ | 6.40 | $ | 5.64 | ||||||||
Net assets | $ | 21,518,390 | $ | 73,406,449 | $ | 42,087,759 | $ | 14,887,426 | �� | |||||||
Shares outstanding ($.01 par value) | 2,717,272 | 10,347,853 | 6,581,242 | 2,641,599 |
* | Net asset value per share equals net assets divided by shares of beneficial interest outstanding. |
See accompanying notes which are an integral part of the financial statements.
Statements of Assets and Liabilities | 11 |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Statements of Operations — For the Period Ended June 30, 2009 (Unaudited)
Amounts in thousands | Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | ||||||||||||
Investment Income | ||||||||||||||||
Income distributions from Underlying Funds | $ | 322 | $ | 867 | $ | 400 | $ | 114 | ||||||||
Expenses | ||||||||||||||||
Advisory fees | 19 | 61 | 36 | 13 | ||||||||||||
Administrative fees | 5 | 15 | 9 | 3 | ||||||||||||
Custodian fees | 10 | 10 | 15 | 9 | ||||||||||||
Transfer agent fees | — | 2 | 1 | — | ||||||||||||
Professional fees | 11 | 13 | 12 | 11 | ||||||||||||
Trustees’ fees | — | 1 | — | — | ||||||||||||
Printing fees | 1 | 4 | 2 | 1 | ||||||||||||
Miscellaneous | 1 | 1 | 1 | — | ||||||||||||
Expenses before reductions | 47 | 107 | 76 | 37 | ||||||||||||
Expense reductions | (37 | ) | (81 | ) | (65 | ) | (33 | ) | ||||||||
Net expenses | 10 | 26 | 11 | 4 | ||||||||||||
Net investment income (loss) | 312 | 841 | 389 | 110 | ||||||||||||
Net Realized and Unrealized Gain (Loss) | ||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||
Investments | (1,369 | ) | (2,867 | ) | (943 | ) | (1,250 | ) | ||||||||
Capital gain distributions from Underlying Funds | 15 | 30 | 9 | — | ||||||||||||
Net realized gain (loss) | (1,354 | ) | (2,837 | ) | (934 | ) | (1,250 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 2,239 | 6,238 | 3,277 | 1,937 | ||||||||||||
Net realized and unrealized gain (loss) | 885 | �� | 3,401 | 2,343 | 687 | |||||||||||
Net Increase (Decrease) in Net Assets from Operations | $ | 1,197 | $ | 4,242 | $ | 2,732 | $ | 797 | ||||||||
See accompanying notes which are an integral part of the financial statements.
12 | Statements of Operations |
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Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Statements of Changes in Net Assets
Moderate Strategy Fund | Balanced Strategy Fund | |||||||||||||||
Amounts in thousands | Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | ||||||||||||
Increase (Decrease) in Net Assets | ||||||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | 312 | $ | 655 | $ | 841 | $ | 1,524 | ||||||||
Net realized gain (loss) | (1,354 | ) | (869 | ) | (2,837 | ) | (1,118 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | 2,239 | (4,012 | ) | 6,238 | (19,597 | ) | ||||||||||
Net increase (decrease) in net assets from operations | 1,197 | (4,226 | ) | 4,242 | (19,191 | ) | ||||||||||
Distributions | ||||||||||||||||
From net investment income | (492 | ) | (482 | ) | (937 | ) | (1,462 | ) | ||||||||
From net realized gain | (120 | ) | (160 | ) | (330 | ) | (1,120 | ) | ||||||||
Net decrease in net assets from distributions | (612 | ) | (642 | ) | (1,267 | ) | (2,582 | ) | ||||||||
Share Transactions | ||||||||||||||||
Net increase (decrease) in net assets from share transactions | 1,625 | 15,522 | 10,273 | 46,234 | ||||||||||||
Total Net Increase (Decrease) in Net Assets | 2,210 | 10,654 | 13,248 | 24,461 | ||||||||||||
Net Assets | ||||||||||||||||
Beginning of period | 19,308 | 8,654 | 60,158 | 35,697 | ||||||||||||
End of period | $ | 21,518 | $ | 19,308 | $ | 73,406 | $ | 60,158 | ||||||||
Undistributed (overdistributed) net investment income included in net assets | $ | (8 | ) | 172 | $ | (16 | ) | $ | 80 |
See accompanying notes which are an integral part of the financial statements.
14 | Statements of Changes in Net Assets |
Table of Contents
Growth Strategy Fund | Equity Growth Strategy Fund | |||||||||||||
Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | Period Ended June 30, 2009 (Unaudited) | Fiscal Year Ended December 31, 2008 | |||||||||||
$ | 389 | $ | 655 | $ | 110 | $ | 122 | |||||||
(934 | ) | (461 | ) | (1,250 | ) | (1,015 | ) | |||||||
3,277 | (15,965 | ) | 1,937 | (6,201 | ) | |||||||||
2,732 | (15,771 | ) | 797 | (7,094 | ) | |||||||||
(404 | ) | (647 | ) | (144 | ) | (89 | ) | |||||||
(213 | ) | (1,109 | ) | (87 | ) | (748 | ) | |||||||
(617 | ) | (1,756 | ) | (231 | ) | (837 | ) | |||||||
5,231 | 24,879 | 1,708 | 7,538 | |||||||||||
7,346 | 7,352 | 2,274 | (393 | ) | ||||||||||
34,742 | 27,390 | 12,613 | 13,006 | |||||||||||
$ | 42,088 | $ | 34,742 | $ | 14,887 | $ | 12,613 | |||||||
$ | (7 | ) | $ | 8 | $ | (2 | ) | $ | 32 |
See accompanying notes which are an integral part of the financial statements.
Statements of Changes in Net Assets | 15 |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Financial Highlights
For a Share Outstanding Throughtout the Period.
Net Asset Value, | $ Net Investment | $ Net Realized | $ Total Income | $ Distributions | $ Distributions from Net Realized Gain | $ Total | |||||||||||||
Moderate Strategy Fund | |||||||||||||||||||
June 30, 2009** | 7.67 | .12 | .37 | .49 | (.20 | ) | (.04 | ) | (.24 | ) | |||||||||
December 31, 2008 | 9.99 | .33 | (2.32 | ) | (1.99 | ) | (.23 | ) | (.10 | ) | (.33 | ) | |||||||
December 31, 2007* | 10.00 | .46 | (.11 | ) | .35 | (.36 | ) | — | (g) | (.36 | ) | ||||||||
Balanced Strategy Fund | |||||||||||||||||||
June 30, 2009** | 6.80 | .09 | .34 | .43 | (.10 | ) | (.04 | ) | (.14 | ) | |||||||||
December 31, 2008 | 9.93 | .23 | (2.88 | ) | (2.65 | ) | (.21 | ) | (.27 | ) | (.48 | ) | |||||||
December 31, 2007* | 10.00 | .47 | (.20 | ) | .27 | (.34 | ) | — | (g) | (.34 | ) | ||||||||
Growth Strategy Fund | |||||||||||||||||||
June 30, 2009** | 6.11 | .06 | .33 | .39 | (.07 | ) | (.03 | ) | (.10 | ) | |||||||||
December 31, 2008 | 9.90 | .15 | (3.46 | ) | (3.31 | ) | (.14 | ) | (.34 | ) | (.48 | ) | |||||||
December 31, 2007* | 10.00 | .45 | (.24 | ) | .21 | (.31 | ) | — | (.31 | ) | |||||||||
Equity Growth Strategy Fund | |||||||||||||||||||
June 30, 2009** | 5.42 | .04 | .27 | .31 | (.06 | ) | (.03 | ) | (.09 | ) | |||||||||
December 31, 2008 | 9.83 | .07 | (3.92 | ) | (3.85 | ) | (.05 | ) | (.51 | ) | (.56 | ) | |||||||
December 31, 2007* | 10.00 | .50 | (.38 | ) | .12 | (.29 | ) | — | (.29 | ) |
See accompanying notes which are an integral part of the financial statements.
