Russell Global Indexes Construction & Methodology Index construction summary The Russell Global Index represents the investable global equity market and its segments comprehensively. It consists of more than 10,000 securities in 63 countries and offers over 300 key subindexes. Consistent with the design of the family of Russell U.S. Equity Indexes, it is constructed using float-adjusted market capitalization weights and represents 98% of the investable global equity market. This is a summary of how these indexes are constructed. We also offer a complete description of the index construction and methodology (PDF). Purpose   Offers investors an accurate and complete global equity market performance benchmark Serves as a proxy for asset allocation purposes Provides a purchasable and replicable vehicle for passive investment portfolios with global exposures Construction of the investable equity universe   Screen companies globally by total market capitalization Apply minimum size and investability standards, and liquidity screens in order to determine a security's index eligibility Determining index membership   Allocate securities to their home countries (each security is included in one, and only one, country) Take the top 98% of companies in the U.S. (Russell 3000 Index), the top 98% of companies in Japan (Russell/Nomura total market index), and the top 98% of companies in the rest of the world Derive each security's weight in the index using float-adjusted market capitalization Determining style index membership   Rank each stock in the Russell Global Large Cap Index and the Russell Global Small Cap Index by two variables : the book-to-price ratio and the I/B/E/S forecast long-term growth mean. Combine variables to create a composite value score (CVS) for each stock. Rank the stocks by their CVS and apply a non-linear probability algorithm to the distribution to determine style membership weights. Roughly 70% are classified as all value or all growth and 30% are weighted proportionately to both value & growth. Subdivision of global index   Modular index construction supports a broad spectrum of sub-indexes based on country, region, sector, size or any other customized needs Combine macroeconomic and market criteria to create robust classification methodologies for developed and emerging markets countries Global-relative approach to index construction results in a classification system that assigns capitalization tiers (small, mid, large) to all companies regardless of domicile, industry or sector Exclusions   Unavailable shares that are restricted by corporate governance or held by strategic investors Securities in countries that do not allow foreign investment Fixed income-like securities Warrants and rights, trust receipts and royalty trusts, limited liability companies, bulletin board, pink sheet stocks (some global exceptions occur), closed-end investment companies, limited partnerships, exchange traded funds Securities with a market capitalization of under $1,000,000 USD Securities with an average daily trading volume of less than $150,000 USD Qualified Foreign Institutional Investor (QFII) shares in China Special rules in individual countries   Rules are designed to reflect country specific regulations as well as the characteristics of local capital markets China and Hong Kong Special Administrative Region are both recognized as different investment universes Russell recognizes shares represented by special depository receipts in countries such as Russia, Israel, the Philippines and others as investable. These underlying shares are added back to free float after the foreign ownership limit adjustment has been applied. Market prices are used to calculate performance Maintenance   Daily adjustments for stock splits, dividends and de-listings Month-end adjustment of stock buybacks and equity offerings Quarterly review of IPO additions Annual reconstitution of index This summary is meant to be an overview of our global index methodology and does not contain complete information about the construction and methodology of the Russell Global Indexes. For a complete and controlling description of the Russell Global Indexes methodology, please consult the comprehensive Russell Global Indexes Construction & Methodology document (PDF) available at russell.com or from your client account manager.			Download the Construction & Methodology summary   Index membership View the Russell Global Index members Printer friendly version of this page

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

© Russell Investments 1995-2008. All rights reserved.
Legal information.    Privacy statement.

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.

Indexes are unmanaged and cannot by invested in directly. Returns represent past performance, are not a guarantee of future performance, and are not indicative of any specific investment.