4

At a Glance

Why invest in Small/Mid-Cap Premier?

  • Small/mid-cap core fund (generally market caps up to $15 billion) that invests primarily in what Royce believes are industry leaders with discernible competitive advantages, high returns on invested capital, and a sustainable, moat-like franchise
  • Focuses on leading quality companies, those with sustainable, moat-like franchises, discernible competitive advantages, a history of prudent capital allocation, and opportunities to profitably reinvest excess cash flow
  • Outperformed its benchmark, the Russell 2000 Index, in 82% of all monthly rolling 10-year periods for the 20 years ended 6/30/17

As of 06/30/17

  • Small/Mid-Cap
    Core Approach
    $5.02B
    Avg. Market Cap
  • Below Average
    Volatility
    98%
    Active Share
  • Fund
    Longevity
    21+
    Years of History

Portfolio Management

"My approach is to remain disciplined, develop well-reasoned, well-researched opinions; analyze business ecosystems and all the forces that are at play; and perhaps most importantly, remember that quality in the end wins out."
Steven McBoyle

Manager Tenure

Manager Tenure

Performance

Average Annual Total Returns (%)

Outperformed Russell 2000 for the Year To Date, 20-Year and since inception (12/27/95) periods as of 06/30/17. Outpaced Russell 2500 for the 20-Year and since inception (12/27/95) periods as of 06/30/17.
QTR YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Small/Mid-Cap Premier 1.25 5.6818.273.8010.115.739.0411.3912.33 12/27/95
Russell 2000 2.46 4.9924.607.3613.706.929.197.988.69 N/A
Russell 2500 2.13 5.9719.846.9314.047.429.989.199.99 N/A

Annual Operating Expenses: 1.30

JUL YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Small/Mid-Cap Premier 1.23 6.9914.485.8810.516.389.9311.2912.34 12/27/95
Russell 2000 0.74 5.7718.459.8914.197.7610.447.788.69 N/A
Russell 2500 1.04 7.0715.089.1214.438.1610.998.9410.00 N/A

Annual Operating Expenses: 1.30

AUG YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Small/Mid-Cap Premier -2.69 4.119.853.938.996.329.3711.0512.17 12/27/95
Russell 2000 -4.71 0.7911.246.8512.277.069.827.488.43 N/A
Russell 2500 -3.76 3.049.956.4312.667.8110.448.719.78 N/A

Annual Operating Expenses: 1.30

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 total annual operating expenses for the Service Class as of the Fund's most current prospectus and include management fees, 12b-1 distribution and service fees and other expenses.

Rolling Returns

On a monthly basis, the Fund outperformed the Russell 2000 in 82% of all 10-Year periods; 77% of all 5-Year periods; and 59% of all 1-Year periods.

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

Relative Returns: Monthly Rolling Average Annual Return Periods 20 Years Through 06/30/17

periods beating
the index(%)
fund
avg(%)
index
avg(%)
10-year
99/121
82 9.4 6.7
5-year
139/181
77 10.3 7.7
1-year
136/229
59 12.9 9.2

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% 57 41
> 5% and ≤ 10% 80 58
> 0% and ≤ 5% 2 1
≤ 0% 0 0

The Fund averaged a 10.6% return over all 139 10-year monthly rolling return periods.

Market Cycle Performance

The Fund outperformed the Russell 2000 in one of the two previous full market cycle periods.
Peak-Peak - 07/13/07 - 04/29/11
Small/Mid-Cap Premier25.3%
Russell 20006.6%