16 | Financial Highlights |
Table of Contents
$ Net Asset Value, | % Total | $ Net Assets, | % Ratio of Expenses Net Assets, Net(d)(e)(f) | % Ratio of Expenses Net Assets, | % Ratio of Net Net Assets(b)(c)(f) | % Portfolio Turnover Rate(c) | |||||||
7.92 | 6.17 | 21,518 | .10 | .49 | 1.62 | 16 | |||||||
7.67 | (20.39 | ) | 19,308 | .11 | .53 | 3.77 | 39 | ||||||
9.99 | 3.54 | 8,654 | .11 | 2.01 | 5.37 | 24 | |||||||
7.09 | 5.91 | 73,406 | .08 | .35 | 1.36 | 9 | |||||||
6.80 | (27.70 | ) | 60,158 | .08 | .35 | 2.75 | 16 | ||||||
9.93 | 2.73 | 35,697 | .08 | .74 | 5.37 | 11 | |||||||
6.40 | 5.96 | 42,088 | .06 | .43 | 1.09 | 4 | |||||||
6.11 | (34.73 | ) | 34,742 | .04 | .40 | 1.85 | 10 | ||||||
9.90 | 2.13 | 27,390 | .04 | .84 | 5.05 | 3 | |||||||
5.64 | 5.25 | 14,887 | .06 | .59 | .86 | 7 | |||||||
5.42 | (41.18 | ) | 12,613 | .04 | .58 | .87 | 24 | ||||||
9.83 | 1.25 | 13,006 | .04 | 1.36 | 5.59 | 6 |
See accompanying notes which are an integral part of the financial statements.
Financial Highlights | 17 |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Notes To Financial Highlights — June 30, 2009 (Unaudited)
* | For the period April 30, 2007 (commencement of operations) to December 31, 2007. |
** | For the period ended June 30, 2009 (Unaudited). |
(a) | Average month-end shares outstanding were used for this calculation. |
(b) | Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the Underlying Funds in which the Fund invests. |
(c) | Periods less than one year are not annualized. |
(d) | The ratios for periods less than one year are annualized. |
(e) | The calculation includes only those expenses charged directly to the Fund and does not include expenses charged to the Underlying Funds in which the Fund invests. |
(f) | May reflect amounts waived and reimbursed by Russell Investment Management Company (“RIMCo”) and Russell Fund Services Company (“RFSC”), respectively. |
(g) | Less than $.01 per share. |
See accompanying notes which are an integral part of the financial statements.
18 | Notes to Financial Highlights |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements — June 30, 2009 (Unaudited)
1. | Organization |
Russell Investment Funds (the “Investment Company” or “RIF”) is a series investment company with nine different investment portfolios referred to as Funds. These financial statements report on four of these Funds (each a “Fund” and collectively the “Funds”). The Investment Company provides the investment base for one or more variable insurance products issued by one or more insurance companies. These Funds are offered at net asset value to qualified insurance company separate accounts offering variable insurance products. The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated October 1, 2008. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.
Russell Investment Company (“RIMCo”) is the Funds’ adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Funds’ administrator and transfer agent.
The Funds seek to achieve their objective by investing in a combination of Russell Investment Company (“RIC”) funds and other of the Investment Company’s funds (the “Underlying Funds”) as set forth in the table below. RIMCo may modify the target asset allocation for any Fund and/or the Underlying Funds in which the Funds invest. From time to time, each Fund may adjust its investments within the ranges below based on RIMCo’s outlook for the economy, financial markets generally and relative market valuation of the asset classes represented by each Underlying Fund. Additionally, each Fund may deviate from the ranges when, in RIMCo’s opinion, it is necessary to do so to pursue the Fund’s investment objective. In the future, the Funds may also invest in other funds which are not currently Underlying Funds.
Asset Allocation Targets as of May 1, 2009 | ||||||||||||
Asset Class/Underlying Funds | Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | ||||||||
Bonds | ||||||||||||
RIF Core Bond Fund | 55-65 | % | 35-45 | % | 15-25 | % | 0 | % | ||||
Domestic Equities | ||||||||||||
RIF Aggressive Equity Fund | 0-8 | 0-9 | 1-11 | 2-12 | ||||||||
RIF Multi-Style Equity Fund | 5-15 | 10-20 | 16-26 | 21-31 | ||||||||
RIF Real Estate Securities Fund | 0-8 | 0-10 | 1-11 | 2-12 | ||||||||
RIC Russell U.S. Quantitative Equity Fund | 5-15 | 10-20 | 15-25 | 20-30 | ||||||||
International Equities | ||||||||||||
RIF Non-U.S. Fund | 4-14 | 9-19 | 12-22 | 18-28 | ||||||||
RIC Russell Emerging Markets Fund | 0-7 | 0-8 | 0-9 | 0-10 | ||||||||
RIC Russell Global Equity Fund | 0-8 | 0-9 | 1-11 | 2-12 |
2. | Significant Accounting Policies |
The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by each Fund in the preparation of its financial statements.
Security Valuation
The Funds value their portfolio securities, the shares of the Underlying Funds, at the current net asset value per share of each Underlying Fund.
The Underlying Funds value portfolio securities according to Board-approved securities valuation procedures and pricing services which include market value procedures, fair value procedures and a description of the pricing services used by the Underlying Funds. Money market fund securities are priced using the amortized cost method of valuation, as are debt obligation securities maturing within 60 days at the time of purchase, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.
Ordinarily, the Underlying Funds value each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Generally, Underlying Fund securities are valued at the close of the market on which they are traded as follows:
• | U.S. listed equities, equity and fixed income options and rights/warrants: Last sale price; last bid price if no last sale price. |
• | U.S. over-the-counter equities: Official closing price; last bid price if no closing price. |
Notes to Financial Statements | 19 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
• | Listed ADRs/GDRs: Last sale price; last bid price if no last sale price. |
• | Municipal bonds, U.S. bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price. |
• | Futures: Settlement price. |
• | Bank loans and forwards: Mean between bid and asking price. |
• | Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier. |
• | The value of swap agreements is equal to the Funds’ obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts. |
• | Equity securities traded on a national foreign securities exchange or a foreign over the counter market are valued on the basis of the official closing price, or lacking the official closing price, at the last sale price of the primary exchange on which the security is traded. |
If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Underlying Funds will use the security’s fair value, as determined in accordance with the fair value procedures. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market on which they are traded, but rather may be priced by another method that the Board believes reflects fair value. The fair value procedures may involve subjective judgments as to the fair value of securities. The use of fair value pricing by an Underlying Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Underlying Fund shares and daily movement of the benchmark index if the index is valued using another pricing method.
This policy is intended to assure that the Underlying Funds’ net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Underlying Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Underlying Fund shares is determined may be reflected in the calculation of net asset values for each applicable Underlying Fund (and each Fund which invests in such Underlying Fund) when the Underlying Funds deem that the particular event or circumstance would materially affect such Underlying Fund’s net asset value. Underlying Funds that invest primarily in frequently traded exchange-listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. Underlying Funds that invest in foreign securities are likely to use fair value pricing more often since significant events may occur between the close of foreign markets and the time of pricing which would trigger fair value pricing of the foreign securities. Underlying Funds that invest in low-rated debt securities are also likely to use fair value pricing more often since the markets in which such securities are traded are generally thinner, more limited and less active than those for higher rated securities. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the US securities market (defined in the fair value procedures as the movement by a single major US Index greater than a certain percentage) or other significant event; foreign market holidays if on a daily basis, Fund exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.
Because foreign securities can trade on non-business days, the net asset value of a Fund’s portfolio that includes an Underlying Fund which invests in foreign securities may change on days when shareholders will not be able to purchase or redeem fund shares.
