20

At a Glance

Why invest in Micro-Cap Trust?

  • One of the only closed-end funds dedicated to investing in micro-cap stocks (generally market caps up to $1 billion)
  • Core approach that combines multiple investment themes and offers wide exposure to micro-cap stocks by investing in companies with strong fundamentals and/or prospects selling at prices that Royce believes do not fully reflect these attributes
  • Outperformed its benchmark, the Russell 2000 Index, in 80% of all monthly rolling 10-year NAV return periods for the 20 years ended 12/31/16

As of 12/31/16

  • Micro-Cap
    Core Approach
    $383.5M
    Avg. Market Cap
  • Active Share
    95%
  • Lead Manager
    Tenure
    23+
    Years on Fund
  • Domestic
    26%
    2016 Annual
    Turnover Rate
  • Daily Price 9.88-$0.08 (-0.80%) MKT $8.57-$0.03 (0.00%)
    $363.7M
    Net Assets

Portfolio Management

"Our task is to scour the large and diverse universe of micro-cap companies for businesses that look mispriced and underappreciated, with the caveat being that they must also have a discernible margin of safety. We are looking for stocks trading at a discount to our estimate of their worth as businesses."
Chuck Royce

Performance

Average Annual Total Returns (%)

Outperformed Russell 2000 for the Year To Date, 1-Year, 15-Year, 20-Year and since inception (12/14/93) periods as of 12/31/16.
QTR YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
RMT 6.52 22.3022.301.9012.493.148.8810.069.85 12/14/93
XOTCX 6.71 21.9821.983.7013.596.079.2210.2610.81 12/14/93
Russell 2000 8.83 21.3121.316.7414.467.078.498.259.08 N/A
JAN YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
RMT 1.23 1.2336.594.2511.763.238.8010.369.87 12/14/93
XOTCX 0.62 0.6232.465.0412.225.939.0110.1810.80 12/14/93
Russell 2000 0.39 0.3933.537.8913.006.938.598.169.07 N/A
FEB YTD 1YR 3YR 5YR 10YR 15YR 20YR SINCE INCEPT. DATE
RMT 3.75 5.0244.573.9611.763.219.1710.5010.02 12/14/93
XOTCX 1.96 2.6036.954.6111.865.629.3210.2610.86 12/14/93
Russell 2000 3.16 3.5739.467.9313.026.879.098.379.19 N/A

Important Performance and Expense Information

All performance information reflects past performance, is presented on a total return basis, net of the Fund's investment advisory fee, and reflects the reinvestment of distributions. Past performance is no guarantee of future results Current performance may be higher or lower than performance quoted. Returns as of the recent month-end may be obtained at www.roycefunds.com. The market price of the Fund's shares will fluctuate, so that shares may be worth more or less than their original cost when sold.

The Fund normally invests in micro-cap companies, which may involve considerably more risk than investing in larger-cap companies. The Fund's broadly diversified portfolio does not ensure a profit or guarantee against loss.

Rolling Returns

On a monthly basis, the Fund outperformed the Russell 2000 in 80% of all 10-Year periods; 62% of all 5-Year periods; and 62% of all 1-Year periods.

For 97% of the periods, 10-year average annual total returns were greater than 5%.

Relative Returns: Monthly Rolling Average Annual Return Periods 20 Years Through 12/31/16

periods beating
the index(%)
fund
avg(%)
index
avg(%)
10-year
97/121
80 8.9 6.9
5-year
112/181
62 10.2 7.6
1-year
142/229
62 11.9 9.2

Absolute Returns: 10-Year Monthly Rolling Return PeriodsNumber of 10-Year Average Annual Return Periods Since the Fund’s Inception

Return Range Periods % in Range
> 10% 67 43
> 5% and ≤ 10% 85 54
> 0% and ≤ 5% 5 3
≤ 0% 0 0

The Fund averaged a 10.2% return over all 157 10-year monthly rolling return periods.

