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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: 811-5371
RUSSELL INVESTMENT FUNDS
(Exact name of registrant as specified in charter)
909 A STREET, TACOMA WASHINGTON 98402
(Address of principal executive offices) (Zip code)
GREGORY J. LYONS, ASSISTANT SECRETARY
RUSSELL INVESTMENT FUNDS
909 A STREET
TACOMA, WASHINGTON 98402
253-596-2406
-------------------------------------------------------------
(Name and address of agent for service)
Registrant's telephone number, including area code: 253-572-9500
Date of fiscal year end: DECEMBER 31
Date of reporting period: January 1, 2004 to June 30, 2004
ITEM 1. REPORTS TO STOCKHOLDERS
RUSSELL INVESTMENT FUNDS
2004 SEMIANNUAL REPORT
MULTI-STYLE EQUITY FUND
AGGRESSIVE EQUITY FUND
NON-U.S. FUND
REAL ESTATE SECURITIES FUND
CORE BOND FUND
JUNE 30, 2004
RUSSELL LOGO
Russell Investment Funds
Russell Investment Funds is a "series mutual fund" with five different
investment portfolios. These financial statements report on the Funds, each of
which has distinct investment objectives and strategies.
Frank Russell Investment Management Company
Responsible for overall management and administration of the Funds.
Frank Russell Company
Consultant to Frank Russell Investment Management Company.
[Blank Page]
Russell Investment Funds
Semiannual Report
June 30, 2004 (Unaudited)
Table of Contents
<Table>
<Caption>
Page
Multi-Style Equity Fund.............................................. 3
Aggressive Equity Fund............................................... 9
Non-U.S. Fund........................................................ 20
Real Estate Securities Fund.......................................... 32
Core Bond Fund....................................................... 34
Notes to Schedules of Investments.................................... 44
Statement of Assets and Liabilities.................................. 46
Statement of Operations.............................................. 50
Statement of Changes in Net Assets................................... 52
Financial Highlights................................................. 54
Notes to Financial Highlights........................................ 56
Notes to Financial Statements........................................ 57
Disclosure of Information about Fund Directors....................... 67
Manager, Money Managers and Service Providers........................ 71
</Table>
Russell Investment Funds
Copyright (c) Frank Russell Company 2004. All rights reserved. This material is
proprietary and may not be reproduced, transferred, or distributed in any form
without prior written permission from Frank Russell Company. It is delivered on
an "as is" basis without warranty. The Russell logo is a trademark and service
mark of Frank Russell Company. Frank Russell Company is the owner of the
trademarks, service marks, and copyrights related to their respective indexes.
This material must be accompanied or preceded by a current Russell Investment
Funds' Prospectus containing complete information concerning the investment
objectives and operations of the Funds, charges and expenses, and the applicable
variable insurance policy Prospectus. The Prospectus should be read carefully
before an investment is made. The performance quoted represents past performance
and 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.
International markets entail different risks than those typically associated
with domestic markets, including currency fluctuations, political and economic
instability, accounting changes and foreign taxation. Securities may be less
liquid and more volatile. Please see the Prospectus for further detail. Russell
Fund Distributors, Inc., is the distributor of Russell Investment Funds.
[Blank Page]
RUSSELL INVESTMENT FUNDS
MULTI-STYLE EQUITY FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
COMMON STOCKS - 96.6%
Auto and Transportation - 2.4%
BorgWarner, Inc. 2,600 114
Burlington Northern Santa Fe Corp. 3,300 116
Cooper Tire & Rubber Co. 2,600 60
CSX Corp. 21,200 695
Dana Corp. 3,000 59
Delphi Corp. 27,700 296
Ford Motor Co. 11,600 182
General Motors Corp. (z) 8,000 373
Gentex Corp. 8,200 325
Lear Corp. 3,500 206
Magna International, Inc. Class A 600 51
Norfolk Southern Corp. 7,800 207
Skywest, Inc. 3,800 66
Southwest Airlines Co. 89,700 1,504
Tidewater, Inc. 10,950 326
Toyota Motor Corp. - ADR 5,850 477
Union Pacific Corp. 600 36
United Parcel Service, Inc. Class B 32,900 2,473
------------
7,566
------------
Consumer Discretionary - 17.1%
Abercrombie & Fitch Co. Class A 12,300 477
Activision, Inc. (AE) 20,150 320
Advance Auto Parts (AE) 14,900 658
Aeropostale, Inc. (AE) 1,500 40
Apollo Group, Inc. Class A (AE) 9,600 848
Autonation, Inc. (AE) 6,700 115
Autozone, Inc. (AE) 4,800 384
Avon Products, Inc. 8,880 410
BearingPoint, Inc. (AE) 18,300 162
Bed Bath & Beyond, Inc. (AE) 21,300 819
Best Buy Co., Inc. 11,800 599
Brink's Co. (The) 2,100 72
Carnival Corp. 5,900 277
CDW Corp. 8,600 548
Cendant Corp. 102,900 2,519
Charming Shoppes 4,700 42
Chico's FAS, Inc. (AE) 9,500 429
Christopher & Banks Corp. 10,700 189
Circuit City Stores, Inc. 28,900 374
Claire's Stores, Inc. 4,800 104
Clear Channel Communications, Inc. 37,450 1,384
Coach, Inc. (AE) 23,400 1,057
Corinthian Colleges, Inc. (AE) 4,100 101
Darden Restaurants, Inc. 8,000 164
DeVry, Inc. (AE) 9,400 258
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Dillard's, Inc. Class A 2,600 58
DIRECTV Group, Inc. (The) 25,822 442
Eastman Kodak Co. 14,000 378
eBay, Inc. (AE) 20,680 1,902
Education Management Corp. (AE) 3,200 105
Electronic Arts, Inc. (AE) 21,100 1,151
Estee Lauder Cos., Inc. (The) Class A 11,300 551
Federated Department Stores 2,200 108
Fisher Scientific International 12,600 728
Fossil, Inc. (AE) 1,800 49
Fox Entertainment Group, Inc. Class A (AE) 33,410 892
Gannett Co., Inc. 10,600 899
Gap, Inc. (The) 14,600 354
Gillette Co. (The) 41,600 1,764
GTECH Holdings Corp. 2,000 93
Home Depot, Inc. 73,200 2,577
InterActiveCorp (AE) 16,570 499
International Game Technology 11,900 459
Interpublic Group of Cos., Inc. 23,100 317
Jack in the Box, Inc. (AE) 2,500 74
JC Penney Co., Inc. Holding Co. 15,600 589
Jones Apparel Group, Inc. 2,100 83
Kimberly-Clark Corp. 26,100 1,719
Knight-Ridder, Inc. 6,600 475
Kohl's Corp. (AE) 17,700 748
Leggett & Platt, Inc. 1,700 45
Liberty Media Corp. Class A (AE) 45,220 407
Marriott International, Inc. Class A 33,350 1,663
Mattel, Inc. 32,100 586
May Department Stores Co. (The) 17,200 473
Maytag Corp. 2,000 49
McDonald's Corp. 89,700 2,332
Mohawk Industries, Inc. (AE) 500 37
Newell Rubbermaid, Inc. 29,900 703
Nike, Inc. Class B 7,090 537
Nordstrom, Inc. 1,500 64
Office Depot, Inc. (AE) 7,400 133
Omnicom Group 22,150 1,681
Reader's Digest Association, Inc. (The) 2,600 42
RR Donnelley & Sons Co. 15,000 495
Sabre Holdings Corp. Class A 5,700 158
SCP Pool Corp. 1,000 45
Sears Roebuck and Co. 5,800 219
Snap-On, Inc. Class C 1,500 50
Stanley Works (The) 1,000 46
Staples, Inc. 28,100 822
Starbucks Corp. (AE) 9,850 428
</Table>
Multi-Style Equity Fund 3
RUSSELL INVESTMENT FUNDS
MULTI-STYLE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Starwood Hotels & Resorts Worldwide, Inc. 20,500 919
Strayer Education, Inc. 500 56
Target Corp. 36,300 1,542
Tech Data Corp. (AE) 3,000 117
Time Warner, Inc. 135,800 2,387
Toro Co. 1,000 70
United Auto Group, Inc. 1,600 49
VeriSign, Inc. (AE) 23,500 468
VF Corp. 3,400 166
Viacom, Inc. Class B 16,100 575
Viad Corp. 1,300 35
Wal-Mart Stores, Inc. 26,900 1,419
Walt Disney Co. 54,650 1,393
Waste Management, Inc. 64,500 1,977
Whirlpool Corp. 800 55
Wynn Resorts, Ltd. (AE)(z) 6,000 232
XM Satellite Radio Holdings, Inc. Class A (AE) 9,700 265
Yahoo!, Inc. (AE) 30,920 1,123
------------
53,227
------------
Consumer Staples - 7.2%
Altria Group, Inc. 16,150 808
Anheuser-Busch Cos., Inc. 30,000 1,620
Clorox Co. 24,700 1,328
Coca-Cola Co. (The) 38,800 1,959
Colgate-Palmolive Co. 28,300 1,654
Del Monte Foods Co. (AE) 33,600 341
General Mills, Inc. 14,100 670
HJ Heinz Co. 19,400 760
Kraft Foods, Inc. Class A 19,900 630
Kroger Co. 15,200 277
PepsiCo, Inc. 64,500 3,476
Pilgrim's Pride Corp. (z) 1,200 35
Procter & Gamble Co. 86,420 4,706
RJ Reynolds Tobacco Holdings, Inc. (z) 2,750 186
Safeway, Inc. (AE) 9,200 233
Sanderson Farms, Inc. 1,200 64
Sara Lee Corp. 48,300 1,110
Supervalu, Inc. 5,000 153
Systemco Corp. 18,870 677
Unilever NV 8,900 610
UST, Inc. 4,800 173
Walgreen Co. 18,750 679
WM Wrigley Jr Co. 3,900 246
------------
22,395
------------
Financial Services - 19.8%
ACE, Ltd. 2,200 93
Alliance Data Systems Corp. (AE) 2,400 101
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Allstate Corp. (The) 14,700 684
American Express Co. 34,670 1,781
American International Group, Inc. 66,609 4,749
AmeriCredit Corp. (AE) 15,200 297
Ameritrade Holding Corp. (AE) 18,400 209
Archstone-Smith Trust (o) 5,700 167
Astoria Financial Corp. 3,700 135
Automatic Data Processing, Inc. 11,400 477
Axis Capital Holdings, Ltd. 7,800 218
Bank of America Corp. 80,398 6,804
Bank of New York Co., Inc. (The) 37,400 1,103
Bank One Corp. 14,550 742
BB&T Corp. 1,000 37
Capital One Financial Corp. 16,800 1,149
Checkfree Corp. (AE) 17,300 519
Chubb Corp. 3,800 259
Cigna Corp. 17,070 1,175
Citigroup, Inc. 153,889 7,157
CNA Financial Corp. (AE) 2,100 62
Comerica, Inc. 14,100 774
Commerce Bancorp, Inc. 3,400 187
Commerce Bancshares, Inc. 12,300 565
Conseco, Inc. (AE) 21,300 424
Deluxe Corp. 2,700 117
Dow Jones & Co., Inc. 12,000 541
E*Trade Financial Corp. (AE) 22,800 254
Endurance Specialty Holdings, Ltd. 6,100 212
Equity Office Properties Trust (o) 16,900 460
Equity Residential (o) 6,800 202
Fannie Mae 44,250 3,159
Fidelity National Financial, Inc. 4,180 156
First American Corp. 3,200 83
First Data Corp. 24,000 1,068
Fiserv, Inc. (AE) 13,400 521
Freddie Mac 15,600 987
Goldman Sachs Group, Inc. 19,960 1,879
Hartford Financial Services Group, Inc. 4,000 275
Health Care REIT, Inc. (o) 1,600 52
Hibernia Corp. Class A 2,500 61
Huntington Bancshares, Inc. 17,400 398
IMPAC Mortgage Holdings, Inc. (o) 2,600 59
Instinet Group, Inc. 36,800 194
Jefferson-Pilot Corp. 2,300 117
JP Morgan Chase & Co. 77,770 3,015
Keycorp 26,400 789
Lehman Brothers Holdings, Inc. 6,500 489
</Table>
4 Multi-Style Equity Fund
RUSSELL INVESTMENT FUNDS
MULTI-STYLE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Lincoln National Corp. 3,500 165
Manulife Financial Corp. 2,619 106
Marsh & McLennan Cos., Inc. 12,350 560
MBIA, Inc. 1,500 86
MBNA Corp. 26,100 673
Merrill Lynch & Co., Inc. 20,900 1,128
Metlife, Inc. 3,200 115
MGIC Investment Corp. (z) 2,550 193
Morgan Stanley 44,250 2,335
National City Corp. 14,700 515
National Commerce Financial Corp. 18,300 595
Northern Trust Corp. 6,300 266
Paychex, Inc. 44,550 1,509
Platinum Underwriters Holdings, Ltd. 9,700 295
PNC Financial Services Group, Inc. 13,000 690
Prentiss Properties Trust (o) 1,200 40
Progressive Corp. (The) 2,400 205
R&G Financial Corp. Class B 900 30
Radian Group, Inc. 8,200 393
Redwood Trust, Inc. (o)(z) 1,400 78
Regions Financial Corp. 2,500 91
St Paul Travelers Cos., Inc. (The) 47,254 1,916
SunTrust Banks, Inc. 4,500 292
T Rowe Price Group, Inc. 8,600 433
Torchmark Corp. 2,400 129
Union Planters Corp. 1,500 45
US Bancorp 26,596 733
Wachovia Corp. 17,200 765
Waddell & Reed Financial, Inc. Class A 12,800 283
Washington Mutual, Inc. 13,200 510
Wells Fargo & Co. 12,400 710
XL Capital, Ltd. Class A 1,000 75
Zions BanCorp. 9,300 571
------------
61,486
------------
Health Care - 13.1%
Abbott Laboratories 16,600 677
Aetna, Inc. 4,000 340
AmerisourceBergen Corp. 4,700 281
Amgen, Inc. 32,990 1,800
Amylin Pharmaceuticals, Inc. (AE)(z) 9,800 223
Anthem, Inc. (AE) 6,100 546
Aventis SA - ADR 9,650 734
Barr Pharmaceuticals, Inc. (AE) 600 20
Baxter International, Inc. 49,750 1,717
Biogen Idec, Inc. (AE) 10,170 643
Boston Scientific Corp. (AE) 57,770 2,473
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Bristol-Myers Squibb Co. 13,400 328
Cardinal Health, Inc. 4,000 280
Caremark Rx, Inc. (AE) 25,200 830
Community Health Systems, Inc. (AE) 2,200 59
Coventry Health Care, Inc. (AE) 3,000 147
Dade Behring Holdings, Inc. (AE) 1,100 52
DaVita, Inc. (AE) 2,700 83
Eli Lilly & Co. 30,500 2,132
Forest Laboratories, Inc. (AE) 9,650 546
Genentech, Inc. (AE) 54,450 3,061
Gilead Sciences, Inc. (AE) 9,050 606
GlaxoSmithKline PLC - ADR 16,150 670
Guidant Corp. 7,100 397
HCA, Inc. 2,000 83
Humana, Inc. 7,000 118
IMS Health, Inc. 4,400 103
Invitrogen Corp. (AE) 6,100 439
IVAX Corp. 18,200 437
Johnson & Johnson 44,100 2,456
Kinetic Concepts, Inc. (AE) 5,800 289
King Pharmaceuticals, Inc. (AE) 3,200 37
McKesson Corp. 27,490 944
Medco Health Solutions, Inc. (AE) 13,400 503
Medtronic, Inc. 24,200 1,179
Merck & Co., Inc. 26,700 1,268
Mylan Laboratories 8,100 164
Omnicare, Inc. 12,500 535
Oxford Health Plans, Inc. 1,800 99
Pacificare Health Systems (AE) 1,400 54
Pfizer, Inc. 251,520 8,623
Province Healthcare Co. (AE) 2,800 48
Quest Diagnostics 2,400 204
Select Medical Corp. 3,300 44
St Jude Medical, Inc. 11,200 847
Stryker Corp. 800 44
Tenet Healthcare Corp. 33,700 452
Teva Pharmaceutical Industries, Ltd. - ADR (z) 11,830 796
UnitedHealth Group, Inc. 9,300 579
Watson Pharmaceuticals, Inc. (AE) 1,400 38
Wyeth 18,200 658
Zimmer Holdings, Inc. (AE) 11,760 1,037
------------
40,723
------------
Integrated Oils - 3.8%
BP PLC - ADR 9,850 528
ChevronTexaco Corp. 21,211 1,996
ConocoPhillips 34,652 2,644
</Table>
Multi-Style Equity Fund 5
RUSSELL INVESTMENT FUNDS
MULTI-STYLE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Exxon Mobil Corp. 83,710 3,719
Marathon Oil Corp. 45,352 1,716
Occidental Petroleum Corp. 22,700 1,099
Unocal Corp. 7,700 293
------------
11,995
------------
Materials and Processing - 4.7%
Acuity Brands, Inc. 1,200 32
Alcoa, Inc. 59,000 1,949
American Standard Cos., Inc. (AE) 10,000 403
Archer-Daniels-Midland Co. 97,696 1,639
Avery Dennison Corp. 4,700 301
Bemis Co. 15,700 444
Bowater, Inc. 14,500 603
Commercial Metals Co. 1,100 36
Dow Chemical Co. (The) 30,400 1,237
Eastman Chemical Co. 3,000 139
Ecolab, Inc. 10,100 320
EI Du Pont de Nemours & Co. 19,334 859
Florida Rock Industries, Inc. 1,100 46
FMC Corp. 2,300 99
Georgia-Pacific Corp. 3,100 115
Hercules, Inc. 6,800 83
International Paper Co. 37,300 1,667
Lennar Corp. Class B 900 37
Louisiana-Pacific Corp. 1,500 35
Lubrizol Corp. 4,000 146
Lyondell Chemical Co. 19,300 336
Martin Marietta Materials, Inc. 2,100 93
Masco Corp. 19,800 617
MeadWestvaco Corp. 27,100 796
Monsanto Co. 14,700 566
PPG Industries, Inc. 1,900 119
Reliance Steel & Aluminum Co. 1,400 56
Rohm & Haas Co. 16,200 674
RPM International, Inc. 24,400 371
Sherwin-Williams Co. (The) 3,600 150
Smurfit-Stone Container Corp. (AE) 8,900 178
Sonoco Products Co. 1,500 38
Temple-Inland, Inc. 1,100 76
Texas Industries, Inc. 700 29
United States Steel Corp. 4,200 148
Vulcan Materials Co. 2,400 114
------------
14,551
------------
Miscellaneous - 4.2%
3M Co. 18,200 1,638
Eaton Corp. 2,000 129
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Fortune Brands, Inc. 1,600 121
General Electric Co. 201,270 6,522
Honeywell International, Inc. 44,900 1,645
ITT Industries, Inc. 4,100 340
Johnson Controls, Inc. 6,600 352
Teleflex, Inc. 5,000 251
Textron, Inc. 3,400 202
Tyco International, Ltd. 53,370 1,769
------------
12,969
------------
Other Energy - 1.8%
Apache Corp. 8,250 359
Calpine Corp. (AE) 53,700 232
El Paso Corp. 19,900 157
EOG Resources, Inc. 10,100 603
Kerr-McGee Corp. 4,100 220
National-Oilwell, Inc. Class C (AE) 8,300 261
NRG Energy, Inc. 5,900 146
Reliant Energy, Inc. (AE) 78,300 848
Schlumberger, Ltd. 32,700 2,077
Williams Cos., Inc. 64,800 771
------------
5,674
------------
Producer Durables - 3.7%
Agilent Technologies, Inc. (AE) 9,100 266
Applied Materials, Inc. (AE) 38,500 755
Boeing Co. (The) 20,800 1,063
Caterpillar, Inc. 18,410 1,462
Centex Corp. 4,200 192
Cooper Industries, Ltd. Class A 1,500 89
Crane Co. 1,400 44
Danaher Corp. 7,300 376
Deere & Co. 9,800 687
DR Horton, Inc. 8,100 230
Emerson Electric Co. 11,300 718
Engineered Support Systems, Inc. 1,050 61
Goodrich Corp. 4,750 154
Hovnanian Enterprises, Inc.
Class A (AE) 900 31
Hubbell, Inc. Class B 1,300 61
Illinois Tool Works, Inc. 9,000 863
KB Home 1,000 69
Koninklijke Philips Electronics NV 36,600 996
Lockheed Martin Corp. 17,400 906
Molex, Inc. 4,300 138
Northrop Grumman Corp. 16,354 878
Parker Hannifin Corp. 700 42
Pitney Bowes, Inc. 2,400 106
</Table>
6 Multi-Style Equity Fund
RUSSELL INVESTMENT FUNDS
MULTI-STYLE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Polycom, Inc. (AE) 23,000 515
Pulte Homes, Inc. 4,100 213
United Defense Industries, Inc. (AE) 1,200 42
United Technologies Corp. 5,030 460
------------
11,417
------------
Technology - 12.5%
3Com Corp. (AE) 31,100 194
ADC Telecommunications, Inc. (AE) 34,600 98
Advanced Micro Devices, Inc. (z) 3,000 48
Agere Systems, Inc. Class A (AE) 114,550 263
Altera Corp. (AE) 5,100 113
Amdocs, Ltd. (AE) 11,400 267
Amphenol Corp. Class A (AE) 3,800 127
Analog Devices, Inc. 20,710 975
Arrow Electronics, Inc. 1,300 35
Autodesk, Inc. 9,300 398
Avaya, Inc. (AE) 24,300 384
Avnet, Inc. 2,500 57
BEA Systems, Inc. (AE) 25,600 210
Broadcom Corp. Class A (AE) 18,870 883
Celestica, Inc. (AE)(z) 2,200 44
Cisco Systems, Inc. (AE) 228,230 5,410
Computer Associates International, Inc. 11,380 319
Computer Sciences Corp. 5,000 232
Comverse Technology, Inc. (AE) 12,100 241
Corning, Inc. 44,960 587
CSG Systems International (AE) 2,400 50
Dell, Inc. (AE) 85,110 3,050
Electronic Data Systems Corp. 4,100 79
EMC Corp. 34,200 390
Flextronics International, Ltd. (AE) 3,300 53
General Dynamics Corp. 600 60
Hewlett-Packard Co. 55,776 1,177
Ingram Micro, Inc. Class A (AE) 5,600 81
Intel Corp. 157,500 4,348
International Business Machines Corp. 24,750 2,182
Juniper Networks, Inc. (AE)(z) 22,300 548
Lucent Technologies, Inc. (z) 40,600 153
Macromedia, Inc. (AE) 8,200 201
Maxim Integrated Products 29,700 1,557
Micron Technology, Inc. 6,300 96
Microsoft Corp. 183,220 5,234
Motorola, Inc. 25,500 465
National Semiconductor Corp. (AE) 5,300 117
Nortel Networks Corp. 59,500 297
Nvidia Corp. (AE) 21,100 433
Peoplesoft, Inc. (AE) 8,100 150
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
PMC - Sierra, Inc. (AE) 30,100 432
Qualcomm, Inc. 37,330 2,724
Raytheon Co. 8,600 308
Red Hat, Inc. (AE) 19,500 448
Sanmina-SCI Corp. (AE) 77,700 707
SAP AG - ADR 9,190 384
Siebel Systems, Inc. (AE) 5,500 59
Silicon Laboratories, Inc. (AE) 9,200 426
Solectron Corp. (AE) 26,500 171
Tellabs, Inc. (AE) 4,000 35
Texas Instruments, Inc. 36,000 870
Vishay Intertechnology, Inc. (AE) 2,900 54
Xilinx, Inc. 13,830 461
------------
38,685
------------
Utilities - 6.3%
Allegheny Energy, Inc. 44,900 692
Alliant Energy Corp. (z) 1,900 50
Alltel Corp. 13,800 699
America Movil SA de CV
Series L - ADR 15,140 551
American Electric Power Co., Inc. 8,100 259
AT&T Corp. 3,640 53
BellSouth Corp. 77,250 2,025
Black Hills Corp. 6,300 198
Centerpoint Energy, Inc. (z) 14,100 162
CMS Energy Corp. (z) 11,400 104
Comcast Corp. Class A 29,617 830
Comcast Corp. Special Class A 5,000 138
COX Communications, Inc. Class A (AE) 2,700 75
Dominion Resources, Inc. 9,900 624
DTE Energy Co. 2,200 89
Edison International 7,100 182
Entergy Corp. 34,350 1,924
Exelon Corp. 19,400 646
FirstEnergy Corp. 6,400 239
FPL Group, Inc. 8,900 569
Liberty Media International, Inc. Class A (AE) 2,011 75
MDU Resources Group, Inc. 1,900 46
NII Holdings, Inc. (AE) 1,700 57
NiSource, Inc. 21,600 445
Northeast Utilities 7,200 140
Oneok, Inc. 15,400 339
Pepco Holdings, Inc. 22,400 409
PG&E Corp. 2,000 56
</Table>
Multi-Style Equity Fund 7
RUSSELL INVESTMENT FUNDS
MULTI-STYLE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Pinnacle West Capital Corp. 1,100 44
PPL Corp. 16,400 753
Progress Energy, Inc. - CVO (AE)(Y) 1,300 --
Public Service Enterprise Group, Inc. 35,550 1,423
Puget Energy, Inc. 14,300 313
Qwest Communications International 38,400 138
SBC Communications, Inc. 75,200 1,824
Sempra Energy 1,800 62
Sprint Corp. 10,000 176
TXU Corp. 5,600 227
UnitedGlobalCom, Inc. Class A (AE) 65,280 474
Verizon Communications, Inc. 62,000 2,244
Wisconsin Energy Corp. 1,400 46
Xcel Energy, Inc. 5,000 84
------------
19,484
------------
TOTAL COMMON STOCKS
(cost $268,515) 300,172
------------
SHORT-TERM INVESTMENTS - 4.2%
Frank Russell Investment Company
Money Market Fund 9,796,000 9,796
State Street Securities Lending Quality Trust
(N) 2,110,220 2,110
United States Treasury Bill (y)(s)
1.596% due 09/09/04 1,000 997
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $12,903) 12,903
------------
TOTAL INVESTMENTS - 100.8%
(identified cost $281,418) 313,075
OTHER ASSETS AND LIABILITIES,
NET - (0.8%) (2,442)
------------
NET ASSETS - 100.0% 310,633
============
<Caption>
UNREALIZED
NOTIONAL APPRECIATION
FUTURES CONTRACTS AMOUNT (DEPRECIATION)
(NUMBER OF CONTRACTS) $ $
- -------------------------------------------------------------------------------
Long Positions
Russell 1000 Index
expiration date 09/04 (7) 2,132 4
S&P 500 E-Mini Index
expiration date 09/04 (8) 456 --
S&P 500 Index
expiration date 09/04 (4) 1,140 6
S&P Midcap 400 Index
expiration date 09/04 (24) 7,299 114
------------
Total Unrealized Appreciation (Depreciation) on
Open Futures Contracts 124
============
</Table>
See accompanying notes which are an integral part of the financial statements.
