13

At a Glance

Why invest in Micro-Cap?

  • One of the oldest open-end funds dedicated to investing in micro-cap stocks (generally market caps up to $1 billion)
  • Core approach that combines multiple investment themes and offers wide exposure to micro-cap stocks by investing in companies with strong fundamentals and/or prospects selling at prices that Royce believes do not fully reflect these attributes
  • Approach emphasizes the intersection of valuation with fundamental strength and/or excellent growth or turnaround potential

As of 06/30/17

  • Micro-Cap
    Core Approach
    $449.7M
    Avg. Market Cap
  • Above Average
    Volatility
    90%
    Active Share
  • Fund
    Longevity
    25+
    Years of History

Portfolio Management

"The micro-cap universe offers plenty of opportunities for us to find companies that are lightly researched or mispriced. Using multiple approaches gives us exposure to the entire asset class while our discipline keeps us focused on the fundamental business strengths that we think can create strong long-term performance."
Jim Stoeffel

Performance

Average Annual Total Returns (%)

Outpaced Russell 2000 for the Quarter, 20-Year and since inception (12/31/91) periods as of 06/30/17.
QTR YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Micro-Cap 2.70 2.0123.040.165.323.117.618.9810.91 12/31/91
Russell Microcap 3.83 4.2327.606.6913.735.478.44N/AN/A N/A
Russell 2000 2.46 4.9924.607.3613.706.929.197.989.70 N/A

Annual Operating Expenses: 1.48

JUL YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Micro-Cap -0.33 1.6816.202.015.863.408.898.6910.86 12/31/91
Russell Microcap -0.56 3.6520.588.9913.966.189.59N/AN/A N/A
Russell 2000 0.74 5.7718.459.8914.197.7610.447.789.69 N/A

Annual Operating Expenses: 1.48

AUG YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Micro-Cap -5.78 -4.197.36-0.684.043.238.358.3010.57 12/31/91
Russell Microcap -4.78 -1.3112.386.2312.275.689.14N/AN/A N/A
Russell 2000 -4.71 0.7911.246.8512.277.069.827.489.47 N/A

Annual Operating Expenses: 1.48

Important Performance and Expense Information

All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 30 days of purchase may be subject to a 1% redemption fee, payable to the Fund, which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Operating expenses reflect the Fund's total annual operating expenses for the Investment Class as of the Fund's most current prospectus and include management fees and other expenses.

Rolling Returns

On a monthly basis, the Fund outperformed the Russell Microcap in 71% of all 10-Year periods; 63% of all 5-Year periods; and 53% of all 1-Year periods.

For 88% of the periods, 10-year average annual total returns were greater than 5%; For 64% of the periods, 10-year average annual total returns were greater than 10%.

Relative Returns: Monthly Rolling Average Annual Return Periods Since Russell Microcap's Inception Through 06/30/17

periods beating
the index(%)
fund
avg(%)
index
avg(%)
10-year
60/85
71 7.9 6.2
5-year
92/145
63 8.5 7.9
1-year
102/193
53 10.5 10.3

Absolute Returns: 10-Year Monthly Rolling Return PeriodsNumber of 10-Year Average Annual Return Periods Since the Fund’s Inception

Return Range Periods % in Range
> 10% 119 64
> 5% and ≤ 10% 46 25
> 0% and ≤ 5% 22 12
≤ 0% 0 0

The Fund averaged a 10.8% return over all 187 10-year monthly rolling return periods.

Market Cycle Performance

Peak-Peak - 07/12/07 - 03/05/14
Micro-Cap32.6%
Russell Microcap44.7%

Peak-Peak - 03/05/14 - 06/23/15
Micro-Cap-4.3%
Russell Microcap6.4%

Peak-Current - 06/23/15 - 06/30/17
Micro-Cap4.6%
Russell Microcap8.6%

Royce defines market cycles as those that have retreated at least 15% from a previous market peak and have rebounded to establish a new peak above the previous one. 

Royce defines market cycles as those that have retreated at least 15% from a previous market peak and have rebounded to establish a new peak above the previous one. 

