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)
Mary Beth Rhoden, 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, 2010 – June 30, 2010
Table of Contents
Item 1. | Reports to Stockholders |
Table of Contents
2010 SEMI-ANNUAL REPORT
Russell Investment Funds
JUNE 30, 2010
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
Semi-annual Report
June 30, 2010 (Unaudited)
Table of Contents
Russell Investment Funds
Copyright © Russell Investments 2010. 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
Multi-Style Equity Fund
Shareholder Expense Example — June 30, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 935.80 | $ | 1,020.43 | ||
Expenses Paid During Period* | $ | 4.22 | $ | 4.41 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.88% (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). |
Multi-Style Equity Fund | 3 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 97.6% | ||||
Consumer Discretionary - 12.4% | ||||
Abercrombie & Fitch Co. Class A | 2,000 | 61 | ||
Amazon.com, Inc. (Æ) | 22,472 | 2,455 | ||
Avon Products, Inc. | 15,500 | 411 | ||
Bed Bath & Beyond, Inc. (Æ) | 20,860 | 774 | ||
Best Buy Co., Inc. | 18,589 | 629 | ||
BJ’s Wholesale Club, Inc. (Æ) | 3,900 | 144 | ||
CarMax, Inc. (Æ) | 11,600 | 231 | ||
CBS Corp. Class B | 110,909 | 1,434 | ||
Comcast Corp. Class A | 95,106 | 1,652 | ||
Costco Wholesale Corp. | 29,800 | 1,634 | ||
Ctrip.com International, Ltd. - ADR (Æ) | 7,400 | 278 | ||
Darden Restaurants, Inc. | 26,400 | 1,026 | ||
eBay, Inc. (Æ) | 13,100 | 257 | ||
Estee Lauder Cos., Inc. (The) Class A | 13,662 | 761 | ||
Expedia, Inc. | 1,700 | 32 | ||
Foot Locker, Inc. | 13,700 | 173 | ||
Ford Motor Co. (Æ)(Ñ) | 128,767 | 1,298 | ||
Harman International Industries, Inc. (Æ) | 2,900 | 87 | ||
Home Depot, Inc. | 56,905 | 1,597 | ||
Hyatt Hotels Corp. (Æ) | 5,300 | 197 | ||
IAC/InterActiveCorp (Æ) | 4,200 | 92 | ||
JC Penney Co., Inc. | 1,800 | 39 | ||
Johnson Controls, Inc. | 46,350 | 1,245 | ||
Kohl’s Corp. (Æ) | 27,444 | 1,304 | ||
Las Vegas Sands Corp. (Æ)(Ñ) | 52,400 | 1,160 | ||
Lennar Corp. Class A | 15,488 | 215 | ||
Lowe’s Cos., Inc. | 103,700 | 2,118 | ||
McDonald’s Corp. | 33,900 | 2,233 | ||
NetFlix, Inc. (Æ) | 2,800 | 304 | ||
Nike, Inc. Class B | 16,700 | 1,128 | ||
priceline.com, Inc. (Æ) | 4,266 | 753 | ||
Pulte Group, Inc. (Æ) | 20,160 | 167 | ||
Rent-A-Center, Inc. Class A (Æ) | 4,700 | 95 | ||
Stanley Black & Decker, Inc. | 3,990 | 202 | ||
Starbucks Corp. | 47,025 | 1,143 | ||
Starwood Hotels & Resorts Worldwide, Inc. (ö) | 6,900 | 286 | ||
Target Corp. | 13,900 | 684 | ||
Tech Data Corp. (Æ) | 6,300 | 224 | ||
Tiffany & Co. | 16,900 | 641 | ||
Time Warner Cable, Inc. | 8,500 | 443 | ||
Time Warner, Inc. | 18,000 | 520 | ||
TJX Cos., Inc. | 32,529 | 1,365 | ||
Viacom, Inc. Class B | 88,400 | 2,773 | ||
Wal-Mart Stores, Inc. | 85,253 | 4,098 | ||
Walt Disney Co. (The) | 57,500 | 1,811 | ||
Wendy’s/Arby’s Group, Inc. | 17,300 | 69 | ||
Whirlpool Corp. | 2,700 | 237 | ||
Yum! Brands, Inc. | 24,900 | 972 | ||
41,452 | ||||
Consumer Staples - 10.0% | ||||
Archer-Daniels-Midland Co. | 23,200 | 599 | ||
Campbell Soup Co. | 16,100 | 577 | ||
Clorox Co. | 4,300 | 267 |
Principal Amount ($) or Shares | Market Value $ | |||
Coca-Cola Co. (The) | 114,712 | 5,749 | ||
Colgate-Palmolive Co. | 44,571 | 3,510 | ||
Constellation Brands, Inc. Class A (Æ) | 12,700 | 198 | ||
Corn Products International, Inc. | 20,800 | 630 | ||
Flowers Foods, Inc. | 6,000 | 147 | ||
Hansen Natural Corp. (Æ) | 600 | 24 | ||
Kellogg Co. | 58,643 | 2,950 | ||
Kimberly-Clark Corp. | 12,000 | 728 | ||
Kraft Foods, Inc. Class A | 16,200 | 454 | ||
Kroger Co. (The) | 6,400 | 126 | ||
Lorillard, Inc. | 6,600 | 475 | ||
Molson Coors Brewing Co. Class B | 33,950 | 1,438 | ||
PepsiCo, Inc. | 128,243 | 7,816 | ||
Philip Morris International, Inc. | 13,100 | 601 | ||
Procter & Gamble Co. (The) | 66,746 | 4,003 | ||
Ralcorp Holdings, Inc. (Æ) | 15,300 | 838 | ||
Reynolds American, Inc. | 4,600 | 240 | ||
Safeway, Inc. | 46,700 | 918 | ||
Sanderson Farms, Inc. | 1,400 | 71 | ||
SUPERVALU, Inc. | 11,300 | 123 | ||
Whole Foods Market, Inc. (Æ) | 30,561 | 1,101 | ||
33,583 | ||||
Energy - 10.2% | ||||
Anadarko Petroleum Corp. | 7,800 | 282 | ||
Apache Corp. | 15,850 | 1,334 | ||
Cameron International Corp. (Æ) | 22,300 | 725 | ||
Chevron Corp. | 58,100 | 3,943 | ||
ConocoPhillips | 72,000 | 3,535 | ||
Devon Energy Corp. | 17,832 | 1,086 | ||
Dynegy, Inc. Class A (Æ) | 7,880 | 30 | ||
EOG Resources, Inc. | 17,500 | 1,722 | ||
Exxon Mobil Corp. | 26,500 | 1,512 | ||
Hess Corp. | 17,100 | 861 | ||
Marathon Oil Corp. | 131,547 | 4,090 | ||
Massey Energy Co. | 10,200 | 279 | ||
Murphy Oil Corp. | 6,900 | 342 | ||
NextEra Energy, Inc. | 23,400 | �� | 1,141 | |
Noble Energy, Inc. | 1,300 | 79 | ||
Occidental Petroleum Corp. | 80,230 | 6,190 | ||
Pioneer Natural Resources Co. | 22,140 | 1,316 | ||
Pride International, Inc. (Æ) | 10,400 | 232 | ||
Rowan Cos., Inc. (Æ) | 4,800 | 105 | ||
Royal Dutch Shell PLC - ADR | 14,500 | 728 | ||
Schlumberger, Ltd. | 23,900 | 1,323 | ||
Southwestern Energy Co. (Æ) | 22,900 | 885 | ||
Statoil ASA - ADR | 36,000 | 689 | ||
Sunoco, Inc. | 14,500 | 504 | ||
Tesoro Corp. | 3,800 | 44 | ||
Valero Energy Corp. | 19,700 | 354 | ||
Williams Cos., Inc. (The) | 38,805 | 709 | ||
34,040 | ||||
Financial Services - 15.3% | ||||
Aflac, Inc. | 31,550 | 1,346 | ||
Allied World Assurance Co. Holdings, Ltd. | 3,100 | 141 | ||
Allstate Corp. (The) | 36,900 | 1,060 |
4 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
American Express Co. | 32,313 | 1,283 | ||
American Financial Group, Inc. | 2,100 | 57 | ||
Ameriprise Financial, Inc. | 6,900 | 249 | ||
AON Corp. | 32,850 | 1,219 | ||
Aspen Insurance Holdings, Ltd. | 10,900 | 270 | ||
Assurant, Inc. | 10,400 | 361 | ||
Axis Capital Holdings, Ltd. | 5,700 | 169 | ||
Bank of America Corp. | 144,559 | 2,077 | ||
Bank of Hawaii Corp. | 3,600 | 174 | ||
Bank of New York Mellon Corp. (The) | 33,300 | 822 | ||
BB&T Corp. | 35,700 | 939 | ||
Berkshire Hathaway, Inc. Class B (Æ) | 3,000 | 239 | ||
BlackRock, Inc. Class A | 900 | 129 | ||
Camden Property Trust (ö) | 7,800 | 319 | ||
Capital One Financial Corp. | 42,976 | 1,732 | ||
Charles Schwab Corp. (The) | 26,800 | 380 | ||
Chimera Investment Corp. (ö) | 108,900 | 393 | ||
Citigroup, Inc. (Æ) | 300,300 | 1,129 | ||
City National Corp. | 2,800 | 143 | ||
Comerica, Inc. | 10,400 | 383 | ||
Commerce Bancshares, Inc. | 3,000 | 108 | ||
Cullen/Frost Bankers, Inc. | 1,500 | 77 | ||
Discover Financial Services | 24,400 | 341 | ||
Endurance Specialty Holdings, Ltd. | 7,000 | 263 | ||
Equity Residential (ö) | 3,600 | 150 | ||
Everest Re Group, Ltd. | 1,500 | 106 | ||
Federated Investors, Inc. Class B (Ñ) | 24,900 | 516 | ||
Fifth Third Bancorp | 66,500 | 817 | ||
First Horizon National Corp. (Æ) | 10,534 | 121 | ||
Franklin Resources, Inc. | 3,300 | 284 | ||
Fulton Financial Corp. | 14,600 | 141 | ||
Goldman Sachs Group, Inc. (The) | 2,879 | 378 | ||
Hartford Financial Services Group, Inc. | 27,400 | 606 | ||
Hudson City Bancorp, Inc. | 60,400 | 739 | ||
JPMorgan Chase & Co. | 125,651 | 4,600 | ||
KeyCorp | 75,300 | 579 | ||
Legg Mason, Inc. | 5,800 | 163 | ||
Lincoln National Corp. | 38,700 | 940 | ||
Marsh & McLennan Cos., Inc. | 35,300 | 796 | ||
Mastercard, Inc. Class A | 4,985 | 995 | ||
Mercury General Corp. | 15,000 | 622 | ||
MetLife, Inc. | 31,000 | 1,171 | ||
Moody’s Corp. | 23,400 | 466 | ||
Morgan Stanley | 40,950 | 951 | ||
New York Community Bancorp, Inc. | 12,500 | 191 | ||
NewAlliance Bancshares, Inc. | 9,300 | 104 | ||
Northern Trust Corp. | 18,500 | 864 | ||
NYSE Euronext | 7,400 | 205 | ||
PartnerRe, Ltd. - ADR | 4,600 | 323 | ||
People’s United Financial, Inc. | 56,900 | 768 | ||
Plum Creek Timber Co., Inc. (ö) | 18,200 | 628 | ||
PNC Financial Services Group, Inc. | 7,700 | 435 | ||
ProLogis (ö) | 19,600 | 199 | ||
Prosperity Bancshares, Inc. | 4,900 | 170 | ||
Prudential Financial, Inc. | 27,300 | 1,465 | ||
Regions Financial Corp. | 27,800 | 183 | ||
SL Green Realty Corp. (ö) | 2,400 | 132 |
Principal Amount ($) or Shares | Market Value $ | |||
State Street Corp. | 25,100 | 849 | ||
SunTrust Banks, Inc. | 69,700 | 1,624 | ||
Transatlantic Holdings, Inc. | 4,900 | 235 | ||
Travelers Cos., Inc. (The) | 8,500 | 419 | ||
US Bancorp | 82,300 | 1,839 | ||
Valley National Bancorp | 42,439 | 578 | ||
Verisk Analytics, Inc. (Æ) | 322 | 10 | ||
Visa, Inc. | 42,544 | 3,010 | ||
Washington Federal, Inc. | 6,100 | 99 | ||
Wells Fargo & Co. | 205,159 | 5,252 | ||
White Mountains Insurance Group, Ltd. | 500 | 162 | ||
Wilmington Trust Corp. (Ñ) | 22,900 | 254 | ||
XL Group PLC | 12,000 | 192 | ||
51,134 | ||||
Health Care - 11.0% | ||||
Abbott Laboratories | 83,362 | 3,900 | ||
Aetna, Inc. | 3,300 | 87 | ||
Allergan, Inc. | 24,600 | 1,433 | ||
AMERIGROUP Corp. Class A (Æ) | 1,500 | 49 | ||
Amgen, Inc. (Æ) | 42,063 | 2,212 | ||
Baxter International, Inc. | 20,000 | 813 | ||
Boston Scientific Corp. (Æ) | 64,200 | 372 | ||
Cardinal Health, Inc. | 3,800 | 128 | ||
Celgene Corp. (Æ) | 11,900 | 605 | ||
Cerner Corp. (Æ) | 5,600 | 425 | ||
Covance, Inc. (Æ) | 11,500 | 590 | ||
Coventry Health Care, Inc. (Æ) | 12,100 | 214 | ||
Covidien PLC | 36,900 | 1,483 | ||
Eli Lilly & Co. (Ñ) | 11,600 | 389 | ||
Express Scripts, Inc. Class A (Æ) | 15,400 | 724 | ||
Forest Laboratories, Inc. (Æ) | 13,400 | 368 | ||
Healthspring, Inc. (Æ) | 2,100 | 33 | ||
Hill-Rom Holdings, Inc. | 3,400 | 103 | ||
Hologic, Inc. (Æ) | 8,200 | 114 | ||
Hospira, Inc. (Æ) | 17,000 | 977 | ||
Humana, Inc. (Æ) | 8,600 | 393 | ||
Illumina, Inc. (Æ) | 7,700 | 335 | ||
Intuitive Surgical, Inc. (Æ) | 3,357 | 1,059 | ||
Johnson & Johnson | 17,600 | 1,039 | ||
King Pharmaceuticals, Inc. (Æ) | 31,200 | 237 | ||
Life Technologies Corp. (Æ) | 7,300 | 345 | ||
Lincare Holdings, Inc. | 13,500 | 439 | ||
Medtronic, Inc. | 25,616 | 929 | ||
Merck & Co., Inc. | 197,900 | 6,921 | ||
Pfizer, Inc. | 195,400 | 2,786 | ||
Sanofi-Aventis SA - ADR | 72,650 | 2,184 | ||
Stryker Corp. | 27,300 | 1,367 | ||
Teleflex, Inc. | 8,200 | 445 | ||
Teva Pharmaceutical Industries, Ltd. - ADR | 6,600 | 343 | ||
Thermo Fisher Scientific, Inc. (Æ) | 20,003 | 981 | ||
UnitedHealth Group, Inc. | 10,400 | 295 | ||
Watson Pharmaceuticals, Inc. Class B (Æ) | 5,500 | 223 | ||
WellPoint, Inc. (Æ) | 8,500 | 416 | ||
Zimmer Holdings, Inc. (Æ) | 23,200 | 1,254 | ||
37,010 | ||||
Multi-Style Equity Fund | 5 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Materials and Processing - 5.5% | ||||
Agnico-Eagle Mines, Ltd. (Þ) | 2,500 | 152 | ||
Air Products & Chemicals, Inc. | 26,400 | 1,711 | ||
Airgas, Inc. | 4,061 | 253 | ||
Allegheny Technologies, Inc. (Ñ) | 8,400 | 371 | ||
Cytec Industries, Inc. | 4,700 | 188 | ||
Dow Chemical Co. (The) | 51,600 | 1,224 | ||
Ecolab, Inc. | 6,100 | 274 | ||
Freeport-McMoRan Copper & Gold, Inc. Class B | 2,900 | 172 | ||
Huntsman Corp. | 71,200 | 617 | ||
International Flavors & Fragrances, Inc. | 6,300 | 267 | ||
Masco Corp. | 75,100 | 808 | ||
MeadWestvaco Corp. | 8,600 | 191 | ||
Newmont Mining Corp. | 64,191 | 3,963 | ||
Nucor Corp. | 19,100 | 731 | ||
Owens-Illinois, Inc. (Æ) | 30,550 | 808 | ||
Pactiv Corp. (Æ) | 19,848 | 553 | ||
Potash Corp. of Saskatchewan, Inc. | 4,400 | 379 | ||
PPG Industries, Inc. | 5,800 | 350 | ||
Praxair, Inc. | 34,382 | 2,613 | ||
Sealed Air Corp. | 48,800 | 962 | ||
Teck Resources, Ltd. Class B | 16,600 | 491 | ||
United States Steel Corp. | 5,700 | 220 | ||
Valspar Corp. | 7,500 | 226 | ||
Vulcan Materials Co. (Ñ) | 20,800 | 912 | ||
18,436 | ||||
Producer Durables - 11.2% | ||||
3M Co. | 32,100 | 2,536 | ||
Accenture PLC Class A | 29,600 | 1,144 | ||
AGCO Corp. (Æ) | 9,000 | 243 | ||
Automatic Data Processing, Inc. | 20,400 | 821 | ||
Avery Dennison Corp. | 14,900 | 479 | ||
Boeing Co. (The) | 9,000 | 565 | ||
Caterpillar, Inc. | 58,077 | 3,489 | ||
CSX Corp. | 6,900 | 342 | ||
Cummins, Inc. | 30,552 | 1,990 | ||
Danaher Corp. | 24,000 | 891 | ||
Deere & Co. | 11,334 | 631 | ||
Delta Air Lines, Inc. (Æ) | 57,300 | 673 | ||
Emerson Electric Co. | 16,100 | 703 | ||
Empresa Brasileira de Aeronautica | 34,600 | 725 | ||
FedEx Corp. | 13,600 | 953 | ||
Fluor Corp. | 19,500 | 829 | ||
General Dynamics Corp. | 11,400 | 668 | ||
General Electric Co. | 133,200 | 1,921 | ||
Goodrich Corp. | 8,600 | 570 | ||
Harsco Corp. | 21,100 | 496 | ||
Honeywell International, Inc. | 95,798 | 3,739 | ||
Joy Global, Inc. | 13,200 | 661 | ||
L-3 Communications Holdings, Inc. Class 3 | 4,600 | 326 | ||
Lexmark International, Inc. Class A (Æ) | 10,900 | 360 | ||
Lincoln Electric Holdings, Inc. | 1,800 | 92 | ||
Lockheed Martin Corp. | 10,400 | 775 | ||
Manpower, Inc. | 13,800 | 596 |
Principal Amount ($) or Shares | Market Value $ | |||
Norfolk Southern Corp. | 500 | 26 | ||
Northrop Grumman Corp. | 7,400 | 403 | ||
PACCAR, Inc. | 17,700 | 706 | ||
Pitney Bowes, Inc. | 33,900 | 744 | ||
Regal-Beloit Corp. | 1,900 | 106 | ||
Robert Half International, Inc. | 19,400 | 457 | ||
Rockwell Automation, Inc. | 8,300 | 407 | ||
SPX Corp. | 9,500 | 502 | ||
SunPower Corp. (Æ) | 48,800 | 527 | ||
Teekay Corp. | 4,700 | 123 | ||
Terex Corp. (Æ) | 4,400 | 82 | ||
Textron, Inc. | 25,550 | 434 | ||
Tidewater, Inc. | 17,300 | 670 | ||
UAL Corp. (Æ)(Ñ) | 11,800 | 243 | ||
Union Pacific Corp. | 5,300 | 368 | ||
United Parcel Service, Inc. Class B | 59,862 | 3,405 | ||
URS Corp. (Æ) | 6,600 | 260 | ||
Waste Management, Inc. | 19,800 | 619 | ||
Watts Water Technologies, Inc. Class A | 2,100 | 60 | ||
Werner Enterprises, Inc. | 8,700 | 190 | ||
37,550 | ||||
Technology - 18.1% | ||||
Advanced Micro Devices, Inc. (Æ) | 16,800 | 123 | ||
Altera Corp. | 13,600 | 337 | ||
Amdocs, Ltd. (Æ) | 5,800 | 156 | ||
Amphenol Corp. Class A | 23,459 | 921 | ||
AOL, Inc. (Æ) | 15,700 | 326 | ||
Apple, Inc. (Æ) | 29,572 | 7,438 | ||
Applied Materials, Inc. | 70,200 | 844 | ||
Baidu, Inc. - ADR (Æ) | 7,000 | 477 | ||
Benchmark Electronics, Inc. (Æ) | 4,100 | 65 | ||
Broadcom Corp. Class A | 78,694 | 2,595 | ||
Check Point Software Technologies, Ltd. (Æ) | 16,300 | 481 | ||
Cisco Systems, Inc. (Æ) | 236,933 | 5,049 | ||
Cognizant Technology Solutions Corp. Class A (Æ) | 16,833 | 843 | ||
Computer Sciences Corp. | 7,500 | 339 | ||
Cree, Inc. (Æ) | 3,700 | 222 | ||
Dell, Inc. (Æ) | 74,200 | 895 | ||
Diebold, Inc. | 13,200 | 360 | ||
Electronic Arts, Inc. Series C (Æ) | 12,800 | 184 | ||
Equinix, Inc. (Æ) | 4,000 | 325 | ||
F5 Networks, Inc. (Æ) | 13,200 | 905 | ||
Google, Inc. Class A (Æ) | 10,270 | 4,570 | ||
Harris Corp. | 9,100 | 379 | ||
Hewlett-Packard Co. | 149,097 | 6,453 | ||
Intel Corp. | 35,900 | 698 | ||
International Business Machines Corp. | 17,654 | 2,180 | ||
Juniper Networks, Inc. (Æ) | 19,600 | 447 | ||
Lam Research Corp. (Æ) | 9,800 | 373 | ||
Linear Technology Corp. | 32,500 | 904 | ||
LSI Corp. (Æ) | 37,700 | 173 | ||
Marvell Technology Group, Ltd. (Æ) | 36,032 | 568 | ||
Maxim Integrated Products, Inc. | 42,900 | 718 | ||
Micron Technology, Inc. (Æ) | 49,200 | 418 |
6 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Microsoft Corp. | 111,166 | 2,558 | ||
Molex, Inc. | 14,800 | 270 | ||
Motorola, Inc. (Æ) | 57,700 | 376 | ||
National Semiconductor Corp. | 67,300 | 906 | ||
NetApp, Inc. (Æ) | 37,290 | 1,391 | ||
Nokia OYJ - ADR | 41,400 | 337 | ||
Oracle Corp. | 56,500 | 1,213 | ||
Plexus Corp. (Æ) | 700 | 19 | ||
QUALCOMM, Inc. | 146,398 | 4,808 | ||
Research In Motion, Ltd. (Æ) | 25,500 | 1,256 | ||
Salesforce.com, Inc. (Æ) | 8,300 | 712 | ||
SanDisk Corp. (Æ) | 10,700 | 450 | ||
Seagate Technology (Æ) | 36,300 | 473 | ||
Synopsys, Inc. (Æ) | 13,200 | 275 | ||
Tellabs, Inc. | 44,600 | 285 | ||
Texas Instruments, Inc. | 142,601 | 3,320 | ||
Tyco Electronics, Ltd. | 33,049 | 839 | ||
VMware, Inc. Class A (Æ) | 3,600 | 225 | ||
60,479 | ||||
Utilities - 3.9% | ||||
Ameren Corp. | 12,800 | 304 | ||
American Electric Power Co., Inc. | 17,400 | 562 | ||
American Water Works Co., Inc. | 31,700 | 653 | ||
AT&T, Inc. | 10,400 | 252 | ||
Atmos Energy Corp. | 5,700 | 154 | ||
BCE, Inc. | 50,900 | 1,490 | ||
CenterPoint Energy, Inc. | 36,900 | 486 | ||
CenturyLink, Inc. | 9,900 | 330 | ||
Consolidated Edison, Inc. | 9,200 | 396 | ||
Constellation Energy Group, Inc. | 6,000 | 193 | ||
Edison International | 11,600 | 368 | ||
Energen Corp. | 3,800 | 168 | ||
Entergy Corp. | 5,000 | 358 | ||
Exelon Corp. | 11,700 | 444 | ||
Frontier Communications Corp. (Ñ) | 57,200 | 407 | ||
Great Plains Energy, Inc. | 28,300 | 482 | ||
MDU Resources Group, Inc. | 35,700 | 644 | ||
NII Holdings, Inc. (Æ) | 6,900 | 224 | ||
NiSource, Inc. | 23,500 | 341 | ||
NV Energy, Inc. | 22,600 | 267 | ||
Pepco Holdings, Inc. | 29,200 | 458 | ||
PG&E Corp. | 8,100 | 333 | ||
Pinnacle West Capital Corp. | 9,400 | 342 | ||
PNM Resources, Inc. | 7,400 | 83 | ||
PPL Corp. | 12,800 | 319 | ||
Progress Energy, Inc. | 10,100 | 396 | ||
Telephone & Data Systems, Inc. | 3,800 | 115 | ||
Veolia Environnement - ADR | 15,200 | 355 | ||
Vodafone Group PLC - ADR | 86,100 | 1,780 | ||
Westar Energy, Inc. | 10,000 | 216 | ||
12,920 | ||||
Total Common Stocks (cost $318,492) | 326,604 | |||
Principal Amount ($) or Shares | Market Value $ | ||||
Short-Term Investments - 2.5% | |||||
Russell U.S. Cash Management Fund (£) | 8,335,452 | 8,335 | |||
Total Short-Term Investments (cost $8,335) | 8,335 | ||||
Other Securities - 0.5% | |||||
State Street Securities Lending Quality Trust (×) | 1,787,986 | 1,782 | |||
Total Other Securities (cost $1,788) | 1,782 | ||||
Total Investments - 100.6% (identified cost $328,615) | 336,721 | ||||
Other Assets and Liabilities, Net - (0.6%) | (1,993 | ) | |||
Net Assets - 100.0% | 334,728 | ||||
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, 2010 (Unaudited)
Amounts in thousands (except contracts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||
Long Postitions | ||||||||||
Russell 1000 Mini Index | 22 | USD | 1,243 | 09/10 | (33) | |||||
S&P 500 E-Mini Index (CME) | 74 | USD | 3,798 | 09/10 | (182) | |||||
S&P 500 Index (CME) | 7 | USD | 1,797 | 09/10 | (67) | |||||
S&P Midcap 400 E-Mini Index (CME) | 8 | USD | 568 | 09/10 | (30) | |||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) | (312) | |||||||||
Presentation of Portfolio Holdings — June 30, 2010 (Unaudited)
Amounts in thousands
Portfolio Summary | Market Value | % of Net Assets | |||||||||||||||
Level 1 | Level 2 | Level 3 | Total | ||||||||||||||
Common Stock | |||||||||||||||||
Consumer Discretionary | $ | 41,452 | $ | — | $ | — | $ | 41,452 | 12.4 | ||||||||
Consumer Staples | 33,583 | — | — | 33,583 | 10.0 | ||||||||||||
Energy | 34,040 | — | — | 34,040 | 10.2 | ||||||||||||
Financial Services | 51,134 | — | — | 51,134 | 15.3 | ||||||||||||
Health Care | 37,010 | — | — | 37,010 | 11.0 | ||||||||||||
Materials and Processing | 18,436 | — | — | 18,436 | 5.5 | ||||||||||||
Producer Durables | 37,550 | — | — | 37,550 | 11.2 | ||||||||||||
Technology | 60,479 | — | — | 60,479 | 18.1 | ||||||||||||
Utilities | 12,920 | — | — | 12,920 | 3.9 | ||||||||||||
Short-Term Investments | — | 8,335 | — | 8,335 | 2.5 | ||||||||||||
Other Securities | — | 1,782 | — | 1,782 | 0.5 | ||||||||||||
Total Investments | 326,604 | 10,117 | — | 336,721 | 100.6 | ||||||||||||
Other Assets and Liabilities, Net | (0.6 | ) | |||||||||||||||
100.0 | |||||||||||||||||
Other Financial Instruments | |||||||||||||||||
Futures Contracts | (312 | ) | — | — | (312 | ) | (0.1 | ) | |||||||||
Total Other Financial Instruments* | (312 | ) | — | — | (312 | ) | |||||||||||
* | 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. |
For a description of the levels see note 2 in the Notes to Financial Statements.
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
Fair Value of Derivative Instruments — June 30, 2010 (Unaudited)
Amounts in thousands
Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Assets and Liabilities - Liabilities | ||||
Daily variation margin on futures contracts* | $ | 312 | ||
Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Operations - Net realized gain (loss) | ||||
Futures contracts | $ | (729 | ) | |
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||
Futures contracts | $ | (675 | ) | |
* | 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. |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Multi-Style Equity Fund | 9 |
Table of Contents
Aggressive Equity Fund
Shareholder Expense Example — June 30, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 962.90 | $ | 1,019.59 | ||
Expenses Paid During Period* | $ | 5.11 | $ | 5.26 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.05% (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, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 96.7% | ||||
Consumer Discretionary - 14.0% | ||||
99 Cents Only Stores (Æ) | 31,460 | 466 | ||
ABM Industries, Inc. | 15,200 | 318 | ||
America’s Car-Mart, Inc. (Æ) | 9,610 | 217 | ||
Arctic Cat, Inc. (Æ) | 1,800 | 16 | ||
Asbury Automotive Group, Inc. (Æ) | 17,531 | 185 | ||
Autoliv, Inc. | 5,400 | 258 | ||
Barnes & Noble, Inc. | 4,200 | 55 | ||
Bebe Stores, Inc. | 26,500 | 170 | ||
BJ’s Wholesale Club, Inc. (Æ) | 7,400 | 274 | ||
Blyth, Inc. | 900 | 31 | ||
Bob Evans Farms, Inc. | 4,900 | 121 | ||
Brown Shoe Co., Inc. | 4,700 | 71 | ||
Build-A-Bear Workshop, Inc. Class A (Æ) | 3,900 | 26 | ||
Callaway Golf Co. | 51,846 | 313 | ||
Capella Education Co. (Æ) | 1,595 | 130 | ||
Career Education Corp. (Æ) | 2,800 | 64 | ||
Carter’s, Inc. (Æ) | 17,657 | 463 | ||
Chico’s FAS, Inc. | 49,915 | 493 | ||
Christopher & Banks Corp. | 32,772 | 203 | ||
Clear Channel Outdoor Holdings, Inc. Class A (Æ) | 4,300 | 37 | ||
Columbia Sportswear Co. | 7,438 | 347 | ||
Core-Mark Holding Co., Inc. (Æ) | 1,700 | 47 | ||
Corinthian Colleges, Inc. (Æ)(Ñ) | 7,600 | 75 | ||
Cracker Barrel Old Country Store, Inc. | 1,200 | 56 | ||
CROCS, Inc. (Æ) | 32,529 | 344 | ||
Ctrip.com International, Ltd. - ADR (Æ) | 6,458 | 243 | ||
Darden Restaurants, Inc. | 8,500 | 330 | ||
DeVry, Inc. | 3,786 | 199 | ||
Dick’s Sporting Goods, Inc. (Æ) | 16,921 | 421 | ||
Dillard’s, Inc. Class A (Ñ) | 33,100 | 712 | ||
Dollar Tree, Inc. (Æ) | 15,600 | 649 | ||
DSW, Inc. Class A (Æ) | 7,269 | 163 | ||
Elizabeth Arden, Inc. (Æ) | 3,100 | 45 | ||
Expedia, Inc. | 25,502 | 479 | ||
Fastenal Co. (Ñ) | 8,917 | 448 | ||
Finish Line, Inc. (The) Class A | 34,935 | 487 | ||
Foot Locker, Inc. | 39,550 | 499 | ||
Fossil, Inc. (Æ) | 8,900 | 309 | ||
Fred’s, Inc. Class A | 9,153 | 101 | ||
Grand Canyon Education, Inc. (Æ) | 8,343 | 195 | ||
Group 1 Automotive, Inc. (Æ)(Ñ) | 4,700 | 111 | ||
Guess?, Inc. | 7,526 | 235 | ||
Gymboree Corp. (Æ) | 5,450 | 233 | ||
Harman International Industries, Inc. (Æ) | 11,655 | 348 | ||
Haverty Furniture Cos., Inc. | 1,300 | 16 | ||
Hillenbrand, Inc. | 14,000 | 299 | ||
HOT Topic, Inc. | 8,200 | 42 | ||
Hyatt Hotels Corp. (Æ) | 2,100 | 78 | ||
IAC/InterActiveCorp (Æ) | 10,124 | 222 | ||
Inter Parfums, Inc. | 1,200 | 17 | ||
Jakks Pacific, Inc. (Æ) | 5,800 | 83 | ||
Jo-Ann Stores, Inc. (Æ) | 7,000 | 263 | ||
Jones Apparel Group, Inc. | 10,200 | 162 | ||
Kenneth Cole Productions, Inc. Class A (Æ) | 25,027 | 276 |
Principal Amount ($) or Shares | Market Value $ | |||
Leapfrog Enterprises, Inc. Class A (Æ) | 6,200 | 25 | ||
Lifetime Brands, Inc. (Æ)(Ñ) | 1,500 | 22 | ||
LKQ Corp. (Æ) | 27,623 | 533 | ||
MarineMax, Inc. (Æ)(Ñ) | 11,900 | 83 | ||
Men’s Wearhouse, Inc. (The) | 9,200 | 169 | ||
Meredith Corp. | 8,700 | 271 | ||
MGM Resorts International (Æ)(Ñ) | 22,398 | 216 | ||
Movado Group, Inc. (Æ) | 3,700 | 39 | ||
MSC Industrial Direct Co. Class A | 4,816 | 244 | ||
Multimedia Games, Inc. (Æ) | 2,100 | 9 | ||
OfficeMax, Inc. (Æ) | 19,662 | 257 | ||
Orient-Express Hotels, Ltd. Class A (Æ) | 8,626 | 64 | ||
Panera Bread Co. Class A (Æ) | 2,910 | 219 | ||
PetSmart, Inc. | 6,400 | 193 | ||
PF Chang’s China Bistro, Inc. (Ñ) | 6,848 | 272 | ||
Phillips-Van Heusen Corp. | 4,700 | 217 | ||
Pricesmart, Inc. | 5,700 | 132 | ||
Red Robin Gourmet Burgers, Inc. (Æ) | 3,200 | 55 | ||
Rent-A-Center, Inc. Class A (Æ) | 27,100 | 549 | ||
Ryland Group, Inc. | 3,400 | 54 | ||
Scholastic Corp. | 5,400 | 130 | ||
Service Corp. International | 20,900 | 155 | ||
Shoe Carnival, Inc. (Æ) | 1,400 | 29 | ||
Skechers U.S.A., Inc. Class A (Æ) | 9,800 | 358 | ||
Sonic Automotive, Inc. Class A (Æ)(Ñ) | 4,800 | 41 | ||
Stage Stores, Inc. | 30,700 | 328 | ||
Steven Madden, Ltd. (Æ) | 22,764 | 717 | ||
Stewart Enterprises, Inc. Class A (Ñ) | 52,300 | 283 | ||
Superior Industries International, Inc. (Ñ) | 18,225 | 245 | ||
Tech Data Corp. (Æ) | 14,700 | 524 | ||
Tempur-Pedic International, Inc. (Æ) | 10,282 | 316 | ||
Thor Industries, Inc. | 3,274 | 78 | ||
Under Armour, Inc. Class A (Æ) | 6,410 | 212 | ||
Urban Outfitters, Inc. (Æ) | 10,080 | 347 | ||
Warnaco Group, Inc. (The) (Æ) | 6,709 | 242 | ||
Washington Post Co. (The) Class B | 400 | 164 | ||
WESCO International, Inc. (Æ) | 2,100 | 71 | ||
WMS Industries, Inc. (Æ) | 5,454 | 214 | ||
Wolverine World Wide, Inc. | 12,200 | 308 | ||
Wyndham Worldwide Corp. | 5,500 | 111 | ||
20,941 | ||||
Consumer Staples - 2.7% | ||||
Alberto-Culver Co. Class B | 10,930 | 296 | ||
Alliance One International, Inc. (Æ) | 23,967 | 85 | ||
Andersons, Inc. (The) | 14,768 | 481 | ||
Church & Dwight Co., Inc. | 4,930 | 309 | ||
Corn Products International, Inc. | 14,600 | 443 | ||
Del Monte Foods Co. | 34,900 | 502 | ||
Lance, Inc. | 20,700 | 341 | ||
Nash Finch Co. | 3,300 | 113 | ||
Ralcorp Holdings, Inc. (Æ) | 2,499 | 137 | ||
Seneca Foods Corp. Class A (Æ) | 1,000 | 32 | ||
Spartan Stores, Inc. | 4,600 | 63 | ||
SUPERVALU, Inc. | 25,900 | 281 | ||
TreeHouse Foods, Inc. (Æ)(Ñ) | 10,980 | 502 | ||
Tyson Foods, Inc. Class A | 25,209 | 413 |
Aggressive Equity Fund | 11 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Winn-Dixie Stores, Inc. (Æ) | 2,900 | 28 | ||
4,026 | ||||
Energy - 5.4% | ||||
Allis-Chalmers Energy, Inc. (Æ) | 3,400 | 7 | ||
Alpha Natural Resources, Inc. (Æ) | 9,108 | 308 | ||
Berry Petroleum Co. Class A | 16,900 | 435 | ||
Complete Production Services, Inc. (Æ) | 18,510 | 265 | ||
Comstock Resources, Inc. (Æ) | 8,346 | 231 | ||
Continental Resources, Inc. (Æ) | 5,070 | 226 | ||
Core Laboratories NV (Ñ) | 2,628 | 388 | ||
Dawson Geophysical Co. (Æ) | 1,300 | 28 | ||
Dril-Quip, Inc. (Æ) | 7,330 | 323 | ||
Dynegy, Inc. Class A (Æ) | 16,620 | 64 | ||
EXCO Resources, Inc. | 27,380 | 400 | ||
Exterran Holdings, Inc. (Æ) | 12,226 | 316 | ||
Frontier Oil Corp. | 18,600 | 250 | ||
Gulf Island Fabrication, Inc. | 2,200 | 34 | ||
Helix Energy Solutions Group, Inc. (Æ) | 12,729 | 137 | ||
Matrix Service Co. (Æ) | 1,700 | 16 | ||
Oceaneering International, Inc. (Æ) | 2,217 | 99 | ||
Oil States International, Inc. (Æ) | 12,700 | 503 | ||
Ormat Technologies, Inc. (Ñ) | 11,900 | 337 | ||
Parker Drilling Co. (Æ) | 2,500 | 10 | ||
Patterson-UTI Energy, Inc. | 27,348 | 352 | ||
Penn Virginia Corp. | 8,100 | 163 | ||
Petroleum Development Corp. (Æ) | 5,100 | 131 | ||
Precision Drilling Corp. (Æ) | 34,851 | 231 | ||
Rosetta Resources, Inc. (Æ) | 22,440 | 444 | ||
Rowan Cos., Inc. (Æ) | 10,541 | 231 | ||
RPC, Inc. (Ñ) | 13,300 | 181 | ||
Sunoco, Inc. | 8,277 | 288 | ||
Swift Energy Co. (Æ) | 4,500 | 121 | ||
Tesoro Corp. | 18,500 | 216 | ||
Tetra Technologies, Inc. (Æ) | 3,300 | 30 | ||
Unit Corp. (Æ)(Ñ) | 9,861 | 400 | ||
W&T Offshore, Inc. (Ñ) | 37,200 | 352 | ||
Walter Energy, Inc. Class A | 3,346 | 204 | ||
Whiting Petroleum Corp. (Æ) | 3,989 | 313 | ||
Willbros Group, Inc. (Æ) | 7,400 | 55 | ||
8,089 | ||||
Financial Services - 19.4% | ||||
Advance America Cash Advance | 6,100 | 25 | ||
Affiliated Managers Group, Inc. (Æ) | 13,605 | 827 | ||
American Equity Investment Life | 35,320 | 365 | ||
American Financial Group, Inc. | 11,400 | 311 | ||
Ameriprise Financial, Inc. | 6,594 | 238 | ||
Apollo Commercial Real Estate Finance, Inc. (ö) | 1,500 | 25 | ||
Apollo Investment Corp. | 17,700 | 165 | ||
Arch Capital Group, Ltd. (Æ) | 3,900 | 291 | ||
Ares Capital Corp. | 52,471 | 657 | ||
Argo Group International Holdings, Ltd. | 3,800 | 116 | ||
Artio Global Investors, Inc. Class A | 24,500 | 386 |
Principal Amount ($) or Shares | Market Value $ | |||
Aspen Insurance Holdings, Ltd. | 11,100 | 275 | ||
Assurant, Inc. | 2,200 | 76 | ||
Banco Latinoamericano de Comercio Exterior SA Class E | 3,300 | 41 | ||
BancorpSouth, Inc. | 16,400 | 293 | ||
Banner Corp. (Ñ) | 2,000 | 4 | ||
BGC Partners, Inc. Class A | 6,200 | 32 | ||
BioMed Realty Trust, Inc. (ö) | 16,770 | 270 | ||
BOK Financial Corp. | 14,500 | 688 | ||
Boston Private Financial Holdings, Inc. | 43,569 | 280 | ||
Brookline Bancorp, Inc. (Ñ) | 19,400 | 172 | ||
Camden Property Trust (ö) | 5,200 | 212 | ||
CapLease, Inc. (ö)(Ñ) | 1,100 | 5 | ||
Chimera Investment Corp. (ö) | 58,500 | 211 | ||
City National Corp. | 5,900 | 302 | ||
Cogdell Spencer, Inc. (ö) | 36,300 | 245 | ||
Colonial Properties Trust (ö) | 40,600 | 590 | ||
CommonWealth REIT (ö) | 14,300 | 89 | ||
Community Bank System, Inc. | 11,000 | 242 | ||
Community Trust Bancorp, Inc. (Ñ) | 1,000 | 25 | ||
CreXus Investment Corp. (ö) | 1,300 | 16 | ||
Cullen/Frost Bankers, Inc. | 800 | 41 | ||
CVB Financial Corp. (Ñ) | 25,200 | 239 | ||
DCT Industrial Trust, Inc. (ö) | 20,400 | 92 | ||
Delphi Financial Group, Inc. Class A | 9,300 | 227 | ||
DiamondRock Hospitality Co. (ö) | 47,479 | 390 | ||
Dime Community Bancshares | 11,000 | 136 | ||
Duff & Phelps Corp. Class A | 29,700 | 375 | ||
Education Realty Trust, Inc. (ö) | 2,700 | 16 | ||
Endurance Specialty Holdings, Ltd. | 6,600 | 248 | ||
Evercore Partners, Inc. Class A | 900 | 21 | ||
Extra Space Storage, Inc. (ö) | 8,200 | 114 | ||
Ezcorp, Inc. Class A (Æ) | 24,774 | 460 | ||