8 Multi-Style Equity Fund
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
COMMON STOCKS - 94.6%
Auto and Transportation - 3.6%
AAR Corp. 30,400 345
Airtran Holdings, Inc. (AE)(z) 12,200 173
Alaska Air Group, Inc. 7,100 169
Arctic Cat, Inc. 2,109 58
ArvinMeritor, Inc. 4,300 84
Autoliv, Inc. 12,700 536
Aviall, Inc. 2,700 51
Collins & Aikman Corp. 7,200 40
Dana Corp. 15,100 296
Dura Automotive Systems, Inc. Class A (AE) 2,300 21
EGL, Inc. (AE) 11,600 309
Forward Air Corp. (AE) 4,600 172
Genesee & Wyoming, Inc. Class A (AE) 19,850 470
Gentex Corp. 4,600 183
Grupo TMM SA - ADR 20,300 50
Heartland Express, Inc. 8,339 228
HUB Group, Inc. Class A (AE) 1,400 48
JB Hunt Transport Services, Inc. 5,600 216
Kansas City Southern 8,700 135
Marten Transport, Ltd. (AE) 1,500 28
Navistar International Corp. 6,000 233
Nordic American Tanker Shipping (z) 3,000 99
Old Dominion Freight Line (AE) 10,700 315
Oshkosh Truck Corp. 6,000 344
Overnite Corp. 3,500 103
Overseas Shipholding Group 3,500 154
Pacer International, Inc. (AE) 18,800 348
Pinnacle Airlines Corp. (AE) 1,700 19
Quantum Fuel Systems Technologies Worldwide,
Inc. (AE) 3,600 22
SCS Transportation, Inc. (AE) 1,500 40
Skywest, Inc. 10,500 183
Stoneridge, Inc. (AE) 1,200 20
TBC Corp. (AE) 1,500 36
Tenneco Automotive, Inc. 9,400 124
Visteon Corp. 26,300 307
Wabash National Corp. 5,900 163
Wabtec Corp. 12,800 231
------------
6,353
------------
Consumer Discretionary - 20.8%
4Kids Entertainment, Inc. (AE) 10,600 254
Aaron Rents, Inc. 12,000 398
Abercrombie & Fitch Co. Class A 3,200 124
Activision, Inc. (AE) 35,600 566
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Advance Auto Parts (AE) 9,600 424
Advo, Inc. 17,250 568
Aeropostale, Inc. (AE) 18,650 502
Alderwoods Group, Inc. (AE) 10,800 132
Alliance Gaming Corp. (AE) 7,500 129
AMC Entertainment, Inc. 3,000 46
America's Car Mart, Inc. (AE) 3,100 93
Ameristar Casinos, Inc. 3,000 101
AnnTaylor Stores Corp. (AE) 3,450 100
Applebees International, Inc. 1,500 35
Applica, Inc. 9,100 81
Arbitron, Inc. 13,300 486
Asbury Automotive Group, Inc. (AE) 3,500 53
Ask Jeeves (AE) 1,600 62
Big 5 Sporting Goods Corp. (AE) 5,100 134
Blockbuster, Inc. Class A (z) 3,100 47
Boca Resorts, Inc. Class A (AE) 2,600 52
Borders Group, Inc. 10,000 234
Boyd Gaming Corp. 5,500 146
Bright Horizons Family Solutions, Inc. (AE) 900 48
Brink's Co. (The) 36,000 1,232
Brookstone, Inc. (AE) 12,550 252
Career Education Corp. (AE) 2,400 109
Carmike Cinemas, Inc. 6,200 245
Carter's, Inc. (AE) 800 23
CEC Entertainment, Inc. (AE) 2,000 59
Central European Distribution Corp. (AE)(z) 1,650 43
Charlotte Russe Holding, Inc. (AE) 16,600 355
Charming Shoppes 23,000 205
Choice Hotels International, Inc. 8,400 421
ChoicePoint, Inc. (AE) 11,833 540
Claire's Stores, Inc. 7,900 171
Coldwater Creek, Inc. (AE) 1,500 40
Concorde Career Colleges, Inc. (AE)(z) 6,083 106
Consolidated Graphics, Inc. (AE) 4,400 194
Copart, Inc. (AE) 9,400 251
Corinthian Colleges, Inc. (AE) 5,200 129
Corporate Executive Board Co. 8,900 514
Corrections Corp. of America 5,400 213
Cox Radio, Inc. Class A (AE) 10,000 174
Dave & Buster's, Inc. (AE) 3,900 73
Deckers Outdoor Corp. (AE)(z) 1,400 41
Dick's Sporting Goods, Inc. (AE) 3,400 113
Digital Theater Systems, Inc. (AE) 7,800 204
Dillard's, Inc. Class A 13,400 299
Dollar Thrifty Automotive Group (AE) 25,100 689
Dollar Tree Stores, Inc. (AE) 2,300 63
</Table>
Aggressive Equity Fund 9
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Dress Barn, Inc. (AE) 2,000 34
Earthlink, Inc. (AE) 11,600 120
Education Management Corp. (AE) 16,500 542
Electronics Boutique Holdings Corp. (AE) 7,100 187
Entercom Communications Corp. (AE) 5,900 220
Exponent, Inc. (AE) 1,600 43
Finish Line Class A (AE) 3,200 97
Fisher Scientific International 2,600 150
Gaylord Entertainment Co. 3,300 104
Genesco, Inc. (AE) 4,200 99
Geo Group, Inc. (The) (AE) 1,000 20
Getty Images, Inc. (AE) 10,400 624
Gevity HR, Inc. 14,398 377
Gold Spot US Dollars Per Troy Ounce 2003
Warrants (AE) 12,300 266
Goody's Family Clothing, Inc. 2,800 29
Gray Television, Inc. 14,600 203
GTECH Holdings Corp. 13,700 634
Guess ?, Inc. (AE) 3,200 52
Guitar Center, Inc. (AE) 4,000 178
Handleman Co. 12,200 283
Harman International Industries, Inc. 800 73
Harte-Hanks, Inc. 5,100 124
Hasbro, Inc. 18,700 355
Haverty Furniture Cos., Inc. 13,900 243
Hearst-Argyle Television, Inc. 36,400 938
Helen of Troy, Ltd. (AE) 4,300 159
Hewitt Associates, Inc. Class A (AE) 16,900 465
Hibbett Sporting Goods, Inc. (AE) 1,500 41
Hilton Hotels Corp. 9,000 168
Hollinger International, Inc. Class A 4,800 81
Hooker Furniture Corp. 1,700 34
IKON Office Solutions, Inc. 2,700 31
Insight Enterprises, Inc. (AE) 11,200 199
International Speedway Corp. Class A 2,700 131
ITT Educational Services, Inc. 1,500 57
Jack in the Box, Inc. (AE) 6,700 199
Jarden Corp. (AE) 5,100 184
Jo-Ann Stores, Inc. (AE) 5,400 159
Jones Apparel Group, Inc. 6,600 261
Journal Register Co. (AE) 4,000 80
Kellwood Co. 11,800 514
Korn/Ferry International (AE)(z) 2,900 56
Labor Ready, Inc. (AE) 13,400 208
Lamar Advertising Co. Class A (AE) 5,900 256
Landry's Restaurants, Inc. 2,600 78
Laureate Education, Inc. (AE) 4,500 172
La-Z-Boy, Inc. Class C 4,300 77
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Leapfrog Enterprises, Inc. (AE)(z) 7,700 153
Lee Enterprises, Inc. 4,200 202
Lithia Motors, Inc. Class A 9,000 223
LKQ Corp. (AE) 3,000 56
Lone Star Steakhouse & Saloon 5,400 147
MTR Gaming Group, Inc. (AE) 2,000 22
Magellan Health Services, Inc. (AE) 7,500 251
Marcus Corp. 10,000 173
MarineMax, Inc. (AE) 3,300 95
Marvel Enterprises, Inc. (AE) 6,150 120
Media General, Inc. Class A 2,800 180
Monro Muffler, Inc. (AE) 1,900 46
Movado Group, Inc. 7,800 135
Movie Gallery, Inc. 4,600 90
MPS Group, Inc. (AE) 45,300 549
MSC Industrial Direct Co. Class A 3,900 128
Nautilus Group, Inc. (z) 16,600 324
Neiman-Marcus Group, Inc. Class A 3,200 178
Nu Skin Enterprises, Inc. (z) 1,500 38
O'Reilly Automotive, Inc. (AE) 1,500 68
Oxford Industries, Inc. (z) 2,500 109
Papa John's International, Inc. (AE)(z) 1,100 32
Payless Shoesource, Inc. (AE) 4,000 60
PEP Boys-Manny Moe & Jack 5,900 150
Petco Animal Supplies, Inc. (AE) 6,100 196
Petsmart, Inc. 4,500 146
Pier 1 Imports, Inc. 7,000 124
Playtex Products, Inc. (AE) 8,900 70
Polo Ralph Lauren Corp. 14,900 513
Pre-Paid Legal Services, Inc. (AE)(z) 4,700 112
Pulitzer, Inc. 3,900 191
Radio One, Inc. Class D (AE) 25,500 408
Red Robin Gourmet Burgers, Inc. (AE)(z) 1,400 38
Regal Entertainment Group Class A 15,400 279
Regis Corp. 5,900 263
Rent-A-Center, Inc. (AE) 12,800 383
Rent-Way, Inc. (AE)(z) 2,700 24
Republic Services, Inc. 6,700 194
Retail Ventures, Inc. (AE) 1,500 12
RR Donnelley & Sons Co. 8,518 281
Ruby Tuesday, Inc. 4,500 124
Sabre Holdings Corp. Class A 5,900 163
Saks, Inc. 44,900 674
Scholastic Corp. (AE) 4,100 123
Scientific Games Corp. Class A (AE) 27,200 521
SCP Pool Corp. 14,400 648
Service Corp. International 21,900 161
</Table>
10 Aggressive Equity Fund
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
ShopKo Stores, Inc. (z) 16,100 228
Shuffle Master, Inc. (AE)(z) 3,300 120
Skechers U.S.A., Inc. Class A (AE) 5,400 70
Snap-On, Inc. Class C 7,000 235
Sonic Automotive, Inc. 7,800 173
Source Interlink Cos., Inc. (AE) 2,100 23
Sourcecorp (AE) 14,300 394
Speedway Motorsports, Inc. (z) 15,000 502
Spherion Corp. (AE) 9,200 93
Stage Stores, Inc. (AE)(z) 12,700 478
Steak N Shake Co. (The) 4,700 86
Stein Mart, Inc. (AE) 4,800 78
Steinway Musical Instruments (AE) 600 21
Stewart Enterprises, Inc. Class A 30,400 247
Strayer Education, Inc. 800 89
Tech Data Corp. (AE) 8,200 321
Tele2 AB Class A - ADR (AE)(z) 13,200 410
TeleTech Holdings, Inc. (AE) 10,000 88
Tetra Tech, Inc. (AE) 6,825 111
Thomas Nelson, Inc. 2,000 45
Tiffany & Co. 2,700 99
Toro Co. 9,600 673
Trans World Entertainment (AE)(z) 8,200 82
Unifirst Corp. 3,100 90
United Auto Group, Inc. 5,300 162
United Stationers, Inc. 4,000 159
Universal Technical Institute, Inc. (AE) 1,900 76
Vail Resorts, Inc. (AE) 3,400 65
Valassis Communications, Inc. 3,800 116
Valueclick, Inc. (AE) 13,400 161
Ventiv Health, Inc. (AE) 4,500 70
VeriSign, Inc. (AE) 13,800 275
Warnaco Group, Inc. (The) (AE) 2,700 57
Watson Wyatt & Co. Holdings 3,200 85
Weight Watchers International, Inc. (AE) 2,900 114
WESCO International, Inc. (AE) 5,600 103
West Corp. (AE) 8,200 214
Wolverine World Wide, Inc. 600 16
Zale Corp. (AE) 1,200 33
------------
36,817
------------
Consumer Staples - 2.3%
7-Eleven, Inc. Class C (AE) 6,100 109
Adolph Coors Co. Class B 2,700 195
Chiquita Brands International, Inc. (AE) 700 15
Church & Dwight, Inc. 1,700 78
Constellation Brands, Inc. Class A (AE) 13,200 490
Del Monte Foods Co. (AE) 7,500 76
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
DIMON, Inc. 2,500 14
Duane Reade, Inc. (AE) 3,700 60
Great Atlantic & Pacific Tea Co. (z) 10,500 80
Lance, Inc. 2,500 39
Longs Drug Stores Corp. 7,100 169
M&F Worldwide Corp. (AE) 7,300 100
Nash Finch Co. (z) 13,400 335
Natures Sunshine Prods, Inc. 3,700 53
NBTY, Inc. (AE) 11,600 341
Nutraceutical International Corp. (AE) 5,600 119
Pathmark Stores, Inc. (AE) 25,600 195
PepsiAmericas, Inc. 7,100 151
Pilgrim's Pride Corp. (z) 12,400 359
Robert Mondavi Class A (AE) 1,800 67
Ruddick Corp. 4,000 90
Sanderson Farms, Inc. (z) 12,900 692
Smart & Final, Inc. 2,900 35
Standard Commercial Corp. 1,200 22
Tyson Foods, Inc. Class A 4,500 94
Universal Corp. 3,200 163
------------
4,141
------------
Financial Services - 17.5%
Advent Software, Inc. (AE) 8,600 155
AG Edwards, Inc. 9,900 337
Alleghany Corp. 153 44
Alliance Data Systems Corp. (AE) 21,500 908
Allmerica Financial Corp. 2,500 85
AMB Property Corp. (o) 8,400 291
American Financial Group, Inc. 6,300 193
American Home Mortgage Investment Corp. (o)(z) 5,900 153
AmeriCredit Corp. (AE)(z) 25,900 506
AmerUs Group Co. (z) 1,800 75
AMLI Residential Properties Trust (o) 1,600 47
Anthracite Capital, Inc. (o) 17,200 206
Arden Realty, Inc. (o) 3,800 112
Ashford Hospitality Trust, Inc. (AE)(o) 15,200 127
Associated Banc-Corp 15,315 454
Associated Estates Realty Corp. (o)(z) 2,600 21
Assured Guaranty, Ltd. (AE) 10,800 183
Asta Funding, Inc. (z) 5,200 90
Astoria Financial Corp. 7,700 282
AvalonBay Communities, Inc. (o) 5,200 294
Bancorpsouth, Inc. (z) 900 20
Bank Mutual Corp. 18,200 198
Bank of Hawaii Corp. 19,300 873
Bankunited Financial Corp. Class A 3,000 77
</Table>
Aggressive Equity Fund 11
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
BOK Financial Corp. (AE) 1,030 40
Boykin Lodging Co. (o) 2,200 17
Brookline Bancorp, Inc. 13,500 198
Capital Automotive REIT (o) 8,500 249
Capital Trust Class A (z) 2,600 69
CapitalSource, Inc. (AE) 11,500 281
Capstead Mortgage Corp. (o)(z) 3,400 46
Cash America International, Inc. 5,100 117
CBL & Associates Properties, Inc. (o) 3,700 204
CCC Information Services Group (AE) 600 10
Central Pacific Financial Corp. 700 19
Certegy, Inc. 5,500 213
Charter Municipal Mortgage Acceptance Co. 4,800 94
Chemical Financial Corp. 700 26
CIT Group, Inc. 5,000 191
City Holding Co. 600 19
City National Corp. 2,900 191
Colonial BancGroup, Inc. (The) 12,200 222
Commerce Group, Inc. 2,000 99
Commercial Federal Corp. 5,000 136
Commercial Net Lease Realty (o)(z) 13,500 232
Community Bank System, Inc. 12,600 287
CompuCredit Corp. (AE) 19,700 341
Cornerstone Realty Income Trust, Inc. (o)(z) 700 6
Corus Bankshares, Inc. 2,600 107
Credit Acceptance Corp. (AE)(z) 3,200 48
CVB Financial Corp. 1,100 24
Cybersource Corp. (AE) 6,600 55
Diamond Rock Hospitality Co. (o) 20,800 209
Doral Financial Corp. 4,650 160
Downey Financial Corp. 3,700 197
Eastgroup Properties (o) 2,000 67
eFunds Corp. (AE) 7,000 123
Encore Capital Group, Inc. (AE) 3,500 46
Entertainment Properties Trust (o) 2,100 75
Equifax, Inc. 12,400 307
Equity Inns, Inc. (o) 3,800 35
Equity One, Inc. (o)(z) 13,200 239
Euronet Worldwide, Inc. (AE) 4,800 111
Fair Isaac Corp. 5,037 168
Falck SPA (AE) 6,400 211
FBL Financial Group, Inc. Class A 1,200 34
Fidelity Bankshares, Inc. 800 28
Fieldstone Investment Corp. (AE)(Y) 13,100 206
First American Corp. 19,300 500
First Bancorp Puerto Rico 600 24
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
First Commonwealth Financial Corp. (z) 4,900 64
First Midwest Bancorp, Inc. 1,900 67
First Niagara Financial Group, Inc. 27,100 325
FirstFed Financial Corp. 3,600 150
Flagstar Bancorp, Inc. 1,500 30
Flushing Financial Corp. 1,200 21
Fremont General Corp. (z) 5,300 94
Friedman Billings Ramsey Group, Inc. Class A
(o)(z) 12,600 249
Fulton Financial Corp. 1,681 34
Gabelli Asset Management, Inc. Class A (z) 6,500 276
GATX Corp. 5,700 155
Getty Realty Corp. (o) 1,900 48
Global Payments, Inc. (z) 15,100 680
Greater Bay Bancorp (z) 6,600 191
Hancock Holding Co. 800 23
Health Care Property Investors, Inc. (o) 900 22
Health Care REIT, Inc. (o)(z) 8,500 276
HealthExtras, Inc. (AE) 14,800 245
Heritage Property Investment Trust (o) 4,000 108
Hospitality Properties Trust (o) 1,800 76
HRPT Properties Trust (o) 40,500 405
Hudson United Bancorp 2,700 101
IberiaBank Corp. (z) 500 30
IMPAC Mortgage Holdings, Inc. (o) 9,500 214
Independent Bank Corp. 990 25
IndyMac Bancorp, Inc. 700 22
Innkeepers USA Trust (o) 3,800 39
Instinet Group, Inc. 17,000 90
Investors Financial Services Corp. 8,800 384
iPayment, Inc. (AE) 8,889 364
iShares Russell 2000 Value Index Fund (z) 5,600 964
Jack Henry & Associates, Inc. 10,600 213
Jefferies Group, Inc. 6,300 195
Jermyn Investments (AE)(Y) 19,400 291
Jones Lang LaSalle, Inc. (AE) 1,400 38
Kilroy Realty Corp. (o) 500 17
Koger Equity, Inc. (o) 8,400 194
La Quinta Corp. 35,600 299
LandAmerica Financial Group, Inc. 14,600 568
LaSalle Hotel Properties (o) 1,800 44
Legg Mason, Inc. 2,000 182
LTC Properties, Inc. (o)(z) 3,500 58
Luminent Mortgage Capital, Inc. (o) 16,800 202
Macatawa Bank Corp. 5,200 143
Mack-Cali Realty Corp. (o) 3,900 161
</Table>
12 Aggressive Equity Fund
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Manufactured Home Communities, Inc. (o) 4,900 163
Markel Corp. (AE) 1,450 402
Marlin Business Services, Inc. (AE) 2,300 35
MB Financial Corp. 750 28
Meadowbrook Insurance Group, Inc. 41,100 218
Meristar Hospitality Corp. (o) 16,600 114
Mid-America Apartment Communities, Inc. (o) 1,400 53
Moody's Corp. 1,200 78
National Health Investors, Inc. (o) 9,400 256
National Penn Bancshares, Inc. (z) 630 19
National Processing, Inc. (AE) 2,500 72
Nationwide Health Properties, Inc. (o) 1,700 32
NDCHealth Corp. 5,700 132
New Century Financial Corp. (z) 11,800 552
Newcastle Investment Corp. (o) 4,000 120
Novastar Financial, Inc. (o)(z) 600 23
Nuveen Investments, Inc. Class A 7,400 198
OceanFirst Financial Corp. 1,703 41
Ohio Casualty Corp. 6,800 137
Pacific Capital Bancorp 1,466 41
Parkvale Financial Corp. 3,757 99
People's Bank 6,700 209
PFF Bancorp, Inc. 5,320 198
Philadelphia Consolidated Holding Co. (AE) 1,500 90
Phoenix Cos., Inc. (The) (z) 2,700 33
Popular, Inc. 1,200 51
Prentiss Properties Trust (o) 6,400 215
PrivateBancorp, Inc. (z) 4,000 110
Protective Life Corp. 7,300 282
Provident Bancorp, Inc. 3,000 34
Provident Bankshares Corp. 1,500 43
Provident Financial Group, Inc. (z) 5,100 201
Providian Financial Corp. 23,200 340
PS Business Parks, Inc. (o) 4,700 189
PXRE Group, Ltd. 7,600 192
Quanta Capital Holdings, Ltd. (AE) 20,800 223
R&G Financial Corp. Class B 3,400 112
Radian Group, Inc. 3,700 177
Raymond James Financial, Inc. 9,600 254
Reckson Associates Realty Corp. (o) 4,800 132
Redwood Trust, Inc. (o)(z) 5,100 284
Regency Centers Corp. (o) 800 34
Republic Bancorp, Inc. 3,700 51
Ryder System, Inc. 7,900 317
Selective Insurance Group 7,200 287
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Senior Housing Properties Trust (o) 21,800 366
Silicon Valley Bancshares 12,600 500
SL Green Realty Corp. (o)(z) 1,400 66
Sotheby's Holdings Class A 330 5
Sovran Self Storage, Inc. (o) 1,100 42
Stancorp Financial Group, Inc. 2,800 188
Sterling Bancorp 2,090 58
Stewart Information Services Corp. 13,100 442
Summit Properties, Inc. (o) 2,400 62
Susquehanna Bancshares, Inc. 1,200 30
TCF Financial Corp. 2,400 139
Texas Regional Bancshares, Inc. Class A 825 38
UCBH Holdings, Inc. 4,500 178
UMB Financial Corp. 500 26
United Bankshares, Inc. 2,000 65
United Community Banks, Inc. 900 23
Universal Health Realty Income Trust (o) 900 26
Washington Mutual, Inc. 2005 Warrants (AE) 44,300 5
Washington Real Estate Investment Trust (o) 5,500 162
Webster Financial Corp. 3,000 141
Weingarten Realty Investors (o) 10,200 319
WellChoice, Inc. (AE) 6,800 282
WesBanco, Inc. 600 17
WFS Financial, Inc. (AE) 1,100 54
Whitney Holding Corp. 2,200 98
World Acceptance Corp. (AE) 10,700 196
WR Berkley Corp. 1,100 47
WSFS Financial Corp. 3,500 170
------------
31,005
------------
Health Care - 13.6%
Abaxis, Inc. (AE) 800 15
Abgenix, Inc. (AE) 14,300 168
Able Laboratories, Inc. (AE)(z) 7,800 160
Accelrys, Inc. (AE) 14,500 143
Accredo Health, Inc. (AE) 4,700 183
Advanced Medical Optics, Inc. (AE) 1,800 77
Align Technology, Inc. (AE) 13,382 254
Alpharma, Inc. Class A 6,600 135
American Medical Security Group, Inc. 1,300 35
American Medical Systems Holdings, Inc. (AE) 10,070 339
Analogic Corp. 3,700 157
Apogent Technologies, Inc. (AE) 1,900 61
</Table>
Aggressive Equity Fund 13
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Applera Corp. - Celera Genomics Group (AE) 19,800 228
Arthrocare Corp. (AE)(z) 7,800 227
Atherogenics, Inc. (AE)(z) 1,500 29
Atrix Labs, Inc. (AE) 4,300 147
Axcan Pharma, Inc. (AE)(z) 6,600 139
Beckman Coulter, Inc. 4,600 281
Beverly Enterprises, Inc. (AE) 4,800 41
Bio-Rad Laboratories, Inc. Class A (AE) 2,800 165
Candela Corp. (AE) 19,900 195
Cephalon, Inc. (AE)(z) 5,400 292
Charles River Laboratories International, Inc.
