A risk-based approach
Transition management services

Transition disclosure document – EMEA
Established in 1936, today Russell Investments (“we”, “our”) provides investment services
and asset management to institutional and individual investors worldwide.
Russell Investments gave birth to its transition management service in the early 80s in
response to the investment needs of our own investment business – i.e. to manage the risks
and costs of transitions within our own multi-manager structure.
Our approach to transition management was developed based on investment management
principles and objectives. We believe this founding principle naturally aligns Russell
Investments objectives with our clients’ objectives. To this end, Russell Investments employs apure-agency, multi-venue trading approach which has neither principal trading facilities nor
interest in any exchange or trading venue. Our trade execution platform was designed with twogoals: facilitating best-execution and eliminating hidden costs, risks and conflicts often
associated with other business models. As a pure agent, Russell Investments is an advocateof transparency, disclosure and competition focused on improving portfolio performance.
Russell Investments’ performance measurement and reporting is also based on investment
management principles. Russell Investments led the industry in the creation of a performancebenchmark for transitions (the T Standard) and more recently has worked to establish astandardised industry performance database. Russell Investments was an original T Charter
adopter and a proponent of the principles underlying the T Charter, which we have also
imbedded into our transition process.
Russell Investments began offering transition management to third-party clients in 1991. In thetime since we’ve witnessed wide adoption of transition management by institutional asset
owners. While our trading capabilities and techniques have evolved over the last 40 years, ourbasic philosophy of focusing on investment management objectives, and our transparent,
pure-agency business model have remained unchanged.
This disclosure document provides information regarding Russell Investments’ Transition
Management service. Specifically, it covers:•

Contracting Method / Business Model•

Execution Method•

Remuneration•

The Russell Investments Team•

Conflicts of Interest

We were an
original T Charter
adopter and a
proponent of theprinciples
underlying the
T Charter, which
we have also
imbedded into
our transition
process.

If you have any questions regarding the content of this document, please contact
Kelly MainelliorRichard Webb

MD, Head of Customised Portfolio Solutions MD, Head of Customised Portfolio Solutions,
EMEA
kmainelli@russellinvestments.com

rwebb@russellinvestments.com

Russell Investments / Transition Management: Transition Disclosure Document/1

Contracting method / Business model
Russell Investments has structured its transition management business to operate as aninvestment manager. Consequently, clients generally contract with the FCA authorised UK firm
Russell Investments Implementation Services Limited (RIISL) in its capacity as an investment
manager. At the client’s option, we have the ability to also contract as a broker. Regardless ofthe type of contract, Russell Investments uses the same trading approach, holds itself to thesame fiduciary standard of care and provides the same level of compensation transparency.
Our legal approach and business model are reflected in our contracts, as well as our internal
governance and controls, all as described in more detail below.

Execution method
Russell Investments always acts as a pure agent when executing trades for clients, never ascounterparty to a trade. When executing trades, Russell Investments follows a best execution
policy which is made available to clients.
We refer to our approach as “pure” agency because we do not operate principal accounts ortrade with affiliates who are acting in a principal capacity, nor do we engage transactions
where Russell Investments represents both sides of a trade, except where prices are
determined with reference to external, verifiable market prices. While not a legal term of art, we
believe the term “pure” agent distinguishes our practices from other firms who claim to act as“agent” while engaging in transactions such as those described above. Importantly, our agency
approach spans all asset types that are traded including, but not limited to, equities, fixedincome, foreign exchange and derivatives.

Remuneration
As noted above and in Russell Investments’ trading practices we disclose all fees and take noother compensation from transition activities. The only form of remuneration is through fully
disclosed, pre-agreed commissions on assets traded or a project management/asset
management fee. At all times, these fees are negotiated and fully disclosed within our contract.

EMEA teamhaving a combinedtransition
management
experience of 72
years, at an
average of 11.9
years.

It is important to know that these fees include all dealing charges. Russell Investments
Implementation Services, LLC (RIIS LLC) collects commissions on securities traded (equities,
fixed income and/or spot currency trades) and from this commission we pay all event
management, execution and clearing costs. We do not receive any additional revenue
associated with the trading from any execution venues.

