UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14C INFORMATION
Information Statement Pursuant to Section 14(c) of the
Securities Exchange Act of 1934
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Russell Investment Company
(Name of Registrant As Specified In Its Charter)
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RUSSELL INVESTMENT COMPANY
1301 Second Avenue
18th Floor
Seattle, WA 98101
July 29, 2019
Emerging Markets Fund
IMPORTANT NOTICE OF INTERNET AVAILABILITY OF INFORMATION STATEMENT REGARDING A RECENT MONEY MANAGER CHANGE
An Information Statement regarding a recent money manager change related to the Emerging Markets Fund (the “Fund”), a series of Russell Investment Company (“RIC”), is available for your review. This Notice presents only an overview of the more complete Information Statement that is available to you on the internet or by mail. We encourage you to access and review all of the important information contained in the Information Statement.
The Fund is not soliciting proxy or consent authority, but is furnishing an Information Statement pursuant to Rule14a-16 and14c-2 under the Securities Exchange Act of 1934, as amended.
The Information Statement details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Neuberger Berman Investment Advisers, LLC to serve as a newnon-discretionary money manager to the Fund. This change became effective on June 10, 2019.
RIC’s investment adviser is Russell Investment Management, LLC (“RIM”). The Information Statement is being provided to you in lieu of a proxy statement pursuant to the terms of an exemptive order granted to RIM and RIC by the Securities and Exchange Commission. The order permits RIM to hire a money manager at any time, subject to the approval of the Fund’s Board, without a shareholder vote. Shareholders of the Fund must be provided with specified information within 90 days of the hiring of any new money manager. The order allows the Fund, in lieu of physical delivery of the Information Statement, to make the Information Statement available online.
The full Information Statement will be available on RIC’s website athttp://hosted.rightprospectus.com/RIC/ until at least 90 days after this notice was sent to you. A paper or email copy of the full Information Statement or other Fund related information may be obtained, without charge, by calling1-800-787-7354 or emailingservice@russellinvestments.com.
If you want to receive more information regarding this recent money manager change, you may request a paper or email copy of the Information Statement per the instructions above. Requests for a paper copy of the Information Statement must be made by the 90th day after this notice was sent to you in order to receive timely delivery. There is no charge to you for requesting a copy.
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
July 29, 2019
To Shareholders of the Emerging Markets Fund (the “Fund”):
Enclosed is an Information Statement of Russell Investment Company (“RIC”) that details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Neuberger Berman Investment Advisers, LLC (“Neuberger”) to serve as a newnon-discretionary money manager to the Fund. This change became effective on June 10, 2019.
The attached Information Statement provides information about Neuberger, the new portfolio management contract with Neuberger and the Board’s considerations in approving the new portfolio management contract.
Please note that the Fund is not required to obtain shareholder approval for this money manager change. We are not asking you for a proxy and you are requested not to send us a proxy.
If you have any questions regarding the Information Statement, please call1-800-787-7354. A paper or email copy of the attached Information Statement may be obtained, without charge, by calling1-800-787-7354.
| Sincerely, |
 |
| Jessica Gates |
| Assistant Secretary |
| Russell Investment Company |
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
INFORMATION STATEMENT
EMERGING MARKETS FUND
Under the terms of an exemptive order (the “Order”) issued by the Securities and Exchange Commission (“SEC”), this document is an Information Statement and is being furnished to shareholders of the Emerging Markets Fund (the “Fund”), a series of Russell Investment Company (“RIC”). Russell Investment Management, LLC (“RIM”) serves as the investment adviser of the Fund.
The Fund allocates most of its assets among the strategies of multiple money managers unaffiliated with RIM. The Fund employs discretionary andnon-discretionary money managers. The Fund’s discretionary money managers select the individual portfolio securities for the assets assigned to them. The Fund’snon-discretionary money managers provide a model portfolio to RIM representing their investment recommendations, based upon which RIM purchases and sells securities for the Fund. RIM manages Fund assets not allocated to discretionary money managers. RIM, as the Fund’s adviser, may change the allocation of the Fund’s assets at any time. The Order permits RIM to hire a money manager at any time, subject to the approval of the Board of Trustees of RIC (the “Board”), without a shareholder vote. Pursuant to the terms of the Order, the Fund is required to notify its shareholders within 90 days of when a new money manager is hired for the Fund.
Change of Money Manager
On May 21, 2019, the Board authorized the signing of a portfolio management contract to engage Neuberger Berman Investment Advisers, LLC (“Neuberger”) as anon-discretionary money manager with respect to a portion of the assets of the Fund determined by RIM.
Portfolio Management Contract
Effective May 21, 2019, RIM, as fiduciary for RIC, entered into a new portfolio management contract with Neuberger. The contract will continue until May 31, 2020. Thereafter, the contract will continue in effect for successive annual periods if its continuance has been specifically approved at least annually by RIC’s Board, including the affirmative vote of a majority of the Trustees who are not parties to the contract, or “interested persons” (as defined in the Investment Company Act of 1940) of any such party, cast in person at a meeting called for the purpose of considering such approval. The contract is automatically terminated if assigned. The contract may be terminated without payment of any penalty by RIM or RIC immediately upon written notice to Neuberger and by Neuberger upon 30 days’ written notice to RIM.
Board Approval of Portfolio Management Contract
In evaluating the portfolio management contract with Neuberger, the Board considered that the Fund, in employing amanager-of-managers method of investment, operates in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. In the case of the Fund, an advisory fee is paid by the Fund to RIM which in turn compensates the money manager firms hired to make specific securities selections or recommendations.
The Board considered that RIM (rather than any money manager) is responsible under the investment advisory agreement for determining, implementing and maintaining the investment program for the Fund. Assets of the Fund generally have been allocated among the strategies of multiple money managers.
RIM is responsible for selecting, subject to Board approval, money managers for the Fund and for actively managing allocations and reallocations of assets among the money managers’ strategies. The Board has been advised that RIM’s goal is to construct and manage diversified portfolios in a risk aware manner. Each money manager for the Fund in effect performs the function of an individual portfolio manager who is responsible for selecting or recommending portfolio securities for the portion of the Fund assigned to it by RIM (each, a ‘‘segment’’) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIM upon its selection or recommendation of portfolio securities and the money manager’s specified role in the Fund. RIM is responsible for communicating performance
expectations to each money manager; supervising compliance by each money manager with the Fund’s investment objective and policies; authorizing money managers to engage in or recommend certain investment strategies for the Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIM is responsible for recommending to the Board the additions of new money managers or terminations or replacements of existing money managers at any time when, based on RIM’s research and ongoing review and analysis, such actions are appropriate. RIM may impose specific investment constraints from time to time for each money manager intended to capitalize on the strengths of that money manager or to coordinate the investment activities of money managers for the Fund in a complementary manner. Therefore, RIM’s selection of money managers is made not only on the basis of performance considerations but also on anticipated compatibility with other money managers in the Fund. In light of the foregoing, the overall performance of the Fund over appropriate periods reflects, in great part, the performance of RIM in designing the Fund’s investment program, structuring the Fund, selecting an effective money manager with a particular investment style orsub-style for a segment that is complementary to the styles of the money managers of other Fund segments, and allocating assets among the money managers’ strategies in a manner designed to achieve the objectives of the Fund.
The Board considered that the prospectus for the Fund and other public disclosures emphasize to investors RIM’s role as the principal investment manager for the Fund, rather than the investment selection or recommendation role of the Fund’s money managers and describe the manner in which the Fund operates so that investors may take that information into account when deciding to purchase shares of the Fund.
