Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM N-CSR
CERTIFIED SHAREHOLDER REPORT OF REGISTERED
MANAGEMENT INVESTMENT COMPANIES
Investment Company Act file number: 811-05371
| Russell Investment Funds |
(Exact name of registrant as specified in charter)
| 1301 2nd Avenue 18th Floor, Seattle Washington 98101 |
(Address of principal executive offices) (Zip code)
Mary Beth Rhoden, Secretary and Chief Legal Officer Russell Investment Funds 1301 2nd Avenue 18th Floor Seattle, Washington 98101 206-505-4846 |
(Name and address of agent for service)
Registrant’s telephone number, including area code: 206-505-7877
Date of fiscal year end: December 31
Date of reporting period: January 1, 2010 to December 31, 2010
Table of Contents
Item 1. Reports to Stockholders
Table of Contents
2010 ANNUAL REPORT
Russell Investment Funds
DECEMBER 31, 2010
FUND
Multi-Style Equity Fund
Aggressive Equity Fund
Non-U.S. Fund
Core Bond Fund
Real Estate Securities Fund
Table of Contents
Russell Investment Funds
Russell Investment Funds is a series investment company with nine different investment portfolios referred to as Funds. These financial statements report on five of these Funds.
Table of Contents
Russell Investment Funds
Annual Report
December 31, 2010
Table of Contents
Russell Investment Funds
Copyright © Russell Investments 2011. All rights reserved.
Russell Investments is a Washington, USA corporation, which operates through subsidiaries worldwide and is a subsidiary of The Northwestern Mutual Life Insurance Company.
Fund objectives, risks, charges and expenses should be carefully considered before investing. A prospectus containing this and other important information must precede or accompany this material. Please read the prospectus carefully before investing.
Securities products and services offered through Russell Financial Services, Inc., a member of FINRA and part of Russell Investments.
Indices and benchmarks are unmanaged and cannot be invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment. Index return information is provided by vendors and although deemed reliable, is not guaranteed by Russell Investments or its affiliates.
Russell Investments is the owner of the trademarks, service marks, and copyrights related to its respective indexes.
Performance quoted represents past performance and does not guarantee future results. The investment return and principal value of an investment will fluctuate so that shares, when redeemed, may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted.
Table of Contents
I am pleased to share with you the results from the Russell Investment Funds’ 2010 Annual Report. It provides portfolio management discussions and fund-specific insights regarding fund performance for the fiscal year ending December 31, 2010.
Russell Investments’ mission is plain and simple — to improve financial security for people. We work to achieve this goal by delivering disciplined investment strategies, objective research and industry-leading service. Despite the difficult economic times and volatile investment markets, we will never lose sight of this primary mission.
Looking back at 2010, it has been a year of progress and challenges. Investors are still wrestling with the aftershocks of market disruptions. The broad equity market, represented by the Russell Global Index, is up more than 9% year-to-date at the writing of this letter in December. But employment numbers in the U.S. are still a cause for concern, as are the debt challenges of several European countries. We believe the experiences of 2010 continue to demonstrate the value of diversification and proactive investment management.
Now more than ever, we believe investors are best served by remaining focused on long-term investing using well-diversified, asset allocated portfolios. We believe it is equally important for investors to continue to talk with their financial advisors to ensure their portfolios remain aligned with their goals. Working with a trusted advisor is the best way to maintain this focus.
The Russell Investments team has decades of experience managing people’s investments through all kinds of market cycles. We believe monitoring investment managers continuously, and maintaining a disciplined approach to portfolio management and implementation is the best way to achieve long-term goals.
On behalf of the Russell Investments team, thank you for your continued support.
Best regards,
Sandra Cavanaugh
CEO, Americas Private Client Services
Russell Investment Management Company
| To Our Shareholders | 3 |
Table of Contents
Russell Investment Funds
Market Summary as of December 31, 2010 (Unaudited)
U.S. Equity Markets
For the fiscal year ended December 31, 2010, the U.S. equity market experienced high levels of volatility, but less than in the one year period ended December 31, 2009. While the markets experienced numerous reversals during the period, investors became increasingly, though cautiously, optimistic regarding the sustainability of the global economic recovery. Strong corporate earnings growth translated into strong positive returns for the major market indexes. The broad market Russell 3000® Index rose 16.93% over the period as global growth recovered and the U.S. economy appeared to be stabilizing.
The economy continued to grow over the fiscal year, but at a slow pace. Relative to past recoveries from deep recessions, economic growth as measured by gross domestic product (GDP) failed to rebound as quickly or with the strength necessary to increase employment and provide assurances that the recessionary period was truly over. Unemployment remained high, averaging approximately 9.5% over the period while wage growth remained stagnant. The national savings rate increased from a modestly negative percentage to a more substantial 6%. While this is a longer-term positive factor for the U.S. economy as it improves the financial health of consumers, the short-term result has been to lower consumer spending. Given the key role that consumer spending continues to play in driving U.S. GDP, expectations for a strong economic recovery moderated as the fiscal year progressed and investors began to expect a more slowly paced increase in economic activity going forward. Expectations were further moderated by a persistently weak housing market, where sales declined following the expiration of the first time home buyers tax credit in the spring.
In response to the slow pace of the economic recovery, and its jobless nature, the U.S. government stepped up its efforts to stimulate economic growth. Unemployment benefits were extended to support consumer demand, while stimulus spending injected capital into the economy. Toward the latter part of the fiscal year, the Federal Reserve announced its intention to expand its quantitative easing efforts beyond the purchase of mortgage backed securities and into direct purchases of U.S. government debt. The market rose as a result due to expectations that this direct injection of money into the economy would cause interest rates to decline in the intermediate-term, and inflationary expectations to rise in the longer-term. Investors took comfort in the Federal Reserve taking such actions to help provide support for the economy and guide it towards a sustainable recovery.
Over the course of the period, global economic growth rebounded on the strength of emerging markets demand and growth. This has been a key to improving investor sentiment and has driven the relative outperformance of some of the more export-oriented sectors including producer durables, materials and processing, and technology. The consumer discretionary sector, which was the best performing sector over the one year period, benefited from both international demand and a modest domestic recovery. Increased global wealth has driven up demand for aspirational goods and services, with leisure travel, lodging and gaming all benefiting.
Domestically, retailers with strong market share and the ability to increase profit margins performed well. The utilities sector outperformed as well. Demand for companies with a lower degree of perceived downside risk increased, as did the desire for steady sources of income. On the other end of the return spectrum, the financial services sector underperformed relative to the benchmark. Increasing financial regulations and an uncertain business landscape made investors wary of investing in banks, brokerage companies and other financial institutions. Concerns over additional losses related to the housing market and uncertainty over the health of loan portfolios also concerned investors. Health care stocks lagged as well, due largely to the uncertainty associated with the passage of new health care legislation and its impact on corporate profitability. Energy stocks underperformed due to concerns over weaker demand growth for gas and oil in a sluggish economic recovery. Potential fallout from the Gulf Coast oil spill also created uncertainty around deep water exploration and drilling firms. Lastly, the consumer staples sector lagged despite strong demand from overseas markets, as investors gravitated away from these companies’ higher relative valuations and the potential margin pressure they could face if commodity prices rise.
Overall, the period was marked by a high degree of correlation among stock price movements across large segments of the benchmark. As such, benchmark and market returns were driven by the performance of the higher and lower ends of
| 4 | Market Summary |
Table of Contents
Russell Investment Company
the risk spectrum where there was more stock price return differentiation. This was largely a result of significant oscillations in investor sentiment driven by macro-economic news and events. This resulted in a “risk on/risk off” phenomenon. Positive economic and company specific news resulted in a “risk on” scenario where companies with more economic sensitivity outperformed the benchmark when “risk” was in favor. In contrast, negative news on the economy, employment, housing, and the European sovereign debt situation resulted in a highly risk-averse (“risk off”) environment in which investors sought safe haven or more defensively oriented investments. Throughout the fiscal year it was a struggle between these two forces, as investors were heavily swayed more by macro-economic news than by company-specific data.
The high degree of uncertainty in the market regarding regulatory, fiscal and monetary policy resulted in a challenging active management environment in U.S. equities. Value-oriented managers had a particularly difficult time due to their almost perennial underweight to the strongly performing utilities sector, while growth-oriented managers fared better. The relative outperformance of consumer staples and parts of the health care sector in the more defensive periods decreased returns for value managers. Additionally, commodity-oriented stocks performed relatively well as investors bet on a sustainable global economic recovery. In contrast, value managers were overweight in technology and consumer discretionary sector companies that they believed had relatively higher and more sustainable growth characteristics. The more cyclical consumer and technology companies as well as those focusing on lower-end domestic consumer spending and targeting international growth performed relatively well.
Growth managers fared relatively well as investors favored growth companies, pushing up the price of stocks associated with international and emerging markets. This applied to technology and consumer product companies as well as agricultural, commodities, and industrial companies producing goods and basic resources needed to satiate emerging market demand. The stocks of the fastest growing companies outperformed the stocks of companies whose earnings grew at a slower rate. This is based on return data categorizing stocks according to each company’s 5-year historical EPS Growth, 1-Year Sales Growth, and IBES Long-Term Forecasted Growth.
Driven by expectations for a moderate global economic recovery, stock prices in the U.S. rose strongly across the investment style as well as the market capitalization spectra.
For the period, the Russell 1000® Growth Index returned 16.7% and the Russell 1000® Value Index returned 15.51%, while the Russell 2000® Growth Index returned 29.1% and the Russell 2000® Value Index returned 24.5%. Small capitalization stocks outperformed large capitalization stocks for the one year period as the Russell 2000® Index returned 26.9% and the Russell 1000® Index returned 16.1% for the period. Mid capitalization stocks once again performed well over the period, while micro capitalization stocks performed best as the Russell Midcap® Index returned 25.47% and the Russell Microcap® Index returned 28.9% for the fiscal year.
The Lipper® Small Cap Value Funds Average outperformed the Russell 2000® Value Index by 1.25%, the Lipper® Small Cap Core Funds Average underperformed the Russell 2000® Index by 1.12% and the Lipper® Small Cap Growth Funds Average underperformed the Russell 2000® Growth Index by 2.05%. The Lipper® Large Cap Growth Funds Average underperformed the Russell 1000® Growth Index by 1.58%, the Lipper® Large Cap Core Funds Average underperformed the Russell 1000® Index by 3.94%, and the Lipper® Large Cap Value Funds Average underperformed the Russell 1000® Value Index by 1.81%.
Non-U.S. Developed Equity Markets
2010 was a rollercoaster year for investors. The Non-U.S. developed equity markets, as measured by the MSCI EAFE Index, rose 7.75% during the year, with most of the Index’s gains coming in the second half of the year. Fears of the European sovereign debt crisis igniting another global economic downturn subsided as a gradual recovery became more likely. Markets fell sharply at the end of April and remained extremely volatile until September, when riskier stocks began to improve as investors gained optimism. On a month-by-month basis, market leadership was inconsistent, but trends became more apparent when the whole of 2010 was taken into account.
The risk factor that was most rewarded was high beta, followed by high price-volatility and high price-momentum. All three factors are a reflection of the market environment that benefited riskier stocks. The prices of high beta stocks tend to rise faster than the broad market in positive return environments, but also fall faster when markets are negative. The price volatility factor represents stocks whose prices tend to change more than the average stock, meaning performance gains and losses are amplified. This is similar to market beta, except that there isn’t necessarily a relationship between the performance of the market and its underlying stocks. Stocks with high-price momentum performed better than the market during the 12 months prior. Their outperformance signals the fact that stocks that did well in 2009 continued to
| Market Summary | 5 |
Table of Contents
Russell Investment Company
outperform in 2010. Momentum made a comeback in 2010, as many of the stocks that rose in 2009 continued to lead the market. Stocks that are typically considered higher-quality, those with high profitability or return on equity, underperformed. However, financial leverage was the worst performing market factor. Financial leverage is a characteristic that investors can use to determine balance sheet quality. Financial leverage is the degree to which a company is utilizing borrowed money (debt) to finance its operations. Financial leverage can boost profits in certain periods, but when debt repayment is a concern, as it was in 2010, companies with a high-level of financial leverage, can perform poorly. Growth stocks significantly outperformed value stocks, with the MSCI EAFE Growth Index returning 12.25% and outperforming the MSCI EAFE Value Index by 9.0%.
Small cap stocks outperformed large cap stocks by a wide margin, as measured by the MSCI EAFE Small Cap Index and the MSCI EAFE Index. U.S. stocks, as measured by the Russell 1000® Index, outperformed developed non-U.S. stocks, as measured by the MSCI EAFE Index, by more than 8.35%, indicating that signs of economic recovery were more evident in the U.S. Extremely negative performance outcomes by the PIIGS countries (Portugal, Ireland, Italy, Greece and Spain), catalyzed by fears surrounding sovereign debt, weighed heavily on international markets. Greece and Spain were penalized most, with returns of -44.87% and -21.95%, respectively, as measured by the MSCI Greece Index and MSCI Spain Index. Both countries’ performance suffered due to uncertainty regarding their ability to service sovereign debt, but experienced some recovery toward the end of the year. Although markets tended to reward risk, stocks with severe debt issues lagged the market. Investors’ dislike for financial leverage impacted country-level returns as well. The weak performance from Greece and Spain confirm this sentiment. Japan as measured by MSCI Japan, out-performed the MSCI EAFE Index returning 15.44% for the year. Emerging markets companies continued to outpace developed markets with the strong return of 18.88%, as measured by the MSCI Emerging Markets Index. Argentina, Thailand, and Peru were the best performing emerging markets countries, all returning over 50% for the year, as measured by the MSCI Argentina Index, MSCI Thailand Index and MSCI Peru Index. China severely underperformed the broader MSCI Emerging Markets Index and the MSCI EAFE Index with a positive return of only 4.63%, as measured by the MSCI China Index , due to inflationary pressures and fears of economic overheating.
The industrials sector was the best performing of the ten sectors in the MSCI EAFE Index, with a return of 20.39%. The companies that make up the sector tend to be economically sensitive and thus performed well given the improving economic environment. Consumer discretionary stocks benefited from the upswing in consumer spending and the sector ended the year up 19.73%. The materials, technology and consumer staples sectors also out-performed the MSCI EAFE Index. Utilities and financials were the only two sectors with negative performance during the year, with returns of -4.88% and -1.62%, respectively, as measured by the MSCI EAFE Utilities and MSCI EAFE Financials Sector Indices . Consumer stocks were led by automobiles and retail. There remains a great deal of skepticism surrounding the health of commercial banks.
Emerging Markets
The MSCI Emerging Markets Index (“the Index”) was up 18.88% over the fiscal year ended December 31, 2010. In spite of persistent volatility, Emerging Markets finished ahead of Developed Markets, which gained 11.76% over the year, as measured by the MSCI Daily TR Net Developed Markets Index in U.S. dollar terms.
Emerging market gains during 2010 were largely driven by a strong recovery in the second half of the fiscal year as the global economic backdrop turned positive. The Index had a modest return of 2.40% during the first calendar quarter, driven by concerns over the sustainability of economic recovery resulting from moves to withdraw stimulus funding in the U.S. and China and by concerns about a growing debt crisis in Europe.
This was followed by a negative and challenging second quarter in which emerging market stocks, commodities and currencies fell sharply, as investor appetite for risk diminished in favor of safer assets, including gold — which reached a record high — and the U.S. dollar. The Index gave up 8.37%, led by heavy losses in May, when the Index endured its worst month since October 2008. The intensifying debt crisis in Europe, evidence of a slowdown in the U.S. and Chinese economies, a massive overhaul of the U.S. banking system and a crisis on the Korean peninsula all had a negative impact.
Emerging market stocks went on to rally sharply over the third quarter, notably in July and September, when the Index enjoyed its best monthly gain since July 2009. The Index gained 18.03% over the period, helped by the secular growth stories that prevailed in certain markets. Investors were also buoyed by news in July that the IMF had raised its global growth forecast and by second-quarter earnings releases from a number of the world’s biggest companies that were well in excess of expectations. Gains were reinforced by more upbeat news from Europe, where the results of the stress tests on banks were largely welcomed.
| 6 | Market Summary |
Table of Contents
Russell Investment Company
The positive trend continued in the fourth quarter, driven by further signs of a burgeoning recovery in the U.S., strong growth in China and by speculation that the second round of quantitative easing (i.e., a policy by which the Federal Reserve purchases U.S. treasuries with newly created central bank money) would help global growth accelerate. A very positive third quarter earnings season and central bank intervention in Europe also helped offset the negative impact of monetary tightening in China and renewed concerns over the debt crisis in Western Europe.
Throughout, there was notable dispersion across country returns over the calendar year, with the smaller emerging market countries performing best. Thailand gained 55.71%, as measured by the MSCI Daily TR Net Emerging Markets Thailand Index. In Latin America, key beneficiaries of the demand for raw materials and the increased risk appetite were strongest, including Peruvian stocks, which gained 53.32%, as measured by the MSCI Daily TR Net Emerging Markets Peru Index, Chilean stocks, which increased 44.16%, as measured by the MSCI daily TR Net Emerging Markets Chile Index in U.S. dollar terms, and Colombian stocks, which gained 43.41%, as measured by the MSCI Daily TR Net Emerging Markets Colombia Index in U.S. dollar terms.
From a regional standpoint, returns in Europe were generally weaker, reflected by the negative returns from Hungary, which declined 9.58%, as measured by the MSCI Daily TR Net Emerging Markets Hungary Index in U.S. dollar terms, and the Czech Republic, which fell 2.53%, as measured by MSCI Daily TR Net Emerging Markets Czech Republic Index in U.S. dollar terms. The larger emerging market countries China and Brazil also stood out in that both had modest returns over the calendar year relative to others, gaining just 4.63% and 6.54%, respectively, as per the MSCI daily TR Net Emerging Markets China Index in U.S. dollar terms and MSCI Daily TR Net Emerging Markets Brazil Index in U.S. dollar terms. At the sector level, the consumer theme dominated returns, with consumer staples stocks gaining 30.35%, as measured by the MSCI Daily TR Net Emerging Markets Consumer Staples Index in U.S. dollar terms, and consumer discretionary stocks gaining 31.40%, as measured by the MSCI Daily TR Net Emerging Markets Consumer Discretionary Index in U.S. dollar terms. This was well ahead of the more defensive utilities sector, which gained 8.10%, as measured by the MSCI Daily TR Net Emerging Markets Utilities Index in U.S. dollar terms, and energy, which gained 9.91%, as measured by the MSCI Daily TR Net Emerging Markets Energy Index in U.S. dollar terms over the calendar year.
Small capitalization stocks, as measured by the MSCI Daily TR Net Emerging Markets Small Cap Index in U.S. dollar terms, gained 27.17%, beating larger-capitalization counterparts, which rose 18.34%, as measured by the MSCI Daily TR Net Emerging Markets Large Cap Index in U.S. dollar terms.
U.S./Global Fixed Income Markets
Over most of the fiscal year ended December 31, 2010, fixed income markets largely continued the global credit rally that started in the early part of 2009, which began with the announcement of government stimulus programs and the release of generally positive U.S. bank stress test results. Despite bouts of volatility brought on by concerns around European sovereign debt, the uncertainty of U.S. economic recovery, the Gulf Coast oil spill, and Federal Reserve market intervention, U.S. interest rates declined and broad bond market indices did well: The 2-year Treasury yield decreased 54 bps to 0.60% and the 10-year yield decreased 54 bps to 3.30%; the Barclays Capital U.S. Aggregate (investment grade) Bond Index, U.S. High Yield Bond Index and Emerging Market Bond Index returned 6.54%, 15.12% and 12.84%, respectively.
There was little market turmoil at the beginning of 2010. Investors anticipated that the U.S. economic recovery would soon stabilize and transition off of government stimulus support. As an example of this, at the end of March 2010, the U.S. Federal Reserve Bank (the Fed) completed its $1.25 trillion agency mortgage-backed security buying program without credit markets being materially disturbed.
By late April and early May, investors saw the return of volatility: The Greek and peripheral European sovereign debt crisis made investors anxious that credit events originating in one region could again spread to other parts of the world. At the same time, the Gulf Coast oil spill reminded investors that unexpected and seemingly random negative events could still pop up and roil financial markets. The U.S. Treasury yield curve reflected this anxiety, with the two-year Treasury yield dropping from 0.58% to 0.60%, and the ten-year Treasury yield dropping from 1.06% to 2.93%i, as investors ran to (and bid up the prices on) low-risk debt backstopped by the U.S. government. Simultaneously, the Fed again became concerned with the U.S. economy, and began to signal that it would hold the overnight target rate at its historically low range of 0.00% to 0.25% for an extended period (which it did through the end of the year). This effectively signaled to investors who had been expecting a rate increase by the end of 2010 to not look for one until well into 2011. Included in this message was that the Fed believed deflation was a greater near-term risk than inflation.
| Market Summary | 7 |
Table of Contents
Russell Investment Company
The housing market, which precipitated the financial crisis in the summer of 2007, continued to have an impact on the overall market throughout the year. Investors were concerned about the effectiveness of U.S. government programs to help borrowers refinance or modify their mortgages in an attempt to stem the rising tide of foreclosures. This problem was exacerbated in the latter part of the year with news that several large residential mortgage servicers were halting foreclosures due to inaccurate or incomplete paperwork, and lawsuits were filed that contended banks did not legally have the right to proceed with certain foreclosures. Despite these issues (which remained unresolved at year end), over the period both residential and commercial mortgage-backed securities performed well, both in terms of total return and relative returns, as compared to equivalent-duration U.S. Treasuries.
Despite the aforementioned bouts of volatility, it was the Fed’s announcement of more support in the form of another round of quantitative easing dubbed “QE2” (i.e., purchasing U.S. Treasuries with newly created central bank money) that caused the fixed income market to fluctuate and turn negative in the last two months of the year. The Fed had previously indicated the possibility of another round of monetary easing and the general expectation had been that QE2 would keep Treasury rates low and thus bode well for credit markets. However, investors focused on the inflationary and U.S. dollar-depressing effects of QE2, with many openly criticizing the $600 billion program. This caused Treasury yields to reverse course and start heading back up. During the first ten months of the year, the 2-year Treasury yield decreased 80 bps to 0.34% and the 10-year yield decreased 124 bps to 2.60%. Following the announcement of QE2, over November and December, 2-year and 10-year Treasury yields increased 26 bps and 69 bps, respectively. Thus it was the Fed’s effort to bolster the economy that caused Treasuries to return -2.6% in the fourth quarter of 2010, which in turn moved the U.S. Aggregate Bond Index to post its first negative quarterly total return in two years.
| i | April-June 2010 peak-to-trough changes |
| 8 | Market Summary |
Table of Contents
[This page intentionally left blank]
Table of Contents
Russell Investment Funds
Portfolio Management Discussion — December 31, 2010 (Unaudited)
Multi-Style Equity Fund | ||||
| Total Return | ||||
1 Year | 16.46 | % | ||
5 Years | 2.51 | %§ | ||
10 Years | 1.25 | %§ | ||
| Russell 1000® Index ** | ||||
| Total Return | ||||
1 Year | 16.10 | % | ||
5 Years | 2.59 | %§ | ||
10 Years | 1.83 | %§ | ||
| 10 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
The Multi-Style Equity Fund (the “Fund”) allocates most of its assets among multiple money managers. Russell Investment Management Company (“RIMCo”), as the Fund’s advisor, may change the allocation of the Fund’s assets among money managers at any time. An exemptive order from the Securities and Exchange Commission (“SEC”) permits RIMCo to engage or terminate a money manager at any time, subject to approval by the Fund’s Board without a shareholder vote. Pursuant to the terms of the exemptive order, the Fund is required to notify its shareholders within 60 days of when a money manager begins providing services. The Fund currently has eight money managers.
What is the Fund’s investment objective?
The Fund seeks to provide long-term capital growth.
How did the Fund perform relative to its benchmark for the fiscal year ended December 31, 2010?
For the fiscal year ended December 31, 2010, the Multi-Style Equity Fund gained 16.46%. This compared to the Russell 1000® Index, which gained 16.10% during the same period. The Fund’s performance includes operating expenses, whereas Index returns are unmanaged and do not include expenses of any kind.
For the fiscal year ended December 31, 2010, the Lipper® Large-Cap Core Funds (VIP) Average gained 13.50%. This average return serves as a peer comparison and is expressed net of operating expenses.
RIMCo may assign a money manager a specific style or capitalization benchmark other than the Fund’s index. However, the Fund’s primary index remains the benchmark for the Fund and is representative of the aggregate of each money manager’s benchmark index.
How did the market conditions described in the Market Summary report affect the Fund’s performance?
The fiscal year ended December 31, 2010 was marked by two almost separate periods — pre and post quantitative easing announced by the U.S. Federal Reserve. Quantitative easing involves purchasing U.S. Treasuries with newly created central bank money. During the first quarter, equity markets maintained some of the positive momentum generated during 2009, but gave back all gains and were posting negative year to date returns as late as August. Concerns over sovereign debt issues in Europe and negative housing data dragged down equity markets during the second and early third quarters. Near the end of the third quarter the U.S. Federal Reserve announced an additional amount of monetary stimulus and equity markets responded strongly by rallying for the duration of the year.
Growth stocks outperformed value stocks by more than 1.2% for the fiscal year ended December 31, 2010, as measured by the Russell 1000® Growth Index against the Russell 1000® Value Index. Stocks with high forecasted growth outperformed those with low forecasted growth and stocks with high historical growth outperformed those with low historical growth, Small cap stocks outperformed large cap stocks by more than 10% for the
year ended December 31, 2010, as measured by the Russell 2000® Index against the Russell 1000® Index. The relative performance of small capitalization stocks reflects the market’s preference for risk over the fiscal year. Stocks with greater volatility outperformed those with lower volatility, reinforcing the market’s increasing appetite for risk. Stocks with high long-term debt-to-capital outperformed those with low long-term debt-to-capital, as financials and other previously poor performing stocks rallied toward the end of the year.
The market also rewarded pro-cyclical sectors during the year. The consumer discretionary sector was the best performer as investors reacted to positive spending data and better-than- expected holiday sales. Utilities and consumer staples, both considered defensive sectors, posted negative returns for the year as investors looked for riskier stocks. The Fund benefited from the pro-cyclical trend through its overweight to consumer discretionary and underweight to consumer staples and utilities. The Fund also benefited from an underweight to health care, the worst performing sector in the Russell 1000® Index.
During the second half of the year, a focus on the performance of individual stocks began to outweigh some of the focus on general macro-economic conditions that had prevailed earlier in the year. The increased appetite for risk among investors, along with declining correlations among stocks in particular, provided a favorable backdrop for active money management in general and for the Fund. General views of the overall equity market began to improve at the end of the third quarter, led by a subsiding fear of European debt contagion and improved confidence in the sustainability of the global recovery. This trend was illustrated by a rotation into the financial services industry by the Fund, particularly into the diversified banks sector.
How did the investment strategies and techniques employed by the Fund and its money managers affect its performance?
Over the fiscal year, the Fund’s managers emphasized companies with high forecasted growth. They looked to companies with overseas exposure, particularly to emerging markets and companies with limited risk of sovereign debt contagion. This contributed positively to returns as the market rewarded risk over the year and emerging market economies, particularly China, exhibited incredible gross domestic product growth. From a strategic standpoint, the Fund aims to be positioned neutrally between growth and value. However, as managers rotated and markets rallied, the Fund experienced some tilt toward increased growth and momentum exposure, both of which contributed positively to returns during the year.
Manager sector weighting decisions played a critical role in determining manager and Fund performance during the year with the consumer discretionary, producer durables and materials & processing sectors all outperforming the Russell 1000® Index. Managers with overweights to these sectors tended to perform better during the year. On the other hand, health care and utilities stocks underperformed the Fund’s benchmark.
| Multi-Style Equity Fund | 11 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
Stock selection in the health care sector was the largest detractor from returns during the fiscal year. The Fund was overweight to some of the worst performing stocks in the pharmaceuticals and biotechnology industries. Stock selection within the financial services sector was the second largest detractor from returns. Holdings within the financial data & systems and diversified financial services industries hurt performance. The Fund’s underweight to real estate investment trusts (REITs) also detracted from performance, as this industry outperformed the rest of the index during the year.
Stock selection within the producer durables, consumer discretionary and energy sectors contributed positively to the Fund’s performance during the fiscal year. Expectations that demand for oil would continue to increase due to the ongoing economic expansion in China and other emerging economies drove up select stock prices in the energy sector, especially in the second half of the year. Within the producer durables sector, returns were led by engines and construction & handling companies on the improved sentiment surrounding global, but specifically emerging market, economic growth. In the consumer discretionary sector, the casinos & gambling industry was the best performing industry, reflecting hopes of more discretionary spending by consumers.
First Eagle Investment Management, LLC (“First Eagle”), outperformed the Russell 1000® Index as a result of both sector allocation decisions and stock selection particularly within the consumer discretionary and materials & processing sectors. First Eagle also benefited from an overweight to the energy sector, specifically from a large overweight to the oil crude producers industry. In addition, they generated positive performance from the financial services sector, particularly in the diversified banks industry. Holdings within the consumer staples sector detracted from returns, mainly due to stock selection in the food industry.
BlackRock Capital Management, Inc. (“BlackRock”), outperformed the Russell 1000® Growth Index on the strength of their stock selection. The effect was strongest within the technology sector where positions in the computer services software & systems industry added to performance. BlackRock also benefited from stock selection within producer durables, where they benefited from holdings in engines and industrial machinery companies. Sector allocation detracted from returns due primarily to an overweight to technology and a neutral weighting to health care.