FBL Financial Group, Inc. Class A | 1,800 | 38 | ||
FBR Capital Markets Corp. (Æ) | 5,100 | 17 | ||
Federal Realty Investment Trust (ö) | 4,200 | 295 | ||
FelCor Lodging Trust, Inc. (Æ)(ö) | 12,100 | 60 | ||
First Horizon National Corp. (Æ) | 25,443 | 291 | ||
First Industrial Realty Trust, Inc. (Æ)(ö) | 7,900 | 38 | ||
First Mercury Financial Corp. | 2,000 | 21 | ||
First Niagara Financial Group, Inc. | 7,900 | 99 | ||
First Potomac Realty Trust (ö) | 4,400 | 63 | ||
FirstMerit Corp. | 17,600 | 302 | ||
Flagstone Reinsurance Holdings SA | 3,600 | 39 | ||
Flushing Financial Corp. | 2,500 | 31 | ||
FPIC Insurance Group, Inc. (Æ) | 900 | 23 | ||
Franklin Street Properties Corp. (ö) | 27,533 | 325 | ||
Fulton Financial Corp. | 32,900 | 318 | ||
Glacier Bancorp, Inc. | 19,000 | 279 | ||
Global Payments, Inc. | 4,908 | 179 | ||
Greenhill & Co., Inc. | 3,954 | 242 | ||
Hancock Holding Co. | 11,600 | 387 | ||
Hercules Technology Growth Capital, Inc. | 3,900 | 36 | ||
Hersha Hospitality Trust (ö) | 38,800 | 175 | ||
Hilltop Holdings, Inc. (Æ) | 5,200 | 52 | ||
Home Bancshares, Inc. | 2,750 | 63 | ||
Horace Mann Educators Corp. | 5,700 | 87 | ||
Hospitality Properties Trust (ö) | 7,500 | 158 |
12 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Huntington Bancshares, Inc. | 39,900 | 221 | ||
Iberiabank Corp. | 12,300 | 633 | ||
Independent Bank Corp. (Ñ) | 5,300 | 131 | ||
Infinity Property & Casualty Corp. | 1,100 | 51 | ||
IntercontinentalExchange, Inc. (Æ) | 2,817 | 318 | ||
Invesco Mortgage Capital, Inc. (ö) | 28,000 | 560 | ||
Investment Technology Group, Inc. (Æ) | 1,900 | 31 | ||
JER Investors Trust, Inc. (Æ)(Å) | 1,771 | — | ||
Kilroy Realty Corp. (ö) | 9,000 | 268 | ||
Knight Capital Group, Inc. Class A (Æ) | 20,823 | 287 | ||
LaSalle Hotel Properties (ö) | 12,997 | 267 | ||
Lazard, Ltd. Class A | 17,700 | 473 | ||
Lexington Realty Trust (ö)(��) | 18,655 | 112 | ||
Mack-Cali Realty Corp. (ö) | 7,300 | 217 | ||
MarketAxess Holdings, Inc. | 11,920 | 164 | ||
Meadowbrook Insurance Group, Inc. | 2,885 | 25 | ||
Medical Properties Trust, Inc. (ö) | 66,714 | 630 | ||
MFA Financial, Inc. (ö) | 38,300 | 283 | ||
Montpelier Re Holdings, Ltd. | 15,800 | 236 | ||
MSCI, Inc. Class A (Æ) | 12,232 | 335 | ||
MVC Capital, Inc. | 1,300 | 17 | ||
Nelnet, Inc. Class A | 8,800 | 170 | ||
NewAlliance Bancshares, Inc. | 24,800 | 278 | ||
OceanFirst Financial Corp. | 1,700 | 21 | ||
Och-Ziff Capital Management Group LLC | 17,846 | 225 | ||
Old National Bancorp | 34,900 | 362 | ||
OneBeacon Insurance Group, Ltd. Class A | 2,800 | 40 | ||
Park National Corp. (Ñ) | 2,900 | 189 | ||
Parkway Properties, Inc. (ö) | 2,400 | 35 | ||
PartnerRe, Ltd. - ADR | 5,500 | 386 | ||
PennantPark Investment Corp. | 40,514 | 387 | ||
Pennymac Mortgage Investment Trust (Æ)(ö) | 2,000 | 32 | ||
Piper Jaffray Cos. (Æ) | 8,498 | 274 | ||
Platinum Underwriters Holdings, Ltd. | 6,300 | 229 | ||
Post Properties, Inc. (ö) | 11,300 | 257 | ||
Presidential Life Corp. | 1,000 | 9 | ||
Prosperity Bancshares, Inc. | 16,100 | 560 | ||
Protective Life Corp. | 5,700 | 122 | ||
Provident New York Bancorp | 1,800 | 16 | ||
PS Business Parks, Inc. (ö) | 2,300 | 128 | ||
Raymond James Financial, Inc. | 12,997 | 321 | ||
Regency Centers Corp. (ö) | 4,500 | 155 | ||
Renasant Corp. | 1,500 | 22 | ||
Republic Bancorp, Inc. Class A | 1,100 | 25 | ||
Resource Capital Corp. (ö) | 44,713 | 254 | ||
SeaBright Holdings, Inc. | 2,700 | 26 | ||
Selective Insurance Group, Inc. | 15,700 | 233 | ||
Signature Bank NY (Æ) | 9,060 | 344 | ||
Simmons First National Corp. Class A | 700 | 18 | ||
SL Green Realty Corp. (ö) | 4,700 | 259 | ||
Southside Bancshares, Inc. | 735 | 14 | ||
Sovran Self Storage, Inc. (ö) | 2,200 | 76 | ||
StanCorp Financial Group, Inc. | 5,700 | 231 | ||
StellarOne Corp. (Ñ) | 25,087 | 320 | ||
Sterling Bancorp Class N | 4,000 | 36 | ||
Sterling Bancshares, Inc. | 70,400 | 332 |
Principal Amount ($) or Shares | Market Value $ | |||
Susquehanna Bancshares, Inc. | 13,600 | 113 | ||
SVB Financial Group (Æ)(Ñ) | 10,370 | 428 | ||
SWS Group, Inc. | 25,800 | 245 | ||
Symetra Financial Corp. | 21,200 | 254 | ||
Texas Capital Bancshares, Inc. (Æ) | 15,619 | 256 | ||
Textainer Group Holdings, Ltd. | 19,673 | 475 | ||
Tower Group, Inc. | 14,523 | 313 | ||
Transatlantic Holdings, Inc. | 3,800 | 182 | ||
Trustmark Corp. | 19,800 | 412 | ||
UMB Financial Corp. | 7,900 | 281 | ||
Umpqua Holdings Corp. | 21,700 | 249 | ||
United Financial Bancorp, Inc. | 1,500 | 20 | ||
Washington Federal, Inc. | 15,648 | 253 | ||
Webster Financial Corp. | 7,600 | 136 | ||
Westamerica Bancorporation (Ñ) | 200 | 11 | ||
Western Alliance Bancorp (Æ) | 3,400 | 24 | ||
White Mountains Insurance Group, Ltd. | 400 | 130 | ||
Whitney Holding Corp. | 25,847 | 239 | ||
Wilshire Bancorp, Inc. (Ñ) | 1,700 | 15 | ||
Wintrust Financial Corp. | 700 | 23 | ||
WSFS Financial Corp. | 500 | 18 | ||
29,173 | ||||
Health Care - 12.0% | ||||
Affymetrix, Inc. (Æ) | 8,300 | 49 | ||
Albany Molecular Research, Inc. (Æ) | 29,617 | 153 | ||
Allscripts-Misys Healthcare Solutions, | 6,706 | 108 | ||
Amedisys, Inc. (Æ) | 7,922 | 348 | ||
Analogic Corp. | 9,630 | 438 | ||
Angiodynamics, Inc. (Æ) | 2,700 | 40 | ||
Assisted Living Concepts, Inc. (Æ) | 5,400 | 160 | ||
Brookdale Senior Living, Inc. (Æ) | 20,369 | 306 | ||
Catalyst Health Solutions, Inc. (Æ) | 5,936 | 205 | ||
Centene Corp. (Æ) | 9,900 | 213 | ||
Cerner Corp. (Æ) | 4,150 | 315 | ||
Conmed Corp. (Æ) | 11,622 | 216 | ||
Coventry Health Care, Inc. (Æ) | 32,055 | 567 | ||
Cynosure, Inc. Class A (Æ) | 19,720 | 212 | ||
Emergency Medical Services Corp. | 6,140 | 301 | ||
Gentiva Health Services, Inc. (Æ) | 8,045 | 217 | ||
Greatbatch, Inc. (Æ) | 14,236 | 318 | ||
Harvard Bioscience, Inc. (Æ) | 49,156 | 175 | ||
Health Management Associates, Inc. Class A (Æ) | 55,310 | 430 | ||
Health Net, Inc. (Æ) | 27,300 | 665 | ||
Healthsouth Corp. (Æ) | 11,697 | 219 | ||
Healthspring, Inc. (Æ) | 38,555 | 598 | ||
Hill-Rom Holdings, Inc. | 5,302 | 161 | ||
HMS Holdings Corp. (Æ)(Ñ) | 10,450 | 567 | ||
Humana, Inc. (Æ) | 10,200 | 466 | ||
Icon PLC - ADR (Æ) | 26,159 | 756 | ||
IDEXX Laboratories, Inc. (Æ)(Ñ) | 5,858 | 357 | ||
Illumina, Inc. (Æ) | 8,936 | 389 | ||
Impax Laboratories, Inc. (Æ) | 8,200 | 156 | ||
Invacare Corp. | 5,700 | 118 |
Aggressive Equity Fund | 13 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Kindred Healthcare, Inc. (Æ) | 17,058 | 219 | ||
King Pharmaceuticals, Inc. (Æ) | 36,900 | 280 | ||
LHC Group, Inc. (Æ) | 7,300 | 203 | ||
Life Technologies Corp. (Æ) | 7,000 | 331 | ||
LifePoint Hospitals, Inc. (Æ) | 4,300 | 135 | ||
Magellan Health Services, Inc. (Æ) | 4,800 | 174 | ||
MedAssets, Inc. (Æ) | 9,200 | 212 | ||
Medicines Co. (The) (Æ) | 8,800 | 67 | ||
Mednax, Inc. (Æ) | 4,212 | 234 | ||
Meridian Bioscience, Inc. | 21,300 | 362 | ||
Molina Healthcare, Inc. (Æ)(Ñ) | 5,200 | 150 | ||
Nabi Biopharmaceuticals (Æ) | 5,700 | 31 | ||
NuVasive, Inc. (Æ)(Ñ) | 11,160 | 396 | ||
Omnicare, Inc. | 13,800 | 327 | ||
OSI Systems, Inc. (Æ) | 9,856 | 274 | ||
Par Pharmaceutical Cos., Inc. (Æ) | 20,800 | 540 | ||
Patterson Cos., Inc. | 12,383 | 353 | ||
PerkinElmer, Inc. | 35,681 | 737 | ||
Perrigo Co. | 3,950 | 233 | ||
PharMerica Corp. (Æ) | 4,600 | 67 | ||
RehabCare Group, Inc. (Æ) | 17,921 | 390 | ||
Res-Care, Inc. (Æ) | 1,000 | 10 | ||
Salix Pharmaceuticals, Ltd. (Æ) | 5,876 | 229 | ||
Sun Healthcare Group, Inc. Class W (Æ) | 7,600 | 61 | ||
SXC Health Solutions Corp. (Æ) | 11,270 | 826 | ||
Symmetry Medical, Inc. (Æ) | 15,858 | 167 | ||
Techne Corp. | 4,228 | 243 | ||
Teleflex, Inc. | 2,800 | 152 | ||
TomoTherapy, Inc. (Æ) | 1,300 | 4 | ||
United Therapeutics Corp. (Æ) | 6,710 | 327 | ||
Universal American Corp. (Æ) | 7,500 | 108 | ||
Universal Health Services, Inc. Class B | 6,200 | 237 | ||
Viropharma, Inc. (Æ) | 26,100 | 293 | ||
Vital Images, Inc. (Æ) | 400 | 5 | ||
Watson Pharmaceuticals, Inc. Class B (Æ) | 4,600 | 187 | ||
West Pharmaceutical Services, Inc. | 7,200 | 263 | ||
18,050 | ||||
Materials and Processing - 7.2% | ||||
A Schulman, Inc. | 10,600 | 201 | ||
Aceto Corp. | 1,000 | 6 | ||
Albemarle Corp. | 9,130 | 363 | ||
Apogee Enterprises, Inc. | 21,000 | 227 | ||
Arch Chemicals, Inc. | 7,500 | 231 | ||
Ashland, Inc. | 11,300 | 524 | ||
Brady Corp. Class A | 9,700 | 242 | ||
Cabot Corp. | 14,621 | 352 | ||
CF Industries Holdings, Inc. | 6,200 | 393 | ||
Clarcor, Inc. | 7,950 | 282 | ||
Comfort Systems USA, Inc. | 9,800 | 95 | ||
Commercial Metals Co. | 31,600 | 418 | ||
Cytec Industries, Inc. | 23,626 | 945 | ||
Ferro Corp. (Æ) | 36,591 | 270 | ||
Gibraltar Industries, Inc. (Æ) | 6,000 | 61 | ||
Griffon Corp. (Æ) | 5,000 | 55 | ||
Haynes International, Inc. | 1,200 | 37 | ||
HB Fuller Co. | 11,200 | 213 |
Principal Amount ($) or Shares | Market Value $ | |||
Headwaters, Inc. (Æ) | 12,800 | 36 | ||
Horsehead Holding Corp. (Æ) | 21,354 | 161 | ||
Huntsman Corp. | 23,700 | 205 | ||
Innospec, Inc. (Æ) | 1,700 | 16 | ||
Interline Brands, Inc. (Æ) | 12,300 | 213 | ||
International Flavors & Fragrances, Inc. | 5,600 | 238 | ||
Kaiser Aluminum Corp. | 15,500 | 537 | ||
Koppers Holdings, Inc. | 16,000 | 360 | ||
Minerals Technologies, Inc. | 8,900 | 423 | ||
Mueller Water Products, Inc. Class A | 52,000 | 193 | ||
Neenah Paper, Inc. | 1,800 | 33 | ||
Olympic Steel, Inc. | 2,200 | 50 | ||
OM Group, Inc. (Æ) | 15,634 | 373 | ||
Pan American Silver Corp. | 10,209 | 258 | ||
PolyOne Corp. (Æ) | 12,800 | 108 | ||
Quanex Building Products Corp. | 9,000 | 156 | ||
Reliance Steel & Aluminum Co. | 4,400 | 159 | ||
RPM International, Inc. | 15,892 | 283 | ||
RTI International Metals, Inc. (Æ) | 9,244 | 223 | ||
Scotts Miracle-Gro Co. (The) Class A | 6,585 | 292 | ||
Simpson Manufacturing Co., Inc. | 3,000 | 74 | ||
Sims Metal Management, Ltd. - ADR | 13,536 | 192 | ||
Steel Dynamics, Inc. | 2,544 | 34 | ||
SuperGen, Inc. (Æ) | 4,200 | 8 | ||
Thompson Creek Metals Co., Inc. (Æ) | 20,622 | 179 | ||
Timken Co. | 2,700 | 70 | ||
Titanium Metals Corp. (Æ)(Ñ) | 9,116 | 160 | ||
Universal Forest Products, Inc. | 8,800 | 267 | ||
Watsco, Inc. | 4,457 | 258 | ||
Westlake Chemical Corp. (Ñ) | 5,000 | 93 | ||
WR Grace & Co. (Æ) | 12,548 | 264 | ||
10,831 | ||||
Producer Durables - 16.3% | ||||
AAR Corp. (Æ) | 7,000 | 117 | ||
Actuant Corp. Class A | 14,872 | 280 | ||
AGCO Corp. (Æ) | 24,162 | 652 | ||
Albany International Corp. Class A | 3,000 | 49 | ||
Alexander & Baldwin, Inc. | 16,033 | 477 | ||
AM Castle & Co. (Æ) | 1,200 | 17 | ||
American Railcar Industries, Inc. (Æ) | 1,300 | 16 | ||
AO Smith Corp. | 5,600 | 270 | ||
Applied Industrial Technologies, Inc. | 17,600 | 446 | ||
Arkansas Best Corp. | 6,500 | 135 | ||
Astec Industries, Inc. (Æ) | 8,293 | 230 | ||
Avery Dennison Corp. | 800 | 26 | ||
Barnes Group, Inc. | 15,000 | 246 | ||
BE Aerospace, Inc. (Æ) | 9,100 | 231 | ||
Briggs & Stratton Corp. | 25,600 | 436 | ||
Brink’s Co. (The) | 13,200 | 251 | ||
Bristow Group, Inc. (Æ) | 2,857 | 84 | ||
Bucyrus International, Inc. Class A | 4,620 | 219 | ||
CAI International, Inc. (Æ) | 11,000 | 131 | ||
Carlisle Cos., Inc. | 2,300 | 83 | ||
CDI Corp. | 2,000 | 31 | ||
Celadon Group, Inc. (Æ) | 1,200 | 17 | ||
Ceradyne, Inc. (Æ) | 11,209 | 239 |
14 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Chart Industries, Inc. (Æ) | 13,593 | 212 | ||
Compass Diversified Holdings | 15,700 | 210 | ||
Consolidated Graphics, Inc. (Æ) | 2,280 | 99 | ||
Convergys Corp. (Æ) | 1,700 | 17 | ||
Copart, Inc. (Æ) | 10,857 | 389 | ||
CoreLogic, Inc. (Æ) | 13,600 | 240 | ||
Corporate Executive Board Co. (The) | 8,000 | 210 | ||
Crane Co. | 2,800 | 85 | ||
Cross Country Healthcare, Inc. (Æ) | 2,800 | 25 | ||
Cubic Corp. | 2,300 | 84 | ||
Curtiss-Wright Corp. | 12,600 | 366 | ||
Dycom Industries, Inc. (Æ) | 2,500 | 21 | ||
Eagle Bulk Shipping, Inc. (Æ)(Ñ) | 9,000 | 38 | ||
Electro Rent Corp. | 14,905 | 191 | ||
Electronics for Imaging, Inc. (Æ) | 3,352 | 33 | ||
EMCOR Group, Inc. (Æ) | 5,300 | 123 | ||
EnerSys (Æ) | 10,290 | 220 | ||
Ennis, Inc. | 1,600 | 24 | ||
EnPro Industries, Inc. (Æ) | 8,186 | 230 | ||
Esterline Technologies Corp. (Æ) | 8,400 | 399 | ||
Flowserve Corp. | 800 | 68 | ||
Foster Wheeler AG (Æ) | 15,869 | 334 | ||
Franklin Electric Co., Inc. | 11,200 | 323 | ||
G&K Services, Inc. Class A | 13,400 | 277 | ||
GATX Corp. | 13,900 | 371 | ||
Genesee & Wyoming, Inc. Class A (Æ) | 10,638 | 397 | ||
Granite Construction, Inc. (Ñ) | 13,100 | 309 | ||
Harsco Corp. | 1,100 | 26 | ||
Heidrick & Struggles International, Inc. | 2,400 | 55 | ||
Hewitt Associates, Inc. Class A (Æ) | 14,200 | 489 | ||
HUB Group, Inc. Class A (Æ) | 16,120 | 484 | ||
IDEX Corp. | 9,542 | 273 | ||
Insituform Technologies, Inc. Class A (Æ)(Ñ) | 8,092 | 166 | ||
JB Hunt Transport Services, Inc. | 8,324 | 272 | ||
Joy Global, Inc. | 8,695 | 435 | ||
Kadant, Inc. (Æ) | 1,000 | 17 | ||
Kansas City Southern (Æ) | 4,600 | 167 | ||
KBR, Inc. | 13,957 | 284 | ||
Kelly Services, Inc. Class A (Æ) | 3,100 | 46 | ||
Kennametal, Inc. | 10,516 | 267 | ||
Kforce, Inc. (Æ) | 3,300 | 42 | ||
Knight Transportation, Inc. (Ñ) | 15,132 | 306 | ||
Layne Christensen Co. (Æ) | 11,515 | 279 | ||
Lexmark International, Inc. Class A (Æ) | 10,500 | 347 | ||
Littelfuse, Inc. (Æ) | 4,400 | 139 | ||
M&F Worldwide Corp. (Æ) | 5,000 | 135 | ||
Manitowoc Co., Inc. (The) (Ñ) | 11,000 | 100 | ||
Manpower, Inc. | 6,347 | 274 | ||
MAXIMUS, Inc. | 900 | 52 | ||
McDermott International, Inc. (Æ) | 16,801 | 364 | ||
Measurement Specialties, Inc. (Æ) | 1,100 | 15 | ||
NACCO Industries, Inc. Class A | 800 | 71 | ||
Nalco Holding Co. | 9,043 | 185 | ||
Nordson Corp. | 1,600 | 90 | ||
On Assignment, Inc. (Æ) | 2,200 | 11 | ||
Oshkosh Corp. (Æ) | 14,700 | 458 |
Principal Amount ($) or Shares | Market Value $ | |||
Overseas Shipholding Group, Inc. (Ñ) | 6,400 | 237 | ||
Pacer International, Inc. (Æ) | 7,100 | 50 | ||
PHI, Inc. (Æ) | 10,308 | 145 | ||
Robbins & Myers, Inc. | 11,952 | 260 | ||
Robert Half International, Inc. | 11,767 | 277 | ||
Roper Industries, Inc. | 12,647 | 708 | ||
RR Donnelley & Sons Co. | 27,200 | 445 | ||
Ryder System, Inc. | 5,300 | 213 | ||
Saia, Inc. (Æ) | 2,400 | 36 | ||
Sensata Technologies Holding NV (Æ) | 15,589 | 249 | ||
SFN Group, Inc. (Æ) | 6,800 | 37 | ||
Shaw Group, Inc. (The) (Æ) | 9,100 | 311 | ||
Skywest, Inc. | 32,200 | 393 | ||
Southwest Airlines Co. | 19,649 | 218 | ||
SPX Corp. | 2,587 | 137 | ||
Standard Register Co. (The) | 300 | 1 | ||
Steelcase, Inc. Class A | 38,300 | 297 | ||
TAL International Group, Inc. | 13,200 | 297 | ||
Teekay Corp. | 4,000 | 105 | ||
Terex Corp. (Æ) | 13,300 | 249 | ||
Trinity Industries, Inc. (Ñ) | 14,600 | 259 | ||
Triumph Group, Inc. | 11,900 | 793 | ||
Tsakos Energy Navigation, Ltd. (Ñ) | 27,200 | 385 | ||
Tutor Perini Corp. (Æ) | 8,600 | 142 | ||
Unifirst Corp. | 7,179 | 316 | ||
URS Corp. (Æ) | 14,009 | 551 | ||
UTi Worldwide, Inc. | 22,940 | 284 | ||
Wabtec Corp. (Ñ) | 14,706 | 587 | ||
Waters Corp. (Æ) | 2,400 | 155 | ||
Watts Water Technologies, Inc. Class A | 2,800 | 80 | ||
Werner Enterprises, Inc. | 10,000 | 219 | ||
Woodward Governor Co. | 7,989 | 204 | ||
24,467 | ||||
Technology - 15.7% | ||||
Acxiom Corp. (Æ) | 26,457 | 389 | ||
ADC Telecommunications, Inc. (Æ) | 10,600 | 79 | ||
ADTRAN, Inc. | 14,123 | 385 | ||
Advanced Micro Devices, Inc. (Æ) | 16,300 | 119 | ||
Amdocs, Ltd. (Æ) | 5,800 | 156 | ||
Amkor Technology, Inc. (Æ) | 21,300 | 117 | ||
Amphenol Corp. Class A | 18,212 | 715 | ||
Anadigics, Inc. (Æ) | 3,700 | 16 | ||
Ansys, Inc. (Æ) | 15,159 | 615 | ||
AOL, Inc. (Æ) | 8,500 | 177 | ||
ArcSight, Inc. (Æ) | 21,222 | 475 | ||
Ariba, Inc. (Æ) | 38,022 | 606 | ||
Arris Group, Inc. (Æ) | 7,000 | 71 | ||
Arrow Electronics, Inc. (Æ) | 12,800 | 286 | ||
Aruba Networks, Inc. (Æ) | 14,537 | 207 | ||
Atheros Communications, Inc. (Æ) | 6,160 | 170 | ||
Aviat Networks, Inc. (Æ) | 10,800 | 39 | ||
Avid Technology, Inc. (Æ) | 3,900 | 50 | ||
Avnet, Inc. (Æ) | 17,000 | 410 | ||
AVX Corp. | 30,500 | 391 | ||
Benchmark Electronics, Inc. (Æ) | 17,851 | 283 | ||
Black Box Corp. | 3,000 | 84 |
Aggressive Equity Fund | 15 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Ciber, Inc. (Æ) | 4,100 | 11 | ||
Cirrus Logic, Inc. (Æ) | 9,600 | 152 | ||
Cogent, Inc. (Æ) | 17,437 | 157 | ||
Cognex Corp. | 5,700 | 100 | ||
Coherent, Inc. (Æ) | 13,133 | 450 | ||
Cohu, Inc. | 16,950 | 206 | ||
Concur Technologies, Inc. (Æ) | 9,435 | 403 | ||
CSG Systems International, Inc. (Æ) | 17,837 | 327 | ||
Digi International, Inc. (Æ) | 2,000 | 17 | ||
DSP Group, Inc. (Æ) | 1,700 | 11 | ||
Earthlink, Inc. (Ñ) | 71,700 | 571 | ||
Electro Scientific Industries, Inc. (Æ) | 34,678 | 463 | ||
Emcore Corp. (Æ)(Ñ) | 5,300 | 5 | ||
Emulex Corp. (Æ) | 16,381 | 150 | ||
Epicor Software Corp. (Æ) | 4,900 | 39 | ||
Equinix, Inc. (Æ) | 6,632 | 539 | ||
Extreme Networks (Æ) | 13,800 | 37 | ||
F5 Networks, Inc. (Æ) | 4,165 | 286 | ||
Fairchild Semiconductor International, Inc. Class A (Æ) | 24,800 | 209 | ||
Flextronics International, Ltd. (Æ)(Ñ) | 22,870 | 128 | ||
Hittite Microwave Corp. (Æ) | 6,179 | 276 | ||
Imation Corp. (Æ) | 4,000 | 37 | ||
Informatica Corp. (Æ)(Ñ) | 30,067 | 718 | ||
Infospace, Inc. (Æ) | 3,800 | 29 | ||
Ingram Micro, Inc. Class A (Æ) | 16,900 | 257 | ||
Integrated Device Technology, Inc. (Æ) | 22,300 | 110 | ||
Integrated Silicon Solution, Inc. (Æ) | 31,000 | 234 | ||
Internap Network Services Corp. (Æ) | 20,700 | 86 | ||
International Rectifier Corp. (Æ) | 22,750 | 423 | ||
Intersil Corp. Class A | 39,354 | 477 | ||
Intevac, Inc. (Æ) | 2,000 | 21 | ||
Lam Research Corp. (Æ) | 6,311 | 240 | ||
Lattice Semiconductor Corp. (Æ) | 86,900 | 377 | ||
LSI Corp. (Æ) | 50,900 | 234 | ||
MEMC Electronic Materials, Inc. (Æ) | 17,856 | 176 | ||
Methode Electronics, Inc. | 10,500 | 102 | ||
MICROS Systems, Inc. (Æ) | 14,013 | 447 | ||
Microsemi Corp. (Æ) | 18,700 | 274 | ||
Molex, Inc. (Ñ) | 15,500 | 283 | ||
National Semiconductor Corp. | 21,789 | 293 | ||
Ness Technologies, Inc. (Æ) | 4,100 | 18 | ||
Netlogic Microsystems, Inc. (Æ) | 8,220 | 224 | ||
Newport Corp. (Æ) | 3,900 | 35 | ||
NICE Systems, Ltd. - ADR (Æ) | 18,173 | 463 | ||
Novellus Systems, Inc. (Æ) | 14,600 | 370 | ||
Perceptron, Inc. (Æ) | 2,154 | 9 | ||
Plexus Corp. (Æ) | 1,700 | 45 | ||
QLogic Corp. (Æ) | 33,816 | 562 | ||
Radisys Corp. (Æ) | 1,900 | 18 | ||
RealNetworks, Inc. (Æ) | 12,700 | 42 | ||
Rovi Corp. (Æ) | 25,030 | 949 | ||
Salesforce.com, Inc. (Æ)(Ñ) | 5,460 | 469 | ||
SBA Communications Corp. Class A (Æ)(Ñ) | 12,627 | 429 | ||
Seachange International, Inc. (Æ) | 2,600 | 21 | ||
Sigma Designs, Inc. (Æ)(Ñ) | 4,900 | 49 | ||
Silicon Image, Inc. (Æ) | 12,200 | 43 | ||
Skyworks Solutions, Inc. (Æ) | 21,270 | 357 |
Principal Amount ($) or Shares | Market Value $ | |||
Smith Micro Software, Inc. (Æ) | 23,201 | 221 | ||
SolarWinds, Inc. (Æ)(Ñ) | 14,033 | 225 | ||
Standard Microsystems Corp. (Æ) | 3,300 | 77 | ||
SuccessFactors, Inc. (Æ) | 16,726 | 348 | ||
Sycamore Networks, Inc. (Æ) | 2,600 | 43 | ||
Symmetricom, Inc. (Æ) | 3,000 | 15 | ||
Synopsys, Inc. (Æ) | 7,800 | 163 | ||
Taleo Corp. Class A (Æ) | 14,649 | 356 | ||
Tekelec (Æ) | 12,991 | 172 | ||
Tellabs, Inc. | 101,250 | 647 | ||
THQ, Inc. (Æ) | 11,800 | 51 | ||
Tier Technologies, Inc. Class B (Æ) | 24,577 | 149 | ||
Trident Microsystems, Inc. (Æ) | 8,800 | 12 | ||
Unisys Corp. (Æ) | 5,600 | 104 | ||
United Online, Inc. | 81,157 | 467 | ||
Varian Semiconductor Equipment Associates, Inc. (Æ) | 6,966 | 200 | ||
VeriFone Systems, Inc. (Æ) | 31,391 | 594 | ||
Verint Systems, Inc. (Æ) | 5,209 | 120 | ||
Vishay Intertechnology, Inc. (Æ) | 35,719 | 276 | ||
Zoran Corp. (Æ) | 5,300 | 51 | ||
23,589 | ||||
Utilities - 4.0% | ||||
Allete, Inc. | 13,100 | 449 | ||
Atmos Energy Corp. | 9,700 | 262 | ||
Central Vermont Public Service Corp. | 1,000 | 20 | ||
Chesapeake Utilities Corp. | 700 | 22 | ||
DPL, Inc. | 2,800 | 67 | ||
Energen Corp. | 5,700 | 253 | ||
Idacorp, Inc. | 7,800 | 259 | ||
Integrys Energy Group, Inc. (Ñ) | 3,700 | 162 | ||
Laclede Group, Inc. (The) | 1,000 | 33 | ||
MDU Resources Group, Inc. | 11,600 | 209 | ||
Mirant Corp. (Æ) | 2,700 | 29 | ||
New Jersey Resources Corp. | 5,050 | 178 | ||
NII Holdings, Inc. (Æ) | 7,232 | 235 | ||
NorthWestern Corp. | 2,300 | 60 | ||
NV Energy, Inc. | 21,400 | 253 | ||
Otter Tail Corp. | 20,300 | 392 | ||
Piedmont Natural Gas Co., Inc. | 9,600 | 243 | ||
Pinnacle West Capital Corp. | 9,800 | 356 | ||
PNM Resources, Inc. | 16,100 | 180 | ||
Portland General Electric Co. | 33,800 | 620 | ||
Southern Union Co. | 10,700 | 234 | ||
Southwest Gas Corp. | 6,200 | 183 | ||
Telephone & Data Systems, Inc. | 5,800 | 176 | ||
UGI Corp. | 15,500 | 394 | ||
UIL Holdings Corp. | 3,000 | 75 | ||
US Cellular Corp. (Æ) | 2,300 | 95 | ||
Vectren Corp. | 12,800 | 303 | ||
Westar Energy, Inc. | 13,200 | 285 | ||
6,027 | ||||
Total Common Stocks (cost $142,999) | 145,193 | |||
16 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | ||||
Short-Term Investments - 3.0% | |||||
Russell U.S. Cash Management Fund (£) | 4,561,979 | 4,562 | |||
Total Short-Term Investments (cost $4,562) | 4,562 | ||||
Other Securities - 5.6% | |||||
State Street Securities Lending Quality Trust (×) | 8,380,991 | 8,352 | |||
Total Other Securities (cost $8,381) | 8,352 | ||||
Total Investments - 105.3% (identified cost $155,942) | 158,107 | ||||
Other Assets and Liabilities, Net - (5.3%) | (7,973 | ) | |||
Net Assets - 100.0% | 150,134 | ||||
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, 2010 (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) | 81 | USD 4,923 | 09/10 | (113) | ||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) | (113) | |||||||
Presentation of Portfolio Holdings — June 30, 2010 (Unaudited)
Amounts in thousands
Market Value | % of Net Assets | ||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Common Stock | |||||||||||||||||
Consumer Discretionary | $ | 20,941 | $ | — | $ | — | $ | 20,941 | 14.0 | ||||||||
Consumer Staples | 4,026 | — | — | 4,026 | 2.7 | ||||||||||||
Energy | 8,089 | — | — | 8,089 | 5.4 | ||||||||||||
Financial Services | 29,173 | — | — | 29,173 | 19.4 | ||||||||||||
Health Care | 18,050 | — | — | 18,050 | 12.0 | ||||||||||||
Materials and Processing | 10,831 | — | — | 10,831 | 7.2 | ||||||||||||
Producer Durables | 24,467 | — | — | 24,467 | 16.3 | ||||||||||||
Technology | 23,589 | — | — | 23,589 | 15.7 | ||||||||||||
Utilities | 6,027 | — | — | 6,027 | 4.0 | ||||||||||||
Short-Term Investments | — | 4,562 | — | 4,562 | 3.0 | ||||||||||||
Other Securities | — | 8,352 | — | 8,352 | 5.6 | ||||||||||||
Total Investments | 145,193 | 12,914 | — | 158,107 | 105.3 | ||||||||||||
Other Assets and Liabilities, Net | (5.3 | ) | |||||||||||||||
100.0 | |||||||||||||||||
Other Financial Instruments | |||||||||||||||||
Futures Contracts | (113 | ) | — | — | (113 | ) | (0.1 | ) | |||||||||
Total Other Financial Instruments** | (113 | ) | — | — | (113 | ) | |||||||||||
* | 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. |
For a description of the levels see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
18 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Fair Value of Derivative Instruments — June 30, 2010 (Unaudited)
Amounts in thousands
Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Assets and Liabilities - Liabilities | ||||
Daily variation margin on futures contracts* | $ | 113 | ||
Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Operations - Net realized gain (loss) | ||||
Futures contracts | $ | 409 | ||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||
Futures contracts | $ | (490 | ) | |
* | 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. |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 19 |
Table of Contents
Non-U.S. Fund
Shareholder Expense Example — June 30, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 882.90 | $ | 1,019.49 | ||
Expenses Paid During | ||||||
Period* | $ | 5.00 | $ | 5.36 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.07% (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, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 90.9% | ||||
Australia - 0.4% | ||||
Billabong International, Ltd. (Ñ) | 172,300 | 1,255 | ||
Austria - 0.1% | ||||
Erste Group Bank AG | 9,913 | 315 | ||
Belgium - 0.8% | ||||
Anheuser-Busch InBev NV | 33,616 | 1,615 | ||
KBC Groep NV (Æ) | 17,798 | 682 | ||
2,297 | ||||
Bermuda - 2.4% | ||||
Esprit Holdings, Ltd. | 229,404 | 1,237 | ||
Jardine Matheson Holdings, Ltd. | 67,700 | 2,366 | ||
Li & Fung, Ltd. | 484,000 | 2,166 | ||
Noble Group, Ltd. (Ñ) | 285,908 | 345 | ||
RenaissanceRe Holdings, Ltd. | 13,200 | 743 | ||
6,857 | ||||
Brazil - 1.7% | ||||
Banco Santander Brasil SA - ADR | 37,130 | 384 | ||
Cyrela Brazil Realty SA Empreendimentos e Participacoes | 36,000 | 389 | ||
Gafisa SA | 54,300 | 325 | ||
OGX Petroleo e Gas Participacoes SA (Æ) | 179,300 | 1,661 | ||
PDG Realty SA Empreendimentos e Participacoes | 140,500 | 1,186 | ||
Vale SA (Ñ) Class B | 38,400 | 935 | ||
4,880 | ||||
�� | ||||
Canada - 1.9% | ||||
Canadian National Railway Co. | 60,914 | 3,495 | ||
Gildan Activewear, Inc. Class A (Æ)(Ñ) | 10,714 | 307 | ||
Magna International, Inc. Class A | 7,236 | 477 | ||
Research In Motion, Ltd. (Æ) | 13,780 | 679 | ||
Teck Resources, Ltd. Class B | 15,570 | 461 | ||
5,419 | ||||
Cayman Islands - 0.3% | ||||
Alibaba.com, Ltd. (Ñ) | 140,500 | 277 | ||
Ctrip.com International, Ltd. - ADR (Æ) | 17,500 | 658 | ||
935 | ||||
China - 0.6% | ||||
Baidu, Inc. - ADR (Æ) | 9,960 | 678 | ||
Ping An Insurance Group Co. of China, Ltd. Class H (Å) | 81,500 | 657 | ||
Tencent Holdings, Ltd. | 32,700 | 539 | ||
1,874 | ||||
Czech Republic - 0.2% | ||||
Komercni Banka AS | 2,687 | 434 | ||
Principal Amount ($) or Shares | Market Value $ | |||
Denmark - 0.7% | ||||
Danske Bank A/S (Æ) | 26,851 | 516 | ||
Novo Nordisk A/S Series B | 12,444 | 1,004 | ||
Novozymes A/S Class B | 5,053 | 536 | ||
2,056 | ||||
Finland - 0.8% | ||||
Fortum OYJ | 26,700 | 588 | ||
Nokia OYJ | 54,510 | 445 | ||
Pohjola Bank PLC Class A | 139,625 | 1,421 | ||
2,454 | ||||
France - 9.0% | ||||
Accor SA (Ñ) | 23,388 | 1,074 | ||
Air France-KLM (Æ) | 47,506 | 559 | ||
Air Liquide SA | 13,613 | 1,367 | ||
AXA SA | 105,005 | 1,592 | ||
BNP Paribas | 5,969 | 319 | ||
Capital Gemini SA | 14,600 | 638 | ||
Carrefour SA | 6,700 | 265 | ||
CNP Assurances | 7,816 | 532 | ||
Credit Agricole SA (Ñ) | 80,710 | 826 | ||
Danone | 19,973 | 1,067 | ||
GDF Suez | 16,359 | 463 | ||
Lagardere SCA | 31,681 | 982 | ||
Legrand SA | 21,189 | 624 | ||
LVMH Moet Hennessy Louis Vuitton SA (Ñ) | 23,742 | 2,586 | ||
Natixis (Æ) | 88,458 | 380 | ||
Pernod-Ricard SA (Ñ) | 22,887 | 1,770 | ||
Publicis Groupe SA (Ñ) | 40,782 | 1,621 | ||
Rallye SA | 46,585 | 1,403 | ||
Sanofi-Aventis SA | 26,282 | 1,585 | ||
Schneider Electric SA | 33,697 | 3,411 | ||
SCOR SE | 38,280 | 732 | ||
Total SA | 21,814 | 971 | ||
UBISOFT Entertainment (Æ) | 85,845 | 639 | ||
Vivendi SA | 45,000 | 910 | ||
26,316 | ||||
Germany - 8.1% | ||||
Adidas AG | 19,194 | 927 | ||
BASF SE | 36,866 | 2,011 | ||
Bayer AG | 21,622 | 1,206 | ||
Beiersdorf AG | 21,420 | 1,178 | ||
Daimler AG (Æ) | 31,597 | 1,600 | ||
Deutsche Boerse AG | 15,500 | 942 | ||
E.ON AG | 55,841 | 1,503 | ||
Henkel AG & Co. KGaA | 16,462 | 672 | ||
Infineon Technologies AG (Æ) | 122,920 | 710 | ||
Linde AG | 23,560 | 2,474 | ||
MAN SE | 20,055 | 1,653 | ||
Merck KGaA | 11,140 | 812 | ||
Metro AG | 25,081 | 1,275 | ||
MTU Aero Engines Holding AG | 38,371 | 2,135 |
Non-U.S. Fund | 21 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Muenchener Rueckversicherungs AG | 4,499 | 563 | ||
SAP AG | 13,660 | 607 | ||
Siemens AG | 27,164 | 2,431 | ||
ThyssenKrupp AG | 25,916 | 637 | ||
Volkswagen AG | 3,800 | 322 | ||
23,658 | ||||
Guernsey - 0.2% | ||||
Amdocs, Ltd. (Æ) | 23,200 | 623 | ||
Hong Kong - 1.4% | ||||
CNOOC, Ltd. | 798,000 | 1,360 | ||
Hang Lung Properties, Ltd. - ADR | 157,000 | 602 | ||
Industrial & Commercial Bank of China Asia, Ltd. | 803,000 | 2,122 | ||
4,084 | ||||
India - 1.3% | ||||
ICICI Bank, Ltd. - ADR | 52,634 | 1,902 | ||
Infosys Technologies, Ltd. - ADR (Ñ) | 22,050 | 1,321 | ||
Reliance Industries, Ltd. - GDR (Þ) | 15,100 | 705 | ||
3,928 | ||||
Ireland - 0.7% | ||||
Accenture PLC Class A | 16,900 | 653 | ||
Cooper Industries PLC | 14,275 | 628 | ||
Covidien PLC | 16,600 | 667 | ||
1,948 | ||||
Israel - 0.7% | ||||
Teva Pharmaceutical Industries, Ltd. - ADR | 39,573 | 2,057 | ||
Italy - 2.9% | ||||
Banca Popolare di Milano Scarl | 120,935 | 499 | ||
ENI SpA | 59,007 | 1,083 | ||
Finmeccanica SpA | 191,247 | 1,985 | ||
Parmalat SpA | 714,070 | 1,659 | ||
Snam Rete Gas SpA | 292,525 | 1,163 | ||
UniCredit SpA | 606,641 | 1,346 | ||
Unione di Banche Italiane SCPA | 76,620 | 659 | ||
8,394 | ||||
Japan - 12.6% | ||||
Aeon Credit Service Co., Ltd. | 28,700 | 255 | ||
Amada Co., Ltd. | 146,700 | 963 | ||
Canon, Inc. | 125,000 | 4,660 | ||
Dai-ichi Life Insurance Co., Ltd. (The) | 500 | 688 | ||
Daikin Industries, Ltd. | 10,300 | 314 | ||
FamilyMart Co., Ltd. (Ñ) | 25,600 | 844 | ||
Fanuc, Ltd. | 8,000 | 898 | ||
Hirose Electric Co., Ltd. (Ñ) | 3,000 | 274 | ||
Honda Motor Co., Ltd. (Ñ) | 23,000 | 668 | ||
Hoya Corp. | 63,300 | 1,344 | ||
Inpex Corp. | 200 | 1,112 | ||
ITOCHU Corp. | 204,600 | 1,595 |
Principal Amount ($) or Shares | Market Value $ | |||
Japan Tobacco, Inc. | 200 | 622 | ||
Konica Minolta Holdings, Inc. | 42,500 | 409 | ||
Lawson, Inc. | 20,500 | 896 | ||
Mabuchi Motor Co., Ltd. (Ñ) | 28,700 | 1,314 | ||
Marubeni Corp. | 257,000 | 1,317 | ||
Mitsubishi Chemical Holdings Corp. (Ñ) | 221,000 | 1,006 | ||
Mitsubishi UFJ Financial Group, Inc. | 138,800 | 629 | ||
Mizuho Financial Group, Inc. (Ñ) | 496,200 | 814 | ||
Mori Seiki Co., Ltd. (Ñ) | 72,600 | 728 | ||
