At a Glance

Overview

Investment Objective

Long-term growth of capital

Portfolio Approach

Broadly diversified portfolio, theme-based, opportunistic value approach

Primary Market Cap Range

Small-cap stocks, up to $2.5 billion

Manager Tenure

Buzz Zaino lead manager since 2013 (manager 1998-2013) and Bill Hench since 2013 (assistant portfolio manager 2004-2013)

As of 6/30/2014

Portfolio Managers





Performance

Average Annual Total Returns (%)

Outperformed Russell 2000 for the 3-Year, 5-Year, 10-Year, 15-Year and since inception (11/19/1996) periods as of 9/30/2014
QTR YTD 1YR 3YR 5YR 10YR 15YR SINCE INCEPT. DATE
Opportunity -8.99 -6.243.7924.8114.619.0012.2112.82 11/19/1996
Russell 2000 -7.36 -4.413.9321.2614.298.197.938.09 N/A

Annual Operating Expenses: 1.17%

SEP YTD 1YR 3YR 5YR 10YR 15YR SINCE INCEPT. DATE
Opportunity -7.55 -6.243.7924.8114.619.0012.2112.82 11/19/1996
Russell 2000 -6.05 -4.413.9321.2614.298.197.938.09 N/A

Annual Operating Expenses: 1.17%

OCT YTD 1YR 3YR 5YR 10YR 15YR SINCE INCEPT. DATE
Opportunity -1.72 -7.850.9724.0915.218.5612.0612.71 11/19/1996
Russell 2000 N/A N/AN/AN/AN/AN/AN/AN/A N/A

Annual Operating Expenses: 1.17%

Important Performance and Expense Information

All performance information reflects past performance, is presented on a total return basis, reflects the reinvestment of distributions, and does not reflect the deduction of taxes that a shareholder would pay on fund distributions or the redemption of fund shares. Past performance is no guarantee of future results. Investment return and principal value of an investment will fluctuate, so that shares may be worth more or less than their original cost when redeemed. Shares redeemed within 180 days of purchase may be subject to a 1% redemption fee, payable to the Fund which is not reflected in the performance shown above; if it were, performance would be lower. Current month-end performance may be higher or lower than performance quoted and may be obtained at www.roycefunds.com. Operating expenses reflect the Fund's total annual operating expenses for the Investment Class as of the Fund's most current prospectus and include management fees, other expenses, and acquired fund fees and expenses. Acquired fund fees and expenses reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies.

Rolling Returns

On a monthly basis, the Fund outperformed the Russell 2000 in 100% of all 10-Year periods; 84% of all 5-Year periods; 79% of all 3-Year periods; and 69% of all 1-Year periods.

For 100% of the periods, 10-year average annual total returns were greater than 5%; For 52% of the periods, 10-year average annual total returns were greater than 10%.

Monthly Rolling Average Annual Return Periods 15 Years Through 9/30/2014

periods beating
the index(%)
fund
avg(%)
index
avg(%)
10-year
61/61
100 9.9 7.1
5-year
102/121
84 10.4 7.4
3-year
115/145
79 11.0 7.7
1-year
117/169
69 15.5 9.7

Absolute Return Focus: Ten-Year Monthly Rolling Returns PeriodsNumber of 10-Year Average Annual Return Periods Since the Fund’s Inception Through 6/30/2014

The Fund averaged a 11.2% return over all 92 10-year monthly rolling return periods.

Market Cycle Performance

The Fund outperformed the Russell 2000 from the 3/9/00, 7/13/07 and 4/29/11 index peaks through 6/30/14 and in each of the two previous full market cycle periods.
Peak-Peak - 03/09/2000 - 07/13/2007
Opportunity191.8%
Russell 200054.8%

Peak-Peak - 07/13/2007 - 04/29/2011
Opportunity6.9%
Russell 20006.6%

Peak-Current - 04/29/2011 - 06/30/2014
Opportunity46.3%
Russell 200044.2%

Calendar Year Total Returns (%)

 