At a meeting held on May 21, 2019, the Board received a proposal from RIM to approve a new portfolio management contract between RIM and Neuberger. The Trustees approved the terms of the proposed portfolio management contract with Neuberger based upon RIM’s recommendation to hire the money manager at the proposed fee rate; information as to the reason for the proposed change; information as to the money manager’s role in the management of the Fund’s investment portfolio (including the amount of Fund assets to be managed pursuant to the new money manager’s strategy) and RIM’s evaluation of the anticipated quality of the investment advisory services to be provided by the money manager; information as to any significant business relationships between the money manager and RIM or Russell Investments Financial Services, LLC, the Fund’s underwriter; the Fund’s Chief Compliance Officer’s evaluation of the money manager’s compliance program, policies and procedures in relation to the money manager’s role in the management of the Fund’s investment portfolio, and certification that they were consistent with applicable legal standards; RIM’s explanation as to the lack of relevance of money manager profitability to the evaluation of portfolio management contracts with money managers because the willingness of the money manager to serve in such capacity depends uponarm’s-length negotiations with RIM; RIM’s awareness of the standard fee rates charged by the money manager to other clients; RIM’s belief that the proposed money manager fees would be reasonable in light of the anticipated quality of investment advisory services to be rendered; and the expected costs of transitioning Fund assets. The Trustees considered information provided by RIM that, based on Fund assets of approximately $1,793 million (as of December 2018), the proposed changes including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM would increase by approximately $215,600 the aggregate money manager fees to be paid by RIM from its investment advisory fee as a result of the engagement of the money manager and, as a result, decrease its profitability from its relationship with the Fund. The Trustees’ approval also reflected their findings at prior meetings, including their May 20, 2019 meeting, where the Fund’s existing advisory agreement with RIM was approved, as well as information received throughout the course of the year, regarding the reasonableness of the aggregate investment advisory fees paid by the Fund, and the fact that the aggregate investment advisory fees paid by the Fund would not increase as a result of the implementation of the proposed money manager changes because the money manager’s investment advisory fees are paid by RIM.
Compensation
Under its advisory agreement with RIC, RIM receives an advisory fee from the Fund for its services. From its advisory fee, RIM, as agent for RIC, pays all Fund money managers for their investment selection or recommendation services. The remainder of the fee is retained by RIM as compensation for its services and to pay expenses. Quarterly, each Fund money manager, including Neuberger, is paid a pro rata portion of its annual fee, based on the monthly average of all the assets allocated to it, in the case of discretionary money managers, or the monthly average of all the assets allocated to its strategy, in the case ofnon-discretionary money managers. The annual rate of the advisory fees payable by the Fund to RIM as a percentage of the average daily net assets of the Fund is 1.15% (estimated to be $27,735,294 based on an assumed average asset level of $2,411,764,717 for the twelve months ended October 31, 2018, RIC’s fiscal year end). Prior to the changes described herein, the aggregate annual rate of the advisory fees payable by RIM to the Fund’s money managers was approximately 0.30% (estimated to be $7,235,294 based on the same asset level). Giving effect to the changes described in this notice including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM, as applicable, the aggregate annual advisory fee payable by RIM to the Fund’s money managers would have been approximately 0.31% (estimated to have been $7,476,471 based on the same asset level). Because the money managers’ investment advisory fees are paid by RIM, the aggregate investment advisory fees paid by the Fund to RIM will not increase as a result of the changes described herein.
For the most recently completed fiscal year, the Fund paid no aggregate commissions to brokers affiliated with Neuberger.
The money managers may use brokerage commissions to pay for soft dollar research services. Any such use will be in accordance with Section 28(e) of the Securities Exchange Act of 1934.
Similar Investment Advisory Relationships
Neuberger does not act as an investment adviser to other registered U.S. investment companies with investment objectives similar to those of the Fund.
Additional Information About Neuberger
Neuberger Berman Investment Advisers, LLC, 190 S. LaSalle Street, Suite 2400, Chicago IL 60603, is a wholly owned subsidiary of Neuberger Berman Group LLC. Neuberger Berman Group LLC is 100% owned and controlled by its employees with no one person owning more than 25%.
The names and principal occupations of the principal executive officers and each director or general partner of Neuberger, all located at 190 S. LaSalle Street, Suite 2400, Chicago IL 60603, are listed below.
Name | Principal Occupation/Title | |
Bradley Tank | Director, President-Fixed Income,CIO- Fixed Income | |
Joseph Amato | Director, President- Equities,CIO- Equities | |
Lawrence Kohn | Director, COO – Equities | |
Brad Cetron | Chief Compliance Officer | |
Robert Eason | Director, COO – Fixed Income | |
Stephen Wright | Director, Managing Director | |
George Walker | Chief Executive Officer | |
Alan Dorsey | CIO – Wealth Management & Neuberger Berman Trust Company | |
Ken deRegt | Chief Risk Officer | |
Andrew Komaroff | Chief Operating Officer | |
Heather Zuckerman | Chief of Staff | |
William Arnold | Chief Financial Officer |
No officers or trustees of RIC are officers, employees, directors, general partners or shareholders of Neuberger. In addition, since the beginning of RIC’s most recently completed fiscal year, no trustee of RIC has had, directly or indirectly, a material interest in any transaction or material proposed transaction to which Neuberger, its parent entity or subsidiaries or any subsidiaries of the parent of any such entities, was or is to be a party. Since the beginning of RIC’s most recently completed fiscal year, none of the Trustees purchased or sold securities of Neuberger or its parent or subsidiaries.
Related Information
Russell Investment Management, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, provides or oversees the provision of all investment advisory and portfolio management services for the Fund.
Russell Investments Financial Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the principal distributor of Fund shares.
Russell Investments Fund Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the administrator of the Fund.
Additional Information
As permitted by law, only one copy of this Information Statement is being delivered to shareholders residing at the same address, unless such shareholders have notified RIC of their desire to receive multiple copies of the Information Statements RIC sends. If you would like to receive an additional copy, please contact RIC by calling1-800-787-7354 or writing to 1301 Second Avenue, 18th Floor, Seattle, WA 98101. RIC will then promptly deliver a separate copy of the Information Statements to any shareholder residing at an address to which only one copy was mailed. Shareholders wishing to receive separate copies of RIC’s Information Statements in the future, and shareholders sharing an address that wish to receive a single copy if they are receiving multiple copies should also direct requests as indicated.
If you have any questions about the changes described in this Information Statement or if you wish to obtain a copy of the Fund’s annual or semiannual reports to shareholders at no charge, please contact your Russell Investments authorized financial intermediary or RIC, at 1301 Second Avenue, 18th Floor, Seattle, WA 98101 or1-800-787-7354.
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
18th Floor
Seattle, WA 98101
July 29, 2019
U.S. Small Cap Equity Fund
IMPORTANT NOTICE OF INTERNET AVAILABILITY OF INFORMATION STATEMENT REGARDING A RECENT MONEY MANAGER CHANGE
An Information Statement regarding a recent money manager change related to the U.S. Small Cap Equity Fund (the “Fund”), a series of Russell Investment Company (“RIC”), is available for your review. This Notice presents only an overview of the more complete Information Statement that is available to you on the internet or by mail. We encourage you to access and review all of the important information contained in the Information Statement.
The Fund is not soliciting proxy or consent authority, but is furnishing an Information Statement pursuant to Rule14a-16 and14c-2 under the Securities Exchange Act of 1934, as amended.
The Information Statement details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Calamos Advisors LLC to serve as a newnon-discretionary money manager to the Fund. At the same time, the Board approved the termination of Timpani Capital Management LLC as anon-discretionary money manager to the Fund. These changes became effective on June 1, 2019.
RIC’s investment adviser is Russell Investment Management, LLC (“RIM”). The Information Statement is being provided to you in lieu of a proxy statement pursuant to the terms of an exemptive order granted to RIM and RIC by the Securities and Exchange Commission. The order permits RIM to hire a money manager at any time, subject to the approval of the Fund’s Board, without a shareholder vote. Shareholders of the Fund must be provided with specified information within 90 days of the hiring of any new money manager. The order allows the Fund, in lieu of physical delivery of the Information Statement, to make the Information Statement available online.