(AE) 1,400 68
Chattem, Inc. 1,200 35
Community Health Systems, Inc. (AE) 14,700 394
Cooper Cos., Inc. 2,200 139
Covance, Inc. (AE) 3,300 127
CR Bard, Inc. 1,000 57
Cytyc Corp. (AE) 7,600 193
Dade Behring Holdings, Inc. (AE) 25,900 1,230
Datascope Corp. 900 36
DaVita, Inc. (AE) 33,051 1,018
Digene Corp. (AE) 800 29
DJ Orthopedics, Inc. (AE) 2,600 60
Edwards Lifesciences Corp. (AE) 7,200 251
Elan Corp. PLC - ADR (AE)(z) 7,700 190
Endo Pharmaceuticals Holdings, Inc. (AE) 8,600 202
Eon Labs, Inc. (AE)(z) 1,100 45
eResearch Technology, Inc. (AE)(z) 21,800 610
Genencor International, Inc. (AE) 9,000 147
Gen-Probe, Inc. (AE) 21,300 1,007
Gentiva Health Services, Inc. 3,900 63
Given Imaging, Ltd. (AE) 6,807 241
Health Net, Inc. (AE) 14,100 374
Healthsouth Corp. (AE)(z) 27,600 166
Henry Schein, Inc. (AE) 1,300 82
Humana, Inc. 41,500 701
Idexx Laboratories, Inc. (AE) 600 38
Impax Laboratories, Inc. (AE) 1,500 29
Inamed Corp. (AE) 3,700 233
Intuitive Surgical, Inc. (AE) 8,900 169
Inveresk Research Group, Inc. (AE) 13,051 402
Invitrogen Corp. (AE) 3,000 216
Kindred Healthcare, Inc. (AE)(z) 13,600 358
Kos Pharmaceuticals, Inc. (AE) 10,900 359
Kosan Biosciences, Inc. (AE) 13,700 108
Kyphon, Inc. (AE) 1,600 45
LabOne, Inc. 2,200 70
LifePoint Hospitals, Inc. (AE) 11,700 435
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Ligand Pharmaceuticals, Inc. Class B (AE) 12,100 210
Lincare Holdings, Inc. (AE) 10,000 329
Manor Care, Inc. 10,600 346
Martek Biosciences Corp. (AE)(z) 5,500 309
Matria Healthcare, Inc. (AE)(z) 1,000 25
Maxygen, Inc. (AE) 1,500 16
Medarex, Inc. (AE)(z) 42,600 311
Medcath Corp. (AE)(z) 1,100 22
Medicis Pharmaceutical Class A 5,500 220
MGI Pharma, Inc. (AE) 5,800 157
Microtek Medical Holdings, Inc. (AE)(z) 6,100 31
Millennium Pharmaceuticals, Inc. (AE) 7,000 97
Millipore Corp. 2,300 130
Myriad Genetics, Inc. (AE)(z) 6,100 91
Nabi Biopharmaceuticals (AE) 10,544 150
NeighborCare, Inc. (AE) 4,100 128
Noven Pharmaceuticals, Inc. (AE) 5,600 123
Ocular Sciences, Inc. (AE) 3,800 144
Omnicare, Inc. 8,700 372
Orthofix International NV (AE) 4,100 175
Pacificare Health Systems (AE)(z) 11,600 448
Par Pharmaceutical Cos., Inc. 5,700 201
Parexel International Corp. (AE)(z) 5,900 117
Pediatrix Medical Group, Inc. (AE) 9,300 650
Perrigo Co. 4,300 82
Pharmacopeia Drug Discovery, Inc. (AE) 9,650 55
Protein Design Labs, Inc. (AE) 8,400 161
Province Healthcare Co. (AE) 18,300 314
QLT, Inc. (AE) 9,400 188
Renal Care Group, Inc. (AE) 12,200 404
Respironics, Inc. (AE) 13,400 787
Salix Pharmaceuticals, Ltd. (AE) 19,321 637
Select Medical Corp. 8,500 114
Sepracor, Inc. (AE) 3,600 190
Serologicals Corp. (AE)(z) 6,100 122
SFBC International, Inc. (AE) 6,500 204
Sierra Health Services (AE)(z) 4,300 192
Stericycle, Inc. (AE) 6,500 336
Sybron Dental Specialties, Inc. (AE) 9,466 283
Telik, Inc. (AE)(z) 2,200 53
Thoratec Corp. (AE) 13,300 143
TLC Vision Corp. (AE) 4,700 55
Triad Hospitals, Inc. (AE) 8,400 313
Universal Health Services, Inc. Class B 5,600 257
VCA Antech, Inc. (AE) 9,500 426
Ventana Medical Systems (AE) 6,500 309
Vicuron Pharmaceuticals, Inc. (AE) 1,500 19
</Table>
14 Aggressive Equity Fund
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
West Pharmaceutical Services, Inc. 500 21
Wright Medical Group, Inc. (AE) 2,300 82
Zymogenetics, Inc. (AE) 5,000 95
------------
24,042
------------
Integrated Oils - 0.1%
KCS Energy, Inc. 11,700 156
------------
Materials and Processing - 7.8%
Albany International Corp. Class A 4,200 141
Aptargroup, Inc. 2,700 118
Arch Chemicals, Inc. 1,800 52
Armor Holdings, Inc. (AE) 5,100 173
Ashland, Inc. 8,600 454
Ball Corp. 5,900 425
Barnes Group, Inc. 1,400 41
Bluegreen Corp. (z) 2,900 40
Brady Corp. Class A 1,000 46
Brookfield Homes Corp. 16,600 435
Brush Engineered Materials, Inc. 2,200 42
Building Material Holding Corp. 1,300 25
Cabot Corp. 9,400 383
Calgon Carbon Corp. (z) 29,800 200
Carpenter Technology 17,000 579
CB Richard Ellis Group, Inc. Class A (AE) 4,900 94
Century Aluminum Co. 8,500 211
Chesapeake Corp. 1,400 37
CIRCOR International, Inc. 3,200 65
Comfort Systems USA, Inc. (AE) 5,100 33
Constar International, Inc. (AE) 9,400 44
Crown Holdings, Inc. 19,600 195
Cytec Industries, Inc. 19,500 886
Delta & Pine Land Co. 9,500 209
Drew Industries, Inc. (AE) 1,100 45
Dycom Industries, Inc. (AE) 8,900 249
Encore Wire Corp. (AE) 4,800 132
Energizer Holdings, Inc. (AE) 4,400 198
Florida Rock Industries, Inc. 9,700 409
GrafTech International, Ltd. (AE) 2,700 28
Greif, Inc. Class A 100 4
Hercules, Inc. 12,300 150
Hughes Supply, Inc. 4,700 277
IMC Global, Inc. 5,700 76
IMCO Recycling, Inc. 5,000 66
Integrated Electrical Services, Inc. (AE) 22,200 179
Jacuzzi Brands, Inc. (AE) 26,000 210
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Lafarge North America, Inc. 3,700 160
Lennox International, Inc. 5,700 103
LNR Property Corp. (z) 8,600 467
Longview Fibre Co. 1,300 19
Louisiana-Pacific Corp. 12,900 305
Lubrizol Corp. 5,700 209
MacDermid, Inc. 800 27
Martin Marietta Materials, Inc. 5,100 226
Maverick Tube Corp. (AE) 4,900 129
Metals USA, Inc. (AE) 2,100 38
Millennium Chemicals, Inc. 13,400 232
Mueller Industries, Inc. 4,000 143
Myers Industries, Inc. 250 4
NCI Building Systems, Inc. (AE) 1,600 52
NewMarket Corp. 12,300 264
Octel Corp. 3,100 82
Oregon Steel Mills, Inc. (AE) 3,600 53
Pactiv Corp. (AE) 11,500 287
Quanex Corp. 5,100 248
Quanta Services, Inc. (AE)(z) 33,600 209
Reliance Steel & Aluminum Co. 7,300 294
Rogers Corp. 7,500 524
RPM International, Inc. 2,900 44
Ryerson Tull, Inc. (z) 12,900 205
Schulman A, Inc. 10,200 219
Sealed Air Corp. (AE) 5,200 277
Silgan Holdings, Inc. 1,600 64
Smurfit-Stone Container Corp. (AE) 14,600 291
Sonoco Products Co. 10,700 273
Southern Peru Copper Corp. 4,100 169
Spartech Corp. 8,600 223
Texas Industries, Inc. 2,800 115
Timken Co. 1,800 48
Titanium Metals Corp. 400 37
Trammell Crow Co. (AE)(z) 200 3
Tredegar Corp. 14,300 231
Unifi, Inc. 10,900 32
URS Corp. 3,100 85
USEC, Inc. 4,500 39
USG Corp. (z) 2,700 47
Valspar Corp. 600 30
Washington Group International, Inc. (AE) 3,200 115
Watsco, Inc. 6,000 168
WCI Communities, Inc. (AE) 1,600 36
York International Corp. 2,700 111
------------
13,888
------------
</Table>
Aggressive Equity Fund 15
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Miscellaneous - 0.7%
Allete, Inc. 7,200 240
Brunswick Corp. 9,000 367
Carlisle Cos., Inc. 6,200 386
Trinity Industries, Inc. (z) 10,200 324
------------
1,317
------------
Other Energy - 3.9%
Berry Petroleum Co. Class A 2,500 74
Cal Dive International, Inc. (AE) 9,500 288
Capstone Turbine Corp. (AE)(z) 7,400 16
CARBO Ceramics, Inc. 1,300 89
Clayton Williams Energy, Inc. (AE) 2,400 57
Consol Energy, Inc. (z) 1,400 50
Cooper Cameron Corp. (AE) 2,300 112
Encore Acquisition Co. (AE) 3,400 95
Evergreen Resources, Inc. (AE) 3,100 125
Global Power Equipment Group, Inc. (AE) 4,700 38
Grant Prideco, Inc. (AE) 19,500 360
Harvest Natural Resources, Inc. (AE) 11,800 176
Houston Exploration Co. (AE) 5,300 275
Magnum Hunter Resources, Inc. (AE)(z) 6,700 70
Massey Energy Co. 7,300 206
Nabors Industries, Ltd. (AE) 4,000 181
National-Oilwell, Inc. Class C (AE) 16,100 507
Newfield Exploration Co. (AE) 1,400 78
NRG Energy, Inc. 8,300 206
Patina Oil & Gas Corp. 20,312 607
Patterson-UTI Energy, Inc. 10,000 334
Petroleum Development Corp. (AE) 14,600 400
Petroquest Energy, Inc. (AE) 7,400 32
Plains Exploration & Production Co. (AE) 3,182 58
Smith International, Inc. 3,600 201
Stone Energy Corp. (AE) 4,900 224
Superior Energy Services (AE) 14,400 145
Swift Energy Co. (AE) 7,583 167
Tesoro Petroleum Corp. 21,700 599
Texas Genco Holdings, Inc. (z) 2,700 122
Universal Compression Holdings, Inc. (AE) 9,600 295
Veritas DGC, Inc. (AE) 23,800 551
Whiting Petroleum Corp. (AE) 6,300 158
------------
6,896
------------
Producer Durables - 7.8%
Actuant Corp. Class A 5,600 218
Advanced Energy Industries, Inc. (AE) 1,300 20
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
American Power Conversion Corp. 10,700 210
American Tower Corp. Class A 15,000 228
Applied Industrial Technologies, Inc. 1,800 54
Arris Group, Inc. (AE) 15,500 92
Artesyn Technologies, Inc. (AE) 44,600 401
Audiovox Corp. Class A (AE) 2,100 35
Axcelis Technologies, Inc. (AE) 9,200 114
Briggs & Stratton Corp. 8,300 733
Cascade Corp. 900 28
Centex Corp. 900 41
CNH Global NV 10,740 222
Crown Castle International Corp. (AE) 2,600 38
CTS Corp. 3,400 41
Curtiss-Wright Corp. 2,200 124
Cymer, Inc. (AE) 5,800 217
Dionex Corp. (AE) 2,700 149
Dominion Homes, Inc. (AE) 700 16
Donaldson Co., Inc. 3,600 105
Duratek, Inc. (AE) 13,073 198
Electroglas, Inc. (AE)(z) 4,500 24
Engineered Support Systems, Inc. 800 47
EnPro Industries, Inc. (AE) 2,800 64
ESCO Technologies, Inc. 4,600 245
Esterline Technologies Corp. 1,200 35
FSI International, Inc. (AE) 3,900 30
Gardner Denver, Inc. (AE) 8,800 246
Genlyte Group, Inc. (AE) 2,200 138
Goodrich Corp. 11,100 359
Graco, Inc. 4,050 126
Hovnanian Enterprises, Inc. Class A (AE)(z) 5,100 177
Hubbell, Inc. Class B 4,100 192
IDEX Corp. 4,950 170
Imagistics International, Inc. (AE) 12,400 439
JLG Industries, Inc. 4,200 58
Joy Global, Inc. 8,800 263
Kadant, Inc. (AE) 800 19
KB Home 800 55
Littelfuse, Inc. (AE) 4,500 191
Manitowoc Co. 3,900 132
Mattson Technology, Inc. (AE) 13,700 165
MDC Holdings, Inc. 4,520 288
Measurement Specialties, Inc. (AE) 6,284 136
Meritage Corp. 300 21
Metrologic Instruments, Inc. (AE)(z) 3,400 68
Mettler Toledo International, Inc. (AE) 5,900 290
</Table>
16 Aggressive Equity Fund
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Middleby Corp. (z) 4,200 229
Milacron, Inc. (z) 22,000 88
Mine Safety Appliances Co. 1,100 37
MKS Instruments, Inc. (AE) 4,700 107
Molex, Inc. 7,300 234
Moog, Inc. Class A 3,400 126
MTS Systems Corp. 13,100 307
Mykrolis Corp. (AE) 9,800 171
NACCO Industries, Inc. Class A 3,800 361
NMS Communications Corp. (AE) 5,000 37
Nordson Corp. 2,500 108
Orbital Sciences Corp. (AE)(z) 20,900 289
Orleans Homebuilders, Inc. (z) 1,700 33
Pall Corp. 10,500 275
Pentair, Inc. 3,000 101
Photon Dynamics, Inc. (AE) 7,900 277
Photronics, Inc. (AE) 18,300 347
Plantronics, Inc. (AE) 10,400 438
Polycom, Inc. (AE) 9,400 211
Pulte Homes, Inc. 2,000 104
Rayovac Corp. (AE) 1,700 48
Rofin-Sinar Technologies, Inc. (AE) 6,500 165
Sonic Solutions, Inc. (AE)(z) 11,400 242
Spatialight, Inc. (AE)(z) 16,047 97
Standard-Pacific Corp. 7,800 385
Steelcase, Inc. Class A 3,500 49
Symmetricom, Inc. (AE) 7,613 68
Tecumseh Products Co. Class A 2,700 111
Tektronix, Inc. 9,400 320
Teledyne Technologies, Inc. (AE) 11,300 226
Terex Corp. 8,100 276
Thomas Industries, Inc. 900 30
Toll Brothers, Inc. (AE) 1,300 55
Transact Technologies, Inc. (z) 3,054 97
Triumph Group, Inc. (AE) 1,400 45
United Defense Industries, Inc. (AE) 4,000 140
United Industrial Corp. 4,100 96
Varian Semiconductor Equipment Associates, Inc.
(AE) 5,700 220
Woodward Governor Co. 800 58
------------
13,870
------------
Technology - 13.0%
3Com Corp. (AE) 81,500 509
ADC Telecommunications, Inc. (AE) 57,600 164
Aeroflex, Inc. (AE) 32,000 459
Agile Software Corp. (AE) 29,300 256
AgilySystem, Inc. 2,300 32
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Aladdin Knowledge Systems 9,000 148
Alliance Semiconductor Corp. (AE) 13,200 79
Amphenol Corp. Class A (AE) 1,000 33
Anixter International, Inc. 9,900 337
Anteon International Corp. (AE) 3,600 117
Arrow Electronics, Inc. 800 21
Artisan Components, Inc. (AE) 4,800 124
Ascential Software Corp. (AE) 12,700 203
ASE Test, Ltd. (AE) 17,200 127
Aspect Communications Corp. (AE) 18,600 264
Aspen Technology, Inc. (AE) 12,300 89
ATI Technologies, Inc. (AE) 20,900 394
Atmel Corp. (AE) 87,900 520
Autodesk, Inc. 2,100 90
Avaya, Inc. (AE) 16,200 256
Avid Technology, Inc. (AE) 3,300 180
Avnet, Inc. 40,500 919
Avocent Corp. (AE) 900 33
AVX Corp. (z) 7,300 105
BearingPoint, Inc. (AE) 32,700 290
BEI Technologies, Inc. 5,900 167
Benchmark Electronics, Inc. (AE) 4,600 134
Borland Software Corp. (AE) 18,700 159
Catapult Communications Corp. (AE) 4,100 94
Ceridian Corp. (AE) 11,600 261
Chordiant Software, Inc. (AE) 3,100 14
Ciena Corp. (AE) 28,300 105
Cognos, Inc. (AE) 7,000 253
Coherent, Inc. (AE) 2,300 69
CommScope, Inc. (AE) 1,900 41
Compuware Corp. (AE) 42,200 279
Comtech Telecommunications (AE) 9,500 214
Comverse Technology, Inc. (AE) 16,100 321
Conexant Systems, Inc. (AE) 13,000 56
CovanSystem Corp. (AE) 3,300 34
CSG Systems International (AE) 5,100 106
Cypress Semiconductor Corp. (AE)(z) 5,300 75
Digital River, Inc. (AE) 9,800 320
Diodes, Inc. (AE) 1,600 38
Ditech Communications Corp. (AE) 15,900 371
DRS Technologies, Inc. (AE) 5,600 179
E.piphany, Inc. (AE) 10,900 53
EDO Corp. 13,800 333
Embarcadero Technologies, Inc. (AE) 4,000 49
Emulex Corp. (AE) 9,800 140
Epicor Software Corp. (AE) 5,000 70
Equinix, Inc. (AE)(z) 7,800 265
ESS Technology (AE) 5,100 55
</Table>
Aggressive Equity Fund 17
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Fairchild Semiconductor International, Inc. (AE) 25,000 409
Filenet Corp. (AE) 4,200 133
FormFactor, Inc. 400 9
Harris Corp. 2,600 132
ID Systems, Inc. (AE)(z) 8,800 133
Imation Corp. 7,200 307
InFocus Corp. (AE) 41,500 353
Informatica Corp. (AE) 20,500 156
Innovative Solutions & Support, Inc. (AE) 11,753 229
Integrated Circuit Systems, Inc. (AE) 10,800 293
Integrated Device Technology, Inc. (AE) 33,200 459
Integrated Silicon Solutions, Inc. (AE) 6,000 73
Intergraph Corp. (AE) 1,700 44
International Rectifier Corp. (AE) 4,800 199
Internet Security Systems (AE) 13,400 206
Intersil Corp. Class A 7,100 154
Interwoven, Inc. (AE) 3,200 32
Iomega Corp. 7,000 39
JDA Software Group, Inc. (AE) 4,600 61
Kemet Corp. (AE) 16,400 200
Keynote Systems, Inc. (AE) 10,500 144
Komag, Inc. (AE)(z) 3,400 47
Lawson Software, Inc. (AE) 3,500 25
Leadis Technology, Inc. (AE) 1,700 23
Lions Gate Entertainment Corp. (AE) 36,100 252
LSI Logic Corp. (AE) 58,300 444
Macromedia, Inc. (AE) 6,900 169
Macrovision Corp. (AE) 5,400 135
MatrixOne, Inc. (AE) 22,800 158
Maxtor Corp. (AE) 27,400 182
MEMC Electronic Materials, Inc. (AE) 7,500 74
Mercury Interactive Corp. (AE) 2,700 135
Merix Corp. (AE)(z) 1,400 16
Methode Electronics, Inc. 17,100 222
Microsemi Corp. 16,300 232
MicroStrategy, Inc. Class A (AE)(z) 700 30
Mindspeed Technologies, Inc. (AE) 12,200 61
MSC.Software Corp. 11,700 105
M-Systems Flash Disk Pioneers (AE)(z) 1,600 24
National Instruments Corp. 8,550 262
NetIQ Corp. (AE) 12,100 160
Newport Corp. 9,800 158
Norske Skogindustrier ASA (z) 5,200 12
Omnivision Technologies, Inc. (AE)(z) 4,000 64
ON Semiconductor Corp. (AE) 35,800 180
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Open Solutions, Inc. (AE) 1,100 27
Packeteer, Inc. (AE) 8,700 141
Park Electrochemical Corp. 2,100 53
PerkinElmer, Inc. 4,600 92
Pixelworks, Inc. (AE)(z) 14,300 219
Plexus Corp. (AE) 3,700 50
PMC - Sierra, Inc. (AE) 17,200 247
Pomeroy IT Solutions, Inc. 1,600 19
Quantum Corp. (AE)(z) 68,500 212
Quest Software, Inc. (AE) 20,600 266
RadiSystem Corp. (AE) 7,600 141
RADWARE, Ltd. (AE) 5,600 95
Sandisk Corp. (AE)(z) 2,900 63
Sanmina-SCI Corp. (AE) 34,200 311
Scansource, Inc. (AE) 4,300 256
Seachange International, Inc. (AE)(z) 2,200 37
Semtech Corp. (AE) 6,800 160
Serena Software, Inc. (AE) 7,300 139
Sigmatel, Inc. (AE) 3,300 96
Silicon Storage Technology, Inc. (AE) 10,100 104
Skyworks Solutions, Inc. 19,400 169
SoftBrands, Inc. (AE) 9 --
SonicWALL, Inc. (AE) 18,600 160
Spectrasite, Inc. (AE) 5,200 225
SRA International, Inc. Class A (AE) 200 8
SS&C Technologies, Inc. 9,900 185
Standard MicroSystems Corp. (AE) 1,300 30
SYKES Enterprises, Inc. (AE) 2,200 17
Symbol Technologies, Inc. 16,300 240
Synaptics, Inc. (AE) 1,600 31
SYNNEX Corp. (AE) 2,100 33
Tekelec (AE) 7,400 134
TIBCO Software, Inc. (AE) 29,400 248
Transaction Systems Architects, Inc. Class A
(AE) 4,500 97
Triquint Semiconductor, Inc. (AE) 10,400 57
TTM Technologies, Inc. (AE) 5,500 65
Tyler Technologies, Inc. 4,100 39
UniSystem Corp. 18,000 250
UNOVA, Inc. (AE) 2,600 53
Utstarcom, Inc. (AE)(z) 1,800 54
Viasat, Inc. (AE) 4,851 121
Vishay Intertechnology, Inc. (AE) 27,600 513
Wavecom SA - ADR (AE)(z) 11,500 86
Websense, Inc. (AE) 6,700 249
Zoran Corp. (AE) 12,300 226
------------
22,957
------------
</Table>
18 Aggressive Equity Fund
RUSSELL INVESTMENT FUNDS
AGGRESSIVE EQUITY FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Utilities - 3.5%
AGL Resources, Inc. 8,200 238
Alliant Energy Corp. 2,000 52
Arch Wireless, Inc. Class A (AE) 1,700 48
Avista Corp. 3,700 68
Centerpoint Energy, Inc. (z) 33,800 389
CMS Energy Corp. (z) 10,900 100
Dobson Communications Corp. Class A (AE) 1,000 3
Energen Corp. 11,500 552
Laclede Group, Inc. (The) 1,000 27
MDU Resources Group, Inc. 8,200 197
New Jersey Resources Corp. 2,100 87
Nextel Partners, Inc. Class A (AE)(z) 25,600 408
NII Holdings, Inc. (AE)(z) 5,800 195
Northeast Utilities 39,600 771
Northwest Natural Gas Co. 1,700 52
NSTAR 4,700 225
OGE Energy Corp. 8,700 222
Pinnacle West Capital Corp. 2,800 113
Primus Telecommunications GP (AE) 18,000 91
PTEK Holdings, Inc. (AE) 40,800 470
South Jersey Industries, Inc. 1,100 48
Southern Union Co. 17,200 363
Southwest Gas Corp. 3,100 75
Southwestern Energy Co. 5,300 152
Telephone & Data Systems, Inc. 1,700 121
UGI Corp. 13,800 443
UnitedGlobalCom, Inc. Class A (AE) 27,200 197
US Cellular Corp. (AE) 9,400 362
WGL Holdings, Inc. (z) 2,800 80
WPS Resources Corp. 100 4
------------
6,153
------------
TOTAL COMMON STOCKS
(cost $145,839) 167,595
------------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 14.2%
Frank Russell Investment Company
Money Market Fund 8,573,000 8,573
State Street Securities Lending Quality Trust
(N) 15,889,638 15,890
United States Treasury Bill (y)(s)
1.245% due 09/09/04 700 698
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $25,161) 25,161
------------
TOTAL INVESTMENTS - 108.8%
(identified cost $171,000) 192,756
OTHER ASSETS AND LIABILITIES,
NET - (8.8%) (15,546)
------------
NET ASSETS - 100.0% 177,210
============
<Caption>
UNREALIZED
NOTIONAL APPRECIATION
FUTURES CONTRACTS AMOUNT (DEPRECIATION)
(NUMBER OF CONTRACTS) $ $
- -------------------------------------------------------------------------------
Long Positions
Russell 2000 E-Mini Index
expiration date 09/04 (62) 3,673 135
Russell 2000 Index
expiration date 09/04 (14) 4,146 121
S&P 500 E-Mini Index
expiration date 09/04 (10) 570 5
S&P 500 Index
expiration date 09/04 (3) 855 3
------------
Total Unrealized Appreciation
(Depreciation) on Open Futures
Contracts 264
============
</Table>
See accompanying notes which are an integral part of the financial statements.
Aggressive Equity Fund 19
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
COMMON STOCKS - 90.5%
Australia - 2.6%
Alinta, Ltd. 11,400 48
Alumina, Ltd. 1,600 6
Amcor, Ltd. 48,900 237
AMP, Ltd. 8,300 36
Ansell, Ltd. 1,900 10
Australia & New Zealand Banking Group, Ltd. 27,463 349
Australian Gas Light Co., Ltd. 1,500 13
Australian Stock Exchange, Ltd. 4,500 49
BHP Billiton, Ltd. 57,864 504
Billabong International, Ltd. (z) 19,500 112
BlueScope Steel, Ltd. 9,800 46
Boral, Ltd. 8,000 36
CFS Gandel Retail Trust (z) 23,400 23
Coca-Cola Amatil, Ltd. 2,300 11
Coles Myer, Ltd. 6,100 36
Commonwealth Bank of Australia 6,600 149
Commonwealth Property Office Fund 18,200 15
CSL, Ltd. 12,702 197
CSR, Ltd. 22,100 34
David Jones, Ltd. (z) 16,300 19
Deutsche Office Trust 12,500 10
Foster's Group, Ltd. 81,300 266
Futuris Corp., Ltd. (z) 6,700 7
General Property Trust 12,700 31
Iluka Resources, Ltd. 1,800 6
Insurance Australia Group, Ltd. 16,000 56
James Hardie Industries NV 18,100 75
John Fairfax Holdings, Ltd. 19,100 49
Lend Lease Corp., Ltd. (z) 13,000 93
Lion Nathan, Ltd. 2,000 9
Macquarie Bank, Ltd. 7,300 172
Macquarie Goodman Industrial Trust 1,400 2
Macquarie Infrastructure Group 6,700 15
Mayne Group, Ltd. 7,000 17
National Australia Bank, Ltd. 40,927 848
Newcrest Mining, Ltd. 500 5
News Corp., Ltd. (z) 42,326 373
OneSteel, Ltd. 19,000 33
Orica, Ltd. 3,600 38
Origin Energy, Ltd. 5,600 22
PaperlinX, Ltd. (z) 22,700 76
Promina Group, Ltd. 48,688 135
Publishing & Broadcasting, Ltd. 10,120 90
QBE Insurance Group, Ltd. (z) 28,835 256
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Rinker Group, Ltd. 25,536 143
Rio Tinto, Ltd. (z) 800 20
Santos, Ltd. 53,300 257
Sons of Gwalia, Ltd. (AE)(z) 7,700 15
Stockland Trust Group (z) 6,200 22
Suncorp-Metway, Ltd. 3,800 37
TABCORP Holdings, Ltd. 2,100 21
Telstra Corp., Ltd. 5,300 19
Wesfarmers, Ltd. 1,900 39
Westfield Holdings, Ltd. (z) 19,100 204
Westfield Trust (z) 10,200 31
Westpac Banking Corp. 17,362 212
WMC Resources, Ltd. 12,100 41
Woodside Petroleum, Ltd. 1,300 15
Woolworths, Ltd. 11,600 92
------------
5,782
------------
Belgium - 1.0%
AGFA-Gevaert NV 7,990 198
Colruyt SA 2,433 300
Delhaize Group 800 41
Dexia (AE) 20,500 --
Dexia (z) 27,810 461
Electrabel (z) 107 34
Fortis (z) 41,120 907
Fortis (z) 3,400 75
KBC Bancassurance Holding 900 52
Solvay SA 500 41
Umicore 200 13
------------
2,122
------------
Brazil - 0.2%
Petroleo Brasileiro SA - ADR 12,820 360
------------
Denmark - 0.9%
Coloplast A/S Class B 100 9
Danske Bank A/S 40,290 955
DSV DE Sammenslut Vogn A/S (z) 400 19
East Asiatic Co., Ltd. A/S (z) 600 28
FLS Industries A/S Class B (AE)(z) 900 13
GN Store Nord 2,500 22
ISS A/S 7,500 371
Novo-Nordisk A/S Class B 8,484 437
TDC A/S (z) 1,700 55
William Demant Holding (AE) 400 15
------------
1,924
------------
</Table>
20 Non-U.S. Fund
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Finland - 1.1%
Elisa OYJ Class S (AE) 2,500 33
Fortum OYJ 43,800 559
Nokia OYJ 28,000 404
Nokia OYJ - ADR 22,508 327
Nokian Renkaat OYJ 200 19
Sampo OYJ 41,950 407
Stora Enso OYJ Class R 2,600 35
UPM-Kymmene OYJ 31,100 592
------------
2,376
------------
France - 9.1%
Air France 3,200 55
Alcatel SA (z) 24,900 384
Aventis SA (z) 12,250 925
AXA (z) 32,289 711
BNP Paribas (z) 23,684 1,456
Caisse Nationale du Credit Agricole 15,363 374
Cap Gemini SA (z) 1,100 44
Carrefour SA (z) 13,200 640
Casino Guichard Perrachon SA (z) 500 45
Christian Dior SA 3,300 213
Cie de Saint-Gobain (z) 4,700 234
CNP Assurances (z) 5,010 291
France Telecom (z) 29,800 777
Groupe Danone (z) 1,412 123
Klepierre (z) 100 7
Lafarge SA (z) 16,792 1,497
Lagardere S.C.A. (z) 11,479 717
L'Oreal SA 12,464 995
Pernod-Ricard (z) 15,867 2,029
