Russell Indexes to Add 48 IPOs on Sept. 30; Change in Methodology Enhances Market Representation of Index.

TACOMA, Wash. -- Forty-eight recent initial public offerings (IPOs) will appear in the broad-market Russell 3000(R) Index after the close of the U.S. equity markets on Sept. 30, marking a change in Russell's transparent index methodology. Five of these IPOs, including Google and Freescale Semiconductor Group, also will jump directly to the large-cap Russell 1000(R) Index. The others, including CB Richard Ellis and salesforce.com, will join the small-cap Russell 2000(R) Index.

The IPOs set for addition to Russell indexes include 17 firms in the Financial Services sector, 11 in the Technology sector and eight in the Consumer Discretionary sector. Three of the consumer discretionary firms will move directly to the Russell 1000.

The complete list of this quarter's IPO additions is posted on www.russell.com. Membership in Russell indexes is determined solely by market capitalization of the companies.

Russell announced in August that its family of U.S. indexes will add IPOs on a quarterly basis in order to enhance how well each index reflects its segment of the U.S. equity market.

"The quarterly addition of IPOs systematically recognizes significant additions to the market earlier than our annual reconstitution processes, which completely recalibrates Russell indexes to market reality," said Lori Richards, senior product manager, Russell indexes. "Our client advisory board recommended this change, which now spreads out reconstitution-related transactions over the course of the year and constrains potential turnover as IPOs are added only if they have kept pace with the market."

IPOs previously were added only as part of Russell's annual index reconstitution process, which meant some IPOs could wait nearly a year for inclusion. Existing index members that grow or shrink in market cap during the year will continue to remain in the respective indexes until the annual reconstitution.

Russell adds companies to its indexes based on total market capitalization. The firm also has always weighted index members by their float-adjusted market cap and explicitly excludes "locked-up" shares from IPO weights. For example, this quarter's 48 IPOs have an average of 61% float-adjusted shares due to lock-up agreements and/or ownership stakes that prevent these shares from being available to the broader market.

"Such adjustments are particularly important for IPOs or other tightly held securities," said Richards. "This methodology allows the stock's weighting in the respective index to reflect shares actually available to investors, and it in turn avoids price pressure on the newly added stock."

The quarterly IPO additions process works as follows:

--On the quarterly "market snapshot" date, which was Aug. 31 for the third quarter, Russell will check all recent IPOs to see how the stock's market cap ranks on that date relative to the market-adjusted market cap breaks established at the latest reconstitution.

--A list of IPOs that qualify for inclusion in Russell indexes would be announced publicly on the 15th of the following month, which is Sept. 15 this quarter.

--Any IPO which has a market cap that justifies inclusion in an index, and which meets Russell's other membership rules, would be added to the appropriate indexes after the U.S. equity markets close on the last day of the quarter, which is Sept. 30 this quarter.

To be eligible for inclusion, the IPO date would need to fall within the three-month period prior to the "rank" date. As IPOs are added to Russell indexes each quarter, Russell will not delete existing index members to make room for them, but will continue to reconstitute the indexes fully each year at the end of the second quarter.

As a result of the annual reconstitution process in 2004, Russell added 100 IPOs to its family of U.S. equity indexes, while only 28 IPOs were added in 2003. The record was set in 2000 when 320 IPOs moved into Russell indexes.

About Russell

Russell Investment Group, a global leader in multi-manager investment services, provides investment products and services in more than 35 countries. Russell manages more than $110 billion in assets and advises clients worldwide representing more than $1.8 trillion. Founded in 1936, Russell is a subsidiary of Northwestern Mutual and is headquartered in Tacoma, Wash., with additional offices in New York, Toronto, London, Paris, Singapore, Sydney, Auckland and Tokyo.

Russell Investment Group is a registered trade name of Frank Russell Company, a Washington, USA corporation, which operates through subsidiaries worldwide. Frank Russell Company is a subsidiary of The Northwestern Mutual Life Insurance Company.