File No.: 333- File No.: 811-03599 |
FORM N-14
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933 [X]
Pre-Effective Amendment No. [ ]
Post-Effective Amendment No. [ ]
(Check appropriate box or boxes)
The Royce Fund
(Exact Name of Registrant as Specified in Charter)
(212) 508-4500
(Area Code and Telephone Number)
745 Fifth Avenue
New York, New York 10151
Address of Principal Executive Offices:
(Number, Street, City, State, Zip Code)
John E. Denneen, Esq.
Secretary, The Royce Fund
745 Fifth Avenue
New York, New York 10151
Name and Address of Agent for Service:
(Number and Street) (City) (State) (Zip Code)
Approximate Date of Proposed Public Offering:
As soon as practicable after this Registration Statement becomes effective
under the Securities Act of 1933, as amended.
Title of the securities being registered: Shares of beneficial interest of Royce International Premier Fund.
No filing fee is due because Registrant is relying on Section 24(f) of the Investment Company Act of 1940, as amended.
THE ROYCE FUND
745 FIFTH AVENUE
NEW YORK, NEW YORK 10151
Dear Shareholders of:
We are sending this information to you because you are a shareholder of one or both of Royce European Small-Cap Fund (“European Small-Cap”) and Royce Global Value Fund (“Global Value”). Shareholders of European Small-Cap are being invited to vote on the proposed reorganization of that Fund into Royce International Premier Fund (“International Premier”). Likewise, Global Value shareholders are being invited to vote on a separate proposed reorganization of Global Value into International Premier. Each of European Small-Cap, Global Value, and International Premier is a series of The Royce Fund (the “Trust”).
For ease of reference and clarity of presentation, we sometimes refer to:
• | each of European Small-Cap and Global Value as a “Target Fund”; | |
• | each proposed transaction as a “Reorganization”; and | |
• | the fund resulting from either or both of the Reorganizations as the “Combined Fund.” |
A special meeting of the shareholders of each Target Fund is scheduled for January 21, 2016 (each, a “Meeting”) to consider and approve the proposed Reorganization for that Target Fund. If a Reorganization receives the required shareholder approval and is completed, shareholders of that Target Fund will become shareholders of International Premier and will cease to own shares of that Target Fund and that Target Fund will be terminated. Please note that the Reorganizations are separate transactions. Shareholder approval of one Reorganization is not contingent upon, and will not affect, shareholder approval of the other Reorganization. Likewise, completion of one Reorganization is not contingent upon, and will not affect, completion of the other Reorganization. This package contains information about each proposal and includes materials you will need to vote.
Proposed Reorganization of Royce European Small-Cap Fund into Royce International Premier Fund
In order to help European Small-Cap shareholders vote on the proposed Reorganization, below is a short summary of the similarities and differences between those Funds and certain other factors to be considered by European Small-Cap shareholders when voting on the Reorganization.
European Small-Cap and International Premier are similar to one another in that they:
• | have the same investment objective; | |
• | have the same portfolio managers; | |
• | use a bottom-up, disciplined value investment approach; | |
• | invest primarily in small-cap equity securities; | |
• | invest a substantial portion of their assets in a limited number of issuers; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities; | |
• | do not expect to engage in hedging transactions to protect against declines in the U.S. dollar or to lock in the | |
value of their foreign security holdings; | ||
• | are subject to the same restrictions on investments in developing country securities; and | |
• | had almost identical portfolio turnover rates for the fiscal year ended December 31, 2014. |
European Small-Cap and International Premier are, however, different from one another in that:
• | European Small-Cap invests, under normal market conditions, at least 80% of its net assets in small-cap equity securities of companies that are headquartered in Europe, while International Premier is not subject to a similar geographical investment requirement; | |
• | International Premier invested 10.7% of its nets assets in developing country securities as of September 30, 2015, compared with 0% for European Small-Cap; and | |
• | they have different benchmark indexes. |
Overall, European Small-Cap and International Premier are subject to similar principal investment risks due to their similar investment strategies and their focus on foreign securities. However, European Small-Cap will be more exposed to the risks associated with investing in Europe than International Premier while International Premier will be more exposed to the risks associated with investing in developing country securities than European Small-Cap.
Although European Small-Cap was larger than International Premier as of September 30, 2015 (i.e., net assets of $21.4 million for European Small-Cap versus net assets of $8.4 million for International Premier), neither Fund has attracted and maintained assets at a sufficient level for it to be viable as a stand-alone mutual fund on a long-term basis. Moreover, because European Small-Cap and International Premier are subject to identical contractual operating expense ratio caps over the same upcoming time periods, European Small-Cap shareholders will not experience increased net annualized operating expense ratios as shareholders of International Premier after the Reorganization during those time periods. We also note that the Combined Fund’s ability to use the capital loss carryforwards of European Small-Cap and International Premier to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be limited.
We believe that completion of this Reorganization would give European Small-Cap shareholders the opportunity to participate in a fund with: (i) the same investment objective and portfolio managers; (ii) similar principal investment strategies and policies; and (iii) a larger asset base over which expenses may be spread. The Board of Trustees of the Trust has approved the proposed Reorganization and recommends that European Small-Cap shareholders vote “FOR” the proposal. Although the Trustees have determined that the proposed Reorganization is in the best interests of European Small-Cap and its shareholders, the final decision rests with those shareholders.
Proposed Reorganization of Royce Global Value Fund into Royce International Premier Fund
In order to help Global Value shareholders vote on the proposed Reorganization, below is a short summary of the similarities and differences between those Funds and certain other factors to be considered by Global Value shareholders when voting on the Reorganization.
Global Value and International Premier are similar to one another in that they:
• | have the same investment objective; | |
• | have the same lead portfolio manager; | |
• | use a bottom-up, disciplined value investment approach; | |
• | invest primarily in the equity securities of smaller companies, with Global Value investing a significant portion of its assets in the equity securities of companies with stock market capitalizations up to $5 billion at the time of investment and International Premier investing primarily in the equity securities of companies with stock market capitalizations up to $3 billion at the time of investment; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities; | |
• | do not expect to engage in hedging transactions to protect against declines in the U.S. dollar or to lock in the value of their foreign security holdings; | |
• | are subject to the same restrictions on investments in developing country securities and invested similar percentages of their respective net assets in those types of securities as of September 30, 2015; and | |
• | had similar portfolio turnover rates for the fiscal year ended December 31, 2014. |
Global Value and International Premier are, however, different from one another in that:
• | their portfolio management teams are not comprised entirely of the same members; | |
• | Global Value’s holdings generally are more broadly diversified than those of International Premier because International Premier normally invests a substantial portion of its assets in a limited number of issuers; | |
• | Although Global Value generally allocates a portion of its assets to U.S. securities, International Premier generally does not do so; and | |
• | They have different benchmark indexes. |
Overall, Global Value and International Premier are subject to similar principal investment risks due to their similar investment strategies and their focus on foreign securities. However, International Premier’s investment of a substantial portion of its assets in a limited number of issuers may involve considerably more risk to investors than Global Value’s more broadly diversified portfolio of smaller-company securities because International Premier’s portfolio may be more susceptible to any single corporate, economic, political, regulatory, or market event. In addition, relative to International Premier, Global Value will be more exposed to the risks associated with
investing in the United States to the extent Global Value invests a larger percentage of its net assets in companies headquartered in that country.
Global Value has experienced a significant decline in its net asset level in recent years, going from $233 million in net assets as of December 31, 2013 to $59.9 million in net assets as of September 30, 2015. Although Global Value’s net asset base was substantially larger than that of International Premier (i.e., $8.4 million) as of that date, neither Fund has attracted and maintained assets at a sufficient level for it to be viable as a stand-alone mutual fund on a long-term basis. Moreover, because International Premier’s various share classes are subject to identical or more favorable contractual operating expense ratio caps over the same upcoming time periods, Global Value shareholders will not experience increased net annualized operating expense ratios as shareholders of International Premier after the reorganization during the time periods covered by those caps. We also note that the Combined Fund’s ability to use the capital loss carryforwards of Global Value, which are substantial, to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be substantially limited. Additionally, the Combined Fund’s ability to use the capital loss carryforwards of International Premier may be limited.
We believe that completion of this Reorganization would give Global Value shareholders the opportunity to participate in a fund with: (i) the same investment objective and the same lead portfolio manager; (ii) similar principal investment strategies and policies; and (iii) a larger asset base over which expenses may be spread. The Board of Trustees of the Trust has approved the proposed Reorganization and recommends that Global Value shareholders vote “FOR” the proposal. Although the Trustees have determined that the proposed Reorganization is in the best interests of Global Value and its shareholders, the final decision rests with those shareholders.
Conclusion
The enclosed materials explain these proposals in more detail and we encourage you to review them carefully. We hope that you will respond today to ensure that your shares will be represented at the relevant Meeting. You may authorize a proxy to vote your shares by using one of the methods below by following the instructions on your proxy card:
• | By touch-tone telephone; | |
• | By internet; or | |
• | By returning the enclosed proxy card in the postage-paid envelope. |
You may also vote in person at the relevant Meeting.
Please call Investor Services toll-free at 1-800-221-4268 with any questions you may have about either Reorganization.
As always, thank you for your continued support of our work. We look forward to serving you for many years to come.
Sincerely,
CHRISTOPHER D. CLARK
President of The Royce Fund
Please vote now. Your vote is important. |
To avoid the wasteful and unnecessary expense of further proxy solicitation, we urge you to indicate your voting instructions on the enclosed proxy card, date and sign it and return it promptly in the envelope provided, or record your voting instructions by touch-tone telephone or via the internet, no matter how large or small your holdings may be. If you submit a properly executed proxy but do not indicate how you wish your shares to be voted, your shares will be voted “FOR” the relevant proposal. |
THE ROYCE FUND
745 FIFTH AVENUE
NEW YORK, NEW YORK 10151
——————
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD ON JANUARY 21, 2016
——————
NOTICE IS HEREBY GIVEN that Special Meetings of Shareholders (each, a “Meeting” and together, the “Meetings”) of the following funds (each, a “Target Fund” and together, the “Target Funds”), each a series of The Royce Fund (the “Trust”), will be held at the offices of the Trust, 745 Fifth Avenue, New York, New York 10151, on January 21, 2016 at the times indicated below:
Legal Name of Target Fund | Referred to Herein As | Meeting Time |
Royce European Small-Cap Fund | European Small-Cap | __:__ ____ Eastern time |
Royce Global Value Fund | Global Value | __:__ ____ Eastern time |
The Meetings will be held for the following purposes:
1. To approve a Plan of Reorganization of the Trust (the “Plan”), on behalf of each Target Fund and Royce International Premier Fund (“International Premier”). As described in more detail in the accompanying Joint Proxy Statement and Prospectus, the Plan provides for the transfer of all of the assets of the relevant Target Fund to International Premier in exchange for International Premier’s assumption of all of the liabilities of that Target Fund and International Premier’s issuance to that Target Fund of shares of beneficial interest of International Premier (the “International Premier Shares”). The International Premier Shares received by a Target Fund in a reorganization transaction will have an aggregate net asset value that is equal to the aggregate net asset value of all of the shares of that Target Fund that are outstanding immediately prior to such reorganization. The Plan also provides for the distribution by a Target Fund, on a pro rata basis, of the International Premier Shares to its shareholders in complete liquidation of the relevant Target Fund. Shareholders of a Target Fund would receive the same class of International Premier Shares as they held in the relevant Target Fund. The reorganization transaction involving European Small-Cap is separate from the transaction involving Global Value. Only shareholders of European Small-Cap will vote in connection with the reorganization transaction involving that Fund. Likewise, only shareholders of Global Value will vote in connection with the reorganization transaction involving that Fund. A vote in favor of the Plan by shareholders of a Target Fund will constitute a vote in favor of the termination of that Target Fund as a separate series of the Trust.
2. To transact such other business as may come before the relevant Meeting or any adjournment thereof.
The Board of Trustees of the Trust has fixed the close of business on November 13, 2015 as the record date (the “Record Date”) for the determination of those Target Fund shareholders entitled to vote at the relevant Meeting or any adjournment thereof. Only holders of record of shares of a Target Fund at the close of business on the Record Date will be entitled to vote at the relevant Meeting or any adjournment thereof.
A complete list of the Target Fund shareholders entitled to vote at the relevant Meeting will be available and open to the examination of any shareholder of that Target Fund for any purpose relevant to such Meeting during ordinary business hours from and after __________ __, ____, at the offices of the Trust, 745 Fifth Avenue, New York, New York 10151.
Under the Plan, shareholder approval of one reorganization transaction is not contingent upon, and will not affect in any way, shareholder approval of the other reorganization transaction. In addition, the consummation of one reorganization transaction is not contingent upon, and will not affect in any way, the consummation of the other reorganization transaction. Target Fund shareholders should consider each proposal independently of the other proposal.
If the Plan receives the required shareholder approval and the reorganization transaction in respect of the Target Fund in which you own shares is completed, you will become a shareholder of International Premier, you will no longer own shares of your Target Fund, and your Target Fund will be liquidated and terminated as a separate series of the Trust. In the event the Plan does not receive the required shareholder approval or the reorganization transaction in respect of the Target Fund in which you own shares is otherwise not completed, the relevant Target Fund and International Premier will continue to operate as separate funds and you will remain a shareholder of your Target Fund.
Please call Investor Services toll-free at 1-800-221-4268 with any questions you may have about Proposal No. 1.
IMPORTANT
To avoid the wasteful and unnecessary expense of further proxy solicitation, please mark your instructions on the enclosed proxy card, date and sign it, and return it in the enclosed envelope (which requires no postage if mailed in the United States), even if you expect to be present at the relevant Meeting. You may also authorize a proxy to vote your shares via touch-tone telephone or the Internet by following the instructions on the proxy card. Please take advantage of these prompt and efficient proxy authorization options. The accompanying proxy is solicited on behalf of the Board of Trustees of the Trust, is revocable, and will not affect your right to vote in person in the event that you attend the relevant Meeting.
By Order of the Board of Trustees of The Royce Fund | |
John E. Denneen | |
Secretary |
[December __, 2015]
The information in this Joint Proxy Statement and Prospectus is not complete and may be changed.
We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is
effective. This Joint Proxy Statement and Prospectus is not an offer to sell these securities and it is
not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
PRELIMINARY PROSPECTUS/PROXY STATEMENT DATED NOVEMBER 3, 2015
JOINT PROXY STATEMENT
for
ROYCE EUROPEAN SMALL-CAP FUND
and
ROYCE GLOBAL VALUE FUND,
EACH A SERIES OF THE ROYCE FUND
and
PROSPECTUS
for
ROYCE INTERNATIONAL PREMIER FUND,
A SERIES OF THE ROYCE FUND
745 Fifth Avenue
New York, New York 10151
1-800-221-4268
Reorganization of Royce European Small-Cap Fund into Royce International Premier Fund
and
Reorganization of Royce Global Value Fund into Royce International Premier Fund
This Joint Proxy Statement and Prospectus (this “Prospectus/Proxy Statement”) is furnished in connection with the Special Meetings of Shareholders (each, a “Meeting” and together, the “Meetings”) of the funds listed immediately below (each, a “Target Fund” and together, the “Target Funds”). Each Target Fund is a separate series of The Royce Fund (the “Trust”). Shareholders of the relevant Target Fund will be asked to approve the Plan of Reorganization of the Trust (the “Plan”) in respect of that Target Fund at the Meeting. As described in more detail below, the Plan provides for the reorganization of each Target Fund into the acquiring fund listed below, which is also a series of the Trust. Each Target Fund and International Premier Fund is sometimes referred to herein as a “Fund”, and collectively, as the “Funds”.
Target Fund | Acquiring Fund | Name of Reorganization |
Royce European Small-Cap Fund | Royce International Premier Fund | European Small-Cap Reorganization |
Royce Global Value Fund | Royce International Premier Fund | Global Value Reorganization |
The Plan provides for the transfer of all of the assets of the relevant Target Fund to Royce International Premier Fund (“International Premier”) in exchange for International Premier’s assumption of all of the liabilities of that Target Fund and International Premier’s issuance to that Target Fund of shares of beneficial interest of International Premier (the “International Premier Shares”). The International Premier Shares received by a Target Fund in a reorganization transaction will have an aggregate net asset value that is equal to the aggregate net asset value of all of the shares of that Target Fund that are outstanding immediately prior to such reorganization. The Plan also provides for the distribution by a Target Fund, on a pro rata basis, of the International Premier Shares to its shareholders in complete liquidation of the relevant Target Fund. Shareholders of a Target Fund would receive the same class of International Premier Shares as they held in the relevant Target Fund.
Each acquisition of assets of a Target Fund by International Premier in exchange for International Premier’s assumption of the Target Fund’s liabilities and the issuance and distribution of the International Premier Shares to the Target Fund and its shareholders is from time to time individually referred to as a “Reorganization” and are from time to time together referred to as the “Reorganizations.” The fund resulting from either Reorganization or both of the Reorganizations is sometimes referred to herein as the “Combined Fund.” Upon completion of either Reorganization or both of the Reorganizations, the Combined Fund will be managed in accordance with International Premier’s investment objective and principal investment policies and strategies and will be subject to International Premier’s legal agreements.
1
The European Small-Cap Reorganization is separate from the Global Value Reorganization. Only shareholders of Royce European Small-Cap Fund (“European Small-Cap”) will vote in connection with the European Small-Cap Reorganization. Likewise, only shareholders of Royce Global Value Fund (“Global Value”) will vote in connection with the Global Value Reorganization.
Under the Plan, shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Target Fund shareholders should consider each proposal independently of the other proposal.
If the Plan receives the required shareholder approval and the corresponding Reorganization in respect of a Target Fund in which you own shares is completed, you will become a shareholder of International Premier, you will no longer own shares of your Target Fund, and your Target Fund will be liquidated and terminated as a separate series of the Trust. In the event the Plan does not receive the required shareholder approval or the corresponding Reorganization in respect of a Target Fund in which you own shares is not otherwise completed, such Target Fund and International Premier will continue to operate as separate Funds and you will remain a shareholder of your Target Fund.
The Board of Trustees of the Trust (the “Board”) has fixed the close of business on November 13, 2015 as the record date (the “Record Date”) for the determination of those Target Fund shareholders entitled to vote at the relevant Meeting or any adjournment thereof. Only holders of record of shares of a Target Fund at the close of business on the Record Date will be entitled to vote at the relevant Meeting or any adjournment thereof.
The Meetings will be held at the offices of the Trust, 745 Fifth Avenue, New York, New York 10151, on January 21, 2016 at the times indicated below:
Target Fund | Meeting Time |
Royce European Small-Cap Fund | __:__ ____ Eastern time |
Royce Global Value Fund | __:__ ____ Eastern time |
Royce & Associates, LLC (“Royce”), the investment adviser to each of European Small-Cap, Global Value, and International Premier, has retained __________, __________, __________, __________ _____ (the “Solicitor”), to solicit proxies for the Meetings. The Solicitor is responsible for printing proxy cards, mailing proxy material to Fund shareholders, soliciting broker-dealer firms, custodians, nominees and fiduciaries, tabulating the returned proxies, and performing other proxy solicitation services. The cost of these services is expected to range from approximately $_____ to $_____, and will be paid by Royce. If you need assistance voting, please call __________ toll-free at 1-___-___-____.
In addition to solicitation through the mail, proxies may be solicited by representatives of the Trust and Royce Fund Services, Inc., each Fund’s distributor, without cost to the Funds. Such solicitation may be by telephone, facsimile, or otherwise. It is anticipated that banks, broker-dealers, custodians, nominees, fiduciaries, and other financial institutions will be requested to forward proxy materials to beneficial owners and to obtain approval for the execution of proxies. Upon request, Royce will reimburse brokers, custodians, nominees, and fiduciaries for the reasonable expenses incurred by them in connection with forwarding solicitation material to the beneficial owners of Fund shares held of record by such persons.
Fund and Share Class | Number of Shares Outstanding |
Royce European Small-Cap Fund | |
Investment | |
Service | |
Royce Global Value Fund | |
Investment | |
Service | |
Consultant | |
R | |
K |
2
Royce International Premier Fund | |
Investment | |
Service | |
Each of the following documents has been filed with the Securities and Exchange Commission (the “SEC”), and is incorporated herein by reference into (each legally forms a part of) this Prospectus/Proxy Statement:
• | The Statement of Additional Information relating to this Prospectus/Proxy Statement, dated [December __, 2015] (the “Reorganization SAI”); | ||
• | The Statutory Prospectus relating to the Consultant Class, R Class, and K Class shares of Global Value, dated May 1, 2015 and as amended and supplemented to date (the “Global Value C-R-K Prospectus”); | ||
• | The Statement of Additional Information relating to each series of the Trust, including International Premier, European Small-Cap, and Global Value, dated May 1, 2015 and as amended and supplemented to date (the “SAI”); and | ||
• | The Annual Report to Shareholders of various series of the Trust, including Global Value, for the fiscal year ended December 31, 2014 (the “Global Value Annual Report”). |
Each of the following documents has been filed with the SEC, and is incorporated herein by reference into (each legally forms a part of), and also accompanies this Prospectus/Proxy Statement:
• | The Statutory Prospectus relating to the Investment Class, Service Class, and/or Institutional Class shares of various series of the Trust, including International Premier, European Small-Cap, and Global Value, dated May 1, 2015 and as amended and supplemented to date (the “Statutory Prospectus”); | ||
• | The Annual Report to Shareholders of various series of the Trust, including International Premier and European Small-Cap, for the fiscal year ended December 31, 2014 (the “Annual Report”); and | ||
• | The Semiannual Report to Shareholders of various series of the Trust, including International Premier, European Small-Cap, and Global Value, for the six-month period ended June 30, 2015 (the “Semiannual Report”). |
The documents listed above are available free of charge by calling Investor Services toll-free at 1-800-221-4268, or by writing to the Funds at 745 Fifth Avenue, New York, New York 10151. Each Target Fund and International Premier are subject to the informational requirements of the Securities Exchange Act of 1934 and the Investment Company Act of 1940 (the “1940 Act”), and in accordance therewith, file reports and other information, including proxy materials and charter documents, with the SEC. You also may view or obtain these documents from the SEC:
In Person: | At the SEC’s Public Reference Room at 100 F Street, N.E., Washington, DC 20549 | ||
By Mail: | Public Reference Section Office of Consumer Affairs and Information Services Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 (duplicating fee required) | ||
By E-mail: | publicinfo@sec.gov (duplicating fee required) By Internet: www.sec.gov |
Mutual fund shares are not deposits or obligations of, or guaranteed or endorsed by, any bank, and are not insured by the Federal Deposit Insurance Corporation or any other U.S. government agency. Mutual fund shares involve investment risks, including the possible loss of principal.
The date of this Prospectus/Proxy Statement is [December __, 2015]
3
FEES AND EXPENSES FOR ROYCE EUROPEAN SMALL-CAP FUND SHAREHOLDERS (INVESTMENT CLASS)
Shareholders of all mutual funds pay various expenses, either directly or indirectly. Transaction expenses are charged directly to your account. Operating expenses are paid from a fund’s assets and, therefore, are paid by shareholders indirectly.
The fee tables below describe the fees and expenses that you pay if you buy and hold Investment Class shares of European Small-Cap and International Premier and the pro forma combined fees and expenses that you may pay if you buy and hold shares of the Combined Fund after giving effect to one or both of the Reorganizations. The annualized expense ratios below for each Fund are based on their respective operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the revised contractual expense caps that will go into effect on January 1, 2016. The pro forma fees and expenses for the Investment Class shares of the Combined Fund further assume that one or both of the Reorganizations, as applicable, occurred on September 30, 2015.
The estimated pro forma Combined Fund fees and expenses presented below are based upon numerous material assumptions. Although these projections represent good faith estimates, no assurance can be given that any particular level of expenses will be achieved, because expenses depend on a variety of factors, including the future level of Fund assets, many of which are beyond the control of the Funds and Royce. Future expenses may be higher than those shown below.
Investment Class | ||||
Shareholder Fees (fees paid directly from your investment) | ||||
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Maximum sales charge (load) imposed on purchases | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum deferred sales charge | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum sales charge (load) imposed on reinvested dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Redemption fee (as a percentage of amount redeemed on shares held for less than 30 days) | 2.00% | 2.00% | 2.00% | 2.00% |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. European Small-Cap shareholders should consider the European Small-Cap Reorganization independently of the Global Value Reorganization. |
4
Investment Class+ | ||||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Management fees++ | 1.00% | 1.00% | 1.00% | 1.00% |
Distribution (12b-1) fees | 0.00% | 0.00% | 0.00% | 0.00% |
Other expenses | 1.57% | 1.93% | 1.20% | 0.53% |
Total annual Fund operating expenses | 2.57% | 2.93% | 2.20% | 1.53% |
Fee waivers and/or expense reimbursements | (1.38)%** | (1.74)%** | (1.01)%** | (0.34)%** |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.19%** | 1.19%** | 1.19%** | 1.19%** |
+ Restated to reflect each Fund’s revised contractual investment management fee rate and the revised contractual expense cap for the Investment Class shares of each Fund which become effective as of January 1, 2016. | ||||
++ Effective January 1, 2016, each Fund’s contractual investment management fee rate will be 1.00% of the first $2,000,000,000, 0.95% of the next $2,000,000,000, 0.90% of the next $2,000,000,000, and 0.85% of any additional average net assets. From July 1, 2015 to December 31, 2015, each Fund’s contractual investment management fee rate was 1.10% of the first $2,000,000,000, 1.05% of the next $2,000,000,000, 1.00% of the next $2,000,000,000, and 0.95% of any additional average net assets. | ||||
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. European Small-Cap shareholders should consider the European Small-Cap Reorganization independently of the Global Value Reorganization. | ||||
** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Investment Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.19% through December 31, 2016 and at or below 1.74% through December 31, 2025. |
The example assumes that you invest $10,000 in the relevant Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the relevant Fund’s total operating expenses remain the same (net of the fee waivers/and or expense reimbursements for the periods noted above in which such fee waivers/and or expense reimbursements would be operative). Although your actual costs may be higher or lower, based on the assumptions your costs would be:
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
1 Year | $121 | $121 | $121 | $121 |
3 Years | $494 | $494 | $494 | $450 |
5 Years | $892 | $892 | $892 | $802 |
10 Years | $2,006 | $2,006 | $2,006 | $1,795 |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. European Small-Cap shareholders should consider the European Small-Cap Reorganization independently of the Global Value Reorganization. |
5
FEES AND EXPENSES FOR ROYCE EUROPEAN SMALL-CAP FUND SHAREHOLDERS (SERVICE CLASS)
Shareholders of all mutual funds pay various expenses, either directly or indirectly. Transaction expenses are charged directly to your account. Operating expenses are paid from a fund’s assets and, therefore, are paid by shareholders indirectly.
The fee tables below describe the fees and expenses that you pay if you buy and hold Service Class shares of European Small-Cap and International Premier and the pro forma combined fees and expenses that you may pay if you buy and hold shares of the Combined Fund after giving effect to one or both of the Reorganizations. The annualized expense ratios below for each Fund are based on their respective operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the revised contractual expense caps that will go into effect on January 1, 2016. The pro forma fees and expenses for the Service Class shares of the Combined Fund further assume that one or both of the Reorganizations, as applicable, occurred on September 30, 2015.
The estimated pro forma Combined Fund fees and expenses presented below are based upon numerous material assumptions. Although these projections represent good faith estimates, no assurance can be given that any particular level of expenses will be achieved, because expenses depend on a variety of factors, including the future level of Fund assets, many of which are beyond the control of the Funds and Royce. Future expenses may be higher than those shown below.
Service Class | ||||
Shareholder Fees (fees paid directly from your investment) | ||||
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Maximum sales charge (load) imposed on purchases | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum deferred sales charge | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum sales charge (load) imposed on reinvested dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Redemption fee (as a percentage of amount redeemed on shares held for less than 30 days) | 2.00% | 2.00% | 2.00% | 2.00% |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. European Small-Cap shareholders should consider the European Small-Cap Reorganization independently of the Global Value Reorganization. |
6
Service Class+ | ||||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Management fees++ | 1.00% | 1.00% | 1.00% | 1.00% |
Distribution (12b-1) fees | 0.25% | 0.25% | 0.25% | 0.25% |
Other expenses | 0.75% | 1.43% | 0.64% | 0.48% |
Total annual Fund operating expenses | 2.00% | 2.68% | 1.89% | 1.73% |
Fee waivers and/or expense reimbursements | (0.56)%** | (1.24)%** | (0.45)%** | (0.29)%** |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.44%** | 1.44%** | 1.44%** | 1.44%** |
+ Restated to reflect each Fund’s revised contractual investment management fee rate and the revised contractual expense cap for the Service Class shares of each Fund which become effective as of January 1, 2016. | ||||
++ Effective January 1, 2016, each Fund’s contractual investment management fee rate will be 1.00% of the first $2,000,000,000, 0.95% of the next $2,000,000,000, 0.90% of the next $2,000,000,000, and 0.85% of any additional average net assets. From July 1, 2015 to December 31, 2015, each Fund’s contractual investment management fee rate was 1.10% of the first $2,000,000,000, 1.05% of the next $2,000,000,000, 1.00% of the next $2,000,000,000, and 0.95% of any additional average net assets. | ||||
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. European Small-Cap shareholders should consider the European Small-Cap Reorganization independently of the Global Value Reorganization. | ||||
** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.44% through December 31, 2016 and at or below 1.99% through December 31, 2025. |
The example assumes that you invest $10,000 in the relevant Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the relevant Fund’s total operating expenses remain the same (net of the fee waivers/and or expense reimbursements for the periods noted above in which such fee waivers/and or expense reimbursements would be operative). Although your actual costs may be higher or lower, based on the assumptions your costs would be:
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
1 Year | $147 | $147 | $147 | $147 |
3 Years | $571 | $571 | $550 | $517 |
5 Years | $1,022 | $1,022 | $980 | $911 |
10 Years | $2,273 | $2,273 | $2,175 | $2,017 |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. European Small-Cap shareholders should consider the European Small-Cap Reorganization independently of the Global Value Reorganization. |
Royce European Small-Cap Fund | Royce International Premier Fund |
65% | 62% |
7
Shareholders of all mutual funds pay various expenses, either directly or indirectly. Transaction expenses are charged directly to your account. Operating expenses are paid from a fund’s assets and, therefore, are paid by shareholders indirectly.
The fee tables below describe the fees and expenses that you pay if you buy and hold Investment Class shares of Global Value and International Premier and the pro forma combined fees and expenses that you may pay if you buy and hold shares of the Combined Fund after giving effect to one or both of the Reorganizations. The annualized expense ratios below for each Fund are based on their respective operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the revised contractual expense caps that will go into effect on January 1, 2016. The pro forma fees and expenses for the Investment Class shares of the Combined Fund further assume that one or both of the Reorganizations, as applicable, occurred on September 30, 2015.
The estimated pro forma Combined Fund fees and expenses presented below are based upon numerous material assumptions. Although these projections represent good faith estimates, no assurance can be given that any particular level of expenses will be achieved, because expenses depend on a variety of factors, including the future level of Fund assets, many of which are beyond the control of the Funds and Royce. Future expenses may be higher than those shown below.
Investment Class | ||||
Shareholder Fees (fees paid directly from your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Maximum sales charge (load) imposed on purchases | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum deferred sales charge | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum sales charge (load) imposed on reinvested dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Redemption fee (as a percentage of amount redeemed on shares held for less than 30 days) | 2.00% | 2.00% | 2.00% | 2.00% |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
8
Investment Class+ | ||||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Management fees++ | 1.00% | 1.00% | 1.00% | 1.00% |
Distribution (12b-1) fees | 0.00% | 0.00% | 0.00% | 0.00% |
Other expenses | 0.55% | 1.93% | 0.54% | 0.53% |
Total annual Fund operating expenses | 1.55% | 2.93% | 1.54% | 1.53% |
Fee waivers and/or expense reimbursements | (0.36)%** | (1.74)%*** | (0.35)%*** | (0.34)%*** |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.19%** | 1.19%*** | 1.19%*** | 1.19%*** |
+ Restated to reflect each Fund’s revised contractual investment management fee rate and the revised contractual expense cap for the Investment Class shares of each Fund which become effective as of January 1, 2016. | ||||
++ Effective January 1, 2016, each Fund’s contractual investment management fee rate will be 1.00% of the first $2,000,000,000, 0.95% of the next $2,000,000,000, 0.90% of the next $2,000,000,000, and 0.85% of any additional average net assets. From July 1, 2015 to December 31, 2015, each Fund’s contractual investment management fee rate was 1.10% of the first $2,000,000,000, 1.05% of the next $2,000,000,000, 1.00% of the next $2,000,000,000, and 0.95% of any additional average net assets. | ||||
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. | ||||
** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Investment Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.19% through December 31, 2016 and at or below 1.99% through December 31, 2021. | ||||
*** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Investment Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.19% through December 31, 2016 and at or below 1.74% through December 31, 2025. |
The example assumes that you invest $10,000 in the relevant Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the relevant Fund’s total operating expenses remain the same (net of the fee waivers/and or expense reimbursements for the periods noted above in which such fee waivers/and or expense reimbursements would be operative). Although your actual costs may be higher or lower, based on the assumptions your costs would be:
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
1 Year | $121 | $121 | $121 | $121 |
3 Years | $454 | $494 | $452 | $450 |
5 Years | $811 | $892 | $806 | $802 |
10 Years | $1,815 | $2,006 | $1,805 | $1,795 |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
9
FEES AND EXPENSES FOR ROYCE GLOBAL VALUE FUND SHAREHOLDERS (SERVICE CLASS)
Shareholders of all mutual funds pay various expenses, either directly or indirectly. Transaction expenses are charged directly to your account. Operating expenses are paid from a fund’s assets and, therefore, are paid by shareholders indirectly.
The fee tables below describe the fees and expenses that you pay if you buy and hold Service Class shares of Global Value and International Premier and the pro forma combined fees and expenses that you may pay if you buy and hold shares of the Combined Fund after giving effect to one or both of the Reorganizations. The annualized expense ratios below for each Fund are based on their respective operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the revised contractual expense caps that will go into effect on January 1, 2016. The pro forma fees and expenses for the Service Class shares of the Combined Fund further assume that one or both of the Reorganizations, as applicable, occurred on September 30, 2015.
The estimated pro forma Combined Fund fees and expenses presented below are based upon numerous material assumptions. Although these projections represent good faith estimates, no assurance can be given that any particular level of expenses will be achieved, because expenses depend on a variety of factors, including the future level of Fund assets, many of which are beyond the control of the Funds and Royce. Future expenses may be higher than those shown below.