Peugeot SA (z) 4,100 228
Pinault-Printemps-Redoute (z) 300 31
Renault SA 800 61
Sanofi-Synthelabo SA (z) 10,000 634
Schneider Electric SA (z) 6,190 422
SNECMA 17,200 337
Societe Assurances Generales de France 1,734 105
Societe BIC SA (z) 400 18
Societe Generale (z) 5,100 433
Suez SA (z) 9,800 204
Thomson (z) 42,000 828
Total SA (z) 14,150 2,697
Total SA - ADR 8,716 837
Unibail (z) 500 52
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Valeo SA (z) 2,000 83
Vivendi Universal SA 61,665 1,710
------------
20,197
------------
Germany - 7.2%
Adidas-Salomon AG (z) 10,651 1,272
Allianz AG 7,900 856
Altana AG (z) 2,700 162
AMB Generali Holding AG 300 23
BASF AG (z) 2,600 139
Bayer AG (z) 30,013 865
Bayerische Hypo-und Vereinsbank AG 8,500 151
Celesio AG 1,300 78
Commerzbank AG 3,300 58
Continental AG 10,000 482
DaimlerChrysler AG 42,409 1,981
Deutsche Bank AG (z) 5,950 467
Deutsche Boerse AG 3,547 180
Deutsche Genossenschafts-Hypothekenbank (AE) 3,700 230
Deutsche Lufthansa AG 35,267 480
Deutsche Post AG 40,440 873
Deutsche Postbank AG (AE) 7,100 255
Deutsche Telekom AG (AE) 50,600 889
E.ON AG 38,007 2,742
Heidelberger Druckmaschinen 6,800 225
Infineon Technologies AG (AE) 3,200 43
KarstadtQuelle AG (z) 28,800 627
Linde AG 800 44
MAN AG 5,800 212
Medion AG (z) 6,000 242
Merck KGaA 3,800 229
Metro AG (z) 400 19
MG Technologies AG (z) 3,400 43
Muenchener Rueckversicherungs AG 940 102
Puma AG Rudolf Dassler Sport (z) 977 248
SAP AG (z) 192 32
Schering AG 4,600 271
Siemens AG 7,200 518
ThyssenKrupp AG 3,000 51
TUI AG (z) 2,500 48
Volkswagen AG 16,960 716
------------
15,853
------------
Greece - 0.5%
Cosmote Mobile Telecommunications SA 17,100 266
EFG Eurobank Ergasias SA 11,700 253
</Table>
Non-U.S. Fund 21
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Hellenic Telecommunications Organization SA 35,552 460
OPAP SA 12,950 243
------------
1,222
------------
Hong Kong - 1.1%
Bank of East Asia, Ltd. 53,036 152
BOC Hong Kong Holdings, Ltd. (z) 22,000 38
Cathay Pacific Airways, Ltd. 13,000 24
Cheung Kong Holdings, Ltd. 32,000 236
China Mobile Hong Kong, Ltd. 137,000 415
CLP Holdings, Ltd. 30,000 164
Dah Sing Banking Group, Ltd. (AE) 3,080 5
DAH Sing Financial (z) 7,700 45
Esprit Holdings, Ltd. 37,500 168
Hang Seng Bank, Ltd. 3,300 42
Henderson Land Development (z) 3,000 13
Hong Kong & China Gas 1,000 2
Hong Kong Exchanges and Clearing, Ltd. 2,000 4
HongKong Electric Holdings 2,000 8
Hopewell Holdings 15,000 30
Hutchison Whampoa, Ltd. 6,000 41
Hysan Development Co., Ltd. 6,000 9
MTR Corp. (z) 166,195 251
New World Development, Ltd. 40,000 29
PCCW, Ltd. (AE)(z) 230,000 156
Shangri-La Asia, Ltd. (z) 4,000 4
Sun Hung Kai Properties, Ltd. 5,000 41
Swire Pacific, Ltd. 64,300 416
Techtronic Industries Co. 71,500 114
Wharf Holdings, Ltd. 43,000 122
Yue Yuen Industrial Holdings 6,500 16
------------
2,545
------------
Ireland - 0.6%
Bank of Ireland 70,588 941
CRH PLC 17,900 379
------------
1,320
------------
Italy - 4.0%
Arnoldo Mondadori Editore SpA 6,200 59
Autostrade SpA (z) 18,200 358
Banca Intesa SpA (z) 80,303 314
Banca Popolare di Milano SCRL 7,600 49
Banche Popolari Unite SCRL 10,703 177
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Banco Popolare di Verona e Novara SCRL 29,370 505
Benetton Group SpA 27,600 316
Capitalia SpA (AE)(z) 58,100 182
e.Biscom (AE)(z) 900 49
Enel SpA (z) 15,300 123
Ente Nazionale Idrocarburi SpA (z) 140,612 2,791
Finmeccanica SpA (z) 730,940 581
Fondiaria-Sai SpA 2,000 45
Gruppo Editoriale L'Espresso SpA (z) 14,300 86
Italcementi SpA (z) 8,700 116
Mediaset SpA (z) 18,300 209
Parmalat Finanziaria SpA (z) 12,500 2
Riunione Adriatica di Sicurta SpA 10,362 188
Sanpaolo IMI SpA (z) 12,005 145
Snam Rete Gas SpA 61,600 265
Telecom Italia 255,422 794
Telecom Italia Media SpA (AE)(z) 47,500 20
Telecom Italia SpA 265,549 586
UniCredito Italiano SpA (z) 175,600 867
------------
8,827
------------
Japan - 22.4%
77 Bank, Ltd. (The) 74,000 503
Acom Co., Ltd. 430 28
Advantest Corp. 200 13
Aeon Co., Ltd. 1,900 76
Aiful Corp. 5,400 562
Aioi Insurance Co., Ltd. 7,000 31
Aisin Seiki Co., Ltd. 7,000 146
All Nippon Airways Co., Ltd. 9,000 29
Alps Electric Co., Ltd. 31,000 440
Amano Corp. 2,000 18
Anritsu Corp. (z) 15,000 98
Aoyama Trading Co., Ltd. 300 8
Asahi Glass Co., Ltd. (z) 33,000 342
Asahi Kasei Corp. 12,000 62
Autobacs Seven Co., Ltd. (z) 600 20
Bank of Yokohama, Ltd. (The) 6,000 37
Benesse Corp. 800 26
Bridgestone Corp. (z) 14,000 262
Brother Industries, Ltd. 1,000 10
Canon, Inc. 27,700 1,456
Central Glass Co., Ltd. 4,000 34
Central Japan Railway Co. 6 51
Chiba Bank, Ltd. (The) 6,000 37
Chubu Electric Power Co., Inc. 5,000 105
Citizen Watch Co., Ltd. 8,000 90
</Table>
22 Non-U.S. Fund
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Credit Saison Co., Ltd. 25,700 771
CSK Corp. 100 5
D&M Holdings, Inc. (AE) 18,000 64
Dai Nippon Printing Co., Ltd. 4,000 64
Daiei, Inc. (The) (AE)(z) 1,000 3
Daiichi Pharmaceutical Co., Ltd. 400 7
Daikin Industries, Ltd. 6,000 161
Daimaru, Inc. 6,000 54
Dainippon Ink and Chemicals, Inc. 2,000 5
Daito Trust Construction Co., Ltd. 3,000 115
Daiwa House Industry Co., Ltd. 4,000 46
Daiwa Securities Group, Inc. 40,000 287
Denso Corp. 7,400 172
Dentsu, Inc. 86 221
Don Quijote Co., Ltd. (z) 2,900 184
Dowa Mining Co., Ltd. 21,000 124
East Japan Railway Co. 346 1,936
Eisai Co., Ltd. 18,000 517
FamilyMart Co., Ltd. 1,000 33
Fast Retailing Co., Ltd. 2,300 186
FCC Co., Ltd. 2,100 90
Fukuoka City Bank, Ltd. (The) (z) 26,000 83
Fuji Electric Holdings Co., Ltd. 4,000 11
Fuji Heavy Industries, Ltd. 66,900 374
Fuji Machine Manufacturing Co., Ltd. 8,300 96
Fuji Photo Film Co., Ltd. 29,000 907
Fuji Soft ABC, Inc. 200 8
Fujikura, Ltd. 5,000 28
Fujisawa Pharmaceutical Co., Ltd. 500 12
Fujitsu, Ltd. (z) 34,000 239
Funai Electric Co., Ltd. 2,300 346
Gunze, Ltd. 2,000 10
Hankyu Department Stores 3,000 26
HIS Co., Ltd. 3,400 103
Hitachi Cable, Ltd. 16,000 76
Hitachi Chemical Co., Ltd. 1,100 18
Hitachi Construction Machinery Co., Ltd. 1,000 12
Hitachi Zosen Corp. (AE) 17,000 28
Hitachi, Ltd. 37,000 254
Hokkaido Electric Power Co., Inc. 1,300 23
Hokugin Financial Group, Inc. 38,000 97
Hokuriku Electric Power Co. 1,000 17
Honda Motor Co., Ltd. 44,600 2,144
Hoya Corp. 2,100 219
Isuzu Motors, Ltd. (AE)(z) 21,000 60
Itochu Corp. 15,000 67
Itochu Techno-Science Corp. 800 34
Ito-Yokado Co., Ltd. 23,000 982
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Japan Radio Co., Ltd. (AE)(z) 12,000 56
Japan Tobacco, Inc. 8 62
JFE Holdings, Inc. 1,300 32
JGC Corp. 1,000 10
Joyo Bank 8,000 35
Kadokawa Holdings, Inc. (z) 2,000 71
Kaken Pharmaceutical Co., Ltd. 4,000 23
Kamigumi Co., Ltd. 14,000 101
Kaneka Corp. 15,000 142
Kansai Electric Power Co., Inc. (The) 4,800 87
Kao Corp. 56,000 1,346
Kawasaki Heavy Industries, Ltd. 14,000 23
Kawasaki Kisen Kaisha, Ltd. 9,000 45
KDDI Corp. 86 491
Keio Teito Electric Railway 12,000 68
Keyence Corp. 700 159
Kobe Steel, Ltd. 5,000 7
Kokuyo Co., Ltd. 300 4
Konica Minolta Holdings, Inc. 36,000 496
Koyo Seiko Co., Ltd. (z) 7,000 83
Kubota Corp. 33,000 175
Kuraray Co., Ltd. 8,100 66
Kuraya Sanseido, Inc. (z) 500 8
Kyocera Corp. 2,600 220
Kyorin Pharmaceutical Co., Ltd. 1,000 15
Kyushu Electric Power Co., Inc. 4,000 74
Lawson, Inc. 14,800 609
Mabuchi Motor Co., Ltd. (z) 8,300 614
Makita Corp. 4,000 60
Marubeni Corp. 27,000 66
Matsumotokiyoshi Co., Ltd. 16,700 504
Matsushita Electric Industrial Co., Ltd. 32,000 453
Meiji Dairies Corp. 2,000 11
Meiji Seika Kaisha, Ltd (z) 3,000 13
Meitec Corp. 2,500 99
Millea Holdings, Inc. 22 326
Minebea Co., Ltd. 91,000 423
Mitsubishi Chemical Corp. 21,000 56
Mitsubishi Electric Corp. 12,000 59
Mitsubishi Estate Co., Ltd. 5,000 62
Mitsubishi Gas Chemical Co., Inc. 4,000 17
Mitsubishi Heavy Industries, Ltd. 22,000 60
Mitsubishi Material 7,000 16
Mitsubishi Rayon Co., Ltd. 38,000 147
Mitsubishi Securities Co., Ltd. (z) 16,000 210
Mitsubishi Tokyo Financial Group, Inc. 144 1,329
Mitsui & Co., Ltd. 34,000 254
Mitsui Chemicals, Inc. 8,000 40
</Table>
Non-U.S. Fund 23
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Mitsui Engineering & Shipbuilding Co., Ltd. 21,000 37
Mitsui Fudosan Co., Ltd. 25,000 299
Mitsui OSK Lines, Ltd. 11,000 58
Mitsui Sumitomo Insurance Co., Ltd. 4,000 37
Mitsui Trust Holdings, Inc. 8,000 59
Mitsumi Electric Co., Ltd. (z) 1,200 14
Mizuho Financial Group, Inc. 97 439
Murata Manufacturing Co., Ltd. 8,500 483
Namco, Ltd. 1,000 28
NEC Corp. 14,000 98
NEC Electronics Corp. (z) 1,300 80
NEC System Intergration & Construction, Ltd. 4,300 43
Nichicon Corp. 5,700 77
Nichirei Corp. 1,000 4
Nidec Copal Corp. 3,300 53
Nikko Cordial Corp. 8,000 39
Nintendo Co., Ltd. 200 23
Nippon Electric Glass Co., Ltd. 7,000 147
Nippon Express Co., Ltd. 132,000 772
Nippon Kayaku Co., Ltd. 1,000 5
Nippon Light Metal Co. 24,000 57
Nippon Oil Corp. 27,000 170
Nippon Sanso Corp. 7,000 37
Nippon Shokubai Co., Ltd. 4,000 32
Nippon Steel Corp. 89,000 186
Nippon Telegraph & Telephone Corp. 179 954
Nippon Yusen Kabushiki Kaisha 6,000 28
Nishimatsu Construction Co., Ltd. (z) 4,000 14
Nishi-Nippon Bank, Ltd. (The) 21,000 96
Nissan Motor Co., Ltd. 13,300 147
Nissen Co., Ltd. 3,800 82
Nisshin Steel Co., Ltd. 26,000 53
Nisshinbo Industries, Inc. 1,000 8
Nitto Denko Corp. 6,100 311
NOK Corp. 5,300 196
Nomura Holdings, Inc. 10,000 148
Nomura Research Institute, Ltd. 1,200 128
NS Solutions Corp. (AE) 1,400 39
NS Solutions Corp. (z) 1,400 40
NSK, Ltd. 4,000 20
NTN Corp. 1,000 5
NTT DoCoMo, Inc. 34 61
OJI Paper Co., Ltd. 3,000 19
Olympus Corp. 3,000 56
Ono Pharmaceutical Co., Ltd. 400 19
ORIX Corp. 11,500 1,314
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Pal Co., Ltd. 1,100 40
Pioneer Corp. (z) 200 5
Promise Co., Ltd. 150 10
Resona Holdings, Inc. (z) 14,000 25
Ricoh Co., Ltd. 16,000 339
Rinnai Corp. 16,500 501
Rohm Co., Ltd. 4,500 537
Sammy Corp. 1,800 86
Sanken Electric Co., Ltd. (z) 9,000 117
Sankyo Co., Ltd. 3,100 67
Sanyo Electric Co., Ltd. 23,000 94
Sega Corp. (AE)(z) 300 4
Seino Transportation Co., Ltd. 7,000 72
Sekisui House, Ltd. 44,800 496
Senshukai Co., Ltd. 4,000 43
SFCG Co., Ltd. (z) 2,920 585
Sharp Corp. 2,000 32
Shimachu Co., Ltd. 900 24
Shin-Etsu Chemical Co., Ltd. 18,900 674
Shinko Electric Industries 4,800 165
Shiseido Co., Ltd. 32,000 402
Showa Shell Sekiyu KK (z) 4,300 39
Skylark Co., Ltd. (z) 29,700 595
SMC Corp. 1,300 140
Snow Brand Milk Products Co., Ltd. (AE) 3,000 10
Softbank Corp. (AE)(z) 400 18
Sohgo Security Services Co., Ltd. (z) 18,100 236
Sompo Japan Insurance, Inc. 5,000 51
Sony Corp. 17,100 642
Stanley Electric Co., Ltd. 9,900 165
STB Leasing Co., Ltd. 1,900 44
Sumisho Lease Co., Ltd. 5,500 215
Sumitomo Bakelite Co., Ltd. 57,100 399
Sumitomo Chemical Co., Ltd. 107,100 498
Sumitomo Corp. 24,000 174
Sumitomo Electric Industries, Ltd. 15,000 153
Sumitomo Forestry Co., Ltd. 12,000 138
Sumitomo Heavy Industries, Ltd. (AE) 22,000 69
Sumitomo Metal Industries, Ltd. 19,000 22
Sumitomo Mitsui Financial Group, Inc. (z) 100 684
Sumitomo Osaka Cement Co., Ltd. 61,000 167
Sumitomo Realty & Development Co., Ltd. 2,000 25
Sumitomo Trust & Banking Co., Ltd. (The) 140,000 994
Suruga Bank, Ltd. (The) 2,000 15
Suzuken Co., Ltd. 1,600 50
Taiheiyo Cement Corp. 16,000 40
</Table>
24 Non-U.S. Fund
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Taisei Corp. 4,000 15
Takashimaya Co., Ltd. 1,000 12
Takeda Chemical Industries, Ltd. 25,400 1,112
Takefuji Corp. (z) 1,620 117
Tanabe Seiyaku Co., Ltd. 1,000 9
TDK Corp. 3,200 242
Telewave, Inc. 11 131
TIS, Inc. 400 17
Tobu Railway Co. 4,000 17
Toda Corp. 1,000 4
Tohoku Electric Power Co., Inc. 2,400 40
Tokyo Electric Power Co., Inc. (The) 14,800 335
Tokyo Gas Co., Ltd. 2,000 7
Tokyo Steel Manufacturing Co., Ltd. (z) 600 10
Tokyu Corp. 6,000 31
Tomen Corp. (AE) 11,000 19
Toppan Printing Co., Ltd. 6,000 68
Toshiba Corp. 18,000 72
Tostem Inax Holding Corp. 1,000 22
Toyo Seikan Kaisha, Ltd. 3,000 51
Toyota Motor Corp. 73,000 2,948
Toyota Tsusho Corp. 1,000 10
Ube Industries, Ltd. 15,000 23
UFJ Holdings, Inc. 146 643
UFJ Tsubasa Securities Co., Ltd. 9,000 38
Uniden Corp. 5,000 108
UNY Co., Ltd. 4,000 51
USS Co., Ltd. 1,170 100
Victor Co. of Japan, Ltd. 1,000 11
West Japan Railway Co. 16 64
World Co., Ltd. 600 18
Yamaha Corp. 1,200 20
Yamaha Motor Co., Ltd. 44,000 683
Yamanouchi Pharmaceutical Co., Ltd. 3,800 127
Yamato Transport Co., Ltd. 2,000 33
Yamazaki Baking Co., Ltd. 2,000 20
Yokogawa Electric Corp. 8,000 106
York-Benimaru Co., Ltd. 3,100 92
Zexel Corp. 5,000 23
------------
49,495
------------
Luxembourg - 0.2%
Arcelor (z) 16,472 277
Millicom International Cellular SA (AE)(z) 4,700 103
------------
380
------------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Mexico - 0.3%
Coca-Cola Femsa SA de CV - ADR 15,100 335
Telefonos de Mexico SA de CV - ADR 10,550 351
------------
686
------------
Netherlands - 3.2%
ABN AMRO Holding NV 27,949 611
Aegon NV 2,600 31
Akzo Nobel NV 18,603 684
ASML Holding NV (AE) 4,000 68
Buhrmann NV 11,300 112
DSM NV 7,900 388
Euronext NV 1,400 39
Euronext NV (z) 6,730 187
European Aeronautic Defense and Space Co. (z) 9,500 264
Heineken NV (z) 8,250 271
ING Groep NV 33,520 791
Koninklijke Ahold NV 9,700 76
Koninklijke Philips Electronics NV 16,940 456
Koninklijke Philips Electronics NV 14,400 392
OCE NV 3,100 50
Royal Dutch Petroleum Co. 19,800 1,016
Royal KPN NV 8,700 66
Royal Numico NV (AE) 31,500 1,012
Vedior NV 1,100 16
Wolters Kluwer NV 30,236 549
------------
7,079
------------
New Zealand - 0.2%
Carter Holt Harvey, Ltd. 85,200 111
Telecom Corp. of New Zealand, Ltd. 74,894 278
------------
389
------------
Norway - 0.6%
DNB NOR ASA 35,192 240
Norsk Hydro ASA 5,600 363
Statoil ASA (z) 16,680 211
Telenor ASA 47,400 329
Yara International ASA (AE) 13,632 110
------------
1,253
------------
Portugal - 0.1%
Electricidade de Portugal SA 87,580 245
------------
</Table>
Non-U.S. Fund 25
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Singapore - 0.9%
CapitaLand, Ltd. 8,000 6
Chartered Semiconductor Manufacturing, Ltd.
(AE)(z) 15,000 12
City Developments, Ltd. 32,000 100
City Developments, Ltd. 2006 Warrants (AE) 3,000 5
Creative Technology, Ltd. 1,350 14
DBS Group Holdings, Ltd. 106,000 887
Fraser and Neave, Ltd. 4,000 33
Jardine Cycle & Carriage, Ltd. 6,000 22
Keppel Corp., Ltd. (z) 61,000 250
Keppel Land, Ltd. 7,000 7
MobileOne, Ltd. 147,800 129
NatSteel, Ltd. 11,000 14
Neptune Orient Lines, Ltd. 29,000 40
Oversea-Chinese Banking Corp. 12,000 84
SembCorp Industries, Ltd. 23,000 18
Singapore Airlines, Ltd. 4,000 26
Singapore Exchange, Ltd. 3,000 3
Singapore Technologies Engineering, Ltd. 170,300 206
Singapore Telecommunications, Ltd. 17,000 22
United Overseas Bank, Ltd. 2,000 16
United Overseas Land, Ltd. 4,000 5
------------
1,899
------------
South Africa - 0.2%
Nedcor, Ltd. 39,883 395
------------
South Korea - 1.1%
Korea Electric Power Corp. - ADR 42,100 386
KT Corp. - ADR 22,100 399
Nextel, Inc. 15,770 766
POSCO - ADR 10,150 340
Samsung Electronics Co., Ltd. - GDR 2,364 486
------------
2,377
------------
Spain - 3.9%
Acerinox SA 3,900 222
ACS Actividades Cons y Serv 15,513 261
Altadis SA (z) 56,427 1,744
Amadeus Global Travel Distribution SA Class A
(AE)(z) 6,300 41
Banco de Sabadell SA 10,000 217
Banco Popular Espanol SA (z) 6,700 378
Banco Santander Central Hispano SA 14,500 150
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Corp Mapfre SA 22,930 281
Endesa SA (z) 51,702 996
Fomento de Construcciones y Contratas SA (z) 1,200 44
Gamesa Corp. Tecnologica SA 1,100 16
Iberia Lineas Aereas de Espana 48,400 139
Indra Sistemas SA (AE)(z) 10,800 138
Red Electrica de Espana (z) 1,100 19
Repsol YPF SA (z) 15,000 328
Repsol YPF SA - ADR 28,739 628
Sogecable SA (AE)(z) 9,400 379
Telefonica SA 174,662 2,582
Union Fenosa SA (z) 4,400 94
------------
8,657
------------
Sweden - 2.8%
Ainax AB (z) 1 --
Atlas Copco AB Class A 1,200 45
Atlas Copco AB Class B 1,100 38
Electrolux AB Series B 25,400 487
Hennes & Mauritz AB Class B (z) 36,022 930
Investor AB Class B (z) 19,420 198
Modern Times Group AB Class B (AE)(z) 900 17
Nordea Bank AB (z) 12,000 86
OMHEX AB (z) 2,400 29
Sandvik AB 1,800 61
Skandia Forsakrings AB 60,076 249
Skandinaviska Enskilda Banken AB Class A 2,200 32
Skanska AB Class B 5,100 45
Svenska Cellulosa AB Class B 1,300 49
Svenska Handelsbanken Class A (z) 63,815 1,279
Tele2 AB Class B (z) 900 39
Telefonaktiebolaget LM Ericsson Class B (AE) 806,932 2,377
TeliaSonera AB 4,000 17
Volvo AB Series A 1,500 50
Volvo AB Series B (z) 2,000 70
WM-data AB Class B (z) 6,000 13
------------
6,111
------------
Switzerland - 6.5%
ABB, Ltd. 24,654 135
Adecco SA (z) 6,918 345
Ciba Specialty Chemicals AG 300 22
Clariant AG (z) 28,605 418
Compagnie Financiere Richemont AG Class A 35,076 915
</Table>
26 Non-U.S. Fund
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Converium Holding AG 900 47
Credit Suisse Group 19,855 705
Georg Fischer AG 170 39
Givaudan 374 216
Julius Baer Holding AG Class B 330 92
Lonza Group AG 10,310 522
Nestle SA 7,210 1,922
Novartis AG 58,017 2,558
PubliGroupe SA 77 24
Roche Holding AG 24,104 2,385
Straumann Holding AG 180 36
Sulzer AG 449 128
Swatch Group AG Class B (z) 300 39
Swiss Life Holding (AE)(z) 3,859 538
Swiss Reinsurance 6,450 419
Synthes, Inc. 3,940 449
UBS AG 27,058 1,906
Valora Holding AG 166 38
Zurich Financial Services AG (AE) 2,713 428
------------
14,326
------------
Taiwan - 0.1%
United Microelectronics Corp. - ADR (AE) 78,576 339
------------
United Kingdom - 19.7%
3i Group PLC 73,580 818
Abbey National PLC 7,600 71
Alliance & Leicester PLC 4,000 61
Alliance Unichem PLC 4,900 58
Allied Domecq PLC 26,450 226
Amvescap PLC 1,500 10
Anglo American PLC 27,756 568
ARM Holdings PLC 6,900 15
Associated British Foods PLC 8,400 96
AstraZeneca PLC 13,325 605
AstraZeneca PLC 26,633 1,196
Aviva PLC 17,000 176
AWG PLC (AE) 8,200 87
AWG PLC (AE) 2,722,400 5
BAA PLC 40,100 403
BAE Systems PLC 145,677 580
Barclays PLC 161,908 1,380
Barratt Developments PLC 7,000 75
BG Group PLC 101,700 627
BHP Billiton PLC 16,300 142
BOC Group PLC 25,881 433
Boots Group PLC 10,100 126
BP PLC 289,500 2,558
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Bradford & Bingley PLC 16,000 81
Brambles Industries PLC 22,600 87
British Airways PLC (AE) 13,400 67
British American Tobacco PLC 74,574 1,156
British Land Co. PLC 32,700 411
British Sky Broadcasting PLC 97,189 1,097
BT Group PLC 211,500 762
Bunzl PLC 70,034 584
Cable & Wireless PLC 44,500 105
Cadbury Schweppes PLC 83,787 723
Centrica PLC 214,300 873
Colt Telecom Group PLC (AE) 2,600 4
Compass Group PLC 7,300 45
Corus Group PLC (AE) 132,308 95
Davis Service Group PLC 3,500 24
Diageo PLC 193,049 2,604
Dixons Group PLC 3,000 9
easyJet PLC (AE) 27,000 78
EMI Group PLC 24,700 109
Firstgroup PLC 500 3
GKN PLC 164,250 747
GlaxoSmithKline PLC 111,578 2,259
HBOS PLC 121,574 1,506
HHG PLC (AE)(z) 3,500 3
HMV Group PLC (AE) 20,700 91
HSBC Holdings PLC 115,440 1,718
HSBC Holdings PLC (z) 11,626 175
Imperial Chemical Industries PLC 17,700 74
Imperial Tobacco Group PLC 66,041 1,424
Inchcape PLC 3,600 115
International Power PLC (AE) 26,000 66
InvenSystem PLC (AE) 110,600 36
ITV PLC 97,678 205
J Sainsbury PLC 124,676 644
Johnston Press PLC 600 6
Kelda Group PLC 6,900 63
Kesa Electricals PLC 38,804 204
Kingfisher PLC 137,801 716
Land Securities Group PLC 2,300 48
Legal & General Group PLC 17,500 30
Lloyds TSB Group PLC 82,700 648
LogicaCMG PLC 12,200 41
Man Group PLC 19,260 499
Marks & Spencer Group PLC 41,700 274
MFI Furniture PLC 11,700 32
Mitchells & Butlers PLC 18,258 92
mmO2 PLC (AE) 45,800 77
Morrison WM Supermarkets 9,071 38
</Table>
Non-U.S. Fund 27
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
MyTravel Group PLC (AE) 53,200 8
Northern Foods PLC 35,900 110
Old Mutual PLC 29,200 56
Pennon Group PLC 4,100 59
Persimmon PLC 4,500 52
Prudential PLC 37,000 319
Punch Taverns PLC 1,300 12
Reckitt Benckiser PLC 100 3
Reed Elsevier PLC 4,000 39
Reuters Group PLC 79,500 534
Rexam PLC 41,391 337
Rio Tinto PLC 40,924 985
RMC Group PLC 4,500 50
Rolls-Royce Group PLC 38,957 178
Royal & Sun Alliance Insurance Group 70,400 105
Royal Bank of Scotland Group PLC 42,659 1,229
SABMiller PLC 2,100 27
Scottish & Newcastle PLC 5,800 46
Scottish & Southern Energy PLC 66,005 816
Scottish Power PLC 15,500 112
Shell Transport & Trading Co. PLC 329,806 2,421
Shire Pharmaceuticals PLC (AE) 8,100 71
SSL International PLC 3,100 16
Stagecoach Group PLC 38,900 63
Standard Chartered PLC 18,500 301
Tate & Lyle PLC 20,300 122
Taylor Woodrow PLC 5,700 27
Tesco PLC 23,100 112
Trinity Mirror PLC 7,600 90
Unilever PLC 8,400 82
United Business Media PLC 27,961 257
United Utilities PLC 5,200 49
Vodafone Group PLC 1,692,207 3,707
Warner Chilcott PLC 1,600 20
Whitbread PLC 2,500 37
Wimpey George PLC 15,900 106
WPP Group PLC 4,000 41
------------
43,663
------------
TOTAL COMMON STOCKS
(cost $169,257) 199,822
------------
OPTIONS PURCHASED - 0.3%
Belgium - 0.3%
Bel 20 Index Futures
Jul 2004 2,449.85 (EUR) Call (54) 3,219 687
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Switzerland - 0.0%
Swiss Market Index Futures
Sep 2004 5,625.31 (EUR) Put (9) 404 36
Sep 2004 5,631.50 (EUR) Put (17) 764 69
------------
105
------------
TOTAL OPTIONS PURCHASED
(cost $756) 792
------------
PREFERRED STOCKS - 1.2%
Australia - 0.0%
News Corp., Ltd. (z) 11,900 97
Brazil - 0.2%
Telecomunicacoes Brasileiras SA - ADR 12,000 350
Germany - 1.0%
Fresenius AG (z) 4,100 311
Fresenius Medical Care AG (z) 1,100 59
Porsche AG (AE) 1,793 1,200
ProSieben SAT.1 Media AG 14,223 257
Wella AG 4,080 382
------------
2,209
------------
TOTAL PREFERRED STOCKS
(cost $2,277) 2,656
------------
SHORT-TERM INVESTMENTS - 21.1%
United States - 21.1%
Frank Russell Investment Company
Money Market Fund 12,536,000 12,536
State Street Securities Lending Quality Trust
(N) 31,101,318 31,101
United States Treasury Bill (y)(s)
0.920% due 08/12/04 (c) 1,000 999
0.950% due 08/12/04 (c) 500 499
1.599% due 09/09/04 1,500 1,495
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $46,630) 46,630
------------
TOTAL INVESTMENTS - 113.1%
(identified cost $218,920) 249,900
OTHER ASSETS AND LIABILITIES,
NET - (13.1%) (29,013)
------------
NET ASSETS - 100.0% 220,887
============
</Table>
See accompanying notes which are an integral part of the financial statements.