The Funds adopted Financial Accounting Standards Board (“FASB”) Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), effective January 1, 2008. In accordance with SFAS 157, fair value is defined as the price that the Funds would receive upon selling an investment in a timely transaction to an independent buyer in the principal or most advantageous market of the investment. SFAS 157 established a three-tier hierarchy to maximize the use of observable market data and minimize the use of unobservable inputs and to establish classification of fair value measurements for disclosure purposes. Inputs refer broadly to the assumptions that market participants would use in pricing the asset, including assumptions about risk, for example, the risk inherent in a particular valuation technique used to measure fair value including a pricing model and/or risk inherent in the inputs to the valuation technique. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability developed based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability developed based on the best information available in the circumstances.
20 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
The three-tier hierarchy of inputs is summarized in the three broad levels listed below.
• Level 1 — quoted prices in active markets for identical investments
• Level 2 — other significant observable inputs (including quoted prices for similar investments, interest rates, prepayment speeds, credit risk, etc.)
• Level 3 — significant unobservable inputs (including the Fund’s own assumptions in determining the fair value of investments)
Inputs used in valuing the Funds’ investments for the period ended June 30, 2009, were level one for all Funds.
Investment Transactions
Investment transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost.
Investment Income
Distributions of income and capital gains from the Underlying Funds are recorded on the ex-dividend date.
Federal Income Taxes
Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.
It is each Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income tax provision is required for the Funds.
In accordance with provisions set forth in the FASB issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement No. 109” (“FIN 48”), adopted by the Funds on January 1, 2007, management has reviewed the Funds’ tax positions for all open tax years, and concluded that adoption had no effect on the Funds’ financial position or results of operations. At June 30, 2009, the Funds have recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.
Each Fund files a U. S. tax return. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years ending December 31, 2005, through December 31, 2007, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.
Dividends and Distributions to Shareholders
Income dividends and capital gain distributions, if any, are recorded on the ex-dividend date. Income dividends are generally declared and paid quarterly. Capital gain distributions are generally declared and paid annually. An additional distribution may be paid by the Funds to avoid imposition of federal income and excise tax on any remaining undistributed capital gains and net investment income.
The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) from investment transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP relate primarily to investments in the Underlying Funds sold at a loss, wash sale deferrals and capital loss carryforwards. Accordingly, the Funds may periodically make reclassifications among certain of their capital accounts without impacting their net asset value.
Expenses
Expenses included in the accompanying financial statements reflect the expenses of each Fund and do not include those expenses incurred by the Underlying Funds. Because the Underlying Funds have varied expense and fee levels and the Funds may own different proportions of the Underlying Funds at different times, the amount of the fees and expenses incurred indirectly by the Funds will vary. Most expenses can be directly attributed to the individual Funds. Expenses which cannot be directly attributed to a specific Fund are allocated among all Funds principally based on their relative net assets.
Notes to Financial Statements | 21 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
Guarantees
In the normal course of business the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote.
3. | Investment Transactions |
Securities
During the period ended June 30, 2009, purchases and sales of the Underlying Funds (excluding short-term investments) were as follows:
Funds | Purchases | Sales | ||||
Moderate Strategy | $ | 4,473,832 | $ | 3,139,492 | ||
Balanced Strategy | 15,302,118 | 5,434,663 | ||||
Growth Strategy | 6,420,836 | 1,413,116 | ||||
Equity Growth Strategy | 2,532,362 | 947,323 |
4. | Related Party Transactions, Fees and Expenses |
Adviser and Administrator
RIMCo is the Funds’ adviser and RFSC, a wholly-owned subsidiary of RIMCo, is the Funds’ administrator. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides ongoing money manager research and trade placement services to RIF and RIMCo.
RIMCo had contractually agreed to waive, through April 29, 2009, its 0.20% advisory fee for each Fund. RIMCo and RFSC had contractually agreed to waive and/or reimburse, through April 29, 2009, each Fund for other direct Fund-level expenses to the extent that direct Fund-level expenses exceeded 0.11%, 0.08%, 0.04% and 0.04% of average daily net assets of the Moderate Strategy, Balanced Strategy, Growth Strategy, and Equity Growth Strategy Funds, respectively, on an annual basis.
Effective April 30, 2009 for each Fund individually, RIMCo has contractually agreed, until April 30, 2010, to waive up to the full amount of its 0.20% advisory fee and then reimburse the Fund for other direct Fund-level expenses to the extent that direct Fund-level expenses exceed 0.10% of the average daily net assets of the Fund on an annual basis. These waivers and reimbursements may not be terminated during the relevant period except at the Board’s discretion.
Direct Fund-level expenses do not include extraordinary expenses or the expenses of other investment companies in which the Funds invest, including the Underlying Funds, which are borne indirectly by the Funds.
The Administrative fee of 0.05% is based upon the average daily net assets of each Fund.
For the period ended June 30, 2009, the fees waived and reimbursed by RIMCo amounted to:
Funds | |||
Moderate Strategy | $ | 36,880 | |
Balanced Strategy | 80,813 | ||
Growth Strategy | 64,507 | ||
Equity Growth Strategy | 33,426 |
RIMCo and RFSC do not have the ability to recover amounts waived or reimbursed from previous periods.
Transfer and Dividend Disbursing Agent
RFSC is the Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RFSC is paid a fee for transfer agency and dividend disbursing services provided to the Funds. RFSC retains a portion of this fee for its services provided to the Funds and pays the balance to unaffiliated agents who assisted in providing these services. Total transfer agency fees paid by the Funds presented herein for the period ended June 30, 2009 were $2,828.
22 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
4. | Related Party Transactions, Fees and Expenses (continued) |
Accrued Fees Payable to Affiliates
Accrued fees payable to affiliates at June 30, 2009, were as follows:
Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | |||||||||
Administrative fees | $ | 873 | $ | 7,528 | $ | 1,717 | $ | 612 | ||||
Trustees’ fees | 52 | 183 | 145 | 61 | ||||||||
$ | 925 | $ | 7,711 | $ | 1,862 | $ | 673 | |||||
Distributor
Russell Financial Services, Inc. (the “Distributor’), a wholly-owned subsidiary of RIMCo, serves as distributor for RIF, pursuant to the Distribution Agreement with the Investment Company. The Distributor receives no compensation from the Investment Company for its services.
Board of Trustees
The Russell Fund Complex consists of RIC, which has 38 Funds, and RIF, which has nine Funds. Each of the Trustees is a Trustee of both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 per year, $6,500 for each regular quarterly meeting attended in person, $2,500 for each special meeting attended in person, and $2,500 for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 fee for attending the quarterly and special meetings and a $500 fee for attending the committee meeting by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee Chair is paid a fee of $6,000 per year. The chairman of the Board receives additional annual compensation of $52,000.