Market Cycle Performance

Peak-Peak - 07/13/07 - 04/29/11
Micro-Cap Trust-0.5%
Russell 20006.6%

Peak-Peak - 04/29/11 - 06/23/15
Micro-Cap Trust53.6%
Russell 200058.5%

Peak-Current - 06/23/15 - 12/31/16
Micro-Cap Trust5.7%
Russell 20007.2%

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 12/14/93 and 12/31/16

Micro-Cap Trust$106,505.81
Russell 2000$74,191.00

Portfolio Impactas of 12/31/16

SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
16.80
10.27
1.86
Energy
4.80
24.03
1.06
Financials
11.33
6.77
0.77
Consumer Discretionary
13.61
5.74
0.75
Information Technology
17.85
4.46
0.71
Consumer Staples
2.75
16.23
0.44
Materials
5.77
4.61
0.27
Real Estate
3.42
5.00
0.21
Health Care
12.47
1.10
0.11
Utilities
0.34
3.19
0.01
Telecommunication Services
0.11
-19.32
-0.03
Cash
10.75
0.11
0.01

Top Contributors

INDUSTRYSECTORGAIN (%)
Energy Equipment & ServicesEnergy0.89
MachineryIndustrials0.75
BanksFinancials0.47
Food ProductsConsumer Staples0.39
Construction & EngineeringIndustrials0.38

Top Detractors

INDUSTRYSECTORGAIN (%)
SoftwareInformation Technology-0.28
PharmaceuticalsHealth Care-0.23
Metals & MiningMaterials-0.16
Leisure ProductsConsumer Discretionary-0.16
DistributorsConsumer Discretionary-0.08

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
Era GroupEnergy Equipment & ServicesEnergy0.70
IntevacTechnology Hardware, Storage & PeripheralsInformation Technology0.25
Sun HydraulicsMachineryIndustrials0.20
Northwest PipeConstruction & EngineeringIndustrials0.18
Cross Country HealthcareHealth Care Providers & ServicesHealth Care0.17

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
Trinity Biotech ADR Cl. AHealth Care Equipment & SuppliesHealth Care-0.19
ASA Gold and Precious MetalsCapital MarketsFinancials-0.17
SurmodicsHealth Care Equipment & SuppliesHealth Care-0.17
Exeter ResourceMetals & MiningMaterials-0.16
NautilusLeisure ProductsConsumer Discretionary-0.14
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
20.46
24.84
4.78
Industrials
15.04
27.12
4.14
Materials
5.66
52.96
2.79
Financials
11.99
21.58
2.35
Energy
4.51
41.99
1.91
Health Care
13.54
13.18
1.65
Real Estate
3.45
28.45
1.08
Consumer Discretionary
13.89
6.99
1.00
Consumer Staples
2.84
29.17
0.77
Utilities
0.33
49.19
0.14
Telecommunication Services
0.08
14.23
0.01
Cash
8.19
0.31
0.03
Unclassified
0.01
0.89
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology2.56
Metals & MiningMaterials2.11
MachineryIndustrials1.37
Health Care Equipment & SuppliesHealth Care1.30
Construction & EngineeringIndustrials1.12

Top Detractors

INDUSTRYSECTORGAIN (%)
SoftwareInformation Technology-0.54
DistributorsConsumer Discretionary-0.46
IT ServicesInformation Technology-0.18
Diversified Consumer ServicesConsumer Discretionary-0.11
Internet & Direct Marketing RetailConsumer Discretionary-0.07

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
IES HoldingsConstruction & EngineeringIndustrials0.88
Major Drilling Group InternationalMetals & MiningMaterials0.68
Newport CorporationElectronic Equipment, Instruments & ComponentsInformation Technology0.57
Era GroupEnergy Equipment & ServicesEnergy0.47
SurmodicsHealth Care Equipment & SuppliesHealth Care0.47

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
ZAIS Group Holdings Cl. ACapital MarketsFinancials-0.71
Fenix PartsDistributorsConsumer Discretionary-0.52
SeaChange InternationalSoftwareInformation Technology-0.43
Sangamo BioSciencesBiotechnologyHealth Care-0.39
Zealand PharmaBiotechnologyHealth Care-0.37
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Information Technology
20.46
24.84
4.78
Industrials
15.04
27.12
4.14
Materials
5.66
52.96
2.79
Financials
11.99
21.58
2.35
Energy
4.51
41.99
1.91
Health Care
13.54
13.18
1.65
Real Estate
3.45
28.45
1.08
Consumer Discretionary
13.89
6.99
1.00
Consumer Staples
2.84
29.17
0.77
Utilities
0.33
49.19
0.14
Telecommunication Services
0.08
14.23
0.01
Cash
8.19
0.31
0.03
Unclassified
0.01
0.89
0.00

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology2.56
Metals & MiningMaterials2.11
MachineryIndustrials1.37
Health Care Equipment & SuppliesHealth Care1.30
Construction & EngineeringIndustrials1.12

Top Detractors

INDUSTRYSECTORGAIN (%)
SoftwareInformation Technology-0.54
DistributorsConsumer Discretionary-0.46
IT ServicesInformation Technology-0.18
Diversified Consumer ServicesConsumer Discretionary-0.11
Internet & Direct Marketing RetailConsumer Discretionary-0.07