Service Class | ||||
Shareholder Fees (fees paid directly from your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Maximum sales charge (load) imposed on purchases | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum deferred sales charge | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum sales charge (load) imposed on reinvested dividends | 0.00% | 0.00% | 0.00% | 0.00% |
Redemption fee (as a percentage of amount redeemed on shares held for less than 30 days) | 2.00% | 2.00% | 2.00% | 2.00% |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
10
Service Class+ | ||||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Management fees++ | 1.00% | 1.00% | 1.00% | 1.00% |
Distribution (12b-1) fees | 0.25% | 0.25% | 0.25% | 0.25% |
Other expenses | 0.52% | 1.43% | 0.51% | 0.48% |
Total annual Fund operating expenses | 1.77% | 2.68% | 1.76% | 1.73% |
Fee waivers and/or expense reimbursements | (0.33)%** | (1.24)%*** | (0.32)%*** | (0.29)%*** |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.44%** | 1.44%*** | 1.44%*** | 1.44%*** |
+ Restated to reflect each Fund’s revised contractual investment management fee rate and the revised contractual expense cap for the Service Class shares of each Fund which become effective as of January 1, 2016. | ||||
++ Effective January 1, 2016, each Fund’s contractual investment management fee rate will be 1.00% of the first $2,000,000,000, 0.95% of the next $2,000,000,000, 0.90% of the next $2,000,000,000, and 0.85% of any additional average net assets. From July 1, 2015 to December 31, 2015, each Fund’s contractual investment management fee rate was 1.10% of the first $2,000,000,000, 1.05% of the next $2,000,000,000, 1.00% of the next $2,000,000,000, and 0.95% of any additional average net assets. | ||||
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. | ||||
** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.44% through December 31, 2016 and at or below 1.99% through December 31, 2018. | ||||
*** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Service Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.44% through December 31, 2016 and at or below 1.99% through December 31, 2025. |
The example assumes that you invest $10,000 in the relevant Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the relevant Fund’s total operating expenses remain the same (net of the fee waivers/and or expense reimbursements for the periods noted above in which such fee waivers/and or expense reimbursements would be operative). Although your actual costs may be higher or lower, based on the assumptions your costs would be:
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
1 Year | $147 | $147 | $147 | $147 |
3 Years | $525 | $571 | $523 | $517 |
5 Years | $928 | $1,022 | $924 | $911 |
10 Years | $2,057 | $2,273 | $2,047 | $2,017 |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
11
FEES AND EXPENSES FOR ROYCE GLOBAL VALUE FUND SHAREHOLDERS (CONSULTANT CLASS)
Shareholders of all mutual funds pay various expenses, either directly or indirectly. Transaction expenses are charged directly to your account. Operating expenses are paid from a fund’s assets and, therefore, are paid by shareholders indirectly.
The fee tables below describe the fees and expenses that you pay if you buy and hold Consultant Class shares of Global Value and International Premier and the pro forma combined fees and expenses that you may pay if you buy and hold shares of the Combined Fund after giving effect to one or both of the Reorganizations. The annualized expense ratio below for Global Value is based on its operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the contractual expense caps that will go into effect on January 1, 2016. International Premier does not currently offer Consultant Class shares; the fees and expenses shown below for the Consultant Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. The pro forma fees and expenses for the Consultant Class shares of the Combined Fund further assume that one or both of the Reorganizations, as applicable, occurred on September 30, 2015.
The estimated pro forma Combined Fund fees and expenses presented below are based upon numerous material assumptions. Although these projections represent good faith estimates, no assurance can be given that any particular level of expenses will be achieved, because expenses depend on a variety of factors, including the future level of Fund assets, many of which are beyond the control of the Funds and Royce. Future expenses may be higher than those shown below.
Consultant Class | ||||
Shareholder Fees (fees paid directly from your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Maximum sales charge (load) imposed on purchases | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum deferred sales charge on purchases held for less than 365 days | 1.00% | 1.00% | 1.00% | 1.00% |
Maximum sales charge (load) imposed on reinvested dividends | 0.00% | 0.00% | 0.00% | 0.00% |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
12
Consultant Class+ | ||||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund* | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations** | |
Management fees++ | 1.00% | 1.00% | 1.00% | 1.00% |
Distribution (12b-1) fees | 1.00% | 1.00% | 1.00% | 1.00% |
Other expenses | 0.50% | 0.50% | 0.50% | 0.50% |
Total annual Fund operating expenses | 2.50% | 2.50% | 2.50% | 2.50% |
Fee waivers and/or expense reimbursements | (0.31)%*** | (0.31)%*** | (0.31)%*** | (0.31)%*** |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 2.19%*** | 2.19%*** | 2.19%*** | 2.19%*** |
+ Restated to reflect each Fund’s revised contractual investment management fee rate and the contractual expense cap for the Consultant Class shares of each Fund which become effective as of January 1, 2016. | ||||
++ Effective January 1, 2016, each Fund’s contractual investment management fee rate will be 1.00% of the first $2,000,000,000, 0.95% of the next $2,000,000,000, 0.90% of the next $2,000,000,000, and 0.85% of any additional average net assets. From July 1, 2015 to December 31, 2015, each Fund’s contractual investment management fee rate was 1.10% of the first $2,000,000,000, 1.05% of the next $2,000,000,000, 1.00% of the next $2,000,000,000, and 0.95% of any additional average net assets. | ||||
* International Premier does not currently offer Consultant Class shares; the fees and expenses shown above for the Consultant Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. | ||||
** Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. | ||||
*** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the Consultant Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 2.19% through December 31, 2016. |
The example assumes that you invest $10,000 in the relevant Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the relevant Fund’s total operating expenses remain the same (net of the fee waivers/and or expense reimbursements for year one). Although your actual costs may be higher or lower, based on the assumptions your costs would be:
Royce Global Value Fund | Royce International Premier Fund* | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations** | |
1 Year | $222 | $222 | $222 | $222 |
3 Years | $749 | $749 | $749 | $749 |
5 Years | $1,303 | $1,303 | $1,303 | $1,303 |
10 Years | $2,813 | $2,813 | $2,813 | $2,813 |
* International Premier does not currently offer Consultant Class shares; the expenses shown above for the Consultant Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. | ||||
** Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
13
FEES AND EXPENSES FOR ROYCE GLOBAL VALUE FUND SHAREHOLDERS (R CLASS)
Shareholders of all mutual funds pay various expenses, either directly or indirectly. Transaction expenses are charged directly to your account. Operating expenses are paid from a fund’s assets and, therefore, are paid by shareholders indirectly.
The fee tables below describe the fees and expenses that you pay if you buy and hold R Class shares of Global Value and International Premier and the pro forma combined fees and expenses that you may pay if you buy and hold shares of the Combined Fund after giving effect to one or both of the Reorganizations. The annualized expense ratio below for Global Value is based on its operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the contractual expense caps that will go into effect on January 1, 2016. International Premier does not currently offer R Class shares; the fees and expenses shown below for the R Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. The pro forma fees and expenses for the R Class shares of the Combined Fund further assume that one or both of the Reorganizations, as applicable, occurred on September 30, 2015.
The estimated pro forma Combined Fund fees and expenses presented below are based upon numerous material assumptions. Although these projections represent good faith estimates, no assurance can be given that any particular level of expenses will be achieved, because expenses depend on a variety of factors, including the future level of Fund assets, many of which are beyond the control of the Funds and Royce. Future expenses may be higher than those shown below.
R Class | ||||
Shareholder Fees (fees paid directly from your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Maximum sales charge (load) imposed on purchases | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum deferred sales charge on purchases held for less than 365 days | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum sales charge (load) imposed on reinvested dividends | 0.00% | 0.00% | 0.00% | 0.00% |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
14
R Class+ | ||||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund* | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations** | |
Management fees++ | 1.00% | 1.00% | 1.00% | 1.00% |
Distribution (12b-1) fees | 0.50% | 0.50% | 0.50% | 0.50% |
Other expenses | 6.98% | 6.98% | 6.98% | 6.98% |
Total annual Fund operating expenses | 8.48% | 8.48% | 8.48% | 8.48% |
Fee waivers and/or expense reimbursements | (6.74)%*** | (6.74)%*** | (6.74)%*** | (6.74)%*** |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.74%*** | 1.74%*** | 1.74%*** | 1.74%*** |
+ Restated to reflect each Fund’s revised contractual investment management fee rate and the contractual expense cap for the R Class shares of each Fund which become effective as of January 1, 2016. | ||||
++ Effective January 1, 2016, each Fund’s contractual investment management fee rate will be 1.00% of the first $2,000,000,000, 0.95% of the next $2,000,000,000, 0.90% of the next $2,000,000,000, and 0.85% of any additional average net assets. From July 1, 2015 to December 31, 2015, each Fund’s contractual investment management fee rate was 1.10% of the first $2,000,000,000, 1.05% of the next $2,000,000,000, 1.00% of the next $2,000,000,000, and 0.95% of any additional average net assets. | ||||
* International Premier does not currently offer R Class shares; the fees and expenses shown above for the R Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. | ||||
** Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. | ||||
*** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the R Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.74% through December 31, 2016 and at or below 1.99% through December 31, 2025. |
The example assumes that you invest $10,000 in the relevant Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the relevant Fund’s total operating expenses remain the same (net of the fee waivers/and or expense reimbursements for the periods noted above). Although your actual costs may be higher or lower, based on the assumptions your costs would be:
Royce Global Value Fund | Royce International Premier Fund* | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations** | |
1 Year | $177 | $177 | $177 | $177 |
3 Years | $600 | $600 | $600 | $600 |
5 Years | $1,050 | $1,050 | $1,050 | $1,050 |
10 Years | $2,297 | $2,297 | $2,297 | $2,297 |
* International Premier does not currently offer R Class shares; the expenses shown above for the R Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. | ||||
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
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FEES AND EXPENSES FOR ROYCE GLOBAL VALUE FUND SHAREHOLDERS (K CLASS)
Shareholders of all mutual funds pay various expenses, either directly or indirectly. Transaction expenses are charged directly to your account. Operating expenses are paid from a fund’s assets and, therefore, are paid by shareholders indirectly.
The fee tables below describe the fees and expenses that you pay if you buy and hold K Class shares of Global Value and International Premier and the pro forma combined fees and expenses that you may pay if you buy and hold shares of the Combined Fund after giving effect to one or both of the Reorganizations. The annualized expense ratio below for Global Value is based on its operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the contractual expense caps that will go into effect on January 1, 2016. International Premier does not currently offer K Class shares; the fees and expenses shown below for the K Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. The pro forma fees and expenses for the K Class shares of the Combined Fund further assume that one or both of the Reorganizations, as applicable, occurred on September 30, 2015.
The estimated pro forma Combined Fund fees and expenses presented below are based upon numerous material assumptions. Although these projections represent good faith estimates, no assurance can be given that any particular level of expenses will be achieved, because expenses depend on a variety of factors, including the future level of Fund assets, many of which are beyond the control of the Funds and Royce. Future expenses may be higher than those shown below.
K Class | ||||
Shareholder Fees (fees paid directly from your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations* | |
Maximum sales charge (load) imposed on purchases | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum deferred sales charge on purchases held for less than 365 days | 0.00% | 0.00% | 0.00% | 0.00% |
Maximum sales charge (load) imposed on reinvested dividends | 0.00% | 0.00% | 0.00% | 0.00% |
* Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
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K Class+ | ||||
Annual Fund Operating Expenses (expenses that you pay each year as a percentage of the value of your investment) | ||||
Royce Global Value Fund | Royce International Premier Fund* | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations** | |
Management fees++ | 1.00% | 1.00% | 1.00% | 1.00% |
Distribution (12b-1) fees | 0.25% | 0.25% | 0.25% | 0.25% |
Other expenses | 83.89% | 83.89% | 83.89% | 83.89% |
Total annual Fund operating expenses | 85.14% | 85.14% | 85.14% | 85.14% |
Fee waivers and/or expense reimbursements | (83.65)%*** | (83.65)%*** | (83.65)%*** | (83.65)%*** |
Total annual Fund operating expenses after fee waivers and/or expense reimbursements | 1.49%*** | 1.49%*** | 1.49%*** | 1.49%*** |
+ Restated to reflect each Fund’s revised contractual investment management fee rate and the contractual expense cap for the K Class shares of each Fund which become effective as of January 1, 2016. | ||||
++ Effective January 1, 2016, each Fund’s contractual investment management fee rate will be 1.00% of the first $2,000,000,000, 0.95% of the next $2,000,000,000, 0.90% of the next $2,000,000,000, and 0.85% of any additional average net assets. From July 1, 2015 to December 31, 2015, each Fund’s contractual investment management fee rate was 1.10% of the first $2,000,000,000, 1.05% of the next $2,000,000,000, 1.00% of the next $2,000,000,000, and 0.95% of any additional average net assets. | ||||
* International Premier does not currently offer K Class shares; the fees and expenses shown above for the K Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. | ||||
** Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. | ||||
*** Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain the K Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below 1.49% through December 31, 2016 and at or below 1.99% through December 31, 2025. |
The example assumes that you invest $10,000 in the relevant Fund for the time periods indicated and then redeem all of your shares at the end of those periods. The example also assumes that your investment has a 5% return each year and that the relevant Fund’s total operating expenses remain the same (net of the fee waivers/and or expense reimbursements for the periods noted above). Although your actual costs may be higher or lower, based on the assumptions your costs would be:
Royce Global Value Fund | Royce International Premier Fund* | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization | Pro Forma Combined Fund Assuming Completion of Both Reorganizations** | |
1 Year | $152 | $152 | $152 | $152 |
3 Years | $576 | $576 | $576 | $576 |
5 Years | $1,026 | $1,026 | $1,026 | $1,026 |
10 Years | $2,277 | $2,277 | $2,277 | $2,277 |
* International Premier does not currently offer K Class shares; the expenses shown above for the K Class shares of International Premier are estimates based on the same assumptions as those used for Global Value. | ||||
** Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization. |
Royce Global Value Fund | Royce International Premier Fund |
54% | 62% |
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SUMMARY OF EUROPEAN SMALL-CAP REORGANIZATION
The following is a summary of certain information contained elsewhere in this Prospectus/Proxy Statement relating to the European Small-Cap Reorganization, including the form of Plan, a copy of which is attached as Appendix A hereto. You should read the more complete information in the rest of this Prospectus/Proxy Statement, including the form of Plan, along with the Statutory Prospectus, the Annual Report, and the Semiannual Report, copies of which are enclosed, the SAI, and the Reorganization SAI. This Prospectus/Proxy Statement is qualified in its entirety by reference to these documents. You should read these materials for more complete information.
General
The Trust is a Delaware statutory trust that is registered with the SEC as an open-end management investment company. Each of European Small-Cap and International Premier is organized as a separate series of the Trust. European Small-Cap and International Premier are “diversified” investment companies within the meaning of the 1940 Act. A “diversified” fund is a mutual fund that, with respect to 75% of the value of its total assets, may not: (i) have more than 5% of the value of its total assets invested in the securities of any one issuer and (ii) own more than 10% of the outstanding voting securities of any one issuer.
European Small-Cap and International Premier have the same two portfolio managers. David A. Nadel and Mark Rayner co-manage European Small-Cap, while Mr. Nadel manages International Premier and is assisted by Mr. Rayner.
Upon completion of the European Small-Cap Reorganization, the Combined Fund will be managed in accordance with International Premier’s investment objective and principal investment policies and strategies and will be subject to International Premier’s legal agreements.
The Proposed European Small-Cap Reorganization
The Board of Trustees of the Trust (the “Board”) has approved the Plan in connection with the European Small-Cap Reorganization and unanimously recommends that European Small-Cap shareholders vote to approve the Plan. The Plan provides, among other things, for:
• | the transfer of all of the assets of European Small-Cap to International Premier in exchange for International Premier’s assumption of all of the liabilities of European Small-Cap and International Premier’s issuance to European Small-Cap of the International Premier Shares; | ||
• | the pro rata distribution of the International Premier Shares by European Small-Cap to its shareholders; | ||
• | the liquidation of European Small-Cap and its termination as a separate series of the Trust. |
The International Premier Shares issued by International Premier to European Small-Cap as part of the European Small-Cap Reorganization will have an aggregate net asset value that is equal to the aggregate net asset value of all of the European Small-Cap shares that are outstanding immediately prior to such Reorganization. European Small-Cap will, in turn, distribute those International Premier Shares to its shareholders. The International Premier Shares received by each European Small-Cap shareholder as part of the European Small-Cap Reorganization will be of the same class and will have an aggregate net asset value that is equal to the aggregate net asset value of their European Small-Cap shares immediately prior to such Reorganization. Please see “Information About the Reorganizations–Summary of the Terms of the Plan” for more detailed information regarding the Plan.
Completion of the European Small-Cap Reorganization is subject to the approval of European Small-Cap shareholders as described in the section entitled “Voting Information” and the satisfaction of certain other conditions. If the Plan receives the required shareholder approval and the European Small-Cap Reorganization is completed, European Small-Cap shareholders will become shareholders of International Premier and will no longer own European Small-Cap shares, and European Small-Cap will be liquidated and terminated as a separate series of the Trust. In the event the Plan does not receive the required shareholder approval or the European Small-Cap Reorganization is not otherwise completed, each of European Small-Cap and International Premier will continue to operate as separate Funds and European Small-Cap shareholders will remain shareholders of that Fund.
Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. European Small-Cap shareholders should consider the European Small-Cap Reorganization independently of the Global Value Reorganization.
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Summary of Reasons for the Proposed European Small-Cap Reorganization
The Trustees unanimously concluded that the interests of existing shareholders of European Small-Cap would not be diluted as a result of the consummation of the Plan and that the consummation of the Plan is in the best interests of each of European Small-Cap and International Premier. The Trustees considered the following factors in making these determinations:
• | European Small-Cap and International Premier have identical investment objectives; | |
• | European Small-Cap and International Premier have the same portfolio managers; | |
• | Each of European Small-Cap and International Premier provides substantial exposure to foreign ( i.e., non-U.S.) equity securities, with International Premier’s holdings being more geographically diversified than those of European Small-Cap; | |
• | Notwithstanding their different geographic focus, European Small-Cap and International Premier both use a bottom-up, disciplined value investment approach to invest in a limited number of small-cap companies; | |
• | European Small-Cap and International Premier are subject to similar principal investment risks; | |
• | European Small-Cap and International Premier had substantially similar portfolio turnover rates for the fiscal year ended December 31, 2014; | |
• | As noted in the table immediately below, International Premier had higher average annual total returns than European Small-Cap for all of the relevant periods ended June 30, 2015; |
Average Annual Total Returns for Periods Ended June 30, 2015* | ||||||
Fund | Quarter | 2 Quarters | 1 Year | 3 Years | 5 Years | Since Inception Date |
Royce European Small-Cap Fund | 6.55% | 11.64% | -9.03% | 10.57% | 9.58% | 3.29% (12/29/2006) |
Royce International Premier Fund | 7.95% | 13.78% | 1.35% | 12.12% | N/A | 5.54% (12/31/2010) |
• | European Small-Cap and International Premier are subject to identical contractual investment advisory fee rates; | |
• | Although European Small-Cap was larger than International Premier as of September 30, 2015 (i.e., net assets of $21.4 million for European Small-Cap versus net assets of $8.4 million for International Premier), neither Fund has attracted and maintained assets at a sufficient level for it to be viable as a stand-alone mutual fund on a long-term basis; | |
• | As set forth above, although European Small-Cap’s restated gross annualized operating expense ratio was lower than that of International Premier, the Combined Fund’s pro forma gross annualized operating expense ratio was lower than European Small-Cap’s expense ratio; | |
• | Because European Small-Cap and International Premier are subject to identical contractual expense caps over the same upcoming time periods, European Small-Cap shareholders will not experience increased net annualized operating expense ratios as shareholders of the Combined Fund during those time periods; | |
• | Post European Small-Cap Reorganization, the Combined Fund’s ability to use the capital loss carryforwards of European Small-Cap and International Premier to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be limited; | |
• | Royce will pay the fees and expenses resulting from the European Small-Cap Reorganization; and | |
• | It is a condition to the closing of the European Small-Cap Reorganization that European Small-Cap and International Premier receive an opinion of special tax counsel to the Trust relating to the tax-free nature of such Reorganization for U.S. federal income tax purposes. |
Please see “Comparison of European Small-Cap and International Premier” and “Information About the Reorganizations–Reasons for the Proposed European Small-Cap Reorganization” for more detailed information about the factors considered by the Board in approving the Plan with respect to European Small-Cap.
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Summary of Investment Objectives, Principal Investment Policies and Strategies, and Benchmarks for
European Small-Cap and International Premier
This section summarizes the investment objectives, principal investment policies and strategies, and benchmarks for European Small-Cap and International Premier.
Royce European Small-Cap Fund | Royce International Premier Fund | |
Investment Objective | Long-term growth of capital | Long-term growth of capital |
Investment Strategy | Royce invests the Fund’s assets in companies trading below its estimate of their current worth that also have strong balance sheets, other business strengths, and/or strong business prospects. Royce also considers companies with the potential for improvement in cash flow levels and internal rates of return. The Fund uses a bottom-up, value approach that focuses primarily on company-specific criteria rather than on political, economic, or other country-specific factors. | Royce invests the Fund’s assets in a limited number (generally less than 100) of equity securities of small-cap companies issued by companies headquartered outside of the United States. Royce looks for companies trading below its estimate of their current worth that it considers “premier”—those that have strong balance sheets, other business strengths, and/or strong business prospects. Normally, the Fund invests at least 80% of its net assets in equity securities of such “premier” companies. At least 65% of these securities will be issued by companies with stock market capitalizations up to $3 billion at the time of investment. In addition, Royce considers companies with the potential for improvement in cash flow levels and internal rates of return. The Fund uses a bottom-up, value approach that focuses primarily on company-specific criteria rather than on political, economic, or other country-specific factors. |
Number of Holdings | As of September 30, 2015, the Fund had 75 holdings, with 46 of those holdings comprising ≥ 75% of the Fund’s assets. | As of September 30, 2015, the Fund had 48 holdings, with 32 of those holdings comprising ≥ 75% of the Fund’s assets. |
Foreign Investments | Normally invests at least 80% of its net assets in equity securities of companies that are headquartered in Europe with market capitalizations up to $3 billion at the time of investment. From time to time, a substantial portion of the Fund’s assets may be invested in European companies headquartered in a single country. As of September 30, 2015: Approximately 98% of the Fund’s net assets were invested in foreign securities. | Normally invests at least 65% of its net assets in equity securities of international companies headquartered in at least three different countries. From time to time, a substantial portion of the Fund’s assets may be invested in companies that are headquartered in a single country. As of September 30, 2015: Approximately 97% of the Fund’s net assets were invested in foreign securities. |
Developing Country Investments | No more than 35% of the Fund’s net assets As of September 30, 2015: None of the Fund’s net assets were invested in developing country securities. | No more than 35% of the Fund’s net assets As of September 30, 2015: Approximately 10.7% of the Fund’s net assets were invested in developing country securities. |
Foreign Currency Hedging | The Fund does not expect to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. | The Fund does not expect to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. |
Benchmark Index | Russell Europe Small Cap Index | Russell Global ex-U.S. Small Cap Index |
Overall, European Small-Cap and International Premier are similar to one another in that they:
• | have the same investment objective; | |
• | have the same portfolio managers; | |
• | use a bottom-up, disciplined value investment approach; | |
• | invest primarily in small-cap equity securities; | |
• | invest a substantial portion of their assets in a limited number of issuers; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities; | |
• | do not expect to engage in hedging transactions to protect against declines in the U.S. dollar or to lock in the value of their foreign security holdings; |
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• | are subject to the same restrictions on investments in developing country securities; and | |
• | had almost identical portfolio turnover rates for the fiscal year ended December 31, 2014. |
European Small-Cap and International Premier are, however, different from one another in that:
• | European Small-Cap invests, under normal market conditions, at least 80% of its net assets in small-cap equity securities of companies that are headquartered in Europe, while International Premier is not subject to a similar geographical investment requirement; | |
• | International Premier invested 10.7% of its nets assets in developing country securities as of September 30, 2015, compared with 0% for European Small-Cap; and | |
• | They have different benchmark indexes. |
Overall, European Small-Cap and International Premier are subject to similar principal investment risks due to their similar investment strategies and their focus on foreign securities. However, relative to International Premier, European Small-Cap will be more exposed to the risks associated with investing in Europe to the extent European Small-Cap invests a larger percentage of its net assets in companies headquartered in Europe. On the other hand, relative to European Small-Cap, International Premier will be more exposed to the risks associated with investing in developing country securities to the extent International Premier invests a greater percentage of its net assets in companies headquartered in those countries.
Principal Investment Risk | Royce European Small-Cap Fund | Royce International Premier |
Market Risk | Yes | Yes |
Small-Cap Securities Risk | Yes | Yes |
Investment in a Limited Number of Issuers | Yes | Yes |
Potential Industry, Sector, and Regional Overweights | Yes | Yes |
Foreign Securities Risk | Yes | Yes |
Currency Risk | Yes | Yes |
Developing Country Risk | Yes* | Yes |
* European Small-Cap is not subject to this risk to the extent it does not invest in developing country securities. As of September 30, 2015, European Small-Cap did not hold any developing country securities.
No assurance can be given that shares of the Combined Fund will not lose value. As with any Fund, the value of the Combined Fund’s investments, and, therefore, the value of the Combined Fund’s shares, may fluctuate.
Post European Small-Cap Reorganization, the Combined Fund’s ability to use the capital loss carryforwards of European Small-Cap and International Premier to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than
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distributions made by European Small-Cap would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former European Small-Cap shareholders. As of December 31, 2014, neither European Small-Cap nor International Premier had any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $235,153 and $553,164 in capital losses were realized and carried over to 2015 by European Small-Cap and International Premier, respectively. See “Information About the Reorganizations–U.S. Federal Income Tax Consequences of each Reorganization” for more information.
Approval of the Plan in respect of the European Small-Cap Reorganization requires the affirmative vote of a majority of the outstanding voting securities of European Small-Cap, which is defined in the 1940 Act as the lesser of: (i) 67% or more of the shares of European Small-Cap present at the relevant Meeting, if the holders of more than 50% of the outstanding shares of European Small-Cap are present or represented by proxy at such Meeting; or (ii) more than 50% of the outstanding shares of European Small-Cap.
All properly executed proxy cards received prior to the European Small-Cap Meeting will be voted at such Meeting in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, proxy cards will be voted “FOR” the Proposal. You may revoke your proxy at any time before it is exercised by sending written instructions to the Secretary of the Trust at 745 Fifth Avenue, New York, New York 10151 or by submitting a new proxy card with a later date. In addition, any shareholder attending the European Small-Cap Meeting may vote in person, whether or not he or she has previously submitted a proxy card. The Board knows of no business other than that mentioned in Proposal No. 1 of the Notice of Special Meeting that will be presented for consideration at the European Small-Cap Meeting. If any other matter is properly presented at the European Small-Cap Meeting or any adjournment thereof, it is the intention of the persons named on the enclosed proxy card to vote in accordance with their best judgment.
Shareholder approval of the European Small-Cap Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the Global Value Reorganization. In addition, the consummation of the European Small-Cap Reorganization is not contingent upon, and will not affect in any way, the consummation of the Global Value Reorganization. European Small-Cap shareholders should consider the proposal relating to the European Small-Cap Reorganization independently of the proposal relating to the Global Value Reorganization.
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SUMMARY OF GLOBAL VALUE REORGANIZATION
The following is a summary of certain information contained elsewhere in this Prospectus/Proxy Statement relating to the Global Value Reorganization, including the form of Plan, a copy of which is attached as Appendix A hereto. You should read the more complete information in the rest of this Prospectus/Proxy Statement, including the form of Plan, along with the Statutory Prospectus, the Annual Report, and the Semiannual Report, copies of which are enclosed, the SAI, and the Reorganization SAI. This Prospectus/Proxy Statement is qualified in its entirety by reference to these documents. You should read these materials for more complete information.
General
As noted above, the Trust is a Delaware statutory trust that is registered with the SEC as an open-end management investment company. Each of Global Value and International Premier is organized as a separate series of the Trust. Global Value and International Premier are “diversified” investment companies within the meaning of the 1940 Act. A “diversified” fund is a mutual fund that, with respect to 75% of the value of its total assets, may not: (i) have more than 5% of the value of its total assets invested in the securities of any one issuer and (ii) own more than 10% of the outstanding voting securities of any one issuer.
David A. Nadel serves as Global Value’s lead portfolio manager and Steven G. McBoyle, James J. Harvey, and Dilip P. Badlani manage that Fund with him. Mr. Nadel manages International Premier, and is assisted by Mark Rayner.
Upon completion of the Global Value Reorganization, the Combined Fund will be managed in accordance with International Premier’s investment objective and principal investment policies and strategies and will be subject to International Premier’s legal agreements.
The Proposed Global Value Reorganization
The Board has approved the Plan in connection with the Global Value Reorganization and unanimously recommends that Global Value shareholders vote to approve the Plan. The Plan provides, among other things, for:
• | the transfer of all of the assets of Global Value to International Premier in exchange for International Premier’s assumption of all of the liabilities of Global Value and International Premier’s issuance to Global Value of the International Premier Shares; | |
• | the pro rata distribution of the International Premier Shares by Global Value to its shareholders; | |
• | the liquidation of Global Value and its termination as a separate series of the Trust. |
The International Premier Shares issued by International Premier to Global Value as part of the Global Value Reorganization will have an aggregate net asset value that is equal to the aggregate net asset value of all of the Global Value shares that are outstanding immediately prior to such Reorganization. Global Value will, in turn, distribute those International Premier Shares to its shareholders. The International Premier Shares received by each Global Value shareholder as part of the Global Value Reorganization will be of the same class and will have an aggregate net asset value that is equal to the aggregate net asset value of their Global Value shares immediately prior to such Reorganization. Please see “Information About the Reorganizations–Summary of the Terms of the Plan” for more detailed information regarding the Plan.
Completion of the Global Value Reorganization is subject to the approval of Global Value shareholders as described in the section entitled “Voting Information” and the satisfaction of certain other conditions. If the Plan receives the required shareholder approval and the Global Value Reorganization is completed, Global Value shareholders will become shareholders of International Premier and will no longer own Global Value shares, and Global Value will be liquidated and terminated as a separate series of the Trust. In the event the Plan does not receive the required shareholder approval or the Global Value Reorganization is not otherwise completed, each of Global Value and International Premier will continue to operate as separate Funds and Global Value shareholders will remain shareholders of that Fund.
Shareholder approval of one Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the other Reorganization. In addition, the consummation of one Reorganization is not contingent upon, and will not affect in any way, the consummation of the other Reorganization. Global Value shareholders should consider the Global Value Reorganization independently of the European Small-Cap Reorganization.
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Summary of Reasons for the Proposed Global Value Reorganization
The Trustees unanimously concluded that the interests of existing shareholders of Global Value would not be diluted as a result of the consummation of the Plan and that the consummation of the Plan is in the best interests of each of Global Value and International Premier. The Trustees considered the following factors in making these determinations:
• | Global Value and International Premier have identical investment objectives; | |
• | Although Global Value and International Premier do not have the same portfolio management teams, David Nadel does serve as the lead portfolio manager for both Funds; | |
• | Although Global Value generally allocates a portion of its assets to U.S. securities while International Premier does not do so, both Funds provide substantial exposure to foreign ( i.e., non-U.S.) securities; | |
• | Global Value and International Premier invest primarily in the equity securities of companies with stock market capitalizations up to $5 billion and up to $3 billion, respectively, at the time of investment; | |
• | Although Global Value’s investment portfolio generally is more broadly diversified than that of International Premier because International Premier normally invests a substantial portion of its assets in a limited number of issuers, both Funds use a bottom-up, disciplined value investment approach to invest in smaller-company securities; | |
• | Global Value and International Premier are subject to similar principal investment risks; | |
• | Global Value and International Premier had similar portfolio turnover rates for the fiscal year ended December 31, 2014; | |
• | As noted in the table immediately below, International Premier had higher average annual total returns than Global Value for all of the relevant periods ended June 30, 2015; |
Average Annual Total Returns for Periods Ended June 30, 2015* | ||||||
Fund | Quarter | 2 Quarters | 1 Year | 3 Years | 5 Years | Since Inception Date |
Royce Global Value Fund | 5.20% | 7.71% | -8.38% | 6.58% | 6.74% | 4.77% (12/29/2006) |
Royce International Premier Fund | 7.95% | 13.78% | 1.35% | 12.12% | N/A | 5.54% (12/31/2010) |
• | Global Value and International Premier are subject to identical contractual investment advisory fee rates; | |
• | Global Value has experienced a significant decline in its net asset level in recent years, going from $233 million in net assets as of December 31, 2013 to $59.9 million in net assets as of September 30, 2015; | |
• | Although Global Value was substantially larger than International Premier as of September 30, 2015 (i.e., Global Value net assets of $59.9 million versus International Premier net assets of $8.4 million), neither Fund has the asset size for it to be viable as a stand-alone mutual fund on a long-term basis; | |
• | As set forth above, although Global Value’s restated gross annualized operating expense ratio was lower than that of International Premier, the Combined Fund’s pro forma gross annualized operating expense ratio was lower than Global Value’s expense ratio; | |
• | Because International Premier’s various share classes are subject to identical or more favorable contractual expense caps than those of Global Value and International Premier’s contractual expense caps are in effect for the same or longer periods of time than those of Global Value, Global Value shareholders will not experience increased net annualized operating expense ratios as shareholders of the Combined Fund during the time periods covered by such contractual expense caps; | |
• | Post Global Value Reorganization, the Combined Fund’s ability to use the capital loss carryforwards of Global Value, which are substantial, to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be substantially limited; | |
• | Additionally, the Combined Fund’s ability to use the capital loss carryforwards of International Premier may be limited; | |
• | Royce will pay the fees and expenses resulting from the Global Value Reorganization; and | |
• | It is a condition to the closing of the Global Value Reorganization that Global Value and International Premier receive an opinion of special tax counsel to the Trust relating to the tax-free nature of such Reorganization for U.S. federal income tax purposes. |
Please see “Comparison of Global Value and International Premier” and “Information About the Reorganizations–Reasons for the Proposed Global Value Reorganization” for more detailed information about the factors considered by the Board in approving the Plan with respect to Global Value.
24
Summary of Investment Objectives, Principal Investment Policies and Strategies, and Benchmarks for
Global Value and International Premier
This section summarizes the investment objectives, principal investment policies and strategies, and benchmarks for Global Value and International Premier.
Royce Global Value Fund | Royce International Premier Fund | |
Investment Objective | Long-term growth of capital | Long-term growth of capital |
Investment Strategy | Royce invests the Fund’s assets primarily in equity securities of companies that it believes are trading below its estimate of their current worth. Royce bases this assessment chiefly on strong balance sheets, other indicators of financial strength, business prospects, and the potential for improvement in cash flow levels and internal rates of return. Although the Fund may invest in equity securities of companies of any market capitalization, Royce expects that a significant portion of the Fund’s assets will be invested in equity securities of companies with stock market capitalizations up to $5 billion. The Fund uses a bottom-up, value approach that focuses primarily on company-specific criteria rather than on political, economic, or other country-specific factors. | Royce invests the Fund’s assets in a limited number (generally less than 100) of equity securities of small-cap companies issued by companies headquartered outside of the United States. Royce looks for companies trading below its estimate of their current worth that it considers “premier”—those that have strong balance sheets, other business strengths, and/or strong business prospects. Normally, the Fund invests at least 80% of its net assets in equity securities of such “premier” companies. At least 65% of these securities will be issued by companies with stock market capitalizations up to $3 billion at the time of investment. In addition, Royce considers companies with the potential for improvement in cash flow levels and internal rates of return. The Fund uses a bottom-up, value approach that focuses primarily on company-specific criteria rather than on political, economic, or other country-specific factors. |
Number of Holdings | As of September 30, 2015, the Fund had 174 holdings, with 87 of those holdings comprising ≥ 75% of the Fund’s assets. | As of September 30, 2015, the Fund had 48 holdings, with 32 of those holdings comprising ≥ 75% of the Fund’s assets. |
Foreign Investments | The Fund will normally invest at least 40% of its net assets in equity securities of companies headquartered in at least three different countries outside of the United States. During periods when market conditions are not deemed favorable by Royce, the Fund will invest at least 30% of its net assets in such companies. From time to time, a substantial portion of the Fund’s assets may be invested in companies that are headquartered in a single country. The Fund may also invest up to 35% of its net assets in U.S. and non- U.S. non-convertible debt or preferred stock. As of September 30, 2015: Approximately 63% of the Fund’s net assets were invested in foreign securities. | Normally invests at least 65% of its net assets in equity securities of international companies headquartered in at least three different countries. From time to time, a substantial portion of the Fund’s assets may be invested in companies that are headquartered in a single country. As of September 30, 2015: Approximately 97% of the Fund’s net assets were invested in foreign securities. |
Developing Country Investments | No more than 35% of the Fund’s net assets As of September 30, 2015: Approximately 9.1% of the Fund’s net assets were invested in developing country securities. | No more than 35% of the Fund’s net assets As of September 30, 2015: Approximately 10.7% of the Fund’s net assets were invested in developing country securities. |
Foreign Currency Hedging | The Fund does not expect to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. | The Fund does not expect to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. |
Benchmark Index | Russell Global Small Cap Index | Russell Global ex-U.S. Small Cap Index |
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Overall, Global Value and International Premier are similar to one another in that they:
• | have the same investment objective; | |
• | have the same lead portfolio manager; | |
• | use a bottom-up, disciplined value investment approach; | |
• | invest primarily in the equity securities of smaller companies, with Global Value investing a significant portion of its assets in the equity securities of companies with stock market capitalizations up to $5 billion at the time of investment and International Premier investing primarily in the equity securities of companies with stock market capitalizations up to $3 billion at the time of investment; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities; | |
• | do not expect to engage in hedging transactions to protect against declines in the U.S. dollar or to lock in the value of their foreign security holdings; | |
• | are subject to the same restrictions on investments in developing country securities and invested similar percentages of their respective net assets in those types of securities as of September 30, 2015; and | |
• | had similar portfolio turnover rates for the fiscal year ended December 31, 2014. |
Global Value and International Premier are, however, different from one another in that:
• | their portfolio management teams are not comprised entirely of the same members; | |
• | Global Value’s holdings generally are more broadly diversified than those of International Premier because International Premier normally invests a substantial portion of its assets in a limited number of issuers; | |
• | Although Global Value generally allocates a portion of its assets to U.S. securities, (e.g., ___% of Global Value’s net assets were invested in U.S. securities as of September 30, 2015), International Premier generally does not do so; and | |
• | They have different benchmark indexes. |
Summary of Principal Investment Risks for Global Value and International Premier
Global Value and International Premier have the similarities and differences as noted immediately above under the heading “Summary of Global Value Reorganization–Summary of Investment Objectives, Principal Investment Policies and Strategies, and Benchmarks for Global Value and International Premier.” The principal investment risks associated with an investment in Global Value and International Premier are identified in the table below. For detailed descriptions of these risks, please see “Comparison of Global Value and International Premier” in this Prospectus/Proxy Statement and the enclosed Statutory Prospectus.