MS&AD Insurance Group Holdings | 40,000 | 854 | ||
NGK Spark Plug Co., Ltd. | 27,000 | 335 | ||
Nintendo Co., Ltd. | 6,300 | 1,835 | ||
Nissan Motor Co., Ltd. | 87,400 | 606 | ||
Nomura Holdings, Inc. | 74,500 | 408 | ||
NTT DoCoMo, Inc. | 900 | 1,361 | ||
NTT DoCoMo, Inc. - ADR | 2,050 | 31 | ||
Omron Corp. | 61,500 | 1,330 | ||
Panasonic Corp. | 50,200 | 627 | ||
Shin-Etsu Chemical Co., Ltd. | 23,200 | 1,079 | ||
Sumco Corp. (Ñ) | 23,800 | 396 | ||
Sumitomo Mitsui Financial Group, Inc. | 38,000 | 1,073 | ||
Takeda Pharmaceutical Co., Ltd. | 34,000 | 1,455 | ||
THK Co., Ltd. | 50,500 | 1,044 | ||
Tokyo Electric Power Co., Inc. (The) | 28,300 | 770 | ||
Tokyo Electron, Ltd. | 2,600 | 140 | ||
Toshiba TEC Corp. | 304,379 | 982 | ||
Toyota Motor Corp. | 28,700 | 987 | ||
Yahoo! Japan Corp. (Ñ) | 495 | 197 | ||
36,860 | ||||
Luxembourg - 0.6% | ||||
ArcelorMittal | 31,273 | 832 | ||
Millicom International Cellular SA | 12,600 | 1,021 | ||
1,853 | ||||
Mexico - 0.1% | ||||
America Movil SAB de CV Series L | 5,350 | 254 | ||
Netherlands - 5.0% | ||||
Aegon NV (Æ) | 166,382 | 891 | ||
Akzo Nobel NV | 52,729 | 2,728 | ||
Brit Insurance Holdings NV | 61,059 | 822 | ||
European Aeronautic Defence and Space Co. NV (Æ)(Ñ) | 59,190 | 1,208 | ||
Fugro NV (Ñ) | 5,750 | 263 | ||
Heineken NV | 48,970 | 2,076 | ||
ING Groep NV (Æ) | 249,281 | 1,851 | ||
Koninklijke Philips Electronics NV | 44,880 | 1,338 | ||
Randstad Holding NV (Æ) | 16,530 | 651 | ||
TNT NV | 34,562 | 871 | ||
Unilever NV | 24,650 | 672 | ||
Wolters Kluwer NV | 61,490 | 1,173 | ||
14,544 | ||||
22 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Norway - 1.2% | ||||
DnB NOR ASA | 135,000 | 1,299 | ||
Statoil ASA | 43,000 | 829 | ||
Telenor ASA | 97,100 | 1,220 | ||
3,348 | ||||
Russia - 0.4% | ||||
Gazprom OAO - ADR | 66,670 | 1,254 | ||
Singapore - 2.2% | ||||
CapitaLand, Ltd. (Ñ) | 382,000 | 974 | ||
Jardine Cycle & Carriage, Ltd. | 132,200 | 2,806 | ||
Singapore Telecommunications, Ltd. | 447,000 | 965 | ||
United Overseas Bank, Ltd. | 109,400 | 1,520 | ||
6,265 | ||||
South Africa - 0.2% | ||||
MTN Group, Ltd. | 38,440 | 504 | ||
South Korea - 0.3% | ||||
Samsung Electronics Co., Ltd. | 1,581 | 993 | ||
Spain - 2.0% | ||||
Banco Bilbao Vizcaya Argentaria SA (Ñ) | 101,959 | 1,052 | ||
Banco Santander SA | 206,192 | 2,167 | ||
Inditex SA | 35,422 | 2,009 | ||
Indra Sistemas SA (Ñ) | 18,000 | 288 | ||
Red Electrica Corp. SA (Ñ) | 7,163 | 256 | ||
5,772 | ||||
Sweden - 1.2% | ||||
Assa Abloy AB Class B | 15,399 | 307 | ||
Skandinaviska Enskilda Banken AB Class A | 55,751 | 296 | ||
Svenska Cellulosa AB Class B | 45,000 | 529 | ||
Telefonaktiebolaget LM Ericsson Class B (Ñ) | 204,946 | 2,282 | ||
3,414 | ||||
Switzerland - 9.6% | ||||
ACE, Ltd. | 19,550 | 1,006 | ||
Actelion, Ltd. (Æ) | 8,530 | 318 | ||
Cie Financiere Richemont SA | 29,486 | 1,026 | ||
Clariant AG (Æ) | 53,200 | 674 | ||
Credit Suisse Group AG | 41,843 | 1,573 | ||
GAM Holding, Ltd. (Æ) | 58,201 | 634 | ||
Georg Fischer AG (Æ) | 5,303 | 1,729 | ||
Givaudan SA | 1,226 | 1,036 | ||
Helvetia Holding AG | 4,515 | 1,187 | ||
Julius Baer Group, Ltd. | 41,452 | 1,180 | ||
Lonza Group AG (Ñ) | 6,655 | 443 | ||
Nestle SA | 97,778 | 4,718 | ||
Novartis AG | 38,000 | 1,844 | ||
Roche Holding AG | 20,972 | 2,880 | ||
Sonova Holding AG | 3,393 | 416 |
Principal Amount ($) or Shares | Market Value $ | |||
Swatch Group AG (The) Class B | 4,519 | 1,265 | ||
Swiss Reinsurance Co., Ltd. | 11,649 | 479 | ||
Syngenta AG | 4,608 | 1,064 | ||
Tyco Electronics, Ltd. | 64,750 | 1,643 | ||
UBS AG (Æ) | 138,204 | 1,832 | ||
Zurich Financial Services AG | 4,953 | 1,087 | ||
28,034 | ||||
Taiwan - 1.1% | ||||
Hon Hai Precision Industry Co., Ltd. (Æ) | 366,000 | 1,286 | ||
Hon Hai Precision Industry Co., Ltd. - GDR (Æ) | 62,650 | 452 | ||
HTC Corp. | 54,000 | 716 | ||
Taiwan Semiconductor Manufacturing Co., Ltd. - ADR | 86,785 | 847 | ||
3,301 | ||||
Thailand - 0.3% | ||||
Bangkok Bank PCL | 204,700 | 799 | ||
United Kingdom - 18.6% | ||||
Aegis Group PLC | 755,902 | 1,198 | ||
Anglo American PLC (Æ) | 43,074 | 1,497 | ||
Autonomy Corp. PLC (Æ) | 35,064 | 946 | ||
Aviva PLC | 214,921 | 999 | ||
BAE Systems PLC | 195,600 | 909 | ||
Barclays PLC | 788,110 | 3,124 | ||
BP PLC - ADR | 6,700 | 193 | ||
BP PLC | 555,647 | 2,669 | ||
Bunzl PLC | 62,900 | 627 | ||
Burberry Group PLC | 61,280 | 691 | ||
Cable & Wireless Worldwide PLC | 622,700 | 798 | ||
Carillion PLC | 213,025 | 971 | ||
Compass Group PLC | 130,184 | 988 | ||
Dairy Crest Group PLC | 160,609 | 884 | ||
Diageo PLC | 107,641 | 1,687 | ||
Hays PLC | 233,430 | 317 | ||
Home Retail Group PLC | 131,403 | 415 | ||
HSBC Holdings PLC | 731,779 | 6,676 | ||
Imperial Tobacco Group PLC | 70,947 | 1,978 | ||
International Power PLC | 149,687 | 663 | ||
Ladbrokes PLC | 115,425 | 218 | ||
National Grid PLC | 90,725 | 668 | ||
Reckitt Benckiser Group PLC | 64,713 | 2,993 | ||
Reed Elsevier PLC | 139,800 | 1,032 | ||
Rolls-Royce Group PLC (Æ)(Å) | 117,172 | 976 | ||
Royal Bank of Scotland Group PLC (Æ) | 991,298 | 597 | ||
Royal Dutch Shell PLC Class A | 154,323 | 3,911 | ||
Sage Group PLC (The) | 463,767 | 1,587 | ||
Smith & Nephew PLC | 144,960 | 1,365 | ||
Smiths Group PLC | 52,272 | 827 | ||
Spectris PLC | 102,113 | 1,176 | ||
Standard Chartered PLC | 114,095 | 2,770 | ||
Tesco PLC | 241,842 | 1,362 | ||
Travis Perkins PLC (Æ) | 119,200 | 1,297 | ||
Vodafone Group PLC | 1,700,892 | 3,525 |
Non-U.S. Fund | 23 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
William Hill PLC | 108,497 | 274 | ||
Wolseley PLC (Æ) | 13,916 | 272 | ||
WPP PLC | 127,027 | 1,194 | ||
54,274 | ||||
United States - 1.3% | ||||
MercadoLibre, Inc. (Æ) | 5,800 | 305 | ||
Philip Morris International, Inc. | 44,000 | 2,017 | ||
Synthes, Inc. (Æ) | 13,446 | 1,546 | ||
3,868 | ||||
Total Common Stocks (cost $280,399) | 265,121 | |||
Preferred Stocks - 0.4% | ||||
Brazil - 0.1% | ||||
NET Servicos de Comunicacao SA (Æ) | 15,200 | 143 | ||
Germany - 0.3% | ||||
Volkswagen AG | 11,150 | 977 | ||
Total Preferred Stocks (cost $1,170) | 1,120 | |||
Principal Amount ($) or Shares | Market Value $ | ||||
Short-Term Investments - 7.2% | |||||
United States - 7.2% | |||||
Russell U.S. Cash Management Fund (£) | 20,891,543 | 20,892 | |||
Total Short-Term Investments (cost $20,892) | 20,892 | ||||
Other Securities - 3.7% | |||||
State Street Securities Lending Quality Trust (×) | 10,910,675 | 10,872 | |||
Total Other Securities (cost $10,911) | 10,872 | ||||
Total Investments - 102.2% (identified cost $313,372) | 298,005 | ||||
Other Assets and Liabilities, Net - (2.2%) | (6,423 | ) | |||
Net Assets - 100.0% | 291,582 | ||||
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, 2010 (Unaudited)
Amounts in thousands (except contracts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized $ | ||||||
Long Positions | ||||||||||
CAC-40 Index (France) | 70 | EUR | 2,409 | 07/10 | (188) | |||||
DAX Index (Germany) | 11 | EUR | 1,639 | 09/10 | (71) | |||||
EUR STOXX 50 Index (EMU) | 164 | EUR | 4,212 | 09/10 | (280) | |||||
FTSE-100 Index (UK) | 68 | GBP | 3,319 | 09/10 | (323) | |||||
TOPIX Index (Japan) | 100 | JPY | 838,500 | 09/10 | (177) | |||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) | (1,039) | |||||||||
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 25 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | |||||||||
Bank of America | USD | 1,689 | EUR | 1,410 | 09/15/10 | 36 | |||||||
Bank of America | USD | 846 | GBP | 584 | 09/15/10 | 26 | |||||||
Bank of America | USD | 1,591 | JPY | 145,833 | 09/15/10 | 61 | |||||||
Bank of America | EUR | 700 | USD | 856 | 09/15/10 | — | |||||||
Bank of America | GBP | 150 | USD | 224 | 09/15/10 | — | |||||||
Bank of America | JPY | 60,000 | USD | 679 | 09/15/10 | — | |||||||
Barclays Bank PLC | USD | 1,688 | EUR | 1,410 | 09/15/10 | 37 | |||||||
Barclays Bank PLC | USD | 80 | GBP | 53 | 07/02/10 | (1 | ) | ||||||
Barclays Bank PLC | USD | 846 | GBP | 584 | 09/15/10 | 26 | |||||||
Barclays Bank PLC | CHF | 20 | USD | 18 | 07/01/10 | — | |||||||
Barclays Bank PLC | GBP | 66 | USD | 99 | 07/01/10 | 1 | |||||||
Brown Brothers Harriman Co. | USD | 327 | EUR | 267 | 07/02/10 | — | |||||||
Brown Brothers Harriman Co. | USD | 836 | EUR | 700 | 09/15/10 | 20 | |||||||
Brown Brothers Harriman Co. | USD | 290 | GBP | 200 | 09/15/10 | 9 | |||||||
Brown Brothers Harriman Co. | CHF | 9 | USD | 9 | 07/01/10 | — | |||||||
Brown Brothers Harriman Co. | EUR | 12 | USD | 15 | 07/01/10 | — | |||||||
Brown Brothers Harriman Co. | EUR | 12 | USD | 15 | 07/01/10 | — | |||||||
Brown Brothers Harriman Co. | EUR | 39 | USD | 48 | 07/06/10 | — | |||||||
Brown Brothers Harriman Co. | EUR | 61 | USD | 75 | 07/06/10 | — | |||||||
Brown Brothers Harriman Co. | EUR | 68 | USD | 83 | 07/06/10 | — | |||||||
Credit Suisse First Boston | USD | 102 | EUR | 83 | 07/01/10 | (1 | ) | ||||||
Credit Suisse First Boston | CHF | 3 | USD | 3 | 07/06/10 | — | |||||||
HSBC | USD | 1,689 | EUR | 1,410 | 09/15/10 | 36 | |||||||
HSBC | USD | 846 | GBP | 584 | 09/15/10 | 26 | |||||||
HSBC | USD | 1,590 | JPY | 145,833 | 09/15/10 | 62 | |||||||
JP Morgan | USD | 178 | EUR | 145 | 07/01/10 | (1 | ) | ||||||
JP Morgan | USD | 1,689 | EUR | 1,410 | 09/15/10 | 36 | |||||||
JP Morgan | USD | 846 | GBP | 584 | 09/15/10 | 26 | |||||||
JP Morgan | USD | 1,591 | JPY | 145,833 | 09/15/10 | 61 | |||||||
JP Morgan | SGD | 107 | USD | 76 | 07/02/10 | — | |||||||
JP Morgan | SGD | 11 | USD | 8 | 07/06/10 | — | |||||||
Mellon Bank | USD | 1,689 | EUR | 1,410 | 09/15/10 | 36 | |||||||
Mellon Bank | USD | 846 | GBP | 584 | 09/15/10 | 26 | |||||||
Mellon Bank | USD | 1,591 | JPY | 145,833 | 09/15/10 | 62 | |||||||
Morgan Stanley | USD | 20 | GBP | 14 | 07/01/10 | 1 | |||||||
Morgan Stanley | USD | 143 | JPY | 12,651 | 07/01/10 | — | |||||||
Morgan Stanley | EUR | 20 | USD | 26 | 07/01/10 | 1 | |||||||
Royal Bank of Canada | USD | 1,590 | JPY | 145,833 | 09/15/10 | 62 | |||||||
Royal Bank of Scotland | USD | 25 | JPY | 2,202 | 07/02/10 | — | |||||||
Royal Bank of Scotland | USD | 116 | HKD | 901 | 07/02/10 | — | |||||||
Royal Bank of Scotland | CHF | 9 | USD | 9 | 07/02/10 | — | |||||||
Societe Generale | USD | 1,688 | EUR | 1,410 | 09/15/10 | 36 | |||||||
Societe Generale | USD | 1,591 | JPY | 145,833 | 09/15/10 | 61 | |||||||
State Street Bank and Trust Company | USD | 1 | BRL | 1 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 41 | BRL | 73 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 34 | EUR | 28 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 244 | EUR | 200 | 09/15/10 | — | |||||||
State Street Bank and Trust Company | USD | 39 | GBP | 26 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 292 | GBP | 200 | 09/15/10 | 6 | |||||||
State Street Bank and Trust Company | USD | 846 | GBP | 584 | 09/15/10 | 26 | |||||||
State Street Bank and Trust Company | USD | 57 | JPY | 5,068 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | BRL | 63 | USD | 35 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | EUR | 1 | USD | 1 | 07/01/10 | — |
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, 2010 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | |||||||||
State Street Bank and Trust Company | EUR | 1 | USD | 1 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | EUR | 4 | USD | 5 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | EUR | 300 | USD | 366 | 09/15/10 | (2 | ) | ||||||
State Street Bank and Trust Company | GBP | 18 | USD | 27 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | GBP | 200 | USD | 299 | 09/15/10 | — | |||||||
State Street Bank and Trust Company | HKD | 458 | USD | 59 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | JPY | 344 | USD | 4 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | JPY | 550 | USD | 6 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | JPY | 3,280 | USD | 37 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | JPY | 5,773 | USD | 65 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | SGD | 44 | USD | 31 | 07/01/10 | — | |||||||
UBS | CHF | 51 | USD | 47 | 07/02/10 | — | |||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Contracts | 775 | ||||||||||||
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 27 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Industry Diversification | % of Net Assets | Market Value $ | ||||
Consumer Discretionary | 15.7 | 45,645 | ||||
Consumer Staples | 9.7 | 28,320 | ||||
Energy | 5.5 | 16,011 | ||||
Financial Services | 21.3 | 62,223 | ||||
Health Care | 5.5 | 15,949 | ||||
Materials and Processing | 8.8 | 25,584 | ||||
Producer Durables | 12.3 | 36,138 | ||||
Technology | 7.3 | 21,304 | ||||
Utilities | 5.2 | 15,067 | ||||
Short-Term Investments | 7.2 | 20,892 | ||||
Other Securities | 3.7 | 10,872 | ||||
Total Investments | 102.2 | 298,005 | ||||
Other Assets and Liabilities, Net | (2.2 | ) | (6,423 | ) | ||
Net Assets | 100.0 | 291,582 | ||||
Geographic Diversification | % of Net Assets | Market Value $ | ||||
Africa | 0.2 | 504 | ||||
Asia | 7.7 | 22,499 | ||||
Europe | 43.8 | 127,691 | ||||
Japan | 12.6 | 36,860 | ||||
Latin America | 4.5 | 13,069 | ||||
Middle East | 0.7 | 2,057 | ||||
Other Regions | 10.4 | 30,179 | ||||
United Kingdom | 18.6 | 54,274 | ||||
Other Securities | 3.7 | 10,872 | ||||
Total Investments | 102.2 | 298,005 | ||||
Other Assets and Liabilities, Net | (2.2 | ) | (6,423 | ) | ||
Net Assets | 100.0 | 291,582 | ||||
See accompanying notes which are an integral part of the financial statements.
28 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Presentation of Portfolio Holdings — June 30, 2010 (Unaudited)
(Amounts in thousands)
Market Value | % of Net Assets | ||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | |||||||||||||
Common Stocks | |||||||||||||||||
Australia | $ | — | $ | 1,255 | $ | — | $ | 1,255 | 0.4 | ||||||||
Austria | — | 315 | — | 315 | 0.1 | ||||||||||||
Belgium | — | 2,297 | — | 2,297 | 0.8 | ||||||||||||
Bermuda | 743 | 6,114 | — | 6,857 | 2.4 | ||||||||||||
Brazil | 4,880 | — | — | 4,880 | 1.7 | ||||||||||||
Canada | 5,419 | — | — | 5,419 | 1.9 | ||||||||||||
Cayman Islands | 658 | 277 | — | 935 | 0.3 | ||||||||||||
China | 678 | 539 | 657 | 1,874 | 0.6 | ||||||||||||
Czech Republic | — | 434 | — | 434 | 0.2 | ||||||||||||
Denmark | — | 2,056 | — | 2,056 | 0.7 | ||||||||||||
Finland | — | 2,454 | — | 2,454 | 0.8 | ||||||||||||
France | — | 26,316 | — | 26,316 | 9.0 | ||||||||||||
Germany | 322 | 23,336 | — | 23,658 | 8.1 | ||||||||||||
Guernsey | 623 | — | — | 623 | 0.2 | ||||||||||||
Hong Kong | — | 4,084 | — | 4,084 | 1.4 | ||||||||||||
India | 3,223 | 705 | — | 3,928 | 1.3 | ||||||||||||
Ireland | 1,948 | — | — | 1,948 | 0.7 | ||||||||||||
Israel | 2,057 | — | — | 2,057 | 0.7 | ||||||||||||
Italy | — | 8,394 | — | 8,394 | 2.9 | ||||||||||||
Japan | 31 | 36,829 | — | 36,860 | 12.6 | ||||||||||||
Luxembourg | 1,021 | 832 | — | 1,853 | 0.6 | ||||||||||||
Mexico | 254 | — | — | 254 | 0.1 | ||||||||||||
Netherlands | — | 14,544 | — | 14,544 | 5.0 | ||||||||||||
Norway | — | 3,348 | — | 3,348 | 1.2 | ||||||||||||
Russia | — | 1,254 | — | 1,254 | 0.4 | ||||||||||||
Singapore | — | 6,265 | — | 6,265 | 2.2 | ||||||||||||
South Africa | — | 504 | — | 504 | 0.2 | ||||||||||||
South Korea | — | 993 | — | 993 | 0.3 | ||||||||||||
Spain | — | 5,772 | — | 5,772 | 2.0 | ||||||||||||
Sweden | — | 3,414 | — | 3,414 | 1.2 | ||||||||||||
Switzerland | 3,283 | 24,751 | — | 28,034 | 9.6 | ||||||||||||
Taiwan | 847 | 2,454 | — | 3,301 | 1.1 | ||||||||||||
Thailand | — | 799 | — | 799 | 0.3 | ||||||||||||
United Kingdom | 4,104 | 50,170 | — | 54,274 | 18.6 | ||||||||||||
United States | 2,322 | 1,546 | — | 3,868 | 1.3 | ||||||||||||
Preferred Stocks | 143 | 977 | — | 1,120 | 0.4 | ||||||||||||
Short-Term Investments | — | 20,892 | — | 20,892 | 7.2 | ||||||||||||
Other Securities | — | 10,872 | — | 10,872 | 3.7 | ||||||||||||
Total Investments | 32,556 | 264,792 | 657 | 298,005 | 102.2 | ||||||||||||
Other Assets and Liabilities, Net | (2.2 | ) | |||||||||||||||
100.0 | |||||||||||||||||
Other Financial Instruments | |||||||||||||||||
Futures Contracts | (1,039 | ) | — | — | (1,039 | ) | (0.4 | ) | |||||||||
Foreign Currency Exchange Contracts | — | 775 | — | 775 | 0.3 | ||||||||||||
Total Other Financial Instruments* | (1,039 | ) | 775 | — | (264 | ) | |||||||||||
* | 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. |
For a description of the levels see note 2 in the Notes to Financial Statements.
Investments in which significant unobservable inputs (Level 3) used in determining a value for the period ending June 30, 2010 were less than 1% of net assets.
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 29 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Fair Value of Derivative Instruments — June 30, 2010 (Unaudited)
Amounts in thousands
Derivatives not accounted for as hedging instruments | Equity Contracts | Foreign Currency Contracts | ||||||
Location: Statement of Assets and Liabilities - Assets | ||||||||
Unrealized appreciation on foreign currency exchange contracts | $ | — | $ | 780 | ||||
Location: Statement of Assets and Liabilities - Liabilities | ||||||||
Unrealized depreciation on foreign currency exchange contracts | $ | — | $ | 5 | ||||
Daily variation margin on futures contracts* | 1,039 | — | ||||||
1,039 | 5 | |||||||
Derivatives not accounted for as hedging instruments | Equity Contracts | Foreign Currency Contracts | ||||||
Location: Statement of Operations - Net realized gain (loss) | ||||||||
Futures contracts | $ | (756 | ) | $ | — | |||
Foreign currency-related transactions | — | (3,322 | ) | |||||
(756 | ) | (3,322 | ) | |||||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||||||
Futures contracts | $ | (1,594 | ) | $ | — | |||
Foreign currency-related transactions | — | 1,608 | ||||||
(1,594 | ) | 1,608 | ||||||
* | 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 |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
30 | Non-U.S. Fund |
Table of Contents
Core Bond Fund
Shareholder Expense Example — June 30, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 1,067.90 | $ | 1,021.47 | ||
Expenses Paid During Period* | $ | 3.44 | $ | 3.36 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.67% (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. |
Core Bond Fund | 31 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Long-Term Investments - 86.1% | ||||
Asset-Backed Securities - 4.9% | ||||
Access Group, Inc. (Ê) | 797 | 817 | ||
Accredited Mortgage Loan Trust (Ê) | 29 | 20 | ||
ACE Securities Corp. (Ê) | 18 | 15 | ||
Series 2005-SD3 Class A | 104 | 96 | ||
Aegis Asset Backed Securities Trust (Ê) | 98 | 60 | ||
Ally Auto Receivables Trust (Þ) | 176 | 176 | ||
Ameriquest Mortgage Securities, Inc. (Ê) | 90 | 38 | ||
ARES CLO Funds (Ê)(Å) | 518 | 478 | ||
Armstrong Loan Funding, Ltd. (Ê)(Å) | 487 | 468 | ||
BA Credit Card Trust (Ê) | 200 | 200 | ||
Bayview Financial Acquisition Trust | 190 | 148 | ||
Centex Home Equity (Ê) | 700 | 379 | ||
CIT Mortgage Loan Trust (Ê)(Å) | 136 | 125 | ||
Series 2007-1 Class 2A2 | 130 | 70 | ||
Series 2007-1 Class 2A3 | 180 | 73 | ||
Citigroup Mortgage Loan Trust, Inc. (Ê) | 592 | 485 | ||
Series 2006-WFH Class A2 | 209 | 206 | ||
Series 2007-WFH Class A2B | 1,290 | 659 | ||
Series 2007-WFH Class A3 | 1,045 | 711 | ||
Series 2007-WFH Class A4 | 840 | 360 |
Principal Amount ($) or Shares | Market Value $ | |||
Conseco Financial Corp. | 960 | 965 | ||
Continental Airlines 1999-1 | 190 | 191 | ||
Continental Airlines 2007-1 | 147 | 145 | ||
Continental Airlines 2009-1 | 245 | 263 | ||
Countrywide Asset-Backed Certificates | 95 | 17 | ||
Series 2004-BC1 Class M1 (Ê) | 83 | 76 | ||
Series 2006-11 Class 1AF4 | 168 | 58 | ||
Countrywide Home Equity Loan Trust (Ê) | 369 | 266 | ||
First Franklin Mortgage Loan Asset Backed Certificates (Ê) | 36 | 35 | ||
Series 2007-FF1 Class A2B | 999 | 616 | ||
GMAC Mortgage Corp. Loan Trust | 53 | 31 | ||
Series 2007-HE3 Class 2A1 | 63 | 34 | ||
Goal Capital Funding Trust (Ê)(Å) | 500 | 499 | ||
GSAA Trust | 320 | 285 | ||
Series 2006-4 Class 1A2 | 192 | 20 | ||
GSAMP Trust (Ê) | 61 | 33 | ||
HSBC Home Equity Loan Trust (Ê) | 171 | 155 | ||
Series 2006-4 Class A3V | 800 | 740 | ||
Series 2007-1 Class AS | 634 | 579 | ||
Series 2007-3 Class APT | 283 | 238 |
32 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
HSI Asset Securitization Corp. Trust (Ê) | 11 | 10 | ||
Indymac Residential Asset Backed Trust (Ê) | 234 | 95 | ||
IXIS Real Estate Capital Trust (Ê) | 496 | 464 | ||
JPMorgan Mortgage Acquisition Corp. (Ê) | 1,000 | 416 | ||
Lehman XS Trust (Ê) | 53 | 31 | ||
Series 2005-5N Class 3A1A | 342 | 220 | ||
Series 2005-7N Class 1A1A | 372 | 240 | ||
Series 2006-16N Class A1A | 9 | 9 | ||
Series 2006-16N Class A4A | 607 | 309 | ||
Long Beach Mortgage Loan Trust (Ê) | 5 | 4 | ||
Master Asset Backed Securities Trust (Ê) | 57 | 30 | ||
Series 2005-WMC Class M1 | 401 | 396 | ||
Morgan Stanley ABS Capital I (Ê) | 26 | 5 | ||
Series 2006-HE1 Class A4 | 1,950 | 1,020 | ||
Series 2007-HE2 Class A2B | 1,043 | 526 | ||
New Century Home Equity Loan Trust (Ê) | 215 | 134 | ||
Option One Mortgage Loan Trust (Ê) | 36 | 13 | ||
Series 2003-3 Class M3 | 27 | 12 | ||
Series 2003-4 Class M2 | 24 | 9 | ||
Park Place Securities, Inc. (Ê) | 210 | 129 | ||
Popular ABS Mortgage Pass-Through Trust | 141 | 123 | ||
Renaissance Home Equity Loan Trust | 61 | 27 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2005-2 Class AF4 | 85 | 71 | ||
Series 2006-1 Class AF6 | 169 | 92 | ||
Residential Asset Mortgage Products, Inc. | 122 | 111 | ||
Series 2003-RS9 Class AI6A | 401 | 372 | ||
Residential Asset Securities Corp. | 126 | 55 | ||
Series 2003-KS2 Class MI3 | 51 | 7 | ||
Series 2003-KS4 Class AIIB (Ê) | 34 | 16 | ||
Series 2007-KS2 Class AI1 (Ê) | 65 | 62 | ||
SBI Heloc Trust (Ê)(Þ) | 10 | 10 | ||
SG Mortgage Securities Trust (Ê) | 1,500 | 618 | ||
SLM Student Loan Trust (Ê) | 36 | 36 | ||
Series 2008-2 Class A1 | 53 | 53 | ||
Series 2008-7 Class A2 | 2,800 | 2,797 | ||
Small Business Administration Participation Certificates | 680 | 728 | ||
Soundview Home Equity Loan Trust (Ê) | 643 | 601 | ||
Structured Asset Securities Corp. (Ê) | 23 | 23 | ||
Series 2007-BC3 Class 2A2 | 1,220 | 753 | ||
21,457 | ||||
Corporate Bonds and Notes - 20.4% | ||||
ACE Capital Trust II | 175 | 210 | ||
Achmea Hypotheekbank NV (Þ) | 900 | 930 | ||
AES Corp. (The) (Ñ)(Þ) | 267 | 271 | ||
Agilent Technologies, Inc. | 300 | 323 | ||
Allied Waste NA, Inc. | 90 | 97 |
Core Bond Fund | 33 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Allstate Life Global Funding Trusts | 200 | 219 | ||
Ally Financial, Inc. | 525 | 532 | ||
7.500% due 12/31/13 | 1,900 | 1,895 | ||
Altria Group, Inc. | 100 | 127 | ||
American Express Bank FSB | 300 | 324 | ||
6.000% due 09/13/17 | 400 | 439 | ||
American Express Centurion Bank | 400 | 440 | ||
American Express Co. | 200 | 231 | ||
American General Finance Corp. | 300 | 239 | ||
Series MTNI (Ñ) | 100 | 90 | ||
American International Group, Inc. (Ñ) | 1,000 | 887 | ||
5.850% due 01/16/18 | 900 | 804 | ||
Amgen, Inc. | 1,000 | 1,256 | ||
Anglo American Capital PLC (Þ) | 100 | 120 | ||
Anheuser-Busch InBev Worldwide, Inc. | 125 | 144 | ||
4.125% due 01/15/15 (Ñ) | 225 | 236 | ||
7.750% due 01/15/19 (Þ) | 200 | 243 | ||
Appalachian Power Co. | 65 | 70 | ||
Arizona Public Service Co. | 100 | 110 | ||
6.250% due 08/01/16 | 150 | 168 | ||
AT&T, Inc. | 200 | 217 | ||
5.500% due 02/01/18 | 200 | 221 | ||
6.300% due 01/15/38 | 900 | 977 | ||
6.400% due 05/15/38 | 175 | 192 | ||
BAC Capital Trust XV (Ê) | 375 | 245 | ||
Bank of America Corp. | 115 | 119 | ||
6.000% due 09/01/17 | 335 | 353 | ||
5.750% due 12/01/17 | 140 | 145 | ||
5.625% due 07/01/20 | 125 | 126 | ||
Bank of America NA | 200 | 175 | ||
6.100% due 06/15/17 | 175 | 181 | ||
Bank of Montreal (Þ) | 100 | 102 |
Principal Amount ($) or Shares | Market Value $ | |||
BankAmerica Capital III (Ê) | 350 | 232 | ||
Bear Stearns Cos. LLC (The) | 600 | 658 | ||
7.250% due 02/01/18 | 445 | 520 | ||
BellSouth Telecommunications, Inc. | 245 | 271 | ||
BNP Paribas Capital Trust (ƒ)(Þ) | 450 | 441 | ||
Boardwalk Pipelines, LP | 225 | 245 | ||
Boston Scientific Corp. | 125 | 123 | ||
6.000% due 01/15/20 (Ñ) | 100 | 99 | ||
7.000% due 11/15/35 | 63 | 61 | ||
Burlington Northern Santa Fe LLC | 25 | 29 | ||
6.750% due 03/15/29 | 10 | 11 | ||
Caterpillar Financial Services Corp. | 100 | 108 | ||
Cellco Partnership / Verizon Wireless Capital LLC | 700 | 742 | ||
8.500% due 11/15/18 | 175 | 228 | ||
CenterPoint Energy Houston Electric LLC (Ñ) | 110 | 121 | ||
CenterPoint Energy Resources Corp. | 50 | 55 | ||
Chase Capital III (Ê) | 295 | 223 | ||
Chesapeake Energy Corp. | 350 | 356 | ||
CHS/Community Health Systems, Inc. | 335 | 345 | ||
Chubb Corp. | 175 | 168 | ||
CIT Group, Inc. (Ñ) | 156 | 150 | ||
7.000% due 05/01/14 | 85 | 80 | ||
7.000% due 05/01/15 | 285 | 263 | ||
7.000% due 05/01/16 | 141 | 129 | ||
7.000% due 05/01/17 | 198 | 178 | ||
Citibank NA | 100 | 102 | ||
Citigroup Capital XXI (Ñ) | 500 | 487 | ||
Citigroup Funding, Inc. | 200 | 206 | ||
Citigroup, Inc. | 500 | 516 | ||
2.125% due 04/30/12 | 800 | 820 | ||
5.500% due 08/27/12 (Ñ) | 200 | 208 |
34 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
5.625% due 08/27/12 | 200 | 206 | ||
5.500% due 04/11/13 | 700 | 728 | ||
5.850% due 07/02/13 (Ñ) | 100 | 105 | ||
6.375% due 08/12/14 | 150 | 159 | ||
5.000% due 09/15/14 | 400 | 400 | ||
4.700% due 05/29/15 (Ñ) | 50 | 50 | ||
5.850% due 08/02/16 | 55 | 57 | ||
6.000% due 08/15/17 | 850 | 883 | ||
6.125% due 11/21/17 | 405 | 423 | ||
6.125% due 08/25/36 | 300 | 273 | ||
6.875% due 03/05/38 | 600 | 629 | ||
8.125% due 07/15/39 | 165 | 197 | ||
Columbus Southern Power Co. | 10 | 11 | ||
Comcast Cable Communications Holdings, Inc. | 100 | 138 | ||
Comcast Cable Holdings LLC | 180 | 201 | ||
Comcast Holdings Corp. | 125 | 145 | ||
Commonwealth Edison Co. | 50 | 58 | ||
Countrywide Financial Corp. | 100 | 105 | ||
COX Communications, Inc. (Þ) | 75 | 83 | ||
8.375% due 03/01/39 | 125 | 170 | ||
Credit Agricole SA (ƒ)(Þ) | 150 | 142 | ||
Credit Suisse USA, Inc. | 45 | 49 | ||
4.875% due 01/15/15 | 55 | 59 | ||
Danske Bank A/S (Þ) | 500 | 512 | ||
DCP Midstream LLC (Þ) | 100 | 129 | ||
Dell, Inc. (Ñ) | 400 | 433 | ||
Delta Air Lines, Inc. | 480 | 504 | ||
Series 00A2 (Ñ) | 205 | 208 | ||
Series 01A2 | 400 | 413 | ||
Developers Diversified Realty Corp. | 175 | 172 | ||
DirecTV Holdings LLC / DirecTV Financing Co., Inc. (Ñ) | 125 | 137 | ||
6.350% due 03/15/40 | 75 | 80 | ||
Discover Bank/Greenwood DE | 250 | 278 |
Principal Amount ($) or Shares | Market Value $ | |||
DISH DBS Corp. | 125 | 125 | ||
Dolphin Energy, Ltd. (Þ) | 125 | 129 | ||
Dow Chemical Co. (The) | 300 | 346 | ||
5.900% due 02/15/15 | 75 | 82 | ||
DPL, Inc. | 193 | 204 | ||
Dynegy Roseton / Danskammer Pass Through Trust | 700 | 616 | ||
Edison Mission Energy | 675 | 432 | ||
El Paso Corp. | 200 | 198 | ||
El Paso Natural Gas Co. | 100 | 109 | ||
El Paso Pipeline Partners Operating Co. LLC | 75 | 77 | ||
Enel Finance International SA (Þ) | 175 | 176 | ||
Energy Transfer Partners, LP (Ñ) | 300 | 320 | ||
Enterprise Products Operating LLC | ||||
6.650% due 04/15/18 | 250 | 285 | ||
Series A | ||||
8.375% due 08/01/66 | 100 | 100 | ||
Farmers Exchange Capital (Þ) | ||||
7.050% due 07/15/28 | 500 | 477 | ||
7.200% due 07/15/48 | 300 | 277 | ||
Fifth Third Bancorp | 1,100 | 1,233 | ||
Fifth Third Bank (Ê) | 250 | 235 | ||
First Niagara Financial Group, Inc. | 125 | 131 | ||
FirstEnergy Corp. | 12 | 13 | ||
FPL Energy Wind Funding LLC (Þ) | 235 | 232 | ||
Freeport-McMoRan Copper & Gold, Inc. | 300 | 330 | ||
General Electric Capital Corp. | ||||
3.000% due 12/09/11 | 500 | 516 | ||
1.384% due 05/22/13 (Ê) | 75 | 74 | ||
5.900% due 05/13/14 (Ñ) | 350 | 386 | ||
5.625% due 05/01/18 | 230 | 244 | ||
5.875% due 01/14/38 | 300 | 294 | ||
6.375% due 11/15/67 | 1,900 | 1,767 | ||
Series EMtn (Ê) | ||||
0.595% due 03/20/14 | 400 | 374 |
Core Bond Fund | 35 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Series GMTN | ||||
2.000% due 09/28/12 | 400 | 410 | ||
2.625% due 12/28/12 | 1,000 | 1,039 | ||
Series MTNA (Ê) | ||||
0.797% due 09/15/14 | 300 | 283 | ||
General Electric Co. | 250 | 272 | ||
Goldman Sachs Group, Inc. (The) | ||||
1.151% due 12/05/11 (Ê) | 1,020 | 1,032 | ||
4.750% due 07/15/13 | 350 | 365 | ||
6.000% due 05/01/14 | 150 | 161 | ||
6.250% due 09/01/17 | 600 | 635 | ||
6.150% due 04/01/18 | 150 | 157 | ||
7.500% due 02/15/19 | 550 | 615 | ||
6.000% due 06/15/20 (Ñ) | 285 | 294 | ||
6.750% due 10/01/37 | 800 | 784 | ||
Series MTNB (Ê) | ||||
0.707% due 07/22/15 | 100 | 90 | ||
Hartford Financial Services Group, Inc. | 50 | 46 | ||
HBOS PLC (Þ) | 825 | 772 | ||
HCA, Inc. | ||||
8.500% due 04/15/19 | 300 | 318 | ||
7.875% due 02/15/20 | 125 | 129 | ||
HCP, Inc. | ||||
5.950% due 09/15/11 | 585 | 606 | ||
6.700% due 01/30/18 | 425 | 448 | ||
Healthcare Realty Trust, Inc. | 700 | 732 | ||
Historic TW, Inc. | 195 | 234 | ||
Indiantown Cogeneration, LP | 275 | 304 | ||
International Paper Co. (Ñ) | 75 | 89 | ||
Jackson National Life Fund LLC | 2,800 | 2,763 | ||
Jersey Central Power & Light Co. | 90 | 97 | ||
JPMorgan Chase & Co. | ||||
5.375% due 01/15/14 (Ñ) | 170 | 183 | ||
6.000% due 01/15/18 | 200 | 221 | ||
Series 1 (ƒ) | ||||
7.900% due 04/29/49 | 300 | 309 | ||
JPMorgan Chase Bank NA | ||||
Series AI (Þ) | ||||
5.875% due 06/13/16 | 70 | 77 | ||
Series BKNT | ||||
6.000% due 10/01/17 | 570 | 621 | ||
JPMorgan Chase Capital XIII (Ê) | 480 | 356 | ||
JPMorgan Chase Capital XXI (Ê) | 335 | 242 |
