Russell Funds Russell Multi-Strategy Alternative Fund Money Manager and Russell Overview January 2016

(1)

Page 1 of 13 // Russell Investments // Russell Multi-Strategy Alternative Fund

Not FDIC Insured - May Lose Value - No Bank Guarantee

Money Manager and Russell Overview

January 2016 Russell’s investment approach

Russell uses a multi-asset approach to investing, combining asset allocation, manager selection and ongoing portfolio management in its investment portfolios. Using this approach as a backdrop to mutual fund construction, Russell researches, monitors, hires and terminates (subject to Fund Board approval) money managers from around the world and strategically allocates fund assets to them. Russell oversees all

investment advisory services to the funds and manages assets not allocated to money managers.

The fund

The Russell Multi-Strategy Alternative Fund includes managers that use a diverse range of alternative investment strategies and sub-strategies that are expected to have low correlation to each other. They utilize Relative Value, Event Driven, Equity Hedge and Tactical Trading strategies. The fund may invest in a broad range of instruments, markets, and asset classes economically tied to U.S., foreign and emerging markets. Investments may include equity securities, fixed income securities and derivatives. The fund may take both long and short positions in all of its investments. The fund may also make investments for hedging purposes in order to address perceived misalignment between its investment exposures and current or anticipated market conditions. As part of its investment objective, the fund seeks to have lower volatility than global equity markets. From a performance standpoint, the fund has relatively conservative return expectations. Over a market cycle, the fund is designed to achieve returns somewhere between global equities and core fixed income, with volatility that is closer to core fixed income than equities. However, as with any investment strategy, the fund may or may not be successful in achieving this objective and an investor could lose money by investing in the fund.

Money Manager Strategies and Sub-Strategies (as of May 2015) *See strategy definitions on page 10.

Relative Value* Event Driven * Equity Hedge* Tactical Trading * DCI

Sub: Fixed income

(long/short credit) Brigade Sub: Opportunistic credit AQR Capital Sub: Quantitative AQR Capital Sub: Systematic macro PIMCO

Sub: Fixed income

Scoggin Sub: Multi-strategy Omega Sub: Fundamental Cambridge Sub: Discretionary macro Passport Sub: Fundamental

Russell portfolio manager Lance Babbit

Lance Babbit is a senior portfolio manager for hedge fund

investments on the alternatives team at Russell Investments. Based in New York, Lance oversees the firm’s hedge fund of funds portfolios, both commingled and customized, for institutional and private clients. Lance has more than 19 years’ experience in the hedge fund of funds business. Lance holds a BA in political science, a JD degree, and an MBA in finance and economics. Lance has been with Russell since 2011.

The Russell portfolio manager’s role

The Russell portfolio manager is responsible for identifying and selecting the strategies and money managers included in the fund and determining the weight for each

assignment. The portfolio manager manages the fund on a daily basis to help keep it on track, monitoring risk and return expectations at the total fund level and making changes when deemed appropriate and/or necessary. Multiple resources from across Russell are used to help determine what is believed to be the best combination of managers and strategies. Manager research and capital markets research are just some of the tools at the portfolio manager’s disposal to help identify opportunities and manage risk.

Target allocation of fund assets:

The percentages below represent the target allocation of the fund’s assets to each money manager’s strategy and Russell Investment Management Company’s strategy. This does not include liquidity reserves managed directly by Russell, which may constitute 5% or more of fund assets at any given time.

18.6% AQR Capital Management, LLC 10.7% Brigade Capital Management, L.P. 8.0% DCI, LLC

10.7% Omega Advisors, Inc.

10.7% Pacific Investment Management Company LLC 13.3% Passport Capital, LLC

10.7% TCW/Scoggin, LLC

16.0% The Cambridge Strategy (Asset Management) Limited 1.3% Russell Investment Management Company*

*Russell 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.

(2)

Managers and Strategies Summary

January 2016

Name Allocation Investment Focus Style Role in the Fund

18.6% Focuses on investments in global developed equities, developed market fixed income (sovereign bonds), developed market inflation linked bonds, and commodity-linked instruments.

Equity hedge and Tactical trading

AQR manages two sub-strategies in the fund, a systematic trading strategy and a quantitative equity hedge strategy.

