Quarterly Fund Review - Russell Investments...Quarterly Fund Review 3Q2020 Russell Investment...
Transcript of Quarterly Fund Review - Russell Investments...Quarterly Fund Review 3Q2020 Russell Investment...
Quarterly Fund Review4Q2020
Russell Investment Company Funds (Class S)
2Disclosures
Fund objectives, risks, charges and expenses should be carefully considered before investing. A summary
prospectus, if available, or a prospectus containing this and other important information can be obtained by
calling 800-787-7354 or by visiting https://russellinvestments.com. Please read a prospectus carefully before
investing.The cover page and these disclosure pages must accompany this report, whether used in whole or in part. Any distribution that does not include these pages will not be
compliant. This material has been filed with the FINRA and must be distributed in the manner in which it was filed.
HOW TO USE THIS REPORT: Each fund contains four pages of information that are designed to be used together, with these disclosure pages. So, an investor in the
Russell U.S. Core Equity Fund would receive the cover page, these disclosure pages and the four fund pages which contain a title page and three performance summary
pages.
Money managers listed are current as of December 31, 2020. Subject to the Fund’s Board approval, Russell Investment Management Company, LLC has the right to engage or terminate a money manager at any time and
without a shareholder vote, based on an exemptive order from the Securities and Exchange Commission. Investments in the Funds are not deposits with or other liabilities of any of the money managers and are subject to
investment risk, including loss of income and principal invested and possible delays in payment of redemption proceeds. The money managers do not guarantee the performance of any Fund or any particular rate of return.
While the investment styles employed by the money managers are intended to be complementary, they may not in fact be complementary. A multi-manager approach could result in more exposure to certain types of
securities and higher portfolio turnover.
**** Russell Investment Management Company, LLC, LLC (RIM) manages this portion of the Fund’s assets to effect the Fund’s investment strategies and/or to actively manage the Fund’s overall exposures to seek to
achieve the desired risk/return profile for the Fund. This does not include liquidity reserves managed directly by RIM, which may constitute 5% or more of fund assets at any given time. RIM may change a Fund’s asset
allocation at any time, including not allocating Fund assets to one or more money manager strategies. ****
Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets.
Mutual fund investing involves risk, principal loss is possible. Please remember that all investments carry some level of risk, including the potential loss of principal invested. They do not typically grow at an even rate of
return and may experience negative growth. As with any type of portfolio structuring, attempting to reduce risk and increase return could, at certain times, unintentionally reduce returns.
Declines in the value of real estate, economic conditions, property taxes, tax laws and interest rates all present potential risks. Investments in international markets can involve risks of currency fluctuation, political and
economic instability, different accounting standards, and foreign taxation.
Investments in infrastructure-related companies have greater exposure to adverse economic, financial, regulatory, and political risks, including governmental regulations. Global securities may be significantly affected by
political or economic conditions and regulatory requirements in a particular country.
Investments in small cap, micro cap, and companies with capitalization smaller than the Russell 2000® Index, are subject to the risks of common stocks, may experience considerable price fluctuations and are more volatile
than large company stocks. Generally, the smaller the company size, the greater the risks.
Alternative strategies may be subject to risks related to equity securities; fixed income securities; non-U.S. and emerging markets securities; currency trading, which may involve instruments that have volatile prices, are
illiquid or create economic leverage; commodity investments; illiquid securities; and derivatives, including futures, options, forwards and swaps.
Commodities may have greater volatility than traditional securities. The value of commodities may be affected by changes in overall market movements, changes in interest rates or sectors affecting a particular industry or
commodity, and international economic, political and regulatory developments.
Investments in global equity may be significantly affected by political or economic conditions and regulatory requirements in a particular country. International markets can involve risks of currency fluctuation, political and
economic instability, different accounting standards and foreign taxation. Emerging or frontier markets involve exposure to economic structures that are generally less diverse and mature. The less developed the market, the
riskier the security. Such securities may be less liquid and more volatile.
Bond investors should carefully consider risks such as interest rate, credit, default and duration risks. An increase in volatility and default risk are inherent in portfolios that invest in high yield ("junk") bonds or mortgage-
backed securities, with exposure to sub-prime mortgages. Generally, when interest rates rise, prices of fixed income securities fall. Interest rates in the United States are at, or near, historic lows, which may increase a
Fund's exposure to risks associated with rising rates. Investment in international and emerging market debt is subject to currency fluctuations and to economic and political risks.
3Disclosures
† The Net Annual Operating Expense Ratio may be less than the Total Operating Expense Ratio and represents the actual expenses expected to be borne by shareholders after application of: (a) a contractual transfer
agency fee or advisory fee waiver through February 28, 2021; (b) a contractual cap and reimbursement on expenses through February 28, 2021; (c) a contractual agreement to permanently waive the advisory and
administrative fees paid by the Fund in an amount equal to the advisory and administrative fees paid by the Subsidiary. This contractual agreement may not be terminated. Details of these agreements are in the current
prospectus. Absent these reductions, the fund's return would have been lower.
1. The Fund first issued Class S Shares on September 2, 2008. The returns shown for Class S Shares prior to that date are the returns of the Fund's Class I Shares.
2. Income from funds managed for tax efficiency may be subject to alternative minimum tax, and/or any applicable state and local taxes.
3. The Fund first issued Class S Shares on October 22, 2007. The returns shown for Class S Shares prior to that date are the returns of the Fund Class I Shares.
4. For periods prior to April 1, 1995, returns for the Fund were reported gross of investment advisory and administrative fees. Had these fees been reflected, the returns would have been negatively affected. For periods
thereafter, returns are reported net of investment advisory and administrative fees but gross of financial intermediary fees.
5. The Fund may invest in derivatives, including futures, options, forwards and swaps. Investments in derivatives may cause the Fund's losses to be greater than if it invests only in conventional securities and can cause the
Fund to be more volatile. Derivatives involve risks different from, or possibly greater than, the risks associated with other investments. The Fund's use of derivatives may cause the Fund's investment returns to be impacted
by the performance of securities the Fund does not own and result in the Fund's total investment exposure exceeding the value of its portfolio.
6. Use of currency trading strategies may adversely impact a Fund’s ability to meet its investment objective of seeking to provide current income.
7. The Multifactor U.S. Equity and Multifactor International Equity Funds utilize a variety of quantitative inputs and qualitative assessments in their management. If these are not predictive or are incorrect, the Funds may
underperform. These Funds also utilize index replication and/or optimization strategies, which may cause their returns to be lower than if they employed an active security selection strategy.
8. The Multi-Strategy Income Fund seeks to provide a high level of current income and, as a secondary objective, long term capital growth. The fund invests in a broad range of income-producing fixed income, equity and
real asset securities.
9. Returns After Taxes on Distributions may be the same as Returns Before Taxes for the same period if there were no distributions for that period.
10. After-tax returns are calculated using the historical highest individual federal marginal income tax rates, as well as the 3.8% Medicare surtax net investment income tax, and do not reflect the impact of state and local
taxes.
11. Return After Taxes on Distributions and Sale of Fund Shares. If a Fund has realized capital losses, the Return After Taxes on Distributions and Sale of Fund Shares may be higher than the Return Before taxes and the
Return After Taxes on Distributions. The calculation of Return After Taxes on Distributions and Sale of Fund Shares assumes that a shareholder has sufficient capital gains of the same character to offset any capital losses
on a sale of fund shares and that shareholder may therefore deduct the entire capital loss.
12. The Multifactor Bond Fund is a new fund without an operating history, which may result in additional risk. There can be no assurance that the Fund will grow to an economically viable size, in which case the Fund may
cease operations. In such an event, investors may be required to liquidate or transfer their investments at an inopportune time.
Indexes and Benchmarks are unmanaged and cannot be invested in directly.
The following paragraphs correspond to indexes used in the accompanying pages:
The Russell 1000® Index is an index of 1000 issues representative of the U.S. large capitalization securities market. The date shown represents the date the index comparison began and may not be the actual index
inception date.
The Russell 1000® Defensive Index measures the performance of the large-cap defensive segment of the U.S. equity universe. It includes those Russell 1000® Index companies with relatively stable business conditions
which are less sensitive to economic cycles, credit cycles, and market volatility based on their stability variables. Stability is measured in terms of volatility (price and earnings), leverage, and return on assets.
The Russell 1000® Dynamic Index measures the performance of the large-cap dynamic segment of the U.S. equity universe. It includes those Russell 1000® Index companies with relatively less stable business conditions
which are more sensitive to economic cycles, credit cycles and market volatility based on their stability variables. Stability is measured in terms of volatility (price and earnings), leverage, and return on assets.
The Russell 1000® Value Index measures the performance of the large-cap value segment of the U.S. equity universe. It includes those Russell 1000® companies with lower price-to-book ratios and lower expected growth
values. Stability is measured in terms of volatility (price and earnings), leverage, and return on assets.
.
4Disclosures
The Russell 2000® Index measures the performance of the 2,000 smallest companies in the Russell 3000®Index, representative of the U.S. small capitalization securities market.
The Russell 2500™ Index is an index of 2500 issues representative of the U.S. small to medium-small capitalization securities market. The date shown represents the date the index comparison began and may not be the
actual index inception date.
The Russell Midcap® Index measures the performance of the mid-cap segment of the U.S. equity universe and is a subset of the Russell 1000® Index. It includes approximately 800 of the smallest securities based on a
combination of their market cap and current index membership. The Russell Midcap® Index represents approximately 31% of the total market capitalization of the Russell 1000 companies.
The Russell Developed ex-U.S. Large Cap index offers investors access to the large-cap segment of the developed equity universe, excluding securities classified in the U.S., representing approximately 40% of the global
equity market. This index includes the largest securities in the Russell Developed ex-U.S. Index.
The Russell Developed Large Cap index offers investors access to the large-cap segment of the developed equity universe representing approximately 70% of the global equity market. This index includes the largest
securities in the Russell Developed Index.
The Russell Emerging Markets index measures the performance of the largest investable securities in emerging countries globally, based on market capitalization. The index covers 21% of the investable global market.
The S&P 500® Index is an index, with dividends reinvested, of 500 issues representative of leading companies in the U.S. large cap securities market (representative sample of leading companies in leading industries).
The S&P Global Infrastructure Index provides liquid and tradable exposure to 75 companies from around the world that represent the listed infrastructure universe. The index has balanced weights across three distinct
infrastructure clusters: utilities, transportation and energy.
The S&P Natural Resources Index includes 90 of the largest publicly-traded companies in natural resources and commodities businesses that meet specific investability requirements, offering investors diversified and
investable equity exposure across 3 primary commodity-related sectors: agribusiness, energy, and metals & mining.
Consumer Price Index (CPI) is a measure of the average change over time in the prices paid by urban consumers for a market basket of goods and services.
FTSE EPRA/NAREIT Developed Real Estate Index is a global market capitalization weighted index composed of listed real estate securities in the North American, European and Asian real estate markets. The date shown
represents the date the index comparison began and may not be the actual index inception date.
FTSE NAREIT Equity REITs Index is a free-float adjusted, market capitalization-weighted index of U.S. equity REITs. Constituents of the index include all tax-qualified REITs with more than 50 percent of total assets in
qualifying real estate assets other than mortgages secured by real property.
The MSCI World Index (net of tax on dividends from foreign holdings) is a market capitalization index, with net or with gross dividends reinvested, that is designed to measure global developed market equity performance.
The Index is composed of companies representative of the market structure of 23 developed market countries in North America, Europe and the Asia/Pacific Region.
The MSCI World ex USA Index captures large and mid cap representation across 22 of 23 Developed Markets countries -- excluding the United States.
The MSCI AC World Index ex USA captures large and mid cap representation across 22 of 23 Developed Markets countries (excluding the U.S.) and 24 Emerging Markets countries.
The MSCI EAFE Index is an index with dividends reinvested, representative of the securities markets of twenty developed market countries in Europe, Australia and the Far East (in U.S. dollars; unmanaged). The date
shown represents the date the index comparison began and may not be the actual index inception date.
The MSCI Emerging Markets Index is a market capitalization weighed index of over 850 stocks traded in 22 world markets. The date shown represents the date the index comparison began and may not be the actual index
inception date.
The ICE BofA Global High Yield Index U.S. Hedged is the USD hedged version of the Bank of America Merrill Lynch Global High Yield Index. The index measures the performance of USD, CAD, GBP, and EUR-
denominated below-investment grade corporate debt publicly issued in the major domestic or Eurobond market.
The ICE BofA 1-3 Year U.S. Treasuries Index measures the performance of securities in the Treasury Index with a maturity of 1 up to (but not including) 3 years.
The ICE BofA U.S. 3-Month Treasury Bill Index is comprised of a single issue purchased at the beginning of the month and held for a full month. At the end of the month that issue is sold and rolled in to a newly selected
issue. The issue selected at each month-end rebalancing is the outstanding Treasury Bill that matures closest to, but not beyond, three months from the rebalancing date. To qualify for selection, an issue must have settled
on or before the month-end rebalancing date.
5Disclosures
The Bloomberg Barclays U.S. Aggregate Bond Index measures the investment grade, USD-denominated, fixed-rate taxable bond market. The index includes Treasuries, government-related and corporate securities,
mortgage based securities (MBS) (agency fixed-rate and hybrid ARM pass-throughs), asset-backed securities (ABS), and commercial mortgage backed securities (CMBS) (agency and non-agency).
The Bloomberg Barclays Municipal Bond Index is a rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market.
The Bloomberg Barclays Municipal1-15 Year Blend (1-17) Index is a rules-based, market-value-weighted index engineered for the long-term tax-exempt bond market
The Bloomberg Barclays Municipal High Yield Bond Index is a flagship measure of the non-investment grade and nonrated USD-denominated tax exempt bond market. Included in the index are securities from all 50 US
States and four other qualifying regions (Washington DC, Puerto Rico, Guam, and the Virgin Islands). The index includes state and local general obligation bonds and revenue bonds.
The Bloomberg Commodity Index Total Return is an index composed of futures contracts on 22 physical commodities.
The CBOE S&P 500 BuyWrite Index (BXMSM) Index is a passive total return index based on (1) buying an S&P 500 stock index portfolio, and (2) "writing" (or selling) the near-term S&P 500® Index (SPXSM) "covered" call
option, generally on the third Friday of each month. The SPX call written will have about one month remaining to expiration, with an exercise price just above the prevailing index level (i.e., slightly out of the money). The
SPX call is held until expiration and cash settled, at which time a new one-month, near-the money call is written.
The Big Six Average is a custom peer universe comprised of the largest six competitor’s multi-asset income funds.
6Disclosures
Glossary of terms
Call Option: Allows the buyer the right (but not the obligation) to purchase the underlying equity or index at a specific price within a specific time period. Every call option has a strike
price and an expiration date. Call options trade on exchanges just like equities and bonds, or can be traded Over-The-Counter (OTC) with dealer counterparties.
Call Option Strike: The pre-specified price at which the call option can be exercised by the buyer.
Call Option Tenor: Options have a defined life. The length of an option’s life is represented by the time left to expiration, or tenor. Tenors can range from a week to ten years.
Written Call Option (aka short call option): Selling an option is also referred to as writing an option. This is the exposure the seller of a call option holds once the transaction is
complete. The seller receives the upfront call premium in exchange for a promise to pay the option buyer an amount due at expiration.
Call Overwriting (aka overwriting, covered portfolio, buy write): The combination of a long equity or index position and a short call position on an identical or similar underlying asset.
Selling an option is also referred to as “writing” an option, so “overwriting” is selling options on top of the equity portfolio.
Call Option Pricing: There are several factors that determine the premium or price of an option. They include, the strike price and tenor of the option, the prevailing risk free interest
rate, the dividend rate of the underlying asset and volatility of the underlying equity or index.
Call Option Roll: If a seller or buyer of a call option elects not to hold the position to expiration, it may want to “roll” the position out to a new expiration date. For a call option seller,
this would mean buying the existing position back and simultaneously writing a new call option with longer tenor and potentially different strike price.
In-the-money (ITM): If a call option’s strike price is below the spot price of the underlying asset at any point in time, it is considered “in-the-money.” A 98% option is in the money.
Out-of-the-money (OTM): If a call option’s strike price is above the spot price of the underlying asset at any point in time, it is considered “out-of-the-money.” A 102% option is out of
the money.
Call Option Pricing: There are several factors that determine the premium or price of an option. They include, the strike price and tenor of the option, the prevailing risk free interest
rate, the dividend rate of the underlying asset and volatility of the underlying equity or index.
Call Option Roll: If a seller or buyer of a call option elects not to hold the position to expiration, it may want to “roll” the position out to a new expiration date. For a call option seller,
this would mean buying the existing position back and simultaneously writing a new call option with longer tenor and potentially different strike price.
In-the-money (ITM): If a call option’s strike price is below the spot price of the underlying asset at any point in time, it is considered “in-the-money.” A 98% option is in the money.
Out-of-the-money (OTM): If a call option’s strike price is above the spot price of the underlying asset at any point in time, it is considered “out-of-the-money.” A 102% option is out of
the money.
Beta: A measure of the Fund's sensitivity to market changes using the Fund's benchmark as an approximation of the market; beta greater than 1 is more volatile than the market;
beta less than 1 is less volatile than the market.
7Disclosures
Russell Investments’ Strategic Factor Beliefs
Value: Russell Investments believes that, over the very long term, value stocks will generate higher returns than growth stocks.
Quality: Russell Investments believes stocks with fundamental security characteristics (e.g. low debt-to-capital ratios) or lower historical return volatility will consistently generate
higher returns relative to stocks that have higher debt-to-capital ratios or higher historical return volatility.
Equity Momentum: Russell Investments believes that high momentum stocks will generate higher returns than low momentum stocks over a market cycle, but may introduce short-
term reversals. Momentum may be defined by relatively strong recent price performance over the last year or, less commonly, relatively strong recent earnings.
Size: Russell Investments believes that there are long-term advantages to overweighting smaller-capitalization stocks and that these are best captured through active management
and well researched factor exposures.
Volatility: Russell Investments believes stocks with higher volatility than stocks with lower volatility do not provide sufficient return to compensate for the additional risk.
Credit (Credit Risk Premium): Russell Investments believes that bonds with credit risk will generate higher returns than those of comparable high-quality government securities over
a market cycle. Russell places a particular emphasis on shorter-term credit issuances and high-yield bonds. Credit risk may be defined by the risk of default, or the probability that a
bond issuer may fail to make payment on their debt obligation.
Duration (Term Risk Premium): Russell Investments believes longer-term bonds will generate higher returns than comparable shorter-term bonds or cash. These higher returns
result from expectations of future interest rates, liquidity preferences and practical constraints on borrowers and lenders. Duration may be defined by the measurement of sensitivity
that a change in interest rates have on the price, or principal amount, of a bond.