Overall, Global Value and International Premier are subject to similar principal investment risks due to their similar investment strategies and their focus on foreign securities. However, International Premier’s investment of a substantial portion of its assets in a limited number of issuers may involve considerably more risk to investors than Global Value’s more broadly diversified portfolio of smaller-company securities because International Premier’s portfolio may be more susceptible to any single corporate, economic, political, regulatory, or market event. In addition, relative to International Premier, Global Value will be more exposed to the risks associated with investing in the United States to the extent Global Value invests a larger percentage of its net assets in companies headquartered in that country.
Principal Investment Risk | Royce Global Value Fund | Royce International Premier |
Market Risk | Yes | Yes |
Small-Cap Securities Risk | Yes | Yes |
Investment in a Limited Number of Issuers | No | Yes |
Potential Industry, Sector, and Regional Overweights | Yes | Yes |
Foreign Securities Risk | Yes | Yes |
Currency Risk | Yes | Yes |
Developing Country Risk | Yes | Yes |
No assurance can be given that shares of the Combined Fund will not lose value. As with any Fund, the value of the Combined Fund’s investments, and, therefore, the value of the Combined Fund’s shares, may fluctuate.
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Post Global Value Reorganization, the Combined Fund’s ability to use the capital loss carryforwards of Global Value, which are substantial, to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be substantially limited. Additionally, the Combined Fund’s ability to use the capital loss carryforwards of International Premier may be limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by Global Value would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former Global Value shareholders. As of December 31, 2014, Global Value had substantial capital loss carryforwards from prior years, including $7,981,106 in capital loss carryforwards expiring on December 31, 2017 and capital loss carryforwards without expiration of $32,992,507. In addition, $31,995,687 in capital losses were realized during the period November 1, 2014 to December 31, 2014 and carried over to 2015 by Global Value. As of December 31, 2014, International Premier did not have any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $553,164 in capital losses were realized and carried over to 2015 by International Premier. See “Information About the Reorganizations–U.S. Federal Income Tax Consequences of each Reorganization” for more information.
International Premier does not currently offer Consultant Class, R Class, or K Class shares and does not have any shares of those classes outstanding as of the date hereof. The Consultant Class, R Class, K Class shares of International Premier issued in connection with the Global Value Reorganization, however, will be subject to identical purchase and redemption procedures and have identical fee structures and exchange rights as the currently outstanding Consultant Class, R Class, K Class shares of Global Value.
As noted above, Consultant Class shares of Global Value and International Premier held for less than 365 days generally are subject to a deferred sales charge of 1.00% (the “Sales Charge”). For purposes of determining whether any Sales Charge is payable in connection with any disposition of the new Consultant Class shares of International Premier that are issued as part of the Global Value Reorganization, the holding period for the currently outstanding Consultant Class shares of Global Value will be “tacked” to the holding period of such new Consultant Class shares of International Premier. For example, assume an investor purchases Consultant Class shares of Global Value six (6) months prior to the Closing Date for the Global Value Reorganization and then redeems the Consultant Class shares of International Premier received as part of the Global Value Reorganization seven (7) months after such Closing Date. Even though the investor held the new Consultant Class shares of International Premier for less than 365 days prior to redeeming them, no Sales Charge would be payable in connection with this redemption because the investor would be deemed to have held such new Consultant Class shares of International Premier for more than 365 days due to the “tacking” of the six-month holding period of the Consultant Class shares of Global Value to the seven-month holding period of the new Consultant Class shares of International Premier.
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Approval of the Plan in respect of the Global Value Reorganization requires the affirmative vote of a majority of the outstanding voting securities of Global Value, which is defined in the 1940 Act as the lesser of: (i) 67% or more of the shares of Global Value present at the relevant Meeting, if the holders of more than 50% of the outstanding shares of Global Value are present or represented by proxy at such Meeting; or (ii) more than 50% of the outstanding shares of Global Value.
All properly executed proxy cards received prior to the Global Value Meeting will be voted at such Meeting in accordance with the instructions marked thereon or otherwise as provided therein. Unless instructions to the contrary are marked, proxy cards will be voted “FOR” the Proposal. You may revoke your proxy at any time before it is exercised by sending written instructions to the Secretary of the Trust at 745 Fifth Avenue, New York, New York 10151 or by submitting a new proxy card with a later date. In addition, any shareholder attending the Global Value Meeting may vote in person, whether or not he or she has previously submitted a proxy card. The Board knows of no business other than that mentioned in Proposal No. 1 of the Notice of Special Meeting that will be presented for consideration at the Global Value Meeting. If any other matter is properly presented at the Global Value Meeting or any adjournment thereof, it is the intention of the persons named on the enclosed proxy card to vote in accordance with their best judgment.
Shareholder approval of the Global Value Reorganization is not contingent upon, and will not affect in any way, shareholder approval of the European Small-Cap Reorganization. In addition, the consummation of the Global Value Reorganization is not contingent upon, and will not affect in any way, the consummation of the European Small-Cap Reorganization. Global Value shareholders should consider the proposal relating to the Global Value Reorganization independently of the proposal relating to the European Small-Cap Reorganization.
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The distribution of the International Premier Shares to Target Fund shareholders will be accomplished by opening new accounts on the books of International Premier in the names of Target Fund shareholders and transferring to those shareholder accounts the relevant International Premier Shares. Accordingly, as a result of a Reorganization, each Target Fund shareholder will receive shares of the same class of International Premier that they hold for their Target Fund having an aggregate net asset value that is equal to the aggregate net asset value of their Target Fund shares as of the Valuation Time. No sales charge, redemption fee, or other fee will be assessed to Target Fund shareholders in connection with their receipt of the International Premier Shares as part of a Reorganization. The stock transfer books of the Target Fund will be permanently closed on the Closing Date. Upon the distribution of the International Premier Shares by the Target Fund to its shareholders, the Target Fund will be liquidated and terminated as a series of the Trust.
Each Reorganization is structured so that International Premier will be the legal survivor in the relevant Reorganization, which means that the management and operation of the Combined Fund will be governed by International Premier’s investment objective, principal investment policies and strategies, and legal agreements upon completion of such Reorganization. In addition, International Premier will be the accounting survivor in each Reorganization, which means that the Combined Fund will carry on the performance and financial history of International Premier upon completion of the relevant Reorganization.
Certain customary representations and warranties have been made in the Plan in respect of the capitalization, status, and conduct of business of each of the Target Fund and International Premier. Unless waived in accordance with the Plan, the obligations of the parties to the Plan are conditioned upon, among other things:
• | the approval of the Plan by the shareholders of the Target Fund in accordance with the requirements of the 1940 Act; | |
• | the absence of any rule, regulation, order, injunction or proceeding preventing or seeking to prevent the consummation of the transactions contemplated by the Plan; | |
• | the receipt of all necessary approvals, consents, registrations and exemptions under federal, state and local laws; | |
• | the truth in all material respects, as of the Closing Date, of the representations and warranties of the parties and performance and compliance in all material respects with the parties’ agreements, obligations and covenants required by the Plan; | |
• | the effectiveness under applicable law of International Premier’s registration statement on Form N-14, of which this Prospectus/Proxy Statement forms a part and the absence of any related stop orders under the Securities Act of 1933; | |
• | the declaration of a dividend by the Target Fund to distribute to its shareholders all of its undistributed net investment income and net capital gains; | |
• | The receipt of an opinion of counsel relating to the tax-free nature of the Reorganization for U.S. federal income tax purposes; and | |
• | the receipt of an opinion of counsel regarding the issuance of the International Premier Shares under Delaware law. |
The opinion of such special tax counsel is not binding on the Internal Revenue Service (the “IRS”) or any court.
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The Plan may be terminated or amended by the mutual consent of the parties before approval thereof by the shareholders of the Target Fund.
The Board recommends that European Small-Cap shareholders should vote to approve the Plan, as it believes the European Small-Cap Reorganization is in the best interests of European Small-Cap as more fully described below under the heading “Reasons for the Proposed European Small-Cap Reorganization.”
The Board also recommends that Global Value shareholders should vote to approve the Plan, as it believes the Global Value Reorganization is in the best interests of Global Value as more fully described below under the heading “Reasons for the Proposed Global Value Reorganization.”
Any brokerage or other trading costs incurred by a Fund in connection with buying or selling portfolio securities prior to a Reorganization will be borne by that Fund and its shareholders. Any brokerage or other trading costs incurred in connection with buying or selling portfolio securities after a Reorganization will be borne by the Combined Fund and its shareholders.
At a Board meeting held on October 8, 2015, Royce first addressed the net asset levels of European Small-Cap and International Premier. Although European Small-Cap was larger than International Premier as of September 30, 2015 (i.e., net assets of $21.4 million for European Small-Cap versus net assets of $8.4 million for International Premier), the Board recognized that neither Fund has attracted and maintained assets at a sufficient level for it to be viable as a stand-alone mutual fund on a long-term basis. Accordingly, by reorganizing European Small-Cap into International Premier, it was noted by the Trustees that, as shareholders of the Combined Fund, former European Small-Cap shareholders would enjoy a larger asset base over which fund expenses could be spread and might benefit from any operating efficiencies or economies of scale that may be achieved by the Combined Fund.
Royce noted to the Trustees that European Small-Cap and International Premier:
• | have identical investment objectives (i.e., long-term growth of capital); | |
• | have the same portfolio managers; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities, with International Premier’s holdings being more geographically diversified than those of European Small-Cap; | |
• | employ similar principal investment strategies (i.e., they both use a bottom-up, disciplined value investment approach to invest in a limited number of small-cap companies with stock market capitalizations up to $3 billion at the time of investment) notwithstanding their different geographic focus; | |
• | are subject to similar principal investment risks; and | |
• | had substantially similar portfolio turnover rates for the fiscal year ended December 31, 2014; |
As a result of these similarities, the Board took note of Royce’s expectation that the securities held by European Small-Cap will not be sold in significant amounts other than in the ordinary course of business prior to, or immediately after, the European Small-Cap Reorganization. However, to the extent dispositions of securities held by European Small-Cap are made, such dispositions will result in taxable gains or losses and transaction costs to European Small-Cap (if the dispositions are made prior to the European Small-Cap Reorganization) or to the Combined Fund (if the dispositions are made after the European Small-Cap Reorganization). Please see “Comparison of European Small-Cap and International Premier” in this Prospectus/Proxy Statement and the enclosed Statutory Prospectus for more detailed information regarding the Funds’ investment objectives, principal investment policies and strategies, and principal investment risks.
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Royce noted to the Trustees that European Small-Cap and International Premier are subject to identical contractual investment management fee rates. Royce then addressed the annualized operating expense ratios for European Small-Cap and International Premier and the pro forma annualized operating expense ratio for the Combined Fund assuming completion of the European Small-Cap Reorganization. The gross annualized operating expense ratios below for each Fund are based on their respective operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the revised contractual expense caps that will go into effect on January 1, 2016. The pro forma gross annualized operating expense ratio below for the Combined Fund further assumes that the European Small-Cap Reorganization occurred on September 30, 2015. The net annualized operating expense ratios below for European Small-Cap, International Premier, and the Combined Fund assume application of the relevant contractual expense cap as described above.
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Combined Fund (Assumes Completion of European Small-Cap Reorganization) | |
Investment Class | |||
Gross Operating Expense Ratio | 2.57% | 2.93% | 2.20% |
Net Operating Expense Ratio | 1.19% | 1.19% | 1.19% |
Service Class | |||
Gross Operating Expense Ratio | 2.00% | 2.68% | 1.89% |
Net Operating Expense Ratio | 1.44% | 1.44% | 1.44% |
As set forth above, although European Small-Cap’s gross restated annualized operating expense ratio was lower than that of International Premier, the Board noted that the Combined Fund’s pro forma gross annualized operating expense ratio was lower than European Small-Cap’s expense ratio. In addition, the Board noted that European Small-Cap, International Premier, and the Combined Fund are subject to the same net annualized operating expense ratios due to the application of a contractual expense cap.
Although past performance is no guarantee of future results, Royce further advised the Trustees that International Premier had higher average annual total returns than European Small-Cap for all of the relevant periods ended June 30, 2015 as set forth in the table immediately below.
Average Annual Total Returns for Periods Ended June 30, 2015 | ||||||
Fund | Quarter | 2 Quarters | 1 Year | 3 Years | 5 Years | Since Inception Date |
Royce European Small-Cap Fund | 6.55% | 11.64% | -9.03% | 10.57% | 9.58% | 3.29% (12/29/2006) |
Royce International Premier Fund | 7.95% | 13.78% | 1.35% | 12.12% | N/A | 5.54% (12/31/2010) |
The Board also noted, however, that the Combined Fund’s ability to use the capital loss carryforwards of European Small-Cap and International Premier to offset the Combined Fund’s capital gains, if any, after the European Small-Cap Reorganization and the use of certain other tax attributes may be limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by European Small-Cap would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former European Small-Cap shareholders. As of December 31, 2014, neither European Small-Cap nor International Premier had any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $235,153 and $553,164 in capital losses were realized and carried over to 2015 by European Small-Cap and International Premier, respectively. See “Information About the Reorganizations–U.S. Federal Income Tax Consequences of each Reorganization” for more information.
Royce further noted to the Trustees that it will pay the fees and expenses resulting from the European Small-Cap Reorganization. Finally, Royce noted to the Trustees that it is a condition to the closing of the European Small-Cap Reorganization that European Small-Cap and International Premier receive an opinion of special tax counsel to the Trust substantially to the effect that the exchange of shares pursuant to the Plan would not result in a taxable gain or loss for U.S. federal income tax purposes for European Small-Cap or its shareholders.
The Trustees, including a majority of the Independent Trustees, after considering the foregoing matters, unanimously concluded that the interests of existing shareholders of each of European Small-Cap and International Premier would not be diluted as a
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result of the consummation of the Plan and that the consummation of the Plan is in the best interests of each of European Small-Cap and International Premier. The determinations were made on the basis of each Trustee’s business judgment after consideration of all of the relevant factors taken as a whole, though individual Trustees may have placed different weight on various factors and assigned different degrees of materiality to various conclusions.
FOR THE REASONS DISCUSSED ABOVE, THE BOARD, ON BEHALF OF EUROPEAN SMALL-CAP,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PLAN
IN RESPECT OF THE EUROPEAN SMALL-CAP REORGANIZATION.
At a Board meeting held on October 8, 2015, Royce first addressed the net asset levels of Global Value and International Premier. The Board noted that Global Value has experienced a significant decline in its net asset level in recent years, going from $233 million in net assets as of December 31, 2013 to $59.9 million in net assets as of September 30, 2015. Although Global Value was substantially larger than International Premier as of September 30, 2015 (i.e., net assets of $59.9 million for Global Value versus net assets of $8.4 million for International Premier), the Board recognized that neither Fund has the asset size for it to be viable as a stand-alone mutual fund on a long-term basis. Accordingly, by reorganizing Global Value into International Premier, it was noted by the Trustees that, as shareholders of the Combined Fund, former Global Value shareholders would enjoy a larger asset base over which fund expenses could be spread and might benefit from any operating efficiencies or economies of scale that may be achieved by the Combined Fund.
Royce noted to the Trustees that Global Value and International Premier:
• | have identical investment objectives (i.e., long-term growth of capital); | |
• | have the same lead portfolio manager; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities; | |
• | employ similar principal investment strategies (i.e., they both use a bottom-up, disciplined value investment approach); | |
• | invest primarily in the equity securities of smaller companies, with Global Value investing primarily in the equity securities of companies with stock market capitalizations up to $5 billion at the time of investment and International Premier investing primarily in the equity securities of companies with stock market capitalizations up to $3 billion at the time of investment; | |
• | are subject to the same restrictions on investments in developing country securities and invested similar percentages of their respective net assets in those types of securities as of September 30, 2015 (i.e. 9.1% for Global Value versus 10.7% for International Premier as of that date); | |
• | are subject to similar principal investment risks; and | |
• | had similar portfolio turnover rates for the fiscal year ended December 31, 2014; |
As a result of these similarities, the Board took note of Royce’s expectation that the securities held by Global Value will not be sold in significant amounts other than in the ordinary course of business prior to, or immediately after, the Global Value Reorganization. However, to the extent dispositions of securities held by Global Value are made, such dispositions will result in taxable gains or losses and transaction costs to Global Value (if the dispositions are made prior to the Global Value Reorganization) or to the Combined Fund (if the dispositions are made after the Global Value Reorganization). Please see “Comparison of Global Value and International Premier” in this Prospectus/Proxy Statement and the enclosed Statutory Prospectus for more detailed information regarding the Funds’ investment objectives, principal investment policies and strategies, and principal investment risks.
Royce noted to the Trustees that Global Value and International Premier are subject to identical contractual investment management fee rates. Royce then addressed the annualized operating expense ratios for Global Value and International Premier and the pro forma annualized operating expense ratio for the Combined Fund assuming completion of the Global Value Reorganization. The gross annualized operating expense ratios below for each Fund are based on their respective operating expenses and average net assets for the nine-month period ended September 30, 2015, as adjusted to give effect to the revised contractual investment management fee structures and the revised contractual expense caps that will go into effect on January 1, 2016. International Premier does not currently offer Consultant Class, R Class, or K Class shares; the fees and expenses shown below for the Consultant Class, R Class, and K Class shares of International Premier are estimates based on the same assumptions
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as those used for Global Value. The pro forma gross annualized operating expense ratio below for the Combined Fund further assumes that the Global Value Reorganization occurred on September 30, 2015. The net annualized operating expense ratios below for Global Value, International Premier, and the Combined Fund assume application of the relevant contractual expense cap as described above.
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Combined Fund (Assumes Completion of Global Value Reorganization) | |
Investment Class | |||
Gross Operating Expense Ratio | 1.55% | 2.93% | 1.54% |
Net Operating Expense Ratio | 1.19% | 1.19% | 1.19% |
Service Class | |||
Gross Operating Expense Ratio | 1.77% | 2.68% | 1.76% |
Net Operating Expense Ratio | 1.44% | 1.44% | 1.44% |
Consultant Class | |||
Gross Operating Expense Ratio | 2.50% | 2.50% | 2.50% |
Net Operating Expense Ratio | 2.19% | 2.19% | 2.19% |
R Class | |||
Gross Operating Expense Ratio | 8.48% | 8.48% | 8.48% |
Net Operating Expense Ratio | 1.74% | 1.74% | 1.74% |
K Class | |||
Gross Operating Expense Ratio | 85.14% | 85.14% | 85.14% |
Net Operating Expense Ratio | 1.49% | 1.49% | 1.49% |
As set forth above, although Global Value’s gross restated annualized operating expense ratio was lower than that of International Premier, the Board noted that the Combined Fund’s pro forma gross annualized operating expense ratio was lower than Global Value’s expense ratio. In addition, the Board noted that Global Value, International Premier, and the Combined Fund are subject to the same net annualized operating expense ratios due to the application of a contractual expense cap.
Although past performance is no guarantee of future results, Royce further advised the Trustees that International Premier had higher average annual total returns than Global Value for all of the relevant periods ended June 30, 2015 as set forth in the table immediately below.
Average Annual Total Returns for Periods Ended June 30, 2015 | ||||||
Fund | Quarter | 2 Quarters | 1 Year | 3 Years | 5 Years | Since Inception Date |
Royce Global Value Fund | 5.20% | 7.71% | -8.38% | 6.58% | 6.74% | 4.77% (12/29/2006) |
Royce International Premier Fund | 7.95% | 13.78% | 1.35% | 12.12% | N/A | 5.54% (12/31/2010) |
The Board also noted, however, that the Combined Fund’s ability to use the capital loss carryforwards of Global Value, which are substantial, to offset the Combined Fund’s capital gains, if any, after the Global Value Reorganization and the use of certain other tax attributes may be substantially limited. Additionally, the Combined Fund’s ability to use the capital loss carryforwards of International Premier may be limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by Global Value would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former Global Value shareholders. As of December 31, 2014, Global Value had substantial capital loss carryforwards from prior years, including $7,981,106 in capital loss carryforwards expiring on December 31, 2017 and capital loss carryforwards without expiration of $32,992,507. In addition, $31,995,687 in capital losses were realized during the period November 1, 2014 to December 31, 2014 and carried over to 2015 by Global Value. As of December 31, 2014, International Premier did not have any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $553,164 in capital losses were realized and carried over to 2015 by International Premier. See “Information About the Reorganizations–U.S. Federal Income Tax Consequences of each Reorganization” for more information.
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Royce further noted to the Trustees that it will pay the fees and expenses resulting from the Global Value Reorganization. Finally, Royce noted to the Trustees that it is a condition to the closing of the Global Value Reorganization that Global Value and International Premier receive an opinion of special tax counsel to the Trust substantially to the effect that the exchange of shares pursuant to the Plan would not result in a taxable gain or loss for U.S. federal income tax purposes for Global Value or its shareholders.
The Trustees, including a majority of the Independent Trustees, after considering the foregoing matters, unanimously concluded that the interests of existing shareholders of each of Global Value and International Premier would not be diluted as a result of the consummation of the Plan and that the consummation of the Plan is in the best interests of each of Global Value and International Premier. The determinations were made on the basis of each Trustee’s business judgment after consideration of all of the relevant factors taken as a whole, though individual Trustees may have placed different weight on various factors and assigned different degrees of materiality to various conclusions.
FOR THE REASONS DISCUSSED ABOVE, THE BOARD, ON BEHALF OF GLOBAL VALUE,
UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE PLAN
IN RESPECT OF THE GLOBAL VALUE REORGANIZATION.
U.S. Federal Income Tax Consequences of each Reorganization
The following is a general summary of the material anticipated U.S. federal income tax consequences of each Reorganization. The discussion is based upon the Code, Treasury regulations, court decisions, published positions of the IRS and other applicable authorities, all as in effect on the date hereof and all of which are subject to change or differing interpretations (possibly with retroactive effect). The discussion is limited to U.S. persons who hold Target Fund shares of as capital assets for U.S. federal income tax purposes. This summary does not address all of the U.S. federal income tax consequences that may be relevant to a particular shareholder or to shareholders who may be subject to special treatment under U.S. federal income tax laws. No ruling has been or will be obtained from the IRS regarding any matter relating to either Reorganization. No assurance can be given that the IRS would not assert, or that a court would not sustain, a position contrary to any of the tax aspects described below. Shareholders must consult their own tax advisers as to the U.S. federal income tax consequences of each Reorganization, as well as to the effects of state, local and non-U.S. tax laws.
It is a condition to closing each Reorganization that the Target Fund and International Premier receive an opinion from Sidley Austin LLP, special U.S. federal income tax counsel to the Trust, dated as of the Closing Date, that the Reorganization will be a “reorganization” within the meaning of Section 368(a) of the Code and that each of the Target Fund and International Premier will be a “party to a reorganization” within the meaning of Section 368(b) of the Code. As such a reorganization, the U.S. federal income tax consequences of each Reorganization can be summarized as follows:
• | No gain or loss will be recognized by the Target Fund upon (i) the transfer of all of its assets to International Premier as described in this Prospectus/Proxy Statement or (ii) the distribution of International Premier shares by the Target Fund to its shareholders; | |
• | No gain or loss will be recognized by International Premier upon the receipt of all of the assets of the Target Fund solely in exchange for the issuance of International Premier shares to the Target Fund and the assumption of all of the liabilities of the Target Fund by International Premier; | |
• | The basis of the assets of the Target Fund acquired by International Premier will be the same as the basis of those assets in the hands of the Target Fund immediately before the transfer; | |
• | The tax holding period of the assets of the Target Fund in the hands of International Premier will include the Target Fund’s tax holding period for those assets; | |
• | Target Fund shareholders will not recognize any gain or loss upon the exchange of their Target Fund shares solely for International Premier shares as part of the Reorganization; | |
• | The basis of International Premier shares received by Target Fund shareholders in the Reorganization will be the same as the basis of their Target Fund shares surrendered in the exchange; and | |
• | The tax holding period of International Premier shares that Target Fund shareholders receive will include the tax holding period of Target Fund shares surrendered in the exchange, provided that such shareholders held Target Fund shares as capital assets on the date of the exchange. |
The opinion of Sidley Austin LLP will be based on U.S. federal income tax law in effect on the Closing Date. In rendering its opinion, Sidley Austin LLP will also rely upon certain representations of the management of International Premier and the Target Fund and assume, among other things, that the Reorganization will be consummated in accordance with the operative documents. An opinion of counsel is not binding on the IRS or any court.
The Trust intends that International Premier continue to be taxed under the rules applicable to regulated investment companies as
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defined in Section 851 of the Code, which are the same rules currently applicable to International Premier, European Small-Cap, Global Value and their respective shareholders.
Target Fund shareholders should note that, if necessary, in accordance with the Fund’s policy of distributing its investment company taxable income and net capital gains for each taxable year in order to qualify for favorable tax treatment as a regulated investment company and avoid federal income and excise tax at the fund level, the Target Fund will declare and pay a distribution of any such previously undistributed income and gains to its shareholders at or immediately prior to the Reorganization. Such distribution will be taxable to Target Fund shareholders.
The portfolio management team for the Target Fund may sell a portion of its portfolio securities prior to the Reorganization. The tax consequences of any such sales will depend on the difference between the price at which such securities are sold and the basis of the Target Fund in such securities. Any capital gains recognized in these sales on a net basis will be distributed to Target Fund shareholders prior to the Reorganization as capital gain dividends (to the extent of net realized long-term capital gains) and/or ordinary dividends (to the extent of net realized short-term capital gains). Such distributions will be taxable to Target Fund shareholders.
It is expected that each of European Small-Cap and International Premier will experience an “ownership change” (as defined under Section 382 of the Code) as a result of the completion of one or both of the Reorganizations. It is not clear as of the date of this Prospectus/Proxy Statement whether Global Value will experience an ownership change as a result of the completion of one or both of the Reorganizations. If a Fund experiences an ownership change, the amount of any net built-in loss (generally determined by netting all unrealized built-in-gains and unrealized built-in losses in the assets of each fund as of the Closing Date) that is realized during any taxable year that begins or ends within the five-year period following the Closing Date (the “Recognition Period”), the capital loss carryforwards of such funds that the Combined Fund will be able to use to offset capital gains, if any, and certain other tax attributes would generally be limited each year. The annual limitation is the product of the net asset value of the applicable Fund immediately before the ownership change and a rate established by the IRS for the month of the Closing Date (e.g., such rate was 2.64% for November 2015). If the net unrealized built-in loss of a Fund as of the Closing Date is de minimis (generally not greater than the lesser of (i) 15% of the fair market value of the assets of such fund as of the Closing Date or (ii) $10 million) it is disregarded and not subject to the limitations. The annual limitation is determined separately for each Fund and any unused limitation can be carried forward to subsequent years. Certain other limitations also apply with respect to offsetting net unrealized built-in losses and capital losses of one Fund against net unrealized built-in gain of another Fund, if such unrealized losses and gain are recognized during the Recognition Period. It is not clear as of the date of this Prospectus/Proxy Statement whether the net unrealized built-in loss of each Fund as of the Closing Date will be de minimis and not subject to these limitations. As a result, no assurance can be given that the actual net unrealized built-in loss of any Fund as of the Closing Date will be, in fact, de minimis.
As of December 31, 2014, Global Value had substantial capital loss carryforwards, including $7,981,106 in capital loss carryforwards expiring on December 31, 2017 (the “Global Value Expiring Losses”) and capital loss carryforwards without expiration of $32,992,507. In addition, $31,995,687 were realized during the period November 1, 2014 to December 31, 2014 and carried over to 2015 by Global Value. These carryover capital losses are collectively referred to herein as the “Global Value Capital Losses.” The Global Value Reorganization is expected to accelerate the expiration of the Global Value Expiring Losses by one taxable year. Additionally, because Global Value may experience an “ownership change” within the meaning of the Code as a result of the completion of one or both of the Reorganizations, the Combined Fund’s ability to use the Global Value Capital Losses and the capital loss carryovers of International Premier and any net built-in losses and certain tax attributes after such Reorganization as described above, may be substantially limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by Global Value would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former Global Value shareholders.
European Small-Cap, on the other hand, did not have any capital loss carryforwards from prior years as of December 31, 2014. During the period November 1, 2014 to December 31, 2014, $235,153 in capital losses were realized and carried over to 2015 by European Small-Cap. Because European Small-Cap is expected to experience an “ownership change” within the meaning of the Code as a result of the completion of one or both of the Reorganizations, the Combined Fund’s ability to use these capital losses and any net built-in losses (if any) after a Reorganization as described above, may be limited depending on the net asset value of the Fund, the amount of its capital loss carryovers, and the rate established by the IRS as of the Closing Date. If the use of carryover capital losses or net built-in losses were restricted, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than such distributions made by European Small-Cap would have included in the absence of such Reorganization, thereby reducing the after-tax investment returns of former European Small-Cap shareholders.
Target Fund shareholders may redeem their shares at any time prior to the closing of either Reorganization. Generally, these are taxable transactions. Shareholders should consult with their own tax advisers regarding potential transactions.
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Holders of Investment Class and Service Class shares of European Small-Cap, Global Value, and International Premier will not be subject to any redemption fees in connection with any redemptions of their Investment Class and Service Class shares of the Combined Fund that are made within the first thirty (30) days after the completion of the relevant Reorganization. As noted above, Consultant Class shares of Global Value and International Premier held for less than 365 days generally are subject to the Sales Charge. For purposes of determining whether any Sales Charge is payable in connection with any disposition of the new Consultant Class shares of the Combined Fund that are issued as part of the Global Value Reorganization, the holding period for the currently outstanding Consultant Class shares of Global Value will be “tacked” to the holding period of such new Consultant Class shares of the Combined Fund. For example, assume an investor purchases Consultant Class shares of Global Value six (6) months prior to the Closing Date for the Global Value Reorganization and then redeems the Consultant Class shares of the Combined Fund received as part of the Global Value Reorganization seven (7) months after such Closing Date. Even though the investor held the new Consultant Class shares of the Combined Fund for less than 365 days prior to redeeming them, no Sales Charge would be payable in connection with this redemption because the investor would be deemed to have held such new Consultant Class shares of the Combined Fund for more than 365 days due to the “tacking” of the six-month holding period of the Consultant Class shares of Global Value to the seven-month holding period of the new Consultant Class shares of the Combined Fund.
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The pro forma capitalization information below is unaudited and for informational purposes only. No assurance can be given as to how many shares of International Premier will be received by European Small-Cap shareholders in connection with the European Small-Cap Reorganization. The pro forma capitalization information should not be relied upon to reflect the number of shares of International Premier that actually will be received by European Small-Cap shareholders in connection with the European Small-Cap Reorganization.
Investment Class | ||||
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization (Unaudited)(1) | |
Net assets | $2,539,991 | $1,654,554 | – | $4,194,545 |
Total shares outstanding | 287,457 | 177,220 | (15,397) (2) | 449,280 |
Net asset value per share | $8.84 | $9.34 | – | $9.34 |
(1) Assumes the European Small-Cap Reorganization had taken place on September 30, 2015. | ||||
(2) Reflects the change in Investment Class shares of International Premier after giving effect to the distribution of Investment Class shares of International Premier to European Small-Cap shareholders as if the European Small-Cap Reorganization had taken place on September 30, 2015. |
Service Class | ||||
Royce European Small-Cap Fund | Royce International Premier Fund | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of European Small-Cap Reorganization (Unaudited)(1) | |
Net assets | $18,693,406 | $6,584,687 | – | $25,278,094 |
Total shares outstanding | 1,674,024 | 598,114 | 23,975(2) | 2,296,114 |
Net asset value per share | $11.17 | $11.01 | – | $11.01 |
(1) Assumes the European Small-Cap Reorganization had taken place on September 30, 2015. | ||||
(2) Reflects the change in Service Class shares of International Premier after giving effect to the distribution of Service Class shares of International Premier to European Small-Cap shareholders as if the European Small-Cap Reorganization had taken place on September 30, 2015. |
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The pro forma capitalization information below is unaudited and for informational purposes only. No assurance can be given as to how many shares of International Premier will be received by Global Value shareholders in connection with the Global Value Reorganization. The pro forma capitalization information should not be relied upon to reflect the number of shares of International Premier that actually will be received by Global Value shareholders in connection with the Global Value Reorganization.
