article 05-01-2015

Updated Prospectuses Now Available: Revised Market Cap Definitions, Fund Name Changes, and New Manager Appointments

We wanted to let you know about the exciting and important changes we are making to certain of The Royce Funds effective with the Prospectus dated May 1, 2015, including name changes designed to better describe three of our Funds' respective investment approaches and primary market cap ranges.

And speaking of market caps, Royce is amending some definitions as follows:

  • Micro-Cap—up to $1 billion in market cap (up from $750 million)
  • Small-Cap—up to $3 billion (up from $2.5 billion, which also raises Royce’s mid-cap "basement" from $2.5 billion to $3 billion)

The following Funds are changing names:

While the Fund's investment objective and strategy are not changing, it has adopted a new non-fundamental investment policy requiring at least 80% of its net assets to be invested in stocks with market caps up to $3 billion.

Portfolio Manager Jay Kaplan will continue to seek companies that he believes are undervalued and temporarily out of favor. He focuses on companies that he believes also possess financial strength, a strong business model, and the ability to generate and effectively allocate excess free cash flow.

This Fund's investment objective and strategy are also not changing. The Fund has, however, adopted a new non-fundamental investment policy requiring at least 80% of its net assets to be invested in stocks with market caps up to $7.5 billion.

Portfolio Manager Chip Skinner and Assistant Portfolio Manager Carl Brown will maintain the Fund's focus on companies that they believe have above-average growth prospects. They will also continue to consider the extent to which these companies are trading below their estimate of their current worth and/or have the potential for higher internal rates of return or improved profit margins.

Portfolio Manager Bill Hench will still be running this strongly performing fund using the same opportunistic, theme-based approach and investing in the same types of companies. As its new name suggests, Royce Micro-Cap Opportunity Fund will be focusing on micro-cap stocks, those with market-caps up to $1 billion. The Fund will no longer be allowed to engage in short sales, write call options, or borrow money for investment purposes.

The following Funds have new portfolio management assignments:

Chris Clark, Royce's President, said, "We think all of these changes reflect the experience and talent of our portfolio managers, who each have distinct investment styles. We also think that these changes will help to better clarify and distinguish each Fund's unique approach within our lineup."

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. Investments in securities of micro-cap, small-cap, and/or mid-cap companies may involve considerably more risk than investments in securities of larger-cap companies. (Please see “Primary Risks for Fund Investors” in the prospectus.) Investments in foreign companies may be subject to different risks than investments in securities of U.S. companies, including adverse political, social, economic, or other developments that are unique to a particular country or region. (Please see “Investing in International Securities” in the prospectus.)

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