Relative Risk/Reward Spectrum

This spectrum shows a visual line-up of The Royce Funds based on each fund's standard deviation for the three years ended 12/31/07. We include both our mutual funds and our closed-end funds. (Funds that have performance track records of less than three years are not included here.*)

Standard Deviation, Explained Simply.

Higher volatility may indicate historically higher risk. One of the best ways to measure investment volatility is by standard deviation. Although it's an arcane statistical formula that includes square roots, variances, etc., simply put, it measures the dispersion of a set of data from its mean. For our Funds, the data we use are investment returns. Over time, the more spread apart a fund's investment returns, the higher the fund's standard deviation.

It helps to understand that a hypothetical CD returning 4% every year for three years, has a 3-year standard deviation of 0. By contrast, the Russell 2000 Index has a standard deviation of 13.35 for the three years ended 12/31/07.

Higher standard deviation? Higher volatility — and potentially more opportunity.

Lower standard deviation? Lower volatility — and potentially less opportunity.

*These Funds are not included: Royce European Smaller-Companies Fund, Royce Global Value Fund, Royce SMid-Cap Value Fund, Royce SMid-Cap Select Fund.