Real Yield: Russell Investments believes that bonds issued by sovereign countries with higher real yields have a greater likelihood of outperforming those with low real yields. Real
yield may be defined by a sovereign country’s stated interest rate less the country’s historical inflation rate.
Implied Volatility: Russell Investments believes the implied volatility in options, such as puts and calls, is consistently higher than the volatility realized in the market by the physical
securities they represent. Therefore, using options-based strategies to capture the priced difference between implied and realized volatility will generate a positive return.
Currency: Russell Investments believes currency can generate higher returns than cash through the use of systematic strategies. The currency return sources are carry, valuation
and trend.
Commodities: Russell Investments believes that an allocation to commodities, implemented with futures, will generate a higher return than cash over a market cycle via systematic
and active strategies. These higher returns result from spot price appreciation, the term structure of commodities futures, and the employment of active strategies.
8Disclosures
Important information
For more information on Russell Investment Company funds, contact your investment professional or plan administrator for assistance.
Russell Investments’ ownership is composed of a majority stake held by funds managed by TA Associates with minority stakes held by funds managed by Reverence Capital
Partners and Russell Investments’ management.
Frank Russell Company is the owner of the Russell trademarks contained in this material and all trademark rights related to the Russell trademarks, which the members of the
Russell Investments group of companies are permitted to use under license from Frank Russell Company. The members of the Russell Investments group of companies are not
affiliated in any manner with Frank Russell Company or any entity operating under the ‘‘FTSE RUSSELL’’ brand.
Russell Investment Company mutual funds are distributed by Russell Investments Financial Services, LLC, member FINRA, part of Russell Investments.
Copyright ©2021 Russell Investments Group, LLC.
First used: February 2021
RIFIS-23686
RIC Commodity Strategies Fund 4Q2020 Performance Summary
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Commodity Strategies Fund 13.77% -1.22% -1.22% -2.18% 1.00% -6.71% -4.17% Jun 30, 2010 1.95% 1.02%
Bloomberg Commodity Index Total Return 10.19% -3.12% -3.12% -2.53% 1.03% -6.50% -3.88%
Annualized Return Annual Expenses
10RIC Commodity Strategies FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
RIM believes that an allocation to commodities, implemented with futures, will
generate a higher return than cash over a market cycle via systematic and
active strategies. These higher returns result from spot price appreciation, the
term structure of commodities futures, and the employment of active strategies.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
The Fund had an overweight to grains, softs, and livestock. It had an
underweight to energy, industrial metals, and precious metals.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Underweight
energy+
Underweight positions in the energy sector contributed
to performance.
Overweight
softs+
Select overweight positions in the softs sector had a
positive impact on performance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Overweight
grains+
Overweight positions to corn, soybeans, soybean
oil, and soybean meal contributed positively to
performance.
Overweight
livestock +Select positions including the overweight to live
cattle added to performance.
Underweight
precious
metals
-Underweight gold and silver negatively impacted
performance.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
†,(a),(c),5
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(c),5 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
DRIVERS OF PERFORMANCE
11RIC Commodity Strategies FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the quarter.
AUM Target % of
Total Fund Weight Fund 4th Inception
$247.77 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Global Market Oriented $162.30 59.00% 65.50%
Mellon Capital Management Corporation $52.64 22.00% 21.24% + + + + --- Mar-17
Pacific Investment Management Company $109.66 37.00% 44.26% + flat flat + --- Dec-17
RIM $85.47 38.00% 34.50%
Russell Investment Management, LLC (Backwardation)1 $19.99 14.00% 8.07% - - - - flat Mar-13
Russell Investment Management, LLC (Cargill ProAlpha)1 $65.49 24.00% 26.43% + + + + + Jun-14
Fund Benchmark
Bloomberg Commodity Index Total Return 10.19% -3.12% -3.12% -2.53% 1.03%
PERFORMANCE AT A GLANCEPeriods Ending December 31, 2020
12RIC Commodity Strategies FundAppendix: Fourth Quarter 2020
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
• Over the quarter, Russell Investments’ backwardation strategy removed exposure to live cattle, silver, and natural gas while adding positions in WTI crude, Brent
crude, and corn.
• The Fund’s largest overweight position is currently soybeans, followed by cotton, corn, soybean meal, and live cattle. The Fund’s largest underweight is to gold,
copper, natural gas, and wheat.
• We believe the Fund is positioned to benefit from strong performance in the grains and livestock sectors, and from relative underperformance of the precious
metals and industrial metals sectors.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Emerging Markets Fund 4Q2020 Performance Summary
.
.
14RIC Emerging Markets FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the Russell
Emerging Markets Fund, although RIM believes that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns. For the equity funds, this means RIM is more likely to include
securities with lower valuation and higher momentum than the market.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Value and momentum - The Fund had cheaper valuation than its benchmark, in-line with
Russell Investments strategic preferences, but the momentum exposure was negative.
› Country allocation - The Fund was underweight Saudi Arabia, Taiwan, Malaysia, China
and Thailand. It was overweight South Korea, and Russia. It also held out-off-benchmark
Frontier Market exposure, most notably in Vietnam and Bangladesh.
› Sector allocation - The Fund was overweight to financials, materials. consumer staples
and was underweight to the consumer discretionary, industrials, energy and
communication services sectors.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Value and
Momentum-
A strategic preference for holdings with value characteristics detracted
and was only partially offset by the positive attribution from the fund’s
momentum tilt.
Country and
Sector
Allocation
-
The underweight to China and the consumer discretionary sector in
particular, as well as an overweight to Brazil, Egypt and Turkey were
among the biggest detractors. However, the underweight to countries
like Thailand and Saudi Arabia were rewarded during the year. From a
sector perspective, being underweight the consumer discretionary and
overweight financials sectors detracted from relative value, while the tilt
towards information technology, materials and industrials was beneficial.
Stock Selection -
Stock selection within Taiwan (Parade Technologies), Chile, Poland and
Russia (Yandex) contributed, but stock selection within China, Brazil
and South Korea detracted.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Value +Our strategic preference for stocks with cheaper valuation
characteristics contributed.
Momentum Flat
The benchmark relative momentum exposure has softened this
year as the market has been led by a narrow set of internet names.
We are not acting to chase momentum at this juncture.
Country
Allocation+
An underweight to Thailand marginally detracted. However, being
overweight South Korea and underweight South Arabia and Qatar
contributed.
Security
Selection-
The overweight to materials names (Anhui Conch Cement) and
communication services names (China Mobile and China Telecom)
in China detracted. Stock selection within Thailand and South Africa
was also not rewarded. Stock selection in Taiwan and its
information technology sector and in materials and information
technology names and South Korea offset some of the negative
impact.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Emerging Markets Fund 19.11% 9.85% 9.85% 2.90% 10.46% 2.63% 6.38% Jan 29, 1993 1.53% 1.25%
MSCI Emerging Markets Index Net 19.70% 18.31% 18.31% 6.17% 12.81% 3.63% ---
Emerging Markets Linked Benchmark1 19.70% 18.31% 18.31% 6.17% 12.44% 3.96% ---
Annualized Return Annual Expenses
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
†,(a),4
DRIVERS OF PERFORMANCE
1. Emerging Markets Linked Benchmark represents the returns of the MSCI Emerging Markets Index Net through December 31, 2010, the returns of the Russell Emerging Markets
Index Net from January 1, 2011 to December 31, 2017, and the returns of the MSCI Emerging Markets Index Net thereafter.
2. Commentary and impact reflects key contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),4 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
15RIC Emerging Markets FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of positioning strategies.
2. Emerging Markets Linked Benchmark represents the returns of the MSCI Emerging Markets Index Net through December 31, 2010, the returns of the Russell Emerging Markets
Index Net from January 1, 2011 to December 31, 2017, and the returns of the MSCI Emerging Markets Index Net thereafter.
3. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Emerging Markets Linked
Benchmark
FUND UPDATES
There were no material changes to the Fund during the quarter.
AUM Target % of
Total Fund Weight Fund 4th Inception
$1,500.91 84.40% 89.32% Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $222.14 15.50% 14.80%
AllianceBernstein L.P. $222.14 15.50% 14.80% + - - - - Apr-99
Market Oriented Style $642.58 37.80% 42.81%
Consilium Investment Management, LLC $94.56 4.80% 6.30% - - - - - Mar-15
Numeric Investors LLC $264.17 16.50% 17.60% - + + - + Oct-13
Oaktree Capital Management, L.P. $283.85 16.50% 18.91% + - - + + Mar-14
Growth Style $402.19 16.50% 16.11%
Axiom International Investors LLC1 $160.36 12.60% 10.68% --- --- --- --- --- Oct-20
Neuberger Berman Investment Advisors, LLC1 $241.83 16.50% 16.11% - - - --- --- Jun-19
RIM $234.00 14.60% 15.59%
Russell Investment Management, LLC1 $234.00 14.60% 15.59% - - - - - Mar-15
Fund Benchmark
Emerging Markets Linked Benchmark2 19.70% 18.31% 18.31% 6.17% 12.44%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
16RIC Emerging Markets Fund
Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
-1.0%
2.2%
0.4%
-3.7%
2.1%
-10.0% 0.0% 10.0%
Asia
Europe
Africa
Middle East
Americas
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
-2.3%
-3.1%
0.0%
-0.4%
5.5%
-1.1%
0.5%
0.1%
0.7%
0.0%
0.2%
-10.0% 0.0% 10.0%
Communication Services
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Value: The Fund maintains positive exposure to value, in-line with Russell
Investments strategic preferences.
› Country allocation: The Fund is overweight to South Korea and Russia and
maintains out-of-benchmark exposure to frontier countries, including Vietnam,
Morocco and Bangladesh. The fund also maintains underweights to China, Saudi
Arabia, Malaysia and South Africa.
› Sector allocation – The Fund is overweight to the financials and materials sectors
and continue to be underweight the consumer discretionary and communication
services sector.
Outlook:
› Digitalization and consumer upgrade story in Asia remains intact, attractive structural
growth opportunities outside the most crowded trades. Domestic consumption
recovery supported by direct stimulus measures.
› Extreme valuation dispersion within the opportunity set continues to provide a strong
backdrop for valuation sensitive strategies. Increasing regulatory scrutiny globally on
tech companies which are already priced to perfection presents downside risks to
growth part of the market.
› A continued weakening of the USD into a global recovery from the Covid-19 lows
should be supportive tailwinds for EM currencies and markets.
› But uncertainties remain high including second wave (covid-19), vaccine roll out and
trade tensions.
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
VOLATILITY
LOW HIGH
REGION POSITIONING2
.
.
MSCI Emerging Markets Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 15.6 12.4 14.9
LT Growth Med 18.8 17.2 18.0
PEG 0.8 0.7 0.8
5yr EPS Growth 13.4 17.2 18.5
Price/Book 2.1 2.4 2.2
Dividend Yield 1.9 1.6 1.9
Beta 0.9 1.0 1.0
Active Risk 2.4 2.2
Active Share 52.7 53.3
Wt Med Mkt Cap (bil) $40.52 $25.05 $19.28
Weighted Avg Mkt Cap (bil) $157.58 $102.47 $86.23
PORTFOLIO CHARACTERISTICS
December 31, 2020
RIC Equity Income Fund 4Q2020 Performance Summary
.
.
18RIC Equity Income FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Equity
Income Fund, although RIM believes that emphasizing certain factors over the
course of a market cycle can offer higher benchmark-relative returns. For the
equity funds, this means RIM is more likely to include securities with lower
valuation, higher quality, positive earnings momentum, lower market
capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Stock selection is the primary source of value added relative to the
benchmark.
› Factor Allocation: The Fund had higher value, quality, and momentum
characteristics than the benchmark.
› Sector Allocation: The Fund had overweights to the information technology
and health care sectors. It was underweight to the industrials and real
estate sectors.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Quality +A tilt toward companies with higher profitability
was rewarded.
Sector
Allocation+
The Fund's overweights to the information
technology and health care sectors were
beneficial.
Stock
Selection+
Selection within the information technology and
consumer discretionary sectors was the primary
driver of outperformance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Quality -
The impact of the Fund's tilts toward stocks with
above benchmark profitability was negative over
the quarter.
Sector
AllocationFlat
An underweight to the consumer staples sector
was rewarded while an underweight to the
financials sector detracted.
Stock
Selection+
Selection within the health care and financials
sectors was additive over the quarter.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Equity Income Fund 16.28% 8.86% 8.86% 8.95% 11.76% 11.20% 10.68% Oct 15, 1981 0.90% 0.81%
Equity Income Fund Linked Benchmark1 16.25% 2.80% 2.80% 8.21% 11.56% 12.00% 11.49%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),1
1. The Equity Income Linked Benchmark represents the returns of the Russell 1000® Index through September 30, 2019 and the returns of the Russell 1000 Value Index from
October 1, 2019 thereafter.
2. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),1 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
19RIC Equity Income FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. The Equity Income Linked Benchmark represents the returns of the Russell 1000® Index through September 30, 2019 and the returns of the Russell 1000 Value Index from
October 1, 2019 thereafter.
2. See Disclosures page (****) for discussion of proprietary strategies.
3. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$230.05 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $124.10 60.00% 53.94%
Barrow, Hanley, Mewhinney & Strauss, LLC $56.93 30.00% 24.75% + - - - - Jun-13
Brandywine Global Investment Management LLC $67.17 30.00% 29.20% + + + - + Sep-15
RIM $105.96 37.00% 46.06%
Russell Investment Management, LLC2 $105.96 37.00% 46.06% - + + + + Jul-12
Fund Benchmark
Equity Income Fund Linked Benchmark1 16.25% 2.80% 2.80% 8.21% 11.56%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
Russell 1000® Value
IndexFund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 17.6 18.0 18.0
LT Growth Med 6.9 7.8 7.0
PEG 2.6 2.3 2.6
5yr EPS Growth 4.7 7.5 8.2
Price/Book 2.4 2.3 2.1
Dividend Yield 2.3 2.2 2.7
Beta 1.0 1.0 1.0
Active Risk 2.8 3.2
Active Share 55.6 54.8
Weighted Median Market Cap (bil) $69.47 $89.40 $82.06
Weighted Average Market Cap (bil) $133.76 $312.49 $291.11
PORTFOLIO CHARACTERISTICS
December 31, 2020 20RIC Equity Income Fund Appendix: Fourth Quarter 2020
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
-2.3%
0.3%
-1.2%
-0.9%
0.1%
1.8%
-5.6%
9.0%
1.4%
-1.5%
-1.3%
Communication Services
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
FACTOR POSITIONING1,2 SECTOR POSITIONING2
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell Investments’
cycle, valuation, sentiment framework as well as to take advantage of tactical
opportunities within each manager’s excess return cycle.
• Overall, RIM has a slight pro-cyclical tilt with overweights to value, quality, and
momentum.
• Multiple COVID-19 vaccines were found to be highly effective and approved for
emergency use in the United States and Europe in December. Markets overlooked virus
outbreaks that intensified through the holiday period as vaccine rollouts should ensure a
strong economic and earnings rebound through the middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help bridge
households and businesses to the point where vaccines allow us to sustain a stronger
and more normalized economy again.
• In alignment with Russell Investments’ strategic equity beliefs, stock selection of the
underlying active managers, based on their long-term assessment of each individual
company, continues to be the primary driver of the Fund’s expected risk and return.
.
.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Global Equity Fund4Q2020 Performance Summary
.
.
22RIC Global Equity Fund Performance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Global
Equity Fund, although RIM believes that emphasizing certain factors over the
course of a market cycle can offer higher benchmark-relative returns. For the
equity funds, this means RIM is more likely to include securities with lower
valuation, higher quality, positive earnings momentum, lower market
capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Factor positioning: The Fund was overweight Value, Quality, and Volatility
while remaining underweight Momentum, Growth and Size.
› Sector positioning: The Fund was overweight the Financials while
underweight Consumer Staples, Industrials, Information Technology, and
Utilities.
› Regional positioning: The Fund was overweight Emerging Markets, Europe
ex UK, UK, and Japan while underweight U.S.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Factor
Allocation-
Factor allocation was negative, led by an overweight to
value. A tilt away from quality helped moderate losses.
Sector
Allocation-
Sector impact was negative, held back by overweights to
Financials and Energy. An underweight to real estate
helped offset some of the loss.
Regional
Positioning+
Region impact was positive, driven by exposure to
emerging markets.
Security
Selection
-
Stock selection impact was negative. Ineffective selection
in financials and consumer discretionary were the main
detractors. From a regional perspective, selection was
poor in Japan.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Factor
Allocation+
Factor impact was positive, an overweight to value was
the main contributor.
Sector
Allocation+
Sector allocation was positive, an overweight to financials
was the largest contributor.
Regional
Positioning+
Regional positioning was positive driven by exposure to
the emerging markets, which was positive over the period.
Security
Selection+
Selection impact was positive, particularly in information
technology. From a regional perspective, selection in
EMEA ex UK was a positive contributor.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Global Equity Fund 16.48% 13.39% 13.39% 9.16% 11.48% 9.21% 6.15% Feb 28, 2007 1.24% 1.07%
MSCI World Net Dividend Index 13.96% 15.90% 15.90% 10.54% 12.19% 9.87% 6.50%
Global Equity Linked Benchmark1 13.96% 15.90% 15.90% 10.54% 12.25% 10.00% 6.59%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(b)
1. Global Equity Linked Benchmark represents the returns of the MSCI World Net Dividend Index through December 31, 2010, the returns of the Russell Developed Large Cap Index
Net from January 1, 2011 to December 31, 2017 and the returns of the MSCI World Index Net thereafter.
2. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. † (b) See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
23RIC Global Equity FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of positioning strategies.
2. Global Equity linked benchmark represents the returns of the MSCI World Net Dividend Index through December 31, 2010, the returns of the Russell Developed Large Cap Index Net from January 1, 2011
to December 31, 2017 and the returns of the MSCI World Index Net thereafter.
3. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s secondary benchmark: Global Equity Linked Benchmark
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$608.83 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $142.46 20.00% 23.40%
Sanders Capital, LLC $142.46 20.00% 23.40% + + + + + Dec-10
Growth Style $124.86 20.00% 20.51%
Intermede Investment Partners Limited and Intermede Global
Partners Inc.$124.86 20.00% 20.51% + --- --- --- --- Jan-20
Blend $233.56 38.00% 38.36%
Wellington Management Company LLP $233.56 38.00% 38.36% + - - + + Jun-13
RIM $107.95 19.00% 17.73%
Russell Investment Management, LLC1 $107.95 19.00% 17.73% + - - - - Sep-12
Fund Benchmark
Global Equity Linked Benchmark2 13.96% 15.90% 15.90% 10.54% 12.25%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
MSCI World Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 21.6 19.2 18.3
LT Growth Med 10.6 9.2 8.5
PEG 2.0 2.1 2.2
5yr EPS Growth 10.2 10.2 11.2
Price/Book 3.0 2.0 1.9
Dividend Yield 1.8 1.6 2.1
Beta 0.9 1.0 1.0
Active Risk 3.4 2.8
Active Share 71.0 67.6
Wt Med Mkt Cap (bil) $87.78 $65.92 $57.75
Weighted Avg Mkt Cap (bil) $332.61 $282.09 $275.07
PORTFOLIO CHARACTERISTICS
December 31, 2020
RIC Global Equity Fund 24Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
0.9%
-0.1%
-2.4%
0.9%
7.3%
0.3%
-1.8%
-2.1%
-0.5%
-1.2%
-1.3%
-10.0% 0.0% 10.0%
Communication Services
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Factor positioning: The Fund is overweight Value, Quality, and Volatility while underweight
Momentum, Growth and Size.
› Sector positioning: The Fund is overweight Financials while underweight Consumer Staples,
Industrials, Information Technology, Real Estate, and Utilities
› Regional positioning: The Fund is overweight Emerging Markets, and Europe ex UK while
underweighting U.S.
Outlook:
The MSCI World Index rose 13.96% in Q4 with favorable conditions for further gains in 2021.
Positive sentiment was driven by the arrival of Covid-19 vaccines. This light at the end of the
tunnel came as Covid-19 cases and deaths reached record highs. Joe Biden’s victory in the US
presidential race, that subsequently came with a “blue-wave” after a January Senatorial run-off
in Georgia, along with a Brexit deal helped ease political uncertainties. President Trump’s efforts
to contest election results, and his second impeachment, lent another source of volatility as we
entered the new year.
The US imposed additional sanctions on Chinese government-controlled companies to end Q4,
with retribution threatened by China. The Biden administration is expected to de-escalate global
trade tensions, which may make trade conflict less of a factor in 2021. Biden’s recent $1.9T
coronavirus relief proposal provides funding to a variety of sources, including paychecks to most
Americans and $20B towards a national vaccine program. The re-opening trade favored
cyclically sensitive stocks in Q4, and we expect this to continue into 2021.
Global markets saw rotation into small cap and value, after a protracted run for large cap
growth names--despite historically high valuations. Valuations tightened in Q4, but remain at
historical highs, leading us to expect this trend will continue in 2021. Financials and energy
outperformed the market over the quarter, and the MSCI Emerging Markets Index rose 19.7%,
marking one of its strongest rallies ever.
REGION POSITIONING2
-5.1%
0.0%
1.5%
-0.4%
3.6%
0.9%
0.1%
-0.5%
-10.0% 0.0% 10.0%
United States
Canada
Emea Ex UK
United Kingdom
Emerging Markets
Japan
Asia ex Japan
Aus/NZ
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
.
.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Global Infrastructure Fund 4Q2020 Performance Summary
.
.
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Global
Infrastructure Fund, although RIM believes that emphasizing certain factors
over the course of a market cycle can offer higher benchmark-relative returns.
For the equity funds, this means RIM is more likely to include securities with
lower valuation, higher quality, positive earnings momentum, lower market
capitalization, and less volatility.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Global Infrastructure Fund 12.54% -3.45% -3.45% 3.53% 7.54% 6.96% 7.29% Sep 30, 2010 1.71% 1.07%
S&P Global Infrastructure Index Net 14.84% -6.49% -6.49% 1.76% 6.94% 5.56% 5.90%
Annualized Return Annual Expenses
26RIC Global Infrastructure FundPerformance Summary: Fourth Quarter 2020
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Sector allocation: The Fund was positioned with underweights to airports,
multi-utilities and pipelines, and overweights to communications, railroads
and gas utilities.
› Country allocation: The Fund had an overweight to North America and an
underweight to Emerging Markets and Asia/Pac ex. Japan.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Positioning +
The underweight to and stock selection
within the pipelines and multi-utilities sectors
benefitted performance over the year.
Extended sectors +
Out-of-benchmark exposure to
communications and renewable electricity
companies were key contributors, as both
sectors posted positive double-digit returns
within the U.S.
Positioning in
utilities-
The underweight to the strong performing
electric utilities and overweight to the
underperforming gas utilities sector
detracted from performance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Positioning in
communications-
Exposure to out-of-benchmark
communications sectors detracted from
performance.
Positioning within
airport services-
A material underweight to airport
companies negatively impacted
performance for the quarter.
Positioning in
multi-utilities+
The underweight to the weak performing
multi-utilities sector was a bright spot in
the portfolio.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
DRIVERS OF PERFORMANCE†,(a),(b)
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(b) See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
27RIC Global Infrastructure FundPerformance Summary: Fourth Quarter 2020
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$139.62 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Global Market Oriented $124.11 87.30% 88.89%
Cohen & Steers Capital Management, Inc. $20.77 14.50% 14.87% - + + + + Oct-10
First Sentier Investors (Australia) IM Limited $52.89 36.90% 37.88% flat + + + + Jan-13
Nuveen Asset Management, LLC $50.45 35.90% 36.14% - + + + + Oct-10
RIM $15.51 9.70% 11.11%
Russell Investment Management, LLC1 $15.51 9.70% 11.11% + flat flat + + May-13
Fund Benchmark
S&P Global Infrastructure Index Net 14.84% -6.49% -6.49% 1.76% 6.94%
PERFORMANCE AT A GLANCEPeriods Ending December 31, 2020
28RIC Global Infrastructure Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2SECTOR POSITIONING2
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the
following:
› Sector allocation: The Fund has material underweights to the
airports, pipelines and multi-utilities sectors. The Fund
maintained a significant allocation to the out-of-benchmark
communications sector as well as overweights to gas utilities
and railroads. During the quarter, the fund decreased its
positions to electric utilities, communications and multi-
utilities while airports and railroads increased.
› Country allocation: The Fund is overweight North America,
Japan and EMEA and underweight Emerging Markets and
Asia ex Japan. During the quarter, exposure to North
America decreased while positions in EMEA ex U.K.
increased.
› Size: The Fund remains underweight the size factor, as we
have a strategic preference for being overweight smaller
companies within the benchmark.
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
REGION POSITIONING2
-5.9%
-2.0%
2.5%
-3.2%
-2.0%
-2.1%
-4.1%
3.9%
4.6%
0.9%
7.5%
-15.0% 0.0% 15.0%
Airport Services
Electric Utilities
Gas Utilities
Highways & Railtracks
Marine Ports & Services
Multi-Utilities
Oil & Gas Storage &Transportation
Railroads
Specialized Reits
Water Utilities
Other
-1.7%
1.1%
-3.4%
1.2%
2.8%
0.2%
Asia/Pacific Ex-Japan
Emea Ex-UK
Emerging Markets
Japan
North America
United Kingdom
Strategic Position
Current Position
.
.
SIZE
SMALL LARGE
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Opportunistic Credit
Fund
4Q2020 Performance Summary
.
.
30RIC Opportunistic Credit FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Global
Opportunistic Credit Fund, although we believe that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns. For the fixed income funds, this means RIM is more likely to include
securities with more credit risk, longer duration, and higher real yield. In
addition, RIM also invests in currency to provide additional return potential
and added diversification.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Duration – The Fund was moderately long duration coming into the quarter.
› Credit – The Fund held overweights to investment grade corporates and
emerging market debt (EMD).
› Currency – The Fund had long positions in GBP and CAD and short
positions in JPY and CHF.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Securitized
Credit-
Securitized credit, particularly commercial
mortgage-backed securities, suffered during the
first quarter and failed to rally as strongly as the
corporate bond market.
Currency -
The Fund held an overweight to emerging
market bonds which suffered from overwhelming
selloff in Q120 and, bond prices were still at low
due to the halt in economic activities as a result
of coronavirus.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Fallen
Angels+
Fallen angel corporate bonds continued their strong
rally in the spread tightening environment this
quarter.
EMD +
Lower-rated and quasisovereign emerging market
issuers performed strongly this quarter which was
additive to performance.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Opportunistic Credit Fund 5.80% 3.64% 3.64% 3.62% 6.37% 4.95% 4.87% Sep 30, 2010 1.38% 0.94%
Opportunistic Blended benchmark* 4.58% 5.21% 5.21% 4.64% 7.27% 6.43% 6.34%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), – (detracted). Returns
are for Class S shares at NAV.
* The Fund is managed to secondary benchmark: 62.5% ICE BofA Developed Markets HY Constrained Index (USD Hedged), 12.5% JPMorgan Emerging Market Bond Index Global Diversified Index
(USD Hedged) and 25% Bloomberg Barclays U.S. Corporate Investment Grade Index. †,(a),5,6 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
†,(a),5,6
31RIC Opportunistic Credit FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. The Fund is managed to secondary benchmark: 62.5% ICE BofA Developed Markets HY Constrained Index (USD Hedged), 12.5% JPMorgan Emerging Market Bond Index
Global Diversified Index (USD Hedged) and 25% Bloomberg Barclays U.S. Corporate Investment Grade Index.
3. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: 50% ICE BofA Developed
Markets HY Constrained Index (USD Hedged), 20% Bloomberg Barclays U.S. 1-3 Month Treasury Bill Index, 20% JPMorgan Emerging Market Bond Index Global Diversified
Index (USD Hedged) and 10% Bloomberg Barclays U.S. Corporate Investment Grade Index.
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$507.76 95.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Specialist $337.44 56.00% 66.46%
Barings LLC $132.28 23.00% 26.05% + + + + --- Jun-17
DuPont Capital Management $92.15 14.00% 18.15% + - - - - Mar-15
Voya Investment Management Co. LLC $113.00 19.00% 22.25% - - - --- --- Sep-18
RIM1 $170.32 39.00% 33.54%
Physicals
US Fallen Angels $45.14 8.00% 8.89% + + + + --- Oct-16
EU Fallen Angels --- 6.00% --- --- --- --- --- --- Oct-20
Quasi Sovereign Bonds $35.52 7.00% 7.00% + + + + --- Jun-17
Intelligent Credit (HY) $32.18 8.00% 6.34% + - - flat --- Oct-17
Intelligent Credit (IG) $57.48 10.00% 11.32% - + + --- --- Sep-18
Fund Benchmark
Opportunistic Credit Blended Benchmark2 4.58% 5.21% 5.21% 4.64% 7.27%
Bloomberg Barclays U.S. Universal 1.29% 7.58% 7.58% 5.45% 4.87%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
Annualized Return
32RIC Opportunistic Credit Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Duration – The Fund maintained long duration.
› Credit – The Fund maintains most of its long risk position in securitized credit
and to a lesser extent in emerging market debt.
› Currency – The Fund is long in GBP and EUR and short in SEK and CHF.
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Holdings within ‘Other’ largely includes covered bonds, cash, FX, and derivatives.
4. Total active risk includes idiosyncratic risk. Credit, rates and currency will not necessarily sum to the total.
SHORT LONG
DURATION
UNDER OVER
CREDIT
CURRENCY
RATES FACTORS
LOW HIGH
SHORT LONG
-19.9%
0.2%
-0.4%
-11.0%
0.2%
5.8%
6.9%
1.7%
16.5%
-30.0% -10.0% 10.0% 30.0%
Government
Government Related
Corporate IG
Corporate HY
Agency Mbs
Cmbs
Abs
Emerging Markets
Other
QUALITY POSITIONING2
-8.2%
1.2%
0.0%
3.0%
-2.8%
-1.3%
3.2%
4.9%
-20.0% 0.0% 20.0%
AAA
AA
A
BBB
BB
B
CCC and below
Not Rated
.
.
3
Opportunistic Blended
Benchmark Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 4.3 5.1 5.3
Yield to Worst 3.1 4.6 5.7
DTS 12.0 16.1 21.5
Active Risk4 1.6 1.9
Rates 0.1 -0.1
Currency 0.4 0.4
Credit 2.1 2.6
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Global Real Estate Securities Fund 4Q2020 Performance Summary
.
.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Global Real Estate Securities Fund 11.93% -5.53% -5.53% 2.60% 4.37% 5.63% 9.05% Jul 28, 1989 1.14% 1.10%
FTSE EPRA/NAREIT Developed Real Estate Index
Net13.26% -9.04% -9.04% 1.52% 3.74% 5.44% ---
Annualized Return Annual Expenses
34RIC Global Real Estate Securities Fund Performance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Global
Real Estate Securities Fund, although RIM believes that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns. RIM is more likely to include securities with lower valuation, higher
quality and larger market capitalization.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
Property sector selection: The Fund was overweight storage, mall and health
care sectors and underweight office, shopping centers and net lease.
Country selection: The Fund was positioned with a tilt towards Emerging
Markets and the U.K. and away from Continental Europe and North America.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Positioning
within Europe+
Positioning in the Netherlands, out-of-benchmark
data center allocation and underweight retail,
together with the overweight to German residential
and UK stock selection helped performance.
Positioning in
Australia+
Exposure to out-of-benchmark companies and
underweights to weak performing companies
drove a majority of excess returns.
Positioning in
the US-
The underweights to shopping centers and net
lease as well as an overweight to data centers and
industrial companies were meaningful detractors
from performance over the year.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Positioning within
the US-
Security selection in the residential, lodging
and retail contributed negatively to
performance. An overweight to data centers
also detracted from performance.
Positioning in
Canada-
Weak selection in Canadian industrial
companies and underweights to diversified
and retail weighed on portfolio performance.
Positioning in
Japan+
Stock selection amongst JREIT companies
and an underweight to industrial benefited
performance.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
DRIVERS OF PERFORMANCE†,(a)
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a) See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
35RIC Global Real Estate Securities FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$535.17 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Real Estate $474.93 87.30% 88.74%
Cohen & Steers Capital Management, Inc. $212.86 38.80% 39.77% - + + + + May-07
RREEF America L.L.C. $262.07 48.50% 48.97% - + + + --- Oct-16
RIM $60.25 9.70% 11.26%
Russell Investment Management, LLC1 $60.25 9.70% 11.26% - + + + + Jun-13
Fund Benchmark
FTSE EPRA/NAREIT Developed Real Estate Index Net 13.26% -9.04% -9.04% 1.52% 3.74%
PERFORMANCE AT A GLANCEPeriods Ending December 31, 2020
36RIC Global Real Estate Securities FundAppendix: Fourth Quarter 2020
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Property sector selection: The Fund is tilted towards malls, storage,
cell towers, gaming and health care while maintaining underweights
to office, industrial and shopping centers. The portfolio favors
property types with stronger underlying fundamentals and growth
potential, rather than seeking to maximize yield. During the quarter,
the Fund’s exposure to industrial, data centers and shopping centers
decreased while lodging, residential and mall exposure increased.
› Country selection: The Fund is positioned with tilts towards the U.K.,
Australia and Asia and away from Continental Europe and North
America. This positioning is consistent with growth expectations and
pricing relative to net asset value within these regions. During the
quarter, the portfolio’s allocation to Europe and Australia was
increased while reducing exposure to North America and Asia.
› Quality: The Fund has an overweight to quality, as companies with
stronger balance sheets and management teams tend to be
rewarded over the longer term.
› Size: The Fund has an overweight to size, as larger companies in the
sector generally offer better liquidity, access to debt and equity
capital, and ability to make accretive acquisitions.REGION POSITIONING2
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
VOLATILITY
LOW HIGH
-0.3%
0.6%
0.8%
-0.4%
1.3%
-4.7%
0.1%
1.6%
1.2%
-10.0% -5.0% 0.0% 5.0% 10.0%
Data Centers
Diversified
Health Care
Industrial
Lodging/Resorts
Office
Residential
Retail
Self Storage
0.3%
0.4%
-0.3%
0.2%
0.1%
-1.1%
0.4%
Asia/Pacific Ex-Japan
Australia
Emea Ex-UK
Emerging Markets
Japan
North America
United Kingdom
FACTOR POSITIONING1,2 SECTOR POSITIONING2
.
.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC International Developed Markets Fund 4Q2020 Performance Summary
.
.
38RIC International Developed Markets FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC
International Developed Markets Fund, although RIM believes that
emphasizing certain factors over the course of a market cycle can offer higher
benchmark-relative returns. For RIM’s equity funds, this means RIM is more
likely to include securities with lower valuation, higher quality, positive
earnings momentum, lower market capitalization, and less volatility.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Factor
Allocation-
Factor allocation was negative driven by an overweight
to Value and an underweight to momentum. An
overweight to volatility was additive.
Sector
Allocation+
Sector allocation was positive, driven by an overweight
to materials and an underweight to materials.
Overweights to financials and energy held back gains.
Regional
Allocation+
Regional positioning was additive. An underweight to
Asia Pacific ex Japan was a contributor.
Security
Selection-
Stock selection was negative. Poor selection in
financials was the main detractor. From a regional
perspective, selection in Japan detracted.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Factor
Allocation+
Factor allocation was positive, driven by an
overweight to value and a preference for smaller
names
Sector
Allocation+
Sector allocation was positive, driven by an
underweight to health care and an overweight to
financials.
Regional
Positioning+
Regional positioning was positive, exposure to
emerging markets was additive.
Security
Selection
+Stock selection was successful, particularly in
technology and industrials. From a regional
perspective, selection in EMEA ex UK was additive.
.
.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Factor allocation: The Fund was overweight Value, Volatility, and Quality
while underweight Growth, Size, and Momentum.
› Sector positioning: The Fund was overweight Consumer Discretionary,
Energy, Financials, and Materials and underweight Consumer Staples,
Health Care, Real Estate, and Utilities.
› Regional positioning: The Fund was overweight EM and Europe ex UK while
underweight Australia/New Zealand and North America.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
International Developed Markets Fund 19.34% 5.76% 5.76% 2.40% 6.57% 4.79% 8.58% Jan 31, 1983 1.01% 0.93%
MSCI World ex USA Index Net 15.85% 7.59% 7.59% 4.22% 7.64% 5.19% 8.69%
International Developed Markets Linked Benchmark1 15.85% 7.59% 7.59% 4.22% 7.68% 5.36% 8.88%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),(b),1
1. International Developed Markets linked benchmark represents the returns of the MSCI EAFE Index Net through December 31, 2010, the returns of the Russell Developed ex-US
Large Cap Index Net from January 1, 2011 to December 31, 2017 and the returns of the MSCI World ex USA Index Net thereafter.
2. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(b),1 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
39RIC International Developed Markets FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of positioning strategies.
2. The International Developed Markets linked benchmark represents the returns of the MSCI EAFE Index Net through December 31, 2010, the returns of the Russell Developed ex
US Large Cap Index Net from January 1, 2011 to December 31, 2017 and the returns of the MSCI World ex USA Index Net thereafter.