Peak-Peak - 04/29/11 - 06/23/15
Small/Mid-Cap Premier21.4%
Russell 200058.5%

Peak-Current - 06/23/15 - 06/30/17
Small/Mid-Cap Premier12.1%
Russell 200012.5%

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 12/27/95 and 06/30/17

Small/Mid-Cap Premier$121,957.93
Russell 2000$60,038.67

Portfolio Impactas of 06/30/17

SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
10.71
6.78
0.72
Real Estate
4.39
9.49
0.42
Health Care
3.20
9.56
0.29
Industrials
25.00
0.74
0.22
Financials
8.60
0.96
0.09
Consumer Staples
2.61
2.28
0.06
Utilities
1.85
-1.51
-0.02
Materials
7.93
-0.89
-0.07
Consumer Discretionary
24.53
-0.37
-0.14
Cash
11.17
0.22
0.03

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology0.46
Real Estate Management & DevelopmentReal Estate0.42
Professional ServicesIndustrials0.34
Household DurablesConsumer Discretionary0.32
DistributorsConsumer Discretionary0.26

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-0.49
Auto ComponentsConsumer Discretionary-0.29
Multiline RetailConsumer Discretionary-0.18
MediaConsumer Discretionary-0.18
Industrial ConglomeratesIndustrials-0.14

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
IPG PhotonicsElectronic Equipment, Instruments & ComponentsInformation Technology0.38
LKQ CorporationDistributorsConsumer Discretionary0.26
ManpowerGroupProfessional ServicesIndustrials0.23
Kennedy Wilson Europe Real EstateReal Estate Management & DevelopmentReal Estate0.23
Thor IndustriesAutomobilesConsumer Discretionary0.18

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Dicks Sporting GoodsSpecialty RetailConsumer Discretionary-0.36
Cooper Tire & RubberAuto ComponentsConsumer Discretionary-0.28
Gentex CorporationAuto ComponentsConsumer Discretionary-0.20
Monro Muffler BrakeSpecialty RetailConsumer Discretionary-0.20
Dollar TreeMultiline RetailConsumer Discretionary-0.18
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
9.83
26.18
2.23
Industrials
23.67
8.17
1.86
Real Estate
4.36
18.66
0.72
Financials
8.35
7.86
0.63
Health Care
2.67
23.85
0.57
Materials
8.29
3.60
0.35
Utilities
1.90
6.11
0.13
Consumer Staples
2.02
-2.83
0.03
Consumer Discretionary
25.89
-0.50
-0.20
Cash
13.03
0.37
0.05

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology1.38
Professional ServicesIndustrials1.03
Real Estate Management & DevelopmentReal Estate0.72
Capital MarketsFinancials0.70
Household DurablesConsumer Discretionary0.51

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-1.33
Industrial ConglomeratesIndustrials-0.19
Multiline RetailConsumer Discretionary-0.16
Paper & Forest ProductsMaterials-0.10
Electrical EquipmentIndustrials-0.08

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
IPG PhotonicsElectronic Equipment, Instruments & ComponentsInformation Technology0.73
ManpowerGroupProfessional ServicesIndustrials0.55
NVRHousehold DurablesConsumer Discretionary0.50
CoherentElectronic Equipment, Instruments & ComponentsInformation Technology0.50
Westlake ChemicalChemicalsMaterials0.50

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Dicks Sporting GoodsSpecialty RetailConsumer Discretionary-0.53
Signet JewelersSpecialty RetailConsumer Discretionary-0.53
Monro Muffler BrakeSpecialty RetailConsumer Discretionary-0.25
Carlisle CompaniesIndustrial ConglomeratesIndustrials-0.19
Dollar TreeMultiline RetailConsumer Discretionary-0.16
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
24.60
23.73
5.72
Consumer Discretionary
24.24
20.48
4.73
Information Technology
8.31
41.70
3.08
Materials
9.94
22.28
2.53
Financials
8.41
22.61
1.88
Real Estate
5.15
23.72
0.98
Health Care
1.91
18.58
0.50
Utilities
1.84
9.20
0.18
Consumer Staples
1.51
-2.17
0.00
Cash
14.07
0.55
0.08
Unclassified
0.03
1.42
0.01