Investment Class | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization (Unaudited)(1) | |
Net assets | $29,720,240 | $1,654,554 | – | $31,374,794 |
Total shares outstanding | 2,417,325 | 177,220 | 766,029(2) | 3,360,575 |
Net asset value per share | $12.29 | $9.34 | – | $9.34 |
(1) Assumes the Global Value Reorganization had taken place on September 30, 2015. | ||||
(2) Reflects the change in Investment Class shares of International Premier after giving effect to the distribution of Investment Class shares of International Premier to Global Value shareholders as if the Global Value Reorganization had taken place on September 30, 2015. |
Service Class | ||||
Royce Global Value Fund | Royce International Premier Fund | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization (Unaudited)(1) | |
Net assets | $21,372,612 | $6,584,687 | – | $27,957,300 |
Total shares outstanding | 1,731,235 | 598,114 | 210,127(2) | 2,539,477 |
Net asset value per share | $12.35 | $11.01 | – | $11.01 |
(1) Assumes the Global Value Reorganization had taken place on September 30, 2015. | ||||
(2) Reflects the change in Service Class shares of International Premier after giving effect to the distribution of Service Class shares of International Premier to Global Value shareholders as if the Global Value Reorganization had taken place on September 30, 2015. |
Consultant Class | ||||
Royce Global Value Fund | Royce International Premier Fund(1) | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization (Unaudited)(2) | |
Net assets | $8,637,016 | $0 | – | $8,637,016 |
Total shares outstanding | 711,248 | 0 | 0(3) | 711,248 |
Net asset value per share | $12.14 | $0.00 | – | $12.14 |
(1) International Premier did not have any Consultant Class shares outstanding as of September 30, 2015. | ||||
(2) Assumes the Global Value Reorganization had taken place on September 30, 2015. | ||||
(3) Reflects the change in Consultant Class shares of International Premier after giving effect to the distribution of Consultant Class shares of International Premier to Global Value shareholders as if the Global Value Reorganization had taken place on September 30, 2015. |
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R Class | ||||
Royce Global Value Fund | Royce International Premier Fund(1) | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization (Unaudited)(2) | |
Net assets | $114,981 | $0 | – | $114,981 |
Total shares outstanding | 12,706 | 0 | 0(3) | 12,706 |
Net asset value per share | $9.05 | $0.00 | – | $9.05 |
(1) International Premier did not have any R Class shares outstanding as of September 30, 2015. | ||||
(2) Assumes the Global Value Reorganization had taken place on September 30, 2015. | ||||
(3) Reflects the change in R Class shares of International Premier after giving effect to the distribution of R Class shares of International Premier to Global Value shareholders as if the Global Value Reorganization had taken place on September 30, 2015. |
K Class | ||||
Royce Global Value Fund | Royce International Premier Fund(1) | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Global Value Reorganization (Unaudited)(2) | |
Net assets | $22,055 | $0 | – | $22,055 |
Total shares outstanding | 2,431 | 0 | 0(3) | 2,431 |
Net asset value per share | $9.07 | $0.00 | – | $9.07 |
(1) International Premier did not have any R Class shares outstanding as of September 30, 2015. | ||||
(2) Assumes the Global Value Reorganization had taken place on September 30, 2015. | ||||
(3) Reflects the change in R Class shares of International Premier after giving effect to the distribution of R Class shares of International Premier to Global Value shareholders as if the Global Value Reorganization had taken place on September 30, 2015. |
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The pro forma capitalization information below is unaudited and for informational purposes only. No assurance can be given as to how many shares of International Premier will be received by shareholders of a Target Fund in connection with both Reorganizations. The pro forma capitalization information should not be relied upon to reflect the number of shares of International Premier that actually will be received by shareholders of a Target Fund in connection with both Reorganizations.
Investment Class | |||||
Royce European Small-Cap Fund | Royce Global Value Fund | Royce International Premier Fund | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Both Reorganizations (Unaudited)(1) | |
Net assets | $2,539,991 | $29,720,240 | $1,654,554 | – | $33,914,785 |
Total shares outstanding | 287,457 | 2,417,325 | 177,220 | 750,633(2) | 3,632,635 |
Net asset value per share | $8.84 | $12.29 | $9.34 | – | $9.34 |
(1) Assumes both Reorganizations had taken place on September 30, 2015. | |||||
(2) Reflects the change in Investment Class shares of International Premier after giving effect to the distribution of Investment Class shares of International Premier to Target Fund shareholders as if both Reorganizations had taken place on September 30, 2015. |
Service Class | |||||
Royce European Small-Cap Fund | Royce Global Value Fund | Royce International Premier Fund | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Both Reorganizations (Unaudited)(1) | |
Net assets | $18,693,406 | $21,372,612 | $6,584,687 | – | $46,650,706 |
Total shares outstanding | 1,674,024 | 1,731,235 | 598,114 | 234,102(2) | 4,237,476 |
Net asset value per share | $11.17 | $12.35 | $11.01 | – | $11.01 |
(1) Assumes both Reorganizations had taken place on September 30, 2015. | |||||
(2) Reflects the change in Service Class shares of International Premier after giving effect to the distribution of Service Class shares of International Premier to Target Fund shareholders as if both Reorganizations had taken place on September 30, 2015. |
Consultant Class | |||||
Royce European Small-Cap Fund(1) | Royce Global Value Fund | Royce International Premier Fund(1) | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Both Reorganizations (Unaudited)(2) | |
Net assets | $0 | $8,637,016 | $0 | – | $8,637,016 |
Total shares outstanding | 0 | 711,248 | 0 | 0(3) | 711,248 |
Net asset value per share | $0.00 | $12.14 | $0.00 | – | $12.14 |
(1) The Fund did not have any Consultant Class shares outstanding as of September 30, 2015. | |||||
(2) Assumes both Reorganizations had taken place on September 30, 2015. | |||||
(3) Reflects the change in Consultant Class shares of International Premier after giving effect to the distribution of Consultant Class shares of International Premier to Target Fund shareholders as if both Reorganizations had taken place on September 30, 2015. |
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R Class | |||||
Royce European Small-Cap Fund(1) | Royce Global Value Fund | Royce International Premier Fund(1) | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Both Reorganizations (Unaudited)(2) | |
Net assets | $0 | $114,981 | $0 | – | $114,981 |
Total shares outstanding | 0 | 12,706 | 0 | 0(3) | 12,706 |
Net asset value per share | $0.00 | $9.05 | $0.00 | – | $9.05 |
(1) The Fund did not have any R Class shares outstanding as of September 30, 2015. | |||||
(2) Assumes both Reorganizations had taken place on September 30, 2015. | |||||
(3) Reflects the change in R Class shares of International Premier after giving effect to the distribution of R Class shares of International Premier to Target Fund shareholders as if both Reorganizations had taken place on September 30, 2015. |
K Class | |||||
Royce European Small-Cap Fund(1) | Royce Global Value Fund | Royce International Premier Fund(1) | Pro Forma Adjustments | Pro Forma Combined Fund Assuming Completion of Both Reorganizations (Unaudited)(2) | |
Net assets | $0 | $22,055 | $0 | – | $22,055 |
Total shares outstanding | 0 | 2,431 | 0 | 0(3) | 2,431 |
Net asset value per share | $0.00 | $9.07 | $0.00 | – | $9.07 |
(1) The Fund did not have any K Class shares outstanding as of September 30, 2015. | |||||
(2) Assumes both Reorganizations had taken place on September 30, 2015. | |||||
(3) Reflects the change in K Class shares of International Premier after giving effect to the distribution of K Class shares of International Premier to Target Fund shareholders as if both Reorganizations had taken place on September 30, 2015. |
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COMPARISON OF EUROPEAN SMALL-CAP AND INTERNATIONAL PREMIER
European Small-Cap and International Premier
Investment Objectives. The investment objectives of the Funds are identical. The investment objective of each of European Small-Cap and International Premier is to seek long-term growth of capital.
Principal Investment Policies and Strategies. As set forth in the table below, the principal investment policies and strategies of European Small-Cap and International Premier are similar.
Royce European Small-Cap Fund | Royce International Premier Fund |
Royce invests the Fund’s assets in companies trading below its estimate of their current worth that also have strong balance sheets, other business strengths, and/or strong business prospects. Royce also considers companies with the potential for improvement in cash flow levels and internal rates of return. In selecting securities for the Fund, Royce generally uses a bottom-up, value approach. Royce primarily focuses on company-specific criteria rather than on political, economic, or other country-specific factors. | Royce invests the Fund’s assets in a limited number (generally less than 100) of equity securities of small-cap companies issued by companies headquartered outside of the United States. Royce looks for companies trading below its estimate of their current worth that it considers “premier”—those that have strong balance sheets, other business strengths, and/or strong business prospects. Normally, the Fund invests at least 80% of its net assets in equity securities of such “premier” companies. At least 65% of these securities will be issued by companies with stock market capitalizations up to $3 billion at the time of investment. In addition, Royce considers companies with the potential for improvement in cash flow levels and internal rates of return. In selecting securities for the Fund, Royce generally uses a bottom-up, value approach. Royce primarily focuses on company-specific criteria rather than on political, economic, or other country-specific factors. |
Normally, the Fund invests at least 80% of its net assets in equity securities of companies that are headquartered in Europe with market capitalizations up to $3 billion at the time of investment. From time to time, a substantial portion of the Fund’s assets may be invested in European companies headquartered in a single country. | Normally, at least 65% of the Fund’s net assets will be invested in equity securities of international companies headquartered in at least three different countries. From time to time, a substantial portion of the Fund’s assets may be invested in companies that are headquartered in a single country. |
No more than 35% of the Fund’s net assets may be invested in developing country securities. | No more than 35% of the Fund’s net assets may be invested in developing country securities |
The Fund does not expect to purchase or sell foreign currencies to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. | The Fund does not expect to purchase or sell foreign currencies to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. |
• | have the same investment objective (i.e., long–term growth of capital); | |
• | have the same portfolio managers; | |
• | use a bottom-up, disciplined value investment approach; | |
• | invest primarily in small-cap equity securities (i.e., those with stock market capitalizations up to $3 billion at the time of investment); | |
• | invest a substantial portion of their assets in a limited number of issuers; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities; | |
• | do not expect to engage in foreign currency hedging to protect against declines in the U.S. dollar or to lock in the value of their foreign security holdings; | |
• | are subject to the same restrictions on investments in developing country securities (i.e., no more than 35% of their respective net assets); and | |
• | had almost identical portfolio turnover rates for the fiscal year ended December 31, 2014 ( i.e., 65% for European Small-Cap and 62% for International Premier). |
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European Small-Cap and International Premier are, however, different from one another in that:
• | European Small-Cap invests, under normal market conditions, at least 80% of its net assets in small-cap equity securities of companies that are headquartered in Europe while International Premier is not subject to a similar geographical investment requirement; | |
• | International Premier invested 10.7% of its nets assets in developing country securities as of September 30, 2015, compared with 0% for European Small-Cap; and | |
• | They have different benchmark indexes. |
Principal Investment Risks. Set forth below is a summary of the principal investment risks that may be associated with an investment in European Small-Cap and International Premier as a result of their respective investment policies and strategies. Overall, European Small-Cap and International Premier are subject to similar principal investment risks. However, relative to International Premier, European Small-Cap will be more exposed to the risks associated with investing in Europe to the extent European Small-Cap invests a greater percentage of its net assets in companies headquartered in Europe. On the other hand, relative to European Small-Cap, International Premier will be more exposed to the risks associated with investing in developing country securities to the extent International Premier invests a greater percentage of its net assets in companies headquartered in those countries.
Principal Investment Risk | Royce European Small-Cap Fund | Royce International Premier Fund |
Market Risk. As with any mutual fund that invests in common stocks, the Fund is subject to market risk—the possibility that common stock prices will decline over short or extended periods of time. As a result, the value of your investment in the Fund will fluctuate, sometimes sharply and unpredictably, and you could lose money over short or long periods of time. Royce’s estimate of a company’s current worth may prove to be inaccurate, or this estimate may not be recognized by other investors, which could lead to portfolio losses. Investments in the Fund are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other government agency. | Yes | Yes |
Small-Cap Securities Risk. The prices of small-cap securities are generally more volatile and their markets are less liquid relative to larger-cap securities. Such companies may also have limited markets, financial resources or product lines, may lack management depth, and may be more vulnerable to adverse business or market developments. Therefore, the Fund may involve considerably more risk of loss and its returns may differ significantly from funds investing in larger-cap companies or other asset classes. | Yes | Yes |
Investment in a Limited Number of Issuers and Industry and Sector Overweights. The Fund’s investment in a limited number of issuers and its potential industry and sector overweights may also involve more risk to investors than a more broadly diversified portfolio of small-cap securities because it may be more susceptible to any single corporate, economic, political, regulatory, or market event. | Yes | Yes |
Foreign Securities Risk. In addition to general market risk, foreign securities may be subject to different risks than investments in U.S. securities, including adverse political, social, economic, or other developments that are unique to a particular country or region. Prices of foreign securities in particular countries or regions may, at times, move in a different direction and/or be more volatile than those of U.S. securities. The Fund’s investments are usually denominated in or tied to the currencies of the countries in which they are primarily traded. Because the Fund does not intend to hedge its foreign currency exposure, the U.S. dollar value of the Fund’s investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar. This may occur even if the value of the investment in the currency’s home country has not declined. | Yes | Yes |
Developing Country Securities Risk. The risk factors identified immediately above under the heading “Foreign Securities Risk” may affect the prices of foreign securities issued by companies headquartered in developing countries more than those headquartered in developed countries. For example, many developing countries have in the past experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries, and there may be delays in settlement procedures. | Yes* | Yes |
* European Small-Cap is not subject to this risk to the extent it does not invest in developing country securities. As of September 30, 2015, European Small-Cap did not hold any developing country securities. |
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COMPARISON OF GLOBAL VALUE AND INTERNATIONAL PREMIER
European Small-Cap and International Premier
Investment Objectives. The investment objectives of the Funds are identical. The investment objective of each of Global Value and International Premier is to seek long-term growth of capital.
Principal Investment Policies and Strategies. As set forth in the table below, the principal investment policies and strategies of Global Value and International Premier are similar.
Royce Global Value Fund | Royce International Premier Fund |
Royce invests the Fund’s assets primarily in equity securities of companies that it believes are trading below its estimate of their current worth. Royce bases this assessment chiefly on strong balance sheets, other indicators of financial strength, business prospects, and the potential for improvement in cash flow levels and internal rates of return. Although the Fund may invest in equity securities of companies of any market capitalization, Royce expects that a significant portion of the Fund’s assets will be invested in equity securities of companies with stock market capitalizations up to $5 billion. In selecting securities for the Fund, Royce generally uses a bottom-up, value approach. Royce primarily focuses on company-specific criteria rather than on political, economic, or other country-specific factors. | Royce invests the Fund’s assets in a limited number (generally less than 100) of equity securities of small-cap companies issued by companies headquartered outside of the United States. Royce looks for companies trading below its estimate of their current worth that it considers “premier”—those that have strong balance sheets, other business strengths, and/or strong business prospects. Normally, the Fund invests at least 80% of its net assets in equity securities of such “premier” companies. At least 65% of these securities will be issued by companies with stock market capitalizations up to $3 billion at the time of investment. In addition, Royce considers companies with the potential for improvement in cash flow levels and internal rates of return. In selecting securities for the Fund, Royce generally uses a bottom-up, value approach. Royce primarily focuses on company-specific criteria rather than on political, economic, or other country-specific factors. |
Under normal market circumstances, the Fund will invest at least 40% of its net assets in equity securities of companies headquartered in at least three different countries outside of the United States. During periods when market conditions are not deemed favorable by Royce, the Fund will invest at least 30% of its net assets in such companies. From time to time, a substantial portion of the Fund’s assets may be invested in companies that are headquartered in a single country. The Fund may also invest up to 35% of its net assets in U.S. and non- U.S. non-convertible debt or preferred stock. | Normally, at least 65% of the Fund’s net assets will be invested in equity securities of international companies headquartered in at least three different countries. From time to time, a substantial portion of the Fund’s assets may be invested in companies that are headquartered in a single country. |
No more than 35% of the Fund’s net assets may be invested in developing country securities. | No more than 35% of the Fund’s net assets may be invested in developing country securities. |
The Fund does not expect to purchase or sell foreign currencies to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. | The Fund does not expect to purchase or sell foreign currencies to hedge against declines in the U.S. dollar or to lock in the value of any foreign securities that it purchases. |
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Overall, Global and International Premier are similar to one another in that they:
• | have the same investment objective (i.e., long–term growth of capital); | |
• | have the same lead portfolio manager; | |
• | use a bottom-up, disciplined value investment approach; | |
• | invest primarily in the equity securities of smaller companies, with Global Value investing a significant portion of its assets in the equity securities of companies with stock market capitalizations up to $5 billion at the time of investment and International Premier investing primarily in the equity securities of companies with stock market capitalizations up to $3 billion at the time of investment; | |
• | provide substantial exposure to foreign (i.e., non-U.S.) equity securities; | |
• | do not expect to engage in foreign currency hedging to protect against declines in the U.S. dollar or to lock in the value of their foreign security holdings; | |
• | are subject to the same restrictions on investments in developing country securities (i.e., no more than 35% of their respective net assets) and invested similar percentages of their respective net assets in those types of securities as of September 30, 2015 (i.e. 9.1% for Global Value versus 10.7% for International Premier as of that date) ; and | |
• | had similar portfolio turnover rates for the fiscal year ended December 31, 2014 (i.e., 54% for Global Value and 62% for International Premier). |
Global Value and International Premier are, however, different from one another in that:
• | their portfolio management teams are not comprised entirely of the same members; | |
• | Global Value’s holdings generally are more broadly diversified than those of International Premier because International Premier normally invests a substantial portion of its assets in a limited number of issuers; | |
• | Although Global Value generally allocates a portion of its assets to U.S. securities, (e.g., ___% of Global Value’s net assets were invested in U.S. securities as of September 30, 2015), International Premier generally does not do so; and | |
• | They have different benchmark indexes. |
45
Principal Investment Risks. Set forth below is a summary of the principal investment risks that may be associated with an investment in Global Value and International Premier as a result of their respective investment policies and strategies. Overall, Global Value and International Premier are subject to similar principal investment risks. However, International Premier’s investment of a substantial portion of its assets in a limited number of issuers may involve considerably more risk to investors than Global Value’s more broadly diversified portfolio of smaller-company securities because International Premier’s portfolio may be more susceptible to any single corporate, economic, political, regulatory, or market event. In addition, relative to International Premier, Global Value will be more exposed to the risks associated with investing in the United States to the extent Global Value invests a larger percentage of its net assets in companies headquartered in that country.
Principal Investment Risk | Royce Global Value Fund | Royce International Premier Fund |
Market Risk. As with any mutual fund that invests in common stocks, the Fund is subject to market risk—the possibility that common stock prices will decline over short or extended periods of time. As a result, the value of your investment in the Fund will fluctuate, sometimes sharply and unpredictably, and you could lose money over short or long periods of time. Royce’s estimate of a company’s current worth may prove to be inaccurate, or this estimate may not be recognized by other investors, which could lead to portfolio losses. Investments in the Fund are not bank deposits and are not insured by the Federal Deposit Insurance Corporation or any other government agency. | Yes | Yes |
Small-Cap Securities Risk. The prices of small-cap securities are generally more volatile and their markets are less liquid relative to larger-cap securities. Such companies may also have limited markets, financial resources or product lines, may lack management depth, and may be more vulnerable to adverse business or market developments. Therefore, the Fund may involve considerably more risk of loss and its returns may differ significantly from funds investing in larger-cap companies or other asset classes. | Yes | Yes |
Investment in a Limited Number of Issuers and Industry and Sector Overweights. The Fund’s investment in a limited number of issuers and its potential industry and sector overweights may also involve more risk to investors than a more broadly diversified portfolio of small-cap securities because it may be more susceptible to any single corporate, economic, political, regulatory, or market event. | No | Yes |
Foreign Securities Risk. In addition to general market risk, foreign securities may be subject to different risks than investments in U.S. securities, including adverse political, social, economic, or other developments that are unique to a particular country or region. Prices of foreign securities in particular countries or regions may, at times, move in a different direction and/or be more volatile than those of U.S. securities. The Fund’s investments are usually denominated in or tied to the currencies of the countries in which they are primarily traded. Because the Fund does not intend to hedge its foreign currency exposure, the U.S. dollar value of the Fund’s investments may be harmed by declines in the value of foreign currencies in relation to the U.S. dollar. This may occur even if the value of the investment in the currency’s home country has not declined. | Yes | Yes |
Developing Country Securities Risk. The risk factors identified immediately above under the heading “Foreign Securities Risk” may affect the prices of foreign securities issued by companies headquartered in developing countries more than those headquartered in developed countries. For example, many developing countries have in the past experienced high rates of inflation or sharply devalued their currencies against the U.S. dollar, thereby causing the value of investments in companies located in those countries to decline. Transaction costs are often higher in developing countries, and there may be delays in settlement procedures. | Yes | Yes |
46
FINANCIAL HIGHLIGHTS
The financial highlights tables for the Investment Class and Service Class shares of European Small-Cap and International Premier for the relevant periods that are contained in the enclosed Statutory Prospectus and in the enclosed Annual Report have been derived from financial statements audited by PricewaterhouseCoopers LLP. The financial highlights tables for the Investment Class, Service Class, Consultant Class, R Class, and K Class shares of Global Value for the relevant periods that are contained in the enclosed Statutory Prospectus, the Global Value C-R-K Prospectus, and the Global Value Annual Report have been derived from financial statements audited by PricewaterhouseCoopers LLP. Copies of the Global Value C-R-K Prospectus and the Global Value Annual Report are available without charge by calling toll-free at 1-800-221-4268. The financial highlights tables for each Class of shares of European Small-Cap, Global Value, and International Premier for the six-month period ended June 30, 2015 are contained in the enclosed Semiannual Report. Such financial highlights tables are incorporated herein by reference into (legally form a part of) this Prospectus/Proxy Statement.
ADDITIONAL INFORMATION
To the extent any of the discussion below under this heading refers only to a single Reorganization, the terms and conditions of the Plan shall in all respects apply separately to each Reorganization and to International Premier and the relevant Target Fund, as applicable.
Under the New York Stock Exchange rules that govern brokers who have record ownership of the shares of a Target Fund that are held in “street name” for their customers, who are the beneficial owners of such Target Fund shares, brokers have the discretion to vote such shares on routine matters, but do not have the discretion to vote such shares on non-routine matters. With respect to each proposal, it is not expected that brokers will be permitted to vote any shares of either Target Fund in their discretion. Proxies that are returned but that are marked “abstain” or on which a broker-dealer has declined to vote on any proposal (“broker non-votes”) will be counted as present for the purposes of determining whether a quorum of Target Fund shareholders is present for a Meeting. Abstentions and broker non-votes will not be counted as votes cast for a Meeting. Therefore, abstentions and broker non-votes will have the same effect as a vote against a proposal as well as a vote against any adjournment of the Meeting.
Shareholders vote at a Meeting by casting ballots (in person or by proxy), which votes will be tabulated by one or two persons who were appointed by the Board before the Meeting to serve as Inspectors and Judges of Voting at the Meeting and who have executed an Inspectors and Judges Oath.
47
Class | Investor | Number of Shares | Type of Ownership | Percentage of Outstanding Shares |
The persons known to the Trust to be beneficial owners or owners of record of 5% or more of the shares of each Class of Global Value as of the Record Date are listed in the table immediately below.
Class | Investor | Number of Shares | Type of Ownership | Percentage of Outstanding Shares |
The persons known to the Trust to be beneficial owners or owners of record of 5% or more of the shares of each Class of International Premier as of the Record Date are listed in the table immediately below.
Class | Investor | Number of Shares | Type of Ownership | Percentage of Outstanding Shares |
As of the Record Date, the Trustees and officers of the Trust (15 individuals) owned, in the aggregate, approximately __% of the outstanding Investment Class shares of European Small-Cap, approximately __% of the outstanding Service Class shares of European Small-Cap, approximately __% of the outstanding Investment Class shares of Global Value, approximately __% of the outstanding R Class shares of Global Value, approximately __% of the outstanding K Class shares of Global Value, approximately __% of the outstanding Investment Class shares of International Premier, and approximately __% of the outstanding Service Class shares of International Premier. As of the Record Date, the Trustees and officers of the Trust (15 individuals) owned, in the aggregate, less than 1% of the outstanding Service Class shares of Global Value and less than 1% of the outstanding Consultant Class shares of Global Value.
48
Shareholder proposals that are submitted in a timely manner will not necessarily be included in the Trust’s proxy materials. Inclusion of such proposals is subject to limitations under the federal securities laws.
OTHER BUSINESS
While each Meeting has been called to transact any business that may properly come before it, the only matters which the Trustees intend to present are the matters stated in the Notice of Special Meetings. However, if any additional matter properly comes before a Meeting and on all matters incidental to the conduct of such Meeting, it is the intention of the persons named in the enclosed proxy to vote the proxy in accordance with their judgment on such matters.
By order of the Board of Trustees of The Royce Fund
Please fill in, date and sign the proxy card and return it in the accompanying postage-paid envelope. You may also provide your voting instructions via telephone or the internet by following the instructions on the proxy card. Please take advantage of these prompt and efficient voting options.
[Dated: December --, 2015]
49
The information in this Statement of Additional Information is not complete and may be changed.
We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This Statement of Additional Information is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted.
SUBJECT TO COMPLETION
STATEMENT OF ADDITIONAL INFORMATION DATED NOVEMBER 3, 2015
THE ROYCE FUND
ROYCE INTERNATIONAL PREMIER FUND
ROYCE EUROPEAN SMALL-CAP FUND
ROYCE GLOBAL VALUE FUND
PART B
[December __, 2015]
This Statement of Additional Information (the “Reorganization SAI”) relates to the proposed reorganizations (each, a “Reorganization” and together, the “Reorganizations) of Royce European Small-Cap Fund (“European Small-Cap”) and Royce Global Value Fund (“Global Value”), each a series of The Royce Fund (the “Trust”), a Delaware statutory trust, into Royce International Premier Fund (“International Premier”), also a series of the Trust. European Small-Cap and Global Value are from time to time individually referred to as a “Target Fund” and are from time to time together referred to as the “Target Funds.”
The Reorganization involving European Small-Cap is separate from the Reorganization involving Global Value. Only shareholders of European Small-Cap will vote in connection with the Reorganization involving that Fund. Likewise, only shareholders of Global Value will vote in connection with the Reorganization involving that Fund.
This Reorganization SAI contains information which may be of interest to shareholders of a Target Fund in connection with the relevant Reorganization, but which is not included in the Joint Proxy Statement and Prospectus dated [December __, 2015] (the “Prospectus/Proxy Statement”). As described in the Prospectus/Proxy Statement, each Reorganization would involve the transfer of all of the assets of a Target Fund to International Premier, in exchange for International Premier’s assumption of all of the liabilities of the Target Fund, and International Premier’s issuance to the Target Fund of shares of International Premier with an aggregate net asset value that is equal to the aggregate net asset value of the Target Fund shares that are outstanding immediately prior to the relevant Reorganization. The Target Fund would, in turn, distribute such International Premier shares to its shareholders on a pro rata basis in complete liquidation of the Target Fund. Shareholders of a Target Fund would receive the same class of International Premier shares as they held in that Target Fund.
This Reorganization SAI is not a prospectus, and should be read in conjunction with the Prospectus/Proxy Statement. The Prospectus/Proxy Statement has been filed with the Securities and Exchange Commission, and is available upon request and without charge by writing to the Trust, 745 Fifth Avenue, New York, New York 10151, or by calling 1-800-221-4268.
Capitalized terms used in this Reorganization SAI and not otherwise defined herein shall have the meanings given them in the Prospectus/Proxy Statement.
S-1
TABLE OF CONTENTS
Additional Information About Royce International Premier Fund, | S-3 |
Financial Statements | S-3 |
Pro Forma Combined Financial Statements Relating to | S-4 |
Pro Forma Combined Financial Statements Relating to | S-11 |
Pro Forma Combined Financial Statements Relating to | S-20 |
S-2
ADDITIONAL INFORMATION ABOUT ROYCE INTERNATIONAL PREMIER FUND,
ROYCE EUROPEAN SMALL-CAP FUND, AND ROYCE GLOBAL VALUE FUND
For Royce International Premier Fund: Incorporates by reference the Statement of Additional Information relating to each series of the Trust, including International Premier, European Small-Cap, and Global Value, dated May 1, 2015 and as amended and supplemented to date (the “SAI”), as filed on May 8, 2015 with the Securities and Exchange Commission (the “SEC”) pursuant to Rule 497 under the Securities Act of 1933 (SEC Accession No. 0000949377-15-000218); the Annual Report to Shareholders of various series of the Trust, including International Premier and European Small-Cap, for the fiscal year ended December 31, 2014 and dated March 6, 2015 (SEC Accession No. 0000949377-15-000148) as filed with the SEC (the “Annual Report”); and the Semiannual Report to Shareholders of various series of the Trust, including International Premier, European Small-Cap, and Global Value, for the six-month period ended June 30, 2015 and dated August 28, 2015 (SEC Accession No. 0000949377-15-000308) as filed with the SEC (the “Semiannual Report”).
For Royce European Small-Cap Fund: Incorporates by reference the SAI, the Annual Report, and the Semiannual Report.
For Royce Global Value Fund: Incorporates by reference the SAI, the Annual Report to Shareholders of various series of the Trust, including Global Value, for the fiscal year ended December 31, 2014 and dated March 6, 2015 (SEC Accession No. 0000949377-15-000148) as filed with the SEC (the “Global Value Annual Report”), and the Semiannual Report.
FINANCIAL STATEMENTS
This Reorganization SAI incorporates by reference (i) the Annual Report; (ii) the Global Value Annual Report; and (iii) the Semiannual Report, each of which has been filed with the SEC. Each of these reports contains historical financial information regarding International Premier, European Small-Cap, and Global Value. The financial statements therein, and the reports of the independent registered public accounting firm named therein, are incorporated herein by reference.
Unaudited pro forma financial statements of International Premier, European Small-Cap, and Global Value are provided on the following pages.
Each unaudited pro forma schedule of investments and each unaudited pro forma statement of assets and liabilities reflect financial positions as if a Reorganization or both Reorganizations had occurred on June 30, 2015. The unaudited pro forma statement of operations reflects expenses for the six-month period ended June 30, 2015. The pro forma financial statements give effect to one or both of the Reorganizations. Each proposed Reorganization will be accounted for as a tax-free reorganization in accordance with accounting principles generally accepted in the United States. The historical cost basis of the investments of each Target Fund is carried over to the Combined Fund. Neither Target Fund currently expects to sell or otherwise dispose of any investments in a significant amount prior to the implementation of the relevant Reorganization, except pursuant to transactions made in the ordinary course of business or with respect to investments that are not freely transferable or are otherwise restricted.