Calendar Year Total Returns (%)

 

Growth of Investment

Value of $10,000 invested between 06/30/00 and 06/30/17

Micro-Cap$39,998.59
Russell Microcap$34,573.85

The since inception performance above dates to the inception of the Russell Microcap on 6/30/2000. The Fund's inception date (12/31/1991) preceded the inception of the index.

Portfolio Impactas of 06/30/17

SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Health Care
8.79
18.99
1.62
Industrials
21.77
3.12
0.71
Information Technology
20.03
2.18
0.51
Materials
5.14
7.19
0.37
Real Estate
1.76
9.42
0.17
Telecommunication Services
0.76
18.32
0.13
Consumer Discretionary
15.28
1.12
0.12
Financials
14.22
0.61
0.08
Consumer Staples
1.20
-10.45
-0.13
Energy
5.82
-8.42
-0.53
Cash
5.24
0.22
0.01

Top Contributors

INDUSTRYSECTORGAIN (%)
Health Care Equipment & SuppliesHealth Care1.05
MachineryIndustrials0.66
PharmaceuticalsHealth Care0.60
Household DurablesConsumer Discretionary0.34
Commercial Services & SuppliesIndustrials0.32

Top Detractors

INDUSTRYSECTORGAIN (%)
Energy Equipment & ServicesEnergy-0.64
Professional ServicesIndustrials-0.41
Electrical EquipmentIndustrials-0.34
Specialty RetailConsumer Discretionary-0.26
Auto ComponentsConsumer Discretionary-0.11

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Corium InternationalPharmaceuticalsHealth Care0.42
Everspin TechnologiesSemiconductors & Semiconductor EquipmentInformation Technology0.39
Novadaq TechnologiesHealth Care Equipment & SuppliesHealth Care0.34
CPI AerostructuresAerospace & DefenseIndustrials0.27
Tactile Systems TechnologyHealth Care Equipment & SuppliesHealth Care0.26

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Tesco CorporationEnergy Equipment & ServicesEnergy-0.31
Progenics PharmaceuticalsBiotechnologyHealth Care-0.19
Stein MartSpecialty RetailConsumer Discretionary-0.18
GAIN Capital HoldingsCapital MarketsFinancials-0.17
Independence Contract DrillingEnergy Equipment & ServicesEnergy-0.17
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Health Care
8.24
20.06
1.71
Information Technology
20.59
6.59
1.43
Industrials
21.58
4.34
0.97
Financials
13.26
2.94
0.39
Telecommunication Services
0.70
36.64
0.23
Real Estate
1.62
9.05
0.16
Materials
4.98
1.57
0.12
Consumer Staples
1.02
-10.35
-0.09
Energy
5.82
-12.68
-0.82
Consumer Discretionary
15.44
-8.07
-1.38
Cash
6.76
0.37
0.02

Top Contributors

INDUSTRYSECTORGAIN (%)
Health Care Equipment & SuppliesHealth Care1.05
MachineryIndustrials1.00
Semiconductors & Semiconductor EquipmentInformation Technology0.92
PharmaceuticalsHealth Care0.73
Household DurablesConsumer Discretionary0.50

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-1.24
Energy Equipment & ServicesEnergy-0.92
Professional ServicesIndustrials-0.58
Textiles, Apparel & Luxury GoodsConsumer Discretionary-0.36
ChemicalsMaterials-0.34

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Ultra Clean HoldingsSemiconductors & Semiconductor EquipmentInformation Technology0.59
Corium InternationalPharmaceuticalsHealth Care0.50
Novadaq TechnologiesHealth Care Equipment & SuppliesHealth Care0.39
Everspin TechnologiesSemiconductors & Semiconductor EquipmentInformation Technology0.39
NovantaElectronic Equipment, Instruments & ComponentsInformation Technology0.34