Given the pro-risk, cyclically driven environment particularly during the second half of the year, Montag & Caldwell, LLC’s (“Montag”) more defensively oriented consistent growth strategy underperformed the Russell 1000® Growth Index during the fiscal year due to both negative stock selection and sector allocation decisions. Stock selection in the financial services sector detracted most from returns, primarily through holdings in the financial data & systems and securities brokerage & services industries. An overweight to the health care sector also detracted from performance. Negative stock selection in the
consumer staples sector, particularly in the food industry, detracted from returns. In contrast, Montag benefited from positive stock selection in the energy sector.
RIMCo currently employs a “select holdings” strategy for a portion of the Fund’s assets that RIMCo determines not to allocate to the money managers. Pursuant to this strategy, RIMCo analyzes the holdings in the Fund segments assigned to money managers to identify particular stocks that have been selected and are held in overweight positions by multiple money managers. RIMCo uses a proprietary model to rank these stocks. Based on this ranking, RIMCo purchases additional shares of certain stocks for the Fund. RIMCo performs this analysis and ranking, and purchases or sells stocks based on this analysis and ranking, on a regular, periodic basis. The strategy is designed to increase the Fund’s exposure to stocks that are viewed as attractive by multiple money managers
The “select holdings” portions of the Fund’s portfolio underperformed the Russell 1000® Index during the year due to negative stock selection. The largest detractor from returns during the year was stock selection within the financial services industry. Poor stock selection in the health care and technology sectors also detracted meaningfully from returns. Large underweights to the consumer discretionary and materials & processing sectors hurt performance, as the two sectors performed well during the year. The portfolio’s large underweight to smaller cap companies further detracted from the Fund’s performance as small capitalization stocks substantially outperformed large capitalization stocks.
Describe any changes to the Fund’s structure or the money manager line-up.
During the year, there were no changes to the Fund’s structure or to the money manager line-up.
| Money Managers as of December 31, 2010 | Style | |
| BlackRock Capital Management, Inc. | Growth | |
| Columbus Circle Investors | Growth | |
| DePrince, Race & Zollo, Inc. | Value | |
| First Eagle Investment Management, LLC | Market Oriented | |
| Institutional Capital LLC | Value | |
| Jacobs Levy Equity Management, Inc. | Value | |
| Montag & Caldwell, LLC | Growth | |
| Suffolk Capital Management, Inc. | Market Oriented | |
The views expressed in this report reflect those of the portfolio managers only through the end of the period covered by the report. These views do not necessarily represent the views of RIMCo, or any other person in RIMCo or any other affiliated organization. These views are subject to change at any time based upon market conditions or other events, and RIMCo disclaims any responsibility to update the views contained herein. These views should not be relied on as investment advice and, because investment decisions for Russell Investment Funds (“RIF”) are based on numerous factors, should not be relied on as an indication of investment decisions of any RIF Fund.
| 12 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
| * | Assumes initial investment on January 1, 2001. |
| ** | Russell 1000® Index includes the 1,000 largest companies in the Russell 3000® Index. The Russell 1000® Index represents the universe of stocks from which most active money managers typically select. The Russell 1000® Index return reflects adjustments from income dividends and capital gain distributions reinvested as of the ex-dividend dates. |
| § | Annualized. |
The performance shown in this section does not reflect any Insurance Company Separate Account or Policy Charges. Performance is historical and assumes reinvestment of all dividends and capital gains. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than when purchased. Past performance is not indicative of future results.
| Multi-Style Equity Fund | 13 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Shareholder Expense Example — December 31, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Annual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from July 1, 2010 to December 31, 2010.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Core Class | Actual Performance | Hypothetical Performance (5% return before expenses) | ||||||
Beginning Account Value July 1, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value December 31, 2010 | $ | 1,244.50 | $ | 1,020.67 | ||||
Expenses Paid During Period* | $ | 5.09 | $ | 4.58 | ||||
| * | Expenses are equal to the Fund’s annualized expense ratio of 0.90% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
| 14 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
| Common Stocks - 97.3% | ||||||||
| Consumer Discretionary - 13.8% | ||||||||
Amazon.com, Inc. (Æ) | 16,882 | 3,038 | ||||||
Autoliv, Inc. (Ñ) | 600 | 47 | ||||||
Baidu, Inc. - ADR (Æ) | 3,800 | 367 | ||||||
Bed Bath & Beyond, Inc. (Æ) | 18,651 | 917 | ||||||
BJ’s Wholesale Club, Inc. (Æ) | 4,500 | 216 | ||||||
Carnival Corp. | 23,100 | 1,065 | ||||||
CBS Corp. Class B | 63,833 | 1,216 | ||||||
Coach, Inc. | 12,200 | 675 | ||||||
Comcast Corp. Class A | 55,376 | 1,217 | ||||||
Costco Wholesale Corp. (Ñ) | 26,000 | 1,877 | ||||||
DISH Network Corp. Class A (Æ) | 10,000 | 197 | ||||||
eBay, Inc. (Æ) | 16,800 | 468 | ||||||
Estee Lauder Cos., Inc. (The) Class A | 11,619 | 938 | ||||||
Ford Motor Co. (Æ)(Ñ) | 149,545 | 2,511 | ||||||
Gap, Inc. (The) (Ñ) | 41,400 | 917 | ||||||
General Motors Co. (Æ)(Ñ) | 24,964 | 921 | ||||||
Harman International Industries, Inc. (Æ) | 2,900 | 134 | ||||||
Home Depot, Inc. | 83,710 | 2,935 | ||||||
Hyatt Hotels Corp. (Æ) | 5,300 | 242 | ||||||
Johnson Controls, Inc. | 92,325 | 3,526 | ||||||
Kohl’s Corp. (Æ)(Ñ) | 13,300 | 723 | ||||||
Las Vegas Sands Corp. (Æ) | 39,915 | 1,834 | ||||||
Lear Corp. (Æ)(Ñ) | 4,334 | 428 | ||||||
Lowe’s Cos., Inc. | 82,150 | 2,059 | ||||||
McDonald’s Corp. | 25,200 | 1,934 | ||||||
NetFlix, Inc. (Æ)(Ñ) | 2,300 | 404 | ||||||
Nike, Inc. Class B | 31,100 | 2,657 | ||||||
priceline.com, Inc. (Æ)(Ñ) | 3,196 | 1,277 | ||||||
Royal Caribbean Cruises, Ltd. (Æ)(Ñ) | 15,400 | 724 | ||||||
Stanley Black & Decker, Inc. (Ñ) | 30,150 | 2,016 | ||||||
Starbucks Corp. | 45,760 | 1,470 | ||||||
Starwood Hotels & Resorts Worldwide, Inc. (Ñ)(ö) | 26,200 | 1,593 | ||||||
Target Corp. | 29,700 | 1,786 | ||||||
Tiffany & Co. (Ñ) | 6,800 | 423 | ||||||
Time Warner, Inc. | 18,000 | 579 | ||||||
TJX Cos., Inc. | 29,600 | 1,314 | ||||||
Tyco Electronics, Ltd. | 24,152 | 855 | ||||||
Urban Outfitters, Inc. (Æ)(Ñ) | 6,700 | 240 | ||||||
Viacom, Inc. Class A | 93,642 | 3,708 | ||||||
Wal-Mart Stores, Inc. | 28,800 | 1,554 | ||||||
Walt Disney Co. (The) | 94,940 | 3,561 | ||||||
Warnaco Group, Inc. (The) (Æ) | 9,800 | 540 | ||||||
Wendy’s/Arby’s Group, Inc. Class A | 26,700 | 123 | ||||||
| 55,226 | ||||||||
| Consumer Staples - 8.0% | ||||||||
Archer-Daniels-Midland Co. | 20,300 | 611 | ||||||
Clorox Co. | 4,300 | 272 | ||||||
Coca-Cola Co. (The) | 109,179 | 7,181 | ||||||
Colgate-Palmolive Co. | 6,200 | 498 | ||||||
ConAgra Foods, Inc. | 35,900 | 811 | ||||||
Corn Products International, Inc. | 8,000 | 368 | ||||||
CVS Caremark Corp. | 18,600 | 647 | ||||||
Energizer Holdings, Inc. (Æ) | 3,200 | 233 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
JM Smucker Co. (The) | 16,200 | 1,064 | ||||||
Kimberly-Clark Corp. | 6,800 | 429 | ||||||
Kraft Foods, Inc. Class A (Ñ) | 49,800 | 1,569 | ||||||
Kroger Co. (The) | 20,000 | 447 | ||||||
Lorillard, Inc. | 4,800 | 394 | ||||||
Molson Coors Brewing Co. Class B | 16,450 | 826 | ||||||
PepsiCo, Inc. | 109,838 | 7,174 | ||||||
Procter & Gamble Co. (The) | 103,784 | 6,677 | ||||||
Safeway, Inc. (Ñ) | 25,300 | 569 | ||||||
Walgreen Co. (Ñ) | 18,800 | 732 | ||||||
Whole Foods Market, Inc. (Ñ) | 31,499 | 1,594 | ||||||
| 32,096 | ||||||||
| Energy - 11.9% | ||||||||
Anadarko Petroleum Corp. | 13,200 | 1,005 | ||||||
Apache Corp. | 42,006 | 5,009 | ||||||
Cameron International Corp. (Æ) | 27,200 | 1,380 | ||||||
Chevron Corp. | 70,707 | 6,452 | ||||||
ConocoPhillips | 75,797 | 5,162 | ||||||
Devon Energy Corp. | 13,633 | 1,070 | ||||||
Dresser-Rand Group, Inc. (Æ) | 3,400 | 145 | ||||||
EnCana Corp. | 15,600 | 454 | ||||||
Exxon Mobil Corp. | 12,100 | 885 | ||||||
Halliburton Co. | 44,500 | 1,817 | ||||||
Marathon Oil Corp. | 119,647 | 4,430 | ||||||
Massey Energy Co. | 16,600 | 891 | ||||||
Murphy Oil Corp. | 18,700 | 1,394 | ||||||
Nabors Industries, Ltd. (Æ) | 5,600 | 131 | ||||||
National Oilwell Varco, Inc. | 19,635 | 1,321 | ||||||
Occidental Petroleum Corp. | 74,330 | 7,291 | ||||||
Pioneer Natural Resources Co. (Ñ) | 23,235 | 2,017 | ||||||
Rowan Cos., Inc. (Æ)(Ñ) | 4,800 | 168 | ||||||
Royal Dutch Shell PLC - ADR | 10,400 | 695 | ||||||
Schlumberger, Ltd. | 37,300 | 3,114 | ||||||
SEACOR Holdings, Inc. (Ñ) | 740 | 75 | ||||||
Spectra Energy Corp. | 5,100 | 127 | ||||||
Statoil ASA - ADR (Ñ) | 30,400 | 723 | ||||||
SunPower Corp. Class B (Æ)(Ñ) | 62,000 | 769 | ||||||
Valero Energy Corp. (Ñ) | 21,700 | 502 | ||||||
Williams Cos., Inc. (The) | 27,700 | 685 | ||||||
| 47,712 | ||||||||
| Financial Services—16.0% | ||||||||
Aflac, Inc. | 31,650 | 1,786 | ||||||
Allied World Assurance Co. Holdings, Ltd. (Ñ) | 3,100 | 184 | ||||||
Allstate Corp. (The) (Ñ) | 37,700 | 1,202 | ||||||
American Express Co. | 47,570 | 2,041 | ||||||
American Financial Group, Inc. | 7,500 | 242 | ||||||
Ameriprise Financial, Inc. | 6,900 | 397 | ||||||
AON Corp. (Ñ) | 31,750 | 1,461 | ||||||
Ares Capital Corp. | 4,300 | 71 | ||||||
Assurant, Inc. | 7,900 | 304 | ||||||
Axis Capital Holdings, Ltd. (Ñ) | 5,700 | 205 | ||||||
Bank of America Corp. | 74,700 | 997 | ||||||
Bank of Hawaii Corp. (Ñ) | 1,900 | 90 | ||||||
Bank of New York Mellon Corp. (The) (Ñ) | 64,600 | 1,951 | ||||||
| Multi-Style Equity Fund | 15 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
BB&T Corp. (Ñ) | 87,950 | 2,312 | ||||||
Berkshire Hathaway, Inc. Class B (Æ) | 1,700 | 136 | ||||||
BlackRock, Inc. Class A | 7,150 | 1,363 | ||||||
Charles Schwab Corp. (The) (Ñ) | 54,150 | 927 | ||||||
Chubb Corp. (Ñ) | 7,600 | 453 | ||||||
CIT Group, Inc. (Æ) | 8,100 | 382 | ||||||
Citigroup, Inc. (Æ) | 581,070 | 2,749 | ||||||
CNA Financial Corp. (Æ)(Ñ) | 3,500 | 95 | ||||||
Discover Financial Services (Ñ) | 24,400 | 452 | ||||||
Endurance Specialty Holdings, Ltd. (Ñ) | 7,000 | 322 | ||||||
Federated Investors, Inc. Class B (Ñ) | 18,800 | 492 | ||||||
Fifth Third Bancorp (Ñ) | 72,426 | 1,063 | ||||||
Fulton Financial Corp. (Ñ) | 17,500 | 181 | ||||||
Goldman Sachs Group, Inc. (The) | 21,178 | 3,561 | ||||||
Hartford Financial Services Group, Inc. (Ñ) | 36,100 | 956 | ||||||
HCC Insurance Holdings, Inc. | 8,800 | 255 | ||||||
Hersha Hospitality Trust Class A (ö) | 5,000 | 33 | ||||||
Hudson City Bancorp, Inc. (Ñ) | 50,900 | 648 | ||||||
Huntington Bancshares, Inc. | 171,100 | 1,175 | ||||||
Jefferies Group, Inc. (Ñ) | 12,800 | 341 | ||||||
JPMorgan Chase & Co. | 111,251 | 4,719 | ||||||
KeyCorp | 57,200 | 506 | ||||||
Liberty Property Trust (Ñ)(ö) | 5,100 | 163 | ||||||
Lincoln National Corp. | 40,300 | 1,121 | ||||||
Loews Corp. | 8,100 | 315 | ||||||
Marsh & McLennan Cos., Inc. | 26,400 | 722 | ||||||
Mastercard, Inc. Class A | 3,828 | 858 | ||||||
Mercury General Corp. (Ñ) | 11,200 | 482 | ||||||
MetLife, Inc. | 71,694 | 3,186 | ||||||
Morgan Stanley | 40,700 | 1,108 | ||||||
Netspend Holdings, Inc. (Æ)(Ñ) | 2,088 | 27 | ||||||
Northern Trust Corp. (Ñ) | 16,100 | 892 | ||||||
NYSE Euronext | 7,400 | 222 | ||||||
People’s United Financial, Inc. (Ñ) | 29,000 | 406 | ||||||
Piedmont Office Realty Trust, Inc. Class A (Ñ)(ö) | 1,200 | 24 | ||||||
Plum Creek Timber Co., Inc. (Ñ)(ö) | 15,000 | 562 | ||||||
PNC Financial Services Group, Inc. | 33,100 | 2,010 | ||||||
Progressive Corp. (The) | 13,600 | 270 | ||||||
Prudential Financial, Inc. | 27,300 | 1,603 | ||||||
Reinsurance Group of America, Inc. Class A (Ñ) | 3,100 | 167 | ||||||
Senior Housing Properties Trust (ö) | 8,800 | 193 | ||||||
State Street Corp. | 23,400 | 1,084 | ||||||
SunTrust Banks, Inc. (Ñ) | 28,000 | 826 | ||||||
Transatlantic Holdings, Inc. | 6,500 | 336 | ||||||
Travelers Cos., Inc. (The) (Ñ) | 8,500 | 474 | ||||||
Unum Group | 9,300 | 225 | ||||||
US Bancorp (Ñ) | 160,159 | 4,319 | ||||||
Valley National Bancorp (Ñ) | 32,239 | 461 | ||||||
Visa, Inc. Class A | 11,737 | 826 | ||||||
Washington Federal, Inc. (Ñ) | 2,900 | 49 | ||||||
Webster Financial Corp. (Ñ) | 4,700 | 93 | ||||||
Wells Fargo & Co. | 221,011 | 6,848 | ||||||
| 63,924 | ||||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
| Health Care - 11.3% | ||||||||
Abbott Laboratories | 61,026 | 2,924 | ||||||
Aetna, Inc. | 13,500 | 412 | ||||||
Alexion Pharmaceuticals, Inc. (Æ)(Ñ) | 4,500 | 362 | ||||||
Allergan, Inc. | 63,462 | 4,358 | ||||||
Amgen, Inc. (Æ) | 12,151 | 667 | ||||||
Baxter International, Inc. | 15,300 | 774 | ||||||
Boston Scientific Corp. (Æ)(Ñ) | 50,000 | 379 | ||||||
Bristol-Myers Squibb Co. | 19,004 | 503 | ||||||
Cardinal Health, Inc. | 3,800 | 146 | ||||||
Celgene Corp. (Æ) | 18,602 | 1,100 | ||||||
Cerner Corp. (Æ)(Ñ) | 5,400 | 512 | ||||||
Cigna Corp. | 9,000 | 330 | ||||||
Covance, Inc. (Æ)(Ñ) | 8,800 | 452 | ||||||
Coventry Health Care, Inc. (Æ) | 12,100 | 319 | ||||||
Covidien PLC | 33,850 | 1,546 | ||||||
Dendreon Corp. (Æ)(Ñ) | 10,100 | 353 | ||||||
Eli Lilly & Co. (Ñ) | 14,400 | 505 | ||||||
Express Scripts, Inc. Class A (Æ) | 13,200 | 713 | ||||||
Hologic, Inc. (Æ)(Ñ) | 8,900 | 167 | ||||||
Humana, Inc. (Æ) | 8,600 | 471 | ||||||
Illumina, Inc. (Æ)(Ñ) | 18,957 | 1,201 | ||||||
Johnson & Johnson | 34,600 | 2,140 | ||||||
Life Technologies Corp. (Æ) | 7,600 | 422 | ||||||
Lincare Holdings, Inc. (Ñ) | 16,400 | 440 | ||||||
Medicis Pharmaceutical Corp. Class A (Ñ) | 32,000 | 857 | ||||||
Medtronic, Inc. | 22,516 | 835 | ||||||
Merck & Co., Inc. | 169,450 | 6,107 | ||||||
Pfizer, Inc. | 372,184 | 6,518 | ||||||
Sanofi-Aventis SA - ADR | 72,050 | 2,322 | ||||||
St. Jude Medical, Inc. (Æ)(Ñ) | 25,416 | 1,087 | ||||||
Stryker Corp. (Ñ) | 36,000 | 1,933 | ||||||
Teleflex, Inc. (Ñ) | 7,000 | 377 | ||||||
Teva Pharmaceutical Industries, Ltd. - ADR | 11,900 | 620 | ||||||
Thermo Fisher Scientific, Inc. (Æ) | 16,517 | 914 | ||||||
UnitedHealth Group, Inc. | 23,600 | 852 | ||||||
Watson Pharmaceuticals, Inc. Class B (Æ) | 19,900 | 1,028 | ||||||
WellPoint, Inc. (Æ) | 8,500 | 483 | ||||||
| 45,129 | ||||||||
| Materials and Processing - 5.1% | ||||||||
Agnico-Eagle Mines, Ltd. (Þ) | 2,400 | 184 | ||||||
Air Products & Chemicals, Inc. (Ñ) | 10,400 | 946 | ||||||
Airgas, Inc. | 1,737 | 108 | ||||||
Alcoa, Inc. | 18,100 | 279 | ||||||
Celanese Corp. Class A | 12,100 | 498 | ||||||
CF Industries Holdings, Inc. (Ñ) | 4,466 | 604 | ||||||
Cytec Industries, Inc. | 4,700 | 249 | ||||||
Ecolab, Inc. | 5,900 | 297 | ||||||
EI du Pont de Nemours & Co. | 16,700 | 833 | ||||||
Freeport-McMoRan Copper & Gold, Inc. Class B | 13,100 | 1,574 | ||||||
Huntsman Corp. | 42,500 | 663 | ||||||
MeadWestvaco Corp. | 10,200 | 267 | ||||||
Monsanto Co. | 36,069 | 2,512 | ||||||
Newmont Mining Corp. | 41,317 | 2,537 | ||||||
| 16 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Nucor Corp. (Ñ) | 17,700 | 776 | ||||||
Owens-Illinois, Inc. (Æ) | 31,850 | 978 | ||||||
Packaging Corp. of America | 9,200 | 238 | ||||||
Potash Corp. of Saskatchewan, Inc. | 9,362 | 1,449 | ||||||
Reliance Steel & Aluminum Co. | 3,100 | 158 | ||||||
Rio Tinto PLC - ADR | 14,800 | 1,061 | ||||||
Sealed Air Corp. (Ñ) | 31,300 | 797 | ||||||
SPX Corp. | 12,400 | 887 | ||||||
Steel Dynamics, Inc. (Ñ) | 30,000 | 549 | ||||||
Textron, Inc. (Ñ) | 3,300 | 78 | ||||||
Vulcan Materials Co. (Ñ) | 18,100 | 803 | ||||||
Weyerhaeuser Co. (Ñ) | 54,266 | 1,027 | ||||||
| 20,352 | ||||||||
| Producer Durables - 10.3% | ||||||||
Accenture PLC Class A | 67,250 | 3,262 | ||||||
AGCO Corp. (Æ)(Ñ) | 2,300 | 117 | ||||||
Agilent Technologies, Inc. (Æ) | 18,382 | 762 | ||||||
AO Smith Corp. | 1,900 | 72 | ||||||
Atlas Air Worldwide Holdings, Inc. (Æ) | 600 | 33 | ||||||
Automatic Data Processing, Inc. (Ñ) | 15,600 | 722 | ||||||
Avery Dennison Corp. (Ñ) | 2,900 | 123 | ||||||
Boeing Co. (The) | 13,200 | 862 | ||||||
Carlisle Cos., Inc. | 9,900 | 393 | ||||||
Caterpillar, Inc. (Ñ) | 33,525 | 3,140 | ||||||
Chicago Bridge & Iron Co. NV (Æ) | 1,100 | 36 | ||||||
CNH Global NV (Æ) | 1,200 | 57 | ||||||
Crane Co. | 5,400 | 222 | ||||||
Danaher Corp. (Ñ) | 23,200 | 1,094 | ||||||
Deere & Co. | 13,802 | 1,146 | ||||||
Delta Air Lines, Inc. (Æ)(Ñ) | 62,200 | 784 | ||||||
Embraer SA (Æ) | 13,000 | 382 | ||||||
EMCOR Group, Inc. (Æ) | 1,200 | 35 | ||||||
Emerson Electric Co. | 23,000 | 1,315 | ||||||
FedEx Corp. (Ñ) | 12,378 | 1,151 | ||||||
Fluor Corp. (Ñ) | 35,600 | 2,360 | ||||||
General Dynamics Corp. | 18,000 | 1,277 | ||||||
General Electric Co. | 48,200 | 882 | ||||||
Harsco Corp. | 20,500 | 581 | ||||||
Honeywell International, Inc. | 87,798 | 4,668 | ||||||
Ingersoll-Rand PLC (Ñ) | 22,600 | 1,064 | ||||||
Jacobs Engineering Group, Inc. (Æ) | 2,800 | 128 | ||||||
Joy Global, Inc. | 5,100 | 442 | ||||||
KBR, Inc. | 7,200 | 219 | ||||||
L-3 Communications Holdings, Inc. | 4,600 | 324 | ||||||
Lexmark International, Inc. Class A (Æ) | 8,300 | 289 | ||||||
Lockheed Martin Corp. (Ñ) | 8,000 | 559 | ||||||
Manpower, Inc. (Ñ) | 15,300 | 960 | ||||||
McDermott International, Inc. (Æ) | 3,500 | 72 | ||||||
Moody’s Corp. (Ñ) | 20,000 | 531 | ||||||
Moog, Inc. Class A (Æ)(Ñ) | 2,100 | 84 | ||||||
Northrop Grumman Corp. (Ñ) | 7,400 | 479 | ||||||
PACCAR, Inc. | 15,000 | 861 | ||||||
Pitney Bowes, Inc. (Ñ) | 25,700 | 621 | ||||||
Robert Half International, Inc. (Ñ) | 14,700 | 450 | ||||||
Rockwell Automation, Inc. (Ñ) | 20,700 | 1,484 | ||||||
Ryder System, Inc. (Ñ) | 3,500 | 184 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Shaw Group, Inc. (The) (Æ) | 2,000 | 68 | ||||||
Terex Corp. (Æ)(Ñ) | 6,400 | 199 | ||||||
Tidewater, Inc. (Ñ) | 13,400 | 721 | ||||||
Union Pacific Corp. | 5,800 | 537 | ||||||
United Continental Holdings, Inc. (Æ) | 12,800 | 305 | ||||||
United Parcel Service, Inc. Class B | 53,262 | 3,866 | ||||||
URS Corp. (Æ) | 6,600 | 275 | ||||||
Verisk Analytics, Inc. Class A (Æ) | 322 | 11 | ||||||
Waste Management, Inc. (Ñ) | 12,200 | 450 | ||||||
Xerox Corp. (Ñ) | 40,000 | 461 | ||||||
| 41,120 | ||||||||
| Technology - 17.6% | ||||||||
Akamai Technologies, Inc. (Æ) | 7,000 | 329 | ||||||
Amdocs, Ltd. (Æ) | 13,100 | 360 | ||||||
Amphenol Corp. Class A (Ñ) | 37,733 | 1,992 | ||||||
Apple, Inc. (Æ) | 27,597 | 8,901 | ||||||
Applied Materials, Inc. (Ñ) | 94,400 | 1,326 | ||||||
BCE, Inc. (Ñ) | 51,900 | 1,840 | ||||||
Broadcom Corp. Class A | 109,444 | 4,766 | ||||||
Brocade Communications Systems, Inc. (Æ) | 16,500 | 87 | ||||||
CA, Inc. (Ñ) | 6,400 | 156 | ||||||
Check Point Software Technologies, Ltd. (Æ)(Ñ) | 17,100 | 791 | ||||||
Cisco Systems, Inc. (Æ) | 52,700 | 1,066 | ||||||
Citrix Systems, Inc. (Æ) | 9,400 | 643 | ||||||
Cognizant Technology Solutions Corp. Class A (Æ) | 22,671 | 1,661 | ||||||
Computer Sciences Corp. | 8,000 | 397 | ||||||
Cree, Inc. (Æ) | 9,000 | 593 | ||||||
Ctrip.com International, Ltd. - ADR (Æ) | 11,200 | 453 | ||||||
Diebold, Inc. (Ñ) | 10,500 | 337 | ||||||
Electronic Arts, Inc. (Æ)(Ñ) | 12,800 | 210 | ||||||
F5 Networks, Inc. (Æ)(Ñ) | 10,892 | 1,418 | ||||||
Google, Inc. Class A (Æ) | 11,815 | 7,018 | ||||||
Harris Corp. (Ñ) | 7,400 | 335 | ||||||
Hewlett-Packard Co. | 22,300 | 939 | ||||||
Ingram Micro, Inc. Class A (Æ) | 11,300 | 216 | ||||||
Intel Corp. | 33,000 | 694 | ||||||
International Business Machines Corp. | 11,145 | 1,636 | ||||||
Intuit, Inc. (Æ)(Ñ) | 9,180 | 453 | ||||||
Juniper Networks, Inc. (Æ) | 37,192 | 1,373 | ||||||
Lam Research Corp. (Æ) | 7,900 | 409 | ||||||
LSI Corp. (Æ) | 37,700 | 226 | ||||||
Maxim Integrated Products, Inc. (Ñ) | 43,600 | 1,030 | ||||||
Micron Technology, Inc. (Æ)(Ñ) | 45,400 | 364 | ||||||
Microsoft Corp. | 144,350 | 4,031 | ||||||
Molex, Inc. (Ñ) | 14,800 | 336 | ||||||
Motorola, Inc. (Æ) | 57,700 | 523 | ||||||
National Semiconductor Corp. (Ñ) | 58,400 | 804 | ||||||
NetApp, Inc. (Æ)(Ñ) | 28,581 | 1,571 | ||||||
Nokia OYJ - ADR (Ñ) | 32,100 | 331 | ||||||
Oracle Corp. | 131,440 | 4,115 | ||||||
QUALCOMM, Inc. | 157,653 | 7,802 | ||||||
Red Hat, Inc. (Æ) | 26,059 | 1,189 | ||||||
Salesforce.com, Inc. (Æ)(Ñ) | 9,400 | 1,241 | ||||||
SanDisk Corp. (Æ) | 12,782 | 637 | ||||||
| Multi-Style Equity Fund | 17 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Synopsys, Inc. (Æ) | 13,200 | 355 | ||||||
Tech Data Corp. (Æ) | 6,300 | 277 | ||||||
Texas Instruments, Inc. (Ñ) | 86,226 | 2,803 | ||||||
VMware, Inc. Class A (Æ)(Ñ) | 5,200 | 462 | ||||||
Vodafone Group PLC - ADR (Ñ) | 95,700 | 2,529 | ||||||
| 71,025 | ||||||||
| Utilities - 3.3% | ||||||||
AGL Resources, Inc. | 4,600 | 165 | ||||||
American Electric Power Co., Inc. | 19,400 | 699 | ||||||
American Water Works Co., Inc. | 21,000 | 531 | ||||||
AT&T, Inc. | 54,800 | 1,609 | ||||||
Calpine Corp. (Æ)(Ñ) | 59,368 | 792 | ||||||
CenterPoint Energy, Inc. (Ñ) | 25,800 | 406 | ||||||
Constellation Energy Group, Inc. | 11,800 | 361 | ||||||
Duke Energy Corp. | 25,900 | 461 | ||||||
Edison International (Ñ) | 11,600 | 448 | ||||||
Energen Corp. | 5,200 | 251 | ||||||
Entergy Corp. | 5,000 | 354 | ||||||
Exelon Corp. (Ñ) | 9,300 | 387 | ||||||
Frontier Communications Corp. (Ñ) | 23,900 | 233 | ||||||
Great Plains Energy, Inc. (Ñ) | 22,200 | 430 | ||||||
MDU Resources Group, Inc. | 21,800 | 442 | ||||||
NextEra Energy, Inc. | 22,300 | 1,160 | ||||||
NII Holdings, Inc. (Æ) | 8,100 | 362 | ||||||
NiSource, Inc. (Ñ) | 23,500 | 414 | ||||||
Northeast Utilities | 10,900 | 347 | ||||||
NV Energy, Inc. | 22,600 | 318 | ||||||
OGE Energy Corp. | 6,400 | 291 | ||||||
Pepco Holdings, Inc. (Ñ) | 20,400 | 372 | ||||||
PG&E Corp. | 8,100 | 388 | ||||||
PNM Resources, Inc. (Ñ) | 7,400 | 96 | ||||||
PPL Corp. (Ñ) | 11,100 | 292 | ||||||
Progress Energy, Inc. Class D | 7,700 | 335 | ||||||
Questar Corp. (Ñ) | 9,400 | 164 | ||||||
Southern Union Co. (Ñ) | 9,700 | 233 | ||||||
Veolia Environnement SA - ADR | 13,400 | 393 | ||||||
Verizon Communications, Inc. | 12,200 | 437 | ||||||
| 13,171 | ||||||||
| Total Common Stocks (cost $317,038) | 389,755 | |||||||
| Short-Term Investments - 2.2% | ||||||||
Russell U.S. Cash Management Fund | 8,880,639 | (¥) | 8,881 | |||||
| Total Short-Term Investments (cost $8,881) | 8,881 | |||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
| Other Securities - 17.0% | ||||||||
Russell Investment Funds Liquidating Trust (×) | 1,329,628 | (¥) | 1,330 | |||||
Russell U.S. Cash Collateral Fund (×) | 66,617,631 | (¥) | 66,617 | |||||
| Total Other Securities (cost $67,947) | 67,947 | |||||||
| Total Investments - 116.5% (identified cost $393,866) | 466,583 | |||||||
| Other Assets and Liabilities, Net - (16.5%) | (66,112 | ) | ||||||
| Net Assets - 100.0% | 400,471 | |||||||
See accompanying notes which are an integral part of the financial statements.