Growth of Investment

Value of $10,000 invested between 11/19/1996 and 9/30/2014

Opportunity$86,209.07
Russell 2000$40,161.56

Portfolio Impactas of 6/30/2014

SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Energy5.810.20.6
Health Care4.55.60.3
Industrials19.80.30.1
Telecommunication Services0.510.30.1
Consumer Staples0.91.00.0
Materials8.8-1.4-0.1
Financials11.3-1.4-0.2
Information Technology27.6-1.8-0.5
Consumer Discretionary14.1-2.9-0.5
Cash6.70.00.0
Unassigned---0.3
Total---0.5

Top Contributors

INDUSTRYSECTORGAIN(%)
Oil, Gas & Consumable FuelsEnergy0.5
Auto ComponentsConsumer Discretionary0.3
MachineryIndustrials0.3
Semiconductors & Semiconductor EquipmentInformation Technology0.3
Electronic Equipment, Instruments & ComponentsInformation Technology0.1

Top Detractors

INDUSTRYSECTORGAIN(%)
Specialty RetailConsumer Discretionary-0.4
Communications EquipmentInformation Technology-0.3
Technology Hardware Storage & PeripheralsInformation Technology-0.2
InsuranceFinancials-0.2
SoftwareInformation Technology-0.1

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Sanmina CorporationElectronic Equipment, Instruments & ComponentsInformation Technology0.2
Goodrich PetroleumOil, Gas & Consumable FuelsEnergy0.2
Tower InternationalAuto ComponentsConsumer Discretionary0.2
NNMachineryIndustrials0.1
SunEdisonSemiconductors & Semiconductor EquipmentInformation Technology0.1

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
QuiksilverTextiles, Apparel & Luxury GoodsConsumer Discretionary-0.3
Dixie GroupHousehold DurablesConsumer Discretionary-0.2
bebe storesSpecialty RetailConsumer Discretionary-0.2
NeoPhotonics CorporationSemiconductors & Semiconductor EquipmentInformation Technology-0.2
CrayTechnology Hardware Storage & PeripheralsInformation Technology-0.2
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Information Technology27.55.21.5
Energy5.725.41.4
Health Care4.816.60.8
Industrials19.82.30.4
Financials11.31.10.1
Telecommunication Services0.528.20.1
Consumer Staples0.85.90.1
Materials8.4-3.5-0.3
Consumer Discretionary14.0-2.9-0.4
Cash7.20.00.0
Unassigned---0.6
Total--3.0

Top Contributors

INDUSTRYSECTORGAIN(%)
Semiconductors & Semiconductor EquipmentInformation Technology1.5
Electronic Equipment, Instruments & ComponentsInformation Technology0.9
Energy Equipment & ServicesEnergy0.8
MachineryIndustrials0.6
Auto ComponentsConsumer Discretionary0.5

Top Detractors

INDUSTRYSECTORGAIN(%)
Specialty RetailConsumer Discretionary-0.5
Internet Software & ServicesInformation Technology-0.4
Communications EquipmentInformation Technology-0.3
Metals & MiningMaterials-0.3
Textiles, Apparel & Luxury GoodsConsumer Discretionary-0.2

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
SunEdisonSemiconductors & Semiconductor EquipmentInformation Technology0.4
Albany Molecular ResearchLife Sciences Tools & ServicesHealth Care0.4
Tower InternationalAuto ComponentsConsumer Discretionary0.4
Basic Energy ServicesEnergy Equipment & ServicesEnergy0.3
Sanmina CorporationElectronic Equipment, Instruments & ComponentsInformation Technology0.3

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
QuiksilverTextiles, Apparel & Luxury GoodsConsumer Discretionary-0.4
Walter EnergyMetals & MiningMaterials-0.2
Extreme NetworksCommunications EquipmentInformation Technology-0.2
VOXX International Cl. ADistributorsConsumer Discretionary-0.2
MolycorpMetals & MiningMaterials-0.2
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Information Technology26.529.17.4
Industrials20.029.65.9
Energy5.869.63.4
Financials12.022.32.8
Consumer Discretionary14.215.82.5
Health Care4.855.42.3
Materials8.220.41.6
Consumer Staples0.718.80.1
Telecommunication Services0.41.70.1
Diversified Investment Companies0.06.90.0
Cash7.40.00.0
Unassigned---1.4
Total--24.8

