Applying Multi Manager to Islamic InvestmentsApplying Multi Manager to Islamic Investments

Shamindra Perera CFA, Managing Director, Russell InvestmentsShamindra Perera CFA, Managing Director, Russell Investments 28 November 200728 November 2007

2

Investment Strategy & Advice: Advising approximately $2.4 trillion*, with over 450 clients globally

Indexes: Benchmark for $4 trillion in assets

Funds: $231 billion in assets under management globally.

Manager Selection: An average of 17 in-depth meetings a day in 2006

Multi-Manager Funds: Over 25 years experience representing approx. 21% market share**

Implementation Services: Global client base with $400 billion in assets***

Russell I nvestmentsExperts I n The People That Manage Money

Tacoma 1936

New York 1969

London 1979

Toronto 1984

Tokyo 1986

Sydney 1986

Auckland 1991

Paris 1994

Amsterdam 1996

Singapore 1999

Johannesburg 2000

Geneva 2001

INDUSTRY RECOGNITION

Manager-of-Manager of the Year 2007

PlanSponsorTM Survey 2007

Multi-Manager of the Year 2006

Alternatives Manager of the Year 2006

Multi-Manager of the Year 2006

Transition Management Survey 2007

As at 30 September 2007 *As at 31 December 2006 * *Source: Cerulli Associates Quantitative Update – Global Multi-Manager Products 2006 * **Relates to Overlay Services clients as at 31 Dec 2006. All other information sourced from Russell Investments

2

3

Why Multi-Manager?No-one is Best at Everything

Source: Athens 2004 Olympic Games

0

5

10

15

20

25

30

35

40

45

% O

utp

erfo

rman

ce b

y In

div

idu

al E

ven

t C

ham

pio

n

Olympic Champion 8.59m9.85s 21.16m 2.36m 44.00s 12.91s 69.89m 5.95m 86.50m 3:34.18

Decathlon Champion 7.84m10.85s 16.36m 2.12m 48.36s 14.05s 48.72m 70.52m 4:40.01

Event 100m Long Jump

Shot Put

High Jump

400m 110m Hurdles

Discus Pole Vault

Javelin 1500m

5.00m

4

Applying Russell Multi-Manager to Shariah Compliant Investing

Guiding principles

Hire managers from the entire universe, not only Shariah compliant managers

Managers focus on managing assets, not Shariah compliance

Apply a single high standard of Shariah investment across all managers

In practice

Managers researched and hired by Russell, Global Leader in Multi Manager Investing. Managers replaced when necessary.

Russell’s Shariah Board formulate and approve Shariah guidelines

Russell provides managers with a list of investable stocks, not Shariah guidelines

5

Shariah Compliance

Board Members Sheikh Dr. Abdullah Al Mutlaq (Saudi Arabia) Chairman

Sheikh Dr. Mohamed Ali Elgari (Saudi Arabia)

Dr. Mohammed Daud Bakar (Malaysia)

Sheikh Esam Mohammed Ishaq (Bahrain)

Single process for all managers Board approves investment guidelines

Board approves approve purification method

Broad universe of stocks is screened for compliance

Managers select securities from a single list

Manager portfolios continuously monitored for compliance

Board certifies Shariah compliance

6

Russell Shariah World Equity FundManager Process Characteristics

MANAGERFund

Weight (%)

Fund

amen

tal

Shor

t Ter

m

Syst

emat

ic

Gro

wth

Top

Dow

n

NUMBEROF

STOCKS

VALUATION/GROWTH

SIZE TURNOVER

McKinley 30 50-70High forecast growth & EPS

variabilitySmall Cap Medium

Legg Mason 40 60-80Low Valuation, depressed

marginsMid/Large Low

Arrowstreet 30 100-150High dividend yield, high price

momentumVariable High

Tech

nica

l

Long

term

Judg

emen

tal

Valu

e

Botto

m U

p

Source: Russell Investments As at: 31st March 2007

TECHNICAL: exploits opportunities created by behavioural anomalies in the market

FUNDAMENTAL: capitalises on superior analysis of companies and securities

LONG TERM: security decisions usually assessed over time horizons longer than 2 years

