• Research Affiliates, LLC and Ryan ALM, Inc Partner to Launch Fundamental Index®-based US Corporate Bond Indexes
• Research Affiliates Awarded Patent for Fundamental Index® Investment Methodology

Research Affiliates, LLC and Ryan ALM, Inc Partner to Launch Fundamental Index®-based US Corporate Bond Indexes

New Indexes Extend Fundamental Index® Methodology into Fixed Income

Newport Beach, CA, and New York, NY, February 10, 2010 – Research Affiliates, LLC, and Ryan ALM, Inc., today announced the launch, effective January 1, 2010, of the RAFI US Corporate Bond Index Series for Investment Grade and High Yield. This series of investable, broad market indexes is the first to apply the Research Affiliates Fundamental Index® methodology for the creation and calculation of bond indexes.

"In seeking to test and extend the boundaries of the Fundamental Index methodology, we applied the approach to bonds looking at US Corporate Investment Grade and High Yield," said Research Affiliates founder Rob Arnott. "The results were compelling, further validating the methodology and offering investors a more efficient means of constructing a bond index or portfolio with superior risk/reward characteristics.”

The Fundamental Index methodology has received numerous awards for innovation and index provider of the year. Currently there are more than 100 equity indexes available through the FTSE RAFI Index Series and more than 200 investment products and separate mandates currently being managed to the methodologies by investors, managers and fund sponsors globally.

In calculating the RAFI® US Corporate Bond Index Series, Research Affiliates provides its Fundamental Index methodology for the creation of an index using fundamental measures of company size. Ryan ALM Index Division applies the methodology to construct and calculate the indexes.

The RAFI US Corporate Bond Indexes start with a universe of 5,000 issues that are then given fundamental weights. Ryan ALM then selects issues that qualify under the index rules, shown below in Tables 1 and 2. A most unique feature of the index rules is the creation of three maturity cells (1–5 years, 5–10 years, and 10+ years) whereby each index only selects the single bond with the highest amount outstanding per issuer per maturity cell. For example, the 1–30+ year index series would have three maturity cells allowing for three issues of the same issuer if they qualify under the index rules. This ensures the greatest liquidity for each index such that investors can actually buy and duplicate the index portfolios, while maintaining exposure to the underlying duration and credit characteristics. Each index has been back-tested to December 31, 1999, and has demonstrated consistent performance versus comparable traditional bond indexes.

RAFI US Corporate Bond Index Series includes:

• RAFI US Investment Grade Corporate Master Index
• RAFI US Investment Grade Corporate Bond Index, 1–5 year
• RAFI US Investment Grade Corporate Bond Index, 1-10 year
• RAFI US Investment Grade Corporate Bond Index, 10 year +
• RAFI US Investment Grade Corporate Bond Index, 1-30 year
• RAFI US High Yield Bond Master Index
• RAFI US high Yield Bond Index, 1-5 year
• RAFI US High Yield Bond Index, 1-10 year
• RAFI US High Yield Bond Index, 1-30 year

Ron Ryan, CEO of Ryan ALM explains: “The RAFI US Corporate Bond Index Series is the result of a partnership leveraging the proven expertise of Research Affiliates in fundamental weights for indexes and Ryan ALM’s expertise in designing bond indexes that are more investable, liquid, and transparent than traditional bond indexes providing a “best fit” solution for fund sponsors. Traditional U.S. corporate bond indexes have thousands of bonds, most of which don’t trade, have low amounts outstanding, are hard to price, and lead to tracking errors that may result in poor risk/reward behaviors.”

 Table 1. RAFI US Investment Grade Corporate Bond Index Series

Table 2. RAFI US High Yield Bond Index Series

About Research Affiliates, LLC.

Research Affiliates, a global leader in innovative investing and asset allocation strategies, has operated worldwide from its base in California since 2002.  Dedicated to solving complex investment issues, the firm creates innovative strategies that respond to the current needs of the market.  Leveraging its strong research focus, Research Affiliates distributes products in partnership with some of the world's leading financial institutions. These affiliations take the form of direct asset management, sub-advisory services, and licensing agreements. 

The firm is majority employee-owned and employs a team of 50 dedicated professionals. Research Affiliates offers advisory services, sub-advisory services, and custom solutions to meet a client's investment needs.

Approximately $46 billion in assets are managed worldwide using investment strategies developed by Research Affiliates, as of December 31, 2009.

About Ryan ALM, Inc.