| 18 | Multi-Style Equity Fund |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands
| Futures Contracts | Number of Contracts | Notional | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
Long Positions | ||||||||||||||||||
Russell 1000 Mini Index | 21 | USD | 1,458 | 03/11 | 30 | |||||||||||||
S&P 500 E-Mini Index (CME) | 96 | USD | 6,014 | 03/11 | 89 | |||||||||||||
S&P 500 Index (CME) | 7 | USD | 2,193 | 03/11 | 46 | |||||||||||||
S&P Midcap 400 E-Mini Index (CME) | 9 | USD | 815 | 03/11 | 9 | |||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | 174 | |||||||||||||||||
Presentation of Portfolio Holdings — December 31, 2010
Amounts in thousands
| Market Value | % of Net | |||||||||||||||||||
| Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | ||||||||||||||||||||
Consumer Discretionary | $ | 55,226 | $ | — | $ | — | $ | 55,226 | 13.8 | |||||||||||
Consumer Staples | 32,096 | — | — | 32,096 | 8.0 | |||||||||||||||
Energy | 47,712 | — | — | 47,712 | 11.9 | |||||||||||||||
Financial Services | 63,924 | — | — | 63,924 | 16.0 | |||||||||||||||
Health Care | 45,129 | — | — | 45,129 | 11.3 | |||||||||||||||
Materials and Processing | 20,352 | — | — | 20,352 | 5.1 | |||||||||||||||
Producer Durables | 41,120 | — | — | 41,120 | 10.3 | |||||||||||||||
Technology | 71,025 | — | — | 71,025 | 17.6 | |||||||||||||||
Utilities | 13,171 | — | — | 13,171 | 3.3 | |||||||||||||||
Short-Term Investments | — | 8,881 | — | 8,881 | 2.2 | |||||||||||||||
Other Securities | — | 67,947 | — | 67,947 | 17.0 | |||||||||||||||
Total Investments | 389,755 | 76,828 | — | 466,583 | 116.5 | |||||||||||||||
Other Assets and Liabilities, Net | (16.5 | ) | ||||||||||||||||||
| 100.0 | ||||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | 174 | — | — | 174 | — | * | ||||||||||||||
Total Other Financial Instruments** | 174 | — | — | 174 | ||||||||||||||||
| * | Less than .05% of net assets. |
| ** | Other financial instruments reflected in the Schedule of Investments, such as futures, forwards, and swap contracts which are valued at the unrealized appreciation/depreciation on the instruments. |
For a description of the levels see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
| Multi-Style Equity Fund | 19 |
Table of Contents
Russell Investment Funds
Multi-Style Equity Fund
Fair Value of Derivative Instruments — December 31, 2010
Amounts in thousands
| Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Assets and Liabilities - Assets | ||||
Daily variation margin on futures contracts* | $ | 174 | ||
| Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Operations - Net realized gain (loss) | ||||
Futures contracts | $ | 2,066 | ||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||
Futures contracts | $ | (189 | ) | |
| * | Includes cumulative appreciation/depreciation of futures contracts as reported in Schedule of Investments. Only current day’s variation margin is reported within the statement of assets and liabilities |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
| 20 | Multi-Style Equity Fund |
Table of Contents
[This page intentionally left blank]
Table of Contents
Russell Investment Funds
Portfolio Management Discussion — December 31, 2010 (Unaudited)
| Aggressive Equity Fund | ||||
| Total Return | ||||
1 Year | 24.88 | % | ||
5 Years | 2.14 | %§ | ||
10 Years | 4.56 | %§ | ||
| Russell 2500™ Index ** | ||||
| Total Return | ||||
1 Year | 26.71 | % | ||
5 Years | 4.86 | %§ | ||
10 Years | 6.98 | %§ | ||
| 22 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
The Aggressive Equity Fund (the “Fund”) allocates most of its assets among multiple money managers. Russell Investment Management Company (“RIMCo”), as the Fund’s advisor, may change the allocation of the Fund’s assets among money managers at any time. An exemptive order from the Securities and Exchange Commission (“SEC”) permits RIMCo to engage or terminate a money manager at any time, subject to approval by the Fund’s Board without a shareholder vote. Pursuant to the terms of the exemptive order, the Fund is required to notify its shareholders within 60 days of when a money manager begins providing services. The Fund currently has six money managers.
What is the Fund’s investment objective?
The Fund seeks to provide long-term capital growth.
How did the Fund perform relative to its benchmark for the fiscal year ended December 31, 2010?
For the fiscal year ended December 31, 2010, the Aggressive Equity Fund gained 24.88%. This is compared to the Russell 2500™ Index, which gained 26.71% during the same period. The Fund’s performance includes operating expenses, whereas index returns are unmanaged and do not include expenses of any kind.
For the fiscal year ended December 31, 2010, the Lipper® Small-Cap Core Funds (VIP) Average gained 25.96%. This average return serves as a peer comparison and is expressed net of operating expenses.
RIMCo may assign a money manager a specific style or capitalization benchmark other than the Fund’s index. However, the Fund’s primary index remains the benchmark for the Fund and is representative of the aggregate of each money manager’s benchmark index.
How did the market conditions described in the Market Summary report affect the Fund’s performance?
A high degree of correlation among stock price movements resulted in a more difficult environment for active management. Price differentiation in the market was more prevalent at the higher and lower ends of the risk and growth spectrum and the returns of the Fund decreased when the “risk on” scenario was present. A “risk on” scenario exists where positive economic and company-specific news leads companies with more economic sensitivity to outperform the benchmark when “risk” is in favor. In this environment, companies with significant economic sensitivity and often poor fundamentals (in the form of high debt and low cash on the balance sheet) outperformed the market. This market environment was prevalent during the fiscal year and detracted from Fund performance as the Fund was clearly positioned in stocks with stronger fundamentals. The fiscal year could be characterized as driven more by macroeconomic forces than company specific data, which did not favor the multi-manager process of the Fund.
How did the investment strategies and techniques employed by the Fund and its money managers affect its performance?
The Fund employs six money managers: two growth-oriented, one market-oriented and three value-oriented. Three of the six managers and two of the three value managers outperformed their respective benchmarks. This was reflective of the conditions in the market with managers benefiting from a moderation in investors’ appetite for riskier companies (i.e., companies with significant levels of debt and negative earnings), but penalized by elevated stock correlations (i.e. similar as opposed to differentiated return patterns) caused investors’ focus on macro related events, such as European sovereign debt worries and ongoing weak U.S. housing and employment data, rather than on corporate earnings and company announcements. This made it a more difficult market for active management.
While the U.S. economic recovery was slower than many investors anticipated, which curtailed investors’ appetite for speculation, investors retained an overweight exposure to companies that were sensitive to these economic conditions. Consequently, managers across the style spectrum with exposure to cyclical stocks or sectors, specifically the technology sector, fared better than those managers without such exposure.
DePrince, Race & Zollo, Inc., (“DePrince”) a yield-focused value manager, underperformed its style benchmark, the Russell 2500™ Value Index, for the fiscal year. DePrince faced several headwinds during the fiscal year that meaningfully impeded their ability to outperform their benchmark. First, their focus on sustainable dividend yield was not rewarded, as investors alternated between high-yield stocks and zero yielding stocks. In addition, DePrince’s macro positioning created significant difficulties as DePrince reduced its risk exposure starting in late 2009 and into early 2010. This was in response to the duration and magnitude of the risk rally, which was predicated on the belief that the U.S. would rebound strongly from the recession. However, DePrince’s risk reduction efforts were premature, as a high tolerance for risk continued to be rewarded during the fiscal year. As a result of this environment, stock selection detracted from performance, with selection in financial services representing the largest detractor. DePrince’s overweight exposure to regional banks also detracted from performance relative to the style benchmark.
Tygh Capital Management, Inc. (“Tygh”), a quality-focused growth-oriented manager, underperformed its style benchmark, the Russell 2500™Growth Index, for the fiscal year. While investor preference for risk detracted from Tygh’s process, underperformance was driven mainly by weak stock selection. The largest detractors to performance relative to its style benchmark were in the consumer discretionary sector, specifically in Tygh’s specialty retail and restaurant holdings. This negative selection was a function of both the companies
| Aggressive Equity Fund | 23 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
held in the sector and Tygh’s underweight or lack of exposure to several larger index constituents that performed well during the period.
Jacobs Levy Equity Management, Inc., like other quantitative managers, faced a number of difficulties during the fiscal year arising from the unfavorable active management environment, particularly the ongoing macroeconomic uncertainty and investors’ preference for risk. Nevertheless, the manager, driven by its macroeconomic model, had a bias to smaller, lower valuation, more economically sensitive stocks. These exposures were beneficial for the manager and were reflected in positive stock selection, which was positive across the majority of sectors and accounted for all of the manager’s outperformance relative to its style benchmark, the Russell 2500™ Value Index.
Ranger Investment Management, L.P., a growth manager that focuses on higher quality stocks with sustainable earnings growth, underperformed its style benchmark, the Russell 2500™ Growth Index. Investor preference for risk and stock selection detracted from returns. Health care stock selection detracted from returns due to holdings in the health care services and pharmaceutical sectors. Stock selection within the materials and processing and consumer discretionary sector detracted from benchmark-relative performance as a result of retail and metal related holdings. Stock selection within the producer durables and technology sectors, however, had a positive impact on returns.
Signia Capital Management, LLC, (“Signia”) a value-oriented manager, outperformed its style benchmark, the Russell 2500™ Value Index, for the fiscal year. Signia’s preference for attractively priced, higher-risk stocks was rewarded during the fiscal year, as investors continued to prefer economically sensitive, higher-risk companies. Signia’s stock selection drove performance, as several precious and industrial metal sector holdings accounted for much of its outperformance through the fiscal year due to an improving global economic outlook and a
weakening U.S. Dollar. Technology sector stock selection contributed as well on the strength of semi-conductor holdings.
ClariVest Asset Management, LLC, has a quantitative process that focuses on identifying companies with sustainable trends in earnings, price and analyst estimate revisions. This approach met with limited success during the year, due to the volatility of the market and U.S. economic uncertainty. In addition, elevated stock correlations created significant difficulties for quantitative processes that look to exploit stock differentiation, which further undermined Clarivest’s ability to outperform its style benchmark, the Russell 2500.
Describe any changes to the Fund’s structure or the money manager line-up.
There were no changes to the Fund’s structure or the money manager lineup in 2010.
| Money Managers as of December 31, 2010 | Styles | |
| ClariVest Asset Management LLC | Market Oriented | |
| DePrince, Race, & Zollo, Inc. | Value | |
| Jacobs Levy Equity Management, Inc. | Value | |
| Ranger Investment Management, L.P. | Growth | |
| Signia Capital Management, LLC | Value | |
| Tygh Capital Management, Inc. | Growth | |
The views expressed in this report reflect those of the portfolio managers only through the end of the period covered by the report. These views do not necessarily represent the views of RIMCo, or any other person in RIMCo or any other affiliated organization. These views are subject to change at any time based upon market conditions or other events, and RIMCo disclaims any responsibility to update the views contained herein. These views should not be relied on as investment advice and, because investment decisions for Russell Investment Funds (“RIF”) are based on numerous factors, should not be relied on as an indication of investment decisions of any RIF Fund.
| * | Assumes initial investment on January 1, 2001. |
| ** | Russell 2500tm Index is composed of the bottom 500 stocks the Russell 1000® Index and all the stocks in the Russell 2000® Index. The Russell 2500tm Index return reflects adjustments for income dividends and capital gains distributions reinvested as of the ex-dividend dates. |
| § | Annualized. |
The performance shown in this section does not reflect any Insurance Company Separate Account or Policy Charges. Performance is historical and assumes reinvestment of all dividends and capital gains. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than when purchased. Past performance is not indicative of future results.
| 24 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Shareholder Expense Example — December 31, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Annual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from July 1, 2010 to December 31, 2010.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate
of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Core Class | Actual Performance | Hypothetical Performance (5% return before expenses) | ||||||
Beginning Account Value July 1, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value December 31, 2010 | $ | 1,296.90 | $ | 1,019.91 | ||||
Expenses Paid During Period* | $ | 6.08 | $ | 5.35 | ||||
| * | Expenses are equal to the Fund’s annualized expense ratio of 1.05% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
| Aggressive Equity Fund | 25 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
| Common Stocks - 95.4% | ||||||||
| Consumer Discretionary - 12.2% | ||||||||
Acacia Research - Acacia Technologies (Æ) | 11,940 | 310 | ||||||
Advance Auto Parts, Inc. | 2,800 | 185 | ||||||
Amerco, Inc. (Æ)(Ñ) | 2,100 | 202 | ||||||
America’s Car-Mart, Inc. (Æ)(Ñ) | 9,610 | 260 | ||||||
Arctic Cat, Inc. (Æ) | 1,800 | 26 | ||||||
Asbury Automotive Group, Inc. (Æ) | 12,631 | 233 | ||||||
Ascena Retail Group, Inc. (Æ) | 13,887 | 367 | ||||||
Bebe Stores, Inc. (Ñ) | 64,400 | 384 | ||||||
BJ’s Wholesale Club, Inc. (Æ) | 5,600 | 268 | ||||||
Bob Evans Farms, Inc. (Ñ) | 2,400 | 79 | ||||||
Buffalo Wild Wings, Inc. (Æ) | 5,261 | 231 | ||||||
Callaway Golf Co. (Ñ) | 26,456 | 213 | ||||||
Cato Corp. (The) Class A (Ñ) | 3,300 | 90 | ||||||
Chico’s FAS, Inc. (Ñ) | 36,400 | 438 | ||||||
Childrens Place Retail Stores, Inc. (The) (Æ)(Ñ) | 7,080 | 351 | ||||||
Christopher & Banks Corp. (Ñ) | 29,282 | 180 | ||||||
Coinstar, Inc. (Æ)(Ñ) | 11,808 | 667 | ||||||
Columbia Sportswear Co. (Ñ) | 2,805 | 169 | ||||||
Corinthian Colleges, Inc. (Æ)(Ñ) | 26,203 | 137 | ||||||
Cracker Barrel Old Country Store, Inc. (Ñ) | 1,200 | 66 | ||||||
CROCS, Inc. (Æ)(Ñ) | 23,274 | 398 | ||||||
Dick’s Sporting Goods, Inc. (Æ)(Ñ) | 12,153 | 456 | ||||||
Dillard’s, Inc. Class A (Ñ) | 9,200 | 349 | ||||||
Dollar Tree, Inc. (Æ) | 13,300 | 747 | ||||||
Elizabeth Arden, Inc. (Æ)(Ñ) | 3,100 | 71 | ||||||
Expedia, Inc. | 13,390 | 336 | ||||||
Federal-Mogul Corp. (Æ) | 19,019 | 392 | ||||||
Finish Line, Inc. (The) Class A (Ñ) | 29,335 | 504 | ||||||
Flextronics International, Ltd. (Æ) | 18,570 | 146 | ||||||
Foot Locker, Inc. (Ñ) | 24,850 | 488 | ||||||
Fossil, Inc. (Æ)(Ñ) | 6,700 | 472 | ||||||
Fred’s, Inc. Class A (Ñ) | 20,000 | 276 | ||||||
Furniture Brands International, Inc. (Æ)(Ñ) | 2,300 | 12 | ||||||
Gentex Corp. (Ñ) | 17,540 | 518 | ||||||
G-III Apparel Group, Ltd. (Æ)(Ñ) | 8,650 | 304 | ||||||
Harley-Davidson, Inc. (Ñ) | 3,400 | 118 | ||||||
Harman International Industries, Inc. (Æ) | 8,600 | 398 | ||||||
Helen of Troy, Ltd. (Æ) | 3,100 | 92 | ||||||
Hillenbrand, Inc. (Ñ) | 18,600 | 387 | ||||||
Hyatt Hotels Corp. (Æ)(Ñ) | 3,800 | 174 | ||||||
Jones Group, Inc. (The) | 28,100 | 437 | ||||||
Kenneth Cole Productions, Inc. Class A (Æ)(Ñ) | 20,764 | 259 | ||||||
Leapfrog Enterprises, Inc. Class A (Æ)(Ñ) | 8,900 | 49 | ||||||
Lear Corp. (Æ)(Ñ) | 1,400 | 138 | ||||||
Lifetime Brands, Inc. (Æ) | 1,500 | 21 | ||||||
LKQ Corp. (Æ) | 30,661 | 697 | ||||||
Meredith Corp. (Ñ) | 11,300 | 392 | ||||||
MGM Resorts International (Æ)(Ñ) | 32,195 | 478 | ||||||
OfficeMax, Inc. (Æ)(Ñ) | 19,662 | 348 | ||||||
Oxford Industries, Inc. (Ñ) | 5,825 | 149 | ||||||
Panera Bread Co. Class A (Æ)(Ñ) | 4,070 | 412 | ||||||
Penn National Gaming, Inc. (Æ)(Ñ) | 6,100 | 214 | ||||||
Perry Ellis International, Inc. (Æ)(Ñ) | 1,600 | 44 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
PF Chang’s China Bistro, Inc. (Ñ) | 14,548 | 705 | ||||||
Pool Corp. (Ñ) | 11,400 | 257 | ||||||
RC2 Corp. (Æ) | 6,900 | 150 | ||||||
Rent-A-Center, Inc. Class A (Ñ) | 3,300 | 107 | ||||||
Rick’s Cabaret International, Inc. (Æ) | 900 | 7 | ||||||
Ross Stores, Inc. | 2,300 | 145 | ||||||
Ruby Tuesday, Inc. (Æ)(Ñ) | 26,896 | 351 | ||||||
Scholastic Corp. | 5,400 | 160 | ||||||
Shoe Carnival, Inc. (Æ)(Ñ) | 1,400 | 38 | ||||||
Standard Motor Products, Inc. (Ñ) | 24,000 | 328 | ||||||
Stein Mart, Inc. (Ñ) | 1,000 | 9 | ||||||
Steven Madden, Ltd. (Æ)(Ñ) | 19,326 | 807 | ||||||
Stewart Enterprises, Inc. Class A (Ñ) | 53,800 | 360 | ||||||
Superior Industries International, Inc. (Ñ) | 30,025 | 637 | ||||||
Systemax, Inc. (Æ)(Ñ) | 1,700 | 24 | ||||||
Tempur-Pedic International, Inc. (Æ)(Ñ) | 9,004 | 361 | ||||||
Texas Roadhouse, Inc. Class A (Æ)(Ñ) | 33,180 | 570 | ||||||
TRW Automotive Holdings Corp. (Æ)(Ñ) | 11,300 | 596 | ||||||
Urban Outfitters, Inc. (Æ)(Ñ) | 1,247 | 45 | ||||||
Warnaco Group, Inc. (The) (Æ)(Ñ) | 6,396 | 352 | ||||||
Wendy’s/Arby’s Group, Inc. Class A | 51,100 | 236 | ||||||
WESCO International, Inc. (Æ)(Ñ) | 500 | 26 | ||||||
Wet Seal, Inc. (The) Class A (Æ)(Ñ) | 19,900 | 74 | ||||||
Williams-Sonoma, Inc. (Ñ) | 12,220 | 436 | ||||||
WMS Industries, Inc. (Æ)(Ñ) | 5,719 | 259 | ||||||
Wolverine World Wide, Inc. (Ñ) | 16,820 | 536 | ||||||
Wyndham Worldwide Corp. | 20,000 | 599 | ||||||
| 23,307 | ||||||||
| Consumer Staples - 2.2% | ||||||||
Andersons, Inc. (The) (Ñ) | 5,388 | 196 | ||||||
Constellation Brands, Inc. Class A (Æ)(Ñ) | 37,800 | 837 | ||||||
Corn Products International, Inc. (Ñ) | 25,500 | 1,173 | ||||||
Energizer Holdings, Inc. (Æ) | 5,500 | 401 | ||||||
Hansen Natural Corp. (Æ) | 3,200 | 167 | ||||||
Nash Finch Co. (Ñ) | 1,500 | 64 | ||||||
Omega Protein Corp. (Æ)(Ñ) | 1,300 | 11 | ||||||
Pilgrim’s Pride Corp. (Æ) | 1,300 | 9 | ||||||
Rite Aid Corp. (Æ) | 80,500 | 71 | ||||||
Sanderson Farms, Inc. (Ñ) | 6,100 | 239 | ||||||
Spartan Stores, Inc. (Ñ) | 4,600 | 78 | ||||||
Susser Holdings Corp. (Æ) | 900 | 12 | ||||||
Tootsie Roll Industries, Inc. | 8,600 | 249 | ||||||
TreeHouse Foods, Inc. (Æ)(Ñ) | 6,980 | 357 | ||||||
Tyson Foods, Inc. Class A | 22,109 | 381 | ||||||
| 4,245 | ||||||||
| Energy - 5.1% | ||||||||
Alpha Natural Resources, Inc. (Æ) | 9,108 | 546 | ||||||
Bronco Drilling Co., Inc. (Æ) | 3,700 | 30 | ||||||
Complete Production Services, Inc. (Æ)(Ñ) | 8,675 | 256 | ||||||
Comstock Resources, Inc. (Æ)(Ñ) | 8,862 | 218 | ||||||
Core Laboratories NV | 4,867 | 433 | ||||||
CVR Energy, Inc. (Æ) | 6,900 | 105 | ||||||
Dawson Geophysical Co. (Æ)(Ñ) | 1,300 | 41 | ||||||
Exterran Holdings, Inc. (Æ) | 9,876 | 237 | ||||||
Forest Oil Corp. (Æ)(Ñ) | 10,619 | 403 | ||||||
| 26 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Global Industries, Ltd. (Æ)(Ñ) | 27,998 | 194 | ||||||
Gulf Island Fabrication, Inc. | 2,200 | 62 | ||||||
Helix Energy Solutions Group, Inc. (Æ)(Ñ) | 14,024 | 170 | ||||||
Helmerich & Payne, Inc. (Ñ) | 9,404 | 456 | ||||||
Oil States International, Inc. (Æ) | 8,600 | 551 | ||||||
Parker Drilling Co. (Æ) | 2,500 | 11 | ||||||
Patterson-UTI Energy, Inc. | 31,046 | 669 | ||||||
Penn Virginia Corp. (Ñ) | 29,300 | 493 | ||||||
Pioneer Natural Resources Co. (Ñ) | 3,450 | 300 | ||||||
Precision Drilling Corp. (Æ) | 28,161 | 273 | ||||||
Rosetta Resources, Inc. (Æ)(Ñ) | 15,190 | 571 | ||||||
Rowan Cos., Inc. (Æ)(Ñ) | 14,881 | 520 | ||||||
SEACOR Holdings, Inc. (Ñ) | 4,800 | 486 | ||||||
Sunoco, Inc. | 15,887 | 641 | ||||||