Transactions with Affiliated Companies
An affiliated company is a company in which a Fund has ownership of at least 5% of the voting securities or under common control. Transactions during the period ended June 30, 2009, with Underlying Funds which are an affiliated company or under common control are as follows:
Affiliate | Market Value | Purchases Cost | Sales Cost | Realized Gain (Loss) | Income Distributions | Capital Gains Distributions | |||||||||||||
Moderate Strategy Fund | |||||||||||||||||||
RIF Core Bond Fund | $ | 12,932,527 | $ | 2,704,141 | $ | 2,082,819 | $ | (244,135 | ) | $ | 252,480 | $ | 14,471 | ||||||
RIF Aggressive Equity Fund | 646,503 | 121,374 | 159,949 | (71,280 | ) | 1,729 | — | ||||||||||||
RIF Multi-Style Equity Fund | 2,144,944 | 386,552 | 512,235 | (227,339 | ) | 18,929 | — | ||||||||||||
RIC Russell U.S. Quantitative Equity Fund | 2,144,530 | 376,549 | 353,884 | (153,171 | ) | 7,284 | — | ||||||||||||
RIF Real Estate Securities Fund | 650,037 | 290,182 | 371,989 | (185,915 | ) | 16,064 | — | ||||||||||||
RIC Russell Emerging Markets Fund | 435,326 | 60,434 | 272,447 | (136,103 | ) | — | |||||||||||||
RIC Russell Global Equity Fund | 643,303 | 97,450 | 171,330 | (79,332 | ) | — | — | ||||||||||||
RIF Non-U.S. Fund | 1,926,963 | 437,150 | 583,411 | (271,297 | ) | 25,335 | — | ||||||||||||
$ | 21,524,133 | $ | 4,473,832 | $ | 4,508,064 | $ | (1,368,572 | ) | $ | 321,821 | $ | 14,471 | |||||||
Balanced Strategy Fund | |||||||||||||||||||
RIF Core Bond Fund | $ | 29,383,423 | $ | 7,761,668 | $ | 3,394,384 | $ | (344,245 | ) | $ | 532,008 | $ | 29,827 | ||||||
RIF Aggressive Equity Fund | 2,930,518 | 433,382 | 271,604 | (141,533 | ) | 7,335 | — | ||||||||||||
RIF Multi-Style Equity Fund | 10,962,547 | 1,768,870 | 1,000,199 | (468,072 | ) | 89,175 | — | ||||||||||||
RIC Russell U.S. Quantitative Equity Fund | 10,970,780 | 2,051,372 | 860,677 | (405,081 | ) | 34,959 | — | ||||||||||||
RIF Real Estate Securities Fund | 3,692,879 | 1,012,592 | 653,306 | (358,761 | ) | 82,647 | — | ||||||||||||
RIC Russell Emerging Markets Fund | 2,333,004 | 215,964 | 877,011 | (501,354 | ) | — | |||||||||||||
RIC Russell Global Equity Fund | 2,921,517 | 363,942 | 284,730 | (139,118 | ) | — | — | ||||||||||||
RIF Non-U.S. Fund | 10,217,773 | 1,694,328 | 959,779 | (508,864 | ) | 120,696 | — | ||||||||||||
$ | 73,412,441 | $ | 15,302,118 | $ | 8,301,690 | $ | (2,867,028 | ) | $ | 866,820 | $ | 29,827 | |||||||
Notes to Financial Statements | 23 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
4. | Related Party Transactions, Fees and Expenses (continued) |
Affiliate | Market Value | Purchases Cost | Sales Cost | Realized Gain (Loss) | Income Distributions | Capital Gains Distributions | |||||||||||||
Growth Strategy Fund | |||||||||||||||||||
RIF Core Bond Fund | $ | 8,524,557 | $ | 1,920,212 | $ | 833,634 | $ | (87,925 | ) | $ | 156,537 | $ | 8,814 | ||||||
RIF Aggressive Equity Fund | 2,523,342 | 304,764 | 105,956 | (57,577 | ) | 6,508 | — | ||||||||||||
RIF Multi-Style Equity Fund | 8,777,925 | 1,083,301 | 67,971 | (33,945 | ) | 71,083 | — | ||||||||||||
RIC Russell U.S. Quantitative Equity Fund | 8,370,528 | 1,242,551 | 11,230 | (5,572 | ) | 27,298 | — | ||||||||||||
RIF Real Estate Securities Fund | 2,535,486 | 628,081 | 540,633 | (319,588 | ) | 56,240 | — | ||||||||||||
RIC Russell Emerging Markets Fund | 1,729,652 | 39,643 | 474,559 | (273,289 | ) | — | |||||||||||||
RIC Russell Global Equity Fund | 2,514,201 | 222,426 | 1,814,922 | (28,953 | ) | — | — | ||||||||||||
RIF Non-U.S. Fund | 7,120,177 | 979,858 | 264,670 | (135,689 | ) | 82,176 | — | ||||||||||||
$ | 42,095,868 | $ | 6,420,836 | $ | 4,113,575 | $ | (942,538 | ) | $ | 399,842 | $ | 8,814 | |||||||
Equity Growth Strategy Fund | |||||||||||||||||||
RIF Aggressive Equity Fund | $ | 1,044,130 | $ | 143,943 | $ | 100,017 | $ | (57,260 | ) | $ | 2,621 | $ | — | ||||||
RIF Multi-Style Equity Fund | 3,858,037 | 605,612 | 460,398 | (244,683 | ) | 32,281 | — | ||||||||||||
RIC Russell U.S. Quantitative Equity Fund | 3,714,414 | 631,205 | 293,361 | (156,899 | ) | 11,890 | — | ||||||||||||
RIF Real Estate Securities Fund | 1,051,979 | 375,877 | 387,273 | (226,887 | ) | 24,670 | — | ||||||||||||
RIC Russell Emerging Markets Fund | 759,239 | 52,366 | 330,493 | (196,440 | ) | — | |||||||||||||
RIC Russell Global Equity Fund | 1,041,414 | 122,284 | 123,353 | (68,337 | ) | — | — | ||||||||||||
RIF Non-U.S. Fund | 3,425,568 | 601,075 | 502,402 | (299,468 | ) | 42,498 | — | ||||||||||||
$ | 14,894,781 | $ | 2,532,362 | $ | 2,197,297 | $ | (1,249,974 | ) | $ | 113,960 | $ | — | |||||||
5. | Federal Income Taxes |
At December 31, 2008, the following Fund had net tax basis capital loss carryforwards which may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Available capital loss carryforwards and expiration dates are as follows:
Funds | 12/31/2016 | Totals | ||||
Equity Growth Strategy | $ | 134,219 | $ | 134,219 |
At June 30, 2009, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | |||||||||||||
Cost of Investments for Tax Purposes | $ | 25,565,293 | $ | 92,054,937 | $ | 57,468,516 | $ | 22,494,682 | ||||||||
Unrealized Appreciation | $ | 21,557 | $ | — | $ | — | $ | — | ||||||||
Unrealized Depreciation | (4,062,716 | ) | (18,642,496 | ) | (15,372,648 | ) | (7,599,901 | ) | ||||||||
Net Tax Unrealized Appreciation (Depreciation) | $ | (4,041,159 | ) | $ | (18,642,496 | ) | $ | (15,372,648 | ) | $ | (7,599,901 | ) | ||||
6. | Fund Share Transactions (amounts in thousands) |
Share transactions for the periods ended June 30, 2009 and December 31, 2008 were as follows:
Shares | Dollars | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||
Moderate Strategy Fund | ||||||||||||||
Proceeds from shares sold | 566 | 2,261 | $ | 4,205 | $ | 21,043 | ||||||||
Proceeds from reinvestment of distributions | 84 | 71 | 612 | 642 | ||||||||||
Payments for shares redeemed | (448 | ) | (682 | ) | (3,192 | ) | (6,163 | ) | ||||||
Net increase (decrease) | 202 | 1,650 | $ | 1,625 | $ | 15,522 | ||||||||
Balanced Strategy Fund | ||||||||||||||
Proceeds from shares sold | 2,173 | 5,802 | $ | 14,513 | $ | 50,702 | ||||||||
Proceeds from reinvestment of distributions | 197 | 306 | 1,267 | 2,582 | ||||||||||
Payments for shares redeemed | (869 | ) | (856 | ) | (5,507 | ) | (7,050 | ) | ||||||
Net increase (decrease) | 1,501 | 5,252 | $ | 10,273 | $ | 46,234 | ||||||||
24 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2009 (Unaudited)
6. | Fund Share Transactions (amounts in thousands) (continued) |
Shares | Dollars | |||||||||||||
2009 | 2008 | 2009 | 2008 | |||||||||||
Growth Strategy Fund | ||||||||||||||
Proceeds from shares sold | 982 | 3,050 | $ | 5,729 | $ | 25,915 | ||||||||
Proceeds from reinvestment of distributions | 108 | 212 | 617 | 1,755 | ||||||||||
Payments for shares redeemed | (194 | ) | (344 | ) | (1,115 | ) | (2,791 | ) | ||||||
Net increase (decrease) | 896 | 2,918 | $ | 5,231 | $ | 24,879 | ||||||||
Equity Growth Strategy Fund | ||||||||||||||
Proceeds from shares sold | 476 | 1,334 | $ | 2,443 | $ | 10,149 | ||||||||
Proceeds from reinvestment of distributions | 47 | 100 | 231 | 837 | ||||||||||
Payments for shares redeemed | (210 | ) | (428 | ) | (966 | ) | (3,448 | ) | ||||||
Net increase (decrease) | 313 | 1,006 | $ | 1,708 | $ | 7,538 | ||||||||
7. | Interfund Lending Program |
The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Funds may borrow money from each other for temporary purposes. All such borrowing and lending will be subject to a participating Fund’s fundamental investment limitations. Typically, Funds will borrow from the RIC Russell Money Market Fund. The RIC Russell Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves and the portfolio manager determines it is in the best interest of the RIC Russell Money Market Fund. The Investment Company Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Russell Money Market Fund could result in a lost investment opportunity or additional borrowing costs. For the period ended June 30, 2009, the Funds presented herein did not borrow through the interfund lending program.