28 Non-U.S. Fund
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
UNREALIZED
NOTIONAL APPRECIATION
FUTURES CONTRACTS AMOUNT (DEPRECIATION)
(NUMBER OF CONTRACTS) $ $
- -------------------------------------------------------------------------------
Long Positions
AEX Index (Germany)
expiration date 07/04 (26) 2,185 23
CAC-40 Index (France)
expiration date 07/04 (5) 228 (1)
expiration date 09/04 (24) 1,096 (4)
DAX Index (Germany)
expiration date 09/04 (14) 1,740 35
DJ STOXX 50 Index (EMU)
expiration date 09/04 (84) 2,879 36
FTSE-100 Index (UK)
expiration date 09/04 (41) 3,324 4
Hang Seng Index (Hong Kong)
expiration date 07/04 (34) 2,679 28
IBEX Plus Index (Spain)
expiration date 07/04 (1) 98 1
TOPIX Index (Japan)
expiration date 09/04 (72) 7,856 282
Short Positions
CAC-40 Index (France)
expiration date 07/04 (30) 1,366 8
FTSE-100 Index (UK)
expiration date 09/04 (27) 2,189 7
MIB-30 (Italy)
expiration date 09/04 (9) 1,551 (30)
SPI 200 Index (Australia)
expiration date 09/04 (28) 1,724 (27)
------------
Total Unrealized Appreciation (Depreciation) on
Open Futures Contracts 362
============
</Table>
<Table>
<Caption>
NOTIONAL MARKET
OPTIONS WRITTEN AMOUNT VALUE
(NUMBER OF CONTRACTS) $ $
- -----------------------------------------------------------------------------
Belgium
Bel20 Index Futures
Jul 2004 2,449.85 (EUR) Put (54) 3,219 (657)
Switzerland
Swiss Market Index Futures
Sep 2004 5,625.31 (EUR) Call (9) 404 (36)
Sep 2004 5,631.50 (EUR) Call (17) 764 (68)
------------
Total Liability for Options Written
(premiums received $755) (761)
============
</Table>
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund 29
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
FOREIGN CURRENCY EXCHANGE CONTRACTS
UNREALIZED
APPRECIATION
AMOUNT AMOUNT SETTLEMENT (DEPRECIATION)
SOLD BOUGHT DATE $
- ------------------- -------------------- ----------- --------------
USD 336 CHF 423 09/15/04 2
USD 5 EUR 4 07/01/04 --
USD 8 EUR 6 07/02/04 --
USD 36 EUR 30 07/02/04 --
USD 54 EUR 45 07/02/04 --
USD 603 EUR 500 09/15/04 5
USD 5,544 EUR 4,600 09/15/04 45
USD 2,058 EUR 1,700 09/15/04 7
USD 19 GBP 10 07/01/04 --
USD 23 GBP 13 07/02/04 --
USD 33 GBP 18 07/02/04 --
USD 37 GBP 20 07/02/04 --
USD 95 GBP 52 09/15/04 (1)
USD 1,460 GBP 800 09/15/04 (18)
USD 904 GBP 500 09/15/04 (3)
USD 2,699 GBP 1,500 09/15/04 4
USD 2,768 GBP 1,535 09/15/04 (1)
USD 70 HKD 541 09/15/04 --
USD 2 JPY 257 07/01/04 --
USD 2 JPY 254 07/02/04 --
USD 2 JPY 256 07/02/04 --
USD 3 JPY 360 07/02/04 --
USD 4 JPY 393 07/02/04 --
USD 5 JPY 546 07/02/04 --
USD 22 JPY 2,405 07/02/04 --
USD 26 JPY 2,831 07/02/04 --
USD 451 JPY 50,000 09/15/04 7
USD 465 JPY 50,979 09/15/04 2
USD 932 JPY 100,000 09/15/04 (15)
USD 1,384 JPY 150,000 09/15/04 (8)
USD 3,158 JPY 350,000 09/15/04 51
USD 6,438 JPY 701,500 09/15/04 (4)
USD 1 SEK 10 07/01/04 --
USD 123 SGD 210 09/15/04 (1)
AUD 980 USD 673 09/15/04 (2)
AUD 1,630 USD 1,126 09/15/04 4
CHF 26 USD 21 07/01/04 --
CHF 10 USD 8 09/15/04 --
DKK 20 USD 3 09/15/04 --
DKK 86 USD 14 09/15/04 --
EUR 51 USD 61 07/01/04 (1)
EUR 73 USD 88 07/01/04 --
EUR 500 USD 602 09/15/04 (6)
EUR 1,266 USD 1,518 09/15/04 (20)
EUR 1,667 USD 2,022 09/15/04 (3)
</Table>
<Table>
<Caption>
FOREIGN CURRENCY EXCHANGE CONTRACTS
UNREALIZED
APPRECIATION
AMOUNT AMOUNT SETTLEMENT (DEPRECIATION)
SOLD BOUGHT DATE $
- ------------------- -------------------- ----------- --------------
EUR 2,600 USD 3,143 09/15/04 (15)
GBP 40 USD 72 07/01/04 1
GBP 600 USD 1,091 09/15/04 10
GBP 700 USD 1,264 09/15/04 2
HKD 9 USD 1 07/02/04 --
HKD 80 USD 10 09/15/04 --
JPY 543 USD 5 07/01/04 --
JPY 2,375 USD 22 07/01/04 --
JPY 2,538 USD 23 07/01/04 --
JPY 558 USD 5 07/02/04 --
JPY 580 USD 5 07/02/04 --
JPY 649 USD 6 07/02/04 --
JPY 817 USD 7 07/06/04 --
JPY 1,157 USD 11 07/06/04 --
JPY 2,002 USD 18 07/06/04 --
JPY 446 USD 4 07/06/04 --
JPY 100,000 USD 924 09/15/04 7
JPY 200,000 USD 1,846 09/15/04 12
SEK 155 USD 21 07/01/04 --
SEK 230 USD 31 09/15/04 --
SEK 6,559 USD 860 09/15/04 (9)
SGD 214 USD 125 09/15/04 --
--------------
52
==============
</Table>
See accompanying notes which are an integral part of the financial statements.
30 Non-U.S. Fund
RUSSELL INVESTMENT FUNDS
NON-U.S. FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
% OF MARKET
INDUSTRY DIVERSIFICATION NET VALUE
(UNAUDITED) ASSETS $
- -----------------------------------------------------------------------------
Auto and Transportation 8.3 18,236
Consumer Discretionary 12.0 26,404
Consumer Staples 8.1 17,960
Financial Services 19.4 42,804
Health Care 7.0 15,325
Integrated Oils 4.7 10,344
Materials and Processing 8.7 19,291
Miscellaneous 1.5 3,330
Options 0.3 792
Other Energy 2.8 6,195
Producer Durables 4.8 10,686
Technology 3.6 8,048
Telecommunication Services 0.1 156
Utilities 10.7 23,699
Short-Term Investments 21.1 46,630
------------ ------------
Total Investments 113.1 249,900
Other Assets and Liabilities, Net (13.1) (29,013)
------------ ------------
Net Assets 100.0 220,887
============ ============
<Caption>
% OF MARKET
GEOGRAPHIC DIVERSIFICATION NET VALUE
(UNAUDITED) ASSETS $
- -----------------------------------------------------------------------------
Africa 0.2 395
Asia 6.3 13,425
Europe 42.4 94,104
Japan 22.4 49,495
Latin America 0.7 1,396
United Kingdom 19.7 43,663
Options 0.3 792
Short-Term Investments 21.1 46,630
------------ ------------
Total Investments 113.1 249,900
Other Assets and Liabilities, Net (13.1) (29,013)
------------ ------------
Net Assets 100.0 220,887
============ ============
</Table>
See accompanying notes which are an integral part of the financial statements.
Non-U.S. Fund 31
RUSSELL INVESTMENT FUNDS
REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
COMMON STOCKS - 97.1%
Apartment - 17.4%
Affordable Residential Communities (AE)(o)(z) 23,000 382
Apartment Investment & Management Co. Class A
(o) 43,100 1,341
Archstone-Smith Trust (o) 330,517 9,694
AvalonBay Communities, Inc. (o) 162,700 9,196
BRE Properties Class A (o) 72,800 2,530
Camden Property Trust (o) 51,500 2,359
Equity Residential (o) 476,700 14,172
Essex Property Trust, Inc. (o) 38,000 2,597
Pennsylvania Real Estate Investment Trust (o)(z) 65,947 2,259
Summit Properties, Inc. (o)(z) 76,100 1,951
Sun Communities, Inc. (o) 15,000 565
United Dominion Realty Trust, Inc. (o) 111,800 2,211
------------
49,257
------------
Health Care - 3.0%
Health Care REIT, Inc. (o) 24,500 796
Healthcare Realty Trust, Inc. (o) 34,500 1,293
LTC Properties, Inc. (o)(z) 1,300 22
National Health Investors, Inc. (o)(z) 37,000 1,006
Omega Healthcare Investors, Inc. (o)(z) 55,000 552
Senior Housing Properties Trust (o)(z) 113,800 1,911
Ventas, Inc. (o)(z) 127,400 2,975
------------
8,555
------------
Hotels/Leisure - 9.1%
Fairmont Hotels & Resorts, Inc. 33,300 897
Hilton Hotels Corp. (z) 409,600 7,643
Hospitality Properties Trust (o) 13,000 550
Host Marriott Corp. (o) 608,900 7,526
La Quinta Corp. 128,600 1,080
LaSalle Hotel Properties (o) 46,900 1,144
Starwood Hotels & Resorts Worldwide, Inc. 152,232 6,828
Strategic Hotel Capital, Inc. (AE)(o) 16,900 248
------------
25,916
------------
Leasing - 0.7%
Glenborough Realty Trust, Inc. (o)(z) 52,100 956
iStar Financial, Inc. (o) 26,500 1,060
------------
2,016
------------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Office/Industrial - 33.5%
Alexandria Real Estate Equities, Inc. (o) 29,800 1,692
AMB Property Corp. (o) 95,800 3,318
American Financial Realty Trust (o)(z) 243,800 3,484
Arden Realty, Inc. (o) 97,100 2,856
Boston Properties, Inc. (o) 182,000 9,115
Brandywine Realty Trust (o) 8,400 228
Brookfield Properties Co. 184,700 5,310
CarrAmerica Realty Corp. (o) 65,700 1,986
Catellus Development Corp. (o) 332,066 8,185
Centerpoint Properties Trust (o) 34,700 2,663
Corporate Office Properties Trust (o) 20,000 497
Crescent Real Estate Equities Co. (o)(z) 88,000 1,419
Duke Realty Corp. (o) 32,000 1,018
Equity Office Properties Trust (o) 211,900 5,764
First Potomac Realty Trust (o) 6,100 117
Highwoods Properties, Inc. (o) 128,200 3,013
HRPT Properties Trust (o)(z) 150,710 1,509
Kilroy Realty Corp. (o) 76,100 2,595
Liberty Property Trust (o)(z) 189,100 7,604
Mack-Cali Realty Corp. (o) 168,300 6,964
Plum Creek Timber Co., Inc. (o) 102,700 3,346
Prentiss Properties Trust (o) 51,500 1,726
Prologis (o) 485,400 15,978
PS Business Parks, Inc. (o) 29,000 1,167
SL Green Realty Corp. (o) 74,000 3,463
------------
95,017
------------
Outlet Centers - 2.8%
Chelsea Property Group, Inc. (o) 121,000 7,892
------------
Regional Malls - 17.5%
General Growth Properties, Inc. (o) 478,000 14,134
Macerich Co. (The) (o) 122,700 5,874
Mills Corp. (The) (o) 22,200 1,037
Rouse Co. (The) (o)(z) 176,700 8,393
Simon Property Group, Inc. (o) 367,300 18,886
Taubman Centers, Inc. (o) 55,000 1,259
------------
49,583
------------
Self Storage - 1.9%
Public Storage, Inc. (o) 68,300 3,142
Shurgard Storage Centers, Inc. Class A (o) 56,900 2,128
------------
5,270
------------
</Table>
32 Real Estate Securities Fund
RUSSELL INVESTMENT FUNDS
REAL ESTATE SECURITIES FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Shopping Center - 11.2%
Developers Diversified Realty Corp. (o) 188,900 6,681
Federal Realty Investment Trust (o) 111,800 4,650
Inland Real Estate Corp. (o) 14,200 185
Kimco Realty Corp. (o) 39,000 1,775
Pan Pacific Retail Properties, Inc. (o) 108,800 5,497
Realty Income Corp. (o)(z) 7,300 305
Regency Centers Corp. (o) 149,500 6,414
Urstadt Biddle Properties, Inc. Class A (o)(z) 6,100 90
Vornado Realty Trust (o) 107,700 6,151
------------
31,748
------------
TOTAL COMMON STOCKS
(cost $211,613) 275,254
------------
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
SHORT-TERM INVESTMENTS - 9.2%
Frank Russell Investment Company
Money Market Fund 7,125,000 7,125
State Street Secuities Lending
Quality Trust (N) 19,145,392 19,145
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $26,270) 26,270
------------
TOTAL INVESTMENTS - 106.3%
(identified cost $237,883) 301,524
OTHER ASSETS AND LIABILITIES,
NET - (6.3%) (17,953)
------------
NET ASSETS - 100.0% 283,571
============
</Table>
See accompanying notes which are an integral part of the financial statements.
Real Estate Securities Fund 33
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
LONG-TERM INVESTMENTS - 60.5%
Asset-Backed Securities - 2.1%
American Airlines, Inc.
7.858% due 10/01/11 140 139
Citibank Credit Card Issuance Trust
Series 2001-A6 Class A6
5.650% due 06/16/08 475 498
Countrywide Asset-Backed Certificates (E)
Series 2004-6 Class 2A1
1.530% due 10/25/21 500 500
Fleet Credit Card Master Trust II
Series 2001-C Class A
3.860% due 03/15/07 375 377
GSAMP Trust (E)
Series 2004-SEA2 Class A2A
1.620% due 03/25/34 400 400
Niagara Mohawk Power Corp.
7.625% due 10/01/05 132 139
Parker Hannifin Employee Stock Ownership Trust
(y)
6.340% due 07/15/08 243 259
Renaissance Home Equity Loan Trust (E)
Series 2004-2 Class AF1
1.530% due 07/25/34 800 800
Small Business Administration
7.449% due 08/01/10 52 57
Tenaska Alabama II Partners, LP (y)
6.125% due 03/30/23 113 113
------------
3,282
------------
Corporate Bonds and Notes - 11.3%
Amerada Hess Corp.
7.300% due 08/15/31 90 91
American Electric Power Co., Inc.
Series C
5.375% due 03/15/10 35 36
American RE Corp.
Series B
7.450% due 12/15/26 245 260
Arrow Electronics, Inc.
6.875% due 07/01/13 140 146
AT&T Corp.
8.050% due 11/15/11 20 21
8.750% due 11/15/31 40 39
BAE Systems Holdings, Inc. (y)
6.400% due 12/15/11 350 373
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Bank of America Corp.
7.800% due 02/15/10 15 17
BankBoston Corp.
Series B
8.250% due 12/15/26 80 89
BCI US Funding Trust (y)(p)
8.010% due 12/29/49 250 280
Boeing Capital Corp.
6.100% due 03/01/11 65 69
Burlington Northern Santa Fe Corp.
6.875% due 12/01/27 25 26
6.750% due 03/15/29 10 10
Campbell Soup Co.
5.875% due 10/01/08 70 74
CenterPoint Energy Houston Electric LLC
Series J2
5.700% due 03/15/13 80 82
CenterPoint Energy Resources Corp.
7.875% due 04/01/13 170 190
CIT Group, Inc.
5.750% due 09/25/07 75 79
6.875% due 11/01/09 45 49
Citigroup, Inc.
3.500% due 02/01/08 560 552
7.250% due 10/01/10 195 220
Columbus Southern Power Co.
Series C
5.500% due 03/01/13 55 55
Comcast Cable Communications
8.375% due 05/01/07 195 218
Comcast Corp.
5.850% due 01/15/10 60 63
Countrywide Home Loans, Inc.
Series MTNK
5.500% due 02/01/07 50 52
Credit Suisse First Boston USA, Inc.
4.625% due 01/15/08 65 66
5.500% due 08/15/13 45 45
Detroit Edison Co.
6.350% due 10/15/32 90 91
Devon Financing Corp. ULC
6.875% due 09/30/11 95 103
Dominion Resources, Inc.
Series B
6.250% due 06/30/12 40 42
DPL, Inc.
8.250% due 03/01/07 115 122
</Table>
34 Core Bond Fund
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Dresdner Funding Trust I
8.151% due 06/30/31 160 178
Duke Capital Corp.
4.302% due 05/18/06 70 71
Duke Energy Field Services LLC
5.750% due 11/15/06 30 31
6.875% due 02/01/11 20 22
El Paso Corp.
8.050% due 10/15/30 400 326
Eli Lilly & Co.
6.770% due 01/01/36 245 269
FedEx Corp.
7.600% due 07/01/97 65 71
Fifth Third Bank
7.750% due 08/15/10 155 162
Financing Corp. Fico
Series 15P
Zero Coupon due 03/07/19 70 30
FirstEnergy Corp.
Series A
5.500% due 11/15/06 40 41
Series B
6.450% due 11/15/11 195 202
Series C
7.375% due 11/15/31 115 120
Ford Motor Co.
6.375% due 02/01/29 70 59
Ford Motor Credit Co.
7.875% due 06/15/10 245 267
7.375% due 02/01/11 370 390
General Electric Capital Corp.
Series MTNA
6.000% due 06/15/12 20 21
General Electric Co.
5.000% due 02/01/13 315 310
General Motors Acceptance Corp.
7.250% due 03/02/11 80 84
6.875% due 09/15/11 405 415
7.000% due 02/01/12 70 72
Glencore Funding LLC
6.000% due 04/15/14 60 56
Golden West Financial Corp.
4.125% due 08/15/07 110 111
Goldman Sachs Group, Inc.
6.875% due 01/15/11 245 269
HCA, Inc.
5.250% due 11/06/08 70 70
7.500% due 11/06/33 45 44
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Historic TW, Inc.
9.125% due 01/15/13 85 104
8.050% due 01/15/16 410 466
HJ Heinz Co.
6.375% due 07/15/28 20 21
HJ Heinz Finance Co.
6.750% due 03/15/32 55 60
Household Finance Corp.
4.750% due 05/15/09 260 261
6.375% due 11/27/12 125 133
HVB Funding Trust I (y)
8.741% due 06/30/31 150 173
International Lease Finance Corp.
6.375% due 03/15/09 125 134
International Paper Co.
5.500% due 01/15/14 140 137
ITT Industries, Inc.
7.400% due 11/15/25 100 111
JP Morgan & Co., Inc.
Series MTNA
6.000% due 01/15/09 120 127
Kellogg Co.
Series B
6.600% due 04/01/11 375 411
KeySpan Corp.
7.250% due 11/15/05 50 53
7.625% due 11/15/10 150 173
Kraft Foods, Inc.
5.250% due 06/01/07 60 62
5.625% due 11/01/11 185 188
5.250% due 10/01/13 205 200
Kroger Co.
8.000% due 09/15/29 15 17
7.500% due 04/01/31 15 17
Lehman Brothers Holdings, Inc.
6.625% due 01/18/12 155 168
Liberty Media Corp.
3.500% due 09/25/06 500 499
5.700% due 05/15/13 50 49
Lockheed Martin Corp.
8.200% due 12/01/09 520 609
Manufacturers & Traders Trust Co.
8.000% due 10/01/10 75 88
Midland Funding II
Series B
13.250% due 07/23/06 45 52
Miller Brewing Co. (y)
5.500% due 08/15/13 130 130
</Table>
Core Bond Fund 35
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Mizuho Preferred Capital Co. LLC (y)(p)
8.790% due 12/29/49 315 345
Monumental Global Funding II (y)
3.850% due 03/03/08 155 155
Morgan Stanley
6.750% due 04/15/11 180 197
Natexis Ambs Co. LLC (y)(p)
8.440% due 12/29/49 120 137
National Rural Utilities Cooperative Finance
5.750% due 08/28/09 70 74
NB Capital Trust IV
8.250% due 04/15/27 90 100
News America Holdings
9.250% due 02/01/13 40 50
7.750% due 12/01/45 95 108
7.900% due 12/01/95 90 100
8.250% due 10/17/96 30 35
News America, Inc.
6.750% due 01/09/38 20 22
Nisource Finance Corp.
7.875% due 11/15/10 190 218
Norfolk Southern Corp.
7.700% due 05/15/17 20 23
7.900% due 05/15/97 185 212
Occidental Petroleum Corp.
9.250% due 08/01/19 95 126
Ohio Power Co.
Series F
5.500% due 02/15/13 20 20
Oncor Electric Delivery Co.
7.250% due 01/15/33 90 100
Pacific Gas & Electric Co.
3.600% due 03/01/09 50 48
4.200% due 03/01/11 65 62
6.050% due 03/01/34 65 61
Progress Energy, Inc.
7.100% due 03/01/11 45 49
7.000% due 10/30/31 120 123
Qwest Capital Funding, Inc.
7.000% due 08/03/09 25 22
Qwest Services Corp. Step Up Bond (y)
14.000% due 12/15/10 40 47
RBS Capital Trust I (p)
4.709% due 12/29/49 235 217
RC Trust 1 Equity Preferred
3.500% due 05/15/06 290 155
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Safeway, Inc.
7.250% due 02/01/31 25 26
Sovereign Bancorp, Inc.
10.500% due 11/15/06 460 527
Sprint Capital Corp.
6.125% due 11/15/08 50 53
8.375% due 03/15/12 60 69
6.875% due 11/15/28 170 163
8.750% due 03/15/32 115 134
Tele-Communications-TCI Group
9.800% due 02/01/12 140 176
7.875% due 08/01/13 285 325
Time Warner, Inc.
6.750% due 04/15/11 95 102
Travelers Property Casualty Corp.
5.000% due 03/15/13 80 77
Tyson Foods, Inc.
8.250% due 10/01/11 60 69
Union Pacific Corp.
5.750% due 10/15/07 55 58
6.125% due 01/15/12 120 126
Union Planters Corp.
7.750% due 03/01/11 50 58
Univision Communications, Inc.
7.850% due 07/15/11 90 104
Verizon Florida, Inc.
Series F
6.125% due 01/15/13 85 87
Wachovia Corp.
7.550% due 08/18/05 50 53
Wells Fargo & Co.
4.950% due 10/16/13 65 63
Wells Fargo Bank NA
7.550% due 06/21/10 50 58
Weyerhaeuser Co.
6.750% due 03/15/12 55 60
Wisconsin Central Transport
6.625% due 04/15/08 325 351
Wyeth
5.500% due 03/15/13 35 34
5.500% due 02/01/14 155 148
Yum! Brands, Inc.
8.875% due 04/15/11 120 145
Zurich Capital Trust I (y)
8.376% due 06/01/37 245 271
------------
17,837
------------
</Table>
36 Core Bond Fund
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Emerging Markets Debt - 1.0%
Argentina Government International Bond
11.375% due 03/15/10 65 19
11.375% due 01/30/17 200 58
Brazilian Government International Bond
2.063% due 04/15/06 64 63
2.125% due 04/15/09 18 16
9.250% due 10/22/10 60 57
11.000% due 01/11/12 540 543
2.125% due 04/15/12 38 31
OAO Gazprom
10.500% due 10/21/09 70 80
9.625% due 03/01/13 (y) 100 103
Panama Government International Bond
9.375% due 07/23/12 100 109
Peru Government International Bond
9.125% due 02/21/12 200 205
9.875% due 02/06/15 200 209
Russia Government International Bond
5.000% due 03/31/30 350 320
------------
1,813
------------
International Debt - 4.7%
Abbey National PLC Step Up Bond (p)
6.700% due 06/29/49 150 161
AXA
8.600% due 12/15/30 85 104
Bombardier, Inc. (y)
6.300% due 05/01/14 85 72
British Sky Broadcasting PLC
8.200% due 07/15/09 230 265
British Telecommunications PLC
8.375% due 12/15/10 90 105
8.875% due 12/15/30 5 6
Conoco Funding Co.
6.350% due 10/15/11 400 435
DBS Capital Funding Corp. (y)(p)
7.657% due 03/15/49 135 151
Deutsche Telekom International Finance BV
8.500% due 06/15/10 130 152
8.750% due 06/15/30 175 213
Dresdner Bank AG for Kyivstar GSM (y)
12.750% due 11/21/05 140 152
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Export Import Bank of Korea
4.125% due 02/10/09 120 116
France Telecom Step Up Bond
8.200% due 03/01/06 440 472
8.750% due 03/01/11 485 562
9.500% due 03/01/31 75 94
Intelsat, Ltd.
6.500% due 11/01/13 205 181
Korea Development Bank
4.250% due 11/13/07 50 50
Korea Electric Power Corp. (y)
5.125% due 04/23/34 60 57
Mexico Government International Bond
8.375% due 01/14/11 100 113
6.375% due 01/16/13 130 130
8.300% due 08/15/31 235 246
Mizuho Financial Group Cayman, Ltd. (y)
5.790% due 04/15/14 130 128
Petroleos Mexicanos
9.500% due 09/15/27 35 39
Poland Government International Bond 4.750% due
10/27/24 200 178
Province of Quebec
5.000% due 07/17/09 35 36
7.500% due 07/15/23 200 240
PTC International Finance II SA 11.250% due
12/01/09 160 174
Royal Bank of Scotland Group PLC (p)
Series 1
9.118% due 03/31/49 550 663
Royal KPN NV
8.000% due 10/01/10 305 353
Santander Financial Issuances
6.800% due 07/15/05 45 47
6.375% due 02/15/11 110 119
Sanwa Finance Aruba AEC
8.350% due 07/15/09 135 154
Shaw Communications, Inc.
8.250% due 04/11/10 115 125
7.200% due 12/15/11 50 52
Stora Enso OYJ
7.375% due 05/15/11 85 94
Systems 2001 AT LLC (y)
7.156% due 12/15/11 145 154
Telecom Italia Capital SA (y)
5.250% due 11/15/13 230 223
6.375% due 11/15/33 80 77
</Table>
Core Bond Fund 37
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
TELUS Corp.
7.500% due 06/01/07 185 201
8.000% due 06/01/11 330 375
TPSA Finance BV (y)
7.750% due 12/10/08 85 94
------------
7,363
------------
Mortgage-Backed Securities - 28.9%
Bank of America Mortgage Securities
Series 2004-1 Class 5A1
6.500% due 09/25/33 60 62
Bear Stearns Adjustable Rate Mortgage Trust
Series 2002-8 Class 3A
6.053% due 08/25/32 14 14
Series 2003-1 Class 6A1
5.134% due 04/25/33 181 181
Series 2003-8 Class 4A1
4.802% due 01/25/34 395 393
Citicorp Mortgage Securities, Inc.
Series 2001-12 Class M
6.394% due 08/25/31 93 92
CS First Boston Mortgage Securities Corp.
Series 2001-AR24 Class 3A
6.263% due 12/25/31 101 104
Series 2002-18 Class 1AIO
7.500% due 06/25/32 400 10
Series 2002-22 Class 1AIO
8.000% due 07/25/32 550 14
Federal Home Loan Mortgage Corp.
15 Year Gold TBA (o)
6.500% 495 522
30 Year Gold TBA (o)
6.000% 380 386
Federal Home Loan Mortgage Corp.
30 Year Gold TBA (o)
5.500% 2,855 2,843
6.000% due 2016 79 82
5.000% due 2018 417 419
7.813% due 2030 6 6
6.500% due 2032 102 106
5.000% due 2033 534 517
Series 2000-2266 Class F
1.689% due 11/15/30 72 73
Series 2002-2504 Class L
5.500% due 03/15/15 8 8
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Federal Home Loan Mortgage Corp. Structured Pass
Through Securities
Series 2003-54 Class 2AIO
0.245% due 02/25/43 8,496 59
Series 2003-54 Class 3AIO
0.760% due 02/25/43 3,370 119
Federal National Mortgage Association
15 Year TBA (o)
5.000% 1,740 1,742
5.500% 3,660 3,743
6.000% 2,180 2,270
30 Year TBA (o)
5.000% 5,610 5,418
5.500% 2,120 2,109
6.000% 4,680 4,769
6.500% 1,460 1,520
7.000% 465 490
6.000% due 2016 34 35
2.969% due 2017 121 122
5.000% due 2017 1,023 1,028
5.500% due 2017 1,370 1,405
6.000% due 2017 297 310
4.500% due 2018 769 754
5.000% due 2018 2,430 2,440
5.500% due 2018 383 393
7.000% due 2032 629 664
5.000% due 2033 656 635
5.500% due 2033 613 612
6.000% due 2033 88 90
6.500% due 2033 368 383
5.000% due 2034 1,921 1,861
5.500% due 2034 548 546
3.966% due 2036 922 948
Series 1992-10 Class ZD
8.000% due 11/25/21 996 1,036
Federal National Mortgage Association Zero
Coupon due 2019 530 528
Federal National Mortgage Association Whole Loan
Series 2002-W1 Class 2AIO
0.585% due 04/25/42 3,084 121
Series 2002-W6 Class 2AIO
0.321% due 06/25/42 3,014 29
Series 2003-W1 Class 1A1
6.500% due 12/25/42 128 133
First Nationwide Trust (E)
Series 2001-4 Class 3A5
1.900% due 09/25/31 25 25
</Table>
38 Core Bond Fund
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Freddie Mac
15 Year Gold TBA (o)
5.000% 330 330
Government National Mortgage Association (E)
Series 2000-29 Class F
1.780% due 09/20/30 94 94
Government National Mortgage Association I
30 Year TBA (o)
5.500% 530 529
6.000% due 2029 35 36
6.500% due 2032 360 376
5.500% due 2033 132 132
Government National Mortgage Association II (E)
4.375% due 2026 564 564
4.750% due 2027 40 40
2.750% due 2032 451 437
MASTR Alternative Loans Trust
Series 2003-2 Class 7A1
7.000% due 12/25/32 14 14
Mellon Residential Funding Corp. (E)
Series 2000-TBC2 Class A1
1.479% due 06/15/30 459 456
Prime Mortgage Trust (E)
Series 2004-CL1 Class 1A2
1.700% due 02/25/34 141 141
Sequoia Mortgage Trust (E)
Series 2001-5 Class A
1.630% due 10/19/26 339 338
------------
45,656
------------
Municipal Bonds - 1.8%
County of Clark Nevada General Obligation
Limited, weekly demand (u)
5.000% due 06/01/32 600 589
Energy Northwest Revenue Bonds
5.500% due 07/01/13 100 110
Florida State Board Education General Obligation
Unlimited, weekly demand
5.000% due 06/01/33 300 295
Golden State Tobacco Securitization Corp.
