Morningstar Calls This Fund A Defensive Small-Cap Strategy
article 05-31-2016

Morningstar: Royce Special Equity Fund "A Defensive Small-Cap Strategy"

Morningstar's Alex Bryan says "Risk-averse small-cap investors can feel good about [this Fund] under Charlie Dreifus." 


Morningstar's Medalist Spotlight for the week of May 24, 2016 was Royce Special Equity Fund.

Morningstar's Alex Bryan describes the Fund: "Over a full market cycle, it should offer a better risk/reward trade-off than most of its peers and could be a compelling investment for risk-averse small-cap investors."

Discussing Royce Special Equity Fund's strategy, as well as Portfolio Manager Charlie Dreifus and Assistant Portfolio Manager Steven McBoyle, Alex says: "Managers Charlie Dreifus and Steven McBoyle scour the small-cap universe for companies with strong returns on invested capital; durable competitive advantages that will allow those returns to persist; conservative accounting practices and balance sheets; and attractive valuations."

Royce Special Equity Fund's Overall Morningstar Rating™ is Four Stars (out of 383 Small Value funds tracked by Morningstar as of 4/30/16).

Charlie Dreifus, who has 46 years of investment experience, manages Royce Special Equity Fund and Royce Special Equity Multi-Cap Fund. Steven McBoyle, who has 24 years of investment experience, serves as assistant portfolio manager for Special Equity and Special Equity Multi-Cap. Steven is a portfolio manager on Royce Premier Fund and Royce Heritage Fund.

Read the fund summary here.

Important Disclosure Information

Average Annual Total Returns as of 3/31/16 (%)

Special Equity 5.63 5.63 -9.60 3.67 5.76 6.57 N/A 8.59 05/01/98
Russell 2000 -1.52 -1.52 -9.76 6.84 7.20 5.26 7.68 6.15 N/A
Annual Operating Expenses: 1.15%

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 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.

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. Smaller-cap stocks may involve considerably more risk than larger-cap stocks. (Please see "Primary Risks for Fund Investors" in the prospectus.)

For each fund with at least a three-year history, Morningstar calculates a Morningstar Rating™ based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a fund's monthly performance (including the effects of sales charges, loads, and redemption fees), placing more emphasis on downward variations and rewarding consistent performance. The top 10% of funds in each category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars and the bottom 10% receive 1 star. (Each share class is counted as a fraction of one fund within this scale and rated separately, which may cause slight variations in the distribution percentages.) The Overall Morningstar Rating for a fund is derived from a weighted average of the performance figures associated with its three-, five- and ten-year (if applicable) Morningstar Rating metrics. Royce Special Equity Fund was rated against the following numbers of U.S.-domiciled small value funds over the following time periods: 383 funds in the last three years, 332 funds in the last five years, and 219 funds in the last ten years. With respect to these small value funds, Royce Special Equity Fund received a Morningstar Rating of 2 stars, 3 stars and 5 stars for the three-, five- and ten-year periods ended 4/30/16, respectively. Past performance is no guarantee of future results.

Royce Special Equity Fund invests primarily in small-cap stocks, which may involve considerably more risk than investing in larger-cap stocks 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 any one 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 25% of its net assets (measured at the time of investment) in securities of companies headquartered in foreign countries, which may involve political, economic, currency, and other risks not encountered in U.S. investments. (Please see "Investing in Foreign Securities" in the prospectus.)

© 2016 Morningstar, Inc. All Rights Reserved. The information contained herein: (1) is proprietary to Morningstar; (2) may not be copied or distributed; and (3) is not warranted to be accurate, complete or timely. Neither Morningstar nor its content providers are responsible for any damages or losses arising from any use of this information. Past performance is no guarantee of future results.



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