Russell Emerging Markets Fund Class A (RIM0038AU) Report & Performance

Contributing to the Fund’s underperformance was poor stock selection in China; notably underweights to consumer-related names like Meituan, Alibaba Group and car maker NIO. Stock selection in South Korea also weighed on returns. This included overweights to Kia Corp. and Samsung Electronics; both of which significantly underperformed the broader market in July. Performance was further impacted by stock selection in Brazil, including an underweight to iron ore major Vale S.A. In contrast, the Fund benefited from our long-held underweights to Saudi Arabia, India and Taiwan. Stock selection in Hong Kong also added value in July. This included overweights to Galaxy Entertainment Group, Orient Overseas International and Geely Automobile. Stock selection in Mexico added further value; notably an overweight to bank Grupo Financiero Banorte, S.A.B. de C.V., which climbed more than 15% for the month. In terms of strategic factor positioning, our preference for small cap, value and momentum stocks contributed positively to performance over the period.

Moving forward, the Fund retains an overweight to China. Elsewhere, the Fund is overweight Brazil and Vietnam and underweight India, Taiwan and Saudi Arabia; countries where our managers do not find as many attractive opportunities. The Fund also maintains modest tilts toward value and momentum stocks, which is in line with our preferred strategic positioning, as well as biases toward small caps and growth names.

The Russell Investments Emerging Markets Fund underperformed the benchmark on a gross of fees and tax basis in the June quarter.

Contributing to the Fund’s underperformance was an overweight exposure and poor stock selection in China, including overweights to China Tourism Group Duty Free Corp. and LONGi Green Energy Technology Co. An underweight to India also weighed on returns; notably underweights to Housing Development Finance, Bajaj Finance and telco Bharti Airtel. Performance was further impacted by an underweight to Taiwan, including an underweight to Taiwan Semiconductor Manufacturing Co. Other notable positions to impact returns were overweights to South African miner AngloGold Ashanti and Hong Kong’s Galaxy Entertainment Group. In contrast, the Fund benefited from an overweight exposure and strong stock selection in Brazil, including an overweight to Petróleo Brasileiro S.A. and an underweight to iron ore major Vale S.A. Stock selection in South Korea also added value; notably an overweight to chip maker SK hynix. In terms of strategic factor positioning, our preferences for value and momentum stocks added further value over the period.

Moving forward, the Fund maintains modest tilts toward value and momentum, which is in line with our preferred strategic positioning. The Fund also holds a bias toward small cap stocks. Elsewhere, the Fund is overweight China and Brazil and holds a modest exbenchmark exposure to Vietnam. We also remain underweight India, Taiwan and Saudi Arabia; countries where our managers do not find as many attractive opportunities.

Contributing to the Fund’s underperformance was an underweight exposure and poor stock selection in India. This included underweights to Infosys and Hindustan Unilever; both of which recorded strong gains for the month. An overweight to the poor-performing Hong Kong market also weighed on returns; notably an ex-benchmark holding in hotel and casino operator Galaxy Entertainment Group. Performance was further impacted by poor stock selection in China, including overweights to Zijin Mining Group Co. and Aluminum Corporation of China. In contrast, the Fund benefited from an overweight exposure and positive stock selection in Brazil; notably an underweight to iron ore major Vale S.A., which fell in line with lower iron ore prices. Stock selection in South Africa also added value in May, including underweights to publishing company Naspers and global gold miner AngloGold Ashanti. Both stocks posted sharp declines for the month. In terms of strategic factor positioning, our preference for small caps and growth names contributed positively to performance over the period; though this was partly offset by our value bias.

Moving forward, the Fund retains an overweight to China. Elsewhere, the Fund is overweight Brazil and Mexico and underweight Saudi Arabia, India and Taiwan; countries where our managers do not find as many attractive opportunities. The Fund also maintains modest tilts toward value and momentum stocks, which is in line with our preferred strategic positioning, as well as biases toward small caps and growth names.