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
IES HoldingsConstruction & EngineeringIndustrials0.88
Major Drilling Group InternationalMetals & MiningMaterials0.68
Newport CorporationElectronic Equipment, Instruments & ComponentsInformation Technology0.57
Era GroupEnergy Equipment & ServicesEnergy0.47
SurmodicsHealth Care Equipment & SuppliesHealth Care0.47

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
ZAIS Group Holdings Cl. ACapital MarketsFinancials-0.71
Fenix PartsDistributorsConsumer Discretionary-0.52
SeaChange InternationalSoftwareInformation Technology-0.43
Sangamo BioSciencesBiotechnologyHealth Care-0.39
Zealand PharmaBiotechnologyHealth Care-0.37
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Health Care
10.89
63.52
5.65
Information Technology
20.24
16.89
3.52
Industrials
18.32
12.86
1.62
Materials
5.85
15.87
1.08
Consumer Staples
2.55
39.98
0.94
Real Estate
3.20
12.74
0.64
Utilities
0.24
133.19
0.23
Telecommunication Services
0.07
134.18
0.11
Consumer Discretionary
14.05
-2.92
-0.39
Energy
3.07
-59.48
-0.87
Financials
12.94
1.02
-1.00
Cash
8.30
0.38
0.04
Unclassified
0.28
20.77
0.09

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology2.75
BiotechnologyHealth Care2.42
Construction & EngineeringIndustrials1.56
Health Care Equipment & SuppliesHealth Care1.55
Semiconductors & Semiconductor EquipmentInformation Technology1.05

Top Detractors

INDUSTRYSECTORGAIN (%)
Capital MarketsFinancials-1.68
Specialty RetailConsumer Discretionary-1.48
Electrical EquipmentIndustrials-0.83
Consumer FinanceFinancials-0.77
Diversified Consumer ServicesConsumer Discretionary-0.70

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
IES HoldingsConstruction & EngineeringIndustrials1.99
Frontier Services GroupAir Freight & LogisticsIndustrials0.75
Idenix PharmaceuticalsBiotechnologyHealth Care0.71
Rentrak CorporationMediaConsumer Discretionary0.71
OrbotechElectronic Equipment, Instruments & ComponentsInformation Technology0.69

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
ZAIS Group Holdings Cl. ACapital MarketsFinancials-0.81
Computer Task GroupIT ServicesInformation Technology-0.80
Mothers WorkSpecialty RetailConsumer Discretionary-0.71
Support.comInternet Software & ServicesInformation Technology-0.68
SeaChange InternationalSoftwareInformation Technology-0.65
SECTOR NAMEAVERAGE WEIGHT (%)TOTAL RETURN (%)CONTRIBUTION TO RETURN (%)
Industrials
20.32
93.88
20.00
Information Technology
20.16
82.25
16.91
Health Care
9.30
269.72
14.35
Financials
12.72
89.70
10.43
Consumer Discretionary
12.71
73.89
8.93
Real Estate
4.05
120.02
5.98
Consumer Staples
2.63
132.83
3.11
Materials
6.07
24.89
1.96
Utilities
0.18
182.84
0.26
Telecommunication Services
0.06
129.66
0.06
Energy
3.26
-50.60
-0.02
Cash
7.97
0.51
0.05
Unclassified
0.56
55.01
0.46

Top Contributors

INDUSTRYSECTORGAIN (%)
Electronic Equipment, Instruments & ComponentsInformation Technology6.72
BiotechnologyHealth Care5.85
Real Estate Management & DevelopmentReal Estate5.76
Building ProductsIndustrials5.49
MachineryIndustrials4.95

Top Detractors

INDUSTRYSECTORGAIN (%)
Metals & MiningMaterials-1.90
Diversified Consumer ServicesConsumer Discretionary-1.03
Consumer FinanceFinancials-0.36
Transportation InfrastructureIndustrials-0.22
Trading Companies & DistributorsIndustrials-0.17

Top Contributors

COMPANYINDUSTRYSECTORGAIN (%)
IES HoldingsConstruction & EngineeringIndustrials3.56
Kennedy-Wilson HoldingsReal Estate Management & DevelopmentReal Estate1.91
LCI IndustriesAuto ComponentsConsumer Discretionary1.76
Universal ElectronicsHousehold DurablesConsumer Discretionary1.74
Quaker ChemicalChemicalsMaterials1.70

Top Detractors

COMPANYINDUSTRYSECTORGAIN (%)
PMFGMachineryIndustrials-0.82
ZAIS Group Holdings Cl. ACapital MarketsFinancials-0.80
Vista GoldMetals & MiningMaterials-0.68
SeaChange InternationalSoftwareInformation Technology-0.65
Fifth Street Asset Management Cl. ACapital MarketsFinancials-0.60

Market Price Performance History

Risk

Down Market Performance Comparisonas of 12/31/16

The Fund outperformed the Russell 2000 during nine out of 11 downturns of 10% or more from the index’s prior historical high over the last 20 years.

