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)
1301 2nd Avenue 18th Floor, Seattle Washington 98101
(Address of principal executive offices) (Zip code)
Mary Beth Rhoden, Secretary and Chief Legal Officer
Russell Investment Funds
1301 2nd Avenue
18th Floor
Seattle, Washington 98101
206-505-4846
(Name and address of agent for service)
Registrant’s telephone number, including area code: 206-505-7877
Date of fiscal year end: December 31
Date of reporting period: January 1, 2013 – June 30, 2013
Table of Contents
Item 1. Reports to Stockholders
Table of Contents
2013 SEMI-ANNUAL REPORT
Russell
Investment Funds
JUNE 30, 2013
FUND
Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
Global Real Estate Securities Fund
Table of Contents
Russell Investment Funds
Russell Investment Funds is a series investment company with ten 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, 2013 (Unaudited)
Table of Contents
Table of Contents
Russell Investment Funds
Copyright © Russell Investments 2013. 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 and part of Russell Investments.
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value June 30, 2013 | $ | 1,137.50 | $ | 1,020.58 | ||||
Expenses Paid During Period* | $ | 4.50 | $ | 4.26 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.85% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
Multi-Style Equity Fund | 3 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Common Stocks - 95.9% | ||||||||
Consumer Discretionary - 15.2% |
| |||||||
Aaron’s, Inc. Class A | 14,300 | 401 | ||||||
Abercrombie & Fitch Co. Class A | 26,600 | 1,203 | ||||||
Amazon.com, Inc. (Æ) | 2,480 | 689 | ||||||
AutoNation, Inc. (Æ) | 2,100 | 91 | ||||||
Avon Products, Inc. | 24,021 | 505 | ||||||
Carnival Corp. | 15,400 | 528 | ||||||
CBS Corp. Class B | 13,500 | 660 | ||||||
Coach, Inc. | 14,800 | 845 | ||||||
Comcast Corp. Class A | 52,055 | 2,180 | ||||||
Costco Wholesale Corp. | 1,249 | 138 | ||||||
Deckers Outdoor Corp. (Æ)(Ñ) | 5,600 | 283 | ||||||
DIRECTV (Æ) | 972 | 60 | ||||||
eBay, Inc. (Æ) | 97,421 | 5,038 | ||||||
Estee Lauder Cos., Inc. (The) Class A | 9,647 | 634 | ||||||
Foot Locker, Inc. | 32,900 | 1,156 | ||||||
Ford Motor Co. | 127,400 | 1,971 | ||||||
GameStop Corp. Class A (Ñ) | 14,200 | 597 | ||||||
General Motors Co. (Æ) | 32,700 | 1,089 | ||||||
Guess?, Inc. | 31,100 | 965 | ||||||
Hanesbrands, Inc. | 13,100 | 674 | ||||||
Harman International Industries, Inc. | 7,900 | 428 | ||||||
Hertz Global Holdings, Inc. (Æ) | 71,687 | 1,778 | ||||||
Home Depot, Inc. | 28,659 | 2,221 | ||||||
Jack in the Box, Inc. (Æ) | 8,000 | 314 | ||||||
Johnson Controls, Inc. | 84,700 | 3,032 | ||||||
Kohl’s Corp. | 12,100 | 611 | ||||||
Las Vegas Sands Corp. | 26,305 | 1,392 | ||||||
Lowe’s Cos., Inc. | 46,850 | 1,916 | ||||||
Macy’s, Inc. | �� | 18,000 | 864 | |||||
Marriott Vacations Worldwide Corp. (Æ) | 7,700 | 333 | ||||||
McDonald’s Corp. | 26,726 | 2,646 | ||||||
MDC Holdings, Inc. | 4,500 | 146 | ||||||
Michael Kors Holdings, Ltd. (Æ) | 15,712 | 974 | ||||||
Nielsen Holdings NV | 19,100 | 642 | ||||||
Nike, Inc. Class B | 44,726 | 2,848 | ||||||
Nu Skin Enterprises, Inc. Class A | 7,700 | 471 | ||||||
Penske Automotive Group, Inc. | 3,300 | 101 | ||||||
PulteGroup, Inc. (Æ) | 5,200 | 99 | ||||||
Royal Caribbean Cruises, Ltd. | 3,800 | 127 | ||||||
Sirius XM Radio, Inc. | 206,800 | 693 | ||||||
Sotheby’s Class A | 17,400 | 660 | ||||||
Starbucks Corp. | 69,954 | 4,582 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. (ö) | 21,940 | 1,386 | ||||||
Target Corp. | 1,836 | 126 | ||||||
Tiffany & Co. | 9,830 | 716 | ||||||
Time Warner, Inc. | 86,940 | 5,027 | ||||||
TJX Cos., Inc. | 2,058 | 103 | ||||||
Urban Outfitters, Inc. (Æ) | 11,100 | 446 | ||||||
VF Corp. | 3,430 | 662 | ||||||
Viacom, Inc. Class B | 42,904 | 2,919 | ||||||
Wal-Mart Stores, Inc. | 26,022 | 1,938 | ||||||
Walt Disney Co. (The) | 35,787 | 2,260 | ||||||
Whirlpool Corp. | 5,323 | 609 | ||||||
Yum! Brands, Inc. | 28,275 | 1,960 | ||||||
|
| |||||||
64,737 | ||||||||
|
|
Principal Amount ($) or Shares | Fair Value $ | |||||||
Consumer Staples - 5.4% | ||||||||
Altria Group, Inc. | 5,758 | 201 | ||||||
Anheuser-Busch InBev NV - ADR | 18,448 | 1,665 | ||||||
Archer-Daniels-Midland Co. | 31,900 | 1,082 | ||||||
Bunge, Ltd. | 10,000 | 708 | ||||||
Coca-Cola Co. (The) | 93,011 | 3,730 | ||||||
Colgate-Palmolive Co. | 43,669 | 2,502 | ||||||
ConAgra Foods, Inc. | 16,600 | 580 | ||||||
CVS Caremark Corp. | 29,360 | 1,679 | ||||||
General Mills, Inc. | 1,841 | 89 | ||||||
Kellogg Co. | 9,247 | 594 | ||||||
Kimberly-Clark Corp. | 1,100 | 107 | ||||||
Molson Coors Brewing Co. Class B | 10,500 | 503 | ||||||
Mondelez International, Inc. Class A | 60,000 | 1,712 | ||||||
PepsiCo, Inc. | 25,466 | 2,083 | ||||||
Philip Morris International, Inc. | 12,610 | 1,092 | ||||||
Procter & Gamble Co. (The) | 49,270 | 3,793 | ||||||
Reynolds American, Inc. | 894 | 43 | ||||||
Rite Aid Corp. (Æ) | 17,500 | 50 | ||||||
Sysco Corp. | 1,709 | 58 | ||||||
TreeHouse Foods, Inc. (Æ) | 2,700 | 177 | ||||||
Tyson Foods, Inc. Class A | 17,000 | 437 | ||||||
Walgreen Co. | 1,406 | 62 | ||||||
|
| |||||||
22,947 | ||||||||
|
| |||||||
Energy - 10.1% | ||||||||
Anadarko Petroleum Corp. | 7,500 | 644 | ||||||
Apache Corp. | 5,700 | 478 | ||||||
Atwood Oceanics, Inc. (Æ) | 2,700 | 141 | ||||||
Cabot Oil & Gas Corp. | 10,040 | 713 | ||||||
Chevron Corp. | 30,898 | 3,658 | ||||||
Cimarex Energy Co. | 5,800 | 377 | ||||||
ConocoPhillips | 2,883 | 174 | ||||||
Diamond Offshore Drilling, Inc. | 4,700 | 323 | ||||||
Exxon Mobil Corp. | 133,129 | 12,030 | ||||||
Halliburton Co. | 43,150 | 1,800 | ||||||
Kinder Morgan, Inc. | 14,400 | 549 | ||||||
Marathon Oil Corp. | 80,691 | 2,790 | ||||||
Marathon Petroleum Corp. | 10,877 | 772 | ||||||
Murphy Oil Corp. | 11,400 | 694 | ||||||
National Oilwell Varco, Inc. | 33,327 | 2,296 | ||||||
Noble Energy, Inc. | 34,496 | 2,071 | ||||||
Occidental Petroleum Corp. | 33,274 | 2,969 | ||||||
Pioneer Natural Resources Co. | 9,960 | 1,442 | ||||||
Precision Drilling Corp. (Ñ) | 52,200 | 446 | ||||||
Rowan Companies PLC (Æ) | 19,100 | 651 | ||||||
Schlumberger, Ltd. | 39,969 | 2,864 | ||||||
SM Energy Co. | 2,500 | 150 | ||||||
Southwestern Energy Co. (Æ) | 39,750 | 1,452 | ||||||
Spectra Energy Corp. | 1,904 | 66 | ||||||
Statoil ASA - ADR | 32,000 | 662 | ||||||
Superior Energy Services, Inc. (Æ) | 25,100 | 651 | ||||||
Tesoro Corp. | 7,400 | 387 | ||||||
Total SA - ADR | 8,600 | 419 | ||||||
Transocean, Ltd. | 12,500 | 599 | ||||||
Whiting Petroleum Corp. (Æ) | 12,600 | 580 | ||||||
|
| |||||||
42,848 | ||||||||
|
|
4 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Financial Services - 16.8% | ||||||||
ACE, Ltd. | 34,491 | 3,086 | ||||||
Aflac, Inc. | 202 | 12 | ||||||
Allstate Corp. (The) | 19,127 | 920 | ||||||
American Express Co. | 19,490 | 1,457 | ||||||
American International Group, Inc. (Æ) | 15,000 | 671 | ||||||
American Tower Corp. Class A (ö) | 17,660 | 1,292 | ||||||
Aspen Insurance Holdings, Ltd. | 15,600 | 579 | ||||||
Assurant, Inc. | 8,200 | 417 | ||||||
Axis Capital Holdings, Ltd. | 15,500 | 710 | ||||||
Bank of America Corp. | 138,200 | 1,778 | ||||||
Bank of New York Mellon Corp. (The) | 53,000 | 1,487 | ||||||
BB&T Corp. | 75,050 | 2,543 | ||||||
Berkshire Hathaway, Inc. Class B (Æ) | 31,350 | 3,509 | ||||||
BlackRock, Inc. Class A | 44 | 11 | ||||||
BOK Financial Corp. | 2,030 | 130 | ||||||
Capital One Financial Corp. | 68,350 | 4,293 | ||||||
Chubb Corp. (The) | 10,238 | 866 | ||||||
Citigroup, Inc. | 64,700 | 3,104 | ||||||
Comerica, Inc. | 21,300 | 848 | ||||||
Cullen/Frost Bankers, Inc. (Ñ) | 7,100 | 474 | ||||||
DiamondRock Hospitality Co. (ö) | 22,300 | 208 | ||||||
Discover Financial Services | 31,087 | 1,481 | ||||||
Endurance Specialty Holdings, Ltd. | 6,500 | 334 | ||||||
Extra Space Storage, Inc. (ö) | 11,500 | 482 | ||||||
Fotex Holding SE (Æ) | 32,874 | 1,072 | ||||||
Franklin Resources, Inc. | 5,174 | 704 | ||||||
Goldman Sachs Group, Inc. (The) | 8,646 | 1,308 | ||||||
Hanover Insurance Group, Inc. (The) | 10,300 | 504 | ||||||
Hartford Financial Services Group, Inc. | 22,700 | 702 | ||||||
JPMorgan Chase & Co. | 108,450 | 5,725 | ||||||
Lincoln National Corp. | 18,533 | 676 | ||||||
Loews Corp. | 663 | 29 | ||||||
M&T Bank Corp. | 1,900 | 212 | ||||||
Markel Corp. (Æ) | 3,139 | 1,654 | ||||||
Marsh & McLennan Cos., Inc. | 1,585 | 63 | ||||||
Mastercard, Inc. Class A | 4,121 | 2,367 | ||||||
MB Financial, Inc. | 1,700 | 46 | ||||||
Mercury General Corp. | 6,000 | 264 | ||||||
MetLife, Inc. | 70,854 | 3,243 | ||||||
Morgan Stanley | 24,800 | 606 | ||||||
Northern Trust Corp. | 13,300 | 770 | ||||||
PartnerRe, Ltd. - ADR | 7,760 | 703 | ||||||
People’s United Financial, Inc. (Ñ) | 22,200 | 331 | ||||||
PNC Financial Services Group, Inc. (The) | 43,550 | 3,176 | ||||||
Principal Financial Group, Inc. | 6,900 | 258 | ||||||
ProAssurance Corp. | 7,900 | 412 | ||||||
Prudential Financial, Inc. | 33,400 | 2,439 | ||||||
Public Storage (ö) | 412 | 63 | ||||||
Regions Financial Corp. | 31,400 | 299 | ||||||
Reinsurance Group of America, Inc. Class A | 5,100 | 352 | ||||||
RenaissanceRe Holdings, Ltd. | 6,500 | 564 | ||||||
Signature Bank (Æ) | 2,900 | 241 | ||||||
SLM Corp. | 24,400 | 558 | ||||||
State Street Corp. | 43,180 | 2,816 | ||||||
SunTrust Banks, Inc. | 33,900 | 1,070 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
SVB Financial Group (Æ) | 1,400 | 117 | ||||||
Symetra Financial Corp. | 11,500 | 184 | ||||||
Thomson Reuters Corp. | 969 | 32 | ||||||
Travelers Cos., Inc. (The) | 10,275 | 821 | ||||||
US Bancorp | 15,361 | 555 | ||||||
Valley National Bancorp (Ñ) | 26,836 | 254 | ||||||
Visa, Inc. Class A | 25,931 | 4,739 | ||||||
Wells Fargo & Co. | 6,400 | 264 | ||||||
WR Berkley Corp. | 9,700 | 396 | ||||||
|
| |||||||
71,281 | ||||||||
|
| |||||||
Health Care - 13.9% | ||||||||
Abbott Laboratories | 37,565 | 1,311 | ||||||
AbbVie, Inc. | 11,000 | 455 | ||||||
Actavis, Inc. (Æ) | 6,400 | 808 | ||||||
Allergan, Inc. | 16,563 | 1,395 | ||||||
Amarin Corp. PLC - ADR (Æ)(Ñ) | 19,200 | 111 | ||||||
Amgen, Inc. | 1,525 | 150 | ||||||
Baxter International, Inc. | 67,112 | 4,648 | ||||||
Becton Dickinson and Co. | 552 | 55 | ||||||
Biogen Idec, Inc. (Æ) | 7,763 | 1,670 | ||||||
Bio-Rad Laboratories, Inc. Class A (Æ) | 2,370 | 266 | ||||||
Bristol-Myers Squibb Co. | 242 | 11 | ||||||
Cardinal Health, Inc. | 10,100 | 477 | ||||||
Celgene Corp. (Æ) | 5,226 | 611 | ||||||
Cerner Corp. (Æ) | 14,700 | 1,413 | ||||||
Community Health Systems, Inc. | 2,500 | 117 | ||||||
Covidien PLC | 51,332 | 3,226 | ||||||
Eli Lilly & Co. | 22,938 | 1,126 | ||||||
Express Scripts Holding Co. (Æ) | 12,557 | 775 | ||||||
Forest Laboratories, Inc. (Æ) | 20,800 | 853 | ||||||
Gilead Sciences, Inc. (Æ) | 32,925 | 1,686 | ||||||
Health Net, Inc. (Æ) | 4,400 | 140 | ||||||
Humana, Inc. | 9,540 | 805 | ||||||
IDEXX Laboratories, Inc. (Æ) | 5,400 | 485 | ||||||
Intuitive Surgical, Inc. (Æ) | 2,976 | 1,507 | ||||||
Johnson & Johnson | 80,727 | 6,931 | ||||||
LifePoint Hospitals, Inc. (Æ) | 11,800 | 576 | ||||||
Magellan Health Services, Inc. (Æ) | 4,800 | 269 | ||||||
McKesson Corp. | 17,907 | 2,051 | ||||||
Medtronic, Inc. | 11,325 | 583 | ||||||
Merck & Co., Inc. | 22,681 | 1,053 | ||||||
Molina Healthcare, Inc. (Æ) | 3,000 | 112 | ||||||
Novartis AG - ADR | 17,250 | 1,220 | ||||||
Novo Nordisk A/S - ADR | 5,820 | 902 | ||||||
Perrigo Co. | 12,170 | 1,473 | ||||||
Pfizer, Inc. | 288,997 | 8,094 | ||||||
Pharmacyclics, Inc. (Æ) | 8,734 | 694 | ||||||
Regeneron Pharmaceuticals, Inc. (Æ) | 6,068 | 1,365 | ||||||
St. Jude Medical, Inc. | 20,904 | 954 | ||||||
Stryker Corp. | 954 | 62 | ||||||
Teva Pharmaceutical Industries, Ltd. - ADR | 12,350 | 484 | ||||||
Thermo Fisher Scientific, Inc. (Ñ) | 19,885 | 1,683 | ||||||
UnitedHealth Group, Inc. | 28,837 | 1,888 | ||||||
Valeant Pharmaceuticals International, Inc. (Æ) | 22,364 | 1,925 | ||||||
Vertex Pharmaceuticals, Inc. (Æ) | 10,310 | 823 |
Multi-Style Equity Fund | 5 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
WellCare Health Plans, Inc. (Æ) | 1,000 | 56 | ||||||
WellPoint, Inc. | 13,000 | 1,064 | ||||||
Zoetis, Inc. Class A | 28,464 | 879 | ||||||
|
| |||||||
59,242 | ||||||||
|
| |||||||
Materials and Processing - 5.1% |
| |||||||
Air Products & Chemicals, Inc. | 582 | 53 | ||||||
CF Industries Holdings, Inc. | 2,140 | 367 | ||||||
Commercial Metals Co. | 24,300 | 359 | ||||||
Dow Chemical Co. (The) | 28,100 | 904 | ||||||
Ecolab, Inc. | 24,499 | 2,087 | ||||||
EI du Pont de Nemours & Co. | 17,800 | 935 | ||||||
Fastenal Co. | 26,340 | 1,208 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 27,600 | 762 | ||||||
Huntsman Corp. | 39,300 | 651 | ||||||
LyondellBasell Industries NV Class A | 10,300 | 682 | ||||||
Masco Corp. | 35,100 | 684 | ||||||
Monsanto Co. | 58,804 | 5,810 | ||||||
Mosaic Co. (The) | 26,800 | 1,442 | ||||||
MRC Global, Inc. (Æ) | 6,600 | 182 | ||||||
Nucor Corp. | 14,800 | 641 | ||||||
PPG Industries, Inc. | 3,967 | 581 | ||||||
Praxair, Inc. | 23,197 | 2,671 | ||||||
Precision Castparts Corp. | 425 | 96 | ||||||
Sealed Air Corp. | 7,200 | 172 | ||||||
Sherwin-Williams Co. (The) | 3,000 | 530 | ||||||
Steel Dynamics, Inc. | 44,159 | 659 | ||||||
|
| |||||||
21,476 | ||||||||
|
| |||||||
Producer Durables - 11.0% | ||||||||
3M Co. | 1,979 | 216 | ||||||
ABM Industries, Inc. | 7,800 | 191 | ||||||
Accenture PLC Class A | 1,839 | 132 | ||||||
AGCO Corp. | 13,100 | 657 | ||||||
Air Lease Corp. Class A | 17,500 | 483 | ||||||
AO Smith Corp. | 16,300 | 591 | ||||||
Automatic Data Processing, Inc. | 29,586 | 2,038 | ||||||
Boeing Co. (The) | 20,567 | 2,107 | ||||||
Brady Corp. Class A | 5,700 | 175 | ||||||
Canadian Pacific Railway, Ltd. | 5,877 | 713 | ||||||
Caterpillar, Inc. | 11,000 | 907 | ||||||
CH Robinson Worldwide, Inc. | 12,100 | 681 | ||||||
Con-way, Inc. | 1,200 | 47 | ||||||
CSX Corp. | 665 | 15 | ||||||
Cummins, Inc. | 5,791 | 628 | ||||||
Curtiss-Wright Corp. | 845 | 31 | ||||||
Danaher Corp. | 1,700 | 108 | ||||||
Danone SA - ADR (Æ) | 52,080 | 781 | ||||||
Deere & Co. | 7,700 | 626 | ||||||
Delta Air Lines, Inc. | 74,620 | 1,396 | ||||||
Eaton Corp. PLC | 10,400 | 684 | ||||||
Electronics for Imaging, Inc. (Æ) | 7,600 | 215 | ||||||
Emerson Electric Co. | 18,356 | 1,001 | ||||||
FedEx Corp. | 15,950 | 1,572 | ||||||
General Dynamics Corp. | 6,000 | 470 | ||||||
General Electric Co. | 321,869 | 7,465 | ||||||
Harsco Corp. | 18,900 | 438 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Honeywell International, Inc. | 56,350 | 4,473 | ||||||
Huntington Ingalls Industries, Inc. | 2,100 | 119 | ||||||
Illinois Tool Works, Inc. | 1,085 | 75 | ||||||
Lexmark International, Inc. Class A | 19,910 | 609 | ||||||
Lockheed Martin Corp. | 762 | 83 | ||||||
Manpowergroup, Inc. | 2,800 | 153 | ||||||
Norfolk Southern Corp. | 5,930 | 430 | ||||||
Northrop Grumman Corp. | 676 | 56 | ||||||
Orbital Sciences Corp. (Æ) | 9,200 | 160 | ||||||
Parker Hannifin Corp. | 7,600 | 725 | ||||||
Pentair, Ltd. | 11,439 | 660 | ||||||
Pitney Bowes, Inc. (Ñ) | 22,500 | 330 | ||||||
Raytheon Co. | 924 | 61 | ||||||
Regal-Beloit Corp. | 5,500 | 357 | ||||||
RR Donnelley & Sons Co. (Ñ) | 21,400 | 300 | ||||||
Ryder System, Inc. | 3,700 | 225 | ||||||
Snap-on, Inc. | 6,600 | 590 | ||||||
Spirit Aerosystems Holdings, Inc. Class A (Æ) | 10,200 | 219 | ||||||
Stanley Black & Decker, Inc. | 7,900 | 611 | ||||||
Terex Corp. (Æ) | 22,500 | 592 | ||||||
Textron, Inc. | 27,800 | 724 | ||||||
Tidewater, Inc. | 13,200 | 752 | ||||||
TransDigm Group, Inc. | 10,749 | 1,685 | ||||||
Tyco International, Ltd. | 19,300 | 636 | ||||||
UniFirst Corp. | 1,700 | 155 | ||||||
Unilever NV (Æ) | 27,312 | 1,074 | ||||||
Union Pacific Corp. | 15,805 | 2,438 | ||||||
United Parcel Service, Inc. Class B | 9,724 | 841 | ||||||
United Technologies Corp. | 18,889 | 1,756 | ||||||
Waste Management, Inc. | 1,349 | 54 | ||||||
Xerox Corp. | 83,600 | 758 | ||||||
Xylem, Inc. | 19,100 | 515 | ||||||
|
| |||||||
46,584 | ||||||||
|
| |||||||
Technology - 14.9% | ||||||||
Adobe Systems, Inc. (Æ) | 19,053 | 869 | ||||||
Analog Devices, Inc. | 31,596 | 1,424 | ||||||
Apple, Inc. | 17,383 | 6,886 | ||||||
Avago Technologies, Ltd. Class A | 17,800 | 665 | ||||||
Benchmark Electronics, Inc. (Æ) | 11,200 | 225 | ||||||
Broadcom Corp. Class A | 20,300 | 685 | ||||||
Brocade Communications Systems, Inc. (Æ) | 96,600 | 556 | ||||||
Ciena Corp. (Æ) | 5,700 | 111 | ||||||
Cisco Systems, Inc. | 259,913 | 6,319 | ||||||
Cognizant Technology Solutions Corp. Class A (Æ) | 736 | 46 | ||||||
Computer Sciences Corp. | 13,100 | 573 | ||||||
Cree, Inc. (Æ) | 8,198 | 524 | ||||||
Crown Castle International Corp. (Æ) | 6,900 | 499 | ||||||
Electronic Arts, Inc. (Æ) | 36,400 | 836 | ||||||
EMC Corp. | 107,276 | 2,534 | ||||||
Facebook, Inc. Class A (Æ) | 34,700 | 863 | ||||||
Google, Inc. Class A (Æ) | 7,555 | 6,651 | ||||||
Hewlett-Packard Co. | 75,900 | 1,883 | ||||||
Intel Corp. | 81,066 | 1,964 | ||||||
International Business Machines Corp. | 9,990 | 1,909 |
6 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Intersil Corp. Class A | 35,600 | 278 | ||||||
Intuit, Inc. | 18,385 | 1,122 | ||||||
Juniper Networks, Inc. (Æ) | 32,100 | 620 | ||||||
Linear Technology Corp. | 17,800 | 656 | ||||||
LinkedIn Corp. Class A (Æ) | 4,633 | 826 | ||||||
LSI Corp. (Æ) | 23,700 | 169 | ||||||
Marvell Technology Group, Ltd. | 16,700 | 196 | ||||||
Mentor Graphics Corp. | 14,000 | 274 | ||||||
Microchip Technology, Inc. (Ñ) | 15,400 | 574 | ||||||
Microsoft Corp. | 69,090 | 2,385 | ||||||
Motorola Solutions, Inc. | 4,400 | 254 | ||||||
NetApp, Inc. | 9,600 | 363 | ||||||
NVIDIA Corp. | 52,600 | 738 | ||||||
Oracle Corp. | 65,340 | 2,007 | ||||||
PMC - Sierra, Inc. (Æ) | 23,500 | 149 | ||||||
QUALCOMM, Inc. | 87,706 | 5,357 | ||||||
RF Micro Devices, Inc. (Æ) | 36,500 | 195 | ||||||
Salesforce.com, Inc. (Æ) | 39,060 | 1,491 | ||||||
SanDisk Corp. (Æ) | 13,100 | 800 | ||||||
SAP AG - ADR (Ñ) | 19,300 | 1,406 | ||||||
Symantec Corp. | 51,400 | 1,155 | ||||||
Tech Data Corp. (Æ) | 7,600 | 358 | ||||||
Texas Instruments, Inc. | 77,927 | 2,716 | ||||||
Vodafone Group PLC - ADR | 118,400 | 3,402 | ||||||
Yahoo!, Inc. (Æ) | 158 | 4 | ||||||
|
| |||||||
63,517 | ||||||||
|
| |||||||
Utilities - 3.5% | ||||||||
Alliant Energy Corp. | 6,000 | 303 | ||||||
Ameren Corp. | 12,500 | 431 | ||||||
American Electric Power Co., Inc. | 18,157 | 813 | ||||||
American States Water Co. | 2,718 | 146 | ||||||
Aqua America, Inc. | 800 | 25 | ||||||
AT&T, Inc. | 111,051 | 3,930 | ||||||
CenturyLink, Inc. | 157 | 6 | ||||||
Dominion Resources, Inc. | 740 | 42 | ||||||
Duke Energy Corp. | 1,823 | 123 | ||||||
Edison International | 13,200 | 636 | ||||||
Encana Corp. | 88,450 | 1,498 | ||||||
Entergy Corp. | 7,700 | 537 | ||||||
Exelon Corp. | 68,728 | 2,121 | ||||||
FirstEnergy Corp. | 13,800 | 515 | ||||||
Great Plains Energy, Inc. | 10,100 | 228 | ||||||
National Fuel Gas Co. | 6,700 | 388 | ||||||
NextEra Energy, Inc. | 6,097 | 497 | ||||||
Penn West Petroleum, Ltd. Class A - ADR (Ñ) | 41,900 | 443 | ||||||
PG&E Corp. | 11,363 | 519 | ||||||
PNM Resources, Inc. | 17,300 | 384 | ||||||
Portland General Electric Co. (Ñ) | 9,500 | 291 | ||||||
Southern Co. | 2,149 | 95 | ||||||
Southwest Gas Corp. | 4,500 | 211 | ||||||
Telephone & Data Systems, Inc. | 21,200 | 523 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Verizon Communications, Inc. | 3,278 | 165 | ||||||
|
| |||||||
14,870 | ||||||||
|
| |||||||
Total Common Stocks (cost $338,041) | 407,502 | |||||||
|
| |||||||
Short-Term Investments - 4.0% | ||||||||
Russell U.S. Cash Management Fund | 16,843,759 | (¥) | 16,844 | |||||
|
| |||||||
Total Short-Term Investments (cost $16,844) | 16,844 | |||||||
|
| |||||||
Other Securities - 1.7% | ||||||||
Russell U.S. Cash Collateral Fund (×) | 7,277,721 | (¥) | 7,278 | |||||
|
| |||||||
Total Other Securities (cost $7,278) | 7,278 | |||||||
|
| |||||||
Total Investments - 101.6% (identified cost $362,163) | 431,624 | |||||||
Other Assets and Liabilities, Net - (1.6%) | (6,681 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 424,943 | |||||||
|
|
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, 2013 (Unaudited)
Amounts in thousands (except contract amounts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||||
Long Positions | ||||||||||||||||||||
S&P 500 E-Mini Index Futures (CME) | 180 | USD | 14,394 | 09/13 | (188) | |||||||||||||||
S&P E-Mini Consumer Staples Select Sector Index Futures (CME) | 46 | USD | 1,821 | 09/13 | (38) | |||||||||||||||
S&P E-Mini Technology Select Sector Index Futures (CME) | 56 | USD | 1,710 | 09/13 | (46) | |||||||||||||||
|
| |||||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) | (272) | |||||||||||||||||||
|
|
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Amounts in thousands
Fair Value | % of Net Assets | |||||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | ||||||||||||||||||||
Consumer Discretionary | $ | 64,737 | $ | — | $ | — | $ | 64,737 | 15.2 | |||||||||||
Consumer Staples | 22,947 | — | — | 22,947 | 5.4 | |||||||||||||||
Energy | 42,848 | — | — | 42,848 | 10.1 | |||||||||||||||
Financial Services | 71,281 | — | — | 71,281 | 16.8 | |||||||||||||||
Health Care | 59,242 | — | — | 59,242 | 13.9 | |||||||||||||||
Materials and Processing | 21,476 | — | — | 21,476 | 5.1 | |||||||||||||||
Producer Durables | 46,584 | — | — | 46,584 | 11.0 | |||||||||||||||
Technology | 63,517 | — | — | 63,517 | 14.9 | |||||||||||||||
Utilities | 14,870 | — | — | 14,870 | 3.5 | |||||||||||||||
Short-Term Investments | — | 16,844 | — | 16,844 | 4.0 | |||||||||||||||
Other Securities | — | 7,278 | — | 7,278 | 1.7 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Investments | 407,502 | 24,122 | — | 431,624 | 101.6 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other Assets and Liabilities, Net | (1.6 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
100.0 | ||||||||||||||||||||
|
| |||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | (272 | ) | — | — | (272 | ) | (0.1 | ) | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Other Financial Instruments* | $ | (272 | ) | $ | — | $ | — | $ | (272 | ) | ||||||||||
|
|
|
|
|
|
|
|
* | Other financial instruments 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.
For disclosure on transfers between Levels 1, 2 and 3 during the period ended June 30, 2013, 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, 2013 (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* | $ | 272 | ||
|
| |||
Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Operations - Net realized gain (loss) | ||||
Futures contracts | $ | 2,803 | ||
|
| |||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||
Futures contracts | $ | (283 | ) | |
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and 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
Russell Investment Company
Multi-Style Equity Fund
Balance Sheet Offsetting of Financial and Derivative Instruments — June 30, 2013 (Unaudited)
Amounts in thousands
Offsetting of Financial Assets and Derivative Assets
Description | Location: Statement of Assets and Liabilities - Assets | Gross Amounts of Recognized Assets | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Assets Presented on the Statement of Assets and Liabilities | ||||||||||
Securities on loan | Investments, at fair value | $ | 7,113 | $ | — | $ | 7,113 | |||||||
|
| |||||||||||||
$ | 7,113 | $ | — | $ | 7,113 | |||||||||
|
|
Financial Assets, Derivative Assets, and Collateral Held by Counterparty
Counterparty | Net Amounts of Assets Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | |||||||||||||
Financial and Derivative Instruments | Collateral Received | |||||||||||||||
Barclays | $ | 2,827 | $ | — | $ | 2,827 | $ | — | ||||||||
Citigroup | 414 | — | 414 | — | ||||||||||||
Credit Suisse | 1,780 | — | 1,780 | — | ||||||||||||
Deutsche Bank | 334 | — | 334 | — | ||||||||||||
Fidelity | 688 | — | 688 | — | ||||||||||||
Goldman Sachs | 729 | — | 729 | — | ||||||||||||
Morgan Stanley | 341 | — | 341 | — | ||||||||||||
|
| |||||||||||||||
$ | 7,113 | $ | — | $ | 7,113 | $ | — | |||||||||
|
|
Offsetting of Financial Liabilities and Derivative Liabilities
Description | Location: Statement of Assets and Liabilities - Liabilities | Gross Amounts of Recognized Liabilities | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | $ | 272 | $ | — | $ | 272 | |||||||
|
| |||||||||||||
$ | 272 | $ | — | $ | 272 | |||||||||
|
|
Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty
Counterparty | Net Amounts of Liabilities Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | |||||||||||||
Financial and Derivative Instruments | Collateral Pledged | |||||||||||||||
Merrill Lynch | $ | 272 | $ | — | $ | 272 | $ | — | ||||||||
|
| |||||||||||||||
$ | 272 | $ | — | $ | 272 | $ | — | |||||||||
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
For further disclosure on derivatives and counterparty risk see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
10 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 362,163 | ||
Investments, at fair value*, ** | 431,624 | |||
Cash | 71 | |||
Cash (restricted)(a) | 1,220 | |||
Receivables: | ||||
Dividends and interest | 626 | |||
Dividends from affiliated Russell funds | 1 | |||
Investments sold | 6,873 | |||
Fund shares sold | 20 | |||
Prepaid expenses | 1 | |||
|
| |||
Total assets | 440,436 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Investments purchased | 7,455 | |||
Fund shares redeemed | 291 | |||
Accrued fees to affiliates | 278 | |||
Other accrued expenses | 101 | |||
Daily variation margin on futures contracts | 90 | |||
Payable upon return of securities loaned | 7,278 | |||
|
| |||
Total liabilities | 15,493 | |||
|
| |||
Net Assets | $ | 424,943 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Multi-Style Equity Fund | 11 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Statement of Assets and Liabilities, continued — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 1,232 | ||
Accumulated net realized gain (loss) | 2,653 | |||
Unrealized appreciation (depreciation) on: | ||||
Investments | 69,461 | |||
Futures contracts | (272 | ) | ||
Shares of beneficial interest | 248 | |||
Additional paid-in capital | 351,621 | |||
|
| |||
Net Assets | $ | 424,943 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 17.12 | ||
Net assets | $ | 424,942,831 | ||
Shares outstanding ($.01 par value) | 24,819,210 | |||
Amounts in thousands | ||||
* Securities on loan included in investments | $ | 7,113 | ||
** Investments in affiliates, Russell U.S. Cash Management Fund and Russell U.S. Cash Collateral Fund | $ | 24,122 | ||
(a) Cash Collateral for Futures | $ | 1,220 |
(#) | 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.
12 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Dividends | $ | 3,995 | ||
Dividends from affiliated Russell funds | 12 | |||
Securities lending income | 29 | |||
|
| |||
Total investment income | 4,036 | |||
|
| |||
Expenses | ||||
Advisory fees | 1,520 | |||
Administrative fees | 104 | |||
Custodian fees | 58 | |||
Transfer agent fees | 9 | |||
Professional fees | 39 | |||
Trustees’ fees | 5 | |||
Printing fees | 20 | |||
Miscellaneous | 9 | |||
|
| |||
Net expenses | 1,764 | |||
|
| |||
Net investment income (loss) | 2,272 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | 26,054 | |||
Futures contracts | 2,803 | |||
|
| |||
Net realized gain (loss) | 28,857 | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 22,314 | |||
Futures contracts | (283 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | 22,031 | |||
|
| |||
Net realized and unrealized gain (loss) | 50,888 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 53,160 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Multi-Style Equity Fund | 13 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 2,272 | $ | 5,006 | ||||
Net realized gain (loss) | 28,857 | 32,075 | ||||||
Net change in unrealized appreciation (depreciation) | 22,031 | 19,577 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 53,160 | 56,658 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (2,749 | ) | (4,388 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (2,749 | ) | (4,388 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | (16,017 | ) | (35,113 | ) | ||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 34,394 | 17,157 | ||||||
Net Assets | ||||||||
Beginning of period | 390,549 | 373,392 | ||||||
|
|
|
| |||||
End of period | $ | 424,943 | $ | 390,549 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | 1,232 | $ | 1,709 |
See accompanying notes which are an integral part of the financial statements.
��
14 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Statements of Changes in Net Assets, continued
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 366 | $ | 6,058 | 1,765 | $ | 25,748 | ||||||||||
Proceeds from reinvestment of distributions | 168 | 2,748 | 298 | 4,388 | ||||||||||||
Payments for shares redeemed | (1,497 | ) | (24,823 | ) | (4,472 | ) | (65,249 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | (963 | ) | $ | (16,017 | ) | (2,409 | ) | $ | (35,113 | ) | ||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
Multi-Style Equity Fund | 15 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each 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 | |||||||||||||||||||
June 30, 2013(1) | 15.15 | .09 | 1.99 | 2.08 | (.11 | ) | — | |||||||||||||||||
December 31, 2012 | 13.24 | .19 | 1.88 | 2.07 | (.16 | ) | — | |||||||||||||||||
December 31, 2011 | 13.58 | .14 | (.35 | ) | (.21 | ) | (.13 | ) | — | |||||||||||||||
December 31, 2010 | 11.77 | .11 | 1.81 | 1.92 | (.11 | ) | — | |||||||||||||||||
December 31, 2009 | 9.00 | .10 | 2.80 | 2.90 | (.13 | ) | — | |||||||||||||||||
December 31, 2008 | 15.65 | .19 | (6.52 | ) | (6.33 | ) | (.19 | ) | (.13 | ) |
See accompanying notes which are an integral part of the financial statements.
16 | Multi-Style Equity Fund |
Table of Contents
$ Total Distributions | $ Net Asset Value, End of Period | % Total Return(d)(f) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Gross(e) | % Ratio of Expenses to Average Net Assets, Net(b)(e) | % Ratio of Net Investment Income to Average Net Assets(b)(e) | % Portfolio Turnover Rate(d) | |||||||||||||||||||||||
(.11 | ) | 17.12 | 13.75 | 424,943 | .85 | .85 | 1.09 | 50 | ||||||||||||||||||||||
(.16 | ) | 15.15 | 15.69 | 390,549 | .87 | .87 | 1.28 | 109 | ||||||||||||||||||||||
(.13 | ) | 13.24 | (1.55 | ) | 373,392 | .85 | .85 | 1.03 | 133 | |||||||||||||||||||||
(.11 | ) | 13.58 | 16.46 | 400,471 | .89 | .89 | .93 | 105 | ||||||||||||||||||||||
(.13 | ) | 11.77 | 32.72 | 376,751 | .86 | .85 | 1.06 | 136 | ||||||||||||||||||||||
(.32 | ) | 9.00 | (41.15 | ) | 298,211 | .89 | .87 | 1.50 | 135 |
See accompanying notes which are an integral part of the financial statements.
Multi-Style Equity Fund | 17 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | ||||||||
June 30, 2013 | $ | 1,162.80 | $ | 1,019.74 | ||||
Expenses Paid During Period* | $ | 5.47 | $ | 5.11 |
* | Expenses are equal to the Fund’s annualized expense ratio of 1.02% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
18 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Common Stocks - 96.7% | ||||||||
Consumer Discretionary - 13.2% | ||||||||
1-800-Flowers.com, Inc. Class A (Æ) | 10,700 | 66 | ||||||
Asbury Automotive Group, Inc. (Æ) | 16,930 | 679 | ||||||
Ascena Retail Group, Inc. (Æ) | 5,502 | 96 | ||||||
Ballantyne Strong, Inc. (Æ) | 2,600 | 11 | ||||||
Bassett Furniture Industries, Inc. | 1,900 | 30 | ||||||
Big 5 Sporting Goods Corp. | 11,600 | 255 | ||||||
Bridgepoint Education, Inc. (Æ) | 12,810 | 156 | ||||||
Brown Shoe Co., Inc. | 15,000 | 323 | ||||||
Buffalo Wild Wings, Inc. (Æ) | 3,560 | 349 | ||||||
Citi Trends, Inc. (Æ) | 40,973 | 595 | ||||||
Conn’s, Inc. (Æ) | 1,300 | 67 | ||||||
Dana Holding Corp. | 4,750 | 91 | ||||||
Deckers Outdoor Corp. (Æ)(Ñ) | 8,672 | 438 | ||||||
Delta Apparel, Inc. (Æ) | 9,600 | 135 | ||||||
Destination Maternity Corp. | 4,400 | 109 | ||||||
Destination XL Group, Inc. (Æ) | 86,075 | 546 | ||||||
Drew Industries, Inc. | 3,676 | 145 | ||||||
Ethan Allen Interiors, Inc. | 15,295 | 440 | ||||||
EW Scripps Co. Class A (Æ) | 10,600 | 165 | ||||||
Express, Inc. (Æ) | 29,830 | 626 | ||||||
Finish Line, Inc. (The) Class A | 37,370 | 816 | ||||||
Fred’s, Inc. Class A | 29,295 | 454 | ||||||
Fuel Systems Solutions, Inc. (Æ) | 44,199 | 790 | ||||||
G-III Apparel Group, Ltd. (Æ) | 4,400 | 212 | ||||||
Gordmans Stores, Inc. (Æ) | 3,017 | 41 | ||||||
Grand Canyon Education, Inc. (Æ) | 28,604 | 922 | ||||||
Group 1 Automotive, Inc. | 12,167 | 783 | ||||||
Guess?, Inc. | 17,100 | 531 | ||||||
Harman International Industries, Inc. | 700 | 38 | ||||||
Harte-Hanks, Inc. | 19,603 | 169 | ||||||
HealthStream, Inc. (Æ) | 26,450 | 670 | ||||||
Helen of Troy, Ltd. (Æ) | 6,600 | 253 | ||||||
Hibbett Sports, Inc. (Æ) | 10,825 | 601 | ||||||
Hillenbrand, Inc. | 9,770 | 232 | ||||||
Inter Parfums, Inc. | 13,550 | 386 | ||||||
Jack in the Box, Inc. (Æ) | 8,100 | 318 | ||||||
Johnson Outdoors, Inc. Class A (Æ) | 1,314 | 33 | ||||||
Jones Group, Inc. (The) | 36,800 | 506 | ||||||
Kirkland’s, Inc. (Æ) | 9,800 | 169 | ||||||
Kona Grill, Inc. (Æ) | 400 | 5 | ||||||
Libbey, Inc. (Æ) | 14,936 | 358 | ||||||
Maidenform Brands, Inc. (Æ) | 4,736 | 82 | ||||||
Marchex, Inc. Class A | 2,000 | 12 | ||||||
Marriott Vacations Worldwide Corp. (Æ) | 5,200 | 225 | ||||||
MDC Holdings, Inc. | 1,300 | 42 | ||||||
Men’s Wearhouse, Inc. (The) | 32,966 | 1,248 | ||||||
Meritage Homes Corp. (Æ) | 16,970 | 736 | ||||||
Monarch Casino & Resort, Inc. (Æ) | 3,000 | 51 | ||||||
New York & Co., Inc. (Æ) | 13,100 | 83 | ||||||
Penske Automotive Group, Inc. | 13,500 | 412 | ||||||
Perry Ellis International, Inc. | 6,600 | 134 | ||||||
Pier 1 Imports, Inc. | 44,100 | 1,035 | ||||||
Proto Labs, Inc. (Æ)(Ñ) | 15,200 | 987 | ||||||
Red Robin Gourmet Burgers, Inc. (Æ) | 8,622 | 476 | ||||||
Regis Corp. | 16,260 | 267 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
RG Barry Corp. | 30,411 | 494 | ||||||
Ritchie Bros Auctioneers, Inc. (Ñ) | 21,580 | 415 | ||||||
Rocky Brands, Inc. | 1,800 | 27 | ||||||
Ruby Tuesday, Inc. (Æ) | 34,668 | 320 | ||||||
Sally Beauty Holdings, Inc. (Æ) | 4,585 | 143 | ||||||
Shoe Carnival, Inc. | 4,705 | 113 | ||||||
Skechers U.S.A., Inc. Class A (Æ) | 13,200 | 317 | ||||||
Smith & Wesson Holding Corp. (Æ) | 19,949 | 199 | ||||||
Sonic Automotive, Inc. Class A | 17,300 | 366 | ||||||
Sonic Corp. (Æ) | 26,450 | 385 | ||||||
Sotheby’s Class A | 14,550 | 552 | ||||||
Sparton Corp. (Æ) | 4,600 | 79 | ||||||
Stamps.com, Inc. (Æ) | 28,525 | 1,123 | ||||||
Stein Mart, Inc. | 8,400 | 115 | ||||||
Steinway Musical Instruments, Inc. (Æ) | 20,403 | 621 | ||||||
Steven Madden, Ltd. (Æ) | 9,424 | 456 | ||||||
Stoneridge, Inc. (Æ) | 11,500 | 134 | ||||||
True Religion Apparel, Inc. | 8,975 | 284 | ||||||
Universal Electronics, Inc. (Æ) | 29,090 | 817 | ||||||
Vera Bradley, Inc. (Æ)(Ñ) | 2,500 | 54 | ||||||
Viad Corp. | 800 | 20 | ||||||
VistaPrint NV (Æ) | 2,000 | 99 | ||||||
VOXX International Corp. Class A (Æ) | 8,700 | 107 | ||||||
West Marine, Inc. (Æ) | 33,163 | 365 | ||||||
Wet Seal, Inc. (The) Class A (Æ) | 65,300 | 308 | ||||||
Zagg, Inc. (Æ) | 41,021 | 219 | ||||||
Zale Corp. (Æ) | 4,700 | 43 | ||||||
|
| |||||||
27,574 | ||||||||
|
| |||||||
Consumer Staples - 2.0% | ||||||||
Andersons, Inc. (The) | 26,900 | 1,431 | ||||||
Annie’s, Inc. (Æ)(Ñ) | 7,560 | 323 | ||||||
Core-Mark Holding Co., Inc. | 4,100 | 260 | ||||||
Fresh Del Monte Produce, Inc. | 10,900 | 304 | ||||||
Ingles Markets, Inc. Class A | 1,600 | 40 | ||||||
Medifast, Inc. (Æ) | 9,825 | 253 | ||||||
Nash Finch Co. | 8,271 | 182 | ||||||
Omega Protein Corp. (Æ) | 10,900 | 98 | ||||||
Pantry, Inc. (The) (Æ) | 12,300 | 150 | ||||||
Rite Aid Corp. (Æ) | 62,400 | 178 | ||||||
SodaStream International, Ltd. (Æ)(Ñ) | 5,612 | 408 | ||||||
Spartan Stores, Inc. | 4,700 | 87 | ||||||
Summer Infant, Inc. (Æ) | 6,100 | 19 | ||||||
TreeHouse Foods, Inc. (Æ) | 7,390 | 484 | ||||||
|
| |||||||
4,217 | ||||||||
|
| |||||||
Energy - 6.3% | ||||||||
Alon USA Energy, Inc. | 19,400 | 281 | ||||||
Approach Resources, Inc. (Æ)(Ñ) | 36,740 | 904 | ||||||
Cal Dive International, Inc. (Æ)(Ñ) | 229,063 | 431 | ||||||
Callon Petroleum Co. (Æ) | 29,252 | 99 | ||||||
CARBO Ceramics, Inc. (Ñ) | 6,212 | 418 | ||||||
Clayton Williams Energy, Inc. (Æ) | 3,500 | 152 | ||||||
Contango Oil & Gas Co. | 11,000 | 371 | ||||||
Core Laboratories | 2,225 | 337 | ||||||
Dawson Geophysical Co. (Æ) | 4,100 | 151 | ||||||
Diamondback Energy, Inc. (Æ) | 100 | 3 | ||||||
EPL Oil & Gas, Inc. (Æ) | 4,100 | 120 |
Aggressive Equity Fund | 19 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Geospace Technologies Corp. (Æ) | 14,686 | 1,014 | ||||||
Green Plains Renewable Energy, Inc. (Æ) | 10,700 | 143 | ||||||
Gulfport Energy Corp. (Æ) | 33,514 | 1,579 | ||||||
Hornbeck Offshore Services, Inc. (Æ) | 6,500 | 348 | ||||||
James River Coal Co. (Æ)(Ñ) | 10,000 | 18 | ||||||
Matrix Service Co. (Æ) | 11,200 | 174 | ||||||
McDermott International, Inc. (Æ) | 42,957 | 351 | ||||||
Midstates Petroleum Co., Inc. (Æ) | 23,100 | 125 | ||||||
Nabors Industries, Ltd. | 48,190 | 738 | ||||||
Natural Gas Services Group, Inc. (Æ) | 3,000 | 70 | ||||||
Pacific Drilling SA (Æ) | 40,057 | 392 | ||||||
Patterson-UTI Energy, Inc. | 26,694 | 517 | ||||||
Pioneer Energy Services Corp. (Æ) | 15,700 | 104 | ||||||
Renewable Energy Group, Inc. (Æ) | 14,800 | 211 | ||||||
REX American Resources Corp. (Æ) | 4,400 | 127 | ||||||
Rowan Companies PLC (Æ) | 23,359 | 796 | ||||||
SunPower Corp. Class A (Æ)(Ñ) | 19,200 | 397 | ||||||
Superior Energy Services, Inc. (Æ) | 25,459 | 660 | ||||||
Synergy Resources Corp. (Æ) | 10,000 | 73 | ||||||
Tesco Corp. (Æ) | 11,400 | 151 | ||||||
TETRA Technologies, Inc. (Æ) | 50,838 | 522 | ||||||
Unit Corp. (Æ) | 14,778 | 629 | ||||||
W&T Offshore, Inc. (Ñ) | 43,190 | 617 | ||||||
Warren Resources, Inc. (Æ) | 27,100 | 69 | ||||||
World Fuel Services Corp. | 1,210 | 48 | ||||||
|
| |||||||
13,140 | ||||||||
|
| |||||||
Financial Services - 21.3% | ||||||||
1st United Bancorp, Inc. | 2,100 | 14 | ||||||
Advent Software, Inc. (Æ) | 24,900 | 873 | ||||||
AG Mortgage Investment Trust, Inc. (ö) | 15,000 | 282 | ||||||
Agree Realty Corp. (ö) | 5,100 | 151 | ||||||
Alexander & Baldwin, Inc. (Æ) | 17,312 | 688 | ||||||
Alexandria Real Estate Equities, Inc. (ö) | 1,700 | 112 | ||||||
American Capital Mortgage Investment Corp. (ö) | 12,920 | 232 | ||||||
American Financial Group, Inc. | 2,100 | 103 | ||||||
Ameriprise Financial, Inc. | 3,658 | 296 | ||||||
Amerisafe, Inc. | 15,349 | 497 | ||||||
AmREIT, Inc. Class B (ö) | 1,200 | 23 | ||||||
Anworth Mortgage Asset Corp. (ö) | 127,230 | 712 | ||||||
Apollo Residential Mortgage, Inc. (ö) | 23,500 | 387 | ||||||
Arbor Realty Trust, Inc. (ö) | 7,200 | 45 | ||||||
Argo Group International Holdings, Ltd. | 7,170 | 304 | ||||||
Arlington Asset Investment Corp. Class A | 5,700 | 152 | ||||||
Assurant, Inc. | 5,000 | 255 | ||||||
Asta Funding, Inc. | 10,938 | 95 | ||||||
Astoria Financial Corp. | 56,570 | 610 | ||||||
Baldwin & Lyons, Inc. Class B | 400 | 10 | ||||||
Bancfirst Corp. | 1,600 | 74 | ||||||
Bank of Marin Bancorp | 700 | 28 | ||||||
Bank of the Ozarks, Inc. | 14,163 | 614 | ||||||
Banner Corp. | 2,200 | 74 | ||||||
BBCN Bancorp, Inc. | 5,400 | 77 | ||||||
BioMed Realty Trust, Inc. (ö) | 29,513 | 597 | ||||||
Boston Private Financial Holdings, Inc. | 42,769 | 455 | ||||||
Bridge Bancorp, Inc. | 500 | 11 | ||||||
Bridge Capital Holdings (Æ) | 200 | 3 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Brookline Bancorp, Inc. | 65,500 | 569 | ||||||
Campus Crest Communities, Inc. (ö) | 49,750 | 574 | ||||||
Capital Bank Financial Corp. Class A (Æ) | 16,100 | 306 | ||||||
Capitol Federal Financial, Inc. | 51,821 | 629 | ||||||
Capstead Mortgage Corp. (ö) | 54,860 | 664 | ||||||
Cardinal Financial Corp. | 7,600 | 111 | ||||||
Cedar Realty Trust, Inc. (ö) | 24,586 | 127 | ||||||
Center Bancorp, Inc. | 2,300 | 29 | ||||||
Centerstate Banks, Inc. | 500 | 4 | ||||||
Central Pacific Financial Corp. (Æ) | 7,800 | 140 | ||||||
Chemical Financial Corp. | 7,500 | 195 | ||||||
Citizens & Northern Corp. | 1,800 | 35 | ||||||
CNB Financial Corp. | 200 | 3 | ||||||
CoBiz Financial, Inc. | 15,283 | 127 | ||||||
Comerica, Inc. | 17,880 | 712 | ||||||
Community Bank System, Inc. | 3,391 | 105 | ||||||
Community Trust Bancorp, Inc. | 1,000 | 36 | ||||||
Crawford & Co. Class B | 2,202 | 12 | ||||||
CVB Financial Corp. | 48,290 | 568 | ||||||
DiamondRock Hospitality Co. (ö) | 106,174 | 989 | ||||||
EMC Insurance Group, Inc. | 100 | 3 | ||||||
Enterprise Financial Services Corp. | 1,200 | 19 | ||||||
EPR Properties (ö) | 6,500 | 327 | ||||||
Equity One, Inc. (ö) | 2,200 | 50 | ||||||
EverBank Financial Corp. | 3,900 | 65 | ||||||
Extra Space Storage, Inc. (ö) | 7,100 | 298 | ||||||
FactSet Research Systems, Inc. (Ñ) | 4,375 | 446 | ||||||
FBL Financial Group, Inc. Class A | 1,800 | 78 | ||||||
First American Financial Corp. | 15,700 | 346 | ||||||
First Bancorp | 2,400 | 34 | ||||||
First Busey Corp. | 10,400 | 47 | ||||||
First Community Bancshares, Inc. | 2,400 | 38 | ||||||
First Connecticut Bancorp, Inc. | 1,938 | 27 | ||||||
First Defiance Financial Corp. | 1,200 | 27 | ||||||
First Financial Bancorp | 39,085 | 582 | ||||||
First Financial Corp. | 2,300 | 71 | ||||||
First Industrial Realty Trust, Inc. (ö) | 24,500 | 372 | ||||||
First Interstate Bancsystem, Inc. Class A | 3,400 | 70 | ||||||
First Merchants Corp. | 11,900 | 204 | ||||||
First Midwest Bancorp, Inc. | 16,000 | 220 | ||||||
First of Long Island Corp. (The) | 1,100 | 37 | ||||||
First Republic Bank | 7,300 | 281 | ||||||
Forestar Group, Inc. (Æ) | 16,067 | 322 | ||||||
Franklin Street Properties Corp. (ö) | 41,517 | 548 | ||||||
German American Bancorp, Inc. | 1,800 | 41 | ||||||
GFI Group, Inc. | 78,132 | 305 | ||||||
Global Indemnity PLC Class A (Æ) | 1,500 | 35 | ||||||
Great Southern Bancorp, Inc. | 3,000 | 81 | ||||||
Hanmi Financial Corp. Class A (Æ) | 8,100 | 143 | ||||||
Hanover Insurance Group, Inc. (The) | 13,285 | 650 | ||||||
HCI Group, Inc. | 1,080 | 33 | ||||||
Heartland Financial USA, Inc. | 1,384 | 38 | ||||||
Hercules Technology Growth Capital, Inc. (Ñ) | 33,090 | 461 | ||||||
Heritage Financial Corp. | 1,700 | 25 | ||||||
Hilltop Holdings, Inc. (Æ) | 30,560 | 501 | ||||||
Home BancShares, Inc. | 23,211 | 603 | ||||||
Home Loan Servicing Solutions, Ltd. | 18,200 | 436 | ||||||
HomeStreet, Inc. | 10,300 | 221 |
20 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Horace Mann Educators Corp. | 18,100 | 441 | ||||||
Horizon Bancorp | 1,163 | 24 | ||||||
Iberiabank Corp. | 19,223 | 1,031 | ||||||
Infinity Property & Casualty Corp. | 12,090 | 722 | ||||||
Investment Technology Group, Inc. (Æ) | 26,600 | 372 | ||||||
JER Investment Trust, Inc. (Æ)(Þ) | 1,771 | — | ||||||
KeyCorp | 62,981 | 695 | ||||||
KKR Financial Holdings LLC | 11,202 | 118 | ||||||
Lakeland Bancorp, Inc. | 1,700 | 18 | ||||||
Lakeland Financial Corp. | 4,431 | 123 | ||||||
LaSalle Hotel Properties (ö) | 10,506 | 259 | ||||||
Maiden Holdings, Ltd. | 20,200 | 227 | ||||||
MainSource Financial Group, Inc. | 5,000 | 67 | ||||||
Manning & Napier, Inc. Class A | 3,200 | 57 | ||||||
MarketAxess Holdings, Inc. | 10,452 | 489 | ||||||
MB Financial, Inc. | 18,300 | 490 | ||||||
MCG Capital Corp. | 27,300 | 142 | ||||||
Mercantile Bank Corp. | 3,729 | 67 | ||||||
Merchants Bancshares, Inc. | 519 | 15 | ||||||
Metro Bancorp, Inc. (Æ) | 1,706 | 34 | ||||||
MetroCorp Bancshares, Inc. | 5,372 | 52 | ||||||
Mission West Properties, Inc. (Æ)(ö) | 4,400 | — | ||||||
Morningstar, Inc. | 8,400 | 652 | ||||||
MVC Capital, Inc. | 6,500 | 82 | ||||||
National Bank Holdings Corp. Class A | 26,180 | 516 | ||||||
National Interstate Corp. | 5,156 | 151 | ||||||
Navigators Group, Inc. (The) (Æ) | 3,100 | 177 | ||||||
Nelnet, Inc. Class A | 7,800 | 282 | ||||||
New Residential Investment Corp. (ö) | 87,143 | 587 | ||||||
Northfield Bancorp, Inc. | 1,400 | 16 | ||||||
Northrim BanCorp, Inc. | 7,945 | 192 | ||||||
OceanFirst Financial Corp. | 5,800 | 90 | ||||||
One Liberty Properties, Inc. (ö) | 2,700 | 59 | ||||||
Oritani Financial Corp. | 6,600 | 103 | ||||||
Pacific Continental Corp. | 4,000 | 47 | ||||||
Park Sterling Corp. (Æ) | 1,700 | 10 | ||||||
Pennsylvania Real Estate Investment Trust (ö) | 10,500 | 198 | ||||||
Peoples Bancorp, Inc. | 2,500 | 53 | ||||||
Piper Jaffray Cos. (Æ) | 15,296 | 484 | ||||||
Platinum Underwriters Holdings, Ltd. | 8,700 | 498 | ||||||
Post Properties, Inc. (ö) | 1,500 | 74 | ||||||
PrivateBancorp, Inc. Class A | 46,271 | 982 | ||||||
ProAssurance Corp. | 11,222 | 585 | ||||||
Protective Life Corp. | 5,700 | 219 | ||||||
Provident Financial Holdings, Inc. | 3,500 | 56 | ||||||
Provident Financial Services, Inc. | 3,420 | 54 | ||||||
Reinsurance Group of America, Inc. Class A | 3,000 | 207 | ||||||
Renasant Corp. | 1,598 | 39 | ||||||
RLJ Lodging Trust (ö) | 17,500 | 394 | ||||||
S&T Bancorp, Inc. | 1,000 | 20 | ||||||
Safeguard Scientifics, Inc. (Æ) | 4,781 | 77 | ||||||
Safety Insurance Group, Inc. | 3,000 | 146 | ||||||
Sandy Spring Bancorp, Inc. | 2,300 | 50 | ||||||
SCBT Financial Corp. | 200 | 10 | ||||||
Selective Insurance Group, Inc. | 7,700 | 177 | ||||||
Signature Bank (Æ) | 5,160 | 428 | ||||||
Solar Capital, Ltd. | 3,900 | 90 | ||||||
Southwest Bancorp, Inc. (Æ) | 275 | 4 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
State Bank Financial Corp. | 3,700 | 56 | ||||||
Sterling Bancorp Class N | 40,870 | 475 | ||||||
Sterling Financial Corp. | 20,130 | 479 | ||||||
Stifel Financial Corp. (Æ) | 11,178 | 399 | ||||||
Summit Hotel Properties, Inc. (ö) | 40,390 | 382 | ||||||
SVB Financial Group (Æ) | 12,830 | 1,069 | ||||||
SWS Group, Inc. (Æ) | 3,400 | 19 | ||||||
SY Bancorp, Inc. | 2,500 | 61 | ||||||
Symetra Financial Corp. | 30,300 | 484 | ||||||
TCP Capital Corp. | 1,000 | 17 | ||||||
Terreno Realty Corp. (ö) | 400 | 7 | ||||||
Territorial Bancorp, Inc. | 1,649 | 37 | ||||||
Texas Capital Bancshares, Inc. (Æ) | 8,990 | 399 | ||||||
TICC Capital Corp. (Ñ) | 16,600 | 160 | ||||||
Tower Group International, Ltd. | 22,384 | 459 | ||||||
Trico Bancshares | 2,900 | 62 | ||||||
UMB Financial Corp. | 11,550 | 643 | ||||||
Union First Market Bankshares Corp. | 3,500 | 72 | ||||||
United Fire Group, Inc. | 6,500 | 161 | ||||||
ViewPoint Financial Group, Inc. | 16,290 | 339 | ||||||
Washington Banking Co. | 9,337 | 133 | ||||||
Washington Federal, Inc. | 19,935 | 376 | ||||||
Washington Real Estate Investment Trust (ö) | 20,770 | 559 | ||||||
Washington Trust Bancorp, Inc. | 1,234 | 35 | ||||||
Webster Financial Corp. | 15,700 | 403 | ||||||
WesBanco, Inc. | 5,200 | 137 | ||||||
Westamerica Bancorporation (Ñ) | 14,620 | 668 | ||||||
Westfield Financial, Inc. | 5,100 | 36 | ||||||
Westwood Holdings Group, Inc. | 15,000 | 644 | ||||||
Wilshire Bancorp, Inc. | 41,300 | 273 | ||||||
Winthrop Realty Trust (ö) | 12,128 | 146 | ||||||
WSFS Financial Corp. | 2,300 | 120 | ||||||
|
| |||||||
44,356 | ||||||||
|
| |||||||
Health Care - 9.6% | ||||||||
Abaxis, Inc. | 17,500 | 831 | ||||||
Accelrys, Inc. (Æ) | 58,225 | 489 | ||||||
Affymetrix, Inc. (Æ) | 55,400 | 246 | ||||||
Air Methods Corp. (Ñ) | 19,568 | 663 | ||||||
Akorn, Inc. (Æ) | 52,010 | 703 | ||||||
Align Technology, Inc. (Æ) | 23,000 | 852 | ||||||
Almost Family, Inc. | 3,200 | 61 | ||||||
AngioDynamics, Inc. (Æ) | 8,600 | 97 | ||||||
athenahealth, Inc. (Æ) | 3,680 | 312 | ||||||
Bio-Reference Labs, Inc. (Æ)(Ñ) | 2,100 | 60 | ||||||
BioScrip, Inc. (Æ) | 40,008 | 660 | ||||||
Cambrex Corp. (Æ) | 7,335 | 102 | ||||||
Cantel Medical Corp. | 9,632 | 326 | ||||||
Centene Corp. (Æ) | 11,510 | 604 | ||||||
CONMED Corp. | 34,127 | 1,066 | ||||||
Cross Country Healthcare, Inc. (Æ) | 6,300 | 33 | ||||||
CryoLife, Inc. | 4,800 | 30 | ||||||
Emergent Biosolutions, Inc. (Æ) | 20,600 | 297 | ||||||
Exactech, Inc. (Æ) | 10,800 | 214 | ||||||
Greatbatch, Inc. (Æ) | 8,100 | 266 | ||||||
Health Net, Inc. (Æ) | 1,600 | 51 | ||||||
Hill-Rom Holdings, Inc. | 8,670 | 292 | ||||||
HMS Holdings Corp. (Æ) | 23,960 | 558 |
Aggressive Equity Fund | 21 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
ICON PLC (Æ) | 9,370 | 332 | ||||||
Kindred Healthcare, Inc. (Æ) | 7,200 | 95 | ||||||
Magellan Health Services, Inc. (Æ) | 6,300 | 353 | ||||||
Masimo Corp. | 4,852 | 103 | ||||||
Medidata Solutions, Inc. (Æ) | 18,615 | 1,442 | ||||||
Meridian Bioscience, Inc. | 62,787 | 1,349 | ||||||
Molina Healthcare, Inc. (Æ) | 12,600 | 468 | ||||||
National Research Corp. Class A (Æ) | 33,675 | 606 | ||||||
National Research Corp. Class B (Æ) | 5,612 | 196 | ||||||
Natus Medical, Inc. (Æ) | 9,800 | 134 | ||||||
Neogen Corp. (Æ) | 21,819 | 1,214 | ||||||
NuVasive, Inc. (Æ) | 19,400 | 481 | ||||||