The full Information Statement will be available on RIC’s website athttp://hosted.rightprospectus.com/RIC/ until at least 90 days after this notice was sent to you. A paper or email copy of the full Information Statement or other Fund related information may be obtained, without charge, by calling1-800-787-7354 or emailingservice@russellinvestments.com.
If you want to receive more information regarding this recent money manager change, you may request a paper or email copy of the Information Statement per the instructions above. Requests for a paper copy of the Information Statement must be made by the 90th day after this notice was sent to you in order to receive timely delivery. There is no charge to you for requesting a copy.
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
July 29, 2019
To Shareholders of the U.S. Small Cap Equity Fund (the “Fund”):
Enclosed is an Information Statement of Russell Investment Company (“RIC”) that details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Calamos Advisors LLC (“Calamos”) to serve as a newnon-discretionary money manager to the Fund. At the same time, the Board approved the termination of Timpani Capital Management LLC as anon-discretionary money manager to the Fund. These changes became effective on June 1, 2019.
The attached Information Statement provides information about Calamos, the new portfolio management contract with Calamos and the Board’s considerations in approving the new portfolio management contract.
Please note that the Fund is not required to obtain shareholder approval for this money manager change. We are not asking you for a proxy and you are requested not to send us a proxy.
If you have any questions regarding the Information Statement, please call1-800-787-7354. A paper or email copy of the attached Information Statement may be obtained, without charge, by calling1-800-787-7354.
| Sincerely, |
 |
| Jessica Gates |
| Assistant Secretary |
| Russell Investment Company |
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
INFORMATION STATEMENT
U.S. SMALL CAP EQUITY FUND
Under the terms of an exemptive order (the “Order”) issued by the Securities and Exchange Commission (“SEC”), this document is an Information Statement and is being furnished to shareholders of the U.S. Small Cap Equity Fund (the “Fund”), a series of Russell Investment Company (“RIC”). Russell Investment Management, LLC (“RIM”) serves as the investment adviser of the Fund.
The Fund allocates most of its assets among the strategies of multiple money managers unaffiliated with RIM. The Fund employs discretionary andnon-discretionary money managers. The Fund’s discretionary money managers select the individual portfolio securities for the assets assigned to them. The Fund’snon-discretionary money managers provide a model portfolio to RIM representing their investment recommendations, based upon which RIM purchases and sells securities for the Fund. RIM manages Fund assets not allocated to discretionary money managers. RIM, as the Fund’s adviser, may change the allocation of the Fund’s assets at any time. The Order permits RIM to hire a money manager at any time, subject to the approval of the Board of Trustees of RIC (the “Board”), without a shareholder vote. Pursuant to the terms of the Order, the Fund is required to notify its shareholders within 90 days of when a new money manager is hired for the Fund.
Change of Money Manager
On May 21, 2019, the Board authorized the signing of a portfolio management contract to engage Calamos Advisors LLC (“Calamos”) as anon-discretionary money manager with respect to a portion of the assets of the Fund determined by RIM. On that same date, the Board also authorized the termination of a similar portfolio management contract with Timpani Capital Management LLC (“Timpani”), anon-discretionary money manager to the Fund. On June 1, 2019, the portfolio management contract with Timpani was terminated.
Portfolio Management Contract
Effective June 1, 2019, RIM, as fiduciary for RIC, entered into a new portfolio management contract with Calamos. The contract will continue until May 31, 2020. Thereafter, the contract will continue in effect for successive annual periods if its continuance has been specifically approved at least annually by RIC’s Board, including the affirmative vote of a majority of the Trustees who are not parties to the contract, or “interested persons” (as defined in the Investment Company Act of 1940) of any such party, cast in person at a meeting called for the purpose of considering such approval. The contract is automatically terminated if assigned. The contract may be terminated without payment of any penalty by RIM or RIC immediately upon written notice to Calamos and by Calamos upon 30 days’ written notice to RIM.
Board Approval of Portfolio Management Contract
In evaluating the portfolio management contract with Calamos, the Board considered that the Fund, in employing amanager-of-managers method of investment, operates in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. In the case of the Fund, an advisory fee is paid by the Fund to RIM which in turn compensates the money manager firms hired to make specific securities selections or recommendations.
The Board considered that RIM (rather than any money manager) is responsible under the investment advisory agreement for determining, implementing and maintaining the investment program for the Fund. Assets of the Fund generally have been allocated among the strategies of multiple money managers.
RIM is responsible for selecting, subject to Board approval, money managers for the Fund and for actively managing allocations and reallocations of assets among the money managers’ strategies. The Board has been advised that RIM’s goal is to construct and manage diversified portfolios in a risk aware manner. Each money manager for the Fund in effect performs the function of an individual portfolio manager who is responsible for selecting or recommending portfolio securities for the portion of the Fund assigned to it by RIM (each, a ‘‘segment’’) in accordance with the Fund’s applicable
investment objective, policies and restrictions, any constraints placed by RIM upon its selection or recommendation of portfolio securities and the money manager’s specified role in the Fund. RIM is responsible for communicating performance expectations to each money manager; supervising compliance by each money manager with the Fund’s investment objective and policies; authorizing money managers to engage in or recommend certain investment strategies for the Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIM is responsible for recommending to the Board the additions of new money managers or terminations or replacements of existing money managers at any time when, based on RIM’s research and ongoing review and analysis, such actions are appropriate. RIM may impose specific investment constraints from time to time for each money manager intended to capitalize on the strengths of that money manager or to coordinate the investment activities of money managers for the Fund in a complementary manner. Therefore, RIM’s selection of money managers is made not only on the basis of performance considerations but also on anticipated compatibility with other money managers in the Fund. In light of the foregoing, the overall performance of the Fund over appropriate periods reflects, in great part, the performance of RIM in designing the Fund’s investment program, structuring the Fund, selecting an effective money manager with a particular investment style orsub-style for a segment that is complementary to the styles of the money managers of other Fund segments, and allocating assets among the money managers’ strategies in a manner designed to achieve the objectives of the Fund.
The Board considered that the prospectus for the Fund and other public disclosures emphasize to investors RIM’s role as the principal investment manager for the Fund, rather than the investment selection or recommendation role of the Fund’s money managers, and describe the manner in which the Fund operates so that investors may take that information into account when deciding to purchase shares of the Fund.
At a meeting held on May 21, 2019, the Board received a proposal from RIM to approve a new portfolio management contract between RIM and Calamos. The Trustees approved the terms of the proposed portfolio management contract with Calamos based upon RIM’s recommendation to hire the money manager at the proposed fee rate; information as to the reason for the proposed change; information as to the money manager’s role in the management of the Fund’s investment portfolio (including the amount of Fund assets to be managed pursuant to the new money manager’s strategy) and RIM’s evaluation of the anticipated quality of the investment advisory services to be provided by the money manager; information as to any significant business relationships between the money manager and RIM or Russell Investments Financial Services, LLC, the Fund’s underwriter; the Fund’s Chief Compliance Officer’s evaluation of the money manager’s compliance program, policies and procedures in relation to the money manager’s role in the management of the Fund’s investment portfolio, and certification that they were consistent with applicable legal standards; RIM’s explanation as to the lack of relevance of money manager profitability to the evaluation of portfolio management contracts with money managers because the willingness of the money manager to serve in such capacity depends uponarm’s-length negotiations with RIM; RIM’s awareness of the standard fee rates charged by the money manager to other clients; RIM’s belief that the proposed money manager fees would be reasonable in light of the anticipated quality of investment advisory services to be rendered; and the expected costs of transitioning Fund assets. The Trustees considered information provided by RIM that the proposed changes including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM would not change the aggregate money manager fees to be paid by RIM from its investment advisory fee as a result of the engagement of the money manager and, as a result, would not change its profitability from its relationship with the Fund. The Trustees’ approval also reflected their findings at prior meetings, including their May 20, 2019 meeting, where the Fund’s existing advisory agreement with RIM was approved, as well as information received throughout the course of the year, regarding the reasonableness of the aggregate investment advisory fees paid by the Fund, and the fact that the aggregate investment advisory fees paid by the Fund would not increase as a result of the implementation of the proposed money manager changes because the money manager’s investment advisory fees are paid by RIM.