3. Performance Key: + Positive impact; Flat Fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: International Developed Markets
Linked Benchmark.
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$1,885.83 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $388.85 16.50% 20.62%
Pzena Investment Management, LLC $388.85 16.50% 20.62% + - - - - Sep-09
Growth Style $357.86 19.50% 18.98%
Intermede Investment Partners Limited and Intermede Global
Partners Inc.$357.86 19.50% 18.98% + --- --- --- --- Jan-20
Blend $635.55 32.00% 33.70%
Wellington Management Company LLP $635.55 32.00% 33.70% + + + + + Sep-14
RIM $503.57 29.00% 26.70%
Russell Investment Management, LLC1 $503.57 29.00% 26.70% + - - - - Aug-13
Fund Benchmark
International Developed Markets Linked Benchmark2 15.85% 7.59% 7.59% 4.22% 7.68%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
MSCI WORLD ex USA Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 18.1 16.8 14.7
LT Growth Med 6.8 4.3 4.6
PEG 2.7 3.9 3.2
5yr EPS Growth 7.9 8.3 8.4
Price/Book 1.8 1.4 1.2
Dividend Yield 2.5 2.3 2.9
Beta 0.8 1.0 1.1
Active Risk 2.8 3.1
Active Share 58.6 60.4
Wt Med Mkt Cap (bil) $41.63 $34.80 $28.13
Weighted Avg Mkt Cap (bil) $77.86 $52.40 $48.09
PORTFOLIO CHARACTERISTICS
December 31, 202040
RIC International Developed Markets Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
0.3%
1.9%
-1.8%
1.5%
4.1%
-4.9%
0.8%
0.3%
1.7%
-1.6%
-2.4%
-10.0% 0.0% 10.0%
Communication Services
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Factor allocation: The Fund is overweight Value, Volatility, and Quality and underweight
Growth, Momentum, and Size.
› Sector allocation: The Fund is overweight Consumer Discretionary, Energy, Financials, and
Materials while underweight Consumer Staples, Health Care, Real Estate, and Utilities.
› Regional Positioning: The Fund is overweight Canada and Emerging Markets while
underweight Japan, US, and UK.
Outlook:
The MSCI World Index rose 13.96% in Q4 with favorable conditions for further gains in 2021.
Positive sentiment was driven by the arrival of Covid-19 vaccines. This light at the end of the
tunnel came as Covid-19 cases and deaths reached record highs. Joe Biden’s victory in the US
presidential race, that subsequently came with a “blue-wave” after a January Senatorial run-off in
Georgia, along with a Brexit deal helped ease political uncertainties. President Trump’s efforts to
contest election results, and his second impeachment, lent another source of volatility as we
entered the new year.
The US imposed additional sanctions on Chinese government-controlled companies to end Q4,
with retribution threatened by China. The Biden administration is expected to de-escalate global
trade tensions, which may make trade conflict less of a factor in 2021. Biden’s recent $1.9T
coronavirus relief proposal provides funding to a variety of sources, including paychecks to most
Americans and $20B towards a national vaccine program. The re-opening trade favored
cyclically sensitive stocks in Q4, and we expect this to continue into 2021.
Global markets saw rotation into small cap and value, after a protracted run for large cap
growth names--despite historically high valuations. Valuations tightened in Q4, but remain at
historical highs, leading us to expect this trend will continue in 2021. Financials and energy
outperformed the market over the quarter, and the MSCI Emerging Markets Index rose 19.7%,
marking one of its strongest rallies ever.
REGION POSITIONING2
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
-1.8%
1.2%
0.9%
-1.1%
3.0%
-1.3%
-0.1%
-1.0%
-10.0% 0.0% 10.0%
United_States
Canada
Emea Ex- United Kingdom
United Kingdom
Emerging Markets
Japan
Asia ex Japan
Aus/NZ
.
.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Investment Grade Bond Fund
4Q2020 Performance Summary
.
.
42RIC Investment Grade Bond FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC
Investment Grade Bond Fund, although RIM believes that emphasizing
certain factors over the course of a market cycle can offer higher benchmark-
relative returns. For the fixed income funds, this means RIM is more likely to
include securities with more credit risk, longer duration, and higher real yield.
In addition, RIM also invests in currency to provide additional return potential
and added diversification.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Duration – The Fund held a moderately long duration position throughout
the quarter.
› Credit – The Fund held an overweight to securitized credit and
underweights to treasuries and government related securities. Within the
securitized sector the Fund prefers non-agency MBS, CMBS and ABS.
› Rates – The Fund was long positions in U.S. 10-year futures and short
positions in German 10-year futures.
› Currency – The Fund was long positions in GBP and CAD and short
positions in JPY and CHF.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Duration +
Accommodative dovish monetary policy throughout
the year made a positive contribution to Fund
performance.
Credit +Investment grade and high yield markets experienced
V-shape recovery for one-year time period.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Credit +Credit continued to outperform with high
expectations for a new U.S. stimulus package.
Quality +
Lower rated credit continued to outperform
leading to solid performance contribution from an
overweight in those areas.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Investment Grade Bond Fund 1.31% 8.95% 8.95% 5.59% 4.54% 3.86% 7.58% Oct 15, 1981 0.56% 0.48%
Bloomberg Barclays U.S. Aggregate Bond Index 0.67% 7.51% 7.51% 5.34% 4.44% 3.84% 7.89%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),(b),3,5,6
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(b),3,5,6 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
43RIC Investment Grade Bond FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Barclays U.S.
Aggregate Index.
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$754.06 95.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Specialist $497.81 57.00% 66.02%
MetLife Investment Management, LLC $181.75 20.90% 24.10% + + + + + Jan-12
Schroder Investment Management North America Inc. $316.06 36.10% 41.91% flat - - - --- Oct-16
RIM1 $256.25 38.00% 33.98%
Physicals
Intelligent Credit (IG) $122.21 14.25% 16.21% + + + + --- Sep-17
US Treasuries $134.04 23.75% 17.78% - + + flat --- Oct-16
Fund Benchmark
Bloomberg Barclays U.S. Aggregate Bond Index 0.67% 7.51% 7.51% 5.34% 4.44%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
Annualized Return
44RIC Investment Grade Bond Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Total active risk includes idiosyncratic risk. Credit, rates and currency will not necessarily sum to the total.
Strategic Position
Current Position
POSITIONING AND OUTLOOK
At the end of the quarter, key aspects of Fund positioning included:
› Duration – The Fund continues to hold a moderately long duration position
› Credit – The Fund holds an overweight to securitized securities and
underweights to treasuries and government related securities. Within the
securitized sector the Fund prefers non-agency MBS, CMBS and ABS.
› Rates – The Fund was long positions in U.S. and Australian rates and short
positions in German and U.K. rates.
› Currency – The Fund was long in GBP and EUR and short in SEK and CHF.
QUALITY POSITIONING2
SHORT LONG
DURATION
UNDER OVER
CREDIT
CURRENCY
RATES FACTORS
LOW HIGH
SHORT LONG
-18.6%
-4.1%
4.2%
2.1%
-9.1%
2.0%
8.6%
0.8%
-20.0% 0.0% 20.0%
Government
Government Related
Corporate IG
Corporate HY
Agency Mbs
Cmbs
Abs
Emerging Markets
-17.2%
-2.1%
-1.8%
11.5%
2.9%
0.2%
0.0%
6.6%
-20.0% 0.0% 20.0%
AAA
AA
A
BBB
BB
B
CCC and below
Not Rated
Bloomberg Barclays
U.S. Aggregate Bond
Index Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 6.0 6.4 6.4
Yield to Worst 1.1 1.8 1.9
DTS 3.7 5.6 7.2
Active Risk3 1.6 1.6
Rates 0.1 0.1
Currency 0.2 0.2
Credit 1.0 1.3
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Multi-Asset Growth Strategy Fund 4Q2020 Performance Summary
.
.
46RIC Multi-Asset Growth Strategy Fund Performance Summary: Fourth Quarter 2020
.
.
STRATEGIC BELIEFS
Design – Translate objectives into a strategic asset allocation.
Construct – Access exposures through a combination of third-party managers
and positioning strategies.
Manage – Dynamically adjust to changing circumstances, markets, and third-
party managers.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Risk Control: RIM entered the quarter with a slight risk-on position, with an overweight to
equity risk and underlying preferences for value and small cap equities being the primary
drivers of return.
› Regional positioning: RIM was underweight U.S., overweight EMEA ex-UK relative to the
strategic positioning. The largest region overweight was non-U.S. countries.
› Credit: RIM entered the quarter neutral credit-sensitive sectors, as credit spreads
tightened back to pre-COVID levels.
› Currency: RIM remained modestly underweight USD, overweight EUR, JPY.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Design -
Rates Value and overweight loans at the expense of high
yield were additive, however more than offset by strategic
preferences for CMBX.
Construct-
Key trends in growth outperformance vs. value continued
which drove the negative excess returns in Perkins,
Atlantic, and Levin, the three strategies in the global value
camp. Furthermore, defensive managers were costly as
well, failing to provide key downside protection in the face
of volatility experienced in the first quarter of the year.
Manage-
Regional equity tilts including a preference for European and
U.K. equities over domestic peers, and tactical sector bets
detracted over one year. Meanwhile, duration positioning,
defensive currency exposures, and risk management
strategies were additive in a volatile market environment.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Design +
Strategic positioning was slightly beneficial, as the
quarter was met with risk-on sentiment. Global
equities rose, strategic preferences for CMBX were
additive, and currency factor preferences were
relatively flat.
Construct +
Cyclical segments of the equity market led broad
indices higher, led by strong outperformance by
small cap and other economically-sensitive styles,
such as global value outperforming growth by
3.10%. Value-oriented managers contributed the
most to excess returns, however growth managers
continued to outperform as well.
Manage -
Tactical positioning was detractive over the quarter, as
regional preferences and an overweight to volatility
detracted. This, however, was partially offset by an
underweight to the USD, and an overweight to equity
risk.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
RIC Multi-Asset Growth Strategy Fund 8.67% 3.13% 3.13% 2.32% --- --- 3.48% Jul 01, 2016 1.22% 0.93%
CPI +4% 1.07% 5.36% 5.36% 5.85% --- --- 5.92%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b),(c) See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
†,(b),(c)
47RIC Multi-Asset Growth Strategy FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
AUM Target % of
Total Fund Weight Fund 4th Inception
$1,528.41 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Equities $754.29 35.00% 49.35%
Atlantic Investment Management, Inc. $134.97 2.50% 8.83% + - - --- --- Dec-18
Kopernik Global Investors LLC $64.32 3.50% 4.21% + + + + --- Mar-17
Russell Investment Management, LLC (Active Proprietary Strategy) $21.65 8.50% 1.42% + - - + --- Mar-17
Berenberg Asset Management LLC $63.05 6.00% 4.13% + --- --- --- --- Jun-20
Boston Partners Global Investors, Inc. $172.05 3.50% 11.26% + + + - --- Dec-17
Levin Easterly Partners, LLC $116.67 3.50% 7.63% + - - - --- Mar-17
RiverPark Advisors, LLC $68.60 4.00% 4.49% + + + + --- Mar-17
Sompo Japan NipponKoa Asset Management Co., Ltd. $112.99 3.50% 7.39% + + + --- --- Sep-18
Real Assets $125.25 15.00% 8.19%
Cohen & Steers Capital Management, Inc. $38.53 5.00% 2.52% + - - - --- Mar-17
First Sentier Investors (Australia) IM Limited $60.29 5.00% 3.94% + - - - --- Mar-17
Russell Investment Management, LLC (Risk Premia Commodities
Backwardation)$26.43 5.00% 1.73% - - - --- --- May-18
Fixed Income / Other $509.66 34.50% 33.35%
GLG LLC $67.17 3.50% 4.39% + - - - --- Mar-17
Hermes Investment Management Limited $57.39 7.00% 3.75% + + + + --- Mar-17
Oaktree Capital Management, L.P. $144.15 6.00% 9.43% + - - - --- Aug-17
Putnam Investment Management, LLC (Fixed Income Opportunistic) $75.71 6.00% 4.95% - - - --- --- Sep-19
Putnam Investment Management, LLC (Agency MBS) $165.24 12.00% 10.81% - - - - --- Mar-17
Fund Benchmark
CPI + 4% 1.07% 5.36% 5.36% 5.85% ---
Annualized
Periods Ending December 31, 2020
48RIC Multi-Asset Growth Strategy Fund Appendix: Fourth Quarter 2020
.
.
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Beta increased throughout the quarter, with underlying preferences for non-U.S. and value-oriented
equities being the primary drivers of risk.
› The underweight U.S. equity position continues to be an overall underweight, funding an overweight to
the UK and Europe ex-UK equities.
› Underweight high yield risk given more attractive skew in equities.
› Currently tilted to value and growth managers and away from defensive managers.
› Tilted to cyclical-oriented companies with a mid- and small-cap bias.
FACTOR POSITIONING1,2
Current Position
Prior Quarter Position
FUND UPDATES
› Increased equity allocation in October heading into the U.S. Presidential election, holding equity
overweights and a moderate risk-on stance, with risk overweights partially mitigated by trims to high yield
credit, securitized, and adding duration moving the Fund to a long duration stance.
› CMBX exposure was trimmed due poor forward-looking return expectations and risk-reward
opportunities.
› Following the election and the resulting risk-on market environment, equity risk was reduced, harvesting
profits of the risk-on positioning in November, however still maintaining a Fund equity overweight.
UNDER OVER
EQUITIES
UNDER OVER
REAL ASSETS
CURRENCIES
UNDER OVER
UNDER OVER
FIXED INCOME
UNDER OVER
EQUITIES
UNDER OVER
REAL ASSETS
CURRENCIES
UNDER OVER
ABSOLUTE RETURN
UNDER OVER
UNDER OVER
FIXED INCOME
†,(b),(c)
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Multifactor U.S. Equity Fund 4Q2020 Performance Summary
.
.
50RIC Multifactor U.S. Equity FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
RIM believes that emphasizing certain factors over the course of a market
cycle can offer higher benchmark-relative returns. For the RIC Multifactor U.S.
Equity Fund, this means RIM is more likely to include securities with lower
valuation, higher quality, positive earnings momentum, lower market
capitalization, and less volatility. In addition, the Fund seeks to add value
through the dynamic management of factors and sectors.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Factor Allocation: The Fund had higher value and quality, and lower size,
volatility, and momentum characteristics than the benchmark.
› Sector Allocation: The Fund had overweights to the financials and health
care sectors. It was underweight to the real estate and consumer staples
sectors.
› Industry Allocation: The Fund had overweights to the banks and health care
providers & services industries. It was underweight to the REITs and hotels,
restaurants & leisure industries.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation-
The Fund's tilts toward stocks with lower valuation
and lower market capitalization held back returns
over the one year period.
Sector
Allocation-
A large overweight to the underperforming
financials sector held back relative performance.
Industry
Allocation-
The Fund's overweights to the airlines, banks, and
insurance industries were not rewarded.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Size +The Fund's tilt toward stocks with lower market
capitalization was beneficial over the quarter.
Sector
Allocation+
An underweight to the real estate sector and an
overweight to the financials sector were
moderately rewarded over the quarter.
Industry
Allocation+
The Fund's overweight to the banks industry and
underweight to the reits industry was beneficial
over the quarter.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Multifactor U.S. Equity Fund 13.76% 13.60% 13.60% 11.09% 13.48% --- 11.61% Jul 31, 2014 0.61% 0.55%
Russell 1000® Index 13.69% 20.96% 20.96% 14.82% 15.60% --- 13.35%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(b),7
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b),7 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
51RIC Multifactor U.S. Equity Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
0.5%
-1.0%
-0.5%
-0.3%
1.2%
1.6%
-0.1%
-0.7%
0.9%
-1.4%
-0.2%
-5.0% 0.0% 5.0%
CommunicationServices
ConsumerDiscretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
InformationTechnology
Materials
Real Estate
UtilitiesStrategic Position
Current Position
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell Investments’
cycle, valuation, sentiment framework as well as to take advantage of tactical opportunities.
• Overall, RIM has a slight pro-cyclical tilt with overweights to value and balance sheet
quality (lower financial leverage). Additionally, RIM has underweights to size and
momentum.
• Multiple COVID-19 vaccines were found to be highly effective and approved for
emergency use in the United States and Europe in December. Markets overlooked virus
outbreaks that intensified through the holiday period as vaccine rollouts should ensure a
strong economic and earnings rebound through the middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help bridge
households and businesses to the point where vaccines allow us to sustain a stronger and
more normalized economy again.
.
.
Russell 1000® Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 25.3 21.0 21.0
LT Growth Med 12.2 10.5 9.5
PEG 2.1 2.0 2.2
5yr EPS Growth 11.4 11.5 11.8
Price/Book 4.2 3.3 2.9
Dividend Yield 1.5 1.5 1.9
Beta 1.0 1.0 1.0
Active Risk 1.9 1.7
Active Share 28.0 26.3
Weighted Median Market Cap (bil) $138.14 $89.40 $87.90
Weighted Average Market Cap (bil) $437.81 $417.20 $391.30
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Multi-Strategy Income Fund 4Q2020 Performance Summary
.
.
53RIC Multi-Strategy Income Fund Performance Summary: Fourth Quarter 2020
.
.
STRATEGIC BELIEFS
Design – Translate objectives into a strategic asset allocation.
Construct – Access exposures through a combination of managers and positioning
strategies.
Manage – Dynamically adjust to changing circumstances, markets and managers.
FUND POSITIONING ENTERING THE QUARTER (versus Fund benchmark)
› Risk Control: RIM entered the quarter with a slight risk-on position, with an overweight to
equity risk and underlying preferences for value and small cap equities being the primary
drivers of return.
› Regional positioning: RIM was underweight U.S., overweight EMEA ex-UK relative to the
strategic positioning. The largest region overweight was non-U.S. countries.
› Credit: RIM entered the quarter neutral credit-sensitive sectors, as credit spreads
tightened back to pre-COVID levels.
› Currency: RIM remained modestly underweight USD, overweight EUR, JPY.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Design -
Rates Value and overweight loans at the expense of high
yield were additive, however more than offset by strategic
preferences for CMBX.
Construct-
Key trends in growth outperformance vs. value continued
which drove the negative excess returns in Perkins, Atlantic,
and Levin, the three strategies in the global value camp.
Furthermore, defensive managers were costly as well, failing
to provide key downside protection in the face of volatility
experienced in the first quarter of the year.
Manage -
Regional equity tilts including a preference for European and
U.K. equities over domestic peers, and tactical sector bets
detracted over one year. Meanwhile, duration positioning,
defensive currency exposures, and risk management
strategies were additive in a volatile market environment.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Design +
Strategic positioning was slightly beneficial, as the
quarter was met with risk-on sentiment. Global
equities rose, strategic preferences for CMBX
were additive, and currency factor preferences
were relatively flat.