Top Contributors

INDUSTRYSECTORGAIN(%)
Semiconductors & Semiconductor EquipmentInformation Technology3.7
MachineryIndustrials2.8
Electronic Equipment, Instruments & ComponentsInformation Technology2.2
Energy Equipment & ServicesEnergy1.7
Oil, Gas & Consumable FuelsEnergy1.7

Top Detractors

INDUSTRYSECTORGAIN(%)
Specialty RetailConsumer Discretionary-0.1
Personal ProductsConsumer Staples-0.1
Internet & Catalog RetailConsumer Discretionary-0.1
Multiline RetailConsumer Discretionary-0.1
Electrical EquipmentIndustrials0.0

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
SunEdisonSemiconductors & Semiconductor EquipmentInformation Technology0.7
Matrix ServiceEnergy Equipment & ServicesEnergy0.5
Goodrich PetroleumOil, Gas & Consumable FuelsEnergy0.4
Tower InternationalAuto ComponentsConsumer Discretionary0.4
Basic Energy ServicesEnergy Equipment & ServicesEnergy0.4

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Tower Group InternationalInsuranceFinancials-0.3
MolycorpMetals & MiningMaterials-0.2
Walter EnergyMetals & MiningMaterials-0.2
QuiksilverTextiles, Apparel & Luxury GoodsConsumer Discretionary-0.2
NeoPhotonics CorporationSemiconductors & Semiconductor EquipmentInformation Technology-0.2
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Consumer Discretionary17.699.617.8
Industrials19.776.216.2
Financials12.465.89.0
Information Technology24.330.87.2
Health Care3.7132.64.6
Materials9.443.73.5
Energy4.947.12.4
Diversified Investment Companies0.06.20.0
Telecommunication Services0.5-12.5-0.3
Consumer Staples1.0-3.9-0.3
Cash6.50.20.0
Unassigned---6.3
Total--53.8

Top Contributors

INDUSTRYSECTORGAIN(%)
Specialty RetailConsumer Discretionary5.5
Building ProductsIndustrials5.0
MachineryIndustrials4.7
Semiconductors & Semiconductor EquipmentInformation Technology4.7
BanksFinancials3.6

Top Detractors

INDUSTRYSECTORGAIN(%)
Electrical EquipmentIndustrials-0.8
Diversified Financial ServicesFinancials-0.5
Metals & MiningMaterials-0.5
Food & Staples RetailingConsumer Staples-0.4
Communications EquipmentInformation Technology-0.4

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Cambrex CorporationLife Sciences Tools & ServicesHealth Care1.6
Cost PlusSpecialty RetailConsumer Discretionary1.3
Apogee EnterprisesBuilding ProductsIndustrials1.3
SunPower CorporationSemiconductors & Semiconductor EquipmentInformation Technology1.3
CrayTechnology Hardware Storage & PeripheralsInformation Technology1.1

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Overseas Shipholding GroupOil, Gas & Consumable FuelsEnergy-0.9
KEMET CorporationElectronic Equipment, Instruments & ComponentsInformation Technology-0.8
Ferro CorporationChemicalsMaterials-0.8
Furniture Brands InternationalHousehold DurablesConsumer Discretionary-0.7
Walter EnergyMetals & MiningMaterials-0.6
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Information Technology25.8147.152.1
Consumer Discretionary18.9276.151.1
Industrials18.8293.245.7
Materials9.8277.327.3
Financials10.9107.811.6
Energy4.8193.39.0
Health Care3.4214.37.5
Consumer Staples0.968.30.5
Telecommunication Services0.558.60.4
Utilities0.020.10.1
Diversified Investment Companies0.06.20.0
Cash6.10.40.0
Unassigned---18.3
Total--187.0

Top Contributors

INDUSTRYSECTORGAIN(%)
Semiconductors & Semiconductor EquipmentInformation Technology22.2
MachineryIndustrials19.2
ChemicalsMaterials15.8
Electronic Equipment, Instruments & ComponentsInformation Technology15.3
Specialty RetailConsumer Discretionary14.9

Top Detractors

INDUSTRYSECTORGAIN(%)
Diversified Financial ServicesFinancials-0.5
Food & Staples RetailingConsumer Staples-0.3
MarineIndustrials-0.3
Internet & Catalog RetailConsumer Discretionary-0.1
Wireless Telecommunication ServicesTelecommunication Services0.0

