N-CSR 1 dncsr.htm RUSSELL INVESTMENT COMPANY Russell Investment Company
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: 811-03153

 

 

Russell Investment Company

(Exact name of registrant as specified in charter)

909 A Street, Tacoma Washington 98402

(Address of principal executive offices) (Zip code)

Gregory J. Lyons, Assistant Secretary

Russell Investment Company

909 A Street

Tacoma, Washington 98402

253-439-2406

(Name and address of agent for service)

Registrant’s telephone number, including area code: 253-572-9500

Date of fiscal year end: October 31

Date of reporting period: November 1, 2007 to April 30, 2008

 

 

 

Table of Contents

Item 1. Reports to Stockholders

 

Table of Contents

LOGO

 

2008 SEMIANNUAL REPORT

 

 

Russell Funds

 

 

APRIL 30, 2008

 

FUND    SHARE CLASS
Diversified Equity Fund    A, C, E, S
Special Growth Fund    A, C, E, S
Quantitative Equity Fund    A, C, E, S
International Securities Fund    A, C, E, S
Global Equity Fund    A, C, E, S
Multistrategy Bond Fund    A, C, E, S

 

LOGO

Table of Contents

 

 

Russell Investment Company

Russell Investment Company is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on six of these Funds.

Table of Contents

 

Russell Investment Company

Russell Funds

Semiannual Report

April 30, 2008 (Unaudited)

Table of Contents

 

     Page
Diversified Equity Fund    3
Special Growth Fund    11
Quantitative Equity Fund    26
International Securities Fund    38
Global Equity Fund    59
Multistrategy Bond Fund    72
Notes to Schedules of Investments    135
Statements of Assets and Liabilities    138
Statements of Operations    142
Statements of Changes in Net Assets    144
Financial Highlights    146
Notes to Financial Highlights    152
Notes to Financial Statements    153
Basis of Approval of Investment Advisory Contracts    174
Shareholder Requests for Additional Information    178
Disclosure of Information about Fund Directors    179
Adviser, Money Managers and Service Providers    183

 

Table of Contents

 

Russell Investment Company - Russell Funds.

Copyright © Russell Investments 2008. 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 distributed through Russell Financial Services, Inc. (effective June 2, 2008, the name changed from Russell Fund Distributors, Inc.) member FINRA, part of Russell Investments.

Russell Investments and Standard & Poor’s Corporation are the owners of the trademarks, service marks, and copyrights related to their respective indexes. Index performance is not indicative of the performance of any specific investment. Indexes are not managed and may not be invested in directly.

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. Current to the most recent month-end performance data may be obtained by visiting www.russell.com/us/fundperformance.

Table of Contents

Russell Investment Company

Diversified Equity Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 893.10    $ 1,018.80

Expenses Paid During Period*

    $ 5.74    $ 6.12

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.22% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 889.90    $ 1,015.07

Expenses Paid During Period*

    $ 9.26    $ 9.87

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.97% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 893.20    $ 1,018.80

Expenses Paid During Period*

    $ 5.74    $ 6.12

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.22% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Diversified Equity Fund   3

Table of Contents

Russell Investment Company

Diversified Equity Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 894.30    $ 1,020.04

Expenses Paid During Period*

    $ 4.57    $ 4.87

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.97% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

4   Diversified Equity Fund

Table of Contents

Russell Investment Company

Diversified Equity Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 93.5%

        

Auto and Transportation - 1.9%

        

American Axle & Manufacturing Holdings, Inc. (Ñ)

    25,700      518

Autoliv, Inc. (Ñ)

    22,300      1,366

CSX Corp.

    77,332      4,868

Daimler AG

    11,200      867

Expeditors International of Washington, Inc. (Ñ)

    66,280      3,088

FedEx Corp.

    92,900      8,906

General Motors Corp. (Ñ)

    248,800      5,772

JB Hunt Transport Services, Inc. (Ñ)

    104,450      3,548

Navistar International Corp. (Æ)

    260,350      17,118

Norfolk Southern Corp. (Ñ)

    74,578      4,443

Southwest Airlines Co.

    10,500      139

Union Pacific Corp.

    214,937      31,207

Visteon Corp. (Æ)(Ñ)

    283,250      1,229
         
        83,069
         

Consumer Discretionary - 11.8%

        

Accenture, Ltd. Class A

    220,060      8,263

Activision, Inc. (Æ)

    117,370      3,175

Allied Waste Industries, Inc. (Æ)

    81,200      1,004

Amazon.com, Inc. (Æ)(Ñ)

    61,000      4,796

Avis Budget Group, Inc. (Æ)

    45,250      601

Avon Products, Inc.

    214,505      8,370

Black & Decker Corp. (Ñ)

    11,100      729

Carnival Corp. (Ñ)

    88,500      3,555

CBS Corp. Class B

    94,950      2,191

Chico’s FAS, Inc. (Æ)(Ñ)

    320,050      2,263

Chipotle Mexican Grill, Inc. Class A (Æ)(Ñ)

    38,340      3,762

Citadel Broadcasting Corp. (Ñ)

    3,190      4

Clear Channel Outdoor Holdings, Inc. Class A (Æ)

    696,760      13,252

Coach, Inc. (Æ)

    123,180      4,382

Costco Wholesale Corp.

    238,824      17,016

DIRECTV Group, Inc. (The) (Æ)

    228,900      5,640

eBay, Inc. (Æ)

    472,005      14,769

Electronic Arts, Inc. (Æ)

    195,300      10,052

Estee Lauder Cos., Inc. (The) Class A (Ñ)

    36,000      1,642

Family Dollar Stores, Inc. (Ñ)

    13,000      278

Focus Media Holding, Ltd. - ADR (Æ)(Ñ)

    64,250      2,370

GameStop Corp. Class A (Æ)

    56,090      3,087

Gannett Co., Inc. (Ñ)

    47,100      1,348

Gap, Inc. (The)

    56,100      1,045
     Principal
Amount ($)
or Shares		      Market
Value
$

Google, Inc. Class A (Æ)

    127,683      73,327

Guess?, Inc. (Ñ)

    205,800      7,878

Home Depot, Inc.

    114,700      3,303

Idearc, Inc. (Ñ)

    16,300      54

Intercontinental Hotels Group PLC - ADR (Ñ)

    219,541      3,519

International Game Technology

    255,000      8,859

JC Penney Co., Inc. (Ñ)

    69,500      2,954

Jones Apparel Group, Inc.

    57,600      912

Las Vegas Sands Corp. (Æ)(Ñ)

    124,730      9,507

Liberty Media Corp. - Capital Series A (Æ)

    79,335      1,219

Liberty Media Corp. - Entertainment Series A (Æ)

    212,190      5,506

Limited Brands, Inc. (Ñ)

    31,800      589

Lowe’s Cos., Inc.

    572,377      14,418

Macy’s, Inc.

    303,380      7,672

McDonald’s Corp.

    1,144,220      68,173

MGM Mirage (Æ)(Ñ)

    113,174      5,789

News Corp. Class A

    658,050      11,779

Nike, Inc. Class B

    373,710      24,964

Nordstrom, Inc. (Ñ)

    142,557      5,027

Omnicom Group, Inc.

    111,300      5,313

priceline.com, Inc. (Æ)(Ñ)

    31,430      4,012

RadioShack Corp. (Ñ)

    48,300      671

Royal Caribbean Cruises, Ltd. (Ñ)

    311,700      9,943

Saks, Inc. (Æ)(Ñ)

    302,500      3,936

Staples, Inc.

    40,350      876

Starbucks Corp. (Æ)

    42,227      685

Target Corp.

    210,050      11,160

Time Warner, Inc.

    100,950      1,499

TJX Cos., Inc.

    76,200      2,455

Urban Outfitters, Inc. (Æ)

    118,400      4,055

VeriSign, Inc. (Æ)(Ñ)

    97,530      3,516

Viacom, Inc. Class B (Æ)(Ñ)

    851,200      32,720

Wal-Mart Stores, Inc.

    607,900      35,246

Walt Disney Co. (The)

    345,540      11,206

Wynn Resorts, Ltd.

    96,732      10,190

XM Satellite Radio Holdings, Inc. Class A (Æ)(Ñ)

    537,150      5,989

Yum! Brands, Inc.

    222,117      9,036
         
        521,551
         

Consumer Staples - 6.3%

        

Altria Group, Inc.

    277,960      5,559

Coca-Cola Co. (The)

    1,302,525      76,680

Coca-Cola Enterprises, Inc.

    45,400      1,022

Colgate-Palmolive Co.

    156,240      11,046

 

Diversified Equity Fund   5

Table of Contents

Russell Investment Company

Diversified Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

ConAgra Foods, Inc.

    27,100      639

Diageo PLC - ADR

    76,770      6,287

Fomento Economico Mexicano SAB de CV - ADR

    288,400      12,531

Kellogg Co.

    5,500      281

Kraft Foods, Inc. Class A

    301,800      9,546

Kroger Co. (The)

    49,300      1,343

Molson Coors Brewing Co. Class B

    80,350      4,406

Nestle SA - ADR

    74,160      8,881

PepsiCo, Inc.

    301,900      20,689

Philip Morris International, Inc. (Æ)

    407,680      20,804

Procter & Gamble Co.

    1,040,750      69,782

Sara Lee Corp.

    85,300      1,238

SUPERVALU, Inc.

    62,900      2,082

Tyson Foods, Inc. Class A (Ñ)

    277,000      4,931

Unilever NV

    287,500      9,643

WM Wrigley Jr Co. (Ñ)

    147,505      11,234
         
        278,624
         

Financial Services - 16.8%

        

ACE, Ltd.

    241,000      14,530

Alliance Data Systems Corp. (Æ)

    106,600      6,120

Allstate Corp. (The)

    357,650      18,011

American Express Co.

    52,800      2,535

American International Group, Inc.

    540,755      24,983

Annaly Capital Management, Inc. (ö)

    1,113,675      18,665

Bank of America Corp.

    823,628      30,919

Bank of New York Mellon Corp. (The)

    615,854      26,808

BlackRock, Inc. (Ñ)

    24,380      4,920

Capital One Financial Corp. (Ñ)

    412,700      21,873

Charles Schwab Corp. (The)

    290,400      6,273

Chubb Corp.

    93,980      4,978

Citigroup, Inc. (Ñ)

    1,227,289      31,014

CME Group, Inc. Class A

    10,680      4,886

Comerica, Inc.

    32,900      1,143

Deutsche Bank AG (Ñ)

    6,000      717

Discover Financial Services

    108,600      1,978

Everest Re Group, Ltd.

    4,300      388

Federal National Mortgage Association (Ñ)

    526,500      14,900

Fidelity National Financial, Inc. Class A (Ñ)

    367,250      5,872

Fiserv, Inc. (Æ)(Ñ)

    74,890      3,786

Franklin Resources, Inc.

    74,300      7,070

Freddie Mac

    754,700      18,800

Genworth Financial, Inc. Class A

    1,027,780      23,701

Goldman Sachs Group, Inc. (The)

    371,935      71,177
     Principal
Amount ($)
or Shares		      Market
Value
$

Hartford Financial Services Group, Inc.

    234,880      16,740

Host Hotels & Resorts, Inc. (ö)

    616,650      10,606

iShares Russell 1000 Value Index Fund (Ñ)

    65,475      5,009

JPMorgan Chase & Co.

    1,620,528      77,218

Keycorp

    56,300      1,358

Lehman Brothers Holdings, Inc. (Ñ)

    141,400      6,256

Lincoln National Corp.

    176,600      9,494

Mastercard, Inc. Class A (Ñ)

    107,573      29,922

Merrill Lynch & Co., Inc.

    41,300      2,058

MetLife, Inc.

    293,720      17,873

MFA Mortgage Investments, Inc. (ö)(Ñ)

    546,950      3,823

Morgan Stanley

    638,950      31,053

National City Corp. (Ñ)

    1,923,040      12,115

Old Republic International Corp. (Ñ)

    62,800      901

PartnerRe, Ltd. - ADR

    8,300      614

PMI Group, Inc. (The)(Ñ)

    139,650      786

PNC Financial Services Group, Inc.

    68,020      4,717

Progressive Corp. (The)(Ñ)

    66,100      1,202

Prudential Financial, Inc.

    204,980      15,519

Redwood Trust, Inc. (ö)(Ñ)

    164,050      5,461

Regions Financial Corp.

    43,200      947

RenaissanceRe Holdings, Ltd.

    97,725      5,027

Sovereign Bancorp, Inc. (Ñ)

    195,700      1,462

State Street Corp.

    223,978      16,158

SunTrust Banks, Inc.

    96,380      5,373

T Rowe Price Group, Inc. (Ñ)

    71,970      4,215

Travelers Cos., Inc. (The)

    294,959      14,866

Unum Group

    134,700      3,126

Visa, Inc. (Æ)

    333,615      27,840

Wachovia Corp. (Ñ)

    437,350      12,749

Washington Mutual, Inc. (Ñ)

    429,185      5,275

Wells Fargo & Co. (Ñ)

    758,083      22,553

Western Union Co. (The)

    235,700      5,421

XL Capital, Ltd. Class A (Ñ)

    37,700      1,315
         
        745,099
         

Health Care - 12.0%

        

Abbott Laboratories

    444,700      23,458

Alcon, Inc.

    46,900      7,410

Alexion Pharmaceuticals, Inc. (Æ)

    36,020      2,535

Allergan, Inc.

    306,240      17,263

AmerisourceBergen Corp. Class A

    36,100      1,464

Baxter International, Inc.

    260,730      16,249

Boston Scientific Corp. (Æ)

    196,800      2,623

Brookdale Senior Living, Inc. (Ñ)

    15,400      403

Cardinal Health, Inc.

    11,100      578

 

6   Diversified Equity Fund

Table of Contents

Russell Investment Company

Diversified Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Charles River Laboratories International, Inc. (Æ)

    61,800      3,588

Cooper Cos., Inc. (The)(Ñ)

    122,800      4,298

Covidien, Ltd.

    238,600      11,140

CVS Caremark Corp.

    1,626,324      65,655

Dentsply International, Inc.

    103,370      4,018

Express Scripts, Inc. Class A (Æ)

    108,700      7,611

Genentech, Inc. (Æ)

    221,894      15,133

Genzyme Corp. (Æ)

    135,960      9,565

Gilead Sciences, Inc. (Æ)(Ñ)

    936,560      48,476

GlaxoSmithKline PLC - ADR (Ñ)

    17,500      772

Human Genome Sciences, Inc. (Æ)(Ñ)

    589,700      3,863

Intuitive Surgical, Inc. (Æ)

    52,153      15,086

Johnson & Johnson

    589,530      39,552

Merck & Co., Inc.

    910,980      34,654

Mylan, Inc. (Æ)(Ñ)

    677,700      8,925

Novartis AG - ADR

    137,600      6,925

Omnicare, Inc. (Ñ)

    261,950      5,331

Pfizer, Inc.

    479,100      9,635

PharMerica Corp. (Æ)(Ñ)

    3,009      51

Savient Pharmaceuticals, Inc. (Æ)(Ñ)

    191,400      4,180

Schering-Plough Corp. (Ñ)

    1,250,250      23,017

St. Jude Medical, Inc. (Æ)

    196,630      8,608

Stericycle, Inc. (Æ)

    64,950      3,467

Stryker Corp.

    234,800      15,222

Teva Pharmaceutical Industries, Ltd. - ADR

    175,400      8,205

Thermo Fisher Scientific, Inc. (Æ)

    433,090      25,063

UnitedHealth Group, Inc.

    288,101      9,401

Vertex Pharmaceuticals, Inc. (Æ)

    79,600      2,031

WellPoint, Inc. (Æ)

    145,980      7,263

Wyeth

    1,181,970      52,562

Zimmer Holdings, Inc. (Æ)

    66,700      4,946
         
        530,226
         

Integrated Oils - 5.9%

        

BP PLC - ADR

    12,400      903

Chevron Corp.

    237,757      22,860

ConocoPhillips

    192,282      16,565

Exxon Mobil Corp.

    725,220      67,496

Hess Corp. (Ñ)

    426,127      45,255

Marathon Oil Corp.

    131,710      6,002

Occidental Petroleum Corp.

    594,700      49,485

Petroleo Brasileiro SA - ADR

    141,884      17,227

Royal Dutch Shell PLC - ADR

    10,400      835

Total SA - ADR

    394,080      33,103
         
        259,731
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Materials and Processing - 5.5%

        

Agrium, Inc.

    105,200      8,311

Air Products & Chemicals, Inc.

    61,210      6,025

Alcoa, Inc.

    98,500      3,426

Allegheny Technologies, Inc.

    57,596      3,964

ArcelorMittal

    20,200      1,800

Archer-Daniels-Midland Co.

    172,000      7,578

Ball Corp. (Ñ)

    18,000      968

Cameco Corp.

    72,200      2,526

Celanese Corp. Class A

    79,000      3,535

Cytec Industries, Inc.

    31,700      1,871

Dow Chemical Co. (The)

    111,800      4,489

EI Du Pont de Nemours & Co. (Ñ)

    514,235      25,151

Fluor Corp.

    85,300      13,040

Freeport-McMoRan Copper & Gold, Inc. Class B (Ñ)

    46,900      5,335

International Paper Co.

    28,900      756

Lennar Corp. Class B

    13,200      221

Louisiana-Pacific Corp. (Ñ)

    59,600      686

Masco Corp. (Ñ)

    695,720      12,669

McDermott International, Inc. (Æ)

    46,861      2,511

Monsanto Co.

    391,275      44,613

Mosaic Co. (The) (Æ)

    29,790      3,650

Nucor Corp.

    153,200      11,567

Owens-Illinois, Inc. (Æ)

    74,720      4,121

Potash Corp. of Saskatchewan

    79,476      14,620

PPG Industries, Inc. (Ñ)

    210,160      12,897

Praxair, Inc.

    149,380      13,640

Precision Castparts Corp.

    104,282      12,259

Rohm & Haas Co. (Ñ)

    198,600      10,615

Smurfit-Stone Container Corp. (Æ)

    55,600      302

Sonoco Products Co.

    41,700      1,374

St. Joe Co. (The) (Ñ)

    158,951      6,464

United States Steel Corp.

    21,800      3,356

Wolseley PLC - ADR (Ñ)

    38,000      376
         
        244,716
         

Miscellaneous - 2.3%

        

Brunswick Corp. (Ñ)

    55,000      917

Eaton Corp. (Ñ)

    257,813      22,646

General Electric Co.

    1,288,805      42,144

Honeywell International, Inc.

    175,900      10,449

SPX Corp.

    36,900      4,539

Textron, Inc.

    323,750      19,752

Tyco International, Ltd.

    73,950      3,460
         
        103,907
         

 

Diversified Equity Fund   7

Table of Contents

Russell Investment Company

Diversified Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Other Energy - 7.8%

        

Anadarko Petroleum Corp.

    209,200      13,924

Apache Corp.

    42,100      5,670

Arch Coal, Inc.

    369,500      21,195

Baker Hughes, Inc.

    190,600      15,416

Cabot Oil & Gas Corp.

    180,000      10,255

Cameron International Corp. (Æ)(Ñ)

    386,298      19,018

Chesapeake Energy Corp.

    266,994      13,804

Consol Energy, Inc.

    318,380      25,776

Devon Energy Corp.

    603,018      68,382

Equitable Resources, Inc.

    20,060      1,331

FMC Technologies, Inc. (Æ)

    51,849      3,484

Halliburton Co.

    501,800      23,038

Massey Energy Co.

    43,400      2,271

National Oilwell Varco, Inc. (Æ)

    119,400      8,173

Peabody Energy Corp.

    69,300      4,236

Pioneer Natural Resources Co. (Ñ)

    137,800      7,955

Reliant Energy, Inc. (Æ)

    585,250      15,064

Schlumberger, Ltd.

    365,911      36,792

Transocean, Inc. (Æ)

    92,538      13,646

Weatherford International, Ltd. (Æ)

    31,872      2,571

Williams Cos., Inc.

    326,498      11,591

XTO Energy, Inc.

    376,031      23,261
         
        346,853
         

Producer Durables - 5.4%

        

American Tower Corp. Class A (Æ)

    82,700      3,591

Applied Materials, Inc.

    1,184,240      22,098

Boeing Co.

    63,750      5,410

Bombardier, Inc. (Æ)

    553,350      3,626

Caterpillar, Inc.

    65,400      5,355

Centex Corp. (Ñ)

    447,050      9,308

Crane Co.

    16,800      688

Deere & Co.

    283,380      23,824

Dover Corp.

    14,400      712

DR Horton, Inc. (Ñ)

    250,550      3,881

Emerson Electric Co.

    435,200      22,744

Flowserve Corp.

    28,070      3,483

Goodrich Corp.

    11,700      797

Ingersoll-Rand Co., Ltd. Class A (Ñ)

    123,900      5,499

KB Home (Ñ)

    40,600      913

Lexmark International, Inc. Class A (Æ)(Ñ)

    17,400      546

Lockheed Martin Corp.

    473,370      50,196

Northrop Grumman Corp.

    137,060      10,084

NVR, Inc. (Æ)(Ñ)

    20,430      12,534

Parker Hannifin Corp.

    180,877      14,443

Pitney Bowes, Inc.

    17,700      639
     Principal
Amount ($)
or Shares		      Market
Value
$

Pulte Homes, Inc. (Ñ)

    59,900      781

Raytheon Co.

    132,345      8,466

United Technologies Corp.

    367,920      26,663

Varian Semiconductor Equipment Associates, Inc. (Æ)(Ñ)

    59,750      2,189
         
        238,470
         

Technology - 13.7%

        

Akamai Technologies, Inc. (Æ)(Ñ)

    92,890      3,323

Altera Corp.

    174,200      3,707

Amphenol Corp. Class A

    497,490      22,974

Analog Devices, Inc.

    175,869      5,665

Apple, Inc. (Æ)

    412,230      71,707

Arrow Electronics, Inc. (Æ)

    44,500      1,211

AU Optronics Corp. - ADR (Ñ)

    162,963      3,181

Avnet, Inc. (Æ)

    35,900      940

BearingPoint, Inc. (Æ)(Ñ)

    822,950      1,523

Broadcom Corp. Class A (Æ)(Ñ)

    522,800      13,572

Celestica, Inc. (Æ)

    156,150      1,463

Cisco Systems, Inc. (Æ)

    2,379,750      61,017

Corning, Inc.

    845,400      22,581

Dell, Inc. (Æ)

    490,700      9,142

First Solar, Inc. (Æ)

    42,420      12,386

Flextronics International, Ltd. (Æ)

    73,700      766

General Dynamics Corp.

    145,888      13,191

Hewlett-Packard Co.

    1,198,900      55,569

Ingram Micro, Inc. Class A (Æ)

    69,900      1,189

Intel Corp.

    1,000,090      22,262

International Business Machines Corp.

    274,360      33,115

International Rectifier Corp. (Æ)

    211,050      4,804

Juniper Networks, Inc. (Æ)(Ñ)

    393,300      10,863

Linear Technology Corp.

    131,000      4,580

Maxim Integrated Products, Inc.

    363,400      7,642

MEMC Electronic Materials, Inc. (Æ)

    82,300      5,182

Microchip Technology, Inc. (Ñ)

    119,720      4,400

Microsoft Corp.

    1,499,100      42,754

Motorola, Inc.

    263,350      2,623

Oracle Corp. (Æ)

    543,920      11,341

Qimonda AG - ADR (Æ)(Ñ)

    365,850      1,302

Qualcomm, Inc.

    1,489,915      64,349

Research In Motion, Ltd. (Æ)

    266,728      32,442

Salesforce.com, Inc. (Æ)(Ñ)

    48,040      3,206

Sanmina-SCI Corp. (Æ)

    302,700      469

Seagate Technology, Inc. (Æ)

    9,200      —

Texas Instruments, Inc. (Ñ)

    414,650      12,091

Tyco Electronics, Ltd.

    895,210      33,490

Xilinx, Inc. (Ñ)

    127,500      3,158
         
        605,180
         

 

8   Diversified Equity Fund

Table of Contents

Russell Investment Company

Diversified Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Utilities - 4.1%

        

Ameren Corp. (Ñ)

    40,700      1,846

America Movil SAB de CV - ADR Series L

    324,606      18,814

American Electric Power Co., Inc.

    60,800      2,713

AT&T, Inc.

    1,389,493      53,787

Atmos Energy Corp.

    39,700      1,099

China Mobile, Ltd. - ADR

    210,772      18,194

CMS Energy Corp. (Ñ)

    79,700      1,162

Dominion Resources, Inc.

    195,390      8,478

Duke Energy Corp.

    84,600      1,549

Embarq Corp.

    217,531      9,043

Fairpoint Communications, Inc. (Ñ)

    4      —

FPL Group, Inc.

    101,400      6,722

NII Holdings, Inc. (Æ)

    31,100      1,423

Progress Energy, Inc. - CVO

    5,500      2

Public Service Enterprise Group, Inc.

    143,320      6,293

Sprint Nextel Corp.

    385,000      3,076

Verizon Communications, Inc.

    542,400      20,872

Vodafone Group PLC - ADR

    740,310      23,438

Wisconsin Energy Corp. (Ñ)

    34,400      1,633
         
        180,144
         
Total Common Stocks        

(cost $3,644,476)

         4,137,570
         
Preferred Stocks - 0.2%        

Financial Services - 0.1%

        

Washington Mutual, Inc.

    5,300      4,558
         

Producer Durables - 0.1%

        

General Motors Corp.

    98,000      1,822
         
Total Preferred Stocks        

(cost $6,225)

         6,380
         
Long-Term Investments - 0.0%        

Corporate Bonds and
Notes -0.0%

        

iStar Financial, Inc.(Ê)
3.198% due 10/01/12

    363      290
         

International Debt - 0.0%

        

Qimonda Finance LLC Series ADS 6.750% due 03/22/13

    1,572      1,354
         
Total Long-Term Investments        

(cost $1,842)

         1,644
         
     Principal
Amount ($)
or Shares		      Market
Value
$		  

Short-Term Investments - 6.4%

        

Russell Investment Company Money Market Fund

    270,128,926      270,129  

United States Treasury Bills (ç)(ž)(§) 0.558% due 06/19/08

    15,000      14,989  
           
Total Short - Term Investments        

(cost $285,118)

         285,118  
           
Other Securities - 10.0%        

Russell Investment Company Money Market Fund (×)

    96,222,585      96,223  

State Street Securities Lending Quality Trust (×)

    346,301,465      346,301  
           
Total Other Securities        

(cost $442,524)

         442,524  
           
Total Investments - 110.1%        

(identified cost $4,380,185)

         4,873,236  
Other Assets and Liabilities, Net - (10.1%)         (446,914 )
           
Net Assets - 100.0%         4,426,322  
           

 

See accompanying notes which are an integral part of the financial statements.

 

Diversified Equity Fund   9

Table of Contents

Russell Investment Company

Diversified Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		   Unrealized
Appreciation
(Depreciation)
$
   
   
Long Positions    
Russell 1000 Index
expiration date 06/08 (65)		   USD  24,590   1,494
Russell Mini Index
expiration date 06/08 (25)		   USD  1,892   68
S&P 500 E-Mini Index (CME)
expiration date 06/08 (1,229)		   USD  85,170   4,421
S&P 500 Index (CME)
expiration date 06/08 (299)		   USD  103,604   4,348
S&P Midcap 400 E-Mini Index (CME)
expiration date 06/08 (799)		   USD  67,124   5,058
     
Total Unrealized Appreciation
(Depreciation) on Open Futures
Contracts		     15,389
     

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Auto and Transportation

    1.9  

Consumer Discretionary

    11.8  

Consumer Staples

    6.3  

Financial Services

    16.8  

Health Care

    12.0  

Integrated Oils

    5.9  

Materials and Processing

    5.5  

Miscellaneous

    2.3  

Other Energy

    7.8  

Producer Durables

    5.4  

Technology

    13.7  

Utilities

    4.1  

Preferred Stocks

    0.2  

Long-Term Investments

    — *

Short-Term Investments

    6.4  

Other Securities

    10.0  
      

Total Investments

    110.1  

Other Assets and Liabilities, Net

    (10.1 )
      
   100.0  
      

Futures Contracts

    0.3  

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

10   Diversified Equity Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 849.80    $ 1,017.30

Expenses Paid During Period*

    $ 6.99    $ 7.62

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.52% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 846.30    $ 1,013.58

Expenses Paid During Period*

    $ 10.42    $ 11.36

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.27% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 849.40    $ 1,017.30

Expenses Paid During Period*

    $ 6.99    $ 7.62

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.52% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Special Growth Fund   11

Table of Contents

Russell Investment Company

Special Growth Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 850.40    $ 1,018.55

Expenses Paid During Period*

    $ 5.84    $ 6.37

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.27% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

12   Special Growth Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 91.1%

        

Auto and Transportation - 4.0%

        

AAR Corp. (Æ)(Ñ)

    100,342      2,348

ABX Holdings, Inc. (Æ)(Ñ)

    30,000      80

Accuride Corp. (Æ)(Ñ)

    7,050      56

Allegiant Travel Co. (Æ)(Ñ)

    16,398      447

American Axle & Manufacturing Holdings, Inc. (Ñ)

    11,067      223

Amerigon, Inc. (Æ)(Ñ)

    24,658      362

Arkansas Best Corp. (Ñ)

    81,652      3,224

Atlas Air Worldwide Holdings, Inc. (Æ)

    8,651      525

Autoliv, Inc. (Ñ)

    65,060      3,984

BorgWarner, Inc. (Ñ)

    43,700      2,148

Bristow Group, Inc. (Æ)(Ñ)

    29,380      1,550

Continental Airlines, Inc. Class B (Æ)(Ñ)

    4,182      75

Dana Corp. (Æ)(Ñ)

    292,900      1

DryShips, Inc. (Ñ)

    24,800      2,046

Dynamex, Inc. (Æ)(Ñ)

    409      10

Expeditors International of Washington, Inc. (Ñ)

    67,071      3,125

FreightCar America, Inc. (Ñ)

    12,500      480

Genco Shipping & Trading, Ltd. (Ñ)

    36,600      2,476

HUB Group, Inc. Class A (Æ)

    46,642      1,525

K-Sea Transportation Partners, LP (Ñ)

    44,500      1,635

Kansas City Southern (Æ)(Ñ)

    58,500      2,637

Kirby Corp. (Æ)

    77,165      4,232

Lear Corp. (Æ)

    15,209      435

Marten Transport, Ltd. (Æ)

    18,100      295

Mesa Air Group, Inc. (Æ)(Ñ)

    18,100      12

Monaco Coach Corp. (Ñ)

    154,700      979

Northwest Airlines Corp. (Æ)

    5,300      51

Pacer International, Inc. (Ñ)

    42,770      794

PHI, Inc. (Æ)(Ñ)

    48,190      1,810

Polaris Industries, Inc. (Ñ)

    16,228      755

Saia, Inc. (Æ)

    17,600      243

Skywest, Inc. (Ñ)

    91,299      1,737

StealthGas, Inc.

    91,779      1,472

Strattec Security Corp.

    28,385      1,044

Superior Industries International, Inc. (Ñ)

    80,830      1,642

Teekay Corp. (Ñ)

    42,600      1,944

Titan International, Inc. (Ñ)

    17,354      618

TRW Automotive Holdings Corp. (Æ)

    63,800      1,631

Ultrapetrol Bahamas, Ltd. (Æ)(Ñ)

    8,500      82

UTI Worldwide, Inc.

    22,922      504

Wabash National Corp.

    24,677      207
     Principal
Amount ($)
or Shares		      Market
Value
$

WABCO Holdings, Inc.

    48,883      2,335

Wabtec Corp.

    137,156      5,881

Werner Enterprises, Inc. (Ñ)

    12,264      239
         
        57,899
         

Consumer Discretionary - 15.7%

        

1-800-FLOWERS.COM, Inc. Class A (Æ)(Ñ)

    37,225      328

4Kids Entertainment, Inc. (Æ)(Ñ)

    268,195      2,374

99 Cents Only Stores (Æ)(Ñ)

    269,360      2,562

Abercrombie & Fitch Co. Class A (Ñ)

    58,400      4,340

Activision, Inc. (Æ)

    308,015      8,332

Administaff, Inc. (Ñ)

    14,948      392

Advisory Board Co. (The)(Æ)(Ñ)

    46,897      2,186

Aeropostale, Inc. (Æ)(Ñ)

    61,200      1,946

Alberto-Culver Co.

    14,500      365

Allied Waste Industries, Inc. (Æ)

    123,600      1,528

America’s Car-Mart, Inc. (Æ)(Ñ)

    13,434      193

American Eagle Outfitters, Inc.

    78,800      1,448

American Greetings Corp. Class A (Ñ)

    5,680      102

Ameristar Casinos, Inc. (Ñ)

    143,500      2,464

AMN Healthcare Services, Inc. (Æ)(Ñ)

    35,483      518

AnnTaylor Stores Corp. (Æ)

    22,456      568

Asbury Automotive Group, Inc.

    43,600      726

AutoNation, Inc. (Æ)(Ñ)

    99,400      1,591

Bally Technologies, Inc. (Æ)(Ñ)

    49,759      1,676

Big Lots, Inc. (Æ)(Ñ)

    33,825      914

BJ’s Wholesale Club, Inc. (Æ)(Ñ)

    35,300      1,346

Blyth, Inc. (Ñ)

    15,047      253

Bob Evans Farms, Inc. (Ñ)

    800      22

Bowne & Co., Inc.

    3,400      57

Brown Shoe Co., Inc.

    144,200      2,405

Buckle, Inc. (The)(Ñ)

    7,000      340

Callaway Golf Co. (Ñ)

    40,570      557

Capella Education Co. (Æ)(Ñ)

    9,486      612

Career Education Corp. (Æ)(Ñ)

    33,914      683

CBRL Group, Inc. (Ñ)

    15,570      575

CDI Corp. (Ñ)

    13,800      375

Central European Distribution Corp. (Æ)(Ñ)

    49,400      3,009

Central European Media Enterprises, Ltd. Class A (Æ)

    20,626      2,187

Cheesecake Factory (The)(Æ)(Ñ)

    138,441      3,133

Chemed Corp. (Ñ)

    27,808      948

Cherokee, Inc. (Ñ)

    2,100      61

Christopher & Banks Corp. (Ñ)

    31,508      373

Churchill Downs, Inc.

    34,300      1,751

Cinemark Holdings, Inc.

    34,600      512

 

Special Growth Fund   13

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

CKE Restaurants, Inc.

    179,800      1,886

Convergys Corp. (Æ)

    166,000      2,610

Core-Mark Holding Co., Inc. (Æ)(Ñ)

    3,600      103

Corrections Corp. of America (Æ)

    111,310      2,838

CRA International, Inc. (Æ)(Ñ)

    13,712      473

CSS Industries, Inc. (Ñ)

    12,900      403

Darden Restaurants, Inc. (Ñ)

    133,625      4,754

Deckers Outdoor Corp. (Æ)

    5,956      822

Denny’s Corp. (Æ)(Ñ)

    67,984      214

DeVry, Inc. (Ñ)

    111,856      6,376

Diamond Management & Technology Consultants, Inc. Class A (Ñ)

    3,600      22

Dollar Tree, Inc. (Æ)

    33,400      1,055

Earthlink, Inc. (Æ)(Ñ)

    148,300      1,354

Electronic Arts, Inc. (Æ)

    89,473      4,605

Elizabeth Arden, Inc. (Æ)

    23,900      442

Entravision Communications Corp. Class A (Æ)(Ñ)

    63,241      442

Ethan Allen Interiors, Inc. (Ñ)

    46,970      1,290

EZCORP, Inc. Class A (Æ)

    28,846      350

Finish Line Class A (Ñ)

    119,400      784

First Advantage Corp. Class A (Æ)(Ñ)

    5,201      107

Focus Media Holding, Ltd. - ADR (Æ)(Ñ)

    160,929      5,937

Fossil, Inc. (Æ)(Ñ)

    600      22

Fred’s, Inc. Class A (Ñ)

    11,200      124

FTD Group, Inc. (Ñ)

    216,918      2,983

FTI Consulting, Inc. (Æ)(Ñ)

    58,301      3,731

Furniture Brands International, Inc. (Ñ)

    222,148      3,010

G&K Services, Inc. Class A

    11,000      347

Gaiam, Inc. Class A (Æ)(Ñ)

    15,165      267

GameStop Corp. Class A (Æ)

    79,103      4,354

Geo Group, Inc. (The) (Æ)(Ñ)

    163,298      4,319

Gray Television, Inc.

    341,300      1,604

Group 1 Automotive, Inc. (Ñ)

    32,600      870

Guess?, Inc. (Ñ)

    50,216      1,922

Hasbro, Inc. (Ñ)

    54,300      1,931

Haverty Furniture Cos., Inc. (Ñ)

    1,000      9

Heidrick & Struggles International, Inc. (Ñ)

    17,500      524

Helen of Troy, Ltd. (Æ)(Ñ)

    102,830      1,739

Hewitt Associates, Inc. Class A (Æ)

    48,300      1,980

Hooker Furniture Corp. (Ñ)

    5,300      111

Hot Topic, Inc. (Æ)(Ñ)

    27,900      148

ICF International, Inc. (Æ)(Ñ)

    32,900      587

IHOP Corp. (Ñ)

    1,935      90

IKON Office Solutions, Inc. (Ñ)

    56,184      615
     Principal
Amount ($)
or Shares		      Market
Value
$

Insight Enterprises, Inc. (Æ)

    7,400      89

International Speedway Corp. Class A (Ñ)

    35,000      1,485

inVentiv Health, Inc. (Æ)(Ñ)

    85,410      2,539

ITT Educational Services, Inc. (Æ)(Ñ)

    54,089      4,146

J Crew Group, Inc. (Æ)(Ñ)

    44,800      2,128

Jack in the Box, Inc. (Æ)

    61,000      1,632

JOS A Bank Clothiers, Inc. (Æ)(Ñ)

    62,430      1,524

Journal Communications, Inc. Class A (Ñ)

    82,900      478

Lakeland Industries, Inc. (Æ)

    97,053      1,213

LECG Corp. (Æ)(Ñ)

    20,861      217

Lin TV Corp. Class A (Æ)(Ñ)

    78,724      789

Lithia Motors, Inc. Class A (Ñ)

    14,700      132

LKQ Corp. (Æ)

    185,697      4,041

LS Starrett Co.

    20,554      401

Macy’s, Inc. (Ñ)

    47,035      1,190

Maidenform Brands, Inc. (Æ)(Ñ)

    13,900      207

Marcus Corp. (Ñ)

    8,400      139

Matthews International Corp. Class A (Ñ)

    15,280      755

MAXIMUS, Inc.

    20      1

Media General, Inc. Class A (Ñ)

    29,075      427

Men’s Wearhouse, Inc.

    53,600      1,427

Meredith Corp. (Ñ)

    39,000      1,264

Movado Group, Inc.

    20,243      442

MSC Industrial Direct Co. Class A (Ñ)

    15,600      761

MWI Veterinary Supply, Inc. (Æ)(Ñ)

    400      14

Net 1 UEPS Technologies, Inc. (Æ)

    23,944      561

NetFlix, Inc. (Æ)(Ñ)

    31,082      994

New Oriental Education & Technology Group - ADR (Æ)(Ñ)

    26,500      1,989

Nu Skin Enterprises, Inc. Class A

    28,476      511

NutriSystem, Inc. (Ñ)

    16,313      328

O’Charleys, Inc. (Ñ)

    71,543      830

Overstock.com, Inc. (Æ)(Ñ)

    28,132      541

Parlux Fragrances, Inc. (Æ)

    608,245      2,032

PC Connection, Inc. (Æ)(Ñ)

    15,500      116

Phillips-Van Heusen Corp. (Ñ)

    77,941      3,290

Pool Corp.

    61,200      1,336

Pre-Paid Legal Services, Inc. (Æ)(Ñ)

    7,002      306

PRG-Schultz International, Inc. (Æ)

    187      2

Priceline.com, Inc. (Æ)(Ñ)

    31,533      4,025

RC2 Corp. (Æ)(Ñ)

    6,889      127

Red Lion Hotels Corp. (Æ)

    123,100      1,168

Rent-A-Center, Inc. (Æ)(Ñ)

    6,211      134

Republic Services, Inc.

    116,340      3,698

Revlon, Inc. Class A (Æ)(Ñ)

    76,500      73

 

14   Special Growth Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Rollins, Inc. (Ñ)

    3,000      48

Ross Stores, Inc.

    46,600      1,561

Rush Enterprises, Inc. Class A (Æ)(Ñ)

    61,894      998

Sally Beauty Holdings, Inc. (Æ)(Ñ)

    77,690      471

Scholastic Corp. (Æ)(Ñ)

    58,488      1,646

School Specialty, Inc. (Æ)(Ñ)

    18,300      539

Select Comfort Corp. (Æ)(Ñ)

    4,300      13

Service Corp. International (Ñ)

    32,800      364

Sinclair Broadcast Group, Inc. Class A

    211,300      1,857

Sohu.com, Inc. (Æ)(Ñ)

    6,600      456

Sonic Automotive, Inc. Class A (Ñ)

    114,500      2,323

Speedway Motorsports, Inc. (Ñ)

    9,712      253

Spherion Corp. (Æ)

    93,000      459

Stage Stores, Inc. (Ñ)

    103,662      1,632

Stamps.com, Inc. (Æ)(Ñ)

    2,016      28

Stanley Furniture Co., Inc.

    6,200      76

Stanley Works (The) (Ñ)

    32,500      1,568

Steven Madden, Ltd. (Æ)

    11,600      219

Strayer Education, Inc. (Ñ)

    4,689      871

Tech Data Corp. (Æ)

    35,700      1,200

Toro Co. (Ñ)

    15,100      640

Tween Brands, Inc. (Æ)(Ñ)

    22,607      430

United Online, Inc. (Ñ)

    398,600      4,257

Universal Electronics, Inc. (Æ)(Ñ)

    7,261      187

Urban Outfitters, Inc. (Æ)(Ñ)

    185,760      6,362

VeriSign, Inc. (Æ)(Ñ)

    133,503      4,813

Viad Corp.

    23,200      730

VistaPrint, Ltd. (Æ)(Ñ)

    14,700      500

Volt Information Sciences, Inc. (Æ)(Ñ)

    16,100      215

Warnaco Group, Inc. (The) (Æ)

    37,200      1,716

Warner Music Group Corp. (Ñ)

    79,840      694

Washington Post Co. (The) Class B

    2,605      1,708

Waste Connections, Inc. (Æ)

    114,361      3,668

Watson Wyatt Worldwide, Inc. Class A

    66,045      3,872

WESCO International, Inc. (Æ)(Ñ)

    39,000      1,451

Westwood One, Inc. (Æ)(Ñ)

    137,100      229

Wet Seal, Inc. (The) Class A (Æ)(Ñ)

    237,700      825

Whirlpool Corp. (Ñ)

    16,000      1,165

Williams-Sonoma, Inc. (Ñ)

    80,283      2,119

Wolverine World Wide, Inc.

    39,000      1,121
         
        224,692
         

Consumer Staples - 1.6%

        

Alliance One International, Inc. (Æ)(Ñ)

    52,587      323

B&G Foods, Inc. Class A

    179,248      1,448

Boston Beer Co., Inc. Class A (Æ)(Ñ)

    820      36

Casey’s General Stores, Inc. (Ñ)

    26,171      579
     Principal
Amount ($)
or Shares		      Market
Value
$

Chiquita Brands International, Inc. (Æ)(Ñ)

    14,781      336

Coca-Cola Bottling Co. Consolidated (Ñ)

    17,024      974

Fresh Del Monte Produce, Inc. (Æ)(Ñ)

    72,900      2,310

Great Atlantic & Pacific Tea Co. (Æ)(Ñ)

    15,781      434

J&J Snack Foods Corp.

    52,300      1,498

JM Smucker Co. (The)

    20,900      1,043

Molson Coors Brewing Co. Class B

    34,800      1,909

Monterey Gourmet Foods, Inc. (Æ)

    615,761      1,860

Nash Finch Co. (Ñ)

    17,617      645

NBTY, Inc. (Æ)

    3,588      101

PepsiAmericas, Inc.

    23,200      596

Pilgrim’s Pride Corp. (Ñ)

    100      2

Ralcorp Holdings, Inc. (Æ)(Ñ)

    12,444      760

Renesola, Ltd. - ADR (Æ)(Ñ)

    55,400      928

Ruddick Corp. (Ñ)

    20,304      786

Sadia SA - ADR (Æ)

    28,400      624

Sanderson Farms, Inc.

    46,385      1,933

Schweitzer-Mauduit International, Inc. (Ñ)

    18,100      401

Tootsie Roll Industries, Inc.

    26,800      652

Universal Corp. (Ñ)

    15,820      1,016

Vector Group, Ltd. (Ñ)

    300      5

Weis Markets, Inc. (Ñ)

    67,740      2,080
         
        23,279
         

Financial Services - 14.5%

        

Acadia Realty Trust (ö)(Ñ)

    2,700      69

Advance America Cash Advance
Centers, Inc. (Ñ)

    64,347      567

Advent Software, Inc. (Æ)(Ñ)

    10,883      434

Affiliated Managers Group, Inc. (Æ)(Ñ)

    27,768      2,758

Agree Realty Corp. (ö)

    6,100      162

Alexander’s, Inc. (Æ)(ö)(Ñ)

    1,769      630

Alexandria Real Estate Equities, Inc. (ö)(Ñ)

    3,543      372

Alliance Data Systems Corp. (Æ)

    58,750      3,373

Allied Capital Corp. (Ñ)

    117,640      2,365

Allied World Assurance Co. Holdings, Ltd.

    21,800      899

Amcore Financial, Inc. (Ñ)

    2,700      34

American Financial Group, Inc. (Ñ)

    61,100      1,675

Amerisafe, Inc. (Æ)

    8,040      115

Amtrust Financial Services, Inc. (Ñ)

    36,512      568

Annaly Capital Management, Inc. (ö)

    101,500      1,701

Anthracite Capital, Inc. (ö)(Ñ)

    6,533      51

 

Special Growth Fund   15

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Anworth Mortgage Asset Corp. (ö)(Ñ)

    317,800      2,123

Apartment Investment & Management Co. Class A (ö)(Ñ)

    20,200      747

Arch Capital Group, Ltd. (Æ)

    51,300      3,624

Ares Capital Corp. (Ñ)

    107,300      1,208

Arthur J Gallagher & Co. (Ñ)

    68,300      1,678

Ashford Hospitality Trust, Inc. (ö)(Ñ)

    312,215      1,808

Aspen Insurance Holdings, Ltd.

    7,700      200

Assurant, Inc.

    87,536      5,690

Astoria Financial Corp. (Ñ)

    20,500      486

Axis Capital Holdings, Ltd.

    86,800      2,943

Bancfirst Corp. (Ñ)

    4,100      179

Banco Latinoamericano de
Exportaciones SA Class E

    27,600      519

Bancorp, Inc. (Æ)(Ñ)

    3,000      33

Bancorpsouth, Inc. (Ñ)

    28,900      694

Bank of Hawaii Corp.

    31,100      1,705

BankAtlantic Bancorp, Inc. Class A (Ñ)

    71,900      221

Bankrate, Inc. (Æ)(Ñ)

    48,170      2,516

Banner Corp. (Ñ)

    7,500      162

Berkshire Hills Bancorp, Inc. (Ñ)

    4,300      110

BioMed Realty Trust, Inc. (ö)(Ñ)

    68,300      1,776

Boston Private Financial Holdings, Inc. (Ñ)

    30,156      280

Brandywine Realty Trust (ö)

    12,200      213

Calamos Asset Management, Inc. Class A (Ñ)

    54,267      974

Capital City Bank Group, Inc. (Ñ)

    900      24

Capital Trust, Inc. Class A (ö)(Ñ)

    3,560      95

Capitol Bancorp, Ltd. (Ñ)

    18,700      321

CapLease, Inc. (ö)(Ñ)

    49,200      409

Capstead Mortgage Corp. (ö)

    73,100      943

Cash America International, Inc.

    52,183      2,129

Castlepoint Holdings, Ltd. (Ñ)

    15,500      143

Cathay General Bancorp (Ñ)

    26,766      456

Cedar Shopping Centers, Inc. (ö)

    56,300      704

Centennial Bank Holdings, Inc. (Æ)(Ñ)

    1,100      7

Center Financial Corp. (Ñ)

    11,200      117

Citizens Republic Bancorp, Inc. (Ñ)

    31,169      257

City Bank (Ñ)

    6,900      125

City Holding Co. (Ñ)

    4,400      183

City National Corp.

    11,500      558

CNA Surety Corp. (Æ)

    107,547      1,423

Colonial BancGroup, Inc. (The) (Ñ)

    296,700      2,415

Commerce Bancshares, Inc. (Ñ)

    36,155      1,573

Corus Bankshares, Inc. (Ñ)

    6,624      49

Cowen Group, Inc. (Æ)(Ñ)

    2,400      16
     Principal
Amount ($)
or Shares		      Market
Value
$

Cullen/Frost Bankers, Inc. (Ñ)

    14,200      793

Cybersource Corp. (Æ)

    126,750      2,301

Darwin Professional Underwriters, Inc. (Æ)(Ñ)

    4,800      119

DCT Industrial Trust, Inc. (ö)(Ñ)

    100      1

Delphi Financial Group, Inc. Class A

    106,957      2,911

Deluxe Corp.

    260,437      5,537

DiamondRock Hospitality Co. (ö)

    7,115      91

Digital Realty Trust, Inc. (ö)(Ñ)

    21,801      845

Dime Community Bancshares

    20,600      385

Duke Realty Corp. (ö)

    64,470      1,574

DuPont Fabros Technology, Inc. (ö)(Ñ)

    99,700      1,795

East West Bancorp, Inc. (Ñ)

    18,007      256

Education Realty Trust, Inc. (ö)(Ñ)

    30,400      406

Electro Rent Corp.

    108,463      1,465

EMC Insurance Group, Inc. (Ñ)

    2,300      67

Employers Holdings, Inc.

    72,900      1,391

Encore Capital Group, Inc. (Æ)

    3,000      20

Equity Lifestyle Properties, Inc. (ö)(Ñ)

    7,887      390

Evercore Partners, Inc. Class A (Ñ)

    8,900      150

Fair Isaac Corp. (Ñ)

    20,215      501

FBL Financial Group, Inc. Class A

    12,800      354

First Commonwealth Financial Corp. (Ñ)

    28,800      359

First Community Bancorp, Inc. (Ñ)

    20,124      432

First Community Bancshares, Inc. (Ñ)

    1,800      60

First Financial Bancorp

    16,200      213

First Financial Holdings, Inc. (Ñ)

    1,800      43

First Industrial Realty Trust, Inc. (ö)(Ñ)

    40,600      1,227

First Potomac Realty Trust (ö)(Ñ)

    34,400      584

First Regional Bancorp (Æ)(Ñ)

    51,069      758

FirstFed Financial Corp. (Æ)(Ñ)

    2,100      32

Flushing Financial Corp.

    72,756      1,420

FPIC Insurance Group, Inc. (Æ)

    7,100      330

Franklin Street Properties Corp. (ö)(Ñ)

    98,935      1,461

Frontier Financial Corp. (Ñ)

    34,811      557

Fulton Financial Corp. (Ñ)

    38,710      483

GAMCO Investors, Inc. Class A (Ñ)

    10,400      478

Getty Realty Corp. (ö)(Ñ)

    2,100      38

GFI Group, Inc. (Ñ)

    41,540      488

Glacier Bancorp, Inc. (Ñ)

    21,800      449

Gramercy Capital Corp. (ö)(Ñ)

    13,551      257

Great Southern Bancorp, Inc. (Ñ)

    3,200      48

Green Bankshares, Inc. (Ñ)

    12,900      258

Greenhill & Co., Inc. (Ñ)

    10,977      714

Hallmark Financial Services (Æ)(Ñ)

    21,747      236

Hanmi Financial Corp. (Ñ)

    24,307      170

 

16   Special Growth Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Hanover Insurance Group, Inc. (The)

    51,200      2,298

Harleysville Group, Inc. (Ñ)

    12,200      445

HCC Insurance Holdings, Inc.

    50,700      1,251

HCP, Inc. (ö)

    19,300      689

Heartland Payment Systems, Inc. (Ñ)

    11,732      257

Hercules Technology Growth Capital, Inc.

    236,503      2,401

Heritage Commerce Corp. (Ñ)

    4,700      83

Home Bancshares, Inc. (Ñ)

    1,000      23

Home Properties, Inc. (ö)(Ñ)

    8,900      468

Hospitality Properties Trust (ö)(Ñ)

    78,500      2,522

HRPT Properties Trust (ö)(Ñ)

    195,100      1,352

Hudson City Bancorp, Inc.

    26,700      511

Hypercom Corp. (Æ)

    277,423      1,185

IBERIABANK Corp. (Ñ)

    28,152      1,357

Imperial Capital Bancorp, Inc.

    400      6

Independent Bank Corp. (Ñ)

    8,800      70

Independent Bank Corp.

    7,900      231

Inland Real Estate Corp. (ö)(Ñ)

    23,500      380

Integra Bank Corp. (Ñ)

    13,000      190

Interactive Brokers Group, Inc. Class A (Æ)(Ñ)

    20,750      655

Interactive Data Corp.

    21,832      589

Intersections, Inc. (Æ)

    103,693      928

Intervest Bancshares Corp. Class A (Ñ)

    6,163      64

Invesco, Ltd.

    106,266      2,726

Investment Technology Group, Inc. (Æ)

    37,200      1,795

Investors Bancorp, Inc. (Æ)

    110,700      1,624

Investors Real Estate Trust (ö)(Ñ)

    17,700      181

IPC Holdings, Ltd.

    120,400      3,505

Jack Henry & Associates, Inc. (Ñ)

    13,921      366

Jefferies Group, Inc.

    136,300      2,562

Kayne Anderson Energy Development Co. (Ñ)

    4,000      89

Kite Realty Group Trust (ö)

    17,500      238

Knight Capital Group, Inc. Class A (Æ)(Ñ)

    266,396      4,984

Kohlberg Capital Corp.

    99,170      996

LTC Properties, Inc. (ö)(Ñ)

    40,301      1,097

Mack-Cali Realty Corp. (ö)

    49,900      1,947

MainSource Financial Group, Inc. (Ñ)

    4,300      64

Markel Corp. (Æ)

    2,300      999

Marlin Business Services Corp. (Æ)(Ñ)

    67,000      435

MCG Capital Corp. (Ñ)

    48,200      369

Meadowbrook Insurance Group, Inc. (Ñ)

    27,800      201

Medical Properties Trust, Inc. (ö)(Ñ)

    62,359      758
     Principal
Amount ($)
or Shares		      Market
Value
$

Mercantile Bank Corp. (Ñ)

    3,700      37

MFA Mortgage Investments, Inc. (ö)(Ñ)

    288,377      2,016

Midwest Banc Holdings, Inc. (Ñ)

    114,633      1,178

Nara Bancorp, Inc. (Ñ)

    8,900      117

Nasdaq OMX Group, Inc. (The) (Æ)(Ñ)

    16,800      612

National Health Investors, Inc. (ö)

    1,400      43

National Retail Properties, Inc. (ö)(Ñ)

    152,911      3,503

Nationwide Health Properties, Inc. (ö)

    3,222      116

Navigators Group, Inc. (Æ)

    3,954      194

NBT Bancorp, Inc. (Ñ)

    6,500      148

Newcastle Investment Corp. (ö)(Ñ)

    32,800      324

NewStar Financial, Inc. (Æ)(Ñ)

    15,700      84

NorthStar Realty Finance Corp. (ö)(Ñ)

    134,900      1,399

NYMAGIC, Inc. (Ñ)

    5,400      123

Ocwen Financial Corp. (Æ)(Ñ)

    3,659      18

Odyssey Re Holdings Corp. (Ñ)

    28,300      1,013

Old Second Bancorp, Inc. (Ñ)

    2,000      49

Omega Healthcare Investors, Inc. (ö)

    1,100      19

OneBeacon Insurance Group, Ltd. Class A (Ñ)

    23,700      466

optionsXpress Holdings, Inc. (Ñ)

    22,983      493

Oriental Financial Group, Inc.

    55,500      1,043

Pacific Capital Bancorp NA (Ñ)

    9,913      202

Parkway Properties, Inc. (ö)

    21,800      865

Patriot Capital Funding, Inc. (Ñ)

    2,600      26

Pennsylvania Real Estate Investment Trust (ö)(Ñ)

    57,700      1,453

Permian Basin Royalty Trust (Ñ)

    48,500      1,102

Piper Jaffray Cos. (Æ)(Ñ)

    67,820      2,527

Platinum Underwriters Holdings, Ltd.

    39,400      1,413

PMI Group, Inc. (The) (Ñ)

    34,793      196

Portfolio Recovery Associates, Inc. (Ñ)

    867      38

Post Properties, Inc. (ö)(Ñ)

    83      3

Potlatch Corp. (ö)(Ñ)

    95,401      4,275

Preferred Bank (Ñ)

    19,728      231

Prosperity Bancshares, Inc. (Ñ)

    4,001      124

Protective Life Corp.

    45,800      1,952

Provident New York Bancorp (Ñ)

    5,400      72

Ramco-Gershenson Properties Trust (ö)

    16,080      361

Realty Income Corp. (ö)(Ñ)

    12,854      338

Reinsurance Group of America, Inc. (Ñ)

    10,000      520

RenaissanceRe Holdings, Ltd. (Ñ)

    48,800      2,510

Renasant Corp. (Ñ)

    13,100      304

Resource Capital Corp. (ö)(Ñ)

    2,500      22

Roma Financial Corp. (Ñ)

    1,000      16

Ryder System, Inc.

    27,495      1,883

 

Special Growth Fund   17

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

S&T Bancorp, Inc. (Ñ)

    200      7

S1 Corp. (Æ)

    86,000      581

Safety Insurance Group, Inc. (Ñ)

    13,190      474

Sanders Morris Harris Group, Inc. (Ñ)

    8,700      72

Sandy Spring Bancorp, Inc. (Ñ)

    10,700      273

SCBT Financial Corp. (Ñ)

    8,457      287

SeaBright Insurance Holdings, Inc. (Æ)

    36      1

Senior Housing Properties Trust (ö)

    58,615      1,404

Southside Bancshares, Inc. (Ñ)

    3,780      91

Southwest Bancorp, Inc.

    61,316      1,079

Sovran Self Storage, Inc. (ö)

    32,500      1,453

StanCorp Financial Group, Inc. (Ñ)

    36,900      1,891

Sterling Bancorp (Ñ)

    43,100      707

Sterling Bancshares, Inc. (Ñ)

    57,522      598

Sterling Financial Corp. (Ñ)

    39,416      481

Stifel Financial Corp. (Æ)(Ñ)

    14,378      680

Sun Bancorp, Inc. (Æ)(Ñ)

    9,400      109

Sunstone Hotel Investors, Inc. (ö)

    65,080      1,216

SVB Financial Group (Æ)(Ñ)

    15,587      758

SWS Group, Inc. (Ñ)

    2,600      34

Taylor Capital Group, Inc. (Ñ)

    5,400      81

Texas Capital Bancshares, Inc. (Æ)(Ñ)

    33,926      626

TNS, Inc. (Æ)(Ñ)

    2,500      57

Tompkins Financial Corp. (Ñ)

    2,500      121

Total System Services, Inc. (Ñ)

    118,180      2,813

TradeStation Group, Inc. (Æ)(Ñ)

    35,800      334

Transatlantic Holdings, Inc. (Ñ)

    9,100      590

U-Store-It Trust (ö)(Ñ)

    172,500      2,082

UCBH Holdings, Inc. (Ñ)

    54,883      400

UDR, Inc. (ö)(Ñ)

    25,400      642

Umpqua Holdings Corp. (Ñ)

    128,600      1,897

United America Indemnity, Ltd. Class A (Æ)

    18,900      292

United Rentals, Inc. (Æ)(Ñ)

    86,200      1,624

Universal American Corp. (Æ)(Ñ)

    35,474      381

Universal Health Realty Income Trust (ö)(Ñ)

    6,473      217

Urstadt Biddle Properties, Inc. Class A (ö)(Ñ)

    12,900      218

ViewPoint Financial Group

    78,227      1,271

Waddell & Reed Financial, Inc. Class A

    25,298      857

Washington Real Estate Investment Trust (ö)(Ñ)

    20,042      712

Webster Financial Corp.

    53,600      1,396

WesBanco, Inc. (Ñ)

    13,400      288

West Coast Bancorp (Ñ)

    9,700      125
     Principal
Amount ($)
or Shares		      Market
Value
$

Westfield Financial, Inc.

    7,400      72

Whitney Holding Corp. (Ñ)

    47,249      1,106

Wilshire Bancorp, Inc.

    11,100      91

World Acceptance Corp. (Æ)(Ñ)

    16,637      655

Wright Express Corp. (Æ)(Ñ)

    10,182      336

WSFS Financial Corp. (Ñ)

    8,400      427

Zenith National Insurance Corp. (Ñ)

    149,585      5,556

Zions Bancorporation (Ñ)

    56,708      2,628
         
        206,466
         

Health Care - 10.4%

        

Abaxis, Inc. (Æ)(Ñ)

    15,472      394

Affymetrix, Inc. (Æ)(Ñ)

    113,211      1,235

Albany Molecular Research, Inc. (Æ)(Ñ)

    391      5

Align Technology, Inc. (Æ)(Ñ)

    45,045      553

Alnylam Pharmaceuticals, Inc. (Æ)(Ñ)

    9,381      235

American Oriental Bioengineering, Inc. (Æ)

    5,913      57

AMERIGROUP Corp. (Æ)

    71,326      1,854

Amsurg Corp. (Æ)(Ñ)

    24,167      617

Analogic Corp.

    29,010      1,671

Animal Health International, Inc. (Æ)

    1,295      11

Ariad Pharmaceuticals, Inc. (Æ)(Ñ)

    143,397      424

Arthrocare Corp. (Æ)(Ñ)

    44,274      1,995

Bio-Rad Laboratories, Inc. Class A (Æ)(Ñ)

    9,942      829

Bio-Reference Labs, Inc. (Æ)(Ñ)

    13,055      329

BioScrip, Inc. (Æ)

    263,676      1,450

Candela Corp. (Æ)

    557,207      1,655

Capital Senior Living Corp. (Æ)(Ñ)

    20,817      177

Caraco Pharmaceutical Laboratories, Ltd. (Æ)(Ñ)

    12,197      201

Centene Corp. (Æ)(Ñ)

    93,574      1,719

Charles River Laboratories International, Inc. (Æ)(Ñ)

    59,739      3,468

Computer Programs & Systems, Inc. (Ñ)

    4,800      91

Cubist Pharmaceuticals, Inc. (Æ)(Ñ)

    17,926      347

Cutera, Inc. (Æ)(Ñ)

    100      1

Datascope Corp.

    78,471      2,940

Eclipsys Corp. (Æ)(Ñ)

    32,764      681

eResearchTechnology, Inc. (Æ)(Ñ)

    145,279      1,770

Gen-Probe, Inc. (Æ)(Ñ)

    103,095      5,810

Gentiva Health Services, Inc. (Æ)(Ñ)

    23,941      521

Haemonetics Corp. (Æ)

    43,788      2,506

Harvard Bioscience, Inc. (Æ)

    109,849      540

HealthExtras, Inc. (Æ)

    2,000      56

 

18   Special Growth Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Healthspring, Inc. (Æ)

    94,640      1,594

Healthways, Inc. (Æ)(Ñ)

    13,373      489

HMS Holdings Corp. (Æ)(Ñ)

    156,915      4,044

Hologic, Inc. (Æ)(Ñ)

    206,092      6,016

Humana, Inc. (Æ)

    21,400      1,023

I-Flow Corp. (Æ)(Ñ)

    20,671      276

Icon PLC - ADR (Æ)

    54,936      3,955

Illumina, Inc. (Æ)(Ñ)

    142,292      11,083

Immucor, Inc. (Æ)(Ñ)

    156,802      4,231

Intuitive Surgical, Inc. (Æ)(Ñ)

    8,775      2,538

Invacare Corp. (Ñ)

    59,755      1,078

Invitrogen Corp. (Æ)(Ñ)

    13,700      1,282

Kendle International, Inc. (Æ)

    14,992      640

Kensey Nash Corp. (Æ)(Ñ)

    7,679      224

Kindred Healthcare, Inc. (Æ)

    43,466      1,031

King Pharmaceuticals, Inc. (Æ)(Ñ)

    242,800      2,280

Landauer, Inc. (Ñ)

    2,816      150

Lifecell Corp. (Æ)(Ñ)

    8,076      410

Luminex Corp. (Æ)(Ñ)

    44,600      870

Magellan Health Services, Inc. (Æ)(Ñ)

    5,500      212

Masimo Corp. (Æ)(Ñ)

    89,003      2,594

Medcath Corp. (Æ)(Ñ)

    300      6

Medical Action Industries, Inc. (Æ)(Ñ)

    900      15

Medicis Pharmaceutical Corp. Class A (Ñ)

    29,858      615

Meridian Bioscience, Inc. (Ñ)

    6,776      183

Merit Medical Systems, Inc. (Æ)

    114,301      1,681

Molina Healthcare, Inc. (Æ)(Ñ)

    50,612      1,257

NuVasive, Inc. (Æ)

    80,586      3,074

OSI Pharmaceuticals, Inc. (Æ)(Ñ)

    20,485      710

Owens & Minor, Inc.

    21,800      988

Patterson Cos., Inc. (Æ)(Ñ)

    101,502      3,471

Pediatrix Medical Group, Inc. (Æ)

    68,040      4,628

Perrigo Co. (Ñ)

    205,695      8,431

Pharmaceutical Product Development, Inc.

    94,065      3,896

PharmaNet Development Group, Inc. (Æ)(Ñ)

    15,574      372

Phase Forward, Inc. (Æ)

    78,000      1,435

PSS World Medical, Inc. (Æ)(Ñ)

    28,946      477

Psychiatric Solutions, Inc. (Æ)(Ñ)

    123,303      4,280

Quality Systems, Inc. (Ñ)

    21,611      694

Quidel Corp. (Æ)

    4,700      75

RehabCare Group, Inc. (Æ)

    21,300      362

Repligen Corp. (Æ)

    1,200      7

Res-Care, Inc. (Æ)

    14,000      228

Resmed, Inc. (Æ)(Ñ)

    61,738      2,662

Retractable Technologies, Inc. (Æ)

    293,945      426
     Principal
Amount ($)
or Shares		      Market
Value
$

Sirona Dental Systems, Inc. (Æ)(Ñ)

    91,478      2,449

Somanetics Corp. (Æ)(Ñ)

    2,717      44

SonoSite, Inc. (Æ)(Ñ)

    16,119      514

Stericycle, Inc. (Æ)

    68,950      3,681

STERIS Corp.

    81,800      2,267

Sun Healthcare Group, Inc. (Æ)

    2,363      31

Symmetry Medical, Inc. (Æ)(Ñ)

    12,625      177

Techne Corp. (Æ)

    77,722      5,636

VCA Antech, Inc. (Æ)(Ñ)

    63,910      2,069

Viropharma, Inc. (Æ)(Ñ)

    167,709      1,536

Vivus, Inc. (Æ)(Ñ)

    59,123      335

Watson Pharmaceuticals, Inc. Class B (Æ)(Ñ)

    86,150      2,674

West Pharmaceutical Services, Inc.

    75,300      3,532

Zimmer Holdings, Inc. (Æ)

    46,165      3,424
         
        148,504
         

Integrated Oils - 0.0%

        

Vaalco Energy, Inc. (Æ)(Ñ)

    50,124      325
         

Materials and Processing - 9.5%

        

Aceto Corp.

    113,400      797

Acuity Brands, Inc. (Ñ)

    22,210      1,063

Airgas, Inc.

    60,151      2,895

AK Steel Holding Corp. (Ñ)

    36,300      2,279

AM Castle & Co. (Ñ)

    93,103      2,878

Apogee Enterprises, Inc. (Ñ)

    112,374      2,507

Armstrong World Industries, Inc.

    14,000      498

Ashland, Inc. (Ñ)

    39,600      2,100

Barnes Group, Inc. (Ñ)

    97,100      2,532

Brady Corp. Class A (Ñ)

    15,810      537

Brush Engineered Materials, Inc. (Æ)(Ñ)

    19,844      615

Buckeye Technologies, Inc. (Æ)

    126,956      1,096

Cabot Corp. (Ñ)

    122,610      3,575

Calgon Carbon Corp. (Æ)(Ñ)

    38,854      554

Celanese Corp. Class A

    64,300      2,877

CF Industries Holdings, Inc. (Ñ)

    16,100      2,153

Chemtura Corp.

    232,000      1,605

Chicago Bridge & Iron Co. NV

    107,299      4,275

Cie Generale de Geophysique-Veritas - ADR (Æ)

    26,558      1,333

Clean Harbors, Inc. (Æ)(Ñ)

    9,495      626

Comfort Systems USA, Inc.

    51,500      700

Compass Minerals International, Inc.

    14,600      920

Corn Products International, Inc. (Ñ)

    18,900      877

Dycom Industries, Inc. (Æ)

    19,100      275

EMCOR Group, Inc. (Æ)

    194,077      4,864

 

Special Growth Fund   19

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Encore Wire Corp. (Ñ)

    18,600      420

Ennis, Inc. (Ñ)

    87,200      1,477

Ferro Corp.

    124,988      2,197

Gafisa SA - ADR (Ñ)

    29,450      1,283

Georgia Gulf Corp. (Ñ)

    1,700      10

Gerdau Ameristeel Corp. (Ñ)

    117,000      1,826

Gibraltar Industries, Inc.

    28,200      295

Glatfelter (Ñ)

    179,519      2,619

GrafTech International, Ltd. (Æ)(Ñ)

    9,712      191

Granite Construction, Inc.

    38,000      1,303

Haynes International, Inc. (Æ)(Ñ)

    32,170      2,015

HB Fuller Co.

    69,700      1,609

Hecla Mining Co. (Æ)(Ñ)

    4,700      48

Hercules, Inc.

    39,258      738

Horsehead Holding Corp. (Æ)(Ñ)

    81,000      1,136

IAMGOLD Corp.

    281,140      1,681

Innophos Holdings, Inc. (Ñ)

    7,400      133

Insituform Technologies, Inc. Class A (Æ)(Ñ)

    161,550      2,733

Interface, Inc. Class A (Ñ)

    38,721      497

Jacobs Engineering Group, Inc. (Æ)(Ñ)

    31,300      2,702

KBR, Inc.

    105,507      3,043

Koppers Holdings, Inc.

    46,204      2,238

LB Foster Co. Class A (Æ)(Ñ)

    13,616      437

Lennox International, Inc.

    45,200      1,498

LSB Industries, Inc. (Æ)(Ñ)

    2,700      41

LSI Industries, Inc. (Ñ)

    33,382      366

Lubrizol Corp.

    21,000      1,225

Lydall, Inc. (Æ)

    111,153      1,295

McDermott International, Inc. (Æ)

    142,798      7,651

Mercer International, Inc. (Æ)(Ñ)

    23,800      160

Michael Baker Corp. (Æ)

    686      14

Mueller Water Products, Inc. Class A (Ñ)

    60,500      487

Myers Industries, Inc.

    121,847      1,533

NCI Building Systems, Inc. (Æ)(Ñ)

    26,300      635

NewMarket Corp. (Ñ)

    8,300      539

Novagold Resources, Inc. (Æ)(Ñ)

    84,050      617

Nuco2, Inc. (Æ)

    1,000      28

Olin Corp. (Ñ)

    16,273      328

Olympic Steel, Inc. (Ñ)

    25,499      1,306

OM Group, Inc. (Æ)(Ñ)

    97,678      5,349

Owens Corning, Inc. (Æ)(Ñ)

    45,700      965

Perini Corp. (Æ)

    21,900      792

Precision Castparts Corp.

    24,317      2,859

Quanex Building Products Corp. (Æ)(Ñ)

    3,643      62

Quanta Services, Inc. (Æ)(Ñ)

    119,686      3,176
     Principal
Amount ($)
or Shares		      Market
Value
$

Reliance Steel & Aluminum Co.

    26,300      1,599

Richmont Mines, Inc. (Æ)

    133,630      464

Rock-Tenn Co. Class A (Ñ)

    59,062      2,004

Rockwood Holdings, Inc. (Æ)(Ñ)

    732      27

RTI International Metals, Inc. (Æ)(Ñ)

    34,680      1,428

Schnitzer Steel Industries, Inc. Class A (Ñ)

    13,948      1,227

Schulman A, Inc.

    21,500      456

Sigma-Aldrich Corp. (Ñ)

    56,800      3,239

Silgan Holdings, Inc.

    400      21

Simpson Manufacturing Co., Inc. (Ñ)

    3,953      104

Sonoco Products Co.

    21,200      699

Spartech Corp. (Ñ)

    46,700      417

Standard Register Co. (The) (Ñ)

    6,500      62

Steel Dynamics, Inc.

    55,416      1,931

Superior Essex, Inc. (Æ)(Ñ)

    34,689      1,031

Symyx Technologies, Inc. (Æ)(Ñ)

    159,376      1,197

Terra Industries, Inc. (Æ)(Ñ)

    14,600      553

Timken Co.

    60,500      2,187

Tronox, Inc. Class B (Ñ)

    4,900      15

Universal Forest Products, Inc. (Ñ)

    13,600      472

Universal Stainless & Alloy (Æ)(Ñ)

    3,100      119

URS Corp. (Æ)(Ñ)

    186,041      7,505

US Concrete, Inc. (Æ)(Ñ)

    5,300      17

Valmont Industries, Inc.

    10,900      1,073

Wausau Paper Corp. (Ñ)

    24,400      189

WCA Waste Corp. (Æ)

    168,678      850

WD-40 Co. (Ñ)

    4,293      134

WR Grace & Co. (Æ)(Ñ)

    7,826      198

Xerium Technologies, Inc. (Ñ)

    15,813      27
         
        135,233
         

Miscellaneous - 0.6%

        

Johnson Controls, Inc.

    51,500      1,816

Lancaster Colony Corp.

    38,000      1,451

Teleflex, Inc.

    55,600      3,063

Wesco Financial Corp. (Ñ)

    4,658      2,017
         
        8,347
         

Other Energy - 9.6%

        

Alon USA Energy, Inc. (Ñ)

    14,237      199

Atlas America, Inc. (Ñ)

    47,750      3,321

Atlas Energy Resources LLC (Ñ)

    7,000      281

Atlas Pipeline Partners, LP (Ñ)

    34,675      1,483

Atwood Oceanics, Inc. (Æ)(Ñ)

    52,250      5,261

Berry Petroleum Co. Class A (Ñ)

    52,900      2,620

Bill Barrett Corp. (Æ)

    15,806      813

Bois d’Arc Energy, Inc. (Æ)(Ñ)

    91,800      2,194

 

20   Special Growth Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Brigham Exploration Co. (Æ)(Ñ)

    273,790      2,585

Bronco Drilling Co., Inc. (Æ)(Ñ)

    158,491      2,726

Callon Petroleum Co. (Æ)(Ñ)

    9,012      180

Cameron International Corp. (Æ)

    33,662      1,657

CARBO Ceramics, Inc.

    79,100      3,760

Carrizo Oil & Gas, Inc. (Æ)

    44,000      2,794

Cimarex Energy Co. (Ñ)

    47,210      2,941

Comstock Resources, Inc. (Æ)

    54,599      2,484

Concho Resources, Inc. (Æ)

    50,500      1,392

Continental Resources, Inc. (Æ)(Ñ)

    42,600      1,831

Core Laboratories NV (Æ)(Ñ)

    29,791      3,732

Dawson Geophysical Co. (Æ)(Ñ)

    4,921      356

Delek US Holdings, Inc.

    130,600      1,441

Denbury Resources, Inc. (Æ)

    79,600      2,433

Dril-Quip, Inc. (Æ)

    73,609      4,207

Enbridge Energy Partners, LP Class A

    36,770      1,843

Encore Acquisition Co. (Æ)(Ñ)

    14,800      675

Energy Partners, Ltd. (Æ)

    11,547      140

EXCO Resources, Inc. (Æ)(Ñ)

    67,800      1,513

Exterran Holdings, Inc. (Æ)(Ñ)

    62,471      4,172

FMC Technologies, Inc. (Æ)(Ñ)

    72,543      4,875

Geokinetics, Inc. (Æ)(Ñ)

    94,164      1,787

Grey Wolf, Inc. (Æ)

    166,800      1,046

Gulf Island Fabrication, Inc.

    9,400      372

Helix Energy Solutions Group, Inc. (Æ)

    63,130      2,181

Helmerich & Payne, Inc. (Ñ)

    63,700      3,424

Hercules Offshore, Inc. (Æ)(Ñ)

    121,587      3,205

Hornbeck Offshore Services, Inc. (Æ)(Ñ)

    66,100      3,296

International Coal Group, Inc. (Æ)(Ñ)

    239,602      1,907

JA Solar Holdings Co., Ltd. - ADR (Æ)

    82,250      1,975

Mariner Energy, Inc. (Æ)(Ñ)

    107,791      2,971

Meridian Resource Corp. (Æ)

    26,389      56

Mitcham Industries, Inc. (Æ)

    14,043      263

Newfield Exploration Co. (Æ)(Ñ)

    24,830      1,509

Oceaneering International, Inc. (Æ)

    52,248      3,489

OSG America, LP

    89,000      1,246

Penn Virginia Corp.

    58      3

PetroHawk Energy Corp. (Æ)(Ñ)

    52,034      1,230

Petroquest Energy, Inc. (Æ)(Ñ)

    162,700      3,381

Quicksilver Resources, Inc. (Æ)(Ñ)

    73,150      3,035

Range Resources Corp.

    55,000      3,651

Rosetta Resources, Inc. (Æ)

    72,500      1,580

Rowan Cos., Inc. (Ñ)

    75,700      2,952

SEACOR Holdings, Inc. (Æ)(Ñ)

    18,300      1,558

SemGroup Energy Partners, LP

    26,300      686

Southwestern Energy Co. (Æ)(Ñ)

    36,300      1,536
     Principal
Amount ($)
or Shares		      Market
Value
$

St. Mary Land & Exploration Co. (Ñ)

    62,200      2,719

Stone Energy Corp. (Æ)

    58,161      3,544

Superior Energy Services (Æ)(Ñ)

    137,210      6,089

Swift Energy Co. (Æ)(Ñ)

    25,000      1,304

Teekay Tankers, Ltd. (Ñ)

    71,000      1,433

TEPPCO Partners, LP (Ñ)

    41,500      1,456

Tesoro Corp. (Ñ)

    53,986      1,357

Union Drilling, Inc. (Æ)(Ñ)

    14,300      242

Unit Corp. (Æ)

    44,500      2,826

USEC, Inc. (Æ)(Ñ)

    61,423      285

W&T Offshore, Inc. (Ñ)

    9,300      380

Whiting Petroleum Corp. (Æ)

    25,346      1,939

XTO Energy, Inc.

    33,061      2,045
         
        137,867
         

Producer Durables - 8.1%

        

Actuant Corp. Class A (Ñ)

    24,818      841

AGCO Corp. (Æ)(Ñ)

    19,150      1,151

Alliant Techsystems, Inc. (Æ)(Ñ)

    9,600      1,056

Altra Holdings, Inc. (Æ)(Ñ)

    100,526      1,531

American Ecology Corp. (Ñ)

    400      11

Ametek, Inc. (Ñ)

    23,300      1,130

AO Smith Corp. (Ñ)

    32,200      996

ATMI, Inc. (Æ)(Ñ)

    6,247      184

Badger Meter, Inc.

    600      31

Baldor Electric Co. (Ñ)

    58,800      1,905

BE Aerospace, Inc. (Æ)

    132,710      5,356

Belden, Inc. (Ñ)

    86,386      2,915

Bucyrus International, Inc. Class A

    22,300      2,808

C&D Technologies, Inc. (Æ)(Ñ)

    1,700      9

Canadian Solar, Inc. (Æ)(Ñ)

    80,900      2,214

Chart Industries, Inc. (Æ)

    143,474      5,831

Cognex Corp.

    69,200      1,744

Cohu, Inc.

    65,400      1,136

Columbus McKinnon Corp. (Æ)(Ñ)

    53,626      1,518

CommScope, Inc. (Æ)(Ñ)

    34,776      1,654

Credence Systems Corp. (Æ)(Ñ)

    136,739      142

CTS Corp.

    35,600      400

Curtiss-Wright Corp. (Ñ)

    1,650      78

Darling International, Inc. (Æ)

    167,888      2,564

Desarrolladora Homex SAB de CV - ADR (Æ)(Ñ)

    15,500      923

Dionex Corp. (Æ)(Ñ)

    17,600      1,377

Donaldson Co., Inc. (Ñ)

    12,300      535

Dover Corp.

    47,500      2,350

DR Horton, Inc. (Ñ)

    30,200      468

Ducommun, Inc. (Æ)

    8,524      278

Electro Scientific Industries, Inc. (Æ)(Ñ)

    180,300      2,959

 

Special Growth Fund   21

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Entegris, Inc. (Æ)

    45,378      342

Esterline Technologies Corp. (Æ)

    12,831      714

Federal Signal Corp. (Ñ)

    97,700      1,356

Flowserve Corp.

    43,950      5,454

Gardner Denver, Inc. (Æ)

    30,200      1,403

General Cable Corp. (Æ)

    19,403      1,300

Goodrich Corp.

    95,932      6,538

Graham Corp.

    3,162      181

Hardinge, Inc. (Ñ)

    21,200      354

Herman Miller, Inc. (Ñ)

    7,566      176

HNI Corp. (Ñ)

    15,921      347

Hubbell, Inc. Class B (Ñ)

    11,400      510

Joy Global, Inc.

    63,973      4,750

Kennametal, Inc.

    3,500      122

Kimball International, Inc. Class B

    186,781      1,918

KLA-Tencor Corp. (Ñ)

    42,012      1,835

M/I Homes, Inc. (Ñ)

    45,300      777

MasTec, Inc. (Æ)(Ñ)

    32,900      269

Mattson Technology, Inc. (Æ)(Ñ)

    20,779      101

MDC Holdings, Inc. (Ñ)

    8,700      379

Molex, Inc. (Ñ)

    45,100      1,280

Moog, Inc. Class A (Æ)

    11,832      510

Nanometrics, Inc. (Æ)

    116      1

Orbital Sciences Corp. (Æ)(Ñ)

    27,382      737

Pall Corp.

    22,300      775

Park-Ohio Holdings Corp. (Æ)(Ñ)

    2,700      45

Pentair, Inc. (Ñ)

    19,500      718

Perceptron, Inc. (Æ)

    166,520      1,675

Plantronics, Inc. (Ñ)

    40,440      1,007

Polycom, Inc. (Æ)

    86,994      1,949

Ritchie Bros Auctioneers, Inc.

    231,097      5,766

Robbins & Myers, Inc. (Ñ)

    150,458      5,997

Rofin-Sinar Technologies, Inc. (Æ)(Ñ)

    66,700      2,540

Ryland Group, Inc. (Ñ)

    13,654      437

SBA Communications Corp. Class A (Æ)(Ñ)

    65,327      2,113

Technitrol, Inc.

    97,407      2,045

Tecumseh Products Co. Class A (Æ)(Ñ)

    42,384      1,328

Teledyne Technologies, Inc. (Æ)

    2,990      176

Terex Corp. (Æ)

    6,600      460

Thomas & Betts Corp. (Æ)

    43,500      1,629

Triumph Group, Inc. (Ñ)

    81,020      4,770

Ultra Clean Holdings (Æ)(Ñ)

    116,821      1,249

Varian Semiconductor Equipment Associates, Inc. (Æ)

    41,352      1,515

Woodward Governor Co.

    31,634      1,111

W.W. Grainger, Inc. (Ñ)

    8,900      772

Zygo Corp. (Æ)

    10,600      124
         
        115,650
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Technology - 13.4%

        

Adaptec, Inc. (Æ)(Ñ)

    63,851      178

Adtran, Inc. (Ñ)

    91,400      2,163

Affiliated Computer Services, Inc. Class A (Æ)

    53,100      2,813

American Science & Engineering, Inc. (Ñ)

    1,200      58

Amkor Technology, Inc. (Æ)(Ñ)

    49,200      470

Amphenol Corp. Class A

    196,473      9,073

Anadigics, Inc. (Æ)(Ñ)

    140,300      1,566

Ansys, Inc. (Æ)(Ñ)

    163,920      6,595

Arrow Electronics, Inc. (Æ)

    90,200      2,454

Avnet, Inc. (Æ)

    113,700      2,978

Avocent Corp. (Æ)(Ñ)

    39,021      761

Bel Fuse, Inc. Class B (Ñ)

    5,600      146

Benchmark Electronics, Inc. (Æ)

    48,600      864

Blackbaud, Inc. (Ñ)

    3,727      88

Blackboard, Inc. (Æ)

    61,900      2,138

Bookham, Inc. (Æ)(Ñ)

    86,500      147

Cavium Networks, Inc. (Æ)(Ñ)

    58,550      1,203

Celestica, Inc. (Æ)

    289,850      2,716

Ceva, Inc. (Æ)(Ñ)

    3,800      37

Check Point Software Technologies (Æ)

    58,000      1,370

Checkpoint Systems, Inc. (Æ)

    40,500      1,050

ChipMOS TECHNOLOGIES Bermuda, Ltd. (Æ)(Ñ)

    286,606      848

Ciber, Inc. (Æ)

    31,300      196

Cognizant Technology Solutions Corp. Class A (Æ)

    84,670      2,731

COMSYS IT Partners, Inc. (Æ)(Ñ)

    962      8

Comtech Telecommunications Corp. (Æ)(Ñ)

    9,941      385

Comverse Technology, Inc. (Æ)

    123,847      2,161

Concur Technologies, Inc. (Æ)(Ñ)

    6,271      208

Conexant Systems, Inc. (Æ)(Ñ)

    172,949      86

Constant Contact, Inc. (Æ)(Ñ)

    42,650      761

Cray, Inc. (Æ)(Ñ)

    38,582      240

CSG Systems International, Inc. (Æ)

    55,000      666

Cubic Corp. (Ñ)

    23,300      632

Data Domain, Inc. (Æ)(Ñ)

    103,350      2,248

Digi International, Inc. (Æ)

    26,230      216

Digital River, Inc. (Æ)(Ñ)

    15,381      505

Diodes, Inc. (Æ)(Ñ)

    1,000      27

DRS Technologies, Inc. (Ñ)

    12,400      774

Electronics for Imaging, Inc. (Æ)(Ñ)

    39,410      568

EMS Technologies, Inc. (Æ)

    26      1

Emulex Corp. (Æ)(Ñ)

    39,073      511

Extreme Networks (Æ)(Ñ)

    111,500      338

 

22   Special Growth Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

F5 Networks, Inc. (Æ)(Ñ)

    88,432      2,001

First Solar, Inc. (Æ)(Ñ)

    11,950      3,489

Flextronics International, Ltd. (Æ)

    212,810      2,211

Flir Systems, Inc. (Æ)(Ñ)

    109,980      3,776

Foundry Networks, Inc. (Æ)(Ñ)

    36,544      465

Gartner, Inc. (Æ)(Ñ)

    5,308      122

GeoEye, Inc. (Æ)(Ñ)

    93,460      2,152

Gerber Scientific, Inc. (Æ)

    14,400      134

Harris Corp. (Ñ)

    40,162      2,170

Hittite Microwave Corp. (Æ)(Ñ)

    36,458      1,447

II-VI, Inc. (Æ)(Ñ)

    5,597      208

Imation Corp.

    90,100      2,112

Informatica Corp. (Æ)

    124,860      1,993

Ingram Micro, Inc. Class A (Æ)

    121,300      2,063

Integrated Device Technology, Inc. (Æ)

    86,268      922

Integrated Silicon Solution, Inc. (Æ)

    2,900      17

Intermec, Inc. (Æ)(Ñ)

    66,231      1,399

International Rectifier Corp. (Æ)(Ñ)

    71,260      1,622

Interwoven, Inc. (Æ)

    91,000      1,025

Intuit, Inc. (Æ)

    74,355      2,005

ION Geophysical Corp. (Æ)(Ñ)

    51,045      813

JDA Software Group, Inc. (Æ)(Ñ)

    19,900      376

Lawson Software, Inc. (Æ)

    13,686      109

Lionbridge Technologies, Inc. (Æ)(Ñ)

    7,700      23

Mantech International Corp. Class A (Æ)

    29,700      1,419

Marvell Technology Group, Ltd. (Æ)

    272,635      3,531

MEMC Electronic Materials, Inc. (Æ)

    29,770      1,875

Mercury Computer Systems, Inc. (Æ)(Ñ)

    6,400      51

Methode Electronics, Inc.

    54,551      591

Micrel, Inc.

    213,800      2,100

Micros Systems, Inc. (Æ)(Ñ)

    352,259      12,558

Microsemi Corp. (Æ)(Ñ)

    131,200      3,214

MicroStrategy, Inc. Class A (Æ)

    8,782      779

Monolithic Power Systems, Inc. (Æ)(Ñ)

    112,700      2,581

NAM TAI Electronics, Inc.

    153,400      1,582

NCR Corp. (Æ)

    223,754      5,511

Netlogic Microsystems, Inc. (Æ)(Ñ)

    87,450      2,868

Netscout Systems, Inc. (Æ)

    30,932      309

Nice Systems, Ltd. - ADR (Æ)

    229,516      7,308

Novatel Wireless, Inc. (Æ)(Ñ)

    833      7

ON Semiconductor Corp. (Æ)(Ñ)

    35,468      265

Oplink Communications, Inc. (Æ)(Ñ)

    4,900      47

OSI Systems, Inc. (Æ)(Ñ)

    87,806      2,147

Park Electrochemical Corp.

    500      14

PerkinElmer, Inc.

    205,425      5,456

Plexus Corp. (Æ)

    15,100      364
     Principal
Amount ($)
or Shares		      Market
Value
$

Power Integrations, Inc. (Æ)

    76,075      2,371

Rimage Corp. (Æ)

    8,294      148

SAIC, Inc. (Æ)(Ñ)

    103,600      1,968

SanDisk Corp. (Æ)

    90,321      2,447

Sanmina-SCI Corp. (Æ)

    650,600      1,008

Satyam Computer Services, Ltd. - ADR (Ñ)

    92,870      2,385

Scansource, Inc. (Æ)(Ñ)

    28,438      710

Seagate Technology (Ñ)

    85,082      1,606

Secure Computing Corp. (Æ)(Ñ)

    67,210      445

Silicon Image, Inc. (Æ)(Ñ)

    1,300      8

Skyworks Solutions, Inc. (Æ)(Ñ)

    140,700      1,223

Solera Holdings, Inc. (Æ)

    22,300      576

SonicWALL, Inc. (Æ)

    86,400      664

SPSS, Inc. (Æ)

    3,400      144

SRA International, Inc. Class A (Æ)(Ñ)

    18,747      492

Standard Microsystems Corp. (Æ)(Ñ)

    9,165      272

STEC, Inc. (Æ)(Ñ)

    16,598      152

Sunpower Corp. Class A (Æ)(Ñ)

    7,150      624

Switch & Data Facilities Co., Inc. (Æ)(Ñ)

    21,600      327

Sybase, Inc. (Æ)

    39,335      1,157

SYKES Enterprises, Inc. (Æ)

    900      15

Synaptics, Inc. (Æ)(Ñ)

    20,147      684

Syniverse Holdings, Inc. (Æ)

    235,238      3,696

Taleo Corp. Class A (Æ)(Ñ)

    27,765      541

Tekelec (Æ)(Ñ)

    19,877      293

Tessera Technologies, Inc. (Æ)(Ñ)

    40,188      813

Tier Technologies, Inc. Class B (Æ)

    296,450      2,300

Trimble Navigation, Ltd. (Æ)(Ñ)

    100,477      3,295

TriQuint Semiconductor, Inc. (Æ)(Ñ)

    318,755      2,101

TTM Technologies, Inc. (Æ)(Ñ)

    10,547      140

Tyler Technologies, Inc. (Æ)(Ñ)

    26,824      388

Unisys Corp. (Æ)

    217,269      904

Verint Systems, Inc. (Æ)

    61,933      1,236

Viasat, Inc. (Æ)

    16,425      363

Vignette Corp. (Æ)(Ñ)

    25,501      295

Vishay Intertechnology, Inc. (Æ)

    330,500      3,123

Vocus, Inc. (Æ)

    129,270      3,592

Western Digital Corp. (Æ)(Ñ)

    139,400      4,041

White Electronic Designs Corp. (Æ)

    436,277      1,994

Xilinx, Inc. (Ñ)

    65,900      1,632

Zoran Corp. (Æ)

    65,683      864
         
        191,246
         

Utilities - 3.7%

        

Alaska Communications Systems Group, Inc. (Ñ)

    44,704      500

 

Special Growth Fund   23

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Allete, Inc. (Ñ)

    25,000      1,044

Alliant Energy Corp.

    56,600      2,132

Atlantic Tele-Network, Inc. (Ñ)

    10,500      327

Atmos Energy Corp. (Ñ)

    110,581      3,061

Avista Corp.

    133,020      2,731

Black Hills Corp. (Ñ)

    18,747      731

California Water Service Group

    14,700      569

CenturyTel, Inc. (Ñ)

    98,500      3,196

Cincinnati Bell, Inc. (Æ)(Ñ)

    173,952      807

Citizens Communications Co. (Ñ)

    134,500      1,442

Clearwire Corp. Class A (Æ)(Ñ)

    160,261      2,427

Cleco Corp. (Ñ)

    182,422      4,380

El Paso Electric Co. (Æ)

    27,442      620

El Paso Pipeline Partners, LP (Ñ)

    71,000      1,654

Empire District Electric Co. (The)

    34,700      723

Energen Corp.

    25,940      1,770

Idacorp, Inc. (Ñ)

    137,370      4,456

iPCS, Inc.

    15,162      461

MDU Resources Group, Inc.

    59,200      1,709

MGE Energy, Inc.

    1,900      66

New Jersey Resources Corp. (Ñ)

    37,749      1,202

NTELOS Holdings Corp. (Ñ)

    27,947      723

Oneok, Inc. (Ñ)

    23,500      1,131

Pepco Holdings, Inc. (Ñ)

    36,100      899

Portland General Electric Co.

    45,000      1,080

Premiere Global Services, Inc. (Æ)

    79,791      1,159

RCN Corp. (Æ)(Ñ)

    15,472      177

Southwest Gas Corp.

    212,439      6,133

Southwest Water Co. (Ñ)

    18,500      206

Suburban Propane Partners, LP (Ñ)

    13,800      564

Telephone & Data Systems, Inc.

    12,300      471

UGI Corp.

    117,500      3,055

UIL Holdings Corp.

    18,100      567

USA Mobility, Inc. (Æ)(Ñ)

    25,304      181
         
        52,354
         
Total Common Stocks        

(cost $1,230,570)

         1,301,862
         
Short-Term Investments - 8.8%        

Russell Investment Company Money Market Fund

    117,661,444      117,661

United States Treasury Bills (ç)(ž)(§)

        

0.560% due 06/19/08

    6,500      6,495

1.330% due 06/19/08

    1,000      998
         
Total Short-Term Investments        

(cost $125,154)

         125,154
         
     Principal
Amount ($)
or Shares		      Market
Value
$		  

Other Securities - 39.5%

        

Russell Investment Company Money Market Fund (×)

    122,610,952      122,611  

State Street Securities Lending Quality Trust (×)

    441,272,207      441,272  
           
Total Other Securities        

(cost $563,883)

         563,883  
           
Total Investments - 139.4%        

(identified cost $1,919,607)

         1,990,899  
Other Assets and Liabilities,
Net - (39.4%)		         (562,607 )
           
Net Assets - 100.0%         1,428,292  
           

 

See accompanying notes which are an integral part of the financial statements.

 

24   Special Growth Fund

Table of Contents

Russell Investment Company

Special Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts

(Number of Contracts)

   Notional
Amount		    Unrealized
Appreciation
(Depreciation)
$
    
    

Long Positions

     

Russell 2000 Mini Index (CME)
expiration date 06/08 (1,670)

   USD  119,823    6,803
      

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

      6,803
      

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Auto and Transportation

    4.0  

Consumer Discretionary

    15.7  

Consumer Staples

    1.6  

Financial Services

    14.5  

Health Care

    10.4  

Integrated Oils

    — *

Materials and Processing

    9.5  

Miscellaneous

    0.6  

Other Energy

    9.6  

Producer Durables

    8.1  

Technology

    13.4  

Utilities

    3.7  

Short-Term Investments

    8.8  

Other Securities

    39.5  
      

Total Investments

    139.4  

Other Assets and Liabilities, Net

    (39.4 )
      
   100.0  
      

Futures Contracts

    0.5  

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

Special Growth Fund   25

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 885.00    $ 1,017.70

Expenses Paid During Period*

    $ 6.75    $ 7.22

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.44% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 881.70    $ 1,013.97

Expenses Paid During Period*

    $ 10.25    $ 10.97

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.19% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 884.70    $ 1,017.70

Expenses Paid During Period*

    $ 6.75    $ 7.22

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.44% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

26   Quantitative Equity Fund

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 886.00    $ 1,018.95

Expenses Paid During Period*

    $ 5.58    $ 5.97

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.19% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Quantitative Equity Fund   27

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 106.0%

        

Auto and Transportation - 1.8%

        

Alexander & Baldwin, Inc. (Ñ)

    26,900      1,351

Autoliv, Inc. (Ñ)

    49,100      3,007

Burlington Northern Santa Fe Corp.

    45,200      4,635

CH Robinson Worldwide, Inc.

    5,100      320

Continental Airlines, Inc. Class A (Æ)

    91,700      1,649

CSX Corp. (Ú)

    218,200      13,736

FedEx Corp. (Ú)

    80,700      7,737

Forward Air Corp.

    5,100      174

Frontline, Ltd. (Ñ)

    47,200      2,646

Genuine Parts Co.

    52,600      2,233

JB Hunt Transport Services, Inc. (Ñ)

    136,470      4,636

Kirby Corp. (Æ)

    51,300      2,813

Landstar System, Inc.

    19,600      1,018

Lear Corp. (Æ)

    29,500      843

Norfolk Southern Corp. (Ú)

    196,300      11,695

Overseas Shipholding Group, Inc. (Ñ)

    20,369      1,533

Southwest Airlines Co.

    35,200      466

TRW Automotive Holdings Corp. (Æ)

    61,900      1,582

UAL Corp. (Ñ)

    64,000      954

Union Pacific Corp. (Ú)

    55,500      8,058

United Parcel Service, Inc. Class B

    21,200      1,535

US Airways Group, Inc. (Æ)

    148,900      1,279

UTI Worldwide, Inc.

    36,600      804

WABCO Holdings, Inc.

    6,000      287

Werner Enterprises, Inc. (Ñ)

    47,200      918
         
        75,909
         

Consumer Discretionary - 15.8%

        

Accenture, Ltd. Class A (Ñ)(Ú)

    1,000,410      37,565

Activision, Inc. (Æ)

    51,500      1,393

Aeropostale, Inc. (Æ)(Ñ)

    23,200      738

Alberto-Culver Co. Class B

    6,400      161

Allied Waste Industries, Inc. (Æ)

    261,600      3,233

Amazon.com, Inc. (Æ)(Ñ)

    56,500      4,443

American Greetings Corp. Class A (Ñ)

    127,120      2,275

Apollo Group, Inc. Class A (Æ)

    131,600      6,698

AutoNation, Inc. (Æ)(Ñ)

    389,939      6,243

Avon Products, Inc.

    206,800      8,069

Best Buy Co., Inc. (Ñ)(Ú)

    1,050,200      45,180

BJ’s Wholesale Club, Inc. (Æ)(Ñ)

    125,700      4,792

Brinker International, Inc.

    70,200      1,593

Burger King Holdings, Inc.

    26,100      728

CBS Corp. Class B

    643,709      14,850

Chipotle Mexican Grill, Inc. Class A (Æ)(Ñ)

    2,050      201

Choice Hotels International, Inc.

    1,600      55
     Principal
Amount ($)
or Shares		      Market
Value
$

Coach, Inc. (Æ)

    339,200      12,065

Columbia Sportswear Co.

    19,600      822

Convergys Corp. (Æ)

    112,700      1,772

Costco Wholesale Corp. (Ú)

    292,500      20,841

Darden Restaurants, Inc.

    100,200      3,565

DeVry, Inc. (Ñ)

    15,800      901

DIRECTV Group, Inc. (The) (Æ)(Ñ)(Ú)

    619,000      15,252

DISH Network Corp. Class A (Æ)

    80,900      2,414

Dolby Laboratories, Inc. Class A (Æ)

    31,200      1,253

Earthlink, Inc. (Æ)

    6,400      58

eBay, Inc. (Æ)(Ú)

    542,000      16,959

Electronic Arts, Inc. Series C (Æ)

    3,600      185

Estee Lauder Cos., Inc. (The) Class A (Ñ)

    86,600      3,950

Family Dollar Stores, Inc.

    47,100      1,008

Foot Locker, Inc.

    125,400      1,586

GameStop Corp. Class A (Æ)(Ñ)

    712,500      39,216

Gap, Inc. (The) (Ú)

    484,100      9,014

Gemstar-TV Guide International, Inc. (Æ)

    1,159      5

Google, Inc. Class A (Æ)(Ú)

    40,300      23,144

Hanesbrands, Inc. (Æ)

    32,950      1,154

Harte-Hanks, Inc.

    30,600      418

Hasbro, Inc.

    181,300      6,447

Hewitt Associates, Inc. Class A (Æ)

    62,600      2,567

IAC/InterActiveCorp (Æ)

    60,100      1,251

Jack in the Box, Inc. (Æ)

    22,400      599

Liberty Global, Inc. Class A (Æ)(Ú)

    128,900      4,562

Liberty Media Corp. - Capital Series A (Æ)

    16,600      255

Macy’s, Inc. (Ú)

    342,900      8,672

Manpower, Inc. (Ñ)

    559,309      37,546

Marriott International, Inc. Class A

    175,100      6,006

Mattel, Inc.

    181,500      3,403

McDonald’s Corp. (Ú)

    603,331      35,946

McGraw-Hill Cos., Inc. (The)

    149,100      6,112

Meredith Corp.

    24,400      791

News Corp. Class A

    357,600      6,401

Nike, Inc. Class B (Ú)

    725,200      48,443

Office Depot, Inc. (Æ)

    264,500      3,354

OfficeMax, Inc.

    18,600      340

Omnicom Group, Inc.

    150,100      7,166

Penske Auto Group, Inc.

    30,600      640

Pool Corp.

    4,300      94

RR Donnelley & Sons Co. (Ú)

    178,500      5,469

Scholastic Corp. (Æ)

    7,500      211

Sears Holdings Corp. (Æ)

    15,300      1,509

Tech Data Corp. (Æ)

    59,700      2,007

Tiffany & Co. (Ñ)

    123,100      5,360

 

28   Quantitative Equity Fund

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Time Warner, Inc. (Ú)

    4,242,070      62,995

TJX Cos., Inc.

    284,800      9,176

VeriSign, Inc. (Æ)(Ñ)

    46,600      1,680

VF Corp.

    35,800      2,663

Viacom, Inc. Class B (Æ)(Ú)

    294,300      11,313

Wal-Mart Stores, Inc. (Ú)

    521,200      30,219

Walt Disney Co. (The) (Ú)

    1,650,130      53,514

Wendy’s International, Inc.

    59,300      1,720

WESCO International, Inc. (Æ)

    19,700      733

Wolverine World Wide, Inc.

    38,200      1,098

Yahoo!, Inc. (Æ)

    55,200      1,513

Yum! Brands, Inc. (Ú)

    320,300      13,030
         
        678,604
         

Consumer Staples - 7.1%

        

Altria Group, Inc.

    254,600      5,092

Anheuser-Busch Cos., Inc.

    268,500      13,210

Brown-Forman Corp. - ADR Class B

    1,300      88

Church & Dwight Co., Inc.

    6,400      364

Coca-Cola Co. (The)

    47,540      2,799

Coca-Cola Enterprises, Inc.

    207,400      4,666

Colgate-Palmolive Co. (Ú)

    143,100      10,117

ConAgra Foods, Inc. (Ú)

    340,300      8,017

Constellation Brands, Inc. Class A (Æ)(Ú)

    113,300      2,080

General Mills, Inc. (Ú)

    176,400      10,655

Hansen Natural Corp. (Ñ)

    21,200      750

Herbalife, Ltd. (Ñ)

    88,000      3,853

Hormel Foods Corp.

    29,000      1,143

Kroger Co. (The) (Ú)

    1,619,779      44,139

Loews Corp. - Carolina Group (Ú)

    58,700      3,855

McCormick & Co., Inc.

    27,200      1,028

Pepsi Bottling Group, Inc. (Ú)

    371,064      12,509

PepsiAmericas, Inc.

    21,900      563

PepsiCo, Inc. (Ú)

    502,500      34,436

Philip Morris International, Inc. (Æ)

    258,800      13,207

Procter & Gamble Co. (Ú)

    773,495      51,863

Ruddick Corp. (Ñ)

    4,900      190

Safeway, Inc.

    828,600      26,184

SUPERVALU, Inc.

    214,100      7,087

SYSCO Corp. (Ú)

    830,400      25,385

Tyson Foods, Inc. Class A

    479,980      8,544

Universal Corp. (Ñ)

    13,000      834

UST, Inc. (Ñ)

    89,920      4,682

Walgreen Co. (Ú)

    174,500      6,081
         
        303,421
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Financial Services - 19.0%

        

ACE, Ltd. (Ú)

    158,700      9,568

Advent Software, Inc. (Æ)(Ñ)

    28,800      1,148

Aflac, Inc.

    137,400      9,160

Allied World Assurance Co. Holdings, Ltd.

    5,900      243

Allstate Corp. (The) (Ú)

    295,800      14,897

AMB Property Corp. (ö)(Ú)

    93,000      5,371

American Express Co.

    327,400      15,722

American Financial Group, Inc.

    97,900      2,684

Ameriprise Financial, Inc. (Ñ)(Ú)

    700,840      33,283

Arch Capital Group, Ltd. (Æ)

    56,100      3,964

Arthur J Gallagher & Co.

    45,100      1,108

Assurant, Inc. (Ú)

    97,300      6,325

Automatic Data Processing, Inc. (Ú)

    500,900      22,140

AvalonBay Communities, Inc. (ö)(Ñ)

    56,850      5,671

Axis Capital Holdings, Ltd.

    341,200      11,570

Bank of America Corp. (Ú)

    1,349,922      50,676

Bank of New York Mellon Corp. (The) (Ú)

    391,804      17,055

BB&T Corp.

    84,000      2,880

BlackRock, Inc. (Ñ)(Ú)

    47,630      9,611

Brandywine Realty Trust (ö)

    97,900      1,708

Broadridge Financial Solutions, Inc.

    51,200      953

Camden Property Trust (ö)

    18,600      984

Capital One Financial Corp. (Ñ)

    51,800      2,745

Cash America International, Inc.

    52,200      2,129

CBL & Associates Properties, Inc. (ö)

    24,700      605

Charles Schwab Corp. (The) (Ú)

    663,300      14,327

Chubb Corp. (Ú)

    683,100      36,184

Cigna Corp. (Ú)

    431,000      18,408

Cincinnati Financial Corp.

    176,527      6,337

Citigroup, Inc.

    247,600      6,257

City National Corp.

    31,800      1,543

CNA Financial Corp. (Ñ)

    124,400      3,335

Comerica, Inc.

    134,900      4,685

Conseco, Inc. (Æ)

    77,600      904

Cullen/Frost Bankers, Inc.

    1,600      89

Discover Financial Services

    353,000      6,428

Duke Realty Corp. (ö)

    207,100      5,057

Dun & Bradstreet Corp.

    39,700      3,347

Eaton Vance Corp. (Ñ)

    45,300      1,658

Endurance Specialty Holdings, Ltd. (Ñ)

    145,900      5,417

Equity Residential (ö)

    115,800      4,808

Everest Re Group, Ltd.

    12,400      1,120

Federal Realty Investment Trust (ö)(Ñ)

    39,700      3,261

Federated Investors, Inc. Class B

    35,900      1,202

 

Quantitative Equity Fund   29

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Fifth Third Bancorp

    757,400      16,231

Franklin Resources, Inc. (Ú)

    178,200      16,956

GFI Group, Inc.

    5,300      62

Global Payments, Inc.

    2,200      97

Goldman Sachs Group, Inc. (The) (Ú)

    96,900      18,544

Hanover Insurance Group, Inc. (The)

    30,100      1,351

Hartford Financial Services Group, Inc. (Ú)

    157,900      11,254

HCC Insurance Holdings, Inc.

    157,300      3,882

Hospitality Properties Trust (ö)

    253,405      8,142

HRPT Properties Trust (ö)

    188,800      1,308

Hudson City Bancorp, Inc. (Ñ)(Ú)

    711,900      13,619

Huntington Bancshares, Inc.

    7,600      71

IntercontinentalExchange, Inc. (Æ)

    30,600      4,748

Invesco, Ltd.

    7,400      190

Investment Technology Group, Inc. (Æ)

    29,900      1,443

Janus Capital Group, Inc. (Ñ)

    58,900      1,653

Jones Lang LaSalle, Inc. (Ñ)

    85,600      6,643

JPMorgan Chase & Co. (Ú)

    985,180      46,944

LaSalle Hotel Properties (ö)

    41,800      1,341

Legg Mason, Inc.

    35,000      2,110

Lincoln National Corp.

    92,100      4,951

Loews Corp.

    166,900      7,028

Macerich Co. (The) (ö)

    37,200      2,720

Mack-Cali Realty Corp. (ö)

    58,100      2,267

Mastercard, Inc. Class A (Ñ)

    9,700      2,698

MetLife, Inc. (Ú)

    380,400      23,147

Morgan Stanley (Ú)

    232,600      11,304

Nasdaq OMX Group (The) (Æ)

    112,800      4,112

National City Corp.

    430,600      2,713

Nationwide Financial Services

    23,900      1,198

Northern Trust Corp.

    160,600      11,902

Odyssey Re Holdings Corp.

    14,700      526

Omega Healthcare Investors, Inc. (ö)

    13,700      240

Pennsylvania Real Estate Investment Trust (ö)

    31,200      786

Phoenix Cos., Inc. (The)

    54,800      712

Plum Creek Timber Co., Inc. (ö)(Ñ)

    2,200      90

Principal Financial Group, Inc.

    64,500      3,461

Prologis (ö)

    792,841      49,640

Protective Life Corp.

    29,500      1,257

Prudential Financial, Inc. (Ú)

    246,200      18,640

Rayonier, Inc. (ö)

    2,100      88

Regency Centers Corp. (ö)

    17,600      1,260

Regions Financial Corp. (Ñ)

    350,060      7,673

RenaissanceRe Holdings, Ltd.

    56,000      2,881

Ryder System, Inc.

    3,800      260
     Principal
Amount ($)
or Shares		      Market
Value
$

Safeco Corp.

    127,500      8,509

SEI Investments Co.

    114,300      2,660

StanCorp Financial Group, Inc.

    16,700      856

State Street Corp. (Ú)

    125,500      9,054

Sunstone Hotel Investors, Inc. (ö)

    39,300      734

SunTrust Banks, Inc.

    137,000      7,638

Synovus Financial Corp. (Ñ)

    7,800      92

T Rowe Price Group, Inc.

    153,700      9,001

TD Ameritrade Holding Corp. (Æ)(Ú)

    506,300      9,164

Travelers Cos., Inc. (The) (Ú)

    830,595      41,862

UnionBanCal Corp.

    5,100      268

US Bancorp

    445,800      15,108

Ventas, Inc. (ö)

    49,200      2,389

Wachovia Corp. (Ñ)(Ú)

    136,600      3,982

Waddell & Reed Financial, Inc. Class A

    21,200      718

Webster Financial Corp.

    13,000      339

Wells Fargo & Co. (Ú)

    334,450      9,950

Western Union Co. (The)

    323,200      7,434

WR Berkley Corp.

    95,675      2,458

XL Capital, Ltd. Class A

    337,400      11,772
         
        818,698
         

Health Care - 12.4%

        

Abbott Laboratories

    25,800      1,361

Aetna, Inc. (Ú)

    385,200      16,795

AMERIGROUP Corp. Class A (Æ)

    72,200      1,877

AmerisourceBergen Corp. Class A (Ú)

    862,412      34,971

Amgen, Inc. (Æ)(Ú)

    398,420      16,682

Baxter International, Inc. (Ú)

    187,600      11,691

Beckman Coulter, Inc.

    35,700      2,438

Becton Dickinson & Co. (Ú)

    69,800      6,240

Biogen Idec, Inc. (Æ)

    386,400      23,451

Boston Scientific Corp. (Æ)(Ú)

    840,500      11,204

Bristol-Myers Squibb Co. (Ú)

    594,500      13,061

Cardinal Health, Inc. (Ú)

    312,800      16,288

Celgene Corp. (Æ)

    114,600      7,121

Covidien, Ltd.

    31,100      1,452

CVS Caremark Corp.

    48,400      1,954

Eli Lilly & Co. (Ú)

    284,700      13,705

Endo Pharmaceuticals Holdings, Inc. (Æ)

    40,400      1,003

Express Scripts, Inc. Class A (Æ)(Ú)

    606,800      42,488

Forest Laboratories, Inc. (Æ)(Ú)

    302,500      10,500

Gen-Probe, Inc. (Æ)

    1,800      101

Genentech, Inc. (Æ)

    42,500      2,899

Genzyme Corp. (Æ)(Ú)

    47,600      3,349

Gilead Sciences, Inc. (Æ)(Ú)

    178,400      9,234

 

30   Quantitative Equity Fund

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Health Net, Inc. (Æ)

    197,900      5,797

Hill-Rom Holdings, Inc. (Ñ)

    3,600      91

HLTH Corp. (Æ)(Ñ)

    194,300      2,161

Humana, Inc. (Æ)

    246,600      11,785

Intuitive Surgical, Inc. (Æ)

    13,650      3,948

Invitrogen Corp. (Æ)

    72,100      6,746

Johnson & Johnson (Ú)

    405,350      27,195

Kindred Healthcare, Inc. (Æ)

    4,600      109

Kinetic Concepts, Inc. (Æ)

    99,300      3,938

King Pharmaceuticals, Inc. (Æ)

    350,300      3,289

Lincare Holdings, Inc. (Æ)

    102,900      2,505

McKesson Corp. (Ú)

    284,600      14,833

Medco Health Solutions, Inc. (Æ)(Ú)

    1,000,280      49,554

Medtronic, Inc. (Ñ)

    355,800      17,320

Merck & Co., Inc. (Ú)

    372,360      14,165

Pfizer, Inc. (Ú)

    4,296,380      86,400

Schering-Plough Corp.

    235,700      4,339

Stryker Corp.

    55,900      3,624

Thermo Fisher Scientific, Inc. (Æ)

    26,400      1,528

UnitedHealth Group, Inc. (Ú)

    315,600      10,298

Warner Chilcott, Ltd. (Æ)(Ñ)

    5,300      91

Watson Pharmaceuticals, Inc. Class B (Æ)(Ñ)

    107,700      3,343

WellCare Health Plans, Inc. (Æ)

    67,000      2,933

WellPoint, Inc. (Æ)(Ú)

    124,000      6,169

Wyeth

    61,800      2,748
         
        534,774
         

Integrated Oils - 7.3%

        

Chevron Corp. (Ú)

    550,410      52,922

ConocoPhillips (Ú)

    629,500      54,232

Exxon Mobil Corp. (Ú)

    1,598,818      148,802

Hess Corp. (Ú)

    106,900      11,353

Marathon Oil Corp. (Ú)

    365,200      16,642

Murphy Oil Corp. (Ú)

    127,300      11,500

Occidental Petroleum Corp. (Ú)

    240,600      20,020
         
        315,471
         

Materials and Processing - 6.6%

        

Airgas, Inc. (Ú)

    54,700      2,633

AK Steel Holding Corp. (Ú)

    51,800      3,252

Alcoa, Inc. (Ú)

    305,400      10,622

Archer-Daniels-Midland Co.

    115,800      5,102

Ashland, Inc.

    143,100      7,587

Avery Dennison Corp.

    29,400      1,417

Bunge, Ltd.

    24,700      2,818

Carpenter Technology Corp.

    37,100      1,902

Celanese Corp. Class A

    104,750      4,688
     Principal
Amount ($)
or Shares		      Market
Value
$

CF Industries Holdings, Inc.

    37,400      5,000

Commercial Metals Co.

    121,000      3,768

Crown Holdings, Inc. (Æ)

    165,400      4,439

Cytec Industries, Inc.

    1,500      88

Domtar Corp. (Æ)

    166,800      996

Dow Chemical Co. (The) (Ú)

    315,800      12,679

Eastman Chemical Co.

    45,900      3,374

EI Du Pont de Nemours & Co.

    163,700      8,007

EMCOR Group, Inc. (Æ)

    117,100      2,934

Energizer Holdings, Inc. (Æ)

    53,970      4,267

Fluor Corp.

    85,850      13,124

FMC Corp.

    6,000      377

Freeport-McMoRan Copper & Gold, Inc. Class B

    89,900      10,226

Granite Construction, Inc.

    58,400      2,003

Harsco Corp.

    67,000      3,975

International Paper Co.

    293,400      7,678

Jacobs Engineering Group, Inc. (Æ)

    107,900      9,315

KBR, Inc.

    225,300      6,498

Lubrizol Corp.

    7,500      437

McDermott International, Inc. (Æ)

    223,700      11,986

Minerals Technologies, Inc. (Ñ)

    11,900      806

Monsanto Co. (Ú)

    177,350      20,221

Mosaic Co. (The) (Æ)

    139,000      17,029

Newmont Mining Corp. (Ú)

    132,800      5,871

Nucor Corp. (Ú)

    296,200      22,363

Olin Corp.

    77,600      1,565

Owens-Illinois, Inc. (Æ)

    187,200      10,324

Perini Corp. (Æ)

    11,900      431

PPG Industries, Inc.

    70,500      4,327

Precision Castparts Corp.

    81,600      9,593

Reliance Steel & Aluminum Co.

    18,000      1,094

Rohm & Haas Co.

    105,700      5,650

RPM International, Inc.

    4,100      91

Scotts Miracle-Gro Co. (The) Class A (Ñ)

    17,000      563

Shaw Group, Inc. (The) (Æ)

    1,700      84

Sherwin-Williams Co. (The) (Ñ)(Ú)

    173,700      9,609

Sonoco Products Co.

    57,200      1,885

Southern Copper Corp. (Ñ)(Ú)

    90,350      10,369

Terra Industries, Inc. (Æ)

    117,800      4,460

Timken Co.

    52,300      1,891

URS Corp. (Æ)

    104,000      4,195

Valspar Corp. (Ñ)

    43,800      963

Worthington Industries, Inc. (Ñ)

    68,800      1,239
         
        285,815
         

 

Quantitative Equity Fund   31

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Miscellaneous - 2.8%

        

3M Co. (Ú)

    196,500      15,111

Berkshire Hathaway, Inc. Class A (Æ)

    8      1,071

Carlisle Cos., Inc. (Ñ)

    56,100      1,620

Eaton Corp. (Ú)

    92,000      8,081

Foster Wheeler, Ltd. (Æ)

    223,200      14,216

General Electric Co. (Ú)

    1,788,120      58,472

Honeywell International, Inc.

    44,228      2,627

ITT Corp.

    83,300      5,331

SPX Corp.

    71,870      8,840

Tyco International, Ltd. (Ú)

    87,500      4,094
         
        119,463
         

Other Energy - 6.8%

        

Anadarko Petroleum Corp. (Ú)

    299,200      19,915

Apache Corp. (Ú)

    386,600      52,067

Bill Barrett Corp. (Æ)(Ñ)

    3,500      180

BJ Services Co.

    247,600      7,000

Cabot Oil & Gas Corp.

    16,000      912

Cameron International Corp. (Æ)

    18,600      916

Chesapeake Energy Corp. (Ñ)(Ú)

    101,100      5,227

Cimarex Energy Co. (Ñ)

    17,100      1,065

Complete Production Services, Inc.

    5,900      159

Denbury Resources, Inc. (Æ)

    2,800      86

Devon Energy Corp. (Ú)

    133,540      15,143

Dresser-Rand Group, Inc. (Æ)

    11,100      406

Dynegy, Inc. Class A (Æ)

    4,230      36

Exterran Holdings, Inc. (Æ)

    11,000      735

FMC Technologies, Inc. (Æ)

    151,700      10,194

Frontier Oil Corp.

    106,900      2,656

Global Industries, Ltd. (Æ)

    323,807      5,168

Halliburton Co. (Ú)

    523,000      24,011

Helix Energy Solutions Group, Inc. (Æ)

    40,200      1,389

Holly Corp.

    65,100      2,700

Massey Energy Co.

    1,700      89

National Oilwell Varco, Inc. (Æ)

    598,400      40,961

Newfield Exploration Co. (Æ)

    65,100      3,955

Noble Energy, Inc.

    34,300      2,984

NRG Energy, Inc. (Æ)

    132,400      5,819

Oceaneering International, Inc. (Æ)

    6,800      454

Patterson-UTI Energy, Inc.

    47,000      1,313

Pioneer Natural Resources Co. (Ñ)

    56,200      3,244

Reliant Energy, Inc. (Æ)

    594,900      15,313

SEACOR Holdings, Inc. (Æ)(Ñ)

    24,050      2,047

St. Mary Land & Exploration Co.

    30,500      1,333

Sunoco, Inc. (Ú)

    184,100      8,544

Superior Energy Services (Æ)

    63,600      2,823
     Principal
Amount ($)
or Shares		      Market
Value
$

Tesoro Corp.

    67,700      1,702

Transocean, Inc. (Æ)

    30,800      4,542

Ultra Petroleum Corp. (Æ)

    3,100      258

Unit Corp. (Æ)

    42,400      2,693

Valero Energy Corp. (Ú)

    551,900      26,960

W&T Offshore, Inc. (Ñ)

    43,500      1,779

Williams Cos., Inc.

    455,100      16,156
         
        292,934
         

Producer Durables - 7.2%

        

AGCO Corp. (Æ)(Ñ)(Ú)

    171,060      10,286

Agilent Technologies, Inc. (Æ)

    57,689      1,743

American Tower Corp. Class A (Æ)

    87,300      3,791

Boeing Co. (Ú)

    769,400      65,291

Caterpillar, Inc. (Ú)

    116,100      9,506

Crane Co.

    6,900      282

Cummins, Inc. (Ú)

    239,500      15,005

Donaldson Co., Inc.

    31,500      1,371

DR Horton, Inc.

    183,500      2,842

Emerson Electric Co.

    54,700      2,859

Flowserve Corp.

    48,701      6,043

Gardner Denver, Inc. (Æ)

    45,400      2,109

Graco, Inc.

    33,302      1,379

Herman Miller, Inc. (Ñ)

    12,800      299

HNI Corp. (Ñ)

    36,000      784

Hubbell, Inc. Class B

    33,100      1,481

Ingersoll-Rand Co., Ltd. Class A (Ñ)

    396,000      17,574

Joy Global, Inc.

    24,800      1,841

KLA-Tencor Corp. (Ú)

    81,800      3,573

Lam Research Corp. (Æ)

    2,100      86

Lexmark International, Inc. Class A (Æ)

    51,000      1,601

Lincoln Electric Holdings, Inc.

    3,100      237

Lockheed Martin Corp. (Ú)

    414,160      43,917

Manitowoc Co., Inc. (The)

    58,400      2,209

Mettler Toledo International, Inc. (Æ)

    14,300      1,362

Molex, Inc.

    85,200      2,418

Northrop Grumman Corp. (Ú)

    755,175      55,558

Parker Hannifin Corp. (Ú)

    142,100      11,347

Raytheon Co. (Ú)

    220,900      14,131

Steelcase, Inc. Class A

    69,902      774

Teradyne, Inc. (Æ)

    191,700      2,548

Thomas & Betts Corp. (Æ)

    27,200      1,019

United Technologies Corp. (Ú)

    151,100      10,950

WW Grainger, Inc. (Ñ)

    51,400      4,457

Xerox Corp.

    776,500      10,848
         
        311,521
         

 

32   Quantitative Equity Fund

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Technology - 13.1%

        

ADC Telecommunications, Inc. (Æ)

    71,300      1,000

Adobe Systems, Inc. (Æ)(Ú)

    285,100      10,631

Adtran, Inc.

    3,900      92

Amdocs, Ltd. (Æ)

    5,800      182

Analog Devices, Inc.

    213,900      6,890

Apple, Inc. (Æ)

    230,750      40,139

Applera Corp. - Applied Biosystems Group

    101,489      3,239

Arrow Electronics, Inc. (Æ)

    86,600      2,356

Autodesk, Inc. (Æ)(Ú)

    181,200      6,886

Avnet, Inc. (Æ)

    487,590      12,770

BMC Software, Inc. (Æ)

    17,700      615

Broadcom Corp. Class A (Æ)

    173,800      4,512

CA, Inc.

    36,700      813

CACI International, Inc. Class A (Æ)

    18,900      947

Cisco Systems, Inc. (Æ)(Ú)

    362,170      9,286

Cognizant Technology Solutions Corp. Class A (Æ)

    50,600      1,632

Computer Sciences Corp. (Æ)(Ñ)

    240,529      10,485

Corning, Inc. (Ú)

    289,200      7,725

Dell, Inc. (Æ)

    198,800      3,704

Electronic Data Systems Corp.

    405,300      7,522

EMC Corp./Massachusetts (Æ)

    251,300      3,870

First Solar, Inc. (Æ)(Ñ)

    13,300      3,883

Garmin, Ltd. (Ñ)

    75,450      3,086

General Dynamics Corp.

    16,000      1,447

Harris Corp.

    137,200      7,413

Hewlett-Packard Co. (Ú)

    677,140      31,385

Ingram Micro, Inc. Class A (Æ)

    61,900      1,053

Intel Corp.

    131,190      2,920

International Business Machines Corp. (Ú)

    276,700      33,398

Jabil Circuit, Inc.

    347,500      3,781

Juniper Networks, Inc. (Æ)(Ú)

    755,100      20,856

L-3 Communications Holdings, Inc. (Ú)

    77,300      8,615

LSI Corp. (Æ)

    14,900      92

Mantech International Corp. Class A (Æ)

    7,800      373

McAfee, Inc. (Æ)

    80,400      2,673

MEMC Electronic Materials, Inc. (Æ)

    27,000      1,700

Microsoft Corp. (Ú)

    2,799,340      79,837

Motorola, Inc. (Ú)

    911,300      9,077

National Instruments Corp.

    29,600      871

National Semiconductor Corp.

    25,400      518

Novell, Inc. (Æ)

    152,100      955

Nvidia Corp.

    440,250      9,047
     Principal
Amount ($)
or Shares		      Market
Value
$

Oracle Corp. (Æ)(Ú)

    2,566,500      53,512

Perot Systems Corp. Class A (Æ)

    8,400      131

QLogic Corp. (Æ)

    22,200      354

Qualcomm, Inc.

    392,600      16,956

Rockwell Automation, Inc.

    124,500      6,752

SAIC, Inc. (Æ)

    104,200      1,980

Salesforce.com, Inc. (Æ)

    4,400      294

Sanmina-SCI Corp. (Æ)

    640,500      993

Scansource, Inc. (Æ)

    4,400      110

Seagate Technology (Ú)

    808,600      15,258

Seagate Technology, Inc. (Æ)

    67,668      —

Silicon Laboratories, Inc. (Æ)

    46,500      1,570

Sun Microsystems, Inc. (Æ)

    796,025      12,466

Sybase, Inc. (Æ)

    3,100      91

Symantec Corp. (Æ)(Ú)

    1,007,330      17,346

Synopsys, Inc. (Æ)

    179,851      4,156

Tellabs, Inc. (Æ)

    571,000      2,946

Teradata Corp. (Æ)

    15,100      321

Texas Instruments, Inc. (Ñ)(Ú)

    1,939,180      56,547

Tyco Electronics, Ltd.

    99,700      3,730

Unisys Corp. (Æ)

    325,100      1,352

Vishay Intertechnology, Inc. (Æ)

    55,700      526

Western Digital Corp. (Æ)

    264,500      7,668
         
        563,335
         

Utilities - 6.1%

        

AES Corp. (The) (Æ)(Ú)

    208,500      3,619

American Electric Power Co., Inc. (Ú)

    44,200      1,973

AT&T, Inc. (Ú)

    1,078,099      41,733

Atmos Energy Corp.

    19,900      551

Centerpoint Energy, Inc.

    360,100      5,481

CenturyTel, Inc.

    152,320      4,943

Comcast Corp. Class A

    14,100      285

Constellation Energy Group, Inc.

    171,100      14,484

Dominion Resources, Inc.

    89,200      3,870

Duke Energy Corp.

    1,001,240      18,333

Edison International (Ú)

    216,841      11,313

Embarq Corp.

    375,000      15,589

Energy East Corp.

    3,800      87

Entergy Corp.

    43,700      5,019

Exelon Corp.

    1,100      94

FirstEnergy Corp. (Ú)

    188,400      14,251

FPL Group, Inc.

    1,400      93

Hawaiian Electric Industries, Inc.

    3,700      91

Mirant Corp. (Æ)(Ñ)

    294,600      12,111

OGE Energy Corp.

    2,600      85

Oneok, Inc.

    21,210      1,021

PG&E Corp.

    85,400      3,416

 

Quantitative Equity Fund   33

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		        Market
Value
$		  
       

Pinnacle West Capital Corp.

    90,300        3,065  

Portland General Electric Co.

    34,000        816  

PPL Corp.

    45,800        2,199  

Public Service Enterprise Group, Inc. (Ú)

    1,130,500        49,640  

Sierra Pacific Resources

    185,900        2,534  

Southern Union Co.

    22,600        579  

Sprint Nextel Corp. (Ú)

    2,393,170        19,121  

TECO Energy, Inc. (Ñ)

    6,000        96  

Telephone & Data Systems, Inc.

    34,500        1,321  

UGI Corp.

    40,800        1,061  

US Cellular Corp. (Æ)

    4,700        259  

Vectren Corp. (Ñ)

    3,300        93  

Verizon Communications, Inc.

    598,910        23,046  
           
        262,272  
           
Total Common Stocks        

(cost $4,329,504)

         4,562,217  
           
Short-Term Investments - 5.0%        

Russell Investment Company Money Market Fund

    204,623,000        204,623  

United States Treasury Bills (ç)(ž)(§)
0.558% due 06/19/08

    9,500        9,493  
           
Total Short-Term Investments        

(cost $214,116)

         214,116  
           
Other Securities - 3.7%        

Russell Investment Company Money Market Fund (×)

    34,845,302        34,845  

State Street Securities Lending Quality Trust (×)

    125,406,931        125,407  
           
Total Other Securities        

(cost $160,252)

         160,252  
           
Total Investments - 114.7%        

(identified cost $4,703,872)

         4,936,585  
           
Securities Sold Short - (11.1%)        

Auto and Transportation - (0.3%)

        

AAR Corp. (Æ)

    (50,400 )      (1,179 )

Expeditors International of Washington, Inc.

    (192,800 )      (8,983 )

Gentex Corp.

    (143,000 )      (2,671 )
           
        (12,833 )
           
     Principal
Amount ($)
or Shares		        Market
Value
$		  

Consumer Discretionary - (2.2%)

        

Allied Waste Industries, Inc. (Æ)

    (69,700 )      (861 )

Amazon.Com, Inc. (Æ)

    (50,800 )      (3,994 )

American Greetings Corp. Class A

    (41,000 )      (734 )

Bed Bath & Beyond, Inc. (Æ)

    (143,300 )      (4,657 )

Cheesecake Factory (The) (Æ)

    (5,200 )      (118 )

Dick’s Sporting Goods, Inc. (Æ)

    (91,300 )      (2,611 )

DynCorp International, Inc. Class A (Æ)

    (37,200 )      (668 )

Electronic Arts, Inc. Series C (Æ)

    (195,800 )      (10,077 )

Fastenal Co.

    (16,600 )      (810 )

Geo Group, Inc. (The) (Æ)

    (3,700 )      (98 )

International Flavors & Fragrances, Inc.

    (53,400 )      (2,436 )

Kohl’s Corp. (Æ)

    (62,700 )      (3,063 )

Lamar Advertising Co. Class A (Æ)

    (79,100 )      (3,128 )

Las Vegas Sands Corp. (Æ)

    (163,000 )      (12,424 )

Liberty Media Corp. - Capital Series A (Æ)

    (36,518 )      (561 )

Live Nation, Inc. (Æ)

    (88,300 )      (1,218 )

MGM Mirage (Æ)

    (158,500 )      (8,107 )

Nordstrom, Inc.

    (211,100 )      (7,443 )

Scientific Games Corp. Class A (Æ)

    (113,600 )      (3,199 )

Service Corp. International

    (321,800 )      (3,575 )

Target Corp.

    (75,800 )      (4,027 )

Toro Co.

    (34,800 )      (1,475 )

Urban Outfitters, Inc. (Æ)

    (99,000 )      (3,391 )

VeriSign, Inc. (Æ)

    (194,800 )      (7,023 )

Wynn Resorts, Ltd.

    (78,000 )      (8,217 )
           
        (93,915 )
           

Consumer Staples - (0.4%)

        

Brown-Forman Corp.

    (113,600 )      (7,727 )

Hershey Co. (The)

    (203,300 )      (7,599 )

Reynolds American, Inc.

    (29,600 )      (1,594 )

Universal Corp.

    (30,600 )      (1,964 )
           
        (18,884 )
           

Financial Services - (1.7%)

        

Citigroup, Inc.

    (323,700 )      (8,180 )

Federal National Mortgage Association

    (284,200 )      (8,043 )

Fidelity National Financial, Inc. Class A

    (175,600 )      (2,808 )

First American Corp.

    (107,900 )      (3,539 )

Freddie Mac

    (340,100 )      (8,472 )

Merrill Lynch & Co., Inc.

    (189,000 )      (9,417 )

New York Community Bancorp, Inc.

    (119,800 )      (2,237 )

Plum Creek Timber Co., Inc. (ö)

    (58,700 )      (2,397 )

 

34   Quantitative Equity Fund

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		        Market
Value
$		  
       

PMI Group, Inc. (The)

    (273,900 )      (1,542 )

Raymond James Financial, Inc.

    (194,700 )      (5,602 )

SLM Corp. (Æ)

    (415,900 )      (7,707 )

Sotheby’s Class A

    (27,000 )      (748 )

Washington Federal, Inc.

    (65,100 )      (1,550 )

Washington Mutual, Inc.

    (663,400 )      (8,153 )

Wright Express Corp. (Æ)

    (29,726 )      (981 )
           
        (71,376 )
           

Health Care - (1.6%)

        

Alexion Pharmaceuticals, Inc. (Æ)

    (17,400 )      (1,225 )

Alpharma, Inc. Class A (Æ)

    (17,100 )      (421 )

American Medical Systems Holdings, Inc. (Æ)

    (27,300 )      (385 )

Amylin Pharmaceuticals, Inc. (Æ)

    (82,900 )      (2,286 )

Auxilium Pharmaceuticals, Inc. (Æ)

    (70,500 )      (2,168 )

BioMarin Pharmaceutical, Inc. (Æ)

    (2,500 )      (91 )

Celgene Corp. (Æ)

    (142,000 )      (8,824 )

Cephalon, Inc. (Æ)

    (41,500 )      (2,590 )

Cepheid, Inc. (Æ)

    (60,540 )      (1,185 )

Cerner Corp. (Æ)

    (60,900 )      (2,818 )

Chattem, Inc. (Æ)

    (3,600 )      (252 )

Cooper Cos., Inc. (The)

    (126,200 )      (4,417 )

Human Genome Sciences, Inc. (Æ)

    (184,000 )      (1,205 )

Humana, Inc. (Æ)

    (122,900 )      (5,873 )

ImClone Systems, Inc. (Æ)

    (36,300 )      (1,693 )

Incyte Corp. (Æ)

    (66,700 )      (724 )

Medarex, Inc. (Æ)

    (148,200 )      (1,063 )

Millipore Corp. (Æ)

    (63,600 )      (4,458 )

Myriad Genetics, Inc. (Æ)

    (56,700 )      (2,355 )

Onyx Pharmaceuticals, Inc. (Æ)

    (19,500 )      (686 )

Quest Diagnostics, Inc.

    (205,800 )      (10,326 )

Savient Pharmaceuticals, Inc. (Æ)

    (122,600 )      (2,678 )

Stryker Corp.

    (78,500 )      (5,089 )

Sunrise Senior Living, Inc. (Æ)

    (95,300 )      (2,044 )

Tenet Healthcare Corp. (Æ)

    (124,300 )      (796 )

United Therapeutics Corp. (Æ)

    (23,800 )      (2,011 )

Vertex Pharmaceuticals, Inc. (Æ)

    (116,500 )      (2,973 )

XenoPort, Inc. (Æ)

    (8,500 )      (364 )
           
        (71,000 )
           

Materials and Processing - (0.8%)

        

Compass Minerals International, Inc.

    (50,200 )      (3,163 )

Hecla Mining Co. (Æ)

    (105,600 )      (1,083 )

Jacobs Engineering Group, Inc. (Æ)

    (89,400 )      (7,718 )

Mosaic Co. (The) (Æ)

    (66,100 )      (8,098 )

Quanta Services, Inc. (Æ)

    (112,000 )      (2,972 )

Rohm & Haas Co.

    (51,600 )      (2,758 )
     Principal
Amount ($)
or Shares		        Market
Value
$		  

RTI International Metals, Inc. (Æ)

    (37,100 )      (1,528 )

Sigma-Aldrich Corp.

    (99,300 )      (5,662 )
           
        (32,982 )
           

Miscellaneous - (0.3%)

        

Fortune Brands, Inc.

    (105,200 )      (7,114 )

Foster Wheeler, Ltd. (Æ)

    (80,800 )      (5,146 )
           
        (12,260 )
           

Other Energy - (1.7%)

        

Arch Coal, Inc.

    (122,400 )      (7,021 )

Chesapeake Energy Corp.

    (36,300 )      (1,877 )

Equitable Resources, Inc.

    (193,900 )      (12,868 )

Parallel Petroleum Corp. (Æ)

    (68,800 )      (1,458 )

Peabody Energy Corp.

    (170,900 )      (10,447 )

Range Resources Corp.

    (174,400 )      (11,577 )

Schlumberger, Ltd.

    (93,400 )      (9,391 )

Smith International, Inc.

    (43,900 )      (3,359 )

Southwestern Energy Co. (Æ)

    (86,800 )      (3,673 )

XTO Energy, Inc.

    (155,000 )      (9,588 )
           
        (71,259 )
           

Producer Durables - (0.6%)

        

American Tower Corp. Class A (Æ)

    (72,400 )      (3,144 )

Danaher Corp.

    (56,800 )      (4,432 )

Dionex Corp. (Æ)

    (38,900 )      (3,043 )

ESCO Technologies, Inc. (Æ)

    (6,500 )      (303 )

InterDigital, Inc. (Æ)

    (80,614 )      (1,634 )

KLA-Tencor Corp.

    (44,300 )      (1,935 )

Lindsay Corp.

    (15,800 )      (1,645 )

Pitney Bowes, Inc.

    (132,300 )      (4,777 )

SBA Communications Corp. Class A (Æ)

    (28,700 )      (928 )

Waters Corp. (Æ)

    (87,700 )      (5,390 )
           
        (27,231 )
           

Technology - (0.6%)

        

ACI Worldwide, Inc. (Æ)

    (34,100 )      (754 )

Akamai Technologies, Inc. (Æ)

    (93,200 )      (3,334 )

Cognizant Technology Solutions Corp. Class A (Æ)

    (130,500 )      (4,209 )

Compuware Corp. (Æ)

    (242,700 )      (1,830 )

Concur Technologies, Inc. (Æ)

    (19,100 )      (633 )

First Solar, Inc. (Æ)

    (23,200 )      (6,774 )

Lawson Software, Inc. (Æ)

    (15,000 )      (120 )

Microsemi Corp. (Æ)

    (73,300 )      (1,796 )

Salesforce.com, Inc. (Æ)

    (122,900 )      (8,201 )
           
        (27,651 )
           

 

Quantitative Equity Fund   35

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		        Market
Value
$		  
       

Utilities - (0.9%)

        

Cablevision Systems Corp. Class A (Æ)

    (231,400 )      (5,322 )

Consolidated Edison, Inc.

    (168,300 )      (7,001 )

DPL, Inc.

    (174,887 )      (4,867 )

Embarq Corp.

    (107,900 )      (4,485 )

Mirant Corp. (Æ)

    (50,000 )      (2,056 )

NII Holdings, Inc. (Æ)

    (163,800 )      (7,492 )

Southern Co.

    (106,500 )      (3,965 )

Vectren Corp.

    (73,900 )      (2,090 )
           
        (37,278 )
           
Total Securities Sold Short        

(proceeds $478,124)

         (476,669 )
           
Other Assets and Liabilities,
Net - (3.6%)		         (154,963 )
           
Net Assets - 100.0%         4,304,953  
           

 

See accompanying notes which are an integral part of the financial statements.

 

36   Quantitative Equity Fund

Table of Contents

Russell Investment Company

Quantitative Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		    Notional
Amount		      Unrealized
Appreciation
(Depreciation)
$
       
       

Long Positions

        

Russell 1000 Index
expiration date 06/08 (49)

    USD  18,537      1,126

Russell 1000 Mini Index (CME) expiration date 06/08 (38)

    USD  2,875      147

S&P 500 E-Mini Index (CME) expiration date 06/08 (567)

    USD  39,293      1,935

S&P 500 Index (CME)
expiration date 06/08 (208)

    USD  72,072      2,610

S&P Midcap 400 E-Mini Index (CME)
expiration date 06/08 (891)

    USD  74,853      5,130
         

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

         10,948
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of Net
Assets		  
  

Auto and Transportation

    1.8  

Consumer Discretionary

    15.8  

Consumer Staples

    7.1  

Financial Services

    19.0  

Health Care

    12.4  

Integrated Oils

    7.3  

Materials and Processing

    6.6  

Miscellaneous

    2.8  

Other Energy

    6.8  

Producer Durables

    7.2  

Technology

    13.1  

Utilities

    6.1  

Short-Term Investments

    5.0  

Other Securities

    3.7  
      

Total Investments

    114.7  

Securities Sold Short

    (11.1 )

Other Assets and Liabilities, Net

    (3.6 )
      
   100.0  
      

Futures Contracts

    0.1  

 

See accompanying notes which are an integral part of the financial statements.

 

Quantitative Equity Fund   37

Table of Contents

Russell Investment Company

International Securities Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 891.10    $ 1,017.70

Expenses Paid During Period*

    $ 6.77    $ 7.22

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.44% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would be higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 887.70    $ 1,013.92

Expenses Paid During Period*

    $ 10.33    $ 11.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.20% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 890.90    $ 1,017.65

Expenses Paid During Period*

    $ 6.82    $ 7.27

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.45% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

38   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 892.10    $ 1,018.95

Expenses Paid During Period*

    $ 5.60    $ 5.97

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.19% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would be higher.

 

International Securities Fund   39

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Common Stocks - 91.8%

        

Australia - 3.6%

        

Adelaide Brighton, Ltd. (Ñ)

    27,251      89

AGL Energy, Ltd. (Ñ)

    13,817      162

Amcor, Ltd.

    1,038,378      6,598

AMP, Ltd. (Ñ)

    315,947      2,323

Ansell, Ltd. - GDR

    83,173      903

Asciano Group (Ñ)

    6,751      26

ASX, Ltd. (Ñ)

    4,656      157

Austereo Group, Ltd.

    2,837      5

Australand Property Group (ö)(Ñ)

    20,903      32

Australia & New Zealand Banking Group, Ltd.

    52,646      1,082

AXA Asia Pacific Holdings, Ltd.

    44,677      249

Babcock & Brown, Ltd. (Ñ)

    1,239      17

BHP Billiton, Ltd. (Ñ)

    144,455      5,819

BlueScope Steel, Ltd.

    96,275      1,000

Boart Longyear Group

    14,007      25

Caltex Australia, Ltd.

    28,784      327

CFS Retail Property Trust (ö)(Ñ)

    16,049      34

Challenger Financial Services Group, Ltd. (Ñ)

    249,416      485

Commonwealth Bank of Australia

    44,737      1,883

Consolidated Media Holdings, Ltd. (Ñ)

    63,660      217

Crown, Ltd.

    9,214      95

CSL, Ltd.

    708,944      26,528

CSR, Ltd. (Ñ)

    14,855      44

David Jones, Ltd. (Ñ)

    36,449      119

DB RREEF Trust (ö)(Ñ)

    140,434      232

Fortescue Metals Group, Ltd. (Æ)

    32,796      228

Foster’s Group, Ltd.

    2,316,421      11,085

Futuris Corp., Ltd.

    51,294      102

Goodman Fielder, Ltd. (Ñ)

    180,388      304

Goodman Group (ö)(Ñ)

    37,483      159

GPT Group (ö)

    70,782      224

Harvey Norman Holdings, Ltd.

    71,788      243

Incitec Pivot, Ltd. (Ñ)

    35,123      5,390

ING Industrial Fund (ö)(Ñ)

    6,473      13

Leighton Holdings, Ltd. - ADR (Ñ)

    9,121      403

Lend Lease Corp., Ltd.

    16,087      187

Lion Nathan, Ltd.

    31,679      250

Macquarie Group, Ltd. (Ñ)

    45,400      2,693

Macquarie Infrastructure Group

    851,431      2,264

Macquarie Office Trust (ö)(Ñ)

    52,719      51

Minara Resources, Ltd.

    24,150      132

Mirvac Group (ö)

    34,083      134

National Australia Bank, Ltd.

    886,293      25,101

Newcrest Mining, Ltd.

    18,606      507
    

Principal
Amount ($)

or Shares

      Market
Value
$

Orica, Ltd.

    10,361      283

Origin Energy, Ltd.

    4,622      61

Pacific Brands, Ltd.

    181,280      338

PaperlinX, Ltd.

    124,249      296

Qantas Airways, Ltd.

    314,532      1,005

QBE Insurance Group, Ltd.

    90,480      2,155

Rio Tinto, Ltd. (Ñ)

    70,493      9,048

Santos, Ltd.

    76,437      1,150

Sons of Gwalia, Ltd. (Æ)(Ñ)(ß)

    34,800      —

SP AusNet

    36,228      43

Stockland (ö)

    56,756      385

Suncorp-Metway, Ltd.

    91,128      1,168

Telstra Corp., Ltd. (Ñ)

    4,007,064      17,194

Telstra Corp., Ltd.

    32,388      90

Toll Holdings, Ltd.

    32,245      240

Wesfarmers, Ltd. (Ñ)

    173,580      6,092

Wesfarmers, Ltd.

    2,984      107

Westfield Group (ö)(Ñ)

    66,525      1,139

Westpac Banking Corp.

    62,257      1,431

Woodside Petroleum, Ltd.

    16,704      883

Woolworths, Ltd.

    58,723      1,585

Zinifex, Ltd.

    278,286      2,638
         
        145,252
         

Austria - 0.4%

        

Erste Bank der Oesterreichischen Sparkassen AG (Ñ)

    130,508      9,717

Raiffeisen International Bank Holding AG

    11,350      1,844

Voestalpine AG

    49,200      3,782
         
        15,343
         

Belgium - 1.0%

        

Colruyt SA (Ñ)

    2,251      570

D’ieteren SA

    263      81

Delhaize Group

    2,085      180

Fortis(Ñ)

    842,278      22,875

Fortis (Æ)

    166,644      3

Hansen Transmissions International NV (Æ)

    908,750      3,962

InBev NV (Ñ)

    46,037      3,793

KBC Groep NV (Ñ)

    14,945      2,016

Nationale A Portefeuille (Æ)(Ñ)

    1,709      134

Solvay SA (Ñ)

    43,063      6,343

Umicore

    6,472      347
         
        40,304
         

 

40   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Bermuda - 1.0%

        

Aquarius Platinum, Ltd. (Ñ)

    292,859      4,633

Benfield Group, Ltd. (Ñ)

    859,934      4,510

Bunge, Ltd. (Ñ)

    39,900      4,552

Cheung Kong Infrastructure Holdings, Ltd. (Ñ)

    21,481      93

Credicorp, Ltd.

    35,200      2,829

Esprit Holdings, Ltd.

    408,315      5,032

Giordano International, Ltd.

    135,053      59

Guoco Group, Ltd.

    10,000      107

Jardine Matheson Holdings, Ltd.

    166,572      5,128

Li & Fung, Ltd.

    852,800      3,508

Midland Holdings, Ltd.

    92,000      95

Orient Overseas International, Ltd.

    29,000      159

Seadrill, Ltd. (Ñ)

    198,000      5,989

Shangri-La Asia, Ltd.

    1,472,000      4,066

Vostok Gas, Ltd.

    4,180      331

VTech Holdings, Ltd. (Ñ)

    40,273      221
         
        41,312
         

Brazil - 1.4%

        

All America Latina Logistica SA (Æ)

    181,255      2,366

Banco do Brasil SA

    80,400      1,398

Bovespa Holding SA - ADR

    710,700      10,646

Cia Vale do Rio Doce - ADR (Æ)

    170,700      6,671

Gafisa SA

    212,819      4,672

Gerdau SA - ADR (Ñ)

    62,300      2,413

Petroleo Brasileiro SA - ADR

    153,126      18,593

Redecard SA

    51,100      996

Unibanco-Uniao de Bancos Brasileiros SA - GDR (Æ)(Ñ)

    66,756      9,707
         
        57,462
         

Canada - 2.8%

        

Agrium, Inc.

    68,500      5,386

Barrick Gold Corp.

    45,200      1,746

Cameco Corp.

    81,300      2,845

Canadian Imperial Bank of Commerce (Ñ)

    38,000      2,799

Canadian National Railway Co.

    94,000      4,925

Canadian Natural Resources, Ltd.

    67,600      5,742

EnCana Corp.

    137,900      11,125

Gammon Gold, Inc. (Ñ)

    224,676      1,715

Gerdau Ameristeel Corp. (Ñ)

    105,900      1,651

Inmet Mining Corp. (Ñ)

    40,100      3,291

Methanex Corp. (Ñ)

    68,818      1,606

Petro-Canada

    94,400      4,730

Potash Corp. of Saskatchewan

    134,687      24,777
    

Principal
Amount ($)

or Shares

      Market
Value
$

Precision Drilling Trust

    97,000      2,427

Research In Motion, Ltd. (Æ)

    195,651      23,797

Rogers Communications, Inc. Class B (Ñ)

    272,219      12,112

Teck Cominco, Ltd. Class B

    51,200      2,236

Teck Cominco, Ltd. Class B (Ñ)

    46,956      2,043
         
        114,953
         

Cayman Islands - 0.3%

        

Hidili Industry International Development, Ltd. (Æ)

    1,611,000      2,462

Hutchison Telecommunications International, Ltd.

    45,413      64

Kingboard Chemical Holdings, Ltd.

    55,000      261

LDK Solar Co., Ltd. - ADR (Æ)(Ñ)

    125,100      3,971

Melco PBL Entertainment Macau, Ltd. - ADR (Æ)(Ñ)

    69,700      920

Tencent Holdings, Ltd. (Ñ)

    8,000      53

Transocean, Inc. (Æ)(Ñ)

    35,600      5,249
         
        12,980
         

China - 0.3%

        

China Communications Construction Co., Ltd. Class H (Ñ)

    750,000      1,785

China Merchants Bank Co., Ltd. (Ñ)

    1,699,000      7,108

China Petroleum & Chemical Corp. Class H (Ñ)

    2,274,000      2,441
         
        11,334
         

Cyprus - 0.0%

        

Bank of Cyprus Public Co., Ltd.

    134,800      1,862
         

Czech Republic - 0.1%

        

Komercni Banka AS

    13,963      3,430
         

Denmark - 0.8%

        

Carlsberg A/S Class B (Ñ)

    10,450      1,393

East Asiatic Co., Ltd. A/S

    4,350      387

FLSmidth & Co. A/S (Ñ)

    13,600      1,435

Novo Nordisk A/S Class B

    126,650      8,710

Vestas Wind Systems A/S (Æ)

    208,440      22,793
         
        34,718
         

Egypt - 0.3%

        

Orascom Construction Industries - GDR

    19,294      3,106

Orascom Telecom Holding SAE - GDR

    112,000      8,358
         
        11,464
         

 

International Securities Fund   41

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Finland - 1.2%

        

Fortum OYJ

    110,238      4,661

Kesko OYJ Class B (Æ)

    5,981      227

Nokia OYJ

    1,115,905      33,590

Orion OYJ Class B

    7,878      166

Outotec OYJ

    20,385      1,276

Stora Enso OYJ Class R (Ñ)

    294,500      3,649

UPM-Kymmene OYJ

    327,367      6,293
         
        49,862
         

France - 11.2%

        

Accor SA (Ñ)

    58,302      4,809

Air France - KLM (Ñ)

    27,900      867

Air Liquide (Ñ)

    57,432      8,612

Alcatel-Lucent - ADR (Ñ)

    593,910      3,961

Alstom (Ñ)

    113,241      26,251

Arkema (Æ)

    30,027      1,735

AXA SA (Ñ)

    629,701      23,341

BNP Paribas

    205,742      22,165

Bouygues (Ñ)

    1,307      98

Carrefour SA (Ñ)

    326,367      22,890

Casino Guichard Perrachon SA

    1,885      238

Christian Dior SA

    6,802      782

Cie de Saint-Gobain (Ñ)

    138,425      11,138

Cie Generale de Geophysique-Veritas (Æ)(Ñ)

    26,751      6,725

CNP Assurances (Æ)(Ñ)

    12,611      1,494

Compagnie Generale des Etablissements Michelin Class B (Ñ)

    31,600      2,874

Credit Agricole SA (Ñ)

    199,925      6,731

Electricite de France (Ñ)

    17,201      1,795

Eramet

    614      546

France Telecom SA (Ñ)

    577,345      18,133

Gaz de France SA (Ñ)

    254,029      16,759

Groupe Danone (Ñ)

    46,787      4,145

JC Decaux SA (Ñ)

    175,796      5,039

L’Oreal SA (Ñ)

    50,352      5,975

Lafarge SA

    2,230      403

Lagardere SCA (Ñ)

    47,800      3,438

Legrand SA (Ñ)

    201,580      6,029

LVMH Moet Hennessy Louis Vuitton SA (Ñ)

    169,955      19,420

Neuf Cegetel (Ñ)

    7,452      417

NicOx SA (Ñ)

    34,166      795

Pernod-Ricard SA (Ñ)

    67,584      7,792

PPR (Ñ)

    32,613      4,263

Rallye SA

    2,509      190

Renault SA (Ñ)

    183,696      18,869
    

Principal
Amount ($)

or Shares

      Market
Value
$

Sanofi-Aventis SA (Ñ)

    203,635      15,685

Schneider Electric SA (Ñ)

    111,699      13,663

SEB SA

    1,964      359

Societe BIC SA (Ñ)

    4,519      232

Societe Generale (Ñ)

    200,354      23,369

Societe Generale (Æ)(Ñ)

    27,857      3,176

Societe Television Francaise 1 (Ñ)

    34,709      732

Suez SA (Ñ)

    188,340      13,272

Suez SA

    40,348      1

Teleperformance - GDR

    8,124      333

Thales SA (Ñ)

    36,756      2,406

Thomson

    15,222      97

Total SA (Ñ)

    850,243      71,436

Total SA - ADR

    47,200      3,965

UBISOFT Entertainment (Æ)

    13,560      1,354

Unibail-Rodamco (ö)

    750      194

Vallourec

    23,633      6,447

Veolia Environnement (Ñ)

    273,666      19,736

Vivendi (Ñ)

    509,471      20,691
         
        455,867
         

Germany - 7.5%

        

Allianz SE (Ñ)

    125,255      25,476

Altana AG (Ñ)

    44,126      918

Arcandor AG (Æ)(Ñ)

    633,586      11,869

Arques Industries AG

    15,829      212

BASF SE (Æ)(Ñ)

    127,701      18,217

Bayer AG (Æ)(Ñ)

    140,960      12,017

Bayerische Motoren Werke AG (Ñ)

    93,960      5,154

Beiersdorf AG (Ñ)

    12,179      1,038

Commerzbank AG (Ñ)

    246,982      8,927

Continental AG (Ñ)

    132,464      15,545

Daimler AG (Ñ)

    121,315      9,412

Deutsche Bank AG (Ñ)

    68,231      8,170

Deutsche Boerse AG (Ñ)

    49,385      7,223

Deutsche Lufthansa AG (Ñ)

    191,600      5,029

Deutsche Telekom AG (Ñ)

    1,135,743      20,394

E.ON AG (Ñ)

    156,948      31,920

Epcos AG

    46,862      717

Freenet AG

    37,164      627

GEA Group AG (Æ)

    107,484      3,969

Gildemeister AG

    11,126      326

Infineon Technologies AG (Æ)

    196,600      1,835

K+S AG (Ñ)

    27,375      11,456

Krones AG

    4,106      349

KUKA AG (Ñ)

    13,532      498

Lanxess AG

    58,990      2,294

Linde AG (Ñ)

    89,390      13,100

 

42   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

MAN AG (Ñ)

    3,565      496

Merck KGAA (Ñ)

    98,614      14,022

Metro AG (Ñ)

    112,688      8,917

Muenchener Rueckversicherungs AG (Ñ)

    55,100      10,656

RWE AG (Ñ)

    236,931      27,253

Salzgitter AG

    11,174      2,282

Siemens AG

    54,208      6,392

Solarworld AG (Ñ)

    79,323      4,251

Stada Arzneimittel AG

    13,953      946

Suedzucker AG (Ñ)

    15,933      363

Symrise AG

    131,836      3,273

ThyssenKrupp AG

    4,943      308

Tognum AG (Æ)

    12,223      351

TUI AG (Ñ)

    86,600      2,472

United Internet AG (Ñ)

    138,450      2,959

Volkswagen AG (Ñ)

    5,445      1,607

Vossloh AG

    4,988      722

Wacker Chemie AG

    10,564      2,601
         
        306,563
         

Greece - 0.3%

        

Coca Cola Hellenic Bottling Co. SA

    68,762      3,093

National Bank of Greece SA

    130,879      7,256
         
        10,349
         

Hong Kong - 1.5%

        

Bank of East Asia, Ltd.

    18,600      105

BOC Hong Kong Holdings, Ltd.

    241,333      625

Cheung Kong Holdings, Ltd.

    242,950      3,802

China Merchants Holdings International Co., Ltd.

    402,000      2,052

China Mobile, Ltd.

    1,177,500      20,318

China Netcom Group Corp. Hong Kong, Ltd.

    552,000      1,667

CLP Holdings, Ltd. (Ñ)

    6,500      51

CNOOC, Ltd.

    3,448,200      6,117

Fosun International (Æ)

    85,000      68

Hang Lung Group, Ltd.

    78,837      425

Hang Lung Properties, Ltd. - ADR

    46,360      189

Hang Seng Bank, Ltd. (Ñ)

    17,100      344

Henderson Land Development Co., Ltd.

    36,000      276

Hong Kong & China Gas Co.

    97,006      283

Hong Kong Exchanges and Clearing, Ltd. (Ñ)

    67,277      1,376

HongKong Electric Holdings (Ñ)

    1,123,000      7,071

Hopewell Holdings

    94,000      410

Hutchison Whampoa, Ltd.

    66,500      651
    

Principal
Amount ($)

or Shares

      Market
Value
$

Hysan Development Co., Ltd.

    46,000      134

Industrial and Commercial Bank of China Asia, Ltd.

    57,143      155

Link REIT (The) (ö)(Ñ)

    60,500      145

Minmetals Resources, Ltd.

    188,000      73

MTR Corp. (Ñ)

    40,000      143

New World Development, Ltd.

    1,352,000      3,493

PCCW, Ltd.

    82,000      53

Sun Hung Kai Properties, Ltd.

    111,333      1,937

Swire Pacific, Ltd.

    43,000      503

Television Broadcasts, Ltd.

    28,667      164

Wharf Holdings, Ltd.

    1,525,843      7,696

Wheelock & Co., Ltd. (Ñ)

    131,068      411

Wing Lung Bank, Ltd.

    10,364      157
         
        60,894
         

India - 0.4%

        

ICICI Bank, Ltd. - ADR

    155,056      6,914

Infosys Technologies, Ltd.

    74,900      3,236

Satyam Computer Services, Ltd.

    91,130      1,083

Satyam Computer Services, Ltd. - ADR (Ñ)

    45,340      1,164

State Bank of India, Ltd. - GDR

    24,500      2,272

Sterlite Industries India, Ltd. - ADR (Æ)(Ñ)

    62,600      1,302
         
        15,971
         

Indonesia - 0.1%

        

Bumi Resources Tbk PT

    4,386,200      3,149
         

Ireland - 0.3%

        

Anglo Irish Bank Corp. PLC (Ñ)

    168,554      2,297

Dragon Oil PLC

    231,714      2,286

Elan Corp. PLC - ADR (Æ)(Ñ)

    186,557      4,905

Ryanair Holdings PLC - ADR (Æ)(Ñ)

    166,912      4,525
         
        14,013
         

Israel - 0.5%

        

Check Point Software Technologies (Æ)

    98,800      2,334

Teva Pharmaceutical Industries, Ltd. - ADR (Ñ)

    352,402      16,485
         
        18,819
         

Italy - 2.9%

        

Alleanza Assicurazioni SpA (Ñ)

    440,887      5,762

Ansaldo STS SpA

    323,927      5,026

Arnoldo Mondadori Editore SpA (Ñ)

    497,832      4,329

Assicurazioni Generali SpA

    22,862      1,012

 

International Securities Fund   43

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Buzzi Unicem SpA

    61,845      1,574

Danieli & Co. SpA

    6,814      161

Enel SpA

    588,220      6,389

ENI SpA

    568,673      21,925

Esprinet SpA Class A (Ñ)

    16,079      175

Fiat SpA (Ñ)

    49,748      1,108

Finmeccanica SpA

    2,802      97

Fondiaria-Sai SpA (Ñ)

    82,251      3,301

Fondiaria-Sai SpA

    9,900      262

Impregilo SpA (Æ)(Ñ)

    171,382      1,036

Indesit Co. SpA (Ñ)

    27,156      326

Intesa Sanpaolo SpA (Ñ)

    3,077,932      23,024

Mediaset SpA (Ñ)

    969,185      8,812

Milano Assicurazioni SpA (Ñ)

    62,879      407

Parmalat Finanziaria SpA (Ñ)(ß)

    42,200      —

Prysmian SpA

    38,161      903

Telecom Italia SpA (Ñ)

    4,146,027      6,804

Terna Rete Elettrica Nazionale SpA

    56,474      249

UniCredit SpA (Ñ)

    3,256,658      24,574

Unione di Banche Italiane SCPA

    6,266      166
         
        117,422
         

Japan - 16.1%

        

77 Bank, Ltd. (The)

    80,000      478

Aeon Credit Service Co., Ltd.

    186,200      2,995

Alfresa Holdings Corp. (Ñ)

    7,600      535

Alpine Electronics, Inc.

    25,500      292

Alps Electric Co., Ltd.

    180,400      1,688

Amada Co., Ltd.

    21,000      176

AOC Holdings, Inc.

    2,300      25

Aoyama Trading Co., Ltd.

    10,100      230

Asahi Kasei Corp. (Ñ)

    177,000      1,008

Astellas Pharma, Inc.

    225,100      9,246

Autobacs Seven Co., Ltd. (Ñ)

    3,700      97

Bank of Yokohama, Ltd. (The)

    368,224      2,683

Bosch Corp. (Ñ)

    167,000      966

Bridgestone Corp.

    188,700      3,478

Calsonic Kansei Corp.

    50,000      217

Canon Marketing Japan, Inc. (Ñ)

    9,500      186

Canon, Inc.

    912,400      45,687

Central Glass Co., Ltd.

    69,000      262

Chuo Mitsui Trust Holdings, Inc.

    72,000      508

Circle K Sunkus Co., Ltd. (Ñ)

    6,900      105

COMSYS Holdings Corp.

    133,000      1,205

Dai Nippon Printing Co., Ltd.

    35,000      537

Daiichi Sankyo Co., Ltd.

    5,100      141

Daikin Industries, Ltd. (Ñ)

    92,800      4,659

Daishi Bank, Ltd. (The)

    44,000      189
    

Principal
Amount ($)

or Shares

      Market
Value
$

Daiwa Securities Group, Inc.

    583,920      5,846

Denki Kagaku Kogyo Kabushiki Kaisha

    223,000      830

DIC Corp.

    503,000      1,624

Duskin Co., Ltd.

    4,100      70

East Japan Railway Co.

    232      1,853

EDION Corp. (Ñ)

    113,300      1,153

Eisai Co., Ltd.

    7,300      259

Exedy Corp.

    10,100      281

Ezaki Glico Co., Ltd. (Ñ)

    5,000      55

FamilyMart Co., Ltd.

    35,400      1,239

Fanuc, Ltd.

    62,700      6,641

FCC Co., Ltd.

    6,900      93

Fuji Fire & Marine Insurance Co., Ltd. (The)

    130,000      423

Fuji Television Network, Inc.

    2,617      4,293

FUJIFILM Holdings Corp.

    26,600      1,027

Fujitsu, Ltd.

    1,076,000      6,923

Funai Electric Co., Ltd.

    7,100      266

Glory, Ltd.

    26,500      600

H2O Retailing Corp. (Ñ)

    71,000      516

Hachijuni Bank, Ltd. (The)

    100,000      663

Haseko Corp.

    144,500      211

Higo Bank, Ltd. (The)

    47,000      296

Hino Motors, Ltd. (Ñ)

    137,000      867

Hirose Electric Co., Ltd. (Ñ)

    32,500      3,870

Hitachi Construction Machinery Co., Ltd.

    78,181      2,446

Hitachi Kokusai Electric, Inc.

    47,000      448

Hitachi, Ltd.

    432,000      2,935

Hokkaido Electric Power Co., Inc.

    12,200      256

Honda Motor Co., Ltd.

    223,800      7,129

Hosiden Corp. (Ñ)

    82,700      1,668

Hoya Corp. (Ñ)

    240,600      6,694

Hyakugo Bank, Ltd. (The)

    2,000      13

Hyakujushi Bank, Ltd. (The)

    19,000      114

Inpex Holdings, Inc.

    977      10,894

Isetan Mitsukoshi Holdings, Ltd. (Æ)(Ñ)

    10,700      112

Isuzu Motors, Ltd.

    660,000      3,182

Itochu Corp.

    128,000      1,349

Itoham Foods, Inc. (Ñ)

    19,000      107

Iyo Bank, Ltd. (The)

    29,000      332

Japan Aviation Electronics Industry, Ltd. (Ñ)

    19,000      163

Japan Tobacco, Inc.

    1,214      5,889

JFE Holdings, Inc.

    202,500      11,042

JFE Shoji Holdings, Inc.

    131,000      1,010

JGC Corp.

    72,000      1,345

 

44   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Joyo Bank, Ltd. (The) (Ñ)

    1,262,590      7,233

JTEKT Corp.

    32,600      580

Juki Corp.

    68,000      253

Kagoshima Bank, Ltd. (The)

    63,000      504

Kansai Electric Power Co., Inc. (The)

    8,400      200

Kao Corp.

    1,099,500      29,782

Kayaba Industry Co., Ltd.

    49,000      232

KDDI Corp.

    1,181      7,603

Keihin Corp. (Ñ)

    32,100      498

Keiyo Bank, Ltd. (The)

    99,000      702

Keyence Corp. (Æ)

    9,759      2,498

Kintetsu World Express, Inc.

    12,100      299

Kobe Steel, Ltd.

    325,000      979

Komatsu, Ltd.

    331,100      10,121

Komori Corp.

    9,000      179

Kose Corp.

    280,400      6,096

Kureha Corp.

    18,000      113

Kyocera Corp. (Ñ)

    4,200      386

Kyoei Steel, Ltd. (Ñ)

    4,200      94

Kyowa Hakko Kogyo Co., Ltd.

    10,330      93

Kyushu Electric Power Co., Inc.

    140,100      3,186

Lawson, Inc. (Ñ)

    23,600      1,020

Leopalace21 Corp. (Ñ)

    10,600      189

Makino Milling Machine Co., Ltd.

    26,000      191

Makita Corp.

    9,800      335

Marubeni Corp.

    1,037,000      8,212

Matsushita Electric Industrial Co., Ltd. (Ñ)

    78,000      1,829

Matsushita Electric Works, Ltd. (Ñ)

    149,000      1,651

Mazda Motor Corp. (Ñ)

    77,000      336

Meiji Dairies Corp. (Ñ)

    110,000      677

MID Reit, Inc. Class A (ö)

    849      3,077

Millea Holdings, Inc.

    305,500      12,891

Mitsubishi Chemical Holdings Corp.

    140,000      935

Mitsubishi Corp.

    739,800      23,942

Mitsubishi Electric Corp.

    63,000      649

Mitsubishi Estate Co., Ltd.

    37,000      1,067

Mitsubishi Materials Corp. 2010

    98,000      462

Mitsubishi UFJ Financial Group, Inc.

    1,460,690      16,062

Mitsui & Co., Ltd.

    597,000      13,913

Mitsui Chemicals, Inc.

    463,000      2,838

Mitsui Fudosan Co., Ltd.

    219,000      5,472

Mitsui Mining & Smelting Co., Ltd.

    182,000      619

Mitsui OSK Lines, Ltd.

    500,000      6,835

Mitsui Sumitomo Insurance Group Holdings, Inc. (Æ)

    243,808      9,707

Mitsui-Soko Co., Ltd. (Ñ)

    542,480      2,727

Mizuho Financial Group, Inc. (Ñ)

    2,015      10,474
    

Principal
Amount ($)

or Shares

      Market
Value
$

Mochida Pharmaceutical Co., Ltd.

    22,000      208

Musashino Bank, Ltd. (The)

    8,100      354

NEC Corp. (Ñ)

    225,000      1,074

NEC Electronics Corp. (Æ)(Ñ)

    15,200      311

New City Residence Investment Corp. Class A (ö)

    443      1,108

Nichirei Corp.

    139,000      659

Nifco, Inc.

    2,200      48

Nintendo Co., Ltd.

    44,200      24,496

Nippon Commercial Investment Corp. (ö)

    882      3,530

Nippon Electric Glass Co., Ltd.

    186,000      2,875

Nippon Express Co., Ltd.

    281,000      1,558

Nippon Kayaku Co., Ltd. (Ñ)

    71,000      496

Nippon Konpo Unyu Soko Co., Ltd.

    19,000      259

Nippon Mining Holdings, Inc.

    245,500      1,528

Nippon Oil Corp.

    216,000      1,489

Nippon Residential Investment Corp. Class A (ö)(Ñ)

    546      1,761

Nippon Seiki Co., Ltd.

    7,000      102

Nippon Sheet Glass Co., Ltd. (Ñ)

    41,000      189

Nippon Steel Corp.

    531,000      3,002

Nippon Telegraph & Telephone Corp.

    1,267      5,478

Nippon Yusen KK

    290,000      2,833

Nipponkoa Insurance Co., Ltd. (Ñ)

    1,133,020      11,099

Nishi-Nippon City Bank, Ltd. (The)

    80,000      246

Nissan Chemical Industries, Ltd.

    25,000      332

Nissan Motor Co., Ltd.

    823,500      7,373

Nissan Shatai Co., Ltd.

    56,000      417

Nisshin Steel Co., Ltd. (Ñ)

    67,000      250

Nisshinbo Industries, Inc.

    18,000      198

Nissin Kogyo Co., Ltd.

    20,900      355

Nitto Denko Corp.

    141,100      5,816

Nomura Holdings, Inc.

    1,116,860      19,446

Noritsu Koki Co., Ltd. (Ñ)

    2,700      37

NTN Corp. (Ñ)

    59,000      454

Oki Electric Industry Co., Ltd. (Ñ)

    422,000      923

Okinawa Electric Power Co., Inc. (The)

    1,800      79

Omron Corp.

    151,900      3,171

Onward Holdings Co., Ltd. (Ñ)

    38,000      432

ORIX Corp.

    31,830      5,784

QP Corp. (Ñ)

    31,500      316

Resona Holdings, Inc. (Ñ)

    223      432

Ricoh Co., Ltd.

    387,000      6,722

Rohm Co., Ltd.

    13,800      970

Sankyo Co., Ltd.

    20,500      1,235

Sankyu, Inc. (Ñ)

    32,000      167

Sanwa Holdings Corp. (Ñ)

    21,000      88

 

International Securities Fund   45

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Sasebo Heavy Industries Co., Ltd. (Ñ)

    34,000      92

Seiko Epson Corp. (Ñ)

    5,800      156

Seino Holdings Corp.

    17,000      113

Seven & I Holdings Co., Ltd.

    478,679      14,300

Sharp Corp.

    248,000      4,201

Shiga Bank, Ltd. (The) (Ñ)

    36,000      241

Shima Seiki Manufacturing, Ltd. - GDR

    8,800      344

Shimano, Inc.

    10,500      480

Shin-Etsu Chemical Co., Ltd.

    129,000      8,048

Shinko Electric Industries Co., Ltd. (Ñ)

    4,200      59

Shinwa Kaiun Kaisha, Ltd.

    56,000      368

Shizuoka Bank, Ltd. (The) (Ñ)

    82,000      1,010

Showa Shell Sekiyu KK

    66,579      705

SMC Corp.

    64,907      7,604

Sohgo Security Services Co., Ltd. (Ñ)

    7,600      107

Sony Corp. (Ñ)

    20,000      917

Stanley Electric Co., Ltd.

    26,500      675

Star Micronics Co., Ltd.

    25,100      425

Sugi Pharmacy Co., Ltd. - GDR (Ñ)

    191,000      5,068

Sumco Techxiv Corp. (Ñ)

    7,400      224

Sumitomo Bakelite Co., Ltd.

    922,170      5,178

Sumitomo Heavy Industries, Ltd.

    81,000      687

Sumitomo Metal Mining Co., Ltd. (Ñ)

    20,000      364

Sumitomo Mitsui Financial Group, Inc. (Ñ)

    995      8,640

Sumitomo Realty & Development Co., Ltd.

    114,000      2,827

Sumitomo Trust & Banking Co., Ltd. (The) (Ñ)

    1,271,997      11,361

Suzuken Co., Ltd.

    9,400      355

Suzuki Motor Corp. (Ñ)

    168,820      4,302

Takeda Pharmaceutical Co., Ltd.

    291,000      15,451

Takefuji Corp.

    5,780      137

TDK Corp.

    19,000      1,301

THK Co., Ltd.

    186,622      4,164

Toho Pharmaceutical Co., Ltd. (Ñ)

    24,272      501

Tokai Rubber Industries, Inc.

    35,400      519

Tokyo Electric Power Co., Inc. (The) (Ñ)

    231,200      5,895

Tokyo Gas Co., Ltd.

    672,000      2,586

Tokyo Steel Manufacturing Co., Ltd. (Ñ)

    27,000      387

Tokyu Land Corp.

    329,900      2,475

Toppan Printing Co., Ltd. (Ñ)

    79,000      882

Toshiba Corp. (Ñ)

    732,000      6,122

Toshiba Machine Co., Ltd.

    27,000      174

Toshiba TEC Corp.

    79,000      556

Toyo Engineering Corp. Class A

    102,000      424

Toyo Ink Manufacturing Co., Ltd.

    16,000      58
    

Principal
Amount ($)

or Shares

      Market
Value
$

Toyo Suisan Kaisha, Ltd.

    80,000      1,424

Toyota Auto Body Co., Ltd.

    31,000      618

Toyota Boshoku Corp.

    6,900      196

Toyota Motor Corp.

    540,500      27,492

Ube Industries, Ltd.

    52,000      184

United Urban Investment Corp. (ö)(Ñ)

    360      2,208

Urban Corp. (Ñ)

    26,300      146

USS Co., Ltd.

    6,080      432

West Japan Railway Co.

    1,384      5,993

Yamada Denki Co., Ltd. (Ñ)

    37,290      3,217

Yamaha Corp.

    51,900      1,026

Yamaha Motor Co., Ltd.

    25,600      499

Yamato Holdings Co., Ltd.

    92,000      1,343

Yamato Kogyo Co., Ltd. - GDR

    22,200      1,058

Yokohama Rubber Co., Ltd. (The)

    14,000      72
         
        658,452
         

Luxembourg - 0.4%

        

ArcelorMittal (Ñ)

    47,662      4,212

ArcelorMittal

    78,646      6,941

Evraz Group SA - GDR

    38,275      3,971

Millicom International Cellular SA (Æ)

    3,500      374

Oriflame Cosmetics SA

    22,000      1,685
         
        17,183
         

Malaysia - 0.1%

        

Sime Darby BHD

    1,092,001      3,324
         

Mauritius - 0.0%

        

Golden Agri-Resources, Ltd.

    95,384      60
         

Mexico - 0.8%

        

America Movil SAB de CV Series L

    413,128      23,945

Cemex SAB de CV - ADR (Æ)(Ñ)

    240,995      6,664

Grupo Modelo SAB de CV (Æ)

    508,100      2,243
         
        32,852
         

Netherlands - 4.5%

        

Akzo Nobel NV (Ñ)

    39,813      3,375

ASM International NV (Ñ)

    4,147      97

ASML Holding NV (Ñ)

    327,868      9,288

Boskalis Westminster (Ñ)

    60,200      3,617

Corporate Express (Ñ)

    118,800      1,367

CSM (Ñ)

    7,712      277

Fugro NV

    31,500      2,808

Heineken NV (Ñ)

    738,310      43,008

ING Groep NV (Ñ)

    941,912      35,858

Koninklijke Ahold NV (Ñ)

    457,227      6,775

 

46   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Koninklijke DSM NV (Æ)

    82,000      4,417

Koninklijke Philips Electronics NV

    370,184      13,900

OCE NV (Ñ)

    60,218      907

Reed Elsevier NV (Ñ)

    491,002      9,281

Rodamco Europe NV (ö)(Ñ)

    3,882      507

Royal KPN NV

    49,001      896

TNT NV (Ñ)

    241,050      9,358

Unilever NV

    951,609      31,991

Wolters Kluwer NV (Ñ)

    192,980      5,181
         
        182,908
         

Netherlands Antilles - 0.1%

        

Hunter Douglas NV

    7,488      468

Schlumberger, Ltd.

    40,500      4,072
         
        4,540
         

New Zealand - 0.1%

        

Telecom Corp. of New Zealand, Ltd. (Ñ)

    1,473,221      4,356
         

Norway - 0.8%

        

Renewable Energy Corp. AS (Æ)(Ñ)

    136,500      4,612

StatoilHydro ASA (Ñ)

    329,465      11,870

Telenor ASA (Ñ)

    117,600      2,364

Yara International ASA (Ñ)

    176,500      12,826
         
        31,672
         

Papua New Guinea - 0.0%

        

Oil Search, Ltd.

    102,996      462
         

Portugal - 0.1%

        

Energias de Portugal SA (Ñ)

    701,332      4,420
         

Russia - 0.4%

        

Gazprom OAO - ADR

    180,250      9,571

LUKOIL - ADR

    19,450      1,756

Mechel - ADR

    15,800      2,304

MMC Norilsk Nickel - ADR

    40,150      1,084

Mobile Telesystems OJSC - ADR

    21,600      1,676
         
        16,391
         

Singapore - 0.8%

        

Allgreen Properties, Ltd.

    263,610      250

Ascendas Real Estate Investment Trust (ö)

    11,000      21

CapitaCommercial Trust (ö)

    10,000      17

CapitaLand, Ltd. (Ñ)

    925,629      4,665

CapitaMall Trust (ö)

    25,571      65
    

Principal
Amount ($)

or Shares

      Market
Value
$

China Aviation Oil Singapore Corp., Ltd.

    37,000      47

Creative Technology, Ltd.

    5,950      29

DBS Group Holdings, Ltd.

    218,000      3,183

Flextronics International, Ltd. (Æ)

    262,000      2,722

Haw Par Corp., Ltd.

    15,667      87

Indofood Agri Resources, Ltd. (Æ)

    50,231      87

Jardine Cycle & Carriage, Ltd.

    20,000      244

Keppel Corp., Ltd.

    85,222      646

NatSteel, Ltd.

    48,000      51

Neptune Orient Lines, Ltd. (Ñ)

    131,269      310

Oversea-Chinese Banking Corp.

    944,800      6,150

Pacific Century Regional Developments, Ltd. (Æ)

    322,000      79

Parkway Holdings, Ltd. (Ñ)

    25,000      64

SembCorp Industries, Ltd.

    54,000      167

Singapore Airlines, Ltd.

    30,240      356

Singapore Exchange, Ltd. (Ñ)

    160,000      1,008

Singapore Petroleum Co., Ltd.

    93,625      497

Singapore Telecommunications, Ltd.

    2,868,310      8,199

SMRT Corp., Ltd.

    36,000      48

STATS ChipPAC, Ltd. (Ñ)

    22,793      19

Straits Asia Resources, Ltd.

    573,000      1,406

United Overseas Bank, Ltd.

    25,143      377

United Overseas Land, Ltd. (Æ)

    38,000      106

Wing Tai Holdings, Ltd. (Ñ)

    60,638      90
         
        30,990
         

South Africa - 0.5%

        

Gold Fields, Ltd. - ADR (Æ)(Ñ)

    272,928      3,684

Impala Platinum Holdings, Ltd.

    93,602      3,832

MTN Group, Ltd.

    704,119      13,370

Sanlam, Ltd.

    335,000      882

Standard Bank Group, Ltd.

    32,712      387
         
        22,155
         

South Korea - 1.3%

        

Honam Petrochemical Corp.

    9,400      832

Hynix Semiconductor, Inc. (Ñ)

    28,700      764

Hyundai Mobis

    13,890      1,270

Hyundai Motor Co. - GDR (Þ)

    12,130      503

Industrial Bank of Korea

    58,000      1,109

Kookmin Bank

    9,300      649

Kookmin Bank - ADR

    66,570      4,643

KT&G Corp.

    23,387      1,935

LG Electronics, Inc. (Ñ)

    32,956      5,121

Mirae Asset Securities Co., Ltd. (Æ)(Ñ)

    8,990      1,228

POSCO

    1,900      935

 

International Securities Fund   47

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Samsung Electronics Co., Ltd.

    44,056      31,365

Shinhan Financial Group Co., Ltd.

    15,000      868

STX Pan Ocean Co., Ltd. (Ñ)

    533,000      1,319
         
        52,541
         

Spain - 2.9%

        

Banco Bilbao Vizcaya Argentaria SA

    141,240      3,243

Banco Santander SA (Ñ)

    1,536,513      33,247

Bankinter SA (Ñ)

    6,065      93

Enagas

    53,359      1,625

Gamesa Corp. Tecnologica SA

    97,408      4,743

Gas Natural SDG SA

    14,189      831

Grifols SA

    5,830      164

Iberdrola Renovables (Æ)(Ñ)

    572,142      4,156

Iberdrola SA

    1,557,039      22,776

Red Electrica de Espana

    45,113      2,939

Repsol YPF SA

    177,375      7,209

Tecnicas Reunidas SA (Ñ)

    40,939      3,103

Telefonica SA (Ñ)

    1,216,218      35,282

Vertice Trescientos Sesenta Grados (Æ)(Ñ)

    16,660      38
         
        119,449
         

Sweden - 0.9%

        

Alfa Laval AB (Ñ)

    9,425      619

Electrolux AB (Ñ)

    107,900      1,655

Hennes & Mauritz AB Class B

    26,150      1,552

Industrivarden AB Class A (Ñ)

    7,200      124

JM AB (Ñ)

    30,300      501

Kinnevik Investment AB (Ñ)

    14,600      313

Nordea Bank AB (Ñ)

    483,043      7,988

Peab AB

    9,800      85

Peab Industri AB Class B

    4,900      49

Scania AB Class B (Ñ)

    92,000      1,899

Skandinaviska Enskilda Banken AB Class A (Ñ)

    13,500      327

Svenska Cellulosa AB Class B (Ñ)

    238,300      4,013

Swedish Match AB (Ñ)

    31,000      680

Tele2 AB Class B (Ñ)

    145,500      3,238

Telefonaktiebolaget LM Ericsson Class B (Ñ)

    4,270,510      10,880

TeliaSonera AB (Ñ)

    111,500      995

Volvo AB Class B

    38,450      586
         
        35,504
         

Switzerland - 6.6%

        

ABB, Ltd.

    494,496      15,160

Actelion, Ltd. (Ñ)

    135,802      6,871
    

Principal
Amount ($)

or Shares

      Market
Value
$

Alcon, Inc.

    27,000      4,266

Baloise Holding AG (Ñ)

    8,706      953

Bucher Industries AG (Æ)

    728      203

Credit Suisse Group (Ñ)

    562,563      30,135

Givaudan SA

    9,020      9,111

Helvetia Holding AG

    1,941      816

Holcim, Ltd. (Ñ)

    127,299      12,491

Julius Baer Holding AG

    273,356      20,216

Kuoni Reisen Holding AG (Æ)(Ñ)

    372      215

Lonza Group AG

    85,087      11,600

Nestle SA

    154,179      73,862

Novartis AG

    466,562      23,693

Roche Holding AG

    186,884      31,120

SGS SA

    278      390

Sonova Holding AG

    1,277      107

Swatch Group AG (Ñ)

    75,472      3,858

Swatch Group AG Class B

    3,880      1,038

Swiss Life Holding

    3,072      918

Swiss Reinsurance (Ñ)

    77,652      6,458

Swisscom AG (Æ)(Ñ)

    147      52

Syngenta AG (Ñ)

    29,104      8,620

UBS AG (Ñ)

    215,538      7,247

Zurich Financial Services AG

    4,734      1,446
         
        270,846
         

Taiwan - 0.3%

        

Asustek Computer, Inc.

    541,000      1,745

China Steel Corp.

    844,600      1,388

HON HAI Precision Industry Co., Ltd.

    663,000      3,823

Siliconware Precision Industries Co.

    936,110      1,610

Taiwan Semiconductor Manufacturing Co., Ltd.

    587,924      1,281

Taiwan Semiconductor Manufacturing Co., Ltd. - ADR

    332,750      3,740

United Microelectronics Corp.

    1,255,596      764
         
        14,351
         

Thailand - 0.1%

        

Bangkok Bank PCL

    819,310      3,611

Banpu PCL

    184,600      2,546
         
        6,157
         

Turkey - 0.0%

        

Turkcell Iletisim Hizmet AS - ADR

    26,700      538
         
        538
         

United Kingdom - 16.6%

        

3i Group PLC

    264,863      4,498

 

48   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Amec PLC - GDR

    40,375      633

Anglo American PLC

    65,179      4,185

Antofagasta PLC

    144,842      2,285

ARM Holdings PLC (Ñ)

    4,188,871      8,324

Associated British Foods PLC

    155,600      2,704

AstraZeneca PLC

    37,576      1,581

Atkins WS PLC

    32,563      682

Autonomy Corp. PLC (Æ)

    344,258      5,835

Aviva PLC

    747,349      9,280

BAE Systems PLC

    1,494,679      13,781

Barclays PLC

    539,100      4,817

BG Group PLC

    1,607,418      39,086

BHP Billiton PLC

    213,777      7,554

BP PLC

    2,188,913      26,568

BP PLC - ADR

    111,070      8,085

Brit Insurance Holdings PLC

    168,347      814

British American Tobacco PLC

    199,665      7,494

British Energy Group PLC

    137,275      2,061

British Land Co. PLC (ö)

    168,593      2,810

British Sky Broadcasting Group PLC

    685,623      7,396

BT Group PLC

    606,911      2,667

Cadbury Schweppes PLC

    546,047      6,306

Carphone Warehouse Group PLC (Ñ)

    1,970,972      10,564

Centrica PLC

    312,391      1,815

Charter PLC

    50,396      894

Close Brothers Group PLC

    55,196      761

Compass Group PLC

    766,056      5,158

Davis Service Group PLC

    28,268      267

Dawnay Day Treveria PLC

    2,767,180      2,762

De La Rue PLC

    124,492      2,107

Diageo PLC

    1,441,854      29,506

easyJet PLC

    548,363      3,343

Eurasian Natural Resources Corp. (Æ)

    513,499      12,179

Experian Group, Ltd.

    811,070      6,082

Galiform PLC

    139,575      189

GKN PLC

    805,328      4,522

GlaxoSmithKline PLC

    2,348,779      52,032

HBOS PLC

    1,735,671      16,003

Home Retail Group PLC

    913,323      4,756

HSBC Holdings PLC

    444,469      7,746

ICAP PLC

    48,557      560

IG Group Holdings PLC

    164,657      1,178

International Power PLC

    595,183      5,165

ITV PLC

    1,832,640      2,387

John Wood Group PLC

    394,053      3,337

Johnson Matthey PLC

    58,423      2,308

Kazakhmys PLC

    94,528      2,943

Kesa Electricals PLC

    200,412      822
    

Principal
Amount ($)

or Shares

      Market
Value
$

Kingfisher PLC

    2,612,451      6,832

Ladbrokes PLC

    632,820      4,092

Land Securities Group PLC (ö)(Ñ)

    24,014      730

Legal & General Group PLC

    324,910      814

Lloyds TSB Group PLC

    1,338,792      11,372

Man Group PLC

    1,982,475      22,684

Michael Page International PLC (Ñ)

    776,254      4,420

National Express Group PLC

    57,385      1,052

National Grid PLC

    171,961      2,383

Old Mutual PLC

    571,313      1,441

Pearson PLC

    119,691      1,543

Petrofac, Ltd.

    48,741      568

Premier Farnell PLC

    30,630      108

Premier Oil PLC (Æ)

    10,115      311

Provident Financial PLC

    7,075      125

Prudential PLC

    65,067      886

Reckitt Benckiser Group PLC

    459,046      26,746

Reed Elsevier PLC

    19,215      243

Regus Group PLC (Æ)

    175,646      321

Rio Tinto PLC

    73,160      8,492

Royal & Sun Alliance Insurance Group

    557,116      1,478

Royal Bank of Scotland Group PLC

    3,190,326      21,553

Royal Dutch Shell PLC Class A (Ñ)

    1,034,871      41,661

Royal Dutch Shell PLC Class B

    171,703      6,855

SABMiller PLC

    27,460      632

Scottish & Southern Energy PLC

    245,345      6,762

Severn Trent PLC

    35,700      1,031

Shire PLC

    50,961      937

Smith & Nephew PLC

    284,639      3,684

Smiths Group PLC

    303,058      5,818

Stagecoach Group PLC

    259,641      1,316

Standard Chartered PLC

    517,695      18,343

Taylor Wimpey PLC

    496,179      1,258

Tesco PLC

    1,507,978      12,746

Thomson Reuters PLC (Æ)

    6,590      205

Trinity Mirror PLC

    238,900      1,284

TUI Travel PLC

    354,500      1,664

Tullett Prebon PLC

    119,737      1,029

Unilever PLC

    642,387      21,628

Vodafone Group PLC

    7,682,121      24,298

Vodafone Group PLC - ADR

    338,170      10,706

Weir Group PLC (The)

    35,460      583

Wellstream Holdings PLC (Æ)

    47,339      1,186

William Hill PLC

    760,954      5,799

WM Morrison Supermarkets PLC

    151,935      860

WPP Group PLC

    2,240,829      27,330

Xstrata PLC

    183,324      14,239
         
        678,880
         

 

International Securities Fund   49

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

United States - 0.5%

        

Las Vegas Sands Corp. (Æ)(Ñ)

    85,623      6,526

Philip Morris International, Inc. (Æ)

    101,600      5,185

Synthes, Inc.

    62,109      8,514
         
        20,225
         
Total Common Stocks        

(cost $3,255,630)

         3,751,579
         
Preferred Stocks - 0.4%        

Brazil - 0.1%

        

Banco Itau Holding Financeira SA

    120,600      3,441

Usinas Siderurgicas de Minas Gerais SA

    34,500      1,685
         
        5,126
         

Germany - 0.3%

        

Henkel KGaA (Æ)(Ñ)

    170,475      7,249

Porsche Automobil Holding SE

    10,890      1,992

RWE AG (Æ)

    6,537      608

Volkswagen AG (Æ)

    494      81
         
        9,930
         

South Korea - 0.0%

        

Hyundai Motor Co.

    21,000      753

Samsung Electronics Co., Ltd.

    1,600      821
         
        1,574
         
Total Preferred Stocks        

(cost $16,889)

         16,630
         
    

Notional

Amount

       

Options Purchased - 0.0%

        

(Number of Contracts)

        

Switzerland - 0.0%

        

Swiss Market Index

        

Jun 2008 7,218.00 CHF Put (380)

    26,471      1,834
         
Total Options Purchased        

(cost $1,903)

         1,834
         

 

A portion of the portfolio has been fair valued as of period end.

    

Principal
Amount ($)

or Shares

      Market
Value
$		  

Warrants & Rights - 0.1%

        

Australia - 0.0%

        

Wesfarmers, Ltd.

        

2008 Warrants (Æ)

    21,707      172  
           

Sweden - 0.0%

        

JM AB 2008 Warrants (Æ)

    30,300      28  
           

Switzerland - 0.0%

        

UBS AG 2008 Warrants (Æ)

    19,038      32  
           

United States - 0.1%

        

Bharti Airtel, Ltd.(Þ) 2012 Warrants (Æ)

    103,800      2,287  
           
Total Warrants & Rights        

(cost $1,765)

         2,519  
           
Short-Term Investments - 7.0%        

United States - 7.0%

        

Russell Investment Company Money Market Fund

    266,124,000      266,124  

United States Treasury Bills (ç)(ž)(§)
0.670% due 06/19/08

    21,500      21,481  
           
        287,605  
           
Total Short-Term Investments        

(cost $287,605)

         287,605  
           
Other Securities - 22.2%        

Russell Investment Company Money Market Fund (×)

    197,439,320      197,439  

State Street Securities Lending Quality Trust (×)

    710,576,691      710,577  
           
Total Other Securities        

(cost $908,016)

         908,016  
           
Total Investments - 121.5%        

(identified cost $4,471,808)

         4,968,183  
Other Assets and Liabilities,
Net - (21.5%)		         (880,535 )
           
Net Assets - 100.0%         4,087,648  
           

 

See accompanying notes which are an integral part of the financial statements.

 

50   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		    Unrealized
Appreciation
(Depreciation)
$		  
    

Long Positions

     

AEX Index (Netherlands)
expiration date 05/08 (208)

   EUR 19,731    1,453  

CAC-40 Index (France)
expiration date 05/08 (410)

   EUR 20,338    1,094  

DAX Index (Germany)
expiration date 06/08 (118)

   EUR 20,623    2,756  

EUR STOXX 50 Index (EMU)
expiration date 06/08 (963)

   EUR 36,218    3,593  

FTSE-100 Index (UK)
expiration date 06/08 (812)

   GBP 49,508    8,234  

Hang Seng Index (Hong Kong)
expiration date 05/08 (211)

   HKD 271,504    286  

MIB-30 (Italy)
expiration date 06/08 (32)

   EUR 5,297    582  

MSCI Singapore Index
expiration date 05/08 (9)

   SGD 698    (8 )

SPI 200 Index (Australia)
expiration date 06/08 (131)

   AUD 18,343    1,088  

TOPIX Index (Japan)
expiration date 06/08 (573)

   JPY 7,752,690    6,774  

Short Positions

     

DAX Index (Germany)
expiration date 06/08 (59)

   EUR 10,312    (441 )

IBEX Plus Index (Spain)
expiration date 05/08 (52)

   EUR 7,123    (309 )

OMX Index
expiration date 05/08 (788)

   SEK 77,145    (282 )

SPI 200 Index (Australia)
expiration date 06/08 (220)

   AUD 30,806    (2,031 )
        

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

      22,789  
        
Options Written
(Number of Contracts)		    Notional
Amount		          
Market
Value
$		  

Switzerland

        

Swiss Market Index
Jun 2008 7,218.00 Call (380)

    CHF  26,471      (2,886 )
           

Total Liability for Options Written (premiums received $1,903)

         (2,886 )
           

 

See accompanying notes which are an integral part of the financial statements.

 

International Securities Fund   51

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   67   AUD   79   05/01/08   7  
USD   161   AUD   172   05/01/08   1  
USD   238   AUD   253   05/05/08   1  
USD   444   AUD   500   06/18/08   24  
USD   453   AUD   500   06/18/08   16  
USD   453   AUD   500   06/18/08   16  
USD   460   AUD   500   06/18/08   9  
USD   460   AUD   500   06/18/08   8  
USD   460   AUD   500   06/18/08   8  
USD   461   AUD   500   06/18/08   8  
USD   464   AUD   500   06/18/08   5  
USD   743   AUD   800   06/18/08   7  
USD   886   AUD   1,000   06/18/08   52  
USD   913   AUD   1,000   06/18/08   25  
USD   920   AUD   1,000   06/18/08   18  
USD   932   AUD   1,000   06/18/08   5  
USD   1,273   AUD   1,358   06/18/08   —  
USD   5,996   AUD   6,500   06/18/08   98  
USD   7,264   AUD   7,750   06/18/08   3  
USD   7,635   AUD   8,147   06/18/08   3  
USD   8,286   AUD   9,000   06/18/08   152  
USD   12,854   AUD   13,950   06/18/08   226  
USD   16,544   AUD   17,652   06/18/08   6  
USD   17,043   AUD   18,809   06/18/08   592  
USD   848   CHF   878   05/05/08   (1 )
USD   142   CHF   148   05/06/08   1  
USD   172   CHF   179   05/06/08   1  
USD   480   CHF   499   05/06/08   2  
USD   581   CHF   602   05/06/08   —  
USD   712   CHF   741   05/06/08   3  
USD   4,718   CHF   4,653   06/18/08   (224 )
USD   4,720   CHF   4,653   06/18/08   (226 )
USD   6,416   CHF   6,469   06/18/08   (169 )
USD   14,332   CHF   14,127   06/18/08   (689 )
USD   25,326   CHF   24,980   06/18/08   (1,203 )
USD   76   DKK   363   05/05/08   —  
USD   4   DKK   19   06/18/08   —  
USD   34   DKK   160   06/18/08   (1 )
USD   108   DKK   516   06/18/08   —  
USD   120   EUR   77   05/02/08   —  
USD   391   EUR   250   05/02/08   —  
USD   672   EUR   431   05/02/08   —  
USD   787   EUR   506   05/02/08   3  
USD   2,138   EUR   1,368   05/02/08   (2 )
USD   198   EUR   127   05/05/08   1  
USD   452   EUR   290   05/05/08   —  
USD   980   EUR   629   05/05/08   2  
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   2,080   EUR   1,335   05/05/08   5  
USD   137   EUR   88   05/06/08   —  
USD   231   EUR   148   05/06/08   1  
USD   232   EUR   149   05/06/08   1  
USD   260   EUR   167   05/06/08   1  
USD   1,082   EUR   695   05/06/08   4  
USD   8,837   EUR   5,639   06/05/08   (45 )
USD   8,924   EUR   5,632   06/05/08   (143 )
USD   1,528   EUR   1,000   06/18/08   30  
USD   1,535   EUR   1,000   06/18/08   23  
USD   1,535   EUR   1,000   06/18/08   23  
USD   1,570   EUR   1,000   06/18/08   (12 )
USD   1,577   EUR   1,000   06/18/08   (19 )
USD   1,578   EUR   1,000   06/18/08   (20 )
USD   2,049   EUR   1,307   06/18/08   (13 )
USD   2,337   EUR   1,500   06/18/08   —  
USD   3,071   EUR   2,000   06/18/08   45  
USD   3,088   EUR   1,986   06/18/08   7  
USD   3,106   EUR   2,000   06/18/08   10  
USD   3,109   EUR   2,000   06/18/08   7  
USD   3,109   EUR   2,000   06/18/08   7  
USD   3,115   EUR   2,000   06/18/08   1  
USD   3,173   EUR   2,000   06/18/08   (57 )
USD   3,183   EUR   2,000   06/18/08   (67 )
USD   4,543   EUR   3,000   06/18/08   131  
USD   4,751   EUR   3,000   06/18/08   (77 )
USD   4,773   EUR   3,000   06/18/08   (99 )
USD   5,300   EUR   3,500   06/18/08   153  
USD   5,714   EUR   3,664   06/18/08   (6 )
USD   7,456   EUR   5,000   06/18/08   334  
USD   7,658   EUR   5,000   06/18/08   132  
USD   8,775   EUR   5,546   06/18/08   (134 )
USD   11,541   EUR   7,362   06/18/08   (71 )
USD   25,286   EUR   15,973   06/18/08   (400 )
USD   37,335   EUR   24,600   06/18/08   993  
USD   37,583   EUR   24,800   06/18/08   1,056  
USD   48,042   EUR   31,700   06/18/08   1,348  
USD   107,986   EUR   71,300   06/18/08   3,101  
USD   9   GBP   14   05/01/08   18  
USD   62   GBP   11   05/01/08   (40 )
USD   301   GBP   151   05/01/08   —  
USD   1,553   GBP   789   05/01/08   16  
USD   1,280   GBP   645   05/02/08   3  
USD   981   GBP   500   06/18/08   10  
USD   982   GBP   500   06/18/08   8  
USD   986   GBP   500   06/18/08   5  
USD   1,008   GBP   500   06/18/08   (17 )

 

See accompanying notes which are an integral part of the financial statements.

 

52   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   1,430   GBP   719   06/18/08   (4 )
USD   1,578   GBP   800   06/18/08   8  
USD   1,962   GBP   1,000   06/18/08   20  
USD   1,974   GBP   1,000   06/18/08   8  
USD   1,975   GBP   1,000   06/18/08   7  
USD   1,986   GBP   1,000   06/18/08   (5 )
USD   1,989   GBP   1,000   06/18/08   (7 )
USD   2,951   GBP   1,500   06/18/08   21  
USD   2,958   GBP   1,500   06/18/08   14  
USD   2,983   GBP   1,500   06/18/08   (10 )
USD   3,488   GBP   1,754   06/18/08   (13 )
USD   3,942   GBP   2,000   06/18/08   21  
USD   3,990   GBP   2,000   06/18/08   (27 )
USD   6,905   GBP   3,500   06/18/08   31  
USD   8,533   GBP   4,325   06/18/08   37  
USD   9,152   GBP   4,598   06/18/08   (40 )
USD   17,975   GBP   9,100   06/18/08   57  
USD   62,378   GBP   31,600   06/18/08   240  
USD   8   HKD   56   05/01/08   —  
USD   27   HKD   208   05/01/08   —  
USD   363   HKD   2,831   05/05/08   —  
USD   38   HKD   293   06/18/08   —  
USD   228   HKD   1,775   06/18/08   —  
USD   1,047   HKD   8,117   06/18/08   (4 )
USD   138   JPY   13,840   05/01/08   (4 )
USD   339   JPY   35,343   05/01/08   1  
USD   356   JPY   32,000   05/01/08   (49 )
USD   2,213   JPY   230,883   05/01/08   8  
USD   2,436   JPY   253,648   05/01/08   4  
USD   1,190   JPY   124,448   05/02/08   6  
USD   3,915   JPY   409,016   05/02/08   19  
USD   1,277   JPY   133,460   05/07/08   6  
USD   1,662   JPY   173,643   05/07/08   8  
USD   480   JPY   50,000   06/18/08   2  
USD   487   JPY   50,000   06/18/08   (5 )
USD   978   JPY   100,000   06/18/08   (13 )
USD   996   JPY   100,000   06/18/08   (32 )
USD   997   JPY   100,000   06/18/08   (32 )
USD   1,011   JPY   100,000   06/18/08   (46 )
USD   1,012   JPY   100,000   06/18/08   (47 )
USD   1,014   JPY   100,000   06/18/08   (49 )
USD   1,014   JPY   100,000   06/18/08   (50 )
USD   1,490   JPY   150,000   06/18/08   (44 )
USD   1,505   JPY   150,000   06/18/08   (58 )
USD   1,520   JPY   150,000   06/18/08   (73 )
USD   1,936   JPY   200,000   06/18/08   (7 )
USD   1,957   JPY   200,000   06/18/08   (28 )
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   1,961   JPY   200,000   06/18/08   (32 )
USD   1,974   JPY   200,000   06/18/08   (46 )
USD   2,477   JPY   250,000   06/18/08   (66 )
USD   2,924   JPY   300,000   06/18/08   (31 )
USD   3,285   JPY   350,000   06/18/08   90  
USD   3,919   JPY   400,000   06/18/08   (61 )
USD   4,902   JPY   504,760   06/18/08   (33 )
USD   5,214   JPY   535,000   06/18/08   (54 )
USD   11,224   JPY   1,150,000   06/18/08   (132 )
USD   50,062   JPY   4,831,819   06/18/08   (3,460 )
USD   61,011   JPY   6,250,000   06/18/08   (730 )
USD   816   NOK   4,151   05/06/08   —  
USD   199   NOK   1,002   06/18/08   (3 )
USD   891   NOK   4,482   06/18/08   (14 )
USD   18,552   NOK   95,769   06/18/08   176  
USD   19,006   NOK   98,882   06/18/08   331  
USD   44,249   NOK   228,372   06/18/08   410  
USD   798   SEK   4,765   06/18/08   (4 )
USD   1,034   SEK   6,247   06/18/08   6  
USD   2   SGD   3   05/01/08   —  
USD   120   SGD   164   05/06/08   —  
USD   307   SGD   423   06/18/08   5  
USD   571   ZAR   4,357   05/07/08   5  
USD   585   ZAR   4,447   05/08/08   3  
AUD   132   USD   146   05/01/08   22  
AUD   32   USD   30   05/02/08   —  
AUD   200   USD   184   06/18/08   (4 )
AUD   400   USD   377   06/18/08   2  
AUD   450   USD   417   06/18/08   (5 )
AUD   500   USD   471   06/18/08   2  
AUD   700   USD   626   06/18/08   (30 )
AUD   700   USD   628   06/18/08   (28 )
AUD   700   USD   635   06/18/08   (21 )
AUD   700   USD   641   06/18/08   (16 )
AUD   700   USD   643   06/18/08   (13 )
AUD   730   USD   673   06/18/08   (12 )
AUD   900   USD   815   06/18/08   (29 )
AUD   1,150   USD   1,042   06/18/08   (36 )
AUD   1,150   USD   1,043   06/18/08   (35 )
AUD   1,200   USD   1,105   06/18/08   (20 )
AUD   1,300   USD   1,198   06/18/08   (21 )
AUD   1,511   USD   1,368   06/18/08   (48 )
AUD   2,951   USD   2,674   06/18/08   (92 )
AUD   3,200   USD   2,950   06/18/08   (50 )
AUD   3,500   USD   3,174   06/18/08   (108 )
AUD   3,900   USD   3,592   06/18/08   (65 )
AUD   4,601   USD   4,174   06/18/08   (139 )

 

See accompanying notes which are an integral part of the financial statements.

 

International Securities Fund   53

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
AUD   4,670   USD   4,229   06/18/08   (150 )
AUD   4,700   USD   4,395   06/18/08   (12 )
AUD   5,751   USD   5,217   06/18/08   (175 )
AUD   6,594   USD   5,981   06/18/08   (201 )
AUD   6,901   USD   6,261   06/18/08   (210 )
AUD   10,329   USD   9,363   06/18/08   (321 )
BRL   44   USD   27   05/02/08   —  
BRL   511   USD   302   05/02/08   (5 )
BRL   1,341   USD   784   05/02/08   (22 )
CAD   1,730   USD   1,711   05/02/08   (7 )
CAD   2,169   USD   2,151   05/05/08   (2 )
CHF   161   USD   156   05/02/08   —  
CHF   135   USD   131   05/05/08   —  
CHF   577   USD   556   05/06/08   (1 )
CHF   4,418   USD   4,372   06/18/08   105  
CHF   8,836   USD   8,738   06/18/08   205  
CHF   10,596   USD   10,479   06/18/08   246  
CHF   22,090   USD   21,856   06/18/08   524  
CHF   30,926   USD   30,584   06/18/08   719  
DKK   2,935   USD   615   05/02/08   1  
DKK   2,988   USD   623   05/05/08   (2 )
DKK   675   USD   142   06/18/08   1  
DKK   9,335   USD   1,964   06/18/08   15  
EUR   53   USD   79   05/01/08   (4 )
EUR   540   USD   824   05/01/08   (19 )
EUR   5   USD   8   05/02/08   —  
EUR   93   USD   144   05/02/08   (2 )
EUR   220   USD   344   05/02/08   1  
EUR   292   USD   452   05/02/08   (5 )
EUR   381   USD   597   05/02/08   2  
EUR   450   USD   696   05/02/08   (7 )
EUR   28   USD   44   05/05/08   —  
EUR   340   USD   531   05/05/08   —  
EUR   29   USD   45   05/06/08   —  
EUR   346   USD   539   05/06/08   (1 )
EUR   604   USD   940   05/06/08   (3 )
EUR   5,635   USD   8,654   06/05/08   (131 )
EUR   5,636   USD   8,661   06/05/08   (125 )
EUR   200   USD   317   06/18/08   5  
EUR   800   USD   1,252   06/18/08   6  
EUR   800   USD   1,267   06/18/08   21  
EUR   1,000   USD   1,557   06/18/08   (2 )
EUR   1,000   USD   1,564   06/18/08   6  
EUR   1,000   USD   1,567   06/18/08   9  
EUR   1,000   USD   1,570   06/18/08   12  
EUR   1,500   USD   2,271   06/18/08   (66 )
EUR   1,900   USD   2,970   06/18/08   10  
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
EUR   2,000   USD   3,189   06/18/08   73  
EUR   2,500   USD   3,787   06/18/08   (108 )
EUR   2,500   USD   3,919   06/18/08   24  
EUR   3,000   USD   4,663   06/18/08   (12 )
EUR   3,000   USD   4,663   06/18/08   (11 )
EUR   3,700   USD   5,807   06/18/08   42  
EUR   4,000   USD   6,058   06/18/08   (174 )
EUR   4,300   USD   6,526   06/18/08   (173 )
EUR   5,000   USD   7,861   06/18/08   71  
EUR   6,000   USD   9,087   06/18/08   (261 )
EUR   12,000   USD   18,145   06/18/08   (551 )
EUR   12,000   USD   18,186   06/18/08   (510 )
EUR   22,500   USD   34,095   06/18/08   (960 )
EUR   30,900   USD   46,780   06/18/08   (1,362 )
EUR   48,111   USD   75,481   06/18/08   523  
EUR   19,130   USD   29,790   07/31/08   46  
GBP   156   USD   308   05/02/08   (2 )
GBP   643   USD   1,266   05/02/08   (13 )
GBP   920   USD   1,811   05/02/08   (18 )
GBP   962   USD   1,898   05/02/08   (15 )
GBP   589   USD   1,168   05/06/08   (4 )
GBP   642   USD   1,275   05/06/08   (1 )
GBP   400   USD   789   06/18/08   (4 )
GBP   500   USD   983   06/18/08   (8 )
GBP   500   USD   1,003   06/18/08   12  
GBP   600   USD   1,179   06/18/08   (10 )
GBP   600   USD   1,184   06/18/08   (5 )
GBP   700   USD   1,393   06/18/08   6  
GBP   750   USD   1,477   06/18/08   (10 )
GBP   900   USD   1,768   06/18/08   (16 )
GBP   900   USD   1,774   06/18/08   (10 )
GBP   900   USD   1,779   06/18/08   (5 )
GBP   900   USD   1,788   06/18/08   5  
GBP   1,000   USD   1,964   06/18/08   (18 )
GBP   1,000   USD   1,971   06/18/08   (10 )
GBP   1,000   USD   1,978   06/18/08   (4 )
GBP   1,500   USD   2,958   06/18/08   (15 )
GBP   1,600   USD   3,142   06/18/08   (29 )
GBP   1,600   USD   3,156   06/18/08   (14 )
GBP   3,361   USD   6,615   06/18/08   (45 )
GBP   4,200   USD   8,290   06/18/08   (32 )
GBP   4,868   USD   9,662   06/18/08   16  
GBP   5,900   USD   11,632   06/18/08   (60 )
GBP   6,800   USD   13,422   06/18/08   (53 )
GBP   8,000   USD   15,812   06/18/08   (41 )
GBP   9,682   USD   19,062   06/18/08   (123 )
GBP   7,919   USD   15,693   07/31/08   50  

 

See accompanying notes which are an integral part of the financial statements.

 

54   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
HKD   1,785   USD   229   05/02/08   —  
HKD   1,053   USD   135   05/05/08   —  
HKD   236   USD   30   06/18/08   —  
HKD   743   USD   96   06/18/08   —  
JPY   45,972   USD   440   05/07/08   (3 )
JPY   30,000   USD   303   06/18/08   14  
JPY   40,000   USD   389   06/18/08   3  
JPY   50,000   USD   482   06/18/08   —  
JPY   70,000   USD   673   06/18/08   (3 )
JPY   80,000   USD   785   06/18/08   13  
JPY   100,000   USD   974   06/18/08   10  
JPY   100,000   USD   1,006   06/18/08   42  
JPY   100,000   USD   1,012   06/18/08   48  
JPY   110,000   USD   1,072   06/18/08   11  
JPY   150,000   USD   1,452   06/18/08   6  
JPY   150,000   USD   1,454   06/18/08   7  
JPY   160,000   USD   1,567   06/18/08   24  
JPY   200,000   USD   1,892   06/18/08   (37 )
JPY   200,000   USD   1,943   06/18/08   14  
JPY   200,000   USD   2,014   06/18/08   85  
JPY   230,000   USD   2,265   06/18/08   47  
JPY   268,424   USD   2,635   06/18/08   46  
JPY   294,303   USD   2,958   06/18/08   119  
JPY   300,000   USD   2,941   06/18/08   48  
JPY   300,000   USD   2,958   06/18/08   64  
JPY   320,000   USD   3,114   06/18/08   27  
JPY   586,232   USD   5,895   06/18/08   241  
JPY   586,232   USD   5,895   06/18/08   241  
JPY   586,232   USD   5,895   06/18/08   241  
JPY   740,308   USD   7,649   06/18/08   507  
JPY   900,000   USD   8,695   06/18/08   14  
JPY   1,040,000   USD   10,145   06/18/08   114  
JPY   1,230,510   USD   12,079   06/18/08   210  
JPY   1,400,000   USD   13,370   06/18/08   (133 )
MXN   1,062   USD   100   05/02/08   (1 )
NOK   64,745   USD   12,560   06/18/08   (101 )
SEK   315   USD   54   05/01/08   2  
SEK   3,942   USD   657   05/05/08   (1 )
SEK   7,330   USD   1,218   05/05/08   (6 )
SEK   523   USD   88   06/18/08   1  
SEK   530   USD   90   06/18/08   1  
SEK   1,061   USD   179   06/18/08   2  
SEK   3,705   USD   612   06/18/08   (5 )
SEK   5,016   USD   836   06/18/08   —  
SEK   77,027   USD   12,752   06/18/08   (80 )
SGD   186   USD   135   06/18/08   (2 )
SGD   218   USD   162   06/18/08   1  
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
SGD   407   USD   296   06/18/08   (5 )
SGD   5,803   USD   4,217   06/18/08   (72 )
             
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts   (1,124 )
             

 

See accompanying notes which are an integral part of the financial statements.

 

International Securities Fund   55

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Index Swap Contracts                                

Fund Receives
Underlying Security

   

Counter
Party

    Notional
Amount		   

Fund Pays
Floating Rate

    Termination
Date		    Unrealized
Appreciation
(Depreciation)
$		  
              

MSCI Belgium Local
Net Total Return Index

    Merrill Lynch    EUR  5,306   

1 Month EUR LIBOR
plus 0.012%

    06/18/08    47  

MSCI Denmark Local
Net Total Return Index

    Merrill Lynch    DKK  20,899   

1 Month DKK LIBOR
minus 0.800%

    06/18/08    (296 )
                  

Total Unrealized Appreciation (Depreciation) on Open Index Swaps

             (249 )
                  

 

See accompanying notes which are an integral part of the financial statements.

 

56   International Securities Fund

Table of Contents

Russell Investment Company

International Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Industry Diversification    % of
Net
Assets		        Market
Value
$		  
       
       

Auto and Transportation

    4.6        187,724  

Consumer Discretionary

    8.5        347,398  

Consumer Staples

    9.0        368,539  

Financial Services

    19.6        802,182  

Health Care

    6.1        248,187  

Integrated Oils

    6.5        266,180  

Materials and Processing

    12.3        500,935  

Miscellaneous

    1.1        43,476  

Other Energy

    2.3        95,144  

Producer Durables

    7.0        286,762  

Technology

    3.9        158,704  

Utilities

    11.3        462,978  

Options Purchased

    —        1,834  

Warrants & Rights

    0.1        2,519  

Short-Term Investments

    7.0        287,605  

Other Securities

    22.2        908,016  
               

Total Investments

    121.5        4,968,183  

Other Assets and Liabilities, Net

    (21.5 )      (880,535 )
               

Net Assets

    100.0        4,087,648  
               
Geographic Diversification    % of
Net
Assets		        Market
Value
$		  
       

Africa

    0.5        22,215  

Asia

    8.6        350,527  

Europe

    42.6        1,740,468  

Japan

    16.1        658,452  

Latin America

    3.7        149,732  

Middle East

    0.7        30,283  

Netherlands Antilles

    0.1        4,540  

Other Regions

    10.4        425,070  

United Kingdom

    16.6        678,880  

Other Securities

    22.2        908,016  
               

Total Investments

    121.5        4,968,183  

Other Assets and Liabilities, Net

    (21.5 )      (880,535 )
               

Net Assets

    100.0        4,087,648  
               

 

See accompanying notes which are an integral part of the financial statements.

 

International Securities Fund   57

Table of Contents

Russell Investment Company

International Securities Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Australia

    3.6  

Austria

    0.4  

Belgium

    1.0  

Bermuda

    1.0  

Brazil

    1.4  

Canada

    2.8  

Cayman Islands

    0.3  

China

    0.3  

Cyprus

    — *

Czech Republic

    0.1  

Denmark

    0.8  

Egypt

    0.3  

Finland

    1.2  

France

    11.2  

Germany

    7.5  

Greece

    0.3  

Hong Kong

    1.5  

India

    0.4  

Indonesia

    0.1  

Ireland

    0.3  

Israel

    0.5  

Italy

    2.9  

Japan

    16.1  

Luxembourg

    0.4  

Malaysia

    0.1  

Mauritius

    — *

Mexico

    0.8  

Netherlands

    4.5  

Netherlands Antilles

    0.1  

New Zealand

    0.1  

Norway

    0.8  

Papue New Guinea

    — *

Portugal

    0.1  

Russia

    0.4  

Singapore

    0.8  

South Africa

    0.5  

South Korea

    1.3  

Spain

    2.9  

Sweden

    0.9  

Switzerland

    6.6  

Taiwan

    0.3  

Thailand

    0.1  

Turkey

    — *

United Kingdom

    16.6  

United States

    0.5  

Preferred Stocks

    0.4  

Options Purchased

    — *

Warrants & Rights

    0.1  

Categories

    % of
Net
Assets		  
  

Short-Term Investments

    7.0  

Other Securities

    22.2  
      

Total Investments

    121.5  

Other Assets and Liabilities, Net

    (21.5 )
      

Net Assets

    100.0  
      

Futures Contracts

    0.6  

Options Written

    (0.1 )

Foreign Currency Exchange Contracts

    (— )*

Index Swaps

    (— )*

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

58   International Securities Fund

Table of Contents

Russell Investment Company

Global Equity Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 897.40    $ 1,017.16

Expenses Paid During Period*

    $ 7.31    $ 7.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.55% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 894.40    $ 1,013.43

Expenses Paid During Period*

    $ 10.83    $ 11.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.30% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 896.90    $ 1,017.16

Expenses Paid During Period*

    $ 7.31    $ 7.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.55% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Global Equity Fund   59

Table of Contents

Russell Investment Company

Global Equity Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 898.90    $ 1,018.40

Expenses Paid During Period*

    $ 6.14    $ 6.52

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.30% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

60   Global Equity Fund

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 91.6%

        

Belgium - 0.6%

        

Dexia SA (Ñ)

    35,654      985

Fortis (Ñ)

    18,992      515

InBev NV (Ñ)

    59,390      4,892

Tessenderlo Chemie NV

    17,084      805
         
        7,197
         

Bermuda - 2.8%

        

Axis Capital Holdings, Ltd.

    170,200      5,772

Central European Media Enterprises, Ltd. Class A (Æ)(Ñ)

    59,200      6,276

Cheung Kong Infrastructure Holdings, Ltd.

    452,000      1,951

GOME Electrical Appliances Holdings, Ltd.

    1,467,000      3,353

Midland Holdings, Ltd.

    1,346,000      1,389

Pacific Basin Shipping, Ltd.

    3,268,529      6,003

RenaissanceRe Holdings, Ltd.

    48,200      2,479

TBS International, Ltd.
Class A (Æ)(Ñ)

    29,200      1,173

Tyco Electronics, Ltd.

    77,000      2,881

Warner Chilcott, Ltd. (Æ)(Ñ)

    55,600      957
         
        32,234
         

Brazil - 2.7%

        

B2W Cia Global Do Varejo

    59,600      1,976

Banco Itau Holding Financeira SA - ADR

    245,900      6,897

Bovespa Holding SA - ADR

    313,500      4,696

Cia Vale do Rio Doce - ADR (Æ)

    186,100      5,925

Gol Linhas Aereas Inteligentes SA - ADR (Ñ)

    122,100      1,984

Petroleo Brasileiro SA - ADR

    70,500      7,128

Tam SA - ADR (Æ)(Ñ)

    117,700      2,778
         
        31,384
         

British Virgin Islands - 0.3%

        

China New Town Development Co., Ltd. (Æ)

    1,214,900      223

UTI Worldwide, Inc. (Ñ)

    120,000      2,638
         
        2,861
         

Canada - 0.2%

        

Agrium, Inc.

    25,800      2,038
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Cayman Islands - 3.1%

        

ACE, Ltd.

    132,900      8,013

Chaoda Modern Agriculture

    1,856,000      2,671

Fresh Del Monte Produce, Inc. (Æ)(Ñ)

    77,700      2,462

Hutchison Telecommunications International, Ltd.

    2,907,000      4,089

Kingboard Laminates Holdings, Ltd.

    1,335,000      913

Noble Corp. (Ñ)

    93,600      5,268

Transocean, Inc. (Æ)(Ñ)

    84,573      12,471
         
        35,887
         

China - 1.0%

        

China Shenhua Energy Co., Ltd.

    897,000      4,142

Industrial & Commercial Bank of China

    6,211,000      4,925

Zhejiang Expressway Co., Ltd. Class H

    2,038,000      2,151
         
        11,218
         

Denmark - 0.4%

        

D/S Norden (Æ)(Ñ)

    46,075      5,077
         

Egypt - 0.7%

        

Egyptian Financial Group-Hermes Holding (Æ)

    161,066      1,655

Orascom Telecom Holding SAE

    396,806      5,986
         
        7,641
         

Finland - 0.7%

        

Fortum OYJ

    114,410      4,838

Nokia OYJ

    110,800      3,335
         
        8,173
         

France - 3.6%

        

Accor SA (Ñ)

    62,580      5,162

Alcatel-Lucent (Ñ)

    1,897,391      12,779

Credit Agricole SA (Ñ)

    28,109      946

Groupe Danone (Ñ)

    57,420      5,087

LVMH Moet Hennessy Louis Vuitton SA

    7,600      868

Pernod-Ricard SA (Ñ)

    45,300      5,223

Peugeot SA

    84,814      5,939

Publicis Groupe

    125,300      5,067

Vallourec

    4,900      1,337
         
        42,408
         

 

Global Equity Fund   61

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Germany - 2.5%

        

Bayer AG (Æ)

    33,500      2,856

Bayerische Motoren Werke AG

    62,700      3,439

Daimler AG

    9,700      753

Deutsche Boerse AG (Ñ)

    31,755      4,644

E.ON AG (Ñ)

    53,744      10,930

Salzgitter AG

    12,113      2,474

SAP AG

    81,300      4,102
         
        29,198
         

Hong Kong - 0.8%

        

Cheung Kong Holdings, Ltd.

    115,000      1,800

Citic Pacific, Ltd.

    194,000      905

CLP Holdings, Ltd.

    490,500      3,882

Hang Lung Group, Ltd.

    69      —

HongKong Electric Holdings

    423,500      2,666
         
        9,253
         

Ireland - 0.7%

        

Anglo Irish Bank Corp. PLC (Ñ)

    250,330      3,447

Bank of Ireland

    341,600      4,760
         
        8,207
         

Israel - 0.2%

        

Teva Pharmaceutical Industries,
Ltd. - ADR

    59,500      2,783
         

Italy - 1.7%

        

Assicurazioni Generali SpA

    37,679      1,668

Enel SpA (Ñ)

    742,980      8,070

Fiat SpA

    117,088      2,607

Luxottica Group SpA (Ñ)

    79,800      2,241

UniCredit SpA

    681,182      5,140
         
        19,726
         

Japan - 8.9%

        

Aeon Mall Co., Ltd. (Ñ)

    154,800      4,880

Alfresa Holdings Corp. (Ñ)

    24,900      1,753

Canon, Inc.

    52,200      2,614

Daiwa Securities Group, Inc.

    704,000      7,048

Honda Motor Co., Ltd.

    128,300      4,087

Itouchu Corp.

    747,000      7,870

Japan Tobacco, Inc.

    714      3,464

Kansai Electric Power Co., Inc. (The)

    125,800      2,998

Kawasaki Kisen Kaisha, Ltd. (Ñ)

    131,000      1,322

KDDI Corp.

    515      3,315

Kyushu Electric Power Co., Inc.

    239,400      5,444
     Principal
Amount ($)
or Shares		      Market
Value
$

Marubeni Corp.

    139,000      1,101

Mitsubishi Corp.

    47,800      1,547

Mitsubishi Steel Manufacturing Co., Ltd. (Ñ)

    248,000      896

Mitsui OSK Lines, Ltd.

    89,000      1,217

Nikon Corp. (Ñ)

    218,000      6,351

Nintendo Co., Ltd.

    10,600      5,875

Nippon Denko Co., Ltd.

    144,000      1,726

Nippon Telegraph & Telephone Corp.

    1,765      7,631

Nipro Corp. (Ñ)

    86,000      1,463

Nomura Holdings, Inc.

    168,700      2,937

NTT DoCoMo, Inc.

    5,307      7,850

Osaka Gas Co., Ltd.

    685,000      2,444

Rohm Co., Ltd.

    72,300      5,080

Sumitomo Corp. (Ñ)

    300,000      4,005

Sumitomo Metal Industries, Ltd.

    438,000      1,852

Toho Pharmaceutical Co., Ltd. (Ñ)

    71,300      1,471

Toyota Motor Corp.

    101,000      5,137
         
        103,378
         

Luxembourg - 0.2%

        

ArcelorMittal

    24,700      2,183
         

Mexico - 1.8%

        

America Movil SAB de CV

    264,300      15,319

Grupo Financiero Banorte SAB de CV

    1,123,300      4,959

Grupo Televisa SA - ADR

    35,000      864
         
        21,142
         

Netherlands - 0.3%

        

ASML Holding NV

    36,790      1,042

TomTom NV (Æ)(Ñ)

    84,787      2,950
         
        3,992
         

Netherlands Antilles - 0.4%

        

Schlumberger, Ltd.

    41,700      4,193
         

Oman - 0.3%

        

Bank Muscat SAOG - GDR

    177,975      3,681
         

Panama - 0.4%

        

Carnival Corp. (Ñ)

    121,400      4,877
         

Russia - 0.9%

        

Gazprom OAO - ADR

    136,450      7,244

Sberbank

    979,270      3,172
         
        10,416
         

 

62   Global Equity Fund

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Singapore - 0.2%

        

Neptune Orient Lines, Ltd. (Ñ)

    630,000      1,489

Singapore Petroleum Co., Ltd.

    164,000      871
         
        2,360
         

South Korea - 0.2%

        

Samsung Electronics Co., Ltd.

    3,700      2,634
         

Spain - 2.0%

        

Iberdrola Renovables (Æ)(Ñ)

    621,005      4,511

Telefonica SA

    633,361      18,374
         
        22,885
         

Sweden - 0.4%

        

Atlas Copco AB Class A (Ñ)

    185,991      2,991

JM AB (Ñ)

    100      2

Peab AB

    59,200      511

Peab Industri AB Class B (Æ)

    26,300      263

Skandinaviska Enskilda Banken AB Class A

    57,400      1,392
         
        5,159
         

Switzerland - 5.8%

        

ABB, Ltd.

    187,874      5,760

Adecco SA (Ñ)

    102,700      6,143

Compagnie Financiere Richemont SA Class A

    68,500      4,160

Credit Suisse Group (Ñ)

    116,400      6,235

Julius Baer Holding AG

    168,886      12,490

Nestle SA

    20,162      9,659

Novartis AG

    96,600      4,906

Swisscom AG (Æ)(Ñ)

    16,043      5,722

UBS AG (Ñ)

    185,700      6,243

Zurich Financial Services AG

    22,220      6,785
         
        68,103
         

United Kingdom - 10.4%

        

Anglo American PLC

    65,454      4,203

AstraZeneca PLC

    45,546      1,916

Aviva PLC

    212,301      2,636

BAE Systems PLC

    442,050      4,076

BG Group PLC

    183,263      4,456

BHP Billiton PLC

    188,758      6,670

BP PLC

    63,288      768

British Airways PLC

    399,018      1,781

British American Tobacco PLC

    130,183      4,886

British Sky Broadcasting Group PLC

    355,100      3,830

Cadbury Schweppes PLC

    68,200      788
     Principal
Amount ($)
or Shares		      Market
Value
$

Centrica PLC

    268,744      1,562

Diageo PLC

    337,304      6,903

Experian Group, Ltd.

    467,200      3,503

GlaxoSmithKline PLC

    214,400      4,750

HSBC Holdings PLC

    57,100      995

Laird Group PLC

    186,013      1,835

Lloyds TSB Group PLC

    388,300      3,298

Old Mutual PLC

    1,559,764      3,934

Prudential PLC

    458,320      6,243

Rio Tinto PLC

    59,221      6,874

Rolls-Royce Group PLC (Æ)

    56,405,729      6,108

Shire PLC

    199,337      3,666

Standard Chartered PLC

    103,717      3,675

Standard Life PLC

    490,176      2,416

Tesco PLC

    593,000      5,012

Vedanta Resources PLC

    49,005      2,160

Venture Production PLC (Ñ)

    186,409      2,743

Vodafone Group PLC

    3,024,428      9,566

Xstrata PLC

    122,919      9,547
         
        120,800
         

United States - 37.4%

        

Aetna, Inc.

    67,200      2,930

Aflac, Inc.

    19,200      1,280

Altria Group, Inc.

    147,000      2,940

Amazon.Com, Inc. (Æ)(Ñ)

    93,000      7,313

American International Group, Inc.

    21,200      979

American Tower Corp. Class A (Æ)

    298,100      12,943

Amtrust Financial Services, Inc. (Ñ)

    183,800      2,858

Annaly Capital Management, Inc. (ö)

    161,000      2,698

Apache Corp.

    24,500      3,300

Apple, Inc. (Æ)

    41,100      7,149

Arch Coal, Inc.

    91,000      5,220

AT&T, Inc.

    105,100      4,068

ATP Oil & Gas Corp. (Æ)

    58,700      1,687

Baker Hughes, Inc.

    76,500      6,187

Bank of New York Mellon Corp. (The)

    140,000      6,094

Bed Bath & Beyond, Inc. (Æ)(Ñ)

    100,300      3,260

Best Buy Co., Inc. (Ñ)

    41,000      1,764

BMC Software, Inc. (Æ)(Ñ)

    27,500      956

Capital One Financial Corp. (Ñ)

    56,000      2,968

Celgene Corp. (Æ)(Ñ)

    40,000      2,486

Cephalon, Inc. (Æ)(Ñ)

    34,900      2,178

Charles Schwab Corp. (The)

    130,300      2,814

Chevron Corp.

    41,200      3,961

Cleveland-Cliffs, Inc. (Ñ)

    15,000      2,406

Coca-Cola Co. (The)

    56,400      3,320

ConocoPhillips

    25,000      2,154

 

Global Equity Fund   63

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Consol Energy, Inc.

    44,100      3,570

Corning, Inc.

    156,700      4,185

Cummins, Inc.

    40,000      2,506

Danaher Corp.

    62,600      4,884

Deere & Co.

    67,900      5,708

Dell, Inc. (Æ)

    339,500      6,325

Discover Financial Services

    137,800      2,509

DR Horton, Inc. (Ñ)

    305,600      4,734

Earthlink, Inc. (Æ)(Ñ)

    520,700      4,754

ENSCO International, Inc.

    34,300      2,186

Exxon Mobil Corp.

    156,300      14,547

Freeport-McMoRan Copper & Gold, Inc. Class B (Ñ)

    60,700      6,905

FTD Group, Inc. (Ñ)

    66,700      917

Genco Shipping & Trading, Ltd. (Ñ)

    18,900      1,279

Genentech, Inc. (Æ)

    101,900      6,950

Gilead Sciences, Inc.(Æ)

    150      7,769

Goldman Sachs Group, Inc. (The)

    64,100      12,267

Google, Inc. Class A (Æ)

    37,300      21,421

Health Net, Inc. (Æ)

    18,800      551

Healthspring, Inc. (Æ)

    103,300      1,740

Hess Corp.

    32,400      3,441

Hewlett-Packard Co.

    337,200      15,629

Home Depot, Inc.

    165,700      4,772

Hovnanian Enterprises, Inc.
Class A (Æ)(Ñ)

    169,700      2,006

Humana, Inc. (Æ)

    34,500      1,649

Intel Corp.

    549,100      12,223

International Business Machines Corp.

    79,300      9,571

Johnson Controls, Inc.

    139,100      4,905

JPMorgan Chase & Co.

    299,800      14,285

Juniper Networks, Inc. (Æ)

    345,400      9,540

Lam Research Corp. (Æ)(Ñ)

    17,400      711

Lennar Corp. Class A (Ñ)

    73,700      1,358

Lincare Holdings, Inc. (Æ)(Ñ)

    79,600      1,937

Lockheed Martin Corp.

    26,800      2,842

Marathon Oil Corp.

    35,500      1,618

Marriott International, Inc. Class A

    85,400      2,929

Mastercard, Inc. Class A (Ñ)

    4,400      1,224

McDonald’s Corp.

    255,100      15,199

MEMC Electronic Materials, Inc. (Æ)

    19,900      1,253

Merck & Co., Inc.

    56,200      2,138

Merrill Lynch & Co., Inc.

    193,600      9,647

Microsoft Corp.

    90,200      2,572

Monsanto Co.

    16,600      1,893

Monster Worldwide, Inc. (Æ)(Ñ)

    87,600      2,131
     Principal
Amount ($)
or Shares		      Market
Value
$

Morgan Stanley

    98,500      4,787

Mosaic Co. (The) (Æ)

    39,300      4,815

Murphy Oil Corp.

    58,500      5,285

NII Holdings, Inc. (Æ)

    85,300      3,902

Oracle Corp. (Æ)

    464,600      9,687

Peabody Energy Corp.

    54,700      3,344

Pfizer, Inc.

    393,100      7,905

Philip Morris International, Inc. (Æ)

    147,000      7,501

Precision Castparts Corp.

    11,600      1,364

Procter & Gamble Co.

    10,300      691

Red Hat, Inc. (Æ)(Ñ)

    123,500      2,540

Ross Stores, Inc.

    51,100      1,711

Schering-Plough Corp.

    244,500      4,501

Smith International, Inc. (Ñ)

    66,200      5,065

Sprint Nextel Corp.

    775,500      6,196

Starwood Hotels & Resorts Worldwide, Inc. (ö)

    17,400      908

Texas Instruments, Inc. (Ñ)

    58,300      1,700

Thermo Fisher Scientific, Inc. (Æ)

    17,500      1,013

Travelers Cos., Inc. (The)

    61,400      3,095

Union Pacific Corp. (Ñ)

    36,600      5,314

Unit Corp. (Æ)

    17,100      1,086

United Technologies Corp.

    90,100      6,530

Valero Energy Corp.

    22,500      1,099

Wal-Mart Stores, Inc.

    103,200      5,984

WellPoint, Inc. (Æ)

    82,300      4,094
         
        437,210
         
Total Common Stocks        

(cost $1,017,314)

         1,068,298
         
Preferred Stocks - 0.2%        

United States - 0.2%

        

Merrill Lynch & Co., Inc. (Æ)

    16      1,405
         
Total Preferred Stocks        

(cost $1,600)

         1,405
         
Warrants & Rights - 0.0%        

Sweden - 0.0%

        

JM AB (Æ)

    100      —
         

Switzerland - 0.0%

        

UBS AG (Æ)

    186      314
         
Total Warrants & Rights        

(cost $—)

         314
         

 

64   Global Equity Fund

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$		  
       

Short-Term Investments - 8.2%

     

United States - 8.2%

        

Russell Investment Company
Money Market Fund

    87,907,000      87,907  

United States Treasury Bills (ç)(ž)(§)

        

0.670% due 06/19/08

    7,500      7,493  
           
Total Short-Term Investments        

(cost $95,400)

         95,400  
           
Other Securities - 14.2%        

Russell Investment Company
Money Market Fund (×)

    36,144,211      36,144  

State Street Securities Lending Quality Trust (×)

    130,081,658      130,082  
           
Total Other Securities        

(cost $166,226)

         166,226  
           
Total Investments - 114.2%        

(identified cost $1,280,540)

         1,331,643  
Other Assets and Liabilities, Net - (14.2%)         (165,136 )
           
Net Assets - 100.0%         1,166,507  
           

 

 

A portion of the portfolio has been fair valued as of period end.

 


 

See accompanying notes which are an integral part of the financial statements.

 

Global Equity Fund   65

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		    Unrealized
Appreciation
(Depreciation)
$
    

Long Positions

     

EUR STOXX 50 Index (EMU)
expiration date 06/08 (386)

   EUR 14,517    1,504

FTSE 100 Index (United Kingdom)
expiration date 06/08 (82)

   GBP 5,000    739

Hang Seng Index (Hong Kong)
expiration date 05/08 (8)

   HKD 10,294    14

S&P 500 E-Mini
expiration date 06/08 (220)

   USD 15,246    821

S&P 500 Index
expiration date 06/08 (85)

   USD 29,453    946

SPI 200 Index (Australia)
expiration date 06/08 (24)

   AUD 3,361    150

TOPIX Index (Japan)
expiration date 06/08 (71)

   JPY 960,630    811

TSE 60 Index (Canada)
expiration date 06/08 (26)

   CAD 4,301    147
      

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

      5,134
      

 

See accompanying notes which are an integral part of the financial statements.

 

66   Global Equity Fund

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   12   AUD   14   05/01/08   2  
USD   90   AUD   100   06/18/08   3  
USD   91   AUD   100   06/18/08   3  
USD   91   AUD   100   06/18/08   3  
USD   92   AUD   100   06/18/08   2  
USD   92   AUD   100   06/18/08   2  
USD   92   AUD   100   06/18/08   2  
USD   92   AUD   100   06/18/08   1  
USD   92   AUD   100   06/18/08   1  
USD   182   AUD   200   06/18/08   6  
USD   183   AUD   200   06/18/08   5  
USD   183   AUD   200   06/18/08   4  
USD   184   AUD   200   06/18/08   3  
USD   188   AUD   200   06/18/08   —  
USD   230   AUD   250   06/18/08   4  
USD   646   AUD   700   06/18/08   10  
USD   737   AUD   800   06/18/08   12  
USD   1,041   AUD   1,130   06/18/08   17  
USD   2,459   AUD   2,670   06/18/08   40  
USD   3,688   AUD   4,000   06/18/08   57  
USD   98   CAD   100   06/18/08   1  
USD   98   CAD   100   06/18/08   1  
USD   98   CAD   100   06/18/08   1  
USD   98   CAD   100   06/18/08   1  
USD   99   CAD   100   06/18/08   1  
USD   195   CAD   200   06/18/08   3  
USD   198   CAD   200   06/18/08   —  
USD   199   CAD   200   06/18/08   (1 )
USD   200   CAD   200   06/18/08   (2 )
USD   201   CAD   200   06/18/08   (3 )
USD   202   CAD   200   06/18/08   (4 )
USD   203   CAD   200   06/18/08   (5 )
USD   296   CAD   300   06/18/08   1  
USD   298   CAD   300   06/18/08   (1 )
USD   299   CAD   300   06/18/08   (2 )
USD   352   CAD   350   06/18/08   (5 )
USD   707   CAD   700   06/18/08   (13 )
USD   1,207   CAD   1,200   06/18/08   (19 )
USD   3,035   CAD   3,005   06/18/08   (59 )
USD   4,429   CAD   4,400   06/18/08   (71 )
USD   201   CHF   208   05/02/08   —  
USD   93   EUR   59   05/02/08   —  
USD   298   EUR   191   05/02/08   1  
USD   509   EUR   326   05/02/08   (1 )
USD   513   EUR   328   05/02/08   (1 )
USD   90   EUR   57   05/05/08   —  
USD   207   EUR   133   05/05/08   1  
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   282   EUR   181   05/05/08   1  
USD   302   EUR   194   05/05/08   1  
USD   118   EUR   76   05/06/08   —  
USD   183   EUR   117   05/06/08   —  
USD   223   EUR   143   05/06/08   1  
USD   249   EUR   160   05/06/08   —  
USD   311   EUR   200   06/18/08   (1 )
USD   473   EUR   300   06/18/08   (7 )
USD   473   EUR   300   06/18/08   (7 )
USD   626   EUR   400   06/18/08   (5 )
USD   757   EUR   500   06/18/08   19  
USD   764   EUR   500   06/18/08   13  
USD   779   EUR   500   06/18/08   (2 )
USD   790   EUR   500   06/18/08   (13 )
USD   793   EUR   500   06/18/08   (16 )
USD   930   EUR   600   06/18/08   2  
USD   933   EUR   600   06/18/08   (1 )
USD   1,258   EUR   800   06/18/08   (15 )
USD   1,275   EUR   800   06/18/08   (33 )
USD   1,563   EUR   1,000   06/18/08   (10 )
USD   1,640   EUR   1,100   06/18/08   68  
USD   2,122   EUR   1,400   06/18/08   53  
USD   3,642   EUR   2,400   06/18/08   86  
USD   6,359   EUR   4,200   06/18/08   166  
USD   8,329   EUR   5,500   06/18/08   215  
USD   10,912   EUR   7,200   06/18/08   272  
USD   29,976   EUR   19,750   06/18/08   703  
USD   —   GBP   2   05/01/08   5  
USD   82   GBP   41   05/01/08   —  
USD   231   GBP   116   05/01/08   1  
USD   27   GBP   14   05/06/08   —  
USD   66   GBP   34   05/06/08   1  
USD   197   GBP   100   06/18/08   1  
USD   197   GBP   100   06/18/08   1  
USD   198   GBP   100   06/18/08   (1 )
USD   391   GBP   200   06/18/08   5  
USD   393   GBP   200   06/18/08   3  
USD   394   GBP   200   06/18/08   1  
USD   395   GBP   200   06/18/08   1  
USD   397   GBP   200   06/18/08   (2 )
USD   403   GBP   200   06/18/08   (7 )
USD   586   GBP   300   06/18/08   7  
USD   588   GBP   300   06/18/08   6  
USD   788   GBP   400   06/18/08   3  
USD   789   GBP   400   06/18/08   2  
USD   794   GBP   400   06/18/08   (3 )
USD   1,439   GBP   730   06/18/08   5  

 

See accompanying notes which are an integral part of the financial statements.

 

Global Equity Fund   67

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   1,778   GBP   900   06/18/08   2  
USD   3,158   GBP   1,600   06/18/08   6  
USD   10,713   GBP   5,430   06/18/08   28  
USD   11,843   GBP   6,000   06/18/08   25  
USD   1   HKD   10   05/01/08   —  
USD   15   HKD   120   05/02/08   —  
USD   20   HKD   153   05/02/08   —  
USD   56   JPY   5,846   05/01/08   1  
USD   1,078   JPY   112,592   05/01/08   5  
USD   186   JPY   19,438   05/07/08   1  
USD   259   JPY   27,051   05/07/08   1  
USD   194   JPY   20,000   06/18/08   (3 )
USD   195   JPY   20,000   06/18/08   (3 )
USD   196   JPY   20,000   06/18/08   (4 )
USD   202   JPY   20,000   06/18/08   (10 )
USD   203   JPY   20,000   06/18/08   (11 )
USD   294   JPY   30,000   06/18/08   (6 )
USD   387   JPY   40,000   06/18/08   (3 )
USD   394   JPY   40,000   06/18/08   (10 )
USD   395   JPY   40,000   06/18/08   (11 )
USD   397   JPY   40,000   06/18/08   (14 )
USD   486   JPY   50,000   06/18/08   (7 )
USD   487   JPY   50,000   06/18/08   (8 )
USD   494   JPY   50,000   06/18/08   (15 )
USD   498   JPY   50,000   06/18/08   (18 )
USD   604   JPY   60,000   06/18/08   (28 )
USD   781   JPY   80,000   06/18/08   (13 )
USD   785   JPY   80,000   06/18/08   (18 )
USD   939   JPY   100,000   06/18/08   21  
USD   2,144   JPY   220,000   06/18/08   (33 )
USD   2,731   JPY   280,000   06/18/08   (45 )
USD   10,962   JPY   1,125,000   06/18/08   (168 )
USD   13,739   JPY   1,410,000   06/18/08   (210 )
USD   27   SEK   162   05/02/08   —  
USD   81   SEK   486   05/02/08   —  
USD   72   SEK   431   05/06/08   —  
AUD   100   USD   91   06/18/08   (3 )
AUD   100   USD   91   06/18/08   (2 )
AUD   100   USD   93   06/18/08   (1 )
AUD   150   USD   139   06/18/08   (1 )
AUD   200   USD   184   06/18/08   (4 )
AUD   200   USD   186   06/18/08   (1 )
AUD   300   USD   274   06/18/08   (7 )
AUD   450   USD   413   06/18/08   (8 )
AUD   6,630   USD   6,109   06/18/08   (97 )
CAD   45   USD   46   05/01/08   2  
CAD   100   USD   98   06/18/08   (1 )
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
CAD   100   USD   98   06/18/08   (1 )
CAD   100   USD   99   06/18/08   —  
CAD   100   USD   99   06/18/08   —  
CAD   100   USD   102   06/18/08   3  
CAD   200   USD   197   06/18/08   (1 )
CAD   200   USD   198   06/18/08   —  
CAD   200   USD   202   06/18/08   4  
CAD   300   USD   301   06/18/08   4  
CAD   800   USD   804   06/18/08   11  
CAD   6,150   USD   6,212   06/18/08   122  
DKK   1,161   USD   240   05/02/08   (3 )
EUR   116   USD   186   05/01/08   5  
EUR   1   USD   2   05/02/08   —  
EUR   215   USD   335   05/02/08   —  
EUR   560   USD   870   05/02/08   (4 )
EUR   34   USD   52   05/05/08   —  
EUR   152   USD   236   05/05/08   (1 )
EUR   100   USD   155   06/18/08   —  
EUR   150   USD   227   06/18/08   (6 )
EUR   200   USD   307   06/18/08   (4 )
EUR   200   USD   313   06/18/08   2  
EUR   200   USD   316   06/18/08   5  
EUR   300   USD   459   06/18/08   (7 )
EUR   400   USD   606   06/18/08   (15 )
EUR   450   USD   706   06/18/08   7  
EUR   500   USD   757   06/18/08   (19 )
EUR   500   USD   783   06/18/08   6  
EUR   500   USD   792   06/18/08   15  
EUR   500   USD   793   06/18/08   17  
EUR   550   USD   862   06/18/08   8  
EUR   900   USD   1,372   06/18/08   (26 )
EUR   30,100   USD   45,617   06/18/08   (1,139 )
GBP   —   USD   2   05/01/08   2  
GBP   100   USD   197   06/18/08   (1 )
GBP   100   USD   197   06/18/08   (1 )
GBP   100   USD   198   06/18/08   —  
GBP   100   USD   198   06/18/08   1  
GBP   100   USD   199   06/18/08   1  
GBP   100   USD   199   06/18/08   1  
GBP   100   USD   200   06/18/08   2  
GBP   150   USD   296   06/18/08   (1 )
GBP   150   USD   296   06/18/08   —  
GBP   150   USD   297   06/18/08   —  
GBP   200   USD   397   06/18/08   1  
GBP   200   USD   398   06/18/08   2  
GBP   200   USD   398   06/18/08   2  
GBP   250   USD   494   06/18/08   —  

 

See accompanying notes which are an integral part of the financial statements.

 

68   Global Equity Fund

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
GBP   350   USD   691   06/18/08   (2 )
GBP   10,875   USD   21,456   06/18/08   (54 )
HKD   2,823   USD   362   05/05/08   —  
JPY   72,998   USD   703   05/07/08   1  
JPY   20,000   USD   194   06/18/08   2  
JPY   20,000   USD   201   06/18/08   9  
JPY   30,000   USD   286   06/18/08   (1 )
JPY   30,000   USD   296   06/18/08   9  
JPY   40,000   USD   391   06/18/08   8  
JPY   40,000   USD   392   06/18/08   8  
JPY   50,000   USD   490   06/18/08   10  
JPY   50,000   USD   490   06/18/08   11  
JPY   80,000   USD   777   06/18/08   9  
JPY   2,544,000   USD   24,791   06/18/08   382  
MXN   119   USD   11   05/02/08   —  
SGD   3   USD   2   05/05/08   —  
SGD   4   USD   3   05/06/08   —  
             
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts   233  
             

 

See accompanying notes which are an integral part of the financial statements.

 

Global Equity Fund   69

Table of Contents

Russell Investment Company

Global Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Industry Diversification    % of
Net
Assets		        Market
Value
$		  
       
       

Auto and Transportation

    4.6        54,017  

Consumer Discretionary

    11.6        135,714  

Consumer Staples

    5.6        65,499  

Financial Services

    17.2        200,990  

Health Care

    7.0        81,240  

Integrated Oils

    3.7        43,358  

Materials and Processing

    7.5        87,383  

Miscellaneous

    0.6        6,678  

Other Energy

    6.1        69,676  

Producer Durables

    6.9        80,978  

Technology

    9.0        104,807  

Utilities

    12.0        139,363  

Warrants & Rights

    —        314  

Short-Term Investments

    8.2        95,400  

Other Securities

    14.2        166,226  
               

Total Investments

    114.2        1,331,643  

Other Assets and Liabilities, Net

    (14.2 )      (165,136 )
               

Net Assets

    100.0        1,166,507  
               
Geographic Diversification    % of
Net
Assets		        Market
Value
$		  
       

Asia

    2.2        25,465  

Europe

    19.9        233,038  

Japan

    8.9        103,378  

Latin America

    10.8        125,524  

Middle East

    1.2        14,105  

Netherlands Antilles

    0.4        4,193  

Other Regions

    46.0        536,053  

United Kingdom

    10.6        123,661  

Other Securities

    14.2        166,226  
               

Total Investments

    114.2        1,331,643  

Other Assets and Liabilities, Net

    (14.2 )      (165,136 )
               

Net Assets

    100.0        1,166,507  
               

 

See accompanying notes which are an integral part of the financial statements.