Construct +
Cyclical segments of the equity market led broad
indices higher, led by strong outperformance by
small cap and other economically-sensitive styles,
such as global value outperforming growth by
3.10%. Value-oriented managers contributed the
most to excess returns, however growth
managers continued to outperform as well.
Manage -
Tactical positioning was detractive over the quarter,
as regional preferences and an overweight to
volatility detracted. This, however, was partially
offset by an underweight to the USD, and an
overweight to equity risk.
Periods Ending December 31, 2020
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
RIC Multi-Strategy Income Fund 8.06% 3.38% 3.38% 3.19% 5.70% --- 3.89% May 01, 2015 1.12% 0.78%
Big Six Average 8.78% 6.32% 6.32% 5.32% 7.04% 6.41% 4.95%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(b),5,6,8
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b),5,6,9 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
54RIC Multi-Strategy Income FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
AUM Target % of
Total Fund Weight Fund 4th Inception
$834.27 97.0% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Global Equities $389.59 31.00% 46.70%
Berenberg Asset Management LLC $54.95 7.00% 6.59% + --- --- --- --- Jun-20
Boston Partners Global Investors, Inc. $120.14 6.00% 14.40% + - - - --- Dec-17
Kopernik Global Investors, LLC $61.18 6.00% 7.33% + + + + --- Apr-16
Russell Investment Management, LLC $64.21 6.00% 7.70% + flat flat + + May-15
Sompo Japan NipponKoa Asset Management Co., Ltd. $89.11 6.00% 10.68% + - - --- --- Sep-18
Real Estate $33.28 6.00% 3.99%
Cohen & Steers Capital Management, Inc - Global Property Securities $24.22 3.00% 2.90% + - - + + May-15
Cohen & Steers Capital Management, Inc - Listed Infrastructure $9.07 3.00% 1.09% - - - - - May-15
Fixed Income $347.87 39.00% 41.70%
Cohen & Steers Capital Management, Inc - Preferred Securities $70.54 10.00% 8.46% - + + + + May-15
GLG LLC $45.55 5.00% 5.46% - - - - --- Apr-17
Oaktree Capital Management, L.P. $81.79 6.00% 9.80% - - - - --- Jul-17
Putnam Investment Management, LLC (Fixed Income Opportunities) $41.39 6.00% 4.96% - - - --- --- Sep-19
Putnam Investment Management, LLC (Mortgage Opportunities) $108.60 12.00% 13.02% - - - - --- Feb-17
Fund Benchmark
Big Six Average 8.78% 6.32% 6.32% 5.32% 7.04%
STYLE-LEVEL PERFORMANCE TABLE
Periods Ending December 31, 2020
Annualized
55RIC Multi-Strategy Income FundAppendix: Fourth Quarter 2020
.
.
FACTOR POSITIONING1,2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
FUND UPDATES
› Increased equity allocation in October heading into the U.S. Presidential election, holding equity overweights and a
moderate risk-on stance, with risk overweights partially mitigated by trims to high yield credit, securitized, and
adding duration moving the Fund to a long duration stance.
› CMBX exposure was trimmed due poor forward-looking return expectations and risk-reward opportunities.
› Following the election and the resulting risk-on market environment, equity risk was reduced, harvesting profits of
the risk-on positioning in November, however still maintaining a Fund equity overweight.
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Beta increased throughout the quarter, with underlying preferences for non-U.S. and value-oriented equities being
the primary drivers of risk.
› The underweight U.S. equity position continues to be an overall underweight, funding an overweight to the UK and
Europe ex-UK equities.
› Underweight high yield risk given more attractive skew in equities.
› Currently tilted to value and growth managers and away from defensive managers.
› Tilted to cyclical-oriented companies with a mid- and small-cap bias.
Current Position
Prior Quarter Position
UNDER OVER
EQUITIES
UNDER OVER
REAL ASSETS
CURRENCIES
UNDER OVER
UNDER OVER
FIXED INCOME
UNDER OVER
EQUITIES
UNDER OVER
REAL ASSETS
CURRENCIES
UNDER OVER
ABSOLUTE RETURN
UNDER OVER
UNDER OVER
FIXED INCOME
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Multifactor Bond Fund 4Q2020 Performance Summary
.
.
57RIC Multifactor Bond FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
RIM believes that emphasizing certain factors over the course of a market cycle
can offer higher benchmark-relative returns. For the RIC Multifactor Bond Fund
RIM believes that overweights to credit and duration offer diversifying excess
returns over a cycle and can be further enhance with selection factors
exposures to in credit, rates and currency.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Duration – The Fund held a moderately long duration position throughout
the quarter.
› Credit – The Fund held an overweight to investment grade corporate credits
especially BBB-rated bonds.
› Rates – The Fund was long positions in U.S. 10-year futures and short
positions in German and Japan 10-year futures.
› Currency – The Fund was long positions in EUR and GBP while short
positions in USD and SEK.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Rates -
A modest steepening of the curve led to
underperformance from duration held on the long
end of the curve.
Credit +Further spread tightening across all sectors was a
leading driver of performance for the quarter.
.
.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Rates +Falling rates over the course of the year led to
positive performance from a long duration position.
Credit +
An overweight to corporate credit and tactical
rotation of that exposure were key performance
drivers.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Multifactor Bond Fund 1.76% 7.68% 7.68% --- --- --- 6.81% Nov 13, 2019 0.66% 0.46%
Bloomberg Barclays Global Aggregate Bond Index
USD Hedged0.89% 5.58% 5.58% --- --- --- 5.25%
Annualized Return Annual Expenses
Periods Ending December 31, 2020
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
DRIVERS OF PERFORMANCE†,(b),12
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), – (detracted). Returns are
for Class S shares at NAV. †,(b),13 See Disclosure page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
58RIC Multifactor Bond Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Total active risk includes idiosyncratic risk. Credit, rates and currency will not necessarily sum to the total.
Strategic Position
Current Position
FUND UPDATES
There were no material changes to the Fund during the quarter.
POSITIONING AND OUTLOOK
At the end of the quarter, key aspects of Fund positioning included:
› Duration – The Fund holds a moderately long duration position.
› Credit – The Fund maintains a long, but reduced risk position in corporate credit.
› Rates – The Fund is long U.S. and Australian rates and short Germany.
› Currency – The Fund is long GBP and EUR while short CHF and SEK.
.
.
SHORT LONG
DURATION
UNDER OVER
CREDIT
CURRENCY
RATES FACTORS
LOW HIGH
SHORT LONG
Barclays Global
Aggregate USD
Hedged Index Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 7.2 8.0 7.8
Yield to Worst 0.8 1.1 1.5
DTS 3.1 4.7 7.0
Active Risk3 1.6 2.2
Rates 0.4 0.2
Currency 0.1 0.1
Credit 0.3 1.1
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Multifactor International Equity Fund 4Q2020 Performance Summary
.
.
60RIC Multifactor International Equity FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Russell Investments’ strategic beliefs on value, momentum, quality and low
volatility factors are designed to provide exposure to equity factors that
Russell Investments believes to outperform over time. The impact of these
strategic factor preferences was negative relative to the MSCI World ex USA
benchmark. The value RIFP (Russell Investment Factor Portfolio)
outperformed relative to the MSCI World ex US markets.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Factor positioning: The Fund was overweight Value while underweight Size and
Momentum.
› Sector positioning: The Fund was overweight Financials, Materials, and Utilities
while underweight Health Care, Industrials, and Technology.
› Regional positioning: The Fund was overweight Emerging Markets while
underweight Asia ex Japan, AU/NZ, and US.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Factor
Allocation-
Factor allocation was negative. An overweight to Value was
the major headwind.
Sector
Allocation-
Sector allocation was negative, mainly held back by an
underweight to technology and an overweight to financials.
Regional
Allocation+
Region positioning was positive, driven by overweights to
Japan and EMEA ex UK.
Security
Selection -Selection was broadly negative, particularly in consumer
discretionary and financials.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Factor
Allocation+
Factor allocation was positive. An overweight to value
and a preference for smaller names were positive
contributors.
Sector
Allocation+
Sector allocation was positive, led by an overweight to
financials and an underweight to health care.
Regional
Positioning-
Regional positioning detracted. An underweight to Asia
Pacific ex Japan was the main detractor
Security
Selection +
Selection was net positive. Poor selection in industrials
and health care was negated by positive selectionin
materials. From a regional perspective selection ion the
UK and EMEA ex UK were positive contributors
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Multifactor International Equity Fund 15.90% 2.51% 2.51% 1.07% 5.50% --- 2.34% Jul 31, 2014 0.78% 0.64%
MSCI World ex-USA Index Net1 15.85% 7.59% 7.59% 4.22% 7.64% --- 4.11%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(b),7
1. The Fund’s benchmark change from the Russell Developed ex-U.S. Large Cap Index Net to the MSCI World ex-USA Index Net was implemented on January 1, 2018.
2. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. . †,(b),7 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios. Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
MSCI World ex USA Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 18.1 14.8 14.0
LT Growth Med 6.8 3.9 3.9
PEG 2.7 3.8 3.6
5yr EPS Growth 7.9 8.4 8.7
Price/Book 1.8 1.5 1.3
Dividend Yield 2.5 3.0 3.5
Beta 0.8 1.0 1.0
Active Risk 1.6 1.5
Active Share 41.0 40.9
Wt Med Mkt Cap (bil) $41.63 $32.92 $30.33
Weighted Avg Mkt Cap (bil) $77.86 $67.08 $67.71
December 31, 2020
PORTFOLIO CHARACTERISTICS 61RIC Multifactor International Equity Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
1.2%
-0.2%
-1.0%
0.0%
3.4%
-2.8%
-1.4%
-2.7%
2.9%
0.3%
0.4%
-10.0% 0.0% 10.0%
CommunicationServicesConsumer
Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Factor positioning: The Fund is overweight Value while underweight Size and Momentum.
› Sector positioning: The Fund is overweight Communication Services, Financials, and Materials
while underweight Consumer Staples, Health Care, Industrials, and Technology.
› Regional positioning: The Fund is overweight Canada, Emerging Markets, and Europe ex UK
while underweight AU/NZ and Japan.
Outlook:
The MSCI World Index rose 13.96% in Q4 with favorable conditions for further gains in 2021.
Positive sentiment was driven by the arrival of Covid-19 vaccines. This light at the end of the tunnel
came as Covid-19 cases and deaths reached record highs. Joe Biden’s victory in the US
presidential race, that subsequently came with a “blue-wave” after a January Senatorial run-off in
Georgia, along with a Brexit deal helped ease political uncertainties. President Trump’s efforts to
contest election results, and his second impeachment, lent another source of volatility as we entered
the new year.
The US imposed additional sanctions on Chinese government-controlled companies to end Q4, with
retribution threatened by China. The Biden administration is expected to de-escalate global trade
tensions, which may make trade conflict less of a factor in 2021. Biden’s recent $1.9T coronavirus
relief proposal provides funding to a variety of sources, including paychecks to most Americans and
$20B towards a national vaccine program. The re-opening trade favored cyclically sensitive stocks in
Q4, and we expect this to continue into 2021.
Global markets saw rotation into small cap and value, after a protracted run for large cap growth
names--despite historically high valuations. Valuations tightened in Q4, but remain at historical
highs, leading us to expect this trend will continue in 2021. Financials and energy outperformed the
market over the quarter, and the MSCI Emerging Markets Index rose 19.7%, marking one of its
strongest rallies ever.
REGION POSITIONING2
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
-1.0%
1.0%
1.1%
-0.4%
1.3%
-1.5%
0.5%
-1.0%
-4.0% -2.0% 0.0% 2.0% 4.0%
United States
Canada
Emea Ex UK
United Kingdom
Emerging Markets
Japan
Asia ex Japan
Aus/NZ
.
.Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Short Duration Bond Fund4Q2020 Performance Summary
.
.
63RIC Short Duration Bond FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Short
Duration Bond Fund, although we believe that emphasizing certain factors
over the course of a market cycle can offer higher benchmark-relative returns.
For the fixed income funds, this means RIM is more likely to include securities
with more credit risk, longer duration, and higher real yield. In addition, we
also invest in currency to provide additional return potential and added
diversification.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Duration: The Fund was long duration versus the benchmark.
› Credit: The Fund was underweight U.S. treasuries while it held an explicit
allocation to corporates and securitized instruments to diversify credit risk.
› Rates: The Fund has long positions in Australia & Japan and short positions in
German & Canada 10-year government interest rate futures.
› Currency: The Fund has long positions NOK, EUR, GBP. It has short positions in
CHF, JPY, USD.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Duration +
Accommodative central bank policy throughout the
year was a strong positive contribution to Fund
performance given the overweight to duration.
Credit +
Active management was a strong positive during the
year, particularly adding credit risk exposure when
spreads widened significantly in March and April.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Credit +
IG Credit continued to outperform on the back of
U.S. Federal reserve buying, U.S. government
stimulus, economic reopening and positive
vaccine news.
Quality +
Lower quality exposure – especially the BBB-
rated quality cohort and sub-investment grade –
was beneficial as higher-beta credit risk continued
to rally during the quarter.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Short Duration Bond Fund 0.77% 4.98% 4.98% 3.63% 2.94% 2.26% 5.87% Oct 30, 1981 0.81% 0.58%
ICE BofAML 1-3 Year U.S. Treasury Index 0.05% 3.10% 3.10% 2.74% 1.90% 1.30% 5.57%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),4,5,6
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),4,5,6 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
64RIC Short Duration Bond FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: ICE Bank of America Merrill Lynch
1-3 Year U.S Treasury Index
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$419.22 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Generalist $241.49 58.00% 57.61%
MetLife Investment Management, LLC $109.44 29.00% 26.11% + + + + + Nov-07
Scout Investments LLC $132.05 29.00% 31.50% + + + + + Oct-14
RIM1 $177.72 39.00% 42.39%
Physicals
Intelligent Credit $85.89 10.00% 20.49% + + + --- --- Jun-19
Strategic Credit Factors $91.83 29.00% 21.91% + + + + flat Nov-14
Fund Benchmark
ICE BofAML 1-3 Year US Treasury Index 0.05% 3.10% 3.10% 2.74% 1.90%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
Annualized Return
65RIC Short Duration Bond Fund Appendix: Fourth Quarter 2020
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Total active risk includes idiosyncratic risk. Credit, rates and currency will not necessarily sum to the total.
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Duration: The Fund maintained a long duration versus the benchmark.
› Credit: The Fund held an underweight to US treasuries while it held an
explicit diversified allocation to corporate credit and securitized
instruments.
› Rates: The Fund has long positions in Australia & Japan and short
positions in German & Canada 10-year government interest rate futures.
› Currency: The Fund has long positions GBP, NOK and EUR. It has short
positions in USD, CHF and SEK.
QUALITY POSITIONING2
SHORT LONG
DURATION
UNDER OVER
CREDIT
CURRENCY
REAL YIELD
LOW HIGH
SHORT LONG
-86.2%
2.6%
20.2%
29.1%
1.7%
4.7%
6.8%
6.5%
-100.0% 0.0% 100.0%
Govt / Govt-Related
High Yield Corporate
Financial Institutions
Industrial
Utility
Residential MBS
CMBS
ABS
-63.0%
9.4%
20.6%
26.8%
2.8%
0.4%
0.7%
2.4%
-80.0% -40.0% 0.0% 40.0% 80.0%
AAA
AA
A
BBB
BB
B
CCC and below
Not Rated
.
.
FACTOR POSITIONING1,2 SECTOR POSITIONING2
Bank of America
Merrill Lynch 1-3 Year
U.S. Treasury Index Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 1.8 2.4 2.3
Yield to Worst 0.1 0.9 1.2
DTS 0.0 1.6 2.6
Active Risk3 3.0 3.8
Rates 0.1 0.0
Currency 0.1 0.1
Credit 1.9 2.6
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC U.S. Small Cap Equity Fund 4Q2020 Performance Summary
.
.
67RIC U.S. Small Cap Equity FundPerformance Summary: Fourth Quarter 2020
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation-
The Fund’s tilts toward companies with lower
valuation and higher profitability were not additive
over the year.
Sector
Allocation+
Underweights to the real estate and financials
sectors were rewarded.
Stock
Selection-
Selection within the consumer staples, industrials,
and health care sectors was a meaningful driver of
underperformance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
AllocationFlat
The Fund’s tilts toward companies with lower
valuations and lower market capitalization were
rewarded over the quarter. However, the Fund’s
underweight to more volatile and unprofitable
stocks detracted.
Sector
Allocation+
Overweights to the energy and materials sectors
were beneficial.
Stock
Selection
+Security selection within the consumer
discretionary and financials sectors was additive to
relative performance.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC U.S.
Small Cap Equity Fund, although RIM believes that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns. For the equity funds, this means RIM is more likely to include
securities with lower valuation, higher quality, positive earnings momentum,
lower market capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Stock selection is the primary source of value added relative to the
benchmark.
› Factor Allocation: The Fund had higher value and quality, and lower size,
volatility, and momentum characteristics than the benchmark.
› Sector Allocation: The Fund was overweight to the materials and information
technology sectors. It was underweight to the health care and industrials
sectors.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
U.S. Small Cap Equity Fund 31.56% 12.84% 12.84% 7.04% 11.29% 10.11% 10.71% Dec 28, 1981 1.16% 1.12%
Russell 2000® Index 31.37% 19.96% 19.96% 10.25% 13.26% 11.20% 10.56%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),1
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),1 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
68RIC U.S. Small Cap Equity FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund Inception
$1,512.15 97.0% 100.0% 4th Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $262.95 20.00% 17.39%
Boston Partners Global Investors, Inc. $262.95 20.00% 17.39% flat - - - - Apr-15
Market Oriented Style $641.81 38.00% 42.44%
Ancora Advisors LLC2 $254.90 18.50% 16.86% + - - - - Dec-14
Penn Capital Management Company, Inc. $155.39 5.00% 10.28% + --- --- --- --- May-20
Jacobs Levy Equity Management, Inc. $231.52 14.50% 15.31% + - - - + Jun-95
Growth Style $314.15 20.00% 20.78%
Ranger Investment Management, L.P. $314.15 20.00% 20.78% - + + --- --- Sep-19
RIM $293.25 19.00% 19.39%
Russell Investment Management, LLC1 $293.25 19.00% 19.39% - - - - - Aug-13
Fund Benchmark
Russell 2000® Index 31.37% 19.96% 19.96% 10.25% 13.26%
PERFORMANCE AT A GLANCEPeriod Ending December 31, 2020
Annualized Return
69RIC U.S. Small Cap Equity Fund Appendix: Fourth Quarter 2020
1. Beta Characteristics: R2000® Index is compared against the R3000® Index. The Fund is compared against the R2000® Index.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell Investments’
cycle, valuation, sentiment framework as well as to take advantage of tactical opportunities
within each manager’s excess return cycle.