The systematic trading strategy uses a dynamic blend of a long-only global risk parity strategy (global equities, global nominal interest rate risk, and global inflation risk which includes inflation-linked bonds and commodities) and a systematic trend-following strategy that goes both long and short across a diverse set of liquid commodity, equity index and fixed income futures plus currency forwards.

The quantitative equity hedge strategy uses fundamentally oriented stock models as inputs to build a well-diversified global portfolio that is subject to controls limiting unwanted risks.

10.7% Primarily invests in high-yield corporate bonds and bank loans.

Event driven Brigade manages an event driven opportunistic credit strategy seeking to generate total return through current yield and price appreciation of underlying investments.

8.0% Uses a market-neutral strategy focused on developed credit markets, predominantly in single name investment grade issuers.

Relative value DCI is a quantitative, market-neutral credit manager that

incorporates a fundamental oversight to analysis to ensure robust data is used in the model.

10.7% Pursues a rigorous, bottom-up approach to stock selection. Focuses on mid to large cap equities.

Equity hedge Omega manages a fundamental equity hedge strategy with a net long bias. The strategy is focused on value investing, driven by deep fundamental research. Omega’s principal focus is large capitalization U.S. equities, with more limited investments in equities of developed European countries and Japan.

10.7% Uses a discretionary relative value fixed income and macro approach. It combines systematic and bottom-up fundamental analysis to guide decision-making and implementation.

Relative value PIMCO’s alternative fixed income investment strategies seek to produce consistent, low volatility returns with low correlation to traditional assets such as bonds and stocks.

Passport Capital, LLC

13.3% Pursues an opportunistic approach to capitalizing on thematic ideas along with fundamental stock selection.

Equity hedge Passport manages a fundamental global equity hedge strategy with a moderate net long bias. The strategy takes an opportunistic approach to combining thematic ideas with fundamental stock selection along with a thorough approach to portfolio construction and risk management. The strategy’s investment universe is comprised the global set of mid-, large- and mega-capitalization stocks.

(3)

Managers and Strategies Summary continued

January 2016

Name Allocation Investment Focus Style Role in the Fund

10.7% Uses a global – but primarily U.S. – opportunistic, multi-strategy event driven multi-strategy focused on identifying fundamental long/short investments.

Event driven TCW/Scoggin manages a differentiated portfolio of catalyst driven investments. The majority of the portfolio is invested in equity instruments, but it also invests in credit instruments from time to time.

16.0% Cambridge’s discretionary investment process depends largely on the identification of key top-down drivers as the determinates of global investment opportunities.

Tactical trading Cambridge employs a discretionary process of identifying global investment themes that include long and short exposure to currencies, equities and debt instruments in G-20 countries (20 major economies including 19 countries and the European Union), and to a smaller extent in emerging markets..

Russell Investment Management Company

1.3% Directly manages an active, model-based positioning strategy to manage the fund’s overall exposures to seek to maintain the fund’s preferred positioning.

-- Russell oversees all investment advisory services to the fund and manages assets not allocated to money managers. This includes the fund’s positioning strategy, which helps the fund to achieve its desired risk/return profile. Russell also manages the fund’s liquidity reserves, which may constitute 5% or more of fund assets at any given time (not included in the percentage cited on the left).

(4)

Page 4 of 13

AQR Capital Management, LLC

January 2016

Manager profile:

Russell began following AQR Capital Management, LLC (AQR) in 2000 and placed the firm in the initial money manager line-up of the Russell Multi-Strategy Alternative Fund in 2012.

What this manager brings to the fund:

AQR manages two sub-strategies in the fund, a systematic trading strategy and a quantitative equity hedge strategy. The firm focuses on investments in global developed equities, developed market fixed income (sovereign bonds), developed market inflation linked bonds, and commodity-linked instruments. Investment process:

 AQR’s systematic trading strategy uses a dynamic blend of a long-only global risk parity strategy (global equities, global nominal interest rate risk, and global inflation risk which includes inflation-linked bonds and commodities) and a systematic trend-following strategy that goes both long and short across a diverse set of liquid commodity, equity index and fixed income futures plus currency forwards.

o The AQR risk parity sub-strategy uses a proprietary risk forecast system to help build an optimally diversified portfolio of global market instruments at specified forecast volatility levels across about 50 different markets.

o The AQR managed futures strategy takes both long and short positions across a diversified opportunity set of more than 100 equity, currency, commodity, and bond and interest rate futures markets. The respective positions taken in each market are based on a systematic investment process that capitalizes on short- to intermediate-term trend following signals in the corresponding markets.