S-3
Pro Forma Condensed Combined Schedule of Investments
Relating to European Small-Cap Reorganization as of June 30, 2015 (Unaudited)
Royce International Premier Fund | Royce European Small-Cap Fund | ProForma Combined Royce International Premier Fund | Combined %of Net Assets | |||||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | |||||||||||||
Mayr-Melnhof Karton | Austria | 1,800 | 203,382 | 4,500 | 508,455 | 6,300 | 711,837 | |||||||||||||
Schoeller-Bleckmann Oilfield Equipment | Austria | - | - | 3,500 | 211,604 | 3,500 | 211,604 | |||||||||||||
Semperit AG Holding | Austria | - | - | 6,500 | 268,121 | 6,500 | 268,121 | |||||||||||||
203,382 | 988,180 | 1,191,562 | 3.9 | % | ||||||||||||||||
CETIP - Mercados Organizados | Brazil | 17,500 | 191,824 | - | - | 17,500 | 191,824 | |||||||||||||
Totvs | Brazil | 15,000 | 188,157 | - | - | 15,000 | 188,157 | |||||||||||||
379,981 | - | 379,981 | 1.2 | % | ||||||||||||||||
Inversiones La Construccion | Chile | 9,000 | 100,802 | - | - | 9,000 | 100,802 | 0.3 | % | |||||||||||
Globaltrans Investment GDR | Cyprus | - | - | 72,200 | 342,950 | 72,200 | 342,950 | 1.1 | % | |||||||||||
Coloplast Cl. B | Denmark | - | - | 3,000 | 196,850 | 3,000 | 196,850 | |||||||||||||
SimCorp | Denmark | 2,500 | 99,561 | - | - | 2,500 | 99,561 | |||||||||||||
Zealand Pharma | Denmark | - | - | 12,000 | 198,150 | 12,000 | 198,150 | |||||||||||||
99,561 | 395,000 | 494,561 | 1.6 | % | ||||||||||||||||
Nokian Renkaat | Finland | 5,000 | 156,692 | 12,500 | 391,730 | 17,500 | 548,422 | 1.8 | % | |||||||||||
Altamir | France | - | - | 20,000 | 232,781 | 20,000 | 232,781 | |||||||||||||
Alten | France | - | - | 6,000 | 278,701 | 6,000 | 278,701 | |||||||||||||
Boiron | France | - | - | 1,500 | 147,160 | 1,500 | 147,160 | |||||||||||||
Gaztransport Et Technigaz | France | - | - | 3,900 | 246,701 | 3,900 | 246,701 | |||||||||||||
Interparfums | France | - | - | 11,500 | 313,468 | 11,500 | 313,468 | |||||||||||||
Lectra | France | - | - | 20,000 | 285,402 | 20,000 | 285,402 | |||||||||||||
Linedata Services | France | - | - | 9,000 | 266,694 | 9,000 | 266,694 | |||||||||||||
Manutan International | France | - | - | 8,500 | 403,971 | 8,500 | 403,971 | |||||||||||||
Neurones | France | - | - | 15,000 | 249,503 | 15,000 | 249,503 | |||||||||||||
Nexity | France | - | - | 5,000 | 196,214 | 5,000 | 196,214 | |||||||||||||
Parrot | France | - | - | 3,000 | 134,551 | 3,000 | 134,551 | |||||||||||||
Robertet | France | - | - | 700 | 159,201 | 700 | 159,201 | |||||||||||||
SEB | France | - | - | 3,000 | 279,604 | 3,000 | 279,604 | |||||||||||||
Tarkett | France | - | - | 9,000 | 194,151 | 9,000 | 194,151 | |||||||||||||
Thermador Groupe | France | 1,700 | 142,162 | 4,953 | 414,194 | 6,653 | 556,356 | |||||||||||||
Vetoquinol | France | - | - | 9,200 | 381,546 | 9,200 | 381,546 | |||||||||||||
Virbac | France | 750 | 160,539 | 1,000 | 214,051 | 1,750 | 374,590 | |||||||||||||
302,701 | 4,397,893 | 4,700,594 | 15.3 | % | ||||||||||||||||
Amadeus Fire | Germany | - | - | 2,500 | 222,970 | 2,500 | 222,970 | |||||||||||||
Bertrandt | Germany | 1,400 | 183,783 | 2,500 | 328,184 | 3,900 | 511,967 | |||||||||||||
Carl Zeiss Meditec | Germany | 8,000 | 203,973 | - | - | 8,000 | 203,973 | |||||||||||||
Fielmann | Germany | 1,300 | 88,364 | 2,750 | 186,924 | 4,050 | 275,288 | |||||||||||||
Gerry Weber International | Germany | - | - | 8,500 | 194,926 | 8,500 | 194,926 | |||||||||||||
KWS Saat | Germany | 500 | 166,392 | 1,000 | 332,783 | 1,500 | 499,175 | |||||||||||||
STRATEC Biomedical | Germany | 2,000 | 110,158 | - | - | 2,000 | 110,158 | |||||||||||||
Takkt | Germany | - | - | 12,000 | 219,536 | 12,000 | 219,536 | |||||||||||||
752,670 | 1,485,323 | 2,237,993 | 7.3 | % | ||||||||||||||||
Stella International Holdings | Hong Kong | 30,000 | 71,598 | - | - | 30,000 | 71,598 | |||||||||||||
Value Partners Group | Hong Kong | 45,000 | 71,057 | - | - | 45,000 | 71,057 | |||||||||||||
142,655 | - | 142,655 | 0.5 | % | ||||||||||||||||
Bajaj Finance | India | 3,300 | 282,324 | - | - | 3,300 | 282,324 | |||||||||||||
Kewal Kiran Clothing | India | 3,980 | 132,562 | - | - | 3,980 | 132,562 | |||||||||||||
Motherson Sumi Systems | India | 24,000 | 195,151 | - | - | 24,000 | 195,151 | |||||||||||||
610,037 | - | 610,037 | 2.0 | % | ||||||||||||||||
Azimut Holding | Italy | 3,500 | 102,388 | 9,600 | 280,835 | 13,100 | 383,223 | |||||||||||||
B&C Speakers | Italy | - | - | 30,000 | 227,429 | 30,000 | 227,429 | |||||||||||||
De’Longhi | Italy | - | - | 8,000 | 183,371 | 8,000 | 183,371 | |||||||||||||
DiaSorin | Italy | 3,500 | 159,786 | 7,400 | 337,833 | 10,900 | 497,619 | |||||||||||||
Recordati | Italy | 8,200 | 171,956 | 12,500 | 262,129 | 20,700 | 434,085 | |||||||||||||
Reply | Italy | - | - | 2,000 | 204,352 | 2,000 | 204,352 | |||||||||||||
434,130 | 1,495,949 | 1,930,079 | 6.3 | % | ||||||||||||||||
S-4
Royce International Premier Fund | Royce European Small-Cap Fund | ProForma Combined Royce International Premier Fund | Combined %of Net Assets | |||||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | |||||||||||||
Horiba | Japan | 3,600 | 146,488 | - | - | 3,600 | 146,488 | |||||||||||||
Meitec Corporation | Japan | 5,200 | 193,749 | - | - | 5,200 | 193,749 | |||||||||||||
MISUMI Group | Japan | 13,000 | 184,614 | - | - | 13,000 | 184,614 | |||||||||||||
TOTO | Japan | 10,000 | 180,251 | - | - | 10,000 | 180,251 | |||||||||||||
Trend Micro | Japan | 4,500 | 154,063 | - | - | 4,500 | 154,063 | |||||||||||||
USS | Japan | 10,000 | 180,578 | - | - | 10,000 | 180,578 | |||||||||||||
1,039,743 | - | 1,039,743 | 3.4 | % | ||||||||||||||||
Brunel International | Netherlands | - | - | 12,500 | 247,984 | 12,500 | 247,984 | 0.8 | % | |||||||||||
Borregaard | Norway | - | - | 35,000 | 247,754 | 35,000 | 247,754 | |||||||||||||
Spectrum | Norway | - | - | 35,000 | 142,402 | 35,000 | 142,402 | |||||||||||||
TGS-NOPEC Geophysical | Norway | 7,500 | 175,149 | 14,800 | 345,628 | 22,300 | 520,777 | |||||||||||||
175,149 | 735,784 | 910,933 | 3.0 | % | ||||||||||||||||
Laboratorios Farmaceuticos Rovi | Spain | - | - | 12,000 | 187,429 | 12,000 | 187,429 | 0.6 | % | |||||||||||
Addtech Cl. B | Sweden | - | - | 27,500 | 418,810 | 27,500 | 418,810 | 1.4 | % | |||||||||||
Belimo Holding | Switzerland | 70 | 166,961 | - | - | 70 | 166,961 | |||||||||||||
Burckhardt Compression Holding | Switzerland | 425 | 161,031 | - | - | 425 | 161,031 | |||||||||||||
Burkhalter Holding | Switzerland | 1,050 | 122,413 | 2,000 | 233,167 | 3,050 | 355,580 | |||||||||||||
Carlo Gavazzi Holding | Switzerland | - | - | 1,400 | 343,954 | 1,400 | 343,954 | |||||||||||||
Forbo Holding | Switzerland | 155 | 184,352 | - | - | 155 | 184,352 | |||||||||||||
Inficon Holding | Switzerland | 450 | 153,778 | - | - | 450 | 153,778 | |||||||||||||
Kaba Holding | Switzerland | 250 | 148,805 | - | - | 250 | 148,805 | |||||||||||||
Kardex | Switzerland | - | - | 3,000 | 180,170 | 3,000 | 180,170 | |||||||||||||
LEM Holding | Switzerland | 260 | 199,807 | 260 | 199,807 | |||||||||||||||
Partners Group Holding | Switzerland | 750 | 224,210 | 750 | 224,210 | |||||||||||||||
Schaffner Holding | Switzerland | - | - | 1,100 | 262,367 | 1,100 | 262,367 | |||||||||||||
VZ Holding | Switzerland | 1,000 | 240,655 | 2,800 | 673,833 | 3,800 | 914,488 | |||||||||||||
Zehnder Group | Switzerland | - | - | 8,000 | 298,626 | 8,000 | 298,626 | |||||||||||||
1,602,012 | 1,992,117 | 3,594,129 | 11.7 | % | ||||||||||||||||
Abcam | United Kingdom | 25,000 | 203,477 | - | - | 25,000 | 203,477 | |||||||||||||
Ashmore Group | United Kingdom | 25,000 | 113,601 | 95,000 | 431,685 | 120,000 | 545,286 | |||||||||||||
AVEVA Group | United Kingdom | 6,500 | 184,653 | 15,000 | 426,123 | 21,500 | 610,776 | |||||||||||||
Brammer | United Kingdom | - | - | 70,000 | 339,586 | 70,000 | 339,586 | |||||||||||||
Circassia Pharmaceuticals | United Kingdom | - | - | 20,000 | 92,075 | 20,000 | 92,075 | |||||||||||||
Clarkson | United Kingdom | 5,832 | 250,806 | 13,400 | 576,268 | 19,232 | 827,074 | |||||||||||||
Consort Medical | United Kingdom | 13,300 | 190,168 | 31,700 | 453,258 | 45,000 | 643,426 | |||||||||||||
Diploma | United Kingdom | - | - | 20,000 | 253,914 | 20,000 | 253,914 | |||||||||||||
e2v technologies | United Kingdom | 40,000 | 157,753 | 120,300 | 474,444 | 160,300 | 632,197 | |||||||||||||
Elementis | United Kingdom | 41,500 | 167,321 | 91,400 | 368,509 | 132,900 | 535,830 | |||||||||||||
Fidessa Group | United Kingdom | 5,200 | 185,879 | - | - | 5,200 | 185,879 | |||||||||||||
Genus | United Kingdom | - | - | 11,500 | 257,850 | 11,500 | 257,850 | |||||||||||||
HellermannTyton Group | United Kingdom | 35,000 | 189,069 | 100,000 | 540,196 | 135,000 | 729,265 | |||||||||||||
HSS Hire Group | United Kingdom | - | - | 60,000 | 126,800 | 60,000 | 126,800 | |||||||||||||
ITE Group | United Kingdom | - | - | 100,000 | 268,684 | 100,000 | 268,684 | |||||||||||||
Jupiter Fund Management | United Kingdom | - | - | 25,000 | 175,077 | 25,000 | 175,077 | |||||||||||||
Kennedy Wilson Europe Real Estate | United Kingdom | - | - | 17,170 | 306,474 | 17,170 | 306,474 | |||||||||||||
Lakehouse | United Kingdom | - | - | 80,000 | 119,415 | 80,000 | 119,415 | |||||||||||||
Latchways | United Kingdom | 16,000 | 197,349 | 33,700 | 415,666 | 49,700 | 613,015 | |||||||||||||
Mears Group | United Kingdom | - | - | 40,000 | 264,441 | 40,000 | 264,441 | |||||||||||||
Polypipe Group | United Kingdom | - | - | 97,900 | 417,636 | 97,900 | 417,636 | |||||||||||||
Porvair | United Kingdom | - | - | 55,000 | 267,898 | 55,000 | 267,898 | |||||||||||||
Rotork | United Kingdom | 30,000 | 109,642 | 50,000 | 182,736 | 80,000 | 292,378 | |||||||||||||
Senior | United Kingdom | - | - | 70,000 | 315,664 | 70,000 | 315,664 | |||||||||||||
Spirax-Sarco Engineering | United Kingdom | 2,300 | 122,619 | 3,000 | 159,938 | 5,300 | 282,557 | |||||||||||||
Synthomer | United Kingdom | - | - | 85,000 | 416,161 | 85,000 | 416,161 | |||||||||||||
Treatt | United Kingdom | - | - | 85,000 | 219,032 | 85,000 | 219,032 | |||||||||||||
Trifast | United Kingdom | - | - | 58,200 | 112,480 | 58,200 | 112,480 | |||||||||||||
Victrex | United Kingdom | 5,000 | 151,626 | - | - | 5,000 | 151,626 | |||||||||||||
Xaar | United Kingdom | - | - | 40,000 | 292,253 | 40,000 | 292,253 | |||||||||||||
2,223,963 | 8,274,263 | 10,498,226 | 34.2 | % | ||||||||||||||||
TOTAL COMMON STOCKS | 8,223,478 | 21,353,412 | 29,576,890 | 96.4 | % | |||||||||||||||
REPURCHASE AGREEMENT | 782,000 | 1,273,000 | 2,055,000 | 6.7 | % | |||||||||||||||
TOTAL INVESTMENTS | 9,005,478 | 22,626,412 | 31,631,890 | 103.1 | % | |||||||||||||||
LIABILITIES LESS CASH AND OTHER ASSETS | (614,355 | ) | (340,841 | ) | (955,196 | ) | -3.1 | % | ||||||||||||
NET ASSETS | 8,391,123 | 22,285,571 | 30,676,694 | 100.0 | % | |||||||||||||||
S-5
Pro Forma Condensed Combined Statement of Assets and Liabilities
Relating to European Small-Cap Reorganization as of June 30, 2015 (Unaudited)
Royce International | Royce European | Adjustments1 | Pro Forma | ||||||||||||
Premier Fund | Small-Cap Fund | Combined Royce International | |||||||||||||
Premier Fund | |||||||||||||||
ASSETS: | |||||||||||||||
Investments at value | $ | 8,223,478 | $ | 21,353,412 | $ | - | $ | 29,576,890 | |||||||
Repurchase agreements (at cost and value) | 782,000 | 1,273,000 | - | 2,055,000 | |||||||||||
Cash and foreign currency | 2,537 | 2,309 | - | 4,846 | |||||||||||
Receivable for investments sold | 73,703 | - | - | 73,703 | |||||||||||
Receivable for capital shares sold | 6,599 | 75,015 | - | 81,614 | |||||||||||
Receivable for dividends and interest | 39,071 | 81,034 | - | 120,105 | |||||||||||
Prepaid expenses and other assets | 126 | 278 | - | 404 | |||||||||||
Total Assets | 9,127,514 | 22,785,048 | - | 31,912,562 | |||||||||||
LIABILITIES: | |||||||||||||||
Payable for investments purchased | 695,888 | 428,216 | - | 1,124,104 | |||||||||||
Payable for capital shares redeemed | 3,204 | - | - | 3,204 | |||||||||||
Payable for investment advisory fees | 4,066 | 20,062 | - | 24,128 | |||||||||||
Payable for trustees’ fees | 192 | 447 | - | 639 | |||||||||||
Accrued expenses | 25,864 | 50,752 | - | 76,616 | |||||||||||
Deferred capital gains tax | 7,177 | - | - | 7,177 | |||||||||||
Total Liabilities | 736,391 | 499,477 | - | 1,235,868 | |||||||||||
Net Assets | $ | 8,391,123 | $ | 22,285,571 | $ | - | $ | 30,676,694 | |||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||
Paid-in capital | $ | 7,892,892 | $ | 23,851,988 | $ | - | $ | 31,744,880 | |||||||
Undistributed net investment income (loss) | 89,282 | 175,917 | - | 265,199 | |||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | (708,412 | ) | (2,392,302 | ) | - | (3,100,714 | ) | ||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 1,117,361 | 649,968 | - | 1,767,329 | |||||||||||
Net Assets | $ | 8,391,123 | $ | 22,285,571 | $ | - | $ | 30,676,694 | |||||||
Investment Class | $ | 1,836,254 | $ | 2,629,734 | $ | - | 4,465,988 | ||||||||
Service Class | 6,554,869 | 19,655,837 | - | 26,210,706 | |||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||
Investment Class | 185,372 | 288,558 | (23,276 | ) | 450,654 | ||||||||||
Service Class | 560,830 | 1,705,577 | (24,259 | ) | 2,242,148 | ||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||
Investment Class2 | $ | 9.91 | $ | 9.11 | $ | - | $ | 9.91 | |||||||
Service Class2 | 11.69 | 11.52 | - | 11.69 | |||||||||||
Investments at identified cost | $ | 7,101,268 | $ | 20,703,011 | - | $ | 27,804,279 |
1 | Reflects the change in shares of Royce International Premier Fund after giving effect to the distribution of shares of Royce International Premier Fund to Royce European Small-Cap shareholders as if the Reorganization had taken place on June 30, 2015. |
2 | Offering and redemption price per share; shares held less than 30 days may be subject to a 2% redemption fee, payable to the Fund. From January 1-31, 2015, the same redemption fee was applied to shares held less than 180 days. |
S-6
Pro Forma Condensed Combined Statement of Operations
Relating to European Small-Cap Reorganization as of June 30, 2015 (Unaudited)
Royce International | Royce European | Adjustments1 | Pro Forma | |||||||||||||
Premier Fund | Small-Cap Fund | Combined Royce International | ||||||||||||||
Premier Fund | ||||||||||||||||
INVESTMENT INCOME: | ||||||||||||||||
INCOME: | ||||||||||||||||
Dividends | $ | 175,645 | $ | 429,193 | $ | - | $ | 604,838 | ||||||||
Foreign withholding tax | (14,320 | ) | (48,747 | ) | - | (63,067 | ) | |||||||||
Total income | 161,325 | 380,446 | - | 541,771 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 51,432 | 133,237 | - | 184,669 | ||||||||||||
Distribution fees | 5,824 | 23,909 | - | 29,733 | ||||||||||||
Shareholder servicing | 13,453 | 27,332 | (7,962 | ) | 32,823 | |||||||||||
Shareholder reports | 1,666 | 11,914 | - | 13,580 | ||||||||||||
Custody | 17,038 | 21,364 | (5,650 | ) | 32,752 | |||||||||||
Registration | 20,443 | 20,054 | (20,054 | ) | 20,443 | |||||||||||
Audit | 14,446 | 12,918 | (12,918 | ) | 14,446 | |||||||||||
Administrative and office facilities | 745 | 1,837 | - | 2,582 | ||||||||||||
Trustees’ fees | 288 | 694 | - | 982 | ||||||||||||
Legal | 55 | 137 | - | 192 | ||||||||||||
Other expenses | 631 | 887 | (525 | ) | 993 | |||||||||||
Total expenses | 126,021 | 254,283 | (47,109 | ) | 333,195 | |||||||||||
Compensating balance credits | (2 | ) | (10 | ) | - | (12 | ) | |||||||||
Fees waived by investment adviser and distributor | (25,827 | ) | (18,159 | ) | - | (43,986 | ) | |||||||||
Expenses reimbursed by investment adviser | (35,141 | ) | (58,763 | ) | 47,109 | (46,795 | ) | |||||||||
Net expenses | 65,051 | 177,351 | - | 242,402 | ||||||||||||
Net investment income (loss) | 96,274 | 203,095 | - | 299,369 | ||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments | (68,015 | ) | (1,988,528 | ) | - | (2,056,543 | ) | |||||||||
Foreign currency transactions | (7,194 | ) | 3,708 | - | (3,486 | ) | ||||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments and foreign currency translations | 1,063,154 | 4,028,207 | - | 5,091,361 | ||||||||||||
Other assets and liabilities denominated in foreign currency | 18,265 | 3,201 | - | 21,466 | ||||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 1,006,210 | 2,046,588 | - | 3,052,798 | ||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 1,102,484 | $ | 2,249,683 | $ | - | $ | 3,352,167 |
1 Decrease due to the elimination of duplicate expenses achieved by merging the funds. |
S-7
Notes to Pro Forma Combined Financial Statements Relating to
European Small-Cap Reorganization as of June 30, 2015 (Unaudited)
NOTE 1 — Basis of Combination:
At a meeting held on October 8, 2015, the Board approved International Premier and European Small-Cap entering into the Plan and the European Small-Cap Reorganization. The Plan provides for the transfer of all of assets of European Small-Cap to International Premier in exchange for International Premier’s assumption of all of the liabilities of European Small-Cap and International Premier’s issuance of shares of beneficial interest of International Premier (the “International Premier Shares”) to European Small-Cap. The International Premier Shares received by European Small-Cap in the proposed reorganization will have an aggregate net asset value that is equal to the aggregate net asset value of the European Small-Cap shares that are outstanding immediately prior to such reorganization. The Plan also provides for the distribution by European Small-Cap, on a pro rata basis, of the International Premier Shares to its shareholders in complete liquidation of European Small-Cap.
The European Small-Cap Reorganization will be accounted for as a tax-free merger of investments companies. The unaudited pro forma condensed combined schedule of investments and the unaudited pro forma condensed combined statement of assets and liabilities reflect the financial position of European Small-Cap and International Premier at June 30, 2015 as if the European Small-Cap Reorganization had occurred on that date. The unaudited pro forma condensed combined statement of operations reflects the results of operations of European Small-Cap and International Premier for the six-month period ended June 30, 2015 as if the European Small-Cap Reorganization had occurred on January 1, 2015. These statements have been derived from the books and records of European Small-Cap and International Premier utilized in calculating daily net asset values at the dates indicated above in conformity with the accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. Completion of the European Small-Cap Reorganization as of June 30, 2015 would not have caused International Premier to violate any of its portfolio-level compliance tests. The historical cost of European Small-Cap’s investment securities will be carried forward to the Combined Fund. The fiscal year end for each of International Premier and European Small-Cap is December 31.
The accompanying pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of European Small-Cap and International Premier included in, incorporated by reference into, the SAI. Such pro forma condensed combined financial statements are presented for information purposes only and may not necessarily be representative of what the actual combined financial statements would have been had the European Small-Cap Reorganization occurred on June 30, 2015 or January 1, 2015, as applicable. Following the European Small-Cap Reorganization, International Premier will be the legal and accounting survivor.
Royce will pay the fees and expenses resulting from the European Small-Cap Reorganization, including proxy solicitation costs and legal and audit fees. Those fees and expenses are estimated to be approximately $[__________]. Any brokerage or other trading costs incurred by European Small-Cap or International Premier in connection with buying or selling portfolio securities prior to the European Small-Cap Reorganization will be borne by the relevant Fund. Any brokerage or other trading costs incurred in connection with buying or selling portfolio securities after the European Small-Cap Reorganization will be borne by the Combined Fund.
NOTE 2 — International Premier and European Small-Cap Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (the “NYSE”) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Each of European Small-Cap and International Premier values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Board, and are reported as Level 3 securities. As a general principle,
S-8
the fair value of a security is the amount which the relevant Fund might reasonably expect to receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, no assurance can be given that a fair value assigned to a particular security will be the amount which the relevant Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, a Fund may fair value the security. European Small-Cap and International Premier use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by a Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
Various inputs are used in determining the value of the investments of European Small-Cap and International Premier, as noted above. These inputs are summarized in the three broad levels below:
Level 1 | – | quoted prices in active markets for identical securities. | |
Level 2 | – | other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedules of Investments. | |
Level 3 | – | significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the investments of European Small-Cap and International Premier as of June 30, 2015.
Level 1 | Level 2 | Level 3 | Total | |
Royce European Small-Cap Fund | ||||
Common Stocks | $21,353,412 | - | - | $21,353,412 |
Cash Equivalents | - | $1,273,000 | - | $1,273,000 |
Royce International Premier Fund | ||||
Common Stocks | $8,223,478 | - | - | $8,223,478 |
Cash Equivalents | - | $782,000 | - | $782,000 |
NOTE 3 — Capital Shares:
As of June 30, 2015, each of European Small-Cap and International Premier only had Investment Class and Service Class shares outstanding. No Consultant Class, R Class, or K Class shares of International Premier will be distributed to European Small-Cap shareholders in connection with the European Small-Cap Reorganization.
The pro forma net asset value per share assumes the issuance of Investment Class and Service Class shares of International Premier that would have been issued at June 30, 2015 in connection with the proposed European Small-Cap Reorganization. The number of full and fractional shares of each Class of International Premier assumed to be issued is determined by dividing: (i) the aggregate value of the assets of European Small-Cap that are
S-9
transferred to International Premier, net of all of the liabilities of European Small-Cap that are assumed to International Premier, by (ii) the net asset value of one share of the relevant Class of International Premier.
The pro forma number of shares outstanding, by Class, for International Premier consists of the following at June 30, 2015.
Class of Shares of International Premier | Shares of International Premier: Pre-European Small- Cap Reorganization | Additional Shares of International Premier Assumed Issued in European Small-Cap Reorganization | Total Outstanding Shares of International Premier: Post- European Small-Cap Reorganization |
Investment Class | 185,372 | 265,282 | 450,654 |
Service Class | 560,830 | 1,681,318 | 2,242,148 |
NOTE 4 — Pro Forma Operating Expenses:
The pro forma condensed combined statement of operations for the six-month period ended June 30, 2015, as adjusted, giving effect to the European Small-Cap Reorganization reflects changes in expenses of International Premier as if such Reorganization was consummated on January 1, 2015.
The contractual investment advisory fee rates for each of European Small-Cap and International Premier have changed during 2015 and will change effective January 1, 2016 as set forth below:
January 1, 2015 through June 30, 2015 | July 1, 2015 through December 31, 2015 | Effective January 1, 2016 | |
Investment Advisory Fee Rate for Royce European Small-Cap Fund | 1.25% of first $2,000,000,000; 1.20% of next $2,000,000,000; 1.15% of next $2,000,000,000; and 1.10% of any additional average net assets | 1.10% of first $2,000,000,000; 1.05% of next $2,000,000,000; 1.00% of next $2,000,000,000; and 0.95% of any additional average net assets | 1.00% of first $2,000,000,000; 0.95% of next $2,000,000,000; 0.90% of next $2,000,000,000; and 0.85% of any additional average net assets |
Investment Advisory Fee Rate for Royce International Premier Fund | 1.25% of first $2,000,000,000; 1.20% of next $2,000,000,000; 1.15% of next $2,000,000,000; and 1.10% of any additional average net assets | 1.10% of first $2,000,000,000; 1.05% of next $2,000,000,000; 1.00% of next $2,000,000,000; and 0.95% of any additional average net assets | 1.00% of first $2,000,000,000; 0.95% of next $2,000,000,000; 0.90% of next $2,000,000,000; and 0.85% of any additional average net assets |
The contractual expense caps for each of European Small-Cap and International Premier have changed during 2015 and will change effective January 1, 2016 as set forth below:
January 1, 2015 through June 30, 2015 | July 1, 2015 through December 31, 2015 | Effective January 1, 2016 | |
Contractual Expense Caps* for Royce European Small-Cap Fund and Related Expiration Dates | |||
Investment Class | 1.44% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.29% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.19% expiring December 31, 2016 1.74% expiring December 31, 2025 |
Service Class | 1.69% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.54% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.44% expiring December 31, 2016 1.99% expiring December 31, 2025 |
Contractual Expense Caps* for Royce International Premier Fund and Related Expiration Dates | |||
Investment Class | 1.44% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.29% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.19% expiring December 31, 2016 1.74% expiring December 31, 2025 |
Service Class | 1.69% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.54% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.44% expiring December 31, 2016 1.99% expiring December 31, 2025 |
* Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain each Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below the amount set forth above for the periods set forth above.
NOTE 5 — Federal Income Taxes:
Each of European Small-Cap and International Premier has elected to be taxed as a “regulated investment company” under the Code. If the European Small-Cap Reorganization is consummated, unless it determines such qualification is no longer in the best interest of shareholders, International Premier will seek to continue to qualify as a regulated investment company by complying with the provisions applicable to certain investment companies, as defined in applicable sections of the Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal income taxes. In addition, European Small-Cap will make any required income or capital gain distributions prior to consummation of the European Small-Cap Reorganization, in accordance with provisions of the Code relating to tax-free reorganizations of investment companies. Post European Small-Cap Reorganization, the Combined Fund’s ability to use the capital loss carryforwards of European Small-Cap and International Premier to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by European Small-Cap would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former European Small-Cap shareholders. As of December 31, 2014, neither European Small-Cap nor International Premier had any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $235,153 and $553,164 in capital losses were realized and carried over to 2015 by European Small-Cap and International Premier, respectively.
S-10
Pro Forma Condensed Combined Schedule of Investments
Relating to Global Value Reorganization as of June 30, 2015 (Unaudited)
Royce International Premier Fund | Royce Global Value Fund | ProForma Combined Royce International Premier Fund | Combined % of Net Assets | ||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | ||||||||||
TFS Corporation | Australia | - | - | 395,400 | 489,639 | 395,400 | 489,639 | 0.6 | % | ||||||||
Mayr-Melnhof Karton | Austria | 1,800 | 203,382 | 7,000 | 790,930 | 8,800 | 994,312 | 1.3 | % | ||||||||
Lazard Cl. A | Bermuda | - | - | 3,200 | 179,968 | 3,200 | 179,968 | 0.2 | % | ||||||||
CETIP - Mercados Organizados | Brazil | 17,500 | 191,824 | 90,000 | 986,523 | 107,500 | 1,178,347 | ||||||||||
MAHLE Metal Leve | Brazil | - | - | 83,700 | 576,109 | 83,700 | 576,109 | ||||||||||
Totvs | Brazil | 15,000 | 188,157 | 80,100 | 1,004,760 | 95,100 | 1,192,917 | ||||||||||
379,981 | 2,567,392 | 2,947,373 | 3.7 | % | |||||||||||||
Absolute Software | Canada | - | - | 16,200 | 116,604 | 16,200 | 116,604 | ||||||||||
Gildan Activewear | Canada | - | - | 5,500 | 182,820 | 5,500 | 182,820 | ||||||||||
Magellan Aerospace | Canada | - | - | 109,100 | 1,490,189 | 109,100 | 1,490,189 | ||||||||||
MTY Food Group | Canada | - | - | 15,100 | 400,410 | 15,100 | 400,410 | ||||||||||
Richelieu Hardware | Canada | - | - | 9,800 | 492,981 | 9,800 | 492,981 | ||||||||||
Ritchie Bros. Auctioneers | Canada | - | - | 19,900 | 555,608 | 19,900 | 555,608 | ||||||||||
- | 3,238,612 | 3,238,612 | 4.1 | % | |||||||||||||
Inversiones La Construccion | Chile | 9,000 | 100,802 | 60,100 | 673,131 | 69,100 | 773,933 | ||||||||||
Sonda | Chile | - | - | 155,400 | 325,495 | 155,400 | 325,495 | ||||||||||
100,802 | 998,626 | 1,099,428 | 1.4 | % | |||||||||||||
AAC Technologies Holdings | China | - | - | 30,000 | 169,708 | 30,000 | 169,708 | ||||||||||
E-House (China) Holdings ADR | China | - | - | 77,500 | 520,800 | 77,500 | 520,800 | ||||||||||
Haitian International Holdings | China | - | - | 167,000 | 384,346 | 167,000 | 384,346 | ||||||||||
Xtep International Holdings | China | - | - | 1,358,800 | 494,329 | 1,358,800 | 494,329 | ||||||||||
- | 1,569,183 | 1,569,183 | 2.0 | % | |||||||||||||
Globaltrans Investment GDR | Cyprus | - | - | 115,800 | 550,050 | 115,800 | 550,050 | 0.7 | % | ||||||||
SimCorp | Denmark | 2,500 | 99,561 | - | - | 2,500 | 99,561 | 0.1 | % | ||||||||
Nokian Renkaat | Finland | 5,000 | 156,692 | 15,000 | 470,076 | 20,000 | 626,768 | 0.8 | % | ||||||||
Alten | France | - | - | 11,100 | 515,598 | 11,100 | 515,598 | ||||||||||
Lectra | France | - | - | 21,310 | 304,095 | 21,310 | 304,095 | ||||||||||
Nexity | France | - | - | 7,700 | 302,169 | 7,700 | 302,169 | ||||||||||
Technicolor | France | - | - | 81,400 | 530,880 | 81,400 | 530,880 | ||||||||||
Thermador Groupe | France | 1,700 | 142,162 | 3,100 | 259,237 | 4,800 | 401,399 | ||||||||||
Virbac | France | 750 | 160,539 | 1,350 | 288,969 | 2,100 | 449,508 | ||||||||||
302,701 | 2,200,948 | 2,503,649 | 3.2 | % | |||||||||||||
Aurelius | Germany | - | - | 8,561 | 365,973 | 8,561 | 365,973 | ||||||||||
Bertrandt | Germany | 1,400 | 183,783 | 950 | 124,710 | 2,350 | 308,493 | ||||||||||
Carl Zeiss Meditec | Germany | 8,000 | 203,973 | 29,000 | 739,402 | 37,000 | 943,375 | ||||||||||
CompuGroup Medical | Germany | - | - | 7,300 | 255,424 | 7,300 | 255,424 | ||||||||||
Fielmann | Germany | 1,300 | 88,364 | 2,450 | 166,532 | 3,750 | 254,896 | ||||||||||
GFT Technologies | Germany | - | - | 9,300 | 191,913 | 9,300 | 191,913 | ||||||||||
KWS Saat | Germany | 500 | 166,392 | 1,100 | 366,061 | 1,600 | 532,453 | ||||||||||
Nemetschek | Germany | - | - | 8,000 | 257,486 | 8,000 | 257,486 | ||||||||||
STRATEC Biomedical | Germany | 2,000 | 110,158 | 2,000 | 110,158 | 4,000 | 220,316 | ||||||||||
752,670 | 2,577,659 | 3,330,329 | 4.2 | % | |||||||||||||
I.T | Hong Kong | - | - | 1,531,000 | 576,726 | 1,531,000 | 576,726 | ||||||||||
New World Department Store China | Hong Kong | - | - | 3,843,400 | 1,031,313 | 3,843,400 | 1,031,313 | ||||||||||
Pacific Textiles Holdings | Hong Kong | - | - | 295,000 | 471,906 | 295,000 | 471,906 | ||||||||||
Stella International Holdings | Hong Kong | 30,000 | 71,598 | - | - | 30,000 | 71,598 | ||||||||||
Television Broadcasts | Hong Kong | - | - | 98,100 | 581,522 | 98,100 | 581,522 | ||||||||||
Texwinca Holdings | Hong Kong | - | - | 208,000 | 220,838 | 208,000 | 220,838 | ||||||||||
Value Partners Group | Hong Kong | 45,000 | 71,057 | 612,600 | 967,319 | 657,600 | 1,038,376 | ||||||||||
142,655 | 3,849,624 | 3,992,279 | 5.0 | % | |||||||||||||
Apollo Tyres | India | - | - | 100,000 | 266,960 | 100,000 | 266,960 | ||||||||||
Bajaj Finance | India | 3,300 | 282,324 | 7,500 | 641,645 | 10,800 | 923,969 | ||||||||||
Kewal Kiran Clothing | India | 3,980 | 132,562 | - | - | 3,980 | 132,562 | ||||||||||
Motherson Sumi Systems | India | 24,000 | 195,151 | 22,500 | 182,954 | 46,500 | 378,105 | ||||||||||
610,037 | 1,091,559 | 1,701,596 | 2.2 | % | |||||||||||||
Selamat Sempurna | Indonesia | - | - | 792,700 | 274,390 | 792,700 | 274,390 | 0.3 | % | ||||||||