Market Downturns (%)

DownMarketImg

Russell 2000 Down Quarters

QUARTER ENDRUSSELL 2000 (%)MICRO-CAP TRUST (%)SPREAD (%)
03/31/16-1.5+0.1+1.6
09/30/15-11.9-13.8-1.9
09/30/14-7.4-7.1+0.3
06/30/12-3.5-4.4-0.9
09/30/11-21.9-20.8+1.1
06/30/11-1.6-3.2-1.6
06/30/10-9.9-8.9+1.0
03/31/09-15.0-11.8+3.2
12/31/08-26.1-33.7-7.6
09/30/08-1.1-6.9-5.8
03/31/08-9.9-10.6-0.7
12/31/07-4.6-4.5+0.1
09/30/07-3.1-3.5-0.4
06/30/06-5.0-3.2+1.8
03/31/05-5.3-1.8+3.5
09/30/04-2.9-3.0-0.1
03/31/03-4.5-6.4-1.9
09/30/02-21.4-24.6-3.2
06/30/02-8.4-5.8+2.6

Long Term Risk Measurementas of 12/31/16

Over the past 3 years, the Fund produced lower volatility than the Russell 2000 Index.
From the Fund's inception, the Fund outperformed the Russell 2000 Index with lower volatility.

Go to Relative Risk Spectrum Tool

Morningstar Statistical Measures as of 12/31/16

Sharpe RatioStandard Deviation
Micro-Cap Trust0.3521.36
Russell 20000.4120.14
Category MedianN/AN/A

Sharpe Ratio Standard Deviation
Micro-Cap Trust
Russell 2000
Category Median
Best Quartile Breakpoint

Composition

Morningstar Style Map™as of 12/31/16

mstar-XOTCX

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 12/31/16

  XOTCX Russell 2000
Average Market Cap
383.5M
1.66B
Net Leverage
0.5%
-
Market Price
$8.16
-
Net Asset Value
$9.63
-
95%
-
2016 Portfolio Turnover
26%
-
Weighted Average P/E,
18.5x
22.9x
Weighted Average P/B
1.7x
2.2x
U.S. Investments (% of Net Assets)
81.3%
-
Non-U.S. Investments (% of Net Assets)
19.2%
-

Portfolio Allocation

  • Total
    Holdings
    338


SECTORS
XOTCX (%) RUSSELL
2000 (%)
Industrials
19.6
14.6
Information Technology
19.5
17.0
Consumer Discretionary
15.2
12.6
Health Care
13.7
12.1
Financials
12.5
19.9
Materials
6.5
4.9
Energy
5.9
3.8
Real Estate
3.9
7.9
Consumer Staples
2.8
3.0
Utilities
0.4
3.5
Telecommunication Services
0.2
0.7
Bonds & Preferreds
0.3
-
Outstanding Line of Credit, Net of Cash and Cash Equivalents
-0.5
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
Era Group
1.4
IES Holdings
1.2
Seneca Foods
1.1
Heritage-Crystal Clean
1.0
Major Drilling Group International
1.0
Atrion Corporation
1.0
Sun Hydraulics
1.0
Orbotech
0.9
Kadant
0.9
Quaker Chemical
0.9
Surmodics
0.9
Intevac
0.9
Standard Motor Products
0.9
MVC Capital
0.9
Exactech
0.8
Zealand Pharma
0.8
Raven Industries
0.8
FARO Technologies
0.8
Tejon Ranch
0.8
Value Line
0.8
Top 20 as % of Net Assets
18.8

