At a Glance

Overview

Investment Objective

Long-term growth of capital — may invest in both long and short positions

Portfolio Approach

Focused portfolio (generally less than 100 positions), disciplined value approach

Primary Market Cap Range

Small-cap and mid-cap stocks, up to $5 billion

Manager Tenure

Lauren Romeo since 2009 (co-manager 2006-2009 and assistant portfolio manager 2005-2006), assistant Chuck Royce since 2009 (co-manager 2006-2009 and portfolio manager 1998-2006)

As of 6/30/2014

Portfolio Manager




Performance

Average Annual Total Returns (%)

Outperformed Russell 2000 for the 1-Year, 10-Year, 15-Year and since inception (11/18/1998) periods as of 6/30/2014
QTR YTD 1YR 3YR 5YR 10YR 15YR SINCE INCEPT. DATE
Select I 2.24 6.6125.8611.2416.6010.7512.6814.16 11/18/1998
Russell 2000 2.05 3.1923.6414.5720.218.708.018.81 N/A

Annual Operating Expenses: 1.20%

JUL YTD 1YR 3YR 5YR 10YR 15YR SINCE INCEPT. DATE
Select I -5.82 0.4113.0010.2713.4110.7712.2213.65 11/18/1998
Russell 2000 -6.05 -3.068.5613.5916.568.787.768.33 N/A

Annual Operating Expenses: 1.20%

AUG YTD 1YR 3YR 5YR 10YR 15YR SINCE INCEPT. DATE
Select I 3.80 4.2220.8315.9413.0011.0712.5213.85 11/18/1998
Russell 2000 4.80 1.5917.2420.9216.529.288.298.61 N/A

Annual Operating Expenses: 1.20%

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 and other expenses.


Rolling Returns

On a monthly basis, the Fund outperformed the Russell 2000 in 100% of all 10-Year periods; 88% of all 5-Year periods; 79% of all 3-Year periods; and 63% of all 1-Year periods.

For 100% of the periods, 10-year average annual total returns were greater than 5%; For 94% of the periods, 10-year average annual total returns were greater than 10%.

Monthly Rolling Average Annual Return Periods 15 Years Through 6/30/2014

periods beating
the index(%)
fund
avg(%)
index
avg(%)
10-year
61/61
100 11.5 6.9
5-year
107/121
88 11.7 7.1
3-year
114/145
79 11.5 7.4
1-year
107/169
63 13.7 9.8

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 11.5% return over all 68 10-year monthly rolling return periods.

Market Cycle Performance

The Fund outperformed the Russell 2000 from the 3/9/00 and 7/13/07 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
Select I188.2%
Russell 200054.8%

Peak-Peak - 07/13/2007 - 04/29/2011
Select I32.8%
Russell 20006.6%

Peak-Current - 04/29/2011 - 06/30/2014
Select I33.4%
Russell 200044.2%

Calendar Year Total Returns (%)

 

Growth of Investment

Value of $10,000 invested between 11/18/1998 and 6/30/2014

Select I$79,097.16
Russell 2000$37,393.88

Portfolio Impactas of 6/30/2014

SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Health Care7.99.90.8
Energy12.16.60.8
Financials11.05.20.6
Industrials22.41.00.3
Consumer Discretionary9.62.20.2
Consumer Staples2.18.50.2
Materials7.60.40.0
Information Technology16.8-0.9-0.2
Cash10.60.00.0
Unassigned---0.4
Total--2.2

Top Contributors

INDUSTRYSECTORGAIN(%)
Energy Equipment & ServicesEnergy0.8
MachineryIndustrials0.6
PharmaceuticalsHealth Care0.4
Capital MarketsFinancials0.4
BiotechnologyHealth Care0.3

Top Detractors

INDUSTRYSECTORGAIN(%)
Electrical EquipmentIndustrials-0.3
Technology Hardware Storage & PeripheralsInformation Technology-0.2
Electronic Equipment, Instruments & ComponentsInformation Technology-0.1
Communications EquipmentInformation Technology-0.1
Professional ServicesIndustrials-0.1

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Lannett CompanyPharmaceuticalsHealth Care0.4
Myriad GeneticsBiotechnologyHealth Care0.3
Timken Company (The)MachineryIndustrials0.3
Cal-Maine FoodsFood ProductsConsumer Staples0.2
Pason SystemsEnergy Equipment & ServicesEnergy0.2

