639

At a Glance

Why invest in Micro-Cap Opportunity?

  • Invests in a limited number of micro-cap companies (generally market caps up to $1 billion) with low P/B and P/S ratios categorized into one of four themes: Turnarounds, Unrecognized Asset Values, Undervalued Growth, and Interrupted Earnings
  • Identifies a catalyst for future earnings growth in the form of new management, more favorable business cycle, product innovation, and/or margin improvement
  • Average annual total return of 11.8% since inception (8/31/10) through 9/30/16

As of 09/30/16

  • Micro-Cap
    Value Approach
    $434.4M
    Avg. Market Cap
  • High
    Volatility
    95%
    Active Share
  • Fund
    Longevity
    6+
    Years of History

Portfolio Management

"I look for turnarounds where the process already appears to be under way or the firm's sector or industry looks close to rebounding. It's important for me to see evidence of positive change beginning to happen, so I like businesses that look like they're on the road to earnings recovery."
Bill Hench

Performance

Average Annual Total Returns (%)

Outperformed Russell Microcap for the Quarter, Year To Date and 1-Year periods as of 09/30/16. Outpaced Russell 2000 for the Quarter, Year To Date and 1-Year periods as of 09/30/16.
QTR YTD 1YR 3YR 5YR SINCE INCEPT. DATE
Micro-Cap Opportunity 13.90 17.5118.111.0615.8211.83 08/31/10
Russell Microcap 11.25 9.3813.475.8416.3714.45 N/A
Russell 2000 9.05 11.4615.476.7115.8214.36 N/A

Annual Operating Expenses: Gross 1.39 Net 1.25

NOV YTD 1YR 3YR 5YR SINCE INCEPT. DATE
Micro-Cap Opportunity 11.45 22.0511.670.4513.7812.17 08/31/10
Russell Microcap 11.62 15.129.184.9714.8814.98 N/A
Russell 2000 11.15 18.0012.086.4513.9814.99 N/A

Annual Operating Expenses: Gross 1.39 Net 1.25

DEC YTD 1YR 3YR 5YR SINCE INCEPT. DATE
Micro-Cap Opportunity -0.94 20.8911.870.5313.7111.99 08/31/10
Russell Microcap -0.25 14.849.585.4414.8214.92 N/A
Russell 2000 -0.60 17.2911.996.6713.9114.87 N/A

Annual Operating Expenses: Gross 1.39 Net 1.25

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 30 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. Gross operating expenses reflect the Fund's total gross annual operating expenses and include management fees, dividends on securities sold short, other expenses and acquired fund fees and expenses. Net operating expenses reflect contractual fee waivers and/or expense reimbursements. All expense information is reported as of the Funds most current prospectus. Royce & Associates has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Investment Class's net annual operating expenses (excluding dividend and interest expenses relating to short sale activities, brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.24% through April 30, 2015.

Market Cycle Performance

Peak-Peak - 03/05/14 - 06/23/15
Micro-Cap Opportunity-3.9%
Russell Microcap6.4%

Peak-Current - 06/23/15 - 09/30/16
Micro-Cap Opportunity-9.0%
Russell Microcap-5.3%

Royce defines market cycles as those that have retreated at least 15% from a previous market peak and have rebounded to establish a new peak above the previous one. 

Royce defines market cycles as those that have retreated at least 15% from a previous market peak and have rebounded to establish a new peak above the previous one. 

Calendar Year Total Returns (%)

 

Growth of Investment

Value of $10,000 invested between 08/31/10 and 09/30/16

Micro-Cap Opportunity$19,736.21
Russell Microcap$22,727.35

Portfolio Impactas of 09/30/16

SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
30.91
29.50
8.47
Consumer Discretionary
15.24
16.62
2.54
Industrials
19.22
6.96
1.43
Health Care
12.14
5.79
0.80
Financials
5.25
13.00
0.69
Energy
3.71
10.00
0.37
Consumer Staples
0.62
24.63
0.14
Real Estate
0.52
11.22
0.07
Materials
7.38
-1.57
0.00
Cash
5.02
0.07
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Semiconductors & Semiconductor EquipmentInformation Technology3.53
Electronic Equipment, Instruments & ComponentsInformation Technology1.72
Household DurablesConsumer Discretionary1.59
Aerospace & DefenseIndustrials1.30
Internet Software & ServicesInformation Technology1.22

