191

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 88% of all monthly rolling 10-year periods for the 20 years ended 3/31/17

As of 03/31/17

  • Small/Mid-Cap
    Core Approach
    $5.14B
    Avg. Market Cap
  • Average
    Volatility
    97%
    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 Quarter, Year To Date, 20-Year and since inception (12/27/95) periods as of 03/31/17. Outpaced Russell 2500 for the Quarter, Year To Date, 20-Year and since inception (12/27/95) periods as of 03/31/17.
QTR YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Small/Mid-Cap Premier 4.44 4.4417.604.448.006.358.3812.0512.54 12/27/95
Russell 2000 2.47 2.4726.227.2212.357.128.388.678.67 N/A
Russell 2500 3.76 3.7621.537.4312.607.719.179.8510.00 N/A

Annual Operating Expenses: 0.96

APR YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Small/Mid-Cap Premier 0.39 4.8516.855.098.336.178.4512.0912.51 12/27/95
Russell 2000 1.10 3.5925.639.0312.957.058.398.718.69 N/A
Russell 2500 0.77 4.5620.698.5512.947.529.249.8210.00 N/A

Annual Operating Expenses: 0.96

MAY YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
Small/Mid-Cap Premier -0.98 3.8314.534.6810.225.898.4911.7612.41 12/27/95
Russell 2000 -1.20 2.3523.018.5914.106.718.558.158.60 N/A
Russell 2500 -0.56 3.9718.808.2214.247.249.349.379.94 N/A

Annual Operating Expenses: 0.96

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. 

All performance and risk information presented in this material prior to the commencement date of Investment Class shares on 3/15/07 reflects Service Class results. Shares of the Fund's Service Class bear an annual distribution expense that is not borne by the Investment Class.

Rolling Returns

On a monthly basis, the Fund outperformed the Russell 2000 in 88% of all 10-Year periods; 78% of all 5-Year periods; and 62% 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 03/31/17

periods beating
the index(%)
fund
avg(%)
index
avg(%)
10-year
107/121
88 9.8 6.8
5-year
142/181
78 10.6 7.7
1-year
141/229
62 13.3 9.3

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% 58 43
> 5% and ≤ 10% 77 57
> 0% and ≤ 5% 1 1
≤ 0% 0 0

The Fund averaged a 10.8% return over all 136 10-year monthly rolling return periods.

Market Cycle Performance

The Fund outperformed the Russell 2000 from the 6/23/15 index peak through current (3/31/17) and in one of the two previous full market cycle periods.
Peak-Peak - 07/13/07 - 04/29/11
Small/Mid-Cap Premier26.2%
Russell 20006.6%

Peak-Peak - 04/29/11 - 06/23/15
Small/Mid-Cap Premier22.9%
Russell 200058.5%

Peak-Current - 06/23/15 - 03/31/17
Small/Mid-Cap Premier11.1%
Russell 20009.8%

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 03/31/17

Small/Mid-Cap Premier$123,180.47
Russell 2000$58,595.14

Portfolio Impactas of 03/31/17

SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
22.31
7.38
1.62
Information Technology
8.94
18.17
1.48
Financials
9.17
6.10
0.55
Materials
8.66
4.53
0.41
Real Estate
3.26
11.08
0.29
Health Care
2.12
13.04
0.28
Utilities
1.95
7.74
0.15
Consumer Staples
1.42
-5.00
-0.03
Consumer Discretionary
27.23
-0.12
-0.06
Cash
14.91
0.15
0.02
Unclassified
0.03
-1.08
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment Instruments & ComponentsInformation Technology0.91
Professional ServicesIndustrials0.69
ChemicalsMaterials0.53
Capital MarketsFinancials0.51
Commercial Services & SuppliesIndustrials0.41

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-0.82
Paper & Forest ProductsMaterials-0.15
AutomobilesConsumer Discretionary-0.09
DistributorsConsumer Discretionary-0.06
Industrial ConglomeratesIndustrials-0.05

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Westlake ChemicalChemicalsMaterials0.48
CoherentElectronic Equipment Instruments & ComponentsInformation Technology0.42
IPG PhotonicsElectronic Equipment Instruments & ComponentsInformation Technology0.34
CopartCommercial Services & SuppliesIndustrials0.33
NVRHousehold DurablesConsumer Discretionary0.32