Top Contributors

INDUSTRYSECTORGAIN (%)
ChemicalsMaterials2.52
Auto ComponentsConsumer Discretionary2.27
Electronic Equipment, Instruments & ComponentsInformation Technology2.09
Professional ServicesIndustrials1.65
AutomobilesConsumer Discretionary1.47

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-0.46
Multiline RetailConsumer Discretionary-0.27
Industrial ConglomeratesIndustrials-0.20
Metals & MiningMaterials-0.18
Food & Staples RetailingConsumer Staples-0.11

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Thor IndustriesAutomobilesConsumer Discretionary1.47
ManpowerGroupProfessional ServicesIndustrials1.26
Westlake ChemicalChemicalsMaterials1.11
CoherentElectronic Equipment, Instruments & ComponentsInformation Technology0.91
Standard Motor ProductsAuto ComponentsConsumer Discretionary0.85

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Signet JewelersSpecialty RetailConsumer Discretionary-0.52
Dicks Sporting GoodsSpecialty RetailConsumer Discretionary-0.40
Monro Muffler BrakeSpecialty RetailConsumer Discretionary-0.28
Dollar TreeMultiline RetailConsumer Discretionary-0.27
Carlisle CompaniesIndustrial ConglomeratesIndustrials-0.20
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Consumer Discretionary
18.11
34.66
7.38
Industrials
23.93
18.29
5.62
Information Technology
12.19
46.88
4.07
Materials
9.41
12.45
1.61
Health Care
2.85
54.99
1.26
Utilities
1.47
54.30
1.09
Consumer Staples
1.48
3.66
0.60
Financials
12.77
10.00
-0.46
Real Estate
3.84
-12.56
-1.02
Energy
1.32
-55.42
-3.84
Cash
11.85
0.73
0.11
Unclassified
0.78
12.89
0.40

Top Contributors

INDUSTRYSECTORGAIN (%)
Auto ComponentsConsumer Discretionary3.45
Commercial Services & SuppliesIndustrials2.31
Professional ServicesIndustrials2.08
Electronic Equipment, Instruments & ComponentsInformation Technology2.00
AutomobilesConsumer Discretionary1.88

Top Detractors

INDUSTRYSECTORGAIN (%)
Energy Equipment & ServicesEnergy-3.79
Specialty RetailConsumer Discretionary-1.74
Capital MarketsFinancials-1.72
Real Estate Management & DevelopmentReal Estate-1.02
Containers & PackagingMaterials-0.29

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Thor IndustriesAutomobilesConsumer Discretionary1.90
CopartCommercial Services & SuppliesIndustrials1.78
LCI IndustriesAuto ComponentsConsumer Discretionary1.71
CoherentElectronic Equipment, Instruments & ComponentsInformation Technology1.27
Lam ResearchSemiconductors & Semiconductor EquipmentInformation Technology1.10

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Signet JewelersSpecialty RetailConsumer Discretionary-1.25
Anixter InternationalElectronic Equipment, Instruments & ComponentsInformation Technology-0.93
TransoceanEnergy Equipment & ServicesEnergy-0.83
KKR & Co. L.P.Capital MarketsFinancials-0.74
Trican Well ServiceEnergy Equipment & ServicesEnergy-0.68
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
23.97
75.97
19.21
Consumer Discretionary
15.52
130.38
16.52
Information Technology
14.57
131.14
16.08
Financials
14.17
99.75
13.88
Health Care
3.54
106.46
3.06
Materials
9.74
19.12
2.04
Utilities
0.95
180.71
1.23
Consumer Staples
1.32
42.98
1.11
Energy
2.90
-23.60
0.18
Telecommunication Services
0.01
-8.73
-0.01
Real Estate
2.93
18.99
-0.39
Cash
9.84
0.85
0.11
Unclassified
0.54
39.94
0.46

Top Contributors

INDUSTRYSECTORGAIN (%)
Capital MarketsFinancials11.95
Electronic Equipment, Instruments & ComponentsInformation Technology8.72
Professional ServicesIndustrials4.89
Auto ComponentsConsumer Discretionary4.69
MachineryIndustrials4.01