Top Detractors

INDUSTRYSECTORGAIN (%)
Electrical EquipmentIndustrials-0.75
Construction MaterialsMaterials-0.38
Metals & MiningMaterials-0.30
Oil, Gas & Consumable FuelsEnergy-0.21
BiotechnologyHealth Care-0.17

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Creative ComputersElectronic Equipment, Instruments & ComponentsInformation Technology1.40
SunEdison SemiconductorSemiconductors & Semiconductor EquipmentInformation Technology1.24
Kratos Defense & Security SolutionsAerospace & DefenseIndustrials1.02
Spartan MotorsAuto ComponentsConsumer Discretionary0.88
Beazer Homes USAHousehold DurablesConsumer Discretionary0.84

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Power Solutions InternationalElectrical EquipmentIndustrials-0.94
U.S. ConcreteConstruction MaterialsMaterials-0.38
A. M. Castle & Co.Metals & MiningMaterials-0.30
Pengrowth EnergyOil, Gas & Consumable FuelsEnergy-0.21
TravelCenters of America LLCSpecialty RetailConsumer Discretionary-0.20
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
30.49
45.37
12.63
Industrials
18.89
14.56
3.24
Consumer Discretionary
14.80
14.08
2.50
Financials
4.68
34.91
1.69
Materials
7.93
3.83
0.50
Consumer Staples
0.57
13.36
0.10
Real Estate
0.19
5.49
0.06
Energy
3.08
21.29
0.05
Telecommunication Services
0.16
-6.42
-0.11
Health Care
13.00
-5.60
-1.34
Cash
6.20
0.21
0.02

Top Contributors

INDUSTRYSECTORGAIN (%)
Semiconductors & Semiconductor EquipmentInformation Technology4.84
Electronic Equipment, Instruments & ComponentsInformation Technology4.04
Aerospace & DefenseIndustrials2.58
Auto ComponentsConsumer Discretionary1.85
MachineryIndustrials1.57

Top Detractors

INDUSTRYSECTORGAIN (%)
Health Care Providers & ServicesHealth Care-1.05
BiotechnologyHealth Care-0.80
Electrical EquipmentIndustrials-0.76
Construction & EngineeringIndustrials-0.46
Hotels, Restaurants & LeisureConsumer Discretionary-0.40

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Amber RoadInternet Software & ServicesInformation Technology2.06
Spartan MotorsAuto ComponentsConsumer Discretionary1.80
Creative ComputersElectronic Equipment, Instruments & ComponentsInformation Technology1.55
Alpha & Omega SemiconductorSemiconductors & Semiconductor EquipmentInformation Technology1.31
Kraton Performance PolymersChemicalsMaterials1.14

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Civitas SolutionsHealth Care Providers & ServicesHealth Care-0.82
Power Solutions InternationalElectrical EquipmentIndustrials-0.81
CareDxBiotechnologyHealth Care-0.80
SunEdisonSemiconductors & Semiconductor EquipmentInformation Technology-0.67
Monster WorldwideInternet Software & ServicesInformation Technology-0.63
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
29.60
60.33
15.31
Industrials
18.88
13.54
3.08
Financials
4.72
46.52
2.12
Health Care
12.84
12.18
0.93
Consumer Discretionary
14.75
2.70
0.84
Materials
8.13
2.12
0.37
Consumer Staples
0.80
12.41
0.13
Telecommunication Services
0.26
27.97
0.09
Real Estate
0.22
-34.72
-0.09
Energy
3.66
2.42
-2.07
Cash
6.14
0.23
0.02