Revenue Bonds, weekly demand
6.750% due 06/01/39 400 359
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Los Angeles Unified School District General
Obligation Unlimited, weekly demand
5.000% due 01/01/28 200 198
Lower Colorado River Authority Revenue Bonds,
weekly demand (u)
5.000% due 05/15/31 300 293
New York City Transitional Finance Authority
Revenue Bonds, weekly demand
5.000% due 02/01/33 300 291
South Carolina Transportation Infrastructure
Bank Revenue Bonds, weekly demand
5.000% due 10/01/33 600 588
Tobacco Settlement Financing Corp. Revenue
Bonds, weekly demand
4.375% due 06/01/19 100 97
University of Texas Revenue Bonds, weekly demand
5.000% due 08/15/33 100 97
------------
2,917
------------
Non-US Bonds - 0.8%
Deutsche Bundesrepublik
5.250% due 01/04/11 EUR 100 131
4.500% due 01/04/13 EUR 900 1,119
------------
1,250
------------
United States Government Agencies - 0.7%
Federal Home Loan Mortgage Corp.
2.750% due 03/15/08 210 203
Federal National Mortgage Association
4.375% due 03/15/13 345 329
Financing Corp. Principal Only STRIP
0.000% due 09/26/19 290 120
0.000% due 04/05/19 380 162
0.000% due 05/11/18 95 43
Residual Funding Principal Only STRIP
0.000% due 10/15/20 600 238
------------
1,095
------------
United States Government Treasuries - 9.2%
United States Treasury Inflation Indexed Bonds
3.375% due 01/15/07 (s) 119 127
3.875% due 01/15/09 1,032 1,150
</Table>
Core Bond Fund 39
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
4.250% due 01/15/10 670 767
3.500% due 01/15/11 918 1,019
3.000% due 07/15/12 836 904
3.875% due 04/15/29 229 292
United States Treasury Note
4.625% due 05/15/06 3,540 3,666
7.000% due 07/15/06 85 92
4.375% due 05/15/07 75 78
3.375% due 12/15/08 405 400
6.000% due 08/15/09 1,665 1,830
5.000% due 02/15/11 15 16
4.250% due 08/15/13 1,885 1,840
4.750% due 05/15/14 95 96
8.750% due 05/15/17 735 996
6.000% due 02/15/26 1,120 1,207
------------
14,480
------------
TOTAL LONG-TERM INVESTMENTS
(cost $94,384) 95,693
------------
PREFERRED STOCKS - 0.5%
Financial Services - 0.5%
Centaur Funding Corp. (y) 165,000 206
DG Funding Trust (y) 49 527
------------
TOTAL PREFERRED STOCKS
(cost $693) 733
------------
SHORT-TERM INVESTMENTS - 55.0%
ABN Amro North America Discount Note (c)(y)
1.040% due 07/06/04 2,100 2,100
1.090% due 07/29/04 200 200
ANZ Delaware, Inc. (c)(y)
1.050% due 07/06/04 1,300 1,300
1.045% due 07/07/04 400 400
Barclays US Funding, LLC (y)
1.110% due 08/25/04 (c) 300 299
1.280% due 09/21/04 1,700 1,693
1.305% due 09/27/04 300 299
Bank of America Corp.
Series MTNI
1.430% due 10/22/04 250 250
Bundesschatzanweisungen
3.000% due 12/10/04 2,440 2,980
CBA Del Finance, Inc. Years 3 & 4 Commercial
Paper (y)
1.050% due 07/02/04 (c) 1,200 1,200
1.070% due 07/15/04 (c) 100 100
1.300% due 09/07/04 599 598
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
Danske Corp. Commercial Paper
1.070% due 07/26/04 (c)(y) 100 100
DNB Nor Bank ASA Commercial Paper
1.260% due 09/20/04 (y) 1,600 1,593
European Investment Bank
1.050% due 07/16/04 (y) 1,200 1,199
0.875% due 11/08/04 JPY 10,000 92
Federal Home Loan Bank Discount Note (y)
1.165% due 07/16/04 (c) 600 600
1.170% due 07/16/04 800 799
Federal Home Loan Bank System
4.125% due 01/14/05 185 187
Federal Home Loan Mortgage Corp. Discount Note
(y)
1.150% due 08/17/04 800 799
Zero Coupon due 08/24/04 1,300 1,298
1.440% due 09/14/04 800 797
1.445% due 09/14/04 900 897
1.437% due 09/30/04 800 797
1.560% due 10/20/04 600 597
Federal National Mortgage Association Discount
Note (y)
1.005% due 07/01/04 (c) 2,700 2,700
1.010% due 07/01/04 (c) 700 700
1.040% due 07/14/04 (c) 800 800
1.045% due 07/14/04 1,300 1,299
1.150% due 08/18/04 1,300 1,298
1.105% due 09/01/04 500 498
1.225% due 09/01/04 1,300 1,297
1.230% due 09/01/04 800 798
1.380% due 09/01/04 800 797
1.200% due 09/08/04 1,000 996
1.415% due 09/08/04 100 100
1.426% due 09/22/04 300 299
1.435% due 09/22/04 1,000 996
Frank Russell Investment Company Money Market
Fund 33,486,000 33,486
General Electric Capital Corp. Commercial Paper
(y)
1.060% due 07/12/04 (c) 200 200
1.460% due 09/14/04 1,300 1,295
1.480% due 09/15/04 800 797
</Table>
40 Core Bond Fund
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands (except share amounts)
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
General Motors Acceptance Corp.
1.580% due 07/20/04 700 700
1.570% due 07/30/04 (E) 400 400
HBOS Treasury Services PLC (y)
1.055% due 07/16/04 (c) 100 100
1.345% due 09/07/04 300 299
1.475% due 09/13/04 100 100
1.580% due 10/21/04 1,200 1,193
ING US Funding LLC Commercial Paper (y)
1.040% due 07/02/04 (c) 900 900
1.345% due 09/09/04 1,400 1,395
Italy Government International Bond
5.000% due 12/15/04 JPY 6,000 56
KFW International Finance
1.000% due 12/20/04 JPY 29,000 266
Lloyds Bank PLC
1.185% due 07/21/04 (y) 1,700 1,699
National Australia Funding, Inc.
1.050% due 07/02/04 (c)(y) 2,000 2,000
Residential Asset Mortgage Products, Inc.
Series 2002-RZ4 Class AIO
5.750% due 04/25/05 523 16
Royal Bank of Scotland PLC
1.135% due 09/04/04 (y) 1,900 1,893
Svenska Handlesbanken, Inc. (y)
1.065% due 07/14/04 (c) 1,500 1,500
1.075% due 07/28/04 800 799
Swedbank Forenings
1.285% due 09/21/04 600 597
Toyota Motor Credit Corp.
1.000% due 12/20/04 JPY 5,000 46
UBS Finance, Inc. (y)
1.060% due 07/21/04 (c) 700 700
1.270% due 09/20/04 100 100
Unicredit Delaware Commercial Paper
1.470% due 09/14/04 (y) 1,000 996
United States Treasury Bill (y)(s)
1.135% due 09/02/04 255 254
1.230% due 09/16/04 20 20
1.391% due 09/16/04 500 498
0.098% due 09/30/04 125 124
</Table>
<Table>
<Caption>
PRINCIPAL MARKET
AMOUNT ($) VALUE
OR SHARES $
- -----------------------------------------------------------------------------
United States Treasury Note
7.875% due 11/15/04 220 225
US Bancorp
Series MTNJ
6.875% due 12/01/04 275 280
Westpac Capital Corp. (c)(y)
1.030% due 07/09/04 100 100
1.090% due 08/12/04 100 100
------------
TOTAL SHORT-TERM INVESTMENTS
(cost $86,903) 86,886
------------
WARRANTS & RIGHTS - 0.1%
Miscellaneous - 0.1%
Mexico Government International Bond Value
Recovery Rights (AE)
Series B 2,500,000 13
Series C 2,500,000 50
Series D 1,900,000 38
Series E 1,900,000 31
------------
132
------------
Utilities - 0.0%
GT Group Telecom, Inc. 2010 Warrants (AE) 175 --
------------
TOTAL WARRANTS
(cost $41) 132
------------
TOTAL INVESTMENTS - 116.1%
(identified cost $182,021) 183,444
OTHER ASSETS AND LIABILITIES,
NET - (16.1%) (25,499)
------------
NET ASSETS - 100.0% 157,945
============
</Table>
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund 41
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands
<Table>
<Caption>
UNREALIZED
NOTIONAL APPRECIATION
FUTURES CONTRACTS AMOUNT (DEPRECIATION)
(NUMBER OF CONTRACTS) $ $
- -------------------------------------------------------------------------------
Long Positions
Eurodollar Futures
expiration date 12/04 (9) 2,193 (4)
expiration date 03/05 (17) 4,124 (26)
expiration date 06/05 (19) 4,590 (31)
expiration date 09/05 (15) 3,611 (28)
expiration date 12/05 (15) 3,600 (27)
expiration date 03/06 (2) 479 (4)
Germany, Federal Republic 5 Year Bonds
expiration date 09/04 (27) 3,623 8
United States Treasury Bonds
expiration date 09/04 (15) 1,596 28
United States Treasury 2 Year Notes
expiration date 09/04 (57) 12,001 22
United States Treasury 5 Year Notes
expiration date 09/04 (64) 6,956 43
United States Treasury 10 Year Notes
expiration date 09/04 (218) 23,834 278
Short Positions
United States Treasury Bonds
expiration date 09/04 (25) 2,659 (49)
United States Treasury 5 Year Notes
expiration date 09/04 (38) 4,130 (29)
United States Treasury 10 Year Notes
expiration date 09/04 (13) 1,421 (14)
------------
Total Unrealized Appreciation (Depreciation) on
Open Futures Contracts 167
============
</Table>
<Table>
<Caption>
NOTIONAL MARKET
OPTIONS WRITTEN AMOUNT VALUE
(NUMBER OF CONTRACTS) $ $
- -----------------------------------------------------------------------------
Euribor Futures
Dec 2004 97.00 Put (3) -- --
Swap Option Three Month LIBOR
Oct 2004 3.80 Call (1) 1,140 --
United States Treasury Notes
5 Year Futures
Aug 2004 111.50 Call (2) 223 --
Aug 2004 107.50 Put (3) 323 (2)
United States Treasury Notes
10 Year Futures
Aug 2004 110.00 Call (10) 1,100 (9)
Aug 2004 111.00 Call (4) 444 (2)
Aug 2004 114.00 Call (1) 114 --
Aug 2004 115.00 Call (11) 1,265 --
Aug 2004 105.00 Put (10) 1,050 (1)
Aug 2004 108.00 Put (6) 648 (4)
------------
Total Liability for Options Written (premiums
received $41) (18)
============
</Table>
<Table>
<Caption>
FOREIGN CURRENCY EXCHANGE CONTRACTS
- -------------------------------------------------------------------------
UNREALIZED
APPRECIATION
AMOUNT AMOUNT SETTLEMENT (DEPRECIATION)
SOLD BOUGHT DATE $
- ------------------- -------------------- ----------- --------------
USD 2,120 EUR 1,750 07/26/04 7
EUR 66 USD 81 07/20/04 1
EUR 1,750 USD 2,072 07/26/04 (56)
EUR 1,870 USD 2,263 12/10/04 (8)
--------------
(56)
==============
</Table>
See accompanying notes which are an integral part of the financial statements.
42 Core Bond Fund
RUSSELL INVESTMENT FUNDS
CORE BOND FUND
SCHEDULE OF INVESTMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
Amounts in thousands
<Table>
<Caption>
INDEX SWAPS
- ---------------------------------------------------------------------------------------------------------------------------
UNREALIZED
NOTIONAL APPRECIATION
FUND RECEIVES COUNTER AMOUNT FUND PAYS TERMINATION (DEPRECIATION)
UNDERLYING SECURITY PARTY $ FLOATING RATE DATE $
- ------------------------------ ---------------- --------- ----------------------- -------------- ----------------
Lehman Brothers CMBS 1 Month USD LIBOR-
ERISA Eligible Index Lehman Brothers 910 BBA minus 0.450% 07/31/04 (2)
Lehman Brothers CMBS 1 Month USD LIBOR-
ERISA Eligible Index Lehman Brothers 320 BBA minus 0.300% 11/30/04 4
----------------
2
================
</Table>
<Table>
<Caption>
INTEREST RATE SWAPS
- ----------------------------------------------------------------------------------------------------------------------
NOTIONAL MARKET
COUNTER AMOUNT TERMINATION VALUE
PARTY $ FUND RECEIVES FUND PAYS DATE $
- --------------------- ------------------------- ------------------ --------------- ---------------- --------
Bank of America USD 6,900 Three Month LIBOR 4.000% 12/15/09 (187)
Barclay's Bank PLC EUR 200 Six Month LIBOR 4.000% 06/17/10 (2)
Barclay's Bank PLC GBP 50 Six Month LIBOR 5.000% 06/16/11 (2)
Barclay's Bank PLC USD 900 Three Month LIBOR 4.000% 12/15/06 6
Goldman Sachs EUR 1,000 Six Month LIBOR 4.000% 06/17/08 5
Merrill Lynch EUR 900 Six Month LIBOR 4.000% 03/15/07 12
Merrill Lynch EUR 3,800 Six Month LIBOR 4.000% 06/17/10 (44)
UBS USD 400 Three Month LIBOR 4.000% 12/15/06 3
UBS USD 1,000 Three Month LIBOR 4.000% 12/15/09 (27)
--------
Total Market Value of Interest Rate Swaps
premiums paid (received) - ($232) (236)
========
</Table>
See accompanying notes which are an integral part of the financial statements.
Core Bond Fund 43
RUSSELL INVESTMENT FUNDS
NOTES TO SCHEDULES OF INVESTMENTS -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
FOOTNOTES:
(AE) Nonincome-producing security.
(o) Real Estate Investment Trust (REIT).
(s) Held as collateral in connection with futures contracts purchased (sold),
options written, or swaps entered into by the Fund.
(y) Rate noted is yield-to-maturity from date of acquisition.
(c) At amortized cost, which approximates market.
(E) Adjustable or floating rate security. Rate shown reflects rate in effect
at period end.
(o) Forward commitment.
(p) Perpetual floating rate security. Rate shown reflects rate in effect at
period end.
(u) Bond is insured by a guarantor or backed by a letter of credit.
(z) All or a portion of the shares of this security are on loan.
(y) 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.
(Y) This security has been valued by the Security Valuation Committee. It is
possible that the estimated value may differ significantly from the amount
that might ultimately be realized.
(ae) Pre-refunded: These bonds are collateralized by US Treasury securities,
which are held in escrow by a trustee and used to pay principal and
interest in the tax-exempt issue and to retire the bonds in full at the
earliest refunding date. The rate noted is for descriptive purposes;
effective yield may vary.
(O) In default.
(N) The security is purchased with the cash collateral from the securities
loaned.
(B) Illiquid Security.
ABBREVIATIONS:
ADR - American Depositary Receipt
GDR - Global Depositary Receipt
ADS - American Depositary Share
CMO - Collateralized Mortgage Obligation
CVO - Contingent Value Obligation
144A - Represents private placement security for qualified buyers according to
rule 144A of the Securities Act of 1933.
GDS - Global Depositary Share
LIBOR - London Interbank Offered Rate
PIK - Payment in Kind
FDIC - Federal Deposit Insurance Company
REMIC - Real Estate Mortgage Investment Conduit
STRIP - Separate Trading of Registered Interest and Principal of Securities
TBA - To Be Announced Security
FOREIGN CURRENCY ABBREVIATIONS:
<Table>
ARS - Argentine peso HKD - Hong Kong dollar PLN - Polish zloty
AUD - Australian dollar HUF - Hungarian forint RUB - Russian ruble
BRL - Brazilian real IDR - Indonesian rupiah SEK - Swedish krona
CAD - Canadian dollar ILS - Israeli shekel SGD - Singapore dollar
CHF - Swiss franc INR - Indian rupee SKK - Slovakian koruna
CLP - Chilean peso ITL - Italian lira THB - Thai baht
CNY - Chinese renminbi yuan JPY - Japanese yen TRL - Turkish lira
COP - Colombian peso KES - Kenyan schilling TWD -- Taiwanese dollar
CRC - Costa Rica colon KRW - South Korean won USD - United States dollar
CZK - Czech koruna MXN - Mexican peso VEB - Venezuelan bolivar
DKK - Danish krone MYR - Malaysian ringgit VND - Vietnamese dong
EGP - Egyptian pound NZD - New Zealand dollar ZAR - South African rand
EUR - Euro PEN - Peruvian nouveau sol
GBP - British pound sterling PHP - Philippine peso
</Table>
44 Notes to Schedules of Investments
(This page intentionally left blank)
RUSSELL INVESTMENT FUNDS
STATEMENT OF ASSETS AND LIABILITIES -- JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
MULTI-STYLE EQUITY
AMOUNTS IN THOUSANDS FUND
- ----------------------------------------------------------------------------------------------
ASSETS
Investments, at identified cost $ 281,418
- ----------------------------------------------------------------------------------------------
Investments, at market*** 313,075
Cash --
Foreign currency holdings* --
Unrealized appreciation on foreign currency exchange contracts --
Receivables:
Dividends and interest 308
Investments sold 4,336
Fund shares sold 85
Foreign taxes recoverable --
From Advisor 4
Daily variation margin on futures contracts 80
Prepaid expenses 1
Unrealized appreciation on index swap contracts --
Interest rate swap contracts, at market value**** --
--------------------
Total assets 317,889
--------------------
LIABILITIES
Payables:
Investments purchased 4,836
Fund shares redeemed 59
Accrued fees to affiliates 213
Other accrued expenses 38
Daily variation margin on futures contracts --
Unrealized depreciation on foreign currency exchange contracts --
Options written, at market value** --
Payable upon return of securities loaned 2,110
Unrealized depreciation on index swap contracts --
Interest rate swap contracts, at market value**** --
--------------------
Total liabilities 7,256
--------------------
NET ASSETS $ 310,633
====================
Net Assets Consist of:
Undistributed (overdistributed) net investment income $ 553
Accumulated net realized gain (loss) (87,518)
Unrealized appreciation (depreciation) on:
Investments 31,657
Futures contracts 124
Options written --
Index swap contracts --
Interest rate swap contracts --
Foreign currency-related transactions --
Shares of beneficial interest 262
Additional paid-in capital 365,555
--------------------
NET ASSETS $ 310,633
====================
</Table>
See accompanying notes which are an integral part of the financial statements.
46 Statement of Assets and Liabilities
<Table>
<Caption>
AGGRESSIVE EQUITY NON-U.S. REAL ESTATE SECURITIES CORE BOND
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------
$ 171,000 $ 218,920 $ 237,883 $ 182,021
- -----------------------------------------------------------------------------------
192,756 249,900 301,524 183,444
-- -- -- 2,811
-- 1,916 -- 172
-- 159 -- 8
136 489 1,358 1,024
2,208 705 953 14,330
154 117 114 12
-- 85 -- --
13 35 -- 3
56 86 -- 213
1 1 1 1
-- -- -- 4
-- -- -- 26
-------------- -------------- -------------- --------------
195,324 253,493 303,950 202,048
-------------- -------------- -------------- --------------
2,045 399 983 43,632
21 6 28 13
144 183 207 79
14 12 16 33
-- 37 -- --
-- 107 -- 64
-- 761 -- 18
15,890 31,101 19,145 --
-- -- -- 2
-- -- -- 262
-------------- -------------- -------------- --------------
18,114 32,606 20,379 44,103
-------------- -------------- -------------- --------------
$ 177,210 $ 220,887 $ 283,571 $ 157,945
============== ============== ============== ==============
$ 183 $ 612 $ 968 $ 1,054
4,882 (50,612) 6,902 686
21,756 30,980 63,641 1,423
264 362 -- 167
-- (6) -- 23
-- -- -- 2
-- -- -- (4)
-- 49 -- (67)
126 218 195 152
149,999 239,284 211,865 154,509
-------------- -------------- -------------- --------------
$ 177,210 $ 220,887 $ 283,571 $ 157,945
============== ============== ============== ==============
</Table>
See accompanying notes which are an integral part of the financial statements.
Statement of Assets and Liabilities 47
RUSSELL INVESTMENT FUNDS
STATEMENT OF ASSETS AND LIABILITIES, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
MULTI-STYLE EQUITY
FUND
- ----------------------------------------------------------------------------------------------
NET ASSET VALUE, offering and redemption price per share:
Net asset value per share***** $ 11.87
Net assets $ 310,633,217
Shares outstanding ($.01 par value) 26,175,498
- ----------------------------------------------------------------------------------------------
Amounts in thousands
* Foreign currency holdings - cost $ --
** Premiums received on options written $ --
*** Securities on loan included in investments $ 2,054
**** Interest rate swap contracts - premiums paid (received) $ --
***** Net asset value per share equals net assets divided by shares of
beneficial interest outstanding.
</Table>
See accompanying notes which are an integral part of the financial statements.
48 Statement of Assets and Liabilities
<Table>
<Caption>
AGGRESSIVE EQUITY NON-U.S. REAL ESTATE SECURITIES CORE BOND
FUND FUND FUND FUND
- -----------------------------------------------------------------------------------
$ 14.05 $ 10.15 $ 14.53 $ 10.39
$ 177,209,510 $ 220,887,258 $ 283,570,764 $ 157,944,556
12,611,622 21,761,089 19,510,556 15,202,355
- -----------------------------------------------------------------------------------
$ -- $ 1,923 $ -- $ 172
$ -- $ 755 $ -- $ 41
$ 15,509 $ 29,576 $ 18,822 $ --
$ -- $ -- $ -- $ (232)
</Table>
See accompanying notes which are an integral part of the financial statements.
Statement of Assets and Liabilities 49
RUSSELL INVESTMENT FUNDS
STATEMENT OF OPERATIONS -- FOR THE PERIOD ENDED JUNE 30, 2004 (UNAUDITED)
<Table>
<Caption>
MULTI-STYLE
AMOUNTS IN THOUSANDS EQUITY FUND
- ----------------------------------------------------------------------------------------------
INVESTMENT INCOME
Dividends $ 2,271
Dividends from affiliated money market fund 85
Interest 6
Securities lending income 5
Less foreign taxes withheld --
--------------------
Total investment income 2,367
--------------------
EXPENSES
Management fees 1,198
Custodian fees 125
Transfer agent fees 4
Professional fees 22
Trustees' fees 4
Printing fees 7
Miscellaneous 15
--------------------
Expenses before reductions 1,375
Expense reductions (39)
--------------------
Net expenses 1,336
--------------------
Net investment income (loss) 1,031
--------------------
NET REALIZED AND UNREALIZED GAIN (LOSS)
Net realized gain (loss) on:
Investments 13,497
Futures contracts 1,182
Options written --
Index swap contracts --
Interest rate swap contracts --
Foreign currency-related transactions --
--------------------
Net realized gain (loss) 14,679
--------------------
Net change in unrealized appreciation (depreciation) on:
Investments (6,056)
Futures contracts (594)
Options written --
Index swap contracts --
Interest rate swap contracts --
Foreign currency-related transactions --
--------------------
Net change in unrealized appreciation (depreciation) (6,650)
--------------------
Net realized and unrealized gain (loss) 8,029
--------------------
NET INCREASE (DECREASE) IN NET ASSETS FROM OPERATIONS $ 9,060
====================
</Table>
See accompanying notes which are an integral part of the financial statements.
50 Statement of Operations
<Table>
<Caption>
AGGRESSIVE EQUITY NON-U.S. REAL ESTATE SECURITIES CORE BOND
FUND FUND FUND FUND
- --------------------------------------------------------------------------------------------------------
$ 1,016 $ 3,633 $ 5,560 $ 29
49 81 41 168
4 16 -- 2,167
37 73 8 --
-- (435) -- --
------------------------------ ------------------- ------------------- -------------------
1,106 3,368 5,609 2,364
------------------------------ ------------------- ------------------- -------------------
835 1,037 1,171 455
130 270 48 74
3 3 3 2
20 28 21 18
2 3 4 2
4 5 6 4
15 10 3 1
------------------------------ ------------------- ------------------- -------------------
1,009 1,356 1,256 556
(86) (101) -- (26)
------------------------------ ------------------- ------------------- -------------------
923 1,255 1,256 530
------------------------------ ------------------- ------------------- -------------------
183 2,113 4,353 1,834
------------------------------ ------------------- ------------------- -------------------
11,887 10,878 9,843 849
575 1,038 -- 199
-- (378) -- 154
-- -- -- 53
-- -- -- (116)
-- (354) -- (233)
------------------------------ ------------------- ------------------- -------------------
12,462 11,184 9,843 906
------------------------------ ------------------- ------------------- -------------------
(5,689) (3,795) 3,201 (2,196)
(69) 95 -- (49)
-- 10 -- (45)
-- -- -- (65)
-- -- -- (45)
-- (283) -- 144
------------------------------ ------------------- ------------------- -------------------
(5,758) (3,973) 3,201 (2,256)
------------------------------ ------------------- ------------------- -------------------
6,704 7,211 13,044 (1,350)
------------------------------ ------------------- ------------------- -------------------
$ 6,887 $ 9,324 $ 17,397 $ 484
============================== =================== =================== ===================
</Table>
See accompanying notes which are an integral part of the financial statements.
Statement of Operations 51
RUSSELL INVESTMENT FUNDS
STATEMENT OF CHANGES IN NET ASSETS
<Table>
<Caption>
MULTI-STYLE EQUITY
FUND
-------------------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2004 DECEMBER 31,
Amounts in thousands (UNAUDITED) 2003
- ---------------------------------------------------------------------------------------------------------------------
INCREASE (DECREASE) IN NET ASSETS
OPERATIONS
Net investment income (loss) $ 1,031 $ 1,977
Net realized gain (loss) 14,679 13,702
Net change in unrealized appreciation (depreciation) (6,650) 47,424
------------------- --------------------
Net increase (decrease) in net assets from operations 9,060 63,103
------------------- --------------------
DISTRIBUTIONS
From net investment income (1,127) (1,743)
From net realized gain -- --
Tax return of capital -- --
------------------- --------------------
Net decrease in net assets from distributions (1,127) (1,743)
------------------- --------------------
SHARE TRANSACTIONS
Net increase (decrease) in net assets from share transactions 5,933 28,613
------------------- --------------------
TOTAL NET INCREASE (DECREASE) IN NET ASSETS 13,866 89,973
NET ASSETS
Beginning of period 296,767 206,794
------------------- --------------------
End of period $ 310,633 $ 296,767
=================== ====================
Undistributed (overdistributed) net investment income included
in net assets $ 553 $ 649
</Table>
See accompanying notes which are an integral part of the financial statements.
52 Statement of Changes in Net Assets
<Table>
<Caption>
AGGRESSIVE EQUITY NON-U.S. REAL ESTATE SECURITIES
FUND FUND FUND
------------------------------ ------------------------------- -------------------------------
SIX MONTHS YEAR SIX MONTHS YEAR SIX MONTHS YEAR
ENDED ENDED ENDED ENDED ENDED ENDED
JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31, JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003 (UNAUDITED) 2003 (UNAUDITED) 2003
- -------------------------------------------------------------------------------------------------------
$ 183 $ 117 $ 2,113 $ 1,801 $ 4,353 $ 9,111
12,462 16,388 11,184 579 9,843 (511)
(5,758) 31,170 (3,973) 53,362 3,201 55,264
------------- -------------- -------------- -------------- -------------- --------------
6,887 47,675 9,324 55,742 17,397 63,864
------------- -------------- -------------- -------------- -------------- --------------
-- (138) (811) (4,573) (2,223) (10,273)
-- -- -- -- -- --
-- -- -- -- -- (341)
------------- -------------- -------------- -------------- -------------- --------------
-- (138) (811) (4,573) (2,223) (10,614)
------------- -------------- -------------- -------------- -------------- --------------
3,938 21,054 5,755 17,610 13,706 41,265
------------- -------------- -------------- -------------- -------------- --------------
10,825 68,591 14,268 68,779 28,880 94,515
166,385 97,794 206,619 137,840 254,691 160,176
------------- -------------- -------------- -------------- -------------- --------------
$ 177,210 $ 166,385 $ 220,887 $ 206,619 $ 283,571 $ 254,691
============= ============== ============== ============== ============== ==============
$ 183 $ -- $ 612 $ (690) $ 968 $ (1,162)
<Caption>
CORE BOND
FUND
-------------------------------
SIX MONTHS YEAR
ENDED ENDED
JUNE 30, 2004 DECEMBER 31,
(UNAUDITED) 2003
- ---
$ 1,834 $ 4,208
906 4,198
(2,256) 243
-------------- --------------
484 8,649
-------------- --------------
(1,214) (5,257)
(487) (2,755)
-- --
-------------- --------------
(1,701) (8,012)
-------------- --------------
11,960 6,285
-------------- --------------
10,743 6,922
147,202 140,280
-------------- --------------
$ 157,945 $ 147,202
============== ==============
$ 1,054 $ 434
</Table>
See accompanying notes which are an integral part of the financial statements.
