549

At a Glance

Why invest in Pennsylvania Mutual?

  • One of the first open-end small-cap funds, managed for more than 40 years by the same portfolio manager—a recognized pioneer of small-cap investing
  • Core approach that combines multiple investment themes and offers wide exposure to small-cap stocks (generally market caps up to $3 billion) by investing in companies with high returns on invested capital or those with strong fundamentals and/or prospects trading at what Royce believes are attractive valuations
  • Provided average annual total returns of 10% or higher in 79% of all monthly rolling 10-year periods ended 6/30/16 since Chuck Royce began to manage the Fund in November 1972

As of 06/30/16

  • Small-Cap
    Core Approach
    $1.61B
    Avg. Market Cap
  • Below Average
    Volatility
    88%
    Active Share
  • Lead Manager
    Tenure
    43+
    Years on Fund

Portfolio Management

"Our task is to scour the large and diverse universe of small-cap companies for businesses that look mispriced and underappreciated, with the only caveat being that they must also have a discernible margin of safety. We are looking for stocks trading at a discount to our estimate of their worth as businesses."
Chuck Royce

Performance

Average Annual Total Returns (%)

Outperformed Russell 2000 for the Year To Date, 1-Year, 15-Year, 20-Year and 30-Year periods as of 06/30/16.
QTR YTD 1YR 3YR 5YR 10YR 15YR 20YR 30YR 40YR
Pennsylvania Mutual 1.08 7.12 -5.51 4.09 5.01 5.06 7.63 9.53 9.74 12.89
Russell 2000 3.79 2.22 -6.73 7.09 8.35 6.20 6.96 7.61 8.54 N/A

Annual Operating Expenses: 1.52

AUG YTD 1YR 3YR 5YR 10YR 15YR 20YR 30YR 40YR
Pennsylvania Mutual 1.25 13.23 9.27 4.76 8.62 5.70 8.29 9.95 10.07 13.10
Russell 2000 1.77 10.23 8.59 8.53 12.85 7.04 8.13 8.21 9.06 N/A

Annual Operating Expenses: 1.52

SEP YTD 1YR 3YR 5YR 10YR 15YR 20YR 30YR 40YR
Pennsylvania Mutual 0.45 13.74 16.90 2.72 11.14 5.66 9.23 9.86 10.24 13.01
Russell 2000 1.42 11.80 16.91 6.80 15.62 7.00 9.28 8.09 9.34 N/A

Annual Operating Expenses: 1.52

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. 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 K Class as of the Fund's most current prospectus and include management fees, 12b-1 distribution and service fees, other expenses and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies.

All performance and risk information presented in this material prior to the commencement date of K Class shares on 5/15/08 reflects Investment Class results. K Class shares bear annual expenses that are higher than those borne by Investment Class shares. If K Class's annual expenses had been reflected, total returns prior to 5/15/08 would have been lower.

Rolling Returns

On a monthly basis, the Fund outperformed the Russell 2000 in 82% of all 10-Year periods; 73% of all 5-Year periods; and 52% of all 1-Year periods.

For 99% of the periods, 10-year average annual total returns were greater than 5%; For 79% of the periods, 10-year average annual total returns were greater than 10%.

Relative Returns: Monthly Rolling Average Annual Return Periods 20 Years Through 06/30/16

periods beating
the index(%)
fund
avg(%)
index
avg(%)
10-year
99/121
82 9.5 7.0
5-year
132/181
73 10.0 7.4
1-year
118/229
52 11.2 9.7

Absolute Returns: 10-Year Monthly Rolling Return PeriodsNumber of 10-Year Average Annual Return Periods Since 11/30/72

Return Range Periods % in Range
> 10% 320 79
> 5% and ≤ 10% 78 19
> 0% and ≤ 5% 6 1
≤ 0% 0 0

The Fund averaged a 13.7% return over all 404 10-year monthly rolling return periods.