Top Contributors

INDUSTRYSECTORGAIN (%)
Semiconductors & Semiconductor EquipmentInformation Technology5.11
Electronic Equipment, Instruments & ComponentsInformation Technology4.72
Aerospace & DefenseIndustrials2.46
Internet Software & ServicesInformation Technology2.44
MachineryIndustrials1.92

Top Detractors

INDUSTRYSECTORGAIN (%)
Oil, Gas & Consumable FuelsEnergy-1.55
Commercial Services & SuppliesIndustrials-0.78
Specialty RetailConsumer Discretionary-0.77
Electrical EquipmentIndustrials-0.70
Construction & EngineeringIndustrials-0.66

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Amber RoadInternet Software & ServicesInformation Technology2.48
Creative ComputersElectronic Equipment, Instruments & ComponentsInformation Technology1.66
Spartan MotorsAuto ComponentsConsumer Discretionary1.66
Newport CorporationElectronic Equipment, Instruments & ComponentsInformation Technology1.40
Alpha & Omega SemiconductorSemiconductors & Semiconductor EquipmentInformation Technology1.29

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Power Solutions InternationalElectrical EquipmentIndustrials-1.27
Stone EnergyOil, Gas & Consumable FuelsEnergy-1.19
Unit CorporationEnergy Equipment & ServicesEnergy-0.92
Dixie GroupHousehold DurablesConsumer Discretionary-0.87
TRC CompaniesCommercial Services & SuppliesIndustrials-0.82
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
30.49
70.79
16.12
Financials
5.44
36.19
2.28
Industrials
17.39
5.91
1.50
Real Estate
1.29
-29.78
0.84
Consumer Staples
0.97
37.61
0.24
Telecommunication Services
0.49
-21.54
-0.35
Materials
7.98
-15.02
-2.17
Health Care
8.24
0.95
-2.39
Consumer Discretionary
15.23
-16.53
-2.73
Energy
4.87
-78.71
-4.51
Cash
7.61
0.29
0.02

Top Contributors

INDUSTRYSECTORGAIN (%)
Semiconductors & Semiconductor EquipmentInformation Technology7.39
Electronic Equipment, Instruments & ComponentsInformation Technology3.56
Building ProductsIndustrials2.65
MachineryIndustrials2.27
Internet Software & ServicesInformation Technology2.13

Top Detractors

INDUSTRYSECTORGAIN (%)
Electrical EquipmentIndustrials-5.07
Metals & MiningMaterials-3.43
Oil, Gas & Consumable FuelsEnergy-2.97
Specialty RetailConsumer Discretionary-2.33
Health Care Equipment & SuppliesHealth Care-2.16

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
QorvoSemiconductors & Semiconductor EquipmentInformation Technology2.55
Builders FirstSourceBuilding ProductsIndustrials1.89
Installed Building ProductsHousehold DurablesConsumer Discretionary1.86
U.S. ConcreteConstruction MaterialsMaterials1.78
Spartan MotorsAuto ComponentsConsumer Discretionary1.65

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Power Solutions InternationalElectrical EquipmentIndustrials-3.51
TravelCenters of America LLCSpecialty RetailConsumer Discretionary-1.35
Exar CorporationSemiconductors & Semiconductor EquipmentInformation Technology-1.24
Hercules Offshore IncEnergy Equipment & ServicesEnergy-1.22
TangoeSoftwareInformation Technology-1.20
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
28.94
238.35
41.58
Consumer Discretionary
14.79
151.61
22.28
Industrials
16.72
141.29
20.78
Financials
6.29
326.91
14.16
Energy
7.19
-54.38
6.13
Materials
7.60
28.12
5.07
Real Estate
2.68
22.75
4.87
Consumer Staples
1.15
13.43
0.42
Telecommunication Services
0.30
-27.86
-0.39
Health Care
5.13
93.06
-0.76
Cash
9.22
0.41
0.05

Top Contributors

INDUSTRYSECTORGAIN (%)
Semiconductors & Semiconductor EquipmentInformation Technology24.41
Household DurablesConsumer Discretionary11.57
Thrifts & Mortgage FinanceFinancials8.86
MachineryIndustrials8.81
Building ProductsIndustrials8.30