Compensation
Under its advisory agreement with RIC, RIM receives an advisory fee from the Fund for its services. From its advisory fee, RIM, as agent for RIC, pays all Fund money managers for their investment selection or recommendation services. The remainder of the fee is retained by RIM as compensation for its services and to pay expenses. Quarterly, each Fund money manager, including Calamos, is paid a pro rata portion of its annual fee, based on the monthly average of all the assets allocated to it, in the case of discretionary money managers, or the monthly average of all the assets allocated to its strategy, in the case ofnon-discretionary money managers. The annual rate of the advisory fees payable by the Fund to RIM as a percentage of the average daily net assets of the Fund is 0.70% (estimated to be $13,978,702 based on an assumed average asset level of $1,996,957,437 for the twelve months ended October 31, 2018, RIC’s fiscal year end). Prior to the changes described herein, the aggregate annual rate of the advisory fees payable by RIM to the Fund’s money managers was approximately 0.27% (estimated to be $5,397,785 based on the same asset level). Giving effect to the changes described in this notice including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM, as applicable, the aggregate annual advisory fee payable by RIM to the Fund’s money managers would have been approximately 0.27% (estimated to have been $5,397,785 based on the same asset level). Because the money managers’ investment advisory fees are paid by RIM, the aggregate investment advisory fees paid by the Fund to RIM will not increase as a result of the changes described herein.
For the most recently completed fiscal year, the Fund paid no aggregate commissions to brokers affiliated with Calamos.
The money managers may use brokerage commissions to pay for soft dollar research services. Any such use will be in accordance with Section 28(e) of the Securities Exchange Act of 1934.
Similar Investment Advisory Relationships
Calamos acts as an investment adviser to other registered U.S. investment companies with investment objectives similar to those of the Fund.
| Name | Assets as of June 30, 2019 | |||
RIF U.S. Small Cap Equity Fund | $ | 230 million | ||
Additional Information About Calamos
Calamos Advisors LLC is wholly-owned and controlled by Calamos Investments LLC. Calamos Investments LLC is wholly-owned and controlled by Calamos Partners LLC. Calamos Partners LLC is wholly-owned and controlled by Calamos Family Partners, Inc. (“CFP”). CFP is owned and controlled by John P. Calamos, Sr. All of these entities are located at 2020 Calamos Court, Naperville, Illinois 60563.
The names and principal occupations of the principal executive officers and each director or general partner of Calamos, all located at 2020 Calamos Court, Naperville, Illinois 60563, are listed below.
Name | Principal Occupation/Title | |
| John P. Calamos, Sr. | Founder, Chairman and Global Chief Investment Officer | |
| John Koudounis | Chief Executive Officer | |
| Robert Behan, CFA | President and Head of Global Distribution | |
| Thomas Herman, CPA | Chief Financial Officer |
No officers or trustees of RIC are officers, employees, directors, general partners or shareholders of Calamos. In addition, since the beginning of RIC’s most recently completed fiscal year, no trustee of RIC has had, directly or indirectly, a material interest in any transaction or material proposed transaction to which Calamos, its parent entity or subsidiaries or any subsidiaries of the parent of any such entities, was or is to be a party. Since the beginning of RIC’s most recently completed fiscal year, none of the Trustees purchased or sold securities of Calamos or its parent or subsidiaries.
Related Information
Russell Investment Management, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, provides or oversees the provision of all investment advisory and portfolio management services for the Fund.
Russell Investments Financial Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the principal distributor of Fund shares.
Russell Investments Fund Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the administrator of the Fund.
Additional Information
As permitted by law, only one copy of this Information Statement is being delivered to shareholders residing at the same address, unless such shareholders have notified RIC of their desire to receive multiple copies of the Information Statements RIC sends. If you would like to receive an additional copy, please contact RIC by calling1-800-787-7354 or writing to 1301 Second Avenue, 18th Floor, Seattle, WA 98101. RIC will then promptly deliver a separate copy of the Information Statements to any shareholder residing at an address to which only one copy was mailed. Shareholders wishing to receive separate copies of RIC’s Information Statements in the future, and shareholders sharing an address that wish to receive a single copy if they are receiving multiple copies should also direct requests as indicated.
If you have any questions about the changes described in this Information Statement or if you wish to obtain a copy of the Fund’s annual or semiannual reports to shareholders at no charge, please contact your Russell Investments authorized financial intermediary or RIC, at 1301 Second Avenue, 18th Floor, Seattle, WA 98101 or1-800-787-7354.
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
18th Floor
Seattle, WA 98101
July 29, 2019
Multi-Strategy Income Fund
IMPORTANT NOTICE OF INTERNET AVAILABILITY OF INFORMATION STATEMENT REGARDING A RECENT MONEY MANAGER CHANGE
An Information Statement regarding a recent money manager change related to the Multi-Strategy Income Fund (the “Fund”), a series of Russell Investment Company (“RIC”), is available for your review. This Notice presents only an overview of the more complete Information Statement that is available to you on the internet or by mail. We encourage you to access and review all of the important information contained in the Information Statement.
The Fund is not soliciting proxy or consent authority, but is furnishing an Information Statement pursuant to Rule14a-16 and14c-2 under the Securities Exchange Act of 1934, as amended.
The Information Statement details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Invesco Advisers, Inc. to serve as a newnon-discretionary money manager to the Fund. At the same time, the Board approved the termination of OFI Global Institutional, Inc. as anon-discretionary money manager to the Fund. These changes became effective on May 24, 2019.
RIC’s investment adviser is Russell Investment Management, LLC (“RIM”). The Information Statement is being provided to you in lieu of a proxy statement pursuant to the terms of an exemptive order granted to RIM and RIC by the Securities and Exchange Commission. The order permits RIM to hire a money manager at any time, subject to the approval of the Fund’s Board, without a shareholder vote. Shareholders of the Fund must be provided with specified information within 90 days of the hiring of any new money manager. The order allows the Fund, in lieu of physical delivery of the Information Statement, to make the Information Statement available online.
The full Information Statement will be available on RIC’s website athttp://hosted.rightprospectus.com/RIC/ until at least 90 days after this notice was sent to you. A paper or email copy of the full Information Statement or other Fund related information may be obtained, without charge, by calling1-800-787-7354 or emailingservice@russellinvestments.com.
If you want to receive more information regarding this recent money manager change, you may request a paper or email copy of the Information Statement per the instructions above. Requests for a paper copy of the Information Statement must be made by the 90th day after this notice was sent to you in order to receive timely delivery. There is no charge to you for requesting a copy.
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
July 29, 2019
To Shareholders of the Multi-Strategy Income Fund (the “Fund”):
Enclosed is an Information Statement of Russell Investment Company (“RIC”) that details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Invesco Advisers, Inc. (“Invesco”) to serve as a newnon-discretionary money manager to the Fund. At the same time, the Board approved the termination of OFI Global Institutional, Inc. as anon-discretionary money manager to the Fund. These changes became effective on May 24, 2019.
The attached Information Statement provides information about Invesco, the new portfolio management contract with Invesco and the Board’s considerations in approving the new portfolio management contract.