The Russell Investments teamRussell Investments has a global transition management capability, including teams based in
Seattle (global headquarters), London and Sydney. Russell Investments employs over 70
investment professionals focused on transition management and related functions. Globally,
the transition management team includes 20 transition specialists (6 of whom are based in
London) with a combined industry experience of 394 years (an average of ~19.7 years), withtenure at Russell Investments extending up to 26 years (average Russell Investments tenure
13.4 years). The combined transition management experience is ~294 years (an average of
14.7 years) with the EMEA team having a combined transition management experience of 72
years, at an average of 11.9 yearsi.
Our transition management team forms part of the wider implementation services team. The
services provided by this global team include exposure management (such as policy
implementation, currency hedging, cash equitisation, downside protection strategies etc.),
specialty asset management (transition management and interim asset management) and
execution management (such as agency equity and fixed income execution services,commission recapture and agency foreign exchange):•iCore Transition Team - Portfolio Management: Russell Investments designates at least
one portfolio manager to be individually accountable for each transition, including
developing and managing a customised transition strategy, serving as a single point ofcontact for the client before, during and after the transition, and ensuring the smoothcoordination of all internal and external parties. In addition, one or more secondary
portfolio managers will be assigned to each event to provide support to the lead portfolio
manager, depending on the complexity of the event.

Source for all statistics: Russell Investments as at 31 March 2022

Russell Investments / Transition Management: Transition Disclosure Document/2•Core Transition Team - Quantitative Research: Quantitative analysts assist the portfolio
manager in developing transition strategies designed to minimise implementation shortfall
which defines the total performance impact of the transition. They also work with theRussell Investments technology team to develop new applications and enhancements to
Russell Investments’ proprietary analytical platform.

•

Core Transition Team - Trading: Although you will contract with the FCA authorised UK
entity, RIISL, all trading is executed through its affiliate, Russell Investments
Implementation Services, LLC. (RIIS), which is a US-based SEC Registered investment
adviser and broker-dealer, member FINRA, SIPC. All trading functions are centralised in
Seattle. However, RIIS traders work closely with and take instructions from the portfolio
managers in London to refine and implement the transition strategies. They source
liquidity from numerous venues (including but not limited to: direct exchange access,crossing networks, dark liquidity pools, broker desks) to ensure best execution, executethe daily transactions and work with our investment operations team to ensure all trade
settlement activity runs smoothly.

•

Support Team - Currency Management: The foreign currency trading team assists theportfolio manager in developing currency strategies suitable for the transition event. They
subsequently oversee all aspects of the currency transactions associated with thetransition.

•

Support Team - Derivatives Management: A team of derivatives specialists works withthe portfolio manager to help develop hedging and securitisation strategies for transitions
which require the use of derivatives to achieve desired exposures.

In addition, there are a vast number of Russell Investments associates that support thetransition team as and when needed. They include our global investment operations team,running a ‘follow-the-sun’ model, which ensure that settlements occur in a timely manner andcorporate actions are addressed. Additional support groups include legal, risk, compliance,technology, senior management and sales / client service.

Conflicts of interest

Our pure-agency,
multi-venue
trading model,
T-standard
performance
reporting andtransparency inremuneration allserve to keep ourservice objectives
aligned with thoseof our clients.

As noted above, Russell Investments’ business model and trading approach operate on
investment management principles, including fiduciary obligations to act in each client’s bestinterests and to identify and manage conflicts of interest. Our pure-agency, multi-venue trading
model, T-standard performance reporting and transparency in remuneration all serve to keep
our service objectives aligned with those of our clients. We believe this approach enables ourclients to evaluate us objectively and positions them to avoid many of the conflicts of interest
inherent in the transition management industry.
That said, Russell Investments regularly reviews, evaluates and manages actual, potential andperceived conflicts of interest in our business. The entities involved with the transition
assignment as set forth in our contracts are subject to regulatory oversight. As such, we havedefined conflict policies that are provided to regulators on request and made available toclients. Details of conflicts of interest which are specific to transition management and how
they are managed are outlined below:

Improper use or disclosure of information
A potential for conflicts arises where Russell Investments’ Transition Team has access to
information which would be useful in the context of Russell Investments’ asset managementbusiness. Examples include acting in advance of public disclosures or taking advantage of
information about underlying money managers. The risk of this kind of conflict is limited as aresult of Russell Investments’ structure. Where Russell Investments does carry out asset
management activity, for the vast majority of the portfolios stock picking is the responsibility ofdelegated third-party money managers. In this framework, Russell Investments portfolio
managers are unable to act upon any knowledge of trading activity being executed on behalf oftransition and implementation clients.
Further, Russell Investments’ trading desk only deals on an agency basis and not as principal.
All transition trades initiated by the transition team use program numbers to anonymise
information received by the traders. Portfolio managers in the asset management business do
not have access to trades carried out by the transition team.