 

70   Global Equity Fund

Table of Contents

Russell Investment Company

Global Equity Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Belgium

    0.6  

Bermuda

    2.8  

Brazil

    2.7  

British Virgin Islands

    0.3  

Canada

    0.2  

Cayman Islands

    3.1  

China

    1.0  

Denmark

    0.4  

Egypt

    0.7  

Finland

    0.7  

France

    3.6  

Germany

    2.5  

Hong Kong

    0.8  

Ireland

    0.7  

Israel

    0.2  

Italy

    1.7  

Japan

    8.9  

Luxembourg

    0.2  

Mexico

    1.8  

Netherlands

    0.3  

Netherlands Antilles

    0.4  

Oman

    0.3  

Panama

    0.4  

Russia

    0.9  

Singapore

    0.2  

South Korea

    0.2  

Spain

    2.0  

Sweden

    0.4  

Switzerland

    5.8  

United Kingdom

    10.4  

United States

    37.4  

Preferred Stocks

    0.2  

Warrants & Rights

    — *

Short-Term Investments

    8.2  

Other Securities

    14.2  
      

Total Investments

    114.2  

Other Assets and Liabilities Net

    (14.2 )
      
   100.0  
      

Futures Contracts

    0.4 *

Foreign Currency Exchange Contracts

    — *

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

Global Equity Fund   71

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,013.90    $ 1,019.89

Expenses Paid During Period*

    $ 5.01    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,009.20    $ 1,016.16

Expenses Paid During Period*

    $ 8.74    $ 8.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.75% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,013.70    $ 1,019.89

Expenses Paid During Period*

    $ 5.01    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

72   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,015.20    $ 1,021.13

Expenses Paid During Period*

    $ 3.76    $ 3.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.75% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Multistrategy Bond Fund   73

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Long-Term Investments - 102.9%

     

Asset-Backed Securities - 9.6%

        

Accredited Mortgage Loan Trust (Ê)

        

Series 2004-2 Class A2

        

3.195% due 07/25/34

    226      117

ACE Securities Corp. (Ê)

        

Series 2003-HE1 Class M1

        

3.870% due 11/25/33

    4,618      4,138

Series 2003-OP1 Class M2

        

4.395% due 12/25/33

    512      378

Series 2004-IN1 Class A1

        

3.215% due 05/25/34

    291      250

Series 2005-HE2 Class M3

        

3.375% due 04/25/35

    1,045      884

Series 2005-HE3 Class A2C

        

3.215% due 05/25/35

    7,203      7,128

Series 2005-HE7 Class A2B

        

3.075% due 11/25/35

    693      683

Series 2005-SD3 Class A

        

3.295% due 08/25/45

    1,717      1,543

Series 2006-ASP Class A2A

        

2.975% due 10/25/36

    388      381

Series 2006-FM1 Class A2C

        

3.045% due 07/25/36

    4,725      3,305

Series 2006-HE2 Class A2C

        

3.055% due 05/25/36

    2,235      2,062

Series 2006-OP1 Class M3

        

3.205% due 04/25/36

    1,056      454

Aegis Asset Backed Securities Trust (Ê)

        

Series 2003-3 Class M2

        

4.545% due 01/25/34

    1,255      714

American Express Credit Account Master Trust (Ê)

        

Series 2004-1 Class B

        

2.966% due 09/15/11

    117      116

Series 2004-3 Class C (Å)

        

3.186% due 12/15/11

    2,000      1,869

Series 2004-4 Class B

        

2.996% due 03/15/12

    1,749      1,703

Series 2004-5 Class B

        

2.966% due 04/16/12

    1,224      1,194

Series 2004-C Class C (Å)

        

3.216% due 02/15/12

    3,031      2,867

Series 2005-3 Class B

        

2.856% due 01/18/11

    466      466

Series 2006-A Class C (Å)

        

2.946% due 08/15/11

    3,500      3,413
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2007-3 Class A

        

2.716% due 10/15/12

    3,550      3,487

American Express Issuance Trust (Ê)

        

Series 2007-1 Class B

        

3.266% due 09/15/11

    4,500      4,199

AmeriCredit Automobile Receivables Trust

        

Series 2005-DA Class A3

        

4.870% due 12/06/10

    1,446      1,430

Series 2006-AF Class A3

        

5.560% due 09/06/11

    6,399      6,423

Series 2007-BF Class A2

        

5.310% due 01/06/11

    7,696      7,698

Ameriquest Mortgage Securities, Inc. (Ê)

        

Series 2002-D Class M1

        

6.356% due 02/25/33

    655      450

Series 2004-R8 Class A5

        

3.265% due 09/25/34

    230      225

Series 2004-R10 Class A5

        

3.285% due 11/25/34

    3      3

Series 2005-R3 Class A1A

        

3.095% due 05/25/35

    5,862      5,667

Series 2005-R5 Class A2B

        

3.125% due 07/25/35

    1,124      1,109

Series 2005-R6 Class A2

        

3.095% due 08/25/35

    10,620      10,113

Series 2005-R7 Class A2C

        

3.155% due 09/25/35

    3,145      3,090

Series 2006-R1 Class A2C

        

3.085% due 08/01/16

    820      769

Argent Securities, Inc. (Ê)

        

Series 2005-W2 Class A2B1

        

3.095% due 10/25/35

    9,267      8,910

Series 2005-W2 Class A2B2

        

3.155% due 10/25/35

    1,573      1,513

Series 2006-M2 Class A2A

        

2.945% due 09/25/36

    220      216

Series 2006-M3 Class A2A

        

2.945% due 10/25/36

    984      966

Asset Backed Funding Certificates (Ê)

        

Series 2006-HE1 Class A2A

        

2.955% due 01/25/37

    1,660      1,613

Series 2006-HE1 Class A2C

        

3.055% due 01/25/37

    1,710      1,158

Series 2006-OPT Class A3A

        

2.955% due 10/25/36

    792      780

2.659% due 11/25/36

    590      567

 

74   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-OPT Class M2

        

3.185% due 09/25/36

    1,152      297

Asset Backed Securities Corp. Home Equity (Ê)

        

Series 2003-HE1 Class M2

        

6.241% due 01/15/33

    1,673      1,485

Series 2004-HE7 Class M9 (Þ)

        

6.099% due 10/25/34

    927      614

Series 2006-HE2 Class M3

        

3.285% due 03/25/36

    1,300      422

Series 2006-HE3 Class A4

        

3.065% due 03/25/36

    1,259      1,220

Bank of America Credit Card Trust (Ê)

        

Series 2006-C4 Class C4

        

2.946% due 11/15/11

    13,292      12,465

Series 2006-C7 Class C7

        

2.946% due 03/15/12

    1,300      1,197

Bank One Issuance Trust (Ê)

        

Series 2003-C4 Class C4

        

3.746% due 02/15/11

    1,866      1,867

Series 2004-B1 Class B1

        

3.036% due 03/15/12

    1,942      1,874

Bayview Financial Acquisition Trust

        

Series 2004-C Class A1 (Ê)

        

3.516% due 05/28/44

    445      401

Series 2006-A Class 1A3

        

5.865% due 02/28/41

    1,540      1,280

Series 2006-C Class 2A1 (Ê)

        

2.996% due 11/28/36

    548      531

Bear Stearns Asset Backed Securities Trust (Ê)

        

Series 2004-BO1 Class 1A1

        

3.095% due 09/25/34

    5      5

Series 2005-AQ1 Class 2A1

        

3.115% due 03/25/35

    88      88

Series 2006-HE3 Class A1

        

2.975% due 04/25/36

    134      133

Series 2006-HE8 Class 2M1

        

3.225% due 10/25/36

    1,600      562

Series 2006-HE9 Class 1A2

        

3.045% due 11/25/36

    2,710      2,181

Capital One Multi-Asset Execution Trust

        

Series 2007-A7 Class A7

        

5.750% due 07/15/20

    2,810      2,769

Carmax Auto Owner Trust

        

Series 2007-2 Class A2

        

5.320% due 01/15/10

    2,836      2,849
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2008-1 Class A2 (Ê)

        

3.416% due 04/15/11

    4,400      4,385

Carrington Mortgage Loan Trust (Ê)

        

Series 2006-FRE Class A3

        

3.045% due 07/25/36

    1,120      957

Series 2006-NC3 Class A1

        

2.945% due 08/25/36

    1,702      1,681

Cendant Timeshare Receivables Funding LLC (Þ)

        

Series 2004-1A Class A1

        

3.670% due 05/20/16

    73      70

Centex Home Equity

        

Series 2002-D Class AF4

        

5.210% due 11/25/28

    152      140

Series 2005-D Class AF4

        

5.270% due 10/25/35

    1,000      944

Series 2006-A Class AV2 (Ê)

        

2.995% due 06/25/36

    2,665      2,593

Chase Credit Card Master Trust (Ê)

        

Series 2002-3 Class B

        

3.166% due 09/15/11

    1,458      1,423

Series 2003-3 Class B

        

3.066% due 10/15/10

    758      758

Series 2003-6 Class A

        

2.826% due 02/15/11

    1,300      1,297

Series 2003-6 Class B

        

3.066% due 02/15/11

    1,307      1,296

Series 2003-6 Class C

        

3.516% due 02/15/11

    1,500      1,481

Chase Issuance Trust

        

Series 2004-C3 Class C3 (Ê)

        

3.186% due 06/15/12

    900      843

Series 2005-A12 Class A (Ê)

        

2.726% due 02/15/11

    1,500      1,494

Series 2005-C1 Class C1 (Ê)

        

3.086% due 11/15/12

    9,000      8,237

Series 2005-C3 Class C3 (Ê)

        

3.056% due 11/15/12

    1,166      1,039

Series 2006-A3 Class A3 (Ê)

        

2.706% due 07/15/11

    1,100      1,092

Series 2006-B1 Class B1 (Ê)(Ñ)

        

2.866% due 04/15/13

    2,831      2,572

Series 2006-B2 Class B (Ê)(Ñ)

        

2.816% due 10/15/12

    2,612      2,424

Series 2006-C3 Class C3 (Ê)

        

2.946% due 06/15/11

    1,600      1,534

Series 2007-A17 Class A

        

5.120% due 10/15/14

    510      514

 

Multistrategy Bond Fund   75

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

CIT Mortgage Loan Trust (Ê)(Å)

        

Series 2007-1 Class 2A1

        

3.895% due 05/25/09

    5,493      4,944

Series 2007-1 Class 2A2

        

4.145% due 10/01/37

    1,700      1,105

Series 2007-1 Class 2A3

        

4.345% due 10/01/37

    3,150      1,733

Citibank Credit Card Issuance Trust

        

Series 2006-B1 Class B1 (Ê)

        

2.851% due 03/07/11

    7,000      6,831

Series 2007-A1 Class A1 (Ê)

        

2.589% due 03/22/12

    4,350      4,273

Series 2007-A8 Class A8

        

5.650% due 09/20/19

    1,660      1,639

Citigroup Mortgage Loan Trust, Inc. (Ê)

        

Series 2006-AMC Class A2B

        

3.055% due 09/25/36

    2,590      2,136

Series 2006-NC1 Class A2A

        

2.965% due 08/25/36

    286      285

Series 2006-NC2 Class A2A

        

2.935% due 09/25/36

    1,811      1,781

Series 2006-NC2 Class A2B

        

3.055% due 09/25/36

    7,685      5,550

Series 2006-WFH Class A1

        

2.639% due 08/25/36

    419      416

Series 2006-WFH Class A2

        

2.995% due 10/25/36

    6,300      5,752

Countrywide Asset-Backed Certificates

        

Series 2004-13 Class AF3

        

3.989% due 02/25/31

    46      46

Series 2004-AB2 Class M3 (Ê)

        

3.495% due 05/25/36

    1,165      753

Series 2004-BC1 Class M1 (Ê)

        

3.395% due 02/25/34

    708      574

Series 2005-4 Class AF3

        

4.456% due 10/25/35

    1,156      1,139

Series 2005-7 Class AF3

        

4.454% due 11/25/35

    410      406

Series 2005-11 Class 3AV2 (Ê)

        

3.185% due 02/25/36

    3,104      3,037

Series 2005-16 Class 2AF1 (Ê)

        

3.045% due 05/25/36

    315      309

Series 2005-17 Class 1AF1 (Ê)

        

3.095% due 05/25/36

    133      132

Series 2005-AB1 Class A2 (Ê)

        

3.105% due 10/25/34

    1,498      1,488

Series 2006-1 Class AF3

        

5.348% due 07/25/36

    2,025      1,848
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-2 Class 2A2 (Ê)

        

3.085% due 06/25/36

    970      899

Series 2006-3 Class 2A2 (Ê)

        

3.075% due 06/25/36

    5,122      4,853

Series 2006-6 Class 2A3 (Ê)

        

3.175% due 09/25/36

    8,700      5,548

Series 2006-11 Class 1AF3

        

6.050% due 09/25/46

    2,085      2,018

Series 2006-11 Class 1AF4

        

6.300% due 09/25/46

    1,935      1,673

Series 2006-13 Class 1AF3

        

5.944% due 01/25/37

    3,050      2,883

Series 2006-13 Class 3AV1 (Ê)

        

2.945% due 01/25/37

    344      341

Series 2006-15 Class A1 (Ê)

        

3.005% due 10/25/46

    428      416

Series 2006-15 Class A3

        

5.689% due 10/25/46

    1,350      1,223

Series 2006-16 Class 2A1 (Ê)

        

2.945% due 12/25/46

    148      145

Series 2006-19 Class 2A1 (Ê)

        

2.955% due 03/25/37

    526      513

Series 2006-22 Class 2A1 (Ê)

        

2.945% due 05/25/37

    435      425

Series 2006-23 Class 2A1 (Ê)

        

2.945% due 05/25/28

    407      398

Series 2006-BC1 Class 2A2 (Ê)

        

3.075% due 04/25/36

    891      868

Series 2006-S1 Class A2

        

5.549% due 08/25/21

    401      391

Series 2006-S3 Class A2

        

6.085% due 06/25/21

    1,355      790

Series 2006-S6 Class A2

        

5.519% due 03/25/34

    5,025      4,736

Series 2006-S7 Class A3

        

5.712% due 11/25/35

    5,860      2,119

Series 2006-S9 Class A3

        

5.728% due 08/25/36

    1,490      1,227

Series 2007-4 Class A2

        

5.530% due 03/25/37

    3,032      2,873

Countrywide Home Equity Loan Trust (Ê)

        

Series 2006-HW Class 2A1B

        

2.866% due 11/15/36

    3,850      3,231

Credit Suisse First Boston Mortgage Securities Corp.

        

Series 2005-AGE Class A2

        

4.640% due 02/25/32

    861      862

 

76   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Credit-Based Asset Servicing and Securitization LLC

        

Series 2004-CB7 Class AF5

        

4.585% due 10/25/34

    770      668

Series 2006-CB5 Class A1 (Ê)

        

2.955% due 06/25/36

    342      339

Series 2007-CB1 Class AF2

        

5.721% due 01/25/37

    1,460      1,313

CSAB Mortgage Backed Trust

        

Series 2006-3 Class A1B2 (Ê)

        

2.990% due 11/25/36

    399      379

Series 2006-4 Class A1A

        

5.868% due 12/25/36

    946      902

Dunkin Securitization (Þ)

        

Series 2006-1 Class A2

        

5.779% due 06/20/31

    3,435      3,091

FBR Securitization Trust (Ê)

        

Series 2005-2 Class AV3A

        

3.185% due 09/25/35

    3,620      3,420

Federal Home Loan Mortgage Corp. Structured Pass Through Securities

        

Series 2000-30 Class A5

        

8.610% due 12/25/30

    498      496

Fieldstone Mortgage Investment Corp. (Ê)

        

Series 2006-1 Class A2

        

3.085% due 05/25/36

    2,647      2,210

Series 2006-3 Class 2A1

        

2.965% due 11/25/36

    330      318

Series 2006-3 Class 2A3

        

3.055% due 11/25/36

    645      417

Series 2006-3 Class M1

        

3.155% due 11/25/36

    2,650      743

First Franklin Mortgage Loan Asset Backed Certificates (Ê)

        

Series 2005-FF4 Class 2A3

        

3.115% due 05/25/35

    135      134

Series 2005-FF8 Class A2C

        

3.165% due 09/25/35

    6,373      6,157

Series 2005-FF9 Class A2

        

3.015% due 10/25/35

    135      135

Series 2005-FFH Class A2B

        

3.145% due 06/25/36

    1,842      1,836

Series 2006-FF1 Class 2A1

        

2.935% due 08/25/36

    1,052      1,029

Series 2006-FF1 Class A2

        

2.945% due 07/25/36

    749      735

2.955% due 10/25/36

    1,001      911
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-FF1 Class A3

        

2.945% due 11/25/36

    888      844

Series 2006-FF2 Class A2

        

2.965% due 02/25/36

    355      353

Series 2006-FF9 Class M1

        

3.145% due 06/25/36

    5,180      1,596

Series 2007-FF1 Class A2A

        

2.935% due 01/25/38

    1,959      1,866

First USA Credit Card Master Trust

        

Series 1998-2 Class C (Å)

        

6.800% due 02/18/11

    2,700      2,675

Series 1998-6 Class A (Ê)

        

2.892% due 04/18/11

    5,400      5,397

Ford Credit Auto Owner Trust (Ê)

        

Series 2008-A Class A2

        

3.316% due 07/15/10

    4,000      3,988

Fremont Home Loan Trust (Ê)

        

Series 2006-3 Class 2A1

        

2.965% due 02/25/37

    651      633

Series 2006-3 Class 2A2

        

3.015% due 02/25/37

    3,780      3,316

Series 2006-A Class 2A2

        

2.995% due 05/25/36

    869      843

Series 2006-A Class M2

        

3.215% due 05/25/36

    1,085      393

Series 2006-D Class 2A1

        

2.955% due 11/25/36

    1,150      1,067

Series 2006-E Class 2A1

        

2.955% due 01/25/37

    463      433

GE Capital Credit Card Master Note Trust

        

Series 2005-3 Class B (Ê)

        

3.016% due 06/15/13

    1,049      942

Series 2006-1 Class A

        

5.080% due 09/15/12

    4,960      5,036

Series 2006-1 Class B (Ê)

        

2.826% due 09/15/12

    1,000      955

GMAC Mortgage Corp. Loan Trust

        

Series 2004-HE5 Class A3

        

3.970% due 09/25/34

    12      12

Series 2007-HE2 Class A2

        

6.054% due 12/25/37

    2,780      1,650

Series 2007-HE3 Class 1A1

        

7.000% due 09/25/37

    1,364      780

Series 2007-HE3 Class 2A1

        

7.000% due 09/25/37

    1,356      763

Green Tree Financial Corp.

        

Series 1994-1 Class A5

        

7.650% due 04/15/19

    3,933      4,020

 

Multistrategy Bond Fund   77

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 1994-3 Class A5

        

8.400% due 06/15/19

    2,283      2,361

Series 1994-5 Class A5

        

8.300% due 12/15/19

    2,327      2,399

GSAA Trust

        

Series 2006-2 Class 2A3 (Ê)

        

3.165% due 12/25/35

    2,675      1,988

Series 2006-4 Class 1A2

        

5.940% due 03/25/36

    1,779      1,127

GSAMP Trust

        

Series 2003-HE2 Class M1 (Ê)

        

3.545% due 08/25/33

    876      687

Series 2006-FM1 Class A2C (Ê)

        

3.055% due 04/25/36

    500      384

Series 2006-FM2 Class A2A (Ê)

        

2.965% due 09/25/36

    1,388      1,358

Series 2006-HE4 Class A2A (Ê)

        

2.965% due 06/25/36

    355      351

Series 2007-FM1 Class A2A (Ê)

        

2.965% due 12/25/36

    1,066      1,024

Series 2007-H1 Class M1 (Ê)

        

3.235% due 02/25/37

    2,252      557

HFC Home Equity Loan Asset Backed Certificates (Ê)

        

Series 2005-1 Class A

        

3.090% due 01/20/34

    2,334      1,927

Series 2007-2 Class A1V

        

2.890% due 07/20/36

    1,911      1,834

Series 2007-3 Class APT

        

4.000% due 11/20/36

    5,810      4,911

Home Equity Asset Trust (Ê)

        

Series 2005-5 Class 2A2

        

3.145% due 11/25/35

    6,304      6,168

Series 2005-7 Class M1

        

3.345% due 01/25/36

    3,910      2,566

Series 2006-3 Class 2A2

        

3.025% due 07/25/36

    1,853      1,817

Series 2006-4 Class M3

        

3.255% due 08/25/36

    788      238

Series 2006-7 Class 2A3

        

3.045% due 01/25/37

    1,650      1,093

Household Automotive Trust

        

Series 2006-1 Class A3

        

5.430% due 06/17/11

    5,755      5,796

Series 2006-2 Class A3

        

5.610% due 08/17/11

    1,932      1,958
     Principal
Amount ($)
or Shares		      Market
Value
$

Household Credit Card Master Note Trust I

        

Series 2006-1 Class A

        

5.100% due 06/15/12

    2,770      2,793

Series 2006-1 Class B (Ê)

        

2.856% due 06/15/12

    932      886

HSI Asset Securitization Corp. Trust (Ê)

        

Series 2006-HE1 Class 2A1

        

2.945% due 10/25/36

    3,325      3,092

Series 2006-HE2 Class 2A1

        

2.945% due 12/25/36

    826      782

Series 2006-HE2 Class M1

        

3.135% due 12/25/36

    1,045      225

Series 2006-OPT Class 2A1

        

2.975% due 12/25/35

    18      18

Indymac Residential Asset Backed Trust (Ê)

        

Series 2006-H2 Class A

        

2.828% due 06/28/36

    1,851      1,613

IXIS Real Estate Capital Trust (Ê)

        

Series 2006-HE2 Class M2

        

3.215% due 08/25/36

    1,517      572

Series 2006-HE3 Class A1

        

2.945% due 10/25/36

    953      930

JP Morgan Mortgage Acquisition Corp. (Ê)

        

Series 2006-CW1 Class A2

        

2.935% due 07/25/28

    61      61

Series 2006-HE1 Class A2

        

2.975% due 01/25/36

    135      134

Series 2006-WMC Class A2

        

2.945% due 07/25/30

    530      526

2.945% due 08/25/36

    239      235

Series 2006-WMC Class A3

        

3.015% due 03/25/36

    2,149      2,104

Lehman XS Trust (Ê)

        

Series 2005-1 Class 2A2

        

4.660% due 07/25/35

    783      590

Series 2005-5N Class 1A1

        

3.195% due 11/25/35

    831      672

Series 2005-5N Class 3A1A

        

3.195% due 11/25/35

    1,928      1,581

Series 2005-9N Class 1A1

        

3.165% due 02/25/36

    610      498

Series 2006-2N Class 1A2

        

3.235% due 02/25/46

    2,363      1,478

Series 2006-9 Class A1A

        

2.965% due 05/25/46

    163      161

 

78   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-11 Class 1A1

        

2.975% due 06/25/46

    1,323      1,267

Series 2006-16N Class A1A

        

2.975% due 11/25/46

    1,135      1,077

Series 2006-16N Class A4A

        

3.085% due 11/25/46

    3,416      2,660

Long Beach Auto Receivables Trust

        

Series 2007-A Class A2

        

5.150% due 11/15/10

    1,119      1,123

Long Beach Mortgage Loan Trust (Ê)

        

Series 2002-5 Class M1

        

4.140% due 11/25/32

    2,883      2,231

Series 2003-3 Class M1

        

4.020% due 07/25/33

    3,086      2,556

Series 2004-4 Class 1A1

        

3.175% due 10/25/34

    29      24

Series 2004-6 Class A3

        

3.545% due 11/25/34

    1,450      1,228

Series 2005-3 Class 2A2

        

3.175% due 09/25/35

    4,681      4,525

Series 2005-WL2 Class 3A3

        

3.165% due 08/25/35

    864      842

Series 2005-WL3 Class 2A2A

        

3.035% due 11/25/35

    7,839      7,723

Series 2006-4 Class 2A1

        

2.945% due 05/25/36

    384      383

Series 2006-9 Class 2A1

        

2.955% due 10/25/36

    3,138      3,045

Mastr Asset Backed Securities Trust (Ê)

        

Series 2003-WMC Class M2

        

5.370% due 08/25/33

    436      259

Series 2005-WMC Class A5

        

2.899% due 03/25/35

    1,219      1,204

Series 2006-AM3 Class A1

        

2.955% due 10/25/36

    123      123

Series 2006-WMC Class A1

        

2.965% due 02/25/36

    31      31

Series 2006-WMC Class M1

        

3.125% due 10/25/36

    2,056      523

Series 2007-HE1 Class A1

        

2.975% due 05/25/37

    1,539      1,478

Mastr Specialized Loan Trust (Þ)

        

Series 2005-2 Class A2

        

5.006% due 07/25/35

    518      400

MBNA Credit Card Master Note Trust (Ê)

        

Series 2001-C2 Class C2 (Å)

        

3.866% due 12/15/10

    7,100      7,054
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-B5 Class B5

        

3.086% due 02/15/11

    2,000      1,981

Series 2003-C3 Class C3

        

4.066% due 10/15/10

    303      303

Series 2005-C3 Class C

        

2.986% due 03/15/11

    15,192      14,867

MBNA Master Credit Card Trust

        

Series 2000-E Class A

        

7.800% due 10/15/12

    600      639

Merrill Lynch Mortgage Investors, Inc. (Ê)

        

Series 2006-HE1 Class A2A

        

2.975% due 12/25/36

    242      242

Series 2006-RM1 Class A2A

        

2.965% due 02/25/37

    176      175

Series 2006-RM3 Class A2A

        

2.925% due 06/25/37

    349      344

Mid-State Trust

        

Series 2003-11 Class A1

        

4.864% due 07/15/38

    131      125

Series 2004-1 Class A

        

6.005% due 08/15/37

    167      166

Series 2005-1 Class A

        

5.745% due 01/15/40

    162      126

Series 2006-1 Class A (Þ)

        

5.787% due 10/15/40

    755      727

Morgan Stanley ABS Capital I (Ê)

        

Series 2003-NC8 Class M1

        

3.945% due 09/25/33

    3,000      2,320

Series 2003-NC8 Class M3

        

6.045% due 09/25/33

    284      158

Series 2006-HE1 Class A2

        

3.015% due 01/25/36

    1,466      1,460

Series 2006-HE1 Class A3

        

3.075% due 01/25/36

    6,325      6,055

Series 2006-HE2 Class M1

        

3.225% due 03/25/36

    6,610      4,095

Series 2006-HE2 Class M2

        

3.245% due 03/25/36

    800      366

Series 2006-HE3 Class A2A

        

2.935% due 04/25/36

    20      20

Series 2006-HE3 Class A2C

        

3.055% due 04/25/36

    1,030      933

Series 2006-HE3 Class M2

        

3.195% due 04/25/36

    7,920      3,336

Series 2006-HE4 Class A1

        

2.935% due 06/25/36

    205      204

Series 2006-HE4 Class A2

        

2.995% due 06/25/36

    640      615

 

Multistrategy Bond Fund   79

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-HE5 Class A2C

        

3.035% due 08/25/36

    3,000      2,313

Series 2006-HE7 Class A2A

        

2.945% due 09/25/36

    2,852      2,801

Series 2006-HE8 Class A2C

        

3.035% due 10/25/36

    2,880      2,223

Series 2006-NC5 Class A2A

        

2.935% due 10/25/36

    4,391      4,299

Series 2006-WMC Class A2C

        

3.045% due 06/25/36

    3,730      2,725

Series 2007-NC3 Class A2A

        

2.955% due 05/25/37

    2,861      2,769

Morgan Stanley Home Equity Loans (Ê)

        

Series 2006-1 Class A2A

        

2.975% due 12/25/35

    65      65

Series 2006-3 Class A1

        

2.945% due 04/25/36

    6      6

Morgan Stanley IXIS Real Estate Capital Trust (Ê)

        

Series 2006-2 Class A1

        

2.945% due 11/25/36

    423      415

Morgan Stanley Mortgage Loan Trust (Ê)

        

Series 2006-12X Class A1

        

3.015% due 10/25/36

    463      459

Series 2006-17X Class A1

        

3.015% due 10/25/46

    433      391

Nationstar Home Equity Loan Trust (Ê)

        

Series 2006-B Class AV1

        

2.965% due 09/25/36

    767      755

New Century Home Equity Loan Trust (Ê)

        

Series 2004-4 Class M2

        

3.425% due 02/25/35

    1,720      1,309

Series 2006-1 Class M2

        

3.255% due 05/25/36

    2,559      1,388

Newcastle Mortgage Securities Trust (Ê)

        

Series 2006-1 Class A1

        

2.965% due 03/25/36

    25      25

Nissan Auto Receivables Owner Trust

        

Series 2008-A Class A3

        

3.890% due 08/15/11

    540      535

Option One Mortgage Loan Trust (Ê)

        

Series 2003-2 Class M2

        

5.445% due 04/25/33

    343      160

Series 2003-3 Class M3

        

4.895% due 06/25/33

    194      42
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-4 Class M2

        

4.545% due 07/25/33

    197      114

Series 2005-2 Class A5

        

3.225% due 05/25/35

    2,283      2,206

Series 2005-3 Class A4

        

3.145% due 08/25/35

    3,142      3,125

Series 2005-4 Class A3

        

3.155% due 11/25/35

    1,344      1,291

Series 2007-1 Class 2A1

        

2.945% due 01/25/37

    1,344      1,301

Park Place Securities, Inc. (Ê)

        

Series 2004-MCW Class A1

        

3.207% due 10/25/34

    789      669

Series 2004-WWF Class A1D

        

3.355% due 02/25/35

    107      101

Series 2005-WCW Class M1

        

3.345% due 09/25/35

    1,705      1,247

Popular ABS Mortgage Pass-Through Trust

        

Series 2005-6 Class A3

        

5.680% due 01/25/36

    1,855      1,842

RAAC Series (Ê)

        

Series 2006-SP1 Class A1

        

2.995% due 09/25/45

    26      26

Renaissance Home Equity Loan Trust

        

Series 2005-1 Class M1

        

5.357% due 05/25/35

    880      626

Series 2005-2 Class AF4

        

4.934% due 08/25/35

    610      560

Series 2005-4 Class A3

        

5.565% due 02/25/36

    353      349

Series 2006-1 Class AF6

        

5.746% due 05/25/36

    1,445      1,122

Series 2006-1 Class AV1 (Ê)

        

2.975% due 05/25/36

    95      94

Series 2006-2 Class AV1 (Ê)

        

2.945% due 08/25/36

    149      149

Series 2006-3 Class AF1

        

5.917% due 11/25/36

    741      738

Series 2007-1 Class AF2

        

5.512% due 04/25/37

    5,245      4,895

Series 2007-2 Class AF2

        

5.675% due 06/25/37

    1,425      1,333

Residential Asset Mortgage Products, Inc.

        

Series 2003-RS1 Class AI6A

        

5.980% due 12/25/33

    1,454      1,258

Series 2006-RZ3 Class A1 (Ê)

        

2.965% due 08/25/36

    1,034      1,011

 

80   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Residential Asset Securities Corp.

        

Series 2001-KS3 Class AII (Ê)

        

3.355% due 09/25/31

    159      141

Series 2003-KS2 Class MI1

        

4.800% due 04/25/33

    3,242      1,910

Series 2003-KS2 Class MI3

        

6.100% due 04/25/33

    619      114

Series 2003-KS4 Class AIIB (Ê)

        

3.475% due 06/25/33

    280      248

Series 2003-KS5 Class AI4

        

3.230% due 12/25/30

    35      34

Series 2005-AHL Class A2 (Ê)

        

3.165% due 07/25/35

    546      534

Series 2005-KS8 Class A3 (Ê)

        

3.155% due 08/25/35

    2,712      2,683

Series 2006-KS1 Class A2 (Ê)

        

3.035% due 02/25/36

    1,800      1,783

Series 2006-KS2 Class A2 (Ê)

        

3.025% due 03/25/36

    3,491      3,447

Series 2006-KS3 Class AI2 (Ê)

        

3.015% due 04/25/36

    2,167      2,129

Series 2006-KS3 Class AI3 (Ê)

        

3.065% due 04/25/36

    875      820

Series 2006-KS6 Class A1 (Ê)

        

2.935% due 08/25/36

    148      146

Series 2006-KS9 Class AI1 (Ê)

        

2.965% due 11/25/36

    540      517

Residential Funding Mortgage Securities II, Inc. (Ê)

        

Series 2006-HI1 Class A1

        

3.005% due 02/25/36

    154      153

Saxon Asset Securities Trust (Ê)

        

Series 2005-4 Class A2C

        

3.145% due 11/25/37

    3,898      3,814

Series 2006-3 Class A1

        

2.955% due 10/25/46

    1,193      1,158

SBI Heloc Trust (Ê)(Þ)

        

Series 2006-1A Class 1A2A

        

3.065% due 08/25/36

    337      323

Securitized Asset Backed Receivables LLC Trust (Ê)

        

Series 2005-HE1 Class A1A (Å)

        

3.195% due 10/25/35

    9,202      9,052

Series 2006-FR4 Class A2A

        

2.975% due 08/25/36

    5,298      4,799

Series 2006-HE1 Class M1

        

3.195% due 05/25/36

    1,980      604

Series 2006-OP1 Class A2B

        

3.095% due 10/25/35

    1,305      1,282
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-WM4 Class A2A

        

5.430% due 11/25/36

    2      2

Series 2007-HE1 Class A2A

        

2.955% due 12/25/36

    2,460      2,285

Series 2007-NC1 Class A2B

        

3.045% due 12/25/36

    1,700      1,057

SG Mortgage Securities Trust (Ê)

        

Series 2006-FRE Class A2B

        

3.075% due 02/25/36

    1,540      1,264

SLM Student Loan Trust (Ê)

        

Series 2005-10 Class A2

        

2.930% due 04/27/15

    306      306

Series 2006-3 Class A2

        

2.920% due 01/25/16

    61      61

Series 2006-8 Class A2

        

2.920% due 10/25/16

    2,053      2,033

Small Business Administration

        

Series 1999-P10 Class 1

        

7.540% due 08/10/09

    216      222

Series 2000-10B Class 1

        

7.452% due 09/10/10

    122      127

Small Business Administration
Participation Certificates

        

Series 2004-20F Class 1

        

5.520% due 06/01/24

    302      310

Series 2005-20G Class 1

        

4.750% due 07/01/25

    2,636      2,578

Soundview Home Equity Loan Trust

        

Series 2005-4 Class 2A3 (Ê)

        

3.125% due 03/25/36

    7,549      7,413

Series 2005-OPT Class 2A3 (Ê)

        

3.155% due 12/25/35

    4,128      3,762

Series 2006-EQ1 Class A1 (Ê)

        

2.945% due 10/25/36

    228      223

Series 2006-EQ2 Class A1 (Ê)

        

2.975% due 01/25/37

    2,666      2,587

Series 2006-OPT Class A2 (Ê)

        

3.015% due 05/25/36

    714      706

Series 2006-OPT Class M3 (Ê)

        

3.215% due 07/25/36

    1,320      441

Series 2006-WF1 Class A1F

        

5.998% due 10/25/36

    1,970      1,946

Series 2006-WF1 Class A2

        

5.645% due 10/25/36

    3,105      2,976

Series 2007-OPT Class 2A1 (Ê)

        

2.975% due 06/25/37

    2,603      2,499

Specialty Underwriting & Residential Finance (Ê)

        

Series 2005-BC4 Class A2B

        

3.125% due 09/25/36

    1,815      1,749

 

Multistrategy Bond Fund   81

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-AB1 Class A1

        

2.975% due 12/25/36

    130      130

Series 2006-AB2 Class A2A

        

2.935% due 06/25/37

    504      498

Series 2006-BC3 Class M2

        

3.185% due 06/25/37

    924      397

Series 2006-BC5 Class A2D

        

3.045% due 11/25/37

    8,205      6,415

Series 2006-BC5 Class M1

        

3.135% due 11/25/37

    3,900      1,046

Structured Asset Investment Loan Trust (Ê)

        

Series 2003-BC1 Class A2

        

3.575% due 01/25/33

    4,282      3,896

Series 2005-3 Class M2

        

3.335% due 04/25/35

    675      450

Series 2005-6 Class A8

        

3.135% due 07/25/35

    3,654      3,628

Series 2005-7 Class A4

        

3.085% due 08/25/35

    4,894      4,814

Series 2005-HE3 Class A2

        

3.145% due 09/25/35

    1,610      1,584

Series 2006-BNC Class A2

        

2.935% due 09/25/36

    1,487      1,456

Series 2006-BNC Class A3

        

3.045% due 09/25/36

    10,000      6,841

Structured Asset Securities Corp.

        

Series 2001-SB1 Class A2

        

3.375% due 08/25/31

    617      514

Series 2004-16X Class A2

        

4.910% due 08/25/34

    19      19

Series 2004-19X Class A2

        

4.370% due 10/25/34

    500      491

Series 2005-4XS Class 1A2B

        

4.670% due 03/25/35

    460      439

Series 2005-GEL Class A (Ê)

        

3.245% due 12/25/34

    293      279

Series 2006-BC3 Class A2 (Ê)

        

2.945% due 10/25/36

    1,727      1,674

Series 2006-BC6 Class A4 (Ê)

        

3.065% due 01/25/37

    1,725      1,246

Series 2006-OW1 Class A3 (Ê)(Þ)

        

3.055% due 12/25/35

    2,000      1,944

Triad Auto Receivables Owner Trust

        

Series 2006-A Class A3

        

4.770% due 01/12/11

    3,781      3,748

Series 2006-C Class A3

        

5.260% due 11/14/11

    4,670      4,597
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2007-A Class A2

        

5.350% due 03/14/11

    3,467      3,467

TXU Electric Delivery Transition Bond Co. LLC

        

Series 2004-1 Class A2

        

4.810% due 11/17/14

    300      301

USAA Auto Owner Trust

        

Series 2006-2 Class A4

        

5.370% due 02/15/12

    500      507

Wachovia Auto Loan Owner Trust 2006-1 (Ê)

        

Series 2008-1 Class A2B

        

3.650% due 03/21/11

    5,000      4,987

Washington Mutual Asset-Backed Certificates (Ê)

        

Series 2006-HE2 Class A1

        

2.935% due 05/25/36

    212      210

Wells Fargo Home Equity Trust (Ê)

        

Series 2006-3 Class A1

        

2.945% due 01/25/37

    310      301
         
        621,831
         

Certificates of Deposit - 0.1%

        

Bank of Ireland Governor & Co.

        

4.298% due 01/15/10

    9,000      8,845
         

Corporate Bonds and
Notes - 18.5%

        

Abbott Laboratories

        

5.875% due 05/15/16

    1,410      1,486

5.600% due 11/30/17

    1,039      1,074

AbitibiBowater, Inc.

        

9.000% due 08/01/09

    2,860      2,360

Ace Capital Trust II

        

9.700% due 04/01/30

    1,050      1,211

AES Corp. (The)

        

9.500% due 06/01/09

    500      518

Aetna, Inc.

        

6.750% due 12/15/37

    1,840      1,808

AIG SunAmerica Global Financing VI (Å)

        

Series 144a

        

6.300% due 05/10/11

    3,095      3,201

Alamosa Delaware, Inc.

        

8.500% due 01/31/12

    800      742

Allied Waste North America, Inc.

        

Series B

        

7.125% due 05/15/16

    500      504

 

82   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Allison Transmission (Ñ)(Å)

        

Series 144a

        

11.000% due 11/01/15

    2,375      2,333

Allstate Life Global Funding Trusts

        

Series MTN

        

5.375% due 04/30/13

    1,700      1,726

American Airlines, Inc.

        

Series 01-1

        

6.817% due 11/23/12

    5,820      5,383

6.977% due 05/23/21

    191      169

American Electric Power Co., Inc.

        

Series C

        

5.375% due 03/15/10

    100      102

American Express Bank FSB

        

Series BKNT

        

6.000% due 09/13/17

    500      503

American Express Centurion Bank

        

Series BKN1

        

6.000% due 09/13/17

    500      503

Series BKNT (Ê)

        

2.738% due 06/12/09

    5,700      5,648

American Express Credit Corp. (Ê)

        

Series MTN

        

2.784% due 11/09/09

    900      889

American General Finance Corp.

        

Series MTN

        

4.875% due 05/15/10

    1,300      1,291

American Honda Finance Corp. (Ê)(Þ)

        

Series MTN

        

3.146% due 02/09/10

    1,600      1,598

American International Group, Inc.

        

4.700% due 10/01/10

    405      405

5.375% due 10/18/11

    2,110      2,139

5.050% due 10/01/15

    1,775      1,710

6.250% due 03/15/87 (Ñ)

    4,050      3,571

Series 144a (Ê)(Þ)

        

2.763% due 06/16/09

    700      700

Series MTN

        

5.850% due 01/16/18

    8,800      8,793

Americo Life, Inc. (Å)

        

Series 144a

        

7.875% due 05/01/13

    250      257

Ameriprise Financial, Inc.

        

7.518% due 06/01/66

    7,965      7,357

AmerisourceBergen Corp.

        

Series WI

        

5.625% due 09/15/12

    3,540      3,531

Anadarko Petroleum Corp.

        

5.950% due 09/15/16

    470      483
     Principal
Amount ($)
or Shares		      Market
Value
$

ANZ Capital Trust (ƒ)(Þ)

        

Series 144a

        

4.484% due 12/31/49

    2,550      2,400

Apache Corp.

        

5.250% due 04/15/13

    1,540      1,580

Appalachian Power Co.

        

Series O

        

5.650% due 08/15/12

    795      804

ARAMARK Corp.

        

Series WI

        

6.739% due 02/01/15 (Ê)

    1,040      1,001

8.500% due 02/01/15 (Ñ)

    1,805      1,882

ArcelorMittal USA

        

6.500% due 04/15/14

    2,820      2,890

Arizona Public Service Co.

        

5.800% due 06/30/14

    1,525      1,463

6.250% due 08/01/16

    850      812

AT&T Corp.

        

7.300% due 11/15/11

    4,730      5,087

8.000% due 11/15/31

    2,375      2,857

AT&T, Inc.

        

6.300% due 01/15/38

    3,235      3,230

Atmos Energy Corp.

        

6.350% due 06/15/17

    800      799

Avista Capital Trust III

        

6.500% due 04/01/34

    1,426      1,439

BAE Systems Holdings, Inc. (Þ)

        

Series 144a

        

6.400% due 12/15/11

    5,800      6,034

Bank of America Corp.

        

5.625% due 10/14/16

    465      472

5.420% due 03/15/17

    480      470

6.000% due 09/01/17

    4,190      4,363

5.750% due 12/01/17 (Ñ)

    6,245      6,363

5.650% due 05/01/18

    3,455      3,450

8.000% due 12/29/49 (ƒ)

    15,380      15,647

8.125% due 12/29/49 (ƒ)

    29,700      30,353

Bank of America NA

        

Series BKNT

        

2.901% due 06/12/09 (Ê)

    6,200      6,170

3.080% due 06/15/16 (Ê)

    3,100      2,640

6.000% due 10/15/36 (Ñ)

    500      494

Bank of New York Mellon Corp. (The)

        

Series MTN

        

5.125% due 11/01/11

    2,400      2,445

Bear Stearns Cos., Inc. (The)

        

5.550% due 01/22/17 (Ñ)

    1,440      1,393

6.400% due 10/02/17

    2,850      2,940

7.250% due 02/01/18

    5,900      6,451

 

Multistrategy Bond Fund   83

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series MTN (Ê)

        

2.979% due 07/16/09

    1,500      1,446

3.160% due 08/21/09 (Ñ)

    4,100      4,030

3.190% due 05/18/10

    8,400      8,131

BellSouth Corp.

        

6.550% due 06/15/34

    260      261

Bellsouth Telecommunications, Inc.

        

7.000% due 12/01/95

    2,185      2,175

BNP Paribas Capital Trust (ƒ)(Å)

        

Series 144a

        

9.003% due 12/29/49

    2,600      2,662

Boardwalk Pipelines, LP

        

5.875% due 11/15/16

    2,825      2,750

Boeing Capital Corp.

        

6.100% due 03/01/11

    500      526

Boston Scientific Corp.

        

6.400% due 06/15/16

    4,940      4,767

BP AMI Leasing, Inc. (Ê)(Þ)

        

Series 144a

        

2.616% due 06/26/09

    4,700      4,701

Bristol-Myers Squibb Co.

        

5.450% due 05/01/18

    280      283

Burlington Northern and Santa Fe Corp. 2005-4 Pass Through Trust

        

4.967% due 04/01/23

    209      191

Burlington Northern Santa Fe Corp.

        

6.750% due 07/15/11

    110      115

5.650% due 05/01/17

    1,425      1,434

6.875% due 12/01/27

    100      104

6.750% due 03/15/29

    110      112

Caesars Entertainment, Inc. (Ñ)

        

8.125% due 05/15/11

    3,000      2,539

Capmark Financial Group, Inc. (Å)

        

5.875% due 05/10/12

    3,605      2,995

6.300% due 05/10/17

    5,950      4,329

Cargill, Inc. (Þ)

        

Series 144a

        

5.200% due 01/22/13

    3,225      3,219

Carolina Power & Light Co.

        

6.500% due 07/15/12

    60      64

Caterpillar Financial Services Corp. (Ê)

        

Series MTN

        

3.130% due 05/18/09

    1,600      1,598

Catlin Insurance Co., Ltd. (ƒ)(Å)

        

Series 144a

        

7.249% due 12/31/49

    575      480
     Principal
Amount ($)
or Shares		      Market
Value
$

CCH I Holdings LLC/CCH I Holdings Capital Corp. (Ñ)

        

13.500% due 01/15/14

    3,855      2,679

CenterPoint Energy Houston Electric LLC

        

Series J2

        

5.700% due 03/15/13

    470      483

CenterPoint Energy Resources Corp.

        

6.125% due 11/01/17

    605      609

6.250% due 02/01/37

    170      157

Series B

        

7.875% due 04/01/13

    3,295      3,599

Charter Communications, Inc. (Ñ)(Þ)

        

Series 144a

        

10.875% due 09/15/14

    2,755      2,913

Chubb Corp.

        

6.000% due 05/11/37

    1,130      1,058

6.375% due 03/29/67 (Ñ)

    2,000      1,866

CIT Group, Inc. (Ê)

        

Series MTN

        

3.190% due 08/17/09

    6,300      5,465

Citigroup Capital XXI

        

8.300% due 12/21/57

    3,165      3,231

Citigroup Funding, Inc. (Ê)

        

Series MTN

        

2.606% due 06/26/09

    1,800      1,769

Citigroup, Inc.

        

2.701% due 12/28/09 (Ê)

    1,600      1,567

4.125% due 02/22/10

    720      707

6.500% due 01/18/11

    2,160      2,235

5.500% due 08/27/12

    1,900      1,903

5.300% due 10/17/12

    800      795

5.500% due 04/11/13

    8,730      8,783

5.850% due 07/02/13

    5,150      5,211

4.700% due 05/29/15

    180      167

6.000% due 08/15/17

    4,000      4,020

6.125% due 11/21/17

    5,060      5,136

6.125% due 08/25/36

    700      643

6.875% due 03/05/38

    3,275      3,387

8.400% due 04/29/49 (ƒ)

    21,670      21,932

Citizens Communications Co.

        

9.250% due 05/15/11 (Ñ)

    1,250      1,319

9.000% due 08/15/31

    3,275      3,021

Clorox Co.

        

4.200% due 01/15/10

    725      723

CNA Financial Corp.

        

6.500% due 08/15/16

    850      836

 

84   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Columbus Southern Power Co.

        

Series C

        

5.500% due 03/01/13

    360      364

Comcast Cable Communications Holdings, Inc.

        

9.455% due 11/15/22

    1,575      1,916

Comcast Cable Communications LLC

        

6.875% due 06/15/09

    525      539

6.750% due 01/30/11

    425      441

Comcast Cable Holdings LLC

        

9.800% due 02/01/12

    1,310      1,477

7.875% due 08/01/13

    2,245      2,441

Comcast Corp.

        

3.010% due 07/14/09 (Ê)

    1,000      982

5.500% due 03/15/11

    1,300      1,309

6.500% due 01/15/15

    280      292

5.900% due 03/15/16

    1,860      1,882

6.500% due 01/15/17

    855      892

6.300% due 11/15/17

    8,595      8,931

5.875% due 02/15/18

    200      199

6.500% due 11/15/35

    880      879

6.450% due 03/15/37

    1,240      1,233

6.950% due 08/15/37

    1,230      1,300

Comcast Holdings Corp.

        

10.625% due 07/15/12

    2,025      2,385

Commonwealth Edison Co.

        

6.150% due 09/15/17

    1,030      1,055

6.950% due 07/15/18

    300      304

5.900% due 03/15/36

    1,100      1,007

6.450% due 01/15/38

    530      522

Series 100

        

5.875% due 02/01/33

    975      894

Series 105

        

5.400% due 12/15/11

    625      632

Series 98

        

6.150% due 03/15/12

    1,000      1,037

Community Health Systems, Inc. (Ñ)

        

Series WI

        

8.875% due 07/15/15

    5,500      5,720

Computer Sciences Corp. (Þ)

        

Series 144a

        

6.500% due 03/15/18

    2,575      2,658

ConAgra Foods, Inc.

        

7.000% due 10/01/28

    855      851

Consolidated Natural Gas Co.

        

Series C

        

6.250% due 11/01/11

    155      162
     Principal
Amount ($)
or Shares		      Market
Value
$

Constellation Brands, Inc. (Ñ)

        

Series B

        

8.125% due 01/15/12

    1,975      2,012

Continental Airlines, Inc.

        

Series 01-1

        

6.503% due 06/15/11

    3,310      3,244

Cooper Industries, Inc.

        

Series WI

        

5.250% due 11/15/12

    500      509

Costco Wholesale Corp.

        

5.500% due 03/15/17

    550      561

Countrywide Home Loans, Inc.

        

Series MTN

        

4.125% due 09/15/09

    1,925      1,798

Series MTNK

        

5.625% due 07/15/09

    1,175      1,115

COX Communications, Inc.

        

4.625% due 01/15/10

    3,785      3,768

Series 144a (Þ)

        

5.875% due 12/01/16

    525      531

Credit Suisse USA, Inc.

        

4.875% due 08/15/10

    335      341

5.500% due 08/15/13

    325      331

4.875% due 01/15/15

    1,025      998

CSC Holdings, Inc.

        

Series B

        

8.125% due 07/15/09

    2,600      2,652

8.125% due 08/15/09

    2,180      2,224

Series WI (Ñ)

        

6.750% due 04/15/12

    500      490

CVS Caremark Corp. (Å)

        

5.750% due 06/01/17

    880      892

Daimler Finance North America LLC

        

8.500% due 01/18/31

    620      716

Series MTN (Ê)

        

3.562% due 08/03/09

    800      788

Darden Restaurants, Inc.

        

6.200% due 10/15/17

    880      855

6.800% due 10/15/37

    1,005      929

Dayton Power & Light Co. (The)

        

5.125% due 10/01/13

    1,560      1,592

DCP Midstream LLC

        

6.875% due 02/01/11

    90      93

Delhaize America, Inc.

        

9.000% due 04/15/31

    1,515      1,875

Delta Air Lines, Inc.

        

6.821% due 08/10/22

    2,442      2,344

 

Multistrategy Bond Fund   85

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 00-1

        

7.379% due 05/18/10

    1,393      1,386

7.570% due 11/18/10

    4,225      4,098

Series 01-1

        

7.111% due 09/18/11

    500      489

Detroit Edison Co. (The)

        

5.400% due 08/01/14

    240      242

6.350% due 10/15/32

    350      353

Developers Diversified Realty Corp.

        

5.000% due 05/03/10

    420      408

4.625% due 08/01/10

    876      852

5.250% due 04/15/11

    50      48

5.375% due 10/15/12

    2,630      2,455

Devon Financing Corp. ULC

        

7.875% due 09/30/31

    1,209      1,471

Dex Media West LLC/Dex Media Finance Co.

        

Series B

        

9.875% due 08/15/13

    1,500      1,414

DirecTV Holdings LLC/DirecTV Financing Co.

        

8.375% due 03/15/13

    1,000      1,028

Discover Financial Services (Ê)

        

Series WI

        

3.431% due 06/11/10

    4,750      4,738

Dominion Resources, Inc.

        

Series 06-B

        

6.300% due 09/30/66

    2,660      2,432

Series A

        

5.200% due 01/15/16

    2,275      2,217

Series B

        

6.250% due 06/30/12

    1,131      1,188

DPL, Inc.

        

6.875% due 09/01/11

    1,555      1,617

Dr Pepper Snapple Group, Inc.

        

Series 144a (Å)

        

6.820% due 05/01/18

    3,900      4,046

7.450% due 05/01/38

    875      937

Drummond Co., Inc. (Þ)

        

Series 144a

        

7.375% due 02/15/16

    2,055      1,852

E*Trade Financial Corp. (Þ)

        

Series 144a

        

12.500% due 11/30/17

    4,775      4,942

Echostar DBS Corp.

        

7.125% due 02/01/16

    1,500      1,474

El Paso Natural Gas Co.

        

7.500% due 11/15/26

    1,175      1,225
     Principal
Amount ($)
or Shares		      Market
Value
$

Elwood Energy LLC

        

8.159% due 07/05/26

    222      213

Energy Future Holdings Corp. (Þ)

        

Series 144a

        

10.875% due 11/01/17

    1,745      1,858

Energy Partners, Ltd.

        

Series WI

        

9.750% due 04/15/14

    900      833

Energy Transfer Partners, LP

        

5.950% due 02/01/15

    4,500      4,471

6.700% due 07/01/18

    2,100      2,182

7.500% due 07/01/38

    2,935      3,142

Enterprise Products Operating LLC (Ñ)

        

6.500% due 01/31/19

    2,905      2,996

Enterprise Products Operating, LP

        

4.950% due 06/01/10

    825      829

8.375% due 08/01/66

    2,670      2,658

7.034% due 01/15/68

    475      415

Series B (Ñ)

        

5.750% due 03/01/35

    675      590

Exelon Generation Co. LLC

        

6.200% due 10/01/17

    520      518

Farmers Exchange Capital (Å)

        

Series 144a

        

7.050% due 07/15/28

    2,510      2,303

Farmers Insurance Exchange (Þ)

        

Series 144a

        

6.000% due 08/01/14

    570      581

8.625% due 05/01/24

    1,830      1,935

FedEx Corp.

        

5.500% due 08/15/09

    620      628

7.600% due 07/01/97

    585      679

First Data Corp. (Ñ)(Þ)

        

Series 144a

        

9.875% due 09/24/15

    2,310      2,102

First Union Institutional Capital II

        

7.850% due 01/01/27

    1,680      1,643

FirstEnergy Corp.

        

Series B

        

6.450% due 11/15/11

    3,450      3,583

Series C

        

7.375% due 11/15/31

    1,630      1,800

Fiserv, Inc.

        

6.125% due 11/20/12

    2,550      2,591

Florida Power & Light Co.

        

5.950% due 02/01/38

    700      711

Ford Motor Co.

        

7.450% due 07/16/31

    5,485      4,100

 

86   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Ford Motor Credit Co. LLC

        

7.375% due 10/28/09

    1,800      1,733

9.875% due 08/10/11

    11,555      11,181

7.250% due 10/25/11

    600      540

5.460% due 01/13/12 (Ê)

    3,235      2,720

7.800% due 06/01/12

    1,515      1,355

7.000% due 10/01/13 (Ñ)

    675      582

8.000% due 12/15/16

    1,625      1,422

Series WI

        

9.750% due 09/15/10

    2,710      2,633

Freeport-McMoRan Copper & Gold, Inc.

        

8.375% due 04/01/17

    5,770      6,376

Freescale Semiconductor, Inc.

        

Series WI (Ñ)

        

8.875% due 12/15/14

    1,625      1,430

10.125% due 12/15/16

    2,155      1,697

General Electric Capital Corp.

        

5.625% due 05/01/18

    2,500      2,526

5.875% due 01/14/38

    7,015      6,688

6.375% due 11/15/67

    22,300      22,321

Series GMTN (Ê)(Ñ)

        

2.931% due 03/12/10

    1,900      1,878

Series MTN

        

3.250% due 06/15/09

    600      600

2.937% due 10/26/09 (Ê)

    2,400      2,369

2.888% due 01/20/10 (Ê)

    5,200      5,171

2.928% due 01/08/16 (Ê)

    1,100      1,016

Series MTNA

        

4.250% due 12/01/10 (Ñ)

    180      182

5.875% due 02/15/12

    320      335

5.450% due 01/15/13

    5,900      6,096

4.750% due 09/15/14

    80      80

General Electric Co.

        

5.250% due 12/06/17

    2,025      2,015

General Mills, Inc.

        

3.038% due 01/22/10 (Ê)

    1,100      1,081

5.650% due 09/10/12

    880      906

General Motors Corp.(Ñ)

        

8.375% due 07/15/33

    5,490      4,179

Genworth Life Institutional Funding Trust (Å)

        

Series MTN

        

5.875% due 05/03/13

    1,930      1,929

Georgia-Pacific LLC

        

8.125% due 05/15/11

    1,000      1,036

9.500% due 12/01/11

    1,210      1,277

Glencore Nickel, Ltd.

        

9.000% due 12/01/14

    305      —
     Principal
Amount ($)
or Shares		      Market
Value
$

GMAC LLC

        

6.875% due 09/15/11

    12,056      10,047

8.000% due 11/01/31 (Ñ)

    5,360      4,055

Goldman Sachs Group, Inc. (The)

        

2.689% due 06/23/09 (Ê)

    4,000      3,951

6.250% due 09/01/17

    6,300      6,437

6.750% due 10/01/37

    13,290      13,023

Series MTN (Ê)(Ñ)

        

3.150% due 11/16/09

    600      591

Series MTNB (Ê)

        

3.250% due 07/23/09

    3,500      3,459

Goodyear Tire & Rubber Co. (The) (Ñ)

        

8.663% due 12/01/09 (Ê)

    1,000      1,001

9.000% due 07/01/15

    625      680

GrafTech Finance, Inc.

        

10.250% due 02/15/12

    562      584

Harrah’s Operating Co., Inc. (Ñ)

        

5.500% due 07/01/10

    525      466

6.500% due 06/01/16

    3,355      1,946

Hawaiian Telcom Communications, Inc. (Ê)(Ñ)

        

Series B

        

8.580% due 05/01/13

    2,945      1,178

HCA, Inc.

        

6.375% due 01/15/15 (Ñ)

    1,575      1,402

Series WI

        

9.125% due 11/15/14

    2,000      2,120

9.250% due 11/15/16

    2,730      2,935

9.625% due 11/15/16

    1,000      1,074

HCP, Inc.

        

Series MTN

        

5.950% due 09/15/11

    1,750      1,700

Health Net, Inc.

        

6.375% due 06/01/17

    2,095      1,896

Healthsouth Corp. (Ñ)

        

10.829% due 06/15/14 (Ê)

    1,190      1,208

10.750% due 06/15/16

    3,035      3,263

Helix Energy Solutions Group, Inc. (Å)

        

Series 144a

        

9.500% due 01/15/16

    500      521

Hertz Corp. (The)

        

8.875% due 01/01/14

    750      756

Historic TW, Inc.

        

8.050% due 01/15/16

    2,360      2,525

6.625% due 05/15/29

    115      111

HJ Heinz Co. (Þ)

        

Series 144a

        

6.428% due 12/01/20

    200      202

 

Multistrategy Bond Fund   87

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Hospira, Inc.(Ê)

        

3.176% due 03/30/10

    1,580      1,527

Hospitality Properties Trust

        

Series WI

        

5.625% due 03/15/17

    5,775      4,866

HRPT Properties Trust

        

5.750% due 02/15/14

    2,140      1,958

HSBC Bank USA NA (Ê)

        

Series BKNT

        

3.130% due 06/10/09

    500      495

HSBC Finance Corp.

        

2.878% due 10/21/09 (Ê)

    1,500      1,470

4.125% due 11/16/09

    1,270      1,267

8.000% due 07/15/10

    165      174

6.750% due 05/15/11

    900      938

6.375% due 10/15/11

    465      482

6.375% due 11/27/12

    1,770      1,822

5.000% due 06/30/15

    1,330      1,294

Series MTN1 (Ê)

        

3.346% due 05/10/10

    1,300      1,244

HUB International Holdings, Inc. (Þ)

        

Series 144a

        

10.250% due 06/15/15

    4,665      3,405

Huntsman LLC

        

11.500% due 07/15/12

    2,500      2,674

Idearc, Inc. (Ñ)

        

8.000% due 11/15/16

    500      325

ING Capital Funding Trust III (ƒ)

        

8.439% due 12/29/49

    3,550      3,566

Inmarsat Finance PLC

        

(Step Up, 10.375%, 11/15/08)

        

Zero coupon due 11/15/12

    1,625      1,603

Intelsat Corp.

        

9.000% due 06/15/16

    2,250      2,270

International Business Machines Corp.

        

5.700% due 09/14/17

    1,100      1,146

International Lease Finance Corp.

        

Series MTN

        

4.950% due 02/01/11

    1,425      1,383

5.625% due 09/20/13

    2,710      2,670

International Paper Co.

        

5.850% due 10/30/12

    6,530      6,419

iStar Financial, Inc.

        

Series B

        

5.125% due 04/01/11

    1,100      963

JC Penney Corp., Inc.

        

6.375% due 10/15/36

    1,645      1,405

Jersey Central Power & Light Co.

        

5.625% due 05/01/16

    1,240      1,199
     Principal
Amount ($)
or Shares		      Market
Value
$

John Hancock Global Funding II (Å)

        

Series 144a

        

7.900% due 07/02/10

    440      482

Johnson & Johnson

        

5.550% due 08/15/17

    410      437

5.950% due 08/15/37

    525      566

JP Morgan Chase Capital XX

        

Series T

        

6.550% due 09/29/36

    200      181

JP Morgan Chase Capital XXII

        

Series V

        

6.450% due 01/15/87

    6,500      5,824

JPMorgan Chase & Co.

        

7.000% due 11/15/09

    415      429

6.750% due 02/01/11 (Ñ)

    175      183

6.000% due 01/15/18

    19,805      20,528

Series 1

        

2.936% due 06/26/09 (Ê)

    700      698

7.900% due 12/31/49 (ƒ)

    11,065      11,272

Series MTN

        

3.202% due 05/07/10 (Ê)

    3,200      3,171

5.375% due 01/15/14

    2,070      2,122

JPMorgan Chase Bank

        

Series EMTN

        

6.000% due 05/22/45

    4,511      4,259

JPMorgan Chase Bank NA

        

Series BKNT

        

6.000% due 10/01/17

    3,300      3,426

K Hovnanian Enterprises, Inc. (Ñ)

        

6.000% due 01/15/10

    1,050      819

KAR Holdings, Inc. (Ñ)

        

Series WI

        

10.000% due 05/01/15

    3,875      3,681

KBC Bank Funding Trust III (ƒ)(Þ)

        

Series 144a

        

9.860% due 11/29/49

    1,960      2,092

Kerr-McGee Corp.

        

6.950% due 07/01/24

    2,455      2,592

Kraft Foods, Inc.

        

3.596% due 08/11/10 (Ê)

    8,200      7,972

5.625% due 11/01/11

    6,260      6,403

6.500% due 08/11/17

    1,475      1,544

6.125% due 02/01/18

    800      817

6.875% due 02/01/38

    350      363

Kroger Co. (The)

        

7.250% due 06/01/09

    270      276

L-3 Communications Corp.

        

Series B

        

6.375% due 10/15/15

    1,500      1,483

 

88   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

LaBranche & Co., Inc.

        

9.500% due 05/15/09

    245      251

11.000% due 05/15/12

    1,390      1,418

Land O’ Lakes, Inc.

        

8.750% due 11/15/11

    625      638

Lear Corp.

        

Series B

        

8.750% due 12/01/16

    805      757

Lehman Brothers Holdings, Inc.

        

3.170% due 08/21/09 (Ê)

    800      770

6.875% due 07/17/37

    2,240      2,077

Series MTN

        

3.170% due 11/16/09 (Ê)

    5,600      5,363

3.233% due 05/25/10 (Ê)

    900      845

2.954% due 07/18/11 (Ê)

    600      543

6.200% due 09/26/14

    2,825      2,843

6.750% due 12/28/17

    175      175

6.875% due 05/02/18

    895      915

7.000% due 09/27/27

    990      970

Liberty Mutual Group, Inc.

        

Series 144a (Þ)

        

7.000% due 03/15/37

    5,065      4,669

7.800% due 03/15/37

    9,220      8,319

Limited Brands, Inc.

        

6.900% due 07/15/17

    945      844

7.600% due 07/15/37

    1,345      1,106

Lowe’s Cos., Inc. (Ñ)

        

6.100% due 09/15/17

    400      415

Lubrizol Corp.

        

4.625% due 10/01/09

    1,961      1,956

MacDermid, Inc. (Þ)

        

Series 144a

        

9.500% due 04/15/17

    3,690      3,524

Macys Retail Holdings, Inc.

        

5.350% due 03/15/12

    1,675      1,561

6.375% due 03/15/37 (Ñ)

    2,500      1,944

Mandalay Resort Group

        

6.500% due 07/31/09

    500      500

Manufacturers & Traders Trust Co.

        

5.585% due 12/28/20

    411      376

Max USA Holdings, Ltd. (Þ)

        

Series 144a

        

7.200% due 04/14/17

    1,915      1,967

McDonald’s Corp.

        

5.800% due 10/15/17

    5,650      5,913

Medco Health Solutions, Inc.

        

6.125% due 03/15/13

    1,350      1,381

7.250% due 08/15/13

    3,697      3,916
     Principal
Amount ($)
or Shares		      Market
Value
$

Merrill Lynch & Co., Inc.

        

5.450% due 02/05/13 (Ñ)

    2,350      2,286

6.400% due 08/28/17

    1,650      1,648

6.110% due 01/29/37

    2,175      1,835

Series MTN

        

3.178% due 05/08/09 (Ê)

    2,300      2,256

3.158% due 08/14/09 (Ê)

    700      683

3.120% due 07/25/11 (Ê)

    1,100      1,010

6.050% due 08/15/12

    1,300      1,296

6.150% due 04/25/13

    2,680      2,674

6.875% due 04/25/18

    3,950      3,982

Series MTN1 (Ê)

        

3.138% due 12/04/09

    1,000      954

MetLife Capital Trust X (Å)

        

Series 144a

        

9.250% due 04/08/68

    1,100      1,240

MetLife, Inc.

        

6.125% due 12/01/11

    2,120      2,239

5.000% due 06/15/15

    770      764

6.400% due 12/15/36

    400      360

MetroPCS Wireless, Inc.

        

9.250% due 11/01/14

    1,000      983

Metropolitan Life Global
Funding I (Ê)(Þ)

        

Series MTN

        

3.110% due 05/17/10

    4,300      4,213

Midamerican Energy Holdings Co.

        

Series 144a (Å)

        

5.750% due 04/01/18

    1,200      1,219

Series WI

        

6.125% due 04/01/36

    2,775      2,773

Midamerican Funding LLC

        

6.750% due 03/01/11

    1,370      1,453

Miller Brewing Co. (Þ)

        

Series 144a

        

5.500% due 08/15/13

    2,300      2,381

Mohegan Tribal Gaming Authority (Ñ)

        

8.000% due 04/01/12

    1,000      935

Monsanto Co.

        

5.125% due 04/15/18

    5,000      4,979

Morgan Stanley

        

3.212% due 05/07/09 (Ê)

    5,100      5,038

Series GMTN (Ñ)

        

5.750% due 08/31/12

    1,600      1,604

Series MTN

        

2.803% due 01/15/10 (Ê)

    2,300      2,214

6.250% due 08/28/17

    900      902

5.950% due 12/28/17 (Ñ)

    1,850      1,833

6.625% due 04/01/18

    8,220      8,523

 

Multistrategy Bond Fund   89

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Natexis Ambs Co. LLC (ƒ)(Þ)

        

Series 144a

        

8.440% due 12/29/49

    650      655

National Rural Utilities Cooperative Finance Corp.

        

5.450% due 04/10/17

    2,360      2,350

5.450% due 02/01/18

    825      821

Nationwide Financial Services

        

6.250% due 11/15/11

    395      407

Nationwide Mutual Insurance Co. (Þ)

        

Series 144a

        

7.875% due 04/01/33

    1,317      1,301

Neiman-Marcus Group, Inc.

        

7.125% due 06/01/28

    2,500      2,238

Nelnet, Inc.

        

7.400% due 09/29/36

    600      388

Nevada Power Co.

        

Series L

        

5.875% due 01/15/15

    550      546

New Cingular Wireless Services, Inc.

        

8.750% due 03/01/31

    2,850      3,508

News America Holdings, Inc.

        

7.750% due 12/01/45

    1,275      1,425

7.900% due 12/01/95

    595      644

8.250% due 10/17/96

    195      220

News America, Inc.

        

6.650% due 11/15/37

    3,525      3,644

Nextel Communications, Inc.

        

Series E

        

6.875% due 10/31/13

    1,795      1,481

Nisource Finance Corp.

        

7.875% due 11/15/10

    1,510      1,587

6.400% due 03/15/18

    1,785      1,759

Nordstrom, Inc. (Ñ)

        

6.250% due 01/15/18

    2,750      2,738

Norfolk Southern Corp.

        

7.900% due 05/15/97

    6,280      6,996

North Front Pass-Through Trust (Þ)

        

Series 144a

        

5.810% due 12/15/24

    6,115      5,840

Nuveen Investments, Inc. (Å)

        

Series 144a

        

10.500% due 11/15/15

    898      864

Ohio Power Co.

        

Series F

        

5.500% due 02/15/13

    55      56

ONEOK Partners, LP

        

6.650% due 10/01/36

    2,175      2,086

6.850% due 10/15/37

    1,150      1,131
     Principal
Amount ($)
or Shares		      Market
Value
$

Oracle Corp.

        

5.750% due 04/15/18

    5,130      5,223

Pacific Gas & Electric Co.

        

4.200% due 03/01/11

    1,815      1,803

6.050% due 03/01/34

    955      950

5.800% due 03/01/37 (Ñ)

    5,425      5,211

Panama Canal Railway Co. (Å)

        

Series 144a

        

7.000% due 11/01/26

    1,000      915

PartnerRe Finance II

        

6.440% due 12/01/66

    150      120

Peabody Energy Corp.

        

7.875% due 11/01/26

    400      415

Pepco Holdings, Inc. (Ê)

        

3.701% due 06/01/10

    3,725      3,713

Phoenix Life Insurance Co. (Þ)

        

Series 144a

        

7.150% due 12/15/34

    1,450      1,443

Pilgrim’s Pride Corp.

        

7.625% due 05/01/15

    616      586

PNC Bank NA

        

Series BKNT

        

6.875% due 04/01/18

    1,950      2,016

Popular North America Capital
Trust I (Ñ)

        

6.564% due 09/15/34

    647      444

Power Contract Financing LLC (Þ)

        

Series 144a

        

6.256% due 02/01/10

    1,051      1,070

Pride International, Inc.

        

7.375% due 07/15/14

    3,115      3,251

Progress Energy, Inc.

        

7.100% due 03/01/11

    1,039      1,103

7.750% due 03/01/31

    135      160

Prudential Financial, Inc.

        

Series MTN

        

6.000% due 12/01/17

    1,385      1,396

Qwest Corp.

        

7.875% due 09/01/11

    3,785      3,880

7.625% due 06/15/15

    800      802

Rabobank Capital Funding II (ƒ)(Þ)

        

Series 144a

        

5.260% due 12/31/49

    865      772

RBS Capital Trust I (ƒ)

        

4.709% due 12/29/49

    660      556

RBS Capital Trust III (ƒ)

        

5.512% due 09/29/49

    3,750      3,162

 

90   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Realogy Corp. (Ñ)

        

Series WI

        

12.375% due 04/15/15

    2,560      1,395

Reckson Operating Partnership, LP

        

5.150% due 01/15/11

    457      435

Reinsurance Group of America, Inc.

        

6.750% due 12/15/65

    325      258

Residential Capital LLC

        

6.178% due 05/22/09 (Ê)

    2,600      1,710

8.375% due 06/30/10 (Ñ)

    1,300      705

8.000% due 02/22/11

    1,925      991

8.500% due 04/17/13

    3,220      1,626

Series WI

        

8.875% due 06/30/15

    2,086      1,043

Rohm & Haas Co.

        

6.000% due 09/15/17

    1,300      1,322

Rural Cellular Corp.

        

9.875% due 02/01/10 (Ñ)

    2,410      2,494

8.250% due 03/15/12

    820      853

8.989% due 11/01/12 (Ê)

    1,750      1,776

SB Treasury Co. LLC (ƒ)(Å)

        

Series 144a

        

9.400% due 12/29/49

    2,028      2,043

Schering-Plough Corp.

        

5.550% due 12/01/13

    2,390      2,448

Simon Property Group, LP

        

5.600% due 09/01/11 (Ñ)

    1,000      1,003

6.100% due 05/01/16

    1,540      1,544

SLM Corp.

        

Series MTN

        

5.400% due 10/25/11

    1,150      1,020

5.125% due 08/27/12

    925      797

Series MTNA

        

3.060% due 07/27/09 (Ê)(Ñ)

    600      555

4.500% due 07/26/10

    1,510      1,347

Smurfit-Stone Container Enterprises, Inc. (Ñ)

        

8.375% due 07/01/12

    2,160      1,976

Southern California Edison Co.

        

7.625% due 01/15/10

    600      627

Series 08-A

        

5.950% due 02/01/38

    1,250      1,262

Southern Copper Corp.

        

7.500% due 07/27/35

    2,310      2,437

Southern Natural Gas Co.

        

7.350% due 02/15/31

    1,050      1,106

Southwestern Energy Co. (Å)

        

Series 144a

        

7.500% due 02/01/18

    870      922
     Principal
Amount ($)
or Shares		      Market
Value
$

Sprint Capital Corp.

        

7.625% due 01/30/11

    4,675      4,430

6.875% due 11/15/28

    1,500      1,166

8.750% due 03/15/32

    2,915      2,572

Starbucks Corp.

        

6.250% due 08/15/17

    1,040      1,033

Stingray Pass-Through Trust (Þ)

        

Series 144a

        

5.902% due 01/12/15

    3,400      846

Suncom Wireless, Inc.

        

8.500% due 06/01/13

    5,520      5,748

Sungard Data Systems, Inc.

        

10.250% due 08/15/15

    2,020      2,146

Swiss Re Capital I, LP (ƒ)(Þ)

        

Series 144a

        

6.854% due 05/29/49

    2,250      2,042

Symetra Financial Corp. (Å)

        

Series 144a

        

6.125% due 04/01/16

    900      817

8.300% due 10/15/67

    2,490      2,199

Target Corp.

        

7.000% due 01/15/38

    1,115      1,197

Temple-Inland, Inc.

        

7.875% due 05/01/12

    2,555      2,614

Tennessee Gas Pipeline Co. (Ñ)

        

7.000% due 10/15/28

    700      698

TEPPCO Partners, LP

        

6.650% due 04/15/18

    2,875      2,893

Tesoro Corp.

        

Series WI

        

6.500% due 06/01/17

    1,200      1,101

Texas Competitive Electric Holdings Co. LLC

       

Series 144a

        

10.250% due 11/01/15

    3,390      3,534

10.500% due 11/01/16 (Å)

    3,900      3,993

Time Warner Cable, Inc.

        

Series WI

        

5.400% due 07/02/12

    6,710      6,749

5.850% due 05/01/17

    1,185      1,176

6.550% due 05/01/37

    1,400      1,391

Time Warner Entertainment Co., LP

        

Series*

        

8.375% due 03/15/23

    886      999

Time Warner, Inc.

        

3.300% due 11/13/09 (Ê)

    2,655      2,562

5.500% due 11/15/11

    1,960      1,942

 

Multistrategy Bond Fund   91

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Transcontinental Gas Pipe Line Corp. (Ñ)

        

7.250% due 12/01/26

    975      1,010

Travelers Cos., Inc. (The)

        

Series MTN

        

5.375% due 06/15/12

    885      901

6.250% due 06/15/37

    1,110      1,087

Twin Reefs Pass-Through Trust (Ê)(ƒ)(Þ)

        

Series 144a

        

3.722% due 12/10/49

    2,300      92

UBS Preferred Funding Trust V (ƒ)(Ñ)

        

Series 1

        

6.243% due 05/12/49

    3,600      3,151

Union Electric Co.

        

6.400% due 06/15/17

    3,635      3,720

Union Pacific Corp.

        

3.625% due 06/01/10

    590      583

6.125% due 01/15/12

    1,550      1,609

United Rentals North America, Inc.

        

6.500% due 02/15/12

    1,500      1,406

United States Steel Corp.

        

5.650% due 06/01/13

    1,320      1,289

6.050% due 06/01/17

    2,990      2,844

6.650% due 06/01/37

    520      455

United Technologies Corp.

        

5.375% due 12/15/17

    1,950      1,990

UnitedHealth Group, Inc.

        

6.000% due 06/15/17

    775      770

Series WI

        

6.500% due 06/15/37

    480      444

6.625% due 11/15/37

    1,325      1,249

Universal City Development Partners

        

11.750% due 04/01/10

    1,895      1,966

Unum Group

        

5.859% due 05/15/09

    740      752

US Oncology, Inc. (Ñ)

        

9.000% due 08/15/12

    1,185      1,203

USB Capital IX (ƒ)(Ñ)

        

6.189% due 04/15/49

    200      152

USB Realty Corp. (ƒ)(Þ)

        

Series 144a

        

6.091% due 12/22/49

    4,500      3,307

Valero Logistics Operations, LP

        

6.050% due 03/15/13

    2,757      2,786

Verizon Communications, Inc.

        

5.250% due 04/15/13

    300      306

6.100% due 04/15/18 (Ñ)

    3,420      3,586
     Principal
Amount ($)
or Shares		      Market
Value
$

6.400% due 02/15/38

    2,225      2,266

6.900% due 04/15/38

    3,590      3,888

Verizon New England, Inc.

        

6.500% due 09/15/11

    70      72

Viacom, Inc.

        

5.750% due 04/30/11

    1,805      1,825

Visteon Corp. (Ñ)

        

8.250% due 08/01/10

    1,010      889

Wachovia Bank NA

        

Series BKNT

        

3.153% due 05/25/10 (Ê)

    3,800      3,660

6.600% due 01/15/38

    3,870      3,742

Wachovia Capital Trust III (ƒ)

        

5.800% due 03/15/42

    11,295      8,980

Wachovia Corp.

        

2.843% due 10/15/11 (Ê)

    1,800      1,699

5.750% due 06/15/17 (Ñ)

    2,280      2,268

5.750% due 02/01/18 (Ñ)

    2,545      2,536

7.980% due 12/31/49 (ƒ)

    11,370      11,186

Series MTN

        

5.500% due 05/01/13

    875      877

Wal-Mart Stores, Inc.

        

4.250% due 04/15/13

    1,310      1,315

6.500% due 08/15/37

    1,330      1,411

6.200% due 04/15/38

    1,980      2,015

Walt Disney Co. (The) (Ê)

        

2.779% due 07/16/10

    6,500      6,433

Washington Mutual Preferred Funding LLC (Ñ)(ƒ)

        

6.665% due 12/31/49 (Å)

    5,000      3,200

Series 144a (Þ)

        

9.750% due 10/29/49

    9,300      8,091

WellPoint, Inc.

        

5.850% due 01/15/36

    865      730

6.375% due 06/15/37

    1,455      1,331

Wells Fargo & Co.

        

2.900% due 09/15/09 (Ê)

    1,000      992

5.250% due 10/23/12

    1,665      1,699

4.375% due 01/31/13 (Ñ)

    4,625      4,575

4.950% due 10/16/13 (Ñ)

    585      585

5.625% due 12/11/17

    10,440      10,761

Wells Fargo Bank NA

        

5.750% due 05/16/16

    1,520      1,573

Willis North America, Inc.

        

5.125% due 07/15/10

    1,540      1,533

Windstream Corp.

        

Series WI

        

8.625% due 08/01/16

    3,285      3,441

 

92   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

WMG Acquisition Corp.

        

7.375% due 04/15/14

    1,230      1,021

World Financial Properties (Å)

        

Series 144a

        

6.950% due 09/01/13

    148      151

Wyeth

        

5.950% due 04/01/37

    1,430      1,416

Xcel Energy, Inc.

        

6.500% due 07/01/36

    970      972

Xlliac Global Funding (Å)

        

Series 144a

        

4.800% due 08/10/10

    730      730

XTO Energy, Inc.

        

5.500% due 06/15/18

    1,750      1,737

Yum! Brands, Inc.

        

8.875% due 04/15/11

    350      385

ZFS Finance USA Trust I

       

Series 144a

        

5.875% due 05/09/32 (Ñ)

    2,100      1,925

6.150% due 12/15/35 (Å)

    4,450      3,966

6.500% due 05/09/37

    1,390      1,224

ZFS Finance USA Trust II (Þ)

        

Series 144a

        

6.450% due 12/15/65

    3,105      2,735
         
        1,192,900
         

International Debt - 6.1%

        

Abbey National PLC (ƒ)
(Step Up, 7.730%, 06/15/08)

        

6.700% due 06/29/49

    1,220      1,197

Abu Dhabi National Energy Co.

        

Series 144a (Þ)

        

5.620% due 10/25/12

    4,520      4,588

6.500% due 10/27/36

    2,110      2,010

America Movil SAB de CV

        

5.500% due 03/01/14

    500      500

ANZ National International, Ltd. (Ê)(Þ)

        

Series 144a

        

3.168% due 08/07/09

    2,800      2,794

Argentina Bonos

        

3.092% due 08/03/12 (Ê)

    5,210      2,816

Series VII

        

7.000% due 09/12/13

    8,250      6,497

Arlington Street CDO, Ltd. (Þ)

        

Series 2000-1A Class A2

        

7.660% due 06/10/12

    1,626      1,645
     Principal
Amount ($)
or Shares		      Market
Value
$

Aspen Insurance Holdings, Ltd.

        

6.000% due 08/15/14

    200      190

AstraZeneca PLC

        

5.900% due 09/15/17

    900      953

6.450% due 09/15/37

    800      864

AXA SA

        

8.600% due 12/15/30

    355      395

Series 144a (ƒ)(Þ)

        

6.463% due 12/31/49

    275      228

Banco Mercantil del Norte SA (Þ)

        

Series 144a

        

6.862% due 10/13/21

    2,950      2,659

Bank of Scotland PLC (Ê)(Þ)

        

Series MTN

        

2.756% due 07/17/09

    2,900      2,897

Barclays Bank PLC

        

5.450% due 09/12/12

    14,600      14,882

Series 144a (Þ)

        

6.050% due 12/04/17

    2,200      2,150

7.375% due 06/29/49 (ƒ)

    2,110      2,041

7.434% due 09/29/49 (ƒ)

    1,475      1,414

Blue City Investments 1, Ltd. for Blue City Co. 1 SAOC (Ê)

        

Series A3

        

6.945% due 11/07/16

    5,500      5,335

C10 Capital SPV, Ltd. (ƒ)(Ñ)(Þ)

        

Series 144a

        

6.722% due 12/31/49

    1,500      1,341

Canadian Natural Resources, Ltd.

        

5.150% due 02/01/13

    1,225      1,241

5.700% due 05/15/17 (Ñ)

    1,325      1,329

5.850% due 02/01/35

    75      69

6.500% due 02/15/37

    1,430      1,439

6.250% due 03/15/38

    1,850      1,806

Canadian Oil Sands, Ltd. (Þ)

        

Series 144a

        

4.800% due 08/10/09

    1,081      1,087

Catalyst Paper Corp. (Ñ)

        

Series D

        

8.625% due 06/15/11

    5,138      4,406

China Development Bank

        

5.000% due 10/15/15

    300      295

Citic Resources Finance, Ltd. (Ñ)(Å)

        

Series 144a

        

6.750% due 05/15/14

    500      475

Citigroup Global Markets Deutschland AG for OAO Gazprom

        

10.500% due 10/21/09

    1,300      1,417

 

Multistrategy Bond Fund   93

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

CODELCO Inc. (Þ)

        

Series 144a

        

6.150% due 10/24/36

    100      97

Commonwealth Bank of Australia (ƒ)(Þ)

        

Series 144a

        

6.024% due 03/29/49

    3,700      3,152

Covidien International Finance SA (Þ)

        

Series 144a

        

5.450% due 10/15/12

    900      907

6.000% due 10/15/17

    2,940      3,006

6.550% due 10/15/37

    1,800      1,840

Credit Agricole SA (Ê)(Þ)

        

Series 144a

        

3.090% due 05/28/09

    2,000      2,001

3.140% due 05/28/10

    2,300      2,300

Deutsche ALT-A Securities NIM Trust (Å)

        

Series 2007-AHM Class N1

        

6.750% due 02/25/47

    473      465

Deutsche Bank AG(Ñ)

        

6.000% due 09/01/17

    4,700      4,918

Deutsche Telekom International Finance BV

        

5.375% due 03/23/11 (Ñ)

    475      482

8.250% due 06/15/30

    500      620

Diageo Capital PLC

        

5.750% due 10/23/17

    910      928

Digicel Group, Ltd. (Å)

        

Series 144a

        

8.875% due 01/15/15

    2,755      2,362

DnB NOR Bank ASA (Ê)(Þ)

        

Series 144a

        

2.780% due 10/13/09

    7,100      7,101

DP World, Ltd. (Þ)

        

Series 144a

        

6.850% due 07/02/37

    2,355      2,029

Egypt Government AID Bonds

        

4.450% due 09/15/15

    2,950      2,987

EnCana Corp.

        

6.500% due 02/01/38

    3,275      3,357

Endurance Specialty Holdings, Ltd.

        

6.150% due 10/15/15

    500      472

7.000% due 07/15/34 (Ñ)

    1,500      1,287

Evraz Group SA (Å)

        

Series 144a

        

8.875% due 04/24/13

    800      810

9.500% due 04/24/18

    3,085      3,124
     Principal
Amount ($)
or Shares		      Market
Value
$

Export-Import Bank of China (Þ)

        

Series 144a

        

4.875% due 07/21/15

    200      195

Export-Import Bank of Korea (Ê)

        

3.166% due 06/01/09

    2,800      2,804

FBG Finance, Ltd. (Å)

        

Series 144a

        

5.125% due 06/15/15

    585      575

FBN Capital Finance Co.

        

9.750% due 03/30/17

    1,250      1,164

FMG Finance Pty, Ltd.

        

Series REGS

        

10.625% due 09/01/16

    740      842

France Telecom SA

        

8.500% due 03/01/31

    1,295      1,669

Galaxy Entertainment Finance Co., Ltd. (Þ)

        

Series 144a

        

9.875% due 12/15/12

    3,990      4,030

Gaz Capital SA

        

Series 144a (Å)

        

7.343% due 04/11/13

    500      523

8.146% due 04/11/18 (Ñ)

    6,715      7,126

Series REGS

        

8.625% due 04/28/34

    14,500      16,929

Grupo Senda Autotransporte SA de CV (Å)

        

Series 144a

        

10.500% due 10/03/15

    3,600      3,384

Harborview NIM Corp. (Å)

        

Series 2007-1A Class N1

        

6.409% due 03/19/37

    108      107

HBOS PLC (ƒ)(Þ)

        

Series 144a

        

5.920% due 09/29/49

    1,200      916

HSBC Holdings PLC

        

6.500% due 05/02/36

    1,580      1,554

6.500% due 09/15/37

    1,000      981

Inco, Ltd.

        

5.700% due 10/15/15

    1,050      1,004

Independencia International, Ltd.

        

Series REGS

        

9.875% due 01/31/17

    2,726      2,715

Intelsat Subsidiary Holding Co., Ltd.

        

8.625% due 01/15/15

    3,285      3,314

Invesco, Ltd.

        

4.500% due 12/15/09

    3,257      3,236

5.625% due 04/17/12

    3,995      3,905

5.375% due 02/27/13

    1,600      1,547

 

94   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Ispat Inland ULC

        

9.750% due 04/01/14

    7,976      8,507

Korea Development Bank (Ê)

        

2.824% due 04/03/10

    8,900      8,870

Korea Electric Power Corp. (Þ)

        

Series 144a

        

5.125% due 04/23/34

    400      392

Korea Southern Power Co., Ltd. (Þ)

        

Series 144a

        

5.375% due 04/18/13

    3,090      3,096

Landsbanki Islands HF (ƒ)(Þ)

        

Series 144a

        

7.431% due 12/31/49

    3,785      2,829

LG Electronics, Inc. (Å)

        

Series 144a

        

5.000% due 06/17/10

    390      386

Marathon Oil Canada Corp.

        

8.375% due 05/01/12

    3,240      3,577

Millicom International Cellular SA

        

10.000% due 12/01/13

    2,200      2,349

Montpelier Re Holdings, Ltd.

        

6.125% due 08/15/13

    3,760      3,707

MUFG Capital Finance 1, Ltd. (ƒ)

        

6.346% due 07/25/99

    3,625      3,276

Nine Dragons Paper Holdings, Ltd. (Å)

        

Series 144a

        

7.875% due 04/29/13

    2,430      2,410

Nippon Life Insurance (Þ)

        

Series 144a

        

4.875% due 08/09/10

    2,685      2,708

Norske Skogindustrier ASA (Þ)

        

Series 144a

        

6.125% due 10/15/15

    2,360      1,463

7.125% due 10/15/33

    3,940      2,854

Petrobras International Finance Co. (Ñ)

        

5.875% due 03/01/18

    1,650      1,643

Petroleum Export, Ltd. (Þ)

        

Series 144a

        

5.265% due 06/15/11

    144      145

Province of Quebec Canada (Ñ)

        

Series PJ

        

6.125% due 01/22/11

    1,880      2,009

PSB Finance SA for Promsvyazbank

        

9.625% due 05/23/12

    900      821

Quebecor World Capital Corp. (Ø)(Ñ)

        

6.125% due 11/15/13

    1,565      653
     Principal
Amount ($)
or Shares		      Market
Value
$

Ras Laffan Liquefied Natural Gas Co., Ltd. II (Þ)

        

Series 144a

        

5.298% due 09/30/20

    500      463

Ras Laffan Liquefied Natural Gas Co., Ltd. III (Þ)

        

Series 144a

        

5.832% due 09/30/16

    3,395      3,250

5.838% due 09/30/27

    300      253

6.332% due 09/30/27

    3,000      2,717

Reliance Industries, Ltd. (Þ)

        

Series 144a

        

10.250% due 01/15/97

    750      810

RESI Finance, LP (Ê)(Þ)

        

Series 2003-D Class B3

        

4.022% due 12/10/35

    1,470      1,225

Series 2003-D Class B4

        

4.222% due 12/10/35

    1,708      1,426

Series 2007-B Class B5

        

3.816% due 03/27/37

    2,237      1,119

Resix Finance, Ltd. Credit-Linked Notes (Ê)(Þ)

        

Series 2003-D Class B7

        

8.472% due 12/10/35

    2,198      1,696

Resona Bank, Ltd. (ƒ)(Þ)

        

Series 144a

        

5.850% due 09/29/49

    7,300      6,157

Resona Preferred Global Securities Cayman, Ltd. (ƒ)(Þ)

        

Series 144a

        

7.191% due 12/29/49

    16,405      14,587

Rogers Wireless, Inc.

        

6.375% due 03/01/14

    4,410      4,500

Royal Bank of Scotland Group PLC (ƒ)

        

Series 1

        

9.118% due 03/31/49

    4,025      4,069

Series 144a (Þ)

        

6.990% due 10/29/49

    6,025      5,530

Series MTN

        

7.640% due 03/31/49

    2,400      2,259

RSHB Capital SA for OJSC Russian Agricultural Bank

        

6.875% due 11/29/10

    1,450      1,474

Santander Perpetual SA Unipersonal (ƒ)(Þ)

        

Series 144a

        

6.671% due 10/29/49

    2,700      2,566

 

Multistrategy Bond Fund   95

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Santander US Debt SA Unipersonal (Ê)(Þ)

        

Series 144a

        

3.074% due 11/20/09

    2,800      2,770

Sappi Papier Holding AG (Þ)

        

Series 144a

        

6.750% due 06/15/12

    1,495      1,410

Shinsei Finance II (ƒ)(Þ)

        

Series 144a

        

7.160% due 07/25/49

    1,400      939

Siemens Financieringsmaatschappij NV (Ê)(Þ)

        

Series 144a
3.118% due 08/14/09

    1,500      1,501

SMFG Preferred Capital USD 1, Ltd. (ƒ)(Þ)

        

Series 144a

        

6.078% due 01/29/49

    1,000      891

Stora Enso OYJ (Þ)

        

Series 144a

        

7.250% due 04/15/36

    1,595      1,346

Systems 2001 AT LLC

        

Series 144a

        

7.156% due 12/15/11

    309      329

6.664% due 09/15/13 (Å)

    337      337

Telecom Italia Capital SA

        

4.000% due 01/15/10

    3,386      3,327

4.875% due 10/01/10 (Ñ)

    950      940

3.344% due 07/18/11 (Ê)

    1,100      1,016

6.200% due 07/18/11

    3,530      3,556

6.000% due 09/30/34

    1,050      938

7.200% due 07/18/36

    1,100      1,102

Telefonica Emisiones SAU

        

2.842% due 06/19/09 (Ê)

    1,000      989

5.984% due 06/20/11

    1,285      1,312

6.421% due 06/20/16

    810      855

Telefonica Europe BV

        

8.250% due 09/15/30

    1,400      1,700

TMK Capital SA for OAO TMK

        

8.500% due 09/29/09

    1,100      1,127

TNK-BP Finance SA

        

Series 144a

       

6.125% due 03/20/12

    400      384

7.500% due 03/13/13

    4,705      4,717

7.875% due 03/13/18 (Å)

    4,480      4,435

Series REGS

        

7.875% due 03/13/18

    5,400      5,353

Transocean, Inc.

        

6.000% due 03/15/18

    5,590      5,782

6.800% due 03/15/38

    1,975      2,101
     Principal
Amount ($)
or Shares		      Market
Value
$

Tristan Oil, Ltd.

        

Series 144a (Þ)

        

10.500% due 01/01/12

    700      669

Series REGS

        

10.500% due 01/01/12

    1,035      987

True Move Co., Ltd. (Þ)

        

Series 144a

        

10.375% due 08/01/14

    1,015      903

Tyco Electronics Group SA (Þ)

        

Series 144a

        

6.000% due 10/01/12

    6,570      6,699

6.550% due 10/01/17

    3,235      3,312

7.125% due 10/01/37

    2,250      2,304

Tyco International Group SA

        

6.750% due 02/15/11

    2,260      2,350

UBS AG

        

Series DPNT

        

5.875% due 12/20/17

    5,375      5,481

Series EMTN

        

Zero coupon due 12/31/17

    3,800      2,232

Series MTN

        

5.750% due 04/25/18

    1,100      1,098

Vale Overseas, Ltd.

        

6.250% due 01/23/17

    2,445      2,506

6.875% due 11/21/36

    200      202

VIP Finance Ireland, Ltd. for OJSC Vimpel Communications

        

Series 144a (Ñ)(Å)

        

8.375% due 04/30/13

    650      650

9.125% due 04/30/18

    6,240      6,245

Series REGS

        

9.125% due 04/30/18

    4,800      4,809

Virgin Media Finance PLC

        

Series $

        

8.750% due 04/15/14

    750      726

VTB 24 Capital PLC (Ê)

        

Series EMTN

        

3.820% due 12/07/09

    3,205      3,093

VTB Capital SA (Ê)(Å)

        

Series 144a

        

4.812% due 11/02/09

    2,100      2,047

Westfield Capital Corp., Ltd./WT Finance Aust Pty Ltd/WEA Finance LLC (Þ)

        

Series 144a

        

5.125% due 11/15/14

    700      649

Westfield Group (Þ)

        

Series 144a

        

5.400% due 10/01/12

    827      816

 

96   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

White Mountains Re Group, Ltd. (ƒ)(Å)

        

Series 144a

        

7.506% due 05/29/49

    11,855      8,881

XL Capital, Ltd. (ƒ)

        

Series E

        

6.500% due 12/31/49

    11,725      8,208

Xstrata Canada Corp.

        

7.250% due 07/15/12

    275      293

6.000% due 10/15/15

    800      782

Xstrata Finance Dubai, Ltd. (Ê)(Þ)

        

Series 144a

        

3.420% due 11/13/09

    885      861
         
        395,481
         

Loan Agreements - 0.9%

        

Adam Aircraft, Term Loan

        

14.680% due 05/01/12

    714      71

ALLTEL Holding Corp., Tranche B3

        

5.466% due 07/17/13

    1,493      1,450

Avis Budget Holdings LLC, Term Loan

        

4.150% due 04/19/12

    670      608

AWAS, Second Lien Term Loan

        

8.625% due 03/21/13

    721      615

Coffeyville Resources LLC, Letter of Credit

        

5.948% due 12/28/13

    97      90

Coffeyville Resources LLC, Tranche D Term Loan

        

5.448% due 12/28/13

    315      290

DaimlerChrysler Financial Services North America LLC, Second Lien Term Loan

        

9.300% due 07/01/13

    4,425      3,540

Douglas Dynamics LLC, Term Loan

        

4.946% due 05/21/13

    1,881      1,627

First Data Corp., Term Loan B1

        

5.349% due 09/24/14

    142      134

5.446% due 09/24/14

    344      324

5.645% due 09/24/14

    4,678      4,395

Ford Motor Co., Term Loan B

        

5.800% due 12/15/13

    5,117      4,699

General Motors Corp., Term Loan B

        

5.059% due 11/01/13

    3,693      3,467

5.059% due 11/29/13

    1,350      1,268

Georgia-Pacific Corp., First Lien Term Loan

        

4.446% due 12/20/12

    192      184

4.740% due 12/20/12

    2,139      2,053

4.835% due 12/20/12

    252      241
     Principal
Amount ($)
or Shares		      Market
Value
$

Georgia-Pacific Corp., Term Loan B2

        

4.446% due 12/20/12

    263      252

4.740% due 12/20/12

    1,121      1,076

HCA, Inc., Term Loan B

        

4.946% due 11/16/13

    200      190

4.946% due 12/30/13

    4,584      4,355

Healthsouth Corp., Term Loan B

        

5.230% due 03/10/13

    2,222      2,106

5.370% due 03/10/13

    5      5

5.370% due 03/13/13

    200      189

Hexion Specialty Chemicals, Inc., Term Loan C1

        

4.938% due 05/05/13

    405      384

Hexion Specialty Chemicals, Inc., Term Loan C2

        

5.000% due 05/05/13

    88      83

Idearc, Inc., Term Loan B

        

4.700% due 11/17/14

    4,570      3,758

4.860% due 11/17/14

    204      167

Realogy Corp., Letter of Credit

        

5.553% due 04/10/13

    295      241

Realogy Corp., Term Loan

        

5.722% due 04/10/13

    1,095      894

Stallion Oilfield Services, Inc., Term Loan

        

7.611% due 06/12/13

    4,500      3,510

Talecris Biotherapeutics, Inc., Second Lien Term Loan

        

9.570% due 12/06/14

    800      664

Texas Competitive Electric Holdings Company LLC, Term Loan B2

        

6.478% due 10/10/14

    987      944

6.596% due 10/10/14

    5,885      5,632

United Airlines, Inc., Term Loan B

        

4.750% due 02/01/14

    645      554

4.938% due 02/01/14

    567      487

Univision Communications, Inc., Term Loan B

        

5.113% due 09/15/14

    107      90

5.149% due 09/15/14

    1,669      1,403

USI Holdings Corp., Tranche B Term Loan

        

5.450% due 05/04/14

    695      637

Visteon Corp., Term Loan

        

7.194% due 06/13/13

    2,200      1,876

Windstream Corp., Term Loan B

        

4.220% due 07/17/13

    2,317      2,251
         
        56,804
         

 

Multistrategy Bond Fund   97

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Mortgage-Backed
Securities - 61.7%

        

Accredited Mortgage Loan Trust (Ê)

        

Series 2006-2 Class A2

        

2.985% due 09/25/36

    2,680      2,579

Adjustable Rate Mortgage Trust

        

Series 2004-5 Class 2A1

        

4.996% due 04/25/35

    1,336      1,292

Series 2005-1 Class 5A2 (Ê)

        

3.225% due 05/25/35

    633      507

Series 2005-3 Class 8A2 (Ê)

        

3.135% due 07/25/35

    1,233      905

Alliance Bancorp Trust (Ê)

        

Series 2007-OA1 Class A1

        

3.135% due 07/25/37

    4,472      3,521

American Home Mortgage Assets (Ê)

        

Series 2007-1 Class A1

        

5.026% due 02/25/47

    3,468      2,654

Series 2007-2 Class A1

        

3.020% due 03/25/47

    4,003      3,114

Series 2007-4 Class A2

        

3.085% due 08/25/37

    12,480      11,133

American Home Mortgage Investment Trust (Ê)

        

Series 2004-1 Class 1A

        

3.245% due 04/25/44

    221      221

Series 2004-4 Class 4A

        

4.390% due 02/25/45

    962      875

Series 2005-2 Class 1A1

        

3.195% due 09/25/45

    5,084      3,896

Series 2005-2 Class 5A2

        

3.045% due 09/25/35

    83      83

Series 2005-4 Class 1A1

        

3.185% due 11/25/45

    1,147      933

Series 2007-1 Class GA1C

        

3.085% due 05/25/47

    5,795      4,527

Banc of America Alternative Loan Trust

        

Series 2003-1 Class A2

        

5.500% due 02/25/33

    1,011      928

Series 2003-2 Class CB2 (Ê)

        

3.395% due 04/25/33

    663      626

Series 2003-10 Class 2A1

        

6.000% due 12/25/33

    501      472

Series 2003-10 Class 2A2 (Ê)

        

3.345% due 12/25/33

    1,554      1,398

Series 2004-2 Class 1A1

        

6.000% due 03/25/34

    1,256      1,183
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2004-10 Class 1CB1

        

6.000% due 11/25/34

    346      326

Series 2004-11 Class 1CB1

        

6.000% due 12/25/34

    399      376

Series 2005-1 Class 2A1

        

5.500% due 02/25/20

    3,019      2,991

Series 2005-3 Class 2A1

        

5.500% due 04/25/20

    500      505

Series 2005-5 Class 2CB1

        

6.000% due 06/25/35

    612      617

Series 2005-6 Class 7A1

        

5.500% due 07/25/20

    1,170      1,171

Series 2005-9 Class 5A1

        

5.500% due 10/25/20

    1,033      1,045

Series 2006-5 Class CB17

        

6.000% due 06/25/36

    2,274      2,031

Series 2006-6 Class CB6

        

6.000% due 07/25/46

    1,992      1,804

Banc of America Commercial Mortgage, Inc.

        

Series 2003-1 Class SBB (Þ)

        

5.860% due 03/11/32

    92      101

Series 2003-1 Class SBC (Þ)

        

5.790% due 03/11/32

    393      431

Series 2003-1 Class SBE (Þ)

        

6.770% due 03/11/32

    1,258      1,430

Series 2004-3 Class A3

        

4.875% due 06/10/39

    1,679      1,682

Series 2004-4 Class A3

        

4.128% due 07/10/42

    6,757      6,713

Series 2005-2 Class A3

        

4.611% due 07/10/43

    77      76

Series 2005-2 Class A4

        

4.783% due 07/10/43

    3,125      3,084

Series 2005-3 Class A2

        

4.501% due 07/10/43

    1,720      1,707

Series 2005-5 Class A4

        

5.115% due 10/10/45

    6,255      6,155

Series 2005-6 Class A4

        

5.353% due 09/10/47

    14,500      14,381

Series 2006-1 Class A4

        

5.372% due 09/10/45

    3,465      3,408

Series 2006-3 Class A4

        

5.889% due 07/10/44

    185      187

Series 2007-1 Class A4

        

5.451% due 01/15/49

    1,200      1,166

Series 2007-2 Class A2

        

5.634% due 04/10/49

    3,540      3,528

 

98   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2007-2 Class A4

        

5.867% due 04/10/49

    3,500      3,472

Banc of America Funding Corp.

        

Series 2004-2 Class 3A11

        

5.250% due 09/20/34

    1,841      1,784

Series 2005-5 Class 1A11

        

5.500% due 09/25/35

    902      862

Series 2005-8 Class 1A1

        

5.500% due 01/25/36

    1,118      1,115

Series 2005-D Class A1 (Ê)

        

4.113% due 05/25/35

    1,306      1,218

Series 2005-F Class 1A2 (Ê)

        

3.150% due 09/20/35

    297      198

Series 2006-3 Class 5A8

        

5.500% due 03/25/36

    3,710      3,415

Series 2006-A Class 3A2

        

5.845% due 02/20/36

    1,348      1,164

Series 2006-A Class 4A1 (Ê)

        

5.566% due 02/20/36

    3,656      3,471

Series 2006-F Class 1A2 (Ê)

        

5.179% due 07/20/36

    362      334

Series 2006-H Class 4A4

        

6.190% due 09/20/46

    1,347      1,135

Series 2006-J Class 4A1

        

6.143% due 01/20/47

    1,119      957

Banc of America Mortgage
Securities, Inc.

        

Series 2003-9 Class 1A12 (Ê)

        

3.345% due 12/25/33

    3,964      3,806

Series 2003-D Class 1A2 (Ê)

        

7.300% due 05/25/33

    1      1

Series 2003-I Class 2A5 (Ê)

        

4.143% due 10/25/33

    818      812

Series 2004-1 Class 5A1

        

6.500% due 09/25/33

    72      71

Series 2004-2 Class 1A9 (Ê)

        

3.345% due 03/25/34

    2,418      2,280

Series 2004-11 Class 2A1

        

5.750% due 01/25/35

    3,051      2,874

Series 2004-D Class 1A1 (Ê)

        

5.646% due 05/25/34

    117      116

Series 2004-F Class 1A1 (Ê)

        

5.642% due 07/25/34

    1,647      1,595

Series 2004-I Class 2A2 (Ê)

        

4.684% due 10/25/34

    301      294

Series 2004-L Class 2A1 (Ê)

        

4.370% due 01/25/35

    2,343      2,241

Series 2005-8 Class A7

        

5.500% due 09/25/35

    1,178      1,185
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-9 Class 2A1

        

4.750% due 10/25/20

    1,032      1,021

Series 2005-G Class 2A1 (Ê)

        

4.922% due 08/25/35

    2,145      2,065

Series 2005-H Class 2A5 (Ê)

        

4.806% due 09/25/35

    2,700      2,467

Series 2005-I Class 2A2 (Ê)

        

4.868% due 10/25/35

    3,623      3,382

Series 2005-I Class 4A1 (Ê)

        

5.270% due 10/25/35

    1,767      1,602

Series 2005-L Class 3A1 (Ê)

        

5.465% due 01/25/36

    1,776      1,668

Series 2006-2 Class A12

        

6.000% due 07/25/36

    1,570      1,508

Series 2006-2 Class A15

        

6.000% due 07/25/36

    2,678      2,626

Series 2006-B Class 1A1 (Ê)

        

6.158% due 11/20/36

    1,581      1,372

Series 2007-3 Class 1A1

        

6.000% due 09/25/37

    19,014      18,384

Bear Stearns Adjustable Rate Mortgage Trust

        

Series 2002-11 Class 1A2

        

6.764% due 02/25/33

    19      19

Series 2003-1 Class 6A1

        

5.031% due 04/25/33

    110      106

Series 2003-8 Class 4A1

        

4.617% due 01/25/34

    448      414

Series 2004-1 Class 21A1

        

4.452% due 04/25/34

    2,038      1,773

Series 2004-3 Class 1A1 (Ê)

        

5.696% due 07/25/34

    1,399      1,373

Series 2004-8 Class 2A1

        

5.072% due 11/25/34

    3,684      3,561

Series 2004-10 Class 22A1

        

4.958% due 01/25/35

    1,587      1,502

Series 2005-2 Class A1 (Ê)

        

4.125% due 03/25/35

    16,733      16,007

Series 2005-2 Class A2 (Ê)

        

4.125% due 03/25/35

    904      864

Series 2005-3 Class 2A1

        

5.069% due 06/25/35

    5,046      4,865

Series 2005-10 Class A1 (Ê)

        

4.750% due 10/25/35

    2,800      2,695

Series 2007-1 Class 3A2

        

5.748% due 02/25/47

    3,169      2,773

Series 2007-3 Class 1A1

        

5.476% due 05/25/47

    6,656      6,316

 

Multistrategy Bond Fund   99

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Bear Stearns Alt-A Trust

        

Series 2005-4 Class 23A1

        

5.371% due 05/25/35

    1,752      1,528

Series 2005-5 Class 21A1

        

5.500% due 06/25/35

    3,873      3,388

Series 2005-7 Class 22A1

        

5.706% due 09/25/35

    709      596

Series 2005-8 Class 11A1 (Ê)

        

3.165% due 10/25/35

    2,970      2,048

Series 2006-3 Class 33A1 (Ê)

        

6.156% due 05/25/36

    1,426      1,147

Bear Stearns Alt-A Trust II

        

Series 2007-1 Class 1A1

        

6.264% due 09/25/47

    10,998      8,792

Bear Stearns Asset Backed Securities Trust

        

Series 2005-AC8 Class A5

        

5.500% due 11/25/35

    1,052      898

Bear Stearns Commercial Mortgage Securities

        

Series 2005-PW1 Class A4

        

5.405% due 12/11/40

    3,500      3,502

Series 2006-PW1 Class A4

        

5.201% due 12/11/38

    11,000      10,602

Series 2007-PW1 Class A4

        

5.902% due 06/11/40

    2,600      2,583

5.694% due 06/11/50

    2,800      2,757

Bear Stearns Mortgage Funding Trust (Ê)

        

Series 2006-AR2 Class 1A1

        

3.095% due 09/25/36

    8,780      6,868

Series 2006-AR2 Class 2A1

        

3.125% due 10/25/36

    2,113      1,597

Series 2006-AR3 Class 1A1

        

3.075% due 03/25/36

    2,049      1,599

Series 2006-AR4 Class A1

        

3.105% due 12/25/36

    2,503      1,951

Series 2006-AR5 Class 1A1

        

3.055% due 12/25/46

    5,499      4,265

Series 2007-AR2 Class A1

        

3.065% due 03/25/37

    2,591      1,850

Series 2007-AR2 Class A3

        

3.125% due 03/25/37

    8,127      3,489

Series 2007-AR3 Class 1A1

        

3.035% due 03/25/37

    3,997      3,118

Bear Stearns Structured Products, Inc.

        

Series 2007-R6 Class 1A1

        

5.682% due 01/26/36

    2,516      2,107
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2007-R6 Class 2A1

        

5.783% due 12/26/46

    1,462      1,206

Series 2007-R7 Class A1 (Ê)(Å)

        

2.806% due 01/25/37

    4,537      4,491

Chase Mortgage Finance Corp.

        

Series 2003-S8 Class A1

        

4.500% due 09/25/18

    1,611      1,554

Series 2006-S4 Class A3

        

6.000% due 12/25/36

    2,678      2,641

Series 2006-S4 Class A4

        

6.000% due 12/25/36

    1,525      1,516

Series 2007-A1 Class 1A3

        

4.353% due 02/25/37

    2,340      2,262

Series 2007-A1 Class 4A1

        

4.472% due 02/25/37

    779      745

Series 2007-A1 Class 5A1

        

4.170% due 02/25/37

    1,767      1,740

Series 2007-A1 Class 8A1

        

4.244% due 02/25/37

    5,858      5,530

Citicorp Mortgage Securities, Inc.

        

Series 2006-3 Class 1A6

        

6.000% due 06/25/36

    1,023      942

Series 2006-3 Class 1A9

        

5.750% due 06/25/36

    1,650      1,509

Citigroup Mortgage Loan Trust, Inc.

        

Series 2005-11 Class A2A (Ê)

        

4.700% due 12/25/35

    310      301

Series 2006-AR3 Class 2A4A

        

5.900% due 06/25/36

    2,826      2,256

Series 2006-AR5 Class 2A1A

        

6.228% due 07/25/36

    2,652      1,953

Series 2007-AR8 Class 2A1A

        

5.914% due 08/25/37

    2,881      2,745

Citigroup/Deutsche Bank Commercial Mortgage Trust

        

Series 2005-CD1 Class A4

        

5.400% due 07/15/44

    8,095      8,053

Series 2006-CD3 Class A5

        

5.617% due 10/15/48

    2,605      2,586

Citimortgage Alternative Loan Trust

        

Series 2006-A3 Class 1A5

        

6.000% due 07/25/36

    1,651      1,476

Series 2007-A1 Class 1A5

        

6.000% due 01/25/37

    2,829      2,448

Commercial Mortgage Pass Through Certificates

        

Series 2001-J1A Class A2 (Þ)

        

6.457% due 02/16/34

    651      671

 

100   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-C7 Class A2

        

5.690% due 06/10/46

    825      832

Series 2007-C9 Class A4

        

6.010% due 12/10/49

    5,422      5,421

Countrywide Alternative Loan Trust

        

Series 2004-28C Class 6A1

        

6.000% due 01/25/35

    537      530

Series 2004-2CB Class 1A4 (Ê)

        

3.295% due 03/25/34

    679      616

Series 2004-J7 Class 1A2

        

4.673% due 08/25/34

    72      71

Series 2004-J8 Class 1A1

        

7.000% due 09/25/34

    511      435

Series 2005-16 Class A1 (Ê)

        

5.881% due 06/25/35

    2,616      1,962

Series 2005-1CB Class 2A2

        

5.500% due 03/25/35

    1,556      1,409

Series 2005-32T Class A7 (Ê)

        

3.145% due 08/25/35

    1,862      1,776

Series 2005-38 Class A1 (Ê)

        

5.576% due 09/25/35

    1,090      885

Series 2005-38 Class A3 (Ê)

        

3.245% due 09/25/35

    1,454      1,185

Series 2005-51 Class 1A1 (Ê)

        

3.120% due 11/20/35

    1,820      1,505

Series 2005-56 Class 2A2 (Ê)

        

6.116% due 11/25/35

    1,133      923

Series 2005-56 Class 3A1 (Ê)

        

3.185% due 11/25/35

    524      427

Series 2005-56 Class 4A1 (Ê)

        

3.205% due 11/25/35

    1,246      1,010

Series 2005-58 Class A2 (Ê)

        

3.190% due 12/20/35

    1,348      901

Series 2005-59 Class 1A1 (Ê)

        

3.225% due 11/20/35

    2,965      2,425

Series 2005-59 Class 1A2B (Ê)

        

3.155% due 11/20/35

    410      382

Series 2005-62 Class 1A1 (Ê)

        

3.195% due 12/25/35

    2,032      1,653

Series 2005-63 Class 3A1

        

5.893% due 11/25/35

    1,369      1,112

Series 2005-63 Class 5A1 (Ê)

        

5.319% due 12/25/35

    3,580      3,389

Series 2005-85C Class 2A2

        

5.500% due 02/25/36

    88      85

Series 2005-J8 Class 1A3

        

5.500% due 07/25/35

    2,196      1,952

Series 2005-J13 Class 2A3

        

5.500% due 11/25/35

    1,112      990
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-9T1 Class A7

        

6.000% due 05/25/36

    1,112      927

Series 2006-43C Class 1A7

        

6.000% due 02/25/37

    3,264      3,017

Series 2006-J2 Class A3

        

6.000% due 04/25/36

    1,671      1,538

Series 2006-OA1 Class 4A1 (Ê)

        

3.085% due 08/25/46

    2,650      2,077

Series 2006-OA1 Class A1 (Ê)

        

2.980% due 02/20/47

    3,341      2,609

Series 2006-OA2 Class A1 (Ê)

        

3.055% due 02/25/47

    3,092      2,412

Series 2006-OA6 Class 1A3 (Ê)

        

3.165% due 07/25/46

    1,092      700

Series 2006-OA7 Class 1A4 (Ê)

        

5.176% due 06/25/46

    5,754      2,966

Series 2007-15C Class A5

        

5.750% due 07/25/37

    11,102      9,043

Series 2007-J2 Class 2A1

        

6.000% due 07/25/37

    3,405      2,799

Series 2007-OA1 Class A1A (Ê)

        

5.706% due 04/25/43

    4,900      3,896

Series 2007-OA4 Class A1 (Ê)

        

3.065% due 05/25/47

    4,671      3,634

Countrywide Home Loan Mortgage Pass Through Trust

        

Series 2003-8 Class A2 (Ê)

        

3.395% due 05/25/18

    2,076      2,061

Series 2003-20 Class 1A9

        

5.500% due 07/25/33

    1,634      1,575

Series 2003-42 Class M (Ê)

        

4.297% due 10/25/33

    798      753

Series 2003-52 Class A1

        

4.501% due 02/19/34

    3,118      2,950

Series 2004-12 Class 1M

        

5.061% due 08/25/34

    323      190

Series 2004-16 Class 1A1 (Ê)

        

3.295% due 09/25/34

    1,323      1,080

Series 2004-22 Class A3

        

4.800% due 11/25/34

    2,290      2,150

Series 2004-HYB Class 1A1

        

4.720% due 02/20/35

    4,004      3,885

Series 2004-HYB Class A2

        

4.549% due 11/20/34

    1,728      1,519

Series 2004-J9 Class 2A1

        

5.250% due 01/25/35

    1,703      1,657

Series 2005-20 Class A5

        

5.500% due 10/25/35

    5,658      4,881

 

Multistrategy Bond Fund   101

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2005-23 Class A1

        

5.500% due 11/25/35

    3,252      3,219

Series 2005-29 Class A1

        

5.750% due 12/25/35

    2,240      2,149

Series 2005-8R Class A4

        

6.000% due 10/25/34

    1,443      1,408

Series 2005-HYB Class 2A1

        

4.902% due 08/20/35

    6,692      5,436

Series 2005-HYB Class 3A2A (Ê)

        

5.250% due 02/20/36

    356      292

Series 2005-HYB Class 4A1

        

5.872% due 12/20/35

    2,394      1,940

Series 2006-1 Class A2

        

6.000% due 03/25/36

    916      911

Series 2006-1 Class A3

        

6.000% due 03/25/36

    323      319

Series 2006-13 Class 1A23

        

6.250% due 09/25/36

    517      525

Series 2006-15 Class A3

        

6.250% due 10/25/36

    1,099      1,126

Series 2006-20 Class B1

        

6.000% due 02/25/37

    990      847

Series 2006-HYB Class 3A1A

        

6.094% due 05/20/36

    1,486      1,185

Series 2006-J4 Class A2

        

6.250% due 09/25/36

    920      923

Series 2006-J4 Class A10

        

6.250% due 09/25/36

    502      454

Series 2006-OA5 Class 2A1 (Ê)

        

3.095% due 04/25/46

    3,737      2,930

Series 2006-R2 Class AF1 (Ê)(Þ)

        

3.315% due 08/25/36

    3,427      3,382

Series 2007-18 Class 2A1

        

6.500% due 09/25/37

    3,252      3,105

Series 2007-HY1 Class 1A2

        

5.692% due 04/25/37

    1,044      922

Credit Suisse First Boston Mortgage Securities Corp.

        

Series 1998-C2 Class A2

        

6.300% due 11/15/30

    626      630

Series 2001-SPG Class A2 (Þ)

        

6.515% due 08/13/18

    800      833

Series 2002-30 Class DB1

        

7.378% due 11/25/32

    605      591

Series 2003-29 Class 5A1

        

7.000% due 12/25/33

    101      96

Series 2004-1 Class 3A1

        

7.000% due 02/25/34

    42      43
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2004-C1 Class A3

        

4.321% due 01/15/37

    2,780      2,747

Series 2005-9 Class 2A1

        

5.500% due 10/25/35

    5,724      5,410

Credit Suisse Mortgage Capital Certificates

        

Series 2006-C1 Class AAB

        

5.681% due 02/15/39

    1,480      1,457

Series 2006-C3 Class B

        

6.021% due 06/15/38

    1,341      1,051

Series 2006-C4 Class A3

        

5.467% due 09/15/39

    3,350      3,289

Series 2007-C1 Class A3

        

5.383% due 02/15/40

    4,050      3,921

Series 2007-C1 Class AAB

        

5.336% due 02/15/40

    4,500      4,389

Series 2007-C3 Class A4

        

5.913% due 06/15/39

    2,600      2,581

Series 2007-C3 Class AAB

        

5.913% due 06/15/39

    4,650      4,637

Crown Castle Towers LLC (Þ)

        

Series 2005-1A Class AFL (Ê)

        

3.096% due 06/15/35

    6,685      6,473

Series 2005-1A Class C

        

5.074% due 06/15/35

    591      552

CS First Boston Mortgage Securities Corp.

        

Series 2001-CKN Class A4

        

5.435% due 09/15/34

    7,891      8,027

Deutsche ALT-A Securities, Inc. Alternate Loan Trust

        

Series 2005-AR1 Class 2A3

        

4.977% due 08/25/35

    3,735      3,030

Series 2006-AB4 Class A1C

        

6.000% due 10/25/36

    1,275      1,136

DLJ Commercial Mortgage Corp.

        

Series 1999-CG1 Class S

        

1.021% due 03/10/32

    17,447      133

Series 1999-CG3 Class A3

        

7.730% due 10/10/32

    1,160      1,205

Downey Savings & Loan Association Mortgage Loan Trust

        

Series 2004-AR3 Class 1A1B (Ê)

        

6.627% due 07/19/44

    466      373

Series 2006-AR1 Class 2A1A (Ê)

        

5.016% due 04/19/47

    1,663      1,586

Fannie Mae

        

7.000% due 2009

    3      3

5.190% due 2012

    2,121      2,171

 

102   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

5.500% due 2013

    13      13

5.000% due 2014

    33      34

5.500% due 2014

    37      38

6.500% due 2015

    13      14

5.000% due 2016

    327      331

5.500% due 2016

    68      69

6.000% due 2016

    712      735

11.000% due 2016

    77      87

5.000% due 2017

    6,239      6,313

5.500% due 2017

    496      508

6.000% due 2017

    479      495

6.500% due 2017

    755      784

8.000% due 2017

    33      37

4.000% due 2018

    4,638      4,498

4.500% due 2018

    12,837      12,771

5.000% due 2018

    23,807      24,059

5.500% due 2018

    420      428

6.500% due 2018

    224      235

4.500% due 2019

    890      884

5.000% due 2019

    14,718      14,868

5.500% due 2019

    179      183

6.000% due 2019

    4,529      4,678

6.500% due 2019

    109      112

4.500% due 2020

    1,774      1,765

5.000% due 2020

    6,784      6,842

5.500% due 2020

    1,114      1,139

6.000% due 2020

    5,715      5,903

6.500% due 2020

    46      49

8.000% due 2020

    5      5

5.000% due 2021

    6,978      7,030

5.500% due 2021

    3,053      3,113

5.500% due 2022

    40,234      41,008

6.500% due 2022

    62      65

4.500% due 2023

    10,534      10,496

5.500% due 2023

    1,926      1,964

6.500% due 2024

    1,214      1,262

7.500% due 2024

    5      6

8.000% due 2024

    73      80

6.500% due 2025

    837      870

7.000% due 2025

    2      3

6.300% due 2026 (Ê)

    193      196

7.000% due 2026

    237      252

9.000% due 2026

    29      32

6.000% due 2027

    5,887      6,038

7.000% due 2027

    7      7

7.500% due 2027

    8      9

6.500% due 2028

    297      307

7.000% due 2028

    390      416
     Principal
Amount ($)
or Shares		      Market
Value
$

6.500% due 2029

    685      719

7.000% due 2029

    1,884      2,006

7.500% due 2029

    45      49

6.500% due 2030

    186      195

7.000% due 2030

    739      788

7.500% due 2030

    318      342

8.000% due 2030

    413      445

8.500% due 2030

    589      651

9.500% due 2030

    74      82

6.500% due 2031

    589      614

7.000% due 2031

    1,451      1,544

7.500% due 2031

    428      461

8.000% due 2031

    534      579

8.500% due 2031

    299      330

6.000% due 2032

    3,736      3,847

6.500% due 2032

    1,740      1,815

7.000% due 2032

    4,985      5,299

7.500% due 2032

    733      787

8.000% due 2032

    2      3

8.500% due 2032

    47      51

3.681% due 2033 (Ê)

    24      25

3.912% due 2033 (Ê)

    1,699      1,747

4.005% due 2033 (Ê)

    28      28

4.848% due 2033 (Ê)

    86      87

5.000% due 2033

    3,367      3,318

5.203% due 2033 (Ê)

    813      825

5.500% due 2033

    11,432      11,530

5.578% due 2033 (Ê)

    857      867

6.000% due 2033

    846      869

6.500% due 2033

    1,182      1,230

7.000% due 2033

    536      568

4.540% due 2034 (Ê)

    2,799      2,809

4.803% due 2034 (Ê)

    319      321

5.000% due 2034

    9,004      8,873

5.500% due 2034

    52,239      52,700

6.000% due 2034

    2,356      2,416

6.301% due 2034 (Ê)

    2,691      2,741

6.500% due 2034

    1,387      1,439

6.637% due 2034 (Ê)

    1,332      1,350

7.000% due 2034

    278      294

7.500% due 2034

    158      169

4.124% due 2035 (Ê)

    2,989      2,998

4.408% due 2035 (Ê)

    2,920      2,946

4.527% due 2035 (Ê)

    3,428      3,448

4.579% due 2035 (Ê)

    1,771      1,782

4.657% due 2035 (Ê)

    3,183      3,203

4.834% due 2035 (Ê)

    3,849      3,899

4.852% due 2035 (Ê)

    1,856      1,869

 

Multistrategy Bond Fund   103

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

5.000% due 2035

    11,455      11,276

5.500% due 2035

    105,970      106,774

6.000% due 2035

    2,803      2,872

6.500% due 2035

    103      107

7.000% due 2035

    666      702

7.500% due 2035

    1,413      1,519

5.000% due 2036

    26,988      26,559

5.500% due 2036

    22,494      22,589

6.000% due 2036

    37,210      38,043

6.500% due 2036

    2,562      2,653

7.000% due 2036

    5,679      5,976

7.500% due 2036

    905      956

5.000% due 2037

    4,347      4,275

5.241% due 2037 (Ê)

    3,055      3,092

5.500% due 2037

    61,469      61,769

5.527% due 2037 (Ê)

    3,599      3,667

5.557% due 2037 (Ê)

    3,180      3,237

5.979% due 2037 (Ê)

    3,752      3,826

6.000% due 2037

    129,885      132,904

6.101% due 2037 (Ê)

    2,415      2,433

6.500% due 2037

    44,787      46,250

7.000% due 2037

    182,218      191,750

7.500% due 2037

    21,794      23,020

5.000% due 2038

    16,779      16,496

5.500% due 2038

    52,431      52,767

6.000% due 2038

    1,888      1,932

7.000% due 2038

    30,841      32,456

7.500% due 2038

    3,921      4,141

5.476% due 2040 (Ê)

    378      381

Series 1997-281 Class 2

        

Interest Only STRIP

        

9.000% due 11/01/26

    35      10

Series 2000-306 Class IO

        

Interest Only STRIP

        

8.000% due 05/01/30

    38      9

Series 2001-317 Class 2

        

Interest Only STRIP

        

8.000% due 08/01/31

    80      18

Series 2002-320 Class 2

        

Interest Only STRIP

        

7.000% due 04/01/32

    25      6

Series 2003-339 Class 23

        

Interest Only STRIP

        

5.000% due 07/01/18

    1,773      249

Series 2003-343 Class 6

        

Interest Only STRIP

        

5.000% due 10/01/33

    2,658      578
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-345 Class 18

        

Interest Only STRIP

        

4.500% due 12/01/18

    8,391      1,289

Series 2003-345 Class 19

        

Interest Only STRIP

        

4.500% due 01/01/19

    9,361      1,412

Series 2004-353 Class 2

        

Interest Only STRIP

        

5.000% due 08/01/34

    6,695      1,641

Series 2004-356 Class 35

        

Interest Only STRIP

        

4.500% due 03/01/20

    1,596      248

Series 2004-356 Class 36

        

Interest Only STRIP

        

4.500% due 03/01/20

    2,724      431

Series 2005-365 Class 12

        

Interest Only STRIP

        

5.500% due 12/01/35

    12,246      2,799

Series 2006-369 Class 8

        

Interest Only STRIP

        

5.500% due 04/01/36

    2,292      530

Series 2006-372 Class 2

        

Interest Only STRIP

        

6.000% due 08/01/36

    8,071      1,794

Series 2006-377 Class 2

        

Interest Only STRIP

        

5.000% due 10/01/36

    8,923      2,127

15 Year TBA (Ï)

        

4.500%

    12,390      12,231

5.000%

    23,625      23,743

5.500%

    84,875      86,413

6.000%

    51,910      53,451

6.500%

    8,695      9,026

30 Year TBA (Ï)

        

5.000%

    79,365      77,951

5.500%

    416,126      418,337

6.000%

    326,042      333,276

6.500%

    81,865      84,705

7.000%

    13,575      14,271

Fannie Mae Grantor Trust

        

Series 1999-T2 Class A1

        

7.500% due 01/19/39

    32      33

Series 2001-T8 Class A2

        

9.500% due 07/25/41

    180      198

Series 2002-T19 Class A1

        

6.500% due 07/25/42

    650      679

Series 2003-T4 Class 2A5

        

5.407% due 09/26/33

    912      820

 

104   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Fannie Mae REMICS

        

Series 1996-46 Class ZA

        

7.500% due 11/25/26

    242      254

Series 1997-68 Class SC (Ê)

        

5.750% due 05/18/27

    93      11

Series 1999-56 Class Z

        

7.000% due 12/18/29

    1,034      1,099

Series 2001-4 Class SA (Ê)

        

Interest Only STRIP

        

4.834% due 02/17/31

    179      15

Series 2003-16 Class NI

        

Interest Only STRIP

        

5.000% due 02/25/15

    123      1

Series 2003-21 Class M

        

5.000% due 02/25/17

    474      482

Series 2003-25 Class IK

        

Interest Only STRIP

        

7.000% due 04/25/33

    294      71

Series 2003-32 Class FH (Ê)

        

3.295% due 11/25/22

    2,448      2,409

Series 2003-32 Class UI

        

Interest Only STRIP

        

6.000% due 05/25/33

    387      96

Series 2003-33 Class IA

        

Interest Only STRIP

        

6.500% due 05/25/33

    1,663      392

Series 2003-35 Class FY (Ê)

        

3.295% due 05/25/18

    4,839      4,789

Series 2003-35 Class IU

        

Interest Only STRIP

        

6.000% due 05/25/33

    409      102

Series 2003-35 Class UI

        

Interest Only STRIP

        

6.500% due 05/25/33

    403      92

Series 2003-64 Class JI

        

Interest Only STRIP

        

6.000% due 07/25/33

    425      112

Series 2003-78 Class FI (Ê)

        

3.295% due 01/25/33

    2,426      2,398

Series 2003-82 Class IA

        

Interest Only STRIP

        

6.000% due 08/25/32

    328      30

Series 2003-82 Class WI

        

Interest Only STRIP

        

6.000% due 08/25/32

    52      6

Series 2003-122 Class AJ

        

4.500% due 02/25/28

    491      490

Series 2004-21 Class FL (Ê)

        

3.245% due 11/25/32

    1,158      1,146
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-36 Class AI

        

Interest Only STRIP

        

5.500% due 10/25/26

    1,657      80

Series 2005-65 Class FP (Ê)

        

3.145% due 08/25/35

    446      444

Series 2005-69 Class IO (Ê)

        

Principal Only STRIP

        

Zero coupon due 08/25/35

    48      6

Series 2005-79 Class FC (Ê)

        

3.195% due 02/25/22

    2,819      2,773

Series 2005-110 Class MB

        

5.500% due 09/25/35

    1,934      1,974

Series 2006-5 Class 3A2 (Ê)

        

4.665% due 05/25/35

    500      504

Series 2006-48 Class LG

        

Zero coupon due 06/25/36

    681      410

Series 2006-81 Class LF (Ê)

        

Zero coupon due 09/25/36

    159      154

Series 2006-118 Class A1 (Ê)

        

2.955% due 12/25/36

    442      426

Series 2006-118 Class A2 (Ê)

        

2.955% due 12/25/36

    1,273      1,225

Series 2007-27 Class XA (Ê)

        

Zero coupon due 05/25/35

    87      84

Series 2007-42 Class LF (Ê)

        

Zero coupon due 05/25/37

    234      233

Series 2007-53 Class UF (Ê)

        

Zero coupon due 06/25/37

    170      172

Series 2007-56 Class GY (Ê)

        

Zero coupon due 06/25/37

    85      91

Series 2007-73 Class A1 (Ê)

        

2.955% due 07/25/37

    3,552      3,252

Fannie Mae Whole Loan

        

Series 2003-W17 Class 1A6

        

5.310% due 08/25/33

    5,400      5,538

Series 2004-W11 Class 1A2

        

6.500% due 05/25/44

    473      506

Series 2004-W11 Class 1A3

        

7.000% due 05/25/44

    890      957

Series 2004-W9 Class 2A1

        

6.500% due 02/25/44

    274      290

Federal Home Loan Mortgage Corp. Structured Pass Through Securities

        

Series 2003-58 Class 2A

        

6.500% due 09/25/43

    251      266

Series 2005-63 Class 1A1 (Ê)

        

5.722% due 02/25/45

    126      119

FHA PJ Reilly 67 NCP

        

7.430% due 01/01/24

    61      61

 

Multistrategy Bond Fund   105

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

First Horizon Alternative Mortgage Securities

        

Series 2004-AA3 Class A1 (Ê)

        

5.296% due 09/25/34

    369      306

Series 2005-AA2 Class 1A1 (Ê)

        

6.583% due 03/25/35

    231      214

Series 2005-AA5 Class 1A1 (Ê)

        

5.318% due 07/25/35

    320      269

Series 2005-AA7 Class 2A1 (Ê)

        

5.407% due 09/25/35

    2,606      2,149

Series 2006-AA5 Class A2 (Ê)

        

6.519% due 09/25/36

    1,491      1,017

Series 2006-FA3 Class A6

        

6.000% due 07/25/36

    1,765      1,675

First Horizon Asset Securities, Inc.

        

Series 2003-5 Class 1A17

        

8.000% due 07/25/33

    114      114

Series 2004-AR5 Class 4A1 (Ê)

        

5.700% due 10/25/34

    404      372

Series 2004-AR6 Class 2A1 (Ê)

        

4.750% due 12/25/34

    682      643

Series 2005-AR3 Class 2A1 (Ê)

        

5.370% due 08/25/35

    810      753

Series 2005-AR5 Class 3A1 (Ê)

        

5.535% due 10/25/35

    854      786

First Union - Chase Commercial Mortgage

        

Series 1999-C2 Class A2

        

6.645% due 06/15/31

    158      160

Freddie Mac

        

5.500% due 2013

    1      1

12.000% due 2013

    10      10

12.000% due 2014

    13      15

11.000% due 2015

    9      10

5.500% due 2016

    30      31

6.000% due 2016

    95      97

10.000% due 2016

    50      56

5.500% due 2017

    206      209

4.000% due 2018

    11,295      10,951

4.500% due 2018

    2,066      2,054

5.000% due 2018

    3,942      3,991

5.500% due 2018

    70      71

4.000% due 2019

    11,019      10,665

4.500% due 2019

    283      282

5.000% due 2019

    5,006      5,058

5.500% due 2019

    196      200

4.500% due 2020

    2,132      2,116

5.000% due 2020

    12,714      12,828
     Principal
Amount ($)
or Shares		      Market
Value
$

5.500% due 2020

    7,165      7,325

8.000% due 2020

    107      116

11.000% due 2020

    42      48

5.000% due 2021

    1,311      1,325

10.500% due 2021

    23      26

6.500% due 2025

    5      5

8.500% due 2025

    30      33

7.000% due 2027

    193      206

8.500% due 2027

    159      176

7.500% due 2028

    48      52

6.500% due 2029

    133      139

7.500% due 2029

    74      80

6.500% due 2030

    8      8

7.266% due 2030 (Ê)

    30      31

7.500% due 2030

    217      234

8.000% due 2030

    44      47

8.500% due 2030

    147      163

6.500% due 2031

    1,072      1,120

7.000% due 2031

    417      445

7.500% due 2031

    125      135

8.000% due 2031

    240      261

6.000% due 2032

    120      124

7.000% due 2032

    217      231

7.500% due 2032

    112      121

3.535% due 2033 (Ê)

    804      808

3.791% due 2033 (Ê)

    154      156

5.000% due 2033

    970      956

5.500% due 2033

    4,611      4,656

6.000% due 2033

    259      266

6.500% due 2033

    404      421

7.000% due 2033

    527      559

7.500% due 2033

    97      105

3.951% due 2034 (Ê)

    200      203

4.863% due 2034 (Ê)

    2,217      2,278

5.366% due 2034 (Ê)

    1,802      1,810

5.500% due 2034

    1,597      1,612

6.000% due 2034

    859      883

6.881% due 2034 (Ê)

    650      661

6.937% due 2034 (Ê)

    171      172

4.820% due 2035 (Ê)

    2,215      2,233

4.868% due 2035 (Ê)

    4,055      4,107

5.000% due 2035

    772      760

5.870% due 2036 (Ê)

    1,354      1,379

5.926% due 2036 (Ê)

    2,469      2,533

5.969% due 2036 (Ê)

    1,485      1,521

5.509% due 2037 (Ê)

    1,894      1,923

5.532% due 2037 (Ê)

    5,162      5,246

5.597% due 2037 (Ê)

    3,481      3,557

 

106   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

5.696% due 2037 (Ê)

    4,720      4,822

5.698% due 2037 (Ê)

    1,069      1,096

5.706% due 2037 (Ê)

    7,142      7,204

5.729% due 2037 (Ê)

    2,755      2,779

5.779% due 2037 (Ê)

    6      6

5.783% due 2037 (Ê)

    2,386      2,430

5.818% due 2037 (Ê)

    2,227      2,270

5.855% due 2037 (Ê)

    721      734

5.872% due 2037 (Ê)

    1,045      1,065

5.970% due 2037 (Ê)

    198      203

6.118% due 2037 (Ê)

    4,870      4,947

7.000% due 2037

    7,964      8,391

5.500% due 2038

    19,898      20,045

15 Year TBA (Ï)

        

5.500%

    58,000      59,033

30 Year TBA (Ï)

        

5.500%

    88,050      88,600

6.000%

    18,080      18,483

Freddie Mac Reference REMIC

        

Series 2006-R00 Class AK

        

5.750% due 12/15/18

    2,037      2,069

Freddie Mac REMICS

        

Series 1991-103 Class Z

        

9.000% due 02/15/21

    44      44

Series 1994-167 Class J

        

6.000% due 04/15/23

    150      152

Series 1994-173 Class Z

        

7.000% due 05/15/24

    279      294

Series 1999-212 Class SG (Ê)

        

Interest Only STRIP

        

4.250% due 06/17/27

    1,346      154

Series 2000-224 Class SC (Ê)

        

Interest Only STRIP

        

4.784% due 08/15/30

    51      5

Series 2000-226 Class F (Ê)

        

3.166% due 11/15/30

    76      75

Series 2001-229 Class KF (Ê)

        

3.145% due 07/25/22

    1,016      1,008

Series 2001-232 Class ZQ

        

6.500% due 06/15/31

    1,766      1,858

Series 2002-246 Class SJ (Ê)

        

Interest Only STRIP

        

5.284% due 03/15/32

    206      25

Series 2003-256 Class FJ (Ê)

        

3.116% due 02/15/33

    1,526      1,501

Series 2003-256 Class IM

        

Interest Only STRIP

        

5.000% due 09/15/14

    150      2
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-258 Class IG

        

Interest Only STRIP

        

4.500% due 10/15/16

    764      71

Series 2003-259 Class IQ

        

Interest Only STRIP

        

5.000% due 06/15/17

    1,081      94

Series 2003-262 Class AB

        

2.900% due 11/15/14

    1,579      1,572

Series 2003-262 Class QH

        

5.000% due 05/15/33

    1,210      1,127

5.000% due 06/15/33

    1,310      1,220

Series 2003-264 Class IM

        

Interest Only STRIP

        

7.000% due 07/15/33

    363      72

Series 2003-266 Class MA

        

4.500% due 10/15/31

    861      862

Series 2004-276 Class IP

        

Interest Only STRIP

        

5.500% due 07/15/23

    560      10

Series 2004-277 Class UF (Ê)

        

3.016% due 06/15/33

    2,847      2,822

Series 2004-281 Class DF (Ê)

        

3.166% due 06/15/23

    613      605

Series 2004-287 Class GC

        

5.000% due 11/15/29

    835      839

Series 2004-289 Class PC

        

5.000% due 07/15/30

    1,490      1,495

Series 2005-291 Class KP

        

5.000% due 11/15/29

    1,495      1,501

Series 2005-292 Class IG

        

Interest Only STRIP

        

5.000% due 04/15/23

    1,131      140

Series 2005-292 Class NA

        

5.000% due 12/15/20

    97      97

Series 2005-294 Class FA (Ê)

        

2.886% due 03/15/20

    1,166      1,151

Series 2005-299 Class KF (Ê)

        

3.116% due 06/15/35

    528      519

Series 2005-300 Class ED

        

5.000% due 07/15/25

    1,785      1,751

Series 2005-301 Class IM

        

Interest Only STRIP

        

5.500% due 01/15/31

    1,879      225

Series 2005-302 Class MB

        

5.000% due 12/15/28

    640      649

Series 2005-303 Class AQ

        

4.500% due 10/15/22

    1,088      1,090

Series 2005-303 Class XA (Ê)

        

Zero coupon due 09/15/35

    289      262

 

Multistrategy Bond Fund   107

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2005-305 Class JF (Ê)

        

3.016% due 10/15/35

    521      515

Series 2005-306 Class PC

        

5.000% due 02/15/29

    1,795      1,819

Series 2006-312 Class HT

        

5.000% due 03/15/26

    3,356      3,268

Series 2006-313 Class FP (Ê)

        

Zero coupon due 04/15/36

    706      717

Series 2006-313 Class X (Ê)

        

Zero coupon due 04/15/36

    131      133

Series 2006-314 Class LF (Ê)

        

3.016% due 05/15/36

    552      545

Series 2006-315 Class EQ

        

5.000% due 05/15/36

    1,485      1,448

Series 2006-316 Class X (Ê)

        

Zero coupon due 06/15/36

    360      324

Series 2006-317 Class XI (Ê)

        

Principal Only STRIP

        

Zero coupon due 10/15/35

    1,633      17

Series 2006-323 Class PA

        

6.000% due 03/15/26

    2,782      2,830

Series 2007-326 Class DO (Ê)

        

Zero coupon due 01/15/37

    91      86

Series 2007-327 Class SX (Ê)

        

Zero coupon due 07/15/36

    162      168

Series 2007-327 Class UF (Ê)

        

Zero coupon due 02/15/37

    170      190

Series 2007-327 Class WF (Ê)

        

Zero coupon due 09/15/36

    79      91

Series 2007-330 Class GL (Ê)

        

19.029% due 04/15/37

    600      768

Series 2007-333 Class AF (Ê)

        

2.866% due 10/15/20

    19,551      19,133

Series 2007-333 Class BF (Ê)

        

2.866% due 07/15/19

    3,211      3,147

Series 2007-333 Class FT (Ê)

        

2.866% due 08/15/19

    14,439      14,143

Series 2007-334 Class FA (Ê)

        

2.946% due 02/15/19

    14,153      13,863

Freddie Mac Strips

        

Interest Only STRIP

        

Series 1998-191 Class IO

        

8.000% due 01/01/28

    31      8

Series 1998-194 Class IO

        

6.500% due 04/01/28

    199      47

Series 2001-212 Class IO

        

6.000% due 05/01/31

    301      69

Series 2001-215 Class IO

        

8.000% due 06/01/31

    131      31
     Principal
Amount ($)
or Shares		      Market
Value
$

GE Capital Commercial Mortgage Corp.

        

Series 2001-1 Class A2

        

6.531% due 05/15/33

    4,025      4,176

Series 2002-1A Class A3

        

6.269% due 12/10/35

    745      771

Series 2002-3A Class A1

        

4.229% due 12/10/37

    2,917      2,893

Series 2006-C1 Class A4

        

5.518% due 03/10/44

    1,010      996

Series 2007-C1 Class A4

        

5.543% due 12/10/49

    4,000      3,910

Ginnie Mae I

        

11.000% due 2010

    9      9

11.000% due 2013

    6      7

10.500% due 2015

    40      45

11.000% due 2015

    2      2

10.500% due 2016

    49      54

10.500% due 2021

    56      65

8.000% due 2022

    20      22

10.000% due 2022

    52      59

9.500% due 2023

    218      241

8.000% due 2025

    13      14

10.000% due 2025

    65      74

8.000% due 2030

    307      336

7.500% due 2031

    51      55

8.000% due 2031

    2      2

8.000% due 2032

    13      14

6.000% due 2036

    277      285

6.000% due 2037

    1,481      1,524

6.500% due 2037

    115      119

30 Year TBA (Ï)

        

5.500%

    11,320      11,441

Ginnie Mae II

        

5.125% due 2023 (Ê)

    255      257

5.375% due 2023 (Ê)

    209      213

5.625% due 2023 (Ê)

    16      17

5.125% due 2024 (Ê)

    125      127

5.625% due 2024 (Ê)

    111      112

5.125% due 2025 (Ê)

    12      13

5.625% due 2025 (Ê)

    8      8

6.375% due 2025 (Ê)

    223      229

5.125% due 2026 (Ê)

    52      53

8.500% due 2026

    36      40

5.375% due 2027 (Ê)

    78      79

5.625% due 2027 (Ê)

    133      134

5.125% due 2029 (Ê)

    269      270

 

108   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Global Signal Trust (Þ)

        

Series 2004-2A Class A

        

4.232% due 12/15/14

    1,070      1,057

Series 2006-1 Class B

        

5.588% due 02/15/36

    750      735

Series 2006-1 Class C

        

5.707% due 02/15/36

    635      605

GMAC Commercial Mortgage Securities, Inc.

        

Series 1999-C2 Class A2

        

6.945% due 09/15/33

    2,612      2,657

GMAC Mortgage Corp. Loan Trust

        

Series 2004-JR1 Class A6 (Ê)

        

3.345% due 12/25/33

    1,081      1,039

Series 2005-AR2 Class 4A (Ê)

        

5.182% due 05/25/35

    7,248      6,523

Series 2005-AR6 Class 3A1

        

5.299% due 11/19/35

    2,837      2,662

Government National Mortgage Association

        

Series 1998-23 Class ZA

        

6.500% due 09/20/28

    2,026      2,127

Series 1999-27 Class SE (Ê)

        

Interest Only STRIP

        

5.887% due 08/16/29

    89      12

Series 1999-40 Class FE (Ê)

        

3.263% due 11/16/29

    803      798

Series 1999-44 Class SA (Ê)

        

Interest Only STRIP

        

5.837% due 12/16/29

    169      23

Series 2001-46 Class SA (Ê)

        

Interest Only STRIP

        

4.867% due 09/16/31

    31      3

Series 2003-5 Class B

        

4.486% due 10/16/25

    795      799

Greenpoint Mortgage Funding Trust

        

Series 2005-AR3 Class X1

        

4.208% due 08/25/45

    140      4

Series 2005-AR4 Class X4

        

4.091% due 10/25/45

    153      5

Series 2006-AR5 Class A1A (Ê)

        

2.975% due 10/25/46

    2,040      1,785

Series 2006-AR6 Class A1A (Ê)

        

2.975% due 10/25/46

    750      658

Series 2006-AR8 Class 1A1A (Ê)

        

2.975% due 01/25/47

    749      713
     Principal
Amount ($)
or Shares		      Market
Value
$

Greenpoint Mortgage Pass-Through Certificates (Ê)

        

Series 2003-1 Class A1

        

4.386% due 10/25/33

    4,184      3,977

Greenwich Capital Commercial Funding Corp.

        

Series 2002-C1 Class XP (Þ)

        

2.216% due 01/11/35

    5,269      156

Series 2003-C2 Class A2

        

4.022% due 01/05/36

    2,630      2,616

Series 2004-GG1 Class A7

        

5.317% due 06/10/36

    4,950      5,028

Series 2005-GG5 Class A41

        

5.243% due 04/10/37

    2,680      2,665

Series 2007-GG9 Class A4

        

5.444% due 03/10/39

    2,700      2,626

GS Mortgage Securities Corp. (Å)

        

Series 2007-NIM Class N1

        

6.250% due 01/25/37

    99      98

GS Mortgage Securities Corp. II

        

Series 2006-GG6 Class A4

        

5.553% due 04/10/38

    3,955      3,933

Series 2006-GG8 Class AAB

        

5.535% due 11/10/39

    2,250      2,226

Series 2007-EOP Class A1 (Ê)(Þ)

        

2.831% due 03/06/20

    2,444      2,261

Series 2007-GG1 Class A4

        

5.993% due 08/10/45

    10,350      10,334

GSMPS Mortgage Loan Trust (Þ)

        

Series 1998-1 Class A

        

8.000% due 09/19/27

    156      161

Series 1998-3 Class A

        

7.750% due 09/19/27

    123      134

Series 1999-3 Class A

        

8.000% due 08/19/29

    329      360

Series 2005-RP1 Class 1A3

        

8.000% due 01/25/35

    822      830

Series 2005-RP1 Class 1A4

        

8.500% due 01/25/35

    998      1,024

Series 2006-RP1 Class 1A2

        

7.500% due 01/25/36

    946      1,000

Series 2006-RP1 Class 1A3

        

8.000% due 01/25/36

    423      464

GSR Mortgage Loan Trust

        

Series 2004-7 Class 1A1

        

5.312% due 06/25/34

    473      443

Series 2004-11 Class 1A1

        

6.266% due 09/25/34

    490      465

 

Multistrategy Bond Fund   109

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2004-12 Class 2A3

        

6.565% due 12/25/34

    526      501

Series 2005-AR6 Class 2A1 (Ê)

        

4.539% due 09/25/35

    3,830      3,586

Series 2005-AR7 Class 6A1

        

5.250% due 11/25/35

    2,637      2,463

Series 2006-1F Class 5A2

        

6.000% due 02/25/36

    546      547

Series 2006-OA1 Class 2A1 (Ê)

        

3.085% due 08/25/46

    1,816      1,551

Harborview Mortgage Loan Trust

        

Series 2005-2 Class 2A1A (Ê)

        

3.020% due 05/19/35

    142      116

Series 2005-4 Class 3A1

        

5.148% due 07/19/35

    1,894      1,796

Series 2005-5 Class 2A1B (Ê)

        

3.090% due 07/19/45

    376      268

Series 2005-10 Class 2A1A (Ê)

        

3.110% due 11/19/35

    2,090      1,712

Series 2005-10 Class 2A1B (Ê)

        

3.180% due 11/19/35

    697      476

Series 2005-14 Class 3A1A

        

5.296% due 12/19/35

    768      741

Series 2005-14 Class 5A1A

        

5.728% due 12/19/35

    3,622      2,778

Series 2005-15 Class 2A11 (Ê)

        

3.070% due 10/20/45

    1,556      1,272

Series 2005-16 Class 3A1A (Ê)

        

3.050% due 01/19/36

    6,142      5,013

Series 2005-16 Class 3A1B (Ê)

        

3.140% due 01/19/36

    805      525

Series 2006-1 Class 2A1A (Ê)

        

3.040% due 03/19/37

    1,170      917

Series 2006-9 Class 2A1A (Ê)

        

3.010% due 11/19/36

    2,122      1,669

Series 2006-10 Class 2A1A (Ê)

        

2.980% due 11/19/36

    2,460      1,916

Series 2006-10 Class 2A1B (Ê)

        

3.040% due 11/19/36

    2,870      1,723

Series 2006-12 Class 2A2A (Ê)

        

2.990% due 01/19/38

    15,130      11,873

Series 2006-14 Class 2A1A (Ê)

        

2.950% due 03/19/38

    7,203      5,625

Series 2006-14 Class 2A1B (Ê)

        

3.000% due 03/19/38

    1,790      1,138

Series 2007-1 Class 2A1A (Ê)

        

2.930% due 04/19/38

    1,439      1,129
     Principal
Amount ($)
or Shares		      Market
Value
$

Impac Secured Assets CMN Owner Trust (Ê)

        

Series 2005-2 Class A1

        

3.215% due 03/25/36

    1,257      930

Series 2006-4 Class A2A

        

2.975% due 01/25/37

    436      404

Indymac Index Mortgage Loan Trust

        

Series 2005-AR1 Class 4A1

        

5.376% due 08/25/35

    3,088      2,617

Series 2005-AR1 Class A1

        

5.441% due 09/25/35

    2,661      2,119

Series 2005-AR2 Class 1A21

        

5.844% due 12/25/35

    787      640

Series 2005-AR3 Class 1A1

        

5.189% due 01/25/36

    1,597      1,549

Series 2006-AR1 Class 1A1A (Ê)

        

2.985% due 11/25/46

    433      405

Series 2006-AR1 Class 1A4A (Ê)

        

3.065% due 11/25/46

    5,280      3,717

Series 2006-AR2 Class A2 (Ê)

        

2.975% due 11/25/36

    1,216      1,164

Series 2006-AR3 Class 2A1A (Ê)

        

3.065% due 01/25/37

    7,759      5,006

Series 2006-AR7 Class 1A1

        

6.164% due 05/25/36

    1,514      1,290

Series 2007-AR5 Class 2A1

        

6.114% due 05/25/37

    2,815      2,329

JP Morgan Chase Commercial Mortgage Securities Corp.

        

Series 2002-C1 Class A3

        

5.376% due 07/12/37

    1,610      1,642

Series 2002-C2 Class A2

        

5.050% due 12/12/34

    12,000      11,976

Series 2003-C1 Class A2

        

4.985% due 01/12/37

    1,618      1,591

Series 2004-LN2 Class A1

        

4.475% due 07/15/41

    3,822      3,768

Series 2005-LDP Class A2

        

4.851% due 08/15/42

    3,000      2,994

Series 2005-LDP Class A3A1

        

4.871% due 10/15/42

    3,620      3,587

Series 2005-LDP Class A4

        

4.918% due 10/15/42

    1,345      1,309

5.345% due 12/15/44

    5,980      5,943

Series 2006-CB1 Class A4

        

5.817% due 05/12/45

    3,435      3,395

Series 2006-LDP Class A3

        

5.336% due 05/15/47

    3,995      3,873

 

110   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-LDP Class A3B

        

5.447% due 05/15/45

    3,080      2,964

Series 2006-LDP Class A4

        

6.065% due 04/15/45

    3,355      3,403

5.399% due 05/15/45

    3,005      2,939

Series 2006-LDP Class AJ

        

6.065% due 04/15/45

    1,110      983

Series 2007-CB1 Class A4

        

5.440% due 06/12/47

    2,500      2,427

Series 2007-CB2 Class A4

        

5.794% due 02/12/51

    4,600      4,560

Series 2007-CB2 Class AJ

        

6.303% due 02/12/51

    1,055      889

Series 2007-LD1 Class A4

        

6.007% due 06/15/49

    8,375      8,365

Series 2007-LDP Class A3

        

5.420% due 01/15/49

    3,390      3,279

JP Morgan Mortgage Trust

        

Series 2005-A1 Class 4A1 (Ê)

        

4.777% due 02/25/35

    2,015      1,895

Series 2005-A1 Class 6T1 (Ê)

        

5.023% due 02/25/35

    922      864

Series 2005-A4 Class 1A1

        

5.400% due 07/25/35

    782      725

Series 2005-A4 Class 2A1

        

5.066% due 07/25/35

    6,424      6,297

Series 2005-A6 Class 1A2

        

5.138% due 09/25/35

    1,470      1,314

Series 2005-A8 Class 1A1

        

5.404% due 11/25/35

    3,808      3,615

Series 2006-A6 Class 1A2

        

6.044% due 10/25/36

    1,100      1,081

Series 2007-A1 Class 1A1 (Ê)

        

4.201% due 07/25/35

    897      870

Series 2007-A1 Class 2A2 (Ê)

        

4.749% due 07/25/35

    826      795

Series 2007-A1 Class 4A2 (Ê)

        

4.071% due 07/25/35

    863      838

Series 2007-A1 Class 5A2 (Ê)

        

4.766% due 07/25/35

    837      803

Series 2007-A1 Class B1

        

4.815% due 07/25/35

    158      122

LB-UBS Commercial Mortgage Trust

        

Series 2000-C5 Class A2

        

6.510% due 12/15/26

    248      256

Series 2001-C2 Class A2

        

6.653% due 11/15/27

    12,000      12,514

Series 2002-C1 Class A4

        

6.462% due 03/15/31

    65      68
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2002-C2 Class F

        

5.794% due 07/15/35

    584      557

Series 2002-C2 Class G

        

5.873% due 07/15/35

    891      852

Series 2004-C4 Class A3

        

5.145% due 06/15/29

    4,310      4,338

Series 2006-C1 Class A4

        

5.156% due 02/15/31

    4,000      3,883

Series 2006-C3 Class A4

        

5.661% due 03/15/39

    2,450      2,451

Series 2006-C4 Class A4

        

6.081% due 06/15/38

    2,495      2,537

Series 2007-C1 Class A3

        

5.398% due 02/15/40

    2,400      2,305

Series 2007-C1 Class A4

        

5.424% due 02/15/40

    2,000      1,942

Series 2007-C6 Class A4

        

5.858% due 07/15/40

    3,250      3,242

Series 2008-C1 Class AJ

        

6.150% due 04/15/41

    1,570      1,279

Lehman Brothers Floating Rate Commercial Mortgage Trust (Ê)

        

Series 2006-LLF Class A1

        

2.796% due 09/15/21

    144      136

Series 2006-LLF Class A2 (Å)

        

2.836% due 09/15/21

    1,738      1,621

Lehman Mortgage Trust

        

Series 2005-2 Class 2A3

        

5.500% due 12/25/35

    1,049      1,008

Series 2005-3 Class 1A3

        

5.500% due 01/25/36

    4,621      4,417

Series 2006-8 Class 2A1 (Ê)

        

3.315% due 12/25/36

    8,617      6,885

Lehman XS Trust (Ê)

        

Series 2007-4N Class 3A2A

        

5.076% due 04/25/37

    7,166      5,653

Series 2007-7N Class 1A2

        

3.135% due 06/25/47

    8,653      5,656

Series 2007-16N Class 2A2

        

3.745% due 09/25/47

    11,763      9,761

Luminent Mortgage Trust (Ê)

        

Series 2006-1 Class A1

        

3.135% due 04/25/36

    1,611      1,220

Series 2006-5 Class A1A

        

3.085% due 07/25/36

    2,696      2,108

Series 2006-6 Class A1

        

3.095% due 10/25/46

    1,272      992

 

Multistrategy Bond Fund   111

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Mastr Adjustable Rate Mortgages Trust

        

Series 2004-10 Class 2A2

        

7.057% due 10/25/34

    14      11

Series 2004-13 Class 3A4 (Ê)

        

3.787% due 11/21/34

    1,963      1,939

Series 2005-1 Class B1

        

6.001% due 03/25/35

    1,167      930

Series 2005-6 Class 7A1

        

5.335% due 06/25/35

    472      427

Series 2005-7 Class 2A2

        

5.357% due 09/25/35

    2,378      2,407

Series 2006-1 Class I2A3 (Ê)

        

5.066% due 01/25/47

    3,492      2,731

Series 2006-2 Class 3A1

        

4.849% due 01/25/36

    719      691

Series 2006-2 Class 4A1

        

4.988% due 02/25/36

    4,934      4,574

Series 2006-OA2 Class 4A1A (Ê)

        

5.176% due 12/25/46

    3,243      2,448

Series 2006-OA2 Class 4A1B (Ê)

        

5.526% due 12/25/46

    11,899      8,476

Series 2007-3 Class 22A1 (Ê)

        

3.005% due 05/25/47

    1,486      1,459

MASTR Alternative Loans Trust

        

Series 2003-4 Class B1

        

5.681% due 06/25/33

    1,451      1,317

Series 2003-6 Class 3A1

        

8.000% due 09/25/33

    86      90

Series 2003-9 Class 1A1

        

5.500% due 12/25/18

    332      332

Series 2004-10 Class 5A6

        

5.750% due 09/25/34

    1,810      1,464

Series 2005-3 Class 7A1

        

6.000% due 04/25/35

    2,347      2,210

MASTR Asset Securitization Trust

        

Series 2003-7 Class 4A35 (Ê)

        

3.295% due 09/25/33

    2,500      2,362

Series 2003-11 Class 6A8 (Ê)

        

3.395% due 12/25/33

    3,237      3,020

Series 2004-4 Class 2A2 (Ê)

        

3.345% due 04/25/34

    616      599

Series 2005-2 Class 1A1

        

5.250% due 11/25/35

    1,216      1,132

Mastr Reperforming Loan Trust (Þ)

        

Series 2005-1 Class 1A5

        

8.000% due 08/25/34

    836      914

Series 2005-2 Class 1A4

        

8.000% due 05/25/35

    855      887
     Principal
Amount ($)
or Shares		      Market
Value
$

Mellon Residential Funding Corp. (Ê)

        

Series 2000-TBC Class A1

        

3.298% due 06/15/30

    783      738

Merrill Lynch Floating Trust (Ê)(Þ)

        

Series 2006-1 Class A1

        

2.786% due 06/15/22

    3,618      3,390

Merrill Lynch Mortgage Investors, Inc.

        

Series 2005-A8 Class A1B1

        

5.250% due 08/25/36

    1,400      1,415

Series 2005-A10 Class A (Ê)

        

3.105% due 02/25/36

    726      584

Merrill Lynch Mortgage Trust

        

Series 2002-MW1 Class J (Þ)

        

5.695% due 07/12/34

    365      283

Series 2004-MKB Class A2

        

4.353% due 02/12/42

    2,865      2,856

Series 2005-CIP Class AM

        

5.107% due 07/12/38

    1,700      1,629

Series 2006-C1 Class A1

        

5.528% due 05/12/39

    2,086      2,099

MLCC Mortgage Investors, Inc. (Ê)

        

Series 2004-HB1 Class A2

        

3.544% due 04/25/29

    215      211

Series 2005-2 Class 3A

        

3.599% due 10/25/35

    270      245

Series 2005-3 Class 5A

        

3.145% due 11/25/35

    1,294      1,119

Morgan Stanley Capital I

        

Series 1999-FNV Class G (Þ)

        

6.120% due 03/15/31

    500      493

Series 1999-LIF Class A2

        

7.110% due 04/15/33

    221      226

Series 2005-HQ7 Class A4

        

5.379% due 11/14/42

    3,000      3,017

Series 2005-IQ1 Class AAB

        

5.178% due 09/15/42

    3,305      3,246

Series 2006-HQ1 Class A4

        

5.328% due 11/12/41

    1,615      1,572

Series 2006-HQ8 Class A4

        

5.560% due 03/12/44

    3,895      3,858

Series 2006-HQ9 Class A4

        

5.731% due 07/12/44

    3,299      3,303

Series 2007-HQ1 Class D (Þ)

        

6.488% due 12/15/44

    1,674      1,086

Series 2007-IQ1 Class A2

        

5.610% due 04/15/49

    4,000      3,984

Series 2007-IQ1 Class A4

        

5.809% due 12/12/49

    7,330      7,272

 

112   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2007-T27 Class A4

        

5.803% due 06/13/42

    683      676

Series 2008-T29 Class A4

        

6.458% due 01/11/43

    2,800      2,876

Morgan Stanley Dean Witter
Capital I (Þ)

        

Series 2001-TOP Class E

        

7.565% due 02/15/33

    180      169

Morgan Stanley Mortgage Loan Trust

        

Series 2006-2 Class 6A

        

6.500% due 02/25/36

    2,417      2,138

Nomura Asset Acceptance Corp.

        

Series 2005-WF1 Class 2A2

        

4.786% due 03/25/35

    1,540      1,459

Nomura Asset Securities Corp.

        

Series 1998-D6 Class A1B

        

6.590% due 03/15/30

    70      70

Prime Mortgage Trust

        

Series 2004-CL1 Class 1A1

        

6.000% due 02/25/34

    320      295

Series 2004-CL1 Class 1A2 (Ê)

        

3.295% due 02/25/34

    135      122

Series 2004-CL1 Class 2A2 (Ê)

        

3.295% due 02/25/19

    32      30

Residential Accredit Loans, Inc.

        

Series 2004-QS5 Class A1

        

4.600% due 04/25/34

    1,046      939

Series 2004-QS5 Class A5

        

4.750% due 04/25/34

    732      660

Series 2004-QS5 Class A6 (Ê)

        

3.495% due 04/25/34

    338      299

Series 2004-QS8 Class A4 (Ê)

        

3.295% due 06/25/34

    2,196      2,038

Series 2005-QA1 Class A41

        

5.676% due 09/25/35

    1,322      1,107

Series 2005-QA8 Class NB3

        

5.479% due 07/25/35

    1,740      1,490

Series 2005-QO4 Class 2A1 (Ê)

        

3.175% due 12/25/45

    2,544      2,074

Series 2005-QO5 Class A1 (Ê)

        

5.326% due 01/25/46

    4,589      3,633

Series 2005-QS1 Class 2A3

        

5.750% due 09/25/35

    11,648      11,308

Series 2006-QO1 Class 1A1 (Ê)

        

3.155% due 02/25/46

    433      283

Series 2006-QO1 Class 2A1 (Ê)

        

3.165% due 02/25/46

    499      349

Series 2006-QS4 Class A11

        

6.000% due 04/25/36

    989      882
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-QS6 Class 1A13

        

6.000% due 06/25/36

    3,867      3,462

Series 2007-QH9 Class A1

        

6.550% due 11/25/37

    12,704      10,454

Series 2007-QO4 Class A1 (Ê)

        

3.095% due 05/25/47

    8,013      6,263

Residential Asset Mortgage Products, Inc.

        

Series 2004-SL1 Class A3

        

7.000% due 11/25/31

    62      63

Series 2004-SL4 Class A3

        

6.500% due 07/25/32

    319      304

Residential Asset Securitization Trust

        

Series 2003-A15 Class 1A2 (Ê)

        

3.345% due 02/25/34

    2,605      2,243

Series 2007-A5 Class 2A3

        

6.000% due 05/25/37

    1,653      1,481

Series 2007-A9 Class A6

        

6.250% due 08/25/13

    9,778      9,651

Residential Funding Mortgage Securities I

        

Series 2003-S14 Class A5 (Ê)

        

3.295% due 07/25/18

    1,931      1,915

Series 2003-S20 Class 1A7 (Ê)

        

3.395% due 12/25/33

    209      201

Series 2003-S5 Class 1A2 (Ê)

        

3.345% due 11/25/18

    932      931

Series 2005-SA4 Class 1A21

        

5.212% due 09/25/35

    2,346      1,996

Series 2005-SA4 Class 2A1

        

5.207% due 09/25/35

    5,635      5,386

Series 2005-SA4 Class 2A2

        

5.184% due 09/25/35

    3,820      3,611

Series 2006-SA3 Class 3A1

        

6.038% due 09/25/36

    1,368      1,298

Series 2006-SA4 Class 2A1

        

6.125% due 11/25/36

    6,111      5,762

Series 2007-S9 Class 1A1

        

6.000% due 10/25/37

    4,030      4,027

SBA CMBS Trust (Þ)

        

Series 2006-1A Class B

        

5.451% due 11/15/36

    2,310      2,236

Sequoia Mortgage Trust (Ê)

        

Series 2004-3 Class A

        

2.633% due 04/20/34

    2,046      1,938

Structured Adjustable Rate Mortgage Loan Trust

        

Series 2004-5 Class 3A1

        

4.380% due 05/25/34

    2,297      2,139

 

Multistrategy Bond Fund   113

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2004-12 Class 3A2

        

5.250% due 09/25/34

    999      871

Series 2004-16 Class 3A1

        

5.450% due 11/25/34

    4,325      3,890

Series 2004-18 Class 5A

        

5.500% due 12/25/34

    419      381

Series 2004-20 Class 3A1

        

5.359% due 01/25/35

    2,624      2,480

Series 2005-19X Class 1A1 (Ê)

        

3.215% due 10/25/35

    799      652

Series 2005-21 Class 7A1

        

6.026% due 11/25/35

    15,925      11,504

Series 2005-22 Class 4A2

        

5.374% due 12/25/35

    122      106

Series 2006-1 Class 2A3

        

5.621% due 02/25/36

    1,780      1,280

Series 2006-1 Class 5A2

        

5.250% due 02/25/36

    6,000      5,120

Series 2006-5 Class 2A1

        

5.969% due 06/25/36

    4,175      3,200

Series 2006-5 Class 5A4

        

5.536% due 06/25/36

    297      255

Series 2006-12 Class 2A1

        

5.961% due 01/25/37

    4,291      3,119

Structured Asset Mortgage Investments, Inc. (Ê)

        

Series 2005-AR8 Class A2

        

5.806% due 02/25/36

    3,426      2,800

Series 2006-AR1 Class 3A1

        

3.125% due 02/25/36

    736      568

Series 2006-AR3 Class 3A1

        

3.085% due 02/25/36

    601      466

Series 2006-AR5 Class 1A2

        

3.155% due 05/25/36

    662      416

Series 2006-AR6 Class 1A3

        

3.085% due 07/25/36

    1,737      1,177

Series 2006-AR7 Class A12

        

3.145% due 08/25/36

    3,526      2,275

Series 2006-AR8 Class A1A

        

3.095% due 10/25/36

    7,340      5,767

Series 2007-AR4 Class A4A

        

3.075% due 09/25/47

    6,192      4,564

Series 2007-AR6 Class A1

        

5.826% due 11/25/37

    11,792      9,592

Structured Asset Securities Corp.

        

Series 2002-22H Class 1A

        

6.938% due 11/25/32

    78      75

Series 2003-26A Class 3A4

        

4.500% due 09/25/33

    505      504
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-26A Class 3A5 (Å)

        

4.530% due 09/25/33

    2,000      2,001

Series 2004-5H Class A2

        

4.430% due 12/25/33

    7      7

Series 2004-12H Class 1A

        

6.000% due 05/25/34

    332      338

Series 2004-21X Class 1A3

        

4.440% due 12/25/34

    2,920      2,923

Series 2005-6 Class B2

        

5.344% due 05/25/35

    278      188

Thornburg Mortgage Securities Trust (Ê)

        

Series 2003-2 Class A1

        

3.575% due 04/25/43

    985      961

Series 2006-5 Class A1

        

3.015% due 09/25/46

    4,456      4,168

Series 2006-6 Class A1

        

3.005% due 11/25/11

    1,552      1,473

Wachovia Bank Commercial Mortgage Trust

        

Series 2005-C16 Class A2

        

4.380% due 10/15/41

    3,852      3,827

Series 2005-C20 Class A4

        

5.285% due 07/15/42

    5,000      5,028

Series 2005-C21 Class A4

        

5.384% due 10/15/44

    4,000      3,991

Series 2006-C28 Class A2

        

5.500% due 10/15/48

    1,510      1,509

Series 2006-WL7 Class A1 (Ê)(Þ)

        

2.806% due 09/15/21

    10,567      9,933

Series 2007-C31 Class A2

        

5.421% due 04/15/47

    4,000      3,957

Series 2007-WHL Class A1 (Ê)(Þ)

        

2.796% due 06/15/20

    3,111      2,868

WaMu Mortgage Pass Through Certificates

        

Series 2002-AR9 Class 1A (Ê)

        

5.726% due 08/25/42

    246      223

Series 2004-AR1 Class A

        

4.229% due 03/25/34

    299      292

Series 2005-AR1 Class A1A (Ê)

        

3.215% due 08/25/45

    1,252      1,025

Series 2005-AR1 Class A1A1 (Ê)

        

3.155% due 11/25/45

    1,360      1,127

Series 2005-AR1 Class A1A2 (Ê)

        

3.175% due 11/25/45

    1,088      891

3.185% due 12/25/45

    1,769      1,501

Series 2005-AR1 Class A1B1 (Ê)

        

3.145% due 12/25/45

    32      32

 

114   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-AR1 Class 2A (Ê)

        

5.826% due 09/25/46

    587      483

Washington Mutual Alternative Mortgage Pass-Through Certificates

        

Series 2005-4 Class CB11

        

5.500% due 06/25/35

    980      816

Series 2005-9 Class 3CB

        

5.500% due 10/25/20

    863      873

Series 2006-AR2 Class A1A (Ê)

        

5.016% due 04/25/46

    1,423      1,129

Series 2006-AR6 Class 1A (Ê)

        

3.085% due 07/25/46

    741      583

Series 2006-AR8 Class 2A (Ê)

        

5.176% due 10/25/46

    3,156      2,355

Series 2006-AR9 Class 2A (Ê)

        

5.166% due 11/25/46

    3,471      2,581

Series 2007-OA1 Class 2A (Ê)

        

4.796% due 12/25/46

    17,939      13,460

Washington Mutual Mortgage
Pass-Through Certificates

        

Series 2003-S9 Class A2 (Ê)

        

3.445% due 10/25/33

    2,683      2,555

Series 2004-AR3 Class A2

        

4.243% due 06/25/34

    3,048      2,956

Series 2004-AR8 Class X

        

Zero coupon due 06/25/44

    229      1

Series 2004-CB3 Class 1A

        

6.000% due 10/25/34

    296      289

Series 2004-CB3 Class 4A

        

6.000% due 10/25/19

    589      602

Series 2005-AR1 Class 1A1

        

4.833% due 10/25/35

    2,095      2,050

Series 2005-AR1 Class A1A1 (Ê)

        

3.185% due 10/25/45

    3,397      2,752

Series 2005-AR1 Class A1B1 (Ê)

        

3.185% due 08/25/45

    47      47

3.155% due 10/25/45

    123      122

3.145% due 11/25/45

    287      268

3.145% due 12/25/45

    261      252

Series 2005-AR6 Class B3 (Ê)

        

3.555% due 04/25/45

    1,471      515

Series 2005-AR8 Class 2A1A (Ê)

        

3.185% due 07/25/45

    686      563

Series 2005-AR8 Class 2AB3 (Ê)

        

3.255% due 07/25/45

    548      382

Series 2006-AR1 Class 1A1

        

5.940% due 09/25/36

    1,356      1,322

Series 2006-AR1 Class 1A4

        

5.648% due 11/25/36

    6,562      6,268
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-AR1 Class 3A1A (Ê)

        

4.996% due 09/25/46

    751      593

Series 2006-AR2 Class 1A1

        

5.307% due 03/25/37

    10,222      9,813

Series 2006-AR7 Class 2A (Ê)

        

5.056% due 07/25/46

    7,651      6,076

Series 2006-AR8 Class 1A5

        

5.884% due 08/25/46

    238      220

Series 2006-AR8 Class 2A3 (Ê)

        

6.131% due 08/25/46

    161      146

Series 2007-HY1 Class 1A1

        

5.714% due 02/25/37

    3,245      3,099

Series 2007-HY2 Class 3A1

        

5.942% due 09/25/36

    4,066      3,851

Series 2007-HY3 Class 4A1

        

5.349% due 03/25/37

    16,634      15,832

Series 2007-HY3 Class 4B1

        

5.348% due 03/25/37

    1,471      1,124

Series 2007-HY4 Class 1A1 (Ê)

        

5.552% due 04/25/37

    1,996      1,897

Series 2007-OA2 Class 1A (Ê)

        

4.776% due 03/25/47

    1,642      1,274

Wells Fargo Alternative Loan Trust

        

Series 2007-PA6 Class A1

        

6.600% due 12/26/37

    11,578      9,272

Wells Fargo Mortgage Backed Securities Trust

        

Series 2004-AA Class A1 (Ê)

        

4.996% due 12/25/34

    2,228      2,151

Series 2004-CC Class A1 (Ê)

        

4.947% due 01/25/35

    2,978      2,871

Series 2004-EE Class 2A1 (Ê)

        

3.989% due 12/25/34

    199      196

Series 2004-I Class 1A1

        

7.030% due 07/25/34

    2,079      2,046

Series 2004-T Class A1 (Ê)

        

6.130% due 09/25/34

    309      309

Series 2005-12 Class 1A7

        

5.500% due 11/25/35

    2,044      2,003

Series 2005-14 Class 2A1

        

5.500% due 12/25/35

    2,392      2,309

Series 2005-17 Class 1A1

        

5.500% due 01/25/36

    2,008      1,988

Series 2005-17 Class 1A2

        

5.500% due 01/25/36

    1,167      1,144

Series 2005-17 Class 2A1

        

5.500% due 01/25/36

    7,894      7,539

Series 2005-18 Class 1A1

        

5.500% due 01/25/36

    7,220      6,967

 

Multistrategy Bond Fund   115

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2005-AR2 Class 2A2 (Ê)

        

4.541% due 03/25/35

    149      143

Series 2005-AR6 Class A1 (Ê)

        

5.038% due 04/25/35

    10,981      10,094

Series 2006-1 Class A3

        

5.000% due 03/25/21

    1,252      1,226

Series 2006-2 Class 2A3

        

5.500% due 03/25/36

    3,330      3,200

Series 2006-2 Class 3A1

        

5.750% due 03/25/36

    8,471      8,213

Series 2006-4 Class 1A8

        

5.750% due 04/25/36

    763      746

Series 2006-4 Class 2A3

        

5.750% due 04/25/36

    620      622

Series 2006-7 Class 2A1

        

6.000% due 06/25/36

    436      436

Series 2006-9 Class 1A14

        

6.000% due 08/25/36

    724      720

Series 2006-AR1 Class 1A2 (Ê)

        

6.023% due 09/25/36

    692      666

Series 2006-AR1 Class 2A2

        

5.717% due 11/25/36

    869      832

Series 2006-AR1 Class 2A4 (Ê)

        

6.090% due 10/25/36

    1,113      1,073

Series 2006-AR1 Class 5A1 (Ê)

        

5.597% due 07/25/36

    1,302      1,253

Series 2006-AR1 Class A1

        

5.643% due 12/25/36

    4,006      3,815

Series 2006-AR1 Class A7

        

5.517% due 08/25/36

    1,586      1,415

Series 2006-AR2 Class 2A1

        

4.950% due 03/25/36

    2,662      2,549

Series 2006-AR4 Class 1A1 (Ê)

        

5.857% due 04/25/36

    1,765      1,653

Series 2006-AR4 Class 2A1 (Ê)

        

5.773% due 04/25/36

    3,653      3,409

Series 2006-AR6 Class 7A1 (Ê)

        

5.111% due 03/25/36

    7,960      7,317

Series 2007-8 Class 1A16

        

6.000% due 07/25/37

    4,379      4,168

Series 2007-10 Class 2A5

        

6.250% due 07/25/37

    2,141      2,063

Series 2007-14 Class 1A1

        

6.000% due 10/25/37

    5,032      5,048

Zuni Mortgage Loan Trust (Ê)

        

Series 2006-OA1 Class A1

        

3.025% due 08/25/36

    1,977      1,877
         
        3,985,976
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Municipal Bonds - 0.2%

        

Badger TOB Asset Securitization Corp. Revenue Bonds
weekly demand

        

6.375% due 06/01/32

      700      703

Michigan State University Revenue Bonds (Ê)(m)
quarterly demand

        

2.684% due 02/15/37

      4,200      3,109

New Jersey Economic Development Authority Revenue Bonds
weekly demand

        

5.750% due 06/15/34

      745      724

San Diego Tobacco Settlement Revenue Funding Corp. Revenue Bonds

        

7.125% due 06/01/32

      1,200      1,138

State of California General Obligation Unlimited
weekly demand

        

5.000% due 02/01/33

      270      270

State of Texas General Obligation Unlimited
weekly demand

        

4.750% due 04/01/35

      450      445

Tobacco Settlement Authority of Iowa Revenue Bonds
weekly demand

        

6.500% due 06/01/23

      385      364

Tobacco Settlement Finance Authority of West Virginia Revenue Bonds

        

7.467% due 06/01/47

      5,925      5,547

Tobacco Settlement Financing Corp. Revenue Bonds
weekly demand

        

5.500% due 06/01/26

      1,500      1,650

West Virginia Economic Development Authority Revenue Bonds (m)

        

5.370% due 07/01/20

      200      201
         
        14,151
         

Non-US Bonds - 1.4%

        

Arab Republic of Egypt (Å)

        

Series 144a

        

8.750% due 07/18/12

    EGP  12,440      2,355

 

116   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Argentina Bocon

        

Series PR12

        

2.000% due 01/03/16

    ARS 3,522      1,831

Argentina Bonos

        

Series $ V

        

10.500% due 06/12/12

    ARS 9,350      2,217

Argentina Government International Bond

        

Series dis

        

5.830% due 12/31/33

    ARS 1,510      458

Barclays Bank PLC (Ê)(Þ)

        

Series BRL$

        

10.031% due 05/19/15

    BRL 25,000      23,490

Bombardier, Inc. (Þ)

        

Series 144a

        

7.250% due 11/15/16

    EUR 375      590

Byggingarsjodur Verkamanna

        

Series 2

        

3.750% due 04/15/34

    ISK 259,144      3,248

Series 3

        

3.750% due 06/15/44

    ISK 487,128      6,085

Colombia Government International Bond

        

9.850% due 06/28/27

    COP  1,700,000      1,512

European Investment Bank

        

2.150% due 01/18/27

    JPY 134,800      1,235

Federative Republic of Brazil

        

12.500% due 01/05/22

    BRL 3,450      2,150

10.250% due 01/10/28

    BRL 16,099      8,608

General Motors Acceptance Corp.

        

Series EMTN

        

5.978% due 06/30/09

    EUR 200      278

Hellas Telecommunications Luxembourg V (Ê)

        

Series REGS

        

8.247% due 10/15/12

    EUR 1,500      2,178

Hungary Government Bond

        

Series 12/C

        

6.000% due 10/24/12

    HUF 733,350      4,064

Impress Holdings B.V. (Ê)

        

Series REGS

        

7.872% due 09/15/13

    EUR 500      757

Ineos Group Holdings PLC

        

Series REGS

        

7.875% due 02/15/16

    EUR 1,000      1,167

Lehman Brothers Holdings, Inc.

        

Series EMTN

        

5.375% due 10/17/12

    EUR 4,200      6,158
     Principal
Amount ($)
or Shares		      Market
Value
$

Mexican Bonos

        

Series M 20

        

7.500% due 06/03/27

    MXN 26,025      2,360

New South Wales Treasury Corp.

        

Series 12RG

        

6.000% due 05/01/12

    AUD 5,530      5,033

Province of Quebec Canada

        

5.000% due 12/01/15

    CAD 3      3

Queensland Treasury Corp.

        

Series 13G

        

6.000% due 08/14/13

    AUD 3,570      3,223

Red Arrow International Leasing PLC

        

8.375% due 06/30/12

    RUB 19,010      807

Republic of Colombia

        

9.850% due 06/28/27

    COP  5,785,000      3,089

Residential Capital LLC

        

7.125% due 05/17/12

    EUR 1,865      1,325

Rhodia SA (Ê)

        

Series REGS

        

7.497% due 10/15/13

    EUR 1,250      1,801

Santa Fe de Bogota DC (Þ)

        

Series 144a

        

9.750% due 07/26/28

    COP 861      722

TELUS Corp.

        

Series CD

        

4.950% due 03/15/17

    CAD 1,095      1,023

United Kingdom Treasury Bills

        

5.000% due 03/07/12

    GBP 1,348      2,741
         
        90,508
         

United States Government Agencies - 0.1%

        

Federal National Mortgage Association (Ñ)

        

3.250% due 04/09/13

      3,725      3,665

Zero coupon due 10/09/19

      1,960      1,128

Small Business Administration

        

Series 2000-P10 Class 1

        

7.449% due 08/10/10

      36      37

Small Business Administration Participation Certificates

        

Series 1997-20D Class 1

        

7.500% due 04/01/17

      825      864
         
        5,694
         

 

Multistrategy Bond Fund   117

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

United States Government Treasuries - 4.3%

        

United States Treasury Inflation Indexed Bonds

        

2.000% due 04/15/12 (Ñ)

    1,365      1,435

2.000% due 01/15/14 (Ñ)

    143      151

2.375% due 01/15/17

    10      10

2.625% due 07/15/17 (Ñ)

    209      230

United States Treasury Notes

        

2.125% due 04/30/10

    1,010      1,007

3.625% due 12/31/12 (Ñ)

    187,563      192,604

3.125% due 04/30/13

    2,665      2,676

12.000% due 08/15/13 (Ñ)

    315      324

13.250% due 05/15/14 (Ñ)

    510      567

12.500% due 08/15/14 (Ñ)

    605      682

4.250% due 11/15/14 (Ñ)

    2,655      2,809

5.125% due 05/15/16 (Ñ)

    20,687      22,903

4.875% due 08/15/16 (Ñ)

    590      642

4.625% due 11/15/16 (Ñ)

    80      86

4.625% due 02/15/17 (Ñ)

    70      75

4.500% due 05/15/17 (Ñ)

    3,830      4,059

3.500% due 02/15/18

    3,280      3,210

8.750% due 08/15/20 (Ñ)

    153      219

6.000% due 02/15/26 (Ñ)

    21,975      25,960

6.125% due 11/15/27

    752      910

4.750% due 02/15/37 (Ñ)

    6,370      6,637

5.000% due 05/15/37 (Ñ)

    9,795      10,615

United States Treasury Principal (Ñ)

        

Principal Only STRIP

        

Zero coupon due 11/15/21

    5      3
         
        277,814
         
Total Long-Term Investments        

(cost $6,830,744)

         6,650,004
         
Common Stocks - 0.0%        

Auto and Transportation - 0.0%

        

Northwest Airlines Corp. (Æ)

    141      1
         

Financial Services - 0.0%

        

Emerging Market Local Currency Fund (Æ)

    108,802      1,314

Pacific Investment Management Co. Series High Yield Portfolio Institutional

    77,506      651
         
        1,965
         
Total Common Stocks        

(cost $1,916)

         1,966
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Preferred Stocks - 0.2%

        

Financial Services - 0.2%

        

Deutsche Bank Contingent Capital Trust II

    45,300      1,028

DG Funding Trust

        

Series 144a (Ê)(Å)

    361      3,612

Federal National Mortgage Association (Ñ)

    223,500      5,596

Freddie Mac (Ñ)

    244,950      6,271
         
        16,507
         

Producer Durables - 0.0%

        

Nexen, Inc.

    15,695      381
         
Total Preferred Stocks        

(cost $17,083)

         16,888
         
Warrants & Rights - 0.0%        

Materials and Processing - 0.0%

        

Solutia, Inc. (Æ)(Þ)
2009 Warrants

    1      —
         
Total Warrants & Rights        

(cost $73)

         —
         
    

Notional
Amount

       

Options Purchased - 0.1%

        

(Number of Contracts)

        

Euro-Bund Futures

        

Sep 2008 92.50 Put (1,308)

    USD 3,270      8

Eurodollar Futures

        

Jun 2008 92.50 Put (500)

    USD 1,250      3

Jun 2008 92.75 Put (472)

    USD 1,180      3

Sep 2008 92.25 Put (615)

    USD 1,538      4

Swaptions

        

(Fund Pays/Fund Receives)

        

USD Three Month LIBOR/USD

        

3.150%

        

Dec 2008 0.00 Call (2)

    USD 151,600      855

USD Three Month LIBOR/USD

        

3.000%

        

Feb 2009 0.00 Call (1)

    USD 162,400      763

USD Three Month LIBOR/USD

        

3.150%

        

Feb 2009 0.00 Call (1)

    USD 70,200      396

 

118   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Notional
Amount		      Market
Value
$
       

USD Three Month LIBOR/USD

        

3.500%

        

Feb 2009 0.00 Call (1)

    USD 103,000      863

USD Three Month LIBOR/USD

        

3.600%

        

Jul 2009 0.00 Call (1)

    USD 16,100      140

USD Three Month LIBOR/USD

        

3.450%

        

Aug 2009 0.00 Call (5)

    USD 102,800      770

USD Three Month LIBOR/USD

        

3.850%

        

Aug 2009 0.00 Call (1)

    USD 17,300      183
         
Total Options Purchased        

(cost $6,270)

         3,988
         
    

Principal
Amount ($)
or Shares

       
Short-Term Investments - 14.5%        

ALROSA Finance SA

        

8.125% due 05/06/08

    4,240      4,240

American Express Bank FSB (Ê)

        

Series BKNT

        

2.723% due 10/16/08

    3,000      2,994

American Express Centurion
Bank (Ê)

        

Series BKNT

        

2.741% due 05/07/08

    800      800

American Express Credit Corp. (Ê)

        

Series MTN

        

2.763% due 03/02/09

    1,800      1,791

AMFM, Inc.

        

8.000% due 11/01/08

    950      973

Amgen, Inc. (Ê)

        

Series WI

        

3.170% due 11/28/08

    4,600      4,582

AT&T, Inc. (Ê)

        

3.155% due 05/15/08

    3,300      3,300

3.278% due 11/14/08

    3,400      3,399

Avista Corp.

        

9.750% due 06/01/08

    1,045      1,050

Bank of America NA (Ê)

        

Series BKNT

        

2.764% due 12/18/08

    400      399

3.089% due 02/27/09

    400      399
     Principal
Amount ($)
or Shares		      Market
Value
$

Bear Stearns Cos., Inc. (The) (Ê)

        

Series MTNB

        

3.551% due 01/30/09

    1,000      988

2.786% due 03/30/09

    900      868

BellSouth Corp. (Ê)

        

3.165% due 08/15/08

    1,300      1,298

Calyon NY

        

2.689% due 01/16/09

    3,400      3,399

CIT Group, Inc. (Ê)

        

2.729% due 12/19/08

    1,800      1,668

3.401% due 01/30/09

    800      734

Citigroup Funding, Inc.
Zero coupon due 07/17/08

    385      603

Series MTN

        

2.980% due 12/08/08

    400      397

2.898% due 04/23/09

    3,600      3,560

Citigroup Global Markets Holdings, Inc. (Ê)

        

Series MTNA

        

2.900% due 03/17/09

    300      298

Citigroup, Inc. (Ê)

        

2.695% due 12/26/08

    3,200      3,183

3.291% due 01/30/09

    400      398

Countrywide Home Loans, Inc.

        

Series MTNH (Ñ)

        

6.250% due 04/15/09

    350      335

Series MTNL (Ñ)

        

3.250% due 05/21/08

    680      678

Daimler Finance North America LLC

        

3.298% due 03/13/09 (Ê)

    2,900      2,872

Series MTN (Ê)

        

3.218% due 03/13/09

    1,700      1,687

Delphi Corp., Second Lien Term Loan

        

6.875% due 07/01/08

    400      402

Deutsche Telekom International Finance BV(Ê)

        

2.779% due 03/23/09

    6,400      6,323

Entergy Gulf States, Inc.

        

3.600% due 06/01/08

    235      235

Series 144a (Ê)(Å)

        

3.740% due 12/08/08

    570      571

Erac USA Finance Co. (Þ)

        

Series 144a

        

5.300% due 11/15/08

    350      351

Fannie Mae REMICS

        

Series 1993-134 Class H

        

6.500% due 08/25/08

    35      35

 

Multistrategy Bond Fund   119

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Federal Home Loan Bank Discount Notes (ç)(ž)

        

Zero coupon due 05/07/08 (Ñ)

    8,160      8,157

Zero coupon due 05/08/08

    4,785      4,783

Zero coupon due 05/09/08 (Ñ)

    12,310      12,304

Zero coupon due 05/14/08 (Ñ)

    3,090      3,088

Zero coupon due 05/28/08

    4,500      4,493

Ferro Corp.

        

9.125% due 01/01/09

    1,500      1,530

Freddie Mac Discount Notes (ç)(ž)

        

Zero Coupon due 07/21/08

    805      801

Gazinvest Luxembourg SA for Gazprombank

        

7.250% due 10/30/08

    2,300      2,321

General Electric Capital Corp. (Ê)

        

Series MTN

        

2.768% due 01/05/09

    800      799

Series MTNA

        

3.007% due 07/28/08

    2,000      1,999

GMAC LLC

        

5.125% due 05/09/08

    1,190      1,190

Goldman Sachs Group, Inc. (The)

        

2.639% due 12/23/08 (Ê)

    800      796

Series MTN

        

2.746% due 03/30/09

    2,800      2,779

Series MTNB

        

2.689% due 12/22/08

    1,800      1,788

HSBC Finance Corp.

        

2.930% due 09/15/08 (Ê)(Ñ)

    4,500      4,477

4.125% due 12/15/08

    175      175

5.875% due 02/01/09

    660      667

International Lease Finance Corp. (Ñ)

        

3.500% due 04/01/09

    550      540

JC Penney Corp., Inc.

        

7.375% due 08/15/08

    1,450      1,458

John Deere Capital Corp. (Ê)

        

Series MTN

        

2.763% due 07/15/08

    800      800

John Hancock Financial Services, Inc.

        

5.625% due 12/01/08

    120      122

Kansas City Southern Railway

        

9.500% due 10/01/08

    5,500      5,555

Lehman Brothers Holdings, Inc. (Ê)

        

Series MTN

        

2.998% due 10/22/08

    1,800      1,794

2.936% due 11/24/08

    1,400      1,370

2.774% due 04/03/09

    5,500      5,313

Mandalay Resort Group

        

9.500% due 08/01/08

    495      500
     Principal
Amount ($)
or Shares		      Market
Value
$

Mantis Reef, Ltd. (Å)

        

Series 144a

        

4.692% due 11/14/08

    585      582

MBNA Corp. (Ê)

        

Series MTNF

        

3.590% due 05/05/08

    780      780

Merrill Lynch & Co., Inc.

        

Zero coupon due 05/28/08

    8,780      8,761

Series MTN1

        

2.900% due 06/16/08

    6,800      6,790

Morgan Stanley (Ê)

        

Series GMTN

        

3.206% due 02/09/09

    3,100      3,072

Owens-Illinois, Inc.

        

7.350% due 05/15/08

    650      650

Quebecor World Capital Corp. (Ø)

        

4.875% due 11/15/08

    525      219

Reckson Operating Partnership, LP

        

7.750% due 03/15/09

    175      173

Residential Capital LLC

        

3.490% due 06/09/08 (Ê)

    3,540      3,297

5.816% due 04/17/09 (Ê)

    495      329

Series 144a (Þ)

        

6.546% due 04/17/09

    3,175      1,433

Royal Bank of Scotland PLC
(The) (Ê)(Þ)

        

Series 144a

        

2.868% due 07/21/08

    800      799

Russell Investment Company Money Market Fund

    731,444,000      731,444

Salomon Brothers AG for OAO Siberian Oil Co.

        

Series REGS

        

10.750% due 01/15/09

    3,045      3,168

Santander US Debt SA
Unipersonal (Ê)(Þ)

        

Series 144a

        

2.659% due 09/19/08

    4,300      4,289

SLM Corp.

        

Series MTNA

        

3.130% due 07/25/08 (Ê)

    6,200      6,150

4.000% due 01/15/09 (Ñ)

    500      483

Southern California Edison Co. (Ê)

        

3.212% due 02/02/09

    600      595

Telesat, SUB Bridge Loan

        

10.500% due 10/31/08

    1,800      1,530

Transocean, Inc. (Ê)

        

3.214% due 09/05/08

    2,000      1,996

 

120   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Unicredit Luxembourg Finance SA (Ê)(Þ)

        

Series 144a

        

2.970% due 10/24/08

    4,100      4,095

United States Treasury Bills (ç)(ž)

        

1.322% due 05/29/08

    250      250

0.894% due 06/12/08 (Ñ)

    250      250

0.935% due 06/12/08 (Ñ)

    500      500

1.118% due 06/12/08 (Ñ)

    2,000      1,997

1.302% due 06/12/08 (Ñ)

    1,750      1,747

1.445% due 06/12/08 (Ñ)

    750      749

2.467% due 06/19/08

    150      150

0.934% due 06/26/08

    500      499

1.215% due 06/26/08

    250      250

1.220% due 06/26/08

    1,500      1,497

1.304% due 06/26/08

    500      499

1.322% due 06/26/08

    500      499

1.352% due 06/26/08

    500      499

1.383% due 06/26/08

    1,000      998

Verizon Communications, Inc. (Ê)

        

2.734% due 04/03/09

    4,800      4,777

VTB Capital SA (Ê)

        

Series 144a (Þ)

        

3.839% due 08/01/08

    3,500      3,500

Series REGS

        

3.839% due 08/01/08

    1,840      1,828

Wachovia Bank NA (Ê)

        

Series BKNT

        

2.645% due 06/27/08 (Ñ)

    800      798

2.639% due 03/23/09

    1,500      1,485

Wachovia Corp. (Ê)

        

3.301% due 10/28/08

    3,000      2,993

Wal-Mart Stores, Inc. (Ê)

        

2.700% due 06/16/08

    1,900      1,900

Westpac Banking Corp. (Ê)

        

Series DPNT

        

2.701% due 06/06/08

    1,300      1,300
         
Total Short-Term Investments     

(cost $937,177)

         934,009
         
     Principal
Amount ($)
or Shares		      Market
Value
$		  
Repurchase Agreements - 0.3%     

Agreement with Credit Suisse First Boston and JP Morgan Chase & Co. (Tri-Party) of $21,700 dated April 30, 2008, at 1.900% to be repurchased at $21,701 on May 1, 2008, collateralized by: $17,112 par United States Treasury Inflation Protected Bonds, valued at $20,145

    21,700      21,700  
           
Total Repurchase Agreements        

(cost $21,700)

         21,700  
           
Other Securities - 5.6%        

Russell Investment Company Money Market Fund (×)

    78,184,602      78,185  

State Street Securities Lending Quality Trust (×)

    281,383,445      281,383  
           
Total Other Securities        

(cost $359,568)

         359,568  
           
Total Investments - 123.6%        

(identified cost $8,174,531)

         7,988,123  
Other Assets and Liabilities, Net - (23.6%)         (1,524,520 )
           

Net Assets - 100.0%

         6,463,603  
           

 

See accompanying notes which are an integral part of the financial statements.

 

Multistrategy Bond Fund   121

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		   

Unrealized
Appreciation

(Depreciation)
$

  
    

Long Positions

     

Euribor Futures
expiration date 06/08 (57)

   EUR  14,250    22  

Euro-Schatz Bond Futures
expiration date 06/08 (1,100)

   EUR  110,000    (2,494 )

Eurodollar Futures (CME)
expiration date 06/08 (140)

   USD  35,000    666  

expiration date 09/08 (7)

   USD  1,750    3  

expiration date 12/08 (1,380)

   USD  345,000    4,501  

expiration date 03/09 (292)

   USD  73,000    364  

expiration date 06/09 (174)

   USD  43,500    (282 )

expiration date 09/09 (260)

   USD  65,000    (300 )

expiration date 12/09 (174)

   USD  43,500    (247 )

expiration date 03/10 (94)

   USD  23,500    (92 )

Germany, Federal Republic
2 Year Bonds
expiration date 06/08 (590)

   EUR  59,000    (1,044 )

5 Year Bonds
expiration date 06/08 (653)

   EUR  65,300    (2,764 )

10 Year Bonds
expiration date 06/08 (18)

   EUR  1,800    (11 )

30 Year Bonds
expiration date 06/08 (123)

   EUR  12,300    (506 )

LIBOR Futures
expiration date 06/08 (98)

   GBP  12,250    27  

expiration date 09/08 (157)

   GBP  19,625    (4 )

expiration date 12/08 (147)

   GBP  18,375    29  

expiration date 06/09 (21)

   GBP  2,625    43  

expiration date 12/09 (5)

   GBP  625    (5 )

Three Month Short Sterling Interest Rate Futures (UK)
expiration date 03/09 (53)

   GBP  6,625    125  

United States Treasury Bonds
expiration date 06/08 (3,166)

   USD  316,600    (2,304 )

United States Treasury Notes
2 Year Futures
expiration date 06/08 (1,810)

   USD  362,000    (2,049 )

United States Treasury Notes
5 Year Futures
expiration date 06/08 (1,994)

   USD  199,400    (1,089 )

United States Treasury Notes
10 Year Futures
expiration date 06/08 (2,127)

   USD  212,700    (159 )
Futures Contracts
(Number of Contracts)		   Notional
Amount		   

Unrealized
Appreciation

(Depreciation)
$

Short Positions

     

Germany, Federal Republic
10 Year Bonds
expiration date 06/08 (171)

   EUR 17,100    749

Japanese 10 Year Bond (Japan)
expiration date 06/08 (31)

   JPY 310,000    710

United Kingdom Treasury Bonds
expiration date 06/08 (84)

   GBP 8,400    187

United States Treasury Bonds
expiration date 06/08 (105)

   USD 10,500    37

United States Treasury Notes
2 Year Futures
expiration date 06/08 (497)

   USD 99,400    844

United States Treasury Notes
5 Year Futures
expiration date 06/08 (765)

   USD 76,500    930

United States Treasury Notes
10 Year Futures
expiration date 06/08 (3,767)

   USD  376,700    6,439
      

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

      2,326
      

 

See accompanying notes which are an integral part of the financial statements.

 

122   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Options Written
(Number of Contracts)		   Notional
Amount		   

Market

Value
$

  
    

Swaptions

     

(Fund Pays/Fund Receives)

     

USD 4.950%/USD Three Month LIBOR
Sep 2008 0.00 Call (2)

      7,100    (335 )

USD 4.300%/USD Three Month LIBOR
Dec 2008 0.00 Call (2)

      50,600    (1,220 )

USD 3.950%/USD Three Month LIBOR
Feb 2009 0.00 Call (1)

      70,600    (1,196 )

USD 4.250%/USD Three Month LIBOR
Feb 2009 0.00 Call (1)

      23,400    (542 )

USD 4.300%/USD Three Month LIBOR
Feb 2009 0.00 Call (1)

      30,700    (756 )

USD 4.600%/USD Three Month LIBOR
Feb 2009 0.00 Call (1)

      10,900    (370 )

USD 4.200%/USD Three Month LIBOR
Jul 2009 0.00 Call (1)

      7,000    (153 )

USD 4.150%/USD Three Month LIBOR
Aug 2009 0.00 Call (1)

      4,000    (83 )

USD 4.400%/USD Three Month LIBOR
Aug 2009 0.00 Call (5)

      31,200    (878 )

USD 4.550%/USD Three Month LIBOR
Aug 2009 0.00 Call (1)

      5,800    (178 )

United States Treasury Notes
10 Year Futures

     

May 2008 118.00 Call (640)

   USD  75,520    (130 )

May 2008 120.00 Call (206)

   USD  24,720    (6 )

May 2008 114.00 Put (711)

   USD  81,054    (278 )

May 2008 116.00 Put (134)

   USD  15,544    (115 )
        

Total Liability for Options Written (premiums received $8,606)

      (6,240 )
        

 


 

See accompanying notes which are an integral part of the financial statements.

 

Multistrategy Bond Fund   123

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Credit Default Swap Contracts  

Reference
Entity

  

Counter Party

   Notional
Amount		   Fund
(Pays)/Receives
Fixed Rate		     Termination
Date		   Market Value
$		  
           

ABX - HE Index for Sub-Prime Home Equity Sector

   Credit Suisse First Boston   USD   5,000   0.090%     08/25/37   (1,751 )

ABX - HE Index for Sub-Prime Home Equity Sector

   Credit Suisse First Boston   USD   5,000   0.090%     08/25/37   (1,751 )

ABX - HE Index for Sub-Prime Home Equity Sector

   Credit Suisse First Boston   USD   2,600   0.760%     01/25/38   (1,084 )

ABX - HE Index for Sub-Prime Home Equity Sector

   Credit Suisse First Boston   USD   4,000   0.760%     01/25/38   (1,660 )

ABX - HE Index for Sub-Prime Home Equity Sector

   Deutsche Bank   USD   7,100   0.110%     05/25/46   (1,180 )

ABX - HE Index for Sub-Prime Home Equity Sector

   Lehman Brothers   USD   5,000   0.090%     08/25/37   (1,751 )

ABX - HE Index for Sub-Prime Home Equity Sector

   Lehman Brothers   USD   15,000   0.760%     01/25/38   (6,224 )

American International Group

   Deutsche Bank   USD   6,700   2.050%     03/20/13   330  

American International Group

   Deutsche Bank   USD   9,000   1.630%     06/20/13   265  

Argentina Government International Bond

   Lehman Brothers   USD   8,000   1.700%     08/20/08   2  

Berkshire Hathaway

   Deutsche Bank   USD   13,500   1.000%     03/20/13   239  

Brazilian Government International Bond

   Lehman Brothers   USD   5,200   1.120%     11/20/11   78  

Brazilian Government International Bond

   Morgan Stanley   USD   500   1.660%     03/20/13   13  

Chesapeake Energy Corp.

   Lehman Brothers   USD   8,000   0.750%     09/20/08   9  

CMBS AAA Index

   Goldman Sachs   USD   2,200   0.080%     12/13/49   (145 )

CMBS AAA Index

   Morgan Stanley   USD   2,800   0.080%     12/13/49   (185 )

Computer Sciences Corp.

   Credit Suisse First Boston   USD   2,575   (1.180% )   03/20/18   97  

Countrywide Home Loans

   Deutsche Bank   USD   10,000   4.500%     06/20/10   64  

Countrywide Home Loans

   Merrill Lynch   USD   7,800   6.300%     06/20/09   68  

Custom FTD Basket

   Morgan Stanley   USD   15,600   11.400%     08/20/08   395  

Dow Jones CDX High Volatility Index

   Chase Securities Inc.   USD   6,000   1.120%     12/20/12   221  

Dow Jones CDX High Volatility Index

   Chase Securities Inc.   USD   1,600   1.120%     12/20/12   51  

Dow Jones CDX High Volatility Index

   Citibank   USD   1,100   0.401%     06/20/12   (27 )

Dow Jones CDX High Volatility Index

   Citibank   USD   5,068   0.355%     06/20/12   (134 )

Dow Jones CDX High Volatility Index

   Citibank   USD   4,968   0.360%     06/20/12   (130 )

Dow Jones CDX High Volatility Index

   Deutsche Bank   USD   7,500   0.707%     12/20/12   177  

Dow Jones CDX High Volatility Index

   Deutsche Bank   USD   4,800   1.550%     06/20/13   140  

Dow Jones CDX High Volatility Index

   Goldman Sachs   USD   4,800   0.600%     12/20/12   (44 )

Dow Jones CDX High Volatility Index

   Goldman Sachs   USD   10,700   1.550%     06/20/13   320  

Dow Jones CDX High Volatility Index

   Merrill Lynch   USD   1,100   1.833%     06/20/12   (32 )

Dow Jones CDX High Volatility Index

   Merrill Lynch   USD   19,873   1.580%     12/20/12   437  

Dow Jones CDX High Volatility Index

   Merrill Lynch   USD   17,000   1.640%     12/20/12   416  

Dow Jones CDX High Volatility Index

   Merrill Lynch   USD   5,600   1.550%     06/20/13   166  

Dow Jones CDX High Volatility Index

   Morgan Stanley   USD   1,100   2.080%     06/20/12   (22 )

Dow Jones CDX High Volatility Index

   Morgan Stanley   USD   11,400   1.550%     06/20/13   339  

Ford Motor Credit Co.

   Barclays Bank PLC   USD   700   5.650%     09/20/12   (35 )

Ford Motor Credit Co.

   Goldman Sachs   USD   300   3.850%     09/20/12   (32 )

Ford Motor Credit Co.

   Lehman Brothers   USD   1,500   5.150%     09/20/12   (99 )

Freddie Mac

   Barclays Bank PLC   USD   2,700   0.720%     03/20/13   50  

Gaz Capital for Gazprom

  

Barclays Bank PLC

   USD   3,500   1.600%     12/20/12   (22 )

Gaz Capital for Gazprom

  

Chase Securities Inc.

   USD   500   0.970%     12/20/12   (15 )

Gaz Capital for Gazprom

  

Chase Securities Inc.

   USD   500   1.020%     12/20/12   (15 )

Gaz Capital for Gazprom

  

JP Morgan

   USD   300   0.970%     11/20/08   1  

Gaz Capital for Gazprom

  

JP Morgan

   USD   1,000   0.360%     05/20/09   (7 )

Gaz Capital for Gazprom

  

Morgan Stanley

   USD   200   2.180%     02/20/13   3  

 

See accompanying notes which are an integral part of the financial statements.

 

124   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Credit Default Swap Contracts  

Reference
Entity

  

Counter Party

   Notional
Amount		   Fund
(Pays)/Receives
Fixed Rate		     Termination
Date		   Market Value
$		  
           

General Motors Acceptance Corp.

  

Bank of America

   USD   4,000   1.000%     09/20/08   (117 )

General Motors Acceptance Corp.

  

Lehman Brothers

   USD   4,000   3.600%     09/20/08   (48 )

General Motors Acceptance Corp.

  

Merrill Lynch

   USD   400   1.850%     09/20/09   (51 )

General Motors Acceptance Corp.

  

Morgan Stanley

   USD   5,000   0.970%     09/20/08   (147 )

General Motors Corp.

  

Citibank

   USD   10,000   4.630%     12/20/12   (1,614 )

General Motors Corp.

  

Lehman Brothers

   USD   5,000   2.300%     09/20/08   1  

Goldman Sachs Group, Inc.

  

Credit Suisse First Boston

   USD   3,300   0.940%     09/20/12   9  

Goldman Sachs Group, Inc.

  

Deutsche Bank

   USD   1,700   0.880%     09/20/12   —    

Indonesia Government International Bond

  

JP Morgan

   USD   1,000   0.390%     12/20/08   (3 )

Indonesia Government International Bond

  

Lehman Brothers

   USD   400   0.400%     12/20/08   (1 )

Kazkommerts International BV

  

Lehman Brothers

   USD   2,700   4.250%     10/20/12   (270 )

Merrill Lynch & Co.

  

Banque National De Paris

   USD   5,300   2.170%     06/20/13   182  

Merrill Lynch & Co.

  

Deutsche Bank

   USD   1,800   2.200%     06/20/13   64  

Merrill Lynch & Co.

  

Royal Bank of Scotland

   USD   3,500   2.200%     06/20/13   125  

Metlife, Inc.

  

Deutsche Bank

   USD   6,700   2.050%     03/20/13   393  

Metlife, Inc.

  

UBS

   USD   6,700   2.050%     03/20/13   393  

Mexico Government International Bond

  

Mexico Government International Bond

   USD   2,400   0.920%     03/20/16   (6 )

Neiman Marcus Group (The)

  

Lehman Brothers

   USD   4,000   1.100%     09/20/08   18  

Nordstrom, Inc.

  

JP Morgan

   USD   2,750   (0.870% )   12/20/17   (48 )

Panama Government International Bond

  

Chase Securities Inc.

   USD   300   1.250%     01/20/17   (7 )

Prudential

  

Deutsche Bank

   USD   6,700   2.300%     03/20/13   389  

Prudential

  

UBS

   USD   6,700   2.300%     03/20/13   389  

Russia Government International Bond

  

Morgan Stanley

   USD   200   0.245%     06/20/08   —    

Russia Government International Bond

  

Morgan Stanley

   USD   2,900   0.795%     08/20/12   (17 )

Russia Government International Bond

  

Morgan Stanley

   USD   300   0.780%     03/20/16   (8 )

Russia Government International Bond

  

Morgan Stanley

   USD   300   0.800%     03/20/16   (7 )

Sunguard Data Systems

  

Lehman Brothers

   USD   8,000   3.500%     09/20/12   16  

Ukraine SP Dub

  

JP Morgan

   USD   4,500   0.730%     04/20/09   (15 )

Univision Communications Inc.

  

Lehman Brothers

   USD   8,000   1.750%     12/20/08   518  

Wachovia

  

JP Morgan

   USD   2,300   3.020%     03/20/13   202  
               

Total Market Value of Open Credit Default Swap Contracts Premiums Paid (Received) - ($13,576)

   (12,124 )
               

 

See accompanying notes which are an integral part of the financial statements.

 

Multistrategy Bond Fund   125

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts  

Counter
Party

   Notional
Amount		   Fund Receives  

Fund Pays

   Termination
Date		   Market Value
$		  
           

Bank of America

   USD   37,500   5.473%  

Three Month LIBOR

   06/14/11   2,771  

Bank of America

   USD   100   4.000%  

Three Month LIBOR

   06/18/13   1  

Bank of America

   USD   60,600   4.500%  

Three Month LIBOR

   06/18/13   1,801  

Bank of America

   USD   7,600   Six Month LIBOR  

5.000%

   06/18/15   (400 )

Bank of America

   USD   13,200   5.548%  

Three Month LIBOR

   06/14/16   1,221  

Bank of America

   USD   300   Three Month LIBOR  

5.000%

   06/18/18   (14 )

Bank of America

   USD   17,000   5.000%  

Three Month LIBOR

   06/18/18   822  

Bank of America

   USD   9,400   Three Month LIBOR  

5.250%

   06/18/23   (593 )

Bank of America

   USD   12,100   Three Month LIBOR  

5.250%

   06/18/23   (763 )

Bank of America

   USD   15,700   Three Month LIBOR  

5.250%

   06/18/23   (991 )

Bank of America

   USD   15,700   Three Month LIBOR  

5.250%

   06/18/23   (991 )

Bank of America

   USD   19,000   Three Month LIBOR  

5.250%

   06/18/23   (1,199 )

Bank of America

   USD   36,300   Three Month LIBOR  

5.250%

   06/18/23   (2,290 )

Bank of America

   USD   1,400   5.250%  

Three Month LIBOR

   06/18/28   86  

Bank of America

   USD   16,400   Three Month LIBOR  

5.250%

   06/18/28   (1,011 )

Bank of America

   USD   7,000   5.628%  

Three Month LIBOR

   06/16/36   974  

Bank of America

   USD   4,200   Three Month LIBOR  

5.000%

   06/18/38   (102 )

Bank of Scotland

   EUR   8,700   4.250%  

Six Month LIBOR

   06/18/10   (51 )

Barclays Bank PLC

   GBP   3,700   6.000%  

Six Month LIBOR

   03/20/09   24  

Barclays Bank PLC

   BRL   5,600   11.360%  

Brazil Interbank Deposit Rate

   01/04/10   (104 )

Barclays Bank PLC

   EUR   2,800   Consumer Price Index (France)  

2.10%

   10/15/10   (7 )

Barclays Bank PLC

   BRL   3,900   Brazil Interbank Deposit Rate  

12.540%

   01/02/12   (48 )

Barclays Bank PLC

   EUR   66,295   Six Month LIBOR  

4.250%

   06/18/13   494  

Barclays Bank PLC

   SEK   10,500   Three Month LIBOR  

4.750%

   06/18/13   (4 )

Barclays Bank PLC

   JPY   180,000   2.000%  

Six Month LIBOR

   12/19/17   50  

Barclays Bank PLC

   SEK   60,000   4.750%  

Three Month LIBOR

   06/18/18   (32 )

Barclays Bank PLC

   SEK   204,700   Three Month LIBOR  

4.750%

   06/18/18   192  

Barclays Bank PLC

   GBP   600   Six Month LIBOR  

4.000%

   12/15/36   142  

Barclays Bank PLC

   EUR   6,610   4.750%  

Six Month LIBOR

   06/18/38   (85 )

Barclays Bank PLC

   USD   3,750   Three Month LIBOR  

5.250%

   06/18/38   (240 )

Bear Stearns

   USD   110,200   Three Month LIBOR  

5.282%

   08/20/12   (9,092 )

Citibank

   USD   900   4.000%  

Three Month LIBOR

   06/18/10   14  

Citibank

   HUF   500,000   8.200%  

Six Month LIBOR

   04/21/13   3  

Citibank

   JPY   93,000   Six Month LIBOR  

1.250%

   06/18/13   5  

Citibank

   MXN   2,300   8.170%  

Mexico Interbank 28 Day Deposit Rate

   11/04/16   (2 )

Citibank

   JPY   1,789,000   1.645%  

Three Month LIBOR

   04/25/18   (159 )

Citibank

   GBP   850   5.250%  

Six Month LIBOR

   06/18/18   15  

Citibank

   EUR   510   4.750%  

Six Month LIBOR

   06/18/38   (7 )

Citibank

   USD   1,720   Three Month LIBOR  

5.250%

   06/18/38   (110 )

Credit Suisse First Boston

   EUR   6,300   4.250%  

Six Month LIBOR

   06/18/10   (37 )

Credit Suisse First Boston

   EUR   5,590   4.500%  

Six Month LIBOR

   06/18/18   (56 )

Credit Suisse First Boston

   EUR   19,270   4.500%  

Six Month LIBOR

   06/18/18   (192 )

Credit Suisse First Boston

   SEK   224,000   Three Month LIBOR  

4.750%

   06/18/18   210  

 

See accompanying notes which are an integral part of the financial statements.

 

126   Multistrategy Bond Fund

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Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts  

Counter
Party

   Notional
Amount		   Fund Receives  

Fund Pays

   Termination
Date		   Market Value
$		  
           

Credit Suisse First Boston

   EUR   6,070   4.750%  

Six Month LIBOR

   06/18/38   (78 )

Credit Suisse First Boston

   EUR   6,610   4.750%  

Six Month LIBOR

   06/18/38   (85 )

Credit Suisse First Boston

   USD   5,270   Three Month LIBOR  

5.250%

   06/18/38   (337 )

Credit Suisse First Boston

   USD   8,000   Three Month LIBOR  

5.250%

   06/18/38   (511 )

Deutsche Bank

   EUR   400   5.000%  

Six Month LIBOR

   12/19/09   4  

Deutsche Bank

   BRL   37,800   12.830%  

Three Month LIBOR

   01/04/10   629  

Deutsche Bank

   EUR   8,000   4.250%  

Six Month LIBOR

   06/18/10   (47 )

Deutsche Bank

   USD   101,280   Three Month LIBOR  

4.315%

   11/17/10   (1,743 )

Deutsche Bank

   JPY   1,472,000   1.183%  

Six Month LIBOR

   12/17/10   (6 )

Deutsche Bank

   JPY   1,937,000   1.170%  

Six Month LIBOR

   12/17/10   (13 )

Deutsche Bank

   JPY   1,937,000   1.160%  

Six Month LIBOR

   12/17/10   (16 )

Deutsche Bank

   JPY   3,848,000   1.181%  

Six Month LIBOR

   12/17/10   (17 )

Deutsche Bank

   JPY   4,045,000   1.183%  

Six Month LIBOR

   12/17/10   (17 )

Deutsche Bank

   USD   52,350   Three Month LIBOR  

3.780%

   12/24/10   (305 )

Deutsche Bank

   USD   20,640   Three Month LIBOR  

4.000%

   12/29/10   (203 )

Deutsche Bank

   USD   31,990   Three Month LIBOR  

3.868%

   12/29/10   (234 )

Deutsche Bank

   USD   49,780   Three Month LIBOR  

3.658%

   01/07/11   (156 )

Deutsche Bank

   USD   26,060   Three Month LIBOR  

3.161%

   01/28/11   178  

Deutsche Bank

   USD   4,700   4.500%  

Three Month LIBOR

   06/18/11   140  

Deutsche Bank

   AUD   5,730   Six Month LIBOR  

7.250%

   06/18/13   49  

Deutsche Bank

   USD   13,500   Three Month LIBOR  

4.500%

   06/18/13   (401 )

Deutsche Bank

   USD   75,600   4.500%  

Three Month LIBOR

   06/18/13   2,247  

Deutsche Bank

   USD   89,300   4.920%  

Three Month LIBOR

   11/17/15   3,423  

Deutsche Bank

   JPY   933,000   Six Month LIBOR  

1.703%

   12/17/15   (60 )

Deutsche Bank

   JPY   1,224,000   Six Month LIBOR  

1.670%

   12/17/15   (54 )

Deutsche Bank

   JPY   1,224,000   Six Month LIBOR  

1.641%

   12/17/15   (32 )

Deutsche Bank

   JPY   2,436,000   Six Month LIBOR  

1.699%

   12/17/15   (153 )

Deutsche Bank

   JPY   2,561,000   Six Month LIBOR  

1.691%

   12/17/15   (147 )

Deutsche Bank

   USD   45,700   4.520%  

Three Month LIBOR

   12/24/15   559  

Deutsche Bank

   USD   18,100   4.745%  

Three Month LIBOR

   12/29/15   460  

Deutsche Bank

   USD   28,000   4.630%  

Three Month LIBOR

   12/29/15   521  

Deutsche Bank

   USD   43,400   4.487%  

Three Month LIBOR

   01/07/16   418  

Deutsche Bank

   USD   22,600   4.224%  

Three Month LIBOR

   01/28/16   (160 )

Deutsche Bank

   JPY   340,000   2.000%  

Six Month LIBOR

   12/19/17   94  

Deutsche Bank

   EUR   5,600   4.500%  

Six Month LIBOR

   06/18/18   (56 )

Deutsche Bank

   USD   8,700   Three Month LIBOR  

5.000%

   06/18/18   (421 )

Deutsche Bank

   USD   2,700   Three Month LIBOR  

5.250%

   06/18/23   (170 )

Deutsche Bank

   USD   26,100   Three Month LIBOR  

5.250%

   06/18/23   (1,647 )

Deutsche Bank

   USD   8,700   5.250%  

Three Month LIBOR

   06/18/28   536  

Deutsche Bank

   USD   12,200   5.250%  

Three Month LIBOR

   06/18/28   752  

Deutsche Bank

   EUR   8,750   4.750%  

Six Month LIBOR

   06/18/38   (112 )

Deutsche Bank

   USD   10,480   Three Month LIBOR  

5.250%

   06/18/38   (670 )

Deutsche Bank

   USD   10,550   Three Month LIBOR  

5.250%

   06/18/38   (675 )

Deutsche Bank

   USD   24,930   Three Month LIBOR  

5.309%

   11/17/38   (1,576 )

Deutsche Bank

   JPY   189,000   2.595%  

Six Month LIBOR

   12/17/38   24  

Deutsche Bank

   JPY   245,000   2.570%  

Six Month LIBOR

   12/17/38   19  

 

See accompanying notes which are an integral part of the financial statements.

 

Multistrategy Bond Fund   127

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts  

Counter
Party

   Notional
Amount		   Fund Receives  

Fund Pays

   Termination
Date		   Market Value
$		  
           

Deutsche Bank

   JPY   245,000   2.540%  

Six Month LIBOR

   12/17/38   4  

Deutsche Bank

   JPY   490,000   2.594%  

Six Month LIBOR

   12/17/38   62  

Deutsche Bank

   JPY   515,000   2.585%  

Six Month LIBOR

   12/17/38   56  

Deutsche Bank

   USD   12,540   Three Month LIBOR  

5.011%

   12/24/38   (182 )

Deutsche Bank

   USD   4,980   Three Month LIBOR  

5.215%

   12/29/38   (230 )

Deutsche Bank

   USD   7,720   Three Month LIBOR  

5.121%

   12/29/38   (244 )

Deutsche Bank

   USD   11,900   Three Month LIBOR  

5.017%

   01/07/39   (176 )

Deutsche Bank

   USD   6,210   Three Month LIBOR  

4.939%

   01/28/39   (10 )

Financial Directors Incorporated

   HUF   254,000   8.280%  

Six Month LIBOR

   04/04/13   (1 )

Financial Directors Incorporated

   HUF   500,000   8.140%  

Six Month LIBOR

   04/18/13   1  

Goldman Sachs

   EUR   800   4.000%  

Six Month LIBOR

   03/20/09   (3 )

Goldman Sachs

   GBP   400   5.000%  

Six Month LIBOR

   06/15/09   (8 )

Goldman Sachs

   GBP   24,600   6.000%  

Six Month LIBOR

   06/19/09   279  

Goldman Sachs

   BRL   1,400   11.465%  

Brazil Interbank Deposit Rate

   01/04/10   (24 )

Goldman Sachs

   EUR   800   1.960%  

Consumer Price Index (France)

   03/30/12   (26 )

Goldman Sachs

   MXN   15,700   7.780%  

Mexico Interbank 28 Day Deposit Rate

   04/03/12   (20 )

Goldman Sachs

   USD   21,405   4.987%  

Three Month LIBOR

   05/02/12   (1,577 )

Goldman Sachs

   GBP   1,200   5.000%  

Six Month LIBOR

   09/17/13   (23 )

Goldman Sachs

   GBP   1,600   Six Month LIBOR  

5.500%

   12/15/36   (367 )

HSBC

   GBP   200   Six Month LIBOR  

4.000%

   12/15/36   47  

JP Morgan

   BRL   36,900   12.395%  

Three Month LIBOR

   01/04/10   136  

JP Morgan

   USD   28,000   4.500%  

Three Month LIBOR

   06/18/11   835  

JP Morgan

   EUR   2,500   1.948%  

Consumer Price Index (France)

   03/15/12   (77 )

JP Morgan

   HUF   242,000   8.280%  

Six Month LIBOR

   04/04/13   1  

JP Morgan

   USD   38,700   4.500%  

Three Month LIBOR

   06/18/13   1,150  

JP Morgan

   USD   81,800   4.500%  

Three Month LIBOR

   06/18/13   2,431  

JP Morgan

   USD   43,300   5.000%  

Three Month LIBOR

   06/18/15   2,280  

JP Morgan

   USD   116,400   5.000%  

Three Month LIBOR

   06/18/15   6,128  

JP Morgan

   USD   6,500   5.000%  

Three Month LIBOR

   06/18/18   314  

JP Morgan

   USD   14,700   5.000%  

Three Month LIBOR

   06/18/18   650  

JP Morgan

   USD   6,300   Three Month LIBOR  

5.250%

   06/18/28   (388 )

JP Morgan

   USD   14,300   Three Month LIBOR  

5.250%

   06/18/28   (784 )

JP Morgan

   USD   700   Three Month LIBOR  

5.000%

   06/18/38   (17 )

JP Morgan

   USD   9,300   5.250%  

Three Month LIBOR

   06/18/38   595  

Lehman Brothers

   GBP   12,600   4.500%  

Six Month LIBOR

   09/20/09   (338 )

Lehman Brothers

   EUR   16,800   4.250%  

Six Month LIBOR

   06/18/10   (98 )

Lehman Brothers

   EUR   19,600   4.250%  

Six Month LIBOR

   06/18/10   (114 )

Lehman Brothers

   JPY   3,356,000   1.188%  

Six Month LIBOR

   12/17/10   (11 )

Lehman Brothers

   EUR   8,520   435.400%  

Six Month LIBOR

   03/18/11   25  

Lehman Brothers

   EUR   8,600   4.280%  

Six Month LIBOR

   03/18/11   14  

Lehman Brothers

   EUR   16,890   4.341%  

Six Month LIBOR

   03/18/11   43  

Lehman Brothers

   EUR   25,800   4.328%  

Six Month LIBOR

   03/18/11   57  

Lehman Brothers

   JPY   2,127,000   Six Month LIBOR  

1.709%

   12/17/15   (146 )

Lehman Brothers

   EUR   8,120   Six Month LIBOR  

4.535%

   03/18/16   (82 )

Lehman Brothers

   EUR   8,200   Six Month LIBOR  

4.440%

   03/18/16   (20 )

 

See accompanying notes which are an integral part of the financial statements.

 

128   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts  

Counter
Party

   Notional
Amount		   Fund Receives  

Fund Pays

   Termination
Date		   Market Value
$		  
           

Lehman Brothers

   EUR   16,120   Six Month LIBOR  

4.503%

   03/18/16   (118 )

Lehman Brothers

   EUR   24,610   Six Month LIBOR  

4.500%

   03/18/16   (173 )

Lehman Brothers

   USD   51,000   5.336%  

Three Month LIBOR

   05/24/17   4,884  

Lehman Brothers

   USD   46,100   5.403%  

Three Month LIBOR

   05/25/17   4,659  

Lehman Brothers

   EUR   3,210   4.908%  

Six Month LIBOR

   03/18/24   58  

Lehman Brothers

   EUR   3,240   4.805%  

Six Month LIBOR

   03/18/24   10  

Lehman Brothers

   EUR   6,370   4.865%  

Six Month LIBOR

   03/18/24   72  

Lehman Brothers

   EUR   9,730   4.875%  

Six Month LIBOR

   03/18/24   125  

Lehman Brothers

   EUR   13,280   4.750%  

Six Month LIBOR

   06/18/38   (170 )

Lehman Brothers

   USD   16,610   Three Month LIBOR  

5.250%

   06/18/38   (1,062 )

Lehman Brothers

   JPY   431,000   2.648%  

Six Month LIBOR

   12/17/38   102  

Merrill Lynch

   GBP   29,800   4.500%  

Six Month LIBOR

   09/20/09   (799 )

Merrill Lynch

   BRL   1,200   12.948%  

Brazil Interbank Deposit Rate

   01/04/10   1  

Merrill Lynch

   BRL   3,700   11.430%  

Brazil Interbank Deposit Rate

   01/04/10   (65 )

Merrill Lynch

   CAD   2,340   4.750%  

Six Month LIBOR

   06/18/13   110  

Merrill Lynch

   CAD   3,110   Three Month LIBOR  

4.750%

   06/18/13   (146 )

Merrill Lynch

   GBP   7,860   Six Month LIBOR  

5.250%

   06/18/13   6  

Merrill Lynch

   JPY   440,000   1.673%  

Six Month LIBOR

   04/28/18   (27 )

Merrill Lynch

   GBP   300   Six Month LIBOR  

4.000%

   12/15/35   22  

Merrill Lynch

   USD   1,500   Three Month LIBOR  

5.000%

   06/18/38   (36 )

Merrill Lynch

   USD   3,300   Three Month LIBOR  

5.000%

   06/18/38   (80 )

Morgan Stanley

   BRL   3,000   12.670%  

Brazil Interbank Deposit Rate

   01/04/10   (18 )

Morgan Stanley

   EUR   13,900   4.250%  

Six Month LIBOR

   06/18/10   (81 )

Morgan Stanley

   USD   2,500   4.000%  

Three Month LIBOR

   06/18/10   40  

Morgan Stanley

   JPY   970,000   1.624%  

Six Month LIBOR

   04/25/18   (104 )

Royal Bank of Scotland

   GBP   500   6.000%  

Six Month LIBOR

   03/20/09   3  

Royal Bank of Scotland

   GBP   3,700   6.000%  

Six Month LIBOR

   06/19/09   42  

Royal Bank of Scotland

   USD   4,000   4.000%  

Three Month LIBOR

   06/18/10   64  

Royal Bank of Scotland

   EUR   900   1.955%  

Consumer Price Index (France)

   03/28/12   (30 )

Royal Bank of Scotland

   CAD   7,660   Six Month LIBOR  

3.740%

   04/23/13   (22 )

Royal Bank of Scotland

   GBP   3,960   5.288%  

Six Month LIBOR

   04/23/13   (2 )

Royal Bank of Scotland

   CAD   15,320   Three Month LIBOR  

3.826%

   04/24/13   (94 )

Royal Bank of Scotland

   GBP   7,920   5.325%  

Six Month LIBOR

   04/24/13   20  

Royal Bank of Scotland

   CAD   7,610   Three Month LIBOR  

3.899%

   04/25/13   (60 )

Royal Bank of Scotland

   GBP   3,950   5.376%  

Six Month LIBOR

   04/25/13   27  

Royal Bank of Scotland

   CAD   9,280   Three Month LIBOR  

3.802%

   04/29/13   (45 )

Royal Bank of Scotland

   GBP   4,800   5.302%  

Six Month LIBOR

   04/29/13   1  

Royal Bank of Scotland

   CAD   5,410   Three Month LIBOR  

3.750%

   04/30/13   —    

Royal Bank of Scotland

   GBP   2,730   5.295%  

Six Month LIBOR

   04/30/13   11  

Royal Bank of Scotland

   CAD   1,100   Three Month LIBOR  

4.750%

   06/18/13   (52 )

Royal Bank of Scotland

   USD   9,370   4.500%  

Three Month LIBOR

   06/18/13   279  

Royal Bank of Scotland

   GBP   200   Six Month LIBOR  

5.500%

   12/15/36   (46 )

Royal Bank of Scotland

   GBP   1,600   Six Month LIBOR  

4.000%

   12/15/36   378  

Salomon Smith Barney

   HUF   257,000   8.470%  

Six Month LIBOR

   04/03/13   13  

UBS

   AUD   26,900   7.000%  

Three Month LIBOR

   09/15/09   (148 )

UBS

   BRL   3,000   12.410%  

Brazil Interbank Deposit Rate

   01/04/10   (18 )

 

See accompanying notes which are an integral part of the financial statements.

 

Multistrategy Bond Fund   129

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts  

Counter
Party

   Notional
Amount		   Fund Receives  

Fund Pays

   Termination
Date		   Market Value
$		  
           

UBS

   AUD   2,400   7.500%  

Three Month LIBOR

   03/15/10   1  

UBS

   EUR   11,600   4.250%  

Six Month LIBOR

   06/18/10   (68 )

UBS

   BRL   3,800   12.540%  

Brazil Interbank Deposit Rate

   01/02/12   (46 )

UBS

   EUR   5,570   4.750%  

Six Month LIBOR

   06/18/38   (71 )

UBS

   USD   6,970   Three Month LIBOR  

5.250%

   06/18/38   (446 )
               

Total Market Value of Open Interest Rate Swap Contracts Premiums Paid (Received) - ($6,402)

   7,239  
               

 

See accompanying notes which are an integral part of the financial statements.

 

130   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Index Swap Contracts  

Fund Receives
Underlying Security

   

Counter
Party

    Notional
Amount		   

Fund Pays
Floating Rate

    Termination
Date		    Unrealized
Appreciation
(Depreciation)
$		  
                 

CMBS AAA 10 Year Index

    Bank of America    USD    3,000    CMBS AAA 10 Year Index     minus 0.550%    05/30/08    69  

CMBS AAA 10 Year Index

    Bank of America    USD    8,000    CMBS AAA 10 Year Index     minus 0.750%    05/30/08    182  

CMBS AAA 10 Year Index

    Bank of America    USD    10,000    CMBS AAA 10 Year Index     minus 1.000%    05/30/08    (225 )

CMBS AAA 10 Year Index

    Bank of America    USD    9,000    CMBS AAA 10 Year Index     minus 1.250%    05/30/08    200  

CMBS AAA 10 Year Index

    Citibank    USD    5,000    CMBS AAA 10 Year Index     minus 1.150%    05/30/08    112  

CMBS AAA 10 Year Index

    Citibank    USD    6,000    CMBS AAA 10 Year Index     minus 1.500%    05/30/08    132  

CMBS AAA 10 Year Index

    Deutsche Bank    USD    3,200    CMBS AAA 10 Year Index     minus 1.000%    05/30/08    72  

CMBS AAA 10 Year Index

    JP Morgan    USD    2,000    CMBS AAA Index     minus 8.550%    05/30/08    2  

CMBS AAA 10 Year Index

    JP Morgan    USD    15,000    CMBS AAA 10 Year Index     minus 1.250%    05/30/08    (334 )

CMBS AAA 10 Year Index

    JP Morgan    USD    7,000    CMBS AAA 10 Year Index     minus 1.300%    05/30/08    156  
                     

Total Unrealized Appreciation (Depreciation) on Open Index Swap Contracts

    366  
                     

 

See accompanying notes which are an integral part of the financial statements.

 

Multistrategy Bond Fund   131

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   681   AUD   729   05/02/08   7  
USD   330   AUD   352   05/15/08   1  
USD   17,071   AUD   18,300   05/21/08   149  
USD   604   AUD   655   06/16/08   11  
USD   633   AUD   680   06/16/08   4  
USD   639   AUD   680   06/16/08   (1 )
USD   5,955   AUD   6,494   06/18/08   135  
USD   8,309   AUD   9,027   06/18/08   155  
USD   8,415   AUD   9,147   06/18/08   161  
USD   11,439   AUD   12,433   06/18/08   218  
USD   808   BRL   1,350   05/05/08   3  
USD   1,207   BRL   2,120   05/05/08   67  
USD   801   BRL   1,350   06/03/08   4  
USD   1,258   BRL   2,120   06/03/08   6  
USD   10,059   BRL   17,252   06/03/08   227  
USD   1,360   CAD   1,375   05/13/08   5  
USD   1,000   CAD   1,017   06/16/08   9  
USD   1,598   CAD   1,601   06/16/08   (8 )
USD   8,490   CAD   8,455   06/18/08   (98 )
USD   8,546   CAD   8,453   06/18/08   (157 )
USD   2,807   CHF   2,844   05/13/08   (62 )
USD   8,364   CHF   8,230   06/18/08   (417 )
USD   8,415   CHF   8,581   06/18/08   (128 )
USD   22,543   CHF   23,354   06/18/08   11  
USD   12   EUR   5   05/01/08   (5 )
USD   2,130   EUR   1,360   05/13/08   (7 )
USD   2,160   EUR   1,360   05/13/08   (38 )
USD   840   EUR   535   06/16/08   (6 )
USD   1,205   EUR   775   06/16/08   3  
USD   364   EUR   229   06/18/08   (7 )
USD   772   EUR   497   06/18/08   2  
USD   1,066   EUR   680   06/18/08   (7 )
USD   7,565   EUR   4,755   06/18/08   (157 )
USD   8,642   EUR   5,506   06/18/08   (64 )
USD   16,581   EUR   10,638   06/18/08   (6 )
USD   16,699   EUR   10,773   06/18/08   86  
USD   17,238   EUR   10,839   06/18/08   (350 )
USD   5   GBP   2   05/01/08   —  
USD   300   GBP   151   05/19/08   1  
USD   1,066   GBP   536   06/18/08   (5 )
USD   1,157   GBP   589   06/18/08   9  
USD   8,037   GBP   4,070   06/18/08   28  
USD   8,362   GBP   4,208   06/18/08   (24 )
USD   16,747   GBP   8,353   06/18/08   (194 )
USD   7,702   INR   305,879   05/12/08   (160 )
USD   7,641   INR   305,879   08/12/08   (136 )
USD   86   JPY   8,883   05/12/08   (1 )
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   2,268   JPY   230,568   05/12/08   (49 )
USD   18,266   JPY   1,870,000   05/15/08   (266 )
USD   1,360   JPY   141,537   05/16/08   2  
USD   1,755   JPY   181,488   06/16/08   (5 )
USD   2,630   JPY   270,745   06/16/08   (19 )
USD   3,217   JPY   334,816   06/16/08   12  
USD   8,350   JPY   832,012   06/18/08   (325 )
USD   8,364   JPY   811,693   06/18/08   (535 )
USD   8,400   JPY   840,874   06/18/08   (290 )
USD   8,490   JPY   875,081   06/18/08   (50 )
USD   8,870   JPY   911,978   06/18/08   (74 )
USD   8,900   JPY   911,978   06/18/08   (104 )
USD   10,274   KRW   10,014,502   08/04/08   (295 )
USD   3,515   MXN   38,840   05/06/08   185  
USD   1,045   MYR   3,407   05/21/08   33  
USD   8,309   NOK   42,848   06/18/08   70  
USD   1,029   NZD   1,339   06/18/08   9  
USD   8,350   NZD   10,490   06/18/08   (218 )
USD   8,373   NZD   10,706   06/18/08   (73 )
USD   8,490   NZD   10,844   06/18/08   (83 )
USD   16,629   NZD   20,967   06/18/08   (375 )
USD   813   PEN   2,280   05/27/08   —  
USD   2,075   RUB   49,151   07/17/08   (3 )
USD   17,094   SEK   102,000   05/19/08   (73 )
USD   1,360   SEK   8,056   06/13/08   (18 )
USD   3,342   SEK   20,414   06/13/08   60  
USD   8,430   SEK   50,363   06/18/08   (40 )
USD   8,638   SEK   53,012   06/18/08   194  
USD   11,686   SGD   16,506   05/22/08   498  
USD   6,130   ZAR   48,815   07/10/08   212  
AUD   265   USD   248   06/16/08   (1 )
AUD   680   USD   631   06/16/08   (7 )
AUD   729   USD   677   06/16/08   (7 )
AUD   1,029   USD   972   06/16/08   7  
AUD   3,006   USD   2,808   06/16/08   (12 )
AUD   5,130   USD   4,723   06/16/08   (88 )
AUD   875   USD   800   06/18/08   (20 )
AUD   8,655   USD   8,037   06/18/08   (78 )
AUD   9,168   USD   8,373   06/18/08   (223 )
AUD   18,391   USD   16,629   06/18/08   (614 )
BRL   1,350   USD   806   05/05/08   (5 )
BRL   2,120   USD   1,266   05/05/08   (7 )
BRL   16,597   USD   9,122   05/15/08   (824 )
BRL   33,698   USD   18,638   05/15/08   (1,555 )
BRL   19,866   USD   11,342   07/02/08   (414 )
CAD   1,367   USD   1,360   05/13/08   3  
CAD   1,379   USD   1,360   05/16/08   (9 )

 

See accompanying notes which are an integral part of the financial statements.

 

132   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
CAD   662   USD   656   06/16/08   (1 )
CAD   7,997   USD   8,097   06/18/08   160  
CAD   8,292   USD   8,415   06/18/08   185  
CAD   275   USD   272   06/30/08   (1 )
CHF   3,023   USD   3,066   06/18/08   146  
CHF   3,212   USD   3,102   06/18/08   —  
CHF   8,251   USD   8,309   06/18/08   341  
CHF   8,581   USD   8,373   06/18/08   86  
CHF   17,099   USD   16,597   06/18/08   84  
EUR   64   USD   99   05/01/08   —  
EUR   10,280   USD   16,108   05/09/08   63  
EUR   680   USD   1,061   05/13/08   (1 )
EUR   1,360   USD   2,161   05/13/08   39  
EUR   110   USD   172   05/29/08   —  
EUR   7,632   USD   11,929   06/03/08   29  
EUR   535   USD   833   06/16/08   (1 )
EUR   571   USD   874   06/18/08   (16 )
EUR   4,060   USD   6,307   06/18/08   (19 )
EUR   5,164   USD   8,081   06/18/08   36  
EUR   5,297   USD   8,332   06/18/08   79  
EUR   5,304   USD   8,307   06/18/08   43  
EUR   5,356   USD   8,430   06/18/08   85  
EUR   5,368   USD   8,314   06/18/08   (49 )
EUR   5,423   USD   8,298   06/18/08   (151 )
EUR   5,448   USD   8,537   06/18/08   48  
EUR   5,474   USD   8,373   06/18/08   (156 )
EUR   6,288   USD   9,767   06/18/08   (31 )
EUR   10,580   USD   16,745   06/18/08   262  
GBP   151   USD   298   05/19/08   (2 )
GBP   919   USD   1,792   05/21/08   (33 )
GBP   132   USD   259   06/16/08   (3 )
GBP   1,616   USD   3,166   06/16/08   (37 )
GBP   4,214   USD   8,415   06/18/08   65  
GBP   4,262   USD   8,400   06/18/08   (46 )
GBP   4,295   USD   8,430   06/18/08   (80 )
GBP   4,672   USD   9,336   06/18/08   78  
GBP   8,396   USD   16,629   06/18/08   (8 )
HUF   676,494   USD   4,240   05/14/08   64  
INR   305,879   USD   7,666   05/12/08   124  
INR   96,384   USD   2,356   08/12/08   (9 )
ISK   658,000   USD   9,041   05/15/08   256  
JPY   34,599   USD   349   05/12/08   16  
JPY   34,626   USD   350   05/12/08   17  
JPY   34,640   USD   350   05/12/08   17  
JPY   34,688   USD   350   05/12/08   16  
JPY   34,750   USD   351   05/12/08   17  
JPY   34,760   USD   350   05/12/08   15  
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
JPY   34,808   USD   351   05/12/08   16  
JPY   38,168   USD   385   05/12/08   18  
JPY   860,983   USD   8,555   05/15/08   267  
JPY   56,545   USD   545   05/16/08   1  
JPY   73,063   USD   710   06/16/08   5  
JPY   136,643   USD   1,350   06/16/08   32  
JPY   180,973   USD   1,755   06/16/08   10  
JPY   613,858   USD   6,053   06/16/08   133  
JPY   155,654   USD   1,600   06/18/08   98  
JPY   805,921   USD   8,332   06/18/08   559  
JPY   816,746   USD   8,309   06/18/08   432  
JPY   835,378   USD   8,037   06/18/08   (20 )
JPY   863,877   USD   8,373   06/18/08   41  
JPY   1,703,682   USD   16,597   06/18/08   165  
KRW   659,579   USD   658   05/30/08   1  
KRW   9,324,180   USD   9,300   05/30/08   8  
MXN   8,742   USD   806   05/06/08   (27 )
MXN   30,098   USD   2,844   05/06/08   (23 )
NOK   42,431   USD   8,362   06/18/08   64  
NZD   6,600   USD   5,167   05/21/08   27  
NZD   21,520   USD   16,848   05/21/08   87  
NZD   10,515   USD   8,364   06/18/08   212  
NZD   10,521   USD   8,298   06/18/08   142  
NZD   10,679   USD   8,362   06/18/08   83  
NZD   10,724   USD   8,415   06/18/08   102  
NZD   10,752   USD   8,290   06/18/08   (46 )
NZD   21,801   USD   17,005   06/18/08   104  
RUB   49,151   USD   2,068   07/10/08   (5 )
SEK   5,428   USD   900   06/18/08   (4 )
SEK   49,517   USD   8,362   06/18/08   113  
SEK   21,529   USD   3,572   06/19/08   (15 )
ZAR   48,051   USD   6,244   07/10/08   2  
             
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts   (1,901 )
             

 

See accompanying notes which are an integral part of the financial statements.

 

Multistrategy Bond Fund   133

Table of Contents

Russell Investment Company

Multistrategy Bond Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of Net
Assets		  
  
  

Asset-Backed Securities

    9.6  

Certificates of Deposit

    0.1  

Corporate Bonds and Notes

    18.5  

International Debt

    6.1  

Loan Agreements

    0.9  

Mortgage-Backed Securities

    61.7  

Municipal Bonds

    0.2  

Non-US Bonds

    1.4  

United States Government Agencies

    0.1  

United States Government Treasuries

    4.3  

Common Stocks

    — *

Preferred Stocks

    0.2  

Warrants & Rights

    — *

Options Purchased

    0.1  

Short-Term Investments

    14.5  

Repurchase Agreements

    0.3  

Other Securities

    5.6  
      

Total Investments

    123.6  

Other Assets and Liabilities, Net

    (23.6 )
      
   100.0  
      

Futures Contracts

    — *

Options Written

    (0.1 )

Index Swap Contracts

    — *

Interest Rate Swap Contracts

    0.1  

Credit Default Swap Contracts

    (0.2 )

Foreign Currency Exchange Contracts

    — *

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

134   Multistrategy Bond Fund

Table of Contents

Russell Investment Company

Russell Funds

Notes to Schedule of Investments — April 30, 2008 (Unaudited)

 

 

 

Footnotes:

(Æ) Nonincome-producing security.
(Ï) Forward commitment.
(Ê) Adjustable or floating rate security. Rate shown reflects rate in effect at period end.
(ƒ) Perpetual floating rate security. Rate shown reflects rate in effect at period end.
(ö) Real Estate Investment Trust (REIT).
(m) Bond is insured by a guarantor.
(ß) Illiquid security.
(Ø) In default.
(ç) At amortized cost, which approximates market.
(ž) Rate noted is yield-to-maturity from date of acquisition.
(æ) Pre-refunded: These bonds are collateralized by US Treasury securities, which are held in escrow by a trustee and used to pay principal and interest in the tax-exempt issue and to retire the bonds in full at the earliest refunding date.
(§) All or a portion of the shares of this security are held as collateral in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund.
(×) The security is purchased with the cash collateral from the securities loaned.
(Ñ) All or a portion of the shares of this security are on loan.
(Þ) Restricted security. Security may have contractual restrictions on resale, may have been offered in a private placement transaction, and may not be registered under the Securities Act of 1933.
(Å) Illiquid and restricted security.
(å) Currency balances were held in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund. See Note 2.
(Ú) All or a portion of the shares of this security are held as collateral in connection with securities sold short.

Abbreviations:

ADR - American Depositary Receipt

ADS - American Depositary Share

CIBOR - Copenhagen Interbank Offered Rate

CME - Chicago Mercantile Exchange

CMO - Collateralized Mortgage Obligation

CVO - Contingent Value Obligation

FDIC - Federal Deposit Insurance Company

GDR - Global Depositary Receipt

GDS - Global Depositary Share

LIBOR - London Interbank Offered Rate

NIBOR - Norwegian Interbank Offered Rate

PIK - Payment in Kind

REMIC - Real Estate Mortgage Investment Conduit

STRIP - Separate Trading of Registered Interest and Principal of Securities

TBA - To Be Announced Security

 

Notes to Schedules of Investments   135

Table of Contents

Russell Investment Company

Russell Funds

Notes to Schedule of Investments, continued — April 30, 2008 (Unaudited)

 

 

 

Foreign Currency Abbreviations:

 

ARS - Argentine peso

   HUF - Hungarian forint   PKR - Pakistani rupee

AUD - Australian dollar

   IDR - Indonesian rupiah   PLN - Polish zloty

BRL - Brazilian real

   ILS - Israeli shekel   RUB - Russian ruble

CAD - Canadian dollar

   INR - Indian rupee   SEK - Swedish krona

CHF - Swiss franc

   ISK - Iceland Krona   SGD - Singapore dollar

CLP - Chilean peso

   ITL - Italian lira   SKK - Slovakian koruna

CNY - Chinese renminbi yuan

   JPY - Japanese yen   THB - Thai baht

COP - Colombian peso

   KES - Kenyan schilling   TRY - Turkish lira

CRC - Costa Rica colon

   KRW - South Korean won   TWD - Taiwanese dollar

CZK - Czech koruna

   MXN - Mexican peso   USD - United States dollar

DKK - Danish krone

   MYR - Malaysian ringgit   VEB - Venezuelan bolivar

EGP - Egyptian pound

   NOK - Norwegian krone   VND - Vietnam dong

EUR - Euro

   NZD - New Zealand dollar   ZAR - South African rand

GBP - British pound sterling

   PEN - Peruvian nouveau sol  
HKD - Hong Kong dollar   PHP - Philippine peso  

 

136   Notes to Schedules of Investments

Table of Contents

 

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Table of Contents

Russell Investment Company

Russell Funds

Statements of Assets and Liabilities — April 30, 2008 (Unaudited)

 

     Diversified Equity
Fund		    Special Growth
Fund		   Quantitative Equity
Fund		    International
Securities Fund
         

Assets

          

Investments, at identified cost

   $ 4,380,185    $ 1,919,607   $ 4,703,872    $ 4,471,808

Investments, at market***

     4,873,236      1,990,899     4,936,585      4,968,183

Cash

     —      12     —      5,601

Cash (Restricted)

     —      —     —      15,713

Foreign currency holdings*

     —      —     —      16,091

Unrealized appreciation on foreign currency exchange contracts

     —      —     —      15,305

Receivables:

          

Dividends and interest

     4,028      735     3,260      15,614

Dividends from affiliated money market funds

     687      282     469      635

Investments sold

     61,304      17,315     134,953      34,600

Fund shares sold

     8,694      3,425     9,243      9,181

Foreign taxes recoverable

     —      —     —      473

Daily variation margin on futures contracts

     —      —     —      1,135

Prepaid expenses

     61      67     45      64

Unrealized appreciation on index swap contracts

     —      —     —      47

Interest rate swap contracts, at market value*****

     —      —     —      —

Credit default swap contracts, at market value****

     —      —     —      —
                         

Total assets

     4,948,010      2,012,735     5,084,555      5,082,642
                         
Liabilities          

Payables:

          

Investments purchased

     68,648      16,519     135,290      54,501

Fund shares redeemed

     5,404      1,892     2,237      7,376

Accrued fees to affiliates

     3,982      1,712     3,872      4,256

Other accrued expenses

     209      129     476      632

Dividends for securities sold short

     —      —     200      —

Daily variation margin on futures contracts

     921      308     606      525

Deferred tax liability

     —      —     —      77

Unrealized depreciation on foreign currency exchange contracts

     —      —     —      16,429

Options written, at market value**

     —      —     —      2,886

Securities sold short, at market value******

     —      —     476,669      —

Payable upon return of securities loaned

     442,524      563,883     160,252      908,016

Unrealized depreciation on index swap contracts

     —      —     —      296

Interest rate swap contracts, at market value*****

     —      —     —      —

Credit default swaps, at market value****

     —      —     —      —
                         

Total liabilities

     521,688      584,443     779,602      994,994
                         
         

Net Assets

   $ 4,426,322    $ 1,428,292   $ 4,304,953    $ 4,087,648
                         

 

See accompanying notes which are an integral part of the financial statements.

 

138   Statements of Assets and Liabilities

Table of Contents

 

Global Equity
Fund		    Multistrategy
Bond Fund
  
  
$ 1,280,540    $ 8,174,531
  1,331,643      7,988,123
  26      2,487
  —      8,535
  1,817      3,251
  2,590      7,678
  
  2,509      52,038
  209      1,909
  7,937      561,733
  2,096      26,920
  172      —
  232      5,198
  7      38
  —      926
  —      44,914
  —      6,580
          
  1,349,238      8,710,330
          
  
  
  8,983      1,803,931
  3,439      3,745
  1,276      4,406
  212      182
  —      —
  238      2,137
  —      —
  2,357      9,579
  —      6,240
  —      —
  166,226      359,568
  —      560
  —      37,675
  —      18,704
          
  182,731      2,246,727
          
  
$ 1,166,507    $ 6,463,603
          

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   139

Table of Contents

Russell Investment Company

Russell Funds

Statements of Assets and Liabilities, continued — April 30, 2008 (Unaudited)

 

Amounts in thousands   Diversified Equity
Fund		     Special Growth
Fund		  
   

Net Assets Consist of:

    

Undistributed (overdistributed) net investment income

   $ 1,637     $ 1,871  

Accumulated net realized gain (loss)

     (169,917 )     (125,616 )

Unrealized appreciation (depreciation) on:

    

Investments (International Securities Fund - net of deferred tax liability for foreign capital gains taxes)

     493,051       71,292  

Futures contracts

     15,389       6,803  

Options written

     —       —  

Credit default swaps

     —       —  

Index swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Securitues sold short

     —       —  

Foreign currency-related transactions

     —       —  

Shares of beneficial interest

     969       332  

Additional paid-in capital

     4,085,193       1,473,610  
               

Net Assets

   $ 4,426,322     $ 1,428,292  
               

Net Asset Value, offering and redemption price per share:

    

Net asset value per share: Class A*******

   $ 45.68     $ 41.17  

Maximum offering price per share (Net asset value plus sales charge of 5.75%********): Class A

   $ 48.47     $ 43.69  

Class A — Net assets

   $ 23,617,220     $ 10,083,346  

Class A — Shares outstanding ($.01 par value)

     516,984       244,892  

Net asset value per share: Class C*******

   $ 43.74     $ 36.98  

Class C — Net assets

   $ 139,997,931     $ 53,910,758  

Class C — Shares outstanding ($.01 par value)

     3,200,503       1,457,998  

Net asset value per share: Class E*******

   $ 45.72     $ 41.19  

Class E — Net assets

   $ 71,676,592     $ 25,551,185  

Class E — Shares outstanding ($.01 par value)

     1,567,794       620,266  

Net asset value per share: Class S*******

   $ 45.73     $ 43.42  

Class S — Net assets

   $ 4,191,029,883     $ 1,338,746,978  

Class S — Shares outstanding ($.01 par value)

     91,656,170       30,829,389  
Amounts in thousands    

*                 Foreign currency holdings - cost

   $ —     $ —  

**               Premiums received on options written

   $ —     $ —  

***             Securities on loan included in investments

   $ 452,067     $ 550,394  

****          Credit default swap contracts - premiums paid (received)

   $ —     $ —  

*****        Interest rate swap contracts - premiums paid (received)

   $ —     $ —  

******      Procedes on securities sold short

   $ —     $ —  

*******    Net asset value per share equals class level net assets
divided by class level shares of beneficial interest outstanding.

    

********  Multistrategy Bond Fund’s maximum sale charge is 3.75%.

    

 

See accompanying notes which are an integral part of the financial statements.

 

140   Statements of Assets and Liabilities

Table of Contents

 

Quantitative
Equity Fund		     International
Securities Fund		     Global Equity
Fund		     Multistrategy
Bond Fund		  
     
     
$ (580 )   $ (12,171 )   $ 62     $ (2,391 )
  (199,516 )     (12,024 )     (70,693 )     108,672  
     

 

232,713

 

     426,298      
 		     
51,103		  
 		     (186,408 )
  10,948       22,789       5,134       2,326  
  —       (983 )     —       2,366  
  —       —       —       1,452  
  —       (249 )     —       366  
  —       —       —       13,641  
  1,455       —       —       —  
  —       (1,314 )     210       (1,803 )
  1,202       599       1,175       6,316  
  4,258,731       3,594,703       1,179,516       6,519,066  
                             
$ 4,304,953     $ 4,087,648     $ 1,166,507     $ 6,463,603  
                             
     
$ 35.71     $ 67.28     $ 9.91     $ 10.23  
$ 37.88     $ 71.39     $ 10.52     $ 10.63  
$ 20,189,629     $ 24,733,798     $ 3,389,860     $ 22,887,674  
  565,440       367,602       341,934       2,236,584  
$ 34.51     $ 64.38     $ 9.87     $ 10.22  
$ 130,823,315     $ 150,388,735     $ 11,700,749     $ 118,650,742  
  3,791,385       2,336,050       1,185,589       11,613,573  
$ 35.74     $ 67.44     $ 9.91     $ 10.22  
$ 69,937,218     $ 86,148,424     $ 14,971,384     $ 113,811,024  
  1,956,925       1,277,424       1,510,162       11,132,355  
$ 35.86     $ 68.37     $ 9.93     $ 10.23  
$ 4,084,003,107     $ 3,826,376,804     $ 1,136,445,353     $ 6,208,254,008  
  113,882,317       55,965,770       114,458,338       606,575,052  
     
$ —     $ 16,134     $ 1,803     $ 3,249  
$ —     $ 1,903     $ —     $ 8,606  
$ 165,918     $ 876,842     $ 160,463     $ 352,415  
$ —     $ —     $ —     $ (13,576 )
$ —     $ —     $ —     $ (6,402 )
$ 478,124     $ —     $ —     $ —  
     
     

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   141

Table of Contents

Russell Investment Company

Russell Funds

Statements of Operations — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands   Diversified Equity
Fund		     Special Growth
Fund		  
   

Investment Income

    

Dividends

   $ 38,227     $ 6,949  

Dividends from affiliated money market funds

     4,971       1,888  

Interest

     183       73  

Securities lending income

     1,466       2,234  

Less foreign taxes withheld

     —       —  
               

Total investment income

     44,847       11,144  
               

Expenses

    

Advisory fees

     15,720       6,327  

Administrative fees

     1,086       352  

Custodian fees

     520       297  

Distribution fees - Class A

     18       8  

Distribution fees - Class C

     547       218  

Transfer agent fees

     3,250       1,758  

Professional fees

     107       38  

Registration fees

     80       51  

Shareholder servicing fees - Class C

     182       73  

Shareholder servicing fees - Class E

     87       32  

Trustees’ fees

     44       14  

Printing fees

     109       50  

Offering fees

     4       4  

Dividends from securities sold short

     —       —  

Interest expense from securities sold short

     —       —  

Miscellaneous

     48       15  
               

Expenses before reductions

     21,802       9,237  

Expense reductions

     (3 )     (4 )
               

Net expenses

     21,799       9,233  
               

Net investment income (loss)

     23,048       1,911  
               

Net Realized and Unrealized Gain (Loss)

    

Net realized gain (loss) on:

    

Investments (International Securities Fund - net of deferred tax liability for foreign capital gains taxes)

     (98,324 )     (100,075 )

Futures contracts

     (31,253 )     (13,762 )

Options written

     —       —  

Credit default swaps

     —       —  

Index swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Securities sold short

     —       —  

Foreign currency-related transactions

     (1 )     —  
               

Net realized gain (loss)

     (129,578 )     (113,837 )
               

Net change in unrealized appreciation (depreciation) on:

    

Investments (International Securities Fund - net of deferred tax liability for foreign capital gains taxes)

     (408,419 )     (126,991 )

Futures contracts

     8,571       1,846  

Options written

     —       —  

Credit default swaps

     —       —  

Index swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Securities sold short

     —       —  

Foreign currency-related transactions

     —       —  
               

Net change in unrealized appreciation (depreciation)

     (399,848 )     (125,145 )
               

Net realized and unrealized gain (loss)

     (529,426 )     (238,982 )
               

Net Increase (Decrease) in Net Assets from Operations

   $ (506,378 )   $ (237,071 )
               

 

See accompanying notes which are an integral part of the financial statements.