 AQR’s quantitative equity hedge strategy uses fundamentally oriented stock models as inputs to build a well-diversified global portfolio that is subject to controls limiting unwanted risks. It is a market neutral strategy that seeks to deliver positive absolute returns by taking long and short positions in equity and equity-related instruments that, based on proprietary quantitative models, are deemed to be either undervalued (and likely to increase in price) or overvalued (and likely to decrease in price). The strategy is designed to be market neutral, over a business cycle as it targets a portfolio beta to equity markets.

Russell’s manager analysis:

Russell believes that AQR’s senior investment team is highly experienced and that AQR’s investment process is strong. Performance of the managed futures sub-strategy will be a function of the degree to which identifiable and persistent upward/downward trends exist within the 100+ market investment universe. Performance of the risk parity sub-strategy will be a function of whether the approximately 50 betas of the markets the portfolio is exposed to pay off in a predictable and consistent manner. The strategy is expected to struggle when macroeconomic concerns cause markets to meaningfully deviate from historical price trends and relationships. Performance of the equity market neutral sub strategy should be a function of whether the underlying factor themes, such as value, momentum, sentiment, quality, stability, and management signaling correctly identify and size investments in overvalued and/or undervalued stocks.

Firm background:

AQR Capital Management, LLC is an investment management firm employing a disciplined quantitative, global investment process (AQR stands for Applied Quantitative Research). The firm manages both long-only and long-short strategies covering equity, fixed income, currency, and derivatives markets

.

Headquarters

:

Greenwich, CT

Founded

:

1998

Lead managers: Brian Hurst, Yao Hua Ooi, Cliff

Asness, John Liew, Jacques Friedman, Lars Nielsen, and Andrea Frazzini

Instruments traded:

Futures Inflation linked bonds Forwards Equities

Options Equity-related instruments Swaps

Geographic focus:

 Global Equity, Currency, Bond and Interest Rates, and Commodities

Number of holdings: Equity hedge (500), Tactical Trading (120-800)

Investment strategies and sub-strategies used by this manager:

Strategy: Tactical Trading

Sub-Strategy: Systematic Macro

Strategy: Equity Hedge

(5)

Page 5 of 13

Brigade Capital Management, L.P.

January 2016

Russell included Brigade Capital Management, LLC (Brigade) in the initial money manager line-up of the Russell Multi-Strategy Alternative Fund in 2012. Donald Morgan is the portfolio manager. The full Brigade investment team comprises 50 people, including specialists in sector analysis, distressed/restructuring, trading and risk control.

Brigade manages an event driven opportunistic credit strategy seeking to generate total return through current yield and price appreciation of underlying investments.

Investment process:

The primary component of Brigade’s credit strategy is to opportunistically vary exposure to high-yield credit instruments, including bonds, loans, and some structured credit bonds. Although the strategy is long-biased, it also has a short credit component as well. The short component is implemented principally through derivatives that reference credit indices in the U.S and in Europe.

Brigade’s analysts focus on high-quality asset coverage and cash flow generation for companies that are current on their credit obligations. They also consider factors such as overall industry health and company-specific trends before making an investment recommendation to the portfolio managers.

Russell believes Brigade’s senior investment professionals have superior insight into assessing fundamental credit quality of companies. Don Morgan has managed portfolios across multiple credit cycles.

Brigade’s opportunistic credit strategy is designed to capture credit market upside combined with reduced magnitude of losses on the downside, especially with respect to long-only credit index investing due to credit selection and partial hedging of interest rate and/or credit risk. Brigade is expected to do well in an environment that is reasonably stable or where credit markets are improving. Russell expects that Brigade’s strategy could underperform long-only, high yield credit strategies in big market rallies over a short time period, especially if that rally is caused by a sharp shift in market sentiment.

Brigade Capital Management, LLC (Brigade) is a fixed income investment firm with an emphasis on credit research. Its investment products include long/short credit, distressed debt and traditional high yield. Brigade was founded by Donald Morgan and Patrick Kelly, and its first investment strategy was launched in early 2007.