Principal Amount ($) or Shares | Market Value $ | |||
JPMorgan Chase Capital XXIII (Ê) | 545 | 399 | ||
KCP&L Greater Missouri Operations Co. | 640 | 737 | ||
Kinder Morgan Energy Partners, LP | 700 | 756 | ||
Kraft Foods, Inc. | ||||
6.125% due 02/01/18 (Ñ) | 200 | 227 | ||
6.125% due 08/23/18 | 125 | 142 | ||
5.375% due 02/10/20 | 700 | 750 | ||
6.500% due 02/09/40 | 175 | 196 | ||
L-3 Communications Corp. | 125 | �� | 125 | |
Landwirtschaftliche Rentenbank | 1,700 | 1,721 | ||
Lehman Brothers Holdings, Inc. (Ø) | ||||
6.200% due 09/26/14 | 200 | 39 | ||
Macquarie Bank, Ltd. (Þ) | 1,000 | 1,048 | ||
Manufacturers & Traders Trust Co. | 84 | 80 | ||
MBNA Capital B (Ê) | 985 | 666 | ||
MBNA Corp. | 200 | 215 | ||
Merrill Lynch & Co., Inc. | ||||
6.050% due 08/15/12 | 100 | 106 | ||
6.050% due 05/16/16 | 300 | 310 | ||
6.400% due 08/28/17 | 325 | 339 | ||
6.875% due 04/25/18 | 725 | 773 | ||
MetLife, Inc. | ||||
6.125% due 12/01/11 | 205 | 217 | ||
6.400% due 12/15/36 | 100 | 88 | ||
Series A | ||||
6.817% due 08/15/18 | 200 | 226 | ||
Metropolitan Life Global Funding I (Þ) | 200 | 217 | ||
Mirant Mid Atlantic Pass Through Trust A | 242 | 247 | ||
Mirant Mid Atlantic Pass Through Trust B | 282 | 291 | ||
Morgan Stanley | ||||
3.250% due 12/01/11 | 700 | 725 | ||
5.375% due 10/15/15 | 500 | 506 | ||
0.754% due 10/18/16 (Ê) | 435 | 378 | ||
5.450% due 01/09/17 | 225 | 223 | ||
6.250% due 08/28/17 | 100 | 102 | ||
5.950% due 12/28/17 | 125 | 127 | ||
6.625% due 04/01/18 | 450 | 472 | ||
7.300% due 05/13/19 | 100 | 108 | ||
5.625% due 09/23/19 | 100 | 97 | ||
Series GMTN (Ê) | ||||
2.930% due 05/14/13 | 200 | 201 |
36 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
0.595% due 01/09/14 | 425 | 391 | ||
National City Bank (Ê) | 700 | 626 | ||
Nevada Power Co. | 100 | 111 | ||
News America Holdings, Inc. | ||||
7.900% due 12/01/95 | 90 | 107 | ||
8.250% due 10/17/96 | 20 | 23 | ||
NGPL PipeCo LLC (Þ) | 200 | 199 | ||
Nisource Finance Corp. | ||||
10.750% due 03/15/16 | 100 | 128 | ||
6.400% due 03/15/18 | 145 | 160 | ||
6.125% due 03/01/22 | 335 | 358 | ||
North American Development Bank | 500 | 523 | ||
Ohio Power Co. | 20 | 22 | ||
Oncor Electric Delivery Co. LLC (Ñ) | 550 | 646 | ||
Panhandle Eastern Pipeline Co., LP | 450 | 504 | ||
Petroleos Mexicanos | 320 | 381 | ||
Philip Morris International, Inc. | 100 | 117 | ||
PNC Bank NA | 175 | 198 | ||
Progress Energy, Inc. | ||||
5.625% due 01/15/16 (Ñ) | 40 | 44 | ||
7.050% due 03/15/19 | 200 | 236 | ||
ProLogis | 150 | 135 | ||
Prudential Financial, Inc. | 375 | 378 | ||
Prudential Holdings LLC (Þ) | 550 | 657 | ||
Public Service Co. of New Mexico | 260 | 274 | ||
Puget Sound Energy, Inc. | 125 | 114 | ||
Pulte Group, Inc. | 1,000 | 967 | ||
Qwest Corp. | ||||
7.875% due 09/01/11 | 120 | 125 | ||
7.625% due 06/15/15 (Ñ) | 100 | 107 | ||
8.375% due 05/01/16 | 175 | 191 | ||
Reinsurance Group of America, Inc. | 75 | 62 | ||
Reliant Energy Mid-Atlantic Power Holdings LLC | 318 | 331 |
Principal Amount ($) or Shares | Market Value $ | |||
Rensselaer Polytechnic Institute | 325 | 352 | ||
Royal Bank of Scotland PLC (The) (Þ) | 100 | 100 | ||
Sabine Pass LNG, LP | ||||
7.250% due 11/30/13 | 730 | 657 | ||
7.500% due 11/30/16 | 65 | 54 | ||
Simon Property Group, LP | ||||
5.300% due 05/30/13 | 395 | 425 | ||
6.100% due 05/01/16 | 130 | 144 | ||
5.650% due 02/01/20 | 275 | 291 | ||
Southern Union Co. | 740 | 656 | ||
Sprint Capital Corp. | 125 | 131 | ||
State Street Capital Trust III (ƒ)(Ñ) | 200 | 200 | ||
Symetra Financial Corp. (Å) | 150 | 151 | ||
Target Corp. | 400 | 436 | ||
Tennessee Gas Pipeline Co. | ||||
8.000% due 02/01/16 | 200 | 232 | ||
7.500% due 04/01/17 | 75 | 86 | ||
8.375% due 06/15/32 | 100 | 117 | ||
Time Warner, Inc. (Ñ) | 400 | 451 | ||
Transatlantic Holdings, Inc. | 150 | 151 | ||
TransCanada PipeLines, Ltd. | 225 | 201 | ||
Transocean, Inc. | 650 | 577 | ||
UAL 2009-1 Pass Through Trust | 97 | 105 | ||
Union Electric Co. | 205 | 233 | ||
Union Pacific Corp. (Ñ) | 400 | 448 | ||
UnitedHealth Group, Inc. | ||||
4.875% due 02/15/13 (Ñ) | 200 | 215 | ||
6.000% due 06/15/17 | 3 | 3 | ||
Series WI | ||||
6.500% due 06/15/37 | 45 | 49 | ||
Vale Overseas, Ltd. (Ñ) | 400 | 422 | ||
Valero Energy Corp. (Ñ) | ||||
9.375% due 03/15/19 | 450 | 545 | ||
6.125% due 02/01/20 | 250 | 257 | ||
Wachovia Corp. | ||||
5.625% due 10/15/16 | 100 | 108 | ||
5.750% due 02/01/18 (Ñ) | 500 | 548 | ||
WEA Finance LLC / WT Finance Aust Pty, Ltd. (Þ) | ||||
7.500% due 06/02/14 | 205 | 232 | ||
6.750% due 09/02/19 | 95 | 106 |
Core Bond Fund | 37 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Wells Fargo & Co. | ||||
5.625% due 12/11/17 (Ñ) | 300 | 328 | ||
Series K (ƒ) | ||||
7.980% due 03/29/49 | 3,300 | 3,399 | ||
Westpac Banking Corp. (Þ) | 800 | 805 | ||
Whirlpool Corp. | ||||
8.000% due 05/01/12 | 25 | 27 | ||
8.600% due 05/01/14 | 75 | 88 | ||
Williams Cos., Inc. (The) | 366 | 419 | ||
Windstream Corp. | 125 | 126 | ||
XTO Energy, Inc. (Ñ) | 175 | 212 | ||
ZFS Finance USA Trust I (Þ) | 200 | 186 | ||
ZFS Finance USA Trust II (Þ) | 300 | 268 | ||
89,746 | ||||
International Debt - 6.3% | ||||
Anglo American Capital PLC (Þ) | 100 | 129 | ||
ANZ National International, Ltd. (Þ) | 600 | 665 | ||
ArcelorMittal | 175 | 183 | ||
ARES CLO Funds (Ê)(Å) | 730 | 672 | ||
Argentina Government International Bond (Ê) | 1,650 | 126 | ||
AstraZeneca PLC | 100 | 117 | ||
Barclays Bank PLC | ||||
5.450% due 09/12/12 | 1,300 | 1,382 | ||
6.050% due 12/04/17 (Þ) | 200 | 202 | ||
BAT International Finance PLC (Þ) | 150 | 197 | ||
BBVA Bancomer SA(Þ) | 300 | 296 | ||
Black Diamond CLO, Ltd. (Ê)(Å) | 750 | 662 | ||
BNP Paribas (ƒ)(Þ) | 300 | 246 | ||
BRFkredit AS (Þ) | 1,200 | 1,222 | ||
Canadian Natural Resources, Ltd. | 100 | 108 |
Principal Amount ($) or Shares | Market Value $ | ||||
Chatham Light CLO, Ltd. (Ê)(Å) | 495 | 464 | |||
Corp. Nacional del Cobre de Chile (Þ) | 200 | 245 | |||
Covidien International Finance SA | 175 | 179 | |||
Credit Suisse NY | 770 | 803 | |||
Deutsche Bank AG | 600 | 662 | |||
Dexia Credit Local (Ê)(Þ) | 500 | 499 | |||
Electricite De France (Þ) | |||||
5.500% due 01/26/14 | 200 | 221 | |||
6.500% due 01/26/19 | 200 | 233 | |||
6.950% due 01/26/39 | 200 | 241 | |||
Endurance Specialty Holdings, Ltd. | 100 | 107 | |||
Enel Finance International SA (Þ) | 300 | 325 | |||
Export-Import Bank of Korea (Ñ) | 700 | 758 | |||
FIH Erhvervsbank A/S (Þ) | 500 | 512 | |||
Gazprom International SA for Gazprom | 64 | 66 | |||
HSBC Holdings PLC | |||||
6.500% due 05/02/36 | 100 | 104 | |||
6.500% due 09/15/37 | 100 | 104 | |||
International Lease Finance Corp. (Ê) | 100 | 111 | |||
Israel Government AID Bond | 400 | 461 | |||
JPMorgan Chase Bank | |||||
10.000% due 07/17/17 | IDR | 2,137,000 | 259 | ||
11.000% due 11/17/20 | IDR | 2,248,000 | 293 | ||
Korea Electric Power Corp. (Þ) | 60 | 64 | |||
Kreditanstalt fuer Wiederaufbau (Ñ) | 900 | 913 | |||
Landwirtschaftliche Rentenbank | 700 | 756 | |||
LeasePlan Corp. NV (Þ) | 400 | 411 | |||
Lloyds TSB Bank PLC (Þ) | 200 | 193 | |||
Mexico Government International Bond | 260 | 274 | |||
Morgan Stanley Bank AG for OAO Gazprom | 900 | 1,001 | |||
MUFG Capital Finance 1, Ltd. (ƒ) | 200 | 194 |
38 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
National Australia Bank, Ltd. (Þ) | 800 | 867 | ||
Peruvian Government International Bond | 180 | 213 | ||
Petro-Canada | 100 | 113 | ||
Petrobras International Finance Co. - Pifco (Ñ) | 800 | 915 | ||
Province of Ontario Canada | 400 | 430 | ||
Qatar Government International Bond (Þ) | 520 | 543 | ||
Ras Laffan Liquefied Natural Gas Co., Ltd. III (Þ) | 250 | 258 | ||
Resona Bank, Ltd. (ƒ)(Þ) | 100 | 95 | ||
Royal Bank of Scotland Group PLC | ||||
6.990% due 10/29/49 (ƒ)(Þ) | 300 | 195 | ||
Series 1 (ƒ) | ||||
9.118% due 03/31/49 | 300 | 258 | ||
Royal Bank of Scotland PLC (The) (Þ) | ||||
3.000% due 12/09/11 | 200 | 205 | ||
1.500% due 03/30/12 | 1,200 | 1,202 | ||
State of Qatar | 100 | 107 | ||
Suncor Energy, Inc. | 100 | 113 | ||
Swedbank AB | ||||
3.000% due 12/22/11 (Å) | 500 | 515 | ||
2.800% due 02/10/12 (Þ) | 100 | 103 | ||
2.900% due 01/14/13 (Å) | 100 | 104 | ||
Swedish Housing Finance Corp. (Þ) | 1,000 | 1,035 | ||
Systems 2001 AT LLC (Þ) | 41 | 42 | ||
Teck Resources, Ltd. | 200 | 245 | ||
Telecom Italia Capital SA | ||||
6.200% due 07/18/11 | 255 | 264 | ||
7.200% due 07/18/36 | 225 | 218 | ||
TransCapitalInvest, Ltd. for OJSC AK Transneft (Þ) | 100 | 117 | ||
UBS AG | ||||
5.850% due 12/31/17 | 270 | 141 | ||
Series DPNT | ||||
5.875% due 12/20/17 | 400 | 423 | ||
5.750% due 04/25/18 | 100 | 103 | ||
UBS Luxembourg SA for OJSC Vimpel Communications | 100 | 103 | ||
US Bank National Associtaion | 100 | 121 | ||
WCI Finance LLC / WEA Finance LLC (Þ) | 75 | 79 | ||
Wells Fargo & Co. | 400 | 461 |
Principal Amount ($) or Shares | Market Value $ | |||
Westpac Banking Corp. (Þ) | 300 | 309 | ||
Westpac Securities NZ, Ltd. (Þ) | 100 | 102 | ||
WG Horizons CLO (Ê)(Å) | 1,300 | 1,166 | ||
Xstrata Canada Corp. | 45 | 49 | ||
27,874 | ||||
Loan Agreements - 0.3% | ||||
Adam Aircraft Term Loan (Å)(Ø) | 49 | — | ||
HCA, Inc., Term Loan A (Ê) | 507 | 479 | ||
Kelson Holdings, Inc., 1st Lien Term Loan (Ê) | 1,000 | 951 | ||
1,430 | ||||
Mortgage-Backed Securities - 35.2% | ||||
ABN Amro Mortgage Corp. | 1,857 | 1,681 | ||
Adjustable Rate Mortgage Trust | ||||
Series 2004-5 Class 2A1 | ||||
3.092% due 04/25/35 | 56 | 50 | ||
Series 2005-3 Class 8A2 (Ê) | ||||
0.587% due 07/25/35 | 85 | 72 | ||
American Home Mortgage Assets (Ê) | 1,060 | 705 | ||
American Home Mortgage Investment Trust (Ê) | 76 | 69 | ||
Banc of America Alternative Loan Trust | ||||
Series 2003-2 Class CB2 (Ê) | ||||
0.847% due 04/25/33 | 47 | 41 | ||
Series 2003-10 Class 2A2 (Ê) | ||||
0.797% due 12/25/33 | 137 | 122 | ||
Series 2006-5 Class CB17 | ||||
6.000% due 06/25/46 | 166 | 120 | ||
Banc of America Commercial Mortgage, Inc. | ||||
Series 2002-PB2 Class A4 | ||||
6.186% due 06/11/35 | 555 | 582 | ||
Series 2005-2 Class A4 | ||||
4.783% due 07/10/43 | 325 | 337 | ||
Series 2005-3 Class A2 | ||||
4.501% due 07/10/43 | 110 | 111 | ||
Series 2006-1 Class A4 | ||||
5.372% due 09/10/45 | 280 | 296 | ||
Series 2006-2 Class A4 | ||||
5.928% due 05/10/45 | 200 | 212 | ||
Series 2006-4 Class A4 | ||||
5.634% due 07/10/46 | 500 | 514 |
Core Bond Fund | 39 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Banc of America Funding Corp. | ||||
Series 2005-D Class A1 (Ê) | ||||
2.926% due 05/25/35 | 92 | 90 | ||
Series 2006-3 Class 5A8 | ||||
5.500% due 03/25/36 | 475 | 387 | ||
Series 2006-A Class 3A2 | ||||
5.721% due 02/20/36 | 141 | 87 | ||
Series 2006-A Class 4A1 (Ê) | ||||
5.520% due 02/20/36 | 385 | 291 | ||
Series 2006-I Class 5A1 (Ê) | ||||
6.063% due 10/20/46 | 1,617 | 1,389 | ||
Banc of America Mortgage Securities, Inc. | ||||
Series 2003-9 Class 1A12 (Ê) | ||||
0.797% due 12/25/33 | 66 | 66 | ||
Series 2004-1 Class 5A1 | ||||
6.500% due 09/25/33 | 7 | 7 | ||
Series 2004-2 Class 1A9 (Ê) | ||||
0.797% due 03/25/34 | 59 | 56 | ||
Series 2004-11 Class 2A1 | ||||
5.750% due 01/25/35 | 245 | 246 | ||
Series 2005-H Class 2A5 (Ê) | ||||
4.784% due 09/25/35 | 220 | 185 | ||
Series 2005-L Class 3A1 (Ê) | ||||
5.401% due 01/25/36 | 163 | 151 | ||
Series 2006-2 Class A15 | ||||
6.000% due 07/25/46 | 122 | 112 | ||
Series 2006-B Class 1A1 (Ê) | ||||
4.264% due 10/20/46 | 75 | 49 | ||
Bear Stearns Adjustable Rate Mortgage Trust | ||||
Series 2003-1 Class 6A1 | ||||
2.960% due 04/25/33 | 28 | 27 | ||
Series 2003-8 Class 4A1 | ||||
3.529% due 01/25/34 | 77 | 73 | ||
Series 2004-9 Class 22A1 (Ê) | ||||
4.069% due 11/25/34 | 52 | 49 | ||
Series 2005-2 Class A1 (Ê) | ||||
2.760% due 03/25/35 | 867 | 803 | ||
Series 2007-3 Class 1A1 | ||||
5.370% due 05/25/47 | 298 | 215 | ||
Bear Stearns Alt-A Trust | ||||
Series 2005-4 Class 23A1 | ||||
2.759% due 05/25/35 | 172 | 133 | ||
Series 2005-7 Class 22A1 | ||||
4.539% due 09/25/35 | 84 | 63 | ||
Chase Mortgage Finance Corp. | ||||
Series 2003-S8 Class A1 | ||||
4.500% due 09/25/18 | 84 | 86 | ||
Series 2006-S4 Class A3 | ||||
6.000% due 12/25/36 | 142 | 140 | ||
Series 2006-S4 Class A4 | ||||
6.000% due 12/25/36 | 32 | 30 | ||
Citigroup Mortgage Loan Trust, Inc. | ||||
Series 2005-11 Class A2A (Ê) | ||||
4.700% due 12/25/35 | 53 | 48 | ||
Series 2006-AR7 Class 1A4A | ||||
5.590% due 11/25/36 | 674 | 499 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2007-AR8 Class 2A1A | ||||
5.825% due 07/25/37 | 885 | 645 | ||
Citigroup/Deutsche Bank Commercial Mortgage Trust | ||||
Series 2005-CD1 Class A4 | ||||
5.397% due 07/15/44 | 340 | 364 | ||
Series 2006-CD3 Class A5 | ||||
5.617% due 10/15/48 | 190 | 195 | ||
Citimortgage Alternative Loan Trust | 96 | 70 | ||
Commercial Mortgage Loan Trust | 120 | 61 | ||
Commercial Mortgage Pass Through Certificates | ||||
Series 2006-C8 Class A4 | ||||
5.306% due 12/10/46 | 200 | 195 | ||
Series 2007-C9 Class A4 | ||||
6.010% due 12/10/49 | 360 | 372 | ||
Countrywide Alternative Loan Trust | ||||
Series 2005-32T Class A7 (Ê) | ||||
0.597% due 08/25/35 | 65 | 55 | ||
Series 2005-J8 Class 1A3 | ||||
5.500% due 07/25/35 | 161 | 135 | ||
Series 2005-J13 Class 2A3 | ||||
5.500% due 11/25/35 | 100 | 79 | ||
Series 2006-9T1 Class A7 | ||||
6.000% due 05/25/36 | 71 | 47 | ||
Series 2006-J2 Class A3 | ||||
6.000% due 04/25/36 | 112 | 89 | ||
Series 2006-OA1 Class A1 (Ê) | ||||
0.528% due 02/20/47 | 698 | 348 | ||
Series 2006-OA1 Class A2 (Ê) | ||||
0.537% due 10/25/46 | 1,675 | 956 | ||
Series 2007-15C Class A5 | ||||
5.750% due 07/25/37 | 722 | 515 | ||
Series 2007-J2 Class 2A1 | ||||
6.000% due 07/25/37 | 210 | 156 | ||
Series 2007-OA1 Class A1A (Ê) | ||||
1.801% due 11/25/47 | 916 | 449 | ||
Countrywide Home Loan Mortgage Pass Through Trust | ||||
Series 2003-8 Class A2 (Ê) | ||||
0.847% due 05/25/18 | 82 | 76 | ||
Series 2003-52 Class A1 | ||||
3.416% due 02/19/34 | 126 | 116 | ||
Series 2004-16 Class 1A1 (Ê) | ||||
0.747% due 09/25/34 | 127 | 71 | ||
Series 2004-22 Class A3 | ||||
3.506% due 11/25/34 | 162 | 139 | ||
Series 2004-HYB Class 1A1 | ||||
3.205% due 02/20/35 | 269 | 247 | ||
Series 2005-1 Class 2A1 (Ê) | ||||
0.637% due 03/25/35 | 1,621 | 845 | ||
Series 2005-3 Class 1A2 (Ê) | ||||
0.637% due 04/25/35 | 24 | 14 |
40 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Series 2005-HYB Class 3A2A (Ê) | ||||
5.250% due 02/20/36 | 53 | 39 | ||
Series 2007-1 Class A1 | ||||
6.000% due 03/25/37 | 1,546 | 1,280 | ||
Series 2007-2 Class A2 | ||||
6.000% due 03/25/37 | 2,100 | 1,667 | ||
Series 2007-4 Class 1A10 | ||||
6.000% due 05/25/37 | 2,000 | 1,505 | ||
Series 2007-18 Class 2A1 | ||||
6.500% due 11/25/37 | 177 | 154 | ||
Series 2007-HY1 Class 1A2 | ||||
5.593% due 04/25/37 | 71 | 14 | ||
Credit Suisse First Boston Mortgage Securities Corp. | 352 | 306 | ||
Credit Suisse Mortgage Capital Certificates | ||||
Series 2006-8 Class 4A1 (Å) | ||||
6.500% due 10/25/21 | 520 | 351 | ||
Series 2006-C2 Class A3 | ||||
5.846% due 03/15/39 | 100 | 104 | ||
Deutsche ALT-A Securities, Inc. Alternate Loan Trust | ||||
Series 2005-AR1 Class 2A3 | ||||
4.273% due 08/25/35 | 465 | 239 | ||
Series 2007-OA1 Class A1 (Ê) | ||||
0.497% due 02/25/47 | 2,403 | 1,255 | ||
Series 2007-OA2 Class A1 (Ê) | ||||
1.191% due 04/25/47 | 1,305 | 722 | ||
DLJ Commercial Mortgage Corp. (Ê) | 245 | 8 | ||
Fannie Mae | ||||
5.190% due 2012 | 200 | 213 | ||
2.829% due 2017 (Ê) | 28 | 30 | ||
6.000% due 2017 | 39 | 42 | ||
4.000% due 2018 | 496 | 525 | ||
4.500% due 2018 | 536 | 574 | ||
5.000% due 2018 | 103 | 111 | ||
6.000% due 2019 | 254 | 277 | ||
4.500% due 2020 | 101 | 108 | ||
5.000% due 2020 | 3,077 | 3,309 | ||
5.500% due 2020 | 124 | 134 | ||
6.000% due 2020 | 315 | 343 | ||
5.500% due 2021 | 192 | 208 | ||
5.500% due 2022 | 250 | 271 | ||
5.000% due 2023 | 523 | 559 | ||
5.500% due 2023 | 267 | 290 | ||
4.500% due 2025 | 1,335 | 1,410 | ||
6.000% due 2026 | 550 | 602 | ||
6.000% due 2027 | 290 | 317 | ||
6.000% due 2028 | 21 | 23 | ||
5.500% due 2029 | 55 | 60 | ||
6.000% due 2032 | 297 | 328 | ||
7.000% due 2032 | 96 | 108 |
Principal Amount ($) or Shares | Market Value $ | |||
2.745% due 2033 (Ê) | 56 | 58 | ||
2.818% due 2033 (Ê) | 125 | 129 | ||
5.000% due 2033 | 371 | 395 | ||
5.500% due 2033 | 396 | 427 | ||
6.000% due 2033 | 94 | 104 | ||
5.000% due 2034 | 1,049 | 1,116 | ||
5.500% due 2034 | 654 | 705 | ||
5.000% due 2035 | 109 | 115 | ||
5.500% due 2035 | 6 | 7 | ||
6.000% due 2035 | 102 | 112 | ||
3.843% due 2036 (Ê) | 294 | 298 | ||
6.000% due 2036 | 143 | 154 | ||
6.500% due 2036 | 75 | 82 | ||
7.000% due 2036 | 12 | 13 | ||
5.500% due 2037 | 360 | 388 | ||
5.503% due 2037 (Ê) | 194 | 207 | ||
6.000% due 2037 | 246 | 269 | ||
6.500% due 2037 | 696 | 758 | ||
5.500% due 2038 | 2,100 | 2,258 | ||
6.000% due 2038 | 1,501 | 1,635 | ||
4.500% due 2039 | 2,723 | 2,837 | ||
5.000% due 2039 | 1,823 | 1,939 | ||
4.500% due 2040 | 1,660 | 1,731 | ||
5.000% due 2040 | 294 | 313 | ||
Series 2003-343 Class 6 | ||||
Interest Only STRIP | ||||
5.000% due 10/01/33 | 172 | 29 | ||
Series 2003-345 Class 18 | ||||
Interest Only STRIP | ||||
4.500% due 12/01/18 | 440 | 47 | ||
Series 2003-345 Class 19 | ||||
Interest Only STRIP | ||||
4.500% due 01/01/19 | 487 | 51 | ||
Series 2005-365 Class 12 | ||||
Interest Only STRIP | ||||
5.500% due 12/01/35 | 657 | 102 | ||
Series 2006-369 Class 8 | ||||
Interest Only STRIP | ||||
5.500% due 04/01/36 | 123 | 17 | ||
30 Year TBA (Ï) | ||||
4.000% | — | 19 | ||
4.500% | 5,000 | 5,175 | ||
6.500% | 13,000 | 14,237 | ||
Fannie Mae REMICS | ||||
Series 1999-56 Class Z | ||||
7.000% due 12/18/29 | 70 | 78 | ||
Series 2003-32 Class FH (Ê) | ||||
0.747% due 11/25/22 | 159 | 158 | ||
Series 2003-35 Class FY (Ê) | ||||
0.747% due 05/25/18 | 234 | 232 | ||
Series 2003-78 Class FI (Ê) | ||||
0.747% due 01/25/33 | 156 | 156 | ||
Series 2004-21 Class FL (Ê) | ||||
0.697% due 11/25/32 | 93 | 93 | ||
Series 2005-79 Class FC (Ê) | ||||
0.647% due 02/25/22 | 24 | 24 |
Core Bond Fund | 41 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Series 2006-27 Class SH (Ê) | ||||
Interest Only STRIP | ||||
6.353% due 04/25/36 | 3,387 | 478 | ||
Series 2006-48 Class LG | ||||
Principal Only STRIP | ||||
Zero coupon due 06/25/36 | 24 | 24 | ||
Series 2007-30 Class AF (Ê) | ||||
0.657% due 04/25/37 | 117 | 116 | ||
Fannie Mae Whole Loan | 30 | 33 | ||
Federal Home Loan Mortgage Corp. Structured Pass Through Securities (Ê) | 24 | 24 | ||
First Horizon Alternative Mortgage Securities | ||||
Series 2004-AA3 Class A1 (Ê) | ||||
2.331% due 09/25/34 | 36 | 31 | ||
Series 2006-FA3 Class A6 | ||||
6.000% due 07/25/36 | 115 | 96 | ||
First Horizon Asset Securities, Inc. (Ê) | ||||
Series 2005-AR5 Class 3A1 | ||||
5.561% due 10/25/35 | 67 | 63 | ||
Freddie Mac | ||||
6.000% due 2016 | 14 | 15 | ||
5.000% due 2018 | 252 | 271 | ||
5.000% due 2019 | 403 | 433 | ||
5.000% due 2020 | 727 | 781 | ||
5.500% due 2020 | 432 | 469 | ||
3.138% due 2030 (Ê) | 1 | 1 | ||
5.000% due 2033 | 118 | 125 | ||
2.873% due 2034 (Ê) | 53 | 54 | ||
5.000% due 2035 | 1,326 | 1,406 | ||
5.779% due 2036 (Ê) | 57 | 60 | ||
5.882% due 2036 (Ê) | 119 | 126 | ||
5.970% due 2036 (Ê) | 70 | 74 | ||
5.315% due 2037 (Ê) | 247 | 261 | ||
5.452% due 2037 (Ê) | 92 | 98 | ||
5.500% due 2037 | 1,266 | 1,357 | ||
5.642% due 2037 (Ê) | 342 | 365 | ||
5.687% due 2037 (Ê) | 45 | 48 | ||
5.724% due 2037 (Ê) | 146 | 156 | ||
5.745% due 2037 (Ê) | 110 | 117 | ||
5.812% due 2037 (Ê) | 116 | 123 | ||
5.859% due 2037 (Ê) | 29 | 31 | ||
5.947% due 2037 (Ê) | 61 | 65 | ||
6.000% due 2037 | 1,049 | 1,141 | ||
5.000% due 2038 | 79 | 83 | ||
5.500% due 2038 | 5,536 | 5,948 | ||
6.000% due 2038 | 6,834 | 7,424 | ||
4.500% due 2039 | 3,584 | 3,718 | ||
5.000% due 2039 | 3,588 | 3,799 | ||
6.000% due 2039 | 105 | 113 | ||
3.594% due 2040 (Ê) | 1,205 | 1,252 | ||
Freddie Mac REMICS | ||||
Series 2000-226 Class F (Ê) | ||||
0.800% due 11/15/30 | 11 | 11 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2003-256 Class FJ (Ê) | ||||
0.750% due 02/15/33 | 78 | 79 | ||
Series 2004-281 Class DF (Ê) | ||||
0.800% due 06/15/23 | 63 | 63 | ||
Series 2005-294 Class FA (Ê) | ||||
0.520% due 03/15/20 | 122 | 120 | ||
Series 2005-299 Class KF (Ê) | ||||
0.750% due 06/15/35 | 22 | 22 | ||
Series 2005-301 Class IM | ||||
Interest Only STRIP | ||||
5.500% due 01/15/31 | 72 | 3 | ||
Series 2007-330 Class GL (Ê)(Å) | ||||
20.057% due 04/15/37 | 8 | 8 | ||
Series 2007-333 Class BF (Ê) | ||||
0.500% due 07/15/19 | 177 | 176 | ||
Series 2007-333 Class FT (Ê) | ||||
0.500% due 08/15/19 | 362 | 360 | ||
Ginnie Mae I | ||||
6.000% due 2029 | 8 | 9 | ||
6.500% due 2037 | 754 | 829 | ||
6.500% due 2038 | 2,378 | 2,612 | ||
4.500% due 2039 | 1,881 | 1,964 | ||
5.000% due 2039 | 289 | 309 | ||
5.500% due 2039 | 174 | 188 | ||
6.500% due 2039 | 939 | 1,032 | ||
30 Year TBA (Ï) | ||||
4.500% | 3,900 | 4,062 | ||
5.500% | 410 | 443 | ||
Ginnie Mae II (Ê) | ||||
4.375% due 01/01/26 | 124 | 128 | ||
3.625% due 01/01/27 | 8 | 9 | ||
2.750% due 01/01/32 | 46 | 47 | ||
GMAC Mortgage Corp. Loan Trust (Ê) | 38 | 37 | ||
Government National Mortgage Association (Ê) | ||||
Series 1999-40 Class FE | ||||
0.900% due 11/16/29 | 68 | 68 | ||
Series 2000-29 Class F | ||||
0.848% due 09/20/30 | 14 | 14 | ||
Series 2007-26 Class SD | ||||
6.450% due 05/16/37 | 3,876 | 448 | ||
Greenwich Capital Commercial Funding Corp. | ||||
Series 2003-C2 Class A2 | ||||
4.022% due 01/05/36 | 4 | 4 | ||
Series 2004-GG1 Class A7 | ||||
5.317% due 06/10/36 | 465 | 497 | ||
Series 2006-GG7 Class A4 | ||||
6.085% due 07/10/38 | 1,105 | 1,155 | ||
Series 2007-GG9 Class A4 | ||||
5.444% due 03/10/39 | 315 | 316 | ||
GS Mortgage Securities Corp. II | ||||
Series 2006-GG6 Class A4 | ||||
5.553% due 04/10/38 | 320 | 329 | ||
Series 2006-GG8 Class AAB | ||||
5.535% due 11/10/39 | 200 | 215 |
42 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
GSR Mortgage Loan Trust | ||||
Series 2005-AR7 Class 6A1 | ||||
5.209% due 11/25/35 | 188 | 176 | ||
Series 2006-3F Class 2A3 | ||||
5.750% due 03/25/36 | 460 | 396 | ||
Series 2007-AR1 Class 1A1 | ||||
3.565% due 03/25/37 | 1,824 | 1,143 | ||
Harborview Mortgage Loan Trust | ||||
Series 2005-3 Class 2A1A (Ê) | ||||
0.588% due 06/19/35 | 1,455 | 835 | ||
Series 2005-4 Class 3A1 | ||||
2.964% due 07/19/35 | 127 | 100 | ||
Series 2005-14 Class 3A1A | ||||
5.225% due 12/19/35 | 59 | 44 | ||
Indymac Index Mortgage Loan Trust | ||||
Series 2005-AR1 Class A1 | ||||
5.185% due 09/25/35 | 544 | 397 | ||
Series 2006-AR2 Class A2 (Ê) | ||||
0.427% due 11/25/36 | 42 | 20 | ||
Series 2006-AR3 Class 2A1A (Ê) | ||||
0.517% due 01/25/37 | 584 | 307 | ||
Series 2007-AR5 Class 1A1 | ||||
5.367% due 05/25/37 | 711 | 352 | ||
JPMorgan Chase Commercial Mortgage Securities Corp. | ||||
Series 2004-LN2 Class A1 | ||||
4.475% due 07/15/41 | 250 | 256 | ||
Series 2005-LDP Class A3A1 | ||||
4.871% due 10/15/42 | 210 | 213 | ||
Series 2005-LDP Class A4 | ||||
4.918% due 10/15/42 | 325 | 340 | ||
5.360% due 12/15/44 | 390 | 415 | ||
Series 2006-CB1 Class A4 | ||||
5.552% due 05/12/45 | 220 | 231 | ||
Series 2006-LDP Class A3B | ||||
5.447% due 05/15/45 | 250 | 260 | ||
Series 2006-LDP Class A4 | ||||
6.064% due 04/15/45 | 650 | 693 | ||
5.399% due 05/15/45 | 290 | 305 | ||
Series 2007-CB1 Class A4 | ||||
5.440% due 06/12/47 | 1,200 | 1,198 | ||
5.937% due 02/12/49 | 340 | 343 | ||
Series 2007-LD1 Class A4 | ||||
5.882% due 02/15/51 | 380 | 381 | ||
Series 2007-LDP Class A3 | ||||
5.420% due 01/15/49 | 700 | 684 | ||
JPMorgan Mortgage Trust | ||||
Series 2005-A1 Class 6T1 (Ê) | ||||
5.017% due 02/25/35 | 74 | 74 | ||
Series 2005-A5 Class TA1 | ||||
5.429% due 08/25/35 | 670 | 671 | ||
Series 2005-S3 Class 1A2 | ||||
5.750% due 01/25/36 | 106 | 93 | ||
Series 2007-A1 Class 2A2 (Ê) | ||||
3.547% due 07/25/35 | 463 | 429 | ||
Series 2007-A4 Class 3A1 | ||||
5.874% due 06/25/37 | 2,512 | 2,173 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2007-S3 Class 1A8 | ||||
6.000% due 08/25/37 | 1,564 | 1,395 | ||
LB-UBS Commercial Mortgage Trust | ||||
Series 2006-C1 Class A4 | ||||
5.156% due 02/15/31 | 1,500 | 1,560 | ||
Series 2006-C3 Class A4 | ||||
5.661% due 03/15/39 | 210 | 217 | ||
Series 2006-C4 Class A4 | ||||
6.080% due 06/15/38 | 105 | 113 | ||
Series 2007-C6 Class A4 | ||||
5.858% due 07/15/40 | 270 | 268 | ||
Lehman Mortgage Trust | ||||
Series 2005-3 Class 1A3 | ||||
5.500% due 01/25/36 | 343 | 294 | ||
Series 2006-8 Class 2A1 (Ê) | ||||
0.767% due 12/25/36 | 700 | 359 | ||
Series 2007-8 Class 3A1 | ||||
7.250% due 09/25/37 | 827 | 458 | ||
Lehman XS Trust (Ê) | 831 | 391 | ||
MASTR Alternative Loans Trust | ||||
Series 2003-4 Class B1 | ||||
5.725% due 06/25/33 | 158 | 106 | ||
Series 2004-10 Class 5A6 | ||||
5.750% due 09/25/34 | 164 | 163 | ||
MASTR Asset Securitization Trust (Ê) | ||||
Series 2003-7 Class 4A35 | ||||
0.747% due 09/25/33 | 63 | 60 | ||
Series 2004-4 Class 2A2 | ||||
0.797% due 04/25/34 | 29 | 27 | ||
Mellon Residential Funding Corp. (Ê) | 124 | 107 | ||
Merrill Lynch Floating Trust (Ê)(Þ) | 550 | 521 | ||
Merrill Lynch Mortgage Investors, Inc. (Ê) | 84 | 64 | ||
Merrill Lynch/Countrywide Commercial Mortgage Trust | ||||
Series 2007-6 Class A4 | ||||
5.485% due 03/12/51 | 100 | 96 | ||
Series 2007-7 Class A4 | ||||
5.810% due 06/12/50 | 1,160 | 1,134 | ||
MLCC Mortgage Investors, Inc. (Ê) | ||||
Series 2004-HB1 Class A2 | ||||
1.150% due 04/25/29 | 28 | 23 | ||
Series 2005-3 Class 5A | ||||
0.597% due 11/25/35 | 52 | 45 | ||
Morgan Stanley Capital I | ||||
Series 2005-HQ6 Class A4A | ||||
4.989% due 08/13/42 | 740 | 769 | ||
Series 2005-IQ1 Class AAB | ||||
5.178% due 09/15/42 | 415 | 434 |
Core Bond Fund | 43 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Series 2006-HQ1 Class A4 | ||||
5.328% due 11/12/41 | 130 | 135 | ||
Series 2006-HQ9 Class A4 | ||||
5.731% due 07/12/44 | 295 | 316 | ||
Series 2007-IQ1 Class A4 | ||||
5.809% due 12/12/49 | 320 | 331 | ||
Series 2007-T27 Class A4 | ||||
5.802% due 06/11/42 | 675 | 707 | ||
Prime Mortgage Trust (Ê) | 21 | 19 | ||
Residential Accredit Loans, Inc. | ||||
Series 2004-QS5 Class A6 (Ê) | ||||
0.947% due 04/25/34 | 38 | 35 | ||
Series 2004-QS8 Class A4 (Ê) | ||||
0.747% due 06/25/34 | 147 | 129 | ||
Series 2005-QA8 Class NB3 | ||||
5.474% due 07/25/35 | 185 | 126 | ||
Series 2005-QO5 Class A1 (Ê) | ||||
1.413% due 01/25/46 | 1,816 | 967 | ||
Series 2005-QS1 Class 2A3 | ||||
5.750% due 09/25/35 | 453 | 345 | ||
Series 2006-QS6 Class 1A13 | ||||
6.000% due 06/25/36 | 190 | 134 | ||
Series 2007-QH9 Class A1 | ||||
6.435% due 11/25/37 | 877 | 402 | ||
Series 2007-QO4 Class A1 (Ê) | ||||
0.547% due 05/25/47 | 1,478 | 761 | ||
Residential Asset Securitization Trust | ||||
Series 2003-A15 Class 1A2 (Ê) | ||||
0.797% due 02/25/34 | 185 | 164 | ||
Series 2005-A10 Class A3 | ||||
5.500% due 09/25/35 | 377 | 289 | ||
Series 2006-A9C Class A6 | ||||
6.000% due 09/25/36 | 278 | 148 | ||
Series 2007-A5 Class 2A3 | ||||
6.000% due 05/25/37 | 92 | 71 | ||
Residential Funding Mortgage Securities I | ||||
Series 2003-S5 Class 1A2 (Ê) | ||||
0.797% due 11/25/18 | 91 | 91 | ||
Series 2003-S14 Class A5 (Ê) | ||||
0.747% due 07/25/18 | 104 | 85 | ||
Series 2005-SA4 Class 2A1 | ||||
5.042% due 09/25/35 | 478 | 416 | ||
Series 2006-SA4 Class 2A1 | ||||
6.098% due 11/25/36 | 306 | 234 | ||
Sequoia Mortgage Trust (Ê) | 49 | 40 | ||
Structured Adjustable Rate Mortgage Loan Trust | ||||
Series 2004-12 Class 3A2 | ||||
2.548% due 09/25/34 | 49 | 42 | ||
Series 2004-16 Class 3A1 | ||||
2.628% due 11/25/34 | 193 | 168 | ||
Series 2005-21 Class 7A1 | ||||
5.959% due 11/25/35 | 999 | 791 |
Principal Amount ($) or Shares | Market Value $ | |||
Series 2006-12 Class 2A1 | ||||
5.729% due 01/25/37 | 663 | 493 | ||
Structured Asset Mortgage Investments, Inc. (Ê) | ||||
Series 2005-AR5 Class A3 | ||||
0.598% due 07/19/35 | 141 | 127 | ||
Series 2006-AR2 Class A1 | ||||
0.577% due 02/25/36 | 471 | 267 | ||
Series 2006-AR8 Class A1A | ||||
0.547% due 10/25/36 | 653 | 361 | ||
Suntrust Adjustable Rate Mortgage Loan Trust (Ê) | 3,486 | 2,847 | ||
Thornburg Mortgage Securities Trust (Ê) | ||||
Series 2003-2 Class A1 | ||||
1.027% due 04/25/43 | 53 | 49 | ||
Series 2006-5 Class A1 | ||||
0.467% due 10/25/46 | 616 | 601 | ||
Series 2006-6 Class A1 | ||||
0.457% due 11/25/46 | 85 | 81 | ||
Wachovia Bank Commercial Mortgage Trust | 1,000 | 1,070 | ||
Washington Mutual Alternative Mortgage Pass-Through Certificates | ||||
Series 2005-4 Class CB11 | ||||
5.500% due 06/25/35 | 90 | 69 | ||
Series 2007-OA1 Class 2A (Ê) | ||||
1.141% due 12/25/46 | 618 | 248 | ||
Washington Mutual Mortgage Pass Through Certificates | ||||
Series 2003-S9 Class A2 (Ê) | ||||
0.897% due 10/25/33 | 121 | 119 | ||
Series 2005-AR1 Class 1A1 | ||||
4.800% due 10/25/35 | 128 | 120 | ||
Series 2005-AR1 Class A1A1 (Ê) | ||||
0.637% due 10/25/45 | 29 | 23 | ||
0.617% due 12/25/45 | 352 | 265 | ||
Series 2005-AR6 Class B3 (Ê)(Å) | ||||
1.007% due 04/25/45 | 192 | 12 | ||
Series 2006-AR2 Class 1A1 | ||||
5.252% due 03/25/37 | 537 | 442 | ||
Series 2007-HY3 Class 4B1 | ||||
5.293% due 03/25/37 | 124 | 9 | ||
Series 2007-HY4 Class 1A1 (Ê) | ||||
5.416% due 04/25/37 | 117 | 88 | ||
Wells Fargo Mortgage Backed Securities Trust | ||||
Series 2006-2 Class 2A3 | ||||
5.500% due 03/25/36 | 285 | 258 | ||
Series 2006-6 Class 1A22 (Ê) | ||||
6.000% due 05/25/36 | 1,300 | 1,125 | ||
Series 2006-AR1 Class 4A1 (Ê) | ||||
5.487% due 07/25/36 | 58 | 46 | ||
Series 2006-AR1 Class A1 (Ê) | ||||
5.130% due 10/25/36 | 1,238 | 1,003 | ||
Series 2006-AR2 Class 2A1 | ||||
4.807% due 03/25/36 | 221 | 196 |
44 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | ||||
Series 2007-8 Class 1A16 | |||||
6.000% due 07/25/37 | 258 | 224 | |||