Market Cycle Performance

The Fund outperformed the Russell 2000 from the 6/23/15 index peak through current (6/30/16) and in one of the two previous full market cycle periods.
Peak-Peak - 07/13/07 - 04/29/11
Pennsylvania Mutual9.4%
Russell 20006.6%

Peak-Peak - 04/29/11 - 06/23/15
Pennsylvania Mutual33.5%
Russell 200058.5%

Peak-Current - 06/23/15 - 06/30/16
Pennsylvania Mutual-8.3%
Russell 2000-9.7%

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 12/31/78 and 06/30/16

Pennsylvania Mutual$799,275.40
Russell 2000$555,202.34

The since inception performance above dates to the inception of the Russell 2000 on 12/31/1978.

Portfolio Impactas of 06/30/16

SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
28.51
2.70
0.80
Health Care
7.26
7.81
0.56
Materials
9.57
6.17
0.54
Energy
3.66
8.71
0.31
Telecommunication Services
0.17
-0.90
0.00
Consumer Staples
1.46
-0.36
0.00
Information Technology
19.23
0.06
-0.01
Financials
14.58
-1.42
-0.21
Consumer Discretionary
14.93
-2.56
-0.44
Cash
0.65
0.06
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Commercial Services & SuppliesIndustrials0.55
Metals & MiningMaterials0.43
MachineryIndustrials0.32
Auto ComponentsConsumer Discretionary0.30
Energy Equipment & ServicesEnergy0.29

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-0.57
Technology Hardware, Storage & PeripheralsInformation Technology-0.19
Capital MarketsFinancials-0.19
Professional ServicesIndustrials-0.16
Diversified Consumer ServicesConsumer Discretionary-0.16

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Drew IndustriesAuto ComponentsConsumer Discretionary0.36
Ritchie Bros. AuctioneersCommercial Services & SuppliesIndustrials0.28
CopartCommercial Services & SuppliesIndustrials0.21
Franco-Nevada CorporationMetals & MiningMaterials0.18
Bio-TechneLife Sciences Tools & ServicesHealth Care0.17

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Buckle (The)Specialty RetailConsumer Discretionary-0.17
MBIAInsuranceFinancials-0.16
Liberty Tax Cl. ADiversified Consumer ServicesConsumer Discretionary-0.16
MTS SystemsElectronic Equipment, Instruments & ComponentsInformation Technology-0.16
STRATTEC SECURITYAuto ComponentsConsumer Discretionary-0.15
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
27.59
9.89
2.81
Information Technology
19.85
9.23
1.97
Materials
9.61
16.07
1.49
Consumer Discretionary
15.09
5.81
0.90
Health Care
6.95
5.55
0.33
Consumer Staples
1.84
12.31
0.30
Energy
3.53
6.08
0.20
Financials
14.49
1.90
0.16
Telecommunication Services
0.16
15.79
0.03
Cash
0.89
0.13
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology1.86
Metals & MiningMaterials1.16
MachineryIndustrials0.97
Commercial Services & SuppliesIndustrials0.82
Auto ComponentsConsumer Discretionary0.55

Top Detractors

INDUSTRYSECTORGAIN (%)
Capital MarketsFinancials-0.52
Professional ServicesIndustrials-0.52
Diversified Consumer ServicesConsumer Discretionary-0.28
Internet Software & ServicesInformation Technology-0.25
BiotechnologyHealth Care-0.13

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Drew IndustriesAuto ComponentsConsumer Discretionary0.44
Franco-Nevada CorporationMetals & MiningMaterials0.43
Newport CorporationElectronic Equipment, Instruments & ComponentsInformation Technology0.43
Ritchie Bros. AuctioneersCommercial Services & SuppliesIndustrials0.42
CoherentElectronic Equipment, Instruments & ComponentsInformation Technology0.35

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Advisory Board (The)Professional ServicesIndustrials-0.28
Liberty Tax Cl. ADiversified Consumer ServicesConsumer Discretionary-0.26
MTS SystemsElectronic Equipment, Instruments & ComponentsInformation Technology-0.19
comScoreInternet Software & ServicesInformation Technology-0.19
DieboldTechnology Hardware, Storage & PeripheralsInformation Technology-0.16
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Materials
9.63
3.55
0.50
Information Technology
20.10
0.28
0.30
Consumer Staples
2.08
0.56
0.07
Telecommunication Services
0.15
4.39
0.01
Utilities
0.01
5.71
0.00
Health Care
6.98
0.81
-0.09
Industrials
26.19
-2.91
-0.44
Energy
3.66
-25.68
-1.21
Consumer Discretionary
15.18
-8.14
-1.34
Financials
14.49
-8.98
-1.51
Cash
1.53
0.17
0.00
Unclassified
0.01
6.88
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology0.86
Auto ComponentsConsumer Discretionary0.52
Commercial Services & SuppliesIndustrials0.42
Household DurablesConsumer Discretionary0.38
Metals & MiningMaterials0.36