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Stein MartSpecialty RetailConsumer Discretionary-0.49
CUI GlobalElectronic Equipment, Instruments & ComponentsInformation Technology-0.35
Tesco CorporationEnergy Equipment & ServicesEnergy-0.33
BioAmberChemicalsMaterials-0.31
Kirkland'sSpecialty RetailConsumer Discretionary-0.31
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
21.89
38.11
8.20
Information Technology
21.24
35.56
7.26
Financials
12.51
25.26
2.98
Health Care
9.18
29.78
2.76
Materials
4.82
24.30
1.23
Consumer Discretionary
15.77
4.79
1.15
Energy
5.54
15.14
0.79
Consumer Staples
0.83
37.91
0.25
Real Estate
1.35
12.64
0.25
Telecommunication Services
0.60
13.57
0.14
Cash
6.27
0.55
0.04

Top Contributors

INDUSTRYSECTORGAIN (%)
MachineryIndustrials4.14
Semiconductors & Semiconductor EquipmentInformation Technology3.21
Electronic Equipment, Instruments & ComponentsInformation Technology2.76
BanksFinancials1.54
Health Care Equipment & SuppliesHealth Care1.35

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-0.73
DistributorsConsumer Discretionary-0.38
Electrical EquipmentIndustrials-0.37
InsuranceFinancials-0.36
Textiles, Apparel & Luxury GoodsConsumer Discretionary-0.30

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Ultra Clean HoldingsSemiconductors & Semiconductor EquipmentInformation Technology1.02
ePlusElectronic Equipment, Instruments & ComponentsInformation Technology0.75
Hudson TechnologiesCommercial Services & SuppliesIndustrials0.72
NovantaElectronic Equipment, Instruments & ComponentsInformation Technology0.63
Fox Factory HoldingAuto ComponentsConsumer Discretionary0.57

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Stein MartSpecialty RetailConsumer Discretionary-0.72
Rubicon ProjectSoftwareInformation Technology-0.64
Fenix PartsDistributorsConsumer Discretionary-0.38
AvingerHealth Care Equipment & SuppliesHealth Care-0.36
Cato Corporation (The) Cl. ASpecialty RetailConsumer Discretionary-0.32
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
20.45
37.83
8.10
Industrials
22.06
18.35
3.97
Financials
10.07
13.45
2.03
Health Care
10.90
25.55
1.70
Telecommunication Services
0.73
88.03
0.64
Real Estate
1.94
8.22
0.40
Utilities
0.04
53.37
0.25
Consumer Discretionary
16.14
-5.55
-0.07
Consumer Staples
0.85
-19.99
-0.49
Materials
5.69
-31.82
-3.83
Energy
5.80
-58.96
-7.13
Cash
5.31
0.73
0.05
Unclassified
0.02
0.00
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Semiconductors & Semiconductor EquipmentInformation Technology5.08
Electronic Equipment, Instruments & ComponentsInformation Technology4.31
MachineryIndustrials2.69
Auto ComponentsConsumer Discretionary2.03
Health Care Equipment & SuppliesHealth Care1.71

Top Detractors

INDUSTRYSECTORGAIN (%)
Energy Equipment & ServicesEnergy-5.40
Metals & MiningMaterials-3.95
Specialty RetailConsumer Discretionary-2.27
Oil, Gas & Consumable FuelsEnergy-1.72
Electrical EquipmentIndustrials-1.38

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
ePlusElectronic Equipment, Instruments & ComponentsInformation Technology1.21
NovantaElectronic Equipment, Instruments & ComponentsInformation Technology0.86
Hudson TechnologiesCommercial Services & SuppliesIndustrials0.84
Ultra Clean HoldingsSemiconductors & Semiconductor EquipmentInformation Technology0.82
Brooks AutomationSemiconductors & Semiconductor EquipmentInformation Technology0.81