Series 2007-10 Class 2A5 | |||||
6.250% due 07/25/37 | 108 | 99 | |||
155,044 | |||||
Municipal Bonds - 1.7% | |||||
Chicago Transit Authority Revenue Bonds | 400 | 444 | |||
City of New York New York General Obligation Unlimited | 1,100 | 1,109 | |||
County of Clark Nevada Revenue Bonds | 100 | 112 | |||
Illinois Municipal Electric Agency Revenue Bonds | 100 | 110 | |||
Los Angeles Unified School District General Obligation Unlimited (µ) | 400 | 406 | |||
Missouri Higher Education Loan Authority (Ê) | 971 | 978 | |||
North Carolina Turnkpike Authority Revenue Bonds | 100 | 107 | |||
Northern California Power Agency Revenue Bonds | 1,000 | 1,031 | |||
Public Power Generation Agency Revenue Bonds | 100 | 104 | |||
State of California General Obligation Unlimited | |||||
7.500% due 04/01/34 | 425 | 454 | |||
7.950% due 03/01/36 | 110 | 116 | |||
5.650% due 04/01/39 (Ê) | 100 | 105 | |||
7.550% due 04/01/39 | 975 | 1,046 | |||
7.625% due 03/01/40 | 400 | 432 | |||
State of Illinois General Obligation Unlimited | 100 | 99 | |||
State of Louisiana Revenue Bonds (Ê) | 400 | 405 | |||
University of California Revenue Bonds | 400 | 411 | |||
7,469 | |||||
Non-US Bonds - 1.3% | |||||
Canadian Government Bond | CAD | 1,000 | 930 | ||
Deutsche Bank AG | |||||
10.000% due 07/17/17 | IDR | 3,300,000 | 400 | ||
10.500% due 08/19/30 (Å) | IDR | 1,000,000 | 118 | ||
FCE Bank plc | EUR | 600 | 737 | ||
Federative Republic of Brazil | |||||
12.500% due 01/05/22 | BRL | 300 | 188 | ||
10.250% due 01/10/28 | BRL | 1,400 | 782 |
Principal Amount ($) or Shares | Market Value $ | ||||
Fortis Bank Nederland Holding NV | EUR | 200 | 251 | ||
Hellas Telecommunications Luxembourg V (Ê) | EUR | 126 | 46 | ||
Impress Holdings BV (Ê) | EUR | 125 | 144 | ||
Mexican Bonos | MXN | 14,800 | 1,240 | ||
Morgan Stanley (Ê) | EUR | 600 | 689 | ||
Societe Financement de l’Economie Francaise | EUR | 100 | 125 | ||
5,650 | |||||
United States Government Agencies - 0.9% | |||||
Federal Home Loan Banks | 1,100 | 1,193 | |||
Federal Home Loan Mortgage Corp. | 100 | 101 | |||
Freddie Mac | 2,200 | 2,487 | |||
3,781 | |||||
United States Government Treasuries - 15.1% | |||||
United States Treasury Inflation Indexed Bonds | |||||
2.000% due 01/15/16 | 1,058 | 1,141 | |||
2.375% due 01/15/25 | 231 | 257 | |||
2.000% due 01/15/26 | 110 | 116 | |||
2.375% due 01/15/27 | 540 | 599 | |||
1.750% due 01/15/28 | 3,208 | 3,254 | |||
United States Treasury Principal | |||||
Zero coupon due 05/15/21 | 100 | 69 | |||
Zero coupon due 11/15/21 | 1,938 | 1,295 | |||
United States Treasury Notes | |||||
1.000% due 04/30/12 (Ñ) | 3,900 | 3,929 | |||
0.750% due 05/31/12 (Ñ) | 4,300 | 4,312 | |||
0.625% due 06/30/12 | 7,300 | 7,301 | |||
1.125% due 06/15/13 | 600 | 602 | |||
2.375% due 02/28/15 | 4,785 | 4,932 | |||
2.500% due 04/30/15 (Ñ) | 800 | 828 | |||
2.125% due 05/31/15 (Ñ) | 200 | 204 | |||
1.875% due 06/30/15 | 8,245 | 8,277 | |||
2.625% due 04/30/16 | 800 | 822 | |||
3.250% due 12/31/16 | 2,725 | 2,872 | |||
3.250% due 03/31/17 | 3,000 | 3,161 | |||
3.125% due 04/30/17 (Ñ) | 900 | 941 | |||
2.625% due 06/30/17 | 1,200 | 1,205 | |||
3.125% due 05/15/19 | 2,400 | 2,450 | |||
3.625% due 08/15/19 | 3,500 | 3,701 | |||
3.375% due 11/15/19 | 4,855 | 5,028 | |||
3.500% due 05/15/20 (Ñ) | 3,200 | 3,349 | |||
8.750% due 05/15/20 | 500 | 747 | |||
8.000% due 11/15/21 | 840 | 1,222 | |||
5.375% due 02/15/31 (§) | 600 | 738 |
Core Bond Fund | 45 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
4.375% due 02/15/38 | 500 | 541 | ||
4.250% due 05/15/39 (Ñ) | 335 | 354 | ||
4.375% due 11/15/39 (Ñ) | 700 | 756 | ||
4.625% due 02/15/40 | 200 | 225 | ||
4.375% due 05/15/40 | 1,200 | 1,298 | ||
66,526 | ||||
Total Long-Term Investments (cost $373,191) | 378,977 | |||
Preferred Stocks - 0.2% | ||||
Consumer Discretionary - 0.1% | ||||
Motors Liquidation Co. (Æ) | 80,000 | 539 | ||
Financial Services - 0.1% | ||||
DG Funding Trust (Å)(Æ) | 49 | 382 | ||
Total Preferred Stocks (cost $766) | 921 | |||
Short-Term Investments - 15.6% | ||||
Ally Financial, Inc. | 525 | 534 | ||
American Express Travel Related Services Co., Inc. (Ê) | 100 | 99 | ||
Cellco Partnership / Verizon Wireless Capital LLC (Ê) | 400 | 409 | ||
Comcast Corp. | 100 | 103 | ||
Countrywide Home Loans, Inc. | 290 | 295 | ||
DCP Midstream LLC | 20 | 21 | ||
Fannie Mae (ç)(ž) | 3,000 | 2,999 | ||
Federal National Mortgage Association Discount Notes (ç)(ž) | ||||
0.010% due 10/04/10 | 1,345 | 1,344 | ||
0.240% due 11/08/10 | 8,000 | 7,994 | ||
Freddie Mac (ç)(ž) | ||||
0.210% due 09/01/10 | 5,000 | 4,999 | ||
0.010% due 10/13/10 | 310 | 310 | ||
General Electric Capital Corp. (Ñ) | 220 | 227 | ||
International Lease Finance Corp. | ||||
5.450% due 03/24/11 | 600 | 591 | ||
5.750% due 06/15/11 | 800 | 785 | ||
Moody’s Corp. | 1,895 | 1,895 | ||
Nisource Finance Corp. | 125 | 128 |
Principal Amount ($) or Shares | Market Value $ | ||||
Progress Energy, Inc. | 77 | 80 | |||
Reckson Operating Partnership, LP | 92 | 92 | |||
Royal Bank of Scotland PLC (The) (Ê)(Þ) | 800 | 799 | |||
Russell U.S. Cash Management Fund (£) | 25,006,454 | 25,006 | |||
SLM Corp. (Ê) | 50 | 50 | |||
Small Business Administration | 3 | 3 | |||
Sun Life Financial Global Funding, LP (Ê)(Þ) | 700 | 700 | |||
United States Treasury BIlls (ç)(ž)(Ñ) | 4,000 | 4,000 | |||
United States Treasury Bills (ç)(ž) | |||||
0.030% due 07/01/10 (Ñ) | 11,000 | 11,000 | |||
0.081% due 08/05/10 (Ñ) | 4,055 | 4,055 | |||
0.150% due 08/12/10 | 180 | 180 | |||
0.219% due 08/26/10 (Ñ) | 74 | 74 | |||
UnitedHealth Group, Inc. | 95 | 97 | |||
Total Short-Term Investments (cost $68,712) | 68,869 | ||||
Repurchase Agreements - 4.2% | |||||
Agreement with Barclays Capital Inc. and State Street Bank & Co. (Tri-party) of $16,600 dated June 30, 2010, at 0.010% to be repurchased at $16,600 on July 1, 2010 collateralized by: $13,340 par United States Treasury Inflation Protected Obligation, valued at $16,742 | 16,600 | 16,600 | |||
Agreement with Credit Suisse First Boston and State Street Bank & Co. (Tri-party) of $1,900 dated June 30, 2010, at 0.010% to be repurchased at $1,900 on July 1, 2010 collateralized by: $2,078 par United States Treasury Obligations, valued at $1,937 | 1,900 | 1,900 | |||
Total Repurchase Agreements (cost $18,500) | 18,500 | ||||
Other Securities - 5.2% | |||||
State Street Securities Lending Quality Trust (×) | 23,128,425 | 23,047 | |||
Total Other Securities (cost $23,128) | 23,047 | ||||
Total Investments - 111.3% (identified cost $484,297) | 490,314 | ||||
Other Assets and Liabilities, Net - (11.3%) | (49,607 | ) | |||
Net Assets - 100.0% | 440,707 | ||||
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, 2010 (Unaudited)
Amounts in thousands (except contracts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized $ | ||||||
Long Positions | ||||||||||
Euro-Bobl Futures (Germany) | 31 | EUR | 3,748 | 09/10 | 39 | |||||
Eurodollar Futures (CME) | 90 | USD | 22,353 | 09/10 | 7 | |||||
Eurodollar Futures (CME) | 79 | USD | 19,598 | 12/10 | 82 | |||||
Eurodollar Futures (CME) | 1 | USD | 248 | 03/11 | 3 | |||||
Long Gilt Bond (UK) | 1 | GBP | 121 | 09/10 | 3 | |||||
United States Treasury 2 Year Notes | 114 | USD | 24,946 | 09/10 | 103 | |||||
United States Treasury 5 Year Notes | 114 | USD | 13,492 | 09/10 | 128 | |||||
United States Treasury 10 Year Notes | 102 | USD | 12,500 | 09/10 | 236 | |||||
United States Treasury 30 Year Bond | 60 | USD | 7,650 | 09/10 | 200 | |||||
Short Positions | ||||||||||
Japanese 10 Year Mini Bond (Japan) | 5 | JPY | 708,300 | 09/10 | (93) | |||||
United States Treasury 5 Year Notes | 23 | USD | 2,722 | 09/10 | (30) | |||||
United States Treasury 10 Year Notes | 16 | USD | 1,961 | 09/10 | (1) | |||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | 677 | |||||||||
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, 2010 (Unaudited)
Amounts in thousands (except contracts)
Options Written (Number of Contracts) | Notional Amount | Market Value $ | ||||
Cross Currency | ||||||
USD/JPY 1 Year | USD | 1,400 | (18 | ) | ||
Eurodollar Futures | USD | 333 | (1 | ) | ||
Inflationary Floor | USD | 2,400 | (25 | ) | ||
Apr 2020 0.00 Put (1) | USD | 5,500 | (62 | ) | ||
Swaptions | ||||||
(Fund Receives/Fund Pays) | ||||||
USD Three Month LIBOR/USD 3.250% | ||||||
Aug 2010 0.00 Call (3) | 5,800 | (133 | ) | |||
USD Three Month LIBOR/USD 3.250% | ||||||
Jan 2011 0.00 Call (1) | 1,100 | (32 | ) | |||
USD 4.500%/USD Three Month LIBOR | ||||||
Aug 2010 0.00 Put (2) | 3,400 | — | ||||
USD 4.750%/USD Three Month LIBOR | ||||||
Aug 2010 0.00 Put (2) | 2,400 | — | ||||
USD 5.500%/USD Three Month LIBOR | ||||||
Aug 2010 0.00 Put (3) | 17,000 | — | ||||
USD 6.000%/USD Three Month LIBOR | ||||||
Aug 2010 0.00 Put (1) | 2,000 | — | ||||
USD 4.000%/USD Three Month LIBOR | ||||||
Oct 2010 0.00 Put (1) | 7,900 | (1 | ) | |||
USD 4.000%/USD Three Month LIBOR | ||||||
Dec 2010 0.00 Put (2) | 10,100 | (4 | ) | |||
USD 5.000%/USD Three Month LIBOR | ||||||
Jan 2011 0.00 Put (1) | 1,100 | (1 | ) | |||
USD 10.000%/USD Three Month LIBOR | ||||||
Jul 2012 0.00 Put (2) | 17,400 | (4 | ) | |||
United States Treasury Notes | ||||||
10 Year Futures | ||||||
Aug 2010 119.00 Call (15) | USD | 15 | (58 | ) | ||
Aug 2010 122.00 Call (2) | USD | 2 | (3 | ) | ||
Aug 2010 114.00 Put (17) | USD | 17 | (1 | ) | ||
Aug 2010 117.00 Put (2) | USD | 2 | — | |||
Total Liability for Options Written (premiums received $570) | (343 | ) | ||||
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
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | |||||||||
Bank of America | USD | 208 | JPY | 18,545 | 09/15/10 | 2 | |||||||
Bank of America | EUR | 169 | USD | 207 | 09/15/10 | — | |||||||
Bank of America | EUR | 174 | GBP | 144 | 09/15/10 | (4 | ) | ||||||
Bank of America | EUR | 174 | GBP | 144 | 09/15/10 | 7 | |||||||
Bank of America | JPY | 96,021 | USD | 1,049 | 07/14/10 | (39 | ) | ||||||
Barclays Bank PLC | USD | 95 | TWD | 3,017 | 08/31/10 | (1 | ) | ||||||
Barclays Bank PLC | EUR | 162 | SEK | 1,540 | 09/15/10 | (2 | ) | ||||||
Barclays Bank PLC | EUR | 162 | SEK | 1,540 | 09/15/10 | 2 | |||||||
Barclays Bank PLC | JPY | 18,822 | NOK | 1,366 | 09/15/10 | (9 | ) | ||||||
Barclays Bank PLC | JPY | 18,822 | NOK | 1,366 | 09/15/10 | 5 | |||||||
Barclays Bank PLC | KRW | 285,775 | USD | 232 | 07/28/10 | (2 | ) | ||||||
Barclays Bank PLC | SEK | 1,677 | USD | 207 | 09/15/10 | (8 | ) | ||||||
Citibank | USD | 1,874 | EUR | 1,518 | 08/24/10 | (17 | ) | ||||||
Citibank | USD | 207 | GBP | 139 | 09/15/10 | 1 | |||||||
Citibank | USD | 203 | NZD | 298 | 09/15/10 | — | |||||||
Citibank | USD | 206 | NZD | 297 | 09/15/10 | (4 | ) | ||||||
Citibank | BRL | 124 | USD | 68 | 08/03/10 | — | |||||||
Citibank | EUR | 71 | USD | 87 | 07/26/10 | — | |||||||
Citibank | EUR | 337 | USD | 412 | 09/15/10 | — | |||||||
Citibank | NOK | 2,688 | EUR | 337 | 09/15/10 | (1 | ) | ||||||
Citibank | NOK | 2,688 | EUR | 337 | 09/15/10 | 2 | |||||||
Citibank | SEK | 1,602 | EUR | 167 | 09/15/10 | — | |||||||
Citibank | SEK | 1,602 | EUR | 167 | 09/15/10 | (1 | ) | ||||||
Credit Suisse First Boston | USD | 454 | KRW | 516,294 | 07/28/10 | (34 | ) | ||||||
Credit Suisse First Boston | BRL | 82 | USD | 46 | 07/12/10 | — | |||||||
Credit Suisse First Boston | CHF | 234 | AUD | 247 | 09/15/10 | (13 | ) | ||||||
Credit Suisse First Boston | CHF | 234 | AUD | 247 | 09/15/10 | 2 | |||||||
Credit Suisse First Boston | CHF | 456 | EUR | 338 | 09/15/10 | (3 | ) | ||||||
Credit Suisse First Boston | CHF | 456 | EUR | 338 | 09/15/10 | (7 | ) | ||||||
Credit Suisse First Boston | EUR | 192 | USD | 230 | 07/15/10 | (5 | ) | ||||||
Credit Suisse First Boston | EUR | 3,173 | USD | 4,252 | 07/26/10 | 372 | |||||||
Credit Suisse First Boston | EUR | 170 | GBP | 140 | 09/15/10 | (2 | ) | ||||||
Credit Suisse First Boston | EUR | 170 | GBP | 140 | 09/15/10 | 3 | |||||||
Credit Suisse First Boston | GBP | 139 | EUR | 171 | 09/15/10 | 1 | |||||||
Credit Suisse First Boston | GBP | 139 | EUR | 171 | 09/15/10 | — | |||||||
Deutsche Bank | USD | 42 | KRW | 47,242 | 07/28/10 | (3 | ) | ||||||
Deutsche Bank | AUD | 245 | USD | 206 | 09/15/10 | 1 | |||||||
Deutsche Bank | AUD | 254 | USD | 204 | 09/15/10 | (7 | ) | ||||||
Deutsche Bank | IDR | 9,719,055 | USD | 1,044 | 07/12/10 | (26 | ) | ||||||
HSBC | USD | 206 | SEK | 1,594 | 09/15/10 | (2 | ) | ||||||
HSBC | EUR | 171 | USD | 206 | 09/15/10 | (3 | ) | ||||||
HSBC | KRW | 12,358 | USD | 10 | 07/28/10 | — | |||||||
HSBC | KRW | 12,425 | USD | 10 | 07/28/10 | — | |||||||
HSBC | KRW | 37,073 | USD | 30 | 07/28/10 | — | |||||||
HSBC | NOK | 1,360 | EUR | 170 | 09/15/10 | 1 | |||||||
HSBC | NOK | 1,360 | EUR | 170 | 09/15/10 | (1 | ) | ||||||
HSBC | SEK | 1,612 | EUR | 168 | 09/15/10 | (2 | ) | ||||||
HSBC | SEK | 1,612 | EUR | 168 | 09/15/10 | 1 | |||||||
JP Morgan | USD | 219 | AUD | 252 | 07/30/10 | (7 | ) | ||||||
JP Morgan | USD | 207 | CNY | 1,400 | 08/25/10 | — | |||||||
JP Morgan | USD | 145 | KRW | 178,685 | 08/27/10 | 1 | |||||||
JP Morgan | USD | 55 | MYR | 180 | 08/30/10 | 1 | |||||||
JP Morgan | CAD | 215 | EUR | 171 | 09/15/10 | 6 |
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 49 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | |||||||||
JP Morgan | CAD | 215 | EUR | 171 | 09/15/10 | 2 | |||||||
JP Morgan | EUR | 168 | CAD | 215 | 09/15/10 | (5 | ) | ||||||
JP Morgan | EUR | 168 | CAD | 215 | 09/15/10 | 2 | |||||||
JP Morgan | EUR | 171 | JPY | 18,963 | 09/15/10 | (4 | ) | ||||||
JP Morgan | EUR | 171 | JPY | 18,963 | 09/15/10 | 10 | |||||||
JP Morgan | EUR | 272 | NOK | 2,152 | 09/15/10 | (1 | ) | ||||||
JP Morgan | EUR | 272 | NOK | 2,152 | 09/15/10 | (3 | ) | ||||||
JP Morgan | GBP | 156 | USD | 234 | 08/09/10 | 1 | |||||||
JP Morgan | KRW | 178,685 | USD | 145 | 07/28/10 | (1 | ) | ||||||
Morgan Stanley | KRW | 12,450 | USD | 10 | 07/28/10 | — | |||||||
Morgan Stanley | KRW | 24,770 | USD | 20 | 07/28/10 | — | |||||||
Royal Bank of Canada | USD | 206 | CAD | 211 | 09/15/10 | (8 | ) | ||||||
Royal Bank of Canada | USD | 413 | EUR | 333 | 09/15/10 | (5 | ) | ||||||
Royal Bank of Canada | USD | 414 | EUR | 338 | 09/15/10 | (1 | ) | ||||||
Royal Bank of Canada | EUR | 170 | USD | 207 | 09/15/10 | (1 | ) | ||||||
Royal Bank of Canada | EUR | 298 | USD | 364 | 09/15/10 | (1 | ) | ||||||
Royal Bank of Canada | EUR | 174 | CAD | 219 | 09/15/10 | (1 | ) | ||||||
Royal Bank of Canada | EUR | 174 | CAD | 219 | 09/15/10 | (6 | ) | ||||||
Royal Bank of Canada | JPY | 18,933 | USD | 207 | 09/15/10 | (7 | ) | ||||||
Royal Bank of Canada | JPY | 19,014 | EUR | 173 | 09/15/10 | 5 | |||||||
Royal Bank of Canada | JPY | 19,014 | EUR | 173 | 09/15/10 | (8 | ) | ||||||
Royal Bank of Canada | MXN | 846 | USD | 66 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | USD | 155 | EUR | 126 | 07/26/10 | (1 | ) | ||||||
Royal Bank of Scotland PLC | USD | 209 | EUR | 171 | 09/15/10 | — | |||||||
Royal Bank of Scotland PLC | EUR | 587 | USD | 715 | 07/26/10 | (3 | ) | ||||||
Royal Bank of Scotland PLC | SEK | 1,620 | USD | 208 | 09/15/10 | — | |||||||
State Street Bank and Trust Company | USD | 348 | CAD | 362 | 09/15/10 | (8 | ) | ||||||
State Street Bank and Trust Company | SEK | 2,507 | USD | 310 | 09/15/10 | (11 | ) | ||||||
UBS | USD | 414 | SEK | 3,245 | 09/15/10 | 2 | |||||||
UBS | AUD | 257 | EUR | 173 | 09/15/10 | (7 | ) | ||||||
UBS | AUD | 257 | EUR | 173 | 09/15/10 | 5 | |||||||
UBS | CAD | 795 | USD | 790 | 07/07/10 | 42 | |||||||
UBS | EUR | 168 | USD | 206 | 09/15/10 | 1 | |||||||
UBS | EUR | 168 | NOK | 1,340 | 09/15/10 | 1 | |||||||
UBS | EUR | 168 | NOK | 1,340 | 09/15/10 | (1 | ) | ||||||
UBS | EUR | 174 | CHF | 240 | 09/15/10 | 17 | |||||||
UBS | EUR | 174 | CHF | 240 | 09/15/10 | (6 | ) | ||||||
UBS | EUR | 518 | CHF | 728 | 09/15/10 | 45 | |||||||
UBS | EUR | 518 | CHF | 728 | 09/15/10 | (5 | ) | ||||||
Westpac Banking Corporation | USD | 205 | AUD | 235 | 09/15/10 | (9 | ) | ||||||
Westpac Banking Corporation | USD | 205 | NZD | 300 | 09/15/10 | — | |||||||
Westpac Banking Corporation | AUD | 243 | USD | 205 | 09/15/10 | 2 | |||||||
Westpac Banking Corporation | AUD | 244 | USD | 204 | 09/15/10 | — | |||||||
Westpac Banking Corporation | AUD | 248 | CHF | 237 | 09/15/10 | (2 | ) | ||||||
Westpac Banking Corporation | AUD | 248 | CHF | 237 | 09/15/10 | 15 | |||||||
Westpac Banking Corporation | CHF | 225 | AUD | 245 | 09/15/10 | (4 | ) | ||||||
Westpac Banking Corporation | CHF | 225 | AUD | 245 | 09/15/10 | (1 | ) | ||||||
Westpac Banking Corporation | EUR | 336 | USD | 413 | 09/15/10 | 2 | |||||||
Westpac Banking Corporation | NZD | 294 | USD | 207 | 09/15/10 | 7 | |||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Contracts | 254 | ||||||||||||
See accompanying notes which are an integral part of the financial statements.
50 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands
Interest Rate Swaps Contracts | |||||||||||||
Counter party | Notional Amount | Fund Receives | Fund Pays | Termination Date | Market Value $ | ||||||||
Bank of America | USD | 500 | 3.000% | Three Month LIBOR | 12/15/15 | 16 | |||||||
Barclays Bank PLC | BRL | 600 | 10.835% | Brazil Interbank Deposit Rate | 01/02/12 | 1 | |||||||
Barclays Bank PLC | EUR | 2,100 | 4.259% | Six Month EURIBOR | 04/23/20 | 45 | |||||||
Barclays Bank PLC | EUR | 2,370 | 4.270% | Six Month EURIBOR | 05/12/20 | 51 | |||||||
Barclays Bank PLC | EUR | 630 | Six Month EURIBOR | 4.085% | 04/23/40 | (54 | ) | ||||||
Barclays Bank PLC | EUR | 700 | Six Month EURIBOR | 3.953% | 05/12/40 | (43 | ) | ||||||
Barclays Bank PLC | GBP | 4,570 | Six Month LIBOR | 4.360% | 08/10/25 | (446 | ) | ||||||
Barclays Bank PLC | USD | 500 | 3.000% | Three Month LIBOR | 12/15/15 | 16 | |||||||
Barclays Bank PLC | USD | 530 | Three Month LIBOR | 4.633% | 11/15/21 | (123 | ) | ||||||
Barclays Bank PLC | USD | 266 | Three Month LIBOR | 4.540% | 11/15/21 | (57 | ) | ||||||
Barclays Bank PLC | USD | 146 | Three Month LIBOR | 4.420% | 11/15/21 | (28 | ) | ||||||
Barclays Bank PLC | USD | 144 | Three Month LIBOR | 4.524% | 11/15/21 | (31 | ) | ||||||
BNP Paribas | BRL | 300 | 11.390% | Brazil Interbank Deposit Rate | 01/02/12 | — | |||||||
BNP Paribas | BRL | 200 | 12.110% | One Month LIBOR | 01/02/14 | 1 | |||||||
BNP Paribas | EUR | 500 | 2.090% | Consumer Price Index (France) | 10/15/10 | 19 | |||||||
Citibank | EUR | 2,100 | 4.286% | Six Month EURIBOR | 04/23/20 | 48 | |||||||
Citibank | EUR | 630 | Six Month EURIBOR | 4.119% | 04/23/40 | (57 | ) | ||||||
Citibank | USD | 100 | 3.000% | Three Month LIBOR | 12/15/15 | 3 | |||||||
Credit Suisse First Boston | BRL | 300 | 12.480% | Brazil Interbank Deposit Rate | 01/02/13 | 2 | |||||||
Credit Suisse First Boston | GBP | 5,450 | Six Month LIBOR | 3.400% | 08/10/15 | (339 | ) | ||||||
Credit Suisse First Boston | GBP | 9,130 | 4.113% | Six Month LIBOR | 08/10/20 | 801 | |||||||
Deutsche Bank | AUD | 200 | 4.500% | Three Month BBSW | 06/15/11 | (1 | ) | ||||||
Deutsche Bank | KRW | 416,000 | 2.820% | Korean Interbank Offer Rate | 01/28/11 | — | |||||||
Deutsche Bank | KRW | 200,000 | 3.870% | Korean Interbank Offer Rate | 06/12/11 | 2 | |||||||
Deutsche Bank | KRW | 1,120,000 | 3.693% | Korean Interbank Offer Rate | 06/26/11 | 5 | |||||||
Deutsche Bank | KRW | 467,700 | 3.620% | Korean Interbank Offer Rate | 07/06/11 | 3 | |||||||
Deutsche Bank | KRW | 781,412 | 3.626% | Three Month LIBOR | 07/07/11 | 5 | |||||||
Deutsche Bank | USD | 200 | 3.000% | Three Month LIBOR | 12/15/15 | 6 | |||||||
Goldman Sachs | BRL | 400 | 10.835% | Brazil Interbank Deposit Rate | 01/02/12 | 1 | |||||||
Goldman Sachs | BRL | 600 | 10.990% | Brazil Interbank Deposit Rate | 01/02/12 | 1 | |||||||
Goldman Sachs | BRL | 1,200 | 11.890% | Brazil Interbank Deposit Rate | 01/02/13 | 2 | |||||||
Goldman Sachs | BRL | 400 | 12.650% | One Month LIBOR | 01/02/14 | 7 | |||||||
HSBC | BRL | 400 | 11.140% | One Month LIBOR | 01/02/12 | 3 | |||||||
HSBC | BRL | 400 | 11.360% | Brazil Interbank Deposit Rate | 01/02/12 | 2 | |||||||
HSBC | BRL | 1,200 | 11.890% | Brazil Interbank Deposit Rate | 01/02/13 | 2 | |||||||
HSBC | BRL | 100 | 12.540% | One Month LIBOR | 01/02/14 | 1 | |||||||
HSBC | MXN | 4,900 | 7.330% | Mexico Interbank 28 Day Deposit Rate | 01/28/15 | 14 | |||||||
HSBC | USD | 100 | 4.000% | Three Month LIBOR | 06/16/15 | 10 | |||||||
JP Morgan | BRL | 500 | 12.170% | Brazil Interbank Deposit Rate | 01/02/13 | 3 | |||||||
JP Morgan | KRW | 405,000 | 2.830% | Korean Interbank Offer Rate | 01/28/11 | — | |||||||
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 | 6 | |||||||
JP Morgan | KRW | 371,651 | 3.660% | Korean Interbank Offer Rate | 07/08/11 | 2 | |||||||
Merrill Lynch | BRL | 700 | 11.980% | Brazil Interbank Deposit Rate | 01/02/12 | 16 | |||||||
Merrill Lynch | BRL | 800 | 12.540% | Brazil Interbank Deposit Rate | 01/02/12 | 28 | |||||||
Merrill Lynch | BRL | 100 | 14.765% | Brazil Interbank Deposit Rate | 01/02/12 | 8 | |||||||
Merrill Lynch | BRL | 500 | 10.990% | Brazil Interbank Deposit Rate | 01/02/12 | 1 | |||||||
Morgan Stanley | BRL | 200 | 11.630% | Brazil Interbank Deposit Rate | 01/02/12 | — | |||||||
Morgan Stanley | BRL | 100 | 12.590% | Brazil Interbank Deposit Rate | 01/02/13 | 1 | |||||||
Morgan Stanley | BRL | 400 | 12.510% | Brazil Interbank Deposit Rate | 01/02/14 | 6 | |||||||
Morgan Stanley | USD | 2,300 | 3.000% | Three Month LIBOR | 12/15/15 | 71 | |||||||
Royal Bank of Scotland | CAD | 1,500 | 5.700% | Canadian Dealer Offer Rate | 12/18/24 | 10 | |||||||
Royal Bank of Scotland | USD | 700 | 4.000% | Three Month LIBOR | 12/16/14 | 78 |
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 51 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands
Interest Rate Swaps Contracts | |||||||||||||
Counterparty | Notional Amount | Fund Receives | Fund Pays | Termination Date | Market Value $ | ||||||||
UBS | AUD | 1,900 | 4.500% | Three Month LIBOR | 06/15/11 | (6 | ) | ||||||
UBS | AUD | 1,600 | 6.000% | Six Month BBSW | 09/15/12 | 27 | |||||||
UBS | BRL | 800 | 10.575% | Brazil Interbank Deposit Rate | 01/02/12 | (17 | ) | ||||||
UBS | BRL | 300 | 12.070% | Brazil Interbank Deposit Rate | 01/02/13 | 1 | |||||||
UBS | BRL | 200 | 12.250% | One Month LIBOR | 01/02/14 | 1 | |||||||
Total Market Value of Open Interest Rate Swap Contracts Premiums Paid (Received) - $105 (å) | 126 | ||||||||||||
Credit Default Swap Contracts | ||||||||||||||||
Corporate Issues | ||||||||||||||||
Reference Entity | Counterparty | Implied Credit Spread | Notional Amount | Fund (Pays)/Receives Fixed Rate | Termination Date | Market Value $ | ||||||||||
Centex Corporation | JP Morgan | 1.344% | USD | 325 | (4.400% | ) | 12/20/13 | (34 | ) | |||||||
Darden Restaurants, Inc. | Deutsche Bank | 0.887% | USD | 400 | (2.250% | ) | 03/20/14 | (20 | ) | |||||||
DR Horton, Inc. | Citibank | 3.006% | USD | 100 | (1.000% | ) | 09/20/16 | 11 | ||||||||
DR Horton, Inc. | Deutsche Bank | 3.006% | USD | 80 | (1.000% | ) | 09/20/16 | 8 | ||||||||
DR Horton, Inc. | Goldman Sachs | 3.006% | USD | 80 | (1.000% | ) | 09/20/16 | 9 | ||||||||
Federative Republic of Brazil | Barclays Bank PLC | 1.342% | USD | 500 | 1.000% | 06/20/15 | (8 | ) | ||||||||
Federative Republic of Brazil | Deutsche Bank | 1.342% | USD | 1,000 | 1.000% | 06/20/15 | (16 | ) | ||||||||
Federative Republic of Brazil | Goldman Sachs | 1.342% | USD | 500 | 1.000% | 06/20/15 | (8 | ) | ||||||||
Ford Motor Credit Co. | Barclays Bank PLC | 4.142% | USD | 1,000 | 6.150% | 09/20/12 | 42 | |||||||||
Gaz Capital for Gazprom | Barclays Bank PLC | 2.576% | USD | 300 | 1.600% | 12/20/12 | (6 | ) | ||||||||
Gaz Capital for Gazprom | Morgan Stanley | 2.610% | USD | 200 | 2.480% | 02/20/13 | 2 | |||||||||
GE Capital Corp. | Citibank | 2.030% | USD | 200 | 4.000% | 12/20/13 | 14 | |||||||||
GE Capital Corp. | Deutsche Bank | 2.030% | USD | 100 | 4.900% | 12/20/13 | 10 | |||||||||
Japan Government Bond | Bank of America | 0.884% | USD | 300 | 1.000% | 03/20/15 | 2 | |||||||||
Japan Government Bond | Deutsche Bank | 0.884% | USD | 100 | 1.000% | 03/20/15 | 1 | |||||||||
Japan Government Bond | JP Morgan | 0.884% | USD | 600 | 1.000% | 03/20/15 | 3 | |||||||||
Lowe’s Companies, Inc. | Citigroupglobal Markets, Inc. | 0.522% | USD | 340 | (1.450% | ) | 03/20/14 | (13 | ) | |||||||
Mexico Government International Bond | Morgan Stanley | 0.835% | USD | 100 | 0.750% | 01/20/12 | — | |||||||||
Pulte Homes, Inc. | Goldman Sachs | 3.063% | USD | 725 | (1.000% | ) | 09/20/16 | 79 | ||||||||
Pulte Homes, Inc. | JP Morgan | 2.534% | USD | 1,000 | (3.870% | ) | 03/20/14 | (47 | ) | |||||||
SLM Corp. | Citibank | 5.488% | USD | 200 | 4.850% | 03/20/13 | (2 | ) | ||||||||
SLM Corp. | Citibank | 5.475% | USD | 1,800 | 5.000% | 06/20/13 | (8 | ) | ||||||||
Target Corp. | Credit Suisse First Boston | 0.508% | USD | 125 | (1.000% | ) | 12/20/14 | (3 | ) | |||||||
Target Corp. | Deutsche Bank | 0.508% | USD | 125 | (1.000% | ) | 12/20/14 | (3 | ) | |||||||
The Home Depot, Inc. | Citigroupglobal Markets, Inc. | 0.501% | USD | 340 | (3.250% | ) | 03/20/14 | (37 | ) | |||||||
Toll Brothers, Inc. | Credit Suisse First Boston | 2.210% | USD | 255 | (1.000% | ) | 09/20/16 | 17 | ||||||||
United Kingdom Gilt | Deutsche Bank | 0.698% | USD | 300 | 1.000% | 12/20/14 | 3 | |||||||||
United Kingdom Gilt | JP Morgan | 0.719% | USD | 300 | 1.000% | 03/20/15 | 3 | |||||||||
United Kingdom Gilt | JP Morgan | 0.719% | USD | 700 | 1.000% | 03/20/15 | 7 | |||||||||
United Kingdom Gilt | Morgan Stanley | 0.698% | USD | 100 | 1.000% | 12/20/14 | 1 | |||||||||
United Kingdom Gilt | Societe Generale | 0.719% | USD | 500 | 1.000% | 03/20/15 | 5 | |||||||||
Total Market Value of Open Corporate Issue Credit Default Swap Contracts Premiums Paid (Received) - $7 | 12 | |||||||||||||||
See accompanying notes which are an integral part of the financial statements.
52 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands
Credit Indices | ||||||||||||||
Reference Entity | Counterparty | Notional Amount | Fund (Pays)/Receives Fixed Rate | Termination Date | Market Value $ | |||||||||
ABX - HE Index for Sub-Prime Home Equity Sector | Barclays Bank PLC | USD | 1,292 | 0.760% | 01/25/38 | (743 | ) | |||||||
ABX - HE Index for Sub-Prime Home Equity Sector | Citibank | USD | 595 | 0.170% | 05/25/46 | (498 | ) | |||||||
ABX - HE Index for Sub-Prime Home Equity Sector | JP Morgan | USD | 1,287 | 0.090% | 08/25/37 | (743 | ) | |||||||
CMBX AJ Index | Bank of America | USD | 100 | (0.840% | ) | 10/12/52 | 21 | |||||||
CMBX AJ Index | Bank of America | USD | 460 | (0.840% | ) | 10/12/52 | 96 | |||||||
CMBX AJ Index | Barclays Bank PLC | USD | 340 | (0.840% | ) | 10/12/52 | 70 | |||||||
CMBX AJ Index | Barclays Bank PLC | USD | 360 | (0.840% | ) | 10/12/52 | 75 | |||||||
CMBX AJ Index | Credit Suisse First Boston | USD | 930 | (0.840% | ) | 10/12/52 | 194 | |||||||
Dow Jones CDX Index | Barclays Bank PLC | USD | 200 | 5.000% | 06/20/15 | 21 | ||||||||
Dow Jones CDX Index | Deutsche Bank | USD | 772 | 0.708% | 12/20/12 | 10 | ||||||||
Dow Jones CDX Index | Deutsche Bank | USD | 1,000 | 5.000% | 06/20/15 | 104 | ||||||||
Dow Jones CDX Index | JP Morgan | USD | 386 | 0.553% | 12/20/17 | 4 | ||||||||
Dow Jones CDX Index | Pershing LLC 1st Republic P.B. CNS | USD | 193 | 0.548% | 12/20/17 | 1 | ||||||||
Total Market Value of Open Credit Index Credit Default Swap Contracts Premiums Paid (Received) - ($1,089) | (1,388 | ) | ||||||||||||
Total Market Value of Open Credit Default Swap Contracts Premiums Paid (Received) - ($1,082) (å) | (1,376 | ) | ||||||||||||
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 53 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Presentation of Portfolio Holdings — June 30, 2010 (Unaudited)
(Amounts in thousands)
Market Value | % of Net | ||||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | |||||||||||||||
Long-Term Investments | |||||||||||||||||||
Asset-Backed Securities | $ | — | $ | 21,457 | $ | — | $ | 21,457 | 4.9 | ||||||||||
Corporate Bonds and Notes | — | 89,746 | — | 89,746 | 20.4 | ||||||||||||||
International Debt | — | 27,874 | — | 27,874 | 6.3 | ||||||||||||||
Loan Agreements | — | 1,430 | — | 1,430 | 0.3 | ||||||||||||||
Mortgage-Backed Securities | — | 155,044 | — | 155,044 | 35.2 | ||||||||||||||
Municipal Bonds | — | 7,469 | — | 7,469 | 1.7 | ||||||||||||||
Non-US Bonds | — | 5,650 | — | 5,650 | 1.3 | ||||||||||||||
United States Government Agencies | — | 3,781 | — | 3,781 | 0.9 | ||||||||||||||
United States Government Treasuries | — | 66,526 | — | 66,526 | 15.1 | ||||||||||||||
Preferred Stocks | 539 | — | 382 | 921 | 0.2 | ||||||||||||||
Short-Term Investments | — | 68,869 | — | 68,869 | 15.6 | ||||||||||||||
Repurchase Agreements | — | 18,500 | — | 18,500 | 4.2 | ||||||||||||||
Other Securities | — | 23,047 | — | 23,047 | 5.2 | ||||||||||||||
Total Investments | 539 | 489,393 | 382 | 490,314 | 111.3 | ||||||||||||||
Other Assets and Liabilities, Net | (11.3 | ) | |||||||||||||||||
100.0 | |||||||||||||||||||
Other Financial Instruments | |||||||||||||||||||
Futures Contracts | 677 | — | — | 677 | 0.2 | ||||||||||||||
Options Written | (81 | ) | (175 | ) | (87 | ) | (343 | ) | (0.1 | ) | |||||||||
Foreign Currency Exchange Contracts | — | 254 | — | 254 | 0.1 | ||||||||||||||
Interest Rate Swap Contracts | — | 21 | — | 21 | — | * | |||||||||||||
Credit Default Swaps | — | (294 | ) | — | (294 | ) | (0.1 | ) | |||||||||||
Total Other Financial Instruments** | 596 | (194 | ) | (87 | ) | 315 | |||||||||||||
* | 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. |
For a description of the levels see note 2 in the Notes to Financial Statements.
