Royce Opportunity Select Fund will be renamed Royce Micro-Cap Opportunity Fund

TheShadow

http://www.sec.gov/Archives/edgar/data/709364/000094937715000154/e34519_ros-supp.htm

497 1 e34519_ros-supp.htm

The Royce Fund

Supplement to the Investment, Service, and Institutional Class Shares Prospectus Dated May 1, 2014

Royce Opportunity Select Fund

On April 22, 2015, the Board of Trustees of The Royce Fund approved name changes and investment policy changes for Royce Opportunity Select Fund. All of these changes will take effect on May 1, 2015. The investment policies and operations of Royce Opportunity Select Fund will not change except as specifically described below.

Royce Opportunity Select Fund will be renamed Royce Micro-Cap Opportunity Fund. The Fund will invest, under normal circumstances, at least 80% of its net assets in equity securities of companies with stock market capitalizations up to $1 billion. In addition, the Fund’s operating policies will prohibit it from engaging in short sale transactions, writing call options, or borrowing money for investment purposes.

April 24, 2015

ROS-042415

Shostakovich

If you can't find 'em, grind 'em...

David_Snowball

From the SEC, Microcap Stock: A Guide for Investors (2013):

The term "microcap stock" applies to companies with low or "micro" capitalizations, meaning the total value of the company's stock. A typical definition would be companies with a market capitalization of less than $250 or $300 million.

That's quite a distance from Royce Micro-Cap Opportunity's billion dollar boundary. The portfolio, as currently constructed is about two-thirds microcap and one-third small cap. The portfolio's average cap is $720 million.

The fund's performance is fine (two years in the top 5%, two years in the bottom 5%, strong start to 2015) but its asset base is nonexistent, perhaps a reminder that the world doesn't need two dozen Royce clones. I suppose the remaining is a futile marketing gesture given the Royce also runs Royce Micro-cap and Royce Micro-cap Discovery.

David

Shostakovich

The fund's performance is fine (two years in the top 5%, two years in the bottom 5%, strong start to 2015)

But how do you benchmark something like this? All Royce funds have style creep -- how can you (for example) benchmark a hypothetical fund that can hold 30% international small- and midcap stocks against the US small cap index (which is exactly the kind of thing Royce does all the time)?

In this case, what is the benchmark? And, can you trust Royce/Legg Mason to not change the portfolio strategy every 3 years to boost market performance or capture flavor-of-the-month investing trends?