Top Detractors

INDUSTRYSECTORGAIN (%)
Electrical EquipmentIndustrials-5.10
Metals & MiningMaterials-3.14
MarineIndustrials-1.81
Health Care Equipment & SuppliesHealth Care-1.45
Food & Staples RetailingConsumer Staples-0.86

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
CalAtlantic GroupHousehold DurablesConsumer Discretionary6.07
Ellie MaeSoftwareInformation Technology5.51
Radian GroupThrifts & Mortgage FinanceFinancials4.34
Lithia Motors Cl. ASpecialty RetailConsumer Discretionary3.93
Builders FirstSourceBuilding ProductsIndustrials3.55

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Power Solutions InternationalElectrical EquipmentIndustrials-3.51
Century AluminumMetals & MiningMaterials-1.51
MBIAInsuranceFinancials-1.38
Walter EnergyMetals & MiningMaterials-1.38
TravelCenters of America LLCSpecialty RetailConsumer Discretionary-1.35

Risk

High Volatility vs. Peer Group as of 09/30/16

The Fund has a high volatility within its peer group of 476 Small-Cap Funds based on 5-year rolling standard deviation.

Down Market Performance Comparisonas of 09/30/16

Market Downturns (%)

DownMarketImg

Russell Microcap Down Quarters

QUARTER ENDRUSSELL MICROCAP (%)MICRO-CAP OPPORTUNITY (%)SPREAD (%)
03/31/16-5.4-0.9+4.5
09/30/15-13.8-19.8-6.0
09/30/14-8.2-10.7-2.5
06/30/14-1.4-2.5-1.1
06/30/12-2.0-1.1+0.9
09/30/11-22.7-26.2-3.5
06/30/11-3.5-6.9-3.4

Capture Ratios Fund's First Full Quarter (09/30/10) to 09/30/16

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 09/30/16

Morningstar Statistical Measures as of 09/30/16

Sharpe RatioStandard Deviation
Micro-Cap Opportunity0.9018.10
Russell Microcap1.0415.75
Category Median1.0214.83
Best Quartile Breakpoint1.1213.92

Category Median and Best Quartile Breakpoint based on 476 small-cap objective funds (oldest class only) with at least five years of history.
Sharpe Ratio Standard Deviation
Micro-Cap Opportunity
Russell Microcap
Category Median
Best Quartile Breakpoint

Composition

Morningstar Style Map™as of 06/30/16

mstar-ROSFX

The Morningstar Style Map is the Morningstar Style Box™ with the center 75% of fund holdings plotted as the Morningstar Ownership Zone™. The Morningstar Style Box is designed to reveal a fund's investment strategy. The Morningstar Ownership Zone provides detail about a portfolio's investment style by showing the range of stock sizes and styles. The Ownership Zone is derived by plotting each stock in the portfolio within the proprietary Morningstar Style Box. The shaded area represents the center 75% of the Fund's assets while the plot point in the middle represents the weighted average of its holdings. Over time, the shape and location of a fund's ownership zone may vary.

Portfolio Diagnosticsas of 09/30/16

  ROSFX Russell Microcap
Average Market Cap
434.4M
380.6M
95%
-
2015 Portfolio Turnover
105%
-
Weighted Average P/B
1.5x
1.8x
Weighted Average P/S
1.0x
1.3x
U.S. Investments (% of Net Assets)
90.4%
-
Non-U.S. Investments (% of Net Assets)
3.6%
-