Top Detractors

INDUSTRYSECTORGAIN (%)
Capital MarketsFinancials-1.33
Specialty RetailConsumer Discretionary-1.26
Energy Equipment & ServicesEnergy-1.18
Professional ServicesIndustrials-0.64
Diversified Consumer ServicesConsumer Discretionary-0.58

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Franco-Nevada CorporationMetals & MiningMaterials0.49
Drew IndustriesAuto ComponentsConsumer Discretionary0.48
John Bean TechnologiesMachineryIndustrials0.40
CoherentElectronic Equipment, Instruments & ComponentsInformation Technology0.38
FabrinetElectronic Equipment, Instruments & ComponentsInformation Technology0.37

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Advisory Board (The)Professional ServicesIndustrials-0.36
Buckle (The)Specialty RetailConsumer Discretionary-0.34
KennametalMachineryIndustrials-0.32
Unit CorporationEnergy Equipment & ServicesEnergy-0.30
Liberty Tax Cl. ADiversified Consumer ServicesConsumer Discretionary-0.27
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
20.53
33.09
6.63
Industrials
25.13
14.52
4.31
Consumer Discretionary
14.85
18.12
2.70
Health Care
6.70
50.06
2.65
Materials
9.80
16.75
1.50
Financials
12.82
16.61
1.49
Consumer Staples
1.96
35.18
0.65
Utilities
0.01
37.00
0.00
Telecommunication Services
0.16
-6.43
-0.01
Energy
5.84
-36.89
-1.55
Cash
2.20
0.22
0.00
Unclassified
0.01
16.84
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology3.33
MachineryIndustrials1.61
Semiconductors & Semiconductor EquipmentInformation Technology1.41
SoftwareInformation Technology1.31
Household DurablesConsumer Discretionary1.14

Top Detractors

INDUSTRYSECTORGAIN (%)
Energy Equipment & ServicesEnergy-1.77
Specialty RetailConsumer Discretionary-0.73
Diversified Financial ServicesFinancials-0.49
Diversified Consumer ServicesConsumer Discretionary-0.40
Electrical EquipmentIndustrials-0.33

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Drew IndustriesAuto ComponentsConsumer Discretionary0.76
Core-Mark Holding CompanyDistributorsConsumer Discretionary0.62
Franco-Nevada CorporationMetals & MiningMaterials0.54
Ritchie Bros. AuctioneersCommercial Services & SuppliesIndustrials0.54
John Bean TechnologiesMachineryIndustrials0.53

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Unit CorporationEnergy Equipment & ServicesEnergy-0.55
KBRConstruction & EngineeringIndustrials-0.38
KennametalMachineryIndustrials-0.36
Atwood OceanicsEnergy Equipment & ServicesEnergy-0.35
Buckle (The)Specialty RetailConsumer Discretionary-0.33
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
25.28
40.58
12.56
Information Technology
20.30
39.50
8.80
Consumer Discretionary
14.64
56.65
8.59
Financials
12.62
46.19
4.53
Health Care
7.03
75.17
4.23
Consumer Staples
1.89
111.13
1.65
Telecommunication Services
0.13
40.59
0.04
Utilities
0.01
-5.40
-0.01
Materials
9.05
-2.38
-0.18
Energy
6.59
-40.26
-2.76
Cash
2.47
0.34
0.01
Unclassified
0.00
16.84
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
MachineryIndustrials4.57
Electronic Equipment, Instruments & ComponentsInformation Technology3.73
SoftwareInformation Technology2.76
Household DurablesConsumer Discretionary2.20
InsuranceFinancials2.17