Tesoro Corp. (Æ)(Ñ) | 21,600 | 400 | ||||||
Tetra Technologies, Inc. (Æ)(Ñ) | 19,655 | 233 | ||||||
Thompson Creek Metals Co., Inc. - | 15,532 | 229 | ||||||
Unit Corp. (Æ)(Ñ) | 8,681 | 404 | ||||||
USEC, Inc. (Æ)(Ñ) | 21,700 | 131 | ||||||
Walter Energy, Inc. Class A | 5,015 | 640 | ||||||
Western Refining, Inc. (Æ) | 9,924 | 105 | ||||||
| 9,808 | ||||||||
| Financial Services - 17.1% | ||||||||
Advance America Cash Advance Centers, Inc. (Ñ) | 3,100 | 17 | ||||||
Affiliated Managers Group, Inc. (Æ)(Ñ) | 13,723 | 1,362 | ||||||
Allied World Assurance Co. Holdings, Ltd. | 2,000 | 119 | ||||||
American Capital Agency Corp. (Ñ)(ö) | 23,900 | 687 | ||||||
American Financial Group, Inc. | 11,400 | 368 | ||||||
American National Insurance Co. | 700 | 60 | ||||||
American Safety Insurance Holdings, | 1,400 | 30 | ||||||
Ameriprise Financial, Inc. | 5,324 | 306 | ||||||
Amtrust Financial Services, Inc. (Ñ) | 3,000 | 53 | ||||||
Apollo Commercial Real Estate Finance, Inc. (Ñ)(ö) | 4,000 | 65 | ||||||
Ares Capital Corp. | 53,980 | 890 | ||||||
Argo Group International Holdings, Ltd. | 3,800 | 142 | ||||||
Ashford Hospitality Trust, Inc. (Æ)(Ñ)(ö) | 10,300 | 99 | ||||||
Aspen Insurance Holdings, Ltd. (Ñ) | 6,300 | 180 | ||||||
Assurant, Inc. (Ñ) | 4,300 | 166 | ||||||
Astoria Financial Corp. | 7,200 | 100 | ||||||
Axis Capital Holdings, Ltd. | 1,100 | 39 | ||||||
BancorpSouth, Inc. (Ñ) | 16,800 | 268 | ||||||
BioMed Realty Trust, Inc. (Ñ)(ö) | 18,883 | 352 | ||||||
BOK Financial Corp. (Ñ) | 13,590 | 727 | ||||||
Boston Private Financial Holdings, Inc. (Ñ) | 47,121 | 309 | ||||||
Brandywine Realty Trust (Ñ)(ö) | 15,000 | 175 | ||||||
Broadridge Financial Solutions, Inc. (Ñ) | 2,700 | 59 | ||||||
Brookline Bancorp, Inc. (Ñ) | 30,900 | 335 | ||||||
Camden Property Trust (ö) | 4,700 | 254 | ||||||
Capitol Federal Financial, Inc. (Ñ) | 27,591 | 329 | ||||||
CapLease, Inc. (Ñ)(ö) | 1,100 | 6 | ||||||
Chesapeake Lodging Trust (Ñ)(ö) | 1,200 | 23 | ||||||
City National Corp. (Ñ) | 5,900 | 362 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Cogdell Spencer, Inc. (Ñ)(ö) | 6,000 | 35 | ||||||
Cohen & Steers, Inc. (Ñ) | 3,400 | 89 | ||||||
Colonial Properties Trust (ö) | 39,162 | 707 | ||||||
CommonWealth REIT (Ñ)(ö) | 12,675 | 323 | ||||||
Community Bank System, Inc. | 13,700 | 380 | ||||||
Community Trust Bancorp, Inc. (Ñ) | 1,000 | 29 | ||||||
CoreLogic, Inc. (Æ) | 13,600 | 252 | ||||||
Cousins Properties, Inc. (Ñ)(ö) | 18,869 | 157 | ||||||
DiamondRock Hospitality Co. (Æ)(Ñ)(ö) | 41,769 | 502 | ||||||
Dime Community Bancshares, Inc. (Ñ) | 8,700 | 127 | ||||||
Duff & Phelps Corp. Class A (Ñ) | 30,800 | 519 | ||||||
Dynex Capital, Inc. (Ñ)(ö) | 28,000 | 306 | ||||||
Education Realty Trust, Inc. (ö) | 9,600 | 75 | ||||||
Endurance Specialty Holdings, Ltd. (Ñ) | 6,600 | 304 | ||||||
Ezcorp, Inc. Class A (Æ) | 24,774 | 672 | ||||||
FBL Financial Group, Inc. Class A (Ñ) | 1,800 | 52 | ||||||
Fidelity National Financial, Inc. Class A (Ñ) | 26,100 | 357 | ||||||
First Financial Bancorp (Ñ) | 7,200 | 133 | ||||||
First Interstate Bancsystem, Inc. | 1,100 | 17 | ||||||
First Midwest Bancorp, Inc. (Ñ) | 11,900 | 137 | ||||||
First Potomac Realty Trust (Ñ)(ö) | 4,400 | 74 | ||||||
FirstMerit Corp. (Ñ) | 13,400 | 265 | ||||||
Flagstone Reinsurance Holdings SA (Ñ) | 23,800 | 300 | ||||||
Flushing Financial Corp. (Ñ) | 2,500 | 35 | ||||||
FPIC Insurance Group, Inc. (Æ) | 900 | 33 | ||||||
Franklin Street Properties Corp. (Ñ)(ö) | 22,243 | 317 | ||||||
Fulton Financial Corp. (Ñ) | 30,900 | 320 | ||||||
Glacier Bancorp, Inc. (Ñ) | 8,800 | 133 | ||||||
Global Cash Access Holdings, Inc. (Æ) | 2,400 | 8 | ||||||
Global Indemnity PLC Class A (Æ) | 1,200 | 25 | ||||||
Hancock Holding Co. (Ñ) | 9,701 | 338 | ||||||
Hanmi Financial Corp. (Æ) | 16,400 | 19 | ||||||
Hatteras Financial Corp. (Ñ)(ö) | 7,700 | 233 | ||||||
HCC Insurance Holdings, Inc. | 12,400 | 359 | ||||||
Healthcare Realty Trust, Inc. (ö) | 9,700 | 205 | ||||||
Hercules Technology Growth Capital, Inc. (Ñ) | 3,900 | 40 | ||||||
Hersha Hospitality Trust Class A (ö) | 11,300 | 75 | ||||||
Hilltop Holdings, Inc. (Æ) | 600 | 6 | ||||||
Home Bancshares, Inc. | 2,750 | 61 | ||||||
Horace Mann Educators Corp. | 7,600 | 137 | ||||||
Hospitality Properties Trust (Ñ)(ö) | 23,043 | 531 | ||||||
Huntington Bancshares, Inc. | 15,000 | 103 | ||||||
Iberiabank Corp. (Ñ) | 600 | 35 | ||||||
Infinity Property & Casualty Corp. | 1,100 | 68 | ||||||
IntercontinentalExchange, Inc. (Æ)(Ñ) | 2,817 | 336 | ||||||
Invesco Mortgage Capital, Inc. (Ñ)(ö) | 27,000 | 590 | ||||||
Investment Technology Group, Inc. (Æ) | 1,900 | 31 | ||||||
JER Investors Trust, Inc. (Æ)(Þ) | 1,771 | — | ||||||
Jones Lang LaSalle, Inc. | 3,200 | 269 | ||||||
Knight Capital Group, Inc. Class A (Æ)(Ñ) | 19,093 | 263 | ||||||
Kohlberg Capital Corp. (Ñ) | 2,800 | 20 | ||||||
LaSalle Hotel Properties (Ñ)(ö) | 12,977 | 342 | ||||||
Lazard, Ltd. Class A | 29,191 | 1,153 | ||||||
Liberty Property Trust (ö) | 11,100 | 354 | ||||||
Mack-Cali Realty Corp. (Ñ)(ö) | 10,200 | 337 | ||||||
| Aggressive Equity Fund | 27 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Maiden Holdings, Ltd. (Ñ) | 4,500 | 35 | ||||||
MCG Capital Corp. | 8,900 | 62 | ||||||
Meadowbrook Insurance Group, Inc. | 7,785 | 80 | ||||||
Medical Properties Trust, Inc. (Ñ)(ö) | 18,400 | 199 | ||||||
MFA Financial, Inc. (Ñ)(ö) | 38,300 | 313 | ||||||
Montpelier Re Holdings, Ltd. (Ñ) | 15,800 | 315 | ||||||
MSCI, Inc. Class A (Æ)(Ñ) | 9,014 | 351 | ||||||
Nelnet, Inc. Class A | 8,800 | 208 | ||||||
Newcastle Investment Corp. (Æ)(ö) | 3,600 | 24 | ||||||
OceanFirst Financial Corp. | 1,700 | 22 | ||||||
Old National Bancorp (Ñ) | 19,951 | 237 | ||||||
OneBeacon Insurance Group, Ltd. | 2,800 | 42 | ||||||
Oritani Financial Corp. (Ñ) | 13,900 | 170 | ||||||
Parkway Properties, Inc. (Ñ)(ö) | 1,900 | 33 | ||||||
PennantPark Investment Corp. (Ñ) | 27,758 | 340 | ||||||
Phoenix Cos., Inc. (The) (Æ)(Ñ) | 16,800 | 43 | ||||||
Piedmont Office Realty Trust, Inc. | 8,900 | 179 | ||||||
Piper Jaffray Cos. (Æ) | 8,238 | 288 | ||||||
Post Properties, Inc. (Ñ)(ö) | 7,300 | 265 | ||||||
Potlatch Corp. (Ñ)(ö) | 12,500 | 407 | ||||||
Prosperity Bancshares, Inc. (Ñ) | 26,780 | 1,053 | ||||||
Protective Life Corp. (Ñ) | 11,600 | 309 | ||||||
PS Business Parks, Inc. (ö) | 2,300 | 128 | ||||||
Raymond James Financial, Inc. (Ñ) | 10,497 | 343 | ||||||
Reinsurance Group of America, Inc. | 5,500 | 295 | ||||||
Republic Bancorp, Inc. Class A | 1,100 | 26 | ||||||
Resource Capital Corp. (Ñ)(ö) | 44,713 | 330 | ||||||
Retail Opportunity Investments Corp. (Ñ)(ö) | 2,800 | 28 | ||||||
Sandy Spring Bancorp, Inc. (Ñ) | 1,200 | 22 | ||||||
SeaBright Holdings, Inc. (Ñ) | 2,000 | 18 | ||||||
Selective Insurance Group, Inc. (Ñ) | 22,300 | 405 | ||||||
Signature Bank NY (Æ)(Ñ) | 5,950 | 298 | ||||||
SL Green Realty Corp. (Ñ)(ö) | 4,700 | 317 | ||||||
Southwest Bancorp, Inc. (Æ)(Ñ) | 1,700 | 21 | ||||||
Sovran Self Storage, Inc. (ö) | 2,200 | 81 | ||||||
StanCorp Financial Group, Inc. (Ñ) | 4,500 | 203 | ||||||
StellarOne Corp. (Ñ) | 19,587 | 285 | ||||||
Sterling Bancorp Class N (Ñ) | 10,700 | 112 | ||||||
Sterling Bancshares, Inc. (Ñ) | 37,200 | 261 | ||||||
Strategic Hotels & Resorts, Inc. (Æ)(ö) | 10,100 | 53 | ||||||
Susquehanna Bancshares, Inc. (Ñ) | 22,100 | 214 | ||||||
SVB Financial Group (Æ)(Ñ) | 5,270 | 280 | ||||||
Symetra Financial Corp. | 30,000 | 411 | ||||||
Texas Capital Bancshares, Inc. (Æ)(Ñ) | 12,619 | 268 | ||||||
TICC Capital Corp. (Ñ) | 32,000 | 359 | ||||||
Transatlantic Holdings, Inc. | 6,700 | 346 | ||||||
Trustmark Corp. (Ñ) | 13,200 | 328 | ||||||
UMB Financial Corp. (Ñ) | 8,800 | 364 | ||||||
United Financial Bancorp, Inc. (Ñ) | 1,500 | 23 | ||||||
Unitrin, Inc. | 4,800 | 118 | ||||||
Washington Federal, Inc. (Ñ) | 45,226 | 765 | ||||||
Webster Financial Corp. | 12,100 | 238 | ||||||
West Coast Bancorp (Æ) | 3,900 | 11 | ||||||
White Mountains Insurance Group, Ltd. (Ñ) | 400 | 134 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Whitney Holding Corp. (Ñ) | 12,604 | 178 | ||||||
| 32,708 | ||||||||
| Health Care - 10.1% | ||||||||
Affymetrix, Inc. (Æ)(Ñ) | 23,800 | 120 | ||||||
Albany Molecular Research, Inc. (Æ)(Ñ) | 24,017 | 135 | ||||||
Allscripts Healthcare Solutions, Inc. (Æ) | 28,546 | 550 | ||||||
Amedisys, Inc. (Æ) | 6,968 | 233 | ||||||
American Oriental Bioengineering, Inc. (Æ)(Ñ) | 5,000 | 12 | ||||||
AMERIGROUP Corp. Class A (Æ) | 4,400 | 193 | ||||||
Analogic Corp. (Ñ) | 8,394 | 415 | ||||||
Angiodynamics, Inc. (Æ) | 2,700 | 41 | ||||||
Brookdale Senior Living, Inc. (Æ)(Ñ) | 20,369 | 436 | ||||||
Catalyst Health Solutions, Inc. (Æ)(Ñ) | 18,288 | 851 | ||||||
Celera Corp. (Æ) | 5,500 | 35 | ||||||
Centene Corp. (Æ)(Ñ) | 3,400 | 86 | ||||||
Conmed Corp. (Æ)(Ñ) | 8,966 | 237 | ||||||
Cooper Cos., Inc. (The) | 6,584 | 371 | ||||||
Coventry Health Care, Inc. (Æ) | 17,100 | 451 | ||||||
Cross Country Healthcare, Inc. (Æ) | 2,800 | 24 | ||||||
Cynosure, Inc. Class A (Æ)(Ñ) | 16,320 | 166 | ||||||
Emergency Medical Services Corp. | 14,011 | 906 | ||||||
Endo Pharmaceuticals Holdings, Inc. (Æ) | 13,100 | 468 | ||||||
Ensign Group, Inc. (The) (Ñ) | 3,800 | 95 | ||||||
Five Star Quality Care, Inc. (Æ)(Ñ) | 38,300 | 271 | ||||||
Gentiva Health Services, Inc. (Æ) | 11,316 | 301 | ||||||
Greatbatch, Inc. (Æ)(Ñ) | 8,836 | 213 | ||||||
Harvard Bioscience, Inc. (Æ)(Ñ) | 39,716 | 162 | ||||||
Health Management Associates, Inc. Class A (Æ) | 46,126 | 440 | ||||||
Health Net, Inc. (Æ) | 30,800 | 840 | ||||||
Healthsouth Corp. (Æ)(Ñ) | 11,697 | 242 | ||||||
Healthspring, Inc. (Æ) | 21,655 | 575 | ||||||
Healthways, Inc. (Æ)(Ñ) | 1,500 | 17 | ||||||
HMS Holdings Corp. (Æ) | 10,450 | 676 | ||||||
Hologic, Inc. (Æ)(Ñ) | 23,400 | 440 | ||||||
Humana, Inc. (Æ)(Ñ) | 6,900 | 378 | ||||||
IDEXX Laboratories, Inc. (Æ)(Ñ) | 5,858 | 405 | ||||||
Illumina, Inc. (Æ)(Ñ) | 7,436 | 471 | ||||||
Impax Laboratories, Inc. (Æ) | 5,000 | 101 | ||||||
Kindred Healthcare, Inc. (Æ)(Ñ) | 16,548 | 304 | ||||||
LifePoint Hospitals, Inc. (Æ)(Ñ) | 5,300 | 195 | ||||||
Magellan Health Services, Inc. (Æ) | 7,930 | 375 | ||||||
Medicines Co. (The) (Æ)(Ñ) | 10,300 | 146 | ||||||
Mednax, Inc. (Æ)(Ñ) | 5,884 | 396 | ||||||
Meridian Bioscience, Inc. (Ñ) | 9,100 | 211 | ||||||
Molina Healthcare, Inc. (Æ)(Ñ) | 9,700 | 270 | ||||||
Palomar Medical Technologies, Inc. (Æ)(Ñ) | 2,300 | 33 | ||||||
Par Pharmaceutical Cos., Inc. (Æ)(Ñ) | 25,400 | 977 | ||||||
PerkinElmer, Inc. (Ñ) | 8,968 | 232 | ||||||
Quality Systems, Inc. (Ñ) | 6,030 | 421 | ||||||
Salix Pharmaceuticals, Ltd. (Æ)(Ñ) | 7,747 | 364 | ||||||
SuperGen, Inc. (Æ)(Ñ) | 4,200 | 11 | ||||||
SXC Health Solutions Corp. (Æ) | 26,680 | 1,143 | ||||||
Symmetry Medical, Inc. (Æ)(Ñ) | 16,118 | 150 | ||||||
| 28 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Teleflex, Inc. (Ñ) | 2,200 | 118 | ||||||
TomoTherapy, Inc. (Æ)(Ñ) | 3,400 | 12 | ||||||
Triple-S Management Corp. Class B (Æ) | 2,400 | 46 | ||||||
United Therapeutics Corp. (Æ)(Ñ) | 5,404 | 342 | ||||||
Universal American Corp. (Ñ) | 7,500 | 153 | ||||||
Viropharma, Inc. (Æ)(Ñ) | 26,100 | 452 | ||||||
Vital Images, Inc. (Æ) | 1,000 | 14 | ||||||
Warner Chilcott PLC Class A (Ñ) | 15,860 | 358 | ||||||
Watson Pharmaceuticals, Inc. Class B (Æ) | 6,100 | 315 | ||||||
West Pharmaceutical Services, Inc. (Ñ) | 14,600 | 602 | ||||||
Zoll Medical Corp. (Æ)(Ñ) | 9,710 | 362 | ||||||
| 19,359 | ||||||||
| Materials and Processing - 8.2% | ||||||||
A Schulman, Inc. (Ñ) | 20,500 | 469 | ||||||
Albemarle Corp. | 13,090 | 731 | ||||||
Apogee Enterprises, Inc. (Ñ) | 4,200 | 57 | ||||||
Arch Chemicals, Inc. (Ñ) | 7,500 | 284 | ||||||
Ashland, Inc. | 11,700 | 595 | ||||||
Ball Corp. | 10,800 | 736 | ||||||
Boise, Inc. (Ñ) | 7,900 | 63 | ||||||
Buckeye Technologies, Inc. | 21,187 | 445 | ||||||
Cabot Corp. | 11,310 | 425 | ||||||
Comfort Systems USA, Inc. (Ñ) | 9,800 | 129 | ||||||
Commercial Metals Co. (Ñ) | 26,400 | 438 | ||||||
Cytec Industries, Inc. | 17,649 | 937 | ||||||
Domtar Corp. | 2,600 | 197 | ||||||
Fastenal Co. (Ñ) | 5,834 | 350 | ||||||
Ferro Corp. (Æ)(Ñ) | 19,478 | 285 | ||||||
HB Fuller Co. | 17,400 | 357 | ||||||
Horsehead Holding Corp. (Æ)(Ñ) | 17,654 | 230 | ||||||
Huntsman Corp. | 19,500 | 304 | ||||||
Interline Brands, Inc. (Æ) | 20,300 | 462 | ||||||
Kaiser Aluminum Corp. (Ñ) | 6,150 | 308 | ||||||
KapStone Paper and Packaging | 25,400 | 389 | ||||||
Kaydon Corp. (Ñ) | 7,600 | 309 | ||||||
Kronos Worldwide, Inc. (Æ)(Ñ) | 1,000 | 42 | ||||||
Lexicon Pharmaceuticals, Inc. (Æ)(Ñ) | 22,800 | 33 | ||||||
MeadWestvaco Corp. (Ñ) | 2,500 | 65 | ||||||
Minerals Technologies, Inc. | 3,900 | 255 | ||||||
Mueller Water Products, Inc. Class A (Ñ) | 54,900 | 229 | ||||||
Neenah Paper, Inc. (Ñ) | 1,800 | 35 | ||||||
OM Group, Inc. (Æ) | 13,634 | 525 | ||||||
Owens & Minor, Inc. (Ñ) | 11,000 | 324 | ||||||
Packaging Corp. of America | 13,900 | 359 | ||||||
Pan American Silver Corp. | 5,268 | 217 | ||||||
PolyOne Corp. (Æ) | 12,800 | 160 | ||||||
Polypore International, Inc. (Æ)(Ñ) | 6,711 | 273 | ||||||
Reliance Steel & Aluminum Co. (Ñ) | 7,800 | 399 | ||||||
RTI International Metals, Inc. (Æ) | 7,474 | 202 | ||||||
Scotts Miracle-Gro Co. (The) Class A (Ñ) | 6,192 | 314 | ||||||
ShengdaTech, Inc. (Æ)(Ñ) | 3,100 | 15 | ||||||
Simpson Manufacturing Co., Inc. (Ñ) | 1,300 | 40 | ||||||
Timken Co. | 16,600 | 793 | ||||||
Titanium Metals Corp. (Æ)(Ñ) | 20,630 | 354 | ||||||
TPC Group, Inc. (Æ)(Ñ) | 26,790 | 813 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Universal Forest Products, Inc. (Ñ) | 10,250 | 399 | ||||||
Valspar Corp. | 10,600 | 365 | ||||||
Watsco, Inc. | 5,002 | 316 | ||||||
WR Grace & Co. (Æ)(Ñ) | 19,048 | 669 | ||||||
| 15,696 | ||||||||
| Producer Durables - 20.7% | ||||||||
ABM Industries, Inc. (Ñ) | 16,800 | 442 | ||||||
Actuant Corp. Class A (Ñ) | 13,309 | 354 | ||||||
Advanced Battery Technologies, Inc. (Æ)(Ñ) | 3,800 | 15 | ||||||
Aecom Technology Corp. (Æ)(Ñ) | 10,300 | 288 | ||||||
AGCO Corp. (Æ)(Ñ) | 12,139 | 615 | ||||||
Aircastle, Ltd. (Ñ) | 38,200 | 399 | ||||||
Alaska Air Group, Inc. (Æ) | 12,800 | 727 | ||||||
Alexander & Baldwin, Inc. (Ñ) | 12,717 | 509 | ||||||
AO Smith Corp. | 8,400 | 320 | ||||||
Applied Industrial Technologies, Inc. | 19,900 | 647 | ||||||
Arkansas Best Corp. (Ñ) | 2,700 | 74 | ||||||
Astec Industries, Inc. (Æ)(Ñ) | 6,703 | 217 | ||||||
Atlas Air Worldwide Holdings, Inc. (Æ)(Ñ) | 3,500 | 195 | ||||||
Avery Dennison Corp. (Ñ) | 2,100 | 89 | ||||||
Barnes Group, Inc. (Ñ) | 12,500 | 258 | ||||||
BE Aerospace, Inc. (Æ) | 28,550 | 1,058 | ||||||
Booz Allen Hamilton Holding Corp. | 12,867 | 250 | ||||||
Brady Corp. Class A (Ñ) | 12,500 | 408 | ||||||
Briggs & Stratton Corp. (Ñ) | 24,900 | 490 | ||||||
CAI International, Inc. (Æ)(Ñ) | 12,923 | 253 | ||||||
Carlisle Cos., Inc. (Ñ) | 9,400 | 374 | ||||||
Celadon Group, Inc. (Æ) | 2,300 | 34 | ||||||
Ceradyne, Inc. (Æ) | 9,059 | 286 | ||||||
Chart Industries, Inc. (Æ)(Ñ) | 13,756 | 465 | ||||||
Compass Diversified Holdings | 15,700 | 278 | ||||||
Consolidated Graphics, Inc. (Æ) | 2,380 | 115 | ||||||
Convergys Corp. (Æ)(Ñ) | 1,700 | 22 | ||||||
Con-way, Inc. (Ñ) | 8,600 | 315 | ||||||
CRA International, Inc. (Æ)(Ñ) | 1,100 | 26 | ||||||
Crane Co. | 8,300 | 341 | ||||||
Cubic Corp. | 4,100 | 193 | ||||||
Curtiss-Wright Corp. (Ñ) | 16,100 | 535 | ||||||
DHT Holdings, Inc. | 3,300 | 15 | ||||||
Diana Shipping, Inc. (Æ)(Ñ) | 17,932 | 216 | ||||||
Ducommun, Inc. | 1,800 | 39 | ||||||
Dycom Industries, Inc. (Æ) | 2,500 | 37 | ||||||
Electro Rent Corp. | 5,474 | 88 | ||||||
Electronics for Imaging, Inc. (Æ)(Ñ) | 4,952 | 71 | ||||||
EMCOR Group, Inc. (Æ) | 5,300 | 154 | ||||||
EnerSys (Æ) | 17,790 | 571 | ||||||
Ennis, Inc. (Ñ) | 1,600 | 27 | ||||||
EnPro Industries, Inc. (Æ)(Ñ) | 8,186 | 340 | ||||||
Esterline Technologies Corp. (Æ) | 8,800 | 604 | ||||||
Excel Maritime Carriers, Ltd. | 11,100 | 62 | ||||||
Forward Air Corp. (Ñ) | 7,800 | 221 | ||||||
G&K Services, Inc. Class A (Ñ) | 10,400 | 321 | ||||||
Genesee & Wyoming, Inc. Class A (Æ)(Ñ) | 9,022 | 478 | ||||||
GrafTech International, Ltd. (Æ) | 13,259 | 263 | ||||||
| Aggressive Equity Fund | 29 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Granite Construction, Inc. (Ñ) | 13,700 | 376 | ||||||
Greenbrier Cos., Inc. (Æ)(Ñ) | 10,000 | 210 | ||||||
Group 1 Automotive, Inc. (Ñ) | 7,020 | 293 | ||||||
Gulfmark Offshore, Inc. Class A (Æ) | 4,000 | 122 | ||||||
Harsco Corp. (Ñ) | 18,100 | 512 | ||||||
Haynes International, Inc. (Ñ) | 700 | 29 | ||||||
HUB Group, Inc. Class A (Æ) | 8,709 | 306 | ||||||
Insituform Technologies, Inc. | 6,542 | 173 | ||||||
JB Hunt Transport Services, Inc. | 12,570 | 513 | ||||||
Joy Global, Inc. | 14,835 | 1,287 | ||||||
Kansas City Southern (Æ) | 3,700 | 177 | ||||||
KBR, Inc. | 58,528 | 1,784 | ||||||
Kelly Services, Inc. Class A (Æ)(Ñ) | 4,400 | 83 | ||||||
Kennametal, Inc. (Ñ) | 17,876 | 705 | ||||||
Knight Transportation, Inc. (Ñ) | 34,875 | 662 | ||||||
Layne Christensen Co. (Æ)(Ñ) | 9,305 | 320 | ||||||
Lexmark International, Inc. Class A (Æ) | 10,500 | 366 | ||||||
Littelfuse, Inc. | 3,200 | 151 | ||||||
LMI Aerospace, Inc. (Æ)(Ñ) | 1,400 | 22 | ||||||
M&F Worldwide Corp. (Æ)(Ñ) | 3,600 | 83 | ||||||
Manpower, Inc. (Ñ) | 6,347 | 398 | ||||||
MAXIMUS, Inc. | 8,500 | 557 | ||||||
McDermott International, Inc. (Æ)(Ñ) | 51,377 | 1,063 | ||||||
Michael Baker Corp. (Æ)(Ñ) | 300 | 9 | ||||||
Miller Industries, Inc. (Ñ) | 1,300 | 18 | ||||||
MSC Industrial Direct Co. Class A | 7,115 | 460 | ||||||
NACCO Industries, Inc. Class A | 800 | 87 | ||||||
Nalco Holding Co. (Ñ) | 12,121 | 387 | ||||||
National Instruments Corp. (Ñ) | 9,329 | 351 | ||||||
Navistar International Corp. (Æ)(Ñ) | 13,820 | 800 | ||||||
Ness Technologies, Inc. (Æ) | 4,100 | 24 | ||||||
Oshkosh Corp. (Æ)(Ñ) | 18,000 | 635 | ||||||
OSI Systems, Inc. (Æ)(Ñ) | 5,632 | 205 | ||||||
Railamerica, Inc. (Æ)(Ñ) | 4,900 | 63 | ||||||
Resources Connection, Inc. (Ñ) | 17,300 | 322 | ||||||
Robbins & Myers, Inc. (Ñ) | 16,462 | 589 | ||||||
Robert Half International, Inc. (Ñ) | 11,767 | 360 | ||||||
Roper Industries, Inc. (Ñ) | 10,296 | 787 | ||||||
RR Donnelley & Sons Co. | 17,000 | 297 | ||||||
RSC Holdings, Inc. (Æ)(Ñ) | 10,900 | 106 | ||||||
Ryder System, Inc. | 9,300 | 490 | ||||||
Saia, Inc. (Æ)(Ñ) | 2,100 | 35 | ||||||
Sensata Technologies Holding NV (Æ) | 15,256 | 459 | ||||||
SFN Group, Inc. (Æ)(Ñ) | 6,800 | 66 | ||||||
Shaw Group, Inc. (The)(Æ) | 8,200 | 281 | ||||||
Sims Metal Management, Ltd. - ADR | 8,204 | 179 | ||||||
Skywest, Inc. (Ñ) | 27,700 | 433 | ||||||
Snyders-Lance, Inc. (Ñ) | 13,000 | 305 | ||||||
Southwest Airlines Co. | 15,879 | 206 | ||||||
Spirit Aerosystems Holdings, Inc. | 9,900 | 206 | ||||||
Steelcase, Inc. Class A (Ñ) | 16,100 | 170 | ||||||
TAL International Group, Inc. (Ñ) | 10,000 | 309 | ||||||
Tecumseh Products Co. Class A (Æ) | 1,900 | 25 | ||||||
Teekay Corp. (Ñ) | 6,000 | 198 | ||||||
Teledyne Technologies, Inc. (Æ) | 9,100 | 400 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
TeleTech Holdings, Inc. (Æ) | 1,500 | 31 | ||||||
Textainer Group Holdings, Ltd. (Ñ) | 14,073 | 401 | ||||||
TransDigm Group, Inc. (Æ) | 5,360 | 386 | ||||||
Trimas Corp. (Æ) | 4,600 | 94 | ||||||
Trimble Navigation, Ltd. (Æ) | 11,227 | 448 | ||||||
Trinity Industries, Inc. (Ñ) | 14,600 | 389 | ||||||
Triumph Group, Inc. (Ñ) | 10,520 | 942 | ||||||
Tsakos Energy Navigation, Ltd. (Ñ) | 31,200 | 312 | ||||||
Tutor Perini Corp. | 8,600 | 184 | ||||||
Unifirst Corp. | 1,500 | 83 | ||||||
Unisys Corp. (Æ) | 2,600 | 67 | ||||||
URS Corp. (Æ) | 23,950 | 996 | ||||||
UTi Worldwide, Inc. | 22,940 | 486 | ||||||
Wabtec Corp. (Ñ) | 9,140 | 483 | ||||||
Watts Water Technologies, Inc. Class A (Ñ) | 4,800 | 176 | ||||||
Werner Enterprises, Inc. (Ñ) | 10,000 | 226 | ||||||
Woodward Governor Co. (Ñ) | 10,529 | 395 | ||||||
| 39,652 | ||||||||
| Technology - 14.6% | ||||||||
ADTRAN, Inc. (Ñ) | 14,123 | 511 | ||||||
Advanced Analogic Technologies, Inc. (Æ) | 600 | 2 | ||||||
Amdocs, Ltd. (Æ) | 3,700 | 102 | ||||||
American Reprographics Co. (Æ)(Ñ) | 5,000 | 38 | ||||||
Amkor Technology, Inc. (Æ)(Ñ) | 21,300 | 157 | ||||||
Amphenol Corp. Class A (Ñ) | 14,793 | 782 | ||||||
Anadigics, Inc. (Æ)(Ñ) | 4,800 | 33 | ||||||
Ansys, Inc. (Æ) | 10,777 | 562 | ||||||
Arris Group, Inc. (Æ) | 5,900 | 66 | ||||||
Aruba Networks, Inc. (Æ)(Ñ) | 11,081 | 231 | ||||||
Atmel Corp. (Æ) | 45,909 | 567 | ||||||
Avago Technologies, Ltd. | 11,168 | 318 | ||||||
Aviat Networks, Inc. (Æ) | 7,900 | 40 | ||||||
Avid Technology, Inc. (Æ) | 600 | 10 | ||||||
AVX Corp. | 18,100 | 279 | ||||||
Axcelis Technologies, Inc. (Æ)(Ñ) | 6,300 | 22 | ||||||
Benchmark Electronics, Inc. (Æ)(Ñ) | 8,000 | 145 | ||||||
Black Box Corp. (Ñ) | 3,000 | 115 | ||||||
Brocade Communications Systems, Inc. (Æ) | 60,100 | 318 | ||||||
Cogo Group, Inc. (Æ) | 900 | 8 | ||||||
Coherent, Inc. (Æ) | 13,133 | 592 | ||||||
Cohu, Inc. (Ñ) | 18,250 | 303 | ||||||
Concur Technologies, Inc. (Æ)(Ñ) | 8,200 | 426 | ||||||
CSG Systems International, Inc. (Æ)(Ñ) | 17,837 | 338 | ||||||
Cypress Semiconductor Corp. (Æ) | 25,253 | 469 | ||||||
Digi International, Inc. (Æ)(Ñ) | 2,000 | 22 | ||||||
Dolby Laboratories, Inc. Class A (Æ) | 6,930 | 462 | ||||||