Headquarters: New York, NY

Founded: 2006

Lead managers: Donald Morgan

Instruments traded: Long:

 Primarily corporate bonds and bank loans  Some convertible bonds, asset-backed

securities, and municipal bonds Short:

 Liquid U.S. and European credit indexes  Short-term currency forwards

Geographic focus:  Primarily USA

 Canada, Western Europe and Australia Number of holdings: 60-80

Investment strategy and sub-strategy used by this manager:

Strategy: Event Driven

(6)

Page 6 of 13

DCI, LLC

January 2016

Manager profile:

Russell added DCI, LLC to the Russell Multi-Strategy Alternative Fund in 2013. DCI manages a market-neutral portfolio of US and European single-name credits, primarily in investment grade credit default swaps (CDS) with some additional high yield exposure.

DCI is a quantitative, market-neutral credit manager that incorporates a fundamental oversight to analysis to ensure robust data is used in the model.

Russell believes this manager helps increase the fund’s diversification by adding a unique exposure to a market-neutral strategy focused on investment grade and high yield corporate credit markets. The fund may have increased sensitivity to moves in interest rates and credit spreads in periods of extreme market stress, however the manager has a proven track record of managing these systemic risks to the portfolio.

DCI incorporates a strategy that is unique, on a stand-alone basis, in providing a highly efficient approach to researching and determining what it believes to be fair value of individual corporate credits. By investing significant capital in infrastructure, the firm can effectively import large amounts of data from a variety of sources, ensure the robustness of that data, incorporate fundamental analysis to normalize model inputs and execute trades in a timely fashion.

Russell believes DCI’s experience and infrastructure, combined with the systematic approach that incorporates common sense fundamental overlay and disciplined risk management, can provide investors with a unique source of market-neutral alpha generation within developed credit markets. The background of the principals as

architects of quantitative credit risk modeling reflects the strong pedigree of investment professionals within the firm.

The manager is expected to do well in periods of higher credit and asset volatility.

Periods of low volatility in credit spreads or high correlation between credits are expected to pose challenges for DCI.

Firm background:

DCI, LLC is an independent asset management firm specializing in long/short and long-only corporate credit strategies.

Headquarters

:

San Francisco, CA Founded

_:

2004

Lead manager: Rich Donick

Instruments traded:

 Credit default swaps (CDS) single name investment grade and high yield issuers Geographic focus:

 Principally in USA  Europe

 Minimal exposure to Australia-Pacific Number of holdings:

150 to 250 (long and short)

Investment strategy and sub-strategy used by this manager:

Strategy: Relative value

Sub-Strategy: Fixed income (Long/short

(7)

Page 7 of 13

Omega Advisors, Inc.

January 2016

Russell included Omega Advisors, Inc. (Omega) in the initial money manager line-up of the Russell Multi-Strategy Alternative Fund in 2012. Omega and its founder Leon Cooperman have been managing alternative investment portfolios since 1991. Leon Cooperman is the Portfolio Manager of the U.S. equity strategy and leads a team of twenty investment analysts, four traders and a macro team comprised of four professionals.

Omega manages a fundamental equity hedge strategy with a net long bias. The strategy is focused on value investing, driven by deep fundamental research. Omega’s principal focus is large capitalized U.S. equities, with more limited investments in equities of developed European countries and Japan.

Omega’s investment time horizon for any portfolio company is generally 12 months. Omega pursues a rigorous, bottom-up approach to stock selection, with particular emphasis on the distinction between a company's business value and its market value. In estimating a company's business value, Omega follows an eclectic style that draws on various valuation methodologies. Once business values have been estimated, they are compared to market prices in order to arrive at an informed investment decision. In addition, index futures and other derivatives are used in an effort to both maximize return potential and hedge downside risk.

Omega is the only manager in the portfolio focused on generating value from long positions in U.S. equities. Omega is expected to perform well in a market that is driven by fundamentals. Omega may be vulnerable if the overall market declines steeply, if momentum-type stocks lead the market and/or small and mid cap stocks lead the market.

Omega Advisors, Inc. is an investment firm focusing on alternative investments. The firm was founded and is 100% owned by Leon Cooperman.