Omnicell, Inc. (Æ) | 16,500 | 339 | ||||||
Pacific Biosciences of California, Inc. (Æ) | 3,100 | 8 | ||||||
PAREXEL International Corp. (Æ) | 14,860 | 683 | ||||||
PharMerica Corp. (Æ) | 8,600 | 119 | ||||||
Prestige Brands Holdings, Inc. (Æ) | 20,350 | �� | 593 | |||||
Quality Systems, Inc. | 20,770 | 389 | ||||||
RTI Biologics, Inc. (Æ) | 23,200 | 87 | ||||||
Select Medical Holdings Corp. | 24,300 | 199 | ||||||
STERIS Corp. | 10,081 | 432 | ||||||
Targacept, Inc. (Æ) | 17,900 | 76 | ||||||
Techne Corp. | 4,910 | 339 | ||||||
Triple-S Management Corp. Class B (Æ) | 6,800 | 146 | ||||||
Universal American Corp. | 15,000 | 133 | ||||||
US Physical Therapy, Inc. | 12,343 | 341 | ||||||
WellCare Health Plans, Inc. (Æ) | 5,000 | 278 | ||||||
West Pharmaceutical Services, Inc. | 2,971 | 209 | ||||||
|
| |||||||
19,957 | ||||||||
|
| |||||||
Materials and Processing - 7.7% |
| |||||||
A Schulman, Inc. | 2,300 | 62 | ||||||
AAON, Inc. | 12,800 | 423 | ||||||
AMCOL International Corp. | 18,075 | 573 | ||||||
Balchem Corp. | 18,725 | 838 | ||||||
Beacon Roofing Supply, Inc. (Æ) | 15,280 | 579 | ||||||
Cabot Corp. | 44,793 | 1,677 | ||||||
Comfort Systems USA, Inc. | 6,570 | 98 | ||||||
Commercial Metals Co. | 4,700 | 69 | ||||||
Cytec Industries, Inc. | 700 | 51 | ||||||
FutureFuel Corp. | 7,300 | 103 | ||||||
Gibraltar Industries, Inc. (Æ) | 4,700 | 68 | ||||||
Globe Specialty Metals, Inc. | 51,650 | 561 | ||||||
Griffon Corp. | 4,000 | 45 | ||||||
Haynes International, Inc. | 7,840 | 375 | ||||||
IAMGOLD Corp. (Ñ) | 57,549 | 249 | ||||||
Insteel Industries, Inc. | 7,771 | 136 | ||||||
Interface, Inc. Class A | 20,053 | 340 | ||||||
Kaiser Aluminum Corp. | 866 | 54 | ||||||
Kaydon Corp. | 28,260 | 779 | ||||||
Koppers Holdings, Inc. | 10,781 | 412 | ||||||
Kronos Worldwide, Inc. (Ñ) | 26,520 | 431 | ||||||
Landec Corp. (Æ) | 8,612 | 114 | ||||||
LB Foster Co. Class A | 3,700 | 160 | ||||||
MRC Global, Inc. (Æ) | 11,500 | 318 | ||||||
Neenah Paper, Inc. | 1,100 | 35 | ||||||
NN, Inc. | 10,528 | 120 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Noranda Aluminum Holding Corp. | 71,960 | 232 | ||||||
Northwest Pipe Co. (Æ) | 2,200 | 61 | ||||||
Olympic Steel, Inc. | 4,900 | 120 | ||||||
OM Group, Inc. (Æ) | 39,369 | 1,218 | ||||||
Omnova Solutions, Inc. (Æ) | 47,300 | 379 | ||||||
PGT, Inc. (Æ) | 32,700 | 284 | ||||||
RTI International Metals, Inc. (Æ) | 15,642 | 433 | ||||||
Schnitzer Steel Industries, Inc. Class A | 20,700 | 484 | ||||||
Simpson Manufacturing Co., Inc. | 49,080 | 1,444 | ||||||
Stillwater Mining Co. (Æ)(Ñ) | 21,509 | 231 | ||||||
TMS International Corp. Class A | 5,800 | 86 | ||||||
Tronox, Ltd. Class A | 33,120 | 667 | ||||||
Universal Forest Products, Inc. | 12,137 | 485 | ||||||
Universal Stainless & Alloy Products, Inc. (Æ) | 17,919 | 528 | ||||||
US Silica Holdings, Inc. (Ñ) | 32,880 | 683 | ||||||
|
| |||||||
16,005 | ||||||||
|
| |||||||
Producer Durables - 17.2% | ||||||||
ABM Industries, Inc. | 61,010 | 1,495 | ||||||
ACCO Brands Corp. (Æ) | 48,963 | 311 | ||||||
Advisory Board Co. (The) (Æ) | 31,218 | 1,706 | ||||||
Aerovironment, Inc. (Æ) | 10,225 | 206 | ||||||
AGCO Corp. | 1,100 | 55 | ||||||
Air Lease Corp. Class A | 13,500 | 372 | ||||||
Air Transport Services Group, Inc. (Æ) | 28,541 | 188 | ||||||
Aircastle, Ltd. | 31,100 | 497 | ||||||
Alamo Group, Inc. | 2,700 | 110 | ||||||
Albany International Corp. Class A | 9,300 | 307 | ||||||
American Railcar Industries, Inc. (Ñ) | 3,500 | 117 | ||||||
AO Smith Corp. | 3,000 | 109 | ||||||
Ascent Capital Group, Inc. Class A (Æ) | 2,700 | 211 | ||||||
Astec Industries, Inc. | 12,799 | 439 | ||||||
Astronics Corp. (Æ) | 4,399 | 180 | ||||||
Atlas Air Worldwide Holdings, Inc. (Æ) | 1,231 | 54 | ||||||
AZZ, Inc. | 16,166 | 623 | ||||||
Brady Corp. Class A | 25,640 | 788 | ||||||
CDI Corp. | 1,700 | 24 | ||||||
Ceco Environmental Corp. | 767 | 9 | ||||||
Chart Industries, Inc. (Æ) | 9,421 | 887 | ||||||
CIRCOR International, Inc. | 14,989 | 762 | ||||||
Columbus McKinnon Corp. (Æ) | 33,757 | 719 | ||||||
Compass Diversified Holdings | 33,000 | 578 | ||||||
Consolidated Graphics, Inc. (Æ) | 4,217 | 198 | ||||||
CoStar Group, Inc. (Æ) | 13,550 | 1,750 | ||||||
CRA International, Inc. (Æ) | 1,200 | 22 | ||||||
Curtiss-Wright Corp. | 24,210 | 897 | ||||||
Ducommun, Inc. (Æ) | 12,121 | 258 | ||||||
Electronics for Imaging, Inc. (Æ) | 16,352 | 463 | ||||||
EMCOR Group, Inc. | 9,500 | 386 | ||||||
EnerSys, Inc. | 16,875 | 828 | ||||||
Ennis, Inc. | 8,795 | 152 | ||||||
Faro Technologies, Inc. (Æ) | 15,175 | 513 | ||||||
Flow International Corp. (Æ) | 19,900 | 73 | ||||||
Forrester Research, Inc. | 130 | 5 | ||||||
Forward Air Corp. | 11,450 | 438 | ||||||
FreightCar America, Inc. | 4,088 | 69 |
22 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
G&K Services, Inc. Class A | 4,000 | 190 | ||||||
Global Power Equipment Group, Inc. | 4,400 | 71 | ||||||
GrafTech International, Ltd. (Æ)(Ñ) | 78,191 | 569 | ||||||
Granite Construction, Inc. | 57,186 | 1,702 | ||||||
Greenbrier Cos., Inc. (Æ) | 15,063 | 367 | ||||||
Gulfmark Offshore, Inc. Class A | 10,700 | 482 | ||||||
Hardinge, Inc. | 3,800 | 56 | ||||||
Harsco Corp. | 20,330 | 471 | ||||||
Healthcare Services Group, Inc. | 37,561 | 921 | ||||||
Heidrick & Struggles International, Inc. | 4,600 | 77 | ||||||
Hub Group, Inc. Class A (Æ) | 9,550 | 348 | ||||||
Hudson Technologies, Inc. (Æ) | 21,000 | 67 | ||||||
Huntington Ingalls Industries, Inc. | 3,700 | 209 | ||||||
InnerWorkings, Inc. (Æ) | 40,000 | 434 | ||||||
Kadant, Inc. | 3,400 | 103 | ||||||
Kelly Services, Inc. Class A (Æ) | 8,100 | 142 | ||||||
Kimball International, Inc. Class B | 14,200 | 138 | ||||||
Knight Transportation, Inc. | 42,930 | 722 | ||||||
Korn/Ferry International (Æ) | 19,900 | 373 | ||||||
Layne Christensen Co. (Æ) | 21,942 | 428 | ||||||
Lexmark International, Inc. Class A | 11,100 | 339 | ||||||
Liquidity Services, Inc. (Æ)(Ñ) | 3,400 | 118 | ||||||
Mac-Gray Corp. | 6,200 | 88 | ||||||
Marlin Business Services Corp. | 1,800 | 41 | ||||||
Marten Transport, Ltd. | 16,167 | 253 | ||||||
MAXIMUS, Inc. | 7,430 | 553 | ||||||
Measurement Specialties, Inc. (Æ) | 3,327 | 155 | ||||||
Mesa Laboratories, Inc. | 3,100 | 168 | ||||||
Modine Manufacturing Co. (Æ) | 14,400 | 157 | ||||||
MYR Group, Inc. (Æ) | 2,500 | 49 | ||||||
Navigant Consulting, Inc. (Æ) | 5,500 | 66 | ||||||
Old Dominion Freight Line, Inc. (Æ) | 5,456 | 227 | ||||||
Orbital Sciences Corp. (Æ) | 20,500 | 356 | ||||||
Orion Marine Group, Inc. (Æ) | 5,032 | 61 | ||||||
Pacer International, Inc. (Æ) | 11,800 | 74 | ||||||
Primoris Services Corp. | 4,800 | 95 | ||||||
Quanta Services, Inc. (Æ) | 16,501 | 437 | ||||||
Raven Industries, Inc. | 35,000 | 1,050 | ||||||
Republic Airways Holdings, Inc. (Æ) | 7,300 | 83 | ||||||
Resources Connection, Inc. | 64,480 | 748 | ||||||
Roadrunner Transportation Systems, Inc. (Æ) | 2,000 | 56 | ||||||
Rollins, Inc. | 25,000 | 648 | ||||||
Saia, Inc. (Æ) | 15,750 | 472 | ||||||
SkyWest, Inc. | 14,000 | 190 | ||||||
Southwest Airlines Co. | 30,842 | 398 | ||||||
Spirit Aerosystems Holdings, Inc. Class A (Æ) | 3,800 | 82 | ||||||
Sterling Construction Co., Inc. (Æ) | 600 | 5 | ||||||
Sun Hydraulics Corp. | 43,806 | 1,371 | ||||||
Tidewater, Inc. | 12,691 | 723 | ||||||
Triumph Group, Inc. | 8,530 | 675 | ||||||
Tsakos Energy Navigation, Ltd. (Ñ) | 46,240 | 221 | ||||||
Tutor Perini Corp. (Æ) | 22,500 | 407 | ||||||
URS Corp. | 3,000 | 142 | ||||||
Wabtec Corp. | 9,986 | 533 | ||||||
YRC Worldwide, Inc. (Æ)(Ñ) | 1,400 | 40 | ||||||
|
| |||||||
35,750 | ||||||||
|
|
Principal Amount ($) or Shares | Fair Value $ | |||||||
Technology - 18.4% | ||||||||
Acacia Research Corp. | 61,944 | 1,385 | ||||||
ACI Worldwide, Inc. (Æ) | 22,200 | 1,032 | ||||||
ADTRAN, Inc. | 18,505 | 455 | ||||||
Amkor Technology, Inc. (Æ) | 60,000 | 253 | ||||||
ANADIGICS, Inc. (Æ) | 44,800 | 99 | ||||||
Applied Micro Circuits Corp. (Æ) | 75,030 | 661 | ||||||
Aruba Networks, Inc. (Æ) | 20,860 | 320 | ||||||
Aspen Technology, Inc. (Æ) | 8,222 | 237 | ||||||
AVG Technologies NV (Æ)(Ñ) | 27,273 | 530 | ||||||
Aviat Networks, Inc. (Æ) | 22,900 | 60 | ||||||
Avid Technology, Inc. (Æ) | 19,400 | 114 | ||||||
Axcelis Technologies, Inc. (Æ) | 1,714 | 3 | ||||||
Bel Fuse, Inc. Class B | 2,700 | 36 | ||||||
Blackbaud, Inc. | 23,900 | 778 | ||||||
Bottomline Technologies de, Inc. (Æ) | 35,000 | 885 | ||||||
Brooks Automation, Inc. | 67,460 | 656 | ||||||
Ceva, Inc. (Æ) | 3,533 | 68 | ||||||
CIBER, Inc. (Æ) | 23,800 | 79 | ||||||
Ciena Corp. (Æ) | 16,600 | 322 | ||||||
Cohu, Inc. (Å) | 34,600 | 433 | ||||||
Commtouch Software, Ltd. (Æ) | 17,100 | 55 | ||||||
Computer Task Group, Inc. | 22,951 | 527 | ||||||
comScore, Inc. (Æ) | 4,299 | 105 | ||||||
Comtech Telecommunications Corp. | 11,100 | 298 | ||||||
CSG Systems International, Inc. (Æ) | 12,700 | 276 | ||||||
Diebold, Inc. | 22,720 | 765 | ||||||
Digi International, Inc. (Æ) | 7,700 | 72 | ||||||
Digital River, Inc. (Æ) | 16,200 | 304 | ||||||
DSP Group, Inc. (Æ) | 8,500 | 71 | ||||||
Echelon Corp. (Æ) | 6,300 | 13 | ||||||
Electro Scientific Industries, Inc. | 59,128 | 636 | ||||||
Emulex Corp. (Æ) | 45,400 | 296 | ||||||
Envestnet, Inc. (Æ) | 10,965 | 270 | ||||||
Extreme Networks (Æ) | 21,600 | 75 | ||||||
FormFactor, Inc. (Æ) | 29,100 | 196 | ||||||
Glu Mobile, Inc. (Æ)(Ñ) | 25,299 | 56 | ||||||
GSI Group, Inc. (Æ) | 6,800 | 55 | ||||||
Hittite Microwave Corp. (Æ) | 12,225 | 709 | ||||||
Hutchinson Technology, Inc. (Æ) | 14,000 | 66 | ||||||
Inphi Corp. (Æ) | 28,670 | 315 | ||||||
Insight Enterprises, Inc. (Æ) | 7,300 | 130 | ||||||
Integrated Silicon Solution, Inc. (Æ) | 10,200 | 112 | ||||||
Inteliquent, Inc. | 42,100 | 242 | ||||||
Interactive Intelligence Group, Inc. (Æ) | 13,933 | 719 | ||||||
InterDigital, Inc. | 3,548 | 158 | ||||||
Intersil Corp. Class A | 158,770 | 1,241 | ||||||
Intevac, Inc. (Æ) | 2,100 | 12 | ||||||
InvenSense, Inc. Class A (Æ)(Ñ) | 25,010 | 385 | ||||||
Ixia (Æ) | 20,970 | 386 | ||||||
KEYW Holding Corp. (The) (Æ)(Ñ) | 15,264 | 202 | ||||||
Kulicke & Soffa Industries, Inc. (Æ) | 52,155 | 577 | ||||||
Limelight Networks, Inc. (Æ) | 12,622 | 28 | ||||||
Marvell Technology Group, Ltd. | 48,893 | 573 | ||||||
Mattson Technology, Inc. (Æ) | 8,200 | 18 | ||||||
MaxLinear, Inc. Class A (Æ) | 1,900 | 13 | ||||||
Mentor Graphics Corp. | 15,200 | 297 |
Aggressive Equity Fund | 23 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Mercury Systems, Inc. (Æ) | 83,517 | 770 | ||||||
Methode Electronics, Inc. | 1,629 | 28 | ||||||
Micrel, Inc. | 89,840 | 888 | ||||||
MKS Instruments, Inc. | 23,930 | 635 | ||||||
Molex, Inc. | 3,400 | 100 | ||||||
Newport Corp. (Æ) | 5,500 | 77 | ||||||
NIC, Inc. | 51,005 | 843 | ||||||
Novatel Wireless, Inc. (Æ) | 17,200 | 68 | ||||||
NVE Corp. (Æ) | 6,200 | 290 | ||||||
NVIDIA Corp. | 42,621 | 598 | ||||||
Oplink Communications, Inc. (Æ) | 3,500 | 61 | ||||||
PC Connection, Inc. | 4,400 | 68 | ||||||
Pericom Semiconductor Corp. (Æ) | 6,700 | 48 | ||||||
Photronics, Inc. (Æ) | 62,472 | 504 | ||||||
PMC - Sierra, Inc. (Æ) | 7,400 | 47 | ||||||
Polycom, Inc. (Æ) | 51,975 | 548 | ||||||
Procera Networks, Inc. (Æ) | 22,297 | 306 | ||||||
PROS Holdings, Inc. (Æ) | 40,025 | 1,198 | ||||||
QLIK Technologies, Inc. (Æ) | 12,070 | 341 | ||||||
QLogic Corp. (Æ) | 26,200 | 250 | ||||||
Quantum Corp. (Æ) | 28,800 | 39 | ||||||
Radisys Corp. (Æ) | 7,400 | 36 | ||||||
Richardson Electronics, Ltd. | 1,000 | 12 | ||||||
Rubicon Technology, Inc. (Æ)(Ñ) | 7,258 | 58 | ||||||
Sapient Corp. (Æ) | 5,362 | 70 | ||||||
SciQuest, Inc. (Æ) | 29,225 | 732 | ||||||
Seachange International, Inc. (Æ) | 18,600 | 218 | ||||||
ShoreTel, Inc. (Æ) | 14,500 | 58 | ||||||
Sigma Designs, Inc. (Æ) | 16,200 | 82 | ||||||
Silicon Graphics International Corp. (Æ) | 23,800 | 318 | ||||||
Silicon Image, Inc. (Æ) | 15,400 | 90 | ||||||
Skyworks Solutions, Inc. (Æ) | 5,653 | 124 | ||||||
Smith Micro Software, Inc. (Æ) | 2,900 | 3 | ||||||
Sourcefire, Inc. (Æ) | 22,040 | 1,224 | ||||||
Spansion, Inc. Class A (Æ) | 26,200 | 328 | ||||||
SPS Commerce, Inc. (Æ) | 13,572 | 746 | ||||||
STEC, Inc. (Æ) | 10,972 | 74 | ||||||
Stratasys, Ltd. (Æ)(Ñ) | 9,825 | 823 | ||||||
Super Micro Computer, Inc. (Æ) | 11,100 | 118 | ||||||
Supertex, Inc. | 2,200 | 53 | ||||||
Symmetricom, Inc. (Æ) | 6,400 | 29 | ||||||
Synchronoss Technologies, Inc. (Æ) | 24,686 | 762 | ||||||
Take-Two Interactive Software, Inc. (Æ) | 10,008 | 150 | ||||||
Tech Data Corp. (Æ) | 3,600 | 170 | ||||||
TeleCommunication Systems, Inc. Class A (Æ) | 29,500 | 69 | ||||||
TeleNav, Inc. (Æ) | 11,117 | 58 | ||||||
Tellabs, Inc. | 122,200 | 242 | ||||||
Tessco Technologies, Inc. | 19,572 | 517 | ||||||
Tessera Technologies, Inc. | 38,180 | 794 | ||||||
TTM Technologies, Inc. (Æ) | 13,800 | 116 | ||||||
Tyler Technologies, Inc. (Æ) | 27,945 | 1,915 | ||||||
United Online, Inc. | 57,900 | 439 | ||||||
Unwired Planet, Inc. (Æ) | 18,400 | 36 | ||||||
Vishay Intertechnology, Inc. (Æ) | 77,242 | �� | 1,073 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Xyratex, Ltd. | 32,160 | 324 | ||||||
|
| |||||||
38,227 | ||||||||
|
| |||||||
Utilities - 1.0% | ||||||||
Alaska Communications Systems Group, Inc. (Æ) | 8,900 | 15 | ||||||
American States Water Co. | 1,700 | 91 | ||||||
Cbeyond, Inc. (Æ) | 13,900 | 109 | ||||||
Chesapeake Utilities Corp. | 1,900 | 98 | ||||||
El Paso Electric Co. | 9,600 | 339 | ||||||
NorthWestern Corp. | 2,500 | 100 | ||||||
Pike Electric Corp. | 13,200 | 162 | ||||||
PNM Resources, Inc. | 22,500 | 499 | ||||||
Portland General Electric Co. (Ñ) | 7,100 | 217 | ||||||
Towerstream Corp. (Æ) | 34,022 | 87 | ||||||
Unitil Corp. | 5,775 | 167 | ||||||
UNS Energy Corp. | 1,407 | 63 | ||||||
US Cellular Corp. | 800 | 29 | ||||||
Vonage Holdings Corp. (Æ) | 16,200 | 46 | ||||||
|
| |||||||
2,022 | ||||||||
|
| |||||||
Total Common Stocks (cost $172,246) | 201,248 | |||||||
|
| |||||||
Short-Term Investments - 2.7% | ||||||||
Russell U.S. Cash Management Fund | 5,629,101 | (¥) | 5,629 | |||||
|
| |||||||
Total Short-Term Investments (cost $5,629) | 5,629 | |||||||
|
| |||||||
Other Securities - 5.3% | ||||||||
Russell U.S. Cash Collateral Fund (×) | 11,121,563 | (¥) | 11,122 | |||||
|
| |||||||
Total Other Securities (cost $11,122) | 11,122 | |||||||
|
| |||||||
Total Investments - 104.7% (identified cost $188,997) | 217,999 | |||||||
Other Assets and Liabilities, Net - (4.7%) | (9,852 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 208,147 | |||||||
|
|
See accompanying notes which are an integral part of the financial statements.
24 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share and cost per unit amounts)
Restricted Securities
% of Net Assets Securities | Acquisition Date | Principal Amount ($) or Shares | Cost per Unit $ | Cost $ | Fair Value (000) $ | |||||||||||||||
0.2% | ||||||||||||||||||||
Cohu, Inc. | 03/05/07 | 34,600 | 11.01 | 381 | 433 | |||||||||||||||
|
|
For a description of restricted securities see note 8 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 25 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except contract amounts)
Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||||
Long Positions | ||||||||||||||||||||
Russell 2000 Mini Index Futures (CME) | 70 | USD | 6,823 | 09/13 | (45) | |||||||||||||||
|
| |||||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) |
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Amounts in thousands
Fair Value | % of Net Assets | |||||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | ||||||||||||||||||||
Consumer Discretionary | $ | 27,574 | $ | — | $ | — | $ | 27,574 | 13.2 | |||||||||||
Consumer Staples | 4,217 | — | — | 4,217 | 2.0 | |||||||||||||||
Energy | 13,140 | — | — | 13,140 | 6.3 | |||||||||||||||
Financial Services | 44,356 | — | — | 44,356 | 21.3 | |||||||||||||||
Health Care | 19,957 | — | — | 19,957 | 9.6 | |||||||||||||||
Materials and Processing | 16,005 | — | — | 16,005 | 7.7 | |||||||||||||||
Producer Durables | 35,750 | — | — | 35,750 | 17.2 | |||||||||||||||
Technology | 38,227 | — | — | 38,227 | 18.4 | |||||||||||||||
Utilities | 2,022 | — | — | 2,022 | 1.0 | |||||||||||||||
Short-Term Investments | — | 5,629 | — | 5,629 | 2.7 | |||||||||||||||
Other Securities | — | 11,122 | — | 11,122 | 5.3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Investments | 201,248 | 16,751 | — | 217,999 | 104.7 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other Assets and Liabilities, Net | (4.7 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
100.0 | ||||||||||||||||||||
|
| |||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | (45 | ) | — | — | (45 | ) | (— | )* | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Other Financial Instruments** | $ | (45 | ) | $ | — | $ | — | $ | (45 | ) | ||||||||||
|
|
|
|
|
|
|
|
* | Less than .05% of net assets. |
** | Other financial instruments 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.
For disclosure on transfers between Levels 1, 2 and 3 during the period ended June 30, 2013, see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
26 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Fair Value of Derivative Instruments — June 30, 2013 (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* | $ | 45 | ||
|
| |||
Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Operations - Net realized gain (loss) | ||||
Futures contracts | $ | 1,425 | ||
|
| |||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||
Futures contracts | $ | (158 | ) | |
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and 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 | 27 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Balance Sheet Offsetting of Financial and Derivative Instruments — June 30, 2013 (Unaudited)
Amounts in thousands
Offsetting of Financial Assets and Derivative Assets | ||||||||||||||
Description | Location: Statement of Assets and Liabilities - Assets | Gross Amounts of Recognized Assets | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Assets Presented on the Statement of Assets and Liabilities | ||||||||||
Securities on loan | Investments, at fair value | $ | 10,860 | $ | — | $ | 10,860 | |||||||
|
|
|
|
|
| |||||||||
$ | 10,860 | $ | — | $ | 10,860 | |||||||||
|
|
|
|
|
|
Financial Assets, Derivative Assets, and Collateral Held by Counterparty | ||||||||||||||||
Counterparty | Net Amounts of Assets Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | |||||||||||||
Financial and Derivative Instruments | Collateral Received | |||||||||||||||
Barclays | $ | 3,566 | $ | — | $ | 3,566 | $ | — | ||||||||
Citigroup | 223 | — | 223 | — | ||||||||||||
Credit Suisse | 652 | — | 652 | — | ||||||||||||
Deutsche Bank | 2,118 | — | 2,118 | — | ||||||||||||
Fidelity | 1,978 | — | 1,978 | — | ||||||||||||
Goldman Sachs | 285 | — | 285 | — | ||||||||||||
JPMorgan Chase | 446 | — | 446 | — | ||||||||||||
Morgan Stanley | 1,271 | — | 1,271 | — | ||||||||||||
UBS | 321 | — | 321 | — | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 10,860 | $ | — | $ | 10,860 | $ | — | |||||||||
|
|
|
|
|
|
|
|
Offsetting of Financial Liabilities and Derivative Liabilities | ||||||||||||||
Description | Location: Statement of Assets and Liabilities - Liabilities | Gross Amounts of Recognized Liabilities | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | $ | 45 | $ | — | $ | 45 | |||||||
|
|
|
|
|
| |||||||||
$ | 45 | $ | — | $ | 45 | |||||||||
|
|
|
|
|
|
Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty | ||||||||||||||||
Counterparty | Net Amounts of Liabilities Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | |||||||||||||
Financial and Derivative Instruments | Collateral Pledged | |||||||||||||||
Merrill Lynch | $ | 45 | $ | — | $ | 45 | $ | — | ||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 45 | $ | — | $ | 45 | $ | — | |||||||||
|
|
|
|
|
|
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
For further disclosure on derivatives and counterparty risk see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
28 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 188,997 | ||
Investments, at fair value*, ** | 217,999 | |||
Cash | 104 | |||
Cash (restricted)(a) | 600 | |||
Receivables: | ||||
Dividends and interest | 266 | |||
Dividends from affiliated Russell funds | 1 | |||
Investments sold | 2,310 | |||
Fund shares sold | 1 | |||
Prepaid expenses | 1 | |||
|
| |||
Total assets | 221,282 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Investments purchased | 1,514 | |||
Fund shares redeemed | 230 | |||
Accrued fees to affiliates | 155 | |||
Other accrued expenses | 101 | |||
Daily variation margin on futures contracts | 13 | |||
Payable upon return of securities loaned | 11,122 | |||
|
| |||
Total liabilities | 13,135 | |||
|
| |||
Net Assets | $ | 208,147 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 29 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Statement of Assets and Liabilities, continued — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 251 | ||
Accumulated net realized gain (loss) | 2,373 | |||
Unrealized appreciation (depreciation) on: | ||||
Investments | 29,002 | |||
Futures contracts | (45 | ) | ||
Shares of beneficial interest | 138 | |||
Additional paid-in capital | 176,428 | |||
|
| |||
Net Assets | $ | 208,147 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share: (#) | $ | 15.13 | ||
Net assets | $ | 208,147,338 | ||
Shares outstanding ($.01 par value) | 13,753,472 | |||
Amounts in thousands | ||||
* Securities on loan included in investments | $ | 10,860 | ||
** Investments in affiliates, Russell U.S. Cash Management Fund and Russell U.S. Cash Collateral Fund | $
| 16,751 |
| |
(a) Cash Collateral for Futures | $ | 600 |
(#) | 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.
30 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Dividends | $ | 1,320 | ||
Dividends from affiliated Russell funds | 5 | |||
Securities lending income | 97 | |||
|
| |||
Total investment income | 1,422 | |||
|
| |||
Expenses | ||||
Advisory fees | 898 | |||
Administrative fees | 50 | |||
Custodian fees | 65 | |||
Transfer agent fees | 4 | |||
Professional fees | 31 | |||
Trustees’ fees | 2 | |||
Printing fees | 13 | |||
Miscellaneous | 8 | |||
|
| |||
Expenses before reductions | 1,071 | |||
Expense reductions | (50 | ) | ||
|
| |||
Net expenses | 1,021 | |||
|
| |||
Net investment income (loss) | 401 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | 9,585 | |||
Futures contracts | 1,425 | |||
|
| |||
Net realized gain (loss) | 11,010 | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | 18,726 | |||
Futures contracts | (158 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | 18,568 | |||
|
| |||
Net realized and unrealized gain (loss) | 29,578 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 29,979 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 31 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 401 | $ | 1,993 | ||||
Net realized gain (loss) | 11,010 | 27,867 | ||||||
Net change in unrealized appreciation (depreciation) | 18,568 | (2,620 | ) | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 29,979 | 27,240 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (120 | ) | (1,994 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (120 | ) | (1,994 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | (7,614 | ) | (16,379 | ) | ||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 22,245 | 8,867 | ||||||
Net Assets | ||||||||
Beginning of period | 185,902 | 177,035 | ||||||
|
|
|
| |||||
End of period | $ | 208,147 | $ | 185,902 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | 251 | $ | (30 | ) |
See accompanying notes which are an integral part of the financial statements.
32 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Statements of Changes in Net Assets, continued
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 284 | $ | 4,041 | 646 | $ | 8,034 | ||||||||||
Proceeds from reinvestment of distributions | 8 | 120 | 154 | 1,994 | ||||||||||||
Payments for shares redeemed | (815 | ) | (11,775 | ) | (2,105 | ) | (26,407 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | (523 | ) | $ | (7,614 | ) | (1,305 | ) | $ | (16,379 | ) | ||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 33 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, | $ Net | $ Net Realized | $ | $ Distributions | $ | $ Total | ||||||||||||||||||||||
June 30, 2013(1) | 13.02 | .03 | 2.09 | 2.12 | (.01 | ) | — | (.01 | ) | |||||||||||||||||||
December 31, 2012 | 11.36 | .13 | 1.67 | 1.80 | (.14 | ) | — | (.14 | ) | |||||||||||||||||||
December 31, 2011 | 11.92 | .04 | (.54 | ) | (.50 | ) | (.06 | ) | — | (.06 | ) | |||||||||||||||||
December 31, 2010 | 9.59 | .04 | 2.34 | 2.38 | (.05 | ) | — | (.05 | ) | |||||||||||||||||||
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 | ) |
See accompanying notes which are an integral part of the financial statements.
34 | Aggressive Equity Fund |
Table of Contents
$ Net Asset Value, | % Total | $ Net Assets, | % Ratio of Expenses | % Ratio of Expenses | % Ratio of Net | % Portfolio | ||||||||||||||||||||
15.13 | 16.28 | 208,147 | 1.07 | 1.02 | .40 | 32 | ||||||||||||||||||||
13.02 | 15.84 | 185,902 | 1.09 | 1.04 | 1.08 | 150 | ||||||||||||||||||||
11.36 | (4.20 | ) | 177,035 | 1.08 | 1.02 | .37 | 105 | |||||||||||||||||||
11.92 | 24.88 | 191,763 | 1.11 | 1.05 | .44 | 107 | ||||||||||||||||||||
9.59 | 34.32 | 158,671 | 1.13 | 1.02 | .65 | 161 | ||||||||||||||||||||
7.18 | (44.16 | ) | 123,088 | 1.18 | 1.05 | .84 | 161 |
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund | 35 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | ||||||||
June 30, 2013 | $ | 1,024.20 | $ | 1,019.89 | ||||
Expenses Paid During Period* | $ | 4.97 | $ | 4.96 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.99% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
36 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Common Stocks - 95.7% | ||||||||
Australia - 0.7% | ||||||||
Amcor, Ltd. (Æ) | 3,666 | 34 | ||||||
AMP, Ltd. | 7,382 | 29 | ||||||
Australia & New Zealand Banking Group, Ltd. - ADR | 7,283 | 190 | ||||||
BHP Billiton, Ltd. - ADR | 9,458 | 271 | ||||||
Brambles, Ltd. | 4,724 | 40 | ||||||
Commonwealth Bank of Australia - ADR | 4,498 | 285 | ||||||
CSL, Ltd. | 1,438 | 81 | ||||||
Insurance Australia Group, Ltd. | 5,436 | 27 | ||||||
National Australia Bank, Ltd. - ADR | 6,028 | 164 | ||||||
Orica, Ltd. | 1,109 | 21 | ||||||
Origin Energy, Ltd. | 1,598 | 18 | ||||||
QBE Insurance Group, Ltd. | 39,789 | 548 | ||||||
Suncorp Group, Ltd. | 3,547 | 39 | ||||||
Telstra Corp., Ltd. | 12,673 | 55 | ||||||
Wesfarmers, Ltd. | 2,950 | 107 | ||||||
Westfield Group (ö) | 4,663 | 49 | ||||||
Westpac Banking Corp. | 8,246 | 218 | ||||||
Woodside Petroleum, Ltd. | 1,846 | 59 | ||||||
Woolworths, Ltd. | 3,652 | 110 | ||||||
|
| |||||||
2,345 | ||||||||
|
| |||||||
Austria - 0.5% | ||||||||
Erste Group Bank AG | 62,500 | 1,668 | ||||||
|
| |||||||
Belgium - 0.4% | ||||||||
Anheuser-Busch InBev NV | 8,399 | 747 | ||||||
KBC Groep NV (Æ) | 17,798 | 663 | ||||||
|
| |||||||
1,410 | ||||||||
|
| |||||||
Bermuda - 1.5% | ||||||||
Jardine Matheson Holdings, Ltd. | 400 | 24 | ||||||
Jardine Strategic Holdings, Ltd. | 500 | 18 | ||||||
Li & Fung, Ltd. | 956,000 | 1,314 | ||||||
PartnerRe, Ltd. - ADR | 10,075 | 912 | ||||||
RenaissanceRe Holdings, Ltd. | 10,425 | 905 | ||||||
Seadrill, Ltd. (Ñ) | 33,000 | 1,344 | ||||||
Yue Yuen Industrial Holdings, Ltd. | 322,500 | 836 | ||||||
|
| |||||||
5,353 | ||||||||
|
| |||||||
Brazil - 1.0% | ||||||||
BM&FBovespa SA | 77,000 | 427 | ||||||
Brookfield Incorporacoes SA (Æ) | 420,100 | 282 | ||||||
Embraer SA - ADR | 54,200 | 1,999 | ||||||
Itau Unibanco Holding SA - ADR | 66,190 | 855 | ||||||
Tim Participacoes SA - ADR | 10,747 | 200 | ||||||
|
| |||||||
3,763 | ||||||||
|
| |||||||
Canada - 1.9% | ||||||||
Alimentation Couche Tard, Inc. Class B | 346 | 21 | ||||||
Bank of Montreal | 1,788 | 104 | ||||||
Bank of Nova Scotia | 3,518 | 188 | ||||||
BCE, Inc. | 1,100 | 45 | ||||||
Brookfield Asset Management, Inc. Class A | 39,166 | 1,410 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Canadian Imperial Bank of Commerce (Þ) | 822 | 58 | ||||||
Canadian National Railway Co. (Æ)(Þ) | 22,687 | 2,206 | ||||||
Canadian National Railway Co. | 1,092 | 106 | ||||||
Canadian Pacific Railway, Ltd. | 263 | 32 | ||||||
Cenovus Energy, Inc. | 924 | 25 | ||||||
Crescent Point Energy Corp. | 847 | 29 | ||||||
Enbridge, Inc. | 1,859 | 78 | ||||||
Great-West Lifeco, Inc. (Þ) | 782 | 21 | ||||||
Husky Energy, Inc. | 900 | 24 | ||||||
Imperial Oil, Ltd. | 800 | 31 | ||||||
Intact Financial Corp. | 400 | 23 | ||||||
National Bank of Canada | 413 | 29 | ||||||
Pembina Pipeline Corp. | 900 | 28 | ||||||
Potash Corp. of Saskatchewan, Inc. | 785 | 28 | ||||||
Power Corp. of Canada | 991 | 27 | ||||||
Power Financial Corp. | 714 | 20 | ||||||
Rogers Communications, Inc. Class B | 1,044 | 41 | ||||||
Royal Bank of Canada - GDR | 4,026 | 235 | ||||||
Shaw Communications, Inc. Class B | 1,091 | 25 | ||||||
Shoppers Drug Mart Corp. | 11,530 | 532 | ||||||
Suncor Energy, Inc. | 2,043 | 60 | ||||||
TELUS Corp. | 613 | 18 | ||||||
Tim Hortons, Inc. | 451 | 24 | ||||||
Toronto Dominion Bank | 2,712 | 218 | ||||||
TransCanada Corp. | 2,063 | 89 | ||||||
Valeant Pharmaceuticals International, Inc. (Æ) | 10,168 | 875 | ||||||
|
| |||||||
6,650 | ||||||||
|
| |||||||
Cayman Islands - 0.2% | ||||||||
Dongyue Group (Ñ) | 1,371,500 | 548 | ||||||
|
| |||||||
Czech Republic - 0.1% | ||||||||
Komercni Banka AS | 2,255 | 419 | ||||||
|
| |||||||
Denmark - 1.7% | ||||||||
AP Moeller - Maersk A/S Class B | 3 | 21 | ||||||
Coloplast A/S Class B | 19,411 | 1,088 | ||||||
Danske Bank A/S (Æ) | 136,176 | 2,330 | ||||||
Novo Nordisk A/S Class B | 6,780 | 1,056 | ||||||
Novozymes A/S Class B | 636 | 20 | ||||||
TDC A/S | 218,300 | 1,770 | ||||||
|
| |||||||
6,285 | ||||||||
|
| |||||||
Finland - 0.0% | ||||||||
Kone OYJ Class B | 510 | 41 | ||||||
Sampo Class A | 1,192 | 46 | ||||||
|
| |||||||
87 | ||||||||
|
| |||||||
France - 9.6% | ||||||||
Air Liquide SA Class A | 15,876 | 1,960 | ||||||
BNP Paribas SA | 37,183 | 2,032 | ||||||
Capital Gemini SA | 46,075 | 2,240 | ||||||
Casino Guichard Perrachon SA (Æ) | 4,100 | 384 | ||||||
Credit Agricole SA (Æ) | 111,785 | 961 | ||||||
Danone SA | 29,713 | 2,230 |
Non-U.S. Fund | 37 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Dassault Systemes SA | 15,865 | 1,940 | ||||||
Essilor International SA | 609 | 65 | ||||||
GDF Suez | 63,589 | 1,246 | ||||||
Lagardere SCA | 24,731 | 689 | ||||||
Legrand SA - ADR | 25,167 | 1,167 | ||||||
L’Oreal SA | 674 | 111 | ||||||
LVMH Moet Hennessy Louis Vuitton SA - ADR | 12,046 | 1,952 | ||||||
Natixis (Æ) | 112,358 | 470 | ||||||
Pernod-Ricard SA (Ñ) | 16,411 | 1,820 | ||||||
Publicis Groupe SA - ADR | 17,629 | 1,255 | ||||||
Rallye SA | 40,485 | 1,457 | ||||||
Sanofi - ADR | 42,584 | 4,414 | ||||||
Schneider Electric SA | 56,648 | 4,110 | ||||||
Sodexo | 278 | 23 | ||||||
Technip SA | 10,837 | 1,100 | ||||||
Total SA (Ñ) | 57,063 | 2,785 | ||||||
Vinci SA | 557 | 28 | ||||||
Vivendi SA - ADR | 2,828 | 54 | ||||||
|
| |||||||
34,493 | ||||||||
|
| |||||||
Germany - 7.2% | ||||||||
Adidas AG | 609 | 66 | ||||||
BASF SE | 1,285 | 115 | ||||||
Bayer AG | 33,108 | 3,531 | ||||||
Bayerische Motoren Werke AG | 16,970 | 1,484 | ||||||
Beiersdorf AG (Æ) | 16,432 | 1,433 | ||||||
Brenntag AG | 5,812 | 883 | ||||||
Daimler AG | 34,500 | 2,087 | ||||||
Deutsche Boerse AG | 53,982 | 3,553 | ||||||
Deutsche Post AG | 939 | 23 | ||||||
E.ON SE | 34,175 | 561 | ||||||
Fresenius Medical Care AG & Co. KGaA | 626 | 44 | ||||||
Fresenius SE & Co. KGaA | 12,954 | 1,597 | ||||||
Henkel AG & Co. KGaA | 6,731 | 528 | ||||||
Linde AG | 12,913 | 2,410 | ||||||
Merck KGaA | 10,014 | 1,526 | ||||||
Muenchener Rueckversicherungs AG | 527 | 97 | ||||||
SAP AG - ADR | 32,206 | 2,358 | ||||||
Siemens AG | 18,221 | 1,842 | ||||||
Volkswagen AG | 9,141 | 1,782 | ||||||
|
| |||||||
25,920 | ||||||||
|
| |||||||
Hong Kong - 1.1% | ||||||||
AIA Group, Ltd. | 742,200 | 3,144 | ||||||
Cheung Kong Holdings, Ltd. | 2,000 | 27 | ||||||
China Unicom Hong Kong, Ltd. | 494,000 | 656 | ||||||
CLP Holdings, Ltd. | 5,500 | 44 | ||||||
Hang Seng Bank, Ltd. | 2,200 | 33 | ||||||
Hong Kong & China Gas Co., Ltd. | 17,600 | 43 | ||||||
Hong Kong Exchanges and Clearing, Ltd. | 2,000 | 30 | ||||||
Link REIT (The) (ö) | 7,000 | 34 | ||||||
Power Assets Holdings, Ltd. | 4,000 | 35 | ||||||
Swire Pacific, Ltd. Class A | 2,000 | 24 | ||||||
|
| |||||||
4,070 | ||||||||
|
|
Principal Amount ($) or Shares | Fair Value $ | |||||||
India - 0.8% | ||||||||
Housing Development Finance Corp. (Æ) | 39,785 | 589 | ||||||
ICICI Bank, Ltd. - ADR | 18,827 | 720 | ||||||
Reliance Industries, Ltd. | 42,512 | 617 | ||||||
Tata Motors, Ltd. - ADR | 38,719 | 907 | ||||||
|
| |||||||
2,833 | ||||||||
|
| |||||||
Indonesia - 0.3% | ||||||||
Bank Rakyat Indonesia Persero Tbk PT | 903,000 | 705 | ||||||
Telekomunikasi Indonesia Persero Tbk PT | 319,100 | 362 | ||||||
|
| |||||||
1,067 | ||||||||
|
| |||||||
Ireland - 1.1% | ||||||||
CRH PLC | 83,700 | 1,700 | ||||||
DCC PLC | 27,300 | 1,067 | ||||||
Kerry Group PLC Class A | 442 | 24 | ||||||
Ryanair Holdings PLC - ADR (Æ) | 21,810 | 1,124 | ||||||
|
| |||||||
3,915 | ||||||||
|
| |||||||
Israel - 0.7% | ||||||||
Check Point Software Technologies, Ltd. (Æ)(Ñ) | 32,337 | 1,606 | ||||||
Teva Pharmaceutical Industries, Ltd. - ADR | 23,800 | 933 | ||||||
Teva Pharmaceutical Industries, Ltd. | 2,864 | 111 | ||||||
|
| |||||||
2,650 | ||||||||
|
| |||||||
Italy - 1.8% | ||||||||
Enel SpA (Æ) | 242,625 | 761 | ||||||
ENI SpA - ADR | 144,723 | 2,973 | ||||||
Luxottica Group SpA | 432 | 22 | ||||||
Saipem SpA - ADR | 24,197 | 393 | ||||||
Snam Rete Gas SpA | 319,812 | 1,457 | ||||||
Telecom Italia SpA | 1,108,100 | 770 | ||||||
|
| |||||||
6,376 | ||||||||
|
| |||||||
Japan - 13.6% | ||||||||
Amada Co., Ltd. | 261,700 | 1,728 | ||||||
Asahi Group Holdings, Ltd. | 1,000 | 25 | ||||||
Asahi Kasei Corp. | 3,000 | 20 | ||||||
Astellas Pharma, Inc. | 26,800 | 1,456 | ||||||
Canon, Inc. | 72,200 | 2,355 | ||||||
Dai-ichi Life Insurance Co., Ltd. (The) | 850 | 1,227 | ||||||
Denso Corp. | 46,100 | 2,168 | ||||||
East Japan Railway Co. | 500 | 39 | ||||||
Eisai Co., Ltd. | 700 | 29 | ||||||
FANUC Corp. | 7,600 | 1,101 | ||||||
Fast Retailing Co., Ltd. | 100 | 34 | ||||||
Fuji Heavy Industries, Ltd. | 57,000 | 1,405 | ||||||
Honda Motor Co., Ltd. | 117,500 | 4,367 | ||||||
Hoya Corp. | 56,100 | 1,159 | ||||||
Inpex Corp. | 253 | 1,056 | ||||||
ITOCHU Corp. | 181,800 | 2,099 | ||||||
Japan Tobacco, Inc. | 900 | 32 | ||||||
Kao Corp. | 1,500 | 51 | ||||||
KDDI Corp. | 51,500 | 2,680 |
38 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Keyence Corp. | 100 | 32 | ||||||
Kyocera Corp. | 3,700 | 377 | ||||||
Lawson, Inc. | 23,600 | 1,801 | ||||||
Mabuchi Motor Co., Ltd. | 33,700 | 1,801 | ||||||
Makita Corp. | 23,600 | 1,275 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 186,700 | 1,152 | ||||||
MS&AD Insurance Group Holdings | 34,100 | 867 | ||||||
Nippon Telegraph & Telephone Corp. | 1,300 | 67 | ||||||
NKSJ Holdings, Inc. | 40,700 | 971 | ||||||
NTT DOCOMO, Inc. | 321 | 499 | ||||||
ORIX Corp. | 123,500 | 1,687 | ||||||
Otsuka Holdings Co., Ltd. | 1,000 | 33 | ||||||
Secom Co., Ltd. | 24,400 | 1,329 | ||||||
Seven & I Holdings Co., Ltd. | 2,100 | 77 | ||||||
Shin-Etsu Chemical Co., Ltd. | 72,200 | 4,790 | ||||||
SMC Corp. | 200 | 40 | ||||||
Sumitomo Corp. | 134,200 | 1,674 | ||||||
Sumitomo Mitsui Financial Group, Inc. | 69,000 | 3,166 | ||||||
Takeda Pharmaceutical Co., Ltd. | 2,100 | 95 | ||||||
THK Co., Ltd. | 57,800 | 1,215 | ||||||
Tokyo Gas Co., Ltd. | 6,000 | 33 | ||||||
Toyota Motor Corp. | 8,800 | 531 | ||||||
Toyota Tsusho Corp. | 18,300 | 472 | ||||||
Yahoo! Japan Corp. | 2,911 | 1,435 | ||||||
Yokogawa Electric Corp. | 21,900 | 262 | ||||||
|
| |||||||
48,712 | ||||||||
|
| |||||||
Jersey - 3.0% | ||||||||
Delphi Automotive PLC | 56,436 | 2,861 | ||||||
Experian PLC | 68,993 | 1,200 | ||||||
Glencore Xstrata PLC | 230,604 | 955 | ||||||
Wolseley PLC - ADR | 28,123 | 1,297 | ||||||
WPP PLC | 257,719 | 4,397 | ||||||
|
| |||||||
10,710 | ||||||||
|
| |||||||
Kenya - 0.2% | ||||||||
Safaricom, Ltd. | 8,818,600 | 673 | ||||||
|
| |||||||
Luxembourg - 0.1% | ||||||||
ArcelorMittal | 33,073 | 370 | ||||||
SES | 885 | 25 | ||||||
Tenaris SA (Æ) | 1,157 | 23 | ||||||
|
| |||||||
418 | ||||||||
|
| |||||||
Mexico - 0.3% | ||||||||
Fomento Economico Mexicano SAB de CV - ADR | 10,054 | 1,037 | ||||||
|
| |||||||
Netherlands - 6.7% | ||||||||
Aegon NV (Ñ) | 503,481 | 3,368 | ||||||
Akzo Nobel NV (Ñ) | 59,383 | 3,348 | ||||||
ASML Holding NV Class G | 455 | 36 | ||||||
Delta Lloyd NV | 103,600 | 2,076 | ||||||
Heineken NV | 31,811 | 2,027 | ||||||
ING Groep NV (Æ) | 520,190 | 4,740 | ||||||
Koninklijke Ahold NV | 2,937 | 44 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Koninklijke DSM NV (Æ) | 309 | 20 | ||||||
Koninklijke Philips NV | 60,971 | 1,662 | ||||||
Randstad Holding NV (Æ) | 43,579 | 1,787 | ||||||
Reed Elsevier NV (Æ) | 89,477 | 1,490 | ||||||
STMicroelectronics NV Class Y | 183,525 | 1,653 | ||||||
Unilever NV | 48,216 | 1,899 | ||||||
|
| |||||||
24,150 | ||||||||
|
| |||||||
Norway - 2.1% | ||||||||
DNB ASA | 145,500 | 2,107 | ||||||
Marine Harvest ASA | 2,084,300 | 2,113 | ||||||
Orkla ASA | 166,900 | 1,367 | ||||||
Statoil ASA Class N | 49,601 | 1,023 | ||||||
TE Connectivity, Ltd. | 19,554 | 388 | ||||||
TGS Nopec Geophysical Co. ASA - ADR | 21,481 | 624 | ||||||
|
| |||||||
7,622 | ||||||||
|
| |||||||
Russia - 0.9% | ||||||||
Gazprom OAO - ADR (Æ) | 246,215 | 1,620 | ||||||
Rosneft OAO - GDR | 2,400 | 16 | ||||||
Rosneft Oil Co. - GDR | 192,200 | 1,317 | ||||||
Sberbank of Russia - ADR | 36,968 | 421 | ||||||
Sberbank of Russia - ADR (Æ) | 497 | 6 | ||||||
|
| |||||||
3,380 | ||||||||
|
| |||||||
Singapore - 1.8% | ||||||||
DBS Group Holdings, Ltd. | 95,000 | 1,162 | ||||||
Jardine Cycle & Carriage, Ltd. | 83,500 | 2,800 | ||||||
Keppel Corp., Ltd. - ADR | 4,000 | 33 | ||||||
Oversea-Chinese Banking Corp., Ltd. | 3,000 | 24 | ||||||
Singapore Telecommunications, Ltd. | 165,000 | 490 | ||||||
United Overseas Bank, Ltd. | 122,100 | 1,913 | ||||||
|
| |||||||
6,422 | ||||||||
|
| |||||||
South Africa - 0.7% | ||||||||
Aspen Pharmacare Holdings, Ltd. (Æ) | 28,040 | 644 | ||||||
Bidvest Group, Ltd. (Æ) | 37,165 | 921 | ||||||
Discovery Holdings, Ltd. | 132,149 | 1,124 | ||||||
|
| |||||||
2,689 | ||||||||
|
| |||||||
South Korea - 1.1% | ||||||||
Hana Financial Group, Inc. | 18,965 | 552 | ||||||
Samsung Electronics Co., Ltd. | 1,910 | 2,244 | ||||||
Shinhan Financial Group Co., Ltd. | 40,171 | 1,323 | ||||||
|
| |||||||
4,119 | ||||||||
|
| |||||||
Spain - 1.5% | ||||||||
Amadeus IT Holding SA Class A | 52,070 | 1,664 | ||||||
Banco Santander SA - ADR | 339,303 | 2,166 | ||||||
Inditex SA | 6,780 | 837 | ||||||
Indra Sistemas SA | 56,450 | 730 | ||||||
|
| |||||||
5,397 | ||||||||
|
| |||||||
Sweden - 0.7% | ||||||||
Assa Abloy AB Class B | 1,002 | 39 |
Non-U.S. Fund | 39 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Atlas Copco AB Class A | 61,536 | 1,486 | ||||||
Atlas Copco AB Class B (Æ) | 1,059 | 23 | ||||||
Hennes & Mauritz AB Class B | 28,334 | 931 | ||||||
Svenska Cellulosa AB Class B | 1,477 | 37 | ||||||
Svenska Handelsbanken AB Class A | 647 | 26 | ||||||
Telefonaktiebolaget LM Ericsson Class B | 8,699 | 99 | ||||||
TeliaSonera AB | 6,712 | 44 | ||||||
|
| |||||||
2,685 | ||||||||
|
| |||||||
Switzerland - 11.0% | ||||||||
ABB, Ltd. (Æ) | 64,787 | 1,406 | ||||||
ABB, Ltd. - ADR (Æ) | 26,500 | 574 | ||||||
ACE, Ltd. | 9,950 | 890 | ||||||
Cie Financiere Richemont SA | 15,509 | 1,372 | ||||||
Credit Suisse Group AG (Æ) | 136,337 | 3,616 | ||||||
GAM Holding AG (Æ) | 38,226 | 587 | ||||||
Geberit AG (Æ) | 4,449 | 1,104 | ||||||
Givaudan SA (Æ) | 25 | 32 | ||||||
Helvetia Holding AG | 900 | 364 | ||||||
Julius Baer Group, Ltd. (Æ) | 32,899 | 1,285 | ||||||
Kuehne & Nagel International AG | 4,648 | 510 | ||||||
Lonza Group AG (Æ) | 17,200 | 1,296 | ||||||
Nestle SA | 69,127 | 4,534 | ||||||
Novartis AG | 72,997 | 5,185 | ||||||
Partners Group Holding AG | 4,757 | 1,288 | ||||||
Roche Holding AG | 23,454 | 5,835 | ||||||
SGS SA | 16 | 34 | ||||||
Sonova Holding AG (Æ) | 5,932 | 629 | ||||||
Swatch Group AG (The) Class B | 77 | 42 | ||||||
Swiss Re AG (Æ) | 10,937 | 814 | ||||||
Swisscom AG | 68 | 30 | ||||||
Syngenta AG | 3,589 | 1,404 | ||||||
TE Connectivity, Ltd. | 45,400 | 2,068 | ||||||
Tyco International, Ltd. | 843 | 28 | ||||||
UBS AG (Æ) | 176,069 | 2,998 | ||||||
Zurich Insurance Group AG (Æ) | 5,686 | 1,475 | ||||||
|
| |||||||
39,400 | ||||||||
|
| |||||||
Taiwan - 1.5% | ||||||||
Hon Hai Precision Industry Co., Ltd. | 861,386 | 2,127 | ||||||
Hon Hai Precision Industry Co., Ltd. - GDR | 27,462 | 134 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. - ADR | 89,358 | 1,636 | ||||||
Teco Electric and Machinery Co., Ltd. | 1,417,200 | 1,419 | ||||||
|
| |||||||
5,316 | ||||||||
|
| |||||||
Turkey - 0.1% | ||||||||
Turkiye Halk Bankasi AS | 57,079 | 484 | ||||||
|
| |||||||
United Kingdom - 19.3% | ||||||||
Anglo American PLC | 46,374 | 893 | ||||||
ARM Holdings PLC | 74,354 | 899 | ||||||
Associated British Foods PLC | 1,094 | 29 | ||||||
AstraZeneca PLC - ADR (Æ) | 3,667 | 174 | ||||||
Aviva PLC | 145,971 | 754 | ||||||
Babcock International Group PLC | 53,312 | 894 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
BAE Systems PLC | 166,555 | 970 | ||||||
Barclays PLC | 983,130 | 4,163 | ||||||
Berkeley Group Holdings PLC | 31,638 | 1,025 | ||||||
BG Group PLC | 88,461 | 1,504 | ||||||
BHP Billiton PLC | 4,437 | 114 | ||||||
BP PLC | 630,600 | 4,366 | ||||||
BP PLC - ADR | 6,600 | 275 | ||||||
British American Tobacco PLC | 5,633 | 289 | ||||||
British Land Co. PLC (ö) | 2,333 | 20 | ||||||
British Sky Broadcasting Group PLC | 2,723 | 33 | ||||||
Capita PLC | 1,986 | 29 | ||||||
Carillion PLC | 158,375 | 666 | ||||||
Centrica PLC | 15,075 | 83 | ||||||
Compass Group PLC | 281,430 | 3,596 | ||||||
Dairy Crest Group PLC | 171,709 | 1,186 | ||||||
Diageo PLC | 101,083 | 2,890 | ||||||
DS Smith PLC Class F | 468,050 | 1,761 | ||||||
GlaxoSmithKline PLC - ADR | 67,074 | 1,681 | ||||||
Hays PLC | 277,446 | 375 | ||||||
HSBC Holdings PLC | 586,614 | 6,100 | ||||||
Imperial Tobacco Group PLC | 127,328 | 4,416 | ||||||
InterContinental Hotels Group PLC - ADR | 40,943 | 1,126 | ||||||
Intertek Group PLC | 488 | 22 | ||||||
J Sainsbury PLC | 4,248 | 23 | ||||||
John Wood Group PLC | 62,311 | 767 | ||||||
Johnson Matthey PLC | 28,186 | 1,127 | ||||||
Kingfisher PLC | 6,249 | 33 | ||||||
Marks & Spencer Group PLC | 4,325 | 28 | ||||||
Meggitt PLC | 140,340 | 1,105 | ||||||
National Grid PLC | 197,443 | 2,240 | ||||||
Next PLC | 459 | 32 | ||||||
Pearson PLC | 2,479 | 44 | ||||||
Reckitt Benckiser Group PLC | 27,227 | 1,925 | ||||||
Reed Elsevier PLC | 3,423 | 39 | ||||||
Rio Tinto PLC (Æ) | 31,382 | 1,281 | ||||||
Rolls-Royce Holdings PLC (Æ) | 53,097 | 916 | ||||||
Royal Bank of Scotland Group PLC (Æ) | 192,262 | 800 | ||||||
Royal Dutch Shell PLC Class A (Ñ) | 152,592 | 4,876 | ||||||
Royal Dutch Shell PLC Class B | 7,517 | 249 | ||||||
SABMiller PLC - ADR | 2,772 | 133 | ||||||
Sage Group PLC (The) | 186,929 | 967 | ||||||
Scottish & Southern Energy PLC | 1,711 | 40 | ||||||
Shire PLC - ADR (Æ) | 1,604 | 51 | ||||||
Smith & Nephew PLC | 119,308 | 1,333 | ||||||
Smiths Group PLC | 54,126 | 1,077 | ||||||
St James’s Place PLC | 104,191 | 856 | ||||||
Standard Chartered PLC | 96,812 | 2,101 | ||||||
Tesco PLC | 22,125 | 112 | ||||||
Travis Perkins PLC | 113,275 | 2,508 | ||||||
Tullow Oil PLC | 53,219 | 810 | ||||||
Unilever PLC | 3,837 | 155 | ||||||
Vodafone Group PLC - ADR (Æ) | 818,381 | 2,338 | ||||||
Weir Group PLC (The) | 31,298 | 1,024 | ||||||
Whitbread PLC (Æ) | 528 | 25 | ||||||
WM Morrison Supermarkets PLC | 7,061 | 28 | ||||||
|
| |||||||
69,376 | ||||||||
|
|
40 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
United States - 0.5% | ||||||||
Philip Morris International, Inc. | 10,100 | 875 | ||||||
Yum! Brands, Inc. | 10,832 | 752 | ||||||
|
| |||||||
1,627 | ||||||||
|
| |||||||
Total Common Stocks (cost $304,392) | 344,069 | |||||||
|
| |||||||
Preferred Stocks - 0.2% | ||||||||
Brazil - 0.2% | ||||||||
Usinas Siderurgicas de Minas Gerais SA (Æ) | 171,175 | 570 | ||||||
|
| |||||||
Germany - 0.0% | ||||||||
Henkel AG & Co. KGaA | 494 | 46 | ||||||
|
| |||||||
Total Preferred Stocks (cost $743) | 616 | |||||||
|
| |||||||
Short-Term Investments - 3.3% | ||||||||
United States - 3.3% | ||||||||
Russell U.S. Cash Management Fund | 11,938,465 | (¥) | 11,938 | |||||
|
| |||||||
Total Short-Term Investments (cost $11,938) | 11,938 | |||||||
|
| |||||||
Other Securities - 1.4% | ||||||||
Russell U.S. Cash Collateral Fund (×) | 5,116,938 | (¥) | 5,117 | |||||
|
| |||||||
Total Other Securities (cost $5,117) | 5,117 | |||||||
|
| |||||||
Total Investments - 100.6% (identified cost $322,190) | 361,740 | |||||||
Other Assets and Liabilities, Net - (0.6%) | (2,284 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 359,456 | |||||||
|
|
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 41 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Futures Contracts | Number of Contracts | Notional | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||||
Long Positions | ||||||||||||||||||||
CAC 40 Index Futures (France) | 35 | EUR | 1,307 | 07/13 | (59 | ) | ||||||||||||||
DAX Index Futures (Germany) | 7 | EUR | 1,394 | 09/13 | (62 | ) | ||||||||||||||
EURO STOXX 50 Index Futures | 196 | EUR | 5,092 | 09/13 | (126 | ) | ||||||||||||||
FTSE 100 Index Futures (United Kingdom) | 29 | GBP | 1,787 | 09/13 | (65 | ) | ||||||||||||||
Hang Seng Index Futures (Hong Kong) | 4 | HKD | 4,146 | 07/13 | 21 | |||||||||||||||
NIKKEI 225 (YEN) Index Futures (CME) | 104 | JPY | 712,400 | 09/13 | 474 | |||||||||||||||
S&P TSE 60 Index Futures (Canada) | 11 | CAD | 1,524 | 09/13 | (2 | ) | ||||||||||||||
SPI 200 Index Futures (Australia) | 9 | AUD | 1,073 | 09/13 | 4 | |||||||||||||||
TOPIX Index Futures (Japan) | 25 | JPY | 282,750 | 09/13 | 107 | |||||||||||||||
Short Positions | ||||||||||||||||||||
MSCI Emerging Markets Mini Index Futures | 235 | USD | 10,971 | 09/13 | 73 | |||||||||||||||
|
| |||||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) |
| 365 | ||||||||||||||||||
|
|
Foreign Currency Exchange Contracts
Amounts in thousands
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
Bank of America | ZAR | 809 | USD | 81 | 07/05/13 | — | ||||||||||||
Bank of America | ZAR | 866 | USD | 87 | 07/05/13 | — | ||||||||||||
Brown Brothers Harriman | GBP | 5 | USD | 7 | 07/01/13 | — | ||||||||||||
Brown Brothers Harriman | GBP | 4 | USD | 6 | 07/02/13 | — | ||||||||||||
Brown Brothers Harriman | GBP | 2 | USD | 3 | 07/03/13 | — | ||||||||||||
Commonwealth Bank of Australia | USD | 253 | AUD | 268 | 09/18/13 | (9 | ) | |||||||||||
Commonwealth Bank of Australia | USD | 357 | CAD | 364 | 09/18/13 | (11 | ) | |||||||||||
Commonwealth Bank of Australia | USD | 1,509 | EUR | 1,133 | 09/18/13 | (34 | ) | |||||||||||
Commonwealth Bank of Australia | USD | 627 | GBP | 400 | 09/18/13 | (19 | ) | |||||||||||
Commonwealth Bank of Australia | USD | 491 | JPY | 46,972 | 09/18/13 | (17 | ) | |||||||||||
Deutsche Bank | USD | 368 | DKK | 2,108 | 07/02/13 | �� | — | |||||||||||
Deutsche Bank | USD | 3,516 | EUR | 2,700 | 09/18/13 | — | ||||||||||||
Deutsche Bank | USD | 38 | NOK | 232 | 07/02/13 | — | ||||||||||||
Deutsche Bank | ZAR | 917 | USD | 92 | 07/05/13 | (1 | ) | |||||||||||
JPMorgan Chase | USD | 253 | AUD | 268 | 09/18/13 | (9 | ) | |||||||||||
JPMorgan Chase | USD | 357 | CAD | 364 | 09/18/13 | (11 | ) | |||||||||||
JPMorgan Chase | USD | 1,512 | EUR | 1,133 | 09/18/13 | (38 | ) | |||||||||||
JPMorgan Chase | USD | 627 | GBP | 400 | 09/18/13 | (19 | ) | |||||||||||
JPMorgan Chase | USD | 491 | JPY | 46,972 | 09/18/13 | (17 | ) | |||||||||||
Royal Bank of Canada | USD | 253 | AUD | 268 | 09/18/13 | (9 | ) | |||||||||||
Royal Bank of Canada | USD | 357 | CAD | 364 | 09/18/13 | (11 | ) | |||||||||||
Royal Bank of Canada | USD | 1,512 | EUR | 1,133 | 09/18/13 | (36 | ) | |||||||||||
Royal Bank of Canada | USD | 627 | GBP | 400 | 09/18/13 | (19 | ) | |||||||||||
Royal Bank of Canada | USD | 285 | HKD | 2,212 | 09/18/13 | — | ||||||||||||
Royal Bank of Canada | USD | 491 | JPY | 46,972 | 09/18/13 | (17 | ) | |||||||||||
Standard Chartered | USD | 253 | AUD | 268 | 09/18/13 | (9 | ) | |||||||||||
Standard Chartered | USD | 357 | CAD | 364 | 09/18/13 | (11 | ) | |||||||||||
Standard Chartered | USD | 1,512 | EUR | 1,133 | 09/18/13 | (37 | ) | |||||||||||
Standard Chartered | USD | 627 | GBP | 400 | 09/18/13 | (19 | ) |
See accompanying notes which are an integral part of the financial statements.