Statement of Changes in Net Assets 53
RUSSELL INVESTMENT FUNDS
FINANCIAL HIGHLIGHTS -- FOR THE PERIODS ENDED
For a Share Outstanding Throughout Each Period.
<Table>
<Caption>
$ $ $ $
NET ASSET VALUE, NET NET REALIZED TOTAL INCOME
BEGINNING OF INVESTMENT AND UNREALIZED FROM
PERIOD INCOME LOSS)(A) GAIN (LOSS) OPERATIONS
- -------------------------------------------------------------------------------------------------------------
MULTI-STYLE EQUITY FUND
June 30, 2004* 11.56 .04 .31 .35
December 31, 2003 9.04 .08 2.51 2.59
December 31, 2002 11.84 .06 (2.80) (2.74)
December 31, 2001 14.13 .07 (2.06) (1.99)
December 31, 2000 16.79 .08 (2.10) (2.02)
December 31, 1999 16.02 .12 2.41 2.53
- -------------------------------------------------------------------------------------------------------------
AGGRESSIVE EQUITY FUND
June 30, 2004* 13.47 .01 .57 .58
December 31, 2003 9.26 .01 4.21 4.22
December 31, 2002 11.44 (.02) (2.16) (2.18)
December 31, 2001 11.73 --(d) (.28) (.28)
December 31, 2000 13.36 .04 (.16) (.12)
December 31, 1999 12.70 .05 .71 .76
- -------------------------------------------------------------------------------------------------------------
NON-U.S. FUND
June 30, 2004* 9.76 .10 .33 .43
December 31, 2003 7.20 .09 2.69 2.78
December 31, 2002 8.64 .06 (1.37) (1.31)
December 31, 2001 11.15 .06 (2.52) (2.46)
December 31, 2000 14.19 .10 (2.11) (2.01)
December 31, 1999 11.09 .10 3.53 3.63
- -------------------------------------------------------------------------------------------------------------
REAL ESTATE SECURITIES FUND
June 30, 2004* 13.71 .22 .71 .93
December 31, 2003 10.51 .55 3.28 3.83
December 31, 2002 10.75 .54 (.13) .41
December 31, 2001 10.67 .57 .24 .81
December 31, 2000 8.81 .54 1.81 2.35
December 31, 1999 (1) 10.00 .35 (1.08) (.73)
- -------------------------------------------------------------------------------------------------------------
CORE BOND FUND
June 30, 2004* 10.47 .13 (.10) .03
December 31, 2003 10.43 .31 .31 .62
December 31, 2002 10.13 .36 .52 .88
December 31, 2001 10.07 .54 .18 .72
December 31, 2000 9.64 .61 .33 .94
December 31, 1999 10.68 .59 (.65) (.06)
- -------------------------------------------------------------------------------------------------------------
<Caption>
$ $
DISTRIBUTIONS DISTRIBUTIONS $
FROM NET FROM NET RETURN OF
INVESTMENT INCOME REALIZED GAIN CAPITAL
- ----------------------------------------
MULTI-STYLE EQUITY FUND
June 30, 2004* (.04) -- --
December 31, 2003 (.07) -- --
December 31, 2002 (.06) -- --
December 31, 2001 (.06) (.24) --
December 31, 2000 (.08) (.56) --
December 31, 1999 (.12) (1.64) --
- ----------------------------------------
AGGRESSIVE EQUITY FUND
June 30, 2004* -- -- --
December 31, 2003 (.01) -- --
December 31, 2002 -- -- --
December 31, 2001 --(d) -- (.01)
December 31, 2000 (.05) (1.46) --
December 31, 1999 (.04) (.06) --
- ----------------------------------------
NON-U.S. FUND
June 30, 2004* (.04) -- --
December 31, 2003 (.22) -- --
December 31, 2002 (.13) -- --
December 31, 2001 (.04) -- (.01)
December 31, 2000 -- (1.00) (.03)
December 31, 1999 (.23) (.30) --
- ----------------------------------------
REAL ESTATE SECURITIES FUND
June 30, 2004* (.11) -- --
December 31, 2003 (.61) -- (.02)
December 31, 2002 (.57) (.08) --
December 31, 2001 (.55) (.18) --
December 31, 2000 (.49) -- --
December 31, 1999 (1) (.34) -- (.12)
- ----------------------------------------
CORE BOND FUND
June 30, 2004* (.08) (.03) --
December 31, 2003 (.38) (.20) --
December 31, 2002 (.30) (.28) --
December 31, 2001 (.60) (.06) --
December 31, 2000 (.51) -- --
December 31, 1999 (.61) (.16) (.21)
- ----------------------------------------
</Table>
See accompanying notes which are an integral part of the financial statements.
54 Financial Highlights
<Table>
<Caption>
% %
$ $ RATIO OF EXPENSES RATIO OF EXPENSES
$ NET ASSET VALUE, % NET ASSETS, TO AVERAGE TO AVERAGE
TOTAL END OF TOTAL END OF PERIOD NET ASSETS, NET ASSETS,
DISTRIBUTIONS PERIOD RETURN(B) (000) NET(C)(E) GROSS(C)
- ---------------------------------------------------------------------------------------------------------------------
(.04) 11.87 3.05 310,633 .87 .90
(.07) 11.56 28.86 296,767 .87 .95
(.06) 9.04 (23.19) 206,794 .92 .99
(.30) 11.84 (14.21) 251,730 .92 .99
(.64) 14.13 (12.26) 262,664 .92 .93
(1.76) 16.79 17.17 285,877 .92 .96
- ---------------------------------------------------------------------------------------------------------------------
-- 14.05 4.31 177,210 1.05 1.15
(.01) 13.47 45.60 166,385 1.06 1.26
-- 9.26 (19.06) 97,794 1.25 1.36
(.01) 11.44 (2.36) 111,693 1.25 1.38
(1.51) 11.73 (.66) 106,665 1.25 1.28
(.10) 13.36 6.08 99,150 1.25 1.34
- ---------------------------------------------------------------------------------------------------------------------
(.04) 10.15 4.38 220,887 1.15 1.24
(.22) 9.76 38.78 206,619 1.16 1.41
(.13) 7.20 (15.15) 137,840 1.30 1.48
(.05) 8.64 (22.03) 154,494 1.30 1.43
(1.03) 11.15 (14.43) 185,644 1.30 1.37
(.53) 14.19 33.36 195,519 1.30 1.50
- ---------------------------------------------------------------------------------------------------------------------
(.11) 14.53 6.75 283,571 .91 .91
(.63) 13.71 37.21 254,691 .95 .95
(.65) 10.51 3.80 160,176 .99 .99
(.73) 10.75 7.84 111,982 1.06 1.06
(.49) 10.67 27.24 88,713 1.08 1.08
(.46) 8.81 (7.26) 55,318 1.15 1.15
- ---------------------------------------------------------------------------------------------------------------------
(.11) 10.39 .35 157,945 .70 .73
(.58) 10.47 6.15 147,202 .71 .78
(.58) 10.43 8.84 140,280 .80 .80
(.66) 10.13 7.41 109,971 .80 .88
(.51) 10.07 10.00 88,514 .80 .84
(.98) 9.64 (.61) 83,620 .80 .86
- ---------------------------------------------------------------------------------------------------------------------
<Caption>
%
RATIO OF NET
INVESTMENT INCOME %
TO AVERAGE PORTFOLIO
NET ASSETS(C) TURNOVER RATE(B)
- ---
.67 63.61
.82 107.67
.61 145.90
.57 131.67
.51 161.09
.74 67.67
- -----------------------------------------
.21 83.10
.10 138.95
(.17) 139.24
.01 180.38
.27 203.48
.37 111.46
- -----------------------------------------
1.94 45.03
1.14 50.29
.77 60.98
.64 79.79
.78 86.06
.80 83.45
- -----------------------------------------
3.16 26.71
4.66 38.84
5.01 55.43
5.35 55.13
5.58 45.79
5.84 23.98
- -----------------------------------------
2.42 84.52
2.86 232.64
3.52 207.60
5.25 205.62
6.20 171.48
5.77 139.06
- -----------------------------------------
</Table>
See accompanying notes which are an integral part of the financial statements.
Financial Highlights 55
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL HIGHLIGHTS -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
* For the six months ended June 30, 2004 (Unaudited).
(1) For the period April 30, 1999 (commencement of operations) to December 31,
1999.
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) The ratios for periods less than one year are annualized.
(d) Less than $.01 per share.
(e) May include amounts waived and/or reimbursed by the investment advisor and
for certain funds, custody credit arrangements. The custody credit
arrangements had an impact of less than .005%.
See accompanying notes which are an integral part of the financial statements.
56 Notes to Financial Highlights
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
1. ORGANIZATION
Russell Investment Funds (the "Investment Company") is a series mutual fund
with five investment portfolios, referred to as "Funds." These financial
statements report on the Funds, each of which has distinct investment
objectives and strategies. 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 a diversified, open-end management investment
company. It is organized and operates as a Massachusetts business trust under
a master trust agreement dated July 11, 1996. The Investment Company's master
trust agreement permits the Board of Trustees to issue an unlimited number of
full and fractional shares of beneficial interest at a $.01 par value.
2. SIGNIFICANT ACCOUNTING POLICIES
The Funds' financial statements are prepared in accordance with accounting
principles generally accepted in the United States of America ("GAAP") which
require the use of management estimates. The following is a summary of the
significant accounting policies consistently followed by the Funds in the
preparation of these financial statements.
Security valuation
United States equity securities listed and traded principally on any national
securities exchange are valued on the basis of the last sale price or, if
there were no sales on that day, at the last reported price, on the primary
exchange on which the security is traded. Equity securities traded on NASDAQ
or in a U.S. OTC market will be valued at the official closing price (NOCP)
as of the close of the market's regular trading hours.
Fixed-income securities listed and traded principally on any national
securities exchange are valued at the evaluated bid price or, if there were
no sales on that day, at the last reported bid price, on the primary exchange
on which the security is traded. Over-the-counter fixed-income securities and
options are valued on the basis of the last sale price. Many fixed-income
securities do not trade each day, and thus last sale or bid prices are
frequently not available. Accordingly, fixed-income securities may be valued
using prices provided by a pricing service approved by the Board of Trustees
when such prices are believed to reflect the market value of such securities.
Futures contracts are valued on the basis of the last sales price. Exchange
listed futures contracts are valued on a basis of the last quoted daily
settlement prices established by the exchange on which they trade. If there
were no sales, futures are valued at the last reported bid price.
Investments in other mutual funds are valued at their net asset value per
share, calculated at the close of business.
The value of swap agreements are equal to the Funds' obligation (or rights)
under swap contracts which will generally be equal to the net amounts to be
paid or received under the contracts based upon the relative values of the
positions held by each party to the contracts.
International equity securities traded on a foreign national securities
exchange or an over-the-counter market (foreign or domestic) are valued on
the basis of the official closing price, or, lacking the official closing
price, at the last sale price on the primary exchange on which the security
is traded.
Short-term investments purchased by the Funds and maturing within 60 days at
the time of purchase are valued at "amortized cost" unless the Board of
Trustees determines that amortized cost does not represent fair value.
The Funds may value certain securities for which market quotations are not
readily available at "fair value," as determined in good faith pursuant to
procedures established by the Board of Trustees. Generally, trading in
non-U.S. securities is substantially completed each day at various times
prior to the close of trading on the U.S. markets. The values of such
securities used in computing the net asset value of a portfolio's shares are
generally determined as of such times.
Occasionally, significant events that affect the values of such securities
may occur between the times at which they are generally determined and the
close of the U.S. markets and would therefore not be reflected in the
computation of a portfolio's net asset value. In such event, these securities
will then be valued at their fair value as determined in good faith under
consistently applied procedures established by and under the general
supervision of the Board of Trustees.
Investment transactions
Securities transactions are recorded on a trade date basis. Realized gains
and losses from securities transactions are recorded on the basis of specific
identified cost incurred by each money manager within a particular Fund.
Notes to Financial Statements 57
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
Investment income
Dividend income is recorded on the ex-dividend date and interest income is
recorded on the accrual basis. The Core Bond Fund classifies gains and losses
realized on prepayments received on mortgage-backed securities as part of
interest income. All premiums and discounts, including original issue
discounts, are amortized/accreted using the interest method.
Federal income taxes
Since the Investment Company is a Massachusetts business trust, each Fund is
a separate corporate taxpayer and determines its net investment income and
capital gains (or losses) and the amounts to be distributed to each Fund's
shareholders without regard to the income and capital gains (or losses) of
the other Funds.
It is each Fund's intention to qualify as a regulated investment company and
distribute all of its taxable income and capital gains. Therefore, no federal
income tax provision was required for the Funds.
Dividends and distributions to shareholders
For all Funds, income dividends and capital gain distributions, if any, are
recorded on the ex-dividend date. Dividends are generally declared and paid
quarterly, except for the Non-U.S. Fund, which generally declares and pays
dividends annually. Capital gain distributions are generally declared and
paid annually. An additional distribution may be paid by the Funds to avoid
imposition of federal income and excise tax on any remaining undistributed
capital gains and net investment income.
The timing and characterization of certain income and capital gain
distributions are determined in accordance with federal tax regulations which
may differ from GAAP. As a result, net investment income and net realized
gain (or loss) 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 GAAP primarily relate to
investments in options, futures, forward contracts, swaps, passive foreign
investment companies, foreign-denominated investments, mortgage-backed
securities, certain securities sold at a loss, capital loss carryforwards and
by recording gains and losses from securities transactions on the basis of
specific identified cost incurred by each money manager for financial
reporting purposes and on the basis of specific identified cost incurred by
each Fund for tax purposes. Permanent differences between book and tax
accounting are reclassified to paid in capital. Accordingly, the Funds may
periodically make reclassifications among certain of its capital accounts
without impacting its net asset value.
Expenses
The Funds will pay their own expenses other than those expressly assumed by
Frank Russell Investment Management Company ("FRIMCo" or "Advisor"). 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 US dollars. Foreign
currency amounts and transactions of the Funds are translated into US dollars
on the following basis:
(a) Market value of investment securities, other assets and liabilities at
the closing rate of exchange on the valuation date.
(b) Purchases and sales of investment securities and income at the closing
rate of exchange prevailing on the respective trade dates of such
transactions.
Reported net realized gains or losses from foreign currency-related
transactions arise from: sales and maturities of short-term securities; sales
of foreign currencies; currency gains or losses realized between the trade
and settlement dates on securities transactions; the difference between the
amounts of dividends, interest, and foreign withholding taxes recorded on the
Non-U.S. Fund's books and the US dollar equivalent of the amounts actually
received or paid. Net unrealized gains or losses from foreign
currency-related transactions arise from changes in the value of assets and
liabilities, other than investments in securities, at year end, as a result
of changes in the exchange rates.
The Funds do not isolate that portion of the results of operations of the
Fund 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.
58 Notes to Financial Statements
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
Derivatives
To the extent permitted by the investment objectives, restrictions and
policies set forth in the Funds' Prospectus and Statement of Additional
Information, the Funds may participate in various derivative-based
transactions. Derivative securities are instruments or agreements whose value
is derived from an underlying security or index. They include options,
futures, swaps, forwards, structured notes and stripped securities. These
instruments offer unique characteristics and risks that assist the Funds in
meeting their investment strategies.
The Funds typically use derivatives in three ways: cash equitization,
hedging, and return enhancement. Cash equitization is a technique that may be
used by certain Funds through the use of options and futures to earn
"market-like" returns with their excess and liquidity reserve cash balances.
Hedging is used by some Funds to limit or control risks, such as adverse
movements in exchange rates and interest rates. Return enhancement can be
accomplished through the use of derivatives in a Fund. By purchasing certain
instruments, Funds may more effectively achieve the desired portfolio
characteristics that assist them in meeting their investment objectives.
Depending on how the derivatives are structured and utilized, the risks
associated with them may vary widely. These risks are generally categorized
as market risk, liquidity risk and counterparty or credit risk.
Foreign currency exchange contracts
In connection with portfolio purchases and sales of securities denominated in
a foreign currency, the Non-U.S. and Core Bond Funds may enter into foreign
currency exchange spot contracts and forward foreign currency exchange
contracts ("contracts"). Contracts are recorded at market value. Certain
risks may arise upon entering into these contracts from the potential
inability of counterparties to meet the terms of their contracts and are
generally limited to the amount of unrealized gain on the contracts, if any,
that is recognized in the Statement of Assets and Liabilities. Realized gains
or losses arising from such transactions are included in net realized gain
(or loss) from foreign currency-related transactions. Open contracts at June
30, 2004 are presented on the Schedule of Investments for the Non-U.S. and
Core Bond Funds.
Forward commitments
The Funds may contract to purchase securities for a fixed price at a future
date beyond customary settlement time (not to exceed 120 days) (i.e., a
"forward commitment," "delayed settlement" or "when issued" transaction,
e.g., to be announced ("TBA")) consistent with a Fund's ability to manage its
investment portfolio and meet redemption requests. The price of the
underlying securities and the date when the securities will be delivered and
paid for are fixed at the time the transaction is negotiated. The Funds may
dispose of a forward commitment transaction prior to settlement if it is
appropriate to do so and realize short-term gains (or losses) upon such sale.
When effecting such transactions, cash or liquid high-grade debt obligations
of the Fund in a dollar amount sufficient to make payment for the portfolio
securities to be purchased will be segregated on the Fund's records at the
trade date and maintained until the transaction is settled. A forward
commitment transaction involves a risk of loss if the value of the security
to be purchased declines prior to the settlement date or the other party to
the transaction fails to complete the transaction.
Options
The Funds will not enter into any such transactions unless it owns (1) an
offsetting ("covered") position in securities, currencies or other options,
futures contracts or forward contracts or (2) cash or liquid assets with a
value, marked to market daily, sufficient to cover their obligations to the
extent not covered as provided in (1) above. The Funds will comply with SEC
guidelines regarding cover for these instruments and will, if the guidelines
so require, designate the prescribed amount of cash or liquid assets as
segregated.
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. These Funds may also
purchase and sell call and put options on foreign currencies. The domestic
equity Funds may utilize options to equitize liquidity reserve balances.
When a Fund writes a covered call or a put option, an amount equal to the
premium received by the Fund is included in the Fund's Statement of Assets
and Liabilities as an asset and as an equivalent liability. The amount of the
liability is subsequently marked-to-market to reflect the current market
value of the option written. The Fund receives a premium on the sale of a
call option but gives up the opportunity to profit from any increase in stock
value above the exercise price of the option, and when the Fund writes a put
option it is exposed to a decline in the price of the underlying security.
If an option which the Fund has written either 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
Notes to Financial Statements 59
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
received when the option was sold) without regard to any unrealized gain or
loss on the underlying security, and the liability related to such option is
extinguished. If a call option which the Fund has written is exercised, the
Fund realizes a capital gain or loss from the sale of the underlying
security, and the proceeds from such sale are increased by the premium
originally received. When a put option which a Fund has written is exercised,
the amount of the premium originally received will reduce the cost of the
security which a Fund purchases upon exercise of the option. Realized gains
(losses) on purchased options are included in net realized gain (loss) from
investments.
The Funds' use of written options involves, to varying degrees, elements of
market risk in excess of the amount recognized in the Statement of Assets and
Liabilities. The face or contract amounts of these instruments reflect the
extent of the Funds' exposure to market risk. The risks may be caused by an
imperfect correlation between movements in the price of the instrument and
the price of the underlying securities and interest rates.
Futures contracts
The Funds utilize futures to equitize uninvested cash balances. The face or
contract amounts of these instruments reflect the extent of the Funds'
exposure to off balance sheet risk. The primary risks associated with the use
of futures contracts are an imperfect correlation between the change in
market value of the securities held by the Fund and the prices of futures
contracts, and the possibility of an illiquid market. Upon entering into a
futures contract, the Funds are required to deposit with a broker an amount,
termed the initial margin, which typically represents 5% of the purchase
price indicated in the futures contract. Payments to and from the broker,
known as variation margin, are required to be made on a daily basis as the
price of the futures contract fluctuates. Changes in the initial settlement
values of futures contracts are accounted for as unrealized appreciation
(depreciation) until the contracts are terminated, at which time realized
gains and losses are recognized.
Investment in international markets
Investing in international markets may involve special risks and
considerations not typically associated with investing in the United States
markets. These risks include revaluation of currencies, high rates of
inflation, repatriation, restrictions on income and capital, and future
adverse political and economic developments. Moreover, securities issued in
these markets may be less liquid, subject to government ownership controls,
delayed settlements, and their prices more volatile than those of comparable
securities in the United States.
Swap agreements
The Funds may enter into swap agreements as an additional equitization
vehicle for uninvested cash balances held by the Funds or to effect
investment transactions consistent with the Funds' investment objectives and
strategies. Swap agreements are two party contracts entered into primarily by
institutional investors for periods ranging from a few weeks to more than one
year. In a standard swap transaction, the two parties agree to exchange the
returns (or differentials in rates of return) earned or realized on
particular investments or instruments. The returns to be exchanged between
the parties are calculated with respect to a "notional amount" (i.e. a
specified dollar amount that is hypothetically invested in a "basket" of
securities representing a particular index). Amounts paid to and received
from the swap counterparties representing capital appreciation and
depreciation on the underlying securities and accrued interest expense and
interest income are recorded as net realized gain (loss). The Fund is exposed
to credit risk in the event of non-performance by the swap counterparties;
however, the Fund does not anticipate non-performance by the counterparties.
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.
60 Notes to Financial Statements
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
3. INVESTMENT TRANSACTIONS
Securities
For the period ended June 30, 2004, purchases and sales of investment
securities (excluding US Government and Agency obligations, short-term
investments, options, futures and repurchase agreements) were as follows:
<Table>
<Caption>
FUNDS PURCHASES SALES
- ---------------------------------------------------------------
Multi-Style Equity $ 199,870,755 $ 182,449,612
Aggressive Equity 143,330,035 138,896,396
Non-U.S. 99,956,592 90,137,928
</Table>
<Table>
- ---------------------------------------------------------------
<Caption>
FUNDS PURCHASES SALES
Real Estate Securities $ 87,913,965 $ 72,350,307
Core Bond 38,193,365 33,507,035
</Table>
Purchases and sales of US Government and Agency obligations (excluding
short-term investments, options, futures and repurchase agreements) were as
follows:
<Table>
<Caption>
FUND PURCHASES SALES
--------------------------------------------------------------------------------
Core Bond $ 48,836,676 $ 53,566,090
</Table>
Written Options Contracts
Fund transactions in written options for the period ended June 30, 2004 were
as follows:
<Table>
<Caption>
NON-U.S. CORE BOND
NUMBER OF PREMIUMS NUMBER OF PREMIUMS
CONTRACTS RECEIVED CONTRACTS RECEIVED
------------------------------------------------------------------------------------------------------------------------------
Outstanding December 31, 2003 101 $ 846 47 $ 89
Opened 1,131 13,633 186 105
Closed (1,152) (13,724) (21) (18)
Expired -- -- (161) (135)
------------------- ------------------- ------------------- -------------------
Outstanding June 30, 2004 80 $ 755 51 $ 41
=================== =================== =================== ===================
</Table>
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 its total assets to certain
brokers. The Fund receives cash (US currency), US Government or US Government
agency obligations as collateral against the loaned securities. To the extent
that a loan is collateralized by cash, such collateral shall be invested by
the securities lending agent, State Street Bank and Trust Company ("State
Street"), in money market mutual funds and such other short-term investments,
provided the investments meet certain quality and diversification
requirements. The collateral received is recorded on the Fund's statement of
assets and liabilities along with the related obligation to return the
collateral.
Income generated from the investment of cash collateral, less negotiated
rebate fees paid to participating brokers and transaction costs, is divided
between the Fund and State Street and is recorded as income for the Fund. To
the extent that a loan is secured by non-cash collateral, brokers pay the
Fund negotiated lenders' fees, which are divided between the Fund and State
Street and are recorded as securities lending income for the Fund. All
collateral received will be in an amount at least equal to 102% (for loans of
US securities) or 105% (for non-US securities) of the market value of the
loaned securities at the inception of each loan. Should the borrower of the
securities fail financially, there is a risk of delay in recovery of the
securities or loss of rights in the collateral. Consequently, loans are made
only to borrowers which are deemed to be of good financial standing. As of
June 30, 2004, the value of outstanding securities on loan and the value of
collateral amounted to as follows:
<Table>
<Caption>
VALUE OF VALUE OF
FUNDS SECURITIES ON LOAN COLLATERAL
- ----------------------------------------------------------------
Multi-Style Equity $ 2,053,643 $ 2,110,220
Aggressive Equity 15,509,224 15,901,638
</Table>
<Table>
- ----------------------------------------------------------------
<Caption>
VALUE OF VALUE OF
FUNDS SECURITIES ON LOAN COLLATERAL
Non-U.S. $ 29,576,420 $ 31,176,254
Real Estate Securities 18,821,676 19,145,392
</Table>
Notes to Financial Statements 61
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
As of June 30, 2004, the cash collateral received for the securities on loan
are invested as follows:
<Table>
<Caption>
STATE STREET
SECURITIES LENDING
FUNDS QUALITY TRUST
----------------------------------------------------------
Multi-Style Equity $ 2,110,220
Aggressive Equity 15,889,638
Non-U.S. 31,101,318
Real Estate Securities 19,145,392
</Table>
As of June 30, 2004, the non-cash collateral received for the securities on
loan in the following funds was:
<Table>
<Caption>
NON-CASH COLLATERAL
FUNDS VALUE NON-CASH COLLATERAL HOLDING
-------------------------------------------------------------------------------------------------
Aggressive Equity $ 12,000 Pool of US Government Securities
Non-U.S. 74,936 Pool of US Government Securities
</Table>
4. RELATED PARTY TRANSACTIONS, FEES AND EXPENSES
Manager
FRIMCo advises and administers all of the Funds which comprise the Investment
Company. FRIMCo is a wholly-owned subsidiary of Frank Russell Company, a
wholly-owned subsidiary of The Northwestern Mutual Life Insurance Company.
Frank Russell Company researches and recommends to FRIMCo, and to the
Investment Company, one or more investment management organizations to manage
the portfolio of each Fund.
The Funds are permitted to invest their cash reserves (i.e., monies awaiting
investment in portfolio securities suitable for the Funds' objectives), and a
portion of the collateral received from the Investment Company's securities
lending program in the Frank Russell Investment Company Money Market Fund. As
of June 30, 2004, $71,516,000 of the Money Market Fund's net assets
represents investments by the Funds.
For the period ended June 30, 2004, the management fee paid to FRIMCo, for
the Funds listed below, in accordance with the Investment Company's
Management Agreement with that firm, amounted to $4,695,725 before waivers
and/or reimbursements. Such fee is payable monthly and is equal to the annual
rate, by Fund, shown in the following table, of the average daily net assets
of the applicable Fund.
<Table>
<Caption>
FUNDS ANNUAL RATE
---------------------------------------------------
Multi-Style Equity 0.78%
Aggressive Equity 0.95
Non-U.S. 0.95
Real Estate Securities 0.85
Core Bond 0.60
</Table>
FRIMCo has contractually agreed to waive a portion of its management fee for
each Fund, up to the full amount of its fee, to the extent the Fund's
operating expenses exceed specified limits imposed by FRIMCo on an annual
basis. Additionally, FRIMCo has contractually agreed to reimburse each Fund
for all remaining expenses, after fee waivers, that still exceed their
respective expense caps. There were no reimbursements for the period ended
June 30, 2004. The advisor does not have the ability to recover amounts
waived or reimbursed from previous periods.