Please note that the Fund is not required to obtain shareholder approval for this money manager change. We are not asking you for a proxy and you are requested not to send us a proxy.
If you have any questions regarding the Information Statement, please call1-800-787-7354. A paper or email copy of the attached Information Statement may be obtained, without charge, by calling1-800-787-7354.
| Sincerely, |
 |
| Jessica Gates |
| Assistant Secretary |
| Russell Investment Company |
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
INFORMATION STATEMENT
MULTI-STRATEGY INCOME FUND
Under the terms of an exemptive order (the “Order”) issued by the Securities and Exchange Commission (“SEC”), this document is an Information Statement and is being furnished to shareholders of the Multi-Strategy Income Fund (the “Fund”), a series of Russell Investment Company (“RIC”). Russell Investment Management, LLC (“RIM”) serves as the investment adviser of the Fund.
The Fund allocates most of its assets among the strategies of multiple money managers unaffiliated with RIM. The Fund employs discretionary andnon-discretionary money managers. The Fund’s discretionary money managers select the individual portfolio securities for the assets assigned to them. The Fund’snon-discretionary money managers provide a model portfolio to RIM representing their investment recommendations, based upon which RIM purchases and sells securities for the Fund. RIM manages Fund assets not allocated to discretionary money managers. RIM, as the Fund’s adviser, may change the allocation of the Fund’s assets at any time. The Order permits RIM to hire a money manager at any time, subject to the approval of the Board of Trustees of RIC (the “Board”), without a shareholder vote. Pursuant to the terms of the Order, the Fund is required to notify its shareholders within 90 days of when a new money manager is hired for the Fund.
Change of Money Manager
On May 21, 2019, the Board authorized the signing of a portfolio management contract to engage Invesco Advisers, Inc. (“Invesco”) as anon-discretionary money manager with respect to a portion of the assets of the Fund determined by RIM. On that same date, the Board also authorized the termination of a similar portfolio management contract with OFI Global Institutional, Inc. (“OFI”), anon-discretionary money manager to the Fund. On May 24, 2019, the portfolio management contract with OFI was terminated.
Portfolio Management Contract
Effective May 24, 2019, RIM, as fiduciary for RIC, entered into a new portfolio management contract with Invesco. The contract will continue until May 31, 2020. Thereafter, the contract will continue in effect for successive annual periods if its continuance has been specifically approved at least annually by RIC’s Board, including the affirmative vote of a majority of the Trustees who are not parties to the contract, or “interested persons” (as defined in the Investment Company Act of 1940) of any such party, cast in person at a meeting called for the purpose of considering such approval. The contract is automatically terminated if assigned. The contract may be terminated without payment of any penalty by RIM or RIC immediately upon written notice to Invesco and by Invesco upon 30 days’ written notice to RIM.
Board Approval of Portfolio Management Contract
In evaluating the portfolio management contract with Invesco, the Board considered that the Fund, in employing amanager-of-managers method of investment, operates in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. In the case of the Fund, an advisory fee is paid by the Fund to RIM which in turn compensates the money manager firms hired to make specific securities selections or recommendations.
The Board considered that RIM (rather than any money manager) is responsible under the investment advisory agreement for determining, implementing and maintaining the investment program for the Fund. Assets of the Fund generally have been allocated among the strategies of multiple money managers.
RIM is responsible for selecting, subject to Board approval, money managers for the Fund and for actively managing allocations and reallocations of assets among the money managers’ strategies. The Board has been advised that RIM’s goal is to construct and manage diversified portfolios in a risk aware manner. Each money manager for the Fund in effect performs the function of an individual portfolio manager who is responsible for selecting or recommending portfolio securities for the portion of the Fund assigned to it by RIM (each, a ‘‘segment’’) in accordance with the Fund’s applicable
investment objective, policies and restrictions, any constraints placed by RIM upon its selection or recommendation of portfolio securities and the money manager’s specified role in the Fund. RIM is responsible for communicating performance expectations to each money manager; supervising compliance by each money manager with the Fund’s investment objective and policies; authorizing money managers to engage in or recommend certain investment strategies for the Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIM is responsible for recommending to the Board the additions of new money managers or terminations or replacements of existing money managers at any time when, based on RIM’s research and ongoing review and analysis, such actions are appropriate. RIM may impose specific investment constraints from time to time for each money manager intended to capitalize on the strengths of that money manager or to coordinate the investment activities of money managers for the Fund in a complementary manner. Therefore, RIM’s selection of money managers is made not only on the basis of performance considerations but also on anticipated compatibility with other money managers in the Fund. In light of the foregoing, the overall performance of the Fund over appropriate periods reflects, in great part, the performance of RIM in designing the Fund’s investment program, structuring the Fund, selecting an effective money manager with a particular investment style orsub-style for a segment that is complementary to the styles of the money managers of other Fund segments, and allocating assets among the money managers’ strategies in a manner designed to achieve the objectives of the Fund.
The Board considered that the prospectus for the Fund and other public disclosures emphasize to investors RIM’s role as the principal investment manager for the Fund, rather than the investment selection or recommendation role of the Fund’s money managers, and describe the manner in which the Fund operates so that investors may take that information into account when deciding to purchase shares of the Fund.
At a meeting held on May 21, 2019, the Board received a proposal from RIM to approve a new portfolio management contract between RIM and Invesco. The Trustees approved the terms of the proposed portfolio management contract with Invesco based upon RIM’s recommendation to hire the money manager at the proposed fee rate; information as to the reason for the proposed change; information as to the money manager’s role in the management of the Fund’s investment portfolio (including the amount of Fund assets to be managed pursuant to the new money manager’s strategy) and RIM’s evaluation of the anticipated quality of the investment advisory services to be provided by the money manager; information as to any significant business relationships between the money manager and RIM or Russell Investments Financial Services, LLC, the Fund’s underwriter; the Fund’s Chief Compliance Officer’s evaluation of the money manager’s compliance program, policies and procedures in relation to the money manager’s role in the management of the Fund’s investment portfolio, and certification that they were consistent with applicable legal standards; RIM’s explanation as to the lack of relevance of money manager profitability to the evaluation of portfolio management contracts with money managers because the willingness of the money manager to serve in such capacity depends uponarm’s-length negotiations with RIM; RIM’s awareness of the standard fee rates charged by the money manager to other clients; RIM’s belief that the proposed money manager fees would be reasonable in light of the anticipated quality of investment advisory services to be rendered; and the expected costs of transitioning Fund assets. The Trustees considered information provided by RIM that the proposed changes including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM would not change the aggregate money manager fees to be paid by RIM from its investment advisory fee as a result of the engagement of the money manager and, as a result, would not change its profitability from its relationship with the Fund. The Trustees’ approval also reflected their findings at prior meetings, including their May 20, 2019 meeting, where the Fund’s existing advisory agreement with RIM was approved, as well as information received throughout the course of the year, regarding the reasonableness of the aggregate investment advisory fees paid by the Fund, and the fact that the aggregate investment advisory fees paid by the Fund would not increase as a result of the implementation of the proposed money manager changes because the money manager’s investment advisory fees are paid by RIM.
