The purpose of Russell equity indices is to help you, as an investor, determine where to invest your hard-earned money. Russell indices, and stock indices in general, provide information on stock market trends so that investors can base decisions on quantitative data.

There are many variables that make Russell indices a valuable resource for your stock market research. When considering Russell equity indices, take the following into account:

1. Russell indices represent over 98% of worldwide stock investment options, making them some of the most comprehensive indices available.

2. The Frank Russell Company makes an effort to present the Russell Equity Indices with a design that is easy to read and comprehend.

3. The intention of Russell Equity Indices is to be objective in their results, representing industries and sectors by using a wide range of securities.

4. The addition of Russell index constituents occurs every quarter under strict rules and regulations to ensure the best coverage of stock market trends.

Action Steps
The best contacts and resources to help you get it done

Understand the system for choosing U.S. Russell index constituents

First, Russell Investments ranks the most common stocks in the U.S. from largest to smallest market capitalization every year on May 31st. Of those stocks, the top 3000 comprise the Russell 3000 Index. Then they divide those 3000 stocks, making the top 1000 the Russell 1000 constituents and the bottom 2000 the Russell 2000 constituents. Russell indices exclude stocks that are below a trading value of $1, as well as pink sheet and bulletin board stocks, closed-end mutual funds, limited partnerships and royalty trusts. They also make adjustments in order to show the actual number of shares available for trading by checking for cross-ownership and privately-held shares.

I recommend: Obtain more information on the determination of Russell index constituents, including their global indexes and the annual reconstruction process, by visiting Russell Investments' webpage on the construction and methodology for Russell indexes. RIMES Technologies provides data services on Russell indices. Wikipedia also provides additional information on Russell indices.

Use the Russell 1000 and Russell 2000 to measure large cap stocks

The Russell 1000 Index represents nearly 92% of the large cap companies available on the U.S. stock market. They determine which companies make it on the index by their market capitalization and the current index membership. Russell 2000 constitutes the next 2000 top companies in the stock market. Both the Russell 1000 and the Russell 2000 go through a rigorous reconstruction each year to be sure investors have the best information on new and growing stocks.

I recommend: Obtain up-to-date information on the Russell 1000 index from the Russell Investments website.

Track the global market through a Russell's index

While the U.S. Russell indices may fit your needs by providing the stock market trends for a number of different companies, their global equity indices provide information for an ever-growing global industry that harnesses ample opportunities for substantial earnings. The Russell Global Index includes about 98% of companies on the global stock market, which they divide into indexes specific to 22 global regions and 63 different countries.

I recommend: Access any of the 50 or more Russell global indexes on the Russell Investments website. Obtain more information about the global Russell indices from RIMES Technologies and learn more about recent developments to Russell's global indices at IndexUniverse.com.

Invest through a fund based on a Russell index

Exchange-traded funds (or ETFs) let you invest in a basket of stocks that mimics the performance of Russell index constituents. You buy and sell ETFs just like stocks through a broker.

I recommend: iShares offers dozens of ETFs covering many different Russell indices, such as the Russell 3000 Index Fund. Or try Proshares or Rydex for other ETFs based on Russell equity indices. Go to ICE Futures U.S. for information on trading futures based on the Russell 1000 and Russell 2000 indices.

Tips & Tactics

Helpful advice for making the most of this Guide

• •  Consult with a financial adviser before investing in any stock, regardless of its record on a market index. There is risk involved in stock investments and no guaranteed return, so be sure you choose investments that best suit your financial situation.