• Relative to the benchmark, the Fund has a slight pro-cyclical tilt and is positioned toward
value, quality, and lower size factors. This is in recognition of current valuation opportunities,
cycle considerations, and the risk of elevated levels of corporate debt and unprofitability
among U.S. small cap companies.
• Multiple COVID-19 vaccines were found to be highly effective and approved for emergency
use in the United States and Europe in December. Markets overlooked virus outbreaks that
intensified through the holiday period as vaccine rollouts should ensure a strong economic
and earnings rebound through the middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help bridge
households and businesses to the point where vaccines allow us to sustain a stronger and
more normalized economy again.
• In alignment with Russell Investments’ strategic equity beliefs, stock selection of the
underlying active managers, based on their long-term assessment of each individual
company, continues to be the primary driver of the Fund’s expected risk and return.
0.5%
1.8%
0.1%
1.1%
-0.3%
-2.6%
-1.2%
0.5%
1.8%
-1.4%
-0.4%
-10.0% 0.0% 10.0%
CommunicationServices
ConsumerDiscretionary
ConsumerStaples
Energy
Financials
Health Care
Industrials
InformationTechnology
Materials
Real Estate
Utilities
SECTOR POSITIONING2FACTOR POSITIONING2,3
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
Strategic Position
Current Position
Russell 2000® Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 19.4 18.3 15.6
LT Growth Med 10.6 10.8 10.7
PEG 1.8 1.7 1.5
5yr EPS Growth 7.4 7.2 7.8
Price/Book 2.6 2.3 1.8
Dividend Yield 1.2 1.0 1.4
Beta1 1.4 1.0 1.0
Active Risk 4.3 4.1
Active Share 63.7 64.3
Wt Med Mkt Cap (bil) $2.83 $1.89 $1.47
Weighted Avg Mkt Cap (bil) $3.35 $2.70 $2.10
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Strategic Bond Fund 4Q2020 Performance Summary
.
.
71RIC Strategic Bond FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC
Strategic Bond Fund, although RIM believes that emphasizing certain factors
over the course of a market cycle can offer higher benchmark-relative returns.
For the fixed income funds, this means RIM is more likely to include securities
with more credit risk, longer duration, and higher real yield. In addition, the
Fund also invests in currency to provide additional return potential and added
diversification.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Duration – The Fund held a moderately long duration position throughout
the quarter.
› Credit – The Fund held an overweight to securitized securities and
underweights to treasuries and government related securities. Within the
securitized sector the Fund prefers non-agency MBS, CMBS and ABS.
› Rates – The Fund was long positions in U.S. 10-year futures and short
positions in German and Japan 10-year futures.
› Currency – The Fund was long positions in GBP and CAD while short
positions in USD and CHF.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Duration +
Accommodative dovish monetary policy
throughout the year led to strong positive
contribution to Fund performance from a long
duration stance.
Credit +
An overweight to corporate credit and tactical
rotation within the sector was a leading driver of
annual performance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Credit +Credit continued to outperform with high
expectations for a new U.S. stimulus package.
Currency +Short USD positions and long positions in various
emerging currencies were additive this quarter.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Strategic Bond Fund 1.90% 8.88% 8.88% 5.76% 4.91% 4.21% 5.61% Jan 29, 1993 0.75% 0.58%
Bloomberg Barclays U.S. Aggregate Bond Index 0.67% 7.51% 7.51% 5.34% 4.44% 3.84% 5.41%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),(b),1,5,6
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%),
– (detracted). Returns are for Class S shares at NAV. . †,(a),(b),1,5,6 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
72RIC Strategic Bond FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Barclays U.S.
Aggregate Index.
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$1,898.57 95.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Generalist $1,148.53 41.80% 60.49%
Colchester Global Investors Limited $242.98 13.30% 12.80% + - - - - Jun-12
Western Asset Management Company $905.55 28.50% 47.70% + + + + --- Jun-16
Specialist $755.72 19.00% 39.80%
Schroder Investment Management North America Inc. $755.72 19.00% 39.80% + - - - + Dec-07
RIM1 $750.04 34.20% 39.51%
Physicals
US Fallen Angels $64.30 0.95% 3.39% + + + + --- Sep-16
Intelligent Credit (IG) $685.74 19.00% 36.12% + + + + --- Sep-17
US Treasuries $315.76 14.25% 16.63% - + + flat --- Oct-16
Fund Benchmark
Bloomberg Barclays U.S. Aggregate Bond Index 0.67% 7.51% 7.51% 5.34% 4.44%
Annualized Return
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
73RIC Strategic Bond Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Holdings within ‘Other’ largely includes covered bonds, cash, FX, and derivatives.
4. Total active risk includes idiosyncratic risk. Credit, rates and currency will not necessarily sum to the total
SHORT LONG
DURATION
UNDER OVER
CREDIT
CURRENCY
RATES FACTORS
LOW HIGH
SHORT LONG
Strategic Position
Current Position
POSITIONING AND OUTLOOK
At the end of the quarter, key aspects of Fund positioning included:
› Duration – The Fund continues to hold a moderately long duration position
› Credit – The Fund maintains an overweight to securitized credit and EMD
but has reduced its corporate overweight
› Rates – The Fund hold long positions in U.S. and Australian rates while
owning shorts in German rates
› Currency – The Fund is long GBP and EUR and short SEK and CHF
QUALITY POSITIONING2
-17.5%
-4.3%
0.9%
3.6%
-11.4%
1.7%
5.8%
5.0%
16.2%
-25.0% 0.0% 25.0%
Government
Government Related
Corporate IG
Corporate HY
Agency MBS
CMBS
ABS
Emerging Markets
Other
-22.4%
-1.3%
-1.9%
12.6%
5.3%
2.0%
0.5%
5.2%
-40.0% -20.0% 0.0% 20.0%
AAA
AA
A
BBB
BB
B
CCC and below
Not Rated
Bloomberg Barclays
U.S. Aggregate Bond
Index Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 6.0 6.4 6.4
Yield to Worst 1.1 2.1 2.2
DTS 3.7 5.9 7.8
Active Risk4 2.4 2.8
Rates 0.3 0.3
Currency 0.5 0.5
Credit 1.1 1.4
December 31, 2020
PORTFOLIO CHARACTERISTICS
3
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Sustainable Equity Fund 4Q2020 Performance Summary
.
.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Sustainable Equity Fund 10.29% 13.48% 13.48% 12.27% 13.04% 12.47% 9.74% May 29, 1987 1.19% 1.12%
Russell 1000® Defensive Index 8.30% 13.93% 13.93% 14.11% 14.55% 13.99% ---
Russell 1000® Index 13.69% 20.96% 20.96% 14.82% 15.60% 14.01% ---
Sustainable Equity Linked Benchmark 8.30% 13.93% 13.93% 14.11% 14.55% 13.25% 10.28%
Annualized Return Annual Expenses
75RIC Sustainable Equity FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC
Sustainable Equity Fund, although RIM believes that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns. For the equity funds, this means RIM is more likely to include
securities with lower valuation, higher quality, positive momentum, lower
market capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Stock selection is the primary source of value added relative to the
benchmark.
› Factor Allocation: The Fund had higher value, and lower size and
momentum characteristics than the benchmark.
› Sector Allocation: The Fund was overweight to the financials and
consumer discretionary sectors. It was underweight to the information
technology and communication services sectors.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Size -
The Fund’s tilt toward stocks with below
benchmark market capitalization detracted from
performance over the year
Sector
Allocation-
An underweight to the information technology
sector and an overweight to the financials sector
held back benchmark relative returns.
Stock
Selection+
Selection within the financials, consumer
discretionary, and real estate sectors was
rewarded.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation+
The Fund's tilts toward stocks with lower valuation
and lower market capitalization were beneficial.
Sector
Allocation-
An underweight to the communication services
sector and an overweight to the real estate sector
held back benchmark relative returns.
Stock
Selection+
Selection within the information technology and
financials sectors was the primary driver of
outperformance.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
DRIVERS OF PERFORMANCE†,(a),(b),1
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(b),1 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
76RIC Sustainable Equity FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
FUND UPDATES
There were no material changes to the Fund during the period.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
AUM Target % of
Total Fund Weight Fund 4th Inception
$275.41 95.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Market Oriented Style $229.79 77.00% 83.43%
Coho Partners, Ltd. - Large Cap Relative Value $40.75 13.00% 14.80% + + + - - Sep-15
Coho Partners, Ltd. - Relative Value $36.41 13.00% 13.22% + - - - - Sep-15
Jacobs Levy Equity Management, Inc. $90.00 30.00% 32.68% + - - flat + Aug-99
Mar Vista Investment Partners, LLC $62.62 21.00% 22.74% + + + + --- Dec-16
RIM $45.63 18.00% 16.57%
Russell Investment Management, LLC1 $45.63 18.00% 16.57% + + + - flat Oct-13
Fund Benchmark
Russell 1000® Defensive Index 8.30% 13.93% 13.93% 14.11% 14.55%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
77RIC Sustainable Equity Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
-7.8%
3.1%
1.5%
0.2%
4.9%
-1.6%
0.4%
-5.4%
0.0%
3.1%
1.6%
-15.0% 0.0% 15.0%
Communication Services
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell Investments’
cycle, valuation, sentiment framework as well as to take advantage of tactical
opportunities within each manager’s excess return cycle.
• The Fund is positioned to provide downside protection relative to the broad market.
Relative to the benchmark, the Fund is currently positioned towards the value factor and
has exposure to below benchmark market capitalization names, in recognition of current
valuation opportunities and business cycle considerations.
• Multiple COVID-19 vaccines were found to be highly effective and approved for
emergency use in the United States and Europe in December. Markets overlooked virus
outbreaks that intensified through the holiday period as vaccine rollouts should ensure a
strong economic and earnings rebound through the middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help bridge
households and businesses to the point where vaccines allow us to sustain a stronger
and more normalized economy again.
• In alignment with Russell Investments’ strategic equity beliefs, stock selection of the
underlying active managers, based on their long-term assessment of each individual
company, continues to be the primary driver of the Fund’s expected risk and return.
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
Russell 1000® Defensive
IndexFund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 24.9 20.3 20.3
LT Growth Med 11.2 11.0 9.5
PEG 2.2 1.8 2.1
5yr EPS Growth 15.1 12.8 12.4
Price/Book 5.8 4.4 4.1
Dividend Yield 1.4 1.4 1.7
Beta1 0.8 1.0 1.0
Active Risk 5.0 5.5
Active Share 58.7 58.1
Weighted Median Market Cap (bil) $235.67 $75.56 $92.27
Weighted Average Market Cap (bil) $579.26 $370.77 $338.43
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Tax-Managed U.S. Large Cap Fund 4Q2020 Performance Summary
.
.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Tax-Managed U.S. Large Cap Fund 11.89% 17.70% 17.70% 12.19% 13.46% 12.40% 8.36% Oct 07, 1996 0.95% 0.92%
S&P 500® Index 12.15% 18.40% 18.40% 14.18% 15.22% 13.88% 9.20%
Annualized Return Annual Expenses
79RIC Tax-Managed U.S. Large Cap FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the Russell
Tax-Managed U.S. Large Cap Fund, although RIM believes that emphasizing
certain factors over the course of a market cycle can offer higher benchmark-
relative returns. For the equity funds, this means RIM is more likely to include
securities with lower valuation, higher quality, positive earnings momentum,
lower market capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Stock selection is the primary source of value added relative to the
benchmark.
› Factor Allocation: The Fund had higher growth and quality, and lower size
than the benchmark.
› Sector Allocation: The Fund had overweights to the health care and
materials sectors. It was underweight to the industrials and consumer
staples sectors.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation+
Impact of factor allocation was positive over the
year, especially a tilt toward stocks with higher
growth characteristics.
Sector
Allocation+
An underweight to the energy sector and an
overweight to the information technology sector
were additive to relative performance.
Stock
Selection-
Selection within the consumer discretionary and
industrials sectors held back returns.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Size +The Fund's tilt toward stocks with lower market
capitalization was beneficial over the quarter.
Sector
Allocation-
Underweights to the energy and financials sectors
were not rewarded.
Stock
Selection+
Selection within the consumer discretionary and
information technology sectors was additive to
relative performance.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
DRIVERS OF PERFORMANCE†,(b),2
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b),2 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
80RIC Tax-Managed U.S. Large Cap FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$4,636.14 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $754.27 20.00% 16.27%
Barrow, Hanley, Mewhinney & Strauss, LLC $754.27 20.00% 16.27% + - - - - Dec-14
Market Oriented Style $874.79 20.00% 18.87%
J.P. Morgan Investment Management Inc. $874.79 20.00% 18.87% - + + + + Oct-96
Growth Style $1,358.38 20.00% 29.30%
Sustainable Growth Advisers, LP $1,358.38 20.00% 29.30% - + + + + Mar-11
RIM $1,648.69 37.00% 35.56%
Russell Investment Management, LLC1 $1,648.69 37.00% 35.56% flat - - - - Oct-13
Fund Benchmark
S&P 500® Index 12.15% 18.40% 18.40% 14.18% 15.22%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
S&P 500 index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 23.8 25.8 25.8
LT Growth Med 12.1 12.8 11.0
PEG 2.0 2.0 2.3
5yr EPS Growth 11.3 13.1 13.3
Price/Book 4.2 4.1 3.8
Dividend Yield 1.6 1.2 1.4
Beta 1.0 1.0 1.0
Active Risk 2.2 1.9
Active Share 41.6 39.4
Weighted Median Market Cap (bil) $167.37 $128.37 $125.35
Weighted Average Market Cap (bil) $489.44 $403.76 $380.98
PORTFOLIO CHARACTERISTICS
December 31, 202081
RIC Tax-Managed U.S. Large Cap Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
-0.7%
-0.7%
-2.1%
-1.1%
-0.9%
3.6%
-0.8%
1.0%
2.1%
-0.6%
0.1%
Communication Services
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
UtilitiesStrategic Position
Current Position
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell
Investments’ cycle, valuation, sentiment framework as well as to take advantage
of tactical opportunities within each manager’s excess return cycle.
• Overall, RIM has a slight pro-cyclical tilt with overweights to value and quality
while maintaining approximately neutral growth exposure for a more core
positioning. Additionally, RIM has an underweight to size.
• Multiple COVID-19 vaccines were found to be highly effective and approved for
emergency use in the United States and Europe in December. Markets
overlooked virus outbreaks that intensified through the holiday period as vaccine
rollouts should ensure a strong economic and earnings rebound through the
middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help
bridge households and businesses to the point where vaccines allow us to
sustain a stronger and more normalized economy again.
• In alignment with Russell Investments’ strategic equity beliefs, stock selection
of the underlying active managers, based on their long-term assessment of each
individual company, continues to be the primary driver of the Fund’s expected
risk and return.
.
.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Tax-Exempt Bond Fund 4Q2020 Performance Summary
.
.
83RIC Tax-Exempt Bond FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Tax-
Exempt Bond Fund, although RIM believes that emphasizing certain factors
over the course of a market cycle can offer higher benchmark-relative returns.
For the fixed income funds, this means RIM is more likely to include securities
with more credit risk, longer duration, and higher real yield.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Duration - The Fund held slightly long duration position over benchmark.
› Credit - The Fund continues to be overweight duration times spread and
overweight the health care and educations sectors. The Fund is also
overweight Illinois, local GOs and the revenue sector while being underweight
the state GO sector.
› Quality - The Fund continued to overweight A- and BBB-rated bonds while
underweighting AAA-rated bonds and maintaining out-of-index to sub-
investment grade credit.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Credit
Selection /
State
-
An overweight to Illinois and an underweight to
California, along with exposure to public
transportation credits such as NY/NJ MTA were
negative for performance. This was offset to a
degree by positives from overweights to Puerto Rico
and Tobacco bonds.
Quality -
Quality selection was a headwind. An underweight
to AAA-rated municipal bonds and an overweight to
BBB-rated municipal bonds detracted from
performance.
.
.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Duration +
The Fund’s overweight to the longer segment of
the yield curve was beneficial as the yield curve
shifted down over the quarter.
Quality +
Overweights to the BBB-and A- rated quality
cohorts, along with out-of-index exposure sub-
investment grade bonds, were beneficial as risk
rallied during the quarter.
Muni Type +
An overweight to the revenue sector, particularly
hospitals, was beneficial as risk was rewarded
during the quarter.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Tax-Exempt Bond Fund 2.18% 4.05% 4.05% 4.17% 3.46% 3.66% 4.41% Sep 05, 1985 0.58% 0.52%
Bloomberg Barclays Municipal 1-15 Yr Blend
(1-17) Index1.33% 4.73% 4.73% 4.23% 3.39% 3.84% ---
Tax-Exempt Bond Linked Benchmark1 1.33% 4.73% 4.73% 4.23% 3.39% 3.67% ---
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),2
1. The Tax-Exempt Bond Linked benchmark represents the returns of the Bloomberg Barclays Municipal 1-10 Year Blend Index through September 30, 2013, and the returns of the
Bloomberg Barclays Municipal 1-15 Year Blend Index thereafter.
2. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. . †,(a),2 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
84RIC Tax-Exempt Bond FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. The Tax-Exempt Bond Linked benchmark represents the returns of the Bloomberg Barclays Municipal 1-10 Year Blend (1-12) Index through September 30, 2013, and the returns
of the Bloomberg Barclays Municipal 1-15 Year Blend (1-17) Index thereafter.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Barclays Municipal 1-15
Year (1-17) Index
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$3,194.32 98.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Specialist $3,194.32 98.00% 100.00%
Goldman Sachs Asset Management $1,130.97 29.40% 35.41% + - - + --- Sep-17
MacKay Shields LLC $2,063.35 68.60% 64.59% + + + + + Jun-13
Fund Benchmark
Tax-Exempt Bond Linked Benchmark1 1.33% 4.73% 4.73% 4.23% 3.39%
Bloomberg Barclays Municipal 1-15 Year Blend (1-17) Index 1.33% 4.73% 4.73% 4.23% 3.39%
Bloomberg Barclays Municipal 1-10 Year Blend (1-12) Index 0.98% 4.23% 4.23% 3.82% 2.96%
Annualized Return
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
85RIC Tax-Exempt Bond Fund Appendix: Fourth Quarter 2020
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Duration – The Fund kept a moderate long duration position over
benchmark.
› Credit - The Fund continued to hold a preference for spread risk and an
overweight to the healthcare and educations sectors. The Fund
maintained overweights to Illinois, local GOs and the revenue sector
while being underweight the state GO sector.