8. | Record Ownership |
As of June 30, 2009, the following table includes shareholders of record with greater than 10% of the total outstanding shares of each respective Fund. The Northwestern Mutual Life Insurance Company accounts were the largest shareholders in each Fund.
Funds | # of Shareholders | % | ||
Moderate Strategy | 1 | 98.3 | ||
Balanced Strategy | 1 | 97.3 | ||
Growth Strategy | 1 | 98.0 | ||
Equity Growth Strategy | 1 | 98.5 |
9. | Dividends |
On July 2, 2009, the Board declared the following dividends payable from net investment income. Dividends were paid on July 7, 2009, to shareholders of record July 6, 2009.
Funds | Net Investment Income | ||
Moderate Strategy | $ | 0.0607 | |
Balanced Strategy | 0.0423 | ||
Growth Strategy | 0.0262 | ||
Equity Growth Strategy | 0.0119 |
10. | Subsequent Events |
Management has evaluated events or transactions that may have occurred since June 30, 2009, that would merit recognition or disclosure in the financial statements. This evaluation was completed through August 14, 2009, the date the financial statements were issued.
Notes to Financial Statements | 25 |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts (Unaudited)
Approval of Investment Advisory Agreement
The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the “RIMCo Agreement”) and the portfolio management contract (collectively, the “portfolio management contracts”) with each Money Manager of the funds in which the Funds invest (the “Underlying Funds”) at a meeting held on April 21, 2009. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Funds, sales and redemptions of the Funds’ and Underlying Funds’ shares, management of the Funds and the Underlying Funds by RIMCo and compliance with applicable regulatory requirements. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds and the Underlying Funds; and (2) information (the “Third-Party Information”) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and the Underlying Funds and their respective operating expenses over various periods of time with other peer funds (“Comparable Funds”) not managed by RIMCo believed by the provider to be generally comparable in investment objectives to the Funds and the Underlying Funds. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Funds and Underlying Funds discussing the legal standards for their consideration of the continuations of the RIMCo Agreement and the portfolio management contracts and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.
On April 20, 2009, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or the Funds’ management were present. At the April 21 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contracts with management, counsel to the Funds and Underlying Funds and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Funds and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.
In evaluating the portfolio management contracts, the Board considered that the Underlying Funds, in employing a manager-of-managers method of investment, operate in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which in turn employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. RIMCo has engaged multiple unaffiliated Money Managers for all Underlying Funds.
The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for allocating assets of each Fund among its Underlying Funds and for determining, implementing and maintaining the investment program for each Underlying Fund. The assets of each Fund are invested in different combinations of the Underlying Funds pursuant to target asset allocations set by RIMCo. RIMCo may modify the target asset allocation for any Fund and/or the Underlying Funds in which the Funds invest. Assets of each Underlying Fund generally have been allocated among the multiple Money Managers selected by RIMCo, subject to Board approval, for that Underlying Fund. RIMCo manages directly a portion of certain Underlying Funds’ assets employing a “select holdings strategy,” as described below, and directly manages the investment of each Underlying Fund’s cash reserves. RIMCo also may manage directly any portion of each Underlying Fund’s assets that RIMCo determines not to allocate to the Money Managers and portions of an Underlying Fund during transitions between Money Managers. In all cases, assets are managed directly by RIMCo pursuant to authority provided by the RIMCo Agreement.
RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Underlying Fund and for actively managing allocations and reallocations of its assets among the Money Managers. The Board has been advised that RIMCo’s goal is to construct and manage diversified portfolios in a risk-aware manner. Each Money Manager for an Underlying Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Underlying Fund assigned to it by RIMCo (each, a “segment”) in accordance with the Underlying Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in an Underlying Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Underlying Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for an Underlying Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of
26 | Basis for Approval of Investment Advisory Contracts |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued (Unaudited)
new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager or to coordinate the investment activities of Money Managers for an Underlying Fund in a complementary manner. Therefore, the performance of individual Money Managers for an Underlying Fund may reflect the roles assigned to them by RIMCo in the Underlying Fund’s investment activities and any constraints placed by RIMCo upon their selection of portfolio securities. In light of the foregoing, the overall performance of each Underlying Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Underlying Fund’s investment program, structuring an Underlying Fund, selecting an effective Money Manager with a particular investment style or sub-style for a segment that is complementary to the styles of the Money Managers of other Underlying Fund segments, and allocating assets among the Money Managers in a manner designed to achieve the objectives of the Underlying Fund.
The Board considered that the prospectuses for the Funds and the Underlying Funds and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for each Underlying Fund, rather than the investment selection role of the Underlying Funds’ Money Managers, and describe the manner in which the Funds or Underlying Funds operate so that investors may take that information into account when deciding to purchase shares of any Fund.
The Board also considered the demands and complexity of managing the Underlying Funds pursuant to the manager-of-managers structure, the special expertise of RIMCo with respect to the manager-of-managers structure of the Underlying Funds and the likelihood that, at the current expense ratio of each Underlying Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of such Underlying Fund selected by shareholders in purchasing their shares of a Fund or Underlying Fund.
In addition to these general factors relating to the manager-of-managers structure of the Underlying Funds, the Trustees considered, with respect to each Fund and Underlying Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:
1. | The nature, scope and quality of the services provided, and expected to be provided, to the Fund or the Underlying Fund by RIMCo; |
2. | The advisory fee paid by the Fund or the Underlying Fund to RIMCo (the “Advisory Fee”) and the fact that it encompasses all investment advisory fees paid by the Fund or Underlying Fund, including the fees for any Money Managers of such Underlying Fund; |
3. | Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund or Underlying Fund, including any administrative, transfer agent or cash management fees and fees received for management of securities lending cash collateral, soft dollar arrangements and commissions in connection with portfolio securities transactions; |
4. | Information provided by RIMCo as to expenses incurred by the Fund or the Underlying Fund; and |
5. | Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund or Underlying Fund. |
In evaluating the nature, quality and scope of services provided and which are expected to be provided to the Funds, including Fund portfolio management services, the Board considered the possible impact of changes in RIMCo’s senior management during the course of 2008 and 2009 and a restructuring of the Russell organization, which was announced to the Board in January 2009 and detailed to the Board on April 15, 2009, and included a significant reduction in Russell’s workforce. Prior to the Independent Trustees’ private meeting on April 20 and at the April 21 meeting of the Board of Trustees, senior representatives of Russell and RIMCo discussed this organizational restructuring with the Board and assured the Board that the restructuring would not result in a diminution of the nature, quality or scope of the services provided to the Funds or Underlying Funds. The Board also discussed with these representatives the impact of developments over the past year in the financial services industry upon the financial resources available to the Russell organization.