S-11
Royce International Premier Fund | Royce Global Value Fund | ProForma Combined Royce International Premier Fund | Combined % of Net Assets | ||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | ||||||||||
Azimut Holding | Italy | 3,500 | 102,388 | 4,000 | 117,015 | 7,500 | 219,403 | ||||||||||
DiaSorin | Italy | 3,500 | 159,786 | 2,700 | 123,263 | 6,200 | 283,049 | ||||||||||
Recordati | Italy | 8,200 | 171,956 | 9,000 | 188,733 | 17,200 | 360,689 | ||||||||||
434,130 | 429,011 | 863,141 | 1.1 | % | |||||||||||||
EPS Holdings | Japan | - | - | 45,100 | 547,236 | 45,100 | 547,236 | ||||||||||
GCA Savvian | Japan | - | - | 50,000 | 620,991 | 50,000 | 620,991 | ||||||||||
Horiba | Japan | 3,600 | 146,488 | 7,500 | 305,184 | 11,100 | 451,672 | ||||||||||
Itoki Corporation | Japan | - | - | 52,700 | 300,995 | 52,700 | 300,995 | ||||||||||
Leopalace21 Corporation | Japan | - | - | 82,400 | 505,637 | 82,400 | 505,637 | ||||||||||
Meitec Corporation | Japan | 5,200 | 193,749 | 12,500 | 465,743 | 17,700 | 659,492 | ||||||||||
Miraca Holdings | Japan | - | - | 5,400 | 270,033 | 5,400 | 270,033 | ||||||||||
MISUMI Group | Japan | 13,000 | 184,614 | 41,000 | 582,245 | 54,000 | 766,859 | ||||||||||
Namura Shipbuilding | Japan | - | - | 35,300 | 302,856 | 35,300 | 302,856 | ||||||||||
Nihon Kohden | Japan | - | - | 2,600 | 64,371 | 2,600 | 64,371 | ||||||||||
Nishikawa Rubber | Japan | - | - | 17,000 | 275,034 | 17,000 | 275,034 | ||||||||||
Obara Group | Japan | - | - | 18,000 | 967,766 | 18,000 | 967,766 | ||||||||||
SPARX Group | Japan | - | - | 226,300 | 475,214 | 226,300 | 475,214 | ||||||||||
Sun Frontier Fudousan | Japan | - | - | 34,400 | 278,832 | 34,400 | 278,832 | ||||||||||
Tokai Tokyo Financial Holdings | Japan | - | - | 56,400 | 410,609 | 56,400 | 410,609 | ||||||||||
TOTO | Japan | 10,000 | 180,251 | 30,200 | 544,358 | 40,200 | 724,609 | ||||||||||
Trancom | Japan | - | - | 6,600 | 360,779 | 6,600 | 360,779 | ||||||||||
Trend Micro | Japan | 4,500 | 154,063 | 9,000 | 308,126 | 13,500 | 462,189 | ||||||||||
USS | Japan | 10,000 | 180,578 | 40,000 | 722,311 | 50,000 | 902,889 | ||||||||||
Zuiko Corporation | Japan | - | - | 7,500 | 258,610 | 7,500 | 258,610 | ||||||||||
1,039,743 | 8,566,930 | 9,606,673 | 12.1 | % | |||||||||||||
CB Industrial Product Holding | Malaysia | - | - | 400,000 | 212,033 | 400,000 | 212,033 | 0.3 | % | ||||||||
Industrias Bachoco ADR | Mexico | - | - | 9,700 | 524,867 | 9,700 | 524,867 | 0.7 | % | ||||||||
Lucas Bols Holding BV | Netherlands | - | - | 11,937 | 230,161 | 11,937 | 230,161 | 0.3 | % | ||||||||
Borregaard | Norway | - | - | 34,000 | 240,675 | 34,000 | 240,675 | ||||||||||
TGS-NOPEC Geophysical | Norway | 7,500 | 175,149 | 35,000 | 817,364 | 42,500 | 992,513 | ||||||||||
Tomra Systems | Norway | - | - | 37,400 | 342,257 | 37,400 | 342,257 | ||||||||||
175,149 | 1,400,296 | 1,575,445 | 2.0 | % | |||||||||||||
Lewis Group | South Africa | - | - | 87,500 | 709,077 | 87,500 | 709,077 | ||||||||||
Nampak | South Africa | - | - | 28,200 | 78,323 | 28,200 | 78,323 | ||||||||||
- | 787,400 | 787,400 | 1.0 | % | |||||||||||||
Huvis Corporation | South Korea | - | - | 27,200 | 264,575 | 27,200 | 264,575 | 0.3 | % | ||||||||
Atento | Spain | - | - | 38,400 | 552,192 | 38,400 | 552,192 | 0.7 | % | ||||||||
Belimo Holding | Switzerland | 70 | 166,961 | 95 | 226,590 | 165 | 393,551 | ||||||||||
Burckhardt Compression Holding | Switzerland | 425 | 161,031 | 500 | 189,449 | 925 | 350,480 | ||||||||||
Burkhalter Holding | Switzerland | 1,050 | 122,413 | 1,400 | 163,217 | 2,450 | 285,630 | ||||||||||
Forbo Holding | Switzerland | 155 | 184,352 | 250 | 297,342 | 405 | 481,694 | ||||||||||
Garmin | Switzerland | - | - | 11,400 | 500,802 | 11,400 | 500,802 | ||||||||||
Inficon Holding | Switzerland | 450 | 153,778 | 400 | 136,692 | 850 | 290,470 | ||||||||||
Kaba Holding | Switzerland | 250 | 148,805 | - | - | 250 | 148,805 | ||||||||||
LEM Holding | Switzerland | 260 | 199,807 | 190 | 146,013 | 450 | 345,820 | ||||||||||
Partners Group Holding | Switzerland | 750 | 224,210 | 1,000 | 298,946 | 1,750 | 523,156 | ||||||||||
VZ Holding | Switzerland | 1,000 | 240,655 | 4,300 | 1,034,815 | 5,300 | 1,275,470 | ||||||||||
1,602,012 | 2,993,866 | 4,595,878 | 5.8 | % | |||||||||||||
Flytech Technology | Taiwan | - | - | 95,600 | 381,105 | 95,600 | 381,105 | ||||||||||
Kinik Company | Taiwan | - | - | 147,100 | 280,331 | 147,100 | 280,331 | ||||||||||
Makalot Industrial | Taiwan | - | - | 35,100 | 302,032 | 35,100 | 302,032 | ||||||||||
Parade Technologies | Taiwan | - | - | 17,300 | 201,851 | 17,300 | 201,851 | ||||||||||
Taiwan Paiho | Taiwan | - | - | 117,100 | 330,185 | 117,100 | 330,185 | ||||||||||
- | 1,495,504 | 1,495,504 | 1.9 | % | |||||||||||||
Abcam | United Kingdom | 25,000 | 203,477 | 85,000 | 691,821 | 110,000 | 895,298 | ||||||||||
Ashmore Group | United Kingdom | 25,000 | 113,601 | 150,000 | 681,608 | 175,000 | 795,209 | ||||||||||
AVEVA Group | United Kingdom | 6,500 | 184,653 | 20,500 | 582,368 | 27,000 | 767,021 | ||||||||||
Brammer | United Kingdom | - | - | 26,000 | 126,132 | 26,000 | 126,132 | ||||||||||
Clarkson | United Kingdom | 5,832 | 250,806 | 31,500 | 1,354,661 | 37,332 | 1,605,467 | ||||||||||
Consort Medical | United Kingdom | 13,300 | 190,168 | 20,000 | 285,968 | 33,300 | 476,136 | ||||||||||
e2v technologies | United Kingdom | 40,000 | 157,753 | 75,000 | 295,788 | 115,000 | 453,541 | ||||||||||
Elementis | United Kingdom | 41,500 | 167,321 | 50,000 | 201,591 | 91,500 | 368,912 | ||||||||||
EMIS Group | United Kingdom | - | - | 39,200 | 567,887 | 39,200 | 567,887 | ||||||||||
Fidessa Group | United Kingdom | 5,200 | 185,879 | 10,000 | 357,459 | 15,200 | 543,338 |
S-12
Royce International Premier Fund | Royce Global Value Fund | ProForma Combined Royce International Premier Fund | Combined % of Net Assets | ||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | ||||||||||
HellermannTyton Group | United Kingdom | 35,000 | 189,069 | 149,000 | 804,892 | 184,000 | 993,961 | ||||||||||
Kennedy Wilson Europe Real Estate | United Kingdom | - | - | 8,865 | 158,235 | 8,865 | 158,235 | ||||||||||
Latchways | United Kingdom | 16,000 | 197,349 | - | - | 16,000 | 197,349 | ||||||||||
Rotork | United Kingdom | 30,000 | 109,642 | 180,000 | 657,851 | 210,000 | 767,493 | ||||||||||
Spirax-Sarco Engineering | United Kingdom | 2,300 | 122,619 | 3,000 | 159,938 | 5,300 | 282,557 | ||||||||||
Synthomer | United Kingdom | - | - | 135,000 | 660,962 | 135,000 | 660,962 | ||||||||||
Victrex | United Kingdom | 5,000 | 151,626 | 7,500 | 227,438 | 12,500 | 379,064 | ||||||||||
Zeal Network | United Kingdom | - | - | 4,500 | 211,108 | 4,500 | 211,108 | ||||||||||
2,223,963 | 8,025,707 | 10,249,670 | 13.0 | % | |||||||||||||
Advance Auto Parts | United States | - | - | 800 | 127,432 | 800 | 127,432 | ||||||||||
AGCO Corporation | United States | - | - | 5,700 | 323,646 | 5,700 | 323,646 | ||||||||||
Alleghany Corporation | United States | - | - | 775 | 363,289 | 775 | 363,289 | ||||||||||
Anixter International | United States | - | - | 9,100 | 592,865 | 9,100 | 592,865 | ||||||||||
ANSYS | United States | - | - | 2,600 | 237,224 | 2,600 | 237,224 | ||||||||||
Applied Industrial Technologies | United States | - | - | 3,300 | 130,845 | 3,300 | 130,845 | ||||||||||
Artisan Partners Asset Management Cl. A | United States | - | - | 11,200 | 520,352 | 11,200 | 520,352 | ||||||||||
Badger Meter | United States | - | - | 1,000 | 63,490 | 1,000 | 63,490 | ||||||||||
Bed Bath & Beyond | United States | - | - | 4,800 | 331,104 | 4,800 | 331,104 | ||||||||||
Blackstone Group L.P. | United States | - | - | 4,000 | 163,480 | 4,000 | 163,480 | ||||||||||
BorgWarner | United States | - | - | 5,300 | 301,252 | 5,300 | 301,252 | ||||||||||
Cal-Maine Foods | United States | - | - | 6,100 | 318,420 | 6,100 | 318,420 | ||||||||||
Capella Education | United States | - | - | 1,400 | 75,138 | 1,400 | 75,138 | ||||||||||
Carlisle Companies | United States | - | - | 6,500 | 650,780 | 6,500 | 650,780 | ||||||||||
Carter’s | United States | - | - | 1,400 | 148,820 | 1,400 | 148,820 | ||||||||||
Coherent | United States | - | - | 4,800 | 304,704 | 4,800 | 304,704 | ||||||||||
Copart | United States | - | - | 5,100 | 180,948 | 5,100 | 180,948 | ||||||||||
Core-Mark Holding Company | United States | - | - | 2,200 | 130,350 | 2,200 | 130,350 | ||||||||||
Diodes | United States | - | - | 3,500 | 84,385 | 3,500 | 84,385 | ||||||||||
Dollar Tree | United States | - | - | 8,200 | 647,718 | 8,200 | 647,718 | ||||||||||
Dorman Products | United States | - | - | 700 | 33,362 | 700 | 33,362 | ||||||||||
Drew Industries | United States | - | - | 11,000 | 638,220 | 11,000 | 638,220 | ||||||||||
DST Systems | United States | - | - | 2,700 | 340,146 | 2,700 | 340,146 | ||||||||||
Dun & Bradstreet | United States | - | - | 500 | 61,000 | 500 | 61,000 | ||||||||||
E*TRADE Financial | United States | - | - | 6,900 | 206,655 | 6,900 | 206,655 | ||||||||||
Equifax | United States | - | - | 1,200 | 116,508 | 1,200 | 116,508 | ||||||||||
Evercore Partners Cl. A | United States | - | - | 1,000 | 53,960 | 1,000 | 53,960 | ||||||||||
Fenix Parts | United States | - | - | 8,500 | 85,170 | 8,500 | 85,170 | ||||||||||
GATX Corporation | United States | - | - | 2,100 | 111,615 | 2,100 | 111,615 | ||||||||||
Genesee & Wyoming Cl. A | United States | - | - | 2,500 | 190,450 | 2,500 | 190,450 | ||||||||||
Gentex Corporation | United States | - | - | 10,000 | 164,200 | 10,000 | 164,200 | ||||||||||
IHS Cl. A | United States | - | - | 1,300 | 167,219 | 1,300 | 167,219 | ||||||||||
Jones Lang LaSalle | United States | - | - | 1,600 | 273,600 | 1,600 | 273,600 | ||||||||||
Kaiser Aluminum | United States | - | - | 400 | 33,232 | 400 | 33,232 | ||||||||||
Kennedy-Wilson Holdings | United States | - | - | 23,800 | 585,242 | 23,800 | 585,242 | ||||||||||
Lam Research | United States | - | - | 1,100 | 89,485 | 1,100 | 89,485 | ||||||||||
ManpowerGroup | United States | - | - | 10,100 | 902,738 | 10,100 | 902,738 | ||||||||||
Media General | United States | - | - | 2,600 | 42,952 | 2,600 | 42,952 | ||||||||||
Mentor Graphics | United States | - | - | 4,700 | 124,221 | 4,700 | 124,221 | ||||||||||
Minerals Technologies | United States | - | - | 10,900 | 742,617 | 10,900 | 742,617 | ||||||||||
Mohawk Industries | United States | - | - | 1,800 | 343,620 | 1,800 | 343,620 | ||||||||||
Monro Muffler Brake | United States | - | - | 700 | 43,512 | 700 | 43,512 | ||||||||||
Mueller Industries | United States | - | - | 3,200 | 111,104 | 3,200 | 111,104 | ||||||||||
National Instruments | United States | - | - | 5,200 | 153,192 | 5,200 | 153,192 | ||||||||||
NVR | United States | - | - | 100 | 134,000 | 100 | 134,000 | ||||||||||
Premier Cl. A | United States | - | - | 2,800 | 107,688 | 2,800 | 107,688 | ||||||||||
Quaker Chemical | United States | - | - | 2,500 | 222,100 | 2,500 | 222,100 | ||||||||||
RBC Bearings | United States | - | - | 300 | 21,528 | 300 | 21,528 | ||||||||||
Reliance Steel & Aluminum | United States | - | - | 8,900 | 538,272 | 8,900 | 538,272 | ||||||||||
Rogers Corporation | United States | - | - | 1,600 | 105,824 | 1,600 | 105,824 | ||||||||||
Sanderson Farms | United States | - | - | 3,100 | 232,996 | 3,100 | 232,996 | ||||||||||
SEI Investments | United States | - | - | 6,700 | 328,501 | 6,700 | 328,501 | ||||||||||
Sensient Technologies | United States | - | - | 3,800 | 259,692 | 3,800 | 259,692 | ||||||||||
Sotheby’s | United States | - | - | 4,700 | 212,628 | 4,700 | 212,628 | ||||||||||
Standard Motor Products | United States | - | - | 14,263 | 500,917 | 14,263 | 500,917 | ||||||||||
Sun Hydraulics | United States | - | - | 3,700 | 141,007 | 3,700 | 141,007 | ||||||||||
Thor Industries | United States | - | - | 13,700 | 771,036 | 13,700 | 771,036 | ||||||||||
Towers Watson & Co. Cl. A | United States | - | - | 2,100 | 264,180 | 2,100 | 264,180 | ||||||||||
UGI Corporation | United States | - | - | 9,500 | 327,275 | 9,500 | 327,275 | ||||||||||
Valmont Industries | United States | - | - | 7,000 | 832,090 | 7,000 | 832,090 | ||||||||||
Valspar Corporation (The) | United States | - | - | 700 | 57,274 | 700 | 57,274 | ||||||||||
Waste Connections | United States | - | - | 3,500 | 164,920 | 3,500 | 164,920 | ||||||||||
Waters Corporation | United States | - | - | 1,300 | 166,894 | 1,300 | 166,894 |
S-13
Royce International Premier Fund | Royce Global Value Fund | ProForma Combined Royce International Premier Fund | Combined % of Net Assets | ||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | ||||||||||
Westlake Chemical | United States | - | - | 9,000 | 617,310 | 9,000 | 617,310 | ||||||||||
Westwood Holdings Group | United States | - | - | 4,200 | 250,194 | 4,200 | 250,194 | ||||||||||
World Fuel Services | United States | - | - | 3,500 | 167,825 | 3,500 | 167,825 | ||||||||||
- | 17,734,413 | 17,734,413 | 22.4 | % | |||||||||||||
TOTAL COMMON STOCKS | 8,223,478 | 64,065,611 | 72,289,089 | 91.4 | % | ||||||||||||
REPURCHASE AGREEMENT | 782,000 | 5,874,000 | 6,656,000 | 8.4 | % | ||||||||||||
TOTAL INVESTMENTS | 9,005,478 | 69,939,611 | 78,945,089 | 99.8 | % | ||||||||||||
LIABILITIES LESS CASH AND OTHER ASSETS/CASH AND OTHER ASSETS LESS LIABILITIES | (614,355 | ) | 755,529 | 141,174 | 0.2 | % | |||||||||||
NET ASSETS | 8,391,123 | 70,695,140 | 79,086,263 | 100.0 | % | ||||||||||||
S-14
Pro Forma Condensed Combined Statement of Assets and Liabilities
Relating to Global Value Reorganization as of June 30, 2015 (Unaudited)
Royce International | Royce Global | Adjustments1 | Pro Forma | ||||||||||||
Premier Fund | Value Fund | Combined Royce | |||||||||||||
International | |||||||||||||||
Premier Fund | |||||||||||||||
ASSETS: | |||||||||||||||
Investments at value | $ | 8,223,478 | $ | 64,065,611 | $ | - | $ | 72,289,089 | |||||||
Repurchase agreements (at cost and value) | 782,000 | 5,874,000 | - | 6,656,000 | |||||||||||
Cash and foreign currency | 2,537 | 307,193 | - | 309,730 | |||||||||||
Receivable for investments sold | 73,703 | 722,666 | - | 796,369 | |||||||||||
Receivable for capital shares sold | 6,599 | 23,173 | - | 29,772 | |||||||||||
Receivable for dividends and interest | 39,071 | 293,926 | - | 332,997 | |||||||||||
Prepaid expenses and other assets | 126 | 204 | - | 330 | |||||||||||
Total Assets | 9,127,514 | 71,286,773 | - | 80,414,287 | |||||||||||
LIABILITIES: | |||||||||||||||
Payable for investments purchased | 695,888 | 75,042 | - | 770,930 | |||||||||||
Payable for capital shares redeemed | 3,204 | 317,222 | - | 320,426 | |||||||||||
Payable for investment advisory fees | 4,066 | 73,658 | - | 77,724 | |||||||||||
Payable for trustees’ fees | 192 | 3,550 | - | 3,742 | |||||||||||
Accrued expenses | 25,864 | 122,161 | - | 148,025 | |||||||||||
Deferred capital gains tax | 7,177 | - | - | 7,177 | |||||||||||
Total Liabilities | 736,391 | 591,633 | - | 1,328,024 | |||||||||||
Net Assets | $ | 8,391,123 | $ | 70,695,140 | $ | - | $ | 79,086,263 | |||||||
ANALYSIS OF NET ASSETS: | |||||||||||||||
Paid-in capital | $ | 7,892,892 | $ | 141,066,289 | $ | - | $ | 148,959,181 | |||||||
Undistributed net investment income (loss) | 89,282 | 439,301 | - | 528,583 | |||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | (708,412 | ) | (72,299,373 | ) | - | (73,007,785 | ) | ||||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 1,117,361 | 1,488,923 | - | 2,606,284 | |||||||||||
Net Assets | $ | 8,391,123 | $ | 70,695,140 | $ | - | $ | 79,086,263 | |||||||
Investment Class | $ | 1,836,254 | $ | 34,188,745 | $ | - | 36,024,999 | ||||||||
Service Class | 6,554,869 | 25,054,308 | - | 31,609,177 | |||||||||||
Consultant Class | 11,302,854 | - | 11,302,854 | ||||||||||||
R Class | 124,902 | - | 124,902 | ||||||||||||
K Class | 24,331 | - | 24,331 | ||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | |||||||||||||||
Investment Class | 185,372 | 2,522,592 | 927,252 | 3,635,216 | |||||||||||
Service Class | 560,830 | 1,839,859 | 303,261 | 2,703,950 | |||||||||||
Consultant Class | 842,229 | - | 842,229 | ||||||||||||
R Class | 12,503 | - | 12,503 | ||||||||||||
K Class | 2,431 | - | 2,431 | ||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | |||||||||||||||
Investment Class2 | $ | 9.91 | $ | 13.55 | - | $ | 9.91 | ||||||||
Service Class2 | 11.69 | 13.62 | - | 11.69 | |||||||||||
Consultant Class3 | 13.42 | - | 13.42 | ||||||||||||
R Class4 | 9.99 | - | 9.99 | ||||||||||||
K Class4 | 10.01 | - | 10.01 | ||||||||||||
Investments at identified cost | $ | 7,101,268 | $ | 62,546,125 | $ | - | $ | 69,647,393 |
1 | Reflects the change in shares of Royce International Premier Fund after giving effect to the distribution of shares of Royce International Premier Fund to Royce Global Value Fund shareholders as if the Reorganization had taken place on June 30, 2015. |
2 | Offering and redemption price per share; shares held less than 30 days may be subject to a 2% redemption fee, payable to the Fund. From January 1-31, 2015, the same redemption fee was applied to shares held less than 180 days. |
3 | Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc. |
4 | Offering and redemption price per share. |
S-15
Pro Forma Condensed Combined Statement of Operations
Relating to Global Value Reorganization as of June 30, 2015 (Unaudited)
Royce International | Royce Global | Adjustments1 | Pro Forma | |||||||||||||
Premier Fund | Value Fund | Combined Royce | ||||||||||||||
International | ||||||||||||||||
INVESTMENT INCOME: | Premier Fund | |||||||||||||||
INCOME: | ||||||||||||||||
Dividends | $ | 175,645 | $ | 1,155,091 | $ | - | $ | 1,330,736 | ||||||||
Foreign withholding tax | (14,320 | ) | (94,575 | ) | - | (108,895 | ) | |||||||||
Securities lending | - | 71 | - | 71 | ||||||||||||
Total income | 161,325 | 1,060,587 | - | 1,221,912 | ||||||||||||
EXPENSES: | ||||||||||||||||
Investment advisory fees | 51,432 | 491,523 | - | 542,955 | ||||||||||||
Distribution fees | 5,824 | 113,588 | - | 119,412 | ||||||||||||
Shareholder servicing | 13,453 | 105,546 | (6,450 | ) | 112,549 | |||||||||||
Shareholder reports | 1,666 | 26,912 | - | 28,578 | ||||||||||||
Custody | 17,038 | 50,626 | (5,650 | ) | 62,014 | |||||||||||
Registration | 20,443 | 35,256 | (20,443 | ) | 35,256 | |||||||||||
Audit | 14,446 | 17,508 | (14,446 | ) | 17,508 | |||||||||||
Administrative and office facilities | 745 | 10,095 | - | 10,840 | ||||||||||||
Trustees’ fees | 288 | 4,301 | - | 4,589 | ||||||||||||
Legal | 55 | 734 | - | 789 | ||||||||||||
Other expenses | 631 | 4,039 | (525 | ) | 4,145 | |||||||||||
Total expenses | 126,021 | 860,128 | (47,514 | ) | 938,635 | |||||||||||
Compensating balance credits | (2 | ) | (44 | ) | - | (46 | ) | |||||||||
Fees waived by investment adviser and distributor | (25,827 | ) | (11,696 | ) | - | (37,523 | ) | |||||||||
Expenses reimbursed by investment adviser | (35,141 | ) | (168,103 | ) | 47,514 | (155,730 | ) | |||||||||
Net expenses | 65,051 | 680,285 | - | 745,336 | ||||||||||||
Net investment income (loss) | 96,274 | 380,302 | - | 476,576 | ||||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | ||||||||||||||||
NET REALIZED GAIN (LOSS): | ||||||||||||||||
Investments | (68,015 | ) | 1,273,580 | - | 1,205,565 | |||||||||||
Foreign currency transactions | (7,194 | ) | (45,554 | ) | - | (52,748 | ) | |||||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | ||||||||||||||||
Investments and foreign currency translations | 1,063,154 | 4,084,452 | - | 5,147,606 | ||||||||||||
Other assets and liabilities denominated in foreign currency | 18,265 | (9,913 | ) | - | 8,352 | |||||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 1,006,210 | 5,302,565 | - | 6,308,775 | ||||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 1,102,484 | $ | 5,682,867 | $ | - | $ | 6,785,351 |
1 | Decrease due to the elimination of duplicate expenses achieved by merging the funds. |
S-16
Notes to Pro Forma Combined Financial Statements Relating to
Global Value Reorganization as of June 30, 2015 (Unaudited)
NOTE 1 — Basis of Combination:
At a meeting held on October 8, 2015, the Board approved International Premier and Global Value entering into the Plan and the Global Value Reorganization. The Plan provides for the transfer of all of assets of Global Value to International Premier in exchange for International Premier’s assumption of all of the liabilities of Global Value and International Premier’s issuance of shares of beneficial interest of International Premier (the “International Premier Shares”) to Global Value. The International Premier Shares received by Global Value in the proposed reorganization will have an aggregate net asset value that is equal to the aggregate net asset value of the Global Value shares that are outstanding immediately prior to such reorganization. The Plan also provides for the distribution by Global Value, on a pro rata basis, of the International Premier Shares to its shareholders in complete liquidation of Global Value.
The Global Value Reorganization will be accounted for as a tax-free merger of investments companies. The unaudited pro forma condensed combined schedule of investments and the unaudited pro forma condensed combined statement of assets and liabilities reflect the financial position of Global Value and International Premier at June 30, 2015 as if the Global Value Reorganization had occurred on that date. The unaudited pro forma condensed combined statement of operations reflects the results of operations of Global Value and International Premier for the six-month period ended June 30, 2015 as if the Global Value Reorganization had occurred on January 1, 2015. These statements have been derived from the books and records of Global Value and International Premier utilized in calculating daily net asset values at the dates indicated above in conformity with the accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. Completion of the Global Value Reorganization as of June 30, 2015 would not have caused International Premier to violate any of its portfolio-level compliance tests. The historical cost of Global Value’s investment securities will be carried forward to the Combined Fund. The fiscal year end for each of International Premier and Global Value is December 31.
The accompanying pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of Global Value and International Premier included in, incorporated by reference into, the SAI. Such pro forma condensed combined financial statements are presented for information purposes only and may not necessarily be representative of what the actual combined financial statements would have been had the Global Value Reorganization occurred on June 30, 2015 or January 1, 2015, as applicable. Following the Global Value Reorganization, International Premier will be the legal and accounting survivor.
Royce will pay the fees and expenses resulting from the Global Value Reorganization, including proxy solicitation costs and legal and audit fees. Those fees and expenses are estimated to be approximately $[__________]. Any brokerage or other trading costs incurred by Global Value or International Premier in connection with buying or selling portfolio securities prior to the Global Value Reorganization will be borne by the relevant Fund. Any brokerage or other trading costs incurred in connection with buying or selling portfolio securities after the Global Value Reorganization will be borne by the Combined Fund.
NOTE 2 — International Premier and Global Value Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (the “NYSE”) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Each of Global Value and International Premier values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Board, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the relevant Fund might reasonably expect to receive for the security upon
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its current sale. However, in light of the judgment involved in fair valuations, no assurance can be given that a fair value assigned to a particular security will be the amount which the relevant Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, a Fund may fair value the security. Global Value and International Premier use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by a Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
Various inputs are used in determining the value of the investments of Global Value and International Premier, as noted above. These inputs are summarized in the three broad levels below:
Level 1 – | quoted prices in active markets for identical securities. | |
Level 2 – | other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedules of Investments. | |
Level 3 – | significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the investments of Global Value and International Premier as of June 30, 2015.
Level 1 | Level 2 | Level 3 | Total | |
Royce Global Value Fund | ||||
Common Stocks | $64,065,611 | – | – | $64,065,611 |
Cash Equivalents | – | $5,874,000 | – | $5,874,000 |
Royce International Premier Fund | ||||
Common Stocks | $8,223,478 | – | – | $8,223,478 |
Cash Equivalents | – | $782,000 | – | $782,000 |
For the six-month period ended June 30, 2015, certain securities have transferred in and out of Level 1 and Level 2 measurements. Each of Global Value and International Premier recognizes transfers between levels as of the end of the reporting period. At June 30, 2015, Global Value and International Premier had securities transfer from Level 2 to Level 1 within the fair value hierarchy of $30,021,085 and $5,977,194, respectively.
NOTE 3 — Capital Shares:
As of June 30, 2015, International Premier only had Investment Class and Service Class shares outstanding while Global Value had Investment Class, Service Class, Consultant Class, R Class, and K Class shares outstanding.
The pro forma net asset value per share assumes the issuance of Investment Class, Service Class, Consultant Class, R Class, and K Class shares of International Premier that would have been issued at June 30, 2015 in connection with the proposed Global Value Reorganization. The number of full and fractional shares of each Class of International Premier assumed to be issued is determined by dividing: (i) the aggregate value of the assets of Global Value that are transferred to International Premier, net of all of the liabilities of Global Value that are assumed to International Premier, by (ii) the net asset value of one share of the relevant Class of International Premier.
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The pro forma number of shares outstanding, by Class, for International Premier consists of the following at June 30, 2015.
Class of Shares of International Premier | Shares of International Premier: Pre-Global Value Reorganization | Additional Shares of International Premier Assumed Issued in Global Value Reorganization | Total Outstanding Shares of International Premier: Post-Global Value Reorganization |
Investment Class | 185,372 | 3,449,844 | 3,635,216 |
Service Class | 560,830 | 2,143,120 | 2,703,950 |
Consultant Class(1) | – | 842,229 | 842,229 |
R Class(1) | – | 12,503 | 12,503 |
K Class(1) | – | 2,431 | 2,431 |
(1) As of June 30, 2015, International Premier did not have any outstanding shares for this share class.
NOTE 4 — Pro Forma Operating Expenses:
The pro forma condensed combined statement of operations for the six-month period ended June 30, 2015, as adjusted, giving effect to the Global Value Reorganization reflects changes in expenses of International Premier as if such Reorganization was consummated on January 1, 2015.
The contractual investment advisory fee rates for each of Global Value and International Premier have changed during 2015 and will change effective January 1, 2016 as set forth below:
January 1, 2015 through June 30, 2015 | July 1, 2015 through December 31, 2015 | Effective January 1, 2016 | |
Investment Advisory Fee Rate for Royce Global Value Fund | 1.25% of first $2,000,000,000; 1.20% of next $2,000,000,000; 1.15% of next $2,000,000,000; and 1.10% of any additional average net assets | 1.10% of first $2,000,000,000; 1.05% of next $2,000,000,000; 1.00% of next $2,000,000,000; and 0.95% of any additional average net assets | 1.00% of first $2,000,000,000; 0.95% of next $2,000,000,000; 0.90% of next $2,000,000,000; and 0.85% of any additional average net assets |
Investment Advisory Fee Rate for Royce International Premier Fund | 1.25% of first $2,000,000,000; 1.20% of next $2,000,000,000; 1.15% of next $2,000,000,000; and 1.10% of any additional average net assets | 1.10% of first $2,000,000,000; 1.05% of next $2,000,000,000; 1.00% of next $2,000,000,000; and 0.95% of any additional average net assets | 1.00% of first $2,000,000,000; 0.95% of next $2,000,000,000; 0.90% of next $2,000,000,000; and 0.85% of any additional average net assets |
The contractual expense caps for each of Global Value and International Premier have changed during 2015 and will change effective January 1, 2016 as set forth below:
January 1, 2015 through June 30, 2015 | July 1, 2015 through December 31, 2015 | Effective January 1, 2016 | |
Contractual Expense Caps* for Royce Global Value Fund and Related Expiration Dates | |||
Investment Class | 1.44% expiring April 30, 2016 1.99% expiring April 30, 2021 | 1.29% expiring April 30, 2016 1.99% expiring April 30, 2021 | 1.19% expiring December 31, 2016 1.99% expiring December 31, 2021 |
Service Class | 1.69% expiring April 30, 2016 1.99% expiring April 30, 2018 | 1.54% expiring April 30, 2016 1.99% expiring April 30, 2018 | 1.44% expiring December 31, 2016 1.99% expiring December 31, 2018 |
Consultant Class | 2.44% expiring April 30, 2016 | 2.29% expiring April 30, 2016 | 2.19% expiring December 31, 2016 |
R Class | 1.99% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.84% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.74% expiring December 31, 2016 1.99% expiring December 31, 2025 |
K Class | 1.74% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.59% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.49% expiring December 31, 2016 1.99% expiring December 31, 2025 |
Contractual Expense Caps* for Royce International Premier Fund and Related Expiration Dates | |||
Investment Class | 1.44% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.29% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.19% expiring December 31, 2016 1.74% expiring December 31, 2025 |
Service Class | 1.69% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.54% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.44% expiring December 31, 2016 1.99% expiring December 31, 2025 |
* Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain each Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below the amount set forth above for the periods set forth above.
NOTE 5 — Federal Income Taxes:
Each of Global Value and International Premier has elected to be taxed as a “regulated investment company” under the Code. If the Global Value Reorganization is consummated, unless it determines such qualification is no longer in the best interest of shareholders, International Premier will seek to continue to qualify as a regulated investment company by complying with the provisions applicable to certain investment companies, as defined in applicable sections of the Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal income taxes. In addition, Global Value will make any required income or capital gain distributions prior to consummation of the Global Value Reorganization, in accordance with provisions of the Code relating to tax-free reorganizations of investment companies. As of December 31, 2014, Global Value had substantial capital loss carryforwards, including $7,981,106 in capital loss carryforwards expiring on December 31, 2017 (the “Global Value Expiring Losses”) and capital loss carryforwards without expiration of $32,992,507. In addition, $31,995,687 were realized during the period November 1, 2014 to December 31, 2014 and carried over to 2015 by Global Value. These carryover capital losses are collectively referred to herein as the “Global Value Capital Losses.” As of December 31, 2014, International Premier did not have any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $553,164 in capital losses were realized and carried over to 2015 by International Premier.
The Global Value Reorganization is expected to accelerate the expiration of the Global Value Expiring Losses by one taxable year. Additionally, because Global Value may experience an “ownership change” within the meaning of the Code as a result of the completion of one or both of the Reorganizations, the Combined Fund’s ability to use the Global Value Capital Losses and the capital loss carryovers of International Premier and any net built-in losses and certain tax attributes after such Reorganization as described above, may be substantially limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by Global Value would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former Global Value shareholders.
