Indexes Reconstitution - New for 2008 (Russell.com)

In the calculation of styles in 2008, Russell will not adjust for the impact of Financial Accounting Standards Board (FASB) 158 for U.S. companies as we did in 2007.

Correct book value is critical in determining the B/P measure. Therefore, the following method is used to estimate the proper adjustments to B/P and book value.

A company's reported book value is adjusted to reflect write-offs stemming from the Financial Accounting Standards Board (FASB)—issued Statement of Financial Accounting Standards numbers 106 and 109 (FAS 106 & 109) since June 30, 1993. Assuming that each company amortized the FAS 106 & 109 transition obligation over a 20-year period beginning with year of adoption, the unamortized portion of the write-off is added back to the reported book value. During reconstitution 2007, Russell also made an adjustment to book value for FASB 158. The date companies were required to be compliant left uncomparable book values across companies for reconstitution in June. However, in 2008, all companies are required to comply with the standard making companies evenly compared and the adjustment unnecessary.