DSP Group, Inc. (Æ) | 1,700 | 14 | ||||||
Earthlink, Inc. (Ñ) | 71,700 | 617 | ||||||
Electro Scientific Industries, Inc. (Æ) | 28,388 | 455 | ||||||
EMS Technologies, Inc. (Æ) | 1,900 | 38 | ||||||
Emulex Corp. (Æ) | 18,667 | 218 | ||||||
Entropic Communications, Inc. (Æ)(Ñ) | 26,090 | 315 | ||||||
Epicor Software Corp. (Æ) | 4,900 | 49 | ||||||
Equinix, Inc. (Æ)(Ñ) | 4,960 | 403 | ||||||
Exar Corp. (Æ)(Ñ) | 4,500 | 31 | ||||||
Extreme Networks (Æ)(Ñ) | 13,800 | 43 | ||||||
| 30 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
FEI Co. (Æ)(Ñ) | 1,000 | 26 | ||||||
Formfactor, Inc. (Æ)(Ñ) | 9,900 | 88 | ||||||
Global Crossing, Ltd. (Æ) | 1,500 | 19 | ||||||
Hittite Microwave Corp. (Æ) | 7,353 | 449 | ||||||
Hutchinson Technology, Inc. (Æ)(Ñ) | 1,100 | 4 | ||||||
IAC/InterActiveCorp (Æ)(Ñ) | 7,294 | 209 | ||||||
Imation Corp. (Æ)(Ñ) | 4,000 | 41 | ||||||
Informatica Corp. (Æ)(Ñ) | 16,077 | 708 | ||||||
Infospace, Inc. (Æ)(Ñ) | 3,800 | 32 | ||||||
Ingram Micro, Inc. Class A (Æ) | 18,300 | 349 | ||||||
Insight Enterprises, Inc. (Æ)(Ñ) | 2,000 | 26 | ||||||
Integrated Device Technology, Inc. (Æ) | 22,300 | 149 | ||||||
Integrated Silicon Solution, Inc. (Æ)(Ñ) | 3,000 | 24 | ||||||
Internap Network Services Corp. (Æ)(Ñ) | 15,082 | 92 | ||||||
International Rectifier Corp. (Æ)(Ñ) | 19,816 | 588 | ||||||
Intersil Corp. Class A (Ñ) | 28,900 | 441 | ||||||
Intevac, Inc. (Æ) | 1,600 | 22 | ||||||
Kemet Corp. (Æ) | 28,100 | 410 | ||||||
Kulicke & Soffa Industries, Inc. (Æ)(Ñ) | 14,100 | 102 | ||||||
Lam Research Corp. (Æ) | 8,428 | 436 | ||||||
Lattice Semiconductor Corp. (Æ)(Ñ) | 18,510 | 112 | ||||||
Lawson Software, Inc. (Æ) | 32,610 | 302 | ||||||
LSI Corp. (Æ) | 62,500 | 374 | ||||||
MEMC Electronic Materials, Inc. (Æ)(Ñ) | 14,426 | 162 | ||||||
Methode Electronics, Inc. (Ñ) | 22,900 | 297 | ||||||
MICROS Systems, Inc. (Æ) | 14,013 | 616 | ||||||
Microsemi Corp. (Æ) | 22,721 | 520 | ||||||
MIPS Technologies, Inc. Class A (Æ)(Ñ) | 33,450 | 507 | ||||||
Molex, Inc. (Ñ) | 16,400 | 373 | ||||||
Motricity, Inc. (Æ)(Ñ) | 21,071 | 391 | ||||||
Multi-Fineline Electronix, Inc. (Æ)(Ñ) | 8,746 | 232 | ||||||
Netlogic Microsystems, Inc. (Æ)(Ñ) | 8,241 | 259 | ||||||
NICE Systems, Ltd. - ADR (Æ) | 18,173 | 635 | ||||||
Novatel Wireless, Inc. (Æ) | 10,500 | 100 | ||||||
Novellus Systems, Inc. (Æ) | 22,800 | 738 | ||||||
Omnivision Technologies, Inc. (Æ)(Ñ) | 1,886 | 56 | ||||||
PMC - Sierra, Inc. (Æ) | 33,694 | 289 | ||||||
Polycom, Inc. (Æ)(Ñ) | 8,346 | 325 | ||||||
Powerwave Technologies, Inc. (Æ) | 26,000 | 66 | ||||||
Radisys Corp. (Æ)(Ñ) | 1,900 | 17 | ||||||
RealNetworks, Inc. (Æ)(Ñ) | 15,100 | 63 | ||||||
RightNow Technologies, Inc. (Æ) | 3,583 | 85 | ||||||
Rovi Corp. (Æ)(Ñ) | 14,940 | 927 | ||||||
Rudolph Technologies, Inc. (Æ)(Ñ) | 2,000 | 16 | ||||||
SBA Communications Corp. Class A (Æ)(Ñ) | 13,279 | 544 | ||||||
Seachange International, Inc. (Æ)(Ñ) | 4,400 | 38 | ||||||
Sigma Designs, Inc. (Æ)(Ñ) | 4,900 | 69 | ||||||
Silicon Graphics International Corp. (Æ) | 700 | 6 | ||||||
Silicon Image, Inc. (Æ) | 26,900 | 198 | ||||||
Skyworks Solutions, Inc. (Æ)(Ñ) | 24,060 | 689 | ||||||
Smith Micro Software, Inc. (Æ)(Ñ) | 17,328 | 273 | ||||||
Sourcefire, Inc. (Æ)(Ñ) | 19,390 | 503 | ||||||
Standard Microsystems Corp. (Æ)(Ñ) | 3,300 | 95 | ||||||
SuccessFactors, Inc. (Æ)(Ñ) | 27,401 | 793 | ||||||
Symmetricom, Inc. (Æ) | 3,000 | 21 | ||||||
Synchronoss Technologies, Inc. (Æ)(Ñ) | 12,190 | 326 | ||||||
SYNNEX Corp. (Æ)(Ñ) | 3,100 | 97 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Synopsys, Inc. (Æ)(Ñ) | 14,800 | 398 | ||||||
Taleo Corp. Class A (Æ)(Ñ) | 12,220 | 338 | ||||||
Tech Data Corp. (Æ) | 6,300 | 277 | ||||||
Tekelec (Æ) | 8,100 | 96 | ||||||
TeleCommunication Systems, Inc. | 6,500 | 30 | ||||||
Tellabs, Inc. | 35,500 | 241 | ||||||
Tier Technologies, Inc. Class B (Æ) | 21,377 | 128 | ||||||
Trident Microsystems, Inc. (Æ) | 7,800 | 14 | ||||||
TTM Technologies, Inc. (Æ)(Ñ) | 3,400 | 51 | ||||||
United Online, Inc. (Ñ) | 100,657 | 664 | ||||||
Varian Semiconductor Equipment Associates, Inc. (Æ) | 12,537 | 463 | ||||||
VeriFone Systems, Inc. (Æ)(Ñ) | 12,386 | 477 | ||||||
Verint Systems, Inc. (Æ) | 5,209 | 165 | ||||||
Vishay Intertechnology, Inc. (Æ)(Ñ) | 13,776 | 202 | ||||||
Zoran Corp. (Æ) | 5,300 | 47 | ||||||
| 28,021 | ||||||||
| Utilities - 5.2% | ||||||||
AGL Resources, Inc. | 11,400 | 408 | ||||||
Allete, Inc. (Ñ) | 12,000 | 447 | ||||||
Approach Resources, Inc. (Æ)(Ñ) | 24,487 | 567 | ||||||
Atmos Energy Corp. (Ñ) | 9,700 | 303 | ||||||
Black Hills Corp. (Ñ) | 13,100 | 393 | ||||||
California Water Service Group (Ñ) | 7,500 | 280 | ||||||
Central Vermont Public Service Corp. (Ñ) | 900 | 20 | ||||||
Chesapeake Utilities Corp. (Ñ) | 1,200 | 50 | ||||||
Clayton Williams Energy, Inc. (Æ)(Ñ) | 500 | 42 | ||||||
DPL, Inc. (Ñ) | 2,800 | 72 | ||||||
El Paso Electric Co. (Æ) | 31,700 | 873 | ||||||
Energen Corp. | 7,800 | 376 | ||||||
GenOn Energy, Inc. (Æ)(Ñ) | 7,654 | 29 | ||||||
Georesources, Inc. (Æ)(Ñ) | 2,000 | 44 | ||||||
Great Plains Energy, Inc. (Ñ) | 10,100 | 196 | ||||||
Idacorp, Inc. | 5,800 | 214 | ||||||
Integrys Energy Group, Inc. (Ñ) | 3,700 | 179 | ||||||
Laclede Group, Inc. (The)(Ñ) | 1,600 | 58 | ||||||
MDU Resources Group, Inc. | 11,600 | 235 | ||||||
NII Holdings, Inc. (Æ) | 9,406 | 420 | ||||||
NiSource, Inc. (Ñ) | 29,300 | 517 | ||||||
NorthWestern Corp. | 2,300 | 66 | ||||||
NV Energy, Inc. | 21,400 | 301 | ||||||
OGE Energy Corp. (Ñ) | 6,600 | 300 | ||||||
Ormat Technologies, Inc. (Ñ) | 11,900 | 352 | ||||||
Otter Tail Corp. (Ñ) | 15,200 | 343 | ||||||
Pinnacle West Capital Corp. | 8,400 | 348 | ||||||
PNM Resources, Inc. (Ñ) | 16,100 | 210 | ||||||
Portland General Electric Co. | 28,500 | 618 | ||||||
Questar Corp. (Ñ) | 3,200 | 56 | ||||||
Southern Union Co. | 3,600 | 87 | ||||||
Southwest Gas Corp. (Ñ) | 6,200 | 227 | ||||||
Telephone & Data Systems, Inc. (Ñ) | 5,800 | 212 | ||||||
UGI Corp. (Ñ) | 12,100 | 382 | ||||||
UIL Holdings Corp. (Ñ) | 5,600 | 168 | ||||||
US Cellular Corp. (Æ)(Ñ) | 2,300 | 115 | ||||||
USA Mobility, Inc. (Ñ) | 2,200 | 39 | ||||||
| Aggressive Equity Fund | 31 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Vaalco Energy, Inc. (Æ) | 7,900 | 57 | ||||||
Vectren Corp. | 7,700 | 195 | ||||||
W&T Offshore, Inc. (Ñ) | 8,300 | 148 | ||||||
Warren Resources, Inc. (Æ)(Ñ) | 11,700 | 53 | ||||||
| 10,000 | ||||||||
| Total Common Stocks (cost $146,934) | 182,796 | |||||||
| Short-Term Investments - 4.5% | ||||||||
Russell U.S. Cash Management Fund | 8,699,200 | (¥) | 8,699 | |||||
| Total Short-Term Investments (cost $8,699) | 8,699 | |||||||
| Other Securities - 38.6% | ||||||||
Russell Investment Funds Liquidating Trust (×) | 2,947,920 | (¥) | 2,948 | |||||
Russell U.S. Cash Collateral Fund (×) | 71,139,132 | (¥) | 71,139 | |||||
| Total Other Securities (cost $74,087) | 74,087 | |||||||
| Total Investments - 138.5% (identified cost $229,720) | 265,582 | |||||||
| Other Assets and Liabilities, Net - (38.5%) | (73,819 | ) | ||||||
| Net Assets - 100.0% | 191,763 | |||||||
See accompanying notes which are an integral part of the financial statements.
| 32 | Aggressive Equity Fund |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
| Long Positions | ||||||||||||||||||
Russell 2000 Mini Index Futures (CME) | 114 | USD | 8,918 | 03/11 | 122 | |||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | 122 | |||||||||||||||||
Presentation of Portfolio Holdings — December 31, 2010
Amounts in thousands
| Market Value | % of Net Assets | |||||||||||||||||||
| Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | ||||||||||||||||||||
Consumer Discretionary | $ | 23,307 | $ | — | $ | — | $ | 23,307 | 12.2 | |||||||||||
Consumer Staples | 4,245 | — | — | 4,245 | 2.2 | |||||||||||||||
Energy | 9,808 | — | — | 9,808 | 5.1 | |||||||||||||||
Financial Services | 32,708 | — | — | 32,708 | 17.1 | |||||||||||||||
Health Care | 19,359 | — | — | 19,359 | 10.1 | |||||||||||||||
Materials and Processing | 15,696 | — | — | 15,696 | 8.2 | |||||||||||||||
Producer Durables | 39,652 | — | — | 39,652 | 20.7 | |||||||||||||||
Technology | 28,021 | — | — | 28,021 | 14.6 | |||||||||||||||
Utilities | 10,000 | — | — | 10,000 | 5.2 | |||||||||||||||
Short-Term Investments | — | 8,699 | — | 8,699 | 4.5 | |||||||||||||||
Other Securities | — | 74,087 | — | 74,087 | 38.6 | |||||||||||||||
Total Investments | 182,796 | 82,786 | — | 265,582 | 138.5 | |||||||||||||||
Other Assets and Liabilities, Net | (38.5 | ) | ||||||||||||||||||
| 100.0 | ||||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | 122 | — | — | 122 | 0.1 | |||||||||||||||
Total Other Financial Instruments* | 122 | — | — | 122 | ||||||||||||||||
| * | Other financial instruments reflected in the Schedule of Investments, such as futures, forwards, and swap contracts which are valued at the unrealized appreciation/depreciation on the instruments. |
For a description of the levels see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
| Aggressive Equity Fund | 33 |
Table of Contents
Russell Investment Funds
Aggressive Equity Fund
Fair Value of Derivative Instruments — December 31, 2010
Amounts in thousands
| Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Assets and Liabilities - Assets | ||||
Daily variation margin on futures contracts* | $ | 122 | ||
| Derivatives not accounted for as hedging instruments | Equity Contracts | |||
Location: Statement of Operations - Net realized gain (loss) | ||||
Futures contracts | $ | 2,062 | ||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||
Futures contracts | $ | (255 | ) | |
| * | Includes cumulative appreciation/depreciation of futures contracts as reported in Schedule of Investments. Only current day’s variation margin is reported within the statement of assets and liabilities |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
| 34 | Aggressive Equity Fund |
Table of Contents
[This page intentionally left blank]
Table of Contents
Russell Investment Funds
Portfolio Management Discussion — December 31, 2010 (Unaudited)
| Non-U.S. Fund | ||||
| Total Return | ||||
1 Year | 11.42 | % | ||
5 Years | 2.02 | %§ | ||
10 Years | 3.16 | %§ | ||
| MSCI EAFE® Index Net (USD)** | ||||
| Total Return | ||||
1 Year | 7.75 | % | ||
5 Years | 2.46 | %§ | ||
10 Years | 3.50 | %§ | ||
| 36 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
The Non-U.S. Fund (the “Fund”) allocates most of its assets among multiple money managers. Russell Investment Management Company (“RIMCo”), as the Fund’s advisor, may change the allocation of the Fund’s assets among money managers at any time. An exemptive order from the Securities and Exchange Commission (“SEC”) permits RIMCo to engage or terminate a money manager at any time, subject to approval by the Fund’s Board without a shareholder vote. Pursuant to the terms of the exemptive order, the Fund is required to notify its shareholders within 60 days of when a new money manager begins providing services. The Fund currently has four money managers.
What is the Fund’s investment objective?
The Fund seeks to provide long-term capital growth.
How did the Fund perform relative to its benchmark for the fiscal year ended December 31, 2010?
For the fiscal year ended December 31, 2010, the Non-U.S. Fund gained 11.42%. This compared to its benchmark, the MSCI EAFE® Index (net of tax on dividends from foreign holdings), which returned 7.75% over the same period. The Fund’s performance includes operating expenses, whereas index returns are unmanaged and do not include expenses of any kind.
For the fiscal year ended December 31, 2010, the Lipper® International Core Funds (VIP) Average returned 9.40%. This average return serves as a peer comparison and is expressed net of operating expenses.
How did the market conditions described in the Market Summary report affect the Fund’s performance?
In 2010, the Fund outperformed its benchmark by 3.67%. Growth managers Marsico Capital Management, LLC (“Marsico”) and MFS Institutional Advisors, Inc. (“MFS”) were the best performers, although all four of the Fund’s managers out-performed the MSCI EAFE Index over the fiscal year. Growth managers were best able to capture market trends that favored stocks with strong earnings growth potential, as measured by analysts’ earnings forecasts.
The Fund was well positioned to take advantage of the volatile market conditions in 2010. Collectively, the money managers’ preferred quality balance sheets, which boosted performance in a market where investors were skeptical of companies with high debt levels. Stocks with high financial leverage, as measured by debt/capital ratios, were the worst performers in the MSCI EAFE Index and the Fund was underweight to such stocks.
Spain was one of the worst performing countries during the fiscal year, losing 22% as measured by the MSCI EAFE Index. During the fiscal year, the Fund had only about 2% allocated to the country and was underweight in many of the country’s financial stocks, such as Banco Bilbao Vizcaya Argentaria and Banco Santander, that performed the worst on a relative basis. This contributed significantly to the Fund’s outperformance during 2010. In addition, the Fund had no exposure to Greece
which, with a return of -45%, was the worst performing country in the index during the fiscal year. The PIIGS countries (Portugal, Ireland, Italy, Greece and Spain) lagged the broader market in 2010 due to sovereign debt issues that threatened to derail the financial system. The Fund was underweight all of the above markets, except for Italy. The Fund was overweight Italy relative to the MSCI EAFE Index by approximately 0.4%, with an average allocation of 3.4%. Italy was the only one of the five above-named markets to detract from the Fund’s performance.
Exposure to stocks in non-index countries, such as Canada and certain emerging markets countries, also contributed positively to performance relative to the MSCI EAFE Index. Three holdings in Canada were particularly helpful. An allocation of over 1% to the stock Canadian National Railway resulted in strong positive contribution, making it among the top 10 positive contributing stocks in the Fund. There were 6 Canadian stocks held in the Fund during the course of the year, but none were as substantial or beneficial as Canadian National Railway, which benefited along with other economically sensitive stocks in the industrials sector. The Fund had an average allocation of 7.7% to emerging markets stocks, which was a positive, given the relative strength versus developed markets stocks. The money managers allocated slightly more than 1% of the Fund’s assets to stocks in China, India and Brazil. Emerging markets exposure remained stable over the course of the year. Growth managers maintained an optimistic view of emerging markets stocks, while value managers were skeptical of high valuations and their prolonged outperformance.
The Fund’s biggest detractor to performance relative to the MSCI EAFE Index came from its underweight to the materials sector, which returned just under 18% during the year. The underweight reflected money managers concern that commodity prices have accelerated too quickly and companies who have outperformed will be unable to sustain such strong relative performance.
How did the investment strategies and techniques employed by the Fund and its money managers affect its performance?
Investment strategies that favored small capitalization stocks with high prospects for earnings growth and low financial leverage performed best during the period. Stocks with high price momentum and high valuations generally outperformed the Fund’s benchmark. The best performing market factor was high beta, which is a factor that describes stocks that perform better than the broader market when it has a positive return. Investment strategies that were able to avoid the financial turmoil in the PIIGS countries also performed well.
Money managers’ positioning translated into strong performance at the Fund level. While the Fund was neutral in terms of its exposure to growth, it benefited significantly from its underweight to financial leverage and overweight to price
| Non-U.S. Fund | 37 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
momentum as compared to the Fund’s benchmark. Country positioning was also favorable. In addition to the beneficial market environment, it was the money managers’ stock selection within sectors and countries that positively impacted the Fund’s relative performance most significantly. It was a unique fiscal year in which all four of the Fund’s money managers outperformed the Fund’s benchmark.
Marsico was the best performing money manager in the Fund, out-pacing the MSCI EAFE Index by about 7% during the fiscal year. In addition to high exposure to growth, emerging markets and price momentum, Marsico’s stock selection was significantly positive. Strong stock selection in the consumer discretionary sector contributed significantly where the Fund’s overweight was backed by gains from a position in Swiss luxury goods company Swatch.
MFS outperformed the MSCI EAFE Index by about 4% during the fiscal year. Its quality-growth strategy favored stocks with strong earnings growth and low financial leverage, particularly stocks with high growth prospects due to emerging markets demand. LVMH Moet Hennessy Louis Vuitton was the top contributor in MFS’s portfolio. It is a good example of a luxury goods stock in the consumer discretionary sector that benefited from growing demand from emerging markets countries. MFS’s underweight to the financials sector and strong stock selection that underweighted commercial banks in favor of capital markets stocks like Julius Baer Group also helped relative performance.
Barrow Hanley’s outperformed the MSCI EAFE Index by over 5%. Its small capitalization stock exposure was a positive tailwind during the year. Barrow’s strongest gains came from stock selection in the industrials and technology sectors. Its large overweight in Georg Fischer, a Swiss manufacturer of piping components, resulted in the biggest single stock contributor to relative performance. The company benefited from higher expectations in growth for manufacturing.
Pzena Investment Management, LLC (“Pzena”) outperformed the MSCI EAFE Index by just over 3% during the period. Pzena had the deepest value exposure of all the Fund’s money managers and was overweight to the underperforming financials sector. However, strong stock selection allowed it to overcome less than ideal style exposure. Pzena’s biggest gains came from stock selection and a 7% overweight to the technology sector. The two top contributing stocks in Pzena’s portfolio came from the technology sector: OMRON Corp and Tyco Electronics. Within the financials sector, the portfolio’s lack of exposure to Spanish bank, Banco Santander S.A., also contributed positively to relative performance.
Describe any changes to the Fund’s structure or the money manager line-up.
There were no changes to the Fund’s structure or money manager line-up during the year.
| Money Managers as of December 31, 2010 | Styles | |
| Barrow Hanley Mewhinney & Strauss, Inc. | Value | |
| Marsico Capital Management, LLC | Growth | |
| MFS Institutional Advisors, Inc. | Growth | |
| Pzena Investment Management, LLC | Value | |
The views expressed in this report reflect those of the portfolio managers only through the end of the period covered by the report. These views do not necessarily represent the views of RIMCo, or any other person in RIMCo or any other affiliated organization. These views are subject to change at any time based upon market conditions or other events, and RIMCo disclaims any responsibility to update the views contained herein. These views should not be relied on as investment advice and, because investment decisions for Russell Investment Funds (“RIF”) are based on numerous factors, should not be relied on as an indication of investment decisions of any RIF Fund.
| * | Assumes initial investment on January 1, 2001. |
| ** | Morgan Stanley Capital International Europe, Australia, Far East (MSCI EAFE®) Index Net (USD) is an index, with dividends reinvested, representative of the securities markets of 20 developed countries in Europe, Australasia and the Far East. |
| § | Annualized. |
The performance shown in this section does not reflect any Insurance Company Separate Account or Policy Charges. Performance is historical and assumes reinvestment of all dividends and capital gains. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than when purchased. Past performance is not indicative of future results.
| 38 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Shareholder Expense Example — December 31, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Annual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from July 1, 2010 to December 31, 2010.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses based on the Fund’s actual expense ratio and an assumed rate
of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect any Insurance Company Separate Account or Policy Charges.