SHORT TERM: security decisions reviewed over time horizons less than 2 years

JUDGEMENTAL: flexible or pragmatic processes that rely on knowledge or experience of individuals or teams

SYSTEMATIC: security selections driven by a systematic, usually quantitative, assessment process with limited scope for variation in implementation

VALUE: relies on analysis of valuation metrics such as price/book

GROWTH: depends on superior forecasting of earnings or cashflow growth

TOP DOWN: forecasts macroeconomic trends expected to drive asset class, country, sector and security returns

BOTTOM UP: focuses on individual securities, with less sensitivity to macro themes and asset class, country or sector returns

7

Russell Shariah Emerging Markets Equity FundManager Process Characteristics

Source: Russell Investments Correct as at 31st March , 2007

MANAGERFund

Weight (%)

Fund

amen

tal

Shor

t Ter

m

Syst

emat

ic

Gro

wth

Top

Dow

n

NUMBEROF

STOCKS

VALUATION/GROWTH

SIZE TURNOVER

Legg Mason 40 60-80Low price/cash, High 5-year

ROEVariable Low/Medium

Principal 20 80-150Low PE, high EPS variability,

high L-T EPS growthMid-cap Medium/High

SWIP 40 25-40Low DY, high long term EPS

growthLarge cap Medium

Tech

nica

l

Long

term

Judg

emen

tal

Valu

e

Botto

m U

p

TECHNICAL: exploits opportunities created by behavioural anomalies in the market

FUNDAMENTAL: capitalises on superior analysis of companies and securities

LONG TERM: security decisions usually assessed over time horizons longer than 2 years

SHORT TERM: security decisions reviewed over time horizons less than 2 years

JUDGEMENTAL: flexible or pragmatic processes that rely on knowledge or experience of individuals or teams

SYSTEMATIC: security selections driven by a systematic, usually quantitative, assessment process with limited scope for variation in implementation

VALUE: relies on analysis of valuation metrics such as price/book

GROWTH: depends on superior forecasting of earnings or cashflow growth

TOP DOWN: forecasts macroeconomic trends expected to drive asset class, country, sector and security returns

BOTTOM UP: focuses on individual securities, with less sensitivity to macro themes and asset class, country or sector returns

8

Russell Investments Limited Disclaimer

This material does not constitute an offer or invitation: to anyone in any jurisdiction to invest in any Russell product or use any Russell services where such offer or invitation is not lawful, or in which the person making such offer or invitation is not qualified to do so; or to anyone to whom it is unlawful to make such offer or invitation, and has not been prepared in connection with any such offer or invitation.

This material is not intended for distribution to retail clients. Unless otherwise specified, Russell is the source of all data. Unless otherwise specified, all information contained in this material is current at the time of issue and to the best of our knowledge all information presented is accurate, however this cannot be guaranteed. Any opinions expressed are those of Russell Investments Limited and not a statement of fact and they do not constitute investment advice and are subject to change. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested. There is no guarantee that any target or projected figures will be met and this information is for illustrative purposes only. Any simulated figures and estimated figures are for illustrative purposes only. Any past performance figures are not necessarily a guide to future performance. Any reference to returns linked to currencies may increase or decrease as a result of currency fluctuations. Any references to tax treatments depend on the circumstances of the individual client and may be subject to change in the future. Copyright © 2007 Russell Investments LimitedIssued by Russell Investments Limited. Company No. 02086230. Registered in England and Wales with registered office at: Rex House, 10 Regent Street, London SW1Y 4PE. Telephone 020 7024 6000. Authorised and regulated by the Financial Services Authority, 25 The North Colonnade, Canary Wharf, London E14 5HS.

9

www.russell.comwww.russell.com

1936 Tacoma, Headquarters1936 Tacoma, Headquarters

1984 Toronto1984 Toronto 1986 Sydney1986 Sydney 1991 Auckland1991 Auckland1986 Tokyo1986 Tokyo1979 London1979 London1969 New York1969 New York

1996 Amsterdam1996 Amsterdam 1999 Singapore1999 Singapore 2000 Johannesburg2000 Johannesburg 2002 Geneva2002 Geneva1994 Paris1994 Paris