42 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
Standard Chartered | USD | 285 | HKD | 2,212 | 09/18/13 | — | ||||||||||||
Standard Chartered | USD | 491 | JPY | 46,972 | 09/18/13 | (17 | ) | |||||||||||
State Street | USD | 141 | AUD | 150 | 09/18/13 | (5 | ) | |||||||||||
State Street | USD | 143 | AUD | 150 | 09/18/13 | (7 | ) | |||||||||||
State Street | USD | 147 | CAD | 150 | 09/18/13 | (5 | ) | |||||||||||
State Street | USD | 196 | CAD | 200 | 09/18/13 | (6 | ) | |||||||||||
State Street | USD | 15 | CHF | 14 | 07/01/13 | — | ||||||||||||
State Street | USD | 170 | DKK | 977 | 07/01/13 | — | ||||||||||||
State Street | USD | 23 | DKK | 130 | 07/03/13 | — | ||||||||||||
State Street | USD | 247 | DKK | 1,416 | 07/03/13 | — | ||||||||||||
State Street | USD | 349 | EUR | 268 | 07/02/13 | — | ||||||||||||
State Street | USD | 668 | EUR | 500 | 09/18/13 | (17 | ) | |||||||||||
State Street | USD | 1,004 | EUR | 750 | 09/18/13 | (27 | ) | |||||||||||
State Street | USD | 293 | GBP | 192 | 07/03/13 | — | ||||||||||||
State Street | USD | 313 | GBP | 200 | 09/18/13 | (9 | ) | |||||||||||
State Street | USD | 314 | GBP | 200 | 09/18/13 | (10 | ) | |||||||||||
State Street | USD | 43 | NOK | 262 | 07/01/13 | — | ||||||||||||
State Street | USD | 76 | NOK | 465 | 07/01/13 | — | ||||||||||||
State Street | USD | 110 | NOK | 673 | 07/03/13 | 1 | ||||||||||||
State Street | USD | 179 | SEK | 1,201 | 07/03/13 | — | ||||||||||||
State Street | AUD | — | USD | — | 07/01/13 | — | ||||||||||||
State Street | AUD | 100 | USD | 92 | 09/18/13 | 1 | ||||||||||||
State Street | AUD | 200 | USD | 184 | 09/18/13 | 2 | ||||||||||||
State Street | CAD | 150 | USD | 143 | 09/18/13 | 1 | ||||||||||||
State Street | CAD | 200 | USD | 190 | 09/18/13 | 1 | ||||||||||||
State Street | CHF | 52 | USD | 55 | 07/03/13 | — | ||||||||||||
State Street | EUR | — | USD | — | 07/01/13 | — | ||||||||||||
State Street | EUR | 230 | USD | 299 | 07/03/13 | — | ||||||||||||
State Street | EUR | 150 | USD | 199 | 09/18/13 | 4 | ||||||||||||
State Street | EUR | 300 | USD | 393 | 09/18/13 | 2 | ||||||||||||
State Street | EUR | 300 | USD | 390 | 09/18/13 | — | ||||||||||||
State Street | EUR | 500 | USD | 657 | 09/18/13 | 5 | ||||||||||||
State Street | GBP | 33 | USD | 50 | 07/01/13 | — | ||||||||||||
State Street | GBP | 100 | USD | 153 | 09/18/13 | 1 | ||||||||||||
State Street | GBP | 100 | USD | 154 | 09/18/13 | 2 | ||||||||||||
State Street | GBP | 200 | USD | 309 | 09/18/13 | 5 | ||||||||||||
State Street | HKD | 16 | USD | 2 | 07/02/13 | — | ||||||||||||
State Street | HKD | 2,043 | USD | 263 | 07/02/13 | — | ||||||||||||
State Street | JPY | 1,076 | USD | 11 | 07/01/13 | �� | — | |||||||||||
State Street | JPY | 2,021 | USD | 20 | 07/01/13 | — | ||||||||||||
State Street | JPY | 4,531 | USD | 46 | 07/01/13 | — | ||||||||||||
State Street | JPY | 5,261 | USD | 54 | 07/01/13 | 1 | ||||||||||||
State Street | NOK | 84 | USD | 14 | 07/03/13 | — | ||||||||||||
State Street | ZAR | 2,235 | USD | 220 | 07/03/13 | (6 | ) | |||||||||||
|
| |||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | (436 | ) | ||||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 43 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Amounts in thousands
Fair Value | % of Net Assets | |||||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | ||||||||||||||||||||
Australia | $ | 2,345 | $ | — | $ | — | $ | 2,345 | $ | 0.7 | ||||||||||
Austria | 1,668 | — | — | 1,668 | 0.5 | |||||||||||||||
Belgium | 1,410 | — | — | 1,410 | 0.4 | |||||||||||||||
Bermuda | 5,353 | — | — | 5,353 | 1.5 | |||||||||||||||
Brazil | 3,763 | — | — | 3,763 | 1.0 | |||||||||||||||
Canada | 6,650 | — | — | 6,650 | 1.9 | |||||||||||||||
Cayman Islands | 548 | — | — | 548 | 0.2 | |||||||||||||||
Czech Republic | 419 | — | — | 419 | 0.1 | |||||||||||||||
Denmark | 6,285 | — | — | 6,285 | 1.7 | |||||||||||||||
Finland | 87 | — | — | 87 | — | * | ||||||||||||||
France | 34,493 | — | — | 34,493 | 9.6 | |||||||||||||||
Germany | 25,920 | — | — | 25,920 | 7.2 | |||||||||||||||
Hong Kong | 4,070 | — | — | 4,070 | 1.1 | |||||||||||||||
India | 2,833 | — | — | 2,833 | 0.8 | |||||||||||||||
Indonesia | 1,067 | — | — | 1,067 | 0.3 | |||||||||||||||
Ireland | 3,915 | — | — | 3,915 | 1.1 | |||||||||||||||
Israel | 2,650 | — | — | 2,650 | 0.7 | |||||||||||||||
Italy | 6,376 | — | — | 6,376 | 1.8 | |||||||||||||||
Japan | 48,712 | — | — | 48,712 | 13.6 | |||||||||||||||
Jersey | 10,710 | — | — | 10,710 | 3.0 | |||||||||||||||
Kenya | 673 | — | — | 673 | 0.2 | |||||||||||||||
Luxembourg | 418 | — | — | 418 | 0.1 | |||||||||||||||
Mexico | 1,037 | — | — | 1,037 | 0.3 | |||||||||||||||
Netherlands | 24,150 | — | — | 24,150 | 6.7 | |||||||||||||||
Norway | 7,622 | — | — | 7,622 | 2.1 | |||||||||||||||
Russia | 3,380 | — | — | 3,380 | 0.9 | |||||||||||||||
Singapore | 6,422 | — | — | 6,422 | 1.8 | |||||||||||||||
South Africa | 2,689 | — | — | 2,689 | 0.7 | |||||||||||||||
South Korea | 4,119 | — | — | 4,119 | 1.1 | |||||||||||||||
Spain | 5,397 | — | — | 5,397 | 1.5 | |||||||||||||||
Sweden | 2,685 | — | — | 2,685 | 0.7 | |||||||||||||||
Switzerland | 39,400 | — | — | 39,400 | 11.0 | |||||||||||||||
Taiwan | 5,316 | — | — | 5,316 | 1.5 | |||||||||||||||
Turkey | 484 | — | — | 484 | 0.1 | |||||||||||||||
United Kingdom | 69,376 | — | — | 69,376 | 19.3 | |||||||||||||||
United States | 1,627 | — | — | 1,627 | 0.5 | |||||||||||||||
Preferred Stocks | 616 | — | — | 616 | 0.2 | |||||||||||||||
Short-Term Investments | — | 11,938 | — | 11,938 | 3.3 | |||||||||||||||
Other Securities | — | 5,117 | — | 5,117 | 1.4 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Investments | 344,685 | 17,055 | — | 361,740 | 100.6 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other Assets and Liabilities, Net | (0.6 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
100.0 | ||||||||||||||||||||
|
| |||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | 365 | — | — | 365 | 0.1 | |||||||||||||||
Foreign Currency Exchange Contracts | (5 | ) | (431 | ) | — | (436 | ) | (0.1 | ) | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Other Financial Instruments** | $ | 360 | $ | (431 | ) | $ | — | $ | (71 | ) | ||||||||||
|
|
|
|
|
|
|
|
* | Less than .05% of net assets. |
** | Other financial instruments 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.
For disclosure on transfers between Levels 1, 2 and 3 during the period ended June 30, 2013, see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
44 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Fair Value of Derivative Instruments — June 30, 2013 (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 | $ | — | $ | 26 | ||||
Daily variation margin on futures contracts* | 679 | — | ||||||
|
|
|
| |||||
Total | $ | 679 | $ | 26 | ||||
|
|
|
| |||||
Location: Statement of Assets and Liabilities - Liabilities | ||||||||
Daily variation margin on futures contracts* | $ | 314 | $ | — | ||||
Unrealized depreciation on foreign currency exchange contracts | — | 462 | ||||||
|
|
|
| |||||
Total | $ | 314 | $ | 462 | ||||
|
|
|
| |||||
Derivatives not accounted for as hedging instruments | Equity Contracts | Foreign Currency Contracts | ||||||
Location: Statement of Operations - Net realized gain (loss) | ||||||||
Futures contracts | $ | 1,731 | $ | — | ||||
Foreign currency-related transactions** | — | (730 | ) | |||||
|
|
|
| |||||
Total | $ | 1,731 | $ | (730 | ) | |||
|
|
|
| |||||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||||||
Futures contracts | $ | 101 | $ | — | ||||
Foreign currency-related transactions*** | — | (375 | ) | |||||
|
|
|
| |||||
Total | $ | 101 | $ | (375 | ) | |||
|
|
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
** | Only includes net realized gain (loss) on forward and spot contracts. May differ from the net realized gain (loss) on foreign currency-related transactions reported within the Statement of Operations. |
*** | Only includes change in unrealized gain (loss) on forward and spot contracts. May differ from the net change in unrealized gain (loss) on foreign currency-related transactions reported within the Statement of Operations. |
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.
Non-U.S. Fund | 45 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Balance Sheet Offsetting of Financial and Derivative Instruments — June 30, 2013 (Unaudited)
Amounts in thousands
Offsetting of Financial Assets and Derivative Assets
Description | Location: Statement of Assets and Liabilities - Assets | Gross Amounts of Recognized Assets | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Assets Presented on the Statement of Assets and Liabilities | ||||||||||
Securities on loan | Investments, at fair value | $ | 4,912 | $ | — | $ | 4,912 | |||||||
Foreign Currency Exchange Contracts | Unrealized appreciation on foreign currency exchange contracts | 26 | — | 26 | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | 679 | — | 679 | ||||||||||
|
| |||||||||||||
$ | 5,617 | $ | — | $ | 5,617 | |||||||||
|
|
Financial Assets, Derivative Assets, and Collateral Held by Counterparty
Counterparty | Net Amounts of Assets Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | |||||||||||||
Financial and Derivative Instruments | Collateral Received | |||||||||||||||
Barclays | $ | 1,700 | $ | — | $ | 1,700 | $ | — | ||||||||
Credit Suisse | 2,557 | — | 2,557 | — | ||||||||||||
JPMorgan Chase | 359 | — | 359 | — | ||||||||||||
Morgan Stanley | 974 | — | 307 | 667 | ||||||||||||
State Street | 27 | — | — | 27 | ||||||||||||
|
| |||||||||||||||
$ | 5,617 | $ | — | $ | 4,923 | $ | 694 | |||||||||
|
|
Offsetting of Financial Liabilities and Derivative Liabilities
Description | Location: Statement of Assets and Liabilities - Liabilities | Gross Amounts of Recognized Liabilities | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | $ | 314 | $ | — | $ | 314 | |||||||
Foreign Currency Exchange Contracts | Unrealized depreciation on foreign currency exchange contracts | 462 | — | 462 | ||||||||||
|
| |||||||||||||
$ | 776 | $ | — | $ | 776 | |||||||||
|
|
Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty
Counterparty | Net Amounts of Liabilities Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | |||||||||||||
Financial and Derivative Instruments | Collateral Pledged | |||||||||||||||
Bank of America | $ | 1 | $ | — | $ | — | $ | 1 | ||||||||
Commonwealth Bank of Australia | 90 | — | — | 90 | ||||||||||||
Deutsche Bank | 2 | — | — | 2 | ||||||||||||
JPMorgan Chase | 93 | — | — | 93 | ||||||||||||
Morgan Stanley | 312 | — | 312 | — | ||||||||||||
Royal Bank of Canada | 93 | — | — | 93 | ||||||||||||
Standard Chartered | 94 | — | — | 94 | ||||||||||||
State Street | 91 | — | — | 91 | ||||||||||||
|
| |||||||||||||||
$ | 776 | $ | — | $ | 312 | $ | 464 | |||||||||
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
For further disclosure on derivatives and counterparty risk see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
46 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 322,190 | ||
Investments, at fair value**, *** | 361,740 | |||
Cash (restricted)(a) | 2,300 | |||
Foreign currency holdings* | 235 | |||
Unrealized appreciation on foreign currency exchange contracts | 26 | |||
Receivables: | ||||
Dividends and interest | 1,108 | |||
Dividends from affiliated Russell funds | 1 | |||
Investments sold | 2,869 | |||
Fund shares sold | 71 | |||
Foreign taxes recoverable | 332 | |||
Daily variation margin on futures contracts | 239 | |||
Other receivable | 4 | |||
Prepaid expenses | 1 | |||
|
| |||
Total assets | 368,926 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Due to custodian | 13 | |||
Investments purchased | 3,205 | |||
Fund shares redeemed | 107 | |||
Accrued fees to affiliates | 274 | |||
Other accrued expenses | 136 | |||
Daily variation margin on futures contracts | 152 | |||
Deferred tax liability | 4 | |||
Unrealized depreciation on foreign currency exchange contracts | 462 | |||
Payable upon return of securities loaned | 5,117 | |||
|
| |||
Total liabilities | 9,470 | |||
|
| |||
Net Assets | $ | 359,456 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 47 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Statement of Assets and Liabilities, continued — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 4,921 | ||
Accumulated net realized gain (loss) | (84,086 | ) | ||
Unrealized appreciation (depreciation) on: | ||||
Investments (net of deferred tax liability for foreign capital gains taxes) | 39,546 | |||
Futures contracts | 365 | |||
Foreign currency-related transactions | (453 | ) | ||
Other investments | 4 | |||
Shares of beneficial interest | 345 | |||
Additional paid-in capital | 398,814 | |||
|
| |||
Net Assets | $ | 359,456 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 10.43 | ||
Net assets | $ | 359,455,681 | ||
Shares outstanding ($.01 par value) | 34,461,245 | |||
Amounts in thousands | ||||
* Foreign currency holdings — cost | $ | 236 | ||
** Securities on loan included in investments | $ | 4,912 | ||
*** Investments in affiliates, Russell U.S. Cash Management Fund and Russell U.S. Cash Collateral Fund | $ | 17,055 | ||
(a) Cash Collateral for Futures | $ | 2,300 |
(#) | 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.
48 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Dividends | $ | 7,515 | ||
Dividends from affiliated Russell funds | 10 | |||
Securities lending income | 261 | |||
Less foreign taxes withheld | (549 | ) | ||
|
| |||
Total investment income | 7,237 | |||
|
| |||
Expenses | ||||
Advisory fees | 1,637 | |||
Administrative fees | 91 | |||
Custodian fees | 99 | |||
Transfer agent fees | 8 | |||
Professional fees | 37 | |||
Trustees’ fees | 4 | |||
Printing fees | 17 | |||
Miscellaneous | 8 | |||
|
| |||
Expenses before reductions | 1,901 | |||
Expense reductions | (91 | ) | ||
|
| |||
Net expenses | 1,810 | |||
|
| |||
Net investment income (loss) | 5,427 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments (net of deferred tax liability for foreign capital gains taxes) | 9,893 | |||
Futures contracts | 1,731 | |||
Foreign currency - related transactions | (752 | ) | ||
|
| |||
Net realized gain (loss) | 10,872 | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments (net of deferred tax liability for foreign capital gains taxes) | (7,352 | ) | ||
Futures contracts | 101 | |||
Foreign currency - related transactions | (392 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | (7,643 | ) | ||
|
| |||
Net realized and unrealized gain (loss) | 3,229 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 8,656 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 49 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | For the Fiscal Year December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 5,427 | $ | 6,625 | ||||
Net realized gain (loss) | 10,872 | 1,732 | ||||||
Net change in unrealized appreciation (depreciation) | (7,643 | ) | 54,010 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 8,656 | 62,367 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (4,457 | ) | (6,051 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (4,457 | ) | (6,051 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | (1,599 | ) | (29,038 | ) | ||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 2,600 | 27,278 | ||||||
Net Assets | ||||||||
Beginning of period | 356,856 | 329,578 | ||||||
|
|
|
| |||||
End of period | $ | 359,456 | $ | 356,856 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | 4,921 | $ | 3,951 |
See accompanying notes which are an integral part of the financial statements.
50 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Statements of Changes in Net Assets, continued
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 927 | $ | 9,746 | 2,308 | $ | 21,577 | ||||||||||
Proceeds from reinvestment of distributions | 427 | 4,457 | 606 | 6,051 | ||||||||||||
Payments for shares redeemed | (1,489 | ) | (15,802 | ) | (5,992 | ) | (56,666 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | (135 | ) | $ | (1,599 | ) | (3,078 | ) | $ | (29,038 | ) | ||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 51 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each 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 | $ Total Distributions | ||||||||||||||||||||||
June 30, 2013(1) | 10.31 | .16 | .09 | .25 | (.13 | ) | — | (.13 | ) | |||||||||||||||||||
December 31, 2012 | 8 .75 | .18 | 1.55 | 1.73 | (.17 | ) | — | (.17 | ) | |||||||||||||||||||
December 31, 2011 | 10.21 | .17 | (1.46 | ) | (1.29 | ) | (.17 | ) | — | (.17 | ) | |||||||||||||||||
December 31, 2010 | 9 .25 | .12 | .92 | 1.04 | (.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 | ) |
See accompanying notes which are an integral part of the financial statements.
52 | Non-U.S. Fund |
Table of Contents
$ Net Asset Value, End of Period | % Total Return(d)(f) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Gross(e) | % Ratio of Expenses to Average Net Assets, Net(b)(e) | % Ratio of Net Investment Income to Average Net Assets(b)(e) | % Portfolio Turnover Rate(d) | ||||||||||||||||||||
10.43 | 2.42 | 359,456 | 1.04 | .99 | 2.98 | 22 | ||||||||||||||||||||
10.31 | 19.81 | 356,856 | 1.07 | 1.01 | 1.94 | 47 | ||||||||||||||||||||
8.75 | (12.88 | ) | 329,578 | 1.10 | 1.04 | 1.74 | 49 | |||||||||||||||||||
10.21 | 11.42 | 366,870 | 1.12 | 1.06 | 1.30 | 49 | ||||||||||||||||||||
9.25 | 27.33 | 322,145 | 1.12 | 1.04 | 1.56 | 133 | ||||||||||||||||||||
7.48 | (42.79 | ) | 255,750 | 1.21 | 1.15 | 2.01 | 123 |
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund | 53 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | ||||||||
June 30, 2013 | $ | 976.90 | $ | 1,021.67 | ||||
Expenses Paid During Period* | $ | 3.09 | $ | 3.16 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.63% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
54 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Long-Term Investments - 82.2% | ||||||||
Asset-Backed Securities - 6.4% |
| |||||||
Access Group, Inc. | 511 | 510 | ||||||
ACE Securities Corp. | 22 | 22 | ||||||
Ally Auto Receivables Trust | 175 | 175 | ||||||
Series 2012-2 Class A2 | 339 | 339 | ||||||
Ally Master Owner Trust | 290 | 293 | ||||||
Series 2012-1 Class A2 | 445 | 448 | ||||||
Series 2013-1 Class A2 | 835 | 827 | ||||||
Alm Loan Funding | 450 | 448 | ||||||
AmeriCredit Automobile Receivables Trust Series 2010-4 Class B | 220 | 221 | ||||||
Series 2011-3 Class B | 450 | 456 | ||||||
Series 2012-2 Class A2 | 812 | 813 | ||||||
Asset Backed Securities Corp. Home Equity Series 2005-HE5 Class M3 | 1,050 | 886 | ||||||
Series 2006-HE5 Class A5 | 1,200 | 949 | ||||||
Bayview Financial Acquisition Trust | 190 | 203 | ||||||
Brazos Higher Education Authority | 500 | 495 | ||||||
Series 2011-2 Class A3 | 410 | 399 | ||||||
Capital One Multi-Asset Execution Trust Series 2006-A12 Class A | 120 | 120 | ||||||
CCG Receivables Trust | 355 | 355 | ||||||
CFC LLC | 390 | 389 | ||||||
Chesapeake Funding LLC | 897 | 899 | ||||||
CIT Education Loan Trust | 447 | 415 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Citigroup Mortgage Loan Trust, Inc. | 1,142 | 1,111 | ||||||
Series 2007-WFH1 Class A4 | 934 | 750 | ||||||
Series 2007-WFH4 Class A2B | 1,261 | 1,111 | ||||||
Conseco Financial Corp. | 290 | 291 | ||||||
Countrywide Asset-Backed Certificates Series 2006-3 Class 2A2 | 123 | 118 | ||||||
Series 2007-4 Class A2 | 245 | 228 | ||||||
DT Auto Owner Trust | 205 | 205 | ||||||
Series 2013-1A Class A | 915 | 914 | ||||||
Educational Funding of the South, Inc. Series 2011-1 Class A2 | 450 | 443 | ||||||
EFS Volunteer LLC | 500 | 464 | ||||||
Exeter Automobile Receivables Trust | 308 | 306 | ||||||
Fannie Mae Grantor Trust | 48 | 49 | ||||||
Federal Home Loan Mortgage Corp. Structured Pass Through Securities | 33 |
| 34 |
| ||||
Green Tree | 833 | 922 | ||||||
Halcyon Structured Asset Management CLO I, Ltd. | 154 | 153 | ||||||
Honda Auto Receivables Owner Trust | 1,141 | 1,143 | ||||||
HSBC Home Equity Loan Trust | 115 | 112 | ||||||
Hyundai Auto Receivables Trust | 110 | 110 | ||||||
Series 2012-B Class A2 | 660 | 660 | ||||||
JPMorgan Mortgage Acquisition Corp. | 1,832 | 1,438 |
Core Bond Fund | 55 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Lafayette CLO, Ltd. | 174 | 174 | ||||||
Landmark VII CDO, Ltd. | 333 | 330 | ||||||
Lehman XS Trust | 167 | 128 | ||||||
Series 2006-13 Class 1A2 | 157 | 121 | ||||||
Series 2006-19 Class A2 | 163 | 122 | ||||||
Long Beach Mortgage Loan Trust | 4 | 4 | ||||||
Series 2004-4 Class M1 | 1,200 | 1,105 | ||||||
Merrill Lynch First Franklin Mortgage Loan Trust | 121 | 65 | ||||||
Series 2007-4 Class 2A2 | 866 | 463 | ||||||
Montana Higher Education Student Assistance Corp. | 650 | 631 | ||||||
Morgan Stanley ABS Capital I, Inc. Trust | 778 | 348 | ||||||
Series 2007-HE5 Class A2D | 778 | 353 | ||||||
Morgan Stanley Capital I, Inc. | 1,950 | 1,440 | ||||||
Motor PLC | 315 | 316 | ||||||
Neptune Finance CCS, Ltd. | 450 | 448 | ||||||
Nob Hill CLO, Ltd. | 500 | 494 | ||||||
OHA Credit Partners VII, Ltd. | 450 | 449 | ||||||
Pacifica CDO V Corp. | 309 | 307 | ||||||
Popular ABS Mortgage Pass-Through Trust | 90 | 79 | ||||||
Series 2006-C Class A4 | 1,380 | 1,015 | ||||||
Series 2006-D Class A3 | 1,500 | 1,078 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Porsche Financial Auto Securities | 160 | 160 | ||||||
Prestige Auto Receivables Trust 2013-1 | 330 | 329 | ||||||
RAMP Trust | 352 | 352 | ||||||
Series 2003-RS11 Class AI6A | 112 | 110 | ||||||
RASC Trust | 26 | 21 | ||||||
Red River CLO, Ltd. | 475 | 461 | ||||||
Renaissance Home Equity Loan Trust | 85 | 81 | ||||||
Series 2006-1 Class AF6 | 154 | 114 | ||||||
Series 2007-1 Class AF2 | 412 | 226 | ||||||
Series 2007-2 Class AF2 | 124 | 67 | ||||||
Santander Drive Auto Receivables Trust | 180 | 182 | ||||||
Series 2012-1 Class B | 340 | 346 | ||||||
Series 2012-2 Class A2 | 498 | 498 | ||||||
Series 2012-2 Class B | 430 | 435 | ||||||
Series 2013-1 Class B | 230 | 229 | ||||||
Series 2013-2 Class B | 360 | 359 | ||||||
Series 2013-3 Class B | 595 | 590 | ||||||
SLM Private Education Loan Trust | 734 | 759 | ||||||
Series 2013-B Class A2A | 1,250 | 1,187 | ||||||
SLM Student Loan Trust | 350 | 349 | ||||||
Series 2005-5 Class A2 | 148 | 148 | ||||||
Series 2006-2 Class A6 | 570 | 480 | ||||||
Series 2006-8 Class A6 | 570 | 481 | ||||||
Series 2008-4 Class A4 | 1,400 | 1,461 |
56 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 2008-7 Class A2 | 1,564 | 1,566 | ||||||
Series 2012-7 Class A3 | 475 | 469 | ||||||
Small Business Administration Participation Certificates | 426 | 465 | ||||||
SMART Trust | 344 | 345 | ||||||
Series 2011-2USA Class A4A | 770 | 785 | ||||||
Series 2012-1USA Class A2A | 287 | 287 | ||||||
Series 2012-1USA Class A4A | 310 | 317 | ||||||
Series 2012-4US Class A2A 0.670% due 06/14/15 | 64 | 64 | ||||||
Series 2013-1US Class A4A | 305 | 303 | ||||||
Soundview Home Equity Loan Trust | 817 | 804 | ||||||
Series 2005-OPT3 Class A4 | 283 | 278 | ||||||
Toyota Auto Receivables Owner Trust | 67 | 67 | ||||||
Washington Mutual Asset-Backed Certificates | 486 | 256 | ||||||
|
| |||||||
45,125 | ||||||||
|
| |||||||
Corporate Bonds and Notes - 11.0% |
| |||||||
AbbVie, Inc. | 400 | 404 | ||||||
1.750% due 11/06/17 (Þ) | 655 | 642 | ||||||
Ally Financial, Inc. | 400 | 410 | ||||||
Alterra USA Holdings, Ltd. | 155 | 160 | ||||||
Altria Group, Inc. | 210 | 316 | ||||||
Amazon.com, Inc. | 295 | 285 | ||||||
American Airlines Class A Pass Through Trust | 450 | 425 | ||||||
American General Institutional Capital B | 205 | 247 | ||||||
American International Group, Inc. | 440 | 482 | ||||||
8.175% due 05/15/58 | 370 | 451 | ||||||
American Tower Corp. | 255 | 295 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Ameriprise Financial, Inc. | 210 | 229 | ||||||
AmerisourceBergen Corp. | 155 | 171 | ||||||
Anadarko Petroleum Corp. | 200 | 230 | ||||||
6.450% due 09/15/36 | 390 | 452 | ||||||
Anheuser-Busch InBev Worldwide, Inc. | 345 | 436 | ||||||
Arch Coal, Inc. | 70 | 70 | ||||||
7.000% due 06/15/19 | 350 | 291 | ||||||
Ashland, Inc. | 145 | 148 | ||||||
4.750% due 08/15/22 (Þ) | 315 | 312 | ||||||
AT&T Corp. | 175 | 244 | ||||||
AT&T, Inc. | 130 | 132 | ||||||
Bank of America Corp. | 400 | 420 | ||||||
4.750% due 08/01/15 | 320 | 339 | ||||||
5.625% due 10/14/16 | 200 | 221 | ||||||
6.000% due 09/01/17 | 135 | 151 | ||||||
5.750% due 12/01/17 | 140 | 156 | ||||||
2.000% due 01/11/18 | 485 | 470 | ||||||
3.300% due 01/11/23 | 615 | 581 | ||||||
Bank of America NA | 600 | 579 | ||||||
6.100% due 06/15/17 | 775 | 865 | ||||||
Barrick NA Finance LLC | 330 | 267 | ||||||
Bear Stearns Cos. LLC | 380 | 416 | ||||||
7.250% due 02/01/18 | 195 | 232 | ||||||
Berkshire Hathaway, Inc. | 425 | 404 | ||||||
Boston Scientific Corp. | 295 | 309 | ||||||
6.000% due 01/15/20 | 200 | 226 | ||||||
Burlington Northern Santa Fe LLC | 25 | 31 | ||||||
6.750% due 03/15/29 | 10 | 12 | ||||||
Cablevision Systems Corp. | 175 | 169 | ||||||
Carlyle Holdings II Finance LLC | 260 | 243 | ||||||
Cellco Partnership / Verizon Wireless Capital LLC | 455 | 591 | ||||||
CenterPoint Energy Resources Corp. | 50 | 58 | ||||||
CF Industries, Inc. | 390 | 370 | ||||||
Chase Capital III | 295 | 239 |
Core Bond Fund | 57 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Chevron Corp. | 540 | 535 | ||||||
3.191% due 06/24/23 | 325 | 323 | ||||||
CHS/Community Health Systems, Inc. | 180 | 191 | ||||||
CIT Group, Inc. | 390 | 421 | ||||||
Citigroup, Inc. | 405 | 426 | ||||||
4.700% due 05/29/15 | 50 | 53 | ||||||
2.250% due 08/07/15 | 295 | 300 | ||||||
5.850% due 08/02/16 | 220 | 246 | ||||||
6.000% due 08/15/17 | 450 | 507 | ||||||
6.125% due 11/21/17 | 405 | 460 | ||||||
5.375% due 08/09/20 | 250 | 276 | ||||||
3.375% due 03/01/23 | 260 | 249 | ||||||
3.500% due 05/15/23 | 860 | 772 | ||||||
CNH Capital LLC | 330 | 332 | ||||||
Commonwealth Edison Co. | 290 | 337 | ||||||
ConAgra Foods, Inc. | 410 | 441 | ||||||
6.625% due 08/15/39 (Þ) | 300 | 349 | ||||||
Continental Airlines 1999-1 Class A Pass Through Trust | 299 | 332 | ||||||
Continental Airlines 2007-1 Class A Pass Through Trust | 132 | 146 | ||||||
Continental Airlines 2009-1 Pass Through Trust | 208 | 238 | ||||||
Coventry Health Care, Inc. | 415 | 462 | ||||||
Crown Castle Towers LLC | 130 | 134 | ||||||
CVS Caremark Corp. | 295 | 307 | ||||||
Daimler Finance NA LLC | 400 | 401 | ||||||
DCP Midstream Operating, LP | 275 | 285 | ||||||
Delta Air Lines Pass Through Trust | 108 | 118 | ||||||
DIRECTV Holdings LLC / DIRECTV Financing Co., Inc. | 275 | 289 | ||||||
3.800% due 03/15/22 | 380 | 365 | ||||||
Discover Financial Services | 260 | 268 | ||||||
DISH DBS Corp. | 400 | 425 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Duke Energy Progress, Inc. | 310 | 283 | ||||||
Dynegy Roseton LLC / Danskammer (Ø) Pass Through Trust | 700 | 14 | ||||||
Edison Mission Energy | 675 | 379 | ||||||
El Paso Natural Gas Co. LLC | 100 | 120 | ||||||
Energy Transfer Partners, LP | 205 | 207 | ||||||
3.292% due 11/01/66 (Ê)(Þ) | 1,380 | 1,243 | ||||||
Enterprise Products Operating LLC | 540 | 604 | ||||||
4.850% due 03/15/44 | 210 | 199 | ||||||
Series B | 290 | 326 | ||||||
Express Scripts Holding Co. | 410 | 435 | ||||||
Farmers Exchange Capital | 845 | 984 | ||||||
7.200% due 07/15/48 (Þ) | 300 | 340 | ||||||
First Data Corp. | 585 | 597 | ||||||
Ford Motor Credit Co. LLC | 600 | 650 | ||||||
FPL Energy Wind Funding LLC | 80 | 67 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 340 | 314 | ||||||
General Electric Capital Corp. | 300 | 318 | ||||||
5.875% due 01/14/38 | 225 | 248 | ||||||
Series GMTN | 230 | 264 | ||||||
3.100% due 01/09/23 | 645 | 609 | ||||||
6.875% due 01/10/39 | 350 | 431 | ||||||
Series MTNA | 420 | 420 | ||||||
6.750% due 03/15/32 | 425 | 510 | ||||||
General Electric Co. | 340 | 384 | ||||||
Genworth Holdings, Inc. | 365 | 317 | ||||||
Georgia-Pacific LLC | 555 | 540 | ||||||
8.875% due 05/15/31 | 205 | 286 | ||||||
Glencore Funding LLC | 405 | 366 | ||||||
Goldman Sachs Group, Inc. (The) | 365 | 358 | ||||||
6.150% due 04/01/18 | 400 | 451 | ||||||
6.000% due 06/15/20 | 150 | 169 | ||||||
6.750% due 10/01/37 | 780 | 799 | ||||||
Series GMTN | 300 | 356 |
58 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Great Plains Energy, Inc. | 170 | 184 | ||||||
HCA, Inc. | 496 | 533 | ||||||
4.750% due 05/01/23 | 205 | 196 | ||||||
HCP, Inc. | 425 | 398 | ||||||
5.375% due 02/01/21 | 400 | 434 | ||||||
Health Care REIT, Inc. | 200 | 227 | ||||||
4.950% due 01/15/21 | 365 | 388 | ||||||
5.250% due 01/15/22 | 200 | 215 | ||||||
6.500% due 03/15/41 | 140 | 155 | ||||||
Healthcare Realty Trust, Inc. | 700 | 783 | ||||||
Hewlett-Packard Co. | 295 | 286 | ||||||
Historic TW, Inc. | 195 | 224 | ||||||
HSBC USA, Inc. | 235 | 240 | ||||||
Humana, Inc. | 160 | 181 | ||||||
7.200% due 06/15/18 | 235 | 280 | ||||||
8.150% due 06/15/38 | 285 | 380 | ||||||
Indiantown Cogeneration, LP | 196 | 210 | ||||||
International Lease Finance Corp. | 720 | 749 | ||||||
4.875% due 04/01/15 | 350 | 356 | ||||||
6.750% due 09/01/16 (Þ) | 100 | 108 | ||||||
3.875% due 04/15/18 | 210 | 197 | ||||||
JetBlue Airways Pass Through Trust | 750 | 676 | ||||||
JPMorgan Chase & Co. | 300 | 312 | ||||||
3.375% due 05/01/23 | 455 | 424 | ||||||
Series 1 | 220 | 249 | ||||||
Series GMTN | 1,400 | 1,398 | ||||||
JPMorgan Chase Bank NA | 70 | 78 | ||||||
6.000% due 10/01/17 | 945 | 1,077 | ||||||
JPMorgan Chase Capital XIII | 480 | 378 | ||||||
JPMorgan Chase Capital XXI | 335 | 255 | ||||||
JPMorgan Chase Capital XXIII | 545 | 414 | ||||||
Life Technologies Corp. | 400 | 451 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Lorillard Tobacco Co. | 465 | 570 | ||||||
Manufacturers & Traders Trust Co. | 84 | 85 | ||||||
Marina District Finance Co., Inc. | 375 | 390 | ||||||
Merck & Co., Inc. | 250 | 237 | ||||||
Merrill Lynch & Co., Inc. | 200 | 226 | ||||||
MetLife, Inc. | 275 | 425 | ||||||
Metropolitan Life Global Funding I | 750 | 737 | ||||||
Mirant Mid Atlantic Pass Through Trust | 340 | 374 | ||||||
Mondelez International, Inc. | 220 | 254 | ||||||
Morgan Stanley | 200 | 207 | ||||||
0.757% due 10/15/15 (Ê) | 180 | 176 | ||||||
1.523% due 02/25/16 (Ê) | 1,300 | 1,297 | ||||||
5.550% due 04/27/17 | 425 | 460 | ||||||
6.250% due 08/28/17 | 500 | 558 | ||||||
5.625% due 09/23/19 | 275 | 296 | ||||||
Series 1654 | 750 | 693 | ||||||
Series GMTN | 225 | 243 | ||||||
Mylan, Inc. | 570 | 562 | ||||||
7.875% due 07/15/20 (Þ) | 340 | 392 | ||||||
National City Bank | 500 | 494 | ||||||
Nationwide Mutual Insurance Company | 265 | 266 | ||||||
5.810% due 12/15/24 (Þ) | 500 | 506 | ||||||
News America, Inc. | 20 | 24 | ||||||
Nisource Finance Corp. | 145 | 168 | ||||||
Nomura Holdings Inc. | 575 | 569 | ||||||
Oncor Electric Delivery Co. LLC | 550 | 665 | ||||||
Panhandle Eastern Pipe Line Co., LP | 450 | 550 | ||||||
Petrohawk Energy Corp. | 230 | 251 | ||||||
Pfizer, Inc. | 450 | 436 | ||||||
Plains Exploration & Production Co. | 355 | 380 | ||||||
Progress Energy, Inc. | 40 | 44 |
Core Bond Fund | 59 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Prudential Financial, Inc. | 330 | 396 | ||||||
Prudential Holdings LLC | 550 | 691 | ||||||
Public Service Co. of Colorado | 195 | 182 | ||||||
Public Service Co. of New Mexico | 260 | 312 | ||||||
QVC, Inc. | 260 | 283 | ||||||
4.375% due 03/15/23 (Þ) | 365 | 340 | ||||||
Rock Tenn Co. | 185 | 196 | ||||||
4.000% due 03/01/23 | 540 | 520 | ||||||
Sabine Pass LNG, LP | 175 | 188 | ||||||
7.500% due 11/30/16 (Þ) | 380 | 390 | ||||||
Samsung Electronics America, Inc. | 705 | 698 | ||||||
Simon Property Group, LP | 160 | 222 | ||||||
SL Green Realty Corp. / SL Green Operating Partnership / Reckson Operating Partnership | 325 | 383 | ||||||
SLM Corp. | 1,800 | 1,909 | ||||||
South Carolina Electric & Gas Co. | 150 | 182 | ||||||
Springleaf Finance Corp. | 300 | 294 | ||||||
Series INCM | 200 | 201 | ||||||
Series MTNI | 700 | 698 | ||||||
Sprint Capital Corp. | 690 | 759 | ||||||
Sprint Nextel Corp. | 340 | 398 | ||||||
Symantec Corp. | ||||||||
4.200% due 09/15/20 | 235 | 241 | ||||||
TD Ameritrade Holding Corp. | ||||||||
4.150% due 12/01/14 | 225 | 236 | ||||||
Tennessee Gas Pipeline Co. LLC | ||||||||
8.000% due 02/01/16 | 200 | 232 | ||||||
8.375% due 06/15/32 | 460 | 616 | ||||||
Time Warner Cable, Inc. | ||||||||
8.250% due 04/01/19 | 315 | 379 | ||||||
Time Warner, Inc. | ||||||||
5.875% due 11/15/16 | 400 | 457 | ||||||
Timken Co. | ||||||||
6.000% due 09/15/14 | 150 | 159 | ||||||
UAL 2009-1 Pass Through Trust | 55 | 63 | ||||||
United Technologies Corp. | ||||||||
1.800% due 06/01/17 | 210 | 211 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
UnitedHealth Group, Inc. | ||||||||
6.000% due 06/15/17 | 3 | 3 | ||||||
2.875% due 03/15/23 | 210 | 197 | ||||||
Valeant Pharmaceuticals International | ||||||||
6.375% due 10/15/20 (Þ) | 195 | 193 | ||||||
Ventas Realty, LP / Ventas Capital Corp. | ||||||||
2.000% due 02/15/18 | 200 | 194 | ||||||
Wachovia Capital Trust III | ||||||||
5.570% due 03/29/49 (Ê)(ƒ) | 415 | 407 | ||||||
WEA Finance LLC / WT Finance Aust Pty, Ltd. | ||||||||
6.750% due 09/02/19 (Þ) | 95 | 112 | ||||||
Weyerhaeuser Co. | ||||||||
7.375% due 10/01/19 | 355 | 419 | ||||||
Williams Cos., Inc. (The) | ||||||||
7.875% due 09/01/21 | 161 | 194 | ||||||
8.750% due 03/15/32 | 108 | 137 | ||||||
Williams Partners, LP / Williams Partners Finance Corp. | ||||||||
7.250% due 02/01/17 | 235 | 273 | ||||||
ZFS Finance USA Trust II | ||||||||
6.450% due 12/15/65 (Þ) | 505 | 540 | ||||||
|
| |||||||
77,233 | ||||||||
|
| |||||||
International Debt - 4.7% | ||||||||
Abbey National Treasury Services PLC | ||||||||
3.875% due 11/10/14 (Þ) | 870 | 896 | ||||||
America Movil SAB de CV | ||||||||
3.125% due 07/16/22 | 295 | 272 | ||||||
ArcelorMittal | ||||||||
5.000% due 02/25/17 | 350 | 354 | ||||||
Arran Funding, Ltd. | 200 | 200 | ||||||
AWAS Aviation Capital, Ltd. | ||||||||
7.000% due 10/17/16 (Þ) | 277 | 288 | ||||||
Bank of Montreal | ||||||||
2.850% due 06/09/15 (Þ) | 100 | 104 | ||||||
Barrick Gold Corp. | ||||||||
2.500% due 05/01/18 (Þ) | 410 | 368 | ||||||
4.100% due 05/01/23 (Þ) | 910 | 760 | ||||||
BBVA Bancomer SA | ||||||||
6.500% due 03/10/21 (Þ) | 200 | 210 | ||||||
BBVA US Senior SAU | ||||||||
4.664% due 10/09/15 | 450 | 464 | ||||||
BM&FBovespa SA | ||||||||
5.500% due 07/16/20 (Þ) | 100 | 102 | ||||||
BP Capital Markets PLC | ||||||||
2.750% due 05/10/23 | 395 | 365 | ||||||
Brazil Minas SPE via State of Minas Gerais | ||||||||
5.333% due 02/15/28 (Þ) | 400 | 388 | ||||||
Caisse Centrale Desjardins du Quebec | ||||||||
2.650% due 09/16/15 (Þ) | 410 | 424 | ||||||
Canadian Oil Sands, Ltd. | ||||||||
6.000% due 04/01/42 (Þ) | 190 | 196 | ||||||
CDP Financial, Inc. | ||||||||
5.600% due 11/25/39 (Þ) | 265 | 304 |
60 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
CNOOC Finance 2013, Ltd. | ||||||||
3.000% due 05/09/23 | 600 | 542 | ||||||
Cooperatieve Centrale Raiffeisen-Boerenleenbank BA/Netherlands | ||||||||
3.950% due 11/09/22 | 748 | 716 | ||||||
Corp. Nacional del Cobre de Chile | ||||||||
7.500% due 01/15/19 (Þ) | 200 | 239 | ||||||
Credit Suisse NY | ||||||||
6.000% due 02/15/18 | 770 | 865 | ||||||
DP World, Ltd. | ||||||||
6.850% due 07/02/37 (Þ) | 330 | 341 | ||||||
Duane Street CLO III, Ltd. | 785 | 777 | ||||||
Eksportfinans ASA | ||||||||
2.375% due 05/25/16 | 225 | 215 | ||||||
Enel Finance International NV | ||||||||
6.000% due 10/07/39 (Þ) | 175 | 162 | ||||||
Export-Import Bank of Korea | ||||||||
5.875% due 01/14/15 | 700 | 745 | ||||||
Fomento Economico Mexicano SAB de CV | ||||||||
4.375% due 05/10/43 | 360 | 313 | ||||||
Government of the Cayman Islands | ||||||||
5.950% due 11/24/19 (Þ) | 230 | 255 | ||||||
HBOS PLC | 825 | 874 | ||||||
HSBC Bank PLC | ||||||||
3.100% due 05/24/16 (Þ) | 800 | 839 | ||||||
Hutchison Whampoa International 11, Ltd. | ||||||||
4.625% due 01/13/22 (Þ) | 375 | 383 | ||||||
Indian Oil Corp., Ltd. | ||||||||
4.750% due 01/22/15 | 400 | 413 | ||||||
Intelsat Jackson Holdings SA | ||||||||
8.500% due 11/01/19 | 400 | 431 | ||||||
7.500% due 04/01/21 | 305 | 320 | ||||||
Intesa Sanpaolo SpA | ||||||||
3.125% due 01/15/16 | 710 | 698 | ||||||
IPIC GMTN, Ltd. | ||||||||
5.500% due 03/01/22 (Þ) | 125 | 133 | ||||||
Israel Government International Bond | ||||||||
4.500% due 01/30/43 | 200 | 180 | ||||||
Itau Unibanco Holding SA | ||||||||
5.500% due 08/06/22 (Þ) | 700 | 669 | ||||||
JPMorgan Chase & Co. | 605 | 569 | ||||||
Kommunalbanken AS | ||||||||
1.125% due 05/23/18 (Þ) | 1,020 | 983 | ||||||
Korea East-West Power Co., Ltd. | ||||||||
2.500% due 07/16/17 (Þ) | 200 | 195 | ||||||
Korea Electric Power Corp. | ||||||||
5.125% due 04/23/34 (Þ) | 60 | 60 | ||||||
Lloyds Banking Group PLC | ||||||||
6.657% due 12/31/49 (ƒ)(Þ) | 675 | 587 | ||||||
LyondellBasell Industries NV | 410 | 446 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Majapahit Holding BV | 100 | 111 | ||||||
Mexico Government International Bond | ||||||||
4.750% due 03/08/44 | 520 | 463 | ||||||
Nexen, Inc. | ||||||||
7.500% due 07/30/39 | 500 | 611 | ||||||
Nokia OYJ | ||||||||
6.625% due 05/15/39 | 280 | 253 | ||||||
Petrobras Global Finance BV | ||||||||
3.000% due 01/15/19 | 100 | 93 | ||||||
4.375% due 05/20/23 | 590 | 541 | ||||||
5.625% due 05/20/43 | 280 | 243 | ||||||
Petrobras International Finance Co. - Pifco | ||||||||
3.875% due 01/27/16 | 400 | 412 | ||||||
7.875% due 03/15/19 | 800 | 925 | ||||||
5.750% due 01/20/20 | 510 | 531 | ||||||
Petroleos Mexicanos | ||||||||
5.500% due 06/27/44 | 40 | 36 | ||||||
Series REGs | ||||||||
5.500% due 06/27/44 | 210 | 189 | ||||||
Province of Quebec Canada | ||||||||
3.500% due 07/29/20 | 200 | 210 | ||||||
Rabobank Nederland | ||||||||
11.000% due 06/29/49 (ƒ)(Þ) | 480 | 616 | ||||||
Ras Laffan Liquefied Natural Gas Co., Ltd. III | 300 | 351 | ||||||
Rio Tinto Finance USA PLC | ||||||||
1.375% due 06/17/16 | 365 | 363 | ||||||
2.250% due 12/14/18 | 205 | 199 | ||||||
Royal Bank of Scotland Group PLC | ||||||||
6.990% due 10/29/49 (ƒ)(Þ) | 300 | 281 | ||||||
Series 1 | ||||||||
9.118% due 03/31/49 (ƒ) | 300 | 303 | ||||||
Russian Foreign Bond - Eurobond | ||||||||
4.500% due 04/04/22 (Þ) | 345 | 352 | ||||||
Saudi Electricity Global Sukuk Co. 2 | ||||||||
5.060% due 04/08/43 (Þ) | 300 | 273 | ||||||
Sirius International Group, Ltd. | ||||||||
7.506% due 05/29/49 (ƒ)(Þ) | 365 | 377 | ||||||
Suncor Energy, Inc. | ||||||||
5.950% due 12/01/34 | 160 | 172 | ||||||
Sydney Airport Finance Co. Pty, Ltd. | ||||||||
3.900% due 03/22/23 (Þ) | 640 | 604 | ||||||
Talisman Energy, Inc. | ||||||||
5.500% due 05/15/42 | 180 | 176 | ||||||
Telefonos de Mexico SAB de CV | ||||||||
5.500% due 01/27/15 | 360 | 379 | ||||||
Total Capital Canada, Ltd. | ||||||||
0.657% due 01/15/16 (Ê) | 1,500 | 1,507 | ||||||
Total Capital SA | ||||||||
4.450% due 06/24/20 | 260 | 283 | ||||||
Transocean, Inc. | ||||||||
2.500% due 10/15/17 | 345 | 341 | ||||||
6.375% due 12/15/21 | 300 | 337 |
Core Bond Fund | 61 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Turkiye Garanti Bankasi AS | ||||||||
2.776% due 04/20/16 (Ê)(Þ) | 200 | 196 | ||||||
Tyco Electronics Group SA | ||||||||
6.550% due 10/01/17 | 240 | 278 | ||||||
Vale Overseas, Ltd. | ||||||||
8.250% due 01/17/34 | 160 | 187 | ||||||
Vale SA | ||||||||
5.625% due 09/11/42 | 320 | 279 | ||||||
Validus Holdings, Ltd. | ||||||||
8.875% due 01/26/40 | 220 | 278 | ||||||
VimpelCom Holdings BV | ||||||||
7.504% due 03/01/22 (Þ) | 420 | 435 | ||||||
Vivendi SA | ||||||||
2.400% due 04/10/15 (Å) | 200 | 204 | ||||||
Volvo Treasury AB | ||||||||
5.950% due 04/01/15 (Þ) | 385 | 414 | ||||||
VPII Escrow Corp. | ||||||||
7.500% due 07/15/21 (Þ) | 165 | 171 | ||||||
Weatherford International, Ltd. | ||||||||
5.125% due 09/15/20 | 280 | 293 | ||||||
Willis Group Holdings PLC | ||||||||
4.125% due 03/15/16 | 210 | 220 | ||||||
|
| |||||||
33,132 | ||||||||
|
| |||||||
Loan Agreements - 0.2% | ||||||||
CHS/Community Health Systems, Inc. Non Extended Term Loan | 288 | 287 | ||||||
HCA, Inc. Term Loan B3 | ||||||||
2.948% due 05/01/18 (Ê) | 507 | 505 | ||||||
Valeant Pharmaceuticals International, Inc. Term Loan | ||||||||
1.000% due 06/24/20 | 400 | 399 | ||||||
|
| |||||||
1,191 | ||||||||
|
| |||||||
Mortgage-Backed Securities - 32.6% |
| |||||||
Adjustable Rate Mortgage Trust | 843 | 635 | ||||||
American Home Mortgage Assets LLC | 324 | 284 | ||||||
American Home Mortgage Investment Trust | ||||||||
Series 2004-4 Class 4A | ||||||||
2.430% due 02/25/45 (Ê) | 54 | 54 | ||||||
Series 2007-1 Class GA1C | ||||||||
0.383% due 05/25/47 (Ê) | 782 | 522 | ||||||
Banc of America Funding Corp. | 316 | 311 | ||||||
Series 2006-G Class 2A3 | 413 | 399 | ||||||
Series 2006-I Class 5A1 | 802 | 707 | ||||||
Series 2007-4 Class 3A1 | 911 | 646 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Banc of America Funding Trust | 936 | 907 | ||||||
Banc of America Large Loan, Inc. | 89 | 89 | ||||||
Banc of America Merrill Lynch Commercial Mortgage, Inc. | 250 | 258 | ||||||
Series 2005-1 Class A4 | 120 | 122 | ||||||
Series 2005-2 Class A5 | 745 | 788 | ||||||
Series 2006-2 Class A4 | 200 | 221 | ||||||
Series 2008-1 Class A4 | 580 | 665 | ||||||
Banc of America Mortgage Securities, Inc. | 3 | 3 | ||||||
Series 2004-11 Class 2A1 | 98 | 100 | ||||||
Series 2005-H Class 2A5 | 191 | 170 | ||||||
Bayview Commercial Asset Trust | 419 | 332 | ||||||
BCAP LLC Trust | 397 | 121 | ||||||
Bear Stearns Adjustable Rate Mortgage Trust | 17 | 17 | ||||||
Series 2003-8 Class 4A1 | 57 | 56 | ||||||
Series 2004-5 Class 2A | 636 | 630 | ||||||
Series 2004-9 Class 22A1 | 31 | 31 | ||||||
Series 2005-2 Class A1 | 478 | 471 | ||||||
Series 2007-3 Class 1A1 | 190 | 152 | ||||||
Bear Stearns Alt-A Trust | 140 | 128 | ||||||
Series 2005-7 Class 22A1 | 326 | 267 | ||||||
Series 2005-10 Class 24A1 | 291 | 196 | ||||||
Series 2006-1 Class 21A2 | 364 | 217 | ||||||
Bear Stearns Commercial Mortgage Securities | 75 | 75 |
62 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 2004-PWR3 Class A4 | 807 | 816 | ||||||
Series 2005-T20 Class A4A | 700 | 755 | ||||||
Series 2006-T22 Class A4 | 505 | 553 | ||||||
BNPP Mortgage Securities LLC | 264 | 278 | ||||||
Citicorp Mortgage Securities, Inc. | 200 | 200 | ||||||
Citigroup Commercial Mortgage Trust | 163 | 163 | ||||||
Series 2006-C5 Class A4 | 135 | 150 | ||||||
Citigroup Commerical Mortgage Trust | 300 | 334 | ||||||
Citigroup Mortgage Loan Trust, Inc. | 33 | 32 | ||||||
Series 2006-AR7 Class 1A4A | 374 | 299 | ||||||
Series 2007-10 Class 2A3A | 387 | 322 | ||||||
Series 2007-10 Class 2A4A | 219 | 191 | ||||||
Series 2007-AR8 Class 2A1A | 502 | 407 | ||||||
Commercial Mortgage Asset Trust | 115 | 117 | ||||||
Commercial Mortgage Pass Through Certificates | 1,441 | 1,429 | ||||||
Commercial Mortgage Trust | 100 | 104 | ||||||
Commerical Mortgage Asset Trust | 200 | 236 | ||||||
Commerical Mortgage Pass Through Certificates | 450 | 424 | ||||||
Countrywide Alternative Loan Trust | 259 | 179 | ||||||
Series 2005-48T1 Class A6 | 781 | 662 | ||||||
Series 2006-36T2 Class 1A9 | 193 | 124 | ||||||
Series 2006-45T1 Class 2A2 | 757 | 615 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Countrywide Home Loan Mortgage | 110 | 101 | ||||||
Series 2004-HYB9 Class 1A1 | 175 | 163 | ||||||
Series 2005-3 Class 1A2 | 18 | 16 | ||||||
Series 2005-HYB9 Class 3A2A | 34 | 30 | ||||||
Series 2007-2 Class A2 | 1,595 | 1,440 | ||||||
Series 2007-4 Class 1A10 | 1,456 | 1,263 | ||||||
Series 2007-HY5 Class 1A1 | 1,194 | 966 | ||||||
Credit Suisse First Boston Mortgage Securities Corp. | 50 | 50 | ||||||
Series 2003-C5 Class D | 215 | 218 | ||||||
Series 2004-C5 Class B | 350 | 360 | ||||||
Series 2005-9 Class 2A1 | 221 | 215 | ||||||
Series 2005-C2 Class A3 | 164 | 167 | ||||||
Credit Suisse Mortgage Capital Certificates | 897 | 850 | ||||||
Series 2007-C1 Class A3 | 100 | 108 | ||||||
DBRR Trust | 340 | 364 | ||||||
Series 2012-EZ1 Class A | 674 | 675 | ||||||
Series 2012-EZ1 Class B | 210 | 210 | ||||||
Series 2013-EZ2 Class A | 668 | 668 | ||||||
DBUBS Mortgage Trust | 900 | 947 | ||||||
Deutsche ALT-A Securities, Inc. Alternate Loan Trust | 412 | 303 | ||||||
Series 2007-OA1 Class A1 | 1,769 | 1,263 | ||||||
Extended Stay America Trust | 100 | 99 | ||||||
Series 2013-ESH7 Class A27 | 325 | 315 | ||||||
Series 2013-ESH7 Class B7 | 100 | 95 |
Core Bond Fund | 63 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Fannie Mae | 12 | 13 | ||||||
6.000% due 2017 | 8 | 8 | ||||||
3.584% due 2020 | 580 | 613 | ||||||
3.632% due 2020 | 763 | 810 | ||||||
3.665% due 2020 | 793 | 841 | ||||||
3.763% due 2020 | 771 | 825 | ||||||
4.250% due 2020 | 765 | 843 | ||||||
5.500% due 2020 | 45 | 49 | ||||||
3.890% due 2021 | 200 | 214 | ||||||
4.302% due 2021 | 801 | 879 | ||||||
4.317% due 2021 | 722 | 800 | ||||||
5.500% due 2021 | 61 | 64 | ||||||
2.500% due 2022 | 1,631 | 1,676 | ||||||
3.017% due 2022 | 296 | 298 | ||||||
5.500% due 2022 | 134 | 142 | ||||||
2.460% due 2023 | 947 | 908 | ||||||
4.000% due 2025 | 792 | 838 | ||||||
4.500% due 2025 | 1,304 | 1,400 | ||||||
3.500% due 2026 | 3,103 | 3,270 | ||||||
6.000% due 2026 | 170 | 186 | ||||||
2.870% due 2027 | 100 | 90 | ||||||
3.000% due 2027 | 2,713 | 2,800 | ||||||
6.000% due 2027 | 108 | 117 | ||||||
5.500% due 2028 | 58 | 63 | ||||||
6.000% due 2028 | 8 | 9 | ||||||
3.000% due 2032 | 1,963 | 1,983 | ||||||
3.500% due 2032 | 610 | 629 | ||||||
6.000% due 2032 | 121 | 133 | ||||||
6.150% due 2032 (Ê) | 107 | 116 | ||||||
5.000% due 2033 | 31 | 33 | ||||||
5.500% due 2033 | 7 | 8 | ||||||
6.000% due 2033 | 6 | 6 | ||||||
6.150% due 2033 (Ê) | 82 | 87 | ||||||
5.000% due 2034 | 363 | 392 | ||||||
5.500% due 2034 | 391 | 431 | ||||||
4.500% due 2035 | 20 | 21 | ||||||
3.434% due 2036 (Ê) | 177 | 183 | ||||||
5.500% due 2037 | 1,351 | 1,462 | ||||||
6.000% due 2037 | 8 | 9 | ||||||
5.500% due 2038 | 1,737 | 1,909 | ||||||
4.000% due 2040 | 692 | 728 | ||||||
4.500% due 2040 | 615 | 652 | ||||||
5.500% due 2040 | 236 | 259 | ||||||
6.000% due 2040 | 872 | 948 | ||||||
4.000% due 2041 | 2,985 | 3,121 | ||||||
4.500% due 2041 | 942 | 999 | ||||||
5.500% due 2041 | 116 | 126 | ||||||
6.000% due 2041 | 938 | 1,018 | ||||||
15 Year TBA (Ï) | 1,700 | 1,651 | ||||||
2.500% | 9,215 | 9,252 | ||||||
3.000% | 3,655 | 3,753 | ||||||
3.500% | 240 | 250 | ||||||
30 Year TBA (Ï) | 11,840 | 11,549 | ||||||
3.500% | 18,765 | 19,012 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
4.000% | 15,680 | 16,305 | ||||||
4.500% | 5,050 | 5,344 | ||||||
5.000% | 10,650 | 11,460 | ||||||
5.500% | 4,785 | 5,194 | ||||||
6.000% | 1,700 | 1,848 | ||||||
4.000% due 07/18/28 | 1,000 | 1,058 | ||||||
Series 2003-343 Class 6 | 71 | 11 | ||||||
Series 2003-345 Class 18 | 121 | 8 | ||||||
Series 2003-345 Class 19 | 133 | 8 | ||||||
Series 2005-365 Class 12 | ||||||||
Interest Only STRIP | ||||||||
5.500% due 12/01/35 | 242 | 34 | ||||||
Series 2006-369 Class 8 | ||||||||
Interest Only STRIP | ||||||||
5.500% due 04/01/36 | 41 | 5 | ||||||
Fannie Mae Grantor Trust | ||||||||
Series 2001-T4 Class A1 | ||||||||
7.500% due 07/25/41 | 338 | 410 | ||||||
Fannie Mae REMICS | ||||||||
Series 1999-56 Class Z | ||||||||
7.000% due 12/18/29 | 37 | 42 | ||||||
Series 2003-32 Class FH | ||||||||
0.593% due 11/25/22 (Ê) | 22 | 22 | ||||||
Series 2003-35 Class FY | ||||||||
0.593% due 05/25/18 (Ê) | 77 | 78 | ||||||
Series 2003-W1 Class 1A1 | ||||||||
6.062% due 12/25/42 | 22 | 25 | ||||||
Series 2004-W2 Class 2A2 | ||||||||
7.000% due 02/25/44 | 279 | 324 | ||||||
Series 2005-110 Class MB | ||||||||
5.500% due 09/25/35 | 96 | 104 | ||||||
Series 2006-27 Class SH | ||||||||
Interest Only STRIP | ||||||||
6.507% due 04/25/36 (Ê) | 1,671 | 254 | ||||||
Series 2007-30 Class AF | ||||||||
0.503% due 04/25/37 (Ê) | 57 | 57 | ||||||
Series 2009-39 Class LB | ||||||||
4.500% due 06/25/29 | 405 | 435 | ||||||
Series 2009-96 Class DB | ||||||||
4.000% due 11/25/29 | 575 | 614 | ||||||
Series 2010-85 Class NJ | ||||||||
4.500% due 08/25/40 | 649 | 675 | ||||||
Series 2010-95 Class S | ||||||||
Interest Only STRIP | ||||||||
6.407% due 09/25/40 (Ê) | 1,644 | 277 | ||||||
Series 2010-112 Class PI | ||||||||
Interest Only STRIP | ||||||||
6.000% due 10/25/40 | 1,508 | 221 | ||||||
Series 2012-55 Class PC | ||||||||
3.500% due 05/25/42 | 700 | 695 |
64 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Fannie Mae-Aces | ||||||||
Series 2006-M2 Class A2F | ||||||||
5.259% due 05/25/20 | 122 | 137 | ||||||
Series 2011-M4 Class A2 | ||||||||
3.726% due 06/25/21 | 80 | 84 | ||||||
Series 2012-M12 Class 1A | ||||||||
2.935% due 08/25/22 | 1,230 | 1,224 | ||||||
Series 2012-M15 Class A | ||||||||
2.745% due 10/25/22 | 958 | 934 | ||||||
FDIC Trust | ||||||||
Series 2010-R1 Class A | ||||||||
2.184% due 05/25/50 (Þ) | 387 | 390 | ||||||
Series 2011-R1 Class A | ||||||||
2.672% due 07/25/26 (Þ) | 547 | 564 | ||||||
Federal Home Loan Mortgage Corp. | ||||||||
Series 2010-K009 Class A2 | ||||||||
3.808% due 08/25/20 | 100 | 107 | ||||||
Series 2011-K014 Class X1 | ||||||||
Interest Only STRIP | ||||||||
1.439% due 04/25/21 | 1,269 | 99 | ||||||
Series 2011-K702 Class X1 | ||||||||
Interest Only STRIP | ||||||||
1.716% due 02/25/18 | 4,727 | 288 | ||||||
Series 2012-K019 Class A2 | ||||||||
2.272% due 03/25/22 | 425 | 398 | ||||||
Series 2012-K020 Class A2 | ||||||||
2.373% due 05/25/22 | 925 | 871 | ||||||
Series 2012-K020 Class X1 | ||||||||
Interest Only STRIP | ||||||||
1.612% due 05/25/22 | 2,385 | 238 | ||||||
Series 2012-K022 Class A2 | ||||||||
2.355% due 07/25/22 | 605 | 568 | ||||||
Series 2012-K501 Class X1A | ||||||||
Interest Only STRIP | ||||||||
1.876% due 08/25/16 | 4,916 | 198 | ||||||
Series 2013-K024 Class X1 | ||||||||
Interest Only STRIP | ||||||||
1.026% due 09/25/22 | 2,390 | 152 | ||||||
Series 2013-K025 Class A1 | ||||||||
1.875% due 04/25/22 | 248 | 245 | ||||||
Series 2013-KS01 Class A2 | ||||||||
2.522% due 01/25/23 | 215 | 203 | ||||||
Series 2013-KSMC Class A2 | ||||||||
2.615% due 01/25/23 | 265 | 251 | ||||||
Federal Home Loan Mortgage Corp. | ||||||||
Series 2003-54 Class 2A | ||||||||
6.500% due 02/25/43 | 365 | 442 | ||||||
Series 2003-56 Class A5 | ||||||||
5.231% due 05/25/43 | 377 | 409 | ||||||
Series 2005-63 Class 1A1 | ||||||||
1.378% due 02/25/45 (Ê) | 17 | 17 | ||||||
First Horizon Asset Securities, Inc. | 803 | 676 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
First Horizon Mortgage Pass-Through Trust 2006-2 | 909 | 914 | ||||||
Freddie Mac | ||||||||
6.000% due 2016 | 4 | 4 | ||||||
3.500% due 2025 | 993 | 1,044 | ||||||
2.533% due 2030 (Ê) | 1 | 1 | ||||||
5.500% due 2037 | 434 | 463 | ||||||
5.500% due 2038 | 1,959 | 2,158 | ||||||
6.000% due 2038 | 413 | 452 | ||||||
4.500% due 2039 | 1,891 | 2,062 | ||||||
4.000% due 2041 | 2,897 | 3,056 | ||||||
4.500% due 2041 | 772 | 831 | ||||||
3.000% due 2042 | 371 | 362 | ||||||
Freddie Mac Reference REMIC | 337 | 371 | ||||||
Freddie Mac REMICS | ||||||||
Series 2000-2266 Class F | ||||||||
0.643% due 11/15/30 (Ê) | 7 | 7 | ||||||
Series 2003-2624 Class QH | ||||||||
5.000% due 06/15/33 | 320 | 345 | ||||||
Series 2007-3335 Class BF | ||||||||
0.343% due 07/15/19 (Ê) | 54 | 54 | ||||||
Series 2007-3335 Class FT | ||||||||
0.343% due 08/15/19 (Ê) | 126 | 126 | ||||||
Series 2009-3569 Class NY | ||||||||
5.000% due 08/15/39 | 1,400 | 1,555 | ||||||
Series 2010-3640 Class JA | ||||||||
1.500% due 03/15/15 | 280 | 281 | ||||||
Series 2010-3653 Class B | ||||||||
4.500% due 04/15/30 | 490 | 531 | ||||||
Series 2010-3704 Class DC | ||||||||
4.000% due 11/15/36 | 451 | 480 | ||||||
Series 2011-3901 Class LA | ||||||||
4.000% due 06/15/38 | 346 | 352 | ||||||
Series 2012-4010 Class KM | ||||||||
3.000% due 01/15/42 | 528 | 542 | ||||||
FREMF Mortgage Trust | 510 | 538 | ||||||
GE Business Loan Trust | 472 | 456 | ||||||
GE Capital Commercial Mortgage Corp. | 45 | 45 | ||||||
Ginne Mae II | 246 | 262 | ||||||
Ginnie Mae I | ||||||||
3.000% due 2027 | 575 | 596 | ||||||
4.500% due 2039 | 1,385 | 1,512 | ||||||
4.564% due 2062 | 1,210 | 1,339 | ||||||
Ginnie Mae II | ||||||||
1.750% due 2026 (Ê) | 82 | 85 | ||||||
1.750% due 2027 (Ê) | 6 | 7 |
Core Bond Fund | 65 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
1.625% due 2032 (Ê) | 32 | 33 | ||||||
3.500% due 2040 (Ê) | 1,208 | 1,286 | ||||||