Portfolio Allocation

  • Total
    Holdings
    100


SECTORS
ROSFX (%) RUSSELL
MICROCAP (%)
Information Technology
30.4
15.0
Industrials
19.1
11.2
Consumer Discretionary
13.8
13.0
Health Care
12.9
21.1
Materials
6.5
2.8
Financials
5.8
23.9
Energy
4.1
3.9
Real Estate
0.7
4.3
Consumer Staples
0.7
2.0
Telecommunication Services
-
1.3
Utilities
-
1.4
Cash and Cash Equivalents
6.0
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Amber Road
2.6
PCM
2.5
Beazer Homes USA
2.2
Kratos Defense & Security Solutions
2.2
Spartan Motors
2.1
SunEdison Semiconductor
2.0
Gencor Industries
1.9
Atlas Air Worldwide Holdings
1.6
Accuray
1.6
Albany Molecular Research
1.6
Boise Cascade
1.6
Sucampo Pharmaceuticals Cl. A
1.6
Helix Energy Solutions Group
1.5
KEYW Holding Corporation
1.5
FormFactor
1.5
Kraton Corporation
1.5
U.S. Concrete
1.4
FreightCar America
1.4
New Home
1.4
Nimble Storage
1.4
Top 20 as % of Net Assets
35.1

SECTORS
ROSFX (%) RUSSELL
MICROCAP (%)
Information Technology
27.4
-
Industrials
18.5
-
Health Care
13.7
-
Consumer Discretionary
13.0
-
Materials
6.3
-
Financials
6.3
-
Energy
4.3
-
Consumer Staples
0.7
-
Real Estate
0.7
-
Cash and Cash Equivalents
9.1
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
SunEdison Semiconductor
2.2
Amber Road
2.1
Spartan Motors
2.0
Gencor Industries
2.0
Beazer Homes USA
1.9
Kratos Defense & Security Solutions
1.7
Albany Molecular Research
1.6
Sucampo Pharmaceuticals Cl. A
1.6
Nanometrics
1.5
PCM
1.5
Helix Energy Solutions Group
1.5
Power Solutions International
1.5
Boise Cascade
1.5
State Bank Financial
1.5
KEYW Holding Corporation
1.5
New Home
1.4
Kraton Corporation
1.4
Nimble Storage
1.4
FreightCar America
1.4
Datawatch Corporation
1.4
Top 20 as % of Net Assets
32.6

Portfolio Holdings

View the complete list of holdings for this fund as of 09/30/16. Unaudited schedule of portfolio holdings is presented for informational purposes only.

Least Portfolio Overlap - U.S. Equity Funds

Greatest Portfolio Overlap - U.S. Equity Funds

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 ($) REINVEST
PRICE ($)
12/16/15 12/17/15 12/17/15 0.0000 - 0.0003 - 0.0003 14.08
12/16/14 12/17/14 12/17/14 0.0000 0.1374 0.3696 - 0.5070 16.13
12/11/13 12/12/13 12/12/13 0.0000 0.2028 0.3520 - 0.5548 16.72
12/12/12 12/13/12 12/13/12 0.1271 0.8221 0.1382 - 1.0874 12.11
12/14/11 12/15/11 12/15/11 0.0171 0.3955 - - 0.4126 9.84

NAV History for

Fees & Expenses

Shareholder Fees (%)

(fees paid directly from your investment)

Maximum sales charge (load) imposed on purchases 0.00
Maximum deferred sales charge 0.00
Maximum sales charge (load) imposed on reinvested dividends 0.00
Redemption fee (as a percentage of amount redeemed on shares held for less than 30 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
Other expenses 0.38
Total annual Fund operating expenses 1.39
Fee waivers and/or expense reimbursements (0.14)
Total annual Fund operating expenses after fee waivers and/or expense reimbursements1.25
Royce & Associates has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Investment Class's net annual operating expenses (excluding dividend and interest expenses relating to short sale activities, brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.24% through April 30, 2015.

Important Disclosure Information

This material is not authorized for distribution unless preceded or accompanied by a current prospectus. Please read the prospectus carefuly before investing or sending money.

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 Fund's P/E ratio calculation excludes companies with zero or negative earnings. The Price-to-Book, or P/B, Ratio is calculated by dividing a company's share price by its book value per share. 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. 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 Microcap Index includes 1,000 of the smallest securities in the small-cap Russell 2000 Index, along with the next smallest eligible securities as determined by Russell. 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. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

Managed by Bill Hench since 2010, assistant Buzz Zaino since 2010

8/31/2010 12:00:00 AM

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