 

142   Statements of Operations

Table of Contents

 

Quantitative Equity
Fund		     International
Securities Fund		     Global Equity
Fund		     Multistrategy
Bond Fund		  
     
     
$ 40,631     $ 54,409     $ 11,825     $ 4,696  
  3,420       6,160       193       16,135  
  148       224       500       155,923  
  622       2,778       110       1,163  
  —       (4,090 )     (513 )     —  
                             
  44,821       59,481       12,115       177,917  
                             
     
  15,435       17,926       5,205       18,741  
  1,066       1,003       274       1,594  
  507       1,683       433       1,014  
  16       19       3       21  
  518       585       40       444  
  3,192       2,997       986       3,188  
  67       97       66       87  
  79       81       88       117  
  173       195       13       148  
  87       106       18       145  
  43       40       11       66  
  86       112       24       151  
  4       4       31       4  
  3,366       —       —       —  
  1,522       —       —       —  
  47       39       10       64  
                             
  26,208       24,887       7,202       25,784  
  (5 )     (34 )     (1 )     (1,164 )
                             
  26,203       24,853       7,201       24,620  
                             
  18,618       34,628       4,914       153,297  
                             
     
     
  (173,321 )     27,412       (57,958 )     47,311  
  (19,868 )     (60,084 )     (11,467 )     58,781  
  —       4,422       —       (8,570 )
  —       —       —       (3,417 )
  —       (873 )     —       1,445  
  —       —       —       55,450  
  35,589       —       —       —  
  —       32,168       2,743       5,783  
                             
  (157,600 )     3,045       (66,682 )     156,783  
                             
     
  (419,731 )     (518,348 )     (57,089 )     (184,882 )
  5,750       12,056       3,807       (8,449 )
  —       (983 )     —       1,172  
  —       —       —       3,496  
  —       (115 )     —       204  
  —       —       —       (12,686 )
  14,673       —       —       —  
  —       (11,180 )     (1,851 )     (2,026 )
                             
  (399,308 )     (518,570 )     (55,133 )     (203,171 )
                             
  (556,908 )     (515,525 )     (121,815 )     (46,388 )
                             
$ (538,290 )   $ (480,897 )   $ (116,901 )   $ 106,909  
                             

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Operations   143

Table of Contents

Russell Investment Company

Russell Funds

Statements of Changes in Net Assets

 

    Diversified Equity
Fund		     Special Growth
Fund		  
     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		  
       

Increase (Decrease) in Net Assets

        

Operations

        

Net investment income (loss)

   $ 23,048     $ 33,034     $ 1,911     $ 2,124  

Net realized gain (loss)

     (129,578 )     378,562       (113,837 )     149,792  

Net change in unrealized appreciation (depreciation)

     (399,848 )     373,249       (125,145 )     53,665  
                               

Net increase (decrease) in net assets from operations

     (506,378 )     784,845       (237,071 )     205,581  
                               

Distributions

        

From net investment income

        

Class A

     (62 )     (16 )     (7 )     —  

Class C

     (156 )     (120 )     —       —  

Class E

     (290 )     (419 )     —       —  

Class S

     (21,987 )     (32,507 )     (2,134 )     —  

From net realized gain

        

Class A

     (1,008 )       (617 )  

Class C

     (13,107 )     (7,141 )     (7,165 )     (9,911 )

Class E

     (5,883 )     (3,123 )     (2,769 )     (3,495 )

Class S

     (347,744 )     (163,053 )     (136,616 )     (144,994 )
                               

Net decrease in net assets from distributions

     (390,237 )     (206,379 )     (149,308 )     (158,400 )
                               

Share Transactions

        

Net increase (decrease) in net assets from share transactions

     537,753       425,814       227,883       351,201  
                               

Total Net Increase (Decrease) in Net Assets

     (358,862 )     1,004,280       (158,496 )     398,382  

Net Assets

        

Beginning of period

     4,785,184       3,780,904       1,586,788       1,188,406  
                               

End of period

   $ 4,426,322     $ 4,785,184     $ 1,428,292     $ 1,586,788  
                               

Undistributed (overdistributed) net investment income included in net assets

   $ 1,637     $ 1,084     $ 1,871     $ 2,101  

 

* For the period February 28, 2007 (commencement of operations) to October 31, 2007.

 

See accompanying notes which are an integral part of the financial statements.

 

144   Statements of Changes in Net Assets

Table of Contents

 

Quantitative Equity
Fund		     International Securities
Fund		     Global Equity
Fund		   Multistrategy Bond
Fund		  
Six Months
Ended
April 30, 2008
(Unaudited)		    

Fiscal Year
Ended
October 31,
2007

     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007*		   Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		  
             
             
             
$ 18,618     $ 34,354     $ 34,628     $ 61,747     $ 4,914     $ 7,131   $ 153,297     $ 237,810  
  (157,600 )     315,651       3,045       584,288       (66,682 )     17,501     156,783       (29,079 )
  (399,308 )     82,499       (518,570 )     341,038       (55,133 )     111,604     (203,171 )     16,509  
                                                           
  (538,290 )     432,504       (480,897 )     987,073       (116,901 )     136,236     106,909       225,240  
                                                           
             
             
  (47 )     (16 )     (370 )     —       (30 )     —     (428 )     (146 )
  (90 )     (165 )     (3,009 )     1,534       (64 )     —     (2,816 )     (3,694 )
  (243 )     (477 )     (2,212 )     2,240       (148 )     —     (3,289 )     (3,921 )
  (18,964 )     (35,129 )     (106,184 )     (74,906 )     (13,125 )     —     (182,512 )     (206,940 )
             
  (820 )       (1,868 )       (51 )      
  (11,169 )     (8,239 )     (23,322 )     6,515       (196 )     —     —       —  
  (5,318 )     (3,730 )     (11,831 )     14,325       (267 )     —     —       —  
  (308,963 )     (190,999 )     (516,586 )     (286,980 )     (19,733 )     —     —       —  
                                                           
  (345,614 )     (238,755 )     (665,382 )     (386,500 )     (33,614 )     —     (189,045 )     (214,701 )
                                                           
             
  491,466       598,724       751,994       369,894       159,950       1,020,836     99,360       3,824,075  
                                                           
  (392,438 )     792,473       (394,285 )     970,467       9,435       1,157,072     17,224       3,834,614  
             
  4,697,391       3,904,918       4,481,933       3,511,466       1,157,072       —     6,446,379       2,611,765  
                                                           
$ 4,304,953     $ 4,697,391     $ 4,087,648     $ 4,481,933     $ 1,166,507     $ 1,157,072   $ 6,463,603     $ 6,446,379  
                                                           
$ (580 )   $ 146     $ (12,171 )   $ 64,976     $ 62     $ 8,515   $ (2,391 )   $ 33,357  

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   145

Table of Contents

Russell Investment Company

Russell Funds

Financial Highlights — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		      $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		         
$
Distributions
from Net
Realized Gain		  
Diversified Equity Fund              

Class A

                 

April 30, 2008*

    55.84    .16      (5.88 )    (5.72 )    (.22 )   (4.22 )

October 31, 2007(2)

    48.45    .14      7.45      7.59      (.20 )   —  

Class C

                 

April 30, 2008*

    53.67    .02      (5.68 )    (5.66 )    (.05 )   (4.22 )

October 31, 2007

    47.30    (.09 )    8.70      8.61      (.04 )   (2.20 )

October 31, 2006

    43.08    (.11 )    5.60      5.49      (.03 )   (1.24 )

October 31, 2005

    38.64    (.10 )    4.58      4.48      (.04 )   —  

October 31, 2004

    36.27    (.17 )    2.54      2.37      —     —  

October 31, 2003

    30.52    (.13 )    5.88      5.75      — (d)   —  

Class E

                 

April 30, 2008*

    55.85    .20      (5.91 )    (5.71 )    (.20 )   (4.22 )

October 31, 2007

    49.01    .29      9.04      9.33      (.29 )   (2.20 )

October 31, 2006

    44.46    .23      5.79      6.02      (.23 )   (1.24 )

October 31, 2005

    39.75    .23      4.70      4.93      (.22 )   —  

October 31, 2004

    37.12    .12      2.61      2.73      (.10 )   —  

October 31, 2003

    31.10    .12      6.00      6.12      (.10 )   —  

Class S

                 

April 30, 2008*

    55.87    .26      (5.92 )    (5.66 )    (.26 )   (4.22 )

October 31, 2007

    49.02    .42      9.05      9.47      (.42 )   (2.20 )

October 31, 2006

    44.45    .35      5.79      6.14      (.33 )   (1.24 )

October 31, 2005

    39.74    .33      4.71      5.04      (.33 )   —  

October 31, 2004

    37.13    .22      2.60      2.82      (.21 )   —  

October 31, 2003

    31.09    .20      6.01      6.21      (.17 )   —  
Special Growth Fund              

Class A

                 

April 30, 2008*

    54.04    .02      (7.74 )    (7.72 )    (.03 )   (5.12 )

October 31, 2007(2)

    49.13    (.02 )    4.93      4.91      —     —  

Class C

                 

April 30, 2008*

    49.25    (.13 )    (7.02 )    (7.15 )    —     (5.12 )

October 31, 2007

    50.08    (.37 )    6.89      6.52      —     (7.35 )

October 31, 2006

    47.85    (.47 )    7.76      7.29      —     (5.06 )

October 31, 2005

    49.16    (.59 )    5.78      5.19      —     (6.50 )

October 31, 2004

    46.99    (.56 )    4.05      3.49      —     (1.32 )

October 31, 2003

    33.52    (.46 )    13.93      13.47      —     —  

Class E

                 

April 30, 2008*

    54.05    .02      (7.76 )    (7.74 )    —     (5.12 )

October 31, 2007

    53.90    (.02 )    7.52      7.50      —     (7.35 )

October 31, 2006

    50.79    (.11 )    8.28      8.17      —     (5.06 )

October 31, 2005

    51.47    (.26 )    6.08      5.82      —     (6.50 )

October 31, 2004

    48.77    (.20 )    4.22      4.02      —     (1.32 )

October 31, 2003

    34.53    (.18 )    14.42      14.24      —     —  

Class S

                 

April 30, 2008*

    56.70    .07      (8.15 )    (8.08 )    (.08 )   (5.12 )

October 31, 2007

    56.07    .11      7.87      7.98      —     (7.35 )

October 31, 2006

    52.52    .02      8.59      8.61      — (d)   (5.06 )

October 31, 2005

    52.89    (.12 )    6.25      6.13      —     (6.50 )

October 31, 2004

    49.95    (.07 )    4.33      4.26      —     (1.32 )

October 31, 2003

    35.28    (.08 )    14.75      14.67      —     —  

 

See accompanying notes which are an integral part of the financial statements.

 

146   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   %
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e) 		    %
Portfolio
Turnover Rate(b)
             
             
(4.44 )   45.68   (10.69 )   23,617   1.22   1.22   .72     53
(.20 )   55.84   15.70     7,438   1.22   1.22   .42     111
             
(4.27 )   43.74   (11.01 )   139,998   1.97   1.97   .11     53
(2.24 )   53.67   18.92     168,870   1.97   1.97   (.18 )   111
(1.27 )   47.30   12.98     151,890   1.97   1.97   (.25 )   97
(.04 )   43.08   11.60     126,123   1.98   1.98   (.24 )   111
—     38.64   6.53     94,663   2.00   2.00   (.45 )   125
—     36.27   18.88     64,316   2.05   2.05   (.39 )   110
             
(4.42 )   45.72   (10.68 )   71,677   1.22   1.22   .85     53
(2.49 )   55.85   19.81     79,125   1.22   1.22   .57     111
(1.47 )   49.01   13.80     69,011   1.22   1.22   .50     97
(.22 )   44.46   12.46     53,227   1.23   1.23   .53     111
(.10 )   39.75   7.33     45,413   1.24   1.25   .30     125
(.10 )   37.12   19.77     34,229   1.30   1.30   .36     110
             
(4.48 )   45.73   (10.57 )   4,191,030   .97   .97   1.10     53
(2.62 )   55.87   20.14     4,529,750   .97   .97   .82     111
(1.57 )   49.02   14.12     3,560,003   .97   .97   .75     97
(.33 )   44.45   12.71     2,557,669   .98   .98   .77     111
(.21 )   39.74   7.61     1,943,583   .99   1.00   .55     125
(.17 )   37.13   20.09     1,445,118   1.04   1.04   .61     110
             
             
(5.15 )   41.17   (15.02 )   10,083   1.52   1.52   .08     89
—     54.04   10.01     3,271   1.48   1.48   (.06 )   144
             
(5.12 )   36.98   (15.37 )   53,911   2.27   2.27   (.68 )   89
(7.35 )   49.25   14.63     70,322   2.23   2.23   (.79 )   144
(5.06 )   50.08   16.26     67,164   2.23   2.23   (.98 )   155
(6.50 )   47.85   10.82     56,084   2.28   2.29   (1.24 )   154
(1.32 )   49.16   7.54     46,919   2.29   2.29   (1.15 )   125
—     46.99   40.19     36,364   2.36   2.36   (1.21 )   127
             
(5.12 )   41.19   (15.06 )   25,551   1.52   1.52   .07     89
(7.35 )   54.05   15.49     29,838   1.48   1.48   (.04 )   144
(5.06 )   53.90   17.12     25,435   1.48   1.48   (.22 )   155
(6.50 )   50.79   11.65     21,436   1.54   1.54   (.50 )   154
(1.32 )   51.47   8.37     32,028   1.54   1.54   (.39 )   125
—     48.77   41.24     16,581   1.62   1.62   (.46 )   127
             
(5.20 )   43.42   (14.96 )   1,338,747   1.27   1.27   .32     89
(7.35 )   56.70   15.78     1,483,357   1.23   1.23   .21     144
(5.06 )   56.07   17.42     1,095,807   1.23   1.23   .03     155
(6.50 )   52.52   11.95     860,480   1.27   1.29   (.23 )   154
(1.32 )   52.89   8.64     707,851   1.29   1.29   (.14 )   125
—     49.95   41.61     631,246   1.35   1.35   (.19 )   127

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   147

Table of Contents

Russell Investment Company

Russell Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		     $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Quantitative Equity Fund              

Class A

                 

April 30, 2008*

    43.67    .13     (4.95 )    (4.82 )    (.15 )    (2.99 )

October 31, 2007(2)

    40.69    .11     3.05      3.16      —      (.18 )

Class C

                 

April 30, 2008*

    42.33    .03     (4.84 )    (4.81 )    (.02 )    (2.99 )

October 31, 2007

    40.71    (.06 )   3.85      3.79      (.05 )    (2.12 )

October 31, 2006

    37.22    (.02 )   5.20      5.18      (.03 )    (1.66 )

October 31, 2005

    34.24    (.02 )   3.07      3.05      (.07 )    —  

October 31, 2004

    31.92    (.12 )   2.44      2.32      —      —  

October 31, 2003

    26.53    (.09 )   5.49      5.40      (.01 )    —  

Class E

                 

April 30, 2008*

    43.69    .16     (4.99 )    (4.83 )    (.13 )    (2.99 )

October 31, 2007

    41.86    .25     3.97      4.22      (.27 )    (2.12 )

October 31, 2006

    38.18    .27     5.34      5.61      (.27 )    (1.66 )

October 31, 2005

    35.04    .26     3.14      3.40      (.26 )    —  

October 31, 2004

    32.55    .14     2.49      2.63      (.14 )    —  

October 31, 2003

    26.94    .12     5.60      5.72      (.11 )    —  

Class S

                 

April 30, 2008*

    43.83    .21     (5.01 )    (4.80 )    (.18 )    (2.99 )

October 31, 2007

    41.99    .36     3.98      4.34      (.38 )    (2.12 )

October 31, 2006

    38.28    .38     5.36      5.74      (.37 )    (1.66 )

October 31, 2005

    35.13    .35     3.15      3.50      (.35 )    —  

October 31, 2004

    32.64    .22     2.49      2.71      (.22 )    —  

October 31, 2003

    27.01    .20     5.61      5.81      (.18 )    —  
International Securities Fund             

Class A

                 

April 30, 2008*

    89.96    .66     (9.91 )    (9.25 )    (2.22 )    (11.21 )

October 31, 2007(2)

    75.34    .80     13.82      14.62      —      —  

Class C

                 

April 30, 2008*

    86.15    .25     (9.37 )    (9.12 )    (1.44 )    (11.21 )

October 31, 2007

    75.34    .49     18.19      18.68      (1.06 )    (6.81 )

October 31, 2006

    62.35    .61     14.89      15.50      (.26 )    (2.25 )

October 31, 2005

    54.38    .25     8.24      8.49      (.52 )    —  

October 31, 2004

    48.46    — (d)   6.65      6.65      (.73 )    —  

October 31, 2003

    38.51    (.05 )   10.21      10.16      (.21 )    —  

Class E

                 

April 30, 2008*

    89.99    .53     (9.79 )    (9.26 )    (2.08 )    (11.21 )

October 31, 2007

    78.34    1.10     18.96      20.06      (1.60 )    (6.81 )

October 31, 2006

    64.66    1.17     15.45      16.62      (.69 )    (2.25 )

October 31, 2005

    56.28    .69     8.55      9.24      (.86 )    —  

October 31, 2004

    49.98    .39     6.87      7.26      (.96 )    —  

October 31, 2003

    39.61    .28     10.50      10.78      (.41 )    —  

Class S

                 

April 30, 2008*

    91.16    .63     (9.92 )    (9.29 )    (2.29 )    (11.21 )

October 31, 2007

    79.23    1.31     19.20      20.51      (1.77 )    (6.81 )

October 31, 2006

    65.35    1.35     15.61      16.96      (.83 )    (2.25 )

October 31, 2005

    56.84    .88     8.62      9.50      (.99 )    —  

October 31, 2004

    50.44    .53     6.92      7.45      (1.05 )    —  

October 31, 2003

    39.98    .38     10.59      10.97      (.51 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

148   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   %
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		     %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e) 		    % Portfolio
Turnover Rate(b)
             
             
(3.14 )   35.71   (11.50 )   20,190   1.44 (n)   1.44   .71     52
(.18 )   43.67   7.75     6,808   1.35 (j)   1.35   .29     101
             
(3.01 )   34.51   (11.83 )   130,823   2.19 (o)   2.19   .15     52
(2.17 )   42.33   9.67     159,955   2.10 (k)   2.10   (.15 )   101
(1.69 )   40.71   14.34     155,978   1.98 (g)   1.98   (.05 )   105
(.07 )   37.22   8.92     128,236   1.98     1.98   (.07 )   108
—     34.24   7.27     98,012   1.99     1.99   (.35 )   91
(.01 )   31.92   20.35     65,096   2.02     2.02   (.32 )   109
             
(3.12 )   35.74   (11.53 )   69,937   1.44 (p)   1.44   .89     52
(2.39 )   43.69   10.53     78,688   1.35 (l)   1.35   .60     101
(1.93 )   41.86   15.18     73,033   1.23 (h)   1.23   .70     105
(.26 )   38.18   9.72     53,725   1.23     1.23   .70     108
(.14 )   35.04   8.08     48,646   1.24     1.24   .40     91
(.11 )   32.55   21.28     37,594   1.28     1.28   .43     109
             
(3.17 )   35.86   (11.40 )   4,084,003   1.19 (q)   1.19   1.14     52
(2.50 )   43.83   10.79     4,451,940   1.10 (m)   1.10   .84     101
(2.03 )   41.99   15.49     3,675,907   .98 (i)   .98   .95     105
(.35 )   38.28   9.99     2,650,719   .98     .98   .94     108
(.22 )   35.13   8.32     2,057,082   .99     .99   .65     91
(.18 )   32.64   21.58     1,555,289   1.02     1.02   .69     109
             
             
(13.43 )   67.28   (10.89 )   24,734   1.44     1.45   1.96     45
—     89.96   19.42     8,354   1.45     1.45   1.57     108
             
(12.65 )   64.38   (11.23 )   150,389   2.20     2.20   .73     45
(7.87 )   86.15   27.02     182,281   2.20     2.20   .64     108
(2.51 )   75.34   25.54     156,760   2.21     2.21   .87     77
(.52 )   62.35   15.72     118,556   2.24     2.25   .42     79
(.73 )   54.38   13.83     80,622   2.29     2.29   —     76
(.21 )   48.46   26.52     47,087   2.42     2.42   (.12 )   69
             
(13.29 )   67.44   (10.91 )   86,148   1.45     1.45   1.53     45
(8.41 )   89.99   27.98     95,103   1.45     1.45   1.37     108
(2.94 )   78.34   26.50     73,044   1.45     1.46   1.61     77
(.86 )   64.66   16.56     49,490   1.49     1.50   1.12     79
(.96 )   56.28   14.68     38,630   1.54     1.54   .72     76
(.41 )   49.98   27.57     26,768   1.67     1.67   .67     69
             
(13.50 )   68.37   (10.79 )   3,826,377   1.19     1.20   1.78     45
(8.58 )   91.16   28.30     4,196,195   1.20     1.20   1.62     108
(3.08 )   79.23   26.80     3,281,662   1.20     1.21   1.85     77
(.99 )   65.35   16.88     2,299,511   1.23     1.25   1.41     79
(1.05 )   56.84   14.98     1,673,516   1.29     1.29   .98     76
(.51 )   50.44   27.81     1,247,393   1.42     1.42   .90     69

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   149

Table of Contents

Russell Investment Company

Russell Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		     $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Global Equity Fund              

Class A

                 

April 30, 2008*

    11.37    .03     (1.18 )    (1.15 )    (.12 )    (.19 )

October 31, 2007(1)

    10.00    .05     1.32      1.37      —      —  

Class C

                 

April 30, 2008*

    11.31    — (d)   (1.18 )    (1.18 )    (.07 )    (.19 )

October 31, 2007(1)

    10.00    — (d)   1.31      1.31      —      —  

Class E

                 

April 30, 2008*

    11.37    .03     (1.19 )    (1.16 )    (.11 )    (.19 )

October 31, 2007(1)

    10.00    .06     1.31      1.37      —      —  

Class S

                 

April 30, 2008*

    11.39    .05     (1.19 )    (1.14 )    (.13 )    (.19 )

October 31, 2007(1)

    10.00    .08     1.31      1.39      —      —  
Multistrategy Bond Fund              

Class A

                 

April 30, 2008*

    10.37    .24     (.09 )    .15      (.29 )    —  

October 31, 2007(2)

    10.38    .30     (.03 )    (.29 )    .28      —  

Class C

                 

April 30, 2008*

    10.35    .20     (.08 )    .12      (.25 )    —  

October 31, 2007

    10.34    .39     (.02 )    (.35 )    (.36 )    —  

October 31, 2006

    10.31    .35     .03      .38      (.33 )    (.02 )

October 31, 2005

    10.63    .24     (.20 )    .04      (.23 )    (.13 )

October 31, 2004

    10.54    .17     .31      .48      (.24 )    (.15 )

October 31, 2003

    10.03    .23     .50      .73      (.22 )    —  

Class E

                 

April 30, 2008*

    10.37    .24     (.10 )    .14      (.29 )    —  

October 31, 2007

    10.35    .49     (.03 )    (.42 )    (.44 )    —  

October 31, 2006

    10.32    .43     .03      .46      (.41 )    (.02 )

October 31, 2005

    10.64    .32     (.20 )    .12      (.31 )    (.13 )

October 31, 2004

    10.55    .24     .32      .56      (.32 )    (.15 )

October 31, 2003

    10.03    .31     .50      .81      (.29 )    —  

Class S

                 

April 30, 2008*

    10.38    .25     (.09 )    .16      (.31 )    —  

October 31, 2007

    10.36    .52     (.04 )    (.44 )    (.46 )    —  

October 31, 2006

    10.33    .45     .03      .48      (.43 )    (.02 )

October 31, 2005

    10.65    .35     (.21 )    .14      (.33 )    (.13 )

October 31, 2004

    10.56    .27     .31      .58      (.34 )    (.15 )

October 31, 2003

    10.04    .34     .50      .84      (.32 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

150   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   %
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e) 		    %
Portfolio
Turnover Rate(b)
             
             
(.31 )   9.91   (10.26 )   3,390   1.55   1.55   .67     85
—     11.37   13.70     2,445   1.58   1.58   .77     62
             
(.26 )   9.87   (10.56 )   11,701   2.30   2.30   (.09 )   85
—     11.31   13.10     10,802   2.33   2.33   (.04 )   62
             
(.30 )   9.91   (10.31 )   14,971   1.55   1.55   .66     85
—     11.37   13.70     15,683   1.58   1.58   .90     62
             
(.32 )   9.93   (10.11 )   1,136,445   1.30   1.30   .91     85
—     11.39   13.90     1,128,142   1.33   1.33   1.12     62
             
             
(.29 )   10.23   1.39     22,888   1.00   1.04   4.63     63
.28     10.37   2.69     9,439   1.02   1.06   4.79     756
             
(.25 )   10.22   .92     118,651   1.75   1.79   3.85     63
(.36 )   10.35   3.68     115,507   1.77   1.81   3.78     756
(.35 )   10.34   3.80     83,363   1.84   1.86   3.39     262
(.36 )   10.31   .35     69,427   1.87   1.87   2.31     197
(.39 )   10.63   4.66     53,573   1.89   1.89   1.58     221
(.22 )   10.54   7.37     36,397   1.94   1.95   2.22     282
             
(.29 )   10.22   1.37     113,811   1.00   1.04   4.61     63
(.44 )   10.37   4.54     117,069   1.02   1.06   4.63     756
(.43 )   10.35   4.57     51,698   1.09   1.11   4.16     262
(.44 )   10.32   1.10     38,311   1.12   1.12   3.06     197
(.47 )   10.64   5.43     31,621   1.14   1.14   2.32     221
(.29 )   10.55   8.23     20,975   1.18   1.19   3.01     282
             
(.31 )   10.23   1.52     6,208,254   .75   .78   4.84     63
(.46 )   10.38   4.79     6,204,364   .77   .81   4.87     756
(.45 )   10.36   4.82     2,476,704   .84   .86   4.41     262
(.46 )   10.33   1.35     1,771,524   .87   .87   3.32     197
(.49 )   10.65   5.68     1,284,520   .89   .89   2.58     221
(.32 )   10.56   8.49     886,596   .94   .94   3.22     282

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   151

Table of Contents

Russell Investment Company

Russell Funds

Notes to Financial Highlights — April 30, 2008

 

 

 

* For the period ended April 30, 2008 (Unaudited).
(1) For the period February 28, 2007 (commencement of operations) to October 31, 2007.
(2) For the period March 1, 2007 (commencement of operations) to October 31, 2007.
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) The ratios for periods less than one year are annualized.
(d) Less than $.01 per share.
(e) May reflect amounts waived and/or reimbursed by RIMCo and/or RFSC, and for certain funds, custody credit arrangements.
(f) Total return for A shares does not reflect a front-end sales charge.
(g) The annualized net expense ratio is 1.97% not including the dividend and interest expense from short sales.
(h) The annualized net expense ratio is 1.22% not including the dividend and interest expense from short sales.
(i) The annualized net expense ratio is 0.96% not including the dividend and interest expense from short sales.
(j) The annualized net expense ratio is 1.25% not including the dividend and interest expense from short sales.
(k) The annualized net expense ratio is 1.97% not including the dividend and interest expense from short sales.
(l) The annualized net expense ratio is 1.22% not including the dividend and interest expense from short sales.
(m) The annualized net expense ratio is 0.97% not including the dividend and interest expense from short sales.
(n) The annualized net expense ratio is 1.22% not including the dividend and interest expense from short sales.
(o) The annualized net expense ratio is 1.96% not including the dividend and interest expense from short sales.
(p) The annualized net expense ratio is 1.21% not including the dividend and interest expense from short sales.
(q) The annualized net expense ratio is 0.96% not including the dividend and interest expense from short sales.

 

See accompanying notes which are an integral part of the financial statements.

 

152   Notes to Financial Highlights

Table of Contents

Russell Investment Company

Russell Funds

Notes to Financial Statements — April 30, 2008 (Unaudited)

 

 

 

1.   Organization

Russell Investment Company (the “Investment Company” or “RIC”) is a series investment company with 44 different investment portfolios referred to as Funds (each a “Fund” and collectively the “Funds”). These financial statements report on six of these Funds. The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated August 19, 2002, as amended. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.

Through December 31, 2007, Russell Investment Management Company (“RIMCo”) was the adviser, administrator and transfer agent of the Funds, providing advisory, administrative and transfer agency services to the Funds. Effective January 1, 2008, RIMCo is the Funds’ adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Funds’ administrator and transfer agent. There was no change in the services provided to the Funds or in aggregate fees paid by the Funds for advisory, administrative and transfer agency services.

 

2.   Significant Accounting Policies

The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by each Fund in the preparation of its financial statements.

Security Valuation

The Funds value portfolio securities according to Board-approved securities valuation procedures, including market value procedures, fair value procedures and pricing services. Money market fund securities are priced using the amortized cost method of valuation, as are debt obligation securities maturing within 60 days at the time of purchase, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.

Ordinarily, the Funds value each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Generally, Fund securities are valued at the close of the market on which they are traded as follows:

 

  •  

US listed equities; equity and fixed income options: Last sale price; last bid price if no last sale price;

 

  •  

US over-the-counter equities: Official closing price; last bid price if no closing price;

 

  •  

Listed ADRs/GDRs: Last sale price; last bid price if no last sale price;

 

  •  

Municipal bonds, US bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price;

 

  •  

Futures: Settlement price.

 

  •  

Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier.

 

  •  

The value of swap agreements are equal to the Funds’ obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts.

 

  •  

Equity securities traded on a national foreign securities exchange or a foreign over the counter market are valued on the basis of the official closing price, or lacking the official closing price, at the last sale price of the primary exchange on which the security is traded.

If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Funds will use the security’s fair value, as determined in accordance with the fair value procedures. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded, but rather may be priced by another method that the Fund’s Board of Trustees believes reflects fair value. The use of fair value pricing by a

 

Notes to Financial Statements   153

Table of Contents

Russell Investment Company

Russell Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Fund shares and the daily movement of the benchmark index if the index is valued using another pricing method.

This policy is intended to assure that the Funds’ net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Fund shares is determined may be reflected in the calculation of net asset values for each applicable Fund when the Funds deem that the particular event or circumstance would materially affect such Fund’s net asset value. Funds that invest primarily in frequently traded exchange listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. Funds that invest in foreign securities are likely to use fair value pricing more often since significant events may occur between the close of foreign markets and the time of pricing which would trigger fair value pricing of the foreign securities. Funds that invest in low rated debt securities are also likely to use fair value pricing more often since the markets in which such securities are traded are generally thinner, more limited and less active than those for higher rated securities. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the US securities market (defined in the Fair Value Procedures as the movement by any two of four major US Indexes greater than a certain percentage) or other significant event; foreign market holidays if on a daily basis, Fund exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.

Because foreign securities can trade on non-business days, the net asset value of a Fund’s portfolio that includes foreign securities may change on days when shareholders will not be able to purchase or redeem fund shares.

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds’ financial statement disclosure.

Investment Transactions

Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost incurred by each money manager within a particular Fund.

Investment Income

Dividend income is recorded net of applicable withholding taxes on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon thereafter as the Funds are informed of the ex-dividend date. Interest income is recorded daily on the accrual basis. All premiums and discounts, including original issue discounts, are amortized/accreted using the interest method.

Federal Income Taxes

Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.

It is each Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income or excise tax provision is required for the Funds.

The Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds adopted the provisions of FIN 48 on November 1, 2007. Management has reviewed the Funds tax positions for all open tax years, and concluded that adoption had no effect on the Funds financial position or results of operations. At April 30, 2008, the Funds had recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.

The Funds file a U. S. tax return. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal year ending October 31, 2005 through October 31, 2007, no examinations are in progress or anticipated at this time. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

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Dividends and Distribution to Shareholders

For all Funds, income and capital gain distributions, if any, are recorded on the ex-dividend date. Income distributions are generally declared and paid according to the following schedule:

 

Declared    Payable      Funds

Monthly

    Early in the following month      Multistrategy Bond

Quarterly

    April, July, October and December      Diversified Equity and Quantitative Equity

Annually

    Mid-December      Special Growth, International Securities and Global Equity

The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) on investment and foreign currency-related transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP primarily relate to investments in options, futures, forward contracts, swap contracts, passive foreign investment companies, foreign-denominated investments, mortgage-backed securities, certain securities sold at a loss and capital loss carryforwards.

Expenses

The Funds will pay their own expenses other than those expressly assumed by RIMCo and RFSC. Most expenses can be directly attributed to the individual Funds. Expenses which cannot be directly attributed to a specific Fund are allocated among all Funds principally based on their relative net assets.

Class Allocation

Each of the Funds presented herein offer the following classes of shares: Class A, Class C, Class E, and Class S. All share classes have identical voting, dividend, liquidation and other rights and the same terms and conditions. The separate classes of shares differ principally in the applicable distribution fees and shareholder servicing fees. Shareholders of each class bear certain expenses that pertain to that particular class. Realized and unrealized gains (losses), net investment income, and expenses with the exception of class level expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class.

Foreign Currency Translations

The books and records of the Funds are maintained in US dollars. Foreign currency amounts and transactions of the Funds are translated into US dollars on the following basis:

 

  (a) Market value of investment securities, other assets and liabilities at the closing rate of exchange on the valuation date.

 

  (b) Purchases and sales of investment securities and income at the closing rate of exchange prevailing on the respective trade dates of such transactions.

Net realized gains or losses from foreign currency-related transactions arise from: sales and maturities of short-term securities; sales of foreign currencies; currency gains or losses realized between the trade and settlement dates on securities transactions; the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds’ books and the US dollar equivalent of the amounts actually received or paid. Net unrealized gains or losses from foreign currency-related transactions arise from changes in the value of assets and liabilities, other than investments in securities, at year-end, as a result of changes in the exchange rates.

The Funds do not isolate that portion of the results of operations of the Funds that arises as a result of changes in exchange rates from that portion that arises from changes in market prices of investments during the year. Such fluctuations are included with the net realized and unrealized gain or loss from investments. However, for federal income tax purposes the Funds do isolate the effects of changes in foreign exchange rates from the fluctuations arising from changes in market prices for realized gain (or loss) on debt obligations.

Capital Gains Taxes

The International Securities and Global Equity Funds may be subject to capital gains taxes and repatriation taxes imposed by certain countries in which they invest. The Funds have recorded a deferred tax liability in respect of the unrealized appreciation

 

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on foreign securities for potential capital gains and repatriation taxes at April 30, 2008. The accrual for capital gains and repatriation taxes is included in net unrealized appreciation (depreciation) on investments in the Statement of Asset and Liabilities for the Funds. The amounts related to capital gains taxes are included in net realized gain (loss) on investments in the Statement of Operations for the Funds.

 

Funds    Deferred Tax
Liability		    Capital Gains
Taxes
     

International Securities

    $ 76,711    $ 57,661

Global Equity

      —      10,685

Derivatives

To the extent permitted by the investment objectives, restrictions and policies set forth in the Funds’ Prospectus and Statement of Additional Information, the Funds may participate in various derivative-based transactions. Derivative securities are instruments or agreements whose value is derived from an underlying security or index. They include options, futures, swaps, forwards, structured notes and stripped securities. These instruments offer unique characteristics and risks that assist the Funds in meeting its investment strategies.

The Funds typically use derivatives in three ways: exposing cash reserves to markets, hedging and return enhancement. The Funds may pursue their strategy of being fully invested by exposing cash reserves to the performance of appropriate markets by purchasing securities and/or derivatives. This is intended to cause the Funds to perform as though cash reserves were actually invested in those markets. Hedging is also used by the Funds to limit or control risks, such as adverse movements in exchange rates and interest rates. Return enhancement can be accomplished through the use of derivatives in a Fund. By purchasing certain instruments, the Funds may more effectively achieve the desired portfolio characteristics that assist them in meeting their investment objectives. Depending on how the derivatives are structured and utilized, the risks associated with them may vary widely. These risks are generally categorized as market risk, liquidity risk and counterparty or credit risk.

Foreign Currency Exchange Contract

In connection with investment transactions consistent with the Funds’ investment objective and strategies, certain Funds may enter into foreign currency exchange spot contracts and forward foreign currency exchange contracts (“contracts”). The International Securities and Global Equity Funds may enter into forward foreign currency overlays on liquidity reserve balances. Additionally, from time to time the International Securities, Global Equity and Multistrategy Bond Funds may enter into contracts to hedge certain foreign currency-denominated assets. Contracts are recorded at market value. Certain risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and are generally limited to the amount of unrealized gain on the contracts, if any, that are recognized in the Statement of Assets and Liabilities. Realized gains or losses arising from such transactions are included in net realized gain (or loss) from foreign currency-related transactions. Open contracts at April 30, 2008 are presented on the Schedules of Investments for the applicable Funds.

Forward Commitments

The Funds may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with a Fund’s ability to manage its investment portfolio and meet redemption requests. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Funds may dispose of a forward commitment transaction prior to settlement if it is appropriate to do so and realize short-term gains (or losses) upon such sale. When effecting such transactions, cash or liquid high-grade debt obligations of the Fund in a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated on the Fund’s records at the trade date and maintained until the transaction is settled. A forward commitment transaction involves a risk of loss if the value of the security to be purchased declines prior to the settlement date or the other party to the transaction fails to complete the transaction.

Loan Agreements

The Multistrategy Bond Fund may invest in direct debt instruments which are interests in amounts owed by corporate, governmental, or other borrowers to lenders or lending syndicates. A Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. A loan is often administered by a bank or other financial institution (the “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified

 

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in the loan agreement. When investing in a loan participation, a Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt by the lender of payments from the borrower. A Fund generally has no right to enforce compliance with the terms of the loan agreement with the borrower. As a result, a Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When a Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan. At the period ended April 30, 2008, the Multistrategy Bond Fund had $3,000,000 in unfunded loan commitments.

Options

The Funds may purchase and sell (write) call and put options on securities and securities indices, provided such options are traded on a national securities exchange or in an over-the-counter market. The Funds may also purchase and sell call and put options on foreign currencies. The domestic equity Funds may utilize options to equitize liquidity reserve balances.

When a Fund writes a covered call or a put option, an amount equal to the premium received by the Fund is included in the Fund’s Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. The Fund receives a premium on the sale of a call option but gives up the opportunity to profit from any increase in stock value above the exercise price of the option, and when the Fund writes a put option it is exposed to a decline in the price of the underlying security.

Whether an option which the Fund has written expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss, if the cost of a closing purchase transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. When a put option which a Fund has written is exercised, the amount of the premium originally received will reduce the cost of the security which a Fund purchases upon exercise of the option. Realized gains (losses) on purchased options are included in net realized gain (loss) from investments.

The Funds’ use of written options involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to market risk. The risks may be caused by an imperfect correlation between movements in the price of the instrument and the price of the underlying securities and interest rates.

Futures Contracts

The Funds presented herein may invest in futures contracts (i.e., interest rate, foreign currency and index futures contracts) to a limited extent. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to off balance sheet risk. The primary risks associated with the use of futures contracts are an imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Funds are required to deposit with a broker an amount, termed the initial margin, which typically represents 5% of the purchase price indicated in the futures contract. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement value are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. As of April 30, 2008, the International Securities Fund and the Multistrategy Bond Fund had cash collateral balances of $15,713,579 and $8,535,000 respectively in connection with futures contracts purchased (sold).

Swap Agreements

The Funds may enter into several different types of agreements including interest rate, index, credit default and currency swaps.

The Funds may enter into index swap agreements as an additional hedging strategy for cash reserves held by the Funds or to effect investment transactions consistent with the Funds’ investment objectives and strategies. Index swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard index swap transaction, the two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular investments or instruments. The returns to be exchanged between the parties are calculated with respect to a “notional amount” (i.e. a specified dollar amount that is hypothetically invested in a “basket” of securities representing a

 

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particular index). Amounts paid to and received from the swap counterparties representing capital appreciation and depreciation on the underlying securities and accrued interest expense and interest income are recorded as net realized gain (loss). The Funds are exposed to credit risk in the event of non-performance by the swap counterparties; however, the Funds do not anticipate non-performance by the counterparties.

The Multistrategy Bond, Global Equity and International Securities Funds may enter into swap agreements, on either an asset-based or liability-based basis, depending on whether they are hedging their assets or their liabilities, and will usually enter into swaps on a net basis, i.e., the two payment streams are netted out, with the Funds receiving or paying, as the case may be, only the net amount of the two payments. When the Funds engage in a swap, they exchange their obligations to pay or rights to receive payments for the obligations to pay or rights to receive payments of another party (i.e., an exchange of floating rate payments for fixed rate payments).

Interest rate swaps are counterparty agreements and can be customized to meet each party’s needs and involve the exchange of a fixed payment per period for a payment that is not fixed. Currency swaps are agreements where two parties exchange specified amounts of different currencies which are followed by a series of interest payments that are exchanged based on the principal cash flow. At maturity the principal amounts are exchanged back to the original party. Credit default swaps are counterparty agreements which allow the transfer of third party credit risk (the possibility that an issuer will default on their obligation by failing to pay principal or interest in a timely manner) from one party to another. The lender faces the credit risk from a third party and the counterparty in the swap agrees to insure this risk in exchange for regular periodic payments.

The Funds expect to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio or to protect against any increase in the price of securities it anticipates purchasing at a later date. The net amount of the excess, if any, of the Funds’ obligations over its entitlements with respect to each swap will be accrued on a daily basis and an amount of cash or liquid high-grade debt securities having an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by the Funds’ custodian. To the extent that the Funds enter into swaps on other than a net basis, the amount maintained in a segregated account will be the full amount of the Fund’s obligations, if any, with respect to such swaps, accrued on a daily basis. If there is a default by the other party to such a transaction, the Funds will have contractual remedies pursuant to the agreement related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid.

Short Sales

The Quantitative Equity Fund may enter into short sale transactions. In a short sale, the seller sells a security that it does not own, typically a security borrowed from a broker or dealer. Because the seller remains liable to return the underlying security that it borrowed from the broker or dealer, the seller must purchase the security prior to the date on which delivery to the broker or dealer is required. The Fund will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the fund must return the borrowed security. The Fund will realize a gain if the security declines in price between those dates. The making of short sales exposes the Fund to the risk of liability for the market value of the security that is sold (the amount of which liability increases as the market value of the underlying security increases), in addition to the costs associated with establishing, maintaining and closing out the short position.

Although the Fund’s potential for gain as a result of a short sale is limited to the price at which it sold the security short less the cost of borrowing the security, its potential for loss is theoretically unlimited because there is no limit to the cost of replacing the borrowed security. When the Fund makes a short sale, the Fund may use all or a portion of the cash proceeds of short sales to purchase other securities or for any other permissible Fund purpose. To the extent necessary to meet collateral requirements, the Fund is required to pledge assets in a segregated account maintained by the Fund’s custodian for the benefit of the broker. The Fund also may use securities it owns to meet any such collateral obligations. Until a Fund replaces a borrowed security in connection with a short sale, the Fund will: (a) maintain daily a segregated account, containing cash, cash equivalents, or liquid marketable securities, at such a level that the amount deposited in the segregated account plus the amount deposited with the broker as collateral will equal the current requirement under Regulation T promulgated by the Board of Governors of the Federal Reserve System under the authority of section 7 and 8 of the Securities Exchange Act of 1934, as amended; or (b) otherwise cover its short position in accordance with positions taken by the staff of the Securities and Exchange Commission (e.g., taking an offsetting long position in the security sold short.) As of April 30, 2008, $1,549,058,378 was held as collateral.

 

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Investments in Emerging Markets

Investing in emerging markets may involve special risks and considerations for the International Securities Fund and Global Equity Fund not typically associated with investing in the United States markets. These risks include revaluation of currencies, high rates of inflation, repatriation, restrictions on income and capital, and future adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls, delayed settlements, and their prices may be more volatile than those of comparable securities in the United States.

Mortgage-Related and Other Asset-Backed Securities

The Multistrategy Bond Fund may invest in mortgage or other asset-backed securities. These securities may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMOresiduals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. Mortgage-backed securities often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice, however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of a Fund’s portfolio at the time the Fund receives the payments for reinvestment. Mortgage-backed securities may have less potential for capital appreciation than comparable fixed income securities due to the likelihood of increased prepayments of mortgages as interest rates decline. If a Fund buys mortgage-backed securities at a premium, mortgage foreclosures and prepayments of principal by mortgagors (which may be made at any time without penalty) may result in some loss of the Fund’s principal investment to the extent of the premium paid. The value of mortgage-backed securities may also change due to shifts in the market’s perception of issuers. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole. Non-governmental mortgage-backed securities may offer higher yields than those issued by government entities, but also may be subject to greater price changes than governmental issues.

Through its investments in mortgage-backed securities (“MBS”), including those that are issued by private issuers, a Fund may have some exposure to subprime loans as well as to the mortgage and credit markets generally. Private issuers include commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called special purpose vehicles or SPVs) and other entities that acquire and package mortgage loans for resale as MBS. Unlike MBS issued or guaranteed by the U.S. government or one of its sponsored entities, MBS issued by private issuers do not have a government or government-sponsored entity guarantee, but may have credit enhancements provided by external entities such as banks or financial institutions or achieved through the structuring of the transaction itself. Examples of such credit support arising out of the structure of the transaction include the issue of senior and subordinated securities (e.g., the issuance of securities by an SPV in multiple classes or “tranches”, with one or more classes being senior to other subordinated classes as to the payment of principal and interest, with the result that defaults on the underlying mortgage loans are borne first by the holders of the subordinated class); creation of “reserve funds” (in which case cash or investments, sometimes funded from a portion of the payments on the underlying mortgage loans, are held in reserve against future losses); and “overcollateralization” (in which case the scheduled payments on, or the principal amount of, the underlying mortgage loans exceeds that required to make payment of the securities and pay any servicing or other fees). However, there can be no guarantee that credit enhancements, if any, will be sufficient to prevent losses in the event of defaults on the underlying mortgage loans. In addition, MBS that are issued by private issuers are not subject to the underwriting requirements for the underlying mortgages that are applicable to those MBS that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying private MBS may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored MBS and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Privately issued pools more frequently include second mortgages, high loan-to-value mortgages and manufactured housing loans. The coupon rates and maturities of the underlying mortgage loans in a private-label MBS pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans. Subprime loans refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. For these reasons, the loans underlying these securities have had in many cases higher default rates than those loans that meet government underwriting requirements. The risk of non-payment is greater for MBS that are backed by mortgage pools that contain subprime loans, but a level of risk exists for all loans. Privately issued MBS are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, MBS held in a Fund’s portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.

 

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Asset-backed securities may include pools of mortgages (“mortgage-backed securities”), loans, receivables or other assets. Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities. For purposes of determining the percentage of a Fund’s total assets invested in securities of issuers having their principal business activities in a particular industry, asset-backed securities will be classified separately, based on the nature of the underlying assets, according to the following categories: captive auto, diversified, retail and consumer loans, captive equipment and business, business trade receivables, nuclear fuel and capital and mortgage lending. Asset-backed securities (other than mortgage-backed securities) present certain risks that are not presented by mortgage-backed securities. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. The Funds will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of asset-backed securities may be affected by legislative or regulatory developments. It is possible that such developments may require the Funds to dispose of any then existing holdings of such securities.

Inflation-Indexed Bonds

The Multistrategy Bond Fund may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity.

Guarantees

In the normal course of business the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote.

 

3.   Investment Transactions

Securities

During the period ended April 30, 2008, purchases and sales of investment securities (excluding US Government and Agency obligations, short-term investments, options, futures and repurchase agreements) were as follows:

 

Funds    Purchases    Sales
     

Diversified Equity

    $ 2,282,835,226    $ 2,233,285,179

Special Growth

      1,237,166,635      1,187,643,306

Quantitative Equity

      2,986,172,135      2,851,955,983

International Securities

      1,846,498,915      1,711,149,517

Global Equity

      975,161,475      879,769,864

Multistrategy Bond

      1,466,184,575      1,499,699,063

Purchases and sales of US Government and Agency obligations (excluding short-term investments, options, futures and repurchase agreements) for the Multistrategy Bond Fund totaled $2,975,598,529 and $2,661,090,353 respectively, for the period ended April 30, 2008.

 

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Written Options Contracts

Transactions in written options contracts for the period ended April 30, 2008 for the following Funds were as follows:

 

     International Securities Fund     Multistrategy Bond Fund  
      Number of
Contracts		     Premiums
Received		     Number of
Contracts		     Premiums
Received		  
        

Outstanding October 31, 2007

    —     $ —     17,035     $ 5,536,309  

Opened

    2,351       10,948,505     6,289       9,659,901  

Closed

    (1,971 )     (9,045,365 )   (10,311 )     (4,577,036 )

Expired

    —       —     (11,306 )     (2,013,557 )
                            

Outstanding April 30, 2008

    380     $ 1,903,140     1,707     $ 8,605,617  
                            

Securities Lending

The Investment Company has a securities lending program whereby each Fund can loan securities with a value up to 33 1/3% of each Fund’s total assets. The Fund receives cash (US currency), US Government or US Government agency obligations as collateral against the loaned securities. To the extent that a loan is collateralized by cash, such collateral is invested by the securities lending agent, State Street Bank and Trust Company (“State Street”) in short-term instruments, money market mutual funds and other short-term investments that meet certain quality and diversification requirements. Cash collateral invested in money market funds is included in the Schedules of Investments. The collateral received is recorded on a lending Fund’s Statement of Assets and Liabilities along with the related obligation to return the collateral.

Income generated from the investment of cash collateral, less negotiated rebate fees paid to participating brokers and transaction costs, is divided between the Fund and State Street and is recorded as income for the Fund. To the extent that a loan is secured by non-cash collateral, brokers pay the Fund negotiated lenders’ fees, which are divided between the Fund and State Street and are recorded as securities lending income for the Fund. All collateral received will be in an amount at least equal to 102% (for loans of US securities) or 105% (for non-US securities) of the market value of the loaned securities at the inception of each loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Fund the next day. Should the borrower of the securities fail financially, there is a risk of delay in recovery of the securities or loss of rights in the collateral. Consequently, loans are made only to borrowers which are deemed to be of good financial standing.

As of April 30, 2008, the non-cash collateral pledged for the securities on loan in the following funds was:

 

      Non-Cash
Collateral Value		    Non-Cash Collateral Holding
     

Diversified Equity

    $ 26,518,679    Pool of US Government Securities

Special Growth

      3,148,646    Pool of US Government Securities

Quantitative Equity

      10,301,744    Pool of US Government Securities

International Securities

      5,230,742    Pool of US Government Securities

Global Equity

      463,031    Pool of US Government Securities

Custodian

The Funds have entered into arrangements with their custodian whereby custody credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ expenses. During the period ended April 30, 2008, the Funds’ custodian fees were reduced by the following amounts under these arrangements which are included in expense reductions on the Statement of Operations:

 

Funds    Amount
Paid
  

Diversified Equity

    $ 3,392

Special Growth

      4,193

Quantitative Equity

      5,340

International Securities

      34,445

Global Equity

      1,464

Multistrategy Bond

      207,411

 

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Brokerage Commissions

The Funds effect certain transactions through BNY ConvergeFX Group — LJR Recapture Services (“LJR”) and its global network of correspondent brokers. LJR is a registered broker and is not an affiliate of the Funds or RIMCo. Trades placed through LJR and its correspondents are used (i) to obtain research services for RIMCo to assist it in its capacity as a manager of managers and (ii) to generate commission rebates to the Funds on whose behalf the trades were made. For purposes of trading to obtain research services for RIMCo or to generate commission rebates to the Funds, the Funds’ money managers are requested to and RIMCo may, with respect to transactions it places, effect transactions with or through LJR and its correspondents or other brokers only to the extent that the Funds will receive competitive execution, price and commissions. In addition, RIMCo recommends targets for the amount of trading that money managers allocate through LJR based upon asset class, investment style and other factors. Research services provided to RIMCo by LJR or other brokers include performance measurement statistics, fund analytics systems and market monitoring systems. Research services will be generally obtained from unaffiliated third parties at market rates. Research provided to RIMCo may benefit the particular Funds generating the trading activity and may also benefit other Funds within the Investment Company and other funds and clients managed or advised by RIMCo or its affiliates. Similarly, the Funds may benefit from research provided with respect to trading by those other funds and clients.

LJR may also rebate to the Funds a portion of commissions earned on certain trading by the Funds through LJR and their correspondents in the form of commission recapture. Commission recapture is paid solely to those Funds generating the applicable trades. Commission recapture is generated on the instructions of the Soft Dollar Committee once RIMCo’s research budget has been met, as determined annually in the Soft Dollar Committee budgeting process.

Effective January 1, 2008, transactions effected through LJR are used solely to generate commission rebates to the Funds and no longer to obtain research services.

Additionally, the Fund paid brokerage commissions to non-affiliated brokers who provided brokerage and research services to the Adviser.

4.   Related Party Transactions, Fees and Expenses

Adviser and Administrator

Through December 31, 2007, RIMCo was the adviser and administrator of all of the Funds which comprise the Investment Company. Effective January 1, 2008, RIMCo advises the Funds and RFSC is the Funds’ administrator. RFSC is a wholly-owned subsidiary of RIMCo. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides money manager evaluation to RIMCo.

The Funds are permitted to invest their cash reserves (i.e., cash awaiting investment or cash held to meet redemption requests or to pay expenses) and also may invest a portion of the collateral received from the Investment Company’s securities lending program, in the RIC Money Market Fund. As of April 30, 2008, $1,677,888,371 of the Money Market Fund’s net assets represents investments by the Funds.

The advisory and administrative fees are based upon the average daily net assets of each Fund at the rates specified in the tables below, are payable monthly and total $79,353,540 and $5,374,829 respectively, for the period ended April 30, 2008.

 

     Annual Rate  
Funds    Adviser        Administrative  

Special Growth

    .90 %      .05 %

Global Equity

    .95        .05  

For the Diversified Equity Fund, the Quantitative Equity Fund, the International Securities Fund, and the Multistrategy Bond Fund, the advisory fee is based on the asset levels of the Funds. The advisory and administrative fee rates for these Funds are as follows:

 

     Diversified Equity Fund     Quantitative Equity Fund     International Securities Fund     Multistrategy Bond Fund  
     Annual Rate     Annual Rate     Annual Rate     Annual Rate  
Average Daily Net Assets    Advisory     Administrative     Advisory     Administrative     Advisory     Administrative     Advisory     Administrative  

First $2 Billion

    .73 %   .05 %   .73 %   .05 %   .90 %   .05 %   .60 %   .05 %

Next $3 Billion

    .72     .05     .72     .05     .89     .05     .59     .05  

Over $5 Billion

    .70     .05     .70     .05     .87     .05     .57     .05  

 

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For the Multistrategy Bond Fund, there was a non-contractual advisory fee waiver of 0.03% applicable to the period ended April 30, 2008, totaling $956,574.

The Adviser does not have the ability to recover amounts waived or reimbursed from previous periods.

Transfer and Dividend Disbursing Agent

Through December 31, 2007 RIMCo was the Transfer and Dividend Disbursing Agent. Effective January 1, 2008 RFSC serves as Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RIMCo and RFSC are paid a fee for transfer agency and dividend disbursing services provided to the Fund. RIMCo and RFSC retain a portion of this fee for their services provided to the Fund and pay the balance to unaffiliated agents who assist in providing these services. Total transfer agency fees paid by the Funds presented herein for the period ended April 30, 2008 were $15,370,550.

Distributor and Shareholder Servicing

On June 2, 2008 Russell Fund Distributors, Inc., a whole owned subsidiary of RIMCo, changed its name to Russell Financial Services, Inc. (the “Distributor”) and serves as distributor for RIC, pursuant to the Distribution Agreement with the Investment Company.

The Investment Company has a Distribution Plan pursuant to Rule 12b-1 (the “Plan”) under the 1940 Act. Under this Plan, the Investment Company is authorized to make payments to the Distributor, or any Selling Agents, as defined in the Plan, for sales support services provided and related expenses incurred which were primarily intended to result in the sale of the Class A and Class C shares subject to the Distribution Plan. The 12b-1 distribution payments shall not exceed 0.25% of the average daily net assets of a Fund’s Class A shares or 0.75% of the average daily net assets of a Fund’s Class C shares on an annual basis.

In addition, the Investment Company has adopted a Shareholder Services Plan (the “Services Plan”) under which the Funds may make payments to the Distributor or any Servicing Agent for any activities or expenses primarily intended to assist, support or service the Servicing Agents’ clients who beneficially own Class C or Class E shares of the Funds. The shareholder servicing payments shall not exceed 0.25% of the average daily net assets of a Fund’s Class C and Class E shares on an annual basis.

Pursuant to the rules of the Financial Industry Regulatory Authority (“FINRA”), the aggregate initial sales charges, deferred sales charges and asset-based sales charges on Class A, Class C and Class E Shares of the Funds may not exceed 7.25%, 6.25% and 6.25%, respectively, of total gross sales, subject to certain exclusions. These limitations are imposed at the class level on each class of shares of each Fund rather than on a per shareholder basis. Therefore, long-term shareholders of the Class A and Class C shares may pay more than the economic equivalent of the maximum sales charges permitted by FINRA.

For the period ended April 30, 2008, the Distributor retained the following amounts in sales charges:

 

Contingent Deferred
Sales Charges		    Class A Shares
  

Diversified Equity Fund

    $ 803

Special Growth Fund

      65

Quantitative Equity Fund

      829

International Securities Fund

      512

Multistrategy Bond Fund

      16

For the period ended April 30, 2008, the sales commissions paid to the selling agents for the sale of Class A shares are as follows:

 

Funds    Aggregate Front-End
Sales Charges on
Class A Shares		    Class A Front-End
Sales Charges
Retained by
Distributor
     

Diversified Equity Fund

    $ 63,582    $ 11,986

Special Growth Fund

      37,386      6,780

Quantitative Equity Fund

      55,775      10,853

International Securities Fund

      59,294      11,315

Global Equity Fund

      19,370      3,637

Multistrategy Bond Fund

      63,080      12,775

 

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Affiliate Payables

Accrued fees payable to affiliates as April 30, 2008 were as follows:

 

     Diversified Equity
Fund		    Special Growth
Fund		    Quantitative Equity
Fund		    International
Securities Fund		    Global Equity
Fund		    Multistrategy Bond
Fund
                 

Advisory Fees

    $ 2,605,945    $ 1,031,295    $ 2,534,721    $ 2,963,135    $ 884,360    $ 2,964,734

Administration Fees

      178,489      57,294      173,611      164,619      46,545      260,064

Distribution Fees

      90,492      35,156      84,486      97,168      7,721      77,379

Shareholder Servicing Fees

      43,199      16,232      41,190      48,368      5,367      47,469

Transfer Agent Fees

      1,055,949      569,822      1,029,915      976,582      329,585      1,043,029

Trustee Fees

      7,847      2,525      7,887      6,366      2,108      13,316
                                         
   $ 3,981,921    $ 1,712,324    $ 3,871,810    $ 4,256,238    $ 1,275,686    $ 4,405,991
                                         

Affiliated Brokerage Commissions

The Funds will effect certain transactions through Russell Implementation Services Inc. (“RIS”) and its global network of unaffiliated correspondent brokers. RIS is a registered broker and investment adviser and an affiliate of RIMCo. Trades placed through RIS and its correspondents are made (i) to manage trading associated with changes in managers, rebalancing across existing managers, cash flows and other portfolio transitions or (ii) to execute portfolio securities transactions for each Fund’s assets that RIMCo determines not to allocate to money managers and for each Fund’s cash reserves.

Board of Trustees

The Russell Fund Complex consists of Russell Investment Company, which has 44 Funds, and Russell Investment Funds (“RIF”), which has nine Funds. Each of the Trustees is a Trustee for both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 ($52,000 prior to January 1, 2008) per year, $6,500 for each regular quarterly meeting attended in person, $2,500 ($2,000 prior to January 1, 2008) for each special meeting attended in person, and $2,500 ($2,000 prior to January 1, 2008) for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 ($500 prior to January 1, 2008) fee for attending quarterly and special meetings and a $500 fee for attending committee meetings by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee chair is paid a fee of $6,000 per year. The chairman of the Board receives additional annual compensation of $52,000.

 

5.   Federal Income Taxes

Multistrategy Bond Fund had net tax basis capital loss carryforwards which may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Available capital loss carryforwards for October 31, 2014 and October 31, 2015 are $14,540,672 and $15,723,968, respectively, totaling $30,264,640 for the period ending April 30, 2008.

 

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Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

At April 30, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

 

     Diversified Equity
Fund		     Special Growth
Fund		     Quantitative Equity
Fund		     International
Securities Fund		  
        

Cost of Investments

    $ 4,466,685,782     $ 1,937,570,000     $ 4,764,664,776     $ 4,536,342,989  
                                

Unrealized Appreciation

    $ 581,624,696     $ 115,983,929     $ 395,962,236     $ 566,179,983  

Unrealized Depreciation

      (175,074,659 )     (62,655,145 )     (224,042,440 )     (134,340,276 )
                                

Net Unrealized Appreciation (Depreciation)

    $ 406,550,037     $ 53,328,784     $ 171,919,796     $ 431,839,707  
                                
      Global Equity
Fund		     Multistrategy Bond
Fund		              
        

Cost of Investments

    $ 1,298,133,051     $ 8,186,892,349      
                    

Unrealized Appreciation

    $ 61,489,976     $ 169,719,831      

Unrealized Depreciation

      (27,979,768 )     (359,954,565 )    
                    

Net Unrealized Appreciation (Depreciation)

    $ 33,510,208     $ (190,234,734 )    
                    

 

6.   Fund Share Transactions (amounts in thousands)

Share transactions for the periods ended April 30, 2008 and October 31, 2007 were as follows:

 

     Shares     Dollars  
Diversified Equity Fund    2008     2007     2008     2007  
        
        

Class A(2)

         

Proceeds from shares sold

    403     158     $ 19,014     $ 8,096  

Proceeds from reinvestment of distributions

    21     —       1,009       15  

Payments for shares redeemed

    (40 )   (25 )     (1,794 )     (1,310 )
                            

Net increase (decrease)

    384     133       18,229       6,801  
                            
        

Class C

         

Proceeds from shares sold

    174     569       7,792       27,724  

Proceeds from reinvestment of distributions

    272     150       12,685       6,962  

Payments for shares redeemed

    (392 )   (783 )     (17,390 )     (38,789 )
                            

Net increase (decrease)

    54     (64 )     3,087       (4,103 )
                            
        

Class E

         

Proceeds from shares sold

    218     339       9,888       17,252  

Proceeds from reinvestment of distributions

    127     73       6,154       3,539  

Payments for shares redeemed

    (194 )   (403 )     (9,083 )     (20,552 )
                            

Net increase (decrease)

    151     9       6,959       239  
                            
        

Class S

         

Proceeds from shares sold

    10,530     20,006       490,364       1,008,986  

Proceeds from reinvestment of distributions

    7,449     3,923       361,342       190,965  

Payments for shares redeemed

    (7,403 )   (15,471 )     (342,229 )     (777,074 )

Net increase (decrease)

    10,576     8,458       509,478       422,877  
                            

Total increase (decrease)

    11,165     8,536     $ 537,753     $ 425,814  
                            

 

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Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Special Growth Fund    2008     2007     2008     2007  
        
        

Class A(2)

         

Proceeds from shares sold

    190     82     $ 8,367     $ 4,191  

Proceeds from reinvestment of distributions

    13     —       597       —  

Payments for shares redeemed

    (19 )   (22 )     (789 )     (1,153 )
                            

Net increase (decrease)

    184     60       8,175       3,038  
                            
        

Class C

         

Proceeds from shares sold

    92     249       3,614       11,647  

Proceeds from reinvestment of distributions

    172     215       6,904       9,576  

Payments for shares redeemed

    (234 )   (377 )     (9,039 )     (17,745 )
                            

Net increase (decrease)

    30     87       1,479       3,478  
                            
        

Class E

         

Proceeds from shares sold

    98     143       4,101       7,262  

Proceeds from reinvestment of distributions

    62     72       2,757       3,492  

Payments for shares redeemed

    (92 )   (135 )     (3,992 )     (6,899 )
                            

Net increase (decrease)

    68     80       2,866       3,855  
                            
        

Class S

         

Proceeds from shares sold

    4,634     8,165       209,121       430,955  

Proceeds from reinvestment of distributions

    2,877     2,759       135,227       139,972  

Payments for shares redeemed

    (2,844 )   (4,303 )     (128,985 )     (230,097 )
                            

Net increase (decrease)

    4,665     6,621       215,363       340,830  
                            

Total increase (decrease)

    4,949     6,848     $ 227,883     $ 351,201  
                            
     Shares     Dollars  
Quantitative Equity Fund    2008     2007     2008     2007  
        

Class A(2)

         

Proceeds from shares sold

    436     185     $ 16,234     $ 7,805  

Proceeds from reinvestment of distributions

    21     —       818       15  

Payments for shares redeemed

    (48 )   (29 )     (1,724 )     (1,258 )
                            

Net increase (decrease)

    409     156       15,328       6,562  
                            
        

Class C

         

Proceeds from shares sold

    178     665       6,364       27,139  

Proceeds from reinvestment of distributions

    290     204       10,748       8,042  

Payments for shares redeemed

    (456 )   (922 )     (16,117 )     (37,845 )
                            

Net increase (decrease)

    12     (53 )     995       (2,664 )
                            
        

Class E

         

Proceeds from shares sold

    274     420       9,843       17,654  

Proceeds from reinvestment of distributions

    145     103       5,548       4,188  

Payments for shares redeemed

    (263 )   (467 )     (9,640 )     (19,530 )
                            

Net increase (decrease)

    156     56       5,751       2,312  
                            

 

166   Notes to Financial Statements

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Quantitative Equity Fund    2008     2007     2008     2007  
        
        

Class S

         

Proceeds from shares sold

    13,804     27,414     $ 508,974     $ 1,152,745  

Proceeds from reinvestment of distributions

    8,356     5,378       320,974       219,863  

Payments for shares redeemed

    (9,843 )   (18,776 )     (360,556 )     (780,094 )
                            

Net increase (decrease)

    12,317     14,016       469,392       592,514  
                            

Total increase (decrease)

    12,894     14,175     $ 491,466     $ 598,724  
                            
     Shares     Dollars  
International Securities Fund    2008     2007     2008     2007  
        

Class A(2)

         

Proceeds from shares sold

    273     108     $ 19,487     $ 8,732  

Proceeds from reinvestment of distributions

    30     —       2,138       —  

Payments for shares redeemed

    (29 )   (15 )     (1,887 )     (1,253 )
                            

Net increase (decrease)

    274     93       19,738       7,479  
                            
        

Class C

         

Proceeds from shares sold

    150     393       9,835       30,016  

Proceeds from reinvestment of distributions

    374     222       25,149       15,825  

Payments for shares redeemed

    (303 )   (580 )     (20,046 )     (45,142 )
                            

Net increase (decrease)

    221     35       14,938       699  
                            
        

Class E

         

Proceeds from shares sold

    172     372       11,847       29,593  

Proceeds from reinvestment of distributions

    199     109       14,003       8,037  

Payments for shares redeemed

    (151 )   (356 )     (10,499 )     (28,038 )
                            

Net increase (decrease)

    220     125       15,351       9,592  
                            
        

Class S

         

Proceeds from shares sold

    6,701     11,105       461,680       885,474  

Proceeds from reinvestment of distributions

    8,531     4,727       607,665       353,027  

Payments for shares redeemed

    (5,299 )   (11,217 )     (367,378 )     (886,377 )
                            

Net increase (decrease)

    9,933     4,615       701,967       352,124  
                            

Total increase (decrease)

    10,648     4,868     $ 751,994     $ 369,894  
                            
     Shares     Dollars  
Global Equity Fund    2008     2007     2008     2007  
        

Class A(1)

         

Proceeds from shares sold

    159     314     $ 1,624     $ 3,256  

Proceeds from reinvestment of distributions

    7     —       77       —  

Payments for shares redeemed

    (39 )   (99 )     (392 )     (1,049 )
                            

Net increase (decrease)

    127     215       1,309       2,207  
                            

 

Notes to Financial Statements   167

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Global Equity Fund    2008     2007     2008     2007  
        
        

Class C(1)

         

Proceeds from shares sold

    303     1,116     $ 3,003     $ 11,534  

Proceeds from reinvestment of distributions

    24     —       253       —  

Payments for shares redeemed

    (96 )   (161 )     (946 )     (1,694 )
                            

Net increase (decrease)

    231     955       2,310       9,840  
                            
        

Class E(1)

         

Proceeds from shares sold

    217     1,650       2,110       16,391  

Proceeds from reinvestment of distributions

    40     —       415       —  

Payments for shares redeemed

    (127 )   (270 )     (1,250 )     (2,851 )
                            

Net increase (decrease)

    130     1,380       1,275       13,540  
                            
        

Class S(1)

         

Proceeds from shares sold

    17,619     106,414       174,652       1,072,533  

Proceeds from reinvestment of distributions

    3,135     —       32,505       —  

Payments for shares redeemed

    (5,317 )   (7,392 )     (52,101 )     (77,284 )
                            

Net increase (decrease)

    15,437     99,022       155,056       995,249  
                            

Total increase (decrease)

    15,925     101,572     $ 159,950     $ 1,020,836  
                            
     Shares     Dollars  
Multistrategy Bond Fund    2008     2007     2008     2007  
        

Class A(2)

         

Proceeds from shares sold

    1,449     1,003     $ 14,988     $ 10,311  

Proceeds from reinvestment of distributions

    37     14       385       142  

Payments for shares redeemed

    (160 )   (107 )     (1,652 )     (1,101 )
                            

Net increase (decrease)

    1,326     910       13,721       9,352  
                            

Class C

         

Proceeds from shares sold

    1,586     6,123       16415       62913  

Proceeds from reinvestment of distributions

    257     340       2,654       3,495  

Payments for shares redeemed

    (1,388 )   (3,367 )     (14,347 )     (34,616 )
                            

Net increase (decrease)

    455     3,096       4,722       31,792  
                            
        

Class E

         

Proceeds from shares sold

    1,554     8,058       16,070       83,361  

Proceeds from reinvestment of distributions

    317     380       3,276       3,902  

Payments for shares redeemed

    (2,032 )   (2,140 )     (20,891 )     (21,994 )
                            

Net increase (decrease)

    (161 )   6,298       (1,545 )     65,269  
                            
        

 

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Multistrategy Bond    2008     2007     2008     2007  
        

Class S

         

Proceeds from shares sold

    70,426     413,550     $ 725,842     $ 4,281,004  

Proceeds from reinvestment of distributions

    17,196     19,651       177,853       201,952  

Payments for shares redeemed

    (78,779 )   (74,308 )     (821,233 )     (765,294 )
                            

Net increase (decrease)

    8,843     358,893       82,462       3,717,662  
                            

Total increase (decrease)

    10,463     369,197     $ 99,360     $ 3,824,075  
                            

 

(1) For the period February 28, 2007 (commencement of operations) to October 31, 2007.
(2) For the period March 1, 2007 (commencement of operations) to October 31, 2007.

 

7.   Interfund Lending Program

The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Funds may borrow money from the RIC Money Market Fund for temporary purposes. All such borrowing and lending will be subject to a participating Fund’s fundamental investment limitations. The RIC Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves. The Investment Company Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Money Market Fund could result in a lost investment opportunity or additional borrowing costs. For the period ended April 30, 2008, the Funds did not participate in the interfund lending program.

 

8.   Record Ownership

As of April 30, 2008, the following table includes shareholders of record with greater than 10% of the total outstanding shares of each respective Fund:

 

      # of Shareholders      %

Diversified Equity

    3      51.0

Special Growth

    3      43.1

Quantitative Equity

    3      50.9

International Securities

    3      48.6

Global Equity

    3      53.5

Multistrategy Bond

    3      59.3

 

9.   Restricted Securities

Restricted securities are subject to contractual limitations on resale, are often issued in private placement transactions, and are not registered under the Securities Act of 1933 (the “Act”). The most common types of restricted securities are those sold under Rule 144A of the Act and commercial paper sold under Section 4(2) of the Act.

A Fund may invest a portion of its net assets not to exceed 15% in securities that are illiquid. Illiquid securities are securities that may not be readily marketable, and that cannot be sold within seven days in the ordinary course of business at the approximate amount at which the Fund has valued the securities. Restricted securities are generally considered to be illiquid.

 

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The following table lists restricted securities held by a Fund that are illiquid. The following table does not include (1) securities deemed liquid by RIMCo or a money manager pursuant to Board approved policies and procedures or (2) illiquid securities that are not restricted securities as designated on the Fund’s Schedule of Investments.

 

Fund - % of Net Assets
Securities		    Acquisition
Date		    Principal
Amount ($)
or Shares		    Cost per Unit
$		    Cost
(000)
$		    Market Value
(000)
$
              

Multistrategy Bond Fund - 2.2%

               

AIG SunAmerica Global Financing VI

    06/09/04    3,095,000    103.27    3,196    3,201

American Express Credit Account Master Trust

    08/02/07    3,030,994    100.04    3,032    2,867

American Express Credit Account Master Trust

    08/02/07    3,500,000    96.09    3,363    3,413

American Express Credit Account Master Trust

    08/02/07    2,000,000    97.44    1,949    1,869

Americo Life, Inc.

    06/20/06    250,000    101.67    254    257

Bear Stearns Structured Products, Inc.

    09/12/07    4,536,766    99.33    4,506    4,491

BNP Paribas Capital Trust

    06/01/06    2,600,000    112.17    2,916    2,662

Bombardier, Inc.

    11/10/06    375,000    128.47    482    590

Catlin Insurance Co., Ltd.

    11/01/07    575,000    100.00    575    480

CIT Mortgage Loan Trust

    10/05/07    5,493,419    100.00    5,493    4,944

CIT Mortgage Loan Trust

    10/05/07    1,700,000    100.00    1,700    1,105

CIT Mortgage Loan Trust

    10/05/07    3,150,000    100.00    3,150    1,733

Citic Resources Finance, Ltd.

    08/01/07    500,000    95.66    478    475

Deutsche ALT-A Securities NIM Trust

    03/12/07    473,201    99.65    472    465

DG Funding Trust

    11/04/06    361    10,584.58    3,821    3,612

Digicel Group, Ltd.

    04/02/08    2,755,000    84.67    2,333    2,362

Dr Pepper Snapple Group, Inc.

    04/25/08    3,900,000    100.63    3,925    4,046

Dr Pepper Snapple Group, Inc.

    04/25/08    875,000    103.61    907    937

Entergy Gulf States, Inc.

    11/30/05    570,000    100.00    570    571

Evraz Group SA

    04/17/08    3,085,000    100.85    3,111    3,124

Evraz Group SA

    04/17/08    800,000    100.00    800    810

Farmers Exchange Capital

    01/26/04    2,510,000    103.82    2,606    2,303

FBG Finance, Ltd.

    06/21/05    585,000    99.38    581    575

First USA Credit Card Master Trust

    11/08/07    2,700,000    100.41    2,711    2,675

Gaz Capital SA

    11/17/06    500,000    100.00    500    523

Gaz Capital SA

    11/17/06    6,715,000    102.88    6,908    7,126

Gaz Capital SA

    11/17/06    6,715,000    102.88    6,908    7,126

Genworth Life Institutional Funding Trust

    04/29/08    1,930,000    99.94    1,929    1,929

Global Funding

    08/03/05    730,000    99.84    729    730

Grupo Senda Autotransporte SA de CV

    03/07/08    3,600,000    94.76    3,411    3,384

GS Mortgage Securities Corp.

    03/19/07    99,343    99.71    99    98

Harborview NIM Corp.

    03/13/07    108,093    99.88    108    107

Helix Energy Solutions Group, Inc.

    12/18/07    500,000    100.00    500    521

John Hancock Global Funding II

    04/21/04    440,000    106.74    470    482

Korea Southern Power Co., Ltd.

    04/11/08    3,090,000    99.85    3,085    3,096

Lehman Brothers Floating Rate Commercial Mortgage Trust

    02/14/07    1,737,754    100.03    1,738    1,621

LG Electronics, Inc.

    03/03/06    390,000    99.39    388    386

Mantis Reef, Ltd.

    10/28/03    585,000    99.96    585    582

MBNA Credit Card Master Note Trust

    07/30/07    7,100,000    99.69    7,078    7,054

Metlife Capital Trust X

    04/01/08    1,100,000    100.00    1,100    1,240

Midamerican Energy Holdings Co.

    03/25/08    1,200,000    99.82    1,198    1,219

Nine Dragons Paper Holding, Ltd.

    04/22/08    2,430,000    99.44    2,416    2,410

Nuveen Investments, Inc.

    02/15/08    898,000    87.20    783    864

Panama Canal Railway Co.

    10/29/07    1,000,000    100.00    1,000    915

SB Treasury Co. LLC

    06/01/06    2,028,000    106.80    2,166    2,043

Securitized Asset Backed Receivables LLC Trust

    02/14/08    9,201,501    97.45    8,967    9,052

Southwestern Energy Co.

    01/11/08    870,000    100.00    870    922

 

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Fund - % of Net Assets
Securities		    Acquisition
Date		    Principal
Amount ($)
or Shares		    Cost per Unit
$		    Cost
(000)
$		    Market Value
(000)
$
              

Structured Asset Securities Corp.

    05/15/07    2,000,000    94.40    1,888    2,001

Symetra Financial Corp.

    10/26/07    900,000    98.36    885    817

Systems 2001 AT LLC

    09/25/03    336,866    102.45    345    337

Texas Competitive Electric Holdings Co. LLC

    04/10/08    3,900,000    101.00    3,939    3,993

TNK-BP Finance SA

    09/28/07    4,480,000    98.44    4,410    4,435

VIP Finance Ireland, Ltd. For OJSC Vimpel Communications

    04/24/08    650,000    100.00    650    650

VIP Finance Ireland, Ltd. For OJSC Vimpel Communications

    04/24/08    6,240,000    100.41    6,266    6,245

VTB Capital SA

    04/30/08    2,100,000    100.00    2,100    2,047

Washington Mutual Preferred Funding LLC

    12/06/06    5,000,000    60.52    3,026    3,200

White Mountains Re Group, Ltd.

    01/25/08    11,855,000    94.30    11,179    8,881

World Financial Properties

    11/08/02    147,631    104.11    154    151

ZFS Finance USA Trust I

    04/03/08    4,450,000    85.68    3,813    3,966
                
               139,720
                

Illiquid securities and restricted securities may be priced by the Funds using fair value procedures approved by the Board of Trustees.

 

10.   Dividends

On May 1, 2008, the Board of Trustees of Russell Investment Company declared the following dividends payable from net investment income. Dividends were payable on May 6, 2008, to shareholders of record May 2, 2008.

 

Funds    Net Investment
Income		    Short-Term
Capital Gains		    Long-Term
Capital Gains
        

Multistrategy Bond - Class S

    $ 0.0420    $ —    $ —

Multistrategy Bond - Class E

      0.0399      —      —

Multistrategy Bond - Class C

      0.0336      —      —

Multistrategy Bond - Class A

      0.0399      —      —

On June 2, 2008, the Board of Trustees of Russell Investment Company declared the following dividends payable from net investment income. Dividends will be payable on June 5, 2008, to shareholders of record June 3, 2008.

 

Funds    Net Investment
Income		    Short-Term
Capital Gains		    Long-Term
Capital Gains
        

Multistrategy Bond - Class S

    $ 0.0348    $ —    $ —

Multistrategy Bond - Class E

      0.0328      —      —

Multistrategy Bond - Class C

      0.2660      —      —

Multistrategy Bond - Class A

      0.0328      —      —

 

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11.   Subsequent Events

At a meeting held on May 20, 2008, the Board of Trustees of Russell Investment Company, upon the recommendation of Russell Investment Management Company, approved a separate Agreement and Plan of Reorganization (each a “Plan”) with respect to the reorganization of each Acquired Fund (as defined below) into its corresponding Acquiring Fund (as defined below) (each a “Reorganization”).

 

Acquired Fund    Acquiring Fund

Diversified Equity Fund into

    Equity I Fund

Quantitative Equity Fund into

    Equity Q Fund

Special Growth Fund into

    Equity II Fund

International Securities Fund into

    International Fund

Multistrategy Bond Fund into

    Fixed Income III Fund

Each Plan provides for the reorganization of an Acquired Fund with and into its corresponding Acquiring Fund in exchange for Shares issued by the Acquiring Fund. The value of Shares issued by the Acquiring Fund in connection with each Reorganization will be equal at the time of the Reorganization to the value of the Shares of the corresponding Acquired Fund. Pursuant to each Plan, shares issued to an Acquired Fund by the corresponding Acquiring Fund will be distributed to Shareholders of the Acquired Fund in connection with the liquidation of the Acquired Fund. As a result, each Shareholder of the Acquired Fund will cease to be a Shareholder of the Acquired Fund and will instead be the owner of that number of full and fractional Shares of the corresponding Acquiring Fund having an aggregate value equal at the time of the Reorganization to the aggregate value of the Shares of the Acquired Fund held by that Shareholder at the effective time of the Reorganization.

Timing of Reorganizations

The Reorganizations are expected to occur on the dates set forth below. On September 2, 2008, prior to the Reorganizations, each Acquiring Fund will change its name.

Diversified Equity Fund: The Reorganization of the Diversified Equity Fund into the Equity I Fund (the Equity I Fund will change its name to the Russell U.S. Core Equity Fund on September 2, 2008) is expected to be completed on or about September 8, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 5, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

Special Growth Fund: The Reorganization of the Special Growth Fund into the Equity II Fund (the Equity II Fund will change its name to the Russell U.S. Small & Mid Cap Fund on September 2, 2008) is expected to be completed on or about September 8, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 5, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

International Securities Fund: The Reorganization of the International Securities Fund into the International Fund (the International Fund will change its name to the Russell International Developed Markets Fund on September 2, 2008) is expected to be completed on or about September 8, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 5, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

Quantitative Equity Fund: The Reorganization of the Quantitative Equity Fund into the Equity Q Fund (the Equity Q Fund will change its name to the Russell U.S. Quantitative Equity Fund on September 2, 2008) is expected to be completed on or about September 22, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 19, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

Multistrategy Bond Fund: The Reorganization of the Multistrategy Bond Fund into the Fixed Income III Fund (the Fixed Income III Fund will change its name to the Russell Strategic Bond Fund on September 2, 2008) is expected to be completed on or about September 22, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 19, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

The Diversified Equity, Special Growth and International Securities Funds will be closed to new and existing shareholders on September 5, 2008 and no purchases of these Funds’ shares will be allowed on or after that date.

 

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The Quantitative Equity and Multistrategy Bond Funds will be closed to new and existing shareholders on September 19, 2008 and no purchases of these Funds’ shares will be allowed on or after that date.

Prior to the closing date of the Reorganizations, each Acquired Fund will declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed all of its investment company taxable income (computed without regard to any deduction for dividends paid), if any, and realized net capital gain, if any, for the current taxable year through the closing date. The record date for this special dividend for the Diversified Equity, Special Growth and International Securities Funds will be August 26, 2008, based on Fund records as of the close of business on August 25, 2008. The record date for this special dividend for the Quantitative Equity and Multistrategy Bond Funds will be September 9, 2008, based on Fund records as of the close of business on September 8, 2008.

You should consult your own tax adviser concerning the possible tax consequences of such dividends and/or other distributions.

Effective September 2, 2008, the Global Equity Fund will change its name to Russell Global Equity Fund.

 

Notes to Financial Statements   173

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Basis for Approval of Investment Advisory Contracts (Unaudited)

 

 

 

Approval of Investment Advisory Agreement

The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the ‘‘RIMCo Agreement’’) and the portfolio management contract with each Money Manager of the Funds (collectively, the ‘‘portfolio management contracts’’) at a meeting held on April 22, 2008. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Funds, sales and redemptions of the Funds’ shares, and the management of the Funds by RIMCo. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds; and (2) information (the ‘‘Third-Party Information’’) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and their respective operating expenses over various periods of time with other peer funds (‘‘Comparable Funds’’) not managed by RIMCo, believed by the provider to be generally comparable in investment objectives and size to the Funds. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Funds discussing the legal standards for their consideration of the continuations of the RIMCo Agreement and the portfolio management contracts and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.

On April 21, 2008, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or the Funds’ management were present. At the April 22 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contracts with management, counsel to the Funds and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Funds and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.

In evaluating the portfolio management contracts, the Board considered that the Funds, in employing a manager-of-managers method of investment, operate in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which, in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. RIMCo has engaged multiple unaffiliated Money Managers for all Funds.

The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for determining, implementing and maintaining the investment program for each Fund. Assets of each Fund generally have been allocated among the multiple Money Managers selected by RIMCo, subject to Board approval, for that Fund. RIMCo manages directly a portion of certain Funds’ assets employing a “select holdings strategy,” as described below, and directly manages the investment of each Fund’s cash reserves. RIMCo also may manage directly any portion of each Fund’s assets that RIMCo determines not to allocate to the Money Managers and portions of a Fund during transitions between Money Managers. In all cases, assets are managed directly by RIMCo pursuant to authority provided by the RIMCo Agreement.

RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Fund and for actively managing allocations and reallocations of assets among the Money Managers. RIMCo’s goal is to construct and manage diversified portfolios in a risk aware manner. Each Money Manager for a Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Fund assigned to it by RIMCo (each, a ‘‘segment’’) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in a Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for a Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager

 

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or to coordinate the investment activities of Money Managers for the Fund in a complementary manner. Therefore, RIMCo’s selection of Money Managers is made not only on the basis of performance considerations but anticipated compatibility with other Money Managers in the same Fund. In light of the foregoing, the overall performance of each Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Fund’s investment program, structuring the Fund, selecting an effective Money Manager with a particular investment style or sub-style for a segment that is complementary to the styles of the Money Managers of other Fund segments, and allocating assets among the Money Managers in a manner designed to achieve the objectives of the Fund.

The Board considered that the prospectuses for the Funds and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for each Fund, rather than the investment selection role of the Funds’ Money Managers, and describe the manner in which the Funds operate so that investors may take that information into account when deciding to purchase shares of any such Fund.

The Board also considered the demands and complexity of managing the Funds pursuant to the manager-of-managers structure, the special expertise of RIMCo with respect to the manager-of-managers structure of the Funds and the likelihood that, at the current expense ratio of each Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of such Fund selected by shareholders in purchasing their shares.

In addition to these general factors relating to the manager-of-managers structure of the Funds, the Trustees considered, with respect to each Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:

 

  1. The nature, scope and quality of the services provided to the Fund by RIMCo;

 

  2. The advisory fee paid by the Fund to RIMCo and the fact that it encompasses all investment advisory fees paid by the Fund, including the fees for any Money Managers of such Fund;

 

  3. Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund, including any administrative, transfer agent, cash management and securities lending fees, soft dollar arrangements and commissions in connection with portfolio securities transactions;

 

  4. Information provided by RIMCo as to expenses incurred by the Fund; and

 

  5. Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund.

As noted above, RIMCo, pursuant to the terms of the RIMCo Agreement, directly managed a portion — up to 10% — of the assets of each of the Diversified Equity Fund, the Quantitative Equity Fund and the International Securities Fund (each a ‘‘Participating Fund’’) during the past year utilizing a select holdings strategy, the actual allocation being determined by each Participating Fund’s RIMCo portfolio manager. The select holdings strategy utilized by RIMCo in managing such assets for a Participating Fund is designed to increase the Participating Fund’s exposure to stocks that are viewed as attractive by multiple Money Managers of that Participating Fund. The Board reviewed the results of the select holdings strategy in respect of each Participating Fund since implementation, taking into account that the strategy has been utilized for a limited period of time. The Trustees considered that RIMCo is not required to pay investment advisory fees to a Money Manager with respect to assets for which the select holdings strategy is utilized and that the profits derived by RIMCo generally and from the Participating Fund consequently may increase incrementally. The Board, however, also considered RIMCo’s advice that it pays certain Money Managers additional fees for providing information and other services in connection with the select holdings strategy and incurs additional costs in carrying out the select holdings strategy, the limited amount of assets that are managed directly by RIMCo pursuant to the select holdings strategy, and the fact that the aggregate investment advisory fees paid by the Participating Fund are not increased as a result of the select holdings strategy.

In evaluating the reasonableness of the Funds’ investment advisory fees in light of Fund performance, the Board considered that RIMCo, in the Agreement Renewal Information and at past meetings, noted differences between the investment strategies of certain Funds and their respective Comparable Funds in pursuing their investment objectives, including Fund strategies which seek to achieve a lower tracking error (i.e., the difference, whether positive or negative, between the return of a fund and its benchmark) and resulting lower return volatility than Comparable Funds. According to RIMCo, these strategies may be expected to result, and for certain Funds during the periods covered by the Third-Party Information did result, in lower performance than that of some of their respective Comparable Funds. According to RIMCo, the strategies pursued by the Funds, among other

 

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things, are intended to result in less volatile, more moderate returns relative to each Fund’s performance benchmark rather than more volatile, more extreme returns that its Comparable Funds may experience over time.

The Board considered for each Fund whether economies of scale have been realized and whether the fees for such Fund appropriately reflect or should be revised to reflect any such economies. The Board determined that, after giving effect to any applicable fee or expense caps, waivers and/or reimbursements, the investment advisory fees for each Fund appropriately reflect any economies of scale realized by that Fund, based upon such factors as the variability of Money Manager investment advisory fees and other factors associated with the manager-of-managers structure employed by the Funds. The Trustees considered that fees payable to RIMCo by institutional clients with investment objectives similar to those of the Funds and other RIC funds under the Board’s supervision are lower, and may, in some cases, be substantially lower than the rates paid by RIC funds supervised by the Board, including the Funds. The Trustees considered the differences in the scope of services it provides to institutional clients and the Funds. In the Agreement Renewal Information, RIMCo noted, among other things, that institutional clients have fewer administrative needs than the Funds. RIMCo noted that since the Funds must constantly issue and redeem their shares, they are more difficult to manage than institutional accounts, where assets are relatively stable. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.

On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years or presented at the April 22 Board meeting by RIMCo, the Board, in respect of each Fund, found, after giving effect to any applicable waivers and/or reimbursements (including the additional waivers and reimbursements described above), (1) the advisory fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided to the Funds; (2) the relative expense ratio of the Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.

The Board further concluded that, under the circumstances, the performance of each of the Funds supported continuation of the RIMCo Agreement except that the Board concluded that, as discussed below, the performance of the Quantitative Equity Fund did not support a determination against continuation of the RIMCo Agreement in respect of that Fund. The Board, in assessing the Funds’ performance, focused upon each Fund’s performance for the 1-, 3- and 5- year periods as most relevant.

With respect to the Quantitative Equity Fund, the Trustees noted that the Third-Party Information showed that the Fund’s performance relative to its Comparable Funds was ranked in the fourth quintile for each of the 3-, 5- and 10-year periods and in the fifth quintile for the 1-year period ended such date. RIMCo noted that the Comparable Funds for the Quantitative Equity Fund have portfolios with significantly smaller average capitalizations than the Quantitative Equity Fund has had. In addition, RIMCo expressed its belief that “transitional” markets pose difficult challenges to quantitative funds, such as the Quantitative Equity Fund, as such funds take time to incorporate new market information into their investment advisers’ quantitative models. RIMCo further noted that the Comparable Funds are a mix of core, growth and value funds and are not focused on portfolios that are quantitatively managed and generally do not employ long/short strategies as the Quantitative Equity Fund does. According to RIMCo, the underperformance of the Quantitative Equity Fund has been more a reflection of the market than of the capabilities of the Fund’s Money Managers.

In evaluating performance, the Board considered each Fund’s absolute performance and its performance relative to appropriate benchmarks and indices and its Comparable Funds. In assessing performance, the Board also considered RIMCo’s investment strategy of managing the Funds in a risk aware manner.

After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Funds and their respective shareholders and voted to approve the continuation of the Agreement.

At the April 22 Board meeting, with respect to the evaluation of the terms of portfolio management contracts with Money Managers, the Board received and considered information from RIMCo reporting, among other things, for each Money Manager, the Money Manager’s performance over various periods; RIMCo’s assessment of the performance of each Money Manager; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Funds’ underwriter; and RIMCo’s recommendation to retain the Money Manager at the current fee rate, to retain the Money Manager at a reduced fee rate or to terminate the Money Manager. RIMCo recommended that each Money Manager be retained at its current fee rate. RIMCo has advised the Board that it does not regard Money Manager profitability as relevant to its evaluation of the

 

176   Basis for Approval of Investment Advisory Contracts

Table of Contents

Russell Investment Company

Russell Funds

Basis for Approval of Investment Advisory Contracts, continued (Unaudited)

 

 

 

portfolio management contracts with Money Managers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by Money Managers to other clients; and RIMCo believes that the fees agreed upon with Money Managers are reasonable in light of the anticipated quality of investment advisory services to be rendered. The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the aggregate investment advisory fees paid by each Fund and the fact that each Money Manager’s fee is paid by RIMCo.

Based substantially upon RIMCo’s recommendations, together with the information received from RIMCo in support of its recommendations at the April 22 meeting, the Board concluded that the fees paid to the Money Managers of each Fund are reasonable in light of the quality of the investment advisory services provided and that continuation of the portfolio management contract with each Money Manager of each Fund would be in the best interests of the Fund and its shareholders.

In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management contract with any Money Manager that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of each Fund.

 

Basis for Approval of Investment Advisory Contracts   177

Table of Contents

Russell Investment Company

Russell Funds

Shareholder Requests for Additional Information — April 30, 2008 (Unaudited)

 

 

 

A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each fiscal year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, (iii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iv) at the Securities and Exchange Commission’s public reference room.

The Board has delegated to RIMCo, as RIC’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Funds may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Funds maintain a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Funds. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Funds’ Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Funds at (800) 787-7354, (ii) at www.russell.com, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

To reduce expenses, we may mail only one copy of the Funds’ prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution.

Some Financial Intermediaries may offer electronic delivery of the Funds’ prospectus and annual and semiannual reports. Please contact your Financial Intermediary for further details.

 

178   Shareholder Requests for Additional Information

Table of Contents

Russell Investment Company

Russell Funds

Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INTERESTED TRUSTEES

            

#Greg J. Stark

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

  

President and Chief Executive Officer since 2004

 

Trustee since 2007

  

Appointed until successor is duly elected and qualified

 

Until successor is chosen and qualified by Trustees

  

•  President and CEO RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”)

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director, of Individual Investor Services, FRC

•  2000 to 2004 Managing Director, Sales and Client Service, RIMCo

   53   None

INDEPENDENT TRUSTEES

        

Thaddas L. Alston

Born April 7, 1945

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2006   Appointed until successor is duly elected and qualified  

•  Senior Vice President, Larco Investments, Ltd. (real estate firm)

   53   None
             

Kristianne Blake,

Born January 22, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman since 2005

  

Appointed until successor is duly elected and qualified

 

Annual

  

•  Director and Chairman of the Audit Committee, Avista Corp.

•  Trustee and Chairman of the Operations Committee, Principal Funds and Principal Variable Contracts Funds

•  Regent, University of Washington

•  President, Kristianne Gates Blake, P.S. (accounting services)

•  February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF

•  Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999–2006

   53  

•  Director, Avista Corp; (electric utilities)

•  Trustee, Principal Funds (investment company);

•  Trustee, Principal Variable Contracts Funds (investment company)

             

Daniel P. Connealy

Born June 6, 1946

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2003

 

Chairman of Audit Committee since 2005

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc.

•  2001–2003, Vice President and Chief Financial Officer, Janus Capital Group Inc.

   53   None

 

# Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee.

 

Disclosure of Information about Fund Directors   179

Table of Contents

Russell Investment Company

Russell Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INDEPENDENT TRUSTEES (continued)

          

Jonathan Fine

Born July 8, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2004

   Appointed until successor is duly elected and qualified  

•  President and Chief Executive Officer, United Way of King County, WA

   53   None
             

Raymond P. Tennison, Jr.

Born December 21, 1955

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2000

 

Chairman of the Nominating and Governance Committee since 2007

  

Appointed until successor is duly elected and qualified.

 

Appointed until successor is duly elected and qualified

  

•  President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company

   53   None
             

Jack R. Thompson,

Born March 21, 1949

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2005   Appointed until successor is duly elected and qualified  

•  September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds

•  September 2007 to present, Director, LifeVantage Corporation (health products company)

•  May 1999 to May 2003, President, Chief Executive Officer and Director, Berger Financial Group, LLC

•  May 1999 to May 2003, President and Trustee, Berger Funds

   53  

•  Director, Sparx Asia Funds (investment company)

•  Director, LifeVantage Corporation (health products company)

             

Julie W. Weston,

Born October 2, 1943

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2002

 

Chairperson of the Investment Committee since 2006

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  Retired

   53   None

 

* Each Trustee is subject to mandatory retirement at age 72.

 

180   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Russell Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

TRUSTEES EMERITUS

            

*George F. Russell, Jr.,

Born July 3, 1932

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus and Chairman Emeritus since 1999   Until resignation or removal  

•  Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)); and RIMCo

•  Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”))

•  Chairman, Sunshine Management Services, LLC (investment adviser)

  53   None
             

Paul E. Anderson,

Born October 15, 1931

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2007   Five year term  

•  President, Anderson Management Group LLC (private investments consulting)

•  February 2002 to June 2005, Lead Trustee, RIC and RIF

•  Trustee of RIC and RIF until 2006

•  Chairman of the Nominating and Governance Committee 2006

   53   None
             

William E. Baxter,

Born June 8, 1925

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2004   Five year term  

•  Retired since 1986

•  Trustee of RIC and RIF until 2004

   53   None
             

Lee C. Gingrich,

Born October 6, 1930

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2006   Five year term  

•  Retired since 1995

•  Trustee of RIC and RIF until 2005

•  Chairman of the Nominating and Governance Committee 2001–2005

   53   None
             

Eleanor W. Palmer,

Born May 5, 1926

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee Emeritus

since 2004

   Five year term  

•  Retired since 1981

•  Trustee of RIC and RIF until 2004

   53   None

 

* Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF.

 

Disclosure of Information about Fund Directors   181

Table of Contents

Russell Investment Company

Russell Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years

OFFICERS

        

Cheryl Wichers

Born December 16, 1966

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Compliance Officer since 2005   Until removed by Independent Trustees  

•  Chief Compliance Officer, RIC

•  Chief Compliance Officer, RIF

•  Chief Compliance Officer, RIMCo

•  Chief Compliance Officer, RFSC

•  April 2002–May 2005, Manager, Global Regulatory Policy

         

Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

   President and Chief Executive Officer since 2004   Until successor is chosen and qualified by Trustees  

•  President and CEO, RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board, President and CEO, RFSC

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director of Individual Investor Services, FRC

•  2000 to 2004, Managing Director, Sales and Client Service, RIMCo

         

Mark E. Swanson,

Born November 26, 1963

 

909 A Street Tacoma, Washington 98402-1616

   Treasurer and Chief Accounting Officer since 1998   Until successor is chosen and qualified by Trustees  

•  Treasurer, Chief Accounting Officer and CFO, RIC and RIF

•  Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc.

•  Treasurer and Principal Accounting Officer, SSgA Funds

         

Peter Gunning,

Born February 22, 1967

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Investment Officer since 2008   Until removed by Trustees  

•  Chief Investment Officer, RIC, RIF

•  1996 to 2008 Chief Investment Officer, Russell, Asia Pacific

         

Gregory J. Lyons,

Born August 24, 1960

 

909 A Street

Tacoma, Washington

98402-1616

   Secretary since 2007   Until successor is chosen and qualified by Trustees  

•  Associate General Counsel and Assistant Secretary FRC and RIA

•  Director and Secretary, RIMCo, RFSC and Russell Financial Services, Inc.

•  Secretary and Chief Legal Counsel, RIC and RIF

 

182   Disclosure of Information about Fund Directors

Table of Contents

Russell Funds

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Interested Trustees

Greg J. Stark

Independent Trustees

Thaddas L. Alston

Kristianne Blake

Daniel P. Connealy

Jonathan Fine

Raymond P. Tennison, Jr.

Jack R. Thompson

Julie W. Weston

Trustees Emeritus

George F. Russell, Jr.

Paul E. Anderson

William E. Baxter

Lee C. Gingrich

Eleanor W. Palmer

Officers

Greg J. Stark, President and Chief Executive Officer

Cheryl Wichers, Chief Compliance Officer

Peter Gunning, Chief Investment Officer

Mark E. Swanson, Treasurer and Chief Accounting Officer

Gregory J. Lyons, Secretary

Adviser

Russell Investment Management Company

909 A Street

Tacoma, WA 98402

Administrator and Transfer and Dividend Disbursing Agent

Russell Fund Services Company

909 A Street

Tacoma, WA 98402

Custodian

State Street Bank and Trust Company

Josiah Quincy Building

200 Newport Avenue

North Quincy, MA 02171

Office of Shareholder Inquiries

909 A Street

Tacoma, WA 98402

(800) 787-7354

Legal Counsel

Dechert LLP

200 Clarendon Street, 27th Floor

Boston, MA 02116-5021

Distributor

Russell Financial Services, Inc.

909 A Street

Tacoma, WA 98402

Money Managers as of April 30, 2008

Diversified Equity Fund

AllianceBernstein L.P., New York, NY

Arnhold and S. Bleichroeder Advisers, LLC, New York, NY

Columbus Circle Investors, Stamford, CT

Institutional Capital LLC, Chicago, IL

Marsico Capital Management, LLC, Denver, CO

MFS Institutional Advisors, Inc., Boston, MA

Montag & Caldwell, Inc., Atlanta, GA

Schneider Capital Management Corporation, Wayne, PA

Suffolk Capital Management, LLC, New York, NY

Turner Investment Partners, Inc., Berwyn, PA

Special Growth Fund

ClariVest Asset Management LLC, San Diego, CA

Delphi Management, Inc., Boston, MA

DePrince, Race & Zollo, Inc., Winter Park, FL

Gould Investment Partners LLC, Berwyn, PA

Jacobs Levy Equity Management, Inc., Florham Park, NJ

PanAgora Asset Management, Inc., Boston, MA

Ranger Investment Management, L.P., Dallas, TX

Signia Capital Management, LLC, Spokane, WA

Tygh Capital Management, Inc., Portland, OR

Quantitative Equity Fund

Aronson+Johnson+Ortiz, LP, Philadelphia, PA

Franklin Portfolio Associates, LLC, Boston, MA

Goldman Sachs Asset Management, L.P., New York, NY

Jacobs Levy Equity Management, Inc., Florham Park, NJ

International Securities Fund

AllianceBernstein L.P., New York, NY

Altrinsic Global Advisors, LLC, Stamford, CT

AQR Capital Management, LLC, Greenwich, CT

Axiom International Investors LLC, Greenwich, CT

Marsico Capital Management, LLC, Denver, CO

MFS Institutional Advisors, Inc., Boston, MA

Mondrian Investment Partners Limited, London, United Kingdom

UBS Global Asset Management (Americas) Inc., Chicago, IL

Wellington Management Company, LLP, Boston, MA

Global Equity Fund

ClariVest Asset Management LLC, San Diego, CA

Gartmore Global Partners, London, United Kingdom

Harris Associates, L.P., Chicago, IL

T. Rowe Price International, Inc., Baltimore, MD


 

Adviser, Money Managers and Service Providers   183

Table of Contents

Russell Funds

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Multistrategy Bond Fund

Drake Capital Management, LLC, New York, NY

Goldman Sachs Asset Management, L.P., New York, NY

Hyperion Brookfield Asset Management, Inc., New York, NY

Logan Circle Partners, L.P., Philadelphia, PA

Metropolitan West Asset Management, LLC, Los Angeles, CA

Pacific Investment Management Company LLC, Newport Beach, CA


 

This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Company. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

 

184   Adviser, Money Managers and Service Providers

Table of Contents

 

Russell Investment Funds    909 A Street      800-787-7354
   Tacoma, Washington 98402      Fax: 253-591-3495
        www.russell.com

 

LOGO

LOGO

LOGO

36-08-067

Table of Contents

LOGO

 

2008 SEMIANNUAL REPORT

 

 

Specialty Funds

 

 

APRIL 30, 2008

 

FUND    SHARE CLASS
Emerging Markets Fund    A, C, E, S
Real Estate Securities Fund    A, C, E, S
Short Duration Bond Fund    A, C, E, S
Tax Exempt Bond Fund    C, E, S
Tax-Managed Large Cap Fund    C, E, S
Tax-Managed Mid & Small Cap Fund    C, E, S
Select Growth Fund    C, E, I, S
Select Value Fund    C, E, I, S
Fixed Income I Fund    C, E, I, S, Y

 

LOGO

Table of Contents

 

 

Russell Investment Company

Russell Investment Company is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on nine of these Funds.

Table of Contents

 

Russell Investment Company

Specialty Funds

Semiannual Report

April 30, 2008 (Unaudited)

Table of Contents

 

     Page
Emerging Markets Fund    3
Real Estate Securities Fund    19
Short Duration Bond Fund    26
Tax Exempt Bond Fund    45
Tax-Managed Large Cap Fund    59
Tax-Managed Mid & Small Cap Fund    66
Select Growth Fund    75
Select Value Fund    83
Fixed Income I Fund    90
Notes to Schedules of Investments    122
Statements of Assets and Liabilities    124
Statements of Operations    128
Statements of Changes in Net Assets    130
Financial Highlights    134
Notes to Financial Highlights    148
Notes to Financial Statements    149
Basis for Approval of Investment Advisory Contracts    171
Shareholder Requests for Additional Information    175
Disclosure of Information about Fund Directors    176
Adviser, Money Managers and Service Providers    180

Table of Contents

 

Russell Investment Company - Specialty Funds.

Copyright © Russell Investments 2008. 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 distributed through Russell Financial Services, Inc. (effective June 2, 2008, the name changed from Russell Fund Distributors, Inc.) member FINRA, part of Russell Investments.

Russell Investments and Standard & Poor’s Corporation are the owners of the trademarks, service marks, and copyrights related to their respective indexes. Index performance is not indicative of the performance of any specific investment. Indexes are not managed and may not be invested in directly.

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 date quoted. Current to the most recent month-end performance data may be obtained by visiting www.russell.com/us/fundperformance.

Table of Contents

Russell Investment Company

Emerging Markets Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 907.50    $ 1,015.47

Expenses Paid During Period*

    $ 8.96    $ 9.47

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.89% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would be higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 904.30    $ 1,011.74

Expenses Paid During Period*

    $ 12.50    $ 13.20

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.64% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would be higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 907.80    $ 1,015.47

Expenses Paid During Period*

    $ 8.97    $ 9.47

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.89% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would be higher.

 

Emerging Markets Fund   3

Table of Contents

Russell Investment Company

Emerging Markets Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 908.80    $ 1,016.71

Expenses Paid During Period*

    $ 7.78    $ 8.22

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.64% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would be higher.

 


 

4   Emerging Markets Fund

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

Common Stocks - 88.0%

        

Argentina - 0.0%

        

Petrobras Energia Participaciones
SA - ADR (Ñ)

    50,227      608
         

Bahrain - 0.1%

        

Gulf Finance House EC - GDR (Þ)

    39,050      1,601
         

Bermuda - 1.0%

        

Aquarius Platinum, Ltd.

    87,600      1,386

Brilliance China Automotive
Holdings, Ltd.

    5,874,000      1,101

C C Land Holdings, Ltd.

    805,000      888

China Hongxing Sports, Ltd.

    6,041,100      3,009

Cosan, Ltd. (Æ)

    46,789      620

COSCO Pacific, Ltd.

    154,000      292

Credicorp, Ltd.

    52,016      4,180

GOME Electrical Appliances
Holdings, Ltd.

    776,000      1,774

Shangri-La Asia, Ltd.

    318,000      879

TPV Technology, Ltd.

    2,252,000      1,570

Wilson Sons, Ltd. Class BDR (Æ)

    94,644      1,139
         
        16,838
         

Brazil - 9.1%

        

All America Latina Logistica SA (Æ)

    189,800      2,478

Amil Participacoes SA

    140,240      852

Anhanguera Educacional
Participacoes SA

    60,538      1,009

Aracruz Celulose SA - ADR (Ñ)

    40,798      3,288

Banco do Brasil SA

    625,200      10,870

Banco Itau Holding Financeira
SA - ADR

    166,200      4,662

Banco Nossa Caixa SA

    48,200      737

Bovespa Holding SA - ADR

    74,800      1,120

Brasil Brokers Participacoes SA (Æ)

    2,000      1,745

Brasil Telecom Participacoes SA

    51,100      1,657

Centrais Eletricas Brasileiras SA

    295,432      4,443

Cia Brasileira de Distribuicao Grupo Pao de Acucar - ADR (Ñ)

    52,483      2,387

Cia de Bebidas das Americas - ADR

    28,500      2,089

Cia de Saneamento Basico do Estado de Sao Paulo (Æ)

    381,240      9,544

Cia de Saneamento Basico do Estado de Sao Paulo - ADR (Æ)(Ñ)

    27,760      1,405

Cia de Saneamento de Minas
Gerais-COPASA (Æ)

    51,400      860

Cia Paranaense de Energia

    2,200      42
    

Principal

Amount ($)

or Shares

      Market
Value
$

Cia Vale do Rio Doce (Æ)

    59,300      2,342

Cia Vale do Rio Doce - ADR (Æ)(Ñ)

    495,400      15,773

Cia Vale do Rio Doce - ADR (Æ)

    462,640      18,080

Cyrela Brazil Realty SA

    180,700      3,015

EDP - Energias do Brasil SA

    11,900      197

Gerdau SA

    19,800      637

Gerdau SA - ADR (Ñ)

    112,700      4,365

Global Village Telecom Holding SA

    12,800      312

Lojas Renner SA

    52,900      1,248

Marfrig Frigorificos e Comercio de Alimentos SA (Æ)

    151,347      1,766

MRV Engenharia e Participacoes SA

    12,600      265

Perdigao SA (Æ)

    72,509      1,996

Petroleo Brasileiro SA

    22,400      663

Petroleo Brasileiro SA - ADR

    253,150      29,303

Redecard SA

    35,300      688

Rossi Residencial SA

    115,000      1,137

Souza Cruz SA

    60,800      1,704

Tele Norte Leste Participacoes SA (Æ)

    45,200      1,387

Tele Norte Leste Participacoes
SA - ADR

    185,300      4,245

Tractebel Energia SA

    16,100      226

Unibanco - Uniao de Bancos Brasileiros SA - GDR (Æ)(Ñ)

    36,000      5,235

Usinas Siderurgicas de Minas
Gerais SA

    65,850      3,367

Weg SA

    83,600      1,005
         
        148,144
         

Canada - 0.3%

        

First Quantum Minerals, Ltd.

    47,363      4,159
         

Cayman Islands - 1.5%

        

Agile Property Holdings, Ltd.

    418,000      583

ASM Pacific Technology

    319,500      2,178

Belle International Holdings, Ltd.

    936,500      999

China Mengniu Dairy Co., Ltd.

    600,000      1,804

Focus Media Holding, Ltd. - ADR (Æ)(Ñ)

    38,000      1,402

Foxconn International Holdings, Ltd.

    848,000      1,307

Hengan International Group Co., Ltd.

    343,000      1,222

Hidili Industry International Development, Ltd. (Æ)

    677,000      1,035

Kingboard Chemical Holdings, Ltd.

    299,000      1,419

Luen Thai Holdings, Ltd.

    1,389,000      135

Pacific Textile Holdings, Ltd.

    1,069,000      225

Parkson Retail Group, Ltd.

    172,679      1,629

Shimao Property Holdings, Ltd.

    434,000      865

 

Emerging Markets Fund   5

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

Shui On Land, Ltd.

    2,481,162      2,470

Sina Corp. (Æ)(Ñ)

    57,500      2,656

Suntech Power Holdings Co., Ltd. - ADR (Æ)

    57,800      2,585

Tencent Holdings, Ltd.

    180,000      1,195

Uni-President China Holdings, Ltd. (Æ)

    1,382,000      763

Xinao Gas Holdings, Ltd.

    112,000      206
         
        24,678
         

Chile - 0.5%

        

Banco de Credito e Inversiones (Æ)

    41,000      1,349

Banco Santander Chile SA - ADR

    75,730      3,977

Embotelladora Andina SA - ADR

    58,900      1,268

Lan Airlines SA - ADR (Ñ)

    100,100      1,324

SACI Falabella

    44,045      236
         
        8,154
         

China - 3.7%

        

Anhui Conch Cement Co., Ltd. Class H

    510,180      4,084

China Communications Construction Co., Ltd. Class H

    1,785,000      4,249

China COSCO Holdings Co., Ltd.
Class H

    417,500      1,248

China Eastern Airlines Corp., Ltd.
Class H (Æ)

    1,382,000      598

China Merchants Bank Co., Ltd.

    434,000      1,816

China National Building Material Co., Ltd. Class H

    412,000      1,018

China Petroleum & Chemical Corp. - ADR (Ñ)

    23,544      2,531

China Petroleum & Chemical Corp.
Class H

    11,558,000      12,409

China Railway Group, Ltd. (Æ)

    681,000      653

China Shenhua Energy Co., Ltd.

    1,281,000      5,915

China Telecom Corp., Ltd. Class H

    3,629,000      2,447

Datang International Power Generation Co., Ltd. Class H

    1,110,000      766

Guangzhou R&F Properties Co., Ltd.

    220,100      631

Industrial & Commercial Bank of China

    11,336,573      8,988

Jiangsu Expressway Co., Ltd. Class H

    2,752,000      2,566

Jiangxi Copper Co., Ltd. Class H

    976,000      2,371

PetroChina Co., Ltd. - ADR (Ñ)

    2,879      435

PetroChina Co., Ltd. Class H

    1,423,000      2,149

Ping An Insurance Group Co. of China, Ltd. Class H

    261,600      2,487
    

Principal

Amount ($)

or Shares

      Market
Value
$

Shanghai Electric Group Co., Ltd. Class H

    1,074,000      606

Shanghai Forte Land Co. Class H

    1,280,000      559

Sinotrans, Ltd. Class H

    893,000      301

Weiqiao Textile Co. Class H

    780,000      934
         
        59,761
         

Colombia - 0.4%

        

BanColombia SA

    160,900      1,475

BanColombia SA - ADR (Ñ)

    109,872      4,386
         
        5,861
         

Cyprus - 0.1%

        

Mirland Development Corp. PLC (Æ)

    106,900      975
         

Czech Republic - 0.7%

        

CEZ (Æ)

    71,400      5,306

Komercni Banka AS

    13,000      3,193

Telefonica O2 Czech Republic AS

    80,900      2,480
         
        10,979
         

Egypt - 1.9%

        

Egyptian Financial Group-Hermes Holding (Æ)

    587,486      6,035

Orascom Construction Industries

    138,600      11,379

Orascom Construction Industries - GDR

    60,129      9,680

Orascom Telecom Holding SAE

    173,215      2,613

Orascom Telecom Holding
SAE - GDR (Ñ)

    6,200      463

Talaat Moustafa Group (Æ)

    705,903      1,459
         
        31,629
         

Greece - 0.1%

        

Coca Cola Hellenic Bottling Co. SA

    37,276      1,677
         

Hong Kong - 2.7%

        

Beijing Enterprises Holdings, Ltd.

    604,000      2,474

China Insurance International Holdings Co., Ltd. (Æ)

    905,000      2,406

China Merchants Holdings International Co., Ltd.

    955,000      4,874

China Mobile, Ltd.

    104,000      1,795

China Mobile, Ltd. - ADR (Ñ)

    74,790      6,456

China Netcom Group Corp. Hong Kong, Ltd.

    1,598,000      4,825

China Overseas Land & Investment, Ltd.

    72,302      153

 

6   Emerging Markets Fund

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

China Resources Enterprise

    2,522,189      9,208

Citic Pacific, Ltd.

    981,000      4,574

Franshion Properties China, Ltd.

    1,968,000      834

Lenovo Group, Ltd.

    1,340,000      1,026

Shenzhen Investment, Ltd.

    268,000      146

Shougang Concord International Enterprises Co., Ltd.

    2,228,000      695

Sinotrans Shipping, Ltd. (Æ)

    3,755,500      2,306

Tianjin Development Holdings

    1,635,000      1,316
         
        43,088
         

Hungary - 0.4%

        

MOL Hungarian Oil and Gas NyRt

    19,680      2,800

MOL Hungarian Oil and Gas NyRt - ADR

    21,900      1,423

Richter Gedeon NyRt

    8,294      1,713
         
        5,936
         

India - 5.9%

        

Allahabad Bank

    243,535      505

Andhra Bank

    429,000      869

Bajaj Holdings and Investment, Ltd.

    26,050      1,380

Bank of Baroda

    220,000      1,717

BF Utilities, Ltd.

    17,297      815

Bharat Petroleum Corp., Ltd.

    7,555      76

Bharti Airtel, Ltd.

    245,070      5,447

Chennai Petroleum Corp., Ltd.

    81,660      729

Container Corp. of India

    124,096      2,636

Dish TV India, Ltd.

    3,716      5

DLF, Ltd.

    230,053      3,993

GAIL India, Ltd. - GDR

    46,071      3,087

Genesis Indian Investment Co., Ltd.

    559,919      27,458

GMR Infrastructure, Ltd. (Æ)

    363,543      1,442

Great Eastern Shipping Co., Ltd. (The)

    223,050      2,423

HDFC Bank, Ltd. - ADR (Ñ)

    29,200      3,294

Hindustan Petroleum Corp., Ltd.

    24,261      154

Housing Development Finance Corp.

    50,328      3,490

ICICI Bank, Ltd.

    120,360      2,605

ICICI Bank, Ltd. - ADR

    15,400      687

Indian Overseas Bank

    250,000      912

Jaiprakash Associates, Ltd.

    136,700      922

Larsen & Toubro, Ltd.

    30,170      2,232

Maruti Suzuki India, Ltd.

    40,791      749

Mundra Port and Special Economic Zone, Ltd. (Æ)

    57,038      1,068

NTPC, Ltd.

    464,830      2,253

Oil & Natural Gas Corp., Ltd.

    72,735      1,860

Oriental Bank of Commerce

    111,000      595
    

Principal

Amount ($)

or Shares

      Market
Value
$

Power Finance Corp., Ltd.

    180,710      726

Reliance Industries, Ltd.

    99,254      6,394

Reliance Industries, Ltd. - GDR (Þ)

    26,500      3,422

State Bank of India, Ltd. - GDR

    29,197      2,707

Steel Authority of India, Ltd.

    30,091      137

Sterlite Industries India, Ltd. - ADR (Æ)

    132,300      2,750

Sun TV Network, Ltd.

    148,536      1,174

Suzlon Energy, Ltd. (Æ)

    415,205      2,939

Tata Steel, Ltd.

    22,583      455

Union Bank of India

    118,000      465

United Spirits, Ltd.

    29,145      1,160
         
        95,732
         

Indonesia - 2.1%

        

Aneka Tambang Tbk PT (Æ)

    1,248,500      474

Aneka Tambang Tbk PT

    11,964,000      4,520

Astra Agro Lestari Tbk PT

    336,789      862

Bakrie and Brothers Tbk PT

    13,596,500      750

Bank Danamon Indonesia Tbk PT

    2,764,000      1,702

Bank Rakyat Indonesia

    11,518,982      7,405

Bumi Resources Tbk PT

    5,923,000      4,252

International Nickel Indonesia Tbk PT

    458,500      329

Kawasan Industri Jababeka Tbk PT

    34,379,500      397

PT Astra International Tbk

    1,086,777      2,348

Ramayana Lestari Sentosa Tbk PT

    6,191,492      536

Telekomunikasi Indonesia Tbk PT

    7,754,807      7,474

Telekomunikasi Indonesia Tbk PT - ADR

    66,470      2,580
         
        33,629
         

Israel - 3.3%

        

Bank Hapoalim BM

    1,233,196      5,207

Bank Leumi Le-Israel BM

    1,450,131      7,190

Cellcom Israel, Ltd.

    61,687      2,045

Check Point Software Technologies (Æ)

    163,621      3,865

IDB Development Corp., Ltd.

    20,729      587

Israel Chemicals, Ltd.

    899,667      16,502

Israel Discount Bank, Ltd. Class A

    36,555      88

Makhteshim-Agan Industries, Ltd.

    76,856      705

Oil Refineries, Ltd.

    498,682      458

Partner Communications

    262,041      6,143

Teva Pharmaceutical Industries, Ltd. - ADR (Ñ)

    237,200      11,096
         
        53,886
         

 

Emerging Markets Fund   7

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

Kazakhstan - 0.1%

        

Halyk Savings Bank Kazakhstan Class A

    101,800      1,638

Halyk Savings Bank of Kazakhstan JSC - GDR

    200      3
         
        1,641
         

Luxembourg - 3.1%

        

Evraz Group SA - GDR

    102,650      10,635

Genesis Smaller Companies

    390,384      30,246

Millicom International Cellular SA (Æ)(Ñ)

    18,600      2,009

Tenaris SA

    1      —

Tenaris SA - ADR (Ñ)

    132,204      7,008
         
        49,898
         

Malaysia - 1.8%

        

AirAsia BHD

    1,525,600      608

Bumiputra-Commerce Holding BHD

    3,177,625      10,035

Bursa Malaysia BHD

    259,800      734

IGB Corp. BHD

    1,829,900      1,086

IOI Corp. BHD

    2,997,675      6,933

KLCC Property Holdings BHD

    256,000      246

Kuala Lumpur Kepong BHD

    142,200      753

Magnum Corp. BHD

    899,000      968

Malaysian Bulk Carriers BHD

    414,625      575

MISC BHD

    755,195      2,197

Mulpha International BHD (Æ)

    564,900      177

PPB Group BHD

    123,000      420

Proton Holdings BHD

    169,800      209

Public Bank BHD

    80,400      290

Sime Darby BHD

    1,053,672      3,207

SP Setia BHD

    332,550      447

TA Enterprise BHD

    954,000      347

Telekom Malaysia BHD

    193,900      223

TM International BHD (Æ)

    193,900      442

Transmile Group BHD

    138,900      74
         
        29,971
         

Mexico - 4.8%

        

Alfa SAB de CV Class A (Æ)(Ñ)

    678,600      4,764

America Movil SAB de CV Series L

    327,573      18,986

Carso Global Telecom SAB de CV Class A (Ñ)

    140,600      693

Cemex SAB de CV (Æ)

    3,810,144      10,582

Coca-Cola Femsa SAB de CV

    29,600      154

Corp. GEO SAB de CV (Æ)

    388,000      1,449

Corp. Moctezuma SAB de CV (Æ)

    308,282      805
   

Principal

Amount ($)

or Shares

      Market
Value
$

Empresas ICA SAB de CV (Æ)

   18,100      110

Fomento Economico Mexicano SAB de CV

   173,500      758

Fomento Economico Mexicano SAB de CV - ADR

   145,391      6,317

Grupo Aeroportuario del Pacifico SA de CV - ADR

   22,100      903

Grupo Aeroportuario del Pacifico SA de CV Class B (Æ)

   42,000      172

Grupo Carso SAB de CV

   32,800      150

Grupo Financiero Banorte SAB de CV Class O (Ñ)

   1,406,790      6,211

Grupo Financiero Inbursa SA Class O

   605,967      1,934

Grupo Mexico SAB de CV

   654,600      4,785

Grupo Televisa SA - ADR (Ñ)

   39,092      965

Megacable Holdings SAB de CV (Æ)

   461,203      1,359

Telefonos de Mexico SAB de CV (Ñ)

   798,800      1,439

Telefonos de Mexico SAB de CV Series L - ADR

   122,700      4,425

Urbi Desarrollos Urbanos SA de CV (Ñ)

   1,250,700      4,008

Wal-Mart de Mexico SAB de CV (Æ)(Ñ)

   970,876      3,928

Wal-Mart de Mexico SAB de CV - ADR

   61,400      2,462
        
       77,359
        

Netherlands - 0.4%

       

X 5 Retail Group NV - GDR

   173,293      6,021
        

Nigeria - 0.1%

       

First City Monument Bank PLC

   3,144,063      462

Guaranty Trust Bank - GDR

   136,900      1,716
        
       2,178
        

Oman - 0.4%

       

Bank Muscat SAOG

   46,800      249

Bank Muscat SAOG - GDR

   207,590      4,280

National Bank of Oman, Ltd.

   806,050      1,769
        
       6,298
        

Pakistan - 0.8%

       

Engro Chemical Pakistan Ltd.

   968,880      4,700

Fauji Fertilizer Co., Ltd.

   1,804,822      3,939

ICI Pakistan, Ltd.

   265,200      831

Oil & Gas Development Co., Ltd.

   344,000      714

Pakistan Petroleum, Ltd.

   170,500      722

Pakistan State Oil Co., Ltd.

   224,500      1,749
        
       12,655
        

 

8   Emerging Markets Fund

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

Philippines - 0.3%

        

Philippine Long Distance Telephone Co.

    34,630      2,108

Philippine Long Distance
Telephone Co. - ADR

    29,840      1,823

Universal Robina Corp.

    2,009,000      666
         
        4,597
         

Poland - 0.7%

        

Bank Pekao SA

    14,500      1,264

KGHM Polska Miedz SA

    179,470      8,275

TVN SA

    178,076      1,823
         
        11,362
         

Russia - 8.7%

        

Bank St. Petersburg (Æ)

    183,700      1,047

Gazprom OAO - ADR

    646,360      34,360

Kalina

    15,100      483

LUKOIL - ADR

    418,864      37,815

Magnit OAO (Æ)

    65,750      2,870

Magnitogorsk Iron & Steel Works - GDR

    137,200      2,380

Magnitogorsk Iron & Steel
Works - GDR (Þ)(Å)

    87,200      1,508

Mechel - ADR

    5,800      846

MMC Norilsk Nickel

    10,800      2,908

MMC Norilsk Nickel - ADR

    658,950      17,792

Mobile Telesystems OJSC - ADR

    71,420      5,541

NovaTek OAO - GDR (Þ)

    19,900      1,482

Novorossiysk Commercial Sea
Port - GDR

    81,325      1,260

Novorossiysk Commercial Sea
Port - GDR (þ)

    23,647      366

Pharmstandard - GDR (Æ)

    48,900      1,222

PIK Group - GDR

    114,200      3,035

RBC Information Systems

    146,581      1,237

Sberbank

    1,770,770      5,735

Seventh Continent

    47,000      1,128

Severstal - GDR

    52,238      1,286

Surgutneftegaz - ADR (Æ)

    68,480      666

Surgutneftegaz - ADR (Ñ)

    114,810      1,119

TMK OAO - GDR

    10,500      345

TMK OAO Class T

    87,000      696

Uralkali - GDR (Æ)(Ñ)

    90,900      4,837

Vimpel-Communications - ADR

    56,100      1,692

VTB Bank OJSC - GDR (Æ)(Þ)

    43,600      327

VTB Bank OJSC - GDR

    781,694      5,836

Wimm-Bill-Dann Foods OJSC - ADR

    14,289      1,739
         
        141,558
         
    

Principal

Amount ($)

or Shares

      Market
Value
$

Singapore - 0.2%

        

Straits Asia Resources, Ltd.

    1,137,000      2,789

Yangzijiang Shipbuilding
Holdings, Ltd. (Æ)

    1,007,000      791
         
        3,580
         

South Africa - 6.1%

        

ABSA Group, Ltd.

    118,787      1,485

ArcelorMittal South Africa, Ltd. Class H

    188,829      5,695

Aveng, Ltd.

    373,888      2,807

Barloworld, Ltd.

    293,740      4,287

Bidvest Group, Ltd.

    406,452      6,102

DataTec, Ltd.

    270,000      965

Exxaro Resources, Ltd.

    157,386      2,591

Foschini, Ltd.

    136,800      651

Freeworld Coatings, Ltd. (Æ)

    135,089      166

Grindrod, Ltd.

    548,431      1,871

Impala Platinum Holdings, Ltd.

    238,947      9,782

Imperial Holdings, Ltd.

    85,100      855

Kumba Iron Ore, Ltd.

    40,233      1,748

Massmart Holdings, Ltd.

    123,508      1,151

Metropolitan Holdings, Ltd.

    530,822      921

Mondi, Ltd.

    137,623      1,137

MTN Group, Ltd.

    231,105      4,388

Murray & Roberts Holdings, Ltd.

    42,200      492

Naspers, Ltd. Class N

    32,000      692

Netcare, Ltd.

    1,253,000      1,449

Pick’n Pay Stores, Ltd.

    142,954      556

Reunert, Ltd.

    113,383      838

Sanlam, Ltd.

    3,091,201      8,136

Sasol, Ltd.

    493,740      28,020

Standard Bank Group, Ltd.

    843,434      9,989

Steinhoff International Holdings, Ltd.

    804,310      1,970

Wilson Bayly Holmes-Ovcon, Ltd.

    2,790      47
         
        98,791
         

South Korea - 10.3%

        

Amorepacific Corp. (Ñ)

    1,943      1,234

Daelim Industrial Co.

    9,390      1,261

Daum Communications Corp. (Æ)

    12,275      752

DC Chemical Co., Ltd.

    4,035      1,625

Dongkuk Steel Mill Co., Ltd.

    11,730      547

GS Holdings Corp.

    26,600      1,061

Hana Financial Group, Inc.

    56,700      2,567

Hankook Tire Co., Ltd.

    120,010      1,838

Hanwha Chem Corp. (Ñ)

    179,600      2,602

Honam Petrochemical Corp. (Ñ)

    71,305      6,311

 

Emerging Markets Fund   9

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

Hynix Semiconductor, Inc. (Ñ)

    339,980      9,052

Hyundai Development Co.

    27,500      1,749

Hyundai Engineering & Construction Co., Ltd.

    14,415      1,319

Hyundai Mobis

    34,350      3,141

Hyundai Motor Co. (Ñ)

    79,470      6,684

Hyundai Steel Co.

    49,740      3,896

Hyunjin Materials Co., Ltd.

    15,306      599

Industrial Bank of Korea (Ñ)

    237,400      4,539

KCC Corp.

    5,315      2,368

Kookmin Bank

    159,202      11,112

Kookmin Bank - ADR

    30,270      2,111

Korea Electric Power Corp.

    152,070      5,036

Korea Electric Power Corp. - ADR (Ñ)

    3,900      64

Korea Investment Holdings Co., Ltd.

    48,340      2,542

KT Corp.

    56,500      2,610

KT Corp. - ADR

    11,980      277

LG Chem, Ltd. (Ñ)

    29,494      2,929

LG Corp. Class H

    32,840      2,724

LG Display Co., Ltd.

    12,480      544

LG Display Co., Ltd. - ADR (Ñ)

    34,625      754

LG Household & Health Care, Ltd. (Ñ)

    17,570      3,634

LIG Insurance Co., Ltd.

    73,400      1,566

Lotte Shopping Co., Ltd.

    2,881      1,049

MegaStudy Co., Ltd.

    3,450      1,134

NHN Corp.

    17,562      4,071

Poongsan Corp. (Ñ)

    44,390      792

POSCO (Ñ)

    13,179      6,482

S-Oil Corp.

    53,548      3,608

Samsung Card Co.

    23,801      1,321

Samsung Electro-Mechanics Co., Ltd.

    20,828      1,128

Samsung Electronics Co., Ltd. (Ñ)

    28,229      20,097

Samsung Electronics Co., Ltd. - GDR

    880      223

Samsung Electronics Co., Ltd. -
GDR (Þ)

    23,589      7,813

Samsung Fire & Marine Insurance Co., Ltd. (Æ)

    33,587      7,313

Samsung SDI Co., Ltd. (Ñ)

    48,916      3,771

Samsung Securities Co., Ltd. (Ñ)

    12,030      985

Shinhan Financial Group Co., Ltd.

    92,760      5,369

Shinsegae Co., Ltd.

    1,938      1,253

SK Energy Co., Ltd.

    25,050      3,057

STX Pan Ocean Co., Ltd.

    1,282,600      3,173

Taihan Electric Wire Co., Ltd.

    13,880      686

Woori Finance Holdings Co., Ltd. (Ñ)

    193,290      3,785
         
        166,158
         
    

Principal

Amount ($)

or Shares

      Market
Value
$

Taiwan - 8.2%

        

Advanced Semiconductor Engineering, Inc. - ADR

    159,956      825

Asia Cement Corp.

    235,930      425

Asustek Computer, Inc.

    1,533,000      4,946

AU Optronics Corp.

    1,982,458      3,867

AU Optronics Corp. - ADR

    79,150      1,545

Cathay Financial Holding Co., Ltd.

    911,245      2,558

Cathay Financial Holding Co., Ltd. - GDR

    60,850      1,725

China Steel Corp. - GDR (Ñ)

    7,903      258

China Steel Corp. Class H

    6,578,087      10,806

Chinatrust Financial Holding Co., Ltd. (Æ)

    801,000      834

Chunghwa Telecom Co., Ltd.

    817,636      2,101

CMC Magnetics Corp. (Æ)

    5,459,000      1,916

Compal Electronics, Inc.

    2,887,746      3,215

Delta Electronics, Inc.

    897,657      2,683

Evergreen Marine Corp. Taiwan, Ltd.

    1,513,870      1,440

Far Eastern Department Stores Co., Ltd.

    1,803,000      3,021

Far Eastern Textile Co., Ltd.

    2,637,254      4,416

Farglory Land Development Co., Ltd.

    478,000      1,535

Formosa Chemicals & Fibre Corp.

    2,237,000      5,418

Formosa Plastics Corp.

    805,000      2,293

Foxconn Technology Co., Ltd.

    302,935      1,937

High Tech Computer Corp.

    182,710      4,683

HON HAI Precision Industry Co., Ltd.

    451,330      2,602

InnoLux Display Corp.

    274,000      803

InnoLux Display Corp. - GDR (Æ)(Þ)

    122,800      723

Inventec Co., Ltd.

    186,000      117

Kasikornbank PCL

    635,533      1,207

Kinsus Interconnect Technology Corp.

    452,000      1,324

Lite-On Technology Corp.

    20,000      23

MediaTek, Inc.

    622,160      8,043

Micro-Star International Co., Ltd.

    1,152,340      1,005

Nan Ya Plastics Corp.

    1,155,710      2,713

Oriental Union Chemical Corp.

    192,780      217

POU Chen Corp. Class B

    1,336,024      1,393

Powerchip Semiconductor Corp.

    9,013,308      3,683

ProMOS Technologies, Inc.

    1,686,000      449

Quanta Computer, Inc.

    274,084      455

Ritek Corp.

    2,653,161      716

Siliconware Precision Industries Co.

    1,518,293      2,611

Siliconware Precision Industries Co. - ADR

    158,200      1,288

Synnex Technology International Corp.

    1,271,000      3,391

Taiwan Cement Corp.

    365,480      593

 

10   Emerging Markets Fund

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

Taiwan Semiconductor Manufacturing Co., Ltd.

    6,338,922      13,813

Taiwan Semiconductor Manufacturing Co., Ltd. - ADR

    216,978      2,439

Teco Electric and Machinery Co., Ltd.

    1,037,000      680

U-Ming Marine Transport Corp.

    609,000      2,034

Uni-President Enterprises Corp.

    1,757,240      2,503

United Microelectronics Corp.

    10,686,812      6,501

United Microelectronics Corp. - ADR (Æ)(Ñ)

    128,917      446

Vanguard International Semiconductor Corp.

    1,105,278      877

Walsin Lihwa Corp.

    2,931,000      1,486

Wintek Corp.

    23,000      21

Wistron Corp.

    1,571,765      2,697

Wistron Corp. - GDR

    36,142      678

Yieh Phui Enterprise

    455,652      213

Yuanta Financial Holding Co., Ltd.

    2,219,135      2,110
         
        132,301
         

Thailand - 2.5%

        

Airports of Thailand PCL

    516,823      896

Bank of Ayudhya Pcl (Æ)

    1,643,722      1,258

Banpu PCL

    284,000      3,917

Charoen Pokphand Foods PCL

    1,099,500      165

Electricity Generating PCL

    167,100      500

Glow Energy PCL - GDR

    942,500      973

Hana Microelectronics PCL

    623,500      344

IRPC PCL

    3,460,900      632

Precious Shipping PCL

    1,054,000      811

PTT Aromatics & Refining PCL

    2,397,549      2,798

PTT Chemical PCL

    1,424,732      4,808

PTT Exploration & Production PCL

    369,300      1,933

PTT PCL

    727,000      7,657

Ratchaburi Electricity Generating Holding PCL

    270,600      390

Regional Container Lines PCL

    962,600      716

Siam Cement PCL

    102,000      679

Siam Commercial Bank PCL

    1,161,900      3,261

Thai Airways International PCL

    442,800      381

Thai Beverage PCL

    12,747,430      2,583

Thai Oil PCL

    1,586,100      3,554

Thoresen Thai Agencies PCL

    539,600      757

Total Access Communication PCL

    828,200      1,207

True Corp. PCL

    4,119,400      634
         
        40,854
         
    

Principal

Amount ($)

or Shares

      Market
Value
$

Turkey - 2.5%

        

Akbank TAS

    53,156      277

Akcansa Cimento AS

    75,895      320

Anadolu Efes Biracilik Ve Malt Sanayii AS

    414,595      3,748

Asya Katilim Bankasi AS

    99,000      682

BIM Birlesik Magazalar AS

    14,500      1,304

Cimsa Cimento Sanayi VE Tica

    263,875      1,274

Dogan Sirketler Grubu Holdings

    2,341,900      2,822

Eregli Demir ve Celik Fabrikalari TAS

    760,025      6,685

Ford Otomotiv Sanayi AS

    143,300      1,342

Haci Omer Sabanci Holding AS

    390,270      1,455

Migros Turk TAS

    157,357      2,520

Trakya Cam Sanayi AS

    453,212      675

Tupras Turkiye Petrol Rafine

    250,037      6,718

Turk Hava Yollari (Ñ)

    132,113      735

Turk Sise ve Cam Fabrikalari AS

    100,353      155

Turkcell Iletisim Hizmet AS

    192,605      1,549

Turkiye Garanti Bankasi AS

    128,000      681

Turkiye Is Bankasi Class C

    866,009      3,966

Turkiye Vakiflar Bankasi Tao Class D

    535,200      1,081

Vestel Elektronik Sanayi (Æ)(Ñ)

    402,003      708

Yapi ve Kredi Bankasi AS

    1,173,401      2,591
         
        41,288
         

United Arab Emirates - 0.3%

        

Dubai Financial Market

    885,300      1,444

Emaar Properties PJSC

    899,100      2,815
         
        4,259
         

United Kingdom - 2.0%

        

Anglo American PLC

    221,351      14,402

Antofagasta PLC

    151,000      2,382

Astro All Asia Networks PLC

    219,067      242

Eurasian Natural Resources Corp. (Æ)

    119,676      2,838

Hikma Pharmaceuticals PLC

    252,549      2,339

Kazakhmys PLC

    27,200      847

SABMiller PLC

    144,030      3,332

Tullow Oil PLC

    383,143      5,759
         
        32,141
         

United States - 0.9%

        

Central European Distribution Corp. (Æ)(Ñ)

    77,510      4,722

CTC Media, Inc. (Æ)(Ñ)

    49,100      1,270

Gulf Finance House EC - GDR

    22,650      869

Southern Copper Corp. (Ñ)

    62,100      7,127
         
        13,988
         

 

Emerging Markets Fund   11

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal

Amount ($)

or Shares

      Market
Value
$
       

Venezuela - 0.0%

        

Siderurgica Venezolana Sivensa SACA - ADR (Ñ)

    13,332      102
         

Zimbabwe - 0.0%

        

Delta Corp., Ltd. (ß)

    1,323,859      473
         
Total Common Stocks        

(cost $1,010,515)

         1,424,808
         
Preferred Stocks - 6.4%        

Brazil - 5.1%

        

Banco Bradesco SA (Æ)

    147,013      3,379

Banco Itau Holding Financeira SA

    188,520      5,379

Brasil Telecom Participacoes SA

    379,200      5,954

Centrais Eletricas Brasileiras SA (Æ)

    426,483      6,620

Cia de Tecidos do Norte de Minas - Coteminas

    144,414      660

Cia Paranaense de Energia (Æ)

    204,200      3,678

Cia Vale do Rio Doce (Æ)

    84,300      2,718

Fertilizantes Fosfatados SA

    21,000      1,261

Investimentos Itau SA

    218,619      1,443

Metalurgica Gerdau SA

    40,200      2,140

Petroleo Brasileiro SA (Æ)

    569,000      13,964

Tam SA

    42,300      972

Tele Norte Leste Participacoes SA (Æ)

    306,900      7,016

Telemar Norte Leste SA (Æ)

    27,200      1,567

Usinas Siderurgicas de Minas Gerais SA

    490,350      23,942

Votorantim Celulose e Papel SA (Æ)

    50,700      1,610
         
        82,303
         

Chile - 0.1%

        

Embotelladora Andina SA Class A

    13,200      41

Embotelladora Andina SA Class B

    318,000      1,108
         
        1,149
         

Colombia - 0.0%

        

BanColombia SA

    7,200      71
         

Russia – 0.2%

        

Transneft

    1,270      1,560

URSA Bank (Æ)

    1,509,305      2,068
         
        3,628
         

South Korea - 1.0%

        

Hyundai Motor Co.

    27,190      975

Samsung Electronics Co., Ltd.

    27,585      14,155
         
        15,130
         
Total Preferred Stocks        

(cost $56,010)

         102,281
         
   

Principal

Amount ($)

or Shares

    Market
Value
$

Warrants & Rights- 0.4%

     

Netherlands Antilles - 0.1%

   

Merrill Lynch International (Æ) 2010 Warrants

     11,224    705

Yes Bank, Ltd. (Æ)
2010 Warrants

     277,454    1,168
      
     1,873
      

United States - 0.3%

     

Far Eastern Textile Co., Ltd. (Æ)(Þ) 2012 Warrants

     1,032,279    1,728

HON HAI Precision Industry Co., Ltd. (Æ)(Þ)
2012 Warrants

     195,836    1,130

JSW Steel, Ltd. (Æ)
2012 Warrants

     71,381    1,531
      
     4,389
      
Total Warrants & Rights
   

(cost $6,202)

    6,262
      
   

Notional

Amount

     

Options Purchased - 0.3%

   

(Number of Contracts)

   

Brazil - 0.1%

     

Bovespa Index Futures

     

Jun 2008 62,732.66 Call (162)

   BRL  10,163    572

Jun 2008 63,354.68 Call (168)

   BRL  10,644    530
      
     1,102
      

South Korea - 0.2%

     

Kospi 200 Index Futures

   

Jun 2008 182.07 Call (120)

   KRW 60,000    3,885

Jun 2008 194.57 Call (20)

   KRW 10,000    523
      
     4,408
      
Total Options Purchased     

(cost $3,117)

      5,510
      

 

12   Emerging Markets Fund

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$		  
       

Short-Term Investments - 4.2%

     

United States - 4.2%

        

Russell Investment Company Money Market Fund

    62,035,000      62,035  

United States Treasury Bills (ç)(ž)(§) 1.220% due 06/26/08

    6,000      5,989  
           
Total Short-Term Investments     

(cost $68,024)

         68,024  
           
Other Securities - 5.7%        

Russell Investment Company Money Market Fund (×)

    20,069,698      20,070  

State Street Securities Lending Quality Trust (×)

    72,230,087      72,230  
           
Total Other Securities
        

(cost $92,300)

         92,300  
           
Total Investments - 105.0%     

(identified cost $1,236,168)

         1,699,185  
Other Assets and Liabilities,     
Net - (5.0%)         (80,358 )
           
Net Assets - 100.0%         1,618,827  
           

 

A portion of the portfolio has been fair valued as of period end.


 

See accompanying notes which are an integral part of the financial statements.

 

Emerging Markets Fund   13

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		      Unrealized
Appreciation
(Depreciation)
$		  
      

Long Positions

       

Hang Seng Index (Hong Kong) expiration date 05/08 (54)

   HKD     69,485      113  

H-Shares Index (Hong Kong)
expiration date 05/08 (101)

   HKD     72,316      20  

Mexican Bolsa Index
expiration date 06/08 (170)

   MXN     51,663      70  

JSE-40 Index (South Africa)
expiration date 06/08 (285)

   ZAR     83,072      233  

MSCI Taiwan Index
expiration date 05/08 (370)

   USD     12,717      (36 )
          

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

        400  
          

 

Options Written

(Number of Contracts)

       
    
Notional
Amount		      Market
Value
$		  

Brazil - 0.1%

       

Bovespa Index Futures
Jun 2008 62,732.66 Put (162)

   BRL     10,163      (29 )

Jun 2008 63,354.68 Put (168)

   BRL     10,644      (30 )

South Korea - 0.3%

       

Kospi 200 Index Futures
Jun 2008 182.07 Put (120)

   KRW     60,000      (599 )

Jun 2008 194.57 Put (20)

   KRW     10,000      (100 )
          

Total Liability for Options Written (premiums received $779)

        (758 )
          

 

See accompanying notes which are an integral part of the financial statements.

 

14   Emerging Markets Fund

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   —   BRL   —   05/02/08   —  
USD   29   BRL   49   05/02/08   1  
USD   580   BRL   987   05/02/08   14  
USD   38   BRL   63   05/05/08   —  
USD   580   BRL   1,000   06/18/08   14  
USD   587   BRL   1,000   06/18/08   7  
USD   591   BRL   1,000   06/18/08   3  
USD   823   BRL   1,400   06/18/08   9  
USD   1,135   BRL   2,000   06/18/08   53  
USD   1,160   BRL   2,000   06/18/08   28  
USD   1,771   BRL   3,000   06/18/08   11  
USD   2,322   BRL   4,000   06/18/08   54  
USD   11,249   BRL   19,100   06/18/08   96  
USD   15   EUR   10   05/02/08   —  
USD   32   EUR   21   05/05/08   —  
USD   31   GBP   16   05/01/08   —  
USD   14   GBP   7   05/02/08   —  
USD   69   IDR   635,934   05/02/08   —  
USD   146   IDR   1,341,789   05/05/08   —  
USD   527   KRW   500,000   06/18/08   (29 )
USD   911   KRW   900,000   06/18/08   (14 )
USD   2,054   KRW   2,000,000   06/18/08   (61 )
USD   2,109   KRW   2,000,000   06/18/08   (116 )
USD   2,621   KRW   2,600,000   06/18/08   (30 )
USD   2,636   KRW   2,500,000   06/18/08   (143 )
USD   6,747   KRW   6,400,000   06/18/08   (369 )
USD   14,018   KRW   13,300,000   06/18/08   (763 )
USD   142   MXN   1,490   05/02/08   —  
USD   139   MXN   1,500   06/18/08   3  
USD   277   MXN   3,000   06/18/08   7  
USD   463   MXN   5,000   06/18/08   11  
USD   470   MXN   5,000   06/18/08   4  
USD   556   MXN   6,000   06/18/08   13  
USD   939   MXN   10,000   06/18/08   9  
USD   1,111   MXN   12,000   06/18/08   26  
USD   1,510   MXN   16,300   06/18/08   35  
USD   2,055   MXN   22,200   06/18/08   48  
USD   4,992   MXN   54,000   06/18/08   123  
USD   —   THB   3   05/02/08   —  
USD   —   THB   9   05/02/08   —  
USD   305   ZAR   2,500   06/18/08   22  
USD   873   ZAR   7,000   06/18/08   42  
USD   1,005   ZAR   8,000   06/18/08   40  
USD   1,219   ZAR   10,000   06/18/08   87  
USD   1,660   ZAR   13,500   06/18/08   103  
USD   2,714   ZAR   21,742   06/18/08   126  
USD   4,025   ZAR   32,200   06/18/08   181  
Foreign Currency Exchange Contracts  
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   5,622   ZAR   45,000   06/18/08   257  
USD   6,711   ZAR   53,700   06/18/08   302  
BRL   3   USD   2   05/02/08   —  
BRL   162   USD   95   05/02/08   (3 )
BRL   26   USD   16   05/05/08   —  
BRL   1,000   USD   590   06/18/08   (4 )
BRL   1,000   USD   590   06/18/08   (4 )
BRL   1,000   USD   598   06/18/08   5  
BRL   2,000   USD   1,151   06/18/08   (37 )
BRL   2,000   USD   1,177   06/18/08   (11 )
BRL   2,500   USD   1,470   06/18/08   (15 )
HKD   296   USD   37   05/01/08   (1 )
KRW   200,000   USD   210   06/18/08   11  
KRW   500,000   USD   516   06/18/08   18  
KRW   600,000   USD   633   06/18/08   35  
KRW   800,000   USD   843   06/18/08   46  
KRW   1,000,000   USD   1,021   06/18/08   25  
KRW   1,000,000   USD   1,035   06/18/08   38  
KRW   1,000,000   USD   1,054   06/18/08   57  
KRW   1,100,000   USD   1,159   06/18/08   63  
KRW   4,100,000   USD   4,321   06/18/08   235  
KRW   7,900,000   USD   8,327   06/18/08   454  
MXN   32   USD   3   05/01/08   —  
MXN   92   USD   9   05/02/08   —  
MXN   156   USD   15   05/02/08   —  
MXN   3,500   USD   328   06/18/08   (4 )
MXN   4,000   USD   364   06/18/08   (15 )
MXN   4,000   USD   369   06/18/08   (10 )
MXN   4,000   USD   370   06/18/08   (9 )
MXN   16,500   USD   1,528   06/18/08   (35 )
MXN   23,000   USD   2,129   06/18/08   (50 )
MXN   25,000   USD   2,313   06/18/08   (55 )
PHP   651   USD   15   05/01/08   —  
PHP   652   USD   15   05/02/08   —  
PHP   5,017   USD   118   05/05/08   —  
THB   391   USD   12   05/02/08   —  
THB   917   USD   29   05/02/08   —  
THB   2,091   USD   65   05/02/08   (1 )
THB   143   USD   5   05/06/08   —  
THB   536   USD   17   05/06/08   —  
USD   958   BRL   1,593   04/30/08   —  
ZAR   650   USD   88   05/01/08   2  
ZAR   487   USD   64   05/06/08   (1 )
ZAR   515   USD   68   05/07/08   —  
ZAR   631   USD   83   05/08/08   —  
ZAR   2,000   USD   247   06/18/08   (14 )
ZAR   4,000   USD   503   06/18/08   (19 )

 

See accompanying notes which are an integral part of the financial statements.

 

Emerging Markets Fund   15

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
ZAR   4,100   USD   511   06/18/08   (24 )
ZAR   8,000   USD   973   06/18/08   (72 )
ZAR   8,000   USD   989   06/18/08   (56 )
ZAR   10,742   USD   1,342   06/18/08   (61 )
ZAR   13,000   USD   1,625   06/18/08   (73 )
ZAR   13,200   USD   1,646   06/18/08   (79 )
ZAR   16,000   USD   1,961   06/18/08   (129 )
ZAR   46,600   USD   5,818   06/18/08   (269 )
             
Total Unrealized Appreciation (Depreciation) onOpen Foreign Currency Exchange Contracts   142  
             

 


 

See accompanying notes which are an integral part of the financial statements.

 

16   Emerging Markets Fund

Table of Contents

Russell Investment Company

Emerging Markets Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Industry Diversification    % of
Net
Assets		        Market
Value
$		  
       
       

Auto and Transportation

    3.5        53,672  

Consumer Discretionary

    3.3        51,707  

Consumer Staples

    4.4        69,863  

Financial Services

    21.6        349,002  

Health Care

    1.2        19,041  

Integrated Oils

    8.3        132,615  

Materials and Processing

    19.3        321,711  

Miscellaneous

    3.6        52,851  

Other Energy

    6.3        105,168  

Producer Durables

    2.9        49,643  

Technology

    9.2        148,481  

Utilities

    10.8        173,332  

Warrants & Rights

    0.4        6,265  

Options Purchased

    0.3        5,510  

Short-Term Investments

    4.2        68,024  

Other Securities

    5.7        92,300  
               

Total Investments

    105.0        1,699,185  

Other Assets and Liabilities, Net

    (5.0 )      (80,358 )
               

Net Assets

    100.0        1,618,827  
               
Geographic Diversification    % of
Net
Assets		        Market
Value
$		  
       

Africa

    6.2        101,442  

Asia

    39.7        641,864  

Europe

    16.9        273,322  

Latin America

    22.6        366,369  

Middle East

    6.1        99,314  

Netherlands Antilles

    0.1        1,873  

Other Regions

    5.7        90,560  

United Kingdom

    2.0        32,141  

Other Securities

    5.7        92,300  
               

Total Investments

    105.0        1,699,185  

Other Assets and Liabilities, Net

    (5.0 )      (80,358 )
               

Net Assets

    100.0        1,618,827  
               

 

See accompanying notes which are an integral part of the financial statements.

 

Emerging Markets Fund   17

Table of Contents

Russell Investment Company

Emerging Markets Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Catagories    % of
Net
Assets		  
  
  

Argentina

    — *

Bahrain

    0.1  

Bermuda

    1.0  

Brazil

    9.1  

Canada

    0.3  

Cayman Islands

    1.5  

Chile

    0.5  

China

    3.7  

Columbia

    0.4  

Cyprus

    0.1  

Czech Republic

    0.7  

Egypt

    1.9  

Greece

    0.1  

Hong Kong

    2.7  

Hungary

    0.4  

India

    5.9  

Indonesia

    2.1  

Israel

    3.3  

Kazakhstan

    0.1  

Luxembourg

    3.1  

Malaysia

    1.8  

Mexico

    4.8  

Netherlands

    0.4  

Nigeria

    0.1  

Oman

    0.4  

Pakistan

    0.8  

Philippines

    0.3  

Poland

    0.7  

Russia

    8.7  

Singapore

    0.2  

South Africa

    6.1  

South Korea

    10.3  

Taiwan

    8.2  

Thailand

    2.5  

Turkey

    2.5  

United Arab Emirates

    0.3  

United Kingdom

    2.0  

United States

    0.9  

Venezuela

    — *

Zimbabwe

    — *

Preferred Stock

    6.4  

Warrants & Rights

    0.4  

Options Purchased

    0.3  

Short-Term Investments

    4.2  

Other Securities

    5.7  
      

Total Investments

    105.0  

Other Assets and Liabilities Net

    (5.0 )
      
   100.0  
      
Catagories    % of
Net
Assets		  

Futures Contracts

    — *

Options Written

    (— )*

Foreign Currency Exchange Contracts

    — *

 

* Less than .05% of net assets

 

See accompanying notes which are an integral part of the financial statements.

 

18   Emerging Markets Fund

Table of Contents

Russell Investment Company

Real Estate Securities Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 925.20    $ 1,018.30

Expenses Paid During Period*

    $ 6.32    $ 6.62

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.32% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 921.90    $ 1,014.57

Expenses Paid During Period*

    $ 9.89    $ 10.37

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.07% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 925.20    $ 1,018.30

Expenses Paid During Period*

    $ 6.32    $ 6.62

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.32% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Real Estate Securities Fund   19

Table of Contents

Russell Investment Company

Real Estate Securities Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 926.40    $ 1,019.54

Expenses Paid During Period*

    $ 5.12    $ 5.37

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.07% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

20   Real Estate Securities Fund

Table of Contents

Russell Investment Company

Real Estate Securities Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       
Common Stocks - 96.2%        

Apartments - 14.2%

        

American Campus Communities, Inc. (ö)

    294,356      8,987

Apartment Investment & Management Co. Class A (ö)(Ñ)

    342,785      12,676

AvalonBay Communities, Inc. (ö)(Ñ)

    794,255      79,227

BRE Properties, Inc. Class A (ö)(Ñ)

    680,197      32,615

Camden Property Trust (ö)(Ñ)

    699,000      36,984

Deutsche Wohnen AG

    36,475      900

Equity Residential (ö)(Ñ)

    1,997,061      82,918

Essex Property Trust, Inc. (ö)(Ñ)

    272,468      32,424

Mid-America Apartment Communities, Inc. (ö)

    158,000      8,295

Post Properties, Inc. (ö)(Ñ)

    275,050      10,094

UDR, Inc. (ö)(Ñ)

    339,800      8,590
         
        313,710
         

Diversified - 9.9%

        

British Land Co. PLC (ö)

    125,092      2,085

CA Immobilien Anlagen AG

    26,501      616

CapitaLand, Ltd.

    325,000      1,638

Castellum AB (Ñ)

    40,995      461

Cheung Kong Holdings, Ltd.

    249      4

DB RREEF Trust (ö)

    983,599      1,628

Forest City Enterprises, Inc. Class A (Ñ)

    22,747      840

GPT Group (ö)

    367,019      1,159

Great Eagle Holdings, Ltd.

    965,291      2,784

Helical Bar PLC

    111,652      751

Henderson Land Development Co., Ltd.

    816,521      6,249

Hysan Development Co., Ltd. (Ñ)

    544,565      1,581

ICADE (Æ)(ö)(Ñ)

    15,109      2,162

iStar Financial, Inc. (ö)(Ñ)

    259,100      4,988

IVG Immobilien AG

    13,631      343

Kenedix Realty Investment Corp. Class A (ö)(Ñ)

    60      353

Keppel Land, Ltd.

    18,000      81

Kerry Properties, Ltd.(Ñ)

    130,000      883

Land Securities Group PLC (ö)

    257,232      7,818

Mirvac Group (ö)(Ñ)

    617,960      2,436

Mitsubishi Estate Co., Ltd. (Ñ)

    464,000      13,382

Mitsui Fudosan Co., Ltd.

    517,700      12,936

New World China Land, Ltd. (Ñ)

    1,663,661      1,247

Sino Land Co. (Ñ)

    579,695      1,455

Sponda OYJ

    69,397      863

Stockland (ö)

    202,140      1,373
     Principal
Amount ($)
or Shares		      Market
Value
$

Sumitomo Realty & Development Co., Ltd. (Ñ)

    122,000      3,026

Sun Hung Kai Properties, Ltd.

    512,320      8,915

Unibail-Rodamco (ö)(Ñ)

    41,770      10,785

Vornado Realty Trust (ö)

    1,200,078      111,715

Washington Real Estate Investment Trust (ö)(Ñ)

    364,800      12,961

Wharf Holdings, Ltd.

    253,515      1,279
         
        218,797
         

Free Standing Retail - 0.4%

        

National Retail Properties, Inc. (ö)(Ñ)

    178,500      4,089

Realty Income Corp. (ö)(Ñ)

    141,600      3,726
         
        7,815
         

Health Care - 9.1%

        

Cogdell Spencer, Inc. (ö)

    94,250      1,597

HCP, Inc. (ö)

    945,600      33,758

Health Care REIT, Inc. (ö)(Ñ)

    407,700      19,753

Healthcare Realty Trust, Inc. (ö)(Ñ)

    148,300      4,201

LTC Properties, Inc. (ö)(Ñ)

    197,410      5,375

Medical Properties Trust, Inc. (ö)(Ñ)

    435,763      5,294

Nationwide Health Properties, Inc. (ö)(Ñ)

    1,486,275      53,536

Omega Healthcare Investors, Inc. (ö)

    488,700      8,552

Senior Housing Properties Trust (ö)

    537,685      12,878

Ventas, Inc. (ö)

    1,123,200      54,543
         
        199,487
         

Industrial - 6.8%

        

AMB Property Corp. (ö)

    564,800      32,617

DCT Industrial Trust, Inc. (ö)(Ñ)

    1,178,100      11,781

EastGroup Properties, Inc. (ö)(Ñ)

    33,061      1,578

First Potomac Realty Trust (ö)(Ñ)

    272,100      4,623

Goodman Group (ö)(Ñ)

    268,522      1,137

Prologis (ö)(Ñ)

    1,569,063      98,239
         
        149,975
         

Lodging/Resorts - 5.2%

        

Ashford Hospitality Trust, Inc. (ö)(Ñ)

    542,500      3,141

DiamondRock Hospitality Co. (ö)

    314,500      4,010

Hospitality Properties Trust (ö)

    65,100      2,092

Host Hotels & Resorts, Inc. (ö)(Ñ)

    4,282,046      73,651

LaSalle Hotel Properties (ö)(Ñ)

    50,424      1,617

Shangri-La Asia, Ltd.

    341,953      945

Starwood Hotels & Resorts Worldwide, Inc.

    512,861      26,776

Sunstone Hotel Investors, Inc. (ö)

    95,668      1,787
         
        114,019
         

 

Real Estate Securities Fund   21

Table of Contents

Russell Investment Company

Real Estate Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Manufactured Homes - 0.5%

        

Equity Lifestyle Properties, Inc. (ö)

    240,561      11,893
         

Mixed Industrial/Office - 1.2%

        

Liberty Property Trust (ö)

    589,160      20,638

PS Business Parks, Inc. (ö)

    96,100      5,501

Segro PLC (ö)

    60,098      546
         
        26,685
         

Office - 13.6%

        

Alexandria Real Estate Equities, Inc. (ö)(Ñ)

    221,558      23,270

Beni Stabili SpA (Ñ)

    457,400      513

BioMed Realty Trust, Inc. (ö)(Ñ)

    969,555      25,208

Boston Properties, Inc. (ö)

    889,309      89,367

Brandywine Realty Trust (ö)

    796,821      13,905

Brookfield Properties Corp.

    949,249      19,108

CapitaCommercial Trust (ö)

    767,000      1,276

Commonwealth Property Office Fund (ö)(Ñ)

    487,941      646

Corporate Office Properties Trust SBI MD (ö)(Ñ)

    248,400      9,265

Derwent London PLC (ö)

    129,233      3,428

Douglas Emmett, Inc. (ö)

    746,131      17,728

Great Portland Estates PLC (ö)(Ñ)

    279,350      2,529

Hongkong Land Holdings, Ltd.

    1,267,000      5,741

HRPT Properties Trust (ö)

    790,200      5,476

Japan Real Estate Investment Corp. Class A (ö)

    36      424

Kilroy Realty Corp. (ö)(Ñ)

    304,830      15,949

Mack-Cali Realty Corp. (ö)

    283,900      11,078

Maguire Properties, Inc. (ö)(Ñ)

    75,836      1,221

Nomura Real Estate Office Fund, Inc. Class A (ö)(Ñ)

    57      451

Norwegian Property ASA (Ñ)

    55,585      485

NTT Urban Development Corp.

    144      224

SL Green Realty Corp. (ö)

    503,471      46,722

Societe Immobiliere de Location pour l’Industrie et le Commerce (ö)

    3,890      556

Tishman Speyer Office Fund (ö)(Ñ)

    512,013      786

Tokyo Tatemono Co., Ltd.

    195,000      1,688
         
        297,044
         

Regional Malls - 16.4%

        

CBL & Associates Properties, Inc. (ö)(Ñ)

    343,300      8,407

CFS Retail Property Trust (ö)(Ñ)

    307,748      649

General Growth Properties, Inc. (ö)(Ñ)

    1,959,925      80,279
     Principal
Amount ($)
or Shares		      Market
Value
$

Macerich Co. (The) (ö)(Ñ)

    694,438      50,784

Simon Property Group, Inc. (ö)

    1,817,208      181,466

Taubman Centers, Inc. (ö)

    603,912      34,224

Westfield Group (ö)(Ñ)

    365,429      6,259
         
        362,068
         

Self Storage - 5.0%

        

Extra Space Storage, Inc. (ö)(Ñ)

    415,300      6,989

Public Storage (ö)(Ñ)

    1,127,970      102,307

Safestore Holdings, Ltd.

    169,616      490
         
        109,786
         

Shopping Centers - 11.3%

        

Cedar Shopping Centers, Inc. (ö)

    101,300      1,266

Citycon OYJ (Æ)

    82,076      476

Corio NV (ö)(Ñ)

    29,549      2,758

Developers Diversified Realty Corp. (ö)(Ñ)

    1,064,014      45,699

Eurocommercial Properties NV (ö)

    18,734      1,077

Federal Realty Investment
Trust (ö)(Ñ)

    969,419      79,638

Hammerson PLC (ö)

    170,567      3,396

Inland Real Estate Corp. (ö)(Ñ)

    7,600      123

Kimco Realty Corp. (ö)(Ñ)

    785,400      31,345

Kite Realty Group Trust (ö)

    335,100      4,551

Mercialys SA (ö)

    14,060      654

Regency Centers Corp. (ö)

    850,530      60,872

Saul Centers, Inc. (ö)

    57,850      2,887

Tanger Factory Outlet Centers (ö)(Ñ)

    340,950      13,754
         
        248,496
         

Specialty - 2.6%

        

Digital Realty Trust, Inc. (ö)(Ñ)

    987,596      38,269

DuPont Fabros Technology,
Inc. (ö)(Ñ)

    303,000      5,454

Plum Creek Timber Co., Inc. (ö)(Ñ)

    209,200      8,544

Rayonier, Inc. (ö)(Ñ)

    139,500      5,863
         
        58,130
         
Total Common Stocks        

(cost $1,664,926)

         2,117,905
         
Short-Term Investments - 3.8%        

Russell Investment Company Money Market Fund

    83,493,000      83,493
         
Total Short-Term Investments        

(cost $83,493)

         83,493
         

 

22   Real Estate Securities Fund

Table of Contents

Russell Investment Company

Real Estate Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$		  
       

Other Securities - 18.7%

        

Russell Investment Company Money Market Fund (×)

    89,635,347      89,635  

State Street Securities Lending Quality Trust (×)

    322,594,243      322,595  
           
Total Other Securities        

(cost $412,229)

         412,230  
           
Total Investments - 118.7%        

(identified cost $2,160,648)

         2,613,628  
Other Assets and Liabilities, Net - (18.7%)         (412,244 )
           
Net Assets - 100.0%         2,201,384  
           

 

 

A portion of the portfolio has been fair valued as of period end.

 


 

See accompanying notes which are an integral part of the financial statements.

 

Real Estate Securities Fund   23

Table of Contents

Russell Investment Company

Real Estate Securities Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   37   AUD   39   05/01/08   1  
USD   43   AUD   46   05/01/08   —  
USD   17   AUD   18   05/02/08   —  
USD   25   AUD   27   05/02/08   —  
USD   69   AUD   73   05/02/08   —  
USD   13   HKD   104   05/02/08   —  
USD   13   HKD   105   05/02/08   —  
USD   70   HKD   549   05/02/08   —  
USD   3   JPY   301   05/01/08   —  
USD   8   JPY   841   05/01/08   —  
USD   151   JPY   15,677   05/01/08   —  
USD   12   JPY   1,283   05/02/08   —  
USD   55   SGD   74   05/05/08   —  
AUD   19   USD   17   05/01/08   (1 )
AUD   123   USD   116   05/02/08   —  
EUR   30   USD   47   05/02/08   —  
GBP   11   USD   22   05/01/08   —  
GBP   12   USD   24   05/01/08   —  
GBP   7   USD   15   05/02/08   —  
GBP   14   USD   28   05/02/08   —  
HKD   237   USD   30   05/02/08   —  
HKD   811   USD   104   05/02/08   —  
JPY   1,065   USD   10   05/01/08   —  
             
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts   —  
             

 

See accompanying notes which are an integral part of the financial statements.

 

24   Real Estate Securities Fund

Table of Contents

Russell Investment Company

Real Estate Securities Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Apartments

    14.2  

Diversified

    9.9  

Free Standing Retail

    0.4  

Health Care

    9.1  

Industrial

    6.8  

Lodging/Resorts

    5.2  

Manufactured Homes

    0.5  

Mixed Industrial/Office

    1.2  

Office

    13.6  

Regional Malls

    16.4  

Self Storage

    5.0  

Shopping Center

    11.3  

Specialty

    2.6  

Short-Term Investments

    3.8  

Other Securities

    18.7  
      

Total Investments

    118.7  

Other Assets and Liabilities, Net

    (18.7 )
      
   100.0  
      

Foreign Currency Exchange Contracts

    — *

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

Real Estate Securities Fund   25

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,026.30    $ 1,020.14

Expenses Paid During Period*

    $ 4.79    $ 4.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.95% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,022.70    $ 1,016.41

Expenses Paid During Period*

    $ 8.55    $ 8.52

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.70% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,026.40    $ 1,020.14

Expenses Paid During Period*

    $ 4.79    $ 4.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.95% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

26   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,028.30    $ 1,021.38

Expenses Paid During Period*

    $ 3.53    $ 3.52

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.70% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Short Duration Bond Fund   27

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Long-Term Investments - 90.5%

     

Asset-Backed Securities - 19.8%

     

American Express Credit Account Master Trust (Ê)

        

Series 2007-7 Class A

        

2.756% due 02/17/15

    3,000      2,857

AmeriCredit Automobile Receivables Trust

        

Series 2007-BF Class A2

        

5.310% due 01/06/11

    254      254

Argent Securities, Inc. (Ê)

        

Series 2006-M2 Class A2A

        

2.945% due 09/25/36

    183      180

Asset Backed Securities Corp. Home Equity (Ê)

        

Series 2002-HE1 Class M1

        

4.366% due 03/15/32

    664      580

Series 2004-HE6 Class A1

        

3.170% due 09/25/34

    160      144

Atlantic City Electric Transition Funding LLC

        

Series 2003-1 Class A2

        

4.460% due 10/20/16

    1,525      1,508

Bank of America Credit Card Trust (Ê)

        

Series 2008-A1 Class A1

        

3.296% due 04/15/13

    200      197

Series 2008-A5 Class A5

        

4.095% due 12/16/13

    4,545      4,545

Bear Stearns Asset Backed Securities Trust (Ê)

        

Series 2004-BO1 Class 1A1

        

3.095% due 09/25/34

    2      2

Series 2007-HE7 Class 1A1

        

3.895% due 08/25/37

    663      608

Capital Auto Receivables Asset Trust

        

Series 2005-1 Class A4

        

4.050% due 07/15/09

    15      15

Series 2006-1 Class A3

        

5.030% due 10/15/09

    524      526

Capital One Multi-Asset Execution Trust

        

Series 2003-A4 Class A4

        

3.650% due 07/15/11

    1,825      1,827

Series 2005-A8 Class A

        

4.400% due 08/15/11

    1,500      1,507

Capital One Prime Auto Receivables Trust

        

Series 2004-3 Class A4

        

3.690% due 06/15/10

    573      573
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2004-3 Class B

        

3.860% due 08/15/11

    1,500      1,501

Caterpillar Financial Asset Trust

        

Series 2006-A Class A3

        

5.570% due 05/25/10

    623      628

Centex Home Equity

        

Series 2003-C Class AF4

        

4.960% due 04/25/32

    111      111

Chase Funding Mortgage Loan Asset-Backed Certificates

        

Series 2001-4 Class 1A6

        

6.241% due 01/25/13

    18      18

Series 2003-3 Class 1A4

        

3.303% due 11/25/29

    38      38

Chase Issuance Trust

        

Series 2005-A10 Class A10

        

4.650% due 12/17/12

    3,155      3,183

Chase Manhattan Auto Owner Trust

        

Series 2005-A Class CTFS

        

4.040% due 04/15/11

    269      269

Series 2006-A Class A3

        

5.340% due 07/15/10

    1,075      1,084

Series 2006-A Class A4

        

5.360% due 01/15/13

    1,700      1,726

CIT Marine Trust

        

Series 1999-A Class A4

        

6.250% due 11/15/19

    369      352

Citibank Credit Card Issuance Trust

        

Series 2007-A5 Class A5

        

5.500% due 06/22/12

    4,175      4,287

Series 2007-A8 Class A8

        

5.650% due 09/20/19

    150      148

Community Program Loan Trust

        

Series 1987-A Class A4

        

4.500% due 10/01/18

    1,357      1,343

Countrywide Asset-Backed Certificates

        

Series 2001-BC3 Class A (Ê)

        

3.375% due 12/25/31

    96      85

Series 2005-1 Class AF4

        

5.147% due 07/25/35

    655      612

Series 2005-7 Class AF2

        

4.367% due 11/25/35

    380      379

Series 2006-16 Class 2A1 (Ê)

        

2.945% due 12/25/46

    148      145

Daimler Chrysler Auto Trust

        

Series 2005-A Class A4

        

3.740% due 02/08/10

    2,021      2,024

 

28   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2008-A Class A3A

        

3.700% due 06/08/12

    600      591

Discover Card Master Trust

        

Series 2008-A3 Class A3

        

5.100% due 10/15/13

    4,600      4,683

E-Trade RV and Marine Trust

        

Series 2004-1 Class A3

        

3.620% due 10/08/18

    1,105      1,075

Equity One ABS, Inc.

        

Series 2003-4 Class M1

        

5.369% due 10/25/34

    1,477      1,166

Federal Home Loan Mortgage Corp. Structured Pass Through Securities

        

Series 2002-50 Class A6

        

3.614% due 09/27/12

    111      111

First USA Credit Card Master Trust (Ê)

        

Series 1998-6 Class A

        

2.892% due 04/18/11

    700      700

Ford Credit Auto Owner Trust

        

Series 2005-B Class A4

        

4.380% due 01/15/10

    425      425

Series 2005-B Class B

        

4.640% due 04/15/10

    1,250      1,248

Series 2005-C Class B

        

4.520% due 09/15/10

    1,000      1,004

Series 2007-B Class A4A

        

5.240% due 07/15/12

    5,750      5,786

Series 2008-A Class A2 (Ê)

        

3.316% due 07/15/10

    400      399

Series 2008-B Class A2 (Ê)

        

1.000% due 12/15/10

    1,000      1,001

FPL Recovery Funding LLC

        

Series 2007-A Class A1

        

5.053% due 02/01/13

    1,300      1,313

Fremont Home Loan Trust (Ê)

        

Series 2006-E Class 2A1

        

2.955% due 01/25/37

    463      433

GE Capital Credit Card Master Note Trust

        

Series 2007-3 Class A2

        

5.400% due 06/15/13

    4,450      4,570

GE Commercial Equipment Financing LLC (Ê)

        

Series 2004-1 Class B

        

3.000% due 12/20/15

    468      464
     Principal
Amount ($)
or Shares		      Market
Value
$

GE Corporate Aircraft Financing LLC (Ê)(Þ)

        

Series 2004-1A Class B

        

3.745% due 01/25/18

    155      146

GE-WMC Mortgage Securities LLC (Ê)

        

Series 2006-1 Class A2A

        

2.935% due 08/25/36

    244      237

GMAC Mortgage Corp. Loan Trust

        

Series 2004-GH1 Class A2

        

4.390% due 12/25/25

    605      593

GSAMP Trust (Ê)

        

Series 2004-SEA Class A2A

        

3.185% due 03/25/34

    214      210

Series 2007-FM1 Class A2A

        

2.965% due 12/25/36

    600      576

Harley-Davidson Motorcycle Trust

        

Series 2003-4 Class A2

        

2.690% due 04/15/11

    262      262

Series 2006-3 Class A3

        

5.240% due 01/15/12

    2,010      2,029

Series 2007-3 Class A4

        

5.520% due 11/15/13

    2,000      2,023

HFC Home Equity Loan Asset Backed Certificates (Ê)

        

Series 2005-1 Class A

        

3.090% due 01/20/34

    283      234

Honda Auto Receivables Owner Trust

        

Series 2004-3 Class A4

        

3.280% due 02/18/10

    1,044      1,044

Series 2005-2 Class A4

        

4.150% due 10/15/10

    715      717

Series 2005-3 Class A4

        

4.030% due 12/20/10

    2,750      2,754

Series 2006-3 Class A3

        

5.120% due 10/15/10

    590      595

Household Credit Card Master Note Trust I (Ê)

        

Series 2007-1 Class A

        

2.766% due 04/15/13

    750      728

Series 2007-2 Class A

        

3.266% due 07/15/13

    3,860      3,774

Lehman XS Trust (Ê)

        

Series 2006-9 Class A1A

        

2.965% due 05/25/46

    140      133

Long Beach Mortgage Loan Trust (Ê)

        

Series 2004-4 Class 1A1

        

3.175% due 10/25/34

    20      17

 

Short Duration Bond Fund   29

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Mastr Asset Backed Securities Trust (Ê)

        

Series 2006-HE5 Class A1

        

2.955% due 11/25/36

    488      474

Nissan Auto Receivables Owner Trust

        

Series 2005-B Class A3

        

3.990% due 07/15/09

    163      163

Series 2005-C Class A4

        

4.310% due 03/15/11

    900      903

Series 2008-A Class A3

        

3.890% due 08/15/11

    430      426

Onyx Acceptance Grantor Trust

        

Series 2005-A Class A4

        

3.910% due 09/15/11

    1,359      1,342

PG&E Energy Recovery Funding LLC

        

Series 2005-1 Class A2

        

3.870% due 06/25/11

    655      656

Series 2005-2 Class A1

        

4.850% due 06/25/11

    451      454

Public Service New Hampshire Funding LLC

        

Series 2001-1 Class A2

        

5.730% due 11/01/10

    314      316

Railcar Leasing LLC (Þ)
Series 1997-1 Class A2
7.125% due 01/15/13

    759      785

SBI Heloc Trust (Ê)(Þ)
Series 2006-1A Class 1A2A
3.065% due 08/25/36

    337      323

SLM Student Loan Trust (Ê)
Series 2006-9 Class A2

        

2.920% due 04/25/17

    316      316

Series 2008-2 Class A1

        

3.220% due 01/26/15

    98      97

USAA Auto Owner Trust
Series 2005-2 Class A4

        

4.170% due 02/15/11

    1,885      1,891

Series 2006-2 Class A4
5.370% due 02/15/12

    600      609

Series 2006-4 Class A2
5.160% due 11/16/09

    383      383

Series 2007-2 Class A3
4.900% due 02/15/12

    1,900      1,916

Series 2008-1 Class A3
4.160% due 04/16/12

    525      524

Series 2008-2 Class A3
4.640% due 10/15/12

    385      386
     Principal
Amount ($)
or Shares		      Market
Value
$

Wells Fargo Financial Owner Trust
Series 2004-4 Class A4
3.440% due 05/17/12

    283      282
         
        86,543
         

Corporate Bonds and Notes - 24.7%

     

Abbott Laboratories
5.600% due 05/15/11

    160      168

Aetna, Inc.
7.875% due 03/01/11

    200      213

Alabama Power Co. Series 07-D
4.850% due 12/15/12

    750      759

Allstate Corp. (The)
7.200% due 12/01/09

    2,000      2,092

Allstate Life Global Funding Trusts
Series MTN
5.375% due 04/30/13

    200      203

AMB Property, LP
6.300% due 06/01/13

    650      655

American Airlines, Inc.
Series 01-1

        

6.817% due 11/23/12

    370      342

Series 99-1
7.324% due 04/15/11

    95      91

American Express Bank FSB (Ñ)
Series BKNT
5.500% due 04/16/13

    1,050      1,050

American Express Centurion Bank
Series BKNT
5.200% due 11/26/10

    500      507

American Express Travel Related Services Co., Inc. (Þ)
5.250% due 11/21/11

    4,120      4,156

American General Finance Corp.
Series MTNI
4.625% due 05/15/09

    530      528

American International Group, Inc.
4.700% due 10/01/10

    1,950      1,949

Ameriprise Financial, Inc.
5.350% due 11/15/10

    500      506

Ameritech Capital Funding Corp.
6.250% due 05/18/09

    2,000      2,036

Amgen, Inc.
4.000% due 11/18/09

    160      160

Associates Corp. of North America
8.550% due 07/15/09

    750      785

AT&T Corp.
7.300% due 11/15/11

    900      968

 

30   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

AT&T, Inc.
4.125% due 09/15/09

    2,510      2,517

Bank of America Corp. (ƒ)
8.000% due 12/29/49

    3,575      3,637

Bear Stearns Cos., Inc. (The)(Ê)
2.979% due 07/16/09

    1,600      1,543

Boston Scientific Corp.
6.400% due 06/15/16

    390      376

Capital One Bank USA North America (Ñ)

        

5.000% due 06/15/09

    530      527

Capmark Financial Group, Inc.
5.875% due 05/10/12

    775      644

Caterpillar Financial Services Corp.

        

4.500% due 06/15/09

    1,250      1,260

3.578% due 02/08/10 (Ê)

    2,000      1,988

Charter Communications, Inc. (Ñ)(Þ)
10.875% due 09/15/14

    240      254

CIT Group, Inc.

        

4.250% due 02/01/10 (Ñ)

    795      685

3.021% due 03/12/10 (Ê)(Ñ)

    1,305      1,056

3.187% due 07/28/11 (Ê)

    358      292

Citigroup Funding, Inc. (Ê)
2.606% due 06/26/09

    200      197

Citigroup, Inc.

        

5.500% due 04/11/13

    700      704

8.400% due 04/29/49 (ƒ)

    545      552

Comcast Cable Communications LLC
6.875% due 06/15/09

    1,040      1,067

Commonwealth Edison Co.
Series 98
6.150% due 03/15/12

    250      259

ConocoPhillips
8.750% due 05/25/10

    1,246      1,369

Constellation Brands, Inc. (Ñ)
Series B
8.125% due 01/15/12

    200      204

Costco Wholesale Corp.
5.300% due 03/15/12

    285      296

COX Communications, Inc.
4.625% due 01/15/10

    420      418

Dean Holding Co. (Ñ)
6.625% due 05/15/09

    275      276

Delta Air Lines, Inc.
Series 00-1
7.570% due 11/18/10

    480      466

Discover Financial Services (Ê)
Series WI
3.431% due 06/11/10

    650      648
     Principal
Amount ($)
or Shares		      Market
Value
$

Dominion Resources, Inc.
Series B
6.250% due 06/30/12

    350      368

Dr Pepper Snapple Group, Inc. (Þ)(Å)
6.120% due 05/01/13

    500      511

E*Trade Financial Corp. (Þ)
12.500% due 11/30/17

    450      466

EI Du Pont de Nemours & Co.
5.000% due 01/15/13

    2,220      2,265

Enterprise Products Operating, LP
Series B
4.625% due 10/15/09

    350      351

Ford Motor Credit Co. LLC
7.375% due 10/28/09

    200      193

Series WI (Ñ)
9.750% due 09/15/10

    205      199

Fortune Brands, Inc.
5.125% due 01/15/11

    350      348

FPL Group Capital, Inc.
5.625% due 09/01/11

    240      249

General Electric Capital Corp.

        

4.875% due 10/21/10

    3,150      3,229

4.800% due 05/01/13

    1,365      1,370

General Mills, Inc.
5.650% due 09/10/12

    415      427

Genworth Financial, Inc.
5.650% due 06/15/12

    500      496

Georgia-Pacific LLC
9.500% due 12/01/11

    235      248

Gillette Co. (The)
3.800% due 09/15/09

    500      503

GMAC LLC

        

6.875% due 09/15/11

    400      333

6.000% due 12/15/11 (Ñ)

    100      79

Goldman Sachs Capital II (ƒ)
5.793% due 12/29/49

    750      566

Hertz Vehicle Financing LLC (Þ)
Series 2005-2A Class A2
4.930% due 02/25/10

    1,000      985

Hewlett-Packard Co.
4.500% due 03/01/13

    2,255      2,273

HSBC Finance Corp.
4.125% due 11/16/09

    3,270      3,263

IBM International Group Capital LLC
5.050% due 10/22/12

    335      346

International Lease Finance Corp.
6.375% due 03/25/13

    1,900      1,926

John Deere Capital Corp. (Ê)
2.999% due 10/16/09

    4,950      4,937

 

Short Duration Bond Fund   31

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

JPMorgan Chase & Co.

        

3.800% due 10/02/09

    3,040      3,000

6.625% due 03/15/12

    2,600      2,714

5.375% due 10/01/12

    1,775      1,825

Series 1 (ƒ)

        

7.900% due 12/31/49

    670      683

KBC Bank Funding Trust III (ƒ)(Þ)
9.860% due 11/29/49

    650      694

Kraft Foods, Inc. (Ñ)
4.125% due 11/12/09

    190      189

LaBranche & Co., Inc.
11.000% due 05/15/12

    225      229

Lehman Brothers Holdings Capital Trust V (ƒ)

        

5.857% due 11/29/49

    540      383

Lehman Brothers Holdings, Inc. (Ê)
3.233% due 05/25/10

    800      751

Lowe’s Cos., Inc.
5.600% due 09/15/12

    1,300      1,341

Lubrizol Corp.
4.625% due 10/01/09

    560      559

Marsh & McLennan Cos., Inc.
5.150% due 09/15/10

    840      826

Marshall & Ilsley Corp.
5.626% due 08/17/09

    4,850      4,847

Medco Health Solutions, Inc.
6.125% due 03/15/13

    485      496

Merrill Lynch & Co., Inc.

        

3.120% due 07/25/11 (Ê)

    500      459

6.150% due 04/25/13

    470      469

Metropolitan Life Global Funding I (Å)
5.125% due 04/10/13

    1,500      1,506

Mizuho JGB Investment LLC (ƒ)(Þ)
9.870% due 12/31/49

    500      501

Motorola, Inc. (Ñ)
5.375% due 11/15/12

    300      284

National City Bank Series BKNT
4.250% due 01/29/10

    1,650      1,567

Nuveen Investments, Inc.
5.000% due 09/15/10

    385      338

ONEOK Partners, LP
5.900% due 04/01/12

    500      509

Pacific Gas & Electric Co.
4.200% due 03/01/11

    480      477

Pacific Life Global Funding (Å)
5.150% due 04/15/13

    900      901

Power Contract Financing LLC (Þ)
Series 144a
6.256% due 02/01/10

    137      139
     Principal
Amount ($)
or Shares		      Market
Value
$

Principal Life Income Funding Trusts
5.300% due 04/24/13

    200      202

SLM Corp.
3.080% due 07/26/10 (Ê)

    100      87

Series MTNA
4.500% due 07/26/10

    1,075      959

Sprint Capital Corp.
7.625% due 01/30/11

    190      180

Suncom Wireless, Inc.
8.500% due 06/01/13

    340      354

TIAA Global Markets, Inc. (Þ)
5.125% due 10/10/12

    2,500      2,546

Time Warner Cable, Inc.
Series WI
5.400% due 07/02/12

    470      473

Union Pacific Corp.
6.500% due 04/15/12

    690      731

Union Planters Corp.
7.750% due 03/01/11

    1,060      1,095

United Technologies Corp.

        

4.375% due 05/01/10

    425      430

7.125% due 11/15/10 (Ñ)

    270      292

UnitedHealth Group, Inc.
4.875% due 02/15/13

    305      291

Verizon Communications, Inc.
4.350% due 02/15/13

    1,055      1,040

Viacom, Inc.
5.750% due 04/30/11

    520      526

Wachovia Capital Trust III (ƒ)
5.800% due 03/15/42

    895      712

Wachovia Corp.

        

5.500% due 05/01/13

    1,200      1,203

7.980% due 12/31/49 (ƒ)(Ñ)

    500      492

Wachovia Mortgage FSB
Series BKNT
4.125% due 12/15/09

    130      131

Wal-Mart Stores, Inc.
4.250% due 04/15/13

    430      432

Washington Mutual Preferred Funding LLC (ƒ)(Ñ)(Þ)
9.750% due 10/29/49

    500      435

WellPoint, Inc.
6.375% due 01/15/12

    440      452

Wells Fargo & Co.

        

5.250% due 10/23/12

    3,500      3,572

4.375% due 01/31/13

    425      420

Willis NA, Inc.
5.125% due 07/15/10

    230      229

 

32   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

XTO Energy, Inc.
4.625% due 06/15/13

    345      340
         
        107,645
         

International Debt - 4.5%

        

Abu Dhabi National Energy Co. (Þ)
5.620% due 10/25/12

    500      507

AstraZeneca PLC
5.400% due 09/15/12

    3,345      3,466

Barclays Bank PLC

        

5.450% due 09/12/12

    3,710      3,782

7.434% due 09/29/49 (ƒ)(Þ)

    150      144

Catalyst Paper Corp. (Ñ)
Series D
8.625% due 06/15/11

    210      180

Credit Agricole SA/London (Ê)(Þ)
3.140% due 05/28/10

    300      300

Credit Agricole SA/London (Ê)(Þ)
3.090% due 05/28/09

    300      300

Diageo Capital PLC
7.250% due 11/01/09

    480      502

EnCana Corp.
4.750% due 10/15/13

    425      423

Galaxy Entertainment Finance Co., Ltd. (Þ)

        

9.875% due 12/15/12

    350      354

Gaz Capital SA (Å)
8.146% due 04/11/18

    200      212

Glitnir Banki HF (Þ)
6.375% due 09/25/12

    5,420      4,687

ICICI Bank, Ltd. (Ê)(Þ)
3.250% due 01/12/10

    1,100      1,060

Invesco, Ltd.
5.625% due 04/17/12

    390      381

Koninklijke Philips Electronics NV (Ñ)

        

4.625% due 03/11/13

    755      753

Korea Southern Power Co., Ltd. (Å)

        

5.375% due 04/18/13

    275      276

Nine Dragons Paper Holdings, Ltd. (Å)

        

7.875% due 04/29/13

    165      164

Norske Skogindustrier ASA (Þ)

        

6.125% due 10/15/15

    215      133

7.125% due 10/15/33

    100      72

Quebecor World Capital Corp. (Ø)

        

6.125% due 11/15/13

    70      29

Sappi Papier Holding AG (Þ)

        

6.750% due 06/15/12

    440      415

Transocean, Inc.

        

5.250% due 03/15/13

    315      318
     Principal
Amount ($)
or Shares		      Market
Value
$

Tyco Electronics Group SA (Þ)

        

6.000% due 10/01/12

    760      775

XL Capital, Ltd. (ƒ)

        

Series E

        

6.500% due 12/31/49

    320      224
         
        19,457
         

Loan Agreements - 0.1%

        

ALLTEL Holding Corp., Term Loan B

        

5.466% due 05/15/15

    124      115

First Data Corp., Term Loan B

        

5.349% due 09/24/14

    8      7

5.446% due 09/24/14

    18      17

5.645% due 09/24/14

    248      233

Texas Competitive Electric Holdings Co. LLC

        

4.896% due 10/10/14

    249      238
         
        610
         

Mortgage-Backed Securities - 38.9%

     

American Home Mortgage Investment Trust

        

Series 2004-3 Class 5A

        

4.290% due 10/25/34

    1,456      1,300

Series 2004-4 Class 4A

        

4.390% due 02/25/45

    441      401

Banc of America Commercial Mortgage, Inc.

        

Series 2003-1 Class SBB (Þ)

        

5.860% due 03/11/32

    115      126

Series 2003-1 Class SBC (Þ)

        

5.790% due 03/11/32

    115      126

Series 2006-4 Class A2

        

5.522% due 09/10/11

    1,200      1,203

Banc of America Funding Corp.

        

Series 2005-D Class A1 (Ê)

        

4.113% due 05/25/35

    6,877      6,414

Series 2006-2 Class 2A18

        

5.750% due 03/25/36

    2,734      2,683

Series 2006-A Class 1A1 (Ê)

        

4.624% due 02/20/36

    339      322

Banc of America Mortgage Securities, Inc.

        

Series 2004-2 Class 2A1

        

5.250% due 03/25/34

    790      774

Series 2004-2 Class 5A1

        

6.500% due 10/25/31

    185      177

Series 2004-I Class 2A2 (Ê)

        

4.684% due 10/25/34

    537      525

 

Short Duration Bond Fund   33

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2004-L Class 1A1 (Ê)

        

6.267% due 01/25/35

    67      68

Series 2004-L Class 2A1 (Ê)

        

4.370% due 01/25/35

    1,490      1,425

Series 2005-8 Class A7

        

5.500% due 09/25/35

    493      495

Series 2005-9 Class 2A1

        

4.750% due 10/25/20

    511      505

Series 2005-G Class 2A1 (Ê)

        

4.922% due 08/25/35

    336      323

Bear Stearns Adjustable Rate Mortgage Trust (Ê)

        

Series 2003-1 Class 5A1

        

5.437% due 04/25/33

    438      410

Series 2003-8 Class 2A1

        

4.761% due 01/25/34

    316      303

Bear Stearns Alt-A Trust (Ê)

        

Series 2005-4 Class 23A1

        

5.371% due 05/25/35

    876      764

Series 2005-7 Class 22A1

        

5.706% due 09/25/35

    55      46

Bear Stearns Asset Backed Securities Trust

        

Series 2003-AC3 Class A1

        

4.000% due 07/25/33

    336      295

Bear Stearns Commercial Mortgage Securities

        

Series 2001-TOP Class A1

        

5.060% due 11/15/16

    232      232

Series 2004-ESA Class H (Þ)

        

5.426% due 05/14/16

    900      923

Series 2004-PWR Class A2

        

4.254% due 07/11/42

    457      454

Bear Stearns Mortgage Funding Trust (Ê)

        

Series 2007-AR1 Class 2A1

        

2.965% due 02/25/37

    1,157      1,015

Bear Stearns Structured Products, Inc. (Ê)

        

Series 2007-R6 Class 1A1

        

5.682% due 01/26/36

    270      226

Series 2007-R6 Class 2A1

        

5.783% due 12/26/46

    183      151

Chase Commercial Mortgage Securities Corp.

        

Series 2000-2 Class B

        

7.782% due 07/15/32

    415      439
     Principal
Amount ($)
or Shares		      Market
Value
$

Chase Issuance Trust

        

Series 2007-A15 Class A

        

4.960% due 09/17/12

    3,200      3,248

Chase Mortgage Finance Corp.

        

Series 2007-A1 Class 8A1

        

4.244% due 02/25/37

    932      880

Commercial Mortgage Acceptance Corp.

        

Series 1998-C2 Class A3

        

6.040% due 09/15/30

    269      269

Commercial Mortgage Pass Through Certificates

        

Series 1999-1 Class A2

        

6.455% due 05/15/32

    369      370

Series 2001-J1A Class A2 (Þ)

        

6.457% due 02/16/34

    90      93

Series 2004-LB2 Class A2

        

3.600% due 03/10/39

    1,000      994

Series 2006-C7 Class A2

        

5.690% due 06/10/46

    110      111

Countrywide Alternative Loan Trust

        

Series 2003-6T2 Class A1

        

6.500% due 06/25/33

    16      16

Series 2003-J2 Class A1

        

6.000% due 10/25/33

    298      279

Series 2004-12C Class 1A1

        

5.000% due 07/25/19

    1,993      1,923

Countrywide Home Loan Mortgage Pass Through Trust

        

Series 2004-22 Class A3

        

4.800% due 11/25/34

    272      255

Series 2004-HYB Class 1A1

        

4.720% due 02/20/35

    494      480

Series 2005-HYB Class 5A1 (Ê)

        

5.250% due 02/20/36

    920      739

Credit Suisse First Boston Mortgage Securities Corp.

        

Series 2003-C4 Class A2

        

3.908% due 08/15/36

    842      839

Deutsche ALT-A Securities, Inc. Alternate Loan Trust (Ê)

        

Series 2007-AR1 Class A3B

        

2.965% due 01/25/47

    468      437

DLJ Commercial Mortgage Corp.

        

Series 1999-CG3 Class A3

        

7.730% due 10/10/32

    900      935

Fannie Mae

        

5.500% due 2009

    99      99

6.000% due 2010

    43      43

 

34   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

6.500% due 2010

    54      57

6.000% due 2011

    77      78

6.500% due 2011

    34      35

5.000% due 2013

    480      486

5.500% due 2013

    448      459

6.000% due 2013

    230      238

6.000% due 2014

    1,150      1,190

5.500% due 2016

    818      838

5.000% due 2017

    69      69

5.500% due 2017

    1,305      1,336

6.000% due 2017

    138      141

7.000% due 2017

    139      146

8.000% due 2017

    726      766

5.000% due 2018

    2,835      2,861

5.000% due 2019

    392      396

5.000% due 2020

    249      251

5.000% due 2021

    811      817

5.500% due 2033

    65      66

6.000% due 2033

    22      23

6.050% due 2033 (Ê)

    105      106

5.500% due 2034

    11,302      11,404

4.647% due 2035 (Ê)

    390      394

4.761% due 2035 (Ê)

    493      498

4.901% due 2035 (Ê)

    23,208      23,484

5.500% due 2035

    16,542      16,661

6.661% due 2035 (Ê)

    3,403      3,425

6.500% due 2037

    —      —

5.576% due 2041 (Ê)

    613      617

5.526% due 2042 (Ê)

    302      304

15 Year TBA (Ï)

        

4.500%

    3,600      3,554

30 Year TBA (Ï)

        

5.000%

    2,000      1,964

6.500%

    3,180      3,459

Fannie Mae Grantor Trust

        

Series 2001-T3 Class A1

        

7.500% due 11/25/40

    476      505

Series 2001-T4 Class A1

        

7.500% due 07/25/41

    75      80

Series 2001-T10 Class A1

        

7.000% due 12/25/41

    113      119

Series 2001-T10 Class A2

        

7.500% due 12/25/41

    62      65

Series 2002-T19 Class A1

        

6.500% due 07/25/42

    880      920

Fannie Mae REMICS

        

Series 2001-50 Class BA

        

7.000% due 10/25/41

    135      144
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-16 Class BH

        

5.000% due 03/25/17

    1,654      1,681

Series 2003-24 Class PU

        

3.500% due 11/25/15

    147      146

Series 2003-63 Class GU

        

4.000% due 07/25/33

    538      538

Series 2003-75 Class NB

        

3.250% due 08/25/18

    375      370

Series 2007-73 Class A1 (Ê)

        

2.955% due 07/25/37

    423      387

Fannie Mae Whole Loan

        

Series 2002-W3 Class A4

        

6.500% due 09/25/28

    622      641

Series 2003-W2 Class 1A1

        

6.500% due 07/25/42

    334      355

Series 2004-W11 Class 1A3

        

7.000% due 05/25/44

    363      391

Federal Home Loan Mortgage Corp.
Structured Pass Through Securities

        

Series 2002-51 Class 1A

        

6.500% due 09/25/43

    276      284

Series 2003-54 Class 2A

        

6.500% due 02/25/43

    230      238

Series 2004-59 Class 1A2

        

7.000% due 10/25/43

    950      1,027

Series 2005-63 Class 1A1 (Ê)

        

5.722% due 02/25/45

    626      591

First Horizon Alternative Mortgage Securities (Ê)
Series 2005-AA7 Class 2A1
5.407% due 09/25/35

    315      260

First Union-Chase Commercial Mortgage Series 1999-C2 Class A2
6.645% due 06/15/31

    694      702

First Union-Lehman Brothers-
Bank of America
Series 1998-C2 Class A2
6.560% due 11/18/35

    35      35

Freddie Mac

        

4.500% due 2009

    264      266

5.500% due 2009

    40      40

6.000% due 2009

    11      11

3.500% due 2010

    153      154

4.000% due 2010

    373      376

6.000% due 2010

    20      20

8.000% due 2010

    1      1

6.000% due 2011

    204      211

6.000% due 2013

    71      74

5.500% due 2014

    219      228

 

Short Duration Bond Fund   35

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

6.000% due 2014

    80      83

6.000% due 2016

    343      356

5.000% due 2018

    421      426

6.000% due 2018

    305      315

6.000% due 2028

    102      103

5.500% due 2029

    75      70

6.000% due 2029

    183      189

6.000% due 2031

    255      263

6.000% due 2032

    309      319

6.000% due 2033

    547      563

4.909% due 2035 (Ê)

    708      717

Freddie Mac REMICS

        

Series 2003-255 Class PB

        

5.500% due 08/15/30

    5      5

Series 2003-258 Class NS

        

3.250% due 09/15/15

    716      711

Series 2003-261 Class JA

        

3.760% due 03/15/29

    982      966

Series 2004-285 Class BA

        

4.500% due 02/15/20

    957      964

Series 2006-314 Class LF (Ê)

        

3.016% due 05/15/36

    552      545

Series 2007-333 Class AF (Ê)

        

2.866% due 10/15/20

    2,635      2,579

Series 2007-333 Class BF (Ê)

        

2.866% due 07/15/19

    422      414

Series 2007-333 Class FT (Ê)

        

2.866% due 08/15/19

    2,015      1,973

Series 2007-334 Class FA (Ê)

        

2.946% due 02/15/19

    1,747      1,711

GE Capital Commercial Mortgage Corp.

        

Series 2001-1 Class A2

        

6.531% due 05/15/33

    420      436

Series 2001-3 Class A1

        

5.560% due 06/10/38

    653      661

Series 2002-1A Class A3

        

6.269% due 12/10/35

    420      434

Series 2004-C3 Class A1

        

3.752% due 07/10/39

    678      675

Series 2005-C1 Class A1

        

4.012% due 06/10/48

    567      564

Ginnie Mae I

        

9.500% due 2017

    —      —

Ginnie Mae II (Ê)

        

5.625% due 2027

    66      67

5.000% due 2032

    91      92
     Principal
Amount ($)
or Shares		      Market
Value
$

GMAC Commercial Mortgage Securities, Inc.

        

Series 1999-C1 Class A2

        

6.175% due 05/15/33

    84      84

Series 2000-C2 Class B

        

7.594% due 06/16/10

    450      474

GMAC Mortgage Corp. Loan Trust (Ê)
Series 2005-AR2 Class 4A
5.182% due 05/25/35

    107      96

Government National Mortgage Association

        

Series 2004-78 Class A

        

3.590% due 11/16/17

    1,422      1,415

Series 2006-67 Class A

        

3.947% due 11/16/30

    913      905

Series 2007-4 Class A

        

4.206% due 06/15/29

    972      968

Series 2007-15 Class A

        

4.512% due 10/16/28

    1,313      1,315

Greenpoint Mortgage Funding Trust (Ê)
Series 2006-AR8 Class 1A1A
2.975% due 01/25/47

    666      634

GS Mortgage Securities Corp. II
Series 2007-GG1 Class A1
5.690% due 08/10/45

    1,225      1,228

GSMPS Mortgage Loan Trust (Þ)

        

Series 2005-RP1 Class 1A3

        

8.000% due 01/25/35

    173      175

Series 2005-RP1 Class 1A4

        

8.500% due 01/25/35

    101      104

Series 2006-RP1 Class 1A2

        

7.500% due 01/25/36

    123      130

GSR Mortgage Loan Trust

        

Series 2004-7 Class 1A1

        

5.312% due 06/25/34

    473      443

Series 2005-AR6 Class 2A1 (Ê)

        

4.539% due 09/25/35

    706      661

Harborview Mortgage Loan Trust (Ê)

        

Series 2005-4 Class 3A1

        

5.148% due 07/19/35

    237      224

Series 2006-12 Class 2A11

        

2.890% due 01/19/38

    807      763

Host Marriot Trust (Þ)
Series 1999-HMT Class E
8.070% due 08/03/15

    650      680

Indymac Index Mortgage Loan Trust (Ê)
Series 2006-AR1 Class 1A1A
2.985% due 11/25/46

    433      405

 

36   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

JP Morgan Chase Commercial Mortgage Securities Corp.

        

Series 2002-C2 Class A1

        

4.326% due 12/12/34

    494      488

Series 2005-LDP Class A1

        

4.655% due 08/15/42

    1,001      1,000

4.613% due 10/15/42

    391      391

JP Morgan Mortgage Trust

        

Series 2005-A1 Class 4A1 (Ê)

        

4.777% due 02/25/35

    729      686

Series 2005-A1 Class 6T1 (Ê)

        

5.023% due 02/25/35

    66      62

Series 2005-A4 Class 1A1

        

5.400% due 07/25/35

    408      378

Series 2005-A8 Class 1A1

        

5.404% due 11/25/35

    670      636

Series 2006-A6 Class 1A2

        

6.044% due 10/25/36

    323      318

LB-UBS Commercial Mortgage Trust

        

Series 2000-C4 Class B

        

7.480% due 07/15/32

    200      211

Mastr Adjustable Rate Mortgages Trust (Ê)
Series 2004-13 Class 3A4
3.787% due 11/21/34

    256      253

Mellon Residential Funding Corp. (Ê)
Series 2000-TBC Class A1
3.298% due 06/15/30

    829      781

Merrill Lynch Mortgage Investors, Inc. (Ê)

        

Series 2005-A10 Class A

        

3.105% due 02/25/36

    66      53

Merrill Lynch Mortgage Trust
Series 2006-C1 Class A1
5.528% due 05/12/39

    1,086      1,093

MLCC Mortgage Investors, Inc. (Ê)
Series 2005-3 Class 5A
3.145% due 11/25/35

    118      102

Morgan Stanley Capital I

        

Series 1999-LIF Class A2

        

7.110% due 04/15/33

    208      213

Series 2005-HQ6 Class A1

        

4.646% due 08/13/42

    1,227      1,225

Morgan Stanley Dean Witter Capital I
Series 2002-HQ Class A2
6.090% due 04/15/34

    27      27

PNC Mortgage Acceptance Corp.
Series 1999-CM1 Class A1B
7.330% due 12/10/32

    324      334
     Principal
Amount ($)
or Shares		      Market
Value
$

Prime Mortgage Trust (Ê)

        

Series 2004-CL1 Class 1A2

        

3.295% due 02/25/34

    154      139

Series 2004-CL1 Class 2A2

        

3.295% due 02/25/19

    32      30

Residential Funding Mortgage Securities I
Series 2006-SA3 Class 3A1
6.038% due 09/25/36

    620      588

Salomon Brothers Mortgage
Securities VII, Inc.
Series 2003-UP2 Class A1
4.000% due 12/25/18

    592      553

Structured Asset Mortgage Investments, Inc. (Ê)
Series 2002-AR3 Class A1
3.130% due 09/19/32

    30      27

Structured Asset Securities Corp. (Ê)
Series 2001-21A Class 1A1
7.108% due 01/25/32

    18      17

Thornburg Mortgage Securities Trust (Ê)
Series 2006-6 Class A1
3.005% due 11/25/11

    565      536

Wachovia Auto Owner Trust
Series 2005-B Class A4
4.840% due 04/20/11

    590      595

Washington Mutual Mortgage Pass Through Certificates

        

Series 2002-AR6 Class A (Ê)

        

5.726% due 06/25/42

    134      123

Series 2002-AR9 Class 1A (Ê)

        

5.726% due 08/25/42

    283      257

Series 2003-AR7 Class A7 (Ê)

        

3.842% due 08/25/33

    403      387

Series 2004-AR1 Class A2A (Ê)

        

3.495% due 11/25/34

    753      645

Series 2005-AR1 Class A1A1 (Ê)

        

3.185% due 10/25/45

    182      147

Series 2006-AR1 Class 1A4

        

5.648% due 11/25/36

    164      156

Series 2006-AR1 Class 2A (Ê)

        

5.826% due 09/25/46

    587      483

Wells Fargo Mortgage Backed Securities Trust

        

Series 2004-CC Class A1 (Ê)

        

4.947% due 01/25/35

    681      657

Series 2004-E Class A2 (Ê)

        

4.500% due 05/25/34

    950      930

 

Short Duration Bond Fund   37

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2004-EE Class 3A1 (Ê)

        

4.015% due 12/25/34

    294      291

Series 2004-I Class 1A1

        

7.030% due 07/25/34

    548      539

Series 2005-9 Class 1A1

        

4.750% due 10/25/35

    2,041      1,964

Series 2005-AR2 Class 2A1 (Ê)

        

4.541% due 03/25/35

    197      189

Series 2005-AR2 Class 2A2 (Ê)

        

4.541% due 03/25/35

    714      686

Series 2005-AR4 Class 2A2

        

4.523% due 04/25/35

    223      207

Series 2005-AR8 Class 2A1

        

4.555% due 06/25/35

    207      196

Series 2006-AR1 Class 5A1 (Ê)

        

5.597% due 07/25/36

    426      410

Series 2006-AR2 Class 2A1

        

4.950% due 03/25/36

    1,000      958

Series 2006-AR4 Class 1A1 (Ê)

        

5.857% due 04/25/36

    159      149

Series 2006-AR4 Class 2A1 (Ê)

        

5.773% due 04/25/36

    776      724

Series 2006-AR5 Class 2A1 (Ê)

        

5.537% due 04/25/36

    962      925

Series 2006-AR6 Class 7A1 (Ê)

        

5.111% due 03/25/36

    90      83
         
        169,865
         

Non-US Bonds - 0.7%

        

Colombia Government International Bond

        

11.750% due 03/01/10

    COP 650,000      377

German Treasury Bills
5.000% due 01/04/12

    EUR        140      227

New South Wales Treasury Corp. Series 12RG
6.000% due 05/01/12

    AUD        375      341

Province of Quebec Canada
5.000% due 12/01/15

    CAD        300      314

United Kingdom Treasury Bills
5.000% due 03/07/12

    GBP        775      1,576
         
        2,835
         

United States Government Agencies - 0.2%

Fannie Mae

        

2.500% due 04/09/10

    500      497

Federal Home Loan Bank
Discount Notes
Series HK10
Zero Coupon due 04/27/10

    401      390
         
        887
         
     Principal
Amount ($)
or Shares		      Market
Value
$

United States Government Treasuries - 1.6%

United States Treasury Inflation Indexed Bonds

        

2.375% due 04/15/11

    709      749

2.000% due 04/15/12

    563      592

3.000% due 07/15/12

    1,548      1,696

United States Treasury Notes

        

1.750% due 03/31/10

    1,725      1,709

3.125% due 04/30/13

    1,170      1,175

3.500% due 02/15/18

    1,185      1,160
         
        7,081
         
Total Long-Term Investments     

(cost $397,926)

         394,923
         

Preferred Stocks - 0.9%

        

Financial Services - 0.9%

        

Bank of America Corp.

    1,000      1,098

DG Funding Trust (Æ)(Å)

    219      2,192

Federal Home Loan Mortgage Corp.

    19,825      508

Federal National Mortgage Association (ƒ)(Ñ)

    4,925      123
         
Total Preferred Stocks        

(cost $3,928)

         3,921
         
    

Notional
Amount

       

Options Purchased - 0.2%

     

(Number of Contracts)

        

Swaptions

        

(Fund Pays/Fund Receives)

        

USD Three Month LIBOR/

        

USD 3.150%

        

Dec 2008 0.00 (1)

    17,000      96

USD Three Month LIBOR/

        

USD 3.000%

        

Feb 2009 0.00 (1)

    66,200      311

USD Three Month LIBOR/

        

USD 3.150%

        

Feb 2009 0.00 (1)

    11,400      64

USD Three Month LIBOR/

        

USD 3.500%

        

Feb 2009 0.00 (1)

    9,400      79

USD Three Month LIBOR/

        

USD 3.450%

        

Aug 2009 0.00 (5)

    31,900      238
         
Total Options Purchased        

(cost $1,358)

         788
         

 

38   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    Principal
Amount ($)
or Shares		      Market
Value
$
      

Short-Term Investments - 10.5%

     

Centex Corp.
4.875% due 08/15/08

     300      297

CIT Group, Inc. (Ê)
3.401% due 01/30/09

     2,320      2,129

Fannie Mae

       

6.000% due 12/01/08

     10      10

5.500% due 02/01/09

     420      428

5.500% due 03/01/09

     37      37

Federal Home Loan Bank Discount Notes (ç)(ž)
Zero Coupon due 05/01/08

     2,100      2,100

Freddie Mac

       

5.500% due 10/01/08

     11      12

6.000% due 02/01/09

     9      9

6.500% due 02/01/09

     54      55

French Discount Treasury Bills
Zero coupon due 05/15/08

   EUR  200      312

Ginnie Mae I
6.000% due 12/15/08

     8      8

GMAC LLC
5.125% due 05/09/08

     115      115

Goldman Sachs Group, Inc. (The)(Ê) 2.746% due 03/30/09

     2,100      2,084

Landwirtschaftliche Rentenbank
0.650% due 09/30/08

   JPY  60,000      577

Merrill Lynch & Co., Inc.
4.831% due 10/27/08

     750      752

Quebecor World Capital Corp. (Ø) 4.875% due 11/15/08

     205      86

Residential Capital LLC

       

3.490% due 06/09/08 (Ê)

     255      237

8.125% due 11/21/08 (Ñ)

     280      232

Rouse Co., LP (The)(Ñ)
8.000% due 04/30/09

     275      271

Russell Investment Company Money Market Fund

     32,026,333      32,026

Saks, Inc. (Ñ)
8.250% due 11/15/08

     175      177

Simon Property Group, LP
7.125% due 02/09/09

     310      313

Susquehanna Auto Lease Trust (Þ)
Series 2006-1 Class A3
5.210% due 03/16/09

     722      724
     Principal
Amount ($)
or Shares		      Market
Value
$		  

United States Treasury Bills (ç)(ž)(§)

        

0.848% due 06/12/08

    200      200  

1.443% due 06/12/08

    50      50  

1.220% due 06/26/08

    150      150  

Vendee Mortgage Trust
Series 2001-3 Class J
6.500% due 05/15/08

    3      3  

VTB Capital SA (Ê)(Þ)
3.839% due 08/01/08

    700      700  

Wachovia Corp.

        

5.625% due 12/15/08

    1,560      1,568  

6.375% due 01/15/09

    210      212  
           
Total Short-Term Investments        

(cost $46,121)

         45,874  
           
Other Securities - 1.3%        

Russell Investment Company
Money Market Fund (×)

    1,266,854      1,267  

State Street Securities Lending
Quality Trust (×)

    4,559,361      4,559  
           
Total Other Securities
        

(cost $5,826)

         5,826  
           
Total Investments - 103.4%        

(identified cost $455,159)

         451,332  
Other Assets and Liabilities,
Net - (3.4%)		         (14,804 )
           
Net Assets - 100.0%         436,528  
           

 

See accompanying notes which are an integral part of the financial statements.

 

Short Duration Bond Fund   39

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		    Notional
Amount		   

Unrealized

Appreciation
(Depreciation)
$

  
        

Long Positions

         

Euribor Futures
expiration date 06/08 (7)

    EUR    1,667    3  

Eurodollar Futures (CME)
expiration date 06/08 (35)

    USD    8,516    37  

expiration date 09/08 (20)

    USD    4,866    23  

expiration date 12/08 (147)

    USD    35,684    530  

expiration date 03/09 (85)

    USD    20,612    242  

expiration date 06/09 (12)

    USD    2,905    3  

expiration date 09/09 (21)

    USD    5,074    35  

expiration date 12/09 (4)

    USD    965    (5 )

expiration date 03/10 (3)

    USD    722    (3 )

Germany 5 Year Bond (Germany)
expiration date 06/08 (22)

    EUR    2,395    (64 )

LIBOR Futures
expiration date 06/08 (25)

    GBP    2,952    10  

expiration date 09/08 (6)

    GBP    710    (2 )

expiration date 12/08 (3)

    GBP    355    (3 )

United States Treasury 2 Year Notes
expiration date 06/08 (54)

    USD    11,485    (81 )

United States Treasury 5 Year Notes
expiration date 06/08 (83)

    USD    9,295    (227 )

Short Positions

         

United States Treasury Bonds
expiration date 06/08 (36)

    USD    4,208    45  

United States Treasury 2 Year Notes
expiration date 06/08 (30)

    USD    8,954    48  

United States Treasury 5 Year Notes
expiration date 06/08 (69)

    USD    7,727    27  

United States Treasury 10 Year Notes
expiration date 06/08 (52)

    USD    5,212    (50 )
            

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

          568  
            
Options Written
(Number of Contracts)		        
Notional
Amount		          
Market
Value
$		  

Swaptions

        

(Fund Pays/Fund Receives)

        

USD 4.300%/USD Three Month LIBOR

     

Dec 2008 0.00 Call (1)

    5,800      (140 )

USD 3.950%/USD Three Month LIBOR

     

Feb 2009 0.00 Call (1)

    28,800      (488 )

USD 4.250%/USD Three Month LIBOR

     

Feb 2009 0.00 Call (1)

    3,800      (88 )

USD 4.300%/USD Three Month LIBOR

     

Feb 2009 0.00 Call (1)

    1,700      (42 )

USD 4.600%/USD Three Month LIBOR

     

Feb 2009 0.00 Call (1)

    1,800      (61 )

USD 4.150%/USD Three Month LIBOR

     

Aug 2009 0.00 Call (1)

    1,100      (23 )

USD 4.400%/USD Three Month LIBOR

     

Aug 2009 0.00 Call (5)

    9,800      (275 )
           

Total Liability for Options Written (premiums received $1,497)

         (1,117 )
           

 

See accompanying notes which are an integral part of the financial statements.

 

40   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   1,122   BRL   1,925   06/03/08   25  
USD   110   CAD   112   06/16/08   1  
USD   202   CAD   205   06/30/08   1  
USD   304   CHF   308   05/13/08   (7 )
USD   1   EUR   —   05/01/08   —  
USD   311   EUR   200   05/02/08   1  
USD   229   EUR   147   06/18/08   —  
USD   161   INR   6,404   05/12/08   (3 )
USD   160   INR   6,404   08/12/08   (3 )
USD   150   JPY   15,512   06/16/08   —  
USD   217   JPY   22,049   06/16/08   (5 )
USD   285   JPY   29,339   06/16/08   (2 )
USD   1,022   KRW   996,341   08/04/08   (29 )
USD   292   MXN   3,165   07/02/08   7  
USD   1,101   SGD   1,556   05/22/08   48  
AUD   515   USD   474   06/16/08   (9 )
BRL   1,788   USD   1,021   07/02/08   (39 )
CAD   76   USD   75   06/16/08   —  
CAD   143   USD   143   06/16/08   1  
EUR   200   USD   312   05/02/08   1  
EUR   188   USD   294   05/29/08   1  
EUR   147   USD   234   06/18/08   5  
GBP   140   USD   274   06/16/08   (3 )
GBP   316   USD   619   06/16/08   (7 )
GBP   314   USD   618   06/18/08   (5 )
INR   6,404   USD   161   05/12/08   3  
JPY   2,671   USD   27   05/12/08   1  
JPY   2,672   USD   27   05/12/08   1  
JPY   2,673   USD   27   05/12/08   1  
JPY   2,676   USD   27   05/12/08   1  
JPY   2,677   USD   27   05/12/08   1  
JPY   2,678   USD   27   05/12/08   1  
JPY   2,974   USD   30   05/12/08   1  
JPY   38,548   USD   379   05/12/08   8  
JPY   15,468   USD   150   06/16/08   1  
KRW   65,156   USD   65   05/30/08   1  
MXN   3,165   USD   297   07/02/08   (2 )
             
Total Unrealized Appreciation (Depreciation) on Open Foreign Currency Exchange Contracts   (3 )
             

 

See accompanying notes which are an integral part of the financial statements.

 

Short Duration Bond Fund   41

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts                   

Counter
Party

    Notional
Amount		      Fund Receives  

Fund Pays

    Termination
Date		    Market
Value
$		  
                  

Bank of America

    USD    400      4.000%  

Three Month LIBOR

    06/18/10    6  

Bank of America

    USD    100      Three Month LIBOR  

5.000%

    06/18/38    (3 )

BNP Paribas

    EUR    1,200      Consumer Price Index (France)  

2.090%

    10/15/10    (6 )

Citibank

    USD    600      4.000%  

Three Month LIBOR

    06/18/10    10  

Deutsche Bank

    GBP    600      6.000%  

Six Month LIBOR

    12/20/08    8  

Goldman Sachs

    EUR    700      4.000%  

Six Month LIBOR

    03/20/09    (3 )

Goldman Sachs

    MXN    2,300      7.780%  

Mexico Interbank
28 Day Deposit Rate

    04/03/12    (3 )

JP Morgan

    USD    3,300      0.763%  

5YR Mid Market Swap Spread

    02/05/09    11  

JP Morgan

    EUR    200      1.948%  

Consumer Price Index (France)

    03/15/12    (6 )

Lehman Brothers

    GBP    1,500      4.500%  

Six Month LIBOR

    09/20/09    (40 )

Merrill Lynch

    BRL    700      12.948%  

Brazil Interbank Deposit Rate

    01/04/10    1  

Morgan Stanley

    BRL    400      12.670%  

Brazil Interbank Deposit Rate

    01/04/10    (2 )

Morgan Stanley

    USD    700      4.000%  

Three Month LIBOR

    06/18/10    11  

UBS

    AUD    1,600      7.500%  

Six Month LIBOR

    03/15/11    2  

UBS

    BRL    400      12.410%  

Brazil Interbank Deposit Rate

    01/04/10    (3 )

UBS

    BRL    1,100      10.575%  

Brazil Interbank Deposit Rate

    01/02/12    (46 )

UBS

    BRL    800      12.540%  

Brazil Interbank Deposit Rate

    01/02/12    (10 )
                      

Total Market Value of Open Interest Rate Swap Contracts Premiums Paid (Received) - $29

    (73 )
                      

 

See accompanying notes which are an integral part of the financial statements.

 

42   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

 

Credit Default Swap Contracts                                      

Reference
Entity

   

Counter
Party

    Notional
Amount		    Fund Receives
Fixed Rate		    Termination
Date		    Market
Value
$		  
                 

Ukraine Government International Bond

    HSBC    USD   

1,000

    0.490%    06/20/09    (10 )

SLM Corp.

    BNP Paribas    USD   

100

    5.050%    03/20/13    5  

Russia Government International Bond

    Barclays Bank PLC    USD   

1,000

    0.275%    06/20/09    (2 )

Russia Government International Bond

    Morgan Stanley    USD   

1,000

    0.305%    12/20/08    —  

Panama Government International Bond

    Deutsche Bank    USD   

300

    0.250%    12/20/08    —  

Lehman Brothers

    Barclays Bank PLC    USD   

800

    0.190%    09/20/08    (6 )

Lehman Brothers

    JP Morgan    USD   

500

    0.300%    09/20/08    (4 )

Indonesia Government International Bond

    JP Morgan    USD   

1,000

    0.400%    12/20/08    (3 )

Indonesia Government International Bond

    Royal Bank of Scotland    USD   

1,000

    0.437%    06/20/09    (7 )

Goldman Sachs Group, Inc.

    Barclays Bank PLC    USD   

1,300

    0.320%    09/20/08    (2 )

Goldman Sachs Group, Inc.

    Bear Stearns    USD   

500

    0.820%    09/20/12    (1 )

General Motors Corp.

    UBS    USD   

300

    8.150%    03/20/13    (16 )

General Motors Acceptance Corp.

    Lehman Brothers    USD   

700

    1.680%    09/20/08    (18 )

General Motors Acceptance Corp.

    Merrill Lynch    USD   

1,000

    1.850%    09/20/09    (129 )

GECC SP BRC

    Barclays Bank PLC    USD   

700

    1.670%    03/20/13    27  

GECC SP BPS

    BNP Paribas    USD   

1,200

    1.300%    03/20/13    27  

GECC SP BPS

    BNP Paribas    USD   

100

    1.250%    03/20/13    2  

Gaz Capital for Gazprom

    Morgan Stanley    USD   

1,400

    0.860%    11/20/11    (36 )

Ford Motor Credit Co.

    Barclays Bank PLC    USD   

2,000

    6.150%    09/20/12    (68 )

Dow Jones CDX High Volatility Index

    Citibank    USD   

500

    2.144%    06/20/12    (8 )

Dow Jones CDX High Volatility Index

    Deutsche Bank    USD   

800

    0.707%    12/20/12    19  

Countrywide Home Loans

    BNP Paribas    USD   

200

    4.400%    03/20/13    19  

CMBS AAA Index

    Morgan Stanley    USD   

1,600

    0.080%    12/13/49    (106 )

Brazilian Government International Bond

    Barclays Bank PLC    USD   

1,000

    0.290%    06/20/09    —  

Brazilian Government International Bond

    Lehman Brothers    USD   

3,200

    1.120%    11/20/11    48  

Brazilian Government International Bond

    Merrill Lynch    BRL   

100

    11.980%    01/02/12    (2 )

American International Group

    Deutsche Bank    USD   

200

    1.970%    03/20/13    9  

American International Group

    Goldman Sachs    USD   

300

    1.380%    06/20/13    5  

American International Group

    Lehman Brothers    USD   

100

    2.125%    03/20/13    5  

American International Group

    Royal Bank of Scotland    USD   

400

    1.360%    06/20/13    7  
                     

Total Market Value of Open Credit Default Swap Contracts Premiums Paid (Received) - ($233)

    (245 )
                     

 

See accompanying notes which are an integral part of the financial statements.

 

Short Duration Bond Fund   43

Table of Contents

Russell Investment Company

Short Duration Bond Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Asset-Backed Securities

    19.8  

Corporate Bonds and Notes

    24.7  

International Debt

    4.5  

Loan Agreements

    0.1  

Mortgage-Backed Securities

    38.9  

Non-US Bonds

    0.7  

United States Government Agencies

    0.2  

United States Government Treasuries

    1.6  

Preferred Stocks

    0.9  

Options Purchased

    0.2  

Short Term Investments

    10.5  

Other Securities

    1.3  
      

Total Investments

    103.4  

Other Assets and Liabilities, Net

    (3.4 )
      
   100.0  
      

Futures Contracts

    0.1  

Options Written

    (0.3 )

Foreign Currency Exchange Contracts

    (— )*

Interest Rate Swap Contracts

    (— )*

Credit Default Swap Contracts

    (0.1 )

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

44   Short Duration Bond Fund

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,013.20    $ 1,017.26

Expenses Paid During Period*

    $ 7.66    $ 7.67

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.53% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,017.00    $ 1,020.98

Expenses Paid During Period*

    $ 3.91    $ 3.92

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.78% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,018.00    $ 1,022.23

Expenses Paid During Period*

    $ 2.66    $ 2.66

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.53% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Tax Exempt Bond Fund   45

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

Municipal Bonds - 96.8%

                  

Alabama - 0.5%

                  

Courtland Industrial Development Board Revenue Bonds

    250      5.000      11/01/13      249

Mobile County Board of School Commissioners General Obligation Unlimited (m)(æ)

    375      5.000      03/01/12      399

Mobile Industrial Development Board Revenue Bonds (Ê)

    1,400      4.875      06/01/34      1,423
                   
                  2,071
                   

Alaska - 0.3%

                  

City of Anchorage Alaska General Obligation Unlimited (m)(æ)

    500      5.750      12/01/16      541

Northern TOB Securitization Corp. Revenue Bonds

    925      4.625      06/01/23      836
                   
                  1,377
                   

Arizona - 2.5%

                  

Arizona Health Facilities Authority Revenue Bonds

    2,000      5.250      01/01/22      2,073

Arizona State Transportation Board Revenue Bonds

    500      5.250      07/01/12      535

Arizona State Transportation Board Revenue Bonds

    1,500      5.000      07/01/14      1,643

Arizona Water Infrastructure Finance Authority Revenue Bonds

    1,165      5.000      10/01/21      1,254

City of Phoenix Arizona General Obligation Limited

    1,000      5.000      07/01/17      1,101

Maricopa County Pollution Control Corp. Revenue Bonds (Ê)

    1,000      2.900      06/01/35      1,002

Salt River Project Agricultural Improvement & Power District Revenue Bonds

    1,350      5.000      01/01/25      1,385

Salt River Project Agricultural Improvement & Power District Revenue Bonds

    1,365      5.000      01/01/28      1,417
                   
                  10,410
                   

California - 6.4%

                  

Abag Finance Authority for Nonprofit Corps. Certificate Of Participation

    600      5.700      08/15/14      607

California Educational Facilities Authority Revenue Bonds (Ê)(m)

    1,000      4.113      09/01/36      1,000

California State Department of Water Resources Revenue Bonds

    250      5.500      05/01/10      264

California State Department of Water Resources Revenue Bonds (m)

    1,000      5.250      05/01/12      1,086

California State Department of Water Resources Revenue Bonds

    1,000      5.000      12/01/21      1,071

California Statewide Communities Development Authority Revenue Bonds (Ê)(m)

    610      4.100      04/01/28      605

California Statewide Communities Development Authority Revenue Bonds (Ê)

    1,000      5.200      12/01/29      1,028

Golden State Tobacco Securitization Corp. Revenue Bonds (m)

    500      5.000      06/01/20      506

Golden State Tobacco Securitization Corp. Revenue Bonds (æ)

    80      5.000      06/01/21      80

Golden State Tobacco Securitization Corp. Revenue Bonds (m)

    750      4.600      06/01/23      620

Golden State Tobacco Securitization Corp. Revenue Bonds

    1,250      4.500      06/01/27      1,116

Kings River Conservation District Certificate Of Participation

    850      5.000      05/01/15      898

Roseville Westpark Community Facilities District No. 1 Special Tax

    600      5.250      09/01/37      497

Santa Clara Unified School District General Obligation Unlimited (m)

    2,895      5.000      07/01/26      2,972

Southern California Public Power Authority Revenue Bonds (m)

    405      5.375      01/01/12      439

State of California General Obligation Unlimited

    1,000      6.600      02/01/10      1,065

State of California General Obligation Unlimited

    2,050      5.000      02/01/12      2,173

State of California General Obligation Unlimited

    1,000      5.250      07/01/12      1,087

State of California General Obligation Unlimited

    550      5.000      08/01/14      590

State of California General Obligation Unlimited

    880      5.000      11/01/15      945

State of California General Obligation Unlimited, (m)

    500      5.000      03/01/17      529

 

46   Tax Exempt Bond Fund

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

State of California General Obligation Unlimited (Ê)

    1,565      5.000      07/01/23      1,653

State of California General Obligation Unlimited

    2,000      5.250      02/01/25      2,062

State of California General Obligation Unlimited (m)

    1,500      5.000      02/01/26      1,521

Tobacco Securitization Authority of Southern California Revenue Bonds

    970      4.750      06/01/25      901

University of California Revenue Bonds

    500      4.000      05/15/14      520

University of California Revenue Bonds

    300      5.000      05/15/15      330
                   
                  26,165
                   

Colorado - 1.1%

                  

Colorado Health Facilities Authority Revenue Bonds (m)(æ)

    1,000      5.500      05/15/14      1,045

Colorado Health Facilities Authority Revenue Bonds

    1,000      5.250      06/01/23      1,013

Colorado Housing & Finance Authority Revenue Bonds

    25      7.250      04/01/10      25

Colorado Housing & Finance Authority Revenue Bonds

    35      6.300      08/01/12      35

Colorado Housing & Finance Authority Revenue Bonds (Ê)

    40      6.300      08/01/16      41

Colorado Housing & Finance Authority Revenue Bonds

    20      6.700      10/01/16      20

Denver City & County Colorado General Obligation Unlimited

    1,750      5.250      08/01/18      1,957

Jefferson County School District R-001 General Obligation Unlimited (m)

    500      5.000      12/15/14      551
                   
                  4,687
                   

Connecticut - 1.2%

                  

Connecticut State Health & Educational Facility Authority Revenue Bonds (Ê)

    600      2.550      07/01/35      600

Connecticut State Health & Educational Facility Authority Revenue Bonds (Ê)

    4,500      2.650      07/01/37      4,500
                   
                  5,100
                   

Delaware - 0.1%

                  

Delaware State Economic Development Authority Revenue Bonds (Ê)(m)

    250      4.900      05/01/26      257
                   

District of Columbia - 0.5%

                  

District of Columbia General Obligation Unlimited (m)

    1,000      5.500      06/01/09      1,036

District of Columbia Revenue Bonds (m)

    1,000      5.000      02/01/12      1,047
                   
                  2,083
                   

Florida - 6.5%

                  

City of Gulf Breeze Florida Revenue Bonds (m)

    1,825      5.000      12/01/15      1,914

City of Pembroke Pines Florida Revenue Bonds (m)

    1,000      5.000      10/01/16      1,067

City of Tallahassee Florida Revenue Bonds (m)

    500      5.000      10/01/11      531

County of Hillsborough Florida Revenue Bonds

    25      6.200      12/01/08      25

County of Hillsborough Florida Revenue Bonds (m)

    1,000      5.500      08/01/12      1,086

County of Miami-Dade Florida Revenue Bonds (m)

    1,000      5.000      06/01/14      1,064

Escambia County Health Facilities Authority Revenue Bonds

    1,000      5.250      11/15/11      1,063

Escambia County Health Facilities Authority Revenue Bonds

    1,000      5.250      11/15/13      1,079

Florida Department of Childrens & Family Services Certificate Of Participation (m)

    1,175      5.000      10/01/15      1,260

Florida Hurricane Catastrophe Fund Revenue Bonds

    1,600      5.000      07/01/10      1,675

Florida State Board of Education General Obligation Unlimited

    1,000      5.000      06/01/16      1,094

Florida State Board of Education Revenue Bonds (m)

    1,000      5.250      01/01/13      1,076

Florida State Division of Bond Finance Revenue Bonds (m)

    1,600      5.250      07/01/13      1,653

Florida State Turnpike Authority Revenue Bonds (m)

    2,000      5.000      07/01/13      2,146

 

Tax Exempt Bond Fund   47

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		                  Rate
            %		      Date
of
Maturity		      Market
Value
$
                 

Florida Water Pollution Control Financing Corp. Revenue Bonds

    500      5.500      01/15/12      536

Hillsborough County Educational Facilities Authority Revenue Revenue Bonds (m)

    720      5.750      04/01/18      741

Miami-Dade County Educational Facilities Authority Revenue Bonds (m)(æ)

    1,750      5.000      04/01/34      1,914

Miami-Dade County School Board Certificate Of Participation (m)

    1,000      5.000      05/01/15      1,057

North Miami Florida Revenue Bonds (m)

    1,325      5.000      04/01/10      1,375

Orlando Utilities Commission Revenue Bonds (æ)

    630      5.250      10/01/20      686

Orlando Utilities Commission Revenue Bonds

    370      5.250      10/01/20      388

Palm Beach County School Board Certificate Of Participation (m)

    1,000      5.000      08/01/14      1,073

Palm Glades Community Development District Special Assessment

    845      4.850      08/01/11      797

Tampa-Hillsborough County Expressway Authority Revenue Bonds (m)

    1,000      5.000      07/01/14      1,072
                   
                  26,372
                   

Georgia - 4.2%

                  

Burke County Development Authority Revenue Bonds (Ê)(m)

    1,660      4.625      01/01/37      1,656

County of Fulton Georgia Revenue Bonds (m)

    1,500      5.250      01/01/35      1,536

Dalton Georgia Revenue Bonds (m)

    500      5.750      01/01/09      512

Georgia State Road & Tollway Authority Revenue Bonds

    590      5.250      03/01/11      631

Gwinnett County School District General Obligation Unlimited

    1,750      5.000      02/01/11      1,855

Hall County School District General Obligation Unlimited

    1,000      5.000      11/01/12      1,082

Main Street Natural Gas, Inc. Revenue Bonds

    825      5.000      03/15/16      830

Marietta Housing Authority Revenue Bonds (Ê)

    200      2.360      07/01/24      200

Municipal Electric Authority of Georgia Revenue Bonds (m)

    850      6.250      01/01/17      1,004

State of Georgia General Obligation Unlimited

    1,000      5.750      08/01/08      1,009

State of Georgia General Obligation Unlimited

    600      6.500      12/01/09      639

State of Georgia General Obligation Unlimited

    1,550      5.000      08/01/12      1,678

State of Georgia General Obligation Unlimited

    1,500      5.000      04/01/13      1,634

State of Georgia General Obligation Unlimited

    2,800      5.000      07/01/13      3,059
                   
                  17,325
                   

Hawaii - 0.9%

                  

City & County of Honolulu Hawaii Revenue Bonds (m)

    1,500      5.000      07/01/19      1,629

Hawaii Housing & Community Development Corp. Revenue Bonds

    420      3.700      01/01/22      409

Kauai County Hawaii General Obligation Unlimited (m)(æ)

    375      6.250      08/01/19      407

State of Hawaii General Obligation Unlimited (m)

    1,000      5.750      01/01/10      1,051
                   
                  3,496
                   

Idaho - 0.7%

                  

Boise State University Revenue Bonds (m)(æ)

    1,230      5.375      04/01/22      1,338

Boise State University Revenue Bonds (m)

    20      5.375      04/01/22      21

Idaho Housing & Finance Association Revenue Bonds (m)

    1,330      5.250      07/15/21      1,432
                   
                  2,791
                   

Illinois - 2.6%

                  

City of Chicago Illinois General Obligation Unlimited (m)

    750      6.000      01/01/11      796

City of Chicago Illinois General Obligation Unlimited (m)

    2,135      5.000      12/01/23      2,218

Cook County Community Consolidated School District No. 15-Palatine General Obligation Limited (m)

    2,235      Zero Coupon      12/01/13      1,804

 

48   Tax Exempt Bond Fund

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                

County of Cook Illinois General Obligation Unlimited (m)(æ)

   2,160      5.375      11/15/21      2,325

Illinois Finance Authority Revenue Bonds (m)

   400      Zero coupon      01/01/10      382

Illinois Finance Authority Revenue Bonds

   670      5.500      10/01/12      722

Illinois Finance Authority Revenue Bonds

   470      5.000      04/01/36      431

Illinois Health Facilities Authority Revenue Bonds

   295      6.000      05/15/10      298

Lake County Community Unit School District No. 116-Round Lake General Obligation Unlimited (m)

   400      7.600      02/01/14      492

State of Illinois Revenue Bonds (m)

   1,000      5.000      06/15/16      1,091
                  
                 10,559
                  

Indiana - 2.0%

                 

Ball State University Revenue Bonds (m)

   1,000      5.000      07/01/16      1,098

Columbus Multi School Building Corp. Indiana Revenue Bonds (m)

   450      5.000      01/10/10      469

Indiana Bond Bank Revenue Bonds (m)

   250      5.750      08/01/13      263

Indiana Health Facility Financing Authority Revenue Bonds

   1,000      5.500      11/15/10      1,064

Indiana Health Facility Financing Authority Revenue Bonds (Ê)

   1,000      5.000      11/01/11      1,054

Indiana State Finance Authority Revenue Bonds (m)

   925      5.000      07/01/11      981

Indiana State Finance Authority Revenue Bonds

   1,500      5.250      02/01/18      1,674

Indiana University Revenue Bonds (æ)

   500      5.750      08/01/10      526

Indianapolis Local Public Improvement Bond Bank Revenue Bonds

   1,000      5.000      02/01/18      1,094
                  
                 8,223
                  

Iowa - 0.6%

                 

Iowa Finance Authority Revenue Bonds

   290      6.000      07/01/10      306

Iowa Finance Authority Revenue Bonds (m)

   1,000      5.000      07/01/14      990

Tobacco Settlement Authority of Iowa Revenue Bonds (æ)

   1,000      5.600      06/01/35      1,087
                  
                 2,383
                  

Kansas - 0.4%

                 

Butler & Sedgwick Counties Unified School District No. 385 Andover General Obligation Unlimited (m)

   500      5.000      09/01/09      517

Kansas Development Finance Authority Revenue Bonds (m)

   150      5.000      08/01/10      158

Kansas Development Finance Authority Revenue Bonds (m)

   230      5.000      08/01/13      252

Wyandotte County-Kansas City Unified Government Revenue Bonds

   305      4.750      12/01/16      302

Wyandotte County-Kansas City Unified Government Transportation Development Dist Revenue Bonds

   720      4.875      10/01/28      619
                  
                 1,848
                  

Louisiana - 0.2%

                 

Louisiana Offshore Terminal Authority Revenue Bonds (Ê)

   1,000      4.000      09/01/23      1,005
                  

Maryland - 3.1%

                 

Maryland Health & Higher Educational Facilities Authority Revenue Bonds

   1,000      5.400      01/01/31      907

Maryland State Transportation Authority Revenue Bonds

   1,000      5.000      03/01/16      1,100

State of Maryland General Obligation Unlimited

   2,000      5.000      02/01/12      2,149

State of Maryland General Obligation Unlimited

   2,500      5.250      03/01/13      2,748

State of Maryland General Obligation Unlimited

   1,000      5.500      03/01/14      1,124

State of Maryland General Obligation Unlimited

   1,500      5.000      08/01/14      1,654

 

Tax Exempt Bond Fund   49

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

State of Maryland General Obligation Unlimited

    1,000      5.000      03/15/17      1,108

State of Maryland General Obligation Unlimited

    1,895      5.000      03/15/19      2,065
                   
                  12,855
                   

Massachusetts - 4.9%

                  

Commonwealth of Massachusetts General Obligation Limited (æ)

    430      6.000      02/01/11      459

Commonwealth of Massachusetts General Obligation Limited

    2,000      5.000      07/01/12      2,150

Commonwealth of Massachusetts General Obligation Limited

    1,000      5.500      11/01/15      1,131

Commonwealth of Massachusetts General Obligation Limited (æ)

    1,000      5.750      10/01/19      1,072

Commonwealth of Massachusetts General Obligation Limited (m)(æ)

    1,000      5.250      01/01/22      1,084

Commonwealth of Massachusetts General Obligation Unlimited

    4,000      5.250      08/01/13      4,394

Commonwealth of Massachusetts General Obligation Unlimited

    1,000      5.500      10/01/16      1,135

Commonwealth of Massachusetts General Obligation Unlimited (Ê)

    2,000      2.570      03/01/26      2,000

Massachusetts Development Finance Agency Revenue Bonds

    100      5.125      12/01/11      102

Massachusetts Development Finance Agency Revenue Bonds

    50      5.150      10/01/14      52

Massachusetts Development Finance Agency Revenue Bonds

    1,500      5.000      10/01/17      1,529

Massachusetts Port Authority Revenue Bonds

    150      5.750      07/01/10      160

Massachusetts School Building Authority Revenue Bonds (m)

    750      5.000      08/15/13      814

Massachusetts State Water Pollution Abatement Revenue Bonds

    1,090      5.000      08/01/16      1,200

Massachusetts Water Resources Authority Revenue Bonds (m)(æ)

    1,425      5.500      08/01/20      1,553

University of Massachusetts Building Authority Revenue Bonds (m)(æ)

    1,000      5.250      11/01/16      1,110
                   
                  19,945
                   

Michigan - 1.9%

                  

Bishop International Airport Authority Revenue Bonds (m)

    750      5.000      12/01/10      779

Detroit Michigan Revenue Bonds (m)

    1,000      5.000      07/01/14      1,087

Detroit Michigan Revenue Bonds (m)

    1,015      5.000      07/01/18      1,094

Kent Hospital Finance Authority Revenue Bonds (Ê)

    500      5.250      01/15/47      519

Michigan Municipal Bond Authority Revenue Bonds

    1,000      5.250      10/01/11      1,078

Michigan Municipal Bond Authority Revenue Bonds (æ)

    500      5.750      10/01/11      543

Michigan State Hospital Finance Authority Revenue Bonds

    1,000      5.500      11/01/14      1,066

Michigan State Hospital Finance Authority Revenue Bonds (m)(æ)

    1,000      6.125      11/15/26      1,064

Michigan State Housing Development Authority Revenue Bonds (m)

    375      4.150      10/01/13      377
                   
                  7,607
                   

Minnesota - 1.5%

                  

State of Minnesota General Obligation Unlimited

    2,500      5.000      06/01/10      2,632

State of Minnesota General Obligation Unlimited

    1,425      5.000      11/01/11      1,533

State of Minnesota General Obligation Unlimited

    545      5.000      06/01/14      599

State of Minnesota General Obligation Unlimited

    1,000      5.000      08/01/15      1,106

State of Minnesota Revenue Bonds

    360      5.875      06/01/27      373
                   
                  6,243
                   

Mississippi - 0.3%

                  

Mississippi Development Bank Special Obligation Revenue Bonds (m)

    1,000      5.000      07/01/15      1,087
                   

 

50   Tax Exempt Bond Fund

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

Missouri - 0.9%

                  

City of State Louis Missouri Revenue Bonds (m)

    1,000      5.250      07/01/11      1,066

City of State Louis Missouri Revenue Bonds (m)

    1,000      5.000      07/01/14      1,081

Joplin Industrial Development Authority Revenue Bonds

    270      5.500      02/15/13      284

Missouri Development Finance Board Revenue Bonds

    1,150      5.000      03/01/28      1,119

Southeast Missouri State University Revenue Bonds (m)

    250      5.625      04/01/10      264
                   
                  3,814
                   

Montana - 0.8%

                  

City of Forsyth Montana Revenue Bonds (Ê)

    1,450      5.200      05/01/33      1,462

Montana Department of Transportation Revenue Bonds (m)

    1,750      5.250      06/01/16      1,925
                   
                  3,387
                   

Nevada - 0.5%

                  

Clark County School District General Obligation Limited (m)(æ)

    330      5.250      06/15/10      341

County of Clark Nevada General Obligation Limited (m)

    1,000      5.000      11/01/13      1,087

Truckee Meadows Water Authority Revenue Bonds (m)

    500      5.500      07/01/11      541
                   
                  1,969
                   

New Jersey - 2.5%

                  

New Jersey Economic Development Authority Revenue Bonds

    1,000      5.000      09/01/12      1,073

New Jersey Economic Development Authority Revenue Bonds

    1,000      5.250      03/01/14      1,086

New Jersey Economic Development Authority Revenue Bonds

    1,020      5.375      06/15/15      1,016

New Jersey Health Care Facilities Financing Authority Revenue Bonds (m)

    1,000      5.000      09/15/17      1,085

New Jersey Health Care Facilities Financing Authority Revenue Bonds

    500      5.250      07/01/25      510

New Jersey State Educational Facilities Authority Revenue Bonds

    1,000      5.750      09/01/10      1,064

New Jersey State Turnpike Authority Revenue Bonds (m)

    500      5.500      01/01/09      511

New Jersey Transportation Trust Fund Authority Revenue Bonds (æ)

    1,000      5.500      06/15/18      1,115

Tobacco Settlement Financing Corp. Revenue Bonds

    1,000      5.500      06/01/11      1,078

Tobacco Settlement Financing Corp. Revenue Bonds (æ)

    210      4.375      06/01/19      210

Tobacco Settlement Financing Corp. Revenue Bonds

    1,405      4.500      06/01/23      1,276
                   
                  10,024
                   

New York - 8.6%

                  

Battery Park City Authority Revenue Bonds

    1,500      5.250      11/01/22      1,605

City of New York New York General Obligation Unlimited

    500      5.000      08/01/10      525

City of New York New York General Obligation Unlimited

    1,000      5.250      08/01/10      1,055

City of New York New York General Obligation Unlimited

    1,500      5.000      08/01/11      1,591

City of New York New York General Obligation Unlimited

    125      5.750      08/01/11      133

City of New York New York General Obligation Unlimited

    850      5.000      03/01/12      904

City of New York New York General Obligation Unlimited

    750      5.000      11/01/12      804

City of New York New York General Obligation Unlimited

    235      5.250      11/01/12      252

City of New York New York General Obligation Unlimited (m)

    1,000      5.000      08/01/14      1,082

City of New York New York General Obligation Unlimited (m)

    1,000      5.000      08/01/17      1,064

City of New York New York General Obligation Unlimited

    1,500      5.000      08/01/21      1,548

City of New York New York General Obligation Unlimited

    2,000      5.000      04/01/23      2,073

Long Island Power Authority Revenue Bonds (m)

    1,250      5.000      12/01/23      1,280

Metropolitan Transportation Authority Revenue Bonds

    1,000      5.000      11/15/18      1,076

 

Tax Exempt Bond Fund   51

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

New York City Municipal Water Finance Authority Revenue Bonds

    1,500      5.250      06/15/12      1,630

New York City Transitional Finance Authority Revenue Bonds

    1,000      5.500      02/01/09      1,027

New York Mortgage Agency Revenue Bonds

    415      5.150      04/01/17      421

New York State Dormitory Authority Revenue Bonds (m)

    560      7.000      07/01/09      575

New York State Dormitory Authority Revenue Bonds

    1,000      6.500      12/01/21      1,049

New York State Dormitory Authority Revenue Bonds (Ê)

    2,000      5.250      11/15/23      2,135

New York State Environmental Facilities Corp. Revenue Bonds (m)

    1,000      6.000      06/15/12      1,114

New York State Thruway Authority Revenue Bonds (m)

    1,575      5.250      04/01/13      1,716

New York State Thruway Authority Revenue Bonds

    1,500      5.000      04/01/14      1,637

Sales Tax Asset Receivables Corp. Revenue Bonds (m)

    1,000      5.000      10/15/29      1,027

Suffolk County Judicial Facilities Agency Revenue Bonds (m)

    500      5.500      04/15/09      514

Tobacco Settlement Financing Authority Revenue Bonds

    1,030      5.000      06/01/12      1,074

Triborough Bridge & Tunnel Authority Revenue Bonds

    950      5.000      11/15/17      1,048

Triborough Bridge & Tunnel Authority Revenue Bonds (Ê)

    2,250      5.000      11/15/25      2,393

Triborough Bridge & Tunnel Authority Revenue Bonds (Ê)

    900      5.000      11/15/38      962

TSASC, Inc. Revenue Bonds

    1,075      4.750      06/01/22      1,013

United Nations Development Corp. Revenue Bonds

    1,000      5.000      07/01/11      1,002
                   
                  35,329
                   

North Carolina - 1.7%

                  

Mecklenburg County North Carolina General Obligation Unlimited

    1,000      5.000      02/01/11      1,061

North Carolina Eastern Municipal Power Agency Revenue Bonds

    250      5.500      01/01/10      259

North Carolina Medical Care Commission Revenue Bonds

    500      5.400      10/01/27      483

North Carolina Municipal Power Agency No. 1 Catawba Revenue Bonds (m)

    1,500      6.000      01/01/12      1,634

North Carolina Municipal Power Agency No. 1 Catawba Revenue Bonds

    200      5.500      01/01/13      216

State of North Carolina General Obligation Unlimited

    1,000      5.000      03/01/12      1,076

State of North Carolina General Obligation Unlimited

    900      5.000      06/01/14      991

University of North Carolina Revenue Bonds (æ)

    1,065      5.375      12/01/14      1,147
                   
                  6,867
                   

North Dakota - 0.2%

                  

County of Williams North Dakota Revenue Bonds

    750      5.000      11/01/31      687
                   

Ohio - 2.1%

                  

Buckeye Tobacco Settlement Financing Authority Revenue Bonds

    2,300      5.125      06/01/24      2,159

City of Columbus Ohio General Obligation Limited

    585      5.250      01/01/11      623

Ohio State Higher Educational Facility Commission Revenue Bonds

    1,000      5.000      12/01/09      1,035

State of Ohio General Obligation Unlimited

    2,700      5.000      06/15/13      2,935

State of Ohio General Obligation Unlimited

    1,500      5.000      09/15/14      1,646
                   
                  8,398
                   

Oklahoma - 0.8%

                  

Oklahoma Development Finance Authority Revenue Bonds (æ)

    1,000      5.750      08/15/13      1,049

Oklahoma Development Finance Authority Revenue Bonds

    275      5.000      10/01/13      287

Oklahoma Development Finance Authority Revenue Bonds

    1,000      5.000      02/15/16      1,034

Oklahoma Housing Finance Agency Revenue Bonds

    40      7.600      09/01/15      41

Tulsa Industrial Authority Revenue Bonds

    740      5.000      10/01/37      717
                   
                  3,128
                   

 

52   Tax Exempt Bond Fund

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

Oregon - 1.3%

                  

City of Portland Oregon Revenue Bonds

    2,000      5.000      06/15/18      2,186

Clackamas County School Distrist No. 62C Oregon City General Obligation
Unlimited (æ)

    435      6.000      06/15/11      467

Oregon State Department of Administrative Services Revenue Bonds (m)

    750      5.250      04/01/10      777

Oregon State Department of Transportation Revenue Bonds

    1,000      5.000      11/15/13      1,094

State of Oregon General Obligation Limited

    630      5.700      10/01/32      637
                   
                  5,161
                   

Pennsylvania - 3.9%

                  

Allegheny County Hospital Development Authority Revenue Bonds

    2,000      5.000      09/01/16      2,111

Allegheny County Industrial Development Authority Revenue Bonds (Ê)(m)

    600      2.380      10/01/25      600

Allegheny County Port Authority Revenue Bonds (m)

    250      5.500      03/01/17      261

Berks County Vocational Technical School Authority Revenue Bonds (m)

    1,260      5.000      06/01/15      1,378

Commonwealth of Pennsylvania General Obligation Unlimited

    2,000      5.000      08/01/13      2,175

Commonwealth of Pennsylvania General Obligation Unlimited

    2,500      5.500      01/01/14      2,787

Commonwealth of Pennsylvania General Obligation Unlimited (m)

    1,300      5.375      07/01/17      1,474

County of Allegheny Pennsylvania General Obligation Unlimited (m)

    1,000      5.000      10/01/15      1,103

Erie County Industrial Development Authority Revenue Bonds

    180      5.300      04/01/12      182

Norwin School District General Obligation Unlimited (m)(æ)

    250      6.000      04/01/20      267

Pennsylvania State University Revenue Bonds

    840      5.000      08/15/17      924

Pennsylvania Turnpike Commission Revenue Bonds (m)

    1,450      5.500      12/01/13      1,606

Sayre Health Care Facilities Authority Revenue Bonds (æ)

    475      5.300      12/01/12      504

University of Pittsburgh Revenue Bonds (Ê)

    400      2.310      09/15/28      400
                   
                  15,772
                   

Puerto Rico - 5.1%

                  

Commonwealth of Puerto Rico General Obligation Unlimited

    750      5.250      07/01/15      779

Commonwealth of Puerto Rico General Obligation Unlimited (m)

    1,060      5.000      07/01/16      1,130

Commonwealth of Puerto Rico General Obligation Unlimited

    1,000      5.500      07/01/18      1,048

Commonwealth of Puerto Rico General Obligation Unlimited

    1,780      5.250      07/01/22      1,791

Commonwealth of Puerto Rico General Obligation Unlimited

    205      5.250      07/01/26      203

Commonwealth of Puerto Rico General Obligation Unlimited (m)

    1,000      5.250      07/01/27      1,020

Commonwealth of Puerto Rico General Obligation Unlimited (æ)

    620      5.250      07/01/32      700

Commonwealth of Puerto Rico General Obligation Unlimited

    380      5.250      07/01/32      372

Government Development Bank for Puerto Rico Revenue Bonds

    3,250      5.000      12/01/09      3,328

Puerto Rico Convention Center Authority Revenue Bonds (m)

    1,250      5.000      07/01/31      1,235

Puerto Rico Electric Power Authority Revenue Bonds

    500      5.000      07/01/08      502

Puerto Rico Electric Power Authority Revenue Bonds (m)

    500      5.500      07/01/17      540

Puerto Rico Highway & Transportation Authority Revenue Bonds

    2,000      5.000      07/01/13      2,054

Puerto Rico Public Buildings Authority Revenue Bonds

    500      5.750      07/01/16      536

Puerto Rico Public Buildings Authority Revenue Bonds (æ)

    2,000      5.500      07/01/23      2,221

Puerto Rico Public Finance Corp. Revenue Bonds (Ê)(m)

    3,250      5.750      08/01/27      3,363
                   
                  20,822
                   

Rhode Island - 0.3%

                  

Rhode Island Economic Development Corp. Revenue Bonds (m)

    1,000      5.000      06/15/12      1,062
                   

 

Tax Exempt Bond Fund   53

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

South Carolina - 1.5%

                  

Greenville County School District Revenue Bonds

    1,000      5.000      12/01/11      1,067

Orangeburg Joint Governmental Action Authority Revenue Bonds (m)

    1,050      5.000      10/01/09      1,080

Richland-Lexington Airport District Revenue Bonds (m)

    500      5.000      01/01/09      508

Richland-Lexington Airport District Revenue Bonds (m)

    440      5.000      01/01/10      455

South Carolina State Public Service Authority Revenue Bonds (m)

    375      5.500      01/01/11      395

South Carolina Transportation Infrastructure Bank Revenue Bonds (m)(æ)

    2,500      5.250      10/01/31      2,703
                   
                  6,208
                   

South Dakota - 0.4%

                  

South Dakota Housing Development Authority Revenue Bonds

    340      4.800      05/01/22      330

South Dakota State Building Authority Revenue Bonds (m)

    1,330      5.000      09/01/12      1,436
                   
                  1,766
                   

Tennessee - 1.5%

                  

Clarksville Natural Gas Acquisition Corp. Revenue Bonds (m)

    1,000      5.000      12/15/14      992

Memphis-Shelby County Airport Authority Revenue Bonds

    2,160      5.050      09/01/12      2,191

Metropolitan Government Nashville & Davidson County Health & Educational Facs Bd Revenue Bonds

    1,000      5.000      10/01/18      1,093

Tennessee Energy Acquisition Corp. Revenue Bonds

    1,000      5.000      02/01/16      1,001

Tennessee Housing Development Agency Revenue Bonds

    950      5.375      01/01/18      967
                   
                  6,244
                   

Texas - 14.5%

                  

Alvin Independent School District General Obligation Unlimited

    515      6.750      08/15/09      544

Alvin Independent School District General Obligation Unlimited

    545      6.750      08/15/10      595

Boerne Independent School District General Obligation Unlimited

    1,380      5.250      02/01/27      1,432

Boerne Independent School District General Obligation Unlimited

    1,500      5.250      02/01/29      1,551

Canadian River Municipal Water Authority Revenue Bonds (m)

    800      5.000      02/15/17      862

Canadian River Municipal Water Authority Revenue Bonds (m)

    415      5.000      02/15/18      443

City of Austin Texas Revenue Bonds (m)

    1,000      5.250      11/15/14      1,096

City of Dallas Texas Revenue Bonds (m)

    1,000      4.875      08/15/23      1,008

City of Dallas Texas Revenue Bonds (m)

    3,500      5.000      10/01/24      3,532

City of San Antonio Texas Revenue Bonds

    1,000      5.250      02/01/13      1,092

City of San Antonio Texas Revenue Bonds

    1,000      5.000      02/01/14      1,089

Conroe Independent School District General Obligation Unlimited

    1,445      5.000      02/15/13      1,562

County of Fort Bend Texas General Obligation Limited (m)

    1,000      5.000      03/01/16      1,093

County of Harris Texas General Obligation Limited

    1,435      5.250      08/15/09      1,489

County of Harris Texas Revenue Bonds (Ê)(m)

    1,500      5.000      08/15/21      1,547

County of Harris Texas Revenue Bonds (m)(æ)

    1,000      5.250      08/15/35      1,062

Dallas Independent School District General Obligation Unlimited

    2,100      5.000      02/15/14      2,289

Fort Worth Independent School District General Obligation Unlimited

    2,000      5.000      02/15/18      2,189

Grand Prairie Independent School District General Obligation Unlimited

    750      5.000      02/15/19      807

Midlothian Development Authority Tax Allocation (m)

    500      5.000      11/15/09      513

New Braunfels Texas General Obligation Limited (m)(æ)

    665      5.250      10/01/21      742

North East Independent School District General Obligation Unlimited

    1,000      5.000      08/01/18      1,089

North East Independent School District General Obligation Unlimited (m)(æ)

    1,000      5.000      08/01/33      1,099

 

54   Tax Exempt Bond Fund

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$
                 

North Harris Montgomery Community College District General Obligation Limited (m)

    1,000      5.000      02/15/12      1,065

North Texas Municipal Water District Revenue Bonds (m)

    2,000      5.000      09/01/13      2,154

North Texas Tollway Authority Revenue Bonds (Ê)(m)(æ)

    15      5.000      01/01/18      15

North Texas Tollway Authority Revenue Bonds (Ê)(m)(æ)

    985      5.000      01/01/18      990

North Texas Tollway Authority Revenue Bonds

    2,000      6.000      01/01/24      2,163

North Texas Tollway Authority Revenue Bonds (Ê)

    1,235      5.750      01/01/38      1,300

Port of Corpus Christi Authority of Nueces County Texas Revenue Bonds

    385      5.350      11/01/10      388

Round Rock Independent School District General Obligation Unlimited

    1,000      6.500      08/01/10      1,085

Round Rock Independent School District General Obligation Unlimited (æ)

    750      6.500      08/01/11      816

Round Rock Independent School District General Obligation Unlimited

    430      5.375      08/01/12      470

SA Energy Acquisition Public Facility Corp. Revenue Bonds

    1,500      5.250      08/01/15      1,526

Sabine River Authority Revenue Bonds

    1,500      5.200      05/01/28      1,108

San Antonio Independent School District General Obligation Unlimited (æ)

    1,000      5.500      08/15/24      1,040

Spring Independent School District General Obligation Unlimited

    1,000      5.000      08/15/16      1,101

State of Texas General Obligation Unlimited

    1,750      5.000      04/01/19      1,893

State of Texas General Obligation Unlimited

    1,500      5.000      04/01/24      1,562

Texas A&M University Revenue Bonds

    1,000      5.000      07/01/08      1,005

Texas A&M University Revenue Bonds

    3,855      5.000      05/15/19      4,181

Texas Municipal Gas Acquisition & Supply Corp. I Revenue Bonds

    1,000      5.000      12/15/11      1,004

Texas Municipal Gas Acquisition & Supply Corp. I Revenue Bonds

    1,000      5.000      12/15/13      997

Texas State Transportation Commission Revenue Bonds

    1,000      5.000      04/01/18      1,085

Tyler Independent School District General Obligation Unlimited

    1,350      5.000      02/15/10      1,409

University of Houston Revenue Bonds (m)(æ)

    2,000      5.500      02/15/30      2,106
                   
                  59,188
                   

Utah - 0.4%

                  

County of Utah Utah Revenue Bonds

    200      5.050      11/01/17      205

Intermountain Power Agency Revenue Bonds (m)

    1,400      6.500      07/01/10      1,513
                   
                  1,718
                   

Virgin Islands - 0.7%

                  

Virgin Islands Public Finance Authority Revenue Bonds

    200      5.000      10/01/13      206

Virgin Islands Public Finance Authority Revenue Bonds

    2,500      5.500      10/01/14      2,535
                   
                  2,741
                   

Virginia - 1.4%

                  

Chesapeake Economic Development Authority Revenue Bonds (Ê)

    550      3.600      02/01/32      534

County of Fairfax Virginia General Obligation Unlimited

    1,750      5.250      04/01/14      1,947

University of Virginia Revenue Bonds

    1,295      5.000      06/01/20      1,360

University of Virginia Revenue Bonds

    1,495      5.000      06/01/21      1,563

Virginia Commonwealth Transportation Board Revenue Bonds

    360      5.375      05/15/12      385
                   
                  5,789
                   

Washington - 3.8%

                  

County of King Washington Revenue Bonds (m)

    1,625      5.000      01/01/14      1,760

Energy Northwest Revenue Bonds

    1,000      7.000      07/01/08      1,008

Energy Northwest Revenue Bonds

    1,000      5.000      07/01/11      1,062

 

Tax Exempt Bond Fund   55

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity		      Market
Value
$		  
                 

Energy Northwest Revenue Bonds

    1,000      5.000      07/01/14      1,087  

Energy Northwest Revenue Bonds

    1,000      7.125      07/01/16      1,243  

King County Public Hospital District No. 2 General Obligation Limited (m)

    1,000      5.000      12/01/19      1,055  

King County School District No. 405 Bellevue General Obligation Unlimited (m)

    1,000      5.000      12/01/14      1,097  

Kitsap County Washington General Obligation Limited (m)(æ)

    775      5.750      07/01/14      829  

Mason County School District No. 309 Shelton General Obligation Unlimited (m)

    1,115      5.000      12/01/18      1,210  

State of Washington General Obligation Unlimited

    1,780      5.000      07/01/16      1,952  

State of Washington General Obligation Unlimited

    1,500      5.000      01/01/20      1,511  

Tobacco Settlement Authority of Washington Revenue Bonds

    835      6.500      06/01/26      854  

Washington Higher Education Facilities Authority Revenue Bonds (m)

    1,000      5.000      11/01/13      1,059  
                     
                  15,727  
                     
Wisconsin - 1.5%                  

City of Madison Wisconsin Revenue Bonds

    280      4.875      10/01/27      295  

Oconto Falls Public School District General Obligation Unlimited (m)(æ)

    750      5.750      03/01/13      812  

State of Wisconsin Certificate Of Participation (m)

    2,825      5.000      03/01/11      2,986  

Wisconsin Health & Educational Facilities Authority Revenue Bonds (m)

    1,425      5.000      12/01/10      1,509  

Wisconsin Health & Educational Facilities Authority Revenue Bonds

    210      5.250      05/01/12      217  

Wisconsin Health & Educational Facilities Authority Revenue Bonds

    220      5.250      05/01/13      227  
                     
                  6,046  
                     
Total Municipal Bonds (cost $394,044)                   395,736  
                     
Short-Term Investments - 3.3%                  

Russell Investment Company Money Market Fund

    13,454,000                13,454  
                     
Total Short-Term Investments (cost $13,454)                   13,454  
                     
Total Investments - 100.1% (identified cost $407,498)                   409,190  
Other Assets and Liabilities, Net - (0.1%)                   (529 )
                     
Net Assets - 100%                   408,661  
                     

 

See accompanying notes which are an integral part of the financial statements.