Contributing to the Fund’s underperformance was an overweight exposure and poor stock selection in China, including overweights to interactive media company Baidu and industrials stocks Weichai Power Co. and Shenzhen Inovance Technology Co.

All three stocks posted sharp declines for the month. Stock selection in Taiwan also weighed on returns in April; notably our holdings in semiconductor names Taiwan Semiconductor Manufacturing Co. and MediaTek. Performance was further impacted by underweights to India and Saudi Arabia; both of which recorded good gains over the period. In contrast, the Fund benefited from an overweight exposure and positive stock selection in Brazil; notably an underweight to iron ore major Vale S.A., which fell in line with lower iron ore prices. Stock selection amongst South African miners also added value in April, including an overweight to global gold mining company AngloGold Ashanti.

In terms of strategic factor positioning, our preference for value stocks and small caps contributed positively to performance over the period; though this was offset by poor stock selection amongst both factors. Moving forward, the Fund retains an overweight to China. Elsewhere, the Fund is overweight Brazil and Mexico and underweight Saudi Arabia, India and Taiwan; countries where our managers do not find as many attractive opportunities.

The Fund also maintains modest tilts toward value and momentum, which is in line with our preferred strategic positioning, and a bias toward small caps.

The Russell Investments Emerging Markets Fund outperformed the benchmark on a gross of fees and tax basis in the March quarter. Contributing to the Fund’s outperformance was an underweight exposure and strong stock selection in India. This included nil holdings in Adani Total Gas and Adani Enterprises. Stock selection in Taiwan also added value over the period; notably our holdings in strong-performing technology names like United Microelectronics Corp. and Taiwan Semiconductor Manufacturing Co. Partly offsetting these positions was our broader underweight to the country.

Other notable positions to add value were overweights to South Korean car maker Kia Corp. and Argentine e-commerce platform MercadoLibre. In contrast, an overweight exposure and poor stock selection in Brazil detracted from overall performance. This included overweights to electric utility Eletrobras S.A. and healthcare provider Hapvida Participacoes e Investimentos S.A. Stock selection in China also weighed on returns; notably underweights to communication services names like Tencent Holdings and Baidu.

During the quarter, we exited our risk positioning strategy targeting large Chinese ecommerce platforms due to some of our managers moving into this space. Moving forward, the Fund maintains modest tilts toward value and momentum, which is in line with our preferred strategic positioning. The Fund also holds a bias toward small cap stocks.

Elsewhere, the Fund is overweight China, Brazil and Mexico and underweight India, Taiwan and Saudi Arabia; countries where our managers do not find as many attractive opportunities.

Contributing to the Fund’s underperformance was an overweight exposure and poor stock selection in Brazil. This included overweights to electric utility Centrais Elétricas Brasileiras S.A. and securities and commodities exchange operator B3 S.A.; both of which posted steep declines for the month. An ex-benchmark exposure to Vietnam and an underweight to Taiwan also weighed on returns; the latter including a material underweight to Taiwan Semiconductor Manufacturing Co. In terms of strategic factor positioning, our preference for value detracted from returns while our momentum tilt and small cap bias had no material impact on overall performance. In contrast, the Fund benefited from positive stock selection in India, including underweights to poorperforming names like Adani Enterprises and Adani Total Gas. Stock selection in China also added value; notably underweights to large cap growth names like Meituan and Tencent Holdings. [Note: We recently removed value manager AllianceBernstein from the Fund’s manager line up and temporarily replaced them with a Russell Investments systematic positioning strategy that targets large cap value.] Moving forward, the Fund retains an overweight to China. Elsewhere, the Fund remains overweight Brazil and underweight Saudi Arabia, India and Taiwan; countries where our managers do not find as many attractive opportunities. The Fund also maintains modest tilts toward value and momentum, which is in line with our preferred strategic positioning, and a bias toward small caps.