Investments in which significant unobservable inputs (Level 3) used in determining a value for the period ending June 30, 2010 were less than 1% of net assets.
See accompanying notes which are an integral part of the financial statements.
54 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Fair Value of Derivative Instruments — June 30, 2010 (Unaudited)
Amounts in thousands
Derivatives not accounted for as hedging instruments | Credit Contracts | Foreign Currency Contracts | Interest Rate Contracts | ||||||
Location: Statement of Assets and Liabilities - Assets | |||||||||
Unrealized appreciation on foreign currency exchange contracts | $ | — | $ | 567 | $ | — | |||
Daily variation margin on futures contracts* | — | — | 801 | ||||||
Interest rate swap contracts, at market value | — | — | 1,328 | ||||||
Credit default swap contracts, at market value | 813 | — | — | ||||||
Total | $ | 813 | $ | 567 | $ | 2,129 | |||
Location: Statement of Assets and Liabilities - Liabilities | |||||||||
Unrealized depreciation on foreign currency exchange contracts | $ | — | $ | 313 | $ | — | |||
Daily variation margin on futures contracts* | — | — | 124 | ||||||
Interest rate swap contracts, at market value | — | — | 1,202 | ||||||
Credit default swap contracts, at market value | 2,189 | — | — | ||||||
Options written, at market value | — | — | 343 | ||||||
Total | $ | 2,189 | $ | 313 | $ | 1,669 | |||
Derivatives not accounted for as hedging instruments | Credit Contracts | Foreign Currency Contracts | Interest Rate Contracts | ||||||||
Location: Statement of Operations - Net realized gain (loss) | |||||||||||
Futures contracts | $ | — | $ | — | $ | 2,647 | |||||
Options Written | — | — | 411 | ||||||||
Credit default swap contracts | (342 | ) | — | — | |||||||
Interest rate swap contracts | — | — | 611 | ||||||||
Foreign currency-related transactions | — | 412 | — | ||||||||
Total | $ | (342 | ) | $ | 412 | $ | 3,669 | ||||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | |||||||||||
Futures contracts | $ | — | $ | — | $ | 1,591 | |||||
Options Written | — | — | 19 | ||||||||
Credit default swap contracts | 587 | — | — | ||||||||
Interest rate swap contracts | — | — | (488 | ) | |||||||
Foreign currency-related transactions | — | 182 | — | ||||||||
Total | $ | 587 | $ | 182 | $ | 1,122 | |||||
* | 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 |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 55 |
Table of Contents
Real Estate Securities Fund
Shareholder Expense Example — June 30, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 1,034.90 | $ | 1,020.03 | ||
Expenses Paid During Period* | $ | 4.84 | $ | 4.81 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.96% (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). |
56 | Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Schedule of Investments — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Common Stocks - 96.1% | ||||
Diversified - 8.4% | ||||
BGP Holdings PLC (Æ)(ö) | 926,311 | — | ||
BR Properties SA | 43,935 | 313 | ||
British Land Co. PLC (ö) | 58,781 | 376 | ||
CapitaLand, Ltd. | 197,512 | 504 | ||
Cousins Properties, Inc. (ö)(Ñ) | 109,527 | 738 | ||
Dexus Property Group (ö) | 627,737 | 404 | ||
FKP Property Group (ö) | 168,636 | 96 | ||
Forest City Enterprises, Inc. Class A (Æ)(Ñ) | 136,408 | 1,544 | ||
Glorious Property Holdings, Ltd. | 802,666 | 228 | ||
Goldcrest Co., Ltd. | 4,956 | 86 | ||
GPT Group (ö) | 121,634 | 286 | ||
Great Eagle Holdings, Ltd. | 34,955 | 89 | ||
Hang Lung Properties, Ltd. - ADR | 132,000 | 506 | ||
Henderson Land Development Co., Ltd. | 45,403 | 214 | ||
Hysan Development Co., Ltd. | 80,460 | 226 | ||
IVG Immobilien AG (Æ) | 7,561 | 45 | ||
Keppel Land, Ltd. | 121,005 | 333 | ||
Kerry Properties, Ltd. | 38,500 | 165 | ||
KWG Property Holding, Ltd. | 280,691 | 173 | ||
Land Securities Group PLC (ö) | 87,939 | 721 | ||
Mirvac Group (ö) | 346,408 | 379 | ||
Mitsubishi Estate Co., Ltd. | 83,000 | 1,152 | ||
Mitsui Fudosan Co., Ltd. | 67,104 | 938 | ||
New World Development, Ltd. | 433,995 | 701 | ||
Norwegian Property ASA (Æ) | 79,112 | 103 | ||
Sponda OYJ | 94,442 | 284 | ||
Stockland (ö) | 308,236 | 958 | ||
Sumitomo Realty & Development Co., Ltd. | 17,000 | 290 | ||
Sun Hung Kai Properties, Ltd. | 141,606 | 1,925 | ||
Tokyu Land Corp. | 12,000 | 42 | ||
Unibail-Rodamco SE (ö) | 6,420 | 1,042 | ||
Vornado Realty Trust (ö) | 252,117 | 18,392 | ||
Washington Real Estate Investment Trust (ö) | 30,857 | 851 | ||
Wharf Holdings, Ltd. | 167,000 | 808 | ||
Wihlborgs Fastigheter AB | 4,938 | 94 | ||
35,006 | ||||
Free Standing Retail - 0.6% | ||||
National Retail Properties, Inc. (ö)(Ñ) | 94,139 | 2,019 | ||
Realty Income Corp. (ö)(Ñ) | 15,900 | 482 | ||
2,501 | ||||
Health Care - 11.4% | ||||
Brookdale Senior Living, Inc. (Æ)(Ñ) | 100,201 | 1,503 | ||
HCP, Inc. (ö) | 353,599 | 11,404 | ||
Health Care REIT, Inc. (ö) | 215,563 | 9,079 | ||
Nationwide Health Properties, Inc. (ö) | 277,729 | 9,934 | ||
Omega Healthcare Investors, Inc. (ö)(Ñ) | 202,285 | 4,032 | ||
Senior Housing Properties Trust (ö) | 217,248 | 4,369 | ||
Ventas, Inc. (ö) | 150,798 | 7,080 | ||
47,401 | ||||
Principal Amount ($) or Shares | Market Value $ | |||
Industrial - 4.5% | ||||
AMB Property Corp. (ö)(Ñ) | 207,223 | 4,913 | ||
Ascendas Real Estate Investment Trust (ö) | 144,000 | 186 | ||
DCT Industrial Trust, Inc. (ö)(Ñ) | 807,558 | 3,650 | ||
EastGroup Properties, Inc. (ö)(Ñ) | 48,799 | 1,736 | ||
First Potomac Realty Trust (ö)(Ñ) | 103,100 | 1,482 | ||
Goodman Group (ö) | 750,375 | 396 | ||
ProLogis (ö)(Ñ) | 640,459 | 6,488 | ||
18,851 | ||||
Lodging/Resorts - 6.1% | ||||
DiamondRock Hospitality Co. (ö) | 130,294 | 1,071 | ||
Hersha Hospitality Trust (ö)(Ñ) | 217,610 | 984 | ||
Hospitality Properties Trust (ö) | 68,326 | 1,442 | ||
Host Hotels & Resorts, Inc. (ö)(Ñ) | 1,003,901 | 13,532 | ||
Hyatt Hotels Corp. (Æ)(Ñ) | 31,352 | 1,163 | ||
LaSalle Hotel Properties (ö) | 44,200 | 909 | ||
Marriott International, Inc. Class A (Ñ) | 71,147 | 2,130 | ||
Pebblebrook Hotel Trust (Æ)(ö)(Ñ) | 38,700 | 729 | ||
Shangri-La Asia, Ltd. | 228,576 | 421 | ||
Starwood Hotels & Resorts Worldwide, Inc. (ö)(Ñ) | 42,100 | 1,744 | ||
Strategic Hotels & Resorts, Inc. (Æ)(ö) | 132,252 | 581 | ||
Sunstone Hotel Investors, Inc. (Æ)(ö) | 69,460 | 690 | ||
25,396 | ||||
Mixed Industrial/Office - 3.6% | ||||
Duke Realty Corp. (ö)(Ñ) | 206,383 | 2,342 | ||
Liberty Property Trust (ö)(Ñ) | 363,591 | 10,490 | ||
PS Business Parks, Inc. (ö)(Ñ) | 37,835 | 2,110 | ||
14,942 | ||||
Office - 11.6% | ||||
Alexandria Real Estate Equities, Inc. (ö) | 74,230 | 4,704 | ||
BioMed Realty Trust, Inc. (ö)(Ñ) | 247,158 | 3,977 | ||
Boston Properties, Inc. (ö) | 234,339 | 16,718 | ||
Brookfield Properties Corp. | 76,182 | 1,070 | ||
CapitaCommercial Trust (Æ)(ö) | 505,000 | 437 | ||
Commonwealth Property Office Fund (ö) | 147,402 | 115 | ||
Corporate Office Properties Trust SBI MD (ö)(Ñ) | 15,951 | 602 | ||
DA Office Investment Corp. Class A (ö) | 32 | 71 | ||
Derwent London PLC (ö) | 14,324 | 266 | ||
Douglas Emmett, Inc. (ö)(Ñ) | 75,216 | 1,070 | ||
Fabege AB | 52,253 | 310 | ||
Great Portland Estates PLC (ö) | 42,164 | 180 | ||
Highwoods Properties, Inc. (ö)(Ñ) | 23,575 | 654 | ||
Hongkong Land Holdings, Ltd. | 219,300 | 1,084 | ||
Hudson Pacific Properties, Inc. (Æ)(ö) | 47,933 | 827 | ||
ICADE (ö) | 2,809 | 237 | ||
Japan Prime Realty Investment Corp. Class A (ö) | 84 | 176 | ||
Japan Real Estate Investment Corp. Class A (ö) | 3 | 24 | ||
Kenedix Realty Investment Corp. Class A (ö) | 40 | 111 |
Real Estate Securities Fund | 57 |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Market Value $ | |||
Kilroy Realty Corp. (ö)(Ñ) | 204,028 | 6,066 | ||
Mack-Cali Realty Corp. (ö) | 48,377 | 1,438 | ||
Nippon Building Fund, Inc. Class A (ö) | 45 | 356 | ||
Orix JREIT, Inc. Class A (ö) | 3 | 12 | ||
Piedmont Office Realty Trust, Inc. (ö)(Ñ) | 179,199 | 3,356 | ||
SL Green Realty Corp. (ö)(Ñ) | 77,903 | 4,288 | ||
48,149 | ||||
Regional Malls - 12.4% | ||||
BR Malls Participacoes SA | 8,751 | 114 | ||
CapitaMalls Asia, Ltd. | 139,000 | 207 | ||
Macerich Co. (The) (ö)(Ñ) | 289,930 | 10,820 | ||
Simon Property Group, Inc. (ö) | 470,383 | 37,983 | ||
Taubman Centers, Inc. (ö)(Ñ) | 19,724 | 742 | ||
Westfield Group (ö) | 138,706 | 1,412 | ||
51,278 | ||||
Residential - 16.2% | ||||
Apartment Investment & Management Co. Class A (ö) | 112,570 | 2,180 | ||
AvalonBay Communities, Inc. (ö) | 151,178 | 14,116 | ||
Boardwalk Real Estate Investment Trust (ö) | 15,341 | 577 | ||
BRE Properties, Inc. Class A (ö) | 58,726 | 2,169 | ||
Camden Property Trust (ö)(Ñ) | 217,826 | 8,898 | ||
China Overseas Land & Investment, Ltd. | 247,200 | 460 | ||
China Resources Land, Ltd. | 98,000 | 184 | ||
Colonial Properties Trust (ö)(Ñ) | 56,594 | 822 | ||
Deutsche Wohnen AG (Æ) | 457 | 4 | ||
Education Realty Trust, Inc. (ö)(Ñ) | 66,534 | 401 | ||
Equity Lifestyle Properties, Inc. (ö)(Ñ) | 64,899 | 3,130 | ||
Equity Residential (ö) | 509,651 | 21,222 | ||
Essex Property Trust, Inc. (ö)(Ñ) | 79,518 | 7,756 | ||
Home Properties, Inc. (ö)(Ñ) | 28,057 | 1,265 | ||
Mid-America Apartment Communities, Inc. (ö) | 12,646 | 651 | ||
Post Properties, Inc. (ö)(Ñ) | 73,233 | 1,665 | ||
UDR, Inc. (ö)(Ñ) | 90,392 | 1,729 | ||
Unite Group PLC (Æ) | 5,272 | 14 | ||
67,243 | ||||
Self Storage - 5.6% | ||||
Extra Space Storage, Inc. (ö)(Ñ) | 252,800 | 3,514 | ||
Public Storage (ö) | 204,131 | 17,945 | ||
Sovran Self Storage, Inc. (ö) | 47,739 | 1,644 | ||
23,103 | ||||
Shopping Centers - 9.6% | ||||
Acadia Realty Trust (ö) | 58,337 | 981 | ||
Alexander’s, Inc. (ö) | 2,225 | 674 | ||
Atrium European Real Estate, Ltd. | 23,403 | 101 | ||
Corio NV (ö) | 5,952 | 289 | ||
Developers Diversified Realty Corp. (ö)(Ñ) | 433,561 | 4,292 | ||
Excel Trust, Inc. (Æ)(ö) | 21,700 | 260 |
Principal Amount ($) or Shares | Market Value $ | ||||
Federal Realty Investment Trust (ö)(Ñ) | 89,327 | 6,277 | |||
Hammerson PLC (ö) | 93,498 | 472 | |||
Inland Real Estate Corp. (ö)(Ñ) | 30,580 | 242 | |||
Kimco Realty Corp. (ö)(Ñ) | 429,370 | 5,771 | |||
Kite Realty Group Trust (ö) | 247,500 | 1,035 | |||
Primaris Retail Real Estate Investment Trust (ö) | 17,365 | 285 | |||
Ramco-Gershenson Properties Trust (ö) | 70,100 | 708 | |||
Regency Centers Corp. (ö)(Ñ) | 313,283 | 10,777 | |||
Retail Opportunity Investments Corp. (Ñ) | 188,790 | 1,822 | |||
RioCan Real Estate Investment Trust (ö) | 3,255 | 58 | |||
Tanger Factory Outlet Centers (ö)(Ñ) | 56,090 | 2,321 | |||
Weingarten Realty Investors (ö) | 174,380 | 3,322 | |||
39,687 | |||||
Specialty - 6.1% | |||||
Digital Realty Trust, Inc. (ö)(Ñ) | 210,408 | 12,136 | |||
DuPont Fabros Technology, Inc. (ö) | 130,508 | 3,205 | |||
Entertainment Properties Trust (ö) | 60,700 | 2,311 | |||
Plum Creek Timber Co., Inc. (ö)(Ñ) | 129,546 | 4,473 | |||
Rayonier, Inc. (ö)(Ñ) | 73,366 | 3,230 | |||
25,355 | |||||
Total Common Stocks (cost $328,500) | 398,912 | ||||
Short-Term Investments - 2.8% | |||||
Russell U.S. Cash Management Fund (£) | 11,750,214 | 11,750 | |||
Total Short-Term Investments (cost $11,750) | 11,750 | ||||
Other Securities - 23.3% | |||||
State Street Securities Lending Quality Trust (×) | 96,900,458 | 96,533 | |||
Total Other Securities (cost $96,900) | 96,533 | ||||
Total Investments - 122.2% (identified cost $437,150) | 507,195 | ||||
Other Assets and Liabilities, Net - (22.2%) | (92,138 | ) | |||
Net Assets - 100.0% | 415,057 | ||||
See accompanying notes which are an integral part of the financial statements.
58 | Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2010 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | |||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | |||||||||
Royal Bank of Scotland PLC | USD | 34 | AUD | 40 | 07/02/10 | (1 | ) | ||||||
Royal Bank of Scotland PLC | USD | 8 | HKD | 60 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | USD | 12 | HKD | 96 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | USD | 18 | HKD | 142 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | USD | 4 | JPY | 378 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | AUD | 4 | USD | 3 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | AUD | 4 | USD | 3 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | AUD | 91 | USD | 77 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | GBP | 1 | USD | 2 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | HKD | 112 | USD | 14 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | JPY | 1,271 | USD | 14 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | JPY | 1,470 | USD | 17 | 07/02/10 | — | |||||||
Royal Bank of Scotland PLC | SEK | 81 | USD | 10 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 5 | AUD | 6 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | USD | 26 | AUD | 30 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | USD | 15 | HKD | 118 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 30 | HKD | 231 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 36 | HKD | 277 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | USD | 4 | JPY | 378 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | AUD | 8 | USD | 7 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | AUD | 15 | USD | 13 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | EUR | 2 | USD | 2 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | EUR | 5 | USD | 6 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | EUR | 2 | USD | 2 | 07/02/10 | — | |||||||
State Street Bank and Trust Company | GBP | 1 | USD | 2 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | JPY | 1,475 | USD | 17 | 07/01/10 | — | |||||||
State Street Bank and Trust Company | SEK | 64 | USD | 8 | 07/01/10 | 1 | |||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | — | ||||||||||||
See accompanying notes which are an integral part of the financial statements.
Real Estate Securities Fund | 59 |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Presentation of Portfolio Holdings — June 30, 2010 (Unaudited)
Amounts in thousands
Market Value | % of Net | ||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | |||||||||||
Common Stocks | |||||||||||||||
Diversified | $ | 35,006 | $ | — | $ | — | $ | 35,006 | 8.4 | ||||||
Free Standing Retail | 2,501 | — | — | 2,501 | 0.6 | ||||||||||
Health Care | 47,401 | — | — | 47,401 | 11.4 | ||||||||||
Industrial | 18,851 | — | — | 18,851 | 4.5 | ||||||||||
Lodging/Resorts | 25,396 | — | — | 25,396 | 6.1 | ||||||||||
Mixed Industrial/Office | 14,942 | — | — | 14,942 | 3.6 | ||||||||||
Office | 48,149 | — | — | 48,149 | 11.6 | ||||||||||
Regional Malls | 51,278 | — | — | 51,278 | 12.4 | ||||||||||
Residential | 67,243 | — | — | 67,243 | 16.2 | ||||||||||
Self Storage | 23,103 | — | — | 23,103 | 5.6 | ||||||||||
Shopping Centers | 39,687 | — | — | 39,687 | 9.6 | ||||||||||
Specialty | 25,355 | — | — | 25,355 | 6.1 | ||||||||||
Short-Term Investments | — | 11,750 | — | 11,750 | 2.8 | ||||||||||
Other Securities | — | 96,533 | — | 96,533 | 23.3 | ||||||||||
Total Investments | 398,912 | 108,283 | — | 507,195 | 122.2 | ||||||||||
Other Assets and Liabilities, Net | (22.2 | ) | |||||||||||||
100.0 | |||||||||||||||
Other Financial Instruments | |||||||||||||||
Foreign Currency Exchange Contracts | — | — | — | — | — | * | |||||||||
Total Other Financial Instruments** | — | — | — | — | |||||||||||
* | 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. |
For a description of the levels see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
60 | Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Real Estate Securities Fund
Fair Value of Derivative Instruments — June 30, 2010 (Unaudited)
Amounts in thousands
Derivatives not accounted for as hedging instruments | Foreign Currency Contracts | ||
Location: Statement of Assets and Liabilities - Assets | |||
Unrealized appreciation on foreign currency exchange contracts | $ | 1 | |
Location: Statement of Assets and Liabilities - Liabilities | |||
Unrealized depreciation on foreign currency exchange contracts | $ | 1 | |
Derivatives not accounted for as hedging instruments | Foreign Currency Contracts | ||
Location: Statement of Operations - Net realized gain (loss) | |||
Foreign currency-related transactions | $ | 10 | |
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | |||
Foreign currency-related transactions | $ | 1 | |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Real Estate Securities Fund | 61 |
Table of Contents
Russell Investment Funds
Notes to Schedules of Investments — June 30, 2010 (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 |
62 | Notes to Schedules of Investments |
Table of Contents
Statements of Assets and Liabilities — June 30, 2010 (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 | $ | 328,615 | $ | 155,942 | $ | 313,372 | $ | 484,297 | $ | 437,150 | |||||
Investments, at market*** | 336,721 | 158,107 | 298,005 | 490,314 | 507,195 | ||||||||||
Cash (restricted) | 1,450 | 700 | 2,000 | 1,852 | — | ||||||||||
Foreign currency holdings* | — | — | 961 | 111 | 38 | ||||||||||
Unrealized appreciation on foreign currency exchange contracts | — | — | 780 | 567 | 1 | ||||||||||
Receivables: | |||||||||||||||
Dividends and interest | 496 | 183 | 728 | 2,857 | 1,341 | ||||||||||
Dividends from affiliated money market funds | 1 | 1 | 3 | 3 | 1 | ||||||||||
Investments sold | 3,222 | 1,319 | 888 | 15,915 | 22,038 | ||||||||||
Fund shares sold | 833 | 508 | 683 | 458 | 88 | ||||||||||
Foreign taxes recoverable | — | — | 286 | — | — | ||||||||||
Daily variation margin on futures contracts | — | — | 23 | 360 | — | ||||||||||
Other receivable | — | — | 7 | 2 | — | ||||||||||
Investments matured | — | — | — | 275 | — | ||||||||||
Prepaid expenses | 54 | 23 | 48 | 56 | 49 | ||||||||||
Interest rate swap contracts, at market value**** | — | — | — | 1,328 | — | ||||||||||
Credit default swap contracts, at market value***** | — | — | — | 813 | — | ||||||||||
Total assets | 342,777 | 160,841 | 304,412 | 514,911 | 530,751 | ||||||||||
Liabilities | |||||||||||||||
Payables: | |||||||||||||||
Due to Custodian | — | — | — | 903 | — | ||||||||||
Due to Broker | — | — | — | 1,400 | — | ||||||||||
Investments purchased | 2,623 | 2,037 | 1,355 | 40,290 | 14,579 | ||||||||||
Fund shares redeemed | 3,222 | 80 | 114 | 4,077 | 3,819 | ||||||||||
Accrued fees to affiliates | 233 | 112 | 218 | 190 | 313 | ||||||||||
Other accrued expenses | 69 | 47 | 66 | 79 | 82 | ||||||||||
Daily variation margin on futures contracts | 114 | 50 | 161 | 17 | — | ||||||||||
Other payable | — | — | — | 73 | — | ||||||||||
Unrealized depreciation on foreign currency exchange contracts | — | — | 5 | 313 | 1 | ||||||||||
Options written, at market value** | — | — | — | 343 | — | ||||||||||
Payable upon return of securities loaned | 1,788 | 8,381 | 10,911 | 23,128 | 96,900 | ||||||||||
Interest rate swap contracts, at market value**** | — | — | — | 1,202 | — | ||||||||||
Credit default swap contracts, at market value***** | — | — | — | 2,189 | — | ||||||||||
Total liabilities | 8,049 | 10,707 | 12,830 | 74,204 | 115,694 | ||||||||||
Net Assets | $ | 334,728 | $ | 150,134 | $ | 291,582 | $ | 440,707 | $ | 415,057 | |||||
See accompanying notes which are an integral part of the financial statements.
Statements of Assets and Liabilities | 63 |
Table of Contents
Russell Investment Funds
Statements of Assets and Liabilities, continued — June 30, 2010 (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 | $ | 1,052 | $ | 114 | $ | 3,604 | $ | 4,164 | $ | 3,859 | ||||||||||
Accumulated net realized gain (loss) | (107,175 | ) | (61,038 | ) | (110,572 | ) | 7,358 | (99,371 | ) | |||||||||||
Unrealized appreciation (depreciation) on: | ||||||||||||||||||||
Investments | 8,106 | 2,165 | (15,367 | ) | 6,017 | 70,045 | ||||||||||||||
Futures contracts | (312 | ) | (113 | ) | (1,039 | ) | 677 | — | ||||||||||||
Options written | — | — | — | 227 | — | |||||||||||||||
Credit default swap contracts | — | — | — | (294 | ) | — | ||||||||||||||
Interest rate swap contracts | — | — | — | 21 | — | |||||||||||||||
Foreign currency-related transactions | — | — | 785 | 252 | — | |||||||||||||||
Other investments | — | — | 7 | 2 | — | |||||||||||||||
Investments matured | — | — | — | (1,125 | ) | — | ||||||||||||||
Shares of beneficial interest | 305 | 163 | 360 | 412 | 348 | |||||||||||||||
Additional paid-in capital | 432,752 | 208,843 | 413,804 | 422,996 | 440,176 | |||||||||||||||
Net Assets | $ | 334,728 | $ | 150,134 | $ | 291,582 | $ | 440,707 | $ | 415,057 | ||||||||||
Net Asset Value, offering and redemption price per share: | ||||||||||||||||||||
Net asset value per share****** | $ | 10.97 | $ | 9.22 | $ | 8.09 | $ | 10.71 | $ | 11.91 | ||||||||||
Net assets | $ | 334,728,353 | $ | 150,134,328 | $ | 291,581,519 | $ | 440,706,518 | $ | 415,056,615 | ||||||||||
Shares outstanding ($.01 par value) | 30,521,504 | 16,283,719 | 36,021,308 | 41,162,114 | 34,837,727 | |||||||||||||||
Amounts in thousands | ||||||||||||||||||||
* Foreign currency holdings - cost | $ | — | $ | — | $ | 361 | $ | 112 | $ | 38 | ||||||||||
** Premiums received on options written | $ | — | $ | — | $ | — | $ | 570 | $ | — | ||||||||||
*** Securities on loan included in investments | $ | 4,751 | $ | 8,577 | $ | 10,355 | $ | 23,432 | $ | 95,200 | ||||||||||
**** Interest rate swap contracts - premiums paid (received) | $ | — | $ | — | $ | — | $ | 105 | $ | — | ||||||||||
***** Credit default swap contracts - premiums paid (received) | $ | — | $ | — | $ | — | $ | (1,082 | ) | $ | — | |||||||||
****** 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.
64 | Statements of Assets and Liabilities |
Table of Contents
Statements of Operations — For Period Ended June 30, 2010 (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 | $ | 3,441 | $ | 992 | $ | 5,636 | $ | 2 | $ | 8,015 | ||||||||||
Dividends from affiliated money market funds | 5 | 2 | 9 | 11 | 5 | |||||||||||||||
Interest | — | — | — | 9,011 | — | |||||||||||||||
Securities lending income | 29 | 76 | 136 | 15 | 134 | |||||||||||||||
Less foreign taxes withheld | — | — | (584 | ) | — | — | ||||||||||||||
Total investment income | 3,475 | 1,070 | 5,197 | 9,039 | 8,154 | |||||||||||||||
Expenses | ||||||||||||||||||||
Advisory fees | 1,362 | 738 | 1,417 | 1,158 | 1,707 | |||||||||||||||
Administrative fees | 93 | 41 | 79 | 105 | 107 | |||||||||||||||
Custodian fees | 80 | 70 | 167 | 153 | 119 | |||||||||||||||
Transfer agent fees | 8 | 4 | 7 | 9 | 9 | |||||||||||||||
Professional fees | 36 | 25 | 41 | 51 | 38 | |||||||||||||||
Trustees’ fees | 6 | 2 | 5 | 5 | 6 | |||||||||||||||
Printing fees | 51 | 22 | 44 | 58 | 53 | |||||||||||||||
Miscellaneous | 14 | 7 | 14 | 18 | 18 | |||||||||||||||
Expenses before reductions | 1,650 | 909 | 1,774 | 1,557 | 2,057 | |||||||||||||||
Expense reductions | — | (49 | ) | (94 | ) | (148 | ) | — | ||||||||||||
Net expenses | 1,650 | 860 | 1,680 | 1,409 | 2,057 | |||||||||||||||
Net investment income (loss) | 1,825 | 210 | 3,517 | 7,630 | 6,097 | |||||||||||||||
Net Realized and Unrealized Gain (Loss) | ||||||||||||||||||||
Net realized gain (loss) on: | ||||||||||||||||||||
Investments | 16,125 | 12,717 | (134 | ) | 2,796 | 21,465 | ||||||||||||||
Futures contracts | (729 | ) | 409 | (756 | ) | 2,647 | — | |||||||||||||
Options written | — | — | — | 411 | — | |||||||||||||||
Credit default swap contracts | — | — | — | (342 | ) | — | ||||||||||||||
Interest rate swap contracts | — | — | — | 611 | — | |||||||||||||||
Foreign currency-related transactions | — | — | (3,322 | ) | 400 | (13 | ) | |||||||||||||
Net realized gain (loss) | 15,396 | 13,126 | (4,212 | ) | 6,523 | 21,452 | ||||||||||||||
Net change in unrealized appreciation (depreciation) on: | ||||||||||||||||||||
Investments | (39,766 | ) | (18,614 | ) | (37,558 | ) | 12,573 | (13,165 | ) | |||||||||||
Futures contracts | (675 | ) | (490 | ) | (1,594 | ) | 1,591 | — | ||||||||||||
Options written | — | — | — | 19 | — | |||||||||||||||
Credit default swap contracts | — | — | — | 587 | — | |||||||||||||||
Interest rate swap contracts | — | — | — | (488 | ) | — | ||||||||||||||
Foreign currency-related transactions | — | — | 1,608 | 177 | 1 | |||||||||||||||
Other investments | — | — | — | (2 | ) | — | ||||||||||||||
Investments matured | — | — | — | (1,125 | ) | — | ||||||||||||||
Net change in unrealized appreciation (depreciation) | (40,441 | ) | (19,104 | ) | (37,544 | ) | 13,332 | (13,164 | ) | |||||||||||
Net realized and unrealized gain (loss) | (25,045 | ) | (5,978 | ) | (41,756 | ) | 19,855 | 8,288 | ||||||||||||
Net Increase (Decrease) in Net Assets from Operations | $ | (23,220 | ) | $ | (5,768 | ) | $ | (38,239 | ) | $ | 27,485 | $ | 14,385 | |||||||
See accompanying notes which are an integral part of the financial statements.
Statements of Operations | 65 |
Table of Contents
Statements of Changes In Net Assets
Multi-Style Equity Fund | Aggressive Equity Fund | |||||||||||||||
Amounts in thousands | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended | ||||||||||||
Increase (Decrease) in Net Assets | ||||||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | 1,825 | $ | 3,384 | $ | 210 | $ | 860 | ||||||||
Net realized gain (loss) | 15,396 | (37,389 | ) | 13,126 | (16,950 | ) | ||||||||||
Net change in unrealized appreciation (depreciation) | (40,441 | ) | 126,483 | (19,104 | ) | 56,497 | ||||||||||
Net increase (decrease) in net assets from operations | (23,220 | ) | 92,478 | (5,768 | ) | 40,407 | ||||||||||
Distributions | ||||||||||||||||
From net investment income | (1,550 | ) | (4,298 | ) | (261 | ) | (695 | ) | ||||||||
From net realized gain | — | — | — | — | ||||||||||||
Net decrease in net assets from distributions | (1,550 | ) | (4,298 | ) | (261 | ) | (695 | ) | ||||||||
Share Transactions | ||||||||||||||||
Net increase (decrease) in net assets from share transactions | (17,253 | ) | (9,640 | ) | (2,508 | ) | (4,129 | ) | ||||||||
Total Net Increase (Decrease) in Net Assets | (42,023 | ) | 78,540 | (8,537 | ) | 35,583 | ||||||||||
Net Assets | ||||||||||||||||
Beginning of period | 376,751 | 298,211 | 158,671 | 123,088 | ||||||||||||
End of period | $ | 334,728 | $ | 376,751 | $ | 150,134 | $ | 158,671 | ||||||||
Undistributed (overdistributed) net investment income included in net assets | $ | 1,052 | $ | 777 | $ | 114 | $ | 165 |
See accompanying notes which are an integral part of the financial statements.
66 | Statements of Changes In Net Assets |
Table of Contents
Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | ||||||||||||||||||||
Period Ended June 30, 2010 | Fiscal Year Ended | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended | |||||||||||||||||
$ | 3,517 | $ | 4,273 | $ | 7,630 | $ | 15,362 | $ | 6,097 | $ | 10,546 | |||||||||||
(4,212 | ) | (16,624 | ) | 6,523 | 6,556 | 21,452 | (39,112 | ) | ||||||||||||||
(37,544 | ) | 81,171 | 13,332 | 28,987 | (13,164 | ) | 130,393 | |||||||||||||||
(38,239 | ) | 68,820 | 27,485 | 50,905 | 14,385 | 101,827 | ||||||||||||||||
(2,908 | ) | (7,901 | ) | (5,532 | ) | (16,238 | ) | (2,341 | ) | (14,717 | ) | |||||||||||
— | — | (1,512 | ) | (4,631 | ) | — | — | |||||||||||||||
(2,908 | ) | (7,901 | ) | (7,044 | ) | (20,869 | ) | (2,341 | ) | (14,717 | ) | |||||||||||
| 10,584 | | 5,476 | 19,697 | 51,424 | (7,695 | ) | 20,182 | ||||||||||||||
(30,563 | ) | 66,395 | 40,138 | 81,460 | 4,349 | 107,292 | ||||||||||||||||
322,145 | 255,750 | 400,569 | 319,109 | 410,708 | 303,416 | |||||||||||||||||
$ | 291,582 | $ | 322,145 | $ | 440,707 | $ | 400,569 | $ | 415,057 | $ | 410,708 | |||||||||||
$ | 3,604 | $ | 2,995 | $ | 4,164 | $ | 2,066 | $ | 3,859 | $ | 103 |
See accompanying notes which are an integral part of the financial statements.
Statements of Changes In Net Assets | 67 |
Table of Contents
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, | $ Net Investment | $ Net Realized | $ Total from | $ Distributions | $ Distributions from Net Realized Gain | $ Total | |||||||||||||
Multi-Style Equity Fund | |||||||||||||||||||
June 30, 2010* | 11.77 | .06 | (.81 | ) | (.75 | ) | (.05 | ) | — | (.05 | ) | ||||||||
December 31, 2009 | 9.00 | .10 | 2.80 | 2.90 | (.13 | ) | — | (.13 | ) | ||||||||||
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 | ) | ||||||||||
Aggressive Equity Fund | |||||||||||||||||||
June 30, 2010* | 9.59 | .01 | (.36 | ) | (.35 | ) | (.02 | ) | — | (.02 | ) | ||||||||
December 31, 2009 | 7.18 | .05 | 2.40 | 2.45 | (.04 | ) | — | (.04 | ) | ||||||||||
December 31, 2008 | 12.99 | .09 | (5.81 | ) | (5.72 | ) | (.09 | ) | — | (c) | (.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 | ) | |||||||||
Non-U.S. Fund | |||||||||||||||||||
June 30, 2010* | 9.25 | .10 | (1.18 | ) | (1.08 | ) | (.08 | ) | — | (.08 | ) | ||||||||
December 31, 2009 | 7.48 | .12 | 1.88 | 2.00 | (.23 | ) | — | (.23 | ) | ||||||||||
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 | ) | ||||||||||
Core Bond Fund | |||||||||||||||||||
June 30, 2010* | 10.20 | .19 | .50 | .69 | (.14 | ) | (.04 | ) | (.18 | ) | |||||||||
December 31, 2009 | 9.33 | .44 | 1.02 | 1.46 | (.46 | ) | (.13 | ) | (.59 | ) | |||||||||
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 | ) | ||||||||
Real Estate Securities Fund | |||||||||||||||||||
June 30, 2010* | 11.58 | .17 | .23 | .40 | (.07 | ) | — | (.07 | ) | ||||||||||
December 31, 2009 | 9.30 | .30 | 2.41 | 2.71 | (.43 | ) | — | (.43 | ) | ||||||||||
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 | ) |
See accompanying notes which are an integral part of the financial statements.
68 | Financial Highlights |
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$ Net Asset Value, Period | % Total | $ Net Assets, | % Ratio of Expenses Net(b)(e) | % Ratio of Expenses | % Ratio of Net | % Portfolio | |||||||
10.97 | (6.42 | ) | 334,728 | .88 | .88 | .98 | 58 | ||||||
11.77 | 32.72 | 376,751 | .85 | .86 | 1.06 | 136 | |||||||
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 | |||||||
9.22 | (3.71 | ) | 150,134 | 1.05 | 1.11 | .26 | 61 | ||||||
9.59 | 34.32 | 158,671 | 1.02 | 1.13 | .65 | 161 | |||||||
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 | |||||||
8.09 | (11.71 | ) | 291,582 | 1.07 | 1.13 | 2.23 | 33 | ||||||
9.25 | 27.33 | 322,145 | 1.04 | 1.12 | 1.56 | 133 | |||||||
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 | |||||||
10.71 | 6.79 | 440,707 | .67 | .74 | 3.69 | 89 | |||||||
10.20 | 16.18 | 400,569 | .66 | .73 | 4.49 | 151 | |||||||
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 | |||||||
11.91 | 3.49 | 415,057 | .96 | .96 | 2.86 | 55 | |||||||
11.58 | 31.16 | 410,708 | .97 | .97 | 3.36 | 110 | |||||||
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 |
See accompanying notes which are an integral part of the financial statements.
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Notes to Financial Highlights — June 30, 2010 (Unaudited)
* | For the period ended June 30, 2010 (Unaudited). |
(a) | Average month-end outstanding were used for this calculation. |
(b) | May reflect amounts waived and/or reimbursed by Russell Investment Management Company (“RIMCo”), and for certain funds, custody credit arrangements. |
(c) | Less than $.01 per share. |
(d) | Periods less than one year are not annualized. |
(e) | The ratios for periods less than one year are annualized. |
See accompanying notes which are an integral part of the financial statements.
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Notes to Financial Statements — June 30, 2010 (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.
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 which include market and fair value procedures. Debt obligation securities maturing within 60 days at 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 Russell Fund Services Company (“RFSC”).
Ordinarily, the Funds value each portfolio security based on market quotations provided by independent pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Pricing services may utilize evaluated pricing models which apply available market information through the use of benchmark curves, benchmarking of similar securities, sector groupings, spread adjustments and ratings. Generally, Fund portfolio securities are valued at the close of the principal exchange 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 (“OTC”) 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. |
• | Options on futures: Last sale price; settlement price if no last sale price. |
• | Bank loans and forwards: Mean between bid and ask price. |
• | Investments in other mutual funds (including unregistered collective vehicles) are valued at their net asset value per share, as provided in the applicable fund prospectus or offering document and applicable law. |
• | 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 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 (e.g. trade information, news, broker quotes) 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.
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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.
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, since foreign securities can trade on non-business days.
Fair value of securities 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. To increase consistency and comparability in fair value measurement, the fair value hierarchy was established 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 fair value hierarchy of inputs is summarized in the three broad levels listed below.
Level 1 — quoted prices (unadjusted) in active markets for identical investments
Level 2 — other significant observable inputs including quoted market prices in non-active markets or prices derived from market data. Included are the following:
• | common stocks traded or quoted only on inactive markets |
• | privately placed bonds whose values are derived from a similar bond that is publicly traded |
• | interest rate swaps valued based on compilation of primarily observable swap curves incorporated into a model or matrix price |
• | euro commercial paper valued at amortized cost which approximates market and is not priced daily or a broker quote in a non-active market with inputs incorporated into a model or matrix price |
• | non registered mutual funds that are daily priced, but not publicly traded |
• | currency forwards valued based on a compilation of primarily observable market currency spot rates incorporated into a model or matrix price |
• | corporate bonds and notes, domestic commercial paper, time deposits, U.S. Government Agencies, U.S. Treasury and Yankee Certificates of Deposit using evaluated pricing based on a compilation of primarily observable market information and or live data sources, active market makers and inter-dealer broker inputs incorporated into a model or matrix price |
• | mortgage-related and other asset backed securities are valued based on evaluators analyzing features such as the pricing speed, spread and volatility in order to confirm the deal structure. Spreads and other information solicited from Wall Street buy and sell-side sources, including primary and secondary dealers, portfolio managers, and research analysts are used as model inputs. Using evaluated pricing based on a compilation of primarily observable market information and or live data sources, active market makers and inter-dealer broker inputs are incorporated into a model or matrix price (security characteristics including coupon rates and maturity dates are disclosed in the Statement of Investments). |
Level 2 investments include positions that are not traded in active markets and/or are subject to transfer restrictions, valuations may be adjusted to reflect illiquidity and/or non-transferability, which are generally based on available market information.