4.000% due 2040 (Ê) | 198 | 210 | ||||||
4.502% due 2061 | 405 | 442 | ||||||
4.700% due 2061 | 320 | 354 | ||||||
5.245% due 2061 | 695 | 785 | ||||||
4.478% due 2063 | 320 | 354 | ||||||
4.519% due 2063 | 1,095 | 1,234 | ||||||
4.652% due 2063 | 115 | 127 | ||||||
4.661% due 2063 | 44 | 49 | ||||||
4.732% due 2063 | 220 | 245 | ||||||
30 Year TBA (Ï) | ||||||||
3.000% | 1,895 | 1,870 | ||||||
3.500% | 1,440 | 1,478 | ||||||
GMAC Commercial Mortgage Securities, Inc. | ||||||||
Series 2004-C3 Class A4 | ||||||||
4.547% due 12/10/41 | 98 | 99 | ||||||
GMAC Mortgage Corp. Loan Trust | 278 | 271 | ||||||
Government National Mortgage Association | ||||||||
Series 2007-12 Class C | ||||||||
5.278% due 04/16/41 | 340 | 369 | ||||||
Series 2007-26 Class SD | ||||||||
Interest Only STRIP | ||||||||
6.608% due 05/16/37 (Ê) | 1,615 | 280 | ||||||
Series 2010-74 Class IO | ||||||||
Interest Only STRIP | ||||||||
0.971% due 03/16/50 | 3,076 | 126 | ||||||
Series 2010-116 Class MP | ||||||||
3.500% due 09/16/40 | 1,519 | 1,621 | ||||||
Series 2010-124 Class C | ||||||||
3.392% due 03/16/45 | 75 | 78 | ||||||
Series 2010-155 Class IO | ||||||||
Interest Only STRIP | ||||||||
1.265% due 06/16/39 | 2,265 | 153 | ||||||
Series 2010-H03 Class HI | ||||||||
Interest Only STRIP | ||||||||
1.465% due 03/20/60 | 22,406 | 1,330 | ||||||
Series 2010-H04 Class BI | ||||||||
Interest Only STRIP | ||||||||
1.382% due 04/20/60 | 1,576 | 99 | ||||||
Series 2010-H12 Class PT | ||||||||
5.470% due 11/20/59 | 712 | 776 | ||||||
Series 2010-H22 Class JI | ||||||||
Interest Only STRIP | ||||||||
2.497% due 11/20/60 | 2,490 | 282 | ||||||
Series 2011-67 Class B | ||||||||
3.863% due 10/16/47 | 230 | 242 | ||||||
Series 2011-127 Class IO | ||||||||
Interest Only STRIP | ||||||||
1.536% due 03/16/47 | 2,342 | 165 | ||||||
Series 2011-H02 Class BI | ||||||||
Interest Only STRIP | ||||||||
0.408% due 02/20/61 | 10,665 | 197 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 2012-99 Class CI | ||||||||
Interest Only STRIP | ||||||||
1.041% due 10/16/49 | 1,906 | 152 | ||||||
Series 2012-115 Class A | ||||||||
2.131% due 04/16/45 | 222 | 220 | ||||||
Series 2012-115 Class IO | ||||||||
Interest Only STRIP | ||||||||
0.433% due 04/16/54 | 790 | 40 | ||||||
Series 2012-147 Class AE | ||||||||
1.750% due 07/16/47 | 397 | 386 | ||||||
GS Mortgage Securities Corp. II | ||||||||
Series 2004-GG2 Class A6 | ||||||||
5.396% due 08/10/38 | 500 | 514 | ||||||
Series 2007-EOP Class A3 | ||||||||
1.456% due 03/06/20 (Ê)(Þ) | 1,800 | 1,805 | ||||||
Series 2011-ALF Class A | ||||||||
2.716% due 02/10/21 (Þ) | 250 | 252 | ||||||
Series 2011-GC5 Class A4 | ||||||||
3.707% due 08/10/44 | 735 | 745 | ||||||
Series 2012-GCJ9 Class A3 | ||||||||
2.773% due 11/10/45 | 290 | 268 | ||||||
GSMPS Mortgage Loan Trust | ||||||||
Series 2006-RP1 Class 1A2 | ||||||||
7.500% due 01/25/36 (Þ) | 415 | 423 | ||||||
GSR Mortgage Loan Trust | ||||||||
Series 2005-AR7 Class 6A1 | ||||||||
5.073% due 11/25/35 (Ê) | 85 | 83 | ||||||
Series 2006-2F Class 3A3 | ||||||||
6.000% due 02/25/36 | 888 | 804 | ||||||
Series 2006-3F Class 2A3 | ||||||||
5.750% due 03/25/36 | 165 | 153 | ||||||
Series 2006-8F Class 4A17 | ||||||||
6.000% due 09/25/36 | 309 | 264 | ||||||
Series 2007-AR2 Class 2A1 | ||||||||
2.780% due 05/25/47 (Ê) | 679 | 563 | ||||||
HarborView Mortgage Loan Trust | ||||||||
Series 2005-4 Class 3A1 | ||||||||
2.765% due 07/19/35 (Ê) | 95 | 81 | ||||||
IndyMac Index Mortgage Loan Trust | ||||||||
Series 2005-AR31 Class 1A1 | ||||||||
2.441% due 01/25/36 (Ê) | 486 | 380 | ||||||
Series 2006-AR41 Class A3 | ||||||||
0.373% due 02/25/37 (Ê) | 1,004 | 682 | ||||||
Irvine Core Office Trust 2013-IRV | ||||||||
Series 2013-IRV Class A1 | ||||||||
2.068% due 05/15/48 (Þ) | 228 | 221 | ||||||
JPMorgan Alternative Loan Trust | ||||||||
Series 2006-A2 Class 3A1 | ||||||||
2.713% due 05/25/36 (Ê) | 1,103 | 818 | ||||||
JPMorgan Chase Commercial Mortgage Securities Corp. | ||||||||
Series 2003-C1 Class D | ||||||||
5.192% due 01/12/37 | 146 | 146 | ||||||
Series 2003-PM1A Class B | ||||||||
5.537% due 08/12/40 | 210 | 210 | ||||||
Series 2004-LN2 Class B | ||||||||
5.315% due 07/15/41 | 150 | 153 |
66 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 2006-LDP8 Class A3B | ||||||||
5.447% due 05/15/45 | 250 | 255 | ||||||
Series 2006-LDP8 Class A4 | ||||||||
5.399% due 05/15/45 | 769 | 845 | ||||||
Series 2007-CB18 Class A4 | ||||||||
5.440% due 06/12/47 | 1,200 | 1,330 | ||||||
Series 2007-CB20 Class ASB | ||||||||
5.688% due 02/12/51 | 70 | 76 | ||||||
Series 2007-LDPX Class A3 | ||||||||
5.420% due 01/15/49 | 700 | 775 | ||||||
JPMorgan Mortgage Trust | ||||||||
Series 2005-A1 Class 6T1 | ||||||||
4.659% due 02/25/35 (Ê) | 19 | 19 | ||||||
Series 2005-A5 Class 3A2 | ||||||||
2.590% due 08/25/35 (Ê) | 35 | 36 | ||||||
Series 2005-A5 Class TA1 | ||||||||
5.290% due 08/25/35 (Ê) | 177 | 175 | ||||||
Series 2005-A8 Class 1A1 | ||||||||
5.184% due 11/25/35 (Ê) | 190 | 179 | ||||||
Series 2005-S3 Class 1A2 | ||||||||
5.750% due 01/25/36 | 44 | 40 | ||||||
Series 2006-A6 Class 1A2 | ||||||||
2.976% due 10/25/36 (Ê) | 146 | 115 | ||||||
Series 2006-A7 Class 2A4R | ||||||||
2.871% due 01/25/37 (Ê) | 1,074 | 863 | ||||||
Series 2007-S3 Class 1A8 | ||||||||
6.000% due 08/25/37 | 847 | 743 | ||||||
LB-UBS Commercial Mortgage Trust | ||||||||
Series 2003-C5 Class C | ||||||||
4.762% due 04/15/37 | 30 | 30 | ||||||
Series 2004-C7 Class A1A | ||||||||
4.475% due 10/15/29 | 59 | 62 | ||||||
Series 2006-C1 Class A3 | ||||||||
5.207% due 02/15/31 | 250 | 258 | ||||||
Mastr Adjustable Rate Mortgages Trust | ||||||||
Series 2006-2 Class 4A1 | ||||||||
2.649% due 02/25/36 (Ê) | 104 | 96 | ||||||
Series 2007-HF2 Class A1 | ||||||||
0.503% due 09/25/37 (Ê) | 608 | 501 | ||||||
Mastr Alternative Loan Trust | ||||||||
Series 2003-4 Class B1 | ||||||||
5.832% due 06/25/33 | 96 | 95 | ||||||
Series 2004-10 Class 5A6 | ||||||||
5.750% due 09/25/34 | 98 | 100 | ||||||
Mellon Residential Funding Corp. | ||||||||
Series 2000-TBC2 Class A1 | ||||||||
0.673% due 06/15/30 (Ê) | 67 | 66 | ||||||
Merrill Lynch Mortgage Trust | ||||||||
Series 2005-A10 Class A | ||||||||
0.403% due 02/25/36 (Ê) | 67 | 58 | ||||||
Series 2005-CIP1 Class AM | ||||||||
5.107% due 07/12/38 | 325 | 344 | ||||||
Series 2008-C1 Class A4 | ||||||||
5.690% due 02/12/51 | 530 | 599 | ||||||
MLCC Mortgage Investors, Inc. | ||||||||
Series 2005-3 Class 5A | ||||||||
0.443% due 11/25/35 (Ê) | 44 | 41 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
ML-CFC Commercial Mortgage Trust | ||||||||
Series 2007-6 Class A4 | ||||||||
5.485% due 03/12/51 | 100 | 111 | ||||||
Morgan Stanley Bank of America Merrill Lynch Trust | ||||||||
Series 2013-C7 Class AS | ||||||||
3.214% due 02/15/46 | 210 | 195 | ||||||
Morgan Stanley Capital I, Inc. | ||||||||
Series 2003-IQ6 Class C | ||||||||
5.293% due 12/15/41 (Þ) | 310 | 317 | ||||||
Series 2003-T11 Class A4 | ||||||||
5.150% due 06/13/41 | 30 | 30 | ||||||
Series 2005-T19 Class A4A | ||||||||
4.890% due 06/12/47 | 750 | 797 | ||||||
Series 2006-T23 Class A4 | ||||||||
5.987% due 08/12/41 | 780 | 868 | ||||||
Series 2007-T27 Class A4 | ||||||||
5.816% due 06/11/42 | 720 | 814 | ||||||
Series 2011-C3 Class A2 | ||||||||
3.224% due 07/15/49 | 195 | 204 | ||||||
Series 2011-C3 Class A4 | ||||||||
4.118% due 07/15/49 | 115 | 120 | ||||||
Morgan Stanley Dean Witter Capital I Trust | 36 | 37 | ||||||
Motel 6 Trust | ||||||||
Series 2012-MTL6 Class A1 | ||||||||
1.500% due 10/05/25 (Þ) | 339 | 334 | ||||||
Series 2012-MTL6 Class A2 | ||||||||
1.948% due 10/05/25 (Þ) | 220 | 216 | ||||||
Series 2012-MTL6 Class XA1 | ||||||||
Interest Only STRIP | ||||||||
3.171% due 10/05/25 (Þ) | 2,130 | 92 | ||||||
Northstar Education Finance, Inc. | ||||||||
Series 2007-1 Class A1 | ||||||||
0.376% due 04/28/30 (Ê) | 475 | 455 | ||||||
NorthStar Mortgage Trust | ||||||||
Series 2012-1 Class A | ||||||||
1.393% due 08/25/29 (Ê)(Þ) | 174 | 174 | ||||||
OBP Depositor LLC Trust | 285 | 309 | ||||||
ORES NPL LLC | ||||||||
Series 2012-LV1 Class A | �� | |||||||
4.000% due 09/25/44 (Þ) | 69 | 69 | ||||||
Prime Mortgage Trust | 11 | 10 | ||||||
Prudential Commerical Mortgage Series 2003-PWR1 Class D | 3 | 3 | ||||||
RALI Trust | 258 | 194 | ||||||
Residential Asset Securitization Trust | 68 | 65 |
Core Bond Fund | 67 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 2005-A10 Class A3 | 141 | 129 | ||||||
Series 2006-A9CB Class A6 6.000% due 09/25/36 | 199 | 134 | ||||||
RFMSI Trust | 196 | 162 | ||||||
RREF 2013 LT1 LLC | 180 | 180 | ||||||
Sequoia Mortgage Trust | 23 | 23 | ||||||
SMA Issuer I LLC | 121 | 122 | ||||||
Structured Adjustable Rate Mortgage Loan Trust | 162 | 151 | ||||||
Structured Asset Mortgage Investments II Trust | 282 | 268 | ||||||
Series 2005-AR5 Class A3 | 110 | 107 | ||||||
Series 2007-AR6 Class A1 | 983 | 779 | ||||||
Structured Asset Securities Corp. | 568 | 560 | ||||||
Wachovia Bank Commercial Mortgage Trust | 100 | 104 | ||||||
Series 2005-C16 Class A4 | 725 | 757 | ||||||
Series 2005-C17 Class A4 | 100 | 105 | ||||||
Series 2005-C20 Class A7 | 800 | 854 | ||||||
Series 2006-WL7A Class A2 | 217 | 215 | ||||||
Wachovia Commercial Mortgage | 90 | 91 | ||||||
Series 2003-C9 Class D | 250 | 252 | ||||||
Washington Mutual Mortgage Pass | 21 | 19 | ||||||
Series 2006-AR7 Class A1A | 921 | 547 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 2007-HY2 Class 2A3 | 773 | 541 | ||||||
Series 2007-HY3 Class 4A1 | 302 | 276 | ||||||
Wells Fargo Mortgage Backed | 104 | 99 | ||||||
Series 2006-AR2 Class 2A1 | 147 | 143 | ||||||
Series 2006-AR2 Class 2A3 | 221 | 212 | ||||||
Series 2006-AR4 Class 1A1 | 390 | 361 | ||||||
Series 2006-AR10 Class 4A1 | 39 | 35 | ||||||
Series 2006-AR17 Class A1 | 677 | 604 | ||||||
Series 2007-8 Class 1A16 | 133 | 126 | ||||||
Series 2007-AR8 Class A1 | 225 | 197 | ||||||
WFRBS Commercial Mortgage Trust | 635 | 667 | ||||||
WF-RBS Commercial Mortgage Trust | 545 | 548 | ||||||
|
| |||||||
228,561 | ||||||||
|
| |||||||
Municipal Bonds - 1.8% | ||||||||
Alabama Public School & College | 100 | 109 | ||||||
Charlotte-Mecklenburg Hospital | 900 | 966 | ||||||
Chicago Transit Authority Revenue | 400 | 464 | ||||||
City of Houston Texas General | 475 | 550 | ||||||
City of New York New York | 1,098 | 1,255 | ||||||
County of Clark Nevada Airport | 100 | 130 | ||||||
Illinois Municipal Electric Agency | 100 | 111 | ||||||
Irvine Ranch Water District Special | 1,000 | 1,228 | ||||||
Los Angeles Unified School District | 400 | 434 |
68 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Metropolitan Government of | 100 | 116 | ||||||
Municipal Electric Authority of | 370 | 399 | ||||||
7.055% due 04/01/57 | 345 | 340 | ||||||
New York City Water & Sewer | 525 | 568 | ||||||
New York State Dormitory Authority | 200 | 231 | ||||||
5.000% due 12/15/25 | 200 | 227 | ||||||
5.000% due 12/15/27 | 200 | 223 | ||||||
5.000% due 03/15/29 | 200 | 218 | ||||||
5.000% due 03/15/41 | 200 | 209 | ||||||
North Carolina Turnpike Authority | 100 | 113 | ||||||
Public Power Generation Agency | 100 | 111 | ||||||
San Diego County Regional Airport | 100 | 111 | ||||||
State of California General Obligation | 775 | 917 | ||||||
7.500% due 04/01/34 | 100 | 130 | ||||||
7.550% due 04/01/39 | 355 | 475 | ||||||
State of Illinois General Obligation | 375 | 411 | ||||||
5.100% due 06/01/33 | 440 | 408 | ||||||
7.350% due 07/01/35 | 350 | 386 | ||||||
State of Louisiana Gasoline & Fuels | 400 | 401 | ||||||
State of Wisconsin Revenue Bonds | 100 | 111 | ||||||
University of California Revenue Bonds | 300 | 330 | ||||||
6.270% due 05/15/31 | 400 | 437 | ||||||
Virginia Commonwealth | 700 | 769 | ||||||
|
| |||||||
12,888 | ||||||||
|
| |||||||
Non-US Bonds - 6.5% | ||||||||
Australia Government Bond | AUD | 2,910 | 2,948 | |||||
Series 126 | AUD | 4,540 | 4,420 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 133 | AUD | 1,560 | 1,628 | |||||
Colombia Government International Bond | COP | 2,112,000 | 1,235 | |||||
9.850% due 06/28/27 | COP | 1,695,000 | 1,159 | |||||
Granite Master Issuer PLC | EUR | 279 | 354 | |||||
Series 2005-4 Class A5 | EUR | 119 | 151 | |||||
Series 2006-4 Class A7 | EUR | 298 | 378 | |||||
Ireland Government Bond | EUR | 940 | 1,311 | |||||
5.400% due 03/13/25 | EUR | 1,830 | 2,582 | |||||
Italy Buoni Poliennali Del Tesoro | EUR | 720 | 943 | |||||
Kingdom of Belgium | EUR | 430 | 625 | |||||
Malaysia Government Bond | MYR | 728 | 233 | |||||
Series 0113 | MYR | 659 | 208 | |||||
Series 0409 | MYR | 440 | 140 | |||||
Series 1/06 | MYR | 1,224 | 397 | |||||
Series 2/05 | MYR | 550 | 180 | |||||
Mexican Bonos | MXN | 17,650 | 1,526 | |||||
Series M 30 | MXN | 14,469 | 1,487 | |||||
Series M | MXN | 19,200 | 1,690 | |||||
New Zealand Government Bond | NZD | 1,270 | 1,090 | |||||
Series 521 | NZD | 4,670 | 4,116 | |||||
Series 1217 | NZD | 1,280 | 1,097 | |||||
Norway Government Bond | NOK | 14,990 | 2,703 | |||||
Peru Government Bond | PEN | 3,110 | 1,287 | |||||
Peruvian Government International Bond | PEN | 475 | 199 | |||||
6.950% due 08/12/31 | PEN | 285 | 107 | |||||
Poland Government Bond | PLN | 5,860 | 1,839 |
Core Bond Fund | 69 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 1019 | PLN | 8,360 | 2,735 | |||||
Province of Ontario Canada | CAD | 200 | 206 | |||||
4.000% due 06/02/21 | CAD | 300 | 305 | |||||
3.150% due 06/02/22 | CAD | 1,500 | 1,421 | |||||
4.700% due 06/02/37 | CAD | 400 | 425 | |||||
4.600% due 06/02/39 | CAD | 100 | 105 | |||||
Province of Quebec Canada | CAD | 300 | 309 | |||||
3.500% due 12/01/22 | CAD | 700 | 676 | |||||
Red & Black Auto Germany | EUR | 46 | 61 | |||||
SC Germany Auto UG | EUR | 997 | 1,308 | |||||
South Africa Government Bond | ZAR | 16,560 | 1,758 | |||||
Wood Street CLO 1 BV | EUR | 145 | 184 | |||||
|
| |||||||
45,526 | ||||||||
|
| |||||||
United States Government Agencies - 2.1% |
| |||||||
Fannie Mae | 100 | 114 | ||||||
Federal Farm Credit Banks | 1,230 | 1,230 | ||||||
Federal Home Loan Banks | 1,020 | 999 | ||||||
0.550% due 06/03/16 | 1,075 | 1,068 | ||||||
Federal Home Loan Mortgage Corp. | ||||||||
0.500% due 09/14/15 | 1,905 | 1,901 | ||||||
2.000% due 08/25/16 | 675 | 699 | ||||||
1.000% due 06/29/17 | 200 | 198 | ||||||
1.000% due 09/29/17 | 200 | 198 | ||||||
0.875% due 03/07/18 | 400 | 387 | ||||||
3.750% due 03/27/19 | 300 | 330 | ||||||
1.750% due 05/30/19 | 600 | 591 | ||||||
1.250% due 10/02/19 | 100 | 95 | ||||||
2.375% due 01/13/22 | 100 | 97 | ||||||
Series 1 | 400 | 394 | ||||||
0.750% due 01/12/18 | 800 | 775 | ||||||
Federal National Mortgage Association | ||||||||
0.500% due 01/29/16 | 1,895 | 1,887 | ||||||
1.250% due 01/30/17 | 300 | 302 | ||||||
0.875% due 08/28/17 | 100 | 98 | ||||||
0.875% due 10/26/17 | 1,600 | 1,564 | ||||||
0.875% due 12/20/17 | 100 | 97 | ||||||
0.875% due 02/08/18 | 1,500 | 1,456 | ||||||
0.875% due 05/21/18 | 300 | 290 | ||||||
Freddie Mac | ||||||||
5.500% due 08/23/17 | 100 | 117 | ||||||
|
| |||||||
14,887 | ||||||||
|
|
Principal Amount ($) or Shares | Fair Value $ | |||||||
United States Government Treasuries - 16.9% |
| |||||||
United States Treasury Principal | 1,350 | 851 | ||||||
United States Treasury Inflation Indexed Bonds | 1,178 | 1,216 | ||||||
0.125% due 04/15/16 | 3,355 | 3,442 | ||||||
0.125% due 04/15/17 | 6,583 | 6,754 | ||||||
0.125% due 04/15/18 | 2,782 | 2,853 | ||||||
1.250% due 07/15/20 | 640 | 695 | ||||||
0.125% due 07/15/22 | 809 | 791 | ||||||
2.375% due 01/15/25 | 3,948 | 4,703 | ||||||
2.000% due 01/15/26 | 351 | 406 | ||||||
2.375% due 01/15/27 | 3,113 | 3,748 | ||||||
1.750% due 01/15/28 | 2,664 | 2,985 | ||||||
2.125% due 02/15/41 | 1,476 | 1,797 | ||||||
United States Treasury Notes | ||||||||
0.250% due 04/15/16 | 7,000 | 6,933 | ||||||
0.500% due 06/15/16 | 3,420 | 3,406 | ||||||
0.875% due 04/30/17 | 4,480 | 4,458 | ||||||
0.750% due 06/30/17 | 6,485 | 6,404 | ||||||
0.750% due 12/31/17 | 2,645 | 2,587 | ||||||
0.875% due 01/31/18 | 900 | 884 | ||||||
3.500% due 02/15/18 | 2,400 | 2,641 | ||||||
0.750% due 02/28/18 | 2,600 | 2,536 | ||||||
0.750% due 03/31/18 | 2,200 | 2,141 | ||||||
0.625% due 04/30/18 | 2,100 | 2,029 | ||||||
1.000% due 05/31/18 | 4,465 | 4,388 | ||||||
1.375% due 06/30/18 | 1,950 | 1,949 | ||||||
1.125% due 05/31/19 | 7,900 | 7,668 | ||||||
0.875% due 07/31/19 | 1,700 | 1,619 | ||||||
1.000% due 08/31/19 | 9,100 | 8,714 | ||||||
1.000% due 09/30/19 | 4,000 | 3,825 | ||||||
1.250% due 10/31/19 | 300 | 291 | ||||||
1.000% due 11/30/19 | 200 | 191 | ||||||
1.250% due 02/29/20 | 500 | 481 | ||||||
1.125% due 03/31/20 | 1,800 | 1,715 | ||||||
1.125% due 04/30/20 | 2,600 | 2,472 | ||||||
1.375% due 05/31/20 | 670 | 647 | ||||||
2.125% due 08/15/21 | 200 | 199 | ||||||
2.000% due 02/15/22 | 600 | 587 | ||||||
1.750% due 05/15/22 | 200 | 191 | ||||||
1.625% due 08/15/22 | 1,400 | 1,313 | ||||||
1.625% due 11/15/22 | 1,145 | 1,069 | ||||||
2.000% due 02/15/23 | 3,900 | 3,753 | ||||||
1.750% due 05/15/23 | 7,315 | 6,850 | ||||||
6.250% due 08/15/23 | 380 | 510 | ||||||
2.750% due 08/15/42 | �� | 3,990 | 3,444 | |||||
3.125% due 02/15/43 | 2,270 | 2,119 | ||||||
|
| |||||||
118,255 | ||||||||
|
| |||||||
Total Long-Term Investments (cost $576,287) | 576,798 | |||||||
|
|
70 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Common Stocks - 0.0% | ||||||||
Financial Services - 0.0% | ||||||||
Escrow GM Corp. (Å) | 80,000 | — | ||||||
Utilities - 0.0% | ||||||||
Dynegy, Inc. (Æ) | 16,210 | 366 | ||||||
|
| |||||||
Total Common Stocks (cost $324) | 366 | |||||||
|
| |||||||
Preferred Stocks - 0.1% | ||||||||
Financial Services - 0.1% | ||||||||
DG Funding Trust (Å) | 49 | 347 | ||||||
XLIT, Ltd. | 100 | 86 | ||||||
|
| |||||||
433 | ||||||||
|
| |||||||
Total Preferred Stocks (cost $600) | 433 | |||||||
|
| |||||||
Notional | ||||||||
Options Purchased - 0.1% | ||||||||
(Number of Contracts) | ||||||||
(Fund Receives/Fund Pays) | ||||||||
USD 0.450%/USD Three Month LIBOR | 1,680 | 129 | ||||||
USD 2.650%/USD Three Month LIBOR | 2,110 | 101 | ||||||
USD 4.500%/USD Three Month LIBOR | 2,670 | 204 | ||||||
|
| |||||||
Total Options Purchased (cost $337) | 434 | |||||||
|
| |||||||
Principal | ||||||||
Short-Term Investments - 26.5% | ||||||||
Adam Aircraft Industries - Term Loan | 49 | — | ||||||
Ally Auto Receivables Trust | 783 | 783 | ||||||
Ally Financial, Inc. | 1,900 | 1,948 | ||||||
AmeriCredit Automobile Receivables Trust | 127 | 127 | ||||||
Series 2013-3 Class A1 | 225 | 225 | ||||||
ANZ National International, Ltd. | 600 | 602 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
ARI Fleet Lease Trust | 226 | 226 | ||||||
Autonomous Community of Valencia Spain | 100 | 130 | ||||||
Banco Santander Brasil SA | 500 | 499 | ||||||
Banco Santander Brazil SA | 200 | 199 | ||||||
Bank of America Corp. | 305 | 321 | ||||||
BMW Vehicle Lease Trust | 225 | 225 | ||||||
British Telecommunications PLC | 1,700 | 1,693 | ||||||
CarMax Auto Owner Trust | 1,373 | 1,373 | ||||||
Cellco Partnership / Verizon Wireless Capital LLC | 235 | 241 | ||||||
CIT Group, Inc. | 1,200 | 1,218 | ||||||
Citigroup, Inc. | 100 | 100 | ||||||
2.275% due 08/13/13 (Ê) | 100 | 100 | ||||||
1.525% due 11/08/13 (Ê) | 900 | 902 | ||||||
Credit Suisse USA, Inc. | 45 | 45 | ||||||
Daimler Finance NA LLC | 700 | 700 | ||||||
1.472% due 09/13/13 (Ê)(Þ) | 200 | 200 | ||||||
Dexia Credit Local SA | EUR 400 | 522 | ||||||
Dexia Credit Local SA NY | 500 | 501 | ||||||
Electricite de France SA | 200 | 205 | ||||||
Enterprise Fleet Financing LLC | 347 | 347 | ||||||
Federal Home Loan Bank Discount Notes | 2,625 | 2,625 | ||||||
Federal Home Loan Mortgage Corp. | 265 | 267 | ||||||
First Investors Auto Owner Trust | 380 | 379 | ||||||
Ford Credit Auto Owner Trust | 709 | 709 | ||||||
Freddie Mac Discount Notes | 1,230 | 1,230 |
Core Bond Fund | 71 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Gazprom OAO Via White Nights | 200 | 212 | ||||||
GE Equipment Transportation LLC | 42 | 42 | ||||||
Series 2013-1 Class A1 | 276 | 276 | ||||||
General Electric Capital Corp. | 350 | 367 | ||||||
Series EMTN | 400 | 400 | ||||||
Goldman Sachs Group, Inc. (The) | 150 | 156 | ||||||
Honda Auto Receivables Owner Trust | 241 | 241 | ||||||
Series 2013-2 Class A1 | 988 | 988 | ||||||
HRPT Properties Trust | 165 | 166 | ||||||
Hyundai Auto Lease Securitization Trust | 354 | 354 | ||||||
Hyundai Auto Receivables Trust | 169 | 169 | ||||||
Intesa Sanpaolo SpA | 200 | 201 | ||||||
JPMorgan Chase & Co. | 170 | 175 | ||||||
Macquarie Bank Ltd | 1,875 | 1,873 | ||||||
Mercedes-Benz Auto Lease Trust 2013-A | 973 | 973 | ||||||
Metropolitan Life Global Funding I | 200 | 209 | ||||||
Ralph Lauren Corp. | EUR 125 | 164 | ||||||
RBS Holdings USA, Inc. | 1,815 | 1,813 | ||||||
Russell U.S. Cash Management Fund | 129,389,306 | (¥) | 129,389 | |||||
Santander Drive Auto Receivables Trust Series 2013-2 Class A1 | 291 | 291 | ||||||
Santander US Debt SA Unipersonal | 400 | 402 | ||||||
Sempra Energy | 255 | 257 | ||||||
SMART Trust | 360 | 360 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Series 2013-2US Class A1 | 605 | 605 | ||||||
Springleaf Finance Corp. | 1,200 | 1,554 | ||||||
United States Treasury Bills | 15,500 | 15,499 | ||||||
0.042% due 08/22/13 (ç)(ž) | 35 | 35 | ||||||
0.073% due 08/22/13 (ç)(ž) | 5 | 5 | ||||||
United States Treasury Inflation Indexed Bonds | 743 | 753 | ||||||
1.250% due 04/15/14 | 2,648 | 2,684 | ||||||
Vodafone Group PLC | 2,800 | 2,793 | ||||||
Volkswagen Auto Loan Enhanced Trust Series 2013-1 Class A1 | 714 | 714 | ||||||
Volkswagen International Finance NV 0.894% due 04/01/14 (Ê)(Þ) | 400 | 401 | ||||||
Volvo Financial Eqiuptment LLC | 512 | 512 | ||||||
WEA Finance LLC / WT Finance Aust Pty, Ltd. | 205 | 218 | ||||||
WM Wrigley Jr Co. | 1,800 | 1,848 | ||||||
|
| |||||||
Total Short-Term Investments (cost $185,637) | 185,741 | |||||||
|
| |||||||
Repurchase Agreements - 2.3% | ||||||||
Agreement with Barclays and State Street (Tri-Party) of $8,200 dated June 25, 2013 at 0.600% to be repurchased at $8,200 on July 12, 2013 collateralized by: $7,973 par various United States Treasury Obligations valued at $8,293. | 8,200 | 8,200 | ||||||
Agreement with Citigroup and State Street (Tri-Party) of $7,700 dated June 28, 2013 at 0.150% to be repurchased at $7,700 on July 1, 2013 collateralized by: $8,010 par various United States Treasury Obligations valued at $7,857. | 7,700 | 7,700 | ||||||
|
| |||||||
Total Repurchase Agreements (cost $15,900) | 15,900 | |||||||
|
| |||||||
Total Investments - 111.2% (identified cost $779,085) | 779,672 | |||||||
Other Assets and Liabilities, Net - (11.2%) | (78,297 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 701,375 | |||||||
|
|
See accompanying notes which are an integral part of the financial statements.
72 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share and cost per unit amounts)
Restricted Securities
% of Net Assets Securities | Acquisition Date | Principal Amount ($) or Shares | Cost per Unit $ | Cost (000) $ | Fair Value (000) $ | |||||||||||||||
0.4% | ||||||||||||||||||||
Adam Aircraft Industries - Term Loan | 05/22/07 | 48,786 | 114.22 | 56 | — | |||||||||||||||
DG Funding Trust | 11/04/03 | 49 | 10,537.11 | 516 | 347 | |||||||||||||||
Electricite de France SA | 01/21/09 | 200,000 | 99.91 | 200 | 205 | |||||||||||||||
Escrow GM Corp. | 04/21/11 | 80,000 | — | — | — | |||||||||||||||
Vivendi SA | 04/03/12 | 200,000 | 100.00 | 200 | 204 | |||||||||||||||
WM Wrigley Jr Co. | 02/28/13 | 1,800,000 | 102.87 | 1,853 | 1,848 | |||||||||||||||
|
| |||||||||||||||||||
2,604 | ||||||||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 73 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except contract amounts)
Futures Contracts | Number of Contracts | Notional | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||||
Long Positions | ||||||||||||||||||||
Euribor Futures (Germany) | 3 | EUR | 745 | 12/14 | (3 | ) | ||||||||||||||
Euribor Futures (Germany) | 3 | EUR | 745 | 03/15 | (2 | ) | ||||||||||||||
Euribor Futures (Germany) | 1 | EUR | 248 | 06/15 | (1 | ) | ||||||||||||||
Eurodollar Futures (CME) | 24 | USD | 5,966 | 09/14 | 4 | |||||||||||||||
Eurodollar Futures (CME) | 29 | USD | 7,201 | 12/14 | (7 | ) | ||||||||||||||
Eurodollar Futures (CME) | 156 | USD | 38,604 | 06/15 | (96 | ) | ||||||||||||||
Eurodollar Futures (CME) | 17 | USD | 4,197 | 09/15 | (24 | ) | ||||||||||||||
Eurodollar Futures (CME) | 68 | USD | 16,745 | 12/15 | (115 | ) | ||||||||||||||
Eurodollar Futures (CME) | 17 | USD | 4,175 | 03/16 | (35 | ) | ||||||||||||||
United States Treasury 2 Year Note Futures | 54 | USD | 11,880 | 09/13 | (7 | ) | ||||||||||||||
United States Treasury 5 Year Note Futures | 80 | USD | 9,684 | 09/13 | (66 | ) | ||||||||||||||
United States Treasury 10 Year Note Futures | 145 | USD | 18,352 | 09/13 | (248 | ) | ||||||||||||||
United States Treasury Long-Term Bond Futures | 70 | USD | 9,509 | 09/13 | (201 | ) | ||||||||||||||
United States Treasury Ultra Long-Term Bond Futures | 6 | USD | 884 | 09/13 | (32 | ) | ||||||||||||||
Short Positions | ||||||||||||||||||||
Canada Government 10 Year Bond Futures (Canada) | 22 | CAD | 2,891 | 09/13 | 100 | |||||||||||||||
Euro-Bobl Futures (Germany) | 27 | EUR | 3,380 | 09/13 | 37 | |||||||||||||||
Euro-Bund Futures (Germany) | 1 | EUR | 142 | 09/13 | 2 | |||||||||||||||
Eurodollar Futures (CME) | 15 | USD | 3,694 | 12/15 | 24 | |||||||||||||||
Euro-OAT Futures (Germany) | 18 | EUR | 2,384 | 09/13 | 66 | |||||||||||||||
Japan Government 10 Year Bond Futures (TSE) (Japan) | 4 | JPY | 570,800 | 09/13 | (1 | ) | ||||||||||||||
United Kingdom Long Gilt Bond Futures (United Kingdom) | 38 | GBP | 4,252 | 09/13 | 285 | |||||||||||||||
United States Treasury 5 Year Note Futures | 33 | USD | 3,995 | 09/13 | 50 | |||||||||||||||
United States Treasury 10 Year Note Futures | 69 | USD | 8,733 | 09/13 | 204 | |||||||||||||||
United States Treasury Long-Term Bond Futures | 8 | USD | 1,087 | 09/13 | 35 | |||||||||||||||
|
| |||||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) | (31 | ) | ||||||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
74 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except contract amounts)
Options Written | Call/Put | Number of Contracts | Strike Price | Notional Amount | Expiration Date | Fair Value $ | ||||||||||||||||||||||||||
Cross Currency Options | Put | 1 | JPY | 95.00 | USD | 400 | 07/05/13 | — | ||||||||||||||||||||||||
Inflationary Floor Options | Call | 1 | 0.00 | USD | 810 | 11/23/20 | (2 | ) | ||||||||||||||||||||||||
Inflationary Floor Options | Put | 1 | 0.00 | USD | 1,400 | 03/10/20 | (2 | ) | ||||||||||||||||||||||||
Inflationary Floor Options | Put | 1 | 0.00 | USD | 1,000 | 03/12/20 | (2 | ) | ||||||||||||||||||||||||
Inflationary Floor Options | Put | 1 | 0.00 | USD | 5,500 | 04/07/20 | (9 | ) | ||||||||||||||||||||||||
Inflationary Floor Options | Put | 1 | 0.00 | USD | 300 | 09/29/20 | — | |||||||||||||||||||||||||
Swaptions | ||||||||||||||||||||||||||||||||
(Fund Receives/Fund Pays) | ||||||||||||||||||||||||||||||||
USD Three Month LIBOR/USD 0.400% | Call | 3 | 0.00 | 1,400 | 03/12/14 | (1 | ) | |||||||||||||||||||||||||
USD Three Month LIBOR/USD 0.750% | Call | 3 | 0.00 | 1,000 | 09/03/13 | — | ||||||||||||||||||||||||||
USD Three Month LIBOR/USD 0.800% | Call | 1 | 0.00 | 900 | 09/03/13 | — | ||||||||||||||||||||||||||
USD Three Month LIBOR/USD 0.900% | Call | 1 | 0.00 | 900 | 09/03/13 | — | ||||||||||||||||||||||||||
USD Three Month LIBOR/USD 1.000% | Call | 1 | 0.00 | 1,300 | 09/03/13 | — | ||||||||||||||||||||||||||
USD Three Month LIBOR/USD 1.100% | Call | 1 | 0.00 | 9,400 | 09/03/13 | (4 | ) | |||||||||||||||||||||||||
USD Three Month LIBOR/USD 1.800% | Call | 6 | 0.00 | 5,900 | 07/29/13 | — | ||||||||||||||||||||||||||
USD Three Month LIBOR/USD 1.800% | Call | 1 | 0.00 | 400 | 07/29/13 | — | ||||||||||||||||||||||||||
USD 0.400%/USD Three Month LIBOR | Put | 3 | 0.00 | 1,400 | 03/12/14 | (5 | ) | |||||||||||||||||||||||||
USD 1.000%/USD Three Month LIBOR | Put | 1 | 0.00 | 900 | 09/03/13 | (30 | ) | |||||||||||||||||||||||||
USD 1.100%/USD Three Month LIBOR | Put | 2 | 0.00 | 1,800 | 09/03/13 | (50 | ) | |||||||||||||||||||||||||
USD 1.150%/USD Three Month LIBOR | Put | 1 | 0.00 | 1,000 | 07/24/13 | — | ||||||||||||||||||||||||||
USD 1.200%/USD Three Month LIBOR | Put | 1 | 0.00 | 1,800 | 07/11/13 | — | ||||||||||||||||||||||||||
USD 1.250%/USD Three Month LIBOR | Put | 2 | 0.00 | 1,000 | 09/03/13 | (21 | ) | |||||||||||||||||||||||||
USD 1.400%/USD Three Month LIBOR | Put | 2 | 0.00 | 1,100 | 09/03/13 | (17 | ) | |||||||||||||||||||||||||
USD 1.450%/USD Three Month LIBOR | Put | 1 | 0.00 | 4,800 | 09/03/13 | (68 | ) | |||||||||||||||||||||||||
USD 1.500%/USD Three Month LIBOR | Put | 1 | 0.00 | 3,900 | 10/28/13 | (70 | ) | |||||||||||||||||||||||||
USD 1.650%/USD Three Month LIBOR | Put | 1 | 0.00 | 9,400 | 09/03/13 | (83 | ) | |||||||||||||||||||||||||
USD 1.700%/USD Three Month LIBOR | Put | 2 | 0.00 | 400 | 07/24/13 | — | ||||||||||||||||||||||||||
USD 2.650%/USD Three Month LIBOR | Put | 1 | 0.00 | 600 | 07/29/13 | (9 | ) | |||||||||||||||||||||||||
USD 2.650%/USD Three Month LIBOR | Put | 6 | 0.00 | 6,300 | 07/29/13 | (96 | ) | |||||||||||||||||||||||||
United States Treasury 10 Year Note Futures | Call | 15 | 133.00 | USD | 15 | 08/23/13 | — | |||||||||||||||||||||||||
United States Treasury 10 Year Note Futures | Put | 15 | 129.00 | USD | 15 | 08/23/13 | (42 | ) | ||||||||||||||||||||||||
|
| |||||||||||||||||||||||||||||||
Total Liability for Options Written (premiums received $276) | (533 | ) | ||||||||||||||||||||||||||||||
|
|
Transactions in options written contracts for the period ended June 30, 2013 were as follows:
| Number of Contracts | Premiums Received | ||||||
Outstanding December 31, 2012 | 163 | $ | 296 | |||||
Opened | 457 | 423 | ||||||
Closed | (453 | ) | (397 | ) | ||||
Expired | (90 | ) | (46 | ) | ||||
|
|
|
| |||||
Outstanding June 30, 2013 | 77 | $ | 276 | |||||
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 75 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | ||||||||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
Bank of America | CAD | 1,541 | USD | 1,514 | 07/18/13 | 49 | ||||||||||||
Bank of America | CHF | 1,472 | USD | 1,560 | 07/18/13 | 2 | ||||||||||||
Bank of America | CHF | 12,395 | USD | 13,494 | 07/18/13 | 369 | ||||||||||||
Bank of America | MXN | 432 | USD | 33 | 09/18/13 | — | ||||||||||||
Bank of America | SEK | 10,350 | USD | 1,587 | 07/18/13 | 45 | ||||||||||||
Barclays | USD | 408 | EUR | 307 | 07/02/13 | (8 | ) | |||||||||||
Barclays | USD | 451 | EUR | 349 | 07/02/13 | 3 | ||||||||||||
Barclays | USD | 343 | JPY | 33,400 | 07/18/13 | (6 | ) | |||||||||||
Barclays | EUR | 1,764 | GBP | 1,501 | 07/18/13 | (13 | ) | |||||||||||
Barclays | EUR | 1,196 | USD | 1,560 | 07/18/13 | 3 | ||||||||||||
Barclays | JPY | 3,900 | USD | 40 | 07/18/13 | 1 | ||||||||||||
Barclays | JPY | 114,876 | USD | 1,208 | 07/18/13 | 50 | ||||||||||||
Barclays | MXN | 1,831 | USD | 142 | 09/18/13 | 2 | ||||||||||||
BNP Paribas | GBP | 75 | USD | 117 | 09/12/13 | 3 | ||||||||||||
BNP Paribas | JPY | 19,800 | USD | 202 | 07/18/13 | 3 | ||||||||||||
BNP Paribas | MXN | 444 | USD | 34 | 09/18/13 | — | ||||||||||||
Citigroup | USD | 9,570 | AUD | 10,114 | 07/18/13 | (331 | ) | |||||||||||
Citigroup | USD | 1,884 | CHF | 1,732 | 07/18/13 | (50 | ) | |||||||||||
Citigroup | USD | 401 | EUR | 301 | 07/02/13 | (10 | ) | |||||||||||
Citigroup | USD | 434 | EUR | 326 | 07/02/13 | (10 | ) | |||||||||||
Citigroup | USD | 4,725 | EUR | 3,614 | 07/02/13 | (21 | ) | |||||||||||
Citigroup | USD | 198 | JPY | 19,500 | 07/18/13 | (1 | ) | |||||||||||
Citigroup | CHF | 2,982 | USD | 3,202 | 07/18/13 | 45 | ||||||||||||
Citigroup | EUR | 1,035 | GBP | 878 | 07/18/13 | (12 | ) | |||||||||||
Citigroup | EUR | 414 | NOK | 3,271 | 07/18/13 | (1 | ) | |||||||||||
Citigroup | EUR | 3,614 | USD | 4,726 | 08/02/13 | 21 | ||||||||||||
Credit Suisse | USD | 201 | EUR | 151 | 07/02/13 | (5 | ) | |||||||||||
Credit Suisse | USD | 1,601 | JPY | 152,317 | 07/18/13 | (65 | ) | |||||||||||
Credit Suisse | USD | 1,601 | JPY | 157,102 | 07/18/13 | (17 | ) | |||||||||||
Credit Suisse | USD | 100 | MYR | 305 | 07/15/13 | (4 | ) | |||||||||||
Credit Suisse | EUR | 1,200 | JPY | 154,813 | 07/18/13 | (1 | ) | |||||||||||
Deutsche Bank | USD | 1,973 | CHF | 1,814 | 07/18/13 | (52 | ) | |||||||||||
Deutsche Bank | USD | 1,601 | JPY | 157,524 | 07/18/13 | (13 | ) | |||||||||||
Deutsche Bank | USD | 1,560 | NOK | 9,489 | 07/18/13 | 1 | ||||||||||||
Deutsche Bank | CAD | 3,801 | USD | 3,731 | 09/23/13 | 124 | ||||||||||||
Deutsche Bank | EUR | 643 | GBP | 547 | 07/18/13 | (4 | ) | |||||||||||
Deutsche Bank | EUR | 148 | NOK | 1,165 | 07/18/13 | (1 | ) | |||||||||||
Deutsche Bank | MYR | 104 | USD | 34 | 07/15/13 | 1 | ||||||||||||
Goldman Sachs | USD | 2,891 | SEK | 18,501 | 07/18/13 | (133 | ) | |||||||||||
Goldman Sachs | CHF | 1,443 | USD | 1,553 | 07/18/13 | 25 | ||||||||||||
Goldman Sachs | GBP | 1,476 | EUR | 1,727 | 07/18/13 | 4 | ||||||||||||
Goldman Sachs | JPY | 152,095 | USD | 1,560 | 07/18/13 | 26 | ||||||||||||
Goldman Sachs | SEK | 11,705 | USD | 1,796 | 07/18/13 | 51 | ||||||||||||
HSBC | USD | 281 | EUR | 211 | 07/02/13 | (7 | ) | |||||||||||
HSBC | MXN | 103 | USD | 8 | 09/18/13 | — | ||||||||||||
HSBC | MXN | 284 | USD | 21 | 09/18/13 | — | ||||||||||||
HSBC | MXN | 345 | USD | 27 | 09/18/13 | 1 | ||||||||||||
HSBC | MXN | 400 | USD | 30 | 09/18/13 | (1 | ) | |||||||||||
JPMorgan Chase | USD | 216 | AUD | 211 | 07/30/13 | (23 | ) | |||||||||||
JPMorgan Chase | USD | 296 | CHF | 280 | 07/30/13 | 1 | ||||||||||||
JPMorgan Chase | USD | 2,709 | CHF | 2,553 | 07/30/13 | (6 | ) | |||||||||||
JPMorgan Chase | USD | 419 | EUR | 317 | 07/02/13 | (7 | ) | |||||||||||
JPMorgan Chase | USD | 471 | EUR | 361 | 07/30/13 | (1 | ) |
See accompanying notes which are an integral part of the financial statements.
76 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | ||||||||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
JPMorgan Chase | USD | 525 | GBP | 340 | 07/30/13 | (8 | ) | |||||||||||
JPMorgan Chase | USD | 4,918 | GBP | 3,176 | 07/30/13 | (88 | ) | |||||||||||
JPMorgan Chase | USD | 401 | JPY | 38,200 | 07/18/13 | (16 | ) | |||||||||||
JPMorgan Chase | USD | 1,617 | JPY | 158,689 | 07/18/13 | (17 | ) | |||||||||||
JPMorgan Chase | USD | 209 | KRW | 233,455 | 07/30/13 | (5 | ) | |||||||||||
JPMorgan Chase | USD | 1,885 | KRW | 2,125,671 | 07/30/13 | (27 | ) | |||||||||||
JPMorgan Chase | USD | 535 | MXN | 6,521 | 07/30/13 | (33 | ) | |||||||||||
JPMorgan Chase | USD | 446 | MYR | 1,360 | 07/30/13 | (16 | ) | |||||||||||
JPMorgan Chase | USD | 4,053 | MYR | 12,386 | 07/30/13 | (140 | ) | |||||||||||
JPMorgan Chase | USD | 575 | NOK | 3,390 | 07/30/13 | (17 | ) | |||||||||||
JPMorgan Chase | USD | 2,591 | NOK | 15,231 | 07/30/13 | (86 | ) | |||||||||||
JPMorgan Chase | USD | 208 | PLN | 668 | 07/30/13 | (7 | ) | |||||||||||
JPMorgan Chase | USD | 440 | PLN | 1,468 | 07/30/13 | 1 | ||||||||||||
JPMorgan Chase | USD | 442 | PLN | 1,458 | 07/30/13 | (4 | ) | |||||||||||
JPMorgan Chase | USD | 442 | PLN | 1,473 | 07/30/13 | — | ||||||||||||
JPMorgan Chase | USD | 590 | SEK | 3,904 | 07/30/13 | (8 | ) | |||||||||||
JPMorgan Chase | USD | 5,399 | SEK | 35,544 | 07/30/13 | (102 | ) | |||||||||||
JPMorgan Chase | USD | 442 | ZAR | 4,429 | 07/02/13 | 6 | ||||||||||||
JPMorgan Chase | USD | 258 | ZAR | 2,361 | 07/30/13 | (20 | ) | |||||||||||
JPMorgan Chase | USD | 2,331 | ZAR | 21,504 | 07/30/13 | (164 | ) | |||||||||||
JPMorgan Chase | AUD | 615 | USD | 597 | 07/30/13 | 36 | ||||||||||||
JPMorgan Chase | AUD | 640 | USD | 623 | 07/30/13 | 39 | ||||||||||||
JPMorgan Chase | AUD | 853 | USD | 874 | 07/30/13 | 95 | ||||||||||||
JPMorgan Chase | AUD | 883 | USD | 907 | 07/30/13 | 101 | ||||||||||||
JPMorgan Chase | AUD | 15,967 | USD | 16,360 | 07/30/13 | 1,786 | ||||||||||||
JPMorgan Chase | BRL | 481 | USD | 236 | 07/30/13 | 22 | ||||||||||||
JPMorgan Chase | BRL | 4,385 | USD | 2,148 | 07/30/13 | 195 | ||||||||||||
JPMorgan Chase | CAD | 1,800 | USD | 1,769 | 07/18/13 | 58 | ||||||||||||
JPMorgan Chase | CAD | 128 | USD | 125 | 07/30/13 | 4 | ||||||||||||
JPMorgan Chase | CAD | 1,026 | USD | 1,006 | 07/30/13 | 31 | ||||||||||||
JPMorgan Chase | CLP | 85,192 | USD | 178 | 07/30/13 | 11 | ||||||||||||
JPMorgan Chase | CLP | 776,458 | USD | 1,602 | 07/30/13 | 81 | ||||||||||||
JPMorgan Chase | COP | 531,814 | USD | 287 | 07/30/13 | 11 | ||||||||||||
JPMorgan Chase | COP | 4,723,941 | USD | 2,542 | 07/30/13 | 91 | ||||||||||||
JPMorgan Chase | CZK | 4,488 | USD | 226 | 07/30/13 | 2 | ||||||||||||
JPMorgan Chase | CZK | 40,854 | USD | 2,066 | 07/30/13 | 22 | ||||||||||||
JPMorgan Chase | EUR | 1,358 | GBP | 1,152 | 07/18/13 | (16 | ) | |||||||||||
JPMorgan Chase | EUR | 273 | USD | 355 | 07/30/13 | — | ||||||||||||
JPMorgan Chase | EUR | 440 | USD | 574 | 07/30/13 | 1 | ||||||||||||
JPMorgan Chase | EUR | 6,767 | USD | 8,812 | 07/30/13 | 2 | ||||||||||||
JPMorgan Chase | IDR | 3,802,362 | USD | 388 | 07/30/13 | 6 | ||||||||||||
JPMorgan Chase | IDR | 34,634,531 | USD | 3,534 | 07/30/13 | 54 | ||||||||||||
JPMorgan Chase | MXN | 4,564 | USD | 372 | 07/30/13 | 21 | ||||||||||||
JPMorgan Chase | MXN | 6,941 | USD | 566 | 07/30/13 | 32 | ||||||||||||
JPMorgan Chase | MXN | 52 | USD | 4 | 09/18/13 | — | ||||||||||||
JPMorgan Chase | MXN | 73 | USD | 6 | 09/18/13 | — | ||||||||||||
JPMorgan Chase | MXN | 371 | USD | 28 | 09/18/13 | — | ||||||||||||
JPMorgan Chase | MXN | 547 | USD | 43 | 09/18/13 | 1 | ||||||||||||
JPMorgan Chase | MYR | 382 | USD | 124 | 07/30/13 | 4 | ||||||||||||
JPMorgan Chase | MYR | 384 | USD | 126 | 07/30/13 | 4 | ||||||||||||
JPMorgan Chase | MYR | 384 | USD | 126 | 07/30/13 | 5 | ||||||||||||
JPMorgan Chase | MYR | 765 | USD | 251 | 07/30/13 | 9 | ||||||||||||
JPMorgan Chase | MYR | 768 | USD | 252 | 07/30/13 | 9 |
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 77 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | ||||||||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
JPMorgan Chase | MYR | 950 | USD | 310 | 07/30/13 | 9 | ||||||||||||
JPMorgan Chase | NOK | 1,714 | USD | 292 | 07/30/13 | 10 | ||||||||||||
JPMorgan Chase | NZD | 707 | USD | 601 | 07/30/13 | 54 | ||||||||||||
JPMorgan Chase | NZD | 710 | USD | 601 | 07/30/13 | 52 | ||||||||||||
JPMorgan Chase | NZD | 718 | USD | 580 | 07/30/13 | 24 | ||||||||||||
JPMorgan Chase | NZD | 763 | USD | 619 | 07/30/13 | 29 | ||||||||||||
JPMorgan Chase | NZD | 12,884 | USD | 10,915 | 07/30/13 | 951 | ||||||||||||
JPMorgan Chase | PEN | 149 | USD | 56 | 07/31/13 | 2 | ||||||||||||
JPMorgan Chase | PEN | 452 | USD | 171 | 07/31/13 | 9 | ||||||||||||
JPMorgan Chase | PEN | 597 | USD | 221 | 07/31/13 | 7 | ||||||||||||
JPMorgan Chase | PEN | 1,801 | USD | 667 | 07/31/13 | 22 | ||||||||||||
JPMorgan Chase | PEN | 5,546 | USD | 2,130 | 07/31/13 | 142 | ||||||||||||
JPMorgan Chase | PLN | 1,473 | USD | 443 | 07/02/13 | — | ||||||||||||
JPMorgan Chase | PLN | 1,610 | USD | 501 | 07/30/13 | 17 | ||||||||||||
JPMorgan Chase | PLN | 12,590 | USD | 3,915 | 07/30/13 | 132 | ||||||||||||
JPMorgan Chase | RUB | 5,147 | USD | 165 | 07/30/13 | 9 | ||||||||||||
JPMorgan Chase | RUB | 46,993 | USD | 1,460 | 07/30/13 | 37 | ||||||||||||
JPMorgan Chase | SEK | 10,350 | USD | 1,588 | 07/18/13 | 45 | ||||||||||||
JPMorgan Chase | SGD | 579 | USD | 467 | 07/30/13 | 10 | ||||||||||||
JPMorgan Chase | SGD | 5,324 | USD | 4,303 | 07/30/13 | 103 | ||||||||||||
JPMorgan Chase | TRY | 307 | USD | 169 | 07/30/13 | 10 | ||||||||||||
JPMorgan Chase | TRY | 2,801 | USD | 1,542 | 07/30/13 | 97 | ||||||||||||
JPMorgan Chase | ZAR | 4,384 | USD | 435 | 07/30/13 | (7 | ) | |||||||||||
JPMorgan Chase | ZAR | 4,411 | USD | 436 | 07/30/13 | (9 | ) | |||||||||||
JPMorgan Chase | ZAR | 4,429 | USD | 440 | 07/30/13 | (6 | ) | |||||||||||
Morgan Stanley | USD | 1,983 | MXN | 24,679 | 09/18/13 | (91 | ) | |||||||||||
Morgan Stanley | EUR | 5,576 | USD | 7,203 | 07/02/13 | (55 | ) | |||||||||||
Morgan Stanley | JPY | 10,000 | USD | 102 | 07/18/13 | 1 | ||||||||||||
Morgan Stanley | MXN | 146 | USD | 11 | 09/18/13 | — | ||||||||||||
Morgan Stanley | MXN | 295 | USD | 22 | 09/18/13 | (1 | ) | |||||||||||
Morgan Stanley | MXN | 394 | USD | 30 | 09/18/13 | — | ||||||||||||
Royal Bank of Canada | USD | 3,282 | CAD | 3,335 | 07/18/13 | (112 | ) | |||||||||||
Royal Bank of Canada | USD | 1,590 | EUR | 1,203 | 07/18/13 | (24 | ) | |||||||||||
Royal Bank of Canada | USD | 2,109 | SEK | 13,495 | 07/18/13 | (97 | ) | |||||||||||
Royal Bank of Canada | CHF | 1,545 | EUR | 1,251 | 07/18/13 | (8 | ) | |||||||||||
Royal Bank of Canada | EUR | 1,055 | NOK | 8,309 | 07/18/13 | (6 | ) | |||||||||||
Royal Bank of Canada | EUR | 1,655 | NOK | 13,084 | 07/18/13 | (2 | ) | |||||||||||
Royal Bank of Canada | GBP | 1,588 | EUR | 1,857 | 07/18/13 | 3 | ||||||||||||
Royal Bank of Canada | GBP | 1,015 | USD | 1,546 | 07/18/13 | 2 | ||||||||||||
Royal Bank of Canada | JPY | 154,126 | AUD | 1,690 | 07/18/13 | (10 | ) | |||||||||||
Royal Bank of Canada | JPY | 779,217 | USD | 8,169 | 07/18/13 | 312 | ||||||||||||
UBS | USD | 941 | BRL | 1,912 | 08/02/13 | (90 | ) | |||||||||||
UBS | USD | 3,636 | EUR | 2,724 | 07/18/13 | (90 | ) | |||||||||||
UBS | USD | 63 | SEK | 408 | 07/18/13 | (2 | ) | |||||||||||
UBS | EUR | 1,167 | CHF | 1,426 | 07/18/13 | (9 | ) | |||||||||||
UBS | EUR | 1,199 | CHF | 1,476 | 07/18/13 | 2 | ||||||||||||
UBS | EUR | 362 | NOK | 2,861 | 07/18/13 | — | ||||||||||||
UBS | JPY | 41,765 | USD | 439 | 07/18/13 | 18 | ||||||||||||
UBS | JPY | 73,447 | USD | 744 | 07/18/13 | 3 | ||||||||||||
UBS | MYR | 96 | USD | 31 | 07/15/13 | 1 | ||||||||||||
UBS | MYR | 104 | USD | 34 | 07/15/13 | 1 | ||||||||||||
|
| |||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | 3,488 | |||||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
78 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Index Swap Contracts | ||||||||||||||||||
Fund Receives | Counterparty | Notional Amount | Terms | Termination Date | Fair Value $ | |||||||||||||
Barclays Capital U.S. Aggregate Bond Index | Bank of America | USD | 5,013 | 1 Month LIBOR plus 0.120% | 03/01/14 | (2 | ) | |||||||||||
Barclays Capital U.S. Aggregate Bond Index | Barclays | USD | 14,685 | 1 Month LIBOR plus 0.200% | 09/01/13 | (8 | ) | |||||||||||
Barclays Capital U.S. Aggregate Bond Index | Barclays | USD | 4,895 | 1 Month LIBOR plus 0.165% | 09/01/13 | (2 | ) | |||||||||||
Barclays Capital U.S. Aggregate Bond Index | Barclays | USD | 9,790 | 1 Month LIBOR plus 0.140% | 09/01/13 | (4 | ) | |||||||||||
Barclays Capital U.S. Aggregate Bond Index | Barclays | USD | 14,664 | 1 Month LIBOR plus 0.140% | 10/01/13 | (6 | ) | |||||||||||
Barclays Capital U.S. Aggregate Bond Index | Barclays | USD | 1,955 | 1 Month LIBOR plus 0.120% | 03/01/14 | (1 | ) | |||||||||||
Barclays Capital U.S. Aggregate Bond Index | Barclays | USD | 4,912 | 1 Month LIBOR plus 0.120% | 03/01/14 | (2 | ) | |||||||||||
|
| |||||||||||||||||
Total Fair Value of Open Index Swap Contracts Premiums Paid (Received) - $ - (å) | (25 | ) | ||||||||||||||||
|
|
Interest Rate Swap Contracts | ||||||||||||||||||
Counterparty | Notional Amount | Fund Receives | Fund Pays | Termination Date | Fair Value $ | |||||||||||||
Bank of America | BRL | 100 | 8.860% | Brazil Interbank Deposit Rate | 01/02/17 | (2 | ) | |||||||||||
Bank of America | MXN | 1,000 | 5.500% | Mexico Interbank 28 Day Deposit Rate | 09/13/17 | — | ||||||||||||
Barclays | MXN | 700 | 5.600% | Mexico Interbank 28 Day Deposit Rate | 09/06/16 | 1 | ||||||||||||
Barclays | MXN | 5,000 | 5.500% | Mexico Interbank 28 Day Deposit Rate | 09/13/17 | 1 | ||||||||||||
Barclays | USD | 2,090 | 3.145% | Three Month LIBOR | 03/15/26 | (104 | ) | |||||||||||
Barclays | USD | 425 | Three Month LIBOR | 2.481% | 11/15/27 | 40 | ||||||||||||
Barclays | USD | 425 | Three Month LIBOR | 2.417% | 11/15/27 | 44 | ||||||||||||
Barclays | USD | 940 | Three Month LIBOR | 3.490% | 03/15/46 | 63 | ||||||||||||
Citigroup | USD | 850 | Three Month LIBOR | 2.714% | 08/15/42 | 107 | ||||||||||||
Goldman Sachs | USD | 15,500 | 1.500% | Three Month LIBOR | 03/18/16 | 54 | ||||||||||||
Goldman Sachs | BRL | 100 | 9.095% | Brazil Interbank Deposit Rate | 01/02/17 | (2 | ) | |||||||||||
Goldman Sachs | USD | 5,200 | 1.000% | Federal Fund Effective Rate - 1 Year | 10/15/17 | (80 | ) | |||||||||||
Goldman Sachs | USD | 2,270 | 2.804% | Three Month LIBOR | 04/09/26 | (181 | ) | |||||||||||
Goldman Sachs | USD | 1,020 | Three Month LIBOR | 3.125% | 04/09/46 | 134 | ||||||||||||
HSBC | MXN | 1,300 | 5.600% | Mexico Interbank 28 Day Deposit Rate | 09/06/16 | 2 | ||||||||||||
HSBC | BRL | 200 | 8.950% | Brazil Interbank Deposit Rate | 01/02/17 | (4 | ) | |||||||||||
HSBC | MXN | 1,000 | 5.500% | Mexico Interbank 28 Day Deposit Rate | 09/13/17 | — | ||||||||||||
JPMorgan | USD | 5,000 | 1.311% | Three Month LIBOR | 10/24/19 | (186 | ) | |||||||||||
JPMorgan | HKD | 19,900 | Three Month HIBOR | 1.085% | 10/25/19 | 131 | ||||||||||||
JPMorgan | SGD | 3,150 | Singapore Swap Offer Rate | 1.315% | 10/30/19 | 100 | ||||||||||||
JPMorgan | USD | 1,750 | 1.471% | Three Month LIBOR | 02/12/20 | (54 | ) | |||||||||||
JPMorgan | HKD | 1,050 | Three Month HIBOR | 1.260% | 02/14/20 | 6 | ||||||||||||
JPMorgan | SGD | 175 | Singapore Swap Offer Rate | 1.440% | 02/17/20 | 5 | ||||||||||||
JPMorgan | HKD | 2,300 | Three Month HIBOR | 1.140% | 04/29/20 | 18 | ||||||||||||
JPMorgan | SGD | 350 | Singapore Swap Offer Rate | 1.185% | 05/04/20 | 16 | ||||||||||||
JPMorgan | USD | 5,000 | 1.501% | Three Month LIBOR | 10/26/20 | (233 | ) | |||||||||||
JPMorgan | USD | 1,500 | 1.535% | Three Month LIBOR | 04/29/21 | (83 | ) | |||||||||||
Morgan Stanley | MXN | 38,000 | 5.500% | Mexico Interbank 28 Day Deposit Rate | 09/13/17 | 6 | ||||||||||||
Morgan Stanley | MXN | 500 | 6.350% | Mexico Interbank 28 Day Deposit Rate | 06/02/21 | — | ||||||||||||
UBS | BRL | 100 | 8.900% | Brazil Interbank Deposit Rate | 01/02/17 | (2 | ) | |||||||||||
|
| |||||||||||||||||
Total Fair Value on Open Interest Rate Swap Contracts Premiums Paid (Received) - $80 (å) |
| (203 | ) | |||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 79 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Credit Default Swap Contracts | ||||||||||||||||||||||||
Corporate Issues | ||||||||||||||||||||||||
Reference | Counterparty | Implied Credit Spread | Notional | Fund (Pays)/ Receives Fixed Rate | Termination Date | Fair Value $ | ||||||||||||||||||
GE Capital Corp. | Citigroup | 0.141% | USD | 200 | 4.000% | 12/20/13 | 4 | |||||||||||||||||
GE Capital Corp. | Deutsche | 0.141% | USD | 100 | 4.900% | 12/20/13 | 2 | |||||||||||||||||
|
| |||||||||||||||||||||||
Total Fair Value on Open Corporate Issues Premiums Paid (Received) - ($-) |
| 6 | ||||||||||||||||||||||
|
|
Credit Indices | ||||||||||||||||||||
Reference | Counterparty | Notional Amount | Fund (Pays)/ Receives Fixed Rate | Termination Date | Fair Value $ | |||||||||||||||
Dow Jones CDX Index | Barclays | USD | 800 | 5.000% | 06/20/15 | 26 | ||||||||||||||
Dow Jones CDX Index | Deutsche Bank | USD | 900 | 5.000% | 06/20/15 | 29 | ||||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 2,800 | 1.000% | 06/20/23 | (80 | ) | |||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 3,000 | 1.000% | 06/20/23 | (84 | ) | |||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 2,800 | 1.000% | 12/20/22 | (61 | ) | |||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 2,200 | (1.000% | ) | 12/20/17 | (27 | ) | ||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 5,000 | (1.000% | ) | 12/20/17 | (75 | ) | ||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 5,000 | 1.000% | 06/20/18 | 31 | ||||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 3,000 | 1.000% | 12/20/17 | 38 | ||||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 386 | 0.553% | 12/20/17 | 6 | ||||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 2,800 | (1.000% | ) | 12/20/22 | 54 | |||||||||||||
Dow Jones CDX Index | JPMorgan | USD | 4,200 | 1.000% | 12/20/17 | 53 | ||||||||||||||
Dow Jones CDX Index | Morgan Stanley | USD | 800 | 5.000% | 06/20/15 | 25 | ||||||||||||||
Dow Jones CDX Index | Pershing | USD | 193 | 0.548% | 12/20/17 | 3 | ||||||||||||||
|
| |||||||||||||||||||
Total Fair Value on Open Credit Indices Premiums Paid (Received) - $64 |
| (62 | ) | |||||||||||||||||
|
|
Sovereign Issues | ||||||||||||||||||||||||
Reference | Counterparty | Implied Credit Spread | Notional | Fund (Pays)/ Receives Fixed Rate | Termination Date | Fair Value $ | ||||||||||||||||||
Brazil Government International Bond | Bank of America | 0.994% | USD | 500 | 1.000% | 03/20/16 | (6 | ) | ||||||||||||||||
Brazil Government International Bond | Barclays | 0.959% | USD | 700 | 1.000% | 12/20/15 | (7 | ) | ||||||||||||||||
Brazil Government International Bond | Barclays | 0.865% | USD | 500 | 1.000% | 06/20/15 | (3 | ) | ||||||||||||||||
Brazil Government International Bond | Credit Suisse | 1.024% | USD | 200 | 1.000% | 06/20/16 | (3 | ) | ||||||||||||||||
Brazil Government International Bond | Deutsche Bank | 0.865% | USD | 1,000 | 1.000% | 06/20/15 | (5 | ) | ||||||||||||||||
Brazil Government International Bond | Goldman Sachs | 0.865% | USD | 500 | 1.000% | 06/20/15 | (3 | ) | ||||||||||||||||
Brazil Government International Bond | HSBC | 0.917% | USD | 100 | 1.000% | 09/20/15 | (1 | ) | ||||||||||||||||
Brazil Government International Bond | JPMorgan | 0.917% | USD | 100 | 1.000% | 09/20/15 | (1 | ) | ||||||||||||||||
Mexico Government International Bond | HSBC | 0.583% | USD | 500 | 1.000% | 03/20/16 | 1 | |||||||||||||||||
United Kingdom Gilt | Societe Generale | 0.225% | USD | 200 | 1.000% | 03/20/15 | 3 | |||||||||||||||||
|
| |||||||||||||||||||||||
Total Fair Value on Open Sovereign Issues Premiums Paid (Received) - ($17) | (25 | ) | ||||||||||||||||||||||
|
| |||||||||||||||||||||||
Total Fair Value on Open Credit Default Swap Contracts Premiums Paid (Received) - $47 (å) | (81 | ) | ||||||||||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
80 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Amounts in thousands
Fair Value | % of Net Assets | |||||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Long-Term Investments | ||||||||||||||||||||
Asset-Backed Securities | $ | — | $ | 44,744 | $ | 317 | $ | 45,061 | 6.4 | |||||||||||
Corporate Bonds and Notes | — | 75,221 | 2,012 | 77,233 | 11.0 | |||||||||||||||
International Debt | — | 33,132 | 64 | 33,196 | 4.7 | |||||||||||||||
Loan Agreements | — | 1,191 | — | 1,191 | 0.2 | |||||||||||||||
Mortgage-Backed Securities | — | 223,139 | 5,422 | 228,561 | 32.6 | |||||||||||||||
Municipal Bonds | — | 12,888 | — | 12,888 | 1.8 | |||||||||||||||
Non-US Bonds | — | 45,526 | — | 45,526 | 6.5 | |||||||||||||||
United States Government Agencies | — | 14,887 | — | 14,887 | 2.1 | |||||||||||||||
United States Government Treasuries | — | 118,255 | — | 118,255 | 16.9 | |||||||||||||||
Utilities | 366 | — | — | 366 | — | * | ||||||||||||||
Preferred Stocks | 86 | — | 347 | 433 | 0.1 | |||||||||||||||
Options Purchased | — | 434 | — | 434 | 0.1 | |||||||||||||||
Short-Term Investments | — | 185,741 | — | 185,741 | 26.5 | |||||||||||||||
Repurchase Agreements | — | 15,900 | — | 15,900 | 2.3 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Investments | 452 | 771,058 | 8,162 | 779,672 | 111.2 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other Assets and Liabilities, Net | (11.2 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
100.0 | ||||||||||||||||||||
|
| |||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | (31 | ) | — | — | (31 | ) | (— | )* | ||||||||||||
Options Written | (42 | ) | (477 | ) | (14 | ) | (533 | ) | (0.1 | ) | ||||||||||
Foreign Currency Exchange Contracts | 6 | 3,482 | — | 3,488 | 0.5 | |||||||||||||||
Index Swaps | — | (25 | ) | — | (25 | ) | (— | )* | ||||||||||||
Interest Rate Swap Contracts | — | (283 | ) | — | (283 | ) | (— | )* | ||||||||||||
Credit Default Swap Contracts | — | (128 | ) | — | (128 | ) | (— | )* | ||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Other Financial Instruments** | $ | (67 | ) | $ | 2,569 | $ | (14 | ) | $ | 2,488 | ||||||||||