Compensation
Under its advisory agreement with RIC, RIM receives an advisory fee from the Fund for its services. From its advisory fee, RIM, as agent for RIC, pays all Fund money managers for their investment selection or recommendation services. The remainder of the fee is retained by RIM as compensation for its services and to pay expenses. Quarterly, each Fund money manager, including Invesco, is paid a pro rata portion of its annual fee, based on the monthly average of all the assets allocated to it, in the case of discretionary money managers, or the monthly average of all the assets allocated to its strategy, in the case ofnon-discretionary money managers. The annual rate of the advisory fees payable by the Fund to RIM as a percentage of the average daily net assets of the Fund is 0.75% (estimated to be $10,301,470 based on an assumed average asset level of $1,373,585,542 for the twelve months ended October 31, 2018, RIC’s fiscal year end). Prior to the changes described herein, the aggregate annual rate of the advisory fees payable by RIM to the Fund’s money managers was approximately 0.28% (estimated to be $3,846,040 based on the same asset level). Giving effect to the changes described in this notice including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM, as applicable, the aggregate annual advisory fee payable by RIM to the Fund’s money managers would have been approximately 0.28% (estimated to have been $3,846,040 based on the same asset level). Because the money managers’ investment advisory fees are paid by RIM, the aggregate investment advisory fees paid by the Fund to RIM will not increase as a result of the changes described herein.
For the most recently completed fiscal year, the Fund paid no aggregate commissions to brokers affiliated with Invesco.
The money managers may use brokerage commissions to pay for soft dollar research services. Any such use will be in accordance with Section 28(e) of the Securities Exchange Act of 1934.
Similar Investment Advisory Relationships
Invesco does not act as an investment adviser to other registered U.S. investment companies with investment objectives similar to those of the Fund.
Additional Information About Invesco
Invesco Advisers, Inc. is wholly- owned and controlled by Invesco Group Services, Inc. Invesco Group Services, Inc. is wholly-owned and controlled by OFI Global Asset Management, Inc. OFI Global Asset Management, Inc. is wholly-owned and controlled by Oppenheimerfunds, Inc. Oppenheimerfunds, Inc. is wholly-owned and controlled by Oppenheimer Acquisition Corp. Oppenheimer Acquisition Corp. is wholly-owned and controlled by Invesco Holding Company (US), Inc. Invesco Holding Company (US), Inc. is wholly-owned and controlled by Invesco Holding Company Limited. Invesco Holding Company Limited is a wholly-owned subsidiary of Invesco Ltd., a publicly traded company. OFI Global Asset Management, Inc., Oppenheimerfunds, Inc. and OFI Global Asset Management, Inc. are located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, NY 10281. Invesco Advisers, Inc., Invesco Group Services, Inc., Invesco Holding Company (US), Inc. and Invesco Ltd. are located at 1555 Peachtree Street, N.E., Suite 1800, Atlanta, Georgia 30309. Invesco Holding Company Limited is located at Perpetual Park Drive,Henley-On Thames, London, United Kingdom, RG9 1HH.
The names and principal occupations of the principal executive officers and each director or general partner of Invesco, all located at 1555 Peachtree Street, N.E., Suite 1800, Atlanta, Georgia 30309, are listed below.
Name | Principal Occupation/Title | |
| Jeffrey Kupor | Director, Senior Vice President and Secretary | |
| Kevin Carome | Director | |
| Loren Starr | Director | |
| Colin Meadows | Director | |
| Robert Leveille | Chief Compliance Officer | |
| Gregory McGreevey | Director, President and Chief Executive Officer | |
| Annette Lege | Chief Accounting Officer, CFO and Treasurer | |
| Andrew Schlossberg | Director and Senior Vice President |
No officers or trustees of RIC are officers, employees, directors, general partners or shareholders of Invesco. In addition, since the beginning of RIC’s most recently completed fiscal year, no trustee of RIC has had, directly or indirectly, a material interest in any transaction or material proposed transaction to which Invesco, its parent entity or subsidiaries or any subsidiaries of the parent of any such entities, was or is to be a party. Since the beginning of RIC’s most recently completed fiscal year, none of the Trustees purchased or sold securities of Invesco or its parent or subsidiaries.
Related Information
Russell Investment Management, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, provides or oversees the provision of all investment advisory and portfolio management services for the Fund.
Russell Investments Financial Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the principal distributor of Fund shares.
Russell Investments Fund Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the administrator of the Fund.
Additional Information
As permitted by law, only one copy of this Information Statement is being delivered to shareholders residing at the same address, unless such shareholders have notified RIC of their desire to receive multiple copies of the Information Statements RIC sends. If you would like to receive an additional copy, please contact RIC by calling1-800-787-7354 or writing to 1301 Second Avenue, 18th Floor, Seattle, WA 98101. RIC will then promptly deliver a separate copy of the Information Statements to any shareholder residing at an address to which only one copy was mailed. Shareholders wishing to receive separate copies of RIC’s Information Statements in the future, and shareholders sharing an address that wish to receive a single copy if they are receiving multiple copies should also direct requests as indicated.
If you have any questions about the changes described in this Information Statement or if you wish to obtain a copy of the Fund’s annual or semiannual reports to shareholders at no charge, please contact your Russell Investments authorized financial intermediary or RIC, at 1301 Second Avenue, 18th Floor, Seattle, WA 98101 or1-800-787-7354.
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
18th Floor
Seattle, WA 98101
July 29, 2019
Multi-Asset Growth Strategy Fund
IMPORTANT NOTICE OF INTERNET AVAILABILITY OF INFORMATION STATEMENT REGARDING A RECENT MONEY MANAGER CHANGE
An Information Statement regarding a recent money manager change related to the Multi-Asset Growth Strategy Fund (the “Fund”), a series of Russell Investment Company (“RIC”), is available for your review. This Notice presents only an overview of the more complete Information Statement that is available to you on the internet or by mail. We encourage you to access and review all of the important information contained in the Information Statement.
The Fund is not soliciting proxy or consent authority, but is furnishing an Information Statement pursuant to Rule14a-16 and14c-2 under the Securities Exchange Act of 1934, as amended.
The Information Statement details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Invesco Advisers, Inc. and Levin Easterly Partners LLC to serve as newnon-discretionary money managers to the Fund. At the same time, the Board approved the termination of OFI Global Institutional, Inc. and Levin Capital Strategies, L.P. asnon-discretionary money managers to the Fund. These changes became effective on May 24, 2019 and June 10, 2019, respectively.
RIC’s investment adviser is Russell Investment Management, LLC (“RIM”). The Information Statement is being provided to you in lieu of a proxy statement pursuant to the terms of an exemptive order granted to RIM and RIC by the Securities and Exchange Commission. The order permits RIM to hire a money manager at any time, subject to the approval of the Fund’s Board, without a shareholder vote. Shareholders of the Fund must be provided with specified information within 90 days of the hiring of any new money manager. The order allows the Fund, in lieu of physical delivery of the Information Statement, to make the Information Statement available online.
The full Information Statement will be available on RIC’s website athttp://hosted.rightprospectus.com/RIC/ until at least 90 days after this notice was sent to you. A paper or email copy of the full Information Statement or other Fund related information may be obtained, without charge, by calling1-800-787-7354 or emailingservice@russellinvestments.com.
If you want to receive more information regarding this recent money manager change, you may request a paper or email copy of the Information Statement per the instructions above. Requests for a paper copy of the Information Statement must be made by the 90th day after this notice was sent to you in order to receive timely delivery. There is no charge to you for requesting a copy.
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
July 29, 2019
To Shareholders of the Multi-Asset Growth Strategy Fund (the “Fund”):
Enclosed is an Information Statement of Russell Investment Company (“RIC”) that details a recent money manager change related to the Fund. Specifically, the Board of Trustees of RIC (the “Board”) has approved the selection of Invesco Advisers, Inc. (“Invesco”) and Levin Easterly Partners LLC (“Levin Easterly”) to serve as newnon-discretionary money managers to the Fund. At the same time, the Board approved the termination of OFI Global Institutional, Inc. and Levin Capital Strategies, L.P. asnon-discretionary money managers to the Fund. These changes became effective on May 24, 2019 and June 10, 2019, respectively.
The attached Information Statement provides information about Invesco and Levin Easterly, the new portfolio management contracts with Invesco and Levin Easterly and the Board’s considerations in approving the new portfolio management contract.