› Quality - The Fund continues to overweight A- and BBB-rated bonds
while underweighting AAA-rated bonds and maintaining out-of-index to
sub-investment grade credit.
SHORT LONG
DURATION
UNDER OVER
CREDIT
-10.2%
-12.8%
2.0%
10.9%
4.2%
0.1%
1.6%
4.3%
-30.0% -10.0% 10.0%
AAA
AA
A
BBB
BB
B
CCC and below
Not Rated
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Total active risk includes idiosyncratic risk. Credit, rates, and currency will not necessarily sum to the total
FACTOR POSITIONING1,2 SECTOR POSITIONING2
Bloomberg Barclays 1-
15 Year Municipal
Bond Index Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 4.3 4.8 4.9
Yield to Worst 0.5 1.2 1.5
DTS 2.1 5.6 6.3
Active Risk3 1.9 2.2
Rates 0.1 0.1
Currency 0.0 0.0
Credit 2.3 2.9
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Tax-Exempt High Yield Bond Fund 4Q2020 Performance Summary
.
.
87RIC Tax-Exempt High Yield Bond FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Tax-
Exempt High Yield Bond Fund, although RIM believes that emphasizing
certain factors over the course of a market cycle can offer higher benchmark-
relative returns. For the fixed income funds, this means RIM is more likely to
include securities with more credit risk, longer duration, and higher real yield.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Duration - The Fund held slightly long duration position over benchmark.
› Credit - The Fund continues to be overweight duration times spread due to
the overweight to the revenue sector, hospitals and Illinois, Chicago and
New Jersey credits that have more spread risk than the benchmark.
› Quality - The Fund continue to maintain an overweight to A- and BBB-rated
municipal bonds compared to the benchmark, along with an underweight to
the sub-investment grade quality cohort.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Credit -
The Fund’s overweight to credit risk in the form of
Illinois, Chicago and the revenue sector detracted
as spreads widened meaningfully during the
COVID-19 pandemic selloff.
Quality -/+
Quality selection was a headwind. And
underweight to AAA-rated municipal bonds and an
overweight to BBB-rated municipal bonds
detracted from performance, while an underweight
to sub-investment grade bonds was beneficial.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Quality +/-
An overweight to the BBB-rated quality cohort was
beneficial as risk rallied, while an underweight to
sub-investment grade bonds detracted.
Muni Sector +
The Fund’s overweight to the revenue sector,
including healthcare, was beneficial given positive
vaccine news.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Tax-Exempt High Yield Bond Fund 4.37% 3.97% 3.97% 5.83% 5.63% --- 5.77% Jun 01, 2015 0.81% 0.64%
Tax-Exempt High Yield Bond Fund Benchmark1 3.43% 5.12% 5.12% 5.93% 5.52% --- 5.16%
Annualized Return Annual ExpensesDRIVERS OF PERFORMANCE
†,(b),2
1. The Fund’s Tax-Exempt High Yield Bond benchmark is 60% Bloomberg Barclays Municipal High Yield Bond Index / 40% Bloomberg Barclays Municipal Bond Index.
2. Commentary and impact reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b),2 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
88RIC Tax-Exempt High Yield Bond FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: 60% Bloomberg Barclays Municipal
High Yield Bond Index / 40% Bloomberg Barclays Municipal Bond Index.
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$1,182.88 98.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Specialist $1,182.88 98.00% 100.00%
Goldman Sachs Asset Management $592.57 49.00% 50.10% + flat flat + + Jun-15
MacKay Shields LLC $590.30 49.00% 49.90% + flat flat + + Jun-15
Fund Benchmark
Bloomberg Barclays Municipal High Yield / Municipal Bond Index 3.43% 5.12% 5.12% 5.93% 5.52%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
Annualized Return
89RIC Tax-Exempt High Yield Bond Fund Appendix: Fourth Quarter 2020
POSITIONING AND OUTLOOK
During the quarter, the manager weights were maintained near their 50/50
strategic target.
Key aspects of Fund positioning going forward include the following:
Duration - The Fund held moderate long duration position over benchmark.
Credit - The Fund continues to be overweight duration times spread due to the
overweight to hospitals and Illinois, Chicago and New Jersey credits that have
more spread risk than the benchmark.
Quality - The Fund maintained an overweight to A- and BBB-rated municipal
bonds compared to the benchmark, and an underweight to sub-investment
grade quality cohort.
SHORT LONG
DURATION
UNDER OVER
CREDIT
-3.2%
-12.8%
3.7%
25.5%
-3.2%
-0.9%
1.4%
-10.5%
-40.0% 0.0% 40.0%
AAA
AA
A
BBB
BB
B
CCC and below
Not Rated
FACTOR POSITIONING1,2 Quality POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Total active risk includes idiosyncratic risk. Credit, rates, and currency will not necessarily sum to total.
Bloomberg Barclays
Municipal HY Bond
Index /
Municipal Bond Index Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 5.7 6.2 6.6
Yield to Worst 2.3 2.5 3.0
DTS 6.6 10.2 10.6
Active Risk3 2.5 2.7
Rates 0.1 0.1
Currency 0.0 0.0
Credit 1.8 2.2
PORTFOLIO CHARACTERISTICS
December 31, 2020
Strategic Position
Current Position
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Tax-Managed International Equity Fund 4Q2020 Performance Summary
.
.
91RIC Tax-Managed International Equity FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Tax-
Managed International Fund, although RIM believes that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns. For the equity funds, this means RIM is more likely to include
securities with lower valuation, higher quality, positive earnings momentum,
lower market capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Factor positioning: The Fund was overweight Value and Volatility while
underweight Momentum and Size.
› Sector positioning: The Fund was overweight Consumer Discretionary,
Financials, and Materials while underweight Consumer Staples, Health
Care, and Real Estate.
› Regional positioning: The Fund was overweight Emerging Markets, Europe
ex UK, and Japan while underweight AU/NZ, Canada, and US.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation-
Factor impact was negative, the Fund's value emphasis
was a headwind.
Sector
Allocation-
Sector allocation was negative. An underweight to
technology and an overweight to financials detracted.
Regional
Allocation+
Regional positioning was additive. An underweight to
Asia Pacific ex Japan was a contributor.
Security
Selection-
Selection was negative. Broadly ineffective selection
was led by poor selection in health care and industrials.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation+ Factor impact was positive, driven by a tilt to value.
Sector
Allocation+
Sector impact was positive. An overweight to financials
and underweight to health care was additive.
Regional
Positioning+
Regional positioning was positive, exposure to emerging
markets was additive.
Security
Selection+
Selection was successful, particularly in consumer
discretionary. From a regional perspective, selection was
additive in EMEA ex UK and emerging markets.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Tax-Managed International Equity Fund 19.80% 6.84% 6.84% 2.19% 7.65% --- 4.27% Jun 01, 2015 1.16% 1.04%
MSCI AC World Index ex USA Net 17.01% 10.65% 10.65% 4.88% 8.93% --- 5.61%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(b),2
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b),2 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
92RIC Tax-Managed International Equity FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. The custom peer group for RIC Tax-Managed International Fund is 80% Morningstar Foreign Large Blend / 20% Morningstar Diversified Emerging Markets.
3. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$2,199.86 99.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Developed $510.09 25.00% 23.19%
Intermede Investment Partners Limited and Intermede Global
Partners Inc.$236.42 12.50% 10.75% + --- --- --- --- Jan-20
Pzena Investment Management, LLC $273.67 12.50% 12.44% + - - - - Jun-15
Emerging $909.46 35.00% 41.34%
AllianceBernstein L.P. $220.43 7.50% 10.02% + - - - + Jun-15
RWC Asset Advisors (US) LLC $322.87 7.50% 14.68% + + + + + Jun-15
Wellington Management Company LLP $366.16 20.00% 16.64% + --- --- --- --- Sep-20
RIM $780.31 39.00% 35.47%
Russell Investment Management, LLC1 $780.31 39.00% 35.47% + - - - - Jun-15
Fund Benchmark
MSCI AC World Index ex USA Net 17.01% 10.65% 10.65% 4.88% 8.93%
Custom Tax-Managed International Equity2 16.53% 11.02% 11.02% 4.48% 8.41%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
MSCI AC World Index ex USA Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 17.2 16.3 14.8
LT Growth Med 10.4 5.3 6.2
PEG 1.7 3.0 2.4
5yr EPS Growth 9.6 9.0 9.9
Price/Book 1.9 1.5 1.3
Dividend Yield 2.3 2.0 2.4
Beta 0.8 1.0 1.0
Active Risk 2.9 2.4
Active Share 55.8 55.0
Wt Med Mkt Cap (bil) $41.62 $33.24 $28.24
Weighted Avg Mkt Cap (bil) $101.15 $53.25 $49.52
PORTFOLIO CHARACTERISTICS
December 31, 2020
93RIC Tax-Managed International Equity Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
-1.0%
-0.5%
-2.0%
1.5%
5.2%
-4.1%
0.5%
-0.4%
2.7%
-0.9%
-1.0%
-10.0% 0.0% 10.0%
CommunicationServicesConsumer
Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
› Factor positioning: The Fund is overweight Value, Volatility, and Quality and underweight
Momentum and Size.
› Sector positioning: The Fund is overweight Energy, Financials, and Materials while underweight
Consumer Staples, Health Care, and Utilities.
› Regional positioning: The Fund is overweight Canada and Emerging Markets while underweight to
Japan and US.
Outlook:
The MSCI World Index rose 13.96% in Q4 with favorable conditions for further gains in 2021. Positive
sentiment was driven by the arrival of Covid-19 vaccines. This light at the end of the tunnel came as
Covid-19 cases and deaths reached record highs. Joe Biden’s victory in the US presidential race, that
subsequently came with a “blue-wave” after a January Senatorial run-off in Georgia, along with a
Brexit deal helped ease political uncertainties. President Trump’s efforts to contest election results,
and his second impeachment, lent another source of volatility as we entered the new year.
The US imposed additional sanctions on Chinese government-controlled companies to end Q4, with
retribution threatened by China. The Biden administration is expected to de-escalate global trade
tensions, which may make trade conflict less of a factor in 2021. Biden’s recent $1.9T coronavirus
relief proposal provides funding to a variety of sources, including paychecks to most Americans and
$20B towards a national vaccine program. The re-opening trade favored cyclically sensitive stocks in
Q4, and we expect this to continue into 2021.
Global markets saw rotation into small cap and value, after a protracted run for large cap growth
names--despite historically high valuations. Valuations tightened in Q4, but remain at historical highs,
leading us to expect this trend will continue in 2021. Financials and energy outperformed the market
over the quarter, and the MSCI Emerging Markets Index rose 19.7%, marking one of its strongest
rallies ever.
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
REGION POSITIONING2
-1.7%
1.4%
0.2%
-0.7%
2.7%
-1.4%
0.0%
-0.4%
-5.0% 0.0% 5.0%
United_States
Canada
Emea Ex- United…
United Kingdom
Emerging Markets
Japan
Asia ex Japan
Aus/NZ
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Tax-Managed Real Assets Fund 4Q2020 Performance Summary
.
.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Tax-Managed Real Assets Fund 18.79% 3.89% 3.89% --- --- --- 7.11% Jun 10, 2019 1.28% 1.08%
Tax-Managed Real Assets Blended Benchmark1 15.58% -4.98% -4.98% --- --- --- 1.34%
Annualized Return Annual Expenses
95RIC Tax-Managed Real Assets Fund Performance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC Tax-
Managed Real Assets Fund, although RIM believes that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Real Estate: The Fund was tilted toward the residential, shopping center and net
lease sectors and away from malls, office and lodging.
› Infrastructure: The Fund was positioned with underweights to airports, marine ports
and pipelines, and overweights to gas utilities and toll roads. The Fund had an
overweight to Emerging Markets and the U.K. and an underweight to North America
and EMEA ex U.K.
› Natural Resources: The Fund was overweight to semiconductors, steel and
upstream energy, and underweight to gold and paper.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Real Estate +
Strong stock selection in office and an
underweight to malls were the largest contributors
to outperformance.
Infrastructure +
The underweight positions and stock selection in
the airport and pipelines sectors drove
outperformance over the year. The out-of-
benchmark investment in communication
companies also contributed positively to
performance.
Natural Resources +
Stock selection in the energy sector, particularly in
the integrated oil & gas refining sub-sectors,
generated a majority of outperformance over this
time period.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact2 Commentary2
Real Estate +Security selection was strongest in the health
care, storage and shopping centers.
Infrastructure -
Exposure to out-of-benchmark communication
and railroads sectors drove underperformance
over the quarter.
Natural Resources +
Security selection in the materials and energy and
drove meaningful outperformance over the
quarter.
Russell Positioning
Strategies+
The Russell positioning sleeve outperformed the
benchmark during the quarter. Benefitting
performance was the overweight to materials and
underweight to real estate.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
DRIVERS OF PERFORMANCE†,(b),1
1. The Fund is managed to a blended benchmark: 40% FTSE NAREIT Equity REIT Index, 30% S&P Global Infrastructure Index, 30% S&P Natural Resources Index.
2. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b),1 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
96RIC Tax-Managed Real Assets FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$530.85 98.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Real Estate $134.53 20.50% 25.34%
RREEF America L.L.C. $134.53 20.50% 25.34% - - - --- --- Jun-19
Infrastructure $92.60 20.50% 17.44%
First Sentier Investors (Australia) IM Limited $92.60 20.50% 17.44% - + + --- --- Jun-19
Natural Resources $163.37 27.50% 30.78%
Grantham, Mayo, Van Otterloo & Co. LLC $163.37 27.50% 30.78% + + + --- --- Jun-19
RIM $140.35 29.50% 26.44%
Russell Investment Management, LLC1 $140.35 29.50% 26.44% + + + --- --- Jun-19
Fund Benchmark
Tax-Managed Real Assets Blended Benchmark 18.79% 3.89% 3.89% --- ---
PERFORMANCE AT A GLANCEPeriods Ending December 31, 2020
97RIC Tax-Managed Real Assets Fund Appendix: Fourth Quarter 2020
2. Positioning relative to the Fund’s index as of December 31, 2020.
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
Real estate:
• Property sector selection: The Fund is tilted toward the lodging, malls, residential and
storage sectors, and away from office and shopping centers. The portfolio favors
property types with stronger underlying fundamentals and growth potential, rather than
seeking to maximize yield. During the quarter, the Fund’s exposure to lodging and malls
increased while exposure to industrial, shopping centers and data centers was reduced.
• Quality: The Fund remains overweight to quality, as companies with stronger balance
sheets and management teams tend to be rewarded over the longer term.
Infrastructure:
• Sector allocation: The Fund has material underweight positions in airports, marine ports
and pipelines, with overweight positions in toll roads, gas utilities and railroads. The
Fund maintained a significant allocation to out-of-index sectors, including a significant
position in gas utilities and some freight rail exposure. During the quarter, the position in
the water utilities and railroads sectors increased while the gas utilities and airport
services sectors decreased.
• Country allocation: The Fund remains positioned with an overweight to North America,
Japan and the U.K, and underweights to Asia Pac ex Japan. During the quarter,
positions in EMEA ex UK and Japan were increased while Emerging Markets and the
U.K. were reduced.
• Size: The Fund remains underweight the size factor, as we have a strategic preference
for being overweight smaller companies within the benchmark.
Natural Resources:
• Sector Allocation: The Fund is overweight upstream energy and industrials as well as
holding significant out-of-benchmark positions in solar energy. Gold, paper and big oil
remain the key underweights. During the quarter, the fund’s exposure to consumer
staples and upstream energy increased while positions in materials decreased.
• Country Selection: Key positions include the overweight to Emerging Markets and
underweight to North America. During the quarter, the fund’s exposure to the U.S. was
reduced while exposure to Emerging Markets increased.
FUND-LEVEL REGION POSITIONING2
-0.3%
1.5%
2.4%
1.5%
0.0%
-0.3%
1.6%
-1.4%
-4.8%
-1.3%
1.0%
-10.0% 0.0% 10.0%
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Other
-1.8%
-1.4%
7.5%
0.5%
-5.9%
1.2%
-15.0% -5.0% 5.0% 15.0%
Asia/Pacific Ex-Japan
Emea Ex-UK
Emerging Markets
Japan
North America
United Kingdom
FUND-LEVEL SECTOR POSITIONING1
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Tax-Managed U.S. Mid & Small Cap Fund 4Q2020 Performance Summary
.
.
99RIC Tax-Managed U.S. Mid & Small Cap FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the Tax-
Managed U.S. Mid & Small Cap Fund, although RIM believes that
emphasizing certain factors over the course of a market cycle can offer higher
benchmark-relative returns. For the equity funds, this means RIM is more
likely to include securities with lower valuation, higher quality, positive
earnings momentum, lower market capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Stock selection is the primary source of value added relative to the
benchmark.
› Factor Allocation: The Fund had higher value and quality, and lower
volatility and momentum characteristics than the benchmark.
› Sector Allocation: The Fund was overweight to the financials and
consumer discretionary sectors. It was underweight to the health care and
real estate sectors.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation-
The Fund’s tilts toward companies with lower
valuation and higher profitability were not additive
over the year.
Sector
Allocation+
An underweight to the real estate sector and an
overweight to the information technology sector were
rewarded.
Stock
Selection-
Selection within the health care, information
technology, and communication services sectors was
the primary driver of underperformance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
AllocationFlat
The Fund’s tilt toward companies with lower
valuation was rewarded over the quarter.
However, the Fund’s underweight to more
unprofitable stocks detracted.
Sector
Allocation+
Underweights to the real estate and health care
sectors were beneficial.
Stock
Selection-
Security selection within the information
technology, health care, and materials sectors was
the primary driver of underperformance
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Tax-Managed U.S. Mid & Small Cap Fund 26.25% 15.34% 15.34% 9.30% 11.44% 10.46% 7.41% Nov 30, 1999 1.29% 1.20%
Russell 2500™ Index 27.41% 19.99% 19.99% 11.33% 13.64% 11.97% 9.69%
Annualized Return Annual Expenses
DRIVERS OF PERFORMANCE†,(a),(b),2
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(b),2 See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
100RIC Tax-Managed U.S. Mid & Small Cap FundPerformance Summary: Fourth Quarter 2020
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
During the quarter, Falcon Point Capital, LLC was terminated and Polen Capital Management, LLC was hired.