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Horsehead Holding CorporationMetals & MiningMaterials-1.01
Total Energy ServicesEnergy Equipment & ServicesEnergy-0.99
Tesco CorporationEnergy Equipment & ServicesEnergy-0.99
Universal Stainless & Alloy ProductsMetals & MiningMaterials-0.95
Lincoln Educational ServicesDiversified Consumer ServicesConsumer Discretionary-0.91
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
18.33
86.03
13.59
Industrials
21.82
66.87
13.13
Health Care
10.59
97.81
7.30
Consumer Discretionary
16.17
26.49
6.38
Financials
7.99
105.69
5.60
Real Estate
2.37
58.40
1.86
Telecommunication Services
0.61
115.40
0.56
Utilities
0.07
12.91
0.19
Consumer Staples
1.08
-21.10
-0.34
Energy
6.89
-36.70
-2.47
Materials
8.29
-34.68
-5.12
Cash
5.69
0.85
0.06
Unclassified
0.09
57.26
0.04

Top Contributors

INDUSTRYSECTORGAIN (%)
Semiconductors & Semiconductor EquipmentInformation Technology7.69
MachineryIndustrials7.07
Electronic Equipment, Instruments & ComponentsInformation Technology4.95
Health Care Equipment & SuppliesHealth Care3.76
Professional ServicesIndustrials3.01

Top Detractors

INDUSTRYSECTORGAIN (%)
Metals & MiningMaterials-6.33
Energy Equipment & ServicesEnergy-1.89
Electrical EquipmentIndustrials-1.27
DistributorsConsumer Discretionary-0.79
Oil, Gas & Consumable FuelsEnergy-0.58

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
LCI IndustriesAuto ComponentsConsumer Discretionary1.52
KadantMachineryIndustrials1.33
Quaker ChemicalChemicalsMaterials1.28
ePlusElectronic Equipment, Instruments & ComponentsInformation Technology1.27
FRP HoldingsReal Estate Management & DevelopmentReal Estate1.25

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Universal Stainless & Alloy ProductsMetals & MiningMaterials-1.30
Dawson GeophysicalEnergy Equipment & ServicesEnergy-1.25
Lincoln Educational ServicesDiversified Consumer ServicesConsumer Discretionary-1.21
Global Power Equipment GroupElectrical EquipmentIndustrials-1.09
Sprott ResourceOil, Gas & Consumable FuelsEnergy-0.91

Risk

Above Average Volatility vs. Peer Group as of 06/30/17

The Fund has a above average volatility within its peer group of 527 Small-Cap Funds based on 5-year rolling standard deviation.

Down Market Performance Comparisonas of 06/30/17

The Fund outperformed the Russell Microcap during six out of seven downturns of 15% or more from the index’s prior historical high since the index’s inception.

Market Downturns (%)

DownMarketImg
Outperformed in 14 out of 23 down quarters.

Russell Microcap Down Quarters

QUARTER ENDRUSSELL MICROCAP (%)MICRO-CAP (%)SPREAD (%)
03/31/16-5.4-1.1+4.3
09/30/15-13.8-15.7-1.9
09/30/14-8.2-10.0-1.8
06/30/14-1.4+1.8+3.2
06/30/12-2.0-8.6-6.6
09/30/11-22.7-22.1+0.6
06/30/11-3.5-4.3-0.8
06/30/10-8.9-5.8+3.1
12/31/09-0.5+6.5+7.0
03/31/09-15.2-6.9+8.3
12/31/08-28.1-27.5+0.6
09/30/08-0.8-12.5-11.7
06/30/08-3.5+1.0+4.5
03/31/08-12.4-7.9+4.5
12/31/07-7.5-1.9+5.6
09/30/07-4.6-0.9+3.7
09/30/06-0.7-2.2-1.5
06/30/06-6.8-3.2+3.6
03/31/05-7.4-3.8+3.6
09/30/04-5.6-1.8+3.8
06/30/04-1.8-1.80.0
03/31/03-2.5-7.2-4.7
09/30/02-22.4-23.5-1.1

Capture Ratios From 06/30/00 ( Inception) to 06/30/17

Upside Capture Ratio measures a manager's performance in up markets relative to the Fund's benchmark. It is calculated by measuring the Fund's performance in quarters when the benchmark goes up and dividing it by the benchmark's return in those quarters.