Core Class | Actual Performance | Hypothetical Performance (5% return before expenses) | ||||||
Beginning Account Value July 1, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | $ | 1,262.10 | $ | 1,019.96 | ||||
Expenses Paid During Period* | $ | 5.93 | $ | 5.30 | ||||
| * | Expenses are equal to the Fund’s annualized expense ratio of 1.04% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
| Non-U.S. Fund | 39 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
| Common Stocks - 92.7% | ||||||||
| Australia - 0.5% | ||||||||
Billabong International, Ltd. (Ñ) | 175,800 | 1,465 | ||||||
Westpac Banking Corp. | 20,750 | 471 | ||||||
| 1,936 | ||||||||
| Austria - 0.1% | ||||||||
Erste Group Bank AG | 11,177 | 525 | ||||||
| Belgium - 0.7% | ||||||||
Anheuser-Busch InBev NV Class 2 | 31,116 | 1,778 | ||||||
KBC Groep NV (Æ) | 17,798 | 608 | ||||||
| 2,386 | ||||||||
| Bermuda - 2.2% | ||||||||
Esprit Holdings, Ltd. | 157,900 | 751 | ||||||
Jardine Matheson Holdings, Ltd. | 68,900 | 3,028 | ||||||
Li & Fung, Ltd. | 626,000 | 3,629 | ||||||
RenaissanceRe Holdings, Ltd. | 13,200 | 841 | ||||||
| 8,249 | ||||||||
| Brazil - 2.1% | ||||||||
Anhanguera Educacional Participacoes SA | 21,500 | 518 | ||||||
Banco Santander Brasil SA - ADR | 44,840 | 610 | ||||||
BR Malls Participacoes SA | 161,800 | 1,667 | ||||||
OGX Petroleo e Gas Participacoes SA (Æ) | 259,800 | 3,131 | ||||||
PDG Realty SA Empreendimentos e Participacoes | 265,900 | 1,628 | ||||||
| 7,554 | ||||||||
| Canada - 1.5% | ||||||||
Canadian National Railway Co. (Þ) | 66,234 | 4,403 | ||||||
Teck Resources, Ltd. Class B | 19,343 | 1,202 | ||||||
| 5,605 | ||||||||
| Cayman Islands - 0.2% | ||||||||
Baidu, Inc. - ADR (Æ) | 6,791 | 656 | ||||||
| China - 0.5% | ||||||||
Ping An Insurance Group Co. of China, Ltd. Class H | 171,500 | 1,917 | ||||||
| Czech Republic - 0.2% | ||||||||
Komercni Banka AS | 2,759 | 653 | ||||||
| Denmark - 1.2% | ||||||||
Danske Bank A/S (Æ) | 26,851 | 688 | ||||||
Novo Nordisk A/S Class B | 16,896 | 1,902 | ||||||
Novozymes A/S Class B (Ñ) | 5,486 | 764 | ||||||
Pandora A/S (Æ) | 15,111 | 911 | ||||||
| 4,265 | ||||||||
| Finland - 0.7% | ||||||||
Fortum OYJ | 26,700 | 810 | ||||||
Pohjola Bank PLC Class A | 142,425 | 1,707 | ||||||
| 2,517 | ||||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
| France - 9.1% | ||||||||
Accor SA | 32,888 | 1,466 | ||||||
Air France-KLM | 48,506 | 885 | ||||||
Air Liquide SA Class A | 13,962 | 1,766 | ||||||
AXA SA - ADR | 22,414 | 374 | ||||||
BNP Paribas | 13,727 | 876 | ||||||
Capital Gemini SA | 25,000 | 1,169 | ||||||
CNP Assurances | 39,164 | 708 | ||||||
Credit Agricole SA | 80,710 | 1,027 | ||||||
Danone | 20,233 | 1,271 | ||||||
GDF Suez | 30,200 | 1,086 | ||||||
Lagardere SCA | 20,281 | 836 | ||||||
Legrand SA - ADR | 20,057 | 817 | ||||||
LVMH Moet Hennessy Louis Vuitton | 18,822 | 3,096 | ||||||
Natixis (Æ) | 72,658 | 340 | ||||||
Pernod-Ricard SA | 26,225 | 2,469 | ||||||
Publicis Groupe SA - ADR | 34,527 | 1,801 | ||||||
Rallye SA | 46,885 | 2,018 | ||||||
Safran SA | 11,328 | 401 | ||||||
Sanofi-Aventis SA - ADR | 26,882 | 1,726 | ||||||
Schneider Electric SA | 33,787 | 5,059 | ||||||
SCOR SE - ADR | 38,980 | 990 | ||||||
Total SA | 14,563 | 773 | ||||||
UBISOFT Entertainment (Æ)(Ñ) | 87,645 | 936 | ||||||
Vivendi SA - ADR | 57,700 | 1,560 | ||||||
| 33,450 | ||||||||
| Germany - 8.0% | ||||||||
Adidas AG | 12,652 | 826 | ||||||
BASF SE | 31,084 | 2,480 | ||||||
Bayer AG | 21,622 | 1,598 | ||||||
Beiersdorf AG | 21,963 | 1,219 | ||||||
Daimler AG (Æ) | 18,292 | 1,240 | ||||||
Deutsche Boerse AG | 15,906 | 1,101 | ||||||
E.ON AG | 37,700 | 1,156 | ||||||
Henkel AG & Co. KGaA | 7,262 | 375 | ||||||
Infineon Technologies AG - ADR (Æ) | 49,879 | 464 | ||||||
Linde AG | 24,154 | 3,665 | ||||||
MAN SE | 21,469 | 2,553 | ||||||
Merck & Co., Inc. | 10,986 | 879 | ||||||
Metro AG | 17,530 | 1,262 | ||||||
MTU Aero Engines Holding AG | 39,071 | 2,641 | ||||||
Muenchener Rueckversicherungs AG | 4,599 | 698 | ||||||
SAP AG - ADR | 14,004 | 713 | ||||||
Siemens AG | 23,932 | 2,962 | ||||||
ThyssenKrupp AG - ADR | 31,253 | 1,295 | ||||||
Volkswagen AG (Ñ) | 16,680 | 2,359 | ||||||
| 29,486 | ||||||||
| Hong Kong - 0.9% | ||||||||
AIA Group, Ltd. (Æ) | 76,000 | 214 | ||||||
China Unicom Hong Kong, Ltd. (Ñ) | 516,000 | 736 | ||||||
CNOOC, Ltd. | 592,000 | 1,409 | ||||||
Hang Lung Properties, Ltd. - ADR | 230,000 | 1,075 | ||||||
| 3,434 | ||||||||
| 40 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
| India - 1.5% | ||||||||
ICICI Bank, Ltd. - ADR | 76,664 | 3,883 | ||||||
Infosys Technologies, Ltd. - ADR | 21,310 | 1,621 | ||||||
| 5,504 | ||||||||
| Indonesia - 0.1% | ||||||||
Astra International Tbk PT | 73,500 | 445 | ||||||
| Ireland - 0.3% | ||||||||
Accenture PLC Class A | 21,400 | 1,038 | ||||||
| Israel - 0.6% | ||||||||
Teva Pharmaceutical Industries, Ltd. - ADR | 41,327 | 2,154 | ||||||
| Italy - 2.4% | ||||||||
ENI SpA -ADR | 60,207 | 1,316 | ||||||
Finmeccanica SpA | 193,047 | 2,195 | ||||||
Parmalat SpA | 728,570 | 1,995 | ||||||
Snam Rete Gas SpA | 298,425 | 1,484 | ||||||
UniCredit SpA | 618,941 | 1,280 | ||||||
Unione di Banche Italiane SCPA | 78,220 | 685 | ||||||
| 8,955 | ||||||||
| Japan - 13.1% | ||||||||
Aeon Credit Service Co., Ltd. (Ñ) | 14,400 | 203 | ||||||
Amada Co., Ltd. | 149,700 | 1,217 | ||||||
Canon, Inc. (Ñ) | 127,200 | 6,523 | ||||||
Dai-ichi Life Insurance Co., Ltd. (The) | 500 | 811 | ||||||
Daikin Industries, Ltd. | 15,000 | 532 | ||||||
Dena Co., Ltd. (Ñ) | 26,200 | 939 | ||||||
Denso Corp. | 21,800 | 752 | ||||||
FamilyMart Co., Ltd. | 28,900 | 1,089 | ||||||
Fanuc, Ltd. | 11,500 | 1,764 | ||||||
Hirose Electric Co., Ltd. | 1,600 | 180 | ||||||
Honda Motor Co., Ltd. (Ñ) | 42,000 | 1,660 | ||||||
Hoya Corp. | 64,900 | 1,575 | ||||||
Inpex Corp. | 243 | 1,421 | ||||||
ITOCHU Corp. | 208,600 | 2,110 | ||||||
Japan Tobacco, Inc. (Ñ) | 296 | 1,094 | ||||||
Komatsu, Ltd. | 64,500 | 1,950 | ||||||
Konica Minolta Holdings, Inc. | 43,500 | 452 | ||||||
Lawson, Inc. | 20,800 | 1,029 | ||||||
Mabuchi Motor Co., Ltd. (Ñ) | 29,300 | 1,509 | ||||||
Marubeni Corp. | 182,000 | 1,279 | ||||||
Mitsubishi Chemical Holdings Corp. | 225,500 | 1,529 | ||||||
Mitsubishi UFJ Financial Group, Inc. | 138,800 | 750 | ||||||
Mizuho Financial Group, Inc. | 190,900 | 359 | ||||||
Mori Seiki Co., Ltd. (Ñ) | 74,100 | 878 | ||||||
MS&AD Insurance Group Holdings | 46,400 | 1,162 | ||||||
NGK Spark Plug Co., Ltd. | 56,000 | 858 | ||||||
Nintendo Co., Ltd. | 3,000 | 880 | ||||||
Nissan Motor Co., Ltd. | 93,400 | 888 | ||||||
Nomura Holdings, Inc. | 89,200 | 565 | ||||||
NTT DoCoMo, Inc. - ADR | 2,050 | 36 | ||||||
NTT DoCoMo, Inc. | 900 | 1,571 | ||||||
Omron Corp. | 30,200 | 800 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Shin-Etsu Chemical Co., Ltd. | 32,100 | 1,738 | ||||||
Sumitomo Mitsui Financial Group, Inc. | 48,400 | 1,723 | ||||||
Suzuken Co., Ltd. | 25,300 | 772 | ||||||
Takeda Pharmaceutical Co., Ltd. | 24,300 | 1,195 | ||||||
THK Co., Ltd. (Ñ) | 50,500 | 1,160 | ||||||
Toshiba TEC Corp. | 310,379 | 1,504 | ||||||
Toyota Motor Corp. | 42,900 | 1,689 | ||||||
| 48,146 | ||||||||
| Luxembourg - 0.7% | ||||||||
ArcelorMittal | 31,873 | 1,213 | ||||||
Millicom International Cellular SA | 12,810 | 1,224 | ||||||
| 2,437 | ||||||||
| Malaysia - 0.1% | ||||||||
Genting BHD - ADR | 135,900 | 493 | ||||||
| Mexico - 0.1% | ||||||||
America Movil SAB de CV - ADR | 5,430 | 311 | ||||||
| Netherlands - 6.1% | ||||||||
Aegon NV | 166,382 | 1,020 | ||||||
Akzo Nobel NV | 63,410 | 3,947 | ||||||
Brit Insurance Holdings NV (ö) | 62,259 | 1,012 | ||||||
Core Laboratories NV (Ñ) | 4,076 | 363 | ||||||
European Aeronautic Defence and Space Co. NV | 66,490 | 1,551 | ||||||
Heineken NV | 50,227 | 2,461 | ||||||
ING Groep NV (Æ) | 459,525 | 4,484 | ||||||
Koninklijke Philips Electronics NV | 52,080 | 1,595 | ||||||
LyondellBasell Industries NV Class A (Æ) | 12,860 | 442 | ||||||
Randstad Holding NV (Æ) | 20,605 | 1,088 | ||||||
Reed Elsevier NV | 93,400 | 1,157 | ||||||
Sensata Technologies Holding NV (Æ) | 28,840 | 868 | ||||||
Unilever NV | 36,450 | 1,134 | ||||||
Wolters Kluwer NV | 63,040 | 1,382 | ||||||
| 22,504 | ||||||||
| Norway - 0.8% | ||||||||
DnB NOR ASA | 137,800 | 1,934 | ||||||
Statoil ASA Class N | 43,900 | 1,043 | ||||||
| 2,977 | ||||||||
| Russia - 0.5% | ||||||||
Gazprom OAO - ADR | 69,870 | 1,766 | ||||||
| Singapore - 2.0% | ||||||||
CapitaLand, Ltd. | 354,000 | 1,027 | ||||||
Jardine Cycle & Carriage, Ltd. (Ñ) | 125,900 | 3,591 | ||||||
Keppel Corp., Ltd. - ADR | 31,000 | 273 | ||||||
Singapore Telecommunications, Ltd. | 362,000 | 860 | ||||||
United Overseas Bank, Ltd. | 112,400 | 1,594 | ||||||
| 7,345 | ||||||||
| Non-U.S. Fund | 41 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
| South Africa - 0.8% | ||||||||
MTN Group, Ltd. | 107,157 | 2,186 | ||||||
Naspers, Ltd. | 14,860 | 875 | ||||||
| 3,061 | ||||||||
| South Korea - 0.4% | ||||||||
Samsung Electronics Co., Ltd. | 1,600 | 1,337 | ||||||
| Spain - 1.5% | ||||||||
Banco Santander SA - ADR | 238,732 | 2,536 | ||||||
Inditex SA | 27,592 | 2,068 | ||||||
Indra Sistemas SA (Ñ) | 30,400 | 520 | ||||||
Red Electrica Corp. SA (Ñ) | 7,263 | 341 | ||||||
| 5,465 | ||||||||
| Sweden - 1.1% | ||||||||
Assa Abloy AB Class B | 28,573 | 806 | ||||||
Skandinaviska Enskilda Banken AB Class A | 55,751 | 465 | ||||||
Svenska Cellulosa AB Class B | 46,263 | 730 | ||||||
Telefonaktiebolaget LM Ericsson Class B | 173,695 | 2,011 | ||||||
| 4,012 | ||||||||
| Switzerland - 9.4% | ||||||||
ACE, Ltd. | 19,550 | 1,217 | ||||||
Cie Financiere Richemont SA | 18,164 | 1,069 | ||||||
Clariant AG (Æ) | 53,200 | 1,079 | ||||||
Credit Suisse Group AG | 27,999 | 1,130 | ||||||
GAM Holding AG | 58,201 | 962 | ||||||
Georg Fischer AG (Æ) | 5,253 | 2,961 | ||||||
Givaudan SA | 1,006 | 1,086 | ||||||
Helvetia Holding AG | 4,615 | 1,775 | ||||||
Julius Baer Group, Ltd. | 69,814 | 3,270 | ||||||
Nestle SA | 94,533 | 5,536 | ||||||
Novartis AG | 38,700 | 2,277 | ||||||
Roche Holding AG | 13,283 | 1,947 | ||||||
Sonova Holding AG | 4,066 | 527 | ||||||
Swatch Group AG (The) Class B | 5,347 | 2,384 | ||||||
Swiss Reinsurance Co., Ltd. | 11,952 | 651 | ||||||
Tyco Electronics, Ltd. | 64,750 | 2,292 | ||||||
UBS AG (Æ) | 177,482 | 2,913 | ||||||
Zurich Financial Services AG | 5,053 | 1,309 | ||||||
| 34,385 | ||||||||
| Taiwan - 0.9% | ||||||||
Hon Hai Precision Industry Co., Ltd. (Þ) | 147,840 | 595 | ||||||
Hon Hai Precision Industry Co., Ltd. - GDR | 70,168 | 567 | ||||||
HTC Corp. | 14,200 | 438 | ||||||
Taiwan Semiconductor Manufacturing Co., Ltd. - ADR | 126,705 | 1,588 | ||||||
| 3,188 | ||||||||
| Thailand - 0.3% | ||||||||
Bangkok Bank PCL | 208,800 | 1,056 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
| United Kingdom - 20.6% | ||||||||
Aegis Group PLC | 755,902 | 1,657 | ||||||
Anglo American PLC | 43,974 | 2,291 | ||||||
ARM Holdings PLC | 66,894 | 455 | ||||||
Aviva PLC | 152,921 | 941 | ||||||
BAE Systems PLC | 279,500 | 1,438 | ||||||
Barclays PLC | 1,244,116 | 5,119 | ||||||
BG Group PLC | 35,277 | 714 | ||||||
BP PLC | 525,047 | 3,847 | ||||||
BP PLC - ADR | 6,700 | 296 | ||||||
Bunzl PLC | 62,900 | 705 | ||||||
Burberry Group PLC | 44,980 | 789 | ||||||
Cable & Wireless Worldwide PLC | 1,313,900 | 1,347 | ||||||
Carillion PLC | 213,025 | 1,278 | ||||||
Compass Group PLC | 164,569 | 1,491 | ||||||
Dairy Crest Group PLC | 163,809 | 1,082 | ||||||
Diageo PLC | 110,407 | 2,045 | ||||||
Ensco PLC - ADR | 24,400 | 1,302 | ||||||
Hays PLC | 238,908 | 481 | ||||||
Home Retail Group PLC | 227,803 | 670 | ||||||
HSBC Holdings PLC | 810,607 | 8,262 | ||||||
Imperial Tobacco Group PLC | 110,747 | 3,397 | ||||||
National Grid PLC | 132,514 | 1,155 | ||||||
Reckitt Benckiser Group PLC | 74,764 | 4,112 | ||||||
Rolls-Royce Group PLC (Æ) | 88,362 | 858 | ||||||
Royal Bank of Scotland Group PLC - ADR (Æ)(Å) | 1,267,698 | 777 | ||||||
Royal Dutch Shell PLC Class A | 177,649 | 5,884 | ||||||
Sage Group PLC (The) | 473,167 | 2,019 | ||||||
Smith & Nephew PLC | 144,960 | 1,523 | ||||||
Smiths Group PLC | 53,578 | 1,041 | ||||||
Spectris PLC | 104,213 | 2,131 | ||||||
Standard Chartered PLC | 106,227 | 2,860 | ||||||
Tesco PLC | 442,630 | 2,935 | ||||||
Travis Perkins PLC | 113,950 | 1,882 | ||||||
Tullow Oil PLC | 66,929 | 1,317 | ||||||
Vodafone Group PLC - ADR | 1,718,792 | 4,476 | ||||||
William Hill PLC | 79,497 | 212 | ||||||
WPP PLC | 115,025 | 1,421 | ||||||
Xstrata PLC | 39,930 | 940 | ||||||
| 75,150 | ||||||||
| United States - 1.4% | ||||||||
MercadoLibre, Inc. (Æ) | 13,619 | 908 | ||||||
Philip Morris International, Inc. | 44,900 | 2,628 | ||||||
Synthes, Inc. (Æ)(Ñ) | 12,708 | 1,726 | ||||||
| 5,262 | ||||||||
| Virgin Islands, British - 0.1% | ||||||||
Mail.ru Group, Ltd. - GDR (Æ)(Å) | 10,389 | 357 | ||||||
| Total Common Stocks (cost $288,764) | 339,981 | |||||||
| 42 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
| Preferred Stocks - 0.1% | ||||||||
| Germany - 0.1% | ||||||||
Porsche Automobil Holding SE | 6,600 | 526 | ||||||
| Total Preferred Stocks (cost $393) | 526 | |||||||
| Short-Term Investments - 6.2% | ||||||||
| United States - 6.2% | ||||||||
Russell U.S. Cash Management Fund | 22,674,026 | (¥) | 22,674 | |||||
| Total Short-Term Investments (cost $22,674) | 22,674 | |||||||
| Other Securities - 4.7% | ||||||||
Russell Investment Funds Liquidating | 10,154,873 | (¥) | 10,155 | |||||
Russell U.S. Cash Collateral Fund (X) | | 7,153,147 | (¥) | 7,153 | ||||
| Total Other Securities (cost $17,308) | 17,308 | |||||||
| Total Investments - 103.7% (identified cost $329,139) | 380,489 | |||||||
| Other Assets and Liabilities, Net - (3.7%) | (13,619 | ) | ||||||
| Net Assets - 100.0% | 366,870 | |||||||
See accompanying notes which are an integral part of the financial statements.
| Non-U.S. Fund | 43 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Futures Contracts | Number of Contracts | Notional Amount | Expiration Date | Unrealized Appreciation (Depreciation) $ | ||||||||||||||
Long Positions | ||||||||||||||||||
ASX SPI 200 Index Futures (Australia) | 4 | AUD | 473 | 03/11 | (1 | ) | ||||||||||||
CAC-40 Index Futures (France) | 48 | EUR | 1,829 | 01/11 | (56 | ) | ||||||||||||
DAX Index Futures (Germany) | 9 | EUR | 1,559 | 03/11 | (37 | ) | ||||||||||||
EURO STOXX 50 Index Futures (EMU) | 136 | EUR | 3,800 | 03/11 | (109 | ) | ||||||||||||
FTSE-100 Index Futures (UK) | 43 | GBP | 2,534 | 03/11 | 30 | |||||||||||||
Hang Seng Index Futures (Hong Kong) | 2 | HKD | 2,302 | 01/11 | — | |||||||||||||
S&P TSE 60 Index Futures (Canada) | 10 | CAD | 1,534 | 03/11 | 3 | |||||||||||||
TOPIX Index Futures (Japan) | 80 | JPY | 716,800 | 03/11 | 181 | |||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Futures Contracts | 11 | |||||||||||||||||
| Foreign Currency Exchange Contracts | ||||||||||||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement | Unrealized Appreciation (Depreciation) $ | ||||||||||||||||||
Bank of America | USD | 1,524 | AUD | 1,500 | 03/16/11 | (3 | ) | |||||||||||||||
Bank of America | EUR | 500 | USD | 656 | 03/16/11 | (6 | ) | |||||||||||||||
Bank of America | GBP | 100 | USD | 154 | 03/16/11 | (1 | ) | |||||||||||||||
Barclays Bank PLC | USD | 1,604 | EUR | 1,212 | 03/16/11 | 15 | ||||||||||||||||
Barclays Bank PLC | USD | 821 | GBP | 524 | 03/16/11 | (4 | ) | |||||||||||||||
BNP Paribas | USD | 821 | GBP | 524 | 03/16/11 | (5 | ) | |||||||||||||||
BNP Paribas | USD | 1,390 | JPY | 115,000 | 03/16/11 | 22 | ||||||||||||||||
Brown Brothers Harriman & Co. | USD | 36 | GBP | 23 | 01/04/11 | — | ||||||||||||||||
Brown Brothers Harriman & Co. | USD | 44 | GBP | 29 | 01/04/11 | — | ||||||||||||||||
Brown Brothers Harriman & Co. | USD | 29 | GBP | 19 | 01/05/11 | — | ||||||||||||||||
Brown Brothers Harriman & Co. | USD | 260 | GBP | 168 | 01/05/11 | 3 | ||||||||||||||||
Brown Brothers Harriman & Co. | USD | 471 | GBP | 305 | 01/05/11 | 5 | ||||||||||||||||
Brown Brothers Harriman & Co. | EUR | 190 | USD | 252 | 01/05/11 | (2 | ) | |||||||||||||||
Brown Brothers Harriman & Co. | EUR | 351 | USD | 466 | 01/05/11 | (3 | ) | |||||||||||||||
Credit Suisse First Boston | EUR | 100 | USD | 131 | 03/16/11 | (2 | ) | |||||||||||||||
Credit Suisse First Boston | GBP | 130 | USD | 200 | 03/16/11 | (3 | ) | |||||||||||||||
Credit Suisse First Boston | JPY | 30,000 | USD | 366 | 03/16/11 | (4 | ) | |||||||||||||||
Deutsche Bank AG | USD | 981 | EUR | 750 | 03/16/11 | 21 | ||||||||||||||||
Deutsche Bank AG | USD | 1,604 | EUR | 1,212 | 03/16/11 | 14 | ||||||||||||||||
Deutsche Bank AG | USD | 386 | GBP | 250 | 03/16/11 | 4 | ||||||||||||||||
Deutsche Bank AG | USD | 1,390 | JPY | 115,000 | 03/16/11 | 27 | ||||||||||||||||
HSBC Bank PLC | USD | 1,605 | EUR | 1,212 | 03/16/11 | 14 | ||||||||||||||||
HSBC Bank PLC | USD | 358 | JPY | 30,000 | 03/16/11 | 12 | ||||||||||||||||
HSBC Bank PLC | USD | 1,390 | JPY | 115,000 | 03/16/11 | 27 | ||||||||||||||||
JP Morgan Chase Bank | USD | 327 | EUR | 250 | 03/16/11 | 7 | ||||||||||||||||
JP Morgan Chase Bank | USD | 1,605 | EUR | 1,212 | 03/16/11 | 14 | ||||||||||||||||
JP Morgan Chase Bank | USD | 821 | GBP | 524 | 03/16/11 | (4 | ) | |||||||||||||||
JP Morgan Chase Bank | USD | 10 | JPY | 846 | 01/04/11 | — | ||||||||||||||||
JP Morgan Chase Bank | USD | 1,390 | JPY | 115,000 | 03/16/11 | 26 | ||||||||||||||||
JP Morgan Chase Bank | JPY | 6,570 | USD | 80 | 01/05/11 | — | ||||||||||||||||
Mellon Bank | USD | 821 | GBP | 524 | 03/16/11 | (4 | ) | |||||||||||||||
Mellon Bank | USD | 1,390 | JPY | 115,000 | 03/16/11 | 27 | ||||||||||||||||
Royal Bank of Canada | USD | 1,604 | EUR | 1,212 | 03/16/11 | 15 | ||||||||||||||||
Royal Bank of Canada | USD | 821 | GBP | 524 | 03/16/11 | (4 | ) | |||||||||||||||
Royal Bank of Canada | USD | 1,390 | JPY | 115,000 | 03/16/11 | 26 | ||||||||||||||||
Royal Bank of Scotland PLC | GBP | 700 | USD | 1,095 | 03/16/11 | 5 | ||||||||||||||||
See accompanying notes which are an integral part of the financial statements.
| 44 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Foreign Currency Exchange Contracts | ||||||||||||||||||||||
Counterparty | Amount Sold | Amount Bought | Settlement | Unrealized Appreciation (Depreciation) $ | ||||||||||||||||||
Societe Generale | USD | 1,605 | EUR | 1,212 | 03/16/11 | 14 | ||||||||||||||||
Societe Generale | USD | 821 | GBP | 524 | 03/16/11 | (4 | ) | |||||||||||||||
State Street Bank & Trust Co. | USD | 48 | EUR | 36 | 01/04/11 | — | ||||||||||||||||
State Street Bank & Trust Co. | HKD | 48 | USD | 6 | 01/03/11 | — | ||||||||||||||||
State Street Bank & Trust Co. | JPY | 324 | USD | 4 | 01/06/11 | — | ||||||||||||||||
State Street Bank & Trust Co. | JPY | 913 | USD | 11 | 01/06/11 | — | ||||||||||||||||
State Street Bank & Trust Co. | JPY | 30,000 | USD | 362 | 03/16/11 | (8 | ) | |||||||||||||||
Westpac Banking Corp. | USD | 1,507 | CAD | 1,500 | 03/16/11 | (1 | ) | |||||||||||||||
Westpac Banking Corp. | USD | 772 | HKD | 6,000 | 03/16/11 | — | ||||||||||||||||
Westpac Banking Corp. | EUR | 200 | USD | 263 | 03/16/11 | (4 | ) | |||||||||||||||
Westpac Banking Corp. | JPY | 200,000 | USD | 2,468 | 03/16/11 | 2 | ||||||||||||||||
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts | 240 | |||||||||||||||||||||
See accompanying notes which are an integral part of the financial statements.
| Non-U.S. Fund | 45 |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Presentation of Portfolio Holdings — December 31, 2010
Amounts in thousands
| Market Value | % of Net | |||||||||||||||||||
| Portfolio Summary | Level 1 | Level 2 | Level 3 | Total | ||||||||||||||||
Common Stocks | ||||||||||||||||||||
Australia | $ | — | $ | 1,936 | $ | — | $ | 1,936 | 0.5 | |||||||||||
Austria | — | 525 | — | 525 | 0.1 | |||||||||||||||
Belgium | — | 2,386 | — | 2,386 | 0.7 | |||||||||||||||
Bermuda | 841 | 7,408 | — | 8,249 | 2.2 | |||||||||||||||
Brazil | 1,128 | 6,426 | — | 7,554 | 2.1 | |||||||||||||||
Canada | 5,605 | — | — | 5,605 | 1.5 | |||||||||||||||
Cayman Islands | 656 | — | — | 656 | 0.2 | |||||||||||||||
China | — | 1,917 | — | 1,917 | 0.5 | |||||||||||||||
Czech Republic | — | 653 | — | 653 | 0.2 | |||||||||||||||
Denmark | — | 4,265 | — | 4,265 | 1.2 | |||||||||||||||
Finland | — | 2,517 | — | 2,517 | 0.7 | |||||||||||||||
France | — | 33,450 | — | 33,450 | 9.1 | |||||||||||||||
Germany | — | 29,486 | — | 29,486 | 8.0 | |||||||||||||||
Hong Kong | 214 | 3,220 | — | 3,434 | 0.9 | |||||||||||||||
India | 5,504 | — | — | 5,504 | 1.5 | |||||||||||||||
Indonesia | — | 445 | — | 445 | 0.1 | |||||||||||||||
Ireland | 1,038 | — | — | 1,038 | 0.3 | |||||||||||||||
Israel | 2,154 | — | — | 2,154 | 0.6 | |||||||||||||||
Italy | — | 8,955 | — | 8,955 | 2.4 | |||||||||||||||
Japan | 36 | 48,110 | — | 48,146 | 13.1 | |||||||||||||||
Luxembourg | 1,224 | 1,213 | — | 2,437 | 0.7 | |||||||||||||||
Malaysia | — | 493 | — | 493 | 0.1 | |||||||||||||||
Mexico | 311 | — | — | 311 | 0.1 | |||||||||||||||
Netherlands | 1,673 | 20,831 | — | 22,504 | 6.1 | |||||||||||||||
Norway | — | 2,977 | — | 2,977 | 0.8 | |||||||||||||||
Russia | — | 1,766 | — | 1,766 | 0.5 | |||||||||||||||
Singapore | — | 7,345 | — | 7,345 | 2.0 | |||||||||||||||
South Africa | — | 3,061 | — | 3,061 | 0.8 | |||||||||||||||
South Korea | — | 1,337 | — | 1,337 | 0.4 | |||||||||||||||
Spain | — | 5,465 | — | 5,465 | 1.5 | |||||||||||||||
Sweden | — | 4,012 | — | 4,012 | 1.1 | |||||||||||||||
Switzerland | 3,509 | 30,876 | — | 34,385 | 9.4 | |||||||||||||||
Taiwan | 1,588 | 1,600 | — | 3,188 | 0.9 | |||||||||||||||
Thailand | — | 1,056 | — | 1,056 | 0.3 | |||||||||||||||
United Kingdom | 6,120 | 69,030 | — | 75,150 | 20.6 | |||||||||||||||
United States | 5,262 | — | — | 5,262 | 1.4 | |||||||||||||||
Virgin Islands, British | 357 | — | — | 357 | 0.1 | |||||||||||||||
Preferred Stocks | — | 526 | — | 526 | 0.1 | |||||||||||||||
Short-Term Investments | — | 22,674 | — | 22,674 | 6.2 | |||||||||||||||
Other Securities | — | 17,308 | — | 17,308 | 4.7 | |||||||||||||||
Total Investments | 37,220 | 343,269 | — | 380,489 | 103.7 | |||||||||||||||
Other Assets and Liabilities, Net | (3.7 | ) | ||||||||||||||||||
| 100.0 | ||||||||||||||||||||
Other Financial Instruments | ||||||||||||||||||||
Futures Contracts | 11 | — | — | 11 | — | * | ||||||||||||||
Foreign Currency Exchange Contracts | 4 | 236 | — | 240 | 0.1 | |||||||||||||||
Total Other Financial Instruments** | 15 | 236 | — | 251 | ||||||||||||||||
| * | Less than .05% of net assets. |
| ** | Other financial instruments reflected in the Schedule of Investments, such as futures, forwards, and swap contracts which are valued at the unrealized appreciation/depreciation on the instruments. |
For a description of the levels see note 2 in the Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
| 46 | Non-U.S. Fund |
Table of Contents
Russell Investment Funds
Non-U.S. Fund
Fair Value of Derivative Instruments — December 31, 2010
Amounts in thousands
| Derivatives not accounted for as hedging instruments | Foreign Currency Contracts | Equity Contracts | ||||||
Location: Statement of Assets and Liabilities - Assets | ||||||||
Unrealized appreciation on foreign currency exchange contracts | $ | 302 | $ | — | ||||
Daily variation margin on futures contracts* | — | 214 | ||||||
Total | $ | 302 | $ | 214 | ||||
Location: Statement of Assets and Liabilities - Liabilities | ||||||||
Unrealized depreciation on foreign currency exchange contracts | $ | 62 | $ | — | ||||
Daily variation margin on futures contracts* | — | (203 | ) | |||||
Total | $ | 62 | $ | (203 | ) | |||
| Derivatives not accounted for as hedging instruments | Foreign Currency Contracts | Equity Contracts | ||||||
Location: Statement of Operations - Net realized gain (loss) | ||||||||
Futures contracts | $ | — | $ | 915 | ||||
Foreign currency-related transactions | (539 | ) | — | |||||
Total | $ | (539 | ) | $ | 915 | |||
Location: Statement of Operations - Net change in unrealized appreciation (depreciation) | ||||||||
Futures contracts | $ | — | $ | (544 | ) | |||
Foreign currency-related transactions | 1,069 | — | ||||||
Total | $ | 1,069 | $ | (544 | ) | |||
| * | Includes cumulative appreciation/depreciation of futures contracts as reported in Schedule of Investments. Only current day’s variation margin is reported within the statement of assets and liabilities |
For further disclosure on derivatives see note 2 in Notes to Financial Statements.
See accompanying notes which are an integral part of the financial statements.
| Non-U.S. Fund | 47 |
Table of Contents
Russell Investment Funds
Portfolio Management Discussion — December 31, 2010 (Unaudited)
| Core Bond Fund | ||||
| Total Return | ||||
1 Year | 10.02 | % | ||
5 Years | 6.45 | %§ | ||
10 Years | 6.12 | %§ | ||
| Barclays Capital U.S. Aggregate Bond Index** | ||||
| Total Return | ||||
1 Year | 6.54 | % | ||
5 Years | 5.80 | %§ | ||
10 Years | 5.84 | %§ | ||
| 48 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
The Core Bond Fund (the “Fund”) allocates most of its assets among multiple money managers. Russell Investment Management Company (“RIMCo”), as the Fund’s advisor, may change the allocation of the Fund’s assets among money managers at any time. An exemptive order from the Securities and Exchange Commission (“SEC”) permits RIMCo to engage or terminate a money manager at any time, subject to approval by the Fund’s Board without a shareholder vote. Pursuant to the terms of the exemptive order, the Fund is required to notify its shareholders within 60 days of when a money manager begins providing services. The Fund currently has three money managers.
What is the Fund’s investment objective?
The Fund seeks to provide current income, and as a secondary objective, capital appreciation.
How did the Fund perform relative to its benchmark for the fiscal year ended December 31, 2010?
For the fiscal year ended December 31, 2010, the Core Bond Fund gained 10.02%. This compared to its benchmark the Barclays Capital U.S. Aggregate Bond Index, which gained 6.54% during the same period. The Fund’s performance includes operating expenses, whereas index returns are unmanaged and do not include expenses of any kind.
For the year ended December 31, 2010, the Lipper® BBB Rated Corp Debt Funds (VIP) Average had a 7.85% return. This average return serves as a peer comparison and is expressed net of operating expenses.
How did the market conditions described in the Market Summary report affect the Fund’s performance?
During the fiscal year, the Fund was well positioned to take advantage of the broad fixed income rally, which occurred when assets returned to a level of pricing that more accurately reflected their credit risk. The key drivers of the Fund’s relatively strong performance in 2010 were a material overweight position in non-agency mortgage-backed securities (MBS), an overweight position in investment grade credit/corporate debts (with an emphasis on financials) and overweight positions in high yield corporate securities. The Fund’s investment grade credit positions benefited from the recovery the credit markets exhibited in 2010, which had resulted from sectors recovering from depressed levels through improved credit fundamentals and decreased investor risk aversion. Similarly, MBS also exhibited a recovery from depressed levels, which was a result of the market’s search for yield and a realization that pricing was too low relative to the security fundamentals of the instruments. Among the primary corporate debt sub-sectors (i.e., financials, industrials and utilities), financials outperformed the other sub-sectors. The performance of the financials sub-sector was largely driven by its relatively poor performance in 2008 as result of the credit crisis exhibited in that year. Because of its poor performance in 2008, the financials sub-sector represented a good value in 2010. Additionally, financials also benefited in 2010 from a modification to the U.S. Treasury yield curve, which allowed
banks to borrow inexpensively in the short term and lend out at a higher rate in the long term.