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Level 3 — significant unobservable inputs including the Fund’s own assumptions in determining the fair value of investments.
Included are the following:
• | OTC securities using the Company’s own data/models |
• | prices with significant haircuts applied |
• | staled securities — fair valuation procedures are applied |
• | securities that have broken tolerance outlined in the Board-approved securities valuation procedures |
• | no current market quotations — fair valuation procedures are applied |
• | unreliable prices — fair valuation procedures are applied |
Level 3 investments include positions with prices not derived from existing market data. As such, Level 3 assets typically involve the use of financial models, such as discounted cash flow analysis for investments in privately held companies, or other non-market based methods to determine an investment’s Fair Value. One may consider Level 3 investments as those that cannot be quickly liquidated for their stated market value.
The levels associated with valuing the Funds’ investments for the period ended June 30, 2010 are disclosed in the Presentation of Portfolio Holdings.
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.
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 an adjustment to interest income. All premiums and discounts, including original issue discounts, are amortized/accreted using the effective 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.
Each Fund qualifies as a regulated investment company under sub-chapter M of the Internal Revenue Code and intends to distribute all of its taxable income and capital gains. Therefore, no federal income tax provision is required for the Funds.
Each Fund files a U. S. tax return. At June 30, 2010, 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. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years ending December 31, 2006 through December 31, 2008, 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
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differences between tax regulations and GAAP primarily relate 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 Russell Investment Management Company (“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 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, 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 within 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 with respect to the unrealized appreciation on foreign securities for potential capital gains and repatriation taxes at June 30, 2010. 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 and repatriation taxes are included in net realized gain (loss) on investments in the Statements of Operations for the Fund. The Non-U.S. Fund had no deferred tax liability for the period ended June 30, 2010.
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 their investment strategies.
The Funds typically use derivatives in three ways: exposing cash reserves to markets, hedging and return enhancement. In addition, the Non-U.S. and Real Estate Securities Funds may enter into foreign exchange contracts for trade settlement purposes. 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 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.
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The Funds’ period end derivatives, as presented in the Schedule of Investments, generally are indicative of the volume of their derivative activity during the period ended June 30, 2010.
The effect of derivative instruments on the Statement of Assets and Liabilities and the Statement of Operations for the period ended June 30, 2010 are disclosed in the Fair Value of Derivative Instruments presentation following each Funds’ Schedule of Investments.
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”). 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.
For the period ended June 30, 2010, the following Funds entered into foreign currency exchange contracts primarily for the strategies listed below:
Strategies | ||
Non-U.S. Fund | Exposing cash reserves to markets and trade settlement | |
Core Bond Fund | Return enhancement and hedging | |
Real Estate Securities Fund | Trade settlement |
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 expose cash reserves to markets.
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 Statements 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.
A Fund may enter into a swaption (swap option). In a swaption, 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, 2010, the Core Bond Fund purchased/sold options primarily for return enhancement and hedging.
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
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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, 2010, the following funds entered into future contracts primarily for the strategies listed below:
Strategies | ||
Multi Style Equity Fund | Exposing cash reserves to markets | |
Aggressive Equity Fund | Exposing cash reserves to markets | |
Non-U.S. Fund | Exposing cash reserves to markets | |
Core Bond Fund | Return enhancement, hedging and exposing cash reserves to markets |
As of June 30, 2010, the Funds had cash collateral balances in connection with futures contracts purchased (sold) as follows:
Cash Collateral | |||
Multi-Style Equity Fund | $ | 1,450,000 | |
Aggressive Equity Fund | 700,000 | ||
Non-U.S. Bond Fund | 2,000,000 |
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 to expose cash reserves to markets 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 followed by each paying the other a series of interest payments based on the principal cash flow. At maturity the principal amounts are returned. 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, to protect against any increase in the price of securities they anticipate purchasing at a later date or for return enhancement. 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 earmarked on the Funds’ records will be the full amount of the Funds’ obligations, if any, with respect to such interest rate swaps, accrued on a daily basis. 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. 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 may enter into swap agreements with counterparties that meet RIMCo’s credit quality limitations. The Funds will not enter into any swap unless the counterparty has a minimum senior unsecured credit rating or long term counterparty credit rating, including reassignments, of A- or better as defined by Standard & Poor’s or an equivalent rating from any nationally recognized statistical rating organization (using highest or split ratings) at the time of entering into such transaction.
Swap agreements generally are entered into by “eligible contract 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.
As of June 30, 2010, the Core Bond Fund had cash collateral balances in connection with swaps contracts purchased (sold) as follows:
Cash Collateral | Due to Broker | |||||
Core Bond Fund | $ | 1,852,071 | $ | 1,400,120 |
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Credit Default Swaps
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 involving 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. Depending upon the terms of the contract, the credit default swap may be closed via physical settlement. However, due to the possible or potential 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 protection via 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.
If a credit event occurs on a corporate issue 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). The 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 the 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 for credit default swaps on asset-backed securities in most instances are 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 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. The 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 Schedule 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
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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 the 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, 2010 for which the 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 the 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. Credit default swap agreements may involve greater risks than if the Fund had invested in the reference obligation directly since, in addition to risks relating to the reference obligation, credit default swaps are subject to illiquidity and counterparty risk. 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 Fund 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.
For the period ended June 30. 2010, the Core Bond Fund entered into credit default swaps primarily for return enhancement and hedging.
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.
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, 2010, the Core Bond Fund entered into interest rate swaps primarily for return enhancement and hedging.
Index Swaps
Certain Funds may enter into index swap agreements to expose cash reserves to markets 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, 2010, the Core Bond Fund did not enter into index swaps.
ISDA Master Agreements
The Funds are parties to International Swaps and Derivatives Association, Inc. Master Agreements (“ISDA Master Agreements”) with counterparties that govern transactions in over-the-counter derivative and foreign exchange contracts entered into by the Funds and those counterparties. The ISDA Master Agreements contain provisions for general obligations, representations,
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agreements, collateral and events of default or termination. Events of termination include conditions that may entitle counterparties to elect to terminate early and cause settlement of all outstanding transactions under the applicable ISDA Master Agreement. Any election to early terminate could be material to the financial statements.
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. The 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 “agent”) 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, the Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the agent selling the loan agreement and only upon receipt by the agent of payments from the borrower. The Fund generally has no right to enforce compliance with the terms of the loan agreement with the borrower. As a result, the Fund may be subject to the credit risk of both the borrower and the agent that is selling the loan agreement. When a Fund purchases assignments from agents it acquires direct rights against the borrower on the loan. At June 30, 2010, the Core Bond Fund had no unfunded loan commitments.
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.
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
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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.
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
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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 Funds 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.
Forward Commitments
Certain Funds may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with the Funds’ investment strategies. 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 Funds in a dollar amount sufficient to make payment for the portfolio securities to be purchased will be earmarked on the Funds’ records at the trade date and 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.
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, 2010, the Core Bond Fund had no cash collateral balances in connection with TBAs.
Inflation-Indexed Bonds
The Core Bond Fund may invest in inflation-indexed securities, which are typically bonds or notes designed to provide a return higher than the rate of inflation (based on a designated index) if held to maturity. A common type of inflation-indexed security is the U.S. Treasury Inflation-Protected Security, or TIPS. The principal of a TIPS increases with inflation and decreases with deflation, as measured by the Consumer Price Index. When a TIPS matures, the adjusted principal or original principal is paid, whichever is greater. TIPS pay interest twice a year, at a fixed rate. The rate is applied to the adjusted principal; so, like the principal, interest payments rise with inflation and fall with deflation. 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
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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 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 and incorporated as components of other receivable and liabilities on the Statements of Assets and Liabilities and net change in realized gain (loss) or unrealized appreciation (depreciation) on the Statement of Operations. The Funds have also utilized certain netting arrangements to offset payables and receivables of Lehman securities.
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.
The court overseeing all the U.S. Lehman entities’ bankruptcy cases set a filing deadline for all those entities. The Lehman Brothers Inc. claims filing deadline was January 30, 2009 for all customer claims and June 1, 2009 for all general creditor claims related to Lehman Brothers Inc. In the case of all other U.S. Lehman entities, court set filing deadlines of September 22, 2009 and November 2, 2009 (for certain “Program Securities”). To the extent that the Funds held accounts with Lehman Brothers Inc., the Funds filed the appropriate customer claims on January 29, 2009 and filed all other claims related to U.S. Lehman entities on the foregoing deadlines. The relevant Funds have entered into a confidential settlement agreement with respect to certain claims for terminated derivatives transactions between the Funds, Lehman Brothers Special Financing Inc. and its parent company Lehman Brothers Holdings Inc.
3. | Investment Transactions |
Securities
During the period ended June 30, 2010, purchases and sales of investment securities (excluding U.S. Government and Agency obligations, short-term investments, options, futures and repurchase agreements) were as follows:
Purchases | Sales | |||||
Multi-Style Equity Fund | $ | 204,444,143 | $ | 211,274,959 | ||
Aggressive Equity Fund | 94,945,021 | 93,933,106 | ||||
Non-U.S. Bond Fund | 102,293,641 | 94,028,438 | ||||
Core Bond Fund | 71,553,723 | 68,345,707 | ||||
Real Estate Securities Fund | 224,796,093 | 230,093,259 |
Purchases and sales of U.S. Government and Agency obligations (excluding short-term investments, options, futures and repurchase agreements) were as follows:
Purchases | Sales | |||||
Core Bond Fund | $ | 273,495,316 | $ | 256,863,307 |
Written Options Contracts
Transactions in written options contracts for the period ended June 30, 2010 were as follows:
Core Bond Fund | |||||||
Number of Contracts | Premiums Received | ||||||
Outstanding December 31, 2009 | 88 | $ | 484,268 | ||||
Opened | 293 | 531,538 | |||||
Closed | (42 | ) | (38,225 | ) | |||
Expired | (147 | ) | (407,115 | ) | |||
Outstanding June 30, 2010 | 192 | $ | 570,466 | ||||
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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 Bank and Trust Company (“State Street”), in short-term instruments, money market mutual funds and other short-term investments that meet certain quality and diversification requirements. 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 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 creditworthy.
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, 2010, 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. Each Fund has earmarked liquid assets to cover the difference between SLQT’s market value per unit and its amortized cost value per unit.
As of June 30, 2010, the non-cash collateral received for the securities on loan in the following funds was:
Non-Cash Collateral Value | Non-Cash Collateral Holding | ||||
Multi-Style Equity Fund | $ | 3,098,221 | Pool of US Government Securities | ||
Aggressive Equity Fund | 512,327 | Pool of US Government Securities | |||
Core Bond Fund | 770,373 | Pool of US Government Securities | |||
Real Estate Securities Fund | 1,677,028 | Pool of US Government Securities |
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, 2010, the Funds’ custodian fees were reduced by the following amounts under these arrangements which are included in expense reductions on the Statements of Operations:
Custody Credit Amount | |||
Multi-Style Equity Fund | $ | 2 | |
Aggressive Equity Fund | 6 | ||
Non-U.S. Fund | 18 | ||
Core Bond Fund | 229 | ||
Real Estate Securities Fund | 1 |
Brokerage Commissions
The Funds effect certain transactions through Recapture Services, division of BNY ConvergeEX Execution Solutions LLC (“LJR”) and its global network of correspondent brokers. LJR is a registered broker and is not an affiliate of the Funds or RIMCo.
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Trades placed through LJR and its correspondents are used (i) to obtain research services for RIMCo to assist RIMCo in its investment decision-making process in its capacity as advisor to the Funds or (ii) to generate commission rebates to the Funds on whose behalf the trades were made. For purposes of trading to obtain research services for RIMCo or 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 money managers or RIMCo believe that the Funds will receive best execution. 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. Research services provided to RIMCo by LJR or other brokers include performance measurements statistics, fund analytic systems and market monitoring systems. Research services will generally be obtained from unaffiliated third parties at market rates. Research provided to RIMCo may benefit the particular Funds generating the trading activity and may also benefit other Funds within RIF and other funds clients managed or advised by RIMCo or its affiliates. Similarly, the Funds may benefit from research provided with respect to trading by those other funds and clients. In some cases, research may also be provided by other non-affiliated brokers.
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.
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 U.S. Cash Management Fund an unregistered Fund advised by RIMCo. As of June 30, 2010, the Investment Company Funds have invested $70,545,642 in the Russell U.S. Cash Management Fund.
The advisory and administrative fees specified in the table below are based upon the average daily net assets of each Fund and are payable monthly.
Annual Rate | ||||||
Advisor | Administrator | |||||
Multi-Style Equity Fund | 0.73 | % | 0.05 | % | ||
Aggressive Equity Fund | 0.90 | 0.05 | ||||
Non-U.S. Fund | 0.90 | 0.05 | ||||
Core Bond Fund | 0.55 | 0.05 | ||||
Real Estate Securities Fund | 0.80 | 0.05 |
The following shows the respective totals for advisory and administrative fees for the period ended June 30, 2010.
Advisory | Administrative | |||||
Multi-Style Equity Fund | $ | 1,362,344 | $ | 93,311 | ||
Aggressive Equity Fund | 738,144 | 41,008 | ||||
Non-U.S. Fund | 1,416,990 | 78,722 | ||||
Core Bond Fund | 1,158,332 | 105,303 | ||||
Real Estate Securities Fund | 1,707,366 | 106,710 |
RIMCo agreed to certain waivers of its advisory fees as follows:
For the Aggressive Equity Fund, RIMCo has contractually agreed, until April 30, 2011, to waive 0.06% of its 0.90% advisory fee. The waiver may not be terminated during the relevant period except with Board approval. The total amount of the waiver for the period ended June 30, 2010 was $49,210. There were no reimbursements during the period.
For the Non-U.S. Fund, RIMCo has contractually agreed, until April 30, 2011, to waive 0.06% of its 0.90% advisory fee. The waiver may not be terminated during the relevant period except with Board approval. The total amount of the waiver for the period ended June 30, 2010 was $94,466. There were no reimbursements during the period.
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Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
For the Core Bond Fund, RIMCo has contractually agreed, until April 30, 2011, to waive 0.07% of its 0.55% advisory fee. The waiver may not be terminated during the relevant period except with Board approval. The total amount of the waiver for the period ended June 30, 2010 was $147,424. There were no reimbursements during the period.
Transfer and Dividend Disbursing Agent
RFSC serves as transfer agent and provides dividend disbursing services to the Funds. For this service, RFSC is paid a fee based upon the average daily net assets of the Funds for transfer agency and dividend disbursing services. 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. Transfer agency fees paid by the Funds presented herein for the period ended June 30, 2010 were as follows:
Amount | |||
Multi-Style Equity Fund | $ | 8,211 | |
Aggressive Equity Fund | 3,609 | ||
Non-U.S. Bond Fund | 6,928 | ||
Core Bond Fund | 9,267 | ||
Real Estate Securities Fund | 9,391 |
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.
Accrued Fees Payable to Affiliates
Accrued fees payable to affiliates for the period ended June 30, 2010 were as follows:
Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | Real Estate Securities Fund | |||||||||||
Advisory fees | $ | 214,312 | $ | 103,961 | $ | 202,153 | $ | 169,456 | $ | 290,239 | |||||
Administration fees | 14,806 | 6,572 | 12,450 | 18,099 | 18,140 | ||||||||||
Transfer agent fees | 1,295 | 579 | 1,090 | 1,532 | 1,578 | ||||||||||
Trustee fees | 2,097 | 1,075 | 1,919 | 714 | 2,900 | ||||||||||
$ | 232,510 | $ | 112,187 | $ | 217,612 | $ | 189,801 | $ | 312,857 | ||||||
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 40 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 $72,000 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 (except for telephonic meetings called pursuant to the Funds’ valuation and pricing procedures) 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 $72,000.
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5. | Federal Income Taxes |
At December 31, 2009, 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:
12/31/2016 | 12/31/2017 | Totals | |||||||
Multi-Style Equity Fund | $ | 47,156,528 | $ | 61,778,100 | $ | 108,934,628 | |||
Aggressive Equity Fund | 35,184,466 | 36,487,757 | 71,672,223 | ||||||
Non-U.S. Fund | 51,009,325 | 51,040,032 | 102,049,357 | ||||||
Real Estate Securities Fund | 25,966,146 | 54,146,913 | 80,113,059 |
At June 30, 2010, 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 | $ | 339,074,308 | $ | 157,369,141 | $ | 317,726,495 | $ | 484,390,379 | $ | 459,974,848 | ||||||||||
Gross Tax Unrealized Appreciation | $ | 6,702,887 | $ | 4,722,673 | $ | 21,864,837 | $ | 17,306,326 | $ | 57,316,383 | ||||||||||
Gross Tax Unrealized Depreciation | (9,056,464 | ) | (3,984,597 | ) | (41,586,815 | ) | (11,382,762 | ) | (10,095,733 | ) | ||||||||||
Net Tax Unrealized Appreciation (Depreciation) | $ | (2,353,577 | ) | $ | 738,076 | $ | (19,721,978 | ) | $ | 5,923,564 | $ | 47,220,650 | ||||||||
6. | Fund Share Transactions (amounts in thousands) |
Share transactions were as follows:
Shares | Dollars | |||||||||||||
Multi-Style Equity Fund | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | ||||||||||
Proceeds from shares sold | 1,087 | 2,436 | $ | 12,909 | $ | 23,857 | ||||||||
Proceeds from reinvestment of distributions | 127 | 483 | 1,551 | 4,298 | ||||||||||
Payments for shares redeemed | (2,708 | ) | (4,036 | ) | (31,713 | ) | (37,795 | ) | ||||||
Net increase (decrease) | (1,494 | ) | (1,117 | ) | $ | (17,253 | ) | $ | (9,640 | ) | ||||
Aggressive Equity Fund | ||||||||||||||
Proceeds from shares sold | 784 | 1,485 | $ | 7,939 | $ | 11,475 | ||||||||
Proceeds from reinvestment of distributions | 26 | 95 | 260 | 695 | ||||||||||
Payments for shares redeemed | (1,066 | ) | (2,176 | ) | (10,707 | ) | (16,299 | ) | ||||||
Net increase (decrease) | (256 | ) | (596 | ) | $ | (2,508 | ) | $ | (4,129 | ) | ||||
Non-U.S. Fund | ||||||||||||||
Proceeds from shares sold | 2,396 | 2,904 | $ | 21,260 | $ | 22,918 | ||||||||
Proceeds from reinvestment of distributions | 332 | 1,010 | 2,908 | 7,901 | ||||||||||
Payments for shares redeemed | (1,543 | ) | (3,249 | ) | (13,584 | ) | (25,343 | ) | ||||||
Net increase (decrease) | 1,185 | 665 | $ | 10,584 | $ | 5,476 | ||||||||
Core Bond Fund | ||||||||||||||
Proceeds from shares sold | 3,980 | 7,232 | $ | 41,617 | $ | 71,125 | ||||||||
Proceeds from reinvestment of distributions | 682 | 2,152 | 7,043 | 20,869 | ||||||||||
Payments for shares redeemed | (2,759 | ) | (4,313 | ) | (28,963 | ) | (40,570 | ) | ||||||
Net increase (decrease) | 1,903 | 5,071 | $ | 19,697 | $ | 51,424 | ||||||||
Real Estate Securities Fund | ||||||||||||||
Proceeds from shares sold | 959 | 4,224 | $ | 11,595 | $ | 34,059 | ||||||||
Proceeds from reinvestment of distributions | 190 | 1,793 | 2,341 | 14,718 | ||||||||||
Payments for shares redeemed | (1,793 | ) | (3,178 | ) | (21,631 | ) | (28,595 | ) | ||||||
Net increase (decrease) | (644 | ) | 2,839 | $ | (7,695 | ) | $ | 20,182 | ||||||
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Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
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, 2010, the Funds did not borrow through the interfund lending program.
8. | Record Ownership |
As of June 30, 2010, 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 shareholder in each Fund.
# of Shareholders | % | |||
Multi-Style Equity Fund | 2 | 81.6 | ||
Aggressive Equity Fund | 2 | 82.6 | ||
Non-U.S. Fund | 2 | 80.9 | ||
Core Bond Fund | 3 | 85.4 | ||
Real Estate Securities Fund | 2 | 92.1 |
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.
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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 Nest Assets Securities | Acquisition Dates | Principal Amount ($) or Shares | Cost per Unit $ | Cost (000) $ | Market Value $ | |||||
Aggressive Equity Fund - 0.0% | ||||||||||
JER Investors Trust, Inc. | 05/27/04 | 1,771 | 81.87 | 145 | — | |||||
Non-U.S. Fund - 0.6% | ||||||||||
Rolls-Royce Group PLC | 03/18/10 | 117,172 | 8.81 | 1,033 | 976 | |||||
Ping An Insurance Group Co. of China, Ltd. Class H | 03/13/09 | 81,500 | 7.93 | 647 | 657 | |||||
1,633 | ||||||||||
Core Bond Fund - 1.4% | ||||||||||
Adam Aircraft Term Loan | 02/13/08 | 49,000 | 99.05 | 48 | — | |||||
ARES CLO Funds | 01/15/09 | 517,962 | 75.39 | 492 | 478 | |||||
ARES CLO Funds | 01/15/09 | 730,000 | 95.02 | 550 | 672 | |||||
Armstrong Loan Funding, Ltd. | 05/21/09 | 486,800 | 87.16 | 424 | 468 | |||||
Black Diamond CLO, Ltd. | 06/01/06 | 750,000 | 85.13 | 638 | 662 | |||||
Chatham Light CLO, Ltd. | 11/25/09 | 495,121 | 90.39 | 448 | 464 | |||||
CIT Mortgage Loan Trust | 09/11/08 | 136,121 | 100.00 | 136 | 125 | |||||
CIT Mortgage Loan Trust | 10/05/07 | 130,000 | 100.00 | 130 | 70 | |||||
CIT Mortgage Loan Trust | 10/05/07 | 180,000 | 100.00 | 180 | 73 | |||||
Credit Suisse Mortgage Capital Certificates | 09/03/08 | 520,000 | 68.10 | 377 | 351 | |||||
Deutsche Bank AG | 04/21/06 | IDR 1,000,000 | 12.00 | 120 | 118 | |||||
DG Funding Trust | 11/04/03 | 49 | 10,537.11 | 516 | 382 | |||||
Freddie Mac REMICS | 06/28/07 | 8,000 | 99.05 | 9 | 8 | |||||
Goal Capital Funding Trust | 05/17/10 | 500,000 | 98.36 | 492 | 499 | |||||
Swedbank AB | 07/16/09 | 100,000 | 103.11 | 103 | 104 | |||||
Swedbank AB | 07/16/09 | 500,000 | 102.37 | 512 | 515 | |||||
Symetra Financial Corp. | 06/02/06 | 150,000 | 98.73 | 148 | 151 | |||||
Washington Mutual Mortgage Pass Through Certificates | 04/01/05 | 192,000 | 100.00 | 192 | 12 | |||||
WG Horizons CLO | 04/12/10 | 1,300,000 | 92.3 | 1,200 | 1,166 | |||||
6,318 | ||||||||||
Illiquid securities and restricted securities may be priced by the Funds using fair value procedures approved by the Board.
10. | Dividends |
On July 1, 2010, the Board declared the following dividends payable from net investment income. Dividends were paid on July 6, 2010, to shareholders of record July 2, 2010.
Net Investment Income | |||
Multi-Style Equity Fund | $ | 0.0344 | |
Aggressive Equity Fund | 0.0088 | ||
Core Bond Fund | 0.0965 | ||
Real Estate Securities Fund | 0.0658 |
11. | Subsequent Events |
Management has evaluated events or transactions that may have occurred since June 30, 2010, that would merit recognition or disclosure in the financial statements. This evaluation was completed through August 13, 2010, the date the financial statements were available to be issued. During the review nothing was discovered which would require further disclosure within the financial statements.
88 | Notes to Financial Statements |
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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 in person on April 20, 2010 (the “Agreement Evaluation Meeting”). 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, analyses 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 not managed by RIMCo, believed by the provider to be generally comparable in investment objectives to the Funds. In the case of each Fund, its other peer funds are collectively hereinafter referred to as the Fund’s “Comparable Funds,” and, with the Fund, such Comparable Funds are collectively hereinafter referred to as the Fund’s “Performance Universe” in the case of performance comparisons and the Fund’s “Expense Universe” in the case of operating expense comparisons. In the case of certain Funds, the Third-Party Information reflected changes in the Comparable Funds requested by RIMCo, which changes were noted in the Third-Party Information. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Evaluation 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 13, 2010, the Independent Trustees in preparation for the Agreement Evaluation Meeting met by conference telephone call to review Agreement Evaluation Information received to that date in a private session with their independent counsel at which no representatives of RIMCo or the Funds’ management were present and, on the basis of that review, requested additional Agreement Evaluation Information. At the Agreement Evaluation Meeting, 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 executive session with their independent counsel to consider additional Agreement Evaluation Information received from RIMCo and management at the Agreement Evaluation 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
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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 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 further considered that Fund investors in pursuing their investment goals and objectives likely purchased their shares on the basis of this information and RIMCo’s reputation for and performance record in managing the Funds’ manager-of-managers structure.
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 overall quality of the investment management and other 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, scope and overall quality of the investment management and other services provided, and which are expected to be provided, to the Funds, including Fund portfolio management services, the Board inquired as to the possible impact on the Funds’ operations of significant changes in RIMCo’s senior management and other personnel providing services to the Funds during 2009 and 2010 to the date of the Agreement Evaluation Meeting and a planned relocation of the Russell organization’s headquarters by the end of 2010. At the Agreement Evaluation Meeting, senior representatives of RIMCo discussed these changes with the Board and assured the Board that, while these changes likely would have a near term impact because of increased demands upon continuing personnel, steps were being taken to avoid any long-term diminution in the nature, scope or quality of the services provided to the Funds. The Board also discussed the possible impact of such changes on the compliance programs of the Funds and RIMCo and received assurances from senior representatives of the Russell organization that such changes would not result in any long-term diminution in the nature and quality of the Funds’ compliance programs.
As noted above, RIMCo, pursuant to the terms of the RIMCo Agreement, directly manages, a portion—up to 10%—of the assets of the Multi-Style Equity Fund (the “Participating Fund”) 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
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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 Evaluation 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, although Fund results in 2008 and early 2009 generally did not reflect uniform success in achieving lesser volatility.
With respect to the Funds’ Advisory Fees, the Third-Party Information showed that the Multi-Style Equity and 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 of its Expense Universe in the fourth quintile of its Expense Universe. On an actual basis (i.e., giving effect to any voluntary fee waivers implemented by RIMCo and the advisers to such Fund’s Comparable Funds), the RIF Aggressive Equity Fund Advisory Fee was ranked in the third quintile of its Expense Universe but the actual Advisory Fee for each of the other Funds was ranked in the fourth quintile of its Expense Universe. The comparison was based upon the latest fiscal years for the Expense Universe funds. In assessing the Funds’ Advisory Fees, the Board focused on actual Advisory Fees. The Board considered that the actual Advisory Fee for each Fund other than the Multi-Style Equity Fund and the Core Bond Fund was ranked within 5 basis points of the third quintile of its Expense Universe. The Board considered RIMCo’s explanation of the reasons for these Funds’ actual Advisory Fee rankings and its belief that the Funds’ Advisory Fees are reasonable notwithstanding such rankings. The Board determined that it would continue to monitor those fees against the Funds’ Comparable Funds’ advisory fees.
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 observed 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. The Board noted that, generally, there was a reduction in the Funds’ assets as a result of market declines and related investor redemptions in 2008 and 2009 and that Fund asset levels generally have not rebounded completely from those levels. In the case of certain Funds, asset levels have continued to decline since 2008. The Board therefore determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the Advisory Fee for each Fund appropriately reflected any economies of scale realized by that Fund, based upon net asset flows since 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, in some cases, may be substantially lower, than the rates paid by RIC funds supervised by the Board, including the Funds. The Trustees considered the differences in the nature and scope of services RIMCo provides to institutional clients and the Funds. RIMCo explained, 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. The Board noted that RIMCo provides office space and facilities to the Funds and all of the Funds’ officers. Accordingly, the Trustees concluded that the services provided to the Funds are sufficiently different from the services provided to the other clients that comparisons are not probative and should not be given significant weight.
In evaluating the Funds’ Advisory Fees, the Board noted that none of the Funds had total expenses which ranked more than 5 basis points below the third quintile of its Expense Universe.
Basis for Approval of Investment Advisory Contracts | 91 |
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Russell Investment Funds
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
On the basis of the Agreement Evaluation 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 Agreement Evaluation 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 was reasonable in light of the nature, scope and overall quality of the investment management and other 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; (4) other benefits and fees received by RIMCo or its affiliates from the Funds were not excessive; and (5) RIMCo’s profitability with respect to the Fund was not excessive in light of the nature, scope and overall quality of the investment management and other services provided by RIMCo.
The Board further concluded that, under the circumstances, the performance of each of the Funds was consistent with continuation of the RIMCo Agreement, although the Board regarded the performance of the Non-U.S. Fund and the Aggressive Equity Fund relative to their respective Comparable Funds as disappointing. The Board, in assessing the Funds’ performance, focused upon each Fund’s performance for the 1-, 3- and 5-year periods ended December 31, 2009 as most relevant.
In evaluating the performance of the Funds generally relative to their Comparable Funds, the Board, in addition to the factors described above, also considered 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, such as 2009.
With respect to the Non-US Fund, the Third-Party Information showed that the Fund’s performance was ranked in the fourth quintile of its Performance Universe for each of the 1-, 3- and 5-year periods ended December 31, 2009. The Trustees considered management’s explanation of the Fund’s relative underperformance. According to RIMCo, the financial crisis that unfolded during 2008, along with certain portfolio positioning decisions by the Money Managers for the Fund, detracted from performance in both 2008 and 2009. During 2009, three of the Fund’s four Money Managers were replaced. RIMCo noted that the recent changes in the Fund’s Money Manager team made meaningful performance comparisons with its Comparable Funds difficult.
With respect to the Aggressive Equity Fund, the Third-Party Information showed that the Fund’s performance was ranked in the fifth and fourth quintiles of its Performance Universe for the 3- and 5-year periods ended December 31, 2009, respectively, but that its performance for the 1-year period was ranked in the second quintile. According to RIMCo, the financial crisis that unfolded throughout 2008 was detrimental to performance and the Fund was further affected by certain portfolio positioning decisions by certain Money Managers. In 2009, the fund’s quality bias was a disadvantage as speculative stocks outperformed. While Fund performance in 2009 was markedly better than 2008, RIMCo advised the Board that it intends to continue its focus on reviewing the Money Manager team to enhance the Fund’s structure, risk profile and excess return profile.
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 and early 2009 that continue to impact the Funds’ relative performance for periods greater than one year.
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 Agreement Evaluation 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
92 | Basis for Approval of Investment Advisory Contracts |
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Russell Investment Funds
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
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 Agreement Evaluation Information and other information received from RIMCo in support of its recommendations at the Agreement Evaluation 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.
Subsequently, the Board of Trustees received a proposal from RIMCo at a meeting held on May 24, 2010, to effect a money manager change for the Real Estate Securities Fund; In the case of such proposed change, the Trustees approved the terms of the proposed portfolio management contract based substantially upon RIMCo’s recommendation to hire the Money Manager at the proposed fee rate; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc. the Fund’s underwriter; RIMCo’s explanation as to the lack of relevance of profitability to the evaluation of portfolio management contracts with money mangers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo’s awareness of the fees charged by the Money Manager to other clients; and RIMCo’s belief that the proposed investment advisory fees would be reasonable in light of the anticipated quality of investment advisory services to be rendered. The Trustees also considered their findings at their April 20, 2010 meeting as to the reasonableness of the aggregate investment advisory fees paid by the Fund, and the fact that the aggregate investment advisory fees paid by the Fund would not increase as a result of the implementation of the proposed money manager change because the money managers’ investment advisory fee is paid by RIMCo.
Basis for Approval of Investment Advisory Contracts | 93 |
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Shareholder Requests for Additional Information — June 30, 2010 (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.
94 | Shareholder Requests for Additional Information |
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Disclosure of Information about Fund Trustees and Officers — June 30, 2010
(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 40 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 from 2004–January 22, 2010*
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 | 49 | None | |||||
# Sandra Cavanaugh Born May 10, 1954
909 A Street Tacoma, Washington 98402-1616 | President and Chief Executive Officer since 2010
Trustee since 2010 | Appointed until successor is duly elected and qualified
Until successor is chosen and qualified by Trustees | •President and CEO RIC and RIF •May 2009 to December 2009, Executive Vice President, Retail Channel, SunTrust Bank •2007 to January 2009, Senior Vice President, National Sales — Retail Distribution, JPMorgan Chase/Washington Mutual, Inc. •1997 to 2007, President — WM Funds Distributor & Shareholder Services/WM Financial Services | 49 | None |
# | Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee. |
# | Ms. Cavanaugh is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee. |
* | Effective January 22, 2010, Greg J. Stark resigned as President and Chief Executive Officer of RIC and RIF. Mr. Stark’s successor is Sandra Cavanaugh. |
Disclosure of Information about Fund Trustees and Officers | 95 |
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Russell Investment Funds
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2010 (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 | ||||||||||
Thaddas L. Alston Born April 7, 1945
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2006
Chairman of the Investment Committee since 2010 | Appointed until successor is duly elected and qualified Appointed until successor is duly elected and qualified | •Senior Vice President, Larco Investments, Ltd. (real estate firm) | 49 | 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 | 49 | •Director, Avista Corp (electric utilities) •Trustee, Principal Investor Funds (investment company); •Trustee, Principal Variable Contracts Funds (investment company) | |||||
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. | 49 | 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 | 49 | 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 | •Vice Chairman, Simpson Investment Company •Until April 2009, President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company | 49 | None |
96 | Disclosure of Information about Fund Trustees and Officers |
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Russell Investment Funds
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2010 (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) | ||||||||||
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 September 2009, 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) | 49 | •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 | Appointed until successor is duly elected and qualified Appointed until successor is duly elected and qualified | Retired | 49 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
Disclosure of Information about Fund Trustees and Officers | 97 |
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Russell Investment Funds
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2010 (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) | 49 | 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 | 49 | 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 | 49 | None |
* | Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF. |
98 | Disclosure of Information about Fund Trustees and Officers |
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Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2010 (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 from 2004–January 22, 2010 | 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 | |||
Sandra Cavanaugh Born May 10, 1954
909 A Street Tacoma, Washington 98402-1616 | President and Chief Executive Officer since 2010
| Appointed until successor is duly elected and qualified
| •President and CEO RIC and RIF •May 2009 to December 2009, Executive Vice President, Retail Channel, SunTrust Bank •2007 to January 2009, Senior Vice President, National Sales — Retail Distribution, JPMorgan Chase/Washington Mutual, Inc. •1997 to 2007, President — WM Funds Distributor & Shareholder Services/WM Financial Services | |||
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 | |||
Mary Beth Rhoden, Born April 25, 1969
909 A Street Tacoma, Washington 98402-1616 | Secretary since 2010 | Until successor is chosen and qualified by Trustees | •1999 to 2010 Assistant Secretary RIC and RIF •Associate Counsel, FRC •Secretary, RIMCo, RFSC and Russell Financial Services, Inc. •Secretary and Chief Legal Counsel, RIC and RIF |
Disclosure of Information about Fund Trustees and Officers | 99 |
Table of Contents
909 A Street, Tacoma, Washington 98402
(800) 787-7354
Interested Trustee
Sandra Cavanaugh
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
Sandra Cavanaugh, President and Chief Executive Officer
Cheryl Wichers, Chief Compliance Officer
Peter Gunning, Chief Investment Officer
Mark E. Swanson, Treasurer and Chief Accounting Officer
Mary Beth Rhoden, 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, 2010
Multi-Style Equity Fund
BlackRock Capital Management, Inc., New York, NY
Columbus Circle Investors, Stamford, CT
DePrince, Race & Zollo, Inc., Winter Park, FL
First Eagle Investment Management, LLC, New York, NY
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
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
Barrow, Hanley, Mewhinney & Strauss, Inc., Dallas, TX
Marsico Capital Management, LLC, Denver, CO
MFS Institutional Advisors, Inc., Boston, MA
Pzena Investment Management, LLC, New York, NY
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
INVESCO Advisers, Inc. which acts as a money manager to the Fund through its INVESCO Real Estate Division, Dallas, TX
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.
100 | Adviser, Money Managers and Service Providers |
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Russell Investment Funds | 909 A Street | 800-787-7354 | ||
Tacoma, Washington 98402 | Fax: 253-591-3495 | |||
www.russell.com |
36-08-072
Table of Contents
2010 SEMI-ANNUAL REPORT
Russell Investment Funds
LifePoints® Variable Target Portfolio Series
JUNE 30, 2010
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
Semi-annual Report
June 30, 2010 (Unaudited)
Table of Contents
Russell Investment Funds - LifePoints® Funds Variable Target Portfolio Series
Copyright© Russell Investments 2010. 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, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 1,012.00 | $ | 1,024.30 | ||
Expenses Paid During Period* | $ | 0.50 | $ | 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 Investments Funds
Moderate Strategy Fund
Schedule of Investments - June 30, 2010 (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 - 60.0% | |||||
RIF Core Bond Fund | 1,551,715 | 16,619 | |||
RIC Russell Investment Grade Bond Fund | 374,468 | 8,309 | |||
24,928 | |||||
Domestic Equities - 17.0% | |||||
RIF Aggressive Equity Fund | 135,186 | 1,247 | |||
RIF Multi-Style Equity Fund | 265,114 | 2,908 | |||
RIC Russell U.S. Quantitative Equity Fund | 122,506 | 2,908 | |||
7,063 | |||||
International Equities - 17.0% | |||||
RIF Non-U.S. Fund | 462,206 | 3,739 | |||
RIC Russell Emerging Markets Fund | 50,027 | 831 | |||
RIC Russell Global Equity Fund | 352,095 | 2,493 | |||
7,063 | |||||
Real Assets - 6.0% | |||||
RIF Real Estate Securities Fund | 104,565 | 1,246 | |||
RIC Russell Commodity Strategies Fund | 124,642 | 1,247 | |||
2,493 | |||||
Total Investments - 100.0% (identified cost $39,700) | 41,547 | ||||
Other Assets and Liabilities, Net – (0.0%) | (9 | ) | |||
Net Assets - 100.0% | 41,538 | ||||
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, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 984.40 | $ | 1,024.30 | ||
Expenses Paid During Period* | $ | 0.49 | $ | 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. |
Balanced Strategy Fund | 5 |
Table of Contents
Russell Investments Funds
Balanced Strategy Fund
Schedule of Investments — June 30, 2010 (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 | 4,457,608 | 47,741 | |||
Domestic Equities - 28.0% | |||||
RIF Aggressive Equity Fund | 517,798 | 4,774 | |||
RIF Multi-Style Equity Fund | 1,305,587 | 14,322 | |||
RIC Russell U.S. Quantitative Equity Fund | 603,298 | 14,323 | |||
33,419 | |||||
International Equities - 25.0% | |||||
RIF Non-U.S. Fund | 2,065,432 | 16,709 | |||
RIC Russell Emerging Markets Fund | 215,567 | 3,581 | |||
RIC Russell Global Equity Fund | 1,348,615 | 9,548 | |||
29,838 | |||||
Real Assets - 7.0% | |||||
RIF Real Estate Securities Fund | 300,384 | 3,580 | |||
RIC Russell Commodity Strategies Fund | 477,410 | 4,774 | |||
8,354 | |||||
Total Investments - 100.0% (identified cost $121,935) | 119,352 | ||||
Other Assets and Liabilities, Net - (0.0%) | (9 | ) | |||
Net Assets - 100.0% | 119,343 | ||||
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, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 957.00 | $ | 1,024.30 | ||
Expenses Paid During | ||||||
Period* | $ | 0.49 | $ | 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. |
Growth Strategy Fund | 7 |
Table of Contents
Russell Investment Funds
Growth Strategy Fund
Schedule of Investments - June 30, 2010 (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 - 20.0% | |||||
RIF Core Bond Fund | 1,243,599 | 13,319 | |||
Domestic Equities - 37.0% | |||||
RIF Aggressive Equity Fund | 433,371 | 3,996 | |||
RIF Multi-Style Equity Fund | 971,300 | 10,655 | |||
RIC Russell U.S. Quantitative Equity Fund | 420,776 | 9,989 | |||
24,640 | |||||
International Equities - 33.0% | |||||
RIF Non-U.S. Fund | 1,564,030 | 12,653 | |||
RIC Russell Emerging Markets Fund | 160,373 | 2,664 | |||
RIC Russell Global Equity Fund | 940,604 | 6,659 | |||
21,976 | |||||
Real Assets - 10.0% | |||||
RIF Real Estate Securities Fund | 223,472 | 2,664 | |||
RIC Russell Commodity Strategies Fund | 399,568 | 3,996 | |||
6,660 | |||||
Total Investments - 100.0% (identified cost $72,391) | 66,595 | ||||
Other Assets and Liabilities, Net - (0.0%) | (14 | ) | |||
Net Assets - 100.0% | 66,581 | ||||
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, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Expense Example, which appears on the Fund’s individual page in this Semi-Annual Report. Please refer to this information when reviewing the Expense Example for this 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, 2010 to June 30, 2010.