Headquarters: New York, NY

Founded: 1991

Lead manager: Leon Cooperman

 Primarily mid to large cap equities  May also invest in treasuries, corporate

bonds, preferred stocks, ADR/ADS, publicly traded trusts, publicly traded LP’s, equity futures, currency futures, REITS and ETFs. Geographic focus:

 Primarily USA

 Some Europe and Japan Number of holdings: 50-200

Strategy: Equity Hedge

(8)

Page 8 of 13

Pacific Investment Management Company LLC

January 2016

Russell added Pacific Investment Management Company LLC (PIMCO) to the Russell Multi-Strategy Alternative Fund in 2013. Russell has been following PIMCO for more than 20 years and their alternative fixed income strategies since 2004.

PIMCO uses a discretionary relative value fixed income and macro approach. It combines systematic and bottom-up fundamental analysis to guide decision-making and implementation. PIMCO’s alternative fixed income investment strategies seek to produce consistent, low volatility returns with low correlation to traditional assets such as bonds and stocks.

PIMCO’s strategies are designed to isolate desired exposures from unwanted risks in an effort to make use of anomalies and capture value in global fixed income markets. The strategies may be implemented through the use of both long and short positions in a broad range of fixed income-related instruments.

PIMCO identifies what it believes to be the most attractive securities and relative value trades to implement the overall strategic and tactical portfolio exposures based upon its macroeconomic views.

The long-term investment themes are set by PIMCO’s Investment Committee, while the portfolio managers develop the shorter-term trading and hedging views. Trades will incorporate bottom-up relative value strategies including yield curve, basis trades, long/short volatility, mortgage securities and carry trades. Additional top-down overlays are applied, including duration and spread management, yield curve positioning and country/currency exposures.

PIMCO adds diversification to the fund and Russell believes it has the potential to perform well across multiple market cycles. The firm’s mandate is the only one in the fund that focuses on global fixed income and currency markets. It provides the fund with a broad range of exposure to liquid fixed income and foreign exchange markets, including exposure to interest rates, credit, emerging markets and currencies.

Russell believes the experience of the principal investment professionals in managing fixed income and currency strategies, the firm’s global presence and experience, and its expertise in researching fixed income markets will benefit the fund. The firm uses its experience to identify trade ideas it believes have the highest probability of success, while maintaining a strict risk management approach that seeks to limit downside risks during periods of market turmoil.

PIMCO’s strategy will tend to do well in periods of market volatility, active market participation and identifiable trends or mean reversion.

PIMCO’s strategy will tend to struggle in periods of significant dislocation such as liquidity crisis, government intervention, breakdowns in factor relationships and severe deleveraging.

Pacific Investment Management Company LLC (PIMCO) was founded in 1971 as a subsidiary of Pacific Life Insurance Company. In 2000, PIMCO was acquired by Allianz SE, a European-based,

multinational insurance and financial services holding company. PIMCO is one of the world’s largest fixed income managers, with a presence in every major bond market, managing both traditional and alternative fixed income strategies.

Headquarters

:

Newport Beach, CA

Founded

:

1971

Lead managers: Qi Wang

 Sovereign bonds and fixed income derivatives

 Corporate bonds (investment grade, high yield, emerging markets)

 Agency and non-agency mortgage-backed securities

Geographic focus: Global, primarily in developed markets with limited exposure to emerging markets Number of holdings: 100-200

Strategy: Relative value

(9)

Page 9 of 13

Passport Capital, LLC

January 2016

Russell began following Passport Capital, LLC (Passport) in 2012 and added them to the Russell Multi-Strategy Alternative Fund in 2014. The Passport strategy is co-managed by John Burbank III and Tim Garry. John tends to concentrate on top-down macro analysis while Tim focuses on risk management. Both work with the analysts on stock selection. The co-portfolio managers work collaboratively and John serves as the ultimate decision maker. The co-PMs are supported by a staff of 23 investment professionals.

Passport manages a fundamental global equity hedge strategy with a moderate net long bias. The strategy takes an opportunistic approach to combining thematic ideas with fundamental stock selection along with a thorough approach to portfolio construction and risk management. The strategy’s investment universe is comprised the global set of mid-, large- and mega-capitalization stocks.

The investment process combines a macroeconomic framework for developing views on thematic headwinds and tailwinds that is combined with fundamentally oriented stock selection, along with a systematic approach to portfolio construction and risk management. The co-portfolio managers are supported by an investment team in which professionals specialize by sector or geography. There are also separate risk management and

quantitative specialists.