Top Detractors

INDUSTRYSECTORGAIN (%)
Metals & MiningMaterials-2.37
Real Estate Management & DevelopmentReal Estate-0.39
Food & Staples RetailingConsumer Staples-0.23
Communications EquipmentInformation Technology-0.20
Electronic Equipment, Instruments & CompInformation Technology-0.17

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Thor IndustriesAutomobilesConsumer Discretionary2.71
LCI IndustriesAuto ComponentsConsumer Discretionary2.30
ManpowerGroupProfessional ServicesIndustrials2.26
IPG PhotonicsElectronic Equipment, Instruments & ComponentsInformation Technology2.09
CopartCommercial Services & SuppliesIndustrials1.93

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
TransoceanEnergy Equipment & ServicesEnergy-0.85
SprottCapital MarketsFinancials-0.73
Gold Fields ADRMetals & MiningMaterials-0.68
Hochschild MiningMetals & MiningMaterials-0.62
Unit CorporationEnergy Equipment & ServicesEnergy-0.61

Risk

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

The Fund has a below average volatility within its peer group of 948 Small/Mid-Cap Funds based on 5-year rolling standard deviation.

Down Market Performance Comparisonas of 06/30/17

The Fund outperformed the Russell 2000 during five out of six downturns of 15% or more from the index’s prior historical high since the Fund’s inception.

Market Downturns (%)

DownMarketImg

Russell 2000 Down Quarters

QUARTER ENDRUSSELL 2000 (%)SMALL/MID-CAP PREMIER (%)SPREAD (%)
03/31/16-1.5+4.8+6.3
09/30/15-11.9-10.4+1.5
09/30/14-7.4-7.40.0
06/30/12-3.5-9.3-5.8
09/30/11-21.9-23.0-1.1
06/30/11-1.6-2.4-0.8
06/30/10-9.9-8.4+1.5
03/31/09-15.0-7.7+7.3
12/31/08-26.1-24.9+1.2
09/30/08-1.1-3.9-2.8
03/31/08-9.9-10.9-1.0
12/31/07-4.6-4.2+0.4
09/30/07-3.1-1.8+1.3
06/30/06-5.0-3.7+1.3
03/31/05-5.3-6.8-1.5
09/30/04-2.9-3.5-0.6
03/31/03-4.5-6.0-1.5
09/30/02-21.4-19.7+1.7

Capture Ratios Fund's First Full Quarter (12/31/95) 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 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 Fund's inception, the Fund outperformed the Russell 2000 Index with lower volatility.

Go to Relative Risk Spectrum Tool

Morningstar Statistical Measures as of 06/30/17

The Fund produced lower volatility than the Russell 2000 and 50% of small/mid-cap objective funds, as shown by its standard deviation.
The Fund produced lower volatility than the Russell 2000 and 50% of small/mid-cap objective funds, as shown by its standard deviation.
Sharpe RatioStandard Deviation
Small/Mid-Cap Premier0.3520.15
Russell 20000.4120.13
Category Median0.4219.02
Best Quartile Breakpoint0.4717.84

Category Median and Best Quartile Breakpoint based on 779 small/mid-cap objective funds (oldest class only) with at least ten years of history.
Sharpe Ratio Standard Deviation
Small/Mid-Cap Premier
Russell 2000
Category Median
Best Quartile Breakpoint

Composition

Morningstar Style Map™as of 03/31/17

mstar-RGFAX

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

  RGFAX Russell 2000
Average Market Cap
5.02B
1.63B
98%
-
2016 Portfolio Turnover
67%
-
Weighted Average P/E,
21.8x
21.7x
Weighted Average P/B
2.9x
2.2x
U.S. Investments (% of Net Assets)
84.5%
-
Non-U.S. Investments (% of Net Assets)
8.1%
-