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Pro Forma Condensed Combined Schedule of Investments
Relating to Both Reorganizations as of June 30, 2015 (Unaudited)
Royce International Premier Fund | Royce European Small-Cap Fund | Royce Global Value Fund | ProForma Combined Royce International Premier Fund | Combined % of Net Assets | |||||||||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | Shares | Market Value | ||||||||||||||||
TFS Corporation | Australia | - | - | - | - | 395,400 | 489,639 | 395,400 | 489,639 | 0.5 | % | ||||||||||||||
Mayr-Melnhof Karton | Austria | 1,800 | 203,382 | 4,500 | 508,455 | 7,000 | 790,930 | 13,300 | 1,502,767 | ||||||||||||||||
Schoeller-Bleckmann Oilfield Equipment | Austria | - | - | 3,500 | 211,604 | - | - | 3,500 | 211,604 | ||||||||||||||||
Semperit AG Holding | Austria | - | - | 6,500 | 268,121 | - | - | 6,500 | 268,121 | ||||||||||||||||
203,382 | 988,180 | 790,930 | 1,982,492 | 1.9 | % | ||||||||||||||||||||
Lazard Cl. A | Bermuda | - | - | - | - | 3,200 | 179,968 | 3,200 | 179,968 | 0.2 | % | ||||||||||||||
CETIP - Mercados Organizados | Brazil | 17,500 | 191,824 | - | - | 90,000 | 986,523 | 107,500 | 1,178,347 | ||||||||||||||||
MAHLE Metal Leve | Brazil | - | - | - | - | 83,700 | 576,109 | 83,700 | 576,109 | ||||||||||||||||
Totvs | Brazil | 15,000 | 188,157 | - | - | 80,100 | 1,004,760 | 95,100 | 1,192,917 | ||||||||||||||||
379,981 | - | 2,567,392 | 2,947,373 | 2.9 | % | ||||||||||||||||||||
Absolute Software | Canada | - | - | - | - | 16,200 | 116,604 | 16,200 | 116,604 | ||||||||||||||||
Gildan Activewear | Canada | - | - | - | - | 5,500 | 182,820 | 5,500 | 182,820 | ||||||||||||||||
Magellan Aerospace | Canada | - | - | - | - | 109,100 | 1,490,189 | 109,100 | 1,490,189 | ||||||||||||||||
MTY Food Group | Canada | - | - | - | - | 15,100 | 400,410 | 15,100 | 400,410 | ||||||||||||||||
Richelieu Hardware | Canada | - | - | - | - | 9,800 | 492,981 | 9,800 | 492,981 | ||||||||||||||||
Ritchie Bros. Auctioneers | Canada | - | - | - | - | 19,900 | 555,608 | 19,900 | 555,608 | ||||||||||||||||
- | - | 3,238,612 | 3,238,612 | 3.2 | % | ||||||||||||||||||||
Inversiones La Construccion | Chile | 9,000 | 100,802 | - | - | 60,100 | 673,131 | 69,100 | 773,933 | ||||||||||||||||
Sonda | Chile | - | - | - | - | 155,400 | 325,495 | 155,400 | 325,495 | ||||||||||||||||
100,802 | - | 998,626 | 1,099,428 | 1.1 | % | ||||||||||||||||||||
AAC Technologies Holdings | China | - | - | - | - | 30,000 | 169,708 | 30,000 | 169,708 | ||||||||||||||||
E-House (China) Holdings ADR | China | - | - | - | - | 77,500 | 520,800 | 77,500 | 520,800 | ||||||||||||||||
Haitian International Holdings | China | - | - | - | - | 167,000 | 384,346 | 167,000 | 384,346 | ||||||||||||||||
Xtep International Holdings | China | - | - | - | - | 1,358,800 | 494,329 | 1,358,800 | 494,329 | ||||||||||||||||
- | - | 1,569,183 | 1,569,183 | 1.5 | % | ||||||||||||||||||||
Globaltrans Investment GDR | Cyprus | - | - | 72,200 | 342,950 | 115,800 | 550,050 | 188,000 | 893,000 | 0.9 | % | ||||||||||||||
Coloplast Cl. B | Denmark | - | - | 3,000 | 196,850 | - | - | 3,000 | 196,850 | ||||||||||||||||
SimCorp | Denmark | 2,500 | 99,561 | - | - | - | - | 2,500 | 99,561 | ||||||||||||||||
Zealand Pharma | Denmark | - | - | 12,000 | 198,150 | - | - | 12,000 | 198,150 | ||||||||||||||||
99,561 | 395,000 | - | 494,561 | 0.5 | % | ||||||||||||||||||||
Nokian Renkaat | Finland | 5,000 | 156,692 | 12,500 | 391,730 | 15,000 | 470,076 | 32,500 | 1,018,498 | 1.0 | % | ||||||||||||||
Altamir | France | - | - | 20,000 | 232,781 | - | - | 20,000 | 232,781 | ||||||||||||||||
Alten | France | - | - | 6,000 | 278,701 | 11,100 | 515,598 | 17,100 | 794,299 | ||||||||||||||||
Boiron | France | - | - | 1,500 | 147,160 | - | - | 1,500 | 147,160 | ||||||||||||||||
Gaztransport Et Technigaz | France | - | - | 3,900 | 246,701 | - | - | 3,900 | 246,701 | ||||||||||||||||
Interparfums | France | - | - | 11,500 | 313,468 | - | - | 11,500 | 313,468 | ||||||||||||||||
Lectra | France | - | - | 20,000 | 285,402 | 21,310 | 304,095 | 41,310 | 589,497 | ||||||||||||||||
Linedata Services | France | - | - | 9,000 | 266,694 | - | - | 9,000 | 266,694 | ||||||||||||||||
Manutan International | France | - | - | 8,500 | 403,971 | - | - | 8,500 | 403,971 | ||||||||||||||||
Neurones | France | - | - | 15,000 | 249,503 | - | - | 15,000 | 249,503 | ||||||||||||||||
Nexity | France | - | - | 5,000 | 196,214 | 7,700 | 302,169 | 12,700 | 498,383 | ||||||||||||||||
Parrot | France | - | - | 3,000 | 134,551 | 3,000 | 134,551 | ||||||||||||||||||
Robertet | France | - | - | 700 | 159,201 | 700 | 159,201 | ||||||||||||||||||
SEB | France | - | - | 3,000 | 279,604 | 3,000 | 279,604 | ||||||||||||||||||
Tarkett | France | - | - | 9,000 | 194,151 | 9,000 | 194,151 | ||||||||||||||||||
Technicolor | France | - | - | - | - | 81,400 | 530,880 | 81,400 | 530,880 | ||||||||||||||||
Thermador Groupe | France | 1,700 | 142,162 | 4,953 | 414,194 | 3,100 | 259,237 | 9,753 | 815,593 | ||||||||||||||||
Vetoquinol | France | - | - | 9,200 | 381,546 | - | - | 9,200 | 381,546 | ||||||||||||||||
Virbac | France | 750 | 160,539 | 1,000 | 214,051 | 1,350 | 288,969 | 3,100 | 663,559 | ||||||||||||||||
302,701 | 4,397,893 | 2,200,948 | 6,901,542 | 6.8 | % | ||||||||||||||||||||
Amadeus Fire | Germany | - | - | 2,500 | 222,970 | - | - | 2,500 | 222,970 | ||||||||||||||||
Aurelius | Germany | - | - | - | - | 8,561 | 365,973 | 8,561 | 365,973 | ||||||||||||||||
Bertrandt | Germany | 1,400 | 183,783 | 2,500 | 328,184 | 950 | 124,710 | 4,850 | 636,677 | ||||||||||||||||
Carl Zeiss Meditec | Germany | 8,000 | 203,973 | - | - | 29,000 | 739,402 | 37,000 | 943,375 | ||||||||||||||||
CompuGroup Medical | Germany | - | - | - | - | 7,300 | 255,424 | 7,300 | 255,424 | ||||||||||||||||
Fielmann | Germany | 1,300 | 88,364 | 2,750 | 186,924 | 2,450 | 166,532 | 6,500 | 441,820 | ||||||||||||||||
Gerry Weber International | Germany | - | - | 8,500 | 194,926 | - | - | 8,500 | 194,926 | ||||||||||||||||
GFT Technologies | Germany | - | - | - | - | 9,300 | 191,913 | 9,300 | 191,913 | ||||||||||||||||
KWS Saat | Germany | 500 | 166,392 | 1,000 | 332,783 | 1,100 | 366,061 | 2,600 | 865,236 | ||||||||||||||||
Nemetschek | Germany | - | - | - | - | 8,000 | 257,486 | 8,000 | 257,486 | ||||||||||||||||
STRATEC Biomedical | Germany | 2,000 | 110,158 | - | - | 2,000 | 110,158 | 4,000 | 220,316 | ||||||||||||||||
Takkt | Germany | - | - | 12,000 | 219,536 | - | - | 12,000 | 219,536 | ||||||||||||||||
752,670 | 1,485,323 | 2,577,659 | 4,815,652 | 4.7 | % | ||||||||||||||||||||
I.T | Hong Kong | - | - | - | - | 1,531,000 | 576,726 | 1,531,000 | 576,726 | ||||||||||||||||
New World Department Store China | Hong Kong | - | - | - | - | 3,843,400 | 1,031,313 | 3,843,400 | 1,031,313 | ||||||||||||||||
Pacific Textiles Holdings | Hong Kong | - | - | - | - | 295,000 | 471,906 | 295,000 | 471,906 | ||||||||||||||||
Stella International Holdings | Hong Kong | 30,000 | 71,598 | - | - | - | - | 30,000 | 71,598 | ||||||||||||||||
Television Broadcasts | Hong Kong | - | - | - | - | 98,100 | 581,522 | 98,100 | 581,522 | ||||||||||||||||
Texwinca Holdings | Hong Kong | - | - | - | - | 208,000 | 220,838 | 208,000 | 220,838 | ||||||||||||||||
Value Partners Group | Hong Kong | 45,000 | 71,057 | - | - | 612,600 | 967,319 | 657,600 | 1,038,376 | ||||||||||||||||
142,655 | - | 3,849,624 | 3,992,279 | 3.9 | % | ||||||||||||||||||||
Apollo Tyres | India | - | - | - | - | 100,000 | 266,960 | 100,000 | 266,960 | ||||||||||||||||
Bajaj Finance | India | 3,300 | 282,324 | - | - | 7,500 | 641,645 | 10,800 | 923,969 | ||||||||||||||||
Kewal Kiran Clothing | India | 3,980 | 132,562 | - | - | - | - | 3,980 | 132,562 | ||||||||||||||||
Motherson Sumi Systems | India | 24,000 | 195,151 | - | - | 22,500 | 182,954 | 46,500 | 378,105 | ||||||||||||||||
610,037 | - | 1,091,559 | 1,701,596 | 1.7 | % | ||||||||||||||||||||
Selamat Sempurna | Indonesia | - | - | - | - | 792,700 | 274,390 | 792,700 | 274,390 | 0.3 | % | ||||||||||||||
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Royce International Premier Fund | Royce European Small-Cap Fund | Royce Global Value Fund | ProForma Combined Royce International Premier Fund | Combined % of Net Assets | |||||||||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | Shares | Market Value | ||||||||||||||||
Azimut Holding | Italy | 3,500 | 102,388 | 9,600 | 280,835 | 4,000 | 117,015 | 17,100 | 500,238 | ||||||||||||||||
B&C Speakers | Italy | - | - | 30,000 | 227,429 | - | - | 30,000 | 227,429 | ||||||||||||||||
De’Longhi | Italy | - | - | 8,000 | 183,371 | - | - | 8,000 | 183,371 | ||||||||||||||||
DiaSorin | Italy | 3,500 | 159,786 | 7,400 | 337,833 | 2,700 | 123,263 | 13,600 | 620,882 | ||||||||||||||||
Recordati | Italy | 8,200 | 171,956 | 12,500 | 262,129 | 9,000 | 188,733 | 29,700 | 622,818 | ||||||||||||||||
Reply | Italy | - | - | 2,000 | 204,352 | - | - | 2,000 | 204,352 | ||||||||||||||||
434,130 | 1,495,949 | 429,011 | 2,359,090 | 2.3 | % | ||||||||||||||||||||
EPS Holdings | Japan | - | - | - | - | 45,100 | 547,236 | 45,100 | 547,236 | ||||||||||||||||
GCA Savvian | Japan | - | - | - | - | 50,000 | 620,991 | 50,000 | 620,991 | ||||||||||||||||
Horiba | Japan | 3,600 | 146,488 | - | - | 7,500 | 305,184 | 11,100 | 451,672 | ||||||||||||||||
Itoki Corporation | Japan | - | - | - | - | 52,700 | 300,995 | 52,700 | 300,995 | ||||||||||||||||
Leopalace21 Corporation | Japan | - | - | - | - | 82,400 | 505,637 | 82,400 | 505,637 | ||||||||||||||||
Meitec Corporation | Japan | 5,200 | 193,749 | - | - | 12,500 | 465,743 | 17,700 | 659,492 | ||||||||||||||||
Miraca Holdings | Japan | - | - | - | - | 5,400 | 270,033 | 5,400 | 270,033 | ||||||||||||||||
MISUMI Group | Japan | 13,000 | 184,614 | - | - | 41,000 | 582,245 | 54,000 | 766,859 | ||||||||||||||||
Namura Shipbuilding | Japan | - | - | - | - | 35,300 | 302,856 | 35,300 | 302,856 | ||||||||||||||||
Nihon Kohden | Japan | - | - | - | - | 2,600 | 64,371 | 2,600 | 64,371 | ||||||||||||||||
Nishikawa Rubber | Japan | - | - | - | - | 17,000 | 275,034 | 17,000 | 275,034 | ||||||||||||||||
Obara Group | Japan | - | - | - | - | 18,000 | 967,766 | 18,000 | 967,766 | ||||||||||||||||
SPARX Group | Japan | - | - | - | - | 226,300 | 475,214 | 226,300 | 475,214 | ||||||||||||||||
Sun Frontier Fudousan | Japan | - | - | - | - | 34,400 | 278,832 | 34,400 | 278,832 | ||||||||||||||||
Tokai Tokyo Financial Holdings | Japan | - | - | - | - | 56,400 | 410,609 | 56,400 | 410,609 | ||||||||||||||||
TOTO | Japan | 10,000 | 180,251 | - | - | 30,200 | 544,358 | 40,200 | 724,609 | ||||||||||||||||
Trancom | Japan | - | - | - | - | 6,600 | 360,779 | 6,600 | 360,779 | ||||||||||||||||
Trend Micro | Japan | 4,500 | 154,063 | - | - | 9,000 | 308,126 | 13,500 | 462,189 | ||||||||||||||||
USS | Japan | 10,000 | 180,578 | - | - | 40,000 | 722,311 | 50,000 | 902,889 | ||||||||||||||||
Zuiko Corporation | Japan | - | - | - | - | 7,500 | 258,610 | 7,500 | 258,610 | ||||||||||||||||
1,039,743 | - | 8,566,930 | 9,606,673 | 9.5 | % | ||||||||||||||||||||
CB Industrial Product Holding | Malaysia | - | - | - | - | 400,000 | 212,033 | 400,000 | 212,033 | 0.2 | % | ||||||||||||||
Industrias Bachoco ADR | Mexico | - | - | - | - | 9,700 | 524,867 | 9,700 | 524,867 | 0.5 | % | ||||||||||||||
Brunel International | Netherlands | - | - | 12,500 | 247,984 | - | - | 12,500 | 247,984 | ||||||||||||||||
Lucas Bols Holding BV | Netherlands | - | - | - | - | 11,937 | 230,161 | 11,937 | 230,161 | ||||||||||||||||
- | 247,984 | 230,161 | 478,145 | 0.5 | % | ||||||||||||||||||||
Borregaard | Norway | - | - | 35,000 | 247,754 | 34,000 | 240,675 | 69,000 | 488,429 | ||||||||||||||||
Spectrum | Norway | - | - | 35,000 | 142,402 | - | - | 35,000 | 142,402 | ||||||||||||||||
TGS-NOPEC Geophysical | Norway | 7,500 | 175,149 | 14,800 | 345,628 | 35,000 | 817,364 | 57,300 | 1,338,141 | ||||||||||||||||
Tomra Systems | Norway | - | - | - | - | 37,400 | 342,257 | 37,400 | 342,257 | ||||||||||||||||
175,149 | 735,784 | 1,400,296 | 2,311,229 | 2.3 | % | ||||||||||||||||||||
Lewis Group | South Africa | - | - | - | - | 87,500 | 709,077 | 87,500 | 709,077 | ||||||||||||||||
Nampak | South Africa | - | - | - | - | 28,200 | 78,323 | 28,200 | 78,323 | ||||||||||||||||
- | - | 787,400 | 787,400 | 0.8 | % | ||||||||||||||||||||
Huvis Corporation | South Korea | - | - | - | - | 27,200 | 264,575 | 27,200 | 264,575 | 0.3 | % | ||||||||||||||
Atento | Spain | - | - | - | - | 38,400 | 552,192 | 38,400 | 552,192 | ||||||||||||||||
Laboratorios Farmaceuticos Rovi | Spain | - | - | 12,000 | 187,429 | - | - | 12,000 | 187,429 | ||||||||||||||||
- | 187,429 | 552,192 | 739,621 | 0.7 | % | ||||||||||||||||||||
Addtech Cl. B | Sweden | - | - | 27,500 | 418,810 | - | - | 27,500 | 418,810 | 0.4 | % | ||||||||||||||
Belimo Holding | Switzerland | 70 | 166,961 | - | - | 95 | 226,590 | 165 | 393,551 | ||||||||||||||||
Burckhardt Compression Holding | Switzerland | 425 | 161,031 | - | - | 500 | 189,449 | 925 | 350,480 | ||||||||||||||||
Burkhalter Holding | Switzerland | 1,050 | 122,413 | 2,000 | 233,167 | 1,400 | 163,217 | 4,450 | 518,797 | ||||||||||||||||
Carlo Gavazzi Holding | Switzerland | - | - | 1,400 | 343,954 | - | - | 1,400 | 343,954 | ||||||||||||||||
Forbo Holding | Switzerland | 155 | 184,352 | - | - | 250 | 297,342 | 405 | 481,694 | ||||||||||||||||
Garmin | Switzerland | - | - | - | - | 11,400 | 500,802 | 11,400 | 500,802 | ||||||||||||||||
Inficon Holding | Switzerland | 450 | 153,778 | - | - | 400 | 136,692 | 850 | 290,470 | ||||||||||||||||
Kaba Holding | Switzerland | 250 | 148,805 | - | - | - | 250 | 148,805 | |||||||||||||||||
Kardex | Switzerland | - | - | 3,000 | 180,170 | - | - | 3,000 | 180,170 | ||||||||||||||||
LEM Holding | Switzerland | 260 | 199,807 | - | - | 190 | 146,013 | 450 | 345,820 | ||||||||||||||||
Partners Group Holding | Switzerland | 750 | 224,210 | - | - | 1,000 | 298,946 | 1,750 | 523,156 | ||||||||||||||||
Schaffner Holding | Switzerland | - | - | 1,100 | 262,367 | - | - | 1,100 | 262,367 | ||||||||||||||||
VZ Holding | Switzerland | 1,000 | 240,655 | 2,800 | 673,833 | 4,300 | 1,034,815 | 8,100 | 1,949,303 | ||||||||||||||||
Zehnder Group | Switzerland | - | - | 8,000 | 298,626 | - | - | 8,000 | 298,626 | ||||||||||||||||
1,602,012 | 1,992,117 | 2,993,866 | 6,587,995 | 6.5 | % | ||||||||||||||||||||
Flytech Technology | Taiwan | - | - | - | - | 95,600 | 381,105 | 95,600 | 381,105 | ||||||||||||||||
Kinik Company | Taiwan | - | - | - | - | 147,100 | 280,331 | 147,100 | 280,331 | ||||||||||||||||
Makalot Industrial | Taiwan | - | - | - | - | 35,100 | 302,032 | 35,100 | 302,032 | ||||||||||||||||
Parade Technologies | Taiwan | - | - | - | - | 17,300 | 201,851 | 17,300 | 201,851 | ||||||||||||||||
Taiwan Paiho | Taiwan | - | - | - | - | 117,100 | 330,185 | 117,100 | 330,185 | ||||||||||||||||
- | - | 1,495,504 | 1,495,504 | 1.5 | % | ||||||||||||||||||||
Abcam | United Kingdom | 25,000 | 203,477 | - | - | 85,000 | 691,821 | 110,000 | 895,298 | ||||||||||||||||
Ashmore Group | United Kingdom | 25,000 | 113,601 | 95,000 | 431,685 | 150,000 | 681,608 | 270,000 | 1,226,894 | ||||||||||||||||
AVEVA Group | United Kingdom | 6,500 | 184,653 | 15,000 | 426,123 | 20,500 | 582,368 | 42,000 | 1,193,144 | ||||||||||||||||
Brammer | United Kingdom | - | - | 70,000 | 339,586 | 26,000 | 126,132 | 96,000 | 465,718 | ||||||||||||||||
Circassia Pharmaceuticals | United Kingdom | - | - | 20,000 | 92,075 | - | - | 20,000 | 92,075 | ||||||||||||||||
Clarkson | United Kingdom | 5,832 | 250,806 | 13,400 | 576,268 | 31,500 | 1,354,661 | 50,732 | 2,181,735 | ||||||||||||||||
Consort Medical | United Kingdom | 13,300 | 190,168 | 31,700 | 453,258 | 20,000 | 285,968 | 65,000 | 929,394 | ||||||||||||||||
Diploma | United Kingdom | - | - | 20,000 | 253,914 | - | - | 20,000 | 253,914 | ||||||||||||||||
e2v technologies | United Kingdom | 40,000 | 157,753 | 120,300 | 474,444 | 75,000 | 295,788 | 235,300 | 927,985 | ||||||||||||||||
Elementis | United Kingdom | 41,500 | 167,321 | 91,400 | 368,509 | 50,000 | 201,591 | 182,900 | 737,421 | ||||||||||||||||
EMIS Group | United Kingdom | - | - | - | - | 39,200 | 567,887 | 39,200 | 567,887 |
S-21
Royce International Premier Fund | Royce European Small-Cap Fund | Royce Global Value Fund | ProForma Combined Royce International Premier Fund | Combined % of Net Assets | |||||||||||||||||||||
Security Display Name | Country | Shares | Market Value | Shares | Market Value | Shares | Market Value | Shares | Market Value | ||||||||||||||||
Genus | United Kingdom | - | - | 11,500 | 257,850 | - | - | 11,500 | 257,850 | ||||||||||||||||
Fidessa Group | United Kingdom | 5,200 | 185,879 | - | - | 10,000 | 357,459 | 15,200 | 543,338 | ||||||||||||||||
HellermannTyton Group | United Kingdom | 35,000 | 189,069 | 100,000 | 540,196 | 149,000 | 804,892 | 284,000 | 1,534,157 | ||||||||||||||||
HSS Hire Group | United Kingdom | - | - | 60,000 | 126,800 | - | - | 60,000 | 126,800 | ||||||||||||||||
ITE Group | United Kingdom | - | - | 100,000 | 268,684 | - | - | 100,000 | 268,684 | ||||||||||||||||
Jupiter Fund Management | United Kingdom | - | - | 25,000 | 175,077 | - | - | 25,000 | 175,077 | ||||||||||||||||
Kennedy Wilson Europe Real Estate | United Kingdom | - | - | 17,170 | 306,474 | 8,865 | 158,235 | 26,035 | 464,709 | ||||||||||||||||
Lakehouse | United Kingdom | - | - | 80,000 | 119,415 | - | - | 80,000 | 119,415 | ||||||||||||||||
Latchways | United Kingdom | 16,000 | 197,349 | 33,700 | 415,666 | - | - | 49,700 | 613,015 | ||||||||||||||||
Mears Group | United Kingdom | - | - | 40,000 | 264,441 | - | - | 40,000 | 264,441 | ||||||||||||||||
Polypipe Group | United Kingdom | - | - | 97,900 | 417,636 | - | - | 97,900 | 417,636 | ||||||||||||||||
Porvair | United Kingdom | - | - | 55,000 | 267,898 | - | - | 55,000 | 267,898 | ||||||||||||||||
Rotork | United Kingdom | 30,000 | 109,642 | 50,000 | 182,736 | 180,000 | 657,851 | 260,000 | 950,229 | ||||||||||||||||
Senior | United Kingdom | - | - | 70,000 | 315,664 | - | - | 70,000 | 315,664 | ||||||||||||||||
Spirax-Sarco Engineering | United Kingdom | 2,300 | 122,619 | 3,000 | 159,938 | 3,000 | 159,938 | 8,300 | 442,495 | ||||||||||||||||
Synthomer | United Kingdom | - | - | 85,000 | 416,161 | 135,000 | 660,962 | 220,000 | 1,077,123 | ||||||||||||||||
Treatt | United Kingdom | - | - | 85,000 | 219,032 | - | - | 85,000 | 219,032 | ||||||||||||||||
Trifast | United Kingdom | - | - | 58,200 | 112,480 | - | - | 58,200 | 112,480 | ||||||||||||||||
Victrex | United Kingdom | 5,000 | 151,626 | - | - | 7,500 | 227,438 | 12,500 | 379,064 | ||||||||||||||||
Xaar | United Kingdom | - | - | 40,000 | 292,253 | - | - | 40,000 | 292,253 | ||||||||||||||||
Zeal Network | United Kingdom | - | - | - | - | 4,500 | 211,108 | 4,500 | 211,108 | ||||||||||||||||
2,223,963 | 8,274,263 | 8,025,707 | 18,523,933 | 18.3 | % | ||||||||||||||||||||
Advance Auto Parts | United States | - | - | - | - | 800 | 127,432 | 800 | 127,432 | ||||||||||||||||
AGCO Corporation | United States | - | - | - | - | 5,700 | 323,646 | 5,700 | 323,646 | ||||||||||||||||
Alleghany Corporation | United States | - | - | - | - | 775 | 363,289 | 775 | 363,289 | ||||||||||||||||
Anixter International | United States | - | - | - | - | 9,100 | 592,865 | 9,100 | 592,865 | ||||||||||||||||
ANSYS | United States | - | - | - | - | 2,600 | 237,224 | 2,600 | 237,224 | ||||||||||||||||
Applied Industrial Technologies | United States | - | - | - | - | 3,300 | 130,845 | 3,300 | 130,845 | ||||||||||||||||
Artisan Partners Asset Management Cl. A | United States | - | - | - | - | 11,200 | 520,352 | 11,200 | 520,352 | ||||||||||||||||
Badger Meter | United States | - | - | - | - | 1,000 | 63,490 | 1,000 | 63,490 | ||||||||||||||||
Bed Bath & Beyond | United States | - | - | - | - | 4,800 | 331,104 | 4,800 | 331,104 | ||||||||||||||||
Blackstone Group L.P. | United States | - | - | - | - | 4,000 | 163,480 | 4,000 | 163,480 | ||||||||||||||||
BorgWarner | United States | - | - | - | - | 5,300 | 301,252 | 5,300 | 301,252 | ||||||||||||||||
Cal-Maine Foods | United States | - | - | - | - | 6,100 | 318,420 | 6,100 | 318,420 | ||||||||||||||||
Capella Education | United States | - | - | - | - | 1,400 | 75,138 | 1,400 | 75,138 | ||||||||||||||||
Carlisle Companies | United States | - | - | - | - | 6,500 | 650,780 | 6,500 | 650,780 | ||||||||||||||||
Carter’s | United States | - | - | - | - | 1,400 | 148,820 | 1,400 | 148,820 | ||||||||||||||||
Coherent | United States | - | - | - | - | 4,800 | 304,704 | 4,800 | 304,704 | ||||||||||||||||
Copart | United States | - | - | - | - | 5,100 | 180,948 | 5,100 | 180,948 | ||||||||||||||||
Core-Mark Holding Company | United States | - | - | - | - | 2,200 | 130,350 | 2,200 | 130,350 | ||||||||||||||||
Diodes | United States | - | - | - | - | 3,500 | 84,385 | 3,500 | 84,385 | ||||||||||||||||
Dollar Tree | United States | - | - | - | - | 8,200 | 647,718 | 8,200 | 647,718 | ||||||||||||||||
Dorman Products | United States | - | - | - | - | 700 | 33,362 | 700 | 33,362 | ||||||||||||||||
Drew Industries | United States | - | - | - | - | 11,000 | 638,220 | 11,000 | 638,220 | ||||||||||||||||
DST Systems | United States | - | - | - | - | 2,700 | 340,146 | 2,700 | 340,146 | ||||||||||||||||
Dun & Bradstreet | United States | - | - | - | - | 500 | 61,000 | 500 | 61,000 | ||||||||||||||||
E*TRADE Financial | United States | - | - | - | - | 6,900 | 206,655 | 6,900 | 206,655 | ||||||||||||||||
Equifax | United States | - | - | - | - | 1,200 | 116,508 | 1,200 | 116,508 | ||||||||||||||||
Evercore Partners Cl. A | United States | - | - | - | - | 1,000 | 53,960 | 1,000 | 53,960 | ||||||||||||||||
Fenix Parts | United States | - | - | - | - | 8,500 | 85,170 | 8,500 | 85,170 | ||||||||||||||||
GATX Corporation | United States | - | - | - | - | 2,100 | 111,615 | 2,100 | 111,615 | ||||||||||||||||
Genesee & Wyoming Cl. A | United States | - | - | - | - | 2,500 | 190,450 | 2,500 | 190,450 | ||||||||||||||||
Gentex Corporation | United States | - | - | - | - | 10,000 | 164,200 | 10,000 | 164,200 | ||||||||||||||||
IHS Cl. A | United States | - | - | - | - | 1,300 | 167,219 | 1,300 | 167,219 | ||||||||||||||||
Jones Lang LaSalle | United States | - | - | - | - | 1,600 | 273,600 | 1,600 | 273,600 | ||||||||||||||||
Kaiser Aluminum | United States | - | - | - | - | 400 | 33,232 | 400 | 33,232 | ||||||||||||||||
Kennedy-Wilson Holdings | United States | - | - | - | - | 23,800 | 585,242 | 23,800 | 585,242 | ||||||||||||||||
Lam Research | United States | - | - | - | - | 1,100 | 89,485 | 1,100 | 89,485 | ||||||||||||||||
ManpowerGroup | United States | - | - | - | - | 10,100 | 902,738 | 10,100 | 902,738 | ||||||||||||||||
Media General | United States | - | - | - | - | 2,600 | 42,952 | 2,600 | 42,952 | ||||||||||||||||
Mentor Graphics | United States | - | - | - | - | 4,700 | 124,221 | 4,700 | 124,221 | ||||||||||||||||
Minerals Technologies | United States | - | - | - | - | 10,900 | 742,617 | 10,900 | 742,617 | ||||||||||||||||
Mohawk Industries | United States | - | - | - | - | 1,800 | 343,620 | 1,800 | 343,620 | ||||||||||||||||
Monro Muffler Brake | United States | - | - | - | - | 700 | 43,512 | 700 | 43,512 | ||||||||||||||||
Mueller Industries | United States | - | - | - | - | 3,200 | 111,104 | 3,200 | 111,104 | ||||||||||||||||
National Instruments | United States | - | - | - | - | 5,200 | 153,192 | 5,200 | 153,192 | ||||||||||||||||
NVR | United States | - | - | - | - | 100 | 134,000 | 100 | 134,000 | ||||||||||||||||
Premier Cl. A | United States | - | - | - | - | 2,800 | 107,688 | 2,800 | 107,688 | ||||||||||||||||
Quaker Chemical | United States | - | - | - | - | 2,500 | 222,100 | 2,500 | 222,100 | ||||||||||||||||
RBC Bearings | United States | - | - | - | - | 300 | 21,528 | 300 | 21,528 | ||||||||||||||||
Reliance Steel & Aluminum | United States | - | - | - | - | 8,900 | 538,272 | 8,900 | 538,272 | ||||||||||||||||
Rogers Corporation | United States | - | - | - | - | 1,600 | 105,824 | 1,600 | 105,824 | ||||||||||||||||
Sanderson Farms | United States | - | - | - | - | 3,100 | 232,996 | 3,100 | 232,996 | ||||||||||||||||
SEI Investments | United States | - | - | - | - | 6,700 | 328,501 | 6,700 | 328,501 | ||||||||||||||||
Sensient Technologies | United States | - | - | - | - | 3,800 | 259,692 | 3,800 | 259,692 | ||||||||||||||||
Sotheby’s | United States | - | - | - | - | 4,700 | 212,628 | 4,700 | 212,628 | ||||||||||||||||
Standard Motor Products | United States | - | - | - | - | 14,263 | 500,917 | 14,263 | 500,917 | ||||||||||||||||
Sun Hydraulics | United States | - | - | - | - | 3,700 | 141,007 | 3,700 | 141,007 | ||||||||||||||||
Thor Industries | United States | - | - | - | - | 13,700 | 771,036 | 13,700 | 771,036 | ||||||||||||||||
Towers Watson & Co. Cl. A | United States | - | - | - | - | 2,100 | 264,180 | 2,100 | 264,180 | ||||||||||||||||
UGI Corporation | United States | - | - | - | - | 9,500 | 327,275 | 9,500 | 327,275 | ||||||||||||||||
Valmont Industries | United States | - | - | - | - | 7,000 | 832,090 | 7,000 | 832,090 | ||||||||||||||||
Valspar Corporation (The) | United States | - | - | - | - | 700 | 57,274 | 700 | 57,274 | ||||||||||||||||
Waste Connections | United States | - | - | - | - | 3,500 | 164,920 | 3,500 | 164,920 | ||||||||||||||||
Waters Corporation | United States | - | - | - | - | 1,300 | 166,894 | 1,300 | 166,894 | ||||||||||||||||
Westlake Chemical | United States | - | - | - | - | 9,000 | 617,310 | 9,000 | 617,310 | ||||||||||||||||
Westwood Holdings Group | United States | - | - | - | - | 4,200 | 250,194 | 4,200 | 250,194 | ||||||||||||||||
World Fuel Services | United States | - | - | - | - | 3,500 | 167,825 | 3,500 | 167,825 | ||||||||||||||||
- | - | 17,734,413 | 17,734,413 | 17.5 | % | ||||||||||||||||||||
TOTAL COMMON STOCKS | 8,223,478 | 21,353,412 | 64,065,611 | 93,642,501 | 92.4 | % | |||||||||||||||||||
REPURCHASE AGREEMENT | 782,000 | 1,273,000 | 5,874,000 | 7,929,000 | 7.8 | % | |||||||||||||||||||
TOTAL INVESTMENTS | 9,005,478 | 22,626,412 | 69,939,611 | 101,571,501 | 100.2 | % | |||||||||||||||||||
LIABILITIES LESS CASH AND OTHER ASSETS/CASH AND OTHER ASSETS LESS LIABILITIES | (614,355 | ) | (340,841 | ) | 755,529 | (199,667 | ) | -0.2 | % | ||||||||||||||||
NET ASSETS | 8,391,123 | 22,285,571 | 70,695,140 | 101,371,834 | 100.0 | % | |||||||||||||||||||
S-22
Pro Forma Condensed Combined Statement of Assets and Liabilities
Relating to Both Reorganizations as of June 30, 2015 (Unaudited)
Royce International | Royce European | Royce Global | Adjustments1 | Pro Forma | ||||||||||||
Premier Fund | Small-Cap Fund | Value Fund | Combined Royce | |||||||||||||
International | ||||||||||||||||
Premier Fund | ||||||||||||||||
ASSETS: | ||||||||||||||||
Investments at value | $ | 8,223,478 | $ | 21,353,412 | $ | 64,065,611 | $ | - | $ | 93,642,501 | ||||||
Repurchase agreements (at cost and value) | 782,000 | 1,273,000 | 5,874,000 | - | 7,929,000 | |||||||||||
Cash and foreign currency | 2,537 | 2,309 | 307,193 | - | 312,039 | |||||||||||
Receivable for investments sold | 73,703 | - | 722,666 | - | 796,369 | |||||||||||
Receivable for capital shares sold | 6,599 | 75,015 | 23,173 | - | 104,787 | |||||||||||
Receivable for dividends and interest | 39,071 | 81,034 | 293,926 | - | 414,031 | |||||||||||
Prepaid expenses and other assets | 126 | 278 | 204 | - | 608 | |||||||||||
Total Assets | 9,127,514 | 22,785,048 | 71,286,773 | - | 103,199,335 | |||||||||||
LIABILITIES: | ||||||||||||||||
Payable for investments purchased | 695,888 | 428,216 | 75,042 | - | 1,199,146 | |||||||||||
Payable for capital shares redeemed | 3,204 | - | 317,222 | - | 320,426 | |||||||||||
Payable for investment advisory fees | 4,066 | 20,062 | 73,658 | - | 97,786 | |||||||||||
Payable for trustees’ fees | 192 | 447 | 3,550 | - | 4,189 | |||||||||||
Accrued expenses | 25,864 | 50,752 | 122,161 | - | 198,777 | |||||||||||
Deferred capital gains tax | 7,177 | - | - | - | 7,177 | |||||||||||
Total Liabilities | 736,391 | 499,477 | 591,633 | - | 1,827,501 | |||||||||||
Net Assets | $ | 8,391,123 | $ | 22,285,571 | 70,695,140 | $ | - | $ | 101,371,834 | |||||||
ANALYSIS OF NET ASSETS: | ||||||||||||||||
Paid-in capital | $ | 7,892,892 | $ | 23,851,988 | 141,066,289 | $ | - | $ | 172,811,169 | |||||||
Undistributed net investment income (loss) | 89,282 | 175,917 | 439,301 | - | 704,500 | |||||||||||
Accumulated net realized gain (loss) on investments and foreign currency | (708,412 | ) | (2,392,302 | ) | (72,299,373 | ) | - | (75,400,087 | ) | |||||||
Net unrealized appreciation (depreciation) on investments and foreign currency | 1,117,361 | 649,968 | 1,488,923 | - | 3,256,252 | |||||||||||
Net Assets | $ | 8,391,123 | $ | 22,285,571 | 70,695,140 | $ | - | $ | 101,371,834 | |||||||
Investment Class | $ | 1,836,254 | $ | 2,629,734 | 34,188,745 | $ | - | 38,654,733 | ||||||||
Service Class | 6,554,869 | 19,655,837 | 25,054,308 | - | 51,265,014 | |||||||||||
Consultant Class | 11,302,854 | - | 11,302,854 | |||||||||||||
R Class | 124,902 | - | 124,902 | |||||||||||||
K Class | 24,331 | - | 24,331 | |||||||||||||
SHARES OUTSTANDING (unlimited number of $.001 par value): | ||||||||||||||||
Investment Class | 185,372 | 288,558 | 2,522,592 | 904,056 | 3,900,578 | |||||||||||
Service Class | 560,830 | 1,705,577 | 1,839,859 | 279,108 | 4,385,374 | |||||||||||
Consultant Class | 842,229 | - | 842,229 | |||||||||||||
R Class | 12,503 | - | 12,503 | |||||||||||||
K Class | 2,431 | - | 2,431 | |||||||||||||
NET ASSET VALUES (Net Assets ÷ Shares Outstanding): | ||||||||||||||||
Investment Class2 | $ | 9.91 | $ | 9.11 | 13.55 | - | $ | 9.91 | ||||||||
Service Class2 | 11.69 | 11.52 | 13.62 | - | 11.69 | |||||||||||
Consultant Class3 | 13.42 | - | 13.42 | |||||||||||||
R Class 4 | 9.99 | - | 9.99 | |||||||||||||
K Class 4 | 10.01 | - | 10.01 | |||||||||||||
Investments at identified cost | $ | 7,101,268 | $ | 20,703,011 | 62,546,125 | $ | - | $ | 90,350,404 |
1 | Reflects the change in shares of Royce International Premier Fund after giving effect to the distribution of shares of Royce International Premier Fund to Royce European Small-Cap Fund and Royce Global Value Fund shareholders as if the Reorganizations had taken place on June 30, 2015. |
2 | Offering and redemption price per share; shares held less than 30 days may be subject to a 2% redemption fee, payable to the Fund. From January 1-31, 2015, the same redemption fee was applied to shares held less than 180 days. |
3 | Offering and redemption price per share; shares held less than 365 days may be subject to a 1% contingent deferred sales charge, payable to Royce Fund Services, Inc. |
4 | Offering and redemption price per share. |
S-23
Pro Forma Condensed Combined Statement of Operations
Relating to Both Reorganizations as of June 30, 2015 (Unaudited)
Royce International | Royce European | Royce Global | Adjustments1 | Pro Forma | |||||||||||
Premier Fund | Small-Cap Fund | Value Fund | Combined Royce | ||||||||||||
International | |||||||||||||||
INVESTMENT INCOME: | Premier Fund | ||||||||||||||
INCOME: | |||||||||||||||
Dividends | $ | 175,645 | $ | 429,193 | 1,155,091 | $ | - | $ | 1,759,929 | ||||||
Foreign withholding tax | (14,320 | ) | (48,747 | ) | (94,575 | ) | - | (157,642 | ) | ||||||
Securities lending | - | - | 71 | - | 71 | ||||||||||
Total income | 161,325 | 380,446 | 1,060,587 | - | 1,602,358 | ||||||||||
EXPENSES: | |||||||||||||||
Investment advisory fees | 51,432 | 133,237 | 491,523 | - | 676,192 | ||||||||||
Distribution fees | 5,824 | 23,909 | 113,588 | - | 143,321 | ||||||||||
Shareholder servicing | 13,453 | 27,332 | 105,546 | (14,412 | ) | 131,919 | |||||||||
Shareholder reports | 1,666 | 11,914 | 26,912 | - | 40,492 | ||||||||||
Custody | 17,038 | 21,364 | 50,626 | (11,300 | ) | 77,728 | |||||||||
Registration | 20,443 | 20,054 | 35,256 | (40,497 | ) | 35,256 | |||||||||
Audit | 14,446 | 12,918 | 17,508 | (27,364 | ) | 17,508 | |||||||||
Administrative and office facilities | 745 | 1,837 | 10,095 | - | 12,677 | ||||||||||
Trustees’ fees | 288 | 694 | 4,301 | - | 5,283 | ||||||||||
Legal | 55 | 137 | 734 | - | 926 | ||||||||||
Other expenses | 631 | 887 | 4,039 | (1,050 | ) | 4,507 | |||||||||
Total expenses | 126,021 | 254,283 | 860,128 | (94,623 | ) | 1,145,809 | |||||||||
Compensating balance credits | (2 | ) | (10 | ) | (44 | ) | - | (56 | ) | ||||||
Fees waived by investment adviser and distributor | (25,827 | ) | (18,159 | ) | (11,696 | ) | - | (55,682 | ) | ||||||
Expenses reimbursed by investment adviser | (35,141 | ) | (58,763 | ) | (168,103 | ) | 94,623 | (167,384 | ) | ||||||
Net expenses | 65,051 | 177,351 | 680,285 | - | 922,687 | ||||||||||
Net investment income (loss) | 96,274 | 203,095 | 380,302 | - | 679,671 | ||||||||||
REALIZED AND UNREALIZED GAIN (LOSS) ON INVESTMENTS AND FOREIGN CURRENCY: | |||||||||||||||
NET REALIZED GAIN (LOSS): | |||||||||||||||
Investments | (68,015 | ) | (1,988,528 | ) | 1,273,580 | - | (782,963 | ) | |||||||
Foreign currency transactions | (7,194 | ) | 3,708 | (45,554 | ) | - | (49,040 | ) | |||||||
NET CHANGE IN UNREALIZED APPRECIATION (DEPRECIATION): | |||||||||||||||
Investments and foreign currency translations | 1,063,154 | 4,028,207 | 4,084,452 | - | 9,175,813 | ||||||||||
Other assets and liabilities denominated in foreign currency | 18,265 | 3,201 | (9,913 | ) | - | 11,553 | |||||||||
Net realized and unrealized gain (loss) on investments and foreign currency | 1,006,210 | 2,046,588 | 5,302,565 | - | 8,355,363 | ||||||||||
NET INCREASE (DECREASE) IN NET ASSETS FROM INVESTMENT OPERATIONS | $ | 1,102,484 | $ | 2,249,683 | 5,682,867 | $ | - | $ | 9,035,034 |
1 | Decrease due to the elimination of duplicate expenses achieved by merging the funds. |
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Notes to Pro Forma Combined Financial Statements Relating to
Both Reorganizations as of June 30, 2015 (Unaudited)
NOTE 1 — Basis of Combination:
At a meeting held on October 8, 2015, the Board approved each Target Fund entering into the Plan with International Premier and both Reorganizations. The Plan provides for the transfer of all of assets of a Target Fund to International Premier in exchange for International Premier’s assumption of all of the liabilities of the Target Fund and International Premier’s issuance of shares of beneficial interest of International Premier (the “International Premier Shares”) to the Target Fund. The International Premier Shares received by a Target Fund in the proposed reorganization will have an aggregate net asset value that is equal to the aggregate net asset value of the Target Fund shares that are outstanding immediately prior to such reorganization. The Plan also provides for the distribution by a Target Fund, on a pro rata basis, of the International Premier Shares to its shareholders in complete liquidation of the Target Fund.