The strategy is expected to hold approximately 40 to 70 long positions, 10 to 25 short positions, and the hedge portfolio largely comprised of equity linked derivatives and ETFs.

Russell believes that the co-portfolio managers are experienced investors with complementary backgrounds and talents that work well together. Passport is also the only money manager in the fund focused on generating value from long and short positions in global equities.

Given the strategy’s focus on combining thematic and fundamental analysis within the stock selection process, Russell believes that the strategy will perform best when other investors are rewarding Passport’s current macroeconomic themes and show a preference for stocks with sound fundamentals and earnings potential. The strategy is expected to struggle when its thematic views are out of favor, the market declines steeply, or when transitory issues cause other investors to treat companies equally (e.g. market conditions are such that fundamental winners and losers are treated equally).

Passport Capital, LLC is a global investment firm founded by John H. Burbank III in 2000. The firm offers both standalone equity long/short and multi-strategy hedge fund mandates. Mr. Burbank owns the firm and serves as the Chief Investment Officer. Headquarters: San Francisco, CA

Founded: 2000

Lead managers: John Burbank III and Tim Garry

 Equities, ETFs, equity linked derivatives, currency forwards

Geographic focus:  Global

Number of holdings: 50-100

Strategy: Equity hedge

(10)

Page 10 of 13

TCW/Scoggin, LLC

January 2016

Russell added TCW/Scoggin, LLC (Scoggin) to the Russell Multi-Strategy Alternative Fund in 2013. Scoggin manages an event-driven strategy for the fund.

Scoggin manages a differentiated portfolio of catalyst-driven investments. The majority of the portfolio is invested in equity instruments, but it also invests in credit instruments from time to time.

Scoggin uses a global -- but primarily U.S. -- opportunistic, multi-strategy event driven strategy focused on identifying fundamental long/short investments. The strategy invests primarily in three areas: event driven equities with a catalyst, special situations equities and select credit opportunities. Scoggin uses a research-intensive, bottom up approach to building the portfolio while striving to adhere to a conservative risk strategy. The investment objective of the strategy is to seek to maximize capital appreciation while managing risk. Scoggin has the ability to look through full capital structures to identify relative value, and the team’s comfort in investing in more than mergers and acquisitions equity trades allows them to identify and invest in a broad array of opportunities.

Craig Effron and Curtis Schenker have been working together for more than 25 years, and they have managed portfolios through many different market environments. Russell believes the overall team dynamic at the firm is strong. The investment professionals are supported by in-house research, trading, and operations teams. Scoggin is expected to do well in periods of increasing equity prices, tightening credit spreads and periods of increased corporate activity. The firm is expected to struggle in a sustained sell-off in credit and equity markets.

TCW/Scoggin, LLC is a recently formed joint venture between the TCW Group and the Scoggin affiliated companies (“Scoggin”). Through this joint venture, TCW/Scoggin, LLC will manage distressed and event-driven alternative investment strategies.

Headquarters

:

New York, NY

Founded

_:

2012

Lead managers: Craig Effron, Curtis Schenker and

Dev Chodry

 Long and short positions in equities

 Equity equivalents, warrants, options, swaps  Bonds, notes, debentures

Geographic focus:  Principally in USA  Global

Number of holdings: 50-75

Strategy: Event driven

(11)

Page 11 of 13

The Cambridge Strategy (Asset Management) Ltd.

January 2016

Russell added The Cambridge Strategy Ltd. (Cambridge) to the Russell Multi-Strategy Alternative Fund in 2013. Cambridge manages a tactical trading strategy for the fund.

Cambridge employs a discretionary process of identifying global macro-economic investment themes that include long and short exposure to currencies, equities and debt instruments in G-20 countries (20 major economies including 19 countries and the European Union), and to a smaller extent in emerging markets. Investment process:

Cambridge’s investment process depends largely on the identification of key top-down drivers as the

determinates of global investment opportunities. The strategy is then expressed globally, across markets and security types. Implementation is achieved through the use of a broad range of equity indices and ETFs, currency forwards, interest rate futures and other derivative instruments. The firm’s risk management process is based on a proprietary algorithm using advanced mathematical and statistical techniques.