 

56   Tax Exempt Bond Fund

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     %
  
Quality Ratings as a % of Value     

AAA

    42

AA

    32

A

    14

BBB

    11

BB

    1
    
   100
    
Economic Sector Emphasis as a % of Value     

General Obligation

    35

Utility Revenue

    13

Other Revenue

    12

Industrial Revenue

    10

Cash Equivalents

    10

Education Revenue

    8

Healthcare Revenue

    6

Pollution Control Revenue

    2

Leasing Revenue

    2

Housing Revenue

    2

Refunded and Special Obligations

    —
    
   100
    

 

See accompanying notes which are an integral part of the financial statements.

 

Tax Exempt Bond Fund   57

Table of Contents

Russell Investment Company

Tax Exempt Bond Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Alabama

    0.5  

Alaska

    0.3  

Arizona

    2.5  

California

    6.4  

Colorado

    1.1  

Connecticut

    1.2  

Delaware

    0.1  

District of Columbia

    0.5  

Florida

    6.5  

Georgia

    4.2  

Hawaii

    0.9  

Idaho

    0.7  

Illinois

    2.6  

Indiana

    2.0  

Iowa

    0.6  

Kansas

    0.4  

Louisiana

    0.2  

Maryland

    3.1  

Massachusetts

    4.9  

Michigan

    1.9  

Minnesota

    1.5  

Mississippi

    0.3  

Missouri

    0.9  

Montana

    0.8  

Nevada

    0.5  

New Jersey

    2.5  

New York

    8.6  

North Carolina

    1.7  

North Dakota

    0.2  

Ohio

    2.1  

Oklahoma

    0.8  

Oregon

    1.3  

Pennsylvania

    3.9  

Puerto Rico

    5.1  

Rhode Island

    0.3  

South Carolina

    1.5  

South Dakota

    0.4  

Tennessee

    1.5  

Texas

    14.5  

Utah

    0.4  

Virgin Islands

    0.7  

Virginia

    1.4  

Washington

    3.8  

Wisconsin

    1.5  

Short-Term Investments

    3.3  
      

Total Investments

    100.1  

Other Assets and Liabilities, Net

    (0.1 )
      
   100.0  
      

 

See accompanying notes which are an integral part of the financial statements.

 

58   Tax Exempt Bond Fund

Table of Contents

Russell Investment Company

Tax-Managed Large Cap Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 881.00    $ 1,015.37

Expenses Paid During Period*

    $ 8.93    $ 9.57

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.91% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 884.40    $ 1,019.10

Expenses Paid During Period*

    $ 5.43    $ 5.82

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.16% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 885.80    $ 1,020.34

Expenses Paid During Period*

    $ 4.27    $ 4.57

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.91% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Tax-Managed Large Cap Fund   59

Table of Contents

Russell Investment Company

Tax-Managed Large Cap Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 93.7%

        

Auto and Transportation - 2.0%

        

Burlington Northern Santa Fe Corp.

    4,200      431

CSX Corp.

    24,600      1,549

Expeditors International of Washington, Inc. (Ñ)

    45,400      2,115

Norfolk Southern Corp. (Ñ)

    44,900      2,675

PACCAR, Inc.

    10,800      511

Union Pacific Corp.

    10,230      1,485

United Parcel Service, Inc. Class B

    35,590      2,577
         
        11,343
         

Consumer Discretionary - 13.7%

     

Abercrombie & Fitch Co. Class A

    9,300      691

Activision, Inc. (Æ)

    59,640      1,613

Advance Auto Parts, Inc.

    8,500      295

Allied Waste Industries, Inc. (Æ)

    193,044      2,386

Amazon.com, Inc. (Æ)(Ñ)

    75,900      5,968

CBS Corp. Class B

    38,900      897

Chipotle Mexican Grill, Inc. Class A (Æ)(Ñ)

    9,630      945

Citadel Broadcasting Corp. (Ñ)

    103,176      140

Dick’s Sporting Goods, Inc. (Æ)(Ñ)

    15,800      452

eBay, Inc. (Æ)

    25,100      785

Electronic Arts, Inc. Series C (Æ)

    3,400      175

Focus Media Holding, Ltd. - ADR (Æ)(Ñ)

    21,230      783

GameStop Corp. Class A (Æ)

    28,410      1,564

Gemstar-TV Guide International, Inc. (Æ)

    1,796      7

Google, Inc. Class A (Æ)

    23,080      13,255

Guess ?, Inc. (Ñ)

    30,510      1,168

Hanesbrands, Inc. (Æ)(Ñ)

    54,100      1,895

International Game Technology

    9,300      323

Iron Mountain, Inc. (Æ)

    40,250      1,106

JC Penney Co., Inc. (Ñ)

    43,600      1,853

Kimberly-Clark Corp.

    10,400      666

Kohl’s Corp. (Æ)

    8,200      401

Las Vegas Sands Corp. (Æ)(Ñ)

    60,000      4,573

Lowe’s Cos., Inc.

    109,900      2,768

McDonald’s Corp.

    37,900      2,258

News Corp. Class A

    98,500      1,763

Nike, Inc. Class B

    25,600      1,710

Nordstrom, Inc. (Ñ)

    52,470      1,850

priceline.com, Inc. (Æ)(Ñ)

    10,480      1,338

Staples, Inc.

    24,000      521

Starbucks Corp. (Æ)

    202,100      3,280
     Principal
Amount ($)
or Shares		      Market
Value
$

Starwood Hotels & Resorts Worldwide, Inc. (ö)

    13,500      705

Target Corp.

    14,900      792

Tim Hortons, Inc. (Ñ)

    2,573      88

Time Warner, Inc.

    143,275      2,128

VeriSign, Inc. (Æ)(Ñ)

    29,620      1,068

VF Corp.

    3,200      238

Wal-Mart Stores, Inc.

    97,500      5,653

Walt Disney Co. (The) (Ñ)

    159,400      5,169

Wyndham Worldwide Corp. (Ñ)

    102,500      2,202

Yahoo!, Inc. (Æ)

    16,100      441

Yum! Brands, Inc.

    7,500      305
         
        76,218
         

Consumer Staples - 5.4%

        

Altria Group, Inc.

    45,800      916

Anheuser-Busch Cos., Inc.

    14,200      699

Coca-Cola Co. (The)

    103,400      6,087

Colgate-Palmolive Co.

    33,940      2,399

General Mills, Inc.

    36,600      2,211

Kraft Foods, Inc. Class A

    135,004      4,270

Molson Coors Brewing Co. Class B

    28,600      1,568

PepsiCo, Inc.

    15,500      1,062

Philip Morris International, Inc. (Æ)

    45,800      2,337

Procter & Gamble Co.

    105,085      7,046

Safeway, Inc.

    29,200      923

SYSCO Corp.

    9,900      303
         
        29,821
         

Financial Services - 17.1%

        

Aflac, Inc.

    3,800      253

Allstate Corp. (The)

    25,500      1,284

American Express Co.

    67,210      3,227

American International Group, Inc.

    103,900      4,800

Apartment Investment & Management Co. Class A (ö)(Ñ)

    11,901      440

Assurant, Inc.

    6,900      448

Axis Capital Holdings, Ltd.

    15,900      539

Bank of America Corp.

    188,599      7,080

Bank of New York Mellon Corp. (The)

    48,811      2,125

BlackRock, Inc. (Ñ)

    5,320      1,074

Capital One Financial Corp. (Ñ)

    55,170      2,924

Charles Schwab Corp. (The)

    35,300      762

Cigna Corp.

    23,700      1,012

CIT Group, Inc. (Ñ)

    23,000      250

Citigroup, Inc. (Ñ)

    157,345      3,976

City National Corp. (Ñ)

    500      24

CME Group, Inc. Class A (Ñ)

    10,720      4,904

 

60   Tax-Managed Large Cap Fund

Table of Contents

Russell Investment Company

Tax-Managed Large Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Colonial BancGroup, Inc. (The) (Ñ)

    16,400      133

Discover Financial Services

    58,900      1,073

Duke Realty Corp. (ö)

    2,300      56

Federal National Mortgage Association (Ñ)

    21,900      620

Freddie Mac

    93,500      2,329

Genworth Financial, Inc. Class A

    18,800      434

Goldman Sachs Group, Inc. (The)

    29,240      5,596

Hartford Financial Services Group, Inc.

    9,800      698

Hospitality Properties Trust (ö)(Ñ)

    7,000      225

Hudson City Bancorp, Inc. (Ñ)

    69,000      1,320

Huntington Bancshares, Inc. (Ñ)

    46,600      438

IntercontinentalExchange, Inc. (Æ)

    26,400      4,096

Janus Capital Group, Inc. (Ñ)

    79,400      2,228

JPMorgan Chase & Co.

    111,220      5,300

Lehman Brothers Holdings, Inc. (Ñ)

    62,700      2,774

Lincoln National Corp.

    6,600      355

MBIA, Inc. (Ñ)

    8,000      83

Merrill Lynch & Co., Inc.

    108,530      5,408

MetLife, Inc.

    13,500      821

Moody’s Corp. (Ñ)

    74,500      2,753

Morgan Stanley

    54,300      2,639

NYSE Euronext

    5,700      377

Paychex, Inc. (Ñ)

    10,600      386

Piper Jaffray Cos. (Æ)

    700      26

Prologis (ö)(Ñ)

    6,000      376

Protective Life Corp.

    5,600      239

Public Storage (ö)

    3,900      354

RenaissanceRe Holdings, Ltd.

    7,700      396

Simon Property Group, Inc. (ö)

    1,900      190

State Street Corp.

    18,900      1,363

TCF Financial Corp. (Ñ)

    18,200      317

TD Ameritrade Holding Corp. (Æ)

    128,700      2,329

Torchmark Corp.

    7,900      511

Travelers Cos., Inc. (The)

    11,600      585

Unum Group

    17,400      404

US Bancorp

    66,800      2,264

Visa, Inc. (Æ)

    64,675      5,397

Wachovia Corp. (Ñ)

    18,100      528

Washington Mutual, Inc. (Ñ)

    179,309      2,204

Wells Fargo & Co.

    52,700      1,568

Western Union Co. (The)

    2,440      56

WR Berkley Corp.

    1,350      35

Zions Bancorporation (Ñ)

    13,200      612
         
        95,018
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Health Care - 13.4%

        

Abbott Laboratories

    103,700      5,470

Abraxis Bioscience, Inc. (Æ)

    9,000      534

Aetna, Inc.

    32,600      1,421

Allergan, Inc.

    105,710      5,959

Amgen, Inc. (Æ)

    9,000      377

Baxter International, Inc.

    18,200      1,134

Biogen Idec, Inc. (Æ)

    9,800      595

BioMarin Pharmaceutical, Inc. (Æ)(Ñ)

    48,060      1,752

Celgene Corp. (Æ)(Ñ)

    21,300      1,324

Cerner Corp. (Æ)(Ñ)

    25,400      1,175

Covidien, Ltd.

    76,025      3,550

CR Bard, Inc.

    7,700      725

CVS Caremark Corp.

    118,610      4,788

Express Scripts, Inc. Class A (Æ)

    29,100      2,038

Forest Laboratories, Inc. (Æ)

    12,100      420

Genentech, Inc. (Æ)

    35,900      2,448

Genzyme Corp. (Æ)

    65,000      4,573

Gilead Sciences, Inc. (Æ)

    100,280      5,190

GlaxoSmithKline PLC - ADR (Ñ)

    25,700      1,134

Intuitive Surgical, Inc. (Æ)

    20,970      6,066

Johnson & Johnson

    62,616      4,201

McKesson Corp.

    6,800      354

Merck & Co., Inc.

    90,600      3,446

Pfizer, Inc.

    207,900      4,181

Schering-Plough Corp.

    79,200      1,458

Sepracor, Inc. (Æ)(Ñ)

    4,500      97

Stryker Corp.

    35,600      2,308

Thermo Fisher Scientific, Inc. (Æ)

    30,020      1,737

Varian Medical Systems, Inc. (Æ)(Ñ)

    50,100      2,349

Watson Pharmaceuticals, Inc. Class B (Æ)(Ñ)

    42,800      1,329

WellPoint, Inc. (Æ)

    9,600      478

Wyeth

    29,500      1,312

Zimmer Holdings, Inc. (Æ)

    7,800      578
         
        74,501
         

Integrated Oils - 5.1%

        

BP PLC - ADR

    19,100      1,390

Chevron Corp.

    79,687      7,662

ConocoPhillips

    73,479      6,330

Exxon Mobil Corp.

    95,246      8,865

Marathon Oil Corp.

    22,300      1,016

Occidental Petroleum Corp.

    12,600      1,049

Petroleo Brasileiro SA - ADR

    9,870      1,198

Royal Dutch Shell PLC - ADR

    7,300      586
         
        28,096
         

 

Tax-Managed Large Cap Fund   61

Table of Contents

Russell Investment Company

Tax-Managed Large Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Materials and Processing - 2.9%

     

Air Products & Chemicals, Inc.

    5,000      492

Alcoa, Inc. (Ñ)

    75,070      2,611

Archer-Daniels-Midland Co.

    5,100      225

Cemex SAB de CV - ADR (Æ)(Ñ)

    80,836      2,235

Domtar Corp. (Æ)

    47,300      282

Forestar Real Estate Group, Inc. (Æ)(Ñ)

    2,266      56

Masco Corp. (Ñ)

    12,100      220

Monsanto Co.

    27,610      3,148

Mosaic Co. (The) (Æ)

    8,090      991

Owens-Illinois, Inc. (Æ)

    16,100      888

Praxair, Inc.

    5,700      521

Rohm & Haas Co. (Ñ)

    19,000      1,016

United States Steel Corp.

    21,500      3,310
         
        15,995
         

Miscellaneous - 2.6%

        

Eaton Corp. (Ñ)

    14,600      1,282

General Electric Co.

    246,900      8,074

Honeywell International, Inc.

    4,300      255

Johnson Controls, Inc.

    52,000      1,834

SPX Corp.

    11,970      1,472

Textron, Inc.

    17,260      1,053

Tyco International, Ltd.

    16,025      750
         
        14,720
         

Other Energy - 6.5%

        

Anadarko Petroleum Corp.

    24,100      1,604

Baker Hughes, Inc. (Ñ)

    23,100      1,868

Cameron International Corp. (Æ)

    27,230      1,341

Devon Energy Corp.

    37,710      4,276

Dynegy, Inc. Class A (Æ)

    3,332      29

El Paso Corp. (Ñ)

    148,030      2,537

EOG Resources, Inc.

    5,400      705

FMC Technologies, Inc. (Æ)

    34,800      2,339

Halliburton Co.

    23,700      1,088

National Oilwell Varco, Inc. (Æ)

    87,500      5,989

Range Resources Corp.

    20,170      1,339

Schlumberger, Ltd.

    86,900      8,738

Valero Energy Corp.

    8,800      430

Weatherford International, Ltd. (Æ)

    24,970      2,014

XTO Energy, Inc.

    27,675      1,712
         
        36,009
         

Producer Durables - 4.5%

        

American Tower Corp. Class A (Æ)

    14,600      634

Applied Materials, Inc.

    110,190      2,056
     Principal
Amount ($)
or Shares		      Market
Value
$

Boeing Co.

    11,800      1,001

Caterpillar, Inc.

    10,700      876

Danaher Corp.

    9,900      772

Deere & Co.

    29,280      2,462

Dover Corp.

    20,000      989

Emerson Electric Co.

    14,600      763

Ingersoll-Rand Co., Ltd. Class A

    20,400      905

Lexmark International, Inc. Class A (Æ)(Ñ)

    32,700      1,027

Lockheed Martin Corp.

    8,600      912

Northrop Grumman Corp.

    12,000      883

NVR, Inc. (Æ)(Ñ)

    2,420      1,485

Parker Hannifin Corp.

    12,000      958

Raytheon Co.

    9,800      627

Toll Brothers, Inc. (Æ)(Ñ)

    11,400      258

United Technologies Corp.

    114,100      8,269
         
        24,877
         

Technology - 14.4%

        

Akamai Technologies, Inc. (Æ)(Ñ)

    41,200      1,474

Altera Corp.

    50,400      1,073

Apple, Inc. (Æ)

    57,140      9,940

Broadcom Corp. Class A (Æ)(Ñ)

    157,600      4,091

Cisco Systems, Inc. (Æ)

    386,730      9,916

Computer Sciences Corp. (Æ)(Ñ)

    5,300      231

Corning, Inc.

    164,560      4,395

Dell, Inc. (Æ)

    84,100      1,567

Electronics for Imaging, Inc. (Æ)(Ñ)

    15,800      228

EMC Corp. (Æ)

    283,100      4,360

First Solar, Inc. (Æ)(Ñ)

    6,020      1,758

Hewlett-Packard Co.

    121,800      5,645

Intel Corp.

    27,800      619

International Business Machines Corp.

    74,000      8,932

Intersil Corp. Class A (Ñ)

    1,700      45

Jabil Circuit, Inc.

    38,800      422

Juniper Networks, Inc. (Æ)

    9,700      268

Microchip Technology, Inc. (Ñ)

    48,410      1,779

Microsoft Corp.

    124,300      3,545

NCR Corp. (Æ)

    22,300      549

Oracle Corp. (Æ)

    205,200      4,278

Qualcomm, Inc.

    95,730      4,135

Research In Motion, Ltd. (Æ)

    16,470      2,003

Salesforce.com, Inc. (Æ)(Ñ)

    73,330      4,893

Seagate Technology, Inc. (Æ)

    26,700      —

Sybase, Inc. (Æ)

    25,600      753

Teradata Corp. (Æ)

    22,300      475

Tyco Electronics, Ltd.

    23,425      876

Xilinx, Inc. (Ñ)

    65,100      1,613
         
        79,863
         

 

62   Tax-Managed Large Cap Fund

Table of Contents

Russell Investment Company

Tax-Managed Large Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$		  
       

Utilities - 6.1%

        

America Movil SAB de CV
Series L - ADR

    83,620      4,847  

American Electric Power Co., Inc.

    18,000      803  

AT&T, Inc.

    278,106      10,765  

CMS Energy Corp. (Ñ)

    51,000      744  

Comcast Corp. Class A (Ñ)

    14,500      298  

Comcast Corp. Special Class A

    135,200      2,736  

Constellation Energy Group, Inc.

    9,430      798  

Edison International

    31,300      1,633  

Embarq Corp. (Ñ)

    17,052      709  

Exelon Corp. (Ñ)

    27,450      2,346  

Fairpoint Communications, Inc. (Ñ)

    2,131      20  

FirstEnergy Corp.

    8,900      673  

Northeast Utilities

    22,200      584  

PG&E Corp. (Ñ)

    46,600      1,864  

Pinnacle West Capital Corp. (Ñ)

    2,200      75  

PPL Corp.

    1,600      77  

Sierra Pacific Resources

    22,200      303  

Sprint Nextel Corp.

    7,856      63  

Verizon Communications, Inc.

    113,080      4,351  

Xcel Energy, Inc. (Ñ)

    15,300      318  
           
        34,007  
           
Total Common Stocks        

(cost $413,390)

         520,468  
           
Short-Term Investments - 5.8%     

Russell Investment Company Money Market Fund

    29,739,000      29,739  

United States Treasury Bills (ç)(ž)(§) 0.558% due 06/19/08

    2,200      2,198  
           
Total Short-Term Investments     

(cost $31,937)

         31,937  
           
Other Securities - 17.2%        

Russell Investment Company Money Market Fund (×)

    20,726,234      20,726  

State Street Securities Lending Quality Trust (×)

    74,592,937      74,593  
           
Total Other Securities        

(cost $95,319)

         95,319  
           
Total Investments - 116.7%        

(identified cost $540,646)

         647,724  
Other Assets and Liabilities,
Net - (16.7%)		      (92,702 )
           
Net Assets - 100.0%         555,022  
           

 

See accompanying notes which are an integral part of the financial statements.

 

Tax-Managed Large Cap Fund   63

Table of Contents

Russell Investment Company

Tax-Managed Large Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		      Unrealized
Appreciation
(Depreciation)
$
      

Long Positions

       

S&P 500 E-Mini Index (CME) expiration date 06/08 (244)

   USD      16,909      907

S&P 500 Index (CME) expiration date 06/08 (45)

   USD      15,593      728
        

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

        1,635
        

 

See accompanying notes which are an integral part of the financial statements.

 

64   Tax-Managed Large Cap Fund

Table of Contents

Russell Investment Company

Tax-Managed Large Cap Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Auto and Transportation

    2.0  

Consumer Discretionary

    13.7  

Consumer Staples

    5.4  

Financial Services

    17.1  

Health Care

    13.4  

Integrated Oils

    5.1  

Materials and Processing

    2.9  

Miscellaneous

    2.6  

Other Energy

    6.5  

Producer Durables

    4.5  

Technology

    14.4  

Utilities

    6.1  

Short-Term Investments

    5.8  

Other Securities

    17.2  
      

Total Investments

    116.7  

Other Assets and Liabilities, Net

    (16.7 )
      
   100.0  
      

Futures Contracts

    0.3  

 

See accompanying notes which are an integral part of the financial statements.

 

Tax-Managed Large Cap Fund   65

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 871.60    $ 1,013.67

Expenses Paid During Period*

    $ 10.47    $ 11.27

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 875.10    $ 1,017.40

Expenses Paid During Period*

    $ 6.99    $ 7.52

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 875.80    $ 1,018.65

Expenses Paid During Period*

    $ 5.83    $ 6.27

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

66   Tax-Managed Mid & Small Cap Fund

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		     

Market
Value

$

       
Common Stocks - 92.7%        

Auto and Transportation - 5.4%

        

AAR Corp. (Æ)(Ñ)

    10,350      242

Alexander & Baldwin, Inc. (Ñ)

    13,599      683

AMR Corp. (Æ)(Ñ)

    9,300      82

ArvinMeritor, Inc. (Ñ)

    11,190      167

Atlas Air Worldwide Holdings, Inc. (Æ)

    4,975      302

BorgWarner, Inc. (Ñ)

    7,150      351

Bristow Group, Inc. (Æ)(Ñ)

    5,580      294

Con-way, Inc.

    3,870      179

Continental Airlines, Inc. Class A (Æ)

    10,625      191

Cooper Tire & Rubber Co.

    42,900      564

Fleetwood Enterprises, Inc. (Æ)(Ñ)

    31,629      109

Genco Shipping & Trading, Ltd. (Ñ)

    4,250      288

General Maritime Corp. (Ñ)

    37,024      967

Genesee & Wyoming, Inc. Class A (Æ)(Ñ)

    24,720      882

Gentex Corp. (Ñ)

    15,360      287

Goodyear Tire & Rubber Co. (The)(Æ)

    9,050      242

Kansas City Southern (Æ)(Ñ)

    2,100      95

Kirby Corp. (Æ)

    9,900      543

Old Dominion Freight Line, Inc. (Æ)(Ñ)

    19,600      602

Overseas Shipholding Group, Inc. (Ñ)

    4,995      376

Skywest, Inc.

    1,600      30

Strattec Security Corp.

    1,700      63

Tenneco, Inc. (Æ)(Ñ)

    82,045      2,099

UTI Worldwide, Inc. (Ñ)

    86,070      1,892

Wabtec Corp.

    43,500      1,865
         
        13,395
         

Consumer Discretionary -16.3%

        

99 Cents Only Stores (Æ)(Ñ)

    68,994      656

Aaron Rents, Inc. (Ñ)

    10,875      271

Activision, Inc. (Æ)

    18,475      500

Advisory Board Co. (The) (Æ)

    6,532      304

Aeropostale, Inc. (Æ)(Ñ)

    12,700      404

AMN Healthcare Services, Inc. (Æ)

    12,050      176

AnnTaylor Stores Corp. (Æ)

    9,100      230

Arbitron, Inc. (Ñ)

    19,605      938

Asbury Automotive Group, Inc.

    13,200      220

Big 5 Sporting Goods Corp. (Ñ)

    7,025      65

Boyd Gaming Corp. (Ñ)

    12,600      236

Bright Horizons Family Solutions, Inc. (Æ)

    7,275      345

Brinker International, Inc. (Ñ)

    14,750      335

Callaway Golf Co. (Ñ)

    13,645      187

Capella Education Co. New (Æ)(Ñ)

    15,474      998
     Principal
Amount ($)
or Shares		     

Market
Value

$

Career Education Corp. (Æ)(Ñ)

    10,625      214

Carmax, Inc. (Æ)(Ñ)

    14,200      295

Carter’s, Inc. (Æ)

    45,875      649

Casual Male Retail Group, Inc. (Æ)(Ñ)

    23,795      103

Cato Corp. (The) Class A

    29,875      515

CDI Corp. (Ñ)

    3,600      98

CEC Entertainment, Inc. (Æ)

    18,675      695

Central European Distribution Corp. (Æ)

    5,887      359

Chipotle Mexican Grill, Inc. Class A (Æ)(Ñ)

    2,110      207

Consolidated Graphics, Inc. (Æ)(Ñ)

    15,800      919

Core-Mark Holding Co., Inc. (Æ)(Ñ)

    7,200      206

Corinthian Colleges, Inc. (Æ)(Ñ)

    47,799      542

Corrections Corp. of America (Æ)

    11,134      284

CoStar Group, Inc. (Æ)(Ñ)

    15,185      728

Deckers Outdoor Corp. (Æ)(Ñ)

    3,010      416

DeVry, Inc.

    13,340      760

Dollar Tree, Inc. (Æ)

    17,500      553

DreamWorks Animation SKG, Inc. Class A (Æ)

    9,405      263

Earthlink, Inc. (Æ)(Ñ)

    88,175      805

Family Dollar Stores, Inc. (Ñ)

    9,475      203

Focus Media Holding, Ltd. - ADR (Æ)(Ñ)

    10,000      369

Fossil, Inc. (Æ)(Ñ)

    44,631      1,597

Fred’s, Inc. Class A (Ñ)

    70,102      777

FTI Consulting, Inc. (Æ)(Ñ)

    18,239      1,167

GameStop Corp. Class A (Æ)(Ñ)

    12,930      712

Gemstar-TV Guide International, Inc. (Æ)

    265      1

Geo Group, Inc. (The) (Æ)

    5,700      151

Greenfield Online, Inc. (Æ)

    25,940      296

Guess ?, Inc. (Ñ)

    17,460      668

Gymboree Corp. (Æ)(Ñ)

    4,780      207

Hearst-Argyle Television, Inc. Class A (Ñ)

    8,840      183

Hertz Global Holdings, Inc. (Æ)(Ñ)

    22,550      290

International Speedway Corp. Class A

    5,825      247

inVentiv Health, Inc. (Æ)

    5,510      164

J Crew Group, Inc. (Æ)(Ñ)

    6,270      298

John Wiley & Sons, Inc. Class A

    5,840      269

Lamar Advertising Co. Class A (Æ)(Ñ)

    3,075      122

Landry’s Restaurants, Inc. (Ñ)

    8,125      130

Lifetime Brands, Inc. (Ñ)

    22,275      190

Liz Claiborne, Inc. (Ñ)

    14,025      248

Matthews International Corp. Class A (Ñ)

    17,450      863

MAXIMUS, Inc.

    5,202      197

 

Tax-Managed Mid & Small Cap Fund   67

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		     

Market
Value

$

       

McClatchy Co. Class A (Ñ)

    21,675      228

Men’s Wearhouse, Inc. (Ñ)

    6,975      186

MPS Group, Inc. (Æ)

    14,300      153

MSC Industrial Direct Co. Class A

    7,744      378

National CineMedia, Inc.

    10,700      205

Navigant Consulting, Inc. (Æ)(Ñ)

    6,150      124

Net 1 UEPS Technologies, Inc. (Æ)(Ñ)

    9,760      229

Papa John’s International, Inc. (Æ)(Ñ)

    22,400      605

PF Chang’s China Bistro, Inc. (Æ)(Ñ)

    41,960      1,302

PHH Corp. (Æ)

    8,375      164

Polo Ralph Lauren Corp. Class A (Ñ)

    5,050      314

Priceline.com, Inc. (Æ)(Ñ)

    2,800      357

RadioShack Corp. (Ñ)

    16,490      229

RC2 Corp. (Æ)(Ñ)

    9,500      176

Red Robin Gourmet Burgers, Inc. (Æ)(Ñ)

    21,675      890

School Specialty, Inc. (Æ)(Ñ)

    19,075      562

Scientific Games Corp. Class A (Æ)(Ñ)

    40,935      1,153

Service Corp. International

    23,020      256

Sinclair Broadcast Group, Inc. Class A (Ñ)

    23,100      203

Strayer Education, Inc. (Ñ)

    14,441      2,681

Tempur-Pedic International, Inc. (Ñ)

    14,425      160

Tetra Tech, Inc. (Æ)(Ñ)

    11,897      251

Tivo, Inc. (Æ)(Ñ)

    26,900      221

Toro Co. (Ñ)

    4,960      210

Tupperware Brands Corp.

    8,625      340

United Online, Inc. (Ñ)

    14,256      152

Valassis Communications, Inc. (Æ)(Ñ)

    47,775      678

Valueclick, Inc. (Æ)(Ñ)

    116,308      2,320

VistaPrint, Ltd. (Æ)(Ñ)

    16,010      545

Watson Wyatt Worldwide, Inc. Class A

    5,411      317

WESCO International, Inc. (Æ)(Ñ)

    8,100      301

WMS Industries, Inc. (Æ)(Ñ)

    25,625      927
         
        40,642
         

Consumer Staples - 2.6%

        

Coca-Cola Bottling Co. Consolidated

    2,720      156

Hain Celestial Group, Inc. (Æ)(Ñ)

    7,729      191

Hansen Natural Corp. (Ñ)

    11,090      392

Lance, Inc. (Ñ)

    39,845      835

Longs Drug Stores Corp. (Ñ)

    2,920      117

Peet’s Coffee & Tea, Inc. (Æ)(Ñ)

    62,730      1,457

Performance Food Group Co. (Æ)

    8,039      269

Ralcorp Holdings, Inc. (Æ)(Ñ)

    4,120      251

Ruddick Corp.

    7,780      301

SunOpta, Inc. (Æ)(Ñ)

    122,615      678

TreeHouse Foods, Inc. (Æ)

    35,400      803
     Principal
Amount ($)
or Shares		     

Market
Value

$

Whole Foods Market, Inc. (Ñ)

    32,430      1,059
         
        6,509
         

Financial Services - 16.1%

        

Advanta Corp. Class B (Ñ)

    36,612      321

Alexander’s, Inc. (Æ)(ö)(Ñ)

    410      146

American Campus Communities, Inc. (ö)(Ñ)

    20,050      612

American Equity Investment Life Holding Co. (Ñ)

    85,500      825

AmeriCredit Corp. (Æ)(Ñ)

    12,625      176

Anchor Bancorp Wisconsin, Inc. (Ñ)

    12,825      195

Apollo Investment Corp. (Ñ)

    11,225      182

Arbor Realty Trust, Inc. (ö)(Ñ)

    38,564      666

Ares Capital Corp.

    19,575      220

Argo Group International Holdings, Ltd. (Æ)

    23,183      830

Bank of the Ozarks, Inc. (Ñ)

    30,415      759

BioMed Realty Trust, Inc. (ö)(Ñ)

    13,900      361

Capital Southwest Corp. (Ñ)

    1,160      138

Capital Trust, Inc. Class A (ö)(Ñ)

    3,410      91

Cash America International, Inc.

    5,325      217

Cedar Shopping Centers, Inc. (ö)

    51,928      649

Colonial BancGroup, Inc. (The)

    21,975      179

Cullen/Frost Bankers, Inc. (Ñ)

    19,895      1,111

Delphi Financial Group, Inc. Class A

    7,845      214

Dime Community Bancshares (Ñ)

    25,220      471

Dun & Bradstreet Corp.

    3,850      325

East West Bancorp, Inc. (Ñ)

    27,967      398

EastGroup Properties, Inc. (ö)

    4,025      192

Employers Holdings, Inc.

    8,325      159

Enstar Group, Ltd. (Æ)(Ñ)

    1,475      160

Euronet Worldwide, Inc. (Æ)(Ñ)

    74,315      1,314

Extra Space Storage, Inc. (ö)(Ñ)

    15,650      263

Fair Isaac Corp.

    26,621      659

Federal Realty Investment Trust (ö)(Ñ)

    3,380      278

FelCor Lodging Trust, Inc. (ö)(Ñ)

    14,080      177

Fidelity National Financial, Inc. Class A (Ñ)

    17,120      274

Fidelity National Information Services, Inc.

    3,844      139

First Commonwealth Financial Corp. (Ñ)

    20,250      252

First Financial Bancorp

    17,600      231

First Industrial Realty Trust, Inc. (ö)(Ñ)

    17,443      527

First Midwest Bancorp, Inc. (Ñ)

    16,778      428

FNB Corp. (Ñ)

    22,245      344

 

68   Tax-Managed Mid & Small Cap Fund

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		     

Market
Value

$

       

Franklin Street Properties Corp. (ö)(Ñ)

    14,375      212

GATX Corp. (Ñ)

    31,850      1,401

General Growth Properties, Inc. (ö)(Ñ)

    8,000      328

Glacier Bancorp, Inc. (Ñ)

    12,427      256

Greenhill & Co., Inc. (Ñ)

    8,990      585

Hanover Insurance Group, Inc. (The)

    16,214      728

Harleysville Group, Inc.

    4,925      179

HCP, Inc. (ö)

    9,025      322

Health Care REIT, Inc. (ö)

    5,060      245

Hersha Hospitality Trust (ö)

    52,725      502

Home Properties, Inc. (ö)(Ñ)

    11,055      581

Inland Real Estate Corp. (ö)

    11,700      189

Integra Bank Corp. (Ñ)

    15,000      219

Interactive Brokers Group, Inc. Class A (Æ)(Ñ)

    8,100      256

Interactive Data Corp.

    17,890      483

Investment Technology Group, Inc. (Æ)

    17,106      826

Investors Real Estate Trust (ö)(Ñ)

    22,730      232

Jack Henry & Associates, Inc. (Ñ)

    15,350      403

Kayne Anderson Energy Development Co. (Ñ)

    7,825      174

Leucadia National Corp. (Ñ)

    5,850      300

Mercury General Corp. (Ñ)

    4,650      232

MF Global, Ltd. (Æ)

    10,950      144

MGIC Investment Corp. (Ñ)

    53,092      692

Mid-America Apartment Communities, Inc. (ö)

    30,898      1,622

Nationwide Health Properties, Inc. (ö)

    7,670      276

Navigators Group, Inc. (Æ)

    4,675      229

Old National Bancorp (Ñ)

    48,054      822

Old Republic International Corp. (Ñ)

    12,937      186

OneBeacon Insurance Group, Ltd. Class A (Ñ)

    11,900      234

Phoenix Cos., Inc. (The)

    12,075      157

Post Properties, Inc. (ö)

    8,105      297

Radian Group, Inc.

    24,725      133

Raymond James Financial, Inc. (Ñ)

    6,438      185

Reinsurance Group of America, Inc. (Ñ)

    4,685      244

RLI Corp. (Ñ)

    11,475      551

Selective Insurance Group (Ñ)

    6,765      144

Signature Bank NY (Æ)(Ñ)

    48,895      1,290

Sovereign Bancorp, Inc. (Ñ)

    11,963      89

State Auto Financial Corp.

    3,055      84

State Street Corp. (Ñ)

    3,869      279

Sterling Bancshares, Inc.

    9,600      100

Sterling Financial Corp. (Ñ)

    15,408      188
     Principal
Amount ($)
or Shares		     

Market
Value

$

Stewart Information Services Corp. (Ñ)

    19,592      480

Sun Communities, Inc. (ö)

    31,946      621

Tanger Factory Outlet Centers (ö)(Ñ)

    4,575      185

TD Ameritrade Holding Corp. (Æ)(Ñ)

    13,900      252

Texas Capital Bancshares, Inc. (Æ)(Ñ)

    82,725      1,526

UCBH Holdings, Inc. (Ñ)

    57,089      416

UnionBanCal Corp. (Ñ)

    3,300      173

United Bankshares, Inc. (Ñ)

    16,400      477

United Fire & Casualty Co. (Ñ)

    23,150      763

Valley National Bancorp (Ñ)

    9,749      187

Vornado Realty Trust (ö)

    3,455      322

Waddell & Reed Financial, Inc. Class A

    23,200      786

Washington Real Estate Investment Trust (ö)(Ñ)

    6,025      214

Westamerica Bancorporation (Ñ)

    13,987      817

Wintrust Financial Corp. (Ñ)

    39,413      1,250

World Acceptance Corp. (Æ)(Ñ)

    14,819      584
         
        40,135
         

Health Care - 12.6%

        

Abraxis Bioscience, Inc. (Æ)

    3,111      184

Alexion Pharmaceuticals, Inc. (Æ)

    9,530      671

Align Technology, Inc. (Æ)(Ñ)

    20,975      258

Amedisys, Inc. (Æ)(Ñ)

    4,916      255

Applera Corp. - Celera Group (Æ)

    68,760      920

Arthrocare Corp. (Æ)(Ñ)

    37,770      1,702

Auxilium Pharmaceuticals, Inc. (Æ)(Ñ)

    3,825      118

BioMarin Pharmaceutical, Inc. (Æ)(Ñ)

    9,600      350

Celgene Corp. (Æ)

    4,730      294

Charles River Laboratories International, Inc. (Æ)(Ñ)

    11,108      645

Chattem, Inc. (Æ)(Ñ)

    13,889      971

Cooper Cos., Inc. (The) (Ñ)

    3,680      129

Covance, Inc. (Æ)(Ñ)

    5,510      462

Coventry Health Care, Inc. (Æ)(Ñ)

    6,925      310

Durect Corp. (Æ)(Ñ)

    63,324      287

Endo Pharmaceuticals Holdings, Inc. (Æ)

    10,825      269

Gen-Probe, Inc. (Æ)(Ñ)

    13,975      788

Gentiva Health Services, Inc. (Æ)

    43,999      957

Haemonetics Corp. (Æ)

    19,323      1,106

Healthsouth Corp. (Æ)(Ñ)

    7,125      140

Henry Schein, Inc. (Æ)(Ñ)

    10,840      600

Hlth Corp. (Æ)(Ñ)

    17,940      199

Hologic, Inc. (Æ)(Ñ)

    13,117      383

ICON plc-ADR (Æ)

    3,770      271

ICU Medical, Inc. (Æ)(Ñ)

    24,221      608

 

Tax-Managed Mid & Small Cap Fund   69

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		     

Market
Value

$

       

Idexx Laboratories, Inc. (Æ)(Ñ)

    30,346      1,614

Illumina, Inc. (Æ)(Ñ)

    2,525      197

ImClone Systems, Inc. (Æ)(Ñ)

    5,990      279

Intuitive Surgical, Inc. (Æ)(Ñ)

    2,870      830

Inverness Medical Innovations, Inc. (Æ)(Ñ)

    3,875      143

Invitrogen Corp. (Æ)

    9,606      899

Kindred Healthcare, Inc. (Æ)

    23,450      556

KV Pharmaceutical Co. Class A (Æ)(Ñ)

    39,905      975

Medical Action Industries, Inc. (Æ)(Ñ)

    41,351      678

Mentor Corp. (Ñ)

    21,394      626

Merit Medical Systems, Inc. (Æ)

    79,303      1,167

Millennium Pharmaceuticals, Inc. (Æ)

    18,025      448

Nighthawk Radiology Holdings, Inc. (Æ)(Ñ)

    195,000      1,462

NuVasive, Inc. (Æ)

    3,375      129

Omnicare, Inc. (Ñ)

    9,575      195

Omnicell, Inc. (Æ)(Ñ)

    4,720      57

Orthofix International NV (Æ)

    6,825      210

OSI Pharmaceuticals, Inc. (Æ)(Ñ)

    5,694      197

Perrigo Co. (Ñ)

    12,200      500

PSS World Medical, Inc. (Æ)

    42,418      699

Quality Systems, Inc. (Ñ)

    47,420      1,523

Stericycle, Inc. (Æ)

    9,420      503

Sunrise Senior Living, Inc. (Æ)(Ñ)

    13,871      298

SurModics, Inc. (Æ)(Ñ)

    16,150      718

Symmetry Medical, Inc. (Æ)

    27,100      380

Techne Corp. (Æ)

    3,040      220

Tenet Healthcare Corp. (Æ)(Ñ)

    38,900      249

United Therapeutics Corp. (Æ)

    4,470      378

US Physical Therapy, Inc. (Æ)

    32,007      499

Vertex Pharmaceuticals, Inc. (Æ)

    10,350      264

Viropharma, Inc. (Æ)(Ñ)

    15,275      140

Vital Signs, Inc. (Ñ)

    15,400      806

WellCare Health Plans, Inc. (Æ)

    3,675      161

Wright Medical Group, Inc. (Æ)(Ñ)

    9,575      267

Zoll Medical Corp. (Æ)(Ñ)

    11,060      369
         
        31,513
         

Integrated Oils - 0.1%

        

Delta Petroleum Corp. (Æ)(Ñ)

    13,325      327
         

Materials and Processing - 8.7%

     

AAON, Inc.

    11,450      207

Agnico-Eagle Mines, Ltd.

    7,160      447

AK Steel Holding Corp. (Ñ)

    6,750      424

Arch Chemicals, Inc.

    5,780      197
     Principal
Amount ($)
or Shares		     

Market
Value

$

Brush Engineered Materials, Inc. (Æ)(Ñ)

    14,973      464

Buckeye Technologies, Inc. (Æ)

    12,300      106

Celanese Corp. Class A (Ñ)

    12,430      556

Ceradyne, Inc. (Æ)(Ñ)

    17,112      667

CF Industries Holdings, Inc. (Ñ)

    8,270      1,106

Clarcor, Inc. (Ñ)

    22,675      951

Cleveland-Cliffs, Inc. (Ñ)

    1,650      265

Coeur d’Alene Mines Corp. (Æ)(Ñ)

    47,175      145

Commercial Metals Co.

    18,725      583

Compass Minerals International, Inc. (Ñ)

    23,040      1,452

Cytec Industries, Inc.

    6,450      381

Deltic Timber Corp. (Ñ)

    13,450      709

EnerSys (Æ)

    9,695      227

ENGlobal Corp. (Æ)(Ñ)

    74,041      744

Ennis, Inc. (Ñ)

    28,050      475

Ferro Corp.

    15,725      276

FMC Corp.

    6,935      435

GrafTech International, Ltd. (Æ)(Ñ)

    19,570      385

Harsco Corp.

    7,460      443

HB Fuller Co. (Ñ)

    7,775      179

Hercules, Inc. (Ñ)

    22,175      417

Huntsman Corp.

    10,490      236

Interface, Inc. Class A (Ñ)

    6,765      87

Interline Brands, Inc. (Æ)

    11,425      221

Jacobs Engineering Group, Inc. (Æ)(Ñ)

    6,525      563

Kaydon Corp. (Ñ)

    11,070      580

Lennox International, Inc.

    7,530      250

LSI Industries, Inc.

    26,505      291

MGP Ingredients, Inc. (Ñ)

    50,977      373

Minerals Technologies, Inc. (Ñ)

    3,910      265

Owens-Illinois, Inc. (Æ)

    11,690      645

Polypore International, Inc. (Æ)(Ñ)

    65,260      1,528

Precision Castparts Corp.

    2,700      317

Rogers Corp. (Æ)

    2,675      92

RPM International, Inc.

    13,056      291

Sigma-Aldrich Corp.

    1,250      71

Sonoco Products Co.

    9,475      312

Southern Copper Corp. (Ñ)

    2,600      298

Steel Dynamics, Inc.

    4,225      147

Terra Industries, Inc. (Æ)

    30,616      1,159

Texas Industries, Inc. (Ñ)

    6,225      482

Universal Forest Products, Inc. (Ñ)

    4,100      142

URS Corp. (Æ)

    3,715      150

USG Corp. (Æ)(Ñ)

    7,417      262

Watsco, Inc. (Ñ)

    13,675      620
         
        21,623
         

 

70   Tax-Managed Mid & Small Cap Fund

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		     

Market
Value

$

       

Miscellaneous - 0.5%

        

Brunswick Corp. (Ñ)

    22,132      369

Carlisle Cos., Inc. (Ñ)

    5,247      152

GenCorp, Inc. (Æ)(Ñ)

    22,975      197

Lancaster Colony Corp.

    5,325      203

Walter Industries, Inc. Class A

    5,853      406
         
        1,327
         

Other Energy - 6.6%

        

Alpha Natural Resources, Inc. (Æ)

    5,210      253

Arch Coal, Inc.

    5,650      324

Basic Energy Services, Inc. (Æ)(Ñ)

    22,025      511

Cheniere Energy, Inc. (Æ)(Ñ)

    9,350      91

Core Laboratories NV (Æ)(Ñ)

    3,910      490

Denbury Resources, Inc. (Æ)

    8,810      269

Encore Acquisition Co. (Æ)

    20,657      943

Energy Partners, Ltd. (Æ)

    14,800      180

Equitable Resources, Inc.

    600      40

FMC Technologies, Inc. (Æ)(Ñ)

    4,925      331

Forest Oil Corp. (Æ)(Ñ)

    26,504      1,562

Foundation Coal Holdings, Inc.

    19,398      1,163

Grey Wolf, Inc. (Æ)(Ñ)

    38,550      242

Helix Energy Solutions Group, Inc. (Æ)(Ñ)

    27,750      959

Hercules Offshore, Inc. (Æ)

    6,275      165

Hornbeck Offshore Services, Inc. (Æ)(Ñ)

    6,565      327

International Coal Group, Inc. (Æ)(Ñ)

    153,372      1,221

JA Solar Holdings Co., Ltd.-ADR (Æ)(Ñ)

    14,160      340

Lufkin Industries, Inc. (Ñ)

    3,355      253

NATCO Group, Inc. Class A (Æ)

    5,100      258

Oil States International, Inc. (Æ)(Ñ)

    6,815      341

Parker Drilling Co. (Æ)(Ñ)

    31,395      252

Patriot Coal Corp. (Æ)(Ñ)

    1,360      90

Peabody Energy Corp.

    4,825      295

PetroHawk Energy Corp. (Æ)(Ñ)

    32,640      772

Plains Exploration & Production Co. (Æ)

    7,642      476

Range Resources Corp.

    10,690      710

Southwestern Energy Co. (Æ)

    7,840      332

Stone Energy Corp. (Æ)

    5,675      346

Tesoro Corp.

    9,450      237

USEC, Inc. (Æ)(Ñ)

    22,300      103

W-H Energy Services, Inc. (Æ)(Ñ)

    8,250      638

Western Refining, Inc. (Ñ)

    30,350      304

Whiting Petroleum Corp. (Æ)

    19,175      1,467

Willbros Group, Inc. (Æ)

    7,575      273
         
        16,558
         
     Principal
Amount ($)
or Shares		     

Market
Value

$

Producer Durables - 6.9%

        

AGCO Corp. (Æ)(Ñ)

    7,985      480

Ametek, Inc.

    9,820      476

Applied Industrial Technologies, Inc. (Ñ)

    8,810      213

AZZ, Inc. (Æ)(Ñ)

    29,967      799

C&D Technologies, Inc. (Æ)(Ñ)

    68,300      377

Champion Enterprises, Inc. (Æ)(Ñ)

    81,767      844

Covanta Holding Corp. (Æ)(Ñ)

    12,980      346

Crown Castle International Corp. (Æ)(Ñ)

    8,200      319

Dionex Corp. (Æ)(Ñ)

    4,350      340

Donaldson Co., Inc. (Ñ)

    22,894      997

EnPro Industries, Inc. (Æ)(Ñ)

    20,375      740

Entegris, Inc. (Æ)

    30,625      231

ESCO Technologies, Inc. (Æ)(Ñ)

    5,575      260

Federal Signal Corp.

    17,925      249

Flowserve Corp. (Ñ)

    4,610      572

General Cable Corp. (Æ)(Ñ)

    17,170      1,150

IDEX Corp.

    15,459      567

Joy Global, Inc.

    6,850      509

Kadant, Inc. (Æ)

    18,725      488

Kennametal, Inc.

    28,135      978

Lexmark International, Inc. Class A (Æ)

    8,350      262

Littelfuse, Inc. (Æ)

    6,355      234

MDC Holdings, Inc. (Ñ)

    6,472      282

Middleby Corp. (Æ)(Ñ)

    12,415      779

Mueller Water Products, Inc. Class B (Ñ)

    10,300      82

Orbital Sciences Corp. (Æ)

    11,791      317

Pentair, Inc. (Ñ)

    8,700      320

Pulte Homes, Inc. (Ñ)

    22,970      299

Robbins & Myers, Inc.

    33,407      1,332

Ryland Group, Inc. (Ñ)

    6,075      194

TAL International Group, Inc. (Ñ)

    26,600      644

Tennant Co. (Ñ)

    22,960      784

Terex Corp. (Æ)

    4,555      317

Varian Semiconductor Equipment Associates, Inc. (Æ)(Ñ)

    13,541      496
         
        17,277
         

Technology - 12.8%

        

Akamai Technologies, Inc. (Æ)(Ñ)

    6,325      226

American Science & Engineering, Inc. (Ñ)

    16,516      805

Anixter International, Inc. (Æ)(Ñ)

    10,355      590

Ansys, Inc. (Æ)(Ñ)

    10,300      414

 

Tax-Managed Mid & Small Cap Fund   71

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		     

Market
Value

$

       

Ariba, Inc. (Æ)

    17,125      203

Atmel Corp. (Æ)

    69,875      260

Avnet, Inc. (Æ)

    10,710      280

Benchmark Electronics, Inc. (Æ)

    52,887      940

Black Box Corp.

    6,756      201

BMC Software, Inc. (Æ)

    12,450      433

CACI International, Inc. Class A (Æ)(Ñ)

    23,421      1,174

Cavium Networks, Inc. (Æ)(Ñ)

    21,810      448

Cognizant Technology Solutions Corp. Class A (Æ)

    6,000      194

Diodes, Inc. (Æ)(Ñ)

    33,212      898

Electronics for Imaging, Inc. (Æ)

    31,750      458

Emulex Corp. (Æ)(Ñ)

    50,498      661

EPIQ Systems, Inc. (Æ)(Ñ)

    43,783      676

F5 Networks, Inc. (Æ)(Ñ)

    53,145      1,203

Fairchild Semiconductor International, Inc. Class A (Æ)(Ñ)

    30,425      397

First Solar, Inc. (Æ)(Ñ)

    1,200      350

Flir Systems, Inc. (Æ)(Ñ)

    12,180      418

Foundry Networks, Inc. (Æ)

    59,575      758

GTSI Corp. (Æ)

    45,996      368

Harris Corp.

    3,880      210

Harris Stratex Networks, Inc. Class A (Æ)

    15,675      149

IHS, Inc. Class A (Æ)(Ñ)

    3,790      250

Informatica Corp. (Æ)(Ñ)

    107,644      1,718

Intersil Corp. Class A (Ñ)

    7,030      188

ION Geophysical Corp. (Æ)(Ñ)

    38,938      620

Jabil Circuit, Inc.

    18,700      203

JDS Uniphase Corp. (Æ)(Ñ)

    17,675      253

Kenexa Corp. (Æ)(Ñ)

    49,340      863

LSI Corp. (Æ)(Ñ)

    54,526      338

Macrovision Solutions Corp. (Æ)(Ñ)

    135,780      2,143

Mantech International Corp. Class A (Æ)

    27,169      1,298

Marvell Technology Group, Ltd. (Æ)

    23,330      302

Mentor Graphics Corp. (Æ)(Ñ)

    57,950      584

MercadoLibre, Inc. (Æ)(Ñ)

    5,700      288

Microchip Technology, Inc. (Ñ)

    16,700      614

Micros Systems, Inc. (Æ)(Ñ)

    11,820      421

NAVTEQ Corp. (Æ)

    3,550      263

Omniture, Inc. (Æ)

    12,520      286

ON Semiconductor Corp. (Æ)(Ñ)

    28,975      216

Parametric Technology Corp. (Æ)(Ñ)

    33,785      589

Perot Systems Corp. Class A (Æ)(Ñ)

    58,300      912
     Principal
Amount ($)
or Shares		     

Market
Value

$

Plexus Corp. (Æ)(Ñ)

    10,055      242

Progress Software Corp. (Æ)

    31,875      964

Salesforce.com, Inc. (Æ)(Ñ)

    8,280      553

SanDisk Corp. (Æ)

    3,510      95

Sonus Networks, Inc. (Æ)(Ñ)

    138,735      556

Spansion, Inc. Class A (Æ)(Ñ)

    62,750      207

Sycamore Networks, Inc. (Æ)

    63,630      205

Syntel, Inc. (Ñ)

    5,991      198

Taleo Corp. Class A (Æ)(Ñ)

    50,980      994

Varian, Inc. (Æ)

    12,558      640

Veraz Networks, Inc. (Æ)(Ñ)

    108,206      278

Vignette Corp. (Æ)

    13,727      159

Zebra Technologies Corp. Class A (Æ)(Ñ)

    46,196      1,698
         
        31,852
         

Utilities - 4.1%

        

Alaska Communications Systems Group, Inc.

    107,788      1,205

Avista Corp.

    24,700      507

Black Hills Corp. (Ñ)

    11,825      461

Cablevision Systems Corp. Class A (Æ)(Ñ)

    3,775      87

Central Vermont Public Service Corp. (Ñ)

    7,025      164

Cleco Corp. (Ñ)

    34,338      824

El Paso Electric Co. (Æ)

    36,330      820

Empire District Electric Co. (The)

    10,300      214

Fairpoint Communications, Inc. (Ñ)

    23,775      219

Great Plains Energy, Inc. (Ñ)

    8,960      230

NeuStar, Inc. Class A (Æ)(Ñ)

    76,053      2,092

New Jersey Resources Corp. (Ñ)

    7,807      249

Northwest Natural Gas Co. (Ñ)

    5,300      238

NorthWestern Corp. (Ñ)

    35,550      882

NSTAR (Ñ)

    9,261      298

Otter Tail Corp. (Ñ)

    6,415      238

Puget Energy, Inc. (Ñ)

    8,190      223

SCANA Corp. (Ñ)

    8,400      331

Southwest Gas Corp.

    8,730      252

Telephone & Data Systems, Inc.

    4,490      172

Time Warner Telecom, Inc. Class A (Æ)(Ñ)

    10,450      205

Wisconsin Energy Corp. (Ñ)

    9,665      459
         
        10,370
         
Total Common Stocks        

(cost $204,708)

         231,528
         

 

72   Tax-Managed Mid & Small Cap Fund

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		     

Market
Value

$

  
       
Warrants & Rights - 0.0%        

Ares Capital Corp. (Æ)

    5,916      —  
           
Total Warrants & Rights        

(cost $-)

         —  
           
Short-Term Investments - 7.1%     

Russell Investment Company

        

Money Market Fund

    16,320,000      16,320  

United States Treasury Bills (ç)(ž)(§) 0.560% due 06/19/08

    1,300      1,299  
           
Total Short-Term Investments     

(cost $17,619)

         17,619  
           
Other Securities - 42.7%        

Russell Investment Company
Money Market Fund (×)

    23,199,965      23,200  

State Street Securities Lending Quality Trust (×)

    83,495,801      83,496  
           
Total Other Securities        

(cost $106,696)

         106,696  
           
Total Investments - 142.5%        

(identified cost $329,023)

         355,843  
Other Assets and Liabilities, Net - (42.5%)         (106,127 )
           
Net Assets - 100.0%         249,716  
           

 


 

See accompanying notes which are an integral part of the financial statements.

 

Tax-Managed Mid & Small Cap Fund   73

Table of Contents

Russell Investment Company

Tax-Managed Mid & Small Cap Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		   Unrealized
Appreciation
(Depreciation)
$
     
Long Positions      
Russell 2000 Mini Index (CME)
expiration date 06/08 (239)		   USD   17,148   1,069
       
Total Unrealized Appreciation
(Depreciation) on Open Futures
Contracts		   1,069
       

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Auto and Transportation

    5.4  

Consumer Discretionary

    16.3  

Consumer Staples

    2.6  

Financial Services

    16.1  

Health Care

    12.6  

Integrated Oils

    0.1  

Materials and Processing

    8.7  

Miscellaneous

    0.5  

Other Energy

    6.6  

Producer Durables

    6.9  

Technology

    12.8  

Utilities

    4.1  

Short-Term Investments

    7.1  

Warrants & Rights

    — *

Other Securities

    42.7  
      

Total Investments

    142.5  

Other Assets and Liabilities, Net

    (42.5 )
      
   100.0  
      

Futures

    0.4  

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

74   Tax-Managed Mid & Small Cap Fund

Table of Contents

Russell Investment Company

Select Growth Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 887.90    $ 1,013.77

Expenses Paid During Period*

    $ 10.47    $ 11.17

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.23% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 892.30    $ 1,018.00

Expenses Paid During Period*

    $ 6.49    $ 6.92

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.38% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 894.10    $ 1,019.94

Expenses Paid During Period*

    $ 4.66    $ 4.97

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.99% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Select Growth Fund   75

Table of Contents

Russell Investment Company

Select Growth Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 892.20    $ 1,018.90

Expenses Paid During Period*

    $ 5.65    $ 6.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.20% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

76   Select Growth Fund

Table of Contents

Russell Investment Company

Select Growth Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 95.3%

        

Auto and Transportation - 2.8%

        

Amerigon, Inc. (Æ)(Ñ)

    5,276      77

Expeditors International of
Washington, Inc. (Ñ)

    38,850      1,810

FedEx Corp.

    12,600      1,208

Quantum Fuel Systems Technologies Worldwide, Inc. (Æ)(Ñ)

    20,282      27

Union Pacific Corp. (Ñ)

    4,800      697

United Parcel Service, Inc. Class B

    21,000      1,521
         
        5,340
         

Consumer Discretionary - 17.7%

     

Activision, Inc. (Æ)(Ñ)

    18,470      500

AFC Enterprises (Æ)(Ñ)

    3,100      32

Amazon.com, Inc. (Æ)(Ñ)

    8,644      680

Autobytel, Inc. (Æ)

    15,500      29

Cache, Inc. (Æ)(Ñ)

    4,600      56

Central Garden and Pet Co. (Æ)(Ñ)

    8,400      43

Chindex International, Inc. (Æ)(Ñ)

    2,250      55

Coach, Inc. (Æ)

    17,860      635

Cost Plus, Inc. (Æ)(Ñ)

    12,200      34

Costco Wholesale Corp. (Ñ)

    8,400      598

Deckers Outdoor Corp. (Æ)(Ñ)

    900      124

Dick’s Sporting Goods, Inc. (Æ)(Ñ)

    23,985      686

eBay, Inc. (Æ)

    90,600      2,835

Eddie Bauer Holdings, Inc. (Æ)(Ñ)

    6,000      24

Electronic Arts, Inc. (Æ)(Ñ)

    31,000      1,596

Estee Lauder Cos., Inc. (The) Class A (Ñ)

    3,700      169

Focus Media Holding, Ltd. - ADR (Æ)(Ñ)

    3,690      136

GameStop Corp. Class A (Æ)(Ñ)

    8,360      460

Google, Inc. Class A (Æ)

    10,266      5,896

Guess ?, Inc. (Ñ)

    13,757      527

Infospace, Inc. (Ñ)

    6,000      72

Inter Parfums, Inc. (Ñ)

    2,400      70

International Game Technology (Ñ)

    42,000      1,459

Isle of Capri Casinos, Inc. (Æ)(Ñ)

    5,100      34

Jamba, Inc. (Æ)(Ñ)

    6,800      17

Landry’s Restaurants, Inc. (Ñ)

    3,200      51

Las Vegas Sands Corp. (Æ)(Ñ)

    15,507      1,182

Leapfrog Enterprises, Inc.
Class A (Æ)(Ñ)

    5,000      42

Looksmart, Ltd. (Æ)(Ñ)

    5,700      25

Lowe’s Cos., Inc. (Ñ)

    67,802      1,708

McDonald’s Corp.

    8,000      477

MGM Mirage (Æ)(Ñ)

    20,000      1,023

MTR Gaming Group, Inc. (Æ)(Ñ)

    5,400      33
     Principal
Amount ($)
or Shares		      Market
Value
$

NexCen Brands, Inc. (Æ)(Ñ)

    15,400      47

Nike, Inc. Class B (Ñ)

    6,370      426

Nordstrom, Inc. (Ñ)

    22,239      784

PetMed Express, Inc. (Æ)(Ñ)

    4,600      52

Pier 1 Imports, Inc. (Æ)(Ñ)

    13,500      105

Revlon, Inc. Class A (Æ)(Ñ)

    46,100      44

Ruby Tuesday, Inc. (Ñ)

    4,700      40

Six Flags, Inc. (Æ)(Ñ)

    23,600      42

Stamps.com, Inc. (Æ)(Ñ)

    3,900      53

Staples, Inc. (Ñ)

    130,300      2,828

Starbucks Corp. (Æ)

    33,500      544

Stein Mart, Inc. (Ñ)

    8,100      43

Target Corp. (Ñ)

    23,418      1,244

Tiffany & Co. (Ñ)

    6,563      286

Time Warner Cable, Inc. Class A (Æ)

    8,902      266

TJX Cos., Inc.

    8,519      274

Urban Outfitters, Inc. (Æ)(Ñ)

    14,490      496

Valuevision Media, Inc. Class A (Æ)(Ñ)

    7,600      42

VeriSign, Inc. (Æ)(Ñ)

    13,700      494

Viacom, Inc. Class B (Æ)(Ñ)

    12,500      481

Wal-Mart Stores, Inc. (Ñ)

    21,913      1,271

Walt Disney Co. (The) (Ñ)

    33,996      1,102

Weight Watchers International,
Inc. (Ñ)

    25,000      1,146

Wet Seal, Inc. (The) Class A (Æ)(Ñ)

    17,000      59

Wynn Resorts, Ltd. (Ñ)

    5,862      618

Youbet.com, Inc. (Æ)(Ñ)

    26,300      22
         
        34,117
         

Consumer Staples - 7.5%

        

Coca-Cola Co. (The)

    58,607      3,450

Colgate-Palmolive Co.

    10,888      770

Diageo PLC - ADR

    11,023      903

Diamond Foods, Inc. (Ñ)

    4,600      98

Fomento Economico Mexicano
SAB de CV - ADR

    7,980      347

General Mills, Inc. (Ñ)

    4,100      248

Kraft Foods, Inc. Class A

    16,500      522

Molson Coors Brewing Co. Class B (Ñ)

    8,290      454

Monterey Gourmet Foods, Inc. (Æ)(Ñ)

    5,948      18

PepsiCo, Inc.

    21,100      1,446

Procter & Gamble Co.

    50,500      3,386

SYSCO Corp. (Ñ)

    27,200      831

Walgreen Co.

    55,600      1,938
         
        14,411
         

 

Select Growth Fund   77

Table of Contents

Russell Investment Company

Select Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Financial Services - 11.4%

        

American Express Co.

    27,458      1,319

American International Group, Inc.

    7,400      342

Automatic Data Processing, Inc. (Ñ)

    24,600      1,087

BlackRock, Inc. Class A (Ñ)

    2,520      508

Blackstone Group, LP (The) (Ñ)

    27,410      512

CBRE Realty Finance, Inc. (ö)(Ñ)

    8,000      31

CME Group, Inc. Class A (Ñ)

    4,700      2,150

Endurance Specialty Holdings, Ltd. (Ñ)

    23,120      858

Fiserv, Inc. (Æ)(Ñ)

    7,750      392

Goldman Sachs Group, Inc. (The)

    8,275      1,584

GSC Investment Corp.

    4,300      44

Hartford Financial Services Group, Inc.

    4,300      306

IntercontinentalExchange, Inc. (Æ)

    20,270      3,145

Mastercard, Inc. Class A (Ñ)

    8,200      2,281

Merrill Lynch & Co., Inc. (Ñ)

    8,100      404

Morgan Stanley

    20,433      993

PNC Financial Services Group, Inc. (Ñ)

    7,050      489

Prudential Financial, Inc.

    4,900      371

SLM Corp. (Æ)(Ñ)

    23,438      434

State Street Corp.

    14,900      1,075

T Rowe Price Group, Inc. (Ñ)

    7,430      435

Visa, Inc. (Æ)

    21,000      1,752

Western Union Co. (The) (Ñ)

    58,873      1,354
         
        21,866
         

Health Care - 15.3%

        

Abbott Laboratories

    7,900      417

Allergan, Inc. (Ñ)

    34,960      1,971

Baxter International, Inc.

    15,380      958

Celgene Corp. (Æ)(Ñ)

    17,369      1,079

Cerus Corp. (Æ)(Ñ)

    8,200      51

Cooper Cos., Inc. (The) (Ñ)

    7,800      273

Coventry Health Care, Inc. (Æ)(Ñ)

    15,520      694

CVS Caremark Corp.

    9,700      392

Dentsply International, Inc. (Ñ)

    19,290      750

Discovery Laboratories, Inc. (Æ)(Ñ)

    8,500      24

Dov Pharmaceutical, Inc. (Æ) (Ñ)

    24,800      1

Genentech, Inc. (Æ)

    36,200      2,469

Genzyme Corp. (Æ)

    24,690      1,737

Gilead Sciences, Inc. (Ñ)

    46      2,399

Hi-Tech Pharmacal Co., Inc. (Æ)(Ñ)

    4,282      37

Human Genome Sciences, Inc. (Æ)(Ñ)

    33,400      219

Immunogen, Inc. (Æ)(Ñ)

    10,900      35

Insite Vision, Inc. (Æ)

    21,500      14
     Principal
Amount ($)
or Shares		      Market
Value
$

Intuitive Surgical, Inc. (Æ)(Ñ)

    2,150      622

Johnson & Johnson

    9,400      631

Kosan Biosciences, Inc. (Æ)(Ñ)

    11,982      20

Ligand Pharmaceuticals, Inc. Class B (Æ)(Ñ)

    9,800      40

Medtronic, Inc. (Ñ)

    62,855      3,060

Merck & Co., Inc.

    51,656      1,965

Mylan, Inc. (Æ)(Ñ)

    38,600      508

Nabi Biopharmaceuticals (Æ)(Ñ)

    14,400      58

Questcor Pharmaceuticals, Inc. (Æ)(Ñ)

    26,200      111

Savient Pharmaceuticals, Inc. (Æ)(Ñ)

    9,200      201

Schering-Plough Corp.

    55,287      1,018

Sequenom, Inc. (Æ)(Ñ)

    13,200      83

Stericycle, Inc. (Æ)

    6,700      358

Synovis Life Technologies, Inc. (Æ)(Ñ)

    4,392      74

Teva Pharmaceutical Industries, Ltd. - ADR

    58,071      2,717

Thermo Fisher Scientific, Inc. (Æ)(Ñ)

    11,940      691

Titan Pharmaceuticals, Inc. (Æ)(Ñ)

    14,900      20

UnitedHealth Group, Inc.

    50,000      1,632

Vertex Pharmaceuticals, Inc. (Æ)

    3,800      97

Wyeth (Ñ)

    22,841      1,016

Zimmer Holdings, Inc. (Æ)

    15,700      1,164
         
        29,606
         

Integrated Oils - 0.7%

        

Exxon Mobil Corp. (Ñ)

    4,800      447

Hess Corp.

    3,600      382

Petroleo Brasileiro SA - ADR

    3,700      449
         
        1,278
         

Materials and Processing - 3.5%

     

Agrium, Inc.

    5,000      395

AspenBio Pharma, Inc. (Æ)

    3,400      14

Beacon Roofing Supply, Inc. (Æ)(Ñ)

    5,000      53

California Coastal Communities, Inc. (Æ)(Ñ)

    3,200      21

Celanese Corp. Class A

    8,150      365

Ecolab, Inc. (Ñ)

    12,400      570

Freeport-McMoRan Copper & Gold, Inc. Class B (Ñ)

    3,100      353

Grubb & Ellis Co. (Ñ)

    5,400      33

Landec Corp. (Æ)(Ñ)

    7,100      58

Monsanto Co.

    9,440      1,076

Mosaic Co. (The) (Æ)

    3,080      377

Owens-Illinois, Inc. (Æ)

    7,720      426

Polypore International, Inc. (Æ)(Ñ)

    4,300      101

Praxair, Inc.

    15,000      1,370

 

78   Select Growth Fund

Table of Contents

Russell Investment Company

Select Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Precision Castparts Corp.

    7,118      837

Rohm & Haas Co. (Ñ)

    9,100      486

Unifi, Inc. (Æ)(Ñ)

    15,400      46

US Concrete, Inc. (Æ)(Ñ)

    11,300      37

Valence Technology, Inc. (Æ)(Ñ)

    19,300      63
         
        6,681
         

Miscellaneous - 3.4%

        

ABB, Ltd. - ADR

    45,276      1,389

General Electric Co.

    55,900      1,828

Honeywell International, Inc.

    8,300      493

SPX Corp.

    2,800      344

Textron, Inc. (Ñ)

    36,519      2,228

Tyco International, Ltd.

    7,630      357
         
        6,639
         

Other Energy - 4.6%

        

Apache Corp.

    11,611      1,564

Cabot Oil & Gas Corp.

    8,400      479

Cameron International Corp. (Æ)(Ñ)

    13,590      669

Chesapeake Energy Corp. (Ñ)

    9,600      496

Consol Energy, Inc.

    6,930      561

EOG Resources, Inc. (Ñ)

    10,500      1,370

Halliburton Co. (Ñ)

    23,210      1,066

Schlumberger, Ltd.

    14,250      1,433

Sunoco, Inc. (Ñ)

    12,638      586

XTO Energy, Inc.

    10,190      630
         
        8,854
         

Producer Durables - 5.1%

        

Applied Materials, Inc. (Ñ)

    73,700      1,375

Boeing Co.

    17,469      1,482

Caterpillar, Inc. (Ñ)

    3,210      263

Crown Castle International Corp. (Æ)(Ñ)

    43,000      1,671

DayStar Technologies, Inc. (Æ)(Ñ)

    7,600      24

Deere & Co.

    7,660      644

DR Horton, Inc.

    27,600      428

EFJ, Inc. (Æ)(Ñ)

    10,200      14

Electroglas, Inc. (Æ)(Ñ)

    10,900      19

Flow International Corp. (Æ)(Ñ)

    6,100      61

Flowserve Corp. (Ñ)

    2,910      361

Hurco Cos., Inc. (Æ)(Ñ)

    1,300      60

Suntech Power Holdings Co., Ltd. - ADR (Æ)(Ñ)

    10,368      464

Terex Corp. (Æ)(Ñ)

    34,260      2,387

Ultratech, Inc. (Æ)(Ñ)

    3,500      50

United Technologies Corp.

    6,900      500
         
        9,803
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Technology - 22.5%

        

Actuate Corp. (Æ)(Ñ)

    9,900      40

Adobe Systems, Inc. (Æ)

    16,813      627

Agilysys, Inc. (Ñ)

    3,300      36

Akamai Technologies, Inc. (Æ)(Ñ)

    9,670      346

Altera Corp. (Ñ)

    18,000      383

Apple, Inc. (Æ)

    39,118      6,805

AuthenTec, Inc. (Æ)

    4,400      59

Avistar Communications Corp. (Æ)(Ñ)

    29,800      25

Broadcom Corp. Class A (Æ)(Ñ)

    33,100      859

Catapult Communications Corp. (Æ)(Ñ)

    6,000      43

Centillium Communications, Inc. (Æ)

    15,926      12

Cisco Systems, Inc. (Æ)

    166,420      4,267

Corning, Inc.

    140,342      3,749

Ditech Networks, Inc. (Æ)(Ñ)

    13,300      38

DSP Group, Inc. (Æ)(Ñ)

    4,000      52

Extreme Networks (Æ)(Ñ)

    24,200      73

First Solar, Inc. (Æ)(Ñ)

    1,690      493

Hewlett-Packard Co.

    10,200      473

Immersion Corp. (Æ)(Ñ)

    6,700      76

Integrated Silicon Solution, Inc. (Æ)(Ñ)

    12,000      71

Intel Corp.

    101,569      2,261

International Business Machines Corp. (Ñ)

    5,000      603

Intuit, Inc. (Æ)

    55,000      1,483

Leadis Technology, Inc. (Æ)(Ñ)

    7,800      14

Magma Design Automation, Inc. (Æ)(Ñ)

    5,400      50

MathStar, Inc. (Æ)(Ñ)

    20,100      7

Maxim Integrated Products, Inc. (Ñ)

    18,500      389

MEMC Electronic Materials, Inc. (Æ)

    9,397      592

Micrel, Inc. (Ñ)

    6,400      63

Microchip Technology, Inc. (Ñ)

    12,400      456

Microsoft Corp.

    69,600      1,985

Netezza Corp. (Æ)(Ñ)

    6,100      65

Netscout Systems, Inc. (Æ)(Ñ)

    5,700      57

ON Semiconductor Corp. (Æ)(Ñ)

    54,200      405

Oracle Corp. (Æ)

    115,197      2,402

Phoenix Technologies, Ltd. (Æ)(Ñ)

    7,100      84

Pixelworks, Inc. (Æ)(Ñ)

    23,500      14

QUALCOMM, Inc.

    121,160      5,233

Radiant Systems, Inc. (Æ)(Ñ)

    4,000      54

Research In Motion, Ltd. (Æ)

    23,570      2,867

Salesforce.com, Inc. (Æ)(Ñ)

    4,930      329

SAP AG - ADR (Ñ)

    16,100      809

Seachange International, Inc. (Æ)(Ñ)

    11,200      80

Seagate Technology (Ñ)

    90,300      1,704

Sun Microsystems, Inc. (Æ)

    60,000      940

 

Select Growth Fund   79

Table of Contents

Russell Investment Company

Select Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$		  
       

Teradata Corp. (Æ)(Ñ)

    48,000      1,022  

Thomson Reuters PLC - ADR (Æ)(Ñ)

    1,920      359  

Transwitch Corp. (Æ)(Ñ)

    30,400      21  

Volterra Semiconductor Corp. (Æ)

    4,200      63  

Xilinx, Inc. (Ñ)

    13,100      324  

Zhone Technologies, Inc. (Æ)(Ñ)

    38,900      38  
           
        43,300  
           

Utilities - 0.8%

        

America Movil SAB de CV Series L

    13,610      790  

FPL Group, Inc.

    7,729      512  

MDU Communications International, Inc. (Æ)

    17,800      7  

Verizon Communications, Inc. (Ñ)

    8,200      316  
           
        1,625  
           
Total Common Stocks
        

(cost $167,506)

         183,520  
           
Short-Term Investments - 4.8%        

Russell Investment Company Money Market Fund

    8,245,000      8,245  

United States Treasury Bills (ç)(ž)(§) 0.558% due 06/19/08

    1,000      999  
           
Total Short-Term Investments        

(cost $9,244)

         9,244  
           
Other Securities - 32.8%        

Russell Investment Company Money Market Fund (×)

    13,728,557      13,729  

State Street Securities Lending Quality Trust (×)

    49,408,561      49,408  
           
Total Other Securities        

(cost $63,138)

         63,137  
           
Total Investments - 132.9%        

(identified cost $239,888)

         255,901  

Other Assets and Liabilities,

Net - (32.9%)

         (63,403 )
           
Net Assets - 100.0%         192,498  
           

 


 

See accompanying notes which are an integral part of the financial statements.

 

80   Select Growth Fund

Table of Contents

Russell Investment Company

Select Growth Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		   Notional
Amount		   Unrealized
Appreciation
(Depreciation)
$
     
     
Long Positions      
Nasdaq 100 E-Mini Index (CME)
expiration date 06/08 (46)		   USD   1,769   129
S&P 500 E-Mini Index (CME)
expiration date 06/08 (31)		   USD   2,148   11
S&P 500 Index (CME)
expiration date 06/08 (12)		   USD   4,158   70
       
Total Unrealized Appreciation
(Depreciation) on Open Futures
Contracts		       210
       

 


 

See accompanying notes which are an integral part of the financial statements.

 

Select Growth Fund   81

Table of Contents

Russell Investment Company

Select Growth Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Auto and Transportation

    2.8  

Consumer Discretionary

    17.7  

Consumer Staples

    7.5  

Financial Services

    11.4  

Health Care

    15.3  

Integrated Oils

    0.7  

Materials and Processing

    3.5  

Miscellaneous

    3.4  

Other Energy

    4.6  

Producer Durables

    5.1  

Technology

    22.5  

Utilities

    0.8  

Short-Term Investments

    4.8  

Other Securities

    32.8  
      

Total Investments

    132.9  

Other Assets and Liabilities, Net

    (32.9 )
      
   100.0  
      

Futures Contracts

    0.1  

 

See accompanying notes which are an integral part of the financial statements.

 

82   Select Growth Fund

Table of Contents

Russell Investment Company

Select Value Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 867.70    $ 1,014.42

Expenses Paid During Period*

    $ 9.75    $ 10.52

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.10% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 871.20    $ 1,018.55

Expenses Paid During Period*

    $ 5.91    $ 6.37

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.27% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 872.90    $ 1,020.14

Expenses Paid During Period*

    $ 4.42    $ 4.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.95% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

Select Value Fund   83

Table of Contents

Russell Investment Company

Select Value Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 871.80    $ 1,019.39

Expenses Paid During Period*

    $ 5.12    $ 5.52

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.10% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period).

 

84   Select Value Fund

Table of Contents

Russell Investment Company

Select Value Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 95.3%

        

Auto and Transportation - 1.3%

        

Ford Motor Co. (Æ)(Ñ)

    109,700      906

General Motors Corp. (Ñ)

    30,400      705

Navistar International Corp. (Æ)

    42,100      2,768

UAL Corp. (Ñ)

    8,400      125
         
        4,504
         

Consumer Discretionary - 9.9%

        

Black & Decker Corp. (Ñ)

    14,300      939

Brinker International, Inc.

    64,900      1,473

CBS Corp. Class B

    71,200      1,643

Costco Wholesale Corp.

    7,100      506

DIRECTV Group, Inc. (The) (Æ)(Ñ)

    100,800      2,484

Expedia, Inc. (Æ)(Ñ)

    27,300      690

Foot Locker, Inc.

    80,900      1,023

Home Depot, Inc.

    47,900      1,380

Jack in the Box, Inc. (Æ)

    24,500      655

JC Penney Co., Inc.

    15,800      671

Jones Apparel Group, Inc.

    53,600      848

Kimberly-Clark Corp.

    36,400      2,329

Kohl’s Corp. (Æ)(Ñ)

    33,610      1,642

Leggett & Platt, Inc. (Ñ)

    46,200      767

Liberty Media Corp. - Entertainment Series A (Æ)

    159,990      4,152

Limited Brands, Inc.

    79,900      1,480

Macy’s, Inc.

    123,340      3,119

Newell Rubbermaid, Inc.

    34,900      716

OfficeMax, Inc.

    82,200      1,502

RR Donnelley & Sons Co.

    29,100      892

Snap-On, Inc.

    15,700      931

Starwood Hotels & Resorts Worldwide, Inc. (ö)

    16,900      882

Target Corp.

    22,590      1,200

VF Corp.

    12,300      915

Walt Disney Co. (The)

    28,600      927

Williams-Sonoma, Inc. (Ñ)

    45,300      1,196
         
        34,962
         

Consumer Staples - 3.5%

        

Altria Group, Inc.

    30,900      618

Campbell Soup Co. (Ñ)

    42,700      1,486

Hershey Co. (The) (Ñ)

    38,600      1,443

Kraft Foods, Inc. Class A

    26,600      841

Philip Morris International, Inc. (Æ)

    30,900      1,577

Procter & Gamble Co.

    15,500      1,039

Safeway, Inc.

    100,140      3,165

Tyson Foods, Inc. Class A (Ñ)

    122,300      2,177
         
        12,346
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Financial Services - 24.1%

        

Annaly Capital Management, Inc. (ö)

    132,100      2,214

AON Corp. (Ñ)

    22,100      1,003

Assurant, Inc.

    11,400      741

Banco Bradesco SA - ADR (Ñ)

    35,100      793

Bank of America Corp.

    124,720      4,682

Bank of New York Mellon Corp. (The)

    25,400      1,106

BB&T Corp. (Ñ)

    48,100      1,649

Capital One Financial Corp. (Ñ)

    26,200      1,389

Citigroup, Inc. (Ñ)

    195,200      4,933

Colonial BancGroup, Inc. (The) (Ñ)

    70,700      575

Federal National Mortgage
Association (Ñ)

    200,400      5,671

Franklin Resources, Inc.

    14,480      1,378

Freddie Mac

    151,800      3,781

Genworth Financial, Inc. Class A

    157,468      3,631

Goldman Sachs Group, Inc. (The)

    24,890      4,763

H&R Block, Inc.

    35,100      768

Hartford Financial Services
Group, Inc.

    13,000      926

Invesco, Ltd. (Ñ)

    28,600      734

Jefferies Group, Inc. (Ñ)

    99,100      1,863

JPMorgan Chase & Co.

    170,310      8,115

Keycorp

    93,200      2,249

Lehman Brothers Holdings, Inc. (Ñ)

    17,600      779

Mercury General Corp. (Ñ)

    30,400      1,517

Merrill Lynch & Co., Inc.

    36,700      1,829

Morgan Stanley

    53,500      2,600

National City Corp. (Ñ)

    107,500      677

New York Community Bancorp,
Inc. (Ñ)

    50,600      945

Northern Trust Corp.

    22,000      1,630

Paychex, Inc. (Ñ)

    23,800      866

Prologis (ö)

    23,500      1,471

Protective Life Corp.

    24,800      1,057

Ryder System, Inc.

    6,000      411

South Financial Group, Inc. (The) (Ñ)

    54,300      328

SunTrust Banks, Inc.

    29,000      1,617

TCF Financial Corp. (Ñ)

    48,400      842

Travelers Cos., Inc. (The)

    23,200      1,169

Unum Group

    47,100      1,093

US Bancorp (Ñ)

    68,720      2,329

Wachovia Corp. (Ñ)

    109,436      3,190

Washington Mutual, Inc. (Ñ)

    274,900      3,378

Wells Fargo & Co. (Ñ)

    91,630      2,726

Wilmington Trust Corp. (Ñ)

    46,400      1,526
         
        84,944
         

 

Select Value Fund   85

Table of Contents

Russell Investment Company

Select Value Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Health Care - 7.3%

        

Abbott Laboratories

    34,760      1,834

Amgen, Inc. (Æ)

    26,620      1,115

Baxter International, Inc.

    24,820      1,547

Biogen Idec, Inc. (Æ)(Ñ)

    49,065      2,978

Bristol-Myers Squibb Co.

    70,800      1,555

Covidien, Ltd.

    36,740      1,715

CVS Caremark Corp.

    26,000      1,050

Eli Lilly & Co.

    16,400      789

Genzyme Corp. (Æ)

    31,830      2,239

Invitrogen Corp. (Æ)(Ñ)

    20,200      1,890

Johnson & Johnson

    15,450      1,036

Medco Health Solutions, Inc. (Æ)

    17,300      857

Merck & Co., Inc.

    51,490      1,959

Omnicare, Inc. (Ñ)

    29,000      590

Pfizer, Inc.

    62,200      1,251

Sanofi-Aventis - ADR

    67,600      2,608

Wyeth

    18,800      836
         
        25,849
         

Integrated Oils - 5.1%

        

BP PLC - ADR

    18,500      1,347

Chevron Corp.

    44,992      4,326

ConocoPhillips

    34,300      2,955

Exxon Mobil Corp.

    49,800      4,635

Hess Corp.

    4,100      435

Marathon Oil Corp.

    31,400      1,431

Occidental Petroleum Corp.

    35,800      2,979
         
        18,108
         

Materials and Processing - 7.6%

     

AbitibiBowater, Inc. (Ñ)

    100,520      992

Alcoa, Inc.

    19,300      671

Ashland, Inc. (Ñ)

    32,300      1,713

Avery Dennison Corp.

    18,300      882

Bemis Co., Inc. (Ñ)

    31,000      815

BHP Billiton, Ltd. - ADR (Æ)

    6,050      491

Bunge, Ltd.

    8,600      981

Cabot Corp. (Ñ)

    28,600      834

Celanese Corp. Class A

    46,800      2,094

CF Industries Holdings, Inc.

    2,800      374

EI Du Pont de Nemours & Co.

    25,800      1,262

Freeport-McMoRan Copper & Gold, Inc. Class B (Ñ)

    20,710      2,356

Harsco Corp.

    11,200      665

Masco Corp. (Ñ)

    50,900      927

MeadWestvaco Corp. (Ñ)

    31,800      836

Mosaic Co. (The) (Æ)

    4,800      588
     Principal
Amount ($)
or Shares		      Market
Value
$

Nucor Corp.

    10,700      808

Packaging Corp. of America

    34,100      750

PPG Industries, Inc.

    13,400      822

Praxair, Inc.

    11,430      1,044

Precision Castparts Corp.

    21,690      2,550

RPM International, Inc. (Ñ)

    35,400      789

Sonoco Products Co.

    27,700      913

Terra Industries, Inc. (Æ)(Ñ)

    12,600      477

Timken Co.

    22,000      795

United States Steel Corp.

    3,000      462

Valspar Corp. (Ñ)

    39,200      862
         
        26,753
         

Miscellaneous - 1.6%

        

Brunswick Corp. (Ñ)

    40,700      679

Eaton Corp. (Ñ)

    14,100      1,238

General Electric Co.

    21,800      713

Johnson Controls, Inc.

    19,800      698

SPX Corp.

    5,400      664

Teleflex, Inc.

    22,600      1,245

Tyco International, Ltd.

    7,175      336
         
        5,573
         

Other Energy - 6.8%

        

Anadarko Petroleum Corp.

    18,400      1,225

Cimarex Energy Co.

    8,900      554

Devon Energy Corp.

    21,460      2,434

Dynegy, Inc. Class A (Æ)

    2,043      18

El Paso Corp. (Ñ)

    35,100      602

EOG Resources, Inc. (Ñ)

    9,990      1,303

Halliburton Co.

    46,020      2,113

National Oilwell Varco, Inc. (Æ)

    23,290      1,594

NRG Energy, Inc. (Æ)(Ñ)

    22,900      1,006

Patterson-UTI Energy, Inc.

    29,600      827

Peabody Energy Corp.

    61,800      3,778

Reliant Energy, Inc. (Æ)

    137,900      3,550

Sunoco, Inc.

    23,600      1,095

Transocean, Inc. (Æ)(Ñ)

    11,087      1,635

Valero Energy Corp.

    25,900      1,265

Williams Cos., Inc.

    25,700      912
         
        23,911
         

Producer Durables - 11.3%

        

Agilent Technologies, Inc. (Æ)

    72,470      2,189

Alcatel-Lucent - ADR

    420,200      2,803

Boeing Co.

    19,090      1,620

Centex Corp. (Ñ)

    84,500      1,759

CNH Global NV (Ñ)

    25,200      1,087

 

86   Select Value Fund

Table of Contents

Russell Investment Company

Select Value Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Cummins, Inc.

    14,300      896

Deere & Co.

    26,050      2,190

Dover Corp.

    35,300      1,746

DR Horton, Inc. (Ñ)

    264,800      4,102

Graco, Inc. (Ñ)

    21,600      894

Illinois Tool Works, Inc.

    31,000      1,621

Lennar Corp. Class A (Ñ)

    18,600      343

Lockheed Martin Corp.

    36,700      3,892

Mettler Toledo International, Inc. (Æ)

    7,200      686

Molex, Inc. (Ñ)

    32,800      931

Nortel Networks Corp. (Æ)(Ñ)

    133,800      1,143

Northrop Grumman Corp.

    37,940      2,791

Pentair, Inc.

    22,600      832

Pulte Homes, Inc. (Ñ)

    256,200      3,341

Raytheon Co.

    54,230      3,469

Terex Corp. (Æ)

    21,100      1,470
         
        39,805
         

Technology - 8.9%

        

Analog Devices, Inc.

    49,800      1,604

AU Optronics Corp. - ADR (Ñ)

    86,891      1,696

BearingPoint, Inc. (Æ)(Ñ)

    893,900      1,654

Cisco Systems, Inc. (Æ)

    77,300      1,982

Corning, Inc.

    18,200      486

Dell, Inc. (Æ)

    103,800      1,934

General Dynamics Corp.

    28,000      2,532

Hewlett-Packard Co.

    80,880      3,749

Intel Corp.

    62,020      1,380

International Business Machines Corp.

    26,220      3,165

Maxim Integrated Products, Inc.

    76,800      1,615

MEMC Electronic Materials, Inc. (Æ)

    10,600      667

Microsoft Corp.

    61,800      1,762

Motorola, Inc.

    297,200      2,960

Rockwell Automation, Inc. (Ñ)

    22,200      1,204

SanDisk Corp. (Æ)

    19,000      515

Seagate Technology, Inc. (Æ)

    1,900      —

Sun Microsystems, Inc. (Æ)

    75,140      1,177

Tyco Electronics, Ltd.

    32,340      1,210
         
        31,292
         

Utilities - 7.9%

        

AGL Resources, Inc.

    24,700      840

America Movil SAB de CV Series L

    13,260      768
     Principal
Amount ($)
or Shares		      Market
Value
$		  

American Electric Power Co., Inc.

    54,800      2,446  

Aqua America, Inc. (Ñ)

    55,000      1,014  

AT&T, Inc.

    134,980      5,225  

China Mobile, Ltd. - ADR (Ñ)

    40,990      3,538  

Citizens Communications Co. (Ñ)

    109,900      1,178  

Edison International

    30,500      1,591  

Mirant Corp. (Æ)(Ñ)

    59,600      2,450  

NiSource, Inc. (Ñ)

    33,800      605  

Northeast Utilities

    33,000      868  

Progress Energy, Inc. - CVO

    1,300      —  

Sprint Nextel Corp.

    263,800      2,108  

Turkcell Iletisim Hizmet AS - ADR

    52,100      1,050  

Verizon Communications, Inc.

    53,500      2,059  

Windstream Corp. (Ñ)

    91,300      1,072  

Xcel Energy, Inc. (Ñ)

    44,600      928  
           
        27,740  
           
Total Common Stocks        

(cost $339,247)

         335,787  
           
Short-Term Investments - 4.7%        

Russell Investment Company Money Market Fund

    14,461,000      14,461  

United States Treasury Bills (ç)(ž)(§) 0.558% due 06/19/08

    2,000      1,999  
           
Total Short-Term Investments        

(cost $16,460)

         16,460  
           
Other Securities - 25.2%        

Russell Investment Company Money Market Fund (×)

    19,296,312      19,296  

State Street Securities Lending Quality Trust (×)

    69,446,703      69,447  
           
Total Other Securities        

(cost $88,743)

         88,743  
           
Total Investments - 125.2%        

(identified cost $444,450)

         440,990  
Other Assets and Liabilities,
Net - (25.2%)		         (88,685 )
           
Net Assets - 100.0%         352,305  
           

 

See accompanying notes which are an integral part of the financial statements.

 

Select Value Fund   87

Table of Contents

Russell Investment Company

Select Value Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		    Notional
Amount		      Unrealized
Appreciation
(Depreciation)
$
       

Long Positions

        

S&P 500 E-Mini Index (CME)
expiration date 06/08 (98)

    USD     6,791      146

S&P 500 Index (CME)
expiration date 06/08 (28)

    USD     9,702      342
         

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

         488
         

 


 

See accompanying notes which are an integral part of the financial statements.

 

88   Select Value Fund

Table of Contents

Russell Investment Company

Select Value Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Auto and Transportation

    1.3  

Consumer Discretionary

    9.9  

Consumer Staples

    3.5  

Financial Services

    24.1  

Health Care

    7.3  

Integrated Oils

    5.1  

Materials and Processing

    7.6  

Miscellaneous

    1.6  

Other Energy

    6.8  

Producer Durables

    11.3  

Technology

    8.9  

Utilities

    7.9  

Short-Term Investments

    4.7  

Other Securities

    25.2  
      

Total Investments

    125.2  

Other Assets and Liabilities, Net

    (25.2 )
      
   100.0  
      

Futures Contracts

    0.1  

 

See accompanying notes which are an integral part of the financial statements.

 

Select Value Fund   89

Table of Contents

Russell Investment Company

Fixed Income I Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,014.50    $ 1,016.91

Expenses Paid During Period*

    $ 8.01    $ 8.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.60% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,019.20    $ 1,021.68

Expenses Paid During Period*

    $ 3.21    $ 3.22

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.64% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,020.90    $ 1,022.92

Expenses Paid During Period*

    $ 1.96    $ 1.96

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.39% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

90   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,020.30    $ 1,022.28

Expenses Paid During Period*

    $ 2.61    $ 2.61

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.52% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class Y

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,021.10    $ 1,023.12

Expenses Paid During Period*

    $ 1.76    $ 1.76

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.35% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Fixed Income I Fund   91

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Long-Term Investments - 95.2%

        

Asset-Backed Securities - 4.1%

        

Aames Mortgage Investment Trust (Ê)(Þ)

     

Series 2005-3 Class A1

        

3.045% due 08/25/35

    430      409

Accredited Mortgage Loan Trust (Ê)

        

Series 2004-2 Class A2

        

3.195% due 07/25/34

    163      84

ACE Securities Corp. (Ê)

        

Series 2003-OP1 Class M2

        

4.395% due 12/25/33

    165      122

Series 2005-SD3 Class A

        

3.295% due 08/25/45

    366      329

Series 2006-HE4 Class A2A

        

2.955% due 10/25/36

    421      411

Aegis Asset Backed Securities Trust (Ê)

     

Series 2003-3 Class M2

        

4.545% due 01/25/34

    350      199

Air 2 US (Þ)

        

8.027% due 10/01/19

    781      766

Ameriquest Mortgage Securities, Inc. (Ê)

     

Series 2002-D Class M1

        

6.356% due 02/25/33

    155      106

Series 2004-R10 Class A5

        

3.285% due 11/25/34

    2      2

Asset Backed Funding Certificates (Ê)

        

Series 2006-HE1 Class A2A

        

2.955% due 01/25/37

    402      391

Series 2006-OPT Class A3A

        

2.955% due 10/25/36

    360      355

Asset Backed Securities Corp. Home
Equity (Ê)

     

Series 2006-HE2 Class A1A

        

3.145% due 03/25/36

    1,346      1,080

Bank of America Credit Card Trust (Ê)

        

Series 2008-A1 Class A1

        

3.296% due 04/15/13

    400      395

Banc of America Mortgage Securities,
Inc. (Ê)

     

Series 2006-B Class 1A1

        

6.158% due 11/20/36

    303      263

Bayview Financial Acquisition Trust

        

Series 2006-A Class 1A3

        

5.865% due 02/28/41

    410      341

Bear Stearns Asset Backed Securities
Trust (Ê)

     

Series 2003-1 Class A1

        

3.395% due 11/25/42

    176      159

Series 2003-SD1 Class A

        

3.345% due 12/25/33

    131      98
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-2 Class A3

        

3.295% due 04/25/35

    43      41

Series 2006-SD2 Class A2

        

3.095% due 06/25/36

    415      376

Series 2007-HE5 Class 1A1

        

2.985% due 10/25/31

    70      67

Series 2007-HE6 Class 1A1

        

4.145% due 06/25/37

    895      766

BNC Mortgage Loan Trust (Ê)

        

Series 2007-2 Class A2

        

2.995% due 05/25/37

    241      230

Burlington Northern and Santa Fe Corp.

     

4.967% due 04/01/23

    193      177

Business Loan Express (Ê)(Þ)

        

Series 2003-2A Class A

        

3.695% due 01/25/32

    315      317

Carrington Mortgage Loan Trust (Ê)

        

Series 2005-NC5 Class A2

        

3.215% due 10/25/35

    275      268

Series 2006-NC3 Class A3

        

3.045% due 08/25/36

    2,105      1,847

Cendant Mortgage Corp. (Ê)(Þ)

        

Series 2003-A Class A3

        

3.445% due 07/25/43

    115      113

Citigroup Mortgage Loan Trust, Inc. (Ê)

        

Series 2006-SHL Class A1 (Þ)

        

3.095% due 11/25/45

    1,200      1,050

Series 2007-AMC Class A2A

        

3.005% due 03/25/37

    625      565

Countrywide Asset-Backed Certificates

        

Series 2001-BC3 Class A (Ê)

        

3.375% due 12/25/31

    96      85

Series 2004-13 Class AF3

        

3.989% due 02/25/31

    44      44

Series 2004-AB2 Class M3 (Ê)

        

3.495% due 05/25/36

    310      200

Series 2004-BC1 Class M1 (Ê)

        

3.395% due 02/25/34

    209      169

Series 2005-17 Class 1AF1 (Ê)

        

3.095% due 05/25/36

    37      37

Series 2006-3 Class 3A1 (Ê)

        

3.015% due 06/25/36

    371      355

Series 2006-6 Class 2A2 (Ê)

        

3.075% due 09/25/36

    657      622

Series 2006-11 Class 1AF4

        

6.300% due 09/25/46

    505      437

Series 2006-BC1 Class 1A (Ê)

        

3.095% due 04/25/36

    1,439      1,314

 

92   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-BC4 Class 2A2 (Ê)

        

3.055% due 07/25/36

    2,220      1,917

Series 2007-7 Class 2A1 (Ê)

        

2.975% due 10/25/37

    215      207

Countrywide Home Equity Loan Trust (Ê)

        

Series 2005-A Class 2A

        

2.956% due 04/15/35

    236      186

Series 2005-G Class 2A

        

2.946% due 12/15/35

    1,177      653

Series 2006-E Class 2A

        

2.856% due 07/15/36

    1,060      875

Series 2007-GW Class A

        

3.266% due 08/15/37

    1,575      1,282

Credit-Based Asset Servicing and Securitization LLC

        

Series 2004-CB7 Class AF5

        

4.585% due 10/25/34

    550      477

Series 2005-CB5 Class AV2 (Ê)

        

3.155% due 08/25/35

    396      380

Series 2006-CB6 Class A21 (Ê)

        

2.935% due 07/25/36

    710      696

Series 2007-RP1 Class A (Ê)(Þ)

        

3.205% due 05/25/46

    1,463      1,447

CVS Pass-Through Trust (Þ)

        

5.789% due 01/10/26

    267      250

5.880% due 01/10/28

    12      12

Delta Air Lines, Inc.

        

6.821% due 08/10/22

    2,072      1,989

Delta Air Lines, Inc.

        

Series 00-1

        

7.570% due 11/18/10

    2,035      1,974

Series 01-1

        

6.619% due 03/18/11

    504      494

7.111% due 09/18/11

    200      195

Ellington Loan Acquisition Trust (Ê)(Þ)

        

Series 2007-1 Class A2A1

        

3.895% due 05/25/37

    945      871

Series 2007-1 Class A2C

        

4.145% due 05/25/37

    1,000      670

First Franklin Mortgage Loan Asset Backed Certificates (Ê)

        

Series 2004-FFH Class 2A1

        

3.275% due 10/25/34

    18      16

Series 2006-FF3 Class A2A

        

2.975% due 02/25/36

    26      26

Fremont Home Loan Trust (Ê)

        

Series 2006-3 Class 2A1

        

2.965% due 02/25/37

    155      151
     Principal
Amount ($)
or Shares		      Market
Value
$

GE-WMC Mortgage Securities LLC (Ê)

        

Series 2006-1 Class A2A

        

2.935% due 08/25/36

    244      237

GMAC Mortgage Corp. Loan Trust

        

Series 2004-HE5 Class A3

        

3.970% due 09/25/34

    3      3

Series 2006-HE4 Class A1 (Ê)

        

2.965% due 12/25/36

    591      473

GSAA Trust (Ê)

        

Series 2006-2 Class 2A3

        

3.165% due 12/25/35

    570      424

Series 2006-4 Class 1A2

        

5.940% due 03/25/36

    512      324

GSAMP Trust (Ê)

        

Series 2003-HE2 Class M1

        

3.545% due 08/25/33

    188      148

HFC Home Equity Loan Asset Backed Certificates (Ê)

        

Series 2005-1 Class A

        

3.090% due 01/20/34

    495      409

Series 2006-2 Class A1

        

2.950% due 03/20/36

    1,593      1,255

HSI Asset Securitization Corp. Trust (Ê)

        

Series 2006-HE2 Class 2A1

        

2.945% due 12/25/36

    191      180

JP Morgan Mortgage Acquisition Corp. (Ê)

        

Series 2006-WMC Class A2

        

2.945% due 08/25/36

    160      157

Series 2007-CH3 Class A2

        

2.975% due 03/25/37

    544      518

Lehman XS Trust (Ê)

        

Series 2005-1 Class 2A1

        

4.660% due 07/25/35

    698      532

Series 2005-1 Class 2A2

        

4.660% due 07/25/35

    183      138

Series 2006-16N Class A1A

        

2.975% due 11/25/46

    464      441

Series 2006-17 Class WF11

        

3.015% due 11/25/36

    427      411

Long Beach Mortgage Loan Trust (Ê)

        

Series 2004-4 Class 1A1

        

3.175% due 10/25/34

    34      28

Series 2006-9 Class 2A1

        

2.955% due 10/25/36

    1,893      1,836

 

Fixed Income I Fund   93

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Mastr Asset Backed Securities Trust (Ê)

        

Series 2003-WMC Class M2

        

5.370% due 08/25/33

    84      50

Morgan Stanley ABS Capital I (Ê)

        

Series 2003-NC8 Class M3

        

6.045% due 09/25/33

    59      33

Series 2006-HE7 Class A2A

        

2.945% due 09/25/36

    1,196      1,175

Series 2007-HE6 Class A1

        

2.955% due 05/25/37

    228      220

Series 2007-NC3 Class A2A

        

2.955% due 05/25/37

    155      150

Morgan Stanley Mortgage Loan Trust (Ê)

        

Series 2006-12X Class A1

        

3.015% due 10/25/36

    315      312

MSDWCC Heloc Trust (Ê)

        

Series 2005-1 Class A

        

3.085% due 07/25/17

    71      56

Nationstar Home Equity Loan Trust (Ê)
Series 2007-B Class 2AV1
3.015% due 04/25/37

    596      579

New Century Home Equity Loan
Trust (Ê)
Series 2004-4 Class M2
3.425% due 02/25/35

    370      282

Northwest Airlines, Inc.
Series 07-1
7.027% due 11/01/19

    745      656

Option One Mortgage Loan Trust (Ê)
Series 2003-2 Class M2

        

5.445% due 04/25/33

    83      39

Series 2003-3 Class M3

        

4.895% due 06/25/33

    151      33

Series 2003-4 Class M2

        

4.545% due 07/25/33

    122      71

Series 2007-4 Class 2A1

        

2.985% due 04/25/37

    2,557      2,403

Series 2007-6 Class 2A1

        

2.955% due 06/25/37

    612      573

Option One Mortgage Securities Corp. NIM Trust (Ê)(Þ)
Series 2006-1A
2.995% due 12/25/10

    884      795

Origen Manufactured Housing
Series 2005-B Class A4

        

5.910% due 01/15/37

    100      95

Series 2006-A Class A1 (Ê)

        

2.866% due 11/15/18

    447      413
     Principal
Amount ($)
or Shares		      Market
Value
$

Ownit Mortgage Loan Asset Backed Certificates (Ê)
Series 2006-6 Class A2C
3.055% due 09/25/37

    2,390      1,954

Park Place Securities, Inc. (Ê)
Series 2004-WWF Class A1D

        

3.355% due 02/25/35

    78      73

Series 2005-WCW Class M1

        

3.345% due 09/25/35

    370      271

Popular ABS Mortgage Pass-Through Trust
Series 2005-6 Class A3
5.680% due 01/25/36

    390      387

RAAC Series (Ê)(Þ)
Series 2006-RP2 Class A
3.145% due 02/25/37

    686      618

Renaissance Home Equity Loan Trust
Series 2003-3 Class A (Ê)

        

3.395% due 12/25/33

    399      356

Series 2005-1 Class M1

        

5.357% due 05/25/35

    225      160

Series 2005-2 Class AF4

        

4.934% due 08/25/35

    585      537

Series 2006-1 Class AF6

        

5.746% due 05/25/36

    305      237

Residential Asset Mortgage Products, Inc.

        

Series 2003-RS1 Class AI6A

        

5.980% due 12/25/33

    306      265

Series 2003-RS2 Class AII (Ê)

        

3.575% due 03/25/33

    116      91

Series 2003-RS3 Class AII (Ê)

        

3.615% due 04/25/33

    84      74

Residential Asset Securities Corp.

        

Series 2001-KS1 Class AI6

        

6.349% due 03/25/32

    464      340

Series 2001-KS1 Class AII (Ê)

        

3.365% due 03/25/32

    80      61

Series 2001-KS3 Class AII (Ê)

        

3.355% due 09/25/31

    51      45

Series 2003-KS2 Class MI1

        

4.800% due 04/25/33

    912      537

Series 2003-KS2 Class MI3

        

6.100% due 04/25/33

    151      28

Series 2006-KS6 Class A1 (Ê)

        

2.935% due 08/25/36

    106      105

Residential Funding Mortgage Securities II, Inc. (Ê)

        

Series 2005-HS1 Class AI1

        

3.015% due 09/25/35

    510      494

 

94   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2007-HSA Class AI1

        

3.015% due 05/25/37

    185      169

SACO I, Inc. (Ê)
Series 2005-WM3 Class A1

        

3.155% due 09/25/35

    75      61

Series 2006-1 Class A

        

3.065% due 09/25/35

    431      272

Saxon Asset Securities Trust (Ê)
Series 2004-1 Class A
3.435% due 03/25/35

    57      49

Security National Mortgage Loan
Trust (Ê)(Þ)
Series 2006-3A Class A1
3.175% due 10/25/09

    426      408

Sierra Receivables Funding Co. (Ê)(Þ)
Series 2006-1A Class A2
2.950% due 05/20/18

    212      179

SLM Student Loan Trust (Ê)
Series 2008-2 Class A1
3.220% due 01/26/15

    195      195

Small Business Administration
Series 2000-P10 Class 1
7.449% due 08/10/10

    54      55

Soundview Home Equity Loan Trust
Series 2006-WF1 Class A2
5.645% due 10/25/36

    1,060      1,016

Southwest Airlines Co.
Series 07-1
6.150% due 08/01/22

    167      160

Specialty Underwriting & Residential Finance (Ê)
Series 2003-BC1 Class A
3.575% due 01/25/34

    25      24

Series 2006-AB1 Class A2

        

3.035% due 12/25/36

    850      829

Structured Asset Investment Loan Trust (Ê)
Series 2005-3 Class M2
3.335% due 04/25/35

    500      333

Structured Asset Securities Corp.

        

Series 2002-AL1 Class A3

        

3.450% due 02/25/32

    441      377

Series 2002-HF1 Class A (Ê)

        

3.185% due 01/25/33

    13      11

Series 2004-19X Class A2

        

4.370% due 10/25/34

    165      162

Series 2006-BC3 Class A2 (Ê)

        

2.945% due 10/25/36

    419      406
     Principal
Amount ($)
or Shares		      Market
Value
$

Truman Capital Mortgage Loan
Trust (Ê)(Þ)
Series 2006-1 Class A
3.155% due 03/25/36

    1,188      1,022

Wachovia Asset Securitization, Inc. (Ê)
Series 2003-HE3 Class A
3.145% due 11/25/33

    164      148

Wells Fargo Home Equity Trust (Ê)
Series 2007-1 Class A1
2.995% due 03/25/37

    512      502
         
        57,818
         

Corporate Bonds and Notes - 16.1%

     

Abbott Laboratories
5.875% due 05/15/16

    265      279

Alamosa Delaware, Inc.
8.500% due 01/31/12

    225      209

Allstate Life Global Funding Trusts
5.375% due 04/30/13

    400      406

American Electric Power Co.,Inc.
Series C
5.375% due 03/15/10

    120      122

American Express Centurion Bank (Ê)
Series BKNT
2.738% due 06/12/09

    1,900      1,883

American Express Co.

        

7.000% due 03/19/18

    200      215

6.800% due 09/01/66

    170      163

American General Finance Corp.

        

3.350% due 08/17/11 (Ê)

    2,000      1,895

6.900% due 12/15/17

    130      129

American International Group, Inc.

        

4.700% due 10/01/10

    60      60

5.375% due 10/18/11

    570      578

5.050% due 10/01/15

    505      487

5.850% due 01/16/18

    80      80

6.250% due 03/15/87

    1,800      1,587

Anadarko Petroleum Corp.

        

3.200% due 09/15/09 (Ê)

    480      472

5.950% due 09/15/16

    550      566

6.450% due 09/15/36

    360      369

Apache Corp.
6.000% due 01/15/37

    420      422

Appalachian Power Co.
Series O
5.650% due 08/15/12

    175      177

ArcelorMittal USA
6.500% due 04/15/14

    615      630

ASIF Global Financing XIX (Þ)
4.900% due 01/17/13

    50      49

 

Fixed Income I Fund   95

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

AT&T, Inc.
5.100% due 09/15/14

    240      241

Atmos Energy Corp.
6.350% due 06/15/17

    185      185

BAC Capital Trust XIV(ƒ)
5.630% due 12/31/49

    20      16

BAE Systems Holdings, Inc. (Þ)
6.400% due 12/15/11

    925      962

Bank of America Corp.

        

4.375% due 12/01/10

    1,700      1,713

5.420% due 03/15/17

    20      20

6.000% due 09/01/17

    1,000      1,041

5.750% due 12/01/17

    2,645      2,695

8.000% due 12/29/49 (ƒ)

    1,700      1,730

8.125% due 12/29/49 (ƒ)

    1,110      1,134

Bank of America NA

        

Series BKNT

        

3.080% due 06/15/16 (Ê)

    1,200      1,022

6.000% due 10/15/36

    300      296

Bank of New York Mellon Corp. (The)
5.125% due 11/01/11

    830      846

Bank of Scotland PLC (Þ)
5.250% due 02/21/17

    230      239

Bear Stearns Cos., Inc. (The)

        

2.979% due 07/16/09 (Ê)

    1,900      1,832

3.160% due 08/21/09 (Ê)

    800      786

6.400% due 10/02/17

    1,585      1,635

7.250% due 02/01/18

    40      44

BellSouth Corp.

        

4.750% due 11/15/12

    20      20

6.550% due 06/15/34

    175      176

Bellsouth Telecommunications, Inc.
7.000% due 12/01/95

    685      682

Burlington Northern Santa Fe Corp.

        

5.650% due 05/01/17

    115      116

6.875% due 12/01/27

    90      93

Camden Property Trust
5.700% due 05/15/17

    640      546

Cardinal Health, Inc.
5.850% due 12/15/17

    470      470

Carolina Power & Light Co.
6.500% due 07/15/12

    5      5

CenterPoint Energy Houston Electric LLC
Series J2
5.700% due 03/15/13

    350      360

CenterPoint Energy Resources Corp.

        

6.125% due 11/01/17

    125      126
     Principal
Amount ($)
or Shares		      Market
Value
$

Series B

        

7.875% due 04/01/13

    345      377

Chubb Corp.
6.000% due 05/11/37

    220      206

Citicorp
7.250% due 10/15/11

    460      474

Citigroup Funding, Inc. (Ê)
2.606% due 06/26/09

    400      393

Citigroup, Inc.

        

2.701% due 12/28/09 (Ê)

    800      784

4.125% due 02/22/10

    630      618

5.500% due 08/27/12

    500      501

5.300% due 10/17/12

    200      199

5.500% due 04/11/13

    2,075      2,088

5.850% due 07/02/13

    100      101

5.000% due 09/15/14

    3,095      2,950

6.000% due 08/15/17

    300      301

6.125% due 11/21/17

    980      995

6.125% due 08/25/36

    500      459

6.875% due 03/05/38

    1,650      1,706

8.400% due 04/29/49 (ƒ)

    2,600      2,631

Clear Channel Communications, Inc.

        

4.250% due 05/15/09

    230      220

6.250% due 03/15/11

    290      246

Clorox Co.
5.450% due 10/15/12

    295      298

Columbus Southern Power Co.
Series C
5.500% due 03/01/13

    85      86

Comcast Cable Communications LLC
6.875% due 06/15/09

    445      457

Comcast Cable Holdings LLC

        

9.800% due 02/01/12

    715      806

7.875% due 08/01/13

    700      761

Comcast Corp.

        

6.500% due 01/15/15

    1,050      1,095

6.500% due 01/15/17

    745      777

6.300% due 11/15/17

    2,340      2,431

6.500% due 11/15/35

    705      704

6.450% due 03/15/37

    115      114

6.950% due 08/15/37

    265      280

Commonwealth Edison Co.

        

6.450% due 01/15/38

    100      99

Series 98

        

6.150% due 03/15/12

    215      223

ConocoPhillips Holding Co.
6.950% due 04/15/29

    825      945

Continental Airlines, Inc.
Series A
5.983% due 04/19/22

    3,295      2,871

 

96   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Countrywide Financial Corp. Series MTN
5.800% due 06/07/12

    530      505

Credit Suisse USA, Inc.

        

5.250% due 03/02/11

    165      168

5.500% due 08/15/13

    115      117

4.875% due 01/15/15

    110      107

CVS Caremark Corp.
6.250% due 06/01/27

    1,265      1,254

CVS Pass-Through Trust (Þ)
6.036% due 12/10/28

    1,082      996

Daimler Finance North AmericaA LLC

        

4.875% due 06/15/10

    1,185      1,197

5.875% due 03/15/11

    300      307

Dayton Power & Light Co. (The)
5.125% due 10/01/13

    345      352

DCP Midstream LLC

        

6.875% due 02/01/11

    45      47

6.750% due 09/15/37 (Þ)

    785      763

Dell, Inc. (Å)
5.650% due 04/15/18

    475      468

Detroit Edison Co. (The)
6.350% due 10/15/32

    125      126

Devon Financing Corp. ULC
7.875% due 09/30/31

    230      280

Dominion Resources, Inc.

        

4.750% due 12/15/10

    90      91

5.700% due 09/17/12

    455      469

Series A

        

5.200% due 01/15/16

    560      546

Series B

        

6.250% due 06/30/12

    15      16

DPL, Inc.
6.875% due 09/01/11

    495      515

DTE Energy Co.
7.050% due 06/01/11

    300      316

Duke Energy Carolinas LLC

        

5.625% due 11/30/12

    265      277

6.000% due 01/15/38

    695      697

Duke Realty, LP
5.950% due 02/15/17

    320      290

Eastman Kodak Co.
7.250% due 11/15/13

    70      68

Electronic Data Systems Corp.
7.125% due 10/15/09

    630      643

Energy Future Holdings Corp.

        

Series P

        

5.550% due 11/15/14

    150      123

Series Q

        

6.500% due 11/15/24

    90      68
     Principal
Amount ($)
or Shares		      Market
Value
$

Series R

        

6.550% due 11/15/34

    635      480

Enterprise Products Operating, LP
6.300% due 09/15/17

    690      703

Erac USA Finance Co. (Þ)
7.000% due 10/15/37

    1,755      1,457

Exelon Corp.

        

4.900% due 06/15/15

    740      693

5.625% due 06/15/35

    330      290

Exelon Generation Co. LLC
6.200% due 10/01/17

    115      114

FedEx Corp.

        

5.500% due 08/15/09

    560      567

7.600% due 07/01/97

    170      197

FirstEnergy Corp.

        

Series B

        

6.450% due 11/15/11

    2,225      2,311

Series C

        

7.375% due 11/15/31

    905      1,000

Florida Power & Light Co.
5.950% due 02/01/38

    145      147

Ford Motor Co.
7.450% due 07/16/31

    410      306

Ford Motor Credit Co. LLC
7.375% due 10/28/09

    3,240      3,119

Freeport-McMoRan Copper & Gold, Inc.

        

6.875% due 02/01/14 (Ñ)

    920      954

8.375% due 04/01/17

    300      331

General Electric Capital Corp.

        

3.250% due 06/15/09

    1,155      1,154

2.888% due 01/20/10 (Ê)

    600      597

3.135% due 08/15/11 (Ê)

    1,500      1,450

5.250% due 10/19/12

    2,970      3,041

5.625% due 05/01/18

    3,030      3,061

5.875% due 01/14/38

    2,315      2,207

5.500% due 09/15/67

    300      427

6.375% due 11/15/67

    4,270      4,274

Series MTN (Ê)

        

2.937% due 10/26/09

    2,700      2,665

Series MTNA

        

6.000% due 06/15/12

    1,270      1,335

5.450% due 01/15/13

    830      858

General Electric Co.
5.250% due 12/06/17

    505      503

General Motors Corp.
8.375% due 07/05/33

    160      171

Glen Meadow Pass-Through Trust (þ)
6.505% due 02/12/67

    200      180

 

Fixed Income I Fund   97

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

GMAC LLC

        

5.625% due 05/15/09 (Ñ)

    2,250      2,116

7.750% due 01/19/10

    230      212

Goldman Sachs Capital II (ƒ)
5.793% due 12/29/49

    960      724

Goldman Sachs Group, Inc. (The)

        

2.689% due 06/23/09 (Ê)

    500      494

5.300% due 02/14/12

    2,605      2,632

5.450% due 11/01/12

    80      81

4.750% due 07/15/13

    625      614

6.250% due 09/01/17

    1,800      1,839

6.150% due 04/01/18

    2,040      2,064

5.950% due 01/15/27

    500      457

6.450% due 05/01/36

    285      271

6.750% due 10/01/37

    1,125      1,102

Goldman Sachs Group, LP
4.500% due 06/15/10

    955      954

Hartford Financial Services
Group, Inc.
5.250% due 10/15/11

    275      279

Hess Corp.

        

7.875% due 10/01/29

    110      132

7.300% due 08/15/31

    465      523

Historic TW, Inc.
8.050% due 01/15/16

    565      605

HJ Heinz Co. (Þ)
6.428% due 12/01/20

    100      101

HSBC Bank USA North America (Ê)
Series BKNT
3.130% due 06/10/09

    800      791

HSBC Finance Corp.

        

4.750% due 05/15/09

    2,895      2,908

2.878% due 10/21/09 (Ê)

    400      392

4.125% due 11/16/09

    1,535      1,532

2.981% due 03/12/10 (Ê)

    700      677

6.375% due 11/27/12

    320      329

5.000% due 06/30/15

    285      277

ILFC E-Capital Trust II (Þ)
6.250% due 12/21/65

    290      257

International Business Machines Corp.

        

5.700% due 09/14/17

    700      729

International Lease Finance Corp.

        

4.750% due 07/01/09

    1,460      1,444

5.625% due 09/15/10

    545      544

5.750% due 06/15/11

    250      249

5.625% due 09/20/13

    1,115      1,098

International Paper Co.
5.850% due 10/30/12

    1,490      1,465
     Principal
Amount ($)
or Shares		      Market
Value
$

Jersey Central Power & Light Co.
5.625% due 05/01/16

    260      251

Johnson & Johnson

        

5.550% due 08/15/17

    90      96

5.950% due 08/15/37

    115      124

JP Morgan Chase Capital XV (Ñ)
5.875% due 03/15/35

    1,165      1,010

JP Morgan Chase Capital XX
Series T
6.550% due 09/29/36

    200      181

JPMorgan Chase & Co.

        

5.375% due 10/01/12

    1,870      1,923

5.375% due 01/15/14

    475      487

5.125% due 09/15/14

    1,085      1,071

5.150% due 10/01/15

    520      520

6.000% due 01/15/18

    2,595      2,690

JPMorgan Chase Bank NA
Series BKNT
5.875% due 06/13/16

    85      86

Kellogg Co.
5.125% due 12/03/12

    660      673

Kerr-McGee Corp.
6.950% due 07/01/24

    290      306

Kinder Morgan Energy Partners, LP

        

7.125% due 03/15/12

    185      195

5.000% due 12/15/13

    115      112

6.000% due 02/01/17

    60      60

5.950% due 02/15/18

    80      79

6.950% due 01/15/38

    1,370      1,389

Kraft Foods, Inc.

        

3.596% due 08/11/10 (Ê)

    1,700      1,653

5.625% due 11/01/11

    1,050      1,074

6.125% due 02/01/18

    1,640      1,674

Lehman Brothers Holdings
Capital Trust V (ƒ)
5.857% due 11/29/49

    1,450      1,029

Lehman Brothers Holdings, Inc.

        

3.170% due 08/21/09 (Ê)

    400      385

3.233% due 05/25/10 (Ê)

    300      282

5.250% due 02/06/12

    140      137

6.200% due 09/26/14

    150      151

6.875% due 05/02/18

    200      205

4.500% due 09/15/22 (Ê)

    1,380      1,328

Liberty Property, LP
5.500% due 12/15/16

    255      227

Manufacturers & Traders Trust Co.
5.585% due 12/28/20

    180      164

Marathon Oil Corp.
5.900% due 03/15/18

    165      167

 

98   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Merrill Lynch & Co., Inc.

        

3.120% due 07/25/11 (Ê)

    700      643

6.050% due 08/15/12

    200      199

5.450% due 02/05/13

    3,430      3,337

6.400% due 08/28/17

    690      689

6.875% due 04/25/18

    835      842

6.220% due 09/15/26

    905      804

MetLife, Inc.

        

6.125% due 12/01/11

    180      190

6.400% due 12/15/36

    1,010      909

Metropolitan Life Global
Funding I(Ê)(Þ)
3.110% due 05/17/10

    900      882

Midamerican Energy Co.
5.800% due 10/15/36

    615      588

Midamerican Energy Holdings Co.
Series WI
6.125% due 04/01/36

    2,150      2,148

Miller Brewing Co. (Þ)
5.500% due 08/15/13

    490      507

Morgan Stanley

        

5.625% due 01/09/12

    510      515

4.750% due 04/01/14

    250      235

3.184% due 10/18/16 (Ê)

    140      123

6.250% due 08/28/17

    300      301

6.625% due 04/01/18

    3,225      3,344

Series MTN (Ê)

        

2.803% due 01/15/10

    600      578

Natexis Ambs Co. LLC (ƒ)(Þ)
8.440% due 12/29/49

    350      352

National Rural Utilities Cooperative Finance Corp.

        

5.450% due 04/10/17

    400      398

5.450% due 02/01/18

    155      154

New Cingular Wireless Services, Inc.

        

7.875% due 03/01/11

    2,855      3,089

8.750% due 03/01/31

    1,110      1,366

News America Holdings, Inc.

        

7.750% due 12/01/45

    15      17

7.900% due 12/01/95

    295      319

8.250% due 10/17/96

    65      73

News America, Inc.

        

6.200% due 12/15/34

    35      34

6.150% due 03/01/37

    2,085      2,019

6.650% due 11/15/37

    20      21

NGPL PipeCo LLC (Þ)
6.514% due 12/15/12

    2,285      2,354

Nisource Finance Corp.

        

7.875% due 11/15/10

    465      489
     Principal
Amount ($)
or Shares		      Market
Value
$

6.400% due 03/15/18

    250      246

Norfolk Southern Corp.

        

7.050% due 05/01/37

    215      238

7.900% due 05/15/97

    1,000      1,114

Northern States Power

        

5.250% due 03/01/18 (Ñ)

    230      231

Series B

        

8.000% due 08/28/12

    890      1,006

Ohio Power Co. Series F
5.500% due 02/15/13

    45      45

ONEOK Partners, LP
6.650% due 10/01/36

    225      216

Oracle Corp.
5.750% due 04/15/18

    2,595      2,642

Pacific Gas & Electric Co.

        

4.200% due 03/01/11

    255      253

6.050% due 03/01/34

    445      443

5.800% due 03/01/37

    110      106

6.350% due 02/15/38

    90      93

Pemex Project Funding Master Trust
Series WI
6.625% due 06/15/35

    430      448

Principal Life Income Funding Trusts

        

5.300% due 12/14/12 (Ñ)

    855      865

5.300% due 04/24/13

    300      304

Progress Energy, Inc.
7.750% due 03/01/31

    130      154

Prudential Financial, Inc.

        

5.100% due 12/14/11

    430      432

6.000% due 12/01/17

    285      287

Public Service Electric & Gas Co.
5.300% due 05/01/18

    800      799

Qwest Corp.
8.875% due 03/15/12

    500      527

Rabobank Capital Funding II (ƒ)(Þ)
5.260% due 12/31/49

    20      18

Rabobank Capital Funding Trust (ƒ)(Þ)
5.254% due 12/29/49

    40      33

RBS Capital Trust III (ƒ)
5.512% due 09/29/49

    675      569

Residential Capital LLC

        

6.178% due 05/22/09 (Ê)

    330      217

8.000% due 02/22/11

    970      500

8.500% due 06/01/12

    300      153

Schering-Plough Corp.
5.550% due 12/01/13

    450      461

Sigma Finance, Inc. (Ê)(Þ)
8.500% due 08/11/16

    1,660      1,557

 

Fixed Income I Fund   99

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Simon Property Group, LP

        

6.100% due 05/01/16

    295      296

5.250% due 12/01/16

    225      213

Southern California Edison Co.
Series 08-A
5.950% due 02/01/38

    230      232

Southern Natural Gas Co. (Þ)
5.900% due 04/01/17

    30      30

Sprint Capital Corp.

        

8.375% due 03/15/12

    360      343

6.875% due 11/15/28

    320      249

8.750% due 03/15/32

    30      26

State Street Capital Trust IV (Ê)
3.800% due 06/15/37

    100      76

SunTrust Capital VIII
6.100% due 12/15/36

    630      518

SunTrust Preferred Capital I (ƒ)
5.853% due 12/31/49

    930      707

TEPPCO Partners, LP
7.550% due 04/15/38

    710      759

Time Warner Cable, Inc.

        

Series WI

        

5.400% due 07/02/12

    380      382

5.850% due 05/01/17

    3,080      3,056

Time Warner Entertainment Co., LP
8.375% due 07/15/33

    105      122

Time Warner, Inc.

        

3.300% due 11/13/09 (Ê)

    400      386

6.875% due 05/01/12

    485      505

7.700% due 05/01/32

    100      108

Travelers Cos., Inc. (The)

        

5.375% due 06/15/12

    130      132

6.250% due 06/15/37

    1,275      1,248

6.250% due 03/15/67

    620      543

Union Electric Co.
6.400% due 06/15/17

    545      558

Union Pacific Corp.

        

6.125% due 01/15/12

    400      415

5.700% due 08/15/18

    1,000      1,012

United Parcel Service, Inc.
4.500% due 01/15/13

    680      692

United States Steel Corp.

        

5.650% due 06/01/13

    80      78

6.050% due 06/01/17

    165      157

6.650% due 06/01/37

    120      105

United Technologies Corp.

        

5.375% due 12/15/17

    335      342

5.400% due 05/01/35 (Ñ)

    70      65
     Principal
Amount ($)
or Shares		      Market
Value
$

UnitedHealth Group, Inc.

        

5.250% due 03/15/11

    280      280

6.000% due 06/15/17

    65      65

6.000% due 02/15/18

    1,135      1,122

Series WI

        

6.500% due 06/15/37

    120      111

USB Capital IX (ƒ)(Ñ)
6.189% due 04/15/49

    200      152

Verizon Communications, Inc.

        

5.350% due 02/15/11

    685      704

6.100% due 04/15/18

    590      619

6.400% due 02/15/38

    1,635      1,665

Verizon Global Funding Corp.
7.375% due 09/01/12

    275      302

Wachovia Capital Trust III (ƒ)
5.800% due 03/15/42

    340      270

Wachovia Corp.

        

5.500% due 05/01/13

    2,355      2,361

5.700% due 08/01/13

    1,530      1,531

5.250% due 08/01/14

    460      455

5.625% due 10/15/16

    400      383

5.750% due 06/15/17

    460      458

7.980% due 12/31/49 (ƒ)

    900      885

Wal-Mart Stores, Inc.
5.800% due 02/15/18

    570      606

Washington Mutual, Inc.

        

5.000% due 03/22/12

    895      805

4.625% due 04/01/14

    296      234

Waste Management, Inc.
6.375% due 11/15/12

    555      572

WellPoint, Inc.
5.875% due 06/15/17

    30      29

Wells Fargo & Co.

        

5.250% due 10/23/12

    345      352

4.375% due 01/31/13

    850      841

4.950% due 10/16/13

    180      180

5.625% due 12/11/17

    260      268

Wells Fargo Bank NA
5.750% due 05/16/16

    310      321

Wells Fargo Capital X
5.950% due 12/15/36

    200      178

Weyerhaeuser Co.
6.750% due 03/15/12

    475      497

Wyeth

        

6.950% due 03/15/11

    575      615

5.950% due 04/01/37

    350      347

Xcel Energy, Inc.
7.000% due 12/01/10

    595      630

 

100   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Xerox Corp.
5.500% due 05/15/12

    620      620

XTO Energy, Inc.

        

7.500% due 04/15/12

    130      141

5.500% due 06/15/18

    1,555      1,543
         
        224,997
         

International Debt - 3.5%

        

Abbey National PLC (ƒ)
(Step Up, 7.730%, 06/15/08)
6.700% due 06/29/49

    105      103

Aiful Corp. (Þ)
5.000% due 08/10/10

    400      379

America Movil SAB de CV
5.625% due 11/15/17

    220      216

Anadarko Finance Co.
Series B
7.500% due 05/01/31

    575      640

AstraZeneca PLC
5.900% due 09/15/17

    300      318

AXA SA
8.600% due 12/15/30

    75      84

Banque Centrale de Tunisie
8.250% due 09/19/27

    550      671

BNP Paribas (ƒ)(Þ)
5.186% due 06/29/49

    1,900      1,645

Bundesrepublik Deutschland
Series 04
3.750% due 01/04/15

    1,040      1,597

Canadian Natural Resources, Ltd.
6.500% due 02/15/37

    125      126

China Development Bank
5.000% due 10/15/15

    100      98

Citigroup Global Markets Deutschland AG for OAO Gazprom
10.500% due 10/21/09

    700      763

CODELCO Inc. (Þ)
6.150% due 10/24/36

    100      97

Credit Agricole SA (Ê)(Þ)

        

3.090% due 05/28/09

    400      400

3.140% due 05/28/10

    600      600

Credit Suisse Guernsey, Ltd. (ƒ)
5.860% due 05/29/49

    520      440

Depfa ACS Bank (Þ)
5.125% due 03/16/37

    400      387

Deutsche Bank AG

        

5.375% due 10/12/12

    720      744

6.000% due 09/01/17

    1,000      1,046
     Principal
Amount ($)
or Shares		      Market
Value
$

Deutsche Telekom International Finance BV

        

8.000% due 06/15/10

    525      562

5.750% due 03/23/16

    300      303

Diageo Capital PLC
5.750% due 10/23/17

    180      184

Egypt Government AID Bonds
4.450% due 09/15/15

    835      845

Eksportfinans A/S
5.500% due 05/25/16

    550      588

EnCana Corp.
6.625% due 08/15/37

    205      209

European Investment Bank

        

2.625% due 05/16/11

    3,635      3,587

Series GMTN

        

3.250% due 05/15/13

    995      980

Export-Import Bank of China (Þ)
4.875% due 07/21/15

    200      195

Export-Import Bank of Korea (Ê)
3.166% due 06/01/09

    200      200

Gaz Capital SA

        

7.343% due 04/11/13 (Å)

    100      105

6.212% due 11/22/16

    1,090      1,030

8.146% due 04/11/18 (Å)

    500      531

6.510% due 03/07/22 (Þ)

    420      384

Glitnir Banki HF (Þ)

        

6.330% due 07/28/11

    270      217

6.375% due 09/25/12

    390      337

6.693% due 06/15/16

    700      504

HBOS Capital Funding, LP (ƒ)(Þ)
6.071% due 06/30/49

    110      91

HBOS PLC (ƒ)(Þ)
5.920% due 09/29/49

    200      153

HSBC Holdings PLC

        

6.500% due 05/02/36

    685      674

6.500% due 09/15/37

    1,035      1,015

Intergas Finance BV (Þ)
6.375% due 05/14/17

    641      558

Ispat Inland ULC
9.750% due 04/01/14

    1,615      1,723

Kaupthing Bank Hf

        

5.750% due 10/04/11 (Þ)

    100      88

7.125% due 05/19/16 (Å)

    1,480      1,195

Kaupthing Bank Hf (Þ)
7.625% due 02/28/15

    1,210      1,129

Klio Funding, Ltd. (Ê)(Å)
Series 2004-1A Class A1
3.645% due 04/23/39

    3,695      1,293

 

Fixed Income I Fund   101

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Koninklijke Philips Electronics NV
6.875% due 03/11/38

    670      723

Korea Development Bank (Ê)
2.824% due 04/03/10

    700      698

Korea Electric Power Corp. (Þ)
5.125% due 04/23/34

    155      152

Marathon Oil Canada Corp.
8.375% due 05/01/12

    610      674

Mexico Government International Bond
Series MTNA
6.750% due 09/27/34

    973      1,077

MUFG Capital Finance 1, Ltd. (ƒ)
6.346% due 07/25/99

    200      181

National Australia Bank, Ltd. (Ê)(Þ)
2.979% due 09/11/09

    500      500

Newcastle CDO, Ltd. (Þ)
Series 2004-4A Class 3FX
5.110% due 03/24/39

    1,075      838

Petrobras International Finance Co.
6.125% due 10/06/16

    460      475

Petroleum Export, Ltd. (Þ)
5.265% due 06/15/11

    144      145

Ras Laffan Liquefied Natural
Gas Co., Ltd. III (Þ)
5.838% due 09/30/27

    250      211

Resona Bank, Ltd. (ƒ)(Þ)
5.850% due 09/29/49

    100      84

Resona Preferred Global
Securities Cayman, Ltd. (ƒ)(Þ)
7.191% due 12/29/49

    405      360

Rogers Wireless, Inc.
6.375% due 03/01/14

    750      765

Royal Bank of Scotland Group PLC

        

7.640% due 03/31/49 (ƒ)

    100      94

6.990% due 10/29/49 (ƒ)(Þ)

    180      165

Series 1 (ƒ)

        

9.118% due 03/31/49

    200      202

Royal KPN NV
8.000% due 10/01/10

    620      663

RSHB Capital SA for OJSC
Russian Agricultural Bank (Þ)
6.299% due 05/15/17

    310      289

Russia Government International Bond
Series REGS
7.500% due 03/31/30

    49      56

Santander Perpetual SA
Unipersonal (ƒ)(Þ)
6.671% due 10/29/49

    900      855
     Principal
Amount ($)
or Shares		      Market
Value
$

Shinsei Finance Cayman, Ltd. (ƒ)(Þ)
6.418% due 01/29/49

    630      462

Siemens Financieringsmaatschappij NV (Þ)

        

5.500% due 02/16/12

    1,400      1,441

6.125% due 08/17/26

    735      715

SMFG Preferred Capital USD 1, Ltd. (ƒ)(Þ)
6.078% due 01/29/49

    1,120      998

Suncor Energy, Inc.
6.500% due 06/15/38

    1,065      1,061

Systems 2001 AT LLC (Þ)
7.156% due 12/15/11

    231      245

Telecom Italia Capital SA

        

6.200% due 07/18/11

    290      292

5.250% due 10/01/15

    290      271

Telefonica Emisiones SAU (Ê)
2.842% due 06/19/09

    800      791

Telefonica Europe BV
7.750% due 09/15/10

    360      386

TNK-BP Finance SA

        

7.875% due 03/13/18 (Þ)

    240      238

Series 144a (Þ)

        

7.500% due 07/18/16

    540      523

Transocean, Inc.

        

6.000% due 03/15/18

    275      285

6.800% due 03/15/38

    75      80

Tyco International Group SA

        

6.750% due 02/15/11

    880      915

6.375% due 10/15/11

    465      479

6.000% due 11/15/13

    835      846

7.000% due 06/15/28

    70      67

6.875% due 01/15/29

    210      202

Vale Overseas, Ltd.

        

6.250% due 01/23/17

    100      103

6.875% due 11/21/36

    837      847
         
        49,488
         

Mortgage-Backed
Securities - 59.9%

        

Adjustable Rate Mortgage Trust (Ê)
Series 2005-3 Class 8A2
3.135% due 07/25/35

    259      190

American Home Mortgage Assets (Ê)
Series 2007-4 Class A2
3.085% due 08/25/37

    2,425      2,163

 

102   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

American Home Mortgage Investment Trust (Ê)

        

Series 2004-4 Class 4A

        

4.390% due 02/25/45

    241      219

Series 2005-2 Class 5A2

        

3.045% due 09/25/35

    229      228

Series 2005-4 Class 1A1

        

3.185% due 11/25/45

    813      661

Arcap Reit, Inc. (Þ)
Series 2004-RR3 Class B
5.040% due 09/21/45

    515      505

Banc of America Alternative Loan Trust

        

Series 2003-2 Class CB2 (Ê)

        

3.395% due 04/25/33

    140      132

Series 2003-10 Class 2A2 (Ê)

        

3.345% due 12/25/33

    346      311

Series 2006-5 Class CB17

        

6.000% due 06/25/36

    804      718

Banc of America Commercial Mortgage, Inc.

        

Series 2004-3 Class A3

        

4.875% due 06/10/39

    580      581

Series 2004-4 Class A3

        

4.128% due 07/10/42

    580      576

Series 2005-2 Class A4

        

4.783% due 07/10/43

    1,100      1,086

Series 2005-3 Class A2

        

4.501% due 07/10/43

    445      442

Series 2005-3 Class A4

        

4.668% due 07/10/43

    1,200      1,155

Series 2006-1 Class A4

        

5.372% due 09/10/45

    910      895

Series 2006-3 Class A4

        

5.889% due 07/10/44

    1,330      1,346

Series 2007-1 Class A3

        

5.449% due 01/15/49

    1,235      1,186

Series 2007-2 Class AAB

        

5.817% due 04/10/49

    990      983

Series 2007-3 Class A4

        

5.838% due 06/10/49

    200      197

Series 2007-5 Class A3

        

5.620% due 02/10/51

    7,355      7,048

Banc of America Funding Corp.

        

Series 2005-5 Class 1A11

        

5.500% due 09/25/35

    1,026      980

Series 2005-D Class A1 (Ê)

        

4.113% due 05/25/35

    412      385
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-3 Class 5A8

        

5.500% due 03/25/36

    1,040      957

Series 2006-A Class 3A2

        

5.845% due 02/20/36

    381      329

Series 2006-A Class 4A1 (Ê)

        

5.566% due 02/20/36

    1,048      995

Series 2007-E Class 4A1 (Ê)

        

5.896% due 07/20/47

    990      956

Banc of America Mortgage Securities, Inc.

        

Series 2003-9 Class 1A12 (Ê)

        

3.345% due 12/25/33

    868      834

Series 2004-1 Class 5A1

        

6.500% due 09/25/33

    57      57

Series 2004-2 Class 5A1

        

6.500% due 10/25/31

    85      81

Series 2004-11 Class 2A1

        

5.750% due 01/25/35

    853      803

Series 2005-H Class 2A5 (Ê)

        

4.806% due 09/25/35

    575      525

Series 2005-L Class 3A1 (Ê)

        

5.465% due 01/25/36

    519      488

Series 2006-2 Class A15

        

6.000% due 07/25/36

    916      898

Series 2007-3 Class 1A1

        

6.000% due 09/25/37

    2,386      2,307

Bear Stearns Adjustable Rate Mortgage Trust

        

Series 2002-11 Class 1A1

        

5.550% due 02/25/33

    32      30

Series 2004-1 Class 23A1 (Ê)

        

5.441% due 04/25/34

    256      236

Series 2004-4 Class A4

        

3.558% due 06/25/34

    102      102

Series 2004-8 Class 2A1

        

5.072% due 11/25/34

    778      752

Series 2004-9 Class 22A1 (Ê)

        

4.777% due 11/25/34

    234      226

Series 2004-10 Class 22A1

        

4.958% due 01/25/35

    353      334

Series 2005-2 Class A1 (Ê)

        

4.125% due 03/25/35

    3,745      3,582

Bear Stearns Alt-A Trust

        

Series 2005-4 Class 23A1

        

5.371% due 05/25/35

    507      442

Series 2005-7 Class 22A1

        

5.706% due 09/25/35

    327      275

Series 2006-4 Class 32A1

        

6.480% due 07/25/36

    84      66

 

Fixed Income I Fund   103

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Bear Stearns Structured Products, Inc.

        

Series 2007-R6 Class 1A1

        

5.682% due 01/26/36

    539      452

Series 2007-R6 Class 2A1

        

5.783% due 12/26/46

    274      226

Series 2007-R10 Class A1 (Ê)(Þ)

        

2.956% due 09/26/37

    1,626      1,553

Series 2007-R11 Class A1A (Ê)(Þ)

        

3.495% due 09/27/37

    1,838      1,751

Chase Mortgage Finance Corp.

        

Series 2003-S8 Class A1

        

4.500% due 09/25/18

    506      488

Series 2005-A1 Class 2A2 (Ê)

        

5.237% due 12/25/35

    1,677      1,657

Series 2006-A1 Class 1A1 (Ê)

        

6.022% due 09/25/36

    1,152      1,140

Series 2006-S4 Class A3

        

6.000% due 12/25/36

    914      902

Series 2006-S4 Class A4

        

6.000% due 12/25/36

    520      517

Citigroup Mortgage Loan Trust, Inc.

        

Series 2004-HYB Class A2 (Ê)

        

6.742% due 02/25/34

    40      39

Series 2005-3 Class 2A2B

        

4.683% due 08/25/35

    713      648

Series 2005-11 Class A2A (Ê)

        

4.700% due 12/25/35

    387      376

Series 2005-11 Class A3 (Ê)

        

4.900% due 12/25/35

    563      544

Series 2006-WFH Class A1 (Ê)

        

2.945% due 10/25/36

    584      576

Series 2007-AHL Class A3A (Ê)

        

2.955% due 05/25/37

    321      300

Series 2007-AR8 Class 2A1A

        

5.914% due 08/25/37

    611      582

Citigroup/Deutsche Bank Commercial Mortgage Trust

        

Series 2005-CD1 Class A4

        

5.400% due 07/15/44

    765      761

Series 2006-CD3 Class A5

        

5.617% due 10/15/48

    685      680

Citimortgage Alternative Loan Trust

        

Series 2006-A3 Class 1A5

        

6.000% due 07/25/36

    510      456

Commercial Mortgage Load Trust

        

Series 2008-LS1 Class A4B

        

6.221% due 12/10/49

    1,890      1,910
     Principal
Amount ($)
or Shares		      Market
Value
$

Countrywide Alternative Loan Trust

        

Series 2004-2CB Class 1A4 (Ê)

        

3.295% due 03/25/34

    491      446

Series 2005-56 Class 4A1 (Ê)

        

3.205% due 11/25/35

    934      757

Series 2005-59 Class 1A1 (Ê)

        

3.225% due 11/20/35

    1,140      933

Series 2005-J8 Class 1A3

        

5.500% due 07/25/35

    770      684

Series 2005-J12 Class 2A1 (Ê)

        

3.165% due 11/25/35

    674      466

Series 2005-J13 Class 2A3

        

5.500% due 11/25/35

    316      281

Series 2006-9T1 Class A7

        

6.000% due 05/25/36

    389      325

Series 2006-43C Class 1A7

        

6.000% due 02/25/37

    236      218

Series 2006-J2 Class A3

        

6.000% due 04/25/36

    586      540

Series 2007-J2 Class 2A1

        

6.000% due 07/25/37

    723      595

Series 2007-OA6 Class A1B (Ê)

        

3.095% due 06/25/37

    684      533

Series 2007-OA7 Class A1A (Ê)

        

3.075% due 05/25/47

    670      521

Countrywide Asset-Backed Certificates (Ê)

        

Series 2006-IM1 Class A2

        

3.135% due 04/25/36

    5,604      5,075

Countrywide Home Loan Mortgage Pass Through Trust

        

Series 2004-16 Class 1A1 (Ê)

        

3.295% due 09/25/34

    290      236

Series 2004-22 Class A3

        

4.800% due 11/25/34

    466      437

Series 2004-HYB Class 1A1

        

4.720% due 02/20/35

    1,038      1,007

Series 2005-3 Class 1A2 (Ê)

        

3.185% due 04/25/35

    147      120

Series 2005-HYB Class 3A2A (Ê)

        

5.250% due 02/20/36

    143      117

Series 2005-R3 Class AF (Ê)(Þ)

        

3.295% due 09/25/35

    965      847

Series 2006-HYB Class 2A1A

        

5.719% due 05/20/36

    723      682

Series 2006-OA4 Class A1 (Ê)

        

5.286% due 04/25/46

    403      293

Series 2007-18 Class 2A1

        

6.500% due 09/25/37

    696      664

 

104   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2007-HY1 Class 1A2

        

5.692% due 04/25/37

    338      298

Credit Suisse Mortgage Capital Certificates

        

Series 2006-C1 Class AAB

        

5.681% due 02/15/39

    1,220      1,201

Series 2006-C2 Class A1

        

5.250% due 03/15/39

    894      896

Series 2006-C2 Class A2

        

5.847% due 03/15/39

    1,120      1,119

Series 2006-TFL Class A1 (Ê)(Å)

        

1.000% due 04/15/21

    174      164

Series 2007-C1 Class A3

        

5.383% due 02/15/40

    2,500      2,420

Series 2007-C2 Class A2

        

5.448% due 01/15/49

    2,285      2,271

Series 2007-C3 Class A4

        

5.913% due 06/15/39

    2,265      2,249

Series 2007-C4 Class A4

        

6.005% due 09/15/39

    1,760      1,760

Series 2007-C5 Class A3

        

5.694% due 09/15/40

    545      524

Series 2007-C5 Class A4

        

5.695% due 09/15/40

    1,200      1,182

Series 2008-C1 Class A3

        

6.219% due 02/15/41

    1,570      1,589

Credit Suisse First Boston Mortgage Securities Corp.

        

Series 1998-C2 Class A2

        

6.300% due 11/15/30

    155      156

Series 2004-C1 Class A3

        

4.321% due 01/15/37

    211      209

Series 2005-9 Class 2A1

        

5.500% due 10/25/35

    1,219      1,152

Series 2005-C4 Class A3

        

5.120% due 08/15/38

    5,050      5,000

Deutsche ALT-A Securities, Inc. Alternate Loan Trust

        

Series 2005-AR1 Class 2A3

        

4.977% due 08/25/35

    1,060      860

Downey Savings & Loan Association Mortgage Loan Trust

        

Series 2004-AR3 Class 1A1B (Ê)

        

6.627% due 07/19/44

    156      124

Series 2005-AR6 Class 2A1A (Ê)

        

3.090% due 10/19/45

    892      733

Fannie Mae

        

7.000% due 2009

    5      5

5.500% due 2011

    415      442
     Principal
Amount ($)
or Shares		      Market
Value
$

7.000% due 2011

    9      9

8.000% due 2011

    2      2

5.190% due 2012 (Ê)

    741      758

7.000% due 2012

    3      3

5.500% due 2013

    8      8

6.500% due 2013

    46      49

5.500% due 2014

    21      21

6.500% due 2015

    19      20

7.000% due 2015

    13      14

5.500% due 2016

    4      4

6.000% due 2016

    137      143

6.500% due 2016

    114      118

9.000% due 2016

    2      2

5.500% due 2017

    196      202

6.000% due 2017

    1,210      1,250

6.500% due 2017

    248      258

7.500% due 2017

    1      1

8.500% due 2017

    4      4

4.500% due 2018

    2,931      2,916

5.000% due 2018

    2,785      2,815

5.500% due 2018

    2,349      2,405

6.500% due 2018

    287      303

4.500% due 2019

    1,312      1,304

5.000% due 2019

    11,330      11,441

6.500% due 2019

    140      145

4.000% due 2020

    1,739      1,675

4.500% due 2020

    3,113      3,093

5.000% due 2020

    10,262      10,347

6.500% due 2020

    60      63

4.000% due 2021

    660      636

5.000% due 2021

    787      792

5.500% due 2021

    22      22

6.000% due 2021

    1,472      1,518

5.500% due 2022

    6,228      6,348

8.000% due 2024

    102      112

8.500% due 2024

    19      22

9.000% due 2024

    4      4

7.000% due 2025

    16      17

8.000% due 2025

    1      1

8.500% due 2025

    27      27

6.000% due 2026

    2,577      2,644

7.000% due 2026

    25      26

9.000% due 2026

    4      5

6.000% due 2027

    1,365      1,400

7.000% due 2027

    7      8

9.000% due 2027

    1      1

6.500% due 2028

    458      481

6.500% due 2029

    1,352      1,411

7.000% due 2029

    122      130

 

Fixed Income I Fund   105

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

6.500% due 2030

    9      9

8.000% due 2030

    127      138

6.500% due 2031

    146      153

8.000% due 2031

    117      126

5.500% due 2032

    64      64

6.000% due 2032

    1,352      1,391

6.500% due 2032

    1,769      1,845

7.000% due 2032

    786      831

8.000% due 2032

    5      7

3.912% due 2033 (Ê)

    487      500

4.500% due 2033

    1,552      1,481

5.000% due 2033

    5,530      5,449

5.203% due 2033 (Ê)

    228      232

5.500% due 2033

    20,488      20,669

6.000% due 2033

    1,046      1,075

6.500% due 2033

    825      859

7.000% due 2033

    188      200

4.500% due 2034

    1,407      1,343

5.000% due 2034

    10,309      10,162

5.500% due 2034

    29,058      29,307

6.000% due 2034

    9,169      9,411

6.500% due 2034

    862      895

4.500% due 2035

    827      788

4.522% due 2035 (Ê)

    539      542

4.667% due 2035 (Ê)

    2,075      2,093

4.840% due 2035 (Ê)

    582      590

4.852% due 2035 (Ê)

    371      374

5.000% due 2035

    10,810      10,639

5.500% due 2035

    47,405      47,762

6.000% due 2035

    6,354      6,518

6.041% due 2035 (Ê)

    1,082      1,113

6.043% due 2035 (Ê)

    651      670

6.045% due 2035 (Ê)

    242      249

6.057% due 2035 (Ê)

    249      256

6.060% due 2035 (Ê)

    1,002      1,030

6.061% due 2035 (Ê)

    308      316

4.777% due 2036 (Ê)

    917      928

5.000% due 2036

    11,697      11,512

5.500% due 2036

    5,600      5,630

6.000% due 2036

    17,324      17,721

6.500% due 2036

    4,420      4,578

7.000% due 2036

    179      188

5.000% due 2037

    2,853      2,805

5.500% due 2037

    7,896      7,948

5.557% due 2037 (Ê)

    731      744

5.571% due 2037 (Ê)

    886      901

5.871% due 2037 (Ê)

    196      199

6.000% due 2037

    17,721      18,136
     Principal
Amount ($)
or Shares		      Market
Value
$

6.500% due 2037

    9,325      9,630

6.000% due 2038

    2,184      2,234

5.276% due 2044 (Ê)

    158      160

Series 2003-343 Class 6

        

Interest Only STRIP

        

5.000% due 10/01/33

    945      205

Series 2003-345 Class 18

        

Interest Only STRIP

        

4.500% due 12/01/18

    2,244      345

Series 2003-345 Class 19

        

Interest Only STRIP

        

4.500% due 01/01/19

    2,504      378

Series 2004-353 Class 2

        

Interest Only STRIP

        

5.000% due 08/01/34

    1,423      349

Series 2004-356 Class 35

        

Interest Only STRIP

        

4.500% due 03/01/20

    384      60

Series 2004-356 Class 36

        

Interest Only STRIP

        

4.500% due 03/01/20

    660      104

Series 2005-365 Class 12

        

Interest Only STRIP

        

5.500% due 12/01/35

    2,621      599

Series 2006-369 Class 8

        

Interest Only STRIP

        

5.500% due 04/01/36

    702      162

Series 2006-372 Class 2

        

Interest Only STRIP

        

6.000% due 08/01/36

    1,675      372

Series 2006-377 Class 2

        

Interest Only STRIP

        

5.000% due 10/01/36

    1,711      408

15 Year TBA (Ï)

        

4.500%

    2,820      2,784

5.000%

    3,895      3,914

5.500%

    6,960      7,086

6.000%

    5,200      5,354

30 Year TBA (Ï)

        

5.000%

    51,160      50,249

5.500%

    73,745      74,137

6.000%

    10,175      10,401

6.500%

    3,770      3,901

Fannie Mae Grantor Trust

        

Series 2001-T6 Class B

        

6.088% due 05/25/11

    1,810      1,876

Series 2002-T5 Class A1 (Ê)

        

3.135% due 05/25/32

    631      621

 

106   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2003-T4 Class 1A (Ê)

        

2.996% due 09/26/33

    169      159

Fannie Mae REMICS

        

Series 1992-158 Class ZZ

        

7.750% due 08/25/22

    206      224

Series 1999-56 Class Z

        

7.000% due 12/18/29

    364      386

Series 2003-21 Class M

        

5.000% due 02/25/17

    25      25

Series 2003-32 Class FH (Ê)

        

3.295% due 11/25/22

    226      222

Series 2003-35 Class FY (Ê)

        

3.295% due 05/25/18

    1,126      1,115

Series 2003-37 Class HY

        

5.000% due 12/25/16

    562      570

Series 2003-78 Class FI (Ê)

        

3.295% due 01/25/33

    517      511

Series 2004-21 Class FL (Ê)

        

3.245% due 11/25/32

    253      250

Series 2005-65 Class FP (Ê)

        

3.145% due 08/25/35

    322      321

Series 2006-5 Class 3A2 (Ê)

        

4.665% due 05/25/35

    100      101

Series 2006-48 Class LG

        

Principal Only STRIP

        

Zero coupon due 06/25/36

    213      128

Series 2007-73 Class A1 (Ê)

        

2.955% due 07/25/37

    761      697

Fannie Mae Whole Loan

        

Series 2003-W1 Class 1A1

        

6.500% due 12/25/42

    58      59

Series 2003-W5 Class A (Ê)

        

3.115% due 04/25/33

    227      215

Series 2003-W9 Class A (Ê)

        

3.135% due 06/25/33

    325      301

Series 2004-W2 Class 5AF (Ê)

        

3.245% due 03/25/44

    436      430

Federal Home Loan Mortgage Corp. Structured Pass Through Securities (Ê)

        

Series 2005-63 Class 1A1

        

5.722% due 02/25/45

    62      59

FHA Project Citi 68 NP
7.430% due 01/01/21

    156      157

First Horizon Alternative Mortgage Securities

        

Series 2004-AA3 Class A1 (Ê)

        

5.296% due 09/25/34

    312      259
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-AA5 Class A2 (Ê)

        

6.519% due 09/25/36

    522      356

Series 2006-AA7 Class A1 (Ê)

        

6.535% due 01/25/37

    2,542      1,968

Series 2006-FA3 Class A6

        

6.000% due 07/25/36

    500      475

First Horizon Asset Securities, Inc. (Ê)

        

Series 2005-AR5 Class 3A1

        

5.535% due 10/25/35

    247      227

Freddie Mac

        

8.000% due 2009

    4      4

6.000% due 2010

    25      26

7.000% due 2010

    39      41

8.000% due 2010

    9      9

6.000% due 2011

    82      84

7.000% due 2011

    7      7

8.000% due 2011

    8      8

6.000% due 2012

    1      1

8.000% due 2012

    4      4

6.000% due 2013

    23      23

7.000% due 2014

    30      31

12.000% due 2014

    17      18

6.000% due 2016

    292      301

9.000% due 2016

    82      88

6.000% due 2017

    480      495

8.000% due 2017

    14      15

4.500% due 2018

    1,388      1,379

5.000% due 2018

    866      875

4.500% due 2019

    803      796

5.000% due 2019

    661      668

5.500% due 2019

    847      866

4.500% due 2020

    310      307

5.500% due 2020

    2,235      2,285

9.000% due 2024

    5      6

6.500% due 2025

    14      15

8.000% due 2025

    14      15

9.000% due 2025

    8      9

9.000% due 2026

    2      2

6.500% due 2027

    2      2

7.216% due 2027 (Ê)

    25      25

8.500% due 2027

    53      58

6.500% due 2028

    165      173

6.500% due 2029

    293      306

7.266% due 2030 (Ê)

    9      9

6.000% due 2031

    14      14

6.500% due 2031

    432      451

5.500% due 2032

    4,030      4,075

6.000% due 2032

    61      63

 

Fixed Income I Fund   107

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

6.500% due 2032

    514      536

7.000% due 2032

    473      502

7.500% due 2032

    52      56

4.985% due 2033 (Ê)

    33      34

5.000% due 2033

    985      971

5.500% due 2033

    5,531      5,587

6.000% due 2033

    474      487

6.500% due 2033

    242      251

4.500% due 2034

    321      307

5.000% due 2034

    3,547      3,498

5.500% due 2034

    2,233      2,254

6.000% due 2034

    810      832

6.500% due 2034

    207      214

6.881% due 2034 (Ê)

    182      185

5.000% due 2035

    5,210      5,131

5.500% due 2035

    2,998      3,024

5.000% due 2036

    3,534      3,480

5.121% due 2036 (Ê)

    21      22

5.500% due 2036

    1,076      1,085

5.870% due 2036 (Ê)

    346      352

5.926% due 2036 (Ê)

    747      767

5.969% due 2036 (Ê)

    458      469

6.149% due 2036 (Ê)

    815      834

5.000% due 2037

    772      759

5.500% due 2037

    284      286

5.509% due 2037 (Ê)

    390      396

5.532% due 2037 (Ê)

    1,059      1,076

5.698% due 2037 (Ê)

    226      231

5.704% due 2037 (Ê)

    1,872      1,912

5.706% due 2037 (Ê)

    1,484      1,496

5.729% due 2037 (Ê)

    571      576

5.763% due 2037 (Ê)

    1,021      1,042

5.783% due 2037 (Ê)

    516      525

5.817% due 2037 (Ê)

    2,302      2,348

5.818% due 2037 (Ê)

    479      489

5.855% due 2037 (Ê)

    154      157

5.872% due 2037 (Ê)

    236      240

5.901% due 2037 (Ê)

    565      577

5.908% due 2037 (Ê)

    512      522

5.911% due 2037 (Ê)

    43      44

6.115% due 2037 (Ê)

    1,699      1,726

6.500% due 2037

    425      441

5.500% due 2038

    480      484

6.500% due 2038

    1,000      1,037

15 Year TBA (Ï)

        

5.000%

    2,500      2,514

30 Year TBA (Ï)

        

5.000%

    3,050      2,997

5.500%

    11,365      11,436
     Principal
Amount ($)
or Shares		      Market
Value
$

6.000%

    12,225      12,497

6.500%

    200      207

Freddie Mac REMICS

        

Series 1991-105 Class G

        

7.000% due 03/15/21

    32      35

Series 1998-210 Class ZM

        

6.000% due 12/15/28

    582      596

Series 2000-226 Class F (Ê)

        

3.166% due 11/15/30

    10      10

Series 2001-229 Class KF (Ê)

        

3.145% due 07/25/22

    336      334

Series 2003-258 Class IG

        

Interest Only STRIP

        

4.500% due 10/15/16

    644      59

Series 2003-262 Class AB

        

2.900% due 11/15/14

    459      457

Series 2004-277 Class UF (Ê)

        

3.016% due 06/15/33

    599      594

Series 2004-281 Class DF (Ê)

        

3.166% due 06/15/23

    458      452

Series 2005-292 Class IG

        

Interest Only STRIP

        

5.000% due 04/15/23

    359      45

Series 2005-294 Class FA (Ê)

        

2.886% due 03/15/20

    872      861

Series 2005-295 Class NA

        

4.250% due 09/15/24

    352      353

Series 2005-299 Class KF (Ê)

        

3.116% due 06/15/35

    471      463

Series 2005-301 Class IM

        

Interest Only STRIP

        

5.500% due 01/15/31

    498      59

Series 2005-305 Class JF (Ê)

        

3.016% due 10/15/35

    375      371

Series 2006-323 Class PA

        

6.000% due 03/15/26

    950      966

Series 2007-333 Class AF (Ê)

        

2.866% due 10/15/20

    5,355      5,241

Series 2007-333 Class BF (Ê)

        

2.866% due 07/15/19

    1,267      1,242

Series 2007-333 Class FT (Ê)

        

2.866% due 08/15/19

    3,022      2,960

Series 2007-334 Class FA (Ê)

        

2.946% due 02/15/19

    3,582      3,509

GE Capital Commercial Mortgage Corp.

        

Series 2006-C1 Class A4

        

5.518% due 03/10/44

    1,145      1,129

 

108   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2007-C1 Class A4

        

5.543% due 12/10/49

    1,060      1,036

Ginnie Mae I

        

6.500% due 2009

    25      25

6.500% due 2010

    2      3

7.000% due 2011

    8      8

9.500% due 2016

    2      2

8.000% due 2017

    10      10

10.500% due 2020

    7      9

8.000% due 2022

    18      19

8.500% due 2022

    10      11

8.500% due 2024

    8      9

8.000% due 2025

    19      21

9.000% due 2025

    17      19

8.000% due 2026

    79      86

7.000% due 2029

    4      5

8.000% due 2029

    55      59

8.500% due 2029

    20      22

8.000% due 2030

    75      83

8.500% due 2030

    18      20

7.000% due 2031

    358      384

7.000% due 2032

    76      80

5.000% due 2033

    2,624      2,605

7.000% due 2033

    16      18

5.000% due 2035

    410      407

6.000% due 2035

    3,664      3,772

30 Year TBA (Ï)

        

5.500%

    2,575      2,608

6.500%

    2,700      2,801

Ginnie Mae II

        

5.125% due 2027 (Ê)

    37      37

5.625% due 2030 (Ê)

    117      118

6.375% due 2030 (Ê)

    18      18

7.500% due 2032

    13      14

4.500% due 2035

    8      7

GMAC Mortgage Corp. Loan Trust

        

Series 2005-AR6 Class 3A1

        

5.299% due 11/19/35

    827      776

Series 2006-AR1 Class 1A1 (Ê)

        

5.589% due 04/19/36

    1,890      1,841

Goldman Sachs Mortgage Securities Corp. II
Series 2007-GG1 Class A4
5.993% due 08/10/45

    1,790      1,787

Government National Mortgage
Association (Ê)
Series 1999-40 Class FE
3.263% due 11/16/29

    770      765
     Principal
Amount ($)
or Shares		      Market
Value
$

Greenpoint Mortgage Funding Trust (Ê)

        

Series 2003-1 Class A1

        

4.386% due 10/25/33

    858      816

Series 2006-AR5 Class A1A

        

2.975% due 10/25/46

    1,407      1,231

Greenwich Capital Commercial Funding Corp.

        

Series 2004-GG1 Class A7

        

5.317% due 06/10/36

    1,745      1,772

Series 2005-GG5 Class A41

        

5.243% due 04/10/37

    695      691

Series 2007-GG1 Class A4

        

5.736% due 12/10/49

    1,645      1,625

GS Mortgage Securities Corp. II

        

Series 2005-GG4 Class AABA

        

4.680% due 07/10/39

    600      584

Series 2006-GG6 Class A4

        

5.553% due 04/10/38

    1,150      1,143

Series 2006-GG8 Class AAB

        

5.535% due 11/10/39

    575      569

GSMPS Mortgage Loan Trust (Ê)(Þ)
Series 2004-4 Class 1AF
3.295% due 06/25/34

    911      851

GSR Mortgage Loan Trust

        

Series 2004-5 Class 1A3 (Ê)

        

3.080% due 05/25/34

    313      253

Series 2004-7 Class 4A1

        

4.841% due 06/25/34

    63      56

Series 2005-AR7 Class 6A1

        

5.250% due 11/25/35

    596      556

Harborview Mortgage Loan Trust

        

Series 2004-4 Class 3A (Ê)

        

4.389% due 06/19/34

    195      184

Series 2005-4 Class 3A1

        

5.148% due 07/19/35

    414      393

Series 2005-14 Class 3A1A

        

5.296% due 12/19/35

    214      207

Series 2006-2 Class 1A

        

5.458% due 02/25/36

    951      738

Series 2006-3 Class 1A1A (Ê)

        

6.356% due 06/19/36

    5,410      4,316

HSI Asset Securitization Corp. Trust (Ê)
Series 2005-I1 Class 2A1
3.015% due 11/25/35

    1      1

Impac CMB Trust (Ê)
Series 2004-5 Class 1A1
3.255% due 10/25/34

    264      211

 

Fixed Income I Fund   109

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Impac Secured Assets CMN Owner Trust (Ê)
Series 2005-2 Class A1
3.215% due 03/25/36

    855      632

Indymac INDA Mortgage Loan Trust (Ê)
Series 2007-AR7 Class 1A1
6.260% due 11/25/37

    276      260

Indymac Index Mortgage Loan Trust

        

Series 2005-AR1 Class A2

        

5.099% due 09/25/35

    286      235

Series 2006-AR2 Class A2 (Ê)

        

2.975% due 11/25/36

    116      111

Series 2006-AR3 Class 2A1A

        

6.365% due 03/25/36

    7,301      5,795

Indymac Loan Trust (Ê)

        

Series 2004-L1 Class A1 (Þ)

        

3.175% due 07/25/09

    108      106

Series 2005-L1 Class A

        

3.095% due 06/25/10

    510      345

Series 2005-L2 Class A1

        

3.115% due 01/25/11

    618      410

JP Morgan Alternative Loan Trust

        

Series 2006-A2 Class 3A1

        

5.936% due 05/25/36

    3,196      2,668

Series 2006-A4 Class A4 (Ê)

        

2.965% due 09/25/36

    437      418

Series 2006-S4 Class A1B (Ê)

        

2.975% due 12/25/36

    1,288      1,240

JP Morgan Chase Commercial Mortgage Securities Corp.

        

Series 2004-CB8 Class A2

        

3.837% due 01/12/39

    875      852

Series 2004-LN2 Class A1

        

4.475% due 07/15/41

    628      619

Series 2005-CB1 Class A4

        

4.895% due 09/12/37

    160      156

5.472% due 01/12/43

    200      199

Series 2005-FL1 Class A1 (Ê)(Þ)

        

2.826% due 02/15/19

    100      96

Series 2005-LDP Class A3

        

4.959% due 08/15/42

    885      869

5.374% due 12/15/44

    2,845      2,821

Series 2005-LDP Class A3A1

        

4.871% due 10/15/42

    1,940      1,922

Series 2005-LDP Class A4

        

4.918% due 10/15/42

    690      671

5.345% due 12/15/44

    645      641
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-CB1 Class A3A (Þ)

        

5.491% due 12/12/44

    1,765      1,755

Series 2006-CB1 Class A4

        

5.481% due 12/12/44

    1,090      1,078

5.817% due 05/12/45

    785      776

Series 2006-CB1 Class ASB

        

5.506% due 12/12/44

    470      462

Series 2006-LDP Class A3

        

5.336% due 05/15/47

    485      470

Series 2006-LDP Class A3B

        

5.447% due 05/15/45

    820      789

Series 2006-LDP Class A4

        

6.065% due 04/15/45

    1,580      1,602

5.399% due 05/15/45

    1,055      1,032

Series 2007-C1 Class A3

        

5.790% due 10/15/14

    2,035      1,936

Series 2007-CB1 Class A2

        

5.815% due 02/12/49

    595      596

Series 2007-CB1 Class A4

        

5.440% due 06/12/47

    165      160

Series 2007-CB2 Class ASB

        

5.688% due 11/12/16

    1,165      1,153

Series 2007-LD1 Class A2

        

5.827% due 02/15/51

    2,550      2,558

Series 2007-LD1 Class A4

        

6.007% due 06/15/49

    1,470      1,468

5.882% due 02/15/51

    1,265      1,262

Series 2007-LDP Class A2

        

5.434% due 01/15/49

    4,150      3,834

Series 2007-LDP Class A3

        

5.420% due 01/15/49

    2,890      2,796

Series 2008-C2 Class A1

        

5.017% due 02/12/51

    450      448

Series 2008-C2 Class ASB

        

6.125% due 02/12/51

    1,055      1,060

JP Morgan Mortgage Trust

        

Series 2005-A1 Class 6T1 (Ê)

        

5.023% due 02/25/35

    461      432

Series 2005-A2 Class 3A1

        

4.911% due 04/25/35

    39      39

Series 2006-A2 Class 1A1

        

5.467% due 04/25/36

    1,612      1,584

Series 2007-A1 Class 3A2 (Ê)

        

5.006% due 07/25/35

    5,248      5,089

Series 2007-A1 Class 6A1

        

4.777% due 07/25/35

    1      1

Series 2007-A4 Class 3A1

        

5.883% due 06/25/37

    1,801      1,748

 

110   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

LB-UBS Commercial Mortgage Trust

        

Series 2001-C3 Class A1

        

6.058% due 06/15/20

    148      150

Series 2004-C4 Class A3

        

5.145% due 06/15/29

    1,460      1,470

Series 2005-C3 Class A5

        

4.739% due 07/15/30

    820      792

Series 2005-C3 Class AAB

        

4.664% due 07/15/30

    1,000      964

Series 2005-C5 Class A4

        

4.954% due 09/15/30

    1,700      1,662

Series 2006-C4 Class A4

        

6.081% due 06/15/38

    400      407

Series 2007-C6 Class A4

        

5.858% due 07/15/40

    695      693

Lehman Brothers Floating Rate Commercial Mortgage Trust
Series 2006-LLF Class A1 (Ê)(Þ)
2.796% due 09/15/21

    96      90

Lehman Mortgage Trust
Series 2005-3 Class 1A3
5.500% due 01/25/36

    1,308      1,250

Lehman XS Trust (Ê)

        

Series 2005-5N Class 1A1

        

3.195% due 11/25/35

    614      497

Series 2005-7N Class 1A1B

        

3.195% due 12/25/35

    461      315

Mastr Adjustable Rate Mortgages Trust

        

Series 2004-13 Class 3A4 (Ê)

        

3.787% due 11/21/34

    427      422

Series 2006-2 Class 3A1

        

4.849% due 01/25/36

    1,182      1,135

Series 2006-OA2 Class 1A1 (Ê)

        

5.126% due 12/25/46

    489      339

Series 2007-3 Class 12A1 (Ê)

        

3.095% due 05/25/47

    1,652      1,282

Mastr Alternative Loans Trust

        

Series 2003-4 Class B1

        

5.681% due 06/25/33

    413      375

Series 2004-10 Class 5A6

        

5.750% due 09/25/34

    640      518

Mastr Asset Securitization Trust

        

Series 2003-7 Class 4A35 (Ê)

        

3.295% due 09/25/33

    643      607

Series 2003-11 Class 6A8 (Ê)

        

3.395% due 12/25/33

    683      637

Series 2004-4 Class 2A2 (Ê)

        

3.345% due 04/25/34

    593      576
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-2 Class 1A1

        

5.250% due 11/25/35

    1,327      1,236

Mastr Reperforming Loan Trust (Þ)
Series 2005-1 Class 1A1
6.000% due 08/25/34

    518      494

Merrill Lynch Mortgage Investors, Inc.

        

Series 2005-A10 Class A (Ê)

        

3.105% due 02/25/36

    264      213

Merrill Lynch Mortgage Trust

        

Series 2004-MKB Class A2

        

4.353% due 02/12/42

    820      817

Series 2006-C1 Class A4

        

5.842% due 05/12/39

    660      663

Merrill Lynch/Countrywide Commercial Mortgage Trust

        

Series 2006-3 Class A2

        

5.291% due 07/12/46

    1,820      1,810

Series 2007-5 Class A4

        

5.378% due 08/12/48

    485      469

Series 2007-8 Class A3

        

6.156% due 08/12/49

    1,915      1,932

Series 2007-8 Class ASB

        

6.089% due 03/12/17

    810      815

MLCC Mortgage Investors, Inc. (Ê)

        

Series 2004-HB1 Class A2

        

3.544% due 04/25/29

    157      154

Series 2005-2 Class 3A

        

3.599% due 10/25/35

    150      136

Series 2005-3 Class 4A

        

3.145% due 11/25/35

    88      80

Morgan Stanley Capital I

        

Series 2004-RR2 Class A2 (Þ)

        

5.450% due 10/28/33

    1,705      1,707

Series 2005-HQ5 Class A4

        

5.168% due 01/14/42

    1,125      1,121

Series 2005-HQ6 Class A4A

        

4.989% due 08/13/42

    530      519

Series 2005-IQ1 Class AAB

        

5.178% due 09/15/42

    940      923

Series 2005-T17 Class A5

        

4.780% due 12/13/41

    310      302

Series 2006-HQ1 Class A4

        

5.328% due 11/12/41

    345      336

Series 2006-HQ8 Class A4

        

5.560% due 03/12/44

    1,025      1,015

Series 2006-HQ9 Class A4

        

5.731% due 07/12/44

    965      966

Series 2007-HQ1 Class A4

        

5.811% due 08/12/16

    1,045      982

 

Fixed Income I Fund   111

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2007-IQ1 Class A4

        

5.809% due 12/12/49

    400      397

Morgan Stanley Mortgage Loan Trust
Series 2006-3AR Class 2A3
5.425% due 03/25/36

    1,065      886

Novastar Mortgage-Backed Notes (Ê)
Series 2006-MTA Class 2A1A
3.085% due 09/25/46

    858      671

Prime Mortgage Trust

        

Series 2004-CL1 Class 1A2 (Ê)

        

3.295% due 02/25/34

    154      139

Series 2004-CL1 Class 2A2 (Ê)

        

3.295% due 02/25/19

    32      30

Series 2006-DR1 Class 2A1 (Þ)

        

5.500% due 05/25/35

    2,264      2,167

Series 2006-DR1 Class 2A2 (Þ)

        

6.000% due 05/25/35

    1,982      1,929

Residential Accredit Loans, Inc.

        

Series 2004-QS5 Class A6 (Ê)

        

3.495% due 04/25/34

    242      215

Series 2004-QS8 Class A4 (Ê)

        

3.295% due 06/25/34

    481      446

Series 2005-QA1 Class 2A1

        

5.828% due 12/25/35

    1,309      1,131

Series 2005-QA1 Class A41

        

5.676% due 09/25/35

    832      697

Series 2005-QA8 Class NB3

        

5.479% due 07/25/35

    539      462

Series 2005-QO3 Class A1 (Ê)

        

3.295% due 10/25/45

    927      753

Series 2006-QA1 Class A21

        

5.963% due 01/25/36

    2,667      2,143

Series 2006-QO7 Class 3A2 (Ê)

        

3.100% due 09/25/46

    1,340      905

Series 2006-QS6 Class 1A13

        

6.000% due 06/25/36

    1,361      1,218

Residential Asset Securities Corp. (Ê)
Series 2003-KS4 Class AIIB
3.475% due 06/25/33

    202      179

Residential Asset Securitization Trust

        

Series 2003-A15 Class 1A2 (Ê)

        

3.345% due 02/25/34

    581      500

Series 2007-A5 Class 2A3

        

6.000% due 05/25/37

    360      322

Residential Funding Mortgage Securities I

        

Series 2003-S5 Class 1A2 (Ê)

        

3.345% due 11/25/18

    717      716
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-S14 Class A5 (Ê)

        

3.295% due 07/25/18

    746      740

Series 2003-S20 Class 1A7 (Ê)

        

3.395% due 12/25/33

    294      283

Series 2006-SA4 Class 2A1

        

6.125% due 11/25/36

    1,370      1,292

Salomon Brothers Mortgage Securities VII, Inc.

        

Series 2002-KEY Class A2

        

4.467% due 03/18/36

    1,205      1,199

Series 2003-UP2 Class A1

        

4.000% due 12/25/18

    279      261

Sequoia Mortgage Trust (Ê)
Series 2004-3 Class A
2.633% due 04/20/34

    436      413

Small Business Administration
Series 1999-P10 Class 1
7.540% due 08/10/09

    129      133

Small Business Administration Participation Certificates
Series 2003-20I Class 1
5.130% due 09/01/23

    65      65

Structured Adjustable Rate Mortgage Loan Trust (Ê)
Series 2005-19X Class 1A1
3.215% due 10/25/35

    591      482

Structured Asset Mortgage Investments, Inc. (Ê)
Series 2005-AR5 Class A2
3.050% due 07/19/35

    300      270

Structured Asset Securities Corp.

        

Series 2004-21X Class 1A3

        

4.440% due 12/25/34

    962      963

Series 2006-11 Class A1 (Þ)

        

5.463% due 10/25/35

    321      278

Thornburg Mortgage Securities Trust

        

Series 2003-2 Class A1 (Ê)

        

3.575% due 04/25/43

    144      140

Series 2006-1 Class A3 (Ê)

        

3.065% due 01/25/36

    1,221      1,202

Series 2006-3 Class A3 (Ê)

        

3.005% due 06/25/46

    1,633      1,616

Series 2006-6 Class A1 (Ê)

        

3.005% due 11/25/11

    423      402

Series 2007-4 Class 2A1

        

6.225% due 09/25/37

    891      836

Series 2007-4 Class 3A1

        

6.217% due 09/25/37

    821      771

 

112   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Wachovia Bank Commercial Mortgage Trust

        

Series 2005-C16 Class A2

        

4.380% due 10/15/41

    951      945

Series 2005-C22 Class A3

        

5.460% due 12/15/44

    2,435      2,428

Series 2007-C33 Class A2

        

6.055% due 02/15/51

    1,700      1,713

Series 2007-WHL Class A1 (Ê) (Þ)

        

2.796% due 06/15/20

    178      164

Washington Mutual Alternative Mortgage Pass-Through Certificates

        

Series 2005-4 Class CB11

        

5.500% due 06/25/35

    350      292

Series 2007-OA2 Class 2A (Ê)

        

5.026% due 01/25/47

    515      378

Series 2007-OA5 Class A1A (Ê)

        

5.166% due 05/25/47

    1,688      1,355

Washington Mutual Mortgage Pass Through Certificates

        

Series 2002-AR1 Class 1A (Ê)

        

5.526% due 11/25/42

    119      112

Series 2003-S9 Class A2 (Ê)

        

3.445% due 10/25/33

    566      539

Series 2005-AR1 Class 1A1

        

4.833% due 10/25/35

    657      643

Series 2005-AR1 Class A1A1 (Ê)

        

3.185% due 10/25/45

    727      589

Series 2005-AR1 Class A1A2 (Ê)

        

3.175% due 11/25/45

    770      631

3.185% due 12/25/45

    407      329

Series 2005-AR6 Class B3 (Ê)

        

3.555% due 04/25/45

    470      165

Series 2006-AR1 Class 1A1A (Ê)

        

5.396% due 01/25/46

    425      332

Series 2007-HY3 Class 4B1

        

5.348% due 03/25/37

    409      313

Series 2007-HY4 Class 1A1 (Ê)

        

5.552% due 04/25/37

    444      422

Wells Fargo Mortgage Backed Securities Trust

        

Series 2004-CC Class A1 (Ê)

        

4.947% due 01/25/35

    634      611

Series 2005-17 Class 2A1

        

5.500% due 01/25/36

    1,679      1,603

Series 2006-2 Class 2A3

        

5.500% due 03/25/36

    954      917
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-AR2 Class 2A1

        

4.950% due 03/25/36

      616      589

Series 2006-AR8 Class 2A3

        

5.241% due 04/25/36

      259      255

Series 2007-8 Class 1A16

        

6.000% due 07/25/37

      933      888

Series 2007-10 Class 2A5

        

6.250% due 07/25/37

      458      441

Zuni Mortgage Loan Trust (Ê)
Series 2006-OA1 Class A1
3.025% due 08/25/36

      774      735
         
        839,421
         

Municipal Bonds - 0.2%

        

Commonwealth of Massachusetts General Obligation Unlimited, weekly demand (m)(æ)
5.000% due 11/01/24

      460      502

San Diego Tobacco Settlement
7.125% due 06/01/32

      300      285

State of Texas General Obligation Unlimited, weekly demand
4.750% due 04/01/35

      300      296

Tobacco Settlement Authority of Iowa Revenue Bonds Unlimited,
weekly demand
6.500% due 06/01/23

      95      90

Tobacco Settlement Finance Authority of West Virginia
7.467% due 06/01/47

      500      468

University of Texas Revenue Bonds (æ) Unlimited, weekly demand
5.000% due 08/15/23

      580      632
         
        2,273
         

Non-US Bonds - 0.1%

        

Canadian Government Bond
4.000% due 12/01/31

   CAD 172      245

Poland Government Bond Series 1013
5.000% due 10/24/13

   PLN  2,540      1,092
         
        1,337
         

United States Government Agencies - 2.1%

Fannie Mae

        

4.750% due 04/19/10 (Ñ)

      3,765      3,900

5.125% due 04/15/11 (Ñ)

      350      370

5.000% due 02/16/12

      3,270      3,461

4.750% due 11/19/12

      1,545      1,624

5.375% due 06/12/17

      5      5

 

Fixed Income I Fund   113

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

6.625% due 11/15/30

    85      104

6.210% due 08/06/38

    420      503

Federal Farm Credit Bank
5.125% due 08/25/16

    830      883

Federal Home Loan Bank

        

3.625% due 12/17/10

    715      726

5.375% due 05/15/19

    315      336

5.125% due 08/15/19

    330      347

Federal Home Loan Bank Discount Notes

        

5.625% due 06/11/21

    1,070      1,150

Series VB15

        

5.000% due 12/21/15

    955      1,010

Federal National Mortgage Association

        

Zero coupon due 07/05/14

    1,515      1,207

6.000% due 08/22/16

    2,260      2,282

5.000% due 04/26/17

    1,315      1,321

5.625% due 07/15/37

    130      144

Freddie Mac

        

5.125% due 08/23/10

    2,330      2,447

5.625% due 11/23/35 (Ñ)

    1,240      1,272

Freddie Mac

        

5.125% due 04/18/11

    230      243

5.250% due 07/18/11

    600      637

4.750% due 03/05/12

    2,815      2,953

5.050% due 01/26/15

    690      733

5.125% due 11/17/17

    1,460      1,542

6.750% due 03/15/31 (Ñ)

    90      112

Small Business Administration Pools (Ê)
5.080% due 09/25/18

    227      238

Tennessee Valley Authority
6.150% due 01/15/38

    500      583
         
        30,133
         

United States Government Treasuries - 9.2%

United States Treasury Principal Principal Only STRIP
Zero coupon due 11/15/21

    2,945      1,583

United States Treasury Inflation Indexed Bonds

        

2.375% due 04/15/11 (Ñ)

    107      113

1.625% due 01/15/15 (Ñ)

    55      57

2.500% due 07/15/16 (Ñ)

    2,086      2,274

2.375% due 01/15/25 (Ñ)

    5,413      5,694

2.000% due 01/15/26 (Ñ)

    395      392

3.875% due 04/15/29 (Ñ)

    1,931      2,517
     Principal
Amount ($)
or Shares		      Market
Value
$

United States Treasury Inflation Indexed Bonds (Ñ)

        

2.375% due 01/15/27

    378      397

1.750% due 01/15/28

    1,214      1,157

United States Treasury Notes

        

4.875% due 06/30/09

    895      924

3.625% due 01/15/10 (Ñ)

    5      5

4.000% due 03/15/10

    3,420      3,532

3.875% due 05/15/10

    3,500      3,616

4.125% due 08/15/10 (Ñ)

    4,240      4,414

3.875% due 09/15/10

    10,180      10,556

4.375% due 12/15/10

    630      663

4.875% due 04/30/11

    2,435      2,604

4.500% due 09/30/11 (Ñ)

    110      117

4.500% due 03/31/12 (Ñ)

    50      53

4.750% due 05/15/14

    650      707

4.250% due 08/15/14

    8,200      8,674

12.500% due 08/15/14

    155      175

4.250% due 11/15/14

    20,465      21,653

4.125% due 05/15/15

    1,370      1,431

5.125% due 05/15/16 (Ñ)

    8,541      9,456

4.750% due 08/15/17 (Ñ)

    100      108

8.750% due 08/15/20 (Ñ)

    3,751      5,370

8.125% due 08/15/21

    2,745      3,801

7.125% due 02/15/23

    3,755      4,866

6.250% due 08/15/23

    3,705      4,459

6.875% due 08/15/25

    2,915      3,752

6.375% due 08/15/27

    545      676

6.125% due 11/15/27

    1,402      1,697

5.375% due 02/15/31 (Ñ)

    255      287

4.375% due 02/15/38 (Ñ)

    30      29

United States Treasury Notes

        

4.625% due 07/31/12 (Ñ)

    540      576

3.625% due 12/31/12 (Ñ)

    16,721      17,170

4.500% due 02/15/36

    2,830      2,835

4.750% due 02/15/37 (Ñ)

    970      1,011
         
        129,401
         
Total Long-Term Investments        

(cost $1,360,360)

         1,334,868
         
Preferred Stocks - 0.8%        

Auto and Transportation - 0.0%

        

General Motors Corp.

    31,725      560
         

 

114   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Financial Services - 0.8%

        

DG Funding Trust (Å)

      392      3,922

Federal Home Loan Mortgage Corp.

      27,050      692

Federal National Mortgage Association (Ñ)

      18,750      470

Federal National Mortgage Association

      1,000      46

Wachovia Corp. (Æ)

      5,000      5,845
         
        10,975
         
Total Preferred Stocks        

(cost $10,918)

         11,535
         
    

Notional
Amount

       

Options Purchased - 0.0%

     

(Number of Contracts)

        

Euro-Bund Futures

        

Sep 2008 92.50 Put (452) 

    USD 1,130      3

Eurodollar Futures

        

Sep 2008 92.25 Put (35) 

    USD  88      —
         
Total Options Purchased        

(cost $5)

         3
         
    

Principal
Amount ($)
or Shares

       

Short-Term Investments - 18.7%

     

American Express Bank FSB (Ê)
Series BKNT
2.723% due 10/16/08

      800      798

American General Finance Corp. (Ê)
Series MTNI
2.785% due 06/27/08

      1,300      1,295

Amgen, Inc. (Ê)
Series WI
3.170% due 11/28/08

      1,000      996

Bank of America NA (Ê)
Series BKNT
2.764% due 12/18/08

      200      199

Banque Paribas
6.875% due 03/01/09

      350      358

Calyon NY (ž)
2.689% due 01/16/09

      800      800

CIT Group, Inc. (Ê)
3.401% due 01/30/09

      2,400      2,202
     Principal
Amount ($)
or Shares		      Market
Value
$

Citigroup Funding, Inc. (Ê)
2.980% due 12/08/08

    400      397

Citigroup, Inc. (Ê)

        

2.695% due 12/26/08

    600      597

3.291% due 01/30/09

    1,400      1,392

COX Communications, Inc.
3.875% due 10/01/08

    240      239

Daimler Finance North America LLC

        

4.050% due 06/04/08

    165      165

3.218% due 03/13/09 (Ê)

    1,600      1,588

3.298% due 03/13/09 (Ê)(Ñ)

    1,100      1,089

Deutsche Telekom International Finance BV (Ê)
2.779% due 03/23/09

    900      889

Fannie Mae

        

7.000% due 09/01/08

    1      1

7.000% due 02/01/09

    1      1

Fannie Mae REMICS
Series 1993-134 Class H
6.500% due 08/25/08

    123      124

Federal Home Loan Bank Discount Notes (ž)(ç)

        

Zero coupon due 05/05/08

    875      875

Zero coupon due 05/07/08 (Ñ)

    2,150      2,149

Zero coupon due 05/09/08

    3,340      3,338

Zero coupon due 05/21/08

    1,575      1,573

Federal National Mortgage Association Discount Notes (ž)(§) Zero coupon due 12/15/08

    1,642      1,621

Fortis Bank (ž)
2.646% due 09/30/08

    800      800

Freddie Mac

        

7.000% due 12/01/08

    1      1

Freddie Mac Discount Notes (ž)(ç)(§)

        

Zero coupon due 07/14/08

    25      25

Zero coupon due 07/21/08

    382      380

Freddie Mac REMICS
Series 1993-160 Class I
Interest Only STRIP
6.500% due 11/15/08

    41      —

French Discount Treasury Bills
Zero coupon due 05/15/08

    700      1,091

Ginnie Mae I

        

6.500% due 01/15/09

    5      5

6.500% due 03/15/09

    7      7

6.500% due 04/15/09

    2      2

Goldman Sachs Group, Inc. (The) (Ê)

        

2.639% due 12/23/08

    100      100

2.746% due 03/30/09

    600      596

 

Fixed Income I Fund   115

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$		  
       

HSBC Finance Corp. (Ê)(Ñ)
3.154% due 12/05/08

    500      497  

Lehman Brothers Holdings, Inc. (Ê)

        

3.010% due 01/23/09

    1,200      1,176  

2.774% due 04/03/09

    1,000      966  

Merrill Lynch & Co., Inc.

        

Zero coupon due 05/28/08 (ž)

    1,720      1,716  

Series MTNC (Ê)

        

2.823% due 06/16/08

    1,900      1,899  

Morgan Stanley (Ê)
Series GMTN
3.206% due 02/09/09

    100      99  

Nordea Bank Finland PLC (ž) 2.712% due 04/09/09

    1,200      1,200  

Residential Capital LLC

        

8.125% due 11/21/08 (Ñ)

    290      241  

5.816% due 04/17/09 (Ê)

    50      33  

Russell Investment Company
Money Market Fund

    224,962,215      224,962  

Skandinaviska Enskilda Banken (ž)
5.340% due 08/21/08

    600      600  

Transocean, Inc. (Ê)
3.214% due 09/05/08

    500      499  

Tyco International Group SA

        

6.125% due 11/01/08

    40      40  

6.125% due 01/15/09

    10      10  

United States Treasury Bills (ç)(ž)(§)
1.221% due 06/26/08

    500      499  

1.302% due 06/26/08

    1,000      998  

Wachovia Bank NA Series BKNT
5.800% due 12/01/08

    280      282  
           
Total Short-Term Investments        

(cost $261,751)

         261,410  
           
Other Securities - 3.6%        

Russell Investment Company
Money Market Fund (×)

    10,815,603      10,816  

State Street Securities Lending Quality Trust (×)

    38,924,949      38,925  
           
Total Other Securities        

(cost $49,741)

         49,741  
           
Total Investments - 118.3%     

(identified cost $1,682,775)

         1,657,557  
Other Assets and Liabilities, Net - (18.3%)         (256,414 )
           
Net Assets - 100.0%         1,401,143  
           

 


 

See accompanying notes which are an integral part of the financial statements.

 

116   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		    Notional
Amount		    Unrealized
Appreciation
(Depreciation)
$		  
        

Long Positions

         

Euribor Futures
expiration date 06/08 (42)

    EUR    9,999    (46 )

Eurodollar Futures (CME) expiration date 06/08 (185)

    USD    45,013    655  

expiration date 09/08 (86)

    USD    20,922    (65 )

expiration date 12/08 (233)

    USD    56,561    754  

expiration date 03/09 (221)

    USD    53,590    59  

expiration date 06/09 (33)

    USD    7,988    (48 )

expiration date 09/09 (42)

    USD    10,149    (56 )

expiration date 12/09 (33)

    USD    7,957    (43 )

expiration date 03/10 (13)

    USD    3,130    (8 )

Germany 10 Year Bond (Germany)
expiration date 06/08 (54)

    EUR    6,160    (242 )

LIBOR Futures
expiration date 06/08 (25)

    GBP    2,952    7  

expiration date 09/08 (50)

    GBP    5,917    (5 )

expiration date 12/08 (60)

    GBP    7,108    13  

expiration date 06/09 (5)

    GBP    593    9  

expiration date 12/09 (1)

    GBP    119    (1 )

Three Month Short Sterling

         

Interest Rate Futures (UK)

expiration date 03/09 (15)

    GBP    1,779    35  

United States Treasury Bonds expiration date 06/08 (124)

    USD    14,494    80  

United States Treasury Notes

         

2 Year Futures
expiration date 06/08 (95)

    USD    20,205    (89 )

United States Treasury Notes

         

5 Year Futures expiration date 06/08 (984)

    USD    110,193    (431 )

United States Treasury Notes

         

10 Year Futures expiration date 06/08 (308)

    USD    35,670    (8 )

Short Positions

         

United States Treasury Notes

         

2 Year Futures expiration date 06/08 (95)

    USD    20,205    157  

United States Treasury Notes

         

5 Year Futures expiration date 06/08 (12)

    USD    1,344    18  

United States Treasury Notes

         

10 Year Futures expiration date 06/08 (142)

    USD    16,445    (53 )
            

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

          692  
            

 

Options Written
(Number of Contracts)		    Notional
Amount		          
Market
Value
$		  

Eurodollar Futures

             

Jun 2008 95.88 Put (20)

    USD      50      —  

Jun 2008 96.25 Put (18)

    USD      45      —  

Jun 2008 96.50 Put (13)

    USD      33      —  

Jun 2008 97.13 Put (29)

    USD      73      (4 )

United Stated Treasury Notes 10 Year Futures

             

May 2008 110.00 Put (18)

    USD      18      (1 )

May 2008 113.00 Put (32)

    USD      32      (4 )

May 2008 114.00 Put (152)

    USD      152      (59 )

May 2008 114.50 Put (17)

    USD      17      (10 )

May 2008 115.50 Put (26)

    USD      26      (18 )

May 2008 116.00 Put (30)

    USD      30      (26 )

May 2008 116.50 Put (19)

    USD      19      (23 )

May 2008 117.00 Call (15)

    USD      15      (6 )

May 2008 118.00 Call (133)

    USD      133      (27 )

May 2008 118.50 Call (17)

    USD      17      (3 )

May 2008 119.00 Call (28)

    USD      28      (2 )

May 2008 120.00 Call (46)

    USD      46      (2 )

May 2008 123.00 Call (7)

    USD      7      —  

Aug 2008 111.00 Put (28)

    USD      28      (24 )

Aug 2008 112.00 Put (21)

    USD      21      (20 )

Aug 2008 117.00 Call (28)

    USD      28      (24 )

Aug 2008 118.00 Call (4)

    USD      4      (3 )
                

Total Liability for Options Written

             

(premiums received $670)

              (256 )
                

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income I Fund   117

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swaps Contracts                   

Counter
Party

    Notional
Amount		    Fund Receives  

Fund Pays

    Termination
Date		    Market
Value
$		  
                

Bank of America

    USD    800    Three Month LIBOR  

5.000%

    06/18/38    (19 )

Bank of America

    USD    1,700    Six Month LIBOR  

5.000%

    06/18/15    (90 )

Barclays Bank PLC

    GBP    400    6.000%  

Six Month LIBOR

    03/20/09    3  

Barclays Bank PLC

    GBP    300    4.750%  

Six Month LIBOR

    09/17/13    (12 )

Barclays Bank PLC

    GBP    100    Six Month LIBOR  

4.000%

    12/15/36    24  

Barclays Bank PLC

    JPY    30,000    2.000%  

Six Month LIBOR

    12/19/17    8  

Citibank

    MXN    1,000    8.170%  

Mexico Interbank 28 Day Deposit Rate

    11/04/16    (1 )

Credit Suisse First Boston

    GBP    200    5.000%  

Six Month LIBOR

    06/15/09    (4 )

Deutsche Bank

    GBP    100    6.000%  

Six Month LIBOR

    12/20/08    1  

Deutsche Bank

    JPY    60,000    2.000%  

Six Month LIBOR

    12/19/17    17  

Deutsche Bank

    USD    200    Three Month LIBOR  

5.000%

    06/18/38    (5 )

Deutsche Bank

    EUR    1,200    Consumer Price Index (France)  

2.090%

    10/15/10    (6 )

Goldman Sachs

    EUR    300    4.000%  

Six Month LIBOR

    03/20/09    (1 )

Goldman Sachs

    GBP    100    5.000%  

Six Month LIBOR

    06/15/09    (2 )

Goldman Sachs

    GBP    2,300    6.000%  

Six Month LIBOR

    06/19/09    26  

Goldman Sachs

    GBP    800    6.000%  

Six Month LIBOR

    12/19/09    14  

Goldman Sachs

    GBP    300    5.000%  

Six Month LIBOR

    09/17/13    (6 )

Goldman Sachs

    GBP    200    Six Month LIBOR  

5.000%

    12/15/36    (55 )

Goldman Sachs

    GBP    100    Six Month LIBOR  

5.000%

    12/19/37    (8 )

JP Morgan

    GBP    400    4.750%  

Six Month LIBOR

    09/17/13    (16 )

JP Morgan

    USD    500    Three Month LIBOR  

5.000%

    06/18/38    (12 )

Lehman Brothers

    GBP    3,300    4.500%  

Six Month LIBOR

    09/20/09    (89 )

Merrill Lynch

    GBP    5,700    4.500%  

Six Month LIBOR

    09/20/09    (153 )

Merrill Lynch

    GBP    200    Six Month LIBOR  

4.000%

    12/15/35    15  

Merrill Lynch

    USD    700    Three Month LIBOR  

5.000%

    06/18/38    (17 )

Morgan Stanley

    USD    300    Three Month LIBOR  

5.000%

    06/18/38    (7 )

Royal Bank of Scotland

    GBP    1,500    6.000%  

Six Month LIBOR

    06/19/09    17  

Royal Bank of Scotland

    GBP    500    Six Month LIBOR  

4.000%

    12/15/36    119  

Royal Bank of Scotland

    GBP    100    Six Month LIBOR  

5.500%

    12/15/36    (23 )

UBS

    AUD    5,300    7.000%  

Three Month LIBOR

    09/15/09    (29 )

UBS

    AUD    500    7.500%  

Three Month LIBOR

    03/15/10    —  
                    

Total Market Value of Open Interest Rate Swap Contracts Premiums Paid (Received) - ($171)

       (311 )
                    

 

See accompanying notes which are an integral part of the financial statements.

 

118   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

 

Credit Default Swap Contracts  

Reference
Entity

    Counter
Party		    Notional
Amount		   

Fund (Pays)/
Receives
Fixed Rate

    Termination
Date		    Market
Value
$		  
                 

ABX - HE Index for Sub-Prime Home Equit

    Lehman Brothers    USD    1,000    0.090%    08/25/37    (350 )

ABX - HE Index for Sub-Prime Home Equit

    Lehman Brothers    USD    3,000    0.760%    01/25/38    (1,245 )

American International Group

    Deutsche Bank    USD    1,500    2.050%    03/20/13    74  

Berkshire Hathaway

    Deutsche Bank    USD    2,900    (1.000%)    03/20/13    51  

Countrywide Home Loans

    JP Morgan    USD    2,400    5.850%    06/20/09    —  

Dow Jones CDX High Volatility Index

    Chase Securities Inc.    USD    400    1.120%    12/20/12    15  

Dow Jones CDX High Volatility Index

    Deutsche Bank    USD    300    1.550%    06/20/13    9  

Dow Jones CDX High Volatility Index

    Deutsche Bank    USD    1,600    0.707%    12/20/12    38  

Dow Jones CDX High Volatility Index

    Goldman Sachs    USD    1,100    1.550%    06/20/13    31  

Dow Jones CDX High Volatility Index

    Goldman Sachs    USD    1,300    1.120%    12/20/12    48  

Dow Jones CDX High Volatility Index

    Merrill Lynch    USD    500    1.550%    06/20/13    15  

Dow Jones CDX High Volatility Index

    Merrill Lynch    USD    1,000    1.833%    06/20/12    (29 )

Dow Jones CDX High Volatility Index

    Morgan Stanley    USD    600    0.963%    12/20/12    17  

Dow Jones CDX High Volatility Index

    Morgan Stanley    USD    1,300    1.550%    06/20/13    39  

Dow Jones CDX High Volatility Index

    Morgan Stanley    USD    5,700    0.771%    12/20/12    138  

Gaz Capital for Gazprom

    Chase Securities Inc.    USD    200    0.970%    12/20/12    (6 )

Gaz Capital for Gazprom

    Chase Securities Inc.    USD    200    1.020%    12/20/12    (6 )

Gaz Capital for Gazprom

    JP Morgan    USD    200    0.970%    11/20/08    1  

Gaz Capital for Gazprom

    Morgan Stanley    USD    100    2.180%    02/20/13    2  

Merrill Lynch & Co.

    Deutsche Bank    USD    1,600    2.200%    06/20/13    57  

Merrill Lynch & Co.

    Royal Bank of Scotland    USD    800    2.200%    06/20/13    28  

Metlife, Inc.

    Deutsche Bank    USD    1,500    2.050%    03/20/13    88  

Metlife, Inc.

    UBS    USD    1,500    2.050%    03/20/13    88  

Pitney Bowes

    Lehman Brothers    USD    145    (0.220%)    09/20/12    (2 )

Prudential

    Deutsche Bank    USD    1,500    2.300%    03/20/13    87  

Prudential

    UBS    USD    1,500    2.300%    03/20/13    87  

Russia Government International Bond

    Morgan Stanley    USD    100    0.245%    06/20/08    —  

Russia Government International Bond

    Morgan Stanley    USD    1,000    0.305%    12/20/08    —  

Russia Government International Bond

    Morgan Stanley    USD    1,000    0.795%    08/20/12    (6 )

SLM Corp.

    JP Morgan    USD    900    4.300%    03/20/13    18  

Wachovia

    JP Morgan    USD    2,700    3.020%    03/20/13    237  
                     

Total Market Value of Open Credit Default Contracts Premiums Paid (Received) - ($1,575)

       (476 )
                     

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income I Fund   119

Table of Contents

Russell Investment Company

Fixed Income I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts  
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
USD   325   AUD   346   05/15/08   1  
USD   355   CAD   356   05/07/08   (1 )
USD   594   CAD   594   05/07/08   (4 )
USD   1,056   CAD   1,063   05/07/08   (1 )
USD   354   CAD   356   08/05/08   —  
USD   589   CAD   594   08/05/08   1  
USD   1,598   EUR   1,006   05/07/08   (28 )
USD   2,109   GBP   1,060   05/19/08   (4 )
USD   3,058   JPY   324,156   05/07/08   61  
USD   54   JPY   5,220   05/12/08   (4 )
USD   162   JPY   16,447   05/12/08   (4 )
USD   286   JPY   27,744   05/12/08   (19 )
USD   3,161   JPY   324,156   08/05/08   (26 )
USD   624   KRW   608,560   08/04/08   (18 )
USD   324   MXN   3,585   05/06/08   17  
USD   1,186   PLN   2,556   05/07/08   (31 )
USD   149   RUB   3,526   07/17/08   —  
USD   716   SGD   1,011   05/22/08   30  
USD   1,925   ZAR   15,330   07/10/08   65  
CAD   356   USD   354   05/07/08   —  
CAD   594   USD   590   05/07/08   —  
CAD   1,063   USD   1,063   05/07/08   8  
CAD   1,063   USD   1,055   08/05/08   1  
EUR   1,006   USD   1,482   05/07/08   (89 )
EUR   967   USD   1,513   05/29/08   5  
EUR   1,006   USD   1,592   08/05/08   28  
GBP   72   USD   142   05/19/08   (1 )
JPY   324,156   USD   3,144   05/07/08   25  
JPY   6,939   USD   71   05/12/08   4  
JPY   6,940   USD   71   05/12/08   4  
JPY   8,013   USD   81   05/12/08   4  
JPY   8,019   USD   81   05/12/08   4  
JPY   8,028   USD   81   05/12/08   4  
JPY   8,030   USD   81   05/12/08   4  
JPY   8,033   USD   81   05/12/08   4  
JPY   8,116   USD   82   05/12/08   4  
JPY   8,823   USD   89   05/12/08   4  
JPY   13,981   USD   143   05/12/08   8  
KRW   40,096   USD   40   05/30/08   —  
MXN   3,585   USD   339   05/06/08   (3 )
PLN   2,556   USD   1,038   05/07/08   (117 )
PLN   2,556   USD   1,176   08/05/08   30  
RUB   3,526   USD   148   07/10/08   —  
             
Total Unrealized Appreciation (Depreciation) onOpen Foreign Currency Exchange Contracts   (34 )
             

 

See accompanying notes which are an integral part of the financial statements.

 

120   Fixed Income I Fund

Table of Contents

Russell Investment Company

Fixed Income I Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Asset-Backed Securities

    4.1  

Corporate Bonds and Notes

    16.1  

International Debt

    3.5  

Mortgage-Backed Securities

    59.9  

Municipal Bonds

    0.2  

Non-US Bonds

    0.1  

United States Government Agencies

    2.1  

United States Government Treasuries

    9.2  

Preferred Stocks

    0.8  

Options Purchased

    — *

Short-Term Investments

    18.7  

Other Securities

    3.6  
      

Total Investments

    118.3  

Other Assets and Liabilities, Net

    (18.3 )
      
   100.0  
      

Futures Contracts

    — *

Options Written

    (— )*

Foreign Currency Exchange Contracts

    (— )*

Interest Rate Swap Contracts

    (— )*

Credit Default Swap Contracts

    (— )*

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income I Fund   121

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Schedules of Investments — April 30, 2008 (Unaudited)

 

 

 

Footnotes:

(Æ) Nonincome-producing security.
(Ï) Forward commitment.
(Ê) Adjustable or floating rate security. Rate shown reflects rate in effect at period end.
(ƒ) Perpetual floating rate security. Rate shown reflects rate in effect at period end.
(ö) Real Estate Investment Trust (REIT).
(m) Bond is insured by a guarantor.
(ß) Illiquid security.
(Ø) In default.
(ç) At amortized cost, which approximates market.
(ž) Rate noted is yield-to-maturity from date of acquisition.
(æ) Pre-refunded: These bonds are collateralized by US Treasury securities, which are held in escrow by a trustee and used to pay principal and interest in the tax-exempt issue and to retire the bonds in full at the earliest refunding date.
(§) All or a portion of the shares of this security are held as collateral in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund.
(×) The security is purchased with the cash collateral from the securities loaned.
(Ñ) All or a portion of the shares of this security are on loan.
(Þ) Restricted security. Security may have contractual restrictions on resale, may have been offered in a private placement transaction, and may not be registered under the Securities Act of 1933.
(Å) Illiquid and restricted security.
(å) Currency balances were held in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund. See Note 2.

Abbreviations:

ADR - American Depositary Receipt

ADS - American Depositary Share

CIBOR - Copenhagen Interbank Offered Rate

CME - Chicago Mercantile Exchange

CMO - Collateralized Mortgage Obligation

CVO - Contingent Value Obligation

FDIC - Federal Deposit Insurance Company

GDR - Global Depositary Receipt

GDS - Global Depositary Share

LIBOR - London Interbank Offered Rate

NIBOR - Norwegian Interbank Offered Rate

PIK - Payment in Kind

REMIC - Real Estate Mortgage Investment Conduit

STRIP - Separate Trading of Registered Interest and Principal of Securities

TBA - To Be Announced Security

 

122   Notes to Schedules of Investments

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Schedules of Investments, continued — April 30, 2008 (Unaudited)

 

 

 

Foreign Currency Abbreviations:

 

ARS - Argentine peso

   HKD - Hong Kong dollar   PHP - Philippine peso

AUD - Australian dollar

   HUF - Hungarian forint   PKR - Pakistani rupee

BRL - Brazilian real

   IDR - Indonesian rupiah   PLN - Polish zloty

CAD - Canadian dollar

   ILS - Israeli shekel   RUB - Russian ruble

CHF - Swiss franc

   INR - Indian rupee   SEK - Swedish krona

CLP - Chilean peso

   ISK - Iceland krona   SGD - Singapore dollar

CNY - Chinese renminbi yuan

   JPY - Japanese yen   SKK - Slovakian koruna

COP - Colombian peso

   KES - Kenyan schilling   THB - Thai baht

CRC - Costa Rica colon

   KRW - South Korean won   TRY - Turkish lira

CZK - Czech koruna

   MXN - Mexican peso   TWD - Taiwanese dollar

DKK - Danish krone

   MYR - Malaysian ringgit   USD - United States dollar

EGP - Egyptian pound

   NOK - Norwegian krone   VEB - Venezuelan bolivar

EUR - Euro

   NZD - New Zealand dollar   VND - Vietnamese dong

GBP - British pound sterling

   PEN - Peruvian nouveau sol   ZAR - South African rand

 

Notes to Schedules of Investments   123

Table of Contents

Russell Investment Company

Specialty Funds

Statements of Assets and Liabilities — April 30, 2008 (Unaudited)

 

Amounts in thousands   Emerging
Markets Fund		    Real Estate
Securities Fund		    Short Duration
Bond Fund
       

Assets

        

Investments, at identified cost

   $ 1,236,168    $ 2,160,648    $ 455,159

Investments, at market***

     1,699,185      2,613,628      451,332

Cash

     7,513      —      93

Cash (restricted)

     —      —      655

Foreign currency holdings*

     7,613      311      366

Unrealized appreciation on foreign currency exchange contracts

     2,718      1      111

Receivables:

        

Dividends and interest

     3,898      1,617      2,623

Dividends from affiliated money market funds

     138      163      84

Investments sold

     6,845      12,242      18,661

Fund shares sold

     3,404      5,523      882

Foreign taxes recoverable

     60      —      —

Miscellaneous receivables

     10      —      —

From Adviser

     —      —      —

Daily variation margin on futures contracts

     135      —      110

Prepaid expenses

     38      37      19

Interest rate swap contracts, at market value*****

     —      —      49

Credit default swap contracts, at market value****

     —      —      173
                   

Total assets

     1,731,557      2,633,522      475,158
                   
Liabilities        

Payables:

        

Due to Custodian

     —      —      —

Investments purchased

     5,169      14,779      29,984

Fund shares redeemed

     7,244      2,765      591

Accrued fees to affiliates

     2,268      2,244      271

Other accrued expenses

     597      119      123

Daily variation margin on futures contracts

     18      —      64

Deferred tax liability

     1,800      —      —

Unrealized depreciation on foreign currency exchange contracts

     2,576      1      114

Options written, at market value**

     758      —      1,117

Payable upon return of securities loaned

     92,300      412,230      5,826

Interest rate swap contracts, at market value*****

     —      —      122

Credit default swap contracts, at market value****

     —      —      418
                   

Total liabilities

     112,730      432,138      38,630
                   
       

Net Assets

   $ 1,618,827    $ 2,201,384    $ 436,528
                   

 

See accompanying notes which are an integral part of the financial statements.

 

124   Statements of Assets and Liabilities

Table of Contents

 

Tax Exempt
Bond Fund		    Tax-Managed Large
Cap Fund		    Tax-Managed Mid
& Small Cap Fund		    Select Growth
Fund		    Select Value
Fund		    Fixed Income I
Fund
              
              
$ 407,498    $ 540,646    $ 329,023    $ 239,888    $ 444,450    $ 1,682,775
  409,190      647,724      355,843      255,901      440,990      1,657,557
  10      —      —      —      —      —
  —      —      —      —      —      1,746
  —      —      —      —      —      1,233
  —      —      —      —      —      316
              
  5,063      449      102      89      424      9,202
  34      82      —      20      40      341
  198      878      1,163      3,756      4,237      79,170
  2,094      2,224      1,155      596      360      1,512
  —      —      —      —      —      —
  —      —      —      —      —      —
  —      —      36      9      —      —
  —      18      —      —      —      682
  14      —      2      5      5      39
  —      —      —      —      —      244
  —      —      —      —      —      1,168
                                      
  416,603      651,375      358,301      260,376      446,056      1,753,210
                                      
              
              
  —      —      404      —      —      2,137
  7,340      —      854      4,320      4,029      293,673
  345      395      236      145      497      2,894
  195      446      291      180      352      501
  62      69      60      61      67      195
  —      124      44      35      63      121
  —      —      —      —      —      —
  —      —      —      —      —      350
  —      —      —      —      —      256
  —      95,319      106,696      63,137      88,743      49,741
  —      —      —      —      —      555
  —      —      —      —      —      1,644
                                      
  7,942      96,353      108,585      67,878      93,751      352,067
                                      
              
$ 408,661    $ 555,022    $ 249,716    $ 192,498    $ 352,305    $ 1,401,143
                                      

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   125

Table of Contents

Russell Investment Company

Specialty Funds

Statements of Assets and Liabilities, continued — April 30, 2008 (Unaudited)

 

Amounts in thousands   Emerging
Markets Fund		     Real Estate
Securities Fund		     Short Duration
Bond Fund		  
     

Net Assets Consist of:

      

Undistributed (overdistributed) net investment income

   $ (35,891 )   $ (1,276 )   $ 1,366  

Accumulated net realized gain (loss)

     107,005       (62,364 )     (12,991 )

Unrealized appreciation (depreciation) on:

      

Investments (Emerging Markets Fund - net of deferred tax liability for foreign capital gains taxes)

     461,217       452,980       (3,827 )

Futures contracts

     400       —       568  

Options written

     21       —       380  

Credit default swaps

     —       —       (12 )

Interest rate swap contracts

     —       —       (102 )

Foreign currency-related transactions

     147       (2 )     3  

Shares of beneficial interest

     734       521       231  

Additional paid-in capital

     1,085,194       1,811,525       450,912  
                       

Net Assets

   $ 1,618,827     $ 2,201,384     $ 436,528  
                       

Net Asset Value, offering and redemption price per share:

                        

Net asset value per share: Class A******

   $ 22.06     $ 41.69     $ 18.90  

Maximum offering price per share (Net asset value plus sales charge of 5.75%*******): Class A

   $ 23.41     $ 44.24     $ 19.64  

Class A — Net assets

   $ 15,626,717     $ 23,319,134     $ 4,073,928  

Class A — Shares outstanding ($.01 par value)

     708,240       559,297       215,527  

Net asset value per share: Class C******

   $ 21.15     $ 40.92     $ 18.86  

Class C — Net assets

   $ 55,975,090     $ 83,283,936     $ 17,002,053  

Class C — Shares outstanding ($.01 par value)

     2,646,913       2,035,267       901,441  

Net asset value per share: Class E******

   $ 22.11     $ 41.77     $ 18.93  

Class E — Net assets

   $ 36,003,895     $ 50,185,039     $ 16,867,916  

Class E — Shares outstanding ($.01 par value)

     1,628,438       1,201,457       891,294  

Net asset value per share: Class I******

   $ —     $ —     $ —  

Class I — Net assets

   $ —     $ —     $ —  

Class I — Shares outstanding ($.01 par value)

     —       —       —  

Net asset value per share: Class S******

   $ 22.09     $ 42.31     $ 18.90  

Class S — Net assets

   $ 1,511,221,086     $ 2,044,595,872     $ 398,584,341  

Class S — Shares outstanding ($.01 par value)

     68,398,975       48,324,977       21,092,431  

Net asset value per share: Class Y******

      

Class Y — Net assets

      

Class Y — Shares outstanding ($.01 par value)

                        
Amounts in thousands      

*                Foreign currency holdings - cost

   $ 7,645     $ 310     $ 361  

**              Premiums received on options written

   $ 779     $ —     $ 1,497  

***            Securities on loan included in investments

   $ 89,997     $ 396,977     $ 5,668  

****          Credit default swap contracts - premiums paid (received)

   $ —     $ —     $ (233 )

*****       Interest rate swap contracts - premiums paid (received)

   $ —     $ —     $ 29  

******     Net asset value per share equals class level net assets divided by class level shares of beneficial interest outstanding.

      

*******   Short Duration Bond Fund’s maximum sale charge is 3.75%.

      

 

See accompanying notes which are an integral part of the financial statements.

 

126   Statements of Assets and Liabilities

Table of Contents

 

Tax Exempt
Bond Fund		     Tax-Managed Large
Cap Fund		     Tax-Managed Mid
& Small Cap Fund		     Select Growth
Fund		     Select Value
Fund		      Fixed Income I
Fund		  
          
          
$ 1,135     $ 932     $ 295     $ 180     $ 288      $ 4,974  
  (4,999 )     (58,448 )     (3,894 )     (5,210 )     (19,622 )      (2,032 )
          
 
 		     
1,692		  
 		     107,078       26,820       16,013       (3,460 )      (25,218 )
  —       1,635       1,069       210       488        692  
  —       —       —       —       —        414  
  —       —       —       —       —        1,099  
  —       —       —       —       —        (140 )
  —       —       —       —       —        (33 )
  191       269       191       228       372        678  
  410,642       503,556       225,235       181,077       374,239        1,420,709  
                                              
$ 408,661     $ 555,022     $ 249,716     $ 192,498     $ 352,305      $ 1,401,143  
                                              
                                              
$ —     $ —     $ —     $ —     $ —      $ —  

$

—

 

   $ —     $ —     $ —     $ —      $ —  
$ —     $ —     $ —     $ —     $ —      $ —  
  —       —       —       —       —        —  
$ 21.31     $ 20.07     $ 11.98     $ 7.76     $ 9.26      $ 20.63  
$ 17,322,573     $ 21,654,513     $ 13,250,939     $ 10,560,895     $ 20,419,409      $ 36,564,004  
  812,920       1,078,813       1,105,970       1,360,949       2,205,203        1,771,949  
$ 21.37     $ 20.60     $ 12.87     $ 8.29     $ 9.48      $ 20.65  
$ 19,924,698     $ 17,482,383     $ 3,627,616     $ 7,850,669     $ 11,657,301      $ 59,769,942  
  932,252       848,764       281,908       946,946       1,229,908        2,894,098  
$ —     $ —     $ —     $ 8.54     $ 9.51      $ 20.65  
$ —     $ —     $ —     $ 101,241,121     $ 106,333,563      $ 575,060,468  
  —       —       —       11,856,960       11,180,922        27,851,186  
$ 21.34     $ 20.68     $ 13.11     $ 8.45     $ 9.48      $ 20.65  
$ 371,413,811     $ 515,885,034     $ 232,837,911     $ 72,845,367     $ 213,894,976      $ 177,414,450  
  17,403,039       24,950,736       17,755,010       8,619,107       22,556,606        8,593,335  
$ —     $ —     $ —     $ —     $ —      $ 20.66  
$ —     $ —     $ —     $ —     $ —      $ 552,334,612  
  —       —       —       —       —        26,739,098  
          
$ —     $ —     $ —     $ —     $ —      $ 1,236  
$ —     $ —     $ —     $ —     $ —      $ 670  
$ —     $ 92,156     $ 104,070     $ 63,495     $ 89,487      $ 48,839  
$ —     $ —     $ —     $ —     $ —      $ (1,575 )
$ —     $ —     $ —     $ —     $ —      $ (171 )
          
          
          

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   127

Table of Contents

Russell Investment Company

Specialty Funds

Statements of Operations — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands   Emerging
Markets Fund		     Real Estate
Securities Fund		  
   

Investment Income

    

Dividends

   $ 33,354     $ 30,691  

Dividends from affiliated money market funds

     127       1,507  

Interest

     861       1  

Securities lending income

     115       1,179  

Less foreign taxes withheld

     (1,327 )     —  
               

Total investment income

     33,130       33,378  
               

Expenses

    

Advisory fees

     9,262       8,202  

Administrative fees

     403       513  

Custodian fees

     1,587       246  

Distribution fees - Class A

     13       19  

Distribution fees - Class C

     213       305  

Transfer agent fees

     1,812       1,838  

Transfer agent fees - Class C

     —       —  

Transfer agent fees - Class E

     —       —  

Transfer agent fees - Class I

     —       —  

Transfer agent fees - Class S

     —       —  

Transfer agent fees - Class Y

     —       —  

Professional fees

     60       46  

Registration fees

     52       66  

Shareholder servicing fees - Class C

     71       102  

Shareholder servicing fees - Class E

     44       56  

Trustees’ fees

     16       20  

Printing fees

     48       55  

Offering fees

     4       4  

Miscellaneous

     18       22  
               

Expenses before reductions

     13,603       11,494  

Expense reductions

     (18 )     (2 )
               

Net expenses

     13,585       11,492  
               

Net investment income (loss)

     19,545       21,886  
               

Net Realized and Unrealized Gain (Loss)

    

Net realized gain (loss) on:

    

Investments (Emerging Markets Fund - net of deferred tax liability for foreign capital gains taxes)

     115,809       (38,678 )

Futures contracts

     (4,909 )     —  

Options written

     (850 )     —  

Credit default swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Foreign currency-related transactions

     418       (87 )
               

Net realized gain (loss)

     110,468       (38,765 )
               

Net change in unrealized appreciation (depreciation) on:

    

Investments (Emerging Markets Fund - net of deferred tax liability for foreign capital gains taxes)

     (299,848 )     (136,713 )

Futures contracts

     (579 )     —  

Options written

     41       —  

Credit default swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Foreign currency-related transactions

     (2,659 )     (31 )
               

Net change in unrealized appreciation (depreciation)

     (303,045 )     (136,744 )
               

Net realized and unrealized gain (loss)

     (192,577 )     (175,509 )
               

Net Increase (Decrease) in Net Assets from Operations

   $ (173,032 )   $ (153,623 )
               

 

See accompanying notes which are an integral part of the financial statements.

 

128   Statements of Operations

Table of Contents

 

Short Duration
Bond Fund		     Tax Exempt
Bond Fund		     Tax-Managed
Large Cap Fund		     Tax-Managed Mid
& Small Cap Fund		     Select Growth
Fund		     Select Value
Fund		     Fixed Income I
Fund		  
           
           
$ 156     $ —     $ 4,170     $ 1,496     $ 892     $ 4,140     $ 223  
  466       185       690       37       178       362       1,881  
  10,219       7,736       26       345       13       24       37,559  
  22       —       282       79       213       299       752  
  —       —       —       —       —       —       —  
                                                     
  10,863       7,921       5,168       1,957       1,296       4,825       40,415  
                                                     
           
  1,017       562       1,923       1,210       775       1,292       1,910  
  113       94       137       62       48       92       382  
  143       73       108       97       101       99       394  
  3       —       —       —       —       —       —  
  61       56       78       48       39       80       135  
  226       187       275       222       —       —       —  
  —       —       —       —       13       27       45  
  —       —       —       —       5       10       15  
  —       —       —       —       26       56       163  
  —       —       —       —       81       281       180  
  —       —       —       —       —       —       13  
  31       23       23       21       21       27       47  
  36       38       24       24       28       33       71  
  20       19       26       16       13       27       45  
  21       25       20       4       9       14       73  
  5       4       6       3       2       4       16  
  7       7       12       4       7       9       25  
  4       —       —       —       —       —       —  
  5       4       6       2       7       4       13  
                                                     
  1,692       1,092       2,638       1,713       1,175       2,055       3,527  
  (8 )     (1 )     (1 )     (102 )     (59 )     (1 )     (230 )
                                                     
  1,684       1,091       2,637       1,611       1,116       2,054       3,297  
                                                     
  9,179       6,830       2,531       346       180       2,771       37,118  
                                                     
           
           
  4,686       (2,129 )     (5,284 )     (65 )     (2,008 )     (11,561 )     6,155  
  3,903       —       (4,721 )     (2,761 )     (1,518 )     (3,097 )     9,035  
  (2,454 )     —       —       —       —       —       707  
  191       —       —       —       —       —       61  
  126       —       —       —       —       —       1,772  
  (25 )     —       —       —       —       1       438  
                                                     
  6,427       (2,129 )     (10,005 )     (2,826 )     (3,526 )     (14,657 )     18,168  
                                                     
           
  (3,083 )     1,730       (63,235 )     (31,783 )     (19,557 )     (45,274 )     (21,743 )
  (100 )     —       224       258       (126 )     343       (1,701 )
  569       —       —       —       —       —       (303 )
  (105 )     —       —       —       —       —       1,604  
  (82 )     —       —       —       —       —       (365 )
  (1 )     —       —       —       —       —       (655 )
                                                     
  (2,802 )     1,730       (63,011 )     (31,525 )     (19,683 )     (44,931 )     (23,163 )
                                                     
  3,625       (399 )     (73,016 )     (34,351 )     (23,209 )     (59,588 )     (4,995 )
                                                     
$ 12,804     $ 6,431     $ (70,485 )   $ (34,005 )   $ (23,029 )   $ (56,817 )   $ 32,123  
                                                     

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Operations   129

Table of Contents

Russell Investment Company

Specialty Funds

Statements of Changes in Net Assets

 

    Emerging Markets
Fund		  
Amounts in thousands   Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		  
   

Increase (Decrease) in Net Assets

    

Operations

    

Net investment income (loss)

   $ 19,545     $ 12,977  

Net realized gain (loss)

     110,468       324,329  

Net change in unrealized appreciation (depreciation)

     (303,045 )     430,567  
               

Net increase (decrease) in net assets from operations

     (173,032 )     767,873  
               

Distributions

    

From net investment income

    

Class A

     (267 )     —  

Class C

     (1,083 )     (540 )

Class E

     (913 )     (518 )

Class I

     —       —  

Class S

     (42,183 )     (23,139 )

Class Y

     —       —  

From net realized gain

    

Class A

     (1,907 )     —  

Class C

     (11,521 )     (6,471 )

Class E

     (6,986 )     (3,838 )

Class I

     —       —  

Class S

     (295,257 )     (151,400 )
               

Net decrease in net assets from distributions

     (360,117 )     (185,906 )
               

Share Transactions

    

Net increase (decrease) in net assets from share transactions

     279,428       125,659  
               

Total Net Increase (Decrease) in Net Assets

     (253,721 )     707,626  

Net Assets

    

Beginning of period

     1,872,548       1,164,922  
               

End of period

   $ 1,618,827     $ 1,872,548  
               

Undistributed (overdistributed) net investment income included in net assets

   $ (35,891 )   $ (10,990 )

 

See accompanying notes which are an integral part of the financial statements.

 

130   Statements of Changes in Net Assets

Table of Contents

 

Real Estate
Securities Fund		     Short Duration
Bond Fund		     Tax Exempt
Bond Fund		     Tax-Managed
Large Cap Fund		  
Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		  
             
             
             
$ 21,886     $ 28,721     $ 9,179     $ 29,986     $ 6,830     $ 12,165     $ 2,531     $ 3,579  
  (38,765 )     241,068       6,427       (2,814 )     (2,129 )     (1,193 )     (10,005 )     30,493  
  (136,744 )     (229,075 )     (2,802 )     7,087       1,730       (3,805 )     (63,011 )     53,439  
                                                             
  (153,623 )     40,714       12,804       34,259       6,431       7,167       (70,485 )     87,511  
                                                             
             
             
  (203 )     (49 )     (68 )     (32 )     —       —       —       —  
  (547 )     (711 )     (281 )     (623 )     (192 )     (334 )     —       —  
  (492 )     (725 )     (349 )     (841 )     (350 )     (553 )     (82 )     (73 )
  —       —       —       —       —       —       —       —  
  (22,795 )     (29,653 )     (9,031 )     (31,025 )     (6,336 )     (11,045 )     (4,031 )     (3,672 )
  —       —       —       —       —       —       —       —  
             
  (1,820 )     —       —       —       —       —       —       —  
  (10,840 )     (9,460 )     —       —       —       —       —       —  
  (5,638 )     (5,015 )     —       —       —       —       —       —  
  —       —       —       —       —       —       —       —  
  (237,975 )     (159,326 )     —       —       —       —       —       —  
                                                             
  (280,310 )     (204,939 )     (9,729 )     (32,521 )     (6,878 )     (11,932 )     (4,113 )     (3,745 )
                                                             
             
  350,603       375,519       (36,781 )     687,090       40,669       75,142       18,899       37,115  
                                                             
  (83,330 )     211,294       (33,706 )     (685,352 )     40,222       70,377       (55,699 )     120,881  
             
  2,284,714       2,073,420       470,234       1,155,586       368,439       298,062       610,721       489,840  
                                                             
$ 2,201,384     $ 2,284,714     $ 436,528     $ 470,234     $ 408,661     $ 368,439     $ 555,022     $ 610,721  
                                                             
$ (1,276 )   $ 875     $ 1,366     $ 1,916     $ 1,135     $ 1,183     $ 932     $ 2,514  

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   131

Table of Contents

Russell Investment Company

Specialty Funds

Statements of Changes in Net Assets, continued

 

    Tax-Managed Mid
& Small Cap Fund		  
Amounts in thousands   Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		  
   

Increase (Decrease) in Net Assets

    

Operations

    

Net investment income (loss)

   $ 346     $ 23  

Net realized gain (loss)

     (2,826 )     21,285  

Net change in unrealized appreciation (depreciation)

     (31,525 )     17,086  
               

Net increase (decrease) in net assets from operations

     (34,005 )     38,394  
               

Distributions

    

From net investment income

    

Class A

     —       —  

Class C

     —       —  

Class E

     —       —  

Class I

     —       —  

Class S

     (94 )     —  

Class Y

     —       —  

From net realized gain

    

Class A

     —       —  

Class C

     (1,169 )     (186 )

Class E

     (276 )     (36 )

Class I

     —       —  

Class S

     (19,428 )     (2,860 )
               

Net decrease in net assets from distributions

     (20,967 )     (3,082 )
               

Share Transactions

    

Net increase (decrease) in net assets from share transactions

     21,139       35,657  
               

Total Net Increase (Decrease) in Net Assets

     (33,833 )     70,969  

Net Assets

    

Beginning of period

     283,549       212,580  
               

End of period

   $ 249,716     $ 283,549  
               

Undistributed (overdistributed) net investment income included in net assets

   $ 295     $ 43  

 

See accompanying notes which are an integral part of the financial statements.

 

132   Statements of Changes in Net Assets

Table of Contents

 

    
Select Growth Fund		     Select Value Fund     Fixed Income I Fund  
Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Six Months
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		  
         
         
         
$ 180     $ (96 )   $ 2,771     $ 4,870     $ 37,118     $ 68,814  
  (3,526 )     18,896       (14,657 )     69,714       18,168       (358 )
  (19,683 )     13,648       (44,931 )     (28,922 )     (23,163 )     (3,507 )
                                             
  (23,029 )     32,448       (56,817 )     45,662       32,123       64,949  
                                             
         
         
  —       —       —       —       —       —  
  —       —       (57 )     (43 )     (740 )     —  
  —       —       (79 )     (98 )     (1,495 )     (1,579 )
  —       —       (866 )     (1,637 )     (16,144 )     (37,229 )
  —       —       (1,743 )     (2,899 )     (4,972 )     —  
  —       —       —       —       (15,167 )     (29,369 )
         
  —       —       —       —       —       —  
  (515 )     —       (3,872 )     (1,561 )     —       —  
  (323 )     —       (1,962 )     (649 )     —       —  
  (4,846 )     —       (19,387 )     (7,736 )     —       —  
  (3,359 )     —       (40,157 )     (15,104 )     —       —  
                                             
  (9,043 )     —       (68,123 )     (29,727 )     (38,518 )     (68,177 )
                                             
         
  12,311       1,071       26,890       12,301       (208,143 )     207,108  
                                             
  (19,761 )     33,519       (98,050 )     28,236       (214,538 )     203,880  
         
  212,259       178,740       450,355       422,119       1,615,681       1,411,801  
                                             
$ 192,498     $ 212,259     $ 352,305     $ 450,355     $ 1,401,143     $ 1,615,681  
                                             
$ 180     $ —     $ 288     $ 262     $ 4,974     $ 6,374  

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   133

Table of Contents

Russell Investment Company

Specialty Funds

Financial Highlights — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		     $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Emerging Markets Fund              

Class A

                 

April 30, 2008*

    30.85    .23     (3.07 )    (2.84 )    (.73 )    (5.22 )

October 31, 2007(1)

    20.50    .14     10.21      10.35      —      —  

Class C

                 

April 30, 2008*

    29.66    .16     (2.96 )    (2.80 )    (.49 )    (5.22 )

October 31, 2007

    21.17    (.02 )   11.80      11.78      (.25 )    (3.04 )

October 31, 2006

    16.73    .01     5.14      5.15      (.28 )    (.43 )

October 31, 2005

    12.52    .04     4.22      4.26      (.05 )    —  

October 31, 2004

    10.68    — (d)   2.08      2.08      (.24 )    —  

October 31, 2003

    7.22    .02     3.44      3.46      —      —  

Class E

                 

April 30, 2008*

    30.84    .25     (3.08 )    (2.83 )    (.68 )    (5.22 )

October 31, 2007

    21.89    .16     12.24      12.40      (.41 )    (3.04 )

October 31, 2006

    17.25    .17     5.29      5.46      (.39 )    (.43 )

October 31, 2005

    12.93    .16     4.34      4.50      (.18 )    —  

October 31, 2004

    10.98    .09     2.15      2.24      (.29 )    —  

October 31, 2003

    7.41    .09     3.49      3.58      (.01 )    —  

Class S

                 

April 30, 2008*

    30.86    .28     (3.09 )    (2.81 )    (.74 )    (5.22 )

October 31, 2007

    21.91    .22     12.23      12.45      (.46 )    (3.04 )

October 31, 2006

    17.25    .21     5.31      5.52      (.43 )    (.43 )

October 31, 2005

    12.94    .20     4.34      4.54      (.23 )    —  

October 31, 2004

    10.98    .12     2.15      2.27      (.31 )    —  

October 31, 2003

    7.43    .11     3.48      3.59      (.04 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

134   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   (%)
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		     %
Portfolio
Turnover Rate(b)
             
             
(5.95 )   22.06   (9.25 )   15,627   1.89   1.90   3.07     25
—     30.85   50.49     3,537   1.88   1.89   .86     67
             
(5.71 )   21.15   (9.57 )   55,975   2.64   2.65   1.45     25
(3.29 )   29.66   63.90     66,707   2.63   2.64   (.07 )   67
(.71 )   21.17   31.63     44,977   2.68   2.68   .07     69
(.05 )   16.73   33.98     33,961   2.74   2.76   .29     72
(.24 )   12.52   20.04     20,467   2.83   2.87   .02     82
—     10.68   47.58     12,306   3.09   3.09   .19     95
             
(5.90 )   22.11   (9.22 )   36,004   1.89   1.90   2.19     25
(3.45 )   30.84   65.17     41,911   1.88   1.89   .68     67
(.82 )   21.89   32.64     27,862   1.93   1.93   .83     69
(.18 )   17.25   34.94     18,855   1.99   2.01   1.02     72
(.29 )   12.93   20.88     14,169   2.07   2.12   .75     82
(.01 )   10.98   48.39     9,598   2.36   2.37   1.02     95
             
(5.96 )   22.09   (9.12 )   1,511,221   1.64   1.65   2.47     25
(3.50 )   30.86   65.53     1,760,393   1.63   1.64   .94     67
(.86 )   21.91   33.04     1,092,083   1.68   1.68   1.06     69
(.23 )   17.25   35.27     794,086   1.73   1.76   1.30     72
(.31 )   12.94   21.22     549,626   1.83   1.87   1.00     82
(.04 )   10.98   48.27     386,560   2.11   2.11   1.30     95

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   135

Table of Contents

Russell Investment Company

Specialty Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Real Estate Securities Fund               

Class A

                  

April 30, 2008*

    52.29    .40    (4.78 )    (4.38 )    (.45 )    (5.77 )

October 31, 2007(1)

    57.37    .11    (4.50 )    (4.39 )    (.69 )    —  

Class C

                  

April 30, 2008*

    51.42    .24    (4.70 )    (4.46 )    (.27 )    (5.77 )

October 31, 2007

    56.11    .20    .27      .47      (.34 )    (4.82 )

October 31, 2006

    46.08    .22    15.14      15.36      (.35 )    (4.98 )

October 31, 2005

    43.10    .42    6.66      7.08      (.43 )    (3.67 )

October 31, 2004

    33.94    .46    9.92      10.38      (1.21 )    (.01 )

October 31, 2003

    26.52    1.11    7.53      8.64      (1.11 )    (.11 )

Class E

                  

April 30, 2008*

    52.36    .39    (4.77 )    (4.38 )    (.44 )    (5.77 )

October 31, 2007

    56.95    .62    .28      .90      (.67 )    (4.82 )

October 31, 2006

    46.62    .59    15.36      15.95      (.64 )    (4.98 )

October 31, 2005

    43.55    .76    6.74      7.50      (.76 )    (3.67 )

October 31, 2004

    34.24    .75    10.04      10.79      (1.47 )    (.01 )

October 31, 2003

    26.72    1.34    7.60      8.94      (1.31 )    (.11 )

Class S

                  

April 30, 2008*

    52.94    .45    (4.82 )    (4.37 )    (.49 )    (5.77 )

October 31, 2007

    57.53    .75    .28      1.03      (.80 )    (4.82 )

October 31, 2006

    47.03    .73    15.51      16.24      (.76 )    (4.98 )

October 31, 2005

    43.90    .88    6.79      7.67      (.87 )    (3.67 )

October 31, 2004

    34.51    .87    10.09      10.96      (1.56 )    (.01 )

October 31, 2003

    26.89    1.42    7.67      9.09      (1.36 )    (.11 )

 

See accompanying notes which are an integral part of the financial statements.

 

136   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   (%)
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		   %
Portfolio
Turnover Rate(b)
             
             
(6.22 )   41.69   (7.48 )   23,319   1.32   1.32   2.00   29
(.69 )   52.29   (7.70 )   7,868   1.32   1.33   .35   70
             
(6.04 )   40.92   (7.81 )   83,284   2.07   2.07   1.18   29
(5.16 )   51.42   .56     98,745   2.07   2.08   .38   70
(5.33 )   56.11   36.63     110,287   2.07   2.08   .45   49
(4.10 )   46.08   17.22     81,876   2.10   2.10   .95   64
(1.22 )   43.10   30.97     61,089   2.12   2.12   1.20   38
(1.22 )   33.94   33.23     32,784   2.20   2.30   3.67   46
             
(6.21 )   41.77   (7.48 )   50,185   1.32   1.32   1.92   29
(5.49 )   52.36   1.33     51,299   1.32   1.33   1.13   70
(5.62 )   56.95   37.65     59,768   1.32   1.32   1.19   49
(4.43 )   46.62   18.09     40,296   1.35   1.35   1.71   64
(1.48 )   43.55   32.00     29,436   1.37   1.37   1.95   38
(1.42 )   34.24   34.21     16,651   1.43   1.62   4.46   46
             
(6.26 )   42.31   (7.36 )   2,044,596   1.07   1.07   2.17   29
(5.62 )   52.94   1.57     2,126,802   1.07   1.08   1.38   70
(5.74 )   57.53   38.04     1,903,365   1.07   1.07   1.46   49
(4.54 )   47.03   18.35     1,434,109   1.10   1.10   1.95   64
(1.57 )   43.90   32.30     1,171,513   1.11   1.11   2.23   38
(1.47 )   34.51   34.58     830,448   1.18   1.18   4.66   46

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   137

Table of Contents

Russell Investment Company

Specialty Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Short Duration Bond Fund               

Class A

                  

April 30, 2008*

    18.81    .36    .13      .49      (.40 )    —  

October 31, 2007(1)

    18.71    .49    .09      .58      (.48 )    —  

Class C

                  

April 30, 2008*

    18.76    .29    .13      .42      (.32 )    —  

October 31, 2007

    18.66    .59    .14      .73      (.63 )    —  

October 31, 2006

    18.63    .50    .03      .53      (.50 )    —  

October 31, 2005

    19.04    .31    (.40 )    (.09 )    (.31 )    (.01 )

October 31, 2004

    19.01    .19    (.01 )    .18      (.15 )    —  

October 31, 2003

    18.98    .31    .06      .37      (.34 )    —  

Class E

                  

April 30, 2008*

    18.82    .36    .14      .50      (.39 )    —  

October 31, 2007

    18.73    .72    .14      .86      (.77 )    —  

October 31, 2006

    18.70    .65    .03      .68      (.65 )    —  

October 31, 2005

    19.10    .46    (.41 )    .05      (.44 )    (.01 )

October 31, 2004

    19.08    .34    (.01 )    .33      (.31 )    —  

October 31, 2003

    19.04    .48    .03      .51      (.47 )    —  

Class S

                  

April 30, 2008*

    18.79    .39    .14      .53      (.42 )    —  

October 31, 2007

    18.70    .75    .16      .91      (.82 )    —  

October 31, 2006

    18.67    .69    .03      .72      (.69 )    —  

October 31, 2005

    19.07    .51    (.41 )    .10      (.49 )    (.01 )

October 31, 2004

    19.05    .38    (.01 )    .37      (.35 )    —  

October 31, 2003

    19.01    .52    .03      .55      (.51 )    —  
Tax Exempt Bond Fund               

Class C

                  

April 30, 2008*

    21.31    .29    (.01 )    .28      (.28 )    —  

October 31, 2007

    21.63    .58    (.32 )    .26      (.58 )    —  

October 31, 2006

    21.45    .57    .17      .74      (.56 )    —  

October 31, 2005

    22.03    .51    (.61 )    (.10 )    (.48 )    —  

October 31, 2004

    21.99    .53    .04      .57      (.53 )    —  

October 31, 2003

    21.94    .58    .07      .65      (.60 )    —  

Class E

                  

April 30, 2008*

    21.38    .37    (.01 )    .36      (.37 )    —  

October 31, 2007

    21.70    .76    (.34 )    .42      (.74 )    —  

October 31, 2006

    21.52    .73    .17      .90      (.72 )    —  

October 31, 2005

    22.10    .67    (.60 )    .07      (.65 )    —  

October 31, 2004

    22.06    .69    .04      .73      (.69 )    —  

October 31, 2003

    21.99    .75    .06      .81      (.74 )    —  

Class S

                  

April 30, 2008*

    21.36    .39    (.01 )    .38      (.40 )    —  

October 31, 2007

    21.67    .80    (.32 )    .48      (.79 )    —  

October 31, 2006

    21.49    .79    .16      .95      (.77 )    —  

October 31, 2005

    22.07    .72    (.60 )    .12      (.70 )    —  

October 31, 2004

    22.03    .75    .03      .78      (.74 )    —  

October 31, 2003

    21.96    .80    .07      .87      (.80 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

138   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   (%)
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		  

%
Ratio of Expenses

to Average
Net Assets,
Gross(c)

   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		   %
Portfolio
Turnover Rate(b)
             
             
(.40 )   18.90   2.63     4,074   .95   .95   3.85   90
(.48 )   18.81   3.16     1,363   .92   .93   3.92   173
             
(.32 )   18.86   2.27     17,002   1.70   1.70   3.12   90
(.63 )   18.76   3.98     16,075   1.67   1.68   3.18   173
(.50 )   18.66   2.89     21,840   1.65   1.66   2.71   112
(.32 )   18.63   (.50 )   30,290   1.65   1.66   1.65   203
(.15 )   19.04   .97     38,427   1.63   1.66   1.00   132
(.34 )   19.01   1.97     41,644   1.56   1.72   1.63   188
             
(.39 )   18.93   2.64     16,868   .95   .95   3.88   90
(.77 )   18.82   4.72     17,092   .92   .93   3.95   173
(.65 )   18.73   3.69     26,800   .90   .91   3.49   112
(.45 )   18.70   .25     24,851   .90   .91   2.43   203
(.31 )   19.10   1.74     23,181   .88   .91   1.76   132
(.47 )   19.08   2.70     20,274   .80   .97   2.52   188
             
(.42 )   18.90   2.83     398,584   .70   .70   4.13   90
(.82 )   18.79   4.99     435,704   .67   .68   4.20   173
(.69 )   18.70   3.95     1,106,946   .65   .65   3.73   112
(.50 )   18.67   .51     1,158,439   .65   .66   2.67   203
(.35 )   19.07   1.98     1,135,332   .63   .66   2.01   132
(.51 )   19.05   2.95     958,064   .56   .72   2.70   188
             
             
(.28 )   21.31   1.32     17,322   1.53   1.53   2.70   29
(.58 )   21.31   1.21     12,722   1.55   1.55   2.72   72
(.56 )   21.63   3.50     11,819   1.56   1.56   2.66   63
(.48 )   21.45   (.46 )   10,493   1.53   1.53   2.31   43
(.53 )   22.03   2.62     10,611   1.53   1.53   2.39   37
(.60 )   21.99   2.98     8,701   1.56   1.56   2.62   37
             
(.37 )   21.37   1.70     19,925   .78   .78   3.46   29
(.74 )   21.38   1.96     19,442   .80   .80   3.48   72
(.72 )   21.70   4.26     11,805   .80   .81   3.41   63
(.65 )   21.52   .31     8,572   .78   .78   3.07   43
(.69 )   22.10   3.38     6,488   .78   .78   3.14   37
(.74 )   22.06   3.75     5,849   .81   .81   3.37   37
             
(.40 )   21.34   1.80     371,414   .53   .53   3.71   29
(.79 )   21.36   2.26     336,275   .55   .55   3.72   72
(.77 )   21.67   4.53     274,438   .55   .56   3.66   63
(.70 )   21.49   .55     228,604   .53   .53   3.31   43
(.74 )   22.07   3.64     185,587   .53   .53   3.39   37
(.80 )   22.03   4.01     144,402   .56   .56   3.62   37

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   139

Table of Contents

Russell Investment Company

Specialty Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		     $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Tax-Managed Large Cap Fund             

Class C

                 

April 30, 2008*

    22.78    (.01 )   (2.70 )    (2.71 )    —      —  

October 31, 2007

    19.62    (.06 )   3.22      3.16      —      —  

October 31, 2006

    17.68    (.02 )   1.96      1.94      —      —  

October 31, 2005

    16.55    .01     1.14      1.15      (.02 )    —  

October 31, 2004

    15.02    (.06 )   1.59      1.53      —      —  

October 31, 2003

    12.61    (.04 )   2.45      2.41      —      —  

Class E

                 

April 30, 2008*

    23.41    .07     (2.77 )    (2.70 )    (.11 )    —  

October 31, 2007

    20.12    .10     3.31      3.41      (.12 )    —  

October 31, 2006

    18.09    .11     2.02      2.13      (.10 )    —  

October 31, 2005

    16.93    .15     1.15      1.30      (.14 )    —  

October 31, 2004

    15.30    .06     1.63      1.69      (.06 )    —  

October 31, 2003

    12.83    .06     2.50      2.56      (.09 )    —  

Class S

                 

April 30, 2008*

    23.52    .10     (2.78 )    (2.68 )    (.16 )    —  

October 31, 2007

    20.21    .15     3.32      3.47      (.16 )    —  

October 31, 2006

    18.16    .17     2.02      2.19      (.14 )    —  

October 31, 2005

    16.99    .20     1.15      1.35      (.18 )    —  

October 31, 2004

    15.34    .10     1.63      1.73      (.08 )    —  

October 31, 2003

    12.87    .10     2.48      2.58      (.11 )    —  
Tax-Managed Mid & Small Cap Fund             

Class C

                 

April 30, 2008*

    15.07    (.04 )   (1.83 )    (1.87 )    —      (1.22 )

October 31, 2007

    13.22    (.13 )   2.18      2.05      —      (.20 )

October 31, 2006

    11.59    (.14 )   1.77      1.63      —      —  

October 31, 2005

    10.17    (.12 )   1.54      1.42      —      —  

October 31, 2004

    9.33    (.13 )   .97      .84      —      —  

October 31, 2003

    7.12    (.08 )   2.29      2.21      —      —  

Class E

                 

April 30, 2008*

    16.03    .01     (1.95 )    (1.94 )    —      (1.22 )

October 31, 2007

    13.93    (.03 )   2.33      2.30      —      (.20 )

October 31, 2006

    12.13    (.05 )   1.85      1.80      —      —  

October 31, 2005

    10.56    (.04 )   1.61      1.57      —      —  

October 31, 2004

    9.62    (.06 )   1.00      .94      —      —  

October 31, 2003

    7.28    (.02 )   2.36      2.34      —      —  

Class S

                 

April 30, 2008*

    16.30    .02     (1.98 )    (1.96 )    (.01 )    (1.22 )

October 31, 2007

    14.13    .01     2.36      2.37      —      (.20 )

October 31, 2006

    12.27    (.01 )   1.87      1.86      —      —  

October 31, 2005

    10.65    (.01 )   1.63      1.62      —      —  

October 31, 2004

    9.68    (.03 )   1.00      .97      —      —  

October 31, 2003

    7.31    — (d)   2.37      2.37      —      —  

 

See accompanying notes which are an integral part of the financial statements.