Portfolio Allocation

  • Total
    Holdings
    82


SECTORS
RGFAX (%) RUSSELL
2000 (%)
Industrials
27.2
14.6
Consumer Discretionary
24.7
12.5
Information Technology
11.6
17.0
Financials
8.8
18.2
Materials
8.2
4.4
Real Estate
4.7
7.5
Health Care
3.8
15.0
Consumer Staples
2.4
2.7
Utilities
1.4
3.7
Energy
-
3.6
Telecommunication Services
-
0.9
Cash and Cash Equivalents
7.3
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Copart
3.2
Alleghany Corporation
3.0
ManpowerGroup
2.6
LKQ Corporation
2.6
Westlake Chemical
2.6
Valmont Industries
2.4
IPG Photonics
2.3
Thor Industries
2.3
Standard Motor Products
2.2
Minerals Technologies
2.1
Affiliated Managers Group
2.0
Hubbell Cl. B
1.9
Lazard Cl. A
1.9
Kirby Corporation
1.9
DST Systems
1.8
Lam Research
1.7
IHS Markit
1.7
AVX Corporation
1.7
Children's Place
1.5
Realogy Holdings
1.5
Top 20 as % of Net Assets
42.9

SECTORS
RGFAX (%) RUSSELL
2000 (%)
Industrials
26.5
-
Consumer Discretionary
21.5
-
Information Technology
10.9
-
Financials
9.2
-
Materials
8.3
-
Real Estate
4.8
-
Health Care
3.7
-
Consumer Staples
2.4
-
Utilities
1.4
-
Cash and Cash Equivalents
11.3
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Copart
3.2
Alleghany Corporation
3.1
LKQ Corporation
2.9
Westlake Chemical
2.7
ManpowerGroup
2.5
Valmont Industries
2.5
IPG Photonics
2.5
Thor Industries
2.3
Affiliated Managers Group
2.3
Hubbell Cl. B
2.1
Minerals Technologies
2.0
Carlisle Companies
2.0
Lazard Cl. A
2.0
Lam Research
2.0
AVX Corporation
1.8
IHS Markit
1.8
Kirby Corporation
1.8
Standard Motor Products
1.7
Children's Place
1.6
Realogy Holdings
1.6
Top 20 as % of Net Assets
44.4

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 0.0281 - 0.5074 - 0.5355 14.74
12/16/15 12/17/15 12/17/15 0.0767 0.0184 1.2395 - 1.3346 12.80
12/16/14 12/17/14 12/17/14 0.0000 0.0657 0.7597 - 0.8254 14.80
12/04/13 12/05/13 12/05/13 0.0037 0.3248 1.6035 - 1.9320 15.61
12/27/12 12/28/12 12/28/12 0.0180 - - - 0.0180 14.21
12/05/12 12/06/12 12/06/12 0.0257 - 0.3625 - 0.3882 13.96
12/07/11 12/08/11 12/08/11 0.0253 0.0658 0.5243 - 0.6154 12.94
12/08/10 12/09/10 12/09/10 0.0591 - 0.2902 - 0.3493 14.60

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 Trustee's Fee applies only to GiftShare Accounts$50.00

Annual Fund Operating Expenses (%)

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

Management fees 0.85
Distribution (12b-1) fees 0.25
Other expenses 0.20
Total annual Fund operating expenses 1.30
The information above reflects the Fund’s amended contractual management fee rate as of May 1, 2016.

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 generally invests in small-cap and mid-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 also generally invests a significant portion of its assets in a limited number of stocks, which may involve considerably more risk than a more broadly diversified portfolio because a decline in the value of any one of these stocks would cause the Fund's overall value to decline to a greater degree. (Please see "Primary Risks for Fund Investors" in the prospectus.) 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. 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. 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.

Steven McBoyle lead manager since 2015 (manager 2012-2015 and assistant portfolio manager 2011-2012), Chuck Royce since 2015 (lead portfolio manager 2010-2015 and manager 1995-2010)

12/27/1995 12:00:00 AM

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