As noted above, RIMCo, pursuant to the terms of the RIMCo Agreement, directly managed during the past year, and continues to manage, a portion—up to 10%—of the assets of each of the RIF Multi-Style Equity Fund and the Russell Investment Company Russell U.S. Quantitative Equity Fund (each a “Participating Underlying Fund”) during the past year, utilizing a select holdings strategy, the actual allocation being determined by each Participating Underlying Fund’s RIMCo portfolio manager. The select holdings strategy utilized by RIMCo in managing such assets for a Participating Underlying Fund is designed to increase the Participating Underlying Fund’s exposure to stocks that are viewed as attractive by multiple Money Managers of that Participating Underlying Fund. The Board reviewed the results of the select holdings strategy in respect of each Participating Underlying Fund during the past year. With respect to each Participating Underlying Fund, the Trustees considered that RIMCo is not required to pay
Basis for Approval of Investment Advisory Contracts | 27 |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued (Unaudited)
investment advisory fees to a Money Manager with respect to assets for which the select holdings strategy is utilized and that the profits derived by RIMCo generally and from the Participating Underlying Fund consequently may increase incrementally. The Board, however, also considered RIMCo’s advice that it pays certain Money Managers additional fees for providing information and other services in connection with the select holdings strategy and incurs additional costs in carrying out the select holdings strategy, the limited amount of assets that are managed directly by RIMCo pursuant to the select holdings strategy, and the fact that the aggregate investment advisory fees paid by the Participating Underlying Fund are not increased as a result of the select holdings strategy.
In evaluating the reasonableness of the Funds’ and Underlying Funds’ Advisory Fees in light of Fund and Underlying Fund performance, the Board considered that, in the Agreement Renewal Information and at past meetings, RIMCo noted differences between the investment strategies of certain Underlying Funds and their respective Comparable Funds in pursuing their investment objectives, including fund strategies which seek to achieve a lower tracking error (i.e., the difference, whether positive or negative, between the return of a fund and its benchmark) and resulting lower return volatility than their Comparable Funds. According to RIMCo, these strategies may be expected to result, and for certain Underlying Funds during the periods covered by the Third-Party Information did result, in lower performance of the Underlying Funds than that of some of their respective Comparable Funds. According to RIMCo, the strategies pursued by the Underlying Funds, among other things, are intended to result in less volatile, more moderate returns relative to each Underlying Fund’s performance benchmark rather than more volatile, more extreme returns that its Comparable Funds may experience over time.
In discussing the Advisory Fees for the Underlying Funds generally, RIMCo noted, among other things, that its Advisory Fees for Underlying Funds encompass services that may not be provided by investment advisers to the Underlying Funds’ Comparable Funds, such as cash equitization and management of portfolio transition costs when Money Managers are added, terminated or replaced. RIMCo also explained that its “margins” in providing investment advisory services to the Underlying Funds tend to be lower than competitors’ margins because of the demands and complexities of managing the Underlying Funds’ manager-of-managers structure, including RIMCo’s payment of a significant portion of the Underlying Funds’ Advisory Fees to their Money Managers.
The Board considered for each Fund and Underlying Fund whether economies of scale have been realized and whether the Advisory Fees for such Fund or Underlying Fund appropriately reflect or should be revised to reflect any such economies. During 2008, the Board noted that, generally, there was a reduction in the assets of the Funds and Underlying Funds as a result of market declines and related investor redemptions. The Board determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the Advisory Fees for each Fund or Underlying Fund appropriately reflect any economies of scale realized by such Fund, based upon any decline in assets during 2008 and such factors as the variability of Money Manager investment advisory fees and other factors associated with the manager-of-managers structure employed by the Underlying Funds.
The Board considered, as a general matter, that fees payable to RIMCo by institutional clients with investment objectives similar to those of certain Funds and other funds under the Board’s supervision, including the Underlying Funds, are lower, and may, in some cases, be substantially lower, than the rates paid by the funds supervised by the Board, including the Funds and Underlying Funds. The Trustees considered the differences in the scope of services RIMCo provides to institutional clients and the funds under its supervision, including the Funds and Underlying Funds. In response to the Trustees’ inquiries, RIMCo, as it has in the past, noted, among other things, that institutional clients have fewer administrative needs than the Funds. RIMCo also noted that since the Funds must constantly issue and redeem their shares, they are more difficult to manage than institutional accounts, where assets are relatively stable. In addition, RIMCo noted that the Funds and Underlying Funds are subject to heightened regulatory requirements relative to institutional clients. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.
On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years, or presented at or in connection with the April 21 Board meeting by RIMCo, the Board, in respect of each Fund and Underlying Fund, found, after giving effect to any applicable waivers and/or reimbursements and considering differences in the composition and investment strategies of their respective Comparable Funds (1) the Advisory Fees charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided, and expected to be provided, to the Funds or Underlying Funds; (2) the relative expense ratio of each Fund and Underlying Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Funds and each Underlying Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.
In evaluating the performance of the Funds and Underlying Funds generally relative to their Comparable Funds, the Board also noted RIMCo’s advice that many of the Underlying Funds’ Comparable Funds do not “equitize” their cash (i.e., cash awaiting investment or disbursement to satisfy redemptions or other fund obligations) and may hold large positions uninvested in their investment portfolios. By contrast, the Underlying Funds generally follow a strategy of equitizing their cash and fully investing their assets in pursuit of their investment objectives (the Underlying Funds’ strategy of equitizing cash and fully investing their assets is hereinafter referred to as their “full investment strategy”). RIMCo noted that the Underlying Funds’ full investment strategy
28 | Basis for Approval of Investment Advisory Contracts |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued (Unaudited)
generally will detract from their relative performance, and therefore the relative performance of the Funds, in a declining market, such as 2008, but may enhance relative performance in a rising market.
The Board further concluded that, under the circumstances, the performance of each of the Funds supported continuation of the RIMCo Agreement. In evaluating performance, the Board considered each Fund’s and Underlying Fund’s absolute performance and its performance relative to appropriate benchmarks and indices in addition to its performance relative to its Comparable Funds. In assessing performance, the Board also considered RIMCo’s investment strategy of managing the Underlying Funds in a risk-aware manner and the extraordinary capital market conditions during 2008. The Board noted that each of the Funds had been in existence for less than three years.
With respect to the RIF LifePoints Balanced Strategy Fund and the RIF LifePoints Growth Strategy Fund, the Third-Party Information showed that each such Fund’s performance was ranked in the fourth quintile for the 1-year period ended December 31, 2008. The Board considered RIMCo’s advice that certain Funds’ relative performance was driven to an extent by the underperformance of the underlying Core Bond Fund and that funds with the highest allocation to fixed income were impacted most by the Core Bond Fund’s underperformance.
After considering the foregoing and other relevant factors and given the limited performance record of the Funds, including the RIF LifePoints Balanced Strategy and Growth Strategy Funds, the Board concluded for the reasons discussed herein that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Funds and their respective shareholders and voted to approve the continuation of the RIMCo Agreement.