AUM Target % of
Total Fund Weight Fund Inception
$1,071.40 97.0% 100.0% 4th Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $285.56 20.50% 26.65%
Cardinal Capital Management LLC $132.46 10.50% 12.36% + --- --- --- --- Jan-20
Snow Capital Management, L.P. $153.10 10.00% 14.29% + - - - --- Apr-16
Market Oriented Style $192.68 18.50% 17.98%
Ancora Advisors, LLC $127.80 10.50% 11.93% + - - - --- Aug-17
Copeland Capital Management, LLC $64.88 8.00% 6.06% - - - flat --- Dec-17
Growth Style $153.15 18.00% 14.29%
Polen Capital Management $62.54 9.00% 5.84% --- --- --- --- --- Oct-20
Summit Creek Advisors, LLC $90.62 9.00% 8.46% - + + + + Jan-10
RIM $440.00 40.00% 41.07%
Russell Investment Management, LLC (Tax
& Positioning Strategy)1 $440.00 40.00% 41.07% + - - - - Jun-14
Fund Benchmark
Russell 2500™ Index 27.41% 19.99% 19.99% 11.33% 13.64%
PERFORMANCE AT A GLANCEPeriod Ending December 31, 2020
Annualized Return
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
101RIC Tax-Managed U.S. Mid & Small Cap Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Beta Characteristics: R2500TM Index is compared against the R3000® Index. The Fund is compared against the R2500TM Index.
0.7%
2.5%
-0.2%
-0.3%
2.9%
-2.2%
-1.0%
0.4%
0.7%
-2.8%
-0.6%
-10.0% 0.0% 10.0%
CommunicationServices
ConsumerDiscretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell Investments’
cycle, valuation, sentiment framework as well as to take advantage of tactical
opportunities within each manager’s excess return cycle.
• Relative to the benchmark, the Fund has a slight pro-cyclical tilt and is positioned toward
value, quality, and lower size factors. This is in recognition of current valuation
opportunities, cycle considerations, and the risk of elevated levels of corporate debt and
unprofitability among U.S. small and mid cap companies.
• Multiple COVID-19 vaccines were found to be highly effective and approved for
emergency use in the United States and Europe in December. Markets overlooked virus
outbreaks that intensified through the holiday period as vaccine rollouts should ensure a
strong economic and earnings rebound through the middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help bridge
households and businesses to the point where vaccines allow us to sustain a stronger and
more normalized economy again.
• In alignment with Russell Investments’ strategic equity beliefs, stock selection of the
underlying active managers, based on their long-term assessment of each individual
company, continues to be the primary driver of the Fund’s expected risk and return.
.
.
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
Russell 2500™ Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 20.3 19.7 17.5
LT Growth Med 10.8 10.1 10.0
PEG 1.9 2.0 1.8
5yr EPS Growth 7.6 10.1 10.4
Price/Book 2.7 2.3 1.9
Dividend Yield 1.3 1.1 1.4
Beta3 1.3 1.0 1.0
Active Risk 3.0 2.8
Active Share 61.0 61.7
Wt Med Mkt Cap (bil) $5.57 $4.61 $3.98
Weighted Avg Mkt Cap (bil) $6.77 $7.16 $6.49
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC U.S. Dynamic Equity Fund 4Q2020 Performance Summary
.
.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
U.S. Dynamic Equity Fund 19.53% 22.43% 22.43% 11.54% 13.82% 12.82% 5.53% Jan 31, 2001 1.52% 1.24%
Russell 1000® Dynamic Index 18.67% 27.69% 27.69% 15.23% 16.38% 13.81% 6.96%
Annualized Return Annual Expenses
103RIC U.S. Dynamic Equity FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC U.S.
Dynamic Equity Fund, although RIM believes that emphasizing certain factors
over the course of a market cycle can offer higher benchmark-relative returns.
For the equity funds, this means RIM is more likely to include securities with
lower valuation, higher quality, positive earnings momentum, lower market
capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Stock selection is the primary source of value added relative to the
benchmark.
› Factor Allocation: The Fund had higher value and quality, and lower
momentum and volatility characteristics than the benchmark.
› Sector Allocation: The Fund had overweights to the information technology
and communication services sectors. It was underweight to the real estate
and utilities sectors.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Value -
The Fund's tilt toward stocks with below
benchmark valuation ratios detracted from
performance over the one year period.
Sector
Allocation+
An overweight to the information technology sector
and an underweight to the consumer staples
sector were rewarded.
Stock
Selection-
Selection within the consumer discretionary and
information technology sectors was a meaningful
driver of underperformance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Value +The Fund's tilt toward stocks with low valuation
was beneficial over the quarter.
Sector
Allocation+
Underweights to the utilities and real estate
sectors were rewarded.
Stock
Selection+
Selection within the energy and industrials sectors
was the primary driver of outperformance.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
DRIVERS OF PERFORMANCE†,(a),(b)
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(b) See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
104RIC U.S. Dynamic Equity FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$157.67 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Market-Oriented Style $42.52 25.00% 26.97%
Jacobs Levy Equity Management, Inc. $42.52 25.00% 26.97% + - - - flat Jun-14
Growth Style $51.96 30.00% 32.95%
Jackson Square Partners, LLC. $51.96 30.00% 32.95% - + + --- --- Feb-19
Value Style $23.64 20.00% 15.00%
Pzena Investment Management, LLC $23.64 20.00% 15.00% + - - - - Aug-15
RIM $39.55 22.00% 25.08%
Russell Investment Management, LLC1 $39.55 22.00% 25.08% - + + + + Jun-14
Fund Benchmark
Russell 1000® Dynamic Index 18.67% 27.69% 27.69% 15.23% 16.38%
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
105RIC U.S. Dynamic Equity Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3.5%
-2.6%
-0.7%
0.1%
-1.1%
0.6%
-1.1%
6.5%
-0.6%
-2.0%
-2.6%
CommunicationServices
Consumer Discretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
Information Technology
Materials
Real Estate
Utilities
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell Investments’ cycle,
valuation, sentiment framework as well as to take advantage of tactical opportunities within
each manager’s excess return cycle.
• Overall, RIM has a slight pro-cyclical tilt with overweights to value and quality. Additionally,
RIM has underweights to size and momentum.
• Multiple COVID-19 vaccines were found to be highly effective and approved for emergency
use in the United States and Europe in December. Markets overlooked virus outbreaks that
intensified through the holiday period as vaccine rollouts should ensure a strong economic and
earnings rebound through the middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help bridge
households and businesses to the point where vaccines allow us to sustain a stronger and
more normalized economy again.
• In alignment with Russell Investments’ strategic equity beliefs, stock selection of the
underlying active managers, based on their long-term assessment of each individual company,
continues to be the primary driver of the Fund’s expected risk and return.VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
Russell 1000® Dynamic
IndexFund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 23.7 23.0 23.0
LT Growth Med 13.1 13.4 11.7
PEG 1.8 1.7 2.0
5yr EPS Growth 6.8 11.3 10.6
Price/Book 3.4 3.1 2.6
Dividend Yield 1.6 1.2 1.4
Beta 1.2 1.0 1.0
Active Risk 3.2 3.4
Active Share 67.0 66.4
Weighted Median Market Cap (bil) $64.62 $51.10 $47.81
Weighted Average Market Cap (bil) $319.15 $303.78 $294.48
December 31, 2020
PORTFOLIO CHARACTERISTICS
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC U.S. Strategic Equity Fund 4Q2020 Performance Summary
.
.
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
U.S. Strategic Equity Fund 15.87% 23.73% 23.73% 13.31% 14.39% --- 13.87% Aug 06, 2012 1.02% 0.74%
Russell 1000® Index 13.69% 20.96% 20.96% 14.82% 15.60% --- 15.13%
Annualized Return Annual Expenses
107RIC U.S. Strategic Equity FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC U.S.
Strategic Equity Fund, although RIM believes that emphasizing certain factors
over the course of a market cycle can offer higher benchmark-relative returns.
For the equity funds, this means RIM is more likely to include securities with
lower valuation, higher quality, positive earnings momentum, lower market
capitalization, and less volatility.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› Stock selection is the primary source of value added relative to the
benchmark.
› Factor Allocation: The Fund had higher value and growth, and lower size
and momentum characteristics than the benchmark.
› Sector Allocation: The Fund had overweights to the information technology
and health care sectors. It was underweight to the consumer staples and
real estate sectors.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation+
Impact of factor allocation was positive over the
year, especially tilts toward stocks with higher
growth and lower leverage.
Sector
Allocation+
Underweights to the industrials and real estate
sectors were additive to relative performance.
Stock
Selection+
Selection within the information technology,
materials, and communication services sectors
was a meaningful driver of outperformance.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Factor
Allocation+
Impact of factor allocation was positive over the
quarter, including tilts toward companies with
lower valuation and lower market capitalization.
Sector
AllocationFlat
An underweight to the consumer staples sector
was rewarded while an underweight to the energy
sector detracted.
Stock
Selection+
Selection within the information technology, health
care, and financials sectors was the primary driver
of outperformance.
.
.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)
Periods Ending December 31, 2020
DRIVERS OF PERFORMANCE†,(a),(b)
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(a),(b) See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
108RIC U.S. Strategic Equity FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. See Disclosures page (****) for discussion of proprietary strategies.
2. Performance Key: + Positive impact; Flat fund and index return within +/- 25 basis points; – Negative impact relative to the Fund’s benchmark: Bloomberg Commodity Index Total
Return
FUND UPDATES
There were no material changes to the Fund during the period.
AUM Target % of
Total Fund Weight Fund 4th Inception
$3,187.72 97.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Value Style $720.97 30.00% 22.62%
Brandywine Global Investment Management LLC $720.97 30.00% 22.62% + - - - - Sep-15
Growth Style $1,248.83 30.00% 39.18%
Jackson Square Partners, LLC. $1,248.83 30.00% 39.18% + + + --- --- Feb-19
RIM $1,217.92 37.00% 38.21%
Russell Investment Management, LLC1 $1,217.92 37.00% 38.21% - - - - - Apr-14
Fund Benchmark
Russell 1000® Index 13.69% 20.96% 20.96% 14.82% 15.60%
Periods Ending December 31, 2020
STYLE-LEVEL PERFORMANCE TABLE
109RIC U.S. Strategic Equity Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2 SECTOR POSITIONING2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
0.1%
0.8%
-2.3%
-1.1%
-0.5%
2.1%
-0.6%
3.1%
0.8%
-1.7%
-0.7%
-10.0% 0.0% 10.0%
CommunicationServices
ConsumerDiscretionary
Consumer Staples
Energy
Financials
Health Care
Industrials
InformationTechnology
Materials
Real Estate
Utilities
Strategic Position
Current Position
VOLATILITY
LOW HIGH
LOW HIGH
VALUE
LOW HIGH
MOMENTUM
QUALITY
SIZE
SMALL LARGE
LOW HIGH
POSITIONING AND OUTLOOK
Key features regarding the Fund’s outlook and positioning included:
• The Fund continues to be dynamically managed in alignment with Russell
Investments’ cycle, valuation, sentiment framework as well as to take
advantage of tactical opportunities within each manager’s excess return cycle.
• Overall, RIM has a slight pro-cyclical tilt with an overweight to value while
maintaining approximately neutral growth exposure for a more core positioning.
Additionally, RIM has an underweight to size.
• Multiple COVID-19 vaccines were found to be highly effective and approved
for emergency use in the United States and Europe in December. Markets
overlooked virus outbreaks that intensified through the holiday period as
vaccine rollouts should ensure a strong economic and earnings rebound
through the middle of 2021.
• The U.S. Congress passed another massive $908bn stimulus package to help
bridge households and businesses to the point where vaccines allow us to
sustain a stronger and more normalized economy again.
• In alignment with Russell Investments’ strategic equity beliefs, stock selection
of the underlying active managers, based on their long-term assessment of
each individual company, continues to be the primary driver of the Fund’s
expected risk and return.
Russell 1000® Index Fund Fund
Portfolio Characteristics Dec-31 Dec-31 Sep-30
P/E 25.3 25.5 24.7
LT Growth Med 12.2 12.8 12.0
PEG 2.1 2.0 2.1
5yr EPS Growth 11.4 13.5 13.1
Price/Book 4.2 3.6 3.3
Dividend Yield 1.5 1.2 1.5
Beta 1.0 1.0 1.0
Active Risk 2.9 2.9
Active Share 49.6 48.5
Weighted Median Market Cap (bil) $138.14 $89.40 $78.81
Weighted Average Market Cap (bil) $437.81 $334.04 $326.63
PORTFOLIO CHARACTERISTICS
December 31, 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
RIC Unconstrained Total Return Fund 4Q2020 Performance Summary
.
.
111RIC Unconstrained Total Return FundPerformance Summary: Fourth Quarter 2020
STRATEGIC BELIEFS
Security selection is a primary source of excess returns within the RIC
Unconstrained Total Return Fund, although RIM believes that emphasizing certain
factors over the course of a market cycle can offer higher benchmark-relative
returns. For the fixed income funds, this means RIM is more likely to include
securities with more credit risk, longer duration, and higher real yield. In addition,
RIM also invests in currency to provide additional return potential and added
diversification.
FUND POSITIONING ENTERING THE QUARTER(versus Fund benchmark)
› The Fund had approximately 55% exposure to the core yield engine,
overweight its strategic weight.
› The Fund had an underweight to diversifiers, but with an overweight to
cash.
› The Fund was slightly below its target on opportunistic strategies.
ANNUAL PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Core Yield
Engine+
By the end of the year the short duration high yield component
was positive for the 12-month period, erasing the losses from
Q1 and finishing ahead of benchmark. Loans were weaker, but
rallied back most of the way finishing the period slightly
negative.
Opportunistic -
The drawdown during the crisis was substantial and the
commercial mortgage sector was slow to recover given the
direct impacts of the shutdown to the underlying industries.
The 12 month returns remain well below benchmark.
Diversifying
Strategies +
Performance in diversifying strategies was mixed over the past
year. The Rates Value strategy was positive as being long U.S.
and Canada rates were the primary contributors as yields fell
dramatically in the first half of the year. Volatility was also a
positive contributor while in the portfolio as it had a positive
impact in Q1. The currency strategy saw drawdown as Carry
and Trend performed poorly during the pandemic before the
exposure was removed.
QUARTERLY PERFORMANCE DRIVERS
Drivers Impact1 Commentary1
Core Yield
Engine+
The core yield engine continued to be the driver of
portfolio performance as risk markets rallied further
on positive vaccine news and further fiscal and
monetary support. The ICE BofA Global High Yield
Constrained Index returned 7.45% while the CS
Leveraged Loan Index was up 3.64%.
Opportunistic
Strategies+
News around upcoming vaccines were a positive
catalyst for the commercial mortgage sector, which
had not previously rallied along with other risk
markets. Prepayment strategies were also positive
during the quarter.
Diversifiers -The rates strategy saw a drawdown, primarily as a
result of rising yields in Australia.
FUND-LEVEL PERFORMANCE SUMMARY (BENCHMARK)Periods Ending December 31, 2020
Since Inception
4th Qtr YTD 1 YR 3 YR 5 YR 10 YR Inception Date Total Net
Unconstrained Total Return Fund 2.78% -1.53% -1.53% 1.98% --- --- 1.98% Sep 22, 2016 1.42% 0.88%
ICE BofAML 3-month U.S. Treasury Bill Index 0.03% 0.67% 0.67% 1.61% --- --- 1.35%
Annualized Return Annual Expenses
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
DRIVERS OF PERFORMANCE†,(b)
1. Commentary and impact key reflects contribution from drivers to the Fund’s performance relative to the index: + (contributed positively), Flat (marginal impact, within +/- 0.05%), –
(detracted). Returns are for Class S shares at NAV. †,(b) See Disclosures page (†) for discussion of Net Annual Operating Expense Ratios.
112RIC Unconstrained Total Return FundPerformance Summary: Fourth Quarter 2020
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.
1. Key reflects RIM’s satisfaction of advisor performance relative to the Fund’s index performance: + (positive satisfaction), Flat (results within +/-0.25% of Fund index performance),
– (negative satisfaction)
FUND UPDATES
H2O AM LLP (“H2O) was removed.
AUM Target % of
Total Fund Weight Fund 4th Inception
$527.98 70.00% 100.00% Qtr YTD 1 YR 3 YR 5 YR Date
Opportunistic $135.76 20.00% 25.71%
Putnam Investment Management LLC $135.76 20.00% 25.71% + - - flat --- Sep-16
Yield $392.22 50.00% 74.29%
Hermes Investment Management Limited $250.37 30.00% 47.42% + + + --- --- Nov-19
First Eagle Alternative Credit, LLC $141.85 20.00% 26.87% + - - + --- Sep-16
Fund Benchmark
ICE BofAML 3 Month Treasury Bill Index 0.03% 0.67% 0.67% 1.61% ---
STYLE-LEVEL PERFORMANCE TABLEPeriods Ending December 31, 2020
Annualized Return
113RIC Unconstrained Total Return Fund Appendix: Fourth Quarter 2020
FACTOR POSITIONING1,2
1. See Russell Investments’ Strategic Factor Beliefs in Disclosure.
2. Positioning relative to the Fund’s index as of December 31, 2020.
3. Total active risk includes idiosyncratic risk. Credit, rates, and currency will not necessarily sum to the total.
Strategic Position
Current Position
POSITIONING AND OUTLOOK
Key aspects of Fund positioning going forward include the following:
Opportunistic Strategies (Manager): The Fund’s current allocation moved slightly below the strategic
allocation to mortgage risk as despite improved news from vaccines, the timing of recovery remains
somewhat uncertain as rollouts commence. The Putnam strategy exposes the Fund to a distinct
combination of risk factors across a variety of security types that we believe have good return potential and
excellent diversification characteristics. While the short-term volatility is may continue, current valuations
look potentially attractive.
Core Yield engine (credit): Credit exposure remained unchanged at 55%, sitting above the strategic
target. Expectations are that the rollout of vaccines globally, along with the continued monetary and fiscal
support, will ultimately support credit markets.
Diversifiers (currency, real yield, volatility): Global Real Rates sits below its target weight. This strategy
continues to play a key role in diversifying the Fund’s return profile. Cash levels are high once again after
the removal of H2O.
BoAML 3 Month
U.S. Treasury Bill
Index Fund Fund
Dec-31 Dec-31 Sep-30
Effective Duration (yrs) 0.3 1.6 1.1
Yield to Worst 0.2 4.1 4.9
DTS 0.0 10.3 12.8
Active Risk3 6.2 7.4
Rates 0.2 0.2
Currency 0.0 0.0
Credit 5.4 6.9
PORTFOLIO CHARACTERISTICS
December 31, 2020
SHORT LONG
DURATION
UNDER OVER
CREDIT
CURRENCY
REAL YIELD
LOW HIGH
SHORT LONG
Performance information is historical and does not guarantee future results. Investment return and principal value will fluctuate so that redeemed shares may be worth more or less than their original cost. Current performance may be lower or higher than the performance data quoted. The most recent month-end performance for Russell Investments mutual funds is available by visiting: https://russellinvestments.com/us/funds/performance-prices.