Royce Discovery Fund (RDF) seeks long-term growth of capital. Royce invests the Fund’s assets primarily in a broadly diversified portfolio of micro-cap companies, those with market capitalizations up to $500 million. Royce selects securities identified by a proprietary quantitative investment model that implements a value approach. These candidates are then evaluated by the Fund’s portfolio managers using both quantitative and qualitative analysis that is focused on balance sheet quality, cash flow levels and various measures of a company’s profitability. We believe that investors in the Fund should have a long-term investment horizon of at least three years. George Necakov, Director of Quantitative Strategies and James Harvey co-manage the Fund.