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Global Power Equipment GroupElectrical EquipmentIndustrials-0.3
Silicon Graphics InternationalTechnology Hardware Storage & PeripheralsInformation Technology-0.2
ICF InternationalProfessional ServicesIndustrials-0.2
Bio-Rad Laboratories Cl. ALife Sciences Tools & ServicesHealth Care-0.1
ADTRANCommunications EquipmentInformation Technology-0.1
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Energy12.626.93.2
Health Care8.021.31.8
Financials10.37.60.8
Information Technology18.44.40.8
Consumer Discretionary9.63.60.4
Industrials21.91.70.4
Consumer Staples1.813.90.3
Materials7.9-2.3-0.3
Cash9.50.00.0
Unassigned---0.8
Total--6.6

Top Contributors

INDUSTRYSECTORGAIN(%)
Energy Equipment & ServicesEnergy3.2
BiotechnologyHealth Care1.6
Semiconductors & Semiconductor EquipmentInformation Technology1.2
Capital MarketsFinancials0.6
Household DurablesConsumer Discretionary0.5

Top Detractors

INDUSTRYSECTORGAIN(%)
Electrical EquipmentIndustrials-0.4
Technology Hardware Storage & PeripheralsInformation Technology-0.3
Communications EquipmentInformation Technology-0.2
Specialty RetailConsumer Discretionary-0.2
Paper & Forest ProductsMaterials-0.1

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Myriad GeneticsBiotechnologyHealth Care1.6
Helmerich & PayneEnergy Equipment & ServicesEnergy1.1
Unit CorporationEnergy Equipment & ServicesEnergy1.0
Pason SystemsEnergy Equipment & ServicesEnergy0.6
TGS-NOPEC GeophysicalEnergy Equipment & ServicesEnergy0.4

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Ascena Retail GroupSpecialty RetailConsumer Discretionary-0.4
Medicines Company (The)PharmaceuticalsHealth Care-0.3
Silicon Graphics InternationalTechnology Hardware Storage & PeripheralsInformation Technology-0.3
Global Power Equipment GroupElectrical EquipmentIndustrials-0.2
ADTRANCommunications EquipmentInformation Technology-0.2
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Energy13.251.16.2
Industrials21.626.86.1
Information Technology19.621.54.6
Health Care7.845.43.4
Financials9.626.92.6
Consumer Discretionary9.028.62.6
Materials8.415.81.6
Consumer Staples1.647.70.7
Cash9.30.00.0
Unassigned---1.8
Total--25.9

Top Contributors

INDUSTRYSECTORGAIN(%)
Energy Equipment & ServicesEnergy6.2
Semiconductors & Semiconductor EquipmentInformation Technology3.2
MachineryIndustrials2.4
Capital MarketsFinancials2.0
PharmaceuticalsHealth Care1.6

Top Detractors

INDUSTRYSECTORGAIN(%)
Technology Hardware Storage & PeripheralsInformation Technology-0.4
Paper & Forest ProductsMaterials-0.1
Specialty RetailConsumer Discretionary-0.1
Communications EquipmentInformation Technology0.0
Personal ProductsConsumer Staples0.0

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Helmerich & PayneEnergy Equipment & ServicesEnergy2.2
Unit CorporationEnergy Equipment & ServicesEnergy1.6
Jazz PharmaceuticalsPharmaceuticalsHealth Care1.3
Lazard Cl. ACapital MarketsFinancials1.1
Pason SystemsEnergy Equipment & ServicesEnergy1.1

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Silicon Graphics InternationalTechnology Hardware Storage & PeripheralsInformation Technology-0.4
American Eagle OutfittersSpecialty RetailConsumer Discretionary-0.3
Intrepid PotashChemicalsMaterials-0.2
Aixtron ADRSemiconductors & Semiconductor EquipmentInformation Technology-0.2
Ascena Retail GroupSpecialty RetailConsumer Discretionary-0.1
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Industrials22.349.710.8
Energy11.769.19.0
Information Technology19.127.07.7
Consumer Discretionary9.062.66.3
Health Care5.489.94.9
Financials8.157.53.8
Consumer Staples1.5125.01.9
Materials11.8-12.0-3.2
Cash11.20.20.0
Unassigned---3.5
Total--37.6