|
|
|
|
|
|
|
|
* | Less than .05% of net assets. |
** | Other financial instruments 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.
For disclosure on transfers between Levels 1, 2 and 3 during the period ended June 30, 2013, see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 81 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Presentation of Portfolio Holdings, continued — June 30, 2013 (Unaudited)
Amounts in thousands
A reconciliation of investments which significant unobservable input (Level 3) were used in determining a value for the period ended June 30, 2013 were as follows:
Category and Subcategory | Beginning Balance 12/31/2012 | Gross Purchases | Gross Sales | Accrued Discounts/ (Premiums) | Realized Gain (Loss) | Net Transfers into Level 3 | Net Transfers out of Level 3 | |||||||||||||||||||||
Long-Term Investments | ||||||||||||||||||||||||||||
Asset-Backed Securities | $ | 317 | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||||
Corporate Bonds and Notes | 1,976 | 450 | 51 | 7 | 1 | 14 | 374 | |||||||||||||||||||||
International Debt | 465 | 65 | 292 | — | — | — | 174 | |||||||||||||||||||||
Mortgage-Backed Securities | 3,200 | 3,217 | 620 | (3 | ) | (6 | ) | 675 | 934 | |||||||||||||||||||
Non-US Bonds | 289 | — | 276 | — | (4 | ) | — | — | ||||||||||||||||||||
Preferred Stocks | 360 | — | — | — | — | — | — | |||||||||||||||||||||
Short-Term Investments | 177 | — | 180 | — | 4 | — | — | |||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total Investments | 6,784 | 3,732 | 1,419 | 4 | (5 | ) | 689 | 1,482 | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Other Financial Instruments | ||||||||||||||||||||||||||||
Options Written | (18 | ) | — | — | — | — | — | — | ||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
| |||||||||||||||
Total Other Financial Instruments | $ | (18 | ) | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | |||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Category and Subcategory | Net change in Unrealized Appreciation/ (Depreciation) | Ending Balance at 6/30/2013 | Net change in Unrealized Appreciation/ (Depreciation) on Investments held as of 6/30/2013 | |||||||||
Long-Term Investments | ||||||||||||
Asset-Backed Securities | $ | — | $ | 317 | $ | — | ||||||
Corporate Bonds and Notes | (11 | ) | 2,012 | (11 | ) | |||||||
International Debt | — | 64 | — | |||||||||
Mortgage-Backed Securities | (107 | ) | 5,422 | (107 | ) | |||||||
Non-US Bonds | (9 | ) | — | (9 | ) | |||||||
Preferred Stocks | (13 | ) | 347 | (13 | ) | |||||||
Short-Term Investments | (1 | ) | — | (1 | ) | |||||||
|
|
|
|
|
| |||||||
Total Investments | (141 | ) | 8,162 | (141 | ) | |||||||
|
|
|
|
|
| |||||||
Other Financial Instruments | ||||||||||||
Options Written | 4 | (14 | ) | 4 | ||||||||
|
|
|
|
|
| |||||||
Total Other Financial Instruments | $ | 4 | $ | (14 | ) | $ | 4 | |||||
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
82 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Fair Value of Derivative Instruments — June 30, 2013 (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 | ||||||||||||
Investments, at fair value* | $ | — | $ | — | $ | 434 | ||||||
Unrealized appreciation on foreign currency exchange contracts | — | 5,684 | — | |||||||||
Daily variation margin on futures contracts** | — | — | 807 | |||||||||
Interest rate swap contracts, at fair value | — | — | 728 | |||||||||
Credit default swap contracts, at fair value | 275 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 275 | $ | 5,684 | $ | 1,969 | ||||||
|
|
|
|
|
| |||||||
Location: Statement of Assets and Liabilities - Liabilities | ||||||||||||
Daily variation margin on futures contracts** | $ | — | $ | — | $ | 838 | ||||||
Unrealized depreciation on foreign currency exchange contracts | — | 2,196 | — | |||||||||
Options written, at fair value | — | — | 533 | |||||||||
Index swap contracts, at fair value | — | — | 25 | |||||||||
Interest rate swap contracts, at fair value | — | — | 931 | |||||||||
Credit default swap contracts, at fair value | 356 | — | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | 356 | $ | 2,196 | $ | 2,327 | ||||||
|
|
|
|
|
| |||||||
Derivatives not accounted for as hedging instruments | Credit Contracts | Foreign Currency Contracts | Interest Rate Contracts | |||||||||
Location: Statement of Operations - Net realized gain (loss) | ||||||||||||
Investments*** | $ | — | $ | — | $ | (7 | ) | |||||
Futures contracts | — | — | (1,342 | ) | ||||||||
Options written | — | — | 138 | |||||||||
Index swap contracts | — | — | (1,952 | ) | ||||||||
Interest rate swap contracts | — | — | 39 | |||||||||
Credit default swap contracts | 310 | — | — | |||||||||
Foreign currency-related transactions**** | — | (2,698 | ) | — | ||||||||
|
|
|
|
|
| |||||||
Total | $ | 310 | $ | (2,698 | ) | $ | (3,124 | ) | ||||
|
|
|
|
|
| |||||||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||||||||||
Investments***** | $ | — | $ | — | $ | 93 | ||||||
Futures contracts | — | — | 216 | |||||||||
Options written | — | — | (467 | ) | ||||||||
Index swap contracts | — | — | 83 | |||||||||
Interest rate swap contracts | — | — | (376 | ) | ||||||||
Credit default swap contracts | (453 | ) | — | — | ||||||||
Foreign currency-related transactions****** | — | 3,943 | — | |||||||||
|
|
|
|
|
| |||||||
Total | $ | (453 | ) | $ | 3,943 | $ | (451 | ) | ||||
|
|
|
|
|
|
* | Market value of purchased options. |
** | 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 and Liabilities. |
*** | Includes net realized gain (loss) on purchased options as reported in the Statement of Operations. |
**** | Only includes net realized gain (loss) on forward and spot contracts. May differ from the net realized gain (loss) on foreign currency-related transactions reported within the Statement of Operations. |
***** | Includes net change in unrealized appreciation/depreciation on purchased options as reported in Schedule of Investments. |
****** | Only includes change in unrealized gain (loss) on forward and spot contracts. May differ from the net change in unrealized gain (loss) on foreign currency-related transactions reported within the Statement of Operations. |
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 | 83 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Balance Sheet Offsetting of Financial and Derivative Instruments — June 30, 2013 (Unaudited)
Amounts in thousands
Offsetting of Financial Assets and Derivative Assets | ||||||||||||||
Description | Location: Statement of Assets and Liabilities - Assets | Gross Amounts of Recognized Assets | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Assets Presented on the Statement of Assets and Liabilities | ||||||||||
Options Purchased Contracts** | Investments, at fair value | $ | 434 | $ | — | $ | 434 | |||||||
Repurchase Agreements*** | Investments, at fair value | 15,900 | — | 15,900 | ||||||||||
Foreign Currency Exchange Contracts | Unrealized appreciation on foreign currency exchange contracts | 5,684 | — | 5,684 | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | 807 | — | 807 | ||||||||||
Interest Rate Swap Contracts | Interest rate swap contracts, at fair value | 728 | — | 728 | ||||||||||
Credit Default Swap Contracts | Credit default swap contracts, at fair value | 275 | — | 275 | ||||||||||
|
|
|
|
|
| |||||||||
$ | 23,828 | $ | — | $ | 23,828 | |||||||||
|
|
|
|
|
|
Financial Assets, Derivative Assets, and Collateral Held by Counterparty | ||||||||||||||||
Net Amounts of Assets Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | ||||||||||||||
Counterparty | Financial and Derivative Instruments | Collateral Received | ||||||||||||||
Bank of America | $ | 465 | $ | — | $ | — | $ | 465 | ||||||||
Barclays | 9,306 | 137 | 7,973 | 1,196 | ||||||||||||
BNP Paribas | 5 | — | — | 5 | ||||||||||||
Citigroup | 8,102 | 12 | 8,010 | 80 | ||||||||||||
Deutsche Bank | 259 | 68 | — | 191 | ||||||||||||
Goldman Sachs | 295 | 134 | — | 161 | ||||||||||||
HSBC | 38 | 3 | — | 35 | ||||||||||||
JPMorgan Chase | 4,972 | 457 | — | 4,515 | ||||||||||||
Morgan Stanley | 38 | 32 | 6 | — | ||||||||||||
Pershing | 3 | — | — | 3 | ||||||||||||
Royal Bank of Canada | 317 | — | — | 317 | ||||||||||||
Societe Generale | 3 | — | — | 3 | ||||||||||||
UBS | 25 | — | — | 25 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 23,828 | $ | 843 | $ | 15,989 | $ | 6,996 | |||||||||
|
|
|
|
|
|
|
|
Offsetting of Financial Liabilities and Derivative Liabilities | ||||||||||||||
Description | Location: Statement of Assets and Liabilities - Liabilities | Gross Amounts of Recognized Liabilities | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | $ | 838 | $ | — | $ | 838 | |||||||
Foreign Currency Exchange Contracts | Unrealized depreciation on foreign currency exchange contracts | 2,196 | — | 2,196 | ||||||||||
Options Written Contracts | Options written, at fair value | 533 | — | 533 | ||||||||||
Index Swap Contracts | Index swap contracts, at fair value | 25 | — | 25 | ||||||||||
Interest Rate Swap Contracts | Interest rate swap contracts, at fair value | 931 | — | 931 | ||||||||||
Credit Default Swap Contracts | Credit default swap contracts, at fair value | 356 | — | 356 | ||||||||||
|
|
|
|
|
| |||||||||
$ | 4,879 | $ | — | $ | 4,879 | |||||||||
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
84 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Balance Sheet Offsetting of Financial and Derivative Instruments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty | ||||||||||||||||
Net Amounts of Liabilities Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | ||||||||||||||
Counterparty | Financial and Derivative Instruments | Collateral Pledged | ||||||||||||||
Bank of America | $ | 67 | $ | — | $ | — | $ | 67 | ||||||||
Bank of New York | 3 | — | — | 3 | ||||||||||||
Barclays | 166 | 137 | 29 | | — | | ||||||||||
Citigroup | 525 | 12 | 71 | 442 | ||||||||||||
Credit Suisse | 94 | — | — | 94 | ||||||||||||
Deutsche Bank | 139 | 68 | — | 71 | ||||||||||||
Goldman Sachs | 882 | 134 | 584 | 164 | ||||||||||||
HSBC | 59 | 3 | — | 56 | ||||||||||||
JPMorgan Chase | 1,736 | 457 | — | 1,279 | ||||||||||||
Morgan Stanley | 714 | 32 | 481 | 201 | ||||||||||||
Royal Bank of Canada | 259 | — | — | 259 | ||||||||||||
Royal Bank of Scotland | 42 | — | — | 42 | ||||||||||||
UBS | 193 | — | — | 193 | ||||||||||||
|
|
|
|
|
|
|
| |||||||||
$ | 4,879 | $ | 843 | $ | 1,165 | $ | 2,871 | |||||||||
|
|
|
|
|
|
|
|
* | 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 and Liabilities. |
** | Fair value of options purchased as reported in the Schedule of Investments. |
*** | Fair value of repurchase agreements as reported in the Schedule of Investments. |
For further disclosure on derivatives and counterparty risk see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 85 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 779,085 | ||
Investments, at fair value***** | 779,672 | |||
Cash | 742 | |||
Cash (restricted)(a)(b) | 2,678 | |||
Foreign currency holdings* | 627 | |||
Unrealized appreciation on foreign currency exchange contracts | 5,684 | |||
Receivables: | ||||
Dividends and interest | 3,541 | |||
Dividends from affiliated Russell funds | 11 | |||
Investments sold | 211,122 | |||
Fund shares sold | 432 | |||
Daily variation margin on futures contracts | 1,214 | |||
Other receivable | 1 | |||
Prepaid expenses | 5 | |||
Interest rate swap contracts, at fair value**** | 728 | |||
Credit default swap contracts, at fair value*** | 275 | |||
|
| |||
Total assets | 1,006,732 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Due to broker(c) | 189 | |||
Investments purchased | 300,097 | |||
Fund shares redeemed | 12 | |||
Accrued fees to affiliates | 323 | |||
Other accrued expenses | 260 | |||
Daily variation margin on futures contracts | 435 | |||
Unrealized depreciation on foreign currency exchange contracts | 2,196 | |||
Options written, at fair value** | 533 | |||
Index swap contracts, at fair value | 25 | |||
Interest rate swap contracts, at fair value**** | 931 | |||
Credit default swap contracts, at fair value*** | 356 | |||
|
| |||
Total liabilities | 305,357 | |||
|
| |||
Net Assets | $ | 701,375 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
86 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Statement of Assets and Liabilities, continued — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 3,290 | ||
Accumulated net realized gain (loss) | (4,002 | ) | ||
Unrealized appreciation (depreciation) on: | ||||
Investments | 587 | |||
Futures contracts | (31 | ) | ||
Options written | (257 | ) | ||
Index swap contracts | (25 | ) | ||
Interest rate swap contracts | (283 | ) | ||
Credit default swap contracts | (128 | ) | ||
Foreign currency-related transactions | 3,437 | |||
Other investments | 1 | |||
Shares of beneficial interest | 669 | |||
Additional paid-in capital | 698,117 | |||
|
| |||
Net Assets | $ | 701,375 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 10.48 | ||
Net assets | $ | 701,375,451 | ||
Shares outstanding ($.01 par value) | 66,907,200 | |||
Amounts in thousands | ||||
* Foreign currency holdings - cost | $ | 651 | ||
** Premiums received on options written | $ | 276 | ||
*** Credit default swap contracts - premiums paid (received) | $ | 47 | ||
**** Interest rate swap contracts - premiums paid (received) | $ | 80 | ||
***** Investments in affiliates, Russell U.S. Cash Management Fund | $ | 129,389 | ||
(a) Cash Collateral for Futures | $ | 533 | ||
(b) Cash Collateral for Swaps | $ | 2,145 | ||
(c) Due to Broker for Swaps | $ | 189 |
(#) | 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.
Core Bond Fund | 87 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Dividends | $ | 8 | ||
Dividends from affiliated Russell funds | 83 | |||
Interest | 8,510 | |||
|
| |||
Total investment income | 8,601 | |||
|
| |||
Expenses | ||||
Advisory fees | 1,903 | |||
Administrative fees | 173 | |||
Custodian fees | 153 | |||
Transfer agent fees | 15 | |||
Professional fees | 64 | |||
Trustees’ fees | 8 | |||
Printing fees | 23 | |||
Miscellaneous | 18 | |||
|
| |||
Expenses before reductions | 2,357 | |||
Expense reductions | (173 | ) | ||
|
| |||
Net expenses | 2,184 | |||
|
| |||
Net investment income (loss) | 6,417 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | 1,451 | |||
Futures contracts | (1,342 | ) | ||
Options written | 138 | |||
Index swap contracts | (1,952 | ) | ||
Interest rate swap contracts | 39 | |||
Credit default swap contracts | 310 | |||
Foreign currency-related transactions | (2,721 | ) | ||
|
| |||
Net realized gain (loss) | (4,077 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (21,573 | ) | ||
Futures contracts | 216 | |||
Options written | (467 | ) | ||
Index swap contracts | 83 | |||
Interest rate swap contracts | (376 | ) | ||
Credit default swap contracts | (453 | ) | ||
Foreign currency-related transactions | 3,875 | |||
|
| |||
Net change in unrealized appreciation (depreciation) | (18,695 | ) | ||
|
| |||
Net realized and unrealized gain (loss) | (22,772 | ) | ||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | (16,355 | ) | |
|
|
See accompanying notes which are an integral part of the financial statements.
88 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 6,417 | $ | 14,225 | ||||
Net realized gain (loss) | (4,077 | ) | 15,276 | |||||
Net change in unrealized appreciation (depreciation) | (18,695 | ) | 18,790 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | (16,355 | ) | 48,291 | |||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (3,249 | ) | (14,526 | ) | ||||
From net realized gain | (2,007 | ) | (16,006 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (5,256 | ) | (30,532 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | 46,968 | 112,651 | ||||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 25,357 | 130,410 | ||||||
Net Assets | ||||||||
Beginning of period | 676,018 | 545,608 | ||||||
|
|
|
| |||||
End of period | $ | 701,375 | $ | 676,018 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | 3,290 | $ | 122 |
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 89 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Statements of Changes in Net Assets, continued
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 5,854 | $ | 63,112 | 11,229 | $ | 121,112 | ||||||||||
Proceeds from reinvestment of distributions | 489 | 5,256 | 2,840 | 30,526 | ||||||||||||
Payments for shares redeemed | (1,988 | ) | (21,400 | ) | (3,608 | ) | (38,987 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | 4,355 | $ | 46,968 | 10,461 | $ | 112,651 | ||||||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
90 | Core Bond Fund |
Table of Contents
(This page intentionally left blank)
Table of Contents
Russell Investment Funds
Core Bond Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each 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 | |||||||||||||||||||
June 30, 2013(1) | 10.81 | .10 | (.35 | ) | (.25 | ) | (.05 | ) | (.03 | ) | ||||||||||||||
December 31, 2012 | 10.47 | .25 | .61 | .86 | (.25 | ) | (.27 | ) | ||||||||||||||||
December 31, 2011 | 10.51 | .35 | .14 | .49 | (.34 | ) | (.19 | ) | ||||||||||||||||
December 31, 2010 | 10.20 | .37 | .63 | 1.00 | (.40 | ) | (.29 | ) | ||||||||||||||||
December 31, 2009 | 9.33 | .44 | 1.02 | 1.46 | (.46 | ) | (.13 | ) | ||||||||||||||||
December 31, 2008 | 10.32 | .47 | (.86 | ) | (.39 | ) | (.39 | ) | (.21 | ) |
See accompanying notes which are an integral part of the financial statements.
92 | Core Bond Fund |
Table of Contents
$ Total Distributions | $ Net Asset Value, End of Period | % Total Return(d)(f) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Gross(e) | % Ratio of Expenses to Average Net Assets, Net(b)(e) | % Ratio of Net Investment Income to Average Net Assets(b)(e) | % Portfolio Turnover Rate(d) | |||||||||||||||||||||||
(.08 | ) | 10.48 | (2.31 | ) | 701,375 | .68 | .63 | 1.85 | 69 | |||||||||||||||||||||
(.52 | ) | 10.81 | 8.38 | 676,018 | .72 | .66 | 2.32 | 192 | ||||||||||||||||||||||
(.53 | ) | 10.47 | 4.68 | 545,608 | .72 | .65 | 3.29 | 203 | ||||||||||||||||||||||
(.69 | ) | 10.51 | 10.02 | 471,898 | .75 | .68 | 3.48 | 195 | ||||||||||||||||||||||
(.59 | ) | 10.20 | 16.18 | 400,569 | .73 | .66 | 4.49 | 151 | ||||||||||||||||||||||
(.60 | ) | 9.33 | (3.87 | ) | 319,109 | .77 | .70 | 4.70 | 164 |
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund | 93 |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | ||||||||
June 30, 2013 | $ | 1,012.70 | $ | 1,020.23 | ||||
Expenses Paid During Period* | $ | 4 .59 | $ | 4 .61 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.92% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
94 | Global Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Common Stocks - 97.2% | ||||||||
Australia - 7.0% | ||||||||
BGP Holdings PLC (Å)(Æ) | 926,311 | — | ||||||
CFS Retail Property Trust Group (ö) | 627,250 | 1,147 | ||||||
Charter Hall Retail REIT (ö) | 255,851 | 892 | ||||||
Commonwealth Property Office Fund (ö) | 1,465,006 | 1,473 | ||||||
Cromwell Property Group (ö) | 831,384 | 741 | ||||||
Dexus Property Group (ö) | 3,998,367 | 3,913 | ||||||
Federation Centres, Ltd. (ö) | 2,683,578 | 5,816 | ||||||
Goodman Group (ö) | 1,056,718 | 4,717 | ||||||
GPT Group (ö) | 855,920 | 3,006 | ||||||
Mirvac Group Class REIT (ö) | 3,036,029 | 4,457 | ||||||
Stockland (ö) | 1,096,665 | 3,490 | ||||||
Westfield Group (ö) | 1,176,245 | 12,306 | ||||||
Westfield Retail Trust (ö) | 718,022 | 2,036 | ||||||
|
| |||||||
43,994 | ||||||||
|
| |||||||
Austria - 0.1% | ||||||||
Conwert Immobilien Invest SE (Æ) | 49,415 | 489 | ||||||
|
| |||||||
Brazil - 0.3% | ||||||||
Multiplan Empreendimentos Imobiliarios SA | 71,938 | 1,670 | ||||||
|
| |||||||
Canada - 3.0% | ||||||||
Allied Properties Real Estate Investment Trust (ö) | 114,851 | 3,495 | ||||||
Boardwalk Real Estate Investment Trust (ö) | 31,900 | 1,768 | ||||||
Brookfield Office Properties, Inc. (Ñ) | 163,345 | 2,718 | ||||||
Calloway Real Estate Investment Trust (ö) | 55,100 | 1,347 | ||||||
Canadian Apartment Properties REIT (ö) | 79,200 | 1,706 | ||||||
Canadian Real Estate Investment Trust (ö) | 23,281 | 964 | ||||||
Chartwell Retirement Residences (Ñ)(ö) | 158,064 | 1,474 | ||||||
Dundee Real Estate Investment Trust Class A (Ñ)(ö) | 41,000 | 1,273 | ||||||
First Capital Realty, Inc. Class A | 29,800 | 506 | ||||||
H&R Real Estate Investment Trust (ö) | 100,328 | 2,103 | ||||||
RioCan Real Estate Investment Trust (ö) | 56,600 | 1,360 | ||||||
|
| |||||||
18,714 | ||||||||
|
| |||||||
China - 0.5% | ||||||||
China Overseas Land & Investment, Ltd. | 803,600 | 2,108 | ||||||
China Resources Land, Ltd. | 200,000 | 547 | ||||||
Guangzhou R&F Properties Co., Ltd. | 188,000 | 272 | ||||||
|
| |||||||
2,927 | ||||||||
|
| |||||||
Finland - 0.1% | ||||||||
Citycon OYJ | 144,256 | 449 | ||||||
Sponda OYJ | 66,100 | 311 | ||||||
|
| |||||||
760 | ||||||||
|
| |||||||
France - 3.3% | ||||||||
Fonciere Des Regions (ö) | 9,842 | 738 | ||||||
Gecina SA (ö) | 16,165 | 1,788 | ||||||
Klepierre - GDR (ö) | 116,216 | 4,580 | ||||||
Mercialys SA (ö) | 37,953 | 732 | ||||||
Societe Immobiliere de Location pour l’Industrie et le Commerce (Æ)(ö) | 3,373 | 348 |
Principal Amount ($) or Shares | Fair Value $ | |||||||
Unibail-Rodamco SE (ö) | 52,987 | 12,347 | ||||||
|
| |||||||
20,533 | ||||||||
|
| |||||||
Germany - 1.2% | ||||||||
Deutsche Euroshop AG | 11,700 | 466 | ||||||
Deutsche Wohnen AG | 199,376 | 3,386 | ||||||
GSW Immobilien AG | 53,489 | 2,069 | ||||||
LEG Immobilien AG | 23,413 | 1,219 | ||||||
TAG Immobilien AG | 24,297 | 265 | ||||||
|
| |||||||
7,405 | ||||||||
|
| |||||||
Hong Kong - 9.6% | ||||||||
Agile Property Holdings, Ltd. | 705,700 | 757 | ||||||
Champion REIT (Æ)(ö) | 1,154,000 | 530 | ||||||
Cheung Kong Holdings, Ltd. | 64,000 | 868 | ||||||
Country Garden Holdings Co., Ltd. | 2,853,788 | 1,494 | ||||||
Hang Lung Properties, Ltd. - ADR | 181,705 | 634 | ||||||
Henderson Land Development Co., Ltd. | 741,619 | 4,427 | ||||||
Hongkong Land Holdings, Ltd. | 1,367,109 | 9,392 | ||||||
Hysan Development Co., Ltd. | 813,958 | 3,532 | ||||||
Kerry Properties, Ltd. | 328,112 | 1,286 | ||||||
Link REIT (The) (ö) | 1,146,517 | 5,639 | ||||||
New World China Land, Ltd. | 364,000 | 140 | ||||||
New World Development Co., Ltd. | 4,828,644 | 6,686 | ||||||
Shangri-La Asia, Ltd. | 172,000 | 297 | ||||||
Shimao Property Holdings, Ltd. | 1,301,011 | 2,583 | ||||||
Shui On Land, Ltd. | 321,500 | 94 | ||||||
Sino Land Co., Ltd. | 144,000 | 203 | ||||||
Soho China, Ltd. | 171,500 | 136 | ||||||
Sun Hung Kai Properties, Ltd. | 851,583 | 10,990 | ||||||
Swire Properties, Ltd. | 44,800 | 133 | ||||||
Wharf Holdings, Ltd. | 1,298,951 | 10,920 | ||||||
|
| |||||||
60,741 | ||||||||
|
| |||||||
Italy - 0.0% | ||||||||
Beni Stabili SpA (ö) | 416,700 | 257 | ||||||
|
| |||||||
Japan - 14.0% | ||||||||
Activia Properties, Inc. (ö) | 287 | 2,260 | ||||||
Advance Residence Investment Corp. (ö) | 148 | 320 | ||||||
Aeon Mall Co., Ltd. | 62,200 | 1,541 | ||||||
Frontier Real Estate Investment Corp. (ö) | 212 | 1,945 | ||||||
GLP J (ö) | 2,086 | 2,040 | ||||||
Hulic Co., Ltd. | 60,000 | 644 | ||||||
Industrial & Infrastructure Fund Investment Corp. (ö) | 158 | 1,538 | ||||||
Japan Logistics Fund, Inc. Class A (ö) | 66 | 605 | ||||||
Japan Prime Realty Investment Corp. Class A (ö) | 1,114 | 3,409 | ||||||
Japan Real Estate Investment Corp. Class A (ö) | 580 | 6,473 | ||||||
Japan Retail Fund Investment Corp. (ö) | 1,460 | 3,050 | ||||||
Kenedix Realty Investment Corp. Class A (ö) | 369 | 1,470 | ||||||
Mitsubishi Estate Co., Ltd. | 754,767 | 20,098 | ||||||
Mitsui Fudosan Co., Ltd. | 630,129 | 18,533 | ||||||
Nippon Building Fund, Inc. (ö) | 186 | 2,153 |
Global Real Estate Securities Fund | 95 |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Nippon Prologis REIT, Inc. (ö) | 208 | 1,809 | ||||||
Nomura Real Estate Holdings, Inc. | 116,327 | 2,573 | ||||||
NTT Urban Development Corp. | 476 | 585 | ||||||
Orix JREIT, Inc. (ö) | 566 | 648 | ||||||
Premier Investment Corp. Class A (ö) | 24 | 92 | ||||||
Sumitomo Realty & Development Co., Ltd. | 364,000 | 14,515 | ||||||
Tokyu Land Corp. | 133,000 | 1,220 | ||||||
United Urban Investment Corp. Class A (ö) | 716 | 968 | ||||||
|
| |||||||
88,489 | ||||||||
|
| |||||||
Netherlands - 0.5% | ||||||||
Corio NV (ö) | 71,226 | 2,835 | ||||||
Vastned (ö) | 6,200 | 254 | ||||||
Wereldhave NV (ö) | 4,525 | 293 | ||||||
|
| |||||||
3,382 | ||||||||
|
| |||||||
Norway - 0.3% | ||||||||
Norwegian Property ASA | 1,632,758 | 2,070 | ||||||
|
| |||||||
Philippines - 0.1% | ||||||||
SM Prime Holdings, Inc. | 2,219,119 | 837 | ||||||
|
| |||||||
Singapore - 4.8% | ||||||||
Ascendas Real Estate Investment Trust (ö) | 408,000 | 718 | ||||||
CapitaCommercial Trust (Æ)(ö) | 370,000 | 428 | ||||||
CapitaLand, Ltd. | 1,952,143 | 4,744 | ||||||
CapitaMall Trust Class A (ö) | 2,516,717 | 3,961 | ||||||
CapitaMalls Asia, Ltd. | 2,041,969 | 2,940 | ||||||
CDL Hospitality Trusts (Æ)(ö) | 529,000 | 709 | ||||||
City Developments, Ltd. | 170,673 | 1,441 | ||||||
Frasers Centrepoint Trust (Æ)(ö) | 322,286 | 475 | ||||||
Global Logistic Properties, Ltd. | 2,795,014 | 6,065 | ||||||
Keppel Land, Ltd. | 399,597 | 1,056 | ||||||
Keppel REIT (ö) | 705,073 | 720 | ||||||
Mapletree Commercial Trust (ö) | 803,500 | 752 | ||||||
Mapletree Greater China Commercial Trust (Æ)(ö) | 1,324,900 | 988 | ||||||
Mapletree Industrial Trust (Æ)(ö) | 466,000 | 485 | ||||||
Mapletree Logistics Trust (Æ)(ö) | 770,007 | 668 | ||||||
Perennial China Retail Trust (Æ) | 1,673,400 | 719 | ||||||
Suntec Real Estate Investment Trust (Æ)(ö) | 2,356,000 | 2,927 | ||||||
UOL Group, Ltd. | 29,000 | 154 | ||||||
Wing Tai Holdings, Ltd. | 78,000 | 126 | ||||||
Yanlord Land Group, Ltd. | 117,000 | 114 | ||||||
|
| |||||||
30,190 | ||||||||
|
| |||||||
Sweden - 0.7% | ||||||||
Castellum AB | 179,941 | 2,443 | ||||||
Fabege AB | 111,662 | 1,098 | ||||||
Hufvudstaden AB Class A | 72,800 | 870 | ||||||
Wihlborgs Fastigheter AB | 22,400 | 332 | ||||||
|
| |||||||
4,743 | ||||||||
|
| |||||||
Switzerland - 0.2% | ||||||||
PSP Swiss Property AG (Æ) | 17,700 | 1,533 | ||||||
|
|
Principal Amount ($) or Shares | Fair Value $ | |||||||
United Kingdom - 5.7% | ||||||||
Big Yellow Group PLC (ö) | 233,322 | 1,365 | ||||||
British Land Co. PLC (ö) | 253,600 | 2,185 | ||||||
Capital & Counties Properties PLC | 148,861 | 740 | ||||||
Derwent London PLC (ö) | 145,710 | 5,098 | ||||||
Great Portland Estates PLC (ö) | 516,580 | 4,176 | ||||||
Hammerson PLC (ö) | 1,002,212 | 7,428 | ||||||
Intu Properties PLC Class H (ö) | 52,474 | 250 | ||||||
Land Securities Group PLC (ö) | 681,038 | 9,157 | ||||||
Londonmetric Property PLC (ö) | 806,731 | 1,272 | ||||||
Segro PLC (ö) | 317,052 | 1,346 | ||||||
Shaftesbury PLC (ö) | 170,636 | 1,544 | ||||||
Unite Group PLC | 231,792 | 1,276 | ||||||
|
| |||||||
35,837 | ||||||||
|
| |||||||
United States - 45.8% | ||||||||
Alexandria Real Estate Equities, Inc. (ö) | 27,100 | 1,781 | ||||||
American Assets Trust, Inc. (ö) | 77,195 | 2,382 | ||||||
American Campus Communities, Inc. (ö) | 19,000 | 772 | ||||||
Apartment Investment & Management Co. Class A (ö) | 68,272 | 2,051 | ||||||
Armada Hoffler Properties, Inc. (ö) | 23,400 | 276 | ||||||
AvalonBay Communities, Inc. (ö) | 82,464 | 11,125 | ||||||
Aviv REIT, Inc. (ö) | 6,600 | 167 | ||||||
BioMed Realty Trust, Inc. (ö) | 85,500 | 1,729 | ||||||
Boston Properties, Inc. (ö) | 105,200 | 11,096 | ||||||
BRE Properties, Inc. Class A (ö) | 84,988 | 4,251 | ||||||
Camden Property Trust (ö) | 29,300 | 2,025 | ||||||
CBL & Associates Properties, Inc. (ö) | 114,613 | 2,455 | ||||||
Colonial Properties Trust (ö) | 70,753 | 1,707 | ||||||
Corporate Office Properties Trust (ö) | 69,612 | 1,776 | ||||||
CubeSmart Class A (ö) | 313,820 | 5,014 | ||||||
DCT Industrial Trust, Inc. (ö) | 93 | 1 | ||||||
DDR Corp. (Ñ)(ö) | 698,492 | 11,630 | ||||||
Digital Realty Trust, Inc. (Ñ)( ö) | 65,745 | 4,011 | ||||||
Douglas Emmett, Inc. (ö) | 92,909 | 2,318 | ||||||
Duke Realty Corp. (ö) | 154,849 | 2,414 | ||||||
DuPont Fabros Technology, Inc. (Ñ)(ö) | 67,400 | 1,627 | ||||||
EPR Properties (ö) | 35,100 | 1,764 | ||||||
Equity Lifestyle Properties, Inc. Class A (ö) | 38,014 | 2,987 | ||||||
Equity One, Inc. (ö) | 29,955 | 678 | ||||||
Equity Residential (ö) | 209,473 | 12,161 | ||||||
Essex Property Trust, Inc. (ö) | 25,612 | 4,070 | ||||||
Extra Space Storage, Inc. (ö) | 119,701 | 5,019 | ||||||
Federal Realty Investment Trust (ö) | 40,100 | 4,157 | ||||||
First Industrial Realty Trust, Inc. (ö) | 87,201 | 1,323 | ||||||
First Potomac Realty Trust (ö) | 57,000 | 744 | ||||||
Forest City Enterprises, Inc. Class A (Æ) | 217,284 | 3,891 | ||||||
HCP, Inc. (ö) | 168,500 | 7,657 | ||||||
Health Care REIT, Inc. (ö) | 175,962 | 11,795 | ||||||
Healthcare Trust of America, Inc. Class A (ö) | 84,468 | 949 | ||||||
Hersha Hospitality Trust Class A (ö) | 175,044 | 987 | ||||||
Host Hotels & Resorts, Inc. (ö) | 631,157 | 10,647 | ||||||
Hudson Pacific Properties, Inc. (ö) | 89,713 | 1,909 | ||||||
Hyatt Hotels Corp. Class A (Æ) | 42,882 | 1,731 | ||||||
Kilroy Realty Corp. (ö) | 57,256 | 3,035 | ||||||
Liberty Property Trust (ö) | 49,500 | 1,830 |
96 | Global Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Principal Amount ($) or Shares | Fair Value $ | |||||||
Macerich Co. (The) (ö) | 128,770 | 7,851 | ||||||
Mid-America Apartment Communities, Inc. (Ñ)(ö) | 39,700 | 2,690 | ||||||
National Retail Properties, Inc. (Ñ)(ö) | 56,819 | 1,955 | ||||||
Orient-Express Hotels, Ltd. Class A (Æ) | 90,385 | 1,099 | ||||||
Parkway Properties, Inc. (ö) | 51,334 | 861 | ||||||
Pebblebrook Hotel Trust (ö) | 17,700 | 457 | ||||||
Piedmont Office Realty Trust, Inc. Class A (Ñ)(ö) | 177,500 | 3,174 | ||||||
Prologis, Inc. (ö) | 441,846 | 16,667 | ||||||
PS Business Parks, Inc. (ö) | 13,452 | 971 | ||||||
Public Storage (ö) | 61,400 | 9,414 | ||||||
Ramco-Gershenson Properties Trust (ö) | 20,000 | 311 | ||||||
Realty Income Corp. (Ñ)(ö) | 54,432 | 2,282 | ||||||
Regency Centers Corp. (ö) | 65,961 | 3,352 | ||||||
Retail Opportunity Investments Corp. (ö) | 175,197 | 2,435 | ||||||
Retail Properties of America, Inc. Class A (Ñ)(ö) | 41,200 | 588 | ||||||
RLJ Lodging Trust (ö) | 143,754 | 3,233 | ||||||
Senior Housing Properties Trust (ö) | 103,797 | 2,691 | ||||||
Simon Property Group, Inc. (ö) | 239,214 | 37,780 | ||||||
SL Green Realty Corp. (Ñ)(ö) | 92,866 | 8,189 | ||||||
Sovran Self Storage, Inc. (ö) | 32,951 | 2,135 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. (ö) | 17,000 | 1,074 | ||||||
Strategic Hotels & Resorts, Inc. (Æ)(ö) | 213,159 | 1,889 | ||||||
UDR, Inc. (ö) | 280,595 | 7,153 | ||||||
Ventas, Inc. (ö) | 206,284 | 14,329 | ||||||
Vornado Realty Trust (ö) | 93,453 | 7,742 | ||||||
WP Carey, Inc. (Ñ)(ö) | 10,907 | 721 | ||||||
|
| |||||||
288,985 | ||||||||
|
| |||||||
Total Common Stocks (cost $517,230) | 613,556 | |||||||
|
| |||||||
Warrants & Rights - 0.0% | ||||||||
United States - 0.0% | ||||||||
New Hotels Resorts | 59,833 | — | ||||||
|
| |||||||
Total Warrants & Rights (cost $-) | — | |||||||
|
| |||||||
Short-Term Investments - 2.0% | ||||||||
United States - 2.0% | ||||||||
Russell U.S. Cash Management Fund | 12,989,984 | (¥) | 12,990 | |||||
|
| |||||||
Total Short-Term Investments (cost $12,990) | 12,990 | |||||||
|
|
Principal Amount ($) or Shares | Fair Value $ | |||||||
Other Securities - 4.1% | ||||||||
Russell U.S. Cash Collateral Fund (×) | 25,661,675 | (¥) | 25,662 | |||||
|
| |||||||
Total Other Securities (cost $25,662) | 25,662 | |||||||
|
| |||||||
Total Investments - 103.3% (identified cost $556,093) | 652,208 | |||||||
Other Assets and Liabilities, Net - (3.3%) | (20,994 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 631,214 | |||||||
|
|
See accompanying notes which are an integral part of the financial statements.
Global Real Estate Securities Fund | 97 |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except share and cost per unit amounts)
Restricted Securities
% of Net Assets Securities | Acquisition Date | Principal Amount ($) or Shares | Cost per Unit $ | Cost (000) $ | Fair Value (000) $ | |||||||||||||||
0.0% | ||||||||||||||||||||
BGP Holdings PLC | 08/06/09 | 926,311 | — | — | — |
For a description of restricted securities see note 8 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
98 | Global Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands (except contract amounts)
Futures Contracts | Number of Contracts | Notional | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||||
Long Positions | ||||||||||||||||||||
Dow Jones US Real Estate Index Futures | 91 | USD | 2,339 | 09/13 | 4 | |||||||||||||||
FTSE EPRA Europe Futures (Germany) | 221 | EUR | 3,218 | 09/13 | (128 | ) | ||||||||||||||
Hang Seng Index Futures (Hong Kong) | 9 | HKD | 9,328 | 07/13 | 48 | |||||||||||||||
MSCI Singapore IX ETS Futures (Singapore) | 10 | SGD | 707 | 07/13 | 12 | |||||||||||||||
S&P Midcap 400 E-Mini Index Futures (CME) | 35 | USD | 4,053 | 09/13 | 17 | |||||||||||||||
S&P TSE 60 Index Futures (Canada) | 4 | CAD | 554 | 09/13 | — | |||||||||||||||
SPI 200 Index Futures (Australia) | 8 | AUD | 954 | 09/13 | 8 | |||||||||||||||
TOPIX Index Futures (Japan) | 14 | JPY | 158,339 | 09/13 | 44 | |||||||||||||||
|
| |||||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å) |
| 5 | ||||||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
Global Real Estate Securities Fund | 99 |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | ||||||||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
Commonwealth Bank of Australia | USD | 154 | AUD | 163 | 09/18/13 | (5 | ) | |||||||||||
Commonwealth Bank of Australia | USD | 113 | CAD | 115 | 09/18/13 | (4 | ) | |||||||||||
Commonwealth Bank of Australia | USD | 866 | EUR | 650 | 09/18/13 | (20 | ) | |||||||||||
Commonwealth Bank of Australia | USD | 122 | JPY | 11,627 | 09/18/13 | (4 | ) | |||||||||||
Deutsche Bank | USD | 134 | AUD | 140 | 09/18/13 | (7 | ) | |||||||||||
Deutsche Bank | USD | 669 | EUR | 500 | 09/18/13 | (18 | ) | |||||||||||
Deutsche Bank | USD | 193 | HKD | 1,500 | 09/18/13 | — | ||||||||||||
Deutsche Bank | USD | 210 | JPY | 20,000 | 09/18/13 | (8 | ) | |||||||||||
Deutsche Bank | USD | 195 | SGD | 245 | 09/18/13 | (2 | ) | |||||||||||
JPMorgan Chase | USD | 154 | AUD | 163 | 09/18/13 | (6 | ) | |||||||||||
JPMorgan Chase | USD | 113 | CAD | 115 | 09/18/13 | (4 | ) | |||||||||||
JPMorgan Chase | USD | 867 | EUR | 650 | 09/18/13 | (20 | ) | |||||||||||
JPMorgan Chase | USD | 122 | JPY | 11,627 | 09/18/13 | (4 | ) | |||||||||||
JPMorgan Chase | EUR | 370 | USD | 490 | 09/18/13 | 8 | ||||||||||||
Royal Bank of Canada | USD | 154 | AUD | 163 | 09/18/13 | (6 | ) | |||||||||||
Royal Bank of Canada | USD | 113 | CAD | 115 | 09/18/13 | (4 | ) | |||||||||||
Royal Bank of Canada | USD | 867 | EUR | 650 | 09/18/13 | (20 | ) | |||||||||||
Royal Bank of Canada | USD | 488 | HKD | 3,785 | 09/18/13 | — | ||||||||||||
Royal Bank of Canada | USD | 122 | JPY | 11,627 | 09/18/13 | (4 | ) | |||||||||||
Standard Chartered | USD | 154 | AUD | 163 | 09/18/13 | (6 | ) | |||||||||||
Standard Chartered | USD | 113 | CAD | 115 | 09/18/13 | (4 | ) | |||||||||||
Standard Chartered | USD | 867 | EUR | 650 | 09/18/13 | (11 | ) | |||||||||||
Standard Chartered | USD | 488 | HKD | 3,785 | 09/18/13 | — | ||||||||||||
Standard Chartered | USD | 122 | JPY | 11,627 | 09/18/13 | (4 | ) | |||||||||||
Standard Chartered | USD | 195 | SGD | 245 | 09/18/13 | (2 | ) | |||||||||||
State Street | USD | 31 | AUD | 33 | 07/01/13 | (1 | ) | |||||||||||
State Street | USD | 5 | AUD | 6 | 07/02/13 | — | ||||||||||||
State Street | USD | 138 | AUD | 150 | 09/18/13 | (2 | ) | |||||||||||
State Street | USD | 76 | CAD | 80 | 07/03/13 | — | ||||||||||||
State Street | USD | 95 | CAD | 100 | 09/18/13 | — | ||||||||||||
State Street | USD | 56 | EUR | 43 | 07/02/13 | — | ||||||||||||
State Street | USD | 557 | EUR | 427 | 07/02/13 | (1 | ) | |||||||||||
State Street | USD | 269 | EUR | 206 | 07/03/13 | — | ||||||||||||
State Street | USD | 263 | EUR | 200 | 09/18/13 | (2 | ) | |||||||||||
State Street | USD | 268 | EUR | 200 | 09/18/13 | (8 | ) | |||||||||||
State Street | USD | 465 | EUR | 350 | 09/18/13 | (9 | ) | |||||||||||
State Street | USD | 524 | EUR | 400 | 09/18/13 | (3 | ) | |||||||||||
State Street | USD | 69 | HKD | 538 | 07/02/13 | — | ||||||||||||
State Street | USD | 129 | HKD | 1,000 | 09/18/13 | — | ||||||||||||
State Street | USD | 71 | JPY | 6,958 | 07/01/13 | (1 | ) | |||||||||||
State Street | USD | 102 | JPY | 10,000 | 09/18/13 | (2 | ) | |||||||||||
State Street | USD | 38 | SGD | 49 | 07/01/13 | — | ||||||||||||
State Street | USD | 83 | SGD | 105 | 07/01/13 | — | ||||||||||||
State Street | USD | 118 | SGD | 149 | 07/02/13 | — | ||||||||||||
State Street | USD | 78 | SGD | 100 | 09/18/13 | 1 | ||||||||||||
State Street | AUD | 6 | JPY | 514 | 07/02/13 | — | ||||||||||||
State Street | AUD | 150 | USD | 143 | 09/18/13 | 6 | ||||||||||||
State Street | CAD | 10 | USD | 9 | 07/02/13 | — | ||||||||||||
State Street | CAD | 26 | USD | 25 | 07/03/13 | — | ||||||||||||
State Street | CAD | 57 | USD | 55 | 07/03/13 | — | ||||||||||||
State Street | CAD | 61 | USD | 58 | 07/03/13 | — | ||||||||||||
State Street | EUR | 10 | GBP | 9 | 07/01/13 | — | ||||||||||||
State Street | EUR | 3 | GBP | 3 | 07/02/13 | — |
See accompanying notes which are an integral part of the financial statements.
100 | Global Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Schedule of Investments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Foreign Currency Exchange Contracts | ||||||||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
State Street | EUR | 3 | GBP | 3 | 07/03/13 | — | ||||||||||||
State Street | EUR | 100 | USD | 133 | 09/18/13 | 3 | ||||||||||||
State Street | EUR | 350 | USD | 467 | 09/18/13 | 12 | ||||||||||||
State Street | GBP | — | USD | — | 07/02/13 | — | ||||||||||||
State Street | GBP | 5 | USD | 8 | 07/02/13 | — | ||||||||||||
State Street | GBP | 7 | USD | 11 | 07/02/13 | — | ||||||||||||
State Street | GBP | 8 | USD | 12 | 07/02/13 | — | ||||||||||||
State Street | GBP | 4 | USD | 6 | 07/03/13 | — | ||||||||||||
State Street | GBP | 9 | USD | 14 | 07/03/13 | — | ||||||||||||
State Street | HKD | 644 | USD | 83 | 07/02/13 | — | ||||||||||||
State Street | HKD | 489 | USD | 63 | 07/03/13 | — | ||||||||||||
State Street | HKD | 700 | USD | 90 | 09/18/13 | — | ||||||||||||
State Street | HKD | 800 | USD | 103 | 09/18/13 | — | ||||||||||||
State Street | JPY | 5,897 | AUD | 65 | 07/03/13 | — | ||||||||||||
State Street | JPY | 4,187 | USD | 42 | 07/01/13 | — | ||||||||||||
State Street | JPY | 10,000 | USD | 106 | 09/18/13 | 5 | ||||||||||||
State Street | PHP | 1,228 | USD | 28 | 07/01/13 | — | ||||||||||||
State Street | PHP | 2,138 | USD | 49 | 07/02/13 | — | ||||||||||||
State Street | SGD | 63 | USD | 50 | 07/01/13 | — | ||||||||||||
State Street | SGD | 72 | USD | 57 | 07/01/13 | — | ||||||||||||
State Street | SGD | 194 | USD | 152 | 07/01/13 | (1 | ) | |||||||||||
State Street | SGD | 46 | USD | 37 | 07/02/13 | — | ||||||||||||
State Street | SGD | 48 | USD | 38 | 07/02/13 | — | ||||||||||||
State Street | SGD | 140 | USD | 110 | 07/02/13 | — | ||||||||||||
State Street | SGD | 32 | USD | 25 | 07/03/13 | — | ||||||||||||
State Street | SGD | 102 | USD | 80 | 07/03/13 | — | ||||||||||||
UBS | USD | 2 | AUD | — | 07/01/13 | (2 | ) | |||||||||||
UBS | USD | 128 | EUR | 98 | 07/01/13 | — | ||||||||||||
UBS | CAD | 5 | USD | 5 | 07/01/13 | — | ||||||||||||
UBS | HKD | 128 | USD | 16 | 07/01/13 | — | ||||||||||||
UBS | JPY | 3,454 | USD | 28 | 07/01/13 | (7 | ) | |||||||||||
UBS | SGD | 8 | USD | 6 | 07/01/13 | — | ||||||||||||
|
| |||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | (167 | ) | ||||||||||||||||
|
|
See accompanying notes which are an integral part of the financial statements.
Global Real Estate Securities Fund | 101 |
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Russell Investment Funds
Global Real Estate Securities Fund
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Amounts in thousands
Fair Value | % of Net Assets | |||||||||||||||||||
Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | ||||||||||||||||||||
Australia | $ | 43,994 | $ | — | $ | — | $ | 43,994 | 7.0 | |||||||||||
Austria | 489 | — | — | 489 | 0.1 | |||||||||||||||
Brazil | 1,670 | — | — | 1,670 | 0.3 | |||||||||||||||
Canada | 18,714 | — | — | 18,714 | 3.0 | |||||||||||||||
China | 2,927 | — | — | 2,927 | 0.5 | |||||||||||||||
Finland | 760 | — | — | 760 | 0.1 | |||||||||||||||
France | 20,533 | — | — | 20,533 | 3.3 | |||||||||||||||
Germany | 7,405 | — | — | 7,405 | 1.2 | |||||||||||||||
Hong Kong | 60,741 | — | — | 60,741 | 9.6 | |||||||||||||||
Italy | 257 | — | — | 257 | — | * | ||||||||||||||
Japan | 88,489 | — | — | 88,489 | 14.0 | |||||||||||||||
Netherlands | 3,382 | — | — | 3,382 | 0.5 | |||||||||||||||
Norway | 2,070 | — | — | 2,070 | 0.3 | |||||||||||||||
Philippines | 837 | — | — | 837 | 0.1 | |||||||||||||||
Singapore | 30,190 | — | — | 30,190 | 4.8 | |||||||||||||||
Sweden | 4,743 | — | — | 4,743 | 0.7 | |||||||||||||||
Switzerland | 1,533 | — | — | 1,533 | 0.2 | |||||||||||||||
United Kingdom | 35,837 | — | — | 35,837 | 5.7 | |||||||||||||||
United States | 288,985 | — | — | 288,985 | 45.8 | |||||||||||||||
Warrants & Rights | — | — | — | — | — | * | ||||||||||||||
Short-Term Investments | — | 12,990 | — | 12,990 | 2.0 | |||||||||||||||
Other Securities | — | 25,662 | — | 25,662 | 4.1 | |||||||||||||||
|
|
|
|
|
|
|
|
|
| |||||||||||
Total Investments | 613,556 | 38,652 | — | 652,208 | 103.3 | |||||||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Other Assets and Liabilities, Net | (3.3 | ) | ||||||||||||||||||
|
| |||||||||||||||||||
100.0 | ||||||||||||||||||||
|
| |||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | 5 | — | — | 5 | — | * | ||||||||||||||
Foreign Currency Exchange Contracts | (13 | ) | (154 | ) | — | (167 | ) | (— | )* | |||||||||||
|
|
|
|
|
|
|
| |||||||||||||
Total Other Financial Instruments** | $ | (8 | ) | $ | (154 | ) | $ | — | $ | (162 | ) | |||||||||
|
|
|
|
|
|
|
|
* | Less than .05% of net assets. |
** | Other financial instruments reflected in the Schedule of Investments, such as futures, forwards, interest rate swaps and credit default swaps 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.
For disclosure on transfers between Levels 1, 2 and 3 during the period ended June 30, 2013, see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
102 | Global Real Estate Securities Fund |
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Global Real Estate Securities Fund
Fair Value of Derivative Instruments — June 30, 2013 (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 | $ | — | $ | 35 | ||||
Daily variation margin on futures contracts* | 133 | — | ||||||
|
|
|
| |||||
Total | $ | 133 | $ | 35 | ||||
|
|
|
| |||||
Location: Statement of Assets and Liabilities - Liabilities | ||||||||
Daily variation margin on futures contracts* | $ | 128 | $ | — | ||||
Unrealized depreciation on foreign currency exchange contracts | — | 202 | ||||||
|
|
|
| |||||
Total | $ | 128 | $ | 202 | ||||
|
|
|
| |||||
Derivatives not accounted for as hedging instruments | Equity Contracts | Foreign Currency Contracts | ||||||
Location: Statement of Operations - Net realized gain (loss) | ||||||||
Futures contracts | $ | 2,765 | $ | — | ||||
Foreign currency-related transactions** | — | (633 | ) | |||||
|
|
|
| |||||
Total | $ | 2,765 | $ | (633 | ) | |||
|
|
|
| |||||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||||||
Futures contracts | $ | (408 | ) | $ | — | |||
Foreign currency-related transactions*** | — | 80 | ||||||
|
|
|
| |||||
Total | $ | (408 | ) | $ | 80 | |||
|
|
|
|
* | Includes cumulative appreciation/depreciation of futures contracts as reported in the Schedule of Investments. Only current day’s variation margin is reported within the Statement of Assets and Liabilities. |
** | Only includes net realized gain (loss) on forward and spot contracts. May differ from the net realized gain (loss) on foreign currency-related transactions reported within the Statement of Operations. |
*** | Only includes change in unrealized gain (loss) on forward and spot contracts. May differ from the net change in unrealized gain (loss) on foreign currency-related transactions reported within the Statement of Operations. |
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.
Global Real Estate Securities Fund | 103 |
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Global Real Estate Securities Fund
Balance Sheet Offsetting of Financial and Derivative Instruments — June 30, 2013 (Unaudited)
Amounts in thousands
Offsetting of Financial Assets and Derivative Assets | ||||||||||||||
Description | Location: Statement of Assets and Liabilities - Assets | Gross Amounts of Recognized Assets | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Assets Presented on the Statement of Assets and Liabilities | ||||||||||
Securities on loan | Investments, at fair value | $ | 25,035 | $ | — | $ | 25,035 | |||||||
Foreign Currency Exchange Contracts | Unrealized appreciation on foreign currency exchange contracts | 35 | — | 35 | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | 133 | — | 133 | ||||||||||
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| |||||||||
$ | 25,203 | $ | — | $ | 25,203 | |||||||||
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|
|
Financial Assets, Derivative Assets, and Collateral Held by Counterparty | ||||||||||||||||
Net Amounts of Assets Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | ||||||||||||||
Counterparty | Financial and Derivative Instruments | Collateral Received | ||||||||||||||
Barclays | $ | 845 | $ | — | $ | 845 | $ | — | ||||||||
Credit Suisse | 6,816 | — | 6,816 | | — | | ||||||||||
Deutsche Bank | 929 | — | 929 | | — | | ||||||||||
Fidelity | 1,151 | — | 1,151 | | — | | ||||||||||
Goldman Sachs | 5,882 | — | 5,882 | | — | | ||||||||||
ING | 9,010 | — | 9,010 | | — | | ||||||||||
JPMorgan Chase | 8 | — | — | 8 | ||||||||||||
Morgan Stanley | 401 | — | 401 | | — | | ||||||||||
State Street | 28 | — | — | 28 | ||||||||||||
UBS | 133 | — | — | 133 | ||||||||||||
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|
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| |||||||||
$ | 25,203 | $ | — | $ | 25,034 | $ | 169 | |||||||||
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|
|
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|
|
Offsetting of Financial Liabilities and Derivative Liabilities | ||||||||||||||
Description | Location: Statement of Assets and Liabilities - Liabilities | Gross Amounts of Recognized Liabilities | Gross Amounts Offset on the Statement of Assets and Liabilities | Net Amounts of Liabilities Presented on the Statement of Assets and Liabilities | ||||||||||
Futures Contracts* | Daily variation margin on futures contracts | $ | 128 | $ | — | $ | 128 | |||||||
Foreign Currency Exchange Contracts | Unrealized depreciation on foreign currency exchange contracts | 202 | — | 202 | ||||||||||
|
|
|
|
|
| |||||||||
$ | 330 | $ | — | $ | 330 | |||||||||
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
104 | Global Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Balance Sheet Offsetting of Financial and Derivative Instruments, continued — June 30, 2013 (Unaudited)
Amounts in thousands
Financial Liabilities, Derivative Liabilities, and Collateral Pledged by Counterparty | ||||||||||||||||
Net Amounts of Liabilities Presented in the Statement of Assets & Liabilities | Gross Amounts Not Offset in the Statement of Assets and Liabilities | Net Amount | ||||||||||||||
Counterparty | Financial and Derivative Instruments | Collateral Pledged | ||||||||||||||
Commonwealth Bank of Australia | $ | 33 | $ | — | $ | — | $ | 33 | ||||||||
Deutsche Bank | 35 | — | — | 35 | ||||||||||||
JPMorgan Chase | 34 | — | — | 34 | ||||||||||||
Royal Bank of Scotland | 34 | — | — | 34 | ||||||||||||
Standard Chartered | 36 | — | — | 36 | ||||||||||||
State Street | 31 | — | — | 31 | ||||||||||||
UBS | 127 | — | 127 | — | ||||||||||||
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| |||||||||
$ | 330 | $ | — | $ | 127 | $ | 203 | |||||||||
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* | 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 and Liabilities. |
For further disclosure on derivatives and counterparty risk see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
Global Real Estate Securities Fund | 105 |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 556,093 | ||
Investments, at fair value**, *** | 652,208 | |||
Cash (restricted)(a) | 1,570 | |||
Foreign currency holdings* | 2,164 | |||
Unrealized appreciation on foreign currency exchange contracts | 35 | |||
Receivables: | ||||
Dividends and interest | 2,119 | |||
Dividends from affiliated Russell funds | 1 | |||
Investments sold | 2,398 | |||
Fund shares sold | 279 | |||
Foreign taxes recoverable | 130 | |||
Daily variation margin on futures contracts | 62 | |||
Prepaid expenses | 3 | |||
|
| |||
Total assets | 660,969 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Investments purchased | 3,122 | |||
Fund shares redeemed | 18 | |||
Accrued fees to affiliates | 442 | |||
Other accrued expenses | 154 | |||
Daily variation margin on futures contracts | 155 | |||
Unrealized depreciation on foreign currency exchange contracts | 202 | |||
Payable upon return of securities loaned | 25,662 | |||
|
| |||
Total liabilities | 29,755 | |||
|
| |||
Net Assets | $ | 631,214 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
106 | Global Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Statement of Assets and Liabilities, continued — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | (14,648 | ) | |
Accumulated net realized gain (loss) | 15,393 | |||
Unrealized appreciation (depreciation) on: | ||||
Investments | 96,115 | |||
Futures contracts | 5 | |||
Foreign currency-related transactions | (219 | ) | ||
Shares of beneficial interest | 413 | |||
Additional paid-in capital | 534,155 | |||
|
| |||
Net Assets | $ | 631,214 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 15.28 | ||
Net assets | $ | 631,214,355 | ||
Shares outstanding ($.01 par value) | 41,318,369 | |||
Amounts in thousands | ||||
* Foreign currency holdings - cost | $ | 2,218 | ||
** Securities on loan included in investments | $ | 25,035 | ||
*** Investments in affiliates, Russell U.S. Cash Management Fund and Russell U.S. Cash Collateral Fund | $ | 38,652 | ||
(a) Cash Collateral for Futures | $ | 1,570 |
(#) | 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.
Global Real Estate Securities Fund | 107 |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Dividends | $ | 10,342 | ||
Dividends from affiliated Russell funds | 13 | |||
Interest | 2 | |||
Securities lending income | 108 | |||
Less foreign taxes withheld | (461 | ) | ||
|
| |||
Total investment income | 10,004 | |||
|
| |||
Expenses | ||||
Advisory fees | 2,569 | |||
Administrative fees | 161 | |||
Custodian fees | 135 | |||
Transfer agent fees | 14 | |||
Professional fees | 42 | |||
Trustees’ fees | 7 | |||
Printing fees | 25 | |||
Miscellaneous | 11 | |||
|
| |||
Net expenses | 2,964 | |||
|
| |||
Net investment income (loss) | 7,040 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | 31,246 | |||
Futures contracts | 2,765 | |||
Foreign currency-related transactions | (633 | ) | ||
|
| |||
Net realized gain (loss) | 33,378 | |||
|
| |||
Net change in unrealized appreciation (depreciation) on: | ||||
Investments | (32,555 | ) | ||
Futures contracts | (408 | ) | ||
Foreign currency-related transactions | (179 | ) | ||
|
| |||
Net change in unrealized appreciation (depreciation) | (33,142 | ) | ||
|
| |||
Net realized and unrealized gain (loss) | 236 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 7,276 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
108 | Global Real Estate Securities Fund |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Statement of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 7,040 | $ | 11,257 | ||||
Net realized gain (loss) | 33,378 | 23,971 | ||||||
Net change in unrealized appreciation (depreciation) | (33,142 | ) | 95,274 | |||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 7,276 | 130,502 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (11,629 | ) | (27,834 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (11,629 | ) | (27,834 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | 27,207 | 34,728 | ||||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 22,854 | 137,396 | ||||||
Net Assets | ||||||||
Beginning of period | 608,360 | 470,964 | ||||||
|
|
|
| |||||
End of period | $ | 631,214 | $ | 608,360 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | (14,648 | ) | $ | (10,059 | ) |
See accompanying notes which are an integral part of the financial statements.
Global Real Estate Securities Fund | 109 |
Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Statement of Changes in Net Assets, continued
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 1,745 | $ | 27,663 | 2,073 | $ | 29,853 | ||||||||||
Proceeds from reinvestment of distributions | 746 | 11,629 | 1,873 | 27,834 | ||||||||||||
Payments for shares redeemed | (764 | ) | (12,085 | ) | (1,596 | ) | (22,959 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | 1,727 | $ | 27,207 | 2,350 | $ | 34,728 | ||||||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
110 | Global Real Estate Securities Fund |
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Table of Contents
Russell Investment Funds
Global Real Estate Securities Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, Beginning of Period | $ Net Investment | Net Realized | $ Total from Investment Operations | $ Distributions | ||||||||||||||||
June 30, 2013(1) | 15.37 | .17 | .03 | .20 | (.29 | ) | ||||||||||||||
December 31, 2012 | 12.65 | .30 | 3.15 | 3.45 | (.73 | ) | ||||||||||||||
December 31, 2011 | 13.92 | .29 | (1.25 | ) | (.96 | ) | (.31 | ) | ||||||||||||
December 31, 2010 | 11.58 | .33 | 2.29 | 2.62 | (.28 | ) | ||||||||||||||
December 31, 2009 | 9.30 | .30 | 2.41 | 2.71 | (.43 | ) | ||||||||||||||
December 31, 2008 | 15.22 | .38 | (6.03 | ) | (5.65 | ) | (.27 | ) |
See accompanying notes which are an integral part of the financial statements.