Within the equity component, long or short equity indices or ETFs are used to express the top-down themes identified in the research process. Within the currency component, Cambridge identifies short and medium term moves in currency pairs, utilizing an approach designed to perform across diverse market environments. Within the rates component, positions are designed either to exploit price anomalies or to capture expected future directional moves based on the top-down research process. Commodities are used on an opportunistic basis. Commodities are used on an opportunistic basis and based on fundamental or technical drivers, oftentimes related to events in commodity-producing emerging or frontier countries.

Russell believes the depth of talent across the investing, risk and support teams is robust. Cambridge is attractive to Russell for its multi-trader team, the focus on structural diversification across

currencies/equities/debt, and focus on risk management. Russell expects Cambridge to be additive to the fund due to its historically low correlation to global equities and to other tactical trading managers in the fund. Cambridge is expected to do well in markets that are modestly trending (either up or down). Cambridge is expected to struggle in choppy markets due to the whipsawing impact on portfolios.

The Cambridge Strategy Ltd. is an institutional asset manager based in London with a branch office in Hong Kong and a representative office in New York.

Headquarters

:

London, U.K

Founded

_:

2003

Lead managers: Russell Thompson (CIO), Ali

Yigitbasioglu, PhD and Walid Khalfallah

Instruments traded:  Equity indices, ETFs  Currencies

 Debt instruments  Commodities Geographic focus:

 G-20 countries (20 major economies including 19 countries and the European Union)

 Emerging markets Number of holdings: 20-40

Strategy: Tactical trading

(12)

Page 12 of 13

Russell Investment Management Company

January 2016

Russell Investment Management Company (Russell) oversees all investment advisory services to the fund and manages assets not allocated to managers.

Manager and strategy oversight:

The portfolio manager and analysts track the effectiveness of every money manager and strategy in the fund. Occasionally, adjustments may be necessary due to reasons such as a change in control at a money manager, the opportunity to select another manager or strategy Russell believes offers an investment proposition that would help improve the fund, or changes in market dynamics.

Any significant fund changes must be validated through an internal Russell governance process to ensure all key considerations were addressed by the portfolio manager. Money manager changes are also subject to approval by the fund’s Board of Trustees.

Investment management:

Russell manages a portion of the fund’s assets internally to seek to precisely manage the fund’s exposures and achieve the desired risk/return profile for the fund. During the portfolio construction and management process, portfolio managers may identify an investment need and seek to address that need with a positioning strategy. Positioning strategies are customized portfolios directly managed by Russell for use within the total portfolio. Portfolio managers use positioning strategies to seek excess return and manage portfolio risks by targeting specific exposures. These strategies are used in conjunction with allocations to third-party active managers to fully reflect Russell’s strategic and dynamic insights with integrated liquidity and risk management.

The positioning strategy used in this fund is implemented on a discretionary basis for strategic and tactical reasons, including hedging and exposure management purposes. It is a dedicated portion of the fund assets that can be rebalanced as needed by the portfolio manager to keep the total portfolio aligned with Russell’s strategic beliefs (e.g. value, momentum, quality and volatility) as well as the fund’s preferred positioning. This allows the portfolio manager to express Russell’s views across multiple factor and industry exposures simultaneously while regularly adapting to changing markets and manager portfolios.

Managing the liquidity reserve:

Every Russell mutual fund maintains cash reserves, which is cash awaiting investment or held to meet redemption requests or to pay expenses. The fund invests its cash reserves in short-term investments, including an unregistered cash management fund advised by Russell. Russell may increase or decrease the fund’s cash reserves to seek to achieve the desired risk/return profile for the fund, or in anticipation of a transition to a new money manager or large redemptions resulting from rebalancing by funds of funds or asset allocation programs.

Russell Investment Management Company is the advisor to Russell Investment Company (RIC) Funds. It is a subsidiary of Russell Investments, which is a subsidiary of the London Stock Exchange Group. Russell Investments provides asset management and investment services to institutional and individual investors around the world.

Headquarters: Seattle, WA

Founded: Russell Investments, founded in 1936 __________________________________________

(13)

Page13 of 13// Russell Investments // Russell Multi-Strategy Alternative Fund

carefully before investing.