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Dillard's Cl. AMultiline RetailConsumer Discretionary3.6
NanometricsSemiconductors & Semiconductor EquipmentInformation Technology2.9
United RentalsTrading Companies & DistributorsIndustrials2.7
PolyOne CorporationChemicalsMaterials2.7
Veeco InstrumentsSemiconductors & Semiconductor EquipmentInformation Technology2.5

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Overseas Shipholding GroupOil, Gas & Consumable FuelsEnergy-1.1
Aviat NetworksCommunications EquipmentInformation Technology-0.7
Eastman KodakTechnology Hardware Storage & PeripheralsInformation Technology-0.5
PHH CorporationDiversified Financial ServicesFinancials-0.5
Furniture Brands InternationalHousehold DurablesConsumer Discretionary-0.5

Risk

Down Market Performance Comparisonas of 6/30/2014

The Fund outperformed the Russell 2000 during five out of 10 downturns of 7.5% or more from the index’s prior historical high over the last 15 years.

Market Downturns (%)

Russell 2000 Down Quarters

QUARTER ENDRUSSELL 2000 (%)OPPORTUNITY (%)SPREAD (%)
9/30/2014-7.4-9.0-1.6
6/30/2012-3.5-5.3-1.8
9/30/2011-21.9-28.0-6.1
6/30/2011-1.6-3.9-2.3
6/30/2010-9.9-12.0-2.1
3/31/2009-15.0-12.9+2.1
12/31/2008-26.1-36.3-10.2
9/30/2008-1.1-4.0-2.9
3/31/2008-9.9-9.3+0.6
12/31/2007-4.6-7.7-3.1
9/30/2007-3.1-5.9-2.8
6/30/2006-5.0-5.9-0.9
3/31/2005-5.3-4.4+0.9
9/30/2004-2.9-4.5-1.6
3/31/2003-4.5-6.1-1.6
9/30/2002-21.4-27.8-6.4
6/30/2002-8.4-5.9+2.5
9/30/2001-20.8-19.0+1.8
3/31/2001-6.5+4.2+10.7
12/31/2000-6.9-5.8+1.1
6/30/2000-3.8-1.7+2.1

Capture Ratios

DATE UP DOWN
From Fund's First Full Quarter
(12/31/1996 - 6/30/2014)
128% 110%
Ten Year 123% 129%
Five Year 122% 134%

Upside Capture Ratio measures a manager's performance in up markets relative to the Fund's benchmark. It is calculated by measuring the Fund's performance in quarters when the benchmark goes up and dividing it by the benchmark's return in those quarters.

Downside Capture Ratio measures a manager's performance in down markets relative to the Fund's benchmark. It is calculated by measuring the Fund's performance in quarters when the benchmark goes down and dividing it by the benchmark's return in those quarters.

Long Term Risk Measurementas of

Over the past 10 years, the Fund outperformed the Russell 2000.
Over the past 5 years, the Fund outperformed the Russell 2000.
Over the past 3 years, the Fund outperformed the Russell 2000.

Go to Relative Risk Spectrum Tool

Morningstar Statistical Measures as of 6/30/2014

Sharpe RatioStandard Deviation
Opportunity0.4324.46
Russell 20000.4419.73
Category Median0.4619.30
Best Quartile Breakpoint0.5118.45

Category Median and Best Quartile Breakpoint based on 291 small-cap objective funds (oldest class only) with at least ten years of history.
Sharpe Ratio Standard Deviation
Opportunity
Russell 2000
Category Median
Best Quartile Breakpoint

Composition

Market Cap Exposureas of 6/30/2014

  • Micro-Cap
    $833.3M
    Avg. Market Cap

Diagnosticsas of 6/30/2014

Weighted Avg. P/B
1.5x
2013 Portfolio Turnover
39%
88%

Portfolio Allocation as of 6/30/2014

  • Diversified
    323
    Holdings


SECTORS
RYPNX(%) RUSSELL 2000(%)
Information Technology
27.9
17.9
Industrials
19.7
13.8
Consumer Discretionary
13.8
13.3
Financials
10.9
23.0
Materials
9.0
5.1
Energy
5.7
6.4
Health Care
4.6
13.3
Consumer Staples
0.9
3.1
Telecommunication Services
0.6
0.8
Utilities
-
3.4
Cash and Cash Equivalents
6.9
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Sanmina Corporation
0.9
NCI Building Systems
0.8
Microsemi Corporation
0.7
OM Group
0.7
Commercial Metals
0.7
Dana Holding Corporation
0.7
Kaiser Aluminum
0.7
Ingram Micro Cl. A
0.7
International Rectifier
0.7
RTI International Metals
0.7
Top 10 as % of Net Assets
7.4