112 | Global Real Estate Securities Fund |
Table of Contents
$ Total | $ Period | % Total Return(d)(f) | $ Net Assets, | % Net Assets, | % Net Assets, | % Net Assets(b)(e) | % Portfolio | |||||||||||||||||||||||
(.29 | ) | 15.28 | 1.27 | 631,214 | .92 | .92 | 2.19 | 42 | ||||||||||||||||||||||
(.73 | ) | 15.37 | 27.56 | 608,360 | .95 | .95 | 2.08 | 59 | ||||||||||||||||||||||
(.31 | ) | 12.65 | (7.05 | ) | 470,964 | .95 | .95 | 2.11 | 57 | |||||||||||||||||||||
(.28 | ) | 13.92 | 22.92 | 493,896 | .99 | .99 | 2.62 | 150 | ||||||||||||||||||||||
(.43 | ) | 11.58 | 31.16 | 410,708 | .97 | .97 | 3.36 | 110 | ||||||||||||||||||||||
(.27 | ) | 9.30 | (37.76 | ) | 303,416 | .96 | .96 | 2.72 | 71 |
See accompanying notes which are an integral part of the financial statements.
Global Real Estate Securities Fund | 113 |
Table of Contents
Russell Investment Funds
Notes to Schedules of Investments — June 30, 2013 (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 U.S. 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. |
(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. |
(¥) | Unrounded unit. |
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 - Bank Bill Swap Reference 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
HIBOR - Hong Kong Interbank Offer Rate
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
UK - United Kingdom
Foreign Currency Abbreviations:
ARS - Argentine peso | HUF - Hungarian forint | PKR - Pakistani rupee | ||
AUD - Australian dollar | IDR - Indonesian rupiah | PLN - Polish zloty | ||
BRL - Brazilian real | ILS - Israeli shekel | RUB - Russian ruble | ||
CAD - Canadian dollar | INR - Indian rupee | SEK - Swedish krona | ||
CHF - Swiss franc | ISK - Icelandic krona | SGD - Singapore dollar | ||
CLP - Chilean peso | ITL - Italian lira | SKK - Slovakian koruna | ||
CNY - Chinese renminbi yuan | JPY - Japanese yen | THB - Thai baht | ||
COP - Colombian peso | KES - Kenyan schilling | TRY - Turkish lira | ||
CRC - Costa Rican colon | KRW - South Korean won | TWD - Taiwanese dollar | ||
CZK - Czech koruna | MXN - Mexican peso | USD - United States dollar | ||
DKK - Danish krone | MYR - Malaysian ringgit | VEB - Venezuelan bolivar | ||
EGP - Egyptian pound | NOK - Norwegian krone | VND - Vietnames dong | ||
EUR - Euro | NZD - New Zealand dollar | ZAR - South African rand | ||
GBP - British pound sterling | PEN - Peruvian nuevo sol | |||
HKD - Hong Kong dollar | PHP - Philippine peso |
114 | Notes to Schedules of Investments |
Table of Contents
Russell Investment Funds
Notes to Financial Highlights — June 30, 2013 (Unaudited)
(1) | For the period ended June 30, 2013 (Unaudited). |
(a) | Average daily shares 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) | Periods less than one year are annualized |
(f) | The total return does not reflect any Insurance Company Separate Account or Policy Charges. |
See accompanying notes which are an integral part of the financial statements.
Notes to Financial Highlights | 115 |
Table of Contents
Russell Investment Funds
Notes to Financial Statements — June 30, 2013 (Unaudited)
1. | Organization |
Russell Investment Funds (the “Investment Company” or “RIF”) is a series investment company with 10 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 (“NAV”) 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 operated as a Massachusetts business trust under an Amended and Restated Master Trust Agreement dated October 1, 2008, as amended (“Master Trust Agreement”). 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 U.S. generally accepted accounting principles (“U.S. 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 the fair value of such short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to Russell Fund Services Company (“RFSC”).
U.S. GAAP defines fair market value as the price that a Fund would receive to sell an asset or pay to transfer a liability in an orderly transaction between market participants at the measurement date. It establishes a fair value hierarchy that prioritizes inputs to valuation methods and requires a separate disclosure of the fair value hierarchy, separately for each major category of assets and liabilities, that segregates fair value measurements into levels (Level 1, 2, and 3). The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities. Levels 1, 2 and 3 of the fair value hierarchy are defined as follows:
• | Level 1 — Quoted prices (unadjusted) in active markets or exchanges for identical assets and liabilities. |
• | Level 2 — Inputs other than quoted prices included within Level 1 that are observable, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active (such as interest rates, yield curves, implied volatilities, credit spreads) or other market corroborated inputs. |
• | Level 3 — Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair market value of investments. |
The availability of observable inputs can vary from security to security and is affected by a wide variety of factors, including, for example, the type of security, whether the security is new and not yet established in the marketplace, the liquidity of markets, and other characteristics particular to the security. To the extent that valuation is based on models or inputs that are less observable or unobservable in the market, the determination of fair value requires more judgment. Accordingly, the degree of judgment exercised in determining fair value is greatest for instruments categorized in Level 3.
The inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, for disclosure purposes, the level in the fair value hierarchy within which the fair value measurement falls in its entirety is determined based on the lowest level input that is significant to the fair value measurement in its entirety.
The valuation techniques and significant inputs used in determining the fair market values of financial instruments categorized as Level 1 and Level 2 of the fair value hierarchy are as follows:
Equity securities, including common and preferred stock, that are traded on a national securities exchange (or reported on the NASDAQ national market) are stated at the last reported sales price on the day of valuation. To the extent these securities are actively traded, and valuation adjustments are not applied, they are categorized as Level 1 of the fair value hierarchy. Certain foreign equity securities may be fair valued using a pricing service that considers the correlation of the trading patterns of the foreign security to the intraday trading in the U.S. markets for investments such as American Depositary Receipts, financial
116 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
futures, exchange traded funds, and the movement of certain indexes of securities, based on the statistical analysis of historical relationships. Preferred stock and other equities traded on inactive markets or valued by reference to similar instruments are categorized as Level 2 of the fair value hierarchy.
Fixed income securities including corporate, convertible and municipal bonds and notes, U.S. government agencies, U.S. treasury obligations, sovereign issues, bank loans, bank notes and non-U.S. bonds are normally valued by pricing service providers that use broker dealer quotations or valuation estimates from their internal pricing models. The service providers’ internal models use inputs that are observable such as issuer details, interest rates, yield curves, prepayment speeds, credit risks/spreads and default rates. Securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
Fixed income securities purchased on a delayed-delivery basis and marked-to-market daily until settlement at the forward settlement date are categorized as Level 2 of the fair value hierarchy.
Mortgage and asset-backed securities are usually issued as separate tranches, or classes, of securities within each deal. These securities are also normally valued by pricing service providers that use broker dealer quotations or valuation estimates from their internal pricing models. The pricing models for these securities usually consider tranche-level attributes, estimated cash flows of each tranche, market-based yield spreads for each tranche, current market data and incorporate deal collateral performance, as available. Mortgage and asset-backed securities that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
Investments in privately held investment funds will be valued based upon the NAV of such investments and are categorized as Level 2 of the fair value hierarchy if the privately-held investment funds’ redemption terms require 90 days notice or less. If the redemption terms require greater than 90 days notice for redemptions, then the investment will be categorized as Level 3. The Funds have adopted the authoritative guidance under U.S. GAAP for estimating the fair value of investments in funds that have calculated NAV per share in accordance with the specialized accounting guidance for investment companies. Accordingly, the Funds estimate the fair value of an investment in a fund using the NAV per share without further adjustment as a practical expedient, if the NAV per share of the investment is determined in accordance with the specialized accounting guidance for investment companies as of the reporting entity’s measurement date.
Short-term investments having a maturity of 60 days or less are generally valued at amortized cost, which approximates fair market value. These investments are categorized as Level 2 of the fair value hierarchy.
Financial over-the-counter derivative instruments are instruments such as foreign currency contracts, futures contracts, options contracts, or swap agreements that derive their value from underlying asset prices, indices, reference rates, and other inputs or a combination of these factors. These contracts are normally valued on the basis of broker-dealer quotations or pricing service providers. Depending on the product and the terms of the transaction, the value of the derivative contracts can be estimated by a pricing service provider using a series of techniques, including simulation pricing models. The pricing models use inputs that are observed from actively quoted markets such as issuer details, indices, spreads, interest rates, curves, dividends and exchange rates. Derivatives that use similar valuation techniques and inputs as described above are categorized as Level 2 of the fair value hierarchy.
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 NAV of Fund shares is determined may be reflected in the calculation of NAV for each applicable Fund when the Fund deems that the particular event or circumstance would materially affect such Fund’s NAV. 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. Although there are observable inputs assigned on a security level, prices are derived from factors using proprietary models or matrix pricing. For this reason, significant events will cause movement between Levels 1 and 2. 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, a Fund’s foreign exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.
The NAV 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.
The Multi-Style Equity, Global Real Estate Securities and Aggressive Equity Funds had no transfers between Levels 1, 2, and 3 for the period ended June 30, 2013.
At the beginning of the period, the Non-U.S. Fund had transfers out of Level 1 into Level 2 representing financial instruments for which restrictions existed and adjustments were made to the otherwise observable price to reflect their fair value. At the end of the period, the Non-U.S. Fund has transfers out of Level 2 back into Level 1 since no fair value pricing was applied. As of June 30, 2013, the amount of the transfers from Level 2 to Level 1 was $229,360,631.
Notes to Financial Statements | 117 |
Table of Contents
Russell Investment Funds
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
The Core Bond Fund had transfers out of Level 3 into Level 2 representing financial instruments that had been determined using unobservable inputs that became observable.
Level 3 Fair Value Investments
The valuation techniques and significant inputs used in determining the fair values of financial instruments classified as Level 3 of the fair value hierarchy are as follows:
Securities and other assets for which market quotes are not readily available are valued at fair value as determined in good faith by the Board and are categorized as Level 3 of the fair value hierarchy. Market quotes are considered not readily available in circumstances where there is an absence of current or reliable market-based data (e.g., trade information or broker quotes). When RFSC applies fair valuation methods that use significant unobservable inputs to determine a Fund’s NAV, securities will not be priced on the basis of quotes from the primary market in which they are traded, but instead may be priced by another method that the Board or persons acting at their direction believe accurately reflects fair value and are categorized as Level 3 of the fair value hierarchy. Fair value pricing may require subjective determinations about the value of a security. While the securities valuation procedures are intended to result in a calculation of a Fund’s NAV that fairly reflects security values as of the time of pricing, the process cannot guarantee that fair values determined by the Board or persons acting at their direction would accurately reflect the price that a Fund could obtain for a security if it were to dispose of that security as of the time of pricing (for instance, in a forced or distressed sale). The prices used by a Fund may differ from the value that would be realized if the securities were sold.
RFSC employs third party pricing vendors to provide fair value measurements. RFSC oversees third-party pricing service providers in order to support the valuation process throughout the year.
The significant unobservable input used in fair value measurement of certain of the Funds’ preferred equity securities is the redemption value calculated on a fully-dilluted basis if converted to common stock. Significant increases (decreases) in the redemption value would have a direct and proportional impact to fair value.
The significant unobservable input used in the fair value measurement of certain of the Funds’ debt securities is the yield to worst ratio. Significant increases (decreases) in the yield to worst ratio would result in a lower (higher) fair value measurement.
These significant unobservable inputs are further disclosed in the Schedule of Investments for each respective fund as applicable.
If third party evaluated vendor pricing is neither available or deemed to be indicative of fair value, RFSC may elect to obtain indicative market quotations (“broker quotes”) directly from the broker or passed through from a third party vendor. In the event that the source of fair value is from a single source broker quote, these securities are classified as Level 3 per the fair value hierarchy. Indicative market quotations are typically received from established market participants. Although independently received, RFSC does not have the transparency to view the underlying inputs which support the market quotation. Significant changes in the broker quote would have direct and proportional changes in the fair value of the security. There is a third-party pricing exception to the quantitative disclosure requirement when prices are not determined by the reporting entity. RFSC is exercising this exception and has made a reasonable attempt to obtain quantitative information from the third party pricing vendors regarding the unobservable inputs used.
For fair valuations using significant unobservable inputs, U.S. GAAP requires a reconciliation of the beginning to ending balances for reported fair values that present changes attributable to total realized and unrealized gains or losses, purchases and sales, and transfers in/out of the Level 3 category during the period. Additionally, U.S. GAAP requires quantitative information regarding the significant unobservable inputs used in the determination of fair value of assets categorized as Level 3 in the fair value hierarchy. In accordance with the requirements of U.S. GAAP, a fair value hierarchy, Level 3 reconciliation and additional disclosure about fair value measurements, if any, have been included in the Presentation of Portfolio Holdings for each respective Fund.
Investment Transactions
Investment transactions are reflected as of the trade date for financial reporting purposes. This may cause the NAV stated in the financial statements to be different from the NAV at which shareholders may transact. Realized gains and losses from securities transactions, if applicable, 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 subsequent to the ex-dividend date. Interest income
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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.
For each year, each Fund intends to qualify as a regulated investment company under sub-chapter M of the Internal Revenue Code (the “Code”) and intends to distribute all of its taxable income and capital gains. Therefore, no federal income tax provision is required for the Funds.
The Funds comply with the authoritative guidance for uncertainty in income taxes which requires management to determine whether a tax position of the Funds is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. Management determined that no accruals need to be made in the financial statements due to uncertain tax positions. Management continually reviews and adjusts its liability for income taxes based on analyses of tax laws and regulations, as well as their interpretations, and other relevant factors.
Each Fund files a U.S. tax return. At June 30, 2013, the Funds had 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, 2009 through December 31, 2011, if applicable, 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 according to the following schedule:
Declared | Payable | Funds | ||
Quarterly | April, July, October and mid-December | Multi-Style Equity, Aggressive Equity, Core Bond and Global Real Estate Securities Funds | ||
Annually | Mid-December | Non-U.S. Fund |
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 U.S. GAAP. As a result, net investment income and net realized gain (or loss) on investment and foreign currency-related transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and U.S. 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. Accordingly, the Funds may periodically make reclassifications among certain of their capital accounts without impacting their net asset values.
Expenses
The Funds 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) | Fair 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. |
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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 Funds’ 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 with the net realized and unrealized gain or loss from investments. However, for federal income tax purposes, the Funds do isolate the effects of changes in foreign exchange rates from the fluctuations arising from changes in market prices for realized gain (or loss) on debt obligations.
Capital Gains Taxes
The Non-U.S. and Global Real Estate Securities Funds may be subject to capital gains taxes and repatriation taxes imposed by certain countries in which they invest. The Non-U.S. and Global Real Estate Securities Funds may record a deferred capital gains tax liability with respect to the unrealized appreciation on foreign securities for potential capital gains and repatriation taxes at June 30, 2013. The accrual for capital gains and repatriation taxes is included in net unrealized appreciation (depreciation) on investments in the Statements of Assets and Liabilities. The amounts related to capital gains and repatriation taxes paid are included in net realized gain (loss) on investments in the Statements of Operations. The Non-U.S. and Global Real Estate Securities Funds had deferred capital gains tax liability of $3,786 and $0, respectively, as of June 30, 2013. The Non-U.S. Fund had a $527 realized loss on investments for capital gains taxes for the period ended June 30, 2013.
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 and forwards. These instruments offer unique characteristics and risks that facilitate the Funds’ investment strategies.
The Funds typically use derivatives in three ways: exposing cash to markets, hedging and return enhancement. In addition, the Non-U.S. and Global Real Estate Securities Funds may enter into foreign exchange contracts for trade settlement purposes. The Funds may pursue their strategy of being fully invested by exposing cash to the performance of appropriate markets by purchasing securities and/or derivatives. This is intended to cause the Funds to perform as though cash were actually invested in those markets. Hedging may also be used by certain 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, including using derivatives as a substitute for holding physical bonds, and using them to express various macro views (e.g., interest rate movements, currency movements, and macro credit strategies). By purchasing certain instruments, the 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 include, but are not limited to, market risk, liquidity risk, counterparty risk, basis risk, reinvestment risk, political risk, prepayment risk, extension risk and credit risk.
The effects of derivative instruments, categorized by risk exposure, on the Statements of Assets and Liabilities and the Statements of Operations, for the period ended June 30, 2013, if applicable, are disclosed in the Fair Value of Derivative Instruments presentation following each applicable Fund’s Schedule of Investments.
Foreign Currency Exchange Contracts
In connection with investment transactions consistent with the Funds’ investment objectives and strategies, certain Funds may enter into foreign currency exchange spot contracts and forward foreign currency exchange contracts (“FX contracts”). From time to time, certain Funds may enter into FX contracts to hedge certain foreign currency-denominated assets. FX contracts are recorded at fair value. Certain risks may arise upon entering into these FX contracts from the potential inability of counterparties to meet the terms of their FX contracts and are generally limited to the amount of unrealized gain on the FX contracts, if any, that are disclosed in the Statements of Assets and Liabilities.
For the period ended June 30, 2013, the following Funds entered into foreign currency exchange contracts primarily for the strategies listed below:
Funds | Strategies | |
Non-U.S. Fund | Exposing cash to markets and trade settlement | |
Core Bond Fund | Return enhancement and hedging | |
Global Real Estate Securities Fund | Exposing cash to markets and trade settlement |
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The Funds’ foreign currency contract notional dollar values outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following tables illustrate the quarterly volume of foreign currency contracts. For the purpose of this disclosure, volume is measured by the amounts bought and sold in USD.
Outstanding Contract Amounts Bought | ||||||||
Quarter Ended | March 31, 2013 | June 30, 2013 | ||||||
Non-U.S. Fund | $ | 20,245,033 | $ | 25,910,875 | ||||
Core Bond Fund | 224,133,730 | 244,800,863 | ||||||
Global Real Estate Securities Fund | 17,240,083 | 13,606,584 | ||||||
Outstanding Contract Amounts Sold | ||||||||
Quarter Ended | March 31, 2013 | June 30, 2013 | ||||||
Non-U.S. Fund | $ | 20,164,938 | $ | 26,355,711 | ||||
Core Bond Fund | 217,408,778 | 229,931,399 | ||||||
Global Real Estate Securities Fund | 17,244,672 | 13,779,493 |
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 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.
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.
For the period ended June 30, 2013, the Core Bond Fund purchased/sold options primarily for return enhancement, hedging and exposing cash to markets.
The Core Bond Fund’s options contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the quarterly volume of options contracts. For purpose of this disclosure, volume is measured by contracts outstanding at period end.
Number of Option Contracts Outstanding | ||||||||
Quarter Ended | March 31, 2013 | June 30, 2013 | ||||||
Core Bond Fund | 179 | 81 |
Futures Contracts
The Funds may invest in futures contracts (i.e., interest rate, foreign currency, index futures contracts). 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 fair value of the securities held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Funds are
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required to deposit with a broker an amount, termed the initial margin, which typically represents 5% to 10% of the purchase price indicated in the futures contract. Payments to and from the broker, known as variation margin, are typically 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, 2013, the following Funds entered into future contracts primarily for the strategies listed below:
Funds | Strategies | |
Multi-Style Equity Fund | Exposing cash to markets | |
Aggressive Equity Fund | Exposing cash to markets | |
Non-U.S. Fund | Exposing cash to markets | |
Core Bond Fund | Return enhancement, hedging and exposing cash to markets | |
Global Real Estate Securities Fund | Exposing cash to markets |
The Funds’ futures contracts outstanding fluctuate throughout the operating year as required to meet strategic requirements. The following table illustrates the quarterly volume of futures contracts. For purpose of this disclosure, volume is measured by contracts outstanding at period end.
Number of Futures Contracts Outstanding | ||||||||
Quarter Ended | March 31, 2013 | June 30, 2013 | ||||||
Multi-Style Equity Fund | 305 | 282 | ||||||
Aggressive Equity Fund | 64 | 70 | ||||||
Non-U.S. Fund | 244 | 655 | ||||||
Core Bond Fund | 1,033 | 908 | ||||||
Global Real Estate Securities Fund | 588 | 392 |
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 swap agreements including credit default, interest rate, index (total return) and currency swaps. 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. 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. The Funds may enter into index swap agreements to expose cash to markets or to effect investment transactions consistent with those Funds’ investment objectives and strategies. Currency swaps are an agreement where two parties exchange specified amounts of different currencies which are followed by each paying the other a series of interest payments that are based on the principal cash flow. At maturity the principal amounts are returned.
The Funds expect to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of their portfolios or to protect against any increase in the price of securities they anticipate purchasing at a later date 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 assets having an aggregate NAV 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 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 BBB- or better as defined by Standard & Poor’s or an equivalent rating from any nationally recognized statistical rating organization (using highest of split ratings) at the time of entering into such transaction.
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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 of protection in a credit default swap, a 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 of protection, 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.
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 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 fair value of credit default swap agreements on corporate issues as of period end are disclosed in the Schedules of Investments and generally serve as an indicator of the current status of the payment/performance risk and represent the likelihood or risk of default (or other defined credit event) for the credit derivative. The implied credit spread of a particular referenced entity reflects the cost of entering into a credit default swap and may include upfront payments required to be made to enter into the agreement. For credit default swap agreements on asset-backed securities and credit indices, the quoted market prices and resulting values serve as the indicator of the current status of the payment/performance risk. Wider credit spreads and increasing market values, in absolute terms when compared to the notional amount of the swap, generally represent a deterioration of the referenced entity’s credit soundness and a greater likelihood or risk of default or other credit event occurring as defined under the terms of the agreement. The maximum potential
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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, 2013, 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 it purchases a credit default swap. As a buyer of a 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 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, 2013, the Core Bond Fund entered into credit default swaps primarily for return enhancement, hedging and exposing cash to markets.
The Core Bond Fund’s credit default swap contract notional amounts outstanding fluctuate throughout the operating year as required to meet the strategic requirements. The following table illustrates the quarterly volume of credit default swap contracts. For the purpose of this disclosure, the volume is measured by the notional amounts outstanding at each quarter end.
Credit Default Swap Notional Amounts Outstanding | ||||||||
Quarter Ended | March 31, 2013 | June 30, 2013 | ||||||
Core Bond Fund | 43,878,699 | 38,478,699 |
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 RIMCo or a money manager using this technique is incorrect in its forecast of fair values, interest rates and other applicable factors, the investment performance of a Fund might 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, 2013, the Core Bond Fund entered into interest rate swaps primarily for return enhancement, hedging and exposing cash to markets.
The Core Bond Fund’s interest rate swap contract notional amounts outstanding fluctuate throughout the operating year as required to meet the strategic requirements. The following table illustrates the quarterly volume of interest rate swap contracts. For the purpose of this disclosure, the volume is measured by the notional amounts outstanding at each quarter end.
Interest Rate Swap Notional Amounts Outstanding | ||||||||
Quarter Ended | March 31, 2013 | June 30, 2013 | ||||||
Core Bond Fund | 108,905,000 | 116,845,000 |
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Index Swaps
Certain Funds may enter into index swap agreements to expose cash 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, 2013, the Core Bond Fund entered into index swaps primarily for the strategy of exposing cash to markets.
The Core Bond Fund’s index swap contract notional amounts outstanding fluctuate throughout the operating year as required to meet the strategic requirements. The following table illustrates the quarterly volume of interest rate swap contracts. For the purpose of this disclosure, the volume is measured by the notional amounts outstanding at each quarter end.
Index Swap Notional Amounts Outstanding | ||||||||
Quarter Ended | March 31, 2013 | June 30, 2013 | ||||||
Core Bond Fund | 72,438,494 | 55,913,955 |
Currency Swaps
Certain Funds may enter into currency swap agreements to enhance returns or for hedging purposes. Currency swap agreements are agreements where two parties exchange specified amounts of different currencies which are followed by paying the other a series of interest payments that are based on the principal cash flow. At maturity, the principal amounts are exchanged.
For the period ended June 30, 2013, none of the Funds entered into currency swaps.
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, 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 terminate early could be material to the financial statements. Since different types of forward and OTC financial derivative transactions have different mechanics and are sometimes traded out of different legal entities of particular counterparty organization, each type of transaction may be covered by a different Master Agreement, resulting in the need for multiple agreements with a single counterparty. As the Master Agreements are specific to unique operations of different asset types, they allow a Fund to net its total exposure to a counterparty in the event of a default with respect to all the transactions governed under a single agreement with a counterparty.
Master Repurchase Agreements (“Master Repo Agreements”) govern transactions between a Fund and select counterparties. The Master Repo Agreements maintain provisions for, among other things, initiation, income payments, events of default, and maintenance of collateral for Repurchase and Reverse Repurchase Agreements.
Master Securities Forward Transaction Agreements (“Master Forward Agreements”) govern the considerations and factors surrounding the settlement of certain forward settling transactions, such as delayed delivery or sale-buyback financing transactions by and between a Fund and select counterparties. The Master Forward Agreements maintain provisions for, among other things, initiation and confirmation, payment and transfer, events of default, termination, and maintenance of collateral.
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 the Fund purchases
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assignments from agents it acquires direct rights against the borrower on the loan. As of June 30, 2013, the Core Bond Fund had no unfunded loan commitments.
Certificates of Participation
Certain Funds may purchase certificates of participation, also known as participation notes or participation interest notes. Certificates of participation are issued by banks or broker-dealers and are designed to replicate the performance of foreign companies or foreign securities markets and can be used by the Fund as an alternative means to access the securities market of a frontier emerging market country. The performance results of certificates of participation will not replicate exactly the performance of the foreign companies or foreign securities markets that they seek to replicate due to transaction and other expenses. Investments in certificates of participation involve certain risks in addition to those associated with a direct investment in the underlying foreign companies or foreign securities markets whose return they seek to replicate. There can be no assurance that there will be a trading market or that the trading price of certificates of participation will equal the underlying value of the foreign company or foreign securities market that it seeks to replicate. The Funds rely on the creditworthiness of the counterparty issuing the certificates of participation and have no rights against the issuer of the underlying security. The Funds minimize this risk by entering into agreements only with counterparties that RIMCo deems creditworthy. Due to liquidity and transfer restrictions, the secondary markets on which the certificates of participation are traded may be less liquid than the markets for other securities, or may be completely illiquid.
Emerging Markets Securities
The Funds may invest in emerging markets securities. Investing in emerging markets securities can pose some risks different from and greater than, risks of investing in U.S. or developed markets securities. These risks include: a risk of loss due to political instability; exposure to economic structures that are generally less diverse and mature, and to political systems which may have less stability than those of more developed countries; smaller market capitalization of securities markets, which may suffer periods of relative illiquidity; significant price volatility; restrictions on foreign investment; and possible repatriation of investment income and capital. In addition, foreign investors may be required to register the proceeds of sales and future economic or political crises could lead to price controls, forced mergers, expropriation or confiscatory taxation, seizure, nationalization, or creation of government monopolies. The currencies of emerging market countries may experience significant declines against the U.S. dollar, and devaluation may occur subsequent to investments in these currencies by the Funds. Emerging market securities may be subject to currency transfer restrictions and may experience delays and disruptions in securities settlement procedures for a Fund’s portfolio securities. Inflation and rapid fluctuations in inflation rates have had, and may continue to have, negative effects on the economies and securities markets of certain emerging market countries.
Emerging Markets Debt
The Core Bond Fund may invest in emerging markets debt. The Fund’s emerging markets debt securities may include obligations of governments and corporations. As with any fixed income securities, emerging markets debt securities are subject to the risk of being downgraded in credit rating and to the risk of default. In the event of a default on any investments in foreign debt obligations, it may be more difficult for the Fund to obtain or to enforce a judgment against the issuers of such securities. With respect to debt issued by emerging market governments, such issuers may be unwilling to pay interest and repay principal when due, either due to an inability to pay or submission to political pressure not to pay, and as a result may default, declare temporary suspensions of interest payments or require that the conditions for payment be renegotiated.
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 within a few days or weeks). 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. The Fund will not invest more than 15% of its net assets (taken at current fair 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 (“ABS”). These securities may include mortgage instruments issued by U.S. government agencies (“agency mortgages”) or those issued by private entities (“non-agency mortgages”). Specific types of instruments may include mortgage pass-through securities, collateralized mortgage obligations
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(“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 the 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 mortgages underlying the securities may default or decline in quality or value. Through its investments in MBS, a Fund has exposure to subprime loans, Alt-A loans and non-conforming loans as well as to the mortgage and credit markets generally. Underlying collateral related to subprime, Alt-A and non-conforming mortgage loans has become increasingly susceptible to defaults and declines in quality or value, especially in a declining residential real estate market. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole.
Mortgage-Backed Securities
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 the Fund’s portfolio at the time resulting in reinvestment risk.
Rising or high interest rates may result in slower than expected principal payments which may tend to extend the duration of MBS, making them more volatile and more sensitive to changes in interest rates. This is known as extension risk.
MBS may have less potential for capital appreciation than comparable fixed income securities due to the likelihood of increased prepayments of mortgages resulting from foreclosures or declining interest rates. These foreclosed or refinanced mortgages are paid off at face value (par) or less, causing a loss, particularly for any investor who may have purchased the security at a premium or a price above par. In such an environment, this risk limits the potential price appreciation of these securities.
Agency Mortgage-Backed Securities
Certain MBS may be issued or guaranteed by the U.S. government or a government sponsored entity, such as Fannie Mae (the Federal National Mortgage Association) or Freddie Mac (the Federal Home Loan Mortgage Corporation). Although these instruments may be guaranteed by the U.S. government or a government sponsored entity, many such MBS are not backed by the full faith and credit of the United States and are still exposed to the risk of non-payment.
Privately Issued Mortgage-Backed Securities
MBS held by a Fund may be issued by private issuers including 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-agency MBS may offer higher yields than those issued by government agencies, 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 refer 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 agency 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 mortgage loans. In addition, MBS that are issued by private issuers are not subject to the underwriting requirements for the underlying mortgages 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
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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 the 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
ABS may include MBS, loans, receivables or other assets. The value of the Fund’s ABS 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 ABS, 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 ABS have become an increasing risk for ABS 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.
ABS (other than MBS) present certain risks that are not presented by MBS. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. ABS are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. The Fund will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets.
Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of ABS 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
The Core Bond Fund may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with the Fund’s 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 may 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 Fund’s 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.
A to be announced (“TBA”) security is a forward mortgage-backed securities trade which the Core Bond Fund may invest in. 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.
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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 a U.S. Treasury Inflation-Protected Security (“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.
Disclosure about Offsetting Assets and Liabilities
Effective during interim and annual periods beginning on or after January 1, 2013, U.S. GAAP requires entities to disclose information about offsetting and related arrangements to enable financial statement users to understand the effects of such arrangements on the balance sheet. This Accounting Standards Update (“ASU”) requires an entity to disclose all financial and derivative instruments, including derivatives, repurchase agreements, securities lending arrangements on a gross basis as well as applicable amounts related to financial collateral.
Balance sheet disclosure is based on various netting agreements between brokers and counterparties, such as ISDA, Master Repo Agreements and Master Forward Agreements. The Funds employ multiple money managers and counterparties. The quantitative disclosure begins with disaggregation of counterparties by legal entity and the roll up of the data to reflect a single counterparty in the table within the Funds’ financial statements. Net exposure represents the net receivable (payable) that would be due from/to the counterparty in the event of default. Exposure from OTC derivatives can only be netted across transactions governed under the same Master Agreement with the same legal entity.
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, Credit and Counterparty 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 also 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 relevant assets recorded in the financial statements (the “Assets”). The 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 with respect to the Assets approximates their carrying value as recorded in the Funds’ Statements of Assets and Liabilities.
Global economies and financial markets are becoming increasingly interconnected and political and economic conditions (including recent instability and volatility) and events (including natural disasters) in one country, region or financial market may adversely impact issuers in a different country, region or financial market. As a result, issuers of securities held by a Fund may experience significant declines in the value of their assets and even cease operations. Such conditions and/or events may not have the same impact on all types of securities and may expose a Fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held by a Fund. This could cause a Fund to underperform other types of investments.
3. | Investment Transactions |
Securities
During the period ended June 30, 2013, 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 | $ | 197,651,428 | $ | 208,818,681 | ||||
Aggressive Equity Fund | 62,297,220 | 71,219,891 | ||||||
Non-U.S. Fund | 81,323,689 | 77,900,238 | ||||||
Core Bond Fund | 180,935,072 | 161,052,475 | ||||||
Global Real Estate Securities Fund | 298,427,966 | 257,793,007 |
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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 | $ | 303,325,000 | $ | 245,496,483 |
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. As of June 30, 2013, to the extent that a loan was collateralized by cash, such collateral was invested by the securities lending agent, Brown Brothers Harriman & Co. (“BBH”), in the Russell U.S. Cash Collateral Fund, an unregistered fund advised by RIMCo. 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 BBH 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 BBH 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 loans of non-U.S. securities) of the fair value of the loaned securities at the inception of each loan. The fair value of the loaned securities is determined at the close of business of the Fund 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 by BBH.
As of June 30, 2013, there were no non-cash collateral pledged for the securities on loan.
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, 2013, the Funds’ custodian fees were not reduced under these arrangements.
Brokerage Commissions
The Funds effect certain transactions through Recapture Services, a division of BNY ConvergeEX Execution Solutions LLC (“BNY”) and its global network of unaffiliated correspondent brokers as well as State Street Global Markets, LLC (“SSGM”) and its global network of unaffiliated correspondent brokers. BNY and SSGM are registered brokers and are not affiliates of the Funds or RIMCo. Trades placed through Recapture Services and SSGM and their correspondents are used (i) to obtain brokerage and research services for RIMCo to assist RIMCo in its investment decision-making process in its capacity as Adviser 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 brokerage and 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 Recapture Services, SSGM and their 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 direct through Recapture Services and SSGM based upon several factors including asset class and investment style, among others. Research services provided to RIMCo by Recapture Services, SSGM or other brokers include performance measurement statistics, fund analytics systems and market monitoring systems. Research services will generally be obtained from unaffiliated third parties at market rates, which may be included in commission costs. Research provided to RIMCo may benefit the particular Funds generating the trading activity and may also benefit other Funds within RIC and other funds and 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.
Decisions concerning the acquisition of research services by RIMCo are approved and monitored by a FRC Soft Commission Committee (“SCC”), which consists principally of employees in research and investment management roles. The SCC acts as an oversight body with respect to purchases of research services acquired by RIMCo using soft commissions generated by funds managed by FRC affiliates, including the Funds.
Recapture Services, SSGM or other brokers may also rebate to the Funds a portion of commissions earned on certain trading by the Funds through Recapture Services, and SSGM and their correspondents in the form of commission recapture. Commission recapture is paid solely to those Funds generating the applicable commission. Commission recapture is generated on the instructions of the SCC once RIMCo’s research needs have been met, as determined annually in the Soft Money Commission budgeting process.
Recapture Services and SSGM retain a portion of all commissions generated, regardless of whether the trades were used to provide research services to RIMCo or commission recapture to the Funds. Trades through Recapture Services, SSGM and their
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correspondents for transition services and manager funding (i.e. brokerage arrangements designed to reduce costs and optimize performance during the transition of Fund assets upon the hiring, termination or additional funding of a money manager) are at ordinary and customary commission rates and do not result in commission rebates or accrued credits for the procurement of research related services.
Additionally, a money manager may independently effect transactions through Recapture Services, SSGM and their correspondents or a broker affiliated with the money manager or another broker to obtain research services for its own use. Research services provided to a money manager may benefit the Fund generating the trading activity but may also benefit other funds and clients managed or advised by the money manager. Similarly, the Funds may benefit from research services provided with respect to trading by those other funds and clients.
Additionally, the Funds paid brokerage commissions to non-affiliated brokers who provided brokerage and research services to the Adviser.
4. | Related Party Transactions, Fees and Expenses |
Adviser, Administrator and Transfer and Dividend Disbursing Agent
RIMCo is the Funds’ adviser and RFSC, a wholly-owned subsidiary of RIMCo, is the Funds’ administrator and transfer agent. 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 Funds are permitted to invest their cash (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, 2013, the Funds had invested $176,790,615 in the Russell U.S. Cash Management Fund. In addition, a portion of the collateral received from the Investment Company’s securities lending program in the amount of $49,177,897 is invested in the Russell U.S. Cash Collateral Fund, an unregistered fund advised by RIMCo.
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 | ||||||||
Funds | Adviser | Administrator | ||||||
Multi-Style Equity Fund | 0.73 | % | up to 0.05 | % | ||||
Aggressive Equity Fund | 0.90 | up to 0.05 | ||||||
Non-U.S. Fund | 0.90 | up to 0.05 | ||||||
Core Bond Fund | 0.55 | up to 0.05 | ||||||
Global Real Estate Securities Fund | 0.80 | up to 0.05 |
The following shows the respective totals for advisory and administrative fees for the period ended June 30, 2013:
Advisory | Administrative | |||||||
Multi-Style Equity Fund | $ | 1,520,054 | $ | 104,077 | ||||
Aggressive Equity Fund | 897,835 | 49,863 | ||||||
Non-U.S. Fund | 1,637,487 | 90,939 | ||||||
Core Bond Fund | 1,903,470 | 172,982 | ||||||
Global Real Estate Securities Fund | 2,568,950 | 160,504 |
RIMCo has agreed to certain waivers of its advisory fees as follows:
For the Aggressive Equity Fund, RIMCo has contractually agreed, until April 30, 2014 to waive 0.05% 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, 2013 was $49,880. There were no reimbursements during the period.
For the Non-U.S. Fund, RIMCo has contractually agreed, until April 30, 2014, to waive 0.05% 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, 2013 was $90,972. There were no reimbursements during the period.
For the Core Bond Fund, RIMCo has contractually agreed, until April 30, 2014, to waive 0.05% 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, 2013 was $173,043. There were no reimbursements during the period.
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
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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, 2013 were as follows:
Amount | ||||
Multi-Style Equity Fund | $ | 9,162 | ||
Aggressive Equity Fund | 4,389 | |||
Non-U.S. Fund | 8,006 | |||
Core Bond Fund | 15,228 | |||
Global Real Estate Securities Fund | 14,129 |
Distributor
Russell Financial Services, Inc. (the “Distributor”), a wholly-owned subsidiary of RIMCo, serves as distributor for RIF, pursuant to the distribution agreement with RIF. 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, 2013 were as follows:
| Multi-Style Equity Fund | Aggressive Equity Fund | Non-U.S. Fund | Core Bond Fund | Global Real Estate Securities Fund | |||||||||||||||
Advisory fees | $ | 257,744 | $ | 145,324 | $ | 256,238 | $ | 290,717 | $ | 413,342 | ||||||||||
Administration fees | 17,408 | 8,434 | 14,861 | 28,674 | 25,480 | |||||||||||||||
Transfer agent fees | 1,542 | 745 | 1,314 | 2,523 | 2,227 | |||||||||||||||
Trustee fees | 1,297 | 606 | 1,101 | 1,119 | 698 | |||||||||||||||
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$ | 277,991 | $ | 155,109 | $ | 273,514 | $ | 323,033 | $ | 441,747 | |||||||||||
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Affiliated Brokerage Commissions
The Funds 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 money managers, rebalancing across existing money 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 including assets RIMCo may manage to manage risk in a Fund’s investment portfolio and for each Fund’s cash reserves.
Amounts retained by RIS for the period ended June 30, 2013 were as follows:
Fund Name | Amount | |||
Multi-Style Equity Fund | $ | 2,454 | ||
Non-U.S. Fund | 12,689 | |||
Global Real Estate Securities Fund | 12,147 |
The Funds are permitted to purchase or sell securities from or to certain related affiliated funds under specified conditions outlined in procedures adopted by the Board. The procedures have been designed to ensure that any purchase or sale of securities by the Funds from or to another fund or portfolio that are, or could be, considered an affiliate by virtue of having a common investment adviser (or affiliated investment advisers), common Trustees and/or common officers complies with Rule 17a-7 of the Act.
During the period ended June 30, 2013, the Funds have engaged in purchases and sales of securities pursuant to Rule 17a-7 of the Act. As defined by the procedures, each transaction is effected at the current market price.
Board of Trustees
The Russell Fund Complex consists of RIC, which has 39 funds, RIF, which has 10 funds and Russell Exchange Traded Funds Trust (“RET”) which has 1 fund. Each of the Trustees is a Trustee of RIC, RIF and RET. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $87,000 per year, each of its interested Trustees a retainer of $75,000 per year and each Trustee $7,000 for each regularly scheduled meeting attended in person and $3,500 for each special meeting and the Annual 38a-1 meeting attended in person, and 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 regularly scheduled and special meetings by phone instead of receiving the full fee had the member attended in person (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
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Committee Chair and Investment Committee Chair are each paid a fee of $15,000 per year and the Nominating and Governance Committee Chair is paid a fee of $12,000 per year. The chairman of the Board receives additional annual compensation of $75,000. Ms. Cavanaugh and the Trustee Emeritus are not compensated by the Russell Fund Complex for service as a Trustee.
5. | Federal Income Taxes |
At December 31, 2012, 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 | No Expiration Short-Term | Totals | ||||||||||||
Multi-Style Equity Fund | $ | — | $ | 21,899,000 | $ | — | $ | 21,899,000 | ||||||||
Aggressive Equity Fund | — | 7,456,521 | — | 7,456,521 | ||||||||||||
Non-U.S. Fund | 40,148,152 | 51,040,031 | 626,708 | 91,814,891 | ||||||||||||
Global Real Estate Securities Fund | — | 10,749,012 | — | 10,749,012 |
Under the Regulated Investment Company Modernization Act of 2010, the Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
At June 30, 2013, 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 | Global Real Estate Securities | |||||||||||||||
Cost of Investments | $ | 365,469,329 | $ | 189,683,478 | $ | 324,743,892 | $ | 779,893,078 | $ | 580,963,484 | ||||||||||
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Gross Unrealized Appreciation | $ | 69,939,968 | $ | 34,358,417 | $ | 54,915,784 | $ | 5,127,712 | $ | 82,759,874 | ||||||||||
Gross Unrealized Depreciation | (3,785,334 | ) | (6,042,494 | ) | (17,919,676 | ) | (5,348,376 | ) | (11,515,506 | ) | ||||||||||
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Net Unrealized Appreciation (Depreciation) | $ | 66,154,634 | $ | 28,315,923 | $ | 36,996,108 | $ | (220,664 | ) | $ | 71,244,368 | |||||||||
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As permitted by tax regulations, the Funds intend to defer a net realized capital loss incurred from November 1, 2012 to December 31, 2012, and treat it as arising in the fiscal year 2013. As of December 31, 2012, the Fund had realized a capital losses as follows:
Non-U.S. Fund $1,003,701
6. | Interfund Lending Program |
The Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility. 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. A 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 Fund. The 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 lending fund could result in reduced returns or additional borrowing costs. For the period ended June 30, 2013, the Funds presented herein did not borrow or lend through the interfund lending program.
7. | Record Ownership |
As of June 30, 2013, 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 | 78.6 | ||||||
Aggressive Equity Fund | 2 | 78.6 | ||||||
Non-U.S. Fund | 2 | 72.9 | ||||||
Core Bond Fund | 3 | 84.3 | ||||||
Global Real Estate Securities Fund | 2 | 91.0 |
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8. | 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, as amended (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.
See each Fund’s Schedule of Investments for a list of restricted securities held by a Fund that are illiquid.
9. | Subsequent Events |
Management has evaluated the events and /or transactions that have occurred through the date the financial statements were available to be issued and noted no items requiring adjustments of the financial statements or additional disclosures.
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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 18, 2013 (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 (“Independent Counsel”), also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds; and (2) information (the “Third-Party Information”) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and their respective operating expenses over various periods of time with other peer funds 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 preparing the Third-Party Information for the Agreement Evaluation Meeting, the third-party service provider initially changed its methodology for selection of the Expense Universe Comparable Funds from that used in prior years to exclude peer funds with distribution or shareholder servicing fees even though their investment objectives were generally comparable to the Funds’ objectives. In RIMCo’s judgment, this change in methodology arbitrarily resulted in a significant reduction in the number of funds in the Expense Universe and made the operating expense comparisons in the Third-Party Information less meaningful. After discussions with the Board’s independent Chair, RIMCo requested, and the third-party information provider furnished supplementally, the Third-Party Information reflecting the methodologies for selection of the Expense Universe Comparable Funds by the third-party service provider used in 2012. The Board focused on the supplemental Third-Party Information in conducting its evaluations. In general, the operating expense comparisons between the Funds and their Comparable Funds in the supplemental Third-Party Information were more favorable. In the case of certain, but not all, Funds, the Third-Party Information also reflected changes in the Comparable Funds requested by RIMCo, which changes were noted in the Third-Party Information. The foregoing and other information received by the Board, including the Independent Trustees, in connection with its evaluations of the RIMCo Agreement and portfolio management agreements is collectively called the “Agreement Evaluation Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and the other RIMCo-managed funds for which the Board has supervisory responsibility (“Other Russell Funds”) with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Funds (“Fund Counsel”) 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 Independent Counsel.
On April 9, 2013, the Independent Trustees in preparation for the Agreement Evaluation Meeting met by conference telephone call to review the Agreement Evaluation Information received to that date in a private session with 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. On April 17, 2013, the Independent Trustees met in person in a private session with Independent Counsel to review additional Agreement Evaluation Information received to that date. 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 RIMCo, Fund management, Independent Counsel and Fund Counsel. Presentations made by RIMCo at the Agreement Evaluation Meeting as part of this review encompassed the Funds and all Other Russell Funds. Information received by the Board, including the Independent Trustees, at the Agreement Evaluation Meeting is included in the Agreement Evaluation Information. Prior to voting at the Agreement Evaluation Meeting, the non-management members of the Board, including the Independent Trustees, met in executive session with Fund Counsel and 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 RIMCo’s advice 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 the investment of each Fund’s cash and 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, Fund assets are managed directly by RIMCo pursuant to authority provided by the RIMCo Agreement.
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RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Fund and for actively managing allocations and reallocations of assets among the Money Managers. The Board has been advised that RIMCo’s goal is to construct and manage diversified portfolios in a risk-aware manner. Each Money Manager for a Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Fund assigned to it by RIMCo (each, a “segment”) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in a Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for a Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager or to coordinate the investment activities of Money Managers for the Fund in a complementary manner. Therefore, RIMCo’s selection of Money Managers is made not only on the basis of performance considerations but also on the basis of 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 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 or transfer agent fees and any 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 discussed with senior representatives of RIMCo the impact on the Funds’ operations of changes in RIMCo’s senior management and other personnel providing investment management and other services to the Funds during the past year. The Board was not advised of any expected diminution in the nature, scope or quality of the investment advisory or other services provided to the Funds from such changes. The Board also discussed the impact of organizational changes on the compliance programs of the Funds and RIMCo with the Funds’ Chief Compliance Officer (the “CCO”) and received assurances from the CCO that such changes have not resulted in any diminution in the scope and quality of the Funds’ compliance programs.
As noted above, RIMCo, in addition to managing the investment of each Fund’s cash, may directly manage a portion of certain Funds (the “Participating Funds”) pursuant to the RIMCo Agreement, the actual allocation being determined from time to time by the
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Participating Funds’ RIMCo portfolio manager. During 2012, RIMCo implemented a strategy of managing a portion of the assets of the Participating Funds to modify such Funds’ overall portfolio characteristics by investing in securities or other instruments that RIMCo believes will achieve the desired risk/return profiles for such Funds. RIMCo monitors and assesses Fund characteristics, including risk, using a variety of measurements, such as tracking error, and may seek to manage Fund characteristics consistent with the Participating Funds’ investment objectives and strategies. Participating Fund characteristics may be managed with the goal to increase or decrease exposures (such as volatility, momentum, value, growth, capitalization size, industry or sector) or to offset undesired relative over or underweights in order to seek to achieve the desired risk/return profile for the Participating Fund. RIMCo may use an index replication or sampling strategy by selecting an index which represents the desired exposure, or may utilize quantitative or qualitative analysis or quantitative models designed to assess Participating Fund characteristics and identify a portfolio which provides the desired exposure. Based on this, for the portion of a Participating Fund’s assets directly managed by RIMCo, RIMCo may purchase common stocks, exchange-traded funds, exchange-traded notes, short-term investments or derivatives, including futures, forwards, options and/or swaps, in order to seek to achieve the desired risk/return profile for the Participating Fund. RIMCo’s direct management of assets for these purposes is hereinafter referred to as the “Direct Management Services.” RIMCo also may reallocate Fund assets among Money Managers, increase Fund cash reserves, determine to not be fully invested, or adjust exposures through the cash equitization process. RIMCo’s Direct Management Services are not intended, and are not expected to be, a primary driver of Participating Funds’ investment results, although the services may have a positive or negative impact on investment results, but rather are intended to enhance incrementally the ability of the Participating Funds to carry out their investment programs. The Board considered that during the period, and to the extent that RIMCo employs its Direct Management Services in respect of Participating Funds, RIMCo is not required to pay investment advisory fees to a Money Manager with respect to assets that are directly managed and that the profits derived by RIMCo generally and from the Participating Funds consequently may be increased incrementally. The Board, however, also considered the potential benefits of the Direct Management Services to Participating Funds; the limited amount of assets that are managed directly by RIMCo pursuant to the Direct Management Services; and the fact that the aggregate investment Advisory Fees paid by the Participating Funds are not increased as a result of RIMCo’s direct management of Participating Fund assets as part of the Direct Management Services or otherwise.
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. The Board noted RIMCo’s further past advice that 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.
The Third-Party Information included, among other things, comparisons of the Funds’ Advisory Fees with the advisory fees of their Comparable Funds 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 Third-Party Information, among other things, showed that each Fund had an Advisory Fee which, compared with its Comparable Funds’ advisory fees on an actual basis, was ranked in the fourth or fifth quintile of its Expense Universe for that expense component. In these rankings, the first quintile represents funds with the lowest investment advisory fees among funds in the Expense Universe and the fifth quintile represents funds with the highest investment advisory fees among the Expense Universe funds. The comparisons were based upon the latest fiscal years for the Expense Universe funds. 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 fair and reasonable under the circumstances, notwithstanding such comparisons. Among other things, RIMCo noted that meaningful comparisons of advisory fees between funds affiliated with insurance companies issuing variable annuity and life policies and non-affiliated funds, such as the Funds, are difficult as insurance companies may allocate fees between the investment policies and their underlying funds. The Board determined that it would continue to monitor the Funds’ Advisory 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. RIMCo expressed the view that Advisory Fees should be considered in the context of a Fund’s total expense ratio to obtain a complete picture. The Board, however, considered each Fund’s Advisory Fee on both a standalone basis and in the context of the Fund’s total expense ratio.
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 Funds are distributed exclusively through variable annuity and variable life insurance contracts issued by insurance companies. Currently, the Funds are made available to holders of such insurance policies by two insurance companies. At the Contract Renewal Meeting, RIMCo advised the Board that it does not
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Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
expect that additional insurance companies will make the Funds available to their variable annuity or variable life insurance policyholders in the near or long term because of a declining interest by the insurance companies generally in variable insurance trusts, such as the Funds, as investment vehicles supporting their products. Notwithstanding this expectation, RIMCo expressed its belief that the Funds will remain viable in light of their cash inflows from current participating insurance companies. The Board 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 the negative implications for significant future Fund asset growth of RIMCo’s expectation that no additional insurance companies will make the Funds available to their variable annuity and variable life insurance policyholders and other factors associated with the manager-of-managers structure employed by the Funds, including the variability of Money Manager investment advisory fees.
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 RIF funds under the Board’s supervision are lower, and, in some cases, may be substantially lower, than the rates paid by RIF 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 compliance, administrative and other 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.
With respect to the Funds’ total expenses, the Third-Party Information showed that the total expenses for the RIF Multi-Style Equity Fund and the RIF Core Bond Fund ranked in the third quintile of its Expense Universe. The total expenses for each of the other Funds ranked in the second quintile of its Expense Universe. In these rankings, the first quintile represents the funds with the lowest total expenses among funds in the Expense Universe and the fifth quintile represents funds with the highest total expenses among the Expense Universe funds
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 and considering any 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; (2) the relative expense ratio of the Fund either was comparable to those of its Comparable Funds or RIMCo had provided an explanation satisfactory to the Board as to why the relative expense ratio was not 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 concluded that, under the circumstances and based on RIMCo’s performance review of each Fund, the performance of each of the Funds would be consistent with continuation of the RIMCo Agreement. The Board, in assessing the Funds’ performance, focused upon each Fund’s performance for the 3-year period ended December 31, 2012 as most relevant but also considered Fund performance for the 1-year and5-year periods ended such date. In reviewing the Funds’ performance generally, the Board took into consideration various steps taken by RIMCo during 2012 to enhance the performance of certain Funds, including a large number of changes in Money Managers and, in the case of Participating Funds, RIMCo’s implementation of its Direct Management Services which are not yet reflected in Fund investment results.
With respect to the RIF Aggressive Equity Fund, the Third-Party Information showed that the Fund’s performance was ranked in the third quintile of its Performance Universe for the 1-year period ended December 31, 2012 and was ranked in the fourth and fifth quintiles for the 3- and 5-year periods ended such date, respectively. RIMCo noted that, effective May 1, 2012, the Fund’s investment strategy changed from investing principally in small and mid-cap securities to investing principally in small cap securities. RIMCo attributed the Fund���s relative underperformance for the 3-year period to the smaller cap profile of the Performance Universe before the Fund’s investment strategy change. Prior to the Fund’s investment strategy change, the Fund’s larger market cap profile resulted in a larger cap, higher quality investment strategy which underperformed the smaller cap, higher risk profile of the other Performance Universe funds significantly in the market environments during the 3- and 5-year periods.
With respect to the RIF Non-U.S. Fund, the Third-Party Information showed that the Fund’s performance for the 1- and 5-year periods ended December 31, 2012 was ranked in the third quintile of its Performance Universe and ranked in the fourth quintile of the Performance Universe for the 3-year period ended such date. RIMCo noted that the Fund’s performance relative to its Performance Universe has been affected negatively by its holdings in European financials, although these positions had produced
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more positive results recently, and its underweight to Australian banks which were leading bank performers but, among other things, were viewed by the Fund’s Money Managers as expensive relative to global peers. Moreover, the Fund’s allocation to sectors that are more sensitive to economic growth than traditional defensive sectors detracted from Fund performance as the global economic crisis continued and consumers and businesses reduced spending. RIMCo noted that the Fund outperformed its benchmark over the 3-year period.
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 relative performance for the 3- and 5-year periods ended December 31, 2012. The Board also considered the large number of Money Manager changes that were made in 2012 and that the performance of Money Managers continues to impact Fund performance for periods prior and subsequent to their termination, and that any incremental positive or negative impact of the Direct Management Services was not yet reflected in the investment results for Participating Funds.
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’ CCO regarding her assessments of Money Manager compliance programs and any compliance issues. RIMCo did not identify any benefits received by Money Managers or their affiliates as a result of their relationships with the Funds other than benefits from their soft dollar arrangements. The Agreement Evaluation Information described, and at the Agreement Evaluation Meeting the Funds’ CCO discussed, oversight of Money Manager soft dollar arrangements. The Agreement Evaluation Information expressed RIMCo’s belief that, based upon certifications from Money Managers and pre-hire and ongoing reviews of Money Manager soft dollar arrangements, policies and procedures, the Money Managers’ soft dollar arrangements, policies and procedures are consistent with applicable legal standards and with disclosures made by Money Managers in their investment adviser registration statements filed with the Securities and Exchange Commission and by the Funds in their registration statements. The Board was advised that, in the case of Money Managers using soft dollar arrangements, the CCO monitors, among other things, the commissions paid by the Funds and percentage of Fund transactions effected pursuant to the soft dollar arrangements, as well as the products or services purchased by the Money Managers with soft dollars generated by Fund portfolio transactions. The CCO and RIMCo do not obtain, and the Agreement Evaluation Information therefore did not include, information regarding the value of soft dollar benefits derived by Money Managers from Fund portfolio transactions. RIMCo recommended that each Money Manager be retained at its current fee rate. In doing so, RIMCo, as it has in the past, 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 of the relevance of Money Manager profitability in light of RIMCo’s belief that such fees are reasonable; 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, 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.
Basis for Approval of Investment Advisory Contracts | 139 |
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Russell Investment Funds
Shareholder Requests for Additional Information — June 30, 2013 (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 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 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 and information regarding how the Funds voted proxies relating to portfolio securities during the most recent 12 month period ended June 30, 2012 are 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 semi-annual reports. Please contact your insurance company for further detail.
140 | Shareholder Requests for Additional Information |
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Russell Investment Funds
Disclosure of Information about Fund Trustees and Officers — June 30, 2013 (Unaudited)
The following tables provide information for each officer and trustee of the Russell Fund Complex. The Russell Fund Complex consists of Russell Investment Company (“RIC”), which has 39 funds, Russell Investment Funds (“RIF”), which has 10 funds, and Russell Exchange Traded Funds Trust (“RET”), which has 1 fund. Each of the trustees is a trustee of RIC, RIF and RET. The first table provides information for the interested trustees. The second table provides information for the independent trustees. The third table provides information for the trustee emeritus. The fourth table provides information for the officers. Furthermore, each Trustee possesses the following specific attributes: Mr. Alston has business, financial and investment experience as a senior executive of an international real estate firm and is trained as a lawyer; Ms. Blake has had experience as a certified public accountant and has had experience as a member of boards of directors/trustees of other investment companies; Ms. Burgermeister has had experience as a certified public accountant and has had experience as a member of boards of directors/trustees of other investment companies; Mr. Connealy has had experience with other investment companies and their investment advisers first as a partner in the investment management practice of PricewaterhouseCoopers LLP and, subsequently, as the senior financial executive of two other investment organizations sponsoring and managing investment companies; Mr. Fine has had financial, business and investment experience as a senior executive of a non-profit organization and previously, as a senior executive of a large regional financial services organization with management responsibility for such activities as investments, asset management and securities brokerage; Mr. Tennison has had business, financial and investment experience as a senior executive of a corporation with international activities and was trained as an accountant; Mr. Thompson has had experience in business, governance, investment and financial reporting matters as a senior executive of an organization sponsoring and managing other investment companies, and, subsequently, has served as a board member of other investment companies, and has been determined by the Board to be an audit committee financial expert; and Ms. Weston has had experience as a tax and corporate lawyer, has served as general counsel of several corporations and has served as a director of another investment company. Ms. Cavanaugh has had experience with other financial services companies, including companies engaged in the sponsorship, management and distribution of investment companies. As a senior officer of the Funds, the Adviser and various affiliates of the Adviser providing services to the Funds, Ms. Cavanaugh is in a position to provide the Board with such parties’ perspectives on the management, operations and distribution of the Funds.
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 During the Past 5 Years | |||||||
INTERESTED TRUSTEES | ||||||||||||
# Sandra Cavanaugh, Born May 10, 1954
1301 Second Avenue, 18th Floor Seattle, WA 98101 | President and Chief Executive Officer since 2010
Trustee since 2010 | Until successor is chosen and qualified by Trustees
Appointed until successor is duly elected and qualified | • President and CEO RIC and RIF and RET • Chairman of the Board, President and CEO, Russell Financial Services, Inc. (“RFS”) • Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”) • Director, RIMCo • Chairman of the Board and President, Russell Insurance Agency, Inc. (“RIA”) (insurance agency) • 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. (investment company) | 50 | None |
141 | 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, 2013 (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 During the Past 5 Years | |||||||
INTERESTED TRUSTEES (continued) | ||||||||||||
## Daniel P. Connealy, Born June 6, 1946
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2003 | Appointed until successor is duly elected and qualified | • June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc. (investment company) • Chairman of the Audit Committee, RIF and RIF from 2005 to 2011. | 50 | None | |||||||
### Jonathan Fine,
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2004 | Appointed until successor is duly elected and qualified | • President and Chief Executive Officer, United Way of King County, WA (charitable organization) | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
# | Ms. Cavanaugh is also an officer and/or director of one or more affiliates of RIC, RIF and RET and is therefore classified as an Interested Trustee. |
## | Mr. Connealy is an officer of a broker-dealer that distributes shares of the Funds and is therefore classified as an Interested Trustee. |
### | Mr. Fine is classified as an Interested Trustee due to Ms. Cavanaugh’s service on the Board of Directors of the United Way of King County (“UWKC”) and in light of charitable contributions made by Russell Investments to UWKC. |
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 During the Past 5 Years | |||||||
INDEPENDENT TRUSTEES | ||||||||||||
Thaddas L. Alston, Born April 7, 1945
1301 Second Avenue, 18th Floor Seattle, WA 98101 | 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) | 50 | None | |||||||
Kristianne Blake, Born January 22, 1954
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2000 Chairman since 2005
| Appointed until successor is duly elected and qualified
Annual | • Director and Chairman of the Audit Committee, Avista Corp. (electric utilities) • Trustee and Chairman of the Operations Committee, Principal Investors Funds and Principal Variable Contracts Funds (investment company) • Regent, University of Washington • President, Kristianne Gates Blake, P.S. (accounting services) | 50 | • Director, Avista Corp (electric utilities); • Trustee, Principal Investors Funds (investment company); • Trustee, Principal Variable Contracts Funds (investment company) |
142 | 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, 2013 (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 During the Past 5 Years | |||||||
INDEPENDENT TRUSTEES (continued) | ||||||||||||
Cheryl Burgermeister Born June 26, 1951
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2012 | Appointed until successor is duly elected and qualified. | • Retired • Trustee and Chairperson of Audit Committee, Select Sector SPDR Funds (investment company) • Trustee and Finance Committee Member/Chairman, Portland Community College (charitable organization) | 50 | • Trustee and Chairperson of Audit Committee, Select Sector SPDR Funds (investment company) | |||||||
Raymond P. Tennison, Jr. Born December 21, 1955
1301 Second Avenue, 18th Floor Seattle, WA 98101 | 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 of the Board, Simpson Investment Company (paper and forest products) • Until November 2010, President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company | 50 | None | |||||||
Jack R. Thompson, Born March 21, 1949
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2005
Chairman of the Audit Committee, since 2012 | Appointed until successor is duly elected and qualified.
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 (investment company) • September 2007 to September 2010 Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation (health products company) | 50 | • Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation until September 2010 (health products company) • Director, Sparx Asia Funds until 2009 (investment company) | |||||||
Julie W. Weston, Born October 2, 1943
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2002 | Appointed until successor is duly elected and qualified | • Retired • Chairperson of the Investment Committee until December 2009 | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
Disclosure of Information about Fund Trustees and Officers | 143 |
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Russell Investment Funds
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013 (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 During the Past 5 Years | |||||||
TRUSTEE EMERITUS | ||||||||||||
** George F. Russell, Jr., Born July 3, 1932 1301 Second Avenue, 18th Floor Seattle, WA 98101 | 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) | 50 | None |
** | Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF. |
Name, 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
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Chief Compliance Officer since 2005 | Until removed by Independent Trustees | • Chief Compliance Officer, RIC, RIF and RET • Chief Compliance Officer, RFSC • 2005-2011 Chief Compliance Officer, RIMCo | |||
Sandra Cavanaugh, Born May 10, 1954
1301 Second Avenue, 18th Floor Seattle, WA 98101 | President and Chief Executive Officer since 2010 | Until successor is chosen and qualified by Trustees | • President and CEO RIC and RIF and RET • Chairman of the Board, President and CEO, Russell Financial Services, Inc. (“RFS”) • Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”) • Director, RIMCo • Chairman of the Board and President, Russell Insurance Agency, Inc. (“RIA”) (insurance agency) • 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. (investment company) | |||
Mark E. Swanson, Born November 26, 1963
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Treasurer and Chief Accounting Officer since 1998 | Until successor is chosen and qualified by Trustees | • Treasurer, Chief Accounting Officer and CFO, RIC, RIF and RET • Head of North America Operations, Russell Investments • May 2009 to October 2011, Global Head of Fund Operations, Russell Investments • 1999 to May 2009, Director, Funds Administration, RIMCo, RFSC, Russell Trust Company (“RTC”) and RFS | |||
Peter Gunning, Born February 22, 1967
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Chief Investment Officer since 2008 | Until removed by Trustees | • Global Chief Investment Officer, Russell Investments • Chief Investment Officer, RIC and RIF • Director, FRC • Chairman of the Board, President and CEO, RIMCo • 1996 to 2008 Chief Investment Officer, Russell, Asia Pacific |
144 | 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, 2013 (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 (continued) | ||||||
Mary Beth Rhoden Albaneze, Born April 25, 1969
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Secretary since 2010 | Until successor is chosen and qualified by Trustees | • Associate General Counsel, Russell Investments • Secretary, RIMCo, RFSC and RFS • Secretary and Chief Legal Officer, RIC, RIF and RET • 1999 to 2010 Assistant Secretary, RIC and RIF |
Disclosure of Information about Fund Trustees and Officers | 145 |
Table of Contents
1301 Second Avenue, Seattle, Washington 98101
(800) 787-7354
Interested Trustees
Sandra Cavanaugh
Daniel P. Connealy
Jonathan Fine
Independent Trustees
Thaddas L. Alston Kristianne Blake
Cheryl Burgermeister
Raymond P. Tennison, Jr.
Jack R. Thompson
Julie W. Weston
Trustee Emeritus
George F. Russell, Jr.
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 Albaneze, Secretary
Adviser
Russell Investment Management Company
1301 Second Avenue
Seattle, WA 98101
Administrator and Transfer and Dividend Disbursing Agent
Russell Fund Services Company
1301 Second Avenue
Seattle, WA 98101
Custodian
State Street Bank and Trust Company
1200 Crown Colony Drive
Crown Colony Office Park
Quincy, MA 02169
Office of Shareholder Inquiries
1301 Second Avenue
Seattle, WA 98101
(800) 787-7354
Legal Counsel
Dechert LLP
One International Place,
40th Floor,
100 Oliver Street
Boston, MA 02110-2605
Distributor
Russell Financial Services, Inc.
1301 Second Avenue
Seattle, WA 98101
Money Managers as of June 30, 2013
Multi-Style Equity Fund
Columbus Circle Investors, Stamford, CT
DePrince, Race & Zollo, Inc., Winter Park, FL
Institutional Capital LLC, Chicago, IL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Mar Vista Investment Partners, LLC, Los Angeles, CA
Suffolk Capital Management LLC, New York, NY
Sustainable Growth Advisers, LP, Stamford, CT
Aggressive Equity Fund
Conestoga Capital Advisors, LLC, Radnor, PA
DePrince, Race & Zollo, Inc., Winter Park, FL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Ranger Investment Management, L.P., Dallas, TX
RBC Global Asset Management (U.S.) Inc., Minneapolis, MN
Signia Capital Management LLC, Spokane, WA
Non-U.S. Fund
Barrow, Hanley, Mewhinney & Strauss, LLC, Dallas, TX
MFS Institutional Advisors Inc., Boston, MA
Pzena Investment Management LLC, New York, NY
William Blair & Company L.L.C., Chicago, IL
Core Bond Fund
Colchester Global Investors Ltd, London, England
Logan Circle Partners, L.P., Philadelphia, PA
Macro Currency Group — an investment group within Principal Global Investors, LLC, Des Moines, IA*
Metropolitan West Asset Management LLC, Los Angeles, CA
Pacific Investment Management Company LLC, Newport Beach, CA
Global Real Estate Securities Fund
AEW Capital Management LP, 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
*Principal Global Investors, LLC is the asset management arm of the Principal Financial Group® (The Principal®), which includes various member companies including Principal Global Investors, LLC, Principal Global Investors (Europe) Limited, and others. The Macro Currency Group is the specialist currency investment group within Principal Global Investors. Where used herein, Macro Currency Group means Principal Global Investors, LLC.