Please note that the Fund is not required to obtain shareholder approval for this money manager change. We are not asking you for a proxy and you are requested not to send us a proxy.
If you have any questions regarding the Information Statement, please call1-800-787-7354. A paper or email copy of the attached Information Statement may be obtained, without charge, by calling1-800-787-7354.
| Sincerely, |
 |
| Jessica Gates |
| Assistant Secretary |
| Russell Investment Company |
RUSSELL INVESTMENT COMPANY
1301 Second Avenue
Seattle, Washington 98101
INFORMATION STATEMENT
MULTI-ASSET GROWTH STRATEGY FUND
Under the terms of an exemptive order (the “Order”) issued by the Securities and Exchange Commission (“SEC”), this document is an Information Statement and is being furnished to shareholders of the Multi-Asset Growth Strategy Fund (the “Fund”), a series of Russell Investment Company (“RIC”). Russell Investment Management, LLC (“RIM”) serves as the investment adviser of the Fund.
The Fund allocates most of its assets among the strategies of multiple money managers unaffiliated with RIM. The Fund employs discretionary andnon-discretionary money managers. The Fund’s discretionary money managers select the individual portfolio securities for the assets assigned to them. The Fund’snon-discretionary money managers provide a model portfolio to RIM representing their investment recommendations, based upon which RIM purchases and sells securities for the Fund. RIM manages Fund assets not allocated to discretionary money managers. RIM, as the Fund’s adviser, may change the allocation of the Fund’s assets at any time. The Order permits RIM to hire a money manager at any time, subject to the approval of the Board of Trustees of RIC (the “Board”), without a shareholder vote. Pursuant to the terms of the Order, the Fund is required to notify its shareholders within 90 days of when a new money manager is hired for the Fund.
Change Of Money Manager
On May 21, 2019, the Board authorized the signing of portfolio management contracts to engage Invesco Advisers, Inc. (“Invesco”) and Levin Easterly Partners, LLC (“Levin Easterly”) asnon-discretionary money managers with respect to a portion of the assets of the Fund determined by RIM. On that same date, the Board also authorized the termination of similar portfolio management contracts with OFI Global Institutional, Inc. (“OFI”) and Levin Capital Strategies, L.P. (“Levin”) asnon-discretionary money managers to the Fund. On May 24, 2019, the portfolio management contract with OFI was terminated. On June 10, 2019, the portfolio management contract with Levin was terminated.
Portfolio Management Contract
Effective May 24, 2019, RIM, as fiduciary for RIC, entered into a new portfolio management contract with Invesco. Effective June 10, 2019, RIM, as fiduciary for RIC, entered into a new portfolio management contract with Levin Easterly. The contracts will continue until May 31, 2020. Thereafter, each contract will continue in effect for successive annual periods if its continuance has been specifically approved at least annually by RIC’s Board, including the affirmative vote of a majority of the Trustees who are not parties to the contracts, or “interested persons” (as defined in the Investment Company Act of 1940) of any such party, cast in person at a meeting called for the purpose of considering such approval. Each contract is automatically terminated if assigned. Each contract may be terminated without payment of any penalty by RIM or RIC immediately upon written notice to Invesco and Levin Easterly and by Invesco and Levin Easterly upon 30 days’ written notice to RIM.
Board Approval of Portfolio Management Contract
In evaluating the portfolio management contracts with Invesco and Levin Easterly, the Board considered that the Fund, in employing amanager-of-managers method of investment, operates in a manner that is distinctly different from most other investment companies. In the case of most other investment companies, an advisory fee is paid by the investment company to its adviser which in turn, employs and compensates individual portfolio managers to make specific securities selections consistent with the adviser’s style and investment philosophy. In the case of the Fund, an advisory fee is paid by the Fund to RIM which in turn compensates the money manager firms hired to make specific securities selections or recommendations.
The Board considered that RIM (rather than any money manager) is responsible under the investment advisory agreement for determining, implementing and maintaining the investment program for the Fund. Assets of the Fund generally have been allocated among the strategies of multiple money managers.
RIM is responsible for selecting, subject to Board approval, money managers for the Fund and for actively managing allocations and reallocations of assets among the money managers’ strategies. The Board has been advised that RIM’s goal is to construct and manage diversified portfolios in a risk aware manner. Each money manager for the Fund in effect performs the function of an individual portfolio manager who is responsible for selecting or recommending portfolio securities for the portion of the Fund assigned to it by RIM (each, a ‘‘segment’’) in accordance with the Fund’s applicable investment objective, policies and restrictions, any constraints placed by RIM upon its selection or recommendation of portfolio securities and the money manager’s specified role in the Fund. RIM is responsible for communicating performance expectations to each money manager; supervising compliance by each money manager with the Fund’s investment objective and policies; authorizing money managers to engage in or recommend certain investment strategies for the Fund; and recommending annually to the Board whether portfolio management contracts should be renewed, modified or terminated. In addition to its annual recommendation as to the renewal, modification or termination of portfolio management contracts, RIM is responsible for recommending to the Board the additions of new money managers or terminations or replacements of existing money managers at any time when, based on RIM’s research and ongoing review and analysis, such actions are appropriate. RIM may impose specific investment constraints from time to time for each money manager intended to capitalize on the strengths of that money manager or to coordinate the investment activities of money managers for the Fund in a complementary manner. Therefore, RIM’s selection of money managers is made not only on the basis of performance considerations but also on anticipated compatibility with other money managers in the Fund. In light of the foregoing, the overall performance of the Fund over appropriate periods reflects, in great part, the performance of RIM in designing the Fund’s investment program, structuring the Fund, selecting an effective money manager with a particular investment style orsub-style for a segment that is complementary to the styles of the money managers of other Fund segments, and allocating assets among the money managers’ strategies in a manner designed to achieve the objectives of the Fund.
The Board considered that the prospectus for the Fund and other public disclosures emphasize to investors RIM’s role as the principal investment manager for the Fund, rather than the investment selection or recommendation role of the Fund’s money managers, and describe the manner in which the Fund operates so that investors may take that information into account when deciding to purchase shares of the Fund.
At a meeting held on May 21, 2019, the Board received a proposal from RIM to approve new portfolio management contracts between RIM and each of Invesco and Levin Easterly. The Trustees approved the terms of the proposed portfolio management contract with each of Invesco and Levin Easterly based upon RIM’s recommendation to hire the money manager at the proposed fee rate; information as to the reason for the proposed change; information as to the money manager’s role in the management of the Fund’s investment portfolio (including the amount of Fund assets to be managed pursuant to the new money manager’s strategy) and RIM’s evaluation of the anticipated quality of the investment advisory services to be provided by the money manager; information as to any significant business relationships between the money manager and RIM or Russell Investments Financial Services, LLC, the Fund’s underwriter; the Fund’s Chief Compliance Officer’s evaluation of the money manager’s compliance program, policies and procedures in relation to the money manager’s role in the management of the Fund’s investment portfolio, and certification that they were consistent with applicable legal standards; RIM’s explanation as to the lack of relevance of money manager profitability to the evaluation of portfolio management contracts with money managers because the willingness of the money manager to serve in such capacity depends uponarm’s-length negotiations with RIM; RIM’s awareness of the standard fee rates charged by the money manager to other clients; RIM’s belief that the proposed money manager fees would be reasonable in light of the anticipated quality of investment advisory services to be rendered; and the expected costs of transitioning Fund assets. The Trustees considered information provided by RIM that the proposed changes including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM would not change the aggregate money manager fees to be paid by RIM from its investment advisory fee as a result of the engagement of the money manager and, as a result, would not change its profitability from its relationship with the Fund. The Trustees’ approval also reflected their findings at prior meetings, including their May 20, 2019 meeting, where the Fund’s existing advisory agreement with RIM was approved, as well as information received throughout the course of the year, regarding the reasonableness of the aggregate investment advisory fees paid by the Fund, and the fact that the aggregate investment advisory fees paid by the Fund would not increase as a result of the implementation of the proposed money manager changes because the money manager’s investment advisory fees are paid by RIM.
