Individual investors

Using indices as benchmarks Measure performance by comparing apples to apples If the Dow Jones Industrial Average is skyrocketing while your fund's pool of stocks is making a slow climb, that doesn't necessarily mean that your fund is underperforming. You could be using the wrong benchmark to measure performance. Comparing apples to apples You can use indices to track current and historical market performance by specific market segment (large/small capitalization) or investment style (growth/value). It's important to use the index that most closely approximates the universe of stocks a manager actually chooses from — whether that is large cap, small cap, growth, value or the broad market. Comparing your results against the correct benchmark gives you a more accurate statement of how your fund is performing. And comparing different indexes is a good indication of how different market segments are performing. An example comparison To illustrate the importance of using the right benchmark, consider this example. Suppose small company stocks, represented by the Russell 2000® Index, were rising, but large-company stocks, represented by the Russell 1000® Index, were stumbling. A large-cap portfolio that returned 1% would appear to be doing poorly if you compared it to the small-cap Russell 2000® Index, which returned 2.29% over the same period. As shown in the following graph, if you compare the hypothetical large-company portfolio's 1% return to the correct benchmark, the Russell 1000® Index, you'll get a different picture. While the large-cap portfolio increased 1%, the large-cap benchmark was down -4.72%. So the portfolio did exceedingly well against its benchmark. This hypothetical example is for illustration only and is not intended to reflect the return of any actual investment. Investments do not typically grow at an even rate of return and may experience negative growth. Analyzing performance with the Russell Indexes To help you better analyze performance, research analysts at Russell developed a coordinated family of indices. Primary U.S. indices include: Russell 3000® Index Measures the U.S. equity broad market — comprised of the 3,000 largest U.S. companies, it represent approximately 98% of all investable U.S. stocks. Russell 1000® Index Measures the large-cap segment of the U.S. equity market — comprises the 1,000 largest companies in the Russell 3000, it represent approximately 90% of the total value. Russell 2000® Index Measures the small-cap segment of the U.S. equity market — comprises the 2,000 smallest companies in the Russell 3000, it represents approximately 8% of the total value. These are further divided into two style indices: growth and value, which measure the performance the growth and value stocks within the indices. In addition to the daily returns updates on russell.com, you can find Russell Index returns published daily in the Wall Street Journal and weekly in Barron's. Fund objectives, risks, charges and expenses should be carefully considered before investing. For a prospectus containing this and other important information call Russell at 1-866-676-7680 or go to the prospectus and reports page to download one. Please read the prospectus carefully before investing. Copyright © Russell Investments 2011. All rights reserved. This material is proprietary and may not be reproduced, transferred, or distributed in any form without prior written permission from Russell Investments. It is delivered on an "as is" basis without warranty. Russell Investment Group is a Washington, USA corporation, which operates through subsidiaries worldwide, including Russell Investments, and is a subsidiary of The Northwestern Mutual Life Insurance Company. Nothing contained in this material is intended to constitute legal, tax, securities, or investment advice, nor an opinion regarding the appropriateness of any investment, nor a solicitation of any type. The general information contained in this publication should not be acted upon without obtaining specific legal, tax, and investment advice from a licensed professional. Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns. Securities products and services offered through Russell Financial Services, Inc., member FINRA, part of Russell Investments. For information on the Financial Industry Regulatory Authority, go to www.finra.org. RFS 2567. First used: October 2009			Value of an advisor Benefits of working with a financial advisor Request a list of advisors in your area   Russell beyond the indexes Diversified investment products Institutional solutions Printer friendly version of this page

WWW.RUSSELL.COM     INSTITUTIONAL INVESTORS     FINANCIAL PROFESSIONALS     INDEXES     SITE MAP    

© Russell Investments 1995-2012. All rights reserved.
Legal information.    Privacy statement.