Top Detractors

INDUSTRYSECTORGAIN (%)
Energy Equipment & ServicesEnergy-2.49
Metals & MiningMaterials-2.07
Diversified Consumer ServicesConsumer Discretionary-0.74
Diversified Financial ServicesFinancials-0.55
Electrical EquipmentIndustrials-0.29

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Drew IndustriesAuto ComponentsConsumer Discretionary1.12
Manhattan AssociatesSoftwareInformation Technology0.84
Dorman ProductsAuto ComponentsConsumer Discretionary0.78
IPG PhotonicsElectronic Equipment, Instruments & ComponentsInformation Technology0.76
NVRHousehold DurablesConsumer Discretionary0.71

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Unit CorporationEnergy Equipment & ServicesEnergy-0.88
CARBO CeramicsEnergy Equipment & ServicesEnergy-0.70
Trican Well ServiceEnergy Equipment & ServicesEnergy-0.64
GrafTech InternationalElectrical EquipmentIndustrials-0.52
KBRConstruction & EngineeringIndustrials-0.52

Risk

Below Average Volatility vs. Peer Group as of 06/30/16

The Fund has a below average volatility within its peer group of 474 Small-Cap Funds based on 5-year rolling standard deviation.

Down Market Performance Comparisonas of 06/30/16

The Fund outperformed the Russell 2000 during 10 out of 11 downturns of 10% or more from the index’s prior historical high since the Fund’s inception.

Market Downturns (%)

DownMarketImg

Russell 2000 Down Quarters

QUARTER ENDRUSSELL 2000 (%)PENNSYLVANIA MUTUAL (%)SPREAD (%)
03/31/16-1.5+6.0+7.5
09/30/15-11.9-13.2-1.3
09/30/14-7.4-7.7-0.3
06/30/12-3.5-7.3-3.8
09/30/11-21.9-21.2+0.7
06/30/11-1.6-2.1-0.5
06/30/10-9.9-8.6+1.3
03/31/09-15.0-12.0+3.0
12/31/08-26.1-26.3-0.2
09/30/08-1.1-7.3-6.2
03/31/08-9.9-6.3+3.6
12/31/07-4.6-3.8+0.8
09/30/07-3.1-2.9+0.2
06/30/06-5.0-5.2-0.2
03/31/05-5.3-0.7+4.6
09/30/04-2.9+0.9+3.8
03/31/03-4.5-5.5-1.0
09/30/02-21.4-17.4+4.0
06/30/02-8.4-4.9+3.5
09/30/01-20.8-14.9+5.9

Capture Ratios From 12/31/78 (Russell 2000 Inception) to 06/30/16

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 06/30/16

Over the past 10 years, the Fund produced lower volatility than the Russell 2000 Index.
Over the past 5 years, the Fund produced lower volatility than the Russell 2000 Index.
Over the past 3 years, the Fund produced lower volatility than the Russell 2000 Index.
From the Index's inception, the Fund outperformed the Russell 2000 Index with lower volatility.

Go to Relative Risk Spectrum Tool

Morningstar Statistical Measures as of 06/30/16

The Fund produced lower volatility than the Russell 2000 and 50% of small-cap objective funds, as shown by its standard deviation.
The Fund produced lower volatility than the Russell 2000 and 50% of small-cap objective funds, as shown by its standard deviation.
The Fund produced lower volatility than the Russell 2000 and 50% of small-cap objective funds, as shown by its standard deviation.
Sharpe RatioStandard Deviation
Pennsylvania Mutual0.3119.06
Russell 20000.3619.83
Category Median0.3619.51
Best Quartile Breakpoint0.4218.66

Category Median and Best Quartile Breakpoint based on 389 small-cap objective funds (oldest class only) with at least ten years of history.
Sharpe Ratio Standard Deviation
Pennsylvania Mutual
Russell 2000
Category Median
Best Quartile Breakpoint

Composition

Morningstar Style Map™as of 06/30/16

mstar-RPMKX

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 06/30/16

  RPMKX Russell 2000
Average Market Cap
1.61B
1.37B
88%
-
2015 Portfolio Turnover
21%
-
Weighted Average P/E,
19.9x
19.6x
Weighted Average P/B
2.2x
2.0x
U.S. Investments (% of Net Assets)
87.6%
-
Non-U.S. Investments (% of Net Assets)
10.7%
-

Portfolio Allocation

  • Total
    Holdings
    308

Top 200 holdings represented 94% of the Fund's equity investments as of 06/30/16.