Downside Capture Ratio measures a manager's performance in down markets relative to the Fund's benchmark. It is calculated by measuring the Fund's performance in quarters when the benchmark goes down and dividing it by the benchmark's return in those quarters.

Long Term Risk Measurementas of 03/31/15

Over the past 10 years, the Fund produced lower volatility than the Russell Microcap Index.
Over the past 5 years, the Fund produced lower volatility than the Russell Microcap Index.
Over the past 3 years, the Fund produced lower volatility than the Russell Microcap Index.
From the Index's inception, the Fund outperformed the Russell Microcap Index with lower volatility.

Go to Relative Risk Spectrum Tool

Morningstar Statistical Measures as of 06/30/17

The Fund produced lower volatility than the Russell Microcap, as shown by its standard deviation.
The Fund produced lower volatility than the Russell Microcap, as shown by its standard deviation.
The Fund produced lower volatility than the Russell Microcap and 50% of small-cap objective funds, as shown by its standard deviation.
Sharpe RatioStandard Deviation
Micro-Cap0.2319.61
Russell Microcap0.3421.21
Category Median0.4119.81
Best Quartile Breakpoint0.4618.89

Category Median and Best Quartile Breakpoint based on 429 small-cap objective funds (oldest class only) with at least ten years of history.
Sharpe Ratio Standard Deviation
Micro-Cap
Russell Microcap
Category Median
Best Quartile Breakpoint

Composition

Morningstar Style Map™as of 03/31/17

mstar-RYOTX

The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund's investment strategy. The Morningstar Ownership Zone provides detail about a portfolio's investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. The shaded area represents the center 75% of the Fund's assets while the plot point in the middle represents the weighted average of its holdings. Over time, the shape and location of a fund's ownership zone may vary.

Portfolio Diagnosticsas of 06/30/17

  RYOTX Russell Microcap
Average Market Cap
449.7M
405.7M
90%
-
2016 Portfolio Turnover
38%
-
Weighted Average P/E,
21.2x
-
Weighted Average P/B
1.9x
1.9x
U.S. Investments (% of Net Assets)
83.3%
-
Non-U.S. Investments (% of Net Assets)
13.3%
-

Portfolio Allocation

  • Total
    Holdings
    164


SECTORS
RYOTX (%) RUSSELL
MICROCAP (%)
Industrials
22.1
11.5
Information Technology
19.7
13.9
Consumer Discretionary
15.3
12.3
Financials
14.7
25.0
Health Care
9.1
21.3
Energy
6.3
4.7
Materials
5.5
3.1
Real Estate
1.8
3.9
Consumer Staples
1.4
1.9
Telecommunication Services
0.8
1.0
Utilities
-
1.4
Cash and Cash Equivalents
3.4
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Zealand Pharma
1.1
CryoLife
1.0
AV Homes
1.0
Citi Trends
0.9
QAD Cl. A
0.9
CPI Aerostructures
0.9
AtriCure
0.9
Ardmore Shipping
0.9
Silicon Motion Technology ADR
0.9
PC Connection
0.8
Canaccord Genuity Group
0.8
Hudson Technologies
0.8
Nautilus
0.8
ORBCOMM
0.8
LSI Industries
0.8
Lindsay Corporation
0.8
Clarkson
0.8
Alimak Group
0.8
Fox Factory Holding
0.8
MCBC Holdings
0.8
Top 20 as % of Net Assets
17.3

SECTORS
RYOTX (%) RUSSELL
MICROCAP (%)
Industrials
21.8
-
Information Technology
20.3
-
Financials
15.4
-
Consumer Discretionary
14.1
-
Health Care
9.0
-
Energy
6.4
-
Materials
5.1
-
Real Estate
1.8
-
Consumer Staples
1.6
-
Telecommunication Services
0.7
-
Cash and Cash Equivalents
3.7
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Zealand Pharma
1.0
Canaccord Genuity Group
0.9
CPI Aerostructures
0.9
QAD Cl. A
0.9
CryoLife
0.9
Ardmore Shipping
0.9
Citi Trends
0.8
Clarkson
0.8
Newpark Resources
0.8
Alimak Group
0.8
AtriCure
0.8
Lindsay Corporation
0.8
Viad Corporation
0.8
Ultra Clean Holdings
0.8
ePlus
0.8
PC Connection
0.8
Nanometrics
0.8
Kadant
0.8
Fabrinet
0.8
Clifton Bancorp
0.8
Top 20 as % of Net Assets
16.7

Portfolio Holdings

View the complete list of holdings for this fund as of 06/30/17. Unaudited schedule of portfolio holdings is presented for informational purposes only.