 

140   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   (%)
Total
Return(b)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		     %
Portfolio
Turnover Rate(b)
             
             
—     20.07   (11.90 )   21,655   1.91   1.91   (.05 )   26
—     22.78   16.11     21,692   1.92   1.92   (.30 )   50
—     19.62   10.97     19,112   1.92   1.92   (.13 )   61
(.02 )   17.68   6.94     16,955   1.91   1.91   .08     43
—     16.55   10.19     13,304   1.92   1.92   (.38 )   32
—     15.02   19.11     10,022   1.94   1.94   (.30 )   127
             
(.11 )   20.60   (11.56 )   17,482   1.16   1.16   .71     26
(.12 )   23.41   17.01     16,891   1.17   1.17   .45     50
(.10 )   20.12   11.82     12,726   1.17   1.17   .60     61
(.14 )   18.09   7.72     8,695   1.16   1.16   .84     43
(.06 )   16.93   11.05     5,991   1.17   1.17   .37     32
(.09 )   15.30   20.04     4,743   1.19   1.19   .46     127
             
(.16 )   20.68   (11.42 )   515,885   .91   .91   .97     26
(.16 )   23.52   17.28     572,139   .92   .92   .70     50
(.14 )   20.21   12.12     458,002   .92   .92   .87     61
(.18 )   18.16   7.98     386,605   .90   .91   1.12     43
(.08 )   16.99   11.33     342,640   .92   .92   .62     32
(.11 )   15.34   20.24     307,458   .94   .94   .71     127
             
             
(1.22 )   11.98   (12.84 )   13,251   2.25   2.33   (.67 )   37
(.20 )   15.07   15.70     14,088   2.25   2.30   (.93 )   57
—     13.22   14.06     11,975   2.25   2.35   (1.09 )   54
—     11.59   13.96     9,295   2.24   2.37   (1.06 )   58
—     10.17   9.00     6,041   2.25   2.34   (1.33 )   203
—     9.33   31.04     5,025   2.25   2.49   (1.06 )   82
             
(1.22 )   12.87   (12.49 )   3,627   1.50   1.58   .09     37
(.20 )   16.03   16.70     3,654   1.50   1.55   (.19 )   57
—     13.93   14.84     2,523   1.50   1.60   (.34 )   54
—     12.13   14.87     1,663   1.48   1.62   (.32 )   58
—     10.56   9.77     1,279   1.50   1.59   (.58 )   203
—     9.62   32.14     850   1.50   1.74   (.31 )   82
             
(1.23 )   13.11   (12.42 )   232,838   1.25   1.33   .33     37
(.20 )   16.30   16.97     265,807   1.25   1.30   .07     57
—     14.13   15.16     198,081   1.25   1.35   (.09 )   54
—     12.27   15.21     156,596   1.22   1.38   (.06 )   58
—     10.65   10.02     123,045   1.25   1.34   (.32 )   203
—     9.68   32.42     106,738   1.25   1.49   (.06 )   82

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   141

Table of Contents

Russell Investment Company

Specialty Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		     $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		     $
Distributions
from Net
Realized Gain		  
Select Growth Fund                

Class C

                

April 30, 2008*

    9.17    (.04 )   (.96 )    (1.00 )    —     (.41 )

October 31, 2007

    7.84    (.09 )   1.42      1.33      —     —  

October 31, 2006

    7.45    (.09 )   .48      .39      —     —  

October 31, 2005

    6.85    (.08 )   .68      .60      —     —  

October 31, 2004

    6.85    (.11 )   .11      —      —     —  

October 31, 2003

    5.23    (.09 )   1.71      1.62      —     —  

Class E

                

April 30, 2008*

    9.72    —     (1.02 )    (1.02 )    —     (.41 )

October 31, 2007

    8.25    (.02 )   1.49      1.47      —     —  

October 31, 2006

    7.76    (.03 )   .52      .49      —     —  

October 31, 2005

    7.08    (.01 )   .69      .68      —     —  

October 31, 2004

    7.03    (.05 )   .10      .05      —     —  

October 31, 2003

    5.31    (.04 )   1.76      1.72      —     —  

Class I

                

April 30, 2008*

    9.98    .02     (1.05 )    (1.03 )    —     (.41 )

October 31, 2007

    8.44    .01     1.53      1.54      —     —  

October 31, 2006

    7.91    .01     .52      .53      — (d)   —  

October 31, 2005

    7.19    .01     .71      .72      —     —  

October 31, 2004

    7.10    (.02 )   .11      .09      —     —  

October 31, 2003

    5.35    (.02 )   1.77      1.75      —     —  

Class S

                

April 30, 2008*

    9.89    .01     (1.04 )    (1.03 )    —     (.41 )

October 31, 2007

    8.38    (.01 )   1.52      1.51      —     —  

October 31, 2006

    7.87    (.01 )   .52      .51      —     —  

October 31, 2005

    7.15    — (d)   .72      .72      —     —  

October 31, 2004

    7.08    (.03 )   .10      .07      —     —  

October 31, 2003

    5.34    (.02 )   1.76      1.74      —     —  

 

See accompanying notes which are an integral part of the financial statements.

 

142   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   (%)
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		     %
Portfolio
Turnover Rate(b)
             
             
(.41 )   7.76   (11.21 )   10,561   2.23   2.27   (.90 )   57
—     9.17   16.96     11,204   2.23   2.27   (1.14 )   139
—     7.84   5.23     9,764   2.22   2.27   (1.20 )   148
—     7.45   8.76     8,149   2.23   2.32   (1.15 )   128
—     6.85   (.15 )   5,942   2.25   2.50   (1.53 )   134
—     6.85   31.17     3,265   2.20   2.74   (1.57 )   150
             
(.41 )   8.29   (10.77 )   7,851   1.38   1.42   (.04 )   57
—     9.72   17.82     7,104   1.37   1.41   (.28 )   139
—     8.25   6.31     6,590   1.36   1.42   (.34 )   148
—     7.76   9.60     4,255   1.28   1.40   (.15 )   128
—     7.08   .71     5,749   1.36   1.54   (.65 )   134
—     7.03   32.39     4,865   1.26   1.79   (.62 )   150
             
(.41 )   8.54   (10.59 )   101,241   .99   1.07   .35     57
—     9.98   18.25     113,989   1.00   1.06   .09     139
—     8.44   6.75     90,953   .95   1.13   .07     148
—     7.91   10.17     112,112   .92   1.08   .12     128
—     7.19   1.13     60,006   .95   1.20   (.23 )   134
—     7.10   32.71     32,003   .93   1.58   (.31 )   150
             
(.41 )   8.45   (10.78 )   72,845   1.20   1.24   .13     57
—     9.89   18.02     79,962   1.16   1.20   (.07 )   139
—     8.38   6.48     71,433   1.15   1.21   (.13 )   148
—     7.87   10.07     57,324   1.06   1.18   .04     128
—     7.15   .99     51,569   1.09   1.27   (.38 )   134
—     7.08   32.58     42,421   1.03   1.56   (.40 )   150

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   143

Table of Contents

Russell Investment Company

Specialty Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		      $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Select Value Fund                  

Class C

                  

April 30, 2008*

    12.84    .03      (1.63 )    (1.60 )    (.03 )    (1.95 )

October 31, 2007

    12.44    .01      1.16      1.17      (.02 )    (.75 )

October 31, 2006

    11.27    .01      1.83      1.84      (.03 )    (.64 )

October 31, 2005

    10.15    (.02 )    1.16      1.14      (.01 )    (.01 )

October 31, 2004

    8.97    (.03 )    1.22      1.19      (.01 )    —  

October 31, 2003

    7.41    (.01 )    1.58      1.57      (.01 )    —  

Class E

                  

April 30, 2008*

    13.10    .07      (1.66 )    (1.59 )    (.08 )    (1.95 )

October 31, 2007

    12.66    .11      1.19      1.30      (.11 )    (.75 )

October 31, 2006

    11.43    .11      1.87      1.98      (.11 )    (.64 )

October 31, 2005

    10.28    .09      1.16      1.25      (.09 )    (.01 )

October 31, 2004

    9.05    .05      1.23      1.28      (.05 )    —  

October 31, 2003

    7.46    .06      1.58      1.64      (.05 )    —  

Class I

                  

April 30, 2008*

    13.13    .08      (1.66 )    (1.58 )    (.09 )    (1.95 )

October 31, 2007

    12.69    .16      1.18      1.34      (.15 )    (.75 )

October 31, 2006

    11.46    .15      1.87      2.02      (.15 )    (.64 )

October 31, 2005

    10.30    .13      1.17      1.30      (.13 )    (.01 )

October 31, 2004

    9.07    .10      1.22      1.32      (.09 )    —  

October 31, 2003

    7.46    .08      1.61      1.69      (.08 )    —  

Class S

                  

April 30, 2008*

    13.10    .08      (1.67 )    (1.59 )    (.08 )    (1.95 )

October 31, 2007

    12.67    .14      1.17      1.31      (.14 )    (.75 )

October 31, 2006

    11.44    .13      1.87      2.00      (.13 )    (.64 )

October 31, 2005

    10.29    .11      1.16      1.27      (.11 )    (.01 )

October 31, 2004

    9.05    .08      1.24      1.32      (.08 )    —  

October 31, 2003

    7.45    .07      1.60      1.67      (.07 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

144   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   (%)
Total
Return(b)(f)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		     %
Portfolio
Turnover Rate(b)
             
             
(1.98 )   9.26   (13.23 )   20,419   2.10   2.10   .51     75
(.77 )   12.84   9.73     25,688   2.09   2.09   .06     128
(.67 )   12.44   17.01     26,168   2.11   2.11   .08     87
(.02 )   11.27   11.23     21,228   2.18   2.20   (.18 )   85
(.01 )   10.15   13.24     16,834   2.25   2.32   (.31 )   96
(.01 )   8.97   21.19     9,972   2.15   2.42   (.12 )   106
             
(2.03 )   9.48   (12.88 )   11,657   1.27   1.27   1.32     75
(.86 )   13.10   10.64     10,774   1.27   1.27   .88     128
(.75 )   12.66   18.15     10,871   1.27   1.27   .91     87
(.10 )   11.43   12.14     8,770   1.25   1.30   .78     85
(.05 )   10.28   14.31     9,167   1.39   1.39   .55     96
(.05 )   9.05   22.01     7,778   1.21   1.48   .77     106
             
(2.04 )   9.51   (12.71 )   106,334   .95   .95   1.68     75
(.90 )   13.13   10.97     139,538   .94   .94   1.21     128
(.79 )   12.69   18.47     131,494   .94   .94   1.26     87
(.14 )   11.46   12.63     135,759   .86   .91   1.14     85
(.09 )   10.30   14.77     102,397   .95   .95   1.00     96
(.08 )   9.07   22.60     74,600   .90   1.23   1.12     106
             
(2.03 )   9.48   (12.82 )   213,895   1.10   1.10   1.52     75
(.88 )   13.10   10.87     274,355   1.05   1.05   1.10     128
(.77 )   12.67   18.32     253,586   1.09   1.10   1.09     87
(.12 )   11.44   12.36     198,551   1.07   1.10   .95     85
(.08 )   10.29   14.61     173,635   1.10   1.10   .84     96
(.07 )   9.05   22.53     128,383   1.01   1.28   1.03     106

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   145

Table of Contents

Russell Investment Company

Specialty Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		    $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Return of
capital
Fixed Income I Fund                  

Class C

                     

April 30, 2008*

    20.76    .38    (.08 )    .30    (.43 )    —      —

October 31, 2007(2)

    20.76    .08    (.08 )    —    —      —      —

Class E

                     

April 30, 2008*

    20.77    .48    (.09 )    .39    (.51 )    —      —

October 31, 2007

    20.82    .96    (.02 )    .94    (.99 )    —      —

October 31, 2006

    20.75    .92    .04      .96    (.89 )    —      —

October 31, 2005

    21.88    .74    (.61 )    .13    (.73 )    (.53 )    —

October 31, 2004

    22.12    .63    .48      1.11    (.69 )    (.66 )    —

October 31, 2003

    22.15    .72    .36      1.08    (.67 )    (.44 )    —

Class I

                     

April 30, 2008*

    20.76    .51    (.08 )    .43    (.54 )    —      —

October 31, 2007

    20.82    1.04    (.06 )    .98    (1.04 )    —      —

October 31, 2006

    20.75    .97    .05      1.02    (.95 )    —      —

October 31, 2005

    21.87    .80    (.61 )    .19    (.78 )    (.53 )    —

October 31, 2004

    22.11    .68    .49      1.17    (.75 )    (.66 )    —

October 31, 2003

    22.15    .78    .35      1.13    (.73 )    (.44 )    —

Class S

                     

April 30, 2008*

    20.76    .50    (.08 )    .42    (.53 )    —      —

October 31, 2007(2)

    20.75    .01    —      .01    —      —      —

Class Y

                     

April 30, 2008*

    20.77    .51    (.08 )    .43    (.54 )    —      —

October 31, 2007

    20.83    1.04    (.05 )    .99    (1.05 )    —      —

October 31, 2006

    20.76    .99    .04      1.03    (.96 )    —      —

October 31, 2005

    21.88    .80    (.61 )    .19    (.78 )    (.53 )    —

October 31, 2004

    22.12    .70    .48      1.18    (.76 )    (.66 )    —

October 31, 2003

    22.16    .79    .36      1.15    (.75 )    (.44 )    —

 

See accompanying notes which are an integral part of the financial statements.

 

146   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   (%)
Total
Return(b)(f)		   $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		   %
Portfolio
Turnover Rate(b)
             
             
(.43 )   20.63   1.45   36,564   1.60   1.63   3.69   56
—     20.76   —   35,689   1.60   1.62   4.21   199
             
(.51 )   20.65   1.92   59,770   .64   .67   4.63   56
(.99 )   20.77   4.64   53,663   .65   .67   4.76   199
(.89 )   20.82   4.79   31,504   .64   .67   4.45   125
(1.26 )   20.75   .60   29,632   .65   .68   3.49   202
(1.35 )   21.88   5.22   27,515   .65   .66   2.88   154
(1.11 )   22.12   5.01   27,009   .67   .67   3.25   184
             
(.54 )   20.65   2.09   575,060   .39   .42   4.88   56
(1.04 )   20.76   4.85   689,651   .40   .42   4.99   199
(.95 )   20.82   5.06   829,914   .40   .42   4.70   125
(1.31 )   20.75   .88   788,808   .38   .40   3.76   202
(1.41 )   21.87   5.52   752,229   .39   .40   3.15   154
(1.17 )   22.11   5.26   639,846   .41   .41   3.50   184
             
(.53 )   20.65   2.03   177,414   .52   .55   4.75   56
—     20.76   .05   226,995   .53   .55   5.30   199
             
(.54 )   20.66   2.11   552,335   .35   .38   4.93   56
(1.05 )   20.77   4.90   609,683   .36   .38   5.04   199
(.96 )   20.83   5.11   550,383   .35   .38   4.77   125
(1.31 )   20.76   .91   398,882   .35   .37   3.81   202
(1.42 )   21.88   5.58   285,228   .33   .34   3.18   154
(1.19 )   22.12   5.33   399,601   .35   .35   3.53   184

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   147

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Financial Highlights — April 30, 2008 (Unaudited)

 

 

 

* For the six months ended April 30, 2008 (Unaudited).
(1) For the period March 1, 2007 (commencement of operations) to October 31, 2007.
(2) For the period October 22, 2007 (commencement of operations) to October 31, 2007.
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) The ratios for periods less than one year are annualized.
(d) Less than $.01 per share.
(e) May reflect amounts waived and/or reimbursed by RIMCo and/or RFSC, and for certain funds, custody credit arrangements.
(f) Excludes the effects of sales charges for Class A. If sales charges were included, the total return would be lower.

 

See accompanying notes which are an integral part of the financial statements.

 

148   Notes to Financial Highlights

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Financial Statements — April 30, 2008 (Unaudited)

 

 

 

1.   Organization

Russell Investment Company (the “Investment Company” or “RIC”) is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on nine of these Funds (each a “Fund” and collectively the “Funds”). The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated August 19, 2002, as amended. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.

Through December 31, 2007, Russell Investment Management Company (“RIMCo”) was the adviser, administrator and transfer agent of the Funds, providing advisory, administrative and transfer agency services to the Funds. Effective January 1, 2008, RIMCo is the Funds adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Funds administrator and transfer agent. There was no change in the services provided to the Funds or in aggregate fees paid by the Funds for advisory, administrative and transfer agency services.

 

2.   Significant Accounting Policies

The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by each Fund in the preparation of its financial statements.

Security Valuation

The Funds value portfolio securities according to Board-approved securities valuation procedures, including market value procedures, fair value procedures and pricing services. Money market fund securities are priced using the amortized cost method of valuation, as are debt obligation securities maturing within 60 days at the time of purchase, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.

Ordinarily, the Funds value each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the Market Value Procedures). Generally, Fund securities are valued at the close of the market on which they are traded as follows:

 

  •  

US listed equities; equity and fixed income options: Last sale price; last bid price if no last sale price;

 

  •  

US over-the-counter equities: Official closing price; last bid price if no closing price;

 

  •  

Listed ADRs/GDRs: Last sale price; last bid price if no last sale price;

 

  •  

Municipal bonds, US bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price;

 

  •  

Futures: Settlement price.

 

  •  

Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier.

 

  •  

The value of swap agreements is equal to the Funds’ obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts.

 

  •  

Equity securities traded on a national foreign securities exchange or a foreign over the counter market are valued on the basis of the official closing price, or lacking the official closing price, at the last sale price of the primary exchange on which the security is traded.

If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Funds will use the security’s fair value, as determined in accordance with the fair value procedures. This generally means that equity securities and fixed income securities listed and traded principally on any national securities exchange are valued on the basis of the last sale price or, lacking any sales, at the closing bid price, on the primary exchange on which the security is traded. The fair value procedures may involve subjective judgments as to the fair value of securities. The effect of fair value pricing is

 

Notes to Financial Statements   149

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

that securities may not be priced on the basis of quotations from the primary market in which they are traded, but rather may be priced by another method that the Fund’s Board of Trustees believes reflects fair value. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Fund shares and the daily movement of the benchmark index if the index is valued using another pricing method.

This policy is intended to assure that the Funds’ net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Fund shares is determined may be reflected in the calculation of net asset values for each applicable Fund when the Funds deem that the particular event or circumstance would materially affect such Fund’s net asset value. Funds that invest primarily in frequently traded exchange listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. Funds that invest in foreign securities are likely to use fair value pricing more often since significant events may occur between the close of foreign markets and the time of pricing which would trigger fair value pricing of the foreign securities. Funds that invest in low rated debt securities are also likely to use fair value pricing more often since the markets in which such securities are traded are generally thinner, more limited and less active than those for higher rated securities. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the US securities market (defined in the Fair Value Procedures as the movement by any two of four major US Indexes greater than a certain percentage) or other significant event; foreign market holidays if on a daily basis, Fund exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.

Because foreign securities can trade on non-business days, the net asset value of a Fund’s portfolio that includes foreign securities may change on days when shareholders will not be able to purchase or redeem fund shares.

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds’ financial statement disclosure.

Investment Transaction

Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost incurred by each money manager within a particular Fund.

Investment Income

Dividend income is recorded net of applicable withholding taxes on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon thereafter as the Funds are informed of the ex-dividend date. Interest income is recorded daily on the accrual basis. All premiums and discounts, including original issue discounts, are amortized/accreted using the interest method.

Federal Income Taxes

Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.

It is each Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income or excise tax provision is required for the Funds.

The Financial Accounting Standards Board (FASB) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds adopted the provisions of FIN 48 on November 1, 2007. Management has reviewed the Funds tax positions for all open tax years, and concluded that adoption had no effect on the Funds financial position or results of operations. At April 30, 2008, the Funds have recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.

 

150   Notes to Financial Statements

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

The Funds file a U. S. tax return. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal year ending October 31, 2005 through October 31, 2007, no examinations are in progress or anticipated at this time. The Funds are not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Dividends and Distributions to Shareholders

For all Funds, income and capital gain distributions, if any, are recorded on the ex-dividend date. Income distributions are generally declared and paid according to the following schedule:

 

Declared    Payable    Funds

Monthly

    Early in the following month    Tax Exempt Bond

Quarterly

    April, July, October and December   

Real Estate Securities,

Short Duration Bond,

Select Value and Fixed Income I

Annually

    Mid-December   

Emerging Markets,

Tax-Managed Large Cap,

Tax-Managed Mid & Small Cap and Select Growth

The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) on investment and foreign currency-related transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP primarily relate to investments in options, futures, forward contracts, swap contracts, passive foreign investment companies, foreign-denominated investments, mortgage-backed securities, certain securities sold at a loss and capital loss carryforwards.

Expenses

The Funds will pay their own expenses other than those expressly assumed by RIMCo or RFSC. Most expenses can be directly attributed to the individual Funds. Expenses which cannot be directly attributed to a specific Fund are allocated among all Funds principally based on their relative net assets.

Class Allocation

Each of the Funds presented herein may offer certain following classes of shares: Class A, Class C, Class E, Class I, Class S and Class Y. All share classes have identical voting, dividend, liquidation and other rights and the same terms and conditions. The separate classes of shares differ principally in the applicable distribution fees and shareholder servicing fees. Shareholders of each class bear certain expenses that pertain to that particular class. Realized and unrealized gains (losses), net investment income, and expenses with the exception of class level expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class.

Foreign Currency Translations

The books and records of the Funds are maintained in US dollars. Foreign currency amounts and transactions of the Funds are translated into US dollars on the following basis:

 

  (a) Market value of investment securities, other assets and liabilities at the closing rate of exchange on the valuation date.

 

  (b) Purchases and sales of investment securities and income at the closing rate of exchange prevailing on the respective trade dates of such transactions.

Net realized gains or losses from foreign currency-related transactions arise from: sales and maturities of short-term securities; sales of foreign currencies; currency gains or losses realized between the trade and settlement dates on securities transactions; the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds’ books and the US dollar equivalent of the amounts actually received or paid. Net unrealized gains or losses from foreign currency-related transactions arise from changes in the value of assets and liabilities, other than investments in securities, at year-end, as a result of changes in the exchange rates.

 

Notes to Financial Statements   151

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

The Funds do not isolate that portion of the results of operations of the Funds that arises as a result of changes in exchange rates from that portion that arises from changes in market prices of investments during the year. Such fluctuations are included with the net realized and unrealized gain or loss from investments. However, for federal income tax purposes the Funds do isolate the effects of changes in foreign exchange rates from the fluctuations arising from changes in market prices for realized gain (or loss) on debt obligations.

Capital Gains Taxes

The Emerging Markets Fund may be subject to capital gains taxes and repatriation taxes imposed by certain countries in which it invests. The Fund has recorded a deferred tax liability of $1,800,030 in respect of the unrealized appreciation on foreign securities for potential capital gains and repatriation taxes at April 30, 2008. The accrual for capital gains and repatriation taxes is included in net unrealized appreciation (depreciation) on investments in the Statement of Asset and Liabilities for the Fund. The amounts related to capital gains taxes are $1,115,460 and are included in net realized gain (loss) on investments in the Statement of Operations for the Fund.

Derivatives

To the extent permitted by the investment objectives, restrictions and policies set forth in the Funds’ Prospectus and Statement of Additional Information, the Funds may participate in various derivative-based transactions. Derivative securities are instruments or agreements whose value is derived from an underlying security or index. They include options, futures, swaps, forwards, structured notes and stripped securities. These instruments offer unique characteristics and risks that assist the Funds in meeting its investment strategies.

The Funds typically use derivatives in three ways: exposing cash reserves to markets, hedging and return enhancement. The Funds may pursue their strategy of being fully invested by exposing cash reserves to the performance of appropriate markets by purchasing securities and/or derivatives. This is intended to cause the Funds to perform as though cash reserves were actually invested in those markets. Hedging is also used by the Funds to limit or control risks, such as adverse movements in exchange rates and interest rates. Return enhancement can be accomplished through the use of derivatives in a Fund. By purchasing certain instruments, the Funds may more effectively achieve the desired portfolio characteristics that assist them in meeting their investment objectives. Depending on how the derivatives are structured and utilized, the risks associated with them may vary widely. These risks are generally categorized as market risk, liquidity risk and counterparty or credit risk.

Foreign Currency Exchange Contracts

In connection with investment transactions consistent with the Funds’ investment objective and strategies, certain Funds may enter into foreign currency exchange spot contracts and forward foreign currency exchange contracts (“contracts”). From time to time the Emerging Markets, Short Duration Bond and Fixed Income I Funds may enter into contracts to hedge certain foreign currency-denominated assets. Contracts are recorded at market value. Certain risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and are generally limited to the amount of unrealized gain on the contracts, if any, that are recognized in the Statement of Assets and Liabilities. Realized gains or losses arising from such transactions are included in net realized gain (or loss) from foreign currency-related transactions. Open contracts at April 30, 2008 are presented on the Schedules of Investments for the applicable Funds.

Forward Commitments

The Funds may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with a Fund’s ability to manage its investment portfolio and meet redemption requests. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Funds may dispose of a forward commitment transaction prior to settlement if it is appropriate to do so and realize short-term gains (or losses) upon such sale. When effecting such transactions, cash or liquid high-grade debt obligations of the Fund in a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated on the Fund’s records at the trade date and maintained until the transaction is settled. A forward commitment transaction involves a risk of loss if the value of the security to be purchased declines prior to the settlement date or the other party to the transaction fails to complete the transaction.

 

152   Notes to Financial Statements

Table of Contents

Russell Investment Company

Specialty Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Loan Agreements

The Fixed Income I Fund may invest in direct debt instruments which are interests in amounts owed by corporate, governmental, or other borrowers to lenders or lending syndicates. A Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. A loan is often administered by a bank or other financial institution (the “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. When investing in a loan participation, a Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt by the lender of payments from the borrower. A Fund generally has no right to enforce compliance with the terms of the loan agreement with the borrower. As a result, a Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When a Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan. At the period ended April 30, 2008, there were no unfunded loan commitments in the Fixed Income I Fund.

Options

The Funds may purchase and sell (write) call and put options on securities and securities indices, provided such options are traded on a national securities exchange or in an over-the-counter market. The Funds may also purchase and sell call and put options on foreign currencies. The domestic equity Funds may utilize options to equitize liquidity reserve balances.

When a Fund writes a covered call or a put option, an amount equal to the premium received by the Fund is included in the Fund’s Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. The Fund receives a premium on the sale of a call option but gives up the opportunity to profit from any increase in stock value above the exercise price of the option, and when the Fund writes a put option it is exposed to a decline in the price of the underlying security.

Whether an option which the Fund has written expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss, if the cost of a closing purchase transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. When a put option which a Fund has written is exercised, the amount of the premium originally received will reduce the cost of the security which a Fund purchases upon exercise of the option. Realized gains (losses) on purchased options are included in net realized gain (loss) from investments.

The Funds’ use of written options involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to market risk. The risks may be caused by an imperfect correlation between movements in the price of the instrument and the price of the underlying securities and interest rates.

Futures Contracts

The Funds may invest in futures contracts (i.e., interest rate, foreign currency and index futures contracts) to a limited extent. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to off balance sheet risk. The primary risks associated with the use of futures contracts are an imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Funds are required to deposit with a broker an amount, termed the initial margin, which typically represents 5% of the purchase price indicated in the futures contract. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement value are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. As of April 30, 2008, the Fixed Income I Fund had cash collateral balance of $1,605,000 in connection with futures contracts purchased (sold).

Swap Agreements

The Funds may enter into several different types of agreements including interest rate, index, credit default and currency swaps.

 

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The Funds may enter into index swap agreements as an additional hedging strategy for cash reserves held by those Funds or to effect investment transactions consistent with those Funds’ investment objectives and strategies. Index swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard index swap transaction, the two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular investments or instruments. The returns to be exchanged between the parties are calculated with respect to a “notional amount” (i.e. a specified dollar amount that is hypothetically invested in a “basket” of securities representing a particular index). Amounts paid to and received from the swap counterparties representing capital appreciation and depreciation on the underlying securities and accrued interest expense and interest income are recorded as net realized gain (loss). The Fund is exposed to credit risk in the event of non-performance by the swap counterparties; however, the Fund does not anticipate non-performance by the counterparties.

The Short Duration Bond and Fixed Income I Funds may enter into swap agreements, on either an asset-based or liability-based basis, depending on whether they are hedging their assets or their liabilities, and will usually enter into swaps on a net basis, i.e., the two payment streams are netted out, with the Funds receiving or paying, as the case may be, only the net amount of the two payments. When the Funds engage in a swap, they exchange their obligations to pay or rights to receive payments for the obligations to pay or rights to receive payments of another party (i.e., an exchange of floating rate payments for fixed rate payments).

Interest rate swaps are counterparty agreements and can be customized to meet each party’s needs and involve the exchange of a fixed payment per period for a payment that is not fixed. Currency swaps are agreements where two parties exchange specified amounts of different currencies which are followed by a series of interest payments that are exchanged based on the principal cash flow. At maturity the principal amounts are exchanged back to the original party. Credit default swaps are counterparty agreements which allow the transfer of third party credit risk (the possibility that an issuer will default on their obligation by failing to pay principal or interest in a timely manner) from one party to another. The lender faces the credit risk from a third party and the counterparty in the swap agrees to insure this risk in exchange for regular periodic payments.

The Funds expect to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio or to protect against any increase in the price of securities it anticipates purchasing at a later date. The net amount of the excess, if any, of the Fund’s obligations over its entitlements with respect to each swap will be accrued on a daily basis and an amount of cash or liquid high-grade debt securities having an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by the Fund’s custodian. To the extent that the Fund enters into swaps on other than a net basis, the amount maintained in a segregated account will be the full amount of the Fund’s obligations, if any, with respect to such swaps, accrued on a daily basis. If there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the agreement related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid.

Investments in Emerging Markets

Investing in emerging markets may involve special risks and considerations for the Emerging Markets Fund not typically associated with investing in the United States markets. These risks include revaluation of currencies, high rates of inflation, repatriation, restrictions on income and capital, and future adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls, delayed settlements, and their prices may be more volatile than those of comparable securities in the United States.

Mortgage-Related and other Asset-Backed Securities

Certain Funds may invest in mortgage or other asset-backed securities. These securities may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. Mortgage-backed securities often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice, however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of a Fund’s portfolio at the time the Fund receives the payments for reinvestment. Mortgage-backed securities may have less potential for capital appreciation than comparable fixed income securities due to the likelihood of increased prepayments of mortgages as interest

 

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rates decline. If a Fund buys mortgage-backed securities at a premium, mortgage foreclosures and prepayments of principal by mortgagors (which may be made at any time without penalty) may result in some loss of the Fund’s principal investment to the extent of the premium paid. The value of mortgage-backed securities may also change due to shifts in the market’s perception of issuers. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole. Non-governmental mortgage-backed securities may offer higher yields than those issued by government entities, but also may be subject to greater price changes than governmental issues.

Through its investments in mortgage-backed securities (“MBS”), including those that are issued by private issuers, a Fund may have some exposure to subprime loans as well as to the mortgage and credit markets generally. Private issuers include commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called special purpose vehicles or SPVs) and other entities that acquire and package mortgage loans for resale as MBS. Unlike MBS issued or guaranteed by the U.S. government or one of its sponsored entities, MBS issued by private issuers do not have a government or government-sponsored entity guarantee, but may have credit enhancements provided by external entities such as banks or financial institutions or achieved through the structuring of the transaction itself. Examples of such credit support arising out of the structure of the transaction include the issue of senior and subordinated securities (e.g., the issuance of securities by an SPV in multiple classes or “tranches”, with one or more classes being senior to other subordinated classes as to the payment of principal and interest, with the result that defaults on the underlying mortgage loans are borne first by the holders of the subordinated class); creation of “reserve funds” (in which case cash or investments, sometimes funded from a portion of the payments on the underlying mortgage loans, are held in reserve against future losses); and “overcollateralization” (in which case the scheduled payments on, or the principal amount of, the underlying mortgage loans exceeds that required to make payment of the securities and pay any servicing or other fees). However, there can be no guarantee that credit enhancements, if any, will be sufficient to prevent losses in the event of defaults on the underlying mortgage loans. In addition, MBS that are issued by private issuers are not subject to the underwriting requirements for the underlying mortgages that are applicable to those MBS that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying private MBS may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored MBS and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Privately issued pools more frequently include second mortgages, high loan-to-value mortgages and manufactured housing loans. The coupon rates and maturities of the underlying mortgage loans in a private-label MBS pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime mortgage loans. Subprime loans refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. For these reasons, the loans underlying these securities have had in many cases higher default rates than those loans that meet government underwriting requirements. The risk of non-payment is greater for MBS that are backed by mortgage pools that contain subprime loans, but a level of risk exists for all loans. Privately issued MBS are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, MBS held in a Fund’s portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.

Asset-backed securities may include pools of mortgages (“mortgage-backed securities”), loans, receivables or other assets. Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities. For purposes of determining the percentage of a Fund’s total assets invested in securities of issuers having their principal business activities in a particular industry, asset-backed securities will be classified separately, based on the nature of the underlying assets, according to the following categories: captive auto, diversified, retail and consumer loans, captive equipment and business, business trade receivables, nuclear fuel and capital and mortgage lending. Asset-backed securities (other than mortgage-backed securities) present certain risks that are not presented by mortgage-backed securities. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through

 

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guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. The Funds will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of asset-backed securities may be affected by legislative or regulatory developments. It is possible that such developments may require the Funds to dispose of any then existing holdings of such securities.

Inflation-Indexed bonds

Certain Funds may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity.

Guarantees

In the normal course of business the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote.

 

3.   Investment Transactions

Securities

During the period ended April 30, 2008, purchases and sales of investment securities (excluding US Government and Agency obligations, short-term investments, options, futures and repurchase agreements) were as follows:

 

Funds    Purchases    Sales
     

Emerging Markets

    $ 388,814,308    $ 502,751,213

Real Estate Securities

      706,294,759      585,592,638

Short Duration Bond

      187,475,649      186,928,254

Tax Exempt Bond

      138,995,031      103,227,460

Tax-Managed Large Cap

      155,999,228      136,409,203

Tax-Managed Mid & Small Cap

      88,259,333      87,153,928

Select Growth

      109,191,364      107,314,365

Select Value

      271,309,297      305,314,135

Fixed Income I

      251,477,492      410,788,061

Purchases and sales of US Government and Agency obligations (excluding short-term investments, options, futures and repurchase agreements) were as follows:

 

Funds    Purchases    Sales
     

Short Duration Bond

    $ 161,547,143    $ 187,759,227

Fixed Income I

      642,104,129      798,351,098

Written Options Contracts

Transactions in written options contracts for the period ended April 30, 2008 for the following Funds were as follows:

 

     Emerging Markets Fund     Short Duration Bond Fund  
      Number of
Contracts		     Premiums
Received		     Number of
Contracts		    

Premiums

Received

  
        

Outstanding October 31, 2007

    278     $ 501,369     15     $ 544,681  

Opened

    1,806       2,345,775     21       1,503,550  

Closed

    (1,614 )     (2,067,921 )   (17 )     (550,220 )

Expired

    —       —     (8 )     (1,224 )
                            

Outstanding April 30, 2008

    470     $ 779,223     11     $ 1,496,787  
                            

 

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     Fixed Income I Fund  
      Number of
Contracts		     Premiums Received  
    

Outstanding October 31, 2007

    4,362     $ 1,040,705  

Opened

    2,310       1,311,410  

Closed

    (2,853 )     (872,551 )

Expired

    (3,118 )     (809,990 )
              

Outstanding April 30, 2008

    701     $ 669,574  
              

Securities Lending

The Investment Company has a securities lending program whereby each Fund can loan securities with a value up to 33 1/3% of each Fund’s total assets. The Fund receives cash (US currency), US Government or US Government agency obligations as collateral against the loaned securities. To the extent that a loan is collateralized by cash, such collateral is invested by the securities lending agent, State Street Bank and Trust Company (“State Street”) in short-term instruments, money market mutual funds and other short-term investments that meet certain quality and diversification requirements. Cash collateral invested in money market funds is included in the Schedules of Investments. The collateral received is recorded on a lending Fund’s Statement of Assets and Liabilities along with the related obligation to return the collateral.

Income generated from the investment of cash collateral, less negotiated rebate fees paid to participating brokers and transaction costs, is divided between the Fund and State Street and is recorded as income for the Fund. To the extent that a loan is secured by non-cash collateral, brokers pay the Fund negotiated lenders’ fees, which are divided between the Fund and State Street and are recorded as securities lending income for the Fund. All collateral received will be in an amount at least equal to 102% (for loans of US securities) or 105% (for non-US securities) of the market value of the loaned securities at the inception of each loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Fund the next day. Should the borrower of the securities fail financially, there is a risk of delay in recovery of the securities or loss of rights in the collateral. Consequently, loans are made only to borrowers which are deemed to be of good financial standing.

As of April 30, 2008, the non-cash collateral pledged for the securities on loan in the following funds was:

 

Funds    Non-Cash
Collateral Value		    Non-Cash Collateral Holding
     

Real Estate Securities

    $ 84,225    Pool of US Government Securities

Select Growth

      2,455,221    Pool of US Government Securities

Select Value

      4,658,970    Pool of US Government Securities

Tax Managed Mid & Small Cap

      509,454    Pool of US Government Securities

Custodian

The Funds have entered into arrangements with their Custodian whereby custody credits realized as a result of uninvested cash balances are used to reduce a portion of the Funds’ expenses. During the period ended April 30, 2008, the Funds’ custodian fees were reduced by the following amounts under these arrangements which are included in expense reductions on the Statement of Operations:

 

Funds    Amount Paid
  

Emerging Markets

    $ 18,203

Real Estate Securities

      2,471

Short Duration Bond

      8,479

Tax Exempt Bond

      646

Tax-Managed Large Cap

      814

Tax-Managed Mid & Small Cap

      1,052

Select Growth

      220

Select Value

      809

Fixed Income I

      77,617

 

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Brokerage Commissions

The Funds effect certain transactions through BNY ConvergeFX Group — LJR Recapture Services (“LJR”) and its global network of correspondent brokers. LJR is a registered broker and is not an affiliate of the Funds or RIMCo. Trades placed through LJR and its correspondents are used (i) to obtain research services for RIMCo to assist it in its capacity as a manager of managers and (ii) to generate commission rebates to the Funds on whose behalf the trades were made. For purposes of trading to obtain research services for RIMCo or to generate commission rebates to the Funds, the Funds’ money managers are requested to and RIMCo may, with respect to transactions it places, effect transactions with or through LJR and its correspondents or other brokers only to the extent that the Funds will receive competitive execution, price and commissions. In addition, RIMCo recommends targets for the amount of trading that money managers allocate through LJR based upon asset class, investment style and other factors. Research services provided to RIMCo by LJR or other brokers include performance measurement statistics, fund analytics systems and market monitoring systems. Research services will be generally obtained from unaffiliated third parties at market rates. Research provided to RIMCo may benefit the particular Funds generating the trading activity and may also benefit other Funds within the Investment Company and other funds and clients managed or advised by RIMCo or its affiliates. Similarly, the Funds may benefit from research provided with respect to trading by those other funds and clients.

LJR may also rebate to the Funds a portion of commissions earned on certain trading by the Funds through LJR and their correspondents in the form of commission recapture. Commission recapture is paid solely to those Funds generating the applicable trades. Commission recapture is generated on the instructions of the Soft Dollar Committee once RIMCo’s research budget has been met, as determined annually in the Soft Dollar Committee budgeting process.

Effective January 1, 2008, transactions effected through LJR are used solely to generate commission rebates to the Funds and no longer to obtain research services.

Additionally, the Fund paid brokerage commissions to non-affiliated brokers who provided brokerage and research services to the Adviser.

 

4.   Related Party Transactions, Fees and Expenses

Adviser and Administrator

Through December 31, 2007, RIMCo was the adviser and administrator of all of the Funds which comprise the Investment Company. Effective January 1, 2008, RIMCo advises the Funds and RFSC is the Funds administrator. RFSC is a wholly-owned subsidiary of RIMCo. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides money manager evaluation to RIMCo.

The Funds are permitted to invest their cash reserves (i.e., cash awaiting investment or cash held to meet redemption requests or to pay expenses) and also may invest a portion of the collateral received from the Investment Company’s securities lending program, in the RIC Money Market Fund (the Fund of the Investment Company not presented herein). As of April 30, 2008, $488,655,760 of the Money Market Fund’s net assets represents investments by the Funds presented herein.

The advisory and administrative fees are based upon the average daily net assets of each Fund and the rates specified in the table below, are payable monthly and total $26,153,415 and $1,843,810 respectively, for the period ended April 30, 2008.

 

     Annual Rate  
Funds    Adviser        Administrator  

Emerging Markets

    1.15 %      .05 %

Real Estate Securities

    .80        .05  

Short Duration Bond

    .45        .05  

Tax-Exempt Bond

    .30        .05  

Tax-Managed Large Cap

    .70        .05  

Tax-Managed Mid & Small Cap

    .98        .05  

Select Growth

    .80        .05  

Select Value

    .70        .05  

Fixed Income I

    .25        .05  

For the Short Duration Bond Fund, RIMCo has contractually agreed to waive, at least until February 28, 2009, up to the full amount of its 0.45% advisory fee and then to reimburse the Fund for other direct Fund-level expenses to the extent that direct

 

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Fund-level expenses exceed 0.75% of the average daily net assets of that Fund on an annual basis. This waiver may not be terminated during the relevant period except at the Board’s discretion. Direct fund-level expenses for the Short Duration Bond Fund do not include 12b-1 fees, shareholder services fees or the expenses of other investment companies in which the Fund invests which are borne indirectly by the Fund. There were no waivers for the period ended April 30, 2008

For the Tax-Managed Mid & Small Cap Fund, RIMCo has contractually agreed to waive, at least until February 28, 2009, up to the full amount of its 0.98% advisory fees and then to reimburse the Fund for other direct Fund-level expenses to the extent that direct Fund-level expenses exceed 1.25% of the average daily net assets of that Fund on an annual basis. This waiver may not be terminated during the relevant period except at the Board’s discretion. Direct fund-level expenses for the Tax-Managed Mid & Small Cap Fund do not include 12b-1 fees, shareholder services fees or the expenses of other investment companies in which the Fund invests which are borne indirectly by the Fund. The total amount of the waiver for period ended April 30, 2008 was $100,986.

For the Select Growth Fund, RIMCo has contractually agreed to waive, at least until February 28, 2009, up to the full amount of its 0.80% advisory fee and then to reimburse the Fund for other direct Fund-level expenses to the extent that direct Fund-level expenses exceed 0.98% of the average daily net assets of that Fund on an annual basis. This waiver may not be terminated during the relevant period except at the Board’s discretion. Direct Fund-level expenses for the Select Growth Fund do not include 12b-1, shareholder services, transfer agency fees or the expenses of other investment companies in which the Fund invests which are borne indirectly by the Fund. The total amount of the waiver for the period ended April 30, 2008 was $35,846.

For the Fixed Income I Fund, there was a non-contractual administrative fee waiver of 0.02% applicable to the period ended April 30, 2008, totaling $152,761.

The Adviser does not have the ability to recover amounts waived or reimbursed from previous periods.

Transfer and Dividend Disbursing Agent

Through December 31, 2007 RIMCo was the Transfer and Dividend Disbursing Agent. Effective January 1, 2008 RFSC serves as Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RIMCo and RFSC are paid a fee for transfer agency and dividend disbursing services provided to the Fund. RIMCo and RFSC retain a portion of this fee for their services provided to the Fund and pay the balance to unaffiliated agents who assist in providing these services. Total transfer agency fees paid by the Funds presented herein for the period ended April 30, 2008 were $5,476,758.

For Class I Shares of the Select Growth Fund, RFSC, as transfer agent to RIC, has contractually agreed to waive, at least until February 29, 2009, its transfer agency fees for Class I Shares to the extent that those fees for that class exceed 0.01% of the average daily net assets of the Class I Shares. The amount of the waiver for the period ended April 30, 2008 was $22,770.

Distributor and Shareholder Servicing

On June 2, 2008, Russell Fund Distributors, Inc., a wholly owned subsidiary of RIMCo, changed its name to Russell Financial Services, Inc. (the “Distributor”) and serves as distributor for RIC, pursuant to the Distribution Agreement with the Investment Company.

The Investment Company has a Distribution Plan pursuant to Rule 12b-1 (the “Plan”) under the 1940 Act. Under this Plan, the Investment Company is authorized to make payments to the Distributor, or any Selling Agents, as defined in the Plan, for sales support services provided and related expenses incurred which were primarily intended to result in the sale of the Class A and Class C shares subject to the Distribution Plan. The 12b-1 distribution payments shall not exceed 0.25% or 0.75% of the average daily net assets of a Fund’s Class A or Class C shares, respectively, on an annual basis.

In addition, the Investment Company has adopted a Shareholder Services Plan (the “Services Plan”) under which the Funds may make payments to the Distributor or any Servicing Agent for any activities or expenses primarily intended to assist, support or service the Servicing Agents’ clients who beneficially own Class C or Class E shares of the Funds. The shareholder servicing payments shall not exceed 0.25% of the average daily net assets of a Fund’s Class C and Class E shares on an annual basis.

Pursuant to the rules of the Financial Industry Regulatory Authority (“FINRA”), these limitation are imposed at the class level of each Fund rather than on a per shareholder basis. Therefore, long-term shareholders may pay more than the economic equivalent of the maximum sales charges permitted by FINRA.

 

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The aggregate initial sales charges, deferred sales charges and asset-based sales charges on Class A, Class C and Class E Shares of the Funds may not exceed 7.25%, 6.25% and 6.25%, respectively, of total gross sales, subject to certain exclusions.

For the period ended April 30, 2008, the sales commissions paid to the selling agents for the sale of Class A shares are as follows:

 

Funds    Aggregate Front-End
Sales Charges on
Class A Shares		    Class A Front-End
Sales Charges
Retained by
Distributor
     

Emerging Markets Fund

    $ 86,759    $ 14,787

Real Estate Securities Fund

      33,725      6,042

Short Duration Bond Fund

      13,879      2,777

Accrued Fees Payable to Affiliates

Accrued fees payable to affiliates as April 30, 2008 were as follows:

 

     Emerging Markets
Fund		    Real Estate
Securities Fund		    Short Duration
Bond Fund		    Tax Exempt
Bond Fund		    Tax Managed
Large Cap Fund
              

Advisory fees

    $ 1,493,977    $ 1,435,199    $ 160,905    $ 96,336    $ 313,023

Administration fees

      64,956      89,700      17,878      16,056      22,359

Distribution fees

      37,069      56,228      11,320      10,553      13,354

Shareholder servicing fees

      18,465      27,407      6,936      7,574      7,980

Transfer agent fees

      650,848      632,567      73,263      64,135      88,523

Trustee fees

      2,561      3,398      935      806      1,061
                                  
   $ 2,267,876    $ 2,244,499    $ 271,237    $ 195,460    $ 446,300
                                  
      Tax Managed
Mid & Small Cap
Fund		    Select Growth
Fund		    Select Value
Fund		    Fixed Income I
Fund		     

Advisory fees

    $ 196,755    $ 124,894    $ 200,342    $ 288,495   

Administration fees

      10,038      7,806      14,310      34,619   

Distribution fees

      8,027      6,525      12,523      22,701   

Shareholder servicing fees

      3,408      3,763      6,530      19,632   

Transfer agent fees

      72,402      37,065      117,241      131,847   

Trustee fees

      450      388      612      3,597   
                              
   $ 291,080    $ 180,441    $ 351,558    $ 500,891   
                              

Affiliated Brokerage Commissions

The Funds will effect certain transactions through Russell Implementation Services Inc. (“RIS”) and its global network of unaffiliated correspondent brokers. RIS is a registered broker and investment adviser and an affiliate of RIMCo. Trades placed through RIS and its correspondents are made (i) to manage trading associated with changes in managers, rebalancing across existing managers, cash flows and other portfolio transitions or (ii) to execute portfolio securities transactions for each Fund’s assets that RIMCo determines not to allocate to money managers and for each Fund’s cash reserves.

Board of Trustees

The Russell Fund Complex consists of Russell Investment Company, which has 44 Funds, and Russell Investment Funds (“RIF”), which has nine Funds. Each of the Trustees is a Trustee for both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 ($52,000 prior to January 1, 2008) per year, $6,500 for each regular quarterly meeting attended in person, $2,500 ($2,000 prior to January 1, 2008) for each special meeting attended in person, and $2,500 ($2,000 prior to January 1, 2008) for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 ($500 prior to January 1, 2008) fee for attending quarterly and special meetings and a $500 fee for attending committee meetings by phone instead of receiving the full fee had the member attended in person.

 

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Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee chair is paid a fee of $6,000 per year. The chair person of the Board receives additional annual compensation of $52,000.

 

5.   Federal Income Taxes

At October 31, 2007, the following Funds had net tax basis capital loss carryforwards which may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Available capital loss carryforwards and expiration dates are as follows:

 

Funds        10/31/08   10/31/09   10/31/10   10/31/11
         

Short Duration Bond

     $ —   $ —   $ —   $ —

Tax Exempt Bond

       682,095     —     —     —

Tax-Managed Large Cap

       —     —     46,414,873     —

Select Value

       —     1,393,793     362,611     —

Fixed Income I

       —     —     —     —

Funds

   10/31/12   10/31/13   10/31/14   10/31/15   Totals

Short Duration Bond

   $ —   $ 10,268,501   $ 7,439,440   $ 1,010,942   $ 18,718,883

Tax Exempt Bond

     357,343     —     634,298     1,197,042     2,870,778

Tax-Managed Large Cap

     —     —     —     —     46,414,873

Select Value

     —     —     —     —     1,756,404

Fixed Income I

     —     15,614,663     14,307,836     —     29,922,499

Select Value Fund had a capital loss carryforward of $11,874,284 that it acquired from the Equity Income Fund and Equity III Fund of which $1,393,793 and $362,611 will expire on October 31 of the years of 2009 and 2010, respectively.

Fixed Income I Fund had a capital loss carryforward of $13,283,390 that it acquired from the Diversified Bond Fund which will expire on October 31, 2013. This capital loss carryforward can be utilized without any limitation until its expiration date.

At April 30, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

 

     Emerging Markets
Fund		     Real Estate
Securities Fund		     Short Duration
Bond Fund		     Tax Exempt Bond
Fund		     Tax-Managed
Large Cap Fund		  

Cost of Investments

    $ 1,292,079,524     $ 2,232,415,857     $ 455,226,569     $ 407,497,556     $ 541,897,483  
                                        

Unrealized Appreciation

    $ 445,604,788     $ 437,691,148     $ 4,787,585     $ 5,463,668     $ 129,387,225  

Unrealized Depreciation

      (38,499,286 )     (56,479,124 )     (8,682,092 )     (3,770,926 )     (23,560,680 )
                                        

Net Unrealized Appreciation (Depreciation)

    $ 407,105,502     $ 381,212,024     $ (3,894,507 )   $ 1,692,742     $ 105,826,545  
                                        
      Tax-Managed
Mid & Small Cap
Fund		     Select Growth
Fund		     Select Value
Fund		     Fixed Income I
Fund		        

Cost of Investments

    $ 329,609,185     $ 242,317,826     $ 452,309,407     $ 1,683,723,915    
                                  

Unrealized Appreciation

    $ 42,919,757     $ 20,375,258     $ 123,774,752     $ 20,302,872    

Unrealized Depreciation

      (16,685,523 )     (6,792,093 )     (135,093,726 )     (46,470,111 )  
                                  

Net Unrealized Appreciation (Depreciation)

    $ 26,234,234     $ 13,583,165     $ (11,318,974 )   $ (26,167,239 )  
                                  

 

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6.   Fund Share Transactions (amounts in thousands)

Share transactions for the periods ended April 30, 2008 and October 31, 2007 were as follows:

 

     Shares     Dollars  
Emerging Markets Fund    2008     2007     2008     2007  
        
        

Class A(a)

         

Proceeds from shares sold

    566     169     $ 13,983     $ 3,936  

Proceeds from reinvestment of distributions

    90     —       1,983       —  

Payments for shares redeemed

    (62 )   (54 )     (1,344 )     (1,347 )
                            

Net increase (decrease)

    594     115       14,622       2,589  
                            
        

Class C

         

Proceeds from shares sold

    250     440       5,354       10,003  

Proceeds from reinvestment of distributions

    565     346       12,037       6,707  

Payments for shares redeemed

    (417 )   (662 )     (9,016 )     (15,321 )
                            

Net increase (decrease)

    398     124       8,375       1,389  
                            
        

Class E

         

Proceeds from shares sold

    346     531       7,783       12,605  

Proceeds from reinvestment of distributions

    348     214       7,725       4,273  

Payments for shares redeemed

    (424 )   (658 )     (9,572 )     (15,434 )
                            

Net increase (decrease)

    270     87       5,936       1,444  
                            
        

Class S

         

Proceeds from shares sold

    8,369     16,902       186,395       385,688  

Proceeds from reinvestment of distributions

    14,622     8,412       324,017       168,078  

Payments for shares redeemed

    (11,636 )   (18,123 )     (259,917 )     (433,529 )
                            

Net increase (decrease)

    11,355     7,191       250,495       120,237  
                            

Total increase (decrease)

    12,617     7,517     $ 279,428     $ 125,659  
                            
     Shares     Dollars  
Real Estate Securities Fund    2008     2007     2008     2007  
        

Class A(a)

         

Proceeds from shares sold

    401     181     $ 16,866     $ 9,650  

Proceeds from reinvestment of distributions

    49     1       1,899       48  

Payments for shares redeemed

    (41 )   (32 )     (1,597 )     (1,683 )
                            

Net increase (decrease)

    409     150       17,168       8,015  
                            
        

Class C

         

Proceeds from shares sold

    125     317       4,947       16,962  

Proceeds from reinvestment of distributions

    284     183       10,879       9,779  

Payments for shares redeemed

    (294 )   (546 )     (11,671 )     (28,667 )
                            

Net increase (decrease)

    115     (46 )     4,155       (1,926 )
                            
        

Class E

         

Proceeds from shares sold

    258     396       10,246       21,270  

Proceeds from reinvestment of distributions

    155     105       6,080       5,726  

Payments for shares redeemed

    (191 )   (571 )     (7,689 )     (30,369 )
                            

Net increase (decrease)

    222     (70 )     8,637       (3,373 )
                            
        

 

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Real Estate Securities Fund    2008     2007     2008     2007  
        
        

Class S

         

Proceeds from shares sold

    10,078     13,353     $ 410,237     $ 717,887  

Proceeds from reinvestment of distributions

    6,363     3,294       252,307       180,617  

Payments for shares redeemed

    (8,288 )   (9,563 )     (341,901 )     (525,701 )
                            

Net increase (decrease)

    8,153     7,084       320,643       372,803  
                            

Total increase (decrease)

    8,899     7,118     $ 350,603     $ 375,519  
                            
     Shares     Dollars  
Short Duration Bond Fund    2008     2007     2008     2007  
        

Class A(a)

         

Proceeds from shares sold

    209     87     $ 3,995     $ 1,635  

Proceeds from reinvestment of distributions

    3     2       61       31  

Payments for shares redeemed

    (70 )   (17 )     (1,339 )     (311 )
                            

Net increase (decrease)

    142     72       2,717       1,355  
                            
        

Class C

         

Proceeds from shares sold

    191     263       3,639       4,913  

Proceeds from reinvestment of distributions

    13     30       245       557  

Payments for shares redeemed

    (160 )   (607 )     (3,029 )     (11,313 )
                            

Net increase (decrease)

    44     (314 )     855       (5,843 )
                            
        

Class E

         

Proceeds from shares sold

    177     344       3,383       6,443  

Proceeds from reinvestment of distributions

    17     42       317       785  

Payments for shares redeemed

    (211 )   (909 )     (4,036 )     (17,025 )
                            

Net increase (decrease)

    (17 )   (523 )     (336 )     (9,797 )
                            
        

Class S

         

Proceeds from shares sold

    3,309     10,184       63,069       190,348  

Proceeds from reinvestment of distributions

    465     1,599       8,737       29,764  

Payments for shares redeemed

    (5,866 )   (47,792 )     (111,823 )     (892,917 )
                            

Net increase (decrease)

    (2,092 )   (36,009 )     (40,017 )     (672,805 )
                            

Total increase (decrease)

    (1,923 )   (36,774 )   $ (36,781 )   $ (687,090 )
                            

 

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Tax Exempt Bond Fund    2008     2007     2008     2007  
        
        

Class C

         

Proceeds from shares sold

    266     173     $ 5,702     $ 3,708  

Proceeds from reinvestment of distributions

    7     12       149       259  

Payments for shares redeemed

    (57 )   (135 )     (1,229 )     (2,885 )
                            

Net increase (decrease)

    216     50       4,622       1,082  
                            
        

Class E

         

Proceeds from shares sold

    193     640       4,136       13,763  

Proceeds from reinvestment of distributions

    16     24       335       517  

Payments for shares redeemed

    (185 )   (299 )     (3,970 )     (6,387 )
                            

Net increase (decrease)

    24     365       501       7,893  
                            
        

Class S

         

Proceeds from shares sold

    4,476     7,043       95,919       151,047  

Proceeds from reinvestment of distributions

    263     460       5,605       9,845  

Payments for shares redeemed

    (3,081 )   (4,419 )     (65,978 )     (94,725 )
                            

Net increase (decrease)

    1,658     3,084       35,546       66,167  
                            

Total increase (decrease)

    1,898     3,499     $ 40,669     $ 75,142  
                            
     Shares     Dollars  
Tax-Managed Large Cap Fund    2008     2007     2008     2007  
        

Class C

         

Proceeds from shares sold

    276     187     $ 5,601     $ 3,940  

Proceeds from reinvestment of distributions

    —     —       —       —  

Payments for shares redeemed

    (150 )   (209 )     (2,986 )     (4,556 )
                            

Net increase (decrease)

    126     (22 )     2,615       (616 )
                            
        

Class E

         

Proceeds from shares sold

    167     180       3,346       3,879  

Proceeds from reinvestment of distributions

    4     4       82       73  

Payments for shares redeemed

    (44 )   (94 )     (896 )     (2,033 )
                            

Net increase (decrease)

    127     90       2,532       1,919  
                            
        

Class S

         

Proceeds from shares sold

    3,201     4,919       66,584       106,174  

Proceeds from reinvestment of distributions

    170     168       3,769       3,467  

Payments for shares redeemed

    (2,746 )   (3,420 )     (56,601 )     (73,829 )
                            

Net increase (decrease)

    625     1,667       13,752       35,812  
                            

Total increase (decrease)

    878     1,735     $ 18,899     $ 37,115  
                            

 

164   Notes to Financial Statements

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Tax-Managed Mid & Small Cap Fund    2008     2007     2008     2007  
        
        

Class C

         

Proceeds from shares sold

    269     196     $ 3,248     $ 2,764  

Proceeds from reinvestment of distributions

    89     13       1,124       180  

Payments for shares redeemed

    (187 )   (181 )     (2,259 )     (2,587 )
                            

Net increase (decrease)

    171     28       2,113       357  
                            
        

Class E

         

Proceeds from shares sold

    68     71       864       1,072  

Proceeds from reinvestment of distributions

    20     3       276       37  

Payments for shares redeemed

    (35 )   (27 )     (452 )     (405 )
                            

Net increase (decrease)

    53     47       688       704  
                            
        

Class S

         

Proceeds from shares sold

    6,155     4,958       84,022       75,154  

Proceeds from reinvestment of distributions

    1,340     189       18,522       2,723  

Payments for shares redeemed

    (6,052 )   (2,855 )     (84,206 )     (43,281 )
                            

Net increase (decrease)

    1,443     2,292       18,338       34,596  
                            

Total increase (decrease)

    1,667     2,367     $ 21,139     $ 35,657  
                            
     Shares     Dollars  
Select Growth Fund    2008     2007     2008     2007  
        

Class C

         

Proceeds from shares sold

    322     272     $ 2,579     $ 2,251  

Proceeds from reinvestment of distributions

    59     —       496       —  

Payments for shares redeemed

    (243 )   (294 )     (1,944 )     (2,439 )
                            

Net increase (decrease)

    138     (22 )     1,131       (188 )
                            
        

Class E

         

Proceeds from shares sold

    231     124       1,962       1,080  

Proceeds from reinvestment of distributions

    36     —       323       —  

Payments for shares redeemed

    (51 )   (192 )     (435 )     (1,661 )
                            

Net increase (decrease)

    216     (68 )     1,850       (581 )
                            
        

Class I

         

Proceeds from shares sold

    1,270     3,420       11,471       30,678  

Proceeds from reinvestment of distributions

    496     —       4,557       —  

Payments for shares redeemed

    (1,330 )   (2,780 )     (11,486 )     (25,125 )
                            

Net increase (decrease)

    436     640       4,542       5,553  
                            
        

Class S

         

Proceeds from shares sold

    1,606     3,441       13,762       30,716  

Proceeds from reinvestment of distributions

    354     —       3,220       —  

Payments for shares redeemed

    (1,423 )   (3,887 )     (12,194 )     (34,429 )
                            

Net increase (decrease)

    537     (446 )     4,788       (3,713 )
                            

Total increase (decrease)

    1,327     104     $ 12,311     $ 1,071  
                            

 

Notes to Financial Statements   165

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Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Select Value Fund    2008     2007     2008     2007  
        
        

Class C

         

Proceeds from shares sold

    190     267     $ 1,874     $ 3,372  

Proceeds from reinvestment of distributions

    380     124       3,710       1,506  

Payments for shares redeemed

    (366 )   (493 )     (3,522 )     (6,263 )
                            

Net increase (decrease)

    204     (102 )     2,062       (1,385 )
                            
        

Class E

         

Proceeds from shares sold

    416     188       4,533       2,445  

Proceeds from reinvestment of distributions

    205     60       2,040       747  

Payments for shares redeemed

    (213 )   (284 )     (2,069 )     (3,658 )
                            

Net increase (decrease)

    408     (36 )     4,504       (466 )
                            
        

Class I

         

Proceeds from shares sold

    1,407     2,329       14,067       30,178  

Proceeds from reinvestment of distributions

    1,958     718       19,568       8,957  

Payments for shares redeemed

    (2,810 )   (2,779 )     (29,525 )     (36,156 )
                            

Net increase (decrease)

    555     268       4,110       2,979  
                            
        

Class S

         

Proceeds from shares sold

    3,133     5,909       30,987       76,224  

Proceeds from reinvestment of distributions

    4,043     1,374       40,296       17,102  

Payments for shares redeemed

    (5,562 )   (6,361 )     (55,069 )     (82,153 )
                            

Net increase (decrease)

    1,614     922       16,214       11,173  
                            

Total increase (decrease)

    2,781     1,052     $ 26,890     $ 12,301  
                            
     Shares     Dollars  
Fixed Income I Fund    2008     2007     2008     2007  
        

Class C(b)

         

Proceeds from shares sold

    328     —     $ 6,853     $ 12  

Shares issued in connection with acquisition of Diversified Bond Fund

    —     1,756       —       36,569  

Proceeds from reinvestment of distributions

    33     —       678       —  

Payments for shares redeemed

    (308 )   (37 )     (6,425 )     (778 )
                            

Net increase (decrease)

    53     1,719       1,106       35,803  
                            
        

Class E

         

Proceeds from shares sold

    1,053     449       22,050       9,291  

Shares issued in connection with acquisition of Diversified Bond Fund

    —     847       —       17,648  

Proceeds from reinvestment of distributions

    66     71       1,364       1,455  

Payments for shares redeemed

    (809 )   (295 )     (16,970 )     (6,112 )
                            

Net increase (decrease)

    310     1,072       6,444       22,282  
                            

 

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Fixed Income I Fund    2008     2007     2008     2007  
        
        

Class I

         

Proceeds from shares sold

    2,955     9,989     $ 61,662     $ 207,015  

Proceeds from reinvestment of distributions

    715     1,594       14,702       32,843  

Payments for shares redeemed

    (9,038 )   (18,227 )     (188,758 )     (378,446 )
                            

Net increase (decrease)

    (5,368 )   (6,644 )     (112,394 )     (138,588 )
                            
        

Class S(b)

         

Proceeds from shares sold

    788     111       16,455       2,332  

Shares issued in connection with acquisition of Diversified Bond Fund

    —     11,102       —       231,136  

Proceeds from reinvestment of distributions

    212     —       4,355       —  

Payments for shares redeemed

    (3,340 )   (280 )     (69,765 )     (5,840 )
                            

Net increase (decrease)

    (2,340 )   10,933       (48,955 )     227,628  
                            
        

Class Y

         

Proceeds from shares sold

    1,414     6,443       29,802       132,994  

Proceeds from reinvestment of distributions

    738     1,426       15,167       29,369  

Payments for shares redeemed

    (4,767 )   (4,939 )     (99,315 )     (102,380 )
                            

Net increase (decrease)

    (2,615 )   2,930       (54,346 )     59,983  
                            

Total increase (decrease)

    (9,960 )   10,010     $ (208,143 )   $ 207,108  
                            

 

(a) For the period March 1, 2007 (commencement of operations) to October 31, 2007.
(b) For the period October 19, 2007 (commencement of operations) to October 31, 2007.

 

7.   Interfund Lending Program

The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Funds may borrow money from the RIC Money Market Fund for temporary purposes. All such borrowing and lending will be subject to a participating Fund’s fundamental investment limitations. The RIC Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves. The Investment Company Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Money Market Fund could result in a lost investment opportunity or additional borrowing costs. The Real Estate Securities Fund borrowed $22,050,000 from the Money Market Fund during the period. Miscellaneous expense on the Statement of Operations for the Real Estate Securities Fund includes $1,868 paid under the Interfund Lending Program for the period ending April 30, 2008.

 

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8.   Record Ownership

As of April 30, 2008, the following table includes shareholders of record with greater than 10% of the total outstanding shares of each respective Fund:

 

      # of Shareholders      %

Emerging Markets

    3      41.0

Real Estate Securities

    3      39.4

Short Duration Bond

    2      43.9

Tax Exempt Bond

    2      52.9

Tax-Managed Large Cap

    1      49.4

Tax-Managed Mid & Small Cap

    1      48.3

Select Growth

    1      22.5

Select Value

    1      21.1

Fixed Income I

    1      15.0

 

9.   Restricted Securities

Restricted securities are subject to contractual limitations on resale, are often issued in private placement transactions, and are not registered under the Securities Act of 1933 (the “Act”). The most common types of restricted securities are those sold under Rule 144A of the Act and commercial paper sold under Section 4(2) of the Act.

A Fund may invest a portion of its net assets not to exceed 15% in securities that are illiquid. Illiquid securities are securities that may not be readily marketable, and that cannot be sold within seven days in the ordinary course of business at the approximate amount at which the Fund has valued the securities. Restricted securities are generally considered to be illiquid.

The following table lists restricted securities held by a Fund that are illiquid. The following table does not include (1) securities deemed liquid by RIMCo or a money manager pursuant to Board approved policies and procedures or (2) illiquid securities that are not restricted securities as designated on the Fund’s Schedule of Investments.

 

Fund - % of Net Assets
Securities		    Acquistion
Date		    Principal
Amount ($)
or Shares		    Cost per
Unit
$		    Cost
(000)
$		    Market Value
(000)
$
              

Emerging Markets Fund - 0.1%

               

Magnitogorsk Iron & Steel Works

    04/24/07    87,200    12.50    1,090    1,508
                
               1,508

Short Duration Bond Fund - 1.3 %

               

DG Funding Trust

    11/04/03    219    10,537.12    2,308    2,192

Dr. Pepper Snapple Group, Inc.

    04/25/08    500,000    100.00    500    511

Gaz Capital SA

    04/03/08    200,000    103.00    206    212

Korea Southern Power Co., Ltd.

    04/11/08    275,000    100.00    275    276

Metropolitan Life Gloval Funding I

    04/07/08    1,500,000    100.00    1,499    1,506

Nine Dragons Paper Holdings, Ltd.

    04/22/08    165,000    100.00    164    164

Pacific Life Global Funding

    04/08/08    900,000    100.00    900    901
                
               5,762
                

Fixed Income I Fund - 0.5%

               

Credit Suisse Mortgage Capital Certificates

    04/25/06    174,269    100.00    174    164

DG Funding Trust

    11/04/03    392    10,587.26    4,150    3,922

Dell, Inc.

    04/14/08    475,000    100.00    474    468

Gaz Capital SA

    03/01/07    100,000    100.00    100    105

Gaz Capital SA

    03/01/07    500,000    100.00    500    531

Kaupting Bank Hf

    05/12/06    1,480,000    100.00    1,473    1,195

Klio Funding, Ltd.

    02/15/06    3,695,000    101.00    3,724    1,293
                
               7,678
                

 

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Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Illiquid securities and restricted securities may be priced by the Funds using fair value procedures approved by the Board of Trustees.

 

10.   Dividends

On May 1, 2008, the Board of Trustees of Russell Investment Company declared the following dividends payable from net investment income. Dividends were payable on May 6, 2008, to shareholders of record May 2, 2008.

 

Funds    Net Investment
Income		    Short-Term Capital
Gains		    Long-Term Capital
Gains
        

Tax Exempt Bond - Class S

    $ 0.0582    $ —    $ —

Tax Exempt Bond - Class E

      0.0538      —      —

Tax Exempt Bond - Class C

      0.0409      —      —

 

11.   Reorganizations

On October 22, 2007, the Fixed Income I Fund (“Acquiring Fund”) acquired the assets and liabilities of the Diversified Bond Fund (“Acquired Fund”) through a reorganization pursuant of a plan of reorganization approved by the Board of Trustees and shareholders of the Acquired Fund. The following is a summary of shares outstanding, net assets, net asset value per share, unrealized appreciation/(depreciation) and accumulated net realized gain (losses) immediately before and after the reorganization:

 

     Before Reorganization    After Reorganization  
     Diversified Bond
Fund		     Fixed Income I
Fund		    Fixed Income I
Fund		  
       

Class C

        

Shares

      1,549,504          1,755,594  

Net assets

    $ 36,569,024        $ 36,569,024  

Net asset value

    $ 23.60        $ 20.83  

Unrealized appreciation/(depreciation)

    $ (1,743,859 )      $ (1,743,859 )

Accumulated net realized gains/(losses)

    $ —        $ —  

Class E

        

Shares

      745,923       1,694,700      2,541,940  

Net assets

    $ 17,648,005     $ 35,293,996    $ 52,942,001  

Net asset value

    $ 23.66     $ 20.83    $ 20.83  

Unrealized appreciation/(depreciation)

    $ (1,401,229 )   $ 585,052    $ (816,177 )

Accumulated net realized gains/(losses)

    $ —     $ 1,560,304    $ 1,560,304  

Class I

        

Shares

        33,170,704      33,170,704  

Net assets

      $ 690,608,745    $ 690,608,745  

Net asset value

      $ 20.82    $ 20.82  

Unrealized appreciation/(depreciation)

      $ 5,542,191    $ 5,542,191  

Accumulated net realized gains/(losses)

      $ 42,681,489    $ 42,681,489  

Class S

        

Shares

      10,059,171          11,101,619  

Net assets

    $ 231,135,715        $ 231,135,715  

Net asset value

    $ 22.98        $ 20.82  

Unrealized appreciation/(depreciation)

    $ 4,053,187        $ 4,053,187  

Accumulated net realized gains/(losses)

    $ —        $ —  

Class Y

        

Shares

        29,481,588      29,481,588  

Net assets

      $ 614,067,476    $ 614,067,476  

Net asset value

      $ 20.83    $ 20.83  

Unrealized appreciation/(depreciation)

      $ 92,396    $ 92,396  

Accumulated net realized gains/(losses)

      $ 35,938,452    $ 35,938,452  

 

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Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

12.   Subsequent Event

Effective September 2, 2008, the Funds will change their names as follows:

 

Current Name    New Name

Tax-Managed Large Cap Fund

    Russell Tax-Managed U.S. Large Cap Fund

Tax-Managed Mid & Small Cap Fund

    Russell Tax-Managed U.S. Mid & Small Cap Fund

Select Growth Fund

    Russell U.S. Growth Fund

Select Value Fund

    Russell U.S. Value Fund

Real Estate Securities Fund

    Russell Real Estate Securities Fund

Emerging Markets Fund

    Russell Emerging Markets Fund

Fixed Income I Fund

    Russell Investment Grade Bond Fund

Short Duration Bond Fund

    Russell Short Duration Bond Fund

Tax Exempt Bond Fund

    Russell Tax Exempt Bond Fund

 

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Basis for Approval of Investment Advisory Contracts (Unaudited)

 

 

 

Approval of Investment Advisory Agreement

The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the ‘‘RIMCo Agreement’’) and the portfolio management contract with each Money Manager of the Funds (collectively, the ‘‘portfolio management contracts’’) at a meeting held on April 22, 2008. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Funds, sales and redemptions of the Funds’ shares, and the management of the Funds by RIMCo. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds; and (2) information (the ‘‘Third-Party Information’’) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and their respective operating expenses over various periods of time with other peer funds (‘‘Comparable Funds’’) not managed by RIMCo, believed by the provider to be generally comparable in investment objectives and size to the Funds. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Funds discussing the legal standards for their consideration of the continuations of the RIMCo Agreement and the portfolio management contracts and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.

On April 21, 2008, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or the Funds’ management were present. At the April 22 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contracts with management, counsel to the Funds and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Funds and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.

In evaluating the portfolio management contracts, the Board considered that the Funds, in employing a manager-of-managers method of investment, operate in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which, in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. RIMCo has engaged multiple unaffiliated Money Managers for all Funds.

The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for determining, implementing and maintaining the investment program for each Fund. Assets of each Fund generally have been allocated among the multiple Money Managers selected by RIMCo, subject to Board approval, for that Fund. RIMCo directly manages the investment of each Fund’s cash reserves. RIMCo also may manage directly any portion of each Fund’s assets that RIMCo determines not to allocate to the Money Managers and portions of a Fund during transitions between Money Managers. In all cases, assets are managed directly by RIMCo pursuant to authority provided by the RIMCo Agreement.

RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Fund and for actively managing allocations and reallocations of assets among the Money Managers. RIMCo’s goal is to construct and manage diversified portfolios in a risk aware manner. Each Money Manager for a Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Fund assigned to it by RIMCo (each, a ‘‘segment’’) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in a Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for a Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager or to coordinate the investment activities of Money Managers for the Fund in a complementary manner. Therefore, RIMCo’s selection of Money Managers is made not only on the

 

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basis of performance considerations but anticipated compatibility with other Money Managers in the same Fund. In light of the foregoing, the overall performance of each Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Fund’s investment program, structuring the Fund, selecting an effective Money Manager with a particular investment style or sub-style for a segment that is complementary to the styles of the Money Managers of other Fund segments, and allocating assets among the Money Managers in a manner designed to achieve the objectives of the Fund.

The Board considered that the prospectuses for the Funds and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for each Fund, rather than the investment selection role of the Funds’ Money Managers, and describe the manner in which the Funds operate so that investors may take that information into account when deciding to purchase shares of any such Fund.

The Board also considered the demands and complexity of managing the Funds pursuant to the manager-of-managers structure, the special expertise of RIMCo with respect to the manager-of-managers structure of the Funds and the likelihood that, at the current expense ratio of each Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of such Fund selected by shareholders in purchasing their shares.

In addition to these general factors relating to the manager-of-managers structure of the Funds, the Trustees considered, with respect to each Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:

 

  1. The nature, scope and quality of the services provided to the Fund by RIMCo;

 

  2. The advisory fee paid by the Fund to RIMCo and the fact that it encompasses all investment advisory fees paid by the Fund, including the fees for any Money Managers of such Fund;

 

  3. Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund, including any administrative, transfer agent, cash management and securities lending fees, soft dollar arrangements and commissions in connection with portfolio securities transactions;

 

  4. Information provided by RIMCo as to expenses incurred by the Fund; and

 

  5. Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund.

In evaluating the reasonableness of the Funds’ investment advisory fees in light of Fund performance, the Board considered that RIMCo, in the Agreement Renewal Information and at past meetings, noted differences between the investment strategies of certain Funds and their respective Comparable Funds in pursuing their investment objectives, including Fund strategies which seek to achieve a lower tracking error (i.e., the difference, whether positive or negative, between the return of a fund and its benchmark) and resulting lower return volatility than Comparable Funds. According to RIMCo, these strategies may be expected to result, and for certain Funds during the periods covered by the Third-Party Information did result, in lower performance than that of some of their respective Comparable Funds. According to RIMCo, the strategies pursued by the Funds, among other things, are intended to result in less volatile, more moderate returns relative to each Fund’s performance benchmark rather than more volatile, more extreme returns that its Comparable Funds may experience over time.

With respect to the Tax Managed Mid & Small Cap Fund, the Third-Party Information showed that the Fund’s management fee relative to its Comparable Funds, on an actual basis (i.e., giving effect to any voluntary fee waivers implemented by RIMCo and the investment advisers to the Comparable Funds) was ranked in the fourth quintile for the 1-year period ended December 31, 2007 and that its total actual expenses were ranked in the fifth quintile. With respect to the Select Growth Fund, the Third-Party Information showed that both the Fund’s management and total fee relative to its Comparable Funds, on an actual basis (i.e., giving effect to any voluntary fee waivers implemented by RIMCo and the investment advisers to the Comparable Funds) were ranked in the fourth quintile for the 1-year period ended December 31, 2007.

At the April 22 Board meeting, RIMCo agreed to implement an additional non-contractual expense waiver/reimbursement of 0.03% per annum of average daily assets for each of the Select Growth Fund and the Tax-Managed Mid & Small Cap Fund. These new expense waivers/reimbursements, effective May 1, 2008, are voluntary and may be terminated by RIMCo at any time.

The Board considered for each Fund whether economies of scale have been realized and whether the fees for such Fund appropriately reflect or should be revised to reflect any such economies. The Board determined that, after giving effect to any applicable fee or expense caps, waivers, or reimbursements, the investment advisory fees for each Fund appropriately reflect any economies of scale realized by that Fund, based upon such factors as the variability of Money Manager investment advisory fees and

 

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other factors associated with the manager-of-managers structure employed by the Funds. The Trustees considered that fees payable to RIMCo by institutional clients with investment objectives similar to those of the Funds and other RIC funds under the Board’s supervision are lower, and may, in some cases, be substantially lower than the rates paid by RIC funds supervised by the Board, including the Funds. The Trustees considered the differences in the scope of services it provides to institutional clients and the Funds. In the Agreement Renewal Information, RIMCo noted, among other things, that institutional clients have fewer administrative needs than the Funds. RIMCo noted that since the Funds must constantly issue and redeem their shares, they are more difficult to manage than institutional accounts, where assets are relatively stable. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.

On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years or presented at the April 22 Board meeting by RIMCo, the Board, in respect of each Fund, found, after giving effect to any applicable waivers and/or reimbursements (including the additional waivers and reimbursements described above), (1) the advisory fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided to the Funds; (2) the relative expense ratio of the Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.

The Board further concluded that, under the circumstances, the performance of each of the Funds supported continuation of the RIMCo Agreement except that the Board concluded that, as discussed below, the performance of the Select Growth and Select Value Funds did not support a determination against continuation of the RIMCo Agreement in respect of that Fund. The Board, in assessing the Funds’ performance, focused upon each Fund’s performance for the 1-, 3- and 5- year periods as most relevant.

With respect to the Select Value Fund, the Third-Party Information showed that the Fund’s performance was ranked in the fourth quintile for the 1- and 3-year periods ended December 31, 2007 but in the third quintile for the 5-year period ended such date. The Trustees considered management’s belief that the Select Value Fund tends to have a deeper value orientation than its Comparable Funds, a tendency which led to greater Fund exposure to market segments that performed poorly during the past year, such as mortgage and housing related stocks. The Trustees also considered RIMCo’s belief that the Select Value Fund has a more contrarian approach than its Comparable Funds. RIMCo advised the Trustees that the Fund’s underperformance for the 1-year period ended December 31, 2007 significantly affected results for the 3- and 5-year periods ended such date.

With respect to the Select Growth Fund, the Third-Party Information showed that the Fund’s performance was ranked in the fourth quintile for the 1- and 5-year periods ended December 31, 2007 and in the fifth quintile for the 3-year period ended such date. RIMCo noted that the investment approaches of two Money Managers for the Select Growth Fund were out of favor in the current market but that the utilization of such Money Managers provides diversification benefits to the Fund’s portfolio. RIMCo noted further that the Comparable Funds for the Select Growth Fund include many funds that typically have smaller capitalization stocks than the Fund or its benchmark. Over the 3- and 5-year periods ended December 31, 2007, according to RIMCo, very small cap stocks outperformed larger cap stocks.

In evaluating performance, the Board considered each Fund’s absolute performance and its performance relative to appropriate benchmarks and indices and its Comparable Funds. In assessing performance, the Board also considered RIMCo’s investment strategy of managing the Funds in a risk aware manner.

After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Funds and their respective shareholders and voted to approve the continuation of the Agreement.

At the April 22 Board meeting, with respect to the evaluation of the terms of portfolio management contracts with Money Managers, the Board received and considered information from RIMCo reporting, among other things, for each Money Manager, the Money Manager’s performance over various periods; RIMCo’s assessment of the performance of each Money Manager; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Funds’ underwriter; and RIMCo’s recommendation to retain the Money Manager at the current fee rate, to retain the Money Manager at a reduced fee rate or to terminate the Money Manager. RIMCo recommended that each Money Manager be retained at its current fee rate. RIMCo has advised the Board that it does not regard Money Manager profitability as relevant to its evaluation of the portfolio management contracts with Money Managers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by Money Managers to other clients; and RIMCo believes that the fees agreed upon with Money Managers are reasonable in light of the anticipated quality of investment advisory services to be rendered.

 

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The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the aggregate investment advisory fees paid by each Fund and the fact that each Money Manager’s fee is paid by RIMCo.

Based substantially upon RIMCo’s recommendations, together with the information received from RIMCo in support of its recommendations at the April 22 meeting, the Board concluded that the fees paid to the Money Managers of each Fund are reasonable in light of the quality of the investment advisory services provided and that continuation of the portfolio management contract with each Money Manager of each Fund would be in the best interests of the Fund and its shareholders.

In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management contract with any Money Manager that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of each Fund.

 

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Shareholder Requests for Additional Information — April 30, 2008 (Unaudited)

 

 

 

A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each fiscal year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, (iii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iv) at the Securities and Exchange Commission’s public reference room.

The Board has delegated to RIMCo, as RIC’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Funds may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Funds maintain a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Funds. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Funds’ Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Funds at (800) 787-7354, (ii) at www.russell.com, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

To reduce expenses, we may mail only one copy of the Funds’ prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution.

Some Financial Intermediaries may offer electronic delivery of the Funds’ prospectus and annual and semiannual reports. Please contact your Financial Intermediary for further details.

 

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Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INTERESTED TRUSTEES

      

#Greg J. Stark

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

  

President and Chief Executive Officer since 2004

 

Trustee since 2007

  

Appointed until successor is duly elected and qualified

 

Until successor is chosen and qualified by Trustees

  

•  President and CEO RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”)

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director, of Individual Investor Services, FRC

•  2000 to 2004 Managing Director, Sales and Client Service, RIMCo

   53   None

INDEPENDENT TRUSTEES

      

Thaddas L. Alston

Born April 7, 1945

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2006   Appointed until successor is duly elected and qualified  

•  Senior Vice President, Larco Investments, Ltd. (real estate firm)

   53   None
             

Kristianne Blake,

Born January 22, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman since 2005

  

Appointed until successor is duly elected and qualified

Annual

  

•  Director and Chairman of the Audit Committee, Avista Corp.

•  Trustee and Chairman of the Operations Committee, Principal Funds and Principal Variable Contracts Funds

•  Regent, University of Washington

•  President, Kristianne Gates Blake, P.S. (accounting services)

•  February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF

•  Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999–2006

   53  

•  Director, Avista Corp; (electric utilities)

•  Trustee, Principal Funds (investment company);

•  Trustee, Principal Variable Contracts Funds (investment company)

             

Daniel P. Connealy

Born June 6, 1946

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2003

 

Chairman of Audit Committee since 2005

  

Appointed until successor is duly elected and qualified

Appointed until successor is duly elected and qualified

  

•  June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc.

•  2001–2003, Vice President and Chief Financial Officer, Janus Capital Group Inc.

   53   None

# Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee.

 

176   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Specialty Funds

Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INDEPENDENT TRUSTEES

      

Jonathan Fine

Born July 8, 1954

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2004   Appointed until successor is duly elected and qualified  

•  President and Chief Executive Officer, United Way of King County, WA

   53   None
             

Raymond P. Tennison, Jr.

Born December 21, 1955

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman of the Nominating and Governance Committee since 2007

  

Appointed until successor is duly elected and qualified.

 

Appointed until successor is duly elected and qualified

  

•  President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company

   53   None
             

Jack R. Thompson,

Born March 21, 1949

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2005   Appointed until successor is duly elected and qualified  

•  September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds

•  September 2007 to present, Director, LifeVantage Corporation (health products company)

•  May 1999 to May 2003, President, Chief Executive Officer and Director, Berger Financial Group, LLC

•  May 1999 to May 2003, President and Trustee, Berger Funds

   53  

Director, Sparx Asia Funds (investment company)

Director, LifeVantage Corporation (health products company)

             

Julie W. Weston,

Born October 2, 1943

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2002

 

Chairperson of the Investment Committee since 2006

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

   Retired   53   None

 

* Each Trustee is subject to mandatory retirement at age 72.

 

Disclosure of Information about Fund Directors   177

Table of Contents

Russell Investment Company

Specialty Funds

Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		  

Position(s) Held
with Fund and

Length of
Time Served

   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

TRUSTEES EMERITUS

*George F. Russell, Jr.,

Born July 3, 1932

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus and Chairman Emeritus since 1999   Until resignation or removal  

•  Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)); and RIMCo

•  Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”))

•  Chairman, Sunshine Management Services, LLC (investment adviser)

  53   None
             

Paul E. Anderson,

Born October 15, 1931

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2007   Five year term  

•  President, Anderson Management Group LLC (private investments consulting)

•  February 2002 to June 2005, Lead Trustee, RIC and RIF

•  Trustee of RIC and RIF until 2006

•  Chairman of the Nominating and Governance Committee 2006

   53   None
             

William E. Baxter,

Born June 8, 1925

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2004   Five year term  

•  Retired since 1986

•  Trustee of RIC and RIF until 2004

   53   None
             

Lee C. Gingrich,

Born October 6, 1930

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2006   Five year term  

•  Retired since 1995

•  Trustee of RIC and RIF until 2005

•  Chairman of the Nominating and Governance Committee 2001–2005

   53   None
             

Eleanor W. Palmer,

Born May 5, 1926

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee Emeritus

since 2004

   Five year term  

•  Retired since 1981

•  Trustee of RIC and RIF until 2004

   53   None

 

* Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF.

 

178   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Specialty Funds

Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years

OFFICERS

Cheryl Wichers

Born December 16, 1966

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Compliance Officer since 2005   Until removed by Independent Trustees  

•  Chief Compliance Officer, RIC

•  Chief Compliance Officer, RIF

•  Chief Compliance Officer, RIMCo

•  Chief Compliance Officer, RFSC

•  April 2002–May 2005, Manager, Global Regulatory Policy

         

Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

   President and Chief Executive Officer since 2004   Until successor is chosen and qualified by Trustees  

•  President and CEO, RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board, President and CEO, RFSC

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director of Individual Investor Services, FRC

•  2000 to 2004, Managing Director, Sales and Client Service, RIMCo

         

Mark E. Swanson,

Born November 26, 1963

 

909 A Street

Tacoma, Washington

98402-1616

   Treasurer and Chief Accounting Officer since 1998   Until successor is chosen and qualified by Trustees  

•  Treasurer, Chief Accounting Officer and CFO, RIC and RIF

•  Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc.

•  Treasurer and Principal Accounting Officer, SSgA Funds

         

Peter Gunning,

Born February 22, 1967

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Investment Officer since 2008   Until removed by Trustees  

•  Chief Investment Officer, RIC, RIF

•  1996 to 2008 Chief Investment Officer, Russell, Asia Pacific

         

Gregory J. Lyons,

Born August 24, 1960

 

909 A Street

Tacoma, Washington

98402-1616

   Secretary since 2007   Until successor is chosen and qualified by Trustees  

•  Associate General Counsel and Assistant Secretary FRC and RIA

•  Director and Secretary, RIMCo, RFSC and Russell Financial Services, Inc.

•  Secretary and Chief Legal Counsel, RIC and RIF

 

Disclosure of Information about Fund Directors   179

Table of Contents

Specialty Funds

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Interested Trustees

Greg J. Stark

Independent Trustees

Thaddas L. Alston

Kristianne Blake

Daniel P. Connealy

Jonathan Fine

Raymond P. Tennison, Jr.

Jack R. Thompson

Julie W. Weston

Trustees Emeritus

George F. Russell, Jr.

Paul E. Anderson

William E. Baxter

Lee C. Gingrich

Eleanor W. Palmer

Officers

Greg J. Stark, President and Chief Executive Officer

Cheryl Wichers, Chief Compliance Officer

Peter Gunning, Chief Investment Officer

Mark E. Swanson, Treasurer and Chief Accounting Officer

Gregory J. Lyons, Secretary

Adviser

Russell Investment Management Company

909 A Street

Tacoma, WA 98402

Administrator and Transfer and Dividend Disbursing Agent

Russell Fund Services Company

909 A Street

Tacoma, WA 98402

Custodian

State Street Bank and Trust Company

Josiah Quincy Building

200 Newport Avenue

North Quincy, MA 02171

Office of Shareholder Inquiries

909 A Street

Tacoma, WA 98402

(800) 787-7354

Legal Counsel

Dechert LLP

200 Clarendon Street, 27th Floor

Boston, MA 02116-5021

Distributor

Russell Financial Services, Inc.

909 A Street

Tacoma, WA 98402

Money Managers as of April 30, 2008

Emerging Markets Fund

AllianceBernstein L.P., New York, NY

Arrowstreet Capital, Limited Partnership, Boston, MA

Genesis Asset Managers, LLP, London, United Kingdom

Harding, Loevner Management, L.P., Somerville, NJ

T. Rowe Price International, Inc., Baltimore, MD

UBS Global Asset Management (Americas) Inc., Chicago, IL

Real Estate Securities Fund

AEW Management and Advisors, L.P., Boston, MA

Cohen & Steers Capital Management, Inc., New York, NY

Heitman Real Estate Securities LLC, Chicago, IL

INVESCO Institutional (N.A.), Inc. which acts as a money manager to the Fund through its INVESCO Real Estate division, Dallas, TX

RREEF America L.L.C., Chicago, IL

Short Duration Bond Fund

Logan Circle Partners, L.P., Philadelphia, PA

Pacific Investment Management Company LLC, Newport Beach, CA

STW Fixed Income Management, Carpinteria, CA

Tax Exempt Bond Fund

Delaware Management Company, a series of Delaware Management Business Trust, Philadelphia, PA

Standish Mellon Asset Management Company LLC, Boston, MA

Tax-Managed Large Cap Fund

Armstrong Shaw Associates Inc., New Canaan, CT

J.P. Morgan Investment Management Inc., New York, NY

Palisades Investment Partners, LLC, Santa Monica, CA

Sands Capital Management, Inc., Arlington, VA

Turner Investment Partners, Inc., Berwyn, PA

Tax-Managed Mid & Small Cap Fund

Chartwell Investment Partners, Berwyn, PA

Netols Asset Management, Inc., Mequon, WI

Parametric Portfolio Associates LLC, Seattle, WA

Transamerica Investment Management, LLC, Los Angeles, CA

Turner Investment Partners, Inc., Berwyn, PA

Select Growth Fund

Cornerstone Capital Management, Inc., Bloomington, MN

Delaware Management Company, a series of Delaware Management Business Trust, Philadelphia, PA

Fuller & Thaler Asset Management, Inc., San Mateo, CA

Suffolk Capital Management, LLC, New York, NY

Sustainable Growth Advisers, LP, Stamford, CT

Turner Investment Partners, Inc., Berwyn, PA

Select Value Fund

DePrince, Race & Zollo, Inc., Winter Park, FL

Iridian Asset Management LLC, Westport, CT

JS Asset Management, LLC, West Conshohocken, PA

Systematic Financial Management, L.P., Teaneck, NJ


 

180   Adviser, Money Managers and Service Providers

Table of Contents

Specialty Funds

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Fixed Income I Fund

Lehman Brothers Asset Management LLC, Chicago, IL

Metropolitan West Asset Management, LLC, Los Angeles, CA

Pacific Investment Management Company LLC, Newport Beach, CA

Western Asset Management Company, Pasadena, CA

Western Asset Management Company Limited, London, England


 

This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Company. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

 

Adviser, Money Managers and Service Providers   181

Table of Contents

 

Russell Investment Funds    909 A Street      800-787-7354
   Tacoma, Washington 98402      Fax: 253-591-3495
        www.russell.com

 

LOGO

LOGO

LOGO

36-08-187

Table of Contents

LOGO

 

2008 Semiannual Report

 

 

Tax-Managed

Global Equity Fund

 

 

APRIL 30, 2008

 

FUND    SHARE CLASS
Tax-Managed Global Equity Fund    C, E, S

 

LOGO

Table of Contents

 

Russell Investment Company

Russell Investment Company is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on one of these Funds.

Table of Contents

 

Russell Investment Company

Tax-Managed Global Equity Fund

Semiannual Report

April 30, 2008 (Unaudited)

Table of Contents

 

     Page
Shareholder Expense Example    3
Schedule of Investments    4
Statement of Assets and Liabilities    5
Statement of Operations    6
Statements of Changes in Net Assets    7
Financial Highlights - Class C    8
Financial Highlights - Class S    9
Notes to Financial Statements    10
Basis for Approval of Investment Advisory Contracts    17
Shareholder Requests for Additional Information    21
Disclosure of Information about Fund Directors    22
Adviser, Money Managers and Service Providers    26

Table of Contents

 

Russell Investment Company - Tax-Managed Global Equity Fund.

Copyright © Russell Investments 2008. 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 distributed through Russell Financial Services, Inc. (effective June 2, 2008, the name changed from Russell Fund Distributors, Inc.) member FINRA, part of Russell Investments.

Russell Investments and Standard & Poor’s Corporation are the owners of the trademarks, service marks, and copyrights related to their respective indexes. Index performance is not indicative of the performance of any specific investment. Indexes are not managed and may not be invested in directly.

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. Current to the most recent month-end performance data may be obtained by visiting www.russell.com/us/fundperformance.

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Shareholder Expense Example — April 30, 2008 (Unaudited)

 

 

 

Fund Expenses

The following disclosure provides important information regarding the Fund’s Expense Example. Please refer to this information when reviewing the Expense Example for the Fund.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 882.80    $ 1,019.89

Expenses Paid During Period*

    $ 4.68    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 887.80    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Shareholder Expense Example   3

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Shares      Market
Value
$

Investments - 100.0%

     

Other Russell Investment Company Series Mutual Funds

     

Domestic Equities - 74.8%

     

Quantitative Equity Fund

    246,003      8,824

Tax-Managed Large Cap Fund

    2,138,587      44,226

Tax-Managed Mid & Small Cap Fund

    1,012,655      13,276
         
        66,326
         

International Equities - 25.2%

     

Emerging Markets Fund

    202,491      4,475

International Securities Fund

    260,663      17,822
         
        22,297
         
Total Investments - 100.0%        

(identified cost $67,728)

         88,623
Other Assets and Liabilities, Net - 0.0%         5
         
Net Assets - 100.0%         88,628
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of Net
Assets		  
    

Domestic Equities

      74.8  

International Equities

      25.2  
        

Total Investments

      100.0  

Other Assets and Liabilities, Net

      — *
        
     100.0  
        

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

4   Schedule of Investments

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Statement of Assets and Liabilities — April 30, 2008 (Unaudited)

 

Amounts in thousands             
    

Assets

     

Investments at market (identified cost $67,728)

    $ 88,623  

Receivables:

     

Investments sold

      35  

Fund shares sold

      19  

From Transfer Agent

      30  

Prepaid expenses

      19  
          

Total assets

        88,726  
Liabilities     

Payables:

     

Fund shares redeemed

   $ 40   

Accrued fees to affiliates

     30   

Other accrued expenses

     28   
        

Total liabilities

      98  
          
    

Net Assets

    $ 88,628  
          

Net Assets Consist of:

     

Undistributed (overdistributed) net investment income

    $ 15  

Accumulated net realized gain (loss)

      (11,869 )

Unrealized appreciation (depreciation) on investments

      20,895  

Shares of beneficial interest

      78  

Additional paid-in capital

      79,509  
          

Net Assets

    $ 88,628  
          
    

Net Asset Value, offering and redemption price per share:

     

Net asset value per share: Class C*

    $ 11.11  

Class C — Net assets

    $ 32,611,597  

Class C — Shares outstanding ($.01 par value)

      2,934,729  

Net asset value per share: Class S*

    $ 11.52  

Class S — Net assets

    $ 56,016,378  

Class S — Shares outstanding ($.01 par value)

      4,861,796  

 

* Net asset value per share equals class level net assets divided by class level shares of beneficial interest outstanding.

 

See accompanying notes which are an integral part of the financial statements.

 

Statement of Assets and Liabilities   5

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Statement of Operations — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands              
   

Investment Income

    

Income distributions from Underlying Funds

 

   $ 2,428  

Expenses

    

Advisory fees

   $ 90    

Administrative fees

     22    

Custodian fees

     12    

Distribution fees - Class C

     114    

Transfer agent fees

     67    

Professional fees

     20    

Registration fees

     22    

Shareholder servicing fees - Class C

     38    

Trustees’ fees

     1    

Printing fees

     2    

Miscellaneous

     1    
         

Expenses before reductions

     389    

Expense reductions

     (237 )  
         

Net expenses

 

     152  
         

Net investment income (loss)

 

     2,276  
         

Net Realized and Unrealized Gain (Loss)

    

Net realized gain (loss) on:

    

Investments

     (960 )  

Capital gain distributions from Underlying Funds

     3,862       2,902  
         

Net change in unrealized appreciation (depreciation) on investments

       (17,119 )
         

Net realized and unrealized gain (loss)

 

     (14,217 )
         

Net Increase (Decrease) in Net Assets from Operations

 

   $ (11,941 )
         

 

See accompanying notes which are an integral part of the financial statements.

 

6   Statement of Operations

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Statements of Changes in Net Assets

 

Amounts in thousands    Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31, 2007		  
    

Increase (Decrease) in Net Assets

     

Operations

     

Net investment income (loss)

    $ 2,276     $ 1,187  

Net realized gain (loss)

      2,902       2,074  

Net change in unrealized appreciation (depreciation)

      (17,119 )     13,168  
                

Net increase (decrease) in net assets from operations

      (11,941 )     16,429  
                

Distributions

     

From net investment income

     

Class C

      (779 )     (207 )

Class S

      (1,443 )     (1,042 )
                

Net decrease in net assets from distributions

      (2,222 )     (1,249 )
                

Share Transactions

     

Net increase (decrease) in net assets from share transactions

      3,958       9,195  
                

Total Net Increase (Decrease) in Net Assets

      (10,205 )     24,375  

Net Assets

     

Beginning of period

      98,833       74,458  
                

End of period

    $ 88,628     $ 98,833  
                

Undistributed (overdistributed) net investment income included in net assets

    $ 15     $ (39 )

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   7

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Financial Highlights - Class C

 

For a Share Outstanding Throughout Each Period.

 

           For the Fiscal Years Ended October 31,  
      2008*     2007     2006     2005     2004     2003  
            

Net Asset Value, Beginning of Period

    $ 12.88     $ 10.87     $ 9.39     $ 8.44     $ 7.61     $ 6.15  
                                                

Income From Operations

             

Net investment income (loss) (a)(b)

      .25       .07       (.03 )     — (g)     (.02 )     (.02 )

Net realized and unrealized gain (loss)

      (1.75 )     2.05       1.51       .95       .86       1.48  
                                                

Total income (loss) from operations

      (1.50 )     2.12       1.48       .95       .84       1.46  
                                                

Distributions

             

From net investment income

      (.27 )     (.11 )     —       —       (.01 )     —  
                                                

Net Asset Value, End of Period

    $ 11.11     $ 12.88     $ 10.87     $ 9.39     $ 8.44     $ 7.61  
                                                

Total Return (%) (c)

      (11.72 )     19.68       15.76       11.26       10.99       23.74  

Ratios/Supplemental Data:

             

Net Assets, end of period (in thousands)

    $ 32,612     $ 27,993     $ 19,439     $ 14,801     $ 12,766     $ 11,523  

Ratios to average net assets (%):

             

Operating expenses, net (d)(e)(f)

      1.00       1.00       1.00       1.00       1.00       1.00  

Operating expenses, gross (d)

      1.53       1.54       1.58       1.55       1.58       1.72  

Net investment income (loss) (d)(f)

      2.26       .57       (.27 )     (.03 )     (.19 )     (.25 )

Portfolio turnover rate (%) (c)

      10       12       9       12       21       60  

 

* For the period ended April 30, 2008 (Unaudited).
(a) Average month-end shares outstanding were used for this calculation.
(b) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividend by the Underlying Funds in which the Fund invests.
(c) Periods less than one year are not annualized.
(d) The ratios for periods less than one year are annualized.
(e) The calculation includes only those expenses charged directly to the Fund and does not include expenses charged to the Underlying Funds in which the Fund invests.
(f) May reflect amounts waived and/or reimbursed by RIMCo and RFSC.
(g) Less than $.01 per share.

 

See accompanying notes which are an integral part of the financial statements.

 

8   Financial Highlights - Class C

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Financial Highlights - Class S

 

For a Share Outstanding Throughout Each Period.

 

           For the Fiscal Years Ended October 31,  
      2008*     2007     2006     2005     2004     2003  
            

Net Asset Value, Beginning of Period

    $ 13.29     $ 11.20     $ 9.65     $ 8.67     $ 7.80     $ 6.27  
                                                

Income From Operations

             

Net investment income (loss) (a)(b)

      .31       .20       .08       .09       .07       .05  

Net realized and unrealized gain (loss)

      (1.79 )     2.10       1.55       .97       .87       1.52  
                                                

Total income (loss) from operations

      (1.48 )     2.30       1.63       1.06       .94       1.57  
                                                

Distributions

             

From net investment income

      (.29 )     (.21 )     (.08 )     (.08 )     (.07 )     (.04 )
                                                

Net Asset Value, End of Period

    $ 11.52     $ 13.29     $ 11.20     $ 9.65     $ 8.67     $ 7.80  
                                                

Total Return (%) (c)

      (11.22 )     20.86       16.95       12.31       12.14       25.09  

Ratios/Supplemental Data:

             

Net Assets, end of period (in thousands)

    $ 56,016     $ 70,840     $ 55,019     $ 42,596     $ 34,708     $ 32,861  

Ratios to average net assets (%):

             

Operating expenses, net (d)(e)(f)

      —       —       —       —       —       —  

Operating expenses, gross (d)

      .53       .54       .58       .55       .58       .72  

Net investment income (loss) (d)(f)

      2.65       1.63       .79       .95       .87       .77  

Portfolio turnover rate (%) (c)

      10       12       9       12       21       60  

 

* For the period ended April 30, 2008 (Unaudited).
(a) Average month-end shares outstanding were used for this calculation.
(b) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividend by the Underlying Funds in which the Fund invests.
(c) Periods less than one year are not annualized.
(d) The ratios for periods less than one year are annualized.
(e) The calculation includes only those expenses charged directly to the Fund and does not include expenses charged to the Underlying Funds in which the Fund invests.
(f) May reflect amounts waived and/or reimbursed by RIMCo and RFSC.

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights - Class S   9

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Notes to Financial Statements — April 30, 2008 (Unaudited)

 

 

 

1.   Organization

Russell Investment Company (the “Investment Company” or “RIC”) is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on one of these Funds (the “Fund”). The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated August 19, 2002. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.

Through December 31, 2007, Russell Investment Management Company (“RIMCo”) was the adviser, administrator and transfer agent of the Fund, providing advisory, administrative and transfer agency services to the Fund. Effective January 1, 2008, RIMCo is the Fund’s adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Fund’s administrator and transfer agent. There was no change in the services provided to the Fund or in aggregate fees paid by the Fund for advisory, administrative and transfer agency services.

In the table below, the Fund allocates its assets by investing in a combination of shares of other of the Investment Company’s Funds (the “Underlying Funds”). RIMCo, the Fund’s investment adviser, may modify the target asset allocation for the Fund and/or the Underlying Funds in which the Fund invests. From time to time, the Fund may adjust its investments within set limits based on RIMCo’s outlook for the economy, financial markets generally and relative market valuation of the asset classes represented by each Underlying Fund. Additionally, the Fund may deviate from set limits when, in RIMCo’s opinion, it is necessary to do so to pursue the Fund’s investment objective. In the future, the Fund may also invest in other funds which are not currently Underlying Funds.

 

Asset Class/Underlying Funds    Asset Allocation
Targets per Prospectus		  
  

Equities

   

US Equities

   

Tax-Managed Large Cap Fund

    50 %

Tax-Managed Mid & Small Cap Fund

    15  

Quantitative Equity Fund

    10  

International Equities

   

International Securities Fund

    20  

Emerging Markets Fund

    5  
      
   100  

Investment Objectives of the Underlying Funds:

Tax-Managed Large Cap Fund

Seeks to provide long term capital growth on an after-tax basis.

Tax-Managed Mid & Small Cap Fund

Seeks to provide long term capital growth on an after-tax basis.

Quantitative Equity Fund

Seeks to provide long term capital growth.

International Securities Fund

Seeks to provide long term capital growth.

Emerging Markets Fund

Seeks to provide long term capital growth.

 

10   Notes to Financial Statements

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

2.   Significant Accounting Policies

The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by the Fund in the preparation of its financial statements.

Security Valuation

The Fund values its portfolio securities, the shares of the Underlying Funds, at the current net asset value per share of each Underlying Fund.

The Underlying Funds value portfolio securities according to Board-approved securities valuation procedures, including market value procedures, fair value procedures and pricing services. Money market fund securities are priced using the amortized cost method of valuation, as are debt obligation securities maturing within 60 days at the time of purchase, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.

Ordinarily, the Underlying Funds value each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Generally, Underlying Fund securities are valued at the close of the market on which they are traded as follows:

 

  • US listed equities; equity and fixed income options: Last sale price; last bid price if no last sale price;

 

  • US over-the-counter equities: Official closing price; last bid price if no closing price;

 

  • Listed ADRs/GDRs: Last sale price; last bid price if no last sale price;

 

  • Municipal bonds, US bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price;

 

  • Futures: Settlement price.

 

  • Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier.

 

  • The value of swap agreements is equal to the Fund’s obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts.

 

  • Equity securities traded on a national foreign securities exchange or a foreign over the counter market are valued on the basis of the official closing price, or lacking the official closing price, at the last sale price of the primary exchange on which the security is traded.

If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Underlying Funds will use the security’s fair value, as determined in accordance with the fair value procedures. This generally means that equity securities and fixed income securities listed and traded principally on any national securities exchange are valued on the basis of the last sale price or, lacking any sales, at the closing bid price, on the primary exchange on which the security is traded. The fair value procedures may involve subjective judgments as to the fair value of securities. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market on which they are traded, but rather may be priced by another method that the Funds’ Board of Trustees believes reflects fair value. The use of fair value pricing by an Underlying Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Underlying Fund shares and daily movement of the benchmark index if the index is valued using another pricing method.

This policy is intended to assure that the Underlying Funds’ net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Underlying Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Underlying Fund shares is determined may be reflected in the calculation of net asset values for each applicable Underlying Fund (and each Fund which invests in such Underlying Fund)

 

Notes to Financial Statements   11

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

when the Underlying Funds deem that the particular event or circumstance would materially affect such Underlying Fund’s net asset value. Underlying Funds that invest primarily in frequently traded exchange listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. Underlying Funds that invest in foreign securities are likely to use fair value pricing more often since significant events may occur between the close of foreign markets and the time of pricing which would trigger fair value pricing of the foreign securities. Underlying Funds that invest in low rated debt securities are also likely to use fair value pricing more often since the markets in which such securities are traded are generally thinner, more limited and less active than those for higher rated securities. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the US securities market (defined in the Fair Value Procedures as the movement by any two of four major US Indexes greater than a certain percentage) or other significant event; foreign market holidays if on a daily basis, Fund exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.

Because foreign securities can trade on non-business days, the net asset value of a Fund’s portfolio that includes an Underlying Fund which invests in foreign securities may change on days when shareholders will not be able to purchase or redeem fund shares.

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund’s financial statement disclosure.

Investment Transactions

Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost.

Investment Income

Distributions of income and capital gains from the Underlying Funds are recorded on the ex-dividend date.

Federal Income Taxes

Since the Investment Company is a Massachusetts business trust, the Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to the Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.

It is the Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income tax provision was required for the Fund.

The Financial Accounting Standards Board (FASB) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Fund adopted the provisions of FIN 48 on November 1, 2007. Management has reviewed the Fund’s tax positions for all open tax years, and concluded that adoption had no effect on the Fund’s financial position or results of operations. At April 30, 2008, the Fund had recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.

The Fund files a U.S. tax return. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal year ending October 31, 2005 through October 31, 2007, no examinations are in progress or anticipated at this time. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

 

12   Notes to Financial Statements

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Dividends and Distributions to Shareholders

Income dividends and capital gain distributions, if any, are recorded on the ex-dividend date. Income dividends are generally declared and paid annually. Capital gain distributions are generally declared and paid annually. An additional distribution may be paid by the Fund to avoid imposition of federal income and excise tax on any remaining undistributed capital gains and net investment income.

The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) from investment transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP relate primarily to wash sale deferrals and capital loss carryforwards. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting its net asset value.

Expenses

Expenses included in the accompanying financial statements reflect the expenses of the Fund and do not include those expenses incurred by the Underlying Funds. Because the Underlying Funds have varied expense and fee levels and the Fund may own different proportions of the Underlying Funds at different times, the amount of the fees and expenses incurred indirectly by the Fund will vary.

Class Allocation

The Fund presented herein offers the following classes of shares: Class C, Class E and Class S (The Class E shares currently do not have any assets). All share classes have identical voting, dividend, liquidation and other rights and the same terms and conditions. The separate classes of shares differ principally in the applicable distribution fees and shareholder servicing fees. Shareholders of each class bear certain expenses that pertain to that particular class. Realized and unrealized gains (losses), net investment income, and expenses with the exception of class level expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class.

Guarantees

In the normal course of business the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund expects the risk of loss to be remote.

 

3.   Investment Transactions

Securities

During the period ended April 30, 2008, the Fund had purchases and sales of the Underlying Funds (excluding short-term investments) of $16,572,686 and $8,702,942, respectively.

 

4.   Related Party Transactions, Fees and Expenses

Adviser and Administrator

Through December 31, 2007, RIMCo was the adviser and administrator of all of the Funds which comprise the Investment Company. Effective January 1, 2008, RIMCo advises the Fund and RFSC is the Fund’s administrator. RFSC is a wholly-owned subsidiary of RIMCo. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides money manager evaluation to RIMCo.

The advisory fee of 0.20% and administrative fee of 0.05% are based upon the average daily net assets of the Fund and are payable monthly and total $89,826 and $22,456 respectively, for the period ended April 30, 2008.

The adviser has contractually agreed to waive the advisory fee at least through February 29, 2009. The amount of such waiver for the period ended April 30, 2008 was $89,826. The adviser does not have the ability to recover amounts waived for the period ended April 30, 2008 or previous periods.

 

Notes to Financial Statements   13

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Transfer and Dividend Disbursing Agent

Through December 31, 2007 RIMCo was the Transfer and Dividend Disbursing Agent. Effective January 1, 2008 RFSC serves as Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RIMCo and RFSC is paid a fee for transfer agency and dividend disbursing services provided to the Fund. RIMCo and RFSC retain a portion of this fee for their services provided to the Fund and pay the balance to unaffiliated agents who assist in providing these services. Total fees for the Fund for the period ended April 30, 2008 were $67,369.

RFSC, as transfer agent, agreed to waive its transfer agency fees and to reimburse the Funds for all direct operating expenses other than Rule 12b-1 distribution fees, shareholder services fees, non-recurring expenses and extraordinary expenses.

For the period ended April 30, 2008, the amount waived and reimbursed by RFSC as transfer agent amounted to $147,376.

Distributor and Shareholder Servicing

On June 2, 2008, Russell Fund Distributors Inc., a wholly owned subsidiary of RIMCo, changed its name to Russell Financial Services, Inc. (the “Distributor”) and serves as distributor for RIC, pursuant to the Distribution Agreement with the Investment Company.

The Investment Company has a Distribution Plan pursuant to Rule 12b-1 (the “Plan”) under the 1940 Act. Under this Plan, the Investment Company is authorized to make payments to the Distributor or any Selling Agents, as defined in the Plan, for sales support services provided, and related expenses incurred which are primarily intended to result in the sale of Class C shares subject to the Distribution Plan. The 12b-1 distribution payments shall not exceed 0.75% of the average daily net assets of the Fund’s Class C shares on an annual basis.

In addition, the Investment Company has adopted a Shareholder Services Plan (the “Services Plan”) under which the Fund may make payments to the Distributor or any Servicing Agent for any activities or expenses primarily intended to assist, support or service the Servicing Agents’ clients who beneficially own Class C and Class E shares of the Fund. The shareholder servicing payments shall not exceed 0.25% of the average daily net assets of a Fund’s Class C and Class E shares on an annual basis.

Pursuant to the rules of the Financial Industry Regulatory Authority (“FINRA”), the aggregate initial sales charges, deferred sales charges and asset-based sales charges on Class C and Class E shares of the fund may not exceed 6.25% and 6.25% respectively, of total gross sales, subject to certain exclusions. These limitations are imposed on each class of shares of the Fund rather than on a per shareholder basis. Therefore, long-term shareholders of the Class C and Class E shares may pay more than the economic equivalent of the maximum sales charges permitted by FINRA.

Accrued Fees Payable to Affiliates

Accrued fees payable to affiliates for the period ended April 30, 2008 were as follows:

 

  

Administration fees

    $ 3,559

Distribution fees

      19,748

Shareholder servicing fees

      6,583

Trustee fees

      214
      
   $ 30,104
      

Board of Trustees

The Russell Fund Complex consists of Russell Investment Company, which has 44 Funds, and Russell Investment Funds (“RIF”), which has nine Funds. Each of the Trustees is a Trustee for both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 ($52,000 prior to January 1, 2008) per year, $6,500 for each regular quarterly meeting attended in person, $2,500 ($2,000 prior to January 1, 2008) for each special meeting attended in person, and $2,500 ($2,000 prior to January 1, 2008) for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 ($500 prior to January 1, 2008) fee for attending quarterly and special meetings and a

 

14   Notes to Financial Statements

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

$500 fee for attending committee meetings by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee chair is paid a fee of $6,000 per year. The chair person of the Board receives additional annual compensation of $52,000.

Transactions With Affiliated Companies

An affiliated company is a company in which a Fund has ownership of the voting securities or under common control. Transactions during the period ended April 30, 2008 with Underlying Funds which are or were an affiliated company are as follows:

 

Affiliate    Purchase Cost    Sales Cost    Income
Distributions		    Capital Gains
Distributions
           

Quantitative Equity

    $ 1,704,770    $ 929,359    $ 162,189    $ 573,159

Tax-Managed Large Cap Fund

      4,880,913      3,887,232      355,732      —

Tax-Managed Mid & Small Cap Fund

      3,250,240      1,874,187      145,925      1,024,811

Emerging Markets

      1,655,849      819,764      368,239      637,629

International Securities

      5,080,914      2,152,056      1,395,987      1,626,095
                           
   $ 16,572,686    $ 9,662,598    $ 2,428,072    $ 3,861,694
                           

 

5.   Federal Income Taxes

The Fund may have a net tax basis capital loss carryforward which may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. At October 31, 2007, available capital carryforwards of $2,165,730 expire on October 31, 2011.

At April 30, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

 

      Tax-Managed
Global Equity Fund
  

Cost of Investments

    $ 80,525,469
      

Unrealized Appreciation

    $ 8,097,149

Unrealized Depreciation

      —
      

Net Unrealized Appreciation (Depreciation)

    $ 8,097,149
      

 

6.   Fund Share Transactions (amounts in thousands)

Share transactions for the periods ended April 30, 2008 and October 31, 2007 were as follows:

 

     Shares     Dollars  
     2008     2007     2008     2007  
        
        

Class C

         

Proceeds from shares sold

    1,075     628     $ 12,799     $ 7,461  

Proceeds from reinvestment of distributions

    65     18       758       202  

Payments for shares redeemed

    (380 )   (261 )     (4,334 )     (3,092 )
                            

Net increase (decrease)

    760     385       9,223       4,571  
                            
        

Class S

         

Proceeds from shares sold

    866     1,470       10,501       17,195  

Proceeds from reinvestment of distributions

    98     86       1,176       982  

Payments for shares redeemed

    (1,431 )   (1,139 )     (16,942 )     (13,553 )
                            

Net increase (decrease)

    (467 )   417       (5,265 )     4,624  
                            

Total increase (decrease)

    293     802     $ 3,958     $ 9,195  
                            

 

Notes to Financial Statements   15

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

  7.   Interfund Lending Program

The Investment Company Fund has been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Investment Company may borrow money from the RIC Money Market Fund for temporary purposes. All such borrowing and lending will be subject to the Fund’s fundamental investment limitations. The RIC Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves. The Investment Company Fund will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. The Fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Money Market Fund could result in a lost investment opportunity of additional borrowing costs. The Fund did not borrow from the program for the period ended April 30, 2008.

 

  8.   Record Ownership

As of April 30, 2008, the Fund had one shareholder of record with greater than 10% of the total outstanding shares of the Fund in the amount of 15.66%.

 

  9.   Subsequent Event

Effective September 2, 2008, Tax-Managed Global Equity Fund will change its name to the Russell Tax-Managed Global Equity Fund.

 

16   Notes to Financial Statements

Table of Contents

Russell Investment Company (“RIC”)

Tax-Managed Global Equity Fund

Basis for Approval of Investment Advisory Contracts

 

 

 

Approval of Investment Advisory Agreement

The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the ‘‘RIMCo Agreement’’) and the portfolio management contract (collectively, the ‘‘portfolio management contracts’’) with each Money Manager of the funds in which the Funds invest (the “Underlying Funds”) at a meeting held on April 22, 2008. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Fund, sales and redemptions of the Fund’s and Underlying Funds’ shares, and the management of the Fund and the Underlying Funds by RIMCo. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Fund and the Underlying Funds; and (2) information (the ‘‘Third-Party Information’’) received from an independent, nationally recognized provider of investment company information comparing the performance of the Fund and the Underlying Funds and their respective operating expenses over various periods of time with other peer funds (‘‘Comparable Funds’’) not managed by RIMCo, believed by the provider to be generally comparable in investment objectives and size to the Fund and the Underlying Funds. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Fund and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Fund discussing the legal standards for their consideration of the continuations of the RIMCo Agreement and the portfolio management contracts and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.

On April 21, 2008, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or management were present. At the April 22 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contracts with management and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Fund and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.

In evaluating the portfolio management contracts, the Board considered that the Underlying Funds, in employing a manager-of-managers method of investment, operate in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which, in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. RIMCo has engaged multiple unaffiliated Money Managers for all Underlying Funds.

The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for allocating assets of the Fund among its Underlying Funds and for determining, implementing and maintaining the investment program for each Underlying Fund. The assets of the Fund are invested in different combinations of the Underlying Funds pursuant to target asset allocations set by RIMCo. RIMCo may modify the target asset allocation for the Fund and/or the Underlying Funds in which the Fund invests. Assets of each Underlying Fund generally have been allocated among the multiple Money Managers selected by RIMCo, subject to Board approval, for that Underlying Fund. RIMCo manages directly a portion of certain Underlying Funds’ assets employing a “select holdings strategy,” as described below, and directly manages the investment of each Underlying Fund’s cash reserves. RIMCo also may manage directly any portion of each Underlying Fund’s assets that RIMCo determines not to allocate to the Money Managers and portions of an Underlying Fund during transitions between Money Managers. In all cases, assets are managed directly by RIMCo pursuant to authority granted by the RIMCo Agreement.

RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Underlying Fund and for actively managing allocations and reallocations of its assets among the Money Managers. RIMCo’s goal is to construct and manage diversified portfolios in a risk aware manner. Each Money Manager for an Underlying Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Underlying Fund assigned to it by RIMCo (each, a ‘‘segment’’) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in an Underlying Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Underlying Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for an Underlying Fund; and recommending annually to the Board whether portfolio management contracts should be

 

Basis for Approval of Investment Advisory Contracts   17

Table of Contents

Russell Investment Company (“RIC”)

Tax-Managed Global Equity Fund

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager or to coordinate the investment activities of Money Managers for an Underlying Fund in a complementary manner. Therefore, the performance of individual Money Managers for an Underlying Fund may reflect the roles assigned to them by RIMCo in the Underlying Funds’ investment activities and any constraints placed by RIMCo upon their selection of portfolio securities. In light of the foregoing, the overall performance of each Underlying Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Underlying Fund’s investment program, structuring an Underlying Fund, selecting an effective Money Manager with a particular investment style or sub-style for a segment that is complementary to the styles of the Money Managers of other Underlying Fund segments, and allocating assets among the Money Managers in a manner designed to achieve the objectives of the Underlying Fund. The Board considered that the prospectuses for the Fund and the Underlying Funds and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for each Underlying Fund, rather than the investment selection role of the Underlying Funds’ Money Managers, and describe the manner in which the Fund or Underlying Funds operate so that investors may take that information into account when deciding to purchase shares of the Fund.

The Board also considered the demands and complexity of managing the Underlying Funds pursuant to the manager-of-managers structure, the special expertise of RIMCo with respect to the manager-of-managers structure of the Underlying Funds and the likelihood that, at the current expense ratio of each Underlying Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of such Underlying Fund selected by shareholders in purchasing their shares of the Fund or Underlying Fund.

In addition to these general factors relating to the manager-of-managers structure of the Underlying Funds, the Trustees considered, with respect to the Fund and each Underlying Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:

 

1. The nature, scope and quality of the services provided to the Fund or Underlying Fund by RIMCo;

 

2. The advisory fee paid by the Fund or Underlying Fund to RIMCo and the fact that it encompasses all investment advisory fees paid by the Fund or Underlying Fund, including the fees for any Money Managers of such Underlying Fund;

 

3. Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund or Underlying Fund, including any administrative, transfer agent, cash management and securities lending fees, soft dollar arrangements and commissions in connection with portfolio securities transactions;

 

4. Information provided by RIMCo as to expenses incurred by the Fund or Underlying Fund; and

 

5. Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund or Underlying Fund.

As noted above, RIMCo, pursuant to the terms of the RIMCo Agreement, directly managed during the past year a portion—up to 10%—of the assets of each of the Quantitative Equity Fund and the International Securities Fund (each a ‘‘Participating Underlying Fund’’) utilizing a select holdings strategy, the actual allocation being determined by each Participating Underlying Fund’s RIMCo portfolio manager. The select holdings strategy utilized by RIMCo in managing such assets for a Participating Underlying Fund is designed to increase the Participating Underlying Fund’s exposure to stocks that are viewed as attractive by multiple Money Managers of that Participating Underlying Fund. The Board reviewed the results of the select holdings strategy in respect of each Participating Underlying Fund since implementation taking into account that the strategy has been utilized for a limited period of time. With respect to each Participating Underlying Fund, the Trustees considered that RIMCo is not required to pay investment advisory fees to a Money Manager with respect to assets for which the select holdings strategy is utilized and that the profits derived by RIMCo generally and from the Participating Underlying Fund consequently may increase incrementally. The Board, however, also considered RIMCo’s advice that it pays certain Money Managers additional fees for providing information and other services in connection with the select holdings strategy and incurs additional costs in carrying out the select holdings strategy, the limited amount of assets that are managed directly by RIMCo pursuant to the select holdings strategy, and the fact that the aggregate investment advisory fees paid by the Participating Underlying Fund are not increased as a result of the select holdings strategy.

 

18   Basis for Approval of Investment Advisory Contracts

Table of Contents

Russell Investment Company (“RIC”)

Tax-Managed Global Equity Fund

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

In evaluating the reasonableness of the Funds’ and Underlying Funds’ investment advisory fees in light of Fund and Underlying Fund performance, the Board considered that RIMCo, in the Agreement Renewal Information and at past meetings, RIMCo noted differences between the investment strategies of certain Underlying Funds and their respective Comparable Funds in pursuing their investment objectives, including Fund strategies which seek to achieve a lower tracking error (i.e., the difference, whether positive or negative, between the return of a fund and its benchmark) and resulting lower return volatility than Comparable Funds. According to RIMCo, these strategies may be expected to result, and for certain Underlying Funds during the periods covered by the Third-Party Information did result, in lower performance of the Fund than that of some of its respective Comparable Funds. According to RIMCo, the strategies pursued by the Underlying Funds, among other things, are intended to result in less volatile, more moderate returns relative to the Fund’s performance benchmark rather than more volatile, more extreme returns that its Comparable Funds may experience over time.

The Board considered for the Fund and each Underlying Fund whether economies of scale have been realized and whether the fees for the Fund or Underlying Fund appropriately reflect or should be revised to reflect any such economies. The Board determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the investment advisory fees for the Fund or Underlying Fund appropriately reflect any economies of scale realized by such Fund, based upon such factors as the variability of Money Manager investment advisory fees and other factors associated with the manager-of-managers structure employed by the Underlying Funds. The Trustees considered that fees payable to RIMCo by institutional clients with investment objectives similar to those of the Fund and other RIC funds under the Board’s supervision, including the Underlying Funds are lower, and may, in some cases, be substantially lower than the rates paid by RIC funds supervised by the Board, including the Fund. The Trustees considered the differences in the scope of services it provides to institutional clients and the funds under its supervision, including the Underlying Funds. In response to the Trustees’ inquiries, RIMCo has previously noted, among other things, that institutional clients have fewer administrative needs than the Fund. RIMCo has in the past noted that since the Fund must constantly issue and redeem its shares, it is more difficult to manage than institutional accounts, where assets are relatively stable. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.

On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years or presented at the April 22 Board meeting by RIMCo, the Board, in respect of the Fund and Underlying Funds, found, after giving effect to waivers and/or reimbursements and considering differences in the composition and investment strategies of their respective Comparable Funds, (1) the advisory fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided to the Fund or Underlying Funds; (2) the relative expense ratio of the Fund and each Underlying Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund and each Underlying Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.

The Board further concluded that, under the circumstances, the performance of the Fund did not support a determination against continuation of the RIMCo Agreement in respect of that Fund. The Board, in assessing the Funds’ performance, focused upon the Fund’s performance for the 1-, 3- and 5- year periods as most relevant.

The Third-Party Information showed that the Fund’s performance relative to its Comparable Funds was ranked in the second quintile for the 1-year period ended December 31, 2007; in the fourth quintile for the 3-year period ended such date; and in the third quintile for the 5-year period ended such date. RIMCo noted that the Fund, maintains a lower allocation to non-U.S. equity securities than the Comparable Funds. During the 5-year period, international developed markets have outperformed, putting the Fund at a relative disadvantage to its Comparable Funds. In evaluating performance, the Board considered each Fund’s and Underlying Fund’s absolute performance and its performance relative to appropriate benchmarks and indices and its Comparable Funds. In assessing performance, the Board also considered RIMCo’s investment strategy of managing the Underlying Funds in a risk aware manner.

After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Fund and its shareholders and voted to approve the continuation of the Agreement.

At the April 22 Board meeting, with respect to the evaluation of the terms of portfolio management contracts with Money Managers for the Underlying Funds, the Board received and considered information from RIMCo reporting, among other things, for each Money Manager, the Money Manager’s performance over various periods; RIMCo’s assessment of the performance of the Money Manager; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Fund’s and Underlying Funds’ underwriter; and RIMCo’s recommendation to retain the Money Manager at the current fee rate, to retain the

 

Basis for Approval of Investment Advisory Contracts   19

Table of Contents

Russell Investment Company (“RIC”)

Tax-Managed Global Equity Fund

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

Money Manager at a reduced fee rate or to terminate the Money Manager. RIMCo recommended that each Money Manager be retained at its current fee rate. RIMCo has advised the Board that it does not regard Money Manager profitability as relevant to its evaluation of the portfolio management contracts with Money Managers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by Money Managers to other clients; and RIMCo believes that the fees agreed upon with Money Managers are reasonable in light of the anticipated quality of investment advisory services to be rendered. The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the aggregate investment advisory fees paid by the Fund and each Underlying Fund and the fact that each Money Manager’s fee is paid by RIMCo.

Based substantially upon RIMCo’s recommendations, together with the information received from RIMCo in support of its recommendations at the April 22 meeting, the Board concluded that the fees paid to the Money Managers of each Underlying Fund are reasonable in light of the quality of the investment advisory services provided and that continuation of the portfolio management contract with each Money Manager of each Underlying Fund would be in the best interests of the Fund and its shareholders.

In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management contract with any Money Manager for an Underlying Fund that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of the Fund and Underlying Funds.

 

20   Basis for Approval of Investment Advisory Contracts

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Shareholder Requests for Additional Information — April 30, 2008 (Unaudited)

 

 

 

A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each fiscal year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, (iii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iv) at the Securities and Exchange Commission’s public reference room.

The Board has delegated to RIMCo, as RIC’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Fund may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Fund maintains a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Fund. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Fund’s Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

Financial Statements of the Underlying Funds can be obtained at no charge by calling the Funds at (800) 787-7354.

To reduce expenses, we may mail only one copy of the Fund’s prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution.

Some Financial Intermediaries may offer electronic delivery of the Fund’s prospectus and annual and semiannual reports. Please contact your Financial Intermediary for further details.

 

Shareholder Requests for Additional Information   21

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INTERESTED TRUSTEES

        

#Greg J. Stark

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

  

President and Chief Executive Officer since 2004

 

Trustee since 2007

  

Appointed until successor is duly elected and qualified

 

Until successor is chosen and qualified by Trustees

  

•  President and CEO RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”)

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director, of Individual Investor Services, FRC

•  2000 to 2004 Managing Director, Sales and Client Service, RIMCo

   53   None

INDEPENDENT TRUSTEES

        

Thaddas L. Alston

Born April 7, 1945

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2006   Appointed until successor is duly elected and qualified  

•  Senior Vice President, Larco Investments, Ltd. (real estate firm)

   53   None
             

Kristianne Blake,

Born January 22, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman since 2005

  

Appointed until successor is duly elected and qualified

 

Annual

  

•  Director and Chairman of the Audit Committee, Avista Corp.

•  Trustee and Chairman of the Operations Committee, Principal Funds and Principal Variable Contracts Funds

•  Regent, University of Washington

•  President, Kristianne Gates Blake, P.S. (accounting services)

•  February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF

•  Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999-2006

   53  

•  Director, Avista Corp; (electric utilities)

•  Trustee, Principal Funds (investment company);

•  Trustee, Principal Variable Contracts Funds (investment company)

             

Daniel P. Connealy

Born June 6, 1946

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2003

 

Chairman of Audit Committee since 2005

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc.

•  2001–2003, Vice President and Chief Financial Officer, Janus Capital Group Inc.

   53   None

 

# Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee.

 

22   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INDEPENDENT TRUSTEES (continued)

        

Jonathan Fine

Born July 8, 1954

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2004   Appointed until successor is duly elected and qualified  

•  President and Chief Executive Officer, United Way of King County, WA

   53   None
             

Raymond P. Tennison, Jr.

Born December 21, 1955

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2000

 

Chairman of the Nominating and Governance Committee since 2007

  

Appointed until successor is duly elected and qualified.

 

Appointed until successor is duly elected and qualified

  

•  President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company

   53   None
             

Jack R. Thompson,

Born March 21, 1949

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2005   Appointed until successor is duly elected and qualified  

•  September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds

•  September 2007 to present, Director, LifeVantage Corporation (health products company)

•  May 1999 to May 2003, President, Chief Executive Officer and Director, Berger Financial Group, LLC

•  May 1999 to May 2003, President and Trustee, Berger Funds

   53  

•  Director, Sparx Asia Funds (investment company)

 

•  Director, LifeVantage Corporation (health products company)

             

Julie W. Weston,

Born October 2, 1943

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2002

 

Chairperson of the Investment Committee since 2006

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  Retired

   53   None

 

* Each Trustee is subject to mandatory retirement at age 72.

 

Disclosure of Information about Fund Directors   23

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

TRUSTEES EMERITUS

        

*George F. Russell, Jr.,

Born July 3, 1932

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus and Chairman Emeritus since 1999   Until resignation or removal  

•  Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)); and RIMCo

•  Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”))

•  Chairman, Sunshine Management Services, LLC (investment adviser)

  53   None
             

Paul E. Anderson,

Born October 15, 1931

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2007   Five year term  

•  President, Anderson Management Group LLC (private investments consulting)

•  February 2002 to June 2005, Lead Trustee, RIC and RIF

•  Trustee of RIC and RIF until 2006

•  Chairman of the Nominating and Governance Committee 2006

   53   None
             

William E. Baxter,

Born June 8, 1925

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2004   Five year term  

•  Retired since 1986

•  Trustee of RIC and RIF until 2004

   53   None
             

Lee C. Gingrich,

Born October 6, 1930

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2006   Five year term  

•  Retired since 1995

•  Trustee of RIC and RIF until 2005

•  Chairman of the Nominating and Governance Committee 2001-2005

   53   None
             

Eleanor W. Palmer,

Born May 5, 1926

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee Emeritus

since 2004

   Five year term  

•  Retired since 1981

•  Trustee of RIC and RIF until 2004

   53   None

 

* Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF.

 

24   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Tax-Managed Global Equity Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name ,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years

OFFICERS

        

Cheryl Wichers

Born December 16, 1966

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Compliance Officer since 2005   Until removed by Independent Trustees  

•  Chief Compliance Officer, RIC

•  Chief Compliance Officer, RIF

•  Chief Compliance Officer, RIMCo

•  Chief Compliance Officer, RFSC

•  April 2002-May 2005, Manager, Global Regulatory Policy

         

Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

   President and Chief Executive Officer since 2004   Until successor is chosen and qualified by Trustees  

•  President and CEO, RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board, President and CEO, RFSC

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director of Individual Investor Services, FRC

•  2000 to 2004, Managing Director, Sales and Client Service, RIMCo

         

Mark E. Swanson,

Born November 26, 1963

 

909 A Street

Tacoma, Washington

98402-1616

   Treasurer and Chief Accounting Officer since 1998   Until successor is chosen and qualified by Trustees  

•  Treasurer, Chief Accounting Officer and CFO, RIC and RIF

•  Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc.

•  Treasurer and Principal Accounting Officer, SSgA Funds

         

Peter Gunning,

Born February 22, 1967

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Investment Officer since 2008   Until removed by Trustees  

•  Chief Investment Officer, RIC, RIF

•  1996 to 2008 Chief Investment Officer, Russell, Asia Pacific

         

Gregory J. Lyons,

Born August 24, 1960

 

909 A Street

Tacoma, Washington

98402-1616

   Secretary since 2007   Until successor is chosen and qualified by Trustees  

•  Associate General Counsel and Assistant Secretary FRC and RIA

•  Director and Secretary, RIMCo, RFSC and Russell Financial Services, Inc.

•  Secretary and Chief Legal Counsel, RIC and RIF

 

Disclosure of Information about Fund Directors   25

Table of Contents

Tax-Managed Global Equity Fund

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Interested Trustees

Greg J. Stark

Independent Trustees

Thaddas L. Alston

Kristianne Blake

Daniel P. Connealy

Jonathan Fine

Raymond P. Tennison, Jr.

Jack R. Thompson

Julie W. Weston

Trustees Emeritus

George F. Russell, Jr.

Paul E. Anderson

William E. Baxter

Lee C. Gingrich

Eleanor W. Palmer

Officers

Greg J. Stark, President and Chief Executive Officer

Cheryl Wichers, Chief Compliance Officer

Peter Gunning, Chief Investment Officer

Mark E. Swanson, Treasurer and Chief Accounting Officer

Gregory J. Lyons, Secretary

Adviser

Russell Investment Management Company

909 A Street

Tacoma, WA 98402

Administrator and Transfer and Dividend Disbursing Agent

Russell Fund Services Company

909 A Street

Tacoma, WA 98402

Custodian

State Street Bank and Trust Company

Josiah Quincy Building

200 Newport Avenue

North Quincy, MA 02171

Office of Shareholder Inquiries

909 A Street

Tacoma, WA 98402

(800) 787-7354

Legal Counsel

Dechert LLP

200 Clarendon Street, 27th Floor

Boston, MA 02116-5021

Distributor

Russell Financial Services, Inc.

909 A Street

Tacoma, WA 98402

Money Managers of Underlying Funds as of April 30, 2008

Quantitative Equity Fund

Aronson+Johnson+Ortiz, LP, Philadelphia, PA

Franklin Portfolio Associates, LLC, Boston, MA

Goldman Sachs Asset Management, L.P., New York, NY

Jacobs Levy Equity Management, Inc., Florham Park, NJ

International Securities Fund

AllianceBernstein L.P., New York, NY

Altrinsic Global Advisors, LLC, Stamford, CT

AQR Capital Management, LLC, Greenwich, CT

Axiom International Investors LLC, Greenwich, CT

Marsico Capital Management, LLC, Denver, CO

MFS Institutional Advisors, Inc., Boston, MA

Mondrian Investment Partners Limited, London, United Kingdom

UBS Global Asset Management (Americas) Inc., Chicago, IL

Wellington Management Company, LLP, Boston, MA

Emerging Markets Fund

AllianceBernstein L.P., New York, NY

Arrowstreet Capital, Limited Partnership, Boston, MA

Genesis Asset Managers, LLP, London, United Kingdom

Harding, Loevner Management, L.P., Somerville, NJ

T. Rowe Price International, Inc., Baltimore, MD

UBS Global Asset Management (Americas) Inc., Chicago, IL

Tax-Managed Large Cap Fund

Armstrong Shaw Associates Inc., New Canaan, CT

J.P. Morgan Investment Management Inc., New York, NY

Palisades Investment Partners, LLC, Santa Monica, CA

Sands Capital Management, Inc., Arlington, VA

Turner Investment Partners, Inc., Berwyn, PA

Tax-Managed Mid & Small Cap Fund

Chartwell Investment Partners, Berwyn, PA

Netols Asset Management, Inc., Mequon, WI

Parametric Portfolio Associates LLC, Seattle, WA

Transamerica Investment Management, LLC, Los Angeles, CA

Turner Investment Partners, Inc., Berwyn, PA


 

This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Company. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

 

26   Manager, Money Managers and Service Providers

Table of Contents

 

Russell Investment Company    909 A Street      800-787-7354
   Tacoma, Washington 98402      Fax: 253-591-3495
        www.russell.com

 

LOGO

LOGO

LOGO

36-08-092

Table of Contents

LOGO

 

2008 SEMIANNUAL REPORT

 

 

Russell Flex Equity Fund*

 

 

APRIL 30, 2008

 

FUND    SHARE CLASS
Russell Flex Equity Fund    A, B

 

LOGO

 

*   On March 4, 2008, the name of the Fund changed from Russell Multi-Manager Principal Protected Fund.

Table of Contents

 

 

Russell Investment Company

Russell Investment Company is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on one of these Funds.

Table of Contents

 

Russell Investment Company

Russell Flex Equity Fund

Semiannual Report

April 30, 2008 (Unaudited)

Table of Contents

 

     Page
Shareholder Expense Example    3
Schedule of Investments    4
Notes to Schedule of Investments    8
Statement of Assets and Liabilities    9
Statement of Operations    10
Statements of Changes in Net Assets    11
Financial Highlights - Class A    12
Financial Highlights - Class B    13
Notes to Financial Statements    14
Basis for Approval of Investment Advisory Contracts    22
Shareholder Requests for Additional Information    26
Disclosure of Information about Fund Directors    27
Matter Submitted to a Vote of Shareholders    31
Adviser, Money Managers and Service Providers    32

Table of Contents

 

Russell Investment Company - Russell Flex Equity Fund.

Copyright © Russell Investments 2008. 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 distributed through Russell Financial Services, Inc. (effective June 2, 2008, the name changed from Russell Fund Distributors, Inc.) member FINRA, part of Russell Investments.

Russell Investments and Standard & Poor’s Corporation are the owners of the trademarks, service marks, and copyrights related to their respective indexes. Index performance is not indicative of the performance of any specific investment. Indexes are not managed and may not be invested in directly.

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. Current to the most recent month-end performance data may be obtained by visiting www.russell.com/us/fundperformance.

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Shareholder Expense Example — April 30, 2008 (Unaudited)

 

 

 

Fund Expenses

The following disclosure provides important information regarding the Fund’s Expense Example. Please refer to this information when reviewing the Expense Example for the Fund.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

April 30, 2008

    $ 981.70    $ 1,015.22

Expenses Paid During Period*

    $ 9.56    $ 9.72

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.94% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class B

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

April 30, 2008

    $ 978.30    $ 1,011.49

Expenses Paid During Period*

    $ 13.23    $ 13.45

 

* Expenses are equal to the Fund’s annualized expense ratio of 2.69% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Shareholder Expense Example   3

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       
Common Stocks - 90.0%        

Auto and Transportation - 3.0%

        

Autoliv, Inc.

    500      31

C.H. Robinson Worldwide, Inc.

    200      12

Delta Air Lines, Inc. (Æ)

    1,000      8

FedEx Corp.

    2,500      240

Forward Air Corp.

    400      14

Genuine Parts Co.

    2,300      98

Hub Group, Inc. Class A (Æ)

    1,000      33

Kirby Corp. (Æ)

    1,500      82

Old Dominion Freight Line, Inc. (Æ)

    1,000      31

TRW Automotive Holdings Corp. (Æ)

    1,500      38
         
        587
         

Consumer Discretionary - 15.4%

     

AutoNation, Inc. (Æ)

    5,900      94

Brinker International, Inc.

    3,400      77

Carnival Corp.

    1,100      44

CBS Corp. Class B

    7,100      164

Columbia Sportswear Co.

    700      29

Convergys Corp. (Æ)

    2,500      39

Costco Wholesale Corp.

    3,400      242

DIRECTV Group, Inc. (The) (Æ)

    6,600      163

DISH Network Corp. Class A (Æ)

    5,000      149

eBay, Inc. (Æ)

    2,100      66

Estee Lauder Cos., Inc. (The) Class A

    3,800      173

Google, Inc. Class A (Æ)

    640      368

Manpower, Inc.

    1,800      121

Mattel, Inc.

    6,400      120

McGraw-Hill Cos., Inc. (The)

    4,000      164

Nike, Inc. Class B

    2,900      194

Omnicom Group, Inc.

    4,200      200

Penske Auto Group, Inc.

    1,400      29

Sohu.com, Inc. (Æ)

    500      35

Time Warner, Inc.

    11,500      171

TJX Cos., Inc.

    700      23

VF Corp.

    2,400      179

WESCO International, Inc. (Æ)

    1,000      37

Wolverine World Wide, Inc.

    1,200      34

Yum! Brands, Inc.

    1,700      69
         
        2,984
         

Consumer Staples - 5.6%

        

Colgate-Palmolive Co.

    3,100      219

Kroger Co. (The)

    6,700      183

Loews Corp. - Carolina Group

    2,200      145

Pepsi Bottling Group, Inc.

    4,400      148
     Principal
Amount ($)
or Shares		      Market
Value
$

Safeway, Inc.

    6,300      199

SYSCO Corp.

    5,900      180
         
        1,074
         

Financial Services - 18.8%

        

ACE, Ltd.

    3,100      187

Aflac, Inc.

    800      53

Allstate Corp. (The)

    3,800      191

Arch Capital Group, Ltd. (Æ)

    1,000      71

Axis Capital Holdings, Ltd.

    1,900      64

Bank of America Corp.

    500      19

Bank of New York Mellon Corp. (The)

    5,700      248

BlackRock, Inc.

    350      71

Camden Property Trust (ö)

    500      26

Cash America International, Inc.

    800      33

CBL & Associates Properties, Inc. (ö)

    1,900      47

Chubb Corp.

    3,400      180

Cigna Corp.

    1,300      55

Discover Financial Services

    700      13

Equity Residential (ö)

    500      21

Federated Investors, Inc. Class B

    3,200      107

Goldman Sachs Group, Inc. (The)

    700      134

Hartford Financial Services Group, Inc.

    2,900      207

Hospitality Properties Trust (ö)

    500      16

JPMorgan Chase & Co.

    1,200      57

Lincoln National Corp.

    3,200      172

Macerich Co. (The) (ö)

    500      37

Mack-Cali Realty Corp. (ö)

    700      27

MetLife, Inc.

    2,200      134

National City Corp.

    900      6

Northern Trust Corp.

    2,800      207

PNC Financial Services Group, Inc.

    2,900      201

Prologis (ö)

    3,000      188

Prudential Financial, Inc.

    3,200      242

RenaissanceRe Holdings, Ltd.

    1,500      77

SEI Investments Co.

    2,400      56

State Street Corp.

    2,900      209

Sunstone Hotel Investors, Inc. (ö)

    300      6

SunTrust Banks, Inc.

    1,400      78

XL Capital, Ltd. Class A

    5,400      188
         
        3,628
         

Health Care - 8.5%

        

AMERIGROUP Corp. (Æ)

    500      13

Amgen, Inc. (Æ)

    4,700      197

Boston Scientific Corp. (Æ)

    8,400      112

Eli Lilly & Co.

    4,900      236

 

4   Schedule of Investments

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Health Net, Inc. (Æ)

    3,300      97

Humana, Inc. (Æ)

    2,800      134

Johnson & Johnson

    3,800      255

King Pharmaceuticals, Inc. (Æ)

    7,200      67

Medco Health Solutions, Inc. (Æ)

    4,600      228

Pfizer, Inc.

    12,000      241

WellCare Health Plans, Inc. (Æ)

    1,400      61
         
        1,641
         

Integrated Oils - 5.3%

        

Chevron Corp.

    4,500      433

Exxon Mobil Corp.

    4,200      391

Marathon Oil Corp.

    4,300      196
         
        1,020
         

Materials and Processing - 5.4%

     

Domtar Corp. (Æ)

    8,500      51

Dow Chemical Co. (The)

    5,100      205

EI Du Pont de Nemours & Co.

    4,400      215

EMCOR Group, Inc. (Æ)

    700      18

Fluor Corp.

    1,100      168

International Paper Co.

    5,900      154

Jacobs Engineering Group, Inc. (Æ)

    700      60

Lennox International, Inc.

    1,200      40

Timken Co.

    400      14

URS Corp. (Æ)

    2,800      113
         
        1,038
         

Miscellaneous - 2.7%

        

3M Co.

    2,900      223

Eaton Corp.

    2,000      176

General Electric Co.

    3,000      98

Tyco International, Ltd.

    400      19
         
        516
         

Other Energy - 5.9%

        

Anadarko Petroleum Corp.

    3,300      220

Apache Corp.

    1,700      229

BJ Services Co.

    400      11

FMC Technologies, Inc. (Æ)

    700      47

Patterson-UTI Energy, Inc.

    2,900      81

Pride International, Inc. (Æ)

    2,300      98

Sunoco, Inc.

    3,100      144

Superior Energy Services (Æ)

    500      22

Transocean, Inc. (Æ)

    629      93

Valero Energy Corp.

    4,000      195
         
        1,140
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Producer Durables - 3.8%

        

Cummins, Inc.

    2,800      176

Lexmark International, Inc. Class A (Æ)

    2,400      75

Lincoln Electric Holdings, Inc.

    500      38

Lockheed Martin Corp.

    400      42

Manitowoc Co., Inc. (The)

    700      27

Molex, Inc.

    700      20

Northrop Grumman Corp.

    2,700      199

Plantronics, Inc.

    1,000      25

United Technologies Corp.

    1,200      87

WW Grainger, Inc.

    500      43
         
        732
         

Technology - 10.1%

        

Affiliated Computer Services, Inc. Class A (Æ)

    1,600      85

Arrow Electronics, Inc. (Æ)

    400      11

Avnet, Inc. (Æ)

    2,500      65

Electronic Data Systems Corp.

    9,700      180

General Dynamics Corp.

    2,800      253

Harris Corp.

    1,900      103

Ingram Micro, Inc.Class A (Æ)

    3,400      58

International Business Machines Corp.

    1,100      133

Jabil Circuit, Inc.

    6,500      71

Motorola, Inc.

    20,600      205

Nvidia Corp.

    9,500      195

SAIC, Inc. (Æ)

    2,900      55

Sanmina-SCI Corp. (Æ)

    11,400      18

Scansource, Inc. (Æ)

    600      15

Seagate Technology

    6,300      119

Symantec Corp. (Æ)

    9,700      167

Tellabs, Inc. (Æ)

    2,700      14

Vishay Intertechnology, Inc. (Æ)

    3,100      29

Western Digital Corp. (Æ)

    5,800      168
         
        1,944
         

Utilities - 5.5%

        

American Electric Power Co., Inc.

    4,600      205

AT&T, Inc.

    2,800      109

Constellation Energy Group, Inc.

    1,800      152

Duke Energy Corp.

    9,900      181

Embarq Corp.

    3,100      129

PG&E Corp.

    3,300      132

Progress Energy, Inc.

    3,400      143

Verizon Communications, Inc.

    500      19
         
        1,070
         
Total Common Stocks        

(cost $16,664)

         17,374
         

 

Schedule of Investments   5

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

         
Principal
Amount ($)
or Shares		      Market
Value
$		  
       

Short-Term Investments - 10.6%

     

Russell Investment Company
Money Market Fund

    1,702,000      1,702  

United States Treasury Bills (ç)(ž)(§)

     

1.221% due 06/26/08

    350,000      349  
           
Total Short-Term Investments        

(cost $2,051)

         2,051  
           
Total Investments - 100.6%     

(identified cost $18,715)

         19,425  

Other Assets and Liabilities,

Net - (0.6%)

         (107 )
           
Net Assets - 100.0%         19,318  
           

 

Futures Contracts

(Number of Contracts)

    Notional
Amount		      Unrealized
Appreciation
(Depreciation)
$
         

Long Positions

          

S&P 500 E-Mini Index (CME) expiration date 06/08 (29)

   USD    2,010      25
           

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

           25
           

 

See accompanying notes which are an integral part of the financial statements.

 

6   Schedule of Investments

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Auto and Transportation

    3.0  

Consumer Discretionary

    15.4  

Consumer Staples

    5.6  

Financial Services

    18.8  

Health Care

    8.5  

Integrated Oils

    5.3  

Materials and Processing

    5.4  

Miscellaneous

    2.7  

Other Energy

    5.9  

Producer Durables

    3.8  

Technology

    10.1  

Utilities

    5.5  

Short-Term Investments

    10.6  
      

Total Investments

    100.6  

Other Assets and Liabilities, Net

    (0.6 )
      
   100.0  
      

Futures Contracts

    — *

 

* Less than .05% of net assets

 

See accompanying notes which are an integral part of the financial statements.

 

Schedule of Investments   7

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Schedule of Investments — April 30, 2008 (Unaudited)

 

 

 

Footnotes:

(Æ) Nonincome-producing security.
(ö) Real Estate Investment Trust (REIT).
(§) All or a portion of the shares of this security are held as collateral in connection with futures contracts purchased (sold) or options written by the Fund.
(ž) Rate noted is yield-to-maturity from date of acquisition.
(ç) At amortized cost, which approximates market.

 

8   Notes to Schedules of Investments

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Statement of Assets and Liabilities — April 30, 2008 (Unaudited)

 

Amounts in thousands             
    

Assets

     

Investments at market (identified cost $18,715)

    $ 19,425  

Receivables:

     

Dividends and interest

      11  

Dividends from affiliated money market funds

      4  

Investments sold

      75  

Prepaid expenses

      26  
          

Total assets

      19,541  
Liabilities     

Payables:

     

Investments purchased

   $ 108   

Fund shares redeemed

     25   

Accrued fees to affiliates

     50   

Other accrued expenses

     32   

Daily variation margin on futures contracts

     8   
        

Total liabilities

      223  
          
    

Net Assets

    $ 19,318  
          

Net Assets Consist of:

     

Undistributed (overdistributed) net investment income

    $ 47  

Accumulated net realized gain (loss)

      (483 )

Unrealized appreciation (depreciation) on:

     

Investments

      710  

Futures contracts

      24  

Shares of beneficial interest

      20  

Additional paid-in capital

      19,000  
          

Net Assets

    $ 19,318  
          
    

Net Asset Value, per share:

     

Net asset value per share: Class A*

    $ 9.90  

Class A — Net assets

    $ 373,197  

Class A — Shares outstanding ($.01 par value)

      37,686  

Net asset value per share: Class B*

    $ 9.62  

Class B — Net assets

    $ 18,944,706  

Class B — Shares outstanding ($.01 par value)

      1,968,470  

*           Net asset value per share equals class level net assets divided by class level shares of beneficial interest outstanding.

     

 

See accompanying notes which are an integral part of the financial statements.

 

Statement of Assets and Liabilities   9

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Statement of Operations — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands              
   

Investment Income

    

Dividends

 

   $ 99  

Dividends from affiliated money market funds

 

     65  

Interest

 

     260  
         

Total investment income

 

     424  

Expenses

    

Advisory fees

   $ 122    

Administrative fees

     7    

Custodian fees

     35    

Distribution fees - Class B

     102    

Transfer agent fees

     35    

Professional fees

     48    

Registration fees

     10    

Shareholder servicing fees - Class A

     1    

Shareholder servicing fees - Class B

     34    

Insurance policy fees

     79    

Miscellaneous

     6    
         

Expenses before reductions

     479    

Expense reductions

     (108 )  
         

Net expenses

 

     371  
         

Net investment income (loss)

 

     53  
         

Net Realized and Unrealized Gain (Loss)

    

Net realized gain (loss) on:

    

Investments

     (420 )  

Futures contracts

     (36 )     (456 )
         

Net change in unrealized appreciation (depreciation) on:

    

Investments

     (677 )  

Futures contracts

     11       (666 )
               

Net realized and unrealized gain (loss)

 

     (1,122 )
         

Net Increase (Decrease) in Net Assets from Operations

 

   $ (1,069 )
         

 

See accompanying notes which are an integral part of the financial statements.

 

10   Statement of Operations

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Statements of Changes in Net Assets

 

Amounts in thousands   Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year Ended
October 31, 2007		  
   

Increase (Decrease) in Net Assets

    

Operations

    

Net investment income (loss)

   $ 53     $ 197  

Net realized gain (loss)

     (456 )     1,868  

Net change in unrealized appreciation (depreciation)

     (666 )     (336 )
               

Net increase (decrease) in net assets from operations

     (1,069 )     1,729  
               

Distributions

    

From net investment income

    

Class A

     (6 )     (20 )

Class B

     (185 )     (203 )

From net realized gain

    

Class A

     (31 )     (36 )

Class B

     (1,809 )     (988 )
               

Net decrease in net assets from distributions

     (2,031 )     (1,247 )
               

Share Transactions

    

Net increase (decrease) in net assets from share transactions

     (11,669 )     (9,691 )
               

Total Net Increase (Decrease) in Net Assets

     (14,769 )     (9,209 )

Net Assets

    

Beginning of period

     34,087       43,296  
               

End of period

  $ 19,318     $ 34,087  
               

Undistributed (overdistributed) net investment income included in net assets

   $ 47     $ 185  

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   11

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Financial Highlights - Class A

For a Share Outstanding Throughout Each Period.

 

          Fiscal Year Ended October 31,  
     2008*     2007     2006     2005      2004      2003**  
             

Net Asset Value, Beginning of Period

   $ 10.80     $ 10.64     $ 10.43     $ 10.48      $ 10.31      $ 10.00  
                                                 

Income From Operations

              

Net investment income (loss) (a)

     .06       .13       .12       .05        .02        .02  

Net realized and unrealized gain (loss)

     (.26 )     .42       .43       (.02 )      .25        .29  
                                                 

Total income (loss) from operations

     (.20 )     .55       .55       .03        .27        .31  
                                                 

Distributions

              

From net investment income

     (.11 )     (.14 )     —       —        —        — (f)

From net realized gain

     (.59 )     (.25 )     (.34 )     (.08 )      (.10 )      —  
                                                 

Total distributions

     (.70 )     (.39 )     (.34 )     (.08 )      (.10 )      —  
                                                 

Net Asset Value, End of Period

   $ 9.90     $ 10.80     $ 10.64     $ 10.43      $ 10.48      $ 10.31  
                                                 

Total Return (%) (b)(c)

     (1.83 )     5.37       5.35       .31        2.61        3.17  

Ratios/Supplemental Data:

              

Net Assets, end of period (in thousands)

     373       1,408       1,548       1,883        2,567        3,521  

Ratios to average net assets (%):

              

Operating expenses, net (d)(e)

     1.94       2.10       2.10       2.09        2.10        2.02  

Operating expenses, gross (d)

     2.73       2.77       2.60       2.36        2.34        2.24  

Net investment income (loss) (d)(e)

     1.10       1.24       1.14       .46        .19        .27  

Portfolio turnover rate (%) (b)

     294       155       74       79        81        38  

 

* For the period ended April 30, 2008 (Unaudited).
** For the period January 21, 2003 (commencement of operations) to October 31, 2003.
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) Excludes the effects of sales charges. If sales charges were included, the total return would be lower.
(d) The ratios for periods less than one year are annualized.
(e) May reflect amounts waived and/or reimbursed by RIMCo and/or RFSC, and custody credit arrangements.
(f) Less than $.01 per share.

 

See accompanying notes which are an integral part of the financial statements.

 

12   Financial Highlights - Class A

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Financial Highlights - Class B

For a Share Outstanding Throughout Each Period.

 

          Fiscal Year Ended October 31,  
     2008*     2007     2006     2005      2004      2003**  
             

Net Asset Value, Beginning of Period

   $ 10.50     $ 10.35     $ 10.22     $ 10.35      $ 10.26      $ 10.00  
                                                 

Income From Operations

              

Net investment income (loss) (a)

     .02       .05       .04       (.03 )      (.06 )      (.04 )

Net realized and unrealized gain (loss)

     (.25 )     .41       .43       (.02 )      .25        .30  
                                                 

Total income (loss) from operations

     (.23 )     .46       .47       (.05 )      .19        .26  
                                                 

Distributions

              

From net investment income

    (.06 )     (.06 )     —       —        —        — (f)

From net realized gain

     (.59 )     (.25 )     (.34 )     (.08 )      (.10 )      —  
                                                 

Total distributions

     (.65 )     (.31 )     (.34 )     (.08 )      (.10 )      —  
                                                 

Net Asset Value, End of Period

   $ 9.62     $ 10.50     $ 10.35     $ 10.22      $ 10.35      $ 10.26  
                                                 

Total Return (%) (b)(c)

     (2.17 )     4.51       4.65       (.47 )      1.83        2.60  

Ratios/Supplemental Data:

              

Net Assets, end of period (in thousands)

     18,945       32,679       41,748       56,526        73,969        86,075  

Ratios to average net assets (%):

             

Operating expenses, net (d)(e)

     2.69       2.85       2.85       2.84        2.85        2.79  

Operating expenses, gross (d)

     3.47       3.52       3.35       3.11        3.09        3.01  

Net investment income (loss) (d)(e)

     .37       .49       .40       (.29 )      (.56 )      (.49 )

Portfolio turnover rate (%) (b)

     294       155       74       79        81        38  

 

* For the period ended April 30, 2008 (Unaudited).
** For the period January 21, 2003 (commencement of operations) to October 31, 2003.
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) Excludes the effects of sales charges. If sales charges were included, the total return would be lower.
(d) The ratios for periods less than one year are annualized.
(e) May reflect amounts waived and/or reimbursed by RIMCo and/or RFSC and custody credit arrangements.
(f) Less than $.01 per share.

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights - Class B   13

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements — April 30, 2008 (Unaudited)

 

 

 

1.   Organization

Russell Investment Company (the “Investment Company” or “RIC”) is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on one of these Funds (the “Fund”). The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated August 19, 2002, as amended. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.

Through December 31, 2007, Russell Investment Management Company (“RIMCo”) was the adviser, administrator and transfer agent of the Fund, providing advisory, administrative and transfer agency services to the Fund. Effective January 1, 2008, RIMCo is the Fund’s adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Fund’s administrator and transfer agent. There was no change in the services provided to the Fund or in aggregate fees paid by the Fund for advisory, administrative and transfer agency services.

The Fund had an Offering Period, a Guarantee Period and a Post Guarantee Period. Shares of the Fund were offered during the Offering Period but were not offered during the Guarantee Period, except in connection with reinvestment of distributions and dividends. During the Guarantee Period, the Fund sought some capital growth, while seeking to preserve principal. Provided that all dividends and distributions received from the Fund had been reinvested and no shares had been redeemed by a shareholder, the Fund guaranteed that the amount distributed, if any, to each shareholder at the end of the Guarantee Period (3/3/08) would be no less than the value of that shareholder’s investment as of the inception of the Guarantee Period less certain expenses. The Fund’s Guarantee was backed by an unconditional and irrevocable financial guarantee from Ambac Assurance Corporation (“Ambac”), a financial guarantor and an operating subsidiary of Ambac Financial Group, Inc., pursuant to a financial guarantee insurance policy issued by Ambac for the benefit of the shareholders of the Fund. The Fund paid to Ambac a fee equal to 0.75% per annum of the average daily net assets of the Fund during the Guarantee Period for providing the financial guarantee insurance policy. If the value of a shareholder’s account was less than the Guaranteed Amount on the Guarantee Maturity Date, the Fund would have been unable to meet its obligations under the Guarantee. If the Fund had been unable to meet its obligations under the Guarantee on the Guarantee Maturity Date, the insurance policy would have required Ambac to pay the Fund an amount sufficient to ensure that all shareholders would be able to redeem their shares on the Guarantee Maturity Date for an amount equal to their respective Guaranteed Amounts on the Guarantee Maturity Date. During the Post Guarantee Period, which commenced immediately following the Guarantee Period, the Fund seeks capital growth. The following table presents the time periods of the Fund’s three phases:

 

Offering Period

    01/21/03 - 02/27/03

Guarantee Period

    03/03/03 - 03/03/08

Post Guarantee Period Commencement

    03/04/08

The Guarantee Maturity Date was March 3, 2008, with a guarantee amount for Class A Shares was $8.56 and for Class B Shares was $8.64. The actual Net Asset Value for Class A and B Shares on March 3, 2008 was $9.60 and $9.34 respectively.

 

2.   Significant Accounting Policies

The Fund’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by the Fund in the preparation of its financial statements.

Security Valuation

The Fund values portfolio securities according to Board-approved securities valuation procedures, including market value procedures, fair value procedures and pricing services. Money market fund securities are priced using the amortized cost method of valuation, as are debt obligation securities maturing within 60 days at the time of purchase, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.

 

14   Notes to Financial Statements

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Ordinarily, the Fund values each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Generally, Fund securities are valued at the close of the market on which they are traded as follows:

 

  •  

US listed equities; equity and fixed income options: Last sale price; last bid price if no last sale price;

 

  •  

US over-the-counter equities: Official closing price; last bid price if no closing price;

 

  •  

Listed ADRs/GDRs: Last sale price; last bid price if no last sale price;

 

  •  

Municipal bonds, US bonds: Evaluated bid price; broker quote if no evaluated bid price;

 

  •  

Futures: Settlement price.

 

  •  

Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier.

 

  •  

Short-term investments purchased by the Fund and maturing within 60 days of the date of purchase are valued at “amortized cost” unless the Board of Trustees determines that amortized cost does not represent fair value.

 

  •  

The value of swap agreements is equal to the Fund’s obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts.

If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Fund will use the security’s fair value, as determined in accordance with the fair value procedures. This generally means that equity securities and fixed income securities listed and traded principally on any national securities exchange are valued on the basis of the last sale price or, lacking any sales, at the closing bid price, on the primary exchange in which the security is traded. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market on which they are traded, but rather may be priced by another method that the Fund’s Board of Trustees believes reflects fair value. The use of fair value pricing by the Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Fund shares and daily movement of the benchmark index if the index is valued using another pricing method.

This policy is intended to assure that the Fund’s net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Fund shares is determined may be reflected in the calculation of net asset values for the Fund when the Fund deems that the particular event or circumstance would materially affect the Fund’s net asset value. Investments in frequently traded exchange listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the US securities market (defined in the Fair Value Procedures as the movement by any two of four major US Indexes greater than a certain percentage) or other significant event; a company development; a natural disaster; or an armed conflict.

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Fund’s financial statement disclosure.

Investment Transactions

Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost incurred by each money manager within a particular Fund.

Investment Income

Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis. All premiums and discounts, including original issue discounts, are amortized/accreted using the interest method.

 

Notes to Financial Statements   15

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Federal Income Taxes

Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.

It is the Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income provision was required for the Fund.

The Financial Accounting Standards Board (FASB) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Fund adopted the provisions of FIN 48 on November 1, 2007. Management has reviewed the Fund’s tax positions for all open tax years, and concluded that adoption had no effect on the Fund’s financial position or results of operations. At April 30, 2008, the Fund had recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expects to take in future tax returns.

The Fund files a U. S. tax return. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal year ending October 31, 2005 through October 31, 2007, no examinations are in progress or anticipated at this time. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Dividends and Distributions to Shareholders

Income, dividends and capital gain distributions, if any, are recorded on the ex-dividend date. Dividends and capital gain distributions are generally declared and paid annually. An additional distribution may be paid by the Fund to avoid imposition of federal income tax on any remaining undistributed capital gains and net investment income.

The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) on investments for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP primarily relate to investments in futures, wash sale deferrals, and certain securities sold at a loss.

Expenses

The Fund will pay its own expenses other than those expressly assumed by RIMCo or RFSC. Most expenses can be directly attributed to the individual Fund. Expenses which cannot be directly attributed to a specific Fund are allocated among all Funds principally based on their relative net assets.

Class Allocation

The Fund presented herein offers the following classes of shares: Class A and Class B. All share classes have identical voting, dividend, liquidation and other rights and the same terms and conditions. The separate classes of shares differ principally in the applicable sales charges, distribution fees and shareholder servicing fees. Class B Shares were purchased at net asset value without paying an initial sales charge. However, if a shareholder redeemed his or her Class B Shares within five years of the purchase date, the shareholder paid a deferred sales charge calculated as a percentage of net asset value at time of purchase. Shareholders of each class bear certain expenses that pertain to that particular class. Realized and unrealized gains (losses), net investment income, and expenses with the exception of class level expenses, are allocated daily to each class of Shares based upon the relative proportion of net assets of each class. Class B Shares, along with their pro rata reinvested dividend shares, automatically convert to Class A Shares eight years after purchase.

Derivatives

To the extent permitted by the investment objectives, restrictions and policies set forth in the Fund’s Prospectus and Statement of Additional Information, the Fund may participate in various derivative-based transactions. Derivative securities are instruments or agreements whose value is derived from an underlying security or index. They include options, futures, swaps, forwards, structured notes and stripped securities. These instruments offer unique characteristics and risks that assist the Fund in meeting its investment strategies.

 

16   Notes to Financial Statements

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

The Fund typically uses derivatives in three ways: exposing cash reserves to markets, hedging and return enhancement. The Fund may pursue its strategy of being fully invested by exposing cash reserves to the performance of appropriate markets by purchasing securities and/or derivatives. This is intended to cause the Fund to perform as though cash reserves were actually invested in those markets. Hedging is also used by the Fund to limit or control risks, such as adverse movements in exchange rates and interest rates. Return enhancement can be accomplished through the use of derivatives in a Fund. By purchasing certain instruments, the Fund may more effectively achieve the desired portfolio characteristics that assist the Fund in meeting its investment objectives. Depending on how the derivatives are structured and utilized, the risks associated with them may vary widely. These risks are generally categorized as market risk, liquidity risk and counterparty or credit risk.

Options

The Fund may purchase and sell (write) call and put options on securities and securities indices, provided such options are traded on a national securities exchange or in an over-the-counter market.

When the Fund writes a covered call or a put option, an amount equal to the premium received by the Fund is included in the Fund’s Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. The Fund receives a premium on the sale of a call option but gives up the opportunity to profit from any increase in stock value above the exercise price of the option, and when the Fund writes a put option it is exposed to a decline in the price of the underlying security.

If an option which the Fund has written either expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss, if the cost of a closing purchase transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. When a put option which a Fund has written is exercised, the amount of the premium originally received will reduce the cost of the security which a Fund purchases upon exercise of the option. Realized gains (losses) on purchased options are included in net realized gain (loss) from investments.

The Fund’s use of written options involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts of these instruments reflect the extent of the Fund’s exposure to market risk. The risks may be caused by an imperfect correlation between movements in the price of the instruments and the price of the underlying securities and interest rates.

Futures Contracts

The Fund utilizes futures contracts to manage allocations between equity and fixed-income weightings. The face or contract amounts of these instruments reflect the extent of the Fund’s exposure to market risk. The primary risks associated with the use of futures contracts are an imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts, and the possibility of an illiquid market. Upon entering into a futures contract, the Fund is required to deposit with a broker an amount, termed the initial margin, which typically represents 5% of the purchase price indicated in the futures contract. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial settlement value are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized.

Swap Agreements

The Fund may enter into several different types of agreements including interest rate and index swaps.

The Fund may enter into index swap agreements as an additional hedging strategy for cash reserves held by the Fund or to effect investment transactions consistent with the Fund’s investment objectives and strategies. Index swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard Index swap transaction, the two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular investments or instruments. The returns to be exchanged between the parties are calculated with respect to a “notional amount” (i.e. a specified dollar amount that is hypothetically invested in a “basket” of securities representing a particular index). Amounts paid to and received from the swap counterparties representing capital appreciation and depreciation on the underlying securities and accrued interest expense and interest income are recorded as net realized gain (loss). The Fund is exposed to credit risk in the event of non-performance by the swap counterparties; however, the Fund does not anticipate non-performance by the counterparties.

 

Notes to Financial Statements   17

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

The Fund may enter into interest rate swap agreements, on either an asset-based or liability basis, depending on whether they are hedging their assets or their liabilities, and will usually enter into interest rate swaps on a net basis, i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. When the Fund engages in an interest rate swap, it exchanges its obligations to pay or rights to receive payments for the obligations or rights to receive payments of another party (i.e., an exchange of floating rate payments for fixed rate payments).

The Fund expects to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of their portfolios or to protect against any increase in the price of securities they anticipate purchasing at a later date. The net amount of the excess, if any, of the Fund’s obligations over their entitlements with respect to each interest rate swap will be accrued on a daily basis and an amount of cash or liquid high-grade debt securities having an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by the Fund’s custodian. To the extent that the Fund enters into interest rate swaps on other than a net basis, the amount maintained in a segregated account will be the full amount of the Fund’s obligations, if any, with respect to such swaps, accrued on a daily basis. If there is a default by the other party to such a transaction, the Fund will have contractual remedies pursuant to the agreement related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid.

Guarantees

In the normal course of business the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund expects the risk of loss to be remote.

 

3.   Investment Transactions

Securities

During the period ended April 30, 2008, purchases and sales of investment securities (excluding US Government and Agency obligations, short-term investments, options, futures and repurchase agreements) were $34,953,821 and $47,328,529, respectively.

Custodian

The Fund has entered into arrangements with its Custodian whereby custody credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund’s expenses. During the period ended April 30, 2008, the Fund’s custodian fees were reduced $3,305 under these arrangements which are included in expense reductions on the Statement of Operations.

Brokerage Commissions

The Funds effect certain transactions through BNY ConvergeFX Group — LJR Recapture Services (“LJR”) and its global network of correspondent brokers. LJR is a registered broker and is not an affiliate of the Funds or RIMCo. Trades placed through LJR and its correspondents are used (i) to obtain research services for RIMCo to assist it in its capacity as a manager of managers and (ii) to generate commission rebates to the Funds on whose behalf the trades were made. For purposes of trading to obtain research services for RIMCo or to generate commission rebates to the Funds, the Funds’ money managers are requested to and RIMCo may, with respect to transactions it places, effect transactions with or through LJR and its correspondents or other brokers only to the extent that the Funds will receive competitive execution, price and commissions. In addition, RIMCo recommends targets for the amount of trading that money managers allocate through LJR based upon asset class, investment style and other factors. Research services provided to RIMCo by LJR or other brokers include performance measurement statistics, fund analytics systems and market monitoring systems. Research services will be generally obtained from unaffiliated third parties at market rates. Research provided to RIMCo may benefit the particular Funds generating the trading activity and may also benefit other Funds within the Investment Company and other funds and clients managed or advised by RIMCo or its affiliates. Similarly, the Funds may benefit from research provided with respect to trading by those other funds and clients.

LJR may also rebate to the Funds a portion of commissions earned on certain trading by the Funds through LJR and their correspondents in the form of commission recapture. Commission recapture is paid solely to those Funds generating the

 

18   Notes to Financial Statements

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

applicable trades. Commission recapture is generated on the instructions of the Soft Dollar Committee once RIMCo’s research budget has been met, as determined annually in the Soft Dollar Committee budgeting process.

Effective January 1, 2008, transactions effected through LJR are used solely to generate commission rebates to the Funds and no longer to obtain research services.

Additionally, the Fund paid brokerage commissions to non-affiliated brokers who provided brokerage and research services to the Adviser.

 

4.   Related Party Transactions, Fees and Expenses

Adviser and Administrator

Through December 31, 2007, RIMCo was the adviser and administrator of all of the Funds which comprise the Investment Company. Effective January 1, 2008, RIMCo advises the Fund and RFSC is the Fund’s administrator. RFSC is a wholly-owned subsidiary of RIMCo. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides money manager evaluation to RIMCo.

The Fund is permitted to invest its cash reserves (i.e., cash awaiting investment or cash held to meet redemption requests or to pay expenses) in the RIC Money Market Fund. As of April 30, 2008, $1,702,000 of the RIC Money Market Fund’s net assets represents investments by this Fund.

The advisory and administrative fees are based upon the average daily net assets of the Fund and the rate specified in the table below. The advisory and administrative fees are payable monthly and total $121,947 and $6,929, respectively, for the period ended April 30, 2008.

 

     Annual Rate  
      Advisory        Administrative  

Guarantee Period

    0.88 %      0.05 %

Post Guarantee Period

    0.88        0.05  

Pursuant to an expense limitation agreement (the “Expense Limitation Agreement”) and subject to possible reimbursement to the investment adviser within three years, the adviser had contractually agreed to waive, during the Guarantee Period ended March 3, 2008, up to the full amount of its 0.93% combined advisory and administrative fees and to reimburse the Fund to the extent that expenses for Class A and Class B Shares exceeded 2.10% and 2.85%, respectively, of average net assets on an annualized basis. Certain expenses that were not covered by the Expense Limitation Agreement, such as extraordinary expenses and other expenses not incurred in the ordinary course of the Fund’s business, would have reduced the Guaranteed Amount.

To the extent fees were waived by the Adviser during the Guarantee Period, the Fund may reimburse the Adviser for any reductions in the Fund’s expenses during the three years following the reduction if such reimbursement is requested by the Adviser, if such reimbursement can be achieved within the specified expense limitation and if the Board of Trustees approves the reimbursement as not inconsistent with the best interest of the Fund. For the periods ended April 30, 2008, October 31, 2007 and October 31, 2006, the Adviser has not recouped waivers of $81,808, $255,941 and $249,134, respectively.

The adviser was paid an advisory fee equal to 0.88% of the Fund’s average daily net assets during the Guarantee Period. From March 3, 2008 to April 30, 2008, the investment adviser waived 0.13% of its 0.88% advisory fee and then reimbursed the Fund for other direct Fund-level expenses to the extent that direct Fund-level expenses exceed 1.18% of the average daily net assets of the Fund on an annual basis. Direct Fund-level expenses do not include 12b-1 fees, shareholder services fees or the expenses of other investment companies in which the Fund invests which are borne indirectly by the Fund. Beginning on May 1, 2008 the investment adviser will waive 0.13% of its 0.88% advisory fee and then reimburse the Fund for other direct Fund-level expenses to the extent that direct Fund-level expenses exceed 0.96% of the average daily net assets of the Fund on an annual basis. Direct Fund-level expenses do not include 12b-1 fees, shareholder services fees or the expenses of other investment companies in which the Fund invests which are borne indirectly by the Fund. The total amount of the waiver for the period ended April 30, 2008 was $105,049.

Transfer and Dividend Disbursing Agent

Through December 31, 2007 RIMCo was the Transfer and Disbursing Agent. Effective January 1, 2008 RFSC serves as Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RIMCo and RFSC are paid a fee for transfer

 

Notes to Financial Statements   19

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

agency and dividend disbursing services provided to the Fund. RIMCo and RFSC retain a portion of this fee for its services provided to the Fund and pay the balance to unaffiliated agents who assist in providing these services. Total fees for the Fund presented herein for the period ended April 30, 2008 were $34,644.

Distributor and Shareholder Servicing

On June 2, 2008, Russell Fund Distributors, Inc., a wholly owned subsidiary of RIMCo, changed its name to Russell Financial Services, Inc. (the “Distributor”) and serves as distributor for RIC, pursuant to the Distribution Agreement with the Investment Company.

The Investment Company has a Distribution Plan pursuant to Rule 12b-1 (the “Plan”) under the 1940 Act. Under this Plan, the Investment Company is authorized to make payments to the Distributor or any Selling Agents, as defined in the Plan, for sales support services provided and related expenses incurred which were primarily intended to result in the sale of the Class B Shares subject to the Distribution Plan. The 12b-1 distribution payments shall not exceed 0.75% of the average daily net assets of a Fund’s Class B Shares on an annual basis.

In addition, the Investment Company has adopted a Shareholder Services Plan (the “Services Plan”) under which the Fund may make payments to the Distributor or any Servicing Agent for any activities or expenses primarily intended to assist, support or service the Servicing Agents’ clients who beneficially own Class A or Class B Shares of the Fund. The shareholder servicing payments shall not exceed 0.25% of the average daily net assets of this Fund’s Class A and Class B Shares on an annual basis.

Pursuant to the rules of the Financial Industry Regulatory Authority (“FINRA”), the aggregate initial sales charges, deferred sales charges and asset-based sales charges on Shares of the Fund may not exceed 7.25% of total gross sales, subject to certain exclusions. This 7.25% limitation is imposed at the class level on each of the Class A Shares and the Class B Shares of the Fund rather than on a per shareholder basis. Therefore, long-term shareholders of the Class A and Class B Shares may pay more than the economic equivalent of the maximum sales charges permitted by FINRA.

Accrued Fees Payable to Affiliates

Accrued fees payable to affiliates for the period ended April 30, 2008 were as follows:

 

Advisory fees

    $  24,233

Administration fees

      818

Distribution fees

      12,029

Shareholder servicing fees

      4,132

Transfer agent fees

      8,965
      
   $ 50,177
      

Affiliated Brokerage Commissions

The Funds will effect certain transactions through Russell Implementation Services Inc. (“RIS”) and its global network of unaffiliated correspondent brokers. RIS is a registered broker and investment adviser and an affiliate of RIMCo. Trades placed through RIS and its correspondents are made (i) to manage trading associated with changes in managers, rebalancing across existing managers, cash flows and other portfolio transitions or (ii) to execute portfolio securities transactions for each Fund’s assets that RIMCo determines not to allocate to money managers and for each Fund’s cash reserves.

Board of Trustees

The Russell Fund Complex consists of Russell Investment Company, which has 44 Funds, and RIF, which has nine Funds. Each of the Trustees is a Trustee for both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 ($52,000 prior to January 1, 2008) per year, $6,500 for each regular quarterly meeting attended in person, $2,500 ($2,000 prior to January 1, 2008) for each special meeting attended in person, and $2,500 ($2,000 prior to January 1, 2008) for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 ($500 prior to January 1, 2008) fee for attending quarterly and special meetings and a $500 fee for attending committee meetings by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also

 

20   Notes to Financial Statements

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee chair is paid a fee of $6,000 per year. The chair person of the Board receives additional annual compensation of $52,000.

 

5.   Federal Income Taxes

The Fund may have net tax basis capital loss carryforwards which may be applied against any realized net taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. At October 31, 2007, the Fund had no capital loss carryforwards.

At April 30, 2008, the cost of investments, net unrealized appreciation (depreciation) for income tax purposes were as follows:

 

Cost of Investments

    $  18,742,857  
        

Unrealized Appreciation

      1,186,883  

Unrealized Depreciation

      (504,971 )
        

Net Unrealized Appreciation (Depreciation)

    $ 681,912  
        

 

6.   Fund Share Transactions (amounts in thousands)

Share transactions for the periods ended April 30, 2008 and October 31, 2007 were as follows:

 

     Shares     Dollars  
     2008     2007     2008     2007  
        

Class A

         

Proceeds from shares sold

    —     —     $ —     $ —  

Proceeds from reinvestment of distributions

    4     5       35       56  

Payments for shares redeemed

    (97 )   (20 )     (998 )     (216 )
                            

Net increase (decrease)

    (93 )   (15 )     (963 )     (160 )
                            
        

Class B

         

Proceeds from shares sold

    —     —     $ —     $ —  

Proceeds from reinvestment of distributions

    192     110       1,860       1,118  

Payments for shares redeemed

    (1,336 )   (1,034 )     (12,566 )     (10,649 )
                            

Net increase (decrease)

    (1,144 )   (924 )     (10,706 )     (9,531 )
                            

Total increase (decrease)

    (1,237 )   (939 )   $ (11,669 )   $ (9,691 )
                            

 

7.   Interfund Lending Program

The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Funds may borrow money from the RIC Money Market Fund for temporary purposes. All such borrowing and lending will be subject to a participating Fund’s fundamental investment limitations. The RIC Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves. The Investment Company Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Money Market Fund could result in a lost investment opportunity or additional borrowing costs. For the period ended April 30, 2008, the Funds did not borrow through the interfund lending program.

 

8.   Record Ownership

As of April 30, 2008, the Fund had no shareholders of record with greater than 10% of the total outstanding shares.

 

Notes to Financial Statements   21

Table of Contents

Russell Investment Company (“RIC”)

Russell Flex Equity Fund

Basis for Approval of Investment Advisory Contracts

 

 

 

Approval of Investment Advisory Agreement

The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the “RIMCo Agreement”) and the portfolio management contract (the “portfolio management contract”) with the sole money manager of the Fund, Jacobs Levy Equity Management, Inc. (the “Equity Money Manager”), at a meeting held on April 22, 2008. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Fund, sales and redemptions of the Fund’s shares, and the management of the Fund by RIMCo. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Fund; and (2) information (the “Third-Party Information”) received from an independent, nationally recognized provider of investment company information comparing the performance of the Fund and its operating expenses over various periods of time with other peer funds (“Comparable Funds”) not managed by RIMCo, believed by the provider to be generally comparable in investment objectives and size to the Fund. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Fund and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Fund discussing the legal standards for their consideration of the proposed continuances of the RIMCo Agreement and the portfolio management contract and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.

On April 21, 2008, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or Fund management were present. At the April 22 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contract with management and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Fund and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.

In evaluating the RIMCo Agreement and the portfolio management contract, the Board considered that, during the five-year period ended March 3, 2008 (the “Guarantee Period”), the Fund’s investment objective was “seeks some capital growth, while seeking to preserve principal.” During the Guarantee Period, the Fund maintained a financial guarantee insurance agreement (the “financial guarantee insurance agreement”) that, among other things, prescribed the Fund’s allocation to equity securities. On March 3, 2008, the financial guarantee insurance agreement terminated and the Fund’s investment objective changed to “seek capital growth.”

The Board also considered that the Fund, in employing a manager-of-managers method of investment, operates in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which in turn employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. At times, RIMCo has engaged multiple unaffiliated money managers for the Fund, although the Fund’s portfolio currently is managed by the Equity Money Manager.

The Board considered that RIMCo (rather than the Equity Money Manager or any other money manager) is responsible under the RIMCo Agreement for determining, implementing and maintaining the investment program for the Fund. During any periods in which multiple money managers have managed the Fund, assets of the Fund were allocated among the money managers. RIMCo directly manages the investment of the Fund’s cash reserves. RIMCo also may manage directly any portion of the Fund’s assets that RIMCo determines not to allocate to the money managers and portions of the Fund during transitions between money managers. Assets are managed directly by RIMCo pursuant to authority provided by the RIMCo Agreement.

RIMCo is responsible for selecting, subject to Board approval, one or more money managers for the Fund and, if more than one money manager has been selected, for actively managing allocations and reallocations of its assets among the money managers. RIMCo’s goal is to construct and manage diversified portfolios in a risk aware manner. Each money manager for the Fund, including the Equity Money Manager, in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Fund assigned to it by RIMCo (each, a “segment”) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon its selection of portfolio securities and the money manager’s specified role in the Fund. RIMCo is responsible for communicating performance expectations to each money manager; supervising compliance by each money manager with the Fund’s investment objective and policies; authorizing each money manager to engage in certain investment strategies for the Fund; and recommending annually to the Board whether each

 

22   Basis for Approval of Investment Advisory Contracts

Table of Contents

Russell Investment Company (“RIC”)

Russell Flex Equity Fund

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

portfolio management contract should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of each portfolio management contract, RIMCo is responsible for recommending to the Board the restructuring of Fund segments among money managers (if more than one money manager has been selected by RIMCo) and additions of new money managers or replacements of existing money managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each money manager intended to capitalize on the strengths of that money manager or, if more than one money manager has been selected by RIMCo, to coordinate the investment activities of the money managers for the Fund in a complementary manner. Therefore, RIMCo’s selection of each money manager is made not only on the basis of performance considerations but anticipated compatibility with any other money managers in the Fund. In light of the foregoing, the overall performance of the Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Fund’s investment program, structuring the Fund, selecting an effective money manager with a particular investment style or sub-style for the Fund or, where multiple money managers have been selected, a Fund segment that is complementary to the styles of the money managers of any other Fund segments, and allocating assets among money managers in a manner designed to achieve the objectives of the Fund.

The Board also considered that the prospectus for the Fund and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for the Fund, rather than the investment selection role of the Fund’s money managers, including the Equity Money Manager, and describe the manner in which the Fund operates so that investors may take that information into account when deciding to purchase shares of the Fund.

The Board also considered the special expertise of RIMCo with respect to the manager-of-managers structure of the Fund and the likelihood that, at the current expense ratio of the Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of the Fund selected by shareholders in purchasing their shares, especially in light of the Fund’s small size.

In addition to the recent changes in the Fund’s investment program following the end of the Guarantee Period and the general factors relating to the manager-of-managers structure of the Fund, the Trustees considered, with respect to the Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:

 

1. The nature, scope and quality of the services provided to the Fund by RIMCo;

 

2. The advisory fee paid by the Fund to RIMCo and the fact that it encompasses all investment advisory fees paid by the Fund, including the fees for the Equity Money Manager and any other money managers of the Fund that may be engaged;

 

3. Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund, including any administrative, transfer agent, cash management and securities lending fees, soft dollar arrangements and commissions in connection with portfolio securities transactions;

 

4. Information provided by RIMCo as to expenses incurred by the Fund; and

 

5. Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund.

At the April 22 Board meeting, RIMCo and management discussed the reasonableness of the Fund’s investment advisory fees.

With regard to fees and expenses, the Third-Party Information showed that the Fund’s contractual management fees and total expenses relative to its Comparable Funds were ranked in the fifth quintile for the 1-year period ended December 31, 2007 but the Fund’s net management fee (i.e., giving effect to any voluntary fee waivers implemented by RIMCo and the investment advisors to the Comparable Funds) relative to the Comparable Funds was ranked in the first quintile. In assessing the Fund’s contractual fees and total expenses, the Board considered that maintaining the financial guarantee insurance agreement involved fees and expenses that put the Fund at a relative disadvantage to its Comparable Funds, which were not subject to such fees and expenses. At the April 22 Board meeting, RIMCo agreed to implement an additional non-contractual waiver/reimbursement of 0.22% per annum of average daily net assets for the Fund. This new waiver/reimbursement, effective May 1, 2008, is voluntary and may be terminated by RIMCo at any time. This new waiver/reimbursement was reviewed and considered appropriate in light of the changes in the Fund’s investment objective following expiration of the Guarantee Period and termination of the financial insurance guarantee agreement, based upon funds with similar investment objectives to that of the Fund after the Guarantee Maturity Date.

At the April 22 Board meeting, the Board considered for the Fund whether economies of scale have been realized and whether the fees for the Fund appropriately reflect or should be revised to reflect any such economies. The Board noted that Fund assets have

 

Basis for Approval of Investment Advisory Contracts   23

Table of Contents

Russell Investment Company (“RIC”)

Russell Flex Equity Fund

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

been declining rather than increasing. In addition, the Board noted that the Fund’s net management fee relative to its Comparable Funds was ranked in the first quintile, according to the Third-Party Information. The Board determined that, after giving effect to any applicable fee or expense cap waivers or reimbursements (including the new waivers/reimbursements described above), the level and structure of the management fee for the Fund is appropriate. The Trustees considered that fees payable to RIMCo by institutional clients with investment objectives similar to those of funds under its supervision are lower, and may, in some cases, be substantially lower than the rates paid by such funds. The Trustees considered the differences in the scope of services RIMCo provides to institutional clients and the funds under its supervision and that institutional clients have fewer administrative needs than the Fund and the other funds supervised by the Board. RIMCo has noted that since the funds supervised by the Board must constantly issue and redeem their shares, they are more difficult to manage than institutional accounts, where assets are relatively stable. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.

On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years or presented at the April 22 Board meeting by RIMCo, the Board, in respect of the Fund, found, after giving effect to existing and proposed applicable waivers and/or reimbursements and considering differences in the composition and investment strategies of its Comparable Funds, (1) the advisory fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided to the Fund; (2) the relative expense ratio of the Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.

The Board also concluded that the performance of the Fund, in light of its particular circumstances, supported continuation of the RIMCo Agreement. The Third-Party Information showed that the Fund’s performance relative to its Comparable Funds was ranked in the fifth quintile for the 1- and 3-year periods ended December 31, 2007. In explaining the Fund’s performance, RIMCo noted in the Agreement Renewal Materials that, as discussed above, the Fund’s investment objective during the Guarantee Period the Fund’s investment objective was “seeks some capital growth, while seeking to preserve principal.” During the Guarantee Period, the Fund generally had a lower allocation to equities than its Comparable Funds because of the market environments at the time of the Fund’s “inception.” The Fund’s allocation to equities during the Guarantee Period was not determined by RIMCo, but rather was prescribed contractually by the terms of the financial guarantee insurance agreement. According to RIMCo, the Comparable Funds were not required to abide by predetermined allocation rules or maintain financial guarantees and incur related fees.

In evaluating performance, the Board considered the Fund’s absolute performance and its performance relative to appropriate benchmarks and indices, as well as its Comparable Funds. The Board also considered RIMCo’s investment strategy of managing the Fund in a risk-aware manner. Lastly, the Board noted that, with the expiration of the Guarantee Period and termination of the financial guarantee insurance agreement, the investment program of the Fund has changed subsequent to the periods covered by the Third-Party Information regarding Fund performance.

After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Fund and its shareholders and voted to approve the continuation of the Agreement.

At the April 22 Board meeting, with respect to the evaluation of the terms of the portfolio management contract with the Equity Money Manager, the Board received and considered information from RIMCo reporting for the Money Manager, among other things, the Equity Money Manager’s performance over various periods; RIMCo’s assessment of the performance of the Equity Money Manager; any significant business relationships between the Equity Money Manager and RIMCo or Russell Financial Services, Inc., the Fund’s underwriter; and RIMCo’s recommendation to retain the Equity Money Manager at the current fee rate. RIMCo has advised the Board that it does not regard money manager profitability as relevant to its evaluation of the portfolio management contracts with money managers because the willingness of money managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by money managers, including the Equity Money Manager, to other clients; and RIMCo believes that the fee agreed upon with the Equity Money Manager is reasonable in light of the anticipated quality of investment advisory services to be rendered. The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the aggregate investment advisory fees paid by the Fund and the fact that the Equity Money Manager’s fee is paid by RIMCo.

Based substantially upon RIMCo’s recommendations, together with the information received from RIMCo in support of its recommendation at the April 22 meeting, the Board concluded that the fee paid to the Equity Money Manager is reasonable in light

 

24   Basis for Approval of Investment Advisory Contracts

Table of Contents

Russell Investment Company (“RIC”)

Russell Flex Equity Fund

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

of the quality of the investment advisory services provided and that continuation of the portfolio management agreement with the Equity Money Manager would be in the best interests of the Fund and its shareholders.

In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management agreement with the Equity Money Manager that was all-important or controlling and each Trustee attributed different weights to the various factors considered.

 

Basis for Approval of Investment Advisory Contracts   25

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Shareholder Requests for Additional Information — April 30, 2008 (Unaudited)

 

 

 

A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each fiscal year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, (iii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iv) at the Securities and Exchange Commission’s public reference room.

The Board has delegated to RIMCo, as RIC’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Fund may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Fund maintains a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Fund. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Fund’s Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

Ambac Assurance Corporation, a Wisconsin domiciled stock insurance company (the “Insurer”), was the issuer of a financial guarantee policy for the benefit of shareholders of the Fund. If the Fund was unable to meet its obligations under the guarantee on the Guarantee Maturity Date, the insurance policy required Ambac to pay the Fund an amount sufficient to ensure that all shareholders would be able to redeem their shares on the Guarantee Maturity Date for an amount equal to their respective guaranteed amounts on the Guarantee Maturity Date. Ambac is a wholly-owned subsidiary of AFG, a publicly-held company. AFG is subject to the informational requirements of the Securities Exchange Act, and in accordance therewith files reports and other information with the SEC. Such reports and other information, including AFG’s most recent annual or quarterly report, may be inspected and copied at the public reference facilities maintained by the Securities and Exchange Commission.

To reduce expenses, we may mail only one copy of the Fund’s prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution.

Some Financial Intermediaries may offer electronic delivery of the Fund’s prospectus and annual and semiannual reports. Please contact your Financial Intermediary for further details.

 

26   Shareholder Requests for Additional Information

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INTERESTED TRUSTEES

#Greg J. Stark

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

  

President and Chief Executive Officer since 2004

 

Trustee since 2007

  

Appointed until successor is duly elected and qualified

 

Until successor is chosen and qualified by Trustees

  

•  President and CEO RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”)

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director, of Individual Investor Services, FRC

•  2000 to 2004 Managing Director, Sales and Client Service, RIMCo

   53   None

INDEPENDENT TRUSTEES

Thaddas L. Alston

Born April 7, 1945

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2006   Appointed until successor is duly elected and qualified  

•  Senior Vice President, Larco Investments, Ltd. (real estate firm)

   53   None
             

Kristianne Blake,

Born January 22, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman since 2005

  

Appointed until successor is duly elected and qualified

 

Annual

  

•  Director and Chairman of the Audit Committee, Avista Corp.

•  Trustee and Chairman of the Operations Committee, Principal Funds and Principal Variable Contracts Funds

•  Regent, University of Washington

•  President, Kristianne Gates Blake, P.S. (accounting services)

•  February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF

•  Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999–2006

   53  

•  Director, Avista Corp; (electric utilities)

•  Trustee, Principal Funds (investment company);

•  Trustee, Principal Variable Contracts Funds (investment company)

             

Daniel P. Connealy

Born June 6, 1946

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2003

 

Chairman of Audit Committee since 2005

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc.

•  2001–2003, Vice President and Chief Financial Officer, Janus Capital Group Inc.

   53   None

 

# Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee.

 

* Each Trustee is subject to mandatory retirement at age 72.

 

Disclosure of Information about Fund Directors   27

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INDEPENDENT TRUSTEES (continued)

Jonathan Fine

Born July 8, 1954

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2004   Appointed until successor is duly elected and qualified  

•  President and Chief Executive Officer, United Way of King County, WA

   53   None
             

Raymond P. Tennison, Jr.

Born December 21, 1955

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman of the Nominating and Governance Committee since 2007

  

Appointed until successor is duly elected and qualified.

 

Appointed until successor is duly elected and qualified

  

•  President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company

   53   None
             

Jack R. Thompson,

Born March 21, 1949

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2005   Appointed until successor is duly elected and qualified  

•  September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds

•  September 2007 to present, Director, LifeVantage Corporation (health products company)

•  May 1999 to May 2003, President, Chief Executive Officer and Director, Berger Financial Group, LLC

•  May 1999 to May 2003, President and Trustee, Berger Funds

   53  

•  Director, Sparx Asia Funds (investment company)

 

•  Director, LifeVantage Corporation (health products company)

             

Julie W. Weston,

Born October 2, 1943

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2002

 

Chairperson of the Investment Committee since 2006

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  Retired

   53   None

 

28   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

TRUSTEES EMERITUS

*George F. Russell, Jr.,

Born July 3, 1932

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus and Chairman Emeritus since 1999   Until resignation or removal  

•  Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)); and RIMCo

•  Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”))

•  Chairman, Sunshine Management Services, LLC (investment adviser)

  53   None
             

Paul E. Anderson,

Born October 15, 1931

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2007   Five year term  

•  President, Anderson Management Group LLC (private investments consulting)

•  February 2002 to June 2005, Lead Trustee, RIC and RIF

•  Trustee of RIC and RIF until 2006

•  Chairman of the Nominating and Governance Committee 2006

   53   None
             

William E. Baxter,

Born June 8, 1925

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2004   Five year term  

•  Retired since 1986

•  Trustee of RIC and RIF until 2004

   53   None
             

Lee C. Gingrich,

Born October 6, 1930

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2006   Five year term  

•  Retired since 1995

•  Trustee of RIC and RIF until 2005

•  Chairman of the Nominating and Governance Committee 2001-2005

   53   None
             

Eleanor W. Palmer,

Born May 5, 1926

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee Emeritus

since 2004

   Five year term  

•  Retired since 1981

•  Trustee of RIC and RIF until 2004

   53  

None

 

* Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF.

 

Disclosure of Information about Fund Directors   29

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years

OFFICERS

        

Cheryl Wichers

Born December 16, 1966

 

909 A Street

Tacoma, Washington 98402-1616

   Chief Compliance Officer since 2005   Until removed by Independent Trustees  

•  Chief Compliance Officer, RIC

•  Chief Compliance Officer, RIF

•  Chief Compliance Officer, RIMCo

•  Chief Compliance Officer, RFSC

•  April 2002-May 2005, Manager, Global Regulatory Policy

         

Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington 98402-1616

   President and Chief Executive Officer since 2004   Until successor is chosen and qualified by Trustees  

•  President and CEO, RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board, President and CEO, RFSC

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director of Individual Investor Services, FRC

•  2000 to 2004, Managing Director, Sales and Client Service, RIMCo

         

Mark E. Swanson,

Born November 26, 1963

 

909 A Street

Tacoma, Washington 98402-1616

   Treasurer and Chief Accounting Officer since 1998   Until successor is chosen and qualified by Trustees  

•  Treasurer, Chief Accounting Officer and CFO, RIC and RIF

•  Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc.

•  Treasurer and Principal Accounting Officer, SSgA Funds

         

Peter Gunning,

Born February 22, 1967

 

909 A Street

Tacoma, Washington 98402-1616

   Chief Investment Officer since 2008  

Until removed by

Trustees

  

•  Chief Investment Officer, RIC, RIF

•  1996 to 2008 Chief Investment Officer, Russell, Asia Pacific

         

Gregory J. Lyons,

Born August 24, 1960

 

909 A Street

Tacoma, Washington 98402-1616

   Secretary since 2007   Until successor is chosen and qualified by Trustees  

•  Associate General Counsel and Assistant Secretary FRC and RIA

•  Director and Secretary, RIMCo, RFSC and Russell Financial Services, Inc.

•  Secretary and Chief Legal Counsel, RIC and RIF

 

30   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Russell Flex Equity Fund

Matter Submitted to a Vote of Shareholders — April 30, 2008 (Unaudited)

 

 

 

There was a Special Meeting in Lieu of Annual Meeting of Shareholders of the Russell Investment Company (“the Investment Company”) held at 909 A Street, Tacoma, Washington on October 3, 2007, which was adjourned until October 25, 2007. The October 25, 2007 meeting was adjourned until November 9, 2007.

THE FOLLOWING MATTERS WERE VOTED UPON AT THE MEETING

The result of each vote accompany the description of each matter

1. Election of Trustees.

Vote:

 

     For         Against

Greg J. Stark

    6,275,366,242.443       238,500,496.197

Thaddas L. Alston

    6,275,783,094.828       238,083,643.812

Kristianne Blake

    6,438,961,734.968       74,905,003.672

Daniel P. Connealy

    6,441,243,550.495       72,623,188.145

Jonathan Fine

    6,434,295,116.486       79,571,622.154

Raymond P. Tennison, Jr.

    6,439,922,643.918       73,944,094.722

Jack R. Thompson

    6,441,278,003.434       72,588,735.206

Julie W. Weston

    6,440,367,146.888       73,499,591.752

2. Approve Changes to the Liquidation Provision of the Master Trust Agreement.

Vote:

 

     For    Against    Abstain

Russell Multi-Manager Principal Protected Fund*

    1,187,048.000    109,196.000    100,481.000

3. Approve Changes to the Reorganization Provision of the Master Trust Agreement.

Vote:

 

     For    Against    Abstain

Russell Multi-Manager Principal Protected Fund*

    1,199,888.000    103,878.000    92,959.000

* On March 4, 2008, the name of the Fund changed to the Russell Flex Equity Fund.

 

Matter Submitted to a Vote of Shareholders   31

Table of Contents

Russell Flex Equity Fund

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Interested Trustees

Greg J. Stark

Independent Trustees

Thaddas L. Alston

Kristianne Blake

Daniel P. Connealy

Jonathan Fine

Raymond P. Tennison, Jr.

Jack R. Thompson

Julie W. Weston

Trustees Emeritus

George F. Russell, Jr.

Paul E. Anderson

William E. Baxter

Lee C. Gingrich

Eleanor W. Palmer

Officers

Greg J. Stark, President and Chief Executive Officer

Cheryl Wichers, Chief Compliance Officer

Peter Gunning, Chief Investment Officer

Mark E. Swanson, Treasurer and Chief Accounting Officer

Gregory J. Lyons, Secretary

Adviser

Russell Investment Management Company

909 A Street

Tacoma, WA 98402

Administrator and Transfer and Dividend Disbursing Agent

Russell Fund Services Company

909 A Street

Tacoma, WA 98402

Custodian

State Street Bank and Trust Company

Josiah Quincy Building

200 Newport Avenue

North Quincy, MA 02171

Office of Shareholder Inquiries

909 A Street

Tacoma, WA 98402

(800) 787-7354

Legal Counsel

Dechert LLP

200 Clarendon Street, 27th Floor

Boston, MA 02116-5021

Distributor

Russell Financial Services, Inc.

909 A Street

Tacoma, WA 98402

Money Managers as of April 30, 2008

Jacobs Levy Equity Management, Inc., Florham Park, NJ


 

This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Company. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

 

32   Adviser, Money Managers and Service Providers

Table of Contents

 

Russell Investment Company    909 A Street      800-787-7354
   Tacoma, Washington 98402      Fax: 253-591-3495
        www.russell.com

 

LOGO

LOGO

LOGO

36-08-095

Table of Contents

LOGO

 

2008 SEMIANNUAL REPORT

 

 

LifePoints® Funds

 

 

APRIL 30, 2008

 

FUND    SHARE CLASS

Conservative Strategy Fund

   

A, C, E, R1, R2, R3, S

Moderate Strategy Fund

   

A, C, E, R1, R2, R3, S

Balanced Strategy Fund

   

A, C, E, R1, R2, R3, S

Growth Strategy Fund

   

A, C, E, R1, R2, R3, S

Equity Growth Strategy Fund

   

A, C, E, R1, R2, R3, S

2010 Strategy Fund

   

A, E, R1, R2, R3, S

2015 Strategy Fund

   

R1, R2, R3

2020 Strategy Fund

   

A, E, R1, R2, R3, S

2025 Strategy Fund

   

R1, R2, R3

2030 Strategy Fund

    A, E, R1, R2, R3, S

2035 Strategy Fund

    R1, R2, R3

2040 Strategy Fund

    A, E, R1, R2, R3, S

2045 Strategy Fund

    R1, R2, R3

2050 Strategy Fund

    R1, R2, R3

In Retirement Fund

    R1, R2, R3
2017 Retirement Distribution Fund — A Shares   
2017 Accelerated Distribution Fund — A Shares   
2027 Extended Distribution Fund — A Shares   
2017 Retirement Distribution Fund — S Shares   
2017 Accelerated Distribution Fund — S Shares   
2027 Extended Distribution Fund — S Shares   

 

LOGO

Table of Contents

 

 

Russell Investment Company

Russell Investment Company is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on twenty-one of these Funds.

Table of Contents

 

Russell Investment Company

LifePoints® Funds

Semiannual Report

April 30, 2008 (Unaudited)

Table of Contents

 

     Page
Conservative Strategy Fund    3
Moderate Strategy Fund    6
Balanced Strategy Fund    9
Growth Strategy Fund    12
Equity Growth Strategy Fund    15
2010 Strategy Fund    18
2015 Strategy Fund    21
2020 Strategy Fund    23
2025 Strategy Fund    26
2030 Strategy Fund    28
2035 Strategy Fund    31
2040 Strategy Fund    33
2045 Strategy Fund    36
2050 Strategy Fund    38
In Retirement Fund    40
2017 Retirement Distribution Fund — A Shares    42
2017 Accelerated Distribution Fund — A Shares    44
2027 Extended Distribution Fund — A Shares    46
2017 Retirement Distribution Fund — S Shares    48
2017 Accelerated Distribution Fund — S Shares    50
2027 Extended Distribution Fund — S Shares    52
Statements of Assets and Liabilities    54
Statements of Operations    62
Statements of Changes in Net Assets    66
Financial Highlights    74
Notes to Financial Highlights    94
Notes to Financial Statements    95
Basis for Approval of Investment Advisory Contracts    128
Shareholder Requests for Additional Information    132
Disclosure of Information about Fund Directors    133
Adviser, Money Managers and Service Providers    137

Table of Contents

 

Russell Investment Company - LifePoints® Funds.

Copyright © Russell Investments 2008. 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 distributed through Russell Financial Services, Inc. (effective June 2, 2008, the name changed from Russell Fund Distributors, Inc.) member FINRA, part of Russell Investments.

Russell Investments and Standard & Poor’s Corporation are the owners of the trademarks, service marks, and copyrights related to their respective indexes. Index performance is not indicative of the performance of any specific investment. Indexes are not managed and may not be invested in directly.

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. Current to the most recent month-end performance data may be obtained by visiting www.russell.com/us/fundperformance.

Table of Contents

Russell Investment Company

Conservative Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 994.30    $ 1,023.62

Expenses Paid During Period*

    $ 1.24    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 990.20    $ 1,019.89

Expenses Paid During Period*

    $ 4.95    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 993.40    $ 1,023.62

Expenses Paid During Period*

    $ 1.24    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Conservative Strategy Fund   3

Table of Contents

Russell Investment Company

Conservative Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 995.30    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 993.50    $ 1,023.62

Expenses Paid During Period*

    $ 1.24    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 992.30    $ 1,022.38

Expenses Paid During Period*

    $ 2.48    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 995.40    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

4   Conservative Strategy Fund

Table of Contents

Russell Investment Company

Conservative Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 99.8%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 79.8%

        

Multistrategy Bond Fund

    29,139,182      298,385

Short Duration Bond Fund

    5,260,736      99,428
         
        397,813
         

Domestic Equities - 14.0%

        

Diversified Equity Fund

    652,369      29,833

Quantitative Equity Fund

    692,926      24,855

Real Estate Securities Fund

    352,181      14,901
         
        69,589
         

International Equities - 6.0%

        

Global Equity Fund

    1,005,708      9,987

International Securities Fund

    291,578      19,935
         
        29,922
         
Total Investments - 99.8%        

(identified cost $479,323)

         497,324
Other Assets and Liabilities, Net - 0.2%         768
         
Net Assets - 100.0%         498,092
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of
Net
Assets
    

Bonds

      79.8

Domestic Equities

      14.0

International Equities

      6.0
      

Total Investments

      99.8

Other Assets and Liabilities, Net

      0.2
      
     100.0
      

 

See accompanying notes which are an integral part of the financial statements.

 

Conservative Strategy Fund   5

Table of Contents

Russell Investment Company

Moderate Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 965.60    $ 1,023.62

Expenses Paid During Period*

    $ 1.22    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 961.50    $ 1,019.89

Expenses Paid During Period*

    $ 4.88    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 964.80    $ 1,023.62

Expenses Paid During Period*

    $ 1.22    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

6   Moderate Strategy Fund

Table of Contents

Russell Investment Company

Moderate Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 965.90    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 965.80    $ 1,023.62

Expenses Paid During Period*

    $ 1.22    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 964.60    $ 1,022.38

Expenses Paid During Period*

    $ 2.44    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 966.80    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Moderate Strategy Fund   7

Table of Contents

Russell Investment Company

Moderate Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares     

Market
Value

$

       

Investments - 99.8%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 59.9%

        

Multistrategy Bond Fund

    72,207,463      739,404
         

Domestic Equities - 25.9%

        

Diversified Equity Fund

    2,694,819      123,234

Quantitative Equity Fund

    3,435,575      123,234

Real Estate Securities Fund

    873,794      36,971

Special Growth Fund

    851,456      36,970
         
        320,409
         

International Equities - 14.0%

        

Emerging Markets Fund

    1,115,240      24,647

Global Equity Fund

    3,723,084      36,970

International Securities Fund

    1,622,212      110,911
         
        172,528
         
Total Investments - 99.8%        

(identified cost $1,176,964)

         1,232,341
Other Assets and Liabilities, Net - 0.2%         2,474
         
Net Assets - 100.0%         1,234,815
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories     

% of

Net

Assets

    

Bonds

      59.9

Domestic Equities

      25.9

International Equities

      14.0
      

Total Investments

      99.8

Other Assets and Liabilities, Net

      0.2
      
     100.0
      

 

See accompanying notes which are an integral part of the financial statements.

 

8   Moderate Strategy Fund

Table of Contents

Russell Investment Company

Balanced Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 940.90    $ 1,023.62

Expenses Paid During Period*

    $ 1.21    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 937.60    $ 1,019.89

Expenses Paid During Period*

    $ 4.82    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 941.00    $ 1,023.62

Expenses Paid During Period*

    $ 1.21    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Balanced Strategy Fund   9

Table of Contents

Russell Investment Company

Balanced Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 942.30    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 940.50    $ 1,023.62

Expenses Paid During Period*

    $ 1.21    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 939.90    $ 1,022.38

Expenses Paid During Period*

    $ 2.41    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 942.30    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

10   Balanced Strategy Fund

Table of Contents

Russell Investment Company

Balanced Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 99.9%

        

Other Russell Investment Company

Series Mutual Funds

Bonds - 40.0%

        

Multistrategy Bond Fund

    223,565,667      2,289,312
         

Domestic Equities - 38.9%

        

Diversified Equity Fund

    18,782,230      858,911

Quantitative Equity Fund

    23,935,082      858,552

Real Estate Securities Fund

    6,713,428      284,045

Special Growth Fund

    5,275,289      229,053
         
        2,230,561
         

International Equities - 21.0%

     

Emerging Markets Fund

    7,791,093      172,183

Global Equity Fund

    23,084,737      229,232

International Securities Fund

    11,723,013      801,502
         
        1,202,917
         
Total Investments - 99.9%        

(identified cost $5,410,680)

         5,722,790
Other Assets and Liabilities, Net - 0.1%         4,230
         
Net Assets - 100.0%         5,727,020
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets
  

Bonds

    40.0

Domestic Equities

    38.9

International Equities

    21.0
    

Total Investments

    99.9

Other Assets and Liabilities, Net

    0.1
    
   100.0
    

 

See accompanying notes which are an integral part of the financial statements.

 

Balanced Strategy Fund   11

Table of Contents

Russell Investment Company

Growth Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 916.70    $ 1,023.62

Expenses Paid During Period*

    $ 1.19    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 913.10    $ 1,019.89

Expenses Paid During Period*

    $ 4.76    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 916.80    $ 1,023.62

Expenses Paid During Period*

    $ 1.19    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

12   Growth Strategy Fund

Table of Contents

Russell Investment Company

Growth Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 917.50    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 916.30    $ 1,023.62

Expenses Paid During Period*

    $ 1.19    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 915.30    $ 1,022.38

Expenses Paid During Period*

    $ 2.38    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 917.50    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Growth Strategy Fund   13

Table of Contents

Russell Investment Company

Growth Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares     

Market
Value

$

       

Investments - 99.9%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 19.7%

        

Multistrategy Bond Fund

    78,729,662      806,192
         

Domestic Equities - 52.9%

        

Diversified Equity Fund

    18,767,717      858,248

Quantitative Equity Fund

    22,624,396      811,537

Real Estate Securities Fund

    6,036,411      255,400

Special Growth Fund

    5,617,500      243,912
         
        2,169,097
         

International Equities - 27.3%

        

Emerging Markets Fund

    7,583,081      167,586

Global Equity Fund

    24,872,260      246,981

International Securities Fund

    10,302,442      704,378
         
        1,118,945
         
Total Investments - 99.9%        

(identified cost $3,906,413)

         4,094,234
Other Assets and Liabilities, Net - 0.1%         2,667
         
Net Assets - 100.0%         4,096,901
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories   

% of

Net

Assets

  

Bonds

    19.7

Domestic Equities

    52.9

International Equities

    27.3
    

Total Investments

    99.9

Other Assets and Liabilities, Net

    0.1
    
   100.0
    

 

See accompanying notes which are an integral part of the financial statements.

 

14   Growth Strategy Fund

Table of Contents

Russell Investment Company

Equity Growth Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 892.20    $ 1,023.62

Expenses Paid During Period*

    $ 1.18    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class C

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 889.10    $ 1,019.89

Expenses Paid During Period*

    $ 4.70    $ 5.02

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.00% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 892.50    $ 1,023.62

Expenses Paid During Period*

    $ 1.18    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Equity Growth Strategy Fund   15

Table of Contents

Russell Investment Company

Equity Growth Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 893.60    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 892.00    $ 1,023.62

Expenses Paid During Period*

    $ 1.18    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 890.50    $ 1,022.38

Expenses Paid During Period*

    $ 2.35    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 892.90    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

16   Equity Growth Strategy Fund

Table of Contents

Russell Investment Company

Equity Growth Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares     

Market
Value

$

       

Investments - 99.9%

        

Other Russell Investment Company

Series Mutual Funds

     

Domestic Equities - 64.9%

        

Diversified Equity Fund

    11,822,956      540,664

Quantitative Equity Fund

    14,482,315      519,481

Real Estate Securities Fund

    3,436,640      145,404

Special Growth Fund

    3,352,538      145,567
         
        1,351,116
         

International Equities - 35.0%

        

Emerging Markets Fund

    4,711,913      104,133

Global Equity Fund

    14,664,424      145,618

International Securities Fund

    6,997,710      478,433
         
        728,184
         
Total Investments - 99.9%        

(identified cost $1,969,053)

         2,079,300
Other Assets and Liabilities, Net - 0.1%         1,737
         
Net Assets - 100.0%         2,081,037
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories   

% of

Net

Assets

  

Domestic Equities

    64.9

International Equities

    35.0
    

Total Investments

    99.9

Other Assets and Liabilities, Net

    0.1
    
   100.0
    

 

See accompanying notes which are an integral part of the financial statements.

 

Equity Growth Strategy Fund   17

Table of Contents

Russell Investment Company

2010 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 971.40    $ 1,023.62

Expenses Paid During Period*

    $ 1.23    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 971.70    $ 1,023.62

Expenses Paid During Period*

    $ 1.23    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 972.70    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

18   2010 Strategy Fund

Table of Contents

Russell Investment Company

2010 Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 972.00    $ 1,023.62

Expenses Paid During Period*

    $ 1.23    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 970.40    $ 1,022.38

Expenses Paid During Period*

    $ 2.45    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 973.60    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

2010 Strategy Fund   19

Table of Contents

Russell Investment Company

2010 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

Bonds - 64.0%

        

Fixed Income III Fund

    2,493,021      25,952

Short Duration Bond Fund

    91,507      1,730
         
        27,682
         

Domestic Equities - 23.6%

        

Equity I Fund

    126,506      3,928

Equity II Fund

    45,820      1,040

Equity Q Fund

    122,916      3,932

Real Estate Securities Fund

    30,542      1,292
         
        10,192
         

International Equities - 12.4%

        

Emerging Markets Fund

    31,444      695

Global Equity Fund

    122,173      1,213

International Fund

    83,133      3,462
         
        5,370
         
Total Investments - 100.0%        

(identified cost $43,599)

         43,244
Other Assets and Liabilities, Net - 0.0%         5
         
Net Assets - 100.0%         43,249
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Bonds

    64.0  

Domestic Equities

    23.6  

International Equities

    12.4  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

20   2010 Strategy Fund

Table of Contents

Russell Investment Company

2015 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 April 1, 2008 to April 30, 2008.

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.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,024.00    $ 1,004.10

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,024.00    $ 1,003.89

Expenses Paid During Period*

    $ 0.21    $ 0.21

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,024.00    $ 1,003.69

Expenses Paid During Period*

    $ 0.41    $ 0.41

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

2015 Strategy Fund   21

Table of Contents

Russell Investment Company

2015 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

Bonds - 54.0%

        

Fixed Income III Fund

    24,462      255
         

Domestic Equities - 29.9%

        

Equity I Fund

    1,747      54

Equity II Fund

    686      16

Equity Q Fund

    1,695      54

Real Estate Securities Fund

    401      17
         
        141
         

International Equities - 16.1%

        

Emerging Markets Fund

    491      11

Global Equity Fund

    1,567      16

International Fund

    1,189      49
         
        76
         
Total Investments - 100.0%        

(identified cost $465)

         472
Other Assets and Liabilities,
Net - 0.0%		         —
         
Net Assets - 100.0%         472
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories     

% of

Net

Assets

  
    

Bonds

      54.0  

Domestic Equities

      29.9  

International Equities

      16.1  
        

Total Investments

      100.0  

Other Assets and Liabilities, Net

      — *
        
     100.0  
        

 

* Less than .05% of net assets

 

See accompanying notes which are an integral part of the financial statements.

 

22   2015 Strategy Fund

Table of Contents

Russell Investment Company

2020 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 943.50    $ 1,023.62

Expenses Paid During Period*

    $ 1.21    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 943.50    $ 1,023.62

Expenses Paid During Period*

    $ 1.21    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 945.30    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

2020 Strategy Fund   23

Table of Contents

Russell Investment Company

2020 Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 943.70    $ 1,023.62

Expenses Paid During Period*

    $ 1.21    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 942.20    $ 1,022.38

Expenses Paid During Period*

    $ 2.41    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 944.50    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed by investment advisor. Without the waiver and/or reimbursement, expenses would have been higher.

 

24   2020 Strategy Fund

Table of Contents

Russell Investment Company

2020 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 42.1%

        

Fixed Income III Fund

    4,209,904      43,825
         

Domestic Equities - 37.6%

        

Equity I Fund

    485,672      15,080

Equity II Fund

    179,360      4,070

Equity Q Fund

    471,413      15,080

Real Estate Securities Fund

    117,427      4,969
         
        39,199
         

International Equities - 20.3%

        

Emerging Markets Fund

    137,026      3,028

Global Equity Fund

    409,005      4,061

International Fund

    337,454      14,052
         
        21,141
         
Total Investments - 100.0%        

(identified cost $104,582)

         104,165

Other Assets and Liabilities,

Net - 0.0%

         9
         
Net Assets - 100.0%         104,174
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Bonds

    42.1  

Domestic Equities

    37.6  

International Equities

    20.3  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2020 Strategy Fund   25

Table of Contents

Russell Investment Company

2025 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 April 1, 2008 to April 30, 2008.

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.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,033.00    $ 1,004.10

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,032.00    $ 1,003.89

Expenses Paid During Period*

    $ 0.21    $ 0.21

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,032.00    $ 1,003.69

Expenses Paid During Period*

    $ 0.42    $ 0.41

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

26   2025 Strategy Fund

Table of Contents

Russell Investment Company

2025 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

Bonds - 26.2%

        

Fixed Income III Fund

    37,105      386
         

Domestic Equities - 48.6%

        

Equity I Fund

    8,919      277

Equity II Fund

    3,493      79

Equity Q Fund

    8,660      277

Real Estate Securities Fund

    1,955      83
         
        716
         

International Equities - 25.2%

        

Emerging Markets Fund

    2,481      55

Global Equity Fund

    8,020      79

International Fund

    5,707      238
         
        372
         
Total Investments - 100.0%        

(identified cost $1,463)

         1,474

Other Assets and Liabilities,

Net - 0.0%

         —
         
Net Assets - 100.0%         1,474
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Bonds

    26.2  

Domestic Equities

    48.6  

International Equities

    25.2  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2025 Strategy Fund   27

Table of Contents

Russell Investment Company

2030 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 900.20    $ 1,023.62

Expenses Paid During Period*

    $ 1.18    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 900.90    $ 1,023.62

Expenses Paid During Period*

    $ 1.18    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 902.00    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

28   2030 Strategy Fund

Table of Contents

Russell Investment Company

2030 Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 900.40    $ 1,023.62

Expenses Paid During Period*

    $ 1.18    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 899.90    $ 1,022.38

Expenses Paid During Period*

    $ 2.36    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 901.20    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

2030 Strategy Fund   29

Table of Contents

Russell Investment Company

2030 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 10.0%

        

Fixed Income III Fund

    834,797      8,690
         

Domestic Equities - 59.0%

        

Equity I Fund

    640,783      19,897

Equity II Fund

    247,828      5,623

Equity Q Fund

    621,918      19,895

Real Estate Securities Fund

    132,889      5,622
         
        51,037
         

International Equities - 31.0%

        

Emerging Markets Fund

    176,651      3,904

Global Equity Fund

    566,507      5,625

International Fund

    415,764      17,313
         
        26,842
         
Total Investments - 100.0%        

(identified cost $86,289)

         86,569

Other Assets and Liabilities,

Net - 0.0%

         2
         
Net Assets - 100.0%         86,571
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Bonds

    10.0  

Domestic Equities

    59.0  

International Equities

    31.0  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

30   2030 Strategy Fund

Table of Contents

Russell Investment Company

2035 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 April 1, 2008 to April 30, 2008.

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.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,040.00    $ 1,004.10

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,039.00    $ 1,003.89

Expenses Paid During Period*

    $ 0.21    $ 0.21

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,039.00    $ 1,003.69

Expenses Paid During Period*

    $ 0.42    $ 0.41

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

2035 Strategy Fund   31

Table of Contents

Russell Investment Company

2035 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

Bonds - 10.1%

        

Fixed Income III Fund

    12,649      132
         

Domestic Equities - 58.8%

        

Equity I Fund

    9,687      301

Equity II Fund

    3,742      85

Equity Q Fund

    9,375      300

Real Estate Securities Fund

    1,984      84
         
        770
         

International Equities - 31.1%

        

Emerging Markets Fund

    2,690      59

Global Equity Fund

    8,609      85

International Fund

    6,329      264
         
        408
         
Total Investments - 100.0%        

(identified cost $1,296)

         1,310

Other Assets and Liabilities,

Net - 0.0%

         —
         
Net Assets - 100.0%         1,310
         

 

 

Presentation of Portfolio Holdings — April 30, (Unaudited)

 

Categories   

% of

Net

Assets

  
  

Bonds

    10.1  

Domestic Equities

    58.8  

International Equities

    31.1  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

32   2035 Strategy Fund

Table of Contents

Russell Investment Company

2040 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 889.90    $ 1,023.62

Expenses Paid During Period*

    $ 1.17    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 889.40    $ 1,023.62

Expenses Paid During Period*

    $ 1.17    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 891.10    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

2040 Strategy Fund   33

Table of Contents

Russell Investment Company

2040 Strategy Fund

Shareholder Expense Example, continued — April 30, 2008 (Unaudited)

 

 

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 889.70    $ 1,023.62

Expenses Paid During Period*

    $ 1.17    $ 1.26

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 888.90    $ 1,022.38

Expenses Paid During Period*

    $ 2.35    $ 2.51

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 891.10    $ 1,024.86

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

34   2040 Strategy Fund

Table of Contents

Russell Investment Company

2040 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$		  
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 10.0%

        

Fixed Income III Fund

    577,971      6,017  
           

Domestic Equities - 59.0%

        

Equity I Fund

    443,751      13,778  

Equity II Fund

    171,647      3,895  

Equity Q Fund

    430,754      13,780  

Real Estate Securities Fund

    92,016      3,893  
           
        35,346  
           

International Equities - 31.0%

        

Emerging Markets Fund

    122,147      2,700  

Global Equity Fund

    392,282      3,895  

International Fund

    287,871      11,987  
           
        18,582  
           
Total Investments - 100.0%        

(identified cost $59,575)

         59,945  
Other Assets and Liabilities,
Net - (0.0%)		         (9 )
           
Net Assets - 100.0%         59,936  
           

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of
Net
Assets		  
    

Bonds

      10.0  

Domestic Equities

      59.0  

International Equities

      31.0  
        

Total Investments

      100.0  

Other Assets and Liabilities, Net

      (— )*
        
     100.0  
        

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2040 Strategy Fund   35

Table of Contents

Russell Investment Company

2045 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 April 1, 2008 to April 30, 2008.

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.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,040.00    $ 1,004.10

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,040.00    $ 1,003.89

Expenses Paid During Period*

    $ 0.21    $ 0.21

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return

before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,040.00    $ 1,003.69

Expenses Paid During Period*

    $ 0.42    $ 0.41

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

36   2045 Strategy Fund

Table of Contents

Russell Investment Company

2045 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 10.0%

        

Fixed Income III Fund

    10,306      107
         

Domestic Equities - 59.0%

        

Equity I Fund

    7,947      247

Equity II Fund

    3,073      69

Equity Q Fund

    7,714      247

Real Estate Securities Fund

    1,648      70
         
        633
         

International Equities - 31.0%

        

Emerging Markets Fund

    2,185      48

Global Equity Fund

    7,023      70

International Fund

    5,153      215
         
        333
         
Total Investments - 100.0%        

(identified cost $1,059)

         1,073
Other Assets and Liabilities,
Net - 0.0%		         —
         
Net Assets - 100.0%         1,073
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of
Net
Assets		  
    

Bonds

      10.0  

Domestic Equities

      59.0  

International Equities

      31.0  
        

Total Investments

      100.0  

Other Assets and Liabilities, Net

      — *
        
     100.0  
        

 

* Less than .05% of net assets

 

See accompanying notes which are an integral part of the financial statements.

 

2045 Strategy Fund   37

Table of Contents

Russell Investment Company

2050 Strategy Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 April 1, 2008 to April 30, 2008.

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.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,051.00    $ 1,004.10

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,051.00    $ 1,003.89

Expenses Paid During Period*

    $ 0.21    $ 0.21

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,050.00    $ 1,003.69

Expenses Paid During Period*

    $ 0.42    $ 0.41

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

38   2050 Strategy Fund

Table of Contents

Russell Investment Company

2050 Strategy Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares     

Market

Value
$

       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 9.6%

        

Fixed Income III Fund

    2,893      30
         

Domestic Equities - 59.0%

        

Equity I Fund

    2,347      73

Equity II Fund

    904      20

Equity Q Fund

    2,264      72

Real Estate Securities Fund

    489      21
         
        186
         

International Equities - 31.4%

        

Emerging Markets Fund

    660      15

Global Equity Fund

    2,092      21

International Fund

    1,520      63
         
        99
         
Total Investments - 100.0%        

(identified cost $301)

         315
Other Assets and Liabilities,
Net - 0.0%		         —
         
Net Assets - 100.0%         315
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Bonds

    9.6  

Domestic Equities

    59.0  

International Equities

    31.4  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2050 Strategy Fund   39

Table of Contents

Russell Investment Company

In Retirement Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 April 1, 2008 to April 30, 2008.

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.

 

Class R1

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,020.00    $ 1,004.10

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R2

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,020.00    $ 1,003.89

Expenses Paid During Period*

    $ 0.21    $ 0.21

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class R3

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

April 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,020.00    $ 1,003.69

Expenses Paid During Period*

    $ 0.41    $ 0.41

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.50% (representing the 30-day period annualized), multiplied by the average account value over the period, multiplied by 30/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

40   In Retirement Fund

Table of Contents

Russell Investment Company

In Retirement Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 67.7%

        

Fixed Income III Fund

    17,587      183

Short Duration Bond Fund

    1,287      24
         
        207
         

Domestic Equities - 21.2%

        

Equity I Fund

    817      25

Equity II Fund

    244      6

Equity Q Fund

    788      25

Real Estate Securities Fund

    216      9
         
        65
         

International Equities - 11.1%

        

Emerging Markets Fund

    172      4

Global Equity Fund

    815      8

International Fund

    518      22
         
        34
         
Total Investments - 100.0%        

(identified cost $303)

         306

Other Assets and Liabilities,

Net - 0.0%

         —
         
Net Assets - 100.0%         306
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Bonds

    67.7  

Domestic Equities

    21.2  

International Equities

    11.1  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

In Retirement Fund   41

Table of Contents

Russell Investment Company

2017 Retirement Distribution Fund — A Shares

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 January 1, 2008 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

January 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 965.00    $ 1,015.70

Expenses Paid During Period*

    $ 0.81    $ 0.83

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 121-day period annualized), multiplied by the average account value over the period, multiplied by 121/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

42   2017 Retirement Distribution Fund — A Shares

Table of Contents

Russell Investment Company

2017 Retirement Distribution Fund — A Shares

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

Domestic Equities - 64.9%

        

Diversified Equity Fund

    548      25

Quantitative Equity Fund

    669      24

Real Estate Securities Fund

    160      7

Special Growth Fund

    155      7
         
        63
         

International Equities - 35.1%

        

Emerging Markets Fund

    224      5

Global Equity Fund

    688      7

International Securities Fund

    325      22
         
        34
         
Total Investments - 100.0%        

(identified cost $98)

         97

Other Assets and Liabilities,

Net - 0.0%

         —
         
Net Assets - 100.0%         97
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories   

% of

Net

Assets

  
  

Domestic Equities

    64.9  

International Equities

    35.1  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2017 Retirement Distribution Fund — A Shares   43

Table of Contents

Russell Investment Company

2017 Accelerated Distribution Fund — A Shares

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 January 1, 2008 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

January 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 952.10    $ 1,015.70

Expenses Paid During Period*

    $ 0.81    $ 0.83

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 121-day period annualized), multiplied by the average account value over the period, multiplied by 121/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

44   2017 Accelerated Distribution Fund — A Shares

Table of Contents

Russell Investment Company

2017 Accelerated Distribution Fund — A Shares

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

Bonds - 75.8%

        

Multistrategy Bond Fund

    7,006      72
         

Domestic Equities - 15.8%

        

Diversified Equity Fund

    134      6

Quantitative Equity Fund

    163      6

Real Estate Securities Fund

    39      2

Special Growth Fund

    38      1
         
        15
         

International Equities - 8.4%

        

Emerging Markets Fund

    55      1

Global Equity Fund

    168      2

International Securities Fund

    79      5
         
        8
         
Total Investments - 100.0%        

(identified cost $95)

         95

Other Assets and Liabilities,

Net - 0.0%

         —
         
Net Assets - 100.0%         95
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories   

% of

Net

Assets

  
  

Bonds

    75.8  

Domestic Equities

    15.8  

International Equities

    8.4  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2017 Accelerated Distribution Fund — A Shares   45

Table of Contents

Russell Investment Company

2027 Extended Distribution Fund — A Shares

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 January 1, 2008 to April 30, 2008.

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.

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

January 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 944.60    $ 1,015.70

Expenses Paid During Period*

    $ 0.80    $ 0.83

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.25% (representing the 121-day period annualized), multiplied by the average account value over the period, multiplied by 121/366 (to reflect the period since commencement of operations). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

46   2027 Extended Distribution Fund — A Shares

Table of Contents

Russell Investment Company

2027 Extended Distribution Fund — A Shares

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 68.1%

        

Multistrategy Bond Fund

    6,244      64
         

Domestic Equities - 21.3%

        

Diversified Equity Fund

    174      8

Quantitative Equity Fund

    211      8

Real Estate Securities Fund

    51      2

Special Growth Fund

    49      2
         
        20
         

International Equities - 10.6%

        

Emerging Markets Fund

    71      1

Global Equity Fund

    217      2

International Securities Fund

    103      7
         
        10
         
Total Investments - 100.0%        

(identified cost $95)

         94
Other Assets and Liabilities,
Net - 0.0%		         —
         
Net Assets - 100.0%         94
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Bonds

    68.1  

Domestic Equities

    21.3  

International Equities

    10.6  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2027 Extended Distribution Fund — A Shares   47

Table of Contents

Russell Investment Company

2017 Retirement Distribution Fund — S Shares

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 January 1, 2008 to April 30, 2008.

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.

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

January 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 938.00    $ 1,016.53

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

48   2017 Retirement Distribution Fund — S Shares

Table of Contents

Russell Investment Company

2017 Retirement Distribution Fund — S Shares

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 100.0%

        

Other Russell Investment Company

Series Mutual Funds

     

Domestic Equities - 64.5%

        

Diversified Equity Fund

    1,134      52

Quantitative Equity Fund

    1,386      49

Real Estate Securities Fund

    326      14

Special Growth Fund

    321      14
         
        129
         

International Equities - 35.5%

        

Emerging Markets Fund

    457      10

Global Equity Fund

    1,415      14

International Securities Fund

    677      47
         
        71
         
Total Investments - 100.0%        

(identified cost $202)

         200
Other Assets and Liabilities,
Net - 0.0%		         —
         
Net Assets - 100.0%         200
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  

Domestic Equities

    64.5  

International Equities

    35.5  
      

Total Investments

    100.0  

Other Assets and Liabilities, Net

    — *
      
   100.0  
      

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

2017 Retirement Distribution Fund — S Shares   49

Table of Contents

Russell Investment Company

2017 Accelerated Distribution Fund — S Shares

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 January 1, 2008 to April 30, 2008.

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.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

January 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 960.10    $ 1,016.53

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

50   2017 Accelerated Distribution Fund — S Shares

Table of Contents

Russell Investment Company

2017 Accelerated Distribution Fund — S Shares

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 85.6%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 71.5%

        

Multistrategy Bond Fund

    21,753      223
         

Domestic Equities - 9.3%

        

Diversified Equity Fund

    251      12

Quantitative Equity Fund

    307      11

Real Estate Securities Fund

    73      3

Special Growth Fund

    71      3
         
        29
         

International Equities - 4.8%

        

Emerging Markets Fund

    101      2

Global Equity Fund

    315      3

International Securities Fund

    150      10
         
        15
         
Total Investments - 85.6%        

(identified cost $266)

         267
Other Assets and Liabilities,
Net - 14.4%		         45
         
Net Assets - 100.0%         312
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of
Net
Assets
    

Bonds

      71.5

Domestic Equities

      9.3

International Equities

      4.8
      

Total Investments

      85.6

Other Assets and Liabilities, Net

      14.4
      
     100.0
      

 

See accompanying notes which are an integral part of the financial statements.

 

2017 Accelerated Distribution Fund — S Shares   51

Table of Contents

Russell Investment Company

2027 Extended Distribution Fund — S Shares

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 January 1, 2008 to April 30, 2008.

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.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

January 1, 2008

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 944.20    $ 1,016.53

Expenses Paid During Period*

    $ 0.00    $ 0.00

 

* There were no expenses charged to class. Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

52   2027 Extended Distribution Fund — S Shares

Table of Contents

Russell Investment Company

2027 Extended Distribution Fund — S Shares

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Shares      Market
Value
$
       

Investments - 90.7%

        

Other Russell Investment Company

Series Mutual Funds

     

Bonds - 72.1%

        

Multistrategy Bond Fund

    34,023      348
         

Domestic Equities - 12.0%

        

Diversified Equity Fund

    507      23

Quantitative Equity Fund

    622      23

Real Estate Securities Fund

    145      6

Special Growth Fund

    144      6
         
        58
         

International Equities - 6.6%

        

Emerging Markets Fund

    204      5

Global Equity Fund

    633      6

International Securities Fund

    303      21
         
        32
         
Total Investments - 90.7%        

(identified cost $434)

         438

Other Assets and Liabilities,

Net - 9.3%

         45
         
Net Assets - 100.0%         483
         

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of
Net
Assets
    

Bonds

      72.1

Domestic Equities

      12.0

International Equities

      6.6
      

Total Investments

      90.7

Other Assets and Liabilities, Net

      9.3
      
     100.0
      

 

See accompanying notes which are an integral part of the financial statements.

 

2027 Extended Distribution Fund — S Shares   53

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Assets and Liabilities — April 30, 2008 (Unaudited)

 

Amounts in thousands   Conservative Strategy
Fund		     Moderate Strategy
Fund		     Balanced Strategy
Fund		     Growth Strategy
Fund		  
       

Assets

        

Investments, at identified cost

   $ 479,323     $ 1,176,964     $ 5,410,680     $ 3,906,413  

Investments, at market

     497,324       1,232,341       5,722,790       4,094,234  

Receivables:

        

Investments sold

     —       —       14,686       3,229  

Fund shares sold

     2,735       27,054       15,964       7,817  

From Affiliates

     95       198       880       634  

Prepaid expenses

     38       44       83       65  
                               

Total assets

     500,192       1,259,637       5,754,403       4,105,979  
                               
Liabilities        

Payables:

        

Investments purchased

     602       22,451       —       —  

Fund shares redeemed

     1,246       1,812       24,694       7,191  

Accrued fees to affiliates

     208       501       2,541       1,779  

Other accrued expenses

     44       58       148       108  
                               

Total liabilities

     2,100       24,822       27,383       9,078  
                               
       

Net Assets

   $ 498,092     $ 1,234,815     $ 5,727,020     $ 4,096,901  
                               

Net Assets Consist of:

        

Undistributed (overdistributed) net investment income

   $ (216 )   $ (481 )   $ (2,385 )   $ (1,675 )

Accumulated net realized gain (loss)

     2,796       20,212       156,024       184,238  

Unrealized appreciation (depreciation) on investments

     18,001       55,377       312,110       187,821  

Shares of beneficial interest

     472       1,120       4,973       3,500  

Additional paid-in capital

     477,039       1,158,587       5,256,298       3,723,017  
                               

Net Assets

   $ 498,092     $ 1,234,815     $ 5,727,020     $ 4,096,901  
                               

 

See accompanying notes which are an integral part of the financial statements.

 

54   Statements of Assets and Liabilities

Table of Contents

 

Equity Growth
Strategy Fund		     2010 Strategy Fund     2015 Strategy Fund    2020 Strategy Fund     2025 Strategy Fund    2030 Strategy Fund  
           
           
$ 1,969,053     $ 43,599     $ 465    $ 104,582     $ 1,463    $ 83,289  
  2,079,300       43,244       472      104,165       1,474      86,569  
           
  5,703       —       10      —       —      —  
  4,871       34       —      166       —      411  
  323       41       8      41       9      42  
  51       7       —      10       —      7  
                                           
  2,090,248       43,326       490      104,382       1,483      87,029  
                                           
           
           
  —       15       —      107       —      391  
  8,232       19       9      49       —      18  
  906       9       —      22       —      19  
  73       34       9      30       9      30  
                                           
  9,211       77       18      208       9      458  
                                           
           
$ 2,081,037     $ 43,249     $ 472    $ 104,174     $ 1,474    $ 86,571  
                                           
           
$ (852 )   $ (11 )   $ 2    $ (23 )   $ 1    $ (16 )
  75,948       (8 )     —      (1,188 )     —      (3,378 )
  110,247       (355 )     7      (417 )     11      280  
  1,817       40       —      93       1      76  
  1,893,877       43,583       463      105,709       1,461      89,609  
                                           
$ 2,081,037     $ 43,249     $ 472    $ 104,174     $ 1,474    $ 86,571  
                                           

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   55

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Assets and Liabilities, continued — April 30, 2008 (Unaudited)

 

     Conservative Strategy
Fund		    Moderate Strategy
Fund		    Balanced Strategy
Fund		    Growth Strategy
Fund
          

Net Asset Value, offering and redemption price per share:

           

Net asset value per share: Class A*

   $ 10.54    $ 11.02    $ 11.52    $ 11.71

Maximum offering price per share (Net asset value plus sales charge of 5.75%): Class A

   $ 11.18    $ 11.69    $ 12.22    $ 12.42

Class A — Net assets

   $ 63,581,103    $ 227,144,749    $ 1,365,631,098    $ 1,064,908,305

Class A — Shares outstanding ($.01 par value)

     6,034,166      20,619,509      118,557,209      90,953,365

Net asset value per share: Class C*

   $ 10.49    $ 10.96    $ 11.45    $ 11.62

Class C — Net assets

   $ 92,579,335    $ 258,417,815    $ 1,697,793,619    $ 1,105,354,728

Class C — Shares outstanding ($.01 par value)

     8,824,502      23,575,803      148,321,301      95,139,904

Net asset value per share: Class E*

   $ 10.56    $ 11.02    $ 11.54    $ 11.73

Class E — Net assets

   $ 83,631,013    $ 196,109,959    $ 716,851,212    $ 574,008,066

Class E — Shares outstanding ($.01 par value)

     7,916,560      17,788,826      62,101,726      48,951,409

Net asset value per share: Class R1*

   $ 10.59    $ 11.06    $ 11.60    $ 11.79

Class R1 — Net assets

   $ 2,948,164    $ 3,484,943    $ 33,101,335    $ 20,020,708

Class R1 — Shares outstanding ($.01 par value)

     278,315      314,995      2,853,542      1,697,724

Net asset value per share: Class R2*

   $ 10.55    $ 11.02    $ 11.53    $ 11.73

Class R2 — Net assets

   $ 6,284,631    $ 14,891,408    $ 52,295,339    $ 31,335,833

Class R2 — Shares outstanding ($.01 par value)

     595,497      1,351,731      4,535,776      2,671,412

Net asset value per share: Class R3*

   $ 10.59    $ 11.06    $ 11.54    $ 11.75

Class R3 — Net assets

   $ 194,411,401    $ 364,245,297    $ 1,178,680,202    $ 891,072,170

Class R3 — Shares outstanding ($.01 par value)

     18,349,913      32,946,352      102,100,554      75,847,839

Net asset value per share: Class S*

   $ 10.60    $ 11.06    $ 11.60    $ 11.79

Class S — Net assets

   $ 54,655,862    $ 170,520,452    $ 682,667,000    $ 410,201,619

Class S — Shares outstanding ($.01 par value)

     5,156,131      15,420,396      58,839,776      34,784,063

 

* Net asset value per share equals class level net assets divided by class level shares of beneficial interest outstanding.

 

See accompanying notes which are an integral part of the financial statements.

 

56   Statements of Assets and Liabilities

Table of Contents

 

Equity Growth
Strategy Fund		    2010 Strategy Fund    2015 Strategy Fund    2020 Strategy Fund    2025 Strategy Fund    2030 Strategy Fund
              
              
$ 11.74    $ 10.71    $ —    $ 11.20    $ —    $ 11.32

$

12.46

    $ 11.36    $ —    $ 11.88    $ —    $ 12.01
$ 380,254,592    $ 1,403,970    $ —    $ 1,888,289    $ —    $ 3,308,366
  32,388,641      131,084      —      168,602      —      292,161
$ 11.09    $ —    $ —    $ —    $ —    $ —
$ 597,938,718    $ —    $ —    $ —    $ —    $ —
  53,938,549      —      —      —      —      —
$ 11.53    $ 10.72    $ —    $ 11.20    $ —    $ 11.33
$ 282,284,170    $ 5,338,115    $ —    $ 9,907,932    $ —    $ 10,367,141
  24,491,715      497,870      —      884,635      —      914,915
$ 11.71    $ 10.73    $ 10.24    $ 11.21    $ 10.33    $ 11.34
$ 10,271,725    $ 6,085,221    $ 266,657    $ 20,182,612    $ 1,267,801    $ 11,498,316
  877,313      567,165      26,034      1,800,897      122,745      1,014,359
$ 11.53    $ 10.72    $ 10.24    $ 11.19    $ 10.32    $ 11.31
$ 33,697,459    $ 6,929,849    $ 102,436    $ 22,150,884    $ 103,226    $ 19,580,227
  2,922,525      646,642      10,000      1,980,015      10,000      1,730,491
$ 11.49    $ 10.71    $ 10.24    $ 11.17    $ 10.32    $ 11.32
$ 473,625,386    $ 14,455,884    $ 102,416    $ 36,680,274    $ 103,205    $ 29,987,754
  41,218,042      1,349,941      10,000      3,282,833      10,000      2,649,618
$ 11.71    $ 10.74    $ —    $ 11.20    $ —    $ 11.33
$ 302,964,454    $ 9,036,252    $ —    $ 13,363,921    $ —    $ 11,829,299
  25,869,174      841,723      —      1,192,755      —      1,043,754

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   57

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Assets and Liabilities, continued — April 30, 2008 (Unaudited)

 

Amounts in thousands       
    
2035 Strategy Fund		    2040 Strategy Fund     2045 Strategy Fund    2050 Strategy Fund
         

Assets

          

Investments, at identified cost

   $ 1,296    $ 59,575     $ 1,059    $ 301

Investments, at market

     1,310      59,945       1,073      315

Receivables:

          

Investments sold

     —      —       15      —

Fund shares sold

     —      246       —      —

From Transfer Agent

     9      37       9      9

Prepaid expenses

     —      8       —      —
                           

Total assets

     1,319      60,236       1,097      324
                           
Liabilities          

Payables:

          

Investments purchased

     —      211       —      —

Fund shares redeemed

     —      45       15      —

Accrued fees to affiliates

     —      15       —      —

Other accrued expenses

     9      29       9      9
                           

Total liabilities

     9      300       24      9
                           
         

Net Assets

   $ 1,310    $ 59,936     $ 1,073    $ 315
                           

Net Assets Consist of:

          

Undistributed (overdistributed) net investment income

   $ 1    $ (15 )   $ 1    $ 1

Accumulated net realized gain (loss)

     —      (2,535 )     —      —

Unrealized appreciation (depreciation) on investments

     14      370       14      14

Shares of beneficial interest

     1      53       1      —

Additional paid-in capital

     1,294      62,063       1,057      300
                           

Net Assets

   $ 1,310    $ 59,936     $ 1,073    $ 315
                           

 

See accompanying notes which are an integral part of the financial statements.

 

58   Statements of Assets and Liabilities

Table of Contents

 

In Retirement Fund    2017 Retirement
Distribution Fund -
A Shares		     2017 Accelerated
Distribution Fund -
A Shares		     2027 Extended
Distribution Fund -
A Shares		     2017 Retirement
Distribution Fund -
S Shares		      2017 Accelerated
Distribution Fund -
S Shares		      2027 Extended
Distribution Fund -
S Shares		  
              
              
$ 303    $ 98     $ 95     $ 95     $ 202      $ 266      $ 434  
  306      97       95       94       200        267        438  
              
  —      —       —       —       —        —        —  
  —      —       —       —       —        45        45  
  8      56       56       56       56        56        56  
  —      —       —       —       —        —        —  
                                                      
  314      153       151       150       256        368        539  
                                                      
              
              
  —      —       —       —       —        —        —  
  —      —       —       —       —        —        —  
  —      —       —       —       —        —        —  
  8      56       56       56       56        56        56  
                                                      
  8      56       56       56       56        56        56  
                                                      
              
$ 306    $ 97     $ 95     $ 94     $ 200      $ 312      $ 483  
                                                      
              
$ 3    $ —     $ 1     $ 1     $ —      $ 1      $ 1  
  —      (3 )     (6 )     (5 )     (4 )      (5 )      (7 )
  3      (1 )     —       (1 )     (2 )      1        4  
  —      —       —       —       —        —        —  
  300      101       100       99       206        315        485  
                                                      
$ 306    $ 97     $ 95     $ 94     $ 200      $ 312      $ 483  
                                                      

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   59

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Assets and Liabilities, continued — April 30, 2008 (Unaudited)

 

         
    
2035 Strategy Fund		    2040 Strategy Fund    2045 Strategy Fund    2050 Strategy Fund
          

Net Asset Value, offering and redemption price per share:

           

Net asset value per share: Class A*

   $ —    $ 11.37    $ —    $ —

Maximum offering price per share (Net asset value plus sales charge of 5.75%): Class A

   $ —    $ 12.07    $ —    $ —

Class A — Net assets

   $ —    $ 1,665,675    $ —    $ —

Class A — Shares outstanding ($.01 par value)

     —      146,440      —      —

Net asset value per share: Class C*

   $ —    $ —    $ —    $ —

Class C — Net assets

   $ —    $ —    $ —    $ —

Class C — Shares outstanding ($.01 par value)

     —      —      —      —

Net asset value per share: Class E*

   $ —    $ 11.38    $ —    $ —

Class E — Net assets

   $ —    $ 6,378,177    $ —    $ —

Class E — Shares outstanding ($.01 par value)

     —      560,299      —      —

Net asset value per share: Class R1*

   $ 10.40    $ 11.39    $ 10.40    $ 10.51

Class R1 — Net assets

   $ 1,101,840    $ 4,801,504    $ 864,801    $ 105,085

Class R1 — Shares outstanding ($.01 par value)

     105,991      421,433      83,125      10,000

Net asset value per share: Class R2*

   $ 10.39    $ 11.38    $ 10.40    $ 10.51

Class R2 — Net assets

   $ 103,931    $ 13,775,875    $ 104,012    $ 105,064

Class R2 — Shares outstanding ($.01 par value)

     10,000      1,210,721      10,000      10,000

Net asset value per share: Class R3*

   $ 10.39    $ 11.36    $ 10.40    $ 10.50

Class R3 — Net assets

   $ 103,910    $ 26,722,858    $ 103,990    $ 105,042

Class R3 — Shares outstanding ($.01 par value)

     10,000      2,351,781      10,000      10,000

Net asset value per share: Class S*

   $ —    $ 11.39    $ —    $ —

Class S — Net assets

   $ —    $ 6,591,453    $ —    $ —

Class S — Shares outstanding ($.01 par value)

     —      578,551      —      —

 

* Net asset value per share equals class level net assets divided by class level shares of beneficial interest outstanding.

 

See accompanying notes which are an integral part of the financial statements.

 

60   Statements of Assets and Liabilities

Table of Contents

 

In Retirement Fund    2017 Retirement
Distribution Fund -
A Shares		    2017 Accelerated
Distribution Fund -
A Shares		    2027 Extended
Distribution Fund -
A Shares		    2017 Retirement
Distribution Fund -
S Shares		    2017 Accelerated
Distribution Fund -
S Shares		    2027 Extended
Distribution Fund -
S Shares
                 
                 
$ —    $ 11.17    $ 10.84    $ 10.87    $ —    $ —    $ —
$ —    $ 10.52    $ 10.21    $ 10.25    $ —    $ —    $ —
$ —    $ 96,537    $ 95,252    $ 94,416    $ —    $ —    $ —
  —      9,173      9,325      9,215      —      —      —
$ —    $ —    $ —    $ —    $ —    $ —    $ —
$ —    $ —    $ —    $ —    $ —    $ —    $ —
  —      —      —      —      —      —      —
$ —    $ —    $ —    $ —    $ —    $ —    $ —
$ —    $ —    $ —    $ —    $ —    $ —    $ —
  —      —      —      —      —      —      —
$ 10.20    $ —    $ —    $ —    $ —    $ —    $ —
$ 102,028    $ —    $ —    $ —    $ —    $ —    $ —
  10,000      —      —      —      —      —      —
$ 10.20    $ —    $ —    $ —    $ —    $ —    $ —
$ 102,007    $ —    $ —    $ —    $ —    $ —    $ —
  10,000      —      —      —      —      —      —
$ 10.20    $ —    $ —    $ —    $ —    $ —    $ —
$ 101,986    $ —    $ —    $ —    $ —    $ —    $ —
  10,000      —      —      —      —      —      —
$ —    $ —    $ —    $ —    $ 10.50    $ 10.18    $ 10.23
$ —    $ —    $ —    $ —    $ 199,762    $ 312,026    $ 482,838
  —      —      —      —      19,020      30,644      47,185

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   61

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Operations — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands   Conservative Strategy
Fund		     Moderate Strategy
Fund		     Balanced Strategy
Fund		     Growth Strategy
Fund		  
       

Investment Income

        

Income distributions from Underlying Funds

   $ 13,925     $ 40,027     $ 201,201     $ 149,963  
                               

Expenses

        

Advisory fees

     484       1,198       5,635       4,032  

Administrative fees

     121       299       1,409       1,008  

Custodian fees

     26       27       30       28  

Distribution fees - Class A

     77       267       1,657       1,276  

Distribution fees - Class C

     321       962       6,271       4,076  

Distribution fees - Class R3

     242       463       1,490       1,114  

Transfer agent fees

     242       599       4,222       3,315  

Professional fees

     23       28       60       49  

Registration fees

     44       57       134       113  

Shareholder servicing fees - Class C

     107       321       2,090       1,359  

Shareholder servicing fees - Class E

     105       248       888       718  

Shareholder servicing fees - Class R2

     6       14       52       33  

Shareholder servicing fees - Class R3

     242       463       1,490       1,114  

Trustees’ fees

     5       12       58       41  

Printing fees

     10       25       114       84  

Offering fees

     —       —       —       —  

Miscellaneous

     4       12       55       40  
                               

Expenses before reductions

     2,059       4,995       25,655       18,400  

Expense reductions

     (959 )     (2,257 )     (11,717 )     (8,710 )
                               

Net expenses

     1,100       2,738       13,938       9,690  
                               

Net investment income (loss)

     12,825       37,289       187,263       140,273  
                               

Net Realized and Unrealized Gain (Loss)

        

Net realized gain (loss) on:

        

Investments

     (836 )     (2,178 )     (20,552 )     (9,895 )

Capital gain distributions from Underlying Funds

     6,105       33,183       241,180       228,693  
                               

Net realized gain (loss)

     5,269       31,005       220,628       218,798  

Net change in unrealized appreciation (depreciation) on investments

     (21,259 )     (113,046 )     (767,237 )     (732,102 )
                               

Net realized and unrealized gain (loss)

     (15,990 )     (82,041 )     (546,609 )     (513,304 )
                               

Net Increase (Decrease) in Net Assets from Operations

   $ (3,165 )   $ (44,752 )   $ (359,346 )   $ (373,031 )
                               

 

*   For the period March 31, 2008 (commencement of operations) to April 30, 2008.