To a lesser extent, allocations to commercial mortgage-backed securities (CMBS), emerging market debt (EMD), and non-dollar investments also contributed positively to the Fund’s performance in 2010. CMBS performed well as the sector did not suffer the same crisis as the residential mortgage sector experienced in 2008. Because of this, investors pursued the relatively high yields available within the CMBS sector. EMD performed well as the general global recovery during the year appeared to occur sooner in emerging economies, many of which had better fiscal positions than those of certain developed economies. The Fund’s positions in non-dollar investments benefited from issue selection and tactical currency investments aimed at capturing returns resulting from the volatility exhibited within the currency markets.
During 2010, duration and yield curve positioning generally did not have an impact on the Fund’s performance. Over the period, the U.S. Treasury yield curve experienced many fluctuations. Though the shorter end of the curve was anchored by a Federal Reserve low-rate policy, the longer end of the curve was weakened by investor concerns about sovereign credit risk in Europe, the uncertain future of the U.S. dollar as a reserve currency resulting from statements by certain countries and inflation concerns stemming from the Federal Reserve’s second round of quantitative easing (QE2) (i.e., the injection of capital into the market through the direct purchase of certain types of assets). The shorter end of the yield curve represents yields on shorter maturity treasury securities, while the longer end of the curve represents yields on the longer maturity treasury securities.
How did the investment strategies and techniques employed by the Fund and its money managers affect its performance?
The Fund’s money managers tend to invest the Fund’s assets in non-Treasury sectors and in types of securities that are not found within the Index (e.g. high yield credit, MBS and EMD. As a result of having a more aggressive asset allocation relative to the Index, as more aggressive risk profiles continued to experience positive returns during 2010, the Fund’s underweight to U.S. Treasuries and overweight to non-Treasury securities resulted in the Fund generating returns in excess of the Index. While sector positions varied throughout 2010, allocations to some of the best performing sectors of the fixed income markets were beneficial to Fund performance. Overweight exposure to both investment grade financials and CMBS and the transition of the Fund’s position in agency mortgages from overweight to underweight over the course of the year contributed positively to Fund performance in 2010. Exposure to MBS was the largest contributor to Fund performance in 2010.
The Fund’s money managers rotate in and out of various sectors in order to gain exposure to those sectors or securities that the
| Core Bond Fund | 49 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Portfolio Management Discussion — December 31, 2010 (Unaudited)
money managers believe could provide the highest value relative to other areas of the market. For example, Pacific Investment Management Company LLC put significant emphasis on non agency mortgage backed securities in an attempt to benefit from such sector’s significant yield and price appreciation which contributed positively to performance. Metropolitan West Asset Management, LLC maintained an emphasis on MBS and CMBS throughout the year and, as a result, the Fund’s performance benefited from the increased demand for these securities. Similarly, Goldman Sachs Asset Management, L.P., also maintained an emphasis on MBS throughout the year and the Fund’s performance benefited from increased demand for these securities. Although investment strategies and techniques will vary across the Fund’s money managers (e.g., different sector emphasis or the same emphasis at different times), the Fund’s performance over the year generally benefited from sector rotation implemented by the money managers.
Describe any changes to the Fund’s structure or the money manager line-up.
There were no changes to the Fund’s money manager line-up during the year. Manager weights were adjusted throughout the year.
| Money Managers as of December 31, 2010 | Styles | |
| Goldman Sachs Asset Management, L.P. | Fully Discretionary | |
| Metropolitan West Asset Management, LLC | Sector Rotation | |
| Pacific Investment Management Company LLC | Fully Discretionary | |
The views expressed in this report reflect those of the portfolio managers only through the end of the period covered by the report. These views do not necessarily represent the views of RIMCo, or any other person in RIMCo or any other affiliated organization. These views are subject to change at any time based upon market conditions or other events, and RIMCo disclaims any responsibility to update the views contained herein. These views should not be relied on as investment advice and, because investment decisions for Russell Investment Funds (“RIF”) are based on numerous factors, should not be relied on as an indication of investment decisions of any RIF Fund.
| * | Assumes initial investment on January 1, 2001. |
| ** | The Barclays Capital U.S. Aggregate Bond Index is an index, with income reinvested, generally representative of intermediate-term government bonds, investment-grade corporate debt securities and mortgage-backed securities. |
| § | Annualized. |
The performance shown in this section does not reflect any Insurance Company Separate Account or Policy Charges. Performance is historical and assumes reinvestment of all dividends and capital gains. Investment return and principal value will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than when purchased. Past performance is not indicative of future results.
| 50 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Shareholder Expense Example — December 31, 2010 (Unaudited)
Fund Expenses
The following disclosure provides important information regarding each Fund’s Expense Example, which appears on each Fund’s individual page in this Annual Report. Please refer to this information when reviewing the Expense Example for a Fund.
Example
As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory fees and other Fund expenses. The Example is intended to help you understand your ongoing costs (in dollars) of investing in the Fund and to compare these costs with the ongoing costs of investing in other mutual funds. The Example is based on an investment of $1,000 invested at the beginning of the period and held for the entire period indicated, which for this Fund is from July 1, 2010 to December 31, 2010.
Actual Expenses
The information in the table under the heading “Actual Performance” provides information about actual account values and actual expenses. You may use the information in this column, together with the amount you invested, to estimate the expenses that you paid over the period. Simply divide your account value by $1,000 (for example, an $8,600 account value divided by $1,000 = 8.6), then multiply the result by the number in the first column in the row entitled “Expenses Paid During Period” to estimate the expenses you paid on your account during this period.
Hypothetical Example for Comparison Purposes
The information in the table under the heading “Hypothetical Performance (5% return before expenses)” provides information about hypothetical account values and hypothetical expenses
based on the Fund’s actual expense ratio and an assumed rate
of return of 5% per year before expenses, which is not the Fund’s actual return. The hypothetical account values and expenses may not be used to estimate the actual ending account balance or expenses you paid for the period. You may use this information to compare the ongoing costs of investing in the Fund and other funds. To do so, compare this 5% hypothetical example with the 5% hypothetical examples that appear in the shareholder reports of other funds.
Please note that the expenses shown in the table are meant to highlight your ongoing costs only and do not reflect any transactional costs. Therefore, the information under the heading “Hypothetical Performance (5% return before expenses)” is useful in comparing ongoing costs only, and will not help you determine the relative total costs of owning different funds. In addition, if these transactional costs were included, your costs would have been higher. The fee and expenses shown in this section do not reflect and Insurance Company Separate Account or Policy Charges.
Core Class | Actual Performance | Hypothetical Performance (5% return before expenses) | ||||||
Beginning Account Value July 1, 2010 | $ | 1,000.00 | $ | 1,000.00 | ||||
Ending Account Value | $ | 1,030.20 | $ | 1,021.73 | ||||
Expenses Paid During Period* | $ | 3.53 | $ | 3.52 | ||||
| * | Expenses are equal to the Fund’s annualized expense ratio of 0.69% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 184/365 (to reflect the one-half year period). May reflect amounts waived, reimbursed and/or other credits. Without any waivers, reimbursements and/or other credits, expenses would have been higher. |
| Core Bond Fund | 51 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
| Long-Term Investments - 92.8% | ||||||||
| Asset-Backed Securities - 4.8% | ||||||||
Access Group, Inc. | 757 | 773 | ||||||
Accredited Mortgage Loan Trust | 27 | 20 | ||||||
ACE Securities Corp. | 14 | 11 | ||||||
Series 2005-SD3 Class A | 84 | 80 | ||||||
Aegis Asset Backed Securities Trust | 92 | 68 | ||||||
Ally Auto Receivables Trust | 74 | 74 | ||||||
Ameriquest Mortgage Securities, Inc. | 90 | 53 | ||||||
Series 2004-R10 Class A5 | — | — | ||||||
Asset Backed Securities Corp. Home Equity | 1,050 | 764 | ||||||
Bayview Financial Acquisition Trust | 190 | 149 | ||||||
Brazos Higher Education Authority | 411 | 408 | ||||||
Series 2010-1 Class A1 | 300 | 299 | ||||||
Centex Home Equity | 700 | 461 | ||||||
CIT Mortgage Loan Trust | 92 | 88 | ||||||
Series 2007-1 Class 2A2 | 130 | 92 | ||||||
Series 2007-1 Class 2A3 | 180 | 96 | ||||||
Citigroup Mortgage Loan Trust, Inc. | 520 | 471 | ||||||
Series 2006-WFH3 Class A2 | 77 | 77 | ||||||
Series 2007-WFH1 Class A3 | 1,045 | 797 | ||||||
Series 2007-WFH1 Class A4 | 840 | 432 | ||||||
Series 2007-WFH4 Class A2B | 1,290 | 749 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Conseco Financial Corp. | 700 | 699 | ||||||
Series 1999-2 Class A5 | 832 | 846 | ||||||
Countrywide Asset-Backed Certificates | 95 | 21 | ||||||
Series 2004-BC1 Class M1 | 76 | 63 | ||||||
Series 2006-11 Class 1AF4 | 164 | 64 | ||||||
Countrywide Home Equity Loan Trust | 335 | 254 | ||||||
First Franklin Mortgage Loan Asset Backed Certificates | 20 | 20 | ||||||
Series 2007-FF1 Class A2B | 862 | 536 | ||||||
GMAC Mortgage Corp. Loan Trust | 47 | 34 | ||||||
Series 2007-HE3 Class 2A1 | 59 | 40 | ||||||
Goal Capital Funding Trust | 97 | 96 | ||||||
GSAA Trust | 320 | 292 | ||||||
GSAMP Trust | 60 | 41 | ||||||
HSBC Home Equity Loan Trust | 163 | 149 | ||||||
Series 2006-4 Class A3V | 800 | 760 | ||||||
Series 2007-1 Class AS | 584 | 546 | ||||||
Series 2007-3 Class APT | 258 | 238 | ||||||
HSI Asset Securitization Corp. Trust | 5 | 5 | ||||||
Indymac Residential Asset Backed Trust | 224 | 83 | ||||||
IXIS Real Estate Capital Trust | 399 | 379 | ||||||
JP Morgan Mortgage Acquisition Corp. | 1,000 | 468 | ||||||
| 52 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Knowledgeworks Foundation | 292 | 288 | ||||||
Lehman XS Trust | 314 | 242 | ||||||
Series 2005-7N Class 1A1A | 349 | 237 | ||||||
Series 2006-16N Class A4A | 574 | 356 | ||||||
Long Beach Mortgage Loan Trust | 5 | 4 | ||||||
Mastr Asset Backed Securities Trust | 57 | 47 | ||||||
Series 2005-WMC1 Class M1 | 252 | 252 | ||||||
Missouri Higher Education Loan Authority | 910 | 914 | ||||||
Morgan Stanley ABS Capital I | 25 | 6 | ||||||
Series 2006-HE1 Class A4 | 1,950 | 1,107 | ||||||
Series 2007-HE2 Class A2B | 1,043 | 528 | ||||||
Nelnet Student Loan Trust | 394 | 393 | ||||||
New Century Home Equity Loan Trust | 215 | 145 | ||||||
Northstar Education Finance, Inc. | 1,000 | 988 | ||||||
Option One Mortgage Loan Trust | 36 | 17 | ||||||
Series 2003-3 Class M3 | 23 | 8 | ||||||
Series 2003-4 Class M2 | 24 | 9 | ||||||
Park Place Securities, Inc. | 210 | 157 | ||||||
Popular ABS Mortgage Pass-Through Trust | 127 | 117 | ||||||
Renaissance Home Equity Loan Trust | 61 | 33 | ||||||
Series 2005-2 Class AF4 | 85 | 72 | ||||||
Series 2006-1 Class AF6 | 166 | 128 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Residential Asset Mortgage Products, Inc. | 381 | 372 | ||||||
Series 2003-RS11 Class AI6A | 116 | 110 | ||||||
Residential Asset Securities Corp. | 120 | 71 | ||||||
Series 2003-KS2 Class MI3 | 46 | 6 | ||||||
Series 2003-KS4 Class AIIB 0.841% due 06/25/33 (Ê) | 32 | 16 | ||||||
Series 2007-KS2 Class AI1 | 37 | 37 | ||||||
SG Mortgage Securities Trust | 1,500 | 567 | ||||||
SLM Student Loan Trust | 39 | 39 | ||||||
Series 2008-7 Class A2 | 2,800 | 2,803 | ||||||
Small Business Administration Participation Certificates | 620 | 660 | ||||||
Soundview Home Equity Loan Trust | 586 | 557 | ||||||
Structured Asset Securities Corp. | 11 | 11 | ||||||
| 22,893 | ||||||||
| Corporate Bonds and Notes - 16.7% | ||||||||
Agilent Technologies, Inc. | 300 | 326 | ||||||
Alcoa, Inc. | 800 | 853 | ||||||
Allied Waste NA, Inc. | 90 | 95 | ||||||
Allstate Life Global Funding Trusts | 200 | 218 | ||||||
Ally Financial, Inc. | 1,900 | 2,039 | ||||||
7.500% due 09/15/20 (Þ) | 100 | 105 | ||||||
Series UNRE | 400 | 414 | ||||||
Altria Group, Inc. | 200 | 264 | ||||||
American Express Bank FSB | 300 | 323 | ||||||
6.000% due 09/13/17 | 400 | 446 | ||||||
American Express Centurion Bank | 400 | 446 | ||||||
| Core Bond Fund | 53 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
American Express Co. | 200 | 233 | ||||||
American General Finance Corp. | 300 | 242 | ||||||
Series MTNI 4.875% due 07/15/12 (Ñ) | 100 | 94 | ||||||
American International Group, Inc. | 700 | 721 | ||||||
5.450% due 05/18/17 | 1,000 | 1,013 | ||||||
5.850% due 01/16/18 | 900 | 928 | ||||||
Amgen, Inc. | 1,000 | 1,213 | ||||||
Anadarko Petroleum Corp. | 250 | 272 | ||||||
Anheuser-Busch InBev Worldwide, Inc. | 125 | 143 | ||||||
4.125% due 01/15/15 | 225 | 237 | ||||||
7.750% due 01/15/19 (Þ) | 125 | 156 | ||||||
Appalachian Power Co. | 65 | 69 | ||||||
Arizona Public Service Co. | 100 | 110 | ||||||
6.250% due 08/01/16 | 75 | 84 | ||||||
AT&T, Inc. | 200 | 214 | ||||||
5.500% due 02/01/18 | 200 | 222 | ||||||
6.300% due 01/15/38 | 900 | 949 | ||||||
6.400% due 05/15/38 | 175 | 186 | ||||||
BAC Capital Trust XV | 375 | 233 | ||||||
Bank of America Corp. | 115 | 119 | ||||||
6.000% due 09/01/17 | 335 | 351 | ||||||
5.750% due 12/01/17 | 140 | 146 | ||||||
5.625% due 07/01/20 | 175 | 178 | ||||||
5.875% due 01/05/21 | 225 | 233 | ||||||
Bank of America NA | 200 | 179 | ||||||
6.100% due 06/15/17 | 175 | 183 | ||||||
BankAmerica Capital III | 350 | 249 | ||||||
Bear Stearns Cos. LLC (The) | 600 | 655 | ||||||
7.250% due 02/01/18 | 445 | 527 | ||||||
Boardwalk Pipelines, LP | 225 | 247 | ||||||
Boston Scientific Corp. | 275 | 281 | ||||||
7.000% due 11/15/35 | 63 | 63 | ||||||
Burlington Northern Santa Fe LLC | 25 | 29 | ||||||
6.750% due 03/15/29 | 10 | 11 | ||||||
Capital One Capital III | 150 | 150 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Caterpillar Financial Services Corp. | 100 | 107 | ||||||
Cellco Partnership / Verizon Wireless Capital LLC | 700 | 733 | ||||||
8.500% due 11/15/18 | 175 | 229 | ||||||
CenterPoint Energy Resources Corp. | 50 | 56 | ||||||
Chase Capital III Series C | 295 | 233 | ||||||
CHS/Community Health Systems, Inc. | 335 | 352 | ||||||
Chubb Corp. | 175 | 182 | ||||||
CIT Group, Inc. (Ñ) | 156 | 160 | ||||||
7.000% due 05/01/14 | 85 | 86 | ||||||
7.000% due 05/01/15 | 285 | 285 | ||||||
7.000% due 05/01/17 | 198 | 198 | ||||||
Series . 7.000% due 05/01/16 | 141 | 142 | ||||||
Citigroup Capital XXI | 500 | 520 | ||||||
Citigroup, Inc. | 200 | 212 | ||||||
5.625% due 08/27/12 | 200 | 210 | ||||||
5.500% due 04/11/13 | 700 | 745 | ||||||
5.850% due 07/02/13 | 100 | 108 | ||||||
2.286% due 08/13/13 (Ê) | 100 | 102 | ||||||
6.375% due 08/12/14 | 150 | 166 | ||||||
5.000% due 09/15/14 | 400 | 414 | ||||||
4.700% due 05/29/15 | 50 | 52 | ||||||
5.850% due 08/02/16 (Ñ) | 55 | 59 | ||||||
6.000% due 08/15/17 | 850 | 922 | ||||||
6.125% due 11/21/17 | 405 | 444 | ||||||
5.375% due 08/09/20 (Ñ) | 250 | 260 | ||||||
6.125% due 08/25/36 | 300 | 287 | ||||||
6.875% due 03/05/38 | 600 | 666 | ||||||
8.125% due 07/15/39 | 165 | 210 | ||||||
Columbus Southern Power Co. | 10 | 11 | ||||||
Comcast Cable Communications Holdings, Inc. | 100 | 138 | ||||||
Comcast Cable Holdings LLC | 180 | 196 | ||||||
Comcast Holdings Corp. | 125 | 142 | ||||||
Continental Airlines 1999-1 Class A Pass Through Trust | 190 | 201 | ||||||
Continental Airlines 2007-1 Class A Pass Through Trust | 145 | 153 | ||||||
| 54 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Continental Airlines 2009-1 Pass Through Trust | 240 | 275 | ||||||
Countrywide Financial Corp. | 100 | 105 | ||||||
COX Communications, Inc. | 75 | 84 | ||||||
Credit Suisse USA, Inc. | 45 | 49 | ||||||
DCP Midstream LLC | 100 | 129 | ||||||
Dell, Inc. | 400 | 429 | ||||||
Delta Air Lines, Inc. | 382 | 416 | ||||||
Developers Diversified Realty Corp. | 175 | 195 | ||||||
Discover Bank | 250 | 294 | ||||||
DISH DBS Corp. | 125 | 129 | ||||||
Dow Chemical Co. (The) | 300 | 346 | ||||||
Dynegy Roseton / Danskammer Pass Through Trust | 700 | 658 | ||||||
Edison Mission Energy | 675 | 535 | ||||||
El Paso Corp. | 200 | 203 | ||||||
El Paso Natural Gas Co. | 100 | 110 | ||||||
El Paso Pipeline Partners Operating Co. LLC | 75 | 79 | ||||||
Energy Transfer Partners, LP | 300 | 329 | ||||||
Enterprise Products Operating LLC | 125 | 143 | ||||||
Series A | 100 | 107 | ||||||
Farmers Exchange Capital | 500 | 483 | ||||||
7.200% due 07/15/48 (Þ) | 300 | 272 | ||||||
Fifth Third Bancorp | 1,100 | 1,266 | ||||||
Fifth Third Bank | 250 | 240 | ||||||
First Niagara Financial Group, Inc. | 125 | 130 | ||||||
Ford Motor Credit Co. LLC | 1,000 | 1,063 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
FPL Energy Wind Funding LLC | 235 | 229 | ||||||
Freeport-McMoRan Copper & Gold, Inc. | 300 | 332 | ||||||
General Electric Capital Corp. | 75 | 75 | ||||||
5.900% due 05/13/14 | 350 | 387 | ||||||
5.625% due 05/01/18 | 230 | 251 | ||||||
4.375% due 09/16/20 (Ñ) | 300 | 295 | ||||||
5.875% due 01/14/38 | 300 | 311 | ||||||
6.375% due 11/15/67 | 1,900 | 1,881 | ||||||
Series EMTN | 400 | 380 | ||||||
General Electric Co. | 250 | 270 | ||||||
Goldman Sachs Group, Inc. (The) | 150 | 165 | ||||||
6.250% due 09/01/17 | 600 | 662 | ||||||
6.150% due 04/01/18 | 400 | 440 | ||||||
7.500% due 02/15/19 | 550 | 641 | ||||||
6.000% due 06/15/20 (Ñ) | 285 | 308 | ||||||
6.750% due 10/01/37 | 800 | 818 | ||||||
Series MTNB | 100 | 96 | ||||||
HCA, Inc. | 300 | 329 | ||||||
7.875% due 02/15/20 (Ñ) | 125 | 134 | ||||||
HCP, Inc. | 425 | 456 | ||||||
Health Care REIT, Inc. | 400 | 399 | ||||||
4.950% due 01/15/21 (Ñ) | 300 | 289 | ||||||
Healthcare Realty Trust, Inc. | 700 | 755 | ||||||
Historic TW, Inc. | 195 | 233 | ||||||
Hospira, Inc. | 150 | 147 | ||||||
HSBC Bank USA | 600 | 596 | ||||||
Indiantown Cogeneration, LP | 275 | 298 | ||||||
International Lease Finance Corp. | 720 | 763 | ||||||
6.750% due 09/01/16 (Þ) | 100 | 107 | ||||||
International Paper Co. | 75 | 89 | ||||||
JP Morgan Chase Capital XIII | 480 | 380 | ||||||
JP Morgan Chase Capital XX | 200 | 201 | ||||||
JP Morgan Chase Capital XXIII | 545 | 420 | ||||||
| Core Bond Fund | 55 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
JPMorgan Chase & Co. | 170 | 185 | ||||||
6.000% due 01/15/18 | 200 | 223 | ||||||
4.250% due 10/15/20 (Ñ) | 300 | 293 | ||||||
Series 1 | 300 | 319 | ||||||
JPMorgan Chase Bank NA | 70 | 77 | ||||||
6.000% due 10/01/17 | 570 | 631 | ||||||
JPMorgan Chase Capital XXI | 335 | 259 | ||||||
KCP&L Greater Missouri Operations Co. | 640 | 726 | ||||||
Kinder Morgan Energy Partners, LP | 700 | 771 | ||||||
Kraft Foods, Inc. | 200 | 228 | ||||||
6.125% due 08/23/18 | 125 | 143 | ||||||
6.500% due 02/09/40 | 175 | 196 | ||||||
L-3 Communications Corp. | 125 | 129 | ||||||
Lehman Brothers Holdings, Inc. | 200 | 49 | ||||||
6.200% due 09/26/14 (Ø) | 200 | 46 | ||||||
Liberty Property, LP | 275 | 272 | ||||||
Life Technologies Corp. | 145 | 155 | ||||||
5.000% due 01/15/21 | 275 | 272 | ||||||
Manufacturers & Traders Trust Co. | 84 | 80 | ||||||
MBNA Capital B | 985 | 687 | ||||||
MBNA Corp. | 200 | 215 | ||||||
Merrill Lynch & Co., Inc. | 100 | 106 | ||||||
6.050% due 05/16/16 | 300 | 309 | ||||||
6.400% due 08/28/17 | 325 | 343 | ||||||
6.875% due 04/25/18 | 500 | 547 | ||||||
MetLife, Inc. | 350 | 357 | ||||||
6.400% due 12/15/36 | 100 | 94 | ||||||
Metropolitan Life Global Funding I | 200 | 218 | ||||||
Mirant Mid Atlantic Pass Through Trust A | 150 | 155 | ||||||
Mirant Mid Atlantic Pass Through Trust B | 282 | 303 | ||||||
Morgan Stanley | 435 | 402 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
5.450% due 01/09/17 | 225 | 233 | ||||||
6.250% due 08/28/17 (Ñ) | 600 | 647 | ||||||
5.950% due 12/28/17 | 125 | 132 | ||||||
6.625% due 04/01/18 | 450 | 488 | ||||||
5.500% due 07/24/20 (Ñ) | 425 | 429 | ||||||
Series GMTN 2.786% due 05/14/13 (Ê) | 200 | 207 | ||||||
National City Bank | 700 | 631 | ||||||
NBC Universal, Inc. | 300 | 291 | ||||||
Nevada Power Co. | 100 | 112 | ||||||
News America Holdings, Inc. | 20 | 24 | ||||||
NGPL PipeCo LLC | 200 | 216 | ||||||
Nisource Finance Corp. | 145 | 161 | ||||||
6.125% due 03/01/22 | 335 | 361 | ||||||
Oncor Electric Delivery Co. LLC | 550 | 644 | ||||||
Panhandle Eastern Pipeline Co., LP | 450 | 519 | ||||||
Philip Morris International, Inc. | 100 | 116 | ||||||
PNC Bank NA | 175 | 200 | ||||||
Progress Energy, Inc. | 40 | 45 | ||||||
7.050% due 03/15/19 | 200 | 237 | ||||||
ProLogis | 150 | 148 | ||||||
Prudential Financial, Inc. | 375 | 387 | ||||||
4.500% due 11/15/20 | 100 | 98 | ||||||
Prudential Holdings LLC | 550 | 655 | ||||||
Public Service Co. of New Mexico | 260 | 292 | ||||||
Puget Sound Energy, Inc. | 125 | 123 | ||||||
Pulte Group, Inc. | 1,000 | 985 | ||||||
Qwest Corp. | 100 | 113 | ||||||
8.375% due 05/01/16 (Ñ) | 175 | 207 | ||||||
Reinsurance Group of America, Inc. | 75 | 69 | ||||||
Reliant Energy Mid-Atlantic Power Holdings LLC | 299 | 323 | ||||||
| 56 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Rensselaer Polytechnic Institute | 325 | 335 | ||||||
Sabine Pass LNG, LP | 730 | 710 | ||||||
7.500% due 11/30/16 (Ñ) | 65 | 61 | ||||||
Series 144a | 380 | 356 | ||||||
Simon Property Group, LP | 130 | 146 | ||||||
5.650% due 02/01/20 | 275 | 297 | ||||||
4.375% due 03/01/21 | 100 | 99 | ||||||
SLM Corp. | 1,800 | 1,734 | ||||||
Southern Union Co. | 740 | 682 | ||||||
Sprint Capital Corp. | 125 | 132 | ||||||
State Street Capital Trust III | 200 | 203 | ||||||