SECTORS
RPMKX (%) RUSSELL
2000 (%)
Industrials
29.0
13.8
Information Technology
18.6
17.3
Consumer Discretionary
15.2
13.5
Financials
14.3
25.8
Materials
8.8
4.6
Health Care
6.9
13.6
Energy
3.8
3.0
Consumer Staples
1.5
3.1
Telecommunication Services
0.2
0.9
Utilities
-
4.3
Cash and Cash Equivalents
1.6
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Drew Industries
1.4
Ritchie Bros. Auctioneers
1.3
Quaker Chemical
1.2
HEICO Corporation
1.2
Copart
1.1
Ethan Allen Interiors
1.1
Landstar System
1.0
Bio-Techne
1.0
Coherent
1.0
RBC Bearings
0.9
Valmont Industries
0.9
Tennant Company
0.9
Genworth MI Canada
0.9
FLIR Systems
0.9
Forward Air
0.9
Cognex Corporation
0.9
First Citizens BancShares Cl. A
0.9
Reliance Steel & Aluminum
0.9
Federated Investors Cl. B
0.9
Stella-Jones
0.9
Top 20 as % of Net Assets
20.2

SECTORS
RPMKX (%) RUSSELL
2000 (%)
Industrials
29.6
-
Information Technology
18.7
-
Consumer Discretionary
15.3
-
Financials
14.5
-
Materials
8.8
-
Health Care
7.0
-
Energy
3.6
-
Consumer Staples
1.5
-
Telecommunication Services
0.2
-
Cash and Cash Equivalents
0.7
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Drew Industries
1.5
Quaker Chemical
1.3
Ritchie Bros. Auctioneers
1.3
HEICO Corporation
1.2
Copart
1.2
Coherent
1.1
Tennant Company
1.1
Ethan Allen Interiors
1.1
Landstar System
1.0
Federated Investors Cl. B
1.0
Bio-Techne
0.9
RBC Bearings
0.9
FLIR Systems
0.9
Genworth MI Canada
0.9
Cognex Corporation
0.9
Forward Air
0.9
DTS
0.9
John Bean Technologies
0.9
Reliance Steel & Aluminum
0.9
Valmont Industries
0.9
Top 20 as % of Net Assets
20.8

Portfolio Holdings

View the complete list of holdings for this fund as of 06/30/16. 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 ($) REINVEST
PRICE ($)
12/16/15 12/17/15 12/17/15 0.0000 0.0124 2.0662 - 2.0786 7.82
12/16/14 12/17/14 12/17/14 0.0000 0.0660 1.4702 - 1.5362 11.00
12/04/13 12/05/13 12/05/13 0.0000 0.1391 0.6517 - 0.7908 12.54
12/27/12 12/28/12 12/28/12 0.0024 - - - 0.0024 10.08
12/05/12 12/06/12 12/06/12 0.0732 0.0344 0.6141 - 0.7217 9.95
12/07/11 12/08/11 12/08/11 0.0000 - 0.3797 - 0.3797 9.55
12/08/10 12/09/10 12/09/10 0.0049 - - - 0.0049 10.35

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 180 days) 0.00

Annual Fund Operating Expenses (%)

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

Management fees 0.75
Distribution (12b-1) fees 0.25
Other expenses 0.51
Acquired fund fees and expenses 0.01
Total annual Fund operating expenses 1.52
Total annual Fund operating expenses may differ from the expense ratio in the Fund's Financial Highlights because they include only the Fund's direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies.

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 small-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 in foreign securities that 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. 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 2000 is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

Chuck Royce lead manager since 2016 (manager 1972-2016), Jay Kaplan (assistant portfolio manager 2003-2016) and Lauren Romeo since 2016 (assistant portfolio manager 2006-2016)

5/15/2008 12:00:00 AM

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