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Signet JewelersSpecialty RetailConsumer Discretionary-0.50
Dicks Sporting GoodsSpecialty RetailConsumer Discretionary-0.17
Standard Motor ProductsAuto ComponentsConsumer Discretionary-0.17
Neenah PaperPaper & Forest ProductsMaterials-0.11
LKQ CorporationDistributorsConsumer Discretionary-0.11
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
22.31
7.38
1.62
Information Technology
8.94
18.17
1.48
Financials
9.17
6.10
0.55
Materials
8.66
4.53
0.41
Real Estate
3.26
11.08
0.29
Health Care
2.12
13.04
0.28
Utilities
1.95
7.74
0.15
Consumer Staples
1.42
-5.00
-0.03
Consumer Discretionary
27.23
-0.12
-0.06
Cash
14.91
0.15
0.02
Unclassified
0.03
-1.08
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment Instruments & ComponentsInformation Technology0.91
Professional ServicesIndustrials0.69
ChemicalsMaterials0.53
Capital MarketsFinancials0.51
Commercial Services & SuppliesIndustrials0.41

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-0.82
Paper & Forest ProductsMaterials-0.15
AutomobilesConsumer Discretionary-0.09
DistributorsConsumer Discretionary-0.06
Industrial ConglomeratesIndustrials-0.05

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Westlake ChemicalChemicalsMaterials0.48
CoherentElectronic Equipment Instruments & ComponentsInformation Technology0.42
IPG PhotonicsElectronic Equipment Instruments & ComponentsInformation Technology0.34
CopartCommercial Services & SuppliesIndustrials0.33
NVRHousehold DurablesConsumer Discretionary0.32

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Signet JewelersSpecialty RetailConsumer Discretionary-0.50
Dicks Sporting GoodsSpecialty RetailConsumer Discretionary-0.17
Standard Motor ProductsAuto ComponentsConsumer Discretionary-0.17
Neenah PaperPaper & Forest ProductsMaterials-0.11
LKQ CorporationDistributorsConsumer Discretionary-0.11
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
25.33
26.45
6.28
Consumer Discretionary
23.38
23.21
5.20
Materials
10.39
30.24
3.20
Information Technology
7.66
32.42
2.27
Financials
9.77
12.64
1.09
Utilities
1.88
25.21
0.48
Health Care
1.28
22.78
0.31
Real Estate
4.32
3.83
-0.07
Consumer Staples
1.08
-8.26
-0.09
Cash
14.60
0.39
0.06
Unclassified
0.32
-5.10
-0.05

Top Contributors

INDUSTRYSECTORGAIN (%)
Auto ComponentsConsumer Discretionary3.46
ChemicalsMaterials2.57
Commercial Services & SuppliesIndustrials1.94
Electronic Equipment Instruments & ComponentsInformation Technology1.48
AutomobilesConsumer Discretionary1.32

Top Detractors

INDUSTRYSECTORGAIN (%)
Specialty RetailConsumer Discretionary-0.93
Real Estate Management & Development-ObsFinancials-0.35
DistributorsConsumer Discretionary-0.17
Trading Companies & DistributorsIndustrials-0.15
Real Estate Management & DevelopmentReal Estate-0.07

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Thor IndustriesAutomobilesConsumer Discretionary1.32
CopartCommercial Services & SuppliesIndustrials1.25
Standard Motor ProductsAuto ComponentsConsumer Discretionary1.13
Drew IndustriesAuto ComponentsConsumer Discretionary1.12
Westlake ChemicalChemicalsMaterials0.93

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Signet JewelersSpecialty RetailConsumer Discretionary-1.34
Kennedy Wilson Europe Real EstateReal Estate Management & Development-ObsFinancials-0.35
Air Lease Cl. ATrading Companies & DistributorsIndustrials-0.34
LaSalle Partners IncorporatedReal Estate Management & DevelopmentReal Estate-0.21
LKQ CorporationDistributorsConsumer Discretionary-0.20
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Consumer Discretionary
16.94
37.87
7.63
Industrials
23.11
17.42
5.59
Information Technology
12.72
38.86
3.52
Materials
9.54
19.46
2.31
Utilities
1.34
74.54
1.12
Health Care
3.00
44.31
1.07
Consumer Staples
1.32
2.79
0.54
Financials
13.96
7.53
-0.34
Real Estate
2.96
-22.40
-1.06
Energy
1.77
-50.44
-3.10
Cash
11.49
0.52
0.08
Unclassified
1.84
30.94
0.84