 

See accompanying notes which are an integral part of the financial statements.

 

62   Statements of Operations

Table of Contents

 

Equity Growth
Strategy Fund		     2010 Strategy
Fund		     2015 Strategy
Fund*		     2020 Strategy
Fund		     2025 Strategy
Fund*		      2030 Strategy
Fund		  
          
          
$ 82,078     $ 1,177     $ 2     $ 3,193     $ 1      $ 2,658  
                                              
          
  2,040       38       —       94       —        74  
  510       9       —       23       —        19  
  26       24       1       24       1        24  
  460       2       —       2       —        4  
  2,211       —       —       —       —        —  
  600       19       —       46       —        34  
  1,728       9       —       23       —        19  
  35       14       4       17       5        16  
  83       31       2       34       2        32  
  737       —       —       —       —        —  
  351       6       —       12       —        12  
  35       6       —       20       —        18  
  600       19       —       46       —        34  
  21       1       —       1          1  
  41       1       1       2          1  
  —       —       —       —       1        —  
  21       —       —       —       —        —  
                                              
  9,499       179       8       344       9        288  
  (4,505 )     (127 )     (8 )     (218 )     (9 )      (186 )
                                              
  4,994       52       —       126       —        102  
                                              
  77,084       1,125       2       3,067       1        2,556  
                                              
          
          
  (10,496 )     (830 )     —       (4,653 )     —        (7,396 )
  147,451       907       —       3,804       —        4,409  
                                              
  136,955       77       —       (849 )     —        (2,987 )
  (462,441 )     (2,074 )     7       (7,124 )     11        (6,324 )
                                              
  (325,486 )     (1,997 )     7       (7,973 )     11        (9,311 )
                                              

$

(248,402

)

   $ (872 )   $ 9     $ (4,906 )   $ 12      $ (6,755 )
                                              

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Operations   63

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Operations, continued — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands    2035 Strategy
Fund*		         
    
    
2040 Strategy
Fund		     2045 Strategy
Fund*		      2050 Strategy
Fund*		  
         

Investment Income

          

Income distributions from Underlying Funds

    $ 1     $ 2,030     $ 1      $ 1  
                                 

Expenses

          

Advisory fees

      —       53       —        —  

Administrative fees

      —       13       —        —  

Custodian fees

      1       23       1        1  

Distribution fees - Class A

      —       2       —        —  

Distribution fees - Class C

      —       —       —        —  

Distribution fees - Class R3

      —       33       —        —  

Transfer agent fees

      —       13       —        —  

Professional fees

      5       16       5        5  

Registration fees

      2       32       2        2  

Shareholder servicing fees - Class C

      —       —       —        —  

Shareholder servicing fees - Class E

      —       7       —        —  

Shareholder servicing fees - Class R2

      —       13       —        —  

Shareholder servicing fees - Class R3

      —       33       —        —  

Trustees’ fees

      —       1       —        —  

Printing fees

      —       1       —        —  

Offering fees

      1       —       1        1  

Miscellaneous

      —       1       —     
                                 

Expenses before reductions

      9       241       9        9  

Expense reductions

      (9 )     (153 )     (9 )      (9 )
                                 

Net expenses

      —       88       —        —  
                                 

Net investment income (loss)

      1       1,942       1        1  
                                 

Net Realized and Unrealized Gain (Loss)

          

Net realized gain (loss) on:

          

Investments

      —       (5,874 )     —        —  

Capital gain distributions from Underlying Funds

      —       3,478       —        —  
                                 

Net realized gain (loss)

      —       (2,396 )     —        —  

Net change in unrealized appreciation (depreciation) on investments

      14       (5,013 )     14        14  
                                 

Net realized and unrealized gain (loss)

      14       (7,409 )     14        14  
                                 

Net Increase (Decrease) in Net Assets from Operations

    $ 15     $ (5,467 )   $ 15      $ 15  
                                 

 

*   For the period March 31, 2008 (commencement of operations) to April 30, 2008.

 

**   For the period December 31, 2007 (commencement of operations) to April 30, 2008.

 

See accompanying notes which are an integral part of the financial statements.

 

64   Statements of Operations

Table of Contents

 

In Retirement
Fund*		     2017
Retirement
Distribution
Fund -
A Shares**		     2017
Accelerated
Distribution
Fund -
A Shares**		     2027
Extended
Distribution
Fund -
A Shares**		     2017
Retirement
Distribution
Fund -
S Shares**		      2017
Accelerated
Distribution
Fund -
S Shares**		      2027
Extended
Distribution
Fund -
S Shares**		  
             
             
$ 3     $ —     $ 1     $ 1     $ —      $ 1      $ 1  
                                                       
             
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  1       1       1       1       1        1        1  
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  4       9       9       9       9        9        9  
  2       18       18       18       18        18        18  
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  —       —       —       —       —        —        —  
  —       1       1       1       1        1        1  
  1       26       26       26       26        26        26  
  —       1       1       1       1        1        1  
                                                       
  8       56       56       56       56        56        56  
  (8 )     (56 )     (56 )     (56 )     (56 )      (56 )      (56 )
                                                       
  —       —       —       —       —        —        —  
                                                       
  3       —       1       1       —        1        1  
                                                       
             
             
  —       (3 )     (6 )     (5 )     (4 )      (5 )      (7 )
  —       —       —       —       —        —        —  
                                                       
  —       (3 )     (6 )     (5 )     (4 )      (5 )      (7 )
  3       (1 )     —       (1 )     (2 )      1        4  
                                                       
  3       (4 )     (6 )     (6 )     (6 )      (4 )      (3 )
                                                       
$ 6     $ (4 )   $ (5 )   $ (5 )   $ (6 )    $ (3 )    $ (2 )
                                                       

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Operations   65

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Changes in Net Assets

 

     Conservative Strategy
Fund		     Moderate Strategy
Fund		  
Amounts in thousands   

Period
Ended
April 30, 2008
(Unaudited)

    

Fiscal Year
Ended
October 31,
2007

    

Period
Ended
April 30, 2008
(Unaudited)

    

Fiscal Year
Ended
October 31,
2007

  
        

Increase (Decrease) in Net Assets

         

Operations

         

Net investment income (loss)

    $ 12,825     $ 16,736     $ 37,289     $ 39,583  

Net realized gain (loss)

      5,269       5,410       31,005       30,238  

Net change in unrealized appreciation (depreciation)

      (21,259 )     7,488       (113,046 )     43,281  
                                

Net increase (decrease) in net assets from operations

      (3,165 )     29,634       (44,752 )     113,102  
                                

Distributions

         

From net investment income

         

Class A

      (1,615 )     (1,943 )     (6,948 )     (6,742 )

Class C

      (2,141 )     (2,638 )     (7,515 )     (7,593 )

Class E

      (2,370 )     (3,215 )     (6,486 )     (7,166 )

Class R1

      (67 )     (40 )     (77 )     (30 )

Class R2

      (154 )     (93 )     (309 )     (103 )

Class R3

      (5,215 )     (6,806 )     (11,590 )     (12,703 )

Class S

      (1,478 )     (2,038 )     (4,844 )     (5,352 )

From net realized gain

         

Class A

      (599 )     (1,062 )     (5,299 )     (2,586 )

Class C

      (944 )     (1,774 )     (6,386 )     (3,931 )

Class E

      (954 )     (1,797 )     (5,016 )     (2,864 )

Class R1

      (23 )     —       (51 )     —  

Class R2

      (57 )     (36 )     (190 )     (31 )

Class R3

      (2,178 )     (4,072 )     (9,264 )     (5,554 )

Class S

      (558 )     (996 )     (3,588 )     (2,000 )
                                

Net decrease in net assets from distributions

      (18,353 )     (26,510 )     (67,563 )     (56,655 )
                                

Share Transactions

         

Net increase (decrease) in net assets from share transactions

      42,569       31,022       105,953       91,815  
                                

Total Net Increase (Decrease) in Net Assets

      21,051       34,146       (6,362 )     148,262  

Net Assets

         

Beginning of period

      477,041       442,895       1,241,177       1,092,915  
                                

End of period

    $ 498,092     $ 477,041     $ 1,234,815     $ 1,241,177  
                                

Undistributed (overdistributed) net investment income included in net assets

    $ (216 )   $ (1 )   $ (481 )   $ (1 )

 

See accompanying notes which are an integral part of the financial statements.

 

66   Statements of Changes in Net Assets

Table of Contents

 

Balanced Strategy
Fund		     Growth Strategy
Fund		     Equity Growth Strategy
Fund		  
Period
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Period
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Period
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		  
         
         
         
$ 187,263     $ 163,266     $ 140,273     $ 96,919     $ 77,084     $ 39,464  
  220,628       180,660       218,798       149,037       136,955       84,006  
  (767,237 )     330,425       (732,102 )     331,481       (462,441 )     217,057  
                                             
  (359,346 )     674,351       (373,031 )     577,437       (248,402 )     340,527  
                                             
         
         
  (46,087 )     (38,232 )     (36,806 )     (23,234 )     (14,153 )     (5,815 )
  (52,771 )     (38,308 )     (35,864 )     (20,010 )     (22,011 )     (10,667 )
  (24,814 )     (22,792 )     (20,852 )     (16,268 )     (10,962 )     (6,724 )
  (952 )     (528 )     (543 )     (232 )     (369 )     (39 )
  (1,720 )     (621 )     (1,060 )     (357 )     (1,121 )     (477 )
  (39,865 )     (37,004 )     (31,167 )     (22,933 )     (18,405 )     (10,707 )
  (23,439 )     (26,332 )     (15,655 )     (14,260 )     (10,914 )     (6,376 )
         
  (43,034 )     (20,715 )     (38,519 )     (16,479 )     (15,610 )     (5,675 )
  (54,476 )     (27,473 )     (41,405 )     (20,338 )     (26,121 )     (12,082 )
  (23,303 )     (12,667 )     (21,957 )     (12,077 )     (12,104 )     (6,640 )
  (822 )     (213 )     (536 )     (122 )     (396 )     (33 )
  (1,590 )     (343 )     (1,106 )     (263 )     (1,225 )     (490 )
  (38,603 )     (22,633 )     (33,813 )     (18,821 )     (20,921 )     (11,067 )
  (21,117 )     (13,918 )     (16,064 )     (9,702 )     (11,661 )     (5,974 )
                                             
  (372,593 )     (261,779 )     (295,347 )     (175,096 )     (165,973 )     (82,766 )
                                             
         
  472,747       792,887       375,554       690,202       222,495       441,978  
                                             
  (259,192 )     1,205,459       (292,824 )     1,092,543       (191,880 )     699,739  
         
  5,986,212       4,780,753       4,389,725       3,297,182       2,272,917       1,573,178  
                                             
$ 5,727,020     $ 5,986,212     $ 4,096,901     $ 4,389,725     $ 2,081,037     $ 2,272,917  
                                             
$ (2,385 )   $ —     $ (1,675 )   $ (1 )   $ (852 )   $ (1 )

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   67

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Changes in Net Assets, continued

 

    2010 Strategy Fund     2015 Strategy Fund
Amounts in thousands   Period
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Period
Ended
April 30, 2008
(Unaudited)
     

Increase (Decrease) in Net Assets

      

Operations

      

Net investment income (loss)

   $ 1,125     $ 638     $ 2

Net realized gain (loss)

     77       198       —

Net change in unrealized appreciation (depreciation)

     (2,074 )     1,317       7
                     

Net increase (decrease) in net assets from operations

     (872 )     2,153       9
                     

Distributions

      

From net investment income

      

Class A

     (54 )     (66 )     —

Class E

     (152 )     (109 )     —

Class R1

     (169 )     (64 )     —

Class R2

     (180 )     (9 )     —

Class R3

     (437 )     (267 )     —

Class S

     (143 )     (129 )     —

From net realized gain

      

Class A

     (14 )     (21 )     —

Class E

     (37 )     (20 )     —

Class R1

     (38 )     (13 )     —

Class R2

     (41 )     —       —

Class R3

     (113 )     (48 )     —

Class S

     (22 )     (37 )     —
                     

Net decrease in net assets from distributions

     (1,400 )     (783 )     —
                     

Share Transactions

      

Net increase (decrease) in net assets from share transactions

     12,763       22,642       463
                     

Total Net Increase (Decrease) in Net Assets

     10,491       24,012       472

Net Assets

      

Beginning of period

     32,758       8,746       —
                     

End of period

   $ 43,249     $ 32,758     $ 472
                     

Undistributed (overdistributed) net investment income included in net assets

   $ (11 )   $ (1 )   $ 2

 

* For the period April 1, 2008 (commencement of operations) to April 30, 2008.

 

See accompanying notes which are an integral part of the financial statements.

 

68   Statements of Changes in Net Assets

Table of Contents

 

2020 Strategy Fund     2025 Strategy Fund   2030 Strategy Fund      
Period
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		     Period
Ended
April 30, 2008
(Unaudited)		   Period
Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31,
2007		       
         
         
         
$ 3,067     $ 1,414     $ 1   $ 2,556     $ 684    
  (849 )     827       —     (2,987 )     749    
  (7,124 )     5,552       11     (6,324 )     5,317    
                                     
  (4,906 )     7,793       12     (6,755 )     6,750    
                                     
         
         
  (63 )     (38 )     —     (124 )     (81 )  
  (301 )     (138 )     —     (337 )     (155 )  
  (618 )     (336 )     —     (355 )     (30 )  
  (618 )     (53 )     —     (642 )     (25 )  
  (1,137 )     (566 )     —     (815 )     (254 )  
  (352 )     (289 )     —     (300 )     (143 )  
         
  (23 )     (4 )     —     (55 )     (17 )  
  (106 )     (8 )     —     (148 )     (30 )  
  (213 )     (33 )     —     (149 )     (4 )  
  (212 )     (2 )     —     (279 )     (4 )  
  (423 )     (42 )     —     (366 )     (56 )  
  (117 )     (27 )     —     (124 )     (25 )  
                                     
  (4,183 )     (1,536 )     —     (3,694 )     (824 )  
                                     
         
  24,361       61,711       1,462     33,727       38,155    
                                     
  15,272       67,968       1,474     23,278       44,081    
         
  88,902       20,934       —     63,293       19,212    
                                     
$ 104,174     $ 88,902     $ 1,474   $ 86,571     $ 63,293    
                                     
$ (23 )   $ (1 )   $ 1   $ (16 )   $ 1    

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   69

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Changes in Net Assets, continued

 

    2035 Strategy Fund    2040 Strategy Fund  
Amounts in thousands   Period
Ended
April 30, 2008
(Unaudited)		    Period
Ended
April 30, 2008
(Unaudited)		    

Fiscal Year
Ended
October 31,
2007

  
      

Increase (Decrease) in Net Assets

       

Operations

       

Net investment income (loss)

   $ 1    $ 1,942     $ 412  

Net realized gain (loss)

     —      (2,396 )     724  

Net change in unrealized appreciation (depreciation)

     14      (5,013 )     4,259  
                      

Net increase (decrease) in net assets from operations

     15      (5,467 )     5,395  
                      

Distributions

       

From net investment income

       

Class A

     —      (78 )     (50 )

Class E

     —      (210 )     (103 )

Class R1

     —      (110 )     (12 )

Class R2

     —      (463 )     (33 )

Class R3

     —      (918 )     (157 )

Class S

     —      (177 )     (66 )

From net realized gain

       

Class A

     —      (34 )     (21 )

Class E

     —      (88 )     (42 )

Class R1

     —      (44 )     (3 )

Class R2

     —      (193 )     (14 )

Class R3

     —      (400 )     (70 )

Class S

     —      (71 )     (23 )
                      

Net decrease in net assets from distributions

     —      (2,786 )     (594 )
                      

Share Transactions

       

Net increase (decrease) in net assets from share transactions

     1,295      20,367       29,518  
                      

Total Net Increase (Decrease) in Net Assets

     1,310      12,114       34,319  

Net Assets

       

Beginning of period

     —      47,822       13,503  
                      

End of period

   $ 1,310    $ 59,936     $ 47,822  
                      

Undistributed (overdistributed) net investment income included in net assets

   $ 1    $ (15 )   $ (1 )

 

* For the period March 31, 2008 (commencement of operations) to April 30, 2008.

 

See accompanying notes which are an integral part of the financial statements.

 

70   Statements of Changes in Net Assets

Table of Contents

 

2045 Strategy Fund   2050 Strategy Fund   In Retirement Fund            
Period
Ended
April 30, 2008
(Unaudited)		   Period
Ended
April 30, 2008
(Unaudited)		   Period
Ended
April 30, 2008
(Unaudited)		               
         
         
         
$ 1   $ 1   $ 3      
  —     —     —      
  14     14     3      
                     
  15     15     6      
                     
         
         
  —     —     —      
  —     —     —      
  —     —     —      
  —     —     —      
  —     —     —      
  —     —     —      
         
  —     —     —      
  —     —     —      
  —     —     —      
  —     —     —      
  —     —     —      
  —     —     —      
                     
  —     —     —      
                     
         
  1,058     300     300      
                     
  1,073     315     306      
         
  —     —     —      
                     
$ 1,073   $ 315   $ 306      
                     
$ 1   $ 1   $ 3      

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   71

Table of Contents

Russell Investment Company

LifePoints® Funds

Statements of Changes in Net Assets, continued

 

    2017 Retirement Distribution
Fund - A Shares		     2017 Accelerated Distribution
Fund - A Shares		  
Amounts in thousands   Period
Ended
April 30, 2008
(Unaudited)**		     Fiscal Year
Ended
October 31,
2007		  
   

Increase (Decrease) in Net Assets

    

Operations

    

Net investment income (loss)

   $ —     $ 1  

Net realized gain (loss)

     (3 )     (6 )

Net change in unrealized appreciation (depreciation)

     (1 )     —  
               

Net increase (decrease) in net assets from operations

     (4 )     (5 )
               

Distributions

    

From net investment income

    

Class A

     —       —  

Class C

     —       —  

Class E

     —       —  

Class R1

     —       —  

Class R2

     —       —  

Class R3

     —       —  

Class S

     —       —  

From net realized gain

    

Class A

     —       —  

Class C

     —       —  

Class E

     —       —  

Class R1

     —       —  

Class R2

     —       —  

Class R3

     —       —  

Class S

     —       —  
               

Net decrease in net assets from distributions

     —       —  
               

Share Transactions

    

Net increase (decrease) in net assets from share transactions

     101       100  
               

Total Net Increase (Decrease) in Net Assets

     97       95  

Net Assets

    

Beginning of period

     —       —  
               

End of period

   $ 97     $ 95  
               

Undistributed (overdistributed) net investment income included in net assets

   $ —     $ 1  

 

**   For the period December 31, 2007 (commencement of operations) to April 30, 2008.

 

See accompanying notes which are an integral part of the financial statements.

 

72   Statements of Changes in Net Assets

Table of Contents

 

2027 Extended Distribution
Fund - A Shares		     2017 Retirement Distribution
Fund - S Shares		     2017 Accelerated Distribution
Fund - S Shares		     2027 Extended Distribution
Fund - S Shares		                  
Period
Ended
April 30, 2008
(Unaudited)**		     Fiscal Year
Ended
October 31,
2007		     Period
Ended
April 30, 2008
(Unaudited)**		     Fiscal Year
Ended
October 31,
2007		                      
             
             
             
$ 1     $ —     $ 1     $ 1          
  (5 )     (4 )     (5 )     (7 )        
  (1 )     (2 )     1       4          
                                     
  (5 )     (6 )     (3 )     (2 )        
                                     
             
             
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
             
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
  —       —       —       —          
                                     
  —       —       —       —          
                                     
             
  99       206       315       485          
                                     
  94       200       312       483          
             
  —       —       —       —          
                                     
$ 94     $ 200     $ 312     $ 483          
                                     
$ 1     $ —     $ 1     $ 1          

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   73

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		   

$

Net
Investment
Income (Loss)(a)(b)

    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
Conservative Strategy Fund                  

Class A

                     

April 30, 2008*

    11.03    .27    (.34 )    (.07 )    (.30 )    (.12 )    (.42 )

October 31, 2007

    10.98    .42    .29      .71      (.42 )    (.24 )    (.66 )

October 31, 2006

    10.66    .34    .40      .74      (.35 )    (.07 )    (.42 )

October 31, 2005

    10.65    .24    .05      .29      (.24 )    (.04 )    (.28 )

October 31, 2004

    10.42    .20    .28      .48      (.21 )    (.04 )    (.25 )

October 31, 2003(1)

    9.94    .09    .50      .59      (.11 )    —      (.11 )

Class C

                     

April 30, 2008*

    10.99    .25    (.36 )    (.11 )    (.27 )    (.12 )    (.39 )

October 31, 2007

    10.93    .34    .30      .64      (.34 )    (.24 )    (.58 )

October 31, 2006

    10.62    .25    .39      .64      (.26 )    (.07 )    (.33 )

October 31, 2005

    10.61    .16    .05      .21      (.16 )    (.04 )    (.20 )

October 31, 2004

    10.38    .12    .28      .40      (.13 )    (.04 )    (.17 )

October 31, 2003

    9.90    .12    .52      .64      (.16 )    —      (.16 )

Class E

                     

April 30, 2008*

    11.06    .30    (.38 )    (.08 )    (.30 )    (.12 )    (.42 )

October 31, 2007

    11.00    .42    .30      .72      (.42 )    (.24 )    (.66 )

October 31, 2006

    10.68    .30    .43      .73      (.34 )    (.07 )    (.41 )

October 31, 2005

    10.66    .24    .06      .30      (.24 )    (.04 )    (.28 )

October 31, 2004

    10.43    .20    .27      .47      (.20 )    (.04 )    (.24 )

October 31, 2003

    9.94    .20    .52      .72      (.23 )    —      (.23 )

Class R1

                     

April 30, 2008*

    11.08    .29    (.34 )    (.05 )    (.32 )    (.12 )    (.44 )

October 31, 2004(17)

    10.77    .40    .22      .62      (.31 )           (.31 )

Class R2

                     

April 30, 2008*

    11.05    .25    (.32 )    (.07 )    (.31 )    (.12 )    (.43 )

October 31, 2007

    10.99    .40    .31      .71      (.41 )    (.24 )    (.65 )

October 31, 2006(8)

    10.86    .33    .09      .42      (.29 )    —      (.29 )

Class R3(9)

                     

April 30, 2008*

    11.09    .28    (.37 )    (.09 )    (.29 )    (.12 )    (.41 )

October 31, 2007

    11.03    .39    .30      .69      (.39 )    (.24 )    (.63 )

October 31, 2006

    10.71    .31    .40      .71      (.32 )    (.07 )    (.39 )

October 31, 2005

    10.69    .21    .06      .27      (.21 )    (.04 )    (.25 )

October 31, 2004

    10.47    .18    .26      .44      (.18 )    (.04 )    (.22 )

October 31, 2003

    9.97    .16    .55      .71      (.21 )    —      (.21 )

Class S

                     

April 30, 2008*

    11.09    .30    (.35 )    (.05 )    (.32 )    (.12 )    (.44 )

October 31, 2007

    11.03    .44    .31      .75      (.45 )    (.24 )    (.69 )

October 31, 2006

    10.72    .36    .39      .75      (.37 )    (.07 )    (.44 )

October 31, 2005

    10.70    .27    .05      .32      (.26 )    (.04 )    (.30 )

October 31, 2004

    10.47    .23    .27      .50      (.23 )    (.04 )    (.27 )

October 31, 2003

    9.97    .23    .52      .75      (.25 )    —      (.25 )

 

See accompanying notes which are an integral part of the financial statements.

 

74   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g)		   %
Portfolio
Turnover Rate(c)
           
           
10.54   (.57 )   63,581   .25   .65   2.60   11
11.03   6.76     52,516   .25   .65   3.87   79
10.98   7.04     46,364   .25   .65   3.14   16
10.66   2.74     40,225   .25   .62   2.26   9
10.65   4.62     20,709   .25   .66   1.89   6
10.42   6.01     5,526   .25   .97   .97   31
           
10.49   (.98 )   92,579   1.00   1.40   2.36   11
10.99   6.04     84,747   1.00   1.40   3.10   79
10.93   6.16     80,692   1.00   1.40   2.34   16
10.62   1.99     88,226   1.00   1.37   1.47   9
10.61   3.87     75,976   1.00   1.38   1.15   6
10.38   6.51     54,674   1.00   1.43   1.21   31
           
10.56   (.66 )   83,631   .25   .65   2.77   11
11.06   6.84     83,894   .25   .65   3.84   79
11.00   6.96     80,224   .25   .65   2.90   16
10.68   2.81     183,219   .25   .62   2.20   9
10.66   4.57     187,993   .25   .63   1.95   6
10.43   7.33     199,230   .25   .68   1.86   31
           
10.59   (.47 )   2,948   —   .40   2.88   11
11.08   5.72     1,914   —   .40   2.98   79
           
10.55   (.65 )   6,285   .25   .65   2.32   11
11.05   6.75     3,156   .25   .65   3.64   79
10.99   3.95     1,466   .25   .67   2.72   31
           
10.59   (.77 )   194,412   .50   .90   2.67   11
11.09   6.53     194,815   .50   .90   3.59   79
11.03   6.74     187,837   .50   .90   2.85   16
10.71   2.55     163,499   .50   .87   1.97   9
10.69   4.23     146,230   .50   .88   1.65   6
10.47   7.17     92,430   .50   .93   1.57   31
           
10.60   (.46 )   54,656   —   .40   2.80   11
11.09   7.10     55,999   —   .40   4.02   79
11.03   7.16     46,312   —   .40   3.36   16
10.72   3.06     44,293   —   .37   2.46   9
10.70   4.82     42,949   —   .38   2.17   6
10.47   7.63     36,380   —   .43   2.27   31

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   75

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		   

$

Net
Investment
Income (Loss)(a)(b)

    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
Moderate Strategy Fund                  

Class A

                     

April 30, 2008*

    12.09    .46    (.87 )    (.41 )    (.37 )    (.29 )    (.66 )

October 31, 2007

    11.54    .42    .74      1.16      (.43 )    (.18 )    (.61 )

October 31, 2006

    10.81    .29    .81      1.10      (.30 )    (.07 )    (.37 )

October 31, 2005

    10.50    .22    .35      .57      (.23 )    (.03 )    (.26 )

October 31, 2004

    10.03    .17    .51      .68      (.19 )    (.02 )    (.21 )

October 31, 2003(3)

    9.02    .07    1.06      1.13      (.12 )    —      (.12 )

Class C

                     

April 30, 2008*

    12.04    .32    (.78 )    (.46 )    (.33 )    (.29 )    (.62 )

October 31, 2007

    11.49    .33    .73      1.06      (.33 )    (.18 )    (.51 )

October 31, 2006

    10.77    .21    .80      1.01      (.22 )    (.07 )    (.29 )

October 31, 2005

    10.45    .14    .36      .50      (.15 )    (.03 )    (.18 )

October 31, 2004

    10.01    .05    .55      .60      (.14 )    (.02 )    (.16 )

October 31, 2003

    9.15    .12    .91      1.03      (.17 )    —      (.17 )

Class E

                     

April 30, 2008*

    12.10    .39    (.81 )    (.42 )    (.37 )    (.29 )    (.66 )

October 31, 2007

    11.55    .42    .74      1.16      (.43 )    (.18 )    (.61 )

October 31, 2006

    10.82    .29    .81      1.10      (.30 )    (.07 )    (.37 )

October 31, 2005

    10.50    .22    .36      .58      (.23 )    (.03 )    (.26 )

October 31, 2004

    10.03    .19    .49      .68      (.19 )    (.02 )    (.21 )

October 31, 2003

    9.16    .21    .89      1.10      (.23 )    —      (.23 )

Class R1

                     

April 30, 2008*

    12.14    2.18    (2.59 )    (.41 )    (.38 )    (.29 )    (.67 )

October 31, 2007

    11.58    .33    .87      1.20      (.46 )    (.18 )    (.64 )

October 31, 2006(15)

    11.47    .11    .09      .20      (.09 )    —      (.09 )

Class R2

                     

April 30, 2008*

    12.09    1.05    (1.46 )    (.41 )    (.37 )    (.29 )    (.66 )

October 31, 2007

    11.54    .39    .76      1.15      (.42 )    (.18 )    (.60 )

October 31, 2006(8)

    11.25    .25    .27      .52      (.23 )    —      (.23 )

Class R3(9)

                     

April 30, 2008*

    12.13    .36    (.78 )    (.42 )    (.36 )    (.29 )    (.65 )

October 31, 2007

    11.58    .39    .73      1.12      (.39 )    (.18 )    (.57 )

October 31, 2006

    10.84    .27    .81      1.08      (.27 )    (.07 )    (.34 )

October 31, 2005

    10.52    .20    .35      .55      (.20 )    (.03 )    (.23 )

October 31, 2004

    10.06    .16    .49      .65      (.17 )    (.02 )    (.19 )

October 31, 2003

    9.19    .16    .92      1.08      (.21 )    —      (.21 )

Class S

                     

April 30, 2008*

    12.13    .43    (.83 )    (.40 )    (.38 )    (.29 )    (.67 )

October 31, 2007

    11.58    .45    .74      1.19      (.46 )    (.18 )    (.64 )

October 31, 2006

    10.84    .32    .82      1.14      (.33 )    (.07 )    (.40 )

October 31, 2005

    10.52    .25    .35      .60      (.25 )    (.03 )    (.28 )

October 31, 2004

    10.05    .21    .49      .70      (.21 )    (.02 )    (.23 )

October 31, 2003

    9.17    .23    .90      1.13      (.25 )    —      (.25 )

 

See accompanying notes which are an integral part of the financial statements.

 

76   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g)		   %
Portfolio
Turnover Rate(c)
           
           
11.02   (3.44 )   227,145   .25   .63   3.17   7
12.09   10.36     211,856   .25   .63   3.56   78
11.54   10.34     165,654   .25   .63   2.63   6
10.81   5.44     121,343   .25   .61   2.03   5
10.50   6.87     55,049   .25   .63   1.71   4
10.03   12.56     18,820   .25   .77   .84   11
           
10.96   (3.85 )   258,418   1.00   1.38   2.80   7
12.04   9.52     262,501   1.00   1.38   2.86   78
11.49   9.51     252,478   1.00   1.38   1.88   6
10.77   4.78     183,445   1.00   1.36   1.31   5
10.45   6.00     146,515   1.00   1.37   .48   4
10.01   11.36     96,231   1.00   1.42   1.29   11
           
11.02   (3.52 )   196,110   .25   .63   3.23   7
12.10   10.34     208,296   .25   .63   3.60   78
11.55   10.32     181,883   .25   .63   2.64   6
10.82   5.52     164,151   .25   .61   2.07   5
10.50   6.85     132,822   .25   .62   1.85   4
10.03   12.19     99,926   .25   .67   2.22   11
           
11.06   (3.41 )   3,485   —   .38   3.15   7
12.14   10.70     2,104   —   .38   2.74   78
11.58   .96     215   —   .20   .89   6
           
11.02   (3.42 )   14,891   .25   .63   2.01   7
12.09   10.28     4,068   .25   .63   3.26   78
11.54   4.68     1,654   .25   .64   2.01   6
           
11.06   (3.54 )   364,245   .50   .88   3.12   7
12.13   10.02     394,039   .50   .88   3.36   78
11.58   10.13     364,759   .50   .88   2.39   6
10.84   5.25     309,824   .50   .86   1.81   5
10.52   6.55     254,060   .50   .87   1.55   4
10.06   11.94     154,267   .50   .92   1.62   11
           
11.06   (3.32 )   170,521   —   .38   3.33   7
12.13   10.61     158,313   —   .38   3.86   78
11.58   10.67     126,487   —   .38   2.89   6
10.84   5.76     113,097   —   .36   2.33   5
10.52   7.03     106,031   —   .37   2.04   4
10.05   12.55     73,980   —   .42   2.44   11

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   77

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
Balanced Strategy Fund                  

Class A

                     

April 30, 2008*

    13.10    .40    (1.16 )    (.76 )    (.42 )    (.40 )    (.82 )

October 31, 2007

    12.18    .40    1.18      1.58      (.42 )    (.24 )    (.66 )

October 31, 2006

    10.99    .25    1.27      1.52      (.26 )    (.07 )    (.33 )

October 31, 2005

    10.33    .20    .71      .91      (.22 )    (.03 )    (.25 )

October 31, 2004

    9.64    .16    .74      .90      (.21 )    —      (.21 )

October 31, 2003(2)

    8.20    .06    1.47      1.53      (.09 )    —      (.09 )

Class C

                     

April 30, 2008*

    13.03    .35    (1.15 )    (.80 )    (.38 )    (.40 )    (.78 )

October 31, 2007

    12.12    .30    1.18      1.48      (.33 )    (.24 )    (.57 )

October 31, 2006

    10.93    .17    1.27      1.44      (.18 )    (.07 )    (.25 )

October 31, 2005

    10.29    .13    .69      .82      (.15 )    (.03 )    (.18 )

October 31, 2004

    9.61    .12    .72      .84      (.16 )    —      (.16 )

October 31, 2003

    8.33    .09    1.31      1.40      (.12 )    —      (.12 )

Class E

                     

April 30, 2008*

    13.12    .41    (1.17 )    (.76 )    (.42 )    (.40 )    (.82 )

October 31, 2007

    12.20    .41    1.17      1.58      (.42 )    (.24 )    (.66 )

October 31, 2006

    11.00    .26    1.27      1.53      (.26 )    (.07 )    (.33 )

October 31, 2005

    10.35    .22    .68      .90      (.22 )    (.03 )    (.25 )

October 31, 2004

    9.65    .22    .69      .91      (.21 )    —      (.21 )

October 31, 2003

    8.35    .17    1.31      1.48      (.18 )    —      (.18 )

Class R1

                     

April 30, 2008*

    13.18    .39    (1.14 )    (.75 )    (.43 )    (.40 )    (.83 )

October 31, 2007

    12.26    .30    1.32      1.62      (.46 )    (.24 )    (.70 )

October 31, 2006(12)

    11.62    .10    .73      .83      (.19 )    —      (.19 )

Class R2

                     

April 30, 2008*

    13.12    .28    (1.05 )    (.77 )    (.42 )    (.40 )    (.82 )

October 31, 2007

    12.19    .40    1.19      1.59      (.42 )    (.24 )    (.66 )

October 31, 2006(10)

    11.76    .12    .49      .61      (.18 )    —      (.18 )

Class R3(9)

                     

April 30, 2008*

    13.12    .40    (1.18 )    (.78 )    (.40 )    (.40 )    (.80 )

October 31, 2007

    12.20    .38    1.17      1.55      (.39 )    (.24 )    (.63 )

October 31, 2006

    11.01    .23    1.26      1.49      (.23 )    (.07 )    (.30 )

October 31, 2005

    10.35    .19    .70      .89      (.20 )    (.03 )    (.23 )

October 31, 2004

    9.66    .17    .71      .88      (.19 )    —      (.19 )

October 31, 2003

    8.36    .12    1.34      1.46      (.16 )    —      (.16 )

Class S

                     

April 30, 2008*

    13.18    .42    (1.17 )    (.75 )    (.43 )    (.40 )    (.83 )

October 31, 2007

    12.26    .45    1.17      1.62      (.46 )    (.24 )    (.70 )

October 31, 2006

    11.05    .29    1.28      1.57      (.29 )    (.07 )    (.36 )

October 31, 2005

    10.39    .25    .69      .94      (.25 )    (.03 )    (.28 )

October 31, 2004

    9.68    .23    .71      .94      (.23 )    —      (.23 )

October 31, 2003

    8.38    .19    1.31      1.50      (.20 )    —      (.20 )

 

See accompanying notes which are an integral part of the financial statements.

 

78   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		  %
Portfolio
Turnover Rate(c)
           
           
11.52   (5.91 )   1,365,631   .25   .67   3.43   7
13.10   13.49     1,352,284   .25   .67   3.21   34
12.18   14.03     996,628   .25   .67   2.15   3
10.99   8.91     593,609   .25   .62   1.88   1
10.33   9.49     281,685   .25   .59   1.63   6
9.64   18.80     60,696   .25   .66   .74   19
           
11.45   (6.24 )   1,697,794   1.00   1.42   3.03   7
13.03   12.60     1,770,369   1.00   1.42   2.44   34
12.12   13.29     1,328,971   1.00   1.42   1.43   3
10.93   7.96     964,203   1.00   1.37   1.22   1
10.29   8.82     653,463   1.00   1.34   1.23   6
9.61   17.02     396,344   1.00   1.36   1.05   19
           
11.54   (5.90 )   716,851   .25   .67   3.47   7
13.12   13.47     760,312   .25   .67   3.26   34
12.20   14.09     615,865   .25   .67   2.23   3
11.00   8.77     506,587   .25   .62   2.03   1
10.35   9.54     416,942   .25   .59   2.25   6
9.65   18.00     414,051   .25   .61   1.88   19
           
11.60   (5.77 )   33,101   —   .42   3.36   7
13.18   13.69     27,052   —   .42   2.42   34
12.26   6.60     4,295   —   .43   .80   3
           
11.53   (5.95 )   52,296   .25   .67   2.41   7
13.12   13.48     22,546   .25   .67   3.21   34
12.19   5.26     15,035   .25   .68   1.14   3
           
11.54   (6.01 )   1,178,680   .50   .92   3.37   7
13.12   13.16     1,307,641   .50   .92   3.04   34
12.20   13.72     1,129,000   .50   .92   1.97   3
11.01   8.61     892,607   .50   .87   1.75   1
10.35   9.25     676,342   .50   .84   1.70   6
9.66   17.76     396,545   .50   .86   1.38   19
           
11.60   (5.77 )   682,667   —   .42   3.52   7
13.18   13.69     746,007   —   .42   3.59   34
12.26   14.40     690,959   —   .42   2.46   3
11.05   9.10     518,148   —   .37   2.28   1
10.39   9.82     426,147   —   .34   2.23   6
9.68   18.22     278,123   —   .36   2.12   19

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   79

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
Growth Strategy Fund                  

Class A

                     

April 30, 2008*

    13.76    .42    (1.55 )    (1.13 )    (.45 )    (.47 )    (.92 )

October 31, 2007

    12.47    .34    1.61      1.95      (.37 )    (.29 )    (.66 )

October 31, 2006

    10.90    .17    1.65      1.82      (.19 )    (.06 )    (.25 )

October 31, 2005

    9.95    .15    .98      1.13      (.18 )    —      (.18 )

October 31, 2004

    9.12    .11    .87      .98      (.15 )    —      (.15 )

October 31, 2003(4)

    7.20    .04    1.94      1.98      (.06 )    —      (.06 )

Class C

                     

April 30, 2008*

    13.67    .37    (1.54 )    (1.17 )    (.41 )    (.47 )    (.88 )

October 31, 2007

    12.39    .25    1.59      1.84      (.27 )    (.29 )    (.56 )

October 31, 2006

    10.84    .09    1.62      1.71      (.10 )    (.06 )    (.16 )

October 31, 2005

    9.89    .09    .96      1.05      (.10 )    —      (.10 )

October 31, 2004

    9.09    .06    .84      .90      (.10 )    —      (.10 )

October 31, 2003

    7.49    .02    1.61      1.63      (.03 )    —      (.03 )

Class E

                     

April 30, 2008*

    13.78    .43    (1.56 )    (1.13 )    (.45 )    (.47 )    (.92 )

October 31, 2007

    12.49    .36    1.59      1.17      (.37 )    (.29 )    (.66 )

October 31, 2006

    10.91    .19    1.64      1.83      (.19 )    (.06 )    (.25 )

October 31, 2005

    9.96    .17    .96      1.13      (.18 )    —      (.18 )

October 31, 2004

    9.13    .15    .82      .97      (.14 )    —      (.14 )

October 31, 2003

    7.51    .08    1.63      1.71      (.09 )    —      (.09 )

Class R1

                     

April 30, 2008*

    13.85    .41    (1.53 )    (1.12 )    (.47 )    (.47 )    (.94 )

October 31, 2007

    12.55    .21    1.79      1.62      (.41 )    (.29 )    (.70 )

October 31, 2006(11)

    11.76    .08    .84      .92      (.13 )    —      (.13 )

Class R2

                     

April 30, 2008*

    13.79    .32    (1.45 )    (1.13 )    (.46 )    (.47 )    (.93 )

October 31, 2007

    12.48    .34    1.62      1.96      (.36 )    (.29 )    (.65 )

October 31, 2006(8)

    11.86    .09    .64      .73      (.11 )    —      (.11 )

Class R3(9)

                     

April 30, 2008*

    13.81    .42    (1.57 )    (1.15 )    (.44 )    (.47 )    (.91 )

October 31, 2007

    12.51    .33    1.60      1.93      (.34 )    (.29 )    (.63 )

October 31, 2006

    10.93    .15    1.65      1.80      (.16 )    (.06 )    (.22 )

October 31, 2005

    9.97    .14    .97      1.11      (.15 )    —      (.15 )

October 31, 2004

    9.15    .11    .84      .95      (.13 )    —      (.13 )

October 31, 2003

    7.54    .05    1.63      1.68      (.07 )    —      (.07 )

Class S

                     

April 30, 2008*

    13.85    .45    (1.57 )    (1.12 )    (.47 )    (.47 )    (.94 )

October 31, 2007

    12.55    .40    1.60      2.00      (.41 )    (.29 )    (.70 )

October 31, 2006

    10.97    .22    1.64      1.86      (.22 )    (.06 )    (.28 )

October 31, 2005

    10.00    .20    .98      1.18      (.21 )    —      (.21 )

October 31, 2004

    9.16    .16    .84      1.00      (.16 )    —      (.16 )

October 31, 2003

    7.54    .10    1.63      1.73      (.11 )    —      (.11 )

 

See accompanying notes which are an integral part of the financial statements.

 

80   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		  %
Portfolio
Turnover Rate(c)
           
           
11.71   (8.33 )   1,064,908   .25   .68   3.55   5
13.76   16.26     1,055,684   .25   .68   2.62   16
12.47   16.87     680,892   .25   .67   1.49   2
10.90   11.44     365,024   .25   .64   1.43   1
9.95   10.76     154,884   .25   .63   1.11   2
9.12   27.35     27,700   .25   .74   .51   15
           
11.62   (8.69 )   1,105,355   1.00   1.43   3.15   5
13.67   15.39     1,176,448   1.00   1.43   1.93   16
12.39   15.95     856,552   1.00   1.42   .77   2
10.84   10.70     572,129   1.00   1.39   .82   1
9.89   9.90     381,245   1.00   1.38   .67   2
9.09   21.89     219,946   1.00   1.41   .24   15
           
11.73   (8.32 )   574,008   .25   .68   3.62   5
13.78   16.23     632,163   .25   .68   2.81   16
12.49   16.93     503,741   .25   .67   1.58   2
10.91   11.40     394,842   .25   .64   1.63   1
9.96   10.72     307,304   .25   .63   1.54   2
9.13   22.90     233,112   .25   .66   1.02   15
           
11.79   (8.25 )   20,021   —   .44   3.48   5
13.85   16.53     15,576   —   .43   1.62   16
12.55   7.41     1,857   —   .43   .62   2
           
11.73   (8.37 )   31,336   .25   .69   5.33   5
13.79   16.30     16,800   .25   .68   2.61   16
12.48   6.23     10,647   .25   .68   .71   2
           
11.75   (8.47 )   891,072   .50   .93   3.52   5
13.81   15.97     992,589   .50   .93   2.55   16
12.51   16.62     822,822   .50   .92   1.32   2
10.93   11.22     616,939   .50   .89   1.35   1
9.97   10.41     452,502   .50   .88   1.14   2
9.15   22.44     232,636   .50   .91   .66   15
           
11.79   (8.25 )   410,201   —   .43   3.76   5
13.85   16.53     500,465   —   .43   3.08   16
12.55   17.12     420,671   —   .42   1.83   2
10.97   11.83     308,795   —   .39   1.88   1
10.00   10.99     247,011   —   .38   1.70   2
9.16   23.10     159,869   —   .41   1.30   15

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   81

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		      $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
Equity Growth Strategy Fund                  

Class A

                     

April 30, 2008

    14.27    .49      (2.01 )    (1.52 )    (.48 )    (.53 )    (1.01 )

October 31, 2007

    12.55    .28      2.08      2.36      (.32 )    (.32 )    (.64 )

October 31, 2006

    10.63    .10      2.00      2.10      (.10 )    (.08 )    (.18 )

October 31, 2005

    9.42    .10      1.22      1.32      (.11 )    —      (.11 )

October 31, 2004

    8.50    .06      .95      1.01      (.09 )    —      (.09 )

October 31, 2003(2)

    6.38    .02      2.13      2.15      (.03 )    —      (.03 )

Class C

                     

April 30, 2008

    13.54    .37      (1.84 )    (1.47 )    (.45 )    (.53 )    (.98 )

October 31, 2007

    12.00    .17      1.97      2.14      (.28 )    (.32 )    (.60 )

October 31, 2006

    10.20    .01      1.93      1.94      (.06 )    (.08 )    (.14 )

October 31, 2005

    9.07    .03      1.17      1.20      (.07 )    —      (.07 )

October 31, 2004

    8.23    .01      .89      .90      (.06 )    —      (.06 )

October 31, 2003

    6.60    (.01 )    1.65      1.64      (.01 )    —      (.01 )

Class E

                     

April 30, 2008

    14.02    .46      (1.94 )    (1.48 )    (.48 )    (.53 )    (1.01 )

October 31, 2007

    12.35    .32      1.99      2.31      (.32 )    (.32 )    (.64 )

October 31, 2006

    10.46    .11      1.96      2.07      (.10 )    (.08 )    (.18 )

October 31, 2005

    9.27    .11      1.19      1.30      (.11 )    —      (.11 )

October 31, 2004

    8.37    .08      .91      .99      (.09 )    —      (.09 )

October 31, 2003

    6.69    .04      1.68      1.72      (.04 )    —      (.04 )

Class R1

                     

April 30, 2008

    14.23    .49      (1.98 )    (1.49 )    (.50 )    (.53 )    (1.03 )

October 31, 2007

    12.51    .15      2.22      2.37      (.33 )    (.32 )    (.65 )

October 31, 2006(11)

    11.57    .04      .95      .99      (.05 )    —      (.05 )

Class R2

                     

April 30, 2008

    14.03    .37      (1.86 )    (1.49 )    (.48 )    (.53 )    (1.01 )

October 31, 2007

    12.35    .31      1.99      2.30      (.30 )    (.32 )    (.62 )

October 31, 2006(8)

    11.60    .03      .76      .79      (.04 )    —      (.04 )

Class R3(9)

                     

April 30, 2008

    13.98    .45      (1.94 )    (1.49 )    (.47 )    (.53 )    (1.00 )

October 31, 2007

    12.33    .27      2.00      2.27      (.30 )    (.32 )    (.62 )

October 31, 2006

    10.46    .08      1.95      2.03      (.08 )    (.08 )    (.16 )

October 31, 2005

    9.27    .09      1.19      1.28      (.09 )    —      (.09 )

October 31, 2004

    8.38    .06      .91      .97      (.08 )    —      (.08 )

October 31, 2003

    6.70    .02      1.69      1.71      (.03 )    —      (.03 )

Class S

                     

April 30, 2008

    14.23    .48      (1.97 )    (1.49 )    (.50 )    (.53 )    (1.03 )

October 31, 2007

    12.51    .35      2.02      2.37      (.33 )    (.32 )    (.65 )

October 31, 2006

    10.59    .14      1.99      2.13      (.13 )    (.08 )    (.21 )

October 31, 2005

    9.37    .15      1.20      1.35      (.13 )    —      (.13 )

October 31, 2004

    8.45    .11      .91      1.02      (.10 )    —      (.10 )

October 31, 2003

    6.75    .07      1.69      1.76      (.06 )    —      (.06 )

 

See accompanying notes which are an integral part of the financial statements.

 

82   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		    %
Portfolio
Turnover Rate(c)
           
           
11.74   (10.78 )   380,255   .25   .69   4.07     4
14.27   19.45     391,792   .25   .68   2.12     18
12.55   19.99     211,813   .25   .68   .85     3
10.63   14.09     94,182   .25   .66   .95     3
9.42   11.92     43,148   .25   .65   .69     12
8.50   33.75     7,399   .25   1.19   .30     18
           
11.09   (11.09 )   597,939   1.00   1.44   3.28     4
13.54   18.51     654,858   1.00   1.43   1.39     18
12.00   19.16     438,483   1.00   1.43   .07     3
10.20   13.29     284,152   1.00   1.41   .31     3
9.07   10.94     192,211   1.00   1.40   .13     12
8.23   24.91     99,808   1.00   1.43   (.19 )   18
           
11.53   (10.75 )   282,284   .25   .69   3.95     4
14.02   19.44     317,412   .25   .68   2.45     18
12.35   20.02     241,818   .25   .68   .99     3
10.46   14.08     192,258   .25   .66   1.13     3
9.27   11.83     152,589   .25   .65   .89     12
8.37   25.89     155,984   .25   .68   .59     18
           
11.71   (10.64 )   10,272   —   .44   4.11     4
14.23   19.66     10,543   —   .44   1.18     18
12.51   8.32     1,391   —   .44   .28     3
           
11.53   (10.80 )   33,698   .25   .70   3.22     4
14.03   19.40     25,130   .25   .68   2.42     18
12.35   6.82     19,094   .25   .69   .26     3
           
11.49   (10.95 )   473,625   .50   .94   3.87     4
13.98   19.24     553,383   .50   .93   2.12     18
12.33   19.61     432,147   .50   .93   .68     3
10.46   13.88     308,388   .50   .91   .85     3
9.27   11.59     225,187   .50   .90   .64     12
8.38   25.60     128,624   .50   .93   .24     18
           
11.71   (10.71 )   302,964   —   .44   4.00     4
14.23   19.74     319,798   —   .43   2.63     18
12.51   20.34     228,432   —   .43   1.17     3
10.59   14.47     133,943   —   .41   1.42     3
9.37   12.09     111,266   —   .40   1.21     12
8.45   26.26     89,455   —   .43   .90     18

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   83

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
2010 Strategy Fund                  

Class A

                     

April 30, 2008

    11.45    .34    (.67 )    (.33 )    (.33 )    (.08 )    (.41 )

October 31, 2007

    10.88    .40    .68      1.08      (.38 )    (.13 )    (.51 )

October 31, 2006

    10.06    .27    .83      1.10      (.28 )    —      (.28 )

October 31, 2005(6)

    10.21    .04    (.11 )    (.07 )    (.08 )    —      (.08 )

Class E

                     

April 30, 2008

    11.46    .33    (.65 )    (.32 )    (.34 )    (.08 )    (.42 )

October 31, 2007

    10.90    .35    .72      1.07      (.38 )    (.13 )    (.51 )

October 31, 2006

    10.07    .27    .83      1.10      (.27 )    —      (.27 )

October 31, 2005(5)

    10.00    .12    .07      .19      (.12 )    —      (.12 )

Class R1

                     

April 30, 2008

    11.47    .34    (.65 )    (.31 )    (.35 )    (.08 )    (.43 )

October 31, 2007

    10.90    .35    .76      1.11      (.41 )    (.13 )    (.54 )

October 31, 2006(13)

    10.45    .13    .53      .66      (.21 )    —      (.21 )

Class R2

                     

April 30, 2008

    11.46    .14    (.46 )    (.32 )    (.34 )    (.08 )    (.42 )

October 31, 2007(16)

    10.91    .31    .76      1.07      (.39 )    (.13 )    (.52 )

Class R3(9)

                     

April 30, 2008

    11.45    .38    (.72 )    (.34 )    (.32 )    (.08 )    (.40 )

October 31, 2007

    10.89    .31    .74      1.05      (.36 )    (.13 )    (.49 )

October 31, 2006

    10.07    .23    .84      1.07      (.25 )    —      (.25 )

October 31, 2005(5)

    10.00    .10    .08      .18      (.11 )    —      (.11 )

Class S

                     

April 30, 2008

    11.47    .26    (.56 )    (.30 )    (.35 )    (.08 )    (.43 )

October 31, 2007

    10.91    .45    .65      1.10      (.41 )    (.13 )    (.54 )

October 31, 2006

    10.08    .29    .84      1.13      (.30 )    —      (.30 )

October 31, 2005(5)

    10.00    .15    .07      .22      (.14 )    —      (.14 )
2015 Strategy Fund                  

Class R1

                     

April 30, 2008(19)

    10.00    .03    .21      .24      —      —      —  

Class R2

                     

April 30, 2008(19)

    10.00    .07    .17      .24      —      —      —  

Class R3

                     

April 30, 2008(19)

    10.00    .07    .17      .24      —      —      —  

 

See accompanying notes which are an integral part of the financial statements.

 

84   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		  %
Portfolio
Turnover Rate(c)
           
           
10.71   (2.86 )   1,404   .25   .93   3.14   105
11.45   10.22     1,958   .25   1.36   3.61   93
10.88   11.02     1,723   .25   3.41   2.53   71
10.06   (1.01 )   990   .25   4.84   .37   1
           
10.72   (2.83 )   5,338   .25   .92   3.09   105
11.46   10.12     4,797   .25   1.36   3.14   93
10.90   11.08     1,485   .25   2.90   2.54   71
10.07   1.96     1,020   .25   5.32   1.25   1
           
10.73   (2.73 )   6,085   —   .67   3.10   105
11.47   10.49     5,138   —   1.11   3.27   93
10.90   5.69     150   —   3.35   1.11   71
           
10.72   (2.80 )   6,930   .25   .90   1.44   105
11.46   10.10     691   .25   1.36   2.62   93
           
10.71   (2.96 )   14,456   .50   1.18   3.54   105
11.45   9.91     17,600   .50   1.61   2.78   93
10.89   10.73     4,028   .50   3.15   2.27   71
10.07   1.79     1,768   .50   5.56   1.06   1
           
10.74   (2.64 )   9,036   —   .65   2.40   105
11.47   10.38     2,575   —   1.11   3.93   93
10.91   11.35     1,360   —   2.69   2.73   71
10.08   2.25     1,023   —   5.07   1.45   1
           
           
10.24   2.40     267   —   28.09   .47   3
           
10.24   2.40     103   .25   28.51   .71   3
           
10.24   2.40     102   .50   28.76   .69   3

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   85

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
2020 Strategy Fund                  

Class A

                     

April 30, 2008*

    12.42    .39    (1.09 )    (.70 )    (.38 )    (.14 )    (.52 )

October 31, 2007

    11.24    .34    1.19      1.53      (.32 )    (.03 )    (.35 )

October 31, 2006

    10.14    .23    1.11      1.34      (.24 )    —      (.24 )

October 31, 2005(6)

    10.29    .03    (.11 )    (.08 )    (.07 )    —      (.07 )

Class E

                     

April 30, 2008*

    12.42    .38    (1.08 )    (.70 )    (.38 )    (.14 )    (.52 )

October 31, 2007

    11.25    .29    1.23      1.52      (.32 )    (.03 )    (.35 )

October 31, 2006

    10.14    .22    1.13      1.35      (.24 )    —      (.24 )

October 31, 2005(5)

    10.00    .11    .14      .25      (.11 )    —      (.11 )

Class R1

                     

April 30, 2008*

    12.42    .39    (1.07 )    (.68 )    (.39 )    (.14 )    (.53 )

October 31, 2007

    11.25    .24    1.31      1.55      (.35 )    (.03 )    (.38 )

October 31, 2006(13)

    10.62    .09    .70      .79      (.16 )    —      (.16 )

Class R2

                     

April 30, 2008*

    12.41    .18    (.87 )    (.69 )    (.39 )    (.14 )    (.53 )

October 31, 2007

    11.24    .27    1.25      1.52      (.32 )    (.03 )    (.35 )

October 31, 2006(14)

    10.82    .02    .50      .52      (.10 )    —      (.10 )

Class R3(9)

                     

April 30, 2008*

    12.39    .43    (1.14 )    (.71 )    (.37 )    (.14 )    (.51 )

October 31, 2007

    11.23    .28    1.21      1.49      (.30 )    (.03 )    (.33 )

October 31, 2006

    10.13    .18    1.14      1.32      (.22 )    —      (.22 )

October 31, 2005(5)

    10.00    .08    .14      .22      (.09 )    —      (.09 )

Class S

                     

April 30, 2008*

    12.42    .37    (1.06 )    (.69 )    (.39 )    (.14 )    (.53 )

October 31, 2007

    11.24    .42    1.14      1.56      (.35 )    (.03 )    (.38 )

October 31, 2006

    10.14    .22    1.14      1.36      (.26 )    —      (.26 )

October 31, 2005(5)

    10.00    .13    .14      .27      (.13 )    —      (.13 )
2025 Strategy Fund                  

Class R1

                     

April 30, 2008(19)

    10.00    .05    .28      .33      —      —      —  

Class R2

                     

April 30, 2008(19)

    10.00    .04    .28      .32      —      —      —  

Class R3

                     

April 30, 2008(19)

    10.00    .04    .28      .32      —      —      —  

 

See accompanying notes which are an integral part of the financial statements.

 

86   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		  %
Portfolio
Turnover Rate(c)		  
           
           
11.20   (5.65 )   1,888   .25   .72   3.47   100  
12.42   13.83     2,016   .25   .86   2.93   44  
11.24   13.33     2,165   .25   2.38   2.12   47  
10.14   (1.02 )   990   .25   4.74   .30   7  
           
11.20   (5.65 )   9,908   .25   .72   3.35   100  
12.42   13.79     9,499   .25   .86   2.44   44  
11.25   13.42     2,118   .25   1.95   2.12   47  
10.14   2.52     1,025   .25   5.13   1.11   7  
           
11.21   (5.47 )   20,183   —   .47   3.44   100  
12.42   14.05     19,194   —   .61   2.02   44  
11.25   6.98     702   —   1.77   .80   47  
           
11.19   (5.63 )   22,151   .25   .72   3.13   100  
12.41   13.81     4,135   .25   .86   2.20   44  
11.24   4.34     641   .25   1.62   .27   47  
           
11.17   (5.78 )   36,680   .50   .97   3.87   100  
12.39   13.50     44,038   .50   1.11   2.33   44  
11.23   13.14     9,355   .50   2.12   1.70   47  
10.13   2.23     1,545   .50   5.38   .89   7  
           
11.20   (5.55 )   13,364   —   .47   3.29   100  
12.42   14.16     10,021   —   .61   3.49   44  
11.24   13.59     5,953   —   1.63   2.15   47  
10.14   2.71     1,027   —   4.88   1.31   7  
           
           
10.33   3.30     1,268   —   12.75   .09   — **
           
10.32   3.20     103   .25   23.74   .43   — **
           
10.32   3.20     103   .50   24.00   .41   — **

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   87

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		     $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
2030 Strategy Fund                 

Class A

                    

April 30, 2008*

    13.23    .45     (1.76 )    (1.31 )    (.41 )    (.19 )    (.60 )

October 31, 2007

    11.53    .31     1.77      2.08      (.31 )    (.07 )    (.38 )

October 31, 2006

    10.19    .21     1.34      1.55      (.21 )    —      (.21 )

October 31, 2005(6)

    10.33    .03     (.11 )    (.08 )    (.06 )    —      (.06 )

Class E

                    

April 30, 2008*

    13.23    .43     (1.73 )    (1.30 )    (.41 )    (.19 )    (.60 )

October 31, 2007

    11.54    .23     1.85      2.08      (.32 )    (.07 )    (.39 )

October 31, 2006

    10.20    .18     1.37      1.55      (.21 )    —      (.21 )

October 31, 2005(5)

    10.00    .10     .19      .29      (.09 )    —      (.09 )

Class R1

                    

April 30, 2008*

    13.24    .44     (1.72 )    (1.28 )    (.43 )    (.19 )    (.62 )

October 31, 2007

    11.54    .14     1.98      2.12      (.35 )    (.07 )    (.42 )

October 31, 2006(13)

    10.75    .07     .86      .93      (.14 )    —      (.14 )

Class R2

                    

April 30, 2008*

    13.22    .13     (1.43 )    (1.30 )    (.42 )    (.19 )    (.61 )

October 31, 2007

    11.53    .16     1.92      2.08      (.32 )    (.07 )    (.39 )

October 31, 2006(14)

    10.98    .02     .62      .64      (.09 )    —      (.09 )

Class R3(9)

                    

April 30, 2008*

    13.22    .49     (1.80 )    (1.31 )    (.40 )    (.19 )    (.59 )

October 31, 2007

    11.54    .17     1.87      2.04      (.29 )    (.07 )    (.36 )

October 31, 2006

    10.19    .16     1.38      1.54      (.19 )    —      (.19 )

October 31, 2005(5)

    10.00    .07     .20      .27      (.08 )    —      (.08 )

Class S

                    

April 30, 2008*

    13.24    .38     (1.67 )    (1.29 )    (.43 )    (.19 )    (.62 )

October 31, 2007

    11.55    .29     1.82      2.11      (.35 )    (.07 )    (.42 )

October 31, 2006

    10.20    .23     1.35      1.58      (.23 )    —      (.23 )

October 31, 2005(5)

    10.00    .12     .19      .31      (.11 )    —      (.11 )
2035 Strategy Fund                 

Class R1

                    

April 30, 2008(19)

    10.00    — (h)   .40      .40      —      —      —  

Class R2

                    

April 30, 2008(19)

    10.00    .03     .36      .39      —      —      —  

Class R3

                    

April 30, 2008(19)

    10.00    .03     .36      .39      —      —      —  

 

See accompanying notes which are an integral part of the financial statements.

 

88   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		  %
Portfolio
Turnover Rate(c)
           
           
11.32   (9.98 )   3,309   .25   .75   3.92   90
13.23   18.51     3,739   .25   .98   2.51   31
11.53   15.38     2,854   .25   2.38   1.93   104
10.19   (1.01 )   990   .25   4.86   .25   1
           
11.33   (9.91 )   10,367   .25   .75   3.77   90
13.23   18.42     10,490   .25   .98   1.88   31
11.54   15.35     4,616   .25   2.15   1.72   104
10.20   2.96     1,029   .25   5.37   .95   1
           
11.34   (9.80 )   11,498   —   .50   3.84   90
13.24   18.80     8,582   —   .73   1.21   31
11.54   8.22     347   —   2.07   .65   104
           
11.31   (9.96 )   19,580   .25   .75   2.35   90
13.22   18.46     3,359   .25   .98   1.26   31
11.53   5.40     633   .25   1.79   .18   104
           
11.32   (10.01 )   29,988   .50   1.01   4.32   90
13.22   18.08     29,200   .50   1.23   1.39   31
11.54   15.22     8,249   .50   2.33   1.42   104
10.19   2.69     1,452   .50   5.62   .75   1
           
11.33   (9.88 )   11,829   —   .50   3.37   90
13.24   18.70     7,923   —   .73   2.32   31
11.55   15.70     2,513   —   1.85   2.13   104
10.20   3.15     1,031   —   5.12   1.16   1
           
           
10.40   4.00     1,102   —   13.85   .07   1
           
10.39   3.90     104   .25   23.65   .26   1
           
10.39   3.90     104   .50   23.91   .24   1

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   89

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		     $
Net Realized
and Unrealized
Gain (Loss)		      $
Total Income
(Loss) from
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		      $
Total
Distributions		  
2040 Strategy Fund                 

Class A

                    

April 30, 2008*

    13.44    .50     (1.96 )    (1.46 )    (.43 )    (.18 )    (.61 )

October 31, 2007

    11.71    .31     1.86      2.17      (.31 )    (.13 )    (.44 )

October 31, 2006

    10.23    .19     1.48      1.67      (.19 )    —      (.19 )

October 31, 2005(6)

    10.36    .02     (.12 )    (.10 )    (.03 )    —      (.03 )

Class E

                    

April 30, 2008*

    13.46    .45     (1.92 )    (1.47 )    (.43 )    (.18 )    (.61 )

October 31, 2007

    11.72    .24     1.94      2.18      (.31 )    (.13 )    (.44 )

October 31, 2006

    10.24    .17     1.50      1.67      (.19 )    —      (.19 )

October 31, 2005(5)

    10.00    .08     .24      .32      (.08 )    —      (.08 )

Class R1

                    

April 30, 2008*

    13.46    .40     (1.85 )    (1.45 )    (.44 )    (.18 )    (.62 )

October 31, 2007

    11.73    .12     2.08      2.20      (.34 )    (.13 )    (.47 )

October 31, 2006(13)

    10.89    .06     .90      .96      (.12 )    —      (.12 )

Class R2

                    

April 30, 2008*

    13.46    .11     (1.58 )    (1.47 )    (.43 )    (.18 )    (.61 )

October 31, 2007

    11.71    .28     1.90      2.18      (.30 )    (.13 )    (.43 )

October 31, 2006(7)

    11.14    .09     .59      .68      (.11 )    —      (.11 )

Class R3(9)

                    

April 30, 2008*

    13.43    .53     (2.00 )    (1.47 )    (.42 )    (.18 )    (.60 )

October 31, 2007

    11.71    .12     2.02      2.14      (.29 )    (.13 )    (.42 )

October 31, 2006

    10.24    .14     1.50      1.64      (.17 )    —      (.17 )

October 31, 2005(5)

    10.00    .06     .24      .30      (.06 )    —      (.06 )

Class S

                    

April 30, 2008*

    13.46    .43     (1.88 )    (1.45 )    (.44 )    (.18 )    (.62 )

October 31, 2007

    11.73    .26     1.94      2.20      (.34 )    (.13 )    (.47 )

October 31, 2006

    10.24    .22     1.49      1.71      (.22 )    —      (.22 )

October 31, 2005(5)

    10.00    .10     .24      .34      (.10 )    —      (.10 )
2045 Strategy Fund                 

Class R1

                    

April 30, 2008(19)

    10.00    — (h)   .40      .40      —      —      —  

Class R2

                    

April 30, 2008(19)

    10.00    .03     .37      .40      —      —      —  

Class R3

                    

April 30, 2008(19)

    10.00    .03     .37      .40      —      —      —  

 

See accompanying notes which are an integral part of the financial statements.

 

90   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		  %
Portfolio
Turnover Rate(c)
           
           
11.37   (11.01 )   1,666   .25   .83   4.29   97
13.44   19.04     2,363   .25   1.14   2.49   22
11.71   16.49     1,886   .25   2.64   1.72   88
10.23   (.95 )   991   .25   4.81   .21   2
           
11.38   (11.06 )   6,378   .25   .83   3.91   97
13.46   19.12     6,353   .25   1.14   1.96   22
11.72   16.48     3,096   .25   2.30   1.55   88
10.24   3.20     1,032   .25   5.26   .78   2
           
11.39   (10.89 )   4,802   —   .58   3.51   97
13.46   19.31     2,935   —   .89   .99   22
11.73   8.47     93   —   2.27   .56   88
           
11.38   (11.03 )   13,776   .25   .82   1.98   97
13.46   19.11     2,060   .25   1.14   2.28   22
11.71   6.11     1,256   .25   2.16   .86   88
           
11.36   (11.11 )   26,723   .50   1.08   4.57   97
13.43   18.75     29,700   .50   1.39   .96   22
11.71   16.11     5,506   .50   2.48   1.25   88
10.24   3.03     1,701   .50   5.52   .59   2
           
11.39   (10.89 )   6,591   —   .58   3.75   97
13.46   19.30     4,410   —   .89   2.07   22
11.73   16.84     1,666   —   1.97   2.00   88
10.24   3.39     1,035   —   5.02   .99   2
           
           
10.40   4.00     865   —   16.05   .08   2
           
10.40   4.00     104   .25   23.86   .26   2
           
10.40   4.00     104   .50   24.11   .24   2

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   91

Table of Contents

Russell Investment Company

LifePoints® Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

      $
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)(b)		    $
Net Realized
and Unrealized
Gain (Loss)		    $
Total Income
(Loss) from
Operations		    $
Distributions
from Net
Investment Income		    $
Distributions
from Net
Realized Gain		    $
Total
Distributions
2050 Strategy Fund                  

Class R1

                     

April 30, 2008(19)

    10.00    .03    .48    .51    —    —    —

Class R2

                     

April 30, 2008(19)

    10.00    .03    .48    .51    —    —    —

Class R3

                     

April 30, 2008(19)

    10.00    .03    .47    .50    —    —    —
In Retirement Fund                  

Class R1

                     

April 30, 2008(19)

    10.00    .09    .11    .20    —    —    —

Class R2

                     

April 30, 2008(19)

    10.00    .09    .11    .20    —    —    —

Class R3

                     

April 30, 2008(19)

    10.00    .09    .11    .20    —    —    —
2017 Retirement Distribution Fund — A Shares            

April 30, 2008(18)

    10.00    .04    .48    .52    —    —    —
2017 Accelerated Distribution Fund — A Shares            

April 30, 2008(18)

    10.00    .10    .11    .21    —    —    —
2027 Extended Distribution Fund — A Shares            

April 30, 2008(18)

    10.00    .07    .18    .25    —    —    —
2017 Retirement Distribution Fund — S Shares            

April 30, 2008(18)

    10.00    .01    .49    .50    —    —    —
2017 Accelerated Distribution Fund — S Shares            

April 30, 2008(18)

    10.00    .07    .11    .18    —    —    —
2027 Extended Distribution Fund — S Shares            

April 30, 2008(18)

    10.00    .04    .19    .23    —    —    —

 

See accompanying notes which are an integral part of the financial statements.

 

92   Financial Highlights

Table of Contents

 

$
Net Asset Value,
End of
Period		   (%)
Total
Return(c)(e)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(d)(f)(g)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(d)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(g) 		  %
Portfolio
Turnover Rate(c)
           
           
10.51   5.10     105   —   33.89   .28   —
           
10.51   5.10     105   .25   34.14   .26   —
           
10.50   5.00     105   .50   34.39   .24   —
           
           
10.20   2.00     102   —   31.45   .89   1
           
10.20   2.00     102   .25   31.70   .87   1
           
10.20   2.00     102   .50   31.94   .85   1
           
10.52   (3.50 )   97   .25   181.72   .79   56
           
10.21   (4.79 )   95   .25   178.45   3.03   114
           
10.25   (5.54 )   94   .25   180.11   2.09   51
           
10.50   (6.20 )   200   —   174.89   .15   42
           
10.18   (3.99 )   312   —   162.10   2.98   37
           
10.23   (5.58 )   483   —   121.53   1.82   40

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   93

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Highlights — April 30, 2008 (Unaudited)

 

 

 

* For the period ended April 30, 2008 (Unaudited).
** Less than 0.50% of net assets.
(1) For the period March 3, 2003 (commencement of operations) to October 31, 2003.
(2) For the period March 4, 2003 (commencement of operations) to October 31, 2003.
(3) For the period March 5, 2003 (commencement of operations) to October 31, 2003.
(4) For the period March 10, 2003 (commencement of operations) to October 31, 2003.
(5) For the period January 1, 2005 (commencement of operations) to October 31, 2005.
(6) For the period September 1, 2005 (commencement of operations) to October 31, 2005.
(7) For the period March 17, 2006 (commencement of operations) to October 31, 2006.
(8) For the period March 29, 2006 (commencement of operations) to October 31, 2006.
(9) Class D Shares were redesignated Class R3 Shares on March 1, 2006.
(10) For the period April 3, 2006 (commencement of operations) to October 31, 2006.
(11) For the period May 19, 2006 (commencement of operations) to October 31, 2006.
(12) For the period June 6, 2006 (commencement of operations) to October 31, 2006.
(13) For the period June 7, 2006 (commencement of operations) to October 31, 2006.
(14) For the period September 8, 2006 (commencement of operations) to October 31, 2006.
(15) For the period October 3, 2006 (commencement of operations) to October 31, 2006.
(16) For the period November 10, 2006 (commencement of operations) to April 30, 2007.
(17) For the period December 29, 2006 (commencement of operations) to April 30, 2007.
(18) For the period December 31, 2007 (commencement of operations) to April 30, 2008.
(19) For the period March 31, 2008 (commencement of operations) to April 30, 2008.
(a) Average month-end shares outstanding were used for this calculation.
(b) Recognition of net investment income by the Fund is affected by the timing of the declaration of dividends by the Underlying Funds in which the Fund invests.
(c) Periods less than one year are not annualized.
(d) The ratios for periods less than one year are annualized.
(e) Total return for Class A does not reflect a front-end sales charge.
(f) The calculation includes only those expenses charged directly to the Fund and does not include expenses charged to the Underlying Funds in which the Funds invest.
(g) May reflect amounts waived and/or reimbursed by RIMCo and/or RFSC.
(h) Less than $.01 per share for the period.

 

See accompanying notes which are an integral part of the financial statements.

 

94   Notes to Financial Highlights

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements — April 30, 2008 (Unaudited)

 

 

 

1.   Organization

Russell Investment Company (the “Investment Company” or “RIC”) is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on 21 of these Funds (each a “Fund” and collectively the “Funds”). The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated August 19, 2002, as amended. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.

Through December 31, 2007, Russell Investment Management Company (“RIMCo”) was the adviser, administrator and transfer agent of the Funds, providing advisory, administrative and transfer agency services to the Funds. Effective January 1, 2008, RIMCo is the Funds’ adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Funds administrator and transfer agent. There was no change in the services provided to the Funds or in aggregate fees paid by the Funds for advisory, administrative and transfer agency services.

Target Portfolio Funds

Each of the Funds listed in the table below allocates its assets by investing in a combination of shares of other of the Investment Company’s Funds (the “Underlying Funds”). RIMCo, may modify the target asset allocation for any Fund and/or the Underlying Funds in which the Funds invest. From time to time, each Fund may adjust its investments within set limits based on RIMCo’s outlook for the economy, financial markets generally and relative market valuation of the asset classes represented by each Underlying Fund. Additionally, each Fund may deviate from set limits when, in RIMCo’s opinion, it is necessary to do so to pursue the Fund’s investment objective. In the future, the Funds may also invest in other funds which are not currently Underlying Funds.

 

     Asset Allocation Targets as set forth in Current Prospectus  

Asset Class/Underlying Funds

    Conservative
Strategy Fund		     Moderate
Strategy Fund		     Balanced
Strategy Fund		     Growth
Strategy Fund		     Equity Growth
Strategy Fund		  
          
US Equities           

Diversified Equity Fund

    6 %   10 %   15 %   21 %   26 %

Quantitative Equity Fund

    5     10     15     20     25  

Special Growth Fund

    —     3     4     6     7  

Real Estate Securities Fund

    3     3     5     6     7  
International Equities           

Global Equity Fund

    2     3     4     6     7  

International Securities Fund

    4     9     14     17     23  

Emerging Markets Fund

    —     2     3     4     5  
Bonds           

Multistrategy Bond Fund

    60     60     40     20     —  

Short Duration Bond Fund

    20     —     —     —     —  
                              
   100     100     100     100     100  
                              

Target Date Funds

Each of the Funds listed in the table below allocates its assets by investing in a combination of shares of the Underlying Funds. The allocation of these Funds’ assets to the Underlying Funds in which it invests will become more conservative over time. Currently, RIMCo will manage each Fund according to its target asset allocation strategy and will not trade actively among Underlying Funds or attempt to capture short-term market opportunities. However, from time to time, RIMCo expects to modify

 

Notes to Financial Statements   95

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

the target asset allocation for the Funds and/or the Underlying Funds in which a Fund invests. In addition, the Funds may in the future invest in other funds which are not currently Underlying Funds.

 

     Asset Allocation Targets as set forth in Current Prospectus  

Assets Class/Underlying Funds

    2010
Strategy Fund		     2015
Strategy Fund		     2020
Strategy Fund		     2025
Strategy Fund		     2030
Strategy Fund		  
          
US Equities           

Equity I Fund

    9 %   12 %   15 %   19 %   23 %

Equity Q Fund

    9     12     14     19     23  

Equity II Fund

    2     3     4     5     6  

Real Estate Securities Fund

    3     4     5     6     6  
International Equities           

Global Equity Fund

    3     3     4     5     7  

International Fund

    8     10     13     16     20  

Emerging Markets Fund

    2     2     3     4     5  
Bonds           

Fixed Income III Fund

    60     54     42     26     10  

Short Duration Bond Fund

    4     —     —     —     —  
                              
   100     100     100     100     100  
                              
     Asset Allocation Targets as set forth in Current Prospectus  

Asset Class/Underlying Funds

    2035
Strategy Fund		     2040
Strategy Fund		     2045
Strategy Fund		     2050
Strategy Fund		     In Retirement
Fund		  
          
US Equities           

Equity I Fund

    23 %   23 %   23 %   23 %   8 %

Equity Q Fund

    23     23     23     23     8  

Equity II Fund

    6     6     6     6     2  

Real Estate Securities Fund

    6     6     6     6     3  
International Equities           

Global Equity Fund

    7     7     7     7     3  

International Fund

    20     20     20     20     7  

Emerging Markets Fund

    5     5     5     5     1  
Bonds           

Fixed Income III Fund

    10     10     10     10     60  

Short Duration Bond Fund

    —     —     —     —     8  
                              
   100     100     100     100     100  
                              

Target Distribution Funds

Each Fund seeks to achieve its objective primarily by investing in the Underlying Funds using a dynamic asset allocation investment strategy. The RIC Underlying Funds currently include the Diversified Equity, Special Growth, Quantitative Equity, International Securities, Global Equity, Short Duration Bond, Multistrategy Bond, Real Estate Securities, Emerging Markets and Money Market Funds. The Underlying Funds are designed to provide the foundation for a diversified portfolio. Each major asset class (US equity, non-US equity, fixed income, real estate and cash) is represented by an Underlying Fund. The Underlying Funds to which the Funds allocate their assets and the percentage allocations will change over time and a Fund may not always invest in all the Underlying Funds. In addition, the Funds may in the future invest in other funds which are not currently Underlying Funds.

 

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Investment Objectives of the Underlying Funds:

Diversified Equity Fund

Seeks to provide long term capital growth.

Equity I Fund

Seeks to provide long term capital growth.

Special Growth Fund

Seeks to provide long term capital growth.

Equity II

Seeks to provide long term capital growth.

Quantitative Equity Fund

Seeks to provide long term capital growth.

Equity Q Fund

Seeks to provide long term capital growth.

Real Estate Securities Fund

Seeks to provide current income and long term capital growth.

Emerging Markets Fund

Seeks to provide long term capital growth.

Global Equity Fund

Seeks to provide long term capital growth.

International Securities Fund

Seeks to provide long term capital growth.

International Fund

Seeks to provide long term capital growth.

Short Duration Bond Fund

Seeks to provide current income and preservation of capital with a focus on short duration securities.

Multistrategy Bond Fund

Seeks to provide current income and as a secondary objective, capital appreciation.

Fixed Income III Fund

Seeks to provide current income and as a secondary objective, capital appreciation.

Money Market Fund

Seeks to maximize current income while preserving capital and liquidity.

 

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2.   Significant Accounting Policies

The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by each Fund in the preparation of its financial statements.

Security Valuation

The Funds value their portfolio securities, the shares of the Underlying Funds, at the current net asset value per share of each Underlying Fund.

The Underlying Funds value portfolio securities according to Board-approved securities valuation procedures, including market value procedures, fair value procedures and pricing services. Money market fund securities are priced using the amortized cost method of valuation, as are debt obligation securities maturing within 60 days at the time of purchase, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.

Ordinarily, the Underlying Funds value each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Generally, Underlying Fund securities are valued at the close of the market on which they are traded as follows:

 

  •  

US listed equities; equity and fixed income options: Last sale price; last bid price if no last sale;

 

  •  

US over-the-counter equities: Official closing price; last bid price if no closing price;

 

  •  

Listed ADRs/GDRs: Last sale price; last bid price if no last sale price;

 

  •  

Municipal bonds, US bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price;

 

  •  

Futures: Settlement price.

 

  •  

Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier.

 

  •  

The value of swap agreements is equal to the Funds’ obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts.

 

  •  

Equity securities traded on a national foreign securities exchange or a foreign over the counter market are valued on the basis of the official closing price, or lacking the official closing price, at the last sale price of the primary exchange on which the security is traded.

If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Underlying Funds will use the security’s fair value, as determined in accordance with the fair value procedures. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market on which they are traded, but rather may be priced by another method that the Funds’ Board of Trustees believes reflects fair value. The use of fair value pricing by an Underlying Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Underlying Fund shares and daily movement of the benchmark index if the index is valued using another pricing method.

This policy is intended to assure that the Underlying Funds’ net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Underlying Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Underlying Fund shares is determined may be reflected in the calculation of net asset values for each applicable Underlying Fund (and each Fund which invests in such Underlying Fund) when the Underlying Funds deem that the particular event or circumstance would materially affect such Underlying Fund’s net asset value. Underlying Funds that invest primarily in frequently traded exchange listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. Underlying Funds that invest in foreign

 

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LifePoints® Funds

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securities are likely to use fair value pricing more often since significant events may occur between the close of foreign markets and the time of pricing which would trigger fair value pricing of the foreign securities. Underlying Funds that invest in low rated debt securities are also likely to use fair value pricing more often since the markets in which such securities are traded are generally thinner, more limited and less active than those for higher rated securities. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the US securities market (defined in the Fair Value Procedures as the movement by any two of four major US Indexes greater than a certain percentage) or other significant event; foreign market holidays if on a daily basis, Fund exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.

Because foreign securities can trade on non-business days, the net asset value of a Fund’s portfolio that includes an Underlying Fund which invests in foreign securities may change on days when shareholders will not be able to purchase or redeem fund shares.

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds’ financial statement disclosure.

Investment Transactions

Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost.

Investment Income

Distributions of income and capital gains from the Underlying Funds are recorded on the ex-dividend date.

Federal Income Taxes

Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.

It is each Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income tax provision was required for the Funds.

The Financial Accounting Standards Board (FASB) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds adopted the provisions of FIN 48 on November 1, 2007. Management has reviewed the Funds tax positions for all open tax years, and concluded that adoption had no effect on the Funds financial position or results of operations. At April 30, 2008, the Funds had recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.

The Funds files a U.S. tax return. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal year ending October 31, 2004 through October 31, 2006, no examinations are in progress or anticipated at this time. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Dividends and Distributions to Shareholders

Income, dividends and capital gain distributions, if any, are recorded on the ex-dividend date. Income dividends are generally declared and paid quarterly. Capital gain distributions are generally declared and paid annually. An additional distribution may be paid by the Funds to avoid imposition of federal income and excise tax on any remaining undistributed capital gains and net investment income.

 

Notes to Financial Statements   99

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LifePoints® Funds

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The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) from investment transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP relate primarily to investments in the Underlying Funds sold at a loss, wash sale deferrals, and capital loss carryforwards. Accordingly, the Funds may periodically make reclassifications among certain of their capital accounts without impacting their net asset value.

Reverse Share Split

By written consent effective as of March 26, 2008, the Board of Trustees of Russell Investment Company approved, on behalf of the 2017 Retirement Distribution Fund — A Shares, 2017 Accelerated Distribution Fund — A Shares, 2027 Extended Distribution Fund — A Shares, 2017 Retirement Distribution Fund — S Shares, 2017 Accelerated Distribution Fund — S Shares, and 2027 Extended Distribution Fund — S Shares (the “Target Distribution Funds”), a reverse share split for each of the Target Distribution Funds. The effective date of the reverse share split was March 27, 2008.

A reverse share split is a combination of a fund’s shares according to a conversion ratio in order to reduce the total number of outstanding shares of the fund. A reverse share split does not alter the rights or value of a shareholder’s interest in a fund.

The conversion ratio of each reverse share split was as follows:

2017 Retirement Distribution Fund — A Shares 10 : 9.173138

2017 Accelerated Distribution Fund — A Shares 10 : 9.324813

2027 Extended Distribution Fund — A Shares 10 : 9.215562

2017 Retirement Distribution Fund — S Shares 10 : 8.933155

2017 Accelerated Distribution Fund — S Shares 10 : 9.431073

2027 Extended Distribution Fund — S Shares 10 : 9.229232

As a result of the reverse share split, the par value of the shares of each of the Target Distribution Funds has been adjusted in accordance with the conversion ratio.

Expenses

Expenses included in the accompanying financial statements reflect the expenses of each Fund and do not include those expenses incurred by the Underlying Funds. Because the Underlying Funds have varied expense and fee levels and the Funds may own different proportions of the Underlying Funds at different times, the amount of the fees and expenses incurred indirectly by the Funds will vary.

Class Allocation

Each of the Funds presented herein offer certain of the following classes of shares: Class A, Class C, Class E, Class R1, Class R2, Class R3 and Class S. All share classes have identical voting, dividend, liquidation and other rights and the same terms and conditions. The separate classes of shares differ principally in the applicable sales charges, distribution fees and shareholder servicing fees. Shareholders of each class bear certain expenses that pertain to that particular class. Realized and unrealized gains (losses), net investment income, and expenses with the exception of class level expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class.

Guarantees

In the normal course of business the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote.

 

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3.   Investment Transactions

Securities

During the period ended April 30, 2008, purchases and sales of the Underlying Funds (excluding short-term investments) were as follows:

 

Funds    Purchases    Sales
     

Conservative Strategy Fund

    $ 94,775,638    $ 52,308,076

Moderate Strategy Fund

      189,222,088      80,849,413

Balanced Strategy Fund

      932,305,393      404,002,153

Growth Strategy Fund

      636,131,547      187,454,722

Equity Growth Strategy Fund

      356,519,177      77,315,463

2010 Strategy Fund

      53,726,459      40,343,898

2015 Strategy Fund

      477,752      12,680

2020 Strategy Fund

      122,469,269      95,440,362

2025 Strategy Fund

      1,467,994      5,357

2030 Strategy Fund

      104,355,112      67,365,137

2035 Strategy Fund

      1,303,991      7,701

2040 Strategy Fund

      75,525,245      52,512,008

2045 Strategy Fund

      1,076,257      17,034

2050 Strategy Fund

      300,879      —

In Retirement Fund

      305,348      2,645

2017 Retirement Distribution Fund — A Shares

      154,684      54,261

2017 Accelerated Distribution Fund — A Shares

      213,191      112,181

2027 Extended Distribution Fund — A Shares

      150,632      49,923

2017 Retirement Distribution Fund — S Shares

      257,377      51,231

2017 Accelerated Distribution Fund — S Shares

      323,388      52,363

2027 Extended Distribution Fund — S Shares

      513,905      73,068

 

4.   Related Party Transactions, Fees and Expenses

Adviser, Administrator, Transfer and Dividend Disbursing Agent

Through December 31, 2007, RIMCo was the adviser and administrator of all of the Funds which comprise the Investment Company. Effective January 1, 2008, RIMCo advises the Funds and RFSC is the Funds’ administrator. RFSC is a wholly-owned subsidiary of RIMCo. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides money manager evaluation to RIMCo.

The advisory fee of 0.20% and administrative fee of 0.05% are based upon the average daily net assets of the Funds and are payable monthly totaling $13,647,209 and $3,411,803 respectively, for the period ended April 30, 2008.

Through December 31, 2007 RIMCo was the Transfer and Dividend Disbursement Agent. Effective January 1, 2008 RFSC serves as Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RIMCo and RFSC are paid a fee for transfer agency and dividend disbursing services provided to the Fund. RIMCo and RFSC retain a portion of this fee for their services provided to the Fund and pay the balance to unaffiliated agents who assist in providing these services. Total fees for the Funds presented herein for the period ended April 30, 2008 were $10,170,737.

Waivers/Reimbursements

Target Portfolio Funds

At least until February 28, 2009, the Conservative Strategy Fund’s annual direct and indirect fund-level operating expenses are capped at the greater of (a) 0.84% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the current “Acquired Funds Fees and Expenses” on an annual basis.

At least until February 28, 2009, the Moderate Strategy Fund’s annual direct and indirect fund-level operating expenses are capped at the greater of (a) 0.95% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the current “Acquired Funds Fees and Expenses” on an annual basis.

 

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At least until February 28, 2009, the Balanced Strategy Fund’s annual direct and indirect fund-level operating expenses are capped at the greater of (a) 1.02% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the current “Acquired Funds Fees and Expenses” on an annual basis.

At least until February 28, 2009, the Growth Strategy Fund’s annual direct and indirect fund-level operating expenses are capped at the greater of (a) 1.09% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the current “Acquired Funds Fees and Expenses” on an annual basis.

At least until February 28, 2009, the Equity Growth Strategy Fund’s annual direct and indirect fund-level operating expenses are capped at the greater of (a) 1.16% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the current “Acquired Funds Fees and Expenses” on an annual basis.

Direct and indirect fund-level operating expenses do not include Rule 12b-1 distribution fees, shareholder servicing fees, non-recurring expenses or extraordinary expenses. These caps may not be terminated during the relevant period except at the Board’s discretion.

Target Date Funds

RIMCo and RFSC, have agreed to waive and/or reimburse the Target Date Funds for all direct operating expenses other than Rule 12b-1 distribution fees, shareholder services fees, non-recurring expenses and extraordinary expenses until February 28, 2009 for the 2010 Strategy, 2020 Strategy, 2030 Strategy, 2040 Strategy Funds and until May 1, 2009 for the 2015 Strategy, 2025 Strategy, 2035 Strategy, 2045 Strategy, 2050 Strategy and In Retirement Funds. These waivers and reimbursements may not be terminated during the relevant period except at the Board’s discretion.

Target Distribution Funds

At least until February 28, 2009, the 2017 Retirement Distribution Fund-A Shares annual direct and indirect fund-level operating expenses are capped at the greater of (a) 1.33% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the then current “Acquired Funds Fees and Expenses” plus 0.25% on an annual basis.

At least until February 28, 2009, the 2017 Accelerated Distribution Fund-A Shares annual direct and indirect fund operating expenses are capped at the greater of (a) 1.24% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the then current “Acquired Funds Fees and Expenses” plus 0.25% on an annual basis.

At least until February 28, 2009, the 2027 Extended Distribution Fund-A Shares annual direct and indirect fund-level operating expenses are capped at the greater of (a) 1.28% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the then current “Acquired Funds Fees and Expenses” plus 0.25% on an annual basis.

At least until February 28, 2009, the 2017 Retirement Distribution Fund-S Shares annual direct and indirect fund-level operating expenses are capped at the greater of (a) 1.15% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the then current “Acquired Funds Fees and Expenses” on an annual basis.

At least until February 28, 2009, the 2017 Accelerated Distribution Fund-S Shares annual direct and indirect fund operating expenses are capped at the greater of (a) 0.96% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the then current “Acquired Funds Fees and Expenses” on an annual basis.

At least until February 28, 2009, the 2027 Extended Distribution Fund-S Shares annual direct and indirect fund-level operating expenses are capped at the greater of (a) 1.00% of the Fund’s average daily net assets on an annual basis or (b) an amount equal to the then current “Acquired Funds Fees and Expenses” on an annual basis.

Direct and indirect fund-level operating expenses do not include non-recurring expenses or extraordinary expenses. These caps may not be terminated during the relevant period except at the Board’s discretion.

 

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As of April 30, 2008, RIMCo and RFSC waived/reimbursed the following expenses:

 

      RIMCo    RFSC
     

Conservative Strategy Fund

    $ 484,013    $ 475,266

Moderate Strategy Fund

      1,197,867      1,058,531

Balanced Strategy Fund

      5,634,761      6,082,277

Growth Strategy Fund

      4,031,705      4,678,220

Equity Growth Strategy Fund

      2,039,542      2,465,196

2010 Strategy Fund

      37,967      88,811

2015 Strategy Fund

      60      8,324

2020 Strategy Fund

      93,549      124,700

2025 Strategy Fund

      114      8,974

2030 Strategy Fund

      74,021      111,969

2035 Strategy Fund

      106      8,832

2040 Strategy Fund

      52,900      99,578

2045 Strategy Fund

      92      8,612

2050 Strategy Fund

      51      8,591

In Retirement Fund

      50      7,779

2017 Retirement Distribution Fund — A Shares

      62      55,710

2017 Accelerated Distribution Fund — A Shares

      63      55,711

2027 Extended Distribution Fund — A Shares

      62      55,710

2017 Retirement Distribution Fund — S Shares

      64      55,711

2017 Accelerated Distribution Fund — S Shares

      69      55,715

2027 Extended Distribution Fund — S Shares

      92      55,732

Distributor and Shareholder Servicing

On June 2, 2008, Russell Fund Distributors, Inc., a wholly owned subsidiary of RIMCo, changed its name to Russell Financial Services, Inc. (the “Distributor”) and serves as a distributor for RIC, pursuant to the Distribution Agreement with the Investment Company.

The Investment Company has a Distribution Plan pursuant to Rule 12b-1 (the “Plan”) under the 1940 Act. Under this Plan, the Investment Company is authorized to make payments to the Distributor or any Selling Agents, as defined in the Plan for sales support services provided, and related expenses incurred which are primarily intended to result in the sale of the Class A, Class C and Class R3 shares subject to the Distribution Plan. The 12b-1 distribution payments shall not exceed 0.25% of the average daily net assets of a Fund’s Class A or Class R3 shares or 0.75% of the average daily net assets of a Fund’s Class C shares on an annual basis.

In addition, the Investment Company has adopted a Shareholder Services Plan (the “Services Plan”) under which the Funds may make payments to the Distributor or any Servicing Agent for any activities or expenses primarily intended to assist, support or service the Servicing Agents’ clients who beneficially own Class C, Class E, Class R2 and Class R3 shares of the Funds. The shareholder servicing payments shall not exceed 0.25% of the average daily net assets of a Fund’s Class C, Class E, Class R2 and Class R3 shares on an annual basis. Pursuant to the rules of the Financial Industry Regulatory Authority (“FINRA”), the aggregate initial sales charges, deferred sales charges and asset-based sales charges on Class A, Class C, Class E, Class R2 and Class R3 Shares of the Funds may not exceed 7.25%, 6.25%, 6.25%, 6.25% and 6.25%, respectively, of total gross sales, subject to certain exclusions. These limitations are imposed at the class level on each class of shares of each Fund rather than on a per shareholder basis. Therefore, long-term shareholders of the Class A, Class C and Class R3 Shares may pay more than the economic equivalent of the maximum sales charges permitted by FINRA.

 

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For the period ended April 30, 2008, the Distributor retained the following amounts in sales charges:

 

Sales Charges    Class A
Shares

Conservative Strategy

    28,246

Moderate Strategy

    6,147

Balanced Strategy

    24,526

Growth Strategy

    2,929

Equity Growth Strategy

    1,572

2010 Strategy

    33

2020 Strategy

    —

2030 Strategy

    —

2040 Strategy

    —

For the period ended April 30, 2008, the sales commissions paid to the selling agents for the sale of Class A shares are as follows:

 

Funds    Aggregate Front-End
Sales Charges
on Class A Shares		    Class A Front-End
Sales Charges
Retained by
Distributor

Conservative Strategy

    209,141    $  38,333

Moderate Strategy

    439,469      79,756

Balanced Strategy

    3,441,135      634,052

Growth Strategy

    3,588,228      625,202

Equity Aggressive Strategy

    1,256,645      215,504

2010 Strategy

    115      15

2020 Strategy

    9,967      1,757

2030 Strategy

    6,651      1,277

2040 Strategy

    4,888      722

Accrued Fees Payable to Affiliates

Accrued fees payable to affiliates as April 30, 2008 were as follows:

 

    Conservative Strategy
Fund		   Moderate Strategy
Fund		   Balanced Strategy
Fund		   Growth Strategy
Fund		   Equity Growth Strategy
Fund		   2010 Strategy
Fund
           

Administration Fees

   $ 20,245   $ 49,014   $ 232,107   $ 172,289   $ 83,918   $ —

Distribution Fees

     109,135     278,741     1,554,414     1,070,101     536,494     3,236

Shareholder Servicing Fees

     77,128     170,529     743,141     529,105     281,252     5,434

Trustee Fees

     1,062     2,492     11,304     7,902     3,913     83
                                   
  $ 207,570   $ 500,776   $ 2,540,966   $ 1,779,397   $ 905,577   $ 8,753
                                   
     2015 Strategy
Fund		   2020 Strategy
Fund		   2025 Strategy
Fund		   2030 Strategy
Fund		   2035 Strategy
Fund		   2040 Strategy
Fund

Administration Fees

   $ —   $ —   $ —   $ —   $ —   $ —

Distribution Fees

     21     7,828     21     6,675     21     5,744

Shareholder Servicing Fees

     42     13,950     42     11,960     42     9,448

Trustee Fees

     —     194     —     170     —     11
                                   
  $ 63   $ 21,972   $ 63   $ 18,805   $ 63   $ 15,203
                                   

 

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     2045 Strategy
Fund		   2050 Strategy
Fund		   In Retirement
Fund		   2017 Retirement
Distribution Fund —
A Shares		   2017 Accelerated
Distribution Fund —
A Shares		   2027 Extended
Distribution Fund —
A Shares
           

Administration fees

   $ —   $ —   $ —   $ 16   $ 16   $ 16

Distribution fees

     21     21     21     57     58     58

Shareholder servicing fees

     42     42     41     —     —     —

Trustee fees

     —     —     —     1     1     1
                                   
  $ 63   $ 63   $ 62   $ 74   $ 75   $ 75
                                   
     2017 Retirement
Distribution Fund —
S Shares		   2017 Accelerated
Distribution Fund —
S Shares		   2027 Extended
Distribution Fund —
S Shares		               

Administration fees

   $ 16   $ 17   $ 23      

Distribution fees

     —     —     —      

Shareholder servicing fees

     —     —     —      

Trustee fees

     1     1     1      
                       
  $ 17   $ 18   $ 24      
                       

Board of Trustees

The Russell Fund Complex consists of Russell Investment Company, which has 44 Funds, and RIF, which has nine Funds. Each of the Trustees is a Trustee for both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 ($52,000 prior to January 1, 2008) per year, $6,500 for each regular quarterly meeting attended in person, $2,500 ($2,000 prior to January 1, 2008) for each special meeting attended in person, and $2,500 ($2,000 prior to January 1, 2008) for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 ($500 prior to January 1, 2008) fee for attending quarterly and special meetings and a $500 fee for attending committee meetings by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee chair is paid a fee of $6,000 per year. The chair person of the Board receives additional annual compensation of $52,000

Transactions With Affiliated Companies

An affiliated company is a company in which a Fund has ownership of at least 5% of the voting securities or under common control. Transactions during the period ended April 30, 2008 with Underlying Funds which are, or were, an affiliated company are as follows:

 

Affiliate    Purchases
Cost		    Sales
Cost		    Income
Distributions		    Capital Gains
Distributions
           

Conservative Strategy

            

Diversified Equity Fund

    $ 11,608,669    $ 5,641,533    $ 777,639    $ 1,635,050

Quantitative Equity Fund

      9,156,112      4,041,537      402,985      1,406,599

International Securities Fund

      9,405,948      4,107,832      1,359,882      1,584,039

Global Equity Fund

      3,376,273      1,920,265      270,030      11,087

Multistrategy Bond Fund

      41,688,684      24,260,897      8,569,770      —

Real Estate Securities Fund

      7,696,168      5,060,778      416,202      1,467,926

Short Duration Bond Fund

      11,843,784      8,111,205      2,128,878      —
                           
   $ 94,775,638    $ 53,144,047    $ 13,925,386    $ 6,104,701
                           

 

Notes to Financial Statements   105

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Affiliate    Purchases
Cost		    Sales
Cost		    Income
Distributions		    Capital Gains
Distributions
           

Moderate Strategy

            

Diversified Equity Fund

    $ 27,854,428    $ 6,332,126    $ 3,334,891    $ 7,034,786

Special Growth Fund

      10,473,839      1,872,432      1,082,893      2,544,113

Quantitative Equity Fund

      26,754,288      4,679,586      2,071,400      7,264,364

International Securities Fund

      33,622,274      7,696,652      7,939,364      9,248,052

Global Equity Fund

      5,634,130      1,610,113      1,049,875      43,108

Multistrategy Bond Fund

      63,283,044      51,284,051      21,607,982      —

Emerging Markets Fund

      8,269,821      2,127,495      1,867,704      3,234,047

Real Estate Securities Fund

      13,330,265      7,424,875      1,072,908      3,814,618
                           
   $ 189,222,089    $ 83,027,330    $ 40,027,017    $ 33,183,088
                           

Balanced Strategy

            

Diversified Equity Fund

    $ 159,676,739    $ 35,487,231    $ 23,940,637    $ 50,540,724

Special Growth Fund

      57,273,873      9,660,403      6,919,686      16,256,866

Quantitative Equity Fund

      152,815,616      22,939,791      14,830,043      52,062,165

International Securities Fund

      198,390,483      33,755,165      58,549,922      68,201,018

Global Equity Fund

      24,700,376      6,128,160      6,662,981      273,585

Multistrategy Bond Fund

      193,518,043      244,951,399      68,300,619      —

Emerging Markets Fund

      51,346,131      13,027,503      13,313,937      23,053,908

Real Estate Securities Fund

      94,584,192      58,605,043      8,683,447      30,792,152
                           
   $ 932,305,453    $ 424,554,695    $ 201,201,272    $ 241,180,418
                           

Growth Strategy

            

Diversified Equity Fund

    $ 119,530,857    $ 10,505,639    $ 24,245,901    $ 51,290,311

Special Growth Fund

      51,262,372      5,542,568      7,519,660      17,666,427

Quantitative Equity Fund

      111,006,708      6,081,774      14,291,515      50,315,903

International Securities Fund

      156,784,811      19,262,762      51,618,430      60,126,972

Global Equity Fund

      17,833,845      1,744,689      7,243,017      297,402

Multistrategy Bond Fund

      60,600,714      110,678,265      24,703,725      —

Emerging Markets Fund

      43,760,697      7,195,929      12,858,805      22,265,819

Real Estate Securities Fund

      75,351,543      36,338,398      7,482,339      26,730,509
                           
   $ 636,131,547    $ 197,350,024    $ 149,963,392    $ 228,693,343
                           

Equity Growth Strategy

            

Diversified Equity Fund

    $ 73,107,716    $ 11,047,428    $ 15,304,154    $ 32,400,663

Special Growth Fund

      29,211,826      3,197,334      4,475,607      10,514,837

Quantitative Equity Fund

      73,873,333      11,392,077      9,130,699      32,179,825

International Securities Fund

      104,012,438      24,038,426      36,087,499      42,035,993

Global Equity Fund

      9,172,812      2,467,667      4,333,954      177,954

Emerging Markets Fund

      26,701,227      8,248,974      8,337,171      14,436,328

Real Estate Securities Fund

      40,439,824      27,419,989      4,408,515      15,705,467
                           
   $ 356,519,176    $ 87,811,895    $ 82,077,599    $ 147,451,067
                           

 

106   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Affiliate   

Purchases

Cost

   

Sales

Cost

   

Income

Distributions

    Capital Gains
Distributions
           

2010 Strategy Fund

            

Diversified Equity Fund

    $ 1,467,880    $ 4,210,036    $ 85,660    $ 192,350

Special Growth Fund

      446,978      1,267,048      28,039      65,875

Quantitative Equity Fund

      1,428,935      4,348,880      52,105      198,919

International Securities Fund

      1,666,028      3,974,691      217,039      252,816

Global Equity Fund

      646,308      292,583      29,206      1,199

Multistrategy Bond Fund

      4,699,898      24,081,794      328,263      —

Emerging Markets Fund

      471,144      244,590      48,462      83,915

Real Estate Securities Fund

      928,105      525,195      33,180      111,743

Short Duration Bond Fund

      1,266,497      187,183      27,902      —

Equity I Fund

      4,249,903      390,912      10,090      —

Equity II Fund

      1,131,619      98,764      —      —

Equity Q Fund

      4,285,659      348,536      9,052      —

International Fund

      3,660,432      349,905      —      —

Fixed Income III Fund

      27,377,073      853,320      307,492      —
                           
   $ 53,726,459    $ 41,173,437    $ 1,176,490    $ 906,817
                           

2015 Strategy Fund

            

Global Equity Fund

    $ 15,447    $ 536    $ —    $ —

Emerging Markets Fund

      10,656      366      —      —

Real Estate Securities Fund

      17,125      666      91      —

Equity I Fund

      53,890      1,405      92      —

Equity II Fund

      15,515      452      —      —

Equity Q Fund

      54,175      1,506      82      —

International Fund

      49,382      —      —      —

Fixed Income III Fund

      261,561      1,530      1,976      —
                           
   $ 477,751    $ 6,461    $ 2,241    $ —
                           

2020 Strategy Fund

            

Diversified Equity Fund

    $ 4,355,878    $ 16,240,486    $ 353,020    $ 792,709

Special Growth Fund

      1,346,952      4,719,919      109,582      257,447

Quantitative Equity Fund

      4,098,480      16,784,188      214,564      819,140

International Securities Fund

      5,503,295      16,103,995      928,611      1,081,679

Global Equity Fund

      1,429,023      614,451      106,207      4,361

Multistrategy Bond Fund

      6,845,638      40,896,112      561,291      —

Emerging Markets Fund

      1,557,424      594,757      211,107      365,544

Real Estate Securities Fund

      2,560,419      1,571,414      139,411      482,993

Equity I Fund

      15,240,704      408,016      37,647      —

Equity II Fund

      4,151,738      104,207      —      —

Equity Q Fund

      15,413,873      293,638      33,597      —

International Fund

      14,181,313      721,390      —      —

Fixed Income III Fund

      45,784,531      1,040,752      498,047      —
                           
   $ 122,469,268    $ 100,093,325    $ 3,193,084    $ 3,803,873
                           

 

Notes to Financial Statements   107

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Affiliate   

Purchases

Cost

   

Sales

Cost

   

Income

Distributions

    Capital Gains
Distributions
           

2025 Strategy Fund

            

Global Equity Fund

    $ 78,935    $ 533    $ —    $ —

Emerging Markets Fund

      53,938      191      —      —

Real Estate Securities Fund

      83,731      1,642      144      —

Equity I Fund

      275,485      735      151      —

Equity II Fund

      79,004      483      —      —

Equity Q Fund

      275,907      1,108      135      —

International Fund

      235,856      549      —      —

Fixed Income III Fund

      385,137      —      952      —
                           
   $ 1,467,993    $ 5,241    $ 1,382    $ —
                           

2030 Strategy Fund

            

Diversified Equity Fund

    $ 6,786,001    $ 20,110,684    $ 422,122    $ 947,877

Special Growth Fund

      2,181,548      6,129,569      136,437      320,541

Quantitative Equity Fund

      6,478,722      20,735,840      256,765      980,250

International Securities Fund

      7,345,296      18,712,375      1,061,472      1,236,439

Global Equity Fund

      2,184,981      227,289      132,310      5,433

Multistrategy Bond Fund

      2,605,888      6,304,014      63,490      —

Emerging Markets Fund

      2,133,829      459,306      248,130      429,653

Real Estate Securities Fund

      3,176,209      1,252,647      144,976      489,355

Equity I Fund

      19,713,769      119,882      49,052      —

Equity II Fund

      5,642,224      47,418      —      —

Equity Q Fund

      20,059,172      92,070      44,003      —

International Fund

      16,890,290      284,395      —      —

Fixed Income III Fund

      9,157,182      285,961      98,880      —
                           
   $ 104,355,111    $ 74,761,450    $ 2,657,637    $ 4,409,548
                           

2035 Strategy Fund

            

Emerging Markets Fund

    $ —    $ 42    $ —    $ —

Global Equity Fund

      84,337      317      —      —

Real Estate Securities Fund

      84,458      1,285      164      —

Equity I Fund

      299,021      1,053      184      —

Equity II Fund

      84,614      615      —      —

Equity Q Fund

      299,344      2,258      165      —

International Fund

      261,163      600      —      —

Fixed Income III Fund

      132,837      1,512      366      —
                           
   $ 1,245,774    $ 7,682    $ 879    $ —
                           

2040 Strategy Fund

            

Diversified Equity Fund

    $ 5,509,386    $ 16,166,667    $ 332,021    $ 745,556

Special Growth Fund

      1,722,724      4,822,959      105,525      247,917

Quantitative Equity Fund

      5,250,708      16,631,506      201,960      771,019

International Securities Fund

      6,338,389      15,653,593      852,510      993,034

Global Equity Fund

      1,715,865      764,639      102,333      4,202

Emerging Markets Fund

      1,746,572      904,214      195,412      338,368

Real Estate Securities Fund

      2,515,725      1,619,330      107,100      378,483

Equity I Fund

      14,043,537      477,688      33,814      —

Equity II Fund

      3,996,601      121,652      —      —

Equity Q Fund

      14,257,286      432,241      30,368      —

International Fund

      11,757,537      258,268      —      —

Fixed Income III Fund

      6,670,917      533,521      69,334      —
                           
   $ 75,525,247    $ 58,386,278    $ 2,030,377    $ 3,478,579
                           

 

108   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Affiliate   

Purchases

Cost

   

Sales

Cost

   

Income

Distributions

    Capital Gains
Distributions
           

2045 Strategy Fund

            

Global Equity Fund

    $ 69,761    $ 1,450    $ —    $ —

Emerging Markets Fund

      48,289      1,243      —      —

Real Estate Securities Fund

      69,527      610      164      —

Equity I Fund

      246,768      3,045      184      —

Equity II Fund

      69,869      1,068      —      —

Equity Q Fund

      246,110      2,277      165      —

International Fund

      216,608      5,122      —      —

Fixed Income III Fund

      109,324      2,266      366      —
                           
   $ 1,076,256    $ 17,081    $ 879    $ —
                           

2050 Strategy Fund

            

Global Equity Fund

    $ 19,500    $ —    $ —    $ —

Emerging Markets Fund

      13,500      —      —      —

Real Estate Securities Fund

      19,664      —      164      —

Equity I Fund

      69,184      —      184      —

Equity II Fund

      19,500      —      —      —

Equity Q Fund

      69,165      —      165      —

International Fund

      60,000      —      —      —

Fixed Income III Fund

      30,366      —      366      —
                           
   $ 300,879    $ —    $ 879    $ —
                           

In Retirement Fund

            

Global Equity Fund

    $ 7,800    $ 203    $ —    $ —

Emerging Markets Fund

      3,600      78      —      —

Real Estate Securities Fund

      9,076      405      76      —

Short Duration Bond Fund

      24,566      —      307      —

Equity I Fund

      24,666      585      66      —

Equity II Fund

      5,400      138      —      —

Equity Q Fund

      24,659      593      59      —

International Fund

      21,000      555      —      —

Fixed Income III Fund

      184,582      —      2,196      —
                           
   $ 305,349    $ 2,557    $ 2,704    $ —
                           

2017 Retirement Distribution Fund — A Shares

            

Diversified Equity Fund

    $ 31,498    $ 6,059    $ 41    $ —

Special Growth Fund

      8,430      1,379      —      —

Quantitative Equity Fund

      30,293      5,594      33      —

International Securities Fund

      28,057      5,465      —      —

Global Equity Fund

      8,474      1,570      —      —

Multistrategy Bond Fund

      33,854      33,854      315      —

Emerging Markets Fund

      6,050      1,161      —      —

Real Estate Securities Fund

      8,028      1,666      54      —
                           
   $ 154,684    $ 56,748    $ 443    $ —
                           

2017 Accelerated Distribution Fund — A Shares

            

Diversified Equity Fund

    $ 23,977    $ 18,114    $ 10    $ —

Special Growth Fund

      1,060      4,832      —      —

Quantitative Equity Fund

      23,031      17,379      8      —

International Securities Fund

      21,586      16,446      —      —

Global Equity Fund

      6,447      4,875      —      —

Multistrategy Bond Fund

      120,906      48,258      999      —

Emerging Markets Fund

      4,645      3,533      —      —

Real Estate Securities Fund

      6,190      4,629      13      —
                           
   $ 207,842    $ 118,066    $ 1,030    $ —
                           

 

Notes to Financial Statements   109

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Affiliate   

Purchases

Cost

   

Sales

Cost

   

Income

Distributions

    Capital Gains
Distributions
           

2027 Extended Distribution Fund — A Shares

            

Diversified Equity Fund

    $ 19,411    $ 11,291    $ 13    $ —

Special Growth Fund

      5,130      2,901      —      —

Quantitative Equity Fund

      18,442      10,624      10      —

International Securities Fund

      17,804      10,771      —      —

Global Equity Fund

      5,230      3,063      —      —

Multistrategy Bond Fund

      75,776      11,315      688      —

Emerging Markets Fund

      3,863      2,336      —      —

Real Estate Securities Fund

      4,975      2,962      17      —
                           
   $ 150,631    $ 55,263    $ 728    $ —
                           

2017 Retirement Distribution Fund — S Shares

            

Diversified Equity Fund

    $ 60,889    $ 8,128    $ 40    $ —

Special Growth Fund

      16,425      2,043      —      —

Quantitative Equity Fund

      58,264      7,500      32      —

International Securities Fund

      54,444      8,019      —      —

Global Equity Fund

      16,394      2,256      —      —

Multistrategy Bond Fund

      23,464      23,464      21      —

Emerging Markets Fund

      11,742      1,702      —      —

Real Estate Securities Fund

      15,754      2,201      52      —
                           
   $ 257,376    $ 55,313    $ 145    $ —
                           

2017 Accelerated Distribution Fund — S Shares

            

Diversified Equity Fund

    $ 22,128    $ —    $ 6    $ —

Special Growth Fund

      5,954      —      —      —

Quantitative Equity Fund

      21,284      —      5      —

International Securities Fund

      19,507      —      —      —

Global Equity Fund

      5,953      —      —      —

Multistrategy Bond Fund

      238,332      —      1,006      —

Emerging Markets Fund

      4,267      —      —      —

Real Estate Securities Fund

      5,963      —      8      —
                           
   $ 323,388    $ —    $ 1,025    $ —
                           

2027 Extended Distribution Fund — S Shares

            

Diversified Equity Fund

    $ 37,058    $ 14,672    $ 9    $ —

Special Growth Fund

      9,950      3,910      —      —

Quantitative Equity Fund

      35,479      13,882      7      —

International Securities Fund

      33,016      13,007      —      —

Global Equity Fund

      9,988      3,984      —      —

Multistrategy Bond Fund

      371,607      24,256      809      —

Emerging Markets Fund

      7,182      2,847      —      —

Real Estate Securities Fund

      9,627      3,700      12      —
                           
   $ 513,907    $ 80,258    $ 837    $ —
                           

 

5.   Federal Income Taxes

The Funds may have net tax basis capital loss carryforwards which may be applied against any realized net taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. At October 31, 2007, the Funds had no capital loss carryforwards.

 

110   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

At April 30, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

 

     Equity
Growth Strategy		     Growth Strategy     Balanced Strategy     Moderate Strategy     Conservative
Strategy		  
          

Cost of Investments

    $ 2,036,466,081     $ 3,945,675,999     $ 5,486,215,255     $ 1,189,898,220     $ 482,486,598  
                                        

Unrealized Appreciation

      54,051,148       184,855,640       265,983,602       51,497,553       18,249,198  

Unrealized Depreciation

      (11,216,920 )     (36,297,150 )     (29,408,506 )     (9,055,071 )     (3,411,941 )
                                        

Net Unrealized Appreciation (Depreciation)

    $ 42,834,228     $ 148,558,490     $ 236,575,096     $ 42,442,482     $ 14,837,257  
                                        
      2010 Strategy     2015 Strategy     2020 Strategy     2025 Strategy     2030 Strategy  

Cost of Investments

    $ 43,748,399     $ 465,177     $ 105,038,269     $ 1,462,752     $ 86,727,108  
                                        

Unrealized Appreciation

      388,544       7,127       2,160,151       11,543       519,131  

Unrealized Depreciation

      (893,348 )     (732 )     (3,033,405 )     —       (676,957 )
                                        

Net Unrealized Appreciation (Depreciation)

    $ (504,804 )   $ 6,395     $ (873,254 )   $ 11,543     $ (157,826 )
                                        
      2035 Strategy     2040 Strategy     2045 Strategy     2050 Strategy     In Retirement  

Cost of Investments

    $ 1,296,332     $ 60,073,562     $ 1,059,247     $ 300,879     $ 302,790  
                                        

Unrealized Appreciation

      13,412       181,483       13,619       14,629       5,040  

Unrealized Depreciation

      —       (310,448 )     —       (254 )     (1,746 )
                                        

Net Unrealized Appreciation (Depreciation)

    $ 13,412     $ (128,965 )   $ 13,619     $ 14,375     $ 3,294  
                                        
      2017 — Class A
Retirement Distribution		     2017 — Class A
Accelerated Distribution		     2027 — Class A
Extended Distribution		              

Cost of Investments

    $ 99,325     $ 97,751     $ 96,775      
                            

Unrealized Appreciation

      1,004       11,851       429      

Unrealized Depreciation

      (3,735 )     (14,292 )     (2,730 )    
                            

Net Unrealized Appreciation (Depreciation)

    $ (2,731 )   $ (2,441 )   $ (2,301 )    
                            
      2017 — Class S
Retirement Distribution		     2017 — Class S
Accelerated Distribution		     2027 — Class S
Extended Distribution		              

Cost of Investments

    $ 205,763     $ 268,206     $ 440,823      
                            

Unrealized Appreciation

      835       —       —      

Unrealized Depreciation

      (6,836 )     (1,181 )     (2,985 )    
                            

Net Unrealized Appreciation (Depreciation)

    $ (6,001 )   $ (1,181 )   $ (2,985 )    
                            

 

Notes to Financial Statements   111

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands)

Share transactions for the periods ended April 30, 2008 and October 31, 2007 were as follows:

 

     Shares     Dollars  
Conservative Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    2,882     1,721     $ 30,750     $ 18,654  

Proceeds from reinvestment of distributions

    181     241       1,909       2,595  

Payments for shares redeemed

    (1,790 )   (1,425 )     (19,011 )     (15,496 )
                            

Net increase (decrease)

    1,273     537       13,648       5,753  
                            
        

Class C

         

Proceeds from shares sold

    2,570     3,293       27,095       35,593  

Proceeds from reinvestment of distributions

    279     399       2,945       4,284  

Payments for shares redeemed

    (1,736 )   (3,361 )     (18,382 )     (36,263 )
                            

Net increase (decrease)

    1,113     331       11,658       3,614  
                            
        

Class E

         

Proceeds from shares sold

    2,011     2,748       21,564       29,955  

Proceeds from reinvestment of distributions

    311     459       3,295       4,957  

Payments for shares redeemed

    (1,993 )   (2,913 )     (21,349 )     (31,656 )
                            

Net increase (decrease)

    329     294       3,510       3,256  
                            
        

Class R1

         

Proceeds from shares sold

    108     214       1,154       2,317  

Proceeds from reinvestment of distributions

    9     4       91       40  

Payments for shares redeemed

    (11 )   (45 )     (117 )     (491 )
                            

Net increase (decrease)

    106     173       1,128       1,866  
                            
        

Class R2

         

Proceeds from shares sold

    2,948     165       31,669       1,787  

Proceeds from reinvestment of distributions

    695     12       7,392       129  

Payments for shares redeemed

    (2,861 )   (25 )     (30,683 )     (273 )
                            

Net increase (decrease)

    782     152       8,378       1,643  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    452     3,391       4,851       36,998  

Proceeds from reinvestment of distributions

    20     1,005       211       10,879  

Payments for shares redeemed

    (162 )   (3,859 )     (1,702 )     (42,140 )
                            

Net increase (decrease)

    310     537       3,360       5,737  
                            
        

Class S

         

Proceeds from shares sold

    2,251     3,735       24,055       40,640  

Proceeds from reinvestment of distributions

    186     264       1,974       2,858  

Payments for shares redeemed

    (2,331 )   (3,147 )     (25,142 )     (34,345 )
                            

Net increase (decrease)

    106     852       887       9,153  
                            

Total increase (decrease)

    4,019     2,876     $ 42,569     $ 31,022  
                            

 

112   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Moderate Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    5,156     5,814     $ 57,878     $ 67,785  

Proceeds from reinvestment of distributions

    1,018     756       11,354       8,719  

Payments for shares redeemed

    (3,074 )   (3,400 )     (34,295 )     (39,680 )
                            

Net increase (decrease)

    3,100     3,170       34,937       36,824  
                            
        

Class C

         

Proceeds from shares sold

    4,074     6,915       45,387       80,137  

Proceeds from reinvestment of distributions

    1,186     966       13,192       11,074  

Payments for shares redeemed

    (3,485 )   (8,050 )     (38,548 )     (92,709 )
                            

Net increase (decrease)

    1,775     (169 )     20,031       (1,498 )
                            
        

Class E

         

Proceeds from shares sold

    2,374     5,954       26,778       69,478  

Proceeds from reinvestment of distributions

    1,028     867       11,479       10,004  

Payments for shares redeemed

    (2,825 )   (5,352 )     (31,657 )     (62,464 )
                            

Net increase (decrease)

    577     1,469       6,600       17,018  
                            
        

Class R1

         

Proceeds from shares sold

    166     204       1,864       2,376  

Proceeds from reinvestment of distributions

    11     3       128       30  

Payments for shares redeemed

    (36 )   (34 )     (419 )     (397 )
                            

Net increase (decrease)

    141     173       1,573       2,009  
                            
        

Class R2

         

Proceeds from shares sold

    1,034     231       11,803       2,665  

Proceeds from reinvestment of distributions

    45     12       499       134  

Payments for shares redeemed

    (64 )   (49 )     (701 )     (572 )
                            

Net increase (decrease)

    1,015     194       11,601       2,227  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    2,709     5,097       30,748       59,503  

Proceeds from reinvestment of distributions

    1,861     1,579       20,854       18,257  

Payments for shares redeemed

    (4,096 )   (5,703 )     (46,271 )     (66,718 )
                            

Net increase (decrease)

    474     973       5,331       11,042  
                            
        

Class S

         

Proceeds from shares sold

    5,554     8,119       61,774       94,417  

Proceeds from reinvestment of distributions

    719     574       8,042       6,650  

Payments for shares redeemed

    (3,898 )   (6,566 )     (43,936 )     (76,874 )
                            

Net increase (decrease)

    2,375     2,127       25,880       24,193  
                            

Total increase (decrease)

    9,457     7,937     $ 105,953     $ 91,815  
                            

 

Notes to Financial Statements   113

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Balanced Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    18,734     30,989     $ 224,155     $ 384,180  

Proceeds from reinvestment of distributions

    7,338     4,710       86,024       57,433  

Payments for shares redeemed

    (10,775 )   (14,254 )     (125,874 )     (176,923 )
                            

Net increase (decrease)

    15,297     21,445       184,305       264,690  
                            
        

Class C

         

Proceeds from shares sold

    17,643     41,510       204,836       511,730  

Proceeds from reinvestment of distributions

    8,875     5,296       103,515       63,959  

Payments for shares redeemed

    (14,111 )   (20,573 )     (162,637 )     (253,738 )
                            

Net increase (decrease)

    12,407     26,233       145,714       321,951  
                            
        

Class E

         

Proceeds from shares sold

    6,376     15,730       75,285       195,313  

Proceeds from reinvestment of distributions

    4,077     2,886       47,879       35,239  

Payments for shares redeemed

    (6,293 )   (11,136 )     (73,958 )     (138,689 )
                            

Net increase (decrease)

    4,160     7,480       49,206       91,863  
                            
        

Class R1

         

Proceeds from shares sold

    839     1,790       9,720       22,407  

Proceeds from reinvestment of distributions

    151     60       1,775       741  

Payments for shares redeemed

    (188 )   (149 )     (2,205 )     (1,863 )
                            

Net increase (decrease)

    802     1,701       9,290       21,285  
                            
        

Class R2

         

Proceeds from shares sold

    3,301     745       40,453       9,179  

Proceeds from reinvestment of distributions

    282     79       3,310       964  

Payments for shares redeemed

    (766 )   (338 )     (8,969 )     (4,193 )
                            

Net increase (decrease)

    2,817     486       34,794       5,950  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    8,041     17,043       94,802       212,147  

Proceeds from reinvestment of distributions

    6,674     4,893       78,468       59,637  

Payments for shares redeemed

    (12,250 )   (14,804 )     (145,697 )     (184,826 )
                            

Net increase (decrease)

    2,465     7,132       27,573       86,958  
                            
        

Class S

         

Proceeds from shares sold

    15,407     24,886       180,439       311,093  

Proceeds from reinvestment of distributions

    3,607     2,954       42,555       36,234  

Payments for shares redeemed

    (16,767 )   (27,611 )     (201,129 )     (347,137 )
                            

Net increase (decrease)

    2,247     229       21,865       190  
                            

Total increase (decrease)

    40,195     64,706     $ 472,747     $ 792,887  
                            

 

114   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Growth Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    14,204     25,662     $ 173,084     $ 328,785  

Proceeds from reinvestment of distributions

    6,093     3,130       73,125       39,074  

Payments for shares redeemed

    (6,040 )   (6,687 )     (71,242 )     (86,175 )
                            

Net increase (decrease)

    14,257     22,105       174,967       281,684  
                            
        

Class C

         

Proceeds from shares sold

    11,272     26,590       133,485       338,379  

Proceeds from reinvestment of distributions

    6,299     3,224       75,173       39,648  

Payments for shares redeemed

    (8,479 )   (12,899 )     (99,292 )     (165,014 )
                            

Net increase (decrease)

    9,092     16,915       109,357       213,013  
                            
        

Class E

         

Proceeds from shares sold

    4,667     12,254       56,115       156,909  

Proceeds from reinvestment of distributions

    3,549     2,265       42,667       28,263  

Payments for shares redeemed

    (5,128 )   (8,993 )     (61,235 )     (115,825 )
                            

Net increase (decrease)

    3,088     5,526       37,547       69,347  
                            
        

Class R1

         

Proceeds from shares sold

    613     1,143       7,230       14,798  

Proceeds from reinvestment of distributions

    89     28       1,078       354  

Payments for shares redeemed

    (129 )   (195 )     (1,551 )     (2,489 )
                            

Net increase (decrease)

    573     976       6,757       12,663  
                            
        

Class R2

         

Proceeds from shares sold

    1,458     464       18,655       5,918  

Proceeds from reinvestment of distributions

    180     50       2,166       620  

Payments for shares redeemed

    (185 )   (148 )     (2,178 )     (1,921 )
                            

Net increase (decrease)

    1,453     366       18,643       4,617  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    4,898     11,128       58,891       143,042  

Proceeds from reinvestment of distributions

    5,394     3,346       64,980       41,753  

Payments for shares redeemed

    (6,318 )   (8,379 )     (76,659 )     (108,206 )
                            

Net increase (decrease)

    3,974     6,095       47,212       76,589  
                            
        

Class S

         

Proceeds from shares sold

    6,408     13,660       76,712       176,462  

Proceeds from reinvestment of distributions

    2,513     1,726       30,352       21,685  

Payments for shares redeemed

    (10,260 )   (12,782 )     (126,003 )     (165,858 )
                            

Net increase (decrease)

    (1,339 )   2,604       (18,939 )     32,289  
                            

Total increase (decrease)

    31,098     54,587     $ 375,554     $ 690,202  
                            

 

Notes to Financial Statements   115

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Equity Growth Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    5,772     13,055     $ 71,121     $ 170,060  

Proceeds from reinvestment of distributions

    2,313     892       28,010       11,107  

Payments for shares redeemed

    (3,162 )   (3,354 )     (37,176 )     (43,909 )
                            

Net increase (decrease)

    4,923     10,593       61,955       137,258  
                            
        

Class C

         

Proceeds from shares sold

    6,266     16,879       71,184       209,627  

Proceeds from reinvestment of distributions

    4,092     1,878       46,897       22,287  

Payments for shares redeemed

    (4,780 )   (6,948 )     (53,287 )     (86,746 )
                            

Net increase (decrease)

    5,578     11,809       64,794       145,168  
                            
        

Class E

         

Proceeds from shares sold

    2,691     8,080       32,064       103,172  

Proceeds from reinvestment of distributions

    1,927     1,083       22,910       13,264  

Payments for shares redeemed

    (2,761 )   (6,105 )     (32,879 )     (78,544 )
                            

Net increase (decrease)

    1,857     3,058       22,095       37,892  
                            
        

Class R1

         

Proceeds from shares sold

    259     796       3,008       10,389  

Proceeds from reinvestment of distributions

    63     6       766       73  

Payments for shares redeemed

    (186 )   (172 )     (2,160 )     (2,223 )
                            

Net increase (decrease)

    136     630       1,614       8,239  
                            
        

Class R2

         

Proceeds from shares sold

    1,067     373       12,897       4,750  

Proceeds from reinvestment of distributions

    197     79       2,345       967  

Payments for shares redeemed

    (133 )   (208 )     (1,566 )     (2,693 )
                            

Net increase (decrease)

    1,131     244       13,676       3,024  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    3,912     9,103       47,047       116,246  

Proceeds from reinvestment of distributions

    3,314     1,781       39,326       21,774  

Payments for shares redeemed

    (5,578 )   (6,348 )     (66,015 )     (81,212 )
                            

Net increase (decrease)

    1,648     4,536       20,358       56,808  
                            
        

Class S

         

Proceeds from shares sold

    7,248     11,141       84,843       145,366  

Proceeds from reinvestment of distributions

    1,787     930       21,572       11,545  

Payments for shares redeemed

    (5,641 )   (7,858 )     (68,412 )     (103,322 )
                            

Net increase (decrease)

    3,394     4,213       38,003       53,589  
                            

Total increase (decrease)

    18,667     35,083     $ 222,495     $ 441,978  
                            

 

116   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
2010 Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    1     84     $ 12     $ 922  

Proceeds from reinvestment of distributions

    6     8       67       87  

Payments for shares redeemed

    (47 )   (79 )     (499 )     (873 )
                            

Net increase (decrease)

    (40 )   13       (420 )     136  
                            
        

Class E

         

Proceeds from shares sold

    164     349       1,764       3,822  

Proceeds from reinvestment of distributions

    17     12       188       128  

Payments for shares redeemed

    (102 )   (79 )     (1,089 )     (868 )
                            

Net increase (decrease)

    79     282       863       3,082  
                            
        

Class R1

         

Proceeds from shares sold

    156     453       1,687       5,013  

Proceeds from reinvestment of distributions

    19     7       207       77  

Payments for shares redeemed

    (56 )   (26 )     (595 )     (285 )
                            

Net increase (decrease)

    119     434       1,299       4,805  
                            
        

Class R2

         

Proceeds from shares sold

    662     61       7,288       673  

Proceeds from reinvestment of distributions

    21     1       221       9  

Payments for shares redeemed

    (95 )   (2 )     (1,016 )     (17 )
                            

Net increase (decrease)

    588     60       6,493       665  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    819     1,590       8,913       17,525  

Proceeds from reinvestment of distributions

    51     29       550       315  

Payments for shares redeemed

    (1,058 )   (451 )     (11,576 )     (4,990 )
                            

Net increase (decrease)

    (188 )   1,168       (2,113 )     12,850  
                            
        

Class S

         

Proceeds from shares sold

    642     317       6,903       3,497  

Proceeds from reinvestment of distributions

    15     15       165       166  

Payments for shares redeemed

    (40 )   (233 )     (427 )     (2,559 )
                            

Net increase (decrease)

    617     99       6,641       1,104  
                            

Total increase (decrease)

    1,175     2,056     $ 12,763     $ 22,642  
                            

 

Notes to Financial Statements   117

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

2015 Strategy Fund    Shares     Dollars  
    
    
    

Class R1

     

Proceeds from shares sold

    27     $ 273  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    (1 )     (10 )
              

Net increase (decrease)

    26       263  
              
    

Class R2

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              
    

Class R3

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              

Total increase (decrease)

    46     $ 463  
              

 

118   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
2020 Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    29     96     $ 328     $ 1,116  

Proceeds from reinvestment of distributions

    7     4       84       41  

Payments for shares redeemed

    (30 )   (130 )     (332 )     (1,483 )
                            

Net increase (decrease)

    6     (30 )     80       (326 )
                            
        

Class E

         

Proceeds from shares sold

    154     686       1,734       7,950  

Proceeds from reinvestment of distributions

    36     13       407       146  

Payments for shares redeemed

    (71 )   (122 )     (812 )     (1,450 )
                            

Net increase (decrease)

    119     577       1,329       6,646  
                            
        

Class R1

         

Proceeds from shares sold

    373     1,675       4,172       19,705  

Proceeds from reinvestment of distributions

    73     32       831       369  

Payments for shares redeemed

    (190 )   (224 )     (2,142 )     (2,640 )
                            

Net increase (decrease)

    256     1,483       2,861       17,434  
                            
        

Class R2

         

Proceeds from shares sold

    1,740     281       20,243       3,267  

Proceeds from reinvestment of distributions

    73     5       830       55  

Payments for shares redeemed

    (166 )   (10 )     (1,821 )     (112 )
                            

Net increase (decrease)

    1,647     276       19,252       3,210  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    1,501     3,901       17,113       45,547  

Proceeds from reinvestment of distributions

    138     52       1,559       608  

Payments for shares redeemed

    (1,909 )   (1,232 )     (22,187 )     (14,581 )
                            

Net increase (decrease)

    (270 )   2,721       (3,515 )     31,574  
                            
        

Class S

         

Proceeds from shares sold

    464     608       5,213       7,055  

Proceeds from reinvestment of distributions

    41     27       469       315  

Payments for shares redeemed

    (119 )   (358 )     (1,328 )     (4,197 )
                            

Net increase (decrease)

    386     277       4,354       3,173  
                            

Total increase (decrease)

    2,144     5,304     $ 24,361     $ 61,711  
                            

 

Notes to Financial Statements   119

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares         Dollars      
2025 Strategy Fund    2008         2008      
          
          

Class R1

           

Proceeds from shares sold

    123       $ 1,264    

Proceeds from reinvestment of distributions

    —         —    

Payments for shares redeemed

    —         (3 )  
                  

Net increase (decrease)

    123         1,261    
                  
          

Class R2

           

Proceeds from shares sold

    10         100    

Proceeds from reinvestment of distributions

    —         —    

Payments for shares redeemed

    —         —    
                  

Net increase (decrease)

    10         100    
                  
          

Class R3

           

Proceeds from shares sold

    10         101    

Proceeds from reinvestment of distributions

    —         —    

Payments for shares redeemed

    —         —    
                  

Net increase (decrease)

    10         101    
                  

Total increase (decrease)

    143       $ 1,462    
                  

 

120   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
2030 Strategy Fund    2008     2007     2008     2007  
        
        

Class A

         

Proceeds from shares sold

    21     97     $ 245     $ 1,188  

Proceeds from reinvestment of distributions

    9     8       100       92  

Payments for shares redeemed

    (20 )   (70 )     (222 )     (847 )
                            

Net increase (decrease)

    10     35       123       433  
                            
        

Class E

         

Proceeds from shares sold

    184     560       2,088       6,785  

Proceeds from reinvestment of distributions

    42     16       484       185  

Payments for shares redeemed

    (103 )   (183 )     (1,180 )     (2,212 )
                            

Net increase (decrease)

    123     393       1,392       4,758  
                            
        

Class R1

         

Proceeds from shares sold

    407     640       4,793       8,012  

Proceeds from reinvestment of distributions

    43     3       505       34  

Payments for shares redeemed

    (84 )   (25 )     (951 )     (312 )
                            

Net increase (decrease)

    366     618       4,347       7,734  
                            
        

Class R2

         

Proceeds from shares sold

    1,624     208       19,554       2,506  

Proceeds from reinvestment of distributions

    79     2       921       29  

Payments for shares redeemed

    (227 )   (11 )     (2,511 )     (136 )
                            

Net increase (decrease)

    1,476     199       17,964       2,399  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    1,463     2,093       17,116       25,650  

Proceeds from reinvestment of distributions

    102     26       1,181       310  

Payments for shares redeemed

    (1,124 )   (626 )     (13,529 )     (7,673 )
                            

Net increase (decrease)

    441     1,493       4,768       18,287  
                            
        

Class S

         

Proceeds from shares sold

    464     634       5,327       7,692  

Proceeds from reinvestment of distributions

    36     14       424       167  

Payments for shares redeemed

    (55 )   (267 )     (618 )     (3,315 )
                            

Net increase (decrease)

    445     381       5,133       4,544  
                            

Total increase (decrease)

    2,861     3,119     $ 33,727     $ 38,155  
                            

 

Notes to Financial Statements   121

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
2035 Strategy Fund    2008     2008  
    
    

Class R1

     

Proceeds from shares sold

    107     $ 1,106  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    (1 )     (11 )
              

Net increase (decrease)

    106       1,095  
              
    

Class R2

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              
    

Class R3

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              

Total increase (decrease)

    126     $ 1,295  
              

 

122   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
2040 Strategy Fund    2008     2007     2008     2007  
        

Class A

         

Proceeds from shares sold

    11     67     $ 139     $ 842  

Proceeds from reinvestment of distributions

    8     6       96       70  

Payments for shares redeemed

    (49 )   (58 )     (531 )     (723 )
                            

Net increase (decrease)

    (30 )   15       (296 )     189  
                            
        

Class E

         

Proceeds from shares sold

    108     280       1,229       3,396  

Proceeds from reinvestment of distributions

    25     12       298       146  

Payments for shares redeemed

    (45 )   (84 )     (511 )     (1,051 )
                            

Net increase (decrease)

    88     208       1,016       2,491  
                            
        

Class R1

         

Proceeds from shares sold

    223     238       2,534       3,006  

Proceeds from reinvestment of distributions

    13     1       154       15  

Payments for shares redeemed

    (33 )   (29 )     (362 )     (357 )
                            

Net increase (decrease)

    203     210       2,326       2,664  
                            
        

Class R2

         

Proceeds from shares sold

    1,260     68       15,234       850  

Proceeds from reinvestment of distributions

    56     4       656       47  

Payments for shares redeemed

    (258 )   (26 )     (2,919 )     (322 )
                            

Net increase (decrease)

    1,058     46       12,971       575  
                            
        

Class R3 (3)

         

Proceeds from shares sold

    1,227     2,140       14,388       26,363  

Proceeds from reinvestment of distributions

    112     19       1,318       227  

Payments for shares redeemed

    (1,198 )   (418 )     (14,286 )     (5,256 )
                            

Net increase (decrease)

    141     1,741       1,420       21,334  
                            
        

Class S

         

Proceeds from shares sold

    312     286       3,620       3,520  

Proceeds from reinvestment of distributions

    21     7       248       89  

Payments for shares redeemed

    (82 )   (107 )     (939 )     (1,344 )
                            

Net increase (decrease)

    251     186       2,930       2,265  
                            

Total increase (decrease)

    1,711     2,406     $ 20,367     $ 29,518  
                            

 

Notes to Financial Statements   123

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
2045 Strategy Fund    2008     2008  
    
    

Class R1

     

Proceeds from shares sold

    85     $ 876  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    (2 )     (18 )
              

Net increase (decrease)

    83       858  
              
    

Class R2

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              
    

Class R3

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              

Total increase (decrease)

    103     $ 1,058  
              
     Shares     Dollars  
2050 Strategy Fund    2008     2008  
    

Class R1

     

Proceeds from shares sold

    10     $ 100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              
    

Class R2

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              
    

Class R3

     

Proceeds from shares sold

    10       100  

Proceeds from reinvestment of distributions

    —       —  

Payments for shares redeemed

    —       —  
              

Net increase (decrease)

    10       100  
              

Total increase (decrease)

    30     $ 300  
              

 

124   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares    Dollars
In Retirement Fund    2008    2008
     
     

Class R1

      

Proceeds from shares sold

    10    $ 100

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Net increase (decrease)

    10      100
           
     

Class R2

      

Proceeds from shares sold

    10      100

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Net increase (decrease)

    10      100
           
     

Class R3

      

Proceeds from shares sold

    10      100

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Net increase (decrease)

    10      100
           

Total increase (decrease)

    30    $ 300
           
     Shares    Dollars
     2008    2008
     

2017 Retirement Distribution Fund - A Shares

      

Proceeds from shares sold

    9    $ 101

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Total net increase (decrease)

    9    $ 101
           
     Shares    Dollars
     2008    2008
     

2017 Accelerated Distribution Fund - A Shares

      

Proceeds from shares sold

    9    $ 100

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Total net increase (decrease)

    9    $ 100
           

 

Notes to Financial Statements   125

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares    Dollars
     
     2008    2008
     

2027 Extended Distribution Fund - A Shares

      

Proceeds from shares sold

    9    $ 99

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Total net increase (decrease)

    9    $ 99
           
     Shares    Dollars
     2008    2008
     

2017 Retirement Distribution Fund - S Shares

      

Proceeds from shares sold

    19    $ 206

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Total net increase (decrease)

    19    $ 206
           
     Shares    Dollars
     2008    2008
     

2017 Accelerated Distribution Fund - S Shares

      

Proceeds from shares sold

    31    $ 315

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Total net increase (decrease)

    31    $ 315
           
     Shares    Dollars
     2008    2008
     

2027 Extended Distribution Fund - S Shares

      

Proceeds from shares sold

    47    $ 485

Proceeds from reinvestment of distributions

    —      —

Payments for shares redeemed

    —      —
           

Total net increase (decrease)

    47    $ 485
           

 

126   Notes to Financial Statements

Table of Contents

Russell Investment Company

LifePoints® Funds

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

7.   Interfund Lending Program

The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Funds may borrow money from the RIC Money Market Fund for Temporary purposes. All such borrowing and lending will be subject to a participating fund’s fundamental investment limitations. The RIC Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves. The Investment Company Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Money Market Fund could result in a lost investment opportunity of additional borrowing costs. The funds did not participate in the credit facility for the period ended April 30, 2008.

 

8.   Record Ownership

As of April 30, 2008, the following table includes shareholders of record with greater than 10% of the total outstanding shares of each respective Fund.

 

      # of Shareholders      %

Conservative Strategy Fund

    2      36.4

Moderate Strategy Fund

    1      20.3

Balanced Strategy Fund

    1      13.3

Growth Strategy Fund

    1      14.8

Equity Growth Strategy Fund

    2      25.0

2010 Strategy Fund

    4      62.3

2015 Strategy Fund

    2      100.0

2020 Strategy Fund

    3      45.2

2025 Strategy Fund

    2      100.0

2030 Strategy Fund

    3      45.6

2035 Strategy Fund*

    1      100.0

2040 Strategy Fund

    3      41.6

2045 Strategy Fund

    2      100.0

2050 Strategy Fund*

    1      100.0

In Retirement Fund*

    1      100.0

2017 Retirement Distribution Fund — A Shares*

    1      100.0

2017 Accelerated Distribution Fund — A Shares*

    1      100.0

2027 Extended Distribution Fund — A Shares*

    1      100.0

2017 Retirement Distribution Fund — S Shares

    4      100.0

2017 Accelerated Distribution Fund — S Shares

    3      100.0

2027 Extended Distribution Fund — S Shares

    2      90.8

 

  * Sole Shareholder is RIMCo.

 

Notes to Financial Statements   127

Table of Contents

Russell Investment Company (“RIC”)

LifePoints® Funds

Basis for Approval of Investment Advisory Contracts

 

 

 

Approval of Investment Advisory Agreement

The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the ‘‘RIMCo Agreement’’) and the portfolio management contract (collectively, the ‘‘portfolio management contracts’’) with each Money Manager of the funds in which the Funds invest (the “Underlying Funds”) at a meeting held on April 22, 2008. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Funds, sales and redemptions of the Funds’ and Underlying Funds’ shares, and the management of the Funds and the Underlying Funds by RIMCo. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds and the Underlying Funds; and (2) information (the ‘‘Third-Party Information’’) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and the Underlying Funds and their respective operating expenses over various periods of time with other peer funds (‘‘Comparable Funds’’) not managed by RIMCo believed by the provider to be generally comparable in investment objectives and size to the Funds and the Underlying Funds. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Funds discussing the legal standards for their consideration of the continuations of the RIMCo Agreement and the portfolio management contracts and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.

On April 21, 2008, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or management were present. At the April 22 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contracts with management and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Funds and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.

In evaluating the portfolio management contracts, the Board considered that the Underlying Funds, in employing a manager-of-managers method of investment, operate in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which in turn employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. RIMCo has engaged multiple unaffiliated Money Managers for all Underlying Funds.

The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for allocating assets of each Fund among its Underlying Funds and for determining, implementing and maintaining the investment program for each Underlying Fund. The assets of each Fund are invested in different combinations of the Underlying Funds pursuant to target asset allocations set by RIMCo. RIMCo may modify the target asset allocation for any Fund and/or the Underlying Funds in which the Funds invest. Assets of each Underlying Fund generally have been allocated among the multiple Money Managers selected by RIMCo, subject to Board approval, for that Underlying Fund. RIMCo manages directly a portion of certain Underlying Funds’ assets employing a “select holdings strategy,” as described below, and directly manages the investment of each Underlying Fund’s cash reserves. RIMCo also may manage directly any portion of each Underlying Fund’s assets that RIMCo determines not to allocate to the Money Managers and portions of an Underlying Fund during transitions between Money Managers. In all cases, assets are managed directly by RIMCo pursuant to authority granted by the RIMCo Agreement.

RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Underlying Fund and for actively managing allocations and reallocations of its assets among the Money Managers. RIMCo’s goal is to construct and manage diversified portfolios in a risk aware manner. Each Money Manager for an Underlying Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Underlying Fund assigned to it by RIMCo (each, a ‘‘segment’’) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in an Underlying Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Underlying Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for an Underlying Fund; and recommending annually to the Board whether portfolio management contracts should be

 

128   Basis for Approval of Investment Advisory Contracts

Table of Contents

Russell Investment Company (“RIC”)

LifePoints® Funds

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager or to coordinate the investment activities of Money Managers for an Underlying Fund in a complementary manner. Therefore, the performance of individual Money Managers for an Underlying Fund may reflect the roles assigned to them by RIMCo in the Underlying Funds’ investment activities and any constraints placed by RIMCo upon their selection of portfolio securities. In light of the foregoing, the overall performance of each Underlying Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Underlying Fund’s investment program, structuring an Underlying Fund, selecting an effective Money Manager with a particular investment style or sub-style for a segment that is complementary to the styles of the Money Managers of other Underlying Fund segments, and allocating assets among the Money Managers in a manner designed to achieve the objectives of the Underlying Fund.

The Board considered that the prospectuses for the Funds and the Underlying Funds and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for each Underlying Fund, rather than the investment selection role of the Underlying Funds’ Money Managers, and describe the manner in which the Funds or Underlying Funds operate so that investors may take that information into account when deciding to purchase shares of any Fund.

The Board also considered the demands and complexity of managing the Underlying Funds pursuant to the manager-or-managers structure, the special expertise of RIMCo with respect to the manager-of-managers structure of the Underlying Funds and the likelihood that, at the current expense ratio of each Underlying Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of each Underlying Fund selected by shareholders in purchasing their shares of a Fund or Underlying Fund.

In addition to these general factors relating to the manager-of-managers structure of the Underlying Funds, the Trustees considered, with respect to each Fund and Underlying Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:

 

1. The nature, scope and quality of the services provided to the Fund and the Underlying Fund by RIMCo;

 

2. The advisory fee paid by the Fund or the Underlying Fund to RIMCo and the fact that it encompasses all investment advisory fees paid by the Fund or Underlying Fund, including the fees for any Money Managers of such Underlying Fund;

 

3. Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund or Underlying Fund, including any administrative, transfer agent, cash management and securities lending fees, soft dollar arrangements and commissions in connection with portfolio securities transactions;

 

4. Information provided by RIMCo as to expenses incurred by the Fund or the Underlying Fund; and

 

5. Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund or Underlying Fund.

As noted above, RIMCo pursuant to the terms of the RIMCo Agreement directly managed during the past year a portion — up to 10% — of the assets of each of the Equity I Fund, Diversified Equity Fund, the Equity Q Fund, the Quantitative Equity Fund, the International Fund and the International Securities Fund (each a ‘‘Participating Underlying Fund’’) utilizing a select holdings strategy, the actual allocation being determined by each Participating Underlying Fund’s RIMCo portfolio manager. The select holdings strategy utilized by RIMCo in managing such assets for a Participating Underlying Fund is designed to increase the Participating Underlying Fund’s exposure to stocks that are viewed as attractive by multiple Money Managers of that Participating Underlying Fund. The Board reviewed the results of the select holdings strategy in respect of each Participating Underlying Fund since implementation taking into account that the strategy has been utilized for a limited period of time. With respect to each Participating Underlying Fund, the Trustees considered that RIMCo is not required to pay investment advisory fees to a Money Manager with respect to assets for which the select holdings strategy is utilized and that the profits derived by RIMCo generally and from the Participating Underlying Fund consequently may increase incrementally. The Board, however, also considered RIMCo’s advice that it pays certain Money Managers additional fees for providing information and other services in connection with the select holdings strategy and incurs additional costs in carrying out the select holdings strategy, the limited amount of assets that are managed directly by RIMCo pursuant to the select holdings strategy, and the fact that the aggregate investment advisory fees paid by the Participating Underlying Fund are not increased as a result of the select holdings strategy.

 

Basis for Approval of Investment Advisory Contracts   129

Table of Contents

Russell Investment Company (“RIC”)

LifePoints® Funds

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

In evaluating the reasonableness of the Funds’ and Underlying Funds’ investment advisory fees in light of Fund and Underlying Fund performance, the Board considered that RIMCo, in the Agreement Renewal Information and at past meetings, noted differences between the investment strategies of certain Underlying Funds and their respective Comparable Funds in pursuing their investment objectives, including Fund strategies which seek to achieve a lower tracking error (i.e., the difference, whether positive or negative, between the return of a fund and its benchmark) and resulting lower return volatility than Comparable Funds. According to RIMCo, these strategies may be expected to result, and for certain Underlying Funds during the periods covered by the Third-Party Information did result, in lower performance of the Funds than that of some of their respective Comparable Funds. According to RIMCo the strategies pursued by the Underlying Funds, among other things are intended to result in less volatile, more moderate returns relative to each Fund’s performance benchmark rather than more volatile, more extreme returns that its Comparable Funds may experience over time.

With regard to the LifePoints Target Date Funds, RIMCo reported that the Third-Party Information reflects the Funds’ expense ratios when the Funds invested in the Underlying Funds offering Class S Shares rather than the Underlying Funds offering Class Y Shares in which they currently invest. RIMCo provided restated expense ratios reflecting the current Underlying Funds and stated that all of the Fund’s total expense ratios are in the third quintile or better.

The Board considered for each Fund and Underlying Fund whether economies of scale have been realized and whether the fees for such Fund or Underlying Fund appropriately reflect or should be revised to reflect any such economies. The Board determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the investment advisory fees for each Fund or Underlying Fund appropriately reflect any economies of scale realized by such Fund, based upon such factors as the variability of Money Manager investment advisory fees and other factors associated with the manager-of-managers structure employed by the Underlying Funds. The Trustees considered that fees payable to RIMCo by institutional clients with investment objectives similar to those of the Funds and other RIC funds under the Board’s supervision, including the Underlying Funds are lower, and may, in some cases, be substantially lower, than the rates paid by RIC funds supervised by the Board, including the Funds. The Trustees considered the differences in the scope of services it provides to institutional clients and the funds under its supervision, including the Underlying Funds. In response to the Trustees’ inquiries, RIMCo has previously noted, among other things, that institutional clients have fewer administrative needs than the Funds. RIMCo has in the past noted that since the Funds must constantly issue and redeem their shares, they are more difficult to manage than institutional accounts, where assets are relatively stable. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.

On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years or presented at the April 22 Board meeting by RIMCo, the Board, in respect of each Fund and Underlying Fund, found, after giving effect to waivers and/or reimbursements and considering differences in the composition and investment strategies of their respective Comparable Funds (1) the advisory fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided to the Funds or Underlying Funds; (2) the relative expense ratio of each Fund and Underlying Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund and each Underlying Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.

The Board further concluded that, under the circumstances, the performance of each of the Funds supported continuation of the RIMCo Agreement. In evaluating performance, the Board considered each Fund’s and Underlying Fund’s absolute performance and its performance relative to appropriate benchmarks and indices and its Comparable Funds. In assessing performance, the Board also considered RIMCo’s investment strategy of managing the Underlying Funds in a risk aware manner.

After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Funds and their respective shareholders and voted to approve the continuation of the Agreement.

At the April 22 Board meeting, with respect to the evaluation of the terms of portfolio management contracts with Money Managers for the Underlying Funds, the Board received and considered information from RIMCo reporting, among other things, for each Money Manager, the Money Manager’s performance over various periods; RIMCo’s assessment of the performance of the Money Manager; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Funds’ and Underlying Funds’ underwriter; and RIMCo’s recommendation to retain the Money Manager at the current fee rate, to retain the Money Manager at a reduced fee rate or to terminate the Money Manager. RIMCo recommended that each Money Manager be retained at its current fee rate. RIMCo has advised the Board that it does not regard Money Manager profitability as relevant to its

 

130   Basis for Approval of Investment Advisory Contracts

Table of Contents

Russell Investment Company (“RIC”)

LifePoints® Funds

Basis for Approval of Investment Advisory Contracts, continued

 

 

 

evaluation of the portfolio management contracts with Money Managers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by Money Managers to other clients; and RIMCo believes that the fees agreed upon with Money Managers are reasonable in light of the anticipated quality of investment advisory services to be rendered. The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the aggregate investment advisory fees paid by each Fund and Underlying Fund and the fact that each Money Manager’s fee is paid by RIMCo.

Based substantially upon RIMCo’s recommendations together with the information received from RIMCo in support of its recommendations at the April 22 meeting, the Board concluded that the fees paid to the Money Managers of each Underlying Fund are reasonable in light of the quality of the investment advisory services provided and that continuation of the portfolio management contract with each Money Manager of each Underlying Fund would be in the best interests of the Fund and its shareholders.

In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management contract with any Money Manager for an Underlying Fund that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of each Fund and Underlying Fund.

 

Basis for Approval of Investment Advisory Contracts   131

Table of Contents

Russell Investment Company

LifePoints® Funds

Shareholder Requests for Additional Information — April 30, 2008 (Unaudited)

 

 

 

A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each fiscal year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, (iii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iv) at the Securities and Exchange Commission’s public reference room.

The Board has delegated to RIMCo, as RIC’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Funds may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Funds maintain a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Funds. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Funds’ Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Funds at (800) 787-7354, (ii) at www.russell.com, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

Financial Statements of the Underlying Funds can be obtained at no charge by calling the Funds at (800) 787-7354.

To reduce expenses, we may mail only one copy of the Funds’ prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution.

Some Financial Intermediaries may offer electronic delivery of the Funds’ prospectus and annual and semiannual reports. Please contact your Financial Intermediary for further details.

 

132   Shareholder Requests for Additional Information

Table of Contents

Russell Investment Company

LifePoints® Funds

Disclosure of Information about Fund Directors — April 31, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INTERESTED TRUSTEES

            

#Greg J. Stark

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

  

President and Chief Executive Officer since 2004

 

Trustee since 2007

  

Appointed until successor is duly elected and qualified

 

Until successor is chosen and qualified by Trustees

  

•   President and CEO RIC and RIF

•   Chairman of the Board, President and CEO, RIMCo

•   Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”)

•   Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•   Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•   Until 2004, Managing Director, of Individual Investor Services, FRC

•   2000 to 2004 Managing Director, Sales and Client Service, RIMCo

   53   None

INDEPENDENT TRUSTEES

          

Thaddas L. Alston

Born April 7, 1945

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2006   Appointed until successor is duly elected and qualified  

•   Senior Vice President, Larco Investments, Ltd. (real estate firm)

   53   None
             

Kristianne Blake, Born January 22, 1954

 

909 A Street Tacoma, Washington 98402-1616

  

Trustee since 2000

 

Chairman since 2005

  

Appointed until successor is duly elected and qualified

 

Annual

  

•   Director and Chairman of the Audit Committee, Avista Corp.

•   Trustee and Chairman of the Operations Committee, Principal Funds and Principal Variable Contracts Funds

•   Regent, University of Washington

•   President, Kristianne Gates Blake, P.S. (accounting services)

•   February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999–2006

   53  

•   Director, Avista Corp; (electric utilities)

•   Trustee, Principal Funds (investment company);

•   Trustee, Principal Variable Contracts Funds (investment company)

             

Daniel P. Connealy

Born June 6, 1946

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2003

 

Chairman of Audit Committee since 2005

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•   June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc.

•   2001–2003, Vice President and Chief Financial Officer, Janus Capital Group Inc.

   53   None

 

# Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee.

 

Disclosure of Information about Fund Directors   133

Table of Contents

Russell Investment Company

LifePoints® Funds

Disclosure of Information about Fund Directors, continued — April 31, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
With Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other Directorships
Held by Trustee

INDEPENDENT TRUSTEES (continued)

          

Jonathan Fine

Born July 8, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2004

   Appointed until successor is duly elected and qualified  

•   President and Chief Executive Officer, United Way of King County, WA

   53   None
             

Raymond P. Tennison, Jr.

Born December 21, 1955

909 A Street

 

Tacoma, Washington

98402-1616

  

Trustee

since 2000

 

Chairman of the Nominating and Governance Committee since 2007

  

Appointed until successor is duly elected and qualified.

 

Appointed until successor is duly elected and qualified

  

•   President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company

   53   None
             

Jack R. Thompson,

Born March 21, 1949

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2005   Appointed until successor is duly elected and qualified  

•   September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds

•   September 2007 to present, Director, LifeVantage Corporation (health products company)

•   May 1999 to May 2003, President, Chief Executive Officer and Director, Berger Financial Group, LLC

•   May 1999 to May 2003, President and Trustee, Berger Funds

   53  

•   Director, Sparx Asia Funds (investment company)

 

•   Director, LifeVantage Corporation (health products company)

             

Julie W. Weston,

Born October 2, 1943

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2002

 

Chairperson of the Investment Committee since 2006

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

 

  

•   Retired

   53   None

 

 

* Each Trustee is subject to mandatory retirement at age 72.

 

134   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

LifePoints® Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

TRUSTEES EMERITUS

            

*George F. Russell, Jr.,

Born July 3, 1932

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus and Chairman Emeritus since 1999   Until resignation or removal  

•   Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)); and RIMCo

•   Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”))

•   Chairman, Sunshine Management Services, LLC (investment adviser)

   53   None
             

Paul E. Anderson,

Born October 15, 1931

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2007   Five year term  

•   President, Anderson Management Group LLC (private investments consulting)

•   February 2002 to June 2005, Lead Trustee, RIC and RIF

•   Trustee of RIC and RIF until 2006

•   Chairman of the Nominating and Governance Committee 2006

   53   None
             

William E. Baxter,

Born June 8, 1925

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2004   Five year term  

•   Retired since 1986

•   Trustee of RIC and RIF until 2004

   53   None
             

Lee C. Gingrich,

Born October 6, 1930

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2006   Five year term  

•   Retired since 1995

•   Trustee of RIC and RIF until 2005

•   Chairman of the Nominating and Governance Committee 2001–2005

   53   None
             

Eleanor W. Palmer,

Born May 5, 1926

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee Emeritus

since 2004

   Five year term  

•   Retired since 1981

•   Trustee of RIC and RIF until 2004

   53   None

 

* Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF.

 

Disclosure of Information about Fund Directors   135

Table of Contents

Russell Investment Company

LifePoints® Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years

OFFICERS

        

Cheryl Wichers

Born December 16, 1966

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Compliance Officer since 2005   Until removed by Independent Trustees  

•   Chief Compliance Officer, RIC

•   Chief Compliance Officer, RIF

•   Chief Compliance Officer, RIMCo

•   Chief Compliance Officer, RFSC

•   April 2002-May 2005, Manager, Global Regulatory Policy

         

Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

   President and Chief Executive Officer since 2004   Until successor is chosen and qualified by Trustees  

•   President and CEO, RIC and RIF

•   Chairman of the Board, President and CEO, RIMCo

•   Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•   Chairman of the Board, President and CEO, RFSC

•   Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•   Until 2004, Managing Director of Individual Investor Services, FRC

•   2000 to 2004, Managing Director, Sales and Client Service, RIMCo

         

Mark E. Swanson,

Born November 26, 1963

 

909 A Street Tacoma, Washington 98402-1616

   Treasurer and Chief Accounting Officer since 1998   Until successor is chosen and qualified by Trustees  

•   Treasurer, Chief Accounting Officer and CFO, RIC and RIF

•   Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc.

•   Treasurer and Principal Accounting Officer, SSgA Funds

         

Peter Gunning,

Born February 22, 1967

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Investment Officer since 2008   Until removed by Trustees  

•   Chief Investment Officer, RIC, RIF

•   1996 to 2008 Chief Investment Officer, Russell, Asia Pacific

         

Gregory J. Lyons,

Born August 24, 1960

 

909 A Street

Tacoma, Washington

98402-1616

   Secretary since 2007   Until successor is chosen and qualified by Trustees  

•   Associate General Counsel and Assistant Secretary FRC and RIA

•   Director and Secretary, RIMCo, RFSC and Russell Financial Services, Inc.

•   Secretary and Chief Legal Counsel, RIC and RIF

 

136   Disclosure of Information about Fund Directors

Table of Contents

LifePoints® Funds

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Interested Trustees

Greg J. Stark

Independent Trustees

Thaddas L. Alston

Kristianne Blake

Daniel P. Connealy

Jonathan Fine

Raymond P. Tennison, Jr.

Jack R. Thompson

Julie W. Weston

Trustees Emeritus

George F. Russell, Jr.

Paul E. Anderson

William E. Baxter

Lee C. Gingrich

Eleanor W. Palmer

Officers

Greg J. Stark, President and Chief Executive Officer

Cheryl Wichers, Chief Compliance Officer

Peter Gunning, Chief Investment Officer

Mark E. Swanson, Treasurer and Chief Accounting Officer

Gregory J. Lyons, Secretary

Adviser

Russell Investment Management Company

909 A Street

Tacoma, WA 98402

Administrator and Transfer and Dividend Disbursing Agent

Russell Fund Services Company

909 A Street

Tacoma, WA 98402

Custodian

State Street Bank and Trust Company

Josiah Quincy Building

200 Newport Avenue

North Quincy, MA 02171

Office of Shareholder Inquiries

909 A Street

Tacoma, WA 98402

(800) 787-7354

Legal Counsel

Dechert LLP

200 Clarendon Street, 27th Floor

Boston, MA 02116-5021

Distributor

Russell Financial Services, Inc.

909 A Street

Tacoma, WA 98402

Money Managers of Underlying Funds as of April 30, 2008

Diversified Equity Fund/Equity I Fund

AllianceBernstein L.P., New York, NY

Arnhold and S. Bleichroeder Advisers, LLC, New York, NY

Columbus Circle Investors, Stamford, CT

Institutional Capital LLC, Chicago, IL

Marsico Capital Management, LLC, Denver, CO

MFS Institutional Advisors, Inc., Boston, MA

Montag & Caldwell, Inc., Atlanta, GA

Schneider Capital Management Corporation, Wayne, PA

Suffolk Capital Management, LLC, New York, NY

Turner Investment Partners, Inc., Berwyn, PA

Special Growth Fund/Equity II Fund

ClariVest Asset Management LLC, San Diego, CA

Delphi Management, Inc., Boston, MA

DePrince, Race & Zollo, Inc., Winter Park, FL

Gould Investment Partners LLC, Berwyn, PA

Jacobs Levy Equity Management, Inc., Florham Park, NJ

PanAgora Asset Management, Inc., Boston, MA

Ranger Investment Management, L.P., Dallas, TX

Signia Capital Management, LLC, Spokane, WA

Tygh Capital Management, Inc., Portland, OR

Quantitative Equity Fund/Equity Q Fund

Aronson+Johnson+Ortiz, LP, Philadelphia, PA

Franklin Portfolio Associates, LLC, Boston, MA

Goldman Sachs Asset Management, L.P., New York, NY

Jacobs Levy Equity Management, Inc., Florham Park, NJ

International Securities Fund/International Fund

AllianceBernstein L.P., New York, NY

Altrinsic Global Advisors, LLC, Stamford, CT

AQR Capital Management, LLC, Greenwich, CT

Axiom International Investors LLC, Greenwich, CT

Marsico Capital Management, LLC, Denver, CO

MFS Institutional Advisors, Inc., Boston, MA

Mondrian Investment Partners Limited, London, United Kingdom

UBS Global Asset Management (Americas) Inc., Chicago, IL

Wellington Management Company, LLP, Boston, MA

Global Equity Fund

ClariVest Asset Management LLC, San Diego, CA

Gartmore Global Partners, London, United Kingdom

Harris Associates, L.P., Chicago, IL

T. Rowe Price International, Inc., Baltimore, MD

Short Duration Bond Fund

Logan Circle Partners, L.P., Philadelphia, PA

Pacific Investment Management Company LLC, Newport Beach, CA

STW Fixed Income Management, Carpinteria, CA


 

Adviser, Money Managers and Service Providers   137

Table of Contents

LifePoints® Funds

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Multistrategy Bond Fund/Fixed Income III Fund

Drake Capital Management, LLC, New York, NY

Goldman Sachs Asset Management, L.P., New York, NY

Hyperion Brookfield Asset Management, Inc., New York, NY

Logan Circle Partners, L.P., Philadelphia, PA

Metropolitan West Asset Management, LLC, Los Angeles, CA

Pacific Investment Management Company LLC, Newport Beach, CA

Real Estate Securities Fund

AEW Management and Advisors, L.P., Boston, MA

Cohen & Steers Capital Management, Inc., New York, NY

Heitman Real Estate Securities LLC, Chicago, IL

INVESCO Institutional (N.A.), Inc. which acts as a money manager to the Fund through its INVESCO Real Estate division, Dallas, TX

RREEF America L.L.C., Chicago, IL

Emerging Markets Fund

AllianceBernstein L.P., New York, NY

Arrowstreet Capital, Limited Partnership, Boston, MA

Genesis Asset Managers, LLP, London, United Kingdom

Harding, Loevner Management, L.P., Somerville, NJ

T. Rowe Price International, Inc., Baltimore, MD

UBS Global Asset Management (Americas) Inc., Chicago, IL

Money Market Fund

Russell Investment Management Company, Tacoma, WA


 

This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Company. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

 

138   Adviser, Money Managers and Service Providers

Table of Contents

 

Russell Investment Company    909 A Street      800-787-7354
   Tacoma, Washington 98402      Fax: 253-591-3495
        www.russell.com

 

LOGO

LOGO

LOGO

36-08-071

Table of Contents

LOGO

 

2008 SEMIANNUAL REPORT

 

 

Money Market Fund

 

 

APRIL 30, 2008

 

FUND    SHARE CLASS
Money Market Fund    A, S

 

LOGO

Table of Contents

 

 

Russell Investment Company

Russell Investment Company is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on one of these Funds.

Table of Contents

 

Russell Investment Company

Money Market Fund

Semiannual Report

April 30, 2008 (Unaudited)

Table of Contents

 

     Page
Shareholder Expense Example    3
Schedule of Investments    4
Notes to Schedules of Investments    8
Statement of Assets and Liabilities    9
Statement of Operations    10
Statements of Changes in Net Assets    11
Financial Highlights - Class A    12
Financial Highlights - Class S    13
Notes to Financial Statements    14
Basis for Approval of Investment Advisory Contracts    19
Shareholder Requests for Additional Information    21
Disclosure of Information about Fund Directors    22
Adviser, Money Managers and Service Providers    26

Table of Contents

 

Russell Investment Company - Money Market Fund.

Copyright © Russell Investments 2008. 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 distributed through Russell Financial Services, Inc. (effective June 2, 2008, the name changed from Russell Fund Distributors, Inc.) member FINRA, part of Russell Investments.

Russell Investments and Standard & Poor’s Corporation are the owners of the trademarks, service marks, and copyrights related to their respective indexes. Index performance is not indicative of the performance of any specific investment. Indexes are not managed and may not be invested in directly.

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. Current to the most recent month-end performance data may be obtained by visiting www.russell.com/us/fundperformance.

Table of Contents

Russell Investment Company

Money Market Fund

Shareholder Expense Example — April 30, 2008 (Unaudited)

 

 

 

Fund Expenses

The following disclosure provides important information regarding the Fund’s Expense Example. Please refer to this information when reviewing the Expense Example for the Fund.

Example

As a shareholder of the Fund, you incur two types of costs: (1) transaction costs, and (2) ongoing costs, including advisory and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class A

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,021.40    $ 1,023.67

Expenses Paid During Period*

    $ 1.21    $ 1.21

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.24% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed by the investment adviser. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class S

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,021.90    $ 1,024.17

Expenses Paid During Period*

    $ 0.70    $ 0.70

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.14% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed by the investment adviser. Without the waiver and/or reimbursement, expenses would have been higher.

 

Shareholder Expense Example

   3

Table of Contents

Russell Investment Company

Money Market Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity#		      Value
$
                 

Corporate Bonds and Notes - 37.3%

                  

Associates Corp. of North America

    57,595      6.250      11/01/08      58,035

Bank of America NA (Ê)

    66,000      3.208      06/03/09      66,000

BNP Paribas (Ê)

    99,000      3.060      05/19/08      99,000

BNP Paribas (Ê)

    100,000      3.132      08/07/08      99,998

Citigroup Funding, Inc. (Ê)

    26,400      3.256      03/02/09      26,205

Citigroup Global Markets Holdings, Inc. (Ê)

    7,100      2.900      03/17/09      7,074

Citigroup, Inc. (Ê)

    70,394      3.162      05/02/08      70,394

Citigroup, Inc. (Ê)

    29,676      2.695      12/26/08      29,601

Citigroup, Inc.

    25,000      3.625      02/09/09      25,069

Credit Agricole SA (Ê)

    75,000      2.569      07/22/08      74,993

Credit Agricole SA (Ê)

    100,000      2.829      04/22/09      100,000

General Electric Capital Corp. (Ê)

    5,000      3.007      07/28/08      5,000

General Electric Capital Corp. (Ê)

    25,000      2.944      08/22/08      24,999

General Electric Co. (Ê)

    40,000      3.030      12/09/08      39,976

Goldman Sachs Group, Inc. (The) (Ê)

    6,100      3.013      07/29/08      6,102

Goldman Sachs Group, Inc. (The) (Ê)

    21,000      2.558      02/13/09      20,856

HSBC Finance Corp. (Ê)

    70,000      3.236      05/09/08      69,994

HSBC Finance Corp. (Ê)

    50,000      3.070      05/21/08      50,001

HSBC Finance Corp. (Ê)

    28,000      2.945      08/22/08      27,933

HSBC Finance Corp. (Ê)

    21,000      3.154      12/05/08      20,950

Lehman Brothers Holdings, Inc. (Ê)

    13,000      3.115      05/29/08      13,001

Lehman Brothers Holdings, Inc. (Ê)

    57,000      2.655      09/26/08      57,000

Lehman Brothers Holdings, Inc. (Ê)

    70,000      3.820      03/11/09      70,000

Lehman Brothers Holdings, Inc. (Ê)

    51,000      2.618      04/03/09      50,604

MBNA Corp. (Ê)

    55,000      3.525      05/05/08      55,001

Merrill Lynch & Co, Inc. (Ê)

    97,000      2.900      06/16/08      97,015

Merrill Lynch & Co, Inc. (Ê)

    15,000      3.058      08/22/08      15,000

Merrill Lynch & Co, Inc. (Ê)

    9,000      3.168      08/22/08      9,003

Merrill Lynch & Co, Inc. (Ê)

    55,000      2.872      11/17/08      55,000

Metropolitan Life Global Funding I (Ê)

    75,000      2.874      08/21/08      74,922

Metropolitan Life Insurance Company (Ê)(Å)

    150,000      3.392      02/09/09      150,000

Metropolitan Life Insurance Company (Ê)(Å)

    50,000      5.153      03/02/09      50,000

Morgan Stanley (Ê)

    75,000      2.976      09/26/08      74,809

Morgan Stanley (Ê)

    90,000      2.380      10/02/08      90,000

New York Life Insurance Co. (Ê)(Å)

    150,000      3.115      05/15/08      150,000

Principal Life Income Funding Trusts (Ê)

    28,750      2.953      06/06/08      28,759

Protective Life Insurance Co. (Ê)(Å)

    50,000      3.343      02/23/09      50,000

Protective Life Secured Trust 2005-B (Ê)

    69,000      3.160      05/16/08      69,003

Puttable Floating Optional Taxable Receipts (Ê)

    59,785      3.630      04/01/26      59,785

Puttable Floating Optional Taxable Receipts (Ê)

    82,375      4.380      10/01/39      82,379

Puttable Floating Optional Taxable Receipts (Ê)

    55,000      4.380      06/15/53      55,000

Royal Bank of Canada (Ê)

    90,000      3.252      05/15/09      90,000

Royal Bank of Scotland Group PLC (Ê)

    30,000      2.718      07/07/08      30,001

Royal Bank of Scotland Group PLC (Ê)

    30,000      2.903      01/15/09      30,000

Royal Bank of Scotland Group PLC (Ê)

    100,000      3.690      03/04/09      100,000

Royal Bank of Scotland PLC (The) (Ê)

    25,000      2.868      07/21/08      25,004

Royal Bank of Scotland PLC (The) (Ê)

    15,000      2.830      09/19/08      14,970

 

4   Schedule of Investments

Table of Contents

Russell Investment Company

Money Market Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity#		      Value
$
                 

UBS AG (Ê)

    57,800      2.683      09/16/08      57,695

UBS AG (Ê)

    100,000      2.630      02/09/09      100,000

UBS Paine Webber Group, Inc.

    8,000      7.625      10/15/08      8,146

Wachovia Bank NA (Ê)

    50,000      3.138      03/10/09      50,000

Wachovia Bank NA (Ê)

    10,000      2.639      03/23/09      9,957
                   
Total Corporate Bonds and Notes (amortized cost $2,794,234)                   2,794,234
                   
Registered Investment Company Funds - 6.7%                  

Merrill Lynch Premier Institutional Fund

    177,587,804                177,588

Reserve Primary Fund Class Institutional

    326,517,964                326,518
                   
Total Registered Investment Company Funds
(amortized cost $504,106)		                   504,106
                   
Domestic Commercial Paper - 46.2%                  

ANZ National Int’l, Ltd.

    100,000      2.910      07/24/08      99,319

Barclays US Funding LLC

    50,000      4.115      07/08/08      49,742

Bayerische Landesbank

    150,000      2.780      05/14/08      149,851

Central American Bank for Economic Integration

    75,000      3.300      05/22/08      74,859

Citigroup Funding, Inc.

    40,000      4.900      05/01/08      40,000

Citigroup Funding, Inc.

    75,000      4.650      05/27/08      74,826

Citigroup Funding, Inc.

    40,000      4.800      06/02/08      39,887

Citigroup Funding, Inc.

    50,000      2.650      08/28/08      49,531

Curzon Funding LLC

    28,500      4.850      05/02/08      28,497

Curzon Funding LLC

    50,000      3.970      05/05/08      49,978

Curzon Funding LLC

    25,000      4.803      05/06/08      24,988

Curzon Funding LLC

    50,000      3.820      06/17/08      49,751

Dealers Capital Access

    10,000      3.050      05/02/08      9,999

Dealers Capital Access

    13,000      3.300      05/09/08      12,991

Dealers Capital Access

    5,141      2.980      05/12/08      5,136

Dealers Capital Access

    11,475      2.930      05/15/08      11,462

Dealers Capital Access

    28,734      5.050      05/16/08      28,690

Dealers Capital Access

    33,000      3.150      06/13/08      32,878

Dealers Capital Access

    13,000      2.980      06/27/08      12,941

Dealers Capital Access

    16,000      3.100      07/11/08      15,904

Erasmus Capital Corp.

    100,000      2.920      05/23/08      99,825

Erasmus Capital Corp.

    100,000      2.980      06/06/08      99,707

Erasmus Capital Corp.

    103,500      2.950      06/16/08      103,116

Erasmus Capital Corp.

    25,000      2.900      07/11/08      24,848

Fairway Finance Corp.

    50,000      2.810      06/11/08      49,841

Fairway Finance Corp.

    90,000      2.900      06/19/08      89,659

Falcon Asset Securitization Co. LLC

    100,000      3.130      05/27/08      99,798

Galleon Capital LLC

    100,000      3.030      05/14/08      99,893

Galleon Capital LLC

    50,000      3.100      05/28/08      49,886

Galleon Capital LLC

    100,000      3.150      06/16/08      99,604

Gotham Funding Corp.

    4,075      2.820      05/19/08      4,069

Gotham Funding Corp.

    31,796      2.800      05/21/08      31,746

Gotham Funding Corp.

    50,000      2.880      05/22/08      49,918

 

Schedule of Investments   5

Table of Contents

Russell Investment Company

Money Market Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity#		      Value
$
                 

Gotham Funding Corp.

    93,937      2.980      06/02/08      93,692

Lehman Brothers Holdings, Inc.

    75,000      3.050      05/28/08      74,828

Long Lane Master Trust IV

    56,720      3.050      05/08/08      56,687

Long Lane Master Trust IV

    50,000      3.170      05/14/08      49,944

Long Lane Master Trust IV

    75,000      4.980      05/27/08      74,733

Long Lane Master Trust IV

    51,330      2.830      07/18/08      51,019

Long Lane Master Trust IV

    50,000      2.970      07/25/08      49,656

Louis Dreyfus Corp.

    33,910      2.800      05/15/08      33,870

Louis Dreyfus Corp.

    67,210      2.900      05/22/08      67,090

Louis Dreyfus Corp.

    120,000      3.100      05/30/08      119,706

Louis Dreyfus Corp.

    69,995      3.070      06/13/08      69,745

Manhattan Asset Funding

    50,000      3.400      05/01/08      50,000

Manhattan Asset Funding

    10,000      2.800      05/14/08      9,990

Manhattan Asset Funding

    45,142      2.950      05/16/08      45,088

Morgan Stanley

    100,000      4.690      07/17/08      99,343

NATC California LLC

    65,000      2.720      07/10/08      64,652

Sheffield Receivables Corp.

    70,500      3.050      05/02/08      70,494

Sheffield Receivables Corp.

    65,478      2.900      06/04/08      65,301

Societe Generale North America

    50,000      4.505      06/02/08      49,869

Three Pillars Funding Corp.

    100,000      2.990      05/27/08      99,788

Three Pillars Funding Corp.

    125,000      3.040      06/16/08      124,521

UBS Finance Delaware LLC

    15,500      1.000      07/07/08      15,416

UBS Finance Delaware LLC

    30,000      1.000      07/10/08      29,831

Victory Receivables Corp.

    50,000      2.950      05/27/08      49,895

Victory Receivables Corp.

    50,000      2.850      07/10/08      49,730

Victory Receivables Corp.

    136,975      2.870      07/17/08      136,131
                   
Total Domestic Commercial Paper (amortized cost $3,464,159)                   3,464,159
                   
Domestic Time Deposit - 1.3%                  

New York Life Insurance Co. (Ê)(Å)

    100,000      3.135      11/17/08      100,000
                   
Total Domestic Time Deposit (amortized cost $100,000)                   100,000
                   
United States Government Agency - 0.1%                  

AID to INH Portugal Guaranteed Note, weekly demand (LIBOR Floater) (Ê)(ß)

    6,250      3.238      12/01/17      6,301
                   
Total United States Government Agency (amortized cost $6,301)                   6,301
                   
Yankee Certificates of Deposit - 8.3%                  

Bank of Montreal (Ê)

    50,000      3.048      05/22/08      50,000

Bank of Montreal (Ê)

    50,000      3.085      05/22/08      50,000

Bank of Montreal

    25,000      5.320      05/23/08      25,000

Barclays Bank PLC

    30,000      5.400      06/09/08      30,000

Barclays Bank PLC (Ê)

    25,000      3.860      01/30/09      25,000

Barclays Bank PLC (Ê)

    100,000      3.110      04/07/09      100,000

BNP Paribas

    50,000      2.700      07/14/08      50,000

Calyon New York (Ê)

    12,400      3.100      05/19/08      12,400

Societe Generale (Ê)

    100,000      5.417      07/03/08      100,000

Societe Generale

    85,000      3.250      07/30/08      85,000

 

6   Schedule of Investments

Table of Contents

Russell Investment Company

Money Market Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

      Principal
Amount ($)
or Shares		      Rate
%		      Date
of
Maturity#		      Value
$
                 

UBS AG

    30,000      4.920      06/12/08      30,000

UBS AG

    60,000      3.200      06/23/08      60,000
                   
Total Yankee Certificates of Deposits (amortized cost $617,400)                   617,400
                   
Total Investments - 99.9% (amortized cost $7,486,200) (†)                   7,486,200
Other Assets and Liabilities, Net - 0.1%                   7,526
                   
Net Assets - 100.0%                   7,493,726
                   

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of Net
Assets
  

Corporate Bonds and Notes

    37.3

Registered Investment Company Funds

    6.7

Domestic Commercial Paper

    46.2

Domestic Time Deposit

    1.3

United States Government Agency

    0.1

Yankee Certificates of Deposit

    8.3
    

Total Investments

    99.9

Other Assets and Liabilities, Net

    0.1
    
   100.0
    

 

See accompanying notes which are an integral part of the financial statements.

 

Schedule of Investments   7

Table of Contents

Russell Investment Company

Money Market Fund

Notes to Schedules of Investments — April 30, 2008 (Unaudited)

 

 

 

Footnotes:

(Ê) Adjustable or floating rate security. Rate shown reflects rate in effect at period end.
(ß) Illiquid security.
(†) The identified cost for Federal income tax purpose is the same as shown above.
# All securities with a maturity date greater than thirteen months have a demand feature or an optional or mandatory put, or are pre-refunded, resulting in an effective maturity of thirteen months or less. Additionally, all daily and weekly demand securities are backed by direct payment of letters of credit.
(Å) Illiquid and restricted security.

Abbreviations:

LIBOR - London Interbank Offered Rate

 

8   Notes to Schedules of Investments

Table of Contents

Russell Investment Company

Money Market Fund

Statement of Assets and Liabilities — April 30, 2008 (Unaudited)

 

Amounts in thousands               
      

Assets

       

Investments at amortized cost which approximates value

      $ 7,486,200  

Interest receivable

        28,194  

Prepaid expenses

        124  
            

Total assets

        7,514,518  
Liabilities       

Payables:

       

Due to custodian

   $ 1,091     

Accrued fees to affiliates

     757     

Other accrued expenses

     304     

Dividends

     18,640     
          

Total liabilities

        20,792  
          
    

Net Assets

      $ 7,493,726  
          

Net Assets Consist of:

     

Undistributed (overdistributed) net investment income

      $ 25  

Accumulated net realized gain (loss)

        (25 )

Shares of beneficial interest

        74,937  

Additional paid-in capital

        7,418,789  
            

Net Assets

      $ 7,493,726  
            
                  

Net Asset Value, offering and redemption price per share:

       

Net asset value per share: Class A*

      $ 1.00  

Class A — Net assets

      $ 576,136,900  

Class A — Shares outstanding ($.01 par value)

        576,127,428  

Net asset value per share: Class S*

      $ 1.00  

Class S — Net assets

      $ 6,917,589,172  

Class S — Shares outstanding ($.01 par value)

        6,917,590,909  
* Net asset value per share equals class level net assets divided by class level shares of beneficial interest outstanding.

 

See accompanying notes which are an integral part of the financial statements.

 

Statement of Assets and Liabilities   9

Table of Contents

Russell Investment Company

Money Market Fund

Statement of Operations — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands            
   

Investment Income

    

Interest

 

   $ 142,733

Expenses

    

Advisory fees

   $ 6,394    

Administrative fees

     1,598    

Custodian fees

     528    

Distribution fees - Class A

     215    

Transfer agent fees

     320    

Professional fees

     57    

Registration fees

     284    

Trustees’ fees

     65    

Printing fees

     112    

Miscellaneous

     64    
         

Expenses before reductions

     9,637    

Expense reductions

     (4,820 )  
         

Net expenses

 

     4,817
     

Net investment income (loss)

 

     137,916

Net Realized and Unrealized Gain (Loss)

 

  

Net realized gain (loss) on investments

 

     176
     

Net Increase (Decrease) in Net Assets from Operations

 

   $ 138,092
       

 

See accompanying notes which are an integral part of the financial statements.

 

10   Statement of Operations

Table of Contents

Russell Investment Company

Money Market Fund

Statements of Changes in Net Assets

 

Amounts in thousands   Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31, 2007		  
   

Increase (Decrease) in Net Assets

    

Operations

    

Net investment income (loss)

   $ 137,916     $ 278,340  

Net realized gain (loss)

     176       (17 )
               

Net increase (decrease) in net assets from operations

     138,092       278,323  
               

Distributions

    

From net investment income

    

Class A

     (8,859 )     (8,328 )

Class S

     (129,056 )     (270,013 )
               

Net decrease in net assets from distributions

     (137,915 )     (278,341 )
               

Share Transactions

    

Net increase (decrease) in net assets from share transactions

     1,772,261       1,479,224  
               

Total Net Increase (Decrease) in Net Assets

     1,772,438       1,479,206  

Net Assets

    

Beginning of period

     5,721,288       4,242,082  
               

End of period

   $ 7,493,726     $ 5,721,288  
               

Undistributed (overdistributed) net investment income included in net assets

   $ 25     $ 24  

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   11

Table of Contents

Russell Investment Company

Money Market Fund

Financial Highlights — Class A

For a Share Outstanding Throughout Each Period.

 

           Fiscal Year Ended October 31,  
      2008*     2007     2006     2005     2004     2003**  
            

Net Asset Value, Beginning of Period

    $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000  

Income From Operations

             

Net investment income (loss) (a)

      .0207       .0517       .0464       .0271       .0108       .0051  
                                                

Distributions

             

From net investment income

      (.0207 )     (.0517 )     (.0464 )     (.0271 )     (.0108 )     (.0051 )
                                                

Net Asset Value, End of Period

    $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000  
                                                

Total Return (%) (b)

      2.14       5.30       4.74       2.74       1.08       .59  

Ratios/Supplemental Data:

             

Net Assets, end of period (in thousands)

    $ 576,137     $ 291,636     $ 76,031     $ 14,410     $ 3,989     $ 682  

Ratios to average net assets (%):

             

Operating expenses, net (c)(d)

      .24       .25       .25       .25       .25       .26  

Operating expenses, gross (c)

      .40       .40       .40       .40       .40       5.24  

Net investment income (loss) (c)(d)

      4.14       5.18       4.82       2.91       1.18       .96  

 

* For the period ended April 30, 2008 (Unaudited).
** For the period April 21, 2003 (commencement of operations) to October 31, 2003.
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) The ratios for periods less than one year are annualized.
(d) May reflect amounts waived and/or reimbursed by RIMCo and RFSC, and for certain funds, custody credit arrangements.

 

See accompanying notes which are an integral part of the financial statements.

 

12   Financial Highlights

Table of Contents

Russell Investment Company

Money Market Fund

Financial Highlights — Class S

For a Share Outstanding Throughout Each Period.

 

           Fiscal Year Ended October 31,  
      2008*     2007     2006     2005      2004      2003  
              

Net Asset Value, Beginning of Period

    $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000      $ 1.0000      $ 1.0000  

Income From Operations

               

Net investment income (loss) (a)

      .0212       .0527       .0474       .0280        .0117        .0121  
                                                  

Distributions

               

From net investment income

      (.0212 )     (.0527 )     (.0474 )     (.0280 )      (.0117 )      (.0121 )

Net Asset Value, End of Period

    $ 1.0000     $ 1.0000     $ 1.0000     $ 1.0000      $ 1.0000      $ 1.0000  
                                                  

Total Return (%) (b)

      2.19       5.40       4.84       2.82        1.17        1.28  

Ratios/Supplemental Data:

               

Net Assets, end of period (in thousands)

    $ 6,917,589     $ 5,429,652     $ 4,166,051     $ 3,145,592      $ 2,958,692      $ 2,363,623  

Ratios to average net assets (%):

               

Operating expenses, net (c)(d)

      .14       .15       .15       .15        .15        .16  

Operating expenses, gross (c)

      .29       .30       .30       .30        .30        .31  

Net investment income (loss) (c)(d)

      4.34       5.27       4.78       2.83        1.16        1.21  

 

* For the period ended April 30, 2008 (Unaudited).
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) The ratios for periods less than one year are annualized.
(d) May reflect amounts waived and/or reimbursed by RIMCo and RFSC, and for certain funds, custody credit arrangements.

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   13

Table of Contents

Russell Investment Company

Money Market Fund

Notes to Financial Statements — April 30, 2008 (Unaudited)

 

 

 

1.   Organization

Russell Investment Company (the “Investment Company” or “RIC”) is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on one of these Funds (“the Fund”). The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated August 19, 2002, as amended. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest.

Through December 31, 2007, Russell Investment Management Company (“RIMCo”) was the adviser, administrator and transfer agent of the Fund, providing advisory, administrative and transfer agency services to the Fund. Effective January 1, 2008, RIMCo is the Fund’s adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Fund’s administrator and transfer agent. There was no change in the services provided to the Fund or in aggregate fees paid by the Fund for advisory, administrative and transfer agency services.

 

2.   Significant Accounting Policies

The Fund’s financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by the Fund in the preparation of its financial statements.

Security Valuation

The Fund values portfolio investments using the amortized cost method. Under this method, a portfolio instrument is initially valued at cost and thereafter a constant accretion/amortization to maturity of any discount or premium is assumed. While amortized cost provides certainty in valuation, it may result in periods when the value of an instrument is higher or lower than the price the Fund would receive if it sold the instrument.

Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier.

Investment Transactions

Securities transactions are recorded on a trade date basis, which in most instances is the same as the settlement date. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost.

Investment Income

Dividend income is recorded on the ex-dividend date and interest income is recorded on an accrual basis.

Federal Income Taxes

Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.

It is the Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income tax provision was required for the Fund.

The Financial Accounting Standards Board (FASB) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Fund adopted the provisions of FIN 48 on November 1, 2007. Management has reviewed the Fund’s tax positions for all open tax years, and concluded that adoption had no effect on the Fund’s financial position or results of operations. At April 30, 2008, the Fund had recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.

 

14   Notes to Financial Statements

Table of Contents

Russell Investment Company

Money Market Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

The Fund files a U.S. tax return. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal year ending October 31, 2005 through October 31, 2007, no examinations are in progress or anticipated at this time. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Dividends and Distributions to Shareholders

The Fund declares and records income dividends daily and pays them monthly. Capital gain distributions are generally declared and paid annually. An additional distribution may be paid by the Fund to avoid imposition of federal income and excise tax on any remaining undistributed capital gains and net investment income.

The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) on investment for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP primarily relate to investments in certain securities sold at a loss and capital loss carryforwards. Accordingly, the Fund may periodically make reclassifications among certain of its capital accounts without impacting its net asset value.

Expenses

The Fund will pay its own expenses other than those expressly assumed by RIMCo or RFSC. Most expenses can be directly attributed to the individual Fund. Expenses which cannot be directly attributed to a specific Fund are allocated among all Funds principally based on their relative net assets.

Class Allocation

The Fund offers the following classes of shares: Class A and Class S. All share classes have identical voting, dividend, liquidation and other rights and the same terms and conditions. The separate classes of shares differ principally in the distribution fees. Shareholders of each class bear certain expenses that pertain to that particular class. Realized and unrealized gains (losses), net investment income, and expenses with the exception of class level expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class.

Guarantees

In the normal course of business the Fund enters into contracts that contain a variety of representations which provide general indemnifications. The Fund’s maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Fund that have not yet occurred. However, the Fund expects the risk of loss to be remote.

 

3.   Related Party Transactions, Fees and Expenses

Adviser and Administrator

Through December 31, 2007, RIMCo was the adviser and administrator of all of the Funds which comprise the Investment Company. Effective January 1, 2008, RIMCo advises the Fund and RFSC is the Fund’s administrator. RFSC is a wholly-owned subsidiary of RIMCo. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides money manager evaluation to RIMCo.

The Investment Company Funds are permitted to invest their cash reserves (i.e., cash awaiting investment or cash held to meet redemption requests or to pay expenses) in the RIC Money Market Fund. As of April 30, 2008, $2,797,223,108 represents investment by other Investment Company Funds not presented herein and investment by the Russell Investment Funds (“RIF”) Funds in the Fund. RIF employs the same investment adviser as RIC. In addition, a portion of the collateral received from the Investment Company’s securities lending program in the amount of $1,000,000,000 is invested in the RIC Money Market Fund.

The advisory fee of 0.20% and administrative fee of 0.05% are based upon the average daily net assets of the Fund and are payable monthly and total $6,393,550 and $1,598,388 respectively, for the period ended April 30, 2008.

The adviser has contractually agreed to waive 0.15% of its 0.20% advisory fee at least through February 28, 2010. The amount of such waiver for the period ended April 30, 2008 was $4,795,163. The adviser does not have the ability to recover amounts waived for the period ended April 30, 2008 or previous periods.

 

Notes to Financial Statements   15

Table of Contents

Russell Investment Company

Money Market Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

Transfer and Dividend Disbursing Agent

Through December 31, 2007 RIMCo was the Transfer and Dividend Disbursing Agent. Effective January 1, 2008, RFSC serves as the Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RIMCo and RFSC were paid a fee for transfer agency and dividend disbursing services provided to the Fund. RIMCo and RFSC retain a portion of this fee for services provided to the Fund and pay the balance to unaffiliated agents who assist in providing these services. Total transfer agency fees paid by the Fund for the period ended April 30, 2008, were $319,678.

Distributor

On June 2, 2008, Russell Fund Distributors Inc., a wholley owned subsidiary of RIMCo, changed its name to Russell Financial Services, Inc. (the “Distributor”) and serves as distributor for RIC, pursuant to the Distribution Agreement with the Investment Company.

The Investment Company has a Distribution Plan pursuant to Rule 12b-1 (the “Plan”) under the 1940 Act. Under this Plan, the Investment Company is authorized to make payments to the Distributor or any Selling Agents, as defined in the Plan, for sales support services provided, and related expenses incurred which are primarily intended to result in the sale of the Class A Shares subject to the Distribution Plan. The 12b-1 distribution payments shall not exceed 0.15% of the average daily net assets of the Fund’s Class A Shares on an annual basis. The Fund’s Class S Shares do not participate in the Investment Company’s distribution plan.

Pursuant to the rules of the Financial Industry Regulatory Authority (“FINRA”) the aggregate initial sales charges and deferred sales charges on Class A Shares of the Fund may not exceed 7.25% of total gross sales, subject to certain exclusions. These limitations are imposed at the class level of the Fund rather than on a per shareholder basis. Therefore, long-term shareholders of the Class A Shares may pay more than the economic equivalent of the maximum sales charges permitted by FINRA.

Accrued Fees Payable to Affiliates

Accrued fees payable to affiliates for the period ended April 30, 2008 were as follows:

 

     Money Market
  

Advisory Fees

    $ 291,681

Administration Fees

      291,681

Distribution Fees

      45,221

Transfer Agent Fees

      114,580

Trustee Fees

      13,713
      
   $ 756,876
      

Board of Trustees

The Russell Fund Complex consists of Russell Investment Company, which has 44 Funds, and RIF, which has nine Funds. Each of the Trustees is a Trustee for both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 ($52,000 prior to January 1, 2008) per year, $6,500 for each regular quarterly meeting attended in person, $2,500 ($2,000 prior to January 1, 2008) for each special meeting attended in person, and $2,500 ($2,000 prior to January 1, 2008) for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 ($500 prior to January 1, 2008) fee for attending quarterly and special meetings and a $500 fee for attending committee meetings by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee chair is paid a fee of $6,000 per year. The Chairman of the Board receives additional annual compensation of $52,000.

Custodian

The Fund has entered into arrangements with its Custodian whereby custody credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund’s expenses. During the period ended April 30, 2008, the Fund’s custodian

 

16   Notes to Financial Statements

Table of Contents

Russell Investment Company

Money Market Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

fees were reduced by $25,047 under these arrangements which are included in expense reductions on the Statement of Operations.

 

4.   Federal Income Taxes

The Fund may have net tax basis capital loss carryforwards which may be applied against any realized net taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. At October 31, 2007, available capital loss carryforwards and expiration dates are as follows:

 

10/31/08   10/31/09   10/31/10   10/31/11   10/31/12   10/31/13   10/31/14   10/31/15   Total
               
$90,626   $35,378   $—   $43,223   $—   $3,147   $11,753   $17,488   $201,615

 

5.   Fund Share Transactions (amounts in thousands)

Share transactions for the periods ended April 30, 2008 and October 31, 2007 were as follows:

 

     On a Constant Dollar Basis  
     2008     2007  
    

Class A

     

Proceeds from shares sold

    $ 529,587     $ 398,952  

Proceeds from reinvestment of distributions

      8,001       6,994  

Payments for shares redeemed

      (253,097 )     (190,341 )
                

Net increase (decrease)

      284,491       215,605  
                
    

Class S

     

Proceeds from shares sold

      18,252,111       39,305,173  

Proceeds from reinvestment of distributions

      44,981       57,984  

Payments for shares redeemed

      (16,809,322 )     (38,099,538 )
                

Net increase (decrease)

      1,487,770       1,263,619  
                

Total increase (decrease)

    $ 1,772,261     $ 1,479,224  
                

 

6.   Interfund Lending Program

The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Other Investment Company Funds and RIF Funds may borrow money from the RIC Money Market Fund for temporary purposes. All such borrowing and lending will be subject to a participating fund’s fundamental investment limitations. The RIC Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves. The Investment Company Funds and RIF Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Money Market Fund could result in a lost investment opportunity of additional borrowing costs. Interest Income on the Statement of Operations for the Fund includes $1,868 received from the Interfund Lending Program for the period ending April 30, 2008.

 

7.   Record Ownership

As of April 30, 2008, the Fund had one shareholder of record with greater than 10% of the total outstanding shares of the Fund in the amount of 11.69%.

 

8.   Restricted Securities

Restricted securities are subject to contractual limitations on resale, often issued in private placement transactions, and not registered under the Securities Act of 1933 (the “Act”). The most common types of restricted securities are those sold under Rule 144A of the Act and commercial paper sold under Section 4(2) of the Act.

The Fund may invest a portion of its net assets not to exceed 10% in securities that are illiquid. Illiquid securities are securities that may not be readily marketable, and cannot be sold within seven days in the ordinary course of business at the approximate amount at which the Fund has valued the securities. Restricted securities are generally considered to be illiquid.

 

Notes to Financial Statements   17

Table of Contents

Russell Investment Company

Money Market Fund

Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

The following table lists restricted securities held by the Fund that are illiquid. The following table does not include (1) securities deemed liquid by RIMCo or a money manager pursuant to Board approved policies and procedures or (2) illiquid securities that are not restricted securities as designated on the Fund’s Schedule of Investments.

 

Fund - % of Net Assets
Securities		    Acquisition
Date		    Principal
Amount ($)
or Shares		    Cost per Unit
$		    Cost
(000)
$		    Market Value
(000)
$
              

Money Market Fund - 6.7%

               

Protective Life Insurance Co.

    10/1/2007    50,000,000    100.00    50,000    50,000

Metropolitan Life Insurance Company

   2/22/2008    50,000,000    100.00    50,000    50,000

Metropolitan Life Insurance Company

    2/22/2008    150,000,000    100.00    150,000    150,000

New York Life Insurance Co.

    5/14/2008    150,000,000    100.00    150,000    150,000

New York Life Insurance Co.

    5/14/2008    100,000,000    100.00    100,000    100,000
                
               500,000
                

Illiquid securities and restricted securities may be priced by the Funds using fair value procedures approved by the Board of Trustees.

 

9.   Market/Security Events

Structured investment vehicles (SIVs) have experienced significantly decreased liquidity as well as declines in the market value of certain categories of collateral underlying the SIVs, although, based on available information, the substantial majority of the underlying collateral remains of high quality. The value of SIVs may be affected by, among other things, changes in: interest rates, the quality of the underlying assets or the market’s assessment thereof, factors concerning the interests in and structure of the issuer or the originator of the receivables, or the creditworthiness of the entities that provide any credit enhancements.

 

10.   Subsequent Event

Effective September 2, 2008, the Money Market Fund will change its name to the Russell Money Market Fund.

 

18   Notes to Financial Statements

Table of Contents

Russell Investment Company (“RIC”)

Institutional Funds

Basis for Approval of Investment Advisory Contract

 

 

 

Approval of Investment Advisory Agreement

The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the ‘‘RIMCo Agreement’’) at a meeting held on April 22, 2008. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Fund, sales and redemptions of the Fund’s shares, and the management of the Fund by RIMCo. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Fund; and (2) information (the ‘‘Third-Party Information’’) received from an independent, nationally recognized provider of investment company information comparing the performance of the Fund and its respective operating expenses over various periods of time with other peer funds (‘‘Comparable Funds’’) not managed by RIMCo believed by the provider to be generally comparable in investment objectives and size to the Fund. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Fund and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates. The Trustees received a memorandum from counsel to the Fund discussing the legal standards for their consideration of the continuation of the RIMCo Agreement and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.

On April 21, 2008, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or the Fund’s management were present. At the April 24 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement with management, counsel to the Fund and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Funds and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.

The Fund may employ a manager-of-managers method of investment. However, RIMCo currently manages the Money Market Fund.

The Board considered that RIMCo is responsible under the RIMCo Agreement for determining, implementing and maintaining the investment program for each Fund.

The Trustees considered, with respect to the Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:

 

1. The nature, scope and quality of the services provided to the Fund by RIMCo;

 

2. The advisory fee paid by the Fund to RIMCo ;

 

3. Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund, including any administrative, transfer agent, cash management and securities lending fees, soft dollar arrangements and commissions in connection with portfolio securities transactions;

 

4. Information provided by RIMCo as to expenses incurred by the Fund; and

 

5. Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund.

At the April 22 Board meeting, RIMCo and management discussed the reasonableness of the Fund’s investment advisory fees.

On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the year or presented at the April 22 Board meeting by RIMCo, the Board, in respect of the Fund, found, after giving effect to any applicable waivers and/or reimbursements (1) the advisory fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided to the Fund; (2) the relative expense ratio of the Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.

The Board further concluded that, under the circumstances, the performance of the Fund supported continuation of the RIMCo Agreement. In evaluating performance, the Board considered the Fund’s absolute performance and its performance relative to appropriate benchmarks and indices and its Comparable Funds.

 

Basis for Approval of Investment Advisory Contract   19

Table of Contents

Russell Investment Company

Institutional Funds

Basis for Approval of Investment Advisory Contract, continued

 

 

 

At the April 22 Board meeting, the Board considered for the Fund whether economies of scale have been realized and whether the fees for the Fund appropriately reflect or should be revised to reflect any such economies. It concluded that the investment advisory fees for the Fund appropriately reflect any economies of scale based upon information provided by RIMCo. After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Funds and their respective shareholders and voted to approve the continuation of the Agreement.

In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of the Fund.

 

20   Basis for Approval of Investment Advisory Contract

Table of Contents

Russell Investment Company

Money Market Fund

Shareholder Requests for Additional Information — April 30, 2008 (Unaudited)

 

 

 

A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each fiscal year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, (iii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iv) at the Securities and Exchange Commission’s public reference room.

The Board has delegated to RIMCo, as RIC’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Fund may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Fund maintains a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Fund. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Fund’s Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

To reduce expenses, we may mail only one copy of the Fund’s prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution.

Some Financial Intermediaries may offer electronic delivery of the Fund’s prospectus and annual and semiannual reports. Please contact your Financial Intermediary for further details.

 

Shareholder Requests for Additional Information   21

Table of Contents

Russell Investment Company

Money Market Fund

Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
With Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INTERESTED TRUSTEES

            

#Greg J. Stark

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

  

President and Chief Executive Officer since 2004

 

Trustee since 2007

  

Appointed until successor is duly elected and qualified

 

Until successor is chosen and qualified by Trustees

  

•  President and CEO RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”)

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director, of Individual Investor Services, FRC

•  2000 to 2004 Managing Director, Sales and Client Service, RIMCo

   53   None

 

# Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee.

 

Name,
Age,
Address		   Position(s) Held
With Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INDEPENDENT TRUSTEES

          

Thaddas L. Alston

Born April 7, 1945

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2006   Appointed until successor is duly elected and qualified  

•  Senior Vice President, Larco Investments, Ltd. (real estate firm)

   53   None
             

Kristianne Blake,

Born January 22, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman since 2005

  

Appointed until successor is duly elected and qualified

 

Annual

  

•  Director and Chairman of the Audit Committee, Avista Corp.

•  Trustee and Chairman of the Operations Committee, Principal Funds and Principal Variable Contracts Funds

•  Regent, University of Washington

•  President, Kristianne Gates Blake, P.S. (accounting services)

•  February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF

•  Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999–2006

   53  

•  Director, Avista Corp; (electric utilities)

•  Trustee, Principal Funds (investment company);

•  Trustee, Principal Variable Contracts Funds (investment company)

 

22   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Money Market Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
With Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INDEPENDENT TRUSTEES

          

Daniel P. Connealy

Born June 6, 1946

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2003

 

Chairman of Audit Committee since 2005

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc.

 

•  2001–2003, Vice President and Chief Financial Officer, Janus Capital Group Inc.

   53   None
             

Jonathan Fine

Born July 8, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2004

   Appointed until successor is duly elected and qualified  

•  President and Chief Executive Officer, United Way of King County, WA

   53   None
             

Raymond P. Tennison, Jr.

Born December 21, 1955

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman of the Nominating and Governance Committee since 2007

  

Appointed until successor is duly elected and qualified.

 

Appointed until successor is duly elected and qualified

  

•  President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company

   53   None
             

Jack R. Thompson,

Born March 21, 1949

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2005   Appointed until successor is duly elected and qualified  

•  September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds

•  September 2007 to present, Director, LifeVantage Corporation (health products company)

•  May 1999 to May 2003, President, Chief Executive Officer and Director, Berger Financial Group, LLC

•  May 1999 to May 2003, President and Trustee, Berger Funds

   53  

•  Director, Sparx Asia Funds (investment company)

•  Director, LifeVantage Corporation (health products company)

             

Julie W. Weston,

Born October 2, 1943

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2002

 

Chairperson of the Investment Committee since 2006

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  Retired

   53   None

 

* Each Trustee is subject to mandatory retirement at age 72.

 

Disclosure of Information about Fund Directors   23

Table of Contents

Russell Investment Company

Money Market Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

TRUSTEES EMERITUS

            

*George F. Russell, Jr.,

Born July 3, 1932

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus and Chairman Emeritus since 1999   Until resignation or removal  

•  Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)); and RIMCo

•  Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”))

•  Chairman, Sunshine Management Services, LLC (investment adviser)

  53   None
             

Paul E. Anderson,

Born October 15, 1931

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2007   Five year term  

•  President, Anderson Management Group LLC (private investments consulting)

•  February 2002 to June 2005, Lead Trustee, RIC and RIF

•  Trustee of RIC and RIF until 2006

•  Chairman of the Nominating and Governance Committee 2006

   53   None
             

William E. Baxter,

Born June 8, 1925

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2004   Five year term  

•  Retired since 1986

•  Trustee of RIC and RIF until 2004

   53   None
             

Lee C. Gingrich,

Born October 6, 1930

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2006   Five year term  

•  Retired since 1995

•  Trustee of RIC and RIF until 2005

•  Chairman of the Nominating and Governance Committee 2001–2005

   53   None
             

Eleanor W. Palmer,

Born May 5, 1926

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee Emeritus

since 2004

   Five year term  

•  Retired since 1981

•  Trustee of RIC and RIF until 2004

   53   None

 

* Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF.

 

24   Disclosure of Information about Fund Directors

Table of Contents

Russell Investment Company

Money Market Fund

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
With Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years

OFFICERS

        

Cheryl Wichers

Born December 16, 1966

 

909 A Street
Tacoma, Washington 98402-1616

   Chief Compliance Officer since 2005   Until removed by Independent Trustees  

•  Chief Compliance Officer, RIC

•  Chief Compliance Officer, RIF

•  Chief Compliance Officer, RIMCo

•  Chief Compliance Officer, RFSC

•  April 2002–May 2005, Manager, Global Regulatory Policy

         

Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington 98402-1616

   President and Chief Executive Officer since 2004   Until successor is chosen and qualified by Trustees  

•  President and CEO, RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board, President and CEO, RFSC

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director of Individual Investor Services, FRC

•  2000 to 2004, Managing Director, Sales and Client Service, RIMCo

         

Mark E. Swanson,
Born November 26, 1963

 

909 A Street

Tacoma, Washington

98402-1616

   Treasurer and Chief Accounting Officer since 1998   Until successor is chosen and qualified by Trustees  

•  Treasurer, Chief Accounting Officer and CFO, RIC and RIF

•  Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc.

•  Treasurer and Principal Accounting Officer, SSgA Funds

         

Peter Gunning,

Born February 22, 1967

 

909 A Street

Tacoma, Washington 98402-1616

   Chief Investment Officer since 2008   Until removed by Trustees  

•  Chief Investment Officer, RIC, RIF

•  1996 to 2008 Chief Investment Officer, Russell, Asia Pacific

         

Gregory J. Lyons,

Born August 24, 1960

 

909 A Street

Tacoma, Washington

98402-1616

   Secretary since 2007   Until successor is chosen and qualified by Trustees  

•  Associate General Counsel and Assistant Secretary FRC and RIA

•  Director and Secretary, RIMCo, RFSC and Russell Financial Services, Inc.

•  Secretary and Chief Legal Counsel, RIC and RIF

 

Disclosure of Information about Fund Directors   25

Table of Contents

Money Market Fund

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Interested Trustees

Greg J. Stark

Independent Trustees

Thaddas L. Alston

Kristianne Blake

Daniel P. Connealy

Jonathan Fine

Raymond P. Tennison, Jr.

Jack R. Thompson

Julie W. Weston

Trustees Emeritus

George F. Russell, Jr.

Paul E. Anderson

William E. Baxter

Lee C. Gingrich

Eleanor W. Palmer

Officers

Greg J. Stark, President and Chief Executive Officer

Cheryl Wichers, Chief Compliance Officer

Peter Gunning, Chief Investment Officer

Mark E. Swanson, Treasurer and Chief Accounting Officer

Gregory J. Lyons, Secretary

Adviser

Russell Investment Management Company

909 A Street

Tacoma, WA 98402

Administrator and Transfer and Dividend Disbursing Agent

Russell Fund Services Company

909 A Street

Tacoma, WA 98402

Custodian

State Street Bank and Trust Company

Josiah Quincy Building

200 Newport Avenue

North Quincy, MA 02171

Office of Shareholder Inquiries

909 A Street

Tacoma, WA 98402

(800) 787-7354

Legal Counsel

Dechert LLP

200 Clarendon Street, 27th Floor

Boston, MA 02116-5021

Distributor

Russell Financial Services, Inc.

909 A Street

Tacoma, WA 98402

Money Managers as of April 30, 2008

Money Market Fund

Russell Investment Management Company, Tacoma, WA


 

This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Company. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

 

26   Manager, Money Managers and Service Providers

Table of Contents

 

Russell Investment Company    909 A Street      800-787-7354
   Tacoma, Washington 98402      Fax: 253-591-3495
        www.russell.com

 

LOGO

LOGO

LOGO

36-08-070

Table of Contents

LOGO

 

2008 SEMIANNUAL REPORT

 

 

Institutional Funds

 

 

APRIL 30, 2008

 

FUND    SHARE CLASS
Equity I Fund    E, I, Y
Equity II Fund    E, I, Y
Equity Q Fund    E, I, Y
International Fund    E, I, Y
Fixed Income III Fund    E, I, Y

 

LOGO

Table of Contents

 

 

Russell Investment Company

Russell Investment Company is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on five of these Funds.

Table of Contents

 

Russell Investment Company

Institutional Funds

Semiannual Report

April 30, 2008 (Unaudited)

Table of Contents

 

     Page
Equity I Fund    3
Equity II Fund    10
Equity Q Fund    24
International Fund    35
Fixed Income III Fund    55
Notes to Schedules of Investments    110
Statements of Assets and Liabilities    112
Statements of Operations    116
Statements of Changes in Net Assets    118
Financial Highlights    120
Notes to Financial Highlights    126
Notes to Financial Statements    127
Basis for Approval of Investment Advisory Contracts    146
Shareholder Requests for Additional Information    150
Disclosure of Information about Fund Directors    151
Adviser, Money Managers and Service Providers    155

Table of Contents

 

Russell Investment Company - Institutional Funds.

Copyright © Russell Investments 2008. 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 distributed through Russell Financial Services, Inc. (effective June 2, 2008,) the name changed from Russell Fund Distributors, Inc.) member FINRA, part of Russell Investments.

Russell Investments and Standard & Poor’s Corporation are the owners of the trademarks, service marks, and copyrights related to their respective indexes. Index performance is not indicative of the performance of any specific investment. Indexes are not managed and may not be invested in directly.

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. Current to the most recent month-end performance data may be obtained by visiting www.russell.com/us/fundperformance.

Table of Contents

Russell Investment Company

Equity I Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 894.20    $ 1,020.19

Expenses Paid During Period*

    $ 4.43    $ 4.72

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.94% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 895.20    $ 1,021.33

Expenses Paid During Period*

    $ 3.35    $ 3.57

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.71% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class Y

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 895.40    $ 1,021.68

Expenses Paid During Period*

    $ 3.02    $ 3.22

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.64% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Equity I Fund   3

Table of Contents

Russell Investment Company

Equity I Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 92.4%

        

Auto and Transportation - 1.9%

        

American Axle & Manufacturing Holdings, Inc. (Ñ)

    14,200      286

Autoliv, Inc. (Ñ)

    8,800      539

CSX Corp.

    35,575      2,239

Daimler AG

    3,300      255

Expeditors International of Washington, Inc.

    29,420      1,371

FedEx Corp.

    41,300      3,959

Ford Motor Co. (Æ)(Ñ)

    28,400      235

General Motors Corp. (Ñ)

    105,600      2,450

JB Hunt Transport Services, Inc. (Ñ)

    48,550      1,649

Navistar International Corp. (Æ)

    121,150      7,966

Norfolk Southern Corp.

    33,631      2,004

Southwest Airlines Co.

    4,900      65

Union Pacific Corp.

    96,092      13,952

Visteon Corp. (Æ)(Ñ)

    135,350      587
         
        37,557
         

Consumer Discretionary - 11.4%

     

Accenture, Ltd. Class A

    92,320      3,467

Activision, Inc. (Æ)

    52,020      1,407

Allied Waste Industries, Inc. (Æ)

    40,000      494

Amazon.Com, Inc. (Æ)(Ñ)

    26,659      2,096

Avis Budget Group, Inc. (Æ)

    20,200      268

Avon Products, Inc.

    93,641      3,654

Black & Decker Corp. (Ñ)

    4,800      315

Carnival Corp.

    41,800      1,679

CBS Corp. Class B (Ñ)

    43,200      997

Chico’s FAS, Inc. (Æ)(Ñ)

    148,550      1,050

Chipotle Mexican Grill, Inc.
Class A (Æ)(Ñ)

    16,980      1,666

Citadel Broadcasting Corp. (Ñ)

    1,174      2

Clear Channel Outdoor Holdings, Inc. Class A (Æ)

    326,878      6,217

Coach, Inc. (Æ)

    54,570      1,941

Costco Wholesale Corp.

    107,558      7,663

DIRECTV Group, Inc. (The) (Æ)

    76,200      1,878

eBay, Inc. (Æ)

    208,313      6,518

Electronic Arts, Inc. (Æ)

    88,000      4,529

Estee Lauder Cos., Inc. (The) Class A (Ñ)

    16,000      730

Family Dollar Stores, Inc. (Ñ)

    8,400      180

Focus Media Holding, Ltd. - ADR (Æ)(Ñ)

    28,500      1,051

GameStop Corp. Class A (Æ)

    24,911      1,371

Gannett Co., Inc. (Ñ)

    25,200      721
     Principal
Amount ($)
or Shares		      Market
Value
$

Gap, Inc. (The)

    24,400      454

Google, Inc. Class A (Æ)

    57,073      32,776

Guess ?, Inc. (Ñ)

    90,584      3,468

Home Depot, Inc.

    48,400      1,394

Intercontinental Hotels Group PLC - ADR (Ñ)

    96,502      1,547

International Game Technology

    113,400      3,940

JC Penney Co., Inc. (Ñ)

    31,450      1,337

Jones Apparel Group, Inc.

    24,500      388

Las Vegas Sands Corp. (Æ)(Ñ)

    56,273      4,289

Liberty Media Corp. Series A (Æ)

    37,032      569

Liberty Media Corp. - Entertainment Series A (Æ)

    99,078      2,571

Limited Brands, Inc. (Ñ)

    12,900      239

Liz Claiborne, Inc. (Ñ)

    21,100      373

Lowe’s Cos., Inc.

    257,189      6,479

Macy’s, Inc.

    128,530      3,251

McDonald’s Corp.

    505,479      30,116

MGM Mirage (Æ)(Ñ)

    47,750      2,442

News Corp. Class A

    289,750      5,187

Nike, Inc. Class B (Ñ)

    163,850      10,945

Nordstrom, Inc. (Ñ)

    63,160      2,227

Omnicom Group, Inc.

    46,690      2,229

priceline.com, Inc. (Æ)(Ñ)

    13,920      1,777

RadioShack Corp. (Ñ)

    26,800      373

Royal Caribbean Cruises, Ltd. (Ñ)

    130,760      4,171

Saks, Inc. (Æ)(Ñ)

    132,161      1,719

Staples, Inc.

    18,700      406

Starbucks Corp. (Æ)

    19,049      309

Target Corp.

    92,300      4,904

Time Warner, Inc.

    51,200      760

TJX Cos., Inc.

    36,700      1,182

Urban Outfitters, Inc. (Æ)

    52,460      1,797

VeriSign, Inc. (Æ)(Ñ)

    43,350      1,563

Viacom, Inc. Class B (Æ)

    284,850      10,950

Wal-Mart Stores, Inc.

    269,070      15,601

Walt Disney Co. (The)

    151,700      4,920

Wynn Resorts, Ltd. (Ñ)

    43,622      4,595

XM Satellite Radio Holdings, Inc. Class A (Æ)(Ñ)

    249,450      2,781

Yum! Brands, Inc.

    100,165      4,075
         
        227,998
         

Consumer Staples - 6.1%

        

Altria Group, Inc.

    117,020      2,340

Coca-Cola Co. (The)

    579,039      34,088

Coca-Cola Enterprises, Inc. (Ñ)

    21,100      475

Colgate-Palmolive Co.

    69,830      4,937

 

4   Equity I Fund

Table of Contents

Russell Investment Company

Equity I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

ConAgra Foods, Inc.

    11,300      266

Diageo PLC - ADR

    32,200      2,637

Fomento Economico Mexicano SAB de CV - ADR

    127,660      5,547

Kraft Foods, Inc. Class A

    135,400      4,283

Kroger Co. (The)

    14,100      384

Molson Coors Brewing Co. Class B

    35,700      1,958

Nestle SA - ADR

    31,110      3,725

PepsiCo, Inc.

    135,600      9,293

Philip Morris International, Inc. (Æ)

    174,780      8,919

Procter & Gamble Co.

    460,240      30,859

Sara Lee Corp.

    40,100      582

SUPERVALU, Inc.

    26,500      877

Tyson Foods, Inc. Class A (Ñ)

    124,800      2,222

Unilever NV

    127,700      4,283

WM Wrigley Jr Co. (Ñ)

    64,407      4,905
         
        122,580
         

Financial Services - 16.6%

        

ACE, Ltd.

    105,850      6,382

Alliance Data Systems Corp. (Æ)

    46,588      2,675

Allstate Corp. (The)

    150,340      7,571

American Express Co.

    24,700      1,186

American International Group, Inc.

    243,500      11,250

Annaly Capital Management, Inc. (ö)

    517,075      8,666

Bank of America Corp.

    351,472      13,194

Bank of New York Mellon Corp. (The)

    266,162      11,586

BlackRock, Inc. Class A (Ñ)

    10,830      2,185

Capital One Financial Corp. (Ñ)

    182,951      9,696

Charles Schwab Corp. (The)

    130,800      2,825

Chubb Corp.

    39,420      2,088

Citigroup, Inc. (Ñ)

    551,800      13,944

CME Group, Inc. Class A

    4,770      2,182

Comerica, Inc.

    13,200      458

Deutsche Bank AG (Ñ)

    2,600      311

Discover Financial Services

    45,900      836

Everest Re Group, Ltd.

    1,500      136

Federal National Mortgage Association (Ñ)

    242,900      6,874

Fidelity National Financial, Inc. Class A (Ñ)

    168,850      2,700

Fifth Third Bancorp

    4,800      103

Fiserv, Inc. (Æ)(Ñ)

    33,270      1,682

Franklin Resources, Inc.

    31,200      2,969

Freddie Mac

    347,350      8,653

Genworth Financial, Inc. Class A

    473,860      10,927

Goldman Sachs Group, Inc. (The)

    166,354      31,835

Hartford Financial Services Group, Inc.

    102,320      7,292
     Principal
Amount ($)
or Shares		      Market
Value
$

Host Hotels & Resorts, Inc. (ö)

    270,950      4,660

iShares Russell 1000 Value Index Fund (Ñ)

    30,600      2,341

JPMorgan Chase & Co.

    701,346      33,419

Keycorp (Ñ)

    18,200      439

Lehman Brothers Holdings, Inc. (Ñ)

    63,000      2,787

Lincoln National Corp.

    81,800      4,398

Mastercard, Inc. Class A (Ñ)

    47,846      13,309

Merrill Lynch & Co., Inc. (Ñ)

    17,400      867

MetLife, Inc.

    122,020      7,425

MFA Mortgage Investments, Inc. (ö)(Ñ)

    253,850      1,774

Morgan Stanley

    287,600      13,977

National City Corp. (Ñ)

    896,110      5,646

Old Republic International Corp. (Ñ)

    28,600      410

PartnerRe, Ltd. - ADR (Ñ)

    5,300      392

PMI Group, Inc. (The) (Ñ)

    64,900      365

PNC Financial Services Group, Inc.

    30,260      2,099

Progressive Corp. (The) (Ñ)

    51,700      940

Prudential Financial, Inc.

    89,510      6,777

Redwood Trust, Inc. (ö)(Ñ)

    76,200      2,537

Regions Financial Corp. (Ñ)

    18,200      399

RenaissanceRe Holdings, Ltd.

    45,025      2,316

Sovereign Bancorp, Inc. (Ñ)

    91,000      680

State Street Corp.

    95,596      6,896

SunTrust Banks, Inc.

    40,430      2,254

T Rowe Price Group, Inc.

    31,980      1,873

Torchmark Corp.

    3,400      220

Travelers Cos., Inc. (The)

    128,785      6,491

Unum Group

    61,350      1,424

Visa, Inc. New (Æ)

    149,747      12,496

Wachovia Corp. (Ñ)

    199,150      5,805

Washington Mutual, Inc. (Ñ)

    197,082      2,422

Wells Fargo & Co. (Ñ)

    344,261      10,242

Western Union Co. (The)

    102,984      2,369

XL Capital, Ltd. Class A

    20,950      731
         
        331,386
         

Health Care - 11.7%

        

Abbott Laboratories

    199,500      10,524

Alcon, Inc.

    20,445      3,230

Alexion Pharmaceuticals, Inc. (Æ)

    16,000      1,126

Allergan, Inc./United States (Ñ)

    137,510      7,751

AmerisourceBergen Corp. Class A

    11,000      446

Baxter International, Inc.

    120,707      7,522

Boston Scientific Corp. (Æ)

    91,650      1,222

Brookdale Senior Living, Inc. (Ñ)

    7,100      186

Cardinal Health, Inc.

    4,700      245

 

Equity I Fund   5

Table of Contents

Russell Investment Company

Equity I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Charles River Laboratories International, Inc. (Æ)

    27,320      1,586

Cooper Cos., Inc. (The) (Ñ)

    58,600      2,051

Covidien, Ltd.

    103,800      4,846

CVS Caremark Corp.

    709,335      28,636

Dentsply International, Inc.

    45,930      1,785

Express Scripts, Inc. Class A (Æ)

    47,518      3,327

Genentech, Inc. (Æ)

    99,204      6,766

Genzyme Corp. (Æ)

    59,715      4,201

Gilead Sciences, Inc. (Æ)(Ñ)

    410,989      21,273

GlaxoSmithKline PLC - ADR (Ñ)

    7,400      326

Human Genome Sciences, Inc. (Æ)(Ñ)

    214,800      1,407

Intuitive Surgical, Inc. (Æ)

    22,904      6,625

Johnson & Johnson

    264,940      17,775

Merck & Co., Inc.

    385,080      14,648

Mylan, Inc. (Æ)(Ñ)

    305,400      4,022

Novartis AG - ADR

    67,950      3,420

Omnicare, Inc. (Ñ)

    122,800      2,499

Pfizer, Inc.

    219,900      4,422

PharMerica Corp. (Æ)

    291      5

Savient Pharmaceuticals, Inc. (Æ)(Ñ)

    89,400      1,953

Schering-Plough Corp. (Ñ)

    557,600      10,265

St. Jude Medical, Inc. (Æ)

    92,634      4,056

Stericycle, Inc. (Æ)

    28,790      1,537

Stryker Corp.

    105,700      6,853

Teva Pharmaceutical Industries, Ltd. - ADR

    76,389      3,574

Thermo Fisher Scientific, Inc. (Æ)(Ñ)

    183,222      10,603

UnitedHealth Group, Inc.

    129,920      4,239

Vertex Pharmaceuticals, Inc. (Æ)

    35,400      903

WellPoint, Inc. (Æ)

    61,240      3,047

Wyeth

    517,650      23,020

Zimmer Holdings, Inc. (Æ)

    29,600      2,195
         
        234,117
         

Integrated Oils - 5.6%

        

BP PLC - ADR

    5,400      393

Chevron Corp.

    101,721      9,780

ConocoPhillips

    80,980      6,976

Exxon Mobil Corp.

    314,500      29,271

Hess Corp. (Ñ)

    182,051      19,334

Marathon Oil Corp.

    55,750      2,541

Occidental Petroleum Corp.

    261,156      21,731

Petroleo Brasileiro SA - ADR

    63,756      7,741

Royal Dutch Shell PLC - ADR

    4,400      353

Total SA - ADR

    169,030      14,199
         
        112,319
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Materials and Processing - 5.5%

     

Agrium, Inc.

    46,700      3,689

Air Products & Chemicals, Inc.

    27,603      2,717

Alcoa, Inc.

    45,600      1,586

Allegheny Technologies, Inc.

    25,973      1,788

ArcelorMittal Class A

    8,800      784

Archer-Daniels-Midland Co.

    75,119      3,310

Ball Corp. (Ñ)

    7,600      409

Cameco Corp.

    33,500      1,172

Celanese Corp. Class A

    35,000      1,566

Cytec Industries, Inc.

    14,600      862

Dow Chemical Co. (The)

    47,900      1,923

EI Du Pont de Nemours & Co. (Ñ)

    223,150      10,914

Fluor Corp.

    38,400      5,870

Freeport-McMoRan Copper & Gold, Inc. Class B (Ñ)

    21,000      2,389

International Paper Co.

    9,000      236

Lennar Corp. Class B (Ñ)

    6,400      107

Louisiana-Pacific Corp. (Ñ)

    24,400      281

Masco Corp. (Ñ)

    299,550      5,455

McDermott International, Inc. (Æ)

    21,139      1,133

Monsanto Co.

    179,550      20,472

Mosaic Co. (The) (Æ)

    13,240      1,622

Nucor Corp.

    71,800      5,421

Owens-Illinois, Inc. (Æ)

    33,220      1,832

Potash Corp. of Saskatchewan

    35,157      6,467

PPG Industries, Inc. (Ñ)

    88,160      5,410

Praxair, Inc.

    67,364      6,151

Precision Castparts Corp.

    46,957      5,520

Rohm & Haas Co. (Ñ)

    88,400      4,725

Smurfit-Stone Container Corp. (Æ)(Ñ)

    24,300      132

Sonoco Products Co.

    17,700      583

St. Joe Co. (The) (Ñ)

    71,860      2,923

United States Steel Corp.

    9,300      1,432

Wolseley PLC - ADR (Ñ)

    17,700      175
         
        109,056
         

Miscellaneous - 2.5%

        

Brunswick Corp. (Ñ)

    23,300      389

Eaton Corp. (Ñ)

    115,608      10,155

General Electric Co.

    667,181      21,817

Honeywell International, Inc.

    78,200      4,645

SPX Corp.

    16,350      2,011

Textron, Inc.

    142,640      8,702

Tyco International, Ltd.

    32,860      1,538
         
        49,257
         

 

6   Equity I Fund

Table of Contents

Russell Investment Company

Equity I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Other Energy - 8.2%

        

Anadarko Petroleum Corp.

    97,800      6,509

Apache Corp.

    25,800      3,475

Arch Coal, Inc. (Ñ)

    171,900      9,860

Baker Hughes, Inc.

    83,950      6,790

Cabot Oil & Gas Corp.

    80,200      4,569

Cameron International Corp. (Æ)(Ñ)

    172,906      8,512

Chesapeake Energy Corp. (Ñ)

    120,982      6,255

Consol Energy, Inc.

    146,640      11,872

Devon Energy Corp.

    278,382      31,568

Equitable Resources, Inc.

    9,050      601

FMC Technologies, Inc. (Æ)(Ñ)

    23,388      1,572

Halliburton Co.

    225,400      10,348

Massey Energy Co.

    20,000      1,047

National Oilwell Varco, Inc. (Æ)

    52,159      3,570

Peabody Energy Corp.

    30,300      1,852

Pioneer Natural Resources Co. (Ñ)

    61,200      3,533

Reliant Energy, Inc. (Æ)

    273,800      7,048

Schlumberger, Ltd.

    164,879      16,579

Transocean, Inc. (Æ)

    41,751      6,157

Valero Energy Corp.

    6,500      317

Weatherford International, Ltd. (Æ)

    14,379      1,160

Williams Cos., Inc.

    157,691      5,598

XTO Energy, Inc.

    234,377      14,498
         
        163,290
         

Producer Durables - 5.4%

        

American Tower Corp. Class A (Æ)

    36,100      1,567

Applied Materials, Inc.

    522,819      9,756

Boeing Co.

    29,550      2,508

Bombardier, Inc. (Æ)

    254,950      1,671

Caterpillar, Inc.

    28,736      2,353

Centex Corp. (Ñ)

    206,600      4,301

Crane Co.

    7,100      291

Deere & Co.

    125,342      10,537

Dover Corp.

    6,100      302

DR Horton, Inc. (Ñ)

    112,650      1,745

Emerson Electric Co.

    194,827      10,182

Flowserve Corp.

    12,480      1,549

Goodrich Corp.

    4,900      334

Ingersoll-Rand Co., Ltd. Class A (Ñ)

    52,000      2,308

KB Home (Ñ)

    17,600      396

Lexmark International, Inc. Class A (Æ)(Ñ)

    8,000      251

Lockheed Martin Corp.

    215,468      22,848

Nokia OYJ - ADR

    16,412      493

Northrop Grumman Corp.

    57,520      4,232

NVR, Inc. (Æ)(Ñ)

    9,470      5,810

Parker Hannifin Corp.

    84,954      6,784
     Principal
Amount ($)
or Shares		      Market
Value
$

Pitney Bowes, Inc.

    7,900      285

Pulte Homes, Inc. (Ñ)

    24,800      323

Raytheon Co.

    60,565      3,874

United Technologies Corp.

    160,180      11,608

Varian Semiconductor Equipment Associates, Inc. (Æ)(Ñ)

    26,540      972
         
        107,280
         

Technology - 13.5%

        

Akamai Technologies, Inc. (Æ)(Ñ)

    41,130      1,471

Altera Corp.

    77,180      1,642

Amphenol Corp. Class A

    233,419      10,779

Analog Devices, Inc.

    91,079      2,934

Apple, Inc. (Æ)

    190,071      33,063

Arrow Electronics, Inc. (Æ)

    16,500      449

AU Optronics Corp. - ADR

    75,995      1,483

Avnet, Inc. (Æ)

    20,400      534

BearingPoint, Inc. (Æ)(Ñ)

    382,750      708

Broadcom Corp. Class A (Æ)(Ñ)

    232,800      6,044

Celestica, Inc. (Æ)

    72,000      675

Cisco Systems, Inc. (Æ)

    1,071,494      27,473

Corning, Inc. 2008

    375,430      10,028

Dell, Inc. (Æ)

    228,750      4,262

First Solar, Inc. New (Æ)(Ñ)

    18,679      5,454

Flextronics International, Ltd. (Æ)

    20,450      212

General Dynamics Corp.

    65,789      5,949

Hewlett-Packard Co.

    531,678      24,643

Ingram Micro, Inc. Class A (Æ)(Ñ)

    29,500      502

Intel Corp.

    433,250      9,644

International Business Machines Corp.

    120,480      14,542

International Rectifier Corp. (Æ)

    98,200      2,235

Juniper Networks, Inc. (Æ)

    177,100      4,892

Linear Technology Corp.

    61,500      2,150

Maxim Integrated Products, Inc.

    158,700      3,337

MEMC Electronic Materials, Inc. (Æ)

    35,933      2,263

Microchip Technology, Inc. (Ñ)

    53,030      1,949

Microsoft Corp.

    541,423      15,441

Motorola, Inc.

    122,650      1,222

Oracle Corp. (Æ)

    228,170      4,757

Qimonda AG - ADR (Æ)(Ñ)

    169,300      603

Qualcomm, Inc.

    670,711      28,968

Research In Motion, Ltd. (Æ)

    118,895      14,461

Salesforce.com, Inc. (Æ)(Ñ)

    21,280      1,420

Sanmina-SCI Corp. (Æ)

    132,400      205

Seagate Technology, Inc. (Æ)

    9,400      —

Texas Instruments, Inc.

    182,500      5,322

Tyco Electronics, Ltd.

    411,735      15,403

Xilinx, Inc. (Ñ)

    56,600      1,402
         
        268,521
         

 

Equity I Fund   7

Table of Contents

Russell Investment Company

Equity I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Utilities - 4.0%

        

Ameren Corp. (Ñ)

    18,500      839

America Movil SAB de CV Series L

    145,529      8,435

American Electric Power Co., Inc.

    26,200      1,169

AT&T, Inc.

    601,578      23,287

Atmos Energy Corp.

    15,900      440

China Mobile, Ltd. - ADR

    95,049      8,205

CMS Energy Corp. (Ñ)

    33,800      493

Dominion Resources, Inc. (Ñ)

    81,970      3,557

Duke Energy Corp.

    36,400      666

Embarq Corp. (Ñ)

    91,258      3,794

Fairpoint Communications, Inc. (Ñ)

    1      —

FPL Group, Inc.

    42,500      2,817

NII Holdings, Inc. (Æ)

    14,500      663

Progress Energy, Inc. - CVO (ß)

    3,200      1

Public Service Enterprise Group, Inc.

    60,120      2,640

Sprint Nextel Corp.

    183,800      1,469

Verizon Communications, Inc.

    247,479      9,523

Vodafone Group PLC - ADR

    320,700      10,153

Wisconsin Energy Corp.

    15,100      717
         
        78,868
         
Total Common Stocks        

(cost $1,622,833)

         1,842,229
         
Preferred Stocks - 0.2%        

Financial Services - 0.1%

        

Washington Mutual, Inc.

    2,500      2,150
         

Producer Durables - 0.1%

        

General Motors Corp.

    45,550      847
         
Total Preferred Stocks        

(cost $2,925)

         2,997
         
Long-Term Investments - 0.0%        

Corporate Bonds and Notes - 0.0%

     

iStar Financial, Inc. (Ê) 3.198% due 10/01/12

    168      134
         

International Debt - 0.0%

        

Qimonda Finance LLC
Series ADS
6.750% due 03/22/13

    731      630
         
Total Long-Term Investments        

(cost $856)

         764
         
     Principal
Amount ($)
or Shares		      Market
Value
$		  

Short-Term Investments - 7.5%

     

Russell Investment Company Money Market Fund

    139,562,285      139,562  

United States Treasury Bills (ç)(ž)(§) 0.558% due 06/19/08

    10,500      10,492  
           
Total Short-Term Investments        

(cost $150,054)

         150,054  
           
Other Securities - 12.4%        

Russell Investment Company Money Market Fund (×)

    53,760,494      53,760  

State Street Securities Lending Quality Trust (×)

    193,481,996      193,482  
           
Total Other Securities        

(cost $247,242)

         247,242  
           
Total Investments - 112.5%        

(identified cost $2,023,910)

         2,243,286  
Other Assets and Liabilities, Net - (12.5%)         (249,438 )
           
Net Assets - 100.0%         1,993,848  
           

 

See accompanying notes which are an integral part of the financial statements.

 

8   Equity I Fund

Table of Contents

Russell Investment Company

Equity I Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts

(Number of Contracts)

   Notional
Amount		    Unrealized
Appreciation
(Depreciation)
$
    
    

Long Positions

     

Russell 1000 Index
expiration date 06/08 (24)

   USD   9,079    551

Russell 1000 Mini Index (CME)
expiration date 06/08 (37)

   USD      2,799    155

S&P 500 E-Mini Index (CME)
expiration date 06/08 (586)

   USD  40,610    2,181

S&P 500 Index (CME)
expiration date 06/08 (189)

   USD 65,489    2,020

S&P Midcap 400 E-Mini Index (CME)
expiration date 06/08 (354)

   USD 29,740    2,405
      

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

      7,312
      

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of Net
Assets		  
    
    

Auto and Transportation

      1.9  

Consumer Discretionary

      11.4  

Consumer Staples

      6.1  

Financial Services

      16.6  

Health Care

      11.7  

Integrated Oils

      5.6  

Materials and Processing

      5.5  

Miscellaneous

      2.5  

Other Energy

      8.2  

Producer Durables

      5.4  

Technology

      13.5  

Utilities

      4.0  

Preferred Stocks

      0.2  

Long Term Investments

      — *

Short-Term Investments

      7.5  

Other Securities

      12.4  
        

Total Investments

      112.5  

Other Assets and Liabilities, Net

      (12.5 )
        
     100.0  
        

Futures Contracts

      0.4  

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

Equity I Fund   9

Table of Contents

Russell Investment Company

Equity II Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 853.60    $ 1,019.19

Expenses Paid During Period*

    $ 5.25    $ 5.72

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.14% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 854.30    $ 1,020.19

Expenses Paid During Period*

    $ 4.33    $ 4.72

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.94% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class Y

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 854.60    $ 1,020.69

Expenses Paid During Period*

    $ 3.87    $ 4.22

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.84% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

10   Equity II Fund

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 92.7%

        

Auto and Transportation - 4.3%

        

AAR Corp. (Æ)(Ñ)

    37,706      882

ABX Holdings, Inc. (Æ)(Ñ)

    11,000      29

Accuride Corp. (Æ)(Ñ)

    2,818      22

Alaska Air Group, Inc. (Æ)(Ñ)

    3,500      75

Allegiant Travel Co. (Æ)(Ñ)

    6,546      178

American Axle & Manufacturing Holdings, Inc. (Ñ)

    4,423      89

Amerigon, Inc. (Æ)(Ñ)

    9,854      145

Arkansas Best Corp. (Ñ)

    14,400      569

Atlas Air Worldwide Holdings, Inc. (Æ)

    3,555      216

Autoliv, Inc. (Ñ)

    23,985      1,469

BorgWarner, Inc. (Ñ)

    16,900      831

Bristow Group, Inc. (Æ)(Ñ)

    11,500      607

Continental Airlines, Inc. Class B (Æ)(Ñ)

    1,996      36

Dana Corp. (Æ)(Ñ)(ß)

    84,800      —

DryShips, Inc. (Ñ)

    7,300      602

Expeditors International of Washington, Inc. (Ñ)

    24,610      1,147

FreightCar America, Inc. (Ñ)

    4,800      184

Frozen Food Express Industries (Ñ)

    59,058      450

Genco Shipping & Trading, Ltd. (Ñ)

    13,500      913

HUB Group, Inc. Class A (Æ)

    17,181      562

K-Sea Transportation Partners, LP (Ñ)

    16,900      621

Kansas City Southern (Æ)(Ñ)

    21,600      974

Kirby Corp. (Æ)(Ñ)

    29,169      1,600

Lear Corp. (Æ)

    6,000      171

Marten Transport, Ltd. (Æ)(Ñ)

    9,800      160

Mesa Air Group, Inc. (Æ)(Ñ)

    8,866      6

Monaco Coach Corp. (Ñ)

    58,300      369

Northwest Airlines Corp. (Æ)

    7,200      70

Pacer International, Inc. (Ñ)

    10,826      201

PHI, Inc. (Æ)(Ñ)

    17,830      670

Polaris Industries, Inc. (Ñ)

    6,484      302

Saia, Inc. (Æ)(Ñ)

    4,700      65

Skywest, Inc. (Ñ)

    20,146      383

StealthGas, Inc. (Ñ)

    37,500      602

Strattec Security Corp.

    12,306      452

Superior Industries International, Inc. (Ñ)

    29,910      607

Teekay Corp. (Ñ)

    16,800      767

Tidewater, Inc. (Ñ)

    10,800      704

Titan International, Inc. (Ñ)

    7,000      249

TRW Automotive Holdings Corp. (Æ)(Ñ)

    25,300      647
     Principal
Amount ($)
or Shares		      Market
Value
$

UTI Worldwide, Inc.

    8,448      186

Vitran Corp., Inc. Class A (Æ)

    27,100      388

Wabash National Corp. (Ñ)

    9,638      81

WABCO Holdings, Inc.

    18,064      863

Wabtec Corp.

    51,480      2,207

Werner Enterprises, Inc. (Ñ)

    4,903      95
         
        22,446
         

Consumer Discretionary - 16.0%

     

1-800-FLOWERS.COM, Inc. Class A (Æ)(Ñ)

    14,875      131

4Kids Entertainment, Inc. (Æ)(Ñ)

    95,971      849

99 Cents Only Stores (Æ)(Ñ)

    96,430      917

Abercrombie & Fitch Co. Class A (Ñ)

    20,400      1,516

Activision, Inc. (Æ)

    114,689      3,102

Administaff, Inc. (Ñ)

    5,980      157

Advisory Board Co. (The) (Æ)(Ñ)

    17,590      820

Aeropostale, Inc. (Æ)(Ñ)

    22,600      718

Alberto-Culver Co.

    5,500      138

Allied Waste Industries, Inc. (Æ)

    47,400      586

America’s Car-Mart, Inc. (Æ)(Ñ)

    5,368      77

American Eagle Outfitters, Inc. (Ñ)

    28,000      514

American Greetings Corp. Class A (Ñ)

    2,459      44

Ameristar Casinos, Inc. (Ñ)

    53,000      910

AMN Healthcare Services, Inc. (Æ)(Ñ)

    14,186      207

AnnTaylor Stores Corp. (Æ)

    8,965      227

Asbury Automotive Group, Inc. (Ñ)

    14,600      243

AutoNation, Inc. (Æ)(Ñ)

    29,900      479

Bally Technologies, Inc. (Æ)(Ñ)

    19,610      661

Big Lots, Inc. (Æ)(Ñ)

    13,524      366

BJ’s Wholesale Club, Inc. (Æ)(Ñ)

    20,500      781

Blyth, Inc. (Ñ)

    6,016      101

Bob Evans Farms, Inc. (Ñ)

    361      10

Bowne & Co., Inc.

    16,500      275

Brown Shoe Co., Inc. (Ñ)

    53,300      889

Buckle, Inc. (The) (Ñ)

    2,650      129

Callaway Golf Co. (Ñ)

    16,197      223

Capella Education Co. (Æ)

    3,787      244

Career Education Corp. (Æ)(Ñ)

    13,515      272

CBRL Group, Inc. (Ñ)

    6,222      230

CCA Industries, Inc.

    49,538      438

CDI Corp. (Ñ)

    7,600      207

Central European Distribution Corp. (Æ)

    18,600      1,133

Central European Media Enterprises, Ltd. Class A (Æ)

    7,602      806

Cheesecake Factory (The) (Æ)(Ñ)

    50,140      1,135

Chemed Corp. (Ñ)

    10,249      349

 

Equity II Fund   11

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Cherokee, Inc. (Ñ)

    1,400      41

Christopher & Banks Corp. (Ñ)

    12,591      149

Churchill Downs, Inc. (Ñ)

    12,700      648

Cinemark Holdings, Inc. (Ñ)

    12,800      190

CKE Restaurants, Inc. (Ñ)

    66,800      701

Convergys Corp. (Æ)

    64,400      1,012

Corrections Corp. of America (Æ)

    41,930      1,069

CRA International, Inc. (Æ)(Ñ)

    5,474      189

CSS Industries, Inc. (Ñ)

    5,000      156

Darden Restaurants, Inc. (Ñ)

    50,584      1,800

Deckers Outdoor Corp. (Æ)(Ñ)

    2,380      329

Denny’s Corp. (Æ)(Ñ)

    25,363      80

DeVry, Inc. (Ñ)

    41,754      2,380

Diamond Management & Technology Consultants, Inc. Class A (Ñ)

    1,000      6

Dollar Tree, Inc. (Æ)

    13,000      411

Earthlink, Inc. (Æ)(Ñ)

    57,200      522

Electronic Arts, Inc. (Æ)

    33,022      1,700

Entravision Communications Corp. Class A (Æ)(Ñ)

    25,000      175

Ethan Allen Interiors, Inc. (Ñ)

    17,500      481

EZCORP, Inc. Class A (Æ)(Ñ)

    11,406      138

Finish Line Class A

    46,000      302

First Advantage Corp. Class A (Æ)(Ñ)

    2,700      55

Focus Media Holding,
Ltd. - ADR (Æ)(Ñ)

    59,886      2,209

Fred’s, Inc. Class A (Ñ)

    4,400      49

FTD Group, Inc. (Ñ)

    85,655      1,178

FTI Consulting, Inc. (Æ)(Ñ)

    22,069      1,412

Furniture Brands International, Inc. (Ñ)

    83,466      1,131

G&K Services, Inc. Class A

    4,200      132

Gaiam, Inc. Class A (Æ)(Ñ)

    6,063      107

GameStop Corp. Class A (Æ)

    29,162      1,605

Geo Group, Inc. (The) (Æ)(Ñ)

    61,729      1,633

Gray Television, Inc. (Ñ)

    126,500      595

Guess?, Inc. (Ñ)

    18,507      708

Hasbro, Inc. (Ñ)

    19,400      690

Heidrick & Struggles International, Inc. (Ñ)

    6,980      209

Helen of Troy, Ltd. (Æ)(Ñ)

    41,800      707

Hewitt Associates, Inc. Class A (Æ)

    18,700      767

Hot Topic, Inc. (Æ)(Ñ)

    11,300      60

ICF International, Inc. (Æ)

    13,800      246

IHOP Corp. (Ñ)

    774      36

IKON Office Solutions, Inc. (Ñ)

    22,430      246

Insight Enterprises, Inc. (Æ)(Ñ)

    5,000      60

International Speedway Corp. Class A

    13,400      568
     Principal
Amount ($)
or Shares		      Market
Value
$

inVentiv Health, Inc. (Æ)(Ñ)

    32,190      957

ITT Educational Services, Inc. (Æ)(Ñ)

    19,935      1,528

J Crew Group, Inc. (Æ)(Ñ)

    16,500      784

Jack in the Box, Inc. (Æ)(Ñ)

    22,500      602

JOS A Bank Clothiers, Inc. (Æ)(Ñ)

    20,500      500

Journal Communications, Inc. Class A (Ñ)

    31,912      184

Kforce, Inc. (Æ)

    1,200      10

Lakeland Industries, Inc. (Æ)

    41,281      516

LECG Corp. (Æ)(Ñ)

    8,328      87

Lin TV Corp. Class A (Æ)(Ñ)

    31,900      320

Lithia Motors, Inc. Class A (Ñ)

    5,900      53

LKQ Corp. (Æ)(Ñ)

    67,286      1,464

LS Starrett Co.

    10,073      196

Macy’s, Inc. (Ñ)

    19,000      480

Maidenform Brands, Inc. (Æ)(Ñ)

    7,000      104

Marcus Corp. (Ñ)

    3,400      56

Matthews International Corp. Class A (Ñ)

    6,106      302

MAXIMUS, Inc.

    53      2

Media General, Inc. Class A (Ñ)

    11,607      170

Men’s Wearhouse, Inc. (Ñ)

    19,800      527

Meredith Corp. (Ñ)

    13,500      438

Movado Group, Inc. (Ñ)

    7,400      162

MSC Industrial Direct Co. Class A (Ñ)

    6,000      293

Net 1 UEPS Technologies, Inc. (Æ)

    9,748      228

NetFlix, Inc. (Æ)(Ñ)

    11,809      378

New Oriental Education & Technology Group - ADR (Æ)(Ñ)

    9,800      736

Nu Skin Enterprises, Inc. Class A (Ñ)

    10,900      195

NutriSystem, Inc. (Ñ)

    6,463      130

O’Charleys, Inc. (Ñ)

    17,584      204

Overstock.com, Inc. (Æ)(Ñ)

    11,266      217

Parlux Fragrances, Inc. (Æ)

    231,528      773

PC Connection, Inc. (Æ)

    6,500      49

Phillips-Van Heusen Corp.

    13,340      563

Pool Corp. (Ñ)

    22,600      493

Pre-Paid Legal Services, Inc. (Æ)(Ñ)

    2,798      122

priceline.com, Inc. (Æ)(Ñ)

    11,364      1,450

RC2 Corp. (Æ)(Ñ)

    2,900      54

Red Lion Hotels Corp. (Æ)

    45,550      432

Rent-A-Center, Inc. (Æ)(Ñ)

    2,100      45

Republic Services, Inc.

    43,308      1,377

Revlon, Inc. Class A (Æ)

    31,900      31

Rollins, Inc.

    1,242      20

Ross Stores, Inc.

    17,500      586

Rush Enterprises, Inc. Class A (Æ)(Ñ)

    20,667      333

Sally Beauty Holdings, Inc. (Æ)(Ñ)

    31,045      188

 

12   Equity II Fund

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Scholastic Corp. (Æ)(Ñ)

    21,717      611

School Specialty, Inc. (Æ)(Ñ)

    7,313      215

Select Comfort Corp. (Æ)(Ñ)

    2,073      6

Service Corp. International (Ñ)

    12,700      141

Sinclair Broadcast Group, Inc. Class A (Ñ)

    78,000      686

Sohu.com, Inc. (Æ)(Ñ)

    2,700      187

Sonic Automotive, Inc. Class A (Ñ)

    43,900      891

Speedway Motorsports, Inc. (Ñ)

    3,883      101

Spherion Corp. (Æ)(Ñ)

    36,600      181

Stage Stores, Inc. (Ñ)

    10,480      165

Stamps.com, Inc. (Æ)(Ñ)

    908      12

Stanley Furniture Co., Inc. (Ñ)

    2,300      28

Stanley Works (The) (Ñ)

    12,000      579

Steven Madden, Ltd. (Æ)

    4,800      91

Strayer Education, Inc. (Ñ)

    1,873      348

Tech Data Corp. (Æ)

    14,600      491

Toro Co. (Ñ)

    5,900      250

Tuesday Morning Corp. (Æ)

    20,000      109

Tween Brands, Inc. (Æ)(Ñ)

    9,034      172

United Online, Inc. (Ñ)

    171,500      1,832

Universal Electronics, Inc. (Æ)(Ñ)

    2,903      75

Urban Outfitters, Inc. (Æ)(Ñ)

    69,430      2,378

VeriSign, Inc. (Æ)(Ñ)

    48,994      1,766

Viad Corp. (Ñ)

    12,800      403

VistaPrint, Ltd. (Æ)(Ñ)

    5,400      184

Volt Information Sciences, Inc. (Æ)(Ñ)

    6,500      87

Warnaco Group, Inc. (The) (Æ)(Ñ)

    14,400      664

Warner Music Group Corp. (Ñ)

    31,907      277

Washington Post Co. (The) Class B (Ñ)

    1,000      656

Waste Connections, Inc. (Æ)

    42,141      1,351

Watson Wyatt Worldwide, Inc. Class A (Ñ)

    23,894      1,401

WESCO International, Inc. (Æ)(Ñ)

    15,000      558

Westwood One, Inc. (Æ)

    54,300      91

Wet Seal, Inc. (The) Class A (Æ)(Ñ)

    91,700      318

Whirlpool Corp. (Ñ)

    5,900      429

Williams-Sonoma, Inc. (Ñ)

    29,615      782

Wolverine World Wide, Inc.

    15,000      431
         
        84,052
         

Consumer Staples - 1.7%

        

Alliance One International, Inc. (Æ)(Ñ)

    21,024      129

B&G Foods, Inc. Class A (Ñ)

    65,825      532

Casey’s General Stores, Inc. (Ñ)

    10,468      232

Chiquita Brands International, Inc. (Æ)(Ñ)

    6,004      137

Coca-Cola Bottling Co. Consolidated (Ñ)

    7,233      414
     Principal
Amount ($)
or Shares		      Market
Value
$

Fresh Del Monte Produce, Inc. (Æ)(Ñ)

    28,100      890

Great Atlantic & Pacific Tea Co. (Æ)(Ñ)

    6,333      174

J&J Snack Foods Corp. (Ñ)

    19,300      553

JM Smucker Co. (The)

    8,100      404

Molson Coors Brewing Co. Class B (Ñ)

    13,300      729

Monterey Gourmet Foods, Inc. (Æ)

    221,806      670

Nash Finch Co. (Ñ)

    7,021      257

NBTY, Inc. (Æ)

    1,362      38

PepsiAmericas, Inc. (Ñ)

    9,000      231

Ralcorp Holdings, Inc. (Æ)(Ñ)

    4,975      304

Renesola, Ltd. - ADR (Æ)(Ñ)

    20,500      343

Ruddick Corp. (Ñ)

    8,106      314

Sadia SA - ADR (Æ)

    10,500      231

Sanderson Farms, Inc. (Ñ)

    17,200      717

Schweitzer-Mauduit International, Inc. (Ñ)

    6,600      146

Tootsie Roll Industries, Inc. (Ñ)

    9,900      241

Universal Corp. (Ñ)

    6,317      405

Weis Markets, Inc. (Ñ)

    25,060      770
         
        8,861
         

Financial Services - 14.3%

        

Acadia Realty Trust (ö)(Ñ)

    1,219      31

Advance America Cash Advance Centers, Inc. (Ñ)

    22,807      201

Advent Software, Inc. (Æ)(Ñ)

    4,352      173

Affiliated Managers Group, Inc. (Æ)(Ñ)

    10,280      1,021

Alexander’s, Inc. (Æ)(ö)(Ñ)

    707      252

Alexandria Real Estate Equities, Inc. (ö)(Ñ)

    1,416      149

Alliance Data Systems Corp. (Æ)(Ñ)

    22,130      1,270

Allied Capital Corp. (Ñ)

    42,120      847

Allied World Assurance Co. Holdings, Ltd.