Portfolio Holdings

View the complete list of holdings for this fund as of 6/30/2014. Unaudited schedule of portfolio holdings is presented for informational purposes only.

Least Portfolio Overlap

Greatest Portfolio Overlap

Investment Themes as a Percentage of Assets

Geographical Breakdown

Distributions

NAV & Distributions


Start DateEnd Date
to

Learn more about distributions

Distributions

RECORD
DATE
EX-DATE PAYABLE
DATE
INCOME ($) SHORT
TERM
GAINS ($)
LONG
TERM
GAINS ($)
RETURN OF
CAPITAL ($)
TOTAL ($) REINVEST
PRICE ($)
12/4/2013 12/5/2013 12/5/2013 0.0000 0.0218 1.5136 - 1.5354 14.84
12/5/2012 12/6/2012 12/6/2012 0.0000 0.1317 0.5382 - 0.6699 11.42
12/7/2011 12/8/2011 12/8/2011 0.0000 - 0.1887 - 0.1887 9.96
12/8/2009 12/9/2009 12/9/2009 0.0010 - - - 0.0010 8.56

NAV History for

Fees & Expenses

Shareholder Fees (%)

(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases0.00
Maximum deferred sales charge on purchases held for less than 365 days1.00
Maximum deferred sales charge0.00
Maximum sales charge (load) imposed on reinvested dividends0.00
Redemption fee (as a percentage of amount redeemed on shares held for less than 180 days)1.00

Annual Fund Operating Expenses (%)

(expenses that you pay each year as a percentage of the value of your investment)

Management fees 0.99
Distribution (12b-1) fees 0.00
Other expenses 0.17
Acquired fund fees and expenses 0.01
Total annual Fund operating expenses 1.17
Total annual Fund operating expenses may differ from the expense ratio in the Fund's Financial Highlights because they include only the Fund's direct operating expenses and do not include acquired fund fees and expenses, which reflect the estimated amount of the fees and expenses incurred indirectly by the Fund through its investments in mutual funds, hedge funds, private equity funds, and other investment companies.

Important Disclosure Information

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefully before investing or sending money. The Fund invests primarily in small-cap stocks, which may involve considerably more risk than investing in larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Fund’s broadly diversified portfolio does not ensure a profit or guarantee against loss.

Sector weightings are determined using the Global Industry Classification Standard ("GICS"). GICS was developed by, and is the exclusive property of, Standard & Poor's Financial Services LLC ("S&P") and MSCI Inc. ("MSCI"). GICS is the trademark of S&P and MSCI. "Global Industry Classification Standard (GICS)" and "GICS Direct" are service marks of S&P and MSCI.

The Price-Earnings, or P/E, Ratio is calculated by dividing a company's share price by its trailing 12-month earnings-per-share (EPS). The Price-to-Book, or P/B, Ratio is calculated by dividing a company's share price by its book value per share. The Sharpe Ratio is calculated for a specified period by dividing a fund's annualized excess returns by its annualized standard deviation. The higher the Sharpe Ratio, the better the fund's historical risk-adjusted performance. Standard deviation is a statistical measure within which a fund's total returns have varied over time. The greater the standard deviation, the greater a fund's volatility. Please read the prospectus for a more complete discussion of risk. Russell Investment Group is the source and owner of the trademarks, service marks, and copyrights related to the Russell Indexes. Russell® is a trademark of Russell Investment Group. The Russell 2000 is an unmanaged, capitalization-weighted index of domestic small-cap stocks. It measures the performance of the 2,000 smallest publicly traded U.S. companies in the Russell 3000 index. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

11/19/1996 12:00:00 AM
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