*

Money manager strategies definitions:

Relative Value Strategy: An investment strategy that seeks to identify price discrepancies or liquidity mismatches among securities that share a common financial factor such as interest rates, an index or issuer to seek

gains and mitigate risk. The strategy is not reliant upon market direction. A money manager may employ a variety of quantitative and qualitative techniques to identify securities it believes are mispriced or display liquidity discrepancies based upon historical, fundamental or technical factors.

Event Driven Strategy: An investment strategy that seeks gains from market movements in the prices of financial instruments caused by specific events. Such events may include balance sheet restructurings, mergers

and acquisitions, litigation, regulatory action or a change in perception of the riskiness of investments. Investments in an Event Driven strategy may include corporate fixed income securities, equity-related instruments, non-agency asset-backed and mortgage-backed securities. Certain of these investments may be illiquid.

Equity Hedge Strategy: An investment strategy that utilizes long and short positions primarily in equity and equity-related instruments. On the long side, money managers will seek gains from securities that they believe

are undervalued, provide short term trading opportunities or offer growth opportunities. On the short side, money managers will (1) seek gains from securities that they believe are overvalued or provide short term trading opportunities, (2) seek to reduce overall market risk or (3) seek gains from an anticipated decline in the price of a company or index by using short sales or options on common stocks or indexes to hedge risk. This strategy may also use derivatives, including options, futures and options on futures.

Tactical Trading Strategy: An investment strategy across global markets that seeks return based on themes or trends in equity markets, interest rates, commodity markets, government securities, currencies or futures

markets. These themes or trends can be price-based (i.e., asset price momentum or an asset price relative to another asset or set of assets) or based on economic theory (i.e., forecasts based on the analysis of interest rate trends, political changes, government policy, flow of funds, or other broad systemic factors). While Tactical Trading strategies often utilize directional long or short positions across global markets, they may also express views on the relative value of assets. Tactical Trading may use multi-durational investments, including short-term investments, to seek gains.

Fund Risks:

Alternative strategies may be subject to risks related to equity securities; fixed income securities, including non-investment grade fixed income securities, which involve higher volatility and higher risk of default than investment grade fixed income securities; non-U.S. and emerging markets securities, which involve risks such as currency fluctuation, political and economic instability, immature economic structures that could result in additional volatility; derivatives, which are subject to a number of risks such as liquidity risk, market risk, credit risk, default risk, counterparty risk (the risk that the other party in an agreement will fail to perform its obligations) and management risk; currency trading, which may involve instruments that have volatile prices, are illiquid or create economic leverage; commodity investments, which may have greater volatility than investments in traditional securities; and liquidity, because certain investments may become illiquid under adverse or volatile market or economic conditions. Additionally, the Fund may enter into short sales and certain of the Fund money managers may utilize a short-only strategy. The making of short sales exposes the Fund to the risk of liability equal to the market value of the security that is sold, in addition to the costs associated with establishing, maintaining and closing out the short position. Short sales have the potential for unlimited loss.

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.

Money managers listed are current as of 05/29/2015. Subject to the fund's Board approval, Russell 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. This document will be updated annually. If a manager change is made during a year, a manager specific page will be added or removed.

The investment styles employed by a Fund's money managers may not be complementary. This concentration may be beneficial or detrimental to a Fund's performance depending upon the performance of those securities and the overall economic environment. The multi-manager approach could increase a Fund's portfolio turnover rates which may result in higher levels of realized capital gains or losses with respect to a Fund's portfolio securities, higher brokerage commissions and other transaction costs.

The degree of correlation among money managers’ investment strategies and the market as a whole will vary as a result of market conditions and other factors. Some money managers will have a greater degree of correlation with each other and with the market than others.

The Russell Multi-Strategy Alternative Fund is classified as a "non-diversified fund" under the 1940 Act which means that a relatively high percentage of the fund's assets may be invested in a limited number of issuers. Thus, the fund may be more susceptible to adverse developments affecting any single issuer held in its portfolio, and may be more susceptible to greater losses because of these developments. 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.

Diversification and strategic asset allocation do not assure profit or protect against loss in declining markets. For more information on Russell Funds, contact your investment professional or plan administrator for assistance.

Russell Investments is a trade name and registered trademark of Frank Russell Company, a Washington USA corporation, which operates through subsidiaries worldwide and is part of London Stock Exchange Group. Securities products and services offered through Russell Financial Services, Inc. member FINRA, part of Russell Investments.