Ryan ALM, Inc. is both a bond index provider and bond asset management firm. Its Index Division (ALM Research Solutions, LLC) designs, maintains and delivers over 70 generic indexes designed by the firm. This includes the Ryan Treasury Yield Curve series (13 Auction maturities, 31 STRIPS and four PowerShares maturity ladder series), FAS 158 Yield Curves, ESG, Green and Corporate bond indexes. Moreover, Ryan ALM is a leader in designing Custom Liability Indexes for its clients. The Index Division primary architect is Ron Ryan, CFA who won the William F. Sharpe Lifetime Index Achievement Award. The Ryan ALM asset management division (Ryan ALM Advisers, LLC) manages bonds as index funds versus all the indexes they create (especially Custom Liability Indexes as Liability Index Funds) to provide a turnkey system. For more information, please visit www.RyanALM.com.

Media contact:

Tucker Hewes, Hewes Communications, Inc., (212) 207-9451, tucker@hewescomm.com

For Additional Information or Licensing Information Contact:
Michael Larsen
Research Affiliates
larsen@rallc.com
949-325-8777

Research Affiliates Awarded Patent for
Fundamental Index® Investment Methodology

Award-Winning Methodology Continues to
Outperform Traditional Cap-Weighted Indexes

Newport Beach, CA, November 18, 2009 -- Research Affiliates LLC today announced that the United States Patent and Trademark Office has approved the issuance of U.S. Patent No. 7620577 for the company's innovative Research Affiliates Fundamental Index® ("RAFI®") indexing methodology, which selects and weights securities using fundamental metrics of company size rather than by market capitalization.

"We are deeply gratified that the United States Patent and Trademark Office has awarded us this patent," said Robert Arnott, chairman and founder of Research Affiliates.  "Our business model differs from most registered investment advisors, in that our core business is developing and licensing new product ideas.  So, unlike most asset managers, we have only our ideas to sell; we can protect these ideas as trade secrets or with patents.  As we want to encourage wide use of these ideas, we favor the latter.

"Fundamental Index® products have been a tremendous success by every significant measure. Over 20 licensed affiliates use the RAFI® concept to manage products that exceed $25 billion in assets under management, after less than five years from publication of our research. The Fundamental Index® methodology has earned prestigious industry awards, and now Research Affiliates has been granted a patent on its innovative indexing method."  Mr. Arnott added, "above all else, we're pleased that the Fundamental Index® approach has produced results, on live assets, that are consistent with our research and have directly benefited investors all over the world."

FTSE RAFI® Index Series

The Fundamental Index® methodology was developed to address the structural return drag created by traditional capitalization-based indexing strategies, which systematically overweight overpriced securities and underweight underpriced securities. According to Research Affiliates' original work on the Fundamental Index® concept, the historical return drag associated with this structural flaw is typically 2% to 4% per annum, globally.

Research Affiliates partnered with FTSE to create the FTSE RAFI® Index Series in 2005.  Index constituents are selected and weighted using four fundamental factors, including total cash dividends, free cash flow, total sales and book equity value.  Presently, there are well over 100 FTSE RAFI® indexes, covering a broad range of global developed and emerging equity markets.

Mr. Arnott commends the indexing community, but points out an Achilles' Heel in conventional indexes, saying "index funds have served investors well for over 25 years, providing broad stock market exposure at a fraction of the price of actively managed funds.  But for all their benefits, capitalization-weighted indexes suffer a structural flaw that leads to overweighting overpriced securities and underweighting underpriced securities.  This failing came to a head in the 2000-2002 bear market where a relatively few stocks, notably in the technology sector, led to woeful index fund returns.  The Fundamental Index concept cures this deficiency while preserving the many and substantial advantages of index fund investing.  Our research shows consistent, significant long-term outperformance of the Fundamental Index® approach compared to applicable cap-weighted indexes, no matter where the equity market." 

Through October 31, 2009, FTSE RAFI® indexes have outperformed their market capitalization-weighted counterparts in 41 of 45 countries, since the launch date of the indexes.  The FTSE RAFI® All World 3000 has outpaced the MSCI All Country World Index® by some 4.8% per annum since FTSE first introduced these indexes in November of 2005.

Through October 31, 2009, the FTSI RAFI® 1000 Index, which comprises large cap U.S. equities, outperformed the S&P 500® by 14.39% in 2009, by 1.47% annualized for three years, and by 1.94% annualized since inception of the index.  The FTSE RAFI® Developed ex US 1000 Index, which comprises large cap developed foreign market stocks, outperformed the MSCI EAFE Index® by 12.71% for 2009, by 3.48% over three years annualized, and 3.18% since inception.  More information on the performance of popular FTSE RAFI® indexes and comparable indexes is available online from Research Affiliates at: http://researchaffiliates.com/rafi/performance.htm.

For more information contact:

Tucker Hewes
Hewes Communications, Inc.
509 Madison Avenue, Suite 904
New York, NY 10022
+1 (212) 207-9451
tucker@hewescomm.com