Top Contributors

INDUSTRYSECTORGAIN(%)
Energy Equipment & ServicesEnergy9.0
MachineryIndustrials5.6
Semiconductors & Semiconductor EquipmentInformation Technology4.4
Electronic Equipment, Instruments & ComponentsInformation Technology3.3
Capital MarketsFinancials2.8

Top Detractors

INDUSTRYSECTORGAIN(%)
Metals & MiningMaterials-3.0
Road & RailIndustrials-1.8
Communications EquipmentInformation Technology-0.9
Specialty RetailConsumer Discretionary-0.8
Containers & PackagingMaterials-0.6

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Helmerich & PayneEnergy Equipment & ServicesEnergy2.7
AZZElectrical EquipmentIndustrials2.1
Minerals TechnologiesChemicalsMaterials2.0
Oil States InternationalEnergy Equipment & ServicesEnergy1.9
Warnaco Group (The)Textiles, Apparel & Luxury GoodsConsumer Discretionary1.8

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Cliffs Natural ResourcesMetals & MiningMaterials-2.0
GrafTech InternationalElectrical EquipmentIndustrials-1.8
Arkansas BestRoad & RailIndustrials-1.8
Sims Metal Management ADRMetals & MiningMaterials-1.6
Intrepid PotashChemicalsMaterials-1.5
SECTOR NAMEAVERAGE WEIGHT(%)TOTAL RETURN(%)CONTRIBUTION TO RETURN(%)
Industrials22.5143.231.6
Energy11.0326.227.2
Information Technology16.5117.520.3
Consumer Discretionary9.9160.116.6
Financials9.3124.311.6
Materials11.461.09.5
Health Care4.7223.88.2
Consumer Staples2.1385.16.0
Government Bonds0.4-37.9-1.5
Cash12.20.40.1
Unassigned---14.1
Total--115.5

Top Contributors

INDUSTRYSECTORGAIN(%)
Energy Equipment & ServicesEnergy27.2
MachineryIndustrials12.8
Textiles, Apparel & Luxury GoodsConsumer Discretionary8.1
Semiconductors & Semiconductor EquipmentInformation Technology8.0
Metals & MiningMaterials7.0

Top Detractors

INDUSTRYSECTORGAIN(%)
Diversified Consumer ServicesConsumer Discretionary-2.0
Government BondsGovernment Bonds-1.5
Road & RailIndustrials-0.7
Communications EquipmentInformation Technology-0.6
Specialty RetailConsumer Discretionary-0.5

Top Contributors

COMPANYINDUSTRYSECTORGAIN(%)
Oil States InternationalEnergy Equipment & ServicesEnergy6.2
Helmerich & PayneEnergy Equipment & ServicesEnergy5.5
Pason SystemsEnergy Equipment & ServicesEnergy4.1
Lazard Cl. ACapital MarketsFinancials3.7
Drew IndustriesAuto ComponentsConsumer Discretionary3.6

Top Detractors

COMPANYINDUSTRYSECTORGAIN(%)
Corinthian CollegesDiversified Consumer ServicesConsumer Discretionary-3.2
Arkansas BestRoad & RailIndustrials-1.8
Sims Metal Management ADRMetals & MiningMaterials-1.5
ProShares UltraShort 20+ Year TreasuryGovernment BondsGovernment Bonds-1.5
AeropostaleSpecialty RetailConsumer Discretionary-1.0

Risk

Down Market Performance Comparisonas of 6/30/2014

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

Market Downturns (%)

Outperformed in 18 out of 21 down quarters.

Russell 2000 Down Quarters

QUARTER ENDRUSSELL 2000 (%)SELECT I (%)SPREAD (%)
6/30/2012-3.5-7.8-4.3
9/30/2011-21.9-21.5+0.4
6/30/2011-1.6-1.2+0.4
6/30/2010-9.9-9.90.0
3/31/2009-15.0-7.2+7.8
12/31/2008-26.1-21.9+4.2
9/30/2008-1.1-1.0+0.1
3/31/2008-9.9-5.5+4.4
12/31/2007-4.6-1.0+3.6
9/30/2007-3.1+1.9+5.0
6/30/2006-5.0-4.4+0.6
3/31/2005-5.3-3.9+1.4
9/30/2004-2.9-0.2+2.7
3/31/2003-4.5+0.3+4.8
9/30/2002-21.4-19.9+1.5
6/30/2002-8.4-12.0-3.6
9/30/2001-20.8-15.9+4.9
3/31/2001-6.5-1.4+5.1
12/31/2000-6.9-2.4+4.5
6/30/2000-3.8-1.4+2.4
9/30/1999-6.30.0+6.3