At the April 21 Board meeting, with respect to the evaluation of the terms of portfolio management contracts with Money Managers for the Underlying Funds, the Board received and considered information from RIMCo reporting, among other things, for each Money Manager, the Money Manager’s performance over various periods; RIMCo’s assessment of the performance of each Money Manager; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Funds’ and Underlying Funds’ underwriter; and RIMCo’s recommendation to retain the Money Manager at the current fee rate, to retain the Money Manager at a reduced fee rate or to terminate the Money Manager. The Board received reports during the course of the year from the Funds’ Chief Compliance Officer regarding each Money Manager’s compliance program. RIMCo recommended that each Money Manager be retained at its current fee rate. RIMCo has advised the Board that it does not regard Money Manager profitability as relevant to its evaluation of the portfolio management contracts with Money Managers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by Money Managers to other clients; and RIMCo believes that the fees agreed upon with Money Managers are reasonable in light of the anticipated quality of investment advisory services to be rendered. The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the Advisory Fee paid by each Fund and Underlying Fund and the fact that each Money Manager’s fee is paid by RIMCo.
Based substantially upon RIMCo’s recommendations, together with the information received from RIMCo in support of its recommendations at the April 21 Board meeting, the Board concluded that the fees paid to the Money Managers of each Underlying Fund are reasonable in light of the quality of the investment advisory services provided and that continuation of the portfolio management contract with each Money Manager of each Underlying Fund would be in the best interests of such Underlying Fund and its shareholders.
In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management contract with any Money Manager for an Underlying Fund that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of each Fund and Underlying Fund.
Basis for Approval of Investment Advisory Contracts | 29 |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Shareholder Requests for Additional Information — June 30, 2009 (Unaudited)
A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each year. These reports are available (i) free of charge, upon request, by calling the Funds at (800) 787-7354, (ii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iii) at the Securities and Exchange Commission’s public reference room.
The Board has delegated to RIMCo, as RIF’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Funds may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Funds maintain a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Funds. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Funds’ Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Funds at (800) 787-7354, and (ii) on the Securities and Exchange Commission’s website at www.sec.gov.
Financial Statements of the Underlying Funds can be obtained at no charge by calling the Funds at (800) 787-7354.
If possible, depending on contract owner registration and address information, and unless you have otherwise opted out, only one copy of the RIF prospectus and each annual and semi-annual report will be sent to contract owners at the same address. If you would like to receive a separate copy of these documents, please contact your Insurance Company. If you currently receive multiple copies of the prospectus, annual report and semi-annual report and would like to request to receive a single copy of these documents in the future, please call your Insurance Company.
Some Insurance Companies may offer electronic delivery of the Funds’ prospectus and annual and semiannual reports. Please contact your Insurance Company for further details.
30 | Shareholder Requests for Additional Information |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers — June 30, 2009
(Unaudited)
The following tables provide information for each officer and Trustee of the Russell Fund Complex. The Russell Fund Complex consists of RIC, which has 38 funds, and RIF, which has nine funds. Each of the Trustees is a Trustee of both RIC and RIF. The first table provides information for the interested Trustee. The second table provides information for the independent Trustees. The third table provides information for the Trustees emeritus. The fourth table provides information for the officers.
Name, Age, Address | Position(s) Held With Fund and Length of Time Served | Term of Office* | Principal Occupation(s) During the Past 5 Years | No. of Portfolios in Russell Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |||||
INTERESTED TRUSTEE | ||||||||||
# Greg J. Stark Born May 3, 1968
909 A Street Tacoma, Washington 98402-1616 | President and Chief Executive Officer since 2004
Trustee since 2007 | Appointed until successor is duly elected and qualified
Until successor is chosen and qualified by Trustees | • President and CEO RIC and RIF • Chairman of the Board, President and CEO, RIMCo • Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”) • Chairman of the Board, President and CEO, Russell Financial Services, Inc. • Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”)) • Until 2004, Managing Director, of Individual Investor Services, FRC • 2000 to 2004 Managing Director, Sales and Client Service, RIMCo | 47 | None | |||||
INDEPENDENT TRUSTEES | ||||||||||
Thaddas L. Alston Born April 7, 1945
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2006 | Appointed until successor is duly elected and qualified | • Senior Vice President, Larco Investments, Ltd. (real estate firm) | 47 | None | |||||
Kristianne Blake, Born January 22, 1954
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2000
Chairman since 2005 | Appointed until successor is duly elected and qualified
Annual | • Director and Chairman of the Audit Committee, Avista Corp. • Trustee and Chairman of the Operations Committee, Principal Investor Funds and Principal Variable Contracts Funds • Regent, University of Washington • President, Kristianne Gates Blake, P.S. (accounting services) • February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF • Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999–2006 | 47 | • Director, Avista Corp (electric utilities) • Trustee, Principal Investor Funds (investment company); • Trustee, Principal Variable Contracts Funds (investment company) |
# | Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee. |
Disclosure of Information about Fund Trustees and Officers | 31 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2009
(Unaudited)
Name, Age, Address | Position(s) Held With Fund and Length of Time Served | Term of Office* | Principal Occupation(s) During the Past 5 Years | No. of Portfolios in Russell Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |||||
INDEPENDENT TRUSTEES (continued) | ||||||||||
Daniel P. Connealy Born June 6, 1946
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2003
Chairman of the Audit Committee since 2005 | Appointed until successor is duly elected and qualified Appointed until successor is duly elected and qualified | • June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc. | 47 | None | |||||
Jonathan Fine, Born July 8, 1954
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2004 | Appointed until successor is duly elected and qualified | • President and Chief Executive Officer, United Way of King County, WA | 47 | None | |||||
Raymond P. Tennison, Jr. Born December 21, 1955
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2000
Chairman of the Nominating and Governance Committee since 2007 | Appointed until successor is duly elected and qualified Appointed until successor is duly elected and qualified | • President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company | 47 | None | |||||
Jack R. Thompson, Born March 21, 1949
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2005 | Appointed until successor is duly elected and qualified | • September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds • September 2007 to present, Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation (health products company) | 47 | • Director, Sparx Asia Funds (investment company) • Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation (health products company) | |||||
Julie W. Weston, Born October 2, 1943
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2002
Chairperson of the Investment Committee since 2006 | Appointed until successor is duly elected and qualified Appointed until successor is duly elected and qualified | • Retired | 47 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
32 | Disclosure of Information about Fund Trustees and Officers |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2009
(Unaudited)
Name, Age, Address | Position(s) Held With Fund and Length of Time Served | Term of Office | Principal Occupation(s) During the Past 5 Years | No. of Portfolios in Russell Fund Complex Overseen by Trustee | Other Directorships Held by Trustee | |||||
TRUSTEES EMERITUS | ||||||||||
* George F. Russell, Jr., Born July 3, 1932
909 A Street Tacoma, Washington 98402-1616 | Trustee Emeritus and Chairman Emeritus since 1999 | Until resignation or removal | • Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)) and RIMCo • Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”)) • Chairman, Sunshine Management Services, LLC (investment adviser) | 47 | None | |||||
Paul E. Anderson, Born October 15, 1931 909 A Street Tacoma, Washington 98402-1616 | Trustee Emeritus since 2007 | Five year term | • President, Anderson Management Group LLC (private investments consulting) • Trustee, RIC and RIF until 2006 • February 2002 to June 2005, Lead Trustee, RIC and RIF • Chairman of the Nominating and Governance Committee, 2006 | 47 | None | |||||
Lee C. Gingrich, Born October 6, 1930
909 A Street Tacoma, Washington 98402-1616 | Trustee Emeritus since 2006 | Five year term | • Retired since 1995 • Trustee of RIC and RIF until 2005 • Chairman of the Nominating and Governance Committee 2001–2005 | 47 | None |
* | Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF. |
Disclosure of Information about Fund Trustees and Officers | 33 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2009
(Unaudited)
Name, Age, Address | Position(s) Held With Fund and Length of Time Served | Term of Office | Principal Occupation(s) During the Past 5 Years | |||
OFFICERS | ||||||
Cheryl Wichers Born December 16, 1966
909 A Street Tacoma, Washington 98402-1616 | Chief Compliance Officer since 2005 | Until removed by Independent Trustees | • Chief Compliance Officer, RIC • Chief Compliance Officer, RIF • Chief Compliance Officer, RIMCo • Chief Compliance Officer, RFSC • April 2002–May 2005, Manager, Global Regulatory Policy | |||
Greg J. Stark, Born May 3, 1968
909 A Street Tacoma, Washington 98402-1616 | President and Chief Executive Officer since 2004 | Until successor is chosen and qualified by Trustees | • President and CEO, RIC and RIF • Chairman of the Board, President and CEO, RIMCo • Chairman of the Board, President and CEO, Russell Financial Services, Inc. • Chairman of the Board, President and CEO, RFSC • Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”)) • Until 2004, Managing Director of Individual Investor Services, FRC • 2000 to 2004, Managing Director, Sales and Client Service, RIMCo | |||
Mark E. Swanson, Born November 26, 1963
909 A Street Tacoma, Washington 98402-1616 | Treasurer and Chief Accounting Officer since 1998 | Until successor is chosen and qualified by Trustees | • Treasurer, Chief Accounting Officer and CFO, RIC and RIF • Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc. • Treasurer and Principal Accounting Officer, SSgA Funds | |||
Peter Gunning, Born February 22, 1967
909 A Street Tacoma, Washington 98402-1616 | Chief Investment Officer since 2008 | Until removed by Trustees | • Chief Investment Officer, RIC and RIF • Director, RIMCo and FRC • 1996 to 2008 Chief Investment Officer, Russell, Asia Pacific | |||
Gregory J. Lyons, Born August 24, 1960
909 A Street Tacoma, Washington 98402-1616 | Secretary since 2007 | Until successor is chosen and qualified by Trustees | • U.S. General Counsel and Assistant Secretary, FRC • Director and Assistant Secretary, RIA • Secretary, RIMCo, RFSC and Russell Financial Services, Inc. • Secretary and Chief Legal Counsel, RIC and RIF |
34 | Disclosure of Information about Fund Trustees and Officers |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
909 A Street, Tacoma, Washington 98402
(800) 787-7354
Interested Trustee
Greg J. Stark
Independent Trustees
Thaddas L. Alston
Kristianne Blake
Daniel P. Connealy
Jonathan Fine
Raymond P. Tennison, Jr.