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.
146 | Adviser, Money Managers and Service Providers |
Table of Contents
Russell Investment Funds | 1301 Second Avenue | 800-787-7354 | ||
Seattle, Washington 98101 | Fax: 206-505-3495 | |||
www.russell.com |
36-08-072
Table of Contents
2013 SEMI-ANNUAL REPORT
Russell
Investment Funds
LifePoints® Funds Variable Target Portfolio Series
JUNE 30, 2013
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 ten 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, 2013 (Unaudited)
Table of Contents
Russell Investment Funds - LifePoints® Funds Variable Target Portfolio Series.
Copyright © Russell Investments 2013. 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 and part of Russell Investments.
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value June 30, 2013 | $ | 1,008.00 | $ | 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 six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
Moderate Strategy Fund | 3 |
Table of Contents
Russell Investment Funds
Moderate Strategy Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Fair Value $ | |||||||
Investments - 100.0% | ||||||||
Russell Investment Company (“RIC”) and other Russell Investment Funds (“RIF”) Series Mutual Funds | ||||||||
Alternative Funds - 12.0% | ||||||||
RIC Russell Commodity Strategies Fund Class Y | 264,232 | 2,193 | ||||||
RIC Russell Global Infrastructure Fund Class Y | 328,699 | 3,741 | ||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 293,437 | 2,987 | ||||||
RIF Global Real Estate Securities Fund | 196,301 | 2,999 | ||||||
|
| |||||||
11,920 | ||||||||
|
| |||||||
Domestic Equities - 13.7% | ||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 106,343 | 3,967 | ||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 178,771 | 1,986 | ||||||
RIF Aggressive Equity Fund | 131,545 | 1,990 | ||||||
RIF Multi-Style Equity Fund | 333,283 | 5,706 | ||||||
|
| |||||||
13,649 | ||||||||
|
|
Shares | Fair Value $ | |||||||
Fixed Income - 57.0% | ||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 198,125 | 1,991 | ||||||
RIC Russell Investment Grade Bond Fund Class Y | 872,935 | 18,917 | ||||||
RIF Core Bond Fund | 3,419,912 | 35,841 | ||||||
|
| |||||||
56,749 | ||||||||
|
| |||||||
International Equities - 17.3% | ||||||||
RIC Russell Emerging Markets Fund Class Y | 202,838 | 3,515 | ||||||
RIC Russell Global Equity Fund Class Y | 739,222 | 7,444 | ||||||
RIF Non-U.S. Fund | 595,724 | 6,213 | ||||||
|
| |||||||
17,172 | ||||||||
|
| |||||||
Total Investments - 100.0% (identified cost $90,814) | 99,490 | |||||||
Other Assets and Liabilities, Net - (0.0%) | (23 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 99,467 | |||||||
|
|
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Categories | % of Net Assets | |||
Alternative Funds | 12.0 | |||
Domestic Equities | 13.7 | |||
Fixed Income | 57.0 | |||
International Equities | 17.3 | |||
|
| |||
Total Investments | 100.0 | |||
Other Assets and Liabilities, Net | (— | )* | ||
|
| |||
100.0 | ||||
|
|
* | Less than .05% of net assets. |
See accompanying notes which are an integral part of the financial statements.
4 | Moderate Strategy Fund |
Table of Contents
Russell Investment Funds
Moderate Strategy Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 90,814 | ||
Investments, at fair value | 99,490 | |||
Receivables: | ||||
Investments sold | 47 | |||
From affiliates | 4 | |||
Prepaid expenses | 1 | |||
|
| |||
Total assets | 99,542 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Fund shares redeemed | 47 | |||
Accrued fees to affiliates | 5 | |||
Other accrued expenses | 23 | |||
|
| |||
Total liabilities | 75 | |||
|
| |||
Net Assets | $ | 99,467 | ||
|
| |||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 34 | ||
Accumulated net realized gain (loss) | (2,986 | ) | ||
Unrealized appreciation (depreciation) on investments | 8,676 | |||
Shares of beneficial interest | 99 | |||
Additional paid-in capital | 93,644 | |||
|
| |||
Net Assets | $ | 99,467 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 10.08 | ||
Net assets | $ | 99,467,230 | ||
Shares outstanding ($.01 par value) | 9,868,357 |
(#) | 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.
Moderate Strategy Fund | 5 |
Table of Contents
Russell Investment Funds
Moderate Strategy Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Income distribution from Underlying Funds | $ | 501 | ||
|
| |||
Expenses | ||||
Advisory fees | 98 | |||
Administrative fees | 25 | |||
Custodian fees | 10 | |||
Transfer agent fees | 2 | |||
Professional fees | 20 | |||
Trustees’ fees | 1 | |||
Printing fees | 9 | |||
Miscellaneous | 3 | |||
|
| |||
Expenses before reductions | 168 | |||
Expense reductions | (119 | ) | ||
|
| |||
Net expenses | 49 | |||
|
| |||
Net investment income (loss) | 452 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | 102 | |||
Capital gain distributions from Underlying Funds | 88 | |||
|
| |||
Net realized gain (loss) | 190 | |||
Net change in unrealized appreciation (depreciation) on investments | 30 | |||
|
| |||
Net realized and unrealized gain (loss) | 220 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 672 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
6 | Moderate Strategy Fund |
Table of Contents
Russell Investment Funds
Moderate Strategy Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 452 | $ | 2,590 | ||||
Net realized gain (loss) | 190 | 558 | ||||||
Net change in unrealized appreciation (depreciation) | 30 | 5,568 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 672 | 8,716 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (505 | ) | (2,603 | ) | ||||
From net realized gain | (466 | ) | (420 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (971 | ) | (3,023 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | 5,545 | 13,472 | ||||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 5,246 | 19,165 | ||||||
Net Assets | ||||||||
Beginning of period | 94,221 | 75,056 | ||||||
|
|
|
| |||||
End of period | $ | 99,467 | $ | 94,221 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | 34 | $ | 87 |
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 1,141 | $ | 11,725 | 1,944 | $ | 19,209 | ||||||||||
Proceeds from reinvestment of distributions | 95 | 971 | 304 | 3,023 | ||||||||||||
Payments for shares redeemed | (699 | ) | (7,151 | ) | (890 | ) | (8,760 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | 537 | $ | 5,545 | 1,358 | $ | 13,472 | ||||||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
Moderate Strategy Fund | 7 |
Table of Contents
Russell Investment Funds
Moderate Strategy Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, Beginning of Period | $ Net Investment Income (Loss)(a)(b)(f) | $ Net Realized and Unrealized Gain (Loss) | $ Total from Investment Operations | $ Distributions from Net Investment Income | $ Distributions from Net Realized Gain | $ Return of Capital | ||||||||||||||||||||||
June 30, 2013(1) | 10.10 | .05 | .03 | .08 | (.05 | ) | (.05 | ) | — | |||||||||||||||||||
December 31, 2012 | 9.41 | .30 | .73 | 1.03 | (.29 | ) | (.05 | ) | — | |||||||||||||||||||
December 31, 2011 | 9.64 | .27 | (.26 | ) | .01 | (.24 | ) | — | — | |||||||||||||||||||
December 31, 2010 | 8.95 | .42 | .69 | 1.11 | (.41 | ) | — | (.01 | ) | |||||||||||||||||||
December 31, 2009 | 7.67 | .36 | 1.34 | 1.70 | (.37 | ) | (.05 | ) | — | |||||||||||||||||||
December 31, 2008 | 9.99 | .33 | (2.32 | ) | (1.99 | ) | (.23 | ) | (.10 | ) | — |
See accompanying notes which are an integral part of the financial statements.
8 | Moderate Strategy Fund |
Table of Contents
$ Total Distributions | $ Net Asset Value, End of Period | % Total Return(c)(h) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Gross(d)(e) | % Ratio of Expenses to Average Net Assets, Net(d)(e)(f) | % Ratio of Net Investment Income to Average Net Assets(b)(c)(f) | % Portfolio Turnover Rate(c) | |||||||||||||||||||||||
(.10 | ) | 10.08 | .80 | 99,467 | .34 | .10 | .46 | 7 | ||||||||||||||||||||||
(.34 | ) | 10.10 | 11.07 | 94,221 | .36 | .10 | 3.01 | 20 | ||||||||||||||||||||||
(.24 | ) | 9.41 | .12 | 75,056 | .38 | .10 | 2.80 | 10 | ||||||||||||||||||||||
(.42 | ) | 9.64 | 12.62 | 54,573 | .44 | .10 | 4.56 | 45 | ||||||||||||||||||||||
(.42 | ) | 8.95 | 23.09 | 35,671 | .48 | .10 | 4.40 | 21 | ||||||||||||||||||||||
(.33 | ) | 7.67 | (20.39 | ) | 19,308 | .53 | .11 | 3.77 | 39 |
See accompanying notes which are an integral part of the financial statements.
Moderate Strategy Fund | 9 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | ||||||||
June 30, 2013 | $ | 1,028.40 | $ | 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 six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
10 | Balanced Strategy Fund |
Table of Contents
Russell Investment Funds
Balanced Strategy Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Fair Value $ | |||||||
Investments - 100.0% | ||||||||
Russell Investment Company (“RIC”) and other Russell Investment Funds (“RIF”) Series Mutual Funds | ||||||||
Alternative Funds - 12.8% | ||||||||
RIC Russell Commodity Strategies Fund Class Y | 952,944 | 7,909 | ||||||
RIC Russell Global Infrastructure Fund Class Y | 950,172 | 10,813 | ||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 808,549 | 8,231 | ||||||
RIF Global Real Estate Securities Fund | 521,212 | 7,964 | ||||||
|
| |||||||
34,917 | ||||||||
|
| |||||||
Domestic Equities - 24.5% | ||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 369,675 | 13,789 | ||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 1,371,522 | 15,237 | ||||||
RIF Aggressive Equity Fund | 749,972 | 11,347 | ||||||
RIF Multi-Style Equity Fund | 1,538,771 | 26,344 | ||||||
|
| |||||||
66,717 | ||||||||
|
|
Shares | Fair Value $ | |||||||
Fixed Income - 36.9% | ||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 802,555 | 8,066 | ||||||
RIF Core Bond Fund | 8,827,379 | 92,511 | ||||||
|
| |||||||
100,577 | ||||||||
|
| |||||||
International Equities - 25.8% | ||||||||
RIC Russell Emerging Markets Fund Class Y | 683,360 | 11,843 | ||||||
RIC Russell Global Equity Fund Class Y | 2,587,771 | 26,059 | ||||||
RIF Non-U.S. Fund | 3,118,451 | 32,525 | ||||||
|
| |||||||
70,427 | ||||||||
|
| |||||||
Total Investments - 100.0% (identified cost $240,802) | 272,638 | |||||||
Other Assets and Liabilities, Net - (0.0%) | (42 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 272,596 | |||||||
|
|
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Categories | % of Net Assets | |||
Alternative Funds | 12.8 | |||
Domestic Equities | 24.5 | |||
Fixed Income | 36.9 | |||
International Equities | 25.8 | |||
|
| |||
Total Investments | 100.0 | |||
Other Assets and Liabilities, Net | (— | )* | ||
|
| |||
100.0 | ||||
|
|
* | Less than .05% of net assets. |
See accompanying notes which are an integral part of the financial statements.
Balanced Strategy Fund | 11 |
Table of Contents
Russell Investment Funds
Balanced Strategy Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 240,802 | ||
Investments, at fair value | 272,638 | |||
Receivables: | ||||
Fund shares sold | 46 | |||
From affiliates | 3 | |||
Prepaid expenses | 2 | |||
|
| |||
Total assets | 272,689 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Investments purchased | 46 | |||
Accrued fees to affiliates | 13 | |||
Other accrued expenses | 34 | |||
|
| |||
Total liabilities | 93 | |||
|
| |||
Net Assets | $ | 272,596 | ||
|
| |||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 16 | ||
Accumulated net realized gain (loss) | (8,235 | ) | ||
Unrealized appreciation (depreciation) on investments | 31,836 | |||
Shares of beneficial interest | 279 | |||
Additional paid-in capital | 248,700 | |||
|
| |||
Net Assets | $ | 272,596 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 9.77 | ||
Net assets | $ | 272,595,718 | ||
Shares outstanding ($.01 par value) | 27,902,339 |
(#) | 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.
12 | Balanced Strategy Fund |
Table of Contents
Russell Investment Funds
Balanced Strategy Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Income distribution from Underlying Funds | $ | 1,405 | ||
|
| |||
Expenses | ||||
Advisory fees | 269 | |||
Administrative fees | 67 | |||
Custodian fees | 9 | |||
Transfer agent fees | 6 | |||
Professional fees | 27 | |||
Trustees’ fees | 3 | |||
Printing fees | 23 | |||
Miscellaneous | 5 | |||
|
| |||
Expenses before reductions | 409 | |||
Expense reductions | (275 | ) | ||
|
| |||
Net expenses | 134 | |||
|
| |||
Net investment income (loss) | 1,271 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | 26 | |||
Capital gain distributions from Underlying Funds | 229 | |||
|
| |||
Net realized gain (loss) | 255 | |||
Net change in unrealized appreciation (depreciation) on investments | 5,603 | |||
|
| |||
Net realized and unrealized gain (loss) | 5,858 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 7,129 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Balanced Strategy Fund | 13 |
Table of Contents
Russell Investment Funds
Balanced Strategy Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 1,271 | $ | 5,701 | ||||
Net realized gain (loss) | 255 | (706 | ) | |||||
Net change in unrealized appreciation (depreciation) | 5,603 | 22,155 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 7,129 | 27,150 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (1,416 | ) | (5,712 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (1,416 | ) | (5,712 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | 13,803 | 30,573 | ||||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 19,516 | 52,011 | ||||||
Net Assets | ||||||||
Beginning of period | 253,080 | 201,069 | ||||||
|
|
|
| |||||
End of period | $ | 272,596 | $ | 253,080 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | 16 | $ | 161 |
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 2,059 | $ | 20,329 | 4,174 | $ | 38,630 | ||||||||||
Proceeds from reinvestment of distributions | 145 | 1,416 | 609 | 5,712 | ||||||||||||
Payments for shares redeemed | (805 | ) | (7,942 | ) | (1,496 | ) | (13,769 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | 1,399 | $ | 13,803 | 3,287 | $ | 30,573 | ||||||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
14 | Balanced Strategy Fund |
Table of Contents
(This page intentionally left blank)
Table of Contents
Russell Investment Funds
Balanced Strategy Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, Beginning of Period | $ Net Investment Income (Loss)(a)(b)(f) | $ Net Realized and Unrealized Gain (Loss) | $ Total from Investment Operations | $ Distributions from Net Investment Income | $ Distributions from Net Realized Gain | $ Return of Capital | ||||||||||||||||||||||
June 30, 2013(1) | 9.55 | .05 | .22 | .27 | (.05 | ) | — | — | ||||||||||||||||||||
December 31, 2012 | 8.66 | .23 | .89 | 1.12 | (.23 | ) | — | — | ||||||||||||||||||||
December 31, 2011 | 9.07 | .21 | (.42 | ) | (.21 | ) | (.20 | ) | — | — | ||||||||||||||||||
December 31, 2010 | 8.25 | .31 | .84 | 1.15 | (.31 | ) | — | (.02 | ) | |||||||||||||||||||
December 31, 2009 | 6.80 | .26 | 1.47 | 1.73 | (.24 | ) | (.04 | ) | — | |||||||||||||||||||
December 31, 2008 | 9.93 | .23 | (2.88 | ) | (2.65 | ) | (.21 | ) | (.27 | ) | — |
See accompanying notes which are an integral part of the financial statements.
16 | Balanced Strategy Fund |
Table of Contents
$ Total Distributions | $ Net Asset Value, End of Period | % Total Return(c)(h) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Gross(d)(e) | % Ratio of Expenses to Average Net Assets, Net(d)(e)(f) | % Ratio of Net Investment Income to Average Net Assets(b)(c)(f) | % Portfolio Turnover Rate(c) | |||||||||||||||||||||||
(.05 | ) | 9.77 | 2.84 | 272,596 | .30 | .10 | .47 | 4 | ||||||||||||||||||||||
(.23 | ) | 9.55 | 12.95 | 253,080 | .32 | .10 | 2.49 | 21 | ||||||||||||||||||||||
(.20 | ) | 8.66 | (2.40 | ) | 201,069 | .31 | .10 | 2.36 | 8 | |||||||||||||||||||||
(.33 | ) | 9.07 | 14.06 | 157,122 | .36 | .10 | 3.67 | 23 | ||||||||||||||||||||||
(.28 | ) | 8.25 | 26.23 | 105,185 | .35 | .09 | 3.62 | 8 | ||||||||||||||||||||||
(.48 | ) | 6.80 | (27.70 | ) | 60,158 | .35 | .08 | 2.75 | 16 |
See accompanying notes which are an integral part of the financial statements.
Balanced Strategy Fund | 17 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees and expenses shown in this section do not reflect any Insurance Company Separate Account of Policy Charges.
Actual Performance | Hypothetical Performance (5% return before expenses) | |||||||
Beginning Account Value | ||||||||
January 1, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | ||||||||
June 30, 2013 | $ | 1,042.10 | $ | 1,024.30 | ||||
Expenses Paid During Period* | $ | 0.51 | $ | 0.50 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.10% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
18 | Growth Strategy Fund |
Table of Contents
Russell Investment Funds
Growth Strategy Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Fair Value $ | |||||||
Investments - 100.0% | ||||||||
Russell Investment Company (“RIC”) and other Russell Investment Funds (“RIF”) Series Mutual Funds | ||||||||
Alternative Funds - 17.9% | ||||||||
RIC Russell Commodity Strategies Fund Class Y | 911,728 | 7,567 | ||||||
RIC Russell Global Infrastructure Fund Class Y | 746,117 | 8,491 | ||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 645,743 | 6,574 | ||||||
RIF Global Real Estate Securities Fund | 423,889 | 6,477 | ||||||
|
| |||||||
29,109 | ||||||||
|
| |||||||
Domestic Equities - 30.1% | ||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 241,983 | 9,026 | ||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 958,886 | 10,653 | ||||||
RIF Aggressive Equity Fund | 609,617 | 9,224 | ||||||
RIF Multi-Style Equity Fund | 1,176,710 | 20,145 | ||||||
|
| |||||||
49,048 | ||||||||
|
|
Shares | Fair Value $ | |||||||
Fixed Income - 17.7% | ||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 643,636 | 6,469 | ||||||
RIF Core Bond Fund | 2,136,509 | 22,391 | ||||||
|
| |||||||
28,860 | ||||||||
|
| |||||||
International Equities - 34.3% | ||||||||
RIC Russell Emerging Markets Fund Class Y | 532,468 | 9,228 | ||||||
RIC Russell Global Equity Fund Class Y | 2,101,737 | 21,164 | ||||||
RIF Non-U.S. Fund | 2,442,137 | 25,471 | ||||||
|
| |||||||
55,863 | ||||||||
|
| |||||||
Total Investments - 100.0% (identified cost $142,060) | 162,880 | |||||||
Other Assets and Liabilities, Net - (0.0%) | (31 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 162,849 | |||||||
|
|
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Categories | % of Net Assets | |||
Alternative Funds | 17.9 | |||
Domestic Equities | 30.1 | |||
Fixed Income | 17.7 | |||
International Equities | 34.3 | |||
|
| |||
Total Investments | 100.0 | |||
Other Assets and Liabilities, Net | (— | )* | ||
|
| |||
100.0 | ||||
|
|
* | Less than .05% of net assets. |
See accompanying notes which are an integral part of the financial statements.
Growth Strategy Fund | 19 |
Table of Contents
Russell Investment Funds
Growth Strategy Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 142,060 | ||
Investments, at fair value | 162,880 | |||
Receivables: | ||||
Fund shares sold | 171 | |||
From affiliates | 3 | |||
Prepaid expenses | 1 | |||
|
| |||
Total assets | 163,055 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Investments purchased | 171 | |||
Accrued fees to affiliates | 7 | |||
Other accrued expenses | 28 | |||
|
| |||
Total liabilities | 206 | |||
|
| |||
Net Assets | $ | 162,849 | ||
|
| |||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 14 | ||
Accumulated net realized gain (loss) | (7,097 | ) | ||
Unrealized appreciation (depreciation) on investments | 20,820 | |||
Shares of beneficial interest | 175 | |||
Additional paid-in capital | 148,937 | |||
|
| |||
Net Assets | $ | 162,849 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 9.30 | ||
Net assets | $ | 162,849,045 | ||
Shares outstanding ($.01 par value) | 17,506,955 |
(#) | 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.
20 | Growth Strategy Fund |
Table of Contents
Russell Investment Funds
Growth Strategy Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Income distribution from Underlying Funds | $ | 823 | ||
|
| |||
Expenses | ||||
Advisory fees | 158 | |||
Administrative fees | 39 | |||
Custodian fees | 9 | |||
Transfer agent fees | 3 | |||
Professional fees | 23 | |||
Trustees’ fees | 2 | |||
Printing fees | 13 | |||
Miscellaneous | 4 | |||
|
| |||
Expenses before reductions | 251 | |||
Expense reductions | (172 | ) | ||
|
| |||
Net expenses | 79 | |||
|
| |||
Net investment income (loss) | 744 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | (104 | ) | ||
Capital gain distributions from Underlying Funds | 53 | |||
|
| |||
Net realized gain (loss) | (51 | ) | ||
Net change in unrealized appreciation (depreciation) on investments | 5,462 | |||
|
| |||
Net realized and unrealized gain (loss) | 5,411 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 6,155 | ||
|
|
See accompanying notes which are an integral part of the financial statements.
Growth Strategy Fund | 21 |
Table of Contents
Russell Investment Funds
Growth Strategy Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 744 | $ | 2,694 | ||||
Net realized gain (loss) | (51 | ) | (785 | ) | ||||
Net change in unrealized appreciation (depreciation) | 5,462 | 14,971 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 6,155 | 16,880 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (800 | ) | (2,688 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (800 | ) | (2,688 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | 12,339 | 19,484 | ||||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 17,694 | 33,676 | ||||||
Net Assets | ||||||||
Beginning of period | 145,155 | 111,479 | ||||||
|
|
|
| |||||
End of period | $ | 162,849 | $ | 145,155 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets assets | $ | 14 | $ | 70 |
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 1,737 | $ | 16,253 | 3,017 | $ | 25,939 | ||||||||||
Proceeds from reinvestment of distributions | 87 | 800 | 306 | 2,689 | ||||||||||||
Payments for shares redeemed | (500 | ) | (4,714 | ) | (1,059 | ) | (9,144 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | 1,324 | $ | 12,339 | 2,264 | $ | 19,484 | ||||||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
22 | Growth Strategy Fund |
Table of Contents
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Table of Contents
Russell Investment Funds
Growth Strategy Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, Beginning of Period | $ Net Investment Income (Loss)(a)(b)(f) | $ Net Realized and Unrealized Gain (Loss) | $ Total from Investment Operations | $ Distributions from Net Investment Income | $ Distributions from Net Realized Gain | $ Return of Capital | ||||||||||||||||||||||
June 30, 2013(1) | 8.97 | .05 | .33 | .38 | (.05 | ) | — | — | ||||||||||||||||||||
December 31, 2012 | 8.01 | .18 | .95 | 1.13 | (.17 | ) | — | — | ||||||||||||||||||||
December 31, 2011 | 8.57 | .17 | (.57 | ) | (.40 | ) | (.16 | ) | — | — | ||||||||||||||||||
December 31, 2010 | 7.66 | .23 | .91 | 1.14 | (.22 | ) | — | (.01 | ) | |||||||||||||||||||
December 31, 2009 | 6.11 | .19 | 1.56 | 1.75 | (.17 | ) | (.03 | ) | — | |||||||||||||||||||
December 31, 2008 | 9.90 | .15 | (3.46 | ) | (3.31 | ) | (.14 | ) | (.34 | ) | — |
See accompanying notes which are an integral part of the financial statements.
24 | Growth Strategy Fund |
Table of Contents
$ Total Distributions | $ Net Asset Value, End of Period | % Total Return(c)(h) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Gross(d)(e) | % Ratio of Expenses to Average Net Assets, Net(d)(e)(f) | % Ratio of Net Investment Income to Average Net Assets(b)(c)(f) | % Portfolio Turnover Rate(c) | |||||||||||||||||||||||
(.05 | ) | 9.30 | 4.21 | 162,849 | .32 | .10 | .47 | 5 | ||||||||||||||||||||||
(.17 | ) | 8.97 | 14.22 | 145,155 | .34 | .10 | 2.07 | 25 | ||||||||||||||||||||||
(.16 | ) | 8.01 | (4.73 | ) | 111,479 | .34 | .10 | 2.02 | 10 | |||||||||||||||||||||
(.23 | ) | 8.57 | 15.06 | 90,592 | .39 | .10 | 2.88 | 29 | ||||||||||||||||||||||
(.20 | ) | 7.66 | 29.43 | 61,506 | .40 | .09 | 2.80 | 6 | ||||||||||||||||||||||
(.48 | ) | 6.11 | (34.73 | ) | 34,742 | .40 | .04 | 1.85 | 10 |
See accompanying notes which are an integral part of the financial statements.
Growth Strategy Fund | 25 |
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value June 30, 2013 | $ | 1,052.70 | $ | 1,024.30 | ||||
Expenses Paid During Period* | $ | 0.51 | $ | 0.50 |
* | Expenses are equal to the Fund’s annualized expense ratio of 0.10% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
26 | Equity Growth Strategy Fund |
Table of Contents
Russell Investment Funds
Equity Growth Strategy Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Fair Value $ | |||||||
Investments - 100.0% | ||||||||
Russell Investment Company (“RIC”) and other Russell Investment Funds (“RIF”) Series Mutual Funds | ||||||||
Alternative Funds - 20.0% | ||||||||
RIC Russell Commodity Strategies Fund Class Y | 246,934 | 2,050 | ||||||
RIC Russell Global Infrastructure Fund Class Y | 204,344 | 2,325 | ||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 220,221 | 2,242 | ||||||
RIF Global Real Estate Securities Fund | 146,818 | 2,243 | ||||||
|
| |||||||
8,860 | ||||||||
|
| |||||||
Domestic Equities - 36.3% | ||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 65,425 | 2,440 | ||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 379,849 | 4,220 | ||||||
RIF Aggressive Equity Fund | 194,859 | 2,948 | ||||||
RIF Multi-Style Equity Fund | 376,492 | 6,446 | ||||||
|
| |||||||
16,054 | ||||||||
|
|
Shares | Fair Value $ | |||||||
Fixed Income - 3.7% | ||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 164,470 | 1,653 | ||||||
|
| |||||||
International Equities - 40.0% | ||||||||
RIC Russell Emerging Markets Fund Class Y | 198,049 | 3,432 | ||||||
RIC Russell Global Equity Fund Class Y | 568,890 | 5,729 | ||||||
RIF Non-U.S. Fund | 821,435 | 8,568 | ||||||
|
| |||||||
17,729 | ||||||||
|
| |||||||
Total Investments - 100.0% (identified cost $36,329) | 44,296 | |||||||
Other Assets and Liabilities, Net - (0.0%) | (17 | ) | ||||||
|
| |||||||
Net Assets - 100.0% | 44,279 | |||||||
|
|
Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Categories | % of Net Assets | |||
Alternative Funds | 20.0 | |||
Domestic Equities | 36.3 | |||
Fixed Income | 3.7 | |||
International Equities | 40.0 | |||
|
| |||
Total Investments | 100.0 | |||
Other Assets and Liabilities, Net | (— | )* | ||
|
| |||
100.0 | ||||
|
|
* | Less than .05% of net assets. |
See accompanying notes which are an integral part of the financial statements.
Equity Growth Strategy Fund | 27 |
Table of Contents
Russell Investment Funds
Equity Growth Strategy Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 36,329 | ||
Investments, at fair value | 44,296 | |||
Receivables: | ||||
Fund shares sold | 22 | |||
From affiliates | 4 | |||
|
| |||
Total assets | 44,322 | |||
|
| |||
Liabilities | ||||
Payables: | ||||
Investments purchased | 22 | |||
Accrued fees to affiliates | 2 | |||
Other accrued expenses | 19 | |||
|
| |||
Total liabilities | 43 | |||
|
| |||
Net Assets | $ | 44,279 | ||
|
| |||
Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | (6 | ) | |
Accumulated net realized gain (loss) | (5,484 | ) | ||
Unrealized appreciation (depreciation) on investments | 7,967 | |||
Shares of beneficial interest | 52 | |||
Additional paid-in capital | 41,750 | |||
|
| |||
Net Assets | $ | 44,279 | ||
|
| |||
Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 8.59 | ||
Net assets | $ | 44,279,465 | ||
Shares outstanding ($.01 par value) | 5,155,172 |
(#) | 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.
28 | Equity Growth Strategy Fund |
Table of Contents
Russell Investment Funds
Equity Growth Strategy Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Income distribution from Underlying Funds | $ | 225 | ||
|
| |||
Expenses | ||||
Advisory fees | 43 | |||
Administrative fees | 11 | |||
Custodian fees | 9 | |||
Transfer agent fees | 1 | |||
Professional fees | 17 | |||
Trustees’ fees | — | * | ||
Printing fees | 3 | |||
Miscellaneous | 3 | |||
|
| |||
Expenses before reductions | 87 | |||
Expense reductions | (66 | ) | ||
|
| |||
Net expenses | 21 | |||
|
| |||
Net investment income (loss) | 204 | |||
|
| |||
Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on investments | 4 | |||
Net change in unrealized appreciation (depreciation) on investments | 1,855 | |||
|
| |||
Net realized and unrealized gain (loss) | 1,859 | |||
|
| |||
Net Increase (Decrease) in Net Assets from Operations | $ | 2,063 | ||
|
|
* | Less than $500. |
See accompanying notes which are an integral part of the financial statements.
Equity Growth Strategy Fund | 29 |
Table of Contents
Russell Investment Funds
Equity Growth Strategy Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 204 | $ | 661 | ||||
Net realized gain (loss) | 4 | 27 | ||||||
Net change in unrealized appreciation (depreciation) | 1,855 | 4,502 | ||||||
|
|
|
| |||||
Net increase (decrease) in net assets from operations | 2,063 | 5,190 | ||||||
|
|
|
| |||||
Distributions | ||||||||
From net investment income | (260 | ) | (652 | ) | ||||
|
|
|
| |||||
Net decrease in net assets from distributions | (260 | ) | (652 | ) | ||||
|
|
|
| |||||
Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | 3,336 | 3,757 | ||||||
|
|
|
| |||||
Total Net Increase (Decrease) in Net Assets | 5,139 | 8,295 | ||||||
Net Assets | ||||||||
Beginning of period | 39,140 | 30,845 | ||||||
|
|
|
| |||||
End of period | $ | 44,279 | $ | 39,140 | ||||
|
|
|
| |||||
Undistributed (overdistributed) net investment income included in net assets | $ | (6 | ) | $ | 50 |
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 573 | $ | 4,950 | 1,330 | $ | 10,387 | ||||||||||
Proceeds from reinvestment of distributions | 30 | 260 | 81 | 652 | ||||||||||||
Payments for shares redeemed | (217 | ) | (1,874 | ) | (915 | ) | (7,282 | ) | ||||||||
|
|
|
|
|
|
|
| |||||||||
Total increase (decrease) | 386 | $ | 3,336 | 496 | $ | 3,757 | ||||||||||
|
|
|
|
|
|
|
|
See accompanying notes which are an integral part of the financial statements.
30 | Equity Growth Strategy Fund |
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Table of Contents
Russell Investment Funds
Equity Growth Strategy Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, Beginning of Period | $ Net Investment Income (Loss)(a)(b)(f) | $ Net Realized and Unrealized Gain (Loss) | $ Total from Investment Operations | $ Distributions from Net Investment Income | $ Distributions from Net Realized Gain | $ Return of Capital | ||||||||||||||||||||||
June 30, 2013(1) | 8.21 | .04 | .39 | .43 | (.05 | ) | — | — | ||||||||||||||||||||
December 31, 2012 | 7.22 | .15 | .98 | 1.13 | (.14 | ) | — | — | ||||||||||||||||||||
December 31, 2011 | 7.82 | .13 | (.61 | ) | (.48 | ) | (.12 | ) | — | — | ||||||||||||||||||
December 31, 2010 | 6.98 | .14 | .91 | 1.05 | (.15 | ) | — | (.06 | ) | |||||||||||||||||||
December 31, 2009 | 5.42 | .12 | 1.56 | 1.68 | (.09 | ) | (.03 | ) | — | |||||||||||||||||||
December 31, 2008 | 9.83 | .07 | (3.92 | ) | (3.85 | ) | (.05 | ) | (.51 | ) | — |
See accompanying notes which are an integral part of the financial statements.
32 | Equity Growth Strategy Fund |
Table of Contents
$ Total Distributions | $ Net Asset Value, End of Period | % Total Return(c)(h) | $ Net Assets, End of Period (000) | % Ratio of Expenses to Average Net Assets, Gross(d)(e) | % Ratio of Expenses to Average Net Assets, Net(d)(e)(f) | % Ratio of Net Investment Income to Average Net Assets(b)(c)(f) | % Portfolio Turnover Rate(c) | |||||||||||||||||||||||
(.05 | ) | 8.59 | 5.27 | 44,279 | .41 | .10 | .47 | 6 | ||||||||||||||||||||||
(.14 | ) | 8.21 | 15.68 | 39,140 | .44 | .10 | 1.79 | 37 | ||||||||||||||||||||||
(.12 | ) | 7.22 | (6.22 | ) | 30,845 | .49 | .10 | 1.72 | 15 | |||||||||||||||||||||
(.21 | ) | 7.82 | 15.09 | 26,816 | .53 | .10 | 1.89 | 42 | ||||||||||||||||||||||
(.12 | ) | 6.98 | 31.79 | 20,057 | .59 | .08 | 2.02 | 21 | ||||||||||||||||||||||
(.56 | ) | 5.42 | (41.18 | ) | 12,613 | .58 | .04 | .87 | 24 |
See accompanying notes which are an integral part of the financial statements.
Equity Growth Strategy Fund | 33 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Highlights — June 30, 2013 (Unaudited)
(1) | For the period ended June 30, 2013 (Unaudited). |
(a) | Average daily shares outstanding were used for this calculation. |
(b) | Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the Underlying Funds in which the Fund invests. |
(c) | Periods less than one year are not annualized. |
(d) | The ratios for periods less than one year are annualized. |
(e) | The calculation includes only those expenses charged directly to the Fund and does not include expenses charged to the Underlying Funds in which the Fund invests. |
(f) | May reflect amounts waived and reimbursed by Russell Investment Management Company (“RIMCo”). |
(g) | Less than $.01 per share. |
(h) | The total return does not reflect any Insurance Company Separate Account or Policy Charges. |
See accompanying notes which are an integral part of the financial statements.
34 | Notes to Financial Highlights |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements — June 30, 2013 (Unaudited)
1. | Organization |
Russell Investment Funds (the “Investment Company” or “RIF”) is a series investment company with 10 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, as amended (“Master Trust Agreement”). The Investment Company’s Master Trust Agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.
Each of the Funds is a “fund of funds” which diversifies its assets by investing in Shares of several other Russell Investment Company (“RIC”) Funds and other of the Investment Company’s Funds (together, the “Underlying Funds”). Each Fund seeks to achieve its specific investment objective by investing in combinations of the Underlying Funds. Each Fund currently intends to invest only in the Underlying Funds. Each Fund intends its strategy of investing in combinations of equity, fixed income and alternative Underlying Funds to result in investment diversification that an investor could otherwise achieve only by holding numerous individual investments. Russell Investment Management Company (“RIMCo”), the Funds’ investment adviser, may modify the target asset allocation for any Fund including changes to the Underlying Funds in which the Funds invest from time to time based on 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. Modifications in the allocations to the Underlying Funds are typically based on strategic, long-term allocation decisions. A Fund’s actual allocation may vary from the target strategic asset allocation at any point in time (1) due to market movements, (2) by up to +/- 3% at the equity, fixed income or alternative category level based on RIMCo’s assessment of relative market valuation of the asset classes represented by each Underlying Fund, and/or (3) due to the implementation over a period of time of a change to the target strategic asset allocation including the addition of a new Underlying Fund. There may be no changes in the asset allocation or to the Underlying Funds in a given year or such changes may be made one or more times in a year. In the future, the Funds may also invest in other Underlying Funds that pursue investment strategies not pursued by the current Underlying Funds or represent asset classes which are not currently represented by the Underlying Funds.
The following table shows the Funds’ allocations to underlying alternative funds, underlying domestic equity funds, underlying fixed income funds, and underlying international equity funds.
Asset Allocation Targets as of May 1, 2013* | ||||||||||||||||
Underlying Funds | Moderate Strategy Fund | Balanced Strategy Fund | Growth Strategy Fund | Equity Growth Strategy Fund | ||||||||||||
Alternative Funds** | ||||||||||||||||
RIC Russell Commodity Strategies Fund | 0-8 | % | 0-9 | % | 1-11 | % | 1-11 | % | ||||||||
RIC Russell Global Infrastructure Fund | 0-8 | 0-8 | 0-9 | 0-9 | ||||||||||||
RIC Russell Multi-Strategy Alternative Fund | 0-8 | 0-8 | 0-9 | 0-10 | ||||||||||||
RIF Global Real Estate Securities Fund | 0-8 | 0-8 | 0-9 | 0-10 | ||||||||||||
Domestic Equity Funds | ||||||||||||||||
RIC Russell U.S. Defensive Equity Fund*** | 0-9 | 0-10 | 0-10 | 1-11 | ||||||||||||
RIC Russell U.S. Dynamic Equity Fund**** | 0-7 | 1-11 | 1-11 | 4-14 | ||||||||||||
RIF Aggressive Equity Fund | 0-7 | 0-9 | 1-11 | 2-12 | ||||||||||||
RIF Multi-Style Equity Fund | 0-9 | 2-12 | 5-15 | 7-17 | ||||||||||||
Fixed Income Funds | ||||||||||||||||
RIC Russell Global Opportunistic Credit Fund | 0-8 | 0-8 | 0-9 | 0-10 | ||||||||||||
RIC Russell Investment Grade Bond Fund | 15-25 | 0 | 0 | 0 | ||||||||||||
RIF Core Bond Fund | 31-41 | 30-40 | 10-20 | 0 | ||||||||||||
International Equity Funds | ||||||||||||||||
RIC Russell Emerging Markets Fund | 0-8 | 0-9 | 0-10 | 1-11 | ||||||||||||
RIC Russell Global Equity Fund | 2-12 | 4-14 | 8-18 | 8-18 | ||||||||||||
RIF Non-U.S. Fund | 3-13 | 9-19 | 13-23 | 17-27 |
* | Prospectus dated May 1, 2013. |
** | Alternative Funds pursue investment strategies that differ from those of traditional broad market equity or fixed income funds or that seek returns with a low correlation to global equity markets. |
*** | Formerly, Russell U.S. Quantitative Equity Fund. |
**** | Formerly, Russell U.S. Growth Fund. |
Notes to Financial Statements | 35 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
2. Significant Accounting Policies
The Funds’ financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. 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.
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 or liability, including assumptions about risk (e.g., the risk inherent in a particular valuation technique, such as a pricing model or the risks inherent in the inputs to a particular 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 or exchanges for identical assets and liabilities. |
• | Level 2 — Inputs other than quoted prices included within Level 1 that are observable, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active (such as interest rates, yield curves, implied volatilities, credit spreads) or other market corroborated inputs. |
• | Level 3 — Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair value of investments. |
The levels associated with valuing the Funds’ investments for the period ended June 30, 2013 were Level 1 for all Funds.
Investment Transactions
Investment transactions are reflected as of the trade date for financial reporting purposes. This may cause the net asset value stated in the financial statements to be different from the net asset value at which shareholders may transact. Realized gains and losses from securities transactions, if applicable, 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.
For each year, each Fund intends to qualify as a regulated investment company under sub-chapter M of the Internal Revenue Code (the “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, 2013, the Funds had 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 ended December 31, 2009 through December 31,
36 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
2011, 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.
The Funds comply with the authoritative guidance for uncertainty in income taxes which requires management to determine whether a tax position of the Funds is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. Management determined that no accruals need to be made in the financial statements due to uncertain tax positions. Management continually reviews and adjusts the Funds’ liability for income taxes based on analyses of tax laws and regulations, as well as their interpretations, and other relevant factors.
Dividends and Distributions to Shareholders
Income dividends, capital gain distributions and return of capital, 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 U.S. 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 U.S. 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 Underlying Funds’ 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.
Market, Credit and Counterparty Risk
In the normal course of business, the Underlying 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 Underlying Funds may also be exposed to counterparty risk or the risk that an institution or other entity with which the Underlying Funds have unsettled or open transactions will default. The potential loss could exceed the value of the relevant assets recorded in the Underlying Funds’ financial statements (the “Assets”). The Assets, which potentially expose the Underlying Funds to credit risk, consist principally of cash due from counterparties and investments. The extent of the Underlying Funds’ exposure to credit and counterparty risks with respect to the Assets approximates their carrying value as recorded in the Underlying Funds’ Statements of Assets and Liabilities.
Global economies and financial markets are becoming increasingly interconnected and political and economic conditions (including recent instability and volatility) and events (including natural disasters) in one country, region or financial market may adversely impact issuers in a different country, region or financial market. As a result, issuers of securities held by an Underlying Fund may experience significant declines in the value of their assets and even cease operations. Such conditions and/or events may not have the same impact on all types of securities and may expose an Underlying Fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held by an Underlying Fund. This could cause an Underlying Fund to underperform other types of investments.
Notes to Financial Statements | 37 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
3. | Investment Transactions |
Securities
During the period ended June 30, 2013, purchases and sales of the Underlying Funds (excluding short-term investments) were as follows:
Purchases | Sales | |||||||
Moderate Strategy Fund | $ | 12,225,988 | $ | 7,109,913 | ||||
Balanced Strategy Fund | 23,344,968 | 11,449,937 | ||||||
Growth Strategy Fund | 19,968,260 | 7,629,387 | ||||||
Equity Growth Strategy Fund | 5,816,763 | 2,537,600 |
4. | Related Party Transactions, Fees and Expenses |
Adviser, Administrator and Transfer and Dividend Disbursing Agent
RIMCo advises the Funds and Russell Fund Services Company (“RFSC”) is the Funds’ administrator and transfer and disbursing agent. 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 up to 0.05% are based upon the average daily net assets of the Funds and are payable monthly. The following shows the total amount of each of these fees paid by the Funds for the period ended June 30, 2013.
Advisory | Administrative | |||||||
Moderate Strategy Fund | $ | 98,056 | $ | 24,506 | ||||
Balanced Strategy Fund | 268,547 | 67,114 | ||||||
Growth Strategy Fund | 157,776 | 39,431 | ||||||
Equity Growth Strategy Fund | 42,577 | 10,641 |
RIMCo has contractually agreed, until April 30, 2014, to waive up to the full amount of its 0.20% advisory fee and then reimburse each Fund for other Fund level direct 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. 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. These waivers and reimbursements may not be terminated during the relevant period except with Board approval.
For the period ended June 30, 2013, RIMCo waived/reimbursed the following expenses:
Waiver | Reimbursement | Total | ||||||||||
Moderate Strategy Fund | $ | 98,056 | $ | 20,797 | $ | 118,853 | ||||||
Balanced Strategy Fund | 268,547 | 6,114 | 274,661 | |||||||||
Growth Strategy Fund | 157,776 | 13,797 | 171,573 | |||||||||
Equity Growth Strategy Fund | 42,577 | 23,383 | 65,960 |
RIMCo does not have the ability to recover amounts waived or reimbursed from previous periods.
RFSC serves as the transfer and 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 assist in providing these services. Total fees paid by the Funds for the period ended June 30, 2013 were as follows:
Amount | ||||
Moderate Strategy Fund | $ | 2,157 | ||
Balanced Strategy Fund | 5,908 | |||
Growth Strategy Fund | 3,471 | |||
Equity Growth Strategy Fund | 937 |
Distributor
Russell Financial Services, Inc. (the “Distributor”), a wholly-owned subsidiary of RIMCo, is the distributor for the Investment Company pursuant to a distribution agreement with the Investment Company. The Distributor receives no compensation from the Investment Company for its services.
38 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
Accrued Fees Payable to Affiliates
Accrued fees payable to affiliates for the period ended June 30, 2013 were as follows:
Moderate Strategy Fund | Balanced Strategy Fund | Growth Fund | Equity Growth Strategy Fund | |||||||||||||
Administration fees | $ | 4,092 | $ | 11,182 | $ | 6,672 | $ | 1,808 | ||||||||
Transfer agent fees | 362 | 992 | 590 | 161 | ||||||||||||
Trustee fees | 149 | 330 | 136 | 58 | ||||||||||||
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$ | 4,603 | $ | 12,504 | $ | 7,398 | $ | 2,027 | |||||||||
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Board of Trustees
The Russell Fund Complex consists of RIC, which has 39 funds, RIF, which has 10 funds and Russell Exchange Traded Funds Trust (“RET”) which has 1 fund. Each of the Trustees is a Trustee of RIC, RIF and RET. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $87,000 per year; each of its interested Trustees a retainer of $75,000 per year; and each Trustee $7,000 for each regularly scheduled meeting attended in person and $3,500 for each special meeting and the Annual 38a-1 meeting attended in person, and 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 regularly scheduled and special meetings by phone instead of receiving the full fee had the member attended in person (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 $15,000 per year and the Nominating and Governance Committee Chair is paid a fee of $12,000 per year. The chairman of the Board receives additional annual compensation of $75,000. Ms. Cavanaugh and the Trustee Emeritus are not compensated by the Russell Fund Complex for service as a Trustee.
Transactions with Affiliated Companies (amounts in thousands)
An affiliated company is a company in which a Fund has ownership of at least 5% of the voting securities or which the Fund controls, is controlled by or is under common control with. Transactions during the period ended June 30, 2013 with Underlying Funds which are, or were, an affiliated company are as follows:
Fair Value | Purchases Cost | Sales Cost | Realized Gain (Loss) | Income Distributions | Capital Gains Distributions | |||||||||||||||||||
Moderate Strategy Fund | ||||||||||||||||||||||||
RIC Russell Commodity Strategies Fund Class Y | $ | 2,193 | $ | 539 | $ | 892 | $ | (54 | ) | $ | — | $ | — | |||||||||||
RIC Russell Global Infrastructure Fund Class Y | 3,741 | 1,010 | 190 | 1 | 9 | — | ||||||||||||||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 2,987 | 286 | 132 | (1 | ) | — | — | |||||||||||||||||
RIF Global Real Estate Securities Fund | 2,999 | 431 | 276 | 4 | 54 | — | ||||||||||||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 3,967 | 115 | 378 | 37 | 10 | — | ||||||||||||||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 1,986 | 118 | 222 | 15 | 2 | — | ||||||||||||||||||
RIF Aggressive Equity Fund | 1,990 | 129 | 317 | 40 | 1 | — | ||||||||||||||||||
RIF Multi-Style Equity Fund | 5,706 | 289 | 639 | 52 | 37 | — | ||||||||||||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 1,991 | 250 | 53 | — | 37 | — | ||||||||||||||||||
RIC Russell Investment Grade Bond Fund Class Y | 18,917 | 2,323 | 1,589 | (39 | ) | 98 | — | |||||||||||||||||
RIF Core Bond Fund | 35,841 | 4,257 | 1,126 | (32 | ) | 179 | 88 | |||||||||||||||||
RIC Russell Emerging Markets Fund Class Y | 3,515 | 1,539 | 103 | (4 | ) | — | — | |||||||||||||||||
RIC Russell Global Equity Fund Class Y | 7,444 | 373 | 723 | 59 | — | — | ||||||||||||||||||
RIF Non-U.S. Fund | 6,213 | 567 | 368 | 24 | 74 | — | ||||||||||||||||||
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$ | 99,490 | $ | 12,226 | $ | 7,008 | $ | 102 | $ | 501 | $ | 88 | |||||||||||||
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Notes to Financial Statements | 39 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
Fair Value | Purchases Cost | Sales Cost | Realized Gain (Loss) | Income Distributions | Capital Gains Distributions | |||||||||||||||||||
Balanced Strategy Fund | ||||||||||||||||||||||||
RIC Russell Commodity Strategies Fund Class Y | $ | 7,909 | $ | 1,815 | $ | 3,080 | $ | (213 | ) | $ | — | $ | — | |||||||||||
RIC Russell Global Infrastructure Fund Class Y | 10,813 | 3,196 | 187 | 8 | 23 | — | ||||||||||||||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 8,231 | 722 | 82 | — | — | — | ||||||||||||||||||
RIF Global Real Estate Securities Fund | 7,964 | 689 | 284 | 12 | 147 | — | ||||||||||||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 13,789 | 110 | 707 | 64 | 36 | — | ||||||||||||||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 15,237 | 528 | 818 | 43 | 18 | — | ||||||||||||||||||
RIF Aggressive Equity Fund | 11,347 | 401 | 840 | 80 | 6 | — | ||||||||||||||||||
RIF Multi-Style Equity Fund | 26,344 | 563 | 1,311 | 111 | 169 | — | ||||||||||||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 8,066 | 912 | 65 | — | 150 | — | ||||||||||||||||||
RIF Core Bond Fund | 92,511 | 9,676 | 2,561 | (37 | ) | 464 | 229 | |||||||||||||||||
RIC Russell Emerging Markets Fund Class Y | 11,843 | 4,061 | 57 | (2 | ) | — | — | |||||||||||||||||
RIC Russell Global Equity Fund Class Y | 26,059 | 573 | 1,055 | (8 | ) | — | — | |||||||||||||||||
RIF Non-U.S. Fund | 32,525 | 2,099 | 377 | (32 | ) | 392 | — | |||||||||||||||||
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$ | 272,638 | $ | 25,345 | $ | 11,424 | $ | 26 | $ | 1,405 | $ | 229 | |||||||||||||
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Growth Strategy Fund | ||||||||||||||||||||||||
RIC Russell Commodity Strategies Fund Class Y | $ | 7,567 | $ | 2,109 | $ | 2,291 | $ | (168 | ) | $ | — | $ | — | |||||||||||
RIC Russell Global Infrastructure Fund Class Y | 8,491 | 2,622 | 93 | 1 | 18 | — | ||||||||||||||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 6,574 | 845 | 77 | (1 | ) | — | — | |||||||||||||||||
RIF Global Real Estate Securities Fund | 6,477 | 808 | 143 | 4 | 114 | — | ||||||||||||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 9,026 | 247 | 242 | 9 | 23 | — | ||||||||||||||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 10,653 | 680 | 519 | 25 | 13 | — | ||||||||||||||||||
RIF Aggressive Equity Fund | 9,224 | 665 | 777 | 46 | 5 | — | ||||||||||||||||||
RIF Multi-Style Equity Fund | 20,145 | 886 | 744 | 35 | 127 | — | ||||||||||||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 6,469 | 1,007 | 37 | — | 118 | — | ||||||||||||||||||
RIF Core Bond Fund | 22,391 | 3,271 | 1,856 | (21 | ) | 110 | 53 | |||||||||||||||||
RIC Russell Emerging Markets Fund Class Y | 9,228 | 3,471 | 19 | (1 | ) | — | — | |||||||||||||||||
RIC Russell Global Equity Fund Class Y | 21,164 | 1,063 | 819 | (18 | ) | — | — | |||||||||||||||||
RIF Non-U.S. Fund | 25,471 | 2,294 | 116 | (15 | ) | 295 | — | |||||||||||||||||
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$ | 162,880 | $ | 19,968 | $ | 7,733 | $ | (104 | ) | $ | 823 | $ | 53 | ||||||||||||
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Equity Growth Strategy Fund | ||||||||||||||||||||||||
RIC Russell Commodity Strategies Fund Class Y | $ | 2,050 | $ | 612 | $ | 679 | $ | (49 | ) | $ | — | $ | — | |||||||||||
RIC Russell Global Infrastructure Fund Class Y | 2,325 | 800 | 80 | 2 | 5 | — | ||||||||||||||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 2,242 | 354 | 66 | (1 | ) | — | — | |||||||||||||||||
RIF Global Real Estate Securities Fund | 2,243 | 418 | 112 | 4 | 38 | — | ||||||||||||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 2,440 | 82 | 97 | 4 | 6 | — | ||||||||||||||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 4,220 | 218 | 147 | 7 | 5 | — | ||||||||||||||||||
RIF Aggressive Equity Fund | 2,948 | 174 | 191 | 14 | 2 | — | ||||||||||||||||||
RIF Multi-Style Equity Fund | 6,446 | 251 | 212 | 10 | 40 | — | ||||||||||||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 1,653 | 319 | 527 | 18 | 30 | — | ||||||||||||||||||
RIC Russell Emerging Markets Fund Class Y | 3,432 | 1,243 | 59 | (1 | ) | — | — | |||||||||||||||||
RIC Russell Global Equity Fund Class Y | 5,729 | 279 | 152 | 3 | — | — | ||||||||||||||||||
RIF Non-U.S. Fund | 8,568 | 1,067 | 212 | (7 | ) | 99 | — | |||||||||||||||||
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$ | 44,296 | $ | 5,817 | $ | 2,534 | $ | 4 | $ | 225 | $ | — | |||||||||||||
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40 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
5. | Federal Income Taxes |
At December 31, 2012, 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 carryfowards and expiration dates are as follows:
No Expiration | ||||||||||||||||||||
Funds | 12/31/2017 | 12/31/2018 | Short-Term | Long-Term | Totals | |||||||||||||||
Balanced Strategy | $ | — | $ | 293,385 | $ | — | $ | — | $ | 293,385 | ||||||||||
Growth Strategy | — | 1,435,649 | 260,313 | 50,547 | 1,746,509 | |||||||||||||||
Equity Growth Strategy | 215,835 | 720,380 | — | 145,785 | 1,082,000 |
Under the Regulated Investment Company Modernization Act of 2010, the Funds will be permitted to carry forward capital losses incurred in taxable years beginning after December 22, 2010 for an unlimited period. However, any losses incurred during those future taxable years will be required to be utilized prior to the losses incurred in pre-enactment taxable years. As a result of this ordering rule, pre-enactment capital loss carryforwards may be more likely to expire unused. Additionally, post-enactment capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
At June 30, 2013, 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 | $ | 94,052,646 | $ | 249,112,239 | $ | 147,458,932 | $ | 40,594,942 | ||||||||
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Unrealized Appreciation | 5,842,452 | 24,843,985 | 16,774,420 | 3,867,329 | ||||||||||||
Unrealized Depreciation | (404,976 | ) | (1,317,843 | ) | (1,353,740 | ) | (166,440 | ) | ||||||||
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Net Unrealized Appreciation (Depreciation) | $ | 5,437,476 | $ | 23,526,142 | $ | 15,420,680 | $ | 3,700,889 | ||||||||
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As permitted by tax regulations, the Funds intend to defer a net realized capital loss incurred from November 1, 2012 to December 31, 2012, and treat it as arising in the fiscal year 2013. As of December 31, 2012, realized capital losses were as follows:
Equity Growth Strategy Fund | $ | 154,679 |
6. | Interfund Lending Program |
The Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). 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. A 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 fund. The 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 fund could result in reduced returns or additional borrowing costs. For the period ended June 30, 2013, the Funds did not borrow or loan through the interfund lending program.
7. | Record Ownership |
As of June 30, 2013, the following table includes shareholders of record with greater than 10% of the total outstanding shares of the Funds:
# of Shareholders | % | |||||||
Moderate Strategy Fund | 1 | 94.6 | ||||||
Balanced Strategy Fund | 1 | 92.5 | ||||||
Growth Strategy Fund | 1 | 89.9 | ||||||
Equity Growth Strategy Fund | 2 | 97.5 |
8. | Subsequent Events |
Management has evaluated the events and /or transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustments of the financial statements or additional disclosures.
Notes to Financial Statements | 41 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts — (Unaudited)
Approval of Investment Advisory Agreement
The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the “RIMCo Agreement”) and the portfolio management contract with each Money Manager of the funds (collectively, the “portfolio management contracts”) in which the Funds invest (the “Underlying Funds”) at a meeting held in person on April 18, 2013 (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 (“Independent Counsel”), also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds and the Underlying Funds; and (2) information (the “Third-Party Information”) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and the Underlying Funds and their respective operating expenses over various periods of time with other peer funds 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 Fund’s “Performance Universe” in the case of performance comparisons and the Fund’s “Expense Universe” in the case of operating expense comparisons. In preparing the Third-Party Information for the Agreement Evaluation Meeting, the third-party service provider initially changed its methodology for selection of the Expense Universe Comparable Funds from that used in prior years to exclude peer funds with distribution or shareholder servicing fees even though their investment objectives were generally comparable to the Funds’ objectives. In RIMCo’s judgment, this change in methodology arbitrarily resulted in a significant reduction in the number of funds in the Expense Universe and made the operating expense comparisons in the Third-Party Information less meaningful. After discussions with the Board’s independent Chair, RIMCo requested, and the third-party information provider furnished supplementally, the Third-Party Information reflecting the methodologies for selection of the Expense Universe Comparable Funds by the third-party service provider used in 2012. The Board focused on the supplemental Third-Party Information in conducting its evaluations. In general, the operating expense comparisons between the Funds and their Comparable Funds in the supplemental Third-Party Information were more favorable. 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 and other information received by the Board, including the Independent Trustees, in connection with its evaluations of the RIMCo Agreement and portfolio management contracts is collectively called the “Agreement Evaluation Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and the other RIMCo-managed funds for which the Board has supervisory responsibility (“Other Russell Funds”) 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 the Underlying Funds (“Fund Counsel”) 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 Independent Counsel.
On April 9, 2013, the Independent Trustees in preparation for the Agreement Evaluation Meeting met by conference telephone call to review the Agreement Evaluation Information received to that date in a private session with 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. On April 17, 2013, the Independent Trustees met in person in a private session with Independent Counsel to review additional Agreement Evaluation Information received to that date. 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 RIMCo, Fund management, Independent Counsel and Fund Counsel. Presentations made by RIMCo at the Agreement Evaluation Meeting as part of this review encompassed the Funds and all Other Russell Funds. Information received by the Board, including the Independent Trustees, at the Agreement Evaluation Meeting is included in the Agreement Evaluation Information. Prior to voting at the Agreement Evaluation Meeting, the non-management members of the Board, including the Independent Trustees, met in executive session with Fund Counsel and 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 each of the Underlying Funds employs a manager-of-managers method of investment and RIMCo’s advice 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.
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
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 the investment of each Underlying Fund’s cash and 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, Underlying Fund 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 with respect to the Underlying Funds is to construct and manage diversified portfolios in a risk-aware manner. Each Money Manager for an Underlying Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Underlying Fund assigned to it by RIMCo (each, a “segment”) in accordance with the Underlying Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in an Underlying Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Underlying Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for an Underlying Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of 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, RIMCo’s selection of Money Managers is made not only on the basis of performance considerations but also on the basis of anticipated compatibility with other Money Managers in the same Underlying Fund. 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 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 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 or transfer agent fees and any fees received for management of securities lending cash collateral, soft dollar arrangements and commissions in connection with portfolio securities transactions; |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
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 discussed with senior representatives of RIMCo the impact on the Funds’ operations of changes in RIMCo’s senior management and other personnel providing investment management and other services to the Funds during the past year. The Board was not advised of any expected diminution in the nature, scope or quality of the investment advisory or other services provided to the Funds or the Underlying Funds from such changes. The Board also discussed the impact of organizational changes on the compliance programs of the Funds, the Underlying Funds and RIMCo with the Funds’ Chief Compliance Officer (the “CCO”) and received assurances from the CCO that such changes have not resulted in any diminution in the scope and quality of the compliance programs of the Funds or the Underlying Funds.
As noted above, RIMCo, in addition to managing the investment of each Underlying Fund’s cash, may directly manage a portion of certain Underlying Funds (the “Participating Underlying Funds”) pursuant to the RIMCo Agreement, the actual allocation being determined from time to time by the Participating Underlying Funds’ RIMCo portfolio managers. During 2012, RIMCo implemented a strategy of managing a portion of the assets of the Participating Underlying Funds to modify such Funds’ overall portfolio characteristics by investing in securities or other instruments that RIMCo believes will achieve the desired risk/return profiles for such Participating Underlying Funds. RIMCo monitors and assesses Participating Underlying Fund characteristics, including risk, using a variety of measurements, such as tracking error, and may seek to manage Participating Underlying Fund characteristics consistent with the Funds’ investment objectives and strategies. Participating Underlying Fund characteristics may be managed with the goal to increase or decrease exposures (such as volatility, momentum, value, growth, capitalization size, industry or sector) or to offset undesired relative over or underweights in order to seek to achieve the desired risk/return profile for the Participating Underlying Fund. RIMCo may use an index replication or sampling strategy by selecting an index which represents the desired exposure, or may utilize quantitative or qualitative analysis or quantitative models designed to assess Participating Underlying Fund characteristics and identify a portfolio which provides the desired exposure. Based on this, for the portion of a Participating Underlying Fund’s assets directly managed by RIMCo, RIMCo may purchase common stocks, exchange-traded funds, exchange-traded notes, short-term investments or derivatives, including futures, forwards, options and/or swaps, in order to seek to achieve the desired risk/return profile for the Participating Underlying Fund. RIMCo’s direct management of assets for these purposes is hereinafter referred to as the “Direct Management Services.” RIMCo also may reallocate Underlying Fund assets among Money Managers, increase Underlying Fund cash reserves, determine to not be fully invested, or adjust exposures through the cash equitization process. RIMCo’s Direct Management Services are not intended, and are not expected, to be a primary driver of Participating Underlying Funds’ investment results, although the services may have a positive or negative impact on investment results, but rather are intended to enhance incrementally the ability of Funds to carry out their investment programs. The Board considered that during the period, and to the extent that RIMCo employs its Direct Management Services in respect of Participating Underlying Funds, RIMCo is not required to pay investment advisory fees to a Money Manager with respect to Participating Underlying Fund assets that are directly managed and that the profits derived by RIMCo generally and from the Participating Underlying Funds consequently may be increased incrementally. The Board, however, also considered the potential benefits of the Direct Management Services to Participating Underlying Funds and the Funds; the limited amount of assets that are managed directly by RIMCo pursuant to the Direct Management Services; and the fact that the aggregate investment advisory fees paid by the Participating Underlying Funds are not increased as a result of RIMCo’s direct management of Participating Underlying Fund assets as part of the Direct Management Services or otherwise.
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. The Board noted RIMCo’s further past advice that 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.
The Third-Party Information included, among other things, comparisons of the Funds’ Advisory Fees with the advisory fees of their Comparable Funds 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 Third-Party Information, among other things, showed that each Fund had an Advisory Fee which, compared with its Comparable Funds’ advisory fees on an actual basis, was ranked in the first quintile of its Expense Universe for that expense component. In these rankings, the first quintile represents funds with the lowest investment advisory fees among funds in the Expense Universe and the fifth quintile represents funds with the highest investment advisory fees among the Expense Universe funds. The comparisons were based upon the latest fiscal years for the Expense Universe funds.
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
In discussing the Advisory Fees for the Underlying Funds generally, RIMCo noted, among other things, that its Advisory Fees for the 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. RIMCo expressed the view that Advisory Fees should be considered in the context of a Fund’s or Underlying Fund’s total expense ratio to obtain a complete picture. The Board, however, considered each Fund’s and Underlying Fund’s Advisory Fee on both a standalone basis and in the context of the Fund’s or Underlying Fund’s total expense ratio.
The Board considered for each Fund and Underlying Fund whether economies of scale have been realized and whether the Advisory Fee for such Fund or Underlying Fund appropriately reflects or should be revised to reflect any such economies. The Funds are distributed exclusively through variable annuity and variable life insurance contracts issued by insurance companies. Currently, the Funds are made available to holders of such insurance policies by two insurance companies. At the Contract Renewal Meeting, RIMCo advised the Board that it does not expect that additional insurance companies will make the Funds available to their variable annuity or variable life insurance policyholders in the near or long term because of a declining interest by the insurance companies generally in variable insurance trusts, such as the Funds, as investment vehicles supporting their products. Notwithstanding this expectation, RIMCo expressed its belief that the Funds will remain viable in light of their cash inflows from current participating insurance companies. The Board 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 the negative implications for significant future Fund asset growth of RIMCo’s expectation that no additional insurance companies will make the Funds available to their variable annuity and variable life insurance policyholders and other factors associated with the manager-of-managers structure employed by the Underlying Funds, including the variability of Money Manager investment advisory fees.
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 the Underlying Funds are lower, and, in some cases, may be substantially lower, than the rates paid by the Funds and the Underlying Funds. The Trustees considered the differences in the nature and scope of services RIMCo provides to institutional clients and the Funds and the Underlying Funds. RIMCo explained, among other things, that institutional clients have fewer compliance, administrative and other needs than the Funds and the Underlying Funds. RIMCo also noted that since the Funds and the Underlying 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 the 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 the Underlying Funds and all of 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 other clients that comparisons are not probative and should not be given significant weight.
With respect to the Funds’ total expenses, the Third-Party Information showed that the total expenses for the Balanced Strategy Fund, Growth Strategy Fund and Equity Growth Strategy Fund ranked in the fourth quintile of its Expense Universe. The total expenses for the Moderate Strategy Fund ranked in the second quintile of its Expense Universe. In these rankings, the first quintile represents funds with the lowest total expenses among funds in the Expense Universe and the fifth quintile represents funds with the highest total expenses among the Expense Universe funds. The Board considered RIMCo’s explanation of the rankings and its advice that the Balanced Strategy Fund was less than 5 basis points from the third quintile of its Expense Universe. The Board also considered RIMCo’s explanation that administration fees and custodian fees contributed to the differential to the third quintile for the Growth Strategy Fund and the Equity Growth Strategy Fund. With respect to the Equity Growth Strategy Fund, the Board considered RIMCo’s explanation that the Fund has a higher equity allocation than its Comparable Funds and that Comparable Funds in the first quintile invested predominantly in passive (i.e., index) products with lower expense ratios than actively managed products, such as the Underlying Funds. Equity funds generally have higher expense ratios than fixed income funds. The higher equity allocation of the Equity Growth Strategy Fund, and resulting higher indirect expenses of the Underlying Fund investments, made meaningful comparisons with its Comparable Funds difficult. RIMCo advised the Board that its internal analysis based upon a more appropriate peer groups of its own selection showed improved comparative results.
