Navigating an Uncertain Market with Narrow Leadership: Charlie Dreifus on WealthTrack
article 09-30-2015

Navigating an Uncertain Market with Narrow Leadership: Charlie Dreifus on WealthTrack

Why is Portfolio Manager Charlie Dreifus not concerned about the market's recent turmoil?

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Courtesy of Consuelo Mack WealthTrack. All Rights Reserved.

In his interview on WealthTrack, originally broadcast on September 18, 2015, Portfolio Manager Charlie Dreifus sat down with host Consuelo Mack to talk about some of the current events that have stirred up the market, including the correction which came early in August, growth concerns in China, uncertainty around interest rates, high valuations, and increasingly narrow market returns.

When asked if he was worried about the recent market turmoil, Charlie replied that, while he is certainly mindful of near-term challenges—particularly the anxieties surrounding a rise in interest rates—he is not concerned.

"The concern about the Fed raising rates, I think, is totally unfounded in terms of being a concern," said Charlie. "Raising rates, it's a healthy sign—it's a sign that we're back on the road to recovery, normalcy; that we're coming off of life support."

In addition, Charlie discussed his approach to evaluating companies, which includes a careful scrutiny of the balance sheet and deep-dive accounting, the importance of dividends in a lower-return environment, why large-caps remain attractive today, and more.

Charlie Dreifus has 47 years of investment industry experience and joined Royce in 1998. He is portfolio manager of Royce Special Equity Multi-Cap Fund and Royce Special Equity Fund.

Royce Special Equity Fund [RYSEX]
Average Annual Total Returns as of Quarter-End 6/30/15 (%)

QTR* YTD* 1 YR 3 YR 5 YR 10 YR 15 YR SINCE INCEPT. DATE
Special Equity -2.86 -0.52 0.40 12.29 13.11 8.41 11.75 9.44 05/01/98
Russell 2000 0.42 4.75 6.49 17.81 17.08 8.40 7.50 7.09 N/A
Annual Operating Expenses: 1.12%

* Not Annualized

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 here. 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.

Royce Special Equity Multi-Cap Fund [RSMCX]
Average Annual Total Returns as of Quarter-End 6/30/15 (%)

QTR* YTD* 1 YR 3 YR SINCE INCEPT. DATE
Special Equity Multi-Cap -2.58 -3.02 0.69 14.97 13.08 12/31/10
Russell 1000 0.11 1.71 7.37 17.73 14.13 N/A
Annual Operating Expenses: 0.97%

* Not Annualized

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 here. 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. All performance and risk information presented in this material prior to the commencement date of Investment Class shares on 3/1/12 reflects Service Class results. Shares of the Fund's Service Class bear an annual distribution expense that is not borne by the Investment Class.

Important Disclosure Information

Charlie Dreifus is a Portfolio Manager of Royce & Associates, LLC, investment adviser to The Royce Funds. He is the portfolio manager of Royce Special Equity Fund and Royce Special Equity Multi-Cap Fund. The thoughts and opinions expressed in the interview are solely those of the person speaking and may differ from those of other Royce investment professionals, or the firm as a whole. There can be no assurance with regard to future market movements. There can be no assurance that companies that currently pay a dividend will continue to do so in the future.

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. Royce Special Equity Multi-Cap Fund invests primarily in mid-cap and larger-cap stocks, and Royce Special Equity Fund invests primarily in small-cap stocks. Investments in securities of small-cap and mid-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.) The Funds generally invest a significant portion of their assets in a limited number of stocks, which may involve considerably more risk than a more broadly diversified portfolio because a decline in the value of any of these stocks would cause the Fund's overall value to decline to a greater degree. Royce Special Equity Multi-Cap Fund may invest up to 25% 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.) 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 1000 index is an unmanaged, capitalization-weighted index of domestic large-cap stocks. It measures the performance of the 1,000 largest publicly traded U.S. companies in the Russell 3000 index. 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 S&P 500 is an index of U.S. large-cap stocks selected by Standard & Poor's based on market size, liquidity, and industry grouping, among other factors. The performance of an index does not represent exactly any particular investment, as you cannot invest directly in an index.

Percentage of Fund Holdings as of 6/30/15 (%)

  Special Equity Multi-Cap Special Equity
Amazon 0.00 0.00
Apple 4.85 0.00
Walt Disney 0.00 0.00
Google Cl. A 0.00 0.00
Google Cl. C 0.00 0.00
Facebook 0.00 0.00
Gilead Sciences, Inc. 0.00 0.00
Pfizer 0.00 0.00
Netflix 0.00 0.00
Starbucks 0.00 0.00
Bed Bath & Beyond 5.34 5.45
SPDR S&P 500 Dividend ETF 0.00 0.00
Vanguard Dividend Appreciation ETF 0.00 0.00

There can be no assurance that any of the securities mentioned in this piece will be included in these portfolios in the future. References to specific securities in this piece are not intended as recommendations and should not be relied upon as the basis for anyone to buy, sell, or hold any security.

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