Top Contributors

INDUSTRYSECTORGAIN (%)
Auto ComponentsConsumer Discretionary3.81
Commercial Services & SuppliesIndustrials2.35
Electronic Equipment Instruments & ComponentsInformation Technology1.85
AutomobilesConsumer Discretionary1.62
ChemicalsMaterials1.58

Top Detractors

INDUSTRYSECTORGAIN (%)
Energy Equipment & ServicesEnergy-3.07
Capital MarketsFinancials-1.44
Specialty RetailConsumer Discretionary-1.22
Real Estate Management & DevelopmentReal Estate-1.06
Real Estate Management & Development-ObsFinancials-0.36

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
CopartCommercial Services & SuppliesIndustrials1.64
Thor IndustriesAutomobilesConsumer Discretionary1.64
Drew IndustriesAuto ComponentsConsumer Discretionary1.56
CoherentElectronic Equipment Instruments & ComponentsInformation Technology1.19
UGI CorporationGas UtilitiesUtilities1.12

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Signet JewelersSpecialty RetailConsumer Discretionary-1.19
Anixter InternationalElectronic Equipment Instruments & ComponentsInformation Technology-0.93
TransoceanEnergy Equipment & ServicesEnergy-0.68
Artisan Partners Asset Management Cl. ACapital MarketsFinancials-0.61
Unit CorporationEnergy Equipment & ServicesEnergy-0.60
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Consumer Discretionary
14.89
120.27
15.35
Industrials
22.83
58.05
14.23
Information Technology
14.60
91.54
11.11
Financials
15.00
72.98
10.76
Health Care
3.57
88.94
2.75
Utilities
0.87
210.71
1.24
Consumer Staples
1.25
40.04
1.06
Telecommunication Services
0.01
-8.73
-0.01
Real Estate
2.35
-0.44
-0.42
Materials
9.58
3.55
-0.45
Energy
3.20
-37.36
-1.92
Cash
9.40
0.64
0.09
Unclassified
2.45
62.52
1.70

Top Contributors

INDUSTRYSECTORGAIN (%)
Capital MarketsFinancials8.98
Electronic Equipment Instruments & ComponentsInformation Technology4.96
Auto ComponentsConsumer Discretionary4.60
Household DurablesConsumer Discretionary3.38
Professional ServicesIndustrials3.17

Top Detractors

INDUSTRYSECTORGAIN (%)
Metals & MiningMaterials-3.98
Energy Equipment & ServicesEnergy-1.86
Real Estate Management & DevelopmentReal Estate-0.42
Communications EquipmentInformation Technology-0.37
Real Estate Management & Development-ObsFinancials-0.36

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Thor IndustriesAutomobilesConsumer Discretionary2.40
Drew IndustriesAuto ComponentsConsumer Discretionary2.23
CopartCommercial Services & SuppliesIndustrials1.83
ManpowerGroupProfessional ServicesIndustrials1.65
SEI InvestmentsCapital MarketsFinancials1.47

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Major Drilling Group InternationalMetals & MiningMaterials-1.05
SprottCapital MarketsFinancials-0.91
LamprellEnergy Equipment & ServicesEnergy-0.90
TransoceanEnergy Equipment & ServicesEnergy-0.83
Gold Fields ADRMetals & MiningMaterials-0.70

Risk

Average Volatility vs. Peer Group as of 03/31/17

The Fund has a average volatility within its peer group of 945 Small/Mid-Cap Funds based on 5-year rolling standard deviation.

Down Market Performance Comparisonas of 03/31/17

The Fund outperformed the Russell 2000 during eight out of 11 downturns of 10% or more from the index’s prior historical high over the last 20 years.