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 and Underlying Fund, found, after giving effect to any applicable waivers and/or reimbursements and considering any 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
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
Fund either was comparable to those of its Comparable Funds or RIMCo had provided an explanation satisfactory to the Board as to why the relative expense ratio was not 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.
The Board concluded that, under the circumstances and based upon RIMCo’s performance review of each Fund and Underlying Fund, the performance of each of the Funds would be consistent with continuation of the RIMCo Agreement. The Board, in assessing the performance of Funds and Underlying Funds with at least three years of performance history, focused upon performance for the 3-year period ended December 31, 2012 as most relevant but also considered the Funds’ and Underlying Funds’ performance for the 1- year and, where applicable, 5-year periods ended such date. In reviewing the performance of the Funds and the Underlying Funds generally, the Board, in addition to the factors described above, took into consideration the various steps taken by RIMCo during 2012 to enhance the performance of certain Underlying Funds, including a large number of changes in Money Managers and RIMCo’s implementation of its Direct Management Services which are not yet reflected in Participating Underlying Fund and Fund investment results.
With respect to the Growth Strategy Fund, the Third-Party Information showed that the Fund’s performance was ranked in the second quintile of its Performance Universe for the 1-year period ended December 31, 2012, but was ranked in the fourth quintile of its Performance Universe for each of the 3- and 5-year periods ended such date.
With respect to the Equity Growth Strategy Fund, the Third-Party Information showed that the performance of the Fund was ranked in the fourth quintile of its Performance Universe for the 1-, 3-, and 5-year periods ended December 31, 2012.
In explaining the periods of underperformance of the Funds relative to the Comparable Funds, RIMCo noted, among other things, that the performance of the Growth Strategy Fund and the Equity Growth Strategy Fund relative to each Fund’s respective Performance Universe was affected negatively by its notable exposure to listed infrastructure securities and commodities, both of which have lagged in the strong equity markets. This exposure, according to RIMCo, is intended to provide diversification benefits and to enhance risk-adjusted returns compared to Comparable Funds, which generally have higher concentrations in equities as growth assets and RIMCo believes that the exposures remain appropriate because of the diversification benefits and potential for enhancing the Funds’ overall risk-adjusted returns.
In evaluating performance, the Board considered each Fund’s and Underlying 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 Underlying Funds in a risk-aware manner and the extraordinary capital market conditions during 2008 and early 2009 that continue to impact relative performance for the 3- and 5-year periods ended December 31, 2012. The Board also considered the large number of Underlying Fund Money Manager changes that were made in 2012 and that the performance of Money Managers continues to impact Fund and Underlying Fund performances for periods prior and subsequent to their termination, and that any incremental positive or negative impact of the Direct Management Services to Underlying Funds was not yet reflected in the investment results of the Underlying Funds or the Funds.
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 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’ CCO regarding her assessments of Money Manager compliance programs and any compliance issues. RIMCo did not identify any benefits received by Money Managers or their affiliates as a result of their relationships with the Underlying Funds other than benefits from their soft dollar arrangements. The Agreement Evaluation Information described, and at the Agreement Evaluation Meeting the Funds’ CCO discussed, oversight of Money Manager soft dollar arrangements. The Agreement Evaluation Information expressed RIMCo’s belief that, based upon certifications from Money Managers and pre-hire and ongoing reviews of Money Manager soft dollar arrangements, policies and procedures, the Money Managers’ soft dollar arrangements, policies and procedures are consistent with applicable legal standards and with disclosures made by Money Managers in their investment adviser registration statements filed with the Securities and Exchange Commission and by the Underlying Funds in their registration
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
statements. The Board was advised that, in the case of Money Managers using soft dollar arrangements, the CCO monitors, among other things, the commissions paid by the Underlying Funds and percentage of Underlying Fund transactions effected pursuant to the soft-dollar arrangements, as well as the products or services purchased by the Money Managers with soft dollars generated by Underlying Fund portfolio transactions. The CCO and RIMCo do not obtain, and the Agreement Evaluation Information therefore did not include, information regarding the value of soft dollar benefits derived by Money Managers from Underlying Fund portfolio transactions. At the Agreement Evaluation Meeting, RIMCo noted that it planned to recommend termination of certain Money Managers to the Board at the May 2013 meeting, with each recommended termination to become effective on a date following the Agreement Evaluation Meeting. Notwithstanding these planned terminations, RIMCo recommended that each Money Manager be retained at its current fee rate. In doing so, RIMCo, as it has in the past, 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 of the relevance of Money Manager profitability in light of RIMCo’s belief that such fees are reasonable; 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.
Subsequently, the Board of Trustees received a proposal from RIMCo at a meeting held on May 21, 2013, to effect Money Manager changes for the Russell Investment Company Russell Global Equity and Russell Multi-Strategy Alternative Funds . In the case of each 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; information as to any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Fund’s underwriter; the CCO’s evaluation of the Money Manager’s compliance program, policies and procedures, and certification that they were consistent with applicable legal standards; 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 the Agreement Evaluation Meeting as to the reasonableness of the aggregate investment advisory fees paid by the Funds, and the fact that the aggregate investment advisory fees paid by the Funds would not increase as a result of the implementation of the proposed Money Manager changes because the Money Managers’ investment advisory fees are paid by RIMCo.
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Shareholder Requests for Additional Information — June 30, 2013 (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 Underlying Funds may be invested. RIMCo has established a proxy voting 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 and information regarding how the Underlying Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2012 are 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’ prospectuses and annual and semi-annual reports. Please contact your Insurance Company for further details.
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers — June 30, 2013 (Unaudited)
The following tables provide information for each officer and trustee of the Russell Fund Complex. The Russell Fund Complex consists of Russell Investment Company (“RIC”), which has 39 funds, Russell Investment Funds (“RIF”), which has 10 funds, and Russell Exchange Traded Funds Trust (“RET”), which has 1 fund. Each of the trustees is a trustee of RIC, RIF and RET. The first table provides information for the interested trustees. The second table provides information for the independent trustees. The third table provides information for the trustee emeritus. The fourth table provides information for the officers. Furthermore, each Trustee possesses the following specific attributes: Mr. Alston has business, financial and investment experience as a senior executive of an international real estate firm and is trained as a lawyer; Ms. Blake has had experience as a certified public accountant and has had experience as a member of boards of directors/trustees of other investment companies; Ms. Burgermeister has had experience as a certified public accountant and has had experience as a member of boards of directors/trustees of other investment companies; Mr. Connealy has had experience with other investment companies and their investment advisers first as a partner in the investment management practice of PricewaterhouseCoopers LLP and, subsequently, as the senior financial executive of two other investment organizations sponsoring and managing investment companies; Mr. Fine has had financial, business and investment experience as a senior executive of a non-profit organization and previously, as a senior executive of a large regional financial services organization with management responsibility for such activities as investments, asset management and securities brokerage; Mr. Tennison has had business, financial and investment experience as a senior executive of a corporation with international activities and was trained as an accountant; Mr. Thompson has had experience in business, governance, investment and financial reporting matters as a senior executive of an organization sponsoring and managing other investment companies, and, subsequently, has served as a board member of other investment companies, and has been determined by the Board to be an audit committee financial expert; and Ms. Weston has had experience as a tax and corporate lawyer, has served as general counsel of several corporations and has served as a director of another investment company. Ms. Cavanaugh has had experience with other financial services companies, including companies engaged in the sponsorship, management and distribution of investment companies. As a senior officer of the Funds, the Adviser and various affiliates of the Adviser providing services to the Funds, Ms. Cavanaugh is in a position to provide the Board with such parties’ perspectives on the management, operations and distribution of the Funds.
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 During the Past 5 Years | |||||||
INTERESTED TRUSTEES | ||||||||||||
# Sandra Cavanaugh, Born May 10, 1954
1301 Second Avenue, Seattle, WA 98101 | President and Chief Executive Officer since 2010
Trustee since 2010 | Until successor is chosen and qualified by Trustees
Appointed until successor is duly elected and qualified | • President and CEO RIC, RIF and RET • Chairman of the Board, President and CEO, Russell Financial Services, Inc. • Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”) • Director, RIMCo • Chairman of the Board and President, Russell Insurance Agency, Inc. (“RIA”) (insurance agency) • 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. (investment company) | 50 | None | |||||||
##Daniel P.Connealy, Born June 6, 1946
1301 Second Avenue, Seattle, WA 98101 | Trustee since 2003 | Appointed until successor is duly elected and qualified | • June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc. (investment company) • Chairman of the Audit Committee, RIF and RIF from 2005 to 2011. | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
# | Ms. Cavanaugh is also an officer and/or director of one or more affiliates of RIC, RIF and RET and is therefore classified as an Interested Trustee. |
## | Mr. Connealy is an officer of a broker-dealer that distributes shares of the Funds and is therefore classified as an Interested Trustee. |
Disclosure of Information about Fund Trustees and Officers | 49 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013 (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 During the Past 5 Years | |||||||
INTERESTED TRUSTEES (continued) | ||||||||||||
###Jonathan Fine, Born July 8, 1954
1301 Second Avenue, Seattle, WA 98101 | Trustee since 2004 | Appointed until successor is duly elected and qualified | • President and Chief Executive Officer, United Way of King County, WA (charitable organization) | 50 | None | |||||||
INDEPENDENT TRUSTEES | ||||||||||||
Thaddas L. Alston, Born April 7, 1945
1301 Second Avenue, Seattle, WA 98101 | 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) | 50 | None | |||||||
Kristianne Blake, Born January 22, 1954
1301 Second Avenue, Seattle, WA 98101 | Trustee since 2000 Chairman since 2005 | Appointed until successor is duly elected and qualified Annual | • Director and Chairman of the Audit Committee, Avista Corp. (electric utilites) • Trustee and Chairman of the Operations Committee, Principal Investors Funds and Principal Variable Contracts Funds (investment company) • Regent, University of Washington • President, Kristianne Gates Blake, P.S. (accounting services) | 50 | • Director, Avista Corp (electric utilities); • Trustee, Principal Investors Funds (investment company); • Trustee, Principal Variable Contracts Funds (investment company) | |||||||
Cheryl Burgermeister Born June 26, 1951
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2012 | Appointed until successor is duly elected and qualified. | • Retired • Trustee and Chairperson of Audit Committee, Select Sector SPDR Funds (investment company) • Trustee and Finance Committee Member/Chairman, Portland Community College (charitable organization) | 50 | • Trustee and Chairperson of Audit Committee, Select Sector SPDR Funds (investment company) | |||||||
Raymond P. Tennison, Jr., Born December 21, 1955
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2000
Chairman of the Nominating and Governance Committee since 2007 | Appointed until successor is duly elected and qualified. | • Vice Chairman of the Board, Simpson Investment Company (paper and forest products) • Until November 2010, President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
### | Mr. Fine is classified as an Interested Trustee due to Ms. Cavanaugh’s service on the Board of Directors of the United Way of King County (“UWKC”) and in light of charitable contributions made by Russell Investments to UWKC. |
50 | Disclosure of Information about Fund Trustees and Officers |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013 (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 During the Past 5 Years | |||||||
INDEPENDENT TRUSTEES (continued) | ||||||||||||
Jack R. Thompson, Born March 21, 1949
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2005
Chairman of the Audit Committee, since 2012 | 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 (investment company) • September 2007 to September 2010 Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation (health products company) | 50 | • Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation until September 2010 (health products company) • Director, Sparx Asia Funds until 2009 (investment company) | |||||||
Julie W. Weston, Born October 2, 1943
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2002 | Appointed until successor is duly elected and qualified | • Retired • Chairperson of the Investment Committee until December 2009 | 50 | None | |||||||
TRUSTEE EMERITUS | ||||||||||||
** George F. Russell, Jr.,
1301 Second Avenue, 18th Floor Seattle, WA 98101 | 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) | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
** | Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF. |
Disclosure of Information about Fund Trustees and Officers | 51 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013 (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
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Chief Compliance Officer since 2005 | Until removed by Independent Trustees | • Chief Compliance Officer, RIC, RIF and RET • Chief Compliance Officer, RFSC • 2005-2011 Chief Compliance Officer, RIMCo | |||
Sandra Cavanaugh, Born May 10, 1954
1301 Second Avenue, 18th Floor Seattle, WA 98101 | President and Chief Executive Officer since 2010 | Until successor is chosen and qualified by Trustees | • CEO, U.S. Private Client Services, Russell Investments • President and CEO, RIC, RIF and RET • Chairman of the Board, Co-President and CEO, RFS • Chairman of the Board, President and CEO, RFSC • Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”)) • 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. (investment company) | |||
Mark E. Swanson, Born November 26, 1963
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Treasurer and Chief Accounting Officer since 1998 | Until successor is chosen and qualified by Trustees | • Treasurer, Chief Accounting Officer and CFO, RIC, RIF and RET • Head of North America Operations, Russell Investments • May 2009 to October 2011, Global Head of Fund Operations, Russell Investments • 1999 to May 2009, Director, Funds Administration, RIMCo, RFSC, Russell Trust Company (“RTC”) and RFS | |||
Peter Gunning, Born February 22, 1967
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Chief Investment Officer since 2008 | Until removed by Trustees | • Global Chief Investment Officer, Russell Investments • Chief Investment Officer, RIC and RIF • Director, FRC • Chairman of the Board, President and CEO, RIMCo • 1996 to 2008 Chief Investment Officer, Russell, Asia Pacific | |||
Mary Beth Rhoden Albaneze, Born April 25, 1969
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Secretary since 2010 | Until successor is chosen and qualified by Trustees | • Associate General Counsel, Russell Investments • Secretary, RIMCo, RFSC and RFS • Secretary and Chief Legal Officer, RIC, RIF and RET • 1999 to 2010 Assistant Secretary, RIC and RIF |
52 | Disclosure of Information about Fund Trustees and Officers |
Table of Contents
LifePoints® Funds Variable Target Portfolio Series
1301 Second Avenue, Seattle, Washington 98101
(800) 787-7354
Interested Trustee
Sandra Cavanaugh
Daniel P. Connealy
Jonathan Fine
Independent Trustees
Thaddas L. Alston
Kristianne Blake
Cheryl Burgermeister
Raymond P. Tennison, Jr.
Jack R. Thompson
Julie W. Weston
Trustee Emeritus
George F. Russell, Jr.
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 Albaneze, Secretary
Adviser
Russell Investment Management Company
1301 Second Avenue
Seattle, WA 98101
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.
Administrator and Transfer and Dividend Disbursing Agent
Russell Fund Services Company
1301 Second Avenue
Seattle, WA 98101
Custodian
State Street Bank and Trust Company
1200 Crown Colony Drive
Crown Colony Office Park
Quincy, MA 02169
Office of Shareholder Inquiries
1301 Second Avenue
Seattle, WA 98101
(800) 787-7354
Legal Counsel
Dechert LLP
One International Place, 40th Floor,
100 Oliver Street
Boston, MA 02110-2605
Distributor
Russell Financial Services, Inc.
1301 Second Avenue
Seattle, WA 98101
Adviser and Service Providers | 53 |
Table of Contents
Russell Investment Funds | 1301 Second Avenue | 800-787-7354 | ||
Seattle, Washington 98101 | Fax: 206-505-3495 | |||
www.russell.com |
36-08-188
Table of Contents
2013 SEMI-ANNUAL REPORT
Russell
Investment Funds
LifePoints® Funds Variable Target Portfolio Series
JUNE 30, 2013
FUND
Conservative Strategy Fund
Table of Contents
Russell Investment Funds
Russell Investment Funds is a series investment company with ten different investment portfolios referred to as Funds. These financial statements report on one of these Funds.
Table of Contents
Russell Investment Funds
LifePoints® Funds
Variable Target Portfolio Series
Semi-annual Report
June 30, 2013 (Unaudited)
Table of Contents
Table of Contents
Russell Investment Funds - LifePoints® Funds Variable Target Portfolio Series.
Copyright © Russell Investments 2013. 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 and part of Russell Investments.
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
Table of Contents
Russell Investment Funds
Shareholder Expense Example — June 30, 2013 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding the Fund’s Shareholder Expense Example (“Example”).
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative 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, 2013 to June 30, 2013.
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 fees 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, 2013 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | ||||||||
June 30, 2013 | $ | 997.00 | $ | 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 six month period annualized), multiplied by the average account value over the period, multiplied by 181/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
Conservative Strategy Fund | 3 |
Table of Contents
Russell Investment Funds
Conservative Strategy Fund
Schedule of Investments — June 30, 2013 (Unaudited)
Amounts in thousands (except share amounts)
Shares | Fair Value $ | |||||||
Investments - 100.7% | ||||||||
Russell Investment Company (“RIC”) and other Russell Investment Funds (“RIF”) Series Mutual Funds | ||||||||
Alternative Funds - 7.9% | ||||||||
RIC Russell Commodity Strategies Fund Class Y | 1,989 | 17 | ||||||
RIC Russell Global Infrastructure Fund Class Y | 2,533 | 28 | ||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 2,288 | 23 | ||||||
RIF Global Real Estate Securities Fund | 1,491 | 23 | ||||||
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91 | ||||||||
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Domestic Equities - 7.1% | ||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 774 | 29 | ||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 1,033 | 11 | ||||||
RIF Multi-Style Equity Fund | 2,359 | 41 | ||||||
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81 | ||||||||
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Fixed Income - 78.3% | ||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 2,272 | 23 | ||||||
RIC Russell Investment Grade Bond Fund Class Y | 10,382 | 225 | ||||||
RIC Russell Short Duration Bond Fund Class Y | 10,880 | 210 | ||||||
RIF Core Bond Fund | 41,769 | 438 | ||||||
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896 | ||||||||
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Shares | Fair Value $ | |||||||
International Equities - 7.4% | ||||||||
RIC Russell Global Equity Fund Class Y | 5,105 | 51 | ||||||
RIF Non-U.S. Fund | 3,267 | 34 | ||||||
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85 | ||||||||
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Total Investments - 100.7% (identified cost $1,131) | 1,153 | |||||||
Other Assets and Liabilities, Net - (0.7%) | (8 | ) | ||||||
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Net Assets - 100.0% | 1,145 | |||||||
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Presentation of Portfolio Holdings — June 30, 2013 (Unaudited)
Categories | % of Net Assets | |||
Alternative Funds | 7.9 | |||
Domestic Equities | 7.1 | |||
Fixed Income | 78.3 | |||
International Equities | 7.4 | |||
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Total Investments | 100.7 | |||
Other Assets and Liabilities, Net | (0.7 | ) | ||
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100.0 | ||||
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See accompanying notes which are an integral part of the financial statements.
4 | Conservative Strategy Fund |
Table of Contents
Russell Investment Funds
Conservative Strategy Fund
Statement of Assets and Liabilities — June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Assets | ||||
Investments, at identified cost | $ | 1,131 | ||
Investments, at fair value | 1,153 | |||
Receivables: | ||||
From affiliates | 4 | |||
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Total assets | 1,157 | |||
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Liabilities | ||||
Payables: | ||||
Accrued fees to affiliates | — | * | ||
Other accrued expenses | 12 | |||
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Total liabilities | 12 | |||
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Net Assets | $ | 1,145 | ||
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Net Assets Consist of: | ||||
Undistributed (overdistributed) net investment income | $ | 1 | ||
Unrealized appreciation (depreciation) on investments | 22 | |||
Shares of beneficial interest | 1 | |||
Additional paid-in capital | 1,121 | |||
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Net Assets | $ | 1,145 | ||
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Net Asset Value, offering and redemption price per share: | ||||
Net asset value per share:(#) | $ | 9.87 | ||
Net assets | $ | 1,145,489 | ||
Shares outstanding ($.01 par value) | 116,104 |
(#) | Net asset value per share equals net assets divided by shares of beneficial interest outstanding. |
* | Less than $500. |
See accompanying notes which are an integral part of the financial statements.
Conservative Strategy Fund | 5 |
Table of Contents
Russell Investment Funds
Conservative Strategy Fund
Statement of Operations — For the Period Ended June 30, 2013 (Unaudited)
Amounts in thousands | ||||
Investment Income | ||||
Income distribution from Underlying Funds | $ | 7 | ||
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Expenses | ||||
Advisory fees | 1 | |||
Administrative fees | | — | * | |
Custodian fees | 8 | |||
Transfer agent fees | — | * | ||
Professional fees | 15 | |||
Trustees’ fees | — | * | ||
Printing fees | 2 | |||
Miscellaneous | 3 | |||
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Expenses before reductions | 29 | |||
Expense reductions | (28 | ) | ||
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Net expenses | 1 | |||
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Net investment income (loss) | 6 | |||
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Net Realized and Unrealized Gain (Loss) | ||||
Net realized gain (loss) on: | ||||
Investments | 1 | |||
Capital gain distributions from Underlying Funds | 1 | |||
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Net realized gain (loss) | 2 | |||
Net change in unrealized appreciation (depreciation) on investments | (13 | ) | ||
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Net realized and unrealized gain (loss) | (11 | ) | ||
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Net Increase (Decrease) in Net Assets from Operations | $ | (5 | ) | |
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* | Less than $500. |
See accompanying notes which are an integral part of the financial statements.
6 | Conservative Strategy Fund |
Table of Contents
Russell Investment Funds
Conservative Strategy Fund
Statements of Changes in Net Assets
Amounts in thousands | Period Ended June 30, 2013 (Unaudited) | Fiscal Year Ended December 31, 2012 | ||||||
Increase (Decrease) in Net Assets | ||||||||
Operations | ||||||||
Net investment income (loss) | $ | 6 | $ | 32 | ||||
Net realized gain (loss) | 2 | 10 | ||||||
Net change in unrealized appreciation (depreciation) | (13 | ) | 49 | |||||
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Net increase (decrease) in net assets from operations | (5 | ) | 91 | |||||
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Distributions | ||||||||
From net investment income | (5 | ) | (32 | ) | ||||
From net realized gain | (6 | ) | (11 | ) | ||||
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Net decrease in net assets from distributions | (11 | ) | (43 | ) | ||||
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Share Transactions* | ||||||||
Net increase (decrease) in net assets from share transactions | 123 | 16 | ||||||
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Total Net Increase (Decrease) in Net Assets | 107 | 64 | ||||||
Net Assets | ||||||||
Beginning of period | 1,038 | 974 | ||||||
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End of period | $ | 1,145 | $ | 1,038 | ||||
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Undistributed (overdistributed) net investment income included in net assets | $ | 1 | $ | — |
* | Share transaction amounts (in thousands) for the periods ended June 30, 2013 and December 31, 2012 were as follows: |
2013 (Unaudited) | 2012 | |||||||||||||||
Shares | Dollars | Shares | Dollars | |||||||||||||
Proceeds from shares sold | 11 | $ | 113 | 63 | $ | 621 | ||||||||||
Proceeds from reinvestment of distributions | 1 | 11 | 4 | 43 | ||||||||||||
Payments for shares redeemed | — | (1 | ) | (65 | ) | (648 | ) | |||||||||
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Total increase (decrease) | 12 | $ | 123 | 2 | $ | 16 | ||||||||||
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See accompanying notes which are an integral part of the financial statements.
Conservative Strategy Fund | 7 |
Table of Contents
Russell Investment Funds
Conservative Strategy Fund
Financial Highlights — For the Periods Ended
For a Share Outstanding Throughout Each Period.
$ Net Asset Value, Beginning of Period | $ Investment | $ Net Realized and Unrealized Gain (Loss) | $ Total from Investment Operations | $ Distributions from Net Investment Income | $ Distributions from Net Realized Gain | $ Total Distributions | ||||||||||||||||||||||
June 30, 2013(1) | 10.00 | .06 | (.09 | ) | (.03 | ) | (.05 | ) | (.05 | ) | (.10 | ) | ||||||||||||||||
December 31, 2012 | 9.59 | .31 | .53 | .84 | (.32 | ) | (.11 | ) | (.43 | ) | ||||||||||||||||||
December 31, 2011(2) | 10.00 | .29 | (.49 | ) | (.20 | ) | (.21 | ) | — | (g) | (.21 | ) |
See accompanying notes which are an integral part of the financial statements.
8 | Conservative Strategy Fund |
Table of Contents
$ Period | % Total Return(c)(h) | $ Net Assets, End of Period (000) | % Net Assets, | % Net Assets, | % Ratio of Net Investment Income to Average Net Assets(b)(c)(f) | % Portfolio Turnover Rate(c) | ||||||||||||||||||||
9.87 | (.30 | ) | 1,145 | 5.17 | .10 | .55 | 7 | |||||||||||||||||||
10.00 | 8.85 | 1,038 | 4.80 | .10 | 3.14 | 73 | ||||||||||||||||||||
9.59 | (1.96 | ) | 974 | 18.39 | .10 | 3.10 | 5 |
See accompanying notes which are an integral part of the financial statements.
Conservative Strategy Fund | 9 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Highlights — June 30, 2013 (Unaudited)
(1) | For the period ended June 30, 2013 (Unaudited). |
(2) | For the period May 3, 2011 (commencement of operations) to December 31, 2011. |
(a) | Average daily shares outstanding were used for this calculation. |
(b) | Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the Underlying Funds in which the Fund invests. |
(c) | Periods less than one year are not annualized. |
(d) | The ratios for periods less than one year are annualized. |
(e) | The calculation includes only those expenses charged directly to the Fund and does not include expenses charged to the Underlying Funds in which the Fund invests. |
(f) | May reflect amounts waived and reimbursed by Russell Investment Management Company (“RIMCo”). |
(g) | Less than $.01 per share. |
(h) | The total return does not reflect any Insurance Company Separate Account or Policy Charges. |
See accompanying notes which are an integral part of the financial statements.
10 | Notes to Financial Highlights |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements — June 30, 2013 (Unaudited)
1. | Organization |
Russell Investment Funds (the “Investment Company” or “RIF”) is a series investment company with 10 different investment portfolios referred to as Funds. These financial statements report on the Conservative Strategy Fund (the “Fund”). The Investment Company provides the investment base for one or more variable insurance products issued by one or more insurance companies. The Fund is 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 (“Investment Company Act”), 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, as amended (“Master Trust Agreement”). 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 Fund is a “fund of funds” which diversifies its assets by investing in Shares of several other Russell Investment Company (“RIC”) Funds and other of the Investment Company’s Funds (together, the “Underlying Funds”). The Fund seeks to achieve its specific investment objective by investing in combinations of Underlying Funds. The Fund currently intends to invest only in the Underlying Funds. The Fund intends its strategy of investing in combinations of equity, fixed income and alternative Underlying Funds to result in investment diversification that an investor could otherwise achieve only by holding numerous individual investments. Russell Investment Management Company (“RIMCo”), the Fund’s investment adviser, may modify the target asset allocation for the Fund, including changes to the Underlying Funds in which the Fund invests from time to time based on 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. Modifications in the allocations to the Underlying Funds are typically based on strategic, long-term allocation decisions. The Fund’s actual allocation may vary from the target strategic asset allocation at any point in time (1) due to market movements, (2) by up to +/- 3% at the equity, fixed income or alternative category level based on RIMCo’s assessment of relative market valuation of the asset classes represented by each Underlying Fund, and/or (3) due to the implementation over a period of time of a change to the target strategic asset allocation including the addition of a new Underlying Fund. There may be no changes in the asset allocation or to the Underlying Funds in a given year or such changes may be made one or more times in a year. In the future, the Fund may also invest in other Underlying Funds that pursue investment strategies not pursued by the current Underlying Funds or represent asset classes which are not currently represented by the Underlying Funds.
The following table shows the Fund’s allocations to underlying alternative funds, underlying domestic equity funds, underlying fixed income funds, and underlying international equity funds.
Asset Allocation Targets as of May 1, 2013*
Underlying Funds | Conservative Strategy Fund | |||
Alternative Funds** | ||||
RIC Russell Commodity Strategies Fund | 0-7 | % | ||
RIC Russell Global Infrastructure Fund | 0-7 | |||
RIC Russell Multi-Strategy Alternative Fund | 0-7 | |||
RIF Global Real Estate Securities Fund | 0-7 | |||
Domestic Equity Funds | ||||
RIC Russell U.S. Defensive Equity Fund *** | 0-8 | |||
RIC Russell U.S. Dynamic Equity Fund **** | 0-6 | |||
RIF Multi-Style Equity Fund | 0-7 | |||
Fixed Income Funds | ||||
RIC Russell Global Opportunistic Credit Fund | 0-7 | |||
RIC Russell Investment Grade Bond Fund | 15-25 | |||
RIC Russell Short Duration Bond Fund | 13-23 | |||
RIF Core Bond Fund | 33-43 | |||
International Equity Funds | ||||
RIC Russell Global Equity Fund | 0-9 | |||
RIF Non-U.S. Fund | 0-9 |
* | Prospectus dated May 1, 2013. |
** | Alternative Funds pursue investment strategies that differ from those of traditional broad market equity or fixed income funds or that seek returns with a low correlation to global equity markets. |
*** | Formerly, Russell U.S. Quantitative Equity Fund. |
**** | Formerly, Russell U.S. Growth Fund. |
Notes to Financial Statements | 11 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
2. | Significant Accounting Policies |
The Fund’s financial statements are prepared in accordance with U.S. generally accepted accounting principles (“U.S. 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 the Fund in the preparation of its financial statements.
Security Valuation
The Fund values its portfolio securities, the shares of the Underlying Funds, at the current net asset value per share of each Underlying Fund.
Fair value of securities is defined as the price that the Fund 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 or liability, including assumptions about risk (e.g., the risk inherent in a particular valuation technique, such as a pricing model or the risks inherent in the inputs to a particular 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 or exchanges for identical assets and liabilities. |
• | Level 2 — Inputs other than quoted prices included within Level 1 that are observable, which may include, but are not limited to, quoted prices for similar assets or liabilities in markets that are active, quoted prices for identical or similar assets or liabilities in markets that are not active (such as interest rates, yield curves, implied volatilities, credit spreads) or other market corroborated inputs. |
• | Level 3 — Significant unobservable inputs based on the best information available in the circumstances, to the extent observable inputs are not available, which may include assumptions made by the Board or persons acting at their direction that are used in determining the fair value of investments. |
The levels associated with valuing the Fund’s investments for the period ended June 30, 2013 were Level 1.
Investment Transactions
Investment transactions are reflected as of the trade date for financial reporting purposes. This may cause the net asset value stated in the financial statements to be different from the net asset value at which shareholders may transact. Realized gains and losses from securities transactions, if applicable, 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, the Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to the Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.
For each year, the Fund intends to qualify as a regulated investment company under sub-chapter M of the Internal Revenue Code (the “Code”) and intends to distribute all of its taxable income and capital gains. Therefore, no federal income tax provision is required for the Fund.
The Fund files a U.S. tax return. At June 30, 2013, the Fund had 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 Fund’s U.S. tax returns filed for the fiscal years ending December 31, 2009 through December 31, 2011, no
12 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
examinations are in progress or anticipated at this time. The Fund is 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.
The Fund complies with the authoritative guidance for uncertainty in income taxes which requires management to determine whether a tax position of the Fund is more likely than not to be sustained upon examination, including resolution of any related appeals or litigation processes, based on the technical merits of the position. For tax positions meeting the more likely than not threshold, the tax amount recognized in the financial statements is reduced by the largest benefit that has a greater than 50% likelihood of being realized upon ultimate settlement with the relevant taxing authority. Management determined that no accruals need to be made in the financial statements due to uncertain tax positions. Management continually reviews and adjusts the Fund’s liability for income taxes based on analyses of tax laws and regulations, as well as their interpretations, and other relevant factors.
Dividends and Distributions to Shareholders
Income dividends, capital gain distributions and return of capital, 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 Fund 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 U.S. 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 U.S. GAAP relate primarily to investments in the Underlying Funds sold at a loss, wash sale deferrals and capital loss carryforwards. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting its net asset values.
Expenses
Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include those expenses incurred by the Underlying Funds. Because the Underlying Funds have varied expense and fee levels and the Fund may own different proportions of the Underlying Funds at different times, the amount of the Underlying Funds’ fees and expenses incurred indirectly by the Fund will vary.
Guarantees
In the normal course of business, the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund expects the risk of loss to be remote.
Market, Credit and Counterparty Risk
In the normal course of business, the Underlying 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 Underlying Funds may also be exposed to counterparty risk or the risk that an institution or other entity with which the Underlying Funds have unsettled or open transactions will default. The potential loss could exceed the value of the relevant assets recorded in the Underlying Funds’ financial statements (the “Assets”). The Assets, which potentially expose the Underlying Funds to credit risk, consist principally of cash due from counterparties and investments. The extent of the Underlying Funds’ exposure to credit and counterparty risks with respect to the Assets approximates their carrying value as recorded in the Underlying Funds’ Statements of Assets and Liabilities.
Global economies and financial markets are becoming increasingly interconnected and political and economic conditions (including recent instability and volatility) and events (including natural disasters) in one country, region or financial market may adversely impact issuers in a different country, region or financial market. As a result, issuers of securities held by an Underlying Fund may experience significant declines in the value of their assets and even cease operations. Such conditions and/or events may not have the same impact on all types of securities and may expose an Underlying Fund to greater market and liquidity risk and potential difficulty in valuing portfolio instruments held by an Underlying Fund. This could cause an Underlying Fund to underperform other types of investments.
Notes to Financial Statements | 13 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
3. | Investment Transactions |
Securities
During the period ended June 30, 2013, purchases and sales of the Underlying Funds (excluding short-term investments) were as follows:
Purchases | Sales | |||||||
Conservative Strategy Fund | $ | 203,506 | $ | 83,338 |
4. | Related Party Transactions, Fees and Expenses |
Adviser, Administrator and Transfer and Dividend Disbursing Agent
RIMCo advises the Fund and Russell Fund Services Company (“RFSC”) is the Fund’s administrator and transfer and disbursing agent. 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 up to 0.05% are based upon the average daily net assets of the Fund and are payable monthly. The following shows the total amount of each of these fees paid by the Fund for the period ended June 30, 2013.
Advisory | Administrative | |||||||
Conservative Strategy Fund | $ | 1,116 | $ | 279 |
RIMCo has contractually agreed, until April 30, 2014, 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. Direct Fund level expenses do not include extraordinary expenses or the expenses of other investment companies in which the Fund invests, including the Underlying Funds, which are borne indirectly by the Fund. These waivers and reimbursements may not be terminated during the relevant period except with Board approval.
For the period ended June 30, 2013, RIMCo waived/reimbursed the following expenses:
Waiver | Reimbursement | Total | ||||||||||
Conservative Strategy Fund | $ | 1,116 | $ | 27,178 | $ | 28,294 |
RIMCo does not have the ability to recover amounts waived or reimbursed from previous periods.
RFSC serves as 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 Fund for transfer agency and dividend disbursing services. RFSC retains a portion of this fee for its services provided to the Fund and pays the balance to unaffiliated agents who assist in providing these services. Total fees paid by the Fund for the period ended June 30, 2013, were as follows:
Amount | ||||
Conservative Strategy Fund | $ | 25 |
Distributor
Russell Financial Services, Inc. (the “Distributor”), a wholly-owned subsidiary of RIMCo, is the distributor for the Investment Company 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, 2013 were as follows:
Conservative Strategy Fund | ||||
Administration fees | $ | 47 | ||
Transfer agent fees | 4 | |||
Trustee fees | 51 | |||
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$ | 102 | |||
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14 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
Board of Trustees
The Russell Fund Complex consists of RIC, which has 39 funds, RIF, which has 10 funds and Russell Exchange Traded Funds Trust (“RET”) which has 1 fund. Each of the Trustees is a Trustee of RIC, RIF and RET. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $87,000 per year; each of its interested Trustees a retainer of $75,000 per year; and each Trustee $7,000 for each regularly scheduled meeting attended in person and $3,500 for each special meeting and the Annual 38a-1 meeting attended in person, and 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 regularly scheduled and special meetings by phone instead of receiving the full fee had the member attended in person (except for telephonic meetings called pursuant to the Fund’s 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 $15,000 per year and the Nominating and Governance Committee Chair is paid a fee of $12,000 per year. The chairman of the Board receives additional annual compensation of $75,000. Ms. Cavanaugh and the Trustee Emeritus are not compensated by the Russell Fund Complex for service as a Trustee.
Transactions with Affiliated Companies (amounts in thousands)
An affiliated company is a company in which a Fund has ownership of at least 5% of the voting securities or which the Fund controls, is controlled by or is under common control with. Transactions during the period ended June 30, 2013 with Underlying Funds which are, or were, an affiliated company are as follows:
Fair Value | Purchases Cost | Sales Cost | Realized Gain (Loss) | Income Distributions | Capital Gains Distributions | |||||||||||||||||||
Conservative Strategy Fund | ||||||||||||||||||||||||
RIC Russell Commodity Strategies Fund Class Y | $ | 17 | $ | 5 | $ | 7 | $ | — | $ | — | $ | — | ||||||||||||
RIC Russell Global Infrastructure Fund Class Y | 28 | 8 | 1 | — | — | — | ||||||||||||||||||
RIC Russell Multi-Strategy Alternative Fund Class Y | 23 | 3 | 1 | — | — | — | ||||||||||||||||||
RIF Global Real Estate Securities Fund | 23 | 3 | 1 | — | 1 | — | ||||||||||||||||||
RIC Russell U.S. Defensive Equity Fund Class Y | 29 | 2 | 3 | — | — | — | ||||||||||||||||||
RIC Russell U.S. Dynamic Equity Fund Class Y | 11 | 1 | 1 | — | — | — | ||||||||||||||||||
RIF Multi-Style Equity Fund | 41 | 8 | 4 | — | — | — | ||||||||||||||||||
RIC Russell Global Opportunistic Credit Fund Class Y | 23 | 15 | 12 | — | 1 | — | ||||||||||||||||||
RIC Russell Investment Grade Bond Fund Class Y | 225 | 30 | 6 | — | 1 | — | ||||||||||||||||||
RIC Russell Short Duration Bond Fund Class Y | 210 | 40 | 15 | — | 2 | — | ||||||||||||||||||
RIF Core Bond Fund | 438 | 81 | 25 | — | 2 | 1 | ||||||||||||||||||
RIC Russell Global Equity Fund Class Y | 51 | 4 | 4 | 1 | — | — | ||||||||||||||||||
RIF Non-U.S. Fund | 34 | 4 | 2 | — | — | — | ||||||||||||||||||
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$ | 1,153 | $ | 204 | $ | 82 | $ | 1 | $ | 7 | $ | 1 | |||||||||||||
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5. | Federal Income Taxes |
At December 31, 2012, the Fund did not have any capital loss carryforwards. Should the Fund have capital loss carryforwards, they may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first.
Under the Regulated Investment Company Modernization Act of 2010, the Fund will be permitted to carry forward capital losses for an unlimited period. Additionally, capital losses that are carried forward will retain their character as either short-term or long-term capital losses rather than being considered all short-term as under previous law.
At June 30, 2013, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:
Conservative Strategy Fund | ||||
Cost of Investments | $ | 1,132,669 | ||
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Unrealized Appreciation | $ | 32,578 | ||
Unrealized Depreciation | (12,528 | ) | ||
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Net Unrealized Appreciation (Depreciation) | $ | 20,050 | ||
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Notes to Financial Statements | 15 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Notes to Financial Statements, continued — June 30, 2013 (Unaudited)
6. | Interfund Lending Program |
The Fund has been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). The Fund may borrow money from another fund for temporary purposes. All such borrowing and lending will be subject to a participating Fund’s fundamental investment limitations. A 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 Fund. The Fund 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 Fund could result in reduced returns or additional borrowing costs. For the period ended June 30, 2013, the Fund did not borrow or loan through the interfund lending program.
7. | Record Ownership |
As of June 30, 2013, the following table includes shareholders of record with greater than 10% of the total outstanding shares of the Fund.
# of Shareholders | % | |||||||
Conservative Strategy Fund | 1 | 100.0 |
8. | Subsequent Events |
Management has evaluated the events and/or transactions that have occurred through the date the financial statements were issued and noted no items requiring adjustments of the financial statements or additional disclosures.
16 | Notes to Financial Statements |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts — (Unaudited)
Approval of Investment Advisory Agreement
The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the “RIMCo Agreement”) and the portfolio management contract with each Money Manager of the funds (collectively, the “portfolio management contracts”) in which the Fund invests (the “Underlying Funds”) at a meeting held in person on April 18, 2013 (the “Agreement Evaluation Meeting”). During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Fund, sales and redemptions of the Fund’s and Underlying Funds’ shares, management of the Fund 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 (“Independent Counsel”), also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Fund 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 the Fund 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 Fund and the Underlying Funds. In the case of the 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 preparing the Third-Party Information for the Agreement Evaluation Meeting, the third-party service provider initially changed its methodology for selection of the Expense Universe Comparable Funds from that used in prior years to exclude peer funds with distribution or shareholder servicing fees even though their investment objectives were generally comparable to the Fund’s objectives. In RIMCo’s judgment, this change in methodology arbitrarily resulted in a significant reduction in the number of funds in the Expense Universe and made the operating expense comparisons in the Third-Party Information less meaningful. After discussions with the Board’s independent Chair, RIMCo requested, and the third-party information provider furnished supplementally, the Third-Party Information reflecting the methodologies for selection of the Expense Universe Comparable Funds by the third-party service provider used in 2012. The Board focused on the supplemental Third-Party Information in conducting its evaluations. In general, the operating expense comparisons between the Funds and their Comparable Funds in the supplemental Third-Party Information were more favorable. In the case of the Fund, the Third-Party Information reflected changes in the Comparable Funds requested by RIMCo, which changes were noted in the Third-Party Information. The foregoing and other information received by the Board, including the Independent Trustees, in connection with its evaluations of the RIMCo Agreement and portfolio management contracts is collectively called the “Agreement Evaluation Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Fund and the other RIMCo-managed funds for which the Board has supervisory responsibility (“Other Russell Funds”) with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Fund and the Underlying Funds (“Fund Counsel”) 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 Independent Counsel.
On April 9, 2013, the Independent Trustees in preparation for the Agreement Evaluation Meeting met by conference telephone call to review the Agreement Evaluation Information received to that date in a private session with Independent Counsel at which no representatives of RIMCo or the Fund’s management were present and, on the basis of that review, requested additional Agreement Evaluation Information. On April 17, 2013, the Independent Trustees met in person in a private session with Independent Counsel to review additional Agreement Evaluation Information received to that date. 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 RIMCo, Fund management, Independent Counsel and Fund Counsel. Presentations made by RIMCo at the Agreement Evaluation Meeting as part of this review encompassed the Fund and all Other Russell Funds. Information received by the Board, including the Independent Trustees, at the Agreement Evaluation Meeting is included in the Agreement Evaluation Information. Prior to voting at the Agreement Evaluation Meeting, the non-management members of the Board, including the Independent Trustees, met in executive session with Fund Counsel and 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 each of the Underlying Funds employs a manager-of-managers method of investment and RIMCo’s advice 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.
Basis for Approval of Investment Advisory Contracts | 17 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for allocating assets of the Fund among its Underlying Funds and for determining, implementing and maintaining the investment program for each Underlying Fund. The assets of the 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 the Fund and/or the Underlying Funds in which the Fund invests. 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 the investment of each Underlying Fund’s cash and 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, Underlying Fund 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 with respect to the Underlying Funds is to construct and manage diversified portfolios in a risk-aware manner. Each Money Manager for an Underlying Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Underlying Fund assigned to it by RIMCo (each, a “segment”) in accordance with the Underlying Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in an Underlying Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Underlying Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for an Underlying Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of 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, RIMCo’s selection of Money Managers is made not only on the basis of performance considerations but also on the basis of anticipated compatibility with other Money Managers in the same Underlying Fund. 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 Fund 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 Fund or Underlying Funds operate so that investors may take that information into account when deciding to purchase shares of the 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 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 the 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:
• | 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; |
• | 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; |
• | 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 or transfer agent fees and any fees received for management of securities lending cash collateral, soft dollar arrangements and commissions in connection with portfolio securities transactions; |
18 | Basis for Approval of Investment Advisory Contracts |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
• | Information provided by RIMCo as to expenses incurred by the Fund or the Underlying Fund; and |
• | 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 Fund, including Fund portfolio management services, the Board discussed with senior representatives of RIMCo the impact on the Fund’s operations of changes in RIMCo’s senior management and other personnel providing investment management and other services to the Fund during the past year. The Board was not advised of any expected diminution in the nature, scope or quality of the investment advisory or other services provided to the Fund or the Underlying Funds from such changes. The Board also discussed the impact of organizational changes on the compliance programs of the Fund, the Underlying Funds and RIMCo with the Fund’s Chief Compliance Officer (the “CCO”) and received assurances from the CCO that such changes have not resulted in any diminution in the scope and quality of the compliance programs of the Fund or the Underlying Funds.
As noted above, RIMCo, in addition to managing the investment of each Underlying Fund’s cash, may directly manage a portion of certain Underlying Funds (the “Participating Underlying Funds”) pursuant to the RIMCo Agreement, the actual allocation being determined from time to time by the Participating Underlying Funds’ RIMCo portfolio managers. During 2012, RIMCo implemented a strategy of managing a portion of the assets of the Participating Underlying Funds to modify such Funds’ overall portfolio characteristics by investing in securities or other instruments that RIMCo believes will achieve the desired risk/return profiles for such Participating Underlying Funds. RIMCo monitors and assesses Participating Underlying Fund characteristics, including risk, using a variety of measurements, such as tracking error, and may seek to manage Participating Underlying Fund characteristics consistent with the Funds’ investment objectives and strategies. Participating Underlying Fund characteristics may be managed with the goal to increase or decrease exposures (such as volatility, momentum, value, growth, capitalization size, industry or sector) or to offset undesired relative over or underweights in order to seek to achieve the desired risk/return profile for the Participating Underlying Fund. RIMCo may use an index replication or sampling strategy by selecting an index which represents the desired exposure, or may utilize quantitative or qualitative analysis or quantitative models designed to assess Participating Underlying Fund characteristics and identify a portfolio which provides the desired exposure. Based on this, for the portion of a Participating Underlying Fund’s assets directly managed by RIMCo, RIMCo may purchase common stocks, exchange-traded funds, exchange-traded notes, short-term investments or derivatives, including futures, forwards, options and/or swaps, in order to seek to achieve the desired risk/return profile for the Participating Underlying Fund. RIMCo’s direct management of assets for these purposes is hereinafter referred to as the “Direct Management Services.” RIMCo also may reallocate Underlying Fund assets among Money Managers, increase Underlying Fund cash reserves, determine to not be fully invested, or adjust exposures through the cash equitization process. RIMCo’s Direct Management Services are not intended, and are not expected, to be a primary driver of Participating Underlying Funds’ investment results, although the services may have a positive or negative impact on investment results, but rather are intended to enhance incrementally the ability of Funds to carry out their investment programs. The Board considered that during the period, and to the extent that RIMCo employs its Direct Management Services in respect of Participating Underlying Funds, RIMCo is not required to pay investment advisory fees to a Money Manager with respect to Participating Underlying Fund assets that are directly managed and that the profits derived by RIMCo generally and from the Participating Underlying Funds consequently may be increased incrementally. The Board, however, also considered the potential benefits of the Direct Management Services to Participating Underlying Funds and the Fund; the limited amount of assets that are managed directly by RIMCo pursuant to the Direct Management Services; and the fact that the aggregate investment advisory fees paid by the Participating Underlying Funds are not increased as a result of RIMCo’s direct management of Participating Underlying Fund assets as part of the Direct Management Services or otherwise.
In evaluating the reasonableness of the Fund’s 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. The Board noted RIMCo’s further past advice that 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.
The Third-Party Information included, among other things, comparisons of the Fund’s Advisory Fees with the advisory fees of their Comparable Funds 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 Third-Party Information, among other things, showed that the Fund had an Advisory Fee which, compared with its Comparable Funds’ advisory fees on an actual basis, was ranked in the first quintile of its Expense Universe for that expense component. In these rankings, the first quintile represents funds with the lowest investment advisory fees among funds in the Expense Universe and the fifth quintile represents funds with the highest investment advisory fees among the Expense Universe funds. The comparisons were based upon the latest fiscal years for the Expense Universe funds.
Basis for Approval of Investment Advisory Contracts | 19 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
In discussing the Advisory Fees for the Underlying Funds generally, RIMCo noted, among other things, that its Advisory Fees for the 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. RIMCo expressed the view that Advisory Fees should be considered in the context of the Fund’s or Underlying Fund’s total expense ratio to obtain a complete picture. The Board, however, considered the Fund’s and Underlying Fund’s Advisory Fee on both a standalone basis and in the context of the Fund’s or Underlying Fund’s total expense ratio.
The Board considered for the Fund and Underlying Fund whether economies of scale have been realized and whether the Advisory Fee for the Fund or Underlying Fund appropriately reflects or should be revised to reflect any such economies. The Fund is distributed exclusively through variable annuity and variable life insurance contracts issued by insurance companies. Currently, the Fund is made available to holders of such insurance policies by two insurance companies. At the Contract Renewal Meeting, RIMCo advised the Board that it does not expect that additional insurance companies will make the Fund available to their variable annuity or variable life insurance policyholders in the near or long term because of a declining interest by the insurance companies generally in variable insurance trusts, such as the Fund, as investment vehicles supporting their products. Notwithstanding this expectation, RIMCo expressed its belief that the Fund will remain viable in light of their cash inflows from current participating insurance companies. The Board determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the Advisory Fee for the Fund or Underlying Fund appropriately reflected any economies of scale realized by that Fund, based upon the negative implications for significant future Fund asset growth of RIMCo’s expectation that no additional insurance companies will make the Fund available to their variable annuity and variable life insurance policyholders and other factors associated with the manager-of-managers structure employed by the Underlying Funds, including the variability of Money Manager investment advisory fees.
The Board considered, as a general matter, that fees payable to RIMCo by institutional clients with investment objectives similar to those of the Fund and the Underlying Funds are lower, and, in some cases, may be substantially lower, than the rates paid by the Fund and the Underlying Funds. The Trustees considered the differences in the nature and scope of services RIMCo provides to institutional clients and the Fund and the Underlying Funds. RIMCo explained, among other things, that institutional clients have fewer compliance, administrative and other needs than the Fund and the Underlying Funds. RIMCo also noted that since the Fund and the Underlying 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 Fund and the Underlying Funds are subject to heightened regulatory requirements relative to institutional clients. The Board noted that RIMCo provides office space and facilities to the Fund and Underlying Funds and all of the Fund’s and Underlying Funds’ officers. Accordingly, the Trustees concluded that the services provided to the Fund and Underlying Funds are sufficiently different from the services provided to the other clients that comparisons are not probative and should not be given significant weight.
With respect to the Fund’s total expenses, the Third-Party Information showed that the total expenses for the Fund were ranked in the second quintile of its Expense Universe. In these rankings, the first quintile represents funds with the lowest total expenses among funds in the Expense Universe and the fifth quintile represents funds with the highest total expenses among funds in the Expense Universe.
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 the Fund and each Underlying Fund, found, after giving effect to any applicable waivers and/or reimbursements and considering any 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 Fund or Underlying Funds; (2) the relative expense ratio of the Fund and each Underlying Fund either was comparable to those of its Comparable Funds or RIMCo had provided an explanation satisfactory to the Board as to why the relative expense ratio was not 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 Fund or the Underlying Funds were not excessive; and (5) RIMCo’s profitability with respect to the Fund 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.
The Board concluded that, under the circumstances and based upon RIMCo’s performance review of the Fund and each Underlying Fund, the performance of the Fund would be consistent with continuation of the RIMCo Agreement. The Board, in assessing the performance of the Fund, focused upon performance for the 1-year period ended December 31, 2012. In assessing the performance
20 | Basis for Approval of Investment Advisory Contracts |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
of the Underlying Funds with at least three years of performance history, the Board focused upon performance for the 3-year period ended December 31, 2012 as most relevant but also considered the Underlying Funds’ performance for the 1- year and, where applicable, 5-year periods ended such date. In reviewing the performance of the Fund and the Underlying Funds generally, the Board took into consideration the various steps taken by RIMCo during 2012 to enhance the performance of certain Underlying Funds, including a large number of changes in Money Managers and RIMCo’s implementation of its Direct Management Services which are not yet reflected in Participating Underlying Fund and Fund investment results.
The Third-Party Information showed that for the one-year period ended December 31, 2012, the Fund’s performance was ranked in the third quintile of its Performance Universe and the Agreement Evaluation Information showed that the Fund outperformed relative to its benchmark for the period.
In evaluating performance, the Board considered the Fund’s and each Underlying Fund’s absolute performance and performance relative to appropriate benchmarks and indices in addition to the Fund’s performance relative to its Comparable Funds. In assessing the Fund’s performance relative to its 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. The Board also took into account the number of Underlying Fund Money Manager changes that were made in 2012; and that the performance of Money Managers continues to impact Fund and Underlying Fund performances for periods prior and subsequent to their termination, and that any incremental positive or negative impact of the Direct Management Services to Underlying Funds was not yet reflected in the investment results of the Underlying Funds or the Fund.
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 the 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 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 Fund’s 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 Fund’s CCO regarding her assessments of Money Manager compliance programs and any compliance issues. RIMCo did not identify any benefits received by Money Managers or their affiliates as a result of their relationships with the Underlying Funds other than benefits from their soft dollar arrangements. The Agreement Evaluation Information described, and at the Agreement Evaluation Meeting the Fund’s CCO discussed, oversight of Money Manager soft dollar arrangements. The Agreement Evaluation Information expressed RIMCo’s belief that, based upon certifications from Money Managers and pre-hire and ongoing reviews of Money Manager soft dollar arrangements, policies and procedures, the Money Managers’ soft dollar arrangements, policies and procedures are consistent with applicable legal standards and with disclosures made by Money Managers in their investment adviser registration statements filed with the Securities and Exchange Commission and by the Underlying Funds in their registration statements. The Board was advised that, in the case of Money Managers using soft dollar arrangements, the CCO monitors, among other things, the commissions paid by the Underlying Funds and percentage of Underlying Fund transactions effected pursuant to the soft-dollar arrangements, as well as the products or services purchased by the Money Managers with soft dollars generated by Underlying Fund portfolio transactions. The CCO and RIMCo do not obtain, and the Agreement Evaluation Information therefore did not include, information regarding the value of soft dollar benefits derived by Money Managers from Underlying Fund portfolio transactions. At the Agreement Evaluation Meeting, RIMCo noted that it planned to recommend termination of certain Money Managers to the Board at the May 2013 meeting, with each recommended termination to become effective on a date following the Agreement Evaluation Meeting. Notwithstanding these planned terminations, RIMCo recommended that each Money Manager be retained at its current fee rate. In doing so, RIMCo, as it has in the past, 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 of the relevance of Money Manager profitability in light of RIMCo’s belief that such fees are reasonable; the Board’s findings as to the reasonableness of the Advisory Fee paid by the Fund and each 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
Basis for Approval of Investment Advisory Contracts | 21 |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Basis for Approval of Investment Advisory Contracts, continued — (Unaudited)
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 the Fund and each Underlying Fund.
Subsequently, the Board of Trustees received a proposal from RIMCo at a meeting held on May 21, 2013, to effect Money Manager changes for the Russell Investment Company Russell Global Equity and Russell Multi-Strategy Alternative Funds. In the case of each 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; information as to any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Fund’s underwriter; the CCO’s evaluation of the Money Manager’s compliance program, policies and procedures, and certification that they were consistent with applicable legal standards; 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 the Agreement Evaluation 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 changes because the Money Managers’ investment advisory fees are paid by RIMCo.
22 | Basis for Approval of Investment Advisory Contracts |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Shareholder Requests for Additional Information — June 30, 2013 (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 Underlying Funds may be invested. RIMCo has established a proxy voting committee and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Fund maintains 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 Fund’s Statement of Additional Information (“SAI”). The SAI and information regarding how the Underlying Funds voted proxies relating to portfolio securities during the most recent 12-month period ended June 30, 2012 are available (i) free of charge, upon request, by calling the Fund 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 Fund’s prospectus and annual and semi-annual reports. Please contact your Insurance Company for further details.
Shareholder Requests for Additional Information | 23 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers — June 30, 2013
(Unaudited)
The following tables provide information for each officer and trustee of the Russell Fund Complex. The Russell Fund Complex consists of Russell Investment Company (“RIC”), which has 39 funds, Russell Investment Funds (“RIF”), which has 10 funds, and Russell Exchange Traded Funds Trust (“RET”), which has 1 fund. Each of the trustees is a trustee of RIC, RIF and RET. The first table provides information for the interested trustees. The second table provides information for the independent trustees. The third table provides information for the trustee emeritus. The fourth table provides information for the officers. Furthermore, each Trustee possesses the following specific attributes: Mr. Alston has business, financial and investment experience as a senior executive of an international real estate firm and is trained as a lawyer; Ms. Blake has had experience as a certified public accountant and has had experience as a member of boards of directors/trustees of other investment companies; Ms. Burgermeister has had experience as a certified public accountant and has had experience as a member of boards of directors/trustees of other investment companies; Mr. Connealy has had experience with other investment companies and their investment advisers first as a partner in the investment management practice of PricewaterhouseCoopers LLP and, subsequently, as the senior financial executive of two other investment organizations sponsoring and managing investment companies; Mr. Fine has had financial, business and investment experience as a senior executive of a non-profit organization and previously, as a senior executive of a large regional financial services organization with management responsibility for such activities as investments, asset management and securities brokerage; Mr. Tennison has had business, financial and investment experience as a senior executive of a corporation with international activities and was trained as an accountant; Mr. Thompson has had experience in business, governance, investment and financial reporting matters as a senior executive of an organization sponsoring and managing other investment companies, and, subsequently, has served as a board member of other investment companies, and has been determined by the Board to be an audit committee financial expert; and Ms. Weston has had experience as a tax and corporate lawyer, has served as general counsel of several corporations and has served as a director of another investment company. Ms. Cavanaugh has had experience with other financial services companies, including companies engaged in the sponsorship, management and distribution of investment companies. As a senior officer of the Funds, the Adviser and various affiliates of the Adviser providing services to the Funds, Ms. Cavanaugh is in a position to provide the Board with such parties’ perspectives on the management, operations and distribution of the Funds.
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 During the Past 5 Years | |||||||
INTERESTED TRUSTEES | ||||||||||||
# Sandra Cavanaugh, Born May 10, 1954
1301 Second Avenue, 18th Floor Seattle, WA 98101 | President and Chief Executive Officer since 2010 Trustee since 2010 | Until successor is chosen and qualified by Trustees Appointed until successor is duly elected and qualified | • President and CEO RIC, RIF and RET • Chairman of the Board, President and CEO, Russell Financial Services, Inc. • Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”) • Director, RIMCo • Chairman of the Board and President, Russell Insurance Agency, Inc. (“RIA”) (insurance agency) • 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. (investment company) | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
# | Ms. Cavanaugh is also an officer and/or director of one or more affiliates of RIC, RIF and RET and is therefore classified as an Interested Trustee. |
24 | Disclosure of Information about Fund Trustees and Officers |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013
(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 During the Past 5 Years | |||||||
INTERESTED TRUSTEES (continued) | ||||||||||||
## Daniel P. Connealy, Born June 6, 1946
1301 Second Avenue, | Trustee since 2003 | Appointed until successor is duly elected and qualified | • June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc. (investment company) • Chairman of the Audit Committee, RIC and RIF from 2005 to 2011. | 50 | None | |||||||
### Jonathan Fine, Born July 8, 1954
1301 Second Avenue, | Trustee since 2004 | Appointed until successor is duly elected and qualified | • President and Chief Executive Officer, United Way of King County, WA (charitable organization) | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
## | Mr. Connealy is an officer of a broker-dealer that distributes shares of the Funds and is therefore classified as an Interested Trustee. |
### | Mr. Fine is classified as an Interested Trustee due to Ms. Cavanaugh’s service on the Board of Directors of the United Way of King County (“UWKC”) and in light of charitable contributions made by Russell Investments to UWKC. |
INDEPENDENT TRUSTEES | ||||||||||||
Thaddas L. Alston,
1301 Second Avenue, Seattle, WA 98101 | 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) | 50 | None | |||||||
Kristianne Blake,
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2000 Chairman since 2005 | Appointed until successor is duly elected and qualified Annual | • Director and Chairman of the Audit Committee, Avista Corp. (electric utilities) • Trustee and Chairman of the Operations Committee, Principal Investors Funds and Principal Variable Contracts Funds (investment company) • Regent, University of Washington • President, Kristianne Gates Blake, P.S. (accounting services) | 50 | • Director, Avista • Trustee, Principal Investors Funds (inves • Trustee, Principal Variable Contracts Funds (inves |
Disclosure of Information about Fund Trustees and Officers | 25 |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013
(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 During the Past 5 Years | |||||||
INDEPENDENT TRUSTEES (continued) | ||||||||||||
Cheryl Burgermeister, Born June 26, 1951
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2012 | Appointed until successor is duly elected and qualified. | • Retired • Trustee and Chairperson of Audit Committee, Select Sector SPDR Funds (investment company) • Trustee and Finance Committee Member/Chairman, Portland Community College (charitable organization) | 50 | Trustee and Chairperson of Audit Committee, Select Sector SPDR Funds (investment company) | |||||||
Raymond P. Tennison, Jr., Born December 21, 1955
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2000 Chairman of the Nominating and Governance Committee since 2007 | Appointed until successor is duly elected and qualified. | • Vice Chairman of the Board, Simpson Investment Company • Until November 2010, President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company | 50 | None | |||||||
Jack R. Thompson,
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2005 Chairman of the Audit Committee, since 2012 | 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 (investment company) • September 2007 to September 2010 Director, Board Chairman and Chairman of the Audit Committee, LifeVantage Corporation (health products company) | 50 | • Director, Board Chairman • Director, Sparx Asia Funds until 2009 (investment company) | |||||||
Julie W. Weston,
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Trustee since 2002 | Appointed until successor is duly elected and qualified | • Retired • Chairperson of the Investment Committee until December 2009 | 50 | None |
* | Each Trustee is subject to mandatory retirement at age 72. |
26 | Disclosure of Information about Fund Trustees and Officers |
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Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013
(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 During the Past 5 Years | |||||||
TRUSTEE EMERITUS | ||||||||||||
** George F. Russell, Jr., Born July 3, 1932 1301 Second Avenue, 18th Floor Seattle, WA 98101 | 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) | 50 | 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 | 27 |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
Disclosure of Information about Fund Trustees and Officers, continued — June 30, 2013
(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
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Chief Compliance Officer since 2005 | Until removed by Independent Trustees | • Chief Compliance Officer, RIC, RIF and RET • Chief Compliance Officer, RFSC • 2005-2011 Chief Compliance Officer, RIMCo | |||
Sandra Cavanaugh, Born May 10, 1954
1301 Second Avenue, 18th Floor Seattle, WA 98101 | President and Chief Executive Officer since 2010 | Until successor is chosen and qualified by Trustees | • CEO, U.S. Private Client Services, Russell Investments • President and CEO, RIC, RIF and RET • Chairman of the Board, Co-President and CEO, RFS • Chairman of the Board, President and CEO, RFSC • Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”)) • 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. (investment company) | |||
Mark E. Swanson, Born November 26, 1963
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Treasurer and Chief Accounting Officer since 1998 | Until successor is chosen and qualified by Trustees | • Treasurer, Chief Accounting Officer and CFO, RIC, RIF and RET • Head of North America Operations, Russell Investments • May 2009 to October 2011, Global Head of Fund Operations, Russell Investments • 1999 to May 2009, Director, Funds Administration, RIMCo, RFSC, Russell Trust Company (“RTC”) and RFS | |||
Peter Gunning, Born February 22, 1967
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Chief Investment Officer since 2008 | Until removed by Trustees | • Global Chief Investment Officer, Russell Investments • Chief Investment Officer, RIC and RIF • Director, FRC • Chairman of the Board, President and CEO, RIMCo • 1996 to 2008 Chief Investment Officer, Russell, Asia Pacific | |||
Mary Beth Rhoden Albaneze, Born April 25, 1969
1301 Second Avenue, 18th Floor Seattle, WA 98101 | Secretary since 2010 | Until successor is chosen and qualified by Trustees | • Associate General Counsel, FRC • Secretary, RIMCo, RFSC and RFS • Secretary and Chief Legal Officer, RIC, RIF and RET • 1999 to 2010 Assistant Secretary, RIC and RIF |
28 | Disclosure of Information about Fund Trustees and Officers |
Table of Contents
Russell Investment Funds
LifePoints® Funds Variable Target Portfolio Series
1301 Second Avenue, Seattle, Washington 98101
(800) 787-7354
Sandra Cavanaugh
Daniel P. Connealy
Jonathan Fine
Independent Trustees
Thaddas L. Alston
Kristianne Blake
Cheryl Burgermeister
Raymond P. Tennison, Jr.
Jack R. Thompson
Julie W. Weston
Trustee Emeritus
George F. Russell, Jr.
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 Albaneze, Secretary
Adviser
Russell Investment Management Company
1301 Second Avenue
Seattle, WA 98101
Administrator and Transfer and Dividend Disbursing Agent
Russell Fund Services Company
1301 Second Avenue
Seattle, WA 98101
Custodian
State Street Bank and Trust Company
1200 Crown Colony Drive
Crown Colony Office Park
Quincy, MA 02169
Office of Shareholder Inquiries
1301 Second Avenue
Seattle, WA 98101
(800) 787-7354
Legal Counsel
Dechert LLP
One International Place, 40th Floor,
100 Oliver Street
Boston, MA 02110-2605
Distributor
Russell Financial Services, Inc.
1301 Second Avenue
Seattle, WA 98101
This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Funds. Such offering is made only by Prospectus, which includes details as to offering price and other material information.
Adviser and Service Providers | 29 |
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Russell Investment Funds | 1301 Second Avenue | 800-787-7354 | ||
Seattle, Washington 98101 | Fax: 206-505-3495 | |||
www.russell.com |
36-08-432
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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]
Item 5. Audit Committee of Listed Registrants. [Not Applicable]
Item 6. [Schedules of Investments are included as part of the Report to Shareholders filed under Item 1 of this form]
Items 7-9. [Not Applicable]
Item 10. Submission of Matters to a Vote of Security Holders
There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.
Item 11. Controls and Procedures
(a) Registrant’s principal executive officer and principal financial officer have concluded that Registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940 (the “Act”)) are effective, based on their evaluation of these controls and procedures as of a date within 90 days of the date this report is filed with the Securities and Exchange Commission.
(b) There were no significant changes in Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected or is likely to materially affect Registrant’s internal control over financial reporting.
Item 12. Exhibit List
(a) Certification for principal executive officer of Registrant as required by Rule 30a-2(a) under the Act and certification for principal financial officer of Registrant as required by Rule 30a-2(a) under the Act.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
Russell Investment Funds
By: | /s/ Sandra Cavanaugh | |
Sandra Cavanaugh | ||
Principal Executive Officer and Chief Executive Officer |
Date: August 26, 2013
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 26, 2013
By: | /s/ Mark E. Swanson | |
Mark E. Swanson | ||
Principal Financial Officer, Principal Accounting Officer and Treasurer |
Date: August 26, 2013