Russell Investments / Transition Management: Transition Disclosure Document/3

Crossing of trades between transition clients (including transitions
for Russell Investments funds)
Where a cross between transition clients is deemed appropriate, the trade will be executed at
an observable market mid-point price to ensure no preference is given to either client. The
mid-point price is based on (an) independent pricing source(s) and records are maintained inorder to provide clients with this information post event.

Managing transitions for Russell Investments funds, separately
managed accounts as well as for third party clients
There may be the perception that Russell Investments might provide preferable treatment to
one client or a certain client type over another. However, to assure that all clients and accounts
are treated equally, Russell Investments has implemented several policies and procedures:•

Russell Investments’ Order Placing and Order Execution policies govern all trading andare applied and enforced regardless of client type.

•

RIIS also applies a consistent trade order aggregation and allocation policy. When
identical securities are traded simultaneously for different clients, if terms and conditions
are the same, orders are aggregated, and allocations made pro-rata to ensure all clientsare treated equally. When the trade direction is opposite, crossing only occurs if bothclients benefit equally. Again, this policy applies to all clients.

•

Each transition event is assigned a dedicated transition portfolio manager, who is incharge of coordinating with all parties involved during the transition. Whether the event isfor an internal or external client, the portfolio manager will use the same methodology andsystems for developing and implementing a transition strategy. The goal of minimising
implementation shortfall and managing risk remains the same. Therefore, nothing in theinvestment process changes based on the client being internal or external.

Choice of execution venue(s)•Where Russell Investments is compensated via commissions (see remuneration section),the commissions the client pays Russell Investments include both our remuneration as
well as the cost of execution. As with any business model that generates revenue fromcommission payments, a potential conflict of interest exists whereby an investment
manager may choose the lowest cost venue(s). In response to this potential conflict:•

Russell Investments is evaluated by its clients on a performance basis and therefore
accountable for best execution. Additionally, Russell Investments monitors all of its
execution venues and retains documented evidence of this. Further, Russell Investments
formally evaluates the efficacy of all trading venues at least bi-annually and also retains an
independent third-party Transaction Cost Analysis (TCA) provider to evaluate theeffectiveness of our execution.

•

In today’s markets execution-only costs have become very similar for most securities
across different venues, and as such the conflict has, to a large degree, abated.

•

If we find that a particular venue’s execution is poor, we cease trading with that venue
regardless of the cost. Russell Investments aligns pay away costs with venues acrossdifferent countries to create as much consistency as possible.

•If, for any reason, a client is not comfortable with a commission-based remuneration
structure, they can always choose to remunerate Russell Investments via an investment
management fee. Commissions to cover execution costs would still be payable, but
Russell Investments would only be remunerated from the investment management fee,
not the commissions.

Russell Investments / Transition Management: Transition Disclosure Document

Russell
Investments has
implemented
several policies
and procedures
to ensure that all
clients (be theyinternal orexternal) aretreated equally/4Use of affiliates during a transition
When affiliated companies are used to provide services to each other, a potential conflict ofinterest may exist. Russell Investments has structured our execution capabilities into acentralised trading function that is leveraged by all regional entities. For transition
management, Russell Investments manages transitions through the regional business units,delegating trading to the centralised business unit, RIIS. To assure that this relationship does
not result in situations where clients may be disadvantaged in any way, we have created agovernance structure that includes several oversight committees:•

Affiliated Business Oversight Committee (ABOC): this group governs the use of affiliates
and assures that these affiliates are providing services that are commensurate with thesame cost and performance levels as could be achieved by an external provider•

Trade Management Oversight Committee (TMOC): this committee reviews the execution
quality achieved across all trading to assure that processes and procedures in place
produce appropriate results

Specifically in EMEA, use of affiliates is only permitted under MiFID II if in the client’s bestinterest. Russell Investments’ ABOC ensures that RIIS trading does not advantage any one
client over another. Moreover, with regard to both external and internal clients, Russell
Investments engages third-party Transaction Cost Analysis (TCA) providers to evaluate
Russell Investments’ execution results. For internal events, quarterly execution quality reports
from the TCA providers are available for Fund boards review. Finally, the fund portfolio
management teams have discretion not to engage the Russell Investments transition team fora transition, if that better serves a Fund interests.