Each Reorganization will be accounted for as a tax-free merger of investments companies. The unaudited pro forma condensed combined schedule of investments and the unaudited pro forma condensed combined statement of assets and liabilities reflect the financial position of European Small-Cap, Global Value, and International Premier at June 30, 2015 as if both Reorganizations had occurred on that date. The unaudited pro forma condensed combined statement of operations reflects the results of operations of European Small-Cap, Global Value, and International Premier for the six-month period ended June 30, 2015 as if both Reorganizations had occurred on January 1, 2015. These statements have been derived from the books and records of European Small-Cap, Global Value, and International Premier utilized in calculating daily net asset values at the dates indicated above in conformity with the accounting principles generally accepted in the United States of America, which may require the use of management accruals and estimates. Actual results may differ from these estimates. Completion of both Reorganizations as of June 30, 2015 would not have caused International Premier to violate any of its portfolio-level compliance tests. The historical cost of each Target Fund’s investment securities will be carried forward to the Combined Fund. The fiscal year end for each of European Small-Cap, Global Value, and International Premier is December 31.
The accompanying pro forma condensed combined financial statements should be read in conjunction with the historical financial statements of European Small-Cap, Global Value, and International Premier included in, incorporated by reference into, the SAI. Such pro forma condensed combined financial statements are presented for information purposes only and may not necessarily be representative of what the actual combined financial statements would have been had both Reorganizations occurred on June 30, 2015 or January 1, 2015, as applicable. Following both Reorganizations, International Premier will be the legal and accounting survivor.
Royce will pay the fees and expenses resulting from both Reorganizations, including proxy solicitation costs and legal and audit fees. Those fees and expenses are estimated to be approximately $[__________]. Any brokerage or other trading costs incurred by a Target Fund or International Premier in connection with buying or selling portfolio securities prior to a Reorganization will be borne by the relevant Fund. Any brokerage or other trading costs incurred in connection with buying or selling portfolio securities after a Reorganization will be borne by the Combined Fund.
NOTE 2 — International Premier, European Small-Cap and Global Value Valuation:
Securities are valued as of the close of trading on the New York Stock Exchange (the “NYSE”) (generally 4:00 p.m. Eastern time) on the valuation date. Securities that trade on an exchange, and securities traded on Nasdaq’s Electronic Bulletin Board, are valued at their last reported sales price or Nasdaq official closing price taken from the primary market in which each security trades or, if no sale is reported for such day, at their highest bid price. Other over-the-counter securities for which market quotations are readily available are valued at their highest bid price, except in the case of some bonds and other fixed income securities which may be valued by reference to other securities with comparable ratings, interest rates and maturities, using established independent pricing services. Each of European Small-Cap, Global Value, and International Premier values its non-U.S. dollar denominated securities in U.S. dollars daily at the prevailing foreign currency exchange rates as quoted by a major bank. Securities for which market quotations are not readily available are valued at their fair value in accordance with the provisions of the 1940 Act, under procedures approved by the Board, and are reported as Level 3 securities. As a general principle, the fair value of a security is the amount which the relevant Fund might reasonably expect to
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receive for the security upon its current sale. However, in light of the judgment involved in fair valuations, no assurance can be given that a fair value assigned to a particular security will be the amount which the relevant Fund might be able to receive upon its current sale. In addition, if, between the time trading ends on a particular security and the close of the customary trading session on the NYSE, events occur that are significant and may make the closing price unreliable, a Fund may fair value the security. European Small-Cap, Global Value, and International Premier use an independent pricing service to provide fair value estimates for relevant non-U.S. equity securities on days when the U.S. market volatility exceeds a certain threshold. This pricing service uses proprietary correlations it has developed between the movement of prices of non-U.S. equity securities and indices of U.S.-traded securities, futures contracts and other indications to estimate the fair value of relevant non-U.S. securities. When fair value pricing is employed, the prices of securities used by a Fund may differ from quoted or published prices for the same security. Investments in money market funds are valued at net asset value per share.
Various inputs are used in determining the value of the investments of European Small-Cap, Global Value, and International Premier, as noted above. These inputs are summarized in the three broad levels below:
Level 1 – | quoted prices in active markets for identical securities. | |
Level 2 – | other significant observable inputs (including quoted prices for similar securities, foreign securities that may be fair valued and repurchase agreements). The table below includes all Level 2 securities. Level 2 securities with values based on quoted prices for similar securities are noted in the Schedules of Investments. | |
Level 3 – | significant unobservable inputs (including last trade price before trading was suspended, or at a discount thereto for lack of marketability or otherwise, market price information regarding other securities, information received from the company and/or published documents, including SEC filings and financial statements, or other publicly available information). |
The inputs or methodology used for valuing securities are not necessarily an indication of the risk associated with investing in those securities.
The following is a summary of the inputs used to value the investments of European Small-Cap, Global Value, and International Premier as of June 30, 2015.
Level 1 | Level 2 | Level 3 | Total | |
Royce European Small-Cap Fund | ||||
Common Stocks | $21,353,412 | – | – | $21,353,412 |
Cash Equivalents | – | $1,273,000 | – | $1,273,000 |
Royce Global Value Fund | ||||
Common Stocks | $64,065,611 | – | – | $64,065,611 |
Cash Equivalents | – | $5,874,000 | – | $5,874,000 |
Royce International Premier Fund | ||||
Common Stocks | $8,223,478 | – | – | $8,223,478 |
Cash Equivalents | – | $782,000 | – | $782,000 |
For the six-month period ended June 30, 2015, certain securities have transferred in and out of Level 1 and Level 2 measurements. Each of European Small-Cap, Global Value, and International Premier recognizes transfers between levels as of the end of the reporting period. At June 30, 2015, European Small-Cap, Global Value, and International Premier had securities transfer from Level 2 to Level 1 within the fair value hierarchy of $13,273,317, $30,021,085, and $5,977,194, respectively.
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NOTE 3 — Capital Shares:
As of June 30, 2015, International Premier and European Small-Cap only had Investment Class and Service Class shares outstanding while Global Value had Investment Class, Service Class, Consultant Class, R Class, and K Class shares outstanding.
The pro forma net asset value per share assumes the issuance of Investment Class, Service Class, Consultant Class, R Class, and K Class shares of International Premier that would have been issued at June 30, 2015 in connection with both proposed Reorganizations. The number of full and fractional shares of each Class of International Premier assumed to be issued is determined by dividing: (i) the aggregate value of the assets of the Target Funds that are transferred to International Premier, net of all of the liabilities of the Target Funds that are assumed to International Premier, by (ii) the net asset value of one share of the relevant Class of International Premier.
The pro forma number of shares outstanding, by Class, for International Premier consists of the following at June 30, 2015.
Class of Shares of International Premier | Shares of International Premier: Pre-Both Reorganizations | Additional Shares of International Premier Assumed Issued in Both Reorganizations | Total Outstanding Shares of International Premier: Post-Both Reorganizations |
Investment Class | 185,372 | 3,715,206 | 3,900,578 |
Service Class | 560,830 | 3,824,544 | 4,385,374 |
Consultant Class(1) | – | 842,229 | 842,229 |
R Class(1) | – | 12,503 | 12,503 |
K Class(1) | – | 2,431 | 2,431 |
(1) As of June 30, 2015, International Premier did not have any outstanding shares for this share class.
NOTE 4 — Pro Forma Operating Expenses:
The pro forma condensed combined statement of operations for the six-month period ended June 30, 2015, as adjusted, giving effect to both Reorganizations reflects changes in expenses of International Premier as if such Reorganizations were consummated on January 1, 2015.
The contractual investment advisory fee rates for each of European Small-Cap, Global Value, and International Premier have changed during 2015 and will change effective January 1, 2016 as set forth below:
January 1, 2015 through June 30, 2015 | July 1, 2015 through December 31, 2015 | Effective January 1, 2016 | |
Investment Advisory Fee Rate for Royce European Small-Cap Fund | 1.25% of first $2,000,000,000; 1.20% of next $2,000,000,000; 1.15% of next $2,000,000,000; and 1.10% of any additional average net assets | 1.10% of first $2,000,000,000; 1.05% of next $2,000,000,000; 1.00% of next $2,000,000,000; and 0.95% of any additional average net assets | 1.00% of first $2,000,000,000; 0.95% of next $2,000,000,000; 0.90% of next $2,000,000,000; and 0.85% of any additional average net assets |
Investment Advisory Fee Rate for Royce Global Value Fund | 1.25% of first $2,000,000,000; 1.20% of next $2,000,000,000; 1.15% of next $2,000,000,000; and 1.10% of any additional average net assets | 1.10% of first $2,000,000,000; 1.05% of next $2,000,000,000; 1.00% of next $2,000,000,000; and 0.95% of any additional average net assets | 1.00% of first $2,000,000,000; 0.95% of next $2,000,000,000; 0.90% of next $2,000,000,000; and 0.85% of any additional average net assets |
Investment Advisory Fee Rate for Royce International Premier Fund | 1.25% of first $2,000,000,000; 1.20% of next $2,000,000,000; 1.15% of next $2,000,000,000; and 1.10% of any additional average net assets | 1.10% of first $2,000,000,000; 1.05% of next $2,000,000,000; 1.00% of next $2,000,000,000; and 0.95% of any additional average net assets | 1.00% of first $2,000,000,000; 0.95% of next $2,000,000,000; 0.90% of next $2,000,000,000; and 0.85% of any additional average net assets |
The contractual expense caps for each of European Small-Cap, Global Value, and International Premier have changed during 2015 and will change effective January 1, 2016 as set forth below:
January 1, 2015 through June 30, 2015 | July 1, 2015 through December 31, 2015 | Effective January 1, 2016 | |
Contractual Expense Caps* for Royce European Small-Cap Fund and Related Expiration Dates | |||
Investment Class | 1.44% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.29% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.19% expiring December 31, 2016 1.74% expiring December 31, 2025 |
Service Class | 1.69% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.54% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.44% expiring December 31, 2016 1.99% expiring December 31, 2025 |
Contractual Expense Caps* for Royce Global Value Fund and Related Expiration Dates | |||
Investment Class | 1.44% expiring April 30, 2016 1.99% expiring April 30, 2021 | 1.29% expiring April 30, 2016 1.99% expiring April 30, 2021 | 1.19% expiring December 31, 2016 1.99% expiring December 31, 2021 |
Service Class | 1.69% expiring April 30, 2016 1.99% expiring April 30, 2018 | 1.54% expiring April 30, 2016 1.99% expiring April 30, 2018 | 1.44% expiring December 31, 2016 1.99% expiring December 31, 2018 |
Consultant Class | 2.44% expiring April 30, 2016 | 2.29% expiring April 30, 2016 | 2.19% expiring December 31, 2016 |
R Class | 1.99% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.84% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.74% expiring December 31, 2016 1.99% expiring December 31, 2025 |
K Class | 1.74% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.59% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.49% expiring December 31, 2016 1.99% expiring December 31, 2025 |
Contractual Expense Caps* for Royce International Premier Fund and Related Expiration Dates | |||
Investment Class | 1.44% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.29% expiring April 30, 2016 1.74% expiring April 30, 2025 | 1.19% expiring December 31, 2016 1.74% expiring December 31, 2025 |
Service Class | 1.69% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.54% expiring April 30, 2016 1.99% expiring April 30, 2025 | 1.44% expiring December 31, 2016 1.99% expiring December 31, 2025 |
* Royce has contractually agreed, without right of termination, to waive fees and/or reimburse expenses to the extent necessary to maintain each Class’s net annual operating expenses (excluding brokerage commissions, taxes, interest, litigation expenses, acquired fund fees and expenses, and other expenses not borne in the ordinary course of business) at or below the amount set forth above for the periods set forth above.
NOTE 5 — Federal Income Taxes:
Each of European Small-Cap, Global Value, and International Premier has elected to be taxed as a “regulated investment company” under the Code. If both Reorganizations are consummated, unless it determines such qualification is no longer in the best interest of shareholders, International Premier will seek to continue to qualify as a regulated investment company by complying with the provisions applicable to certain investment companies, as defined in applicable sections of the Code, and to make distributions of taxable income sufficient to relieve it from all, or substantially all, Federal income taxes. In addition, each Target Fund will make any required income or capital gain distributions prior to consummation of both Reorganizations, in accordance with provisions of the Code relating to tax-free reorganizations of investment companies. As of December 31, 2014, Global Value had substantial capital loss carryforwards, including $7,981,106 in capital loss carryforwards expiring on December 31, 2017 (the “Global Value Expiring Losses”) and capital loss carryforwards without expiration of $32,992,507. In addition, $31,995,687 were realized during the period November 1, 2014 to December 31, 2014 and carried over to 2015 by Global Value. These carryover capital losses are collectively referred to herein as the “Global Value Capital Losses.” As of December 31, 2014, International Premier did not have any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $553,164 in capital losses were realized and carried over to 2015 by International Premier.
The Global Value Reorganization is expected to accelerate the expiration of the Global Value Expiring Losses by one taxable year. Additionally, because Global Value may experience an “ownership change” within the meaning of the Code as a result of the completion of one or both of the Reorganizations, the Combined Fund’s ability to use the Global Value Capital Losses and the capital loss carryovers of International Premier and any net built-in losses and certain tax attributes after such Reorganization as described above, may be substantially limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by Global Value would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former Global Value shareholders.
As of December 31, 2014, neither European Small-Cap nor International Premier had any capital loss carryforwards from prior years. During the period November 1, 2014 to December 31, 2014, $235,153 and $553,164 in capital losses were realized and carried over to 2015 by European Small-Cap and International Premier, respectively. Post European Small-Cap Reorganization, the Combined Fund’s ability to use the capital loss carryforwards of European Small-Cap and International Premier to offset the Combined Fund’s capital gains, if any, and the use of certain other tax attributes may be limited. Consequently, the Combined Fund’s distributions to its shareholders may include larger amounts of taxable capital gains than distributions made by European Small-Cap would have included in the absence of a Reorganization, thereby reducing the after-tax investment returns of former European Small-Cap shareholders.
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PART C - OTHER INFORMATION
Item 15: Indemnification
(a) Article IX of the Trust Instrument of The Royce Fund (the “Registrant” or the “Trust”) provides as follows: |
“ARTICLE IX
LIMITATION OF LIABILITY AND INDEMNIFICATION
Section 1. Limitation of Liability. All persons contracting with or having any claim against the Trust or a particular Series shall look only to the assets of the Trust or such Series for payment under such contract or claim; and neither the Trustees nor any other Trust’s officers, employees or agents, whether past, present or future, shall be personally liable therefor. Every written instrument or obligation on behalf of the Trust or any Series shall contain a statement to the foregoing effect, but the absence of such statement shall not operate to make any Trustee or officers of the trust liable thereunder. None of the Trustees or officers of the Trust shall be responsible or liable for any act or omission or for neglect or wrongdoing by him or any agent, employee, investment adviser or independent contractor of the Trust, but nothing contained in this Trust Instrument or in the Delaware Act shall protect any Trustee or officer of the Trust against liability to the Trust or to Shareholders to which he would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his or her office. |
INDEMNIFICATION
Section 2.
(a) Subject to the exceptions and limitations contained in Section 2(b) below: |
(i) Every person who is, or has been, a Trustee or officer of the Trust (including persons who serve at the Trust’s request as directors, officers or trustees of another entity in which the Trust has any interest as a shareholder, creditor or otherwise) (hereinafter referred to as a “Covered Person”) shall be indemnified by the appropriate Fund to the fullest extent not prohibited by law against liability and against all expenses reasonably incurred or paid by him in connection with any claim, action, suit or proceeding in which he becomes involved as a party or otherwise by virtue of his being or having been a Trustee or officer and against amounts paid or incurred by him in the settlement thereof; and | |
(ii) The words “claim”, “action”, “suit” or “proceeding” shall apply to all claims, actions, suits or proceedings (civil, criminal, administrative, investigatory or other, including appeals), actual or threatened, while in office or thereafter, and the words “liability” and “expenses” shall include, without limitation, attorneys’ fees, costs, judgments, amounts paid in settlement, fines, penalties and other liabilities. |
(b) No indemnification shall be provided hereunder to a Covered Person: |
(i) Who shall, in respect of the matter or matters involved, adjudicated by a court or body before which the proceeding was brought (A) to be liable to the Trust or its Shareholders by reason of willful misfeasance, bad faith, gross negligence in the performance of his duties or reckless disregard of the obligations and duties involved in the conduct of his office or (B) not to have acted in the belief that his action was in the best interest of the Trust; or | |
(ii) In the event of a settlement, unless there has been a determination that such Trustee or officer did not engage in willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of his office, |
(A) By the court or other body approving the settlement;
(B) By a majority of those Trustees who are neither Interested Persons of the Trust nor are parties to the matter, based upon a review of readily available facts (as opposed to a full trial-type inquiry); or |
(C) By written opinion of independent legal counsel, based upon a review of readily available facts (as opposed to a full trial-type inquiry). |
(c) The rights of indemnification herein provided may be insured against by policies maintained by the Trust, shall be severable, shall not be exclusive of or affect any other rights to which any Covered Person may now or hereafter be entitled, shall continue as to a person who has ceased to be such Trustee or officer and shall inure to the benefit of the heirs, executors and administrators of such a person. Nothing contained herein shall affect any |
rights to indemnification to which Trust personnel, other than Trustees and officers, and other persons may be entitled by contract or otherwise under law. |
(d) Expenses in connection with the preparation and presentation of a defense to any claim, action, suit or proceeding of the type described in subsection (a) of this Section 2 may be paid by the applicable Fund from time to time prior to final disposition thereof upon receipt of an undertaking by or on behalf of such Covered Person that such amount will be paid over by him to the applicable Fund if and when it is ultimately determined that he is not entitled to indemnification under this Section 2; provided, however, that either (i) such Covered Person shall have provided appropriate security for such undertaking, (ii) the Trust is insured against losses arising out of any such advance payments or (iii) either a majority of the Trustees who are neither Interested Persons of the Trust nor parties to the matter, or independent legal counsel in a written opinion, shall have determined, based upon a review of readily available facts (as opposed to a trial-type inquiry or full investigation), that there is reason to believe that such Covered Person will be found entitled to indemnification under this Section 2.”
(b) Paragraph 8 of the Investment Advisory Agreements by and between the Registrant and Royce & Associates provides as follows:
“8. Protection of the Adviser. The Adviser (or any sub-investment adviser as may be applicable) shall not be liable to the Fund or to any portfolio series thereof for any action taken or omitted to be taken by the Adviser in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Fund or such series, and the Fund or each portfolio series thereof involved, as the case may be, shall indemnify the Adviser and hold it harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Adviser in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Fund or any portfolio series thereof or its security holders) arising out of or otherwise based upon any action actually or allegedly taken or omitted to be taken by the Adviser in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an investment adviser of the Fund or such series. Notwithstanding the preceding sentence of this Paragraph 8 to the contrary, nothing contained herein shall protect or be deemed to protect the Adviser against or entitle or be deemed to entitle the Adviser to indemnification in respect of, any liability to the Fund or to any portfolio series thereof or its security holders to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its duties and obligations under this Agreement.
Determinations of whether and the extent to which the Adviser is entitled to indemnification hereunder shall be made by reasonable and fair means, including (a) a final decision on the merits by a court or other body before whom the action, suit or other proceeding was brought that the Adviser was not liable by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of its duties or (b) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Adviser was not liable by reason of such misconduct by (i) the vote of a majority of a quorum of the Trustees of the Fund who are neither “interested persons” of the Fund (as defined in Section 2(a)(19) of the Investment Company Act of 1940) nor parties to the action, suit or other proceeding or (ii) an independent legal counsel in a written opinion.”
(c) Paragraph 9 of the Distribution Agreement made October 1, 2001 by and between the Registrant and Royce Fund Services, Inc. provides as follows:
“9. Protection of the Distributor. The Distributor shall not be liable to the Fund or to any series thereof for any action taken or omitted to be taken by the Distributor in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an underwriter of the Shares, and the Fund or each portfolio series thereof involved, as the case may be, shall indemnify the Distributor and hold it harmless from and against all damages, liabilities, costs and expenses (including reasonable attorneys’ fees and amounts reasonably paid in settlement) incurred by the Distributor in or by reason of any pending, threatened or completed action, suit, investigation or other proceeding (including an action or suit by or in the right of the Fund or any series thereof or its security holders) arising out of or otherwise based upon any action actually or allegedly taken or omitted to be taken by the Distributor in connection with the performance of any of its duties or obligations under this Agreement or otherwise as an underwriter of the Shares. Notwithstanding the preceding sentences of this Paragraph 9 to the contrary, nothing contained herein shall protect or be deemed to protect the Distributor against, or entitle or be deemed to entitle the Distributor to indemnification in respect of, any liability to the Fund or to any portfolio series thereof or its security holders to which the Distributor would otherwise be subject by reason of willful misfeasance, |
bad faith or gross negligence in the performance of its duties or by reason of its reckless disregard of its duties and obligations under this Agreement. |
Determinations of whether and to the extent to which the Distributor is entitled to indemnification hereunder shall be made by reasonable and fair means, including (a) a final decision on the merits by a court or other body before whom the action, suit or other proceeding was brought that the Distributor was not liable by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of its duties or (b) in the absence of such a decision, a reasonable determination, based upon a review of the facts, that the Distributor was not liable by reason of such misconduct by (a) the vote of a majority of a quorum of the Trustees of the Fund who are neither “interested persons” of the Fund (as defined in Section 2(a)(19) of the 1940 Act) nor parties to the action, suit or other proceeding or (b) an independent legal counsel in a written opinion.” |
(d) The Fund, its officers and directors, R&A, the Distributor and certain others are presently insured under a Directors and Officers/Errors and Omissions Liability Insurance Policy issued by ICI Mutual Insurance Company, which generally covers claims by the Fund’s stockholders, and third persons based on or alleging negligent acts, misstatements or omissions by the insureds and the costs and expenses of defending those claims, up to a limit of $30,000,000, with a deductible amount of $500,000.
Item 16: Exhibits | |
1(a) | Trust Instrument dated April 12, 1996, previously filed on August 16, 2006 with Post-Effective Amendment No. 76 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
1(b) | Certificate of Trust dated April 12, 1996, previously filed on August 16, 2006 with Post-Effective Amendment No. 76 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(2) | By-laws dated April, 12, 1996, previously filed on August 16, 2006 with Post-Effective Amendment No. 76 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(3) | Not applicable. |
(4) | Plan of Reorganization of The Royce Fund, on behalf of each of Royce European Small-Cap Fund, Royce Global Value Fund, and Royce International Premier Fund. Included as Appendix A to Prospectus/Proxy Statement. |
(5) | Portions of the Trust Instrument, Investment Advisory Agreement, and Distribution Agreement in respect of the Registrant defining the rights of shareholders of the Registrant. See Item 15 of Part C of this Registration Statement on Form N-14. |
(6)(a) | Amended and Restated Investment Advisory Agreement, dated July 1, 2015, between The Royce Fund and Royce & Associates, LLC in respect of Royce European Small-Cap Fund, previously filed on October 26, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(6)(b) | Amended and Restated Investment Advisory Agreement, dated July 1, 2015, between The Royce Fund and Royce & Associates, LLC in respect of Royce Global Value Fund, previously filed on October 26, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(6)(c) | Amended and Restated Investment Advisory Agreement, dated July 1, 2015, between The Royce Fund and Royce & Associates, LLC in respect of Royce International Premier Fund, previously filed on October 26, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
6(d) | Investment Advisory Fee Waiver and Expense Reimbursement Agreements for Royce European Small-Cap Fund (Investment Class), Royce European Small-Cap Fund (Service Class), Royce Global Value Fund (Investment Class), Royce Global Value Fund (Service Class), Royce Global Value Fund (K Class), Royce Global Value Fund (R Class), Royce International Premier Fund (Investment Class), and Royce International Premier Fund (Service Class), each dated July 1, 2015, previously filed on October 26, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration statement and hereby incorporated by reference. |
(7) | Distribution Agreement between The Royce Fund and Royce Fund Services, Inc. dated October 1, 2001, previously filed on October 15, 2001 with Post-Effective Amendment No. 55 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(8) | Not applicable. |
(9)(a) | Form of Custodian Contract with State Street Bank and Trust Company dated as of December 31, 1985 and amendments dated December 11, 1987, May 13, 1988, April 7, 1992 and November 13, 1997, September 14, 2000, April 16, 2003 and June 30, 2005, previously filed on October 27, 2006 with Post-Effective Amendment No. 77 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(9)(b) | Special Custody and Pledge Agreement among The Royce Fund, Goldman Sachs and State Street Bank dated as of November 11, 2010, previously filed on April 28, 2011 with Post-Effective Amendment No. 105 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(10)(a) | Amended and Restated Distribution Plan of The Royce Fund, previously filed on February 29, 2012 with Post-Effective Amendment No. 108 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
(10)(b) | Distribution Fee Agreements between Royce Global Value Fund (formerly, Royce International Value Fund) (Service Class), and Royce European Small-Cap Fund (formerly, Royce International Smaller-Companies Fund and formerly, Royce European Smaller-Companies Fund) (Service Class) and Royce Fund Services, Inc. dated October 27, 2006, previously filed on April 30, 2008 with Post-Effective Amendment No. 85 to the Trust’s Registration statement and hereby incorporated by reference. |
(10)(c) | Distribution Fee Agreements between Royce Global Value Fund (K Class and R Class) and Royce Fund Services, Inc., dated December 14, 2011, previously filed on December 23, 2011 with Post-Effective Amendment No. 106 to the Trust’s Registration statement and hereby incorporated by reference. |
(10)(d) | Distribution Fee Agreement between Royce Global Value Fund (Consultant Class) and Royce Fund Services, Inc., dated April 7, 2011, previously filed on April 28, 2011 with Post-Effective Amendment No. 105 to the Trust’s Registration statement and hereby incorporated by reference. |
(10)(e) | Distribution Fee Agreement between Royce International Premier Fund (Service Class) and Royce Fund Services, Inc., dated September 23, 2010, previously filed on October 5, 2010 with Post-Effective Amendment No. 101 to the Trust’s Registration statement and hereby incorporated by reference. |
(10)(f) | Distribution Fee Agreements between Royce International Premier Fund (Consultant Class, R Class, and K Class) and Royce Fund Services, Inc., dated October 8, 2015, previously filed on October 26, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration statement and hereby incorporated by reference. |
(10)(g) | Rule 18f-3 Plan for Royce European Small-Cap Fund (formerly, Royce European Smaller-Companies Fund), dated October 17, 2013, previously filed on November 8, 2013 with Post-Effective Amendment No. 117 to the Trust’s Registration statement and hereby incorporated by reference. |
(10)(h) | Rule 18f-3 Plan for Royce Global Value Fund, dated December 14, 2011, previously filed on December 23, 2011 with Post-Effective Amendment No. 106 to the Trust’s Registration statement and hereby incorporated by reference. |
(10)(i) | Rule 18f-3 Plan for Royce International Premier Fund dated October 8, 2015, previously filed on October 26, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
11 | Legal Opinion of Richards, Layton & Finger as to the legality of the securities being registered. Filed herewith. |
12(a) | Form of Tax Opinion of Sidley Austin LLP supporting the tax matters and consequences to shareholders discussed in the Prospectus/Proxy Statement as it relates to the reorganization of Royce European Small-Cap Fund into Royce International Premier Fund. |
12(b) | Form of Tax Opinion of Sidley Austin LLP supporting the tax matters and consequences to shareholders discussed in the Prospectus/Proxy Statement as it relates to the reorganization of Royce Global Value Fund into Royce International Premier Fund. |
13(a) | Form of Transfer Agency and Services Agreement between The Royce Fund and Royce Capital Fund and Boston Financial Data Services, Inc., dated as of April 4, 2009, previously filed on April 30, 2009 with Post-Effective Amendment No. 91 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
13(b) | Administration Agreement between The Royce Fund and Royce & Associates, LLC dated January 1, 2008, previously filed on April 30, 2008 with Post-Effective Amendment No. 85 to the Trust’s Registration statement on Form N-1A and hereby incorporated by reference. |
14 | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm for each of Royce European Small-Cap Fund, Royce Global Value Fund, and Royce International Premier Fund. Filed herewith. |
15 | Not applicable. |
16 | Not applicable. |
17(a) | Form of Proxy Card for Royce European Small-Cap Fund. Filed herewith. |
17(b) | Form of Proxy Card for Royce Global Value Fund. Filed herewith. |
17(c) | Statutory Prospectus relating to the Consultant Class, R Class, and K Class shares of various series of the Trust, including Royce Global Value Fund, dated May 1, 2015, previously filed on April 30, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
17(d) | Statutory Prospectus relating to the Investment Class, Service Class, and/or Institutional Class shares of various series of the Trust, including Royce European Small-Cap Fund, Royce Global Value Fund, and Royce International Premier Fund, dated May 1, 2015, previously filed on April 30, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
17(e) | Statement of Additional Information relating to each series of the Trust, Royce European Small-Cap Fund, Royce Global Value Fund, and Royce International Premier Fund, dated May 1, 2015, previously filed on April 30, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
17(f) | Annual Report to Shareholders of various series of the Trust, including Royce European Small-Cap Fund and Royce International Premier Fund, for the fiscal year ended December 31, 2014, incorporated by reference to the Certified Shareholder Report on Form N-CSR of the Registrant, filed on March 6, 2015. |
17(g) | Annual Report to Shareholders of various series of the Trust, including Royce Global Value Fund, for the fiscal year ended December 31, 2014, incorporated by reference to the Certified Shareholder Report on Form N-CSR of the Registrant, filed on March 6, 2015. |
17(h) | Semiannual Report to Shareholders of various series of the Trust, including Royce European Small-Cap Fund, Royce Global Value Fund, and Royce International Premier Fund, for the six-month period ended June 30, 2015, incorporated by reference to the Certified Shareholder Report on Form N-CSR of the Registrant, filed on August 28, 2015. |
17(i) | Code of Ethics for The Royce Funds and The Royce Companies, as amended through April 22, 2015, previously filed on April 30, 2015 with Post-Effective Amendment No. 128 to the Trust’s Registration Statement on Form N-1A and hereby incorporated by reference. |
SIGNATURES
As required by of the Securities Act of 1933, this registration statement has been signed on behalf of the registrant, in the City of New York and State of New York on the 3rd day of November, 2015.
THE ROYCE FUND
By: | /s/ Christopher D. Clark | ||
Christopher D. Clark, President |
SIGNATURE | TITLE | DATE | ||
/s/ Charles M. Royce | Trustee | November 3, 2015 | ||
Charles M. Royce | ||||
/s/ Peter K. Hoglund | Treasurer | November 3, 2015 | ||
Peter K. Hoglund | ||||
/s/ Christopher D. Clark | President and Trustee | November 3, 2015 | ||
Christopher D. Clark | ||||
/s/ Patricia W. Chadwick | Trustee | November 3, 2015 | ||
Patricia W. Chadwick | ||||
/s/ Richard M. Galkin | Trustee | November 3, 2015 | ||
Richard M. Galkin | ||||
/s/ Stephen L. Isaacs | Trustee | November 3, 2015 | ||
Stephen L. Isaacs | ||||
/s/ Arthur S. Mehlman | Trustee | November 3, 2015 | ||
Arthur S. Mehlman | ||||
/s/ David L. Meister | Trustee | November 3, 2015 | ||
David L. Meister | ||||
/s/ G. Peter O’Brien | Trustee | November 3, 2015 | ||
G. Peter O’Brien | ||||
/s/ Michael K. Shields | Trustee | November 3, 2015 | ||
Michael K. Shields |
NOTICE
A copy of the Trust Instrument of The Royce Fund is on file with the Secretary of State of Delaware, and notice is hereby given that this instrument is executed on behalf of the Registrant by an officer of the Registrant as an officer and not individually and that the obligations of or arising out of this instrument are not binding upon any of the Trustees or shareholders individually but are binding only upon the assets and property of the Registrant.
Exhibit Index
Exhibit Number | Exhibit Name |
(4) | Plan of Reorganization of The Royce Fund, on behalf of each of Royce European Small-Cap Fund, Royce Global Value Fund, and Royce International Premier Fund. Included as Appendix A to Prospectus/Proxy Statement. |
11 | Legal Opinion of Richards, Layton & Finger as to the legality of the securities being registered. |
12(a) | Form of Tax Opinion of Sidley Austin LLP supporting the tax matters and consequences to shareholders discussed in the Prospectus/Proxy Statement as it relates to the reorganization of Royce European Small-Cap Fund into Royce International Premier Fund. |
12(b) | Form of Tax Opinion of Sidley Austin LLP supporting the tax matters and consequences to shareholders discussed in the Prospectus/Proxy Statement as it relates to the reorganization of Royce Global Value Fund into Royce International Premier Fund. |
14 | Consent of PricewaterhouseCoopers LLP, independent registered public accounting firm for each of Royce European Small-Cap Fund, Royce Global Value Fund, and Royce International Premier Fund. |
17(a) | Form of Proxy Card for Royce European Small-Cap Fund. |
17(b) | Form of Proxy Card for Royce Global Value Fund. |