    9,200      379

Amerisafe, Inc. (Æ)(Ñ)

    2,716      39

Amtrust Financial Services, Inc. (Ñ)

    14,591      227

Annaly Capital Management, Inc. (ö)

    39,100      655

Anthracite Capital, Inc. (ö)(Ñ)

    2,658      21

Anworth Mortgage Asset Corp. (ö)(Ñ)

    118,800      794

Apartment Investment & Management Co. Class A (ö)(Ñ)

    7,200      266

Arch Capital Group, Ltd. (Æ)(Ñ)

    17,100      1,208

Ares Capital Corp.

    37,500      422

Arthur J Gallagher & Co. (Ñ)

    24,900      612

Ashford Hospitality Trust, Inc. (ö)(Ñ)

    131,520      761

Aspen Insurance Holdings, Ltd.

    3,400      88

Assurant, Inc.

    32,364      2,104

 

Equity II Fund   13

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Astoria Financial Corp. (Ñ)

    7,600      180

Axis Capital Holdings, Ltd. (Ñ)

    16,000      543

Bancfirst Corp. (Ñ)

    2,500      109

Banco Latinoamericano de Exportaciones SA Class E (Ñ)

    9,800      184

Bancorp, Inc. (Æ)(Ñ)

    89      1

Bank of Hawaii Corp.

    11,400      625

BankAtlantic Bancorp, Inc. Class A (Ñ)

    27,600      85

Bankrate, Inc. (Æ)(Ñ)

    18,100      946

Banner Corp. (Ñ)

    5,000      108

Berkshire Hills Bancorp, Inc. (Ñ)

    3,000      77

BioMed Realty Trust, Inc. (ö)(Ñ)

    25,600      666

Boston Private Financial Holdings, Inc. (Ñ)

    12,050      112

Brandywine Realty Trust (ö)

    34,600      604

Calamos Asset Management, Inc. Class A (Ñ)

    21,422      385

Capital Trust, Inc. Class A (ö)(Ñ)

    1,491      40

Capitol Bancorp, Ltd. (Ñ)

    7,400      127

CapLease, Inc. (ö)

    10,900      91

Capstead Mortgage Corp. (ö)

    27,300      352

Cash America International, Inc. (Ñ)

    19,889      811

Castlepoint Holdings, Ltd. (Ñ)

    8,500      78

Cathay General Bancorp (Ñ)

    10,524      179

Cedar Shopping Centers, Inc. (ö)(Ñ)

    4,600      57

Centennial Bank Holdings, Inc. (Æ)(Ñ)

    1,000      6

Center Financial Corp. (Ñ)

    6,700      70

Central Pacific Financial Corp. (Ñ)

    587      11

Citizens Republic Bancorp, Inc. (Ñ)

    12,422      102

City Bank (Ñ)

    5,053      92

City Holding Co. (Ñ)

    3,700      154

City National Corp.

    4,200      204

CNA Surety Corp. (Æ)(Ñ)

    45,577      603

CoBiz Financial, Inc. (Ñ)

    900      10

Colonial BancGroup, Inc. (The) (Ñ)

    114,425      931

Commerce Bancshares, Inc.

    13,856      603

Community Trust Bancorp, Inc. (Ñ)

    300      9

Corus Bankshares, Inc. (Ñ)

    2,648      19

Cowen Group, Inc. (Æ)(Ñ)

    2,500      17

Cybersource Corp. (Æ)

    46,800      849

Delphi Financial Group, Inc. Class A (Ñ)

    39,150      1,066

Deluxe Corp. (Ñ)

    97,110      2,065

DiamondRock Hospitality Co. (ö)(Ñ)

    2,844      36

Digital Realty Trust, Inc. (ö)(Ñ)

    8,703      337

Dime Community Bancshares (Ñ)

    16,200      302

DuPont Fabros Technology, Inc. (ö)(Ñ)

    36,800      662

East West Bancorp, Inc. (Ñ)

    7,197      102
     Principal
Amount ($)
or Shares		      Market
Value
$

Education Realty Trust, Inc. (ö)(Ñ)

    14,100      188

Electro Rent Corp.

    38,826      525

EMC Insurance Group, Inc. (Ñ)

    1,600      47

Employers Holdings, Inc. (Ñ)

    26,900      513

Equity Lifestyle Properties, Inc. (ö)(Ñ)

    3,152      156

Fair Isaac Corp. (Ñ)

    7,865      195

FBL Financial Group, Inc. Class A

    5,300      147

First Commonwealth Financial Corp. (Ñ)

    11,100      138

First Community Bancorp, Inc. (Ñ)

    8,019      172

First Community Bancshares, Inc. (Ñ)

    1,200      40

First Financial Bancorp

    6,100      80

First Industrial Realty Trust, Inc. (ö)(Ñ)

    14,500      438

First Regional Bancorp (Æ)(Ñ)

    19,723      293

FirstFed Financial Corp. (Æ)(Ñ)

    945      14

Flushing Financial Corp. (Ñ)

    23,400      457

FPIC Insurance Group, Inc. (Æ)(Ñ)

    2,700      126

Franklin Street Properties Corp. (ö)(Ñ)

    35,418      523

Frontier Financial Corp. (Ñ)

    13,871      222

GAMCO Investors, Inc. Class A (Ñ)

    4,400      202

Getty Realty Corp. (ö)(Ñ)

    946      17

GFI Group, Inc. (Ñ)

    16,600      195

Glacier Bancorp, Inc. (Ñ)

    8,400      173

Gramercy Capital Corp. (ö)(Ñ)

    5,419      103

Great Southern Bancorp, Inc. (Ñ)

    2,000      30

Green Bankshares, Inc. (Ñ)

    5,300      106

Greenhill & Co., Inc. (Ñ)

    4,469      291

Hallmark Financial Services (Æ)(Ñ)

    8,809      95

Hanmi Financial Corp. (Ñ)

    9,714      68

Hanover Insurance Group, Inc. (The) (Ñ)

    17,800      799

Harleysville Group, Inc. (Ñ)

    5,600      204

HCC Insurance Holdings, Inc. (Ñ)

    25,700      634

HCP, Inc. (ö)(Ñ)

    7,500      268

Heartland Payment Systems, Inc. (Ñ)

    4,689      103

Hercules Technology Growth Capital, Inc.

    87,900      892

Heritage Commerce Corp. (Ñ)

    2,600      46

Home Bancshares, Inc. (Ñ)

    1,013      24

Home Properties, Inc. (ö)(Ñ)

    3,502      184

Hospitality Properties Trust (ö)(Ñ)

    28,100      903

HRPT Properties Trust (ö)(Ñ)

    72,900      505

Hudson City Bancorp, Inc.

    10,300      197

Hypercom Corp. (Æ)(Ñ)

    98,336      420

IBERIABANK Corp. (Ñ)

    9,002      434

Imperial Capital Bancorp, Inc. (Ñ)

    181      3

Independent Bank Corp.

    3,400      99

Integra Bank Corp. (Ñ)

    4,000      58

 

14   Equity II Fund

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Interactive Brokers Group, Inc. Class A (Æ)(Ñ)

    7,700      243

Interactive Data Corp.

    8,813      238

Intersections, Inc. (Æ)

    42,267      378

Intervest Bancshares Corp. Class A (Ñ)

    2,216      23

Invesco, Ltd. (Ñ)

    39,354      1,009

Investment Technology Group, Inc. (Æ)

    13,700      661

Investors Bancorp, Inc. (Æ)

    40,900      600

Investors Real Estate Trust (ö)

    12,500      127

IPC Holdings, Ltd. (Ñ)

    46,091      1,342

Jack Henry & Associates, Inc. (Ñ)

    5,547      146

Jefferies Group, Inc. (Ñ)

    50,300      946

Kayne Anderson Energy Development Co.

    1,700      38

Kite Realty Group Trust (ö)

    9,200      125

Knight Capital Group, Inc. Class A (Æ)(Ñ)

    99,349      1,859

Kohlberg Capital Corp. (Ñ)

    41,711      419

LTC Properties, Inc. (ö)(Ñ)

    15,533      423

Mack-Cali Realty Corp. (ö)

    17,800      695

MainSource Financial Group, Inc. (Ñ)

    3,300      49

Marlin Business Services Corp. (Æ)(Ñ)

    28,775      187

MCG Capital Corp. (Ñ)

    18,800      144

Meadowbrook Insurance Group, Inc.

    11,600      84

Medical Properties Trust, Inc. (ö)(Ñ)

    16,840      205

Mercantile Bank Corp. (Ñ)

    2,900      29

MFA Mortgage Investments, Inc. (ö)(Ñ)

    108,984      762

Midwest Banc Holdings, Inc. (Ñ)

    42,900      441

Nara Bancorp, Inc. (Ñ)

    4,700      62

Nasdaq OMX Group (The) (Æ)(Ñ)

    6,200      226

National Health Investors, Inc. (ö)

    620      19

National Retail Properties, Inc. (ö)(Ñ)

    58,419      1,338

Nationwide Health Properties, Inc. (ö)

    1,446      52

Navigators Group, Inc. (Æ)

    1,580      77

NBT Bancorp, Inc. (Ñ)

    2,400      55

NewStar Financial, Inc. (Æ)

    6,200      33

NorthStar Realty Finance Corp. (ö)(Ñ)

    41,500      430

NYMAGIC, Inc. (Ñ)

    1,000      23

Odyssey Re Holdings Corp. (Ñ)

    13,100      469

Omega Healthcare Investors, Inc. (ö)

    100      2

OneBeacon Insurance Group, Ltd. Class A (Ñ)

    9,700      191

optionsXpress Holdings, Inc. (Ñ)

    9,288      199

Oriental Financial Group, Inc.

    20,800      391

Pacific Capital Bancorp NA (Ñ)

    3,764      77

Parkway Properties, Inc. (ö)

    7,900      313

Pennsylvania Real Estate Investment Trust (ö)(Ñ)

    23,600      594
     Principal
Amount ($)
or Shares		      Market
Value
$

Permian Basin Royalty Trust (Ñ)

    18,600      423

Piper Jaffray Cos. (Æ)(Ñ)

    30,530      1,138

Platinum Underwriters Holdings, Ltd.

    14,100      506

PMA Capital Corp. Class A (Æ)

    8,100      75

PMI Group, Inc. (The) (Ñ)

    14,013      79

Portfolio Recovery Associates, Inc. (Ñ)

    346      15

Potlatch Corp. (ö)(Ñ)

    35,478      1,590

Preferred Bank (Ñ)

    8,429      99

Procentury Corp.

    2,400      43

Prosperity Bancshares, Inc. (Ñ)

    1,600      50

Protective Life Corp.

    17,100      729

Provident New York Bancorp (Ñ)

    2,500      33

Ramco-Gershenson Properties Trust (ö)(Ñ)

    5,200      117

Realty Income Corp. (ö)(Ñ)

    5,205      137

Reinsurance Group of America, Inc.

    3,800      198

RenaissanceRe Holdings, Ltd. (Ñ)

    17,700      910

Ryder System, Inc. (Ñ)

    9,500      650

S&T Bancorp, Inc. (Ñ)

    91      3

S1 Corp. (Æ)

    33,200      224

Safety Insurance Group, Inc.

    6,024      216

Sanders Morris Harris Group, Inc. (Ñ)

    3,400      28

SCBT Financial Corp. (Ñ)

    3,821      130

Senior Housing Properties Trust (ö)(Ñ)

    22,819      546

Southside Bancshares, Inc.

    1,890      46

Southwest Bancorp, Inc. (Ñ)

    28,641      504

Sovran Self Storage, Inc. (ö)(Ñ)

    15,000      670

StanCorp Financial Group, Inc. (Ñ)

    13,200      676

Sterling Bancorp (Ñ)

    16,100      264

Sterling Bancshares, Inc. (Ñ)

    22,986      239

Sterling Financial Corp. (Ñ)

    16,031      196

Stifel Financial Corp. (Æ)(Ñ)

    5,775      273

Sun Bancorp, Inc. (Æ)

    4,900      57

Sunstone Hotel Investors, Inc. (ö)(Ñ)

    32,598      609

SVB Financial Group (Æ)(Ñ)

    6,230      303

SWS Group, Inc. (Ñ)

    1,600      21

Taylor Capital Group, Inc. (Ñ)

    1,800      27

Texas Capital Bancshares, Inc. (Æ)(Ñ)

    13,544      250

TNS, Inc. (Æ)(Ñ)

    1,129      26

Total System Services, Inc. (Ñ)

    43,537      1,036

TradeStation Group, Inc. (Æ)(Ñ)

    14,335      134

Transatlantic Holdings, Inc.

    4,300      279

U-Store-It Trust (ö)(Ñ)

    71,600      864

UCBH Holdings, Inc. (Ñ)

    21,169      154

UDR, Inc. (ö)(Ñ)

    9,800      248

Umpqua Holdings Corp. (Ñ)

    47,400      699

United America Indemnity, Ltd. Class A (Æ)(Ñ)

    8,700      134

United Rentals, Inc. (Æ)(Ñ)

    21,500      405

 

Equity II Fund   15

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Universal American Corp. (Æ)(Ñ)

    14,175      152

Universal Health Realty Income Trust (ö)(Ñ)

    2,434      82

Urstadt Biddle Properties, Inc. Class A (ö)(Ñ)

    3,200      54

ViewPoint Financial Group

    28,900      470

Waddell & Reed Financial, Inc. Class A

    10,268      348

Washington Real Estate Investment Trust (ö)(Ñ)

    8,009      285

Washington Trust Bancorp, Inc. (Ñ)

    900      22

Webster Financial Corp.

    23,300      607

WesBanco, Inc. (Ñ)

    6,200      133

Westfield Financial, Inc. (Ñ)

    2,900      28

Wilshire Bancorp, Inc. (Ñ)

    3,100      26

World Acceptance Corp. (Æ)(Ñ)

    6,650      262

Wright Express Corp. (Æ)(Ñ)

    4,151      137

WSFS Financial Corp. (Ñ)

    630      32

Zenith National Insurance Corp. (Ñ)

    56,618      2,103

Zions Bancorporation (Ñ)

    20,597      955
         
        74,930
         

Health Care - 10.6%

        

Abaxis, Inc. (Æ)(Ñ)

    6,165      157

Affymetrix, Inc. (Æ)(Ñ)

    40,524      442

Albany Molecular Research, Inc. (Æ)(Ñ)

    138      2

Align Technology, Inc. (Æ)(Ñ)

    17,983      221

Alnylam Pharmaceuticals, Inc. (Æ)(Ñ)

    3,749      94

American Oriental Bioengineering, Inc. (Æ)(Ñ)

    2,668      26

AMERIGROUP Corp. (Æ)

    27,007      702

Amsurg Corp. (Æ)(Ñ)

    9,631      246

Analogic Corp. (Ñ)

    10,730      618

Animal Health International, Inc. (Æ)

    584      5

Ariad Pharmaceuticals, Inc. (Æ)(Ñ)

    57,330      170

Arthrocare Corp. (Æ)(Ñ)

    16,323      736

Bio-Rad Laboratories, Inc. Class A (Æ)

    3,877      323

Bio-Reference Labs, Inc. (Æ)

    5,202      131

BioScrip, Inc. (Æ)

    94,369      519

Candela Corp. (Æ)

    199,442      592

Capital Senior Living Corp. (Æ)(Ñ)

    8,322      71

Caraco Pharmaceutical Laboratories, Ltd. (Æ)(Ñ)

    4,800      79

Centene Corp. (Æ)(Ñ)

    41,220      757

Charles River Laboratories International, Inc. (Æ)

    22,221      1,290

Computer Programs & Systems, Inc. (Ñ)

    2,100      40
     Principal
Amount ($)
or Shares		      Market
Value
$

Cubist Pharmaceuticals, Inc. (Æ)(Ñ)

    7,157      139

Datascope Corp. (Ñ)

    29,000      1,086

Eclipsys Corp. (Æ)(Ñ)

    13,080      272

eResearchTechnology, Inc. (Æ)(Ñ)

    56,753      691

Gen-Probe, Inc. (Æ)(Ñ)

    38,459      2,168

Gentiva Health Services, Inc. (Æ)(Ñ)

    9,300      202

Haemonetics Corp. (Æ)

    16,128      923

Hanger Orthopedic Group, Inc. (Æ)

    4,100      48

Harvard Bioscience, Inc. (Æ)

    48,563      239

HealthExtras, Inc. (Æ)

    903      25

Healthspring, Inc. (Æ)(Ñ)

    36,969      623

Healthways, Inc. (Æ)(Ñ)

    5,339      195

HMS Holdings Corp. (Æ)(Ñ)

    59,503      1,533

Hologic, Inc. (Æ)(Ñ)

    76,797      2,242

Humana, Inc. (Æ)

    8,100      387

I-Flow Corp. (Æ)(Ñ)

    8,264      110

Icon PLC - ADR (Æ)(Ñ)

    20,642      1,486

Illumina, Inc. (Æ)(Ñ)

    52,585      4,096

Immucor, Inc. (Æ)(Ñ)

    54,644      1,474

Intuitive Surgical, Inc. (Æ)(Ñ)

    3,250      940

Invacare Corp. (Ñ)

    23,011      415

Invitrogen Corp. (Æ)(Ñ)

    5,400      505

Kendle International, Inc. (Æ)

    5,985      256

Kensey Nash Corp. (Æ)(Ñ)

    3,061      89

Kindred Healthcare, Inc. (Æ)

    17,507      415

King Pharmaceuticals, Inc. (Æ)(Ñ)

    89,600      841

Landauer, Inc. (Ñ)

    1,900      101

Lifecell Corp. (Æ)(Ñ)

    3,228      164

Luminex Corp. (Æ)(Ñ)

    16,500      322

Magellan Health Services, Inc. (Æ)(Ñ)

    2,200      85

Masimo Corp. (Æ)(Ñ)

    33,581      979

Medcath Corp. (Æ)(Ñ)

    136      3

Medicis Pharmaceutical Corp. Class A (Ñ)

    11,920      246

Meridian Bioscience, Inc. (Ñ)

    2,700      73

Merit Medical Systems, Inc. (Æ)(Ñ)

    44,337      652

Molina Healthcare, Inc. (Æ)(Ñ)

    20,803      517

NuVasive, Inc. (Æ)

    29,705      1,133

OSI Pharmaceuticals, Inc. (Æ)(Ñ)

    8,163      283

Owens & Minor, Inc.

    8,300      376

Patterson Cos., Inc. (Æ)(Ñ)

    37,577      1,285

Pediatrix Medical Group, Inc. (Æ)

    25,640      1,744

Perrigo Co. (Ñ)

    76,679      3,143

Pharmaceutical Product
Development, Inc.

    35,191      1,458

PharmaNet Development Group, Inc. (Æ)(Ñ)

    6,206      148

Phase Forward, Inc. (Æ)

    29,400      541

PSS World Medical, Inc. (Æ)(Ñ)

    11,222      185

 

16   Equity II Fund

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Psychiatric Solutions, Inc. (Æ)(Ñ)

    45,445      1,577

Quality Systems, Inc. (Ñ)

    7,964      256

Quidel Corp. (Æ)

    1,762      28

RehabCare Group, Inc. (Æ)

    10,800      184

Repligen Corp. (Æ)

    1,721      10

Res-Care, Inc. (Æ)

    2,300      37

Resmed, Inc. (Æ)(Ñ)

    22,679      978

Retractable Technologies, Inc. (Æ)

    110,746      161

Sirona Dental Systems, Inc. (Æ)(Ñ)

    34,348      920

Somanetics Corp. (Æ)(Ñ)

    1,227      20

SonoSite, Inc. (Æ)(Ñ)

    6,367      203

Stericycle, Inc. (Æ)

    25,980      1,387

STERIS Corp. (Ñ)

    30,000      831

Sun Healthcare Group, Inc. (Æ)(Ñ)

    1,445      19

Symmetry Medical, Inc. (Æ)(Ñ)

    4,791      67

Techne Corp. (Æ)

    28,619      2,075

VCA Antech, Inc. (Æ)(Ñ)

    23,724      768

Viropharma, Inc. (Æ)(Ñ)

    67,052      614

Vivus, Inc. (Æ)(Ñ)

    23,637      134

Watson Pharmaceuticals, Inc. Class B (Æ)(Ñ)

    31,870      989

West Pharmaceutical Services, Inc. (Ñ)

    27,800      1,304

Zimmer Holdings, Inc. (Æ)

    16,992      1,260
         
        55,881
         

Integrated Oils - 0.0%

        

Vaalco Energy, Inc. (Æ)(Ñ)

    20,030      130
         

Materials and Processing - 9.7%

     

Aceto Corp.

    40,597      285

Acuity Brands, Inc. (Ñ)

    8,945      428

Airgas, Inc.

    22,294      1,073

AK Steel Holding Corp. (Ñ)

    14,000      879

AM Castle & Co. (Ñ)

    30,600      946

Apogee Enterprises, Inc. (Ñ)

    48,820      1,089

Armstrong World Industries, Inc. (Ñ)

    5,400      192

Ashland, Inc. (Ñ)

    14,100      748

Barnes Group, Inc. (Ñ)

    35,900      936

Brady Corp. Class A

    6,317      214

Brush Engineered Materials, Inc. (Æ)(Ñ)

    7,922      246

Buckeye Technologies, Inc. (Æ)(Ñ)

    51,674      446

Cabot Corp. (Ñ)

    43,190      1,259

Calgon Carbon Corp. (Æ)(Ñ)

    15,431      220

Celanese Corp. Class A

    24,900      1,114

CF Industries Holdings, Inc. (Ñ)

    6,100      816

Chemtura Corp.

    84,400      584

Chicago Bridge & Iron Co. NV

    39,545      1,575
     Principal
Amount ($)
or Shares		      Market
Value
$

Cie Generale de Geophysique-Veritas - ADR (Æ)

    9,788      491

Clean Harbors, Inc. (Æ)(Ñ)

    3,794      250

Comfort Systems USA, Inc. (Ñ)

    28,700      390

Commercial Metals Co. (Ñ)

    16,200      504

Compass Minerals International, Inc.

    5,600      353

Corn Products International, Inc.

    7,400      343

Dycom Industries, Inc. (Æ)(Ñ)

    8,000      115

EMCOR Group, Inc. (Æ)

    67,916      1,702

Ennis, Inc. (Ñ)

    39,800      674

Ferro Corp. (Ñ)

    47,201      830

Gafisa SA - ADR (Ñ)

    10,900      475

Georgia Gulf Corp. (Ñ)

    766      5

Gerdau Ameristeel Corp. (Ñ)

    40,500      632

Gibraltar Industries, Inc. (Ñ)

    10,500      110

Glatfelter (Ñ)

    66,747      974

GrafTech International, Ltd. (Æ)(Ñ)

    3,870      76

Granite Construction, Inc. (Ñ)

    16,200      556

Haynes International, Inc. (Æ)(Ñ)

    12,130      760

HB Fuller Co. (Ñ)

    25,800      595

Hecla Mining Co. (Æ)(Ñ)

    2,122      22

Hercules, Inc. (Ñ)

    16,057      302

Horsehead Holding Corp. (Æ)(Ñ)

    33,700      472

IAMGOLD Corp.

    100,650      602

Innophos Holdings, Inc. (Ñ)

    4,094      73

Insituform Technologies, Inc. Class A (Æ)(Ñ)

    59,770      1,011

Interface, Inc. Class A (Ñ)

    15,458      198

Jacobs Engineering Group, Inc. (Æ)(Ñ)

    12,000      1,036

KBR, Inc. (Ñ)

    40,859      1,178

Koppers Holdings, Inc. (Ñ)

    17,352      841

LB Foster Co. Class A (Æ)(Ñ)

    5,328      171

Lennox International, Inc. (Ñ)

    16,500      547

LSB Industries, Inc. (Æ)(Ñ)

    1,216      19

LSI Industries, Inc. (Ñ)

    15,839      174

Lubrizol Corp.

    10,200      595

Lydall, Inc. (Æ)

    37,988      443

McDermott International, Inc. (Æ)

    52,632      2,820

Mercer International, Inc. (Æ)(Ñ)

    9,700      65

Michael Baker Corp. (Æ)

    400      8

Myers Industries, Inc. (Ñ)

    45,000      566

NCI Building Systems, Inc. (Æ)(Ñ)

    10,700      258

NewMarket Corp.

    3,181      207

Novagold Resources, Inc. (Æ)(Ñ)

    31,000      228

Nuco2, Inc. (Æ)

    290      8

Olin Corp. (Ñ)

    6,507      131

Olympic Steel, Inc. (Ñ)

    5,516      282

OM Group, Inc. (Æ)(Ñ)

    36,466      1,997

Owens Corning, Inc. (Æ)(Ñ)

    18,900      399

 

Equity II Fund   17

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Perini Corp. (Æ)(Ñ)

    9,700      351

Precision Castparts Corp.

    8,962      1,054

Quanex Building Products Corp. (Æ)(Ñ)

    1,383      23

Quanta Services, Inc. (Æ)

    43,743      1,161

Reliance Steel & Aluminum Co.

    9,400      571

Richmont Mines, Inc. (Æ)

    47,840      166

Rock-Tenn Co. Class A (Ñ)

    22,947      779

Rockwood Holdings, Inc. (Æ)(Ñ)

    377      14

RTI International Metals, Inc. (Æ)(Ñ)

    13,070      538

Schnitzer Steel Industries, Inc. Class A (Ñ)

    5,312      467

Schulman A, Inc.

    2,100      45

Seabridge Gold, Inc. (Æ)(Ñ)

    22,500      461

Sigma-Aldrich Corp. (Ñ)

    21,900      1,249

Silgan Holdings, Inc. (Ñ)

    100      5

Simpson Manufacturing Co., Inc.

    1,580      42

Sonoco Products Co. (Ñ)

    14,500      478

Spartech Corp. (Ñ)

    19,300      173

Standard Register Co. (The) (Ñ)

    6,500      62

Superior Essex, Inc. (Æ)

    8,900      265

Symyx Technologies, Inc. (Æ)(Ñ)

    56,533      425

Terra Industries, Inc. (Æ)

    5,600      212

Timken Co. (Ñ)

    21,600      781

Universal Forest Products, Inc. (Ñ)

    10,100      351

URS Corp. (Æ)

    69,916      2,820

Valmont Industries, Inc.

    4,000      394

Wausau Paper Corp. (Ñ)

    6,800      53

WCA Waste Corp. (Æ)

    60,391      304

WD-40 Co. (Ñ)

    1,717      53

WR Grace & Co. (Æ)(Ñ)

    3,119      79

Xerium Technologies, Inc. (Ñ)

    12,006      20
         
        50,934
         

Miscellaneous - 0.6%

        

Johnson Controls, Inc. (Ñ)

    18,500      652

Lancaster Colony Corp. (Ñ)

    14,000      535

Teleflex, Inc. (Ñ)

    22,000      1,212

Wesco Financial Corp. (Ñ)

    1,777      769
         
        3,168
         

Other Energy - 9.5%

        

Alon USA Energy, Inc. (Ñ)

    5,684      79

Atlas America, Inc. (Ñ)

    17,600      1,224

Atlas Energy Resources LLC (Ñ)

    2,700      108

Atwood Oceanics, Inc. (Æ)(Ñ)

    19,430      1,956

Berry Petroleum Co. Class A (Ñ)

    19,700      976

Bill Barrett Corp. (Æ)(Ñ)

    6,316      325
     Principal
Amount ($)
or Shares		      Market
Value
$

Bois d’Arc Energy, Inc. (Æ)(Ñ)

    34,187      817

Brigham Exploration Co. (Æ)(Ñ)

    103,480      977

Bronco Drilling Co., Inc. (Æ)(Ñ)

    59,220      1,019

Callon Petroleum Co. (Æ)(Ñ)

    3,604      72

Cameron International Corp. (Æ)(Ñ)

    12,690      625

CARBO Ceramics, Inc. (Ñ)

    29,200      1,388

Carrizo Oil & Gas, Inc. (Æ)(Ñ)

    16,200      1,029

Cimarex Energy Co. (Ñ)

    16,490      1,027

Comstock Resources, Inc. (Æ)

    20,985      955

Concho Resources, Inc. (Æ)

    18,600      513

Continental Resources, Inc. (Æ)(Ñ)

    15,800      679

Core Laboratories NV (Æ)(Ñ)

    10,993      1,377

Dawson Geophysical Co. (Æ)(Ñ)

    1,968      142

Delek US Holdings, Inc. (Ñ)

    59,100      652

Denbury Resources, Inc. (Æ)

    30,700      938

Dril-Quip, Inc. (Æ)

    28,040      1,603

Enbridge Energy Partners, LP Class A (Ñ)

    12,000      601

Encore Acquisition Co. (Æ)(Ñ)

    5,500      251

Energy Partners, Ltd. (Æ)

    4,615      56

EXCO Resources, Inc. (Æ)

    25,500      569

Exterran Holdings, Inc. (Æ)(Ñ)

    23,022      1,538

FMC Technologies, Inc. (Æ)(Ñ)

    27,123      1,823

Geokinetics, Inc. (Æ)(Ñ)

    33,686      639

Grey Wolf, Inc. (Æ)

    64,300      403

Gulf Island Fabrication, Inc. (Ñ)

    3,500      138

Helix Energy Solutions Group, Inc. (Æ)

    23,266      804

Helmerich & Payne, Inc. (Ñ)

    11,700      629

Hercules Offshore, Inc. (Æ)(Ñ)

    42,150      1,111

Hornbeck Offshore Services, Inc. (Æ)(Ñ)

    24,400      1,217

International Coal Group, Inc. (Æ)(Ñ)

    86,616      689

JA Solar Holdings Co., Ltd. - ADR (Æ)

    30,300      727

Lufkin Industries, Inc. (Ñ)

    8,600      649

Mariner Energy, Inc. (Æ)(Ñ)

    40,627      1,120

Meridian Resource Corp. (Æ)(Ñ)

    12,997      28

Mitcham Industries, Inc. (Æ)

    5,474      102

Newfield Exploration Co. (Æ)(Ñ)

    9,330      567

Oceaneering International, Inc. (Æ)

    19,255      1,286

OSG America, LP

    35,500      497

Patterson-UTI Energy, Inc.

    5,900      165

Penn Virginia Corp.

    27      1

PetroHawk Energy Corp. (Æ)(Ñ)

    21,106      499

Petroquest Energy, Inc. (Æ)(Ñ)

    61,100      1,270

Quicksilver Resources, Inc. (Æ)(Ñ)

    27,000      1,120

Range Resources Corp.

    20,300      1,348

Rosetta Resources, Inc. (Æ)(Ñ)

    27,200      593

Rowan Cos., Inc. (Ñ)

    27,900      1,088

 

18   Equity II Fund

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

SEACOR Holdings, Inc. (Æ)(Ñ)

    6,500      553

SemGroup Energy Partners, LP

    10,300      269

Southwestern Energy Co. (Æ)

    13,730      581

St. Mary Land & Exploration Co. (Ñ)

    19,000      831

Stone Energy Corp. (Æ)(Ñ)

    22,810      1,390

Superior Energy Services (Æ)(Ñ)

    52,400      2,325

TEPPCO Partners, LP (Ñ)

    16,000      561

Tesoro Corp. (Ñ)

    19,839      499

Unit Corp. (Æ)(Ñ)

    16,900      1,073

USEC, Inc. (Æ)(Ñ)

    24,477      114

Whiting Petroleum Corp. (Æ)

    9,400      719

XTO Energy, Inc.

    11,800      730
         
        49,654
         

Producer Durables - 8.5%

        

Actuant Corp. Class A (Ñ)

    9,890      335

AGCO Corp. (Æ)(Ñ)

    7,100      427

Alliant Techsystems, Inc. (Æ)(Ñ)

    3,700      407

Altra Holdings, Inc. (Æ)(Ñ)

    37,500      571

American Ecology Corp. (Ñ)

    309      8

Ametek, Inc.

    9,000      437

AO Smith Corp. (Ñ)

    13,200      408

ATMI, Inc. (Æ)(Ñ)

    2,497      74

Badger Meter, Inc. (Ñ)

    106      6

Baldor Electric Co. (Ñ)

    21,700      703

BE Aerospace, Inc. (Æ)

    50,150      2,024

Belden, Inc. (Ñ)

    32,592      1,100

Bucyrus International, Inc. Class A

    8,300      1,045

C&D Technologies, Inc. (Æ)(Ñ)

    1,022      6

Canadian Solar, Inc. (Æ)(Ñ)

    29,900      818

Cascade Corp. (Ñ)

    6,200      268

Chart Industries, Inc. (Æ)

    54,083      2,198

Cognex Corp. (Ñ)

    25,500      643

Cohu, Inc. (Ñ)

    24,198      420

Columbus McKinnon Corp. (Æ)(Ñ)

    21,858      619

CommScope, Inc. (Æ)(Ñ)

    12,818      609

Credence Systems Corp. (Æ)(Ñ)

    52,272      54

CTS Corp. (Ñ)

    13,400      151

Curtiss-Wright Corp. (Ñ)

    745      35

Darling International, Inc. (Æ)

    65,720      1,004

Desarrolladora Homex SAB de
CV - ADR (Æ)(Ñ)

    5,700      340

Dionex Corp. (Æ)(Ñ)

    6,900      540

Donaldson Co., Inc. (Ñ)

    4,700      205

Dover Corp.

    18,800      930

DR Horton, Inc. (Ñ)

    11,700      181

Ducommun, Inc. (Æ)

    7,124      232

Electro Scientific Industries, Inc. (Æ)

    66,710      1,095
     Principal
Amount ($)
or Shares		      Market
Value
$

Entegris, Inc. (Æ)(Ñ)

    18,142      137

Esterline Technologies Corp. (Æ)

    5,208      290

Federal Signal Corp. (Ñ)

    37,700      523

Flowserve Corp. (Ñ)

    16,100      1,998

Gardner Denver, Inc. (Æ)(Ñ)

    11,700      543

General Cable Corp. (Æ)(Ñ)

    7,152      479

Goodrich Corp.

    35,715      2,434

Graham Corp.

    1,265      72

Hardinge, Inc. (Ñ)

    7,000      117

Herman Miller, Inc. (Ñ)

    3,024      71

HNI Corp. (Ñ)

    6,362      138

Hubbell, Inc. Class B (Ñ)

    4,300      192

Joy Global, Inc.

    23,680      1,758

Kennametal, Inc.

    16,500      574

Kimball International, Inc. Class B

    68,392      702

KLA-Tencor Corp. (Ñ)

    15,000      655

M/I Homes, Inc. (Ñ)

    17,400      298

MasTec, Inc. (Æ)(Ñ)

    11,700      96

Mattson Technology, Inc. (Æ)

    8,307      40

MDC Holdings, Inc. (Ñ)

    4,900      214

Moog, Inc. Class A (Æ)

    4,307      186

Nanometrics, Inc. (Æ)

    864      6

Orbital Sciences Corp. (Æ)

    11,076      298

Pall Corp.

    8,600      299

Pentair, Inc. (Ñ)

    7,500      276

Perceptron, Inc. (Æ)

    61,610      620

Plantronics, Inc. (Ñ)

    22,971      572

Polycom, Inc. (Æ)

    32,210      721

Ritchie Bros Auctioneers, Inc.

    85,692      2,138

Robbins & Myers, Inc. (Ñ)

    56,618      2,257

Rofin-Sinar Technologies, Inc. (Æ)(Ñ)

    24,700      941

Ryland Group, Inc. (Ñ)

    5,451      174

SBA Communications Corp. Class A (Æ)(Ñ)

    24,013      777

Technitrol, Inc. (Ñ)

    38,091      800

Tecumseh Products Co. Class A (Æ)(Ñ)

    18,958      594

Teledyne Technologies, Inc. (Æ)

    1,100      65

Terex Corp. (Æ)

    8,700      606

Triumph Group, Inc. (Ñ)

    30,560      1,799

Twin Disc, Inc.

    18,062      326

Ultra Clean Holdings (Æ)

    49,827      533

Varian Semiconductor Equipment Associates, Inc. (Æ)

    15,241      558

Woodward Governor Co.

    12,099      425

WW Grainger, Inc. (Ñ)

    3,500      303

Zygo Corp. (Æ)(Ñ)

    3,700      43
         
        44,541
         

 

Equity II Fund   19

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Technology - 13.8%

        

Adaptec, Inc. (Æ)(Ñ)

    25,648      72

Adtran, Inc. (Ñ)

    33,700      797

Affiliated Computer Services, Inc. Class A (Æ)(Ñ)

    20,900      1,107

American Science & Engineering, Inc. (Ñ)

    500      24

Amkor Technology, Inc. (Æ)(Ñ)

    19,000      181

Amphenol Corp. Class A

    72,405      3,344

Anadigics, Inc. (Æ)(Ñ)

    52,700      588

Ansys, Inc. (Æ)(Ñ)

    61,202      2,462

Arrow Electronics, Inc. (Æ)(Ñ)

    34,600      941

Avnet, Inc. (Æ)(Ñ)

    33,600      880

Avocent Corp. (Æ)(Ñ)

    15,593      304

Bel Fuse, Inc. Class B (Ñ)

    1,900      50

Benchmark Electronics, Inc. (Æ)

    18,700      332

Blackbaud, Inc. (Ñ)

    1,487      35

Blackboard, Inc. (Æ)

    23,320      805

Bookham, Inc. (Æ)(Ñ)

    36,000      61

Cavium Networks, Inc. (Æ)(Ñ)

    21,600      444

Celestica, Inc. (Æ)

    105,560      989

Ceva, Inc. (Æ)(Ñ)

    1,518      15

Check Point Software Technologies (Æ)

    22,200      524

Checkpoint Systems, Inc. (Æ)

    15,500      402

Ciber, Inc. (Æ)(Ñ)

    18,200      114

Cognizant Technology Solutions Corp. Class A (Æ)

    31,920      1,029

Comtech Telecommunications Corp. (Æ)(Ñ)

    3,975      154

Comverse Technology, Inc. (Æ)

    45,647      797

Concur Technologies, Inc. (Æ)(Ñ)

    2,508      83

Conexant Systems, Inc. (Æ)(Ñ)

    68,500      34

Constant Contact, Inc. (Æ)(Ñ)

    15,800      282

Cray, Inc. (Æ)(Ñ)

    16,273      101

CSG Systems International, Inc. (Æ)

    11,700      142

Cubic Corp. (Ñ)

    9,000      244

Data Domain, Inc. (Æ)

    38,150      830

Digi International, Inc. (Æ)(Ñ)

    10,483      86

Digital River, Inc. (Æ)(Ñ)

    6,150      202

Diodes, Inc. (Æ)(Ñ)

    452      12

DRS Technologies, Inc. (Ñ)

    4,800      300

Electronics for Imaging, Inc. (Æ)(Ñ)

    15,789      228

Emulex Corp. (Æ)(Ñ)

    15,573      204

Extreme Networks (Æ)(Ñ)

    48,300      146

F5 Networks, Inc. (Æ)

    32,593      738

First Solar, Inc. (Æ)(Ñ)

    4,400      1,285

Flextronics International, Ltd. (Æ)

    76,190      792
     Principal
Amount ($)
or Shares		      Market
Value
$

Flir Systems, Inc. (Æ)(Ñ)

    41,220      1,415

Foundry Networks, Inc. (Æ)

    13,325      170

Gartner, Inc. (Æ)(Ñ)

    2,122      49

GeoEye, Inc. (Æ)(Ñ)

    35,110      809

Harris Corp. (Ñ)

    15,119      817

Hittite Microwave Corp. (Æ)(Ñ)

    13,493      536

II-VI, Inc. (Æ)

    2,237      83

Imation Corp. (Ñ)

    33,300      781

Informatica Corp. (Æ)(Ñ)

    47,050      751

Ingram Micro, Inc. Class A (Æ)(Ñ)

    41,100      699

Integrated Device Technology, Inc. (Æ)

    33,812      361

Integrated Silicon Solution, Inc. (Æ)(Ñ)

    4,900      29

Intermec, Inc. (Æ)(Ñ)

    24,409      516

International Rectifier Corp. (Æ)

    25,510      581

Interwoven, Inc. (Æ)

    35,200      396

Intuit, Inc. (Æ)

    27,208      734

ION Geophysical Corp. (Æ)(Ñ)

    20,438      326

Jabil Circuit, Inc.

    1,800      20

JDA Software Group, Inc. (Æ)(Ñ)

    7,700      146

Lawson Software, Inc. (Æ)

    5,471      44

Lionbridge Technologies, Inc. (Æ)(Ñ)

    1,100      3

Mantech International Corp. Class A (Æ)(Ñ)

    11,000      525

Marvell Technology Group, Ltd. (Æ)

    100,484      1,301

MEMC Electronic Materials, Inc. (Æ)

    11,200      705

Mercury Computer Systems, Inc. (Æ)(Ñ)

    2,888      23

Methode Electronics, Inc. (Ñ)

    26,435      287

Micrel, Inc. (Ñ)

    79,100      777

Micros Systems, Inc. (Æ)(Ñ)

    132,343      4,718

Microsemi Corp. (Æ)(Ñ)

    49,290      1,208

MicroStrategy, Inc. Class A (Æ)(Ñ)

    3,505      311

Monolithic Power Systems, Inc. (Æ)(Ñ)

    42,400      971

NAM TAI Electronics, Inc.

    56,500      582

NCR Corp. (Æ)

    82,466      2,031

Netlogic Microsystems, Inc. (Æ)(Ñ)

    33,000      1,082

Netscout Systems, Inc. (Æ)

    12,366      124

Nice Systems, Ltd. - ADR (Æ)(Ñ)

    85,685      2,728

ON Semiconductor Corp. (Æ)(Ñ)

    14,178      106

Oplink Communications, Inc. (Æ)(Ñ)

    2,210      21

OSI Systems, Inc. (Æ)(Ñ)

    32,714      800

PerkinElmer, Inc.

    76,535      2,033

Plexus Corp. (Æ)(Ñ)

    6,200      149

Power Integrations, Inc. (Æ)

    28,050      874

Rimage Corp. (Æ)

    3,314      59

SAIC, Inc. (Æ)(Ñ)

    34,900      663

SanDisk Corp. (Æ)(Ñ)

    33,287      902

Sanmina-SCI Corp. (Æ)

    245,300      380

 

20   Equity II Fund

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Satyam Computer Services, Ltd. - ADR (Ñ)

    34,890      896

Scansource, Inc. (Æ)(Ñ)

    10,634      266

Seagate Technology

    31,000      585

Secure Computing Corp. (Æ)(Ñ)

    26,920      178

Silicon Image, Inc. (Æ)(Ñ)

    1,000      6

Skyworks Solutions, Inc. (Æ)(Ñ)

    54,300      472

Solera Holdings, Inc. (Æ)

    8,200      212

SonicWALL, Inc. (Æ)(Ñ)

    47,500      365

SPSS, Inc. (Æ)(Ñ)

    1,400      59

SRA International, Inc. Class A (Æ)(Ñ)

    7,492      197

Standard Microsystems Corp. (Æ)(Ñ)

    3,662      109

STEC, Inc. (Æ)(Ñ)

    6,633      61

Sunpower Corp. Class A (Æ)(Ñ)

    2,600      227

Switch & Data Facilities Co., Inc. (Æ)(Ñ)

    8,636      131

Sybase, Inc. (Æ)(Ñ)

    15,704      462

SYKES Enterprises, Inc. (Æ)(Ñ)

    200      3

Synaptics, Inc. (Æ)(Ñ)

    8,317      282

Syniverse Holdings, Inc. (Æ)(Ñ)

    97,279      1,528

Taleo Corp. Class A (Æ)(Ñ)

    11,100      216

Tekelec (Æ)(Ñ)

    8,053      119

Tessera Technologies, Inc. (Æ)(Ñ)

    14,836      300

Tier Technologies, Inc. Class B (Æ)

    109,690      851

Trimble Navigation, Ltd. (Æ)(Ñ)

    37,034      1,214

TriQuint Semiconductor, Inc. (Æ)(Ñ)

    127,719      842

TTM Technologies, Inc. (Æ)(Ñ)

    47,125      627

Tyler Technologies, Inc. (Æ)(Ñ)

    10,719      155

Unisys Corp. (Æ)

    75,200      313

Verigy, Ltd. (Æ)

    25,000      534

Verint Systems, Inc. (Æ)

    23,684      472

Viasat, Inc. (Æ)(Ñ)

    6,567      145

Vignette Corp. (Æ)(Ñ)

    10,191      118

Vishay Intertechnology, Inc. (Æ)

    120,170      1,136

Vocus, Inc. (Æ)

    48,700      1,353

Western Digital Corp. (Æ)(Ñ)

    50,000      1,449

White Electronic Designs Corp. (Æ)

    156,136      714

Xilinx, Inc. (Ñ)

    24,000      594

Zoran Corp. (Æ)(Ñ)

    26,555      349
         
        72,326
         

Utilities - 3.7%

        

Alaska Communications Systems Group, Inc. (Ñ)

    17,872      200

Allete, Inc. (Ñ)

    9,100      380

Alliant Energy Corp. (Ñ)

    17,300      652

Atlantic Tele-Network, Inc. (Ñ)

    4,000      124

Atmos Energy Corp. (Ñ)

    41,210      1,141
     Principal
Amount ($)
or Shares		      Market
Value
$

Avista Corp.

    49,220      1,010

Black Hills Corp. (Ñ)

    7,491      292

California Water Service Group (Ñ)

    5,400      209

CenturyTel, Inc. (Ñ)

    35,900      1,165

Cincinnati Bell, Inc. (Æ)(Ñ)

    69,546      323

Clearwire Corp. Class A (Æ)(Ñ)

    58,041      879

Cleco Corp. (Ñ)

    68,206      1,638

El Paso Electric Co. (Æ)

    10,974      248

El Paso Pipeline Partners, LP (Ñ)

    25,200      587

Energen Corp.

    9,790      668

Idacorp, Inc. (Ñ)

    50,850      1,649

iPCS, Inc.

    6,058      184

MDU Resources Group, Inc.

    26,100      753

MGE Energy, Inc. (Ñ)

    700      24

New Jersey Resources Corp. (Ñ)

    20,250      645

NTELOS Holdings Corp. (Ñ)

    11,076      287

Oneok, Inc. (Ñ)

    9,000      433

Pepco Holdings, Inc.

    13,900      346

Premiere Global Services, Inc. (Æ)

    31,131      452

RCN Corp. (Æ)(Ñ)

    6,182      71

Southwest Gas Corp. (Ñ)

    83,064      2,398

Southwest Water Co. (Ñ)

    7,600      85

Suburban Propane Partners, LP (Ñ)

    5,300      216

SureWest Communications (Ñ)

    4,000      56

Telephone & Data Systems, Inc.

    10,100      387

UGI Corp.

    55,600      1,446

UIL Holdings Corp. (Ñ)

    6,704      210

USA Mobility, Inc. (Æ)(Ñ)

    6,300      45
         
        19,203
         
Total Common Stocks        

(cost $458,413)

         486,126
         
Short-Term Investments - 7.3%        

Russell Investment Company Money Market Fund

    35,516,001      35,516

United States Treasury Bills (ç)(ž)(§)
0.558% due 06/19/08

    2,500      2,498
         
Total Short-Term Investments        

(cost $38,014)

         38,014
         

 

Equity II Fund   21

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$		  
       
Other Securities - 43.1%        

Russell Investment Company
Money Market Fund (×)

    49,124,959      49,125  

State Street Securities Lending Quality Trust (×)

    176,798,881      176,799  
           
Total Other Securities        

(cost $225,924)

         225,924  
           
Total Investments - 143.1%        

(identified cost $722,351)

         750,064  
           
Other Assets and Liabilities, Net - (43.1%)         (225,802 )
           
Net Assets - 100.0%         524,262  
           

 

See accompanying notes which are an integral part of the financial statements.

 

22   Equity II Fund

Table of Contents

Russell Investment Company

Equity II Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		    Notional
Amount
    Unrealized
Appreciation
(Depreciation)
$
     
     

Long Positions

      

Russell 2000 Mini Index (CME) expiration date 06/08 (508)

    USD   36,449    1,873
       

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts

       1,873
       

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of Net
Assets		  
    

Auto and Transportation

      4.3  

Consumer Discretionary

      16.0  

Consumer Staples

      1.7  

Financial Services

      14.3  

Health Care

      10.6  

Integrated Oils

      — *

Materials and Processing

      9.7  

Miscellaneous

      0.6  

Other Energy

      9.5  

Producer Durables

      8.5  

Technology

      13.8  

Utilities

      3.7  

Short-Term Investments

      7.3  

Other Securities

      43.1  
        

Total Investments

      143.1  

Other Assets and Liabilities, Net

      (43.1 )
        
     100.0  
        

Futures Contracts

      0.4  

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

Equity II Fund   23

Table of Contents

Russell Investment Company

Equity Q Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 883.90    $ 1,019.14

Expenses Paid During Period*

    $ 5.39    $ 5.77

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.15% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 884.70    $ 1,020.24

Expenses Paid During Period*

    $ 4.36    $ 4.67

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.93% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class Y

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 885.20    $ 1,020.59

Expenses Paid During Period*

    $ 4.03    $ 4.32

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.86% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

24   Equity Q Fund

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 108.2%

        

Auto and Transportation - 2.0%

        

Alexander & Baldwin, Inc. (Ñ)

    10,800      542

Autoliv, Inc. (Ñ)

    51,900      3,178

Burlington Northern Santa Fe Corp.

    17,360      1,780

CH Robinson Worldwide, Inc.

    1,500      94

Con-way, Inc.

    12,600      583

Continental Airlines, Inc. Class A (Æ)

    37,000      665

CSX Corp.

    83,200      5,237

Delta Air Lines, Inc. (Æ)

    34,500      294

FedEx Corp. (Û)

    32,000      3,068

Forward Air Corp.

    12,700      433

Frontline, Ltd. (Ñ)

    19,100      1,071

Genuine Parts Co.

    40,700      1,728

JB Hunt Transport Services, Inc. (Ñ)

    42,204      1,434

Kirby Corp. (Æ)

    27,800      1,525

Landstar System, Inc.

    5,880      305

Lear Corp. (Æ)

    11,800      337

Norfolk Southern Corp. (Û)

    75,900      4,522

Overseas Shipholding Group, Inc. (Ñ)

    512      39

Southwest Airlines Co.

    10,800      143

TRW Automotive Holdings Corp. (Æ)

    25,100      642

UAL Corp. (Ñ)

    25,900      386

Union Pacific Corp. (Û)

    17,520      2,544

United Parcel Service, Inc. Class B

    6,578      476

US Airways Group, Inc. (Æ)

    56,700      487

UTI Worldwide, Inc.

    13,900      305

WABCO Holdings, Inc.

    2,300      110

Werner Enterprises, Inc. (Ñ)

    14,500      282
         
        32,210
         

Consumer Discretionary - 15.8%

     

Accenture, Ltd. Class A (Û)

    365,166      13,712

Activision, Inc. (Æ)

    15,750      426

Aeropostale, Inc. (Æ)(Ñ)

    7,100      226

Alberto-Culver Co. Class B

    2,000      50

Allied Waste Industries, Inc. (Æ)

    105,400      1,303

Amazon.com, Inc. (Æ)(Ñ)

    17,233      1,355

American Greetings Corp. Class A (Ñ)

    38,310      686

AnnTaylor Stores Corp. (Æ)(Û)

    36,500      923

Apollo Group, Inc. Class A (Æ)

    41,068      2,090

AutoNation, Inc. (Æ)(Ñ)

    226,927      3,633

Avon Products, Inc.

    4,993      195

Bebe Stores, Inc.

    28,200      282

Best Buy Co., Inc. (Ñ)(Û)

    353,000      15,186

BJ’s Wholesale Club, Inc. (Æ)(Ñ)

    39,178      1,493

Brinker International, Inc.

    30,300      688

Burger King Holdings, Inc.

    10,600      296
     Principal
Amount ($)
or Shares		      Market
Value
$

CBS Corp. Class B

    214,094      4,939

Chico’s FAS, Inc. (Æ)

    67,300      476

Chipotle Mexican Grill, Inc. Class A (Æ)(Ñ)

    623      61

Choice Hotels International, Inc.

    15,500      535

Coach, Inc. (Æ)

    136,100      4,841

Columbia Sportswear Co.

    7,300      306

Convergys Corp. (Æ)

    44,200      695

Costco Wholesale Corp. (Û)

    100,090      7,131

Darden Restaurants, Inc.

    41,800      1,487

DeVry, Inc. (Ñ)

    4,800      274

DIRECTV Group, Inc. (The) (Æ)(Ñ)(Û)

    167,620      4,130

DISH Network Corp. Class A (Æ)

    38,700      1,155

Dolby Laboratories, Inc. Class A (Æ)

    12,700      510

Earthlink, Inc. (Æ)

    1,600      15

eBay, Inc. (Æ)(Û)

    219,584      6,871

Electronic Arts, Inc. Series C (Æ)

    1,100      57

Estee Lauder Cos., Inc. (The) Class A (Ñ)

    32,850      1,498

Foot Locker, Inc.

    72,800      921

GameStop Corp. Class A (Æ)(Ñ)

    259,995      14,310

Gap, Inc. (The) (Û)

    187,500      3,491

Gemstar-TV Guide International, Inc. (Æ)

    1,386      6

Google, Inc. Class A (Æ)(Û)

    14,469      8,309

Harman International Industries, Inc.

    14,900      609

Harte-Hanks, Inc.

    12,300      168

Hasbro, Inc. (Ñ)

    73,100      2,599

Hewitt Associates, Inc. Class A (Æ)

    23,900      980

IAC/InterActiveCorp (Æ)

    68,100      1,417

International Game Technology

    35,000      1,216

International Speedway Corp. Class A

    9,500      403

Jack in the Box, Inc. (Æ)

    5,800      155

Jarden Corp. (Æ)

    30,200      644

Kimberly-Clark Corp. (Û)

    72,035      4,610

Liberty Media Corp. - Capital Series A (Æ)

    5,200      80

Macy’s, Inc. (Û)

    160,100      4,049

Manpower, Inc.

    205,151      13,772

Marriott International, Inc. Class A

    75,100      2,576

Mattel, Inc.

    143,800      2,696

McDonald’s Corp. (Û)

    201,240      11,990

McGraw-Hill Cos., Inc. (The)

    64,800      2,656

News Corp. Class A

    144,700      2,590

Nike, Inc. Class B (Û)

    268,810      17,957

Office Depot, Inc. (Æ)

    100,900      1,279

OfficeMax, Inc.

    3,000      55

Omnicom Group, Inc. (Û)

    65,700      3,137

Penske Auto Group, Inc.

    18,700      391

 

Equity Q Fund   25

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Polo Ralph Lauren Corp. Class A

    17,100      1,062

Pool Corp.

    5,000      109

RR Donnelley & Sons Co. (Û)

    71,600      2,194

Scholastic Corp. (Æ)

    3,000      84

Sears Holdings Corp. (Æ)

    4,760      469

Starbucks Corp. (Æ)(Û)

    102,600      1,665

Tech Data Corp. (Æ)

    23,244      781

Tiffany & Co.

    49,800      2,168

Time Warner, Inc. (Û)

    1,237,153      18,372

TJX Cos., Inc.

    101,350      3,265

VeriSign, Inc. (Æ)(Ñ)

    14,371      518

VF Corp.

    29,800      2,217

Viacom, Inc. Class B (Æ)

    80,200      3,083

Wal-Mart Stores, Inc. (Û)

    140,146      8,126

Walt Disney Co. (The) (Û)

    647,707      21,005

Wendy’s International, Inc.

    28,100      815

WESCO International, Inc. (Æ)

    11,100      413

Wolverine World Wide, Inc.

    16,000      460

Yahoo!, Inc. (Æ)

    17,500      480

Yum! Brands, Inc. (Û)

    151,800      6,175
         
        254,052
         

Consumer Staples - 7.3%

        

Altria Group, Inc.

    80,760      1,615

Anheuser-Busch Cos., Inc.

    137,736      6,776

Brown-Forman Corp. - ADR

    410      28

Church & Dwight Co., Inc.

    1,990      113

Coca-Cola Co. (The)

    14,779      870

Coca-Cola Enterprises, Inc.

    78,521      1,767

Colgate-Palmolive Co. (Û)

    56,900      4,023

ConAgra Foods, Inc. (Û)

    138,500      3,263

Constellation Brands, Inc. Class A (Æ)(Û)

    82,300      1,511

General Mills, Inc. (Û)

    72,000      4,349

Hansen Natural Corp. (Ñ)

    6,500      230

Herbalife, Ltd. (Ñ)

    28,971      1,268

Hormel Foods Corp.

    18,250      719

Kroger Co. (The) (Û)

    613,502      16,718

Loews Corp. - Carolina Group (Û)

    13,600      893

McCormick & Co., Inc.

    1,800      68

Pepsi Bottling Group, Inc. (Û)

    127,400      4,295

PepsiAmericas, Inc.

    6,684      172

PepsiCo, Inc. (Û)

    240,999      16,516

Philip Morris International, Inc. (Æ)

    82,060      4,187

Procter & Gamble Co. (Û)

    298,401      20,008

Ruddick Corp. (Ñ)

    1,500      58

Safeway, Inc. (Û)

    322,300      10,185

SUPERVALU, Inc.

    89,898      2,976
     Principal
Amount ($)
or Shares		      Market
Value
$

Sysco Corp. (Û)

    341,500      10,440

Tyson Foods, Inc. Class A

    147,268      2,621

Universal Corp. (Ñ)

    4,020      258

UST, Inc. (Ñ)

    27,845      1,450
         
        117,377
         

Financial Services - 19.0%

        

ACE, Ltd. (Û)

    53,405      3,220

Advent Software, Inc. (Æ)(Ñ)

    9,153      365

Aflac, Inc.

    54,900      3,660

Allied World Assurance Co. Holdings, Ltd. (Û)

    2,200      91

Allstate Corp. (The) (Û)

    119,855      6,036

AMB Property Corp. (ö)

    14,107      815

American Express Co.

    132,500      6,363

American Financial Group, Inc.

    29,600      812

Ameriprise Financial, Inc. (Û)

    105,506      5,010

Apartment Investment & Management Co. Class A (ö)

    58,000      2,145

Arch Capital Group, Ltd. (Æ)

    23,984      1,694

Arthur J Gallagher & Co.

    16,900      415

Assurant, Inc. (Û)

    50,180      3,262

Automatic Data Processing, Inc. (Û)

    125,800      5,560

AvalonBay Communities, Inc. (ö)

    17,370      1,733

Axis Capital Holdings, Ltd.

    134,987      4,577

Bank of America Corp. (Û)

    464,552      17,439

Bank of New York Mellon Corp. (The) (Û)

    143,195      6,233

BB&T Corp.

    34,000      1,166

BlackRock, Inc. (Ñ)(Û)

    17,060      3,443

Brandywine Realty Trust (ö)

    50,600      883

Broadridge Financial Solutions, Inc.

    10,500      195

Camden Property Trust (ö)

    19,900      1,053

Capital One Financial Corp. (Ñ)

    15,846      840

Cash America International, Inc.

    20,900      852

CBL & Associates Properties, Inc. (ö)

    32,200      789

Charles Schwab Corp. (The) (Û)

    239,200      5,167

Chubb Corp. (Û)

    100,656      5,332

Cigna Corp. (Û)

    297,000      12,685

Cincinnati Financial Corp.

    71,232      2,557

Citigroup, Inc.

    100,202      2,532

City National Corp.

    11,900      577

CNA Financial Corp. (Ñ)

    57,900      1,552

Colonial Properties Trust (ö)

    31,500      763

Comerica, Inc.

    77,300      2,685

Cullen/Frost Bankers, Inc.

    500      28

Discover Financial Services

    41,400      754

Duke Realty Corp. (ö)

    79,000      1,929

Dun & Bradstreet Corp.

    16,000      1,349

 

26   Equity Q Fund

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Eaton Vance Corp. (Ñ)

    14,491      530

Endurance Specialty Holdings, Ltd. (Ñ)

    48,814      1,812

Equity Residential (ö)

    35,638      1,480

Federal Realty Investment Trust (ö)

    12,347      1,014

Federated Investors, Inc. Class B

    10,400      348

Fifth Third Bancorp (Ñ)

    288,000      6,172

Franklin Resources, Inc. (Û)

    70,900      6,746

Genworth Financial, Inc. Class A

    129,200      2,979

GFI Group, Inc.

    2,100      25

Global Payments, Inc.

    650      29

Goldman Sachs Group, Inc. (The) (Û)

    55,000      10,525

Hanover Insurance Group, Inc. (The)

    11,400      512

Hartford Financial Services Group, Inc. (Û)

    62,000      4,419

HCC Insurance Holdings, Inc.

    64,000      1,579

Hospitality Properties Trust (ö)

    102,600      3,297

HRPT Properties Trust (ö)

    70,400      488

Hudson City Bancorp, Inc.

    282,549      5,405

Huntington Bancshares, Inc.

    31,000      291

IntercontinentalExchange, Inc. (Æ)

    3,240      503

Invesco, Ltd.

    2,200      56

Investment Technology Group,
Inc. (Æ)

    15,300      738

Janus Capital Group, Inc. (Ñ)

    18,050      506

Jones Lang LaSalle, Inc. (Ñ)

    32,420      2,516

JPMorgan Chase & Co. (Û)

    524,210      24,979

LaSalle Hotel Properties (ö)

    21,700      696

Liberty Property Trust (ö)

    22,200      778

Lincoln National Corp. (Û)

    36,600      1,968

Loews Corp.

    58,138      2,448

Macerich Co. (The) (ö)

    11,305      827

Mack-Cali Realty Corp. (ö)

    33,500      1,307

Mastercard, Inc. Class A (Ñ)

    3,335      928

MetLife, Inc. (Û)

    140,970      8,578

Morgan Stanley (Û)

    110,300      5,361

Nasdaq OMX Group (The) (Æ)(Ñ)

    50,300      1,833

National City Corp.

    179,700      1,132

Nationwide Financial Services

    7,353      368

Northern Trust Corp. (Û)

    61,600      4,565

Odyssey Re Holdings Corp.

    8,000      286

Omega Healthcare Investors, Inc. (ö)

    5,200      91

Pennsylvania Real Estate Investment Trust (ö)

    14,600      368

Phoenix Cos., Inc. (The)

    20,900      272

Plum Creek Timber Co., Inc. (ö)(Ñ)

    650      27

Principal Financial Group, Inc.

    25,800      1,384

Prologis (ö)(Û)

    172,291      10,787

Protective Life Corp.

    4,600      196
     Principal
Amount ($)
or Shares		      Market
Value
$

Prudential Financial, Inc. (Û)

    74,694      5,655

PS Business Parks, Inc. (ö)

    4,100      235

Rayonier, Inc. (ö)

    650      27

Regency Centers Corp. (ö)

    5,511      394

Regions Financial Corp. (Ñ)

    106,868      2,343

RenaissanceRe Holdings, Ltd.

    22,200      1,142

Ryder System, Inc.

    1,143      78

Safeco Corp.

    51,900      3,464

SEI Investments Co.

    55,400      1,289

Selective Insurance Group

    13,600      290

StanCorp Financial Group, Inc.

    4,000      205

State Street Corp. (Û)

    50,600      3,650

Sunstone Hotel Investors, Inc. (ö)

    30,500      570

SunTrust Banks, Inc.

    18,654      1,040

Synovus Financial Corp. (Ñ)

    2,400      28

T Rowe Price Group, Inc.

    64,900      3,801

TD Ameritrade Holding Corp. (Æ)

    204,400      3,700

Travelers Cos., Inc. (The) (Û)

    309,378      15,593

UnionBanCal Corp.

    1,160      61

United Rentals, Inc. (Æ)

    21,600      407

US Bancorp

    200,202      6,785

Ventas, Inc. (ö)

    15,246      740

Wachovia Corp. (Ñ)(Û)

    56,400      1,644

Waddell & Reed Financial, Inc. Class A

    20,300      687

Webster Financial Corp.

    5,300      138

Weingarten Realty Investors (ö)

    25,800      952

Wells Fargo & Co.

    82,793      2,463

Western Union Co. (The)

    134,400      3,091

WR Berkley Corp.

    35,600      915

XL Capital, Ltd. Class A

    134,700      4,700
         
        303,797
         

Health Care - 12.9%

        

Abbott Laboratories

    7,980      421

Aetna, Inc. (Û)

    149,600      6,523

AMERIGROUP Corp. Class A (Æ)

    27,600      717

AmerisourceBergen Corp. Class A (Û)

    311,653      12,637

Amgen, Inc. (Æ)(Û)

    198,032      8,292

Baxter International, Inc. (Û)

    72,000      4,487

Beckman Coulter, Inc.

    13,800      943

Becton Dickinson & Co. (Û)

    31,400      2,807

Biogen Idec, Inc. (Æ)

    138,571      8,410

Boston Scientific Corp. (Æ)(Û)

    308,115      4,107

Bristol-Myers Squibb Co.

    239,900      5,271

Cardinal Health, Inc. (Û)

    127,000      6,613

Celgene Corp. (Æ)(Ñ)

    46,100      2,865

Covidien, Ltd.

    9,181      429

CVS Caremark Corp.

    14,700      593

 

Equity Q Fund   27

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Eli Lilly & Co. (Û)

    111,175      5,352

Endo Pharmaceuticals Holdings, Inc. (Æ)

    23,200      576

Express Scripts, Inc. Class A (Æ)(Û)

    238,077      16,670

Forest Laboratories, Inc. (Æ)(Û)

    123,400      4,283

Gen-Probe, Inc. (Æ)

    550      31

Genentech, Inc. (Æ)

    16,020      1,093

Gilead Sciences, Inc. (Æ)(Û)

    52,938      2,740

Health Net, Inc. (Æ)

    79,900      2,340

HealthExtras, Inc. (Æ)

    12,100      341

Hill-Rom Holdings, Inc. (Ñ)

    1,100      28

Hlth Corp. (Æ)(Ñ)

    78,600      874

Humana, Inc. (Æ)

    99,500      4,755

Intuitive Surgical, Inc. (Æ)

    5,124      1,482

Invitrogen Corp. (Æ)(Ñ)

    28,142      2,633

Johnson & Johnson (Û)

    169,111      11,346

Kindred Healthcare, Inc. (Æ)

    1,400      33

Kinetic Concepts, Inc. (Æ)

    30,390      1,205

King Pharmaceuticals, Inc. (Æ)

    133,400      1,253

Lincare Holdings, Inc. (Æ)(Ñ)

    43,100      1,049

McKesson Corp. (Û)

    65,500      3,414

Medco Health Solutions, Inc. (Æ)(Û)

    359,137      17,792

Medtronic, Inc. (Ñ)

    143,600      6,990

Merck & Co., Inc. (Û)

    123,507      4,698

Pfizer, Inc. (Û)

    1,568,836      31,549

Schering-Plough Corp. (Û)

    173,800      3,200

Stryker Corp.

    22,600      1,465

Techne Corp. (Æ)

    8,600      624

Thermo Fisher Scientific, Inc. (Æ)

    11,200      648

UnitedHealth Group, Inc. (Û)

    162,800      5,312

Universal Health Services, Inc. Class B

    12,900      808

Varian Medical Systems, Inc. (Æ)

    12,800      600

Warner Chilcott, Ltd. (Æ)(Ñ)

    1,600      27

Watson Pharmaceuticals, Inc. Class B (Æ)(Ñ)

    48,042      1,491

WellCare Health Plans, Inc. (Æ)

    26,900      1,178

WellPoint, Inc. (Æ)(Û)

    53,800      2,677

Wyeth

    21,300      947
         
        206,619
         

Integrated Oils - 8.3%

        

Chevron Corp. (Û)

    213,050      20,485

ConocoPhillips (Û)

    388,188      33,442

Exxon Mobil Corp. (Û)

    607,617      56,551

Hess Corp.

    35,100      3,727

Marathon Oil Corp. (Û)

    158,300      7,214

Murphy Oil Corp. (Û)

    43,100      3,894
     Principal
Amount ($)
or Shares		      Market
Value
$

Occidental Petroleum Corp. (Û)

    92,214      7,673
         
        132,986
         

Materials and Processing - 6.6%

     

AK Steel Holding Corp. (Û)

    21,970      1,379

Alcoa, Inc.

    122,300      4,254

Archer-Daniels-Midland Co.

    44,900      1,978

Ashland, Inc.

    56,961      3,020

Avery Dennison Corp.

    7,800      376

Bunge, Ltd. (Ñ)

    7,428      847

Carpenter Technology Corp.

    13,320      683

Celanese Corp. Class A

    31,754      1,421

CF Industries Holdings, Inc.

    11,547      1,544

Commercial Metals Co.

    26,850      836

Crown Holdings, Inc. (Æ)

    67,000      1,798

Cytec Industries, Inc.

    470      28

Domtar Corp. (Æ)

    92,800      554

Dow Chemical Co. (The) (Û)

    128,700      5,167

Eastman Chemical Co.

    16,700      1,227

EI Du Pont de Nemours & Co.

    66,200      3,238

EMCOR Group, Inc. (Æ)

    47,000      1,178

Energizer Holdings, Inc. (Æ)(Ñ)

    16,316      1,290

Fluor Corp.

    32,406      4,954

FMC Corp.

    1,860      117

Freeport-McMoRan Copper & Gold, Inc. Class B

    36,400      4,141

Granite Construction, Inc.

    25,300      868

Harsco Corp.

    25,500      1,513

International Paper Co.

    144,600      3,784

Jacobs Engineering Group, Inc. (Æ)

    40,600      3,505

KBR, Inc.

    82,998      2,394

Lubrizol Corp.

    2,298      134

McDermott International, Inc. (Æ)

    29,060      1,557

Minerals Technologies, Inc.

    3,675      249

Monsanto Co. (Û)

    71,761      8,182

Mosaic Co. (The) (Æ)

    52,891      6,480

Nucor Corp. (Û)

    108,800      8,214

Olin Corp.

    29,600      597

Owens-Illinois, Inc. (Æ)

    71,809      3,960

Perini Corp. (Æ)

    2,400      87

PPG Industries, Inc.

    30,400      1,866

Precision Castparts Corp.

    32,900      3,868

Reliance Steel & Aluminum Co.

    19,990      1,215

Rohm & Haas Co.

    58,900      3,148

RPM International, Inc.

    1,300      29

Scotts Miracle-Gro Co. (The) Class A

    6,650      220

Shaw Group, Inc. (The) (Æ)

    550      27

Sherwin-Williams Co. (The) (Ñ)(Û)

    71,400      3,950

 

28   Equity Q Fund

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Smurfit-Stone Container Corp. (Æ)

    106,400      578

Sonoco Products Co.

    16,100      531

Southern Copper Corp. (Ñ)(Û)

    32,014      3,674

Terra Industries, Inc. (Æ)(Ñ)

    36,113      1,367

Timken Co.

    21,500      777

URS Corp. (Æ)

    42,100      1,698

Valspar Corp. (Ñ)

    11,000      242

Worthington Industries, Inc. (Ñ)

    21,394      385
         
        105,129
         

Miscellaneous - 2.8%

        

3M Co.

    25,872      1,989

Berkshire Hathaway, Inc. Class A (Æ)

    3      401

Brunswick Corp.

    32,300      539

Carlisle Cos., Inc. (Ñ)

    22,700      656

Eaton Corp.

    59,100      5,191

Foster Wheeler, Ltd. (Æ)

    88,800      5,656

General Electric Co. (Û)

    695,061      22,728

Honeywell International, Inc.

    13,837      822

ITT Corp.

    32,400      2,074

SPX Corp.

    23,834      2,932

Tyco International, Ltd. (Û)

    29,800      1,394
         
        44,382
         

Other Energy - 6.8%

        

Anadarko Petroleum Corp. (Û)

    115,510      7,688

Apache Corp. (Û)

    139,007      18,721

Bill Barrett Corp. (Æ)(Ñ)

    1,100      57

BJ Services Co.

    58,500      1,654

Bois d’Arc Energy, Inc. (Æ)

    12,100      289

Cabot Oil & Gas Corp.

    4,840      276

Cameron International Corp. (Æ)

    5,700      281

Chesapeake Energy Corp. (Ñ)(Û)

    40,900      2,115

Cimarex Energy Co. (Ñ)

    5,389      336

Complete Production Services, Inc.

    20,500      554

Denbury Resources, Inc. (Æ)

    850      26

Devon Energy Corp. (Û)

    44,281      5,021

Dresser-Rand Group, Inc. (Æ)

    3,878      142

Dynegy, Inc. Class A (Æ)

    5,054      44

Exterran Holdings, Inc. (Æ)

    3,320      222

FMC Technologies, Inc. (Æ)

    55,780      3,748

Frontier Oil Corp.

    41,700      1,036

Global Industries, Ltd. (Æ)

    107,156      1,710

Halliburton Co. (Û)

    175,918      8,076

Helmerich & Payne, Inc.

    9,900      532

Holly Corp.

    26,000      1,078

Massey Energy Co.

    500      26

National Oilwell Varco, Inc. (Æ)(Ñ)

    225,974      15,468
     Principal
Amount ($)
or Shares		      Market
Value
$

Newfield Exploration Co. (Æ)

    5,300      322

Noble Energy, Inc.

    10,553      918

NRG Energy, Inc. (Æ)

    50,163      2,205

Oceaneering International, Inc. (Æ)

    2,120      142

Patterson-UTI Energy, Inc.

    41,300      1,154

Pioneer Natural Resources Co. (Ñ)

    17,427      1,006

Reliant Energy, Inc. (Æ)

    198,173      5,101

SEACOR Holdings, Inc. (Æ)(Ñ)

    7,398      630

St. Mary Land & Exploration Co.

    24,000      1,049

Sunoco, Inc. (Û)

    76,300      3,541

Superior Energy Services (Æ)

    29,000      1,287

Tesoro Corp.

    27,300      686

Transocean, Inc. (Æ)

    12,400      1,829

Ultra Petroleum Corp. (Æ)

    650      54

Unit Corp. (Æ)

    15,400      978

Valero Energy Corp. (Û)

    213,920      10,450

W&T Offshore, Inc. (Ñ)

    34,770      1,422

Williams Cos., Inc.

    184,200      6,539
         
        108,413
         

Producer Durables - 7.2%

        

AGCO Corp. (Æ)

    43,153      2,595

Agilent Technologies, Inc. (Æ)

    18,427      557

American Tower Corp. Class A (Æ)

    34,700      1,507

Boeing Co. (Û)

    285,236      24,205

Caterpillar, Inc. (Û)

    82,689      6,770

Crane Co.

    2,800      115

Cummins, Inc. (Û)

    95,900      6,008

Donaldson Co., Inc. (Ñ)

    11,300      492

DR Horton, Inc.

    19,800      307

Emerson Electric Co.

    16,815      879

Flowserve Corp.

    20,370      2,528

Gardner Denver, Inc. (Æ)

    16,600      771

Graco, Inc.

    5,400      224

Herman Miller, Inc. (Ñ)

    3,904      91

HNI Corp. (Ñ)

    11,329      247

Hubbell, Inc. Class B (Ñ)

    11,900      532

Ingersoll-Rand Co., Ltd. Class A (Ñ)

    146,547      6,504

Joy Global, Inc.

    18,581      1,380

Kennametal, Inc.

    14,900      518

Lam Research Corp. (Æ)

    24,150      986

Lexmark International, Inc. Class A (Æ)

    24,900      781

Lockheed Martin Corp. (Û)

    150,040      15,910

Mettler Toledo International, Inc. (Æ)

    14,700      1,400

Molex, Inc.

    46,400      1,317

Northrop Grumman Corp. (Û)

    285,371      20,995

Parker Hannifin Corp. (Û)

    46,000      3,673

 

Equity Q Fund   29

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Plantronics, Inc.

    25,900      645

Raytheon Co.

    49,190      3,147

Steelcase, Inc. Class A

    33,200      368

Terex Corp. (Æ)

    18,600      1,296

United Technologies Corp. (Û)

    48,800      3,536

W.W. Grainger, Inc. (Ñ)

    17,651      1,530

Xerox Corp.

    312,600      4,367
         
        116,181
         

Technology - 13.5%

        

ADC Telecommunications, Inc. (Æ)

    27,200      381

Adobe Systems, Inc. (Æ)

    112,100      4,180

Adtran, Inc.

    1,200      28

Advanced Micro Devices, Inc. (Æ)(Û)

    75,300      449

Affiliated Computer Services, Inc. Class A (Æ)(Û)

    29,200      1,547

Amdocs, Ltd. (Æ)

    1,800      57

Analog Devices, Inc.

    119,180      3,839

Apple, Inc. (Æ)

    88,090      15,323

Applera Corp. - Applied Biosystems Group

    36,563      1,167

Arrow Electronics, Inc. (Æ)

    32,100      873

Autodesk, Inc. (Æ)(Û)

    85,700      3,257

Avnet, Inc. (Æ)

    191,494      5,015

Benchmark Electronics, Inc. (Æ)

    21,000      373

BMC Software, Inc. (Æ)

    15,200      528

Broadcom Corp. Class A (Æ)

    115,000      2,985

CA, Inc.

    11,124      246

CACI International, Inc. Class A (Æ)

    8,900      446

Cisco Systems, Inc. (Æ)(Û)

    161,834      4,149

Cognizant Technology Solutions Corp. Class A (Æ)

    19,400      626

Computer Sciences Corp. (Æ)(Ñ)

    96,953      4,226

Corning, Inc. (Û)

    13,200      353

Dell, Inc. (Æ)

    60,218      1,122

Electronic Data Systems Corp.

    160,200      2,973

EMC Corp. (Æ)

    77,833      1,199

First Solar, Inc. (Æ)

    5,400      1,577

Garmin, Ltd. (Ñ)(Û)

    26,671      1,091

General Dynamics Corp.

    4,730      428

Harris Corp.

    55,200      2,983

Hewlett-Packard Co. (Û)

    257,716      11,945

Ingram Micro, Inc. Class A (Æ)

    62,800      1,068

Intel Corp.

    40,612      904

International Business Machines Corp. (Û)

    100,410      12,120

Jabil Circuit, Inc.

    119,600      1,301

JDS Uniphase Corp. (Æ)

    37,300      534

Juniper Networks, Inc. (Æ)(Û)

    248,966      6,876
     Principal
Amount ($)
or Shares		      Market
Value
$

L-3 Communications Holdings, Inc. (Û)

    34,600      3,856

LSI Corp. (Æ)

    4,600      29

McAfee, Inc. (Æ)

    33,700      1,121

MEMC Electronic Materials, Inc. (Æ)

    8,122      511

Microsoft Corp. (Û)

    1,033,172      29,466

Motorola, Inc. (Û)

    364,300      3,628

National Instruments Corp.

    21,700      638

National Semiconductor Corp.

    7,632      156

Nvidia Corp.

    145,066      2,981

Oracle Corp. (Æ)(Û)

    1,040,700      21,699

Plexus Corp. (Æ)

    23,700      571

QLogic Corp. (Æ)

    6,800      109

Qualcomm, Inc.

    144,500      6,241

Rockwell Automation, Inc.

    50,159      2,720

SAIC, Inc. (Æ)

    64,500      1,226

Salesforce.com, Inc. (Æ)

    1,350      90

Sanmina-SCI Corp. (Æ)

    255,900      397

Sapient Corp. (Æ)

    21,400      152

Scansource, Inc. (Æ)

    2,500      62

Seagate Technology

    300,600      5,672

Seagate Technology, Inc. (Æ)

    57,274      —

Silicon Laboratories, Inc. (Æ)

    24,900      841

SRA International, Inc. Class A (Æ)

    9,300      244

Sun Microsystems, Inc. (Æ)(Û)

    211,550      3,313

Sybase, Inc. (Æ)

    950      28

Symantec Corp. (Æ)(Û)

    362,768      6,247

Synopsys, Inc. (Æ)

    64,438      1,489

Tellabs, Inc. (Æ)

    230,200      1,188

Teradata Corp. (Æ)

    4,800      102

Texas Instruments, Inc. (Û)

    709,076      20,677

Tyco Electronics, Ltd.

    30,634      1,146

Unisys Corp. (Æ)

    154,600      643

Vishay Intertechnology, Inc. (Æ)

    50,100      473

Western Digital Corp. (Æ)

    101,500      2,943
         
        216,828
         

Utilities - 6.0%

        

AES Corp. (The) (Æ)(Û)

    81,900      1,422

American Electric Power Co., Inc. (Û)

    34,000      1,517

AT&T, Inc. (Û)

    435,097      16,843

Centerpoint Energy, Inc. (Ñ)

    145,700      2,218

CenturyTel, Inc.

    46,640      1,514

Comcast Corp. Class A

    4,200      85

Constellation Energy Group, Inc.

    56,300      4,766

Dominion Resources, Inc.

    32,098      1,393

Duke Energy Corp.

    349,286      6,395

Edison International (Û)

    83,200      4,341

Embarq Corp.

    140,565      5,843

Energy East Corp.

    1,200      27

 

30   Equity Q Fund

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Entergy Corp.

    18,500      2,125

Exelon Corp.

    320      27

FirstEnergy Corp. (Û)

    73,353      5,548

FPL Group, Inc.

    430      29

Hawaiian Electric Industries, Inc.

    1,100      27

Mirant Corp. (Æ)(Ñ)

    117,350      4,824

NSTAR

    5,600      180

OGE Energy Corp.

    800      26

Oneok, Inc.

    6,721      323

PG&E Corp. (Ñ)

    34,600      1,384

Pinnacle West Capital Corp.

    36,400      1,235

Portland General Electric Co.

    13,800      331

PPL Corp.

    14,300      687

Public Service Enterprise Group, Inc. (Û)

    424,982      18,661

Sierra Pacific Resources

    74,500      1,016

Southern Union Co.

    9,100      233

Sprint Nextel Corp. (Û)

    708,109      5,658

TECO Energy, Inc.

    1,900      30

Telephone & Data Systems, Inc.

    13,700      525

Telephone & Data Systems, Inc. Class L (Ñ)

    42      2

UGI Corp.

    14,600      380

US Cellular Corp. (Æ)

    800      44

Vectren Corp.

    1,000      28

Verizon Communications, Inc.

    153,477      5,906
         
        95,593
         
Total Common Stocks        

(cost $1,624,686)

         1,733,567
         
Short-Term Investments - 3.6%        

Russell Investment Company Money Market Fund

    52,093,900      52,094

United States Treasury Bills (ç)(ž)(§) 0.560% due 06/19/08

    5,500      5,496
         
Total Short-Term Investments        

(cost $57,590)

         57,590
         
Other Securities – 3.8%        

Russell Investment Company Money Market Fund (×)

    13,111,930      13,112

State Street Securities Lending Quality Trust (×)

    47,189,345      47,189
         
Total Other Securities        

(cost $60,301)

         60,301
         
Total Investments - 115.6%        

(identified cost $1,742,577)

         1,851,458
         
     Principal
Amount ($)
or Shares		        Market
Value
$		  

Securities Sold Short - (11.9%)

        

Auto and Transportation - (0.3%)

 

     

AAR Corp. (Æ)

    (20,200 )      (473 )

Expeditors International of Washington, Inc.

    (63,100 )      (2,940 )

Gentex Corp.

    (43,600 )      (814 )
           
        (4,227 )
           

Consumer Discretionary - (2.4%)

 

     

Allied Waste Industries, Inc. (Æ)

    (86,300 )      (1,067 )

Amazon.Com, Inc. (Æ)

    (20,600 )      (1,620 )

American Greetings Corp. Class A

    (16,500 )      (295 )

Bed Bath & Beyond, Inc. (Æ)

    (55,000 )      (1,788 )

Cheesecake Factory (The) (Æ)

    (2,100 )      (48 )

Dick’s Sporting Goods, Inc. (Æ)

    (36,900 )      (1,055 )

DynCorp International, Inc. Class A (Æ)

    (15,000 )      (269 )

Electronic Arts, Inc. Series C (Æ)

    (94,200 )      (4,848 )

Geo Group, Inc. (The) (Æ)

    (4,500 )      (119 )

International Flavors & Fragrances, Inc.

    (20,600 )      (940 )

Lamar Advertising Co. Class A (Æ)

    (23,000 )      (909 )

Las Vegas Sands Corp. (Æ)

    (63,900 )      (4,870 )

Liberty Media Corp. - Capital Series A (Æ)

    (30,900 )      (475 )

Live Nation, Inc. (Æ)

    (34,100 )      (470 )

MGM Mirage (Æ)

    (63,500 )      (3,248 )

Nordstrom, Inc.

    (102,300 )      (3,607 )

Scientific Games Corp. Class A (Æ)

    (45,600 )      (1,284 )

Service Corp. International

    (129,700 )      (1,441 )

Target Corp.

    (7,200 )      (383 )

Toro Co.

    (14,200 )      (602 )

Urban Outfitters, Inc. (Æ)

    (37,600 )      (1,288 )

VeriSign, Inc. (Æ)

    (76,900 )      (2,772 )

Wynn Resorts, Ltd.

    (31,300 )      (3,297 )
           
        (36,695 )
           

Consumer Staples - (0.5%)

        

Brown-Forman Corp.

    (46,200 )      (3,143 )

Hershey Co. (The)

    (81,500 )      (3,046 )

Reynolds American, Inc.

    (14,300 )      (770 )

Universal Corp.

    (11,900 )      (764 )
           
        (7,723 )
           

Financial Services - (1.8%)

        

Citigroup, Inc.

    (151,600 )      (3,831 )

DST Systems, Inc. (Æ)

    (3,700 )      (221 )

Federal National Mortgage Association

    (113,800 )      (3,221 )

 

Equity Q Fund   31

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		        Market
Value
$		  
       

Fidelity National Financial, Inc. Class A

    (70,900 )      (1,134 )

First American Corp.

    (43,500 )      (1,427 )

Freddie Mac

    (111,400 )      (2,775 )

Loews Corp.

    (3,500 )      (147 )

Merrill Lynch & Co., Inc.

    (87,300 )      (4,350 )

New York Community Bancorp, Inc.

    (41,500 )      (775 )

Plum Creek Timber Co., Inc. (ö)

    (20,600 )      (841 )

PMI Group, Inc. (The)

    (110,400 )      (622 )

Raymond James Financial, Inc.

    (78,600 )      (2,261 )

SLM Corp. (Æ)

    (161,000 )      (2,983 )

Sotheby’s Class A

    (11,400 )      (316 )

Unitrin, Inc.

    (14,600 )      (554 )

Washington Mutual, Inc.

    (265,900 )      (3,268 )

Wright Express Corp. (Æ)(Û)

    (4,900 )      (162 )
           
        (28,888 )
           

Health Care - (1.8%)

        

Alexion Pharmaceuticals, Inc. (Æ)

    (10,100 )      (711 )

Alpharma, Inc. Class A (Æ)

    (8,100 )      (199 )

American Medical Systems Holdings, Inc. (Æ)

    (12,200 )      (172 )

Amylin Pharmaceuticals, Inc. (Æ)

    (26,300 )      (725 )

Auxilium Pharmaceuticals, Inc. (Æ)

    (28,200 )      (867 )

BioMarin Pharmaceutical, Inc. (Æ)

    (2,500 )      (91 )

Celgene Corp. (Æ)

    (59,100 )      (3,672 )

Cephalon, Inc. (Æ)

    (14,600 )      (911 )

Cepheid, Inc. (Æ)

    (24,900 )      (487 )

Cerner Corp. (Æ)

    (23,200 )      (1,073 )

Chattem, Inc. (Æ)

    (1,500 )      (105 )

Cooper Cos., Inc. (The)

    (50,900 )      (1,782 )

Coventry Health Care, Inc. (Æ)

    (30,600 )      (1,369 )

Genentech, Inc. (Æ)

    (12,300 )      (839 )

Human Genome Sciences, Inc. (Æ)

    (82,400 )      (540 )

Humana, Inc. (Æ)

    (40,400 )      (1,931 )

ImClone Systems, Inc. (Æ)

    (14,600 )      (681 )

Incyte Corp. (Æ)

    (26,900 )      (292 )

Medarex, Inc. (Æ)

    (57,600 )      (413 )

Millipore Corp. (Æ)

    (25,700 )      (1,802 )

Myriad Genetics, Inc. (Æ)

    (25,100 )      (1,043 )

Onyx Pharmaceuticals, Inc. (Æ)

    (7,900 )      (278 )

Quest Diagnostics, Inc.

    (62,400 )      (3,131 )

Savient Pharmaceuticals, Inc. (Æ)

    (49,500 )      (1,081 )

Stryker Corp.

    (24,400 )      (1,582 )

Sunrise Senior Living, Inc. (Æ)

    (38,400 )      (824 )

United Therapeutics Corp. (Æ)

    (9,800 )      (828 )

Vertex Pharmaceuticals, Inc. (Æ)

    (47,000 )      (1,199 )

XenoPort, Inc. (Æ)

    (3,900 )      (167 )
           
        (28,795 )
           
     Principal
Amount ($)
or Shares		        Market
Value
$		  

Materials and Processing - (0.8%)

 

     

Compass Minerals International, Inc.

    (16,600 )      (1,046 )

Hecla Mining Co. (Æ)

    (28,400 )      (291 )

Jacobs Engineering Group, Inc. (Æ)

    (37,000 )      (3,194 )

Mosaic Co. (The) (Æ)

    (28,000 )      (3,430 )

Quanta Services, Inc. (Æ)

    (45,200 )      (1,200 )

Rohm & Haas Co.

    (12,200 )      (652 )

RTI International Metals, Inc. (Æ)

    (18,400 )      (758 )

Sigma-Aldrich Corp.

    (52,600 )      (2,999 )
           
        (13,570 )
           

Miscellaneous - (0.3%)

        

Fortune Brands, Inc.

    (43,600 )      (2,948 )

Foster Wheeler, Ltd. (Æ)

    (26,000 )      (1,656 )
           
        (4,604 )
           

Other Energy - (1.9%)

        

Arch Coal, Inc.

    (19,900 )      (1,141 )

Chesapeake Energy Corp.

    (13,500 )      (698 )

Diamond Offshore Drilling, Inc.

    (11,400 )      (1,430 )

EOG Resources, Inc.

    (19,800 )      (2,584 )

Equitable Resources, Inc.

    (75,400 )      (5,004 )

Halliburton Co.

    (1,700 )      (78 )

NRG Energy, Inc. (Æ)

    (23,700 )      (1,042 )

Parallel Petroleum Corp. (Æ)

    (27,800 )      (589 )

Peabody Energy Corp.

    (65,200 )      (3,986 )

Range Resources Corp.

    (66,200 )      (4,394 )

Schlumberger, Ltd.

    (41,900 )      (4,213 )

Smith International, Inc.

    (15,900 )      (1,217 )

Southwestern Energy Co. (Æ)

    (34,800 )      (1,472 )

XTO Energy, Inc.

    (52,900 )      (3,272 )
           
        (31,120 )
           

Producer Durables - (0.7%)

        

American Tower Corp. Class A (Æ)

    (29,300 )      (1,272 )

Briggs & Stratton Corp.

    (6,500 )      (99 )

Danaher Corp.

    (42,200 )      (3,291 )

Dionex Corp. (Æ)

    (15,700 )      (1,228 )

ESCO Technologies, Inc. (Æ)

    (2,900 )      (135 )

InterDigital, Inc. (Æ)

    (32,500 )      (659 )

Lindsay Corp.

    (6,400 )      (666 )

Pitney Bowes, Inc.

    (42,500 )      (1,535 )

SBA Communications Corp. Class A (Æ)

    (29,000 )      (938 )

Waters Corp. (Æ)

    (32,600 )      (2,004 )
           
        (11,827 )
           

 

32   Equity Q Fund

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		        Market
Value
$		  
       

Technology - (0.7%)

        

ACI Worldwide, Inc. (Æ)

    (14,900 )      (329 )

Akamai Technologies, Inc. (Æ)

    (37,800 )      (1,352 )

Cognizant Technology Solutions Corp. Class A (Æ)

    (52,300 )      (1,687 )

Compuware Corp. (Æ)

    (94,400 )      (712 )

Concur Technologies, Inc. (Æ)

    (7,300 )      (242 )

First Solar, Inc. (Æ)

    (6,400 )      (1,869 )

Lawson Software, Inc. (Æ)

    (6,200 )      (50 )

Microsemi Corp. (Æ)

    (29,600 )      (725 )

Omniture, Inc. (Æ)

    (22,900 )      (523 )

QUALCOMM, Inc.

    (9,400 )      (406 )

Salesforce.com, Inc. (Æ)

    (49,200 )      (3,283 )
           
        (11,178 )
           

Utilities - (0.7%)

        

Cablevision Systems Corp. Class A (Æ)

    (98,300 )      (2,261 )

Consolidated Edison, Inc.

    (45,000 )      (1,872 )

DPL, Inc.

    (65,400 )      (1,820 )

Mirant Corp. (Æ)

    (15,900 )      (654 )

NII Holdings, Inc. (Æ)

    (52,100 )      (2,383 )

Southern Co.

    (49,800 )      (1,854 )

Vectren Corp.

    (29,000 )      (820 )
           
        (11,664 )
           
Total Securities Sold Short        

(proceeds $187,261)

         (190,291 )
           
Other Assets and Liabilities,
Net - (3.7%)		         (59,685 )
           
Net Assets - 100.0%         1,601,482  
           

 


 

See accompanying notes which are an integral part of the financial statements.

 

Equity Q Fund   33

Table of Contents

Russell Investment Company

Equity Q Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts

(Number of Contracts)

  Notional
Amount		   Unrealized
Appreciation
(Depreciation)
$
     
     
Long Positions      
Russell 1000 Index
expiration date 06/08 (20)		   USD   7,566   459
Russell 1000 Mini Index
expiration date 06/08 (10)		   USD   757   31
S&P 500 E-Mini Index (CME)
expiration date 06/08 (179)		   USD     12,405   587
S&P 500 Index (CME)
expiration date 06/08 (48)		   USD   16,632   522
S&P Midcap 400 E-Mini Index (CME)
expiration date 06/08 (240)		   USD   20,162   1,432
       
Total Unrealized Appreciation
(Depreciation) on Open Futures
Contracts		       3,031
       

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories      % of Net
Assets		  
    

Auto and Transportation

      2.0  

Consumer Discretionary

      15.8  

Consumer Staples

      7.3  

Financial Services

      19.0  

Health Care

      12.9  

Integrated Oils

      8.3  

Materials and Processing

      6.6  

Miscellaneous

      2.8  

Other Energy

      6.8  

Producer Durables

      7.2  

Technology

      13.5  

Utilities

      6.0  

Short-Term Investments

      3.6  

Other Securities

      3.8  
        

Total Investments

      115.6  

Securities Sold Short

      (11.9 )

Other Assets and Liabilities, Net

      (3.7 )
        
     100.0  
        

Futures Contracts

      0.2  

 

See accompanying notes which are an integral part of the financial statements.

 

34   Equity Q Fund

Table of Contents

Russell Investment Company

International Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 890.60    $ 1,019.10

Expenses Paid During Period*

    $ 5.45    $ 5.82

 

* Expenses are equal to the Fund’s annualized expense ratio of 1.16% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 891.40    $ 1,020.34

Expenses Paid During Period*

    $ 4.28    $ 4.57

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.91% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class Y

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 891.90    $ 1,020.54

Expenses Paid During Period*

    $ 4.09    $ 4.37

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.87% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

International Fund   35

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Common Stocks - 91.4%

     

Australia - 3.5%

        

Adelaide Brighton, Ltd. (Ñ)

    10,435      34

AGL Energy, Ltd. (Ñ)

    6,856      81

Amcor, Ltd.

    485,408      3,084

AMP, Ltd.

    139,809      1,028

Ansell, Ltd. - GDR

    44,753      486

Asciano Group (Ñ)

    3,116      12

ASX, Ltd. (Ñ)

    2,508      84

Austereo Group, Ltd.

    1,319      2

Australand Property Group (ö)(Ñ)

    13,884      22

Australia & New Zealand Banking Group, Ltd.

    23,888      491

AXA Asia Pacific Holdings, Ltd.

    25,715      143

Babcock & Brown, Ltd. (Ñ)

    1,196      16

BHP Billiton, Ltd. (Ñ)

    71,304      2,872

BlueScope Steel, Ltd.

    46,768      486

Boart Longyear Group

    6,741      12

Caltex Australia, Ltd.

    13,427      152

CFS Retail Property Trust (ö)(Ñ)

    14,161      30

Challenger Financial Services Group, Ltd. (Ñ)

    148,532      289

Coca-Cola Amatil, Ltd.

    544      4

Commonwealth Bank of Australia

    21,406      901

Consolidated Media Holdings, Ltd.

    28,477      97

Crown, Ltd.

    4,572      47

CSL, Ltd.

    329,598      12,333

CSR, Ltd.

    2,020      6

David Jones, Ltd. (Ñ)

    19,286      63

DB RREEF Trust (ö)

    65,896      109

Fortescue Metals Group, Ltd. (Æ)

    16,273      113

Foster’s Group, Ltd.

    1,099,869      5,263

Futuris Corp., Ltd.

    13,391      27

Goodman Fielder, Ltd. (Ñ)

    64,388      108

Goodman Group (ö)(Ñ)

    17,546      74

GPT Group (ö)

    34,415      109

Harvey Norman Holdings, Ltd.

    33,839      115

Incitec Pivot, Ltd.

    14,968      2,297

ING Industrial Fund (ö)(Ñ)

    3,078      6

Leighton Holdings, Ltd. - ADR (Ñ)

    3,782      167

Lend Lease Corp., Ltd.

    8,919      104

Lion Nathan, Ltd.

    14,728      116

Macquarie Airports

    419,656      1,237

Macquarie Group, Ltd. (Ñ)

    34,900      2,071

Macquarie Infrastructure Group (Ñ)

    44,396      118

Macquarie Office Trust (ö)(Ñ)

    24,364      24

Minara Resources, Ltd.

    9,416      51

Mirvac Group (ö)

    18,765      74

National Australia Bank, Ltd.

    320,684      9,082
     Principal
Amount ($)
or Shares		      Market
Value
$

Newcrest Mining, Ltd.

    13,929      379

Orica, Ltd.

    5,141      141

Origin Energy, Ltd.

    823      11

Pacific Brands, Ltd.

    73,984      138

PaperlinX, Ltd. (Ñ)

    58,662      140

Qantas Airways, Ltd.

    156,068      499

QBE Insurance Group, Ltd.

    40,434      963

Rio Tinto, Ltd. (Ñ)

    39,930      5,125

Santos, Ltd.

    34,512      519

Sons of Gwalia, Ltd. (Æ)(Ñ)(ß)

    22,400      —

SP AusNet

    16,843      20

Stockland (ö)

    27,400      186

Suncorp-Metway, Ltd.

    47,063      603

TABCORP Holdings, Ltd. (Ñ)

    1,745      19

Telstra Corp., Ltd.

    14,465      40

Telstra Corp., Ltd. (Ñ)

    1,937,481      8,314

Toll Holdings, Ltd.

    14,977      112

Wesfarmers, Ltd. (Ñ)

    84,361      2,961

Wesfarmers, Ltd.

    2,345      84

Westfield Group (ö)(Ñ)

    33,009      565

Westpac Banking Corp.

    25,656      590

Woodside Petroleum, Ltd.

    7,697      407

Woolworths, Ltd.

    28,798      777

Zinifex, Ltd.

    125,653      1,191
         
        67,824
         

Austria - 0.4%

        

Erste Bank der Oesterreichischen Sparkassen AG (Ñ)

    58,236      4,336

Raiffeisen International Bank Holding AG

    8,710      1,415

Voestalpine AG

    29,400      2,260
         
        8,011
         

Belgium - 1.0%

        

Colruyt SA

    697      176

D’ieteren SA

    128      40

Delhaize Group

    3,227      279

Fortis (Æ)

    88,920      1

Fortis (Ñ)

    413,706      11,235

Hansen Transmissions International NV (Æ)

    393,936      1,718

InBev NV (Ñ)

    19,591      1,614

KBC Groep NV (Ñ)

    7,131      962

Nationale A Portefeuille (Æ)(Ñ)

    836      66

Solvay SA (Ñ)

    19,434      2,863

Umicore

    3,472      186
         
        19,140
         

 

36   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Bermuda - 1.0%

        

Aquarius Platinum, Ltd.

    124,813      1,975

Benfield Group, Ltd. (Ñ)

    413,235      2,167

Bunge, Ltd. (Ñ)

    30,600      3,491

Catlin Group, Ltd.

    27,290      211

China Grand Forestry Resources Group, Ltd. (Æ)

    108,553      13

Credicorp, Ltd.

    15,000      1,205

Esprit Holdings, Ltd.

    175,161      2,159

Giordano International, Ltd.

    61,579      27

Jardine Matheson Holdings, Ltd.

    85,987      2,647

Li & Fung, Ltd.

    372,200      1,531

Midland Holdings, Ltd.

    47,333      49

Noble Group, Ltd.

    20,000      33

Orient Overseas International, Ltd.

    14,400      79

Seadrill, Ltd. (Ñ)

    86,000      2,601

Shangri-La Asia, Ltd.

    616,000      1,702

Vostok Gas, Ltd.

    2,090      166

VTech Holdings, Ltd.

    18,975      104
         
        20,160
         

Brazil - 1.4%

        

All America Latina Logistica SA (Æ)

    75,706      988

Banco do Brasil SA

    43,800      761

Bovespa Holding SA - ADR

    342,100      5,125

Cia Vale do Rio Doce - ADR (Æ)

    73,200      2,861

Gafisa SA

    88,878      1,951

Gerdau SA - ADR (Ñ)

    30,800      1,193

Petroleo Brasileiro SA - ADR

    80,043      9,719

Redecard SA

    39,200      764

Unibanco - Uniao de Bancos Brasileiros SA - GDR (Æ)(Ñ)

    26,983      3,924
         
        27,286
         

Canada - 3.0%

        

Agrium, Inc. (Ñ)

    52,600      4,136

Barrick Gold Corp.

    34,700      1,340

Bombardier, Inc. (Æ)

    68,889      451

Cameco Corp.

    35,500      1,242

Canadian Imperial Bank of Commerce (Ñ)

    20,800      1,532

Canadian National Railway Co.

    41,720      2,186

Canadian Natural Resources, Ltd.

    51,900      4,409

EnCana Corp.

    71,000      5,728

Fairfax Financial Holdings, Ltd.

    800      242

Gammon Gold, Inc. (Ñ)

    105,111      803

Gerdau Ameristeel Corp. (Ñ)

    56,700      884

HudBay Minerals, Inc. (Æ)

    35,500      670
     Principal
Amount ($)
or Shares		      Market
Value
$

Inmet Mining Corp. (Ñ)

    6,800      558

Methanex Corp. (Ñ)

    37,897      884

Petro-Canada

    38,300      1,919

Potash Corp. of Saskatchewan

    61,606      11,334

Precision Drilling Trust

    74,400      1,862

Research In Motion, Ltd. (Æ)

    90,416      10,997

Rogers Communications, Inc. Class B (Ñ)

    124,699      5,548

Teck Cominco, Ltd. Class B (Ñ)

    32,568      1,417

Teck Cominco, Ltd. Class B

    16,400      716
         
        58,858
         

Cayman Islands - 0.4%

        

Hidili Industry International Development, Ltd. (Æ)

    687,000      1,050

Hutchison Telecommunications International, Ltd.

    21,630      30

Kingboard Chemical Holdings, Ltd.

    27,500      131

LDK Solar Co., Ltd. - ADR (Æ)(Ñ)

    54,200      1,720

Melco PBL Entertainment Macau, Ltd. - ADR (Æ)(Ñ)

    53,500      706

Tencent Holdings, Ltd. (Ñ)

    5,800      39

Transocean, Inc. (Æ)(Ñ)

    27,300      4,026
         
        7,702
         

China - 0.3%

        

China Communications Construction Co., Ltd. Class H (Ñ)

    325,000      774

China Merchants Bank Co., Ltd. (Ñ)

    1,063,000      4,447

China Petroleum & Chemical Corp. Class H

    1,250,000      1,342
         
        6,563
         

Cyprus - 0.1%

        

Bank of Cyprus Public Co., Ltd.

    103,400      1,428
         

Czech Republic - 0.1%

        

Komercni Banka AS

    5,745      1,411
         

Denmark - 0.8%

        

Carlsberg A/S Class B (Ñ)

    3,150      420

East Asiatic Co., Ltd. A/S

    1,300      116

FLSmidth & Co. A/S (Ñ)

    5,800      612

Novo Nordisk A/S Class B

    57,475      3,953

Vestas Wind Systems A/S (Æ)

    102,481      11,206
         
        16,307
         

 

International Fund   37

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Egypt - 0.3%

        

Orascom Construction Industries - GDR

    8,187      1,318

Orascom Telecom Holding SAE - GDR

    48,500      3,619
         
        4,937
         

Finland - 1.2%

        

Fortum OYJ

    59,810      2,529

Kesko OYJ Class B (Æ)(Ñ)

    4,997      189

Nokia OYJ

    498,079      14,993

OKO Bank PLC Class A (Ñ)

    4,006      80

Orion OYJ Class B

    4,736      100

Outotec OYJ

    11,817      740

Stora Enso OYJ Class R (Ñ)

    110,500      1,369

UPM-Kymmene OYJ

    159,081      3,058
         
        23,058
         

France - 10.8%

        

Accor SA (Ñ)

    24,356      2,009

Air France-KLM

    14,800      460

Air Liquide (Ñ)

    25,627      3,843

Alcatel-Lucent - ADR (Ñ)

    277,500      1,851

Alstom

    48,377      11,215

Arkema (Æ)

    17,055      985

AXA SA (Ñ)

    274,871      10,189

BNP Paribas

    102,176      11,008

Bouygues (Ñ)

    605      45

Carrefour SA (Ñ)

    150,256      10,538

Casino Guichard Perrachon SA

    888      112

Christian Dior SA

    4,576      526

Cie de Saint-Gobain

    61,673      4,963

Cie Generale de Geophysique-Veritas (Æ)(Ñ)

    11,387      2,863

CNP Assurances (Æ)(Ñ)

    6,154      729

Compagnie Generale des Etablissements Michelin Class B

    16,200      1,473

Credit Agricole SA (Ñ)

    107,912      3,633

Electricite de France (Ñ)

    8,275      863

Eramet

    308      274

France Telecom SA (Ñ)

    215,178      6,758

Gaz de France SA (Ñ)

    116,374      7,678

Groupe Danone (Ñ)

    19,542      1,731

JC Decaux SA (Ñ)

    73,426      2,105

L’Oreal SA (Ñ)

    24,115      2,862

Lafarge SA

    1,276      230

Lagardere SCA (Ñ)

    26,200      1,885

Legrand SA

    89,950      2,690
     Principal
Amount ($)
or Shares		      Market
Value
$

LVMH Moet Hennessy Louis Vuitton SA (Ñ)

    75,894      8,672

Neuf Cegetel (Ñ)

    4,598      257

NicOx SA (Ñ)

    2,904      68

Pernod-Ricard SA (Ñ)

    30,172      3,479

PPR (Ñ)

    13,621      1,780

Rallye SA

    1,227      93

Renault SA (Ñ)

    84,414      8,671

Sanofi-Aventis SA (Ñ)

    90,648      6,982

Schneider Electric SA (Ñ)

    49,517      6,057

SEB SA

    785      143

Societe BIC SA (Ñ)

    2,211      113

Societe Generale (Ñ)

    107,230      12,507

Societe Generale (Æ)(Ñ)

    15,068      1,718

Societe Television Francaise 1 (Ñ)

    15,488      327

Suez SA

    27,332      —

Suez SA (Ñ)

    105,505      7,435

Teleperformance - GDR

    1,748      72

Thales SA (Ñ)

    18,971      1,242

Total SA

    408,148      34,292

Total SA - ADR

    20,100      1,688

UBISOFT Entertainment (Æ)

    7,166      716

Unibail-Rodamco (ö)

    356      92

Vallourec

    10,255      2,797

Veolia Environnement (Ñ)

    114,737      8,274

Vivendi (Ñ)

    240,971      9,787
         
        210,780
         

Germany - 7.4%

        

Allianz SE (Ñ)

    63,060      12,826

Altana AG (Ñ)

    11,509      239

Arcandor AG (Æ)(Ñ)

    270,356      5,064

Arques Industries AG

    9,004      120

BASF SE (Æ)(Ñ)

    62,862      8,967

Bayer AG (Æ)(Ñ)

    62,485      5,327

Bayerische Motoren Werke AG (Ñ)

    41,970      2,302

Beiersdorf AG (Ñ)

    5,646      481

Commerzbank AG (Ñ)

    105,051      3,797

Continental AG (Ñ)

    55,327      6,493

Daimler AG (Ñ)

    55,986      4,343

Deutsche Bank AG (Ñ)

    36,755      4,401

Deutsche Boerse AG (Ñ)

    28,450      4,161

Deutsche Lufthansa AG (Ñ)

    112,300      2,948

Deutsche Telekom AG (Ñ)

    578,094      10,381

E.ON AG (Ñ)

    73,685      14,986

Epcos AG

    11,372      174

Freenet AG

    15,191      256

GEA Group AG (Æ)

    44,467      1,642

 

38   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Gildemeister AG

    5,563      163

Infineon Technologies AG (Æ)

    214,800      2,005

K+S AG

    11,760      4,922

Krones AG

    1,007      86

KUKA AG (Ñ)

    6,767      249

Lanxess AG

    28,605      1,112

Linde AG (Ñ)

    40,000      5,862

MAN AG (Ñ)

    1,820      253

Merck KGAA (Ñ)

    43,333      6,162

Metro AG (Ñ)

    52,929      4,188

Muenchener Rueckversicherungs AG (Ñ)

    23,229      4,492

RWE AG (Ñ)

    112,533      12,944

Salzgitter AG

    6,424      1,312

Siemens AG

    25,987      3,064

Solarworld AG

    33,806      1,812

Stada Arzneimittel AG

    5,945      403

Suedzucker AG (Ñ)

    32,897      749

Symrise AG

    61,606      1,530

ThyssenKrupp AG

    2,619      163

Tognum AG (Æ)

    9,384      270

United Internet AG (Ñ)

    58,490      1,250

Volkswagen AG (Ñ)

    3,263      963

Vossloh AG

    2,436      353

Wacker Chemie AG (Ñ)

    4,352      1,072

Wincor Nixdorf AG

    549      42
         
        144,329
         

Greece - 0.3%

        

Coca Cola Hellenic Bottling Co. SA

    29,716      1,337

National Bank of Greece SA

    76,336      4,232
         
        5,569
         

Hong Kong - 1.6%

        

Bank of East Asia, Ltd.

    7,400      42

BOC Hong Kong Holdings, Ltd.

    124,000      321

Cheung Kong Holdings, Ltd.

    113,900      1,782

China Merchants Holdings International Co., Ltd.

    167,800      856

China Mobile, Ltd.

    581,500      10,034

China Netcom Group Corp. Hong Kong, Ltd.

    244,000      737

CLP Holdings, Ltd. (Ñ)

    8,500      67

CNOOC, Ltd.

    1,440,450      2,555

Fosun International (Æ)

    37,000      30

Hang Lung Group, Ltd.

    40,625      219

Hang Lung Properties, Ltd. - ADR

    22,116      90

Hang Seng Bank, Ltd. (Ñ)

    8,300      167
     Principal
Amount ($)
or Shares		      Market
Value
$

Henderson Land Development Co., Ltd.

    18,000      138

Hong Kong & China Gas Co.

    55,173      161

Hong Kong Exchanges and Clearing, Ltd. (Ñ)

    44,677      914

HongKong Electric Holdings

    547,500      3,447

Hopewell Holdings

    46,000      201

Hutchison Whampoa, Ltd.

    32,000      313

Hysan Development Co., Ltd.

    24,000      70

Industrial and Commercial Bank of China Asia, Ltd.

    28,857      78

Link REIT (The) (ö)(Ñ)

    32,000      77

Minmetals Resources, Ltd.

    80,000      31

MTR Corp. (Ñ)

    21,000      75

New World Development, Ltd.

    1,021,000      2,638

PCCW, Ltd.

    31,000      20

Sun Hung Kai Properties, Ltd.

    71,000      1,236

Swire Pacific, Ltd.

    21,821      255

Television Broadcasts, Ltd.

    14,667      84

Wharf Holdings, Ltd.

    795,353      4,012

Wheelock & Co., Ltd.

    68,000      213

Wing Hang Bank, Ltd.

    3,500      47

Wing Lung Bank, Ltd.

    2,318      42
         
        30,952
         

India - 0.3%

        

ICICI Bank, Ltd. - ADR

    64,772      2,889

Infosys Technologies, Ltd.

    33,400      1,443

Satyam Computer Services, Ltd.

    40,470      481

Satyam Computer Services, Ltd. - ADR (Ñ)

    20,250      520

Sterlite Industries India, Ltd. - ADR (Æ)(Ñ)

    26,700      555
         
        5,888
         

Indonesia - 0.1%

        

Bumi Resources Tbk PT

    3,366,100      2,416
         

Ireland - 0.3%

        

Anglo Irish Bank Corp. PLC (Ñ)

    70,405      959

Dragon Oil PLC

    98,728      974

Elan Corp. PLC - ADR (Æ)(Ñ)

    80,900      2,127

Ryanair Holdings PLC - ADR (Æ)(Ñ)

    73,097      1,982
         
        6,042
         

Israel - 0.5%

        

Check Point Software Technologies (Æ)

    75,800      1,790

 

International Fund   39

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Teva Pharmaceutical Industries, Ltd. - ADR

    185,632      8,684
         
        10,474
         

Italy - 3.1%

        

A2A SpA

    37,441      138

Alleanza Assicurazioni SpA

    211,124      2,759

Ansaldo STS SpA

    151,493      2,351

Arnoldo Mondadori Editore SpA (Ñ)

    238,394      2,073

Assicurazioni Generali SpA

    8,234      365

Buzzi Unicem SpA

    23,096      588

Danieli & Co. SpA

    2,076      49

Enel SpA

    307,311      3,338

ENI SpA

    381,808      14,720

Fiat SpA (Ñ)

    23,222      517

Finmeccanica SpA

    4,607      160

Fondiaria-Sai SpA (Ñ)

    47,937      1,924

Impregilo SpA (Æ)(Ñ)

    80,475      486

Indesit Co. SpA

    13,616      164

Intesa Sanpaolo SpA (Ñ)

    1,442,569      10,791

Mediaset SpA

    453,377      4,122

Milano Assicurazioni SPA (Ñ)

    55,459      359

Parmalat Finanziaria SpA (Ñ)(ß)

    46,200      —

Prysmian SpA

    16,294      386

Telecom Italia SpA

    1,984,179      3,256

Terna Rete Elettrica Nazionale SpA (Ñ)

    36,769      162

UniCredit SpA (Ñ)

    1,544,271      11,653

Unione di Banche Italiane SCPA

    2,679      71
         
        60,432
         

Japan - 15.7%

        

77 Bank, Ltd. (The)

    41,000      245

Aeon Credit Service Co., Ltd. (Ñ)

    83,000      1,335

Alfresa Holdings Corp. (Ñ)

    3,100      218

Alpine Electronics, Inc.

    12,300      141

Alps Electric Co., Ltd.

    32,900      308

Amada Co., Ltd.

    9,000      75

Aoyama Trading Co., Ltd.

    4,400      100

Asahi Kasei Corp. (Ñ)

    85,000      484

Astellas Pharma, Inc.

    112,400      4,617

Autobacs Seven Co., Ltd. (Ñ)

    2,500      65

Bank of Yokohama, Ltd. (The)

    192,834      1,405

Bosch Corp. (Ñ)

    73,000      422

Bridgestone Corp.

    83,900      1,546

Brother Industries, Ltd. (Ñ)

    11,500      149

Calsonic Kansei Corp.

    19,000      82

Canon Marketing Japan, Inc. (Ñ)

    5,900      116
     Principal
Amount ($)
or Shares		      Market
Value
$

Canon, Inc.

    423,450      21,203

Capcom Co., Ltd. - GDR (Ñ)

    3,300      100

Central Glass Co., Ltd.

    40,000      152

Chuo Mitsui Trust Holdings, Inc.

    42,000      297

Circle K Sunkus Co., Ltd. (Ñ)

    4,700      71

COMSYS Holdings Corp.

    69,000      625

Dai Nippon Printing Co., Ltd.

    16,000      246

Daiichi Sankyo Co., Ltd.

    1,400      39

Daikin Industries, Ltd. (Ñ)

    38,800      1,948

Daishi Bank, Ltd. (The)

    30,000      129

Daiwa Securities Group, Inc.

    258,910      2,592

Denki Kagaku Kogyo K K

    110,000      409

Duskin Co., Ltd.

    4,400      75

Eisai Co., Ltd.

    3,800      135

Exedy Corp.

    5,400      150

Ezaki Glico Co., Ltd. (Ñ)

    3,000      33

FamilyMart Co., Ltd.

    19,200      672

Fanuc, Ltd.

    27,800      2,944

FCC Co., Ltd.

    3,400      46

Fuji Fire & Marine Insurance Co., Ltd. (The)

    58,000      189

Fuji Television Network, Inc.

    1,250      2,051

FUJIFILM Holdings Corp.

    11,400      440

Fujitsu, Ltd.

    470,000      3,024

Funai Electric Co., Ltd.

    4,900      184

Glory, Ltd.

    11,000      249

H2O Retailing Corp. (Ñ)

    34,000      247

Hachijuni Bank, Ltd. (The)

    40,000      265

Haseko Corp.

    66,000      96

Heiwado Co., Ltd. (Ñ)

    2,300      37

Higo Bank, Ltd. (The)

    20,000      126

Hino Motors, Ltd.

    58,000      367

Hirose Electric Co., Ltd. (Ñ)

    14,400      1,715

Hitachi Construction Machinery Co., Ltd.

    32,627      1,021

Hitachi Kokusai Electric, Inc. (Ñ)

    25,000      238

Hitachi, Ltd.

    221,000      1,502

Hokkaido Electric Power Co., Inc.

    7,400      155

Hokkoku Bank, Ltd. (The)

    7,000      30

Honda Motor Co., Ltd.

    93,100      2,966

Hosiden Corp. (Ñ)

    35,200      710

Hoya Corp. (Ñ)

    107,600      2,994

Hyakujushi Bank, Ltd. (The)

    9,000      54

Inpex Holdings, Inc.

    496      5,531

Isetan Mitsukoshi Holdings, Ltd. (Æ)(Ñ)

    4,500      47

Itochu Corp.

    64,000      674

Itoham Foods, Inc. (Ñ)

    13,000      74

Iyo Bank, Ltd. (The)

    16,000      183

 

40   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Japan Aviation Electronics Industry, Ltd.

    13,000      112

Japan Tobacco, Inc.

    526      2,552

JFE Holdings, Inc.

    94,000      5,126

JFE Shoji Holdings, Inc.

    65,000      501

JGC Corp.

    36,000      672

Joyo Bank, Ltd. (The) (Ñ)

    589,930      3,379

JTEKT Corp.

    13,300      237

Juki Corp.

    34,000      127

Kagoshima Bank, Ltd. (The)

    33,000      264

Kansai Electric Power Co., Inc. (The)

    2,100      50

Kanto Auto Works, Ltd.

    2,900      39

Kao Corp.

    517,300      14,012

Kawasaki Kisen Kaisha, Ltd. (Ñ)

    13,000      131

Kayaba Industry Co., Ltd.

    28,000      133

KDDI Corp.

    520      3,348

Keihin Corp. (Ñ)

    17,400      270

Keiyo Bank, Ltd. (The)

    47,000      333

Keyence Corp. (Æ)

    4,559      1,167

Kintetsu World Express, Inc. (Ñ)

    5,900      146

Kobe Steel, Ltd.

    144,000      434

Komatsu, Ltd. (Ñ)

    171,600      5,245

Komori Corp.

    4,900      97

Kose Corp.

    135,410      2,944

Kureha Corp.

    12,000      75

Kyocera Corp. (Ñ)

    2,800      257

Kyoei Steel, Ltd. (Ñ)

    2,100      47

Kyowa Hakko Kogyo Co., Ltd.

    5,553      50

Kyushu Electric Power Co., Inc.

    59,400      1,351

Lawson, Inc. (Ñ)

    8,900      384

Leopalace21 Corp. (Ñ)

    4,600      82

Makino Milling Machine Co., Ltd.

    9,000      66

Makita Corp.

    4,500      154

Marubeni Corp.

    436,000      3,453

Matsushita Electric Industrial Co., Ltd. (Ñ)

    40,000      938

Matsushita Electric Works, Ltd. (Ñ)

    74,000      820

Mazda Motor Corp. (Ñ)

    35,000      153

Meiji Dairies Corp. (Ñ)

    46,000      283

MID Reit, Inc. Class A (ö)(Ñ)

    397      1,439

Millea Holdings, Inc.

    144,800      6,110

Mitsubishi Chemical Holdings Corp.

    208,500      1,392

Mitsubishi Corp.

    234,300      7,582

Mitsubishi Electric Corp.

    28,000      288

Mitsubishi Estate Co., Ltd. (Ñ)

    17,000      490

Mitsubishi Materials Corp.

    43,000      203

Mitsubishi UFJ Financial Group, Inc.

    662,000      7,279

Mitsui & Co., Ltd.

    268,000      6,246

Mitsui Chemicals, Inc.

    285,000      1,747
     Principal
Amount ($)
or Shares		      Market
Value
$

Mitsui Engineering & Shipbuilding Co., Ltd. (Ñ)

    16,000      52

Mitsui Fudosan Co., Ltd.

    96,000      2,399

Mitsui Mining & Smelting Co., Ltd.

    99,000      337

Mitsui OSK Lines, Ltd.

    253,000      3,458

Mitsui Sumitomo Insurance Group Holdings, Inc. (Æ)

    113,967      4,537

Mitsui-Soko Co., Ltd. (Ñ)

    259,750      1,306

Mizuho Financial Group, Inc. (Ñ)

    873      4,538

Musashino Bank, Ltd. (The)

    4,500      196

Namco Bandai Holdings, Inc.

    81,900      1,020

NEC Corp. (Ñ)

    94,000      449

NEC Electronics Corp. (Æ)(Ñ)

    8,300      170

New City Residence Investment Corp. Class A (ö)

    212      530

Nichirei Corp.

    69,000      327

Nifco, Inc.

    2,500      54

Nintendo Co., Ltd.

    21,100      11,694

Nippon Commercial Investment Corp. (ö)

    427      1,709

Nippon Electric Glass Co., Ltd.

    79,200      1,224

Nippon Express Co., Ltd.

    132,000      732

Nippon Kayaku Co., Ltd.

    35,000      244

Nippon Konpo Unyu Soko Co., Ltd.

    10,000      137

Nippon Mining Holdings, Inc.

    197,000      1,226

Nippon Oil Corp.

    107,000      738

Nippon Residential Investment Corp. Class A (ö)

    261      842

Nippon Seiki Co., Ltd.

    4,000      58

Nippon Sheet Glass Co., Ltd. (Ñ)

    18,000      83

Nippon Steel Corp. (Ñ)

    500,000      2,827

Nippon Telegraph & Telephone Corp.

    686      2,966

Nippon Yusen KK

    56,000      547

Nipponkoa Insurance Co., Ltd. (Ñ)

    543,000      5,319

Nishi-Nippon City Bank, Ltd. (The)

    31,000      95

Nissan Chemical Industries, Ltd.

    12,000      159

Nissan Motor Co., Ltd.

    407,900      3,652

Nissan Shatai Co., Ltd.

    29,000      216

Nisshin Steel Co., Ltd.

    27,000      101

Nisshinbo Industries, Inc.

    6,000      66

Nissin Kogyo Co., Ltd. (Ñ)

    10,100      172

Nitto Denko Corp.

    64,500      2,659

Nomura Holdings, Inc. (Ñ)

    531,360      9,252

NTN Corp. (Ñ)

    24,000      185

Okinawa Electric Power Co., Inc. (The)

    900      39

Omron Corp.

    66,500      1,388

Onward Holdings Co., Ltd. (Ñ)

    19,000      216

ORIX Corp.

    14,690      2,669

QP Corp. (Ñ)

    16,400      165

 

International Fund   41

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Resona Holdings, Inc. (Ñ)

    104      202

Ricoh Co., Ltd.

    179,000      3,109

Rohm Co., Ltd.

    5,900      415

Sankyo Co., Ltd.

    9,500      572

Sankyu, Inc. (Ñ)

    14,000      73

Sasebo Heavy Industries Co., Ltd. (Ñ)

    16,000      43

Seiko Epson Corp. (Ñ)

    2,800      75

Seven & I Holdings Co., Ltd.

    225,700      6,742

Sharp Corp.

    135,000      2,287

Shiga Bank, Ltd. (The) (Ñ)

    18,000      121

Shima Seiki Manufacturing,
Ltd. - GDR

    3,900      152

Shimano, Inc.

    7,200      329

Shin-Etsu Chemical Co., Ltd.

    57,400      3,581

Shinwa Kaiun Kaisha, Ltd.

    18,000      118

Shizuoka Bank, Ltd. (The) (Ñ)

    40,000      493

Showa Shell Sekiyu KK

    38,000      402

SMC Corp.

    30,388      3,560

Sohgo Security Services Co., Ltd. (Ñ)

    5,300      75

Sony Corp. (Ñ)

    9,100      417

Stanley Electric Co., Ltd.

    18,000      459

Star Micronics Co., Ltd. (Ñ)

    12,400      210

Sugi Pharmacy Co., Ltd. - GDR (Ñ)

    89,300      2,369

Sumco Techxiv Corp. (Ñ)

    3,300      100

Sumitomo Bakelite Co., Ltd. (Ñ)

    438,300      2,461

Sumitomo Heavy Industries, Ltd.

    36,000      305

Sumitomo Metal Industries, Ltd.

    12,000      51

Sumitomo Metal Mining Co., Ltd. (Ñ)

    10,000      182

Sumitomo Mitsui Financial Group, Inc. (Ñ)

    454      3,942

Sumitomo Realty & Development Co., Ltd.

    48,000      1,190

Sumitomo Trust & Banking Co., Ltd. (The) (Ñ)

    582,081      5,199

Suzuken Co., Ltd.

    6,000      227

Suzuki Motor Corp. (Ñ)

    80,880      2,061

Takeda Pharmaceutical Co., Ltd.

    137,300      7,290

Takefuji Corp. (Ñ)

    3,690      87

TDK Corp.

    8,600      589

THK Co., Ltd.

    86,394      1,928

Toho Co., Ltd. (Ñ)

    3,400      78

Toho Pharmaceutical Co., Ltd. (Ñ)

    12,686      262

Tokai Rubber Industries, Inc.

    19,100      280

Tokyo Electric Power Co., Inc. (The) (Ñ)

    126,900      3,236

Tokyo Gas Co., Ltd.

    306,000      1,178

Tokyo Steel Manufacturing Co., Ltd. (Ñ)

    15,000      215

Tokyo Style Co., Ltd.

    4,000      40
     Principal
Amount ($)
or Shares		      Market
Value
$

Tokyu Land Corp.

    141,000      1,058

Toppan Printing Co., Ltd. (Ñ)

    54,000      603

Toshiba Corp. (Ñ)

    444,000      3,714

Toshiba Machine Co., Ltd.

    12,000      78

Toshiba TEC Corp.

    43,000      303

Toyo Engineering Corp. Class A (Ñ)

    58,000      241

Toyo Ink Manufacturing Co., Ltd.

    8,000      29

Toyo Suisan Kaisha, Ltd.

    44,000      783

Toyota Auto Body Co., Ltd. (Ñ)

    13,300      265

Toyota Boshoku Corp.

    3,500      99

Toyota Motor Corp.

    255,700      13,006

Ube Industries, Ltd.

    23,000      81

United Urban Investment Corp. (ö)

    173      1,061

Urban Corp. (Ñ)

    14,900      83

USS Co., Ltd.

    2,860      203

West Japan Railway Co.

    639      2,767

Yamada Denki Co., Ltd.

    15,600      1,346

Yamaha Corp.

    25,100      496

Yamaha Motor Co., Ltd.

    12,200      238

Yamato Holdings Co., Ltd.

    41,000      598

Yamato Kogyo Co., Ltd. - GDR

    10,800      515

Yodogawa Steel Works, Ltd.

    8,000      42
         
        305,618
         

Luxembourg - 0.4%

        

ArcelorMittal

    60,675      5,359

Evraz Group SA - GDR

    16,272      1,688

Millicom International Cellular SA (Æ)

    1,600      171

Oriflame Cosmetics SA

    9,700      743
         
        7,961
         

Malaysia - 0.1%

        

Sime Darby BHD

    727,191      2,213
         

Mauritius - 0.0%

        

Golden Agri-Resources, Ltd.

    60,846      38
         

Mexico - 0.7%

        

America Movil SAB de CV Series L

    179,732      10,417

Cemex SAB de CV - ADR (Æ)(Ñ)

    100,658      2,783

Grupo Modelo SAB de CV (Æ)

    225,300      995
         
        14,195
         

Netherlands - 4.5%

        

Akzo Nobel NV (Ñ)

    18,179      1,541

ASM International NV (Ñ)

    3,896      91

ASML Holding NV

    142,126      4,026

Boskalis Westminster (Ñ)

    46,200      2,776

 

42   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Corporate Express (Ñ)

    62,600      720

CSM (Ñ)

    2,181      78

Fugro NV

    24,952      2,224

Heineken NV (Ñ)

    327,110      19,055

ING Groep NV (Ñ)

    452,050      17,209

Koninklijke Ahold NV (Ñ)

    231,606      3,432

Koninklijke DSM NV (Æ)

    40,600      2,187

Koninklijke Philips Electronics NV

    173,256      6,506

OCE NV (Ñ)

    29,901      451

Reed Elsevier NV (Ñ)

    231,327      4,373

Rodamco Europe NV (ö)(Ñ)

    1,957      256

Royal KPN NV

    76,976      1,407

TNT NV

    107,560      4,176

Unilever NV

    432,645      14,544

Wolters Kluwer NV (Ñ)

    130,450      3,502
         
        88,554
         

Netherlands Antilles - 0.2%

        

Hunter Douglas NV

    2,819      176

Schlumberger, Ltd.

    31,100      3,127
         
        3,303
         

New Zealand - 0.1%

        

Telecom Corp. of New Zealand, Ltd. (Ñ)

    742,068      2,194
         

Norway - 0.8%

        

Renewable Energy Corp. AS (Æ)(Ñ)

    59,150      1,999

StatoilHydro ASA (Ñ)

    156,218      5,628

Telenor ASA (Ñ)

    50,000      1,005

Yara International ASA (Ñ)

    105,150      7,641
         
        16,273
         

Papua New Guinea - 0.0%

        

Oil Search, Ltd.

    49,980      224
         

Portugal - 0.1%

        

Energias de Portugal SA (Ñ)

    335,835      2,117
         

Russia - 0.5%

        

Gazprom OAO - ADR

    105,100      5,581

LUKOIL - ADR

    7,450      673

Mechel - ADR

    12,200      1,779

MMC Norilsk Nickel - ADR

    19,100      515

Mobile Telesystems OJSC - ADR

    16,600      1,288
         
        9,836
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Singapore - 0.7%

        

Allgreen Properties, Ltd.

    130,220      123

Ascendas Real Estate Investment Trust (ö)

    8,000      15

CapitaCommercial Trust (ö)

    5,000      8

CapitaLand, Ltd. (Ñ)

    391,400      1,973

CapitaMall Trust (ö)

    12,286      31

China Aviation Oil Singapore Corp., Ltd.

    16,000      20

Creative Technology, Ltd.

    3,450      17

DBS Group Holdings, Ltd.

    101,700      1,485

Flextronics International, Ltd. (Æ)(Ñ)

    97,000      1,008

Haw Par Corp., Ltd.

    8,556      47

Indofood Agri Resources, Ltd. (Æ)

    27,901      48

Jardine Cycle & Carriage, Ltd. (Ñ)

    9,800      120

Keppel Corp., Ltd.

    42,889      325

NatSteel, Ltd.

    44,400      48

Neptune Orient Lines, Ltd. (Ñ)

    65,231      154

Oversea-Chinese Banking Corp.

    477,800      3,110

Pacific Century Regional Developments, Ltd. (Æ)

    113,000      28

Parkway Holdings, Ltd.

    9,000      23

SembCorp Industries, Ltd.

    24,580      76

Singapore Airlines, Ltd.

    15,100      178

Singapore Exchange, Ltd. (Ñ)

    123,000      775

Singapore Petroleum Co., Ltd.

    46,281      246

Singapore Telecommunications, Ltd.

    1,253,500      3,583

SMRT Corp., Ltd.

    16,000      21

Straits Asia Resources, Ltd.

    244,000      599

United Overseas Bank, Ltd.

    11,714      176

United Overseas Land, Ltd. (Æ)

    17,000      47

Wing Tai Holdings, Ltd.

    27,776      41
         
        14,325
         

South Africa - 0.5%

        

Gold Fields, Ltd. - ADR (Æ)(Ñ)

    127,511      1,721

Impala Platinum Holdings, Ltd.

    39,892      1,633

MTN Group, Ltd.

    300,732      5,710

Sanlam, Ltd.

    209,900      553

Standard Bank Group, Ltd.

    16,889      200
         
        9,817
         

South Korea - 1.3%

        

Hynix Semiconductor, Inc.

    15,400      410

Hyundai Mobis

    7,500      686

Industrial Bank of Korea

    34,000      650

Kookmin Bank

    5,500      384

Kookmin Bank - ADR

    31,880      2,224

KT&G Corp.

    17,871      1,478

 

International Fund   43

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

LG Electronics, Inc.

    16,183      2,515

Mirae Asset Securities Co., Ltd. (Æ)(Ñ)

    6,860      937

POSCO

    1,600      787

Samsung Electronics Co., Ltd.

    20,352      14,489

Shinhan Financial Group Co., Ltd.

    9,200      532

STX Pan Ocean Co., Ltd. (Ñ)

    227,000      562
         
        25,654
         

Spain - 2.9%

        

Banco Bilbao Vizcaya Argentaria SA

    59,611      1,369

Banco Santander SA (Ñ)

    720,354      15,587

Bankinter SA (Ñ)

    2,800      43

Enagas

    27,108      826

Gamesa Corp. Tecnologica SA

    42,319      2,061

Gas Natural SDG SA

    12,870      754

Grifols SA

    11,028      309

Iberdrola Renovables (Æ)

    247,441      1,797

Iberdrola SA

    727,708      10,645

Red Electrica de Espana

    19,627      1,278

Repsol YPF SA

    91,456      3,717

Tecnicas Reunidas SA (Ñ)

    17,708      1,342

Telefonica SA (Ñ)

    587,002      17,029

Vertice Trescientos Sesenta Grados (Æ)(Ñ)

    7,527      17
         
        56,774
         

Sweden - 0.9%

        

Alfa Laval AB (Ñ)

    3,425      225

D Carnegie AB (Ñ)

    5,700      73

Electrolux AB (Ñ)

    55,300      848

Hennes & Mauritz AB Class B

    12,675      752

Industrivarden AB Class A (Ñ)

    3,500      60

JM AB (Ñ)

    7,900      131

Kinnevik Investment AB (Ñ)

    4,300      92

Nordea Bank AB (Ñ)

    145,591      2,407

Peab AB

    10,400      90

Scania AB Class B (Ñ)

    47,900      989

SKF AB Class B (Ñ)

    10,400      191

Svenska Cellulosa AB Class B (Ñ)

    114,100      1,921

Swedish Match AB (Ñ)

    15,400      338

Tele2 AB Class B (Ñ)

    66,100      1,471

Telefonaktiebolaget LM Ericsson Class B (Ñ)

    1,953,500      4,977

TeliaSonera AB (Ñ)

    48,500      433

Volvo AB Class A (Æ)(Ñ)

    5,500      83

Volvo AB Class B (Ñ)

    90,100      1,374
         
        16,455
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Switzerland - 6.5%

        

ABB, Ltd.

    211,001      6,469

Actelion, Ltd. (Ñ)

    58,468      2,958

Alcon, Inc.

    11,500      1,817

Baloise Holding AG (Ñ)

    1,871      205

Barry Callebaut AG

    124      92

Bucher Industries AG (Æ)

    364      102

Credit Suisse Group (Ñ)

    252,302      13,515

Givaudan SA (Ñ)

    4,030      4,071

Helvetia Holding AG

    479      201

Holcim, Ltd.

    53,176      5,218

Julius Baer Holding AG

    117,454      8,686

Kuoni Reisen Holding AG (Æ)(Ñ)

    403      233

Lonza Group AG (Ñ)

    35,540      4,845

Nestle SA

    69,988      33,529

Novartis AG

    231,716      11,767

Roche Holding AG

    84,324      14,042

SGS SA

    86      121

Sonova Holding AG (Ñ)

    554      47

Swatch Group AG (Ñ)

    32,123      1,642

Swatch Group AG Class B

    14,059      3,761

Swiss Life Holding

    2,283      682

Swiss Reinsurance (Ñ)

    34,432      2,864

Syngenta AG (Ñ)

    17,147      5,078

UBS AG (Ñ)

    97,647      3,283

Zurich Financial Services AG

    1,720      525
         
        125,753
         

Taiwan - 0.3%

        

Asustek Computer, Inc.

    270,000      871

HON HAI Precision Industry Co., Ltd.

    277,000      1,597

Siliconware Precision Industries Co.

    529,239      911

Taiwan Semiconductor Manufacturing Co., Ltd.

    370,844      808

Taiwan Semiconductor Manufacturing Co., Ltd. - ADR

    147,430      1,657

United Microelectronics Corp.

    757,819      461
         
        6,305
         

Thailand - 0.2%

        

Bangkok Bank PCL

    392,310      1,729

Banpu PCL

    78,700      1,085

PTT PCL

    48,200      508
         
        3,322
         

Turkey - 0.0%

        

Turkcell Iletisim Hizmet AS - ADR

    20,500      413
         

 

44   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

United Kingdom - 16.6%

        

3i Group PLC

    116,749      1,982

Amec PLC - GDR

    23,656      371

Anglo American PLC

    33,969      2,181

Antofagasta PLC

    101,418      1,600

ARM Holdings PLC (Ñ)

    1,816,729      3,610

Associated British Foods PLC

    106,400      1,849

AstraZeneca PLC

    20,084      845

Atkins WS PLC

    21,278      446

Autonomy Corp. PLC (Æ)

    147,943      2,508

Aviva PLC

    390,869      4,853

BAE Systems PLC

    897,452      8,274

Barclays PLC

    330,693      2,955

BG Group PLC

    732,195      17,804

BHP Billiton PLC

    95,194      3,364

BP PLC

    1,086,767      13,191

BP PLC - ADR

    51,960      3,782

Brit Insurance Holdings PLC

    91,414      442

British American Tobacco PLC

    135,923      5,102

British Energy Group PLC

    70,370      1,057

British Land Co. PLC (ö)

    74,427      1,240

British Sky Broadcasting Group PLC

    286,367      3,089

BT Group PLC

    319,381      1,404

Cadbury Schweppes PLC

    255,384      2,949

Carphone Warehouse Group PLC (Ñ)

    853,588      4,575

Centrica PLC

    156,196      908

Charter PLC

    20,178      358

Close Brothers Group PLC

    21,964      303

Compass Group PLC

    353,049      2,377

Davis Service Group PLC

    22,979      217

Dawnay Day Treveria PLC

    1,294,730      1,292

De La Rue PLC

    89,946      1,523

Diageo PLC

    667,057      13,651

easyJet PLC

    237,722      1,449

Eurasian Natural Resources Corp. (Æ)

    250,348      5,938

Experian Group, Ltd.

    378,902      2,841

Galiform PLC

    63,562      86

GKN PLC

    384,348      2,158

GlaxoSmithKline PLC

    1,147,476      25,420

HBOS PLC

    845,460      7,795

Home Retail Group PLC

    402,723      2,097

HSBC Holdings PLC

    209,011      3,642

ICAP PLC

    19,552      226

IG Group Holdings PLC

    70,761      506

International Power PLC

    253,702      2,202

ITV PLC

    575,710      750

John Wood Group PLC

    167,631      1,420

Johnson Matthey PLC

    24,406      964

Kazakhmys PLC

    59,767      1,861
     Principal
Amount ($)
or Shares		      Market
Value
$

Kesa Electricals PLC

    83,071      341

Kingfisher PLC

    1,168,489      3,056

Ladbrokes PLC

    282,719      1,828

Land Securities Group PLC (ö)(Ñ)

    11,723      356

Legal & General Group PLC

    144,169      361

Lloyds TSB Group PLC

    635,016      5,394

Man Group PLC

    914,090      10,459

Michael Page International PLC (Ñ)

    336,637      1,917

Mitchells & Butlers PLC

    62,700      371

National Express Group PLC

    44,046      808

National Grid PLC

    69,997      970

Old Mutual PLC

    242,237      611

Pearson PLC

    68,773      887

Petrofac, Ltd.

    19,262      225

Premier Farnell PLC

    8,571      30

Prudential PLC

    31,294      426

Reckitt Benckiser Group PLC

    203,330      11,847

Reed Elsevier PLC

    9,527      120

Regus Group PLC (Æ)

    102,145      186

Rio Tinto PLC

    33,386      3,875

Rolls-Royce Group PLC (Æ)

    25,523      221

Rolls-Royce Group PLC Class B (Æ)

    2,286,860      5

Royal & Sun Alliance Insurance Group

    523,156      1,388

Royal Bank of Scotland Group PLC

    1,542,837      10,423

Royal Dutch Shell PLC Class A (Ñ)

    482,559      19,427

Royal Dutch Shell PLC Class B

    62,649      2,501

SABMiller PLC

    12,443      286

Scottish & Southern Energy PLC

    110,429      3,043

Severn Trent PLC

    27,400      792

Shire PLC

    26,899      495

Smith & Nephew PLC

    171,975      2,226

Smiths Group PLC

    137,632      2,642

Stagecoach Group PLC

    94,011      476

Standard Chartered PLC

    233,729      8,282

Taylor Wimpey PLC

    256,659      651

Tesco PLC

    644,218      5,445

Thomson Reuters PLC (Æ)

    3,213      100

Trinity Mirror PLC

    123,400      663

Tullett Prebon PLC

    72,336      621

Unilever PLC

    302,217      10,175

Vodafone Group PLC

    3,910,636      12,369

Vodafone Group PLC - ADR

    158,250      5,010

Weir Group PLC (The)

    10,534      173

Wellstream Holdings PLC (Æ)

    20,170      505

William Hill PLC

    356,214      2,714

WM Morrison Supermarkets PLC

    106,805      604

WPP Group PLC

    1,014,031      12,368

Xstrata PLC

    82,995      6,446
         
        323,576
         

 

International Fund   45

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

United States - 0.5%

        

Las Vegas Sands Corp. (Æ)(Ñ)

    35,762      2,726

Philip Morris International, Inc. (Æ)(Ñ)

    65,300      3,332

Synthes, Inc.

    27,761      3,806
         
        9,864
         
Total Common Stocks        

(cost $1,524,698)

         1,784,351
         
Preferred Stocks - 0.5%        

Brazil - 0.2%

        

Banco Itau Holding Financeira SA

    92,500      2,640

Usinas Siderurgicas de Minas Gerais SA

    17,475      853
         
        3,493
         

Germany - 0.3%

        

Fresenius SE

    2,934      243

Henkel KGaA (Æ)(Ñ)

    79,729      3,390

Porsche Automobil Holding SE

    4,630      847

RWE AG (Æ)

    2,639      246

Volkswagen AG (Æ)

    238      39
         
        4,765
         

South Korea - 0.0%

        

Samsung Electronics Co., Ltd.

    900      462
         
Total Preferred Stocks        

(cost $8,301)

         8,720
         
    

Notional
Amount

       

Options Purchased - 0.0%

        

(Number of Contracts)

        

Switzerland - 0.0%

        

Swiss Market Index Futures Jun 2008 7,218.00 Put (188)

    CHF  13,570      907
         
Total Options Purchased        

(cost $942)

         907
         

A portion of the portfolio has been fair valued as of period end.

     Principal
Amount ($)
or Shares		      Market
Value
$		  

Warrants & Rights - 0.1%

        

Australia - 0.0%

        

Wesfarmers, Ltd. (Æ) 2008 Rights

    9,939      79  
           

Sweden - 0.0%

        

JM AB (Æ) 2008 Rights

    7,900      7  
           

Switzerland - 0.0%

        

UBS AG (Æ) 2008 Rights

    12,547      21  
           

United States - 0.1%

        

Bharti Airtel, Ltd. (þ)(Æ) 2012 Warrants

    79,600      1,754  
           
Total Warrants & Rights        

(cost $1,259)

         1,861  
           
Short-Term Investments - 7.3%        

United States - 7.3%

        

Russell Investment Company Money Market Fund

    129,607,001      129,607  

United States Treasury Bills (ç)(ž)(§)
0.670% due 06/19/08

    12,000      11,989  
           
Total Short-Term Investments        

(cost $141,596)

         141,596  
           
Other Securities - 21.8%        

Russell Investment Company Money Market Fund (×)

    92,683,975      92,684  

State Street Securities Lending Quality Trust (×)

    333,566,143      333,566  
           
Total Other Securities        

(cost $426,250)

         426,250  
           
Total Investments - 121.1%        

(identified cost $2,103,046)

         2,363,685  
Other Assets and Liabilities, Net - (21.1%)         (411,293 )
           
Net Assets - 100.0%         1,952,392  
           

 

See accompanying notes which are an integral part of the financial statements.

 

46   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		    Notional Amount      Unrealized
Appreciation
(Depreciation)
$		  
         
         

Long Positions

          

AEX Index (Netherlands)
expiration date 05/08 (104)

    EUR   9,865      726  

CAC-40 Index (France)
expiration date 05/08 (215)

    EUR   10,665      541  

DAX Index (Germany)
expiration date 06/08 (60)

    EUR   10,487      1,208  

EUR STOXX 50 Index
expiration date 06/08 (470)

    EUR   17,677      2,117  

FTSE-100 Index (UK)
expiration date 06/08 (410)

    GBP   4,100      3,998  

Hang Seng Index (Hong Kong)
expiration date 05/08 (104)

    HKD   133,822      142  

MIB-30 (Italy)
expiration date 06/08 (16)

    EUR   2,648      291  

MSCI Singapore Index
expiration date 05/08 (5)

    SGD   388      (5 )

SPI 200 Index (Australia)
expiration date 06/08 (64)

    AUD   8,961      465  

TOPIX Index (Japan)
expiration date 06/08 (287)

    JPY   3,883,110      3,319  

Short Positions

          

Dax Index (Germany)
expiration date 06/08 (30)

    EUR   5,243      (261 )

IBEX Plus Index (Spain)
expiration date 05/08 (27)

    EUR   3,698      (160 )

OMX Index (Sweden)
expiration date 05/08 (389)

    SEK   38,083      (139 )

SPI 200 Index (Australia)
expiration date 06/08 (109)

    AUD   15,263      (1,031 )
             

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (å)

           11,211  
             
Options Written
(Number of Contracts)		    Notional
Amount		          
Market
Value
$		  
         

Switzerland

          

Swiss Market Index Futures

          

Jun 2008 7,218.00 Call (188)

    CHF   13,570      (1,428 )
             

Total Liability for Options Written
(premiums received $942)

           (1,428 )
             

 

See accompanying notes which are an integral part of the financial statements.

 

International Fund   47

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts      
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   32   AUD   38   05/01/08   4  
USD   121   AUD   129   05/01/08   1  
USD   184   AUD   196   05/05/08   1  
USD   92   AUD   100   06/18/08   1  
USD   186   AUD   200   06/18/08   2  
USD   275   AUD   300   06/18/08   7  
USD   280   AUD   300   06/18/08   2  
USD   444   AUD   500   06/18/08   24  
USD   454   AUD   500   06/18/08   15  
USD   460   AUD   500   06/18/08   9  
USD   464   AUD   500   06/18/08   5  
USD   557   AUD   600   06/18/08   6  
USD   630   AUD   672   06/18/08   —  
USD   639   AUD   700   06/18/08   17  
USD   1,384   AUD   1,500   06/18/08   23  
USD   3,595   AUD   3,836   06/18/08   1  
USD   3,779   AUD   4,032   06/18/08   2  
USD   6,889   AUD   7,500   06/18/08   143  
USD   8,188   AUD   8,736   06/18/08   3  
USD   8,367   AUD   9,234   06/18/08   291  
USD   14,109   AUD   15,325   06/18/08   259  
USD   355   CHF   367   05/05/08   —  
USD   59   CHF   62   05/06/08   —  
USD   72   CHF   75   05/06/08   —  
USD   200   CHF   208   05/06/08   1  
USD   243   CHF   251   05/06/08   —  
USD   297   CHF   310   05/06/08   1  
USD   2,344   CHF   2,312   06/18/08   (111 )
USD   2,345   CHF   2,312   06/18/08   (112 )
USD   3,194   CHF   3,221   06/18/08   (84 )
USD   7,121   CHF   7,019   06/18/08   (343 )
USD   12,484   CHF   12,313   06/18/08   (593 )
USD   27   DKK   130   05/05/08   —  
USD   9   DKK   44   06/18/08   —  
USD   71   DKK   340   06/18/08   —  
USD   96   EUR   61   05/02/08   —  
USD   163   EUR   105   05/02/08   —  
USD   281   EUR   180   05/02/08   —  
USD   366   EUR   235   05/02/08   1  
USD   926   EUR   593   05/02/08   —  
USD   83   EUR   53   05/05/08   —  
USD   352   EUR   225   05/05/08   —  
USD   409   EUR   263   05/05/08   1  
USD   900   EUR   578   05/05/08   2  
USD   57   EUR   37   05/06/08   —  
USD   97   EUR   62   05/06/08   —  
USD   97   EUR   62   05/06/08   —  
Foreign Currency Exchange Contracts      
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   109   EUR   70   05/06/08   —  
USD   452   EUR   290   05/06/08   2  
USD   3,831   EUR   2,445   06/05/08   (20 )
USD   3,871   EUR   2,443   06/05/08   (62 )
USD   782   EUR   500   06/18/08   (2 )
USD   785   EUR   500   06/18/08   (6 )
USD   788   EUR   500   06/18/08   (9 )
USD   1,017   EUR   649   06/18/08   (6 )
USD   1,450   EUR   933   06/18/08   3  
USD   1,554   EUR   1,000   06/18/08   4  
USD   1,554   EUR   1,000   06/18/08   4  
USD   1,555   EUR   1,000   06/18/08   3  
USD   1,558   EUR   1,000   06/18/08   —  
USD   1,563   EUR   1,000   06/18/08   (5 )
USD   1,580   EUR   1,000   06/18/08   (22 )
USD   1,584   EUR   1,000   06/18/08   (26 )
USD   1,587   EUR   1,000   06/18/08   (29 )
USD   1,591   EUR   1,000   06/18/08   (33 )
USD   1,592   EUR   1,000   06/18/08   (34 )
USD   2,125   EUR   1,400   06/18/08   56  
USD   2,378   EUR   1,500   06/18/08   (41 )
USD   2,853   EUR   1,829   06/18/08   (3 )
USD   3,063   EUR   2,000   06/18/08   53  
USD   3,071   EUR   2,000   06/18/08   45  
USD   3,728   EUR   2,500   06/18/08   167  
USD   4,348   EUR   2,748   06/18/08   (66 )
USD   4,543   EUR   3,000   06/18/08   131  
USD   4,546   EUR   3,000   06/18/08   128  
USD   5,727   EUR   3,653   06/18/08   (35 )
USD   6,222   EUR   4,100   06/18/08   165  
USD   12,529   EUR   7,914   06/18/08   (198 )
USD   44,964   EUR   29,700   06/18/08   1,310  
USD   64,964   EUR   42,900   06/18/08   1,875  
USD   69,063   EUR   45,600   06/18/08   1,983  
USD   5   GBP   7   05/01/08   8  
USD   30   GBP   5   05/01/08   (20 )
USD   129   GBP   65   05/01/08   —  
USD   564   GBP   287   05/01/08   6  
USD   536   GBP   270   05/02/08   1  
USD   30   GBP   15   05/06/08   —  
USD   593   GBP   300   06/18/08   2  
USD   720   GBP   362   06/18/08   (2 )
USD   986   GBP   500   06/18/08   5  
USD   994   GBP   500   06/18/08   (3 )
USD   1,008   GBP   500   06/18/08   (17 )
USD   1,183   GBP   600   06/18/08   6  
USD   1,373   GBP   700   06/18/08   14  

 

See accompanying notes which are an integral part of the financial statements.

 

48   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts      
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   1,382   GBP   700   06/18/08   5  
USD   1,574   GBP   800   06/18/08   11  
USD   1,596   GBP   800   06/18/08   (11 )
USD   1,758   GBP   884   06/18/08   (7 )
USD   1,971   GBP   1,000   06/18/08   11  
USD   1,972   GBP   1,000   06/18/08   9  
USD   1,988   GBP   1,000   06/18/08   (7 )
USD   2,963   GBP   1,500   06/18/08   9  
USD   4,518   GBP   2,270   06/18/08   (20 )
USD   6,119   GBP   3,100   06/18/08   24  
USD   20,898   GBP   10,600   06/18/08   107  
USD   53,121   GBP   26,925   06/18/08   233  
USD   4   HKD   28   05/01/08   —  
USD   13   HKD   103   05/01/08   —  
USD   280   HKD   2,184   05/05/08   —  
USD   17   HKD   135   06/18/08   —  
USD   118   HKD   919   06/18/08   —  
USD   505   HKD   3,911   06/18/08   (2 )
USD   68   JPY   6,800   05/01/08   (2 )
USD   180   JPY   16,160   05/01/08   (24 )
USD   259   JPY   26,957   05/01/08   1  
USD   925   JPY   96,560   05/01/08   3  
USD   1,059   JPY   110,290   05/01/08   2  
USD   907   JPY   94,826   05/02/08   5  
USD   1,697   JPY   177,315   05/02/08   8  
USD   553   JPY   57,782   05/07/08   3  
USD   694   JPY   72,487   05/07/08   3  
USD   489   JPY   50,000   06/18/08   (7 )
USD   498   JPY   50,000   06/18/08   (16 )
USD   776   JPY   80,000   06/18/08   (4 )
USD   785   JPY   80,000   06/18/08   (14 )
USD   793   JPY   80,000   06/18/08   (21 )
USD   795   JPY   80,000   06/18/08   (23 )
USD   877   JPY   90,000   06/18/08   (9 )
USD   968   JPY   100,000   06/18/08   (4 )
USD   980   JPY   100,000   06/18/08   (16 )
USD   987   JPY   100,000   06/18/08   (23 )
USD   996   JPY   100,000   06/18/08   (32 )
USD   1,003   JPY   100,000   06/18/08   (39 )
USD   1,012   JPY   100,000   06/18/08   (47 )
USD   1,013   JPY   100,000   06/18/08   (49 )
USD   1,014   JPY   100,000   06/18/08   (50 )
USD   1,464   JPY   150,000   06/18/08   (17 )
USD   1,470   JPY   150,000   06/18/08   (23 )
USD   1,471   JPY   150,000   06/18/08   (25 )
USD   1,877   JPY   200,000   06/18/08   52  
USD   2,469   JPY   254,238   06/18/08   (17 )
Foreign Currency Exchange Contracts      
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
USD   22,827   JPY   2,340,000   06/18/08   (258 )
USD   24,684   JPY   2,382,386   06/18/08   (1,706 )
USD   29,726   JPY   3,050,000   06/18/08   (309 )
USD   30,964   JPY   3,172,000   06/18/08   (371 )
USD   354   NOK   1,800   05/06/08   —  
USD   95   NOK   478   06/18/08   (1 )
USD   425   NOK   2,137   06/18/08   (7 )
USD   9,182   NOK   47,398   06/18/08   87  
USD   9,416   NOK   48,989   06/18/08   164  
USD   21,878   NOK   112,912   06/18/08   203  
USD   395   SEK   2,357   06/18/08   (2 )
USD   516   SEK   3,116   06/18/08   3  
USD   1   SGD   2   05/01/08   —  
USD   95   SGD   129   05/06/08   —  
USD   106   SGD   146   06/18/08   2  
USD   247   ZAR   1,883   05/07/08   2  
USD   253   ZAR   1,923   05/08/08   1  
AUD   65   USD   73   05/01/08   11  
AUD   13   USD   12   05/02/08   —  
AUD   100   USD   92   06/18/08   (2 )
AUD   100   USD   92   06/18/08   (2 )
AUD   100   USD   92   06/18/08   (2 )
AUD   300   USD   275   06/18/08   (6 )
AUD   450   USD   408   06/18/08   (14 )
AUD   500   USD   460   06/18/08   (9 )
AUD   568   USD   515   06/18/08   (18 )
AUD   568   USD   515   06/18/08   (17 )
AUD   600   USD   543   06/18/08   (20 )
AUD   600   USD   553   06/18/08   (10 )
AUD   746   USD   676   06/18/08   (24 )
AUD   1,100   USD   1,019   06/18/08   (13 )
AUD   1,459   USD   1,322   06/18/08   (46 )
AUD   1,731   USD   1,569   06/18/08   (53 )
AUD   2,271   USD   2,060   06/18/08   (69 )
AUD   2,308   USD   2,090   06/18/08   (74 )
AUD   2,500   USD   2,304   06/18/08   (40 )
AUD   2,838   USD   2,575   06/18/08   (86 )
AUD   3,200   USD   2,872   06/18/08   (128 )
AUD   3,254   USD   2,952   06/18/08   (99 )
AUD   3,406   USD   3,090   06/18/08   (104 )
AUD   4,150   USD   3,824   06/18/08   (67 )
AUD   5,106   USD   4,629   06/18/08   (159 )
AUD   6,200   USD   5,710   06/18/08   (103 )
BRL   19   USD   11   05/02/08   —  
BRL   213   USD   126   05/02/08   (2 )
BRL   562   USD   329   05/02/08   (9 )
CAD   58   USD   57   05/01/08   —  

 

See accompanying notes which are an integral part of the financial statements.

 

International Fund   49

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts      
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
CAD   21   USD   21   05/02/08   —  
CAD   740   USD   732   05/02/08   (3 )
CAD   1,668   USD   1,655   05/05/08   (1 )
CHF   70   USD   68   05/02/08   —  
CHF   59   USD   57   05/05/08   —  
CHF   250   USD   241   05/06/08   —  
CHF   2,185   USD   2,162   06/18/08   52  
CHF   4,369   USD   4,321   06/18/08   101  
CHF   5,240   USD   5,182   06/18/08   122  
CHF   10,924   USD   10,808   06/18/08   259  
CHF   15,293   USD   15,124   06/18/08   355  
DKK   1,274   USD   267   05/02/08   —  
DKK   1,296   USD   270   05/05/08   (1 )
DKK   41   USD   9   06/18/08   —  
DKK   251   USD   53   06/18/08   —  
DKK   3,111   USD   654   06/18/08   5  
EUR   25   USD   37   05/01/08   (2 )
EUR   269   USD   410   05/01/08   (10 )
EUR   12   USD   19   05/02/08   —  
EUR   40   USD   62   05/02/08   (1 )
EUR   92   USD   144   05/02/08   —  
EUR   130   USD   200   05/02/08   (2 )
EUR   188   USD   291   05/02/08   (3 )
EUR   295   USD   462   05/02/08   1  
EUR   148   USD   231   05/05/08   —  
EUR   12   USD   19   05/06/08   —  
EUR   263   USD   409   05/06/08   (1 )
EUR   270   USD   421   05/06/08   (1 )
EUR   2,444   USD   3,754   06/05/08   (57 )
EUR   2,444   USD   3,756   06/05/08   (54 )
EUR   500   USD   756   06/18/08   (23 )
EUR   500   USD   778   06/18/08   (1 )
EUR   500   USD   778   06/18/08   (1 )
EUR   700   USD   1,096   06/18/08   5  
EUR   1,000   USD   1,570   06/18/08   12  
EUR   2,000   USD   3,145   06/18/08   28  
EUR   2,200   USD   3,453   06/18/08   25  
EUR   3,000   USD   4,719   06/18/08   45  
EUR   4,700   USD   7,116   06/18/08   (206 )
EUR   5,200   USD   7,875   06/18/08   (227 )
EUR   7,000   USD   10,602   06/18/08   (304 )
EUR   15,000   USD   23,313   06/18/08   (58 )
EUR   24,081   USD   37,781   06/18/08   262  
EUR   29,820   USD   45,193   06/18/08   (1,268 )
EUR   40,900   USD   61,985   06/18/08   (1,738 )
EUR   8,853   USD   13,786   07/31/08   21  
GBP   120   USD   236   05/02/08   (2 )
Foreign Currency Exchange Contracts      
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
GBP   287   USD   566   05/02/08   (6 )
GBP   398   USD   784   05/02/08   (8 )
GBP   402   USD   793   05/02/08   (6 )
GBP   285   USD   566   05/06/08   —  
GBP   451   USD   894   05/06/08   (3 )
GBP   400   USD   789   06/18/08   (4 )
GBP   500   USD   995   06/18/08   4  
GBP   500   USD   995   06/18/08   4  
GBP   500   USD   1,003   06/18/08   12  
GBP   745   USD   1,469   06/18/08   (7 )
GBP   800   USD   1,571   06/18/08   (14 )
GBP   1,000   USD   1,972   06/18/08   (9 )
GBP   1,000   USD   1,973   06/18/08   (8 )
GBP   1,669   USD   3,284   06/18/08   (22 )
GBP   1,700   USD   3,347   06/18/08   (22 )
GBP   1,750   USD   3,455   06/18/08   (13 )
GBP   1,900   USD   3,748   06/18/08   (17 )
GBP   2,000   USD   3,943   06/18/08   (21 )
GBP   2,458   USD   4,879   06/18/08   8  
GBP   4,807   USD   9,464   06/18/08   (61 )
GBP   5,000   USD   9,821   06/18/08   (87 )
GBP   9,860   USD   19,454   06/18/08   (85 )
GBP   10,550   USD   20,813   06/18/08   (92 )
GBP   3,687   USD   7,306   07/31/08   24  
HKD   880   USD   113   05/02/08   —  
HKD   112   USD   14   06/18/08   —  
HKD   418   USD   54   06/18/08   —  
JPY   2,163   USD   21   05/02/08   —  
JPY   34,719   USD   332   05/07/08   (2 )
JPY   20,000   USD   198   06/18/08   5  
JPY   40,000   USD   389   06/18/08   3  
JPY   40,000   USD   402   06/18/08   17  
JPY   50,000   USD   494   06/18/08   12  
JPY   90,000   USD   877   06/18/08   9  
JPY   90,000   USD   909   06/18/08   41  
JPY   100,000   USD   968   06/18/08   4  
JPY   100,000   USD   980   06/18/08   16  
JPY   100,000   USD   1,007   06/18/08   43  
JPY   130,000   USD   1,273   06/18/08   19  
JPY   134,086   USD   1,316   06/18/08   23  
JPY   145,458   USD   1,462   06/18/08   59  
JPY   220,000   USD   2,144   06/18/08   22  
JPY   289,742   USD   2,913   06/18/08   119  
JPY   289,742   USD   2,914   06/18/08   119  
JPY   289,742   USD   2,914   06/18/08   119  
JPY   320,000   USD   3,222   06/18/08   136  
JPY   363,074   USD   3,751   06/18/08   249  

 

See accompanying notes which are an integral part of the financial statements.

 

50   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts      
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
JPY   400,000   USD   3,886   06/18/08   28  
JPY   450,000   USD   4,389   06/18/08   49  
JPY   614,676   USD   6,034   06/18/08   105  
JPY   1,050,000   USD   10,340   06/18/08   213  
JPY   2,150,000   USD   20,950   06/18/08   214  
JPY   2,620,000   USD   25,532   06/18/08   262  
NOK   31,982   USD   6,204   06/18/08   (50 )
SEK   156   USD   27   05/01/08   1  
SEK   1,706   USD   285   05/05/08   —  
SEK   3,155   USD   524   05/05/08   (3 )
SEK   243   USD   41   06/18/08   1  
SEK   247   USD   42   06/18/08   1  
SEK   493   USD   83   06/18/08   1  
SEK   1,845   USD   305   06/18/08   (2 )
SEK   2,444   USD   407   06/18/08   —  
SEK   37,953   USD   6,283   06/18/08   (39 )
SGD   97   USD   70   06/18/08   (1 )
SGD   110   USD   82   06/18/08   —  
SGD   193   USD   140   06/18/08   (2 )
SGD   2,792   USD   2,029   06/18/08   (34 )
             
          184  
             

 


 

See accompanying notes which are an integral part of the financial statements.

 

International Fund   51

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Index Swap Contracts                               

Fund Receives
Underlying Security

   

Counter
Party

    Notional
Amount		    Fund Pays
Floating Rate		    Termination
Date		    Unrealized
Appreciation
(Depreciation)		  
                

MSCI Belgium
Local Net Total Return Index

    Merrill Lynch    EUR  

705

    1 Month EUR LIBOR
plus 0.01%		    06/18/08    6  

MSCI Belgium
Local Net Total Return Index

    Merrill Lynch    EUR  

1,772

    1 Month EUR LIBOR
plus 0.01%		    06/18/08    16  

MSCI Denmark
Local Net Total Return Index

    Merrill Lynch    DKK  

625

    1 Month DKK LIBOR
minus 0.08%		    06/18/08    (2 )

MSCI Denmark
Local Net Total Return Index

    Merrill Lynch    DKK  

10,754

    1 Month DKK LIBOR
minus 0.08%		    06/18/08    (20 )

MSCI Denmark
Local Net Total Return Index

    Merrill Lynch    DKK  

1,053

    1 Month DKK LIBOR
minus 0.08%		    06/18/08    (2 )
                    

Total Unrealized Appreciation (Depreciation) on Open Index Swaps

          (2 )
                    

 

See accompanying notes which are an integral part of the financial statements.

 

52   International Fund

Table of Contents

Russell Investment Company

International Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Industry Diversification    % of
Net
Assets		       

Market
Value

$

  
       
       

Auto and Transportation

    4.3        83,855  

Consumer Discretionary

    8.2        159,629  

Consumer Staples

    8.8        172,416  

Financial Services

    19.5        381,749  

Health Care

    6.0        117,819  

Integrated Oils

    6.7        130,911  

Materials and Processing

    12.4        241,593  

Miscellaneous

    1.1        21,015  

Other Energy

    2.7        52,726  

Producer Durables

    7.1        138,376  

Technology

    3.8        73,442  

Utilities

    11.3        219,540  

Options Purchased

    —        907  

Warrants & Rights

    0.1        1,861  

Short-Term Investments

    7.3        141,596  

Other Securities

    21.8        426,250  
               

Total Investments

    121.1        2,363,685  

Other Assets and Liabilities, Net

    (21.1 )      (411,293 )
               

Net Assets

    100.0        1,952,392  
               
Geographic Diversification    % of
Net
Assets		       

Market
Value

$

  
       

Africa

    0.5        9,855  

Asia

    8.6        168,421  

Europe

    42.3        826,343  

Japan

    15.7        305,618  

Latin America

    3.7        72,836  

Middle East

    0.8        15,411  

Netherlands Antilles

    0.2        3,303  

Other Regions

    10.9        212,072  

United Kingdom

    16.6        323,576  

Other Securities

    21.8        426,250  
               

Total Investments

    121.1        2,363,685  

Other Assets and Liabilities, Net

    (21.1 )      (411,293 )
               

Net Assets

    100.0        1,952,392  
               

 

See accompanying notes which are an integral part of the financial statements.

 

International Fund   53

Table of Contents

Russell Investment Company

International Fund

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of
Net
Assets		  
  
  

Australia

    3.5  

Austria

    0.4  

Belgium

    1.0  

Bermuda

    1.0  

Brazil

    1.4  

Canada

    3.0  

Cayman Islands

    0.4  

China

    0.3  

Cyprus

    0.1  

Czech Republic

    0.1  

Denmark

    0.8  

Egypt

    0.3  

Finland

    1.2  

France

    10.8  

Germany

    7.4  

Greece

    0.3  

Hong Kong

    1.6  

India

    0.3  

Indonesia

    0.1  

Ireland

    0.3  

Israel

    0.5  

Italy

    3.1  

Japan

    15.7  

Luxembourg

    0.4  

Malaysia

    0.1  

Mauritius

    — *

Mexico

    0.7  

Netherlands

    4.5  

Netherlands Antilles

    0.2  

New Zealand

    0.1  

Norway

    0.8  

Papua New Guinea

    — *

Portugal

    0.1  

Russia

    0.5  

Singapore

    0.7  

South Africa

    0.5  

South Korea

    1.3  

Spain

    2.9  

Sweden

    0.9  

Switzerland

    6.5  

Taiwan

    0.3  

Thailand

    0.2  

Turkey

    — *

United Kingdom

    16.6  

United States

    0.5  

Preferred Stocks

    0.5  

Options Purchased

    — *

Warrants & Rights

    0.1  

Short-Term Investments

    7.3  

Other Securities

    21.8  
      

Total Investments

    121.1  

Other Assets and Liabilities, Net

    (21.1 )
      
   100.0  
      
Categories    % of
Net
Assets		  
  

Futures Contracts

    0.6  

Options Written

    (0.1 )

Foreign Currency Exchange Contracts

    — *

Index Swap Contracts

    (— )*

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

54   International Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Shareholder Expense Example — April 30, 2008 (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 Semiannual 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 and administrative fees; distribution (12b-1) and/or service 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 November 1, 2007 to April 30, 2008.

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.

 

Class E

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,018.90    $ 1,020.39

Expenses Paid During Period*

    $ 4.52    $ 4.52

 

* 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 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class I

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,020.00    $ 1,021.63

Expenses Paid During Period*

    $ 3.26    $ 3.27

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.65% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Class Y

    Actual
Performance		    Hypothetical
Performance
(5% return
before expenses)
     

Beginning Account Value

      

November 1, 2007

    $ 1,000.00    $ 1,000.00

Ending Account Value

      

April 30, 2008

    $ 1,021.20    $ 1,021.83

Expenses Paid During Period*

    $ 3.07    $ 3.07

 

* Expenses are equal to the Fund’s annualized expense ratio of 0.61% (representing the six month period annualized), multiplied by the average account value over the period, multiplied by 182/366 (to reflect the one-half year period). Reflects amounts waived and/or reimbursed. Without the waiver and/or reimbursement, expenses would have been higher.

 

Fixed Income III Fund   55

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Long-Term Investments - 104.7%

        

Asset-Backed Securities - 12.3%

        

Accredited Mortgage Loan Trust (Ê)

        

Series 2004-2 Class A2

        

3.195% due 07/25/34

    71      37

ACE Securities Corp. (Ê)

        

Series 2003-HE1 Class M1

        

3.870% due 11/25/33

    1,131      1,013

Series 2003-OP1 Class M2

        

4.395% due 12/25/33

    110      81

Series 2004-IN1 Class A1

        

3.215% due 05/25/34

    97      83

Series 2005-HE2 Class M3

        

3.375% due 04/25/35

    260      220

Series 2005-HE3 Class A2C

        

3.215% due 05/25/35

    1,801      1,782

Series 2005-HE7 Class A2B

        

3.075% due 11/25/35

    169      167

Series 2005-SD3 Class A

        

3.295% due 08/25/45

    391      352

Series 2006-ASP Class A2A

        

2.975% due 10/25/36

    194      191

Series 2006-FM1 Class A2C

        

3.045% due 07/25/36

    2,870      2,008

Series 2006-HE2 Class A2C

        

3.055% due 05/25/36

    1,365      1,259

Series 2006-OP1 Class M3

        

3.205% due 04/25/36

    641      276

Aegis Asset Backed Securities Trust (Ê)

        

Series 2003-3 Class M2

        

4.545% due 01/25/34

    265      151

American Express Credit Account Master Trust (Ê)

        

Series 2004-1 Class B

        

2.966% due 09/15/11

    33      33

Series 2004-4 Class B

        

2.996% due 03/15/12

    494      481

Series 2004-5 Class B

        

2.966% due 04/16/12

    346      337

Series 2004-C Class C (Å)

        

3.216% due 02/15/12

    1,264      1,196

Series 2005-3 Class B

        

2.856% due 01/18/11

    133      133

Series 2007-3 Class A

        

2.716% due 10/15/12

    600      589

American Express Issuance Trust (Ê)

        

Series 2007-1 Class B

        

3.266% due 09/15/11

    1,200      1,120
     Principal
Amount ($)
or Shares		      Market
Value
$

AmeriCredit Automobile Receivables Trust

        

Series 2007-BF Class A2

        

5.310% due 01/06/11

    3,874      3,874

Series 2007-DF Class A2A

        

5.660% due 01/06/11

    2,397      2,407

Ameriquest Mortgage Securities, Inc. (Ê)

        

Series 2002-D Class M1

        

6.356% due 02/25/33

    145      100

Series 2004-R8 Class A5

        

3.265% due 09/25/34

    38      37

Series 2004-R10 Class A5

        

3.285% due 11/25/34

    1      1

Series 2005-R3 Class A1A

        

3.095% due 05/25/35

    2,030      1,963

Series 2005-R5 Class A2B

        

3.125% due 07/25/35

    273      270

Series 2005-R6 Class A2

        

3.095% due 08/25/35

    2,700      2,571

Series 2005-R7 Class A2C

        

3.155% due 09/25/35

    459      451

Series 2006-R1 Class A2C

        

3.085% due 08/01/16

    260      244

Argent Securities, Inc. (Ê)

        

Series 2005-W2 Class A2B1

        

3.095% due 10/25/35

    1,659      1,595

Series 2005-W2 Class A2B2

        

3.155% due 10/25/35

    429      413

Series 2006-M3 Class A2A

        

2.945% due 10/25/36

    268      263

Asset Backed Funding Certificates (Ê)

        

Series 2006-HE1 Class A2A

        

2.955% due 01/25/37

    453      440

Series 2006-HE1 Class A2C

        

3.055% due 01/25/37

    1,035      701

Series 2006-OPT Class A3A

        

2.955% due 10/25/36

    216      213

Series 2006-OPT Class M2

        

3.185% due 09/25/36

    341      88

Asset Backed Securities Corp.
Home Equity (Ê)

        

Series 2003-HE1 Class M2

        

6.241% due 01/15/33

    1,016      901

Series 2004-HE6 Class A1

        

3.170% due 09/25/34

    80      72

Series 2004-HE7 Class M9 (Þ)

        

6.099% due 10/25/34

    232      154

Series 2006-HE2 Class M3

        

3.285% due 03/25/36

    325      105

Series 2006-HE3 Class A4

        

3.065% due 03/25/36

    889      861

 

56   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Bank of America Credit Card Trust (Ê)

        

Series 2006-C4 Class C4

        

2.946% due 11/15/11

    5,082      4,766

Series 2006-C7 Class C7

        

2.946% due 03/15/12

    300      276

Series 2008-A1 Class A1

        

3.296% due 04/15/13

    500      494

Bank One Issuance Trust (Ê)

        

Series 2003-C4 Class C4

        

3.746% due 02/15/11

    527      527

Series 2004-B1 Class B1

        

3.036% due 03/15/12

    549      530

Bayview Financial Acquisition Trust

        

Series 2006-A Class 1A3

        

5.865% due 02/28/41

    340      283

Series 2006-C Class 2A1 (Ê)

        

2.996% due 11/28/36

    166      161

Bear Stearns Asset Backed Securities Trust (Ê)

        

Series 2004-BO1 Class 1A1

        

3.095% due 09/25/34

    2      2

Series 2005-AQ1 Class 2A1

        

3.115% due 03/25/35

    29      29

Series 2006-HE3 Class A1

        

2.975% due 04/25/36

    36      36

Series 2006-HE8 Class 2M1

        

3.225% due 10/25/36

    400      141

Series 2006-HE9 Class 1A2

        

3.045% due 11/25/36

    1,620      1,304

BNC Mortgage Loan Trust (Ê)

        

Series 2007-2 Class A2
2.995% due 05/25/37

    803      766

Capital One Multi-Asset Execution Trust

        

Series 2007-A7 Class A7
5.750% due 07/15/20

    1,110      1,094

Carmax Auto Owner Trust

        

Series 2007-2 Class A2

        

5.320% due 01/15/10

    1,134      1,140

Series 2008-1 Class A2 (Ê)

        

3.416% due 04/15/11

    1,250      1,246

Carrington Mortgage Loan Trust (Ê)

        

Series 2006-FRE Class A3

        

3.045% due 07/25/36

    675      577

Series 2006-NC3 Class A1

        

2.945% due 08/25/36

    1,034      1,021

Centex Home Equity (Ê)

        

Series 2006-A Class AV2
2.995% due 06/25/36

    2,665      2,593
     Principal
Amount ($)
or Shares		      Market
Value
$

Chase Credit Card Master Trust (Ê)

        

Series 2002-3 Class B

        

3.166% due 09/15/11

    412      402

Series 2003-3 Class B

        

3.066% due 10/15/10

    214      214

Series 2003-5 Class C

        

3.636% due 01/17/11

    2,000      1,984

Series 2003-6 Class B

        

3.066% due 02/15/11

    369      366

Series 2003-6 Class C

        

3.516% due 02/15/11

    400      395

Chase Issuance Trust

        

Series 2004-C3 Class C3 (Ê)

        

3.186% due 06/15/12

    300      281

Series 2005-A12 Class A (Ê)

        

2.726% due 02/15/11

    500      498

Series 2005-C1 Class C1 (Ê)

        

3.086% due 11/15/12

    2,000      1,830

Series 2005-C3 Class C3 (Ê)

        

3.056% due 11/15/12

    329      293

Series 2006-B1 Class B1 (Ñ)(Ê)

        

2.866% due 04/15/13

    800      727

Series 2006-B2 Class B (Ñ)(Ê)

        

2.816% due 10/15/12

    738      685

Series 2006-C3 Class C3 (Ê)

        

2.946% due 06/15/11

    415      398

Series 2007-A17 Class A

        

5.120% due 10/15/14

    105      106

CIT Mortgage Loan Trust (Ê)(Å)

        

Series 2007-1 Class 2A1

        

3.895% due 05/25/09

    1,329      1,196

Series 2007-1 Class 2A2

        

4.145% due 10/01/37

    400      260

Series 2007-1 Class 2A3

        

4.345% due 10/01/37

    747      411

Citibank Credit Card Issuance Trust

        

Series 2006-B1 Class B1 (Ê)

        

2.851% due 03/07/11

    4,000      3,903

Series 2007-A1 Class A1 (Ê)

        

2.589% due 03/22/12

    725      712

Series 2007-A8 Class A8

        

5.650% due 09/20/19

    335      331

Citigroup Mortgage Loan Trust, Inc. (Ê)

        

Series 2006-AMC Class A2B

        

3.055% due 09/25/36

    1,570      1,295

Series 2006-NC1 Class A2A

        

2.965% due 08/25/36

    87      87

Series 2006-NC2 Class A2A

        

2.935% due 09/25/36

    494      486

 

Fixed Income III Fund   57

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-NC2 Class A2B

        

3.055% due 09/25/36

    4,670      3,373

Series 2006-WFH Class A1

        

2.639% due 08/25/36

    73      72

Series 2007-AHL Class A3A

        

2.955% due 05/25/37

    2,087      1,949

Series 2007-AMC Class A2A

        

2.955% due 05/25/37

    2,152      2,066

Countrywide Asset-Backed Certificates

        

Series 2004-13 Class AF3

        

3.989% due 02/25/31

    16      16

Series 2004-AB2 Class M3 (Ê)

        

3.495% due 05/25/36

    230      149

Series 2004-BC1 Class M1 (Ê)

        

3.395% due 02/25/34

    159      129

Series 2004-S1 Class A2

        

3.872% due 03/25/20

    41      39

Series 2005-7 Class 3AV3 (Ê)

        

3.305% due 06/25/35

    2,000      1,955

Series 2005-11 Class 3AV2 (Ê)

        

3.185% due 02/25/36

    1,888      1,847

Series 2005-16 Class 2AF1 (Ê)

        

3.045% due 05/25/36

    104      102

Series 2005-AB1 Class A2 (Ê)

        

3.105% due 10/25/34

    1,498      1,488

Series 2006-1 Class AF3

        

5.348% due 07/25/36

    100      91

Series 2006-2 Class 2A2 (Ê)

        

3.085% due 06/25/36

    589      546

Series 2006-3 Class 2A2 (Ê)

        

3.075% due 06/25/36

    1,050      995

Series 2006-6 Class 2A3 (Ê)

        

3.175% due 09/25/36

    5,285      3,370

Series 2006-11 Class 1AF4

        

6.300% due 09/25/46

    405      350

Series 2006-13 Class 1AF3

        

5.944% due 01/25/37

    1,035      978

Series 2006-15 Class A3

        

5.689% due 10/25/46

    260      236

Series 2006-17 Class 2A1 (Ê)

        

2.945% due 03/25/47

    161      159

Series 2006-BC1 Class 2A2 (Ê)

        

3.075% due 04/25/36

    189      184

Series 2006-S2 Class A2

        

5.627% due 07/25/27

    385      290

Series 2006-S3 Class A2

        

6.085% due 06/25/21

    540      315

Series 2006-S6 Class A2

        

5.519% due 03/25/34

    555      523
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-S7 Class A3

        

5.712% due 11/25/35

    2,575      931

Series 2006-S9 Class A3

        

5.728% due 08/25/36

    665      548

Series 2007-4 Class A2

        

5.530% due 03/25/37

    540      512

Series 2007-7 Class 2A1 (Ê)

        

2.975% due 10/25/37

    788      760

Countrywide Home Equity Loan Trust (Ê)

        

Series 2006-HW Class 2A1B

        

2.866% due 11/15/36

    1,283      1,077

Credit Suisse First Boston Mortgage Securities Corp.

        

Series 2005-AGE Class A2

        

4.640% due 02/25/32

    282      282

Credit-Based Asset Servicing and Securitization LLC

        

Series 2006-CB5 Class A1 (Ê)

        

2.955% due 06/25/36

    104      103

Series 2007-CB1 Class AF2

        

5.721% due 01/25/37

    335      301

CSAB Mortgage Backed Trust

        

Series 2006-3 Class A1B2 (Ê)

        

2.990% due 11/25/36

    242      229

Series 2006-4 Class A1A

        

5.868% due 12/25/36

    574      547

Dunkin Securitization (Þ)

        

Series 2006-1 Class A2

        

5.779% due 06/20/31

    860      774

FBR Securitization Trust (Ê)

        

Series 2005-2 Class AV3A

        

3.185% due 09/25/35

    2,961      2,798

Fieldstone Mortgage Investment Corp. (Ê)

        

Series 2006-1 Class A2

        

3.085% due 05/25/36

    1,605      1,340

Series 2006-3 Class 2A3

        

3.055% due 11/25/36

    820      530

Series 2006-3 Class M1

        

3.155% due 11/25/36

    665      186

First Franklin Mortgage Loan Asset Backed Certificates (Ê)

        

Series 2005-FF4 Class 2A3

        

3.115% due 05/25/35

    37      37

Series 2005-FF8 Class A2C

        

3.165% due 09/25/35

    3,107      3,001

Series 2005-FF9 Class A2

        

3.015% due 10/25/35

    37      37

 

58   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2005-FFH Class A2B

        

3.145% due 06/25/36

    471      470

Series 2006-FF1 Class 2A1

        

2.935% due 08/25/36

    336      329

Series 2006-FF1 Class A2

        

2.945% due 07/25/36

    222      218

2.955% due 10/25/36

    250      228

Series 2006-FF1 Class A3

        

2.945% due 11/25/36

    571      542

Series 2006-FF2 Class A2

        

2.965% due 02/25/36

    50      50

Series 2006-FF9 Class M1

        

3.145% due 06/25/36

    3,150      970

First USA Credit Card Master Trust (Ê)

        

Series 1998-6 Class A

        

2.892% due 04/18/11

    1,200      1,199

Ford Credit Auto Owner Trust (Ê)

        

Series 2008-A Class A2

        

3.316% due 07/15/10

    2,000      1,994

Fremont Home Loan Trust (Ê)

        

Series 2006-3 Class 2A1

        

2.965% due 02/25/37

    124      120

Series 2006-3 Class 2A2

        

3.015% due 02/25/37

    2,290      2,009

Series 2006-A Class 2A2

        

2.995% due 05/25/36

    300      291

Series 2006-A Class M2

        

3.215% due 05/25/36

    270      98

Series 2006-D Class 2A1

        

2.955% due 11/25/36

    493      457

Series 2006-E Class 2A1

        

2.955% due 01/25/37

    264      247

GE Capital Credit Card Master Note Trust

        

Series 2005-3 Class B (Ê)

        

3.016% due 06/15/13

    296      266

Series 2006-1 Class A

        

5.080% due 09/15/12

    832      845

Series 2006-1 Class B (Ê)

        

2.826% due 09/15/12

    500      477

GMAC Mortgage Corp. Loan Trust

        

Series 2004-HE5 Class A3

        

3.970% due 09/25/34

    3      3

Series 2007-HE2 Class A2

        

6.054% due 12/25/37

    560      332

Series 2007-HE3 Class 1A1

        

7.000% due 09/25/37

    318      182

Series 2007-HE3 Class 2A1

        

7.000% due 09/25/37

    362      203
     Principal
Amount ($)
or Shares		      Market
Value
$

Green Tree Financial Corp.

        

Series 1994-1 Class A5

        

7.650% due 04/15/19

    738      754

Series 1994-3 Class A5

        

8.400% due 06/15/19

    623      644

Series 1994-5 Class A5

        

8.300% due 12/15/19

    1,096      1,130

GSAA Trust

        

Series 2006-2 Class 2A3 (Ê)

        

3.165% due 12/25/35

    595      442

Series 2006-4 Class 1A2

        

5.940% due 03/25/36

    422      267

GSAMP Trust (Ê)

        

Series 2003-HE2 Class M1

        

3.545% due 08/25/33

    192      150

Series 2004-SEA Class A2A

        

3.185% due 03/25/34

    71      70

Series 2006-FM1 Class A2C

        

3.055% due 04/25/36

    500      384

Series 2006-FM2 Class A2A

        

2.965% due 09/25/36

    589      576

Series 2006-HE4 Class A2A

        

2.965% due 06/25/36

    101      100

Series 2007-H1 Class M1

        

3.235% due 02/25/37

    1,369      338

HFC Home Equity Loan Asset Backed Certificates (Ê)

        

Series 2005-1 Class A

        

3.090% due 01/20/34

    530      438

Series 2007-3 Class A1

        

3.600% due 11/20/36

    1,147      1,143

Series 2007-3 Class APT

        

4.000% due 11/20/36

    1,362      1,151

Home Equity Asset Trust (Ê)

        

Series 2005-5 Class 2A2

        

3.145% due 11/25/35

    1,609      1,574

Series 2005-7 Class M1

        

3.345% due 01/25/36

    2,375      1,559

Series 2006-3 Class 2A2

        

3.025% due 07/25/36

    2,125      2,084

Series 2006-4 Class M3

        

3.255% due 08/25/36

    479      144

Series 2006-7 Class 2A3

        

3.045% due 01/25/37

    1,000      662

Household Automotive Trust

        

Series 2006-1 Class A3

        

5.430% due 06/17/11

    1,679      1,691

Series 2006-2 Class A3

        

5.610% due 08/17/11

    537      544

 

Fixed Income III Fund   59

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Household Credit Card Master Note Trust I

        

Series 2006-1 Class A

        

5.100% due 06/15/12

    465      469

Series 2006-1 Class B (Ê)

        

2.856% due 06/15/12

    264      251

HSI Asset Securitization Corp. Trust (Ê)

        

Series 2006-HE1 Class 2A1

        

2.945% due 10/25/36

    907      843

Series 2006-HE2 Class 2A1

        

2.945% due 12/25/36

    191      180

Series 2006-HE2 Class M1

        

3.135% due 12/25/36

    260      56

Series 2006-OPT Class 2A1

        

2.975% due 12/25/35

    5      5

Indymac Residential Asset Backed Trust (Ê)

        

Series 2006-H2 Class A

        

2.828% due 06/28/36

    617      538

IXIS Real Estate Capital Trust (Ê)

        

Series 2006-HE2 Class M2

        

3.215% due 08/25/36

    921      348

Series 2006-HE3 Class A1

        

2.945% due 10/25/36

    579      565

JP Morgan Mortgage Acquisition Corp. (Ê)

        

Series 2006-CW1 Class A2

        

2.935% due 07/25/28

    17      17

Series 2006-HE1 Class A2

        

2.975% due 01/25/36

    37      37

Series 2006-WMC Class A2

        

2.945% due 07/25/30

    145      143

2.945% due 08/25/36

    359      352

Series 2006-WMC Class A3

        

3.015% due 03/25/36

    754      738

Series 2007-HE1 Class AV1

        

2.955% due 04/25/09

    461      431

Lehman XS Trust (Ê)

        

Series 2005-1 Class 2A2

        

4.660% due 07/25/35

    168      127

Series 2006-2N Class 1A2

        

3.235% due 02/25/46

    619      387

Series 2005-5N Class 3A1A

        

3.195% due 11/25/35

    723      593

Series 2005-9N Class 1A1

        

3.165% due 02/25/36

    916      747

Series 2006-16N Class A1A

        

2.975% due 11/25/46

    361      343
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-16N Class A4A

        

3.085% due 11/25/46

    1,206      939

Long Beach Mortgage Loan Trust (Ê)

        

Series 2002-5 Class M1

        

4.140% due 11/25/32

    843      652

Series 2003-3 Class M1

        

4.020% due 07/25/33

    1,489      1,233

Series 2004-4 Class 1A1

        

3.175% due 10/25/34

    9      8

Series 2004-6 Class A3

        

3.545% due 11/25/34

    880      745

Series 2005-3 Class 2A2

        

3.175% due 09/25/35

    423      409

Series 2005-WL2 Class 3A3

        

3.165% due 08/25/35

    1,283      1,250

Series 2005-WL3 Class 2A2A

        

3.035% due 11/25/35

    2,352      2,317

Series 2006-4 Class 2A1

        

2.945% due 05/25/36

    105      104

Mastr Asset Backed Securities Trust (Ê)

        

Series 2003-WMC Class M2

        

5.370% due 08/25/33

    99      58

Series 2006-AM3 Class A1

        

2.955% due 10/25/36

    34      33

Series 2006-WMC Class A1

        

2.965% due 02/25/36

    8      8

Series 2006-WMC Class M1

        

3.125% due 10/25/36

    1,250      318

Mastr Specialized Loan Trust (Þ)

        

Series 2005-2 Class A2

        

5.006% due 07/25/35

    141      109

MBNA Credit Card Master Note Trust (Ê)

        

Series 2003-B5 Class B5

        

3.086% due 02/15/11

    500      495

Series 2003-C3 Class C3

        

4.066% due 10/15/10

    85      85

Series 2003-C6 Class C6

        

3.896% due 12/15/10

    1,700      1,689

Series 2005-C3 Class C

        

2.986% due 03/15/11

    3,195      3,127

MBNA Master Credit Card Trust

        

Series 2000-E Class A

        

7.800% due 10/15/12

    705      750

Merrill Lynch Mortgage Investors, Inc. (Ê)

        

Series 2006-HE1 Class A2A

        

2.975% due 12/25/36

    66      66

Series 2006-RM1 Class A2A

        

2.965% due 02/25/37

    48      48

 

60   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Mid-State Trust

        

Series 2003-11 Class A1

        

4.864% due 07/15/38

    47      45

Series 2004-1 Class A

        

6.005% due 08/15/37

    46      46

Series 2005-1 Class A

        

5.745% due 01/15/40

    131      102

Series 2006-1 Class A (Þ)

        

5.787% due 10/15/40

    225      216

Morgan Stanley ABS Capital I (Ê)

        

Series 2003-NC8 Class M1

        

3.945% due 09/25/33

    750      580

Series 2003-NC8 Class M3

        

6.045% due 09/25/33

    64      35

Series 2006-HE1 Class A2

        

3.015% due 01/25/36

    628      626

Series 2006-HE1 Class A3

        

3.075% due 01/25/36

    3,835      3,671

Series 2006-HE2 Class M1

        

3.225% due 03/25/36

    4,013      2,486

Series 2006-HE2 Class M2

        

3.245% due 03/25/36

    483      221

Series 2006-HE3 Class A2A

        

2.935% due 04/25/36

    5      5

Series 2006-HE3 Class A2C

        

3.055% due 04/25/36

    490      444

Series 2006-HE3 Class M2

        

3.195% due 04/25/36

    4,815      2,028

Series 2006-HE4 Class A1

        

2.935% due 06/25/36

    56      56

Series 2006-HE5 Class A2C

        

3.035% due 08/25/36

    2,000      1,542

Series 2006-HE8 Class A2C

        

3.035% due 10/25/36

    1,755      1,355

Series 2006-WMC Class A2C

        

3.045% due 06/25/36

    2,265      1,655

Series 2006-WMC Class A2FP

        

2.945% due 07/25/36

    344      328

Morgan Stanley Home Equity Loans (Ê)

        

Series 2006-1 Class A2A

        

2.975% due 12/25/35

    18      18

Series 2006-3 Class A1

        

2.945% due 04/25/36

    2      2

Morgan Stanley Mortgage Loan Trust (Ê)

        

Series 2006-17X Class A1

        

3.015% due 10/25/46

    262      237

Nationstar Home Equity Loan Trust (Ê)

        

Series 2006-B Class AV1

        

2.965% due 09/25/36

    228      225
     Principal
Amount ($)
or Shares		      Market
Value
$

New Century Home Equity Loan Trust (Ê)

        

Series 2004-4 Class M2

        

3.425% due 02/25/35

    380      289

Series 2006-1 Class M2

        

3.255% due 05/25/36

    1,555      844

Newcastle Mortgage Securities Trust (Ê)

        

Series 2006-1 Class A1

        

2.965% due 03/25/36

    12      12

Option One Mortgage Loan Trust (Ê)

        

Series 2003-2 Class M2

        

5.445% due 04/25/33

    77      36

Series 2003-3 Class M3

        

4.895% due 06/25/33

    60      13

Series 2003-4 Class M2

        

4.545% due 07/25/33

    49      29

Series 2005-2 Class A5

        

3.225% due 05/25/35

    609      588

Series 2005-3 Class A4

        

3.145% due 08/25/35

    903      899

Series 2005-4 Class A3

        

3.155% due 11/25/35

    413      396

Series 2006-1 Class 2A2

        

3.025% due 01/25/36

    2,252      2,205

Park Place Securities, Inc. (Ê)

        

Series 2004-MCW Class A1

        

3.207% due 10/25/34

    389      330

Series 2005-WCW Class M1

        

3.345% due 09/25/35

    375      274

Popular ABS Mortgage Pass-Through Trust

        

Series 2005-6 Class A3

        

5.680% due 01/25/36

    415      412

RAAC Series (Ê)

        

Series 2006-SP1 Class A1

        

2.995% due 09/25/45

    9      8

Renaissance Home Equity Loan Trust

        

Series 2005-1 Class M1

        

5.357% due 05/25/35

    190      135

Series 2005-2 Class AF4

        

4.934% due 08/25/35

    205      188

Series 2005-4 Class A3

        

5.565% due 02/25/36

    103      102

Series 2006-1 Class AF3

        

5.608% due 05/25/36

    200      194

Series 2006-1 Class AF6

        

5.746% due 05/25/36

    320      248

Series 2006-1 Class AV1 (Ê)

        

2.975% due 05/25/36

    26      26

 

Fixed Income III Fund   61

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-2 Class AV1 (Ê)

        

2.945% due 08/25/36

    41      41

Series 2006-3 Class AF1

        

5.917% due 11/25/36

    183      183

Series 2007-1 Class AF2

        

5.512% due 04/25/37

    575      537

Series 2007-2 Class AF2

        

5.675% due 06/25/37

    390      365

Residential Asset Mortgage Products, Inc.

        

Series 2003-RS1 Class AI6A

        

5.980% due 12/25/33

    324      280

Series 2006-RZ3 Class A1 (Ê)

        

2.965% due 08/25/36

    292      286

Series 2006-RZ4 Class A1A (Ê)

        

2.975% due 10/25/36

    292      280

Residential Asset Securities Corp.

        

Series 2001-KS3 Class AII (Ê)

        

3.355% due 09/25/31

    38      33

Series 2003-KS2 Class MI1

        

4.800% due 04/25/33

    759      447

Series 2003-KS2 Class MI3

        

6.100% due 04/25/33

    135      25

Series 2003-KS4 Class AIIB (Ê)

        

3.475% due 06/25/33

    90      80

Series 2005-AHL Class A2 (Ê)

        

3.165% due 07/25/35

    149      146

Series 2005-KS6 Class A3 (Ê)

        

3.125% due 07/25/35

    1,218      1,207

Series 2005-KS8 Class A3 (Ê)

        

3.155% due 08/25/35

    986      976

Series 2006-KS1 Class A2 (Ê)

        

3.035% due 02/25/36

    436      431

Series 2006-KS2 Class A2 (Ê)

        

3.025% due 03/25/36

    1,396      1,379

Series 2006-KS3 Class AI2 (Ê)

        

3.015% due 04/25/36

    526      517

Residential Funding Mortgage Securities II, Inc. (Ê)

        

Series 2006-HI1 Class A1

        

3.005% due 02/25/36

    42      42

Saxon Asset Securities Trust (Ê)

        

Series 2005-4 Class A2C

        

3.145% due 11/25/37

    1,101      1,077

Series 2006-3 Class A1

        

2.955% due 10/25/46

    286      277

SBI Heloc Trust (Ê)(Þ)

        

Series 2006-1A Class 1A2A

        

3.065% due 08/25/36

    192      185
     Principal
Amount ($)
or Shares		      Market
Value
$

Securitized Asset Backed Receivables LLC Trust (Ê)

        

Series 2005-HE1 Class A1A (Å)

        

3.195% due 10/25/35

    4,019      3,953

Series 2006-FR4 Class A2A

        

2.975% due 08/25/36

    3,220      2,916

Series 2006-HE1 Class M1

        

3.195% due 05/25/36

    1,203      367

Series 2006-OP1 Class A2B

        

3.095% due 10/25/35

    356      350

Series 2007-NC1 Class A2B

        

3.045% due 12/25/36

    600      373

SG Mortgage Securities Trust (Ê)

        

Series 2006-FRE Class A2B

        

3.075% due 02/25/36

    935      768

SLC Student Loan Trust (Ê)

        

Series 2007-1 Class A1

        

3.045% due 02/15/15

    519      516

SLM Student Loan Trust (Ê)

        

Series 2006-3 Class A2

        

2.920% due 01/25/16

    28      28

Series 2006-8 Class A2

        

2.920% due 10/25/16

    449      445

Series 2007-3 Class A1

        

2.910% due 10/27/14

    943      937

Series 2008-2 Class A1

        

3.220% due 01/26/15

    195      195

Small Business Administration Participation Certificates

        

Series 2005-20G Class 1

        

4.750% due 07/01/25

    1,348      1,318

Soundview Home Equity Loan Trust

        

Series 2005-4 Class 2A3 (Ê)

        

3.125% due 03/25/36

    2,059      2,022

Series 2005-OPT Class 2A3 (Ê)

        

3.155% due 12/25/35

    1,166      1,063

Series 2006-EQ1 Class A1 (Ê)

        

2.945% due 10/25/36

    142      139

Series 2006-EQ2 Class A1 (Ê)

        

2.975% due 01/25/37

    1,168      1,134

Series 2006-OPT Class A2 (Ê)

        

3.015% due 05/25/36

    195      193

Series 2006-OPT Class M3 (Ê)

        

3.215% due 07/25/36

    801      268

Series 2006-WF1 Class A1F

        

5.998% due 10/25/36

    1,970      1,946

Series 2006-WF1 Class A2

        

5.645% due 10/25/36

    695      666

 

62   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Specialty Underwriting & Residential Finance (Ê)

        

Series 2005-BC4 Class A2B

        

3.125% due 09/25/36

    1,815      1,749

Series 2006-AB1 Class A1

        

2.975% due 12/25/36

    36      35

Series 2006-AB2 Class A2A

        

2.935% due 06/25/37

    137      136

Series 2006-BC1 Class A2B

        

3.045% due 12/25/36

    2,500      2,431

Series 2006-BC3 Class M2

        

3.185% due 06/25/37

    561      241

Series 2006-BC5 Class A2D

        

3.045% due 11/25/37

    4,980      3,893

Series 2006-BC5 Class M1

        

3.135% due 11/25/37

    900      241

Structured Asset Investment Loan Trust (Ê)

        

Series 2003-BC1 Class 3A

        

3.575% due 11/25/33

    12      11

Series 2003-BC1 Class A2

        

3.575% due 01/25/33

    1,210      1,100

Series 2005-3 Class M2

        

3.335% due 04/25/35

    210      140

Series 2005-6 Class A8

        

3.135% due 07/25/35

    731      725

Series 2005-7 Class A4

        

3.085% due 08/25/35

    1,224      1,203

Series 2006-BNC Class A2

        

2.935% due 09/25/36

    406      397

Series 2006-BNC Class A3

        

3.045% due 09/25/36

    6,000      4,105

Structured Asset Securities Corp.

        

Series 2001-SB1 Class A2

        

3.375% due 08/25/31

    199      166

Series 2004-16X Class A2

        

4.910% due 08/25/34

    6      6

Series 2004-19X Class A2

        

4.370% due 10/25/34

    105      103

Series 2005-GEL Class A (Ê)

        

3.245% due 12/25/34

    92      88

Series 2006-BC3 Class A2 (Ê)

        

2.945% due 10/25/36

    942      913

Series 2006-BC6 Class A4 (Ê)

        

3.065% due 01/25/37

    1,050      759

Terwin Mortgage Trust (Þ)

        

Series 2006-2HG Class A1

        

4.500% due 03/25/37

    345      162
     Principal
Amount ($)
or Shares		      Market
Value
$

Triad Auto Receivables Owner Trust

        

Series 2006-C Class A3

        

5.260% due 11/14/11

    1,688      1,662

Series 2007-A Class A2

        

5.350% due 03/14/11

    1,156      1,156

TXU Electric Delivery Transition Bond Co. LLC

        

Series 2004-1 Class A2

        

4.810% due 11/17/14

    100      100

USAA Auto Owner Trust

        

Series 2008-1 Class A3

        

4.160% due 04/16/12

    295      292

Wachovia Auto Loan Owner Trust (Ê)

        

Series 2008-1 Class A2B

        

3.650% due 03/21/11

    2,000      1,995

Washington Mutual Asset-Backed Certificates (Ê)

        

Series 2006-HE2 Class A1

        

2.935% due 05/25/36

    58      57

Wells Fargo Home Equity Trust (Ê)

        

Series 2006-3 Class A1

        

2.945% due 01/25/37

    177      172
         
        222,862
         

Certificates of Deposit - 0.1%

        

Bank of Ireland Governor & Co.

        

4.298% due 01/15/10

    2,200      2,162
         

Corporate Bonds and Notes - 18.3%

     

Abbott Laboratories

        

5.875% due 05/15/16

    285      300

5.600% due 11/30/17

    256      265

AbitibiBowater, Inc.

        

9.000% due 08/01/09

    785      648

Ace Capital Trust II

        

9.700% due 04/01/30

    375      433

AES Corp. (The)

        

9.500% due 06/01/09

    375      389

Aetna, Inc.

        

6.750% due 12/15/37

    560      550

AIG SunAmerica Global Financing VI (Å)

        

Series 144a
6.300% due 05/10/11

    630      652

Alamosa Delaware, Inc.

        

8.500% due 01/31/12

    195      181

Allied Waste North America, Inc.

        

Series B
7.125% due 05/15/16

    160      161

 

Fixed Income III Fund   63

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Allison Transmission (Ñ)(Þ)

        

Series 144a
11.000% due 11/01/15

    770      757

Allstate Life Global Funding Trusts

        

Series MTN
5.375% due 04/30/13

    500      508

American Airlines, Inc.

        

Series 01-1

        

6.817% due 11/23/12

    1,655      1,531

6.977% due 05/23/21

    54      48

American Electric Power Co., Inc.

        

Series C
5.375% due 03/15/10

    40      41

American Express Bank FSB

        

Series BKNT

        

5.500% due 04/16/13 (Ñ)

    2,475      2,476

6.000% due 09/13/17

    100      101

American Express Centurion Bank

        

Series BKN1

        

6.000% due 09/13/17

    100      101

Series BKNT (Ê)

        

2.738% due 06/12/09

    800      793

American Express Co.

        

7.000% due 03/19/18

    400      430

American Express Credit Corp. (Ê)

        

Series MTN
2.784% due 11/09/09

    200      198

American General Finance Corp.

        

6.900% due 12/15/17

    800      791

Series MTN

        

4.875% due 05/15/10

    425      422

American International Group, Inc.

        

4.700% due 10/01/10

    440      440

5.375% due 10/18/11

    560      568

5.050% due 10/01/15

    765      737

6.250% due 03/15/87

    700      617

Series 144a (Ê)(Þ)

        

2.763% due 06/16/09

    300      300

Series MTN

        

5.850% due 01/16/18

    1,900      1,899

Americo Life, Inc. (Å)

        

Series 144a
7.875% due 05/01/13

    100      103

Ameriprise Financial, Inc.

        

7.518% due 06/01/66

    2,155      1,990

AmerisourceBergen Corp.

        

5.875% due 09/15/15

    15      15

Series WI

        

5.625% due 09/15/12

    795      793
     Principal
Amount ($)
or Shares		      Market
Value
$

Anadarko Petroleum Corp.

        

5.950% due 09/15/16

    225      231

ANZ Capital Trust (ƒ)(Þ)

        

Series 144a
4.484% due 12/31/49

    575      541

Apache Corp.

        

5.250% due 04/15/13

    425      436

Appalachian Power Co.

        

Series O
5.650% due 08/15/12

    185      187

ARAMARK Corp.

        

Series WI

        

6.739% due 02/01/15 (Ê)

    325      313

8.500% due 02/01/15 (Ñ)

    480      500

ArcelorMittal USA

        

6.500% due 04/15/14

    570      584

Arizona Public Service Co.

        

5.800% due 06/30/14

    150      144

6.250% due 08/01/16

    500      478

AT&T Corp.

        

7.300% due 11/15/11

    335      360

8.000% due 11/15/31

    665      800

AT&T, Inc.

        

3.195% due 02/05/10 (Ê)

    200      199

4.950% due 01/15/13

    100      101

5.500% due 02/01/18

    100      100

6.300% due 01/15/38

    2,215      2,211

Atmos Energy Corp.

        

6.350% due 06/15/17

    210      210

Avista Capital Trust III

        

6.500% due 04/01/34

    360      363

Axcan Intermediate Holdings, Inc. (Å)

        

9.250% due 03/01/15

    1,000      1,002

BAE Systems Holdings, Inc. (Þ)

        

Series 144a
6.400% due 12/15/11

    2,580      2,684

Bank of America Corp.

        

3.155% due 11/06/09 (Ê)

    200      198

5.375% due 09/11/12 (Ñ)

    1,100      1,132

5.625% due 10/14/16

    145      147

6.000% due 09/01/17

    975      1,015

5.750% due 12/01/17

    2,300      2,344

5.650% due 05/01/18

    1,360      1,358

8.000% due 12/29/49 (ƒ)

    9,175      9,334

8.125% due 12/29/49 (ƒ)

    2,600      2,657

Bank of America NA (Ê)

        

Series BKNT
2.901% due 06/12/09

    1,300      1,294

 

64   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Bank of New York Mellon Corp. (The)

        

Series MTN
5.125% due 11/01/11

    725      739

Bear Stearns Cos., Inc. (The)

        

5.550% due 01/22/17 (Ñ)

    520      503

6.400% due 10/02/17

    1,575      1,625

7.250% due 02/01/18

    2,235      2,444

Series MTN (Ê)

        

2.979% due 07/16/09

    2,200      2,121

3.160% due 08/21/09 (Ñ)

    1,300      1,278

BellSouth Corp.

        

6.550% due 06/15/34

    85      85

Bellsouth Telecommunications, Inc.

        

7.000% due 12/01/95

    680      677

BNP Paribas Capital Trust (ƒ)(Å)

        

Series 144a
9.003% due 12/29/49

    850      870

Boardwalk Pipelines, LP

        

5.875% due 11/15/16

    425      414

Boeing Capital Corp.

        

6.100% due 03/01/11

    120      126

Boston Scientific Corp.

        

6.400% due 06/15/16

    1,430      1,380

BP AMI Leasing, Inc. (Ê)(Þ)

        

Series 144a
2.616% due 06/26/09

    1,000      1,000

Bristol-Myers Squibb Co.

        

5.450% due 05/01/18

    75      76

Burlington Northern Santa Fe Corp.

        

6.750% due 07/15/11

    20      21

5.650% due 05/01/17

    370      372

6.875% due 12/01/27

    60      62

Caesars Entertainment, Inc. (Ñ)

        

8.125% due 05/15/11

    2,100      1,777

Capmark Financial Group, Inc.

        

5.875% due 05/10/12

    1,090      906

6.300% due 05/10/17

    1,385      1,008

Cargill, Inc. (Þ)

        

Series 144a
5.200% due 01/22/13

    800      799

Carolina Power & Light Co.

        

6.500% due 07/15/12

    45      48

Catlin Insurance Co., Ltd. (ƒ)(Å)

        

Series 144a
7.249% due 12/31/49

    200      167

CCH I Holdings LLC/CCH I Holdings Capital Corp. (Ñ)

        

13.500% due 01/15/14

    1,220      848
     Principal
Amount ($)
or Shares		      Market
Value
$

CenterPoint Energy Houston Electric LLC

        

Series J2
5.700% due 03/15/13

    135      139

CenterPoint Energy Resources Corp.

        

6.125% due 11/01/17

    255      257

6.250% due 02/01/37

    55      51

Series B

        

7.875% due 04/01/13

    675      737

Charter Communications, Inc. (Ñ)(Þ)

        

Series 144a
10.875% due 09/15/14

    855      904

Chubb Corp.

        

6.000% due 05/11/37

    325      304

6.375% due 03/29/67 (Ñ)

    450      420

CIT Group, Inc.

        

3.100% due 06/08/09 (Ê)

    100      90

Series MTN (Ê)

        

3.190% due 08/17/09

    700      607

Citigroup Capital XXI

        

8.300% due 12/21/57

    1,305      1,332

Citigroup Funding, Inc. (Ê)

        

Series MTN
2.606% due 06/26/09

    400      393

Citigroup, Inc.

        

2.701% due 12/28/09 (Ê)

    700      686

6.500% due 01/18/11

    210      217

5.500% due 08/27/12

    600      601

5.300% due 10/17/12

    200      199

5.500% due 04/11/13

    2,465      2,480

5.850% due 07/02/13

    1,550      1,568

4.700% due 05/29/15

    170      158

5.850% due 08/02/16

    150      151

6.000% due 08/15/17

    500      502

6.125% due 11/21/17

    1,335      1,355

6.125% due 08/25/36

    200      184

6.875% due 03/05/38

    875      905

8.400% due 04/29/49 (ƒ)

    2,790      2,824

Citizens Communications Co.

        

9.250% due 05/15/11 (Ñ)

    250      264

9.000% due 08/15/31

    910      839

Clorox Co.

        

4.200% due 01/15/10

    155      155

CNA Financial Corp.

        

6.500% due 08/15/16

    275      270

Columbus Southern Power Co.

        

Series C
5.500% due 03/01/13

    75      76

 

Fixed Income III Fund   65

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Comcast Cable Communications Holdings, Inc.

        

9.455% due 11/15/22

    250      304

Comcast Cable Communications LLC

        

6.750% due 01/30/11

    140      145

Comcast Cable Holdings LLC

        

9.800% due 02/01/12

    350      395

7.875% due 08/01/13

    670      728

Comcast Corp.

        

3.010% due 07/14/09 (Ê)

    500      491

5.500% due 03/15/11

    525      529

6.500% due 01/15/15

    105      110

5.900% due 03/15/16

    530      536

6.500% due 01/15/17

    210      219

6.300% due 11/15/17

    2,615      2,717

5.875% due 02/15/18

    100      100

6.500% due 11/15/35

    225      225

6.450% due 03/15/37

    425      423

6.950% due 08/15/37

    385      407

Comcast Holdings Corp.

        

10.625% due 07/15/12

    475      559

Commonwealth Edison Co.

        

6.150% due 09/15/17

    330      338

6.950% due 07/15/18

    100      101

6.450% due 01/15/38

    135      133

Series 100

        

5.875% due 02/01/33

    300      275

Series 105

        

5.400% due 12/15/11

    225      228

Series 98

        

6.150% due 03/15/12

    220      228

Community Health Systems, Inc.

        

Series WI
8.875% due 07/15/15

    1,660      1,726

ConAgra Foods, Inc.

        

7.000% due 10/01/28

    135      134

Consolidated Natural Gas Co.

        

Series C
6.250% due 11/01/11

    80      83

Constellation Brands, Inc. (Ñ)

        

Series B
8.125% due 01/15/12

    620      632

Continental Airlines, Inc.

        

Series 01-1
6.503% due 06/15/11

    970      951

Cooper Industries, Inc.

        

Series WI
5.250% due 11/15/12

    165      168

Costco Wholesale Corp.

        

5.500% due 03/15/17

    200      204
     Principal
Amount ($)
or Shares		      Market
Value
$

Countrywide Home Loans, Inc.

        

Series MTN

        

4.125% due 09/15/09

    450      420

Series MTNK

        

5.625% due 07/15/09

    300      285

COX Communications, Inc.

        

4.625% due 01/15/10

    1,110      1,105

Series 144a (Þ)

        

5.875% due 12/01/16

    175      177

Credit Suisse USA, Inc.

        

4.875% due 08/15/10

    130      132

5.250% due 03/02/11

    210      214

5.500% due 08/15/13

    55      56

4.875% due 01/15/15

    175      170

CSC Holdings, Inc.

        

Series B

        

8.125% due 07/15/09

    620      632

8.125% due 08/15/09

    515      525

Series WI (Ñ)

        

6.750% due 04/15/12

    160      157

CVS Caremark Corp.

        

5.750% due 06/01/17

    310      314

Daimler Finance North America LLC

        

8.500% due 01/18/31

    150      173

Series MTN (Ê)

        

3.562% due 08/03/09

    400      394

Darden Restaurants, Inc.

        

6.200% due 10/15/17

    210      204

6.800% due 10/15/37

    240      222

Dayton Power & Light Co. (The)

        

5.125% due 10/01/13

    395      403

DCP Midstream LLC

        

6.875% due 02/01/11

    20      21

Delhaize America, Inc.

        

9.000% due 04/15/31

    309      382

Delta Air Lines, Inc.

        

6.821% due 08/10/22

    589      565

Series 00-1

        

7.379% due 05/18/10

    325      323

7.570% due 11/18/10

    1,060      1,028

Series 01-1

        

7.111% due 09/18/11

    250      244

Detroit Edison Co. (The)

        

6.350% due 10/15/32

    130      131

Developers Diversified Realty Corp.

        

4.625% due 08/01/10

    355      345

5.250% due 04/15/11

    70      67

5.375% due 10/15/12

    460      429

 

66   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Devon Financing Corp. ULC

        

7.875% due 09/30/31

    350      426

Dex Media West LLC/Dex Media Finance Co.

        

Series B
8.500% due 08/15/10

    625      614

DirecTV Holdings LLC/DirecTV Financing Co.

        

8.375% due 03/15/13

    250      257

Discover Financial Services (Ê)

        

Series WI
3.431% due 06/11/10

    1,270      1,267

Dominion Resources, Inc.

        

Series 06-B (Ñ)

        

6.300% due 09/30/66

    530      485

Series A

        

5.200% due 01/15/16

    545      531

Series B

        

6.250% due 06/30/12

    263      276

DPL, Inc.

        

6.875% due 09/01/11

    561      583

Dr Pepper Snapple Group, Inc.

        

Series 144a (Å)

        

6.820% due 05/01/18

    1,000      1,037

7.450% due 05/01/38 (Ñ)

    250      268

Drummond Co., Inc. (Þ)

        

Series 144a
7.375% due 02/15/16

    470      424

E*Trade Financial Corp. (Þ)

        

Series 144a
12.500% due 11/30/17

    1,435      1,485

Echostar DBS Corp.

        

7.125% due 02/01/16

    500      491

El Paso Corp.

        

8.050% due 10/15/30

    300      322

Series* (Ñ)

        

9.625% due 05/15/12

    300      328

El Paso Natural Gas Co.

        

7.500% due 11/15/26

    250      261

Elwood Energy LLC

        

8.159% due 07/05/26

    74      71

Energy Future Holdings Corp. (Þ)

        

Series 144a
10.875% due 11/01/17

    530      564

Energy Partners, Ltd.

        

Series WI
9.750% due 04/15/14

    225      208

Energy Transfer Partners, LP

        

5.950% due 02/01/15

    950      944

6.700% due 07/01/18

    700      727

7.500% due 07/01/38

    905      969
     Principal
Amount ($)
or Shares		      Market
Value
$

Enterprise Products Operating LLC

        

6.500% due 01/31/19

    1,055      1,088

Enterprise Products Operating, LP

        

4.950% due 06/01/10

    275      276

8.375% due 08/01/66

    545      542

7.034% due 01/15/68

    75      66

Exelon Generation Co. LLC

        

6.200% due 10/01/17

    120      119

Farmers Exchange Capital (Å)

        

Series 144a
7.050% due 07/15/28

    1,420      1,303

Farmers Insurance Exchange (Þ)

        

Series 144a
6.000% due 08/01/14

    255      260

FedEx Corp.

        

5.500% due 08/15/09

    45      46

7.600% due 07/01/97

    180      209

First Data Corp. (Þ)

        

Series 144a
9.875% due 09/24/15

    770      701

First Union Institutional Capital II

        

7.850% due 01/01/27

    640      626

FirstEnergy Corp.

        

Series B

        

6.450% due 11/15/11

    745      774

Series C

        

7.375% due 11/15/31

    275      304

Fiserv, Inc.

        

6.125% due 11/20/12

    600      610

Florida Power & Light Co.

        

5.950% due 02/01/38

    185      188

Ford Motor Co.

        

7.450% due 07/16/31

    1,570      1,174

Ford Motor Credit Co. LLC

        

7.375% due 02/01/11

    100      92

9.875% due 08/10/11

    2,870      2,777

7.250% due 10/25/11

    195      176

5.460% due 01/13/12 (Ê)

    520      437

7.800% due 06/01/12

    310      277

7.000% due 10/01/13 (Ñ)

    60      52

8.000% due 12/15/16 (Ñ)

    330      289

Series WI

        

9.750% due 09/15/10

    655      636

Freeport-McMoRan Copper & Gold, Inc.

        

8.375% due 04/01/17

    1,545      1,707

Freescale Semiconductor, Inc.

        

Series WI

        

8.875% due 12/15/14

    580      510

10.125% due 12/15/16 (Ñ)

    700      551

 

Fixed Income III Fund   67

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

General Electric Capital Corp.

        

5.625% due 05/01/18

    760      768

5.875% due 01/14/38

    2,765      2,636

6.375% due 11/15/67

    5,200      5,205

Series GMTN

        

2.931% due 03/12/10 (Ê)(Ñ)

    200      198

5.500% due 04/28/11

    400      416

Series MTN (Ê)

        

2.937% due 10/26/09

    1,400      1,382

2.888% due 01/20/10

    1,100      1,094

2.928% due 01/08/16

    100      92

Series MTNA

        

4.250% due 12/01/10 (Ñ)

    55      56

5.875% due 02/15/12

    60      63

5.450% due 01/15/13

    1,150      1,188

General Electric Co.

        

5.000% due 02/01/13

    45      46

5.250% due 12/06/17

    700      697

General Mills, Inc.
5.650% due 09/10/12

    270      278

General Motors Corp. (Ñ)

        

8.375% due 07/15/33

    1,485      1,130

Genworth Life Institutional Funding Trust (Å)

        

Series MTN
5.875% due 05/03/13

    510      510

Georgia-Pacific LLC (Ø)

        

9.500% due 12/01/11

    445      469

Glencore Nickel, Ltd.

        

9.000% due 12/01/14

    235      —

GMAC LLC

        

5.750% due 05/21/10

    1,140      1,495

6.875% due 09/15/11

    1,825      1,521

8.000% due 11/01/31

    1,530      1,158

Goldman Sachs Group, Inc. (The)

        

2.689% due 06/23/09 (Ê)

    900      889

6.250% due 09/01/17

    1,600      1,635

6.150% due 04/01/18

    1,300      1,315

6.750% due 10/01/37

    1,740      1,705

Series MTN (Ê)

        

3.150% due 11/16/09

    200      197

Series MTNB

        

3.250% due 07/23/09

    700      692

Goodyear Tire & Rubber Co. (The) (Ñ)

        

8.663% due 12/01/09 (Ê)

    1,000      1,001

9.000% due 07/01/15

    125      136

GrafTech Finance, Inc.

        

10.250% due 02/15/12

    229      238
     Principal
Amount ($)
or Shares		      Market
Value
$

GulfSouth Pipeline Co., LP (Þ)

        

6.300% due 08/15/17

    275      275

Halliburton Co.

        

5.500% due 10/15/10

    125      129

Harrah’s Operating Co., Inc.

        

5.500% due 07/01/10

    200      177

6.500% due 06/01/16

    955      554

Hawaiian Telcom Communications, Inc. (Ê)(Ñ)

        

Series B
8.580% due 05/01/13

    655      262

HCA, Inc.

        

6.375% due 01/15/15

    460      409

Series WI

        

9.125% due 11/15/14

    625      662

9.250% due 11/15/16

    750      806

9.625% due 11/15/16

    250      268

HCP, Inc.

        

Series MTN
5.950% due 09/15/11

    575      559

Health Net, Inc.

        

6.375% due 06/01/17

    490      443

Healthsouth Corp.

        

10.829% due 06/15/14 (Ê)

    390      396

10.750% due 06/15/16 (Ñ)

    925      994

Hertz Corp. (The)

        

8.875% due 01/01/14

    125      126

Historic TW, Inc.

        

8.050% due 01/15/16

    540      578

6.625% due 05/15/29

    55      53

HJ Heinz Co. (Þ)

        

Series 144a
6.428% due 12/01/20

    100      101

Hospira, Inc. (Ê)

        

3.176% due 03/30/10

    260      251

HRPT Properties Trust

        

5.750% due 02/15/14

    1,040      952

HSBC Finance Corp.

        

2.878% due 10/21/09 (Ê)

    300      294

4.125% due 11/16/09

    105      105

8.000% due 07/15/10

    45      47

6.375% due 10/15/11

    380      394

6.375% due 11/27/12

    395      407

5.000% due 06/30/15

    605      589

HUB International Holdings, Inc. (Þ)

        

Series 144a
10.250% due 06/15/15

    1,315      960

Huntsman LLC

        

11.500% due 07/15/12

    500      535

 

68   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Idearc, Inc.

        

8.000% due 11/15/16

    250      163

ING Capital Funding Trust III (ƒ)

        

8.439% due 12/29/49

    875      879

Inmarsat Finance PLC

        

(Step Up, 10.375%, 11/15/08)
Zero coupon due 11/15/12

    375      370

Intelsat Corp.

        

9.000% due 06/15/16

    1,500      1,513

International Business Machines Corp.

        

5.700% due 09/14/17

    580      604

International Lease Finance Corp.

        

5.750% due 06/15/11

    185      184

Series MTN

        

4.950% due 02/01/11

    350      340

5.625% due 09/20/13

    190      187

International Paper Co.

        

5.850% due 10/30/12

    1,330      1,307

iStar Financial, Inc.

        

Series B
5.125% due 04/01/11

    350      306

JC Penney Corp., Inc.

        

6.375% due 10/15/36

    515      440

Jersey Central Power & Light Co.

        

5.625% due 05/01/16

    275      266

Johnson & Johnson

        

5.550% due 08/15/17

    95      101

5.950% due 08/15/37

    115      124

JP Morgan Chase Capital XX

        

Series T
6.550% due 09/29/36

    100      91

JPMorgan Chase & Co.

        

7.000% due 11/15/09

    125      129

6.750% due 02/01/11 (Ñ)

    70      73

5.600% due 06/01/11

    235      241

6.000% due 01/15/18

    5,655      5,861

Series 1 (ƒ)

        

7.900% due 12/31/49

    3,125      3,183

Series MTN

        

3.202% due 05/07/10 (Ê)

    600      595

5.375% due 01/15/14

    495      507

JPMorgan Chase Bank

        

Series EMTN
6.000% due 05/22/45

    2,103      1,985

JPMorgan Chase Bank NA

        

Series BKNT
5.875% due 06/13/16

    240      243

K Hovnanian Enterprises, Inc. (Ñ)

        

6.000% due 01/15/10

    500      390
     Principal
Amount ($)
or Shares		      Market
Value
$

KAR Holdings, Inc. (Ñ)

        

Series WI
10.000% due 05/01/15

    1,215      1,154

KBC Bank Funding Trust II (ƒ)

        

6.880% due 06/30/49

    600      935

KBC Bank Funding Trust III (ƒ)(Þ)

        

Series 144a
9.860% due 11/29/49

    490      523

Kerr-McGee Corp.

        

6.950% due 07/01/24

    450      475

Kraft Foods, Inc.

        

4.125% due 11/12/09 (Ñ)

    285      284

3.596% due 08/11/10 (Ê)

    1,800      1,750

5.625% due 11/01/11

    1,425      1,458

6.500% due 08/11/17

    325      340

6.125% due 02/01/18

    200      204

6.875% due 02/01/38

    240      249

Kroger Co. (The)

        

7.250% due 06/01/09

    175      179

L-3 Communications Corp.

        

Series B
6.375% due 10/15/15

    250      247

LaBranche & Co., Inc.

        

11.000% due 05/15/12

    390      398

Land O’ Lakes, Inc.

        

8.750% due 11/15/11

    125      128

Lear Corp.

        

Series B
8.750% due 12/01/16

    150      141

Lehman Brothers Holdings, Inc.

        

3.170% due 08/21/09 (Ê)

    300      289

6.875% due 07/17/37

    650      603

Series MTN

        

3.170% due 11/16/09 (Ê)

    300      287

3.233% due 05/25/10 (Ê)

    400      376

2.954% due 07/18/11 (Ê)

    300      272

6.200% due 09/26/14

    1,650      1,660

6.750% due 12/28/17

    50      50

6.875% due 05/02/18

    470      481

7.000% due 09/27/27

    270      265

Series MTNG (Ê)

        

3.346% due 11/10/09

    300      288

Liberty Mutual Group, Inc.

        

Series 144a (Þ)

        

7.000% due 03/15/37

    1,600      1,475

7.800% due 03/15/37

    2,255      2,035

Limited Brands, Inc.

        

6.900% due 07/15/17

    240      214

7.600% due 07/15/37

    355      292

Lowe’s Cos., Inc. (Ñ)

        

6.100% due 09/15/17

    135      140

Lubrizol Corp.

        

4.625% due 10/01/09

    430      429

 

Fixed Income III Fund   69

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

MacDermid, Inc. (Þ)

        

Series 144a
9.500% due 04/15/17

    1,000      955

Macys Retail Holdings, Inc.

        

5.350% due 03/15/12

    410      382

Mandalay Resort Group (Ñ)

        

6.500% due 07/31/09

    160      160

Manufacturers & Traders Trust Co.

        

5.585% due 12/28/20

    334      305

Marsh & McLennan Cos., Inc.

        

5.150% due 09/15/10

    590      580

Max USA Holdings, Ltd. (Þ)

        

Series 144a
7.200% due 04/14/17

    400      411

McDonald’s Corp. (Ñ)

        

5.800% due 10/15/17

    1,500      1,570

Medco Health Solutions, Inc.

        

6.125% due 03/15/13

    335      343

7.250% due 08/15/13

    1,110      1,176

Merrill Lynch & Co., Inc.

        

5.450% due 02/05/13

    625      608

6.400% due 08/28/17

    975      974

6.110% due 01/29/37

    640      540

Series MTN

        

3.178% due 05/08/09 (Ê)

    400      392

3.158% due 08/14/09 (Ê)

    400      390

3.120% due 07/25/11 (Ê)

    500      459

6.050% due 08/15/12

    500      499

6.150% due 04/25/13

    825      823

6.875% due 04/25/18

    1,190      1,200

MetLife Capital Trust X (Å)

        

Series 144a
9.250% due 04/08/68

    400      451

MetLife, Inc.

        

6.125% due 12/01/11

    750      792

5.000% due 06/15/15

    260      258

6.400% due 12/15/36

    100      90

Metropolitan Life Global Funding I (Ê)(Þ)

        

Series MTN
3.110% due 05/17/10

    800      784

Midamerican Energy Holdings Co.

        

Series 144a (Å)

        

5.750% due 04/01/18

    400      406

Series WI

        

6.125% due 04/01/36

    450      450

Midamerican Funding LLC

        

6.750% due 03/01/11

    540      573

Miller Brewing Co. (Þ)

        

Series 144a
5.500% due 08/15/13

    885      916
     Principal
Amount ($)
or Shares		      Market
Value
$

Mohegan Tribal Gaming Authority (Ñ)

        

8.000% due 04/01/12

    125      117

Morgan Stanley

        

3.212% due 05/07/09 (Ê)

    200      198

Series GMTN

        

5.750% due 08/31/12

    350      351

Series MTN

        

2.803% due 01/15/10 (Ê)

    300      289

6.250% due 08/28/17

    400      401

5.950% due 12/28/17

    500      495

6.625% due 04/01/18

    2,270      2,354

Natexis Ambs Co. LLC (ƒ)(Þ)

        

Series 144a
8.440% due 12/29/49

    185      186

National Rural Utilities Cooperative Finance Corp.

        

5.450% due 04/10/17

    660      657

5.450% due 02/01/18

    205      204

Nationwide Financial Services

        

6.250% due 11/15/11

    265      273

Nationwide Mutual Insurance Co. (Þ)

        

Series 144a
7.875% due 04/01/33

    625      617

Neiman-Marcus Group, Inc.

        

7.125% due 06/01/28

    1,500      1,342

Nelnet, Inc.

        

7.400% due 09/29/36

    225      146

Nevada Power Co.

        

Series L

        

5.875% due 01/15/15

    175      174

Series O

        

6.500% due 05/15/18

    450      461

New Cingular Wireless Services, Inc.

        

7.875% due 03/01/11

    275      297

8.750% due 03/01/31

    180      222

News America Holdings, Inc.

        

9.250% due 02/01/13

    25      29

7.750% due 12/01/45

    355      397

7.900% due 12/01/95

    120      130

8.250% due 10/17/96

    45      51

News America, Inc.

        

6.650% due 11/15/37

    825      853

Nextel Communications, Inc.

        

Series E
6.875% due 10/31/13

    560      462

Nisource Finance Corp.

        

7.875% due 11/15/10

    345      363

6.400% due 03/15/18

    395      389

 

70   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Norfolk Southern Corp.

        

7.050% due 05/01/37

    485      538

7.900% due 05/15/97

    1,150      1,281

North Front Pass-Through Trust (Þ)

        

Series 144a
5.810% due 12/15/24

    1,605      1,533

Nuveen Investments, Inc. (Å)

        

Series 144a
10.500% due 11/15/15

    273      263

Ohio Power Co.

        

Series F
5.500% due 02/15/13

    230      232

ONEOK Partners, LP

        

6.650% due 10/01/36

    175      168

6.850% due 10/15/37

    475      467

Oracle Corp.

        

5.750% due 04/15/18

    1,550      1,578

Pacific Gas & Electric Co.

        

4.200% due 03/01/11

    275      273

6.050% due 03/01/34

    200      199

Panama Canal Railway Co. (Å)

        

Series 144a
7.000% due 11/01/26

    500      457

PartnerRe Finance II

        

6.440% due 12/01/66

    75      60

Peabody Energy Corp.

        

7.875% due 11/01/26

    100      104

Pepco Holdings, Inc. (Ê)

        

3.701% due 06/01/10

    625      623

Phoenix Life Insurance Co. (Þ)

        

Series 144a
7.150% due 12/15/34

    525      522

Pilgrim’s Pride Corp.

        

7.625% due 05/01/15

    83      79

PNC Bank NA

        

Series BKNT
6.875% due 04/01/18

    450      465

Popular North America Capital Trust I (Ñ)

        

6.564% due 09/15/34

    215      148

Power Contract Financing LLC (Þ)

        

Series 144a
6.256% due 02/01/10

    74      75

Pride International, Inc.

        

7.375% due 07/15/14

    780      814

Principal Life Income Funding Trusts

        

5.300% due 04/24/13

    400      405

Progress Energy, Inc.

        

7.100% due 03/01/11

    257      273

7.750% due 03/01/31

    140      166
     Principal
Amount ($)
or Shares		      Market
Value
$

Prudential Financial, Inc.

        

Series MTN
6.000% due 12/01/17

    345      348

Qwest Corp.

        

7.875% due 09/01/11

    1,165      1,194

7.625% due 06/15/15

    200      200

Rabobank Capital Funding II (ƒ)(Þ)

        

Series 144a
5.260% due 12/31/49

    200      178

Raytheon Co.

        

6.750% due 03/15/18

    285      311

RBS Capital Trust I (ƒ)

        

4.709% due 12/29/49

    285      240

RBS Capital Trust III (ƒ)

        

5.512% due 09/29/49

    795      670

Realogy Corp. (Ñ)

        

Series WI
12.375% due 04/15/15

    635      346

Reckson Operating Partnership, LP

        

5.150% due 01/15/11

    135      128

Reinsurance Group of America, Inc.

        

6.750% due 12/15/65

    100      79

Residential Capital LLC

        

8.375% due 06/30/10 (Ñ)

    425      231

8.000% due 02/22/11

    435      224

8.500% due 04/17/13

    530      268

Series WI

        

8.875% due 06/30/15

    560      280

Rohm & Haas Co.

        

6.000% due 09/15/17

    200      203

Rural Cellular Corp.

        

9.875% due 02/01/10

    555      574

8.250% due 03/15/12

    744      774

SB Treasury Co. LLC (ƒ)(Å)

        

Series 144a
9.400% due 12/29/49

    650      655

Schering-Plough Corp.

        

5.550% due 12/01/13

    540      553

Simon Property Group, LP

        

5.600% due 09/01/11

    300      301

6.100% due 05/01/16

    415      416

SLM Corp.

        

Series MTN

        

5.400% due 10/25/11

    300      266

5.125% due 08/27/12

    225      194

Series MTNA

        

3.060% due 07/27/09 (Ê)(Ñ)

    2,000      1,850

4.500% due 07/26/10

    650      580

 

Fixed Income III Fund   71

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Smurfit-Stone Container Enterprises, Inc. (Ñ)

        

8.375% due 07/01/12

    680      622

Southern California Edison Co.

        

7.625% due 01/15/10

    110      115

Series 08-A

        

5.950% due 02/01/38

    320      323

Southern Copper Corp.

        

7.500% due 07/27/35

    700      739

Southern Natural Gas Co.

        

7.350% due 02/15/31

    275      290

Sprint Capital Corp.

        

7.625% due 01/30/11

    1,370      1,298

6.875% due 11/15/28

    145      113

8.750% due 03/15/32

    980      865

Starbucks Corp.

        

6.250% due 08/15/17

    275      273

Steel Dynamics, Inc. (Å)

        

7.750% due 04/15/16

    500      511

Stingray Pass-Through Trust (Å)

        

Series 144a
5.902% due 01/12/15

    1,000      249

Suncom Wireless, Inc.

        

8.500% due 06/01/13

    1,350      1,406

Sungard Data Systems, Inc. (Ñ)

        

10.250% due 08/15/15

    546      580

Swiss Re Capital I, LP (ƒ)(Þ)

        

Series 144a
6.854% due 05/29/49

    400      363

Symetra Financial Corp.

       

Series 144a

        

6.125% due 04/01/16 (Å)

    300      272

8.300% due 10/15/67

    575      508

Target Corp.

        

7.000% due 01/15/38

    360      386

Temple-Inland, Inc.

        

7.875% due 05/01/12

    567      580

Tennessee Gas Pipeline Co. (Ñ)

        

7.000% due 10/15/28

    150      149

TEPPCO Partners, LP

        

6.650% due 04/15/18

    750      755

Tesoro Corp.

        

Series WI
6.500% due 06/01/17

    500      459

Texas Competitive Electric Holdings Co. LLC

       

Series 144a

        

10.250% due 11/01/15

    1,105      1,152

10.500% due 11/01/16 (Å)

    1,100      1,126
     Principal
Amount ($)
or Shares		      Market
Value
$

Time Warner Cable, Inc.

        

Series WI

        

5.400% due 07/02/12

    1,435      1,443

5.850% due 05/01/17

    260      258

6.550% due 05/01/37 (Ñ)

    125      124

Time Warner Entertainment Co., LP

        

Series*
8.375% due 03/15/23

    365      412

Time Warner, Inc.

        

3.300% due 11/13/09 (Ê)

    2,200      2,123

5.500% due 11/15/11

    555      550

Transcontinental Gas Pipe Line Corp.

        

7.250% due 12/01/26

    215      223

Travelers Cos., Inc. (The)

        

Series MTN

        

5.375% due 06/15/12

    330      336

6.250% due 06/15/37

    365      357

Twin Reefs Pass-Through
Trust (Ê)(ƒ)(Þ)

        

Series 144a
3.722% due 12/10/49

    500      20

Union Electric Co. (Ñ)

        

6.400% due 06/15/17

    830      849

Union Pacific Corp.

        

3.625% due 06/01/10

    120      119

6.125% due 01/15/12

    560      581

United Rentals North America, Inc.

        

6.500% due 02/15/12

    500      469

United States Steel Corp.

        

5.650% due 06/01/13

    680      664

6.050% due 06/01/17

    755      718

6.650% due 06/01/37

    105      92

United Technologies Corp.

        

5.375% due 12/15/17

    675      689

UnitedHealth Group, Inc.

        

5.250% due 03/15/11

    20      20

4.875% due 02/15/13

    400      382

6.000% due 06/15/17

    155      154

Series WI

        

6.500% due 06/15/37

    195      180

6.625% due 11/15/37

    375      354

Universal City Development Partners

        

11.750% due 04/01/10

    555      576

Unum Group

        

5.859% due 05/15/09

    240      244

US Oncology, Inc. (Ñ)

        

9.000% due 08/15/12

    350      355

USB Capital IX (ƒ)(Ñ)

        

6.189% due 04/15/49

    100      76

 

72   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

USB Realty Corp. (ƒ)(Þ)

        

Series 144a
6.091% due 12/22/49

    1,000      735

Valero Logistics Operations, LP

        

6.050% due 03/15/13

    660      667

Verizon Communications, Inc.

        

6.100% due 04/15/18 (Ñ)

    1,035      1,085

6.400% due 02/15/38

    800      815

6.900% due 04/15/38

    1,080      1,170

Verizon New England, Inc.

        

6.500% due 09/15/11

    40      41

Viacom, Inc.

        

5.750% due 04/30/11

    760      768

Visteon Corp. (Ñ)

        

8.250% due 08/01/10

    240      211

Wachovia Bank NA

        

Series BKNT
6.600% due 01/15/38

    1,020      986

Wachovia Capital Trust III (ƒ)

        

5.800% due 03/15/42

    3,520      2,798

Wachovia Corp.

        

3.126% due 12/01/09 (Ê)

    400      393

5.625% due 10/15/16

    100      96

5.750% due 06/15/17

    700      696

5.750% due 02/01/18

    1,945      1,938

7.980% due 12/31/49 (ƒ)

    9,950      9,789

Wal-Mart Stores, Inc.

        

4.250% due 04/15/13

    395      397

6.500% due 08/15/37

    440      467

6.200% due 04/15/38

    600      611

Walt Disney Co. (The) (Ê)

        

2.779% due 07/16/10

    1,400      1,386

Washington Mutual Preferred Funding LLC

        

6.665% due 12/31/49 (ƒ)(Å)

    2,000      1,280

Series 144a (Ñ)(ƒ)

        

9.750% due 10/29/49

    2,900      2,523

WellPoint, Inc.

        

5.850% due 01/15/36

    240      203

6.375% due 06/15/37

    465      425

Wells Fargo & Co.

        

5.250% due 10/23/12

    395      403

4.375% due 01/31/13

    1,250      1,237

4.950% due 10/16/13 (Ñ)

    155      155

5.625% due 12/11/17

    3,245      3,345

Wells Fargo Bank NA

        

5.750% due 05/16/16

    385      398

Willis North America, Inc.

        

5.125% due 07/15/10

    545      543
     Principal
Amount ($)
or Shares		      Market
Value
$

Windstream Corp.

        

Series WI
8.625% due 08/01/16

    925      969

WMG Acquisition Corp.

        

7.375% due 04/15/14

    345      286

World Financial Properties (Å)

        

Series 144a
6.950% due 09/01/13

    148      151

Wyeth

        

5.950% due 04/01/37

    700      693

Xcel Energy, Inc.

        

6.500% due 07/01/36

    230      231

Xlliac Global Funding (Å)

        

Series 144a
4.800% due 08/10/10

    240      240

XTO Energy, Inc.

        

5.500% due 06/15/18

    500      496

Yum! Brands, Inc.

        

8.875% due 04/15/11

    110      121

ZFS Finance USA Trust I

       

Series 144a

        

5.875% due 05/09/32 (Ñ)

    520      477

6.150% due 12/15/35 (Å)

    1,025      914

6.500% due 05/09/37

    520      458

ZFS Finance USA Trust II (Þ)

        

Series 144a
6.450% due 12/15/65

    600      529
         
        332,308
         

International Debt - 6.0%

        

Abbey National PLC (ƒ)
(Step Up, 7.730%, 06/15/08)

        

6.700% due 06/29/49

    275      270

Abu Dhabi National Energy Co.

        

Series 144a (Þ)

        

5.620% due 10/25/12

    1,050      1,066

6.500% due 10/27/36

    760      724

America Movil SAB de CV

        

5.500% due 03/01/14

    200      200

ANZ National International, Ltd. (Ê)(Þ)

        

Series 144a
3.168% due 08/07/09

    1,300      1,297

Argentina Bonos

        

3.092% due 08/03/12 (Ê)

    1,310      708

Series VII

        

7.000% due 09/12/13

    1,820      1,433

Arlington Street CDO, Ltd. (Þ)

        

Series 2000-1A Class A2
7.660% due 06/10/12

    813      822

 

Fixed Income III Fund   73

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Aspen Insurance Holdings, Ltd.

        

6.000% due 08/15/14

    75      71

AstraZeneca PLC

        

5.900% due 09/15/17

    200      212

6.450% due 09/15/37

    100      108

AXA SA

        

8.600% due 12/15/30

    160      178

Series 144a (ƒ)(Þ)

        

6.463% due 12/31/49

    125      104

Banco Mercantil del Norte SA (Þ)

        

Series 144a
6.862% due 10/13/21

    620      559

Bank of Scotland PLC (Ê)(Þ)

        

Series MTN
2.756% due 07/17/09

    600      599

Barclays Bank PLC

        

5.450% due 09/12/12

    4,500      4,587

Series 144a (Þ)

        

6.050% due 12/04/17

    500      489

7.375% due 06/29/49 (ƒ)

    965      933

7.434% due 09/29/49 (ƒ)

    440      422

Blue City Investments 1, Ltd. for
Blue City Co. 1 SAOC (Ê)

        

Series A3
6.945% due 11/07/16

    1,750      1,697

BNP Paribas (ƒ)(Þ)

        

5.186% due 06/29/49

    600      519

C10 Capital SPV, Ltd. (ƒ)(Ñ)(Þ)

        

Series 144a
6.722% due 12/31/49

    300      268

Canadian Natural Resources, Ltd.

        

5.150% due 02/01/13

    350      355

5.700% due 05/15/17

    275      276

5.850% due 02/01/35

    25      23

6.500% due 02/15/37

    435      438

6.250% due 03/15/38

    435      425

Canadian Oil Sands, Ltd. (Þ)

        

Series 144a
4.800% due 08/10/09

    240      241

Catalyst Paper Corp.

        

Series D
8.625% due 06/15/11

    1,560      1,338

China Development Bank

        

5.000% due 10/15/15

    100      98

Citic Resources Finance, Ltd. (Ñ)(Å)

        

Series 144a
6.750% due 05/15/14

    1,000      950

Citigroup Global Markets Deutschland AG for OAO Gazprom

        

10.500% due 10/21/09

    100      109
     Principal
Amount ($)
or Shares		      Market
Value
$

Covidien International Finance SA (Þ)

        

Series 144a

        

5.450% due 10/15/12

    240      242

6.000% due 10/15/17

    745      762

6.550% due 10/15/37

    510      521

Credit Agricole SA (Ê)(Þ)

        

Series 144a

        

3.090% due 05/28/09

    400      400

3.140% due 05/28/10

    400      400

Deutsche ALT-A Securities NIM Trust (Å)

        

Series 2007-AHM Class N1
6.750% due 02/25/47

    101      99

Deutsche Bank AG (Ñ)

        

6.000% due 09/01/17

    1,100      1,151

Deutsche Telekom International Finance BV

        

8.000% due 06/15/10

    240      257

5.375% due 03/23/11

    125      127

8.250% due 06/15/30

    200      248

Diageo Capital PLC

        

5.750% due 10/23/17

    290      296

Digicel Group, Ltd.

        

Series 144a (Ñ)(Å)

        

8.875% due 01/15/15

    775      665

DnB NOR Bank ASA (Ê)(Þ)

        

Series 144a
2.780% due 10/13/09

    2,400      2,400

DP World, Ltd. (Þ)

        

Series 144a
6.850% due 07/02/37

    610      525

Egypt Government AID Bonds

        

4.450% due 09/15/15

    695      704

EnCana Corp.

        

6.500% due 02/01/38

    825      846

Endurance Specialty Holdings, Ltd.

        

6.150% due 10/15/15

    175      165

7.000% due 07/15/34

    275      236

Enel Finance International SA (Þ)

        

6.250% due 09/15/17

    1,500      1,545

Evraz Group SA (Å)

        

Series 144a

        

8.875% due 04/24/13

    200      202

9.500% due 04/24/18 (Ñ)

    950      962

Export-Import Bank of China (Þ)

        

Series 144a
4.875% due 07/21/15

    100      98

FBG Finance, Ltd. (Å)

        

Series 144a
5.125% due 06/15/15

    190      187

 

74   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

FBN Capital Finance Co.

        

9.750% due 03/30/17

    1,000      931

FMG Finance Pty, Ltd.

        

Series REGS
10.625% due 09/01/16

    225      256

France Telecom SA

        

8.500% due 03/01/31

    260      335

Galaxy Entertainment Finance Co., Ltd. (Þ)

        

Series 144a
9.875% due 12/15/12

    900      909

Gaz Capital SA

        

Series 144a (Å)

        

7.343% due 04/11/13

    100      105

8.146% due 04/11/18 (Ñ)

    2,100      2,229

Series REGS

        

8.625% due 04/28/34

    3,400      3,969

Grupo Senda Autotransporte SA de CV (Å)

        

Series 144a
10.500% due 10/03/15

    1,000      940

Harborview NIM Corp. (Å)

        

Series 2007-1A Class N1
6.409% due 03/19/37

    18      18

HBOS PLC (ƒ)(Þ)

        

Series 144a
5.920% due 09/29/49

    500      382

HSBC Holdings PLC

        

6.500% due 05/02/36

    385      379

6.500% due 09/15/37

    200      196

Inco, Ltd.

        

5.700% due 10/15/15

    375      358

Independencia International, Ltd.

        

Series REGS
9.875% due 01/31/17

    703      700

Intelsat Subsidiary Holding Co., Ltd.

        

8.625% due 01/15/15

    890      898

Invesco, Ltd.

        

4.500% due 12/15/09

    730      725

5.625% due 04/17/12

    1,340      1,310

5.375% due 02/27/13

    460      445

Ispat Inland ULC

        

9.750% due 04/01/14

    2,403      2,563

Korea Electric Power Corp.

        

Series 144a
5.125% due 04/23/34

    85      83

Korea Southern Power Co., Ltd. (Å)

        

Series 144a
5.375% due 04/18/13

    860      862
     Principal
Amount ($)
or Shares		      Market
Value
$

Landsbanki Islands HF (ƒ)(Þ)

        

Series 144a
7.431% due 12/31/49

    910      680

LG Electronics, Inc. (Å)

        

Series 144a
5.000% due 06/17/10

    130      129

Marathon Oil Canada Corp.

        

8.375% due 05/01/12

    865      955

Millicom International Cellular SA

        

10.000% due 12/01/13

    500      534

Montpelier Re Holdings, Ltd.

        

6.125% due 08/15/13

    900      887

MUFG Capital Finance 1, Ltd. (ƒ)

        

6.346% due 07/25/99

    525      475

National Australia Bank, Ltd. (Ê)(Þ)

        

2.979% due 09/11/09

    400      400

Nine Dragons Paper Holdings, Ltd. (Å)

        

Series 144a

        

7.875% due 04/29/13

    570      565

Nippon Life Insurance (Þ)

        

Series 144a

        

4.875% due 08/09/10

    565      570

Norske Skogindustrier ASA (Þ)

        

Series 144a

        

6.125% due 10/15/15

    520      322

7.125% due 10/15/33

    1,210      877

Petrobras International Finance Co. (Ñ)

        

5.875% due 03/01/18

    825      822

Petroleum Export, Ltd. (Þ)

        

Series 144a

        

5.265% due 06/15/11

    72      72

Province of Quebec Canada

        

Series PJ

        

6.125% due 01/22/11

    515      550

PSB Finance SA for Promsvyazbank

        

9.625% due 05/23/12

    250      228

Quebecor World Capital Corp. (Ø)(Ñ)

        

6.125% due 11/15/13

    390      163

Ras Laffan Liquefied Natural Gas Co., Ltd. II (Þ)

        

Series 144a

        

5.298% due 09/30/20

    250      231

Ras Laffan Liquefied Natural Gas Co., Ltd. III (Þ)

        

Series 144a

        

5.832% due 09/30/16

    765      732

6.332% due 09/30/27

    660      598

Reliance Industries, Ltd. (Þ)

        

Series 144a

        

10.250% due 01/15/97

    250      270

 

Fixed Income III Fund   75

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

RESI Finance, LP (Ê)(Þ)

        

Series 2003-D Class B3

        

4.022% due 12/10/35

    893      744

Series 2003-D Class B4

        

4.222% due 12/10/35

    1,039      868

Series 2007-B Class B5

        

3.816% due 03/27/37

    559      280

Resix Finance, Ltd. Credit-Linked Notes (Ê)(Þ)

        

Series 2003-D Class B7

        

8.472% due 12/10/35

    549      424

Resona Bank, Ltd. (ƒ)(Þ)

        

Series 144a

        

5.850% due 09/29/49

    1,945      1,640

Resona Preferred Global Securities Cayman, Ltd. (ƒ)(Þ)

        

Series 144a

        

7.191% due 12/29/49

    4,195      3,730

Rogers Wireless, Inc.

        

6.375% due 03/01/14

    1,065      1,087

Royal Bank of Scotland Group PLC (ƒ)

        

Series 1

        

9.118% due 03/31/49

    1,350      1,365

Series 144a (Þ)

        

6.990% due 10/29/49

    1,750      1,606

Series MTN

        

7.640% due 03/31/49

    800      753

RSHB Capital SA for OJSC Russian Agricultural Bank

        

6.875% due 11/29/10

    285      290

Santander Perpetual SA
Unipersonal (ƒ)(Þ)

        

Series 144a

        

6.671% due 10/29/49

    1,500      1,425

Sappi Papier Holding AG (Þ)

        

Series 144a

        

6.750% due 06/15/12

    625      589

Shinsei Finance II (ƒ)(Þ)

        

Series 144a

        

7.160% due 07/25/49

    570      382

Siemens Financieringsmaatschappij NV (Ê)(Þ)

        

Series 144a

        

3.118% due 08/14/09

    500      500

SMFG Preferred Capital USD 1,
Ltd. (ƒ)(Þ)

        

Series 144a

        

6.078% due 01/29/49

    200      178
     Principal
Amount ($)
or Shares		      Market
Value
$

Stora Enso OYJ (Þ)

        

Series 144a

        

7.250% due 04/15/36

    245      207

Systems 2001 AT LLC

       

Series 144a

        

7.156% due 12/15/11

    105      111

6.664% due 09/15/13 (Å)

    109      109

Telecom Italia Capital SA

        

4.000% due 01/15/10

    965      948

4.875% due 10/01/10

    325      322

3.344% due 07/18/11 (Ê)

    500      462

6.200% due 07/18/11

    1,155      1,164

5.250% due 11/15/13

    175      168

7.200% due 07/18/36

    380      381

Telefonica Emisiones SAU

        

2.842% due 06/19/09 (Ê)

    500      495

5.984% due 06/20/11

    250      255

6.421% due 06/20/16

    320      338

Telefonica Europe BV

        

8.250% due 09/15/30

    260      316

TMK Capital SA for OAO TMK

        

8.500% due 09/29/09

    300      307

TNK-BP Finance SA

        

Series 144a

        

6.125% due 03/20/12

    100      96

7.500% due 03/13/13

    1,025      1,028

7.875% due 03/13/18 (Å)

    1,650      1,633

Series REGS

        

7.875% due 03/13/18

    1,325      1,313

Transocean, Inc.

        

6.000% due 03/15/18

    1,525      1,578

6.800% due 03/15/38

    640      681

Tristan Oil, Ltd.

        

Series 144a (Þ)

        

10.500% due 01/01/12

    300      286

Series REGS

        

10.500% due 01/01/12

    260      248

True Move Co., Ltd. (Þ)

        

Series 144a

        

10.375% due 08/01/14

    170      151

Tyco Electronics Group SA (Þ)

        

Series 144a

        

6.000% due 10/01/12

    1,790      1,825

6.550% due 10/01/17

    910      932

7.125% due 10/01/37

    640      655

Tyco International Group SA

        

6.750% due 02/15/11

    505      525

UBS AG

        

Series DPNT

        

5.875% due 12/20/17

    1,385      1,412

 

76   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series EMTN

        

Zero coupon due 12/31/17

    890      523

Series MTN

        

5.750% due 04/25/18

    800      799

Vale Overseas, Ltd.