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, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||
Ending Account Value | ||||||
June 30, 2010 | $ | 927.70 | $ | 1,024.30 | ||
Expenses Paid During Period* | $ | 0.48 | $ | 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. |
Equity Growth Strategy Fund | 9 |
Table of Contents
Russell Investment Funds
Equity Growth Strategy Fund
Schedule of Investments - June 30, 2010 (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 | |||||
Domestic Equities - 47.1% | |||||
RIF Aggressive Equity Fund | 161,666 | 1,490 | |||
RIF Multi-Style Equity Fund | 388,217 | 4,259 | |||
RIC Russell U.S. Quantitative Equity Fund | 179,391 | 4,259 | |||
10,008 | |||||
International Equities - 41.0% | |||||
RIF Non-U.S. Fund | 605,383 | 4,898 | |||
RIC Russell Emerging Markets Fund | 64,099 | 1,065 | |||
RIC Russell Global Equity Fund | 390,986 | 2,768 | |||
8,731 | |||||
Real Assets - 12.0% | |||||
RIF Real Estate Securities Fund | 107,183 | 1,277 | |||
RIC Russell Commodity Strategies Fund | 127,762 | 1,278 | |||
2,555 | |||||
Total Investments - 100.1% (identified cost $22,721) | 21,294 | ||||
Other Assets and Liabilities, Net - (0.1%) | (14 | ) | |||
Net Assets - 100.0% | 21,280 | ||||
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 — June 30, 2010 (Unaudited)
Amounts in thousands | Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | ||||||||||||
Assets | ||||||||||||||||
Investments, at identified cost | $ | 39,700 | $ | 121,935 | $ | 72,391 | $ | 22,721 | ||||||||
Investments, at market | 41,547 | 119,352 | 66,595 | 21,294 | ||||||||||||
Receivables: | ||||||||||||||||
Investments sold | 1,596 | 6,919 | 4,509 | 1,292 | ||||||||||||
Fund shares sold | 249 | 364 | — | 2 | ||||||||||||
From Adviser | 3 | 4 | 2 | 1 | ||||||||||||
Prepaid expenses | 3 | 8 | 5 | 2 | ||||||||||||
Total assets | 43,398 | 126,647 | 71,111 | 22,591 | ||||||||||||
Liabilities | ||||||||||||||||
Payables: | ||||||||||||||||
Investments purchased | 1,845 | 7,282 | 4,508 | 1,294 | ||||||||||||
Fund shares redeemed | — | — | 1 | — | ||||||||||||
Accrued fees to affiliates | 2 | 5 | 3 | 1 | ||||||||||||
Other accrued expenses | 13 | 17 | 18 | 16 | ||||||||||||
Total liabilities | 1,860 | 7,304 | 4,530 | 1,311 | ||||||||||||
Net Assets | $ | 41,538 | $ | 119,343 | $ | 66,581 | $ | 21,280 | ||||||||
Net Assets Consist of: | ||||||||||||||||
Undistributed (overdistributed) net investment income | $ | 21 | $ | (34 | ) | $ | (18 | ) | $ | (6 | ) | |||||
Accumulated net realized gain (loss) | (3,179 | ) | (7,255 | ) | (4,756 | ) | (4,705 | ) | ||||||||
Unrealized appreciation (depreciation) on investments | 1,847 | (2,583 | ) | (5,796 | ) | (1,427 | ) | |||||||||
Shares of beneficial interest | 46 | 148 | 91 | 33 | ||||||||||||
Additional paid-in capital | 42,803 | 129,067 | 77,060 | 27,385 | ||||||||||||
Net Assets | $ | 41,538 | $ | 119,343 | $ | 66,581 | $ | 21,280 | ||||||||
Net Asset Value, offering and redemption price per share: | ||||||||||||||||
Net asset value per share* | $ | 8.95 | $ | 8.04 | $ | 7.28 | $ | 6.44 | ||||||||
Net assets | $ | 41,538,000 | $ | 119,342,602 | $ | 66,581,050 | $ | 21,280,182 | ||||||||
Shares outstanding ($.01 par value) | 4,643,605 | 14,844,675 | 9,149,906 | 3,305,620 |
* | 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, 2010 (Unaudited)
Amounts in thousands | Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | ||||||||||||
Investment Income | ||||||||||||||||
Income distributions from Underlying Funds | $ | 438 | $ | 1,070 | $ | 427 | $ | 90 | ||||||||
Expenses | ||||||||||||||||
Advisory fees | 38 | 116 | 66 | 22 | ||||||||||||
Administrative fees | 10 | 29 | 16 | 5 | ||||||||||||
Custodian fees | 10 | 10 | 13 | 10 | ||||||||||||
Transfer agent fees | 1 | 3 | 1 | 1 | ||||||||||||
Professional fees | 15 | 19 | 16 | 14 | ||||||||||||
Trustees’ fees | — | 1 | 1 | — | ||||||||||||
Printing fees | 7 | 22 | 13 | 4 | ||||||||||||
Miscellaneous | 4 | 6 | 5 | 3 | ||||||||||||
Expenses before reductions | 85 | 206 | 131 | 59 | ||||||||||||
Expense reductions | (66 | ) | (148 | ) | (98 | ) | (48 | ) | ||||||||
Net expenses | 19 | 58 | 33 | 11 | ||||||||||||
Net investment income (loss) | 419 | 1,012 | 394 | 79 | ||||||||||||
Net Realized and Unrealized Gain (Loss) | ||||||||||||||||
Net realized gain (loss) on investments | (479 | ) | (2,584 | ) | (2,654 | ) | (1,166 | ) | ||||||||
Net change in unrealized appreciation (depreciation) on investments | 377 | (639 | ) | (866 | ) | (695 | ) | |||||||||
Net realized and unrealized gain (loss) | (102 | ) | (3,223 | ) | (3,520 | ) | (1,861 | ) | ||||||||
Net Increase (Decrease) in Net Assets from Operations | $ | 317 | $ | (2,211 | ) | $ | (3,126 | ) | $ | (1,782 | ) | |||||
See accompanying notes which are an integral part of the financial statements.
12 | Statements of Operations |
Table of Contents
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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, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | ||||||||||||
Increase (Decrease) in Net Assets | ||||||||||||||||
Operations | ||||||||||||||||
Net investment income (loss) | $ | 419 | $ | 1,061 | $ | 1,012 | $ | 2,754 | ||||||||
Net realized gain (loss) | (479 | ) | (1,690 | ) | (2,584 | ) | (3,251 | ) | ||||||||
Net change in unrealized appreciation (depreciation) | 377 | 5,647 | (639 | ) | 19,134 | |||||||||||
Net increase (decrease) in net assets from operations | 317 | 5,018 | (2,211 | ) | 18,637 | |||||||||||
Distributions | ||||||||||||||||
From net investment income | (462 | ) | (1,078 | ) | (1,218 | ) | (2,602 | ) | ||||||||
From net realized gain | — | (120 | ) | — | (331 | ) | ||||||||||
Net decrease in net assets from distributions | (462 | ) | (1,198 | ) | (1,218 | ) | (2,933 | ) | ||||||||
Share Transactions | ||||||||||||||||
Net increase (decrease) in net assets from share transactions | 6,012 | 12,543 | 17,587 | 29,323 | ||||||||||||
Total Net Increase (Decrease) in Net Assets | 5,867 | 16,363 | 14,158 | 45,027 | ||||||||||||
Net Assets | ||||||||||||||||
Beginning of period | 35,671 | 19,308 | 105,185 | 60,158 | ||||||||||||
End of period | $ | 41,538 | $ | 35,671 | $ | 119,343 | $ | 105,185 | ||||||||
Undistributed (overdistributed) net investment income included in net assets | $ | 21 | $ | 64 | $ | (34 | ) | $ | 172 |
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, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | |||||||||||
$ | 394 | $ | 1,237 | $ | 79 | $ | 307 | |||||||
(2,654 | ) | (1,439 | ) | (1,166 | ) | (2,467 | ) | |||||||
(866 | ) | 12,548 | (695 | ) | 6,654 | |||||||||
(3,126 | ) | 12,346 | (1,782 | ) | 4,494 | |||||||||
(473 | ) | (1,156 | ) | (126 | ) | (220 | ) | |||||||
— | (213 | ) | — | (87 | ) | |||||||||
(473 | ) | (1,369 | ) | (126 | ) | (307 | ) | |||||||
| 8,674 | | 15,787 | 3,131 | 3,257 | |||||||||
5,075 | 26,764 | 1,223 | 7,444 | |||||||||||
61,506 | 34,742 | 20,057 | 12,613 | |||||||||||
$ | 66,581 | $ | 61,506 | $ | 21,280 | $ | 20,057 | |||||||
$ | (18 | ) | $ | 61 | $ | (6 | ) | $ | 41 |
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, Beginning of Period | $ Net Investment Income (Loss)(a)(b) | $ Net Realized and Unrealized Gain (Loss) | $ Total from Investment Operations | $ Distributions from Net Investment Income | $ Distributions from Net Realized Gain | $ Return of Capital | ||||||||||||
Moderate Strategy Fund | ||||||||||||||||||
June 30, 2010** | 8.95 | .10 | .01 | .11 | (.11 | ) | — | — | ||||||||||
December 31, 2009 | 7.67 | .36 | 1.34 | 1.70 | (.37 | ) | (.05 | ) | — | |||||||||
December 31, 2008 | 9.99 | .33 | (2.32 | ) | (1.99 | ) | (.23 | ) | (.10 | ) | — | |||||||
December 31, 2007* | 10.00 | .46 | (.11 | ) | .35 | (.36 | ) | — | (g) | — | ||||||||
Balanced Strategy Fund | ||||||||||||||||||
June 30, 2010** | 8.25 | .08 | (.20 | ) | (.12 | ) | (.09 | ) | — | — | ||||||||
December 31, 2009 | 6.80 | .26 | 1.47 | 1.73 | (.24 | ) | (.04 | ) | — | |||||||||
December 31, 2008 | 9.93 | .23 | (2.88 | ) | (2.65 | ) | (.21 | ) | (.27 | ) | — | |||||||
December 31, 2007* | 10.00 | .47 | (.20 | ) | .27 | (.34 | ) | — | (g) | — | ||||||||
Growth Strategy Fund | ||||||||||||||||||
June 30, 2010** | 7.66 | .05 | (.37 | ) | (.32 | ) | (.06 | ) | — | — | ||||||||
December 31, 2009 | 6.11 | .19 | 1.56 | 1.75 | (.17 | ) | (.03 | ) | — | |||||||||
December 31, 2008 | 9.90 | .15 | (3.46 | ) | (3.31 | ) | (.14 | ) | (.34 | ) | — | |||||||
December 31, 2007* | 10.00 | .45 | (.24 | ) | .21 | (.31 | ) | — | — | |||||||||
Equity Growth Strategy Fund | ||||||||||||||||||
June 30, 2010** | 6.98 | .03 | (.53 | ) | (.50 | ) | (.04 | ) | — | — | ||||||||
December 31, 2009 | 5.42 | .12 | 1.56 | 1.68 | (.09 | ) | (.03 | ) | — | |||||||||
December 31, 2008 | 9.83 | .07 | (3.92 | ) | (3.85 | ) | (.05 | ) | (.51 | ) | — | |||||||
December 31, 2007* | 10.00 | .50 | (.38 | ) | .12 | (.29 | ) | — | — |
See accompanying notes which are an integral part of the financial statements.
16 | Financial Highlights |
Table of Contents
$ Total Distributions | $ Net Asset Value, End of Period | % Total Return(c) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Net(d)(e)(f) | % Ratio of Expenses to Average Net Assets, Gross(d)(e) | % Ratio of Net Investment Income to Average Net Assets(c)(f) | % Portfolio Turnover Rate(c) | |||||||||
(.11 | ) | 8.95 | 1.20 | 41,538 | .10 | .45 | 1.14 | 38 | ||||||||
(.42 | ) | 8.95 | 23.09 | 35,671 | .10 | .48 | 4.40 | 21 | ||||||||
(.33 | ) | 7.67 | (20.39 | ) | 19,308 | .11 | .53 | 3.77 | 39 | |||||||
(.36 | ) | 9.99 | 3.54 | 8,654 | .11 | 2.01 | 5.37 | 24 | ||||||||
(.09 | ) | 8.04 | (1.56 | ) | 119,343 | .10 | .35 | .91 | 13 | |||||||
(.28 | ) | 8.25 | 26.23 | 105,185 | .09 | .35 | 3.62 | 8 | ||||||||
(.48 | ) | 6.80 | (27.70 | ) | 60,158 | .08 | .35 | 2.75 | 16 | |||||||
(.34 | ) | 9.93 | 2.73 | 35,697 | .08 | .74 | 5.37 | 11 | ||||||||
(.06 | ) | 7.28 | (4.30 | ) | 66,581 | .10 | .40 | .59 | 16 | |||||||
(.20 | ) | 7.66 | 29.43 | 61,506 | .09 | .40 | 2.80 | 6 | ||||||||
(.48 | ) | 6.11 | (34.73 | ) | 34,742 | .04 | .40 | 1.85 | 10 | |||||||
(.31 | ) | 9.90 | 2.13 | 27,390 | .04 | .84 | 5.05 | 3 | ||||||||
(.04 | ) | 6.44 | (7.23 | ) | 21,280 | .10 | .54 | .36 | 23 | |||||||
(.12 | ) | 6.98 | 31.79 | 20,057 | .08 | .59 | 2.02 | 21 | ||||||||
(.56 | ) | 5.42 | (41.18 | ) | 12,613 | .04 | .58 | .87 | 24 | |||||||
(.29 | ) | 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, 2010 (Unaudited)
* | For the period April 30, 2007 (commencement of operations) to December 31, 2007. |
** | For the period ended June 30, 2010 (Unaudited). |
(a) | Average month-end 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”). |
(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, 2010 (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.
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. Russell Investment Management Company (“RIMCo”) is the Funds’ adviser and may modify the target asset allocation for any Fund and/or the Underlying Funds in which the Funds invest from time to time based on strategic capital markets research or on factors such as RIMCo’s outlook for the economy, financial markets generally and/or relative market valuation of the asset classes represented by each Underlying Fund. In the future, the Fund may also invest in other Underlying Funds. Any modification in the asset allocation or changes to the Underlying Funds will be based on strategic, long-term allocation decisions and not tactical, short-term positioning and may be made one or more times per year. In the future, the Funds may also invest in other funds which are not currently Underlying Funds.
Target Asset Allocation Range as of June 30, 2010 | ||||||||||||
Asset Class/Underlying Funds | Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | ||||||||
Bonds | ||||||||||||
RIF Core Bond Fund | 35-45 | % | 35-45 | % | 15-25 | % | 0 | % | ||||
RIC Russell Investment Grade Bond Fund | 15-25 | 0 | 0 | 0 | ||||||||
Domestic Equities | ||||||||||||
RIF Aggressive Equity Fund | 0-8 | 0-9 | 1-11 | 2-12 | ||||||||
RIF Multi-Style Equity Fund | 2-12 | 7-17 | 11-21 | 15-25 | ||||||||
RIC Russell U.S. Quantitative Equity Fund | 2-12 | 7-17 | 10-20 | 15-25 | ||||||||
International Equities | ||||||||||||
RIF Non-U.S. Fund | 4-14 | 9-19 | 14-24 | 18-28 | ||||||||
RIC Russell Emerging Markets Fund | 0-7 | 0-8 | 0-9 | 0-10 | ||||||||
RIC Russell Global Equity Fund | 1-11 | 3-13 | 5-15 | 8-18 | ||||||||
Real Assets | ||||||||||||
RIF Real Estate Securities Fund | 0-8 | 0-8 | 0-9 | 1-11 | ||||||||
RIC Russell Commodity Strategies Fund | 0-8 | 0-9 | 1-11 | 1-11 |
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. Generally, Underlying Fund portfolio securities are valued at the close of the principal exchange on which they are traded.
Fair value of securities 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. To increase consistency and comparability in fair value measurement, the fair value hierarchy was established 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.
Notes to Financial Statements | 19 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
The fair value hierarchy of inputs is summarized in the three broad levels listed below.
Level 1 — quoted prices (unadjusted) in active markets for identical investments
Level 2 — other significant observable inputs including quoted market prices in non-active markets or prices derived from market data.
Level 3 — significant unobservable inputs including the Fund’s own assumptions in determining the fair value of investments.
The levels associated with valuing the Funds’ investments for the period ended June 30, 2010 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.
Each Fund qualifies as a regulated investment company under sub-chapter M of the Internal Revenue Code and intends to distribute all of its taxable income and capital gains. Therefore, no federal income tax provision is required for the Funds.
Each Fund files a U. S. tax return. At June 30, 2010, 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. While the statute of limitations remains open to examine the Funds’ U.S. tax returns filed for the fiscal years ending December 31, 2006, through December 31, 2008, 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 values.
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.
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.
20 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
3. | Investment Transactions |
Securities
During the period ended June 30, 2010, purchases and sales of the Underlying Funds (excluding short-term investments) were as follows:
Purchases | Sales | |||||
Moderate Strategy Fund | $ | 20,768,756 | $ | 14,796,677 | ||
Balanced Strategy Fund | 32,688,888 | 15,308,051 | ||||
Growth Strategy Fund | 19,228,292 | 10,625,994 | ||||
Equity Growth Strategy Fund | 8,068,859 | 4,981,390 |
4. | Related Party Transactions, Fees and Expenses |
Adviser and Administrator
RIMCo advises the Funds and Russell Fund Services Company (“RFSC”) is the Funds’ administrator. RFSC is a wholly-owned subsidiary of RIMCo. 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 advisory fee of 0.20% and administrative fee of 0.05% are based upon the average daily net assets of the Funds and are payable monthly. The following shows totals respectively, for the period ended June 30, 2010.
Advisory | Administrative | |||||
Moderate Strategy Fund | $ | 38,205 | $ | 9,551 | ||
Balanced Strategy Fund | 116,500 | 29,125 | ||||
Growth Strategy Fund | 65,700 | 16,425 | ||||
Equity Growth Strategy Fund | 21,792 | 5,448 |
RIMCo has contractually agreed, until April 30, 2011, 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 with Board approval.
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.
For the period ended June 30, 2010, the fees waived and reimbursed by RIMCo amounted to:
RIMCo Waiver / Reimbursement | |||
Moderate Strategy Fund | $ | 66,209 | |
Balanced Strategy Fund | 147,911 | ||
Growth Strategy Fund | 98,116 | ||
Equity Growth Strategy Fund | 47,927 |
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 based upon the average daily net assets of the Funds for transfer agency and dividend disbursing services. 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 fees paid for the Funds presented herein for the period ended June 30, 2010 amounted to:
Amount Paid | |||
Moderate Strategy Fund | $ | 841 | |
Balanced Strategy Fund | 2,563 | ||
Growth Strategy Fund | 1,445 | ||
Equity Growth Strategy Fund | 480 |
Notes to Financial Statements | 21 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
Distributor
Russell Financial Services, Inc. (the “Distributor’), a wholly-owned subsidiary of RIMCo, is the distributor for RIF pursuant to a Distribution Agreement with the Investment Company. The Distributor receives no compensation from the Investment Company for its services.
Accrued Fees Payable to Affiliates
Accrued fees payable to affiliates for the period ended June 30, 2010 were as follows:
Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | |||||||||
Administration fees | $ | 1,704 | $ | 5,002 | $ | 2,802 | $ | 918 | ||||
Transfer agent fees | 147 | 431 | 242 | 80 | ||||||||
Trustees fees | — | — | 32 | 48 | ||||||||
$ | 1,851 | $ | 5,433 | $ | 3,076 | $ | 1,046 | |||||
Board of Trustees
The Russell Fund Complex consists of RIC, which has 40 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 $72,000 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 (except for telephonic meetings called pursuant to the Funds’ valuation and pricing procedures) 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 $72,000.
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, 2010, with Underlying Funds which are, or were, an affiliated company are as follows:
Affiliate | Market Value | Purchases Cost | Sales Cost | Realized Gain (Loss) | Income Distributions | |||||||||||
Moderate Strategy | ||||||||||||||||
RIF Core Bond Fund | $ | 16,618,869 | $ | 4,039,683 | $ | 9,595,411 | $ | 105,769 | $ | 314,610 | ||||||
RIC Russell Investment Grade Bond Fund | 8,309,435 | 8,472,345 | 377,730 | 2,041 | 61,804 | |||||||||||
RIF Aggressive Equity Fund | 1,246,415 | 451,016 | 262,810 | (29,812 | ) | 1,819 | ||||||||||
RIF Multi-Style Equity Fund | 2,908,302 | 1,244,771 | 1,903,993 | (230,083 | ) | 14,021 | ||||||||||
RIC Russell U.S. Quantitative Equity Fund | 2,908,302 | 1,197,721 | 1,771,701 | (219,945 | ) | 8,152 | ||||||||||
RIF Non-U.S. Fund | 3,739,246 | 1,523,452 | 644,493 | (89,868 | ) | 31,360 | ||||||||||
RIC Russell Emerging Markets Fund | 830,944 | 320,407 | 173,902 | (536 | ) | — | ||||||||||
RIC Russell Global Equity Fund | 2,492,830 | 1,878,628 | 305,140 | (35,827 | ) | — | ||||||||||
RIF Real Estate Securities Fund | 1,246,415 | 394,319 | 240,692 | 19,066 | 6,296 | |||||||||||
RIC Russell Commodity Strategies Fund | 1,246,415 | 1,246,414 | — | — | — | |||||||||||
$ | 41,547,173 | $ | 20,768,756 | $ | 15,275,872 | $ | (479,195 | ) | $ | 438,062 | ||||||
22 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
Affiliate | Market Value | Purchases Cost | Sales Cost | Realized Gain (Loss) | Income Distributions | |||||||||||
Balanced Strategy | ||||||||||||||||
RIF Core Bond Fund | $ | 47,740,979 | $ | 8,653,549 | $ | 5,143,092 | $ | 147,343 | $ | 782,308 | ||||||
RIF Aggressive Equity Fund | 4,774,098 | 795,642 | 150,421 | (42,655 | ) | 7,376 | ||||||||||
RIF Multi-Style Equity Fund | 14,322,294 | 3,016,308 | 4,210,443 | (921,484 | ) | 66,269 | ||||||||||
RIC Russell U.S. Quantitative Equity Fund | 14,322,294 | 3,267,962 | 4,444,021 | (1,127,083 | ) | 36,864 | ||||||||||
RIF Non-U.S. Fund | 16,709,343 | 4,521,664 | 521,977 | (135,463 | ) | 144,680 | ||||||||||
RIC Russell Emerging Markets Fund | 3,580,573 | 714,757 | 149,984 | (21,738 | ) | — | ||||||||||
RIC Russell Global Equity Fund | 9,548,196 | 6,237,443 | 172,912 | (39,637 | ) | — | ||||||||||
RIF Real Estate Securities Fund | 3,580,573 | 707,465 | 3,098,855 | (442,937 | ) | 32,515 | ||||||||||
RIC Russell Commodity Strategies Fund | 4,774,098 | 4,774,098 | — | — | — | |||||||||||
$ | 119,352,448 | $ | 32,688,888 | $ | 17,891,705 | $ | (2,583,654 | ) | $ | 1,070,012 | ||||||
Growth Strategy | ||||||||||||||||
RIF Core Bond Fund | $ | 13,318,949 | $ | 2,052,129 | $ | 1,583,926 | $ | 49,144 | $ | 221,351 | ||||||
RIF Aggressive Equity Fund | 3,995,685 | 539,731 | 221,501 | (70,148 | ) | 6,217 | ||||||||||
RIF Multi-Style Equity Fund | 10,655,160 | 1,873,912 | 4,100,395 | (897,655 | ) | 51,849 | ||||||||||
RIC Russell U.S. Quantitative Equity Fund | 9,989,212 | 1,939,149 | 4,319,681 | (1,116,691 | ) | 26,985 | ||||||||||
RIF Non-U.S. Fund | 12,653,002 | 4,234,780 | 632,143 | (156,374 | ) | 98,664 | ||||||||||
RIC Russell Emerging Markets Fund | 2,663,790 | 492,397 | 214,469 | (38,533 | ) | — | ||||||||||
RIC Russell Global Equity Fund | 6,659,475 | 3,722,198 | 260,027 | (61,793 | ) | — | ||||||||||
RIF Real Estate Securities Fund | 2,663,790 | 378,235 | 1,947,741 | (361,915 | ) | 21,839 | ||||||||||
RIC Russell Commodity Strategies Fund | 3,995,685 | 3,995,761 | 76 | — | — | |||||||||||
$ | 66,594,748 | $ | 19,228,292 | $ | 13,279,959 | $ | (2,653,965 | ) | $ | 426,905 | ||||||
Equity Growth Strategy | ||||||||||||||||
RIF Aggressive Equity Fund | $ | 1,490,558 | $ | 397,446 | $ | 329,594 | $ | (75,431 | ) | $ | 2,450 | |||||
RIF Multi-Style Equity Fund | 4,258,737 | 1,161,661 | 2,102,940 | (388,262 | ) | 22,097 | ||||||||||
RIC Russell U.S. Quantitative Equity Fund | 4,258,737 | 1,177,960 | 1,908,799 | (430,380 | ) | 12,068 | ||||||||||
RIF Non-U.S. Fund | 4,897,547 | 1,556,413 | 765,126 | (180,606 | ) | — | ||||||||||
RIC Russell Emerging Markets Fund | 1,064,684 | 314,375 | 227,225 | (27,208 | ) | — | ||||||||||
RIC Russell Global Equity Fund | 2,768,180 | 1,808,379 | 233,249 | (37,108 | ) | 44,449 | ||||||||||
RIF Real Estate Securities Fund | 1,277,621 | 375,005 | 580,672 | (27,221 | ) | 8,735 | ||||||||||
RIC Russell Commodity Strategies Fund | 1,277,621 | 1,277,620 | — | — | — | |||||||||||
$ | 21,293,685 | $ | 8,068,859 | $ | 6,147,605 | $ | (1,166,216 | ) | $ | 89,799 | ||||||
5. | Federal Income Taxes |
At December 31, 2009, the following Funds 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 | 12/31/2017 | Totals | ||||||
Moderate Strategy | $ | — | $ | 257,395 | $ | 257,395 | |||
Balanced Strategy | — | 286,231 | 286,231 | ||||||
Growth Strategy | — | 335,288 | 335,288 | ||||||
Equity Growth Strategy | 11,522 | 258,785 | 270,307 |
At June 30, 2010, 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 | $ | 42,429,823 | $ | 127,162,387 | $ | 74,911,726 | $ | 26,502,902 | ||||||||
Gross Tax Unrealized Appreciation | $ | 191,249 | $ | 14,206,124 | $ | 2,515,832 | $ | 1,679,193 | ||||||||
Gross Tax Unrealized Depreciation | (1,073,898 | ) | (22,016,064 | ) | (10,832,811 | ) | (6,888,411 | ) | ||||||||
Net Tax Unrealized Appreciation (Depreciation) | $ | (882,649 | ) | $ | (7,809,940 | ) | $ | (8,316,979 | ) | $ | (5,209,218 | ) | ||||
Notes to Financial Statements | 23 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
6. | Fund Share Transactions (amounts in thousands) |
Share transactions were as follows:
Shares | Dollars | |||||||||||||
Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | Period Ended June 30, 2010 (Unaudited) | Fiscal Year Ended December 31, 2009 | |||||||||||
Moderate Strategy Fund | ||||||||||||||
Proceeds from shares sold | 1,117 | 2,000 | $ | 10,158 | $ | 16,613 | ||||||||
Proceeds from reinvestment of distributions | 50 | 153 | 462 | 1,198 | ||||||||||
Payments for shares redeemed | (507 | ) | (684 | ) | (4,608 | ) | (5,268 | ) | ||||||
Net increase (decrease) | 660 | 1,469 | $ | 6,012 | $ | 12,543 | ||||||||
Balanced Strategy Fund | ||||||||||||||
Proceeds from shares sold | 2,433 | 4,503 | $ | 20,397 | $ | 33,006 | ||||||||
Proceeds from reinvestment of distributions | 142 | 410 | 1,218 | 2,932 | ||||||||||
Payments for shares redeemed | (483 | ) | (1,007 | ) | (4,028 | ) | (6,615 | ) | ||||||
Net increase (decrease) | 2,092 | 3,906 | $ | 17,587 | $ | 29,323 | ||||||||
Growth Strategy Fund | ||||||||||||||
Proceeds from shares sold | 1,324 | 2,492 | $ | 10,274 | $ | 16,740 | ||||||||
Proceeds from reinvestment of distributions | 59 | 212 | 473 | 1,370 | ||||||||||
Payments for shares redeemed | (263 | ) | (359 | ) | (2,073 | ) | (2,323 | ) | ||||||
Net increase (decrease) | 1,120 | 2,345 | $ | 8,674 | $ | 15,787 | ||||||||
Equity Growth Strategy Fund | ||||||||||||||
Proceeds from shares sold | 761 | 1,048 | $ | 5,430 | $ | 6,208 | ||||||||
Proceeds from reinvestment of distributions | 17 | 59 | 125 | 306 | ||||||||||
Payments for shares redeemed | (345 | ) | (563 | ) | (2,424 | ) | (3,257 | ) | ||||||
Net increase (decrease) | 433 | 544 | $ | 3,131 | $ | 3,257 | ||||||||
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, 2010, the Funds did not borrow through the interfund lending program.
8. | Record Ownership |
As of June 30, 2010, 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.
# of Shareholders | % | |||
Moderate Strategy Fund | 1 | 98.4 | ||
Balanced Strategy Fund | 1 | 97.7 | ||
Growth Strategy Fund | 1 | 97.9 | ||
Equity Growth Strategy Fund | �� | 1 | 97.8 |
24 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2010 (Unaudited)
9. | Dividends |
On July 2, 2010, the Board declared the following dividends payable from net investment income. Dividends were paid on July 7, 2010, to shareholders of record July 6, 2010.
Net Investment Income | |||
Moderate Strategy Fund | $ | 0.0471 | |
Balanced Strategy Fund | 0.0351 | ||
Growth Strategy Fund | 0.0211 | ||
Equity Growth Strategy Fund | 0.0098 |
10. | Subsequent Events |
Management has evaluated events or transactions that may have occurred since June 30, 2010, that would merit recognition or disclosure in the financial statements. This evaluation was completed through August 13, 2010, the date the financial statements were available to be issued.
Effective October 1, 2010, each Fund’s allocation to the Underlying Funds in which it invests will be modified to include the RIC Global Infrastructure Fund and the RIC Russell Global Credit Strategies Fund as Underlying Funds.
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LifePoints® 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 in person on April 20, 2010 (the “Agreement Evaluation Meeting”). 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, reports and analyses 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 not managed by RIMCo believed by the provider to be generally comparable in investment objectives to the Funds and the Underlying Funds. In the case of each Fund, its other peer funds are collectively hereinafter referred to as the Fund’s “Comparable Funds,” and, with the Fund, such Comparable Funds are collectively hereinafter referred to as the “Performance Universe” in the case of performance comparisons and the Fund’s “Expense Universe” in the case of operating expense comparisons. In the case of certain Funds, the Third-Party Information reflected changes in the Comparable Funds requested by RIMCo, which changes were noted in the Third-Party Information. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Evaluation 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 13, 2010, the Independent Trustees in preparation for the Agreement Evaluation Meeting met by conference telephone call to review Agreement Evaluation Information received to that date in a private session with their independent counsel at which no representatives of RIMCo or the Funds’ management were present and, on the basis of that review, requested additional Agreement Evaluation Information. At the Agreement Evaluation Meeting, 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 executive session with their independent counsel to consider additional Agreement Evaluation Information received from RIMCo and management at the Agreement Evaluation 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
26 | Basis for Approval of Investment Advisory Contracts |
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Russell Investment Funds
LifePoints® Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
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 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 further considered that Fund investors in pursuing their investment goals and objectives likely purchased their shares on the basis of this information and RIMCo’s reputation and performance record in managing the Underlying Funds’ manager-of-managers structure.
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 overall quality of the investment management and other 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, scope and overall quality of the investment management and other services provided and which are expected to be provided to the Funds, including Fund portfolio management services, the Board inquired as to the possible impact on the Funds’ operations of significant changes in RIMCo’s senior management and other personnel providing services to the Funds during 2009 and 2010 to the date of the Agreement Evaluation Meeting and a planned relocation of the Russell organization’s headquarters by the end of 2010. At the Agreement Evaluation Meeting, senior representatives of RIMCo discussed these changes with the Board and assured the Board that while these changes likely would have a near term impact because of increased demands upon continuing personnel, steps were being taken to avoid any long-term diminution in the nature, scope or quality of the services provided to the Funds or Underlying Funds. The Board also discussed the possible impact of such changes on the compliance programs of the Funds and RIMCo and received assurances from senior representatives of the Russell organization that such changes would not result in any long-term diminution in the scope and quality of the Funds’ compliance programs.
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Russell Investment Funds
LifePoints® Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
As noted above, RIMCo, pursuant to the terms of the RIMCo Agreement, directly manages 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 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 Evaluation 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, although Fund results in 2008 and early 2009 generally did not reflect uniform success in achieving lesser volatility.
With respect to the Fund’s Advisory Fees, the Third-Party Information showed that the Advisory Fee for each Fund on a contractual basis was ranked in the fourth quintile of its Expense Universe but was ranked in the first quintile of its Expense Universe on an actual basis (i.e., giving effect to any voluntary fee waivers implemented by RIMCo and the advisors to such Fund’s Comparable Funds). The comparisons were based upon the latest fiscal year for the Expense Universe Funds. In assessing the Funds’ Advisory Fees, the Board focused on actual Advisory Fees.
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 observed 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. 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 in 2008 and that Fund asset levels have not rebounded completely from those levels. In the case of certain Funds and Underlying Funds, asset levels have continued to decline since 2008. The Board, therefore, determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the Advisory Fee for each Fund or Underlying Fund appropriately reflected any economies of scale realized by that Fund, based upon net asset flows since 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 the Funds and other funds under the Board’s supervision, including the Underlying Funds, are lower, and, in some cases, may 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 nature and scope of services RIMCo provides to institutional clients and the funds under its supervision, including the Funds and Underlying Funds. RIMCo, as it has in the past, noted, among other things, that institutional clients have fewer administrative needs than the Funds. RIMCo also observed 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. The Board noted that RIMCo provides office space and facilities to the Funds and Underlying Funds and all of
28 | Basis for Approval of Investment Advisory Contracts |
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LifePoints® Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
the Funds’ and Underlying Funds’ officers. Accordingly, the Trustees concluded that the services provided to the Funds and Underlying Funds are sufficiently different from the services provided to the institutional clients that comparisons are not probative and should not be given significant weight.
On the basis of the Agreement Evaluation 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 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 Fee charged by RIMCo was reasonable in light of the nature, scope and overall quality of the investment management and other 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; (4) other benefits and fees received by RIMCo or its affiliates from the Funds or Underlying Funds were not excessive; and (5) RIMCo’s profitability with respect to the Funds and each Underlying Fund was not excessive in light of the nature, scope and overall quality of the investment management and other services provided by RIMCo.
In evaluating the performance of the Funds and Underlying Funds generally relative to their Comparable Funds, the Board, in addition to factors discussed above, also considered 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 usually 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 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, such as 2009.
The Board further concluded that, under the circumstances, the performance of each of the Funds was consistent with continuation of the RIMCo Agreement. In evaluating performance, the Board considered each Fund’s and Underlying Fund’s absolute performance and such Fund’s performance relative to appropriate benchmarks and indices in addition to its performance relative to its Comparable Funds. In assessing performance relative to their Comparable Funds or benchmarks or in absolute terms, the Board also considered RIMCo’s stated 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.
After considering the foregoing and other relevant factors and given the limited performance record of the 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 each Fund and its shareholders and voted to approve the continuation of the RIMCo Agreement.
At the Agreement Evaluation 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 Agreement Evaluation Information, 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 |
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Russell Investment Funds
LifePoints® Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
Subsequently, the Board of Trustees received a proposal from RIMCo at a meeting held on May 24, 2010, to effect a money manager change for the Real Estate Securities Fund and the Russell Investment Company Russell U.S. Quantitative Equity Fund; In the case of each such proposed change, the Trustees approved the terms of the proposed portfolio management contract based substantially upon RIMCo’s recommendation to hire the Money Manager at the proposed fee rate; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc. the Fund’s underwriter; RIMCo’s explanation as to the lack of relevance of profitability to the evaluation of 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’s awareness of the fees charged by the Money Manager to other clients; and RIMCo’s belief that the proposed investment advisory fees would be reasonable in light of the anticipated quality of investment advisory services to be rendered. The Trustees also considered their findings at their April 20, 2010 meeting as to the reasonableness of the aggregate investment advisory fees paid by the Fund, and the fact that the aggregate investment advisory fees paid by the Fund would not increase as a result of the implementation of the proposed money manager change because the money managers’ investment advisory fee is paid by RIMCo.
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Shareholder Requests for Additional Information — June 30, 2010 (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.
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Disclosure of Information about Fund Trustees and Officers — June 30, 2010
(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 40 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 from 2004–January 22, 2010*
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 | 49 | None | |||||
# Sandra Cavanaugh Born May 10, 1954
909 A Street Tacoma, Washington 98402-1616 | President and Chief Executive Officer since 2010
Trustee since 2010 | Appointed until successor is duly elected and qualified
Until successor is chosen and qualified by Trustees | •President and CEO RIC and RIF •May 2009 to December 2009, Executive Vice President, Retail Channel, SunTrust Bank •2007 to January 2009, Senior Vice President, National Sales — Retail Distribution, JPMorgan Chase/Washington Mutual, Inc. •1997 to 2007, President — WM Funds Distributor & Shareholder Services/WM Financial Services | 49 | None |
# | Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee. |
# | Ms. Cavanaugh is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee. |
* | Effective January 22, 2010, Greg J. Stark resigned as President and Chief Executive Officer of RIC and RIF. Mr. Stark’s successor is Sandra Cavanaugh. |
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Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2010 (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 | ||||||||||
Thaddas L. Alston Born April 7, 1945
909 A Street Tacoma, Washington 98402-1616 | Trustee since 2006
Chairman of the Investment Committee since 2010 | Appointed until successor is duly elected and qualified Appointed until successor is duly elected and qualified | •Senior Vice President, Larco Investments, Ltd. (real estate firm) | 49 | 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 | 49 | •Director, Avista Corp (electric utilities) •Trustee, Principal Investor Funds (investment company); •Trustee, Principal Variable Contracts Funds (investment company) | |||||
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. | 49 | 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 | 49 | 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 | •Vice Chairman, Simpson Investment Company •Until April 2009, President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company | 49 | None |
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Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2010 (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) | ||||||||||
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 September 2009, 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) | 49 | •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 | Appointed until successor is duly elected and qualified Appointed until successor is duly elected and qualified | Retired | 49 | 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, 2010 (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) | 49 | 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 | 49 | 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 | 49 | 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 | 35 |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2010 (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 from 2004–January 22, 2010 | 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 | |||
Sandra Cavanaugh Born May 10, 1954
909 A Street Tacoma, Washington 98402-1616 | President and Chief Executive Officer since 2010
| Appointed until successor is duly elected and qualified
| •President and CEO RIC and RIF •May 2009 to December 2009, Executive Vice President, Retail Channel, SunTrust Bank •2007 to January 2009, Senior Vice President, National Sales — Retail Distribution, JPMorgan Chase/Washington Mutual, Inc. •1997 to 2007, President — WM Funds Distributor & Shareholder Services/WM Financial Services | |||
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 | |||
Mary Beth Rhoden, Born April 25, 1969
909 A Street Tacoma, Washington 98402-1616 | Secretary since 2010 | Until successor is chosen and qualified by Trustees | •1999 to 2010 Assistant Secretary RIC and RIF •Associate Counsel, FRC •Secretary, RIMCo, RFSC and Russell Financial Services, Inc. •Secretary and Chief Legal Counsel, RIC and RIF |
36 | Disclosure of Information about Fund Trustees and Officers |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Russell Investment Funds
909 A Street, Tacoma, Washington 98402
(800) 787-7354
Interested Trustee
Sandra Cavanaugh
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
Sandra Cavanaugh, President and Chief Executive Officer
Cheryl Wichers, Chief Compliance Officer
Peter Gunning, Chief Investment Officer
Mark E. Swanson, Treasurer and Chief Accounting Officer
Mary Beth Rhoden, 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, 2010
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
RIC Russell Investment Grade Bond Fund
Metropolitan West Asset Management, LLC, Los Angeles, CA
Neuberger Berman Fixed Income LLC, Chicago, IL
Pacific Investment Management Company LLC, Newport Beach, CA
Western Asset Management Company, Pasadena, CA
Western Asset Management Company Limited, London, England
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
BlackRock Capital Management, Inc., New York, NY
Columbus Circle Investors, Stamford, CT
DePrince, Race & Zollo, Inc., Winter Park, FL
First Eagle Investment Management, LLC, New York, NY
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
RIF Real Estate Securities Fund
AEW Capital Management, L.P., Boston, MA
Cohen & Steers Capital Management, Inc., New York, NY
INVESCO Advisers, Inc. which acts as a money manager to the Fund through its INVESCO Real Estate Division, Dallas, TX
RIC Russell Commodity Strategies Fund
Credit Suisse Asset Management, LLC, New York, NY
Goldman Sachs Asset Management, L.P., New York, NY
RIC Russell U.S. Quantitative Equity Fund
Aronson+Johnson+Ortiz, LP, Philadelphia, PA
INTECH Investment Management LLC, West Palm Beach, FL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Numeric Investors LLC, Boston, MA
RIF Non-U.S. Fund
Barrow, Hanley, Mewhinney & Strauss, Inc., Dallas, TX
Marsico Capital Management, LLC, Denver, CO
MFS Institutional Advisors, Inc., Boston, MA
Pzena Investment Management, LLC, New York, NY
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
Adviser, Money Managers and Service Providers | 37 |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
Russell Investment Funds
909 A Street, Tacoma, Washington 98402
(800) 787-7354
RIC Russell Global Equity Fund
Gartmore Global Partners, London, United Kingdom
Harris Associates, L.P., Chicago, IL
MFS Institutional Advisors, Inc., Boston, MA
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.
38 | 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 |
36-08-188
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.
Table of Contents
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/ SANDRA CAVANAUGH | |
Sandra Cavanaugh | ||
Principal Executive Officer and Chief Executive Officer |
Date: August 30, 2010
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/ SANDRA CAVANAUGH | |
Sandra Cavanaugh | ||
Principal Executive Officer and Chief Executive Officer | ||
Date: August 30, 2010 |
By: | /s/ MARK E. SWANSON | |
Mark E. Swanson | ||
Principal Financial Officer, Principal Accounting Officer and Treasurer | ||
Date: August 30, 2010 |