Capture Ratios

DATE UP DOWN
From Fund's First Full Quarter
(12/31/1998 - 6/30/2014)
105% 73%
Ten Year 95% 77%
Five Year 91% 109%

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 with lower volatility.
Over the past 5 years, the Fund produced lower volatility than the Russell 2000.
Over the past 3 years, the Fund produced lower volatility than the Russell 2000.

Go to Relative Risk Spectrum Tool

The Fund produced lower volatility than the Russell 2000 and 50% of small-cap objective funds, as shown by its standard deviation.
The Fund produced lower volatility than the Russell 2000 and 75% of small-cap objective funds, as shown by its standard deviation.
The Fund beat the Russell 2000 and performed within the top 25% of small-cap objective funds on a risk-adjusted basis, as shown by its Sharpe ratio. In addition, the Fund produced lower volatility than the Russell 2000 and 75% of small-cap objective funds, as shown by its standard deviation.

Morningstar Statistical Measures as of 6/30/2014

Sharpe RatioStandard Deviation
Select I0.5917.15
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
Select I
Russell 2000
Category Median
Best Quartile Breakpoint

Composition

Market Cap Exposureas of 6/30/2014

  • Small-Cap
    $2.3B
    Avg. Market Cap

Diagnosticsas of 6/30/2014

Weighted Avg. P/E,
20.5x
Weighted Avg. P/B
2.2x
2013 Portfolio Turnover
56%
97%

Portfolio Allocation as of 6/30/2014

  • Focused
    72
    Holdings


SECTORS
RYSFX(%) RUSSELL 2000(%)
Industrials
21.8
13.8
Information Technology
17.1
17.9
Energy
11.4
6.4
Financials
10.9
23.0
Consumer Discretionary
10.1
13.3
Health Care
8.2
13.3
Materials
7.5
5.1
Consumer Staples
3.3
3.1
Telecommunication Services
-
0.8
Utilities
-
3.4
Cash and Cash Equivalents
9.7
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Unit Corporation
3.2
Federated Investors Cl. B
2.8
MKS Instruments
2.7
CIRCOR International
2.6
Nu Skin Enterprises Cl. A
2.3
TGS-NOPEC Geophysical
2.1
Genesco
2.0
Myriad Genetics
2.0
Alleghany Corporation
2.0
Reliance Steel & Aluminum
1.9
Top 10 as % of Net Assets
23.6

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

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 ($) REINVEST
PRICE ($)
12/11/2013 12/12/2013 12/12/2013 0.0028 0.3580 1.7893 - 2.1501 18.68
12/12/2012 12/13/2012 12/13/2012 0.2984 0.0999 1.3945 - 1.7928 16.90
12/14/2011 12/15/2011 12/15/2011 0.0000 - 2.5624 - 2.5624 16.33
12/15/2010 12/16/2010 12/16/2010 0.0000 0.1332 0.1279 - 0.2611 20.25
12/15/2009 12/16/2009 12/16/2009 0.1536 - - - 0.1536 17.28

NAV History for

Fees & Expenses

Shareholder Fees (%)

(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases0.00
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 1.00
Distribution (12b-1) fees 0.00
Dividends on securities sold short 0.00
Other expenses 0.20
Total annual Fund operating expenses 1.20

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 and mid-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 may sell securities short which involves selling a security it does not own in anticipation that the security's price will decline. Short sales present unlimited risk on an individual stock basis since the Fund may be required to buy the security sold short at a time when the security has appreciated in value. The Fund also invests primarily in a limited number of stocks, which may involve considerably more risk than a less concentrated portfolio because a decline in the value of these stocks would cause the Fund's overall value to decline to a greater degree. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Fund may invest up to 15% of its net assets in foreign securities (measured at the time of investment), which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see "Investing in Foreign Securities" in the prospectus.)

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.

11/18/1998 12:00:00 AM
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