        

6.250% due 01/23/17

    585      600

VIP Finance Ireland, Ltd. for OJSC Vimpel Communications

        

Series 144a (Å)

        

8.375% due 04/30/13

    150      150

9.125% due 04/30/18 (Ñ)

    1,885      1,887

Series REGS

        

9.125% due 04/30/18

    1,500      1,503

Virgin Media Finance PLC
Series $

        

8.750% due 04/15/14

    200      193

VTB 24 Capital PLC (Ê)

        

Series EMTN

        

3.820% due 12/07/09

    765      738

VTB Capital SA (Ñ)(Å)

        

Series 144a

        

6.609% due 10/31/12

    100      98

Westfield Capital Corp., Ltd./WT Finance Aust Pty Ltd/WEA Finance LLC (Þ)

        

Series 144a

        

5.125% due 11/15/14

    225      209

Westfield Group (Þ)

        

Series 144a

        

5.400% due 10/01/12

    276      272

White Mountains Re Group, Ltd. (ƒ)(Å)

        

Series 144a

        

7.506% due 05/29/49

    3,130      2,345

XL Capital, Ltd. (ƒ)

        

Series E

        

6.500% due 12/31/49

    2,845      1,991

Xstrata Canada Corp.

        

7.250% due 07/15/12

    75      80

6.000% due 10/15/15

    250      244

Xstrata Finance Dubai, Ltd. (Ê)(Þ)

        

Series 144a

        

3.420% due 11/13/09

    290      282
         
        108,931
         

Loan Agreements - 0.7%

        

Adam Aircraft, Term Loan

        

14.680% due 05/01/12

    146      15

ALLTEL Holding Corp., Tranche B3

        

5.466% due 07/17/13

    348      338
     Principal
Amount ($)
or Shares		      Market
Value
$

Avis Budget Holdings LLC,
Term Loan

        

4.150% due 04/19/12

    145      132

AWAS, Second Lien Term Loan

        

8.625% due 03/21/13

    153      130

Coffeyville Resources LLC,
Letter of Credit

        

5.948% due 12/28/13

    32      30

Coffeyville Resources LLC,
Tranche D Term Loan

        

5.448% due 12/28/13

    105      97

DaimlerChrysler Financial Services North America LLC, Second Lien Term Loan

        

9.300% due 07/01/13

    975      780

Douglas Dynamics LLC, Term Loan

        

4.946% due 05/21/13

    395      342

First Data Corp., Term Loan B1

        

4.700% due 09/24/14

    33      31

5.446% due 09/24/14

    80      75

5.640% due 09/24/14

    1,091      1,025

Flextronics International, Ltd., Delayed Draw Term Loan A

        

4.963% due 10/15/14

    2      2

Flextronics International, Ltd.,
Term Loan A

        

4.948% due 10/15/14

    7      7

Ford Motor Co., Term Loan B

        

5.800% due 12/15/13

    1,781      1,635

General Motors Corp., Term Loan B

        

5.059% due 11/01/13

    689      647

5.059% due 11/29/13

    301      283

Georgia-Pacific Corp., First Lien
Term Loan

        

4.446% due 12/20/12

    22      21

4.740% due 12/20/12

    243      234

4.835% due 12/20/12

    29      27

Georgia-Pacific Corp., Term Loan B

        

4.446% due 12/20/12

    96      92

4.740% due 12/20/12

    410      393

HCA, Inc., Term Loan B

        

4.946% due 12/30/13

    989      940

Healthsouth Corp., Term Loan B

        

5.230% due 03/10/13

    471      446

5.370% due 03/10/13

    1      1

Hexion Specialty Chemicals, Inc., Term Loan C1

        

4.938% due 05/05/13

    162      154

Hexion Specialty Chemicals, Inc., Term Loan C2

        

5.000% due 05/05/13

    35      33

 

Fixed Income III Fund   77

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Idearc, Inc., Term Loan B

        

4.700% due 11/17/14

    1,038      853

4.860% due 11/17/14

    46      38

Realogy Corp., Letter of Credit

        

5.553% due 04/10/13

    63      52

Realogy Corp., Term Loan

        

5.722% due 04/10/13

    234      191

Stallion Oilfield Services, Inc., Term Loan

        

7.611% due 06/12/13

    900      702

Talecris Biotherapeutics, Inc.,
Second Lien Term Loan

        

9.570% due 12/06/14

    300      249

Texas Competitive Electric Holdings Company LLC, Term Loan B2

        

6.478% due 10/10/14

    237      227

6.596% due 10/10/14

    1,410      1,350

United Airlines, Inc., Term Loan B

        

4.750% due 02/01/14

    114      98

4.938% due 02/01/14

    100      86

Univision Communications, Inc.,
Term Loan B

        

5.113% due 09/15/14

    21      17

5.149% due 09/15/14

    322      270

USI Holdings Corp.,
Tranche B Term Loan

        

5.450% due 05/04/14

    199      182

Visteon Corp., Term Loan

        

7.194% due 06/13/13

    300      256

Windstream Corp., Term Loan B

        

4.220% due 07/17/13

    328      318
         
        12,799
         

Mortgage-Backed Securities - 61.1%

     

Accredited Mortgage Loan Trust (Ê)

        

Series 2006-2 Class A2

        

2.985% due 09/25/36

    925      890

Adjustable Rate Mortgage Trust

        

Series 2004-5 Class 2A1

        

4.996% due 04/25/35

    292      283

Series 2005-1 Class 5A2 (Ê)

        

3.225% due 05/25/35

    158      127

Series 2005-3 Class 8A2 (Ê)

        

3.135% due 07/25/35

    276      203

Alliance Bancorp Trust (Ê)

        

Series 2007-OA1 Class A1

        

3.135% due 07/25/37

    885      697
     Principal
Amount ($)
or Shares		      Market
Value
$

American Home Mortgage Assets (Ê)

        

Series 2007-2 Class A1

        

3.020% due 03/25/47

    756      588

American Home Mortgage Investment Trust (Ê)

        

Series 2004-1 Class 1A

        

3.245% due 04/25/44

    69      69

Series 2004-4 Class 4A

        

4.390% due 02/25/45

    201      182

Series 2005-2 Class 1A1

        

3.195% due 09/25/45

    1,033      792

Series 2007-1 Class GA1C

        

3.085% due 05/25/47

    1,155      902

Banc of America Alternative Loan Trust

        

Series 2003-1 Class A2

        

5.500% due 02/25/33

    253      232

Series 2003-2 Class CB2 (Ê)

        

3.395% due 04/25/33

    148      140

Series 2003-10 Class 2A1

        

6.000% due 12/25/33

    168      158

Series 2003-10 Class 2A2 (Ê)

        

3.345% due 12/25/33

    357      322

Series 2004-2 Class 1A1

        

6.000% due 03/25/34

    98      92

Series 2004-10 Class 1CB1

        

6.000% due 11/25/34

    107      101

Series 2004-11 Class 1CB1

        

6.000% due 12/25/34

    125      118

Series 2005-1 Class 2A1

        

5.500% due 02/25/20

    612      606

Series 2005-3 Class 2A1

        

5.500% due 04/25/20

    161      163

Series 2005-5 Class 2CB1

        

6.000% due 06/25/35

    218      220

Series 2005-6 Class 7A1

        

5.500% due 07/25/20

    178      178

Series 2005-9 Class 5A1

        

5.500% due 10/25/20

    303      306

Series 2006-5 Class CB17

        

6.000% due 06/25/36

    512      458

Banc of America Commercial Mortgage, Inc.

        

Series 2003-1 Class SBC (Þ)

        

5.790% due 03/11/32

    252      277

Series 2003-1 Class SBE (Þ)

        

6.770% due 03/11/32

    252      287

Series 2004-3 Class A3

        

4.875% due 06/10/39

    380      380

 

78   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2004-4 Class A3

        

4.128% due 07/10/42

    1,645      1,634

Series 2005-2 Class A4

        

4.783% due 07/10/43

    730      721

Series 2005-3 Class A2

        

4.501% due 07/10/43

    360      357

Series 2005-5 Class A4

        

5.115% due 10/10/45

    1,500      1,476

Series 2006-1 Class A4

        

5.372% due 09/10/45

    760      748

Series 2006-3 Class A4

        

5.889% due 07/10/44

    65      66

Series 2006-4 Class A4

        

5.634% due 07/10/46

    1,885      1,875

Series 2007-2 Class A2

        

5.634% due 04/10/49

    640      638

Series 2007-2 Class A4

        

5.867% due 04/10/49

    1,200      1,191

Banc of America Funding Corp.

        

Series 2004-2 Class 3A11

        

5.250% due 09/20/34

    460      446

Series 2005-D Class A1 (Ê)

        

4.113% due 05/25/35

    275      256

Series 2005-F Class 1A2 (Ê)

        

3.150% due 09/20/35

    99      66

Series 2006-3 Class 5A8

        

5.500% due 03/25/36

    930      856

Series 2006-A Class 3A2

        

5.845% due 02/20/36

    318      274

Series 2006-A Class 4A1 (Ê)

        

5.566% due 02/20/36

    798      758

Series 2006-J Class 4A1

        

6.143% due 01/20/47

    172      147

Banc of America Mortgage Securities, Inc.

        

Series 2003-9 Class 1A12 (Ê)

        

3.345% due 12/25/33

    931      894

Series 2003-D Class 1A2 (Ê)

        

7.300% due 05/25/33

    1      1

Series 2004-1 Class 5A1

        

6.500% due 09/25/33

    14      14

Series 2004-2 Class 1A9 (Ê)

        

3.345% due 03/25/34

    574      541

Series 2004-11 Class 2A1

        

5.750% due 01/25/35

    713      672

Series 2004-D Class 1A1 (Ê)

        

5.646% due 05/25/34

    58      58

Series 2004-L Class 2A1 (Ê)

        

4.370% due 01/25/35

    497      475
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-8 Class A7

        

5.500% due 09/25/35

    228      230

Series 2005-9 Class 2A1

        

4.750% due 10/25/20

    320      317

Series 2005-H Class 2A5 (Ê)

        

4.806% due 09/25/35

    600      548

Series 2005-I Class 4A1 (Ê)

        

5.270% due 10/25/35

    396      359

Series 2005-L Class 3A1 (Ê)

        

5.465% due 01/25/36

    417      392

Series 2006-2 Class A12

        

6.000% due 07/25/36

    393      377

Series 2006-2 Class A15

        

6.000% due 07/25/36

    608      597

Series 2006-B Class 1A1 (Ê)

        

6.158% due 11/20/36

    393      341

Series 2007-3 Class 1A1

        

6.000% due 09/25/37

    4,486      4,337

Bear Stearns Adjustable Rate Mortgage Trust

        

Series 2004-1 Class 21A1

        

4.452% due 04/25/34

    449      391

Series 2004-8 Class 2A1

        

5.072% due 11/25/34

    819      791

Series 2004-9 Class 22A1 (Ê)

        

4.777% due 11/25/34

    936      905

Series 2005-10 Class A1 (Ê)

        

4.750% due 10/25/35

    933      898

Series 2005-10 Class A3 (Ê)

        

4.650% due 10/25/35

    2,000      1,792

Series 2005-2 Class A1 (Ê)

        

4.125% due 03/25/35

    3,979      3,806

Series 2005-2 Class A2 (Ê)

        

4.125% due 03/25/35

    3,841      3,670

Series 2005-3 Class 2A1

        

5.069% due 06/25/35

    1,094      1,055

Series 2005-5 Class A2 (Ê)

        

4.550% due 08/25/35

    4,601      4,374

Series 2007-1 Class 3A2

        

5.748% due 02/25/47

    418      365

Series 2007-3 Class 1A1

        

5.476% due 05/25/47

    1,529      1,451

Bear Stearns Alt-A Trust

        

Series 2005-4 Class 23A1

        

5.371% due 05/25/35

    369      322

Series 2005-5 Class 21A1

        

5.500% due 06/25/35

    1,162      1,016

Series 2005-7 Class 22A1

        

5.706% due 09/25/35

    109      92

 

Fixed Income III Fund   79

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-3 Class 33A1 (Ê)

        

6.156% due 05/25/36

    401      322

Bear Stearns Alt-A Trust II

        

Series 2007-1 Class 1A1

        

6.264% due 09/25/47

    2,750      2,198

Bear Stearns Asset Backed Securities Trust

        

Series 2005-AC8 Class A5

        

5.500% due 11/25/35

    277      237

Bear Stearns Commercial Mortgage Securities

        

Series 2005-PW1 Class A4

        

5.405% due 12/11/40

    1,500      1,501

Series 2006-PW1 Class A4

        

5.201% due 12/11/38

    2,440      2,352

Series 2007-PW1 Class A4

        

5.902% due 06/11/40

    900      894

5.694% due 06/11/50

    1,700      1,674

Bear Stearns Mortgage Funding Trust (Ê)

        

Series 2006-AR2 Class 1A1

        

3.095% due 09/25/36

    1,411      1,104

Series 2006-AR2 Class 2A1

        

3.125% due 10/25/36

    845      639

Series 2006-AR3 Class 1A1

        

3.075% due 03/25/36

    615      480

Series 2006-AR4 Class A1

        

3.105% due 12/25/36

    760      592

Series 2006-AR5 Class 1A1

        

3.055% due 12/25/46

    1,109      860

Series 2007-AR2 Class A1

        

3.065% due 03/25/37

    848      605

Series 2007-AR2 Class A3

        

3.125% due 03/25/37

    4,937      2,119

Series 2007-AR3 Class 1A1

        

3.035% due 03/25/37

    891      695

Bear Stearns Structured Products, Inc.

        

Series 2007-R6 Class 1A1

        

5.682% due 01/26/36

    539      452

Series 2007-R6 Class 2A1

        

5.783% due 12/26/46

    274      226

Chase Mortgage Finance Corp.

        

Series 2003-S8 Class A1

        

4.500% due 09/25/18

    366      353

Series 2006-S4 Class A3

        

6.000% due 12/25/36

    633      624

Series 2006-S4 Class A4

        

6.000% due 12/25/36

    360      358
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2007-A1 Class 1A3

        

4.353% due 02/25/37

    780      754

Series 2007-A1 Class 8A1

        

4.244% due 02/25/37

    1,716      1,620

Citicorp Mortgage Securities, Inc.

        

Series 2006-3 Class 1A6

        

6.000% due 06/25/36

    256      236

Series 2006-3 Class 1A9

        

5.750% due 06/25/36

    350      320

Citigroup Commercial Mortgage Trust

        

Series 2006-C5 Class A4

        

5.431% due 10/15/49

    510      499

Citigroup Mortgage Loan Trust, Inc.

        

Series 2005-11 Class A2A (Ê)

        

4.700% due 12/25/35

    77      75

Series 2006-AR3 Class 2A4A

        

5.900% due 06/25/36

    1,716      1,370

Series 2006-AR5 Class 2A1A

        

6.228% due 07/25/36

    1,633      1,203

Series 2007-AR8 Class 2A1A

        

5.914% due 08/25/37

    611      582

Series 2008-RR1 Class A1A1 (Ê)(Å)

        

2.965% due 01/25/37

    867      867

Citigroup/Deutsche Bank Commercial Mortgage Trust

        

Series 2005-CD1 Class A4

        

5.400% due 07/15/44

    2,585      2,572

Series 2006-CD3 Class A5

        

5.617% due 10/15/48

    455      452

Citimortgage Alternative Loan Trust

        

Series 2006-A3 Class 1A5

        

6.000% due 07/25/36

    335      299

Series 2007-A1 Class 1A5

        

6.000% due 01/25/37

    655      567

Commercial Mortgage Pass Through Certificates

        

Series 2001-J1A Class A2 (Þ)

        

6.457% due 02/16/34

    208      214

Series 2006-C7 Class A2

        

5.690% due 06/10/46

    235      237

Series 2007-C9 Class A4

        

6.010% due 12/10/49

    1,453      1,453

Countrywide Alternative Loan Trust

        

Series 2004-28C Class 6A1

        

6.000% due 01/25/35

    212      209

Series 2004-J7 Class 1A2

        

4.673% due 08/25/34

    23      23

Series 2004-J8 Class 1A1

        

7.000% due 09/25/34

    173      148

 

80   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2005-1CB Class 2A2

        

5.500% due 03/25/35

    389      352

Series 2005-16 Class A1 (Ê)

        

5.881% due 06/25/35

    981      736

Series 2005-32T Class A7 (Ê)

        

3.145% due 08/25/35

    382      365

Series 2005-38 Class A1 (Ê)

        

5.576% due 09/25/35

    363      295

Series 2005-51 Class 2A1 (Ê)

        

3.100% due 11/20/35

    426      343

Series 2005-51 Class 2A2A (Ê)

        

3.090% due 11/20/35

    92      80

Series 2005-51 Class 4A1 (Ê)

        

3.120% due 11/20/35

    620      506

Series 2005-56 Class 2A2 (Ê)

        

6.116% due 11/25/35

    381      310

Series 2005-58 Class A2 (Ê)

        

3.190% due 12/20/35

    404      270

Series 2005-59 Class 1A2B (Ê)

        

3.155% due 11/20/35

    133      124

Series 2005-63 Class 3A1

        

5.893% due 11/25/35

    365      297

Series 2005-63 Class 5A1 (Ê)

        

5.319% due 12/25/35

    716      678

Series 2005-J8 Class 1A3

        

5.500% due 07/25/35

    496      441

Series 2005-J13 Class 2A3

        

5.500% due 11/25/35

    269      240

Series 2006-9T1 Class A7

        

6.000% due 05/25/36

    260      216

Series 2006-43C Class 1A7

        

6.000% due 02/25/37

    743      686

Series 2006-J2 Class A3

        

6.000% due 04/25/36

    387      356

Series 2006-OA1 Class 4A1 (Ê)

        

3.085% due 08/25/46

    861      675

Series 2006-OA1 Class A1 (Ê)

        

2.980% due 02/20/47

    1,022      798

Series 2006-OA2 Class A1 (Ê)

        

3.055% due 02/25/47

    603      471

Series 2006-OA2 Class A2A (Ê)

        

2.950% due 05/20/46

    164      150

Series 2006-OA6 Class 1A3 (Ê)

        

3.165% due 07/25/46

    353      227

Series 2006-OA7 Class 1A4 (Ê)

        

5.176% due 06/25/46

    3,504      1,806

Series 2007-15C Class A5

        

5.750% due 07/25/37

    2,775      2,261
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2007-J2 Class 2A1

        

6.000% due 07/25/37

    723      595

Series 2007-OA1 Class A1A (Ê)

        

5.706% due 04/25/43

    2,940      2,338

Series 2007-OA6 Class A1B (Ê)

        

3.095% due 06/25/37

    2,052      1,598

Countrywide Home Loan Mortgage Pass Through Trust

        

Series 2003-8 Class A2 (Ê)

        

3.395% due 05/25/18

    493      490

Series 2003-20 Class 1A9

        

5.500% due 07/25/33

    408      394

Series 2003-42 Class M (Ê)

        

4.297% due 10/25/33

    191      180

Series 2003-52 Class A1

        

4.501% due 02/19/34

    520      492

Series 2004-16 Class 1A1 (Ê)

        

3.295% due 09/25/34

    298      243

Series 2004-22 Class A3

        

4.800% due 11/25/34

    505      474

Series 2004-HYB Class 1A1

        

4.720% due 02/20/35

    890      863

Series 2004-HYB Class A2

        

4.549% due 11/20/34

    359      315

Series 2004-J9 Class 2A1

        

5.250% due 01/25/35

    425      414

Series 2005-8R Class A4

        

6.000% due 10/25/34

    361      352

Series 2005-11 Class 5A1 (Ê)

        

3.195% due 03/25/35

    41      35

Series 2005-20 Class A5

        

5.500% due 10/25/35

    3,434      2,963

Series 2005-23 Class A1

        

5.500% due 11/25/35

    982      972

Series 2005-29 Class A1

        

5.750% due 12/25/35

    632      606

Series 2005-HYB Class 2A1

        

4.902% due 08/20/35

    1,602      1,301

Series 2005-HYB Class 3A2A (Ê)

        

5.250% due 02/20/36

    143      117

Series 2005-HYB Class 4A1

        

5.872% due 12/20/35

    535      433

Series 2005-R2 Class 2A4 (Þ)

        

8.500% due 06/25/35

    389      395

Series 2006-1 Class A2

        

6.000% due 03/25/36

    289      288

Series 2006-1 Class A3

        

6.000% due 03/25/36

    105      104

 

Fixed Income III Fund   81

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-13 Class 1A23

        

6.250% due 09/25/36

    129      131

Series 2006-15 Class A3

        

6.250% due 10/25/36

    275      281

Series 2006-20 Class B1

        

6.000% due 02/25/37

    248      212

Series 2006-HYB Class 3A1A

        

6.094% due 05/20/36

    402      321

Series 2006-J4 Class A10

        

6.250% due 09/25/36

    125      114

Series 2006-J4 Class A2

        

6.250% due 09/25/36

    230      231

Series 2006-OA5 Class 2A1 (Ê)

        

3.095% due 04/25/46

    1,121      879

Series 2006-R2 Class AF1 (Ê)(Þ)

        

3.315% due 08/25/36

    651      643

Series 2007-18 Class 2A1

        

6.500% due 09/25/37

    722      689

Series 2007-HY1 Class 1A2

        

5.692% due 04/25/37

    222      196

Credit Suisse First Boston Mortgage Securities Corp.

        

Series 1998-C2 Class A2

        

6.300% due 11/15/30

    129      130

Series 2001-SPG Class A2 (Þ)

        

6.515% due 08/13/18

    185      193

Series 2002-30 Class DB1

        

7.378% due 11/25/32

    151      148

Series 2003-29 Class 5A1

        

7.000% due 12/25/33

    31      30

Series 2004-1 Class 3A1

        

7.000% due 02/25/34

    13      14

Series 2004-C1 Class A3

        

4.321% due 01/15/37

    675      667

Series 2005-9 Class 2A1

        

5.500% due 10/25/35

    1,272      1,202

Credit Suisse Mortgage Capital Certificates

        

Series 2006-C1 Class AAB

        

5.681% due 02/15/39

    130      128

Series 2006-C3 Class B

        

6.021% due 06/15/38

    812      636

Series 2007-C1 Class A3

        

5.383% due 02/15/40

    1,300      1,258

Series 2007-C1 Class AAB

        

5.336% due 02/15/40

    500      488

Series 2007-C3 Class A4

        

5.913% due 06/15/39

    900      893
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2007-C3 Class AAB

        

5.913% due 06/15/39

    2,300      2,293

Crown Castle Towers LLC (Þ)

        

Series 2005-1A Class AFL (Ê)

        

3.096% due 06/15/35

    1,360      1,317

Series 2005-1A Class C

        

5.074% due 06/15/35

    150      140

Deutsche ALT-A Securities, Inc. Alternate Loan Trust

        

Series 2005-AR1 Class 2A3

        

4.977% due 08/25/35

    905      734

Series 2006-AB4 Class A1C

        

6.000% due 10/25/36

    772      688

DLJ Commercial Mortgage Corp.

        

Series 1999-CG1 Class S

        

Principal Only STRIP

        

1.021% due 03/10/32

    5,645      43

Series 1999-CG3 Class A3

        

7.730% due 10/10/32

    310      322

Downey Savings & Loan Association Mortgage Loan Trust

        

Series 2004-AR3 Class 1A1B (Ê)

        

6.627% due 07/19/44

    110      88

Series 2006-AR1 Class 2A1A (Ê)

        

5.016% due 04/19/47

    549      524

Fannie Mae

        

5.190% due 2012 (Ê)

    496      507

5.000% due 2014

    17      17

6.000% due 2016

    21      22

5.000% due 2017

    1,266      1,281

5.500% due 2017

    32      34

6.000% due 2017

    43      44

6.500% due 2017

    136      141

7.000% due 2017

    48      51

4.000% due 2018

    1,546      1,499

4.500% due 2018

    3,055      3,039

5.000% due 2018

    4,758      4,807

7.000% due 2018

    120      129

10.000% due 2018

    31      35

4.500% due 2019

    166      165

5.000% due 2019

    4,247      4,291

6.000% due 2019

    906      936

4.500% due 2020

    516      513

5.000% due 2020

    1,272      1,284

5.500% due 2020

    111      114

6.000% due 2020

    1,715      1,771

5.000% due 2021

    480      485

5.500% due 2021

    2,206      2,248

5.500% due 2022

    8,015      8,168

 

82   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

4.500% due 2023

    1,772      1,766

5.500% due 2023

    467      476

6.500% due 2024

    916      952

10.000% due 2024

    24      27

7.155% due 2025 (Ê)

    19      19

6.000% due 2026

    4,419      4,532

6.300% due 2026 (Ê)

    142      144

6.000% due 2027

    1,365      1,400

7.500% due 2027

    9      9

7.000% due 2028

    17      18

7.500% due 2028

    191      207

6.500% due 2029

    2      2

7.000% due 2029

    87      93

7.500% due 2029

    61      66

8.000% due 2029

    5      5

8.500% due 2029

    2      2

7.500% due 2030

    53      58

8.500% due 2030

    191      211

9.500% due 2030

    59      66

7.000% due 2031

    395      421

7.500% due 2031

    174      187

8.000% due 2031

    225      243

8.500% due 2031

    182      202

6.000% due 2032

    803      827

6.500% due 2032

    2      2

7.000% due 2032

    351      372

7.500% due 2032

    196      211

8.000% due 2032

    22      23

3.912% due 2033 (Ê)

    415      426

4.235% due 2033 (Ê)

    199      200

4.676% due 2033 (Ê)

    478      487

5.000% due 2033

    792      781

5.203% due 2033 (Ê)

    194      197

5.500% due 2033

    5,150      5,195

6.000% due 2033

    264      271

7.000% due 2033

    885      938

5.000% due 2034

    1,106      1,090

5.500% due 2034

    19,517      19,689

6.000% due 2034

    481      493

7.000% due 2034

    261      277

7.500% due 2034

    75      80

4.778% due 2035 (Ê)

    822      831

4.793% due 2035 (Ê)

    647      655

4.834% due 2035 (Ê)

    1,260      1,276

5.000% due 2035

    1,279      1,259

5.134% due 2035 (Ê)

    569      580

5.500% due 2035

    11,520      11,606

6.000% due 2035

    441      451

7.000% due 2035

    12      13
     Principal
Amount ($)
or Shares		      Market
Value
$

7.500% due 2035

    516      556

4.738% due 2036 (Ê)

    647      651

5.000% due 2036

    6,150      6,052

5.500% due 2036

    6,978      7,010

6.000% due 2036

    6,886      7,040

6.293% due 2036 (Ê)

    99      101

6.318% due 2036 (Ê)

    99      101

6.500% due 2036

    1,719      1,782

7.000% due 2036

    65      69

7.500% due 2036

    214      228

5.000% due 2037

    1,000      983

5.500% due 2037

    42,618      42,870

5.557% due 2037 (Ê)

    759      773

5.979% due 2037 (Ê)

    610      622

6.000% due 2037

    37,437      38,307

6.500% due 2037

    12,858      13,287

7.000% due 2037

    51,848      54,563

7.500% due 2037

    5,207      5,500

5.000% due 2038

    2,880      2,830

5.500% due 2038

    55,967      56,328

6.000% due 2038

    932      954

7.000% due 2038

    2,971      3,126

7.500% due 2038

    1,946      2,055

5.276% due 2043 (Ê)

    250      252

Series 1997-281 Class 2

        

Interest Only STRIP

        

9.000% due 11/01/26

    29      8

Series 2000-306 Class IO

        

Interest Only STRIP

        

8.000% due 05/01/30

    30      7

Series 2001-317 Class 2

        

Interest Only STRIP

        

8.000% due 08/01/31

    31      7

Series 2002-320 Class 2

        

Interest Only STRIP

        

7.000% due 04/01/32

    15      4

Series 2003-339 Class 23

        

Interest Only STRIP

        

5.000% due 07/01/18

    1,745      245

Series 2003-343 Class 6

        

Interest Only STRIP

        

5.000% due 10/01/33

    620      135

Series 2003-345 Class 18

        

Interest Only STRIP

        

4.500% due 12/01/18

    1,627      250

Series 2003-345 Class 19

        

Interest Only STRIP

        

4.500% due 01/01/19

    1,816      274

 

Fixed Income III Fund   83

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2004-353 Class 2

        

Interest Only STRIP

        

5.000% due 08/01/34

    1,490      365

Series 2004-356 Class 35

        

Interest Only STRIP

        

4.500% due 03/01/20

    329      51

Series 2004-356 Class 36

        

Interest Only STRIP

        

4.500% due 03/01/20

    562      89

Series 2005-365 Class 12

        

Interest Only STRIP

        

5.500% due 12/01/35

    2,771      633

Series 2006-369 Class 8

        

Interest Only STRIP

        

5.500% due 04/01/36

    508      118

Series 2006-372 Class 2

        

Interest Only STRIP

        

6.000% due 08/01/36

    2,001      445

Series 2006-377 Class 2

        

Interest Only STRIP

        

5.000% due 10/01/36

    2,231      532

15 Year TBA (Ï)

        

4.500%

    4,085      4,033

5.000%

    6,325      6,357

6.000%

    59,075      60,386

30 Year TBA (Ï)

        

5.000%

    26,975      26,495

5.500%

    188,631      189,611

5.500%

    8,765      8,924

6.000%

    8,485      8,737

6.500%

    20,460      21,170

7.000%

    5,330      5,602

Fannie Mae Grantor Trust

        

Series 2001-T8 Class A2

        

9.500% due 07/25/41

    55      61

Series 2003-T4 Class 2A5

        

5.407% due 09/26/33

    138      124

Fannie Mae REMICS

        

Series 1996-46 Class ZA

        

7.500% due 11/25/26

    64      67

Series 1999-56 Class Z

        

7.000% due 12/18/29

    239      254

Series 2003-16 Class NI

        

Interest Only STRIP

        

5.000% due 02/25/15

    48      1

Series 2003-21 Class M

        

5.000% due 02/25/17

    102      104

Series 2003-25 Class IK

        

Interest Only STRIP

        

7.000% due 04/25/33

    73      18
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2003-32 Class FH (Ê)

        

3.295% due 11/25/22

    539      530

Series 2003-32 Class UI

        

Interest Only STRIP

        

6.000% due 05/25/33

    112      28

Series 2003-33 Class IA

        

Interest Only STRIP

        

6.500% due 05/25/33

    647      152

Series 2003-35 Class FY (Ê)

        

3.295% due 05/25/18

    1,012      1,002

Series 2003-35 Class IU

        

6.000% due 05/25/33

    136      34

Series 2003-35 Class UI

        

Interest Only STRIP

        

6.500% due 05/25/33

    132      30

Series 2003-64 Class JI

        

Interest Only STRIP

        

6.000% due 07/25/33

    134      35

Series 2003-78 Class FI (Ê)

        

3.295% due 01/25/33

    552      546

Series 2003-82 Class IA

        

Interest Only STRIP

        

6.000% due 08/25/32

    96      9

Series 2003-82 Class WI

        

Interest Only STRIP

        

6.000% due 08/25/32

    19      2

Series 2003-122 Class AJ

        

4.500% due 02/25/28

    105      105

Series 2004-21 Class FL (Ê)

        

3.245% due 11/25/32

    262      259

Series 2005-36 Class AI

        

Interest Only STRIP

        

5.500% due 10/25/26

    572      28

Series 2005-79 Class FC (Ê)

        

3.195% due 02/25/22

    586      576

Series 2005-110 Class MB

        

5.500% due 09/25/35

    560      571

Series 2006-5 Class 3A2 (Ê)

        

4.665% due 05/25/35

    100      101

Series 2006-48 Class LG

        

Principal Only STRIP

        

Zero coupon due 06/25/36

    139      84

Series 2006-118 Class A2 (Ê)

        

2.955% due 12/25/36

    413      397

Series 2007-42 Class LF (Ê)

        

Zero coupon due 05/25/37

    78      78

Series 2007-73 Class A1 (Ê)

        

2.955% due 07/25/37

    761      697

 

84   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Fannie Mae Whole Loan

        

Series 2003-W17 Class 1A6

        

5.310% due 08/25/33

    1,700      1,743

Series 2004-W11 Class 1A2

        

6.500% due 05/25/44

    153      163

Series 2004-W9 Class 2A1

        

6.500% due 02/25/44

    86      91

Federal Home Loan Mortgage Corp. Structured Pass Through Securities

        

Series 2003-58 Class 2A

        

6.500% due 09/25/43

    80      85

Series 2005-63 Class 1A1 (Ê)

        

5.722% due 02/25/45

    31      30

First Horizon Alternative Mortgage Securities

        

Series 2004-AA3 Class A1 (Ê)

        

5.296% due 09/25/34

    116      96

Series 2005-AA7 Class 2A1 (Ê)

        

5.407% due 09/25/35

    693      571

Series 2006-AA5 Class A2 (Ê)

        

6.519% due 09/25/36

    338      230

Series 2006-FA3 Class A6

        

6.000% due 07/25/36

    426      404

First Horizon Asset Securities, Inc.

        

Series 2003-5 Class 1A17

        

8.000% due 07/25/33

    44      44

Series 2004-AR5 Class 4A1 (Ê)

        

5.700% due 10/25/34

    128      118

Series 2004-AR6 Class 2A1 (Ê)

        

4.750% due 12/25/34

    128      121

Series 2005-AR3 Class 2A1 (Ê)

        

5.370% due 08/25/35

    125      116

Series 2005-AR5 Class 3A1 (Ê)

        

5.535% due 10/25/35

    195      179

Series 2006-AR4 Class 1A3 (Ê)

        

5.492% due 01/25/37

    164      153

First Union-Chase Commercial Mortgage

        

Series 1999-C2 Class A2
6.645% due 06/15/31

    79      80

First Union-Lehman Brothers-Bank of America

        

Series 1998-C2 Class A2
6.560% due 11/18/35

    1      1

Freddie Mac

        

6.000% due 2016

    35      36

8.500% due 2017

    41      44

10.500% due 2017

    14      16

4.000% due 2018

    2,689      2,607
     Principal
Amount ($)
or Shares		      Market
Value
$

4.500% due 2018

    645      637

5.000% due 2018

    737      746

4.000% due 2019

    3,148      3,047

4.500% due 2019

    142      141

5.000% due 2019

    1,251      1,265

5.000% due 2020

    1,270      1,281

5.500% due 2020

    1,456      1,488

10.000% due 2020

    41      46

8.500% due 2025

    15      16

7.216% due 2027 (Ê)

    26      27

8.500% due 2027

    77      85

6.475% due 2028 (Ê)

    23      23

7.111% due 2028 (Ê)

    21      21

7.000% due 2030

    45      47

7.266% due 2030 (Ê)

    5      5

7.500% due 2030

    189      205

8.000% due 2030

    42      46

7.000% due 2031

    88      95

7.500% due 2031

    12      13

8.000% due 2031

    12      13

7.500% due 2032

    93      101

5.000% due 2033

    307      303

7.000% due 2033

    30      32

4.031% due 2034 (Ê)

    301      303

4.863% due 2034 (Ê)

    725      745

6.881% due 2034 (Ê)

    155      158

6.937% due 2034 (Ê)

    32      32

5.870% due 2036 (Ê)

    279      284

5.926% due 2036 (Ê)

    546      560

5.969% due 2036 (Ê)

    339      347

5.509% due 2037 (Ê)

    435      442

5.532% due 2037 (Ê)

    1,299      1,321

5.597% due 2037 (Ê)

    558      570

5.696% due 2037 (Ê)

    783      800

5.698% due 2037 (Ê)

    240      246

5.706% due 2037 (Ê)

    1,786      1,801

5.729% due 2037 (Ê)

    687      693

5.783% due 2037 (Ê)

    531      541

5.818% due 2037 (Ê)

    504      513

5.855% due 2037 (Ê)

    163      166

5.872% due 2037 (Ê)

    238      242

6.000% due 2037

    62      63

6.118% due 2037 (Ê)

    1,161      1,180

7.000% due 2037

    1,776      1,871

5.500% due 2038

    5,944      5,986

15 Year TBA (Ï)

        

5.500%

    14,500      14,758

30 Year TBA (Ï)

        

5.000%

    1,195      1,174

5.500%

    20,650      20,779

6.000%

    6,610      6,747

 

Fixed Income III Fund   85

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Freddie Mac Reference REMIC

        

Series 2006-R00 Class AK
5.750% due 12/15/18

    494      502

Freddie Mac REMICS

        

Series 1991-103 Class Z

        

9.000% due 02/15/21

    44      44

Series 1994-173 Class Z

        

7.000% due 05/15/24

    92      97

Series 1999-212 Class SG (Ê)

        

Interest Only STRIP

        

4.250% due 06/17/27

    330      38

Series 2001-229 Class KF (Ê)

        

3.145% due 07/25/22

    253      251

Series 2001-232 Class ZQ

        

6.500% due 06/15/31

    420      441

Series 2003-256 Class FJ (Ê)

        

3.116% due 02/15/33

    324      318

Series 2003-258 Class IG

        

Interest Only STRIP

        

4.500% due 10/15/16

    240      22

Series 2003-259 Class IQ

        

Interest Only STRIP

        

5.000% due 06/15/17

    221      19

Series 2003-261 Class UI

        

Interest Only STRIP

        

6.500% due 05/15/33

    91      21

Series 2003-262 Class AB

        

2.900% due 11/15/14

    395      393

Series 2003-262 Class QH

        

5.000% due 05/15/33

    280      261

5.000% due 06/15/33

    315      293

Series 2003-264 Class IM

        

Interest Only STRIP

        

7.000% due 07/15/33

    112      22

Series 2003-266 Class MA

        

4.500% due 10/15/31

    315      315

Series 2004-275 Class FM (Ê)

        

3.066% due 12/15/30

    293      291

Series 2004-276 Class IP

        

Interest Only STRIP

        

5.500% due 07/15/23

    177      3

Series 2004-277 Class UF (Ê)

        

3.016% due 06/15/33

    637      632

Series 2004-281 Class DF (Ê)

        

3.166% due 06/15/23

    202      199

Series 2004-287 Class GC

        

5.000% due 11/15/29

    480      482

Series 2004-289 Class PC

        

5.000% due 07/15/30

    640      642
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-291 Class KP

        

5.000% due 11/15/29

    215      216

Series 2005-292 Class IG

        

Interest Only STRIP

        

5.000% due 04/15/23

    266      33

Series 2005-294 Class FA (Ê)

        

2.886% due 03/15/20

    378      373

Series 2005-299 Class KF (Ê)

        

3.116% due 06/15/35

    174      171

Series 2005-300 Class ED

        

5.000% due 07/15/25

    890      873

Series 2005-301 Class IM

        

Interest Only STRIP

        

5.500% due 01/15/31

    374      45

Series 2005-302 Class MB

        

5.000% due 12/15/28

    200      203

Series 2005-303 Class XA (Ê)

        

Zero coupon due 09/15/35

    72      65

Series 2005-306 Class PC

        

5.000% due 02/15/29

    1,220      1,237

Series 2006-312 Class HT

        

5.000% due 03/15/26

    555      540

Series 2006-313 Class FP (Ê)

        

Zero coupon due 04/15/36

    282      287

Series 2006-315 Class EQ

        

5.000% due 05/15/36

    355      346

Series 2006-317 Class XI (Ê)

        

Interest Only STRIP

        

12.600% due 10/15/35

    637      7

Series 2006-323 Class PA

        

6.000% due 03/15/26

    623      634

Series 2007-327 Class SX (Ê)

        

Zero coupon due 07/15/36

    81      84

Series 2007-327 Class UF (Ê)

        

Zero coupon due 02/15/37

    85      95

Series 2007-327 Class WF (Ê)

        

Zero coupon due 09/15/36

    79      91

Series 2007-330 Class GL (Ê)

        

19.029% due 04/15/37

    72      92

Series 2007-333 Class AF (Ê)

        

2.866% due 10/15/20

    4,250      4,159

Series 2007-333 Class BF (Ê)

        

2.866% due 07/15/19

    676      663

Series 2007-333 Class FT (Ê)

        

2.866% due 08/15/19

    3,106      3,042

Series 2007-334 Class FA (Ê)

        

2.946% due 02/15/19

    2,883      2,824

Series 2007-334 Class FT (Ê)

        

3.066% due 10/15/33

    4,598      4,487

 

86   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Freddie Mac Strips

        

Series 1998-191 Class IO

        

Interest Only STRIP

        

8.000% due 01/01/28

    25      6

Series 1998-194 Class IO

        

Interest Only STRIP

        

6.500% due 04/01/28

    87      21

Series 2001-212 Class IO

        

Interest Only STRIP

        

6.000% due 05/01/31

    65      15

Series 2001-215 Class IO

        

Interest Only STRIP

        

8.000% due 06/01/31

    44      11

GE Capital Commercial Mortgage Corp.

        

Series 2001-1 Class A2

        

6.531% due 05/15/33

    1,240      1,287

Series 2002-1A Class A3

        

6.269% due 12/10/35

    305      315

Series 2002-3A Class A1

        

4.229% due 12/10/37

    915      908

Series 2007-C1 Class A4

        

5.543% due 12/10/49

    1,130      1,105

Ginnie Mae I

        

10.500% due 2016

    19      21

11.000% due 2020

    36      40

10.000% due 2022

    34      39

7.500% due 2024

    23      25

7.500% due 2032

    22      23

6.000% due 2037

    887      913

30 Year TBA (Ï)

        

5.500%

    1,845      1,856

Ginnie Mae II (Ê)

        

5.125% due 2023

    48      48

5.625% due 2023

    16      17

5.125% due 2024

    125      127

5.625% due 2024

    114      115

5.625% due 2025

    4      4

6.375% due 2025

    149      150

5.125% due 2026

    52      53

5.125% due 2027

    6      6

5.375% due 2027

    78      79

5.625% due 2027

    71      71

6.375% due 2027

    4      4

6.375% due 2028

    3      3

6.375% due 2030

    120      122

Global Signal Trust

        

Series 2004-2A Class A (Þ)

        

4.232% due 12/15/14

    225      222
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-1 Class B

        

5.588% due 02/15/36

    125      122

Series 2006-1 Class C

        

5.707% due 02/15/36

    335      319

GMAC Commercial Mortgage Securities, Inc.

        

Series 1999-C2 Class A2
6.945% due 09/15/33

    468      476

GMAC Mortgage Corp. Loan Trust

        

Series 2004-JR1 Class A6 (Ê)

        

3.345% due 12/25/33

    401      386

Series 2005-AR2 Class 4A (Ê)

        

5.182% due 05/25/35

    1,912      1,721

Series 2005-AR6 Class 3A1

        

5.299% due 11/19/35

    654      613

Government National Mortgage Association (Ê)

        

Series 1999-27 Class SE

        

5.887% due 08/16/29

    119      16

Series 1999-40 Class FE

        

3.263% due 11/16/29

    262      261

Series 1999-44 Class SA

        

5.837% due 12/16/29

    132      18

Series 2000-29 Class S

        

5.700% due 09/20/30

    32      4

Series 2002-27 Class SA

        

5.287% due 05/16/32

    49      5

Greenpoint Mortgage Funding Trust

        

Series 2006-AR6 Class A1A (Ê)

        

2.975% due 10/25/46

    682      598

Greenwich Capital Commercial Funding Corp.

        

Series 2002-C1 Class XP (Þ)

        

2.216% due 01/11/35

    1,100      33

Series 2003-C2 Class A2

        

4.022% due 01/05/36

    500      497

Series 2004-GG1 Class A7

        

5.317% due 06/10/36

    1,115      1,133

Series 2005-GG5 Class A41

        

5.243% due 04/10/37

    1,040      1,034

Series 2007-GG9 Class A4

        

5.444% due 03/10/39

    610      593

GS Mortgage Securities Corp. (Å)

        

Series 2007-NIM Class N1
6.250% due 01/25/37

    17      16

GS Mortgage Securities Corp. II

        

Series 2006-GG6 Class A4

        

5.553% due 04/10/38

    1,075      1,069

 

Fixed Income III Fund   87

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-GG8 Class AAB

        

5.535% due 11/10/39

    485      480

Series 2007-GG1 Class A4

        

5.993% due 08/10/45

    2,950      2,945

GSMPS Mortgage Loan Trust (Þ)

        

Series 1998-3 Class A

        

7.750% due 09/19/27

    40      44

Series 1999-3 Class A

        

8.000% due 08/19/29

    63      69

Series 2005-RP1 Class 1A3

        

8.000% due 01/25/35

    698      705

Series 2005-RP1 Class 1A4

        

8.500% due 01/25/35

    112      115

Series 2006-RP1 Class 1A3

        

8.000% due 01/25/36

    139      152

GSR Mortgage Loan Trust

        

Series 2004-7 Class 1A1

        

5.312% due 06/25/34

    143      134

Series 2005-AR6 Class 2A1 (Ê)

        

4.539% due 09/25/35

    1,277      1,195

Series 2005-AR7 Class 6A1

        

5.250% due 11/25/35

    510      477

Series 2006-1F Class 5A2

        

6.000% due 02/25/36

    178      178

Series 2006-OA1 Class 2A1 (Ê)

        

3.085% due 08/25/46

    559      477

Harborview Mortgage Loan Trust

        

Series 2005-2 Class 2A1A (Ê)

        

3.020% due 05/19/35

    85      69

Series 2005-4 Class 3A1

        

5.148% due 07/19/35

    414      393

Series 2005-5 Class 2A1B (Ê)

        

3.090% due 07/19/45

    120      85

Series 2005-10 Class 2A1A (Ê)

        

3.110% due 11/19/35

    464      380

Series 2005-10 Class 2A1B (Ê)

        

3.180% due 11/19/35

    232      159

Series 2005-14 Class 3A1A

        

5.296% due 12/19/35

    180      174

Series 2005-14 Class 5A1A

        

5.728% due 12/19/35

    724      556

Series 2005-16 Class 2A1A (Ê)

        

3.040% due 01/19/36

    543      450

Series 2005-16 Class 3A1A (Ê)

        

3.050% due 01/19/36

    1,271      1,037

Series 2005-16 Class 3A1B

        

3.140% due 01/19/36

    265      173

Series 2006-1 Class 2A1A (Ê)

        

3.040% due 03/19/37

    705      553
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-9 Class 2A1A (Ê)

        

3.010% due 11/19/36

    627      493

Series 2006-10 Class 2A1A (Ê)

        

2.980% due 11/19/36

    738      575

Series 2006-12 Class 2A2A (Ê)

        

2.990% due 01/19/38

    788      618

Series 2006-14 Class 2A1A (Ê)

        

2.950% due 03/19/38

    604      472

Series 2006-14 Class 2A1B (Ê)

        

3.000% due 03/19/38

    358      228

Series 2007-1 Class 2A1A (Ê)

        

2.930% due 04/19/38

    474      371

Indymac Index Mortgage Loan Trust

        

Series 2004-AR1 Class 2A

        

5.052% due 12/25/34

    137      124

Series 2005-AR1 Class 4A1

        

5.376% due 08/25/35

    515      436

Series 2005-AR1 Class A1

        

5.441% due 09/25/35

    1,331      1,059

Series 2005-AR2 Class 1A21

        

5.844% due 12/25/35

    252      205

Series 2006-AR1 Class 1A4A (Ê)

        

3.065% due 11/25/46

    3,200      2,253

Series 2006-AR2 Class A2 (Ê)

        

2.975% due 11/25/36

    380      364

Series 2006-AR3 Class 2A1A (Ê)

        

3.065% due 01/25/37

    2,421      1,562

Series 2006-AR7 Class 1A1

        

6.164% due 05/25/36

    931      793

Series 2007-AR5 Class 2A1

        

6.114% due 05/25/37

    1,714      1,418

JP Morgan Chase Commercial Mortgage Securities Corp.

        

Series 2002-C1 Class A3

        

5.376% due 07/12/37

    595      607

Series 2003-C1 Class A2

        

4.985% due 01/12/37

    1,015      998

Series 2004-LN2 Class A1

        

4.475% due 07/15/41

    719      709

Series 2005-LDP Class A2

        

4.851% due 08/15/42

    1,000      998

Series 2005-LDP Class A3A1

        

4.871% due 10/15/42

    505      500

Series 2005-LDP Class A4

        

4.918% due 10/15/42

    250      243

5.345% due 12/15/44

    1,300      1,292

Series 2006-CB1 Class A4

        

5.817% due 05/12/45

    525      519

Series 2006-LDP Class A3

        

5.336% due 05/15/47

    1,740      1,687

 

88   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-LDP Class A3B

        

5.447% due 05/15/45

    595      573

Series 2006-LDP Class A4

        

6.065% due 04/15/45

    2,050      2,079

5.399% due 05/15/45

    700      685

Series 2006-LDP Class AJ

        

6.065% due 04/15/45

    370      328

Series 2007-CB1 Class A4

        

5.440% due 06/12/47

    4,500      4,368

Series 2007-CB2 Class A4

        

5.794% due 02/12/51

    1,670      1,656

Series 2007-CB2 Class AJ

        

6.303% due 02/12/51

    245      206

Series 2007-LD1 Class A4

        

6.007% due 06/15/49

    1,694      1,692

Series 2007-LDP Class A3

        

5.420% due 01/15/49

    690      667

JP Morgan Mortgage Trust

        

Series 2005-A1 Class 4A1 (Ê)

        

4.777% due 02/25/35

    492      463

Series 2005-A1 Class 6T1 (Ê)

        

5.023% due 02/25/35

    132      123

Series 2005-A4 Class 1A1

        

5.400% due 07/25/35

    389      361

Series 2005-A6 Class 1A2

        

5.138% due 09/25/35

    475      425

Series 2005-A8 Class 1A1

        

5.404% due 11/25/35

    1,601      1,519

Series 2006-A6 Class 1A2

        

6.044% due 10/25/36

    226      223

Series 2007-A1 Class 2A2 (Ê)

        

4.749% due 07/25/35

    826      795

LB-UBS Commercial Mortgage Trust

        

Series 2000-C5 Class A2

        

6.510% due 12/15/26

    99      103

Series 2001-C2 Class A2

        

6.653% due 11/15/27

    2,645      2,758

Series 2002-C2 Class F

        

5.794% due 07/15/35

    355      338

Series 2002-C2 Class G

        

5.873% due 07/15/35

    542      518

Series 2002-C4 Class A5

        

4.853% due 09/15/31

    1,000      1,000

Series 2004-C4 Class A3

        

5.145% due 06/15/29

    1,055      1,062

Series 2006-C1 Class A4

        

5.156% due 02/15/31

    1,500      1,456

Series 2006-C3 Class A4

        

5.661% due 03/15/39

    680      680
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-C4 Class A4

        

6.081% due 06/15/38

    480      488

Series 2007-C1 Class A3

        

5.398% due 02/15/40

    955      917

Series 2007-C1 Class A4

        

5.424% due 02/15/40

    500      485

Series 2007-C6 Class A4

        

5.858% due 07/15/40

    740      738

Series 2008-C1 Class AJ

        

6.150% due 04/15/41

    953      777

Lehman Brothers Floating Rate Commercial Mortgage Trust (Ê)

        

Series 2006-LLF Class A1

        

2.796% due 09/15/21

    64      60

Series 2006-LLF Class A2 (Å)

        

2.836% due 09/15/21

    517      482

Lehman Mortgage Trust

        

Series 2005-2 Class 2A3

        

5.500% due 12/25/35

    246      236

Series 2005-3 Class 1A3

        

5.500% due 01/25/36

    1,085      1,037

Series 2006-8 Class 2A1 (Ê)

        

3.315% due 12/25/36

    1,723      1,377

Lehman XS Trust (Ê)

        

Series 2007-16N Class 2A2

        

3.745% due 09/25/47

    2,941      2,440

Series 2007-4N Class 3A2A

        

5.076% due 04/25/37

    896      707

Series 2007-7N Class 1A2

        

3.135% due 06/25/47

    2,884      1,885

Luminent Mortgage Trust (Ê)

        

Series 2006-1 Class A1

        

3.135% due 04/25/36

    353      268

Series 2006-5 Class A1A

        

3.085% due 07/25/36

    674      527

Series 2006-6 Class A1

        

3.095% due 10/25/46

    375      292

Mastr Adjustable Rate Mortgages Trust

        

Series 2004-13 Class 3A4 (Ê)

        

3.787% due 11/21/34

    427      422

Series 2005-6 Class 7A1

        

5.335% due 06/25/35

    166      150

Series 2006-1 Class I2A3 (Ê)

        

5.066% due 01/25/47

    873      683

Series 2006-2 Class 4A1

        

4.988% due 02/25/36

    944      875

Series 2006-OA2 Class 4A1A (Ê)

        

5.176% due 12/25/46

    1,621      1,224

 

Fixed Income III Fund   89

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-OA2 Class 4A1B (Ê)

        

5.526% due 12/25/46

    3,243      2,310

Series 2007-3 Class 22A1 (Ê)

        

3.005% due 05/25/47

    301      295

Mastr Alternative Loans Trust

        

Series 2003-2 Class 6A1

        

6.000% due 03/25/33

    676      670

Series 2003-4 Class B1

        

5.681% due 06/25/33

    342      310

Series 2003-6 Class 3A1

        

8.000% due 09/25/33

    24      25

Series 2003-9 Class 1A1

        

5.500% due 12/25/18

    121      121

Series 2004-10 Class 5A6

        

5.750% due 09/25/34

    410      332

Series 2005-3 Class 7A1

        

6.000% due 04/25/35

    213      201

Mastr Asset Securitization Trust (Ê)

        

Series 2003-11 Class 6A8

        

3.395% due 12/25/33

    718      670

Series 2003-7 Class 4A35

        

3.295% due 09/25/33

    526      497

Series 2004-4 Class 2A2

        

3.345% due 04/25/34

    203      197

Mastr Reperforming Loan Trust (Þ)

        

Series 2005-1 Class 1A5

        

8.000% due 08/25/34

    180      197

Series 2005-2 Class 1A4

        

8.000% due 05/25/35

    825      856

Mellon Residential Funding Corp. (Ê)

        

Series 2000-TBC Class A1
3.298% due 06/15/30

    253      239

Merrill Lynch Mortgage Trust

        

Series 2002-MW1 Class J (Þ)

        

5.695% due 07/12/34

    185      144

Series 2004-MKB Class A2

        

4.353% due 02/12/42

    615      613

Series 2005-CIP Class AM

        

5.107% due 07/12/38

    350      335

Series 2006-C1 Class A1

        

5.528% due 05/12/39

    71      71

Merrill Lynch/Countrywide Commercial Mortgage Trust

        

Series 2007-8 Class A3
6.156% due 08/12/49

    1,100      1,110

MLCC Mortgage Investors, Inc. (Ê)

        

Series 2004-HB1 Class A2

        

3.544% due 04/25/29

    67      66
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-2 Class 3A

        

3.599% due 10/25/35

    30      27

Morgan Stanley Capital I

        

Series 1999-FNV Class G (Þ)

        

6.120% due 03/15/31

    130      128

Series 1999-LIF Class A2

        

7.110% due 04/15/33

    452      462

Series 2005-HQ7 Class A4

        

5.379% due 11/14/42

    1,000      1,006

Series 2005-IQ1 Class AAB

        

5.178% due 09/15/42

    810      796

Series 2006-HQ1 Class A4

        

5.328% due 11/12/41

    360      351

Series 2006-HQ8 Class A4

        

5.560% due 03/12/44

    895      887

Series 2006-HQ9 Class A4

        

5.731% due 07/12/44

    790      791

Series 2007-HQ1 Class D (Þ)

        

6.488% due 12/15/44

    418      272

Series 2007-IQ1 Class A2

        

5.610% due 04/15/49

    1,000      996

Series 2007-IQ1 Class A4

        

5.809% due 12/12/49

    1,030      1,022

Series 2007-T27 Class A4

        

5.803% due 06/13/42

    413      409

Series 2008-T29 Class A4

        

6.458% due 01/11/43

    1,700      1,746

Morgan Stanley Dean Witter Capital I (Þ)

        

Series 2001-TOP Class E
7.565% due 02/15/33

    100      94

Morgan Stanley Mortgage Loan Trust

        

Series 2006-2 Class 6A
6.500% due 02/25/36

    560      495

Nomura Asset Acceptance Corp.

        

Series 2005-WF1 Class 2A2
4.786% due 03/25/35

    415      393

Prime Mortgage Trust

        

Series 2004-CL1 Class 1A1

        

6.000% due 02/25/34

    58      53

Series 2004-CL1 Class 1A2 (Ê)

        

3.295% due 02/25/34

    39      35

Series 2004-CL1 Class 2A2 (Ê)

        

3.295% due 02/25/19

    16      15

Residential Accredit Loans, Inc.

        

Series 2004-QS5 Class A1

        

4.600% due 04/25/34

    261      235

Series 2004-QS5 Class A5

        

4.750% due 04/25/34

    183      165

 

90   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2004-QS5 Class A6 (Ê)

        

3.495% due 04/25/34

    106      94

Series 2004-QS8 Class A4 (Ê)

        

3.295% due 06/25/34

    494      459

Series 2005-QA1 Class A41

        

5.676% due 09/25/35

    169      142

Series 2005-QA8 Class NB3

        

5.479% due 07/25/35

    398      341

Series 2005-QO5 Class A1 (Ê)

        

5.326% due 01/25/46

    1,147      908

Series 2005-QS1 Class 2A1

        

6.000% due 09/25/35

    198      199

Series 2005-QS1 Class 2A3

        

5.750% due 09/25/35

    2,912      2,827

Series 2006-QO1 Class 1A1 (Ê)

        

3.155% due 02/25/46

    144      94

Series 2006-QO1 Class 2A1 (Ê)

        

3.165% due 02/25/46

    171      119

Series 2006-QO1 Class A1 (Ê)

        

3.055% due 01/25/37

    815      636

Series 2006-QS4 Class A11

        

6.000% due 04/25/36

    247      220

Series 2006-QS6 Class 1A13

        

6.000% due 06/25/36

    869      778

Series 2007-QH9 Class A1

        

6.550% due 11/25/37

    2,932      2,412

Series 2007-QO4 Class A1 (Ê)

        

3.095% due 05/25/47

    1,677      1,311

Residential Asset Mortgage Products, Inc.

        

Series 2004-SL1 Class A3

        

7.000% due 11/25/31

    19      19

Series 2004-SL4 Class A3

        

6.500% due 07/25/32

    103      98

Residential Asset Securitization Trust

        

Series 2003-A15 Class 1A2 (Ê)

        

3.345% due 02/25/34

    599      516

Series 2007-A5 Class 2A3

        

6.000% due 05/25/37

    304      272

Series 2007-A9 Class A6

        

6.250% due 08/25/13

    2,444      2,413

Residential Funding Mortgage Securities I

        

Series 2003-S5 Class 1A2 (Ê)

        

3.345% due 11/25/18

    310      310

Series 2003-S14 Class A5 (Ê)

        

3.295% due 07/25/18

    623      618

Series 2003-S20 Class 1A7 (Ê)

        

3.395% due 12/25/33

    155      149
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2005-SA4 Class 2A1

        

5.207% due 09/25/35

    1,409      1,346

Series 2005-SA4 Class 2A2

        

5.184% due 09/25/35

    764      722

Series 2006-SA3 Class 3A1

        

6.038% due 09/25/36

    407      386

Series 2006-SA4 Class 2A1

        

6.125% due 11/25/36

    1,221      1,151

Series 2007-S9 Class 1A1

        

6.000% due 10/25/37

    969      968

Sequoia Mortgage Trust (Ê)

        

Series 2004-3 Class A
2.633% due 04/20/34

    465      441

Structured Adjustable Rate Mortgage Loan Trust

        

Series 2004-5 Class 3A1

        

4.380% due 05/25/34

    510      475

Series 2004-12 Class 3A2

        

5.250% due 09/25/34

    200      174

Series 2004-16 Class 3A1

        

5.450% due 11/25/34

    947      852

Series 2004-18 Class 5A

        

5.500% due 12/25/34

    145      132

Series 2005-17 Class 3A1

        

5.540% due 08/25/35

    58      49

Series 2005-21 Class 7A1

        

6.026% due 11/25/35

    3,822      2,761

Series 2005-22 Class 4A2

        

5.374% due 12/25/35

    50      44

Series 2006-1 Class 5A2

        

5.250% due 02/25/36

    1,000      853

Series 2006-5 Class 2A1

        

5.969% due 06/25/36

    2,537      1,944

Series 2006-5 Class 5A4

        

5.536% due 06/25/36

    105      90

Series 2006-12 Class 2A1

        

5.961% due 01/25/37

    1,716      1,248

Structured Asset Mortgage Investments, Inc. (Ê)

        

Series 2005-AR5 Class A3

        

3.050% due 07/19/35

    397      330

Series 2006-AR1 Class 2A1

        

3.125% due 02/25/36

    1,094      860

Series 2006-AR2 Class A2

        

3.205% due 02/25/36

    368      228

Series 2006-AR3 Class 3A1

        

3.085% due 02/25/36

    195      151

Series 2006-AR7 Class A12

        

3.145% due 08/25/36

    2,144      1,383

 

Fixed Income III Fund   91

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2006-AR8 Class A1A

        

3.095% due 10/25/36

    1,517      1,192

Series 2007-AR4 Class A4A

        

3.075% due 09/25/47

    1,243      916

Series 2007-AR6 Class A1

        

5.826% due 11/25/37

    2,948      2,398

Structured Asset Securities Corp.

        

Series 2002-22H Class 1A

        

6.938% due 11/25/32

    26      25

Series 2003-26A Class 3A5

        

4.530% due 09/25/33

    1,000      1,000

Series 2004-12H Class 1A

        

6.000% due 05/25/34

    109      111

Series 2004-21X Class 1A3

        

4.440% due 12/25/34

    697      698

Series 2005-6 Class B2

        

5.344% due 05/25/35

    96      65

Thornburg Mortgage Securities Trust (Ê)

        

Series 2003-2 Class A1

        

3.575% due 04/25/43

    340      331

Series 2006-5 Class A1

        

3.015% due 09/25/46

    1,857      1,737

Series 2006-6 Class A1

        

3.005% due 11/25/11

    282      268

Wachovia Bank Commercial Mortgage Trust

        

Series 2005-C16 Class A2

        

4.380% due 10/15/41

    871      866

Series 2005-C20 Class A4

        

5.285% due 07/15/42

    1,000      1,006

Series 2005-C21 Class A4

        

5.384% due 10/15/44

    1,500      1,496

Series 2006-C28 Class A2

        

5.500% due 10/15/48

    510      510

Series 2006-WL7 Class A1 (Ê)(Þ)

        

2.806% due 09/15/21

    1,990      1,871

Series 2007-C31 Class A2

        

5.421% due 04/15/47

    1,000      989

Series 2007-WHL Class A1 (Ê)(Þ)

        

2.796% due 06/15/20

    711      656

Washington Mutual Alternative Mortgage Pass-Through Certificates

        

Series 2005-4 Class CB11

        

5.500% due 06/25/35

    220      183

Series 2006-AR2 Class A1A (Ê)

        

5.016% due 04/25/46

    469      372

Series 2006-AR6 Class 1A (Ê)

        

3.085% due 07/25/46

    196      154
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2007-OA1 Class 2A (Ê)

        

4.796% due 12/25/46

    5,980      4,487

Washington Mutual Mortgage Pass-Through Certificates

        

Series 2003-S9 Class A2 (Ê)

        

3.445% due 10/25/33

    594      566

Series 2004-AR3 Class A2

        

4.243% due 06/25/34

    653      633

Series 2004-AR8 Class X

        

Principal Only STRIP

        

Zero coupon due 06/25/44

    76      —

Series 2004-CB3 Class 1A

        

6.000% due 10/25/34

    78      77

Series 2004-CB3 Class 4A

        

6.000% due 10/25/19

    180      184

Series 2005-AR1 Class 1A1

        

4.833% due 10/25/35

    469      459

Series 2005-AR1 Class A1A1 (Ê)

        

3.185% due 10/25/45

    436      353

3.165% due 12/25/45

    452      376

Series 2005-AR1 Class A1B1 (Ê)

        

3.185% due 08/25/45

    15      15

3.155% due 10/25/45

    41      40

3.145% due 11/25/45

    94      88

3.145% due 12/25/45

    87      84

Series 2005-AR6 Class B3 (Ê)

        

3.555% due 04/25/45

    339      119

Series 2005-AR8 Class 2A1A (Ê)

        

3.185% due 07/25/45

    411      338

Series 2005-AR8 Class 2AB3 (Ê)

        

3.255% due 07/25/45

    165      114

Series 2006-AR1 Class 1A1

        

5.940% due 09/25/36

    562      548

Series 2006-AR1 Class 1A4

        

5.648% due 11/25/36

    688      657

Series 2006-AR1 Class 3A1A (Ê)

        

4.996% due 09/25/46

    751      593

Series 2006-AR2 Class 1A1

        

5.307% due 03/25/37

    1,573      1,510

Series 2006-AR7 Class 2A (Ê)

        

5.056% due 07/25/46

    2,782      2,210

Series 2006-AR8 Class 1A5

        

5.884% due 08/25/46

    76      70

Series 2006-AR8 Class 2A3 (Ê)

        

6.131% due 08/25/46

    50      46

Series 2007-HY1 Class 1A1

        

5.714% due 02/25/37

    924      882

Series 2007-HY2 Class 3A1

        

5.942% due 09/25/36

    2,859      2,708

 

92   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Series 2007-HY3 Class 4A1

        

5.349% due 03/25/37

    3,568      3,395

Series 2007-HY3 Class 4B1

        

5.348% due 03/25/37

    299      229

Series 2007-HY4 Class 1A1 (Ê)

        

5.552% due 04/25/37

    414      393

Series 2007-OA2 Class 1A (Ê)

        

4.776% due 03/25/47

    821      637

Wells Fargo Alternative Loan Trust

        

Series 2007-PA6 Class A1
6.600% due 12/26/37

    2,661      2,131

Wells Fargo Mortgage Backed Securities Trust

        

Series 2004-CC Class A1 (Ê)

        

4.947% due 01/25/35

    634      611

Series 2004-E Class A2 (Ê)

        

4.500% due 05/25/34

    516      505

Series 2004-O Class A1 (Ê)

        

4.889% due 08/25/34

    2,102      1,976

Series 2004-T Class A1 (Ê)

        

6.130% due 09/25/34

    84      84

Series 2005-12 Class 1A7

        

5.500% due 11/25/35

    474      464

Series 2005-14 Class 2A1

        

5.500% due 12/25/35

    1,286      1,241

Series 2005-17 Class 1A1

        

5.500% due 01/25/36

    711      704

Series 2005-17 Class 1A2

        

5.500% due 01/25/36

    371      364

Series 2005-17 Class 2A1

        

5.500% due 01/25/36

    1,755      1,676

Series 2005-18 Class 1A1

        

5.500% due 01/25/36

    1,284      1,239

Series 2005-AR6 Class A1 (Ê)

        

5.038% due 04/25/35

    2,196      2,019

Series 2006-1 Class A3

        

5.000% due 03/25/21

    298      292

Series 2006-2 Class 2A3

        

5.500% due 03/25/36

    788      757

Series 2006-2 Class 3A1

        

5.750% due 03/25/36

    660      640

Series 2006-4 Class 1A8

        

5.750% due 04/25/36

    232      227

Series 2006-4 Class 2A3

        

5.750% due 04/25/36

    198      199

Series 2006-9 Class 1A14

        

6.000% due 08/25/36

    181      180

Series 2006-AR1 Class 1A2 (Ê)

        

6.023% due 09/25/36

    232      223
     Principal
Amount ($)
or Shares		      Market
Value
$

Series 2006-AR1 Class 2A4 (Ê)

        

6.090% due 10/25/36

    315      304

Series 2006-AR1 Class 5A1 (Ê)

        

5.597% due 07/25/36

    534      514

Series 2006-AR1 Class A1

        

5.643% due 12/25/36

    203      193

Series 2006-AR1 Class A7

        

5.517% due 08/25/36

    462      412

Series 2006-AR2 Class 2A1

        

4.950% due 03/25/36

    539      516

Series 2006-AR4 Class 1A1 (Ê)

        

5.857% due 04/25/36

    697      653

Series 2006-AR4 Class 2A1 (Ê)

        

5.773% due 04/25/36

    984      919

Series 2006-AR5 Class 2A1 (Ê)

        

5.537% due 04/25/36

    370      356

Series 2006-AR6 Class 7A1 (Ê)

        

5.111% due 03/25/36

    1,585      1,457

Series 2007-10 Class 2A5

        

6.250% due 07/25/37

    444      428

Series 2007-14 Class 1A1

        

6.000% due 10/25/37

    1,235      1,239

Series 2007-8 Class 1A16

        

6.000% due 07/25/37

    975      928

Zuni Mortgage Loan Trust (Ê)

        

Series 2006-OA1 Class A1
3.025% due 08/25/36

    265      252
         
        1,109,448
         

Municipal Bonds - 0.2%

        

Badger TOB Asset Securitization Corp. Revenue Bonds, weekly demand

        

6.375% due 06/01/32

    800      803

City of Colorado Springs Colorado Revenue Bonds, weekly demand

        

5.000% due 11/15/33

    200      203

Michigan State University Revenue Bonds (Ê)(m), quarterly demand

        

2.684% due 02/15/37

    1,060      784

New Jersey Economic Development Authority Revenue Bonds, weekly demand

        

5.750% due 06/15/34

    235      228

State of California General Obligation Unlimited, weekly demand

        

5.000% due 02/01/33

    75      75

State of Texas General Obligation Unlimited, weekly demand

        

4.750% due 04/01/35

    250      247

 

Fixed Income III Fund   93

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

    

Principal
Amount ($)

or Shares

      Market
Value
$
       

Tobacco Settlement Authority of Iowa Revenue Bonds, weekly demand

        

6.500% due 06/01/23

      95      90

Tobacco Settlement Finance Authority of West Virginia Revenue Bonds

        

7.467% due 06/01/47

      710      665

University of Arkansas Revenue Bonds (m), weekly demand

        

5.000% due 11/01/31

      500      507

West Virginia Economic Development Authority Revenue Bonds (m)

        

5.370% due 07/01/20

      65      65
         
        3,667
         

Non-US Bonds - 1.0%

        

Arab Republic of Egypt (Þ)

        

Series 144a
8.750% due 07/18/12

    EGP 3,330      630

Argentina Bocon

        

Series PR12
2.000% due 01/03/16

    ARS 1,000      520

Argentina Bonos

        

Series $ V
10.500% due 06/12/12

    ARS 1,995      473

Argentina Government International Bond

        

Series dis
5.830% due 12/31/33

    ARS 500      152

Bombardier, Inc. (Å)

        

Series 144a
7.250% due 11/15/16

    EUR 125      197

Byggingarsjodur Verkamanna

        

Series 2

        

3.750% due 04/15/34

    ISK 65,392      820

Series 3

        

3.750% due 06/15/44

    ISK 123,000      1,536

Colombia Government International Bond

        

9.850% due 06/28/27

    COP  910,000      445

European Investment Bank

        

2.150% due 01/18/27

    JPY 31,800      291

Federative Republic of Brazil

        

12.500% due 01/05/22

    BRL 975      610

10.250% due 01/10/28

    BRL 4,660      2,505

Hellas Telecommunications Luxembourg V (Ê)

        

Series REGS
8.247% due 10/15/12

    EUR 375      545
     Principal
Amount ($)
or Shares		      Market
Value
$

Hungary Government Bond

        

Series 12/C
6.000% due 10/24/12

    HUF 195,300      1,082

Impress Holdings B.V.

        

Series REGS
7.872% due 09/15/13

    EUR 375      568

Ineos Group Holdings PLC

        

Series REGS
7.875% due 02/15/16

    EUR 250      292

Lehman Brothers Holdings, Inc.

        

Series EMTN
5.375% due 10/17/12

    EUR 1,000      1,466

Mexican Bonos

        

Series M 20
7.500% due 06/03/27

    MXN 6,735      611

New South Wales Treasury Corp.

        

Series 12RG
6.000% due 05/01/12

    AUD 1,310      1,192

Queensland Treasury Corp.

        

Series 13G
6.000% due 08/14/13

    AUD 1,055      952

Red Arrow International Leasing PLC

        

8.375% due 06/30/12

    RUB 1,661      70

Republic of Colombia

        

9.850% due 06/28/27

    COP 1,132,000      604

Residential Capital LLC

        

7.125% due 05/17/12

    EUR 375      266

Rhodia SA (Ê)

        

Series REGS
7.497% due 10/15/13

    EUR 250      360

Santa Fe de Bogota DC (Þ)

        

Series 144a
9.750% due 07/26/28

    EUR 378      317

TELUS Corp.

        

Series CD
4.950% due 03/15/17

    CAD 195      182

United Kingdom Treasury Bills

        

5.000% due 03/07/12

    GBP 384      781
         
        17,467
         

United States Government Agencies - 0.2%

     

Fannie Mae (Ñ)

        

4.750% due 11/19/12

      860      903

Federal National Mortgage Association

        

3.250% due 04/09/13 (Ñ)

      940      925

Zero coupon due 10/09/19

      695      400

 

94   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Small Business Administration

        

Series 2000-P10 Class 1
7.449% due 08/10/10

    30      31

Small Business Administration Participation Certificates

        

Series 1997-20D Class 1
7.500% due 04/01/17

    825      864
         
        3,123
         

United States Government Treasuries - 4.8%

     

United States Treasury Inflation Indexed Bonds

        

2.000% due 04/15/12 (Ñ)

    835      878

2.625% due 07/15/17 (Ñ)

    1,088      1,197

2.000% due 01/15/26 (Ñ)

    1,306      1,298

2.375% due 01/15/27 (Ñ)

    1,050      1,104

1.750% due 01/15/28 (Ñ)

    807      769

United States Treasury Notes

     

3.625% due 12/31/12 (Ñ)

    57,840      59,395

3.125% due 04/30/13

    560      562

5.125% due 05/15/16 (Ñ)

    6,795      7,523

4.500% due 05/15/17 (Ñ)

    205      217

8.750% due 08/15/20 (Ñ)

    162      232

6.000% due 02/15/26 (Ñ)

    6,850      8,092

6.125% due 11/15/27

    642      777

4.750% due 02/15/37 (Ñ)

    1,675      1,745

5.000% due 05/15/37 (Ñ)

    2,405      2,606

United States Treasury Principal (Ñ) Principal Only STRIP

        

Zero coupon due 11/15/21

    45      24
         
        86,419
         
Total Long-Term Investments     

(cost $1,942,755)

         1,899,186
         
Common Stocks - 0.0%     

Auto and Transportation - 0.0%

     

Northwest Airlines Corp. (Æ)

    44      —
         

Financial Services - 0.0%

     

Emerging Market Local Currency Fund (Æ)

    23,903      289

Pacific Investment Management Co. Series High Yield Portfolio Institutional

    41,173      346
         
Total Common Stocks        

(cost $615)

         635
         
     Principal
Amount ($)
or Shares		      Market
Value
$

Preferred Stocks - 0.3%

        

Financial Services - 0.3%

     

Deutsche Bank Contingent Capital Trust II (ƒ)

      13,175      299

DG Funding Trust
Series 144a (Ê)(ƒ)(Å)

      118      1,180

Federal National Mortgage Association (ƒ)(Ñ)

      58,225      1,458

Freddie Mac (ƒ)(Ñ)

      73,950      1,893
         
        4,830
         

Producer Durables - 0.0%

     

Nexen, Inc.

      4,055      98
         
Total Preferred Stocks        

(cost $4,989)

         4,928
         
Warrants & Rights - 0.0%        

Materials and Processing - 0.0%

     

Solutia, Inc. (Þ)(Æ)
2009 Warrants

      —      —
         
Total Warrants & Rights        

(cost $38)

         —
         
    

Notional
Amount

       

Options Purchased - 0.0%

        

(Number of Contracts)

        

Eurodollar Futures

        

Jun 2008 92.50 Put (112)

    USD  280      1

Jun 2008 92.75 Put (172)

    USD 430      1

Sep 2008 92.25 Put (176)

    USD 440      1

Sep 2008 92.50 Put (172)

    USD  1,113      3
         
        6
         

Swaptions - 0.0%

        

(Fund Pays/Fund Receives)

        

USD Three Month LIBOR/USD

        

3.150%

        

Dec 2008 0.00 Call (2)

      40,800      230

USD Three Month LIBOR/USD

        

3.150%

        

Feb 2009 0.00 Call (1)

      19,200      108

USD Three Month LIBOR/USD

        

3.500%

        

Feb 2009 0.00 Call (1)

      26,100      219

 

Fixed Income III Fund   95

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Notional
Amount		      Market
Value
$
       

USD Three Month LIBOR/USD

        

3.600%

        

Feb 2009 0.00 Call (1)

    48,800      229

USD Three Month LIBOR/USD

        

3.600%

        

Jul 2009 0.00 Call (1)

    2,300      20

USD Three Month LIBOR/USD

        

3.450%

        

Aug 2009 0.00 Call (5)

    42,300      335
         
        1,141
         
Total Options Purchased        

(cost $1,809)

         1,147
         
    

Principal
Amount ($)
or Shares

       

Short-Term Investments - 15.6%

        

AIG Matched Funding Corp. (Ê)(Þ)

        

2.800% due 06/16/08

    400      399

ALROSA Finance SA

        

8.125% due 05/06/08

    546      546

American Express Bank FSB (Ê)

        

Series BKNT

        

2.723% due 10/16/08

    600      599

American Express Centurion Bank (Ê)

        

Series BKNT

        

2.741% due 05/07/08

    400      400

American Express Credit Corp. (Ê)(Ñ)

        

Series MTN

        

2.763% due 03/02/09

    600      597

AMFM, Inc.

        

8.000% due 11/01/08

    225      230

Amgen, Inc. (Ê)

        

Series WI

        

3.170% due 11/28/08

    900      896

AT&T, Inc. (Ê)

        

3.278% due 11/14/08

    1,000      1,000

Avista Corp.

        

9.750% due 06/01/08

    220      221

BellSouth Corp. (Ê)

        

3.165% due 08/15/08

    600      599

BNP Paribas

        

Zero coupon due 05/28/08

    2,795      2,789

Calyon NY

        

2.689% due 01/16/09

    700      700
     Principal
Amount ($)
or Shares		      Market
Value
$

CIT Group, Inc. (Ê)

        

3.215% due 08/15/08

    300      293

2.729% due 12/19/08

    100      93

3.401% due 01/30/09

    400      367

Citigroup Funding, Inc.

        

Zero coupon due 07/17/08

    125      196

Series MTN (Ê)

        

2.980% due 12/08/08

    100      99

Citigroup, Inc. (Ê)

        

2.695% due 12/26/08

    500      497

3.291% due 01/30/09

    800      795

Countrywide Home Loans, Inc.

        

Series MTNH

        

6.250% due 04/15/09

    75      72

Series MTNL (Ñ)

        

3.250% due 05/21/08

    215      214

Daimler Finance NA LLC (Ê)

        

Series MTNE
3.769% due 10/31/08

    1,100      1,097

Daimler Finance North America LLC

        

3.298% due 03/13/09 (Ê)(Ñ)

    500      495

Series MTN (Ê)

        

3.218% due 03/13/09

    200      198

Delphi Corp., Second Lien Term Loan

        

6.875% due 07/01/08

    100      100

Dexia Credit SA

        

2.654% due 09/29/08

    2,300      2,299

Entergy Gulf States, Inc.

        

3.600% due 06/01/08

    80      80

Series 144a (Ê)(Å)

        

3.740% due 12/08/08

    195      195

Erac USA Finance Co. (Þ)

        

Series 144a
5.300% due 11/15/08

    100      100

Federal Home Loan Bank Discount Notes

        

1.750% due 05/01/08 (ç)(ž)

    10,600      10,600

4.800% due 05/02/08

    5,800      5,800

Zero coupon due 05/08/08 (ç)(ž)

    5,250      5,248

Zero coupon due 05/09/08 (ç)(ž)(Ñ)

    2,585      2,584

Zero coupon due 05/14/08 (ç)(ž)

    1,140      1,139

Zero coupon due 05/21/08 (ç)(ž)

    16,330      16,311

Ferro Corp.

        

9.125% due 01/01/09

    375      383

Ford Motor Credit Co. LLC

        

5.800% due 01/12/09

    900      880

Fortis Bank

        

5.265% due 06/30/08

    900      899

2.649% due 09/30/08

    600      600

 

96   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$
       

Freddie Mac Discount Notes (ç)(ž)

        

Zero coupon due 07/21/08

    202      201

Gazinvest Luxembourg SA for Gazprombank

        

7.250% due 10/30/08

    470      474

General Electric Capital Corp. (Ê)

        

Series MTN
2.768% due 01/05/09

    500      500

GMAC LLC

        

5.125% due 05/09/08

    305      305

Goldman Sachs Group, Inc. (The) (Ê)

        

Series MTN

        

2.746% due 03/30/09

    400      397

Series MTNB

        

3.013% due 07/29/08

    100      100

3.186% due 11/10/08

    400      399

HSBC Finance Corp.

        

2.930% due 09/15/08 (Ê)(Ñ)

    1,900      1,890

3.154% due 12/05/08 (Ê)(Ñ)

    100      99

5.875% due 02/01/09

    210      212

JC Penney Corp., Inc.

        

7.375% due 08/15/08

    280      282

Kansas City Southern Railway

        

9.500% due 10/01/08

    1,400      1,414

Lehman Brothers Holdings, Inc. (Ê)

        

Series MTN
2.774% due 04/03/09

    800      773

Mandalay Resort Group

        

9.500% due 08/01/08

    20      20

Mantis Reef, Ltd. (Å)

        

Series 144a
4.692% due 11/14/08

    200      199

MBNA Corp. (Ê)

        

Series MTNF
3.590% due 05/05/08

    255      255

Merrill Lynch & Co., Inc.

        

Zero coupon due 05/28/08

    2,795      2,789

Series MTNC

        

2.823% due 06/16/08

    1,100      1,099

Morgan Stanley

        

2.840% due 11/21/08 (Ê)

    500      498

Series GMTN

        

3.206% due 02/09/09

    1,400      1,388

Nordea Bank Finland PLC

        

3.028% due 05/28/08

    900      900

3.028% due 04/09/09

    300      300

Owens-Illinois, Inc.

        

7.350% due 05/15/08

    250      250
     Principal
Amount ($)
or Shares		      Market
Value
$

Quebecor World Capital Corp. (Ø)

        

4.875% due 11/15/08

    100      42

Rabobank USA Financial Corp.

        

Zero coupon due 05/19/08

    2,795      2,792

Reckson Operating Partnership, LP

        

7.750% due 03/15/09

    75      74

Residential Capital LLC

        

3.490% due 06/09/08 (Ê)

    545      508

5.816% due 04/17/09 (Ê)

    135      90

Series 144a (Þ)

        

6.546% due 04/17/09

    605      273

Russell Investment Company Money Market Fund

    189,290,000      189,290

Salomon Brothers AG for OAO Siberian Oil Co.

        

Series REGS
10.750% due 01/15/09

    675      702

SLM Corp. (Ê)

        

Series MTNA
3.130% due 07/25/08

    1,000      992

Telefonos de Mexico SAB de CV

        

4.500% due 11/19/08

    175      176

Telesat, SUB Bridge Loan

        

10.500% due 10/31/08

    275      234

Transocean, Inc. (Ê)

        

3.214% due 09/05/08

    400      399

UBS Finance Delaware LLC

        

2.940% due 06/06/08

    650      648

Unicredito Italiano NY (Ê)

        

Series YCD

        

3.135% due 05/06/08

    1,100      1,100

3.085% due 05/29/08

    500      500

United States Treasury Bills (ç)(ž)

        

1.343% due 06/12/08 (Ñ)

    250      250

2.467% due 06/19/08 (§)

    75      75

1.077% due 06/26/08

    250      250

1.221% due 06/26/08 (§)

    800      799

United States Treasury Notes (Ñ)

        

4.875% due 01/31/09

    4,400      4,502

VTB Capital SA (Ê)

        

Series 144a (Þ)

        

3.839% due 08/01/08

    765      765

Series REGS

        

3.839% due 08/01/08

    320      318

Wachovia Bank NA (Ê)

        

Series BKNT

        

2.645% due 06/27/08

    400      399

2.654% due 10/03/08

    700      697

2.639% due 03/23/09

    700      693

 

Fixed Income III Fund   97

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands (except share amounts)

 

     Principal
Amount ($)
or Shares		      Market
Value
$		  
       

Wal-Mart Stores, Inc. (Ê)

        

2.700% due 06/16/08

    1,000      1,000  

Westpac Banking Corp. (Ê)

        

Series DPNT
2.701% due 06/06/08

    300      300  
           
Total Short-Term Investments        

(cost $283,653)

         283,222  
           

Other Securities - 6.9%

        

Russell Investment Company Money Market Fund (×)

    27,133,099      27,133  

State Street Securities Lending Quality Trust (×)

    97,651,003      97,651  
           
Total Other Securities        

(cost $124,784)

         124,784  
           
Total Investments - 127.5%        

(identified cost $2,358,643)

         2,313,902  

Other Assets and Liabilities,

Net - (27.5%)

         (499,765 )
           

Net Assets - 100.0%

         1,814,137  
           

 


 

See accompanying notes which are an integral part of the financial statements.

 

98   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Futures Contracts
(Number of Contracts)		        Notional
Amount
$		    Unrealized
Appreciation
(Depreciation)
$		  
       

Long Positions

        

Euribor Futures
expiration date 06/08 (18)

    EUR   4,500    7  

Eurodollar Futures (CME)
expiration date 06/08 (20)

    USD   5,000    84  

expiration date 09/08 (2)

    USD   500    1  

expiration date 12/08 (305)

    USD   76,250    1,057  

expiration date 03/09 (63)

    USD   15,750    90  

expiration date 06/09 (51)

    USD   12,750    (84 )

expiration date 09/09 (127)

    USD   31,750    96  

expiration date 12/09 (91)

    USD   22,750    124  

expiration date 03/10 (64)

    USD   16,000    164  

Euro-Schatz Bond Futures
expiration date 06/08 ( 293)

    EUR   29,300    (664 )

Germany, Federal Republic
expiration date 06/08 (31)

    EUR   3,100    (124 )

Germany, Federal Republic
2 Year Bonds
expiration date 06/08 (149)

    EUR   14,900    (259 )

Germany, Federal Republic
5 Year Bonds
expiration date 06/08 (137)

    EUR   13,700    (576 )

Germany, Federal Republic
10 Year Bonds
expiration date 06/08 (14)

    EUR   1,400    4  

LIBOR Futures
expiration date 06/08 (25)

    GBP   3,125    4  

expiration date 09/08 (48)

    GBP   6,000    (23 )

expiration date 12/08 (36)

    GBP   4,500    (27 )

expiration date 06/09 (1)

    GBP   125    2  

Three Month Short Sterling Interest Rate Futures (UK)
expiration date 03/09 (9)

    GBP   1,125    19  

United States Treasury 2 Year Notes
expiration date 06/08 (477)

    USD   95,400    (534 )

United States Treasury 5 Year Notes
expiration date 06/08 (359)

    USD   35,900    (311 )

United States Treasury 10 Year Notes
expiration date 06/08 (458)

    USD   45,800    (25 )

United States Treasury Bonds
expiration date 06/08 (778)

    USD   77,800    (440 )
Futures Contracts
(Number of Contracts)		        Notional
Amount
$		    Unrealized
Appreciation
(Depreciation)
$		  

Short Positions

        

Eurodollar Futures
expiration date 06/08 (26)

    USD   6,500    10  

Germany, Federal Republic
10 Year Bonds
expiration date 06/08 (47)

    EUR   4,700    206  

Japanese 10 Year Bond (Japan)
expiration date 06/08 (8)

    JPY   80,000    18  

United Kingdom Treasury Bonds
expiration date 06/08 (22)

    GBP   2,200    50  

United States Treasury 2 Year Notes
expiration date 06/08 (121)

    USD   24,200    212  

United States Treasury 5 Year Notes
expiration date 06/08 (352)

    USD   35,200    348  

United States Treasury 10 Year Notes
expiration date 06/08 (851)

    USD   85,100    1,112  

United States Treasury Bonds
expiration date 06/08 (19)

    USD   1,900    (14 )
           

Total Unrealized Appreciation (Depreciation) on Open Futures Contracts (°a)

         527  
           

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income III Fund   99

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Options Written
(Number of Contracts)		    Notional
Amount
$		    Market
Value
$		  

Swaptions

      

(Fund Pays/Fund Receives)

      

USD 4.300%/USD Three Month LIBOR

      

Dec 2008 0.00 Call (2)

      13,700    (330 )

USD 3.950%/USD Three Month LIBOR

      

Feb 2009 0.00 Call (1)

      21,200    (359 )

USD 4.250%/USD Three Month LIBOR

      

Feb 2009 0.00 Call (1)

      6,400    (148 )

USD 4.300%/USD Three Month LIBOR

      

Feb 2009 0.00 Call (1)

      7,500    (185 )

USD 4.600%/USD Three Month LIBOR

      

Feb 2009 0.00 Call (1)

      3,100    (105 )

USD 4.200%/USD Three Month LIBOR

      

Jul 2009 0.00 Call (1)

      1,000    (22 )

USD 4.150%/USD Three Month LIBOR

      

Aug 2009 0.00 Call (1)

      1,300    (27 )

USD 4.400%/USD Three Month LIBOR

      

Aug 2009 0.00 Call (5)

      11,200    (315 )

USD 4.550%/USD Three Month LIBOR

      

Aug 2009 0.00 Call (1)

      1,900    (58 )

United States Treasury Notes
10 Year Futures

      

May 2008 118.00 Call (161)

    USD  161    (33 )

May 2008 120.00 Call (57)

    USD  57    (2 )

May 2008 114.00 Put (183)

    USD 183    (72 )

May 2008 116.00 Put (37)

    USD 37    (32 )
         

Total Liability for Options Written (premiums received $2,410)

       (1,688 )
         

 

See accompanying notes which are an integral part of the financial statements.

 

100   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts      
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
USD   318   AUD   340   05/02/08   3  
USD   5,210   AUD   5,585   05/21/08   46  
USD   161   AUD   175   06/16/08   3  
USD   172   AUD   185   06/16/08   1  
USD   174   AUD   185   06/16/08   —  
USD   215   AUD   232   06/18/08   3  
USD   1,503   AUD   1,639   06/18/08   34  
USD   2,099   AUD   2,280   06/18/08   39  
USD   2,120   AUD   2,304   06/18/08   41  
USD   2,885   AUD   3,136   06/18/08   55  
USD   218   BRL   385   05/05/08   13  
USD   319   BRL   560   05/05/08   18  
USD   217   BRL   365   06/03/08   1  
USD   332   BRL   560   06/03/08   2  
USD   7,850   BRL   13,462   06/03/08   177  
USD   365   CAD   369   05/13/08   1  
USD   265   CAD   269   06/16/08   2  
USD   740   CAD   742   06/16/08   (4 )
USD   2,140   CAD   2,131   06/18/08   (26 )
USD   2,156   CAD   2,132   06/18/08   (40 )
USD   757   CHF   767   05/13/08   (17 )
USD   2,112   CHF   2,078   06/18/08   (106 )
USD   2,120   CHF   2,162   06/18/08   (33 )
USD   5,661   CHF   5,865   06/18/08   3  
USD   572   EUR   365   05/13/08   (2 )
USD   580   EUR   365   05/13/08   (10 )
USD   50   EUR   32   05/29/08   —  
USD   228   EUR   145   06/16/08   (2 )
USD   855   EUR   550   06/16/08   2  
USD   269   EUR   172   06/18/08   (2 )
USD   2,015   EUR   1,266   06/18/08   (42 )
USD   2,301   EUR   1,466   06/18/08   (17 )
USD   4,214   EUR   2,719   06/18/08   22  
USD   4,421   EUR   2,836   06/18/08   (2 )
USD   4,590   EUR   2,886   06/18/08   (93 )
USD   1   GBP   1   05/01/08   —  
USD   235   GBP   118   06/18/08   (1 )
USD   2,226   GBP   1,120   06/18/08   (6 )
USD   2,236   GBP   1,132   06/18/08   8  
USD   4,220   GBP   2,105   06/18/08   (49 )
USD   2,292   INR   91,028   05/12/08   (48 )
USD   2,274   INR   91,028   08/12/08   (41 )
USD   19   JPY   1,962   05/12/08   —  
USD   101   JPY   9,740   05/12/08   (8 )
USD   173   JPY   17,544   05/12/08   (4 )
USD   449   JPY   43,597   05/12/08   (30 )
USD   5,656   JPY   579,000   05/15/08   (82 )
Foreign Currency Exchange Contracts      
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
USD   365   JPY   37,986   05/16/08   1  
USD   8   JPY   848   06/16/08   —  
USD   475   JPY   49,121   06/16/08   (1 )
USD   616   JPY   64,129   06/16/08   2  
USD   710   JPY   73,091   06/16/08   (5 )
USD   250   JPY   25,937   06/18/08   —  
USD   2,107   JPY   209,946   06/18/08   (82 )
USD   2,112   JPY   204,961   06/18/08   (135 )
USD   2,140   JPY   220,574   06/18/08   (13 )
USD   2,162   JPY   222,252   06/18/08   (18 )
USD   2,169   JPY   222,252   06/18/08   (25 )
USD   2,237   JPY   223,933   06/18/08   (77 )
USD   1,827   KRW   1,781,013   08/04/08   (52 )
USD   944   MXN   10,432   05/06/08   50  
USD   157   MYR   511   05/21/08   5  
USD   2,099   NOK   10,824   06/18/08   18  
USD   2,107   NZD   2,647   06/18/08   (55 )
USD   2,110   NZD   2,698   06/18/08   (19 )
USD   2,140   NZD   2,733   06/18/08   (21 )
USD   4,204   NZD   5,301   06/18/08   (95 )
USD   217   PEN   610   05/27/08   —  
USD   490   PHP   22,462   05/19/08   41  
USD   355   RUB   8,399   07/17/08   (1 )
USD   5,195   SEK   31,000   05/19/08   (22 )
USD   365   SEK   2,162   06/13/08   (5 )
USD   883   SEK   5,395   06/13/08   16  
USD   2,007   SEK   12,320   06/18/08   45  
USD   2,245   SEK   13,412   06/18/08   (11 )
USD   2,791   SGD   3,942   05/22/08   119  
AUD   70   USD   65   06/16/08   —  
AUD   185   USD   172   06/16/08   (2 )
AUD   278   USD   263   06/16/08   2  
AUD   340   USD   316   06/16/08   (3 )
AUD   812   USD   759   06/16/08   (3 )
AUD   1,149   USD   1,058   06/16/08   (20 )
AUD   221   USD   202   06/18/08   (5 )
AUD   2,310   USD   2,110   06/18/08   (56 )
AUD   2,408   USD   2,236   06/18/08   (22 )
AUD   4,649   USD   4,204   06/18/08   (155 )
BRL   365   USD   218   05/05/08   (1 )
BRL   560   USD   335   05/05/08   (2 )
BRL   1,268   USD   697   05/15/08   (63 )
BRL   2,574   USD   1,424   05/15/08   (119 )
BRL   366   USD   210   07/02/08   (6 )
BRL   14,261   USD   8,142   07/02/08   (298 )
CAD   367   USD   365   05/13/08   1  
CAD   370   USD   365   05/16/08   (2 )

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income III Fund   101

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Foreign Currency Exchange Contracts      
         
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
CAD   177   USD   175   06/16/08   —  
CAD   1,989   USD   2,014   06/18/08   40  
CAD   2,089   USD   2,120   06/18/08   47  
CAD   279   USD   276   06/30/08   (1 )
CHF   697   USD   706   06/18/08   34  
CHF   832   USD   804   06/18/08   —  
CHF   2,084   USD   2,099   06/18/08   86  
CHF   2,162   USD   2,110   06/18/08   22  
CHF   4,312   USD   4,185   06/18/08   21  
EUR   17   USD   26   05/01/08   —  
EUR   4,100   USD   6,425   05/09/08   25  
EUR   185   USD   289   05/13/08   —  
EUR   365   USD   580   05/13/08   10  
EUR   670   USD   1,048   05/29/08   3  
EUR   2,221   USD   3,472   06/03/08   8  
EUR   145   USD   226   06/16/08   —  
EUR   146   USD   223   06/18/08   (4 )
EUR   174   USD   276   06/18/08   6  
EUR   276   USD   429   06/18/08   (1 )
EUR   1,129   USD   1,754   06/18/08   (5 )
EUR   1,304   USD   2,041   06/18/08   9  
EUR   1,336   USD   2,102   06/18/08   20  
EUR   1,357   USD   2,102   06/18/08   (12 )
EUR   1,368   USD   2,093   06/18/08   (38 )
EUR   1,376   USD   2,157   06/18/08   12  
EUR   1,379   USD   2,110   06/18/08   (39 )
EUR   1,414   USD   2,214   06/18/08   12  
EUR   1,426   USD   2,245   06/18/08   23  
EUR   1,749   USD   2,717   06/18/08   (9 )
EUR   2,817   USD   4,459   06/18/08   70  
GBP   239   USD   465   05/21/08   (9 )
GBP   61   USD   119   06/16/08   (1 )
GBP   430   USD   842   06/16/08   (10 )
GBP   1,062   USD   2,120   06/18/08   16  
GBP   1,135   USD   2,237   06/18/08   (12 )
GBP   1,144   USD   2,245   06/18/08   (21 )
GBP   1,168   USD   2,334   06/18/08   20  
GBP   2,122   USD   4,204   06/18/08   (3 )
HUF   180,158   USD   1,129   05/14/08   17  
INR   91,028   USD   2,281   05/12/08   36  
ISK   165,500   USD   2,274   05/15/08   64  
JPY   8,413   USD   85   05/12/08   4  
JPY   8,424   USD   85   05/12/08   4  
JPY   8,427   USD   85   05/12/08   4  
JPY   8,508   USD   86   05/12/08   4  
JPY   8,514   USD   86   05/12/08   4  
JPY   8,528   USD   86   05/12/08   4  
Foreign Currency Exchange Contracts      
Amount
Sold		   Amount
Bought		   Settlement
Date		   Unrealized
Appreciation
(Depreciation)
$		  
         
JPY   9,319   USD   94   05/12/08   4  
JPY   12,999   USD   133   05/12/08   8  
JPY   13,001   USD   133   05/12/08   8  
JPY   26,105   USD   267   05/12/08   16  
JPY   270,400   USD   2,687   05/15/08   84  
JPY   15,044   USD   145   05/16/08   —  
JPY   19,552   USD   190   06/16/08   1  
JPY   36,944   USD   365   06/16/08   9  
JPY   48,981   USD   475   06/16/08   3  
JPY   26,182   USD   269   06/18/08   17  
JPY   203,318   USD   2,102   06/18/08   141  
JPY   206,324   USD   2,099   06/18/08   109  
JPY   230,078   USD   2,230   06/18/08   11  
JPY   232,413   USD   2,236   06/18/08   (6 )
JPY   429,590   USD   4,185   06/18/08   42  
KRW   117,281   USD   117   05/30/08   —  
MXN   2,461   USD   227   05/06/08   (8 )
MXN   7,972   USD   753   05/06/08   (6 )
NOK   11,295   USD   2,226   06/18/08   17  
NZD   6,600   USD   5,167   05/21/08   27  
NZD   2,654   USD   2,093   06/18/08   36  
NZD   2,655   USD   2,112   06/18/08   54  
NZD   2,702   USD   2,120   06/18/08   26  
NZD   2,843   USD   2,226   06/18/08   22  
NZD   2,866   USD   2,210   06/18/08   (12 )
NZD   5,501   USD   4,291   06/18/08   26  
RUB   8,399   USD   353   07/10/08   (1 )
SEK   13,182   USD   2,226   06/18/08   30  
SEK   3,713   USD   616   06/19/08   (3 )
             
Total Unrealized Appreciation (Depreciation) on  Open Foreign Currency Exchange Contracts   (170 )
             

 

See accompanying notes which are an integral part of the financial statements.

 

102   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Index Swap Contracts  

Fund Receives
Underlying Security

   

Counter
Party

    Notional
Amount
$		   

Fund Pays
Floating Rate

    Termination
Date		    Unrealized
Appreciation
(Depreciation)
$		  
                 

CMBS AAA 10 Year Index

    Bank of America    USD    500   

CMBS AAA 10 Year Index minus 0.055%

    05/30/08    11  

CMBS AAA 10 Year Index

    Bank of America    USD    2,000   

CMBS AAA 10 Year Index minus 0.075%

    05/30/08    46  

CMBS AAA 10 Year Index

    Bank of America    USD    1,000   

CMBS AAA 10 Year Index minus 0.115%

    05/30/08    23  

CMBS AAA 10 Year Index

    Bank of America    USD    4,000   

CMBS AAA 10 Year Index minus 0.125%

    05/30/08    89  

CMBS AAA 10 Year Index

    Citibank    USD    1,500   

CMBS AAA 10 Year Index minus 0.150%

    05/30/08    33  

CMBS AAA 10 Year Index

    Deutsche Bank    USD    400   

CMBS AAA 10 Year Index minus 0.100%

    05/30/08    9  

Turkish Overnight Index Tuibon

    Deutsche Bank    TRY    2,554   

Turkish Overnight Index Tuibon plus 0.500%

    05/30/08    (3 )

CMBS AAA 10 Year Index

    JP Morgan    USD    1,000   

CMBS AAA 10 Year Index minus 0.855%

    05/30/08    1  

CMBS AAA 10 Year Index

    JP Morgan    USD    1,500   

CMBS AAA 10 Year Index minus 0.130%

    05/30/08    33  
                     

Total Unrealized Appreciation (Depreciation) on Open Index Swap Contracts

       242  
                     

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income III Fund   103

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts                                

Counter
Party

    Notional
Amount		   

Fund Receives

   

Fund Pays

    Termination
Date		    Market Value
$		  
                 

Bank of America

    USD    12,100    5.473%   

Three Month LIBOR

    06/14/11    905  

Bank of America

    USD    3,600    4.500%   

Three Month LIBOR

    06/18/13    107  

Bank of America

    USD    16,100    4.500%   

Three Month LIBOR

    06/18/13    479  

Bank of America

    USD    2,200    Six Month LIBOR   

5.000%

    06/18/15    (116 )

Bank of America

    USD    4,000    5.548%   

Three Month LIBOR

    06/14/16    428  

Bank of America

    USD    4,500    5.000%   

Three Month LIBOR

    06/18/18    218  

Bank of America

    USD    100    Three Month LIBOR   

5.000%

    06/18/18    (5 )

Bank of America

    USD    6,400    Three Month LIBOR   

5.250%

    06/18/23    (404 )

Bank of America

    USD    6,400    Three Month LIBOR   

5.250%

    06/18/23    (404 )

Bank of America

    USD    1,300    Three Month LIBOR   

5.250%

    06/18/23    (82 )

Bank of America

    USD    4,800    Three Month LIBOR   

5.250%

    06/18/23    (303 )

Bank of America

    USD    9,700    Three Month LIBOR   

5.250%

    06/18/23    (612 )

Bank of America

    USD    4,400    Three Month LIBOR   

5.250%

    06/18/28    (271 )

Bank of America

    USD    2,500    5.628%   

Three Month LIBOR

    06/16/36    350  

Bank of America

    USD    600    Three Month LIBOR   

5.000%

    06/18/38    (15 )

Bank of Scotland

    EUR    2,300    4.250%   

Six Month LIBOR

    06/18/10    (13 )

Barclays Bank PLC

    GBP    400    6.000%   

Six Month LIBOR

    03/20/09    3  

Barclays Bank PLC

    EUR    13,340    Six Month LIBOR   

4.250%

    06/18/13    99  

Barclays Bank PLC

    SEK    2,700    Three Month LIBOR   

4.750%

    06/18/13    (1 )

Barclays Bank PLC

    USD    930    4.500%   

Three Month LIBOR

    06/18/13    28  

Barclays Bank PLC

    USD    11,100    4.500%   

Three Month LIBOR

    06/18/13    330  

Barclays Bank PLC

    GBP    400    4.750%   

Six Month LIBOR

    09/17/13    (16 )

Barclays Bank PLC

    JPY    40,000    2.000%   

Six Month LIBOR

    12/19/17    11  

Barclays Bank PLC

    SEK    45,600    Three Month LIBOR   

4.750%

    06/18/18    43  

Barclays Bank PLC

    USD    740    Three Month LIBOR   

5.250%

    06/18/38    (47 )

Barclays Bank PLC

    EUR    1,670    4.750%   

Six Month LIBOR

    06/18/38    (21 )

Bear Stearns

    USD    6,900    Three Month LIBOR   

5.282%

    08/20/12    (528 )

Bear Stearns

    USD    26,100    Three Month LIBOR   

4.500%

    06/18/13    (776 )

Bear Stearns

    USD    5,400    Three Month LIBOR   

5.000%

    06/18/18    (261 )

Bear Stearns

    USD    5,300    5.250%   

Three Month LIBOR

    06/18/28    327  

BNP Paribas

    EUR    900    Consumer Price Index (France)   

2.090%

    10/15/10    (4 )

Citibank

    USD    400    4.000%   

Three Month LIBOR

    06/18/10    6  

Citibank

    HUF    130,000    8.200%   

Six Month LIBOR

    04/21/13    2  

Citibank

    JPY    476,000    1.645%   

Six Month LIBOR

    04/25/18    (39 )

Citibank

    GBP    370    5.250%   

Six Month LIBOR

    06/18/18    7  

Citibank

    EUR    1,400    4.750%   

Six Month LIBOR

    06/18/38    (18 )

Citibank

    EUR    150    4.750%   

Six Month LIBOR

    06/18/38    (2 )

Citibank

    USD    460    Three Month LIBOR   

5.250%

    06/18/38    (29 )

Credit Suisse First Boston

    EUR    1,600    4.250%   

Six Month LIBOR

    06/18/10    (9 )

Credit Suisse First Boston

    EUR    5,110    4.500%   

Six Month LIBOR

    06/18/18    (51 )

Credit Suisse First Boston

    SEK    49,500    Three Month LIBOR   

4.750%

    06/18/18    46  

Credit Suisse First Boston

    EUR    1,100    4.750%   

Six Month LIBOR

    06/18/38    (14 )

Credit Suisse First Boston

    EUR    1,670    4.750%   

Six Month LIBOR

    06/18/38    (21 )

Credit Suisse First Boston

    USD    1,330    Three Month LIBOR   

5.250%

    06/18/38    (85 )

Credit Suisse First Boston

    USD    2,030    Three Month LIBOR   

5.250%

    06/18/38    (130 )

Deutsche Bank

    GBP    100    6.000%   

Six Month LIBOR

    12/20/08    1  

 

See accompanying notes which are an integral part of the financial statements.

 

104   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts                                

Counter
Party

    Notional
Amount		    Fund Receives   

Fund Pays

    Termination
Date		    Market Value
$		  
                 

Deutsche Bank

    EUR    1,700    5.000%   

Six Month LIBOR

    12/19/09    17  

Deutsche Bank

    BRL    9,500    12.830%   

Brazil Interbank Deposit Rate

    01/04/10    158  

Deutsche Bank

    EUR    2,000    4.250%   

Six Month LIBOR

    06/18/10    (12 )

Deutsche Bank

    USD    25,180    Three Month LIBOR   

4.315%

    11/17/10    (433 )

Deutsche Bank

    JPY    355,000    1.183%   

Six Month LIBOR

    12/17/10    (2 )

Deutsche Bank

    JPY    928,000    1.181%   

Six Month LIBOR

    12/17/10    (4 )

Deutsche Bank

    JPY    976,000    1.183%   

Six Month LIBOR

    12/17/10    (4 )

Deutsche Bank

    JPY    467,000    1.170%   

Six Month LIBOR

    12/17/10    (3 )

Deutsche Bank

    JPY    467,000    1.160%   

Six Month LIBOR

    12/17/10    (4 )

Deutsche Bank

    USD    13,170    Three Month LIBOR   

3.780%

    12/24/10    (77 )

Deutsche Bank

    USD    8,000    Three Month LIBOR   

3.868%

    12/29/10    (59 )

Deutsche Bank

    USD    5,140    Three Month LIBOR   

4.000%

    12/29/10    (50 )

Deutsche Bank

    USD    12,390    Three Month LIBOR   

3.658%

    01/07/11    (39 )

Deutsche Bank

    USD    6,460    Three Month LIBOR   

3.161%

    01/28/11    44  

Deutsche Bank

    AUD    1,450    Six Month LIBOR   

7.250%

    06/18/13    12  

Deutsche Bank

    USD    4,600    4.500%   

Three Month LIBOR

    06/18/13    137  

Deutsche Bank

    USD    6,100    Three Month LIBOR   

4.500%

    06/18/13    (181 )

Deutsche Bank

    USD    22,200    4.920%   

Three Month LIBOR

    11/17/15    851  

Deutsche Bank

    JPY    225,000    Six Month LIBOR   

1.703%

    12/17/15    (15 )

Deutsche Bank

    JPY    588,000    Six Month LIBOR   

1.699%

    12/17/15    (37 )

Deutsche Bank

    JPY    618,000    Six Month LIBOR   

1.691%

    12/17/15    (35 )

Deutsche Bank

    JPY    296,000    Six Month LIBOR   

1.670%

    12/17/15    (13 )

Deutsche Bank

    JPY    296,000    Six Month LIBOR   

1.641%

    12/17/15    (8 )

Deutsche Bank

    USD    11,500    4.520%   

Three Month LIBOR

    12/24/15    141  

Deutsche Bank

    USD    7,000    4.630%   

Three Month LIBOR

    12/29/15    130  

Deutsche Bank

    USD    4,500    4.745%   

Three Month LIBOR

    12/29/15    114  

Deutsche Bank

    USD    10,800    4.487%   

Three Month LIBOR

    01/07/16    104  

Deutsche Bank

    USD    5,600    4.224%   

Three Month LIBOR

    01/28/16    (40 )

Deutsche Bank

    JPY    80,000    2.000%   

Six Month LIBOR

    12/19/17    22  

Deutsche Bank

    EUR    2,210    4.750%   

Six Month LIBOR

    06/18/38    (28 )

Deutsche Bank

    USD    2,670    Three Month LIBOR   

5.250%

    06/18/38    (171 )

Deutsche Bank

    USD    2,650    Three Month LIBOR   

5.250%

    06/18/38    (169 )

Deutsche Bank

    USD    6,200    Three Month LIBOR   

5.309%

    11/17/38    (392 )

Deutsche Bank

    JPY    46,000    2.595%   

Six Month LIBOR

    12/17/38    6  

Deutsche Bank

    JPY    118,000    2.594%   

Six Month LIBOR

    12/17/38    15  

Deutsche Bank

    JPY    124,000    2.585%   

Six Month LIBOR

    12/17/38    13  

Deutsche Bank

    JPY    60,000    2.570%   

Six Month LIBOR

    12/17/38    5  

Deutsche Bank

    JPY    60,000    2.540%   

Six Month LIBOR

    12/17/38    1  

Deutsche Bank

    USD    3,150    Three Month LIBOR   

5.011%

    12/24/38    (46 )

Deutsche Bank

    USD    1,930    Three Month LIBOR   

5.121%

    12/29/38    (61 )

Deutsche Bank

    USD    1,240    Three Month LIBOR   

5.215%

    12/29/38    (57 )

Deutsche Bank

    USD    2,960    Three Month LIBOR   

5.017%

    01/07/39    (44 )

Deutsche Bank

    USD    1,540    Three Month LIBOR   

4.939%

    01/28/39    (3 )

Goldman Sachs

    EUR    300    4.000%   

Six Month LIBOR

    03/20/09    (1 )

Goldman Sachs

    GBP    5,300    6.000%   

Six Month LIBOR

    06/19/09    60  

Goldman Sachs

    GBP    800    6.000%   

Six Month LIBOR

    12/19/09    14  

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income III Fund   105

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts                                

Counter
Party

    Notional
Amount		    Fund Receives   

Fund Pays

    Termination
Date		    Market Value
$		  
                 

Goldman Sachs

    USD    4,320    4.987%   

Three Month LIBOR

    05/02/12    (158 )

Goldman Sachs

    GBP    600    5.000%   

Six Month LIBOR

    09/17/13    (12 )

Goldman Sachs

    GBP    400    Six Month LIBOR   

5.500%

    12/15/36    (91 )

Goldman Sachs

    GBP    100    Six Month LIBOR   

5.000%

    12/19/37    (8 )

HSBC

    GBP    800    5.000%   

Six Month LIBOR

    09/17/13    (15 )

JP Morgan

    BRL    9,300    12.395%   

Brazil Interbank Deposit Rate

    01/04/10    34  

JP Morgan

    USD    8,300    4.500%   

Three Month LIBOR

    06/18/11    247  

JP Morgan

    HUF    64,000    8.280%   

Six Month LIBOR

    04/04/13    —  

JP Morgan

    USD    21,800    4.500%   

Three Month LIBOR

    06/18/13    648  

JP Morgan

    USD    5,800    4.500%   

Three Month LIBOR

    06/18/13    172  

JP Morgan

    USD    27,400    4.500%   

Three Month LIBOR

    06/18/13    814  

JP Morgan

    GBP    500    4.750%   

Six Month LIBOR

    09/17/13    (20 )

JP Morgan

    USD    21,900    5.000%   

Three Month LIBOR

    06/18/15    1,153  

JP Morgan

    USD    8,200    5.000%   

Three Month LIBOR

    06/18/15    432  

JP Morgan

    USD    20,300    Three Month LIBOR   

5.000%

    06/18/15    (1,069 )

JP Morgan

    USD    8,800    5.000%   

Three Month LIBOR

    06/18/18    425  

JP Morgan

    USD    1,700    5.000%   

Three Month LIBOR

    06/18/18    82  

JP Morgan

    USD    4,100    5.000%   

Three Month LIBOR

    06/18/18    181  

JP Morgan

    USD    3,300    Three Month LIBOR   

5.250%

    06/18/23    (208 )

JP Morgan

    USD    1,200    Three Month LIBOR   

5.250%

    06/18/28    (74 )

JP Morgan

    USD    1,700    Three Month LIBOR   

5.250%

    06/18/28    (105 )

JP Morgan

    USD    4,000    Three Month LIBOR   

5.250%

    06/18/28    (219 )

JP Morgan

    USD    3,000    5.250%   

Three Month LIBOR

    06/18/38    192  

JP Morgan

    USD    200    Three Month LIBOR   

5.000%

    06/18/38    (5 )

Lehman Brothers

    GBP    4,100    4.500%   

Six Month LIBOR

    09/20/09    (104 )

Lehman Brothers

    EUR    4,500    4.250%   

Six Month LIBOR

    06/18/10    (26 )

Lehman Brothers

    EUR    5,200    4.250%   

Six Month LIBOR

    06/18/10    (30 )

Lehman Brothers

    JPY    809,000    1.188%   

Six Month LIBOR

    12/17/10    (3 )

Lehman Brothers

    EUR    4,500    4.341%   

Six Month LIBOR

    03/18/11    12  

Lehman Brothers

    EUR    2,270    4.354%   

Six Month LIBOR

    03/18/11    7  

Lehman Brothers

    EUR    7,170    4.328%   

Six Month LIBOR

    03/18/11    16  

Lehman Brothers

    EUR    2,390    4.280%   

Six Month LIBOR

    03/18/11    4  

Lehman Brothers

    JPY    513,000    Six Month LIBOR   

1.709%

    12/17/15    (35 )

Lehman Brothers

    EUR    4,290    Six Month LIBOR   

4.503%

    03/18/16    (31 )

Lehman Brothers

    EUR    2,170    Six Month LIBOR   

4.535%

    03/18/16    (22 )

Lehman Brothers

    EUR    6,850    Six Month LIBOR   

4.500%

    03/18/16    (48 )

Lehman Brothers

    EUR    2,280    Six Month LIBOR   

4.440%

    03/18/16    (6 )

Lehman Brothers

    USD    5,000    5.371%   

Three Month LIBOR

    05/23/17    493  

Lehman Brothers

    USD    10,500    5.336%   

Three Month LIBOR

    05/24/17    1,006  

Lehman Brothers

    USD    9,450    5.403%   

Three Month LIBOR

    05/25/17    955  

Lehman Brothers

    EUR    1,690    4.865%   

Six Month LIBOR

    03/18/24    19  

Lehman Brothers

    EUR    860    4.908%   

Six Month LIBOR

    03/18/24    16  

Lehman Brothers

    EUR    2,700    4.875%   

Six Month LIBOR

    03/18/24    35  

Lehman Brothers

    EUR    900    4.805%   

Six Month LIBOR

    03/18/24    3  

Lehman Brothers

    EUR    3,350    4.750%   

Six Month LIBOR

    06/18/38    (43 )

Lehman Brothers

    USD    4,190    Three Month LIBOR   

5.250%

    06/18/38    (268 )

Lehman Brothers

    JPY    104,000    2.648%   

Six Month LIBOR

    12/17/38    25  

 

See accompanying notes which are an integral part of the financial statements.

 

106   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Interest Rate Swap Contracts                                

Counter
Party

    Notional
Amount		   

Fund Receives

   

Fund Pays

    Termination
Date		    Market Value
$		  
                 

Merrill Lynch

    USD    900    Fannie Mae Constantly Maturing Mortgage 30 day rate   

5.399

    02/20/09    33  

Merrill Lynch

    USD    1,100    Three Month LIBOR   

5.500%

    05/21/09    (11 )

Merrill Lynch

    GBP    5,600    4.500%   

Six Month LIBOR

    09/20/09    (150 )

Merrill Lynch

    CAD    590    4.750%   

Six Month LIBOR

    06/18/13    28  

Merrill Lynch

    CAD    830    Three Month LIBOR   

4.750%

    06/18/13    (39 )

Merrill Lynch

    GBP    1,980    Six Month LIBOR   

5.250%

    06/18/13    1  

Merrill Lynch

    JPY    117,000    1.673%   

Six Month LIBOR

    04/28/18    (7 )

Merrill Lynch

    GBP    100    Six Month LIBOR   

4.000%

    12/15/35    7  

Merrill Lynch

    USD    900    Three Month LIBOR   

5.000%

    06/18/38    (22 )

Morgan Stanley

    BRL    800    12.670%   

Brazil Interbank Deposit Rate

    01/04/10    (5 )

Morgan Stanley

    EUR    3,500    4.250%   

Six Month LIBOR

    06/18/10    (20 )

Morgan Stanley

    USD    800    4.000%   

Three Month LIBOR

    06/18/10    13  

Morgan Stanley

    EUR    860    Six Month LIBOR   

4.250%

    06/18/13    6  

Morgan Stanley

    JPY    59,000    1.250%   

Six Month LIBOR

    06/18/13    (3 )

Morgan Stanley

    JPY    259,000    1.624%   

Six Month LIBOR

    04/25/18    (26 )

Morgan Stanley

    USD    400    Three Month LIBOR   

5.000%

    06/18/38    (10 )

Royal Bank of Canada

    CAD    2,040    Six Month LIBOR   

3.740%

    04/23/13    (6 )

Royal Bank of Canada

    GBP    1,060    5.288%   

Six Month LIBOR

    04/23/13    1  

Royal Bank of Canada

    CAD    4,080    Three Month LIBOR   

3.826%

    04/24/13    (27 )

Royal Bank of Canada

    GBP    2,120    5.325%   

Six Month LIBOR

    04/24/13    8  

Royal Bank of Canada

    CAD    2,030    Three Month LIBOR   

3.899%

    04/25/13    (18 )

Royal Bank of Canada

    GBP    1,050    5.376%   

Six Month LIBOR

    04/25/13    8  

Royal Bank of Canada

    CAD    2,580    Three Month LIBOR   

3.802%

    04/29/13    (13 )

Royal Bank of Canada

    GBP    1,330    5.302%   

Six Month LIBOR

    04/29/13    1  

Royal Bank of Canada

    CAD    1,510    Three Month LIBOR   

3.750%

    04/30/13    —  

Royal Bank of Canada

    GBP    760    5.295%   

Six Month LIBOR

    04/30/13    3  

Royal Bank of Canada

    CAD    280    Three Month LIBOR   

4.750%

    06/18/13    (13 )

Royal Bank of Canada

    USD    2,360    4.500%   

Three Month LIBOR

    06/18/13    70  

Royal Bank of Scotland

    GBP    1,500    6.000%   

Six Month LIBOR

    06/19/09    17  

Royal Bank of Scotland

    USD    1,300    4.000%   

Three Month LIBOR

    06/18/10    21  

Royal Bank of Scotland

    GBP    200    Six Month LIBOR   

4.000%

    12/15/36    41  

Royal Bank of Scotland

    GBP    100    Six Month LIBOR   

5.500%

    12/15/36    (16 )

Royal Bank of Scotland

    USD    600    Three Month LIBOR   

5.000%

    06/18/38    (15 )

Salomon Smith Barney

    HUF    68,000    8.470%   

Six Month LIBOR

    04/03/13    3  

Salomon Smith Barney

    HUF    67,000    8.280%   

Six Month LIBOR

    04/04/13    —  

Salomon Smith Barney

    HUF    140,000    8.140%   

Six Month LIBOR

    04/18/13    —  

UBS

    AUD    7,000    7.000%   

Three Month LIBOR

    09/15/09    (39 )

UBS

    BRL    800    12.410%   

Brazil Interbank Deposit Rate

    01/04/10    (5 )

UBS

    AUD    600    7.500%   

Three Month LIBOR

    03/15/10    —  

UBS

    EUR    3,100    4.250%   

Six Month LIBOR

    06/18/10    (18 )

UBS

    AUD    1,900    7.500%   

Six Month LIBOR

    03/15/11    3  

UBS

    BRL    1,700    10.575%   

Brazil Interbank Deposit Rate

    01/02/12    (72 )

UBS

    EUR    1,410    4.750%   

Six Month LIBOR

    06/18/38    (18 )

UBS

    USD    1,760    Three Month LIBOR   

5.250%

    06/18/38    (113 )
                     

Total Market Value of Open Interest Rate Swap Contracts Premiums Paid (Received) - ($2,755)

       2,938  
                     

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income III Fund   107

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Credit Default Swap Contracts                                

Reference
Entity

   

Counter
Party

   

Notional
Amount

    Fund (Pays)/
Receives
Fixed Rate		    Termination
Date		    Market Value
$		  

ABX - HE Index for Sub-Prime Home Equity Sector

    Credit Suisse First Boston    USD    1,250    0.090%    08/25/37    (438 )

ABX - HE Index for Sub-Prime Home Equity Sector

    Credit Suisse First Boston    USD    1,250    0.090%    08/25/37    (438 )

ABX - HE Index for Sub-Prime Home Equity Sector

    Credit Suisse First Boston    USD    700    0.760%    01/25/38    (292 )

ABX - HE Index for Sub-Prime Home Equity Sector

    Credit Suisse First Boston    USD    1,000    0.760%    01/25/38    (416 )

ABX - HE Index for Sub-Prime Home Equity Sector

    Deutsche Bank    USD    1,800    0.110%    05/25/46    (299 )

ABX - HE Index for Sub-Prime Home Equity Sector

    Lehman Brothers    USD    1,300    0.090%    08/25/37    (455 )

ABX - HE Index for Sub-Prime Home Equity Sector

    Lehman Brothers    USD    4,000    0.7605    01/25/38    (1,660 )

American International Group

    Deutsche Bank    USD    1,800    2.050%    03/20/13    89  

American International Group

    Deutsche Bank    USD    2,200    1.630%    06/20/13    65  

Argentina Government International Bond

    Lehman Brothers    USD    1,600    1.700%    08/20/08    —  

Berkshire Hathaway

    Deutsche Bank    USD    3,600    1.000%    03/20/13    64  

Brazilian Government International Bond

    Lehman Brothers    USD    1,400    1.980%    03/20/16    49  

Chesapeake Energy Corp.

    Lehman Brothers    USD    2,000    0.750%    09/20/08    2  

CMBS AAA Index

    Morgan Stanley    USD    1,400    0.080%    12/13/49    (92 )

Countrywide Home Loans

    Merrill Lynch    USD    2,200    6.300%    06/20/13    19  

Custom FTD Basket

    Morgan Stanley    USD    4,400    11.400%    08/20/08    111  

Dow Jones CDS Emerging Markets Index

    Barclays Bank PLC    USD    300    2.650%    06/20/13    7  

Dow Jones CDS Emerging Markets Index

    Lehman Brothers    USD    1,500    2.650%    06/20/13    33  

Dow Jones CDS Emerging Markets Index

    Morgan Stanley    USD    100    2.650%    06/20/13    2  

Dow Jones CDX High Volatility Index

    Chase Securities Inc.    USD    400    1.120%    12/20/12    15  

Dow Jones CDX High Volatility Index

    Citibank    USD    500    2.144%    06/20/12    (8 )

Dow Jones CDX High Volatility Index

    Deutsche Bank    USD    2,000    0.708%    12/20/12    47  

Dow Jones CDX High Volatility Index

    Deutsche Bank    USD    1,200    1.550%    06/20/13    35  

Dow Jones CDX High Volatility Index

    Goldman Sachs    USD    1,600    1.120%    12/20/12    59  

Dow Jones CDX High Volatility Index

    Goldman Sachs    USD    2,800    1.550%    06/20/13    79  

Dow Jones CDX High Volatility Index

    Lehman Brothers    USD    1,300    0.600%    12/20/12    —  

Dow Jones CDX High Volatility Index

    Merrill Lynch    USD    1,000    1.830%    06/20/12    (29 )

Dow Jones CDX High Volatility Index

    Merrill Lynch    USD    3,000    1.640%    12/20/12    73  

Dow Jones CDX High Volatility Index

    Merrill Lynch    USD    1,500    1.550%    06/20/13    45  

Dow Jones CDX High Volatility Index

    Morgan Stanley    USD    1,000    2.080%    06/20/12    (19 )

Dow Jones CDX High Volatility Index

    Morgan Stanley    USD    3,100    1.550%    06/20/13    92  

Ford Motor Credit Co.

    Goldman Sachs    USD    100    3.850%    09/20/12    (11 )

Freddie Mac

    Barclays Bank PLC    USD    700    0.720%    03/20/13    13  

Gaz Capital for Gazprom

    Barclays Bank PLC    USD    1,100    1.600%    12/20/12    (7 )

Gaz Capital for Gazprom

    Chase Securities Inc.    USD    600    1.250%    12/20/08    4  

Gaz Capital for Gazprom

    JP Morgan    USD    100    0.970%    11/20/08    —  

Gaz Capital for Gazprom

    Morgan Stanley    USD    1,500    2.480%    02/20/13    43  

General Motors Acceptance Corp.

    Lehman Brothers    USD    400    3.600%    09/20/08    (5 )

General Motors Acceptance Corp.

    Lehman Brothers    USD    900    1.680%    09/20/08    (23 )

General Motors Acceptance Corp.

    Merrill Lynch    USD    1,000    1.850%    09/20/09    (128 )

General Motors Corp.

    Bank of America    USD    900    8.950%    03/20/13    (23 )

General Motors Corp.

    Bank of America    USD    800    5.000%    06/20/13    (129 )

General Motors Corp.

    Chase Securities Inc.    USD    200    4.550%    12/20/12    (33 )

General Motors Corp.

    Citibank    USD    300    4.630%    12/20/12    (48 )

General Motors Corp.

    Deutsche Bank    USD    500    5.000%    06/20/13    (81 )

General Motors Corp.

    Lehman Brothers    USD    1,000    2.300%    09/20/08    —  

Indonesia Government International Bond

    Lehman Brothers    USD    100    0.400%    12/20/08    —  

Kazkommerts International BV

    Lehman Brothers    USD    700    4.250%    10/20/12    (70 )

Lehman Brothers

    Barclays Bank PLC    USD    300    0.190%    09/20/08    (2 )

Lehman Brothers

    JP Morgan    USD    300    0.300%    09/20/08    (2 )

 

See accompanying notes which are an integral part of the financial statements.

 

108   Fixed Income III Fund

Table of Contents

Russell Investment Company

Fixed Income III Fund

Schedule of Investments, continued — April 30, 2008 (Unaudited)

Amounts in thousands

 

Credit Default Swap Contracts                                

Reference
Entity

   

Counter
Party

   

Notional
Amount

    Receives
Fixed Rate		    Termination
Date		    Value
$		  

Merrill Lynch & Co.

    Deutsche Bank    USD    2,000    2.200%    06/20/13    71  

Merrill Lynch & Co.

    Royal Bank of Scotland    USD    1,000    2.200%    06/20/13    36  

Metlife, Inc.

    Deutsche Bank    USD    1,800    2.050%    03/20/13    105  

Metlife, Inc.

    UBS    USD    1,800    2.050%    03/20/13    105  

Mexico Government International Bond

    JP Morgan    USD    200    0.920%    03/20/16    (1 )

Neiman Marcus Group (The)

    Lehman Brothers    USD    1,000    1.100%    09/20/08    5  

Prudential

    Deutsche Bank    USD    1,800    2.300%    03/20/13    104  

Prudential

    UBS    USD    1,800    2.300%    03/20/13    104  

Russia Government International Bond

    Morgan Stanley    USD    100    0.245%    06/20/08    —  

Sunguard Data Systems

    Lehman Brothers    USD    2,000    3.500%    09/20/12    4  

Univision Communications Inc.

    Lehman Brothers    USD    2,000    1.750%    12/20/08    130  
                     

Total Market Value of Open Credit Default Contracts Premiums Paid (Received) - ($3,786)

    (3,099 )
                     

 

 

Presentation of Portfolio Holdings — April 30, 2008 (Unaudited)

 

Categories    % of Net
Assets		  
  

Asset-Backed Securities

    12.3  

Certificates of Deposit

    0.1  

Corporate Bonds and Notes

    18.3  

International Debt

    6.0  

Loan Agreements

    0.7  

Mortgage-Backed Securities

    61.1  

Municipal Bonds

    0.2  

Non-US Bonds

    1.0  

United States Government Agencies

    0.2  

United States Government Treasuries

    4.8  

Common Stocks

    — *

Preferred Stocks

    0.3  

Warrants & Rights

    — *

Options Purchased

    — *

Short Term Investments

    15.6  

Other Securities

    6.9  
      

Total Investments

    127.5  

Other Assets and Liabilities, Net

    (27.5 )
      
   100.0  
      

Futures Contracts

    — *

Options Written

    (0.1 )

Foreign Currency Exchange Contracts

    — *

Index Swap Contracts

    — *

Interest Rate Swap Contracts

    0.2  

Credit Default Swaps

    (0.2 )

 

* Less than .05% of net assets.

 

See accompanying notes which are an integral part of the financial statements.

 

Fixed Income III Fund   109

Table of Contents

Russell Investment Company

Institutional Funds

Notes to Schedule of Investments — April 30, 2008 (Unaudited)

 

 

 

Footnotes:

(Æ) Nonincome-producing security.
(Ï) Forward commitment.
(Ê) Adjustable or floating rate security. Rate shown reflects rate in effect at period end.
(ƒ) Perpetual floating rate security. Rate shown reflects rate in effect at period end.
(ö) Real Estate Investment Trust (REIT).
(m) Bond is insured by a guarantor.
(ß) Illiquid security.
(Ø) In default.
(ç) At amortized cost, which approximates market.
(ž) Rate noted is yield-to-maturity from date of acquisition.
(æ) Pre-refunded: These bonds are collateralized by US Treasury securities, which are held in escrow by a trustee and used to pay principal and interest in the tax-exempt issue and to retire the bonds in full at the earliest refunding date.
(§) All or a portion of the shares of this security are held as collateral in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund.
(×) The security is purchased with the cash collateral from the securities loaned.
(Ñ) All or a portion of the shares of this security are on loan.
(Þ) Restricted security. Security may have contractual restrictions on resale, may have been offered in a private placement transaction, and may not be registered under the Securities Act of 1933.
(Å) Illiquid and restricted security.
(å) Currency balances were held in connection with futures contracts purchased (sold), options written, or swaps entered into by the Fund. See Note 2.
(Û) All or a portion of the shares of this security are held as collateral in connection with securities sold short.

Abbreviations:

ADR - American Depositary Receipt

GDR - Global Depositary Receipt

ADS - American Depositary Share

CME - Chicago Mercantile Exchange

CMO - Collateralized Mortgage Obligation

CVO - Contingent Value Obligation

144A - Represents private placement security for qualified buyers according to rule 144A of the Securities Act of 1933.

GDS - Global Depositary Share

LIBOR - London Interbank Offered Rate

PIC - Payment in Kind

FDIC - Federal Deposit Insurance Company

REMIC - Real Estate Mortgage Investment Conduit

STRIP - Separate Trading of Registered Interest and Principal of Securities

TBA - To Be Announced Security

 

110   Notes to Schedules of Investments

Table of Contents

Russell Investment Company

Institutional Funds

Notes to Schedule of Investments, continued — April 30, 2008 (Unaudited)

 

 

 

Foreign Currency Abbreviations:

 

ARS - Argentine peso

   HKD - Hong Kong dollar   PLN - Polish zloty

AUD - Australian dollar

   HUF - Hungarian forint   RUB - Russian ruble

BRL - Brazilian real

   ID - Indonesian rupiah   SEK - Swedish krona

CAD - Canadian dollar

   ILS - Israeli shekel   SGD - Singapore dollar

CHF - Swiss franc

   INR - Indian rupee   SKK - Slovakian koruna

CLP - Chilean peso

   ITL - Italian lira   THB - Thai baht

CNY - Chinese renminbi yuan

   JPY - Japanese yen   TRL - Turkish lira

COP - Colombian peso

   KES - Kenyan schilling   TWD - Taiwanese dollar

CRC - Costa Rica colon

   KRW - South Korean won   USD - United States dollar

CZK - Czech koruna

   MXN - Mexican peso   VEB - Venezuelan bolivar

DKK - Danish krone

   MYR - Malaysian ringgit   VND - Vietnam dong

EGP - Egyptian pound

   NZD - New Zealand dollar   ZAR - South African rand

EUR - Euro

   PEN - Peruvian nouveau sol  

GBP - British pound sterling

   PHP - Philippine peso  

 

Notes to Schedules of Investments   111

Table of Contents

Russell Investment Company

Institutional Funds

Statements of Assets and Liabilities — April 30, 2008 (Unaudited)

 

Amounts in thousands   Equity I
Fund		    Equity II
Fund
    

Assets

     

Investments, at identified cost

   $ 2,023,910    $ 722,351

Investments, at market***

     2,243,286      750,064

Cash

     —      —

Cash (restricted)

     —      —

Foreign currency holdings*

     —      —

Unrealized appreciation on foreign currency exchange contracts

     —      —

Receivables:

     

Dividends and interest

     1,563      281

Dividends from affiliated money market funds

     359      88

Investments sold

     26,412      5,866

Fund shares sold

     3,768      603

Foreign taxes recoverable

     —      —

From Adviser

     —      —

Daily variation margin on futures contracts

     —      —

Prepaid expenses

     106      22

Unrealized appreciation on index swap contracts

     —      —

Interest rate swap contracts, at market value*****

     —      —

Credit default swaps, at market value****

     —      —
            

Total assets

     2,275,494      756,924
            
Liabilities     

Payables:

     

Due to Custodian

     —      —

Investments purchased

     30,741      5,587

Fund shares redeemed

     1,863      567

Accrued fees to affiliates

     1,161      385

Other accrued expenses

     158      103

Dividends for securities sold short

     —      —

Daily variation margin on futures contracts

     481      96

Deferred tax liability

     —      —

Unrealized depreciation on foreign currency exchange contracts

     —      —

Options written, at market value**

     —      —

Securities sold short, at market value******

     —      —

Payable upon return of securities loaned

     247,242      225,924

Unrealized depreciation on index swap contracts

     —      —

Interest rate swap contracts, at market value*****

     —      —

Credit default swaps, at market value****

     —      —
            

Total liabilities

     281,646      232,662
            
    

Net Assets

   $ 1,993,848    $ 524,262
            

 

See accompanying notes which are an integral part of the financial statements.

 

112   Statements of Assets and Liabilities

Table of Contents

 

Equity Q
Fund		    International
Fund		    Fixed Income III
Fund
     
     
$ 1,742,577    $ 2,103,046    $ 2,358,643
  1,851,458      2,363,685      2,313,902
  —      —      160
  —      8,367      3,901
  —      5,246      1,356
  —      10,987      2,090
     
  989      7,533      13,867
  319      282      572
  49,975      21,790      167,540
  2,400      3,465      6,684
  —      296      —
  —      —      —
  —      561      1,365
  44      42      7
  —      22      245
  —      —      12,469
  —      —      1,610
                 
  1,905,185      2,422,276      2,525,768
                 
     
     
  —      387      —
  49,839      27,088      565,080
  1,849      1,813      1,288
  966      1,292      921
  209      474      178
  79      —      —
  169      263      1,189
  —      62      —
  —      10,803      2,260
  —      1,428      1,688
  190,291      —      —
  60,301      426,250      124,784
  —      24      3
  —      —      9,531
  —      —      4,709
                 
  303,703      469,884      711,631
                 
     
$ 1,601,482    $ 1,952,392    $ 1,814,137
                 

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   113

Table of Contents

Russell Investment Company

Institutional Funds

Statements of Assets and Liabilities, continued — April 30, 2008 (Unaudited)

 

Amounts in thousands   Equity I
Fund		     Equity II
Fund		  
   

Net Assets Consist of:

    

Undistributed (overdistributed) net investment income

   $ 1,146     $ 1,277  

Accumulated net realized gain (loss)

     (78,641 )     (37,424 )

Unrealized appreciation (depreciation) on:

    

Investments (International Fund - net of deferred tax liability for foreign capital gains taxes)

     219,376       27,713  

Futures contracts

     7,312       1,873  

Options written

     —       —  

Credit default swaps

     —       —  

Index swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Securities sold short

     —       —  

Foreign currency-related transactions

     —       —  

Shares of beneficial interest

     642       231  

Additional paid-in capital

     1,844,013       530,592  
               

Net Assets

   $ 1,993,848     $ 524,262  
               
               

Net Asset Value, offering and redemption price per share:

    

Net asset value per share: Class E*******

   $ 31.07     $ 22.58  

Class E — Net assets

   $ 72,225,125     $ 38,530,507  

Class E — Shares outstanding ($.01 par value)

     2,324,919       1,706,457  

Net asset value per share: Class I*******

   $ 31.06     $ 22.71  

Class I — Net assets

   $ 1,308,905,335     $ 393,556,568  

Class I — Shares outstanding ($.01 par value)

     42,140,742       17,329,525  

Net asset value per share: Class Y*******

   $ 31.05     $ 22.70  

Class Y — Net assets

   $ 612,717,418     $ 92,174,550  

Class Y — Shares outstanding ($.01 par value)

     19,733,285       4,061,178  
Amounts in thousands    

*              Foreign currency holdings - cost

   $ —     $ —  

**            Premiums received on options written

   $ —     $ —  

***          Securities on loan included in investments

   $ 249,703     $ 220,516  

****        Credit default swap contracts - premiums paid (received)

   $ —     $ —  

*****     Interest rate swap contracts - premiums paid (received)

   $ —     $ —  

******   Proceeds on securities sold short

   $ —     $ —  

******* Net asset value per share equals class level net assets divided by
class level shares of beneficial interest outstanding.

    

 

See accompanying notes which are an integral part of the financial statements.

 

114   Statements of Assets and Liabilities

Table of Contents

 

Equity Q
Fund		     International
Fund		     Fixed Income III
Fund		  
   
   
$ 75     $ (4,659 )   $ (1,426 )
  (54,289 )     1,793       32,220  
   
  108,881       260,577       (44,741 )
  3,031       11,211       527  
  —       (486 )     722  
  —       —       687  
  —       (2 )     242  
  —       —       5,693  
  (3,030 )     —       —  
  —       129       (163 )
  501       469       1,744  
  1,546,313       1,683,360       1,818,632  
                     
$ 1,601,482     $ 1,952,392     $ 1,814,137  
                     
                     
   
$ 31.97     $ 41.65     $ 10.42  
$ 63,401,062     $ 68,732,665     $ 30,103,887  
  1,983,350       1,650,388       2,890,121  
$ 31.98     $ 41.63     $ 10.40  
$ 1,194,950,417     $ 1,521,244,685     $ 1,571,651,944  
  37,367,611       36,540,330       151,118,613  
$ 31.98     $ 41.64     $ 10.40  
$ 343,130,561     $ 362,414,173     $ 212,381,139  
  10,728,477       8,703,881       20,413,622  
   
$ —     $ 5,249     $ 1,374  
$ —     $ 942     $ 2,410  
$ 69,758     $ 410,241     $ 122,441  
$ —     $ —     $ (3,786 )
$ —     $ —     $ (2,755 )
$ 187,261     $ —     $ —  
   

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Assets and Liabilities   115

Table of Contents

Russell Investment Company

Institutional Funds

Statements of Operations — For the Period Ended April 30, 2008 (Unaudited)

 

Amounts in thousands   Equity I
Fund		     Equity II
Fund		  
   

Investment Income

    

Dividends

   $ 18,398     $ 2,679  

Dividends from affiliated money market funds

     339       574  

Interest

     770       27  

Securities lending income

     159       866  

Less foreign taxes withheld

     —       —  
               

Total investment income

     19,666       4,146  
               

Expenses

    

Advisory fees

     5,173       1,821  

Administrative fees

     470       130  

Custodian fees

     294       214  

Transfer agent fees - Class E

     15       9  

Transfer agent fees - Class I

     466       199  

Transfer agent fees - Class Y

     12       2  

Professional fees

     64       29  

Registration fees

     102       28  

Shareholder servicing fees - Class E

     73       46  

Trustees’ fees

     19       5  

Printing fees

     38       11  

Dividends from securities sold short

     —       —  

Interest expense from securities sold short

     —       —  

Miscellaneous

     20       6  
               

Expenses before reductions

     6,746       2,500  

Expense reductions

     (190 )     (54 )
               

Net expenses

     6,556       2,446  
               

Net investment income (loss)

     13,110       1,700  
               

Net Realized and Unrealized Gain (Loss)

    

Net realized gain (loss) on:

    

Investments (International Fund - net of foreign capital gains taxes)

     (43,192 )     (29,050 )

Futures contracts

     (20,084 )     (5,078 )

Options written

     —       —  

Credit default swap contracts

     —       —  

Index swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Securities sold short

     —       —  

Foreign currency-related transactions

     —       —  
               

Net realized gain (loss)

     (63,276 )     (34,128 )
               

Net change in unrealized appreciation (depreciation) on:

    

Investments (International Fund - net of deferred tax liability for foreign capital gains taxes)

     (164,336 )     (55,005 )

Futures contracts

     4,470       1,344  

Options written

     —       —  

Credit default swap contracts

     —       —  

Index swap contracts

     —       —  

Interest rate swap contracts

     —       —  

Securities sold short

     —       —  

Foreign currency-related transactions

     —       —  
               

Net change in unrealized appreciation (depreciation)

     (159,866 )     (53,661 )
               

Net realized and unrealized gain (loss)

     (223,142 )     (87,789 )
               

Net Increase (Decrease) in Net Assets from Operations

   $ (210,032 )   $ (86,089 )
               

 

See accompanying notes which are an integral part of the financial statements.

 

116   Statements of Operations

Table of Contents

 

Equity Q
Fund		     International
Fund		     Fixed Income III
Fund		  
   
   
$ 15,169     $ 25,812     $ 1,367  
  974       2,809       5,345  
  55       119       40,429  
  266       1,400       430  
  —       (1,929 )     —  
                     
  16,464       28,211       47,571  
                     
   
  4,369       6,765       4,233  
  397       483       423  
  267       1,092       486  
  15       16       7  
  490       384       374  
  7       7       4  
  45       75       39  
  53       59       89  
  77       78       34  
  16       19       18  
  30       45       36  
  1,164       —       —  
  566       —       —  
  18       21       16  
                     
  7,514       9,044       5,759  
  (160 )     (208 )     (236 )
                     
  7,354       8,836       5,523  
                     
  9,110       19,375       42,048  
                     
   
   
  (47,574 )     27,038       14,014  
  (8,794 )     (31,387 )     15,574  
  —       (1,067 )     (2,513 )
  —       —       (1,177 )
  —       (7 )     (504 )
  —       —       12,479  
  18,389       —       —  
  —       14,117       2,063  
                     
  (37,979 )     8,694       39,936  
                     
   
  (179,032 )     (263,038 )     (47,739 )
  1,922       5,917       (2,684 )
  —       (486 )     349  
  —       —       986  
  —       63       194  
  —       —       (1,383 )
  2,514       —       —  
  —       (4,127 )     (513 )
                     
  (174,596 )     (261,671 )     (50,790 )
                     
  (212,575 )     (252,977 )     (10,854 )
                     
$ (203,465 )   $ (233,602 )   $ 31,194  
                     

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Operations   117

Table of Contents

Russell Investment Company

Institutional Funds

Statements of Changes in Net Assets

 

    Equity I Fund     Equity II Fund  
Amounts in thousands   Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31, 2007		     Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31, 2007		  
       

Increase (Decrease) in Net Assets

        

Operations

        

Net investment income (loss)

   $ 13,110     $ 19,386     $ 1,700     $ 2,364  

Net realized gain (loss)

     (63,276 )     162,786       (34,128 )     92,042  

Net change in unrealized appreciation (depreciation)

     (159,866 )     152,792       (53,661 )     (314 )
                               

Net increase (decrease) in net assets from operations

     (210,032 )     334,964       (86,089 )     94,092  
                               

Distributions

        

From net investment income

        

Class E

     (361 )     (375 )     (107 )     —  

Class I

     (8,791 )     (13,092 )     (2,005 )     (541 )

Class Y

     (4,014 )     (5,658 )     (509 )     (242 )

From net realized gain

        

Class E

     (5,138 )     (1,967 )     (6,217 )     (8,116 )

Class I

     (106,919 )     (49,705 )     (69,029 )     (92,903 )

Class Y

     (46,131 )     (22,622 )     (14,095 )     (22,679 )
                               

Net decrease in net assets from distributions

     (171,354 )     (93,419 )     (91,962 )     (124,481 )
                               

Share Transactions

        

Net increase (decrease) in net assets from share transactions

     353,518       136,161       89,827       19,538  
                               

Total Net Increase (Decrease) in Net Assets

     (27,868 )     377,706       (88,224 )     (10,851 )

Net Assets

        

Beginning of period

     2,021,716       1,644,010       612,486       623,337  
                               

End of period

   $ 1,993,848     $ 2,021,716     $ 524,262     $ 612,486  
                               

Undistributed (overdistributed) net investment income included in net assets

   $ 1,146     $ 1,202     $ 1,277     $ 2,198  

 

See accompanying notes which are an integral part of the financial statements.

 

118   Statements of Changes in Net Assets

Table of Contents

 

Equity Q Fund     International Fund     Fixed Income III Fund  
Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31, 2007		     Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31, 2007		     Period Ended
April 30, 2008
(Unaudited)		     Fiscal Year
Ended
October 31, 2007		  
         
         
         
$ 9,110     $ 18,004     $ 19,375     $ 38,478     $ 42,048     $ 57,801  
  (37,979 )     156,888       8,694       324,541       39,936       (129 )
  (174,596 )     12,304       (261,671 )     158,455       (50,790 )     6,325  
                                             
  (203,465 )     187,196       (233,602 )     521,474       31,194       63,997  
                                             
         
         
  (322 )     (485 )     (1,863 )     (1,423 )     (851 )     (765 )
  (7,131 )     (13,875 )     (48,623 )     (43,118 )     (44,978 )     (48,727 )
  (2,132 )     (4,295 )     (10,288 )     (11,524 )     (4,959 )     (5,610 )
         
  (6,797 )     (4,085 )     (10,100 )     (5,123 )     —    
  (121,318 )     (86,826 )     (246,655 )     (142,647 )     —    
  (33,792 )     (28,301 )     (51,323 )     (37,641 )     —    
                                             
  (171,492 )     (137,867 )     (368,852 )     (241,476 )     (50,788 )     (55,102 )
                                             
         
  173,761       101,510       341,075       83,580       265,129       698,789  
                                             
  (201,196 )     150,839       (261,379 )     363,578       245,535       707,684  
         
  1,802,678       1,651,839       2,213,771       1,850,193       1,568,602       860,918  
                                             
$ 1,601,482     $ 1,802,678     $ 1,952,392     $ 2,213,771     $ 1,814,137     $ 1,568,602  
                                             
    
$		  
75		  
 		   $ 550     $ (4,659 )   $ 36,740     $ (1,426 )   $ 7,314  

 

See accompanying notes which are an integral part of the financial statements.

 

Statements of Changes in Net Assets   119

Table of Contents

Russell Investment Company

Institutional Funds

Financial Highlights — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

          
$
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		      $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Equity I Fund                  

Class E

                  

April 30, 2008*

    38.09    .17      (4.02 )    (3.85 )    (.20 )    (2.97 )

October 31, 2007

    33.51    .29      6.08      6.37      (.28 )    (1.51 )

October 31, 2006

    30.81    .25      3.96      4.21      (.24 )    (1.27 )

October 31, 2005

    27.56    .25      3.24      3.49      (.24 )    —  

October 31, 2004

    25.75    .16      1.82      1.98      (.17 )    —  

October 31, 2003

    21.46    .15      4.28      4.43      (.14 )    —  

Class I

                  

April 30, 2008*

    38.08    .22      (4.04 )    (3.82 )    (.23 )    (2.97 )

October 31, 2007

    33.49    .37      6.10      6.47      (.37 )    (1.51 )

October 31, 2006

    30.79    .32      3.96      4.28      (.31 )    (1.27 )

October 31, 2005

    27.54    .32      3.24      3.56      (.31 )    —  

October 31, 2004

    25.72    .23      1.82      2.05      (.23 )    —  

October 31, 2003

    21.44    .21      4.26      4.47      (.19 )    —  

Class Y

                  

April 30, 2008*

    38.07    .23      (4.04 )    (3.81 )    (.24 )    (2.97 )

October 31, 2007

    33.49    .39      6.09      6.48      (.39 )    (1.51 )

October 31, 2006

    30.77    .34      3.98      4.32      (.33 )    (1.27 )

October 31, 2005

    27.53    .31      3.26      3.57      (.33 )    —  

October 31, 2004

    25.72    .25      1.81      2.06      (.25 )    —  

October 31, 2003

    21.43    .23      4.27      4.50      (.21 )    —  
Equity II Fund                  

Class E

                  

April 30, 2008*

    31.79    .05      (4.35 )    (4.30 )    (.09 )    (4.82 )

October 31, 2007

    34.16    .05      4.59      4.64      —      (7.01 )

October 31, 2006

    38.43    .02      5.76      5.78      —      (10.05 )

October 31, 2005

    39.28    (.04 )    4.44      4.40      (.06 )    (5.19 )

October 31, 2004

    36.12    .04      3.12      3.16      —      —  

October 31, 2003

    25.54    .01      10.65      10.66      (.08 )    —  

Class I

                  

April 30, 2008*

    31.98    .08      (4.39 )    (4.31 )    (.14 )    (4.82 )

October 31, 2007

    34.31    .12      4.60      4.72      (.04 )    (7.01 )

October 31, 2006

    38.57    .09      5.79      5.88      (.09 )    (10.05 )

October 31, 2005

    39.39    .04      4.45      4.49      (.12 )    (5.19 )

October 31, 2004

    36.19    .10      3.15      3.25      (.05 )    —  

October 31, 2003

    25.59    .06      10.66      10.72      (.12 )    —  

Class Y

                  

April 30, 2008*

    31.98    .09      (4.38 )    (4.29 )    (.17 )    (4.82 )

October 31, 2007

    34.32    .15      4.59      4.74      (.07 )    (7.01 )

October 31, 2006

    38.58    .12      5.79      5.91      (.12 )    (10.05 )

October 31, 2005

    39.41    .07      4.45      4.52      (.16 )    (5.19 )

October 31, 2004

    36.22    .14      3.14      3.28      (.09 )    —  

October 31, 2003

    25.61    .10      10.67      10.77      (.16 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

120   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   %
Total
Return(b)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		     %
Portfolio
Turnover Rate(b)
             
             
(3.17 )   31.07   (10.58 )   72,225   .94   .96   1.11     54
(1.79 )   38.09   19.82     49,355   .93   .95   .82     113
(1.51 )   33.51   14.07     43,911   .93   .96   .78     98
(.24 )   30.81   12.70     37,666   .92   .96   .83     110
(.17 )   27.56   7.69     33,143   .94   .96   .61     130
(.14 )   25.75   20.79     32,632   .99   .99   .68     116
             
(3.20 )   31.06   (10.48 )   1,308,905   .71   .73   1.39     54
(1.88 )   38.08   20.17     1,396,706   .68   .70   1.07     113
(1.58 )   33.49   14.34     1,095,931   .71   .73   1.01     98
(.31 )   30.79   12.97     825,172   .69   .73   1.06     110
(.23 )   27.54   7.99     697,537   .71   .72   .84     130
(.19 )   25.72   21.02     580,055   .75   .75   .92     116
             
(3.21 )   31.05   (10.46 )   612,718   .64   .66   1.43     54
(1.90 )   38.07   20.23     575,655   .63   .65   1.12     113
(1.60 )   33.49   14.48     504,168   .64   .66   1.07     98
(.33 )   30.77   13.00     341,294   .65   .67   1.03     110
(.25 )   27.53   8.07     104,440   .63   .65   .92     130
(.21 )   25.72   21.09     89,546   .66   .66   1.00     116
             
             
(4.91 )   22.58   (14.64 )   38,530   1.14   1.16   .46     91
(7.01 )   31.79   15.98     38,520   1.13   1.15   .17     143
(10.05 )   34.16   17.91     39,987   1.11   1.14   .07     155
(5.25 )   38.43   11.53     34,849   1.08   1.11   (.09 )   156
—     39.28   8.72     80,542   1.09   1.09   .09     126
(.08 )   36.12   41.88     46,901   1.12   1.12   .04     132
             
(4.96 )   22.71   (14.57 )   393,557   .94   .96   .65     91
(7.05 )   31.98   16.21     480,645   .93   .95   .38     143
(10.14 )   34.31   18.17     471,745   .91   .94   .27     155
(5.31 )   38.57   11.77     496,716   .87   .91   .12     156
(.05 )   39.39   8.98     674,280   .90   .90   .27     126
(.12 )   36.19   42.08     606,333   .94   .94   .22     132
             
(4.99 )   22.70   (14.54 )   92,175   .84   .86   .76     91
(7.08 )   31.98   16.30     93,321   .83   .85   .47     143
(10.17 )   34.32   18.31     111,605   .82   .85   .36     155
(5.35 )   38.58   11.85     112,625   .81   .83   .18     156
(.09 )   39.41   9.05     159,820   .79   .79   .37     126
(.16 )   36.22   42.34     190,066   .81   .81   .36     132

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   121

Table of Contents

Russell Investment Company

Institutional Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

          
$
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Equity Q Fund                  

Class E

                  

April 30, 2008*

    40.29    .18    (4.61 )    (4.43 )    (.17 )    (3.72 )

October 31, 2007

    39.35    .31    3.80      4.11      (.33 )    (2.84 )

October 31, 2006

    35.20    .35    5.02      5.37      (.35 )    (.87 )

October 31, 2005

    32.32    .35    2.88      3.23      (.35 )    —  

October 31, 2004

    30.10    .23    2.24      2.47      (.25 )    —  

October 31, 2003

    24.90    .22    5.18      5.40      (.20 )    —  

Class I

                  

April 30, 2008*

    40.30    .22    (4.61 )    (4.39 )    (.21 )    (3.72 )

October 31, 2007

    39.36    .40    3.81      4.21      (.43 )    (2.84 )

October 31, 2006

    35.20    .44    5.03      5.47      (.44 )    (.87 )

October 31, 2005

    32.32    .44    2.88      3.32      (.44 )    —  

October 31, 2004

    30.10    .30    2.24      2.54      (.32 )    —  

October 31, 2003

    24.89    .27    5.19      5.46      (.25 )    —  

Class Y

                  

April 30, 2008*

    40.30    .24    (4.62 )    (4.38 )    (.22 )    (3.72 )

October 31, 2007

    39.36    .42    3.80      4.22      (.44 )    (2.84 )

October 31, 2006

    35.20    .46    5.02      5.48      (.45 )    (.87 )

October 31, 2005

    32.32    .45    2.88      3.33      (.45 )    —  

October 31, 2004

    30.09    .32    2.25      2.57      (.34 )    —  

October 31, 2003

    24.89    .30    5.17      5.47      (.27 )    —  
International Fund               

Class E

                  

April 30, 2008*

    56.97    .39    (6.23 )    (5.84 )    (1.47 )    (8.01 )

October 31, 2007

    50.51    .83    12.10      12.93      (1.41 )    (5.06 )

October 31, 2006

    40.45    .87    9.87      10.74      (.68 )    —  

October 31, 2005

    35.15    .57    5.41      5.98      (.68 )    —  

October 31, 2004

    31.22    .38    4.29      4.67      (.74 )    —  

October 31, 2003

    24.71    .30    6.59      6.89      (.38 )    —  

Class I

                  

April 30, 2008*

    57.01    .43    (6.22 )    (5.79 )    (1.58 )    (8.01 )

October 31, 2007

    50.55    .95    12.10      13.05      (1.53 )    (5.06 )

October 31, 2006

    40.47    1.00    9.86      10.86      (.78 )    —  

October 31, 2005

    35.16    .68    5.39      6.07      (.76 )    —  

October 31, 2004

    31.20    .46    4.29      4.75      (.79 )    —  

October 31, 2003

    24.74    .36    6.53      6.89      (.43 )    —  

Class Y

                  

April 30, 2008*

    57.03    .46    (6.23 )    (5.77 )    (1.61 )    (8.01 )

October 31, 2007

    50.56    1.01    12.07      13.08      (1.55 )    (5.06 )

October 31, 2006

    40.47    .92    9.96      10.88      (.79 )    —  

October 31, 2005

    35.17    .68    5.40      6.08      (.78 )    —  

October 31, 2004

    31.21    .45    4.33      4.78      (.82 )    —  

October 31, 2003

    24.75    .38    6.54      6.92      (.46 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

122   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   %
Total
Return(b)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		     %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		   %
Portfolio
Turnover Rate(b)
             
             
(3.89 )   31.97   (11.61 )   63,401   1.15 (l)   1.17   1.10   70
(3.17 )   40.29   11.11     61,842   1.07 (i)   1.09   .79   121
(1.22 )   39.35   15.56     56,703   .94 (f)   .96   .93   106
(.35 )   35.20   10.03     46,352   .91     .93   1.01   117
(.25 )   32.32   8.22     47,570   .92     .93   .71   103
(.20 )   30.10   21.76     40,924   .94     .94   .80   115
             
(3.93 )   31.98   (11.53 )   1,194,950   .93 (m)   .95   1.36   70
(3.27 )   40.30   11.40     1,369,379   .82 (j)   .84   1.04   121
(1.31 )   39.36   15.87     1,201,844   .70 (g)   .72   1.18   106
(.44 )   35.20   10.30     1,009,002   .66     .69   1.26   117
(.32 )   32.32   8.46     1,018,806   .69     .69   .94   103
(.25 )   30.10   22.04     822,548   .72     .72   1.02   115
             
(3.94 )   31.98   (11.48 )   343,131   .86 (n)   .88   1.44   70
(3.28 )   40.30   11.44     371,457   .77 (k)   .79   1.09   121
(1.32 )   39.36   15.93     393,292   .64 (h)   .67   1.23   106
(.45 )   35.20   10.34     338,308   .63     .65   1.30   117
(.34 )   32.32   8.58     336,836   .61     .61   1.05   103
(.27 )   30.09   22.13     674,326   .63     .63   1.10   115
             
             
(9.48 )   41.65   (10.94 )   68,733   1.16     1.19   1.80   47
(6.47 )   56.97   28.47     61,533   1.16     1.18   1.64   108
(.68 )   50.51   26.84     51,470   1.17     1.19   1.88   83
(.68 )   40.45   17.19     41,415   1.15     1.18   1.49   80
(.74 )   35.15   15.20     35,442   1.19     1.20   1.13   81
(.38 )   31.22   28.33     24,163   1.26     1.26   1.14   79
             
(9.59 )   41.63   (10.86 )   1,521,245   .91     .94   1.98   47
(6.59 )   57.01   28.75     1,792,063   .91     .93   1.87   108
(.78 )   50.55   27.17     1,420,218   .91     .93   2.15   83
(.76 )   40.47   17.48     1,127,303   .90     .93   1.76   80
(.79 )   35.16   15.47     915,469   .95     .96   1.36   81
(.43 )   31.20   28.37     597,650   1.06     1.06   1.38   79
             
(9.62 )   41.64   (10.81 )   362,414   .87     .89   2.13   47
(6.61 )   57.03   28.85     360,175   .86     .88   1.98   108
(.79 )   50.56   27.24     378,505   .86     .89   1.99   83
(.78 )   40.47   17.53     587,751   .86     .89   1.76   80
(.82 )   35.17   15.54     491,855   .87     .88   1.35   81
(.46 )   31.21   28.51     567,878   .96     .96   1.45   79

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   123

Table of Contents

Russell Investment Company

Institutional Funds

Financial Highlights, continued — For the Periods Ended

For a Share Outstanding Throughout Each Period.

 

          
$
Net Asset Value,
Beginning of
Period		    $
Net
Investment
Income (Loss)(a)		    $
Net Realized
and Unrealized
Gain (Loss)		      $
Total from
Investment
Operations		      $
Distributions
from Net
Investment Income		      $
Distributions
from Net
Realized Gain		  
Fixed Income III Fund               

Class E

                  

April 30, 2008*

    10.53    .25    (.06 )    .19      (.30 )    —  

October 31, 2007

    10.48    .53    (.02 )    .51      (.46 )    —  

October 31, 2006

    10.44    .45    .04      .49      (.42 )    (.03 )

October 31, 2005

    10.70    .35    (.21 )    .14      (.32 )    (.08 )

October 31, 2004

    10.67    .28    .31      .59      (.38 )    (.18 )

October 31, 2003

    10.11    .38    .52      .90      (.34 )    —  

Class I

                  

April 30, 2008*

    10.51    .26    (.05 )    .21      (.32 )    —  

October 31, 2007

    10.46    1.54    (1.00 )    .54      (.49 )    —  

October 31, 2006

    10.43    .47    .03      .50      (.44 )    (.03 )

October 31, 2005

    10.69    .38    (.22 )    .16      (.34 )    (.08 )

October 31, 2004

    10.65    .30    .32      .62      (.40 )    (.18 )

October 31, 2003

    10.09    .40    .52      .92      (.36 )    —  

Class Y

                  

April 30, 2008*

    10.51    .27    (.06 )    .21      (.32 )    —  

October 31, 2007

    10.46    .60    (.06 )    .54      (.49 )    —  

October 31, 2006

    10.43    .64    (.13 )    .51      (.45 )    (.03 )

October 31, 2005(1)

    10.74    .14    (.26 )    (.12 )    (.19 )    —  

 

See accompanying notes which are an integral part of the financial statements.

 

124   Financial Highlights

Table of Contents

 

$
Total
Distributions		     $
Net Asset Value,
End of
Period		   %
Total
Return(b)		     $
Net Assets,
End of Period
(000)		   %
Ratio of Expenses
to Average
Net Assets,
Net(c)(e)		   %
Ratio of Expenses
to Average
Net Assets,
Gross(c)		   %
Ratio of Net
Investment Income
to Average
Net Assets(c)(e)		   %
Portfolio
Turnover Rate(b)
             
             
(.30 )   10.42   1.89     30,104   .90   .93   4.74   66
(.46 )   10.53   4.99     18,101   .92   .95   4.69   698
(.45 )   10.48   4.81     15,119   .92   .96   4.27   270
(.40 )   10.44   1.37     9,268   .93   .95   3.32   198
(.56 )   10.70   5.65     7,489   .96   .96   2.64   196
(.34 )   10.67   9.05     6,481   1.00   1.00   3.61   266
             
(.32 )   10.40   2.00     1,571,652   .65   .68   4.97   66
(.49 )   10.51   5.27     1,415,575   .67   .70   4.97   698
(.47 )   10.46   4.95     744,559   .70   .73   4.51   270
(.42 )   10.43   1.65     560,896   .69   .71   3.55   198
(.58 )   10.69   5.99     461,966   .72   .72   2.85   196
(.36 )   10.65   9.27     297,726   .78   .78   3.83   266
             
(.32 )   10.40   2.12     212,381   .61   .64   5.11   66
(.49 )   10.51   5.30     134,926   .62   .65   5.01   698
(.48 )   10.46   5.03     101,240   .63   .67   4.60   270
(.19 )   10.43   (1.15 )   40,259   .64   .67   3.74   198

 

See accompanying notes which are an integral part of the financial statements.

 

Financial Highlights   125

Table of Contents

Russell Investment Company

Institutional Funds

Notes to Financial Highlights — April 30, 2008 (Unaudited)

 

 

 

* For the period ended April 30, 2008 (Unaudited).
(1) For the period June 23, 2005 (commencement of operations) to October 31, 2005.
(a) Average month-end shares outstanding were used for this calculation.
(b) Periods less than one year are not annualized.
(c) The ratios for periods less than one year are annualized.
(d) Less than $.01 per share.
(e) May reflect amounts waived and/or reimbursed by RIMCo and/or RFSC, and for certain funds, custody credit arrangements.
(f) The annualized net expense ratio is 0.93% not including the dividend expense from short sales.
(g) The annualized net expense ratio is 0.69% not including the dividend expense from short sales.
(h) The annualized net expense ratio is 0.63% not including the dividend expense from short sales.
(i) The annualized net expense ratio is 0.93% not including the dividend expense from short sales.
(j) The annualized net expense ratio is 0.68% not including the dividend expense from short sales.
(k) The annualized net expense ratio is 0.64% not including the dividend expense from short sales.
(l) The annualized net expense ratio is 0.93% not including the dividend expense from short sales.
(m) The annualized net expense ratio is 0.72% not including the dividend expense from short sales.
(n) The annualized net expense ratio is 0.64% not including the dividend expense from short sales.

 

See accompanying notes which are an integral part of the financial statements.

 

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1.   Organization

Russell Investment Company (the “Investment Company” or “RIC”) is a series investment company with 44 different investment portfolios referred to as Funds. These financial statements report on five of these Funds. The Investment Company is registered under the Investment Company Act of 1940, as amended, as an open-end management investment company. It is organized and operates as a Massachusetts business trust under an amended and restated master trust agreement dated August 19, 2002, as amended. The Investment Company’s master trust agreement permits the Board of Trustees (the “Board”) to issue an unlimited number of shares of beneficial interest at a $.01 par value per share.

Through December 31, 2007, Russell Investment Management Company (“RIMCo”) was the adviser, administrator and transfer agent of the Funds, providing advisory, administrative and transfer agency services to the Funds. Effective January 1, 2008, RIMCo is the Funds adviser and Russell Fund Services Company (“RFSC”), a wholly-owned subsidiary of RIMCo, is the Funds administrator and transfer agent. There was no change in the services provided to the Funds or in aggregate fees paid by the Funds for advisory, administrative and transfer agency services.

 

2.   Significant Accounting Policies

The Funds’ financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) which require the use of management estimates and assumptions at the date of the financial statements. Actual results could differ from those estimates. The following is a summary of the significant accounting policies consistently followed by each Fund in the preparation of its financial statements.

Security Valuation

The Funds value portfolio securities according to Board-approved securities valuation procedures, including market value procedures, fair value procedures and pricing services. Money market fund securities are priced using the amortized cost method of valuation, as are debt obligation securities maturing within 60 days at the time of purchase, unless the Board determines that amortized cost does not represent market value of short-term debt obligations. The Board has delegated the responsibility for administration of the securities valuation procedures to RFSC.

Ordinarily, the Funds value each portfolio security based on market quotations provided by pricing services or alternative pricing services or dealers (when permitted by the market value procedures). Generally, Fund securities are valued at the close of the market on which they are traded as follows:

 

  •  

US listed equities; equity and fixed income options: Last sale price; last bid price if no last sale price;

 

  •  

US over-the-counter equities: Official closing price; last bid price if no closing price;

 

  •  

Listed ADRs/GDRs: Last sale price; last bid price if no last sale price;

 

  •  

Municipal bonds, US bonds, Eurobonds/foreign bonds: Evaluated bid price; broker quote if no evaluated bid price;

 

  •  

Futures: Settlement price.

 

  •  

Investments in other mutual funds are valued at their net asset value per share, calculated at 4 p.m. Eastern time or as of the close of the New York Stock Exchange, whichever is earlier.

 

  •  

The value of swap agreements are equal to the Funds’ obligation (or rights) under swap contracts which will generally be equal to the net amounts to be paid or received under the contracts based upon the relative values of the positions held by each party to the contracts.

 

  •  

Equity securities traded on a national securities foreign exchange or an over the counter market are valued on the basis of the official closing price, or lacking the official closing price, at the last sale price of the primary exchange on which the security is traded.

If market quotations are not readily available for a security or if subsequent events suggest that a market quotation is not reliable, the Funds will use the security’s fair value, as determined in accordance with the fair value procedures. This generally means that equity securities and fixed income securities listed and traded principally on any national securities exchange are valued on the basis of the last sale price or, lacking any sales, at the closing bid price, on the primary exchange on which the security is traded.

 

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The fair value procedures may involve subjective judgments as to the fair value of securities. The effect of fair value pricing is that securities may not be priced on the basis of quotations from the primary market in which they are traded, but rather may be priced by another method that the Fund’s Board of Trustees believes reflects fair value. The use of fair value pricing by a Fund may cause the net asset value of its shares to differ significantly from the net asset value that would be calculated using normal pricing methods. Fair value pricing could also cause discrepancies between the daily movement of the value of Fund shares and the daily movement of the benchmark index if the index is valued using another pricing method.

This policy is intended to assure that the Funds’ net asset values fairly reflect security values as of the time of pricing. Events or circumstances affecting the values of Fund securities that occur between the closing of the principal markets on which they trade and the time the net asset value of Fund shares is determined may be reflected in the calculation of net asset values for each applicable Fund when the Funds deem that the particular event or circumstance would materially affect such Fund’s net asset value. RIC Funds that invest primarily in frequently traded exchange listed securities will use fair value pricing in limited circumstances since reliable market quotations will often be readily available. RIC Funds that invest in foreign securities are likely to use fair value pricing more often since significant events may occur between the close of foreign markets and the time of pricing which would trigger fair value pricing of the foreign securities. RIC Funds that invest in low rated debt securities are also likely to use fair value pricing more often since the markets in which such securities are traded are generally thinner, more limited and less active than those for higher rated securities. Examples of events that could trigger fair value pricing of one or more securities are: a material market movement of the US securities market (defined in the fair value procedures as the movement by any two of four major US Indexes greater than a certain percentage) or other significant event; foreign market holidays if on a daily basis, Fund exposure exceeds 20% in aggregate (all closed markets combined); a company development; a natural disaster; or an armed conflict.

Because foreign securities can trade on non-business days, the net asset value of a Fund’s portfolio that includes foreign securities may change on days when shareholders will not be able to purchase or redeem fund shares.

In September 2006, Statement of Financial Accounting Standards No. 157, Fair Value Measurements (“SFAS 157”), was issued and is effective for fiscal years beginning after November 15, 2007. SFAS 157 defines fair value, establishes a framework for measuring fair value and expands disclosures about fair value measurements. Management is currently evaluating the impact the adoption of SFAS 157 will have on the Funds financial statement disclosure.

Investment Transaction

Securities transactions are recorded on a trade date basis. Realized gains and losses from securities transactions, if any, are recorded on the basis of specific identified cost incurred by each money manager within a particular Fund.

Investment Income

Dividend income is recorded net of applicable withholding taxes on the ex-dividend date, except that certain dividends from foreign securities are recorded as soon thereafter as the Funds are informed of the ex-dividend date. Interest income is recorded daily on the accrual basis. All premiums and discounts, including original issue discounts, are amortized/accreted using the interest method.

Federal Income Taxes

Since the Investment Company is a Massachusetts business trust, each Fund is a separate corporate taxpayer and determines its net investment income and capital gains (or losses) and the amounts to be distributed to each Fund’s shareholders without regard to the income and capital gains (or losses) of the other Funds.

It is each Fund’s intention to qualify as a regulated investment company and distribute all of its taxable income and capital gains. Therefore, no federal income or excise tax provision was required for the Funds.

The Financial Accounting Standards Board (“FASB”) issued Interpretation No. 48, “Accounting for Uncertainty in Income Taxes, an Interpretation of FASB Statement 109” (“FIN 48”), in June 2006. FIN 48 permits the recognition of tax benefits of an uncertain tax position only when the position is “more likely than not” to be sustained assuming examination by taxing authorities. The Funds adopted the provisions of FIN 48 on November 1, 2007. Management has reviewed the Funds tax positions for all open tax years, and concluded that adoption had no effect on the Funds financial position or results of operations. At

 

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April 30, 2008, the Funds had recorded no liabilities for net unrecognized tax benefits relating to uncertain income tax positions they have taken or expect to take in future tax returns.

The Funds file a U. S. tax return. While the statute of limitations remains open to examine the Fund’s U.S. tax returns filed for the fiscal year ending October 31, 2005 through October 31, 2007, no examinations are in progress or anticipated at this time. The Fund is not aware of any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly change in the next twelve months.

Dividends and Distributions to Shareholders

For all Funds, income and capital gain distributions, if any, are recorded on the ex-dividend date. Income distributions are generally declared and paid according to the following schedule:

 

Declared    Payable    Funds

Quarterly

    April, July, October and December    Equity I, Equity Q and Fixed Income III Funds

Annually

    Mid-December    Equity II and International Funds

Capital gain distributions are generally declared and paid annually. An additional distribution may be paid by the Funds to avoid imposition of federal income and excise tax on any remaining undistributed capital gains and net investment income.

The timing and characterization of certain income and capital gain distributions are determined in accordance with federal tax regulations which may differ from GAAP. As a result, net investment income and net realized gain (or loss) on investment and foreign currency-related transactions for a reporting period may differ significantly from distributions during such period. The differences between tax regulations and GAAP primarily relate to investments in options, futures, forward contracts, swap contracts, passive foreign investment companies, foreign-denominated investments, mortgage-backed securities, certain securities sold at a loss and capital loss carryforwards.

Expenses

The Funds will pay their own expenses other than those expressly assumed by RIMCo and RFSC. Most expenses can be directly attributed to the individual Funds. Expenses which cannot be directly attributed to a specific Fund are allocated among all Funds principally based on their relative net assets.

Class Allocation

The Funds presented herein offer the following classes of shares: Class E, Class I, and Class Y. All share classes have identical voting, dividend, liquidation and other rights and the same terms and conditions. The separate classes of shares differ principally in the applicable distribution fees and shareholder servicing fees. Shareholders of each class bear certain expenses that pertain to that particular class. Realized and unrealized gains (losses), net investment income, and expenses with the exception of class level expenses, are allocated daily to each class of shares based upon the relative proportion of net assets of each class.

Foreign Currency Translations

The books and records of the Funds are maintained in US dollars. Foreign currency amounts and transactions of the Funds are translated into US dollars on the following basis:

 

  (a) Market value of investment securities, other assets and liabilities at the closing rate of exchange on the valuation date.

 

  (b) Purchases and sales of investment securities and income at the closing rate of exchange prevailing on the respective trade dates of such transactions.

Reported net realized gains or losses from foreign currency-related transactions arise from: sales and maturities of short-term securities; sales of foreign currencies; currency gains or losses realized between the trade and settlement dates on securities transactions; the difference between the amounts of dividends, interest, and foreign withholding taxes recorded on the Funds’ books and the US dollar equivalent of the amounts actually received or paid. Net unrealized gains or losses from foreign currency-related transactions arise from changes in the value of assets and liabilities, other than investments in securities, at year-end, as a result of changes in the exchange rates.

 

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The Funds do not isolate that portion of the results of operations of the Funds that arises as a result of changes in exchange rates from that portion that arises from changes in market prices of investments during the year. Such fluctuations are included with the net realized and unrealized gain or loss from investments. However, for federal income tax purposes the Funds do isolate the effects of changes in foreign exchange rates from the fluctuations arising from changes in market prices for realized gain (or loss) on debt obligations.

Capital Gains Taxes

The International Fund may be subject to capital gains taxes and repatriation taxes imposed by certain countries in which it invests. The Fund has recorded a deferred tax liability of $62,027 in respect of the unrealized appreciation on foreign securities for potential capital gains and repatriation taxes at April 30, 2008. The accrual for capital gains and repatriation taxes is included in net unrealized appreciation (depreciation) on investments in the Statement of Asset and Liabilities for the Funds. The amounts related to capital gains taxes of $9,420 are included in net realized gain (loss) on investments in the Statement of Operations for the Fund.

Derivatives

To the extent permitted by the investment objectives, restrictions and policies set forth in the Funds’ Prospectus and Statement of Additional Information, the Funds may participate in various derivative-based transactions. Derivative securities are instruments or agreements whose value is derived from an underlying security or index. They include options, futures, swaps, forwards, structured notes and stripped securities. These instruments offer unique characteristics and risks that assist the Funds in meeting its investment strategies.

The Funds typically use derivatives in three ways: exposing cash reserves to markets, hedging and return enhancement. The Funds may pursue its strategy of being fully invested by exposing cash reserves to the performance of appropriate markets by purchasing securities and/or derivatives. This is intended to cause the Funds to perform as though cash reserves were actually invested in those markets. Hedging is also used by the Funds to limit or control risks, such as adverse movements in exchange rates and interest rates. Return enhancement can be accomplished through the use of derivatives in a Fund. By purchasing certain instruments, the Funds may more effectively achieve the desired portfolio characteristics that assist them in meeting their investment objectives. Depending on how the derivatives are structured and utilized, the risks associated with them may vary widely. These risks are generally categorized as market risk, liquidity risk and counterparty or credit risk.

Foreign Currency Exchange Contracts

In connection with investment transactions consistent with the Fund’s investment objective and strategies, certain Funds may enter into foreign currency exchange spot contracts and forward foreign currency exchange contracts (“contracts”). From time to time the International and Fixed Income III Funds may enter into contracts to hedge certain foreign currency-denominated assets. Contracts are recorded at market value. Certain risks may arise upon entering into these contracts from the potential inability of counterparties to meet the terms of their contracts and are generally limited to the amount of unrealized gain on the contracts, if any, that are recognized in the Statement of Assets and Liabilities. Realized gains or losses arising from such transactions are included in net realized gain (or loss) from foreign currency-related transactions. Open contracts at April 30, 2008 are presented on the Schedule of Investments for the applicable Funds.

Forward Commitments

Certain Funds may contract to purchase securities for a fixed price at a future date beyond customary settlement time consistent with a Fund’s ability to manage its investment portfolio and meet redemption requests. The price of the underlying securities and the date when the securities will be delivered and paid for are fixed at the time the transaction is negotiated. The Funds may dispose of a forward commitment transaction prior to settlement if it is appropriate to do so and realize short-term gains (or losses) upon such sale. When effecting such transactions, cash or liquid high-grade debt obligations of the Fund in a dollar amount sufficient to make payment for the portfolio securities to be purchased will be segregated on the Fund’s records at the trade date and maintained until the transaction is settled. A forward commitment transaction involves a risk of loss if the value of the security to be purchased declines prior to the settlement date or the other party to the transaction fails to complete the transaction.

 

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Loan Agreements

The Fixed Income III Fund may invest in direct debt instruments which are interests in amounts owed by corporate, governmental, or other borrowers to lenders or lending syndicates. A Fund’s investments in loans may be in the form of participations in loans or assignments of all or a portion of loans from third parties. A loan is often administered by a bank or other financial institution (the “lender”) that acts as agent for all holders. The agent administers the terms of the loan, as specified in the loan agreement. When investing in a loan participation, a Fund has the right to receive payments of principal, interest and any fees to which it is entitled only from the lender selling the loan agreement and only upon receipt by the lender of payments from the borrower. A Fund generally has no right to enforce compliance with the terms of the loan agreement with the borrower. As a result, a Fund may be subject to the credit risk of both the borrower and the lender that is selling the loan agreement. When a Fund purchases assignments from lenders it acquires direct rights against the borrower on the loan. At the period ended April 30, 2008, the Fixed Income III Fund had $1,000,000 in unfunded loan commitments.

Investments in Emerging Markets

Investing in emerging markets may involve special risks and considerations for the International Fund not typically associated with investing in the United States markets. These risks include revaluation of currencies, high rates of inflation, repatriation, restrictions on income and capital, and future adverse political and economic developments. Moreover, securities issued in these markets may be less liquid, subject to government ownership controls, delayed settlements, and their prices may be more volatile than those of comparable securities in the United States.

Options

The Funds may purchase and sell (write) call and put options on securities and securities indices, provided such options are traded on a national securities exchange or in an over-the-counter market. The Funds may also purchase and sell call and put options on foreign currencies. The domestic equity Funds may utilize options to equitize liquidity reserve balances.

When a Fund writes a covered call or a put option, an amount equal to the premium received by the Fund is included in the Fund’s Statement of Assets and Liabilities as an asset and as an equivalent liability. The amount of the liability is subsequently marked-to-market to reflect the current market value of the option written. The Fund receives a premium on the sale of a call option but gives up the opportunity to profit from any increase in stock value above the exercise price of the option, and when the Fund writes a put option it is exposed to a decline in the price of the underlying security.

Whether an option which the Fund has written expires on its stipulated expiration date or the Fund enters into a closing purchase transaction, the Fund realizes a gain (or loss, if the cost of a closing purchase transaction exceeds the premium received when the option was sold) without regard to any unrealized gain or loss on the underlying security, and the liability related to such option is extinguished. If a call option which the Fund has written is exercised, the Fund realizes a capital gain or loss from the sale of the underlying security, and the proceeds from such sale are increased by the premium originally received. When a put option which a Fund has written is exercised, the amount of the premium originally received will reduce the cost of the security which a Fund purchases upon exercise of the option. Realized gains (losses) on purchased options are included in net realized gain (loss) from investments.

The Funds’ use of written options involves, to varying degrees, elements of market risk in excess of the amount recognized in the Statement of Assets and Liabilities. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to market risk. The risks may be caused by an imperfect correlation between movements in the price of the instrument and the price of the underlying securities and interest rates.

Futures Contracts

The Funds presented herein may invest in futures contracts (i.e., interest rate, foreign currency and index futures contracts) to a limited extent. The face or contract amounts of these instruments reflect the extent of the Funds’ exposure to off balance sheet risk. The primary risks associated with the use of futures contracts are an imperfect correlation between the change in market value of the securities held by the Fund and the prices of futures contracts and the possibility of an illiquid market. Upon entering into a futures contract, the Funds are required to deposit with a broker an amount, termed the initial margin, which typically represents 5% of the purchase price indicated in the futures contract. Payments to and from the broker, known as variation margin, are required to be made on a daily basis as the price of the futures contract fluctuates. Changes in initial

 

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settlement value are accounted for as unrealized appreciation (depreciation) until the contracts are terminated, at which time realized gains and losses are recognized. As of April 30, 2008, the International Fund and Fixed Income III Fund had cash collateral balances of $8,367,513 and $17,848,934, respectively, in connection with futures contracts purchased (sold).

Swap Agreements

The Funds may enter into several different types of agreements including interest rate, index, credit default and currency swaps.

The Funds may enter into index swap agreements as an additional hedging strategy for cash reserves held by those Funds or to effect investment transactions consistent with these Funds’ investment objectives and strategies. Index swap agreements are two party contracts entered into primarily by institutional investors for periods ranging from a few weeks to more than one year. In a standard index swap transaction, the two parties agree to exchange the returns (or differentials in rates of return) earned or realized on particular investments or instruments. The returns to be exchanged between the parties are calculated with respect to a “notional amount” (i.e. a specified dollar amount that is hypothetically invested in a “basket” of securities representing a particular index). Amounts paid to and received from the swap counterparties representing capital appreciation and depreciation on the underlying securities and accrued interest expense and interest income are recorded as net realized gain (loss). The Funds are exposed to credit risk in the event of non-performance by the swap counterparties; however, the Funds do not anticipate non-performance by the counterparties.

The Fixed Income III and International Funds may enter into swap agreements, on either an asset-based or liability-based basis, depending on whether it is hedging its assets or its liabilities, and will usually enter into swaps on a net basis, i.e., the two payment streams are netted out, with the Fund receiving or paying, as the case may be, only the net amount of the two payments. When a Fund engages in a swap, it exchanges its obligations to pay or rights to receive payments for the obligations or rights to receive payments of another party (i.e., an exchange of floating rate payments for fixed rate payments).

Interest rate swaps are a counterparty agreement and can be customized to meet each party’s needs and involves the exchange of a fixed payment per period for a payment that is not fixed. Currency swaps are an agreement where two parties exchange specified amounts of different currencies which are followed by a series of interest payments that are exchanged based on the principal cash flow. At maturity the principal amounts are exchanged back. Credit default swaps are a counterparty agreement which allows the transfer of third party credit risk (the possibility that an issuer will default on their obligation by failing to pay principal or interest in a timely manner) from one party to another. The lender faces the credit risk from a third party and the counterparty in the swap agrees to insure this risk in exchange for regular periodic payments.

The Funds expect to enter into these transactions primarily to preserve a return or spread on a particular investment or portion of its portfolio or to protect against any increase in the price of securities it anticipates purchasing at a later date. The net amount of the excess, if any, of the Funds’ obligations over its entitlements with respect to each swap will be accrued on a daily basis and an amount of cash or liquid high-grade debt securities having an aggregate net asset value at least equal to the accrued excess will be maintained in a segregated account by the Funds’ custodian. To the extent that the Fund enters into swaps on other than a net basis, the amount maintained in a segregated account will be the full amount of the Funds’ obligations, if any, with respect to such interest rate swaps, accrued on a daily basis. If there is a default by the other party to such a transaction, the Funds will have contractual remedies pursuant to the agreement related to the transaction. The swap market has grown substantially in recent years with a large number of banks and investment banking firms acting both as principals and as agents utilizing standardized swap documentation. As a result, the swap market has become relatively liquid.

Short Sales

The Equity Q Fund may enter into short sale transactions. In a short sale, the seller sells a security that it does not own, typically a security borrowed from a broker or dealer. Because the seller remains liable to return the underlying security that it borrowed from the broker or dealer, the seller must purchase the security prior to the date on which delivery to the broker or dealer is required. The Fund will incur a loss as a result of the short sale if the price of the security increases between the date of the short sale and the date on which the fund must return the borrowed security. The Fund will realize a gain if the security declines in price between those dates. The making of short sales exposes the Fund to the risk of liability for the market value of the security that is sold (the amount of which liability increases as the market value of the underlying security increases), in addition to the costs associated with establishing, maintaining and closing out the short position.

 

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Although the Fund’s potential for gain as a result of a short sale is limited to the price at which it sold the security short less the cost of borrowing the security, its potential for loss is theoretically unlimited because there is no limit to the cost of replacing the borrowed security. When the Fund makes a short sale, the Fund may use all or a portion of the cash proceeds of short sales to purchase other securities or for any other permissible Fund purpose. To the extent necessary to meet collateral requirements, the Fund is required to pledge assets in a segregated account maintained by the Fund’s custodian for the benefit of the broker.

The Fund also may use securities it owns to meet any such collateral obligations. Until a Fund replaces a borrowed security in connection with a short sale, the Fund will: (a) maintain daily a segregated account, containing cash, cash equivalents, or liquid marketable securities, at such a level that the amount deposited in the segregated account plus the amount deposited with the broker as collateral will equal the current requirement under Regulation T promulgated by the Board of Governors of the Federal Reserve System under the authority of section 7 and 8 of the Securities Exchange Act of 1934, as amended; or (b) otherwise cover its short position in accordance with positions taken by the staff of the SEC (e.g., taking an offsetting long position in the security sold short). As of April 30, 2008, $580,701,729 was held as collateral.

Mortgage-Related and Other Asset-Backed Securities

The Fixed Income III Fund may invest in mortgage or other asset-backed securities. These securities may include mortgage pass-through securities, collateralized mortgage obligations (“CMOs”), commercial mortgage-backed securities, mortgage dollar rolls, CMO residuals, stripped mortgage-backed securities (“SMBSs”) and other securities that directly or indirectly represent a participation in, or are secured by a payable from, mortgage loans on real property. Mortgage-backed securities often have stated maturities of up to thirty years when they are issued, depending upon the length of the mortgages underlying the securities. In practice, however, unscheduled or early payments of principal and interest on the underlying mortgages may make the securities’ effective maturity shorter than this, and the prevailing interest rates may be higher or lower than the current yield of a Fund’s portfolio at the time the Fund receives the payments for reinvestment. Mortgage-backed securities may have less potential for capital appreciation than comparable fixed income securities due to the likelihood of increased prepayments of mortgages as interest rates decline. If a Fund buys mortgage-backed securities at a premium, mortgage foreclosures and prepayments of principal by mortgagors (which may be made at any time without penalty) may result in some loss of the Fund’s principal investment to the extent of the premium paid. The value of mortgage-backed securities may also change due to shifts in the market’s perception of issuers. In addition, regulatory or tax changes may adversely affect the mortgage securities markets as a whole. Non-governmental mortgage-backed securities may offer higher yields than those issued by government entities, but also may be subject to greater price changes than governmental issues.

Through its investments in mortgage-backed securities (“MBS”), including those that are issued by private issuers, a Fund may have some exposure to subprime loans as well as to the mortgage and credit markets generally. Private issuers include commercial banks, savings associations, mortgage companies, investment banking firms, finance companies and special purpose finance entities (called special purpose vehicles or SPVs) and other entities that acquire and package mortgage loans for resale as MBS. Unlike MBS issued or guaranteed by the U.S. government or one of its sponsored entities, MBS issued by private issuers do not have a government or government-sponsored entity guarantee, but may have credit enhancements provided by external entities such as banks or financial institutions or achieved through the structuring of the transaction itself. Examples of such credit support arising out of the structure of the transaction include the issue of senior and subordinated securities (e.g., the issuance of securities by an SPV in multiple classes or “tranches”, with one or more classes being senior to other subordinated classes as to the payment of principal and interest, with the result that defaults on the underlying mortgage loans are borne first by the holders of the subordinated class); creation of “reserve funds” (in which case cash or investments, sometimes funded from a portion of the payments on the underlying mortgage loans, are held in reserve against future losses); and “overcollateralization” (in which case the scheduled payments on, or the principal amount of, the underlying mortgage loans exceeds that required to make payment of the securities and pay any servicing or other fees). However, there can be no guarantee that credit enhancements, if any, will be sufficient to prevent losses in the event of defaults on the underlying mortgage loans. In addition, MBS that are issued by private issuers are not subject to the underwriting requirements for the underlying mortgages that are applicable to those MBS that have a government or government-sponsored entity guarantee. As a result, the mortgage loans underlying private MBS may, and frequently do, have less favorable collateral, credit risk or other underwriting characteristics than government or government-sponsored MBS and have wider variances in a number of terms including interest rate, term, size, purpose and borrower characteristics. Privately issued pools more frequently include second mortgages, high loan-to-value mortgages and manufactured housing loans. The coupon rates and maturities of the underlying mortgage loans in a private-label MBS pool may vary to a greater extent than those included in a government guaranteed pool, and the pool may include subprime

 

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mortgage loans. Subprime loans refer to loans made to borrowers with weakened credit histories or with a lower capacity to make timely payments on their loans. For these reasons, the loans underlying these securities have had in many cases higher default rates than those loans that meet government underwriting requirements. The risk of non-payment is greater for MBS that are backed by mortgage pools that contain subprime loans, but a level of risk exists for all loans. Privately issued MBS are not traded on an exchange and there may be a limited market for the securities, especially when there is a perceived weakness in the mortgage and real estate market sectors. Without an active trading market, MBS held in a Fund’s portfolio may be particularly difficult to value because of the complexities involved in assessing the value of the underlying mortgage loans.

Asset-backed securities may include pools of mortgages (“mortgage-backed securities”), loans, receivables or other assets. Payment of principal and interest may be largely dependent upon the cash flows generated by the assets backing the securities. For purposes of determining the percentage of a Fund’s total assets invested in securities of issuers having their principal business activities in a particular industry, asset-backed securities will be classified separately, based on the nature of the underlying assets, according to the following categories: captive auto, diversified, retail and consumer loans, captive equipment and business, business trade receivables, nuclear fuel and capital and mortgage lending. Asset-backed securities (other than mortgage-backed securities) present certain risks that are not presented by mortgage-backed securities. Primarily, these securities may not have the benefit of any security interest in the related assets. Credit card receivables are generally unsecured and the debtors are entitled to the protection of a number of state and federal consumer credit laws, many of which give such debtors the right to set off certain amounts owed on the credit cards, thereby reducing the balance due. There is the possibility that recoveries on repossessed collateral may not, in some cases, be available to support payments on these securities. Asset-backed securities are often backed by a pool of assets representing the obligations of a number of different parties. To lessen the effect of failures by obligors on underlying assets to make payments, the securities may contain elements of credit support which fall into two categories: (i) liquidity protection, and (ii) protection against losses resulting from ultimate default by an obligor on the underlying assets. Liquidity protection refers to the provision of advances, generally by the entity administering the pool of assets, to ensure that the receipt of payments on the underlying pool occurs in a timely fashion. Protection against losses results from payment of the insurance obligations on at least a portion of the assets in the pool. This protection may be provided through guarantees, policies or letters of credit obtained by the issuer or sponsor from third parties, through various means of structuring the transaction or through a combination of such approaches. The Funds will not pay any additional or separate fees for credit support. The degree of credit support provided for each issue is generally based on historical information respecting the level of credit risk associated with the underlying assets. Delinquency or loss in excess of that anticipated or failure of the credit support could adversely affect the return on an investment in such a security. The availability of asset-backed securities may be affected by legislative or regulatory developments. It is possible that such developments may require the Funds to dispose of any then existing holdings of such securities.

Inflation-Indexed Bonds

The Fixed Income III Fund may invest in inflation-indexed bonds. Inflation-indexed bonds are fixed-income securities whose principal value is periodically adjusted to the rate of inflation. The interest rate on these bonds is generally fixed at issuance at a rate lower than typical bonds. Over the life of an inflation-indexed bond, however, interest will be paid based on a principal value, which is adjusted for inflation. Any increase in the principal amount of an inflation-indexed bond will be included as interest income in the Statement of Operations, even though investors do not receive their principal until maturity.

Guarantees

In the normal course of business the Funds enter into contracts that contain a variety of representations which provide general indemnifications. The Funds’ maximum exposure under these arrangements is unknown as this would involve future claims that may be made against the Funds that have not yet occurred. However, the Funds expect the risk of loss to be remote.

 

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3.   Investment Transactions

Securities

During the period ended April 30, 2008, purchases and sales of investment securities (excluding US Government and Agency obligations, short-term investments, options, futures and repurchase agreements) were as follows:

 

Funds   Purchases    Sales
    

Equity I

   $ 1,089,039,746    $ 965,107,037

Equity II

     459,848,273      473,776,064

Equity Q

     1,205,419,569      1,211,276,178

International

     858,943,326      870,377,782

Fixed Income III

     619,619,269      484,557,862

Purchases and sales of US Government and Agency obligations (excluding short-term investments, options, futures and repurchase agreements) for the Fixed Income III Fund totaled $832,078,310 and $651,040,438 respectively, for the period ended April 30, 2008.

Written Options Contracts

Transactions in written options contracts for the period ended April 30, 2008 for the following Funds were as follows:

 

     International Fund     Fixed Income III Fund  
      Number of
Contracts		     Premiums Received     Number of
Contracts		     Premiums Received  
        

Outstanding October 31, 2007

    —     $ —     4,199     $ 1,550,298  

Opened

    1,161       5,408,879     1,429       2,665,867  

Closed

    (973 )     (4,467,325 )   (2,103 )     (1,118,150 )

Expired

    —       —     (3,073 )     (688,047 )
                            

Outstanding April 30, 2008

    188     $ 941,554     452     $ 2,409,968  
                            

Securities Lending

The Investment Company has a securities lending program whereby each Fund can loan securities with a value up to 331/3% of its total assets. The Fund receives cash (US currency), US Government or US Government agency obligations as collateral against the loaned securities. To the extent that a loan is collateralized by cash, such collateral is invested by the securities lending agent, State Street Bank and Trust Company (“State Street”) in short-term instruments, money market mutual funds and other short-term investments that meet certain quality and diversification requirements. Cash collateral invested in money market funds is included in the Schedules of Investments. The collateral received is recorded on a lending Fund’s statement of assets and liabilities along with the related obligation to return the collateral.

Income generated from the investment of cash collateral, less negotiated rebate fees paid to participating brokers and transaction costs, is divided between the Fund and State Street and is recorded as income for the Fund. To the extent that a loan is secured by non-cash collateral, brokers pay the Fund negotiated lenders’ fees, which are divided between the Fund and State Street and are recorded as securities lending income for the Fund. All collateral received will be in an amount at least equal to 102% (for loans of US securities) or 105% (for non-US securities) of the market value of the loaned securities at the inception of each loan. The market value of the loaned securities is determined at the close of business of the Funds and any additional required collateral is delivered to the Fund the next day. Should the borrower of the securities fail financially, there is a risk of delay in recovery of the securities or loss of rights in the collateral. Consequently, loans are made only to borrowers which are deemed to be of good financial standing.

As of April 30, 2008, the non-cash collateral pledged for the securities on loan in the following funds was:

 

Funds    Non-Cash
Collateral Value		    Non-Cash Collateral Holding
     

Equity I

    $ 11,590,881    Pool of US Government Securities

Equity II

      996,596    Pool of US Government Securities

Equity Q

      11,385,652    Pool of US Government Securities

International

      1,129,908    Pool of US Government Securities

 

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Custodian

The Funds have entered into arrangements with their custodian whereby custody credits realized as a result of uninvested cash balances were used to reduce a portion of the Fund’s expenses. During the period ended April 30, 2008, the Fund’s custodian fees were reduced by the following amounts under these arrangements which are included in expense reductions on the Statement of Operations:

 

Funds    Amount
Paid
  

Equity I

    $ 2,014

Equity II

      1,690

Equity Q

      1,613

International

      14,854

Fixed Income III

      66,318

Brokerage Commissions

The Funds effect certain transactions through BNY ConvergeFX Group — LJR Recapture Services (“LJR”) and its global network of correspondent brokers. LJR is a registered broker and is not an affiliate of the Funds or RIMCo. Trades placed through LJR and its correspondents are used (i) to obtain research services for RIMCo to assist it in its capacity as a manager of managers and (ii) to generate commission rebates to the Funds on whose behalf the trades were made. For purposes of trading to obtain research services for RIMCo or to generate commission rebates to the Funds, the Funds’ money managers are requested to and RIMCo may, with respect to transactions it places, effect transactions with or through LJR and its correspondents or other brokers only to the extent that the Funds will receive competitive execution, price and commissions. In addition, RIMCo recommends targets for the amount of trading that money managers allocate through LJR based upon asset class, investment style and other factors. Research services provided to RIMCo by LJR or other brokers include performance measurement statistics, fund analytics systems and market monitoring systems. Research services will be generally obtained from unaffiliated third parties at market rates. Research provided to RIMCo may benefit the particular Funds generating the trading activity and may also benefit other Funds within the Investment Company and other funds and clients managed or advised by RIMCo or its affiliates. Similarly, the Funds may benefit from research provided with respect to trading by those other funds and clients.

LJR may also rebate to the Funds a portion of commissions earned on certain trading by the Funds through LJR and their correspondents in the form of commission recapture. Commission recapture is paid solely to those Funds generating the applicable trades. Commission recapture is generated on the instructions of the Soft Dollar Committee once RIMCo’s research budget has been met, as determined annually in the Soft Dollar Committee budgeting process.

Effective January 1, 2008, transactions effected through LJR are used solely to generate commission rebates to the Funds and no longer to obtain research services.

Additionally, the Fund paid brokerage commissions to non-affiliated brokers who provided brokerage and research services to the Adviser.

 

4.   Related Party Transactions, Fees and Expenses

Adviser and Administrator

Through December 31, 2007, RIMCo was the adviser and administrator of all of the Funds which comprise the Investment Company. Effective January 1, 2008, RIMCo advises the Funds and RFSC is the Funds administrator. RFSC is a wholly-owned subsidiary of RIMCo. RIMCo is a wholly-owned subsidiary of Frank Russell Company (a subsidiary of The Northwestern Mutual Life Insurance Company). Frank Russell Company provides money manager evaluation to RIMCo.

The Funds are permitted to invest their cash reserves (i.e., cash awaiting investment or cash held to meet redemption requests or to pay expenses), and also may invest a portion of the collateral received from the Investment Company’s securities lending program in the Investment Company’s Money Market Fund (one of the Funds of the Investment Company not presented herein). As of April 30, 2008, $546,069,187 of the Money Market Fund’s net assets represents investment by the Funds.

 

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The advisory and administrative fees are based upon the average daily net assets of each Fund and the rates specified in the table below. The advisory and administrative fees are payable monthly and total $22,360,809 and $1,904,023 respectively, for the period ended April 30, 2008.

 

     Annual Rate  
Funds    Adviser        Administrator  

Equity I

    .55 %      .05 %

Equity II

    .70        .05  

Equity Q

    .55        .05  

International

    .70        .05  

Fixed Income III

    .50        .05  

For the Equity I, Equity II, Equity Q, International, and Fixed Income III Funds, there was a non-contractual administrative fee waiver of 0.02% applicable to the period ended April 30, 2008. The waivers for the period were as follows:

 

Funds    Amount
Waived
  

Equity I

    $ 188,104

Equity II

      52,041

Equity Q

      158,859

International

      193,277

Fixed Income III

      169,328

RIMCo and RFSC do not have the ability to recover amounts waived or reimbursed from previous periods.

Transfer and Dividend Disbursing Agent

Through December 31, 2007 RIMCo was the Transfer and Dividend Disbursing Agent. Effective January 1, 2008 RFSC serves as Transfer and Dividend Disbursing Agent for the Investment Company. For this service, RIMCo and RFSC are paid a fee for transfer agency and dividend disbursing services provided to the Fund. RIMCo and RFSC retain a portion of this fee for its services provided to the Fund and pay the balance to unaffiliated agents who assist in providing these services. Total transfer agency fees paid by the Funds presented herein for the period ended April 30, 2008 were $2,007,609.

Distributors and Shareholder Servicing

On June 2, 2008 Russell Fund Distributors, Inc., a wholley owned subsidiary of RIMCo, changed its name to Russell Financial Services, Inc. (the “Distributor”) and serves as distributor for RIC, pursuant to the Distribution Agreement with the Investment Company.

The Investment Company has adopted a Shareholder Services Plan (the “Services Plan”) under which the Funds may make payments to the Distributor or any Servicing Agent for any activities or expenses primarily intended to assist, support or service the Servicing Agents’ clients who beneficially own Class E shares of the Funds. The shareholder servicing payments shall not exceed 0.25% of the average daily net assets of a Fund’s Class E shares on an annual basis.

Brokerage Commissions

The Funds will effect transactions through Russell Implementation Services, Inc. (“RIS”) and its global network of unaffiliated correspondent brokers. RIS is a registered broker and investment adviser and an affiliate of RIMCo. Trades placed through RIS and its correspondents are made (i) to manage trading associated with changes in managers, rebalancing across existing managers, cash flows and other portfolio transitions, or (ii) to execute portfolio securities transactions for the portion of each Fund’s assets that RIMCo determines not to allocate to money managers, including assets allocated to the “select holdings” strategy, and for each Fund’s cash reserves.

The Funds effect certain transactions through BNY ConvergeFX Group — LJR Recapture Services (“LJR”) and its global network of correspondent brokers. LJR is a registered broker and is not an affiliate of the Funds or RIMCo. Trades placed through LJR and its correspondents are used (i) to obtain research services for RIMCo to assist it in its capacity as a manager of managers

 

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and (ii) to generate commission rebates to the Funds on whose behalf the trades were made. For purposes of trading to obtain research services for RIMCo or to generate commission rebates to the Funds, the Funds’ money managers are requested to and RIMCo may, with respect to transactions it places, effect transactions with or through LJR and its correspondents or other brokers only to the extent that the Funds will receive competitive execution, price and commissions. In addition, RIMCo recommends targets for the amount of trading that money managers allocate through LJR based upon asset class, investment style and other factors. Research services provided to RIMCo by LJR or other brokers include performance measurement statistics, fund analytics systems and market monitoring systems. Research services will be generally obtained from unaffiliated third parties at market rates. Research provided to RIMCo may benefit the particular Funds generating the trading activity and may also benefit other Funds within the Investment Company and other funds and clients managed or advised by RIMCo or its affiliates. Similarly, the Funds may benefit from research provided with respect to trading by those other funds and clients.

LJR may also rebate to the Funds a portion of commissions earned on certain trading by the Funds through LJR and their correspondents in the form of commission recapture. Commission recapture is paid solely to those Funds generating the applicable trades. Commission recapture is generated on the instructions of the Soft Dollar Committee once RIMCo’s research budget has been met, as determined annually in the Soft Dollar Committee budgeting process.

Additionally, the Fund paid brokerage commissions to non-affiliated brokers who provided brokerage and research services to the Adviser.

Affiliate Receivables and Payables

Accrued fees payable to affiliates as April 30, 2008 were as follows:

 

     Equity I Fund    Equity II Fund    Equity Q Fund    International Fund    Fixed Income III Fund
              

Advisory Fees

    $ 879,496    $ 295,610    $ 710,887    $ 1,097,484    $ 734,966

Administrative Fees

      47,973      12,669      38,776      47,035      44,098

Shareholder Servicing Fees

      13,637      7,819      12,944      15,010      6,199

Transfer Agent Fees

      216,564      67,566      200,114      129,720      131,808

Trustee Fees

      3,527      913      2,912      3,066      3,753
                                  
   $ 1,161,197    $ 384,577    $ 965,633    $ 1,292,315    $ 920,824
                                  

Affiliated Brokerage Commissions

The Funds will effect certain transactions through Russell Implementation Services Inc. (“RIS”) and its global network of unaffiliated correspondent brokers. RIS is a registered broker and investment adviser and an affiliate of RIMCo. Trades placed through RIS and its correspondents are made (i) to manage trading associated with changes in managers, rebalancing across existing managers, cash flows and other portfolio transitions or (ii) to execute portfolio securities transactions for each Fund’s assets that RIMCo determines not to allocate to money managers and for each Fund’s cash reserves.

Board of Trustees

The Russell Fund Complex consists of Russell Investment Company, which has 44 Funds, and Russell Investment Funds (“RIF”), which has nine Funds. Each of the Trustees is a Trustee for both RIC and RIF. During the period, the Russell Fund Complex paid each of its independent Trustees a retainer of $60,000 ($52,000 prior to January 1, 2008) per year, $6,500 for each regular quarterly meeting attended in person, $2,500 ($2,000 prior to January 1, 2008) for each special meeting attended in person, and $2,500 ($2,000 prior to January 1, 2008) for each Audit Committee meeting, Nominating and Governance Committee meeting, Investment Committee meeting or any other committee meeting established and approved by the Board that is attended in person. Each Trustee receives a $1,000 ($500 prior to January 1, 2008) fee for attending quarterly and special meetings and a $500 fee for attending committee meetings by phone instead of receiving the full fee had the member attended in person. Trustees’ out of pocket expenses are also paid by the Russell Fund Complex. The Audit Committee Chair and Investment Committee Chair are each paid a fee of $12,000 per year and the Nominating and Governance Committee chair is paid a fee of $6,000 per year. The chairman of the Board receives additional annual compensation of $52,000.

 

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5.   Federal Income Taxes

The Fixed Income III Fund had net tax basis capital loss carryforwards which may be applied against any net realized taxable gains in each succeeding year or until their respective expiration dates, whichever occurs first. Available capital loss carryforwards for October 31, 2014 totaled $2,895,957 for the period ending October 31, 2007.

At April 30, 2008, the cost of investments and net unrealized appreciation (depreciation) for income tax purposes were as follows:

 

    Equity I Fund     Equity II Fund     Equity Q Fund     International Fund     Fixed Income III Fund  
         

Cost of Investments

   $ 2,064,556,596     $ 729,647,836     $ 1,766,147,908     $ 2,137,519,910     $ 2,359,905,016  
                                       

Unrealized Appreciation

   $ 251,708,911     $ (22,608,555 )   $ 179,078,736     $ 289,230,425     $ 47,075,040  

Unrealized Depreciation

     (72,979,258 )     43,024,568       (93,769,087 )     (63,065,573 )     (93,077,631 )
                                       

Net Unrealized Appreciation (Depreciation)

   $ 178,729,653     $ 20,416,013     $ 85,309,649     $ 226,164,852     $ (46,002,591 )
                                       

 

6.   Fund Share Transactions (amounts in thousands)

Share transactions for the periods ended April 30, 2008 and October 31, 2007 were as follows:

 

     Shares     Dollars  
Equity I Fund    2008     2007     2008     2007  
        
        

Class E

         

Proceeds from shares sold

    1,094     226     $ 36,436     $ 7,867  

Proceeds from reinvestment of distributions

    152     65       5,023       2,153  

Payments for shares redeemed

    (217 )   (305 )     (6,944 )     (10,662 )
                            

Net increase (decrease)

    1,029     (14 )     34,515       (642 )
                            
        

Class I

         

Proceeds from shares sold

    7,377     9,610       231,737       333,059  

Proceeds from reinvestment of distributions

    3,322     1,754       109,417       58,436  

Payments for shares redeemed

    (5,238 )   (7,409 )     (170,138 )     (258,274 )
                            

Net increase (decrease)

    5,461     3,955       171,016       133,221  
                            
        

Class Y

         

Proceeds from shares sold

    5,439     4,069       174,019       143,003  

Proceeds from reinvestment of distributions

    1,360     779       44,754       25,923  

Payments for shares redeemed

    (2,187 )   (4,783 )     (70,786 )     (165,344 )
                            

Net increase (decrease)

    4,612     65       147,987       3,582  
                            

Total increase (decrease)

    11,102     4,006     $ 353,518     $ 136,161  
                            

 

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
Equity II Fund    2008     2007     2008     2007  
        
        

Class E

         

Proceeds from shares sold

    506     253     $ 12,665     $ 7,632  

Proceeds from reinvestment of distributions

    255     275       6,211       7,810  

Payments for shares redeemed

    (266 )   (486 )     (6,837 )     (14,776 )
                            

Net increase (decrease)

    495     42       12,039       666  
                            
        

Class I

         

Proceeds from shares sold

    2,784     3,301       65,876       99,503  

Proceeds from reinvestment of distributions

    2,830     3,156       69,187       90,141  

Payments for shares redeemed

    (3,315 )   (5,176 )     (83,905 )     (159,018 )
                            

Net increase (decrease)

    2,299     1,281       51,158       30,626  
                            
        

Class Y

         

Proceeds from shares sold

    806     718       18,116       20,760  

Proceeds from reinvestment of distributions

    598     803       14,604       22,921  

Payments for shares redeemed

    (261 )   (1,855 )     (6,090 )     (55,435 )
                            

Net increase (decrease)

    1,143     (334 )     26,630       (11,754 )
                            

Total increase (decrease)

    3,937     989     $ 89,827     $ 19,538  
                            
     Shares     Dollars  
Equity Q Fund    2008     2007     2008     2007  
        

Class E

         

Proceeds from shares sold

    644     300     $ 23,213     $ 11,626  

Proceeds from reinvestment of distributions

    195     114       6,684       4,268  

Payments for shares redeemed

    (390 )   (320 )     (13,446 )     (12,508 )
                            

Net increase (decrease)

    449     94       16,451       3,386  
                            
        

Class I

         

Proceeds from shares sold

    6,033     8,735       198,546       338,225  

Proceeds from reinvestment of distributions

    3,539     2,494       121,383       93,386  

Payments for shares redeemed

    (6,184 )   (7,787 )     (212,252 )     (302,189 )
                            

Net increase (decrease)

    3,388     3,442       107,677       129,422  
                            
        

Class Y

         

Proceeds from shares sold

    2,189     1,335       70,497       51,414  

Proceeds from reinvestment of distributions

    1,048     871       35,924       32,596  

Payments for shares redeemed

    (1,724 )   (2,982 )     (56,788 )     (115,308 )
                            

Net increase (decrease)

    1,513     (776 )     49,633       (31,298 )
                            

Total increase (decrease)

    5,350     2,760     $ 173,761     $ 101,510  
                            

 

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6.   Fund Share Transactions (amounts in thousands) (continued)

 

     Shares     Dollars  
International Fund    2008     2007     2008     2007  
        
        

Class E

         

Proceeds from shares sold

    554     194     $ 25,650     $ 9,669  

Proceeds from reinvestment of distributions

    259     135       11,266       6,282  

Payments for shares redeemed

    (243 )   (267 )     (10,646 )     (13,603 )
                            

Net increase (decrease)

    570     62       26,270       2,348  
                            
        

Class I

         

Proceeds from shares sold

    6,007     7,653       252,786       382,992  

Proceeds from reinvestment of distributions

    6,414     3,711       278,346       172,747  

Payments for shares redeemed

    (7,312 )   (8,025 )     (316,488 )     (400,986 )
                            

Net increase (decrease)

    5,109     3,339       214,644       154,753  
                            
        

Class Y

         

Proceeds from shares sold

    1,761     3,218       72,765       160,123  

Proceeds from reinvestment of distributions

    1,419     878       61,591       40,861  

Payments for shares redeemed

    (792 )   (5,267 )     (34,195 )     (274,505 )
                            

Net increase (decrease)

    2,388     (1,171 )     100,161       (73,521 )
                            

Total increase (decrease)

    8,067     2,230     $ 341,075     $ 83,580  
                            
     Shares     Dollars  
Fixed Income III Fund    2008     2007     2008     2007  
        

Class E

         

Proceeds from shares sold

    1,478     568     $ 15,678     $ 5,946  

Proceeds from reinvestment of distributions

    72     67       751       695  

Payments for shares redeemed

    (380 )   (358 )     (3,994 )     (3,738 )
                            

Net increase (decrease)

    1,170     277       12,435       2,903  
                            
        

Class I

         

Proceeds from shares sold

    30,939     79,354       326,074       828,320  

Proceeds from reinvestment of distributions

    4,043     4,360       41,827       45,288  

Payments for shares redeemed

    (18,616 )   (20,166 )     (195,801 )     (210,718 )
                            

Net increase (decrease)

    16,366     63,548       172,100       662,890  
                            
        

Class Y

         

Proceeds from shares sold

    8,525     2,834       90,628       29,655  

Proceeds from reinvestment of distributions

    480     540       4,959       5,610  

Payments for shares redeemed

    (1,426 )   (217 )     (14,993 )     (2,269 )
                            

Net increase (decrease)

    7,579     3,157       80,594       32,996  
                            

Total increase (decrease)

    25,115     66,982     $ 265,129     $ 698,789  
                            

 

7.   Interfund Lending Program

The Investment Company Funds have been granted permission from the Securities and Exchange Commission to participate in a joint lending and borrowing facility (the “Credit Facility”). Portfolios of the Funds may borrow money from the RIC Money Market Fund for Temporary purposes. All such borrowing and lending will be subject to a participating fund’s fundamental investment

 

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Notes to Financial Statements, continued — April 30, 2008 (Unaudited)

 

 

 

limitations. The RIC Money Market Fund will lend through the program only when the returns are higher than those available from an investment in repurchase agreements or short-term reserves. The Investment Company Funds will borrow through the program only when the costs are equal to or lower than the cost of bank loans. Interfund loans and borrowings normally extend overnight, but can have a maximum duration of seven days. Loans may be called on one business day’s notice. A participating fund may have to borrow from a bank at a higher interest rate if an interfund loan is called or not renewed. Any delay in repayment to the RIC Money Market Fund could result in a lost investment opportunity of additional borrowing costs. For the period ended April 30, 2008, the Funds did not participate in the interfund lending program.

 

8.   Record Ownership

As of April 30, 2008, the following table includes shareholders of record with greater than 10% of the total outstanding shares of each respective Fund:

 

Funds    # of Shareholders      %

Equity I

    1      24.7

Equity II

    1      33.2

Equity Q

    1      30.2

International

    1      34.7

Fixed Income III

    1      33.6

 

9.   Restricted Securities

Restricted securities are subject to contractual limitations on resale, are often issued in private placement transactions, and are not registered under the Securities Act of 1933 (the “Act”). The most common types of restricted securities are those sold under Rule 144A of the Act and commercial paper sold under Section 4(2) of the Act.

A Fund may invest a portion of its net assets not to exceed 15% in securities that are illiquid. Illiquid securities are securities that may not be readily marketable, and that cannot be sold within seven days in the ordinary course of business at the approximate amount at which the Fund has valued the securities. Restricted securities are generally considered to be illiquid.

The following table lists restricted securities held by a Fund that are illiquid. The following table does not include (1) securities deemed liquid by RIMCo or a money manager pursuant to Board approved policies and procedures or (2) illiquid securities that are not restricted securities as designated on the Fund’s Schedule of Investments.

 

Fund - % of Net Assets
Securities		    Acquisition
Date		    Principal
Amount ($)
or Shares		    Cost per Unit
$		    Cost
(000)
$		    Market Value
(000)
$
              

Fixed Income III Fund - 2.0%

               

AIG SunAmerica Global Financing VI

    06/09/04    630,000    103.47    652    652

American Express Credit Account Master Trust

    08/02/07    1,263,914    99.74    1,261    1,196

Americo Life, Inc.

    06/20/06    100,000    102.10    102    103

Axcan Intermediate Holdings, Inc.

    02/13/08    1,000,000    98.76    988    1,002

BNP Paribas Capital Trust

    06/01/06    850,000    112.20    953    870

Bombardier, Inc.

    11/10/06    125,000    128.47    161    197

Catlin Insurance Co., Ltd.

    11/01/07    200,000    100.00    200    167

CIT Mortgage Loan Trust

    10/05/07    1,329,053    100.00    1,329    1,196

CIT Mortgage Loan Trust

    10/05/07    400,000    100.00    400    260

CIT Mortgage Loan Trust

    10/05/07    746,769    100.00    747    411

Citic Resources Finance, Ltd.

    08/01/07    1,000,000    95.66    957    950

Citigroup Mortgage Loan Trust, Inc.

    10/18/06    867,320    100.00    867    867

Deutsche ALT-A Securities NIM Trust

    03/12/07    100,846    99.65    100    99

DG Funding Trust

    11/04/03    118    10,587.51    1,249    1,181

Digicel Group, Ltd.

    04/02/08    775,000    84.82    657    665

Dr. Pepper Snapple Group, Inc

    04/25/08    1,000,000    100.55    1,006    1,037

Dr. Pepper Snapple Group, Inc

    04/25/08    250,000    103.61    259    268

Entergy Gulf States, Inc

    11/30/05    195,000    100.00    195    195

 

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Institutional Funds

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Fund - % of Net Assets
Securities		    Acquisition
Date		    Principal
Amount ($)
or Shares		    Cost per Unit
$		    Cost
(000)
$		    Market Value
(000)
$
              

Evraz Goup SA

    04/17/08    950,000    100.91    959    962

Evraz Goup SA

    04/17/08    200,000    100.00    200    202

FBG Finance, Ltd.

    06/02/05    190,000    99.17    188    187

Farmers Exchange Capital

    05/18/07    1,420,000    101.68    1,442    1,303

Gaz Capital SA

    11/17/06    100,000    100.00    100    105

Gaz Capital SA

    11/17/06    2,100,000    103.13    2,166    2,229

Genworth Life Institutional Funding Trust

    04/29/08    510,000    99.94    510    510

Grupo Senda Autotransporte SA de CV

    03/07/08    1,000,000    94.76    948    940

GS Mortgage Securities Corp.

    03/19/07    16,557    99.71    17    16

Harborview NIM Corp.

    03/02/07    18,016    99.88    18    18

Korea Southern Power Co., Ltd.

    04/11/08    860,000    99.75    858    862

Lehman Brothers Floating Rate Commercial Mortgage Trust

    02/14/07    516,629    100.03    517    482

LG Electronics

    06/10/05    130,000    99.39    129    129

Mantis Reef, Ltd.

    10/28/03    200,000    100.00    200    199

MetLife Capital Trust X

    04/01/08    400,000    100.00    400    451

Midamerican Energy Holding Co.

    03/25/08    400,000    99.82    399    406

Nine Dragons Paper Holdings, Ltd.

    04/22/08    570,000    99.49    567    565

Nuveen Investments, Inc.

    02/15/08    273,000    87.20    238    263

Panama Canal Railway Co.

    10/29/07    500,000    100.00    500    457

SB Treasury Co. LLC

    06/01/06    650,000    106.80    694    655

Securitized Asset Backed Receivables LLc Trust

    02/14/08    4,018,794    97.42    3,915    3,953

Steel Dynamics, Inc.

    03/27/08    500,000    100.00    500    511

Stingray Pass-Through Trust

    11/27/06    1,000,000    93.91    939    249

Symetra Financial Corp.

    10/04/07    300,000    98.36    295    272

Systems 2001 AT LLC

    01/31/02    108,752    101.60    110    109

Texas Competitive Electric Holdings Co. LLC

    04/10/08    1,100,000    101.00    1,111    1,126

TNK-BP Finance SA

    10/03/07    1,650,000    98.65    1,628    1,633

VIP Finance Ireland, Ltd. For OJSC Vimpel Communications

    04/24/08    150,000    100.00    150    150

VIP Finance Ireland, Ltd. For OJSC Vimpel Communications

    04/24/08    1,885,000    100.32    1,891    1,887

VTB Capital SA

    04/30/08    100,000    99.93    100    98

Washington Mutual Preferred Funding LLC

    10/18/07    2,000,000    61.90    1,238    1,280

White Mountains Re Group, Ltd.

    01/25/08    3,130,000    92.00    2,879    2,345

World Financial Properties

    01/08/02    147,631    104.11    154    151

Xlliac Global Funding

    08/03/05    240,000    99.84    240    240

ZFS Finance USA Trust I

    04/03/08    1,025,000    85.01    871    914
                
               37,175
                

Illiquid securities and restricted securities may be priced by the Funds using fair value procedures approved by the Board of Trustees.

 

Notes to Financial Statements   143

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10.   Subsequent Event

At a meeting held on May 20, 2008, the Board of Trustees of Russell Investment Company, upon the recommendation of Russell Investment Management Company, approved a separate Agreement and Plan of Reorganization (each a “Plan”) with respect to the reorganization of each Acquired Fund (as defined below) into its corresponding Acquiring Fund (as defined below) (each a “Reorganization”).

 

Acquired Fund

          

Acquiring Fund

Diversified Equity Fund

    into      Equity I Fund

Quantitative Equity Fund

    into      Equity Q Fund

Special Growth Fund

    into      Equity II Fund

International Securities Fund

    into      International Fund

Multistrategy Bond Fund

    into      Fixed Income III Fund

Each Plan provides for the reorganization of an Acquired Fund with and into its corresponding Acquiring Fund in exchange for Shares issued by the Acquiring Fund. The value of Shares issued by the Acquiring Fund in connection with each Reorganization will be equal at the time of the Reorganization to the value of the Shares of the corresponding Acquired Fund. Pursuant to each Plan, shares issued to an Acquired Fund by the corresponding Acquiring Fund will be distributed to Shareholders of the Acquired Fund in connection with the liquidation of the Acquired Fund. As a result, each Shareholder of the Acquired Fund will cease to be a Shareholder of the Acquired Fund and will instead be the owner of that number of full and fractional Shares of the corresponding Acquiring Fund having an aggregate value equal at the time of the Reorganization to the aggregate value of the Shares of the Acquired Fund held by that Shareholder at the effective time of the Reorganization.

Timing of Reorganizations

The Reorganizations are expected to occur on the dates set forth below. On September 2, 2008, prior to the Reorganizations, each Acquiring Fund will change its name.

Diversified Equity Fund: The Reorganization of the Diversified Equity Fund into the Equity I Fund (the Equity I Fund will change its name to the Russell U.S. Core Equity Fund on September 2, 2008) is expected to be completed on or about September 8, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 5, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

Special Growth Fund: The Reorganization of the Special Growth Fund into the Equity II Fund (the Equity II Fund will change its name to the Russell U.S. Small & Mid Cap Fund on September 2, 2008) is expected to be completed on or about September 8, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 5, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

International Securities Fund: The Reorganization of the International Securities Fund into the International Fund (the International Fund will change its name to the Russell International Developed Markets Fund on September 2, 2008) is expected to be completed on or about September 8, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 5, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

Quantitative Equity Fund: The Reorganization of the Quantitative Equity Fund into the Equity Q Fund (the Equity Q Fund will change its name to the Russell U.S. Quantitative Equity Fund on September 2, 2008) is expected to be completed on or about September 22, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 19, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

Multistrategy Bond Fund: The Reorganization of the Multistrategy Bond Fund into the Fixed Income III Fund (the Fixed Income III Fund will change its name to the Russell Strategic Bond Fund on September 2, 2008) is expected to be completed on or about September 22, 2008 at 8:00 a.m. Eastern Time based on values as of the close of regular trading on the New York Stock Exchange on September 19, 2008, or at such earlier or subsequent date as RIC determines to be in the interest of the Funds.

 

144   Notes to Financial Statements

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Prior to the closing date of the Reorganizations, each Acquiring Fund will declare and pay to its shareholders of record one or more dividends and/or other distributions so that it will have distributed all of its investment company taxable income (computed without regard to any deduction for dividends paid), if any, for the current taxable year through the closing date. The record date for this special dividend for the Equity I, Equity II and International Funds will be August 26, 2008, based on Fund records as of the close of business on August 25, 2008. The record date for this special dividend for the Equity Q Fund (to be renamed Russell U.S. Quantitative Equity Fund) and Fixed Income III Fund (to be renamed Russell Strategic Bond Fund) will be September 9, 2008, based on Fund records as of the close of business on September 8, 2008.

You should consult your own tax adviser concerning the possible tax consequences of such dividends and/or other distributions.

 

Notes to Financial Statements   145

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Basis for Approval of Investment Advisory Contracts (Unaudited)

 

 

 

Approval   of Investment Advisory Agreement

The Board of Trustees, including all of the Independent Trustees, last considered and approved the continuation of the advisory agreement with RIMCo (the ‘‘RIMCo Agreement’’) and the portfolio management contract with each Money Manager of the Funds (collectively, the ‘‘portfolio management contracts’’) at a meeting held on April 22, 2008. During the course of a year, the Trustees receive a wide variety of materials regarding the investment performance of the Funds, sales and redemptions of the Funds’ shares, and the management of the Funds by RIMCo. In preparation for the annual review, the Independent Trustees, with the advice and assistance of their independent counsel, also requested and the Board considered (1) information and reports prepared by RIMCo relating to the services provided by RIMCo (and its affiliates) to the Funds; and (2) information (the ‘‘Third-Party Information’’) received from an independent, nationally recognized provider of investment company information comparing the performance of each of the Funds and their respective operating expenses over various periods of time with other peer funds (‘‘Comparable Funds’’) not managed by RIMCo, believed by the provider to be generally comparable in investment objectives and size to the Funds. The foregoing information requested by the Trustees or provided by RIMCo is collectively called the “Agreement Renewal Information.” The Trustees’ evaluations also reflected the knowledge and familiarity gained as Board members of the Funds and other funds in the same complex with respect to services provided by RIMCo, RIMCo’s affiliates and each Money Manager. The Trustees received a memorandum from counsel to the Funds discussing the legal standards for their consideration of the continuations of the RIMCo Agreement and the portfolio management contracts and the Independent Trustees separately received a memorandum regarding their responsibilities from their independent counsel.

On April 21, 2008, the Independent Trustees met to review the Agreement Renewal Information in a private session with their independent counsel at which no representatives of RIMCo or the Funds’ management were present. At the April 22 meeting of the Board of Trustees, the Board, including the Independent Trustees, reviewed the proposed continuance of the RIMCo Agreement and the portfolio management contracts with management, counsel to the Funds and independent counsel to the Independent Trustees. Presentations made by RIMCo to the Board as part of this review encompassed the Funds and all other RIMCo-managed funds for which the Board has supervisory responsibility. Following this review, but prior to voting, the Independent Trustees again met in a private session with their independent counsel to evaluate additional information and analyses received from RIMCo and management at the Board meeting. The discussion below reflects all of these reviews.

In evaluating the portfolio management contracts, the Board considered that the Funds, in employing a manager-of-managers method of investment, operate in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which, in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. RIMCo has engaged multiple unaffiliated Money Managers for all Funds.

The Board considered that RIMCo (rather than any Money Manager) is responsible under the RIMCo Agreement for determining, implementing and maintaining the investment program for each Fund. Assets of each Fund generally have been allocated among the multiple Money Managers selected by RIMCo, subject to Board approval, for that Fund. RIMCo manages directly a portion of certain Funds’ assets employing a “select holdings strategy,” as described below, and directly manages the investment of each Fund’s cash reserves. RIMCo also may manage directly any portion of each Fund’s assets that RIMCo determines not to allocate to the Money Managers and portions of a Fund during transitions between Money Managers. In all cases, assets are managed directly by RIMCo pursuant to authority provided by the RIMCo Agreement.

RIMCo is responsible for selecting, subject to Board approval, Money Managers for each Fund and for actively managing allocations and reallocations of assets among the Money Managers. RIMCo’s goal is to construct and manage diversified portfolios in a risk aware manner. Each Money Manager for a Fund in effect performs the function of an individual portfolio manager who is responsible for selecting portfolio securities for the portion of the Fund assigned to it by RIMCo (each, a ‘‘segment’’) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIMCo upon their selection of portfolio securities and the Money Manager’s specified role in a Fund. RIMCo is responsible for communicating performance expectations to each Money Manager; supervising compliance by each Money Manager with each Fund’s investment objective and policies; authorizing Money Managers to engage in certain investment strategies for a Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIMCo is responsible for recommending to the Board additions of new Money Managers or replacements of existing Money Managers at any time when, based on RIMCo’s research and ongoing review and analysis, such actions are appropriate. RIMCo may impose specific investment constraints from time to time for each Money Manager intended to capitalize on the strengths of that Money Manager or to coordinate the investment activities of

 

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Institutional Funds

Basis for Approval of Investment Advisory Contracts, continued (Unaudited)

 

 

 

Money Managers for the Fund in a complementary manner. Therefore, RIMCo’s selection of Money Managers is made not only on the basis of performance considerations but anticipated compatibility with other Money Managers in the same Fund. In light of the foregoing, the overall performance of each Fund over appropriate periods reflects, in great part, the performance of RIMCo in designing the Fund’s investment program, structuring the Fund, selecting an effective Money Manager with a particular investment style or sub-style for a segment that is complementary to the styles of the Money Managers of other Fund segments, and allocating assets among the Money Managers in a manner designed to achieve the objectives of the Fund.

The Board considered that the prospectuses for the Funds and other public disclosures emphasize to investors RIMCo’s role as the principal investment manager for each Fund, rather than the investment selection role of the Funds’ Money Managers, and describe the manner in which the Funds operate so that investors may take that information into account when deciding to purchase shares of any such Fund.

The Board also considered the demands and complexity of managing the Funds pursuant to the manager-of-managers structure, the special expertise of RIMCo with respect to the manager-of-managers structure of the Funds and the likelihood that, at the current expense ratio of each Fund, there would be no acceptable alternative investment managers to replace RIMCo on comparable terms given the need to continue the manager-of-managers strategy of such Fund selected by shareholders in purchasing their shares.

In addition to these general factors relating to the manager-of-managers structure of the Funds, the Trustees considered, with respect to each Fund, various specific factors in evaluating renewal of the RIMCo Agreement, including the following:

 

1. The nature, scope and quality of the services provided to the Fund by RIMCo;

 

2. The advisory fee paid by the Fund to RIMCo and the fact that it encompasses all investment advisory fees paid by the Fund, including the fees for any Money Managers of such Fund;

 

3. Information provided by RIMCo as to other fees and benefits received by RIMCo or its affiliates from the Fund, including any administrative, transfer agent, cash management and securities lending fees, soft dollar arrangements and commissions in connection with portfolio securities transactions;

 

4. Information provided by RIMCo as to expenses incurred by the Fund; and

 

5. Information provided by RIMCo as to the profits that RIMCo derives from its mutual fund operations generally and from the Fund.

As noted above, RIMCo, pursuant to the terms of the RIMCo Agreement, directly managed a portion—up to 10%—of the assets of each of the Equity I Fund, the Equity Q Fund and the International Fund (each a ‘‘Participating Fund’’) during the past year utilizing a select holdings strategy, the actual allocation being determined by each Participating Fund’s RIMCo portfolio manager. The select holdings strategy utilized by RIMCo in managing such assets for a Participating Fund is designed to increase the Participating Fund’s exposure to stocks that are viewed as attractive by multiple Money Managers of that Participating Fund. The Board reviewed the results of the select holdings strategy in respect of each Participating Fund since implementation, taking into account that the strategy has been utilized for a limited period of time. The Trustees considered that RIMCo is not required to pay investment advisory fees to a Money Manager with respect to assets for which the select holdings strategy is utilized and that the profits derived by RIMCo generally and from the Participating Fund consequently may increase incrementally. The Board, however, also considered RIMCo’s advice that it pays certain Money Managers additional fees for providing information and other services in connection with the select holdings strategy and incurs additional costs in carrying out the select holdings strategy, the limited amount of assets that are managed directly by RIMCo pursuant to the select holdings strategy, and the fact that the aggregate investment advisory fees paid by the Participating Fund are not increased as a result of the select holdings strategy.

In evaluating the reasonableness of the Funds’ investment advisory fees in light of Fund performance, the Board considered that RIMCo, in the Agreement Renewal Information and at past meetings, noted differences between the investment strategies of certain Funds and their respective Comparable Funds in pursuing their investment objectives, including Fund strategies which seek to achieve a lower tracking error (i.e., the difference, whether positive or negative, between the return of a fund and its benchmark) and resulting lower return volatility than Comparable Funds. According to RIMCo, these strategies may be expected to result, and for certain Funds during the periods covered by the Third-Party Information did result, in lower performance than that of some of their respective Comparable Funds. According to RIMCo, the strategies pursued by the Funds, among other things, are intended to result in less volatile, more moderate returns relative to each Fund’s performance benchmark rather than more volatile, more extreme returns that its Comparable Funds may experience over time.

 

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Basis for Approval of Investment Advisory Contracts, continued (Unaudited)

 

 

 

The Board considered for each Fund whether economies of scale have been realized and whether the fees for such Fund appropriately reflect or should be revised to reflect any such economies. The Board determined that, after giving effect to any applicable fee or expense caps, waivers or reimbursements, the investment advisory fees for each Fund appropriately reflect any economies of scale realized by that Fund, based upon such factors as the variability of Money Manager investment advisory fees and other factors associated with the manager-of-managers structure employed by the Funds. The Trustees considered that fees payable to RIMCo by institutional clients with investment objectives similar to those of the Funds and other RIC funds under the Board’s supervision are lower, and may, in some cases, be substantially lower than the rates paid by RIC funds supervised by the Board, including the Funds. The Trustees considered the differences in the scope of services it provides to institutional clients and the Funds. In the Agreement Renewal Information, RIMCo noted, among other things, that institutional clients have fewer administrative needs than the Funds. RIMCo noted that since the Funds must constantly issue and redeem their shares, they are more difficult to manage than institutional accounts, where assets are relatively stable. Accordingly, the Trustees did not regard these fee differences as relevant to their deliberations.

On the basis of the Agreement Renewal Information, and other information previously received by the Board from RIMCo during the course of the current year or prior years or presented at the April 22 Board meeting by RIMCo, the Board, in respect of each Fund, found, after giving effect to any applicable waivers and/or reimbursements (including the additional waivers and reimbursements described above), (1) the advisory fee charged by RIMCo to be reasonable in light of the nature, scope and quality of the services provided to the Funds; (2) the relative expense ratio of the Fund was comparable to those of its Comparable Funds; (3) RIMCo’s methodology of allocating expenses of operating funds in the complex was reasonable; and (4) RIMCo’s profitability with respect to the Fund was not excessive in light of the nature, scope and quality of the services provided by RIMCo.

The Board further concluded that, under the circumstances, the performance of each of the Funds supported continuation of the RIMCo Agreement except that the Board concluded that, as discussed below, the performance of the Equity Q Fund did not support a determination against continuation of the RIMCo Agreement in respect of that Fund. The Board, in assessing the Funds’ performance, focused upon each Fund’s performance for the 1-, 3- and 5- year periods as most relevant.

With respect to the Equity Q Fund, the Trustees noted that the Third-Party Information showed that the Fund’s performance relative to its Comparable Funds was ranked in the fourth quintile for each of the 1-, 3-, 5- and 10-year periods. RIMCo noted that the Comparable Funds for the Equity Q Fund have portfolios with significantly smaller average capitalizations than the Equity Q Fund has had. In addition, RIMCo expressed its belief that “transitional” markets pose difficult challenges to quantitative funds, such as the Equity Q Fund, as such funds take time to incorporate new market information into their investment advisers’ quantitative models. RIMCo further noted that the Comparable Funds are a mix of core, growth and value funds and are not focused on portfolios that are quantitatively managed and generally do not employ long/short strategies as the Equity Q Fund does. According to RIMCo, the underperformance of the Equity Q Fund has been more a reflection of the market than of the capabilities of the Fund’s Money Managers. In evaluating performance, the Board considered each Fund’s absolute performance and its performance relative to appropriate benchmarks and indices and its Comparable Funds. In assessing performance, the Board also considered RIMCo’s investment strategy of managing the Funds in a risk aware manner.

After considering the foregoing and other relevant factors, the Board concluded that continuation of the RIMCo Agreement on its current terms and conditions would be in the best interests of the Funds and their respective shareholders and voted to approve the continuation of the Agreement.

At the April 22 Board meeting, with respect to the evaluation of the terms of portfolio management contracts with Money Managers, the Board received and considered information from RIMCo reporting, among other things, for each Money Manager, the Money Manager’s performance over various periods; RIMCo’s assessment of the performance of each Money Manager; any significant business relationships between the Money Manager and RIMCo or Russell Financial Services, Inc., the Funds’ underwriter; and RIMCo’s recommendation to retain the Money Manager at the current fee rate, to retain the Money Manager at a reduced fee rate or to terminate the Money Manager. RIMCo recommended that each Money Manager be retained at its current fee rate. RIMCo has advised the Board that it does not regard Money Manager profitability as relevant to its evaluation of the portfolio management contracts with Money Managers because the willingness of Money Managers to serve in such capacity depends upon arm’s-length negotiations with RIMCo; RIMCo is aware of the fees charged by Money Managers to other clients; and RIMCo believes that the fees agreed upon with Money Managers are reasonable in light of the anticipated quality of investment advisory services to be rendered. The Board accepted RIMCo’s explanation in light of the Board’s findings as to the reasonableness of the aggregate investment advisory fees paid by each Fund and the fact that each Money Manager’s fee is paid by RIMCo.

 

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Basis for Approval of Investment Advisory Contracts, continued (Unaudited)

 

 

 

Based substantially upon RIMCo’s recommendations, together with the information received from RIMCo in support of its recommendations at the April 22 meeting, the Board concluded that the fees paid to the Money Managers of each Fund are reasonable in light of the quality of the investment advisory services provided and that continuation of the portfolio management contract with each Money Manager of each Fund would be in the best interests of the Fund and its shareholders.

In their deliberations, the Trustees did not identify any particular information as to the RIMCo Agreement or, other than RIMCo’s recommendation, the portfolio management contract with any Money Manager that was all-important or controlling and each Trustee attributed different weights to the various factors considered. The Trustees evaluated all information available to them on a Fund-by-Fund basis and their determinations were made in respect of each Fund.

 

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Shareholder Requests for Additional Information — April 30, 2008 (Unaudited)

 

 

 

A complete unaudited schedule of investments is made available generally no later than 60 days after the end of the first and third quarters of each fiscal year. These reports are available (i) free of charge, upon request, by calling the Fund at (800) 787-7354, (ii) at www.russell.com, (iii) on the Securities and Exchange Commission’s website at www.sec.gov, and (iv) at the Securities and Exchange Commission’s public reference room.

The Board has delegated to RIMCo, as RIC’s investment adviser, the primary responsibility for monitoring, evaluating and voting proxies solicited by or with respect to issuers of securities in which assets of the Funds may be invested. RIMCo has established a proxy voting committee (“Committee”) and has adopted written proxy voting policies and procedures (“P&P”) and proxy voting guidelines (“Guidelines”). The Funds maintain a Portfolio Holdings Disclosure Policy that governs the timing and circumstances of disclosure to shareholders and third parties of information regarding the portfolio investments held by the Funds. A description of the P&P, Guidelines, Portfolio Holdings Disclosure Policy and additional information about Fund Trustees are contained in the Funds’ Statement of Additional Information (“SAI”). The SAI is available (i) free of charge, upon request, by calling the Funds at (800) 787-7354, (ii) at www.russell.com, and (iii) on the Securities and Exchange Commission’s website at www.sec.gov.

To reduce expenses, we may mail only one copy of the Funds’ prospectus and each annual and semi-annual report to those addresses shared by two or more accounts. If you wish to receive individual copies of these documents, please contact your financial institution.

Some Financial Intermediaries may offer electronic delivery of the Funds’ prospectus and annual and semiannual reports. Please contact your Financial Intermediary for further details.

 

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Disclosure of Information about Fund Directors — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INTERESTED TRUSTEES

            

#Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

  

President and Chief Executive Officer since 2004

 

Trustee since 2007

  

Appointed until successor is duly elected and qualified

 

Until successor is chosen and qualified by Trustees

  

•  President and CEO RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Fund Services Company (“RFSC”)

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director, of Individual Investor Services, FRC

•  2000 to 2004 Managing Director, Sales and Client Service, RIMCo

   53  

None

INDEPENDENT TRUSTEES

          

Thaddas L. Alston,

Born April 7, 1945

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2006   Appointed until successor is duly elected and qualified  

•  Senior Vice President, Larco Investments, Ltd. (real estate firm)

   53   None
             

Kristianne Blake,

Born January 22, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2000

 

Chairman since 2005

  

Appointed until successor is duly elected and qualified

 

Annual

  

•  Director and Chairman of the Audit Committee, Avista Corp.

•  Trustee and Chairman of the Operations Committee, Principal Funds and Principal Variable Contracts Funds

•  Regent, University of Washington

•  President, Kristianne Gates Blake, P.S. (accounting services)

•  February 2002 to June 2005, Chairman of the Audit Committee, RIC and RIF

•  Trustee and Chairman of the Operations and Distribution Committee, WM Group of Funds, 1999–2006

   53  

•  Director, Avista Corp; (electric utilities)

•  Trustee, Principal Funds (investment company);

•  Trustee, Principal Variable Contracts Funds (investment company)

             

Daniel P. Connealy,

Born June 6, 1946

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee since 2003

 

Chairman of Audit Committee since 2005

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  June 2004 to present, Senior Vice President and Chief Financial Officer, Waddell & Reed Financial, Inc.

•  2001–2003, Vice President and Chief Financial Officer, Janus Capital Group Inc.

   53   None

 

# Mr. Stark is also an officer and/or director of one or more affiliates of RIC and RIF and is therefore an Interested Trustee.

 

Disclosure of Information about Fund Directors   151

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Russell Investment Company

Institutional Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office*		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

INDEPENDENT TRUSTEES (continued)

          

Jonathan Fine,

Born July 8, 1954

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2004

   Appointed until successor is duly elected and qualified  

•  President and Chief Executive Officer, United Way of King County, WA

   53   None
             

Raymond P. Tennison, Jr.

Born December 21, 1955

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2000

 

Chairman of the Nominating and Governance Committee since 2007

  

Appointed until successor is duly elected and qualified.

 

Appointed until successor is duly elected and qualified

  

•  President, Simpson Investment Company and several additional subsidiary companies, including Simpson Timber Company, Simpson Paper Company and Simpson Tacoma Kraft Company

   53   None
             

Jack R. Thompson,

Born March 21, 1949

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee since 2005   Appointed until successor is duly elected and qualified  

•  September 2003 to present, Independent Board Chair and Chairman of the Audit Committee, Sparx Asia Funds

•  September 2007 to present, Director, LifeVantage Corporation (health products company)

•  May 1999 to May 2003, President, Chief Executive Officer and Director, Berger Financial Group, LLC

•  May 1999 to May 2003, President and Trustee, Berger Funds

   53  

•  Director, Sparx Asia Funds (investment company)

•  Director, LifeVantage Corporation (health products company)

             

Julie W. Weston,

Born October 2, 1943

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee

since 2002

 

Chairperson of the Investment Committee since 2006

  

Appointed until successor is duly elected and qualified

 

Appointed until successor is duly elected and qualified

  

•  Retired

   53   None

 

* Each Trustee is subject to mandatory retirement at age 72.

 

152   Disclosure of Information about Fund Directors

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Institutional Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years		   No. of
Portfolios
in Russell
Fund
Complex
Overseen
by Trustee		   Other
Directorships Held
by Trustee

TRUSTEES EMERITUS

            

*George F. Russell, Jr.,

Born July 3, 1932

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus and Chairman Emeritus since 1999   Until resignation or removal  

•  Director Emeritus, Frank Russell Company (investment consultant to institutional investors (“FRC”)); and RIMCo

•  Chairman Emeritus, RIC and RIF; Russell Implementation Services Inc. (broker-dealer and investment adviser (“RIS”)); Russell 20-20 Association (non-profit corporation); and Russell Trust Company (non-depository trust company (“RTC”))

•  Chairman, Sunshine Management Services, LLC (investment adviser)

  53   None
             

Paul E. Anderson,

Born October 15, 1931

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2007   Five year term  

•  President, Anderson Management Group LLC (private investments consulting)

•  February 2002 to June 2005, Lead Trustee, RIC and RIF

•  Trustee of RIC and RIF until 2006

•  Chairman of the Nominating and Governance Committee 2006

   53   None
             

William E. Baxter,

Born June 8, 1925

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2004   Five year term  

•  Retired since 1986

•  Trustee of RIC and RIF until 2004

   53   None
             

Lee C. Gingrich,

Born October 6, 1930

 

909 A Street

Tacoma, Washington

98402-1616

   Trustee Emeritus since 2006   Five year term  

•  Retired since 1995

•  Trustee of RIC and RIF until 2005

•  Chairman of the Nominating and Governance Committee 2001-2005

   53   None
             

Eleanor W. Palmer,

Born May 5, 1926

 

909 A Street

Tacoma, Washington

98402-1616

  

Trustee Emeritus

since 2004

   Five year term  

•  Retired since 1981

•  Trustee of RIC and RIF until 2004

   53   None

 

* Mr. Russell is also a director emeritus of one or more affiliates of RIC and RIF.

 

Disclosure of Information about Fund Directors   153

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Russell Investment Company

Institutional Funds

Disclosure of Information about Fund Directors, continued — April 30, 2008 (Unaudited)

 

 

 

Name,
Age,
Address		   Position(s) Held
with Fund and
Length of
Time Served		   Term
of
Office		   Principal Occupation(s)
During the
Past 5 Years

OFFICERS

        

Cheryl Wichers

Born December 16, 1966

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Compliance Officer since 2005   Until removed by Independent Trustees  

•  Chief Compliance Officer, RIC

•  Chief Compliance Officer, RIF

•  Chief Compliance Officer, RIMCo

•  Chief Compliance Officer, RFSC

•  April 2002–May 2005, Manager, Global Regulatory Policy

         

Greg J. Stark,

Born May 3, 1968

 

909 A Street

Tacoma, Washington

98402-1616

   President and Chief Executive Officer since 2004   Until successor is chosen and qualified by Trustees  

•  President and CEO, RIC and RIF

•  Chairman of the Board, President and CEO, RIMCo

•  Chairman of the Board, President and CEO, Russell Financial Services, Inc.

•  Chairman of the Board, President and CEO, RFSC

•  Chairman of the Board and President, Russell Insurance Agency, Inc. (insurance agency (“RIA”))

•  Until 2004, Managing Director of Individual Investor Services, FRC

•  2000 to 2004, Managing Director, Sales and Client Service, RIMCo

         

Mark E. Swanson,

Born November 26, 1963

 

909 A Street

Tacoma, Washington 98402-1616

   Treasurer and Chief Accounting Officer since 1998   Until successor is chosen and qualified by Trustees  

•  Treasurer, Chief Accounting Officer and CFO, RIC and RIF

•  Director, Funds Administration, RIMCo, RFSC, RTC and Russell Financial Services, Inc.

•  Treasurer and Principal Accounting Officer, SSgA Funds

         

Peter Gunning,

Born February 22, 1967

 

909 A Street

Tacoma, Washington

98402-1616

   Chief Investment Officer since 2008   Until removed by Trustees  

•  Chief Investment Officer, RIC, RIF

•  1996 to 2008 Chief Investment Officer, Russell, Asia Pacific

         

Gregory J. Lyons,

Born August 24, 1960

 

909 A Street

Tacoma, Washington

98402-1616

   Secretary since 2007   Until successor is chosen and qualified by Trustees  

•  Associate General Counsel and Assistant Secretary FRC and RIA

•  Director and Secretary, RIMCo, RFSC and Russell Financial Services, Inc.

•  Secretary and Chief Legal Counsel, RIC and RIF

 

154   Disclosure of Information about Fund Directors

Table of Contents

Institutional Funds

Russell Investment Company

909 A Street, Tacoma, Washington 98402

(800) 787-7354

 

 

 

Interested Trustees

Greg J. Stark

Independent Trustees

Thaddas L. Alston

Kristianne Blake

Daniel P. Connealy

Jonathan Fine

Raymond P. Tennison, Jr.

Jack R. Thompson

Julie W. Weston

Trustees Emeritus

George F. Russell, Jr.

Paul E. Anderson

William E. Baxter

Lee C. Gingrich

Eleanor W. Palmer

Officers

Greg J. Stark, President and Chief Executive Officer

Cheryl Wichers, Chief Compliance Officer

Peter Gunning, Chief Investment Officer

Mark E. Swanson, Treasurer and Chief Accounting Officer

Gregory J. Lyons, Secretary

Adviser

Russell Investment Management Company

909 A Street

Tacoma, WA 98402

Administrator and Transfer and Dividend Disbursing Agent

Russell Fund Services Company

909 A Street

Tacoma, WA 98402

Custodian

State Street Bank and Trust Company

Josiah Quincy Building

200 Newport Avenue

North Quincy, MA 02171

Office of Shareholder Inquiries

909 A Street

Tacoma, WA 98402

(800) 787-7354

Legal Counsel

Dechert LLP

200 Clarendon Street, 27th Floor

Boston, MA 02116-5021

Distributor

Russell Financial Services, Inc.

909 A Street

Tacoma, WA 98402

Money Managers as of April 30, 2008

Equity I Fund

AllianceBernstein L.P., New York, NY

Arnhold and S. Bleichroeder Advisers, LLC, New York, NY

Columbus Circle Investors, Stamford, CT

Institutional Capital LLC, Chicago, IL

Marsico Capital Management, LLC, Denver, CO

MFS Institutional Advisors, Inc., Boston, MA

Montag & Caldwell, Inc., Atlanta, GA

Schneider Capital Management Corporation, Wayne, PA

Suffolk Capital Management, LLC, New York, NY

Turner Investment Partners, Inc., Berwyn, PA

Equity II Fund

ClariVest Asset Management LLC, San Diego, CA

Delphi Management, Inc., Boston, MA

DePrince, Race & Zollo, Inc., Winter Park, FL

Gould Investment Partners LLC, Berwyn, PA

Jacobs Levy Equity Management, Inc., Florham Park, NJ

PanAgora Asset Management, Inc., Boston, MA

Ranger Investment Management, L.P., Dallas, TX

Signia Capital Management, LLC, Spokane, WA

Tygh Capital Management, Inc., Portland, OR

Equity Q Fund

Aronson+Johnson+Ortiz, LP, Philadelphia, PA

Franklin Portfolio Associates, LLC, Boston, MA

Goldman Sachs Asset Management, L.P., New York, NY

Jacobs Levy Equity Management, Inc., Florham Park, NJ

International Fund

AllianceBernstein L.P., New York, NY

Altrinsic Global Advisors, LLC, Stamford, CT

AQR Capital Management, LLC, Greenwich, CT

Axiom International Investors LLC, Greenwich, CT

Marsico Capital Management, LLC, Denver, CO

MFS Institutional Advisors, Inc., Boston, MA

Mondrian Investment Partners Limited, London, United Kingdom

UBS Global Asset Management (Americas) Inc., Chicago, IL

Wellington Management Company, LLP, Boston, MA

Fixed Income III Fund

Drake Capital Management, LLC, New York, NY

Goldman Sachs Asset Management, L.P., New York, NY

Hyperion Brookfield Asset Management, Inc., New York, NY

Logan Circle Partners, L.P., Philadelphia, PA

Metropolitan West Asset Management, LLC, Los Angeles, CA

Pacific Investment Management Company LLC, Newport Beach, CA


 

This report is prepared from the books and records of the Funds and is submitted for the general information of shareholders and is not authorized for distribution to prospective investors unless accompanied or preceded by an effective Prospectus. Nothing herein contained is to be considered an offer of sale or a solicitation of an offer to buy shares of Russell Investment Company. Such offering is made only by Prospectus, which includes details as to offering price and other material information.

 

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Table of Contents

 

Russell Investment Company    909 A Street      800-787-7354
   Tacoma, Washington 98402      Fax: 253-591-3495
        www.russell.com

 

LOGO

LOGO

LOGO

36-08-068

Table of Contents

Item 2. Code of Ethics. [Annual Report Only]

Item 3. Audit Committee Financial Expert. [Annual Report Only]

Item 4. Principal Accountant Fees and Services. [Annual Report Only]

Item 5. Audit Committee of Listed Registrants. [Not Applicable]

Item 6. [Schedules of Investments are included as part of the Report to Stockholders filed under Item 1 of this form]

Items 7-9. [Not Applicable]

Item 10. Submission of Matters to a Vote of Security Holders

There have been no changes to the procedures by which shareholders may recommend nominees to the Registrant’s Board of Trustees that would require disclosure herein.

Item 11. Controls and Procedures

(a) Registrant’s principal executive officer and principal financial officer have concluded that Registrant’s disclosure controls and procedures (as defined in Rule 30a-2(c) under the Investment Company Act of 1940 (the “Act”)) are effective, based on their evaluation of these controls and procedures as of a date within 90 days of the date this report is filed with the Securities and Exchange Commission.

(b) There were no significant changes in Registrant’s internal control over financial reporting that occurred during the period covered by this report that has materially affected or is likely to materially affect Registrant’s internal control over financial reporting.

Item 12. Exhibit List

(a) Certification for principal executive officer of Registrant as required by Rule 30a-2(a) under the Act and certification for principal financial officer of Registrant as required by Rule 30a-2(a) under the Act.

 

Table of Contents

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Russell Investment Company      
By:   /s/ Greg J. Stark
  Greg J. Stark
  President, Principal Executive Officer and Chief Executive Officer
       
Date: June 30, 2008      

Pursuant to the requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940, this report has been signed below by the following persons on behalf of the Registrant and in the capacities and on the dates indicated.

 

By:   /s/ Greg J. Stark
  Greg J. Stark
  President, Principal Executive Officer and Chief Executive Officer
       
Date: June 30, 2008      

 

By:   /s/ Mark E. Swanson
  Mark E. Swanson
  Principal Financial Officer, Principal Accounting Officer and Treasurer
       
Date: June 30, 2008