A strong
governanceprocess exists
at the senior
managementlevel to ensure
not only thequality of theaffiliatedservices, butthat clientsare not
disadvantaged.

Compensation on brokerage commission created during a transition
In general, Russell Investments is compensated on the brokerage commission created duringa transition. As such, a conflict may exist where Russell Investments would be incentivised tomaximise trading to increase revenue. However, Russell Investments does not choose thesecurities that are traded in the course of a transition. Trading is driven by the difference
between the existing holdings in the account(s) where we assume oversight and the securities
selected by the new manager(s). The key area to review in such a case is the securities thatare retained (which are not traded) and making sure that these “in-kinds” (common securities
between legacy and target portfolios) are maximised.
Russell Investments ensures that any in-kinds are transferred and not traded, as trading would
create unnecessary expense and risk to the client. If any in-kinds were needlessly traded wewould view this as an ‘error’ and the client would be made whole, assuming there was a loss
as a direct result of the additional trading. Russell Investments performs pre-transition analysis
which estimates the levels of retentions and a final analysis prior to an event with latest
information. This is then compared with the ‘actual’ results after an event is completed and any
discrepancy would be investigated and visible to the client.
In addition, Russell Investments can provide both the client and their agents with full disclosure
into the trading data and details involved in the transition, including time-stamped execution
data. Using this data, one can compare buy and sell transactions to ensure that Russell
Investments did not inflate the amount traded by limiting the retained securities. In the rarecase where the same security is bought and sold in the course of a transition, Russell
Investments will disclose this to the client prior to execution.

No direct commission to Russell Investments on futures trading in atransition
Russell Investments trades derivatives as an investment manager and introducing broker. As
such, Russell Investments does not collect additional commissions on futures trades over andabove those charged by the futures broker. At times, this has been perceived as a potential
conflict in that Russell Investments might not recommend a strategy that includes trading
futures because there is no direct remuneration from this activity.
The decision whether to use futures or not in a transition is an investment decision and onethat is reviewed for relevance for every transition. These strategies are reviewed with the client
and receive peer review before any such strategy is implemented.
When pricing the commission rates on securities that will be traded, Russell Investments takes
into account all of the instruments and asset types we intend to trade in order to achieve thebest result for our clients.

Russell Investments / Transition Management: Transition Disclosure Document/5

Important information
For professional clients only.
Unless otherwise specified, Russell Investments is the source of all data. All information contained in this material iscurrent at the time of issue and, to the best of our knowledge, accurate. Any opinion expressed is that of Russell
Investments, is not a statement of fact, is subject to change and does not constitute investment advice.
Issued by Russell Investments Implementation Services Limited.Company No. 3049880. Registered in England andWales with registered office at: Rex House, 10 Regent Street, London SW1Y 4PE. Telephone 020 7024 6000.
Authorised and regulated by the Financial Conduct Authority, 12 Endeavour Square, London, E20 1JN. Russell
Investments Limited is a Dubai International Financial Centre company which is regulated by the Dubai Financial
Services Authority at: Office 4, Level 1, Gate Village Building 3, DIFC, PO Box 506591, Dubai UAE. Telephone +971
4 359 0322.This material should only be marketed towards Professional Clients as defined by the DFSA. Russell
Investments Ireland Limited. Company No. 213659. Registered in Ireland with registered office at: 78 Sir John
Rogerson’s Quay, Dublin 2, Ireland. Authorised and regulated by the Central Bank of Ireland
KvK number 67296386©1995-2022 Russell Investments Group, LLC. All rights reserved. Copyright © 2022.
R-00687-2022-04-06

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