Least Portfolio Overlap - U.S. Equity Funds

Greatest Portfolio Overlap - U.S. Equity Funds

Geographical Breakdown

Distributions

NAV & Distributions


Start DateEnd Date
to

Learn more about distributions

Distributions

RECORD
DATE
EX-DATE PAYABLE
DATE
INCOME ($) SHORT
TERM
GAINS ($)
LONG
TERM
GAINS ($)
RETURN OF
CAPITAL ($)
TOTAL ($) REINVEST
PRICE ($)
12/14/16 12/15/16 12/15/16 0.0579 - 1.3023 - 1.3602 11.93
12/16/15 12/17/15 12/17/15 0.0000 - 1.4411 - 1.4411 11.00
12/16/14 12/17/14 12/17/14 0.0000 - 1.4830 - 1.4830 14.10
12/04/13 12/05/13 12/05/13 0.0185 - 1.1929 - 1.2114 16.20
12/27/12 12/28/12 12/28/12 0.0050 0.0259 - - 0.0309 14.48
12/05/12 12/06/12 12/06/12 0.0000 0.0273 0.8269 - 0.8542 14.17
12/07/11 12/08/11 12/08/11 0.2016 - 0.6977 - 0.8993 14.47
12/08/10 12/09/10 12/09/10 0.2533 - - - 0.2533 17.03
12/08/09 12/09/09 12/09/09 0.1842 - - - 0.1842 13.21

NAV History for

Fees & Expenses

Shareholder Fees (%)

(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases 0.00
Maximum deferred sales charge 0.00
Maximum sales charge (load) imposed on reinvested dividends 0.00
Redemption fee (as a percentage of amount redeemed on shares held for less than 30 days) 1.00

Annual Fund Operating Expenses (%)

(expenses that you pay each year as a percentage of the value of your investment)

Management fees 1.25
Distribution (12b-1) fees 0.00
Other expenses 0.23
Total annual Fund operating expenses 1.48

Important Disclosure Information

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefuly before investing or sending money. The Fund invests primarily in micro-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss. The Fund may invest up to 25% of its net assets (measured at the time of investment) in securities of companies headquartered in foreign countries, which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see "Investing in Foreign Securities" in the prospectus.)

Sector weightings are determined using the Global Industry Classification Standard ("GICS"). GICS was developed by, and is the exclusive property of, Standard & Poor's Financial Services LLC ("S&P") and MSCI Inc. ("MSCI"). GICS is the trademark of S&P and MSCI. "Global Industry Classification Standard (GICS)" and "GICS Direct" are service marks of S&P and MSCI.

The Price-Earnings, or P/E, Ratio is calculated by dividing a company's share price by its trailing 12-month earnings-per-share (EPS). The Fund's P/E ratio calculation excludes companies with zero or negative earnings. The Price-to-Book, or P/B, Ratio is calculated by dividing a company's share price by its book value per share. Standard deviation is a statistical measure within which a fund's total returns have varied over time. The greater the standard deviation, the greater a fund's volatility. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell Microcap Index includes 1,000 of the smallest securities in the small-cap Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The Russell Microcap Index includes 1,000 of the smallest securities in the small-cap Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

Jim Stoeffel lead manager since 2015 (co-manager 2015), Jenifer Taylor (co-manager or manager 2006-2015), Chris Flynn, Jim Harvey, and Brendan Hartman since 2015 (assistant portfolio manager 2013-2015)

12/31/1991 12:00:00 AM

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