Symetra Financial Corp. | 150 | 151 | ||||||
Target Corp. | 400 | 433 | ||||||
Tennessee Gas Pipeline Co. | 200 | 232 | ||||||
7.500% due 04/01/17 | 75 | 86 | ||||||
8.375% due 06/15/32 | 100 | 118 | ||||||
Time Warner, Inc. | 400 | 451 | ||||||
Transatlantic Holdings, Inc. | 150 | 154 | ||||||
TransDigm, Inc. | 250 | 259 | ||||||
UAL 2009-1 Pass Through Trust | 94 | 109 | ||||||
Union Electric Co. | 205 | 232 | ||||||
Union Pacific Corp. | 400 | 449 | ||||||
UnitedHealth Group, Inc. | 200 | 213 | ||||||
6.000% due 06/15/17 | 3 | 3 | ||||||
6.500% due 06/15/37 | 45 | 50 | ||||||
Valero Energy Corp. | 450 | 559 | ||||||
6.125% due 02/01/20 | 100 | 106 | ||||||
Wachovia Corp. | 100 | 109 | ||||||
5.750% due 02/01/18 (Ñ) | 500 | 555 | ||||||
WCI Finance LLC / WEA Finance LLC | 75 | 80 | ||||||
WEA Finance LLC / WT Finance Aust Pty, Ltd. | 205 | 233 | ||||||
6.750% due 09/02/19 (Þ) | 95 | 106 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Wells Fargo & Co. | 300 | 332 | ||||||
Series K | 3,300 | 3,483 | ||||||
Whirlpool Corp. | 25 | 27 | ||||||
8.600% due 05/01/14 | 75 | 86 | ||||||
Williams Cos., Inc. (The) | 416 | 491 | ||||||
8.750% due 03/15/32 (Ñ) | 175 | 214 | ||||||
Windstream Corp. | 125 | 132 | ||||||
ZFS Finance USA Trust II | 300 | 295 | ||||||
| 79,022 | ||||||||
| International Debt - 9.2% | ||||||||
Achmea Hypotheekbank NV | 900 | 936 | ||||||
AK Transneft OJSC Via TransCapitalInvest, Ltd. | 100 | 124 | ||||||
Anglo American Capital PLC | 100 | 120 | ||||||
9.375% due 04/08/19 (Þ) | 100 | 135 | ||||||
ANZ National International, Ltd. | 600 | 660 | ||||||
ArcelorMittal | 175 | 186 | ||||||
ARES CLO Funds | 384 | 371 | ||||||
Series 2005-10A Class A3 | 635 | 597 | ||||||
Arkle Master Issuer PLC | 600 | 599 | ||||||
Armstrong Loan Funding, Ltd. | 306 | 303 | ||||||
AstraZeneca PLC | 100 | 116 | ||||||
AWAS Aviation Capital, Ltd. | 365 | 362 | ||||||
Bank of Montreal | 100 | 102 | ||||||
Barclays Bank PLC | 1,300 | 1,392 | ||||||
6.050% due 12/04/17 (Þ) | 200 | 205 | ||||||
BAT International Finance PLC | 150 | 197 | ||||||
BBVA Bancomer SA | 300 | 317 | ||||||
Black Diamond CLO, Ltd. | 750 | 677 | ||||||
| Core Bond Fund | 57 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
BM&FBovespa SA | 100 | 102 | ||||||
BNP Paribas | 300 | 273 | ||||||
Bolivarian Republic of Venezuela | 60 | 39 | ||||||
BP Capital Markets PLC | 175 | 190 | ||||||
3.875% due 03/10/15 | 150 | 155 | ||||||
4.500% due 10/01/20 | 150 | 150 | ||||||
BRFkredit AS | 1,200 | 1,219 | ||||||
Canadian Natural Resources, Ltd. | 100 | 108 | ||||||
Chatham Light CLO, Ltd. | 495 | 463 | ||||||
Cie de Financement Foncier | 500 | 502 | ||||||
2.125% due 04/22/13 (Þ) | 200 | 202 | ||||||
Corp. Nacional del Cobre de Chile | 200 | 243 | ||||||
Covidien International Finance SA | 175 | 175 | ||||||
Credit Agricole SA | 150 | 154 | ||||||
Credit Suisse NY | 770 | 826 | ||||||
CSN Islands XI Corp. | 200 | 216 | ||||||
Danske Bank A/S | 500 | 512 | ||||||
Deutsche Bank AG | 600 | 672 | ||||||
Dexia Credit Local SA | 500 | 498 | ||||||
DnB NOR Boligkreditt | 500 | 475 | ||||||
Dolphin Energy, Ltd. | 120 | 128 | ||||||
Electricite De France | 200 | 220 | ||||||
6.500% due 01/26/19 (Þ) | 200 | 233 | ||||||
6.950% due 01/26/39 (Þ) | 200 | 237 | ||||||
Endurance Specialty Holdings, Ltd. | 100 | 105 | ||||||
Enel Finance International SA | 300 | 328 | ||||||
5.125% due 10/07/19 (Ñ)(Þ) | 175 | 173 | ||||||
Export-Import Bank of Korea | 700 | 758 | ||||||
FIH Erhvervsbank A/S | 500 | 513 | ||||||
Gazprom International SA for Gazprom | 58 | 62 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Gazprom Via Gaz Capital SA | 110 | 135 | ||||||
HBOS PLC | 825 | 772 | ||||||
Holmes Master Issuer PLC | 300 | 300 | ||||||
HSBC Bank USA | 590 | 734 | ||||||
HSBC Holdings PLC | ||||||||
6.500% due 05/02/36 | 100 | 104 | ||||||
6.500% due 09/15/37 | 100 | 105 | ||||||
Indian Oil Corp., Ltd. | 400 | 412 | ||||||
ING Bank NV | 600 | 585 | ||||||
Israel Government AID Bond | 400 | 444 | ||||||
Korea Electric Power Corp. | 60 | 63 | ||||||
LeasePlan Corp. NV | 400 | 411 | ||||||
Lloyds TSB Bank PLC | 200 | 184 | ||||||
Macquarie Bank, Ltd. | 1,000 | 1,056 | ||||||
Majapahit Holding BV | 100 | 116 | ||||||
Mexico Government International Bond | 260 | 266 | ||||||
Monument Park CDO, Ltd. | 628 | 607 | ||||||
Morgan Stanley Bank AG for OAO | 900 | 1,020 | ||||||
MUFG Capital Finance 1, Ltd. | 200 | 202 | ||||||
National Australia Bank, Ltd. | 800 | 867 | ||||||
Nexen, Inc. | 125 | 136 | ||||||
Noble Group, Ltd. | 100 | 111 | ||||||
North American Development Bank | 400 | 412 | ||||||
Peruvian Government International Bond | 40 | 37 | ||||||
Petrobras International Finance Co. - Pifco | 800 | 946 | ||||||
Petro-Canada | 100 | 114 | ||||||
Petroleos Mexicanos | 320 | 386 | ||||||
| 58 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Qatar Government International Bond | 520 | 549 | ||||||
Ras Laffan Liquefied Natural Gas | 250 | 258 | ||||||
Series REGS | 300 | 346 | ||||||
Republic of Venezuela | 60 | 41 | ||||||
Resona Bank, Ltd. | 100 | 100 | ||||||
Royal Bank of Scotland Group PLC | 300 | 231 | ||||||
Series 1 | 300 | 296 | ||||||
Royal Bank of Scotland PLC (The) | 1,200 | 1,209 | ||||||
2.625% due 05/11/12 (Þ) | 300 | 307 | ||||||
4.875% due 08/25/14 (Þ) | 1,000 | 1,024 | ||||||
5.625% due 08/24/20 (Ñ) | 200 | 199 | ||||||
Russia Government International Bond | 107 | 124 | ||||||
RZD Capital, Ltd. | 500 | 520 | ||||||
Santander US Debt SA Unipersonal | 400 | 389 | ||||||
Silverstone Master Issuer PLC | 500 | 501 | ||||||
SLM Corp. | 150 | 178 | ||||||
Sparebanken 1 Boligkreditt | 1,000 | 993 | ||||||
Stadshypotek AB | 800 | 799 | ||||||
State of Qatar | 100 | 107 | ||||||
Suncor Energy, Inc. | 100 | 115 | ||||||
Swedbank AB | ||||||||
2.800% due 02/10/12 (Þ) | 100 | 102 | ||||||
2.900% due 01/14/13 (Þ) | 100 | 103 | ||||||
Swedish Housing Finance Corp. | 1,000 | 1,027 | ||||||
Teck Resources, Ltd. | 200 | 260 | ||||||
Telecom Italia Capital SA | 225 | 211 | ||||||
Telemar Norte Leste SA | 125 | 120 | ||||||
TransCanada PipeLines, Ltd. | 225 | 222 | ||||||
Transocean, Inc. | ||||||||
4.950% due 11/15/15 | 75 | 78 | ||||||
6.500% due 11/15/20 | 300 | 319 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
UBS AG | 270 | 123 | ||||||
Series DPNT | ||||||||
5.875% due 12/20/17 | 400 | 440 | ||||||
5.750% due 04/25/18 | 100 | 109 | ||||||
Vale Overseas, Ltd. | 400 | 426 | ||||||
Venezuela Government International Bond | 150 | 106 | ||||||
Vivendi SA | 400 | 431 | ||||||
Wells Fargo & Co. | 400 | 507 | ||||||
Westpac Banking Corp. | ||||||||
1.900% due 12/14/12 (Þ) | 800 | 814 | ||||||
3.585% due 08/14/14 (Þ) | 700 | 746 | ||||||
WG Horizons CLO | 800 | 730 | ||||||
White Nights Gazprom | ||||||||
10.500% due 03/08/14 | 200 | 239 | ||||||
10.500% due 03/25/14 | 300 | 358 | ||||||
| 43,612 | ||||||||
| Loan Agreements - 0.2% | ||||||||
Adam Aircraft Industries, Term Loan | 49 | — | ||||||
CIT Group, Inc. Term Loan | 500 | 510 | ||||||
HCA, Inc. | 507 | 501 | ||||||
| 1,011 | ||||||||
| Mortgage-Backed Securities - 45.4% | ||||||||
ABN Amro Mortgage Corp. | 1,909 | 1,806 | ||||||
Adjustable Rate Mortgage Trust | 51 | 45 | ||||||
American Home Mortgage Assets | 1,009 | 728 | ||||||
American Home Mortgage Investment Trust | 72 | 64 | ||||||
Banc of America Commercial Mortgage, Inc. | 533 | 552 | ||||||
Series 2005-2 Class A | 316 | 328 | ||||||
Series 2006-1 Class A | 280 | 300 | ||||||
Series 2006-2 Class A | 200 | 219 | ||||||
| Core Bond Fund | 59 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Series 2006-4 Class A | 500 | 536 | ||||||
Banc of America Funding Corp. | 85 | 82 | ||||||
Series 2006-3 Class 5A | 475 | 433 | ||||||
Series 2006-A Class 4A1 | 353 | 294 | ||||||
Series 2006-I Class 5A | 1,345 | 1,191 | ||||||
Banc of America Mortgage Securities, Inc. | 6 | 6 | ||||||
Series 2004-11 Class 2A | 213 | 220 | ||||||
Series 2005-H Class 2A5 | 220 | 177 | ||||||
Series 2006-B Class 1A | 69 | 41 | ||||||
Bear Stearns Adjustable Rate Mortgage Trust | 25 | 24 | ||||||
Series 2003-8 Class 4A1 | 73 | 69 | ||||||
Series 2004-9 Class 22A1 | 47 | 46 | ||||||
Series 2005-2 Class | 773 | 734 | ||||||
Series 2007-3 Class 1A1 | 277 | 208 | ||||||
Bear Stearns Alt-A Trust | 164 | 128 | ||||||
Series 2005-7 Class 22A1 | 398 | 302 | ||||||
Citigroup Mortgage Loan Trust, Inc. | 49 | 47 | ||||||
Series 2006-AR7 Class 1A4A | 633 | 477 | ||||||
Series 2007-AR8 Class 2A1A | 823 | 602 | ||||||
Citigroup/Deutsche Bank Commercial Mortgage Trust | 340 | 366 | ||||||
Series 2006-CD3 Class A5 | 190 | 204 | ||||||
Commercial Mortgage Pass Through Certificates | 200 | 209 | ||||||
Series 2007-C9 Class A4 | 360 | 387 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Countrywide Alternative Loan Trust | 39 | 37 | ||||||
Series 2005-48T1 Class A6 | 897 | 664 | ||||||
Series 2006-36T2 Class 1A9 | 288 | 157 | ||||||
Series 2006-OA16 Class A2 | 1,596 | 1,017 | ||||||
Series 2006-OA19 Class A1 | 681 | 394 | ||||||
Series 2007-15CB Class A5 | 683 | 498 | ||||||
Series 2007-J2 Class 2A1 | 190 | 152 | ||||||
Series 2007-OA11 Class A1A | 896 | 495 | ||||||
Countrywide Home Loan Mortgage Pass Through Trust | 111 | 96 | ||||||
Series 2004-22 Class A3 | 155 | 124 | ||||||
Series 2004-HYB9 Class 1A1 | 256 | 221 | ||||||
Series 2005-1 Class 2A1 | 1,508 | 842 | ||||||
Series 2005-3 Class 1A2 | 23 | 15 | ||||||
Series 2005-HYB9 Class 3A2A | 48 | 39 | ||||||
Series 2007-1 Class A1 | 1,390 | 1,183 | ||||||
Series 2007-2 Class A2 | 2,100 | 1,808 | ||||||
Series 2007-4 Class 1A10 | 2,000 | 1,632 | ||||||
Series 2007-HY1 Class 1A2 | 64 | 9 | ||||||
Credit Suisse First Boston Mortgage Securities Corp. | 335 | 291 | ||||||
Credit Suisse Mortgage Capital Certificates | 473 | 360 | ||||||
Series 2006-C2 Class A3 | 100 | 105 | ||||||
Deutsche ALT-A Securities, Inc. Alternate Loan Trust | 465 | 251 | ||||||
Series 2007-OA1 Class A1 | 2,253 | 1,232 | ||||||
Series 2007-OA2 Class A1 | 1,240 | 738 | ||||||
| 60 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Fannie Mae | ||||||||
2.896% due 2017 (Ê) | 27 | 27 | ||||||
6.000% due 2017 | 29 | 32 | ||||||
4.000% due 2018 | 422 | 440 | ||||||
4.500% due 2018 | 114 | 122 | ||||||
6.000% due 2019 | 218 | 237 | ||||||
5.500% due 2020 | 94 | 101 | ||||||
6.000% due 2020 | 269 | 292 | ||||||
5.500% due 2021 | 185 | 199 | ||||||
5.500% due 2022 | 243 | 261 | ||||||
5.500% due 2023 | 226 | 245 | ||||||
4.500% due 2025 | 1,267 | 1,341 | ||||||
6.000% due 2026 | 452 | 491 | ||||||
6.000% due 2027 | 246 | 267 | ||||||
6.000% due 2028 | 18 | 20 | ||||||
6.000% due 2032 | 252 | 278 | ||||||
5.000% due 2033 | 102 | 108 | ||||||
5.500% due 2033 | 16 | 18 | ||||||
6.000% due 2033 | 13 | 14 | ||||||
5.000% due 2034 | 788 | 834 | ||||||
5.500% due 2034 | 613 | 662 | ||||||
5.500% due 2035 | 6 | 6 | ||||||
3.865% due 2036 (Ê) | 271 | 270 | ||||||
5.500% due 2037 | 880 | 942 | ||||||
6.000% due 2037 | 596 | 653 | ||||||
6.500% due 2037 | 9,795 | 10,893 | ||||||
5.500% due 2038 | 4,303 | 4,627 | ||||||
6.000% due 2038 | 1,168 | 1,283 | ||||||
4.500% due 2039 | 2,694 | 2,779 | ||||||
4.000% due 2040 | 7,137 | 7,111 | ||||||
4.500% due 2040 | 4,848 | 4,985 | ||||||
15 Year TBA(Ï) | ||||||||
3.000% | 4,000 | 3,909 | ||||||
3.500% | 1,865 | 1,878 | ||||||
4.000% | 2,000 | 2,060 | ||||||
30 Year TBA(Ï) | ||||||||
4.000% | 1,000 | 995 | ||||||
4.500% | 25,000 | 25,658 | ||||||
5.000% | 2,000 | 2,103 | ||||||
5.500% | 7,000 | 7,489 | ||||||
Series 2003-343 Class 6 | 149 | 27 | ||||||
Series 2003-345 Class 18 | 370 | 40 | ||||||
Series 2003-345 Class 19 | 409 | 44 | ||||||
Series 2005-365 Class 12 | 573 | 94 | ||||||
Series 2006-369 Class 8 | 105 | 18 | ||||||
Fannie Mae REMICS | ||||||||
Series 1999-56 Class Z | 63 | 71 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Series 2003-32 Class FH | 126 | 126 | ||||||
Series 2003-35 Class FY | 199 | 200 | ||||||
Series 2006-27 Class SH | 3,078 | 444 | ||||||
Series 2006-48 Class LG | 12 | 11 | ||||||
Series 2007-30 Class AF | 105 | 105 | ||||||
Series 2010-95 Class S | 3,125 | 514 | ||||||
Fannie Mae Whole Loan | ||||||||
Series 2003-W1 Class 1A1 | 29 | 33 | ||||||
Federal Home Loan Mortgage Corp. Structured Pass Through Securities | 23 | 22 | ||||||
Freddie Mac | ||||||||
6.000% due 2016 | 12 | 13 | ||||||
5.000% due 2018 | 173 | 184 | ||||||
5.000% due 2019 | 337 | 360 | ||||||
5.000% due 2020 | 308 | 329 | ||||||
3.500% due 2025 | 1,500 | 1,511 | ||||||
2.813% due 2030 (Ê) | 1 | 1 | ||||||
5.000% due 2035 | 1,072 | 1,130 | ||||||
5.293% due 2037 (Ê) | 235 | 249 | ||||||
5.500% due 2037 | 1,018 | 1,079 | ||||||
6.000% due 2037 | 924 | 1,020 | ||||||
5.500% due 2038 | 4,082 | 4,412 | ||||||
6.000% due 2038 | 2,677 | 2,945 | ||||||
4.500% due 2039 | 3,020 | 3,121 | ||||||
6.000% due 2039 | 94 | 104 | ||||||
4.500% due 2040 | 1,871 | 1,919 | ||||||
5.500% due 2040 | 928 | 990 | ||||||
15 Year TBA (Ï) | ||||||||
3.500% | 8,110 | 8,158 | ||||||
30 Year TBA (Ï) | ||||||||
4.000% | 3,000 | 2,978 | ||||||
5.000% | 3,000 | 3,146 | ||||||
5.500% | 3,000 | 3,197 | ||||||
Freddie Mac REMICS | 9 | 9 | ||||||
Series 2005-3019 Class IM | 55 | 2 | ||||||
Series 2007-3335 Class BF | 148 | 148 | ||||||
Series 2007-3335 Class FT | 307 | 306 | ||||||
Ginnie Mae I | ||||||||
3.950% due 2025 | 100 | 100 | ||||||
6.000% due 2029 | 7 | 8 | ||||||
| Core Bond Fund | 61 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
6.500% due 2037 | 537 | 606 | ||||||
6.500% due 2038 | 1,928 | 2,177 | ||||||
4.500% due 2039 | 1,814 | 1,887 | ||||||
5.500% due 2039 | 162 | 176 | ||||||
6.500% due 2039 | 747 | 843 | ||||||
30 Year TBA (Ï) | ||||||||
3.500% | 3,000 | 2,888 | ||||||
4.000% | 3,755 | 3,780 | ||||||
Ginnie Mae II | ||||||||
3.375% due 2026 (Ê) | 117 | 121 | ||||||
2.625% due 2027 (Ê) | 8 | 8 | ||||||
2.750% due 2032 (Ê) | 43 | 44 | ||||||
30 Year TBA(Ï) | ||||||||
4.000% | 4,840 | 4,833 | ||||||
5.000% | 1,000 | 1,063 | ||||||
Goldman Sachs Mortgage Securities Corp. II | 500 | 523 | ||||||
Government National Mortgage Association | 13 | 13 | ||||||
Interest Only STRIP | 2,923 | 435 | ||||||
Series 2010-116 Class MP | 2,094 | 2,094 | ||||||
Greenwich Capital Commercial Funding Corp. | 685 | 717 | ||||||
Series 2004-GG1 Class A7 | 465 | 502 | ||||||
Series 2006-GG7 Class A4 | 1,105 | 1,206 | ||||||
Series 2007-GG9 Class A4 | 1,115 | 1,175 | ||||||
GS Mortgage Securities Corp. II | 320 | 344 | ||||||
Series 2006-GG8 Class AAB | 200 | 212 | ||||||
GSR Mortgage Loan Trust | 160 | 156 | ||||||
Series 2006-2F Class 3A3 | 812 | 652 | ||||||
Series 2006-3F Class 2A3 | 385 | 340 | ||||||
Series 2006-8F Class 4A17 | 543 | 467 | ||||||
Series 2007-AR1 Class 1A1 | 1,708 | 1,081 | ||||||
Series 2007-AR2 Class 2A1 | 1,006 | 763 | ||||||
Harborview Mortgage Loan Trust | 1,404 | 951 | ||||||
Series 2005-4 Class 3A1 | 122 | 97 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Indymac Index Mortgage Loan Trust | 512 | 426 | ||||||
Series 2006-AR35 Class 2A1A | 544 | 292 | ||||||
Series 2007-AR5 Class 1A1 | 632 | 317 | ||||||
JP Morgan Chase Commercial Mortgage Securities Corp. | 646 | 664 | ||||||
Series 2004-LN2 Class A1 | 231 | 236 | ||||||
Series 2005-LDP4 Class A3A1 | 185 | 187 | ||||||
Series 2005-LDP4 Class A4 | 325 | 344 | ||||||
Series 2005-LDP5 Class A4 | 390 | 420 | ||||||
Series 2006-CB16 Class A4 | 220 | 235 | ||||||
Series 2006-LDP7 Class A4 | 650 | 711 | ||||||
Series 2006-LDP8 Class A3B | 250 | 261 | ||||||
Series 2006-LDP8 Class A4 | 290 | 309 | ||||||
Series 2007-CB18 Class A4 | 1,200 | 1,258 | ||||||
Series 2007-CB19 Class A4 | 340 | 361 | ||||||
Series 2007-LD12 Class A4 | 100 | 106 | ||||||
Series 2007-LDPX Class A3 | 700 | 728 | ||||||
JP Morgan Mortgage Trust | 60 | 60 | ||||||
Series 2005-A5 Class TA1 | 562 | 551 | ||||||
Series 2005-S3 Class 1A2 | ||||||||
5.750% due 01/25/36 | 95 | 86 | ||||||
Series 2007-A1 Class 2A2 | 406 | 377 | ||||||
Series 2007-A4 Class 3A1 | 2,182 | 1,900 | ||||||
Series 2007-S3 Class 1A8 | 1,401 | 1,339 | ||||||
LB-UBS Commercial Mortgage Trust | 1,500 | 1,602 | ||||||
Lehman Mortgage Trust | 258 | 211 | ||||||
Series 2006-8 Class 2A1 | 639 | 363 | ||||||
Series 2007-8 Class 3A1 | 797 | 438 | ||||||
| 62 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Lehman XS Trust | 785 | 425 | ||||||
MASTR Alternative Loans Trust Series | 147 | 99 | ||||||
Series 2004-10 Class 5A6 | 152 | 152 | ||||||
Mellon Residential Funding Corp. | 108 | 105 | ||||||
Merrill Lynch Floating Trust | 405 | 393 | ||||||
Merrill Lynch Mortgage Investors, Inc. | 83 | 63 | ||||||
Merrill Lynch/Countrywide Commercial Mortgage Trust | 100 | 102 | ||||||
MLCC Mortgage Investors, Inc. | 49 | 44 | ||||||
Morgan Stanley Capital I | 740 | 784 | ||||||
Series 2005-IQ10 Class AAB | 407 | 427 | ||||||
Series 2006-HQ9 Class A4 | 295 | 320 | ||||||
Series 2006-HQ10 Class A4 | 130 | 138 | ||||||
Series 2007-T27 Class A4 | 675 | 733 | ||||||
NCUA Guaranteed Notes | 498 | 484 | ||||||
Series 2010-R1 Class 1A | 1,572 | 1,570 | ||||||
Series 2010-R2 Class 1A | 1,591 | 1,591 | ||||||
Series 2010-R2 Class 2A | 806 | 801 | ||||||
Prime Mortgage Trust | 19 | 17 | ||||||
Residential Accredit Loans, Inc. | 1,708 | 981 | ||||||
Series 2005-QS13 Class 2A3 | 386 | 338 | ||||||
Series 2007-QO4 Class A1 | 1,383 | 811 | ||||||
Residential Asset Securitization Trust | 151 | 140 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
Series 2005-A10 Class A3 | 319 | 269 | ||||||
Series 2006-A9CB Class A6 | 259 | 156 | ||||||
Residential Funding Mortgage Securities I | 440 | 352 | ||||||
Series 2006-SA4 Class 2A1 | 281 | 208 | ||||||
Sequoia Mortgage Trust | 46 | 39 | ||||||
Structured Adjustable Rate Mortgage Loan Trust | 48 | 41 | ||||||
Series 2004-16 Class 3A1 | 187 | 161 | ||||||
Series 2006-12 Class 2A1 | 620 | 481 | ||||||
Structured Asset Mortgage Investments, Inc. | 138 | 128 | ||||||
Series 2006-AR2 Class A1 | 446 | 290 | ||||||
Series 2006-AR8 Class A1A | 623 | 403 | ||||||
Structured Asset Securities Corp. | 733 | 712 | ||||||
Suntrust Adjustable Rate Mortgage Loan Trust | 3,044 | 2,586 | ||||||
Thornburg Mortgage Securities Trust | 752 | 745 | ||||||
Series 2006-6 Class A1 | 76 | 75 | ||||||
Wachovia Bank Commercial Mortgage Trust | 1,000 | 1,081 | ||||||
Series 2006-C27 Class A3 | 700 | 753 | ||||||
Washington Mutual Alternative Mortgage Pass-Through Certificates | 585 | 278 | ||||||
Washington Mutual Mortgage Pass Through Certificates | 189 | 10 | ||||||
Series 2005-AR13 Class A1A1 | 28 | 23 | ||||||
Series 2005-AR17 Class A1A1 | 332 | 283 | ||||||
Series 2006-AR2 Class 1A1 | 475 | 386 | ||||||
| Core Bond Fund | 63 |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Series 2007-HY3 Class 4B1 Interest Only STRIP | 124 | 9 | ||||||
Wells Fargo Mortgage Backed Securities Trust | 250 | 233 | ||||||
Series 2006-6 Class 1A22 | 1,300 | 1,208 | ||||||
Series 2006-AR2 Class 2A1 | 205 | 181 | ||||||
Series 2006-AR10 Class 4A1 | 55 | 43 | ||||||
Series 2006-AR14 Class 1A7 | 1,700 | 1,450 | ||||||
Series 2006-AR17 Class A1 | 1,116 | 908 | ||||||
Series 2007-8 Class 1A16 | 224 | 200 | ||||||
Series 2007-AR8 Class A1 | 375 | 302 | ||||||
| 214,431 | ||||||||
| Municipal Bonds - 1.9% | ||||||||
Chicago Transit Authority Revenue Bonds | 400 | 396 | ||||||
City of New York New York General Obligation Unlimited | 1,100 | 1,077 | ||||||
Connecticut State Health & Educational Facility Authority Revenue Bonds | 100 | 101 | ||||||
County of Clark Nevada Revenue Bonds | 100 | 98 | ||||||
Illinois Municipal Electric Agency Revenue Bonds | 100 | 103 | ||||||
Irvine Ranch Water District Revenue Bonds | 1,000 | 1,003 | ||||||
Los Angeles Unified School District General Obligation Unlimited | 400 | 392 | ||||||
New Jersey State Turnpike Authority Revenue Bonds | 1,000 | 1,084 | ||||||
New York State Dormitory Authority Revenue Bonds | 50 | 50 | ||||||
North Carolina Turnkpike Authority Revenue Bonds | 100 | 104 | ||||||
Northern California Power Agency Revenue Bonds | 1,000 | 1,011 | ||||||
Public Power Generation Agency Revenue Bonds | 100 | 99 | ||||||
| Principal Amount ($) or Shares | Market Value $ | |||||||
State of California General Obligation Unlimited | 425 | 439 | ||||||
7.950% due 03/01/36 | 110 | 113 | ||||||
5.650% due 04/01/39 (Ê) | 100 | 106 | ||||||
7.550% due 04/01/39 | 655 | 680 | ||||||
7.625% due 03/01/40 | 400 | 417 | ||||||
7.600% due 11/01/40 | 325 | 338 | ||||||
State of Illinois General Obligation Unlimited | 100 | 101 | ||||||
7.350% due 07/01/35 | 550 | 539 | ||||||
State of Louisiana Revenue Bonds | 400 | 404 | ||||||
University of California Revenue Bonds | 400 | 388 | ||||||
| 9,043 | ||||||||
| Non-US Bonds - 1.5% | ||||||||
Argentina Government International Bond | EUR 1,730 | 290 | ||||||
Canadian Government Bond | CAD 400 | 409 | ||||||
2.000% due 12/01/14 | CAD 1,000 | 997 | ||||||
FCE Bank plc | EUR 600 | 838 | ||||||
Federative Republic of Brazil | BRL 300 | 215 | ||||||
10.250% due 01/10/28 | BRL 1,400 | 875 | ||||||
Fortis Bank Nederland Holding NV | EUR 200 | 273 | ||||||
Hellas Telecommunications Luxembourg V Series REGS | EUR 128 | 38 | ||||||
Impress Holdings BV Series REGS | EUR 125 | 166 | ||||||
Mexican Bonos Series M 20 | MXN 3,991 | 403 | ||||||
Mexican Bonos Desarr | MXN 1,726 | 149 | ||||||
Morgan Stanley | EUR 600 | 766 | ||||||
Province of Ontario Canada | CAD 400 | 423 | ||||||
4.600% due 06/02/39 | CAD 100 | 105 | ||||||
Societe Financement de l’Economie Francaise | EUR 100 | 136 | ||||||
South Africa Government Bond | ZAR 1,900 | 287 | ||||||
Series R208 | ZAR 4,340 | 594 | ||||||
| 6,964 | ||||||||
| United States Government Agencies - 3.8% | ||||||||
Fannie Mae | 900 | 1,036 | ||||||
| 64 | Core Bond Fund |
Table of Contents
Russell Investment Funds
Core Bond Fund
Schedule of Investments, continued — December 31, 2010
Amounts in thousands (except share amounts)
| Principal Amount ($) or Shares | Market Value $ | |||||||
Federal Home Loan Banks | 1,570 | 1,570 | ||||||
3.625% due 10/18/13 | 100 | 107 | ||||||
3.125% due 12/13/13 | 200 | 211 | ||||||
4.500% due 09/13/19 | 1,100 | 1,183 | ||||||
Federal Home Loan Mortgage Corp. | 2,970 | 2,976 | ||||||
1.750% due 09/10/15 | 1,000 | 983 | ||||||
Federal National Mortgage Association | 855 | 855 | ||||||
0.420% due 09/13/12 (Ê) | 1,455 | 1,457 | ||||||
0.291% due 10/18/12 (Ê) | 1,485 | 1,486 | ||||||
1.250% due 08/20/13 | 100 | 101 | ||||||
1.125% due 09/30/13 | 100 | 100 | ||||||
2.875% due 12/11/13 | 100 | 105 | ||||||
0.750% due 12/18/13 | 2,600 | 2,571 | ||||||
3.000% due 09/16/14 | 500 | 527 | ||||||
1.625% due 10/26/15 | 100 | 97 | ||||||
Freddie Mac | 500 | 560 | ||||||
4.375% due 07/17/15 | 900 | 993 | ||||||
5.250% due 04/18/16 | 600 | 686 | ||||||
5.000% due 02/16/17 | 100 | 113 | ||||||
Tennessee Valley Authority | 100 | 94 | ||||||
| 17,811 | ||||||||
| United States Government Treasuries - 9.3% | ||||||||
United States Treasury Principal | 1,938 | 1,288 | ||||||
United States Treasury Inflation Indexed Bonds | ||||||||
3.375% due 01/15/12 (Æ) | 1,293 | 1,352 | ||||||
3.000% due 07/15/12 | 730 | 775 | ||||||
2.000% due 01/15/16 (Æ) | 1,320 | 1,437 | ||||||
1.250% due 07/15/20 (Æ) | 401 | 411 | ||||||
2.375% due 01/15/25 (Æ) | 4,125 | |||||||