Market Downturns (%)

DownMarketImg

Russell 2000 Down Quarters

QUARTER ENDRUSSELL 2000 (%)SMALL/MID-CAP PREMIER (%)SPREAD (%)
03/31/16-1.5+4.9+6.4
09/30/15-11.9-10.3+1.6
09/30/14-7.4-7.3+0.1
06/30/12-3.5-9.3-5.8
09/30/11-21.9-22.9-1.0
06/30/11-1.6-2.3-0.7
06/30/10-9.9-8.4+1.5
03/31/09-15.0-7.7+7.3
12/31/08-26.1-24.8+1.3
09/30/08-1.1-3.9-2.8
03/31/08-9.9-10.9-1.0
12/31/07-4.6-4.1+0.5
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
06/30/02-8.4-9.6-1.2

Capture Ratios Fund's First Full Quarter (12/31/95) to 03/31/17

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 03/31/17

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 03/31/17

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 Premier0.3820.16
Russell 20000.4120.13
Category Median0.4319.07
Best Quartile Breakpoint0.4817.94

Category Median and Best Quartile Breakpoint based on 767 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 12/31/16

mstar-RHFHX

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 03/31/17

  RHFHX Russell 2000
Average Market Cap
5.14B
1.74B
97%
-
2016 Portfolio Turnover
67%
-
Weighted Average P/E,
21.8x
22.9x
Weighted Average P/B
2.9x
2.3x
U.S. Investments (% of Net Assets)
83.0%
-
Non-U.S. Investments (% of Net Assets)
7.5%
-

Portfolio Allocation

  • Total
    Holdings
    84


SECTORS
RHFHX (%) RUSSELL
2000 (%)
Consumer Discretionary
26.7
12.2
Industrials
23.8
14.3
Information Technology
10.3
17.5
Financials
8.9
19.4
Materials
8.5
5.2
Real Estate
4.8
7.8
Health Care
3.1
13.0
Consumer Staples
2.3
2.9
Utilities
2.1
3.7
Energy
-
3.4
Telecommunication Services
-
0.7
Cash and Cash Equivalents
9.5
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Copart
3.1
Westlake Chemical
3.0
Alleghany Corporation
3.0
Valmont Industries
2.4
ManpowerGroup
2.3
LKQ Corporation
2.2
Minerals Technologies
2.1
UGI Corporation
2.1
Thor Industries
2.0
Standard Motor Products
2.0
DST Systems
2.0
Hubbell Cl. B
2.0
Gentex Corporation
2.0
Kirby Corporation
1.9
Affiliated Managers Group
1.9
Dicks Sporting Goods
1.9
IPG Photonics
1.9
Lazard Cl. A
1.9
AVX Corporation
1.7
Cooper Tire & Rubber
1.7
Top 20 as % of Net Assets
43.1

SECTORS
RHFHX (%) RUSSELL
2000 (%)
Consumer Discretionary
25.7
-
Industrials
24.8
-
Information Technology
10.5
-
Financials
8.5
-
Materials
8.0
-
Real Estate
4.3
-
Health Care
3.1
-
Consumer Staples
2.7
-
Utilities
2.0
-
Cash and Cash Equivalents
10.5
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Copart
3.0
Alleghany Corporation
3.0
Westlake Chemical
2.5
Valmont Industries
2.4
LKQ Corporation
2.4
ManpowerGroup
2.3
Minerals Technologies
2.2
Standard Motor Products
2.1
Thor Industries
2.0
UGI Corporation
2.0
Dicks Sporting Goods
2.0
IPG Photonics
2.0
Affiliated Managers Group
2.0
Kirby Corporation
1.9
Gentex Corporation
1.9
Hubbell Cl. B
1.9
DST Systems
1.8
AVX Corporation
1.7
Lazard Cl. A
1.7
Lam Research
1.7
Top 20 as % of Net Assets
42.5

Portfolio Holdings

View the complete list of holdings for this fund as of 03/31/17. 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 0.0594 - 0.5074 - 0.5668 14.78
12/16/15 12/17/15 12/17/15 0.1151 0.0184 1.2395 - 1.3730 12.83
12/16/14 12/17/14 12/17/14 0.0510 0.0657 0.7597 - 0.8764 14.84
12/04/13 12/05/13 12/05/13 0.0552 0.3248 1.6035 - 1.9835 15.65
12/27/12 12/28/12 12/28/12 0.0626 - - - 0.0626 14.24
12/05/12 12/06/12 12/06/12 0.0691 - 0.3625 - 0.4316 14.04
12/07/11 12/08/11 12/08/11 0.0539 0.0658 0.5243 - 0.6440 13.01
12/08/10 12/09/10 12/09/10 0.0770 - 0.2902 - 0.3672 14.66

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 0.00
Other expenses 0.10
Acquired fund fees and expenses 0.06
Total annual Fund operating expenses 1.01
The information above reflects the Fund’s amended contractual management fee rate as of May 1, 2016. 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 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)

3/15/2007 12:00:00 AM

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