Jack R. Thompson
Julie W. Weston
Trustees Emeritus
George F. Russell, Jr.
Paul E. Anderson
Lee C. Gingrich
Officers
Greg J. Stark, President and Chief Executive Officer
Cheryl Wichers, Chief Compliance Officer
Peter Gunning, Chief Investment Officer
Mark E. Swanson, Treasurer and Chief Accounting Officer
Gregory J. Lyons, Secretary
Adviser
Russell Investment Management Company
909 A Street
Tacoma, WA 98402
Administrator and Transfer and Dividend Disbursing Agent
Russell Fund Services Company
909 A Street
Tacoma, WA 98402
Custodian
State Street Bank and Trust Company
Josiah Quincy Building
200 Newport Avenue
North Quincy, MA 02171
Office of Shareholder Inquiries
909 A Street
Tacoma, WA 98402
(800) 787-7354
Legal Counsel
Dechert LLP
200 Clarendon Street, 27th Floor
Boston, MA 02116-5021
Distributor
Russell Financial Services, Inc.
909 A Street
Tacoma, WA 98402
Money Managers of Underlying Funds as of June 30, 2009
RIF Core Bond Fund
Goldman Sachs Asset Management, L.P., New York, NY
Metropolitan West Asset Management, LLC, Los Angeles, CA
Pacific Investment Management Company LLC, Newport Beach, CA
RIF Aggressive Equity Fund
ClariVest Asset Management LLC, San Diego, CA
DePrince, Race & Zollo, Inc., Winter Park, FL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Ranger Investment Management, L.P., Dallas, TX
Signia Capital Management, LLC, Spokane, WA
Tygh Capital Management, Inc., Portland, OR
RIF Multi-Style Equity Fund
Arnhold and S. Bleichroeder Advisers, LLC, New York, NY
Columbus Circle Investors, Stamford, CT
DePrince, Race & Zollo, Inc., Winter Park, FL
Institutional Capital LLC, Chicago, IL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Montag & Caldwell, Inc., Atlanta, GA
Suffolk Capital Management, LLC, New York, NY
Turner Investment Partners, Inc., Berwyn, PA
RIF Real Estate Securities Fund
AEW Capital Management, L.P., Boston, MA
Cohen & Steers Capital Management, Inc., New York, NY
Heitman Real Estate Securities LLC, Chicago, IL
INVESCO Institutional (N.A.), Inc. which acts as a money manager to the Fund through its INVESCO Real Estate Division, Dallas, TX
RREEF America L.L.C., Chicago, IL
RIC Russell U.S. Quantitative Equity Fund
Aronson+Johnson+Ortiz, LP, Philadelphia, PA
Goldman Sachs Asset Management, L.P., New York, NY
INTECH Investment Management LLC, West Palm Beach, FL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Mellon Capital Management Corporation, Boston, MA
RIF Non-U.S. Fund
Altrinsic Global Advisors, LLC, Stamford, CT
Barrow, Hanley, Mewhinney & Strauss, Inc., Dallas, TX
Marsico Capital Management, LLC, Denver, CO
MFS Institutional Advisors, Inc., Boston, MA
RIC Russell Emerging Markets Fund
AllianceBernstein L.P., New York, NY
Arrowstreet Capital, Limited Partnership, Boston, MA
Genesis Asset Managers, LLP, London, United Kingdom
Harding Loevner LLC, Somerville, NJ
T. Rowe Price International, Inc., Baltimore, MD
UBS Global Asset Management (Americas) Inc., Chicago, IL
RIC Russell Global Equity Fund
ClariVest Asset Management LLC, San Diego, CA
Gartmore Global Partners, London, United Kingdom
Harris Associates, L.P., Chicago, IL
Tradewinds Global Investors, LLC, Los Angeles, CA
T. Rowe Price International, Inc., Baltimore, MD
This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Funds. Such offering is made only by Prospectus, which includes details as to offering price and other material information.
Adviser, Money Managers and Service Providers | 35 |
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Russell Investment Funds | 909 A Street | 800-787-7354 | ||
Tacoma, Washington 98402 | Fax: 253-591-3495 | |||
www.russell.com |
36-08-188
Table of Contents
Item 2. | Code of Ethics. [Annual Report Only] |
Item 3. | Audit Committee Financial Expert. [Annual Report Only] |
Item 4. | Principal Accountant Fees and Services. [Annual Report Only] |
Items 5. | Audit Committee of Listed Registrants. [Not Applicable] |
Item 6. | [Schedule of investments is included as part of the report to shareholders filed under Item 1 of this form] |
Items 7-9. | [Not Applicable] |
Item 10. | Submission of Matters to a Vote of Security Holders |
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.
Item 11. | Controls and Procedures |
(a) Registrant’s principal executive officer and principal financial officer have concluded that Registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940 (the “Act”)) are effective, based on their evaluation of these controls and procedures as of a date within 90 days of the date this report is filed with the Securities and Exchange Commission.
(b) There were no significant changes in Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected or is likely to materially affect Registrant’s internal control over financial reporting.
Item 12. | Exhibit List |
(a) Certification for principal executive officer of Registrant as required by Rule 30a-2(a) under the Act and certification for principal financial officer of Registrant as required by Rule 30a-2(a) under the Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Russell Investment Funds | ||
By: | /s/ Greg J. Stark | |
Greg J. Stark | ||
Principal Executive Officer and Chief Executive Officer |
Date: August 27, 2009
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.
By: | /s/ Greg J. Stark | |
Greg J. Stark | ||
Principal Executive Officer and Chief Executive Officer |
Date: August 27, 2009
By: | /s/ Mark E. Swanson | |
Mark E. Swanson | ||
Principal Financial Officer, Principal Accounting Officer and Treasurer |
Date: August 27, 2009