Compensation
Under its advisory agreement with RIC, RIM receives an advisory fee from the Fund for its services. From its advisory fee, RIM, as agent for RIC, pays all Fund money managers for their investment selection or recommendation services. The remainder of the fee is retained by RIM as compensation for its services and to pay expenses. Quarterly, each Fund money manager, including Invesco and Levin Easterly, is paid a pro rata portion of its annual fee, based on the monthly average of all the assets allocated to it, in the case of discretionary money managers, or the monthly average of all the assets allocated to its strategy, in the case ofnon-discretionary money managers. The annual rate of the advisory fees payable by the Fund to RIM as a percentage of the average daily net assets of the Fund is 0.85% (estimated to be $16,394,888 based on an assumed average asset level of $1,928,810,411 for the twelve months ended October 31, 2018, RIC’s fiscal year end). Prior to the changes described herein, the aggregate annual rate of the advisory fees payable by
RIM to the Fund’s money managers was approximately 0.24% (estimated to be $4,629,145 based on the same asset level). Giving effect to the changes described in this notice including any changes to the target allocation of Fund assets among the Fund’s money managers and RIM, as applicable, the aggregate annual advisory fee payable by RIM to the Fund’s money managers would have been approximately 0.24% (estimated to have been $4,629,145 based on the same asset level). Because the money managers’ investment advisory fees are paid by RIM, the aggregate investment advisory fees paid by the Fund to RIM will not increase as a result of the changes described herein. These figures do not reflect consolidation of the Fund’s wholly-owned subsidiary.
For the most recently completed fiscal year, the Fund paid no aggregate commissions to brokers affiliated with Invesco or Levin Easterly.
The money managers may use brokerage commissions to pay for soft dollar research services. Any such use will be in accordance with Section 28(e) of the Securities Exchange Act of 1934.
Similar Investment Advisory Relationships
Invesco and Levin Easterly do not act as investment advisers to other registered U.S. investment companies with investment objectives similar to those of the Fund.
Additional Information About Invesco and Levin Easterly
Invesco Advisers, Inc. is wholly-owned and controlled by Invesco Group Services, Inc. Invesco Group Services, Inc. is wholly-owned and controlled by OFI Global Asset Management, Inc. OFI Global Asset Management, Inc. is wholly-owned and controlled by Oppenheimerfunds, Inc. Oppenheimerfunds, Inc. is wholly-owned and controlled by Oppenheimer Acquisition Corp. Oppenheimer Acquisition Corp. is wholly-owned and controlled by Invesco Holding Company (US), Inc. Invesco Holding Company (US), Inc. is wholly-owned and controlled by Invesco Holding Company Limited. Invesco Holding Company Limited is a wholly owned subsidiary of Invesco Ltd., a publicly traded company. OFI Global Asset Management, Inc., Oppenheimerfunds, Inc. and OFI Global Asset Management, Inc. are located at Two World Financial Center, 225 Liberty Street, 11th Floor, New York, NY 10281. Invesco Advisers, Inc., Invesco Group Services, Inc., Invesco Holding Company (US), Inc. and Invesco Ltd. are located at 1555 Peachtree Street, N.E., Suite 1800, Atlanta, Georgia 30309. Invesco Holding Company Limited is located at Perpetual Park Drive,Henley-On Thames, London, United Kingdom, RG9 1HH.
The names and principal occupations of the principal executive officers and each director or general partner of Invesco, all located at 1555 Peachtree Street, N.E., Suite 1800, Atlanta, Georgia 30309, are listed below.
Name | Principal Occupation/Title | |
| Jeffrey Kupor | Director, Senior Vice President and Secretary | |
| Kevin Carome | Director | |
| Loren Starr | Director | |
| Colin Meadows | Director | |
| Robert Leveille | Chief Compliance Officer | |
| Gregory McGreevey | Director, President and Chief Executive Officer | |
| Annette Lege | Chief Accounting Officer, CFO and Treasurer | |
| Andrew Schlossberg | Director and Senior Vice President |
No officers or trustees of RIC are officers, employees, directors, general partners or shareholders of Invesco. In addition, since the beginning of RIC’s most recently completed fiscal year, no trustee of RIC has had, directly or indirectly, a material interest in any transaction or material proposed transaction to which Invesco, its parent entity or subsidiaries or any subsidiaries of the parent of any such entities, was or is to be a party. Since the beginning of RIC’s most recently completed fiscal year, none of the Trustees purchased or sold securities of Invesco or its parent or subsidiaries.
Levin Easterly Partners LLC, 595 Madison Avenue, 17th Floor, New York, NY 10022, is wholly-owned and controlled by LE Partners Holdings LLC. LE Partners Holdings LLC is wholly-owned and controlled by Easterly Partners Group LLC. Easterly Partners Group LLC is wholly-owned and controlled by EPG Holdings LLC. EPG Holdings LLC is wholly-owned and controlled by Easterly LLC. Easterly LLC is wholly-owned and controlled by Darrell Crate and Avshalom Kalichstein. LE Partners Holdings LLC, Easterly Partners Group LLC, EPG Holdings LLC and Easterly LLC are located at 138 Conant Street, Beverly, MA 01915.
The names and principal occupations of the principal executive officers and each director or general partner of Levin Easterly, all located at 595 Madison Avenue, 17th Floor, New York, NY 10022, are listed below.
Name | Principal Occupation/Title | |
| Darrell Crate | Chairman | |
| Raymond Ottusch | Chief Compliance Officer | |
| Richard Root | Chief Financial Officer | |
| Grace Bosserman | Chief Operating Officer | |
| Glenn Aigen | Chief Executive Officer | |
| Jack Murphy | Vice Chairman and Chief Investment Officer |
No officers or trustees of RIC are officers, employees, directors, general partners or shareholders of Levin Easterly. In addition, since the beginning of RIC’s most recently completed fiscal year, no trustee of RIC has had, directly or indirectly, a material interest in any transaction or material proposed transaction to which Levin Easterly, its parent entity or subsidiaries or any subsidiaries of the parent of any such entities, was or is to be a party. Since the beginning of RIC’s most recently completed fiscal year, none of the Trustees purchased or sold securities of Levin Easterly or its parent or subsidiaries.
Related Information
Russell Investment Management, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, provides or oversees the provision of all investment advisory and portfolio management services for the Fund.
Russell Investments Financial Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the principal distributor of Fund shares.
Russell Investments Fund Services, LLC, 1301 Second Avenue, 18th Floor, Seattle, WA 98101, a wholly-owned subsidiary of RIM, is the administrator of the Fund.
Additional Information
As permitted by law, only one copy of this Information Statement is being delivered to shareholders residing at the same address, unless such shareholders have notified RIC of their desire to receive multiple copies of the Information Statements RIC sends. If you would like to receive an additional copy, please contact RIC by calling1-800-787-7354 or writing to 1301 Second Avenue, 18th Floor, Seattle, WA 98101. RIC will then promptly deliver a separate copy of the Information Statements to any shareholder residing at an address to which only one copy was mailed. Shareholders wishing to receive separate copies of RIC’s Information Statements in the future, and shareholders sharing an address that wish to receive a single copy if they are receiving multiple copies should also direct requests as indicated.
If you have any questions about the changes described in this Information Statement or if you wish to obtain a copy of the Fund’s annual or semiannual reports to shareholders at no charge, please contact your Russell Investments authorized financial intermediary or RIC, at 1301 Second Avenue, 18th Floor, Seattle, WA 98101 or1-800-787-7354.