The expense caps and waivers were as follows:
<Table>
<Caption>
FUNDS EXPENSE CAP MANAGER FEES WAIVED
--------------------------------------------------------------------------------
Multi-Style Equity 0.87% $ 39,039
Aggressive Equity 1.05 85,786
Non-U.S. 1.15 100,589
Real Estate Securities 1.10 --
Core Bond 0.70 25,890
</Table>
62 Notes to Financial Statements
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
Custodian
The Funds have entered into arrangements with their Custodian whereby custody
credits realized as a result of uninvested cash balances were used to reduce
a portion of the Funds' expenses. For the period ended June 30, 2004, the
Funds' custodian fees were reduced by the following amounts under these
arrangements:
<Table>
<Caption>
CUSTODY CREDIT
FUNDS AMOUNT
----------------------------------------------------------
Multi-Style Equity $ 87
Aggressive Equity 236
Non-U.S. 260
Real Estate Securities 124
Core Bond 400
</Table>
Analytic services
Fees for analytic services provided to the Funds are paid or accrued to
Russell/Mellon Analytical Services, an affiliate of the Investment Company.
Russell/Mellon Analytical Services provides TruVP System to the Funds,
pursuant to a written Service Agreement. The TruVP System provides analytics
used by the investment department. Total fees for the Funds reported herein
for the period ended June 30, 2004 were $36,957. Since June 1, 2004, these
fees were borne by FRIMCo and will no longer be charged to the Funds.
Transfer agent
The Investment Company has a contract with FRIMCo to provide transfer agent
services to the Funds. Total fees for the period ended June 30, 2004 were
$15,119.
Distributor
Russell Fund Distributors, Inc. (the "Distributor"), a wholly-owned
subsidiary of FRIMCo, is the principal Distributor for Investment Company
shares. The Distributor receives no compensation from the Investment Company
for its services.
Brokerage commissions
The Funds may effect portfolio transactions through Frank Russell Securities,
Inc., an affiliate of the Manager, when a money manager determines that the
Fund will receive competitive execution, price and commissions. Amounts
retained by Frank Russell Securities, Inc. for the period ended June 30, 2004
were as follows:
<Table>
<Caption>
FUNDS AMOUNT
- ------------------------------------------------
Multi-Style Equity $ 5,529
Aggressive Equity 5,147
</Table>
<Table>
- ------------------------------------------------
<Caption>
FUNDS AMOUNT
Non-U.S. $ 9,869
Real Estate Securities 525
</Table>
Additionally, the Funds paid brokerage commissions to non-affiliated brokers
who provided brokerage and research services to the Manager.
Board of Trustees
The Russell Fund Complex consists of Frank Russell Investment Company
("FRIC"), which has 30 funds, and Russell Investment Funds ("RIF"), which has
five funds. Each of the trustees is a trustee of both FRIC and RIF. The
Russell Fund Complex pays each of its Trustees not affiliated with FRIMCo a
retainer of $52,000 per year, $5,000 for each regular quarterly meeting
attended in person, $2,000 for each special meeting attended in person, and
$2,000 for each Joint Audit Committee meeting or Nominating and Governance
Committee meeting attended in person. The Trustee will receive a $500 fee for
attending the meetings by phone instead of receiving the full fee had the
member attended in person. Out of pocket expenses are also paid by the
Russell Fund Complex. The Lead Trustee is paid a fee of $10,000 per year, and
each Committee Chair is paid a fee of $6,000 per year.
Notes to Financial Statements 63
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
5. FEDERAL INCOME TAXES
At December 31, 2003, 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:
Capital loss carryforward
<Table>
<Caption>
12/31/09 12/31/10 12/31/11 TOTALS
----------------------------------------------------------------------------------------------------------------
Multi-Style Equity $ 45,480,975 $ 42,288,325 $ 3,419,554 $ 91,188,854
Aggressive Equity -- 7,535,681 -- 7,535,681
Non-U.S. 26,643,305 25,579,757 5,516,762 57,739,824
Real Estate Securities -- -- 3,692,826 3,692,826
</Table>
At June 30, 2004, the cost of investments and net unrealized appreciation
(depreciation) for income tax purposes were as follows:
<Table>
<Caption>
REAL ESTATE
MULTI-STYLE EQUITY AGGRESSIVE EQUITY NON-U.S. SECURITIES CORE BOND
------------------------------------------------------------------------------------------------------------------------------
Cost of Investments $ 282,874,792 $ 171,854,691 $ 220,782,742 $ 238,588,090 $ 182,067,821
============== ============== ============== ============== ==============
Unrealized Appreciation 34,761,943 24,484,098 32,236,978 63,671,455 2,213,975
Unrealized Depreciation (4,561,859) (3,582,512) (3,119,513) (735,120) (837,327)
-------------- -------------- -------------- -------------- --------------
Net Unrealized Appreciation
(Depreciation) $ 30,200,084 $ 20,901,586 $ 29,117,465 $ 62,936,335 $ 1,376,648
============== ============== ============== ============== ==============
</Table>
64 Notes to Financial Statements
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
6. FUND SHARE TRANSACTIONS (amounts in thousands)
Share transactions for the period ended June 30, 2004 and the year ended
December 31, 2003 were as follows:
<Table>
<Caption>
SHARES DOLLARS
------------------------------------- -------------------------------------
2004 2003 2004 2003
----------------- ----------------- ----------------- -----------------
MULTI-STYLE EQUITY
Proceeds from shares sold 2,145 3,987 $ 25,138 $ 40,534
Proceeds from reinvestment of
distributions 95 181 1,127 1,744
Payments for shares redeemed (1,736) (1,381) (20,332) (13,665)
----------------- ----------------- ----------------- -----------------
Total net increase (decrease) 504 2,787 $ 5,933 $ 28,613
================= ================= ================= =================
AGGRESSIVE EQUITY
Proceeds from shares sold 1,427 3,825 $ 19,956 $ 43,296
Proceeds from reinvestment of
distributions -- 11 -- 138
Payments for shares redeemed (1,164) (2,043) (16,018) (22,380)
----------------- ----------------- ----------------- -----------------
Total net increase (decrease) 263 1,793 $ 3,938 $ 21,054
================= ================= ================= =================
NON-U.S.
Proceeds from shares sold 1,938 2,604 $ 19,367 $ 21,233
Proceeds from reinvestment of
distributions 80 489 811 4,572
Payments for shares redeemed (1,434) (1,048) (14,423) (8,195)
----------------- ----------------- ----------------- -----------------
Total net increase (decrease) 584 2,045 $ 5,755 $ 17,610
================= ================= ================= =================
REAL ESTATE SECURITIES
Proceeds from shares sold 2,381 3,284 $ 34,024 $ 39,761
Proceeds from reinvestment of
distributions 145 856 2,224 10,614
Payments for shares redeemed (1,593) (806) (22,542) (9,110)
----------------- ----------------- ----------------- -----------------
Total net increase (decrease) 933 3,334 $ 13,706 $ 41,265
================= ================= ================= =================
CORE BOND
Proceeds from shares sold 1,761 2,229 $ 18,451 $ 23,733
Proceeds from reinvestment of
distributions 162 760 1,700 8,011
Payments for shares redeemed (781) (2,383) (8,191) (25,459)
----------------- ----------------- ----------------- -----------------
Total net increase (decrease) 1,142 606 $ 11,960 $ 6,285
================= ================= ================= =================
</Table>
7. BENEFICIAL INTEREST
As of June 30, 2004, the following table includes shareholders with shares of
beneficial interest greater than 10% of the total outstanding shares of each
respective Fund. Northwestern Mutual Life Insurance Company was the largest
shareholder in each Fund.
<Table>
<Caption>
FUNDS # OF SHAREHOLDERS %
--------------------------------------------------------------------------------
Multi-Style Equity 3 82.5
Aggressive Equity 3 82.7
Non-U.S. 3 87.0
Real Estate Securities 3 89.1
Core Bond 3 91.3
</Table>
8. ILLIQUID OR RESTRICTED SECURITIES
A Fund may invest a portion of its net assets not to exceed 15% in securities
that are illiquid. 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. Illiquid and restricted securities may be priced by the Funds
using fair value procedures approved by the Board of Trustees. Restricted
securities are subject to contractual limitations on
Notes to Financial Statements 65
RUSSELL INVESTMENT FUNDS
NOTES TO FINANCIAL STATEMENTS, CONTINUED -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
resale, are often issued in private placement transactions, and are not
registered under the Securities Act of 1933 (the "Act"). The most common
types of restricted securities are those sold under Rule 144A of the Act and
commercial paper sold under Section 4(2) of the Act. Such restricted
securities are not subject to the 15% limitation if the Adviser, under
supervision of the Board of Trustees, determines that a liquid trading market
exists.
Pursuant to guidelines established by the Board of Trustees, the Adviser has
determined that a liquid trading market exists for the following restricted
securities held as of June 30, 2004:
<Table>
<Caption>
COST
FUND - % OF NET ASSETS ACQUISITION SHARES COST PER UNIT (000)
SECURITIES DATE OUTSTANDING $ $
----------------------------------------------------------------------------------------------------------------
CORE BOND FUND -- 2.7%
BAE Systems Holdings, Inc. 12/28/01 350,000 100.10 350
BCI US Funding Trust 01/07/03 250,000 108.08 270
Bombardier, Inc. 04/14/04 85,000 90.82 77
Centaur Funding Corp. 03/07/02 165,000 1.07 177
DBS Capital Funding Corp. 10/17/03 135,000 112.65 152
DG Funding Trust 11/04/03 49 10,537.12 516
Dresdner Bank AG for Kyivstar GSM 11/05/02 140,000 100.73 141
HVB Funding Trust I 05/01/03 150,000 96.70 145
Korea Electric Power Corp. 04/20/04 60,000 98.44 59
Miller Brewing Co. 08/06/03 130,000 99.28 129
Mizuho Financial Group Cayman, Ltd. 02/27/04 130,000 99.95 130
Mizuho Preferred Capital Co. LLC 08/20/99 315,000 90.81 286
Monumental Global Funding II 02/04/03 155,000 100.00 155
Natexis Ambs Co. LLC 06/24/98 120,000 106.14 127
OAO Gazprom 02/21/03 100,000 107.52 108
Parker Hannifin Employee Stock
Ownership Trust 03/09/99 243,211 100.00 243
Qwest Services Corp. Step Up Bond 03/02/04 40,000 116.53 47
Systems 2001 AT LLC 03/08/02 145,055 102.09 148
Telecom Italia Capital SA 10/22/03 230,000 99.76 229
Telecom Italia Capital SA 10/22/03 80,000 99.56 80
Tenaska Alabama II Partners, LP 10/09/03 113,092 100.00 113
TPSA Finance BV 08/20/02 85,000 95.72 81
Zurich Capital Trust I 01/10/03 245,000 93.92 230
<Caption>
MARKET VALUE
FUND - % OF NET ASSETS (000)
SECURITIES $
-------------------------------------
CORE BOND FUND -- 2.7%
BAE Systems Holdings, Inc. 373
BCI US Funding Trust 280
Bombardier, Inc. 72
Centaur Funding Corp. 206
DBS Capital Funding Corp. 151
DG Funding Trust 527
Dresdner Bank AG for Kyivstar GSM 152
HVB Funding Trust I 173
Korea Electric Power Corp. 57
Miller Brewing Co. 130
Mizuho Financial Group Cayman, Ltd. 128
Mizuho Preferred Capital Co. LLC 345
Monumental Global Funding II 155
Natexis Ambs Co. LLC 137
OAO Gazprom 103
Parker Hannifin Employee Stock
Ownership Trust 259
Qwest Services Corp. Step Up Bond 47
Systems 2001 AT LLC 154
Telecom Italia Capital SA 223
Telecom Italia Capital SA 77
Tenaska Alabama II Partners, LP 113
TPSA Finance BV 94
Zurich Capital Trust I 271
----------------
4,227
================
</Table>
9. SHAREHOLDER REQUESTS FOR OTHER INFORMATION
A description of the policies and procedures that the Fund has adopted to
determine how to vote proxies relating to portfolio securities is available
(i) without charge, upon request, by calling the Fund at (800) 787-7354, (ii)
on the Fund's website at www.russell.com, and (iii) on the Securities and
Exchange Commission's website at www.sec.gov.
66 Notes to Financial Statements
RUSSELL INVESTMENT FUNDS
DISCLOSURE OF INFORMATION ABOUT FUND DIRECTORS -- JUNE 30, 2004 (UNAUDITED)
- --------------------------------------------------------------------------------
The following tables provide information for each officer and trustee of the
Russell Fund Complex. The Russell Fund Complex consists of Frank Russell
Investment Company ("FRIC"), which has 30 funds, and Russell Investment Funds
("RIF"), which has 5 funds. Each of the trustees is a trustee of both FRIC and
RIF. The first table provides information for trustees who are interested
trustees. The second table provides information for the independent trustees.
The third table provides information for the officers.
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
No. of
Portfolios
in Russell
Position(s) Held Fund
Name, with Fund and Term Principal Occupation(s) Complex Other
Age, Length of of During the Overseen Directorships Held
Address Time Served Office Past 5 Years by Trustee by Trustee
- ----------------------------------------------------------------------------------------------------------------------------
INTERESTED TRUSTEES AND INTERESTED TRUSTEE EMERITUS
- ----------------------------------------------------------------------------------------------------------------------------
*George F. Russell, Trustee Emeritus Five year term - Director Emeritus, FRC 35 None
Jr., and Chairman - Chairman Emeritus, FRIC and
Born July 3, 1932 Emeritus since RIF
1999 - Chairman Emeritus, Frank
909 A Street Russell Securities, Inc.
Tacoma, Washington - Chairman Emeritus, Russell
98402-1616 20/20 Association
- Chairman Emeritus, Frank
Russell Trust Company
- Director Emeritus FRIMCo
- Chairman of Sunshine
Management Services, LLC
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
*Lynn L. Anderson, Trustee since Appointed until - Vice Chairman, FRC 35 - Trustee, The
Born April 22, 1987 successor is - Chairman of the Board, SsgA Funds
1939 duly elected Trustee, FRIC and RIF (investment
Chairman of the and qualified - CEO and Chairman of the company)
909 A Street Board since 1999 Board, Russell Fund
Tacoma, Washington Until successor Distributors, Inc. and
98402-1616 is chosen and FRIMCo
qualified by - Trustee, President and
trustees Chairman of the Board, SsgA
Funds (investment company)
- Director and Chairman of the
Board, Frank Russell Trust
Company
- Director, Frank Russell
Investments (Ireland)
Limited and Frank Russell
Investments (Cayman) Ltd.
- Until October, 2002,
President and CEO, FRIC and
RIF
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
*Michael J.A. Trustee Since Appointed until - 1990 to 2003, President, 35 None
Phillips, 2002 successor is FRC,
Born January 20, duly elected - 1993 to 2003, CEO, FRC
1948 and qualified. - Chairman of the Board and
Director, FRC
909 A Street - Trustee, FRIC and RIF
Tacoma, Washington - Director, FRTC and Frank
98402-1616 Russell Capital Inc.
- Director/Chairman, Frank
Russell Investments
(Delaware), Inc.
- Director, Chairman of The
Board and President, Russell
20/20 Association
- Director, Frank Russell
Company Pty. Limited, Frank
Russell Japan Co., Ltd.,
Frank Russell Investments
(Suisse), S.A., and Frank
Russell Company Limited
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
* Each of Messrs. Russell, Anderson and Phillips is also an officer of an
affiliate of FRIC and RIF and is therefore an interested trustee.
Disclosure of Information about Fund Directors 67
RUSSELL INVESTMENT FUNDS
DISCLOSURE OF INFORMATION ABOUT FUND DIRECTORS, CONTINUED -- JUNE 30, 2004
(UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
No. of
Portfolios
in Russell
Position(s) Held Fund
Name, with Fund and Term Principal Occupation(s) Complex Other
Age, Length of of During the Overseen Directorships Held
Address Time Served Office Past 5 Years by Trustee by Trustee
- ----------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES AND INDEPENDENT TRUSTEES EMERITUS
- ----------------------------------------------------------------------------------------------------------------------------
Paul E. Anderson, Trustee since Appointed until - President, Anderson 35 None
Born October 15, 1984 successor is Management Group LLC
1931 duly elected (private investments
and qualified consulting)
909 A Street
Tacoma, Washington
98402-1616
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Paul Anton, Ph.D., Trustee Emeritus Five year term - Retired since 1997 35 None
Born December 1, since 2003 - Trustee of FRIC and RIF
1919 Until 2002
909 A Street
Tacoma, Washington
98402-1616
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
William E. Baxter, Trustee Emeritus Five year term - Retired since 1986 35 None
Born June 8, 1925 since 2004 - Trustee of FRIC and RIF
Until 2004
909 A Street
Tacoma, Washington
98402-1616
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Kristianne Blake, Trustee since Appointed until - President, Kristianne Gates 35 - Trustee WM Group
Born January 22, 2000 successor is Blake, P.S. (accounting of Funds
1954 duly elected services) (investment
and qualified company);
909 A Street - Director, Avista
Tacoma, Washington Corp
98402-1616
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Daniel P. Connealy, Trustee since Appointed until - 2004, Chief Financial 35 - Director, Gold
Born June 6, 1946 2003 successor is Officer, Waddell & Reed Banc
duly elected - 2001 to 2003, Vice President Corporation,
909 A Street and qualified and Chief Financial Officer, Inc.
Tacoma, Washington Janus Capital Group Inc.
98402-1616 - 1979 to 2001, Audit and
Accounting Partner,
PricewaterhouseCoopers LLP
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Jonathan Fine Trustee since Appointed until - President and Chief 35 None
Born July 8, 1954 2004 successor is Executive Officer, United
duly elected Way of King County, WA
909 A Street and qualified - 1996 to 2000, Chief
Tacoma, Washington Executive Officer,
98402-1616 Seattle/King County Chapter
of the American Red Cross
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
68 Disclosure of Information about Fund Directors
RUSSELL INVESTMENT FUNDS
DISCLOSURE OF INFORMATION ABOUT FUND DIRECTORS, CONTINUED -- JUNE 30, 2004
(UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
- ----------------------------------------------------------------------------------------------------------------------------
No. of
Portfolios
in Russell
Position(s) Held Fund
Name, with Fund and Term Principal Occupation(s) Complex Other
Age, Length of of During the Overseen Directorships Held
Address Time Served Office Past 5 Years by Trustee by Trustee
- ----------------------------------------------------------------------------------------------------------------------------
INDEPENDENT TRUSTEES AND INDEPENDENT TRUSTEES EMERITUS (CONTINUED)
- ----------------------------------------------------------------------------------------------------------------------------
Lee C. Gingrich, Trustee since Appointed until - Retired since 1995 35 None
Born October 6, 1984 successor is
1930 duly elected
and qualified
909 A Street
Tacoma, Washington
98402-1616
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Eleanor W. Palmer, Trustee Emeritus Five year term - Retired since 1981 35 None
Born May 5, 1926 since 2004 - Trustee of FRIC and RIF
Until 2004
909 A Street
Tacoma, Washington
98402-1616
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Raymond P. Trustee since Appointed until - President, Simpson 35 None
Tennison, Jr. 2000 successor is Investment Company and
Born December 21, duly elected several additional
1955 and qualified subsidiary companies,
including Simpson Timber
909 A Street Company, Simpson Paper
Tacoma, Washington Company and Simpson Tacoma
98402-1616 Kraft Company
- ----------------------------------------------------------------------------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------------
Julie W. Weston, Trustee since Appointed until - Retired since 2000 35 None
Born October 2, 2002 successor is - 1987 to 2000, Arbitrator,
1943 duly elected The American Arbitration
and qualified Association Commercial Panel
909 A Street - 1995 to 1999, Hearing
Tacoma, Washington Officer, University of
98402-1616 Washington
- 1987 to 2002, Director,
Smith Barney Fundamental
Value Fund
- ----------------------------------------------------------------------------------------------------------------------------
</Table>
Disclosure of Information about Fund Directors 69
RUSSELL INVESTMENT FUNDS
DISCLOSURE OF INFORMATION ABOUT FUND DIRECTORS, CONTINUED -- JUNE 30, 2004
(UNAUDITED)
- --------------------------------------------------------------------------------
<Table>
<Caption>
- --------------------------------------------------------------------------------------------------------------------------
Position(s) Held
Name, with Fund and Term Principal Occupation(s)
Age, Length of of During the
Address Time Served Office Past 5 Years
- --------------------------------------------------------------------------------------------------------------------------
OFFICERS
- --------------------------------------------------------------------------------------------------------------------------
Leonard P. Brennan, President and Until successor - President and CEO, FRIC
Born October 11, 1959 Chief Executive is chosen and - President and CEO, RIF
Officer since qualified by - Director, Russell Fund Distributors, Inc., Frank
909 A Street 2002 Trustees Russell Company, S.A., Frank Russell Investments
Tacoma, Washington (Singapore) Private Limited and Frank Russell
98402-1616 Investments (UK) Limited
- Director, President and CEO, FRIMCo
- Director and COO, Frank Russell Company Limited and
Russell Systems Limited
- President, Russell Insurance Agency, Inc.
- 1995-2003, Managing Director, Europe, Africa, and the
Middle East
- 1998-2003, Managing Director, International
Operations of FRC
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Mark E. Swanson, Treasurer and Until successor - Treasurer and Chief Accounting Officer, FRIC and RIF
Born November 26, 1963 Chief Accounting is chosen and 1998 to present,
Officer since qualified by - Director, Funds Administration, FRIMCo and Frank
909 A Street 1998 Trustees Russell Trust Company
Tacoma, Washington - Treasurer, SSgA Funds (investment company);
98402-1616 - Manager, Funds Accounting and Taxes, Russell Fund
Distributors, Inc.
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Randall P. Lert, Chief Portfolio Until removed - Director of Investments, FRIC and RIF
Born October 3, 1953 Strategist since by Trustees - Chief Portfolio Strategist, FRIMCo
January 2004 - Chief Investment Officer, Frank Russell Trust Company
909 A Street - Director, FRIMCo and Frank Russell Fund Distributors,
Tacoma, Washington Inc.
98402-1616
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Karl J. Ege, Secretary and Until removed - Secretary and General Counsel, FRIC, RIF, FRIMCo,
Born October 8, 1941 General Counsel by Trustees - Frank Russell Trust Company and Russell Fund
since 1994 Distributors, Inc.
909 A Street - Director, Secretary and General Counsel, Frank
Tacoma, Washington Russell Capital Inc.
98402-1616 - Director and Secretary, Russell 20-20 Association
- --------------------------------------------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------------------------------------------
Mark D. Amberson, Director of Until removed - Director of Short-Term Investment Funds, FRIC, RIF,
Born July 20, 1960 Short-Term by Trustees FRIMCo and Frank Russell Trust Company
Investment Funds - From 1991 to 2001, Portfolio Manager, FRIC, RIF,
909 A Street since 2001 FRIMCo and Frank Russell Trust Company
Tacoma, Washington
98402-1616
- --------------------------------------------------------------------------------------------------------------------------
</Table>
70 Disclosure of Information about Fund Directors
RUSSELL INVESTMENT FUNDS
FRANK RUSSELL INVESTMENT COMPANY
909 A Street, Tacoma, Washington 98402
(800) 832-6688
In Washington (253) 627-7001
- --------------------------------------------------------------------------------
TRUSTEES
Lynn L. Anderson, Chairman
Paul E. Anderson
Kristianne Blake
Daniel P. Connealy
Jonathan Fine
Lee C. Gingrich
Michael J.A. Phillips
Raymond P. Tennison, Jr.
Julie W. Weston
TRUSTEES EMERITUS
George F. Russell, Jr.
Paul Anton, PhD
William E. Baxter
Eleanor W. Palmer
OFFICERS
Lynn L. Anderson, Chairman of the Board
Leonard P. Brennan, President and Chief Executive Officer
Karl J. Ege, Secretary and General Counsel
Mark E. Swanson, Treasurer and Chief Accounting Officer
Tom F. Hanly, Chief Investment Officer
Randall P. Lert, Director of Investments
Mark D. Amberson, Director of Short Term Investment Funds
Gregory J. Lyons, Assistant Secretary and Associate General Counsel
Mary Beth Rhoden, Assistant Secretary
Margaret A. Foster, Assistant Secretary
Greg S. Korte, Assistant Treasurer
David J. Craig, Assistant Treasurer
Bruce S. C. Dunn, Assistant Treasurer
MANAGER, TRANSFER AND DIVIDEND PAYING AGENT
Frank Russell Investment Management Company
909 A Street
Tacoma, WA 98402
CONSULTANT
Frank Russell Company
909 A Street
Tacoma, WA 98402
CUSTODIAN
State Street Bank and Trust Company
Allan Forbes Building
150 Newport Avenue AFB35
North Quincy, MA 02171
OFFICE OF SHAREHOLDER INQUIRIES
909 A Street
Tacoma, WA 98402
(800)787-7354
RUSSELL INVESTMENT FUNDS
909 A Street, Tacoma, Washington 98402
(800) 832-6688
In Washington (253) 627-7001
LEGAL COUNSEL
Stradley, Ronon, Stevens & Young, LLP
2600 One Commerce Square
Philadelphia, PA 19103-7098
DISTRIBUTOR
Russell Fund Distributors, Inc.
909 A Street
Tacoma, WA 98402
MONEY MANAGERS
Multi-Style Equity Fund
Alliance Capital Management L.P., which acts as money manager to the Fund
through its Bernstein Investment Research and Management Unit,
New York, NY
Ark Asset Management Co., Inc., New York, NY
Brandywine Asset Management, LLC, Wilmington, DE
DePrince, Race & Zollo, Inc., Orlando, FL
Institutional Capital Corporation, Chicago, IL
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Montag & Caldwell, Inc., Atlanta, GA
Turner Investment Partners, Inc., Berwyn, PA
Aggressive Equity Fund
CapitalWorks Investment Partners, LLC, San Diego, CA
David J. Greene and Company, LLC, New York, NY
Geewax, Terker & Company, Chadds Ford, PA
Goldman Sachs Asset Management, L.P., New York, NY
Gould Investment Partners LLC, Berwyn, PA
Jacobs Levy Equity Management, Inc., Florham Park, NJ
Nicholas-Applegate Capital Management LLC, San Diego, CA
TimesSquare Capital Management, Inc., New York, NY
Non-U.S. Fund
AQR Capital Management, LLC, New York, NY
Fidelity Management & Research Company, Boston, MA
Oechsle International Advisors, LLC, Boston, MA
The Boston Company Asset Management, LLC, Boston, MA
Real Estate Securities Fund
AEW Management and Advisors, L.P., Boston, MA
INVESCO Institutional (N.A.), Inc., which acts as money manager to the Fund
through its INVESCO Real Estate Division, Dallas, TX
RREEF America L.L.C., Chicago, IL
Manager, Money Managers and Service Providers 71
RUSSELL INVESTMENT FUNDS
FRANK RUSSELL INVESTMENT COMPANY
909 A Street, Tacoma, Washington 98402
(800) 832-6688
In Washington (253) 627-7001
- --------------------------------------------------------------------------------
Core Bond Fund
Pacific Investment Management Company LLC,
Newport Beach, CA
TimesSquare Capital Management, Inc., New York, NY
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 Frank Russell Investment
Company. Such offering is made only by Prospectus, which includes details as to
offering price and other material information.
72 Manager, Money Managers and Service Providers
(This page intentionally left blank)
(This page intentionally left blank)
RUSSELL LOGO
Russell Investment Funds
909 A Street
Tacoma, Washington 98402
253-627-7001
800-787-7354
Fax: 253-591-3495
www.russell.com 36-08-072 (06/04)
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 [ANNUAL REPORT ONLY]
ITEM 6. SCHEDULE OF INVESTMENTS [INCLUDED IN ITEM 1]
ITEM 7. DISCLOSURE OF PROXY VOTING POLICIES AND PROCEDURES FOR CLOSED-END
MANAGEMENT INVESTMENT COMPANIES. [NOT APPLICABLE]
ITEM 8. PURCHASES OF EQUITY SECURITIES BY CLOSED-END MANAGEMENT INVESTMENT
COMPANIES AND AFFILIATED PURCHASERS. [NOT APPLICABLE]
ITEM 9. 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 Directors that would
require disclosure herein.
ITEM 10. 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 controls or
in other factors that could significantly affect these controls subsequent
to the date of their evaluation.
ITEM 11. EXHIBITS
EXHIBIT LIST
(a) certification for principal executive officer of Registrant as
required by Rule 30a-2 under the Act and certification for principal
financial officer of Registrant as required by Rule 30a-2 under the Act.
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/ Leonard P. Brennan
--------------------------------------
Leonard P. Brennan
Principal Executive Officer and Chief Executive Officer
Date: August 11, 2004
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/ Leonard P. Brennan
--------------------------------------
Leonard P. Brennan
Principal Executive Officer and Chief Executive Officer
Date: August 11, 2004
By: /s/ Mark E. Swanson
--------------------------------------
Mark E. Swanson
Principal Financial Officer, Principal Accounting Officer and Treasurer
Date: August 11, 2004