SECTORS
XOTCX (%) RUSSELL
2000 (%)
Industrials
20.1
-
Information Technology
20.0
-
Consumer Discretionary
14.8
-
Health Care
13.4
-
Financials
12.6
-
Materials
6.8
-
Energy
6.0
-
Real Estate
3.6
-
Consumer Staples
2.6
-
Utilities
0.4
-
Telecommunication Services
0.1
-
Bonds & Preferreds
0.4
-
Outstanding Line of Credit, Net of Cash and Cash Equivalents
-0.8
-
POSITIONS% OF NET ASSETS
(SUBJECT TO CHANGE)
IES Holdings
1.2
Era Group
1.2
Major Drilling Group International
1.2
Seneca Foods
1.1
Heritage-Crystal Clean
1.0
Orbotech
1.0
Intevac
1.0
Sun Hydraulics
0.9
Atrion Corporation
0.9
Zealand Pharma
0.9
Kadant
0.9
Quaker Chemical
0.9
Surmodics
0.9
Titan International
0.9
MVC Capital
0.8
FARO Technologies
0.8
Standard Motor Products
0.8
Raven Industries
0.8
Silvercrest Asset Management Group Cl. A
0.8
Exactech
0.8
Top 20 as % of Net Assets
18.8

Portfolio Holdings

View the complete list of holdings for this fund as of 12/31/16. Unaudited schedule of portfolio holdings is presented for informational purposes only.

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 ($) REINVEST
PRICE ($)
12/13/16 12/09/16 12/27/16 EST 0.0201 EST 0.0157 EST 0.1242 EST 0.0000 0.1600 8.22
09/13/16 09/09/16 09/26/16 EST 0.0189 EST 0.0147 EST 0.1164 EST 0.0000 0.1500 7.59
06/13/16 06/09/16 06/27/16 EST 0.0201 EST 0.0157 EST 0.1242 EST 0.0000 0.1600 7.36
03/14/16 03/10/16 03/24/16 EST 0.0214 EST 0.0167 EST 0.1319 EST 0.0000 0.1700 6.98
12/14/15 12/10/15 12/28/15 0.0055 0.0986 0.5058 0.0000 0.6100 7.13
09/14/15 09/10/15 09/25/15 0.0018 0.0323 0.1658 0.0000 0.2000 8.01
06/15/15 06/11/15 06/26/15 0.0020 0.0356 0.1824 0.0000 0.2200 9.46
03/13/15 03/11/15 03/25/15 0.0021 0.0372 0.1907 0.0000 0.2300 9.73
12/15/14 12/11/14 12/26/14 0.0324 0.3352 1.8225 0.0000 2.1900 10.08
09/15/14 09/11/14 09/26/14 0.0035 0.0367 0.1997 0.0000 0.2400 11.75
06/16/14 06/12/14 06/27/14 0.0035 0.0367 0.1997 0.0000 0.2400 12.45
03/13/14 03/11/14 03/25/14 0.0034 0.0352 0.1914 0.0000 0.2300 12.53
12/13/13 12/11/13 12/27/13 0.0222 0.1774 0.7704 0.0000 0.9700 12.29
09/16/13 09/12/13 09/27/13 0.0032 0.0256 0.1112 0.0000 0.1400 11.66
06/14/13 06/12/13 06/27/13 0.0032 0.0256 0.1112 0.0000 0.1400 10.68
03/06/13 03/04/13 03/25/13 0.0030 0.0238 0.1032 0.0000 0.1300 10.60
12/06/12 12/04/12 12/24/12 0.0212 0.0324 0.0764 0.0000 0.1300 9.09
09/06/12 09/04/12 09/24/12 0.0196 0.0299 0.0705 0.0000 0.1200 9.25
06/06/12 06/04/12 06/25/12 0.0212 0.0324 0.0764 0.0000 0.1300 8.61
03/06/12 03/02/12 03/23/12 0.0212 0.0324 0.0764 0.0000 0.1300 9.31
12/06/11 12/02/11 12/23/11 0.0143 0.0000 0.0637 0.0620 0.1400 8.38
09/06/11 09/01/11 09/23/11 0.0143 0.0000 0.0637 0.0620 0.1400 8.19
06/06/11 06/02/11 06/23/11 0.0133 0.0000 0.0592 0.0575 0.1300 9.24
03/07/11 03/03/11 03/23/11 0.0123 0.0000 0.0546 0.0531 0.1200 9.67
12/06/10 12/02/10 12/23/10 0.0630 - 0.0170 - 0.0800 9.40
03/06/09 03/04/09 03/23/09 0.0000 0.0000 0.0000 0.2200 0.2200 4.26

NAV History for

Fees & Expenses

Annual Fund Operating Expenses (%)

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

Management fees 0.93
Other expenses 0.24
Total annual Fund operating expenses 1.17

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. The Fund is a closed-end registered investment company whose shares of common stock may trade at a discount to their net asset value. Shares of the Fund's common stock are also subject to the market risks of investing in the underlying portfolio securities held by the Fund.

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. 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 Chuck Royce since 1993, assistant portfolio managers Chris Flynn and Jim Harvey since 2009

12/14/1993 12:00:00 AM

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