Russell's Overlay Services Continues to Surge (Russell.com)

Russell's Overlay Services Continues to Surge
Firm Sees 50% Growth in 2006 and Announces Three New Clients

Tacoma, WA — October 17, 2006 — Following a year when Russell Investment Group's overlay services client base more than doubled, growing from $100 billion to $250 billion in 2005, the business continues to surge in 2006. As of August 31, Russell's overlay services client base stands at $372 billion, and synthetic exposure across these clients exceeds $20 billion. Overlay services — which include policy implementation, portable alpha and other customized solutions — aim to reduce tracking error to policy while improving investment performance.

As part of Russell's growth, the overlay services team also announced three new client engagements:

Washington State Investment Board selected Russell to run an overlay program for its $55 billion fund.
Aetna Inc. has retained Russell to run a full policy implementation package for its $5.3 billion employee retirement fund.
San Bernardino County Employees' Retirement Association recently selected Russell to manage an overlay derivative strategy for its $5.4 billion fund.

"Overlay services are becoming a must-have, especially for those plan sponsors seeking flexibility in the management of their pension funds and in the implementation of their investment policy," said Michael Thomas, director of overlay services. "Russell is extremely proud of the results delivered to our existing overlay services clients and will continue to develop and execute solutions that effectively capture administrative alpha. On average, Russell's policy implementation clients have seen — at the plan level — 17 basis points contributed to their return while reducing total fund tracking error. We calculate that's more than $8.5 million a year on a $5 billion fund, and, in many cases, that would be enough for an entire month's worth of benefit payments."

Pension funds and other institutional investors are working with Russell's overlay services team to optimize tactical shifts in asset allocation and currency hedging. For many clients, Russell provides currency and asset class overlays in a single, integrated solution that implements tactical adjustments in a timely and cost-effective manner.

"We are always looking for innovations to help improve our fund's performance and reduce risk," said Joe Dear, Executive Director, Washington State Investment Board. "Russell has a very deep portfolio management team dedicated to overlays, which gave us confidence in choosing them as a partner."

The overlay services team operates within Russell Implementation Services, a division of Russell's Institutional Investor Services group that is dedicated to helping clients improve their net investment returns by providing efficient implementation tools to multi-manager portfolios. Transition management, commission management and agency currency execution are a few of the other growing implementation services.

For three decades, Russell has been researching the discovery and implementation of techniques designed to minimize the cost of strategic portfolio changes by its clients. Russell's global implementation services team currently includes 105 specialists who handle implementation issues for clients representing more than $4 trillion in assets.

About Russell
Russell Investment Group, a global leader in multi-manager investing, provides investment products and services in 44 countries. Russell manages more than $171 billion in assets as of 6/30/06 and advises clients worldwide representing more than $2.4 trillion. Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Sydney, Singapore, Auckland and Tokyo.

Contacts:
Jennifer Tice, 253-439-2921
Matt Burkhard, 718-875-2122

Russell Investment Group, a Washington, USA corporation, operates through subsidiaries worldwide.

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